SCHEDULE 14A INFORMATION
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Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] confidential, for use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
UGI CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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):
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(5) Total fee paid:
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[_] 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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UGI
CORPORATION
Notice of February 26, 2002
Annual Meeting and
Proxy Statement_________
BOX 858 VALLEY FORGE, PA 19482 -- 610-337-1000
UGI
CORPORATION
LON R. GREENBERG
Chairman, President and
Chief Executive Officer
January 4, 2002
Dear Shareholder,
On behalf of our entire Board of Directors, I cordially invite you to
attend our Annual Meeting of Shareholders on Tuesday, February 26, 2002. At the
meeting, we will review UGI's performance for fiscal year 2001 and our
expectations for the future.
A notice of the meeting and Proxy Statement follow. You will also find
enclosed your proxy voting card and the 2001 Annual Report. I would like to take
this opportunity to remind you that your vote is important. Please take a moment
now to complete, sign and date the enclosed proxy voting card and return it in
the postage-paid envelope we have provided.
I look forward to seeing you on February 26th and addressing your questions
and comments.
Sincerely,
Lon R. Greenberg
460 NORTH GULPH ROAD, KING OF PRUSSIA, PA 19406
BOX 858 VALLEY FORGE, PA 19482 -- 610-337-1000
UGI
CORPORATION
January 4, 2002
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of UGI Corporation will be held on
Tuesday, February 26, 2002, at 10:00 a.m., at The Desmond Hotel and Conference
Center, Ballrooms A and B, One Liberty Boulevard, Malvern, Pennsylvania.
Directions to The Desmond Conference Center are included in our Proxy Statement.
Shareholders will consider and take action on the following matters:
1. Election of eight directors to serve until the next annual meeting
of shareholders;
2. Ratification of the appointment of Arthur Andersen LLP as
independent certified public accountants for fiscal year 2002; and
3. Transaction of any other business that is properly raised at the
meeting.
Your Board of Directors recommends a vote "in favor of" the two
proposals.
Brendan P. Bovaird
Corporate Secretary
460 NORTH GULPH ROAD, KING OF PRUSSIA, PA 19406
TABLE OF CONTENTS
Annual Meeting Information.............................................................................. 1
Who is entitled to vote?........................................................................... 1
What am I voting on?............................................................................... 1
How does the Board of Directors recommend I vote on the proposals?................................. 1
What does it mean if I get more than one proxy card?............................................... 2
How do I vote?..................................................................................... 2
What is a quorum?.................................................................................. 2
What vote is required to approve each item?........................................................ 2
Who will count the vote?........................................................................... 2
What are the deadlines for shareholders' proposals for next year's
Annual Meeting?................................................................................ 3
How much did this proxy solicitation cost?......................................................... 3
Securities Ownership of Management...................................................................... 3
Securities Ownership of Certain Beneficial Owners....................................................... 5
Item 1 - Election of Directors.......................................................................... 5
Nominees........................................................................................... 5
Board Committees and Meeting Attendance............................................................ 9
Compensation of Directors............................................................................... 11
Amended and Restated Directors' Equity Compensation Pan............................................ 12
2000 Directors' Stock Option Plan.................................................................. 12
i
Report of the Audit Committee of the Board of Directors................................................. 13
Report of the Independent Accountants' Fees............................................................. 14
Report of the Compensation and Management Development Committee
of the Board of Directors........................................................................... 15
Corporate Performance................................................................................... 19
Compensation of Executive Officers...................................................................... 20
Summary of Compensation............................................................................ 20
Option Exercises in Fiscal Year 2001 and Fiscal Year-End Option Values............................. 23
Retirement Benefits................................................................................ 25
Severance Pay Plan for Senior Executive Employees.................................................. 26
Change of Control Arrangements..................................................................... 26
Stock Ownership Policy and Indebtedness of Management.............................................. 27
Stock Price Information............................................................................ 27
Item 2 - Ratification of Appointment of Independent Certified Public Accountants........................ 27
Item 3 - Other Matters.................................................................................. 28
Glossary ............................................................................................... 29
ii
UGI CORPORATION
460 North Gulph Road
King of Prussia, Pennsylvania 19406
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Proxy Statement
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Annual Meeting Information
This proxy statement contains information related to the Annual Meeting of
Shareholders of UGI Corporation to be held on Tuesday, February 26, 2002,
beginning at 10:00 a.m., at The Desmond Hotel and Conference Center, One Liberty
Boulevard, Malvern, Pennsylvania, and at any postponements or adjournments
thereof.
Please refer to the map showing the meeting location which appears at the
back of this booklet. This proxy statement was prepared under the direction of
the Company's Board of Directors to solicit your proxy for use at the Annual
Meeting. It will be mailed to shareholders on January 4, 2002.
Who is entitled to vote?
Shareholders owning our Common Stock on November 30, 2001 are entitled to
vote at the Annual Meeting, or any postponement or adjournment of the meeting.
Each Shareholder has one vote per share on all matters to be voted on. On
November 30, 2001, there were 27,339,684 shares of Common Stock outstanding.
What am I voting on?
You will be asked to elect nominees to serve on the Board of Directors, and
to ratify the appointment of our independent accountants for fiscal year 2002.
The Board of Directors is not aware of any other matters to be presented for
action at the meeting. If any other matter requiring a vote of the shareholders
should arise, the Proxies will vote in accordance with their best judgment.
How does the Board of Directors recommend I vote on the proposals?
The Board recommends a vote FOR each of the nominees, and FOR the
ratification of the appointment of Arthur Andersen LLP as our independent
certified public accountants for fiscal year 2002.
What does it mean if I get more than one proxy card?
If your shares are registered differently and are in more than one account,
you will receive more than one card. Please complete, sign and return all of the
proxy cards you receive to ensure that all of your shares are voted.
How do I vote?
Sign and date each proxy card you receive and return it in the prepaid
envelope. If you sign your proxy, but do not mark your choices, your Proxies
will vote for the persons nominated for election as directors, and in favor of
ratifying the appointment of Arthur Andersen LLP as independent certified public
accountants for fiscal year 2002. You can revoke your proxy at any time before
it is exercised. To do so, you must give written notice of revocation to the
Corporate Secretary, UGI Corporation, 460 North Gulph Road, King of Prussia,
Pennsylvania 19406, submit another properly signed proxy with a more recent
date, or vote in person at the meeting.
What is a quorum?
A "quorum" is the presence at the meeting, in person or represented by
Proxy, of the holders of a majority of the outstanding shares. There must be a
quorum for the meeting to be held. Abstentions are counted for purposes of
determining the presence or absence of a quorum, but are not considered a vote
cast under Pennsylvania law. Shares held by brokers in street name and for which
the beneficial owners have withheld the discretion to vote from brokers are
called "broker non-votes." They are counted to determine if a quorum is present,
but are not considered a vote cast under Pennsylvania law. Broker non-votes will
not affect the outcome of a vote on a particular matter.
What vote is required to approve each item?
The director nominees will be elected by a plurality of the votes cast at
the Annual Meeting. All other matters to be considered at the meeting require
the affirmative vote of a majority of the votes cast at the meeting on the item
to be approved.
Who will count the vote?
Mellon Investor Services LLC, our Transfer Agent, will tabulate the votes
cast by proxy or in person at the Annual Meeting.
2
What are the deadlines for shareholders' proposals for next year's Annual
Meeting?
Shareholders may submit proposals on matters appropriate for shareholder
action at future annual meetings by following the rules of the Securities and
Exchange Commission. Proposals intended for inclusion in next year's proxy
statement and proxy card must be received by the Company not later than
September 6, 2002. If the Company does not receive notice of any other matter
that a shareholder wishes to raise at the Annual Meeting in 2003 by November 20,
2002 and a matter is raised at that meeting, the Proxies will have discretionary
authority to vote on the matter. All proposals and notifications should be
addressed to the Corporate Secretary.
How much did this proxy solicitation cost?
The Company has engaged Georgeson Shareholder to solicit proxies for the
Company for a fee of $6,000 plus expenses. We also reimburse banks, brokerage
firms and other institutions, nominees, custodians and fiduciaries for their
reasonable expenses for sending proxy materials to beneficial owners and
obtaining their voting instructions. Certain directors, officers and regular
employees of the Company and its subsidiaries may solicit proxies personally or
by telephone or facsimile without additional compensation.
Securities Ownership of Management
The following table shows the number of shares of Common Stock beneficially
owned by each director, by each of the executive officers named in the Summary
Compensation Table on page 20, and by all directors and executive officers as a
group. The table shows ownership as of November 1, 2001, except for Mr. Jones,
whose ownership is shown as of December 18, 2001.
Our subsidiary AmeriGas Propane, Inc. is the General Partner of AmeriGas
Partners, L.P. The table also shows, as of November 1, 2001, the number of
Common Units of AmeriGas Partners beneficially owned by each director and
executive officer and by all directors and executive officers as a group.
