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BOSTON EDISON COMPANY
800 Boylston Street, Boston, Massachusetts 02199
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
TO BE HELD ON MAY 12, 1995
TO THE HOLDERS OF COMMON STOCK:
The Annual Meeting of Stockholders of Boston Edison Company (the
"Company") will be held at the Sheraton Boston Hotel & Towers, Prudential
Center, Boston, Massachusetts, on Friday, May 12, 1995 at 11:00 a.m., for the
following purposes:
1. To elect five Class I directors to serve until the 1998 Annual
Meeting.
2. To transact any other business which may properly
come before the Annual Meeting or any adjournment thereof.
Further information as to the matters to be considered and acted on at
the Annual Meeting will be found in the Proxy Statement enclosed herewith.
The close of business on March 14, 1995 has been fixed as the
record date for the determination of holders of the Company's Common Stock
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
ADDRESSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
YOUR PROXY MAY BE REVOKED AT ANY TIME BEFORE THE VOTE IS TAKEN BY DELIVERING TO
THE CLERK OF THE COMPANY A WRITTEN REVOCATION OR A PROXY BEARING A LATER DATE
OR BY ORAL REVOCATION IN PERSON TO THE CLERK OF THE COMPANY AT THE ANNUAL
MEETING.
By Order of the Board of Directors,
Theodora S. Convisser
CLERK
Boston, Massachusetts
March 27, 1995
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BOSTON EDISON COMPANY
800 Boylston Street, Boston, Massachusetts 02199
(617) 424-2000
PROXY STATEMENT
This Proxy Statement, the accompanying proxy and Annual Report to
stockholders for the year 1994 containing financial statements are being
mailed to stockholders beginning March 27, 1995. They are furnished in
connection with the solicitation of proxies by the Board of Directors of
Boston Edison Company to be voted at the Annual Meeting of Stockholders of
the Company to be held on May 12, 1995 for the purposes set forth in the
foregoing Notice.
The accompanying proxy, if properly executed and delivered by a
stockholder entitled to vote, will be voted at the Annual Meeting as
specified in the proxy, but may be revoked at any time before the vote is
taken by the signer delivering to the Clerk of the Company a written
revocation or a proxy bearing a later date or by oral revocation in person to
the Clerk of the Company at the Annual Meeting. If choices are not specified
on the accompanying proxy, the shares will be voted FOR the election of all
of the nominees for director specified below.
All the costs of preparing, assembling and mailing the material
enclosed and any additional material which may be sent in connection with the
solicitation of the enclosed proxies will be paid by the Company, and no part
thereof will be paid directly or indirectly by any other person. Some
employees may devote a part of their time to the solicitation of proxies or
for attendance at the meeting but no additional compensation will be paid
them for the time so employed and the cost of such additional solicitation
will be nominal. The Company will reimburse brokerage firms, banks, trustees
and others for their actual out-of-pocket expenses in forwarding proxy
material to the beneficial owners of its Common Stock.
On March 14, 1995, there were issued and outstanding 45,642,022
shares ($1 par value per share) of Common Stock of the Company. Only common
stockholders of record at the close of business on that date shall be
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof, and those entitled to vote will have one vote for each share held.
To the knowledge of management, no person owns beneficially more than 5
percent of the outstanding voting securities of the Company.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
INFORMATION ABOUT NOMINEES AND INCUMBENT DIRECTORS
Pursuant to the Company's Bylaws, the Board of Directors has fixed
the number of directors at 14 members. The Company's Restated Articles of
Organization provide for the classification of the Board of Directors into
three classes serving staggered three-year terms. The five persons named
below have been nominated by the Board of Directors for election as Class I
directors for a term expiring at the 1998 Annual Meeting and until their
successors are duly chosen and qualified. The remaining nine directors will
continue to serve as set forth below, with the four Class II directors having
terms expiring in 1996 and the five Class III directors having terms expiring
in 1997. If any of the nominees shall by reason of death, disability or
resignation be unavailable as a candidate at the Annual Meeting, votes
pursuant to the proxy will be cast for a substitute candidate as may be
designated by the Board of Directors, or in the absence of such designation,
in such other manner as the directors may in their discretion determine.
Alternatively, in such situation, the Board of Directors may take action to
fix the number of directors for the ensuing year at the number of nominees
named herein who are then able to serve.
The Board of Directors has adopted the following director
retirement policy. Directors who are employees of the Company, with the
exception of the chief executive officer, retire from the Board when they
retire from employment with the Company. Directors who are not employees of
the Company or who have served as chief executive officer retire from the
Board at the annual meeting of stockholders following their seventieth
birthday. President and Chief Operating Officer George W.Davis, who has
served on the Company's Board of Directors since 1992, has announced his
intention to retire as an employee of the Company and as a member of its
Board of Directors effective September 1, 1995.
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The Board of Directors, which held eight regular meetings and one
special meeting during 1994, has an Executive Committee, an Audit, Finance
and Risk Management Committee, an Executive Personnel Committee, a Nuclear
Oversight Committee, a Capital Investment Committee and a Pricing Committee.
