[LOGO]
300 Erie Boulevard West
Syracuse, New York 13202
March 31, 2000
Dear Shareholder:
I am pleased to invite you to the Annual Meeting of Shareholders of
Niagara Mohawk Holdings, Inc. scheduled to be held on Tuesday, May 16, 2000, at
10:30 a.m. (EDT), in Syracuse, New York.
- - This year you will be asked to elect four directors to Class III. You will
also be asked to vote on a shareholder proposal that the Company endorse the
CERES Principles.
- - At the meeting, we will present a report on Niagara Mohawk's past
performance and on other matters of current interest to our shareholders.
- - If you plan to attend the meeting, please check the appropriate box on
your proxy card and detach the admission card to present at the meeting
registration tables.
- - Shareholders of record may vote their shares by using the internet or the
telephone. Instructions for using these convenient services are set forth on
the enclosed proxy card. Of course, you may also vote your shares by completing
and signing the enclosed proxy card and mailing it in the enclosed postage-paid
envelope.
If you require special assistance at the meeting because of a disability,
please contact the Office of the Secretary, Syracuse, N.Y. 13202, at (315) 428-
6943.
Sincerely,
William E. Davis
Chairman of the Board and
Chief Executive Office
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NIAGARA MOHAWK HOLDINGS, INC.
300 Erie Boulevard West
Syracuse, New York 13202
DATE & TIME: Tuesday, May 16, 2000, at 10:30 A.M. (EDT)
PLACE: The Onondaga County Convention Center
800 South State Street
Syracuse, New York 13202-3017
ITEMS OF BUSINESS:
(1) Election of Lawrence Burkhardt, III, John H. Dalton, William J.
Donlon, and Stephen B. Schwartz to serve in Class III for a 3-year term
expiring at the 2003 Annual Meeting; and
(2) To consider and act upon a shareholder proposal that the Company
endorse the CERES Principles; and
(3) To transact other business that may properly come before the
meeting or any adjournment(s) or postponement(s) of the meeting.
RECORD DATE: The Board of Directors has fixed the close of business on
March 20, 2000, as the record date for the purpose of determining shareholders
who are entitled to notice and to vote at the meeting.
PROXY VOTING: Shareholders of record may vote by mail, telephone or on-line
via the internet.
Your vote is important to us. If you do attend and vote at the Annual
Meeting, your vote in person will supersede any earlier vote by proxy.
By Order of the Board of Directors
Kapua A. Rice
Secretary
March 31, 2000
TABLE OF CONTENTS
Page
About the Meeting
Who can attend the meeting?................... 2
Who can speak at the meeting?................. 2
What are shareholders being asked to vote on?. 2
Voting Procedures
How many shares are outstanding and entitled to
vote?........................................ 3
What constitutes a quorum?..................... 3
Who is eligible to vote?....................... 3
How do shareholders vote?...................... 3
How do shareholders vote if their shares are
held in the name of a broker?................. 3
Can shareholders change their vote?............ 3
How many votes are required to approve each
item?......................................... 4
Are votes confidential?........................ 4
Proposal 1: Nomination and Election of Directors
Who is being nominated for election to the
Board of Directors?........................... 4
Did the Company receive any director
nominations from shareholders?................. 5
What is the business background for each of
the nominees and directors?.................... 5
- -Nominees for Class III Directors whose terms
expire in 2003................................ 5
- -Class I Directors whose terms expire in 2001... 6
- -Class II Directors whose terms expire in 2002.. 7
Board Meetings-Committees of the Board
How often did the Board meet in 1999?........... 8
What committees has the Board established and
how often did they meet?....................... 8
What are the primary functions of the Audit
Committee and the Compensation and Succession
Committee?..................................... 9
Director Compensation
How are directors compensated?................. 10
Did the Company enter into any transactions
with directors?............................... 10
What did directors receive in the form of
health and life insurance benefits?........... 10
Stock Ownership Information
Who are the largest owners of the Company's
stock?........................................ 11
How much stock do the Company's directors and
executive officers own?....................... 12
Were there any late filings under Section 16(a)
Beneficial Ownership Reporting Compliance?.... 13
Board of Directors' Compensation and Succession
Committee Report on Executive Compensation
What is the Company's philosophy on executive
officer compensation?......................... 13
How is the Company's Chief Executive Officer
compensated?.................................. 15
Executive Compensation
Summary Compensation Table..................... 16
Aggregated Option/SAR Exercises in Last Fiscal
Year and Fiscal Year-End Option/SAR Values.... 18
Performance Graph.............................. 18
Retirement Benefits and Employment Agreements
Niagara Mohawk Pension Plan.................... 19
Supplemental Executive Retirement Plan......... 19
Annual Retirement Allowance.................... 20
Employment Agreements.......................... 20
Proposal 2: Shareholder Proposal
Statement of Shareholder....................... 22
Board of Directors' Response to the
Shareholder Proposal.......................... 23
Other Information
What is the deadline for submitting a proposal
for next year's annual meeting?............... 24
What does the Company pay for indemnification
insurance?.................................... 24
How much will it cost the Company to solicit
votes?........................................ 25
Who is the Company's independent accountant?... 25
Who do I contact to receive Quarterly Reports?. 25
NIAGARA MOHAWK HOLDINGS, INC.
300 Erie Boulevard West
Syracuse, New York 13202
PROXY STATEMENT
This proxy statement and the accompanying proxy card are being furnished in
connection with the solicitation by the Board of Directors (the "Board of
Directors" or the "Board") of Niagara Mohawk Holdings, Inc. ("NM Holdings" or
the "Company") for use at its 2000 Annual Meeting of Shareholders on Tuesday,
May 16, 2000, at 10:30 a.m. (EDT) and at any adjournment(s) or postponement(s).
These proxy materials, together with the 1999 Annual Report of Niagara Mohawk
Holdings, Inc. are first being mailed to shareholders on or about March 31,
2000.
About the Meeting
Who can attend the meeting?
Attendance will be limited to:
- - shareholders of record;
- - beneficial owners of common stock entitled to vote at the meeting having
evidence of ownership;
- -the authorized representative of an absent shareholder; and
- -invited guests of management.
Any person who owns shares of NM Holdings in the name of a bank, broker or
other holder of record must show proof of ownership. Proof of ownership may
be in the form of a letter or a recent statement from the bank or broker
showing ownership of NM Holdings' common stock.
Any person claiming to be an authorized representative of a shareholder must,
upon request, produce written evidence of the authorization.
Cameras, recording devices and other electronic devices will not be permitted
at the meeting.
Who can speak at the meeting?
In order to assure a fair and orderly meeting and to accommodate as many
shareholders as possible who may wish to speak at the meeting, management will
permit only shareholders or their authorized representatives to address the
meeting.
What are shareholders being asked to vote on?
- -The election of Lawrence Burkhardt, III, John H. Dalton, William J.
Donlon, and Stephen B. Schwartz to serve as directors in Class III for a 3-year
term expiring at the 2003 Annual Meeting of Shareholders.
- -To consider and act upon a shareholder proposal advocating the endorsement
by the Company of the CERES Principles.
- -Management does not know of any matters to be presented for action at the
annual meeting other than the election of directors.
Voting Procedures
How many shares are outstanding and entitled to vote?
At the close of business on the record date, there were 177,364,863 shares of
NM Holdings' common stock outstanding and entitled to vote at the annual
meeting. Each share of common stock is entitled to one vote.
What constitutes a quorum?
- -A majority of the shares entitled to vote at the meeting shall constitute
a quorum. Abstentions and broker non-votes will be counted in the number of
shares present, in person or by proxy, for purposes of determining a quorum.
- -A broker non-vote occurs when a broker does not have discretionary voting
power to vote on a specific matter and has not received instructions from the
beneficial owner.
Who is eligible to vote?
Only shareholders of common stock whose names appeared on the books of NM
Holdings on the record date, March 20, 2000, will be entitled to vote at the
meeting and at any adjournment thereof.
How do shareholders vote?
Whether or not you plan to attend, please take the time to vote. Shareholders
may vote by mail, telephone or on-line via the internet. The telephone and
internet procedures authenticate shareholders by use of a control number
and permit confirmation that the vote has been properly recorded. Also, please
be advised that you do not need to return your proxy card if you vote by
telephone or via the internet.
- -BY MAIL: Please mark your vote, sign, date and promptly return your proxy
card in the enclosed postage-paid envelope.