Mr. Greenberg beneficially owns approximately 2.1% of the outstanding
Common Stock. Each other person named in the table beneficially owns less than
1% of the outstanding Common Stock. Directors and executive officers as a group
own approximately 3.8% of the outstanding Common Stock and less than 1% of the
outstanding Common Units of AmeriGas Partners. For purposes of reporting total
beneficial ownership, Shares which may be acquired within 60 days of November 1,
2001 through stock option exercises are included.
3
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Security Ownership of Directors and Executive Officers
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Aggregate Number Aggregate Number of
of Shares of UGI AmeriGas
Common Stock Units Held Exercisable Partners, L.P.
Beneficially Under Directors' Options for UGI Common Units
Name Owned (1) Equity Plan (2) Stock Beneficially Owned (1)
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James W. Stratton 1,997(3) 12,060 13,800 1,000(3)
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Richard C. Gozon 6,997 17,051 13,800 5,000
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Stephen D. Ban 6,793(4) 8,578 11,700 0
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Lon R. Greenberg 111,867(5) 0 461,459 6,500(5)
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Marvin O. Schlanger 2,369 5,559 8,800 1,000(6)
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Thomas F. Donovan 1,969 2,772 8,800 1,000
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Anne Pol 1,728 7,888 8,800 0
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Ernest E. Jones 0 0 0 0
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Anthony J. Mendicino 38,007(7) 0 45,000 10,000(7)
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Robert J. Chaney 38,450 0 77,528 0
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Eugene V. N. Bissell 37,047(8) 0 18,579 12,750(8)
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Brendan P. Bovaird 22,690(9) 0 30,000 1,000(9)
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Directors and executive
officers as a group (13
persons) 283,267 53,908 755,599 38,250
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(1) Sole voting and investment power unless otherwise specified.
(2) The Amended and Restated Directors' Equity Compensation Plan provides that
Units will be converted to Shares and paid out to directors upon their
retirement or termination of service.
(3) Mr. Stratton's Shares and Common Units are held jointly with his spouse.
(4) Dr. Ban's Shares are held in a revocable trust.
(5) Mr. Greenberg holds 88,220 Shares jointly with his spouse and 5,832 Shares
represented by units held in the UGI Stock Fund of the 401(k) Employee
Savings Plan, based on September 30, 2001 statements. Mr. Greenberg's adult
children hold 4,500 of the Common Units shown.
(6) Mr. Schlanger's spouse holds all Common Units shown.
(7) Mr. Mendicino holds 86 Shares and all Common Units jointly with his spouse.
(8) Mr. Bissell's Shares and Common Units are held jointly with his spouse.
(9) Mr. Bovaird holds 19,993 Shares jointly with his spouse and 2,697 Shares
represented by units held in the UGI Stock Fund of the 401(k) Employee
Savings Plan, based on September 30, 2001 statements. Mr. Bovaird's Common
Units are held jointly with his spouse.
4
Section 16 (a) - Beneficial Ownership
Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires directors and
certain officers of the Company to send reports of their ownership of Shares and
changes in ownership to the Securities and Exchange Commission. Based on our
records, we believe that during Fiscal 2001 our directors and officers complied
with all SEC filing requirements applicable to them.
Securities ownership of Certain Beneficial Owners __________________
The following table shows information regarding each person known by the
Company to be the beneficial owner of more than 5% of the Company's Common
Stock. The ownership information below is based on information reported on Form
13F as filed with the Securities and Exchange Commission in November 2001 for
the quarter ended September 30, 2001.
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Securities Ownership of Certain Beneficial Owners
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Title of Name and Address of Amount and Nature of Percent of
Class Beneficial Owner Beneficial Ownership Class (1)
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Common Stock Snyder Capital Management LP 2,351,550 8.6%
350 California Street, Suite 1460
San Francisco, CA 94104-1436
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(1) Based on 27,339,684 Shares of Common Stock issued and outstanding at
November 30, 2001.
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Item 1 -- Election of Directors
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Nominees
Eight directors will be elected at the Annual Meeting. Directors will serve
until the next annual meeting or until their earlier resignation or removal. If
any nominee is not available for election, proxies will be voted for another
person nominated by the Board of Directors or the size of the Board will be
reduced. Seven members of the Board of Directors elected at last year's annual
meeting are standing for election this year, together with Mr. Jones, who was
elected to the Board effective January 1, 2002.
5
The nominees are as follows:
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James W. Stratton
Director since 1979
Age 65
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Mr. Stratton is the Chairman, Chief Executive Officer, and a director of
Stratton Management Company (an investment advisory and financial consulting
firm) (since 1972). He is also Chairman and a director of EFI (a financial
services firm) (since 1979). Mr. Stratton serves as a director of UGI Utilities,
Inc.; AmeriGas Propane, Inc.; Stratton Growth Fund, Inc.; Stratton Monthly
Dividend REIT Shares, Inc.; Stratton Small-Cap Value Fund; Teleflex, Inc.; and
BE&K, Inc.
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Richard C. Gozon
Director since 1989
Age 63
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Mr. Gozon is Executive Vice President of Weyerhaeuser Company (an
integrated forest products company) (since 1994). He was formerly a director
(1984 to 1993), President and Chief Operating Officer of Alco Standard
Corporation (a provider of paper and office products) (1988 to 1993); Executive
Vice President and Chief Operating Officer (1988), President (1985 to 1987) of
Paper Corporation of America. He also serves as a director of UGI Utilities,
Inc.; AmeriGas Propane, Inc., AmeriSource Bergen Corp.; and Triumph Group, Inc.
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Stephen D. Ban
Director since 1991
Age 61
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Dr. Ban is the past President and Chief Executive Officer of the Gas
Research Institute (gas industry research and development funded by
distributors, transporters, and producers of natural gas) (1987 through 1999).
He formerly served as Executive Vice President. Prior to coming to GRI in 1981,
he was Vice President, Research and Development and Quality Control of
Bituminous Materials, Inc. Dr. Ban also serves as a director of UGI Utilities,
Inc. and Energen Corporation.
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6
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Lon R. Greenberg
Director since 1994
Age 51
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Mr. Greenberg has been Chairman of the Board of Directors of UGI since
August 1996, Chief Executive Officer since August 1995, and President since
1994. He was formerly Vice Chairman of the Board (1995 to 1996), and Senior Vice
President - Legal and Corporate Development (1989 to 1994). Mr. Greenberg also
serves as a director of UGI Utilities, Inc.; and AmeriGas Propane, Inc.
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Marvin O. Schlanger
Director since 1998
Age 53
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Mr. Schlanger is Chairman of the Board and Chief Executive Officer of
Resolution Performance Products, Inc. (a global producer and marketer of
intermediate and specialty chemicals) (November 2000 to present). Mr. Schlanger
is also a Principal in the firm of Cherry Hill Chemical Investments, L.L.C.
(management services and capital for chemical and allied industries) (October
1998 to present). He also has served as interim President of OneChem, Ltd. (1999
to 2000). Mr. Schlanger was previously President and Chief Executive Officer
(May 1998 to October 1998), Executive Vice President and Chief Operating Officer
(1994 to May 1998) and a director (1994 to 1998) of ARCO Chemical Company. He
also held the position of Senior Vice President of ARCO Chemical Company and
President of ARCO Chemical Americas Company (1992 to 1994). Mr. Schlanger also
serves as a director of UGI Utilities, Inc.; OneChem, Ltd.; and Wellman, Inc.
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Thomas F. Donovan
Director since 1998
Age 68
______________________________________________________________________________
Mr. Donovan retired as Vice Chairman of Mellon Bank on January 31, 1997, a
position he had held since 1988. He continues to serve as a director of UGI
Utilities, Inc.; AmeriGas Propane, Inc. and Nuclear Electric Insurance Ltd.
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7
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Anne Pol
Director 1993 through 1997 and
since December 1999
Age 54
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Mrs. Pol is President and Chief Operating Officer of Trex Enterprises
Corporation (a high technology research and development company), a position she
has held since October 15, 2001. She previously served as Senior Vice President,
Thermo Electron Corporation (environmental monitoring, analytical instruments
and a major producer of recycling equipment, biomedical products and alternative
energy systems) (1998 to 2001); and Vice President (1996 to 1998). Mrs. Pol also
served as President, Pitney Bowes Shipping and Weighing Systems Division, a
business unit of Pitney Bowes Inc. (mailing and related business equipment)
(1993 to 1996); Vice President, New Product Programs in the Mailing Systems
Division of Pitney Bowes Inc. (1991 to 1993); and Vice President, Manufacturing
Operations in the Mailing Systems Division of Pitney Bowes Inc. (1990 to 1991).
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Ernest E. Jones
Director since 2002
Age 57
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Mr. Jones is President and Chief Executive Officer of Philadelphia
Workforce Development Corporation (an agency which funds, coordinates and
implements employment and training activities in Philadelphia), a position he
has held since 1998. He formerly served as President and Executive Director of
the Greater Philadelphia Urban Affairs Coalition (1983 to 1998). Mr. Jones also
served as Executive Director of Community Legal Services, Inc. (1977 to 1983).
