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 (AS PERMITTED BY RULE
14a-6(e)(2))
[X] Definitive Proxy Statement [_] Definitive Additional Materials
[_] Soliciting Material Pursuant to ss. 240.14a-12
CH ENERGY GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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:
---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------------
[_] 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:
---------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------------
CH ENERGY GROUP, INC.
284 SOUTH AVENUE
POUGHKEEPSIE, NEW YORK 12601-4879
March 3, 2003
To the Holders of Common Stock:
I am pleased to invite you to the Annual Meeting of Shareholders of CH
Energy Group, Inc. (the "Corporation").
The Annual Meeting of Shareholders will be held at the Corporation's office
in Poughkeepsie, NY on Tuesday, April 1, 2003 at 10:30 AM. A Notice of the
Annual Meeting and Proxy Statement are attached.
We request that you sign, date and mail the enclosed proxy card promptly.
Prompt return of your voted proxy will reduce the cost of further mailings. As
an alternative to returning your proxy card by mail, you can also vote your
shares by proxy by calling the toll-free number on your proxy card or over the
Internet at the address identified on your proxy card. Both methods of voting
are available 24 hours a day, seven days a week and will be accessible until
12:01 AM on March 25, 2003. You may revoke your voted proxy at any time prior to
the meeting or vote in person if you attend the meeting.
The response from our shareholders in the past to this annual proxy
statement has been outstanding, and this year we are once again looking forward
to receiving your proxy.
You are cordially invited to attend the Annual Meeting in person. It is
always a pleasure for me and the other members of the Board of Directors to meet
with our shareholders. We look forward to greeting as many of you as possible at
the meeting.
Paul J. Ganci
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
CH ENERGY GROUP, INC.
284 SOUTH AVENUE
POUGHKEEPSIE, NY 12601-4879
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
To the Holders of Common Stock:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of CH
Energy Group, Inc. will be held:
TIME ............. 10:30 a.m. on Tuesday, April 1, 2003
PLACE ............ Office of the Corporation
284 South Avenue
Poughkeepsie, NY 12601
ITEMS OF BUSINESS (1) To elect three Directors whose terms expire in April
2006; and
(2) To act upon any other matters that may properly come
before the meeting.
RECORD DATE ..... Holders of Record of Common Shares on the close of business
on February 24, 2003 are entitled to vote at the meeting.
ANNUAL REPORT .... The Annual Report to Shareholders, as combined with the
Corporation's Form 10-K Annual Report to the Securities and
Exchange Commission, is enclosed.
PROXY VOTING ..... It is important that your shares be represented and voted at
the Meeting. Please MARK, SIGN, DATE AND RETURN PROMPTLY the
enclosed proxy card in the postage-paid envelope furnished
for that purpose. As an alternative to returning your proxy
card by mail, you can also vote your shares by proxy by
calling the toll-free number on your proxy card or over the
Internet at the address identified on your proxy card. Both
Internet and telephone voting are available 24 hours a day,
seven days a week, and will be accessible until 12:01 AM on
March 25, 2003. You may revoke your voted proxy at any time
prior to the meeting or vote in person if you attend the
meeting. Any proxy may be revoked in the manner described in
the accompanying Proxy Statement at any time prior to its
exercise at the meeting.
By Order of the Board of Directors,
CORPORATE SECRETARY
March 3, 2003
TABLE OF CONTENTS
PAGE
----
PROXY STATEMENT ........................................................... 1
PROPOSAL NO. 1--ELECTION OF DIRECTORS ..................................... 3
BOARD OF DIRECTORS AND COMMITTEES ......................................... 6
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION .................................................... 9
EXECUTIVE COMPENSATION .................................................... 10
REPORT OF THE AUDIT COMMITTEE ............................................. 14
PERFORMANCE GRAPH ......................................................... 16
PROXY STATEMENT
The enclosed proxy is being solicited by the Board of Directors of CH
Energy Group, Inc. (the "Corporation") for use in connection with its Annual
Meeting of Shareholders to be held on April 1, 2003. This proxy statement and
enclosed proxy are being sent to the Corporation's shareholders on or about
March 3, 2003. The mailing address of the principal executive office of the
Corporation is 284 South Avenue, Poughkeepsie, NY 12601-4879.
The Corporation is the holding company parent of Central Hudson Gas &
Electric Corporation ("Central Hudson") and Central Hudson Enterprises
Corporation ("CHEC"), and their respective subsidiaries.
SHAREHOLDERS ENTITLED TO VOTE
The record of shareholders entitled to notice of, and to vote at, the
Annual Meeting was taken at the close of business on February 24, 2003. At that
date, there were 16,040,550 shares of Common Stock ($0.10 par value) of the
Corporation ("Common Stock") outstanding. Each share of Common Stock is entitled
to one vote. No other class of securities is entitled to vote at this meeting.
PROXIES
HOW YOU CAN VOTE
Shareholders of record can give a proxy to be voted at the meeting either
(i) over the telephone by calling the toll-free number identified on the proxy
card, (ii) electronically, using the Internet, or (iii) by mailing in the
enclosed proxy card. Shareholders who hold their shares in "street name" must
vote their shares in the manner prescribed by their brokers.
The telephone and Internet voting procedures have been set up for
shareholder convenience and have been designed to authenticate shareholder
identity, to allow shareholders to give voting instructions, and to confirm that
those instructions have been recorded properly. If shareholders of record would
like to vote by proxy by telephone or by using the Internet, please refer to the
specific instructions set forth on the enclosed proxy card. If shareholders wish
to vote using a paper format and return their signed proxy before the Annual
Meeting, their shares will be voted as directed.
Whether shareholders choose to vote by telephone, over the Internet or by
mail, they can specify whether their shares should be voted for the Board of
Directors' nominees for Director, as shown on the proxy card.
