ATMOS ENERGY CORP

2024 Elements of Compensation

Our Total Rewards strategy is reviewed each year and updated as needed by our HR Committee, with assistance from its independent executive compensation consultant. None of our named executive officers have an employment agreement with the Company. We believe that our executive compensation program provides our named executive officers with a balanced compensation approach each year by providing a market-competitive base salary along with participation in annual and long-term incentive compensation plans that are based solely on the Company’s financial performance. These incentive plans are designed to reward our named executive officers on both an annual and long-term basis if they attain specified targets, the attainment of which does not require the taking of an unreasonable amount of risk, as discussed in “Compensation Risk Assessment,” beginning on page 49.

Base Salary

The payment of a base salary is intended to provide a stable, fixed amount of income to our named executive officers for their day-to-day job performance. Base salaries represent a relatively small portion of total compensation. However, the amount of base salary paid to each named executive officer is a determinant of other elements of compensation. The HR Committee reviews base salaries annually, and generally targets the 50 th percentile of the competitive market practice. Annual salary adjustments are not automatic or guaranteed, but rather based on the committee’s subjective evaluation of the performance of each named executive officer, the value of the individual in the position to the Company relative to other positions and their level of experience, the Company’s base salary increase budget and guidelines as well as current economic conditions. As a result, the HR Committee approved modest increases in base salaries for our named executive officers, and their 2024 base salaries are shown below.

The HR Committee believes that the base salaries provided to each of the named executive officers are appropriate to retain and motivate them, are competitive with salaries offered for similar positions by companies in our proxy peer group and are consistent with our Total Rewards strategy.

Annual Incentive Compensation

Through our Incentive Plan, we provide our named executive officers an opportunity to earn an annual incentive award based upon the Company’s financial performance each year as measured by our fully diluted EPS.

2024 Annual Incentive Award Target Opportunities

For fiscal 2024, the HR Committee reviewed competitive compensation benchmarking data, as discussed below, to establish an annual target opportunity expressed as a percentage of base salary earned during fiscal 2024 for each named executive officer. Such target incentive award opportunities are reviewed each year and benchmarked against the 50th percentile for similar positions within companies in our proxy peer group. The Incentive Plan targets for fiscal 2024 for each of the named executive officers were as follows, which remained unchanged as a percentage of base salary from fiscal 2023 levels.

At its meeting in November 2023, the HR Committee established the threshold, target and maximum performance levels of EPS upon which the Incentive Plan’s awards would be based for fiscal 2024, along with the corresponding percentages of target awards to be paid out. The target EPS performance level was based on our annual business plan and budget and considered factors including 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 our annual business planning process.

EPS as measurement metricThe HR Committee believes that EPS is the most appropriate measurement of our financial performance both on an annual and long-term basis, because it most accurately reflects the growth and performance of our operations. The EPS measurement is also one of the most currently well-known measurements of overall financial performance of public companies, particularly within the utility industry. The HR Committee believes that using this measurement as the basis for our incentive compensation plans best aligns the interests of our named executive officers with the interests of our shareholders.Annually increasing EPS target performance levelsThe HR Committee has continued to set increasingly challenging EPS target performance levels under the Incentive Plan each fiscal year, as demonstrated by increasing such target performance levels on average by 9% per year over the last three fiscal years. Such target performance levels have also continued to be within the range of announced EPS guidance provided to the public in November of each year.

Performance Levels and Achievement

The following table summarizes the performance levels and actual performance attained under the Incentive Plan for fiscal 2024:

The HR Committee may, at its sole discretion, reduce the performance results upon which awards under the Incentive Plan are based to offset any unintended results arising from events not anticipated when the performance goals were established. Due to the passage of Texas Senate Bill 2, Proposition 4 on November 7, 2023, we remeasured our property tax accrual liability, resulting in a pre-tax benefit of $21.1 million for fiscal year 2024, or $0.10 per diluted share. Accordingly, the HR Committee approved an adjusted performance level of $6.73 to take into account the financial impact of the tax law change for the performance period of the awards under the Incentive Plan. Since the adjusted performance level attained was between the target of $6.53 per share and maximum of $6.86 per share, straight-line interpolation was used to compute the percentage of the target award earned and each named executive officer earned 161% of their target award. Additionally, the HR Committee does place a limit under certain conditions on the amount of earned awards for all our executive officers. If the Company’s TSR during any fiscal year is negative, the earned award for each officer for that fiscal year will be limited to the amount earned at the target level of performance. This limitation was not applicable for the fiscal 2024 performance period since the Company’s TSR was positive for such performance period.

Awards under the Incentive Plan are paid in cash and are based on the participant’s eligible earnings received during the fiscal year. However, under the terms of the Incentive Plan, participants may elect prior to the beginning of each fiscal year to convert all or a portion of their final earned awards to time-lapse RSUs with three-year cliff vesting, with a premium equal to 20% of the amount converted, such that the value of time-lapse RSUs received will equal 120% of the value of the final earned award, and with such units being awarded under our LTIP. Each named executive officer elected to receive 100% cash for his or her fiscal 2024 Incentive Plan award.

Long-Term Incentive Compensation

The HR Committee grants awards under our LTIP each fiscal year that are structured with a portion of the targeted long-term value in the form of three-year performance-based RSUs (measured by cumulative EPS over the three-fiscal year period) and with the remaining portion in the form of time-lapse RSUs with three-year cliff vesting. For fiscal 2024, to bring LTIP awards more in line with our peers and further reinforce our pay for performance philosophy, the HR Committee increased the weighting of performance-based RSUs in our named executive officers’ LTIP awards from 50% to 75% and decreased the weighting of time-lapse RSUs with three-year cliff vesting from 50% to 25%. The HR Committee bases the actual number and value of awards granted to each named executive officer primarily on the competitive compensation benchmarking of grants made by the companies in our proxy peer group, as discussed below.

TIME-LAPSE RSUs

•Alignment with shareholders

•Facilitates share ownership

•Strong retention vehicle

PERFORMANCE-BASED RSUs

•Tied to achievement of long-term operational objectives

•Alignment with shareholders

•Facilitates share ownership

•Strong retention vehicle

2024 Performance-Based RSU Grants (2024-2026 awards)

At its meeting in November 2023, the HR Committee also established the threshold, target and maximum performance levels of cumulative EPS upon which performance-based RSUs awards would be based for the fiscal 2024-2026 performance period, along with the corresponding percentages of target awards. The three-fiscal year cumulative EPS target performance level was based on the same factors utilized by the HR Committee for our Incentive Plan described above. The HR Committee then awarded grants to the named executive officers at its meeting in May 2024, which were later ratified by the Board, of performance-based RSUs for the fiscal 2024-2026 performance period. The following table shows the three-year performance criteria for such period (which represent increased performance level requirements over the fiscal 2023-2025 grant).

2022 Performance-Based RSUs Grants (2022-2024 awards)

The 2022 performance-based RSUs awarded in May 2022 were also based on the Company’s three year cumulative EPS performance for the 2022 through 2024 fiscal years. The HR Committee has also historically set increasingly challenging cumulative three-fiscal year EPS target performance levels each year. The HR Committee believes this EPS performance is in alignment with the Company’s shareholder return performance over that same time period. The following table summarizes the performance levels and actual performance attained for the fiscal 2022-2024 performance-based RSUs.

Similar to the Incentive Plan performance discussed above, the HR Committee approved an adjusted performance level of $18.43 to take into account the financial impact of the tax law change described above for the performance period of the awards under the LTIP. Since the adjusted performance level attained was between the target of $17.69 per share and maximum of $18.58 per share, straight-line interpolation was used to compute the percentage of the target award earned and each named executive officer earned 183% of their target award. The awards were paid in the form of shares of Company stock issued in November 2024 with the named executive officers also receiving accumulated cash dividend equivalents over the three-fiscal year performance period on such awards. As with the payout of Incentive Plan awards, if the Company’s TSR during the performance period is negative, the earned award for each such officer for such performance period will be limited to the amount earned at the target level of performance. This limitation was not applicable for the 2022-2024 performance period since the Company’s TSR was positive for such performance period.

Retirement Benefits

All our current named executive officers, other than Ms. Hartsfield and Mr. Robbins, participate in our Pension Account Plan (“PAP”), which 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 2024,” beginning on page 51, would be considered eligible compensation in determining benefits. See the discussion under “Pension Account Plan” on page 56, for more information about this plan.

In addition, all our named executive officers participate in our Retirement Savings Plan (“RSP”), which is a qualified defined contribution plan. Any named executive officer who joined the Company after September 30, 2010, is not eligible to participate in the PAP. However, in lieu thereof, such officers would receive a fixed annual Company contribution (“FACC”) which is equal to 4% of his or her eligible earnings to the RSP. Ms. Hartsfield and Mr. Robbins receive this FACC. See the discussion under “Retirement Savings Plan” on page 56 for more information about this plan.

Mr. Akers also participates in the Supplemental Executive Retirement Plan (“SERP”), which provides additional retirement benefits (as well as supplemental disability and death benefits). Since he has participated in the plan for at least two years and has attained the age of 55, he is entitled to a lump sum payment under the SERP. The lump sum payment is the actuarial equivalent of an annual supplemental pension in an amount that, when added to the annual retirement amount payable to him under the PAP, equals 60% of his total cash compensation, which is generally his last annual base salary and the amount of his last award under the Incentive Plan, subject to reductions for retirement prior to age 62.

Mr. Forsythe, Mr. McDill, Ms. Hartsfield, and Mr. Robbins participate in the Account Balance SERP, which is a non-qualified account based plan, under which the Company currently provides an annual contribution of 25% of the participant’s total annual earnings (base salary and incentive payment under our Incentive Plan) into a notional supplemental retirement account, as well as provides supplemental disability and death benefits.

The HR Committee believes that these retirement benefits are an important component of Total Rewards and are required to ensure that our overall executive compensation package remains competitive with executive compensation packages offered by other major public companies in our industry. See the discussion under “Retirement Plans,” beginning on page 56, for more information on our retirement benefits.

Change in Control Severance Benefits

We have severance agreements in place with each of our named executive officers to provide certain severance benefits to 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 58). In connection with a qualifying termination, the severance agreement for each named executive officer generally provides that the Company will pay such officer a lump sum equal to (a) 2.5 times their total cash compensation (annual base salary and the higher of the last annual award under the Incentive Plan or the average of the three highest annual awards received under such 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 or the FACC, as applicable, and (ii) an amount that is actuarially equivalent to an additional three years of Company matching contributions payable to the officer under the RSP.

In addition, each named executive officer would be paid (i) an amount that is generally actuarially equivalent to an additional 36 months of health and welfare benefits and (ii) an amount that is actuarially equivalent to 36 months of disability, accident and life insurance coverage. If the total of such lump sum severance payment results in the imposition of excise taxes under Section 4999 of the Internal Revenue Code (“IRC”), the named executive 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 payment under the agreement, each named executive officer may elect to have the Company pay the full severance payment amount, thereby leaving such officer responsible for personally paying the excise tax penalties imposed on such “excess parachute payments.”

The HR Committee believes that providing severance protection to our named executive officers following a change in control is a key component to ensuring that our executive compensation program remains competitive and that our named executive officers remain engaged before and during any potential change in control transaction.