During 1994 the Executive Committee, which is authorized to exercise in the
intervals between Board meetings those powers of the Board which can be
delegated and to act as a nominating committee, met five times. The Audit,
Finance and Risk Management Committee, the responsibilities of which include
recommendations as to the selection of independent auditors, review of the
scope of the independent audit, annual financial statements, internal audit
reports, and financial and accounting controls and procedures, and review of
the Company's financial requirements, insurance coverages, and legal
compliance programs, met three times. The Executive Personnel Committee,
which is responsible for reviewing officer and director compensation
arrangements, executive officer personnel planning and performance, certain
benefit programs, and the Company's human resources policies, met three
times. The Nuclear Oversight Committee, which oversees the Company's nuclear
operations, met three times. The Capital Investment Committee, which
provides external oversight of the Company's plans for capital improvements
and reviews investments in related businesses, met three times. The Pricing
Committee, which is authorized to approve the terms of the Company's debt and
equity offerings, met once. All directors attended at least 75% of the
aggregate of the total number of meetings of the Board and the total number
of meetings held by all committees of the Board on which he or she served,
with the exception of Charles K. Gifford.
The names of the nominees as Class I directors and the incumbent
Class II and Class III directors and certain information concerning them are
shown in the following table:
NOMINEES AS CLASS I DIRECTORS - TERMS EXPIRING 1998
PRINCIPAL OCCUPATION (1)
NOMINEE AND DIRECTORSHIPS
------- ------------------------
Nelson S. Gifford Former Vice Chairman (1990-1991),Avery Dennison Corporation
Age: 64 (Pressure-Sensitive Adhesives and Materials, Office Products,
Director since: 1981 Product Identification and Control Systems, and Specialty
Member: Audit, Finance Chemicals); formerly Chairman (1986-1990) and Chief Executive
and Risk Management, Officer (1975-1990), Dennison Manufacturing Company
Pricing and Capital (Stationery Products, Systems and Packaging)
Investment Committees Directorships: John Hancock Mutual Life Insurance Company,
Reed and Barton, J. M. Huber Corp., Nypro Inc.
Kenneth I. Guscott General Partner, Long Bay Management Company (Real Estate
Age: 69 Development)
Director since: 1973 Directorships: Phoenix Home Life Mutual Insurance Company
Member: Executive
and Nuclear Oversight
Committees
Matina S. Horner Executive Vice President (since 1989), Teachers Insurance and
Age: 55 Annuity Association/College Retirement Equities Fund;
Director since : 1988 formerly President (1972-1989), Radcliffe College
Member: Audit, Finance Directorships: The Neiman-Marcus Group, Inc.
and Risk Management,
Executive and Pricing
Committees
FOOTNOTES ON PAGE 4
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Bernard W. Reznicek Dean, College of Business Administration, Creighton University
Age: 58 (since 1994); former Chairman of the Board (1992-1994),
Director since: 1987 Chief Executive Officer (1990-1994), President (1987-1992)
Member: Capital and Chief Operating Officer (1987-1990), Boston Edison
Investment and Company
Nuclear Oversight Directorships: Guarantee Mutual Life Company, State Street
Committees Boston Corporation, State Street Bank and Trust Company
Paul E. Tsongas Partner (1985-1989 and 1991 to present), formerly Of Counsel
Age: 54 (1989-1991), Foley, Hoag &Eliot (Law Firm); former Chairman,
Director since: 1985 Commonwealth of Massachusetts Board of Regents of Higher
Member: Audit, Finance Education (1989-1991); former United States Senator from
and Risk Management Massachusetts (1979-1985)
and Executive Directorships: Wang Laboratories, Shawmut Bank, N.A.,
Personnel Committees M/A-COM, Inc., Thermo Fibretek, Inc., Thermo Power, Inc.,
NORESCO
INCUMBENT CLASS II DIRECTORS - TERMS EXPIRING 1996
PRINCIPAL OCCUPATION (1)
DIRECTOR AND DIRECTORSHIPS
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William F. Connell Chairman and Chief Executive Officer,Connell Limited Partnership
Age: 56 (Metals Recycling and Processing and Industrial Production)
Director since: 1987 Directorships: Connell Industries, Inc., Teksid Aluminum
Member: Executive Foundry, Inc., Arthur D. Little, Inc., Harcourt General, Inc.,
and Executive Bank of Boston Corporation, The First National Bank of Boston,
Personnel Committees North American Mortgage Company
Charles K. Gifford President, Bank of Boston Corporation (Bank Holding Company)
Age: 52 and The First National Bank of Boston
Director since: 1990 Directorships: Bank of Boston Corporation, The First National
Member: Audit, Finance Bank of Boston, Massachusetts Mutual Life Insurance Company,
and Risk Management Massachusetts Minority Enterprise Investment Corporation
and Executive Personnel
Committees
Thomas J. May Chairman and Chief Executive Officer (since 1994), formerly Presi-
Age: 47 dent and Chief Operating Officer (1993-1994), Executive Vice
Director since: 1991 President (1990-1993) and Senior Vice President (1987-1990),
Member: Executive and Boston Edison Company
Pricing Committees Directorships: Bank of Boston Corporation, The First National Bank
of Boston, The New England
Sherry H. Penney Chancellor, University of Massachusetts at Boston
Age: 57 Directorships: Various educational, civic and cultural organizations
Director since: 1990
Member: Audit, Finance
and Risk Management,
Executive Personnel
and Pricing Committees
FOOTNOTES ON PAGE 4
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INCUMBENT CLASS III DIRECTORS - TERMS EXPIRING 1997
PRINCIPAL OCCUPATION (1)
DIRECTOR AND DIRECTORSHIPS
-------- ------------------------
Gary L. Countryman Chairman of the Board (since 1991) and Chief Executive Officer, formerly President
Age: 55 (1986-1992), Liberty Mutual Insurance Company, and Chairman and Chief Executive Officer,
Director since: 1986 Liberty Life Assurance Company of Boston
Member, Executive Personnel Directorships: Liberty Mutual Insurance Company, Liberty Mutual Fire Insurance Company,
and Capital Investment Liberty Life Assurance Company of Boston, Bank of Boston Corporation, The First
Committees National Bank of Boston, The Neiman-Marcus Group, Inc.
