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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
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Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Boston Edison Company
(Name of Registrant as Specified In Its Charter)
Boston Edison Company
(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) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
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BOSTON EDISON COMPANY
800 Boylston Street, Boston, Massachusetts 02199
NOTICE OF ANNUAL STOCKHOLDERS' MEETING
TO BE HELD ON MAY 8, 1996
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, Republic Ballroom,
Prudential Center, Boston, Massachusetts, on Wednesday, May 8, 1996 at 11:00
a.m., for the following purposes:
1. To elect four Class II directors to serve until the 1999 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 11, 1996 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 28, 1996
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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 1995 containing financial statements are being mailed
to stockholders beginning March 28, 1996. 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 8, 1996 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 11, 1996, there were issued and outstanding 48,106,439 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 12 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 four persons named below have
been nominated by the Board of Directors for election as Class II directors for
a term expiring at the 1999 Annual Meeting and until their successors are duly
chosen and qualified. The remaining directors will continue to serve as set
forth below, with the four Class III directors having terms expiring in 1997 and
the three Class I directors having terms expiring in 1998. 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 a 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. George W. Davis, the Company's
President and Chief Operating Officer, who served on the Company's Board of
Directors since 1992, retired pursuant to the policy on October 1, 1995, and
Kenneth I. Guscott, who has served on the Company's Board of Directors since
1973, will retire pursuant to the policy on May 8, 1996. Bernard W. Reznicek,
the Company's former Chairman and Chief Executive Officer, who has served on the
Company's Board of Directors since 1987, resigned from the Board effective March
1, 1996, and the Company is searching for a replacement to fill his vacancy.
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The Board of Directors, which held eight regular meetings and one special
meeting during 1995, 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 1995
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 four 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 three times. 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.
The names of the nominees as Class II directors and the incumbent Class I
and Class III directors and certain information concerning them are shown in the
following table:
NOMINEES AS CLASS II DIRECTORS - TERMS EXPIRING 1999
PRINCIPAL OCCUPATION (1)
NOMINEE AND DIRECTORSHIPS
------- ------------------------
William F. Connell Chairman and Chief Executive Officer, Connell Limited Partnership
Age: 57 (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 Chairman, President and Chief Executive Officer (since 1995), formerly
Age: 53 President (1989 -1995), Bank of Boston Corporation
Director since: 1990 (Bank Holding Company) and The First National Bank of Boston
Member: Audit, Finance Directorships: Bank of Boston Corporation, The First National
and Risk Management, Bank of Boston, Massachusetts Mutual Life Insurance Company
Executive Personnel
and Pricing Committees
Thomas J. May Chairman, President and Chief Executive Officer (since 1995),
Age: 48 formerly Chairman and Chief Executive Officer (1994-1995),
Director since: 1991 President and Chief Operating Officer (1993-1994), and Executive Vice
Member: Executive and President (1990-1993), Boston Edison Company
Pricing Committees Directorships: Bank of Boston Corporation, The First National Bank
of Boston, New England Mutual Life Insurance Company
Sherry H. Penney Chancellor (1988-1995 and 1996 to present), President (interim)
Age: 58 (1995), University of Massachusetts at Boston
Director since: 1990 Directorships: Various educational, civic and cultural organizations
Member: Audit, Finance
and Risk Management
and Executive Personnel Committees
<FN>
(1) Except as otherwise noted, each nominee and incumbent director has held
the position indicated for the last five years.
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INCUMBENT CLASS III DIRECTORS - TERMS EXPIRING 1997
PRINCIPAL OCCUPATION (1)
DIRECTOR AND DIRECTORSHIPS
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Gary L. Countryman Chairman of the Board (since 1991) and Chief Executive Officer,
Age: 56 formerly President (1986-1992), Liberty Mutual Insurance Company,
Director since: 1986 and Chairman and Chief Executive Officer, Liberty Life
Member: Executive Assurance Company of Boston
Personnel and Directorships: Liberty Mutual Insurance Company, Liberty Mutual
Capital Investment Fire Insurance Company, Liberty Life Assurance Company of
Committees Boston, Bank of Boston Corporation, The First National
Bank of Boston, The Neiman-Marcus Group, Inc.