IF SHAREHOLDERS DO NOT SPECIFY ON THEIR PROXY CARD (OR WHEN GIVING THEIR
PROXY BY TELEPHONE OR OVER THE INTERNET) HOW THEY WANT TO VOTE THEIR SHARES, IT
IS THE INTENTION OF THE PERSONS NAMED ON THE PROXY FORM TO VOTE "FOR" THE
ELECTION OF THE NOMINEES FOR DIRECTOR AS SET FORTH UNDER "PROPOSAL NO. 1 -
ELECTION OF DIRECTORS" HEREIN. ABSTENTIONS AND BROKER NON-VOTES ARE VOTED
NEITHER "FOR" NOR "AGAINST" AND HAVE NO EFFECT ON THE VOTE BUT ARE COUNTED IN
THE DETERMINATION OF A QUORUM.
1
REVOCATION OF PROXIES
Shareholders can revoke their proxy at any time before it is exercised in
any of three ways:
(a) by submitting written notice of revocation to the Corporate Secretary;
(b) by submitting another proxy by telephone, over the Internet, or by
mail that is later dated and (if by mail) that is properly signed; or
(c) by voting in person at the meeting.
COST OF PROXY SOLICITATION
The cost of preparing, printing, and mailing the notice of meeting, proxy
statement, proxy, and annual report will be borne by the Corporation. Proxy
solicitation other than by use of the mail may be made by regular employees of
the Corporation by telephone and personal solicitation. Banks, brokerage houses,
custodians, nominees, and fiduciaries are requested to forward soliciting
material to their principal(s) and to obtain authorization for the execution of
proxies, and may be reimbursed for their out-of-pocket expenses incurred in that
connection. In addition, the Corporation has retained D.F. King & Co., Inc. of
New York, NY, a proxy solicitation organization, to assist in the solicitation
of proxies. The fee of such organization in connection therewith is estimated to
be $7,000, plus reasonable out-of-pocket expenses.
SHAREHOLDER COMMUNICATIONS
Highlights of the 2003 Annual Meeting will be published on the
Corporation's Internet site (www.chenergygroup.com) and in the Corporation's
August 1, 2003 Report to Shareholders.
Shareholders' comments related to any aspect of the Corporation's business
are welcome. Space for comments is provided on the proxy card given to
shareholders of record. Shareholders may submit comments to the Corporation in
care of the Corporate Secretary. Although comments are not answered on an
individual basis, they do assist the Directors and Management in addressing the
needs of shareholders.
SHAREHOLDER PROPOSALS
A shareholder who would like to have a proposal included in the
Corporation's 2004 Proxy Statement must submit the proposal so that the
Corporate Secretary receives it no later than November 3, 2003. The Rules of the
Securities and Exchange Commission contain procedures governing shareholder
proposals that may be included in a proxy statement. In addition, the
Corporation's By-laws must be followed. The By-laws require any shareholder
wishing to make a nomination for Director or to introduce a proposal or other
business at the Corporation's 2004 Annual Meeting of Shareholders to give the
Corporation advance written notice thereof no earlier than January 1, 2004 and
no later than February 1, 2004.
A copy of the Corporation's By-laws may be obtained by writing to the
Corporate Secretary, CH Energy Group, Inc., 284 South Avenue, Poughkeepsie, NY
12601-4879.
2
CURRENT DIRECTORS, CLASSES AND TERMS OF OFFICE
The Corporation's Restated Certificate of Incorporation and By-laws require
that the Board of Directors be divided into three classes as nearly equal in
number as possible with staggered terms so that, at each Annual Meeting of
Shareholders, one class of Directors will stand for election to a three year
term. The Directors currently in classes and their respective terms of office
expire as of the Annual Meeting of the years shown below:
CLASS I - 2004
--------------
Edward F. X. Gallagher
Steven V. Lant
CLASS II - 2005
---------------
Steven M. Fetter
Stanley J. Grubel
CLASS III - 2003
----------------
Jack Effron
Heinz K. Fridrich
Paul J. Ganci
On November 21, 2002, the Board of Directors increased the number of
directors by one to a total of eight, and elected E. Michel Kruse as a Director.
Mr. Kruse, as a Director appointed by the Board, serves without a class
designation until this Annual Meeting of Shareholders. If elected, Mr. Kruse
will be a Class III director with a term expiring at the Annual Meeting of
Shareholders in 2006.
Jack Effron, a member of the Board of Directors since 1986, will not be
standing for re-election in Class III. The number of Directors will be reduced
to seven as of this Annual Meeting.
Three Class III Directors are to be elected by a plurality of the votes
cast at this Annual Meeting by the holders of shares entitled to vote.
The nominees for these Directorship positions are set forth in Proposal No.
1 below. Although the Board of Directors does not contemplate that the nominees
will be unable to serve, should such a situation arise prior to the meeting, the
proxies will be voted in accordance with the best judgment of the persons acting
thereunder.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
At this Annual Meeting, the Board of Directors proposes, and recommends a
vote in favor thereof, the following nominees to be elected to the Board of
Directors, their terms to expire at the Annual Meeting in the year noted below
or until a successor is elected and qualified:
CLASS III - 2006
----------------
Heinz K. Fridrich
Paul J. Ganci
E. Michel Kruse
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS
PROPOSAL NO. 1.
3
NOMINEES AND OTHER DIRECTORS
The following table sets forth the name and age of each nominee and each
Director of the Corporation whose term of office continues after the Annual
Meeting, the principal occupation of each during the past five years, business
experience during the past five years, and the period during which each has
served as a Director of the Corporation. Each nominee is currently serving as a
Director of the Corporation.
PRINCIPAL OCCUPATION OR EMPLOYMENT PERIOD OF
AND POSITIONS AND OFFICES WITH THE BUSINESS EXPERIENCE SERVICE AS
NAME AND AGE CORPORATION(1) DURING PAST FIVE YEARS(1) DIRECTOR BEGAN
- ----------- ---------------------------------- ------------------------- --------------
NOMINEES FOR ELECTION AS CLASS III DIRECTORS SERVING FOR A TERM EXPIRING IN 2006
--------------------------------------------------------------------------------
Heinz K. Fridrich ........... Industry Professor, University of Present Positions 1999,
69 Florida at Gainesville; Vice served as
Chairman of the Board, and a Director
[PHOTO OMITTED] Chairman of Audit Committee of of Central
the Corporation; Director, Solectron Hudson
Corp., CA; Director, Veeco beginning
Instruments, NY 1988(2)
Fernandina Beach, FL
Paul J. Ganci ............... Chairman of the Board, Present position since 1999,
64 President and Chief Executive May 2002; served as
Officer of the Corporation Chairman of the Board a Director
[PHOTO OMITTED] Poughkeepsie, NY and Chief Executive of Central
Officer of the Hudson
Corporation, 1998 - beginning
2002; President and 1989
Chief Operating Officer
of the Corporation,
1993-1998
E. Michel Kruse ............. Retired Chairman and Senior 2002
58 Greenwich, CT Advisor - Financial
Institutions Group of
[PHOTO OMITTED] UBS Warburg, 2000-
2002; Chief Executive -
BHF - Bank AG,
Frankfurt, Germany,
1997-1999; Chief
Financial Officer and
Vice Chairman of the
Board - The Chase
Manhattan Corporation,
1992-1996
4
PRINCIPAL OCCUPATION OR EMPLOYMENT PERIOD OF
AND POSITIONS AND OFFICES WITH THE BUSINESS EXPERIENCE SERVICE AS
NAME AND AGE CORPORATION(1) DURING PAST FIVE YEARS(1) DIRECTOR BEGAN
- ----------- ---------------------------------- ------------------------- --------------
INCUMBENT CLASS I DIRECTORS SERVING FOR A TERM EXPIRING IN 2004
--------------------------------------------------------------------------------
Edward F. X. Gallagher ...... Chairman of Gallagher Present Position 1999,
69 Transportation Services served as
Newburgh, NY a Director
[PHOTO OMITTED] of Central
Hudson
beginning in
1984(2)
Steven V. Lant .............. Chief Operating Officer and Present position; 2002
46 Chief Financial Officer of the except Chief Financial
Corporation; Chief Financial Officer of the
[PHOTO OMITTED] Officer of Central Hudson; Corporation, Central
President, Chief Operating Hudson and Central
Officer and Chief Financial Hudson Energy
Officer of CHEC; Director of the Services ("CH
Corporation, Central Hudson Services"), 2001-
and CHEC 2002; Chief Financial
Poughkeepsie, NY Officer and Treasurer
of the Corporation,
Central Hudson and
CH Services, 1999-
2001; Chief Financial
Officer, Treasurer and
Corporate Secretary of
Central Hudson,
1998-1999
INCUMBENT CLASS II DIRECTORS SERVING FOR A TERM EXPIRING IN 2005
----------------------------------------------------------------
Steven M. Fetter ............ President, Regulation Present position since 2002
51 UnFettered; April 2002; Group
Board member, National Head and Managing
[PHOTO OMITTED] Regulatory Research Institute (at Director, Global Power
Ohio State University), Keystone Group, FitchRatings,
Center Energy Program, 1998-2002; Chairman
Regulatory Information and Commissioner of
Technology Consortium the Michigan Public
Fair Haven, NJ Service Commission,
1987-1993; Acting
Associate Deputy
Under Secretary of
Labor, U.S. Department
of Labor, 1987
5
PRINCIPAL OCCUPATION OR EMPLOYMENT PERIOD OF
AND POSITIONS AND OFFICES WITH THE BUSINESS EXPERIENCE SERVICE AS
NAME AND AGE CORPORATION(1) DURING PAST FIVE YEARS(1) DIRECTOR BEGAN
- ----------- ---------------------------------- ------------------------- --------------
Stanley J. Grubel ........... Consultant; Present position since 1999,
60 Director, Asyst Technologies, December 2001; Vice served as
Inc., CA President and General a Director
[PHOTO OMITTED] White Plains, NY Manager, Philips of Central
Semiconductor Hudson
Manufacturing, Inc., beginning
2000-2001; Chairman in May,
of the Board and Chief 1999(2)
Executive Officer,
MiCRUS, 1995-2000
- ---------------
(1) Based on information furnished to the Corporation as of December 31, 2002.
(2) Resigned as a Central Hudson Director, effective December 15, 1999.
BOARD OF DIRECTORS AND COMMITTEES
MEETINGS AND ATTENDANCE
During 2002 there were nine meetings of the Board of Directors.
All Directors attended all of the Board meetings and meetings of Committees
of the Board on which they served.
The five standing Committees of the Board of Directors are the Audit
Committee, the Compensation and Succession Committee ("Compensation Committee"),
the Executive Committee, the Finance Committee and the Business Development
Committee. The Reports of the Audit Committee and the Compensation Committee are
set forth below.
COMPENSATION OF DIRECTORS AND OFFICERS OF THE BOARD
Each non-employee member of the Corporation's Board of Directors ("Outside
Director") (Messrs. Ganci and Lant are employee-Directors) receives an annual
retainer of $20,000 and $1,000 for attendance at each meeting of the Board and
each meeting of any Committee of the Board of which the Director is a member or
an invitee. Mr. Fridrich also receives an annual retainer in the amount of
$5,000 for his role as Vice Chairman of the Board and $5,000 for his role as
Chairman of the Audit Committee. Mr. Grubel receives an annual retainer of
$5,000 for his role as Chairman of the Business Development Committee. Mr.
Gallagher receives an annual retainer of $5,000 for his role as Chairman of the
Finance Committee. The annual retainer of $5,000 for the Chairmanship of the
Compensation and Succession Committee was prorated between Mr. Effron, who
served as Chairman of such Committee until June 28, 2002, and Mr. Fetter, upon
his appointment as Chairman effective June 28, 2002. On January 1, 2002, each
Outside Director received $9,000 in lieu of a grant of stock options.
6
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table lists the number of shares of equity securities of the
Corporation beneficially owned by each of the Directors, each executive officer
listed in the table under the caption "Executive Compensation," by beneficial
owners of more than 5% of the Corporation's Common Stock and by all Directors
and executive officers of the Corporation and its subsidiary companies as a
group:
NO. OF % OF THE
SHARES OF THE CORPORATION'S
CORPORATION'S COMMON
NAME COMMON STOCK(1) STOCK(2)
- ----- --------------- -------------
Jack Effron ................................... 8,083 Less than 1%
Heinz K. Fridrich ............................. 7,233 Less than 1%
Steven M. Fetter .............................. 202 Less than 1%
Edward F. X. Gallagher ........................ 6,685 Less than 1%
Paul J. Ganci ................................. 24,726 Less than 1%
Stanley J. Grubel ............................. 4,470 Less than 1%
Steven V. Lant ................................ 6,092 Less than 1%
E. Michel Kruse ............................... 0 --
Carl E. Meyer ................................. 7,260 Less than 1%
Allan R. Page ................................. 8,329 Less than 1%
Joseph J. DeVirgilio, Jr ...................... 3,941 Less than 1%
Arthur R. Upright ............................. 3,905 Less than 1%
Gabelli Asset Management Inc. (5) ............. 1,495,150 9.24%
All Directors and Executive Officers
as a Group (22) Persons ..................... 91,093 Less than 1%
- ---------------
(1) Based on information furnished to the Corporation by the Directors and
executive officers of the Corporation as of December 31, 2002 (excludes
shares of the Corporation's Common Stock underlying stock options granted).
(2) The percentage ownership calculation for each owner has been made on the
basis of the amount of outstanding shares of the Corporation's Common Stock
as of the record date.
(3) As a former employee of FitchRatings, Mr. Fetter was prohibited under
FitchRatings' internal policy from owning any shares of common stock of the
companies rated by FitchRatings, including those of the Corporation.
(4) Includes 3,404 shares owned by the spouse of Mr. Ganci. The shares owned by
Mrs. Ganci are considered to be beneficially owned by Mr. Ganci only for
the purpose of this Proxy Statement and he disclaims any beneficial
interest in these shares for all other purposes.
(5) Based upon a Schedule 13 D/A filed with the Securities and Exchange
Commission on December 2, 2002 by Gabelli Asset Management Inc. on behalf
of: Gabelli Funds, LLC, GAMCO Investors, Inc., MJG Associates, Inc.,
Gabelli & Co. Inc. Profit Sharing Plan, Gabelli Foundation, Inc., and
Gabelli Group Capital Partners, Inc. As reported on said Schedule 13 D/A,
as of September 30, 2002, the Corporation's securities are beneficially
owned as follows: Gabelli Funds--369,400 (2.28%), GAMCO--1,116,250 (6.90%),
Gabelli Foundation, Inc.--6,000 (0.04%), Gabelli & Co. Inc. Profit Sharing
Plan--2,000 (0.01%), MJG Associates--1,500 (0.01%). GAMCO does noT have the
authority to vote 51,800 of the reported shares. The principal business
address for each of the foregoing, other than MJG Associates and Gabelli
Foundation, Inc., is One Corporate Center, Rye, NY 10580. The principal
business address for MJG Associates is 8 Sound Shore Dr., Greenwich, CT
06830. The principal business address for Gabelli Foundation, Inc. is 165
West Liberty Street, Reno, NV 89501.
STOCK PLAN FOR OUTSIDE DIRECTORS
The Corporation's Stock Plan for Outside Directors ("Stock Plan") provides
that at least a portion of compensation of the outside Directors of the
Corporation be made in the form of the Corporation's Common Stock.
The Stock Plan provides that each Outside Director receives 50 shares of
the Corporation's Common Stock for each full quarter of each year of service as
an Outside Director. The shares are awarded on a quarterly basis.
7
When an Outside Director ceases to be a Director for any reason (other than for
cause), that Director will continue to receive shares of Common Stock on a
quarterly basis for each full quarter of past service (25 shares for each
completed service quarter prior to April 26, 2002, and 50 shares for each
completed service quarter thereafter). Service as a Director of Central Hudson
is included for calculation purposes in the Stock Plan. No distribution will be
made to a Director's estate under the Stock Plan after that Director's death.
LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN
The Corporation's Long-Term Performance-Based Incentive Plan, approved by
shareholders at the 2000 Annual Meeting of Shareholders and subsequently
amended, became effective January 1, 2000 (as amended, the "Incentive Plan").
The purposes of the Incentive Plan are to provide key executives with long-term
compensation incentives that are tied to performance and to create increased
shareholder value, and for Outside Directors, to provide additional equity
compensation.
The Incentive Plan provides, in part, that (a) non-qualified stock options
covering 3,000 shares be granted to each Outside Director as of January 1, 2001;
(b) 1,000 non-qualified stock options, exercisable on and after the date of
grant with a term of ten years, be granted to Outside Directors of the
Corporation on January 1 of each year, upon authorization of the Compensation
Committee; (c) the price of such stock options be the Fair Market Value of the
Corporation's Common Stock on the date of the grant. No stock options were
granted to Outside Directors under the Incentive Plan in 2002.
THE COMPENSATION AND SUCCESSION COMMITTEE
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Succession Committee (the "Compensation
Committee") are Steven M. Fetter (Chairman), Jack Effron and Stanley J. Grubel.
The Compensation Committee had eight meetings in 2002. The Compensation
Committee (a) considers and recommends to the Board of Directors the
compensation of (i) Directors and officers of the Board of Directors, (ii) the
Chairman of the Board, President and Chief Executive Officer (and special terms,
if any, of employment) and of the Chief Operating Officer and Chief Financial
Officer, (iii) the senior executive officers of the Corporation, and (b) reviews
recommendations on compensation for other officers of the Corporation and its
subsidiary companies. Annual salary determinations by the Board of Directors
become effective as of the Annual Meeting of Shareholders of each year and
continue until the following Annual Meeting. Further, the Compensation Committee
reviews the candidates for appointment by the Board of Directors as officers of
the Corporation and its subsidiary companies.
The Compensation Committee is also charged with considering and receiving
proposed nominees by shareholders for election to the Board of Directors,
reviewing and comparing the qualifications of those nominees with other
potential nominees, and recommending to the Board of Directors the candidates to
be nominated for election to the Board of Directors. Any shareholder desiring to
submit the name of a nominee should send it, together with a statement of the
candidate's qualifications, to the Compensation Committee, c/o the Corporate
Secretary, CH Energy Group, Inc., 284 South Avenue, Poughkeepsie, NY 12601-4879.
No Compensation Committee interlock relationships existed in 2002 for the
Corporation or its subsidiary companies.
8
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
The following disclosure is made over the name of each member of the
Compensation Committee, on the date hereof, and shall be considered a report of
the Compensation Committee:
It is the objective of the Compensation Committee to develop an executive
compensation program that will attract, retain and motivate directors and
executive officers to create long-term shareholder value. For executives, the
design of the executive compensation program incorporates base salary, annual
short-term incentives, long-term incentives, and retirement benefits which, in
aggregate, result in total remuneration that is compensation that is close to
the median from comparably-sized electric and natural gas utilities and energy
services companies in the United States.
Specific annual short-term incentives are developed which reward
achievement of that year's business plan goals that are consistent with the
strategy of the Corporation to create shareholder value.
Long-term incentives may include two components:
(1) Stock options, the value of which are directly tied to the long-term
increase in the market value of the Corporation's Common Stock; and
(2) Performance shares, the number and value of which are directly tied to
the total return of the Corporation's Common Stock relative to an
industry index.
The compensation of individual executives is determined by evaluating the
contribution of each executive to achievement of the Corporation's business plan
and the responsibility level of the executive's position. The Compensation
Committee also reviews executive succession plans in the determination of
executive compensation. In addition, the Compensation Committee reviews and
evaluates the performance of Mr. Ganci, based on the degree to which he (i)
meets the criteria set forth in his position description and (ii) accomplishes
the Corporation's strategic goals and objectives for which he was responsible.
For Directors, total compensation is also tied to the median practice of
comparable companies. Total compensation for a Director of the Corporation
consists of retainers and Board and Committee meeting fees, payable in cash and
equity compensation, as described herein.
SECTION 162(M) OF THE INTERNAL REVENUE CODE ("CODE")
The Compensation Committee and the Board of Directors have considered the
federal income tax deduction limitations established under Section 162(m) of the
Code, which provide that, unless an appropriate exemption applies, a tax
deduction for the Corporation for remuneration of any officer named in the
caption "Executive Compensation" will not be allowed to the extent this
remuneration in any taxable year exceeds $1 million. To the extent Code section
162(m) would limit the Corporation's federal income tax deductions, the
Compensation Committee intends to qualify the performance-based compensation of
the executive officers for full deductibility whenever possible and consistent
with the goals of the Compensation Committee's policies.
Steven M. Fetter, Chairman
Jack Effron
Stanley J. Grubel
9
EXECUTIVE COMPENSATION
The Summary Compensation Table set forth below includes compensation
information with respect to the Chairman of the Board, President and Chief
Executive Officer of the Corporation and the Corporation's named executive
officers. The "named executive officers" include the Chief Executive Officer,
the other four most highly compensated executive officers whose salary and any
bonus in 2002 exceeded $100,000 for services rendered to the Corporation and its
subsidiary companies, and one individual who would otherwise have been included
as a named executive officer except for his retirement in 2002:
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPANSATION SECURITIES
------------ UNDERLYING LTIP ALLOTHER
NAME AND PRINCIPAL POSITION(S) YEAR SALARY(1) BONUS OPTIONS(2) PAYOUTS ($) COMPENSATION(3)
- ------------------------------ ---- --------- ----- ----------- ---------- ---------------
PAUL J. GANCI, Chairman 2002 $440,667 $ 60,000 0 $5,500
of the Board, President and 2001 $415,000 $172,500 8,900 $5,250
Chief Executive Officer of 2000 $393,666 $ 15,583(4) 8,900 $5,250
the Corporation, Chairman
of the Board and Chief
Executive Officer of
Central Hudson and of CHEC
STEVEN V. LANT, Chief Operating 2002 $283,583 $ 35,547 0 $5,500
Officer and Chief Financial 2001 $203,500 $ 53,650 3,600 $5,250
Officer of the Corporation, 2000 $165,500 $ 0 3,600 $5,250
Chief Financial Officer of
Central Hudson, and President,
Chief Operating Officer and
Chief Financial Officer of CHEC
CARL E. MEYER, Executive Vice 2002 $266,889 $ 35,156 0 $5,500
President of the Corporation and 2001 $257,500 $ 73,750 3,600 $5,250
President and Chief Operating 2000 $255,000 $ 8,333(4) 3,600 $5,250
Officer of Central Hudson
JOSEPH J. DEVIRGILIO, JR., 2002 $195,733 $ 38,700 0 $5,500
Senior Vice President of the 2001 $186,163 $ 49,500 2,200 $5,250
Corporation and of Central 2000 $184,264 $ 0 2,200 $5,250
Hudson, Executive Vice
President of CHEC
ARTHUR R. UPRIGHT, 2002 $190,644 $ 26,488 0 $5,500
Senior Vice President of the 2001 $176,516 $ 50,560 2,200 $5,250
Corporation and of 2000 $161,417 $ 0 2,200 $5,250
Central Hudson
ALLAN R. PAGE, former 2002 $154,583 $ 27,344 0 $63,537 $235,500
President of the Corporation 2001 $261,250 $ 70,800 3,600 $5,250
and President and Chief 2000 $261,212 $ 0 3,600 $5,250
Operating Officer of
CH Services(5)
- ---------------
(1) This base salary amount includes amounts deferred under (i) Central
Hudson's Flexible Benefits Plan, which Plan is established pursuant to
Section 125 of the Code, which permits those electing to participate to
defer salary, within specified limits, to be applied to qualified medical
and/or child care benefit payments, (ii) Central Hudson's Savings Incentive
Plan ("SIP"), a "defined contribution" plan which meets the requirements of
the
10
Code,including Code Section 401(k), which, among other things, permits,
within limits, participants to tax defer base salary, and, within limits,
provides for Central Hudson contributions to participants, and (iii) the
Corporation's Directors and Executives Deferred Compensation Plan (more
fully described herein under the sub-caption "Directors and Executives
Deferred Compensation Plan").
(2) Indicates number of shares of the Corporation's Common Stock underlying
stock options.
(3) These are amounts contributed by Central Hudson for the benefit of the
named individual under the SIP.
(4) Compensation paid for years of service prior to 2000 pursuant to the terms
of Central Hudson's Executive Incentive Plan, which Plan was terminated,
effective January 1, 2000.
(5) Mr. Page was President of the Corporation and President and Chief Operating
Officer of CH Services and retired on August 1, 2002. The amounts shown in
columns (c) and (d) reflect compensation as of August 1, 2002. Column (h)
includes payments for performance shares granted in 2000 and 2001, prorated
for Mr. Page's retirement in 2002, upon the Corporation's attainment of
industry goals. Column (i) consists of other payments to Mr. Page in
connection with his retirement.
The Corporation did not grant stock options or performance shares in 2002.
AGGREGATED STOCK OPTION EXERCISES IN FISCAL YEAR 2002
The following table sets forth information concerning the exercise of stock
options by the Corporation's named executive officers during the last fiscal
year and the value of unexercised options on an aggregated basis.
NUMBER OF
SHARES
UNDERLYING VALUE OF
UNEXERCISED UNEXERCISED IN THE
NUMBER OF OPTIONS AT MONEY OPTIONS AT
SHARES FISCAL YEAR END FISCAL YEAR END
ACQUIRED
ON EXERCISABLE/ EXERCISABLE/
NAME EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
---- --------- -------------- --------------- ------------------
Paul J. Ganci ................... -- -- 17,800/10,200 52,296/101,318
Steven V. Lant .................. -- -- 7,200/4,400 21,154/40,982
Carl E. Meyer ................... -- -- 7,200/3,600 21,154/40,982
Arthur R. Upright ............... -- -- 4,400/2,000 12,927/25,045
Allan R. Page ................... -- $52,344 3,600/0 0/9,252
Joseph J. DeVirgilio, Jr. ....... -- -- 4,400/2,000 12,927/25,045
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information concerning the Corporation's
compensation plans (including individual compensation arrangements) under which
equity securities of the Corporation are authorized for issuance.
NUMBER OF SECURITIES TO WEIGHTED AVERAGE
BE ISSUED UPON EXERCISE EXERCISE PRICE OF NUMBER OF SECURITIES
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, REMAINING AVAILABLE FOR
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS FUTURE ISSUANCE
------------- ----------------------- -------------------- -----------------------
Equity compensation plans approved
by security holders 84,200(1) $40.22 399,343(2)
Equity compensation plans not
approved by security holders --(3)
Total 84,200 $40.22 399,343
- ---------------
(1) This includes only stock options granted under the Long-Term
Performance-Based Incentive Plan.
(2) This excludes 11,020 performance shares granted, 1,837 performance shares
awarded and 3,600 stock options exercised in 2002 under the Long-Term
Performance-Based Incentive Plan.
(3) The Corporation also has an equity compensation plan described herein under
the caption "Stock Plan for Outside Directors." No options, warrants or
rights are granted under this plan. See description above for further
details.
11
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and Directors and persons who own more than ten percent
(10%) of a registered class of the Corporation's equity securities ("Reporting
Persons") to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission (the "SEC") and the New
York Stock Exchange. These Reporting Persons are required by SEC regulations to
furnish the Corporation with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of these forms furnished to the Corporation and
written representations from the Corporation's officers and Directors, all of
the Reporting Persons made all requisite filings on a timely basis in 2002 with
respect to shares of the Corporation, with the exception of Mr. Kruse in filing
his Initial Statement of Beneficial Ownership (which disclosed no ownership or
transactions), which filing has since been made.
PENSIONS/DEFERRED COMPENSATION PLANS
DIRECTORS AND EXECUTIVES DEFERRED COMPENSATION PLAN
The Directors and Executives Deferred Compensation Plan ("Deferred Plan")
applies to Directors, officers and other executives of the Corporation and of
its subsidiary companies. It permits the participants to elect to defer all or
part of their compensation for services rendered to the Corporation and/or its
subsidiary companies. Under the Deferred Plan, compensation is defined to
include (a) base salary, (b) certain bonuses, and (c) payments for (i) the
Supplementary Retirement Plan described herein, (ii) Change of Control
agreements described herein, (iii) Directors' fees for services rendered as a
member of the Board of Directors and any Committee of the Board, (iv) services
rendered as an officer of the Board of Directors, (v) services rendered as an
officer of the Corporation or its subsidiary companies, and (vi) for any other
services rendered individually by agreement with the Corporation or its
subsidiary companies. The Corporation can make discretionary contributions to
the Deferred Plan. Compensation deferred in accordance with the Deferred Plan is
paid to Directors and officers (adjusted to reflect investment earnings and
losses) at the time the Director or officer ceases being a member of the Board
of Directors or an officer of the Corporation or its subsidiary companies, or
prior to such time under certain circumstances, either in a lump sum or over a
period of time depending on the circumstances of cessation and/or distribution
elections.
CENTRAL HUDSON RETIREMENT INCOME PLAN
The Retirement Income Plan of Central Hudson Gas & Electric Corporation
(the "Retirement Plan") is a "defined benefit" plan which is intended to meet
the requirements of the Code and generally provides benefits to all employees of
Central Hudson and those subsidiary companies that have adopted the Retirement
Plan, including the named executive officers.
There are several components to the benefit provided under the Retirement
Plan. First, the Retirement Plan provides retirement benefits generally related
to a participant's annual base salary for each year of eligible employment.
These benefits depend upon length of service, age at retirement, and eligible
earnings during years of participation in the Retirement Plan and any
predecessor plans. This portion of a participant's benefit is determined based
on the accumulation over that participant's career of a percentage of each
year's eligible earnings. For periods on and after October 1, 1989, the
percentage is 2% of eligible earnings, except that for years in which the
participant is over 50 years of age, the percentage is increased to 2.5%.
Second, the Retirement Plan provides a benefit for service prior to October 1,
2001 based on a percentage of a participant's average earnings at October 1,
2001 (being 50% of each of the base salaries at October 1, 1998 and 2001 and
100% of each of the base salaries at October 1, 1999 and 2000) and the number of
years of service while a member of the Retirement Plan prior to October 1, 2001,
all subject to certain limitations. Finally, a cash balance account benefit is
also available upon retirement under the Retirement Plan, and provides for a
credit to those participants in the Retirement Plan on January 1, 1987 of 10% of
their base salary on that date, a credit to those participants in the Retirement
Plan on September 30, 1991 of 5% of their base salary as of that date, a credit
to those participants in the Retirement Plan on September 30,
12
1997 of 5% of their base salary as of that date and a further credit to those
participants in the Retirement Plan on September 30, 1999 of 5% of their base
salary as of that date with, in all four cases, annual interest earned thereon.
In 2002, the Corporation made a $32 million contribution to the Retirement Plan
to maintain its fully-funded status for federal income tax purposes.
While the amount of the contribution payment or accrual with respect to a
specified person is not and cannot readily be separately or individually
calculated by the actuaries for the Retirement Plan, estimated annual benefits
under the Retirement Plan upon retirement at age 65 for the named executive
officers, assuming continuation of current annual salary levels and giving
effect to applicable benefit limitations in the Code, are as follows: Mr. Ganci
- - $154,029; Mr. Lant - $158,047; Mr. Meyer - $160,000; Mr. DeVirgilio -
$160,000; Mr. Upright - $135,269; and Mr. Page - $21,415(1).
CENTRAL HUDSON RETIREMENT BENEFIT RESTORATION PLAN
The Central Hudson Retirement Benefit Restoration Plan ("RBRP") is an
unfunded, uninsured pension benefit plan for a select group of highly
compensated employees. The RBRP provides an annual retirement benefit to those
participants in the Retirement Plan who hold the following offices with the
Corporation and Central Hudson: Chairman of the Board and Chief Executive
Officer, President, Vice President (including all levels thereof), Secretary,
Chief Financial Officer, Treasurer, Controller, and Assistant Treasurer. This
benefit is equal to the difference between (i) that received under the
Retirement Plan, giving effect to applicable salary and benefit limitations
under the Code and (ii) that which would have been received under the Retirement
Plan, without giving effect to the limitations under the Code. Enhanced benefits
are payable under certain circumstances following a Change of Control. The named
executive officers have a current salary level which, if continued to retirement
at age 65, would provide a benefit under the RBRP. The estimated annual benefits
under the RBRP upon retirement at age 65 for those individuals, assuming the
continuation of current annual salary levels, are as follows: Mr. Ganci -
$130,525; Mr. Lant - $42,469; Mr. Meyer - $51,241; Mr. DeVirgilio - $6,452; Mr.
Upright - $0; and Mr. Page - $82,682 (1).
SUPPLEMENTARY RETIREMENT PLAN
The Corporation's Supplementary Retirement Plan ("SRP") covers a select
group of highly compensated employees as an incentive for them to remain with
the Corporation or its subsidiary companies. Under the SRP, an annual benefit is
payable for 10 years, commencing on retirement, to eligible participants
(generally those who retire at age 60 or older and with 10 or more years of
service) of the following percentage of annual base compensation at retirement:
60 to 63 - 10%; 63 to 65 - 15%; 65 or over - 20%. Enhanced benefits are payable
under certain circumstances following a Change of Control. No amounts were paid
under the SRP for the named executive officers for the year 2002. Estimated
annual benefits under the SRP upon retirement at age 65 for the named
individuals, assuming continuation of current annual salary levels, are as
follows: Mr. Ganci - $90,000; Mr. Lant - $58,000; Mr. DeVirgilio - $39,700; Mr.
Meyer - $54,000; Mr. Upright - $39,000; and Mr. Page - not applicable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
The Corporation has an Employment Agreement ("Agreement") with each of the
named executive officers. Until a Change of Control occurs, each Agreement is
automatically renewed for one year on each July 31, unless a notice not to
extend is given.
If a Change of Control (as defined in the Agreement) occurs during the term
of an Agreement, then the Agreement becomes operative for a fixed three year
period. Upon a Change of Control, each Agreement provides generally that such
officers' terms and conditions of employment then in effect (including position,
location, base salary, bonus and benefits) will not be adversely changed during
the three year period after a Change of Control. If such officer's employment is
terminated (i) by the Corporation or a subsidiary for reasons other than death,
cause or disability (as those terms are defined in each Agreement), (ii) by such
officer for good reason (as that term is defined in each
- ---------------
(1) Based on actual numbers post-retirement.
13
Agreement), (iii) by such officer regardless of reason (during the 30-day period
beginning on the first anniversary of the Change of Control), (iv) upon certain
terminations prior to a Change of Control, or (v) in connection with or in
anticipation of a Change of Control, such officer, in addition to all amounts
accrued to the date of termination, will receive a lump-sum payment equal to the
sum of (a) the officer's base salary through the date of termination to the
extent not previously paid, (b) a proportionate bonus based on the higher of the
officer's most recent annual bonus and the officer's annual bonus for the last
fiscal year ("Highest Annual Bonus"), (c) accrued vacation, (d) outplacement
services, and (e) three times the sum of the officer's base salary and the
officer's Highest Annual Bonus. In addition, such officer would be entitled to
continued employee welfare benefits and to a credit for pension purposes for the
three years from the date of the termination.
In the event any payments made to any such officers as a result of a Change
of Control, whether under an Agreement or otherwise, would subject such officer
to the excise tax on certain "excess parachute payments" payable under Code
Section 4999, or interest or penalties with respect to this tax, the officer
generally will be entitled to be made whole for the payment of any taxes,
interest or penalties. Each such officer, while covered by an Agreement, is not
entitled to participate in the Corporation's Change of Control Severance Policy.
In the event of a Change of Control, the Agreements will supersede any
individual employment and/or severance agreements entered into by the
Corporation with such officers, except in certain instances.
In connection with his retirement from the Corporation and its affiliates,
Mr. Page received a payment of $230,000 in 2002 and will receive payments in
2003 of $200,000 and $100,000.
REPORT OF THE AUDIT COMMITTEE
The members of the Audit Committee are Heinz K. Fridrich (Chairman), Edward
F. X. Gallagher, Steven M. Fetter, and E. Michel Kruse. The Audit Committee had
five meetings during 2002. The Audit Committee (i) examines the adequacy of the
Corporation's and its subsidiary companies' internal audit activities, (ii)
reviews the scope of the audit by the Corporation's independent accountants,
PricewaterhouseCoopers LLP, and related matters pertaining to the examination of
the financial statements, (iii) reviews the nature and extent of any non-audit
services and pre-approves any such services provided by the Corporation's
independent accountants, (iv) consults at least three times a year with the
independent accountants regarding financial issues, (v) makes recommendations to
the Board of Directors on the foregoing matters as well as on the appointment of
the Corporation's independent accountants, (vi) meets regularly with the
Corporation's Internal Auditing Manager and Controller, and (vii) reviews
quarterly and annual financial statements filed with the SEC.
For 2002, the Audit Committee has:
1. reviewed and discussed the audited financial statements with
management;
2. discussed with the independent auditors the matters required to be
discussed by Statement on Auditing Standards No. 61 (Codification of
Statements on Auditing Standards), as may be modified or supplemented;
3. received the written disclosures and the letter from the independent
accountants required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), as may be modified
or supplemented, and has discussed with and affirmed the independence
of PricewaterhouseCoopers LLP from the management of the Corporation
and its subsidiary companies; and
4. received the reports of the Chief Executive Officer and the Chief
Financial Officer relating to their evaluation of the Corporation's
internal controls.
14
Based on the review and discussions referred to above and additional
matters deemed relevant and appropriate by the Audit Committee, the Audit
Committee recommended to the Corporation's Board of Directors that the audited
financial statements be included in the Corporation's Annual Report on Form 10-K
for the last fiscal year for filing with the SEC.
The Audit Committee has also determined that all Directors serving on the
Audit Committee during 2002 are "independent" for purposes of the current New
York Stock Exchange listing standards and that none of the Audit Committee
members have a relationship with the Corporation or its subsidiary companies
which would interfere with that Audit Committee member's independence from the
management of the Corporation and its subsidiary companies. The Audit Committee
has also considered whether the provision of services for which fees were paid
under the captions "Financial Information Systems Design and Implementation
Fees" and "All Other Fees" is compatible with maintaining the independence of
PricewaterhouseCoopers LLP.
In April 2000, the appointment of the firm of PricewaterhouseCoopers LLP to
examine the Corporation's financial statements for the five year period
beginning in 2000 was ratified by the shareholders of the Corporation.
Representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting. They will be given the opportunity to make a statement if desired and
will be available to respond to appropriate questions from shareholders.
Information on fees billed by PricewaterhouseCoopers LLP and other
independent firms (which audited certain of the Corporation's subsidiaries)
during 2002 is provided below:
PRICEWATERHOUSECOOPERS, LLP
Audit Fees .......................................................... $270,000
Financial Information Systems Design and Implementation Fees ........ 0
All Other Fees ...................................................... 88,610
--------
SUBTOTAL .......................................................... $358,610
OTHER AUDITING FIRMS
Audit Fees .......................................................... $ 25,350
All Other Fees ...................................................... 685
--------
SUBTOTAL .......................................................... $ 26,035
TOTAL AUDIT 2002 FEES FOR CORPORATION AND ITS SUBSIDIARY COMPANIES .. $384,645
========
Heinz K. Fridrich, Chairman
Edward F. X. Gallagher
Steven M. Fetter
E. Michel Kruse
15
PERFORMANCE GRAPH
The line graph set forth below provides a comparison of the Corporation's
cumulative total shareholder return on its Common Stock with the Standard &
Poor's 500 Index and as a corporation-determined peer comparison, and with the
EEI Combination Gas and Electric Investor-Owned Utilities Index ("EEI Index").
Shareholder return is the sum of the dividends paid and the change in the market
price of stock.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL
RETURN* AMONG CH ENERGY GROUP, INC.,
THE S&P 500 INDEX, AND THE EEI INDEX
[CHART OMITTED]
YEAR ENDING DECEMBER 31,
- --------------------------------------------------------------------------------
1998 1999 2000 2001 2002
- --------------------------------------------------------------------------------
CH Energy Group, Inc.** $107 $ 83 $121 $123 $138
S&P 500 Index $129 $156 $141 $125 $ 97
EEI Index $114 $ 93 $137 $125 $107
- --------------------------------------------------------------------------------
- ---------------
* Assumes $100 invested on January 1, 1998 in the Corporation's Common Stock,
the S&P 500 Index and the EEI Index.
** Central Hudson Common Stock was exchanged on a one-for-one basis with this
Corporation's Common Stock on December 15, 1999.
16
OTHER MATTERS
The Board of Directors does not know of any matters to be brought before
the meeting other than those referred to in the notice hereof. If any other
matters properly come before the meeting, it is the intention of the persons
named in the form of proxy to vote the proxy in accordance with their judgment
on such matters.
By Order of the Board of Directors,
CORPORATE SECRETARY
March 3, 2003
17
[This Page Intentionally Left Blank]
ROUTE TO CH ENERGY GROUP, INC.
FROM NEW YORK CITY AREA:
o Taconic State parkway North to
Interstate 84 (I-84)
o I-84 West to Exit 13 (Route 9)
o Turn right off ramp onto Route 9 North
o Route 9 approximately 12 miles to the
Academy Street / South Avenue Exit
o Bear left at end of ramp and go
under overpass
o Turn right into CH Energy Group, Inc.
entrance
FROM CONNECTICUT:
o I-84 West to Exit 13 (Route 9)
o Continue as above
[MAP OMITTED]
FROM PENNSYLVANIA:
o I-84 East to Exit 13 (Route 9)
o Turn left off ramp onto Route 9 North
o Continue as above
FROM NEW JERSEY AND UPSTATE NEW YORK:
o New York State Thruway (I-87) to Exit 18 (New Paltz)
o Turn right onto Route 299
o Route 299 approximately 5 miles, turn
right onto Route 9W South
o Route 9W approximately 2 miles, bear
right for FDR/Mid-Hudson Bridge
o After crossing bridge take first right
(Route 9 South)
o Bear right off exit ramp into CH Energy
Group, Inc. entrance