George W. Davis President and Chief Operating Office (since 1994), formerly
Age: 61 Executive Vice President (1992-1994), Senior Vice President
Director since: 1992 (1990-1991) and Vice President (1989-1990), Boston Edison
Member: Executive and Company; Vice Admiral (ret.) U. S. Navy and former Commander
Pricing Committees Naval Surface Force, Pacific (1985-1988)
Directorships: Institute of Nuclear Power Operations, various educational, civic and
cultural organizations.
Thomas G. Dignan, Jr. (2) Partner, Ropes & Gray (Law Firm)
Age: 54 Directorships: Various educational, cultural and civic organizations.
Director since: 1983
Member: Executive,
Nuclear Oversight and
Capital Investment
Committees
Herbert Roth, Jr. Former Chairman of the Board (1978-1985) and Chief Executive Officer (1968-1985),
Age: 66 Officer (1968-1985), LFE Corporation (Traffic and Industrial Director since: 1978
Director since: 1978 Process Control Systems)
Member: Capital Directorships/Trusteeships: Landauer, Inc., Tech/Ops Sevcon, Inc., Phoenix Home Life
Investment and Nuclear Mutual Insurance Company, Phoenix Series Fund, Phoenix Total Return Fund, Inc.,
Oversight Committees Phoenix Multi-Portfolio Fund, The Big Edge Series Fund, Mark IV Industries
Fund, The Big Edge Series Fund, Mark IV Industries
Stephen J. Sweeney Former Chairman of the Board (1986-1992) and Chief Executive Officer (1984-1990),
Age: 66 Officer (1984-1990), Boston Edison Company
Director since: 1983 Directorships: Selecterm, Inc., Liberty Mutual Insurance Company, Liberty
Member: Capital Mutual Fire Insurance Company, Liberty Life Assurance Company of Boston, Uno
Investment and Restaurant Corporation
Nuclear Oversight
Committees
<FN>
(1) Except as otherwise noted, each nominee and incumbent director has held the position indicated for the last five years.
(2) During 1994 the Company paid legal fees to the firm of Ropes & Gray.
STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of the Company's Common Stock, $1.00 par value, beneficially owned as of
January 31, 1995 by each director and nominee, each of the executive officers named in the Compensation Tables, and the directors
and executive officers of the Company as a group. None of the individual or collective holdings listed below exceeds 1% of the
Company's outstanding Common Stock. Except as indicated below, all of the shares listed are held by the persons named with both
sole voting power and sole investment power. No member of the group is the beneficial owner of the Company's preferred stock.
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NUMBER OF
COMMON SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED
------------------------ ------------------
William F. Connell 1,311
Gary L. Countryman 1,111
Cameron H. Daley 3,223
George W. Davis(1) 3,019
Thomas G. Dignan, Jr. 1,454
Charles K. Gifford 1,150
Nelson S. Gifford 1,766
Kenneth I. Guscott 1,102
Matina S. Horner 1,111
Ronald A. Ledgett 2,792(2)
Thomas J. May 10,546(2)
Sherry H. Penney 1,161
Charles E. Peters, Jr. 2,605
Bernard W. Reznicek (1) 7,585
Herbert Roth, Jr. 5,600
Stephen J. Sweeney 4,660(3)
Paul E. Tsongas 1,347
-------------
All directors and executive officers as a (1) (2)
group, including those named above (24 persons) 68,648
<FN>
(1) Messrs. Davis and Reznicek filed reports for transactions which
occurred in 1994 relating to the sale, respectively, of 753 and 3,601 shares of
the Company's common stock, and Douglas S. Horan, who became an executive
officer during 1994, filed his Initial Statement of Beneficial Ownership on
Form 3, beyond the specified dates.
(2) The following shares are held in the Company's Deferred Compensation
Trust due to deferrals by the following participants in the Company's Deferred
Compensation Plan: Mr. May, 5,367 shares; Mr. Ledgett, 1,537 shares; all
executive officers as a group, 11,926 shares. Participants in the Plan may
instruct the trustee to vote shares of Company common stock held in the trust in
accordance with their allocable share of such deferrals, but have no dispositive
power with respect to shares held in the trust.