Mr. Jones also serves as a director of the African American Museum in
Philadelphia; First Union Regional Foundation; Thomas Jefferson University;
United Way of Southeastern Pennsylvania; and the William Penn Foundation.
8
Board Committees and Meeting Attendance
The Board of Directors has five committees, the Audit, Compensation and
Management Development, Executive, Nominating, and Planning and Finance
Committees. Committees report their actions to the full Board at its next
regular meeting. A description of the duties of each committee follows the table
below.
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Committee Membership and Meetings Held in Fiscal 2001
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Compensation
and Planning
Management and
Name Audit Development Executive Nominating Finance
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J. W. Stratton [check]* [check]* [check]
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R. C. Gozon [check]* [check] [check] [check]
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S. D. Ban ++ [check]
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L. R. Greenberg [check] [check]
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T. F. Donovan [check]* [check]
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M. O. Schlanger ++ [check] [check]*
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A. Pol ++ [check] [check]
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No. of Meetings in
Fiscal 2001** 2 3 1 1 1
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[check] Member
* Chairperson
** The Board held 10 meetings in Fiscal 2001. All directors attended
all meetings of the Board of Directors and all meetings of Committees
of the Board of which they were members.
++ Dr. Ban also serves as Chairperson for the Pension Committee of the
Board of Directors of UGI Utilities, Inc., a subsidiary of the
Company. Mr. Schlanger and Mrs. Pol are also members of the
Pension Committee.
9
Audit Committee
. Oversees the Company's financial reporting process and the adequacy of its
controls relative to financial and business risk.
. Monitors the independence of the Company's independent public accountants
and the performance of the independent public accountants and the internal
audit staff.
. Recommends to the Board the engagement or replacement of the Company's
independent public accountants.
. Provides a means for open communication among the Company's independent
public accountants, management, internal audit staff and the Board.
Compensation and Management
Development Committee
. Establishes executive compensation policies and programs.
. Recommends to the Board base salaries and target bonus levels for
executive officers.
. Reviews the Company's management development and succession planning
policies.
. Approves the awards and payments to be made to employees of the Company
and its subsidiaries under its long-term compensation plans.
. Makes recommendations to the Board of Directors concerning outside
director compensation.
Executive Committee
. Has the full power of the Board between meetings of the Board, with
specified limitations relating to major corporate matters.
Nominating Committee
. Reviews the qualification of persons eligible to stand for election
as directors and makes recommendation to the Board on this matter.
. Considers as nominees for director qualified persons recommended by
directors, management and shareholders. Written recommendations for director
nominees should be delivered to the Corporate Secretary, UGI Corporation, 460
North Gulph Road, King of Prussia, PA 19406. The Company's bylaws do not
permit Shareholders to nominate candidates from the floor at an annual
meeting without notifying the Corporate Secretary 45 days prior to the
anniversary of the mailing date of the Company's proxy statement for the
previous year's annual meeting. Notification must include certain information
detailed in the Company's bylaws. If you intend to nominate a candidate from
the floor at an annual meeting, please contact the Corporate Secretary.
Planning and Finance Committee
. Reviews the overall business and financial planning of the Company and
its capital expenditures and operating budgets.
Compensation of Directors
The table below shows the components of director compensation for
Fiscal 2001.
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Directors' Compensation (1)
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Cash Equity
Component (2) Component
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Annual retainer $18,500 (3) 135 Shares (3)
630 Units (4)
4,800 Options (5)
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Annual retainer for Committee Chair $ 2,500 --
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Annual retainer for Executive Committee member $ 1,500 --
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Annual retainer for Nominating Committee member $ 1,500 --
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Board attendance fee (per meeting) $ 1,000 --
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Committee attendance fee (per meeting) $ 1,000 --
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Fee for special service related to Board $ l,000 --
business rendered at the request of the
Chairman of the Board
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(1) A director who is an officer or employee of the Company or its subsidiaries
is not compensated for service on the Board or on any Committee of the
Board.
(2) Directors can defer, until they leave the Board or reach age 70, the
receipt of all or a part of the cash retainers and fees payable to them for
services as a director. Messrs. Ban, Gozon and Schlanger, and Mrs. Pol
elected this deferral option.
(3) $18,500 of the annual retainer of $22,000 is paid in cash and $3,500 is
paid in whole shares of Common Stock pursuant to the Amended and Restated
Directors' Equity Compensation Plan described below. Fractional Shares are
paid in cash. Each Share had a fair market value of $25.875 on December
29, 2000.
(4) An award of Units was made effective January 1, 2001 pursuant to the
Amended and Restated Directors' Equity Compensation Plan described below.
(5) An award of options for the purchase of Common Stock was made effective
January 1, 2001 pursuant to the 2000 Directors' Stock Option Plan described
below. These options are immediately exercisable.
11
Amended and Restated Directors'
Equity Compensation Plan
The Amended and Restated Directors' Equity Compensation Plan provides for
annual awards to directors of (i) shares of Common Stock and (ii) 630 Units. A
Unit represents an interest equivalent to one share of Common Stock. Directors'
annual retainer fees in excess of $18,500 are paid in Common Stock. The fair
market value of the Stock is determined as of the first day of the calendar
year. The Stock is issued promptly after the first meeting of the Board of
Directors in each calendar year. The amount of the annual retainer fee and the
corresponding grant of Stock are prorated for any director who commences service
during a calendar year. Fractional shares are paid in cash. Prior to the
beginning of each calendar year, participants may elect to defer any portion of
their meeting fees and the cash portion of their annual retainer into Units.
All whole Units credited to a director earn dividend equivalents on each
record date for the payment of a dividend by the Company on its Common Stock. A
dividend equivalent is an amount determined by multiplying the number of Units
credited to a participant's account by the per-share cash dividend, or the per-
share fair market value of any non-cash dividend, paid by the Company on its
Shares on a dividend payment date. Accrued dividend equivalents are converted to
additional whole Units annually, on the last day of the calendar year.
All Units and dividend equivalents are fully vested when credited to the
participant's account. Account balances become payable in Shares upon retirement
or termination of service, unless the director elected to defer receipt of those
benefits.
2000 Directors' Stock Option Plan
The 2000 Directors' Stock Option Plan provides for stock option grants to
non-employee directors. The number of options to be granted is determined by the
Compensation and Management Development Committee of the Board, subject to Board
approval. In making awards, the Committee relies on management recommendations
made in consultation with the Company's independent compensation consultants. No
participant may be granted options relating to more than 10,000 Shares in any
calendar year. Except as otherwise provided by the Committee, all options
granted under the Plan are fully vested on the date of grant. The option price
per Share may not be less than 100% of fair market value of the Stock on the
effective date of the option.
12
Notwithstanding anything to the contrary, the following reports of the
Audit Committee and the Compensation and Management Development Committee shall
not be deemed incorporated by reference by any general statement incorporating
by reference this proxy statement into any filing under the Securities Act of
1933, as amended, or under the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically incorporates this information
by reference, and shall not otherwise be deemed filed under such Acts.
Report of the Audit Committee of the Board of Directors
The Audit Committee is composed of three directors. Each of us is
independent as defined by the listing standards of the New York Stock Exchange.
We have recommended, and the Board has adopted, a written Audit Committee
charter.
Management is responsible for the Company's financial reporting process
including its system of internal controls, and for the preparation of
consolidated financial statements in accordance with accounting principles
generally accepted in the United States. The Company's independent auditors are
responsible for auditing those financial statements. Our responsibility as
members of the Audit Committee is to oversee these processes. It is not our duty
or our responsibility to conduct auditing or accounting reviews or procedures.
Therefore, we have relied, without independent verification, on management's
representation that the financial statements have been prepared with integrity
and objectivity and in conformity with accounting principles generally accepted
in the United States and on the representations of the independent auditors
included in their report on the Company's financial statements. Furthermore, our
considerations and discussions with management and the independent auditors do
not assure that the Company's financial statements are presented in accordance
with accounting principles generally accepted in the United States, that the
audit of the Company's financial statements has been carried out in accordance
with generally accepted auditing standards or that the Company's independent
accountants are in fact "independent."
We have reviewed and discussed with management and the independent
accountants the Company's audited financial statements for fiscal 2001. In
addition, we have discussed with the independent accountants the matters
required to be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees."
We have also received from the independent accountants written disclosures
and a letter concerning the independent accountants' independence from the
Company, as required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees." These disclosures have been
reviewed by us and discussed with the independent accountants.
13
Based on these reviews and discussions, we have recommended to the Board
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for fiscal 2001 for filing with the Securities and Exchange
Commission.
