def14a
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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o Preliminary Proxy Statement
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o Confidential, for Use of the Commission Only (as
permitted
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þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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o Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12 |
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WGL Holdings, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): |
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Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing. |
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Form, schedule or registration statement no.: |
WGL
Holdings, Inc.
101 Constitution Ave., N.W.
Washington, D.C. 20080
NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS
The annual meeting of shareholders of WGL Holdings, Inc. will be
held at the National Press Club, 529 14th St., N.W.;
Washington, D.C. 20045 on Thursday, March 4, 2010, at
10:00 a.m., Eastern Time, for the following purposes, as
more fully set forth in the annexed proxy statement:
(1) To elect eight directors;
(2) To ratify the appointment of Deloitte &
Touche LLP as independent public accountants for fiscal year
2010;
(3) To approve the Directors Stock Compensation Plan,
as amended and restated;
(4) To consider and act on a shareholder proposal relating
to cumulative voting, if this proposal is brought before the
meeting; and
(5) To transact any other business properly brought before
the meeting and any adjournment thereof.
Only holders of record of the common stock of WGL Holdings, Inc.
at the close of business on January 4, 2010, the record
date fixed by the board of directors, will be entitled to vote
on each matter submitted to a vote of shareholders at the
meeting. To assure your representation at the annual meeting,
you are urged to cast your vote, as instructed in the Notice of
Internet Availability of Proxy Materials, over the Internet or
by telephone as promptly as possible. You may also request a
paper proxy card to submit your vote by mail, if you prefer.
Any shareholder of record attending the annual meeting may vote
in person, even if she or he has voted over the Internet, by
telephone or returned a completed proxy card. Please note,
however, that if your shares are held of record by a broker,
bank or other nominee and you wish to vote at the meeting, you
must obtain a valid form issued in your name from that record
holder. Each holder of common stock is entitled to one vote for
each share of that stock standing in the name of the holder on
the records of WGL Holdings, Inc. at the close of business on
January 4, 2010.
By order of the board of directors,
Douglas V. Pope
Secretary
January 19, 2010
IMPORTANT
NOTICE
YOUR VOTE IS
IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING,
YOU ARE REQUESTED TO VOTE YOUR SHARES AS PROMPTLY AS
POSSIBLE. PLEASE VOTE OVER THE INTERNET AT WWW.PROXYVOTE.COM OR
BY TELEPHONE AT
1-800-690-6903.
ALTERNATIVELY, YOU MAY REQUEST A PAPER PROXY CARD, WHICH YOU MAY
COMPLETE, SIGN AND RETURN BY MAIL.
ADMISSION
PROCEDURES
Admission to the annual meeting will be limited to persons
who: (a) are listed on WGL Holdings, Inc.s records as
shareholders as of January 4, 2010 (the record
date), or (b) bring documentation to the meeting that
demonstrates their beneficial ownership of WGL Holdings, Inc.
common stock through a broker, bank or other institution as of
the record date.
Proxy
Statement
January 19,
2010
Table of
Contents
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Exhibit A: Directors Stock Compensation Plan, as
amended and restated
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A-1
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i
PROXY
STATEMENT
WGL HOLDINGS, INC.
101 Constitution Ave., N.W.
Washington, D.C. 20080
January 19, 2010
INFORMATION
REGARDING THE ANNUAL MEETING
This proxy statement is provided in connection with a
solicitation of proxies by the board of directors of WGL
Holdings, Inc. to be used at the annual meeting of shareholders
to be held on Thursday, March 4, 2010 at 10:00 a.m.,
Eastern Time, and at any adjournment thereof. The annual meeting
will be held at the National Press Club, 529 14th St.,
N.W.; Washington, D.C. 20045. This proxy statement is first
being provided to our shareholders on or about January 19,
2010. Throughout this proxy statement, WGL Holdings,
the Company, we, our or
us are intended to refer to WGL Holdings, Inc. and
its consolidated subsidiaries, unless specifically indicated
otherwise.
You are invited to attend the annual meeting, and we request
that you vote on the proposals described in this proxy
statement. You do not need to attend the meeting to vote your
shares. If you have received a printed copy of these materials
by mail, you may complete, sign and return your proxy card or
follow the instructions below to submit your proxy by telephone
or over the Internet. If you did not receive a printed copy of
these materials by mail and are accessing them on the Internet,
you may follow the instructions below to submit your proxy over
the Internet or by telephone.
Notice Regarding
the Availability of Proxy Materials
In accordance with rules and regulations adopted by the
Securities and Exchange Commission, instead of mailing a printed
copy of our proxy materials to each shareholder of record, we
may now furnish proxy materials via the Internet. We intend to
mail a printed copy of this proxy statement and a paper proxy
card to certain shareholders of record entitled to vote at the
annual meeting. All other shareholders will receive a Notice
Regarding the Availability of Proxy Materials (sometimes
referred to in this proxy statement as the Notice).
The Notice will first be mailed on or about January 19,
2010.
On the date of mailing of the Notice, shareholders will be able
to access all of the proxy materials on a web site referred to
in the Notice. The proxy materials will be available free of
charge. The Notice will instruct you as to how you may access
and review all of the important information contained in the
proxy materials (including our Annual Report to shareholders)
over the Internet. The Notice also instructs you as to how you
may submit your proxy over the Internet. If you received a
Notice and would like to receive printed copies of the proxy
materials, you should follow the instructions for requesting
such materials included in the Notice.
Washington Gas
Light Company Savings and Capital Appreciation Plans
If you participate in either the Washington Gas Light Company
Savings or Capital Appreciation Plan (401(k) plans) and you own
WGL Holdings common stock in one of those plans, your proxy card
will serve as a voting instruction to the 401(k) plan trustee.
If you are also a shareholder of record outside of the 401(k)
plans, your proxy card (or Internet or telephone vote) will vote
both your record shares and your 401(k) plan shares, as long as
your registration information is identical in both accounts. For
example, if your registered stock account is in your single name
and also lists the same address as your 401(k) account, you
should receive one proxy card, or Notice for both the 401(k)
plan shares and for the shares held by our transfer agent.
However, if your shares held by the transfer agent are in joint
names, or at a different address, you will receive separate
proxy materials for each account. To allow sufficient time for
voting by the administrator of the 401(k) plans, your voting
instructions must be received by 11:59 pm Eastern Time on
March 2, 2010.
1
One Vote For Each
Share Held
At the annual meeting, each holder of WGL Holdings common stock
will be entitled to one vote for each share of common stock
standing in the name of the holder on the records of WGL
Holdings at the close of business on January 4, 2010.
Outstanding voting securities as of January 4, 2010,
consisted of 50,302,721 shares of common stock.
Shareholders of
Record and Beneficial Owners
Most of our shareholders hold their shares through a broker,
bank or other nominee rather than directly in their own name. As
summarized below, there are some distinctions between shares
held of record and those owned beneficially.
Shareholders of
Record
If your shares are registered directly in your name with Bank of
New York Mellon, our transfer agent, you are considered, with
respect to those shares, the shareholder of record, and the
Notice or this proxy statement is being sent directly to you by
our agent. As the shareholder of record, you have the right to
vote by proxy or to vote in person at the annual meeting.
Beneficial
Owners
If your shares are held in a brokerage account or by a bank or
other nominee, you are considered the beneficial owner of shares
held in street name, and the Notice or this proxy
statement and voting instruction form will be forwarded to you
by your broker or nominee. The broker or nominee is considered,
with respect to those shares, the shareholder of record. As the
beneficial owner, you have the right to direct your broker how
to vote. Beneficial owners that received a Notice by mail from
the shareholder of record should follow the instructions
included in the Notice to view the proxy statement and transmit
voting instructions. Beneficial owners that receive a printed
copy of the proxy materials also may receive a voting
instruction form and voting instructions. Those beneficial
owners may mail the voting instruction form, or may vote by
telephone or over the Internet as instructed by that broker or
nominee in the voting form.
Voting Methods
and Procedures
Shareholders of record may vote in any one of four ways:
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by telephone;
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over the Internet;
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in person at the annual meeting; or
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by proxy card, if you received a printed copy of the proxy
materials by mail.
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The procedures for voting by proxy are as follows:
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To vote by proxy on the Internet, go to www.proxyvote.com to
complete an electronic proxy card.
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To vote by proxy using the enclosed proxy card (if you received
a paper copy of the proxy materials), complete, sign and date
your proxy card and return it promptly in the envelope provided.
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To vote by proxy over the telephone dial,
1-800-690-6903
using a touch-tone phone and follow the recorded instructions.
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If you vote via Internet or telephone, your vote must be
received by 11:59 p.m. Eastern Time on March 3, 2010
to be counted. Proxy cards must be received before
4:00 p.m. Eastern Time on March 2, 2010 or delivered
at the annual meeting to be counted.
2
We provide Internet proxy voting to allow you to vote your
shares on-line, with procedures designed to ensure the
authenticity and correctness of your proxy vote instructions.
However, please be aware that you must bear any costs associated
with your Internet access, such as usage charges from Internet
access providers and telephone companies.
Receipt of More
Than One Notice or Proxy Card
If you received more than one Notice or proxy card, your shares
are probably registered in more than one name or are registered
in different accounts. Please follow the voting instructions
included in each Notice and proxy card to ensure that all of
your shares are voted.
Voting Shares in
Person at the Annual Meeting
Shares held directly in your name as the shareholder of record
may be voted in person at the annual meeting. In order to vote
at the annual meeting, shareholders of record must bring their
Notice or proof of ownership. Beneficial owners must obtain a
valid proxy from the record owner to vote in person at the
annual meeting. Beneficial owners should follow the instructions
provided by their broker or contact their broker to request the
requisite proxy form. Even if you currently plan to attend the
annual meeting, we recommend that you also submit your proxy as
described above so that your vote will be counted if you later
decide not to attend the meeting. You may still attend the
meeting and vote in person if you have already voted by proxy.
Consideration of
Proposals Presented at the Annual Meeting
Other than the election of directors and the three other
proposals described in this proxy statement, we do not expect
any matters to be presented for a vote at the annual meeting. If
you grant a proxy, Terry D. McCallister, Chairman and Chief
Executive Officer, Adrian P. Chapman, President and Chief
Operating Officer, and Vincent L. Ammann, Jr., Vice
President and Chief Financial Officer (collectively referred to
as the proxyholders) will have the discretion to
vote your shares on any additional matters properly presented
for a vote at the annual meeting. Under our bylaws, the deadline
for notifying us of any additional proposals to be presented at
the annual meeting has passed and, accordingly, shareholders may
not present any additional proposals at the annual meeting.
Quorum and Vote
Tabulation
As provided in our bylaws, a majority of the shares entitled to
vote at the annual meeting, present in person or represented by
proxy, will constitute a quorum for the meeting.
On Proposal (1), the election of directors, you may either vote
FOR all the nominees to the Board of Directors or
you may WITHHOLD your vote from any or all nominees.
On Proposal (2), the ratification of the appointment of
Deloitte & Touche LLP, Proposal (3) approval of
the Directors Stock Compensation Plan, as amended and
restated and on Proposal (4) relating to cumulative voting
and any other matter to be voted on at the annual meeting, you
may vote FOR, AGAINST or
ABSTAIN from voting.
All valid proxies properly executed and received by us will be
voted in accordance with the instructions specified in the
proxy. If a proxy is submitted without instructions, shares will
be voted: (1) FOR the election of each
of the named nominees for director, (2) FOR
ratification of the appointment of Deloitte &
Touche LLP as independent public accountants for fiscal year
2010, (3) FOR the approval of the
Directors Stock Compensation Plan, as amended and restated
and (4) AGAINST the shareholder proposal
relating to cumulative voting.
3
At the annual meeting:
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The eight director nominees receiving the greatest number of
votes will be elected:
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All other proposals must receive more votes cast in favor of
each than the number of votes cast against each in order to be
approved. Broker shares not voted (sometimes called broker
non-votes) and abstentions have no effect on the final
vote counted on these matters. A broker non-vote
occurs when a shareholder of record, such as a broker, holding
shares for a beneficial owner does not vote on a particular item
because the shareholder of record does not have discretionary
voting power with respect to that item and has not received
voting instructions from the beneficial owner.
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Shares withheld and broker non-votes will have no effect on the
election of directors.
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Abstentions and broker non-votes will be counted in determining
a quorum for the meeting.
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Adjournments
We currently expect to take votes and close the polls on all
proposals at the annual meeting. However, we may:
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keep the polls open to facilitate additional proxy solicitation
with regard to any or all proposals; and/or
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allow the inspectors of election to count and report on votes
that have been cast after the polls have closed.
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If any of the above occurs, we could propose one or more
adjournments of the annual meeting. For any adjournment to be
approved, the votes cast in favor of it must represent a
majority of the total number of votes cast by the shareholders
present at the meeting in person or by proxy.
Proxies that we have solicited will be voted in favor of any
adjournment that we propose. If any adjournment is properly
proposed at the meeting on behalf of anyone else, the persons
named as proxies, acting in that capacity, will have discretion
to vote on the adjournment in accordance with their best
judgment.
Solicitation of
Proxies
The solicitation of proxies is being made on behalf of the board
of directors, and the cost will be borne by WGL Holdings.
Brokerage houses and other custodians will be reimbursed by WGL
Holdings for their expenses in forwarding proxy materials to the
beneficial owners of shares held in their name. Further
solicitation of proxies may be made by telephone or other
communication by regular employees of WGL Holdings.
Morrow & Co., LLC, 470 West Avenue, Stamford,
Connecticut, has been retained by WGL Holdings for a fee of
$5,500, plus expenses, to assist in the solicitation of proxies.
Revocation of
Proxies
You may revoke your proxy at any time before the final vote at
the meeting. You may revoke your proxy in any one of three ways:
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If you received a printed copy of the proxy materials by mail,
you may submit another properly completed proxy card with a
later date.
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You may send a written notice that you are revoking your proxy
to: Corporate Secretary, WGL Holdings, Inc., 101 Constitution
Avenue, N.W., Washington, DC 20080.
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You may attend the annual meeting and vote in person. However,
simply attending the annual meeting will not, by itself, revoke
your proxy.
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4
PROPOSAL 1
ELECTION OF
DIRECTORS
At the annual meeting, eight directors are to be elected. All of
the nominees are presently members of the Board of Directors.
Each nominee will be elected to serve until the next annual
meeting of shareholders of the Company.
It is the intention of the proxy holders to vote proxies for the
election of the nominees named below, unless such authority is
withheld. We do not contemplate that any of such nominees will
become unavailable for any reason, but if that should occur
before the meeting, the proxies received for that nominee will
be voted for another nominee or other nominees, to be selected
by the board of directors in their discretion.
The board of directors recommends a vote FOR the
election of each of the following nominees:
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Michael D. Barnes, age 66, is Senior Of Counsel to the
law firm of Covington & Burling LLP. He was President of
The Brady Campaign and Brady Center to Prevent Gun Violence from
2000 through June 2006. He was previously a partner in the law
firm of Hogan & Hartson LLP. Mr. Barnes was United States
Representative from Marylands 8th Congressional
District from 1979 to 1987. Mr. Barnes has been a director of
Washington Gas Light Company since 1991, a director of WGL
Holdings since November 2000 and serves as Chairman of the
Governance Committee. As Chairman of the Governance Committee,
Mr. Barnes also serves as Lead Director for the Board of
Directors.
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George P. Clancy, Jr., age 66, is Executive Vice
President and
Mid-Atlantic
Region Market President of Chevy Chase Bank, a division of
Capital One, N.A. He joined Chevy Chase Bank in 1995. Mr.
Clancy has an extensive career in banking which includes serving
as President and Chief Operating Officer of The Riggs National
Corporation (1985-1986) and President and Chief Executive
Officer of Signet Bank, N.A. (1988-1995). Mr. Clancy is active
in several community and civic organizations, including serving
as: the Founding and immediate past Chairman and currently as a
Member of the Board of Directors of the Catholic Charities
Foundation, Member of the Board of Trustees of the University
System of Maryland Foundation, Inc., a Member of the Board of
Trustees of the University of Maryland College Park Foundation
and is on the Executive Committee of the Washington D.C. Police
Foundation. Mr. Clancy has been a director of Washington Gas
Light Company and a director of WGL Holdings since
December 2000.
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James W. Dyke, Jr., age 63, is a partner in the Virginia
law firm of McGuire Woods LLP, where he specializes in
corporate, education, voting rights, government relations and
municipal law. He has been a partner with the firm since 1993.
In addition to his legal career, Mr. Dyke has extensive
professional experience in government and public relations.
Among other appointments, he served as Secretary of Education
for the Commonwealth of Virginia from 1990 to 1993 and as
Domestic Policy Advisor to former Vice President Walter Mondale.
Mr. Dyke has assumed leadership positions in several
business and community organizations, including serving as
former Chairman of the Fairfax County, Virginia, Chamber of
Commerce, the Northern Virginia Business Roundtable and the
Emerging Business Forum. He is also Chair of the Greater
Washington Board of Trade for 2010. Mr. Dyke has been a director
of Washington Gas Light Company and of WGL Holdings since
September 2003.
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Melvyn J. Estrin, age 67, is Chairman of the Board and
Chief Executive Officer of Human Service Group, Inc. trading as
Estrin International (1983-present) and is Chief Executive
Officer of University Research Co., LLC. Mr. Estrin is a
Director of ChemLink, LLC; Eagle Hospitality LLC; Armed Forces
Lodging LLC and HHB Inc. Mr. Estrin has served as Chairman and
Chief Executive Officer of two Fortune 500 companies and
has been a principal in numerous business enterprises. Mr.
Estrin is a Trustee Emeritus of the John F. Kennedy Center for
the Performing Arts. Mr. Estrin was a Commissioner of the
National Capital Planning Commission (Jan. 1997-Dec. 2000). He
also served as a Trustee of the University of Pennsylvania (Oct.
1986-1991), has been a director of Washington Gas Light Company
since 1991, a director of WGL Holdings since November 2000 and
serves as Chairman of the Human Resources Committee.
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James F. Lafond, age 67, is the retired Area Managing
partner for the greater Washington, D.C. area for
PricewaterhouseCoopers LLP. He is a Certified Public Accountant
with extensive experience serving in leadership positions with
PricewaterhouseCoopers and with its predecessor, Coopers &
Lybrand LLP. He has been active in several civic and non-profit
organizations. Among other recognitions, he has received the
Lifetime Achievement Award from the Leukemia and Lymphoma
Society. He is currently a director of VSE Corporation as well
as several not-for-profit entities. Mr. Lafond has been a
director of Washington Gas Light Company and of WGL Holdings
since September 2003.
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Debra L. Lee, age 55, is Chairman and Chief Executive
Officer of BET Networks, a global multi-media company that owns
and operates Black Entertainment Television and several other
ventures. BET Networks is a division of Viacom, Inc. Ms. Lee
previously was Executive Vice President and General Counsel of
BET Holdings (1992-1995), President and Chief Operating Officer
(1995-May 2005), President and Chief Executive Officer (June
2005-January 2006), and was elected to her present position in
January 2006. Ms. Lee serves on the boards of Girls, Inc., Alvin
Ailey American Dance Theater and the National Cable Television
Association. Ms. Lee is also on the Boards of Directors of
Eastman Kodak Company, Marriott International, Inc. and Revlon,
Inc. Ms. Lee has been a director of Washington Gas Light Company
since July 2000 and a director of WGL Holdings since November
2000.
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Terry D. McCallister, age 54, is Chairman and Chief
Executive Officer of WGL Holdings and of Washington Gas Light
Company, positions he has held since October 1, 2009. Mr.
McCallister previously served as President and Chief Operating
Officer of WGL Holdings and Washington Gas Light Company
(2001-2009); Mr. McCallister joined Washington Gas Light Company
in April 2000 as Vice President of Operations. He was previously
with Southern Natural Gas, where he served as Vice President and
Director of Operations and with Atlantic Richfield Company,
where he held various leadership positions. Mr. McCallister
has a bachelors degree in engineering management from the
University of Missouri at Rolla and is a graduate of the Darden
Business School Executive Program. Mr. McCallister serves on the
Board of Directors of the American Gas Association, is Chairman
of the Board of Directors of the Southern Gas Association and is
Vice Chairman of the Board of Directors of the Gas Technology
Institute. He also serves on the boards of several business and
community organizations, including, among others, the Greater
Washington Board of Trade, the Boys and Girls Clubs of Greater
Washington, Northern Virginia Family Services and the INOVA
Health System Foundation.
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Karen Hastie Williams, age 65, retired in 2004 as a
Partner with the Washington, D.C. law firm of Crowell
& Moring, where she specialized in public contract law.
Prior to joining Crowell & Moring, Ms. Williams served as
Administrator for the Office of Federal Procurement Policy at
the Office of Management and Budget (1980-1981) and Chief
Counsel of the Senate Committee on the Budget (1977-1980). Ms.
