I'm John Gibson, Chairman of the Board of ONE Gas Inc. On behalf of the company and its board of directors, it's my pleasure to welcome you to the 2018 Annual Meeting of Shareholders of ONE Gas Inc. In accordance with the notice of the meeting, I now call this meeting to order. It is our intention to conduct today's meeting according to the agenda and the rules and procedures you received as you entered the room. Please note that following adjournment of the meeting, there will be an opportunity for questions and discussion with management. 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 Securities Act of 1933 and the Securities Exchange Act of 1934. Actual results could differ materially from those projected in any forward-looking statements. For a discussion of those factors that could cause actual results to differ, please refer to our SEC filing. Before proceeding to the business of the meeting, I want to introduce our directors, whom I ask to remain standing until all introductions have been made. Please hold your applause until all the directors have been introduced. Douglas Yaeger, retired Chairman, President, and Chief Executive Officer of The Laclede Group, now Spire Inc., St. Louis, Missouri. Robert Evans, retired President and Chief Executive Officer of Duke Energy Americas, Minden, Louisiana.
Pattye Moore, Chairman of the Board, Red Robin Gourmet Burgers, and owner, Patty L. Moore & Associates, Tulsa. Eduardo Rodriguez, President, Strategic Communication Consulting Group, El Paso, Texas. Michael Hutchinson, retired partner at Deloitte & Touche, Denver, Colorado. Pierce Norton, President and Chief Executive Officer, ONE Gas Inc., Tulsa. Let's give them a hand. I would also like to introduce Dean Simone with PricewaterhouseCoopers LLP, which currently serves as the company's independent registered public accounting firm. If questions arise during the discussion period that PricewaterhouseCoopers LLP should appropriately address, we will call upon Mr. Simone to answer those questions. At the table is Brian Shore, Vice President, Associate General Counsel, and Corporate Secretary of ONE Gas, who will serve as Secretary for this meeting. Also at the table is Daniel Laufer of EQ Shareowner Services, our independent stock transfer agent.
I hereby appoint Mr. Laufer as Inspector for all votes held and ballots taken at this meeting. Mr. Laufer has executed and delivered an oath of Inspector that will be filed with the records of this meeting. Mr. 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 business to be acted upon at this meeting, a proxy card, and the company's 2017 annual report were first mailed beginning on April 4th, 2018 to each shareholder of record as of March 26th, 2018. An affidavit regarding the mailing has been executed and delivered and will be filed with the minutes of this meeting. A list of shareholders entitled to notice of and to vote at this meeting, certified by EQ Shareowner Services, our independent stock transfer agent, has been available for viewing here at corporate headquarters for the past 10 days and is available for viewing at this meeting. All documents concerning the call and notice of this meeting will be filed with records of the corporation. At the record date, 52,462,880 shares of ONE Gas common stock were issued and outstanding.
The count of shares immediately prior to this meeting shows that 48,985,920 shares of ONE Gas common stock are represented at this meeting in person or by proxy, representing 93% of the outstanding common stock of the corporation. ONE Gas's bylaws provide that a quorum for a shareholder meeting consists of the presence, in person or by proxy, of a majority of the shares of common stock outstanding at the record date. Mr. Chairman, a quorum is present.
Excuse me. Thank you, Mr. Shore. I hereby declare a quorum is present at this meeting. Again, on behalf of the board of directors of ONE Gas, express my appreciation to all shareholders in attendance today and all shareholders who returned their proxies. The first matter to be acted upon by our shareholders today is the election of 3 Class I directors to serve for a three-year term expiring at the company's annual meeting of shareholders in 2021. Mr. Rodriguez, will you as Chair of the Corporate Governance Committee announce the names of the nominees for these directorships?
Mr. Chairman, the nominees for the 3 Class I directorships, as set forth in the proxy statement for this meeting are John W. Gibson, Pattye L. Moore, and Douglas H. Yaeger.
Thank you, Mr. Rodriguez. You have heard the nominations, since there were no additional nominations received in the period of time allotted under our bylaws, no other nominations may be accepted. The second matter to be acted on by shareholders today is the ratification of the selection of PricewaterhouseCoopers LLP, as the independent registered public accounting firm for ONE Gas, Inc. for the 2018 fiscal year. Mr. Hutchinson, will you, as chair of the Audit Committee, present a motion to ratify the appointment of PricewaterhouseCoopers LLP?
Mr. Chairman, I move for shareholder approval of the following resolution. Resolved that the selection of PricewaterhouseCoopers LLP, as the independent registered public accounting firm for ONE Gas, Inc. for the year ending December 31, 2018, be and hereby is ratified and approved by the shareholders of ONE Gas, Inc.
Thank you, Mr. Hutchinson. The third matter to be acted on by shareholders is the annual advisory vote on executive compensation. Ms. Moore, will you, as chair of the Executive Compensation Committee, present a motion to approve, on an advisory basis, the compensation paid to the named executive officers as set forth in the company's proxy statement for the 2018 annual meeting of shareholders?
Mr. Chairman, I move for shareholder approval of the following resolution. Resolved that the shareholders hereby approve, on an advisory basis, the compensation paid to the named officers as disclosed in the company's proxy statement for the 2018 annual meeting of shareholders pursuant to Item 402 of Regulation S-K, including the compensation discussion and analysis, compensation tables, and narrative discussion.
Thank you, Ms. Moore. The fourth matter to be acted on by shareholders is to approve the ONE Gas, Inc. Amended and Restated Equity Compensation Plan (2018). Ms. Moore, will you, as chair of the Executive Compensation Committee, present a motion to approve the ONE Gas, Inc. Amended and Restated Equity Compensation Plan (2018), as set forth in the company's proxy statement for the 2018 annual meeting of shareholders?
Mr. Chairman, I move for shareholder approval of the following resolution. Resolved that the shareholders hereby approve the ONE Gas, Inc. Amended and Restated Equity Compensation Plan (2018), as disclosed in the company's proxy statement for the 2018 annual meeting of shareholders.
Thank you, Ms. Moore. The fifth matter to be acted on by shareholders is to approve the Amended and Restated Certificate of Incorporation to eliminate the classified structure of our board, provide for the annual election of directors, and allow shareholder removal of directors with or without cause. Mr. Rodriguez, will you, as chair of the Corporate Governance Committee, present a motion to approve the Amended and Restated Certificate of Incorporation to eliminate the classified structure of our board, provide for the annual election of directors, and allow shareholder removal of directors with or without cause as set forth in the company's proxy statement for the 2018 annual meeting of shareholders?
Mr. Chairman, I move for shareholder approval of the following resolution. Resolved that the shareholders hereby approve the amended and restated certificate of incorporation to eliminate the classified structure of our board, provide for the annual election of directors, and allow shareholder removal of directors with or without cause as disclosed in the company's proxy statement for the 2018 annual meeting of shareholders.
Thank you, Mr. Rodriguez. This concludes the matters to be acted on by shareholders at today's meeting. 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 declare the polls closed. The Inspector of Election will now count the votes.
While the inspector is completing the tabulation of the votes, I would like to ask Pierce Norton, President and Chief Executive Officer, to provide a review of the company's 2017 performance.
Good morning. We appreciate your attendance, either here in person today or on our webcast. I would like to begin this morning by acknowledging and thanking our board of directors for their continued service and guidance. And thank our 3,500 employees for working every day to ensure the safe delivery of natural gas and also providing the service that is valued by our customers. Our company has been a distributor of natural gas for more than 100 years. Throughout our history, we have been fortunate to have a dedicated workforce, and I want to thank the retirees for their continued support of our company and for being champions of our company. We also thank you for your investment and confidence in our company.
Our mission to deliver natural gas for a better tomorrow starts with a commitment to safely provide reliable energy to over 2.1 million customers in Oklahoma, Kansas, and Texas. Every day, these customers rely on natural gas to meet their residential, commercial, industrial, and transportation needs. They count on us for reliability, for comfort, and for convenience at a substantial cost savings compared with other energy options. It is my privilege today to provide you an overview of the accomplishments of 2017. Our company is first and foremost committed to creating a culture of safety. Keeping employees, customers, and our communities safe is the foundation of all that we do. For the first time in our history, our company has ranked in the first quartile nationally on three key safety metrics, employee injuries, severe injuries, and vehicle incidents.
Results like this prove we are progressing in the right direction toward the goal as a company-wide culture where zero incidents is our goal every day of every year. At ONE Gas, we are proud of the development of continued progress we've made to maintain a high-performing workforce. We know that delivering results begins with our employees, and our focus remains on ensuring we accomplish goals in a way that is safe and ethical. How we do our work matters, and we continue to build on strategies that engage our workforce and establish trust and clarity of our mission. In 2017, part of building that trust was the creation of an inclusion and diversity council comprised of employees throughout the company who are working to help ensure that we all feel welcome and that we're respected for our differences. Our history dates back to 1906.
Few companies have that legacy in combination with the ability to leverage technology and process improvements today and into the future. Optimizing performance through innovation in our field operations and customer service teams, for example, has allowed us to better meet the needs of our customers while making our work more efficient. In such a fast-paced digital age as our customers expect that we do business on their terms, that is why we also are advancing use in communication platforms like social media and mobile devices, making it easier to communicate and conduct business with us. We continue to see results of new technology used to evaluate our natural gas systems, further strengthening our ability to make informed and data-driven decisions around our capital expenditures. In 2017, we invested over $350 million in capital expenditures, with 70% of that investment going toward system integrity.
These investments enhance our system's reliability while also reducing our environmental footprint. Being good stewards of the environment also means being a diligent operator. Our partnership with the Environmental Protection Agency Natural Gas STAR and Methane Challenge programs has helped us lead the way forward with a voluntary commitment to reduce greenhouse gas emissions. This past year, we once again exceeded our goal to replace more than 2% of our vintage pipe. System investment also helps us to grow. In 2017, we added 14,000 net customers who are now able to take advantage of affordable domestic energy. Natural gas is well-positioned to remain competitive compared with other energy options and is the only source that is designed through its delivery systems to meet the needs of the market at any time, during any day, of any season.
Its competitive advantage in our areas has expanded to 3.5 to one on average compared with electricity. Collaborative relationships with our regulators help to keep us accountable and cost-effective. We are pleased with our well-balanced regulatory strategy. Our average rate base in 2018 is expected to be $3.4 billion, with 42% in Oklahoma, 30% in Kansas, and 28% in Texas. In addition to a cost advantage, our customers are also seeing cost savings due in part to the Tax Cuts and Jobs Act of 2017. This new law allows us to continue our investment in critical infrastructure while also passing the benefit of lower costs to our customers from the reduction of federal taxes. The execution of our strategic plan has had a positive financial impact on our company. In 2017, our net income increased to $163 million with a corresponding earnings per share of $3.08.
That's compared to $140 million of net income and $2.65 per share in 2016. We also increased our quarterly dividend by $0.04 per share to $0.46 per share, which was effective for the first quarter of 2018. This increase will result in an annualized dividend of $1.84 per share. We expect an average annual dividend increase in the range of 7%-9% between now and 2022, subject to board approval. ONE Gas remains an attractive long-term investment opportunity. Our capital investment in managed pipeline replacement will continue to provide decades of clarity on capital spending as well as cost mitigation through the system's modernization. Over time, we continue replacing more of our older assets through our pipeline integrity program, requiring continuous investments and delivering a sustainable foundation for our future.
We know the financial and economic impact is not the only impact that we have as a corporation. Our commitment to a better tomorrow involves making the communities that we serve better through charitable giving, volunteerism, and community engagement. Last year, we contributed $2.7 million through the ONE Gas Foundation and civic and corporate contributions. Our employees volunteered 8,600 hours throughout our service territories. We see these contributions and volunteer hours as an investment in our communities and in the future and the sustainability of our company. A better tomorrow for all of us. Again, we appreciate your support, your confidence, and investment in our company. Mr. Chairman, thank you for the opportunity to review the company's 2017 performance. You took my script. We're not going to get much further.
Thank you, Mr. Norton. Mr. Shore, will you please report on the results of the voting?
Mr. Chairman, we've been provided the preliminary report of the Inspector of Elections as follows. Each of the nominees for the three Class I directorships has received votes in favor of his or her election in excess of 94% of the votes cast by the shares of ONE Gas common stock represented at this meeting in person or by proxy. Proposal number two, to ratify the selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm for ONE Gas Inc. for the year ending December 31st, 2018, has received votes in favor of the proposal in excess of 99% of the shares of ONE Gas common stock represented at this meeting in person or by proxy.
Proposal number three, to approve on an advisory basis the compensation paid to the named executive officers as set forth in the proxy statement for this meeting, has received votes in favor of the proposal in excess of 96% of the shares of ONE Gas, Inc. common stock represented at this meeting in person or by proxy. Proposal number four, to approve the ONE Gas, Inc. Amended and Restated Equity Compensation Plan (2018), as set forth in the proxy statement for this meeting, has received votes in favor of the proposal in excess of 87% of the shares of ONE Gas, Inc. common stock represented at this meeting in person or by proxy.
Proposal number five, to approve the amended and restated Certificate of Incorporation to eliminate the classified structure of the board, provide for the annual election of directors, and allow shareholder removal of directors with or without cause, as set forth in the proxy statement for this meeting, has received votes in favor of the proposal in excess of 81% of the outstanding shares of ONE Gas, Inc. common stock represented at this meeting in person or by proxy.
Thank you, Mr. Shore. Each of the nominees for director has received a majority of the votes cast in favor of their election, so each of the Class 1 nominees has been elected a director of the company to serve until the company's annual meeting in 2021. The proposal to ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ended December 31, 2018, has been approved. The advisory vote to approve executive compensation has been approved. The proposal to approve the ONE Gas, Inc. Amended and Restated Equity Compensation Plan (2018) has been approved. The proposal to approve the amended and restated Certificate of Incorporation to eliminate the classified structure of our board, provide for the annual election of directors, and allow shareholder removal of directors with or without cause has been approved.
Because no one has submitted any additional business for this meeting, in accordance with the provisions of our bylaws, there is no other business to come before our 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.