Audit Committee
Thomas F. Donovan, Chairman
Anne Pol
Marvin O. Schlanger
Report of The Independent Accountants' Fees
The aggregate fees billed by Arthur Andersen LLP, the Company's independent
public accountants, in fiscal 2001 were as follows:
Audit Fees
For professional services rendered for
(1) the audit of the annual consolidated
financial statements of the Company and
its subsidiaries, including AmeriGas
Partners, L.P., UGI Utilities, Inc. and
Flaga GmbH, and (2) the reviews of the
Quarterly Reports on Form 10-Q of the
Company, AmeriGas Partners, L.P. and UGI
Utilities, Inc...................................................... $577,000
Audit-Related Fees
For professional services rendered for
(1) the audit of the annual financial statements
of significant businesses acquired by AmeriGas
Partners, L.P., (2) the audit of employee benefit
plans of the Company's subsidiaries, and (3) in
connection with securities offerings by the
Company's subsidiaries.............................................. $598,000
14
Report of The Compensation and Management Development
Committee of The Board of Directors
Role of the Committee
The Committee establishes and oversees the Company's executive compensation
policies and programs. The Committee also recommends to the Board of Directors
base salaries, target bonus levels, actual bonuses, and long-term incentive
awards to be paid to executive officers. In carrying out these functions, we
believe it is important to align executive compensation with business objectives
and strategies, management initiatives, financial performance and enhanced
shareholder value.
Our Committee is comprised of independent outside directors, none of whom
is or was an officer or employee of the Company or its subsidiaries.
Periodically, we solicit and receive recommendations and advice from independent
third party compensation consultants. Towers Perrin has acted in this capacity
since 1986. Compensation for the chief executive officers of each of UGI
Utilities, Inc. and AmeriGas Propane, Inc. is determined by the Compensation
Committee and Board of Directors of those companies under the same process
described in this report.
Executive Compensation Program
The executive compensation program is designed to attract and retain key
executives with outstanding abilities and to motivate them to perform to the
full extent of their abilities. We believe that executives should have a greater
portion of their compensation at risk than other employees, and that executive
compensation, as stated above, should be tied to the performance of the business
and be aligned with benefits realized by the Company's shareholders.
Compensation for Company executives consists of both cash and equity-based
opportunities. The annual cash compensation consists of (i) base salary and (ii)
annual bonus opportunity under the Company's Annual Bonus Plan. Currently long-
term equity-based opportunities are provided under the Company's 2000 Stock
Incentive Plan.
The Committee determines base salary ranges for executive officers based
upon competitive pay practices in general industry and the energy services
industry. The base salary ranges for all executive officers were set at the 50th
percentile of the survey companies. For fiscal year 2001, as has been the
practice in the past, the Committee reviewed a report from Towers Perrin which
compared base salary ranges for executive officers with base salary ranges for
similar positions, as reported in published survey results in Towers Perrin's
Executive Compensation Database, and Towers Perrin's Energy Services Executive
Compensation Database. This comparison was weighted to reflect the Company's
approximate business mix.
15
Annually, the Committee recommends to the Board of Directors changes in
actual salaries of executive officers based on judgments of past performance,
job duties, scope and responsibilities, and expected future contributions. The
most recent past performance is the prime determinant.
The Committee also oversees the Company's Annual Bonus Plan for executive
officers. We establish challenging objectives based on business targets. For
Messrs. Greenberg, Mendicino, and Bovaird, the sole objective in 2001 was
achieving financial performance for the Company. Mr. Bissell is covered under
the AmeriGas Propane, Inc. Annual Bonus Plan. Mr. Bissell had a combination of
financial and business performance objectives. Of these objectives, the
financial objective has the greatest weight. Mr. Chaney is covered under the UGI
Utilities, Inc. Annual Bonus Plan. For Mr. Chaney, the sole objective was
achieving the financial performance goal for UGI Utilities, Inc.
Each year, after completion of the audit of the Company's financial
statements, the Committee reviews business results and determines and recommends
to the Board cash bonus payments under the terms of the Annual Bonus Plan. The
financial objective for fiscal year 2001 for UGI Corporation executives was
achievement of targeted earnings per share. For executives whose sole objective
is achieving a financial performance goal, bonus payments are subject to a
maximum 15% adjustment of the calculated bonus based on the individual's
contribution having a significant impact on corporate performance. During fiscal
year 2001, the financial objective for UGI Utilities, Inc. was net earnings
after preferred stock dividends. For AmeriGas Propane, Inc. the financial
objective was earnings before interest, taxes, depreciation and amortization
("EBITDA"), while business performance objectives measured improvement in safety
and customer growth.
Periodically, the Committee reviews the overall competitiveness of the
Annual Bonus Plan with its compensation consultant. For 2001, using the
published survey sources and methodology previously identified, the Annual Bonus
Plan target bonus opportunity for each executive remained at the 75th percentile
of the survey companies. The 75th percentile level was determined to be
appropriate in light of the Committee's view that the annual bonus opportunities
should have a high reward potential to recognize the difficulty of achieving the
annual goals and the significant corporate impact of doing so.
The Committee believes that the Company competes for key executives from a
broad pool of companies in general industry and the energy industry. This pool
of companies is much larger than the group of companies comprising the S&P
Utilities Index, against which total shareholder return is compared in the
"Corporate Performance" section of this Proxy Statement. Therefore, the survey
companies used to determine competitive pay practices and establish base salary
ranges, Annual Bonus Plan target opportunities and long-term equity-based
awards, are not the same as the companies comprising the S&P Utilities Index.
The Committee oversees the Company's long-term equity-based plans. Long-
term equity-based pay is set at the 50th percentile of the survey companies. The
2000 Stock
16
Incentive Plan is an omnibus plan that permits grants of (i) stock options, (ii)
dividend equivalents, and (iii) restricted stock. All dividend equivalents and
restricted stock grants are subject to objective, performance-based goals. The
2000 Plan is intended to provide a strong incentive for improved financial
performance. The Committee selects performance criteria such as relative total
shareholder return or stock price appreciation targets designed to reconfirm the
Company's long-standing goal of providing superior shareholder returns. The
Committee made awards under the 2000 Plan during fiscal year 2001. These awards
consisted of restricted shares of UGI Common Stock and a cash award equivalent
to the dividends on the corresponding number of Shares paid during the
restriction period. In the case of Mr. Bissell, the award consisted of
restricted AmeriGas Partners Common Units and a similar cash award based on
Partnership distributions. Award levels were set by the Committee based on
competitive practices as reported by Towers Perrin.
Fiscal Year 2001 CEO Compensation
The compensation for Mr. Greenberg recommended to the Board of Directors
was based upon a number of factors and criteria. These include the procedure for
determining base salary ranges, actual salaries within ranges, Annual Bonus Plan
targets and long-term incentive awards described earlier in this report.
Base Salary. For 2001, the Committee determined that Mr. Greenberg's base
salary be increased by 6.0% over the level set for fiscal year 2000. The
Committee's determination was based on Mr. Greenberg's position in salary range
and his distinguished performance in advancing the company's strategic goals as
well as his overall leadership in guiding the Company's improving financial
performance.
Annual Bonus. For 2001, Mr. Greenberg earned the annual bonus shown on page
20. The amount of this bonus is based on the Company's fiscal year 2001 earnings
per share, which increased 28% over fiscal year 2000 earnings, and exceeded
targeted levels. In addition, the amount of Mr. Greenberg's annual bonus was
adjusted to reflect his continued strong leadership and significant
accomplishments throughout 2001, including overseeing several major business
acquisitions.
Long-Term Incentive. During fiscal 2001, after consultation with Towers
Perrin, the Board made grants to Mr. Greenberg under the 2000 Stock Incentive
Plan of 12,500 restricted shares in January 2001 and 37,500 restricted shares in
September 2001. These grants are based on competitive long-term incentive award
levels. The performance period for these grants will end December 31, 2003.
17
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the tax deduction to
$1,000,000 for compensation paid to the Chief Executive Officer and the other
Named Executive Officers unless certain requirements are met. One of the
requirements is that compensation over $1,000,000 must be based upon attainment
of performance goals approved by shareholders. The 2000 Stock Incentive Plan was
designed to meet the requirements of Section 162(m).
To the extent possible, the Committee intends to preserve deductibility of
compensation, but it may choose to provide compensation that is not deductible
in order to maximize shareholder return and to retain and reward high-performing
executives.
Compensation and Management
Development Committee
Richard C. Gozon, Chairman
Thomas F. Donovan
Anne Pol
18
Corporate Performance shown.
The line graph shown below shows a five-year comparison of the cumulative
total shareholder return on the Common Stock of the Company as compared to the
cumulative total return of two other indices: the S&P 500 Index and the S&P
Utilities Index. The annualized returns reflected in the graph for the Company,
the S&P 500 Index and the S&P Utilities Index were 9.65%, 10.23%, and 9.81%
respectively.
Comparison of 5 Year Cumulative Total Shareholder Return Amoung
UGI Corporation, S&P 500, and S&P Utiliites Index
[Graphic to Come]
1996 1997 1998 1999 2000 20001
- --------------------------------------------------------------------------------
UGI Corporation 100.00 124.79 110.50 118.80 133.29 158.50
- --------------------------------------------------------------------------------
S&P 500 100.00 140.45 153.15 195.74 221.74 162.71
- --------------------------------------------------------------------------------
S&P Utilities Index 100.00 114.38 148.72 146.98 212.43 159.68
- --------------------------------------------------------------------------------
The performance illustrated assumes that $100 was invested in UGI Common Stock
and each index on September 30, 1996, and that all dividends were reinvested.