Thomas G. Dignan, Jr. (2) Partner, Ropes & Gray (Law Firm)
Age: 55 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
Age: 67 Officer (1968-1985), LFECorporation (Traffic and Industrial
Director since: 1978 Process Control Systems)
Member: Capital Directorships/Trusteeships: Landauer, Inc., Tech/Ops Sevcon, Inc.,
Investment and Phoenix Home Life Mutual Insurance Company, Phoenix Series
Nuclear Oversight Fund, Phoenix Total Return Fund, Inc., Phoenix Multi-Portfolio
Committees Fund, The Big Edge Series Fund, Mark IV Industries
Stephen J. Sweeney Former Chairman of the Board (1986-1992) and Chief Executive
Age: 67 Officer (1984-1990), Boston Edison Company
Director since: 1983 Directorships: Selecterm, Inc., Liberty Mutual Insurance
Member: Capital Company, Liberty Mutual Fire Insurance Company, Liberty Life
Investment and Assurance Company of Boston, Uno 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 1995, the Company paid legal fees to the firm of Ropes & Gray.
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INCUMBENT CLASS I DIRECTORS - TERMS EXPIRING 1998
PRINCIPAL OCCUPATION (1)
DIRECTOR AND DIRECTORSHIPS
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Nelson S. Gifford Principal, Fleetwing Capital (Venture Investments) (1992 to present);
Age: 65 formerly Vice Chairman (1990-1991), Avery Dennison Corporation
Director since: 1981 (Pressure-Sensitive Adhesives and Materials, Office Products,
Member: Audit, Finance Product Identification and Control Systems, and Specialty Chemicals);
and Risk Management Chairman (1986-1990) and Chief Executive Officer (1986-1990),
and Capital Dennison Manufacturing Company (Stationery Products,
Investment Committees Systems and Packaging)
Directorships: John Hancock Mutual Life Insurance Company,
Reed and Barton, J. M. Huber Corp., Nypro Inc., Partners Fund
Matina S. Horner Executive Vice President, Teachers Insurance and
Age: 56 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
Paul E. Tsongas Partner (1985-1989 and 1991 to present), formerly Of Counsel
Age: 55 (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)
Executive Personnel Directorships: Wang Laboratories, Shawmut Bank, N.A.,
and Pricing Committees M/A-COM, Inc., Thermo Fibertek, Inc., Thermo Power, Inc.,
NORESCO
<FN>
(1) Except as otherwise noted, each nominee and incumbent director has held
the position indicated for the last five years.
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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, 1996 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.
NUMBER OF
COMMON SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED
------------------------ ------------------
E. Thomas Boulette 2,194 (1) (2)
William F. Connell 1,585
Gary L. Countryman 1,385
George W.Davis 2,716 (2)
Thomas G. Dignan, Jr. 1,768
Charles K. Gifford 1,390
Nelson S. Gifford 2,103
Kenneth I. Guscott 1,362
L. Carl Gustin 4,032 (2)
John J. Higgins 4,237 (1) (2)
Matina S. Horner 1,385
Ronald A. Ledgett 3,735 (1) (2)
Thomas J. May 13,053 (1) (2)
Sherry H. Penney 1,435
Herbert Roth, Jr. 5,800
Stephen J. Sweeney 4,885 (3)
Paul E. Tsongas 1,654
------
All directors and executive officers as a group,
including those named above (23 persons) 67,052 (1) (2)
<FN>
(1) 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: Dr. Boulette, 828 shares; Mr. Higgins, 2,512 shares; Mr.
Ledgett, 2,006 shares; Mr. May, 6,622 shares; all executive officers as a
group, 14,423 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.
(2) These totals include the following number of shares held in the Company's
401(k) Plan: Dr. Boulette, 1,147 shares; Mr. Davis, 1,247 shares;
Mr. Gustin, 2,818 shares; Mr. Higgins, 1,725 shares; Mr. Ledgett, 1,729
shares; Mr. May, 5,259 shares; all executive officers as a group, 21,790
shares.
(3) 3,629 of Mr. Sweeney's 4,885 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.
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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 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 the 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 as signatories to this report. Except as
discussed below, none of these non-employee directors has any interlocking or
other relationship with the Company that would require disclosure by the
Securities and Exchange Commission. 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 program is to establish
base salaries which are competitive with all electric 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 and to create value for stockholders.
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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 all other electric utility
companies. The Company's strategy is to establish base salaries and potential
total compensation (base salary, annual and long-term incentives) at the 60th
percentile when compared to all electric utilities.
During 1995, 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 electric utility companies. The data demonstrated that the Company was in
conformance with its compensation strategy, except as it relates to the
long-term plan, to the satisfaction of the Committee. Recommendations to modify
the long-term plan were reviewed and approved by the Committee, and are
discussed below in the section describing long-term compensation.
Executive officer compensation in 1995 was not impacted by Section 162(m)
of the Internal Revenue Code because compensation levels were below the $1
million threshold established by the statute. The Committee intends to consider
the impact of Section 162(m) when 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 1996.
ANNUAL INCENTIVE
The Company's annual incentive payments, reported in the fourth column
of the Summary Compensation Table below, are based on both corporate and unit
performance objectives which are derived from the corporate operating plan.
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 and staffing and key operating goals and are approved by the
Committee. The annual incentive plan award for Mr. May is based solely on the
Company's achieving the earnings per share objective. In 1995, earnings per
share were $2.52 prior to a restructuring charge, and the Company was able to
reduce its regulatory assets by $10 million, which exceeded the plan targets.
The annual incentive plan awards for Messrs. Ledgett, Boulette, Gustin and
Higgins were based 60% on earnings per share and 40% on unit performance
objectives to achieve certain business unit budget and operating plan targets.
All four officers exceeded 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 objectives which create value for both the stockholder
and the customer. Prior to 1995, the potential award receivable under the
Performance Share Plan at the end of a three-year cycle was conditioned upon
meeting 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 81 companies. To reach the target award, Boston Edison
must be within the top 30% of the industry as measured by the Goldman Sachs
database. 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 performance measures are weighted in
favor of the stockholder measure (75%) when determining the final award. All
awards under the Performance Share Plan are paid in shares of the Company's
Common Stock.
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During 1995, at the request of the Committee, the Company and outside
executive compensation consultants reviewed the design of the Performance Share
Plan to determine whether it was meeting the compensation strategy. A study of
total shareholder return for the entire electric utility industry over a
ten-year period showed that the design of the Plan would no longer support the
Company's long-term objectives, but would prevent the attainment of the overall
compensation strategy. The study further supported the conclusion that total
shareholder return is the best financial indicator of Company performance in the
electric utility industry, especially as the industry transitions to a more
competitive market.
The Committee reviewed and accepted a recommendation to make total
shareholder return the sole performance measure of the Plan and adopted a
modified implementation schedule beginning with the 1995-1997 cycle. To reach
the threshold award, Boston Edison must be within the top 50% of the industry as
measured by the Goldman Sachs Database; for the target award, the Company must
be in the top 40%; and for the maximum award, the Company must be in the top
10%. The Committee recommended implementing the new formula by blending the
pre-1995 and 1995 Plan formulas, with awards for the 1993-1995 cycle to be
calculated by weighting the pre-1995 formula by 66.7% and the 1995 formula by
33.3% and for the 1994-1996 cycle by weighting the pre-1995 formula by 33.3% and
the 1995 formula by 66.7%.
Based on the above recommendation, awards for the Performance Share Plan
for the performance period ending in 1995 were determined using two formulas.
The pre-1995 Plan required threshold performance for the shareholder measure to
be at the 60th percentile level of the Goldman Sachs Database, and for the
customer measure to rank seventh in the peer group. The Company achieved the
54th percentile for the shareholder measure, but ranked 8th for the customer
measure, which resulted in no credit towards the final target award on the
customer portion. The 1995 Plan requires threshold performance for the
shareholder measure to be at the 50th percentile of the Goldman Sachs Database.