Williams is a director of SunTrust Banks, Inc., Continental
Airlines Company, Gannett Co. and The Chubb Corporation. Ms.
Williams has been a director of Washington Gas Light Company
since 1992, a director of WGL Holdings since November 2000 and
serves as Chair of the Audit Committee.
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7
BOARD OF
DIRECTORS AND COMMITTEES OF THE BOARD
The following information relates to board and board committee
meetings during the fiscal year ended September 30, 2009.
The board of directors of WGL Holdings held eight meetings
during fiscal year 2009. Each current board member attended 75%
or more of the meetings of the board, and the committees on
which he or she served, that were held during the period for
which he or she was a director or committee member.
The board of directors has established four standing committees:
1) the Executive Committee; 2) the Audit Committee;
3) the Governance Committee, and 4) the Human
Resources Committee. Each of these committees is described in
more detail below.
Executive
Committee
The Executive Committee members are: Terry D.
McCallister (Chairman), Michael D. Barnes, Melvyn J. Estrin, and
Karen Hastie Williams. There are four alternate members: George
P. Clancy, Jr., James W. Dyke, Jr., James F. Lafond
and Debra L. Lee. This committee may exercise all of the
authority of the board of directors when the board is not in
session. This committee did not meet during fiscal year 2009.
Audit
Committee
The Audit Committee members are: Karen Hastie
Williams (Chair), Melvyn J. Estrin, George P. Clancy, Jr.
and James F. Lafond. Members of the Audit Committee are
independent under the rules of the Securities and Exchange
Commission (SEC) and the New York Stock Exchange (NYSE). The
board of directors has determined that Messrs. Clancy,
Estrin and Lafond meet the qualifications of an audit
committee financial expert, as that term is defined by
rules of the SEC.* As provided in its charter, functions of the
Audit Committee include the appointment, compensation and
oversight of independent public accountants, reviewing with
management and the independent public accountants the financial
statements, the accompanying report of the independent
accountants and reviewing the system of internal controls and
the adequacy of the internal audit program. The Audit Committee
Report, which appears later in this proxy statement and the
audit committee charter, provide a further description of the
responsibilities of this committee. The Audit Committee held
five meetings during fiscal year 2009.
Mrs. Williams, the Chair of the Audit Committee,
simultaneously serves on the audit committees of four other
public companies. Neither our bylaws nor the audit committee
charter limit the number of audit committees that our directors
may join. The Board has evaluated and reviewed the existing
workload demands of her committee memberships in light of the
time commitment necessary for her to fulfill her obligations as
an effective audit committee member. Based on that evaluation
and review, the Board determined that her simultaneous service
would not impair the ability of Mrs. Williams to serve
effectively on the audit committee of WGL Holdings.
Governance
Committee
The Governance Committee members are: Michael
D. Barnes (Chairman), James W. Dyke, Jr., and Karen Hastie
Williams. Members of the Governance Committee are independent
under the rules of the NYSE. As provided in its charter,
functions of the Governance Committee include consideration of
criteria for selection of candidates for election to the board
of directors and committees of the board and adoption of
policies and principles concerning board service and corporate
governance. This committee also considers criteria for oversight
and evaluation of the board and management and the
* In accordance with rules of
the SEC, persons determined to be audit committee financial
experts will not be deemed an expert for any purpose, including,
without limitation for purposes of Section 11 of the
Securities Act of 1933, as a result of being so designated. The
designation or identification of a person as an audit committee
financial expert does not impose on such person any duties,
obligations or liabilities that are greater than those imposed
on such person as a member of the audit committee and the board
of directors in the absence of such designation or
identification.
8
adoption of a code of conduct. The Governance Committee will
consider nominees recommended by shareholders. Those
recommendations should be sent to the Chair of the Governance
Committee,
c/o the
Corporate Secretary of WGL Holdings, Inc; 101 Constitution Ave.,
N.W.; Washington, D.C. 20080. This committee held three
meetings during fiscal year 2009.
Governance
Committee Processes
The Governance Committee will consider board nominees
recommended by shareholders. Those recommendations should be
sent to the Chair of the Governance Committee,
c/o the
Corporate Secretary of WGL Holdings, Inc.; 101 Constitution
Ave., N.W.; Washington D.C. 20080. As provided in its charter,
the Governance Committee will follow procedures which it deems
reasonable and appropriate in the identification of candidates
for election to the Board and evaluating the background and
qualifications of those candidates. Those processes include
consideration of nominees suggested by an outside search firm,
by incumbent board members and by shareholders. The Governance
Committee will seek candidates having experience and abilities
relevant to serving as a director of the Company and who
represent the best interests of shareholders as a whole and not
any specific interest group or constituency. The Governance
Committee will evaluate the qualifications of candidates
recommended by shareholders using the same criteria as used for
other board candidates. The Governance Committee from time to
time engages the service of a professional search firm to
identify and to evaluate potential nominees.
Human Resources
Committee
The Human Resources Committee (the HR
Committee) members are: Melvyn J. Estrin
(Chairman), George P. Clancy, Jr. and Debra L. Lee. Members
of the Human Resources Committee are independent under the rules
of the NYSE. The HR Committee met four times in fiscal year
2009. The HR Committee discharges the Boards
responsibilities relating to compensation of our executive
officers. As provided in its charter, primary functions of the
HR Committee include setting corporate goals and objectives
relevant to compensation of the Chief Executive Officer (CEO),
evaluating the CEOs performance and setting the CEOs
compensation based on this evaluation. The HR Committee also
recommends compensation levels, sets performance targets and
evaluates the performance of our other executive officers and
determines any incentive and equity-based compensation to be
awarded to those officers. The HR Committee also considers
succession planning for WGL Holdings leadership positions.
The HR Committee may, in accordance with its charter,
delegate authority to act upon specific matters within
specified parameters to a subcommittee consisting of one or more
members, or to management. Any such delegates are required
to report any action to the full HR Committee at its next
meeting. Please see the discussion under the Compensation
Discussion and Analysis section below for information relating
to processes and procedures for the consideration and
determination of executive compensation.
Governance. The HR Committee focuses on good
governance practices in its operation. In fiscal year 2009, this
included, among other matters:
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Reviewing tally sheets prepared by its independent consultant
regarding the Chief Executive Officer, Chief Financial Officer,
and the next three most highly compensated officers (the
Named Executive Officers). Tally sheets identify the
material elements of such executives compensation, show
the cumulative impact of prior grants of long-term incentive
awards, and quantify severance and other payouts to which the
executive would be entitled under various employment termination
scenarios. The tally sheets reviewed by the HR Committee
indicated that cumulative pay was reasonable, and that no
changes needed to be made to the Companys pay philosophy.
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9
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Considering compensation for the Named Executive Officers in the
context of all of the components of total compensation, and not
allowing the sum of the components to exceed market levels of
total compensation opportunity.
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Receiving meeting materials several days in advance of meetings.
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Having regular executive sessions of HR Committee members.
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Having direct access to an outside executive compensation
consultant.
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Compensation Consultant. The HR Committee has
the sole authority to retain and terminate any compensation
consultant engaged to assist the HR Committee in the evaluation
of the compensation of our executive officers, including all of
the Named Executive Officers. During fiscal year 2009, the HR
Committee retained Hewitt Associates (Hewitt) as its independent
consulting firm. A principal of Hewitt attended three of the
four HR Committee meetings held during fiscal year 2009.
Hewitt provided data and information to the HR Committee, but
did not make recommendations with respect to specific levels of
compensation. Hewitts services to the HR Committee during
fiscal year 2009 included the following:
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Development of market data in line with the Companys
compensation philosophy. Please review the discussion under the
Compensation Discussion and Analysis (CD&A) section of this
proxy statement for further information regarding the market
data developed with Hewitts assistance in connection with
the compensation of our executive officers;
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Pay and performance comparisons;
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Tally sheet development;
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Impact of retirement benefits redesign on market posture;
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Legislative and regulatory, and market trends update;
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Assistance with FAS 123R expense calculations;
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Review of the CD&A;
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Preparation of total compensation statements; and
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Director pay review (conducted in fiscal year 2008 for fiscal
year 2009 implementation).
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Consultant Independence. It is important for
the HR Committee to receive advice from an independent source.
The following information describes the independence of Hewitt
and the individual Hewitt consultant that provides advice to the
HR Committee.
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The HR Committee retains the individual consultant and
consulting firm, and the consultant reports directly to the HR
Committee.
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The individual consultant (a principal of Hewitt) was retained
initially in 1998. The selection of the individual consultant
was a combined decision of the CEO at the time (now retired) and
the HR Committee at the time (the HR Committee is now composed
of entirely different directors).
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The consultant, by being affiliated with a large firm, provides
resources, data and perspectives that help WGL Holdings and the
HR Committee make informed business judgments with respect to
executive pay;
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In order to promote independence, the consultants firm
compensates its executive compensation consultants solely for
executive compensation consulting services, with no aspect of
pay being dependent on whether or to what extent WGL Holdings or
Washington Gas uses other services of that firm;
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Fees paid by WGL Holdings to Hewitt represent less than 1% of
the aggregate fees that Hewitt billed all of its clients for
services during Hewitts 2009 fiscal year;
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10
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Hewitt has no service contracts with senior management of WGL
Holdings or its subsidiaries;
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The individual consultant has no other public company clients at
which an executive officer of WGL Holdings or Washington Gas
serves as a director; and
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Hewitt has no employees that are executive officers or family
members of any executive officer of WGL Holdings or its
subsidiaries.
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Given the above factors, the HR Committee has concluded that the
individual consultant and consulting firm are independent and
that the HR Committee can rely on the consultants advice.
Human Resources
Committee Interlocks and Insider Participation
As previously described, the Human Resources Committee currently
is composed of three independent, non-employee directors. Each
such director served as a member of the HR Committee during the
entire 2009 fiscal year. No member of the HR Committee has ever
been an officer or employee of WGL Holdings or any of its
subsidiaries. No member of the board or HR Committee has served,
at any time since October 1, 2008, as an executive officer
of any entity that at such time had one or more of WGL
Holdings executive officers serving as a member of that
entitys board or compensation committee.
Director
Independence and Corporate Governance Practices
The board of directors has determined that all of the current
directors and each of the nominees for election as director,
except Mr. McCallister, are independent within the meaning
of NYSE rules. In determining independence, the board of
directors considered the specific criteria for independence
under the NYSE rules and also the facts and circumstances of any
other relationships of individual directors with the Company.
The Audit, Governance and Human Resources Committees have each
adopted a charter for their respective committees. These
charters may be viewed on our web site, www.wglholdings.com.
Our corporate governance guidelines and bylaws establish a Lead
Director of the Board and designate the Chair of the Governance
Committee to serve in that position. Among other powers and
responsibilities, the Lead Director will:
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preside at all meetings of the Board at which the Chairman is
not present, including independent executive sessions of the
independent directors;
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approve information sent to the board;
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approve meeting agendas for the board;
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approve meeting schedules to assure that there is sufficient
time for discussion of all agenda items;
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have the authority to convene meetings of the independent
directors;
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be available to communicate or meet with any shareholder
controlling at least five percent of the outstanding voting
stock of the Company; and
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function as a liaison between the Chairman of the Board and
independent directors, as necessary.
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The board and board committees regularly meet in executive
sessions without the presence of any management representatives.
The Lead Director presides in those executive sessions. If the
executive session includes or is devoted to a report of a board
committee, the chair of that committee presides in that portion
of the executive session.
The board has also adopted a Code of Conduct. The corporate
governance guidelines, bylaws and the Code of Conduct may be
viewed on our web site, www.wglholdings.com, and copies may be
11
obtained by request to the Secretary of the Company. Those
requests should be sent to: Corporate Secretary; WGL Holdings,
Inc.; 101 Constitution Ave., N.W.; Washington, D.C. 20080.
The board of directors has a policy under which directors who
are not employees of the Company and its subsidiaries may not
stand for re-election after reaching the age of 72. Also, under
this policy, directors who are employees of the Company must
retire from the board upon their retirement from the Company.
This policy can be changed at any time by action of the board of
directors.
The Company expects all board members to attend the annual
meeting of shareholders, but from time to time, other
commitments may prevent all directors from attending each annual
meeting. All directors attended the most recent annual meeting
of shareholders, which was held on March 5, 2009.
DIRECTOR
COMPENSATION
Director Annual
Retainer and Meeting Fees
Compensation for directors during fiscal year 2009 consisted of
an annual retainer, fees for attending meetings, and an annual
equity award. Directors were offered the opportunity to receive
all of their cash compensation on a deferred basis under the WGL
Holdings and Washington Gas Light Companys Deferred
Compensation Plan for Outside Directors described later in this
proxy statement. Mr. McCallister, our Chairman and Chief
Executive Officer, does not receive compensation for his service
as a director.
The non-employee directors currently receive 1,800 shares
of WGL Holdings common stock annually in accordance with the
Directors Stock Compensation Plan in addition to a
retainer paid in cash. Non-employee directors of WGL Holdings
also serve as directors of its utility subsidiary, Washington
Gas Light Company (Washington Gas). The directors serve on the
same committees of each Board. Non-employee directors receive
only one cash retainer which is payable by Washington Gas.
Usually, the board meetings of WGL Holdings and Washington Gas
are held consecutively. The fiscal year 2009 compensation
arrangements of non-employee directors were coordinated as
described below:
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Washington Gas
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Light Company
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WGL Holdings, Inc.
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Description of fees paid to non-employee Directors*
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Dollar Amount
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Dollar Amount
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On days when both boards meet
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$
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1,000
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$
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500
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On days when both committees meet
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$
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1,000
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|
$
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500
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On days when only one board meets
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$
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1,200
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$
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1,200
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On days when only one committee meets
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$
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1,200
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$
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1,200
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Each day a Director attends a Director Education Program
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$
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1,000
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$
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500
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Annual Meeting attendance fee
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$
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1,000
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$
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500
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Annual cash retainer (paid on quarterly basis)
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$
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50,000
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0
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Annual retainer to chair of Governance Committee
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$
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7,500
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0
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Annual retainer to chair of Human Resources Committee
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$
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7,500
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0
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Annual retainer to chair of Audit Committee
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$
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10,000
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0
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Lead Director annual retainer
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$
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5,000
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0
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*
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Allocation based on approximate
time required for board responsibilities for each company (1/3
WGL Holdings; 2/3 Washington Gas).
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12
The following table presents information regarding the
compensation paid during fiscal year 2009 to the non-employee
directors of WGL Holdings.
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Change in
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Pension
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Value and
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Non-
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Non-
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qualified
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Fees
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Equity
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Deferred
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Earned
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Incentive
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Compensa-
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or Paid
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Stock
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Option
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Plan
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tion
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All Other
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in Cash
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Awards(1)
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Awards
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Compen-
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Earnings(2)
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Compensation
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Total
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Name
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($)
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|
($)
|
|
($)
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|
sation ($)
|
|
($)
|
|
($)
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|
($)
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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Michael D. Barnes
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$
|
90,700
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$
|
58,986
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0
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|
|
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0
|
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|
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0
|
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0
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$
|
149,686
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George P. Clancy
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$
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81,200
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$
|
58,986
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0
|
|
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0
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$
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24,239
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|
|
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0
|
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$
|
164,425
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James W. Dyke, Jr.(3)
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$
|
51,350
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|
|
$
|
58,986
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|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
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$
|
110,336
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Melvyn J. Estrin
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$
|
85,700
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|
|
$
|
58,986
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|
|
|
0
|
|
|
|
0
|
|
|
$
|
63,995
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|
|
|
0
|
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$
|
208,681
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James F. Lafond
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$
|
78,200
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|
|
$
|
58,986
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|
|
|
0
|
|
|
|
0
|
|
|
$
|
29,933
|
|
|
|
0
|
|
|
$
|
167,119
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Debra L. Lee
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$
|
73,700
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|
|
$
|
58,986
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|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
132,686
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Karen Hastie Williams
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|
$
|
86,700
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|
|
$
|
58,986
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
145,686
|
|
|
|
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(1)
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On January 2, 2009, each of
the non-employee directors received an award of
1,800 shares of WGL Holdings common stock in accordance
with the terms of the WGL Holdings, Inc. Directors Stock
Compensation Plan. The amounts reported for stock awards reflect
the aggregate dollar amounts recognized in accordance with
Statement of Financial Accounting Standards No. 123R for
financial statement reporting purposes for fiscal year 2009. The
grant date fair value of each equity award computed in
accordance with FAS 123R was $32.77 per share.
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(2)
|
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Amounts in this column only reflect
earnings on non-qualified deferred compensation. None of the
directors have any retirement benefits except for
Mr. Barnes, Mr. Estrin and Mrs. Williams. As
described below under, DIRECTOR COMPENSATION
Director Retirement Plan, the retirement benefits for
these three directors are frozen and, therefore, there is no
change in pension value.
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(3)
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Mr. Dyke is a partner of the
law firm, McGuire Woods LLP. Under the arrangement Mr. Dyke
has with his law firm, McGuire Woods is entitled to receive:
1) half of the compensation Mr. Dyke is paid for board
meeting fees and 2) half of the fees paid to Mr. Dyke
for any director education seminar he attends. Accordingly,
during fiscal year 2009, we paid McGuire Woods $29,850 in board
meeting, retainer and seminar fees in connection with
Mr. Dykes service on our board of directors. McGuire
Woods did not provide the Company legal services and received no
other fees from the Company during fiscal year 2009.
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Non-Employee
Director Compensation
All non-employee directors are compensated similarly in
accordance with the terms of our director compensation program.
Usually, the board reviews the level of compensation it receives
for its service every two years. In connection with this review,
Hewitt Associates, the boards executive compensation
consulting firm, conducts a director pay review survey every two
years to identify board compensation practices of a peer group
of companies. The most recent study was conducted during fiscal
year 2008. The board takes this survey information into
consideration when determining the meeting fees, retainers and
other forms of compensation it will be paid. The board may take
action at any time to amend the amount or type of compensation
it receives. Directors employed by the Company do not receive
compensation for their role as a director. The executive
officers of the Company do not have a role in determining or
recommending the amount or form of director compensation. Other
than conducting the director pay review previously mentioned,
Hewitt Associates has no role in determining the compensation of
the board of directors.
Director Deferred
Compensation Plan
Non-employee directors of WGL Holdings are eligible to defer up
to 100% of their cash board compensation under the WGL Holdings
and Washington Gas Light Company Deferred Compensation Plan for
Outside Directors, as amended and restated (the Director
Deferred Compensation Plan). This includes the deferral of
the payment of a non-employee directors annual board and
committee cash retainer, board meeting fees, committee meeting
fees, fees for attendance at annual and special
13
shareholder meetings and fees paid by the Company for attending
director education programs. Deferrals are set at percentage
increments of 10%. Interest is earned on deferred amounts,
compounded quarterly, at a rate equal to the weekly average
yield to maturity for
10-year
U.S. Government fixed interest rate securities issued at
the time of the deferral, with a minimum rate of 8% per year.
Non-employee directors may elect to defer distribution of their
compensation for a minimum period of one year following the end
of the year in which compensation is deferred or until the
directors retirement from the board. Compensation deferred
under the Director Deferred Compensation Plan may be distributed
earlier than the time period specified by a director in the
event of the directors retirement, disability, death or
upon the occurrence of a severe financial hardship. Non-employee
directors may elect to receive payment of deferred amounts in a
lump sum or in up to ten annual installments. Non-employee
directors must elect the time and method of distribution at the
same time they submit a deferral application. Payments commence
within 30 days of the event which triggers payout.
The amount of early withdrawals or accelerated payments made in
connection with a severe financial hardship are limited in
accordance with applicable tax laws. The Administrator of the
Director Deferred Compensation Plan has the sole discretion to
determine whether such an early withdrawal or accelerated
payment in the event of a severe financial hardship will be
permitted.
Directors
Stock Compensation Plan
Pursuant to the terms of the WGL Holdings, Inc. Directors
Stock Compensation Plan, as amended and restated
(Directors Stock Plan), 1,800 shares of
WGL Holdings common stock are currently awarded to each
non-employee director annually. During fiscal year 2009, the
award was made on January 2, 2009. The Directors
Stock Plan is administered by the Human Resources Committee of
the Board. Employee directors are not eligible to participate in
this plan. The shares of common stock awarded under the plan are
immediately vested and non-forfeitable. The Directors
Stock Plan is unfunded and will expire on March 5, 2013, if
not previously terminated by the board or by the shareholders.
At the annual meeting, shareholders will be asked to vote on a
proposal to approve an amendment and restatement of the
Directors Stock Compensation Plan. A description of the
amended and restated plan is included elsewhere in this proxy
statement under the heading, Proposal 3: Approval of
Directors Stock Compensation Plan, as amended and
restated.