19
Compensation of Executive Officers
Summary of Compensation
The following table shows cash and other compensation paid or accrued during
the last three fiscal years to the Company's Chief Executive Officer and each of
the four other most highly compensated executive officers.
Summary Compensation Table
- -----------------------------------------------------------------------------------------------------------------------------------
Long Term Compensation
- -----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------------------
Securities
Other Under- All
Annual Restricted lying Other
Name and Principal Fiscal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus (1) sation (2) Awards (3) SARs Payouts sation (4)
- -----------------------------------------------------------------------------------------------------------------------------------
Lon R. Greenberg 2001 $667,799 $595,010 $14,849 $ 323,438 0 $ 0 $20,939
Chairman, President $1,000,875 0
and Chief Executive 2000 $640,662 $262,836 $13,092 $ 0 225,000 (5a) $ 0 $20,417
Officer 1999 $587,139 $266,776 $11,359 $ 611,260 225,000 (5b) $ 0 $18,273
- -----------------------------------------------------------------------------------------------------------------------------------
Anthony J. Mendicino 2001 $285,864 $154,562 $ 0 $ 64,688 0 $ 0 $ 8,226
Vice President - $ 226,866
Finance and Chief 2000 $271,953 $ 79,715 $ 0 $ 0 45,000 (5a) $ 0 $ 4,868
Financial Officer 1999 $247,499 $ 77,740 $ 0 $ 305,625 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------------------
Eugene V. N. Bissell 2001 $329,415 $ 236,313 $ 300 $ 28,263 0 $ 0 $48,072
President and Chief $ 99,725
Executive Officer, 2000 $245,366 $ 59,253 $ 3,142 $ 0 28,000 (5a) $ 0 $31,886
AmeriGas Propane, 12,750 (5d) 0
Inc. 1999 $194,335 $ 54,668 $ 1,706 $ 142,625 0 $386,250 (6) $21,900
- -----------------------------------------------------------------------------------------------------------------------------------
Robert J. Chaney 2001 $285,500 $ 144,144 $ 7,511 $ 64,688 0 $ 0 $ 9,609
President and Chief $ 133,450
Executive Officer, 2000 $264,307 $ 141,570 $ 5,898 $ 0 45,000 (5a) $ 0 $ 7,569
UGI Utilities, Inc. 1999 $221,445 $ 72,109 $ 7,817 $ 142,625 5,556 (5c) $ 0 $ 5,742
- -----------------------------------------------------------------------------------------------------------------------------------
Brendan P. Bovaird 2001 $222,283 $ 96,708 $ 4,860 $ 38,813 0 $ 0 $ 6,112
Vice President and $ 120,105
General Counsel 2000 $210,392 $ 49,349 $ 6,332 $ 0 28,000 (5a) $ 0 $ 5,927
1999 $189,600 $ 53,048 $14,399 $ 142,625 0 $ 0 $ 5,215
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Bonuses earned under the Annual Bonus Plan are for the year reported,
regardless of the year paid. The Company's Annual Bonus Plan is based on
the achievement of business and/or financial performance objectives, which
support business plans and goals. Bonus opportunities vary by position and
for Fiscal 2001 ranged from 0% to 173% of base salary for Mr. Greenberg, 0%
to 115% for Mr. Mendicino, 0% to 114% for Mr. Bissell, 0% to 87% for Mr.
Chaney, and 0% to 92% for Mr. Bovaird.
(2) Amounts represent tax payment reimbursements for certain benefits.
20
(3) Effective January 1, 2001 and September 25, 2001, the Board of Directors of
the Company and, with respect to Mr. Chaney, the Board of Directors of UGI
Utilities, Inc., approved performance-contingent restricted stock awards to
the Named Executives, other than Mr. Bissell, under the UGI Corporation
2000 Stock Incentive Plan. Effective January 1, 2001 and September 24,
2001, the Board of Directors of AmeriGas Propane, Inc. approved performance
contingent restricted Unit awards to Mr. Bissell under the 2000 AmeriGas
Propane, Inc. Long-Term Incentive Plan. Under these plans, shares of UGI
Common Stock or, in the case of Mr. Bissell, Common Units of AmeriGas
Partners, were awarded based on the Company's progress in achieving
strategic initiatives and goals contained in the Company's 2000 Budget and
Plan.
The performance contingency for the January 2001 restricted stock awards has
been met. Accordingly, the restriction period will end on December 31, 2003.
The performance requirement was an average closing price per Share on the New
York Stock Exchange equal to $26.00 for a period of five consecutive trading
days. The performance contingency for the September 2001 restricted stock
awards has also been met and the restriction period will end on December 31,
2003. That performance requirement was an average closing price per Share on
the New York Stock Exchange equal to $29.00 for a period of five consecutive
trading days. When the restriction period ends, the executive will also receive
an amount of cash equal to the per share dividends paid on the Company's Shares
during the restriction period multiplied by the number of restricted Shares
awarded.
The performance contingency for the January 2001 restricted Common Unit award
has been met. Accordingly, the restriction period will end on December 31,
2003. The performance requirement was an average closing price per Unit on the
New York Stock Exchange equal to $19.00 for a period of five consecutive trading
days. The performance contingency for the September 2001 restricted Common Unit
award has also been met and the restriction period will end on December 31,
2003. That performance requirement was an average closing price per Unit on the
New York Stock Exchange equal to $23.75 for a period of five consecutive trading
days. When the restriction period ends, the executive will also receive an
amount of cash equal to the per Unit distributions paid on the Common Units
during the restriction period multiplied by the number of restricted Units
awarded.
The dollar values shown in the table above represent the aggregate value of
each award on the date of grant, determined by multiplying the number of shares
awarded by the closing price of UGI Common Stock or, for Mr. Bissell, the
closing price of a Common Unit on the New York Stock Exchange on the effective
dates of the respective grants.
Based on the closing stock price of UGI Common Stock on the New York Stock
Exchange on September 28, 2001, Mr. Greenberg's 50,000 restricted shares had a
market value of $1,355,000; Mr. Mendicino's 11,000 restricted shares had a
market value of $298,100; Mr. Chaney's 7,500 restricted shares had a market
value of $203,250; and Mr. Bovaird's 6,000 restricted shares had a market value
of $162,600. Based on the closing unit price of Common Units of AmeriGas
Partners, L.P. on the New York Stock Exchange on September 28, 2001, Mr.
Bissell's 6,150 restricted Units had a market value of $141,204.
(4) Amounts represent Company contributions in accordance with the provisions
of the UGI Utilities, Inc. Employee 401(k) Savings Plan or, for Mr.
Bissell, the AmeriGas Propane, Inc. Employee 401(k) Savings Plan and
allocations under the Supplemental Executive Retirement Plan. During
fiscal years 2001, 2000, and 1999, the following contributions were made to
the Named Executives: (i) under the Employee Savings Plan: For each of
Messrs. Greenberg, Chaney, and Mendicino $3,825, $3,825 and $3,600; Mr.
Bissell, $7,576, $9,424 and $5,000; Mr. Bovaird, $3,825, $3,825 and $3,509;
and (ii) under the Supplemental Executive Retirement Plan: Mr. Greenberg
$17,114, $16,592 and $14,673; Mr. Mendicino, $4,401, $4,043 and $2,178; Mr.
Chaney, $5,784, $3,744 and $2,142; Mr. Bovaird, $2,287, $2,102 and $1,706;
and Mr. Bissell, $48,072, $22,462 and $16,900.
(5) (a) Non-qualified stock options granted effective January 1, 2000 under
the 1997 SODEP without the opportunity to earn dividend equivalents.
(b) Non-qualified stock options granted on June 4, 1999 under the 1997
SODEP without the opportunity to earn dividend equivalents.
21
(5) (c) Non-qualified stock options granted under the 1997 SODEP, which
included the opportunity for participants to earn dividend equivalents,
subject to a comparison of the total return on a share of the Company's
Common Stock with the total return achieved by each member of the 1997
SODEP Peer Group over a three-year period beginning January 1, 1997 and
ending December 31, 1999. No dividend equivalents were earned for these
options.
(d) Non-qualified stock options granted on July 25, 2000 under the 1997
SODEP without the opportunity to earn dividend equivalents.
(6) Payout under the performance-based AmeriGas Propane, Inc. Long-Term
Incentive Plan. The performance contingency was satisfied May 18, 1999 when
fifty percent of the Subordinated Units of AmeriGas Partners, L.P. converted to
Common Units in accordance with the Partnership Agreement, based on Partnership
financial and operating performance. The award was made partially in Common
Units (approximately 60%) and partially in cash (approximately 40%). Mr.
Bissell received 11,250 Common Units.
