Atmos Energy founding CEO Charlie Vaughan looks back at 55-year career
By Cheryl Hall
Dallas can thank Charlie Vaughan and a historic snowfall in West Texas for bringing the city one of its largest and most successful corporations.
On Wednesday morning, shareholders of Atmos Energy Corp. will pay tribute to their 75-year-old founding chairman as he officially steps away from the tiny utility that he moved here from Amarillo in 1986 and helped nurture into one of the nation’s largest natural gas distributors.
The send-off will cap nearly 56 years with the company and its previous parent that included stints as a typist, ditch digger, meter painter and gas-line burier — a Charlie of all trades.
Vaughan retired as chairman in 1997 but stayed on the board until the end of last year, serving as its lead director for the past decade. He’s known as Atmos’ moral compass.
“He was the general. ‘We’re going to go up that hill,’” says Bob Best, Atmos chairman and Vaughan’s handpicked successor. “That’s what made Atmos what it is.”
If there hadn’t been a massive snowstorm 30 years ago that sent Panhandle temperatures plunging to freezing or below for 10 straight days, there wouldn’t have been a hill to take, and Vaughan’s career probably would have ended unceremoniously in the trenches.
In October 1983, Vaughan took command of Energas Co., a small, debt-laden spinoff of Pioneer Corp.
His bosses had surprised him by naming him chairman, president and CEO of Energas just two weeks before it was spun off. Most of his colleagues were relieved that Vaughan had been tapped for the assignment and not them.
Pioneer had kept its most profitable large customers, saddling Energas with 280,000 residential and commercial accounts. Energas had to buy natural gas and lease space from its former parent, which wasn’t offering any family discounts.
Vaughan had worked his way up the operations ranks, so this “corporate stuff” was new terrain for him.
“Then they said, ‘Oh, by the way, you have to pay this 40-cent dividend [to Pioneer shareholders] in 90 days,” says Vaughan, sitting at Atmos’ boardroom table on the 18th floor of Lincoln Center. “All of a sudden this company was in my hands. It was an exciting time, an opportunity. But I wasn’t thinking about the opportunity, I was worried about survival.”
He and Energas were saved by a mid-December snowfall that launched the coldest West Texas winter in 50 years. The company made enough money to pay the dividends and retire its debt.
“The next year it started running through my mind, we were debt-free. If we were going to grow, we had to expand out of West Texas,” he says.
So he did.
Vaughan’s first and perhaps most pivotal deal was to buy Trans Louisiana Gas Co., which started out as the industry’s first hostile takeover attempt but ended with happy handshakes.
A provision buried in the agreement stipulated that Energas would move its headquarters to Dallas. The night the deal was inked, Vaughan called his board and said, “Oh, by the way …”
“They were shocked, because I’d never mentioned moving the company to Dallas,” says Vaughan, who has a reputation for getting his way. “When we moved Energas to Dallas, that’s when things really kicked off.”
Vaughan chose Dallas because of its airports and because it was equidistant from the main operations in Lafayette, La., Midland, Lubbock and Amarillo. He needed to raise the company’s visibility so that he could finance his acquisition plans. And he wanted to make it easier to hire talent.
“It was difficult to get anybody to show any interest in Amarillo, Texas, because of its size and the difficulty of getting there. And,” he says with a smile, “I was born and raised 85 miles south of here in Hubbard. So Dallas was made to order.”
The folks in Amarillo took great offense. T. Boone Pickens publicly chastised Vaughan for the move. Vaughan couldn’t resist calling his friend and giving a little jab three years later when Pickens announced that Mesa LP was moving here, too.
Vaughan asked the Richards Group to come up with a new name and logo. He winnowed 100 choices to 20 and let his officer group vote by secret ballot. He counted the votes in another room and his favorite name won.
“I wanted a name that had five letters or less, because that’s always printed in all-caps in stock listings. I wanted something easy to pronounce, or so I thought it was.” (Many people, even some board members, call it at-mos, not at-muss.)
“The neat thing about Atmos is it means gases in the atmosphere in the Greek language,” Vaughan says.
Energas became Atmos and was listed on the Big Board on Saturday, Oct. 1, 1988. Two days later, Vaughan walked on the floor of the New York Stock Exchange, bought the company’s first 100 shares and breathed a sigh of relief. “I knew we were going to survive.”
After Atmos went public, Vaughan completed purchases of utilities with distribution in 11 states, bringing it to the million-customer mark. At that point, he was ready to retire and hand off the reins to someone to build on that foundation.
His choice was Bob Best.
“I’d wanted him to come to work for Atmos for years,” Vaughan says. “One Sunday morning, my wife, Barbara, said, ‘Just pick up the phone and call him.’ So I called him before we went to church and said, ‘I want you to be chairman, president and CEO of Atmos.’”
Best was stunned.
Praying on it
“Charlie and I knew each other. Atmos was a customer of the company I was working for in Houston, but it wasn’t like we were bosom buddies,” Best recalls. “I told him, ‘Charlie, I think I’ll go to church and pray on this.’ My mind was just spinning.”
Today, Atmos has 3 million customers strung from the Blue Ridge Mountains to the Rockies.
Vaughan taught Best about courage and gumption. “Charlie had the internal strength and the belief that he was doing right by the employees, customers and communities,” Best says. “He passed that on to me.”
In 2004, Atmos got into a dogfight with several companies trying to buy TXU Gas Co.’s distribution and pipeline assets. Its bid came in second best and the board was trying to figure out its next step.
Best stood at the boardroom window, looking down on the Dallas North Tollway just as a TXU truck drove by.
“I said, ‘By God, I do not want to see Atlanta Gas Light trucks going up and down this road.’ So we upped our bid by $50 million, and we got it.”
Vaughan proudly watched his protégé in action and smiled.
Title: Founding chairman, president and CEO, Atmos Energy Corp.; recently retired as lead director of its board
Education: Degree in business management from West Texas State College, 1965
Early life: Born in Hubbard; grew up picking cotton on his grandparents’ farm and later stocking groceries before and after school in his hometown of Lockney
Natural gas career: Took a job at Pioneer Natural Gas Co. in 1957 typing, digging ditches, painting meters and burying service lines to pay college tuition; worked his way up through operations at Pioneer Corp.; named CEO of Pioneer spinoff Energas in 1983, which he renamed Atmos and moved to Dallas; served as CEO until 1997
Resides: Far North Dallas
Personal: Married to Barbara,
a former TWA flight attendant, for 50 years; one married daughter and two grandchildren, 15 and 20
Atmos Energy Corp. began in 1983 as a struggling tiny West Texas spinoff with Charlie Vaughan at its helm. Here’s how far it has come from its first year of operations to the end of fiscal 2012 in September:
States of operation
billion cubic feet
SOURCE: Atmos Energy