UNITED ILLUMINATING CO, DEF 14A, 1994-04-08

UNITED ILLUMINATING CO
DEF 14A, 1994-04-08
ELECTRIC SERVICES

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<PAGE>

SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

The United Illuminating Company
------------------------------------------------
(Name of Registrant as Specified In Its Charter)

The United Illuminating Company
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).

[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).

Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*

(4) Proposed maximum aggregate value of transaction:
- --------
*Set forth the amount on which the filing is calculated and state how it was
determined.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount previously paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

Notes:

<PAGE>

[LOGO OF UNITED ILLUMINATING APPEARS HERE]

P.O. Box 1564, New Haven, CT 06506-0901

April 8, 1994

Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of the Shareholders of
The United Illuminating Company, which will be held on Wednesday, May 18, 1994
at 10:00 a.m. The meeting will be held at the New Haven Lawn Club, 193 Whitney
Avenue, New Haven, Connecticut. A diagram showing the location of the New Haven
Lawn Club appears on the back cover of the enclosed Proxy Statement.
Please return your proxy, completed, signed and dated, REGARDLESS of whether
you plan to attend the Annual Meeting. We look forward to seeing you on May 18.

Sincerely,

Richard J. Grossi
Chairman of the Board and
Chief Executive Officer

Robert L. Fiscus
President and Chief
Financial Officer

<PAGE>

THE UNITED ILLUMINATING COMPANY

NOTICE OF ANNUAL MEETING OF THE SHAREHOLDERS

TO THE SHAREHOLDERS:

Notice is hereby given that the Annual Meeting of the Shareholders of The
United Illuminating Company will be held at the New Haven Lawn Club, 193
Whitney Avenue, New Haven, Connecticut, on Wednesday, May 18, 1994 at ten
o'clock in the forenoon, for the following purposes:

1. To elect a Board of Directors for the ensuing year.

2. To vote on the approval of the employment, by the Board of Directors, of
Coopers & Lybrand as the firm of independent public accountants to audit
the books and affairs of the Company for the fiscal year 1994.

3. To transact such other business as may properly come before the meeting
or any adjournments thereof.

The Board of Directors has fixed the close of business on March 14, 1994 as
the record date for determination of the shareholders of the Company entitled
to notice of, and to vote at, the meeting and any adjournments thereof.

REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, SIGN,
DATE AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.

Dated at New Haven, Connecticut, this 8th day of April, 1994.

By Order of the Board of Directors,

Kurt Mohlman, Treasurer and Secretary

YOUR VOTE IS IMPORTANT

IN ORDER TO SAVE THE COMPANY THE EXPENSE OF FURTHER SOLICITATION TO ENSURE
THAT A QUORUM IS PRESENT AT THE ANNUAL MEETING, PLEASE MAIL YOUR PROXY
PROMPTLY--REGARDLESS OF THE NUMBER OF SHARES YOU OWN, AND REGARDLESS OF
WHETHER YOU PLAN TO ATTEND THE MEETING.

A diagram showing the location of the New Haven Lawn Club appears on the back
cover of the Proxy Statement.
<PAGE>

PROXY STATEMENT

This statement and the accompanying proxy form are furnished on or about
April 8, 1994, to security holders of record as of the close of business on
March 14, 1994, in connection with the solicitation of proxies for use at the
Annual Meeting of the Shareholders of The United Illuminating Company to be
held at the New Haven Lawn Club, 193 Whitney Avenue, New Haven, Connecticut on
Wednesday, May 18, 1994 at 10:00 a.m. for the purposes set forth in the
foregoing Notice of Annual Meeting of the Shareholders. The mailing address of
the principal executive offices of the Company is 157 Church Street, P.O. Box
1564, New Haven, Connecticut 06506. The solicitation is made by the Company,
and the expense of printing and mailing proxy material will be borne by the
Company. The Company will request banks, brokers and other custodians, nominees
and fiduciaries to send proxy material to beneficial owners of shares and to
secure their voting instructions, if necessary, and the Company will reimburse
them for their reasonable expenses in so doing. Directors, officers and
employees of the Company may also solicit proxies personally or by telephone or
telegraph, but no compensation will be paid specifically for any such
solicitation. In addition, Georgeson & Company, Inc. of New York, New York, has
been retained to aid in the solicitation of proxies by similar methods at a
cost to the Company of approximately $11,500, plus expenses.