22
Option Exercises in Fiscal 2001
and Fiscal Year-End Option Values
The table below shows the number and value of stock options for each of
the Named Executives:
Option Exercises in Fiscal 2001
And Fiscal Year-End Option Values
- ----------------------------------------------------------------------------------------------------------
Value of
Number of Number of Securities Unexercised
Shares Underlying Unexercised In-The-Money
Acquired on Value Options at Options at
Name Exercise Realized Fiscal Year End Fiscal Year End*
- ----------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------
Lon R. Greenberg 20,000 $155,694 73,959 $515,864(1)
200,000 112,500 $895,000(2)
112,500 150,000 $756,563(3) $756,563(3)
75,000 $485,625(4) $971,250(4)
- ----------------------------------------------------------------------------------------------------------
Anthony J. Mendicino 0 $ 0 30,000 30,000 $141,750(5)
15,000 $ 97,125(4) $194,250(4)
- ----------------------------------------------------------------------------------------------------------
Eugene V.N. Bissell 0 $ 0 9,333 18,667 $ 60,431(4) $120,869(4)
4,246 8,504 $ 22,716(6) $ 45,496(6)
5,000 $ 32,375(7)
- ----------------------------------------------------------------------------------------------------------
Robert J. Chaney 30,000 $177,027 13,639 $ 95,132(1)
35,000 $156,625(2)
8,333 $ 39,373(5)
5,556 $ 32,503(8)
15,000 30,000 $ 97,125(4) $194,250(4)
- ----------------------------------------------------------------------------------------------------------
Brendan P. Bovaird 5,007 $ 44,234
30,000 $134,250(2)
9,333 $ 76,196 18,667 $120,869(4)
- ----------------------------------------------------------------------------------------------------------
* The fiscal 2001 year-end closing stock price was $27.10
(1) Value is calculated using the difference between $20.125 (1992 SODEP option
price) and $27.10 multiplied by the number of Shares underlying the option.
(2) Value is calculated using the difference between $22.625 (1997 SODEP option
grant price at December 10, 1996) and $27.10 multiplied by the number of
Shares underlying the option
(3) Value is calculated using the difference between $20.375 (1997 SODEP option
grant price at June 4, 1999) and $27.10 multiplied by the number of Shares
underlying the option.
(4) Value is calculated using the difference between $20.625 (1997 SODEP option
price at January 1, 2000) and $27.10 multiplied by the number of Shares
underlying the option.
(5) Value is calculated using the difference between $22.375 (1997 SODEP grant
price at September 29, 1998) and $27.10 multiplied by the number of Shares
underlying the option.
23
(6) Value is calculated using the difference between $21.750 (1997 SODEP grant
price at July 25, 2000) and $27.10 multiplied by the number of Shares
underlying the option.
(7) Value is calculated using the difference between $20.625 (1992 Non-Qualified
Stock Option Plan option grant price at December 18, 1995) and $27.10
multiplied by the number of Shares underlying the option.
(8) Value is calculated using the difference between $21.250 (1997 SODEP grant
price at February 23, 1999) and $27.10 multiplied by the number of Shares
underlying the option.
24
Retirement Benefits
The following Pension Plan Benefits Table shows the annual benefits payable
upon retirement to the Named Executives other than Mr. Bissell under the
Company's Retirement Plan and its Supplemental Executive Retirement Plan. The
amounts shown assume the executive retires in 2001 at age 65, and that the
aggregate benefits are not subject to statutory maximums. Messrs. Greenberg,
Mendicino, Chaney, and Bovaird had, respectively, 21 years, 9 years, 37 years
and 6 years of credited service under these Plans at September 30, 2001. Mr.
Bissell previously accumulated more than 5 years of credited service with UGI
and its subsidiaries before joining AmeriGas Propane, Inc. in 1995. He does not
currently participate in the Company's Retirement Plan.
Pension Plan Benefits Table
- ----------------------------------------------------------------------------------------------------------
Annual Plan Benefit for Years of Credited Service Shown (2)
- ----------------------------------------------------------------------------------------------------------
Final 5-Year
Average Annual 5 10 15 20 25 30 35 40
Earnings (1) Years Years Years Years Years Years Years Years
- ----------------------------------------------------------------------------------------------------------
$ 100,000 $ 9,500 $ 19,000 $ 28,500 $ 38,000 $ 47,500 $ 57,000 $ 66,500 $ 68,400 (3)
- ----------------------------------------------------------------------------------------------------------
$ 200,000 $ 19,000 $ 38,000 $ 57,000 $ 76,000 $ 95,000 $114,000 $ 133,000 $ 136,800 (3)
- ----------------------------------------------------------------------------------------------------------
$ 300,000 $ 28,500 $ 57,000 $ 85,500 $114,000 $142,500 $171,000 $ 199,500 $ 205,200 (3)
- ----------------------------------------------------------------------------------------------------------
$ 400,000 $ 38,000 $ 76,000 $114,000 $152,000 $190,000 $228,000 $ 266,000 $ 273,600 (3)
- ----------------------------------------------------------------------------------------------------------
$ 500,000 $ 47,500 $ 95,000 $142,500 $190,000 $237,500 $285,000 $ 332,500 $ 342,000 (3)
- ----------------------------------------------------------------------------------------------------------
$ 600,000 $ 57,000 $114,000 $171,000 $228,000 $285,000 $342,000 $ 399,000 $ 410,400 (3)
- ----------------------------------------------------------------------------------------------------------
$ 700,000 $ 66,500 $133,000 $199,500 $266,000 $332,500 $399,000 $ 465,500 $ 478,800 (3)
- ----------------------------------------------------------------------------------------------------------
$ 800,000 $ 76,000 $152,000 $228,000 $304,000 $380,000 $456,000 $ 532,000 $ 547,200 (3)
- ----------------------------------------------------------------------------------------------------------
$ 900,000 $ 85,500 $171,000 $256,500 $342,000 $427,500 $513,000 $ 598,500 $ 615,600 (3)
- ----------------------------------------------------------------------------------------------------------
$1,000,000 $ 95,000 $190,000 $285,000 $380,000 $475,000 $570,000 $ 665,000 $ 684,000 (3)
- ----------------------------------------------------------------------------------------------------------
$1,100,000 $104,500 $209,000 $313,500 $418,000 $522,500 $627,000 $ 731,500 $ 752,400 (3)
- ----------------------------------------------------------------------------------------------------------
$1,200,000 $114,000 $228,000 $342,000 $456,000 $570,000 $684,000 $ 798,000 $ 820,800 (3)
- ----------------------------------------------------------------------------------------------------------
$1,300,000 $123,500 $247,000 $370,500 $494,000 $617,500 $741,000 $ 864,500 $ 889,200 (3)
- ----------------------------------------------------------------------------------------------------------
$1,400,000 $133,000 $266,000 $399,000 $532,000 $665,000 $798,000 $ 931,000 $ 957,600 (3)
- ----------------------------------------------------------------------------------------------------------
$1,500,000 $142,500 $285,000 $427,500 $570,000 $712,500 $855,000 $ 997,500 $1,026,000 (3)
- ----------------------------------------------------------------------------------------------------------
$1,600,000 $152,000 $304,000 $456,000 $608,000 $760,000 $912,000 $1,064,000 $1,094,400 (3)
- ----------------------------------------------------------------------------------------------------------
(1) Consists of (i) base salary, commissions and cash payments under the Annual
Bonus Plan, and (ii) deferrals thereof permitted under the Internal Revenue
Code.
25
(2) Annual benefits are computed on the basis of straight life annuity amounts.
These amounts include pension benefits, if any, to which a participant may
be entitled as a result of participation in a pension plan of a subsidiary
during previous periods of employment. The amounts shown do not take into
account exclusion of up to 35% of the estimated primary Social Security
benefit. The Retirement Plan provides a minimum benefit equal to 25% of a
participant's final 12-months' earnings, reduced proportionately for less
than 15 years of credited service at retirement. The minimum Retirement
Plan benefit is not subject to Social Security offset.
(3) The maximum benefit under the Retirement Plan and the UGI Supplemental
Executive Retirement Plan is equal to 60% of a participant's highest
consecutive 12 months' earnings during the last 120 months.
Severance Pay Plan for Senior
Executive Employees
The UGI Corporation Severance Pay Plan for Senior Executive Employees and the
AmeriGas Propane, Inc. Executive Employee Severance Pay Plan assist certain
senior level employees of the Company and AmeriGas Propane, Inc. in the event
their employment is terminated without fault on their part. Benefits are payable
to a senior executive covered by either Severance Plan if the senior executive's
employment is involuntarily terminated for any reason other than for cause or as
a result of the senior executive's death or disability.