(3) 3,629 of Mr. Sweeney's 4,660 shares are held in a charitable annuity
remainder trust, of which he, as a co-trustee of the trust, shares dispositive
and voting power with respect to the shares.
DIRECTOR AND EXECUTIVE COMPENSATION
DIRECTOR COMPENSATION
Each director who is not an employee of the Company receives an annual
Board retainer of $10,000 and 200 shares of the Company's Common Stock pursuant
to the Company's 1991 Director Stock Plan. Each such director who is a member
of the Executive Committee receives an additional annual Committee retainer of
$4,000. With the exception of the Pricing Committee, the members of which
receive no retainer, each of the chairmen of the other Board committees who is
not an employee of the Company receives an annual Committee retainer of $4,000
and the other non-employee members of those committees receive an annual
Committee retainer of $2,750. Each director who is not an employee of the
Company receives $1,000 for attendance in person at each meeting of the Board or
a committee and $500 for participating in
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such a meeting by telephone. Directors may elect to defer part or all of their
directors' fees pursuant to the Company's Deferred Fee Plan. Each director who
is not otherwise eligible for any Company pension or retirement benefit is
entitled to an annual amount, equal to the cash component of the annual Board
retainer plus twice the retainer received by a member of a committee other than
the Executive Committee, for a period of years equal to his or her service on
the Board of Directors, such payments to commence upon the director's date of
death in office, resignation or retirement. Should a director die prior to
full receipt of the benefit, his or her survivors continue to receive the
payments to which the director would have been entitled up to a maximum of ten
years from the commencement of the benefit.
REPORT OF THE EXECUTIVE PERSONNEL COMMITTEE
Under rules established by the Securities and Exchange Commission, the
Company is required to provide certain data and information in regard to the
compensation and benefits provided to its executive officers, including the
Company's Chief Executive Officer and four other most highly compensated
executive officers (the "named executive officers"). The disclosure
requirements for the named executive officers include the use of tables
summarizing total compensation and a report explaining the rationale and
considerations that led to fundamental executive compensation decisions
affecting those individuals for the prior year. In fulfillment of this
requirement, the Executive Personnel Committee, at the direction of the Board
of Directors, has prepared the following report for inclusion in this Proxy
Statement.
THE EXECUTIVE PERSONNEL COMMITTEE
The Company's executive compensation program is administered by the
Executive Personnel Committee, a committee of the Board of Directors composed
of the five non-employee directors listed below this report. All decisions of
the Executive Personnel Committee regarding the compensation of the named
executive officers are subject to the approval of the non-employee directors of
the Company, none of whom are eligible to participate in the incentive plans
described below.
COMPENSATION PHILOSOPHY
The executive compensation philosophy of the Company is to provide
competitive levels of compensation that advance the Company's annual and
long-term performance objectives, reward corporate performance, and assist the
Company in attracting, retaining and motivating highly qualified executives.
The framework for the Committee's executive compensation programs is to
establish base salaries which are competitive with national utilities, and to
incent excellent performance by providing executives with the opportunity to
earn additional remuneration under the annual and long-term incentive plans.
The incentive plan goals are designed to improve the effectiveness and enhance
the efficiency of Company operations, to provide savings for customers and to
create value for stockholders.
COMPONENTS OF COMPENSATION
Compensation paid to the named executive officers, as reflected in the
following tables, consists of three primary elements: base salary, amounts
paid under the Company's Executive Annual Incentive Compensation Plan, and
shares of the Company's Common Stock awarded under the Company's Performance
Share Plan. The Company compares its compensation levels against other
electric utility companies which subscribe to a similar total compensation
strategy, that is a policy which provides for base salary as well as the
potential for annual and long-term incentive awards. The Company's strategy is
to establish base salaries at the 60th percentile for those electric utilities
which possess the same total compensation strategy, and to establish potential
total compensation (base salary, annual and long-term incentives) at the 75th
percentile for extraordinary performance.
During 1994, the Committee thoroughly reviewed data collected by
nationally recognized compensation experts as well as by the Company's Human
Resources group to determine whether the Company was meeting its compensation
strategy. The review evaluated base salary and annual and long-term incentives
for nearly all publicly traded electric utility companies possessing a similar
total compensation strategy. The data demonstrated that the Company was in
conformance with its compensation strategy to the satisfact ion of the
Committee.
Executive officer compensation in 1994 was not impacted by Section
162(m) of the Internal Revenue Code because compensation levels were below the
$1 million threshold established by that statute. The
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Committee intends to consider the impact of Section 162(m) in establishing
compensation levels in the future to the extent it may become applicable. The
Company does not expect Section 162 (m) to result in the loss of any deductions
in 1995.
ANNUAL INCENTIVE
Officers and key managers who participate in the Company's annual
incentive plan are eligible to earn cash awards, reported for the named
executive officers in the fourth column of the Summary Compensation Table
below, through the achievement of corporate, unit and individual performance
objectives. Target awards are established at the beginning of a year based on
a percentage of the participants' base compensation, ranging from 10% to 50% on
the basis of the individual's level of responsibility, as determined within the
discretion of the Committee. Whether a participant earns the target award, or
a greater or lesser amount, or any award at all, depends upon the degree of
achievement of plan objectives set for the individual, his organization and the
corporation during the year.