- -BY TELEPHONE: Please call the toll-free telephone number on your proxy
card (800-250-9081). Once connected, you will be prompted to record and confirm
your vote. Telephone voting is available 24 hours a day, through Monday,
May 15, 2000, 5:00 P.M. (EDT).
- -VIA INTERNET: You may vote on-line by using the following internet
address: http://www.votefast.com. Specific instructions will be available,
allowing you to record and confirm your vote. Internet voting is available 24
hours a day, through Monday, May 15, 2000, 5:00 P.M. (EDT).
How do shareholders vote if their shares are held in the name of a broker?
If your shares are held by a broker, often referred to as "in street name," you
will receive a proxy card from your broker seeking instruction as to how your
shares should be voted. If you do not issue instructions to your broker, your
broker may vote your shares at its discretion on your behalf.
Can shareholders change their vote?
A shareholder who has executed and returned a proxy may revoke it at any time
before it is voted by:
- -submitting a properly signed proxy with a later date or voting again at a
later time by telephone or on the internet;
- -sending a written statement to that effect to the Secretary of NM
Holdings; or
- -voting in person at the annual meeting.
How many votes are required to approve each item?
- -Election of Directors. The affirmative vote of a plurality of votes cast
at the meeting is required for the election of directors.
- -Shareholder Proposal. The affirmative vote of a majority of votes cast is
necessary to approve the shareholder proposal advocating the endorsement by the
Company of the CERES Principles. Brokers who have not received any instructions
from their clients do not have the authority to vote on this proposal.
Proxies will be voted in accordance with the shareholders' instructions. If no
instructions are given, proxies will be voted FOR the election of the nominees
for directors and AGAINST the shareholder proposal.
- -Other Matters. If other matters are properly brought before the meeting or
at any adjournment, the persons named on the enclosed proxy card intend to vote
the shares represented by them in accordance with their best judgment.
Abstentions and broker non-votes will not be considered as votes cast with
respect to a particular matter.
Are votes confidential?
Under the By-Laws, tabulation of proxies and the votes cast at the meeting is
conducted by an independent agent and certified by independent inspectors of
election. Any information which would identify the vote of any shareholder is
held permanently confidential and will not be disclosed to the Company, except
as may be necessary to meet any legal requirements.
Proposal 1: Nomination and Election of Directors
The Board of Directors is divided into three classes, composed of as nearly
equal a number of directors as is possible, with staggered terms of office so
that one class of the directors must be elected at each annual meeting. In
order to comply with this requirement, William J. Donlon, who previously
served in Class II, is being moved to Class III for this election.
Presently, the Board of Directors consists of fifteen directors. Messrs.
Douglas M. Costle and Donald B. Riefler, whose current terms as directors expire
at the 2000 Annual Meeting of Shareholders, will not be standing for
re-election. Mr. Costle is retiring for health reasons and Mr. Riefler has
reached the mandatory retirement age for directors. Their contributions were
many and are gratefully appreciated. The Company will have thirteen directors
following the 2000 Annual Meeting.
Who is being nominated for election to the Board of Directors?
This year, you are being asked to vote for the following nominees to serve as
directors in Class III until the 2003 Annual Meeting of Shareholders. Mr.
Dalton, who joined the Board on June 15, 1999, is being proposed for election
by the shareholders to the Board of Directors for the first time.
Lawrence Burkhardt, III
John H. Dalton
William J. Donlon
Stephen B. Schwartz
All nominees are currently directors of the Company and have consented to serve
a 3-year term. Each nominee elected as a director will continue in office until
his term expires or until his successor has been elected.
Directors will be elected by a plurality of the votes cast at the meeting.
Did the Company receive any director nominations from shareholders?
The Company has not received any notices of proposed shareholder nominations
for the 2000 Annual Meeting. In accordance with the Company By-Laws, any
nominations for director must have been received by the Secretary between 90-120
days before the meeting.
What is the business background for each of the nominees and directors?
The principal occupation, age as of December 31, 1999, and certain other
information about each of the nominees and other directors whose terms of
office continue after the Annual Meeting is as follows.
Each director of the Company, other than William J. Donlon who previously
served in Class II, is a member of the class of directors in which such
director previously served for Niagara Mohawk Power Corporation ("NMPC"), a
subsidiary of NM Holdings, and the length of term as a director reflects such
director's service with NMPC.
NOMINEES FOR CLASS III DIRECTORS WHOSE TERMS EXPIRE IN 2003
LAWRENCE BURKHARDT, III
- -Retired Rear Admiral, United States Navy
- -Director since 1988
- -Chair of Nuclear Oversight Committee of the Board
Mr. Burkhardt, age 67, independent consultant to the nuclear industry since
1990. Prior to his retirement in 1990, Mr. Burkhardt was employed by NMPC and
served as Executive Vice President of Nuclear Operations.
JOHN H. DALTON
- -Chairman and Chief Executive Officer, Metal Technology, Inc.
- -Director since 1999
- -Member of Corporate Public Policy & Environmental Affairs and Nuclear
Oversight Committees of the Board
Mr. Dalton, age 58, Chairman and Chief Executive Officer of Metal Technology,
Inc., owner of a patented new electrolytic process for cleaning mill scale and
other impurities from steel, located in Washington, DC. Mr. Dalton was elected
to his present position in 1999. From 1993-1998, he served as Secretary of the
Navy. Director of Cantor Exchange, Fresh Del Monte Produce, Inc., Metal
Technology, Inc. and TransTechnology Corporation.
WILLIAM J. DONLON
- -Former Chairman of the Board and Chief Executive Officer of NMPC
- -Director since 1980
Mr. Donlon, age 69, retired in 1993 as Chairman of the Board and Chief
Executive Officer of NMPC with 45 years of service as an active employee.
Director of the Directors' Advisory Council-Syracuse Division for M&T Bank.
STEPHEN B. SCHWARTZ
- -Retired Senior Vice President, International Business Machines Corporation
- -Director since 1992
- -Member of Executive, Compensation and Succession (Chair) and Finance
Committees of the Board
Mr. Schwartz, age 65, retired as Senior Vice President of International
Business Machines Corporation in 1992, after working at IBM for almost 35 years.
Director of MFRI, Inc.
CLASS I DIRECTORS WHOSE TERMS EXPIRE IN 2001
SALVATORE H. ALFIERO
- -Chairman and Chief Executive Officer, Mark IV Industries, Inc.
- -Director since 1998
- -Member of Executive, Corporate Public Policy & Environmental Affairs and
Finance Committees of the Board
Mr. Alfiero, age 62, Chairman and Chief Executive Officer, Mark IV Industries,
Inc., a manufacturer of engineered systems and components for power
transmission, fluid power and transfer, and filtration applications, located in
Amherst, NY. Mr. Alfiero founded Mark IV Industries, Inc. in 1969 and has been
Chairman and Chief Executive Officer since its inception. Director of HSBC USA;
HSBC Bank USA Inc. (formerly Marine Midland Bank); Phoenix Home Life Mutual
Insurance Company; and Southwire Company.
ALBERT J. BUDNEY, JR.
- -President of the Company
- -Director since 1995
Mr. Budney, age 52, was elected President of NM Holdings in April 1998. From
1995 to March 1999, he served as President of NMPC. Mr. Budney was previously
employed by UtiliCorp United, Inc., an energy services company, as Managing
Vice President of the UtiliCorp Power Services Group and as President of the
Missouri Public Service Division. Mr. Budney joined UtiliCorp United, Inc., in
1993. Director of Opinac North America, Inc. ("Opinac NA"); Niagara Mohawk
Energy, Inc. ("NM Energy"); Canadian Niagara Power Company, Limited ("CNP");
and Utilities Mutual Insurance Company. Mr. Budney also serves as a director of
two companies in which Opinac NA has made significant investments: Telergy,
Inc., a regional fiber-optic telecommunications provider, and Evonyx, Inc., a
manufacturer of alternative energy technology products. Mr. Budney is also
President and Chief Executive Officer of Opinac NA and President of Opinac
Energy Corporation ("Opinac"). Opinac NA is a wholly-owned subsidiary of the
Company and holds 100 percent of NM Energy and, through its subsidiary, Opinac,
a 50 percent interest in CNP.