Director
Retirement Plan
A retirement plan for non-employee directors of Washington Gas
adopted in 1995 was terminated by the Board of Washington Gas
effective January 1, 1998, subject to vesting of benefits
earned by the directors as of that date. Of the current
directors, only Messrs. Barnes and Estrin and
Mrs. Williams have vested benefits under this plan. The
benefits are frozen and will be paid out in a fixed amount per
year to each of them for a ten-year period commencing after
their retirement from the board. Under the plan,
Messrs. Barnes and Estrin will receive $10,200 per year and
Mrs. Williams will receive $8,500 per year during the
ten-year payout period.
Donations to
Civic Organizations and Charities
Washington Gas has a long-standing tradition of supporting
charitable and civic organizations within the Washington, DC
metropolitan area by contributing financial donations and
employee volunteer resources. None of the donations made by
Washington Gas during fiscal year 2009 were made in the name of
a director of WGL Holdings or Washington Gas.
Communications
with the Board
Shareholders and all other interested parties may send
communications regarding financial accounting, internal
accounting controls, auditing, code of conduct or other concerns
to non-management board members by using the toll-free number
established for such purposes, which is
1-800-249-5360.
14
Board of
Directors Stock Ownership Guidelines
The board of directors has stock ownership guidelines pursuant
to which each board member should own shares of WGL Holdings
having a value of at least five times the amount of his or her
annual cash retainer. New directors will have five years from
the date of their election to the board of directors to acquire
this level of ownership. Based on the closing price of the
common stock of WGL Holdings on January 4, 2010, each of
the current directors owned shares in excess of the minimum
value set forth in the stock ownership guidelines.
Security
Ownership of Management and Certain Beneficial Owners
The following table sets forth the information as of
January 4, 2010, regarding outstanding common stock of WGL
Holdings beneficially owned by each director, each nominee for
election as a director, the executive officers named in the
Summary Compensation Table in this proxy statement, and all
directors, nominees and executive officers as a group. Each of
the individuals listed, as well as all directors and executive
officers as a group, beneficially owned less than 1% of the
Companys outstanding common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Which
|
|
|
|
|
May Be Acquired
|
|
|
Amount and Nature
|
|
Within 60 Days
|
|
|
of Beneficial
|
|
By Exercise of
|
Name of Beneficial Owner
|
|
Ownership(1)
|
|
Stock Options
|
|
Vincent L. Ammann, Jr.
|
|
|
13,542
|
|
|
|
42,407
|
|
Michael D. Barnes
|
|
|
14,306
|
|
|
|
0
|
|
Beverly J. Burke
|
|
|
25,083
|
|
|
|
50,177
|
|
Adrian P. Chapman
|
|
|
25,043
|
|
|
|
25,999
|
|
George P. Clancy, Jr.
|
|
|
13,900
|
|
|
|
0
|
|
James H. DeGraffenreidt, Jr.
|
|
|
147,727
|
|
|
|
204,100
|
|
James W. Dyke, Jr.
|
|
|
9,987
|
|
|
|
0
|
|
Melvyn J. Estrin
|
|
|
20,162
|
|
|
|
0
|
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James F. Lafond
|
|
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13,268
|
|
|
|
0
|
|
Debra L. Lee
|
|
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10,445
|
|
|
|
0
|
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Terry D. McCallister
|
|
|
49,424
|
|
|
|
142,660
|
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Karen Hastie Williams
|
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12,737
|
|
|
|
0
|
|
All directors, nominees and executive officers as a group:
|
|
|
432,187
|
|
|
|
652,045
|
|
|
|
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(1)
|
|
All shares are directly owned by
persons shown in this table except 9,343 shares are held
indirectly by executive officers in the Washington Gas Light
Company Savings Plan for Management Employees.
|
The following table sets forth information regarding any person
who is known to WGL Holdings to be the beneficial owner of more
than five percent of WGL Holdings common stock. This information
is based on the most recently publicly available information at
the time of preparation of this proxy statement.
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|
Name and Address
|
|
Amount and Nature
|
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Percent
|
of Beneficial Owner
|
|
of Beneficial Ownership
|
|
of Class
|
|
American Century Investment Management, Inc.
|
|
|
3,846,238
|
(1)
|
|
7.7%
|
430 West 7th Street
Kansas City, MO
64105-1407
|
|
|
|
|
|
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Barclays Global Investors NA (CA)
|
|
|
3,447,475
|
(2)
|
|
6.9%
|
45 Fremont Street
San Francisco, CA
94105-2228
|
|
|
|
|
|
|
State Street Global Advisors
|
|
|
2,544,866
|
(3)
|
|
5.1%
|
1 Lincoln Street
Boston, MA
02111-2900
|
|
|
|
|
|
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15
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(1)
|
|
This information is based on a
Form 13G, filed on February 13, 2009, with the SEC by
American Century Investment Management, Inc., which reported
that it had sole voting authority and sole investment authority
over the shares.
|
|
(2)
|
|
This information is based on a
Form 13G, filed on February 5, 2009, with the SEC by
Barclays Global Investors NA(CA), which reported that it had
sole voting authority and sole investment authority over the
shares.
|
|
(3)
|
|
This information is based on a
Form 13G, filed on February 17, 2009, with the SEC by
State Street Global Advisors, which reported that it had sole
voting authority and sole investment authority over the shares.
|
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 as
amended, requires our executive officers and directors to file
reports of securities ownership and changes in such ownership
with the SEC. Based on our records and information, in fiscal
year 2009, all of our directors and executive officers met the
applicable reporting requirements under Section 16(a),
except Mrs. Karen Hastie Williams, a director of the
Company. A Statement of Change in Beneficial Ownership on
Form 4 regarding the sale of 1,800 shares of WGL
Holdings common stock by Mrs. Williams was not filed timely
during fiscal year 2009.
Policies and
Procedures for Review, Approval or Ratification of
Related-Person Transactions
Our policies and procedures for the review, approval or
ratification of related person transactions are set forth in our
Related Person Transactions Policy. In summary, a related person
transaction is a consummated or currently proposed transaction
in which we were or are to be a participant and the amount
involved exceeds $120,000, and in which a related person (i.e.,
any director or executive officer or nominee for director, or
any member of the immediate family of such person) has or will
have a direct or indirect material interest.
The Governance Committee of the Board of Directors is
responsible for reviewing and approving all material
transactions with any related person. This obligation is set
forth in writing in the Governance Committee Charter. A copy of
the Governance Committee charter is available at
www.wglholdings.com.
To identify related party transactions, each year we submit and
require our directors and officers to complete Director and
Officer Questionnaires identifying any transactions with us in
which the officer or director or their family members have an
interest. We also distribute questionnaires to directors,
executive officers and others within the Company to identify
related party transactions for purposes of meeting accounting
and disclosure requirements under the Statement of Financial
Accounting Standard No. 57 (SFAS 57). We review
related party transactions due to the potential for a conflict
of interest. A conflict of interest occurs when an
individuals private interest interferes, or appears to
interfere, in any way with the Companys interests. Our
Code of Conduct requires all directors, officers and employees
who may have a potential or apparent conflict of interest to
notify their supervisor or the Chief Compliance Officer.
We expect our directors, officers and employees to act and make
decisions that are in the Companys best interests and
encourage them to avoid situations which present a conflict
between our interests and their own personal interests. Our
directors, officers and employees are prohibited from taking any
action that may make it difficult for them to perform their
duties, responsibilities and services to WGL Holdings in an
objective and fair manner. In addition, we are prohibited from
extending personal loans to, or guaranteeing the personal
obligations of, any director or officer.
No Material
Related Person Transactions During Fiscal Year 2009
There were no material related person transactions during fiscal
year 2009 and no transactions were considered or reviewed for
approval in connection with our related person transactions
policy.
16
HUMAN RESOURCES
COMMITTEE REPORT*
The following Compensation Discussion and Analysis section has
been prepared by the management of WGL Holdings. WGL Holdings is
responsible for the Compensation Discussion and Analysis and for
the disclosure controls relating to executive compensation. The
Compensation Discussion and Analysis is not a report or
disclosure of the Human Resources Committee.
The Human Resources Committee has reviewed and discussed with
management the Compensation Discussion and Analysis section of
this proxy statement. Based upon this review and its
discussions, the Human Resources Committee recommended to the
Board of Directors that the following Compensation Discussion
and Analysis section be included in this proxy statement.
HUMAN RESOURCES COMMITTEE
Melvyn J. Estrin (Chairman)
George P. Clancy, Jr.
Debra L. Lee
COMPENSATION
DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (CD&A) contains a
discussion of the material elements of compensation awarded to,
earned by, or paid to the principal executive officer, the
principal financial officer, and the other three most highly
compensated executive officers of WGL Holdings and Washington
Gas. These individuals are listed in the Summary Compensation
Table (Summary Compensation Table) provided later in this proxy
statement and are referred to in this CD&A as the
Named Executive Officers. References to the HR
Committee are to the Human Resources Committee of the
Board of Directors. None of the Named Executive Officers are
members of the HR Committee.
FY2009 In
Review
WGL Holdings performed well in FY2009 against all measures of
success, and this is reflected in executive compensation for the
year.
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|
|
|
|
Short-term incentive payouts for the Named Executive Officers
averaged 153% of target, reflecting a year in which we met or
exceeded each of twelve goals set at the beginning of the year.
The achievement of these goals produced successful outcomes for
our customers, our employees and our investors.
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|
|
|
Long-term incentives granted on October 1, 2006 paid out at
195% of target, reflecting our superior three-year stock
performance against utility peers.
|
Note that base salary increases and other pay elements are a
function of factors other than performance. A discussion of
these pay elements and further detail regarding our incentives
payouts are provided below.
Objectives of
Executive Compensation Program
The HR Committees philosophy is that total compensation
for each of our executive officers should be competitive with
executives with similar experience and responsibility. This
compensation also should reflect the individual performance of
each officer as well as corporate performance.
* Notwithstanding anything to
the contrary set forth in any of the Companys filings
under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate other
filings with the SEC, including this proxy statement, in whole
or in part, the following Human Resources Committee Report shall
not be deemed to be incorporated by reference into any such
filings.
17
The executive compensation program of WGL Holdings is intended
to achieve three fundamental objectives:
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attract and retain qualified executives;
|
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|
|
focus executives attention on specific strategic and
operating objectives of WGL Holdings; and
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|
|
align executives interests with the long-term interests of
WGL Holdings shareholders and the customers of its
regulated utility, Washington Gas.
|
We provide the Named Executive Officers a competitive total
compensation program that is based on the size-adjusted
50th
percentile of the range of compensation paid by similar utility
industry companies for similar positions, with actual pay that
reflects WGL Holdings short and long-term performance and
the individuals performance. The program aligns the
short-term and long-term interests of management with that of
our shareholders to maximize shareholder value. The
programs performance goals and factors also align
managements interests with utility company customers by
rewarding the provision of a safe and reliable gas supply to
customers at a reasonable cost. Several of these performance
goals and factors are discussed below. The programs in place for
fiscal year 2009 support our
pay-for-performance
philosophy.
Elements of
Executive Compensation Program
In 2009*, our compensation program for our executive officers,
including the Named Executive Officers, consisted of several
compensation elements, each of which is discussed in more detail
below. Each element of the executive compensation program is
appropriately structured to help achieve one or more of the
compensation objectives described above. Decisions with respect
to one element of pay tend not to impact other elements of pay,
but are made in the context of total compensation. The following
are the material elements of our executive compensation program:
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|
|
base salary;
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|
|
short-term incentives;
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|
|
long-term incentives;
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|
|
retirement benefits;
|
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|
|
change in control protection, and
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|
|
perquisites.
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Mix of
Pay
A significant percentage of total compensation is allocated to
incentives, both short-term and long-term. Short-term incentives
focus on internal performance measures and goals that we set
each year, and are paid in cash. Long-term incentives focus on
our stock performance against peers and are both denominated in
and paid in a combination of stock and cash. There is no
pre-established policy or target for the allocation between
either cash and non-cash or short-term and long-term
compensation. Rather, the HR Committee uses market data and its
business judgment to determine the appropriate level and mix of
incentive compensation. The allocation between current and
long-term
compensation is based primarily on competitive market practices
relative to base salaries, annual short term incentive awards
and long-term incentive award values.
Market Data
and Peer Groups
During 2008, as background to compensation decisions for 2009,
Hewitt Associates (Hewitt), the HR Committees
independent executive compensation consultant, collected and
analyzed
* Unless stated otherwise,
references to the year 2009 in this CD&A mean
our fiscal year 2009 which began on October 1, 2008 and
ended on September 30, 2009.
18
comprehensive market data on base salary, short and long-term
incentives, and the sum of those components. Hewitt separately
analyzed the market competitiveness of our executive benefits
program and the prevalence of perquisites. To develop market
information for our executive officers, including the Named
Executive Officers, Hewitt compared compensation opportunities
for comparable positions at comparable companies of comparable
revenue size, using various statistical techniques to adjust the
market data to be appropriate for our particular revenue size.
The elements of pay were benchmarked both individually and in
total to the same peer companies.
The total compensation peer group of companies used as
background to 2009 pay decisions is shown below. The list is
subject to change each year depending on the availability of the
companies data through Hewitts database, and the
continued appropriateness of the companies. All companies
included are utility companies, consistent with our philosophy
of paying at the size-adjusted
50th
percentile of the utilities market. While we periodically review
market data of general industry companies, to date it has not
impacted our actual pay levels or practices.
Fiscal 2009 Total
Compensation Peer Group
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AGL Resources
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DTE Energy Company
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|
Piedmont Natural Gas
|
Allegheny Energy
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|
Laclede Group
|
|
Pioneer Natural Resources Co.
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Ameren Corporation
|
|
New Jersey Resources
|
|
Portland General Electric Co.
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Atmos Energy
|
|
Nicor Inc.
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|
PPL Corporation
|
Black Hills Corporation
|
|
NiSource Inc.
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|
SCANA Corporation
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CH Energy
|
|
Northwest Natural Gas
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|
Sempra
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Cleco Corporation
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|
Northeast Utilities
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|
South Jersey Industries
|
CMS Energy Corporation
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|
NStar
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|
Southwest Gas
|
Consolidated Edison
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|
Pepco Holdings, Inc.
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|
UIL Holdings
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Vectren Corporation
|
Base
Salary
Base salary levels of executive officers (which includes the
Chairman and Chief Executive Officer), in 2009 and for the last
several years, were set at a level approximately equal to the
size-adjusted 50th percentile of the utility market for
officers of similar experience and responsibility. The HR
Committee utilized comprehensive executive compensation data
provided by Hewitt in determining these market levels and in
establishing a competitive level of compensation for all of our
officers. This approach was taken to place base salaries at
overall market rates, and to leave the opportunity for each
officer to achieve or exceed total target compensation through
incentive pay. This continuing practice is designed to encourage
higher levels of performance by the officers. It also is seen as
a way to align the interests of the officers of WGL Holdings,
Inc. and Washington Gas more closely with the interests of the
shareholders.
The compensation data compiled by Hewitt demonstrated a higher
level of market base pay for the Chairman and Chief Executive
Officer position as compared to other executive officers.
Therefore, the HR Committee granted Mr. DeGraffenreidt
higher levels of short and long-term compensation than other
officers. Short-term and long-term incentive opportunities for
the Chairman and Chief Executive Officer and for the other
executive officers were established based on considerations of
market data and internal pay equity.
Mr. DeGraffenreidt, our Chairman and Chief Executive
Officer during fiscal year 2009, made specific recommendations
for 2009 salary adjustments for all officers except himself,
considering the data provided by the HR Committees
consultant on industry compensation levels, the scope of each
Named Executive Officers role, and the Named Executive
Officers sustained individual performance, results, and
time in position.
19
These recommendations were presented to the HR Committee for
discussion and recommendation to the Board at the
September 19, 2008 HR Committee meeting. The HR Committee
consulted with Hewitt in executive session at that meeting to
consider Mr. DeGraffenreidts base salary and target
incentives for fiscal year 2009, which it has sole authority to
approve. Based on the market data, the HR Committee decided
to increase base salary while maintaining target incentives for
Mr. DeGraffenreidt at then-current levels when expressed as
a percent of base salary. The other named executive officers
received increases in base salary. Two of those increases, for
Messrs. Chapman and Ammann, were substantial (9.7% and
18.8% respectively) in order to close significant gaps between
their base salaries and the market for their positions. Target
short-term and long-term incentives as a percentage of base
salary for the Named Executive Officers were kept at the
then-current levels. Base salary increases were effective on
October 1, 2008.
The base salary that was paid to each Named Executive Officer in
2009 is the amount reported for such officer in column
(c) of the Summary Compensation Table that appears later in
this proxy statement.
Omnibus
Incentive Compensation Plan
The WGL Holdings, Inc. Omnibus Incentive Compensation Plan
(Omnibus Plan) provides the opportunity for
short-term and long-term incentive compensation of our executive
officers, including the Named Executive Officers. Short-term
incentive compensation is at risk, in that payment
of any of this compensation depends upon performance of the
individual officer and our company performance. Long-term
incentive compensation is also at risk in that it
relates directly to the performance of our common stock against
that of other utilities.
Short-Term
Incentive Compensation
Purpose of
Short-Term Incentives
The short-term incentive program is designed to encourage and to
recognize high levels of performance by officers of WGL Holdings
and its subsidiaries.
Short-Term
Incentive Awards
The 2009 short-term incentive program set target percentages of
base salary that may be earned for the achievement of corporate
and individual performance goals. Payouts may be higher or lower
than target depending on 2009 corporate and individual
performance. Payouts may range from 0% to 172.5% of target per
the scale below.
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Item
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Corporate
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Individual
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Total
|
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Weighting
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75%
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25%
|
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100%
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Corporate or Individual Factor, as applicable
|
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maximum 1.5
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maximum 1.5
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Individual Factor applied again to the Corporate Portion
|
|
maximum 1.2
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Maximum payout as % of target
|
|
135%
|
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37.5%
|
|
172.5%
|
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|
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|
The amounts listed in columns (c), (d) and (e) of the
Grants of Plan-Based Awards table in this proxy
statement show the potential range of short-term cash awards for
2009 for each Named Executive Officer.
At its September 19, 2008 meeting, the HR Committee set
2009 target short-term incentive award opportunities for each
Named Executive Officer at or near the size-adjusted
50th percentile of the market data provided by Hewitt. It
also approved 2009 performance factors and goals that governed
payout under the plan.
20
The performance factors recognize that shareholders in a
regulated utility achieve their investing goals when customers
are well served through efficient operations. The 2009
performance goals, targets and results are set forth below.
For the Company:
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A return on equity threshold of 9.5%, which, if not met, would
lead to a zero payout of the Corporate Portion of the plan.
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Corporate performance measures in four categories as shown below
(these measures comprise what is referred to as our
corporate scorecard). Performance against these
goals resulted in a Corporate Factor determined by the HR
Committee. The determination of the Corporate Factor is
discretionary, not formulaic, and the measures below were set at
challenging degrees of difficulty that target significant
achievement and are not weighted in any particular manner.
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Corporate Goals
|
|
Fiscal Year 2009
Target
|
|
Fiscal Year 2009
Results
|
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|
1.
|
|
|
Foster High Performance
|
|
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|
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|
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Employee Work Safety
|
|
Less than or equal to 4.57 incidents per 100 employees
|
|
4.5 incidents per
100 employees
|
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Employee Engagement
|
|
greater than or equal to the International Survey National Norm
(ISNN) (i.e., 79% with margin of error of +/− 5%)
|
|
77%
|
|
2.
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Improve Processes
|
|
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|
|
BPO* Service Level Achievement
|
|
Greater than or equal to 90%
|
|
91%
|
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BPO Cost Alignment
|
|
Less than or equal to 100%
|
|
95%
|
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Construction Unit Cost Attainment
|
|
Less than or equal to 100% of planned budget
|
|
82%
|
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O & M Per Customer
|
|
Less than or equal to $244
|
|
$239
|
|
3.
|
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Win Customers
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New Therm Growth
|
|
Greater than or equal to 15.2 million therms
|
|
16.6 million therms
|
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Damage Prevention Success
|
|
Less than or equal to 2.0 damages per 1,000 locate requests
|
|
1.71 damages per 1000
|
|
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|
Customer Satisfaction
|
|
Greater than or equal to 82% satisfied customers
|
|
85.2%
|
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|
|
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System Reliability
|
|
Less than or equal to 95 outages per 100,000 meters
|
|
70 outages per
100,000 meters
|
|
4.
|
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Reward Investors
|
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|
|
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|
Utility Return on Equity
|
|
Greater than or equal to 10%
|
|
10.8%
|
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Non-Utility Earnings
|
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100% of targeted earnings levels
|
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130%
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*
|
|
Note to above chart:
BPO means the business process outsourcing plan
which is an agreement whereby a service provider will perform
certain functions that have historically been performed
internally by the company.
|
The Companys progress in the abovementioned areas
strengthens our ability to grow and to provide a competitive
return for investors while maintaining a safe, reliable natural
gas distribution system that provides sustainable value for our
customers.