Corporate performance objectives include a comparison of target to
actual earnings per share from operations and achievement of unit performance
objectives. The earnings per share objective reflects certain market,
financial, and operating goals to be achieved and is approved by the Committee.
Unit performance objectives include predetermined levels for operating and
capital budgets, complement and overtime, and are approved by the Committee.
The annual incentive plan awards for Messrs. May and Davis are based solely on
the Company's achieving the earnings per share objective. In 1994, earnings per
share from operations was $2.41, which exceeded the target of $2.40. This
represented a 5.7% increase in 1994, which exceeded the Company's target growth
rate of 5.3% and out-performed the industry average growth rate of 2.0%. The
annual incentive plan awards for Messrs. Peters, Daley and Ledgett were based
equally on the earnings per share objective for the Company and unit
performance objectives which had been established for each of their
organizations to achieve certain specified targets for adherence to the annual
operating budget and complement reduction. All three officers met the
specified unit performance levels.
LONG-TERM COMPENSATION
The purpose of the Performance Share Plan is to enhance corporate focus
on the Company's business direction beyond the annual operating plan and to
promote achievement of long-term corporate objectives which provide savings to
create value for the stockholder and the customer. Officers and key managers
who participate in the Company's Performance Share Plan are eligible to earn
awards, paid in shares of the Company's Common Stock, based on the achievement
by the Company of stated performance measures over a three-year cycle. Target
awards are established at the beginning of a cycle based on a percentage of the
participants' base compensation, ranging from 10% to 50% on the basis of the
individual's level of responsibility, as determined within the discretion of
the Committee.
Whether the participant earns the target award, or a greater or lesser
amount, or any award at all, depends upon the degree of achievement by the
corporation over a three-year cycle of two performance criteria, a stockholder
measure and a customer measure. The stockholder criterion measures relative
total return to the stockholder, which is defined as total dividends paid plus
stock appreciation throughout the three-year performance period based on a
comparison of the Company's common stock performance to that of the Goldman
Sachs Electric Utility Database, a group of approximately 80 companies. To
reach the target award, Boston Edison must be within the top 30% of the
industry as measured by the Goldman Sachs Database; for the threshold award,
the Company must be in the top 40%; and for the maximum award, the Company must
be in the top 20%. During the 1992-1994 cycle (see the eighth column of the
Summary Compensation Table below), Boston Edison's performance was in the top
30%, achieving the 72nd percentile of the group,. The customer measure requires
Boston Edison to be within the top 35% of a peer group of 13 urban utilities
(selected because they possess operations and customer characteristics similar
to those of Boston Edison) in terms of having the lowest increase in
residential customer price per kWh through the three-year period to reach
target. The percentage required for threshold is 50% and for maximum is 20%.
During the 1992-1994 cycle, the Company did not achieve the customer measure
threshold level and the Plan participants did not qualify for the portion of
the award attributable thereto. The two performance measures were equally
weighted (50% each) when determining the final award.
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OTHER PLANS
At various times in the past, the Company has adopted certain
broad-based employee benefit plans in which officers are permitted to
participate on the same terms as non-executive employees who meet applicable
eligibility criteria. Such plans include retirement and life and health
insurance plans, and a 401(k) savings plan which includes a Company matching
contribution equal to the first six percent of pay contributed by the employee
up to the maximum deductible 401(k) contribution allowed by the Internal
Revenue Code. In addition, the Company has a deferred compensation plan in
which officers and senior managers may elect to participate and a Key Executive
Benefit Plan which pays participants supplementary retirement income for 15
years equal to 33% of final annual salary.
MR. MAY'S 1994 COMPENSATION
The Executive Personnel Committee makes decisions regarding the
compensation of the Chief Executive Officer using the same philosophy and
criteria as set forth above. As with its other officers, the Company compares
compensation levels for the Chief Executive Officer to those of other electric
utility companies which maintain a similar total compensation strategy (see
discussion above).
Each year the Company approves the adjustment of salary ranges for the
Chief Executive Officer and other corporate officers based on studies conducted
by external executive compensation consultants and the Company's Human
Resources group. In 1994, studies indicated officer base salary ranges to be
less than the approved 60th percentile position to market. Upon his
appointment to the position of Chief Executive Officer in July 1994, Mr. May
received a 16% increase to his base salary. His salary will next be reviewed
by the Committee in April 1995.
Mr. May's annual incentive award, shown in the fourth column of the
Summary Compensation Table below, was in conformance with the provisions of the
Annual Incentive Plan as described above, and was based on the Company's
surpassing of its target by achieving earnings per share from operations of
$2.41 in 1994. This represented an earnings growth rate of 5.7%, which
exceeded the Company's 1994 target growth rate of 5.3% and the industry
earnings growth rate of 2.0%. Mr. May's long-term incentive award, shown in
the eighth column of the Summary Compensation Table below, was also in
conformance with the provisions of the Performance Share Plan and was based on
the Company's performance under the stockholder and customer performance
measures as described above.