Each Severance Plan provides for cash payments equal to a participant's
compensation for a period of time ranging from 3 months to 15 months (30 months
in the case of Mr. Greenberg and 18 months in the case of Mr. Bissell),
depending on length of service. In addition, a participant receives the cash
equivalent of his target bonus under the Annual Bonus Plan, pro-rated for the
number of months served in the fiscal year. However, if the termination occurs
in the last two months of the fiscal year, the Chief Executive Officer has the
discretion to determine whether the participant will receive a pro-rated target
bonus, or the actual annual bonus which would have been paid after the end of
the fiscal year, had the participant's entire bonus been contingent on meeting
the Company's financial performance goal. Each Plan also provides for separation
pay equal to one day's pay for each month of service, not to exceed an amount
equal to one year's compensation. Certain employee benefits are continued under
the Plan for a period up to 15 months (30 months in the case of Mr. Greenberg
and 18 months in the case of Mr. Bissell). The Company has the option to pay a
participant the cash equivalent of those employee benefits.
In order to receive benefits under the applicable Severance Plan, a senior
executive is required to execute a release which discharges the Company and its
subsidiaries from liability for any claims the senior executive may have against
any of them, other than claims for amounts or benefits due the executive under
any plan, program or contract binding on UGI or its subsidiaries. The senior
executive is also required to cooperate in attending to matters pending at the
time of his termination.
Change of Control Arrangements
Messrs. Greenberg, Mendicino, and Bovaird each have an agreement with the
Company that provides certain benefits in the event of a change of control of
the Company. Mr. Bissell and Mr. Chaney each have a similar agreement with
AmeriGas Propane, Inc. and UGI Utilities, Inc., respectively. The agreements
operate independently of the Severance Plan, continue through July 2004, and are
automatically extended in one-year increments thereafter unless, prior to a
change of control, the Company terminates an agreement. In the absence of a
change of control, each agreement will terminate when, for any reason, the
executive terminates his employment with the Company or its subsidiaries.
A change of control is generally deemed to occur in the following instances:
. Any person (other than certain persons or entities affiliated with the
Company), together with all affiliates and associates of such person,
acquires securities representing 20% or more of either (A) the then
outstanding shares of Common Stock, or (B) the combined voting power of the
Company's then outstanding voting securities; or
. individuals, who at the beginning of any 24-month period constitute the
Board of Directors (the "Incumbent Board") and any new director whose
election by the Board of Directors, or nomination for election by the
Company's shareholders, was approved by a vote of a least a majority of the
Incumbent Board, cease for any reason to constitute a majority; o r
. the Company is reorganized, merged or consolidated with or into, or sells
all or substantially all of its assets to, another corporation in a
transaction in which former shareholders of the Company do not own more
than 50% of, respectively, the outstanding common stock and the combined
voting power of the then outstanding voting securities of the surviving or
acquiring corporation; or
. the Company is liquidated or dissolved.
The agreements covering Mr. Bissell and Mr. Chaney provide benefits upon a
change of control of (i) AmeriGas Propane, Inc. or its subsidiaries (in the case
of Mr. Bissell), and (ii) UGI Utilities, Inc. (in the case of Mr. Chaney), in
addition to providing benefits in the event of a change of control of the
Company.
The agreements provide for payment of severance benefits if there is a
termination of the executive's employment without cause at any time within three
years after a change of control. In addition, following a change of control,
the executive may elect to terminate his employment without loss of severance
benefits in certain situations, including termination of officer status; a
significant adverse change in authority, duties, responsibilities or
compensation; the failure of the Company to comply with any of the terms of the
agreement; or a substantial relocation or excessive travel requirements.
An executive terminated with rights to severance compensation under a change
of control agreement will receive an amount equal to 1.0 or 1.5 (2.5 in the case
of Mr. Greenberg) times his average annual total cash remuneration for the
preceding five calendar years. If the severance compensation payable, either
alone or together with other payments to an executive, would constitute "excess
parachute payments," as defined in Section 280G of the Internal Revenue Code of
1986,
26
as amended, the executive will also receive an amount to satisfy the
executive's additional tax burden. In addition, upon a change of control, the
agreement provides for an immediate cash payment equal to the market value of
any pending target award under the Company's long-term compensation plan.
Stock Ownership Policy and
Indebtedness of Management
The Board of Directors established a policy effective October 1, 1997 that
requires individuals in key management positions in the Company and its
subsidiaries to own significant amounts of Common Stock. The required levels of
ownership range from approximately 40% of base salary to approximately 450% of
base salary for the Company's Chief Executive Officer. The policy is designed to
encourage growth in shareholder value by closely linking executives' risks and
rewards with the Company's total shareholder return. To assist employees in
purchasing Stock to comply with the policy, interest-bearing loans are available
from a subsidiary of the Company. Each loan is full recourse to the borrower and
is secured by a pledge of the Stock purchased. The loans mature in 10 years.
All of the Company's executive officers obtained loans to finance the
purchase of Stock to comply with the policy. The largest amounts outstanding
under these loans during Fiscal 2001 were: Mr. Greenberg, $1,423,413; Mr.
Bissell, $648,493; Mr. Chaney, $498,642; Mr. Mendicino, $467,710; Mr. Bovaird,
$309,993; and Mr. Hall $212,840. The executives officers' outstanding loan
amounts as of October 31, 2001 were: Mr. Greenberg, $1,290,474; Mr. Bissell,
$626,592; Mr. Chaney, $425,659; Mr. Mendicino, $431,573; Mr. Bovaird, $255,822;
and Mr. Hall, $201,134 .
Stock Price Information
The closing price of the Company's Common Stock as reported on the New York
Stock exchange Composite Transactions tape on November 30, 2001 was $29.45.
- ----------------------------------------------------------------------
Item 2 -- Ratification of Appointment of
Independent Certified Public Accountants
- ----------------------------------------------------------------------
The Board of Directors appointed Arthur Andersen LLP as independent certified
public accountants to examine and report on the consolidated financial
statements of the Company for fiscal year 2002 and recommends that the
Shareholders ratify the appointment. If the Shareholders do not ratify the
appointment of Arthur Andersen, the Audit Committee and the Board of Directors
will consider the appointment of other independent certified public accountants.
One or more representatives of Arthur Andersen will be present at the Annual
Meeting. They will have the opportunity to respond to appropriate questions and
to make a statement if they wish to do so.
27
- ----------------------------------------------------------------------
Item 3 -- Other Matters
- ----------------------------------------------------------------------
The Board of Directors is not aware of any other matter to be presented for
action at the meeting. If any other matter requiring a vote of the shareholders
should arise, the Proxies (or their substitutes) will vote in accordance with
their best judgment.
28
Glossary
1992 SODEP UGI Corporation 1992 Stock Option
and Dividend Equivalent Plan.
1997 SODEP UGI Corporation 1997 Stock Option
and Dividend Equivalent Plan.
2000 Directors' Plan UGI Corporation 2000 Directors'
Stock Option Plan
Amended and Restated Directors' UGI Corporation Amended and
Equity Compensation Plan Restated Directors' Equity
Compensation Plan.
AmeriGas Partners or Partnership AmeriGas Partners, L.P., a master
limited partnership whose Common
Units trade on the New York Stock
Exchange.
AmeriGas Propane AmeriGas Propane, Inc., a
subsidiary of the Company and the
General Partner of AmeriGas
Partners, L.P.
Annual Meeting Annual Meeting of Shareholders of
UGI Corporation to be held on
February 26, 2002.
Arthur Andersen Arthur Andersen LLP.
Board or Board of Directors Board of Directors of UGI
Corporation.
Common Stock or Stock or Shares UGI Corporation Common Stock.
Common Unit A limited partnership interest in
AmeriGas Partners, L.P.
Distribution Equivalent A distribution equivalent is an
amount determined by multiplying
the number of restricted Common
Units by the per-unit cash
distribution, or the per-unit fair
market value of any non-cash
distribution, paid by the
Partnership on its Common Units on
a distribution payment date.
Dividend Equivalent A dividend equivalent is an amount
determined by multiplying the
number of either (1) restricted
Shares or (2) Shares underlying an
option granted with Dividend
Equivalents, by the per-share cash
dividend, or the per-share fair
market value of any non-cash
dividend, paid by the Company on
its Shares on a dividend payment
date.
29
Fiscal 2001 The Company's fiscal year ended
September 30, 2001.
Named Executives The Company's Chief Executive
Officer and each of the four other
most highly compensated executive
officers.
Proxies Lon R. Greenberg, James W.
Stratton and Stephen D. Ban, or
any one of them.
Retirement Plan Retirement Income Plan for
Employees of UGI Utilities, Inc.
Securities and Exchange Commission The United States Securities and
or SEC or Commission Exchange Commission.
Severance Plan UGI Corporation Severance Pay Plan
for Senior Executive Employees.
Shareholder A holder of UGI Common Stock.
UGI or Company UGI Corporation.
Unit A single unit granted under the
UGI Corporation Amended and
Restated Directors' Equity
Compensation Plan that represents
an interest equivalent to one
share of Common Stock.
30
[MAP APPEARS HERE]
Directions to The Desmond Great Valley Hotel
and Conference Center
Directions from Philadelphia. Take the Schuylkill Expressway (I-76) West. Follow
I-76 West to Route 202 South. Take Route 202 South to the Great Valley/Route 29
North Exit. At the end of the ramp, proceed through the light onto Liberty
Boulevard. The Desmond will be on the right.
Directions from South Jersey. Take I-95 South to Route 322 West. Take 322 West
to Route 1 South to Route 202 North. Take Route 202 North to Great Valley/Route
29 North Exit. Turn right onto Route 29 North. Turn right at second light onto
Liberty Boulevard. The Desmond will be on the left.
Directions from Philadelphia Airport. Take I-95 South to 476 North. Follow 476
North to the Schuylkill Expressway (I-76) West to Route 202 South. Take Route
202 South to the Great Valley/Route 29 North Exit. At the end of the ramp,
proceed through the light onto Liberty Boulevard. The Desmond will be on the
right.
Directions from Wilmington and Points South (Delaware and Maryland). Take I-95
North to Route 202 North to the Great Valley/Route 29 North Exit. Turn right
onto Route 29 North. Turn right at second light onto Liberty Boulevard. The
Desmond will be on the left.
Directions from New York and Points North. Take the New Jersey Turnpike South to
Exit 6, the Pennsylvania Turnpike extension. Follow the Turnpike West to Exit
24, Valley Forge. Take Route 202 South to the Great Valley/Route 29 North Exit.
At the end of the ramp, proceed through the light onto Liberty Boulevard. The
Desmond will be on the right.
Directions from Harrisburg and Points West. Take the Pennsylvania Turnpike East
to Exit 24, Valley Forge. Take Route 202 South to Great Valley/Route 29 North
Exit. At the end of the ramp, proceed through the light onto Liberty Boulevard.
The Desmond will be on the right.
Please mark
your votes as [X]
indicated in
this example
The Board of Directors recommends that you vote "FOR" Numbers 1 and 2.
1. ELECTION OF DIRECTORS
FOR WITHHOLD
all nominees AUTHORITY
(except as noted) (all nominees)
[ ] [ ]
01 J.W. Stratton, 02 S.D. Ban, 03 R.C. Gozon, 04 L.R. Greenberg
05 T.F. Donovan, 06 M.O. Schlanger, 07 A. Pol, 08 E.E. Jones
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list above.)
2. RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS
FOR AGAINST ABSTAIN
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign the full corporate name by duly
authorized officer.
Signature ___________________ Signature ___________________ Date _____________
FOLD AND DETACH HERE
UGI
CORPORATION
Dear Shareholder:
Enclosed are materials relating to UGI Corporation's February
26, 2002 Annual Meeting of Shareholders. The Notice of the
Meeting and Proxy Statement describe the formal business to be
transacted at the meeting.
Your vote is important to us. Please complete, sign and return the attached
proxy card in the accompanying postage-paid envelope whether or not you expect
to attend the meeting.
Brendan P. Bovaird
Corporate Secretary
------------------------------------------------------------------------------
UGI News & Reports You can obtain news and other
---------------------------- information about UGI and our
24 Hours a day -- Every day! majority-owned AmeriGas Partners, L.P.
1-800-UGI-9453 or conveniently by telephone or
www.ugicorp.com by the Internet.
- -------------------------------------------------------------------------------
PROXY PROXY
UGI CORPORATION
Proxy Solicited by the Board of Directors
The undersigned hereby appoints James W. Stratton, Lon R. Greenberg and Stephen
D. Ban, or any of them, with full power of substitution, as proxies to
represent and vote all shares of UGI Common Stock of the undersigned, including
any shares credited under the UGI Dividend Reinvestment Plan, at the Annual
Meeting of Shareholders of UGI Corporation to be held February 26, 2002, and
any adjournments of the Annual Meeting, as indicated on the reverse side of
this proxy card and, in their discretion, upon any other matters that arise at
the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED. ON
MATTERS FOR WHICH YOU DO NOT SPECIFY A CHOICE, YOUR SHARES WILL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS.
(Continued and to be signed on reverse side)
FOLD AND DETACH HERE
Please mark
your votes as [X]
indicated in
this example
The Board of Directors recommends that you vote "FOR" Numbers 1 and 2.
1. ELECTION OF DIRECTORS 01 J.W. Stratton, 02 S.D. Ban, 03 R.C. Gozon, 04 L.R. Greenberg
FOR all WITHHOLD 05 T.F. Donovan, 06 M.O. Schlanger, 07 A. Pol, 08 E.E. Jones
nominees AUTHORITY (INSTRUCTION: To withhold authority to vote for any individual
(except as noted) (all nominees) nominee, strike a line through the nominee's name in the list
[___] [___] above.)
2. RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS
FOR AGAINST ABSTAIN
[___] [___] [___]
_____
|
|
When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign the full corporate name by duly authorized officer.
Signature _____________________________________ Signature ________________________________________ Date ______________________
/\ FOLD AND DETACH HERE /\
UGI
CORPORATION
Dear Shareholder:
Enclosed are materials relating to UGI Corporation's February 26, 2002 Annual Meeting of Shareholders. The Notice of
the Meeting and Proxy Statement describe the formal business to be transacted at the meeting.
Your vote is important to us. Please complete, sign and return the attached proxy card in the accompanying postage-paid
envelope whether or not you expect to attend the meeting.
Brendan P. Bovaird
Corporate Secretary
------------------------------------------------------------------------------------------------
UGI News & Reports You can obtain news and other
---------------------------- information about UGI and our
24 Hours a day -- Every day! majority-owned AmeriGas Partners, L.P.
1-800-UGI-9453 or conveniently by telephone or
www.ugicorp.com by the Internet.
------------------------------------------------------------------------------------------------
PROXY PROXY
FIDELITY MANAGEMENT TRUST COMPANY
Upon return of this Proxy to you, you are instructed to cause all UGI
Corporation Common Stock in my AmeriGas Propane, Inc. Savings Plan Account to
be voted at the Annual Meeting of Shareholders of UGI Corporation, to be held
on February 26, 2002, and any adjournment thereof, as follows:
As indicated by me on the reverse side, but, if I make no indication as to a
particular matter, then as recommended by the Board of Directors on such
matter, and in their discretion, upon such other matters as may properly come
before the meeting. The Trustee will keep my vote completely confidential.
If the Trustee does not receive my executed Proxy by February 21, 2002, I
understand the Trustee will vote the shares represented by this Proxy in the
same proportion as it votes those shares for which it does receive a properly
executed Proxy.
(Continued and to be signed on reverse side)
/\ FOLD AND DETACH HERE /\
Please mark
your votes as [X]
indicated in
this example
The Board of Directors recommends that you vote "FOR" Numbers 1 and 2.
1. ELECTION OF DIRECTORS 01 J.W. Stratton, 02 S.D. Ban, 03 R.C. Gozon, 04 L.R. Greenberg
FOR all WITHHOLD 05 T.F. Donovan, 06 M.O. Schlanger, 07 A. Pol, 08 E.E. Jones
nominees AUTHORITY (INSTRUCTION: To withhold authority to vote for any individual
(except as noted) (all nominees) nominee, strike a line through the nominee's name in the list
[___] [___] above.)
2. RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS
FOR AGAINST ABSTAIN
[___] [___] [___]
_____
|
|
When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign the full corporate name by duly authorized officer.
Signature _____________________________________ Signature ________________________________________ Date ______________________
/\ FOLD AND DETACH HERE /\
UGI
CORPORATION
Dear Shareholder:
Enclosed are materials relating to UGI Corporation's February 26, 2002 Annual Meeting of Shareholders. The Notice of
the Meeting and Proxy Statement describe the formal business to be transacted at the meeting.
Your vote is important to us. Please complete, sign and return the attached proxy card in the accompanying postage-paid
envelope whether or not you expect to attend the meeting.
Brendan P. Bovaird
Corporate Secretary
------------------------------------------------------------------------------------------------
UGI News & Reports You can obtain news and other
---------------------------- information about UGI and our
24 Hours a day -- Every day! majority-owned AmeriGas Partners, L.P.
1-800-UGI-9453 or conveniently by telephone or
www.ugicorp.com by the Internet.
------------------------------------------------------------------------------------------------
PROXY PROXY
FIDELITY MANAGEMENT TRUST COMPANY
Upon return of this Proxy to you, you are instructed to cause all UGI
Corporation Common Stock in my UGI Utilities, Inc. Savings Plan Account to be
voted at the Annual Meeting of Shareholders of UGI Corporation, to be held on
February 26, 2002, and any adjournment thereof, as follows:
As indicated by me on the reverse side, but, if I make no indication as to a
particular matter, then as recommended by the Board of Directors on such
matter, and in their discretion, upon such other matters as may properly come
before the meeting. The Trustee will keep my vote completely confidential.
If the Trustee does not receive my executed Proxy by February 21, 2002, I
understand the Trustee will vote the shares represented by this Proxy in the
same proportion as it votes those shares for which it does receive a properly
executed Proxy.
(Continued and to be signed on reverse side)
/\ FOLD AND DETACH HERE /\