DR. BONNIE G. HILL
- -President and Chief Executive Officer of The Times Mirror Foundation; Vice
President of The Times Mirror Company and Sr. Vice President-Communications
and Public Affairs of The Los Angeles Times
- -Director since 1991
- -Member of Audit, Corporate Public Policy & Environmental Affairs (Acting
Chair) and Finance Committees of the Board
Dr. Hill, age 58, President and Chief Executive Officer of The Times Mirror
Foundation, a non-profit institution; Vice President of The Times Mirror
Company, a news and information company, and Sr. Vice President-Communications
and Public Affairs of The Los Angeles Times, located in Los Angeles, CA. From
1992-1996, Dr. Hill served as Dean and Professor of Commerce of the McIntire
School of Commerce at the University of Virginia. Director of AK Steel
Corporation; Hershey Foods Corporation; and The Home Depot, Inc.
CLARK A. JOHNSON
- -Former Chairman, Pier 1 Imports, Inc.
- -Director since 1998
- -Member of Executive, Compensation and Succession and Finance Committees of
the Board
Mr. Johnson, age 68, retired on February 28, 1999 as Chairman of Pier 1
Imports, Inc., a specialty retailer of imported home furnishings, gifts and
related items, located in Fort Worth, TX. Mr. Johnson joined Pier 1 Imports,
Inc. in 1985 as President and Chief Executive Officer and was elected Chairman
and Chief Executive Officer in 1987, serving in that capacity until elected
Chairman in 1998. Director of Albertson's Inc.; InterTAN Inc.; Metromedia
International Group; and PSSI World Medical.
HENRY A. PANASCI, JR.
- -Chairman of Cygnus Management Group, LLC
- -Director since 1988
- -Member of Compensation and Succession, Corporate Public Policy &
Environmental Affairs and Finance Committees of the Board
Mr. Panasci, age 71, Chairman of Cygnus Management Group, LLC, a consulting
firm specializing in venture capital and private investments located in
Syracuse, NY. Mr. Panasci retired in 1996 as Chairman of the Board and Chief
Executive Officer of Fay's Incorporated, a drug store chain. Mr. Panasci
co-founded Fay's Drug Co., Inc. with his father in 1958. Director of National
Association of Chain Drug Stores.
CLASS II DIRECTORS WHOSE TERMS EXPIRE IN 2002
WILLIAM F. ALLYN
- -Chairman and Chief Executive Officer of Welch Allyn Ventures LLC
- -Director since 1988
- -Member of Audit, Compensation and Succession, and Nuclear Oversight
Committees of the Board
Mr. Allyn, age 64, Chairman and Chief Executive Officer of Welch Allyn Ventures
LLC, Skaneateles Falls, NY, a holding company of three separate businesses:
Welch Allyn, Inc., a manufacturer of medical, dental and lighting products;
Welch Allyn Data Collection Inc., which makes bar code readers; and Everest VIT
Inc., which makes remote visual inspection devices for boilers, jet engines and
nuclear reactors. Mr. Allyn was elected to his present position in 1999,
effective January 2000. From 1980-1999, he served as President and Chief
Executive Officer of Welch Allyn, Inc. Director of M&T Corporation; Oneida
Limited; Perfex Corporation; and Welch Allyn, Inc.
WILLIAM E. DAVIS
- -Chairman of the Board and Chief Executive Officer of the Company
- -Director since 1992
- -Chair of Executive Committee of the Board
Mr. Davis, age 57, was elected Chairman of the Board and Chief Executive
Officer of NM Holdings in April 1998 and of NMPC in 1993. Mr. Davis joined NMPC
in 1990 and was elected Senior Vice President in April 1992, serving in that
capacity until elected Vice-Chairman of the Board of NMPC in November 1992.
Director of Opinac NA; NM Energy; NMPC; CNP; and Utilities Mutual Insurance
Company. Mr. Davis is also the Chairman of the Board of NM Energy, Opinac NA and
NMPC and holds the position of Secretary, Utilities Mutual Insurance Company.
ANTHONY H. GIOIA
- -Chairman and Chief Executive Officer of Gioia Management, Inc.
- -Director since 1996
- -Member of Compensation and Succession and Nuclear Oversight Committees of
the Board
Mr. Gioia, age 58, Chairman and Chief Executive Officer of Gioia Management,
Inc., a holding company for several companies, including three packaging
companies located in Buffalo and Lockport, NY. Mr. Gioia has held his present
position since 1987. Director of Greater Buffalo Savings Bank and Kaleida
Health Systems. In 1999, a wholly-owned subsidiary of Gioia Management, Inc.,
of which subsidiary Mr. Gioia is Chair, filed for protection under Chapter 11 of
the federal bankruptcy code.
DR. PATTI McGILL PETERSON
- -Executive Director of the Council for International Exchange of Scholars
and Vice President of the Institute of International Education
- -Director since 1988
- -Member of Executive, Audit (Chair) and Corporate Public Policy &
Environmental Affairs Committees of the Board
Dr. Peterson, age 56, Executive Director of the Council for International
Exchange of Scholars, Washington, DC, and Vice President of the Institute of
International Education, New York, NY, affiliated non-profit institutions which
develop partnerships between the public and private sectors in education,
business, science and engineering, the environment and the arts in 170
nations. From 1996 to 1997, Dr. Peterson was a Senior Fellow of the Cornell
Institute for Public Affairs, Cornell University, Ithaca, NY. Dr. Peterson also
served as President of St. Lawrence University from 1987-1996, and is President
Emerita. Independent Trustee of John Hancock Mutual Funds.
Board Meetings-Committees of the Board
How often did the Board meet in 1999?
During 1999, the Board of Directors held twelve meetings. Each director, except
for Mr. Douglas M. Costle, attended more than 75 percent of the meetings of the
Board and Board Committees on which he or she served in 1999.
What committees has the Board established and how often did they meet?
The Board Committees consist of an Executive Committee, Audit Committee,
Committee on Corporate Public Policy & Environmental Affairs, Compensation and
Succession Committee, Finance Committee, and Nuclear Oversight Committee. The
Compensation and Succession Committee acts as a nominating committee in
recommending candidates for Board membership.
BOARD COMMITTEE MEMBERS
Corp. Public Compen- Nuclear
Execu- Policy & Env. Sation & Over-
Name tive Audit Affairs Succession Finance sight
S. H. Alfiero X X X
W. F. Allyn X X X
A. J. Budney, Jr.
L. Burkhardt, III X*
D. M. Costle X X X* X
J. H. Dalton X X
W. E. Davis X*
W. J. Donlon
A. H. Gioia X X
B. G. Hill X X** X
C. A. Johnson X X X
H. A. Panasci,Jr. X X X
P. M. Peterson X X* X
D. B. Riefler X X X* X
S. B. Schwartz X X* X
No. of Meetings
in 1999 0 9 5 9 8 9
* Chair
**Acting Chair
With the exception of the Executive Committee, membership on the Board
Committees is limited to non-employee directors.
What are the primary functions of the Audit Committee and the Compensation and
Succession Committee?
Audit Committee
The primary function of the Audit Committee is to assist the Board of Directors
in its oversight of the Company's (i) accounting and financial reporting
principles and policies, (ii) internal accounting controls and procedures,
(iii) financial statements and the independent audit thereof, (iv) selection,
evaluation and, where deemed appropriate, replacement of the independent
auditor, (v) evaluation of the independence of the independent auditor, and
(vi) ethics program.
The membership of the Committee consists of only directors of the Company
Compensation and Succession Committee
The primary function of the Compensation and Succession Committee is to ensure
that the compensation and benefits available to the Board of Directors, senior
management and other Company officers and employees enables the Company to
attract and retain qualified individuals.
The Compensation and Succession Committee also conducts an annual evaluation of
the Company's Chief Executive Officer and makes recommendations where
appropriate concerning annual performance evaluations for senior officers;
senior officer succession plans; officer and director candidates; compensation
and benefit plans; Board and officer compensation; Board effectiveness;
diversity strategies and plans; and performance of the Company's actuarial
advisor toward funding the Company's Pension Plan, Post-Retirement Benefits
Other Than Pension Plan, and Supplemental Executive Retirement Plan.
The membership of the Committee consists of only directors of the Company who
are not, and have not been, officers of the Company.
Director Compensation
How are directors compensated?
Only non-employee directors are compensated for their services. The breakdown
of their compensation is as follows:
Annual Cash Retainer Fees
- -$25,000 annual retainer for serving on the Board of Directors.