By the Executive Personnel Committee,
William F. Connell (Chairman)
Gary L. Countryman
Charles K. Gifford
Sherry H. Penney
Paul E. Tsongas
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Charles K. Gifford, who is a member of the Company's Executive
Personnel Committee, is President of Bank of Boston Corporation and The First
National Bank of Boston. Thomas J. May, the Company's Chairman and Chief
Executive Officer, serves on the boards of directors of Bank of Boston
Corporation and The First National Bank of Boston.
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EXECUTIVE COMPENSATION TABLES
The following information is given regarding annual and long-term
compensation earned by the Chief Executive Officer and the four other most
highly compensated executive officers of the Company with respect to the years
1992, 1993 and 1994. Pursuant to the Commission's regulations, information is
also provided with respect to Mr. Reznicek, who served as the Company's
Chairman and Chief Executive Officer for the first six months of 1994.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------------------------------------------------------------------------------
NAME OTHER ALL
AND ANNUAL RESTRICTED OTHER
PRINCIPAL COMPEN- STOCK OPTIONS/ LTIP COMPEN-
POSITION YEAR SALARY BONUS SATION(1) AWARD(S) SARS PAYOUTS SATION(2)
------------------- ----- -------- -------- --------- ---------- --------- -------- ----------
Thomas J. May 1994 $362,500 $214,500 -- -- -- $59,950 $24,421
Chairman and 1993 297,250 139,405 -- -- -- 78,000 22,244
Chief Executive Officer 1992 279,500 119,250 -- -- -- 123,750 23,139
George W. Davis 1994 310,000 143,000 -- -- -- 52,140 18,136
President and Chief 1993 289,750 139,405 -- -- -- 31,500 16,221
Operating Officer 1992 248,875 103,750 -- -- -- 45,375 11,886
Charles E. Peters, Jr. 1994 181,700 45,484 -- -- -- 26,400 9,000
Senior Vice President 1993 173,750 55,605 -- -- -- 36,000 9,281
1992 164,958 54,000 -- -- -- -- 6,843
Cameron H. Daley 1994 175,808 44,408 -- -- -- 26,015 9,000
Senior Vice President 1993 170,050 54,615 -- -- -- 33,750 9,431
1992 162,167 53,213 -- -- -- 75,075 7,021
Ronald A. Ledgett 1994 172,667 43,050 -- -- -- 24,750 15,248
Senior Vice President 1993 163,416 51,810 -- -- -- 14,325 9,598
1992 154,083 50,625 -- -- -- 31,760 7,239
Bernard W. Reznicek 1994 353,072 -- -- -- -- -- 87,848
Former Chairman and 1993 435,000 283,500 -- -- -- 131,250 28,090
Chief Executive Officer 1992 398,333 240,625 53,077 -- -- 199,375 34,344
<FN>
(1) None of the named executive officers received amounts of other annual compensation in 1992, 1993 or 1994
which would require disclosure pursuant to the Commission's rules with the exception of Mr.Reznicek, who
received a housing allowance of $44,000 in 1992.
(2) Amounts in this column for 1994 are comprised as follows: the Company's matching contribution under its
401(k) plan ($9,000 for each named officer); that portion of earnings on deferred compensation deemed by
the Commission to be above-market (Mr. May, $15,421; Mr Davis, $8,936; Mr. Ledgett, $6,248; Mr. Reznicek,
$14,098); and $64,750 paid to Mr. Reznicek for his service as a director and consultant in 1994 following
his retirement as an employee of the Company.
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
The following table sets forth Performance Share awards potentially
payable in 1997 based on performance during the three-year period from
January 1, 1994 through December 31, 1996.
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ESTIMATED FUTURE PAYOUTS
---------------------------------------------
NUMBER OF PERFORMANCE OR
SHARES, UNITS OTHER PERIOD
OR OTHER UNTIL MATURA-
NAME RIGHTS (1) TION OR PAYOUT THRESHOLD(1) TARGET(1) MAXIMUM(1)
---- ------------- -------------- --------- ------ -------
Thomas J. May 6,281 1994 - 1996 3,141 6,281 9,422
George W. Davis 4,917 1994 - 1996 2,459 4,917 7,376
Charles E. Peters, Jr. 2,219 1994 - 1996 1,110 2,219 3,329
Cameron H. Daley 2,166 1994 - 1996 1,083 2,166 3,249
Ronald A. Ledgett 2,100 1994 - 1996 1,050 2,100 3,150
<FN>
(1) The first of these columns shows the estimated number of shares to be
awarded if target performance is achieved, and the last three
columns if threshold, target and maximum performance, respectively, are
achieved, calculated with reference to the Company's closing Common Stock
price on December 31, 1994. The Performance Share Plan has a stockholder
and customer performance measure. The target performance level for the
stockholder measure is to achieve the 70th percentile of the Goldman Sachs
Database at the end of the performance period. The target performance
level for the customer measure is to achieve a ranking of 5th out of 13
urban utilities. Beginning with the 1993 performance period, the
weighting between the two performance measures changed from 50%/50% to
75%/25% with the heavier emphasis on the stockholder measure. See "Report
of the Executive Personnel Committee - Long-Term Compensation".