21
For fiscal year 2009, the return on common equity threshold and
all other performance criteria were met or exceeded and as a
result, on November 12, 2009, our current CEO,
Mr. McCallister recommended, and the HR Committee approved,
a Corporate Factor of 1.3 for 2009.
Each Named Executive Officer had individual goals for FY2009,
which encompassed:
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their contributions to meeting established corporate and
departmental goals;
|
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|
managing resources within established departmental budgets;
|
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|
effectiveness in areas of leadership, planning and
teamwork; and
|
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|
evaluations by peers and others.
|
After a comprehensive performance appraisal of each executive
officer and a review of their achievement of the personal goals
which had been set for them, Mr. McCallister recommended,
an Individual Factor specific to each Named Executive Officer,
except for himself and our FY 2009 CEO, Mr. DeGraffenreidt
The HR Committee discussed and approved the Individual Factors
recommended by the CEO for the Named Executive Officers.
In executive session, the HR Committee developed Individual
Factors of 1.5 for Mr. McCallister and
Mr. DeGraffenreidt. These Individual Factors reflected the
personal effectiveness of the executives in achieving the
results of the corporate scorecard which are described above.
The HR Committee also noted the extremely smooth Chief Executive
Officer transition effected in 2009 by Messrs. McCallister
and DeGraffenreidt.
For tax purposes, the HR Committee set a limitation on 2009
short-term incentive payouts for Messrs. DeGraffenreidt and
McCallister of 0.92% and 0.51% of 2009 net income,
respectively. The HR Committee then used negative discretion as
provided under Section 162(m) of the Internal Revenue Code
to arrive at actual, lower 2009 payouts based on our performance
for the year.
The amounts of short-term incentive awards relating to the 2009
fiscal year were paid in December, 2009 and are set forth under
column (g) entitled Non-Equity Incentive Plan Compensation
in the Summary Compensation Table. The amounts of such
short-term incentive awards range from 148% to 155% of target.
Forfeiture and
Recoupment of Short-Term Incentives
On December 18, 2009, the Board of Directors of WGL
Holdings, Inc. adopted a Forfeiture and Recoupment Policy in
order to recoup short-term incentive awards paid to certain
officers of the company and its subsidiaries, including the
Named Executive Officers. Pursuant to the policy, the WGL
Holdings, Inc. board of directors, upon recommendation by the HR
Committee, may direct that all or a portion of any short-term
incentive payout made to certain officers be recovered if such
payout is based on materially inaccurate financial statements or
any other materially inaccurate performance metric criteria.
The HR Committee will determine whether such recovery will be
effectuated by: (i) seeking repayment from the officer,
(ii) reducing the amount that would otherwise be payable to
the officer under any compensatory plan, program, or arrangement
maintained by the Company, (iii) withholding payment of
future increases in compensation (including the payment of any
discretionary bonus amount) or grants of compensatory awards
that would otherwise have been made in accordance with the
Companys otherwise applicable compensation practices, or
(iv) any combination of the foregoing. In each instance in
which the potential for recovery of short-term incentives
exists, the company will not seek recovery after a period of
24 months following the first public issuance or filing
with the Securities and Exchange Commission (which ever first
occurs) of a financial report containing a materially inaccurate
statement or the achievement of performance metric criteria
where the achievement of such criteria is later deemed to have
been materially inaccurate.
22
Long-Term
Incentive Compensation
Purpose of
Long-Term Incentive Awards
The 2009 long-term incentive program was designed to achieve the
following goals:
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Align executives interests with shareholder
interests. For example, performance share and
performance unit payouts are dependent on our common
stocks performance compared to companies in our peer
group. Performance share awards also rise and fall in value with
the price of our stock during the performance period.
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Match market practice: the majority of
regulated utility companies use plans similar to our performance
share and performance unit programs and use similar performance
measures.
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Promote common stock ownership: payout of
earned performance share awards is made 100% in common stock.
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Encourage retention: vesting provisions in the
performance share and performance unit programs provide
incentive for executives to stay with us and manage the company
in the long-term interests of the Company, its shareholders and
customers.
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Stock
Options
The Outstanding Equity Awards at Fiscal 2009 Year
End table shows the prices at which those stock options
were granted. When our stock price is above the exercise price
of an option, the option has value to the executive. When our
stock price is below the exercise price of an option, the option
is worth $0 to the executive at that point.
The Option Exercises and Stock Vested in Fiscal Year
2009 table shows the extent to which the Named Executive
Officers exercised vested options in 2009 at prices above the
exercise price, and recognized value. Executives only recognize
value from stock options when our price has risen from the date
the options were granted.
In fiscal year 2008, we changed the program to eliminate the
granting of stock options and to grant performance shares and
performance units in a 50%-50% ratio. In both cases, the
combinations were chosen as the best to motivate executive
officers to generate, and reward them for, shareholder value
creation. The performance units are earned on the same basis as
the performance shares. The program change was done in order to
achieve the same goals listed above, while lowering the dilutive
effect of the program and bringing it more in line with
competitive practice.
How 2009 Award
Sizes Were Determined
The target values of the long-term incentive awards for Named
Executive Officers are determined by the HR Committee based on
the size-adjusted 50th percentile of the market data
provided by Hewitt and on internal pay equity. To arrive at the
actual award sizes for performance shares and performance units,
we divide the executive officers target value applicable
to performance units (50% of the total) by the value of one
performance unit on the date of grant, and the target value
applicable to performance shares (50% of the total) by the value
of one performance share on the date of grant, both as
calculated by Hewitt.
Performance
Share and Performance Unit Awards
Performance share awards are denominated in shares of WGL
Holdings common stock and are paid out in shares of WGL Holdings
stock. Performance unit awards are denominated in dollars and
are paid out in cash. In all other respects, the two awards are
the same.
Performance shares and performance units will be paid out at the
end of the performance period if certain long-term performance
criteria are achieved and the Named Executive Officer remains an
employee. If the Named Executive Officer leaves the Company
before the performance period has
23
ended, he or she will forfeit any payouts for all open
performance periods. Upon retirement, death or disability,
however, the HR Committee has discretion to prorate awards based
on the number of months worked in the performance period.
The measure of performance for performance shares and
performance units is Total Shareholder Return relative to a
specified peer group. Total Shareholder Return is calculated as
follows:
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Total Shareholder Return
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=
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Change in stock price + dividends paid
Beginning
stock price
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Performance/Payout
Relationship
The table below shows the performance and payout scale for
performance share and performance unit awards.
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Payout of
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Performance in Total
Shareholder
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Performance Shares or Units
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Return vs. Peers
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(% of Target Awarded)
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90th percentile+
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200%
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70th percentile
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150%
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50th percentile
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100%
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30th percentile
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50%
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Less than
30th percentile
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0% (No payout)
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Generally, the percentile rank will not fall directly on one of
the ranks listed in the left column. When this occurs,
performance must be interpolated between the percentiles listed
in the columns.
Peer Group
Selection
As noted in the performance/payout relationship table above,
grants made in 2009 (i.e., on October 1, 2008) measure
our
2009-2011
Total Shareholder Return against peer companies. The
2009-2011
performance period runs from October 1, 2008 through
September 30, 2011. The
2009-2011
peer companies were approved at the HR Committees
September 19, 2008 meeting based on the following criteria:
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classification as an energy related company under the Standard
Industrialization Classification codes;
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public equity ownership and headquarters in the United States;
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no announced merger plans;
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annual net revenues greater than $175 million;
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at least 75% of assets related to U.S. natural gas
distribution;
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no significant exploration and production or electric generation
assets;
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no significant energy trading operations; and
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an investment grade credit rating by Standard &
Poors and Moodys.
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24
Companies that meet most, but not all of the above criteria are
considered and included in the peer group if deemed to be
comparable from other market indicators. The companies chosen
using that criteria were as follows:
2009
2011 Performance Share and Performance Unit Peer Group
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AGL Resources
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Nicor Inc.
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Piedmont Natural Gas
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Atmos Energy
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Northeast Utilities
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South Jersey Industries
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CH Energy Group
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Northwest Natural Gas
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Southwest Gas Corp.
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Consolidated Edison, Inc.
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NSTAR
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UIL Holdings Corp.
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Laclede Group Inc.
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Pepco Holdings, Inc.
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Vectren Corporation
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New Jersey Resources
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Payout of
2007-2009
Performance Share Awards
In September 2006, the HR Committee awarded performance shares
for the
2007-2009
performance period (the
2007-2009
performance period). The
2007-2009
performance period ran from October 1, 2006 through
September 30, 2009. The awards for the
2007-2009
performance period were made on the same terms as described
above.
The
2007-2009
peer group was developed using the same criteria listed above
under Peer Group Selection, except that companies
were excluded based on having unregulated generation assets
rather than electric generation assets. The peer group used for
the
2007-2009
period is shown below.
2007
2009 Performance Share Peer Group
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AGL Resources
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Energy East
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Piedmont Natural Gas
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Alliant Energy
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Laclede Group Inc.
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Pinnacle West Capital Corporation
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Atmos Energy
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MGE Energy Inc.
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Puget Energy
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CH Energy Group
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New Jersey Resources
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SCANA Corporation
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Consolidated Edison, Inc.
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Nicor Inc.
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South Jersey Industries
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DTE Energy Company
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Northwest Natural Gas
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Southwest Gas Corp.
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El Paso Electric
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NSTAR
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UIL Holdings Corp.
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Pepco Holdings, Inc.
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Vectren Corporation
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The
2007-2009
performance shares vested and were paid out on October 1,
2009 at 195% of target. This was the result of our Total
Shareholder Return performance at the 88th percentile of
the peer group during
2007-2009.
Other Prior
Year Awards
Performance share awards also were made for the
2008-2010
performance period which runs from October 1, 2007 through
September 30, 2010. The terms of those awards are the same
as described above.
Analysis
Key Analytic
Tools
The HR Committee uses specific analytic tools as well as its
seasoned business judgment in forming recommendations and
decisions on executive compensation matters. To facilitate the
HR Committees decision-making process for fiscal year
2009, Hewitt prepared: an executive compensation market study,
compensation tally sheets for each executive, pay and
performance comparisons, data on executive compensation trends
and information on peer group pay practices.
25
These materials were delivered to the HR Committee members in
advance of HR Committee meetings and were the subject of
discussion between HR Committee members and Hewitt.
In addition, the HR Committee received and considered
comprehensive reports from management on corporate and
individual executive performance. Corporate performance was
specifically discussed with the HR Committee at the time our
financial results for fiscal year 2009 were being released to
the public. The HR Committee considered our corporate
performance as measured by our reported financial results for
fiscal year 2009, the corporate scorecard for fiscal year 2009
and in comparison to our financial goals. Details regarding the
targets and results for our corporate scorecard are reported
elsewhere in this CD&A.
Individual performance is measured each year by the HR Committee
and our management in part by the use of a multi-rater survey of
our executives. This multi-rater survey is prepared and
administered by a separate consultant to the company and the HR
Committee. The HR Committee members also have direct knowledge
of the performance of several of the executives through regular
and special reports by these executives to the board of
directors and board committees. In addition, our Chairman and
Chief Executive Officer discusses the performance of our other
executives in detail with the HR Committee.
Several specific corporate performance factors and individual
performance factors were considered by the HR Committee in
establishing the compensation of our Named Executive Officers
for fiscal year 2009. Those corporate and leadership performance
factors are specifically described elsewhere in this proxy
statement.
Retirement
Benefits
We provide retirement benefits to the Named Executive Officers
under the terms of qualified and non-qualified defined-benefit
and defined-contribution retirement plans. Retirement benefits
provide post-employment security to our employees. They are an
essential part of a total compensation package that is
competitive with those offered by other companies, particularly
other gas and electric utilities. There are two primary
retirement benefit programs applicable to the Named Executive
Officers:
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employee benefits that are available to all of our employees,
including the Washington Gas Light Company Savings Plan for
Management Employees, and the tax-qualified Washington Gas Light
Company Employees Pension Plan; and
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the Supplemental Executive Retirement Plan (SERP).
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The Washington Gas Light Company Employees Pension Plan
(Pension Plan) is a qualified, trusteed,
non-contributory pension plan covering all active employees
(including executive officers) and vested former employees of
Washington Gas. The Washington Gas Light Company Savings Plan
for Management Employees (401(k) Plan) is also a
tax-qualified retirement plan in which the Named Executive
Officers participate on the same terms as our other
participating employees.
The SERP is a defined benefit plan that allows accrual of a
higher benefit than the qualified plan, but vests it more
slowly. This plan allows us to: i) attract mid-career
executive hires by replacing foregone pension benefits at former
employers, and ii) be competitive with pensions provided to
executives at peer companies which aids in the retention of our
executive officers.
Effective July 1, 2009, the Pension Plan was closed to new
entrants. All new hires after that date will participate in a
defined contribution plan (the DC Plan). The DC Plan
provides a Company contribution between 4%-6% of base salary
(depending on length of service) to subject employees. The
Pension Plan was closed in order to reduce the Companys
risk and to provide a greater degree of predictability regarding
the Companys long-term financial obligations.
On December 18, 2009, the Washington Gas board of directors
adopted a defined contribution form of Supplemental Executive
Retirement Plan (the DC SERP). The prior defined
benefit SERP was closed to new participants on December 31,
2009. Newly hired or promoted executives will be eligible to
participate only in the DC SERP. Current executives had a choice
of either remaining in the
26
SERP or joining the new DC SERP. The changes to the SERP were
made for several reasons. By closing the SERP to new
participants and creating the DC SERP, the Company is able to:
(i) reduce its risk, (ii) provide greater
predictability of its long-term financial obligations, and
(iii) align executive compensation with prevailing market
practices. The benefits provided under the DC SERP are at the
market median and comprise an element of our total compensation
package that is competitive with those offered by other gas and
electric utilities.
The SERP and DC SERP include a clawback provision
that requires a participant to forfeit benefit payments under
certain circumstances. Under this clawback provision, if a SERP
or DC SERP participant willfully performs any act or willfully
fails to perform any act that may result in material discredit
or substantial detriment to Washington Gas, then upon a majority
vote of the board of directors, the participant, his or her
surviving spouse and any beneficiary of those persons, will
forfeit any benefit payments owing on and after a date fixed by
the board of directors. After this fixed date, Washington Gas
will have no further obligation under the SERP or DC SERP to the
participant, his or her spouse or any beneficiary. Also, under
the clawback provision, if a participant has received a lump-sum
benefit, the participant or the surviving spouse would be
required to return a proportionate share of that lump sum
payment to Washington Gas.
None of the Named Executive Officers are participants in the DC
SERP or DC Plan.
See Pension
benefits Pension Plan later in
this proxy statement for a discussion of the other aspects of
the Pension Plan.
See Pension
benefits Supplemental Executive Retirement
Plan later in this proxy statement for a discussion of
the other aspects of the SERP.
Severance/Change
in Control Protections
Our policy regarding severance protection for Named Executive
Officers stems from its importance in recruiting and retaining
executives in a competitive environment where executives are
commonly being recruited from well-compensated positions in
other companies or considering attractive opportunities with
other companies.
We offer certain benefits to executive officers in the event of
a change in control of WGL Holdings or Washington Gas. The
occurrence, or potential occurrence, of a change in control
transaction would create uncertainty regarding the continued
employment of each Named Executive Officer. This uncertainty
would result from the fact that many change in control
transactions result in significant organizational changes,
particularly at the senior executive level. Providing limited
protections to the Named Executive Officers upon a change in
control is in our shareholders best interests because
doing so serves to promote a stable executive team during the
transition process and is helpful in hiring executives into the
company.
To encourage the Named Executive Officers to remain employed
with us during a time when their prospects for continued
employment following the transaction would be uncertain, and to
permit them to remain focused on shareholders and
customers interests during the change in control, the
Named Executive Officers would be provided with severance
benefits which include the value of two or three years
worth of target-level compensation if their employment were
actually or constructively terminated without cause in
connection with a change in control.
Named Executive Officers should not be entitled to receive cash
severance benefits merely because a change in control
transaction occurs. Therefore, the WGL Holdings, Inc. and
Washington Gas Light Company Change in Control Severance Plan
for Certain Executives (the CIC Plan) provides for
the payment of severance benefits upon a dual
trigger event. A dual trigger event used in
this context means that cash payments and vesting/payouts of
one-half the outstanding long-term incentive awards happen only
upon the occurrence of both a change in control and either:
(i) an involuntary termination of employment or (ii) a
voluntary termination with good reason.
27
Given that none of the Named Executive Officers has an
employment agreement that provides for fixed positions or
duties, or for a fixed base salary or actual or target annual
bonus, we have concluded that a constructive termination
severance trigger is appropriate to prevent potential acquirers
from having an incentive to cause constructive termination of a
Named Executive Officers employment to avoid paying any
severance benefits at all. Without a constructive termination
severance trigger, following a change in control, an acquirer
could materially demote a Named Executive Officer, materially
reduce his or her salary and reduce or eliminate his or her
annual bonus opportunity in order to force the Named Executive
Officer to terminate his or her own employment and thereby avoid
paying severance. Thus, the CIC Plan provides certain benefits
for Named Executive Officers in the event of a qualified
termination.
Levels of
change-in-control
payments were developed in prior years and were either
reaffirmed or adjusted after a thorough reevaluation of such
protection by the HR Committee in 2006. That
re-evaluation
included input from Hewitt and considered both market practice
and best practice.
See Potential
Payments Upon Termination Or Change In
Control Change in Control Severance Plan
for Certain Executives later in this proxy statement
for a discussion of the other aspects of the CIC Plan.
Perquisites
We provide limited perquisites to the Named Executive Officers.
In general, we will provide Named Executive Officers with a
specific perquisite only when the perquisite provides
competitive value and promotes retention of executives, or when
the perquisite provides shareholder value.
We have a program of income tax, estate and financial planning
services for our executive officers. We pay the actual cost of
these services provided to the executive officer up to a
pre-determined
ceiling. We also pay the cost of certain other perquisites for
executive officers, including parking at our headquarters
building, a vehicle allowance and an annual physical
examination. We have memberships at three clubs held in the
names of the Chairman and Chief Executive Officer and the
President and Chief Operating Officer that are for use in
business purposes. We also have rights to the use of a suite at
a sports arena that is available for business purposes by
employees. Other benefits available to the Named Executive
Officers are noted in footnotes to the Summary Compensation
Table.
The values of perquisites provided to each Named Executive
Officer in 2009 are reported in Column (i) of the Summary
Compensation Table in this proxy statement.
Timing of
Compensation
Under our current policy, long-term incentive awards are granted
effective each October 1, the first day of the fiscal year.
Short-term awards are generally made in November. The HR
Committee has the discretion to make awards at any time.
Following is a discussion of the timing of compensation
decisions for fiscal year 2009:
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Base salary changes for 2009 were determined at the
September 19, 2008 HR Committee and September 24, 2008
board meetings;
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Short and long-term incentive goals for 2009 were set at the
September 19, 2008 HR Committee meeting;
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Performance share and performance unit grants were approved at
the September 19, 2008 HR Committee meeting for grant
effective on October 1, 2008, and;
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Short-term incentive payments for 2009 were approved at the HR
Committee and Board meetings held on November 12, 2009.
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28
Impact of
Prior Compensation
Amounts realizable from prior compensation did not serve to
increase or decrease 2009 compensation amounts. The HR
Committees primary focus was on achieving market-level
compensation opportunities.
Factors
Considered in Decisions to Increase or Decrease Compensation
Materially
As described above in this CD&A, market data, retention
needs, performance and internal pay equity have been the primary
factors considered in decisions to increase or decrease
compensation opportunities materially. Corporate and individual
performances are the primary factors in determining the ultimate
value of those compensation opportunities.
Role of
Executive Officers
Mr. DeGraffenreidt, our Chairman and Chief Executive
Officer during fiscal year 2009, recommended to the HR Committee
compensation opportunities for the other Named Executive
Officers. Mr. DeGraffenreidt was not involved in
determining his own compensation. In determining short-term
incentive payouts for 2009, Mr. McCallister recommended an
Individual Factor specific to each Named Executive Officer,
except for himself and Mr. DeGraffenreidt. None of the
other Named Executive Officers had any role in determining their
executive compensation.
Company Policy
Regarding the Economic Risk of Common Stock
Ownership
Our Code of Conduct prohibits executive officers, directors and
other individuals with material non-public information from
engaging in purchase, sale or option exercises with respect to
our common stock outside of certain window periods, except in
accordance with established SEC
Rule 10b5-1
plans.