With a 54 percentile shareholder measure achievement and the application of the
33.3% weighting, the total payment for the 1993-1995 Performance Share Plan was
24% of the total target award.
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, life, and health insurance plans, as well as 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 a 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 1995 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 other officers, the Company compares
compensation levels for the Chief Executive Officer to all other electric
utility companies.
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. The 1995 studies indicated Boston Edison's officer base pay to be less
than the approved 60th percentile position to market. Mr. May received an 11%
increase to his base salary in 1995. His salary will next be reviewed by the
Committee in April 1996.
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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 its
operating plan targets. Mr. May's long-term incentive award, shown in the eighth
column of the Summary Compensation Table below, was in conformance with
provisions of the Performance Share Plan and was based on the Company's
achievement of the performance measures as described above.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Charles K. Gifford, who is a member of the Company's Executive Personnel
Committee, is Chairman, President and Chief Executive Officer of Bank of Boston
Corporation and The First National Bank of Boston. Thomas J. May, the Company's
Chairman, President and Chief Executive Officer, serves on the boards of
directors of Bank of Boston Corporation and The First National Bank of Boston.
By the Executive Personnel Committee,
William F. Connell (Chairman)
Gary L. Countryman
Charles K. Gifford
Sherry H. Penney
Paul E. Tsongas
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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
1993, 1994 and 1995. Pursuant to the Commission's regulations, information is
also provided with respect to Mr.Davis, who retired from employment with the
Company on October 1, 1995.
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 1995 $415,083 $292,500 -- -- -- $27,084 $ 9,000
Chairman, President and 1994 362,500 214,500 -- -- -- 59,950 24,421
Chief Executive Officer 1993 297,250 139,405 -- -- -- 78,000 22,244
George W.Davis 1995 303,671 97,500 -- -- -- 24,836 9,000
Former President and 1994 310,000 143,000 -- -- -- 52,140 18,136
Chief Operating Officer 1993 289,750 139,405 -- -- -- 31,500 16,221
Ronald A. Ledgett 1995 181,133 75,000 -- -- -- 11,210 9,000
Senior Vice President 1994 172,667 43,050 -- -- -- 24,750 15,248
1993 163,416 51,810 -- -- -- 14,325 9,598
E. Thomas Boulette 1995 178,375 63,938 -- -- -- 10,899 9,000
Senior Vice President 1994 166,073 40,968 -- -- -- 10,959 9,542
1993 156,864 50,375 -- -- -- -- -- 9,469
L. Carl Gustin 1995 176,839 64,988 -- -- -- 11,353 9,000
Senior Vice President 1994 170,675 42,794 -- -- -- 25,075 9,559
1993 163,667 52,470 -- -- -- 32,625 9,492
John J. Higgins 1995 163,522 60,094 -- -- -- 10,389 9,000
Senior Vice President 1994 157,542 39,398 -- -- -- 22,770 10,099
1993 150,313 48,015 -- -- -- 29,400 9,968
<FN>
(1) None of the named executive officers received amounts of other annual compensation in 1993, 1994 or 1995
which would require disclosure pursuant to the Commission's rules.
(2) Amounts in this column for 1995 represent the Company's matching
contribution under its 401(k) plan.
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LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
The following table sets forth Performance Share awards potentially payable
in 1998 based on performance during the three-year period from January 1, 1995
through December 31, 1997.