PENSION PLAN TABLE
The Company's pension plans generally provide, for employees who are not
members of a collective bargaining unit, annual benefits upon retirement at age
65 (normal retirement) or thereafter, as shown on the following table, reduced
by up to 50% of the employee's primary Social Security Benefit.
ANNUAL PENSION (2)
AVERAGE ----------------------------------------------------------
ANNUAL BASE PAY
USED FOR 10 YEARS OF 20 YEARS OF 30 YEARS OF 40 YEARS OF
COMPUTING PENSION (1) SERVICE SERVICE SERVICE SERVICE
--------------------- ----------- ----------- ----------- -----------
$100,000....................... $20,000 $ 40,000 $ 62,500 $ 67,500
150,000...................... 30,000 60,000 93,750 101,250
200,000 (3).................. 40,000 80,000 125,000 135,000
250,000 (3).................. 50,000 100,000 156,250 168,750
300,000 (3).................. 60,000 120,000 187,500 202,500
350,000 (3).................. 70,000 140,000 218,750 236,250
400,000 (3).................. 80,000 160,000 250,000 270,000
<FN>
(1) For purposes of determining benefits, average annual base pay is
determined by averaging an employee's base pay for the thirty-six
consecutive months of employment out of the employee's last ten years of
employment which produces the highest average. Certain employees have
made employee contributions to the pension plan and receive additional
pension benefits based on those contributions.
(2) The benefits set forth in the above table assume that the employee
elects a straight life annuity. Federal law limits the annual benefits
payable from qualified pension plans. Payments in excess of applicable
limitations are made outside the qualified pension plan pursuant to the
Company's excess benefit plan.
(3) For 1994, compensation taken into account under the qualified
pension plan for any individual in any year was limited to $150,000.
Benefits based on compensation in excess of this limit are paid under
the Company's excess benefit plan, which together with individual
agreements may also provide for supplemental benefits in excess of
limitations on benefits under the Company's qualified pension plan, as
described above, or based on additional credit for service with other
employers or other factors.
10
12
Under the pension arrangements described above, the credited years of
service through 1994 and the average annual base pay as of December 31, 1994
for the officers named in the compensation table above are as follows: Mr.
May, 19 and $313,083; Mr. Davis, 6 and $233,708; Mr. Peters, 4 and $173,469;
Mr.Daley, 30 and $169,342 and Mr. Ledgett, 8 and $163,389. The Company has
entered into a contract with Mr. Ledgett whereby he will accrue 100% of his
retirement plan benefit over a period of 20 instead of 30 years of service.
KEY EXECUTIVE BENEFIT PLAN
The Key Executive Benefit Plan pays selected officers who have served
20 years with the Company and have 10 years of participation in the Plan and
who retire at given ages ranging from 60 to 62 (among the named executive
officers, 60 for Mr.Daley and 62 for Mr. Peters) supplementary retirement
income for 15 years equal to 33% of final annual salary. The Company has
entered into contracts with Messrs. May, Davis and Ledgett whereby
they are entitled to a reduced benefit equal to 16.5% of annual salary at
termination after five years of service with the Company and participation in
the Plan, with an additional 3.3% of annual salary for each additional year of
participation, up to the maximum benefit upon termination after ten years of
participation in the Plan.
STOCK PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company
include in this Proxy Statement a line-graph presentation comparing cumulative
five-year shareholder returns with the S&P 500 Stock Index and either a
nationally recognized industry standard or an index of peer companies selected
by the Company. For the 1994 Proxy Statement, the Board of Directors has
approved the use of the Edison Electric Industry 100 Index (EEI100 Index), a
recognized industry index of approximately 100 electric utility companies.
Pursuant to the Commission's regulations, the graph below depicts the
investment of $100 at the commencement of the measurement period, with
dividends reinvested.
[CHART]
--------------------------------------------------------------------------------
Index: 1990 1991 1992 1993 1994
------ ---- ---- ---- ---- ----
Boston Edison $108 $145 $172 $197 $170
S&P500 $ 97 $126 $136 $150 $152
EEI 100 Index $101 $131 $141 $156 $138
--------------------------------------------------------------------------------
Annual Total Return: 1990 1991 1992 1993 1994
-------------------- ---- ---- ---- ---- ----
Boston Edison 8.4% 33.8% 18.8% 14.5% (13.8%)
S&P 500 (3.2%) 30.6% 7.6% 10.0% 1.3%
EEI 100 Index 1.4% 28.9% 7.6% 11.1% (11.6%)
--------------------------------------------------------------------------------
11
13
OTHER MATTERS
VOTING PROCEDURES. Consistent with state law and under the Company's
Bylaws, a majority of the shares entitled to be cast on a particular matter,
present in person or represented by proxy, constitutes a quorum as to such
matter. Votes cast by proxy or in person at the Annual Meeting will be counted
by persons appointed by the Company to act as election inspectors for the
meeting.
Directors will be elected by a plurality of the votes properly cast at
the meeting. The election inspectors will count shares represented by proxies
that withhold authority to vote for a nominee for election as a director or
that reflect abstentions and "broker non-votes" (i.e., shares represented at
the meeting held by brokers or nominees as to which (i) instructions have not
been received from the beneficial owners or persons entitled to vote and (ii)
the broker or nominee does not have the discretionar y voting power on a
particular matter) only as shares that are present and entitled to vote on the
matter for purposes of determining the presence of a quorum. Neither
abstentions nor broker non-votes have any effect on the outcome of voting on
the election of directors.
ADJOURNMENT OF MEETING. If sufficient votes in favor of any of the
proposals set forth in the Notice of Annual Meeting are not received by the
time scheduled for the meeting, the persons named as proxies may propose one or
more adjournments of the meeting to permit further solicitation of proxies with
respect to any such proposals. Any adjournment will require the affirmative
vote of a majority of the votes cast on the question in person or by proxy at
the session of the meeting to be adjourned. The persons named as proxies will
vote in favor of such adjournment those proxies which they are entitled to vote
in favor of such proposals. They will vote against any such adjournment those
proxies required to be voted against any of such proposals. The Company will
pay the costs of any additional solicitation and of any adjourned session.
AUDITORS. Representatives of Coopers & Lybrand, the Company's
auditors, will be present at the Annual Meeting and will have the opportunity
to make a statement if they desire to do so. The representatives will be
available to respond to appropriate questions by the Company's stockholders.
OTHER BUSINESS. The management has no reason to believe that any other
business will be presented at the Annual Meeting, but if any other business
shall be presented, votes pursuant to the proxy will be cast thereon in
accordance with the discretion of the persons named in the accompanying proxy.
STOCKHOLDER PROPOSALS. Any proposal to be presented at the annual
meeting of stockholders to be held in May 1996 must be received at the
Company's principal executive offices no later than November 28, 1995.
STOCKHOLDER NOMINATIONS OF DIRECTORS. The Board of Directors will
consider nominations of candidates for election as directors from stockholders
which are submitted in accordance with the procedures set forth in Section 3.1
of the Company's Bylaws. In general, these procedures require that stockholder
nominations must be submitted to the Clerk of the Company in writing not less
than 45 days prior to the anniversary of the date of the immediately preceding
annual meeting and must contain certain specified information concerning the
person to be nominated and the stockholder submitting the nomination and the
consent of the nominee to serve as director if so elected.
THE GREATER PART OF THE STOCK OF THE COMPANY IS WIDELY DISTRIBUTED IN
SMALL LOTS. IT IS IMPORTANT, THEREFORE, IN ORDER TO SECURE REPRESENTATION AT
THE ANNUAL MEETING OF THE NUMBER OF SHARES NECESSARY TO TAKE ACTION, THAT ALL
STOCKHOLDERS WHO CANNOT BE PRESENT IN PERSON, HOWEVER SMALL THEIR HOLDINGS,
FILL IN, SIGN AND RETURN THE ENCLOSED PROXY WITHOUT DELAY TO THE FIRST NATIONAL
BANK OF BOSTON, P.O. BOX 1850, BOSTON, MASSACHUSETTS 02105. A STAMPED ENVELOPE
IS ENCLOSED FOR THIS PURPOSE.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. IF YOU
PLAN TO ATTEND, PLEASE NOTIFY THE CLERK OF THE COMPANY AT 800 BOYLSTON STREET,
BOSTON, MASSACHUSETTS 02199.
12
14
BOSTON EDISON COMPANY
P PROXY FOR ANNUAL MEETING ON MAY 12, 1995
R
O THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
X
Y The undersigned hereby appoint Thomas J. May, Stephen J. Sweeney and
Paul E. Tsongas and each of them proxies, with power of substitution, to act
and vote in the name of the undersigned, with all the powers that the
undersigned would possess if personally present, on all matters which may
come before the Annual Meeting of Stockholders of Boston Edison Company to
be held on May 12, 1995 and any adjournment thereof.
The proxies are hereby authorized and instructed upon the matters
specified in the Notice of Annual Meeting as set forth on the reverse side
hereof. If no choice is indicated as to proposal number one, the proxies
shall vote FOR the election of all the nominees for director. The proxies
may vote in their discretion on any other matter which may properly come
before the Meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting dated March 27, 1995 and the related Proxy Statement.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
/ SEE REVERSE SIDE /
/ X / PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
PLEASE DO NOT MARK ANY BOXES IF VOTING WITH MANAGEMENT
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
1. Election of Directors
NOMINEES: Nelson S. Gifford, Kenneth I. Guscott, Matina
S. Horner, Bernard W. Reznicek, Paul E. Tsongas.
FOR WITHHELD
/ / / /
/ /______________________________________
For all nominees except as noted above
MARK HERE / / MARK HERE / /
FOR ADDRESS IF COMMENTS
CHANGE AND ON OTHER SIDE
NOTE AT LEFT
Please sign name exactly as it appears hereon.
When signing as attorney, agent, guardian, executor,
administrator, trustee or the like, please give your
full title as such.
Signature: _________________________ Date ___________
Signature: _________________________ Date ___________