1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement / / Confidential,
for Use of the Commission Only
/ / Definitive proxy statement (as permitted by Rule 14a-6(e)(2))
/x/ Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE COLUMBIA GAS SYSTEM, INC
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(Name of Registrant as Specified in Its Charter)
THE COLUMBIA GAS SYSTEM, INC
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
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(4) Proposed maximum aggregate value of transaction:
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(5) Total Fee Paid:
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/x/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
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Dear Shareholder:
At the 1993 annual shareholders' meeting, I announced that I would be
retiring when Columbia's Chapter 11 bankruptcy proceedings were further
advanced to allow new management to lead the reorganized company. Both the
Corporation and Columbia Gas Transmission Corporation expect to file
reorganization plans with the U.S. Bankruptcy Court prior to April 18, 1995. I
am optimistic that consideration and approval of the plans of reorganization
will move forward promptly.
Following the 1993 shareholders' meeting, the Board of Directors
established a committee of outside directors to conduct a nationwide search for
the most qualified executive to succeed me. As a result of its extensive
recruiting efforts, the search committee recommended to the Board at its March
15th meeting that Mr. Oliver G. Richard, III, be elected to the Board and the
offices of Chairman, Chief Executive Officer, and President of the Corporation.
The Board accepted that recommendation and elected Mr. Richard to those
positions effective as of the close of business on April 28, 1995. Mr. Richard
was assigned to the class of directors standing for election in 1996. I
wholeheartedly support Mr. Richard's selection, which has also been
enthusiastically endorsed by the Official Committee of Equity Security Holders
in Columbia's bankruptcy proceedings. Following Mr. Richard's assumption of
his duties, I will retire.
Columbia is fortunate to have an executive as qualified as Mr. Richard
to lead the Corporation in meeting the challenges and securing the
opportunities that lie ahead. Mr. Richard, 42, has a distinguished record. In
1992 he was elected Chairman of New Jersey Resources Corporation, where he had
been President and Chief Executive Officer since 1991. He was also President
and Chief Executive Officer of New Jersey Natural Gas Company, New Jersey
Resources Corporation's principal operating company. Previously, he was with
Enron Corporation, where he was President and Chief Executive Officer of
Northern Natural Gas Company from 1989 to 1991 and, from 1987 to 1989, Senior
Vice President and then Executive Vice President of Enron Gas Pipeline Group.
Mr. Richard also served as Vice President and General Counsel of Tenngasco, a
Tenneco Corporation subsidiary, from 1985 to 1987, and as a Commissioner of the
Federal Energy Regulatory Commission from 1982 to 1985.
Mr. Richard serves on the boards of National Westminster Bank USA,
Monmouth College and Monmouth Medical Center. He is a member of the National
Petroleum Council and a board member of the American Gas Association.
To attract an executive of this caliber, the Corporation has entered
into an employment agreement with Mr. Richard that provides a base salary of
$750,000 per year, subject to such increases as may be approved by the Board.
Mr. Richard does not presently own any shares of the Corporation's Common
Stock. The agreement provides for a grant of 10,000 shares of the
Corporation's Common Stock upon Mr. Richard's initiation of employment with the
Corporation, and 5,000 shares per year on December 31 of each of the years
1995, 1996, and 1997, if he is employed by the Corporation on those dates. In
addition, subject to the receipt of necessary approvals, on the thirtieth day
after the Corporation is discharged from bankruptcy, Mr. Richard will receive a
grant of options to purchase, at the then prevailing market price, 100,000
shares of the Corporation's Common Stock. If the options cannot be issued as
of the thirtieth day following the Corporation's discharge from bankruptcy but
are issued later, Mr. Richard will receive a cash payment equal to the excess,
if any, of the exercise price over the fair market value of the shares on the
thirtieth day following discharge from bankruptcy.
Under the terms of the employment agreement, the Corporation will
compensate Mr. Richard for certain items that he will forfeit as a result of
his terminating employment with New Jersey Resources Corporation. This
compensation is not expected to exceed $100,000. Besides being eligible to
participate in all incentive compensation plans and employee benefit programs
provided to other senior executives of the Corporation, Mr. Richard may
receive, upon retirement, supplemental pension payments to make up the
difference, if any, between the Corporation's pension benefits and those Mr.
Richard would have received from his present employer.
The employment agreement further provides for severance benefits to be
paid to Mr. Richard in the event his employment is terminated without cause.
The severance benefits would include payment of Mr. Richard's annual base
salary, incentive compensation and fringe benefits for a period of 24 months.
If his employment is terminated before the first anniversary of the signing of
the agreement, Mr. Richard would receive his annual base salary, incentive
compensation, and fringe benefits for the remainder of the first year, in
addition to the 24-month salary, incentive compensation and fringe benefits.
If Mr. Richard's employment is terminated due to a change in control of the
Corporation (as defined in the agreement), the period of severance benefits is
extended from 24 to 36 months, but the amount that may be paid to Mr. Richard,
which would constitute "parachute payments" under the Internal Revenue Code,
will be limited to the extent necessary to avoid the imposition of an excise
tax under the Internal Revenue Code.
Since the Corporation and Columbia Gas Transmission expect to file
Chapter 11 reorganization plans shortly with the Bankruptcy Court, I am pleased
to announce that Columbia will be initiating a toll-free number
(1-800-863-5331) that investors can call beginning April 17 to hear a recorded
message regarding developments in the proceedings.
This letter is intended to supplement the Annual Report and Proxy
Statement that have been mailed to you under separate cover.
Sincerely yours,
John H. Croom
March 15, 1995