Stock
Ownership Guidelines
The Board has a policy of encouraging our executive officers to
accumulate an amount of shares equal in value to such executive
officers base salary.
Other
Compensation Matters
We do not have any written or unwritten employment agreements
with any of the Named Executive Officers. Each Named Executive
Officer is an employee at will.
All elements of executive compensation are regularly benchmarked
against executive compensation in peer companies. Base salary,
annual bonus, and long-term incentive compensation are
benchmarked annually while other employee benefits and
perquisites are benchmarked every two years.
COMPENSATION OF
EXECUTIVE OFFICERS
The following tables and related footnotes and discussion
present information about compensation for the Chief Executive
Officer, the Chief Financial Officer and the three other most
highly compensated executive officers of WGL Holdings and its
subsidiaries (the Named Executive Officers). The
Summary Compensation Table below quantifies the
value of the different forms of compensation earned by or paid
to Named Executive Officers in fiscal years 2007, 2008 and 2009.
The primary elements of each Named Executive Officers
total compensation reported in the table are base salary, a
bonus contingent on performance, a long-term equity incentive
opportunity consisting of non-qualified stock options,
performance shares, and accumulated retirement pension benefits.
29
Named Executive Officers also earned the other compensation
listed in Column (i) of the Summary Compensation Table.
The Summary Compensation Table should be read in connection with
the tables and narrative descriptions that follow. The
Grants of Plan-Based Awards in Fiscal 2009 table,
and the description of the material terms of the non-qualified
options and performance shares granted in fiscal year 2009 that
follows it, provide information regarding the long-term equity
incentives awarded to Named Executive Officers that are reported
in the Summary Compensation Table. The Outstanding Equity
Awards at Fiscal 2009 Year End and Option
Exercises and Stock Vested in Fiscal Year 2009 tables
provide further information on the Named Executive
Officers potential realizable value and actual value
realized with respect to their equity awards.
The Pension Benefits table and related description
of the material terms of the retirement plans describe each
Named Executive Officers retirement benefits to provide
context to the amounts listed in the Summary Compensation Table.
The discussion in the section Potential Payments Upon
Termination or Change in Control explains the potential
future payments that may become payable to the Named Executive
Officers under certain circumstances.
SUMMARY
COMPENSATION TABLE
The following table presents information about compensation for
the Named Executive Officers. It includes all compensation
awarded to, earned by or paid to the Named Executive Officers
during fiscal years 2007, 2008 and 2009. Each of the below-named
individuals was also an executive officer of Washington Gas
Light Company (Washington Gas), our utility subsidiary. The
compensation shown in the following table was paid to the
individual by Washington Gas.
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Change in
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Pension
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Value and
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Non-Equity
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Non-qualified
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Incentive
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Deferred
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All Other
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Name and
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Stock
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Option
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Compensation
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Compensation
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Compensation
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Principal Position (1)
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Year
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Salary
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Bonus
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Awards (2)
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Awards (2)
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($) (3)
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Earnings($) (4)
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($) (5)
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Total($)
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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(i)
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(j)
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James H. DeGraffenreidt, Jr.
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2009
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$
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760,000
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0
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$
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1,463,168
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$
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0
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$
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821,940
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$
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1,319,634
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$
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40,664
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$
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4,405,406
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Chairman of the Board and
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2008
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$
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730,000
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0
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$
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997,358
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$
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341,969
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$
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789,495
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$
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$
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39,166
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$
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2,897,988
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Chief Executive Officer
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2007
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$
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730,000
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0
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$
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852,615
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$
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614,075
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$
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638,750
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$
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311,595
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$
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37,723
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$
|
3,184,758
|
|
Vincent L. Ammann, Jr.
|
|
|
2009
|
|
|
$
|
380,000
|
|
|
|
0
|
|
|
$
|
429,778
|
|
|
$
|
40,671
|
|
|
$
|
293,550
|
|
|
$
|
213,200
|
|
|
$
|
26,380
|
|
|
$
|
1,383,579
|
|
Vice President and
|
|
|
2008
|
|
|
$
|
320,000
|
|
|
|
0
|
|
|
$
|
222,786
|
|
|
$
|
60,410
|
|
|
$
|
243,200
|
|
|
$
|
35,734
|
|
|
$
|
26,176
|
|
|
$
|
908,306
|
|
Chief Financial Officer
|
|
|
2007
|
|
|
$
|
270,000
|
|
|
|
0
|
|
|
$
|
128,728
|
|
|
$
|
71,767
|
|
|
$
|
168,750
|
|
|
$
|
64,925
|
|
|
$
|
26,506
|
|
|
$
|
730,676
|
|
Terry D. McCallister
|
|
|
2009
|
|
|
$
|
485,000
|
|
|
|
0
|
|
|
$
|
719,011
|
|
|
$
|
89,960
|
|
|
$
|
449,595
|
|
|
$
|
563,425
|
|
|
$
|
48,617
|
|
|
$
|
2,355,608
|
|
President and
|
|
|
2008
|
|
|
$
|
460,000
|
|
|
|
0
|
|
|
$
|
481,216
|
|
|
$
|
165,349
|
|
|
$
|
422,970
|
|
|
$
|
|
|
|
$
|
46,746
|
|
|
$
|
1,576,281
|
|
Chief Operating Officer
|
|
|
2007
|
|
|
$
|
455,000
|
|
|
|
0
|
|
|
$
|
404,056
|
|
|
$
|
211,423
|
|
|
$
|
341,250
|
|
|
$
|
176,471
|
|
|
$
|
46,591
|
|
|
$
|
1,634,791
|
|
Beverly J. Burke
|
|
|
2009
|
|
|
$
|
325,000
|
|
|
|
0
|
|
|
$
|
368,052
|
|
|
$
|
0
|
|
|
$
|
216,816
|
|
|
$
|
628,948
|
|
|
$
|
25,724
|
|
|
$
|
1,564,540
|
|
Vice President and
|
|
|
2008
|
|
|
$
|
310,000
|
|
|
|
0
|
|
|
$
|
247,543
|
|
|
$
|
0
|
|
|
$
|
212,040
|
|
|
$
|
42,728
|
|
|
$
|
25,026
|
|
|
$
|
837,337
|
|
General Counsel
|
|
|
2007
|
|
|
$
|
305,000
|
|
|
|
0
|
|
|
$
|
210,043
|
|
|
$
|
162,142
|
|
|
$
|
171,550
|
|
|
$
|
174,841
|
|
|
$
|
24,609
|
|
|
$
|
1,048,185
|
|
Adrian P. Chapman
|
|
|
2009
|
|
|
$
|
340,000
|
|
|
|
0
|
|
|
$
|
406,094
|
|
|
$
|
41,425
|
|
|
$
|
232,560
|
|
|
$
|
449,494
|
|
|
$
|
29,196
|
|
|
$
|
1,498,769
|
|
Vice President of
|
|
|
2008
|
|
|
$
|
310,000
|
|
|
|
0
|
|
|
$
|
241,830
|
|
|
$
|
73,407
|
|
|
$
|
212,040
|
|
|
$
|
|
|
|
$
|
30,474
|
|
|
$
|
867,751
|
|
Washington Gas
|
|
|
2007
|
|
|
$
|
275,000
|
|
|
|
0
|
|
|
$
|
172,088
|
|
|
$
|
91,578
|
|
|
$
|
154,650
|
|
|
$
|
80,884
|
|
|
$
|
31,294
|
|
|
$
|
805,494
|
|
|
|
|
(1)
|
|
The principal positions shown are
as of September 30, 2009. Mr. DeGraffenreidt, our
former Chairman and Chief Executive Officer, retired effective
September 30, 2009 and, therefore, is included as one of
the Named Executive Officers for fiscal year 2009.
Mr. McCallister became our Chairman and Chief Executive
Officer effective October 1, 2009.
|
|
(2)
|
|
Stock awards consist of performance
shares, performance units and stock options. We did not grant
stock options during fiscal years 2008 and 2009. The amounts in
column (e) include the sum of the values for performance
shares and performance units. The following Named Executive
Officers were granted the corresponding target value of
performance units in fiscal year 2009:
Mr. DeGraffenreidt $727,705;
Mr. Ammann $225,400;
Mr. McCallister $358,586;
Ms. Burke $183,672; and
Mr. Chapman $210,710. The following Named
Executive Officers were granted the corresponding target value
of performance units in fiscal year 2008:
Mr. DeGraffenreidt $199,168;
Mr. Ammann $58,204;
Mr. McCallister $97,613;
Ms. Burke $50,120; and
Mr. Chapman $56,385. Performance share,
performance unit and option values reflect the aggregate dollar
amounts expensed during fiscal years 2007, 2008 and 2009 as
determined under FAS 123R for financial statement reporting
purposes for all outstanding grants disregarding any estimate of
forfeitures related to service-based
|
30
|
|
|
|
|
vesting conditions. For a
discussion of the assumptions and methodologies used to
calculate these amounts, see the discussion of performance
shares, performance units and options contained in Note 11
(Stock-Based Compensation) to the WGL Holdings Consolidated
Financial Statements, included as part of the Companys
2009 Annual Report on
Form 10-K
filed with the SEC and incorporated herein by reference. There
were no forfeitures of performance shares, performance units or
option awards by any Named Executive Officer in fiscal years
2007, 2008, or 2009. The fiscal year 2007 stock award values
reflected in column (e) are the value of performance shares
only. We caution that the actual amount ultimately realized by a
Named Executive Officer from the disclosed equity awards listed
under columns (e) and (f) will likely vary based on a
number of factors, including our actual operating performance,
stock price fluctuations, differences from the valuation
assumptions used and the timing of exercise or applicable
vesting.
|
|
|
|
The terms of stock option awards
provide for accelerated vesting upon retirement, death or
disability. In accordance with applicable accounting rules, we
record stock option expense over the lesser of the three-year
vesting period, or the period until an employee is retirement
eligible. Since Ms. Burke was retirement eligible during
fiscal year 2008, the FAS 123R value of her stock options
for 2008 and 2009 is zero, as reported in the above table. Since
Mr. DeGraffenreidt was retirement eligible during fiscal year
2009, the FAS 123R value of his stock options for 2009 is
zero, as reported in the above table. Performance shares and
performance units do not provide for accelerated vesting.
|
|
(3)
|
|
The amounts shown in this column
constitute the short-term incentive payouts made to the Named
Executive Officers as described in the CD&A. The fiscal
year 2009 short-term incentive payout amounts were paid in
December 2009.
|
|
(4)
|
|
None of the Named Executive
Officers, except Ms. Burke, have any non-qualified deferred
compensation, therefore, this column only reflects pension
accruals for the officers, except Ms. Burke. There are no
above market or preferential earnings on compensation deferred
on a basis that are not tax-qualified, including such earnings
on non-qualified contribution plans. The pension accrual amounts
represent the difference in present value (measured at the
respective fiscal year-end dates shown in the table) of the
age 65 accrued pension (or the current benefit if older)
under the Pension Plan and Supplemental Executive Retirement
Plan, based on the pension plan assumptions for each year as
shown in the text following the Pension Benefits
table set forth later in this proxy statement.
|
|
|
|
During fiscal year 2008, the change
in pension values for Messrs. DeGraffenreidt, McCallister
and Chapman were each negative. The change in pension values for
Messrs. DeGraffenreidt, McCallister and Chapman were:
($612,009), ($44,436) and ($121,866), respectively. Pursuant to
SEC rules, companies are not allowed to use these negative
figures in tabulating the total reported in column (j) of
the Summary Compensation Table. During fiscal year 2009, the
change in pension values for all of the Named Executive Officers
was positive. Consequently, the 2009 change in pension values
for Messrs. DeGraffenreidt, McCallister and Chapman reflect
an increase in pension value that reversed the losses realized
in fiscal year 2008.
|
|
(5)
|
|
The amounts in column
(i) represent the values of perquisites and matching
contributions under the Washington Gas Light Companys
Savings Plan for Management Employees (the 401(k) Savings
Plan). The value of perquisites is set forth in the
following table. The following Named Executive Officers received
the corresponding amounts as matching contributions under the
401(k) Savings Plan during fiscal year 2007:
Mr. DeGraffenreidt $8,985;
Mr. Ammann $10,338;
Mr. McCallister $9,000;
Ms. Burke $8,915; and
Mr. Chapman $9,652. The following Named
Executive Officers received the corresponding amounts as
matching contributions under the 401(k) Savings Plan during
fiscal year 2008: Mr. DeGraffenreidt $8,985;
Mr. Ammann $9,892;
Mr. McCallister $9,131;
Ms. Burke $9,061; and
Mr. Chapman $9,511. The following Named
Executive Officers received the corresponding amounts as
matching contributions under the 401(k) Savings Plan during
fiscal year 2009: Mr. DeGraffenreidt $9,485;
Mr. Ammann $9,800;
Mr. McCallister $9,700;
Ms. Burke $9,500; and
Mr. Chapman $9,439.
|
Perquisites
We have a program of income tax, estate and financial planning
services for our executive officers. We pay the actual cost of
these services provided to the executive up to a pre-determined
ceiling depending on the level of the executive officer. The
highest amount provided to any executive under the income tax,
estate and financial planning program is $10,000 per year. We
also pay the cost of certain other perquisites for executive
officers, including: parking at our headquarters building, a
gasoline allowance and an annual physical examination. We have
memberships at three clubs held in the names of the Chairman and
Chief Executive Officer
and/or the
President
and/or Chief
Operating Officer that are for use for business purposes. We
also have rights to the use of a suite at a sports and
entertainment facility that is available for use in business
purposes by employees and directors.
31
These suites generally are maintained for business
entertainment, but may be used for personal use. The entire
amount has been included in the table below, although we believe
that only a portion of this cost represents a perquisite.
The following table sets forth the incremental value of
perquisites for the Named Executive Officers in 2007, 2008 and
2009 included in the All Other Compensation column
(i) of the Summary Compensation Table above.
Fiscal Years
2007, 2008 and 2009 Incremental Cost of Perquisites
Provided to Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax and
|
|
Vehicle
|
|
|
|
|
|
|
|
Tax
|
|
Club
|
|
|
Name and
|
|
|
|
Financial
|
|
Allowance
|
|
Parking
|
|
Physical
|
|
Insurance
|
|
Gross-up
|
|
Dues
|
|
Total
|
Principal Position
|
|
Year
|
|
Counseling ($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
|
James H. DeGraffenreidt, Jr.
|
|
|
2009
|
|
|
$
|
0
|
|
|
$
|
8,400
|
|
|
$
|
6,240
|
|
|
$
|
0
|
|
|
$
|
4,722
|
|
|
$
|
1,599
|
|
|
$
|
10,218
|
|
|
$
|
31,179
|
|
Chairman of the Board and
|
|
|
2008
|
|
|
$
|
0
|
|
|
$
|
8,400
|
|
|
$
|
6,000
|
|
|
$
|
0
|
|
|
$
|
4,722
|
|
|
$
|
1,557
|
|
|
$
|
9,502
|
|
|
$
|
30,181
|
|
Chief Executive Officer
|
|
|
2007
|
|
|
$
|
0
|
|
|
$
|
8,400
|
|
|
$
|
6,000
|
|
|
$
|
0
|
|
|
$
|
4,920
|
|
|
$
|
991
|
|
|
$
|
8,427
|
|
|
$
|
28,738
|
|
Vincent L. Ammann, Jr.
|
|
|
2009
|
|
|
$
|
0
|
|
|
$
|
8,400
|
|
|
$
|
3,120
|
|
|
$
|
1,393
|
|
|
$
|
3,200
|
|
|
$
|
467
|
|
|
$
|
0
|
|
|
$
|
16,580
|
|
Vice President and
|
|
|
2008
|
|
|
$
|
0
|
|
|
$
|
8,400
|
|
|
$
|
3,000
|
|
|
$
|
1,714
|
|
|
$
|
2,886
|
|
|
$
|
284
|
|
|
$
|
0
|
|
|
$
|
16,284
|
|
Chief Financial Officer
|
|
|
2007
|
|
|
$
|
0
|
|
|
$
|
8,400
|
|
|
$
|
3,000
|
|
|
$
|
1,714
|
|
|
$
|
2,903
|
|
|
$
|
151
|
|
|
$
|
0
|
|
|
$
|
16,168
|
|
Terry D. McCallister
|
|
|
2009
|
|
|
$
|
0
|
|
|
$
|
8,400
|
|
|
$
|
6,240
|
|
|
$
|
1,595
|
|
|
$
|
3,585
|
|
|
$
|
749
|
|
|
$
|
18,348
|
|
|
$
|
38,917
|
|
President and
|
|
|
2008
|
|
|
$
|
0
|
|
|
$
|
8,400
|
|
|
$
|
6,000
|
|
|
$
|
1,792
|
|
|
$
|
3,532
|
|
|
$
|
715
|
|
|
$
|
17,176
|
|
|
$
|
37,615
|
|
Chief Operating Officer
|
|
|
2007
|
|
|
$
|
1,473
|
|
|
$
|
8,400
|
|
|
$
|
6,000
|
|
|
$
|
2,642
|
|
|
$
|
3,730
|
|
|
$
|
579
|
|
|
$
|
14,767
|
|
|
$
|
37,591
|
|
Beverly J. Burke
|
|
|
2009
|
|
|
$
|
0
|
|
|
$
|
8,400
|
|
|
$
|
3,120
|
|
|
$
|
0
|
|
|
$
|
3,801
|
|
|
$
|
903
|
|
|
$
|
0
|
|
|
$
|
16,224
|
|
Vice President and
|
|
|
2008
|
|
|
$
|
0
|
|
|
$
|
8,400
|
|
|
$
|
3,000
|
|
|
$
|
0
|
|
|
$
|
3,716
|
|
|
$
|
849
|
|
|
$
|
0
|
|
|
$
|
15,965
|
|
General Counsel
|
|
|
2007
|
|
|
$
|
0
|
|
|
$
|
8,400
|
|
|
$
|
3,000
|
|
|
$
|
0
|
|
|
$
|
3,683
|
|
|
$
|
611
|
|
|
$
|
0
|
|
|
$
|
15,694
|
|
Adrian P. Chapman
|
|
|
2009
|
|
|
$
|
4,600
|
|
|
$
|
8,400
|
|
|
$
|
3,120
|
|
|
$
|
0
|
|
|
$
|
3,181
|
|
|
$
|
456
|
|
|
$
|
0
|
|
|
$
|
19,757
|
|
Vice President of
|
|
|
2008
|
|
|
$
|
4,500
|
|
|
$
|
8,400
|
|
|
$
|
3,000
|
|
|
$
|
1,526
|
|
|
$
|
3,118
|
|
|
$
|
419
|
|
|
$
|
0
|
|
|
$
|
20,963
|
|
Washington Gas
|
|
|
2007
|
|
|
$
|
5,300
|
|
|
$
|
8,400
|
|
|
$
|
3,000
|
|
|
$
|
1,656
|
|
|
$
|
3,064
|
|
|
$
|
222
|
|
|
$
|
0
|
|
|
$
|
21,642
|
|
The amounts set forth in the tax
gross-up
column in the above table represent the amount of taxes paid by
the Company on behalf of officers relating to life insurance
coverage with benefits in excess of $50,000. We provide the
executive officers (and all employees) life insurance equal to
one times the employees salary. Under the Internal Revenue
Code, the cost of the first $50,000 of life insurance paid by us
is not taxable income to the employee. However, the premiums we
paid for insurance in excess of $50,000 is taxable income
(imputed income) to the employee. The Company grosses
up the income of the Named Executive Officers for the
taxes on this imputed income (i.e., we pay the taxes for the
Named Executive Officers on this imputed income). The imputed
income amount and the amount of the tax gross up are both
taxable income to the Named Executive Officer.
The amounts under the column entitled, insurance in
the above table represent the premiums paid by the Company for
the respective Named Executive Officers long term care and
imputed income for life insurance.