- -$4,000 additional annual retainer if serving as a chair of a Board
Committee.
Meeting Fees
- -$1,000 for each Board meeting attended.
- -$1,000 for each Committee meeting attended.
Directors are reimbursed for their travel, lodging and related expenses.
Outside Director Deferred Stock Unit Plan
In 1996, the Board of Directors adopted an Outside Director Deferred Stock Unit
Plan.
Each outside director is credited with deferred stock units ("DSUs") on an
annual basis equal in value to $15,000 ($17,000 for Committee Chairs).
Accordingly, all outside directors were credited with 1,034 DSUs (1,172 for
Committee Chairs) based on the average of the opening and closing price of a
share of common stock on May 19, 1999 ($14.50). The beneficial stock ownership
table on page 12, shows the total number of DSUs credited to each of the
outside directors under this plan as of March 17, 2000.
When a director ceases to be an outside director, the amount of DSUs credited
to him or her is paid in a lump sum or in five equal annual installments. The
first DSU installment payment would be made shortly after the director's service
ends and the other installments would be paid on the first through fourth
anniversaries of such date, based on the prevailing stock price at that time.
Did the Company enter into any transactions with directors?
Lawrence Burkhardt, III, received a consulting fee of $18,000 during 1999.
What did directors receive in the form of health and life insurance benefits?
The Company provides certain health and life insurance benefits to directors
who are not employees of the Company.
In 1999, the Board of Directors discontinued health care benefits for outside
directors who first join the Board after October 28, 1999. Based on the fact
that our existing directors may have relied on the existence of this coverage,
they were grandfathered. Outside Directors who elected coverage under the
Company's health care plans contribute a portion of the monthly costs
associated with these plans.
During 1999, the following health and life insurance benefits were received by
the following directors: Mr. Alfiero ($637), Mr. Burkhardt ($9,877), Mr. Costle
($10,947), Mr. Dalton ($2,129), Mr. Donlon ($333), Mr. Gioia ($11,867), Dr.
Hill ($8,350), Mr. Panasci ($12), Dr. Peterson ($4,289), Mr. Riefler
($10,235) and Mr. Schwartz ($637).
Stock Ownership Information
Who are the largest owners of the Company's stock?
The following table indicates the number of shares of common stock owned by
persons known to the Company to own beneficially more than 5% of the
outstanding Common Stock as of December 31, 1999.
Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
Common Stock Tiger Management L.L.C. 11,149,400(a) 6.0%
101 Park Avenue
New York, NY 10178
Common Stock FMR Corp. 9,588,543(b) 5.119%
82 Devonshire Street
Boston, Massachusetts 02109
Common Stock T. Rowe Price Associates, 9,734,999(c) 5.1%
Inc.
100 E. Pratt Street
Baltimore, Maryland 21202
(a) Pursuant to Amendment No. 1 to Schedule 13G, dated February 14, 2000,
Julian H. Robertson, Jr. is the ultimate controlling person of Tiger Management
L.L.C. and Tiger Performance L.L.C.
(b) Pursuant to Schedule 13G, dated February 14, 2000, FMR Corp. has sole
power to vote 930,743 shares and the sole power to dispose or to direct the
disposition of 9,588,543 shares.
(c) Pursuant to Schedule 13G, dated February 14, 2000, these securities are
owned by various individual and institutional investors which T. Rowe Price
Associates, Inc. ("Price Associates") serves as investment adviser with power
to direct investments and/or sole power to vote the securities. For purposes
of the reporting requirements of the Securities Exchange Act of 1934, Price
Associates is deemed to be a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the beneficial owner of
such securities.
Approximately 90% or 159,571,970 shares of the Company's common stock
outstanding as of December 31, 1999, are held by shareholders who elected to
hold their shares not in their own names, but in the names of banking
or financial intermediaries. These shares are registered in the nominee name of
The Depository Trust Company, Cede & Co.
How much stock do the Company's directors and executive officers own?
The following table indicates the number of shares of the Company's common
stock beneficially owned as of March 17, 2000, by each director of the Company,
each of the executive officers named in the Summary Compensation Table below and
the current directors and executive officers of the Company and NMPC as a group.
The table also lists the number of stock units credited to directors, named
executive officers and the directors and executive officers of the Company and
NMPC as a group pursuant to the Company's compensation and benefit programs as
of March 17, 2000. No voting rights are associated with stock units.
Amount and
Nature of
Title of Name of Beneficial Percent Stock Units
Class Beneficial Owner Ownership * Of Class Held
Common Stock
Directors:
Salvatore H. Alfiero 5,000 ** 2,045(6)
William F. Allyn 1,500 ** 11,203(6)
Albert J. Budney, Jr. 13,653(1) ** 53,500(7)
Lawrence Burkhardt, III 452 ** 5,090(6)
Douglas M. Costle 1,000 ** 11,868(6)
John H. Dalton 2,000 ** 972(6)
William E. Davis 49,475(2) ** 120,000(7)
William J. Donlon 2,010 ** 682(6)
Anthony H. Gioia 500 ** 4,356(6)
Bonnie G. Hill 1,000 ** 10,260(6)
Clark A. Johnson 15,000 ** 2,045(6)
Henry A. Panasci, Jr. 2,500 ** 4,356(6)
Patti McGill Peterson 1,500 ** 13,516(6)
Donald B. Riefler 1,000 ** 28,194(6)
Stephen B. Schwartz 500 ** 13,521(6)
Named Executives:
Darlene D. Kerr 28,525(3) ** 39,100(7)
John H. Mueller 791 ** 31,600(7)
David J. Arrington 14,720(4) ** 32,000(7)
All Directors and
Executive Officers (25)
as a group ... 204,658(5) ** 520,170
* Based on information furnished to the Company by the Directors and
Executive Officers. Includes shares of common stock credited under the
Employees' Savings Fund Plan as of March 17, 2000.
** Less than one percent.
(1) Includes presently exercisable options for 10,000 shares of common stock.
(2) Includes presently exercisable options for 42,625 shares of common stock.
(3) Includes presently exercisable options for 9,000 shares of common stock.
(4) Includes presently exercisable options for 12,000 shares of common stock.
(5) Includes presently exercisable options for 106,375 shares of common stock.
(6) Represents deferred stock units granted pursuant to the Outside Director
Deferred Stock Unit Plan. For additional information regarding deferred stock
units, refer to page 10 ("Director Compensation").
(7) Represents stock units granted in 1998 and 2000 pursuant to the Long-Term
Incentive Plan and CEO Special Award Plan. For additional information regarding
the Long-Term Incentive Plan refer to page 14.
Were there any late filings under Section 16(a) Beneficial Ownership Reporting
Compliance?
The rules of the SEC require that the Company disclose late filings of reports
of ownership and changes in ownership of the Company's equity securities by its
directors, executive officers and any other person subject to Section 16 of the
Securities and Exchange Act of 1934. To the best of the Company's knowledge,
there were no late filings during 1999.
Board of Directors' Compensation and Succession Committee
Report on Executive Compensation
The Compensation and Succession Committee of the Board of Directors (the
"Committee") is comprised entirely of non-employee directors. The Committee has
responsibility for recommending officer salaries and for administration of the
Company's officer incentive compensation plans as described in this report. The
Committee makes recommendations to the Board of Directors which makes final
officer compensation determinations.
This Committee report describes the Company's executive officer compensation
policies, the components of the compensation program, and the manner in which
1999 compensation determinations were made for the Company's Chairman of the
Board and Chief Executive Officer, Mr. William E. Davis.
What is the Company's philosophy on executive officer compensation?
The 1999 Executive Officer Compensation Program was comprised of base salary,
annual incentive compensation, and grants of stock units and stock appreciation
rights ("SARs") made pursuant to the Long-Term Incentive Plan ("LTIP") adopted
by the Board of Directors on September 25, 1996, as described later in this
report.
Base Salary
The Committee seeks to ensure that salaries of the Company's officers,
including executive officers, remain competitive with levels paid to individuals
in comparable positions among other U.S. electric and gas utilities with
comparable revenues (collectively referred to as the "Comparator Utilities").
The Committee believes that competitive salaries provide the foundation of the
Company's officer compensation program and are essential for the Company to
attract and retain qualified officers, especially in light of the increasing
competition within the industry. Each officer position has been assigned to a
competitive salary range. The Committee intends to administer salaries within
the 25th to 75th percentiles of practice with respect to those Comparator
Utilities. The 1999 average salary of the five named executive officers fell
below 50th percentile competitive levels.
Annual Officer Incentive Compensation Plan ("OICP")
On December 13, 1990 the Board of Directors adopted the Company's OICP for
officers which is structured and administered so that a significant component
of each officer's annual cash compensation must be earned on the basis of the
Company's and the officer's annual performance. Maximum incentive award
opportunities for 1999 were set by the Committee at 40% of salary for Mr. Davis
and at 25% to 40% for all other officers. OICP award opportunities are
intended to position officer annual compensation (salary + OICP awards) within
the 25th to 75th percentile of Comparator Utilities practice depending on
Company financial performance, operating performance, and the performance of
the Company's common stock over the course of the year.
For the 1999 plan year, awards were based on the degree to which certain pre-
established financial and operating objectives were met or exceeded. The
objectives for the 1999 plan year included economic value added (EVA(r) is a
registered trademark of Stern Stewart & Co.), business unit financial
objectives and business/support group operating objectives. These objectives
were weighted differently for each business/support unit, based on the
applicability of such objectives to the business or support unit. In addition,
starting in 1999, the OICP was modified so that awards would also vary based on
the performance of the Company's common stock during the course of the plan
year.
Awards for the named executive officers averaged 16.6% of their 1999 salaries.
Their average annual compensation (salary + OICP awards) fell below the 50th
percentile of Comparator Utilities practice. Refer to the Summary Compensation
Table on page 16 for specific amounts paid to named executive officers under
the 1999 OICP. These awards were paid on February 25, 2000.
Long-Term Incentive Plan
On September 25, 1996 the Board of Directors adopted the LTIP to promote the
success and enhance the value of the Company through the retention and
continued motivation of executive officers. Through this plan the Board of
Directors seeks to focus efforts on the execution of business strategies
directed toward improving financial returns to shareholders. The LTIP provides a
continuous program of long-term stock incentives to executive officers through
periodic grants of stock units and SARs. Dividend equivalents on stock unit
grants, if any, are credited on grants and are paid when the related stock units
are paid.
In 1999, no LTIP grants were made to named executive officers because the Board
of Directors on August 25, 1998 approved the accelerated granting of LTIP stock
units and SARs that would have normally been granted at the start of 1999 (for
the 3-year period 1999-2001) and at the start of 2000 (for the 3-year period
2000-2002). These LTIP grants were accelerated to provide additional motivation
and incentive to officers and to increase their retention value.
The stock units that would have normally been granted at the start of 1999 will
not vest until the end of 2001. The accelerated 1999 SAR grants do not vest and
become exercisable until January 2, 2002 and expire on December 31, 2008.
Similarly, the stock units that would have normally been granted at the start
of 2000 will not vest until the end of 2002. The accelerated 2000 SAR grants
do not vest and become exercisable until January 2, 2003, and expire
December 31, 2009. Stock units and SARs would vest upon a change in control.
Through the combination of base salary, annual incentive compensation, stock
unit and SAR grants, the Committee seeks to focus the efforts of officers
toward improving, annually and over the longer-term, the financial returns
for its shareholders.
How is the Company's Chief Executive Officer compensated?
William E. Davis became Chief Executive Officer on May 1, 1993. During 1999,
Mr. Davis' salary was increased to a current annual rate of $680,000. This
increase was based on an evaluation of his performance and competitive
compensation practice for the Comparator Utilities. Previous analysis by the
Committee's compensation consultant had revealed that Mr. Davis' salary was
below the 25th percentile of competitive practice. Consistent with the
Committee's philosophy of administering salaries between the 25th and 75th
percentile of competitive practice, a multi-year approach was enacted to bring
Mr. Davis' salary closer to the 50th percentile. Mr. Davis' salary in 1999, as
reported in the Summary Compensation Table, was below the 50th percentile
relative to salaries paid to CEOs at electric and gas utilities with comparable
revenues. With respect to 1999, Mr. Davis earned an annual incentive
compensation award in the amount of $78,580, which represented 12.0% of the
salary he received in 1999. This award was paid pursuant to the terms of the
OICP which included financial and operating objectives approved by the Committee
for 1999. These objectives related to EVA(r), business unit financial
performance, and business/support group operating performance. In addition,
starting in 1999 the annual OICP was modified so that awards would also vary
based on the performance of the Company's common stock during the course of
the plan year. Mr. Davis' 1999 annual compensation (salary + OICP award) fell
between the 25th and 50th percentiles of Comparator Utilities practice.
In 1999, no LTIP grants were made to Mr. Davis because on August 25, 1998 the
Board of Directors approved an accelerated grant of LTIP stock units and SARs
to Mr. Davis that would have normally been granted at the start of 1999 (for
the 3-year period 1999-2001) and at the start of 2000 (for the 3-year period
2000-2002). Each of these grants consisted of 28,000 stock units and 100,000
SARs, with an exercise price of $15.36. These grants were accelerated in
order to increase their incentive and retention value.
Under Section 162(m) of the Internal Revenue Code, the Company may not deduct
certain compensation in excess of $1,000,000 paid to a named executive officer
in any taxable year. The Committee believes it is important to maintain
flexibility in its executive compensation plans in order to attract and retain
high quality executives, which may result in compensation being paid in a
particular year in excess of the limit. In 1999 the compensation of Mr. Davis
exceeded the limit.
Submitted by the Compensation and
Succession Committee of the Board
of Directors:
Stephen B. Schwartz, Chair
William F. Allyn
Anthony H. Gioia
Clark A. Johnson
Henry A. Panasci, Jr
Executive Compensation
The following table shows, for the last three fiscal years, cash and other
compensation paid to the Chairman of the Board and Chief Executive Officer and
to each of the other four most highly compensated executive officers of the
Company and/or NMPC for fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
Fiscal Years 1999, 1998 and 1997
Annual Compensation
Other
Annual
Compen-
Name and Principal Year Salary Bonus sation
Position ($) (A) ($) ($) (B)
W. E. Davis 1999 652,993 78,580 0
Chairman and CEO 1998 530,001 180,937 218
1997 450,501 0 110
A. J. Budney, Jr. 1999 444,333 150,540
President 1998 366,001 124,949 218
1997 315,002 0 110
D. D. Kerr* 1999 345,001 44,190 0
Executive Vice 1998 256,334 79,942 218
President 1997 210,001 0 110
J. H. Mueller* 1999 309,001 20,040 0
Senior Vice 1998 255,835 48,519 11,585
President 1997 - - -
D. J. Arrington 1999 269,667 42,390 0
Senior Vice 1998 221,501 57,147 218
President 1997 190,000 0 110
(continued)
Long-Term Compensation
Awards
Securities
Restricted Underlying All Other
Stock Options/ Compen-
Name and Principal Award(s) SARs sation
Position Year ($) (C) (#) ($) (E)
W. E. Davis 1999 0 0 39,003
Chairman and CEO 1998 1,256,500(D) 325,000(D) 44,539
1997 371,875 70,000 42,358
A. J. Budney, Jr. 1999 0 0 28,949
President 1998 503,750(D) 170,000(D) 18,051
1997 185 938 35,000 16,436
D. D. Kerr* 1999 0 0 12,317
Executive Vice 1998 371,100(D) 119,000(D) 9,583
President 1997 85,000 16,000 7,953
J. H. Mueller* 1999 0 0 9,961
Senior Vice 1998 324,413(D) 104,000(D) 30,529
President 1997 - - -
D. J. Arrington 1999 0 0 9,878
Senior Vice 1998 290,312 89,000(D) 8,780
President 1997 85,000 16,000 8,050
*Ms. Kerr and Mr. Mueller are executive officers of NMPC.
(A) Includes all employee contributions to the Employees' Savings Fund Plan.
(B) Other Annual Compensation for Mr. Mueller in 1998 represents or includes
amounts reimbursed for payment of taxes associated with relocation expenses.
1997 and 1998 Other Annual Compensation for Messrs. Davis, Budney, Mueller and
Arrington and Ms. Kerr represents or includes amounts reimbursed for payment of
taxes associated with non-cash compensation.
(C) In 1997, 68,500 stock units were granted to the above-named executive
officers pursuant to the LTIP adopted by the Board of Directors on
September 25, 1996. These grants were made for the 3-year period January 1,
1997, through December 31, 1999. These stock units vested and became payable
on December 31, 1999. The 1997 values listed in the table were calculated by
multiplying the stock units granted by $10.625, the price at the time these
stock unit grants were made. No dividend equivalents were credited on these
stock units.
In 1998, 82,700 stock units were granted in January and 118,000 in August
(consisting of two grants of 59,000 each) to the above-named executive officers
pursuant to the LTIP adopted by the Board of Directors on September 25, 1996.
The first grant was made for a 3-year period January 1, 1998 through
December 31, 2000, which will vest and become payable on December 31, 2000; the
second grant was made for a 3-year period January 1, 1999 through December 31,
2001, which will vest and become payable on December 31, 2001; and the
third grant was made for a 3-year period January 1, 2000 through December 31,
2002, which will vest and become payable on December 31, 2002. The 1998 values
listed in the table were calculated by multiplying the stock units granted in
January by $11.00 and those granted in August by $15.5625, the prices at the
time these stock unit grants were made. Dividend equivalents, if any, will be
credited on these grants and will be paid when the related stock
units are paid.
In 1999, no stock units were granted to the above-named executive
officers.
As of the end of the 1999 fiscal year, based on a closing market price of
$13.9375, Mr. Davis held 126,000 stock units having a market value of
$1,756,125; Mr. Budney held 55,000 stock units having a market value of
$766,563; Ms. Kerr held 35,100 stock units having a market value of $489,206;
Mr. Mueller held 24,100 stock units having a market value of $335,894; and Mr.
Arrington held 29,000 stock units having a market value of $404,188.
(D) This amount represents three distinct grants from the LTIP. The first
grant will vest and become payable (in the case of stock units) and exercisable
(in the case of SARs) after December 31, 2000; the second after December 31,
2001; and the third after December 31, 2002.
(E) All Other Compensation for 1999 includes: employer contributions to the
Company's Employees' Savings Fund Plan: Mr. Davis ($4,800), Mr. Budney
($4,800), Ms. Kerr ($4,800), Mr. Mueller ($4,800), and Mr. Arrington ($4,800);
taxable portion of life insurance premiums: Mr. Davis ($6,357), Mr. Budney
($2,562), Ms. Kerr ($2,092), Mr. Mueller ($3,009), and Mr. Arrington ($3,002);
employer contributions to the Company's Excess Benefit Plan: Mr. Davis
($14,789), Mr. Budney ($8,530), Ms. Kerr ($5,425), Mr. Mueller ($2,152) and Mr.
Arrington ($2,076); directors fees received from CNP: Mr. Davis ($13,057) and
Mr. Budney ($13,057).
There were no option/SAR grants made to named executive officers in 1999.
The following table summarizes exercises of options by the Chairman of the
Board and Chief Executive Officer, Mr. William E. Davis, and the other named
executive officers, the number of unexercised SARs and options held by them and
the spread (the difference between the current market price of the stock and the
exercise price of the SAR or option, to the extent that market price at the end
of the year exceeds exercise price) on those unexercised SARs or options for
fiscal year ended December 31, 1999.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
Number of Securities
Underlying Value of
Options/ Unexercised Options/ Unexercised
SARs Value SARs at Fiscal Options/SARs At
Name Exercised Realized Year-End (#) Fiscal Year-
(#) ($) End ($) (A)
Exer- Unexer- Exer- Unexer-
cisable cisable cisable cisable
W. E. Davis 0 0 275,125 395,000 988,594 634,313
A. J. Budney, Jr. 0 0 121,000 205,000 477,563 339,938
D. D. Kerr 0 0 52,000 135,000 193,438 176,663
J. H. Mueller 0 0 0 104,000 0 118,463
D. J. Arrington 0 0 32,500 105,000 121,719 131,100
_______________
(A) Calculated based on the closing market price of the Company's common stock
on December 31, 1999 ($13.9375).
PERFORMANCE GRAPH
Niagara Mohawk Holdings, Inc.
Comparison of Five-Year Cumulative Total Return
vs. S&P 500 Index and EEI Index
[ILLUSTRATION OF PERFORMANCE GRAPH]
1994 1995 1996 1997 1998 1999
NM Holdings, Inc. 100 72.87 75.74 80.54 123.68 106.90
S&P 500 Index 100 137.58 169.17 225.60 290.08 351.12
EEI Index 100 127.37 126.57 163.62 190.11 154.50
Assumes $100 invested on December 31, 1994 in NM Holdings' common stock, S&P
500 and the Edison Electric Institute Combination Gas and Electric Investor-
Owned Utilities Index ("EEI Index"). All dividends assumed to be reinvested over
the five-year period.
Retirement Benefits and Employment Agreements
Niagara Mohawk Pension Plan
The Niagara Mohawk Pension Plan ("Basic Plan") is a noncontributory, tax-
qualified defined benefit plan and provides all employees of the Company with a
minimum retirement benefit. This retirement benefit is related to compensation-
that is, base salary or pay-subject to the maximum annual limits noted in the
Retirement Benefits Table.
The participant's Basic Plan retirement benefit is based on one of two formulas
depending on age and years of service on July 1, 1998:
- -the cash balance formula; or
- -the highest five-year average compensation.
Effective July 1, 1998, the Basic Plan was amended to include a cash balance
formula. Under a cash balance formula a participant's retirement benefit grows
with pay credits (4% - 8% x salary) plus interest credits on a monthly basis. A
non-represented (management) employee who was at least 45 years of age and has
10 years of service on July 1, 1998 or has at least 5 years of service and 50
points (age plus service) as of December 31, 1998 will receive the higher of
the two formulas-the cash balance formula or the highest consecutive five-year
compensation. All other non-represented employees' Basic Plan benefit will be
based on the cash balance formula only. Directors who are not employees are not
eligible to participate in the Basic Plan.
Supplemental Executive Retirement Plan
The Supplemental Executive Retirement Plan ("SERP") is a noncontributory,
nonqualified defined benefit plan that provides additional retirement benefits
to officers of the Company who have obtained age 55 and who have 20 or more
years of employment. The Committee may grant exceptions to the age and service
requirements.
The SERP provides a benefit equal to the greater of:
(i) 60% of base salary averaged over the final 36 months of employment,
reduced by benefits payable under the Basic Plan; retirement benefits
accrued during previous employment and one-half of the maximum
security benefit to which the participant may be entitled at the
time of retirement, or
(ii) benefits payable under the Basic Plan without regard to the annual
benefit limitations imposed by the Internal Revenue Code.
Provided certain established criteria are met, participants in the SERP
may elect to receive their benefit in a lump sum payment.
The following table shows the maximum retirement benefit (adjusted for Social
Security) an officer can earn in aggregate under both the Basic Plan and the
SERP.
Annual Retirement Allowance
Years of Service
3-Year Average
Annual Salary 10* 15* 20 25 30 35
$150,000 $21,090 $33,885 $ 81,500 $ 81,500 $ 81,500 $ 81,500
225,000 21,960 35,280 126,500 126,500 126,500 126,500
300,000 21,960 35,280 171,500 171,500 171,500 171,500
375,000 21,960 35,280 216,500 216,500 216,500 216,500
450,000 21,960 35,280 261,500 261,500 261,500 261,500
525,000 21,960 35,280 306,500 306,500 306,500 306,500
600,000 21,960 35,280 351,500 351,500 351,500 351,500
675,000 21,960 35,280 396,500 396,500 396,500 396,500
* Basic Plan benefit only.
The benefit calculations assume the officer has selected a straight life
annuity and retired on December 31, 1999 at age 65. Annual compensation limits
($160,000 for 1997, 1998 and 1999) under a tax-qualified plan will reduce the
benefit amount collectible under the Basic Plan for some highly compensated
officers.
As of December 31, 1999, the persons named in the Summary Compensation Table
had the following estimated credited years of benefit service for purposes of
the pension program: Mr. Davis, 10 years; Mr. Budney, 5 years; Ms. Kerr, 27
years; Mr. Mueller, 4 years; and Mr. Arrington, 9 years.
Employment Agreements
The Company has entered into employment agreements with Messrs. Davis, Budney,
Mueller, Arrington and Ms. Kerr, which have a rolling 3-year term. In the event
of a change in control (as defined in the agreement), the agreement will remain
in effect for a period of at least 36 months thereafter unless a notice not to
extend the term of the agreement was given at least 18 months prior to the
change in control. The agreements provide that the executive will receive a
base salary equal to the executive's annual salary at the effective date of the
agreements or such greater amount determined by the Company, that the executive
will be able to participate in the Company's incentive compensation plans and
that the executive is entitled to vacation, fringe benefits, insurance coverage
and other terms and conditions of the agreement as are provided to employees of
the Company with comparable rank and seniority. If the executive has completed
eight years of service and attained age 55 at the time of the executive's
termination of employment, the executive (and eligible dependents) will be
entitled to coverage for medical, prescription drug, dental and hospitalization
benefits for the remainder of the executive's life with all premiums therefor
paid by the Company. If an executive has completed eight years of service but
has not attained age 55 upon terminating employment, such benefits will be
provided when the executive attains age 55.
The employment agreements also provide that the executive's benefits under the
SERP will be based on the executive's salary, annual incentive awards and
awards under the 1995 Stock Incentive Plan, as applicable. Further, if the
executive's employment is terminated by the Company without cause at any time,
or by the executive for good reason after a change in control (as such terms are
defined in the agreement), or after completing eight years of service, the
agreements provide that the executive will be deemed fully vested under the SERP
without reduction for early commencement. If the executive is under age 55, the
executive will be entitled to a fully vested SERP benefit upon attaining age 55,
without reduction for early commencement.
If the executive's employment is terminated by the Company without cause prior
to a change in control, the executive will be entitled to a lump sum severance
benefit in an amount equal to two times the executive's base salary plus an
amount equal to two times the greater of the executive's (i) most recent annual
incentive award or (ii) average annual incentive award paid over the previous
three years. In addition, the executive will receive a pro rata portion of the
incentive award which would have been payable to the executive for the fiscal
year in which termination of employment occurs, provided that the executive has
been employed for 180 days in such fiscal year. The executive will also be
entitled to continued participation in the Company's employee benefit plans for
two years, coverage for the balance of the executive's life under a life
insurance policy providing a death benefit equal to 2.5 times the executive's
base salary at termination and payment by the Company of fees and expenses for
an executive recruiting or placement firm in seeking new employment.
If, following a change in control, the executive's employment is terminated by
the Company without cause or by the executive for good reason, the executive
will be entitled to a lump sum severance benefit equal to four times the
executive's base salary. The executive will also be entitled to the additional
benefits referred to in the last sentence of the preceding paragraph, except
that employee benefit plan coverage for medical, prescription drug, dental and
hospitalization benefits will continue for the remainder of the executive's
life with all premiums therefor paid by the Company and coverage under other
employee benefit plans will continue for four years. In the event that the
payments to the executive upon termination of employment following a change in
control would subject the executive to the excise tax on excess parachute
payments under the Internal Revenue Code, the Company will reimburse the
executive for such excise tax (and the income tax and excise tax on such
reimbursement). In the event of a dispute over an executive's rights under the
executive's agreement following a change in control of the Company, the Company
will pay the executive's reasonable legal fees with respect to the dispute
unless the executive's claims are found to be frivolous.
Proposal 2: Shareholder Proposal
The Benedictine Sisters, 530 Bandera Road, San Antonio, Texas 78228, and the
Sisters of St. Joseph of Carondelet, Albany Province, 385 Watervliet-Shaker
Road, Latham, New York 12210-4799, who own 205 and 15,500 shares of the
Company's common stock, respectively, have advised the Company that they intend
to present the following proposal at the 2000 Annual Meeting of Shareholders.
The proposed resolution and supporting statement are as follows:
WHEREAS:
All leaders of industry in the United States now acknowledge their obligation
to pursue superior environmental performance and to disclose information about
that performance to their investors and other stakeholders.
The integrity, utility, and comparability of environmental disclosure depends
on the creation of environmental reports that employ a common format, use
credible metrics, and follow a set of a generally accepted environmental
disclosure standards.
The Coalition for Environmentally Responsible Economies (CERES), a ten year old
partnership among some of the largest investors, environmental groups, and
corporations in the country, has established what we believe is the most
thorough and well-respected environmental disclosure form in the United States.
CERES has also gathered leading international organizations, including the
United Nations Environment Programme, into a collaborative Global Reporting
Initiative to guide and accelerate the worldwide trend toward standardized
environmental reporting.
The CERES Principles and the CERES Report have already been adopted by leading
firms in highly diverse industries such as Bank America, Baxter International,
Bethlehem Steel, Coca-Cola, General Motors, Interface, ITT Industries,
Pennsylvania Power and Light, Polaroid, and Sun Company.
We believe endorsing the CERES Principles commits a company to the prudent
oversight of its financial and physical resources through: 1) protection of the
biosphere; 2) sustainable use of natural resources; 3) waste reduction; 4)
energy conservation; 5) risk reduction; 6) safe products/services; 7)
environmental restoration; 8) informing the public; 9) management commitment;
10) audits and reports. (The full text of the CERES Principles and
accompanying CERES Report form are obtainable from CERES, 11 Arlington
Street, Boston Massachusetts 02116, (617) 247-0700 or at www.ceres.org).
RESOLVED: Shareholders request that the company endorse the CERES Principles as
a reasonable and beneficial component of their corporate commitment to be
publicly accountable for environmental performance."
Statement of Shareholder
"Recent studies show that the integration of environmental commitment into
business operations provide competitive advantage and improve long-term
financial performance for companies. In addition, the depth of a firm's
environmental commitment and the quality with which it manages its
environmental performance provide us with indicators of the foresight of its
management.
Given investors' needs for credible information about a firm's environmental
performance, and given the large number of companies that have already endorsed
the CERES Principles and adopted its report format, endorsement of the CERES
Principles is a reasonable, widely accepted step for any company wishing to
demonstrate its seriousness about superior environmental performance.
The goal of the CERES Principles is continuous improvement in corporate
environmental performance, coupled with public accountability. One cannot
measure improvement without having data over time. Standardizing that data
enables investors to assess environmental progress within and across
industries. By endorsing the CERES Principles, a company agrees to a single
consistent standard for environmental reporting. An endorsing company works with
CERES and other endorsing companies in setting that reporting standard.
Your vote FOR this resolution serves the best interests of our Company and its
shareholders."
Board of Directors' Response to the Shareholder Proposal
In 1991, the Company adopted the Corporate Policy on Protection of the
Environment that articulates the Company's proactive approach toward
environmental issues. The environmental policy takes the Company beyond mere
compliance with the law. In addition, its comprehensive environmental
management system has helped the Company stay in the forefront of progress
toward an environmentally sustainable energy future.
Since adopting its policy in 1991, the Company has comprehensively measured and
reported on its environmental performance and has engaged in benchmarking its
environmental program against corporate programs both within and outside of the
utility industry. Such benchmarking has consistently shown that the Company
has a leading-edge environmental program. In addition, the Company has been
recognized by a number of governmental and environmental organizations for its
environmental achievements, including its proactive response to global warming,
its leadership in establishing environmental performance indices for the
utility industry, and other advanced strategic environmental management
practices.
Consistent with its policy of going beyond compliance, during 1997 the Company
became the first utility in the U.S. to voluntarily undertake and achieve full
registration of its fossil and nuclear generation portfolio to the newly
adopted international quality standard for Environmental Management Systems
known as ISO 14001, to which the U.S. is a signatory. The registration process
culminated in rigorous independent audit, conducted by an accredited Registrar,
which assessed each facility's conformance to every element contained in the
Standard. This included effective implementation of the Company's environmental
policies and procedures, compliance with environmental laws and regulation,
commitments to pollution prevention, continuous improvement, environmental
performance monitoring and measurement, and other aspects of demonstrated
adherence to the Standard. Further ISO 14001 registered facilities are subject
to ongoing formal semi-annual surveillance audits performed by the Registrar, in
order to maintain their Certificates of Registration.
In 1999, the Company successfully certified its Investment Recovery operation.
It is the Company's intent to achieve ISO 14001 certificates of registration for
two field operations work headquarters in 2000.
In 1999, the Company, along with one other U.S. utility, were judged by
Innovest Strategic Value Advisors, Inc., an investment research firm
specializing in finance and the environment, as having the strongest
environmental performance and the greatest managerial capacity to convert that
performance into shareholder value. In Innovest's report for 2000, the Company
shares the same distinction.
Given its track record of dealing successfully with environmental issues under
its own corporate policy, the Company carefully reviewed the CERES Principles
and does not believe that adopting the CERES Principles in lieu of, or in
addition to, the Company's existing environmental policy, programs and reporting
systems, would help the Company better fulfill its continuing commitment to
environmental performance excellence. The Company believes that its
environmental program provides the most specific and focused approach to ensure
that the Company is in compliance with all applicable environmental regulations
and to maintain its position as a recognized leader for its environmental
achievements.
Therefore, the Board of Directors recommends that you vote AGAINST this
proposal.
Other Information
What is the deadline for submitting a proposal for next year's annual meeting?
Shareholders who want to have a proposal included in the Company's proxy
statement and proxy card for the 2001 Annual Meeting of Shareholders must notify
the Secretary of the Company. The proposal must be received on or before Friday,
December 1, 2000 and should be addressed to:
Office of the Secretary
Niagara Mohawk Holdings, Inc.
300 Erie Boulevard West, A-4
Syracuse, New York 13202-4250
A shareholder must be a registered or beneficial owner of at least one percent
of the Company's outstanding common stock or stock with a market value of $2,000
and the shareholder must continue to own such stock through the date on which
the meeting is held.
Shareholders who wish to present a proposal at the 2001 Annual Meeting, must
notify the Secretary of the Company in writing not less than 90 days nor more
than 120 days before the annual meeting.
Any nominations for director to be made at a shareholder meeting must contain
the specific information required in the Company By-Laws. A copy of the relevant
portion of the By-Laws may be obtained upon written request from the
Secretary of the Company.
What does the Company pay for indemnification insurance?
The directors and officers of the Company and its subsidiaries are insured
against obligations which may be incurred as a result of the Company's
indemnification of its directors and officers. The coverage also
insures the directors and officers against liabilities for which they may not
be indemnified by the Company or its subsidiaries, except for a dishonest act or
breach of trust. The insurance was purchased from the National Union Fire
Insurance Company, Associated Electric & Gas Insurance Services, Ltd., Energy
Insurance Mutual, Federal Insurance Company and ACE Insurance Company Ltd., for
the term from January 31, 2000, to January 30, 2001, for an aggregate premium of
$826,799.
How much will it cost the Company to solicit votes?
- -NM Holdings retained D.F. King & Co. to assist in the solicitation of
proxies for the 2000 Annual Meeting of Shareholders at a fee of $11,500 plus
out-of-pocket expenses. The Company pays all costs of solicitation, including
certain expenses of brokers and nominees who mail proxy material to their
customers or principals.
- -In addition to the use of the mail, proxies may be solicited personally,
by telephone or telegram or by the Company officers and employees without
additional compensation.
Who is the Company's independent accountant?
The Company has selected the independent accounting firm of
PricewaterhouseCoopers LLP to examine the financial statements of the Company
and its subsidiaries for year ended December 31, 2000. Representatives of
PricewaterhouseCoopers LLP will be present at the meeting to make a statement
if they wish to do so and will be available to respond to appropriate
questions.
Who do I contact to receive quarterly reports?
Shareholders who are not receiving quarterly reports directly from the Company
and who would like to receive the Company's quarterly reports may write to:
Investor Relations
Niagara Mohawk Power Corporation
300 Erie Boulevard West, C-3
Syracuse, NY 13202-4250
By Order of the Board of Directors,
Kapua A. Rice
Secretary
Dated: March 31, 2000
THE FOLLOWING TEXT APPEARS ON BLANK PAGE
[Intentionally Left Blank]
[DIRECTIONS TO THE ONONDAGA COUNTY CONVENTION CENTER]
ONCENTER DIRECTIONS
[ILLUSTRATON OF MAP]
From the NYS Thruway (I90):
Take Exit 36, Rt. 81 South to Syracuse. Harrison Street Exit #18, right on
Harrison two blocks, turn left onto State Street, left into parking garage
From the North:
Rt 81 South to Harrison Street Exit #18, right on Harrison two blocks, turn
left onto State Street, left into parking garage
From the South:
Rt. 81 North to Adams Street Exit #18, straight one block, left onto Harrison
two blocks, turn left onto State Street, left into parking garage.
[FORM OF PROXY - FRONT]
_______________________________________________________________________________
ADMISSION CARD
Niagara Mohawk Holdings, Inc. Annual Meeting of Shareholders - May 16, 2000 -
10:30 a.m.
Name(s) Mr., Ms., Mr. & Mrs.
(Please circle one)
_____________________________________________________________________
Address
_____________________________________________________________________
_____________________________________________________________________
___ Common Shareholder ___ Company Employee
Number of shares of common stock ____ ___ Company Retiree
Social Security Number ___ Invited guest representing
_____________________ ___________________________
(company, organization, etc.)
THE ONONDAGA COUNTY CONVENTION CENTER, 800 SO. STATE STREET, SYRACUSE, NEW YORK
13202-3017
_______________________________________________________________________________
Dear Shareholder:
Please bring the above card to the Annual Meeting. It will expedite your
admittance when presented upon your arrival.
Very truly yours,
Kapua Rice
Corporate Secretary
PLEASE FOLD AND TEAR HERE
- ------------------------------------------------------------------------------
Niagara Mohawk Holdings, Inc.
300 Erie Boulevard West, Syracuse, New York 13202
The undersigned hereby appoints William F. Allyn, William E. Davis, Henry A.
Panasci, Jr., and Patti McGill Peterson and each or any of them, proxies of the
undersigned, with power of substitution to represent and to vote, as designated
on the reverse side, and on any other business that may come before the
meeting, all the shares of Common Stock of the Corporation held of record by
the undersigned on March 20, 2000 at the Annual Meeting of Shareholders to be
held on May 16, 2000 and at any adjournment(s) or postponement(s) thereof.
If voting by mail, please date, sign exactly as your name appears on the form
and mail the proxy promptly. When signing as an attorney, executor,
administrator, trustee or guardian, please give your full title as such. If
shares are held jointly, both owners should sign.
____ Please check this box to give your consent to access all future proxy
materials and annual reports via the internet.
____ Please check this box if you plan to attend the Annual Meeting of
Shareholders.
(Continued and To Be Voted and Signed on Reverse)
[FORM OF PROXY - BACK]
[NMH Logo]
IF YOU WISH TO VOTE BY TELEPHONE OR INTERNET, PLEASE READ THE INSTRUCTIONS
BELOW
Niagara Mohawk Holdings, Inc. encourages you to take advantage of voting your
shares electronically on matters to be covered at the 2000 Annual Meeting of
Shareholders. Please take the opportunity to use one of the three voting
methods outlined below to cast your ballot.
VOTE BY PHONE - 1-800-250-9081
Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a week.
Have your proxy card in hand when you call. You will be prompted to enter your
Control Number, which is located below, and then follow the simple prompts that
will be presented to you to record your vote.
VOTE BY INTERNET - http://www.votefast.com
Use the Internet to vote your proxy 24 hours a day, 7 days a week. Have your
proxy card in hand when you access the web site. You will be prompted to enter
your Control Number, and then you can follow the simple prompts that will be
presented to you to record your vote.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the enclosed postage-paid
envelope or return it to: Corporate Election Services, P.O. Box 1150,
Pittsburgh, Pennsylvania 15230-9954.
If you vote by phone or by using the Internet, please do not mail your proxy.
THANK YOU FOR VOTING
CONTROL NUMBER
ACCOUNT NUMBER
PLEASE FOLD AND TEAR HERE Please mark your votes as this _X_
- -------------------------------------------------------------------------------
Niagara Mohawk Holdings, Inc.
The Board of Directors recommends a vote FOR Proposal 1:
(1) Election of Directors to Class III
FOR WITHHOLD FOR ALL To withhold authority to
Nominees: ALL ALL EXCEPT: vote, mark "For All
(1) Lawrence Burkhardt,III ___ ___ ___ Except" and write the
(2) John H. Dalton nomineee(s) number(s)
(3) William J. Donlon on this line._________
(4) Stephen B. Schwartz
The Board of Directors recommends a vote AGAINST Proposal 2:
(2) Shareholder proposal requesting the Corporation to endorse the
CERES Principles.
FOR AGAINST ABSTAIN
___ ___ ___
(3) To transact such other business as may properly come before the meeting.
_______________________________________
Signature Date
_______________________________________
Signature (Joint Owners) Date
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE