Edgar Filing: ATMOS ENERGY CORP

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12

Definitive Proxy Statement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

(Amendment No. )

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Atmos Energy Corporation

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LOGO

December 22, 2011

Dear Atmos Energy Shareholder:

You are cordially invited to attend the annual meeting of shareholders on Wednesday, February 8, 2012, at 9:30 a.m. Central Standard Time. The meeting will be held in the Lincoln Ballroom at the Hilton Hotel Lincoln Centre, 5410 LBJ Freeway, Dallas, Texas 75240.

The matters to be acted upon at the meeting are described in the Notice of Annual Meeting of Shareholders and Proxy Statement. In addition, we will review the affairs and progress of the Company during the past year and discuss the results of operations for the first quarter of our 2012 fiscal year.

Your vote is very important, regardless of the number of shares you hold. Whether or not you plan to attend the meeting in person, please cast your vote, as instructed in the Notice of Internet Availability of Proxy Materials (“Notice”) or proxy card, over the Internet, by telephone or on the proxy card, as promptly as possible. If you received only a Notice in the mail or by electronic mail, you may also request a paper proxy card to submit your vote by mail, if you prefer. However, we encourage you to vote over the Internet or by telephone because it is more convenient and saves printing costs and postage fees, as well as natural resources.

On behalf of your Board of Directors, thank you for your continued support and interest in Atmos Energy Corporation.


Sincerely,


Robert W. Best				Kim R. Cocklin
Executive Chairman of the Board				President and Chief Executive Officer

ATMOS ENERGY CORPORATION

P.O. Box 650205

Dallas, Texas 75265-0205

NOTICE OF ANNUAL MEETING

OF SHAREHOLDERS

To Our Shareholders:

The annual meeting of the shareholders of Atmos Energy Corporation will be held in the Lincoln Ballroom at the Hilton Hotel Lincoln Centre, 5410 LBJ Freeway, Dallas, Texas 75240 on Wednesday, February 8, 2012, at 9:30 a.m. Central Standard Time for the following purposes:

To elect eight directors for one-year terms expiring in 2013;

To ratify the Audit Committee’s appointment of Ernst & Young LLP (“Ernst & Young”) to serve as the Company’s independent registered public accounting firm for fiscal 2012;

To act upon a proposal for a non-binding, advisory vote by the shareholders to approve the compensation of the named executive officers of the Company for fiscal 2011 (“Say on Pay”); and

To transact such other business as may properly come before the meeting or any adjournment thereof.

Shareholders of record of our common stock at the close of business on December 12, 2011, will be entitled to notice of, and to vote at, such meeting. The stock transfer books will not be closed. Your vote is very important to us. Regardless of the number of shares you own, please vote. All shareholders of record may vote (i) over the Internet, (ii) by toll-free telephone (please see the proxy card for instructions), (iii) by written proxy by signing and dating the proxy card and mailing it to us or (iv) by attending the annual meeting and voting in person. These various options for voting are described in the Notice or proxy card. For all shareholders who participate in our Retirement Savings Plan and Trust (“RSP”), your vote over the Internet, by telephone or on your proxy card will serve as voting instructions to the trustee of the RSP. If you have shares of our common stock issued to you under the RSP, only the trustee may vote your plan shares even if you attend the annual meeting in person.

All shareholders who hold their shares in “street name” in the name of a broker, bank or other nominee (“broker”) may submit their written votes through voting instruction forms provided by their brokers. If you hold your shares in street name, you may also generally vote your proxy over the Internet or by telephone, in accordance with voting instructions provided by your broker. Pursuant to recent amendments of the rules of the New York Stock Exchange (“NYSE”), brokers no longer have the discretion to vote the shares of customers who fail to provide voting instructions on any of the proposals listed above except the proposal to ratify the Audit Committee’s appointment of Ernst & Young to serve as the Company’s independent registered public accounting firm for fiscal 2012. Therefore, if you do not provide instructions to your broker to vote your shares, the broker may vote your shares only on that one proposal at our annual meeting. In addition, if you own your shares in street name and you intend to vote in person at the meeting, you must first obtain a legal proxy from your broker and bring that legal proxy to the annual meeting.

We encourage you to receive all proxy materials in the future electronically to help us save printing costs and postage fees, as well as natural resources in producing and distributing these materials. If you wish to receive these materials electronically next year, please follow the instructions on the proxy card or on our website at www.atmosenergy.com.

By Order of the Board of Directors,

Dwala Kuhn

Corporate Secretary

December 22, 2011

TABLE OF CONTENTS


	Page
GENERAL MEETING MATTERS		1
Date, Time, Place and Purpose of Meeting		1
Internet Availability of Proxy Materials		1
Revocability and Voting of Proxies		1
Solicitation of Proxies		2
Common Stock Information; Record Date		2
Quorum Requirement		2
Broker Non-Votes and Vote Required		2
CORPORATE GOVERNANCE AND OTHER BOARD MATTERS		3
Corporate Governance		3
Independence of Directors		3
Related Person Transactions		4
Board Leadership Structure		6
Risk Oversight Process		7
Lead Director and Communications with Directors		8
Committees of the Board of Directors		9
Other Board and Board Committee Matters		10
Independence of Audit Committee Members, Financial Literacy and Audit Committee Financial Experts		10
Audit Committee Pre-Approval Policy		11
Compensation Risk Assessment		12
PROPOSAL ONE—ELECTION OF DIRECTORS		13
Background		13
Procedures for Nomination of Candidates for Director		13
Qualifications for Directors		14
Nominees for Director		15
Directors Continuing in Office		19
DIRECTOR COMPENSATION		20
Annual Compensation		20
Long-Term Compensation		21
Summary of Cash and Other Compensation		22
Director Deferred Board Fees		23
Director Share Units and Stock-for-Fee Awards		23
BENEFICIAL OWNERSHIP OF COMMON STOCK		24
Security Ownership of Certain Beneficial Owners		24
Security Ownership of Management and Directors		25
Section 16(a) Beneficial Ownership Reporting Compliance		25
HUMAN RESOURCES COMMITTEE REPORT		26
COMPENSATION DISCUSSION AND ANALYSIS		26
Executive Summary		26
Executive Compensation Objectives and Strategy		28
Elements of Executive Compensation		29
Additional Information on Executive Compensation		34
Competitive Compensation Benchmarking		35
Executive Compensation Consultants		37


	Page
Management’s Role in Setting Executive Compensation		37
Executive Compensation Recoupment Policy		37
Policy Prohibiting Hedging-Related Transactions		38
Share Ownership Guidelines		38
NAMED EXECUTIVE OFFICER COMPENSATION		39
Summary of Cash and Other Compensation		39
1998 Long-Term Incentive Plan		41
Grants of Plan-Based Awards		43
Outstanding Equity Awards		44
Option Exercises and Stock Vested		45
Pension Benefits		46
Retirement Plans		46
Change in Control Severance Agreements		48
Potential Payments Upon Termination or Change in Control		49
AUDIT COMMITTEE REPORT		54
PROPOSAL TWO—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		56
Audit and Related Fees		56
PROPOSAL THREE—NON-BINDING, ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION		57
Background of the Proposal		57
Executive Compensation		57
OTHER MATTERS		59
Shareholder Proposals		59
Other Business		59
Annual Report		59

ATMOS ENERGY CORPORATION

P.O. Box 650205

Dallas, Texas 75265-0205

PROXY STATEMENT

for the

2012 ANNUAL MEETING OF SHAREHOLDERS

to be Held on February 8, 2012

GENERAL MEETING MATTERS

Date, Time, Place and Purpose of Meeting

Our 2012 annual meeting of shareholders will be held on Wednesday, February 8, 2012, at 9:30 a.m. Central Standard Time in the Lincoln Ballroom at the Hilton Hotel Lincoln Centre, 5410 LBJ Freeway, Dallas, Texas 75240. The purpose of the 2012 annual meeting is set forth in the Notice of Annual Meeting of Shareholders to which this proxy statement is attached. Atmos Energy Corporation is referred to as “Atmos Energy,” the “Company,” “our,” “us” or “we” in this proxy statement.

Internet Availability of Proxy Materials

Under rules of the U.S. Securities and Exchange Commission (“SEC”), we are furnishing proxy materials to our shareholders primarily over the Internet, rather than mailing paper copies of the materials (including our Summary Annual Report and Annual Report on Form 10-K for fiscal 2011) to each shareholder. If you received only a Notice by mail or electronic mail, you will not receive a paper copy of these proxy materials unless you request one. Instead, the Notice will instruct you as to how you may access and review the proxy materials on the Internet. The Notice will also instruct you as to how you may access your proxy card to vote over the Internet. If you received a Notice by mail or electronic mail and would like to receive a paper copy of our proxy materials, free of charge, please follow the instructions included in the Notice.

We anticipate that the Notice will be mailed to our shareholders on or about December 22, 2011, and will be sent by electronic mail to our shareholders who have opted for such means of delivery on or about December 23, 2011.

Revocability and Voting of Proxies

Any shareholder of record giving a proxy has the power to revoke the proxy at any time prior to its exercise by (1) submitting a new proxy with a later date, including a proxy given over the Internet or by telephone; (2) notifying our Corporate Secretary in writing before the meeting; or (3) voting in person at the meeting. Any shareholder owning shares in street name who wishes to revoke voting instructions previously given to a broker should contact such broker for further instructions. An independent inspector will count the votes. Your vote will not be disclosed to us and will remain confidential except under special circumstances. For example, a copy of your proxy card will be sent to us if you add any written comments to the card. If you are a shareholder of record and give us your signed proxy, but do not specify how to vote on any particular proposal, we will vote your shares in favor of the nominees for the election of directors (see “Proposal One—Election of Directors,” beginning on page 13), in favor of the proposal to ratify the Audit Committee’s appointment of Ernst & Young as the independent registered public accounting firm for the Company for fiscal 2012 (see “Proposal Two—Ratification of Appointment of Independent Registered Public Accounting Firm” on page 56) and in favor of the advisory proposal to approve executive compensation for fiscal 2011 (see “Proposal Three—Non-Binding, Advisory Vote on Approval of Executive Compensation,” beginning on page 57).

Solicitation of Proxies

The proxy accompanying this statement is solicited by the management of the Company at the direction of our Board of Directors. It is expected that these materials will be first sent to our shareholders on or about December 22, 2011. We expect to solicit proxies primarily by mail, but our directors, officers, employees and agents may also solicit proxies in person or by telephone or other electronic means. We will pay for all costs of preparing, assembling and distributing the proxies and accompanying materials for the annual meeting of shareholders, including the costs of reimbursing brokers for forwarding proxies and proxy materials to their principals. We will ask brokers to prepare and send a Notice to customers or clients for whom they hold shares and forward copies of the proxy materials to such beneficial owners who request a paper copy. In addition, Morrow & Co., LLC, 470 West Avenue, Stamford, Connecticut 06902 (“Morrow”) will assist us in the solicitation of proxies. We will pay approximately $7,500 in fees, plus expenses and disbursements, to Morrow for its proxy solicitation services.

Common Stock Information; Record Date

As of December 12, 2011, our record date, there were 90,218,531 shares of our common stock, no par value, issued and outstanding, all of which are entitled to vote. These shares constitute the only class of our stock issued and outstanding. As stated in the Notice, only shareholders of record at the close of business on December 12, 2011, will be entitled to vote at the meeting. Each share is entitled to one vote.

Quorum Requirement

Our bylaws provide that if the holders of a majority of the issued and outstanding shares of our common stock entitled to vote are present in person or represented by proxy, there will be a quorum. The aggregate number of votes entitled to be cast by all shareholders present in person or represented by proxy at the annual meeting, whether those shareholders vote for, against or abstain from voting on any matter, will be counted for purposes of determining whether a quorum exists. Broker non-votes, which are described below, will also be considered present for purposes of determining whether a quorum exists.

Broker Non-Votes and Vote Required

If a broker holds your shares and you have previously elected to receive a paper copy of your proxy materials, this proxy statement and other proxy materials have been sent to your broker. You may have received this proxy statement directly from your broker, together with instructions as to how to direct the broker to vote your shares. If you desire to have your vote counted, it is important that you return your voting instructions to your broker. Rules of the NYSE determine whether proposals presented at shareholder meetings are considered “routine” or “non-routine.” If a proposal is routine, a broker holding shares for an owner in street name may vote on the proposal without voting instructions from the owner. If a proposal is non-routine, the broker may vote on the proposal only if the owner has provided voting instructions. A “broker non-vote” occurs when the broker is unable to vote on a proposal because the proposal is non-routine and the owner does not provide instructions. Broker non-votes have no effect on the vote on such a proposal because they are not considered present and entitled to vote. Proposals One and Three are considered non-routine proposals. Therefore, brokers may vote on these proposals only if voting instructions are provided by the owner of the shares. Only Proposal Two, the proposal to ratify the appointment of Ernst & Young as the independent registered

public accounting firm for the Company for fiscal 2012, is considered a routine proposal under the rules of the NYSE. As a result, brokers holding shares for an owner in street name may vote on Proposal Two, even if no voting instructions are provided by the owner of the shares.

For all proposals, the number of votes required for approval is a majority of the shares of our common stock present or represented by proxy and entitled to vote at the meeting. Abstentions will have the same effect as an “against” vote but, as discussed above, broker non-votes will have no effect on the vote for these proposals. If any other proposals are properly presented to the shareholders at the meeting, the number of votes required for approval will depend on the nature of the proposal. Generally, under Texas and Virginia law and our bylaws, the number of votes required to approve a proposal is a majority of the shares of common stock present or represented by proxy and entitled to vote at the meeting. The proxy gives discretionary authority to the proxy holders to vote on any matter not included in this proxy statement that is properly presented to the shareholders at the meeting. The persons named as proxies on the proxy card are Robert W. Best, Executive Chairman, Charles K. Vaughan, Director and Lead Director and Nancy K. Quinn, Director and Chair of the Audit Committee.

CORPORATE GOVERNANCE AND OTHER BOARD MATTERS

Corporate Governance

In accordance with, and pursuant to, the corporate governance-related listing standards of the NYSE, the Board has adopted and periodically updated our Corporate Governance Guidelines (“Guidelines”), which govern the structure and proceedings of the Board and contain the Board’s position on many governance issues. The Board has also adopted and periodically updated the Code of Conduct for our directors, officers and employees. The Code of Conduct provides guidance to the Board and management in areas of ethical business conduct and risk and provides guidance to employees and directors by helping them to recognize and deal with ethical issues including, but not limited to (i) conflicts of interest, (ii) gifts and entertainment, (iii) confidential information, (iv) fair dealing, (v) protection of corporate assets and (vi) compliance with rules and regulations. We have provided to our directors, officers and other employees a toll-free compliance hotline and a website by which they may report on an anonymous basis any observation of unethical behavior or suspected violation of our Code of Conduct. In addition, the Board has adopted and periodically updated the charters for each of its Audit, Human Resources and Nominating and Corporate Governance Committees. All of the foregoing documents are posted on the Corporate Governance page under the Investors tab of our website at www.atmosenergy.com.

Independence of Directors

The Board is comprised of a majority of independent directors in accordance with NYSE corporate governance-related listing standards. In accordance with rules of the SEC and the NYSE as well as our Guidelines, to be considered independent, a director must not have a direct or indirect material relationship with the Company or its management, other than as a director. To assist it in making its determination of the independence of each of its members, the Board has adopted its Categorical Standards of Director Independence (“Standards”). The Standards specify the criteria by which the independence of our directors will be determined and the types of relationships the Board has determined to be categorically immaterial, including relationships of directors and their immediate families with respect to past employment or affiliation with the Company, our management or our

independent registered public accounting firm. For purposes of the Standards, the Board has adopted the definition of an “immediate family member” as set forth by the NYSE, which includes a director’s spouse, parents, children, siblings and in-laws of the director, as well as anyone else (other than domestic employees) who shares such director’s home. The Standards and our Guidelines are posted on the Corporate Governance page of our website.

Based on its review of the Standards, as well as applicable SEC and NYSE rules, and taking into consideration all business relationships between the Company and each non-employee director and non-employee director nominee, the Board has concluded that none of such relationships are material other than the relationship with Mr. Springer described below. Accordingly, the Board has affirmatively determined that Ms. Quinn, Dr. Meredith and Messrs. Douglas, Esquivel, Gordon, Grable, Vaughan and Ware, as well as the non-employee directors who are continuing to serve the remainder of their terms, are independent members of the Board. In addition, the Board has affirmatively determined that each member of the Audit, Human Resources and Nominating and Corporate Governance Committees are independent under the Standards, as well as applicable SEC and NYSE rules.

In recommending to the Board that each non-employee director and nominee be found independent, the Nominating and Corporate Governance Committee reviewed and considered the following transactions, relationships or arrangements during the past three fiscal years, as discussed below. All matters described below fall within the Standards, including the monetary thresholds set forth in such Standards. Such matters are more fully discussed below under “Related Person Transactions.”

•

Mr. Ware is president of Amarillo National Bank in Amarillo, Texas, which provides a $25 million short-term line of credit to the Company and serves as a depository bank for us; and

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Several of our other directors either are natural gas customers or are affiliated with businesses that are natural gas customers of the Company in the ordinary course of business.

Because Mr. Springer’s son-in-law is a partner with the firm of Ernst & Young, our independent registered public accounting firm, the Board has determined that Mr. Springer may not be considered independent from the Company under the Standards. However, Mr. Springer’s son-in-law is not involved in our audit and is not considered a “covered person” with respect to us, as defined under the SEC’s independence-related rules and regulations for auditors. Thus, this relationship has no effect on Ernst & Young’s independence as our independent registered public accounting firm. Further, Mr. Springer does not serve on our Audit, Human Resources or Nominating and Corporate Governance Committees.

Related Person Transactions

In accordance with applicable SEC rules and in recognition that transactions into which we enter with related persons may present potential or actual conflicts of interest, our Board has adopted written guidelines with respect to related person transactions. For purposes of these guidelines, a reportable “related person transaction” is a transaction between the Company and any related person (i) involving more than $120,000 when aggregated with all similar transactions during any fiscal year and (ii) where such “related person” has or will have a direct or indirect material interest in such transaction (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity). A “related person” is any (a) person who is or was (since the beginning of the last fiscal year) an executive officer, director or nominee for election as a director of the Company; (b) person who

beneficially owns more than five percent of the Company’s common stock or (c) immediate family member of any of the foregoing. An immediate family member includes a person’s spouse, parents, children, siblings, in-laws and anyone residing in such person’s home (other than domestic employees).

Under the guidelines, all executive officers, directors and director nominees are required to identify, to the best of their knowledge after reasonable inquiry, business and financial affiliations involving themselves or their immediate family members who could reasonably be expected to give rise to a related person transaction. Executive officers, directors and director nominees are required to advise the Corporate Secretary of the Company promptly of any change in the information provided and are asked periodically to review and reaffirm this information.

The Nominating and Corporate Governance Committee reviews the material facts of all related person transactions and either approves or disapproves of the entry into any such transaction. However, if advance committee approval of a related person transaction is not feasible, then it shall be considered and, if the committee determines it to be appropriate, ratified at the committee’s next regularly scheduled meeting. In determining whether to approve or ratify a related person transaction, the committee takes into account, among other factors it deems appropriate, whether the related person transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction.

No director is allowed to participate in any discussion or approval of a related person transaction for which he or she is a related person, except that the director shall provide all material information concerning the transaction to the committee. If a related person transaction will be ongoing, the committee may establish guidelines for the Company’s management to follow in its ongoing dealings with the related person. Thereafter, the committee, on at least an annual basis, shall review and assess ongoing relationships with the related person to see that they remain in compliance with the committee’s related person transaction guidelines and that the related person transaction remains appropriate. In addition, the committee will periodically review the related person guidelines to determine if changes or modifications may be appropriate.

The committee also makes a recommendation to the Board as to whether the committee determines that an identified transaction is required to be reported as a related person transaction under SEC rules. Under SEC rules, certain transactions are deemed not to involve a material interest and thus, not reportable (including transactions in which the amount involved in any 12-month period is less than $120,000 and transactions with entities where a related person’s interest is limited to service as a non-employee director). In determining materiality for this purpose, information is considered material if, in light of all the facts and circumstances of the transaction, there is a substantial likelihood a reasonable investor would consider the information important in deciding whether to buy, sell or vote shares of Company stock. The types of transactions specified below, which are pre-approved by the committee, are presumed not to be material.

•

Transactions in the ordinary course of business with an entity for which a related person serves as an executive officer, provided (i) the affected director or executive officer does not participate in the decision on the part of the Company to enter into such transactions and (ii) the amount involved in any related category of transactions during any particular fiscal year is the lesser of (a) $1 million or (b) an amount which is less than one percent of the entity’s gross revenue for the most recently completed fiscal year for which data is publicly available;

•

Charitable gifts made in the ordinary course of business to a foundation, university or other nonprofit organization, provided (i) the affected director or executive officer does not participate in the decision on the part of the Company to make such gifts and (ii) the amount of gifts during any particular fiscal year is the lesser of (a) $120,000 or (b) an amount which is less than one percent of the nonprofit entity’s gross revenue for the most recently completed fiscal year for which data is publicly available;

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Employment by the Company of a family member of an executive officer, provided the executive officer does not participate in decisions regarding the hiring, performance evaluation, or compensation of the family member; and

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Payments under the Company’s employee benefit plans and other programs that are available generally to the Company’s employees (including contributions under the Company’s educational matching gift programs and payments to providers under the Company’s health care plans).

The committee has reviewed the Company’s ordinary course of business transactions during fiscal 2011 with companies for which related persons serve as executive officers and all other related person transactions, including the following transactions, which represent the only significant transactions of this type during fiscal 2011:

•

As noted above, in the discussion on the independence of our directors, Mr. Ware is president of Amarillo National Bank in Amarillo, Texas, which provides a $25 million short-term line of credit to the Company and serves as a depository bank for us. In addition, from October 2010 through March 2011, Amarillo National Bank was the trustee for our 1998 Long-Term Incentive Plan (“LTIP”). During fiscal 2011, we paid a total of $287,674 to Amarillo National Bank for these services, which amount is reasonable and customary for these types of services and are substantially on the same terms as comparable third-party transactions. The committee has received written confirmation that such amount represents less than one percent of the gross revenues of the bank for the applicable period.

•

Mr. Esquivel is Vice President for Community and Corporate Relations for UT Southwestern Medical Center in Dallas, Texas, which is a natural gas distribution customer of the Company in the ordinary course of business. For the 2011 fiscal year, the Company received total revenues from UT Southwestern Medical Center in the amount of $921,058. Our sales of natural gas to UT Southwestern Medical Center are made on substantially the same terms as other comparable third-party transactions. The committee has received written confirmation that such amount represents less than one percent of the gross revenues of UT Southwestern for the applicable period.

Accordingly, the committee has determined that none of those transactions involved a material interest. In addition, the Company is not aware of any related person transactions required to be reported under applicable SEC rules since the beginning of the last fiscal year where our policies and procedures did not require review or where such policies and procedures were not followed.

Board Leadership Structure

The Company’s bylaws and Guidelines provide that our Board of Directors has the right to exercise its discretion to either separate or combine the offices of the Chairman of the Board and the Chief Executive Officer (“CEO”). This decision is based upon the Board’s determination of what is in the best interests of the Company and its shareholders, in light of the circumstances and taking into consideration succession planning, skills and experience of the individuals filling those positions and

other relevant factors. Until October 1, 2010, the Board had historically determined that the offices of the Chairman of the Board and the CEO should be combined, primarily to provide unified leadership and direction for the Company. However, Mr. Best was appointed by the Board as Executive Chairman effective October 1, 2010, while Mr. Cocklin was appointed as President and CEO also effective October 1, 2010. Considering the skills and experience of Messrs. Best and Cocklin, the need to provide an orderly leadership transition from Mr. Best to Mr. Cocklin, and the completion of the execution of the Company’s succession planning process, the Board determined that the Board and Company’s leadership structure that is most appropriate is to have an Executive Chairman separate from its CEO. The current leadership structure is based on the experienced leadership provided by a full-time Executive Chairman (currently Mr. Best) and a full-time CEO (currently Mr. Cocklin), with both positions being subject to oversight and review by the Company’s independent directors. The Board recognizes that if the circumstances change in the future, other leadership structures might also be appropriate and it has the discretion to revisit this determination of the Company’s leadership structure. A combined Chairman and CEO Board leadership structure has previously worked well for the Company and its shareholders and may do so in the future.

The Board’s leadership structure is designed so that independent directors exercise oversight of the Company’s management and key issues related to strategy and risk. Only independent directors serve on the Audit Committee, the Human Resources Committee and the Nominating and Corporate Governance Committee of the Board and all standing Board committees are chaired by independent directors. Additionally, independent directors regularly hold executive sessions of the Board outside the presence of the Executive Chairman, the President and CEO or any other Company employee and they generally meet in a private session with the Executive Chairman and the President and CEO at every regularly scheduled Board meeting.

Each year, the independent directors of the Board select an independent director to serve as a Lead Director (the “Lead Director”). The Lead Director performs the following duties: (i) convenes and chairs meetings of the non-management directors in executive sessions as may be necessary; (ii) coordinates and develops the agenda for executive sessions of the non-management directors; (iii) coordinates feedback to the Executive Chairman and the President and CEO on behalf of the non-management directors regarding business, management or other issues; (iv) collaborates with the Executive Chairman and the President and CEO in developing the agenda for meetings of the Board; (v) consults with the Executive Chairman and the President and CEO on related information that is sent to the Board; (vi) discusses the results of the performance evaluation of both the Executive Chairman and the President and CEO with the Chair of the Human Resources Committee; (vii) reports to the Executive Chairman and President and CEO the results of their respective performance evaluations and (viii) identifies and develops with the Executive Chairman and the President and CEO along with the Chair of the Nominating and Corporate Governance Committee, the Board’s compositional needs and criteria for the selection of candidates to serve as directors. In performing the duties described above, the Lead Director is expected to consult with the chairs of the appropriate Board committees and solicit their participation. The Lead Director also performs such other duties as may be assigned to the Lead Director by the Board of Directors, the independent directors, the Executive Chairman or the President and CEO.

Risk Oversight Process

Our Board of Directors has the primary responsibility for risk oversight of the Company as a whole. However, the Board has delegated primary oversight responsibility to the Audit Committee.

The Audit Committee is responsible for overseeing risks associated with financial and accounting matters, including compliance with all legal and regulatory requirements and internal control over financial reporting. In addition, the Audit Committee has oversight responsibility for the Company’s overall business risk management process, which includes the identification, assessment, mitigation and monitoring of key business risks on a company-wide basis. To assist the Audit Committee in performing this function, for the last several years, the Audit Committee has engaged the firm of KPMG LLP (“KPMG”), which also serves as the Company’s internal auditor, to perform an annual enterprise risk assessment, upon which KPMG reports to the Audit Committee at its meeting each spring. For fiscal 2011, 14 key business risks were assessed by KPMG, including physical infrastructure, competition, transaction processing, business disruption, gas supply, credit, liquidity, regulatory and compliance. The Chairman of the Audit Committee then reports to the Board at its next meeting on such risk assessment and the overall effectiveness of the key business risk processes and controls. In addition, KPMG presents a report on its internal audit activities during the prior quarter to the Audit Committee at its regularly-scheduled quarterly meetings. The report includes the audit activities performed the previous quarter, which address the key business risks previously identified during the annual enterprise risk assessment, including evaluations and assessments of internal controls and procedures.

In addition, at each quarterly Audit Committee meeting, the Audit Committee reviews with management the steps taken by management to ensure compliance with established risk management policies and procedures relating to the Company’s marketing and trading affiliate, Atmos Energy Marketing, LLC (“AEM”). Compliance with these risk management policies and procedures is monitored on a monthly basis by the AEM Risk Management Committee, which is comprised of officers of the Company and AEM along with other key employees. Such risk management policies and procedures address credit risk, liquidity risk, operational risk and legal/contract/regulatory risks. If appropriate, the Chairman of the Audit Committee then reports to the Board on any significant deviations from the risk management policies and procedures.

The Board has also charged the Human Resources Committee (“HR Committee”) with ensuring that our executive compensation policies and practices support the retention and development of executive talent with the experience required to manage risks inherent to our business and do not encourage or reward excessive risk-taking by our executives. See the discussion in “Compensation Risk Assessment,” beginning on page 12 for more information on the specific processes used by the HR Committee to assess the risk profile of our compensation program. The Nominating and Corporate Governance Committee oversees risks associated with corporate governance, including Board leadership structure, succession planning and other matters. The Board’s role in risk oversight has had no significant effect on the Board’s leadership structure. In addition, we believe that the current leadership structure of the Board supports effective oversight of the Company’s risk management processes described above by providing independent leadership at the Board committee level, with ultimate oversight by the full Board as led by the Executive Chairman, the President and CEO and the Lead Director.

Lead Director and Communications with Directors

In accordance with the corporate governance-related listing standards of the NYSE, the independent directors of the Board have designated Charles K. Vaughan as the Lead Director at all meetings of non-management directors during fiscal 2012, which meetings will continue to be held by the Board on a regular basis. In addition, all independent members of the Board meet as a group at

least once annually. Shareholders and other interested parties may communicate with Mr. Vaughan, individual non-management directors, or the non-management directors as a group, by writing to Board of Directors, Atmos Energy Corporation, P.O. Box 650205, Dallas, Texas, 75265-0205 or by electronic mail at boardofdirectors@atmosenergy.com. Our Senior Vice President and General Counsel, Louis P. Gregory, receives all such communications initially and forwards the communications to Mr. Vaughan or another individual non-management director, if applicable, as he deems appropriate. Interested parties may also contact our directors who are members of management, Robert W. Best, Executive Chairman (robert.best@atmosenergy.com) and Kim R. Cocklin, President and CEO (kim.cocklin@atmosenergy.com); by mail at Atmos Energy Corporation, P.O. Box 650205, Dallas, Texas 75265-0205, or by telephone at 972-934-9227.

Committees of the Board of Directors

Standing Committees. We have certain standing committees, each of which is described below. The Executive Committee consists of the chairpersons of each of our standing committees and our Lead Director, Mr. Vaughan. Current members of the Executive Committee are Dr. Meredith, Ms. Quinn and Messrs. Gordon, Vaughan and Ware. Mr. Vaughan, as Lead Director, serves as chairman of the committee. In accordance with our bylaws, the Executive Committee has, and may exercise, all of the powers of the Board of Directors during the intervals between the Board’s meetings, subject to certain limitations and restrictions as set forth in the bylaws or as may be established by resolution of the Board from time to time. The Executive Committee held no meetings during fiscal 2011.

The Board has established a separately-designated standing Audit Committee in accordance with applicable provisions of the Securities Exchange Act of 1934 (“Exchange Act”). The Audit Committee consists of Ms. Quinn, Dr. Meredith and Messrs. Esquivel, Grable and Ware. Ms. Quinn serves as chair of the committee. As discussed in “Independence of Directors,” beginning on page 3, the Board has determined that each member of the committee satisfies the independence requirements of the NYSE and SEC. The Audit Committee oversees our accounting and financial reporting processes and procedures; reviews the scope and procedures of the internal audit function; appoints our independent registered public accounting firm and is responsible for the oversight of its work and the review of the results of its independent audits. The Audit Committee held five meetings during the last fiscal year and has adopted a charter that it follows in conducting its activities, which is available on the Corporate Governance page of our website.

The Human Resources Committee consists of Messrs. Douglas, Esquivel, Gordon and Grable. Mr. Gordon serves as chairman of the committee. As previously discussed, the Board has determined that each member of the committee satisfies the independence requirements of the NYSE and SEC. This committee reviews and makes recommendations to the Board regarding executive compensation policy and strategy and specific compensation recommendations for the CEO as well as our other officers and division presidents. This committee retained the worldwide consulting firm of Pay Governance LLC during fiscal 2011 to serve as its executive compensation consultant, which was directly accountable to the committee for the performance of its consulting services. In addition, the committee determines, develops and makes recommendations to the Board regarding severance agreements, succession planning and other related matters concerning our CEO as well as other officers and division presidents. This committee also administers our LTIP and Annual Incentive Plan for Management (“Incentive Plan”). During the last fiscal year, the committee held four meetings. The committee has adopted a charter that it follows in conducting its activities, which is available on the Corporate Governance page of our website.

The Nominating and Corporate Governance Committee consists of Ms. Quinn, Dr. Meredith and Messrs. Gordon and Ware. Mr. Ware serves as chairman of the committee. As previously discussed, the Board has determined that each member of the committee satisfies the independence requirements of the NYSE and SEC. This committee makes recommendations to the Board regarding the nominees for director to be submitted to our shareholders for election at each annual meeting of shareholders, selects candidates for consideration by the full Board to fill any vacancies on the Board, which may occur from time to time, and oversees all of our corporate governance matters. The committee held three meetings during the last fiscal year. The committee has adopted a charter that it follows in conducting its activities, which is available on the Corporate Governance page of our website.

The Work Session/Annual Meeting Committee consists of Dr. Meredith and Messrs. Douglas, Springer and Ware. Dr. Meredith serves as chairman of the committee. This committee selects the site and plans the meeting and agenda for the work session meeting of the Board held each year for the purpose of focusing on long-range planning and corporate strategy issues and selects the site for the annual meeting of shareholders. During the last fiscal year, the Work Session/Annual Meeting Committee held two meetings.

Other Board and Board Committee Matters

Human Resources Committee Interlocks and Insider Participation. As discussed above, the members of the HR Committee during the last fiscal year were Messrs. Douglas, Esquivel, Gordon and Grable. None of the committee members were, during fiscal 2011 or previously, an officer or employee of the Company or any of our subsidiaries. In addition, there were no interlocking relationships between any executive officer of the Company and any other corporation during fiscal 2011.

Attendance at Board Meetings. During fiscal 2011, our Board held 14 meetings and each director attended at least 75 percent of the aggregate of (a) all meetings of the Board and (b) all meetings of the committees of the Board on which such director served. We strongly support and encourage each member of our Board to attend our annual meeting of shareholders. However, on February 9, 2011, the date of our 2011 annual meeting of shareholders, only four of our directors were physically able to attend the annual meeting due to a major ice and snowstorm in the Dallas-Ft.Worth Metroplex on the day of the meeting.

Independence of Audit Committee Members, Financial Literacy and Audit Committee Financial Experts

In addition to being declared as independent under the NYSE listing standards, applicable NYSE and SEC rules and regulations require that each member of an audit committee satisfy additional independence and financial literacy requirements and at least one of these members must satisfy the additional requirement of having accounting or related financial management expertise. This additional requirement can be satisfied if the Board determines that at least one Audit Committee member is an “audit committee financial expert,” within the meaning of applicable SEC rules and regulations. Generally, the additional independence requirements provide that (i) a member of the Audit Committee, or his or her immediate family members, are prohibited from receiving any direct or indirect compensation or fee from the Company or its affiliates and (ii) he or she may not be an affiliated person of the Company or any of its subsidiaries. An “immediate family member” is defined by applicable NYSE rules to include a director’s spouse, parents, children, siblings and in-laws of the director, as well as anyone else (other than domestic employees) who shares the director’s home.

Generally, the financial literacy requirements provide that the Board, in its business judgment, shall determine if each member is financially literate, taking into account factors such as the member’s education, experience and ability to read and understand financial statements of public companies. Audit committee financial experts must have the following five additional attributes: (i) an understanding of generally accepted accounting principles and financial statements, (ii) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves, (iii) experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements, or experience actively supervising one or more persons engaged in such activities, (iv) an understanding of internal control over financial reporting and (v) an understanding of how an audit committee functions.

Based on its review of the independence, financial literacy and audit committee financial expert requirements previously discussed, as well as its review of their individual backgrounds and qualifications, the Board has determined that all members of the Audit Committee satisfy the additional independence and financial literacy requirements required by the SEC and NYSE for members of an audit committee. The Board has also designated Ms. Quinn and Mr. Ware each as an “audit committee financial expert,” as such term is defined by applicable rules and regulations of the SEC. As provided by the safe harbor contained in applicable SEC rules and regulations, our audit committee financial experts will not be deemed “experts” for any purpose as a result of being so designated. In addition, such designation does not impose on such persons any duties, obligations or liabilities that are greater than the duties, obligations and liabilities imposed on such persons as members of the Audit Committee or the Board in the absence of such designation. This designation also does not affect the duties, obligations or liabilities of any other member of the Audit Committee or the Board.

Audit Committee Pre-Approval Policy

The Audit Committee has adopted a pre-approval policy relating to the provision of both audit and non-audit services by Ernst & Young. Our Audit Committee Pre-Approval Policy provides for the pre-approval of audit, audit-related, tax and other services specifically described in appendices to the policy on an annual basis. Such services are pre-approved up to a specified fee limit. All other permitted services, as well as proposed services exceeding the pre-approved fee limit, must be separately pre-approved by the Audit Committee. Requests for services that require separate approval by the Audit Committee must be submitted to the Audit Committee by both our Chief Financial Officer and our independent registered public accounting firm and must include a joint statement as to whether, in their view, the request is consistent with the SEC’s rules on auditor independence. The policy authorizes the Audit Committee to delegate to one or more of its members pre-approval authority with respect to permitted services. The Audit Committee did not delegate any such pre-approval authority in fiscal 2011 and it pre-approved all audit, audit-related and tax fees for services performed by Ernst & Young in fiscal 2011 in accordance with such pre-approval policy. The Audit Committee further concluded that the provision of these services by Ernst & Young was compatible with maintaining its independence. The Audit Committee Pre-Approval Policy is available on the Corporate Governance page of our website.

Compensation Risk Assessment

The HR Committee has periodically engaged Pay Governance LLC, the executive compensation consulting firm (“Pay Governance”), which is the committee’s independent executive compensation consultant, to assist the committee in assessing the risk profile of the compensation program of the Company. Pay Governance has reviewed all of the compensation arrangements of the Company to gauge whether any compensation arrangement encourages employees to engage in excessively risky behaviors detrimental to the Company and its shareholders. Our two annual incentive compensation plans are the Variable Pay Plan (“VPP”) and the Incentive Plan. Pay Governance has also evaluated our long-term incentive plan, the LTIP, which includes grants of both time-lapse restricted share units (“RSU’s”) and performance-based RSU’s. The review by Pay Governance of these incentive plans has included an evaluation of the plans’ design features and provisions, including such provisions as the establishment of target levels, the determination of awards, the types of performance criteria measured, the capping of maximum award opportunities, the balance between annual and long-term opportunities, the role of the HR Committee in its governance and oversight and other issues. At the conclusion of its review and evaluation, Pay Governance has reported that the features shown below help to mitigate any excessive risk-taking on the part of the participants in these plans:

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Both the Incentive Plan and VPP annual plans place an appropriate cap on the size of any cash awards earned.

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Long-term incentives are granted each year to participants to appropriately balance short-term interests with long-term value creation.

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Fifty percent of the long-term awards are performance-based RSU’s, which are tied to both three-year earnings per share (“EPS”) performance and the return to shareholders (share price appreciation plus accrued dividends) for all participants, including our named executive officers.

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A key feature of the Incentive Plan that encourages long-term value creation is the plan’s provision to allow for a premium value of voluntary conversion of annual cash awards, in 25 percent increments, to three-year time-lapse RSU’s with a 50 percent premium value (20 percent beginning in fiscal 2012).

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Another key feature of the Incentive Plan that encourages long-term value creation is the plan’s provision to allow for a premium value of voluntary conversion of annual cash awards, in 25 percent increments, to bonus stock with a 10 percent premium value (five percent beginning in fiscal 2012).

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Once the threshold levels are achieved, both the annual and long-term performance incentive plans use mathematical interpolation to calculate payouts between performance levels, thereby removing any payout cliffs or steep payout curves.

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The Company has a policy for the recoupment of executive compensation (“clawback policy”) that provides for the repayment or forfeiture of any incentive awards earned due to fraud, misconduct or misstatement of financial results, described in “Executive Compensation Recoupment Policy,” beginning on page 37.

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Key executives are subject to share ownership guidelines which encourage the executives to align their interests with the long-term interests of shareholders and all other constituents.

In addition, the HR Committee has periodically (i) reviewed the competitiveness of the compensation program for our affiliate, Atmos Energy Holdings, Inc. (“AEH”), (ii) assessed the alignment of the AEH compensation program with the risk profile of the trading/marketing company in

relation to the overall energy marketing and trading spectrum and (iii) approved enhancements to the compensation program that better align compensation with the Company’s business strategy. Based on such review and evaluation, the HR Committee has determined that AEH’s compensation program contains risks that are appropriate to the nature, size and scope of its operations. Accordingly, the HR Committee has determined that none of the plans comprising the compensation plans of either the Company or AEH encourage our executive officers or other employees to take excessive risks and that the risks arising from these plans are not reasonably likely to have a material adverse effect on the Company or AEH.

PROPOSAL ONE—ELECTION OF DIRECTORS

Background

Pursuant to an amendment to our Articles of Incorporation that was approved by our shareholders at our annual meeting of shareholders in February 2010, since February 2010, the Board of Directors has not been divided into three classes. Beginning with the 2011 annual meeting of shareholders, and at each annual meeting thereafter, all directors elected at the annual meeting have been and shall be elected for a one-year term expiring at the next annual meeting thereafter. However, this change to a declassified Board has not and will not affect the unexpired terms of directors elected prior to the change. The Board is nominating Ms. Quinn, Dr. Meredith and Messrs. Cocklin, Douglas, Esquivel, Gordon, Springer and Ware to continue serving as directors whose one-year terms will expire in 2013. Messrs. Cocklin, Douglas, Esquivel and Gordon were last elected to one-year terms by the shareholders at the 2011 annual meeting and Ms. Quinn, Dr. Meredith and Messrs. Springer and Ware were last elected to three-year terms by the shareholders at the 2009 annual meeting. All nominees were recommended for nomination by the Nominating and Corporate Governance Committee of the Board. We did not pay a fee to any third party to identify, evaluate or assist in identifying or evaluating potential nominees for the Board. In addition, the Nominating and Corporate Governance Committee did not receive any recommendations from a shareholder or a group of shareholders who, individually or in the aggregate, beneficially owned greater than five percent of our common stock for at least one year.

The other directors listed under “Directors Continuing in Office,” beginning on page 19, will continue to serve in their positions for the remainder of their current terms. The names, ages, biographical summaries and qualifications of (i) the persons who have been nominated to serve as our directors are set forth under “Nominees for Director,” beginning on page 15 and (ii) the directors who are continuing in office until the expiration of their terms are set forth in “Directors Continuing in Office” below. Each of the nominees has consented to be a nominee and to serve as a director if elected. If we receive proxies that are signed but do not specify how to vote, we will vote those shares FOR all of the nominees. To be elected as a director, our bylaws require a nominee to receive the vote of a majority of all outstanding shares of our common stock entitled to vote and represented in person or by proxy at a meeting of shareholders at which a quorum is present.

Procedures for Nomination of Candidates for Director

According to our bylaws, any shareholder may make nominations for the election of directors if notice of such nominations is delivered to, or mailed and received by the Corporate Secretary of the Company at our principal executive offices, not less than 60 days nor more than 85 days prior to the date of the originally scheduled meeting. However, if less than 75 days’ notice or prior public

disclosure of the date of the meeting is given by the Company, notice of such nominations must be so received no later than the close of business on the 25th day following the earlier of the day on which notice of the meeting was sent or the day on which such public disclosure was made. Since we are providing less than 75 days’ notice or prior public disclosure of the date of the 2012 annual meeting, shareholders may make nominations for the election of directors at the 2012 annual meeting, if notice of such nominations is delivered to, or mailed and received by the Corporate Secretary of the Company at our principal executive offices no later than the close of business on January 16, 2012, the 25th day following the day on which notice of the meeting is to be sent, December 22, 2011. If no nominations are so made, only the nominations made by the Board of Directors may be voted upon at the 2012 annual meeting.

There are no differences in the manner in which the committee evaluates nominees for director based on whether or not the nominee is presented by a shareholder. All director candidates shall, at a minimum, possess the qualifications for director discussed below. Such notices should include the following: (i) name, address and number of shares owned by the nominating shareholder, (ii) the nominee’s name and address, (iii) a listing of the nominee’s background and qualifications, (iv) a description of all arrangements between such shareholder and each nominee and any other person and (v) all other information relating to such person that is required to be disclosed in the solicitations for proxies for election of directors under applicable SEC and NYSE rules and regulations. A signed statement from the nominee should accompany the notice of nomination indicating that he or she consents to being considered as a nominee and that, if nominated by the Board and elected by the shareholders, he or she will serve as a director.

Qualifications for Directors

The Nominating and Corporate Governance Committee uses a variety of methods to identify nominees for director, including considering potential director candidates who come to the committee’s attention through current officers, directors, professional search firms, shareholders or other persons. Nominees for director must possess, at a minimum, the level of education, experience, sophistication and expertise required to perform the duties of a member of the board of directors of a public company of our size and scope. Once a person is nominated, the committee will assess the qualifications of the nominee, including an evaluation of his or her judgment and skills. The Board has adopted guidelines outlining the qualifications sought when considering non-employee director nominees, which are discussed in our Guidelines posted on the Corporate Governance page of our website.

Based on the Guidelines, the specific qualifications and skills the Board seeks across its membership to achieve a balance of experiences important to the Company include, but are not limited to, outstanding achievement in personal careers; prior board experience; wisdom, integrity and ability to make independent, analytical inquiries; understanding of our business environment; and willingness to devote adequate time to Board duties. Other required specific qualifications and skills include a basic understanding of principal operational and financial objectives and plans and strategies of a corporation or organization of our stature; results of operations and financial condition of an organization and of any significant subsidiaries or business segments and a relative understanding of an organization and its business segments in relation to its competitors.

The Board is committed to diversified membership. The Board does not discriminate on the basis of race, color, national origin, gender, religion or disability in selecting nominees. Although the Board

has not established a formal policy on diversity, the Board and the committee believe it is important that our directors represent diverse viewpoints and backgrounds. Our Guidelines provide that the committee shall evaluate each director’s continued service on the Board, at least annually, by considering the appropriate skills and characteristics of members of the Board of Directors in the context of the then current makeup of the Board. This assessment includes the following factors: diversity (including diversity of skills, background and experience); age; business or professional background; financial literacy and expertise; availability and commitment; independence and other criteria that the committee or the full Board finds to be relevant. It is also the practice of the committee to consider these factors when screening and evaluating candidates for nomination to the Board.

Nominees for Director

Each of the following eight current directors has been nominated to serve an additional one-year term on the Board of Directors with such term expiring in 2013.

LOGO

Kim R. Cocklin, President and Chief Executive Officer of Atmos Energy since October 2010; formerly President and Chief Operating Officer of Atmos Energy from October 2008 through September 2010 and Senior Vice President, Regulated Operations of Atmos Energy from June 2006 through September 2008; formerly Senior Vice President, General Counsel and Chief Compliance Officer of Piedmont Natural Gas Company in Charlotte, North Carolina from February 2003 through May 2006. Mr. Cocklin, 60, has been a director of Atmos Energy since 2009.

Mr. Cocklin was promoted to lead Atmos Energy as President and Chief Executive Officer in October 2010 and has been on the Company’s senior management team since June 2006. Mr. Cocklin has over 30 years of experience in the natural gas industry, most of that serving in senior management positions at Atmos Energy, Piedmont Natural Gas Company and The Williams Companies. Mr. Cocklin has a strong background in the natural gas industry, including interstate pipeline companies, local distribution companies and gas treatment facilities. He also has extensive experience in rates and regulatory matters, business development and Sarbanes-Oxley compliance matters. Mr. Cocklin has held leadership roles within leading natural gas industry associations, including the Southern Gas Association and American Gas Association. As a result of such professional experience and leadership abilities, as well as possessing those attributes discussed in the “Qualifications for Directors” section above, the Board has nominated Mr. Cocklin to continue serving as a director of Atmos Energy.


		Richard W. Douglas, Executive Vice President for Jones Lang LaSalle LLC in Dallas, Texas since July 2008; formerly Executive Vice President with The Staubach Company in Dallas, Texas from October 2004 to July 2008, having served in numerous other executive officer positions with the Staubach Company from February 1999 to October 2004. Mr. Douglas, 64, has been a director of Atmos Energy since 2007. Mr. Douglas gained leadership experience with Jones Lang LaSalle LLC, a global real estate management and investment firm and developed business and strategic planning expertise while at The Staubach Company, a nationally renowned real estate brokerage and services firm with international partnerships. Mr. Douglas also possesses outside board experience on numerous civic and nonprofit boards such as the United Way of Metropolitan Dallas. In addition, Mr. Douglas has experience as a leader in community organizations such as the Greater Dallas Chamber of Commerce. As a result of his professional experience and leadership abilities, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Mr. Douglas to continue serving as a director of Atmos Energy.

		Ruben E. Esquivel, Vice President for Community and Corporate Relations for UT Southwestern Medical Center in Dallas, Texas since December 1995; formerly President and Chief Executive Officer of AVO International (formerly known as Multi-Amp Corporation). Mr. Esquivel, 68, has been a director of Atmos Energy since 2008. Mr. Esquivel has led the community and corporate relations efforts for The University of Texas Southwestern Medical Center at Dallas, one of the nation’s leading academic medical and research institutions, for the past 16 years. During his 34-year career with AVO International, Mr. Esquivel gained valuable leadership and managerial experience. Mr. Esquivel also has served as a leader on the boards of numerous publicly-held and non-profit organizations, including his past appointment as chairman of the Texas Guaranteed Student Loan Corporation, and chairman of several boards including the Dallas County Hospital District, North Texas Commission and YMCA of Metropolitan Dallas. As a result of his professional experience and leadership abilities, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Mr. Esquivel to continue serving as a director of Atmos Energy.


		Richard K. Gordon, General Partner of Juniper Capital LP in Houston, Texas, since March 2003 and General Partner of Juniper Energy LP in Houston, Texas since August 2006; and formerly Vice Chairman Investment Banking for Merrill Lynch & Co. in Houston, Texas from October 1994 to February 2003. Mr. Gordon, 62, has been a director of Atmos Energy since 2001. For both Juniper Capital LP and Juniper Energy LP, Mr. Gordon has been responsible for the past 10 years for managing a portfolio comprised of approximately $2 billion of power generation, mineral, oil and gas, natural gas gathering and oilfield services assets. Prior to working with Juniper Capital and Juniper Energy, Mr. Gordon spent 29 years working with such financial services firms as Dillon, Read & Co. Inc., The First Boston Corporation and Merrill Lynch & Co. At such firms, Mr. Gordon was responsible for investment banking activities related to energy and power companies, including natural gas distribution companies. Based on his extensive business experience, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Mr. Gordon to continue serving as a director of Atmos Energy.

		Thomas C. Meredith, Ed.D, President, Effective Leadership LLC from April 2009 to present; formerly Commissioner of Mississippi Institutions of Higher Learning in Jackson, Mississippi from October 2005 until November 2008; and Chancellor of the University System of Georgia in Atlanta, Georgia from January 2002 through September 2005. Dr. Meredith, 70, has been a director of Atmos Energy since 1995. Dr. Meredith has exhibited leadership skills over the past 14 years as an administrative and financial consultant to university boards and presidents, Commissioner of Mississippi Institutions of Higher Learning, Chancellor of the University System of Georgia and Chancellor of the University of Alabama System. He also led an economic development task force for the State of Alabama, which led to the implementation of a major economic development plan for that state. Dr. Meredith is a recognized consultant in executive leadership and board development matters and he has experience in supervising executive level accounting staff, which has added to his financial and macroeconomic knowledge and related skills. As a result of his professional experience and leadership abilities, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Dr. Meredith to continue serving as a director of Atmos Energy.


		Nancy K. Quinn, Principal of Hanover Capital, LLC in East Hampton, New York since July 1996; currently a director of Endeavor International Corporation and Helix Energy Solutions Group, Inc. Ms. Quinn, 58, has been a director of Atmos Energy since 2004. Hanover Capital, LLC, a privately-owned advisory firm, provides senior financial and strategic expertise, primarily to clients in the energy and natural resources industries. Prior to joining Hanover Capital, Ms. Quinn held a senior advisory role with the Beacon Group, focusing on energy industry private equity opportunities and merger and acquisition transactions. Ms. Quinn gained extensive experience in independent exploration and production, as well as in diversified natural gas and oilfield service sectors, while holding leadership positions at such firms as PaineWebber Incorporated and Kidder, Peabody & Co. Incorporated. Ms. Quinn has corporate governance leadership experience as chair of the audit committee of Endeavor International and has outside board experience as a member of the boards of Endeavour International and Helix Energy Solutions Group. Ms. Quinn was also previously a member of the boards of Louis Dreyfus Natural Gas and DeepTech International. As a result of her professional experience and leadership abilities, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Ms. Quinn to continue serving as a director of Atmos Energy.

		Stephen R. Springer, Retired, formerly Senior Vice President and General Manager of the Midstream Division of The Williams Companies, Inc. in Tulsa, Oklahoma from January 1999 to February 2002; currently a director of DCP Midstream Partners, LP. Mr. Springer, 65, has been a director of Atmos Energy since 2005. Mr. Springer’s professional career includes 32 years in the regulated and nonregulated energy industry, while holding leadership roles at Texas Gas Transmission Corporation, Transco Energy Company and The Williams Company. Mr. Springer’s vast knowledge of the natural gas industry includes natural gas transmission, marketing, supply, transportation, business development, distribution and gathering and processing segments of the industry. Mr. Springer also has outside board experience as a member of the boards of DCP Midstream Partners LP and the Indiana University Foundation. As a result of his professional experience and leadership abilities, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Mr. Springer to continue serving as a director of Atmos Energy.

LOGO

Richard Ware II, President of Amarillo National Bank in Amarillo, Texas since 1981. Mr. Ware, 65, has been a director of Atmos Energy since 1994.

Mr. Ware has developed substantial knowledge of the financial services industry during his 36-year career with a nationally recognized banking institution. Mr. Ware’s strong background in assessing and overseeing complex financial matters, his leadership experience in supervising principal financial officers and his experience on the audit or finance committees of Atmos Energy, Southwest Coca Cola Bottling Company and the board of trustees of Southern Methodist University is a valuable asset to the Company. As a result of his professional experience and leadership abilities, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has nominated Mr. Ware to continue serving as a director of Atmos Energy.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS

VOTE “FOR” EACH OF THE ABOVE NOMINEES FOR DIRECTOR.

Directors Continuing in Office

The following directors will continue to serve until the expiration of their terms as noted below.

LOGO

Robert W. Best, Executive Chairman of the Board of Atmos Energy since October 2010; formerly Chairman of the Board and Chief Executive Officer of Atmos Energy from October 2008 to September 2010 and Chairman of the Board, President and Chief Executive Officer from March 1997 to September 2008; currently a director of Associated Electric & Gas Insurance Limited. Mr. Best, 65, has been a director of Atmos Energy since 1997. Term expires in 2013.

Mr. Best led the senior management team of the country’s largest natural gas-only distributor, Atmos Energy, from March 1997 until his retirement as Chief Executive Officer on September 30, 2010. Prior to joining Atmos Energy, Mr. Best had an extensive background in the natural gas industry, especially in the interstate pipeline, gas marketing and gas distribution segments of the industry, while serving in leadership roles at Consolidated Natural Gas Company, Transco Energy Company and Texas Gas Transmission Corporation during his 37-year career. Mr. Best also has outside board experience as a member of the boards of Maguire Energy Institute in the Cox School of Business at Southern Methodist University, Associated Electric & Gas Insurance Services Limited and the Gas Technology Institute, with leadership experience as chairman of the boards of Atmos Energy, American Gas Association, Southern Gas Association and Dallas Regional Chamber of Commerce. As a result of his professional experience and leadership abilities, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has determined that Mr. Best should serve as a director of Atmos Energy.


		Robert C. Grable, Founding Partner, Kelly Hart & Hallman LLP, Fort Worth, Texas, since April 1979. Mr. Grable, 65, has been a director of Atmos Energy since 2009. Term expires in 2013. Mr. Grable possesses advanced leadership skills developed as partner and one of seven founders of Kelly Hart & Hallman LLP, a large regional law firm. Mr. Grable has extensive experience in representing companies in the oil and gas industry, having represented oil and gas producers, pipelines and utilities in transactions, regulatory matters and litigation for over 31 years. Mr. Grable also has outside board experience as Trustee of the University of Texas Law Foundation and as an advisory board member for the local division of a global financial services firm. Mr. Grable is also a member of the McDonald Observatory and Astronomy Board of Visitors at the University of Texas at Austin. As a result of his professional experience and leadership abilities, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has determined that Mr. Grable should serve as a director of Atmos Energy.

		Charles K. Vaughan, Retired, formerly Chairman of the Board of Atmos Energy from October 1983 until March 1997. Mr. Vaughan, 74, has been a director of Atmos Energy since 1983 and Lead Director of Atmos Energy since 2003. Term expires in 2013. Mr. Vaughan has been involved in some capacity with Atmos Energy for over 54 years. His leadership experience as former Chairman, President and Chief Executive Officer of the Company, his vision for strategic development and his leadership in the successful implementation of multiple acquisitions for the Company have greatly contributed to the Company’s success. Mr. Vaughan’s outside board experience on the boards of Texas Gas Association, Southern Gas Association and American Gas Association and his affiliations in gas industry, business and community organizations have benefited not only the Company but the entire natural gas distribution industry. As a result of his professional experience and leadership abilities, as well as possessing those attributes discussed in the “Qualifications for Directors” section, the Board has determined that Mr. Vaughan should serve as a director of Atmos Energy.

DIRECTOR COMPENSATION

Annual Compensation

As compensation for serving as a director during fiscal 2011, each of our non-employee directors received an annual retainer of $75,000 payable in advance on a quarterly basis. Since June 1, 2007, our Lead Director, Mr. Vaughan, has received an annual fee of $25,000 for additional services he has performed in connection with being the Lead Director. Committee chairpersons are also paid an additional annual fee of $5,000 for additional services performed in connection with their committee duties and responsibilities.

The Company also provides our non-employee directors the option to receive all or part of their director fees (in 10 percent increments) in Atmos Energy common stock through the Atmos Energy

Corporation Outside Directors Stock-for-Fee Plan (“Stock-for-Fee Plan”). The purpose of this plan is to increase the proprietary interest of our non-employee directors in the Company’s long-term prospects and the strategic growth of our business. The common stock portion of the payment of the fee earned in each quarter is issued as soon as possible following the first business day of each quarter. The number of shares issued is equal to the amount of the fee that would have been paid to the non-employee director during a quarter divided by the fair market value (mean of the highest and lowest prices as reported on the NYSE Consolidated Tape) on the first business day of such quarter. Only whole numbers of shares of common stock may be issued; fractional shares are paid in cash.

With respect to other director compensation matters, all directors are reimbursed for reasonable expenses incurred in connection with attendance at Board and committee meetings. A director who is also an officer or employee receives no compensation for his or her service as a director. We provide business travel accident insurance for non-employee directors and their spouses. The policy provides $100,000 coverage to directors and $50,000 coverage to their spouses per accident while traveling on Company business.

Long-Term Compensation

Each non-employee director participates in the Atmos Energy Corporation Equity Incentive and Deferred Compensation Plan for Non-Employee Directors (“Directors Plan”). This plan allows each such director to defer receipt of his or her annual retainer fee or other director fees and to invest such deferred fees in either a cash account or a stock account (in 10 percent increments). Each non-employee director also receives an annual grant of share units under the LTIP for each year he or she serves on the Company’s Board of Directors. The grants occur on the 30^th day following the Company’s annual meeting of shareholders each plan year. The Directors Plan is intended to encourage qualified individuals to accept nominations as directors of the Company and to better align the interests between the non-employee directors and the Company’s other shareholders.

The amount of the fee allocated as a credit to the cash account is converted to a cash balance as of the first business day of each quarter to be credited with interest at a rate equal to 2.5 percent plus the annual yield reported on a 10-year U.S. Treasury Note for the first business day of January for each plan year. The amount of the fee allocated as a credit to the stock account is converted to share units. The fee payable for the quarter is converted to a number of whole and, if applicable, fractional share units on the first business day of that quarter. Share units are also credited with dividend equivalents as and when dividends are declared on shares of the Company’s common stock. Such dividend equivalent credits are converted to whole and, if applicable, fractional share units on the last business day of the month in which such dividends are paid. At the time of a participating director’s retirement, plan benefits paid from the cash account are paid in the form of cash. Plan benefits paid from the stock account are paid in the form of shares of common stock equal in number to whole share units in the director’s stock account. Any fractional share units are rounded up to a whole share unit prior to distribution.

Summary of Cash and Other Compensation

The following table sets forth all compensation paid to our non-employee directors for fiscal 2011.

Director Compensation for Fiscal Year 2011(a)


Name	Fees Earned or Paid in Cash ($)(b)	Stock Awards ($)(c)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(d)	All Other Compensation ($)(e)	Total ($)
Richard W. Cardin	27,009	110,651	—	16,086		153,746
Richard W. Douglas	75,000	116,663	—	—		191,663
Ruben E. Esquivel	45,000	112,757	1,848	—		159,605
Richard K. Gordon	80,000	133,872	—	—		213,872
Robert C. Grable	52,571	131,479	—	—		184,050
Dr. Thomas C. Meredith	80,000	148,849	1,605	—		230,454
Phillip E. Nichol	27,009	150,558	—	19,252		196,819
Nancy K. Quinn	55,240	152,199	2	—		207,441
Stephen R. Springer	75,000	123,349	—	—		198,349
Charles K. Vaughan	105,000	162,397	—	—		267,397
Richard Ware II	24,294	200,957	—	—		225,251

(a)	No options were awarded to our directors and no non-equity incentive plan compensation was earned by our directors in fiscal 2011.

(b)

Non-employee directors may defer all or a part of their annual cash retainer under our Directors Plan. During fiscal 2011, $53,250 of the total amount payable for directors’ fees was deferred, at the election of two of our directors, under our Directors Plan. Ms. Quinn and Mr. Esquivel elected to defer all or a portion of their director fees in fiscal 2011, as described in the table immediately below. Deferred amounts are invested, at the election of the participating director, either in a stock account or a cash account. Although Dr. Meredith did not participate in the deferred compensation feature of the Directors Plan in fiscal 2011, his accumulated balance associated with participation in previous years has continued to earn interest payable monthly.

(c)

The amounts in this column reflect the fair value on the date of grant, calculated in accordance with FASB ASC Topic 718, of the share units awarded to our directors (except for Messrs. Cardin and Nichol) under our LTIP for service on our Board in fiscal 2011. The share units do not contain restrictions and are valued at $33.91 per share, which was the fair market value (mean of the highest and lowest prices as reported on the NYSE Consolidated Tape) on the date of grant on March 11, 2011. The amounts for Messrs. Cardin and Nichol were calculated as of the effective date of retirement, February 9, 2011, at the fair market value of $33.29.

The amounts described above also reflect the fair value of shares of stock issued under our Stock-for-Fee Plan to Messrs. Grable and Ware, who elected to receive all or a portion of their director’s fees in the form of shares of stock in lieu of cash retainers for service on our Board in fiscal 2011. These shares also do not contain any restrictions. Shares are awarded on the first trading day of the quarter in which such fees were earned at the fair market value on that date. As a result, shares were issued to Messrs. Grable and Ware on the following dates and at the following values during fiscal 2011: (i) October 1, 2010, with a value of $29.33 per share; (ii) January 3, 2011, with a value of $31.50 per share; (iii) April 1, 2011, with a value of $34.45 per share and (iv) July 1, 2011, with a value of $33.57 per share.

(d)

The amounts in this column represent the amount of above-market portion of interest earned during fiscal 2011 on the accumulated amount of Board fees deferred to cash accounts. Interest considered above-market is the incremental rate of interest earned above 120 percent of the 10-year U.S. Treasury Note rate, which is reset on January 1 each year.

(e)

No director received perquisites and other personal benefits with an aggregate value equal to or exceeding $10,000 during fiscal 2011 other than Messrs. Cardin and Nichol. These perquisites and other benefits were received primarily relating to retirement gifts and related items in recognition of their individual valued and lengthy service on the Board of Directors. Such perquisites and other benefits were valued at the aggregate incremental cost to the Company. Messrs. Cardin and Nichol served as directors during fiscal 2011 until their retirement on February 9, 2011, following our 2011 annual meeting of shareholders.

Director Deferred Board Fees

The following table sets forth, for each participating non-employee director, the amount of director compensation deferred during fiscal 2011 and cumulative deferred compensation as of September 30, 2011.

Director Deferred Board Fees for Fiscal Year 2011


Director	Board Fees Deferred to Stock Account ($)(a)	Dividend Equivalents Earned on Stock Account and Reinvested ($)(b)	Cumulative Board Fees Deferred to Stock Account at September 30 ($)	Board Fees Deferred to Cash Account ($)	Interest Earned on Cash Account ($)(c)	Cumulative Board Fees Deferred to Cash Account at September 30 ($)
Ruben E. Esquivel	—	—	—	30,000	5,995	116,394
Dr. Thomas C. Meredith	—	2,422	44,026	—	5,231	91,366
Nancy K. Quinn	23,250	2,316	59,409	—	7	120

(a)

Ms. Quinn elected to receive 30 percent of her director fees in deferred stock. The $23,250 amount represents 721 share units received in fiscal 2011. Deferrals of amounts in the stock account are treated as though the deferred amounts are invested in our common stock at the fair market value of the shares on the date earned. Shares of our common stock equal to the number of share units in a director’s stock account are issued to such director on the last day of the director’s service or a later date selected by the director.

(b)

Dividend equivalents earned on amounts of share units in the stock account are reinvested in additional share units based on the fair market value of the shares on the last trading day of each quarter. Such stock prices for fiscal 2011 were as follows: $31.33 on December 31, 2010, $34.00 on March 31, 2011, $33.22 on June 30, 2011 and $32.87 on September 30, 2011.

(c)

The amounts in this column represent interest earned on accumulated amount of Board fees deferred to the cash account, during fiscal 2011, including deferrals made to the cash account in fiscal 2011, at a rate equal to the 10-year U.S. Treasury Note rate on the first day of each plan year (January 1) plus 250 basis points.

Director Share Units and Stock-for-Fee Awards

The following table sets forth the number of share units issued to our non-employee directors during fiscal 2011 for service on our Board or a Board committee and the number of share units earned as dividend equivalents during fiscal 2011 on the accumulated balances of share units for each director. The table also shows the amount of shares granted to directors in fiscal 2011 who elected to take all or a portion of their directors’ fees in stock under our Stock-for-Fee Plan.

Director Share Units and Stock-for-Fee Awards for Fiscal Year 2011(a)


Director	Share Units Awarded(#)(b)	Share Units Earned as Dividend Equivalents(#)(c)	Shares Received as Stock-for-Fee Awards(#)(d)	Aggregate Grant Date Fair Value($)
Richard W. Cardin(e)	3,000	344	—	110,651
Richard W. Douglas	3,000	454	—	116,663
Ruben E. Esquivel	3,000	335	—	112,757
Richard K. Gordon	3,000	978	—	133,872
Robert C. Grable	3,000	222	699	131,479
Dr. Thomas C. Meredith	3,000	1,434	—	148,849
Phillip E. Nichol(f)	3,000	1,547	—	150,558
Nancy K. Quinn	3,721	835	—	152,199
Stephen R. Springer	3,000	658	—	123,349
Charles K. Vaughan	3,000	1,847	—	162,397
Richard Ware II	3,000	1,371	1,686	200,957

(a)	All awards of share units under our LTIP vest immediately upon grant. Accordingly, no outstanding awards of share units are presented in this table.

(b)

This amount represents annual grants of share units awarded to each non-employee director under our LTIP on the 30th calendar day following our annual meeting and the amount of share units held in a stock account which reflect the portion of director fees elected by the non-employee director for conversion to deferred share units as indicated above in the “Director Deferred Board Fees for Fiscal Year 2011,” table beginning on page 23. The share units are converted to common stock on a one-for-one basis at the time of retirement from our Board and directors have the option to take distribution in a single lump sum or in up to five annual installments.

(c)	Share units earned as dividend equivalents are calculated based on the fair market value of the shares on the last trading day of each quarter. See footnote (b) to the “Director Deferred Board Fees for Fiscal Year 2011” table above.

(d)

As discussed in footnote (c) to the “Director Compensation for Fiscal Year 2011” table on page 22, shares received as Stock-for-Fee awards are issued on the first trading day of the quarter in which they are earned and the number of shares awarded equals the amount of fees divided by the fair market value on that date. Only whole shares are issued; fractional shares are paid in cash.

(e)

Upon his retirement from the Board of Directors, Mr. Cardin received a lump sum distribution of these shares, the total value of which was $1,166,948. The value was determined on February 9, 2011, based on the fair market value of the shares (mean of the highest and lowest prices as reported on the NYSE Consolidated Tape) of $33.29 per share.

(f)

Upon his retirement from the Board of Directors, Mr. Nichol’s equity incentive balance was 44,543 share units, which he elected to take in five annual installments. The first installment of 8,909 shares was issued on February 9, 2011, the total value of which was $296,581. The value was determined on February 9, 2011, based on the fair market value of the shares of $33.29 per share. Since the first distribution of 8,909 shares, Mr. Nichol’s remaining equity incentive balance has accumulated quarterly dividend equivalents, bringing his aggregate share unit total to 36,735 share units.

BENEFICIAL OWNERSHIP OF COMMON STOCK

Security Ownership of Certain Beneficial Owners

The following table lists the beneficial ownership, as of December 1, 2011, with respect to each person known by us to be the beneficial owner of more than five percent of any class of our voting securities.


Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent (%) of Class
Common stock	BlackRock, Inc.(a) 40 East 52nd Street New York, NY 10022	6,618,115	7.33(b)

Common stock	The Vanguard Group, Inc.(c) 100 Vanguard Blvd. Malvern, PA 19355	4,765,911	5.28(b)

(a)

Based solely upon information contained in the most recently filed Schedule 13G/A with the SEC on February 2, 2011, which was filed by BlackRock, Inc. reflecting beneficial ownership of 6,618,115 shares of common stock as of December 31, 2010. According to this filing, BlackRock, Inc. possessed sole voting power over 6,618,115 of these shares with no shared voting power and sole dispositive power over 6,618,115 shares with no shared dispositive power. BlackRock, Inc. has not subsequently filed any Schedules 13G or amendments thereto with respect to its beneficial ownership of the Company’s common stock.

(b)	The percent of voting securities is based on the number of outstanding shares of our common stock as of December 1, 2011.

(c)

Based solely upon information contained in the most recently filed Schedule 13G with the SEC on February 10, 2011, which was filed by The Vanguard Group, Inc. (“Vanguard”) on behalf of its subsidiary, Vanguard Fiduciary Trust Company (“VFTC”), reflecting beneficial ownership of 60,726 shares by VFTC of the total of 4,765,911 shares of common stock as of December 31, 2010. According to this filing, Vanguard possessed sole voting power over 4,705,185 shares with no shared voting power and sole dispositive power over 4,705,185 shares with shared dispositive power with VFTC over 60,726 shares. In addition, VFTC possessed sole voting power over 60,726 shares with no shared voting power and no sole dispositive power with shared dispositive power with Vanguard over 60,726 shares. Vanguard has not subsequently filed any schedules 13G or amendments thereto with respect to its or its subsidiary’s beneficial ownership of the Company’s common stock.

Security Ownership of Management and Directors

The following table lists the beneficial ownership, as of December 1, 2011, of our common stock, the only class of securities issued and outstanding, with respect to all our directors and nominees for director, our chief executive officer, chief financial officer and our three other most highly compensated executive officers (our “named executive officers”) and all our directors and named executive officers as a group. Except as otherwise noted, the directors, nominees and named executive officers, individually or as a group, have sole voting and investment power with respect to the shares listed.


Name of Beneficial Owner	Amount and Nature of Beneficial Ownership(#)			Percent (%) of Class(a)
Robert W. Best		620,682	(b)
Kim R. Cocklin		224,509
Richard W. Douglas		14,182	(c)
Ruben E. Esquivel		10,090	(c)
Richard K. Gordon		35,018	(c)
Robert C. Grable		9,317	(c)
Louis P. Gregory		83,203
Michael E. Haefner		57,316
Fred E. Meisenheimer		87,309
Dr. Thomas C. Meredith		47,798	(c)
Nancy K. Quinn		23,977	(c)
Stephen R. Springer		18,080	(c)(d)
Charles K. Vaughan		86,244	(c)
Richard Ware II		68,400	(c)
All directors, nominees and named executive officers as a group (14 individuals)(b)(c)(d)		1,386,125			1.53

(a)	The percentage of shares beneficially owned by any individual does not exceed one percent of the class so owned.

(b)	Includes 62,900 shares issuable upon the exercise of options held by Mr. Best under our LTIP within 60 days of December 1, 2011.

(c)

Includes cumulative share units credited to the following directors under our Directors Plan and LTIP in the following respective amounts: Mr. Douglas, 12,037 units; Mr. Esquivel, 9,090 units; Mr. Gordon, 25,018 units; Mr. Grable, 6,293 units; Dr. Meredith, 36,340 units; Ms. Quinn, 21,977 units; Mr. Springer, 17,080 units; Mr. Vaughan, 46,535 units and Mr. Ware, 34,739 units.

(d)	Includes 1,000 shares owned by Mr. Springer’s spouse with whom voting and investment power are shared.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who beneficially own more than ten percent of our common stock to file with the SEC initial reports of ownership and reports of changes in their ownership in our common stock. Directors, certain executive officers and greater-than-ten-percent beneficial shareholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such reports furnished to us, we believe that, during fiscal 2011, all of our directors, named executive officers and greater-than-ten-percent beneficial owners were in compliance with the Section 16(a) filing requirements.

HUMAN RESOURCES COMMITTEE REPORT

The Human Resources Committee of the Board of Directors has the responsibility for reviewing and recommending to the full Board of Directors, the Company’s executive compensation program. The committee is composed entirely of persons who qualify as independent directors under the listing standards of the NYSE. In this context, the committee has met, reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on this review and discussion, the committee recommended to the Board of Directors, and the Board of Directors approved, the inclusion of the Compensation Discussion and Analysis in this proxy statement.

Respectfully submitted by the members of the Human Resources Committee of the Board of Directors:

Richard K. Gordon, Chairman

Richard W. Douglas

Ruben E. Esquivel

Robert C. Grable

COMPENSATION DISCUSSION AND ANALYSIS

Overview. In this section, we discuss our executive compensation objectives and strategy, the elements of compensation that we provide to our named executive officers, and the analysis we employed in reaching the decisions to pay the specific amounts and types of executive compensation discussed. Later, under “Named Executive Officer Compensation,” beginning on page 39, we present a series of tables containing specific information about the compensation paid to or earned by our named executive officers during fiscal 2011, as well as more information about the elements of our executive officer compensation program. The discussion below is intended to assist you in understanding the information provided in the tables and in putting that information into context.

Executive Summary

Our executive compensation program is built upon the strategy of “Total Rewards,” which we adopted for all employees in 1998. Under our Total Rewards strategy, we take a comprehensive view of the various compensation plans and employee benefits that comprise the total package of compensation that is offered to all our officers, including the named executive officers in this proxy statement, division presidents and other key employees. The Total Rewards strategy is based on the payment of (i) total cash compensation, composed of base salary and annual incentive compensation and (ii) total direct compensation, composed of total cash compensation and the annualized expected value of long-term incentive compensation awards, being targeted at the 50th percentile of all such compensation for equivalent positions at companies of comparable size in the natural gas distribution industry, which is represented by companies in our proxy peer group and in an energy services industry database, as discussed below. We believe this strategy also fosters a philosophy of “pay for performance” through the use of both annual and long-term incentive plans.

Our Total Rewards strategy, in which we limit the use of executive benefits and perquisites, is reviewed each year and updated as needed by our HR Committee with assistance from its independent executive compensation consultant. None of our employees, including our named executive officers,

have an employment agreement with the Company. Our executive compensation program does not permit or include problematic pay practices such as (i) the re-pricing of “underwater” stock options without shareholder approval, (ii) excessive perquisites or tax gross-up payments, or (iii) change in control severance payments that (a) exceed three times base salary and most recent bonus, (b) are triggered without an involuntary job loss or substantial diminution of duties (“single triggers”) or (c) contain excise tax gross-up payments. We believe that our executive compensation program provides our executive officers with a balanced compensation approach each year by providing a reasonable base salary along with reasonable annual and long-term incentive compensation plans. These incentive plans are designed to reward our executive officers on both an annual and long-term basis if they attain specified target goals, the attainment of which do not require the taking of an unreasonable amount of risk, as discussed in “Compensation Risk Assessment,” beginning on page 12.

Overview of Annual Incentive Compensation Paid for Fiscal 2011 Financial Performance. The Company achieved its budgeted EPS goal of $2.27 per diluted share in fiscal 2011, representing a 3.2 percent increase over fiscal 2010. The Company’s target EPS amount under the Incentive Plan was also $2.27 for fiscal 2011. Because the Company actually earned an EPS of $2.27, this performance attainment resulted in the named executive officers, and the other participants in the Incentive Plan, receiving awards equal to 100 percent of their respective target awards (as a specified percentage of base salary). See “Annual Incentive Compensation,” beginning on page 30.

Overview of Long-Term Incentive Compensation Paid for Fiscal 2009-2011 Financial Performance. The Company achieved a cumulative EPS amount of $6.54, compared to the cumulative EPS target amount of $6.63 during the three-year performance period ended September 30, 2011 (fiscal 2009-2011), for the grants of performance-based RSU’s awarded in May 2009. The participants, including the named executive officers, earned a total number of performance-based RSU’s equal to approximately 80 percent of the target plus dividend equivalents, in the form of shares of common stock issued in November 2011. See “Long-Term Incentive Compensation,” beginning on page 32.

Recently Adopted Changes in Executive Compensation. During the last couple of fiscal years, the HR Committee, along with its current executive compensation consultant, Pay Governance LLC, with the assistance of its former executive compensation consultant, Towers Watson, have completed periodic reviews of the Company’s overall approach to executive benefits and perquisites, to ensure that the Company’s current benefits, perquisites, policies and practices have continued to be in line with best practices of other companies in the natural gas distribution industry as well as other Fortune 500 companies. As a result of those reviews, the HR Committee has approved several changes to the Company’s benefits, perquisites, policies and practices that have maintained the alignment of the Company’s executive compensation plans with best practices utilized by other companies in our industry peer group as well as by other Fortune 500 companies in general and have reduced the overall cost of executive compensation for all of the Company’s officers and division presidents. These changes, which were all approved by our Board of Directors, include those specifically discussed below:

•

Beginning in fiscal 2012, when participants in the Incentive Plan elect to convert all or a portion of their incentive payments to time-lapse RSU’s or shares of bonus stock prior to the beginning of each fiscal year, the premium in value they will receive for the conversion to RSU’s will be reduced from 50 percent to 20 percent of the value at the date of grant, while the premium received for shares of bonus stock will be reduced from 10 percent to five percent;

•

Beginning in fiscal 2012, the performance targets and actual performance attainment for both the Incentive Plan and performance-based RSU’s granted under the LTIP will exclude any mark-to-market gains or losses recognized by the Company’s nonregulated operations. See the discussion under “Annual Incentive Compensation,” beginning on page 30 and “Long-Term Incentive Compensation,” beginning on page 32;

•

Beginning in fiscal 2011, adoption of a clawback policy, known as the Executive Compensation Recoupment Policy, which provides for the recoupment by the Company under certain circumstances of incentive compensation, including annual incentive awards, stock-based awards, performance-based compensation and any other forms of cash or equity compensation other than salary. See the discussion under “Executive Compensation Recoupment Policy,” beginning on page 37;

•

Beginning in fiscal 2011, adoption of a policy that prohibits hedging transactions in our common stock by any employee or director of Atmos Energy through the purchase of any financial instruments that establish a short position in our common stock and are designed to hedge or offset any decrease in the market value of our common stock. See the discussion under “Policy Prohibiting Hedging-Related Transactions” on page 38;

•

Beginning in fiscal 2010, imposition of limits on the amount of awards earned as annual incentive compensation by our named executive officers with respect to the payouts under the Incentive Plan. If the total increase in the price of a share of Company common stock and the cumulative amount of dividends paid (“Total Shareholder Return” or “TSR”) during the fiscal year is negative, the payout of the award for each named executive officer will be reduced to the amount awarded at the target level of the applicable incentive opportunity for each named executive officer, should the Company’s performance exceed the performance target. See the discussion under “Annual Incentive Compensation,” beginning on page 30;

•

Beginning in fiscal 2010, any distributions of awards of performance-based RSU’s that have been granted to our named executive officers under our LTIP shall be reduced to the amount awarded at the target level of performance, unless the Total Shareholder Return during the three-year performance period is positive. See “1998 Long-Term Incentive Plan,” beginning on page 41;

•

Beginning in fiscal 2010, elimination of payment by the Company to our named executive officers, in the event that excise taxes will be due on the payment of severance benefits to our named executive officers in the case of a change in control (“tax gross-up payment”). See the discussion under “Change in Control Severance Benefits” on page 34; and

•

Beginning in fiscal 2010, enforcement of restriction period through the end of the relevant three-year restriction period on all equity grants under our LTIP for all recipients who have retired prior to the expiration of such restricted period.

Executive Compensation Objectives and Strategy

Our executive compensation program is designed to ensure that the interests of our executive officers are closely aligned with those of our shareholders and that our executive officers are paid an appropriate amount of incentive compensation only when the Company’s performance warrants the payment of such compensation. At the same time, and in consideration of our ownership of regulated natural gas distribution properties and related nonregulated operations, our executive compensation plan considers the interests of both our regulated and nonregulated customers. We believe that our executive compensation program is effective in allowing the organization to attract and retain highly-qualified senior management who can deliver outstanding performance.

As discussed above, our executive compensation plan is built on the Total Rewards strategy and is founded upon the following principles:

•

Our compensation strategy should be aligned with the overall business strategy of providing safe, quality service to our customers, seeking ongoing improvements in operating efficiencies and focusing upon growth opportunities in both our regulated and nonregulated operations.

•

Overall pay targets should reflect the intent to pay executive base salaries at the 50th percentile of the competitive market practice with targeted total cash compensation and targeted total direct compensation to be paid at the 50th percentile of competitive market practice, if established performance targets are reached.

•

Key executives charged with the responsibility for establishing and executing business strategy should have incentive compensation opportunities that are aligned with the creation of shareholder value and include upside potential with commensurate downside risk.

•

Incentive compensation plans, to the extent practical and consistent with our overall corporate business strategy, should comply with Section 162(m) of the Internal Revenue Code (the “Code”) so that full income tax deductions for executive compensation may be realized by the Company.

•

Stock ownership is an important component of our executive compensation strategy and should closely align executives’ interests with those of our shareholders. To facilitate stock ownership for executives, stock-based incentive plans should be utilized, along with share ownership guidelines.

•

Our compensation strategy should have a limited emphasis upon perquisites and other personal benefits.

Elements of Executive Compensation

The following discussion describes the various elements of executive compensation that we have provided to our named executive officers, as well as a discussion of why we pay each element, how we determine the amount we pay under each element and how each element fits into our overall compensation objectives.

Base Salary. The amount of base salary paid to each named executive officer is a major determinant of the amounts of all other elements of compensation paid to our named executive officers. For example, the annual awards under the Incentive Plan are based on a percentage of base salary. See “Annual Incentive Compensation,” beginning on page 30. In addition, the value of our long-term incentive compensation that the HR Committee has granted to our executive officers ranges from 100 percent to 150 percent of each named executive officer’s midpoint of his respective salary range. See “Long-Term Incentive Compensation,” beginning on page 32. Base salaries represent a small percentage of total compensation (approximately 20 percent in fiscal 2011). Positions are compared on the basis of job content to similar positions in companies in our proxy peer group and the energy services industry database. Salary ranges are reviewed on an annual basis and proposed salary ranges are reviewed and considered by the HR Committee in October of each year. The midpoint of each salary range is designed to approximate the 50th percentile of base salaries of such comparable companies. Our CEO provided the committee with an oral presentation discussing his individual performance and contributions, along with a performance evaluation of each named executive officer (other than himself and Mr. Best) that reflected individual goals and areas of accountability. Mr. Best also provided the committee with an oral presentation discussing his individual performance and contributions as Executive Chairman. Each named executive officer’s final base salary for 2011 (fiscal

year 2011 for Messrs. Best and Cocklin and calendar year 2011 for the remainder of the named executive officers) was established by the committee after considering the competitive benchmarking data for each position, as discussed below, the committee’s subjective evaluation of the performance of each named executive officer, the Company’s overall salary increase budget and related salary increase guidelines established by the Company as well as current economic conditions. Generally, the base salary for each named executive officer, as finally determined by the committee for 2011, was established at or near the salary range midpoint for his pay grade, based upon the factors discussed above. In addition, in recognition of the beginning of the transition of duties and responsibilities from Mr. Best to Mr. Cocklin as chief executive officer of the Company, effective October 1, 2010, Mr. Best’s base salary was decreased by 15 percent to $750,000 while Mr. Cocklin received a 35 percent increase in base salary to $750,000. In addition, the committee granted increases in base salaries to the remaining named executive officers in the following amounts, effective as of January 1, 2011: Mr. Meisenheimer, a six percent increase to $405,450; Mr. Gregory, a three percent increase to $334,180 and Mr. Haefner, a six percent increase to $310,050. The base salary increases were higher for Messrs. Meisenheimer and Haefner primarily because their base salaries were further below the midpoint of their salary ranges than the base salary of Mr. Gregory. The committee believes that the base salaries as finally determined for each of the named executive officers were appropriate and competitive with salaries offered for similar positions by companies in our proxy peer group and the energy services industry database and are consistent with our Total Rewards strategy.

Annual Incentive Compensation. We believe it is important to provide our named executive officers with a reasonable financial incentive to maximize the Company’s financial performance each year. Through our Incentive Plan, we provide our named executive officers, along with other officers, division presidents and other key management employees, an opportunity to earn an annual incentive award based upon the Company’s actual financial performance each year. The Incentive Plan, which has been designed to comply with Section 162(m) of the Code, is based on our ability to achieve a target level of EPS each year. The EPS performance measurement is the lynchpin of both our short-term (annual) and long-term compensation plans. The HR Committee believes that EPS is the most appropriate measurement of our financial performance both on an annual and long-term basis, because it reflects the growth of both our regulated and nonregulated operations. EPS is also one of the most well-known measurements of overall financial performance, which is widely used by financial analysts as well as the investing public. The committee believes that using this measurement as the basis for our incentive compensation plans aligns the interests of the participants in the Incentive Plan and the LTIP, including our named executive officers, with the interests of our shareholders.

For fiscal 2011, the HR Committee reviewed competitive compensation benchmarking data, as discussed below, to establish an annual target opportunity expressed as a percentage of salary earned for the fiscal year for each participant in the Incentive Plan. The committee has historically used varying percentages for annual target incentive award opportunities for all participants in the Incentive Plan, based on each participant’s particular pay grade, which range from Grades 11-14 for our named executive officers. Our pay grades are based on competitive market data, as well as the job content and responsibility of each participant, and the potential impact that each participant could have on the operations and financial performance of the Company. The target incentive award opportunities for each participant are reviewed each year and benchmarked against the 50th percentile as described above.

The Incentive Plan targets for fiscal 2011 for each of the named executive officers were as follows:


Name		Fiscal Year 2011 Incentive Plan Target as Percent (%) of Salary Earned
Robert W. Best		80
Kim R. Cocklin		80
Fred E. Meisenheimer		60
Louis P. Gregory		55
Michael E. Haefner		55

At its meeting in October 2010, the HR Committee established the threshold, target and maximum performance levels of EPS presented below, upon which the Incentive Plan’s awards would be based for fiscal 2011. The target EPS goal was based on our annual business plan and budget and took into account such factors in our regulated operations as the allowed rates of return in our established service areas, natural gas pricing and volatility, budgeted capital expenditures, expected growth within our service areas, competitive factors from other service providers and other business considerations embedded in the annual business planning process. The target EPS goal also took into account earnings expected from our nonregulated operations, including earnings from the provision of natural gas management and marketing services to municipalities, other local gas distribution companies and industrial customers as well as the provision of natural gas transportation and storage services to certain of our natural gas distribution divisions and third parties.

The Company’s target level of EPS was $2.27 for fiscal 2011 and the HR Committee adopted this level as the Incentive Plan’s target goal. A threshold level of performance was established at an EPS amount of $2.02. If we had earned an EPS less than $2.02, no awards would have been paid to any participant under the Incentive Plan. For fiscal 2011, we earned an EPS of $2.27. This performance attainment resulted in the named executive officers, and the other participants in the Incentive Plan, receiving awards equal to 100 percent of their respective target awards (as a specified percentage of salary earned for the fiscal year). The maximum payout opportunity under the Incentive Plan would have resulted in our named executive officers receiving an award equal to 200 percent of their target award, or a total of 110 percent to 160 percent of each of their respective salaries earned for the fiscal year, depending on each officer’s pay grade. To achieve a maximum award under the Incentive Plan, we would have had to earn an equivalent of $2.53 in EPS. The HR Committee has the discretion under the Incentive Plan to make downward adjustments to earned awards but may not make upward adjustments. For fiscal 2011, the committee did not use its discretion to make negative adjustments to any awards for any participant in the Incentive Plan, including the named executive officers. However, the committee had previously decided to place a limit under certain conditions on the amount of earned awards for all members of the Management Committee, which is composed of all our named executive officers, beginning in fiscal 2010. If the Total Shareholder Return during any fiscal year is negative, the earned award for each such officer for that fiscal year will be limited to the amount earned at the target level of performance. This limitation was not operative in fiscal 2011 both because compensation was paid at the target level of performance, as discussed above and the Total Shareholder Return was positive for the fiscal year at 16.6 percent.

For two of the last three fiscal years prior to fiscal 2011, we either reached or exceeded our target level of performance based on EPS, with the payouts to participants averaging approximately 107

percent of their target awards each year. Our EPS target levels under the plan have historically increased between 4 and 6 percent each year and typically have been within the range of announced EPS guidance provided to the public in October or November of each year. The following table summarizes the performance targets and actual performance attainment for the Incentive Plan for fiscal 2011:


Performances	Company EPS Performance	Percent (%) of Target Award Earned
Below Threshold	Less than $2.02	No award
Threshold	$2.02	50
Actual EPS Earned	$2.27	100
Target	$2.27	100
Maximum	$2.53	200

As discussed above in “Recently Adopted Changes in Executive Compensation”, beginning in fiscal 2012, the performance targets and actual performance attainment for the Incentive Plan will exclude any mark-to-market gains or losses recognized by the Company’s nonregulated operations. This change was made in an effort to remove the impact of such gains or losses on earnings since they do not truly reflect the operating performance of the Company.

Long–Term Incentive Compensation. From fiscal 2004 through fiscal 2008, we used time-lapse shares of restricted stock with a three-year cliff vesting period and performance-based RSU’s that were subject to a three-year performance criteria expressed as a cumulative EPS target amount, as our two forms of long-term incentive compensation under our LTIP. See “1998 Long-Term Incentive Plan,” beginning on page 41 for further information about the LTIP. In May 2009, the HR Committee began its current program of awarding grants that are structured with 50 percent of the targeted long-term value in the form of time-lapse RSU’s with three-year cliff vesting (as distinct from shares) with the remaining 50 percent in the form of performance-based RSU’s. The committee decided to grant time-lapse RSU’s (as distinct from shares) primarily because their terms are more aligned with the terms of the performance-based RSU’s. Typically, the value of the long-term compensation that the committee grants has ranged from 100 percent to 150 percent of each named executive officer’s midpoint of his respective salary range. All such grants in fiscal 2011 fell within that range for all named executive officers. We based the actual number and value of awards granted on the competitive compensation benchmarking of grants made by the companies in our proxy peer group and the energy services industry database, as discussed below.

The HR Committee believes that the payment of long-term incentive compensation in the form of grants of time-lapse RSU’s promotes and encourages long-term retention and service to the Company and better aligns the interests of our named executive officers with those of our shareholders through increased share ownership. The committee also believes that an equal amount of grants of performance-based RSU’s, as measured by cumulative EPS over a three-year performance period, provide a balanced approach to long-term compensation by rewarding our named executive officers for improved financial performance of the Company, thereby giving them an incentive to enhance long-term shareholder value. Finally, the committee believes this approach should also better align the interests of our named executive officers with those of our shareholders through promoting improved financial performance of the Company, increased shareholder value and increased share ownership.

With respect to the Company’s actual performance during the three-year performance period ended September 30, 2011, for the grants of performance-based RSU’s awarded in May 2009 for the

fiscal 2009-2011 performance period, the Company achieved a cumulative EPS amount of $6.54, compared to the cumulative EPS target amount of $6.63. Since the performance level attained was between threshold and target, straight-line interpolation was used to compute the actual number of performance-based RSU’s earned. Therefore, the participants, including the named executive officers, earned a total number of performance-based RSU’s equal to approximately 80 percent of the target plus dividend equivalents, in the form of shares of common stock issued in November 2011. Note that the TSR limitations on the payout of the grants of performance-based RSU’s will be operative beginning for the fiscal 2010-2012 performance period.

The committee also awarded grants of new performance-based RSU’s in May 2011 for the fiscal 2011-2013 performance period. The following table shows the three-year performance criteria for fiscal 2011-2013:

Performance-Based Restricted Stock Units Grants in May 2011

Fiscal Years 2011-2013 Cumulative EPS Targets


	Below Threshold	Threshold	Target	Maximum
Three-Year Cumulative EPS	<$6.90	$6.90	$7.15	$7.40
Percent of Award Earned	None	50%	100%	150%

As discussed above in “Recently Adopted Changes in Executive Compensation,” beginning on page 27, beginning in fiscal 2012, like under the Incentive Plan, the performance targets and actual performance attainment for any performance-based RSU’s granted under the LTIP will exclude any mark-to-market gains or losses recognized by the Company’s nonregulated operations. This same change was made in an effort to remove the impact of such gains or losses on earnings over the three year performance period since they do not truly reflect the operating performance of the Company over such period.

Retirement Benefits. Our Pension Account Plan (“PAP”) serves as the foundation of retirement benefits for our named executive officers. It is a qualified, cash balance defined benefit pension plan. Benefits under this plan become vested and non-forfeitable after completion of three years of continuous employment. For any named executive officer who retires with vested benefits under the plan, the compensation shown as “Salary” in the “Summary Compensation Table for Fiscal Year 2011,” beginning on page 39 would be considered eligible compensation in determining benefits.

Our named executive officers (as well as most of our other officers, division presidents and other employees designated by the Board) also participate in one of two supplemental retirement plans, which provide retirement benefits (as well as supplemental disability and death benefits). Each participant in these supplemental plans who has been a participant for at least two years and has attained age 55 is entitled to an annual supplemental pension in an amount that, when added to his or her annual pension payable under the PAP, equals 60 percent of his compensation, which will be generally equal to the sum of the amount of the participant’s last annual base salary and the amount of his or her last award under the Incentive Plan (75 percent of compensation in the case of Mr. Best), subject to reductions for less than ten years of employment with the Company and for retirement prior to age 62 (the “60% SERP”). In addition, should the Board appoint any officers to the Company’s Management Committee in the future, such officer will also participate in the 60% SERP. However, all other officers who have been appointed by the Board on or after August 5, 2009 instead participate in a supplemental account balance retirement plan that provides retirement benefits to the participants. The HR Committee believes that these retirement benefits at the amounts provided are an important

component of the total compensation and benefits that we provide under our Total Rewards strategy and are required to ensure that our overall executive compensation package remains competitive with packages offered by other major public companies in our industry. See the discussion under “Retirement Plans,” beginning on page 46 for more information on our retirement benefits.

Change in Control Severance Benefits. We have entered into severance agreements with each of the named executive officers to provide certain severance benefits for them in the event of the termination of their employment within three years following a “change in control” of the Company (as defined in the severance agreements and described generally in “Change in Control Severance Agreements,” beginning on page 48). The severance agreement for each named executive officer generally provides that the Company will pay such officer as severance pay in one lump sum an amount equal to (a) 2.5 times his total compensation (annual base salary and the higher of the last payment or the average of the three highest payments received under the Incentive Plan) and (b) the total of (i) an amount that is actuarially equivalent to an additional three years of annual age and service credits payable to the officer under our PAP (ii) an amount that is actuarially equivalent to an additional three years of Company matching contributions payable to the officer under our RSP, (iii) an amount that is generally actuarially equivalent to an additional three years of health and welfare benefits and (iv) an amount actuarially equivalent to 36 months of accident and life insurance coverage, along with disability coverage. If such lump sum severance payment results in the imposition of excise taxes imposed by Section 4999 of the Code, the officer has the ability to elect to have the payment reduced to a level that will result in no payment of such excise tax. In lieu of reducing the severance payments under the agreement, each participant may elect to have the Company pay the full severance amount, thereby leaving the participant responsible for personally paying the excise tax penalties imposed for “excess parachute payments.” The Board and the HR Committee modified the severance agreements for each of the named executive officers beginning in fiscal 2010 to this “best-net” approach, so that the Company would no longer be liable for tax gross-up payments on behalf of those individuals whose severance payments would have triggered excise tax penalties.

Additional Information on Executive Compensation

The compensation of our executive chairman, Mr. Best, and chief executive officer, Mr. Cocklin, were higher in fiscal 2011 than that of any of our other named executive officers, primarily in recognition of their levels of responsibility and the competitive market data for executive chairmen and chief executive officers of comparably sized companies in our proxy peer group and the energy services industry database. However, both Mr. Best and Mr. Cocklin participated in all the same compensation plans as the other officers and division presidents and were subject to the same performance measurement determinations under the incentive compensation plans. We do not have any individual compensation policies or plans that are not applied consistently to all of our officers and division presidents. We also do not have a policy under which the annual levels of compensation, and the grant of both Incentive Plan and LTIP awards, are adjusted each year to reflect the projected gains that may be realized by an executive officer from stock-based compensation. Each year, we set our target opportunities in incentive compensation based solely upon competitive market conditions and the other factors discussed below.

In addition, the HR Committee and our Board of Directors considered the results of our most recent shareholder advisory vote on executive compensation at our February 9, 2011 meeting of shareholders. Our shareholders overwhelmingly approved the compensation of our named executive officers for fiscal 2010, with over 96 percent of the shares voted in favor of such compensation.

Accordingly, our HR Committee and our Board decided to continue to adhere to its pay for performance philosophy and did not materially change our executive compensation decisions and policies over the last fiscal year. However, the HR Committee and Board will continue to review our executive compensation program in the future and will consider the views of our shareholders and other developments during such review.

Competitive Compensation Benchmarking

Like all major corporations, we operate in a competitive environment for talented executives. Pay Governance, the independent executive compensation consultant to the HR Committee, provided a comprehensive review of the compensation program elements and pay levels for companies similar to us and of comparable size as measured by financial measures and market capitalization for fiscal 2011. The competitive compensation benchmarking included assessments of all elements of compensation for our named executive officers, as well as the compensation program for the non-employee directors serving on the Board.

The competitive compensation benchmarking data reviewed by the HR Committee included base salary, annual incentive compensation and long-term incentive compensation found in the proxy statements filed by companies in the proxy peer group. This set of proxy peer group companies was also used to benchmark annual share utilization data, stock overhang and market capitalization data for long-term incentive compensation analysis. The companies in the proxy peer group were selected because they represent those companies considered by the committee to be the most comparable to the Company in terms of business operations, market capitalization and overall financial performance. The annual revenue for the companies in the proxy peer group ranged from $1.3 billion to $13.0 billion, with the average being $4.5 billion for the most recent year reported, while the Company reported revenue of $4.7 billion for the year ended September 30, 2010. The market capitalization for the companies in the proxy peer group ranged from $2.0 billion to $7.9 billion, with the average being $4.7 billion as of April 2011, while the market capitalization for the Company was $3.2 billion. The companies in the proxy peer group are selected annually by the committee, after its review of the recommendation of Pay Governance. The companies in the proxy peer group selected for the 2011 fiscal year were as follows:


		AGL Resources Inc.		Nicor, Inc.
		CenterPoint Energy Resources Corporation		NiSource, Inc.
		CMS Energy Corporation		ONEOK, Inc.
		EQT Corporation		Piedmont Natural Gas Company, Inc.
		Intergys Energy Group, Inc.		Vectren Corporation
		National Fuel Gas Corporation		WGL Holdings, Inc.

To supplement the executive compensation information derived from its study of the proxy peer group, the HR Committee also considered executive compensation benchmarking data from the latest Towers Watson U.S. CDB Energy Services Executive Compensation Database (“energy services industry database”). The companies in this database constitute a more diverse set of companies, including companies in the gas, nuclear and electric utilities industries. To adjust for size differences, Towers Watson employed a statistical analysis (single regression analysis) in the survey based on relative total annual revenues to determine competitive pay rates for our named executive officers based upon the data derived from all companies in the energy services industry database. The companies in this database are as follows:

AEI Services

Allegeheny Energy, Inc.

ALLETE, Inc.

Alliant Energy Corporation

Ameren Corporation

American Electric Power Company, Inc.

Areva

ATC Management, Inc.

Atmos Energy Corporation

Avista Corporation

BG US Services

Black Hills Power, Inc.

California Independent System Operator

Calpine Corporation

CenterPoint Energy Resources Corporation

CH Energy Group

Cleco Corporation

CMS Energy Corporation

Colorado Springs Utilities

Consolidated Edison, Inc.

Constellation Energy Group, Inc.

Covanta Holding Corporation

CPS Energy

DCP Midstream Partners, LP

Direct Energy

Dominion Resources, Inc.

DPL, Inc.

DTE Energy Company

Duke Energy Corporation

E.ON U.S.

Edison International

El Paso CGP Company

Electric Power Research Institute

Enbridge Energy Company, Inc.

Energen Corporation

Energy Future Holdings Corporation

Energy Northwest

Entergy Corporation

EPCO Holdings, Inc.

ERCOT

Exelon Corporation

First Solar, Inc.

FirstEnergy Corp.

FPL Group (Nextra Energy, Inc.)

GDF SUEZ Energy North America

Hawaiian Electric

IDACORP

Integrys Energy Group, Inc.

ISO New England

Kinder Morgan Kansas, Inc.

LES

Lower Colorado River Authority

MDU Resources Group, Inc.

Midwest Independent Transmission System Operator

Mirant Corporation

New York Independent System Operator

New York Power Authority

Nicor, Inc.

Northeast Utilities

NorthWestern Energy, LLC

NRG Energy, Inc.

NSTAR

NV Energy, Inc.

NW Natural

OGE Energy Corp.

Oglethorpe Power Corporation

Omaha Public Power

Pacific Gas and Electric Company

Pepco Holdings, Inc.

Pinnacle West Capital Corporation

PJM Interconnection

PNM Resources, Inc.

Portland General Electric

PPL Corporation

Progress Energy, Inc.

Proliance Holdings

Public Service Enterprise Group Incorporated

Puget Energy, Inc.

Regency Energy Partners LP

RRI Energy, Inc.

Salt River Project

Santee Cooper

SCANA Corporation

Sempra Energy

The Southern Company

Southern Maryland Electric Cooperative

Southern Union Company

Southwest Power Pool

Spectra Energy Corp.

STP Nuclear Operating

Targa Resources, Inc.

Tennessee Valley Authority

TransCanada Corporation

UIL Holdings Corporation

UniSource Energy Corporation

Unitil Corporation

Vectren Corporation

Westar Energy, Inc.

Westinghouse Electric Corp.

Wisconsin Energy Corporation

Wolf Creek Nuclear

Xcel Energy, Inc.

Using primarily the proxy peer group compensation analysis, along with the data from the energy services industry database, the targeted level of compensation for each named executive officer that represented the 50th percentile level for each position was determined. A named executive officer’s base salary, total cash compensation (base salary plus annual incentive award) and total direct compensation (base salary plus annual incentive award plus annualized long-term incentive compensation) were considered competitive if his targeted level of compensation (for each element as well as total compensation) fell within 15 percent above or below the 50th percentile competitive benchmark amount. For fiscal 2011, the targeted level of compensation of each of our named executive officers fell within such range.

Executive Compensation Consultants

The HR Committee has been granted in its charter the sole authority from the Board of Directors for the appointment, compensation and oversight of the Company’s outside compensation consultant. The committee retained Pay Governance during the 2011 fiscal year as its consultant to assist the committee with its responsibilities related to the Company’s compensation program for its executives and board of directors. Specifically, the committee directed Pay Governance to (i) regularly attend meetings of the committee, (ii) conduct studies of competitive compensation practices and (iii) develop conclusions and recommendations related to the executive compensation plans of the Company for consideration by the committee. Pay Governance prepared reports and analyses and assisted with (i) the identification of the Company’s proxy peer group, (ii) an assessment of competitive compensation for non-employee directors, and (iii) a review of base salary, annual incentives and long-term incentive compensation opportunities relative to competitive practices. Pay Governance also prepared a report on emerging trends and developments in executive compensation, provided recommendations regarding our executive compensation strategy and performed an assessment of the risks contained in the Company’s incentive compensation plans. A senior consultant from Pay Governance attended all four HR Committee meetings held in fiscal 2011. Pay Governance provided no additional services to the Company or its affiliates during fiscal 2011.

Management’s Role in Setting Executive Compensation

The HR Committee and Kim Cocklin, our Chief Executive Officer since October 1, 2010, met with representatives of Pay Governance at the beginning of fiscal 2011 to review and discuss the compensation of all other named executive officers. However, at no time did Mr. Cocklin meet with representatives of Pay Governance regarding his own compensation. The only other executive officer of the Company who regularly worked with Pay Governance is the senior vice president, human resources. For fiscal 2011, Mr. Cocklin recommended to the committee compensation for Messrs. Meisenheimer, Gregory and Haefner, while Pay Governance provided to the committee general guidance and competitive compensation data for Mr. Best.

Both Mr. Best and Mr. Cocklin may be present during a portion of the committee’s meetings on executive compensation. However, Mr. Best and Mr. Cocklin and any other members of management in attendance at committee meetings are excused when that executive’s compensation is discussed and decisions regarding his compensation are reached by the committee. Messrs. Best, Meisenheimer, Gregory and Haefner attend the committee’s meetings except when compensation of the executive officers is discussed. All decisions by the committee concerning executive compensation levels to be paid to the CEO and the other named executive officers are approved by the Board.

Executive Compensation Recoupment Policy

In November 2010, our Board of Directors adopted our clawback policy, which provides for the recoupment by the Company under certain circumstances of incentive compensation, including annual cash bonuses, stock-based awards, performance-based compensation and any other forms of cash or equity compensation other than salary (“awards”). This policy applies to any current or former employee holding (or who held) a position of division president or corporate vice president or above. In the event of an accounting restatement of the Company’s previously issued financial statements due to the material noncompliance of the Company with any financial reporting requirement under the federal securities laws, the Company will seek recovery from any current or former officer who received the amount or portion of any awards paid or granted during the three-year period preceding

the date on which the Company is required to prepare an accounting restatement, based on the erroneous data, in excess of what would have been paid or granted to the officer under the accounting restatement.

In addition, in the event of an accounting restatement as a result of errors, omission, fraud or other causes, the HR Committee shall review the facts and circumstances underlying the restatement (including any potential wrongdoing and whether the restatement was the result of negligence or intentional or gross misconduct) and may, in its discretion, direct that the Company recover all or a portion of any award from one or more officers with respect to any fiscal year in which the Company’s financial results are negatively affected by such restatement. If (a) the payment, grant or vesting of any award(s) is based upon the achievement of financial results that are subsequently restated or (b) a lower payment, award value or vesting would have occurred based upon the restated financial results, the committee may seek to recoup, and such officer shall forfeit or repay, all or any portion of such excess compensation as the committee deems appropriate. Finally, if the committee determines that an officer engaged in an act of fraud or misconduct that contributed to the need for a financial restatement, the committee may, in its discretion, recover and the officer shall forfeit or repay, all of the officer’s awards for the relevant period, plus a reasonable rate of interest. This policy, however, does not affect the Company’s ability to recoup executive compensation under any other applicable law or regulation, including but not limited to the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).

Policy Prohibiting Hedging-Related Transactions

Also in November 2010, our Board of Directors adopted a policy prohibiting hedging transactions in our common stock as an amendment to our insider trading policy, which provides that no employee of Atmos Energy or member of our Board of Directors may purchase any financial instruments (including, without limitation, prepaid variable forward contracts, equity swaps, collars and exchange funds) that establish a short position in our common stock and are designed to hedge or offset any decrease in the market value of our common stock granted by Atmos Energy as part of compensation to employees or directors or our common stock already held by them. In addition, the following transactions are prohibited: (i) ”short sales,” which are sales of our common stock that are not then owned, (ii) trading of put options, call options or other derivatives of our common stock and (iii) purchases of our common stock on margin, or holding our common stock in a margin account, borrowing against any account in which our common stock is held or otherwise pledging our common stock as collateral for a loan. However, any such arrangements already in existence as of November 3, 2010 have been allowed to continue, provided that the employee or director had disclosed the arrangement to the General Counsel or Corporate Secretary.

Share Ownership Guidelines

We have adopted share ownership guidelines for our named executive officers, and for other officers and division presidents, which are voluntary and are intended to be achieved by each such executive over the course of five years. The HR Committee believes that executive share ownership promotes better alignment of the interests of our executives with those of our shareholders and it monitors compliance with the ownership guidelines each year. The executive chairman and the chief executive officer each have a guideline to reach a share ownership position of five times his base salary, with each of the remaining named executive officers having a guideline to reach a share ownership position of 2.5 times base salary. The share ownership positions include shares of unvested time-lapse RSU’s but do not include stock options or unvested performance-based RSU’s. Each of the named executive officers has achieved his individual ownership objective.

NAMED EXECUTIVE OFFICER COMPENSATION

Summary of Cash and Other Compensation

The following table provides information concerning compensation we paid to or accrued on behalf of our Principal Executive Officer, our Principal Financial Officer and the three other most highly compensated executive officers serving as such on September 30, 2011.

Summary Compensation Table for Fiscal Year 2011(a)


Name and Principal Position	Year		Salary ($)		Stock Awards ($)(b)		Non-Equity Incentive Plan Compensation ($)(c)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(d)		All Other Compensation ($)(e)		Total ($)
Robert W. Best(f) Executive Chairman of the Board		2011 2010 2009		750,000 875,372 848,844		1,780,760 1,577,951 1,655,960		600,000 706,152 657,000		135,303 197,486 3,549,649		163,276 168,529 202,323		3,429,339 3,525,490 6,913,776

Kim R. Cocklin(g) President and Chief Executive Officer		2011 2010 2009		743,330 552,692 537,328		1,783,052 916,414 2,258,079		594,664 362,253 337,000		1,488,867 783,815 705,159		132,722 155,888 202,833		4,742,635 2,771,062 4,040,399

Fred E. Meisenheimer Senior Vice President and Chief Financial Officer		2011 2010 2009		398,830 373,250 309,522		682,581 590,861 558,812		239,298 229,500 184,500		525,657 1,446,042 1,334,277		82,592 63,366 46,064		1,928,958 2,703,019 2,433,175

Louis P. Gregory Senior Vice President and General Counsel		2011 2010 2009		331,372 321,757 312,006		484,868 410,744 363,411		182,255 178,445 135,900		588,707 329,305 852,591		71,230 66,941 74,959		1,658,432 1,307,192 1,738,867

Michael E. Haefner(h) Senior Vice President, Human Resources		2011 2010 2009		304,988 288,786 —		476,086 403,048 —		167,743 160,875 —		301,265 228,141 —		55,254 40,511 —		1,305,336 1,121,361 —

(a)	No bonuses, as defined by applicable SEC rules and regulations, were paid or options awarded to any named executive officers in fiscal years 2011, 2010 or 2009.

(b)

In accordance with applicable SEC rules, the valuation of stock awards in this table is based upon the grant date fair value of time-lapse restricted stock and time-lapse RSU’s granted during fiscal 2009-2011 along with performance-based RSU’s granted during fiscal 2009-2011 and excludes any estimate of forfeitures related to service vesting conditions. Note that due to a change in applicable SEC rules, the valuation of stock awards is no longer based on the compensation cost of awards recognized for financial statement purposes but instead are valued at the grant date fair value calculated in accordance with FASB ASC Topic 718. As a result, the amounts shown for fiscal 2009 have been changed to comply with the requirements of the new rules. The valuation also includes the fair value of the time-lapse RSU’s converted from the portion of incentive compensation elected to be converted by the named executive officers in the prior fiscal year. In our financial statements, we use an estimated forfeiture rate of two percent (2%) of each grant (other than special one-time grants). The fair value of time-lapse-restricted stock, time-lapse RSU’s and performance-based RSU’s was determined based on the mean of the highest and lowest prices of our common stock on the grant date as reported on the NYSE Consolidated Tape, plus the value of the dividend equivalents for performance-based RSU’s.

The fair value of the stock awards of restricted stock, RSU’s and performance-based RSU’s on the grant date are shown in the following table at their maximum value, assuming the highest level of performance conditions will be achieved during the performance period of the performance-based RSU’s:


	Year		Stock Awards ($)
Robert W. Best		2011		2,671,451
		2010		1,973,666
		2009		2,066,759
Kim R. Cocklin		2011		2,673,743
		2010		1,114,271
		2009		2,463,478
Fred E. Meisenheimer		2011		981,406
		2010		722,766
		2009		690,855
Louis P. Gregory		2011		693,082
		2010		501,429
		2009		436,768
Michael E. Haefner		2011		684,300
		2010		493,733
		2009		—

(c)

The amounts reflect the payments attributable to performance achieved at the level of 100 percent of target EPS in fiscal 2011 under our Incentive Plan. For a discussion of the performance criteria established by our HR Committee for awards in fiscal 2011 under our Incentive Plan, see “Elements of Executive Compensation,” beginning on page 29. Awards under the Incentive Plan are paid in cash and are based on the participant’s annual salary as of the grant date of the award. However, participants may elect prior to the beginning of each fiscal year to convert all or a portion of their awards either to bonus stock, with a premium equal to 10 percent of the total amount converted, or to time-lapse RSU’s, with a premium equal to 50 percent of the amount converted, with such units being awarded under our LTIP. The amounts shown above do not include incentive compensation that was converted through an election by participating named executive officers prior to the beginning of fiscal 2011 to time-lapse RSU’s, as shown in the table below. Such Incentive Plan payments include a premium of 50 percent of the value associated with the conversion in November 2011 to shares of time-lapse RSU’s, which will be reflected in the Grants of Plan-Based Awards table for fiscal 2012. These units vest three years following the date of grant. The conversion elections are reflected in the table below.


	Incentive Plan Award ($)		Cash (%)		Amount ($)		Restricted Stock Units Elected (%)		Value of Restricted Stock Units ($)		Units (#)
Robert W. Best		600,000		—		—		100		900,000		25,648
Kim R. Cocklin		594,664		50		297,332		50		445,998		12,710
Fred E. Meisenheimer		239,298		—		—		100		358,947		10,229
Louis P. Gregory		182,255		—		—		100		273,382		7,791
Michael E. Haefner		167,743		—		—		100		251,614		7,171

Mr. Cocklin elected to convert to time-lapse RSU’s 50 percent of his Incentive Plan payment attributable to fiscal 2011. Accordingly, in November 2011, Mr. Cocklin received 50 percent of his total Incentive Plan payment of $594,664 in cash or $297,332, while he received 50 percent in the form of time-lapse RSU’s valued at $445,998 (reflecting a 50 percent premium on the remaining $297,332 of his total Incentive Plan payment). Such units were issued on November 8, 2011, based on the mean of the highest and lowest prices of our common stock that day, as reported on the NYSE Consolidated Tape, of $35.09 per share or 12,710 units. Messrs. Best, Meisenheimer, Gregory and Haefner elected to convert 100 percent of their respective Incentive Plan payments attributable to fiscal 2011 to time-lapse RSU’s. Accordingly, in November 2011, Mr. Best received time-lapse RSU’s valued at $900,000 or 25,648 units; Mr. Meisenheimer received time-lapse RSU’s valued at $358,947 or 10,229 units, Mr. Gregory received time-lapse RSU’s valued at $273,382 or 7,791 units and Mr. Haefner received time-lapse RSU’s valued at $251,614 or 7,171 units (with all such grants reflecting a 50 percent premium). Each of such units was issued on November 8, 2011 also at $35.09 per share.

(d)

The amounts reflect the aggregate current year increase in pension values for each named executive officer based on the change in the present value of the benefit as presented in the “Pension Benefits for Fiscal Year 2011” table on page 46. The present value is based on the earliest age for which an unreduced benefit is available and assumptions from the September 30, 2010 and September 30, 2011 measurement dates for our Pension Account Plan.

(e)	The components of “All Other Compensation” are reflected in the table to follow.

(f)	Mr. Best was appointed Executive Chairman of the Company, effective October 1, 2010.

(g)	Mr. Cocklin was appointed President and CEO of the Company, effective October 1, 2010.

(h)

Mr. Haefner joined the Company on June 2, 2008. However, he did not become one of the top three named executive officers other than the Principal Executive Officer or the Principal Financial Officer until October 1, 2009. Accordingly, no compensation information is presented for Mr. Haefner in fiscal 2009.

All Other Compensation

for Fiscal Year 2011


Name	Company Contributions to Retirement Savings Plan ($)	Cost of Premiums for Company- Paid Term Life Insurance ($)	Dividends/ Dividend Equivalents Paid on Restricted Stock/Unit Awards ($)(a)	Financial Planning ($)(b)	Perquisites ($)(c)	Total ($)
Robert W. Best	9,800	1,938	145,853	5,685	—	163,276
Kim R. Cocklin	9,800	1,938	116,813	4,171	—	132,722
Fred E. Meisenheimer	9,800	1,938	68,854	2,000	—	82,592
Louis P. Gregory	9,800	1,835	57,595	2,000	—	71,230
Michael E. Haefner	9,800	1,689	41,765	2,000	—	55,254

(a)

The amounts represent the dividends paid on unvested time-lapse restricted stock awards or dividend equivalents paid on time-lapse RSU’s. Dividends are paid on shares of unvested restricted shares of common stock at the same rate as on non-restricted shares of common stock. Dividend equivalents are also paid on unvested time-lapse RSU’s at the same rate as dividends on non-restricted shares of common stock.

(b)	We provide financial planning services to our named executive officers, which benefit is valued at the actual charge for the services.

(c)	No named executive officer received perquisites and other personal benefits with an aggregate value equal to or exceeding $10,000 during fiscal 2011.

1998 Long-Term Incentive Plan

To provide our named executive officers, other officers, division presidents and other key management employees with the incentive to achieve our long-term growth and profitability goals as well as to focus upon the creation of shareholder value, the HR Committee makes recommendations to the Board concerning grants of long-term incentive awards under our LTIP.

The HR Committee recommends all annual long-term incentive grants at its regularly scheduled March meeting, which are then approved by the Board at its regularly scheduled April or May meeting. In addition, when an award is granted in connection with a pre-established performance goal, the committee approves the performance goal and the related compensation formula within the first 90 days of the fiscal year. Each year, prior to making grants, the committee establishes a target long-term incentive value for the LTIP participants, including the named executive officers. The actual value of grants ultimately received by participants may differ from the intended value or target long-term incentive value granted, depending upon share price performance and any performance considerations imposed upon such awards.

No options have been granted to any participants since fiscal 2003 although they may still be granted under the terms of the LTIP. However, some participants did receive options in fiscal 2004 and 2005 pursuant to their election to convert all or a portion of their incentive compensation received under the Incentive Plan in those years, which election is no longer allowed under the Incentive Plan. Options may be exercisable in full at the time of grant or may become exercisable in one or more

installments. Options are exercisable for a period of ten years after the date of grant of the option. Since October 1, 2007, under the LTIP, at least 25 percent of the number of shares of common stock acquired through the exercise of any options granted after that date may not be sold or otherwise transferred by the participant for at least one year after the date of exercise. In the event of a participant’s termination of service, the options lapse 90 days after said termination, except in the case of retirement, in which case the retiring participant may exercise the options at any time within three years from the date of retirement. In the event of death, the options may be exercised by the personal representative of the optionee at any time within three years from the date of death.

As discussed above, in “Long-Term Incentive Compensation,” beginning on page 32, from fiscal 2004 through fiscal 2008, we used shares of time-lapse restricted stock and performance-based RSU’s as our form of long-term incentive compensation. All restrictions lapse on time-lapse restricted stock at the conclusion of the third year following the date of grant, except for any grants that may be made by our Board in connection with the appointment of an officer. Dividends are paid on all time-lapse restricted stock after the date of grant during the period before the restrictions have lapsed at the same rate as other shares. Dividend equivalents are paid on the time-lapse RSU’s at the same time and at the same rate as dividends are paid on time-lapse restricted stock and unrestricted shares of common stock. Once the restrictions have lapsed, the shares are issued to the participant by the Company, net of shares withheld for taxes, provided that he or she is an employee of the Company at that time.

Performance-based RSU’s are subject to a three-year performance criterion expressed as a cumulative EPS target amount. The EPS target is derived from our annual business plan and represents the same EPS target at the time of grant as that used under the Incentive Plan; the EPS targets added to the Incentive Plan’s target EPS for the second and third years have historically represented a growth in EPS of 4 percent to 6 percent each year, on average. At the conclusion of the three-year performance period, the total number of performance-based RSU’s to be issued is determined by a formula with an established threshold, target and maximum number of RSU’s earned, ranging from 0 percent to 150 percent of the performance-based RSU’s granted, based on the cumulative amount of EPS achieved over the three-year performance period. Although our LTIP provides that cash, shares of our common stock or a combination thereof may be issued to participants in payment for their units, we have always paid participants for their units in the form of shares of our common stock at the end of each three-year performance period. In addition, dividend equivalents are credited to each participant’s account with respect to the performance-based RSU’s earned, with the payment of such dividend equivalents in the form of additional shares of stock not occurring until the three-year cumulative EPS performance targets are measured and vesting is completed. Beginning with grants made to our named executive officers during fiscal 2010, any distributions of awards of performance-based RSU’s that have been granted to our named executive officers during fiscal 2010 or thereafter will be reduced to the amount awarded at the target level of performance, unless the Total Shareholder Return during the three-year performance period is positive. In addition, as discussed above under “Long-Term Incentive Compensation,” beginning on page 32, beginning with grants in fiscal 2012, the performance targets and actual performance attainment for all performance-based RSU’s granted under the LTIP will exclude any mark-to-market gains or losses recognized by the Company’s nonregulated operations.

Grants of Plan-Based Awards

The following table shows the grants of executive compensation plan-based awards to the named executive officers during fiscal 2011.

Grants of Plan-Based Awards for Fiscal Year 2011(a)


Name	Grant Date		Estimated Future Payouts Under Non-Equity Incentive Plan Awards(b)						Estimated Future Payouts Under Equity Incentive Plan Awards(c)			All Other Stock Awards: Number of Shares of Stock or Units (#)	Grant Date Fair Value of Stock and Option Awards ($)
Name	Grant Date		Threshold ($)		Target ($)		Maximum ($)		Threshold (#)	Target (#)	Maximum (#)		Grant Date Fair Value of Stock and Option Awards ($)
Robert W. Best
Incentive Plan		10/01/10		300,000		600,000		1,200,000	—	—	—	—		—
Restricted Stock Units		11/02/10		—		—		—	—	—	—	8,895		264,807	(d)
Restricted Stock Units		05/03/11		—		—		—	—	—	—	23,100		801,801
PBR Stock Units		05/03/11		—		—		—	11,550	23,100	34,650	—		801,801

Kim R. Cocklin
Incentive Plan		10/01/10		297,332		594,664		1,189,328	—	—	—	—		—
Restricted Stock Units		11/02/10		—		—		—	—	—	—	9,126		271,690	(d)
Restricted Stock Units		05/03/11		—		—		—	—	—	—	23,100		801,801
PBR Stock Units		05/03/11		—		—		—	11,550	23,100	34,650	—		801,801

Fred E. Meisenheimer
Incentive Plan		10/01/10		119,649		239,298		478,596	—	—	—	—		—
Restricted Stock Units		11/02/10		—		—		—	—	—	—	11,564		344,250	(d)
Restricted Stock Units		05/03/11		—		—		—	—	—	—	7,750		269,003
PBR Stock Units		05/03/11		—		—		—	3,875	7,750	11,625	—		269,003

Louis P. Gregory
Incentive Plan		10/01/10		92,784		182,255		364,509	—	—	—	—		—
Restricted Stock Units		11/02/10		—		—		—	—	—	—	8,991		267,688	(d)
Restricted Stock Units		05/03/11		—		—		—	—	—	—	5,400		187,434
PBR Stock Units		05/03/11		—		—		—	2,700	5,400	8,100	—		187,434

Michael E. Haefner
Incentive Plan		10/01/10		85,397		167,743		335,487	—	—	—	—		—
Restricted Stock Units		11/02/10		—		—		—	—	—	—	8,106		241,313	(d)
Restricted Stock Units		05/03/11		—		—		—	—	—	—	5,400		187,434
PBR Stock Units		05/03/11		—		—		—	2,700	5,400	8,100	—		187,434

(a)	No options were awarded to any named executive officer in fiscal 2011.

(b)

The amounts reflect the estimated payments which could have been made under our Incentive Plan, based upon the participant’s annual salary as of the date presented. The plan provides that our officers may receive annual cash incentive awards based on the performance and profitability of the Company. The HR Committee establishes annual target awards for each officer. The actual amounts earned by the named executive officers in fiscal 2011 under the plan are set forth under the “Non-Equity Incentive Plan Compensation” column in the “Summary Compensation Table for Fiscal Year 2011,” beginning on page 39.

(c)

The amounts reflect the performance-based RSU’s granted under our LTIP, which vest three years from the beginning of the performance measurement period (October 1, 2010), at which time the holder is entitled to receive a percentage of the performance-based RSU’s granted, based on our cumulative EPS performance over the period October 1, 2010 to September 30, 2013, payable in shares of our common stock including credited dividend equivalents. The grant date fair value on May 3, 2011 of $34.71, which is the mean of the highest and lowest prices of the stock on the date of grant, as reported on the NYSE Consolidated Tape, is reflected at the target level of performance.

(d)

The amounts reflect the incentive compensation received under the Incentive Plan for fiscal 2010 attributable to conversions to shares of time-lapse RSU’s issued under our LTIP. Such shares were granted at the fair market value of $29.77 on the date of grant on November 2, 2010. The grant date fair value is the value of the shares attributable to the original amount of incentive compensation converted plus the 50 percent value premium received in connection with such conversion.

Outstanding Equity Awards

The following table shows the outstanding equity awards held by the named executive officers at September 30, 2011.

Outstanding Equity Awards at Fiscal Year-End for 2011(a)


	Option Awards						Stock Awards
Name	Number of Securities Underlying Unexercised Options Exercisable (#)		Option Exercise Price ($)		Option Expiration Date		Number of Shares of Stock or Units of Stock That Have Not Vested (#)(b)		Market Value of Shares of Stock or Units of Stock That Have Not Vested ($)(c)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(d)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(c)
Robert W. Best		62,900	$	21.23		03/11/2013		105,795		3,433,048		47,100		1,528,395
Kim R. Cocklin		—		—		—		93,392		3,030,570		35,100		1,138,995
Fred E. Meisenheimer		—		—		—		53,503		1,736,172		15,750		511,088
Louis P. Gregory		—		—		—		42,924		1,392,884		10,900		353,705
Michael E. Haefner		—		—		—		30,222		980,704		10,900		353,705

(a)

There were no securities underlying either unexercised options, which were unexercisable or unexercised unearned options granted under any equity incentive plan at the end of fiscal 2011. This table does not include amounts of time-lapse RSU’s that were issued in November 2011 as a result of elections by the named executive officers to convert all or a portion of incentive compensation.

(b)	Time-lapse restricted stock and time-lapse RSU’s generally vest three years from the date of grant, as reflected in the next table.

(c)	Market value is based on the closing price of our common stock of $32.45, as reported on the NYSE Consolidated Tape on September 30, 2011.

(d)

See footnote (c) to the “Grants of Plan-Based Awards for Fiscal Year 2011” table, beginning on page 43 for a discussion of the vesting terms of our performance-based RSU’s. Based on our projected performance at September 30, 2011, performance-based RSU’s, at the target level of performance, will vest as indicated in the “Performance-Based Restricted Stock Units Vesting Schedule” on page 45.

Time-Lapse Restricted Stock and Time-Lapse Restricted Stock Units Vesting Schedule(a)


	11-11-11(b)	05-05-12(c)	11-10-12(b)	05-04-13(c)	11-02-13(b)	05-03-14(c)	Total
Robert W. Best	13,328	28,000	8,472	24,000	8,895	23,100	105,795
Kim R. Cocklin	17,783	14,000	17,383	12,000	9,126	23,100	93,392
Fred E. Meisenheimer	7,672	9,000	9,517	8,000	11,564	7,750	53,503
Louis P. Gregory	11,023	5,000	7,010	5,500	8,991	5,400	42,924
Michael E. Haefner	—	5,000	6,216	5,500	8,106	5,400	30,222

(a)	This table does not include amounts of time-lapse RSU’s that were issued in November 2011 as a result of elections by the named executive officers to convert all or a portion of incentive compensation.

(b)	The amounts represent time-lapse RSU’s issued under our LTIP as a result of the participant’s election to convert all or a portion of his Incentive Plan payment.

(c)	The amounts represent time-lapse RSU’s granted under our LTIP. These units vest three years from the date of grant.

Performance-Based Restricted Stock Units Vesting Schedule


	9-30-12		9-30-13		Total
Robert W. Best		24,000		23,100		47,100
Kim R. Cocklin		12,000		23,100		35,100
Fred E. Meisenheimer		8,000		7,750		15,750
Louis P. Gregory		5,500		5,400		10,900
Michael E. Haefner		5,500		5,400		10,900

Option Exercises and Stock Vested

The following table sets forth the exercises of stock options and vested stock received by the named executive officers during fiscal 2011.

Option Exercises and Stock Vested for Fiscal Year 2011


Name	Option Awards				Stock Awards(a)
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)		Stock Awards(#)(b)		Value Realized on Vesting ($)(c)
Robert W. Best		285,592		2,224,119		61,340		2,041,202
Kim R. Cocklin		—		—		58,636		1,822,437
Fred E. Meisenheimer		—		—		15,758		508,079
Louis P. Gregory		—		—		16,677		536,542
Michael E. Haefner		—		—		8,877		290,639

(a)	The named executive officers elected to have vested shares withheld, in each case, to cover applicable state and federal taxes incurred, upon receipt of their vested shares.

(b)	Includes shares that vested during fiscal 2011 attributable to time-lapse RSU’s and performance-based RSU’s, including shares received as dividend equivalents on performance-based RSU’s over the three fiscal-year performance period.

(c)

The value received on vesting represents the market value of the shares received based on the mean of the highest and lowest prices of our common stock as reported on the NYSE Consolidated Tape on the vesting dates as follows: $29.33 on October 1, 2010; $30.36 on November 5, 2010; $34.74 on April 29, 2011; $32.60 on June 2, 2011 and $32.87 on September 30, 2011.

Pension Benefits

The table below shows the present value of accumulated benefits payable to each of the named executive officers, including the number of years of service credited to each such named executive officer under our PAP and Supplemental Plans, along with the total amount of payments made during fiscal 2011. See the discussion under “Pension Account Plan” below and “Supplemental Plans,” beginning on page 47 for more information on these plans. We used the following assumptions in calculating the present value of accumulated benefits for the PAP and Supplemental Plans:

Pension Benefits for Fiscal Year 2011


• Retirement age:		(a) 65, or current age if later, for the PAP (62, or current age if later, for Mr. Best, since he was a participant in the Company’s retirement plan in 1998 at the time of the adoption of the PAP and thus is eligible for “grandfathered benefits”) (b) 62, or current age if later, for the Company’s Supplemental Executive Benefits Plan (“SEBP”) and the Company’s Supplemental Executive Retirement Plan (“SERP”)

• Discount Rate:		5.05 percent

• Postretirement mortality:		Use of the applicable mortality table for 2011, as defined in Code Section 417(e)(3)


Name	Plan Name	Number of Years Credited Service(#)		Present Value of Accumulated Benefit($)		Payments During Last Fiscal Year($)
Robert W. Best(a)	Pension Account Plan		14.500		555,177		—
	Supplemental Executive Benefits Plan		14.500		15,992,202		—
Kim R. Cocklin(b)	Pension Account Plan		5.333		88,647		—
Kim R. Cocklin(b)	Supplemental Executive Retirement Plan		5.333		3,577,152		—
Fred E. Meisenheimer(c)	Pension Account Plan		11.167		224,190		—
	Supplemental Executive Retirement Plan		11.167		4,750,854		—
Louis P. Gregory(d)	Pension Account Plan		11.000		195,909		—
Louis P. Gregory(d)	Supplemental Executive Retirement Plan		11.000		2,930,986		—
Michael E. Haefner(e)	Pension Account Plan		3.250		44,752		—
	Supplemental Executive Retirement Plan		3.250		643,634		—

(a)	Mr. Best is currently eligible for retirement in each plan.

(b)	Mr. Cocklin is eligible for early retirement with an immediate PAP benefit and a reduced benefit under the SERP.

(c)	Mr. Meisenheimer is currently eligible for retirement in each plan.

(d)	Mr. Gregory is currently eligible for early retirement with an immediate PAP benefit and a reduced benefit under the SERP.

(e)	Upon attainment of age 55, Mr. Haefner will be eligible for early retirement with an immediate PAP benefit and a reduced benefit under the SERP.

Retirement Plans

Pension Account Plan. Our PAP is a qualified, cash balance defined benefit pension plan under both the Code and the Employee Retirement Income Security Act of 1974, as amended. The plan covers a majority of our employees, including all named executive officers. Benefits under this plan become vested and non-forfeitable after completion of three years of continuous employment. Under

the terms of the PAP, a vested participant receives a benefit based on the value of the cash balance account at termination or retirement from the Company. Benefits payable under our retirement plan are not offset by Social Security benefits. Under the Code, the annual compensation of each employee to be taken into account under our retirement plan for 2011 cannot exceed $245,000.

The earnings utilized in the PAP include W-2 earnings, 401(k) deferrals and Code Section 125 (“cafeteria plan”) reductions, while it excludes all incentive pay and expense reimbursements. All participants are fully vested in their account balances after three years of eligible service and may choose to receive their account balances in the form of a lump sum or an annuity. For any named executive officer who retires with vested benefits under the plan, the compensation shown as “Salary” in the “Summary Compensation Table for Fiscal Year 2011,” beginning on page 39 would be considered eligible compensation in determining benefits, subject to applicable limitations under the Code.

Supplemental Plans. Mr. Best also participates in the Company’s SEBP, while Messrs. Cocklin, Meisenheimer, Gregory and Haefner participate in the Company’s SERP, (collectively, the “Supplemental Plans”), which provide retirement benefits (as well as supplemental disability and death benefits) to most officers, division presidents and other employees, all as approved by the Board. For any participant in the SERP prior to November 2008, the SERP provides that an officer or division president (or any other employee selected by the Board) who has participated in the SERP for at least two years and has attained age 55 is entitled to an annual supplemental pension in an amount that, when added to his or her annual pension payable under the PAP, equals 60 percent of his compensation, subject to reductions for less than ten years of employment and for retirement prior to age 62. Mr. Best is entitled to 75 percent of his compensation under the SEBP. The Board amended the SERP to provide that any participant who begins participation in the SERP beginning in November 2008 must have participated in the SERP for at least three years and attained age 55 to receive the same benefits, subject to reductions for less than ten years of participation in the plan and for retirement prior to age 62.

The Supplemental Plans cover compensation in an amount equal to the sum of (a) the greater of the participant’s annual base salary at the date of termination of employment or the average of the participant’s annual base salary for the highest of three calendar years (whether or not consecutive) of employment with the Company and (b) the greater of the amount of the participant’s last award under any of the Company’s annual performance bonus or incentive plans or the average of the participant’s highest three performance awards under such plans (whether or not consecutive). The amount of current compensation covered by the Supplemental Plans as of the end of fiscal 2011 for each of the named executive officers listed in the Summary Compensation Table is as follows: Mr. Best, $1,629,207; Mr. Cocklin, $1,344,700; Mr. Meisenheimer, $644,750; Mr. Gregory, $516,480 and Mr. Haefner, $477,750.

Each of the named executive officers has also entered into a participation agreement with the Company as required by the Supplemental Plans. Each of the Supplemental Plans provides that the accrued benefits, as calculated pursuant to the plan, of each participant will vest if: (a) the plan is terminated by the Company; (b) the plan is amended by the Company, resulting in a decrease in the benefits otherwise payable to the participant; (c) the participant’s employment is terminated by the Company for any reason other than “cause”; (d) the participant’s participation in the plan is terminated by the Company for any reason other than “cause” prior to the participant’s termination of employment; (e) within any time during the three-year period following a “change of control” of the

Company (as such term is defined in the plan), (i) the participant’s employment is terminated involuntarily by the Company for any reason other than “cause” or (ii) the participant is demoted or reassigned to a position that would cause him to cease to be eligible for participation in the plan; or (f) in anticipation of a “change in control” (whether or not a “change in control” ever occurs), if (i) the participant’s employment is terminated involuntarily by the Company for any reason other than “cause” at the request of a party to a pending transaction that would constitute a “change in control,” if and when the transaction were consummated or (ii) the participant’s participation in the plan is terminated for any reason other than “cause” prior to the participant’s termination of employment. The participation agreements set forth the specific rights of the participants to their accrued benefits upon the occurrence of the events described above and constitute enforceable contracts separate from the provisions of the Supplemental Plans.

Change in Control Severance Agreements

We have entered into severance agreements with each of the current named executive officers to provide certain severance benefits for them in the event of the termination of their employment within three years following a “change in control” of the Company (as defined in the severance agreements and described generally below). In addition, such executive officer will be entitled to all rights and benefits, if any, provided under any other plan or agreement between him and the Company.

The severance agreement for each named executive officer generally provides that the Company will pay such officer as severance pay in one lump sum an amount equal to (a) 2.5 times his total compensation (annual base salary and average amount of annual incentive compensation received under the Incentive Plan) and (b) the total of (i) an amount that is actuarially equivalent to an additional three years of annual age and service credits payable to the officer under the PAP and (ii) an amount that is actuarially equivalent to an additional three years of Company matching contributions payable to the officer under the RSP. The Company is also obligated to provide the officer with all medical, dental, vision and any other health benefits which qualify for continuation coverage under Code Section 4980B, for a period of 18 months from the date of termination. In addition, following the end of the 18-month period, the Company is to pay such officer a lump sum amount equal to the present value of the cost to the Company of providing those benefits to him for an additional 18-month period. Also, the Company must pay the officer a lump sum amount equal to the present value of the cost to the Company of providing accident and life insurance benefits as well as disability benefits for a period of 36 months from his date of termination, equal to such benefits in effect for the officer at the time of the change in control.

However, if an executive officer is terminated by the Company for “cause” (as defined in the severance agreement), or his employment is terminated by retirement, death or disability, the Company is not obligated to pay such officer the lump sum severance payment. Further, if an executive officer voluntarily terminates his employment except for “constructive termination” (as defined in the severance agreement), the Company is not obligated to pay such officer the lump sum severance payment. Also, beginning in fiscal 2010, the Company eliminated the payment of any excise tax gross-up payments which may be due on the payment of severance benefits to our named executive officers. As a result, if such lump sum severance benefit payments result in the imposition of excise taxes imposed by Section 4999 of the Code, for which the officer is now responsible for paying, the officer will have the option to elect to have the payment reduced to a level that will result in no payment of such excise tax by such officer.

For the purposes of these agreements, a “change in control” will generally be deemed to have occurred at any one of the following times:

•

on the date any person acquires ownership of stock, that together with stock already held by such person, results in the person having beneficial ownership of 50 percent or more of the total fair market value or total voting power of our stock;

•

on the date that a person acquires or has acquired over a 12-month period ownership of our stock possessing 30 percent or more of the total voting power of our stock;

•

on the date a majority of the members of our Board is replaced during any 12-month period by directors whose election is not endorsed by a majority of the Board before the date of the election; or

•

on the date that a person acquires at least 40 percent of the total gross fair market value of our assets over a 12-month period immediately before such acquisition, except if such sale is to a person or entity owning, directly or indirectly, at least 50 percent of the total value or voting power of our stock before such acquisition.

For the purposes of these severance agreements, “cause” means (i) the willful and continued failure by the employee to substantially perform his duties with the Company (other than any such failure resulting from his incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the employee by the Board that specifically identifies the manner in which the Board believes that the employee has not substantially performed his duties or (ii) an employee’s willful engagement in conduct that is demonstrably and materially injurious to the Company, monetarily or otherwise. No act, or failure to act, on an employee’s part shall be deemed “willful” unless done, or omitted to be done, by the employee not in good faith and without a reasonable belief that the action or omission was in the best interests of the Company. Notwithstanding the foregoing, the employee shall not be deemed to have been terminated for cause unless approved by an affirmative vote of not less than three-quarters (3/4) of the entire membership of our Board at a meeting called and held for such determination.

Potential Payments Upon Termination or Change in Control

Payments Made Upon Any Termination. Regardless of the manner in which a named executive officer’s employment is terminated, he is entitled to receive the following amounts earned during his term of employment. Such amounts include:

•

amount of accrued but unpaid salary;

•

amounts contributed under, or otherwise vested in our RSP;

•

amounts accrued and vested through our PAP and Supplemental Plans; and

•

amounts attributable to the exercise of rights with respect to each outstanding and vested stock option granted under our LTIP.

Payments Made Upon Retirement. In the event of the retirement of a named executive officer, in addition to the items identified above, such named executive officer will:

•

be entitled to receive a pro rata portion, at the end of the three-year performance period, based on the number of months completed of such performance period, of each outstanding grant of performance-based RSU’s under our LTIP, at a value equal to the actual level of performance achieved during the period; and

•

be entitled to receive, upon the termination of the restricted period, shares of stock equal to the number of time-lapse RSU’s granted under our LTIP or issued as a result of an election to convert all or a portion of an Incentive Plan payment.

Payments Made Upon Death or Disability. In the event of the death or disability of a named executive officer, in addition to the benefits listed under the headings, “Payments Made Upon Any Termination” and “Payments Made Upon Retirement”, the named executive officer or designated beneficiary will receive benefits under the Company’s disability plan or payments under the Company’s life insurance plan, as appropriate.

Payments Made Upon a Change in Control. As discussed above in “Change in Control Severance Agreements,” beginning on page 48, we have also entered into severance agreements with each of the named executive officers to provide certain severance benefits for them in the event of the termination or “constructive termination” of their employment within three years following a “change in control” of the Company, as such terms are defined in the agreements. As is also discussed above, the severance agreements for each of the named executive officers were modified beginning in fiscal 2010 to the “best net” approach, so that the Company would no longer be liable for the tax gross-up payments on behalf of those individuals whose severance payments would have triggered excise tax penalties. In the tables below under the heading “Termination Upon Change in Control,” we assume the named executive officers would pay any related excise tax penalties. The severance agreement for each such executive officer provides that the Company will pay such executive officer a lump sum severance payment as described above in “Change in Control Severance Agreements.”

In the tables below, “Potential Post-Employment Payment Tables,” beginning on page 52, we have shown the severance compensation and employee benefits to be provided in the aggregate to each named executive officer in the event of each of five termination scenarios. In each scenario, there are differences in how retirement benefits and health and welfare benefits are determined. The following discussion provides more specific information on the retirement benefits and health and welfare benefits under each of the various scenarios:

Termination Upon Death. The SEBP/SERP benefit is the sum of the following:

•

two times final average earnings (base salary plus annual payment under the Incentive Plan) less the amount paid through the Company’s group life insurance plan;

•

a life annuity benefit of 50 percent of final average earnings (base salary plus annual payment under the Incentive Plan) payable to the surviving spouse;

•

a temporary life annuity benefit of 25 percent of final average earnings (base salary plus annual payment under Incentive Plan) payable to dependent children until children reach the age of 18 years;

•

the PAP plan benefit equal to the account balance at the time of death; and

•

the RSP plan benefit equal to the account balance at the time of death.

Termination Upon Disability. The SERP/SEBP benefit is the sum of the following:

•

a monthly benefit based on 60 percent of compensation (base salary plus annual payment under the Incentive Plan) less the amount paid from the Company’s group disability plan, with this net benefit payable as a temporary benefit until the age of 65 years;

•

regular retirement benefit (described below in “Termination Upon Retirement”) payable after age of 65 years;

•

the PAP plan benefit equal to the value of the projected age 65 monthly benefit assuming level future earnings from date of disability; and

•

the RSP plan benefit equal to the account balance at the time of disability.

Termination Upon Retirement. For Mr. Best, the SEBP/SERP benefit at retirement is the lump sum benefit equal to a target benefit of 75 percent of final average earnings (base salary plus annual payment under the Incentive Plan) less an offset for the benefits to be paid from the tax-qualified PAP. For the other four named executive officers, their SEBP/SERP benefit at retirement is the lump sum benefit equal to a target benefit of 60 percent of final average earnings (base salary plus annual payment under the Incentive Plan) less an offset for the benefits to be paid from the tax-qualified PAP. In addition, the following benefits are payable at retirement:

•

the PAP plan benefit equal to the account balance at the time of retirement; and

•

the RSP plan benefit equal to the account balance at the time of disability.

Termination Without Cause. The retirement benefits for a termination without cause are equal to the same retirement benefits as described above with respect to termination upon retirement.

Termination Upon Change in Control. The SEBP/SERP benefit upon termination pursuant to a change in control is equal to the same retirement benefits as described above with respect to termination upon retirement with the following additional provisions:

•

there is no reduction applied to the earned benefit in the event that the executive has less than 10 years of service;

•

there is no reduction applied to the earned benefit for early commencement prior to age 62;

•

the executive officer is immediately vested in the accrued benefit;

•

in addition, the PAP benefit includes the accrued benefit at the time of termination plus an additional three years of earned compensation credits; and

•

the RSP benefit includes the accrued benefit at the time of termination plus an additional three years of Company matching contributions.

Health and Welfare Benefits. The Company only provides supplemental benefits in the form of health and welfare benefits in the event of the termination of a named executive officer pursuant to a change in control. The supplemental health and welfare benefit reported in the following table represents the benefits described above under “Payments Made Upon a Change in Control,” beginning on page 50.

Potential Post-Employment Payment Tables. The following tables reflect estimates of the total amount of compensation due each named executive officer in the event of such executive’s termination of employment by reason of death, disability or retirement, termination of employment without cause, or termination of employment following a change in control. The amounts shown below assume that such termination was effective as of September 30, 2011 and are estimates of the amounts which would be paid out to the executives upon such termination. The actual amounts to be paid out can only be determined at the time of such executive’s separation from the Company.

In addition to the amounts set forth in the following table, in the event of his termination of employment for any reason, Mr. Best would receive a total of $705,738 in exercisable options which had been earned as of September 30, 2011.


Robert W. Best	Termination Upon Death($)		Termination Upon Disability($)		Termination Upon Retirement($)		Termination Without Cause($)		Termination Upon Change in Control($)
Cash Severance		—		—		—		—		3,741,293
Equity
Time-Lapse Restricted Stock/Restricted Stock Units		3,433,048		3,433,048		3,433,048		3,000,554		3,433,048
Performance-Based Restricted Stock Units		825,419		825,419		825,419		825,419		825,419
Total		4,258,467		4,258,467		4,258,467		3,825,973		4,258,467
Retirement Benefits
Pension Account Plan		519,391		557,850		519,391		519,391		589,602
Supplemental Executive Benefits Plan		12,798,475		15,417,904		15,430,338		15,430,338		15,430,338
Retirement Savings Plan		1,826,584		1,826,584		1,826,584		1,826,584		1,853,247
Total		15,144,450		17,802,338		17,776,313		17,776,313		17,873,187
Other Benefits
Health & Welfare		—		—		—		—		40,453
Total		19,402,917		22,060,805		22,034,780		21,602,286		25,913,400


Kim R. Cocklin	Termination Upon Death($)		Termination Upon Disability($)		Termination Upon Retirement($)		Termination Without Cause($)		Termination Upon Change in Control($)
Cash Severance		—		—		—		—		3,361,750
Equity
Time-Lapse Restricted Stock/Restricted Stock Units		3,030,570		3,030,570		3,030,570		2,453,512		3,030,570
Performance-Based Restricted Stock Units		542,836		542,836		542,836		542,836		542,836
Total		3,573,406		3,573,406		3,573,406		2,996,348		3,573,406
Retirement Benefits
Pension Account Plan		84,238		194,671		84,238		84,238		144,698
Supplemental Executive Retirement Plan		9,252,468		5,937,578		4,755,542		4,755,542		9,335,574
Retirement Savings Plan		156,675		156,675		156,675		156,675		183,338
Total		9,493,381		6,288,924		4,996,455		4,996,455		9,663,610
Other Benefits
Health & Welfare		—		—		—		—		40,453
Total		13,066,787		9,862,330		8,569,861		7,992,803		16,639,219


Fred E. Meisenheimer	Termination Upon Death($)		Termination Upon Disability($)		Termination Upon Retirement($)		Termination Without Cause($)		Termination Upon Change in Control($)
Cash Severance		—		—		—		—		1,611,875
Equity
Time-Lapse Restricted Stock/Restricted Stock Units		1,736,172		1,736,172		1,736,172		1,487,216		1,736,172
Performance-Based Restricted Stock Units		275,703		275,703		275,703		275,703		275,703
Total		2,011,875		2,011,875		2,011,875		1,762,919		2,011,875
Retirement Benefits
Pension Account Plan		224,805		224,805		224,805		224,805		295,016
Supplemental Executive Retirement Plan		4,628,415		4,594,253		4,594,253		4,594,253		4,594,253
Retirement Savings Plan		246,443		246,443		246,443		246,443		273,106
Total		5,099,663		5,065,501		5,065,501		5,065,501		5,162,375
Other Benefits
Health & Welfare		—		—		—		—		40,453
Total		7,111,538		7,077,376		7,077,376		6,828,420		8,826,578


Louis P. Gregory	Termination Upon Death($)		Termination Upon Disability($)		Termination Upon Retirement($)		Termination Without Cause($)		Termination Upon Change in Control($)
Cash Severance		—		—		—		—		1,291,200
Equity
Time-Lapse Restricted Stock/Restricted Stock Units		1,392,884		1,392,884		1,392,884		1,035,188		1,392,884
Performance-Based Restricted Stock Units		190,356		190,356		190,356		190,356		190,356
Total		1,583,240		1,583,240		1,583,240		1,225,544		1,583,240
Retirement Benefits
Pension Account Plan		189,015		385,610		189,015		189,015		249,475
Supplemental Executive Retirement Plan		4,274,751		3,898,821		3,444,992		3,444,992		4,385,380
Retirement Savings Plan		432,839		432,839		432,839		432,839		459,502
Total		4,896,605		4,717,270		4,066,846		4,066,846		5,094,357
Other Benefits
Health & Welfare		—		—		—		—		54,833
Total		6,479,845		6,300,510		5,650,086		5,292,390		8,023,630


Michael E. Haefner	Termination Upon Death($)		Termination Upon Disability($)		Termination Upon Retirement($)		Termination Without Cause($)		Termination Upon Change in Control($)
Cash Severance		—		—		—		—		1,194,375
Equity
Time-Lapse Restricted Stock/Restricted Stock Units		980,704		980,704		—		—		980,704
Performance-Based Restricted Stock Units		190,356		190,356		—		—		190,356
Total		1,171,060		1,171,060		—		—		1,171,060
Retirement Benefits
Pension Account Plan		43,888		272,756		43,888		43,888		90,803
Supplemental Executive Retirement Plan		3,879,354		2,004,773		—		—		3,624,792
Retirement Savings Plan		109,205		109,205		109,205		109,205		135,868
Total		4,032,447		2,386,734		153,093		153,093		3,851,463
Other Benefits
Health & Welfare		—		—		—		—		54,477
Total		5,203,507		3,557,794		153,093		153,093		6,271,375

AUDIT COMMITTEE REPORT

The Audit Committee of the Board of Directors is composed of five directors who are independent directors as required by and in compliance with all applicable listing standards of the NYSE as well as all applicable rules and regulations of the SEC, as discussed in the “Corporate Governance and Other Board Matters” section of this proxy statement, beginning on page 3. The Audit Committee acts under a written charter adopted by the Board of Directors, which sets forth its detailed responsibilities and duties, as well as requirements for the Audit Committee’s composition and meetings. A copy of the charter is available on the Corporate Governance page of the Company’s website.

The primary purpose of the Audit Committee is to oversee the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the financial reporting process, including systems of internal control over financial reporting and disclosure controls and procedures. Ernst & Young is responsible for (i) expressing an opinion, based on its audit, as to the conformity of the audited financial statements with generally accepted accounting principles and (ii) expressing an opinion, based on its audit, on the effectiveness of the Company’s internal control over financial reporting.

In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited financial statements in the Company’s 2011 Annual Report on Form 10-K with both management and Ernst & Young, which included a discussion of the critical accounting policies and practices used by the Company, and alternative treatments of financial information within generally accepted accounting principles, if any, and their effects, including the treatments preferred by the independent registered public accounting firm, if applicable. In addition, the Audit Committee reviewed all other material communications between the Company and Ernst & Young.

Management has represented to the Audit Committee that the Company’s internal control over financial reporting is effective. The Audit Committee then reviewed and discussed management’s assessment with management and Ernst & Young. The Audit Committee also discussed with Ernst & Young its report on the Company’s internal control over financial reporting as well as the matters required to be discussed under generally accepted auditing standards, including those matters set forth in Statement on Auditing Standards No. 61, (AICPA, Professional Standards, Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in its Rule 3200T.

In addition, the Audit Committee has received and reviewed the written disclosures and letter from Ernst & Young, which are required by applicable requirements of the Public Company Accounting Oversight Board, regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and discussed with Ernst & Young the firm’s independence, as well as those disclosures related to the independence of the Company’s independent registered public accounting firm required by the provisions of the Sarbanes-Oxley Act of 2002 and related rules and regulations of the SEC. The Audit Committee has also considered the fees paid to Ernst & Young during the last fiscal year for audit and non-audit services and has determined that the non-audit services provided are compatible with the firm’s independence and are in compliance with applicable law.

The Audit Committee has also discussed with KPMG, which provides internal audit services to the Company, and Ernst & Young, the overall scope and plans for their respective audits. The Audit Committee periodically meets with both firms, with and without management present, to discuss the results of their examinations, the assessments of the Company’s internal control over financial reporting, as well as the overall quality of the Company’s financial reporting.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (which the Board has approved) that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the year ended September 30, 2011 for filing with the SEC. The Audit Committee has also appointed Ernst & Young as the Company’s independent registered public accounting firm for the 2012 fiscal year, which appointment is being submitted to our shareholders for their ratification at our 2012 annual meeting of shareholders.

Respectfully submitted by the members of the Audit Committee of the Board of Directors:

Nancy K. Quinn, Chair

Ruben E. Esquivel

Robert C. Grable

Dr. Thomas C. Meredith

Richard Ware II

PROPOSAL TWO—RATIFICATION OF APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board has appointed Ernst & Young to continue as our independent registered public accounting firm for the fiscal year ending September 30, 2012. The firm of Ernst & Young (and its predecessors) has been our independent registered public accounting firm since our incorporation in 1983. It is expected that representatives of Ernst & Young will be present at the annual meeting. The representatives of Ernst & Young will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

As a matter of good corporate governance, the Company submits the Audit Committee’s selection of Ernst & Young as its independent registered public accounting firm to our shareholders for ratification each year. If the selection of Ernst & Young is not ratified by a majority of our common stock present or represented by proxy and entitled to vote on the matter, the Audit Committee will take into account the outcome of the vote in its future selection of an independent registered public accounting firm.

Audit and Related Fees

Fees for professional services provided by our independent registered public accounting firm, Ernst & Young, in each of the last two fiscal years, in each of the following categories are:


	September 30
	2011		2010
	($ In thousands)
Audit Fees		3,030		2,884
Audit-Related Fees		56		64
Tax Fees		115		295
All Other Fees		—		—

Total Fees		3,201		3,243

Audit Fees. Fees for audit services include fees associated with the annual audit, the assessment by the firm of our design and operating effectiveness of internal control over financial reporting and the reviews of our quarterly reports on Form 10-Q, along with comfort letters and consents related to our debt offering.

Audit-Related Fees. Audit-related fees principally include fees relating to procedures performed in connection with the statutory audit of the Company’s wholly-owned subsidiary, Blueflame Insurance Services, Ltd., and the examination of the Illinois Annual Reconciliation of Over/Under Gas Recoveries.

Tax Fees. Tax fees include fees relating to reviews of tax returns, tax consulting and assistance with sales and use tax filings and audits.

As discussed in “Audit Committee Pre-Approval Policy” on page 11, all professional services provided by Ernst & Young were pre-approved by the Audit Committee in accordance with its pre-approval policy.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2012.

PROPOSAL THREE—NON-BINDING, ADVISORY VOTE

ON APPROVAL OF EXECUTIVE COMPENSATION

Background of the Proposal

We are required by Section 14A of the Securities Exchange Act to hold a separate non-binding, advisory shareholder vote to approve the compensation of our executive officers as described in the Compensation Discussion and Analysis, the executive compensation tables and any related information in our proxy statement (commonly known as the “Say on Pay” proposal). At our last annual meeting of shareholders on February 9, 2011, our shareholders voted overwhelmingly to adopt the recommendation of our Board to vote on the Say on Pay proposal every year at our annual meeting. As a result, we will submit our Say on Pay proposal to our shareholders at each annual meeting until we are required to submit to our shareholders within the next five years another proposal on the frequency of the vote on the Say on Pay proposal.

Executive Compensation

As discussed above in the “Compensation Discussion and Analysis,” section of this proxy statement, beginning on page 26, the Board believes that our current executive compensation program directly links executive compensation to our financial performance and align the interests of our executive officers with those of our shareholders. Our Board also believes that our executive compensation program provides our executive officers with a balanced compensation package that includes a reasonable base salary along with annual and long-term incentive compensation plans that are based on the Company’s financial performance. These incentive plans are designed to reward our executive officers on both an annual and long-term basis if they attain specified target goals, the attainment of which do not require the taking of an unreasonable amount of risk, as discussed above in “Compensation Risk Assessment,” beginning on page 12. Our shareholders overwhelmingly approved this executive compensation philosophy when they approved the executive compensation of our named executive officers at our last annual meeting. See “Additional Information on Executive Compensation,” beginning on page 34.

The HR Committee periodically reviews the Company’s overall approach to executive compensation to see that the Company’s current benefits, perquisites, policies and practices continue to be in line with the best practices of companies in the natural gas distribution industry and in other Fortune 500 companies and to assist us with the hiring and retention of a high-quality management team. As a result, during the past several years, (as discussed above in “Compensation Discussion and Analysis,” beginning on page 26) the committee recommended changes to our executive compensation program, which changes were approved by the Board, as follows:

•

Reduction in premium paid from 50 percent to 20 percent of the value at the date of grant of time-lapse RSU’s granted to participants in our Incentive Plan who elect to convert all or a portion of their incentive payments to such equity grants. Also, reduction in premium from 10 percent to five percent of the value at the date grant of shares of bonus stock granted to participants who elect to convert all or a portion of their incentive payments to such equity grants;

•

Exclusion from the performance targets and actual performance attainment for both the Incentive Plan and performance-based RSU’s granted under the LTIP of any mark-to-market gains or losses recognized by the Company’s nonregulated operations;

•

Adoption of a clawback policy, which provides for the recoupment by the Company under certain circumstances of all incentive compensation paid to all our corporate officers and division presidents;

•

Adoption of a policy that prohibits hedging transactions in our common stock by employees and directors of Atmos Energy;

•

Imposition of a limit, at the target level of performance, on both short-term and long-term incentive compensation paid to our named executive officers if our Total Shareholder Return during the fiscal year or during the three fiscal year performance period is negative;

•

Elimination of any excise tax gross-up payments made by the Company, to our named executive officers, which may be due on payment of severance benefits paid in the case of a change in control; and

•

Enforcement of restriction period through the end of the relevant three-year restriction period on all equity grants under our LTIP for all recipients who have retired prior to the expiration of such restricted period.

The “Compensation Discussion and Analysis” discussion, beginning on page 26, includes additional details about our executive compensation program. This Say on Pay proposal is set forth in the following resolution:

RESOLVED, that the shareholders of Atmos Energy Corporation approve, on an advisory basis, the compensation of its named executive officers for fiscal 2011, as disclosed in the Company’s Proxy Statement for the 2012 Annual Meeting of Shareholders, pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, and any related information found in the proxy statement of Atmos Energy Corporation.

Because your vote on this proposal is advisory, it will not be binding on the Board or the Company. However, the HR Committee and the Board of Directors will take into account the outcome of the vote when considering future executive compensation arrangements.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF

EXECUTIVE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS,

AS DISCLOSED IN THIS PROXY STATEMENT, PURSUANT TO THE COMPENSATION

DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.

OTHER MATTERS

Shareholder Proposals

In the event a shareholder intends to present a proposal at our annual meeting of shareholders on February 8, 2012, in accordance with the Company’s bylaws, the shareholder must be a shareholder of record on the record date, December 12, 2011, who shall continue to be entitled to vote at the annual meeting and who mails a notice of such proposal so that it is received by the Corporate Secretary at our principal executive offices by January 16, 2012 and includes the information required by the Company’s bylaws. In the event a shareholder intends to present a proposal at our 2013 annual meeting of shareholders, if such proposal is to be included in our proxy statement relating to such meeting, it must be received by the Corporate Secretary at our principal executive offices no later than August 24, 2012 and it must be prepared according to applicable law, as determined by the Company.

Other Business

We know of no other business that may come before the annual meeting. However, if any other matters are properly brought before the meeting by the management or any shareholder, it is the intention of each person named in the accompanying proxy to vote such proxy in accordance with his judgment on such matters. The proxy confers discretionary authority to take action with respect to any such additional matters that may come before the meeting.

Annual Report

A copy of our Annual Report on Form 10-K for the fiscal year ended September 30, 2011, including the financial statements and the financial statement schedules included therein, accompanies this proxy statement. In addition, the exhibits of the Annual Report on Form 10-K are available upon payment of charges that approximate our cost of reproduction. If you would like to receive a copy of these exhibits, please call Shareholder Relations at 972-855-3792 or mail your written request to Shareholder Relations, Atmos Energy Corporation, P.O. Box 650205, Dallas, Texas 75265-0205.

By Order of the Board of Directors,

LOGO

Dwala Kuhn

Corporate Secretary

Dallas, Texas

December 22, 2011

ATMOS ENERGY CORPORATION

C/O AMERICAN STOCK TRANSFER

6201 15TH AVENUE, SECOND FLOOR

BROOKLYN, NY 11219

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Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the website 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. You may also request electronic delivery of proxy materials on our website at www.atmosenergy.com.

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the 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.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

M39616-P17625-Z56662 KEEP THIS PORTION FOR YOUR RECORDS

DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

ATMOS ENERGY CORPORATION

The Board of Directors recommends you vote

FOR the following listed nominees:

ELECTION OF DIRECTORS

For

Against

Abstain

Nominees:

1a. Kim R. Cocklin

1b. Richard W. Douglas

The Board of Directors recommends that you vote

FOR proposals 2-3.

For

Against

Abstain

1c. Ruben E. Esquivel

1d. Richard K. Gordon

Proposal to ratify the appointment of Ernst & Young

LLP as the Company’s independent registered public

accounting firm for fiscal 2012.

1e. Thomas C. Meredith

1f. Nancy K. Quinn

1g. Stephen R. Springer

1h. Richard Ware II

Proposal for an advisory vote by shareholders to

approve the compensation of the Company’s named

executive officers for fiscal 2011 (“Say on Pay”).

For address changes and/or comments, please check this box and write them on the back where indicated.

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

Signature [PLEASE SIGN WITHIN BOX]

Date

Signature (Joint Owners)

Date

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Notice and Proxy Statement, Summary Annual Report and Form 10-K are available at www.proxyvote.com.

Please date, sign and mail your proxy card back as soon as possible!

Annual Meeting of Shareholders

ATMOS ENERGY CORPORATION

February 8, 2012

-Please Detach and Mail in Envelope Provided-

M39617-P17625-Z56662

ATMOS ENERGY CORPORATION

PROXY FOR ANNUAL MEETING OF SHAREHOLDERS

FEBRUARY 8, 2012

The undersigned hereby appoints Robert W. Best, Charles K. Vaughan and Nancy K. Quinn, or any of them, each with full power of substitution, to represent the undersigned at the Annual Meeting of Shareholders of Atmos Energy Corporation to be held at 9:30 a.m., Central Standard Time on February 8, 2012, in the Lincoln Ballroom at the Hilton Hotel Lincoln Centre, 5410 LBJ Freeway, Dallas, TX 75240, and at any adjournment or postponement thereof, and to vote the number of shares the undersigned would be entitled to vote if personally present at the meeting on the matters listed on the reverse side.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ATMOS ENERGY CORPORATION. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR ELECTION, FOR PROPOSAL 2 AND FOR PROPOSAL 3. In their discretion, the proxy holders are authorized to vote upon such other business as may properly come before the meeting, and at any adjournment or postponement thereof, to the extent authorized by Rule 14a-4(c) promulgated by the Securities and Exchange Commission, and by applicable state laws (including matters that the proxy holders do not know, a reasonable time before this solicitation, are to be presented).

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO COMPLETE THIS PROXY BY MAIL BY DATING, SIGNING AND PROMPTLY MAILING THIS PROXY IN THE ENCLOSED RETURN ENVELOPE SO THAT THE SHARES MAY BE REPRESENTED AT THE MEETING.

Address Changes/Comments: ___________________________________________________________________

_____________________________________________________________________________________________

(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)

Continued and to be signed on reverse side