Atmos Energy 1998 Annual Report Download - page 42

employee, executive and non-employee director compensation
and benefits. The LTIP is a comprehensive, long-term incentive
compensation plan, providing for discretionary awards of incen-
tive stock options, non-qualified stock options, stock appreciation
rights, bonus stock, restricted stock and performance-based stock
to help attract, retain, and reward employees and non-employee
directors of the Company and its subsidiaries. The maximum
aggregate number of shares that may by issued under the LTIP
shall not exceed 1,500,000 shares of common stock.
10 EMPLOYEE RETIREMENT AND STOCK
OWNERSHIP PLANS
In fiscal 1998, the Company adopted SFAS No. 132, “Employers
Disclosures about Pensions and Other Postretirement Benefits.”
The Statement revises employers’ disclosures about pension and
other postretirement benefit plans. It does not change the meas-
urement or recognition of those plans. Disclosures for earlier
periods have been restated as required by SFAS No. 132.
Defined Benefit Plans As of September 30,1998, the Company had
four defined benefit pension plans, covering the Western Kentucky
Division employees, the Greeley Division employees, the United
Cities Division employees, and the fourth covering all other Atmos
employees. The plans provide similar benefits to all employees.
Prior to January 1,1999, the benefits are based upon years of
service and the highest paid five consecutive calendar years of
compensation within the last 10 years of employment.
Effective January 1,1999, the plans will be merged into the
Western Kentucky Gas plan, and will be known as the Pension
Account Plan which will cover all employees of the Company.
Participants will have an opening account balance established for
them as of January 1,1999 equal to the present value of their
respective accrued benefits under the pension plans as of
December 31,1998. The Pension Account Plan will credit an allo-
cation to each participant’s account at the end of each year
according to a formula based on his age, service and total pay
(excluding incentive pay).
The Pension Account Plan provides for an additional annual
allocation based upon a participant’s age as of January 1,1999 for
those participants who were participants in the prior pension
plans. The plan will credit this additional allocation each year
through December 31,2008. In addition, at the end of each year,
a participant’s account will be credited with interest on the
employee’s prior year account balance. A special grandfather ben-
efit also applies through December 31,2008, for participants who
will be at least age 50 as of January 1,1999, and who were partici-
pants in one of the prior plans on December 31,1998.
Participants are fully vested in their account balances after five
years of service and may choose to receive their account balances
as a lump sum or an annuity. The obligations shown as of
September 30,1998 anticipate the changes which will be effective
January 1,1999.
The Company’s funding policy is to contribute annually an
amount in accordance with the requirements of the Employee
Retirement Income Security Act of 1974. Contributions are
intended to provide not only for benefits attributed to service to
date but also for those expected to be earned in the future.
Supplemental Executive Benefits Plan The Company has a non-
qualified Supplemental Executive Benefits Plan (“Supplemental
Plan”) which provides additional pension, disability and death
benefits to the officers and certain other employees of the
Company. The supplemental plan was amended and restated in
November 1997. In addition, in August 1998, the Company
adopted the Performance-Based Supplemental Executive Benefits
Plan, which will cover all employees who become officers or
business unit presidents after August 12,1998.
The following table sets forth the combined total for the four
defined benefit pension plans and the Supplemental Plan’s funded
status for 1998 and 1997:
1998 1997
Change in benefit obligation:
Benefit obligation at beginning of year $247,948 $235,943
Service cost 5,761 6,124
Interest cost 17,901 16,054
Curtailments/Special termination benefits (2,645) 4,557
Plan amendments (14,041) 2,314
Actuarial (gain)/loss 15,028 (6,561)
Benefits paid (14,937) (10,483)
Benefit obligation at end of year 255,015 247,948
Change in plan assets:
Fair value of plan assets at beginning of year 259,852 224,699
Actual return on plan assets 40,062 42,416
Employer contribution 1,731 3,219
Benefits paid (14,937) (10,482)
Fair value of plan assets at end of year 286,708 259,852
Funded status 31,693 11,904
Unrecognized transition asset (294) (414)
Unrecognized prior service cost (524) 13,490
Unrecognized net (gain)/loss (38,844) (35,681)
Accrued pension cost
(net amount recognized) $ (7,969) $ (10,701)
38 ATMOS ENERGY CORPORATION