32
GRANTS OF
PLAN-BASED AWARDS IN FISCAL YEAR 2009
The following Grants of Plan-Based Awards table sets forth
information concerning the range of short-term incentive
opportunities and opportunities under grants of performance
shares and units to our Named Executive Officers during the
fiscal year ended September 30, 2009. The grants in the
following table were made under the Omnibus Incentive
Compensation Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
Estimated Future Payouts
|
|
|
|
|
|
|
Under Non-Equity
|
|
Under Equity
|
|
|
|
|
|
|
Incentive Plan Awards
|
|
Incentive Plan Awards(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Number
|
|
Number
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
of Shares
|
|
of Shares
|
|
of Shares
|
|
Fair Value
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
of Stock
|
|
of Stock
|
|
of Stock
|
|
of Stock(2)
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(l)
|
|
James H. DeGraffenreidt, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Incentive
|
|
|
N/A
|
|
|
|
166,250
|
|
|
|
532,000
|
|
|
|
917,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Program
|
|
|
10/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,346
|
|
|
|
20,692
|
|
|
|
41,384
|
|
|
$
|
32.71
|
|
Performance Unit Program
|
|
|
10/1/2008
|
|
|
|
335,733
|
|
|
|
671,466
|
|
|
|
1,342,932
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.01
|
|
Vincent L. Ammann, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Incentive
|
|
|
N/A
|
|
|
|
59,375
|
|
|
|
190,000
|
|
|
|
327,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Program
|
|
|
10/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,449
|
|
|
|
6,897
|
|
|
|
13,794
|
|
|
$
|
32.71
|
|
Performance Unit Program
|
|
|
10/1/2008
|
|
|
|
111,911
|
|
|
|
223,822
|
|
|
|
447,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.01
|
|
Terry D. McCallister
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Incentive
|
|
|
N/A
|
|
|
|
90,938
|
|
|
|
291,000
|
|
|
|
501,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Program
|
|
|
10/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,136
|
|
|
|
10,271
|
|
|
|
20,542
|
|
|
$
|
32.71
|
|
Performance Unit Program
|
|
|
10/1/2008
|
|
|
|
166,640
|
|
|
|
333,279
|
|
|
|
666,558
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.01
|
|
Beverly J. Burke
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Incentive
|
|
|
N/A
|
|
|
|
45,703
|
|
|
|
146,250
|
|
|
|
252,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Program
|
|
|
10/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,622
|
|
|
|
5,244
|
|
|
|
10,488
|
|
|
$
|
32.71
|
|
Performance Unit Program
|
|
|
10/1/2008
|
|
|
|
85,079
|
|
|
|
170,157
|
|
|
|
340,314
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.01
|
|
Adrian P. Chapman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Incentive
|
|
|
N/A
|
|
|
|
47,813
|
|
|
|
153,000
|
|
|
|
263,925
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Share Program
|
|
|
10/1/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,086
|
|
|
|
6,171
|
|
|
|
12,342
|
|
|
$
|
32.71
|
|
Performance Unit Program
|
|
|
10/1/2008
|
|
|
|
100,131
|
|
|
|
200,262
|
|
|
|
400,524
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1.01
|
|
|
|
|
|
|
Note that columns:
(i) All Other Stock Awards, (j) All
Other Option Awards: Number of Securities, and
(k) Exercise Price of Option Awards, have been
omitted in accordance with SEC rules because no such
compensation was awarded to, earned by, or paid to the Named
Executive Officers during fiscal year 2009.
|
|
|
|
No consideration was paid by any of
the Named Executive Officers for the awards listed in the
Grants of Plan-Based Awards table.
|
|
(1)
|
|
Amounts in these columns represent
the threshold, target and maximum payouts under our Performance
Share Program for the
36-month
performance period from October 1, 2008 through
September 30, 2011.
|
|
(2)
|
|
Numbers in this column represent
the grant date fair value, as determined in accordance with
Financial Accounting Standard 123R, of performance units and
performance share awards granted during fiscal year 2009. For a
discussion of the assumptions and methodologies used to
calculate the amounts reported, see the discussion of stock
options and performance shares contained in Note 11 (Stock
Based Compensation) to the Companys Consolidated Financial
Statements, included as part of WGL Holdings 2009 Annual
Report on
Form 10-K
filed with the Securities and Exchange Commission and
incorporated herein by reference.
|
No Employment
Agreements with Named Executive Officers
None of the Named Executive Officers have employment agreements
with the Company.
Performance
Shares and Performance Units
Performance share awards are denominated and paid out in shares
of WGL Holdings common stock. Performance unit awards are
denominated in dollars and are paid out in cash. In all other
respects, the two awards are the same.
The vesting of performance share and performance unit awards is
conditioned upon the performance of the Company and the
officers continued employment. As long as each Named
33
Executive Officer continues to remain an employee, performance
shares and units become earned and vested based on WGL
Holdings comparative total shareholder return over a
designated three-year performance period. Performance share
award grantees do not have the rights of shareholders until the
performance shares fully vest. Therefore, performance share
grantees do not receive dividends or other earnings on the
performance share until it fully vests. Since the performance
units pay out in cash once vested, performance unit grantees do
not receive dividends or other rights of shareholders.
For further information regarding the performance share and
performance unit payout peer groups and the total shareholder
return necessary for the vesting of performance shares, please
see the discussion under the heading, Long-Term Incentive
Compensation-Performance Share and Performance Unit Awards
in the Compensation Discussion & Analysis section of
this proxy statement.
Awards are converted to cash for shares to the extent necessary
to satisfy minimum tax withholding or any governmental levies.
Performance shares and performance units are generally forfeited
for no value if a Named Executive Officers employment
terminates prior to the end of the performance period. However,
a Named Executive Officer, subject to the sole discretion of the
HR Committee of the WGL Holdings Board of Directors, may vest in
all or a portion of his or her outstanding performance shares or
performance units if his or her employment terminates as a
result of retirement, death, or disability. In the event of a
change in control, the target number of performance shares
granted prior to December 15, 2006 will automatically vest
as of the effective date of the change of control, and
will be settled in stock as soon as practicable following the
effective date of the change in control. Under certain
circumstances, following a change in control, between 50% to
100% of an officers outstanding performance share or
performance unit awards granted on or after December 15,
2006 would become fully vested at target levels.
34
OUTSTANDING
EQUITY AWARDS AT FISCAL 2009 YEAR-END
The following table summarizes the equity awards we have made to
our Named Executive Officers which were outstanding as of
September 30, 2009. Outstanding equity awards at fiscal
year-end consist of non-qualified stock options, performance
shares and performance units.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Plan
|
|
Equity
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Awards:
|
|
Incentive
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Market or
|
|
Plan
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Payout
|
|
Awards:
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Number of
|
|
Value of
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
Unearned
|
|
Unearned
|
|
Unearned
|
|
Unearned
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
Shares or
|
|
Shares or
|
|
Shares or
|
|
Shares or
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
Other
|
|
Other
|
|
Other
|
|
Other
|
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
|
Rights That
|
|
Rights That
|
|
Rights That
|
|
Rights That
|
|
|
Options
|
|
Options
|
|
Exercise
|
|
Expiration
|
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
Name
|
|
Exercisable(1)(#)
|
|
Unexercisable(2)(#)
|
|
Price($)
|
|
Date(1)(2)
|
|
|
Vested(3)(#)
|
|
Vested(3)($)
|
|
Vested(4)(#)
|
|
Vested(4)($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(e)
|
|
(f)
|
|
|
(i)
|
|
(j)
|
|
(k)
|
|
(l)
|
James H. DeGraffenreidt, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-05
|
|
|
87,635
|
|
|
|
|
|
|
$
|
32.13
|
|
|
|
10/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-06
|
|
|
|
|
|
|
116,465
|
|
|
$
|
31.34
|
|
|
|
10/1/2016
|
|
|
|
|
13,712
|
|
|
$
|
454,416
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,042
|
|
|
$
|
697,332
|
|
|
|
713,097
|
|
|
$
|
713,097
|
|
Awarded
10-1-08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,692
|
|
|
$
|
685,733
|
|
|
|
671,466
|
|
|
$
|
671,466
|
|
Vincent L. Ammann, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-04
|
|
|
6,121
|
|
|
|
|
|
|
$
|
28.26
|
|
|
|
10/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-05
|
|
|
10,760
|
|
|
|
|
|
|
$
|
32.13
|
|
|
|
10/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-06
|
|
|
|
|
|
|
25,526
|
|
|
$
|
31.34
|
|
|
|
10/1/2016
|
|
|
|
|
3,006
|
|
|
$
|
99,619
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,149
|
|
|
$
|
203,778
|
|
|
|
208,394
|
|
|
$
|
208,394
|
|
Awarded
10-1-08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,897
|
|
|
$
|
228,567
|
|
|
|
223,822
|
|
|
|
223,822
|
|
Terry D. McCallister
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-03
|
|
|
25,674
|
|
|
|
|
|
|
$
|
27.58
|
|
|
|
10/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-04
|
|
|
45,117
|
|
|
|
|
|
|
$
|
28.26
|
|
|
|
10/1/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-05
|
|
|
41,083
|
|
|
|
|
|
|
$
|
32.13
|
|
|
|
10/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-06
|
|
|
|
|
|
|
56,460
|
|
|
$
|
31.34
|
|
|
|
10/1/2016
|
|
|
|
|
6,647
|
|
|
$
|
220,281
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,313
|
|
|
$
|
341,773
|
|
|
|
349,493
|
|
|
$
|
349,493
|
|
Awarded
10-1-08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,271
|
|
|
$
|
340,381
|
|
|
|
333,279
|
|
|
$
|
333,279
|
|
Beverly J. Burke
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-05
|
|
|
21,342
|
|
|
|
|
|
|
$
|
32.13
|
|
|
|
10/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-06
|
|
|
|
|
|
|
28,835
|
|
|
$
|
31.34
|
|
|
|
10/1/2016
|
|
|
|
|
3,395
|
|
|
$
|
112,510
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,295
|
|
|
$
|
175,476
|
|
|
|
179,450
|
|
|
$
|
179,450
|
|
Awarded
10-1-08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,244
|
|
|
$
|
173,786
|
|
|
|
170,157
|
|
|
$
|
170,157
|
|
Adrian P. Chapman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-06
|
|
|
|
|
|
|
25,999
|
|
|
$
|
31.34
|
|
|
|
10/1/2016
|
|
|
|
|
3,061
|
|
|
$
|
101,442
|
|
|
|
|
|
|
|
|
|
Awarded
10-1-07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,957
|
|
|
$
|
197,415
|
|
|
|
201,881
|
|
|
$
|
201,881
|
|
Awarded
10-1-08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,171
|
|
|
$
|
204,507
|
|
|
|
200,262
|
|
|
$
|
200,262
|
|
|
|
|
(1)
|
|
Subject to each Named Executive
Officers continued employment, each stock option grant
becomes vested on the third anniversary of the date of grant.
All exercisable options are currently vested. Please see the
text under the heading Options below for a
description of the vesting conditions of stock options.
|
|
(2)
|
|
The unexercisable options are
unvested. Subject to each Named Executive Officers
continued employment, each unvested stock option grant becomes
vested on the third anniversary of the date of grant. Please see
the text under the heading Options below for a
description of the vesting conditions of stock options.
|
|
(3)
|
|
Columns (i) and
(j) relate to performance shares. Performance shares become
earned and vested at the end of a three-year performance period,
subject to: i) such officers continued employment and
ii) the comparative total shareholder return of WGL
Holdings as compared to the total shareholder return of a peer
group of companies during the three year performance period. The
number of performance shares shown in the Awarded
10-1-07
and Awarded
10-1-08
rows for each Named Executive Officer in column (i) of the
Outstanding Equity Awards at Fiscal
2009 Year-End table are the target number of shares
that may become earned if WGL Holdings total shareholder return
is at the 50th percentile of its peer group of companies. The
value shown in column (j) of the table is the number of
shares shown in column (i) times the closing price of WGL
Holdings common stock on September 30, 2009 ($33.14), the
last trading day of fiscal year 2009.
|
|
(4)
|
|
Columns (k) and
(l) relate to performance units. We granted performance
units for the first time on October 1, 2007. Performance
units become earned and vested at the end of a three-year
performance period, subject to: i) such officers
continued employment and ii) the comparative total
shareholder return of WGL Holdings
|
35
|
|
|
|
|
as compared to the total
shareholder return of a peer group of companies during the three
year performance period. The number of performance units shown
for each Named Executive Officer in column (k) of the
Outstanding Equity Awards at Fiscal
2008 Year-End table in the Awarded
10-1-07
and Awarded
10-1-08
rows are the target number of units that may be earned if WGL
Holdings total shareholder return is at the 50th percentile of
its peer group of companies. The value shown in column
(l) of the table is the number of units shown in column
(k) multiplied by $1.00 which is the value of each
performance share unit.
|
Options
Each option award is a non-qualified option that may be
exercised to purchase one share of WGL Holdings common stock at
an exercise price equal to the fair market value of the
underlying common stock on the grant date. The fair market value
is the closing price of one share of WGL Holdings common stock,
as reported on the New York Stock Exchange composite tape on the
grant date, or if the common stock was not traded on such day,
then on the next preceding day that the common stock was traded.
The exercise price of options may be paid in cash, by delivery
of already-owned shares of common stock of WGL Holdings or by
any other method approved by the HR Committee, which administers
the 1999 Plan. Awards are converted to cash to the extent
necessary to satisfy minimum tax withholding or any governmental
levies. Holders of option awards do not have the rights of
shareholders until the option is exercised. Therefore, option
holders do not receive dividends or other earnings on the
underlying stock until the option is exercised.
Each Named Executive Officers stock option award has a
three-year vesting period. Subject to each Named Executive
Officers continued employment, 100% of his or her stock
option award will vest and become exercisable on the third
anniversary of the grant date. Options expire on the tenth
anniversary of the date of grant. Each Named Executive
Officers stock option award may also become vested
depending on the circumstances of his or her termination of
employment, if such termination occurs prior to the vesting of
options. If a Named Executive Officer terminates employment
because of death, permanent and total disability, or retirement,
his or her stock option award will immediately vest and become
exercisable. If a Named Executive Officers employment
terminates for any other reason, the unvested portion of his or
her stock option award will immediately terminate. All options
immediately become exercisable upon a change in control. If a
Named Executive Officer is terminated for cause, then all
unexercised options, whether or not vested, will expire as of
the employment termination date. Stock option awards are
generally only transferable to a beneficiary of a Named
Executive Officer upon his or her death.
OPTION EXERCISES
AND STOCK VESTED IN FISCAL YEAR 2009
The following Option Exercises and Stock Vested table provides
additional information about the value realized by the Named
Executive Officers on option award exercises and stock award
vesting during the year ended September 30, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
Shares
|
|
|
|
|
Shares Acquired
|
|
Value Realized
|
|
Shares Acquired
|
|
Withheld
|
|
Value Realized
|
Name
|
|
on Exercise (#)
|
|
on Exercise(1)($)
|
|
on Vesting (#)
|
|
to Cover
|
|
on Vesting ($)(2)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
Taxes (#)
|
|
(e)
|
|
James H. DeGraffenreidt, Jr.
|
|
|
0
|
|
|
$
|
0
|
|
|
|
27,844
|
|
|
|
12,321
|
|
|
$
|
903,538
|
|
Vincent L. Ammann, Jr.
|
|
|
5,000
|
|
|
$
|
40,061
|
|
|
|
3,419
|
|
|
|
1,101
|
|
|
$
|
110,947
|
|
Terry D. McCallister
|
|
|
16,800
|
|
|
$
|
133,056
|
|
|
|
13,053
|
|
|
|
4,204
|
|
|
$
|
423,570
|
|
Beverly J. Burke
|
|
|
0
|
|
|
$
|
0
|
|
|
|
6,781
|
|
|
|
2,370
|
|
|
$
|
220,043
|
|
Adrian P. Chapman
|
|
|
51,528
|
|
|
$
|
351,908
|
|
|
|
5,538
|
|
|
|
1,784
|
|
|
$
|
179,708
|
|
|
|
|
(1)
|
|
The amounts shown in the column,
value realized on exercise equal the differences
between (i) the market price of WGL Holdings common stock on the
exercise date and (ii) the exercise price of those options,
multiplied by the corresponding amount set forth in column (b).
|
|
(2)
|
|
The amounts shown in the column,
value realized on vesting equal the product of: (i)
the closing market price of WGL Holdings common stock on the
last day of the performance share vesting period ($32.45)
multiplied by (ii) the number of shares acquired upon vesting as
set forth in column (d).
|
36
PENSION
BENEFITS
The following table and related discussion describes the present
value of accumulated benefits payable to each of our Named
Executive Officers under our Washington Gas Light Company
Employees Pension Plan (a qualified plan) and the
Washington Gas Light Company Supplemental Executive Retirement
Plan (a non-qualified plan).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Present Value
|
|
|
|
|
Years
|
|
of
|
|
|
|
|
Credited
|
|
Accumulated
|
|
|
|
|
Service
|
|
Benefit
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
James H. DeGraffenreidt, Jr.
|
|
Washington Gas Light Company Pension Plan
|
|
|
23.5
|
|
|
$
|
476,372
|
|
|
|
Washington Gas Light Company
|
|
|
|
|
|
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
30.0
|
|
|
$
|
4,596,530
|
|
Vincent L. Ammann, Jr.
|
|
Washington Gas Light Company Pension Plan
|
|
|
6.0
|
|
|
$
|
79,553
|
|
|
|
Washington Gas Light Company
|
|
|
|
|
|
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
10.0
|
|
|
$
|
316,699
|
|
Terry D. McCallister
|
|
Washington Gas Light Company Pension Plan
|
|
|
9.5
|
|
|
$
|
171,960
|
|
|
|
Washington Gas Light Company
|
|
|
|
|
|
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
18.5
|
|
|
$
|
1,375,547
|
|
Beverly J. Burke
|
|
Washington Gas Light Company Pension Plan
|
|
|
17.0
|
|
|
$
|
416,986
|
|
|
|
Washington Gas Light Company
|
|
|
|
|
|
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
28.0
|
|
|
$
|
1,532,548
|
|
Adrian P. Chapman
|
|
Washington Gas Light Company Pension Plan
|
|
|
28.0
|
|
|
$
|
420,061
|
|
|
|
Washington Gas Light Company
|
|
|
|
|
|
|
|
|
|
|
Supplemental Executive Retirement Plan
|
|
|
30.0
|
|
|
$
|
861,004
|
|
Note that column (e) Payments During Last Fiscal
Year has been omitted in accordance with SEC rules because
no such payments were made during fiscal year 2009.
The following actuarial assumptions were used in determining the
amounts set forth in the Pension Benefits table:
|
|
|
|
|
|
|
September 30,
|
|
September 30,
|
Measurement Date
|
|
2009
|
|
2008
|
|
Discount Rate
|
|
6.5%
|
|
7.5%
|
Pre-retirement Mortality
|
|
None
|
|
None
|
Postretirement Mortality
|
|
RP 2000
|
|
RP 2000
|
|
|
Combined Healthy
|
|
Combined Healthy
|
Retirement Age
|
|
65
|
|
65
|
Payment Form
|
|
Single life annuity
|
|
Single life annuity
|
For a discussion of the assumptions and methodologies used to
calculate the amounts reported in the Pension
Benefits table above, see the discussion contained in
Note 10 (Pension and other Post-Retirement Benefit Plans)
to the Companys Consolidated Financial Statements, and
Managements Discussion and Analysis of Financial Condition
and Results of Operations included as part of WGL Holdings
2008 and 2009 Annual Reports on
Form 10-K
filed with the SEC and incorporated herein by reference.
Pension and other
Retirement Benefits
Washington Gas provides retirement benefits to the Named
Executive Officers under the terms of qualified and
non-qualified defined-benefit and defined-contribution
retirement plans. Retirement benefits provide post-employment
security to our employees. As of the end of the fiscal year
2009, there were three primary retirement benefit programs
applicable to the Named Executive Officers:
|
|
|
|
|
the Washington Gas Light Company Savings Plan for Management
Employees (401(k) Plan), a tax-qualified defined
contribution plan in which the Named Executive Officers
participate on the same terms as our other participating
employees;
|
37
|
|
|
|
|
the Washington Gas Light Company Employees Pension Plan
(Pension Plan), a qualified, trusteed,
non-contributory pension plan covering all active employees
(including executive officers) and vested former employees of
Washington Gas; and
|
|
|
|
the Washington Gas Light Company Supplemental Executive
Retirement Plan (SERP), a non-qualified
defined-benefit retirement plan which provides the Named
Executive Officers a benefit up to 60% of the individuals
final average compensation, as determined under that plan.
|
Pension
Plan
The Named Executive Officers each participate in the Pension
Plan. All employees of Washington Gas, including part-time
employees, automatically become participants in the Pension Plan
on the first day of the month immediately following their
employment commencement date. Participation in the Pension Plan
is now closed to newly-hired employees. The Plan is closed to
employees first hired on or after January 1, 2009 who are
covered under the collective bargaining agreements with the
International Brotherhood of Teamsters and Office and
Professional Employees International Union Local 2, to
management employees first hired on or after July 1, 2009,
to Hampshire Gas Company employees first hired on or after
January 1, 2010, and to employees first hired on or after
January 1, 2010 who are covered by the collective
bargaining agreement between Washington Gas and the
International Brotherhood of Electrical Workers, Local 1900.
These newly-hired employees will receive instead an
employer-provided contribution under the companys defined
contribution plan (i.e., the 401(k) Plan).
The Pension Plan is a tax-qualified defined benefit retirement
plan. The Pension Plan provides an unreduced retirement benefit
at termination of employment at the normal retirement age of 65.
A participant must have five years of accredited service under
the Pension Plan to vest in a pension benefit.
The Pension Plan accrued benefit is calculated using a formula
based on accredited service and final average compensation.
Final average compensation is the average of the employees
rate of annual basic compensation on December 31 of each of the
three calendar years of accredited service preceding the
employees normal retirement date, early or disability
retirement date, actual date of retirement or date of
termination of employment, whichever is applicable. Annual basic
compensation consists of the regular annual salary or wages of
an employee, excluding bonuses, compensation for overtime or
other extra or special compensation, but including commissions,
bonuses and other forms of incentive compensation paid to
salesmen. The rate of final average compensation is multiplied
by the percentage rate that applies to the participants
years of accredited service. Bargaining units representing
certain Washington Gas employees have negotiated different
percentages for their members. A change was made to the formula
for calculating the retirement benefit for management employees
and for employees covered by the collective bargaining agreement
with the International Brotherhood of Electrical Workers, Local
1900 who retire on or after January 1, 2010 and for
employees covered by Office and Professional Employees
International Union Local 2 who retire on or after
January 1, 2009. The retirement benefit for these employees
will be determined by using the average of the retirees
highest three years of earnings, rather than the average of the
retirees last three years of earnings.
An early retirement benefit, discounted for age, is available to
employees at age 55 with 5 years of accredited
service. Employees having any combination of age and accredited
service that equals 90 or more and employees with 30 years
of accredited service may retire early without discounting their
pension for age. As of the date of this proxy statement, only
one Named Executive Officer, Beverly J. Burke, our Vice
President and General Counsel, is currently eligible to receive
an early retirement benefit.
The normal form of pension benefit is a joint and survivor
annuity for a married employee and a single-life annuity for an
unmarried employee. Participants may elect among various payment
options that will be the actuarial equivalent of the normal form
of retirement benefit. There is no lump sum optional form of
payment under the current Pension Plan.
38
Also in 2009, several management employees were offered the
choice of continuing to accrue benefits under the Pension Plan
or instead have their Pension Plan benefit frozen and receive an
enhanced benefit in the form of an employer contribution under
the Companys 401(k) plan. A number of management employees
elected to freeze their benefit under the Pension Plan.
Supplemental
Executive Retirement Plan
The Named Executive Officers participate the SERP which is a
non-qualified, unfunded defined benefit retirement plan. The
purpose of the SERP is to provide an additional incentive to
attract and retain key employees designated by the Board of
Directors. The Board of Directors of Washington Gas designates
participants in the SERP.
The SERP provides a retirement benefit that supplements the
benefit payable under the Pension Plan. The benefit amount is
based on years of benefit service and the average of the
participants highest rates of annual basic compensation,
including any short-term incentive awards, on December 31 of the
three years out of the final five years of the
participants service as a participant. Benefit service
under the SERP consists of years of accredited service under the
Pension Plan plus the number of years of plan service under
SERP, to a maximum of 30 years. There is a vesting schedule
for the benefit that varies depending upon the point in time the
individual became a participant in the SERP.
At normal retirement, the SERP participant is entitled to an
annual benefit equal to the participants vested percentage
of an amount equal to 2% of final average compensation
multiplied by the number of years of benefit service, reduced by
the amount of the normal retirement benefit paid under the
Pension Plan and the amount of any other supplemental pension
benefit provided by Washington Gas. Participants in the WGL
Holdings, Inc. and Washington Gas Light Company Change in
Control Severance Plan for Certain Executives, described
elsewhere in this proxy statement, may earn extra years of
benefit service under the SERP in certain events of termination
following a change in control, up to the maximum of
30 years of benefit service.
The SERP provides an unreduced retirement benefit at termination
of employment at the normal retirement age of 65. An early
retirement benefit, discounted for age, is available to
participants at age 55 with 10 years of benefit
service. As of the date of this proxy statement, only one Named
Executive Officer, Beverly J. Burke, our Vice President and
General Counsel, is currently eligible to receive an early
retirement benefit under the SERP.
A participant in the SERP can elect the same forms of benefit
available under the Pension Plan, and in addition can elect a
lump sum payment form. For SERP benefits earned through
December 31, 2004, the lump sum amount is limited to the
amount of the benefit attributable to short-term incentive
compensation. For benefits earned on and after January 1,
2005, participants may elect a lump sum benefit in any
percentage. The lump sum amount is an actuarial determination
based on the participants life expectancy discounted using
the yield on the zero-coupon U.S. Treasury security with
maturity equal to the maturity of each years payment. The
lump sum shall equal the sum of the discounted payments.
39
NON-QUALIFIED
DEFERRED COMPENSATION
The following table presents information regarding the
contributions to and earnings on the Named Executive
Officers deferred compensation balances during fiscal year
2009, and also shows the total deferred amounts for the Named
Executive Officers at the end of fiscal year 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate
|
|
|
|
|
Executive
|
|
Registrant
|
|
Earnings
|
|
Withdrawals/
|
|
Balance
|
|
|
|
|
Contributions
|
|
Contributions
|
|
in Last FY
|
|
Distributions
|
|
at Last FYE
|
Name
|
|
|
|
in Last FY
|
|
in Last FY ($)
|
|
($)(1)
|
|
($)
|
|
($)
|
(a)
|
|
Plan
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
James H. DeGraffenreidt, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vincent L. Ammann, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terry D. McCallister
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beverly J. Burke
|
|
|
Executive Incentive
Compensation Plan
|
|
|
|
0
|
|
|
|
0
|
|
|
$
|
799
|
|
|
|
0
|
|
|
$
|
39,631
|
|
Adrian P. Chapman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
No deferrals of compensation were made during the 2009 fiscal
year. The amount set forth in the above table for Ms. Burke
reflects a deferral made on a bonus in the amount of $28,500
during fiscal year 2001. The quarterly interest rate is equal to
weekly average yield to maturity for five-year U.S. Treasury
fixed interest rate securities (adjusted to a constant maturity
of five years). This deferral was made under the Washington Gas
Light Company Executive Incentive Compensation Plan which is
currently inactive. The amount reported in column (d) in
the above table is also included in the amount shown for
Ms. Burke in column (h) of the Summary Compensation
Table in this proxy statement. |
POTENTIAL
PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Change in Control
Severance Plan for Certain Executives
Each of the Named Executive Officers listed in the Summary
Compensation Table in this proxy statement participates in the
WGL Holdings, Inc. and Washington Gas Light Company Change in
Control Severance Plan for Certain Executives (the CIC
Plan). Change in control protections provide
severance pay and, in some situations, vesting or payment of
long-term incentive awards, upon a change in control. The change
in control provisions under the CIC Plan are effective during
the period of one year prior to, and two years following, a
change in control of WGL Holdings or Washington Gas Light
Company. The CIC Plan incorporates the definition of a change in
control as defined in the WGL Holdings, Inc. and Washington Gas
Light Company Change in Control Policy (CIC Policy).
A change in control generally will occur under the CIC Policy in
the event of:
|
|
|
|
|
an acquisition of 30% or more of the voting stock of WGL
Holdings or Washington Gas;
|
|
|
|
a change in the majority of the board of directors of WGL
Holdings; or
|
|
|
|
a merger, reorganization, consolidation or sale of all or
substantially all of the assets of WGL Holdings or Washington
Gas.
|
Generally, during the one year prior and two years following a
change in control the executive is entitled to base salary,
annual incentives, savings and retirement plans, welfare benefit
plans, expenses, fringe benefits, office and vacation,
consistent with those in place prior to the change in control or
available after the change in control if more beneficial.
Annual base salary is defined as the amount equal to the highest
base salary rate in effect during the period beginning twelve
months immediately preceding a change in control and ending on
the date of the Named Executive Officers termination. The
annual incentive bonus is equal to each executives target
annual bonus for the fiscal year in which the Named Executive
Officers employment is terminated.
40
With respect to all the Named Executive Officers, if the Named
Executive Officer is terminated during the effective period for
reasons other than cause, or if the Named Executive Officer
resigns for good reason, the Named Executive Officer is entitled
to certain severance benefits. These benefits include:
|
|
|
|
|
salary replacement benefits equal to the sum of the
executives annual base salary plus annual incentive bonus
multiplied by three for Messrs. McCallister, Chapman and
Ammann, and Ms. Burke;
|
|
|
|
the sum of any unpaid base salary and vacation pay through the
termination date and the product of the executives annual
bonus and a fraction, the numerator of which is the number of
days in the current fiscal year through the termination date,
and the denominator of which is 365;
|
|
|
|
medical and dental replacement benefits for three years for
Messrs. McCallister, Chapman and Ammann, and Ms. Burke;
|
|
|
|
an additional three years of benefit service under the SERP for
Messrs. McCallister, Chapman and Ammann, and
Ms. Burke, provided, in no event shall such additional
service when added to the executives SERP benefit service
credit exceed the maximum of 30 years; and
|
|
|
|
outplacement services of up to $25,000; provided such services
must be incurred by the executive within 12 months of his
or her termination.
|
If a change in control payment exceeds the limit for deductible
payments under Section 280G of the Internal Revenue Code by
10% or more, reimbursement will be made for the full amount of
any excise taxes imposed on severance payments and any other
payments under Section 4999 of the Internal Revenue Code
and for all taxes due on the amount of that reimbursement. This
excise tax
gross-up
provision is intended to preserve the level of
change-in-control
severance protections that we have determined to be appropriate.
Following a change in control: (i) 50% of a Named Executive
Officers outstanding options would become immediately
vested and exercisable, and the remaining 50% would become
immediately vested and exercisable upon certain qualified
terminations of employment, and (ii) 50% of such
officers outstanding awards that had performance based
vesting conditions would become immediately fully vested at
target levels, with the other 50% becoming vested at target
levels upon certain qualified terminations of employment.
Together, the CIC Plan and the CIC Policy provide that a
qualified termination triggers the receipt of
severance benefits. Generally, a qualified
termination means any termination of employment by a
participant in the CIC Plan that is not initiated by the Company
and that is caused by any one or more of the following events,
if such event occurs during the change in control effective
period:
|
|
|
|
|
assignment to the participant, without his or her consent, of
duties inconsistent in any material respect with the
executives then current position or duties (including, for
Messrs. McCallister, Chapman, Ammann and Ms. Burke,
not having their current position at the most senior resulting
entity following the change in control), or any other action by
the company which would cause him or her to violate ethical or
professional obligations, or which results in a significant
diminution in such position or duties;
|
|
|
|
the participant, without his or her consent, being required to
relocate to a principal place of employment that is both more
than 35 miles from his or her existing principal place of
employment, and farther from the participants current
residence than his or her existing principal place of employment;
|
|
|
|
the Company materially reduces, without his or her consent, the
participants base salary rate or target bonus opportunity,
or materially reduces the aggregate value of other incentives
and retirement opportunity, or fails to allow the participant to
participate in all welfare benefit plans,
|
41
|
|
|
|
|
incentive, savings and retirement plan, fringe benefit plans and
vacation benefits applicable to other senior executives; or
|
|
|
|
|
|
the Company fails to obtain a satisfactory agreement from any
successor entity to assume and agree to perform the
Companys obligations to the Named Executive Officer under
the CIC Plan.
|
A Named Executive Officer will not be able to receive severance
benefits for a qualified termination if the executive continues
in employment with the Company for more than 90 days
following the later of the occurrence or knowledge of an event
or events that would constitute a qualified termination. Also,
the Named Executive Officer will not be entitled to receive
severance benefits under the CIC Plan if the Named Executive
Officers employment with the Company terminates because of
a change in control and the Named Executive Officer accepts
employment, or has the opportunity to continue employment, with
a successor entity (other than under terms and conditions which
would constitute a qualified termination).
The levels of
change-in-control
payments were developed in prior years and were either
reaffirmed or adjusted after a thorough reevaluation of such
protection by the Human Resources Committee of the Board of
Directors (the HR Committee) in 2006. That
reevaluation included input from the HR Committees
executive compensation consultant and considered both market
practice and best practice. The circumstances and payments of
compensation following a change in control are provided by the
CIC Plan. In approving the CIC Plan, the HR Committee considered
data provided by its consultant regarding competitive market
practices regarding
change-in-control
benefits for senior executives. The HR Committee also considered
the corporate and shareholder value of retaining certain
executives following a
change-in-control.
The multiples of pay for various levels of officers reflect the
HR Committees judgment that those levels are fair,
appropriate and reasonable for each officer.
In determining the appropriate payment and benefit levels under
the CIC Plan, the HR Committee also considered the potential
importance of retaining certain executives following a
change-in-control
to assist in a successful transition to a new organization and
management. The CIC Plan is intended in part to provide some
protection of employment and benefits for executives who agree
to remain with a new organization following a
change-in-control.
The CIC Plan is a material part of our total compensation
program. Each component of this program, including base salary,
incentives, retirement benefits and the CIC Plan, has been
designed to meet certain unique purposes. In the absence of a
CIC Plan, it is unlikely that other elements of the total
compensation program would have been different to offset the
risk posed by the lack of a CIC Plan. The reason for this is
that no other element of compensation can achieve the aims of
the CIC Plan.
The severance benefits available under the CIC Plan are not
additive or cumulative to severance or termination benefits that
a Named Executive Officer might also be entitled to receive
under the terms of any other arrangement or agreement with the
Company. As a condition of participating in the CIC Plan, the
Named Executive Officer must expressly agree that the CIC Plan
supersedes all prior plans or agreements providing for severance
benefits.
42
The following table lists the amounts the Named Executive
Officers were eligible to receive from the Company under the CIC
Plan if a change in control had occurred and the Named Executive
Officers employment was terminated either involuntarily
without cause or as a result of a good reason termination
effective as of September 30, 2009, the end of our 2009
fiscal year. The amounts would be payable in a single lump sum
and, to the extent required to comply with Section 409A of
the Internal Revenue Code, would not be paid to the Named
Executive Officer prior to the date that is six months from
the date of termination. The calculations in the table below are
based on a common stock price equal to $33.14 per share which
was the closing price of WGL Holdings common stock on
September 30, 2009, which was the last trading day of
fiscal 2009.
Incremental
Payments Due to
Change-In-Control*
(assuming termination of employment on September 30,
2009)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DeGraffenreidt
|
|
Ammann
|
|
McCallister
|
|
Burke
|
|
Chapman
|
|
Cash severance
|
|
$
|
3,876,000
|
|
|
$
|
1,710,000
|
|
|
$
|
2,328,000
|
|
|
$
|
1,413,750
|
|
|
$
|
986,000
|
|
Additional value due to vesting of unvested options
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Additional value due to vesting of unvested performance shares
and units
|
|
$
|
2,765,584
|
|
|
$
|
863,982
|
|
|
$
|
1,363,897
|
|
|
$
|
698,348
|
|
|
$
|
803,500
|
|
Additional SERP amount due to vesting
|
|
$
|
0
|
|
|
$
|
443,192
|
|
|
$
|
618,151
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Additional SERP amount due to service credit
|
|
$
|
0
|
|
|
$
|
189,938
|
|
|
$
|
400,965
|
|
|
$
|
191,540
|
|
|
$
|
0
|
|
Medical and dental continuation
|
|
$
|
73,056
|
|
|
$
|
62,813
|
|
|
$
|
50,058
|
|
|
$
|
50,058
|
|
|
$
|
33,372
|
|
Outplacement (maximum)
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
|
$
|
25,000
|
|
Sec 280(G) excise tax and related
gross-up**
|
|
$
|
0
|
|
|
$
|
1,507,300
|
|
|
$
|
1,928,900
|
|
|
$
|
883,100
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
6,739,640
|
|
|
$
|
4,802,225
|
|
|
$
|
6,714,970
|
|
|
$
|
3,261,796
|
|
|
$
|
1,847,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
SERP calculations were made using a
6.5% discount rate. Medical and dental continuation amounts are
estimates. As a result, the Section 280G excise tax and
related
gross-up
amounts have been rounded.
|
|
**
|
|
This amount represents a
reimbursement to the executive to cover the excise tax paid to
the Internal Revenue Service on the
change-in-control
benefits.
|
All severance benefits payable under the CIC Plan are subject to
each participants compliance with a post-employment
restrictions policy. The policy defines the scope of
restrictions that will apply to post-employment actions
undertaken by executives who receive severance benefits
following a termination of employment. The policy is intended to
protect (i) confidential information belonging to the
Company that the executive had access to and possesses due to
the nature of his or her position and (ii) the competitive
business operations of the Company. The restrictions under the
policy last for one year following the executives date of
termination. The policy prohibits any terminated Named Executive
Officer that receives the severance benefits described above
from soliciting employees or customers and disclosing
confidential information. For the purposes of the
policy, confidential information includes, but is
not limited to non-public information regarding computer
programs, discoveries or improvements, marketing, manufacturing,
or organizational research and development, or business plans;
sales forecasts; personnel information, including the identity
of employees, their responsibilities, competence, abilities, and
compensation; pricing and financial information; current and
prospective customer lists and information on customers or their
employees; information concerning planned or pending
acquisitions or divestitures; and information concerning
purchases of major equipment or property.
43
Incremental
Payments Due to Other Terminations
The Company has no employment contracts and no guaranteed
severance for terminations other than upon a change in control.
Upon retirement, vesting of performance shares and units is at
the discretion of the Human Resources Committee of the board of
directors. The Human Resources Committee has historically not
vested such awards upon retirement.
EQUITY
COMPENSATION PLAN INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
|
|
|
|
|
|
|
remaining available
|
|
|
|
|
|
|
for future issuance
|
|
|
Number of securities
|
|
Weighted-average
|
|
under equity
|
|
|
to be issued upon
|
|
exercise price of
|
|
compensation plans
|
|
|
exercise of
|
|
outstanding
|
|
(excluding
|
|
|
outstanding options,
|
|
options, warrants
|
|
securities reflected
|
|
|
warrants and rights
|
|
and rights
|
|
in column (a))
|
Plan Category
|
|
(a)
|
|
(b)
|
|
(c)*
|
|
Equity compensation plans approved by security holders
|
|
|
846,207
|
|
|
$
|
30.74
|
|
|
|
1,300,099
|
|
Equity compensation plans not approved by security holders
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Total
|
|
|
846,207
|
|
|
$
|
30.74
|
|
|
|
1,300,099
|
|
|
|
|
*
|
|
The number of securities remaining
available for future issuance under the 1999 Incentive
Compensation Plan is reduced upon the issuance of securities,
not at the time of grant.
|
The above table presents information regarding compensation
plans under which common stock may be issued to employees and
non-employees as compensation. The Company currently has three
such plans: the Directors Stock Compensation Plan, the
1999 Incentive Compensation Plan and the WGL Holdings Omnibus
Incentive Compensation Plan. Effective March 1, 2007, no
further awards will be made under the 1999 Incentive
Compensation Plan. Total shares shown in the above table include
19,583 shares available for future issuance under the
Directors Stock Compensation Plan, 426,723 shares
available upon the vesting of performance shares and exercise of
stock options shares under the 1999 Plan and
1,700,000 shares available for future issuance under the
Omnibus Incentive Compensation. Performance shares that may be
issued under the Omnibus Incentive Compensation Plan are
calculated under a formula that enables a determination of the
minimum and maximum number of performance shares that may be
issued. This formula is further described above in this proxy
statement in the Compensation Discussion and Analysis section
under the caption, Long-Term Incentive Compensation.
44
AUDIT COMMITTEE
REPORT
The Audit Committee of the Board of Directors of the Company is
composed of four directors who are not employees of the Company.
Members of the committee are independent under rules of the
Securities and Exchange Commission and the New York Stock
Exchange. The names of the members of this committee as of the
date of this proxy statement appear at the end of this report.
The Audit Committee oversees the Companys financial
reporting process on behalf of the Companys Board of
Directors and is directly responsible for the appointment,
compensation and oversight of the Companys independent
public accountants. The committee maintains a charter that
outlines its responsibilities. The committee met five times
during fiscal year 2009.
The Audit Committee has implemented the requirements of the
Sarbanes-Oxley Act of 2002 and rules of the New York Stock
Exchange with respect to the responsibilities of audit
committees of public companies. Among other matters, the Audit
Committee reviews procedures on internal control over financial
reporting with management and with the Companys
independent public accountants. The Audit Committee and the
Companys full board of directors are committed to
compliance with all provisions of that statute and related
regulations. Further actions have been taken by the Audit
Committee and the board of directors as statutory and regulatory
provisions became effective for audit committees and independent
auditors.
The Audit Committee reviewed and discussed the Companys
audited financial statements with management of the Company and
the independent public accountants. The Audit Committee
discussed with the Companys internal auditor and the
independent public accountants the overall scope and specific
plans for their respective audits and the adequacy of the
Companys internal controls.