ESTIMATED FUTURE PAYOUTS
---------------------------------------------
NUMBER OF PERFORMANCE OR
SHARES, UNITS OTHER PERIOD
OR OTHER UNTIL MATURA- (1) (1) (1)
NAME RIGHTS (1) TION OR PAYOUT THRESHOLD TARGET MAXIMUM
---- ------------- -------------- --------- ------ -------
Thomas J. May 8,125 1995 - 1997 4,063 8,125 16,250
Ronald A. Ledgett 2,200 1995 - 1997 1,100 2,200 4,400
E. Thomas Boulette 2,131 1995 - 1997 1,066 2,131 4,262
L. Carl Gustin 2,166 1995 - 1997 1,083 2,166 4,332
John J. Higgins 2,003 1995 - 1997 1,002 2,003 4,006
<FN>
(1) The first of these columns shows the 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. In
addition to these amounts, dividends attributable to each share are credited throughout the performance
period and deemed reinvested quarterly. The Performance Share Plan has a stockholder performance measure with
the target performance level set at the 60th percentile of the Goldman Sachs Database at the end of the
performance period. At the end of the period, the achievement percentage is applied to the total number of
shares - the amount as shown above plus shares added through dividend reinvestment - to determine the number
of shares actually earned and distributed. 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.
AVERAGE ANNUAL PENSION (2)
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
450,000.......(3) 90,000 180,000 281,250 303,750
<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.
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(3) For 1995, 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.
Under the pension arrangements described above, the credited years of
service through 1995 and the average annual base pay as of December 31, 1995 for
the executive officers named in the compensation table above are as follows: Mr.
May, 20 and $ 358,277; Mr. Davis, 6 and $304,562; Mr. Ledgett, 9 and $172,405;
Dr. Boulette, 4 and $167,103; Mr. Gustin 15 and $170,393; and Mr. Higgins, 8 and
$157,125. 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 10 years of
participation in the Plan and who retire at age 65, or at age 62 if they have
served 20 years with the Company, supplementary retirement income for 15 years
equal to 33% of final annual salary. The Company has entered into contracts with
Messrs. May 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. 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.
[PERFORMANCE GRAPH]
- ----------------------------------------------------------------------
Index: 1991 1992 1993 1994 1995
- ----- ---- ---- ---- ---- ----
Boston Edison $134 $159 $182 $157 $207
S&P 500 $131 $141 $155 $157 $215
EEI 100 Index $129 $139 $154 $136 $178
======================================================================
Annual Total Return: 1991 1992 1993 1994 1995
- ------------------- ---- ---- ---- ---- ----
Boston Edison 33.8% 18.8% 14.5% (13.8%) 32.2%
S&P 500 30.6% 7.6% 10.0% 1.3% 37.6%
EEI 100 Index 28.9% 7.6% 11.1% (11.6%) 31.0%
- ----------------------------------------------------------------------
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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 discretionary 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 1997 must be received at the Company's
principal executive offices no later than November 28, 1996.
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 BOSTON EQUISERVE, P.O.
BOX 1878, 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 SO INDICATE ON THE ENCLOSED PROXY CARD.
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16
DETACH HERE
BED 2F
BOSTON EDISON COMPANY
PROXY FOR ANNUAL MEETING ON MAY 8, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P
R
O
X
Y
The undersigned herby appoints William F. Connell, Gary L. Countryman
and Thomas J. May 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 is personally present, on all matters which may come
before the Annual Meeting of Stockholders of Boston Edison Company to be held
on May 8, 1996 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 28, 1996 and the related Proxy Statement.
-----------
SEE REVERSE
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
-----------
17
[LOGO]
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
This year's Annual Stockholders' Meeting will be held:
DATE: WEDNESDAY, MAY 8, 1996
LOCATION: SHERATON BOSTON HOTEL & TOWERS
PRUDENTIAL CENTER
BOSTON, MASSACHUSETTS
TIME: 11:00 A.M.
To ensure that your shares are voted on your behalf, plelase return your proxy
promptly in the enclosed envelope.
PLEASE MARK
/ X / VOTES AS IN DETACH HERE BED F
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: William F. Connell, Charles K. Gifford,
Thomas J. May, Sherry H. Penney
FOR WITHHELD
/ / / /
/ /
------------------------------------- MARK HERE MARK HERE
For all nominees except as noted above TO DISCONTINUE / / IF COMMENTS / /
MULTIPLE ON OTHER
MAILINGS SIDE
MARK HERE
IF YOU PLAN / /
TO ATTEND
THE MEETING
MARK HERE
FOR ADDRESS / /
CHANGE AND
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:
--------------------- ------------ --------------------- ------------