Ladies and gentlemen, and welcome. I'm John Gibson, Chairman of the Board of ONE Gas Inc. And it is my pleasure to welcome you to the ONE Gas 2021 Annual Meeting of Shareholders. I now call this meeting to order. It is our intention to conduct today's meeting according to the agenda and rules and procedures you received as you entered the room and pursuant to the CDC's social distancing guidelines.
Please note that following adjournment of the meeting, there will be an opportunity for questions and discussion. The polls will be open for voting after all the proposals have been presented. I remind you that statements made during our annual meeting that include expectations or predictions should be considered forward looking statements and are covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, the Securities Act of 1933 and the Securities and Exchange Act of 1934, each as amended. Actual results could differ materially from those projected in any forward looking statements. For a discussion of factors that could cause actual results to differ, please refer to our SEC filings.
Before proceeding to the business of the meeting, let me introduce the other members of the Board. Robert Evans, retired President and Chief Executive Officer of Duke Energy Americas, Minden, Louisiana Tracy Hart, President and Chief Executive Officer, Tarleton Corporation, St. Louis, Missouri Michael Hutcheson, retired partner at Deloitte and Touche, Denver, Colorado Patty Moore, retired Board Chair, Red Robin Gourmet Burgers and owner, Patty L. Moore and Associates, Broken Arrow, Oklahoma Pierce Norton, President and Chief Executive Officer, 1 Gas Inc, Tulsa, Oklahoma Eduardo Gilles, President, Strategic Communication Consulting Group, El Paso, Texas Doug Yeager, retired Chairman, President and Chief Executive Officer of the Laclede Group, now Spire Inc, St. Louis, Missouri.
I would like to thank each of the directors for their service on the board. Brian Shore, Vice President, Associate General Counsel and Corporate Secretary of ONE Gas Inc, will serve as secretary for this meeting. Dan Loeffler of EQ Shareholder Services, our independent stock transfer agent, has been appointed as Inspector of Election for this meeting. Shore will now report on the mailing of the notice of this meeting and the presence of a quorum.
Thank you, Mr. Chairman. Notice of this meeting, accompanied by a proxy statement covering the matters to be acted upon at this meeting, a proxy card and the company's 2020 annual report were first mailed on April 7, 2021 to each shareholder of record as of March 30, 2021. A list of shareholders entitled to notice of and vote at this meeting has been available for viewing here at corporate headquarters for the past 10 days and is available for viewing at this meeting. At the record date, 53,245,011 shares of ONE Gas common stock were issued and outstanding.
We are informed by the Inspector of Election that the count of shares immediately prior to this meeting shows that a majority of the shares of ONE Gas common stock outstanding at the record date represented at this meeting in person or by proxy. Therefore, Mr. Chairman, in accordance with our bylaws, a quorum is present.
Thank you, Mr. Shore. I hereby declare a quorum is present and that this meeting is duly convened for the purpose of conducting such business as may properly come before it. On behalf of the Board of Directors of ONE Gas, I express my appreciation to all shareholders in attendance today and all shareholders who have returned their proxies. At today's meeting, we are asking shareholders to vote on the following 5 proposals.
Proposal number 1 is the annual election of 8 directors to serve for a 1 year term expiring at the company's annual meeting of shareholders in 2022. The nominees for the 8 directorships are set forth in the proxy statement for this meeting and were previously introduced. Proposal number 2 is the ratification of the selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for ONE Gas Inc. For the 2021 fiscal year. Proposal number 3 is the amendment and restatement of the employee stock purchase plan to authorize an additional 550,000 shares of One Gas Inc.
Common stock for issuance under the plan and to introduce new holdings requirements and transfer restrictions for plan participants as described in the proxy statement for today's meeting. Proposal number 4 is the annual advisory vote on the compensation paid to the named executive officers as described in the proxy statement for today's meeting. And proposal number 5 is the advisory vote on the frequency of the advisory vote on executive compensation paid to the named executive officers as described in the proxy statement for today's meeting. I now move for shareholder approval these 5 proposals. The polls are now open.
I would like to point out that those of you who have previously returned proxies have authorized the persons named in the proxy to vote your shares as instructed on all proposals coming before the meeting and you do not need to vote by ballot. If any shareholder present has not submitted a proxy or wishes to revoke a previously voted proxy and cast your vote by ballot, please raise your hand and you will be given a ballot. Since all those desiring to vote by proxy or ballot have done so, I now declare the polls closed. The Inspector of Election will now tabulate the votes. While the Inspector is completing the tabulation of the votes, I would like to make a few comments concerning the company's recent announcement Pierce Norton's decision to retire as CEO effective June 27, 2021.
First, the Board of Directors and I would like to thank Pierce for his leadership these past 7 years. In that time, Pierce has established a solid culture and sustainable business model that will benefit all stakeholders for years to come. The governance committee led by Eduardo Rodriguez has already begun taking the necessary actions to recommend Pierce's replacement to the Board of Directors. Through the Board's active process, the Board anticipates making a decision within a few weeks. Pierce, thank you again for all your service to all ONE Gas stakeholders.
I'll now turn it over to you to provide an update on the company's performance.
Thank you, Mr. Chairman, and good morning. We appreciate you joining us today for insight on our company's performance in 2020. I would also like to share my thoughts about the recent announcement concerning my retirement. I'm very appreciative to have held the position with this great company.
It has been an honor to serve our shareholders, employees, customers and communities. From day 1 of the formation of this company in 20 14, the executive team then and now has focused on ingraining a culture that is built upon our core values and executing our mission, vision and strategies to create a competitive advantage and a sustainable future. The accomplishments of this company over the past 7 years are too numerous to mention in this short period of time. However, I do want to recognize the people that made it happen, our Board of Directors, our leadership and every employee. The engagement and collaboration through this organization created a working environment that made our success possible.
I'm confident that the value based culture created in this company will continue to bring benefits to all stakeholders. Now let's turn to 2020. During an unprecedented year of challenges in our country and our communities, our mission to deliver natural gas for a better tomorrow guided our business strategy and daily operations. Our customers' homes transitioned to places of work, schooling and much more. We were there to deliver affordable natural gas through our resilient and reliable systems, bringing comfort and stability in the face of uncertainty.
On behalf of our Board of Directors and the executive leadership team, I'd like to express our gratitude to our nearly 3,000 700 employees for their teamwork, resiliency and responsiveness during an unprecedented year in our history. Thank you for living out our core values and working every day to ensure delivery of natural gas to our valued customers. I would also like to thank those who serve on our Board of Directors for their continued service and guidance and to you, our investors, for your confidence in our company. As you'll hear in our 2020 results, ONE Gas is committed to creating exceptional value for our stakeholders. Each day we strive to build on our legacy of safely and reliably delivering natural gas to our more than 2,200,000 customers to meet their residential, commercial and transportation needs.
Although we have only been operating under the ONE Gas name since 2014, we have served customers in our communities for more than 100 years. The legacy is rooted in the exceptional talent and a dedicated workforce that came before us. Thank you to our retirees who continue to be a part of that legacy and for continuing to be champions of the company today. And now I'm pleased to report on some of the notable achievements in 2020. Our net income increased to 196,000,000 dollars with a corresponding diluted earnings per share of $3.68 compared with 187,000,000 dollars of net income and earnings per share of $3.51 in 2019.
During 2020, we paid an annualized dividend of 2.16 dollars an increase of $0.16 over the 2019 annualized dividend. In 2021, we've increased our first and second quarter dividend by $0.04 over dividends paid in 2020 to $0.58 per share, resulting in an annualized dividend of 2 point $3.2 per share. Our average annual dividend growth rate is expected to increase 6% to 8% between now and 2025 with a targeted dividend payout ratio of 55% to 65% subject to Board approval. These results are made possible by a focused business strategy, our dedicated workforce and staying true to our core values, which have enabled us to increase both shareholder value and the impact we make in the communities that we serve. Our primary core value is safety.
Our employees drive our safety culture through their commitment to 0 harm, operating safely and reducing risk for one another, our customers and communities. In 2020, we remained in the 1st quartile in all safety metrics tracked by the American Gas Association. Our days away restricted and transferred, which is the DART rate, was again the lowest in company history and the lowest of all similar sized local distribution companies for the 4th year in a row. We remain committed to refining our processes and procedures to produce zero harm to our employees, customers and the public. Modernizing our distribution systems remains a pivotable way that we maintain safe and reliable operations while reducing emissions.
Pipeline replacements is also our core to our business model and will continue to provide decades of clarity on capital spending as well as cost mitigation through system modernization. In 2020, we invested $512,000,000 in capital expenditures and asset removal costs with 70% of that investment was going towards system integrity. We replaced 4 70 miles of distribution mains, service lines and transmission lines last year, which included 197 miles of vintage pipelines. With more than 60,000 miles of distribution mains, services and transmission pipelines, there's always more work to do. That's why we continue to utilize technology that prioritizes which assets we replace.
World events in 2020, including a pandemic and social injustices, challenged us to further explore how we can build a better tomorrow for everyone and strengthen a sense of belonging from employees and customers to suppliers and the communities that we serve. As a leader in our industry and across the 3 states we operate, we are committed to listening and learning with a goal of providing a more equitable experience for all. In 2020, we again had record breaking participation in our employee engagement survey with more than 90 percent of our employees providing feedback. Employee engagement scores were in the top quartile of Gallup's overall company database and showed improvement for the 4th consecutive year. It's also important that our employees and customers have the community resources and the quality of life they desire.
So we look for ways to give of our time and our resources through charitable giving, volunteerism and community engagement. 2020, we provided $3,200,000 through the ONE Gas Foundation Grants and Community Investments. These are just a few of the ways that we're executing on our environmental, social and governance or ESG strategy. In addition, in 2020, we began a formal ESG steering committee that includes representation from every functional area of the company. This group will help us to develop and oversee the execution of our strategy and will provide a vision and direction of the ONE Gas ESG goals, targets and related policies, processes and data collection activities.
It will also help guide our disclosure of ESG related information to the public. We are reporting our progress through our website and annual sustainability report. However, we are taking a different approach when it comes to communicating our long term environmental goals. We want to understand our potential before we commit to what we can achieve. While we understand the sense of urgency for us to reduce both our direct and indirect emissions, we are first developing our strategy that will allow us to quantify our opportunities and identify possible timelines to reach such goals.
Our strategy will be grounded in understanding how best to utilize the resources already available, which includes existing technologies and our assets. We will also look for innovative ways to work collaboratively to achieve net zero emissions. We look forward to showing you our progress on that journey. Mr. Chairman, thank you for the opportunity to review the company's 2020 performance.
Thank you, Pierce. Mr. Shore, would you please report on the results of the voting?
Mr. Chairman, we've been provided the preliminary report of the election as follows. Each of the 8 director nominees has been elected for a 1 year term. The selection of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm has been ratified with a 99% favorable vote. Amendment and restatement of the employee stock purchase plan to authorize an additional 550,000 shares of ONE Gas common stock for issuance under the plan and to introduce new holding requirements and transfer restrictions for the plan participants has received a 98.68 percent favorable vote.
The advisory vote on the compensation paid to the named executive officers received a 97.07 favorable vote and the frequency of the advisory vote on the compensation page of the named executive in
accordance with the provisions of our bylaws, there is no other business in accordance with the provisions of our bylaws, there is no other business to come before this meeting. I once again express my appreciation to the shareholders who attended this meeting and to those who submitted their proxies prior to the meeting. I now declare this annual meeting of shareholders adjourned. We are now ready for a session with management for your questions.