The Audit Committee discussed with the independent public
accountants those matters required to be discussed by Statement
on Auditing Standards No. 61, as amended (AICPA,
Professional Standards, Vol. 1, AU section 380), as
adopted by the Public Company Accounting Oversight Board in
Rule 3200T). The committee received the written disclosures
and the letter from the independent public accountants required
by the applicable requirements of the Public Company Accounting
Oversight Board regarding the independent accountants
communications with the audit committee concerning independence,
and has discussed with the independent accountant the
independent accountants independence.
Based on the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited
financial statements be included in the Companys Annual
Report on
Form 10-K
for the year ended September 30, 2009, for filing with the
Securities and Exchange Commission.
AUDIT COMMITTEE
Karen Hastie Williams (Chair)
George P. Clancy, Jr.
Melvyn J. Estrin
James F. Lafond
45
FISCAL YEARS 2009
AND 2008 AUDIT FIRM FEE SUMMARY
Deloitte & Touche LLP (Deloitte), the
Companys independent registered public accounting firm,
billed the Company the following fees for fiscal years 2009 and
2008:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Audit Fees
|
|
$
|
1,984,333
|
|
|
$
|
1,999,634
|
|
Audit Related Fees
|
|
|
0
|
|
|
|
0
|
|
Tax Fees
|
|
|
24,000
|
|
|
|
24,000
|
|
All Other Fees
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Total Fees
|
|
$
|
2,008,333
|
|
|
$
|
2,023,634
|
|
|
|
|
|
|
|
|
|
|
Services Provided
by Deloitte
All services rendered by Deloitte are permissible under
applicable laws and regulations and were pre-approved by the
Audit Committee, or by the Chair of the Audit Committee by
delegated authority as required by law. The fees paid to
Deloitte for services are described in the above table under the
categories listed below.
|
|
|
|
1)
|
Audit Fees These are fees for professional services
performed by Deloitte for the audit of the Companys annual
financial statements and review of financial statements included
in the Companys quarterly filings on
Form 10-Q,
and services that are normally provided in connection with
statutory and regulatory filings or engagements. For fiscal
years 2009, and 2008 the total audit fees include $611,841 and
$710,526 respectively, to perform an assessment of the
Companys internal control over financial reporting as
required by Section 404 of the Sarbanes-Oxley Act of 2002.
|
|
|
2)
|
Audit-Related Fees These are fees for services
performed by Deloitte related to the audit.
|
|
|
3)
|
Tax Fees These are fees for professional services
performed by Deloitte with respect to tax compliance, tax advice
and tax planning. This includes review of tax returns for the
Company and its consolidated subsidiaries.
|
|
|
4)
|
All Other Fees These are fees for other permissible
work performed by Deloitte that does not meet the above category
descriptions.
|
These services are actively monitored (as to both spending level
and work content) by the Audit Committee to maintain the
appropriate objectivity and independence in Deloittes core
work, which is the audit of the Companys consolidated
financial statements and the assessment of internal controls in
accordance with Section 404 of the Sarbanes-Oxley Act of
2002.
Pre-approval
policy for audit and non-audit services
In accordance with provisions of the Sarbanes-Oxley Act of 2002,
all audit and non-audit services provided to the Company by its
independent auditors must be pre-approved by the Audit
Committee. As authorized by that statute, the Audit Committee
has delegated authority to the Chair of the Audit Committee to
pre-approve up to $100,000 in audit and non-audit services. This
authority may be exercised when the Audit Committee is not in
session. Any decisions by the Chair of the Audit Committee under
this delegated authority are reported at the next meeting of the
Audit Committee. All services reported in the schedule shown
above for fiscal years 2009 and 2008 were pre-approved by the
full Audit Committee or by the Chair of the Audit Committee, by
delegated authority.
46
PROPOSAL 2
RATIFICATION OF
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
At a meeting held on November 23, 2009, the audit committee
of the board of directors appointed the firm of
Deloitte & Touche LLP, independent public accountants,
to audit the books, records and accounts of the Company for
fiscal year 2010. The board of directors recommends that the
shareholders ratify this appointment.
Representatives of Deloitte & Touche LLP will be
present at the annual meeting with the opportunity to make a
statement if they desire to do so, and will be available to
respond to appropriate questions.
The board of
directors recommends a vote FOR this
proposal.
PROPOSAL 3
APPROVAL OF
DIRECTORS STOCK COMPENSATION PLAN, AS AMENDED AND
RESTATED
The full text of the Directors Stock Compensation Plan,
as amended and restated, is included as Exhibit A to this
Proxy Statement, and the following description is qualified in
its entirety by reference to Exhibit A.
The board of directors of the Company recommends that
shareholders approve the adoption of the Companys
Directors Stock Compensation Plan, as amended and restated
(the Directors Stock Plan). The principal
amendment to the currently effective Directors Stock
Compensation Plan is the authorization of an additional
150,000 shares to the aggregate number of shares of the
Companys common stock reserved for awards, subject to
adjustment for stock dividends, stock splits, consolidations or
other changes in the Companys capitalization. The current
plan has 6,983 shares remaining as reserved shares
available for issuance. If the proposal is approved by
shareholders, the Directors Stock Plan will have
156,983 shares reserved for issuance.
Under the Directors Stock Plan each non-employee director
will continue to receive 1,800 shares annually, subject to
adjustment, and the Directors Stock Plan expressly permits
the board of directors to change the number of shares awarded to
non-employee directors. The amendments also provide that the
Directors Stock Plan will expire on March 4, 2020,
the tenth anniversary of the Directors Stock Plan.
Description of
the Directors Stock Plan
Purposes: The Directors Stock Plan is intended to assist
the Company in promoting the identity of interest between the
Companys non-employee directors and its shareholders. It
also is intended to assist the Company in attracting and
retaining non-employee directors. These purposes are promoted
through use of common stock as a portion of the retainer payable
to non-employee directors.
Awards: Shares of common stock will be awarded to each
non-employee director on January 1 of each year during the term
of the Directors Stock Plan or on such other date as may
be determined by the board of directors. Currently, each
participant receives 1,800 shares of common stock on
January 1 of each year. The board of directors may from time to
time increase or decrease the number of shares to be awarded to
individual participants. The board of directors may grant a
proportionate award to a non-employee director who joins the
board during any year or becomes eligible for an award.
The shares of common stock awarded under the Directors
Stock Plan are non-forfeitable and the participating directors
are immediately and fully vested in those shares. Subject to any
applicable limitations under the securities laws and Company
policies, directors may sell shares issued under the
Directors Stock Plan at any time.
47
Shares Authorized: Up to 156,983 shares of common
stock may be issued under the Directors Stock Plan. This
aggregate limit will be adjusted to reflect stock dividends,
stock splits, consolidations or other changes in the
Companys capitalization. The current plan has
6,983 shares remaining as reserved shares available for
issuance. If the proposal is approved by shareholders, the
Directors Stock Plan will have 156,983 shares
reserved for issuance.
The Companys board of directors may amend or terminate the
Directors Stock Plan at any time. Any amendment will be
subject to shareholder approval if required by law, stock
exchange policy or other determination by the board of directors.
The following table illustrates the total benefits provided to
all non-employee directors under the current Directors
Stock Compensation Plan in fiscal year 2009. There were
1,800 shares of common stock awarded to each non-employee
director under the current Directors Stock Compensation
Plan during fiscal year 2009. An additional 1,800 shares
were awarded to participants of the current Directors
Stock Compensation Plan on January 1, 2010.
New Plan
Benefits
Directors
Stock Compensation Plan
|
|
|
|
|
|
|
|
|
Position
|
|
Value
|
|
Number of Shares
|
|
Non-employee directors
|
|
$
|
412,902
|
|
|
|
12,600 shares
|
|
As of January 4, 2010, the Human Resources Committee of the
Companys board of directors has granted awards with
respect to 113,017 shares of common stock under the current
Directors Stock Compensation Plan. Seven directors are
currently participants in the plan. As of January 4, 2010,
6,983 shares remained available for awards under the
current Directors Stock Compensation Plan. As noted above,
the proposed amendment and restatement would add
150,000 shares to the Directors Stock Plan for a
total reserve as of March 4, 2010 of 156,983 shares.
Vote needed for
Passage of Proposal
To be approved, this proposal must receive more votes cast in
favor of the proposal than the number of votes cast against the
proposal.
The board of directors recommends a vote FOR the
approval of the Directors Stock Compensation Plan, as
amended and restated.
PROPOSAL 4
SHAREHOLDER
PROPOSAL
Mrs. Evelyn Y. Davis, whose address is The Watergate Office
Building, 2600 Virginia Ave., N.W., Suite 215,
Washington, D.C. 20037, has given notice of her intention
to present a proposal for consideration by the shareholders at
the annual meeting. The proposal of Mrs. Davis, who is
owner of record of 280 shares of common stock of the
Company, is set forth below in the form of a resolution along
with her supporting statement.
Your board of directors opposes the adoption of the following
proposal for the reasons stated after the proposal and,
therefore, recommends that shareholders vote AGAINST
the proposal.
RESOLVED, That the stockholders of WGL Holdings assembled
in Annual Meeting in person and by proxy, hereby request the
Board of Directors to take the necessary steps to provide for
cumulative voting in the election of directors, which means each
stockholder shall be entitled to as many votes as shall equal
the number of shares he or she owns multiplied by the number of
directors
48
to be elected, and he or she may cast all of such votes for a
single candidate, or any two or more of them as he or she may
see fit.
REASONS: Many states have mandatory cumulative voting, so
do National Banks. In addition, many corporations
have adopted cumulative voting.
Last year the owners of 15,233,850 shares,
representing approximately 48.49% of the shares voting, voted
FOR my proposal.
If you AGREE, please mark your proxy FOR this
resolution.
Board of Directors Recommendation The board
of directors recommends that shareholders vote
AGAINST this shareholder proposal for the following
reasons:
Your board of directors believes it is important for each member
of the board to represent all shareholders, not just a
particular interest group or faction.
Persons serving on the Companys board of directors have
wide experience in law, accounting, business and finance.
Directors are not elected to represent a particular viewpoint,
and the directors do not believe it is desirable to select
candidates for election in that manner.
These objectives of your directors are fundamentally different
from the objectives of a cumulative voting procedure. Cumulative
voting could permit a relatively small group of shareholders to
elect a particular director. A director elected through
cumulative voting might therefore become (or appear to become)
an advocate for a particular shareholder or shareholders. This
result could be directly opposite to the purpose of having each
member of your board of directors represent all shareholders.
Cumulative voting for directors could also result in factions
and interest groups being created in the board, causing
significant interference with the board deliberative process.
For these reasons, the board of directors and the management
oppose the proposed resolution.
Mrs. Davis has submitted substantially the same proposal
each year since 1986 and it has been defeated by our
shareholders each year.
For the above reasons, the board of directors recommends that
shareholders vote AGAINST proposal #4.
OTHER
MATTERS
The board of directors knows of no other matters to be brought
before the annual meeting. However, if any other matters come
before the meeting, it is the intention of the persons named in
the enclosed proxy card to vote in accordance with their best
judgment on such matters.
The annual report for fiscal year 2009, including financial
statements, was posted to our web site www.wglholdings.com on
January 19, 2010.
Upon written request, the Company will furnish without charge a
copy of its most recent annual report on
Form 10-K.
Please direct these requests to: Robert Dennis,
Director Investor Relations, WGL Holdings, Inc., 101
Constitution Ave., N.W., Washington, D.C. 20080.
SHAREHOLDER
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any shareholder who wishes to submit a proposal for printing in
the Companys proxy statement for the annual meeting of
shareholders to be held in year 2011 (expected to be held in
March 2011) must submit that proposal so it is received by
the Companys corporate secretary no later than the close
of business on September 21, 2010. To be included in the
Companys proxy statement, the shareholder proposal must
meet the requirements of the applicable rules of the Securities
and Exchange Commission. Proposals should be addressed to the
Corporate Secretary, WGL Holdings, Inc., 101 Constitution Ave.,
N.W., Washington, D.C. 20080.
49
Other business matters to be brought by shareholders, including
any nominations for board membership, can only be considered at
the shareholder meeting in accordance with advance notice
provisions of the Companys bylaws. Notice of these matters
must be received by the Companys corporate secretary not
less than sixty (60) calendar days prior to the scheduled
date of the next annual meeting of shareholders, or
January 3, 2011, assuming the next annual meeting of
shareholders is held on March 4, 2011. Notice of such
matters should be addressed to the corporate secretary, WGL
Holdings, Inc., 101 Constitution Ave., N.W.,
Washington, D.C. 20080. A copy of the corporate bylaws
which describes the advance notice procedures can be obtained
from the corporate secretary at the address shown in this
paragraph.
By order of the board of directors,
Douglas V. Pope
Secretary
January 19, 2010
50
Exhibit A
WGL HOLDINGS,
INC.
DIRECTORS
STOCK COMPENSATION PLAN,
as amended and
restated
ARTICLE I
DEFINITIONS
1.01 Affiliate means any subsidiary or
parent corporation of the Company (as such terms are
defined in section 424 of the Code).
1.02 Board means the Board of Directors of the
Company.
1.03 Code means the Internal Revenue Code of 1986,
as amended.
1.04 Common Stock means the common stock of the
Company.
1.05 Company means WGL Holdings, Inc. and includes
any predecessor or successor in interest.
1.06 Date of Award means each January 1 or such
other date as determined by the Board during the term of the
Plan.
1.07 Participant means a member of the Board who
satisfies the requirements of Article IV.
1.08 Plan means the WGL Holdings, Inc.
Directors Stock Compensation Plan, as amended and restated.
ARTICLE II
PURPOSES
The Plan is intended to assist the Company in promoting a
greater identity of interest between the Companys
non-employee directors and its shareholders, and to assist the
Company in attracting and retaining non-employee directors by
affording Participants an opportunity to share in the future
success of the Company.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Human Resources Committee
of the Board, or such other person or group as the Board may
designate, in a manner that is consistent with the provisions of
this Plan. The person or group administering the Plan shall not
be liable for any act done in good faith with respect to this
Plan. All expenses of administering this Plan shall be borne by
the Company and its Affiliates.
ARTICLE IV
ELIGIBILITY
Each member of the Board who is not an employee of the Company
or an Affiliate, and who has not been employed by the Company or
any of its Affiliates during the twelve months preceding the
Date of Award will participate in the Plan during his or her
service on the Board.
A-1
ARTICLE V
AWARDS
Shares of Common Stock will be awarded to each Participant as of
each Date of Award. Subject to Article VIIIs
limitation on the number of shares of Common Stock which may be
issued under the Plan, on each Date of Award each Participant
will be awarded 1,800 shares of common stock, as may be
adjusted under Article VIII. The Board may from time to
time increase or decrease the number of shares to be awarded to
individual Participants under the Plan. The Board may grant a
proportionate award to a Participant who joins the Board or
becomes eligible for an award during any year.
ARTICLE VI
VESTING OF SHARES
The shares of Common Stock awarded under the Plan will be
immediately vested and nonforfeitable. Subject to the
requirements of Article IX, the shares awarded under the
Plan may be sold or transferred by the Participant at any time.
ARTICLE VII
SHAREHOLDER RIGHTS
Participants will have all the rights of shareholders with
respect to shares of Common Stock awarded under the Plan.
Accordingly, Participants will be entitled to vote the shares
and receive dividends.
ARTICLE VIII
SHARES AUTHORIZED
Up to one hundred fifty-six thousand nine hundred eighty-three
(156,983) shares of Common Stock may be awarded under the Plan.
If the Company effects one or more stock dividends, stock
split-ups,
subdivisions, reclassifications, or consolidations of shares, or
other similar changes in capitalization after the Plans
adoption by the Board, the maximum number of shares that may be
awarded under the Plan shall be proportionately adjusted.
ARTICLE IX
COMPLIANCE WITH LAW
AND APPROVAL OF REGULATORY BODIES
No Common Stock shall be awarded and no certificates for shares
of Common Stock shall be delivered under the Plan except in
compliance with all applicable federal and state laws and
regulations, any listing agreement to which the Company is a
party, and the rules of all domestic stock exchanges on which
the Companys shares may be listed. The Company shall have
the right to rely on the opinion of its counsel as to such
compliance. Any share certificate issued to evidence Common
Stock issued under the Plan may bear such legends and statements
as the Company may deem advisable to assure compliance with
federal and state law and regulations. No Common Stock shall be
awarded and no certificates for shares of Common Stock shall be
delivered until the Company has obtained such consent or
approval as it may deem advisable from regulatory bodies having
jurisdiction over such matters.
A-2
ARTICLE X
GENERAL PROVISIONS
10.01 Unfunded Plan. The Plan, insofar as
it provides for awards, shall be unfunded, and the Company shall
not be required to segregate any assets that may at any time be
represented by awards under the Plan. Any liability of the
Company to any person with respect to any award under the Plan
shall be based solely upon any contractual obligations that may
be created pursuant to the Plan. No such obligation of the
Company shall be deemed to be secured by any pledge of, or other
encumbrance on, any property of the Company.
10.02 Rules of Construction. Headings are
given to the articles and sections of the Plan solely as a
convenience to facilitate reference. The references to any
statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such
provisions of law.
ARTICLE XI
AMENDMENT OF PLAN
The Board may amend the Plan from time to time. No amendment may
become effective until shareholder approval is obtained if such
approval is required by any federal or state law or regulation
or the rules of any stock exchange on which the Common Stock may
be listed, or if the Board in its discretion determines that the
obtaining of such shareholder approval is for any reason
advisable. No amendment shall, without a Participants
consent, adversely affect any rights of such Participant under
any award outstanding at the time such amendment is made.
ARTICLE XII
DURATION OF PLAN
The Plan will expire on March 4, 2020, the tenth
anniversary of its amendment and restatement by shareholders, if
not previously terminated by the Board or by the shareholders.
ARTICLE XIII
EFFECTIVE DATE OF
PLAN
The Plan will become effective once it is adopted by the Board
and approved by a majority of the votes cast at a duly held
shareholders meeting at which a quorum representing a
majority of all outstanding voting stock is, either in person or
by proxy, present and voting on the Plan. No awards will be made
under the Plan prior to approval of the Plan by the
Companys shareholders.
A-3
VOTE
BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information until 11:59 P.M. Eastern
Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and
follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY
MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all
future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for
electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you
agree to receive or access proxy materials electronically in future years.
VOTE
BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS: |
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M18175-P86561 |
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS
VALID ONLY WHEN SIGNED AND DATED.
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WGL HOLDINGS, INC. |
For |
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Withhold
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For All
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To withhold
authority to vote for any individual nominee(s),
mark For All Except
and write the number(s) of the
nominee(s) on the line below.
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All |
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Except
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The Board of Directors recommends that you
vote FOR the following: |
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Vote on Directors |
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1. |
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Election of Directors |
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Nominees: |
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01) Michael D. Barnes |
05) James F. Lafond |
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02) George P. Clancy, Jr. |
06) Debra L. Lee |
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03) James W. Dyke, Jr. |
07) Terry D. McCallister |
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04) Melvyn J. Estrin |
08) Karen Hastie Williams |
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Vote on Proposals |
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The Board of
Directors recommends you vote FOR the following proposal(s): |
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Abstain
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Proposal to ratify the appointment of
Deloitte & Touche LLP as independent public accountants for fiscal year 2010. |
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3. |
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Proposal to approve the Directors Stock
Compensation Plan, as amended and restated. |
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The Board of Directors recommends you vote AGAINST the following
proposal: |
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Proposal to provide for cumulative voting in
the election of directors. |
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5. |
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In their discretion, upon such other matters
that may properly come before the meeting or any adjournment or adjournments thereof. |
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For address changes and/or comments, please check this box and
write them on the back where indicated.
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The shares represented by this proxy, when properly executed, will be
voted in the manner directed herein by the undersigned Shareholder(s). If no direction is made, this proxy will
be voted FOR items 1, 2, and
3, and AGAINST item 4. If any other matters properly come before the meeting, the persons named
in this proxy will vote in their discretion.
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Signature [PLEASE SIGN WITHIN BOX] |
Date |
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Signature (Joint Owners) |
Date
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Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
M18176-P86561
WGL HOLDINGS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL
MEETING OF SHAREHOLDERS
MARCH 4, 2010
The shareholder(s) hereby appoint(s) Terry D. McCallister, Adrian P.
Chapman and Vincent L. Ammann, Jr., or any of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on the reverse side of this proxy, all of the shares of
common stock of WGL Holdings, Inc. that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders to
be held at 10:00 a.m., Eastern Time on March 4, 2010, at the National Press Club, 529 14th St., NW, Washington, DC 20045,
and any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS, FOR
PROPOSALS 2 AND 3, AND AGAINST PROPOSAL 4.
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE
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Address Changes/Comments: |
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(If you noted any Address Changes/Comments above, please mark
corresponding box on the reverse side.)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE