SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
New York State Electric & Gas Corporation
(Name of Registrant as Specified In Its Charter)
R. R. Donnelley Financial
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(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:
(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:*
(4) Proposed maximum aggregate value of transaction:
- --------
*Set forth the amount on which the filing is calculated and state how it was
determined.
[_] 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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(4) Date Filed:
Notes:
NEW YORK STATE ELECTRIC & GAS CORPORATION
ITHACA, NEW YORK
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1994
------------
To the Holders of Common Stock of
New York State Electric & Gas Corporation:
You are cordially invited to attend the Annual Meeting of Stockholders of New
York State Electric & Gas Corporation which will be held at the Corporation's
General Office on Route 13 (Ithaca-Dryden Road) in the Town of Dryden, Tompkins
County, New York, on May 13, 1994 at 11:00 A.M. (Eastern Daylight Saving Time).
The meeting is being held to elect four directors to serve in Class I for a
term expiring at the 1997 Annual Meeting, and for the transaction of any other
business properly brought before the meeting or any adjournment thereof.
Holders of record of Common Stock at the close of business on March 24, 1994
will be entitled to notice of and to vote at the meeting.
Whether or not you expect to be present at the Annual Meeting, the Board of
Directors requests you to mark, sign and date the accompanying form of proxy
and return it in the enclosed envelope. The proxy is revocable by you at any
time before the exercise thereof, and the giving of such proxy will not affect
your right to vote in person, if you attend the Annual Meeting.
By Order of the Board of Directors,
James A. Carrigg
Chairman, President and
Chief Executive Officer
Daniel W. Farley
Vice President and Secretary
Dated: March 31, 1994
Please mark, sign and date the enclosed proxy and return it in the envelope
enclosed for your convenience.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1994
------------
This statement is furnished in connection with the solicitation of proxies on
behalf of the Board of Directors of New York State Electric & Gas Corporation,
to be used at the Annual Meeting of Stockholders of the Corporation to be held
on May 13, 1994 at the Corporation's General Office in the Town of Dryden, New
York. This statement and the form of proxy were first mailed to holders of
Common Stock on or about March 31, 1994. The mailing address of the
Corporation's principal executive office is P. O. Box 3607, Binghamton, NY
13902-3607.
ANNUAL REPORT
An Annual Report to Stockholders for the year ended December 31, 1993,
including consolidated financial statements, has been mailed to all
stockholders of record. The Annual Report is not a part of this Proxy
Statement.
OUTSTANDING VOTING SECURITIES OF THE CORPORATION
The close of business on March 24, 1994 has been fixed as the date for
determining the holders of Common Stock entitled to vote at the meeting.
As of March 24, 1994, the Corporation had outstanding 70,976,793 shares of
Common Stock. Holders of Common Stock have cumulative voting rights for the
election of directors and one vote per share for all other purposes. Cumulative
voting means that the total number of votes which a stockholder may cast for
the election of directors shall equal the number of directors to be elected
multiplied by the number of shares held, and the stockholder may cast all of
such votes for a single nominee for director or may distribute them among all
or several nominees, as the stockholder sees fit.
COMMON STOCK REPRESENTED BY YOUR PROXY
The proxy represents the number of shares registered in your name as well as
the number of whole shares credited to your account under the Corporation's
Dividend Reinvestment and Stock Purchase Plan. If you are an employee of the
Corporation and participate in the Tax Deferred Savings Plans, the proxy
constitutes an instruction for the trustee of such Plans to vote the whole
shares in your account in such Plans in the manner specified on the proxy. If
you are an employee of the Corporation and participate in the Tax Reduction Act
Employee Stock Ownership Plan, the proxy constitutes an instruction to vote all
your shares in such Plan, in the manner specified on the proxy.
ELECTION OF DIRECTORS
The Board of Directors of the Corporation presently consists of eleven
directors divided into three classes, as nearly equal in number as possible.
One class of directors is elected at each annual meeting of stockholders for a
term expiring at the third succeeding annual meeting of stockholders.
The nominees for election at this Annual Meeting to serve as directors in
Class I for a term expiring at the 1997 Annual Meeting of Stockholders and
thereafter until their successors shall be elected and shall qualify are:
Everett A. Gilmour, Allen E. Kintigh, Alton G. Marshall, and Robert A. Plane.
Everett A. Gilmour, Allen E. Kintigh, Alton G. Marshall, and Robert A. Plane
were elected to Class I at the 1991 Annual Meeting of Stockholders for a term
expiring at the 1994 Annual Meeting of Stockholders.
Unless otherwise specified on the proxy, shares represented by proxies in the
accompanying form received on behalf of the Board of Directors will be voted
for the election of Everett A. Gilmour, Allen E. Kintigh, Alton G. Marshall,
and Robert A. Plane. Proxy holders reserve the right to exercise cumulative
voting rights and to cast the votes at the meeting in such manner, and for such
lesser number of said nominees, as they may deem best, in order, so far as
possible, to secure the election of said nominees. While it is not anticipated
that any of the nominees will be unable to qualify or accept office, if one or
more should be unable to do so, the proxy holders reserve the right to vote for
any substitute nominee or nominees designated by the Board of Directors. The
four nominees receiving the highest number of affirmative votes cast by
stockholders entitled to vote shall be elected to serve as directors in Class
I. Abstentions and broker non-votes are voted neither "for" nor "against," and
have no effect on the vote.
During 1993, there were eleven meetings of the Board of Directors. All of the
directors attended 75% or more of the total number of meetings of the Board of
Directors and the Committees of the Board on which they served, except for
Alton G. Marshall who attended 71% of the meetings of the Board of Directors
and the Committees of the Board on which he served.
The following sets forth information for each nominee for election at this
Annual Meeting and for each director continuing in office.
CLASS I
DIRECTORS NOMINATED FOR TERMS EXPIRING IN 1997
YEAR FIRST
NAME AND AGE ELECTED A DIRECTOR
------------ ------------------
(Photo of Everett A. Gilmour, 72 1980
Everett A.
Gilmour Former Chairman of the Board and Chief Executive Officer,
Appears Here) The National Bank and Trust Company of Norwich, Norwich,
NY. Director of: The National Bank and Trust Company of
Norwich, Norwich, NY; N.B.T. Bancorp, Inc., Norwich, NY;
Preferred Mutual Insurance Company, New Berlin, NY;
Deposit Telephone Company, Deposit, NY; Norwich Aero
Products Corporation, Norwich, NY; and Delaware Otsego
Corporation, Cooperstown, NY. Prior to April 25, 1989,
Mr. Gilmour was Chairman of the Board of The National
Bank and Trust Company of Norwich.
2
YEAR FIRST
ELECTED A
NAME AND AGE DIRECTOR
------------ ----------
(Photo of Allen Allen E. Kintigh, 69 1987
E. Kintigh
Appears Here Former President and Chief Operating Officer of the
Corporation, Binghamton, NY. President, Royal Equipment,
Inc., Vestal, NY. Former President and Director of
Somerset Railroad Corporation, a wholly-owned subsidiary
of the Corporation. Mr. Kintigh was President and Chief
Operating Officer of the Corporation from May 13, 1988 to
December 31, 1990. Mr. Kintigh was Executive Vice
President of the Corporation from December 1, 1987 to May
13, 1988. Prior to that time Mr. Kintigh was Senior Vice
President-Generation of the Corporation.
(Photo of Alton Alton G. Marshall, 72 1971
G. Marshall
Appears Here) President of Alton G. Marshall Associates, Inc., New
York, NY, a real estate investment corporation. Director
of: EQK Partners, Atlanta, GA; and Lincoln Savings Bank,
FSB, Brooklyn, NY. Independent General Partner of
Equitable Capital Partners and Equitable Capital Partners
(Retirement Fund), New York, NY; Trustee of Hudson River
Trust, New York, NY; Governor of The Real Estate Board of
New York, Inc., New York, NY. From March 1984 to December
31, 1990, Mr. Marshall was Chairman and Chief Executive
Officer of Lincoln Savings Bank, FSB, Brooklyn, NY.
(Photo of Robert Robert A. Plane, 66 1982
A. Plane
Appears Here) President of Wells College, Aurora, NY. President
Emeritus of Clarkson University, Potsdam, NY. Mr. Plane
served as Interim President of Wells College from March
11, 1991 to October 7, 1991. Mr. Plane was Director of
the New York State Agricultural Experiment Station from
November 1, 1986 to July 1, 1990. Mr. Plane was President
of Clarkson University prior to July 1, 1985.
3
CLASS II
DIRECTORS WHOSE TERMS EXPIRE IN 1995
YEAR FIRST
ELECTED A
NAME AND AGE DIRECTOR
------------ ----------
(Photo of James James A. Carrigg, 60 1983
A. Carrigg
Appears Here) Chairman, President and Chief Executive Officer of the
Corporation, Binghamton, NY. Director and Past President
of Empire State Electric Energy Research Corporation, New
York, NY; Trustee of Broome Community College,
Binghamton, NY; Director of: Security Mutual Life
Insurance Company of New York, Binghamton, NY; Home
Mutual Insurance Company, Binghamton, NY; Utilities
Mutual Insurance Company, New York, NY; First Empire
State Corporation, Buffalo, NY; New York Business
Development Corporation, Albany, NY; United Health
Services, Inc., Binghamton, NY; United MedManagement,
Inc., Binghamton, NY; United Health Services Hospitals,
Inc., Binghamton, NY; and Director's Advisory Council,
Endicott Trust Division of M & T Bank, Endicott, NY. Mr.
Carrigg has been Chairman, President and Chief Executive
Officer of the Corporation since January 1, 1991. He was
Chairman and Chief Executive Officer of the Corporation
from May 13, 1988 to December 31, 1990. Prior to that
time Mr. Carrigg was President and Chief Operating
Officer of the Corporation.
(Photo of Paul Paul L. Gioia, 51 1991
L. Gioia
Appears Here) Partner, LeBoeuf, Lamb, Greene & MacRae, Albany, NY;
attorneys at law. Director of Berkshire Gas Company,
Pittsfield, MA. Mr. Gioia was a Senior Vice President of
First Albany Corporation from May 1, 1987 to October 31,
1993. Prior to that time Mr. Gioia served as a member and
was Chairman of the Public Service Commission of the
State of New York and also served as a member of the New
York State Energy Research and Development Authority.
(Photo of Ben E. Ben E. Lynch, 56 1987
Lynch Appears
Here) President of Winchester Optical Company, Elmira, NY.
Chairman of Arnot-Ogden Medical Center, Elmira, NY; Past
President of Horseheads Board of Education, Horseheads,
NY. Mr. Lynch has been President of Winchester Optical
Company since 1965.
4
YEAR FIRST
ELECTED A
NAME AND AGE DIRECTOR
------------ ----------
(Photo of Charles W. Stuart, 68 1971
Charles W. Stuart
Appears Here) Chairman and Chief Executive Officer of C. W. Stuart &
Co., Inc., Newark, NY; interstate trucking concern.
Former Chairman of the Board, C. H. Stuart, Inc., Newark,
NY; diversified business, manufacturer of jewelry.
CLASS III
DIRECTORS WHOSE TERMS EXPIRE IN 1996
(Photo of Alison P. Casarett, 63 1979
Alison P.
Casarett Special Assistant to the President, Cornell University,
Appears Here) Ithaca, NY. Professor of Radiation Biology, New York
State College of Veterinary Medicine, Cornell University.
Dr. Casarett was Dean of The Graduate School at Cornell
University from July 1, 1979 to July 31, 1993.
(Photo of John M. Keeler, 60 1989
John M. Keeler
Appears Here) Managing Partner, Hinman, Howard & Kattell(/1/),
Binghamton, NY; attorneys at law. Director of Security
Mutual Life Insurance Company of New York, Binghamton,
NY; Past President of Broome County Bar Association,
Binghamton, NY; Past President of Broome County United
Way.
(Photo of David R. Newcomb, 70 1979
David R. Newcomb
Appears Here) Former President and Chief Executive Officer, Buffalo
Forge Company, Buffalo, NY; manufacturer of heating,
ventilation, and air conditioning equipment. Director of:
Pratt & Lambert, Inc., Buffalo, NY; Rigidized Metals,
Inc., Buffalo, NY; Utica Mutual Insurance Company, Utica,
NY; Utica National Life Insurance Company, Utica, NY; and
Buffalo General Hospital, Buffalo, NY.
- --------
(1) The law firm of which Mr. Keeler is a member provided legal services to
the Corporation in 1993 and is expected to provide legal services to the
Corporation in 1994.
5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates the amount and percentage of equity securities
of the Corporation beneficially owned by each person known to the Corporation
to be the owner of more than 5% of the Corporation's equity securities.
NAME AND ADDRESS COMMON STOCK PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------ --------
Franklin Resources, Inc.* 4,999,100 7.1%
777 Mariners Island Blvd.
San Mateo, CA 94404
- --------
* Based on a Schedule 13G filed with the Securities and Exchange Commission for
the period ended December 31, 1993. The shares were acquired in the ordinary
course of business and not for the purpose of changing or influencing the
control of the Corporation. Franklin Resources, Inc., a mutual fund
investment company, has sole voting power and shared disposition power with
respect to all of the shares.
The following table indicates the number of shares of equity securities of
the Corporation beneficially owned by each director and nominee, the chief
executive officer and each of the next four highest compensated executive
officers, and by the 23 executive officers and directors as a group and the
percent of the outstanding securities so owned.
COMMON STOCK
BENEFICIALLY OWNED PERCENT
NAME FEBRUARY 14, 1993 OF CLASS
---- ------------------ --------
James A. Carrigg.............................. 9,654 **
Alison P. Casarett............................ 401 **
Richard P. Fagan.............................. 2,691 **
Russell Fleming, Jr........................... 294 **
Everett A. Gilmour............................ 2,232 **
Paul L. Gioia................................. 1,127 **
John M. Keeler................................ 817 **
Allen E. Kintigh.............................. 846 **
Paul Komar.................................... 3,440*** **
Ben E. Lynch.................................. 746 **
Alton G. Marshall............................. 200 **
David R. Newcomb.............................. 2,940 **
Robert A. Plane............................... 750 **
Jack H. Roskoz................................ 3,344 **
Charles W. Stuart............................. 400 **
23 executive officers and directors as a 52,979**** **
group.........................................
- --------
** Less than 1/5 of 1% of the outstanding Common Stock.
*** Mr. Komar retired effective February 1, 1994.
**** Includes 4,176 shares held by an officer as nominee for the Employees'
Stock Purchase Plan.
6
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's directors and executive officers, and persons holding ten
percent or more of the Corporation's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Such reporting persons are also
required to provide the Corporation with copies of all Section 16(a) forms they
file. Specific due dates for these reports have been established by SEC
regulations. Based solely on its review of the copies of the reports received
by it and certain written representations from certain reporting persons, the
Corporation believes that during 1993, all filing requirements were satisfied
by its directors and executive officers.
EXECUTIVE COMPENSATION
The compensation of the chief executive officer and the next four highest
compensated executive officers of the Corporation for services to the
Corporation for each of the last three fiscal years, is shown by the following:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1)
- --------------------------- ---- ---------- --------- ----------------
James A. Carrigg..................... 1993 $ 413,123 $ 0 $2,429
Chairman, President and 1992 386,665 0 2,362
Chief Executive Officer 1991 366,100 125,384 1,451
Jack H. Roskoz....................... 1993 251,000 0 2,249
Senior Vice President 1992 241,000 21,187 2,182
1991 215,000 66,950 1,271
Russell Fleming, Jr.................. 1993 215,000 0 1,747
Senior Vice President 1992 207,000 0 1,164
1991 195,000 12,764 0
Richard P. Fagan..................... 1993 191,400 0 2,249
Senior Vice President 1992 185,000 0 2,171
1991 176,000 45,967 720
Paul Komar (2)....................... 1993 176,800 0 2,969
Senior Vice President 1992 170,000 0 2,830
1991 157,500 20,704 1,871
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(1) In 1993, the Corporation contributed for Messrs. Carrigg, Roskoz, Fleming,
Fagan, and Komar, $2,249, $2,249, $1,747, $2,249, and $2,249, respectively,
under the Tax Deferred Savings Plan. The Corporation has contributed for
Messrs. Carrigg and Komar, $180 and $720, respectively, under the
Employees' Stock Purchase Plan.
(2) Mr. Komar retired effective February 1, 1994.
The following table sets forth the maximum retirement benefits payable to
executive officers who retire at age 60 or later, in specified compensation and
years of service classifications, pursuant to the Corporation's Retirement
Benefit Plan and the Corporation's Supplemental Executive Retirement Plan as
they presently exist, and assuming no optional payment form is elected. The
amounts listed below reflect the deduction for Social Security benefits. There
are no other offset amounts.
7
PENSION PLAN TABLE
AVERAGE YEARS OF SERVICE
ANNUAL --------------------------------------------------------------
SALARY* 10 15 20 25 30 35 40**
------- -------- -------- -------- -------- -------- -------- --------
$550,000................ $246,300 $275,200 $304,100 $333,000 $361,900 $390,800 $419,700
500,000................ 222,700 248,900 275,200 301,500 327,800 354,000 380,300
450,000................ 199,000 222,700 246,300 270,000 293,600 317,200 340,900
400,000................ 175,400 196,400 217,400 238,400 259,500 280,500 301,500
350,000................ 151,700 170,100 188,500 206,900 225,300 243,700 262,100
300,000................ 128,100 143,900 159,600 175,400 191,100 206,900 222,700
250,000................ 104,500 117,600 130,700 143,900 157,000 170,100 183,300
200,000................ 80,800 91,300 101,800 112,300 122,800 133,400 143,900
150,000................ 57,200 65,000 72,900 80,800 88,700 96,600 104,500
- --------
* Average of the highest salaries (not including amounts listed under "Bonus"
and "All Other Compensation" in the Summary Compensation Table) in any five
consecutive years during the last ten years of employment. The average of
the highest three years of salary within the last ten years of employment
for the Supplemental Executive Retirement Plan was assumed to be
approximately 5% higher than each salary shown.
** Maximum years of service for Retirement Benefit Plan and Supplemental
Executive Retirement Plan purposes.
The Corporation's Retirement Benefit Plan provides retirement benefits for
its hourly and salaried employees, including executive officers, based on the
average of the highest salaries in any five consecutive years during the last
ten years of employment and years of service. The Retirement Benefit Plan is
non-contributory and is funded under a trust arrangement and an insurance
contract. Amounts paid into the Retirement Benefit Plan are computed on an
actuarial basis. The Retirement Benefit Plan provides for normal, early, or
disability retirement benefits.
The Corporation's Supplemental Executive Retirement Plan provides that all
salaried employees, including executive officers, shall receive the full
benefits of the Corporation's Retirement Benefit Plan without regard to any
limitation imposed by the federal tax law. In addition, it provides that all
officers and certain other key employees, who have at least ten years of
service, who have served in those capacities for at least five years and who
retire at age 60 or later, shall receive a total retirement benefit (including
benefits under the Retirement Benefit Plan and Social Security), based on years
of service, of up to 75% of the average of their highest three years of salary
within the last ten years of employment with the Corporation.
Mr. Fleming has an agreement with the Corporation which provides that, for
the purposes of the Retirement Benefit Plan and the Supplemental Executive
Retirement Plan, respectively, he will be credited with two years of service
for each year actually worked at the Corporation for the first five years of
employment, provided that he is employed by the Corporation for at least five
years. Mr. Fleming was employed by the Corporation commencing October 1, 1990.
Messrs. Carrigg, Roskoz, Fleming, Fagan, and Komar have 35, 31, 6, 22 and 24
credited years of service, respectively, under the Retirement Benefit Plan and
Supplemental Executive Retirement Plan.
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
The Corporation has entered into an agreement with Mr. Carrigg which provides
for his employment as Chairman, President and Chief Executive Officer of the
Corporation for a term ending on December 31, 1996,
8
with automatic one-year extensions unless either Mr. Carrigg or the Corporation
gives notice that the agreement is not to be extended. The agreement was
unanimously approved by the Board of Directors and provides for a base salary,
currently $425,000, subject to increase by the Board of Directors, and for Mr.
Carrigg's continued eligibility for participation in the Corporation's other
compensation and benefit plans. The agreement also provides that in the event
of the termination of Mr. Carrigg's employment by the Corporation without cause
(as defined in the agreement) prior to a change in control (as defined in the
agreement) of the Corporation, Mr. Carrigg will receive a lump sum amount equal
to the present value of the aggregate base salary otherwise payable to Mr.
Carrigg through the end of the term of the agreement. However, if within two
years following a change in control, or, if longer, within the two-year period
following consummation of a merger or consolidation, Mr. Carrigg's employment
is terminated either by the Corporation without cause or by Mr. Carrigg for
good reason, Mr. Carrigg will instead receive a lump-sum payment equal to two
times the sum of (i) his then-annual base salary and (ii) the higher of the
award he received pursuant to the Corporation's Annual Executive Incentive
Compensation Plan (AEICP) in the fiscal year preceding the date of termination
or the average amount so paid in the three fiscal years preceding the year in
which the change in control occurs. In the event of such termination, Mr.
Carrigg will also be entitled to continuation of his life, disability, accident
and health insurance benefits for a period of twenty-four months and shall
receive an amount equal to all earned but unpaid awards under the AEICP and a
pro rata portion of any award under the AEICP with respect to the year in which
the termination occurs, calculated by assuming that the threshold performance
goals for such year have been met and using adjusted variable performance
goals; provided, however, that there shall be no duplication of payments made
pursuant to the agreement and the AEICP. Also, in the event of such
termination, Mr. Carrigg will be given an additional two years of age and
service credit under the Supplemental Executive Retirement Plan. Termination of
employment by Mr. Carrigg for good reason means Mr. Carrigg's termination of
his own employment following, among other things, a reduction in his
compensation or benefits, a diminution of his duties or responsibilities or the
assignment to him of duties inconsistent with his position. In the event Mr.
Carrigg's employment is terminated for cause, Mr. Carrigg is entitled to
receive only amounts earned through the date of termination. The agreement also
provides for payments in the event of the termination of Mr. Carrigg's
employment due to disability.
The Corporation has entered into severance agreements with Messrs. Roskoz,
Fleming and Fagan in order to provide for certain payments if within two years
following a change in control or, if longer, within the two-year period
following consummation of a merger or consolidation, the individual's
employment is terminated either by the Corporation without cause or by the
individual for good reason. The severance agreements have terms ending on
December 31, 1996, with automatic one-year extensions unless either the
individual or the Corporation gives notice that the agreement is not to be
extended. The agreements were unanimously approved by the Board of Directors.
The benefits consist of a lump-sum severance payment equal to one and one-half
times the sum of (i) the individual's then-annual base salary, and (ii) the
higher of the award the individual received pursuant to the AEICP in the fiscal
year preceding the date of termination or the average amount so paid in the
three fiscal years preceding the year in which the change in control occurs. In
the event of such termination, the individual will be entitled to continuation
of his life, disability, accident and health insurance benefits for a period of
eighteen months and shall also receive an amount equal to all earned but unpaid
awards under the AEICP and a pro rata portion of any award under the AEICP with
respect to the year in which the termination occurs, calculated by assuming
that the threshold performance goals for such year have been met and using
adjusted variable performance goals; provided, however, that there shall be no
duplication of payments made pursuant to the agreement and the AEICP.
9
Also, in the event of such termination, the individual will receive
outplacement counseling and shall be given an additional one and one-half years
of age and service credit under the Supplemental Executive Retirement Plan.
The Corporation has also entered into severance agreements with eight other
executive officers of the Corporation which provide the same benefits as the
severance agreements described in the immediately preceding paragraph except
that the lump-sum severance payment described therein shall be calculated by
using a multiple of one, the insurance benefits shall continue for a period of
twelve months and the age and service credit under the Supplemental Executive
Retirement Plan shall be one year.
In the event of a change in control (as defined in the AEICP), the
Corporation will pay participants in the AEICP, including executive officers,
an amount which includes all earned but unpaid awards, and a pro rata portion
of any award with respect to the year in which the change in control occurs,
calculated by assuming that the threshold performance goals for such year have
been met and using adjusted variable performance goals.
In the event of a change in control (as defined in the Performance Share
Plan), the Corporation will pay participants in the Performance Share Plan,
including executive officers, an amount which includes all earned but unpaid
awards and an award with respect to the year in which the change in control
occurs, based on the Corporation's achieving certain performance measures
involving the market-to-book ratio of the Corporation's Common Stock and one-
year average total stockholder return of the Corporation as compared to the top
100 utilities by revenue.
After a change in control (as defined in the Supplemental Executive
Retirement Plan), all officers and certain other key employees, who have at
least ten years of service, who have served in those capacities for at least
five years, and whose employment is terminated at age 55 or later, other than
for cause (as defined in the Supplemental Executive Retirement Plan), shall
receive a total retirement benefit (including benefits under the Retirement
Benefit Plan and Social Security), based on years of service, of up to 75% of
the average of their highest three years of salary during the last ten years of
employment with the Corporation. However, in the case of termination prior to
age 60, such total retirement benefit will be determined by applying the same
reduction in benefits as is applied to benefits upon retirement prior to age 60
under the Retirement Benefit Plan.
DIRECTORS' COMPENSATION
Directors of the Corporation, other than officers, receive an annual retainer
of $18,000, plus $700 for each directors' meeting attended. Members of the
Executive Committee, other than officers, receive compensation of $1,500
annually. Members of committees, including the Executive Committee, other than
officers, receive $600 for each committee meeting attended, except that if the
committee meeting is held on the same day and at the same location as a
directors' meeting, the fee is $500. If a directors' meeting or committee
meeting is held by means of a conference telephone, the fee is $250. The
Chairperson of each standing committee receives additional compensation of
$1,000 for serving as Chairperson of such committee. Under the terms of the
Corporation's Deferred Compensation Plan for Directors, directors can elect to
defer a portion or all of their compensation. Such deferred compensation,
together with interest thereon, is payable in a lump sum or over a period of
years following retirement as a director.
10
The Corporation has a Retirement Plan for Directors pursuant to which
directors of the Corporation qualify for annual retirement benefits. A director
who serves on the Board of Directors for a minimum of five years qualifies for
annual retirement benefits equal to 50% of the highest annual retainer in
effect for that director during the period of the director's service on the
Board of Directors. A director with ten years or more of service on the Board
of Directors qualifies for annual retirement benefits equal to 100% of the
highest annual retainer in effect for that director during the period of the
director's service on the Board of Directors, while a director with between
five and ten years of service qualifies for pro rated amounts. Under the Plan,
retirement benefit payments generally commence upon the later of the director's
attaining age 65 or retirement from the Board of Directors. The Plan provides
for the payment of annual retirement benefits to continue for a period equal to
the greater of the director's life or ten years. Directors elected prior to the
effective date of the Plan will have their prior service as directors included
in establishing their eligibility and the amount of their retirement benefits.
A director who is also an officer of the Corporation would qualify for
retirement benefits only if the director serves as a director after the
director ceases to be an officer or served as a director before election as an
officer. In either case, the director's service as a director while also an
officer will be included in establishing the amount of the director's
retirement benefits.
COMMITTEES
The Corporation's Board of Directors has an Audit Committee, a Nominating
Committee, and an Executive Compensation and Succession Committee.
The Audit Committee, which consists of Robert A. Plane, Chairman, Paul L.
Gioia, John M. Keeler, and Ben E. Lynch, had four meetings in 1993. Alison P.
Casarett has been designated as an alternate member of the Audit Committee and
serves in the absence of any regular member. The Audit Committee recommends the
appointment of the independent accountants and reviews with them the audit plan
and results of the audit. It also meets with the independent accountants,
internal auditor, and management to discuss the adequacy of the Corporation's
system of internal controls and financial reporting, and meets with the
internal auditor to discuss the results of completed internal audits.
The Corporation established a Nominating Committee on January 10, 1994, which
consists of Alton G. Marshall, Chairman, Alison P. Casarett, Everett A.
Gilmour, Ben E. Lynch, and David R. Newcomb. The Nominating Committee is
responsible for recommending candidates to fill vacancies on the Board of
Directors. The Committee makes recommendations to the Board of Directors
regarding criteria for nomination as a candidate to the Board of Directors.
Stockholders wishing to recommend candidates for consideration by the
Nominating Committee should submit to the Secretary of the Corporation the
name, a statement of qualifications and the written consent of the candidate.
Recommendations will be brought to the attention of the Nominating Committee.
The Executive Compensation and Succession Committee, which consists of
Everett A. Gilmour, Chairman, Alison P. Casarett, Ben E. Lynch, Alton G.
Marshall, and David R. Newcomb, had five meetings in 1993. That Committee,
among other things, recommends compensation for officers, awards under the
Annual Executive Incentive Compensation Plan, and candidates for election as
officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Wells P. Allen, Jr., who served on the Executive Compensation and Succession
Committee until his retirement from the Board of Directors on May 14, 1993, was
Chairman and Chief Executive Officer of the Corporation prior to May 13, 1988.
11
REPORT OF EXECUTIVE COMPENSATION AND SUCCESSION COMMITTEE ON EXECUTIVE
COMPENSATION
The Executive Compensation and Succession Committee reviews the compensation
levels of members of management, evaluates the performance of management, and
considers management succession and related matters. In addition, the Committee
administers the Corporation's incentive plans, which include an annual
incentive plan and a long-term performance plan.
The compensation policy of the Committee is that executive compensation,
including compensation of the Chief Executive Officer, should consist of base
salary and incentive compensation.
In determining base salaries for 1993 for executive officers, including the
Chief Executive Officer, the Committee considered the fact that the
Corporation's generating system was ranked first in New York State and third in
the country for operating performance by Electric Light and Power Magazine; the
Corporation was successful in renegotiating uneconomical contracts with non-
utility generators; and the Corporation was successful in earning incentives
under its Demand Side Management Programs. The Committee's decisions were also
influenced by the fact that although the common stock prices of most of the
companies in the Standard & Poor's Utilities Index increased in 1992 because of
declining interest rates, the Corporation's Common Stock outperformed that
index in terms of cumulative total stockholder return and that the
Corporation's securities ratings were upgraded in 1992 by Fitch Investors
Services, Inc. and Moody's Investors Service. With respect to Mr. Carrigg's
base salary for 1993, the Committee was also influenced by Mr. Carrigg's strong
record in the areas of customer service, relations with regulatory agencies
(the Corporation reached a three-year rate settlement agreement with the Staff
of the Public Service Commission of the State of New York), and work
simplification program. The Committee also took particular note of Mr.
Carrigg's dedication in leading the Corporation to strong financial and
operating results, and in positioning the Corporation to successfully meet the
challenges posed by competition in the utility industry.
The above factors were considered subjectively, together with the policy of
the Committee that, in general, executive officers of the Corporation should be
compensated at competitive levels to attract, motivate
and retain talented executives. To that end, the Committee also reviewed
compensation data from a group of sixteen comparably-sized utility companies
nationwide, six other New York State combination electric and gas utilities,
and several comparably-sized general industry companies located in or near the
Corporation's service area in order to assist it in its decision-making. Some
of these utility companies and comparably-sized general industry companies are
included in the comparison indices in the Stock Performance Graph. Taking into
consideration all of these factors, the Committee targeted base salary at
approximately the median level for the comparably-sized utility company group,
subject to adjustment depending on the individual's performance. The 1993 base
salaries for the named executive officers, including Mr. Carrigg, were
approximately at such median level.
In order to further ensure the achievement of a link between corporate
performance and executive compensation, the Corporation has an Annual Executive
Incentive Compensation Plan (AEICP) pursuant to which executive and other
officers of the Corporation qualify for cash incentive awards if goals which
will create benefits for stockholders and customers of the Corporation are
achieved during the year. Performance goals are established each year on a
corporate level. An incentive award will be made under the AEICP if certain
threshold earnings per share and customer service performance goals are met.
The threshold earnings per share performance goal was not met for 1993 and thus
no awards were made under the AEICP. The
12
amount of the incentive award, if any, is based on a percentage, starting at
7.5% of a participant's salary grade midpoint. For 1993, the amount of the
incentive award could have increased by amounts ranging from 0.75% to 1.5% of a
participant's salary grade midpoint for every one cent ($.01) per share over
the threshold earnings per share performance goal and by amounts ranging from
1.5% to 3.0% of a participant's salary grade midpoint for each cost management
or business development variable performance goal that was met or exceeded.
Individual incentive awards, if any, are approved by the Board of Directors
after review and recommendation by the Committee.
While attaining established corporate goals is an important component of
earning incentive awards, the Committee believes that compensation should also
be based upon the Corporation's performance as compared to the performance of a
group of companies in the same industry. Thus, the Corporation has a
Performance Share Plan (Plan) pursuant to which executive and other officers of
the Corporation qualify for cash incentive awards if certain long-term
performance measures of the Corporation involving the Corporation's rank within
the top 100 utilities by revenue are achieved. There have been no cash payments
made under the Plan since its inception on January 1, 1991. Under the Plan,
certain amounts of Performance Shares are granted to participants depending
upon their position. Performance Shares granted earn dividend equivalents in
the form of additional Performance Shares. If the average of the Corporation's
rankings with respect to market-to-book ratio of the Corporation's Common Stock
and with respect to the three-year average total shareholder return of the
Corporation, in both cases, compared to the top 100 utilities by revenue, meets
or exceeds a certain level, cash payments representing the value of a portion
of the Performance Shares granted will be made to participants. The Plan
provides that achievement of: an average ranking of 50th to 41st will result in
a cash payment representing 10% of the Performance Shares granted; an average
ranking of 40th to 31st will result in a cash payment representing an
additional 20% of the Performance Shares granted; an average ranking of 30th to
21st will result in a cash payment representing an additional 30% of the
Performance Shares granted; and an average ranking of at least 20th will result
in a cash payment representing the remaining 40% of the Performance Shares
granted. The value of the Performance Shares will be measured by reference to
the value of the Corporation's Common Stock at the time of payment.
Executive Compensation and Succession
Committee*
Everett A. Gilmour, Chairman Alton G. Marshall
Alison P. Casarett David R. Newcomb
Ben E. Lynch
- --------
* Mr. Wells P. Allen retired from the Executive Compensation and Succession
Committee of the Board of Directors on May 14, 1993.
13
STOCK PERFORMANCE GRAPH
The yearly change in the cumulative total stockholder return on the
Corporation's Common Stock during the five years ending December 31, 1993,
compared with the cumulative total return on the Standard & Poor's Utilities
Index and Standard & Poor's 500 Index, assuming $100 was invested on December
31, 1988, and assuming reinvestment of dividends, is shown by the following:
NEW YORK STATE ELECTRIC & GAS CORPORATION
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN NEW YORK STATE ELECTRIC & GAS
CORPORATION, S&P UTILITIES, AND S&P 500
12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93
-------- -------- -------- -------- -------- --------
New York State Electric &
Gas Corporation......... $100.00 $137.77 $134.86 $163.15 $196.79 $198.52
Standard & Poor's Utili-
ties.................... $100.00 $147.22 $143.45 $164.42 $177.73 $203.39
Standard & Poor's 500.... $100.00 $131.69 $127.60 $166.47 $179.15 $197.21
14
INDEPENDENT ACCOUNTANTS
The Corporation has appointed Coopers & Lybrand, a firm of independent
certified public accountants, as auditors for the year 1994. Representatives of
Coopers & Lybrand are expected to be present at the meeting and will have an
opportunity to make a statement if they desire to do so. They will also be
available to answer questions that may be asked by stockholders. From time to
time Coopers & Lybrand performs certain management advisory services for the
Corporation.
DEADLINE FOR STOCKHOLDER PROPOSALS
The date by which proposals of stockholders intended to be presented at the
1995 Annual Meeting must be received by the Corporation for inclusion in the
proxy statement and form of proxy relating to that meeting is December 1, 1994.
Such proposals should be sent to the Secretary of the Corporation at P.O. Box
3200, Ithaca, NY 14852-3200.
OTHER MATTERS
The Board of Directors does not know of any other matters of business to be
presented for action at the meeting. However, the enclosed form of proxy will
confer discretionary authority for the transacting of any such other and
further business if properly brought before the meeting or any adjournment
thereof. If any such business is so brought before the meeting, the persons
named in the enclosed form of proxy, or their substitutes, will vote according
to their discretion.
The proxy is revocable by you at any time before the exercise thereof, and
the giving of such proxy will not affect your right to vote in person, should
you later find it convenient to attend the meeting.
The Corporation adopted By-Law No. 8 in 1993 to provide that any stockholder
who at an Annual Meeting wishes to nominate a person for election to the Board
of Directors must give at least 60 days and not more than 90 days advance
written notice and that such notice must meet certain other requirements as set
forth in By-Law No. 8. By-Law No. 8 is attached as Exhibit A to this Proxy
Statement.
The Corporation's By-Law No. 12 was amended in 1994 to provide that the 70
year age limitation does not apply in connection with the election of directors
at the 1994 Annual Meeting of Stockholders. The third paragraph of By-Law No.
12 was amended to read as follows: "No director who shall have attained the age
of 70 shall stand for re-election as a director; provided, however, that such
age limitation shall not apply in connection with the election of directors at
the 1994 annual meeting of stockholders."
State law requires the Corporation to inform stockholders of the initiation
or renewal of insurance indemnifying itself and its officers and directors. The
Corporation's Pension Trust Liability Insurance, which is carried with Federal
Insurance Company, covering the Corporation and its directors and those
officers considered fiduciaries under the Employee Retirement Income Security
Act of 1974, has been renewed for one year beginning October 1, 1993 at a
premium of $58,190.
15
COST OF SOLICITATION
The accompanying proxy is solicited on behalf of the Board of Directors. The
cost of this solicitation, including reimbursement of charges of brokerage
houses and others for their expenses in forwarding proxy materials to
beneficial owners of stock, will be paid by the Corporation. In addition,
directors, officers, and employees of the Corporation may solicit proxies by
telephone, telegram or in person, without additional compensation.
By Order of the Board of Directors,
Daniel W. Farley,
Vice President and Secretary
Dated: March 31, 1994
16
EXHIBIT A
NEW YORK STATE ELECTRIC & GAS CORPORATION
BY-LAW NO. 8
8. Except as may be otherwise provided in the Certificate of Incorporation, as
amended, with respect to the right of holders of serial preferred stock or
preference stock of the Corporation to elect a specified number of directors in
certain circumstances, only persons who are nominated in accordance with the
following procedures shall be eligible for election as directors of the
Corporation. Nominations of persons for election to the Board of Directors may
be made at any annual meeting of stockholders, or at any special meeting of
stockholders called for the purpose of electing directors, (a) by or at the
direction of the Board of Directors (or any duly authorized committee thereof)
or (b) by any stockholder of the Corporation (i) who is a stockholder of record
on the date of the giving of the notice provided for in this By-Law and on the
record date for the determination of stockholders entitled to vote at such
meeting and (ii) who complies with the notice procedures set forth in this By-
Law.
In addition to any other applicable requirements, for a nomination to be made
by a stockholder, such stockholder must have given timely notice thereof in
proper written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to or
mailed and received at the principal executive offices of the Corporation (a)
in the case of an annual meeting, not less than sixty (60) days nor more than
ninety (90) days prior to the anniversary date of the immediately preceding
annual meeting of stockholders; provided, however, that in the event that the
annual meeting is called for a date that is not within thirty (30) days before
or after such anniversary date, notice by the stockholder in order to be timely
must be so received not later than the close of business on the tenth (10th)
day following the day on which such notice of the date of the annual meeting
was mailed or such public disclosure of the date of the annual meeting was
made, whichever first occurs; and (b) in the case of a special meeting of
stockholders called for the purpose of electing directors, not later than the
close of business on the tenth (10th) day following the day on which notice of
the date of the special meeting was mailed or public disclosure of the date of
the special meeting was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
set forth (a) as to each person whom the stockholder proposes to nominate for
election as a director (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class or series and number of shares of capital stock of the
Corporation which are owned beneficially or of record by the person and (iv)
any other information relating to the person that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant to
Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder; and (b) as to the
stockholder giving the notice (i) the name and record address of such
stockholder, (ii) the class or series and number of shares of capital stock of
the Corporation which are owned beneficially or of record by such stockholder,
(iii) a description of all arrangements or understandings between such
stockholder and each proposed nominee and any other person or persons
(including their names) pursuant to which the nomination(s) are to be made by
such stockholder, (iv) a representation that such stockholder intends to appear
in person or by proxy at the meeting to nominate the person(s) named in its
notice and (v) any other information relating to such stockholder that would be
required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and
17
regulations promulgated thereunder. Such notice must be accompanied by a
written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.
No person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth in this By-Law. If
the chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures, the chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall
be disregarded.
18
NEW YORK STATE ELECTRIC & GAS CORPORATION
PO Box 3200, Ithaca, NY 14852-3200
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned appoints J. A. Carrigg, R. P. Fagan, and D. W. Farley, or
P any one or more of them, with power of substitution, proxies of the
undersigned, to vote, as specified below, and in their discretion with
R respect to any other business properly brought before the meeting, all
shares of stock of New York State Electric & Gas Corporation which the
O undersigned is entitled to vote at the Annual Meeting of Stockholders of
said Corporation to be held on May 13, 1994, and at any adjournment
X thereof.
Y ELECTION OF DIRECTORS [_] FOR all nominees listed [_] WITHHOLD AUTHORITY
below (except as written to vote for all
to the contrary on the nominees
line provided below)
E. A. Gilmour, A. E.
Kintigh, A. G. Marshall,
R. A. Plane
Instruction: To withhold authority to vote for any individual nominee,
print that nominee's name on the line provided below.
-------------------------------------------------------------
The shares represented by this Proxy will be voted as specified. If no
specification is made, this Proxy will be voted FOR all the nominees.
Dated , 1994
---------------------------
--------------------------------------
--------------------------------------
(Signature/s)
(Joint owners each must sign. When signing
as attorney, trustee, administrator,
executor or guardian, please give your
full title as such.)
GRAPHICS APPENDIX LIST
----------------------
EDGAR Version Typeset Version
- ------------- ---------------
2, 3, 4, 5 Photos of the directors and nominees for directors
appear to the left of each respective name on pages
2, 3, 4 and 5
14 A Performance Graph showing a Comparison of Five-Year
Cumulative Total Return for New York State Electric
& Gas Corporation, S&P Utilities, and S&P 500