SHAREHOLDERS ENTITLED TO VOTE:

At the close of business on March 14, 1994, the record date for the meeting,
14,084,291 shares of Common Stock of the Company were outstanding and will be
entitled to vote at the meeting, each share being entitled to one vote, on each
matter coming before the meeting as set forth in the accompanying Notice of
Annual Meeting of the Shareholders and commented on in this Proxy Statement.
All votes on each matter coming before the meeting will be counted and
tabulated by Inspectors of Proxies and Tellers appointed by the President of
the Company pursuant to its Bylaws.

Common Stock shareholders who are participants in the Company's Automatic
Dividend Reinvestment and Common Stock Purchase Plan (DRP) will receive proxy
forms that will include the shares in their accounts under the DRP. Continental
Stock Transfer & Trust Company, the Company's co-agent under the DRP, has
authorized the Company to vote shares held in the DRP according to the
instructions received on such proxy forms.

Shares of Common Stock for which a proxy in the form that accompanies this
Proxy Statement is properly signed and returned (a) will be voted or not voted,
in accordance with the choice indicated on the proxy, to fix the number of
directors for the ensuing year at twelve and elect as directors the twelve
persons named in this Proxy Statement (or such other person or persons as the
present Board of Directors shall determine, if one or more of the twelve
persons named is unable to serve); (b) will be voted for or against, or not
voted, in accordance with the choice indicated on the proxy, with respect to
the proposal to approve the employment of Coopers & Lybrand as independent
auditors for the fiscal year 1994; and (c) will be voted in accordance with the
discretion of the person or persons voting them with respect to such other
matters, if any, as may come before the meeting. The Company is not aware of
any such other matters to be presented at the meeting.

Any proxy may be revoked by the shareholder at any time prior to its use. A
proxy may be revoked by filing with the Secretary of the Company a written
notice of revocation or a properly signed proxy bearing a later date. A
shareholder who attends the meeting in person may, if he or she wishes, vote by
ballot at the meeting, thereby canceling any proxy vote previously given.
<PAGE>

Under Connecticut law and the Company's Certificate of Incorporation and
Bylaws, action by the shareholders on any matter coming before the meeting can
be taken only by the affirmative vote of a majority of the shares of Common
Stock represented at the meeting in person or by proxy. Accordingly, when a
share represented at the meeting is not voted with respect to the election of
directors, approval of the employment of independent auditors, or such other
matters as may come before the meeting, the effect is equivalent to a vote
against the recommendation of the Board of Directors with respect to the action
to be taken on such matter. Cumulative voting is not permitted under
Connecticut law unless a corporation's certificate of incorporation provides
for cumulative voting rights; and the Company's Certificate of Incorporation
contains no provision for such rights.

PRINCIPAL SHAREHOLDERS:

At the close of business on March 14, 1994, there was no shareholder known to
the Company to be the beneficial owner of more than 5% of the shares of its
Common Stock.

NOMINEES FOR ELECTION AS DIRECTORS:

It is intended that shares of Common Stock represented by proxies who are
authorized to vote for the election of a Board of Directors on the form which
accompanies this Proxy Statement will be voted to fix the number of directors
at twelve and (unless instructed otherwise on the form) in favor of the persons
listed below for election as directors of the Company. While it is not
anticipated that any of the persons listed below will be unable to serve as a
director, if that should occur the proxies will be voted for such other person
or persons as the present Board of Directors shall determine. All of the
nominees listed below except John L. Lahey were elected directors at the last
annual meeting. In accordance with the retirement policy of the Board, Leland
W. Miles, a director since 1978, is not a candidate for re-election this year.

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<PAGE>

<TABLE>
<CAPTION>
Name, Principal Occupation, Other
Corporate Affiliations and Principal Occupations Director
During the Past Five Years of Nominee Age/1/ Since
- ---------------------------------------------------------------------------------
<S> <C> <C>
David E. A. Carson 59 1993
President, Chief Executive Officer and director, People's Bank,
Bridgeport, Connecticut and President, Chief Executive Officer
and trustee, People's Mutual Holdings, Bridgeport, Connecticut.
Also, chairman, Bridgeport Public Education Fund, Bridgeport,
Connecticut and Business Advisory Committee of Connecticut Com-
mission on Children, Hartford, Connecticut; trustee of Connect-
icut Public Broadcasting, Hartford, Connecticut; Vice Chairman
of Savings & Community Bankers of America, Washington, D.C.;
director of Bridgeport Hospital, Bridgeport, Connecticut, Old
State House, Hartford, Connecticut, Private Industry Council of
Southwestern Connecticut, Bridgeport, Connecticut, Connecticut
Mutual Investment Accounts, Hartford, Connecticut and American
Skandia Trust, Shelton, Connecticut; and member, Board of Over-
seers, The Bushnell, Hartford, Connecticut and Bridgeport Fi-
nancial Review Board, Bridgeport, Connecticut.

John F. Croweak 57 1987
Chairman of the Board of Directors, President and Chief Execu-
tive Officer, Blue Cross & Blue Shield of Connecticut, Inc.,
North Haven, Connecticut. Also, Chairman of the Board of Direc-
tors, Connecticut American Life Insurance Company, North Haven,
Connecticut and ProMed Systems, Inc., New Haven, Connecticut;
and director of BCS Financial, Chicago, Illinois, The New Haven
Savings Bank, New Haven, Connecticut and Quinnipiac College,
Hamden, Connecticut.

J. Hugh Devlin 51 1989
Managing Director and Consultant, Barr Devlin Associates, In-
corporated, New York, New York. From January 1989 to April 1990
Mr. Devlin served as Advisory Director of Morgan Stanley & Co.,
Inc., New York, New York. Also, Chairman of the Board of Trust-
ees, Riverview Medical Center, Red Bank, New Jersey.

John D. Fassett 68 1972
Consultant; Author. Also, director of The New Haven Savings
Bank, New Haven, Connecticut and former Chairman of the Board
of Directors and Chief Executive Officer of the Company.

Robert L. Fiscus 56 1992
President since May 1991, director since May 1992 and Chief Fi-
nancial Officer since August 1983, The United Illuminating Com-
pany. Mr. Fiscus also served as Executive Vice President of the
Company during the period January 1989 to May 1991. Also, di-
rector of The Aristotle Corporation, New Haven, Connecticut;
director and Treasurer of Griffin Health Services Corporation
and Griffin Hospital, Derby, Connecticut; member, Board of Gov-
ernors of University of New Haven, New Haven, Connecticut; and
President of the United Way of Greater New Haven, New Haven,
Connecticut.
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
Name, Principal Occupation, Other
Corporate Affiliations and Principal Occupations Director
During the Past Five Years of Nominee Age/1/ Since
- ---------------------------------------------------------------------------------
<S> <C> <C>
Richard J. Grossi 58 1988
Chairman of the Board of Directors and Chief Executive Officer
since May 1991, The United Illuminating Company. Mr. Grossi
also served as President of the Company during the period Janu-
ary 1989 to May 1991 and Chief Operating Officer of the Company
during the period January 1989 to May 1991. Also, director of
Tennis Foundation of Connecticut, Inc., New Haven, Connecticut,
Connecticut Public Broadcasting, Inc., Hartford, Connecticut,
The New Haven Savings Bank, New Haven, Connecticut, Blue Cross
& Blue Shield of Connecticut, Inc., North Haven, Connecticut,
Edison Electric Institute, Washington, D.C. and Connecticut
Business and Industry Association, Hartford, Connecticut; Vice
Chairman of Northeast Power Coordinating Council, New York, New
York; trustee of Yale-New Haven Hospital, New Haven, Connecti-
cut and North American Electric Reliability Council, Princeton,
New Jersey; Chairman, New Haven Regional Leadership Council,
New Haven, Connecticut, Electric Council of New England, Bed-
ford, Massachusetts and Executive Committee of the Seabrook
Joint Owners; and member, West Haven Planning and Finance As-
sistance Board, West Haven, Connecticut.

Betsy Henley-Cohn 41 1989
Chairman of the Board of Directors, Joseph Cohn & Son, Inc.,
New Haven, Connecticut, commercial painting contractors. Also,
Chairwoman of Birmingham Utilities, Inc., Ansonia, Connecticut;
Chairman, Board of Commissioners, 9th Square Tax District, City
of New Haven, Connecticut; and director of The Aristotle Corpo-
ration, New Haven, Connecticut.

John L. Lahey 47
President, Quinnipiac College, Hamden, Connecticut. Also,
Chairman of the Executive Committee, Connecticut Conference of
Independent Colleges, Hartford, Connecticut; President, Con-
necticut Chapter of The Newcomen Society, Exton, Pennsylvania;
director of Gaylord Hospital, Wallingford, Connecticut and Oak-
dale Theater, Wallingford, Connecticut; and member, Regional
Leadership Council, New Haven, Connecticut and Regional Plan
Association, New York, New York.

F. Patrick McFadden, Jr. 56 1987
President and Chief Executive Officer and director, The Bank of
New Haven and BNH Bancshares, Inc., New Haven, Connecticut. Al-
so, Chairman of the Board of Directors, Yale-New Haven Health
Services Corporation, New Haven, Connecticut; director of The
Community Foundation for Greater New Haven, New Haven, Connect-
icut and Science Park Development Corporation, New Haven, Con-
necticut. During the period January 1989 to August 1989 Mr. Mc-
Fadden served as Chairman of the Board and Chief Executive Of-
ficer, New Haven Merchants Bank, New Haven, Connecticut.
</TABLE>

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<PAGE>

James A. Thomas 55 1992
Master, Saybrook College, Yale University, New Haven, Connecti-
cut and Associate Dean, Yale Law School, New Haven, Connecti-
cut. Also, trustee of Yale-New Haven Hospital, New Haven, Con-
necticut and People's Mutual Holdings, Bridgeport, Connecticut;
advisory director of People's Bank, Bridgeport, Connecticut;
and director of People's Bank Holding Company, Bridgeport, Con-
necticut and Shubert Theater, New Haven, Connecticut.

William S. Warner 69 1986
Chairman of the Board of Directors, Aquarion Company (formerly
The Hydraulic Company), Bridgeport, Connecticut. During the pe-
riod January 1989 to January 1990 Mr. Warner also served as
Chief Executive Officer of The Hydraulic Company. Also, direc-
tor of Bridgeport Hospital, Bridgeport, Connecticut; and trust-
ee, The Mountain Grove Cemetery Association, Bridgeport, Con-
necticut.
</TABLE>
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/1/Age at May 18, 1994. The Board of Directors has adopted a policy pursuant to
which a director will not be a candidate for re-election after his or her
70th birthday.

- 5 -
<PAGE>

The Board of Directors held 10 meetings during 1993. The average attendance
record of the directors was 99.0% for meetings of the Board of Directors and
its committees held during 1993.

Messrs. Croweak, Grossi, McFadden and Warner serve on the Executive
Committee of the Board of Directors. The Executive Committee, a standing
committee that has and may exercise all the powers of the Board of Directors
when it is not in session, did not meet during 1993.

Ms. Henley-Cohn, Dr. Miles and Messrs. Carson, Fassett, Thomas and Warner
serve on the Audit Committee of the Board of Directors. The Audit Committee, a
standing committee that oversees the Company's financial accounting and
reporting practices; evaluates the reliability of the Company's system of
internal controls; assures the objectivity of independent audits; explores
other issues that it deems may potentially affect the Company and its
employees; and makes recommendations in these regards to the officers and to
the Board of Directors, held five meetings during 1993.

Ms. Henley-Cohn and Messrs. Croweak, Devlin, O'Keefe and Thomas serve on the
Compensation and Executive Development Committee of the Board of Directors.
The Compensation and Executive Development Committee, a standing committee
that reviews the performance of the officers of the Company; reviews and
recommends to the Board of Directors the levels of compensation and other
benefits paid and to be paid to the officers of the Company; reviews and
administers incentive compensation programs for the officers of the Company;
recommends to the Board of Directors changes in said programs; reviews the
recommendations of management for its succession planning and the selection of
officers of the Company; and reviews the investment standards, policies and
objectives established for, and the performance and methods of, the Company's
pension plan investment managers, held seven meetings during 1993.

Ms. Henley-Cohn and Messrs. Carson, Devlin, McFadden and O'Keefe serve on
the Strategic Direction Committee of the Board of Directors. The Strategic
Direction Committee, a standing committee that assists the Chief Executive
Officer and senior management with the development of an overall strategic
plan for the Company, taking into account the key strategic issues facing the
Company and the electric utility industry and providing a focus for defining
and implementing the annual goals and projects comprising the Company's
corporate business and operational plans, held three meetings during 1993.

Messrs. Carson, Devlin, McFadden, O'Keefe and Thomas serve on the Committee
on Directors. The Committee on Directors, a standing committee created on
November 22, 1993, recommends policy with respect to the composition,
organization, practices and compensation of the Board of Directors and
performs the nominating function for the Board. It held one meeting in 1993.
The Committee on Directors will consider nominees for election as directors
recommended by shareholders upon the timely submission of the names of such
nominees with their qualifications and biographical information forwarded to
the Committee in care of the Treasurer and Secretary of the Company.

STOCK OWNERSHIP OF DIRECTORS AND OFFICERS:

The following table sets forth the number of shares of Common Stock of the
Company beneficially owned, directly or indirectly, by each director and
nominee director, by each of the five most highly compensated officers during
1993 and by all directors, the nominee director and officers as a group, as of
March 14, 1994:

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<PAGE>

<TABLE>
<CAPTION>
Shares
Name of Individual or Beneficially
Number of Persons in Owned Directly
Group or Indirectly(/1/)
-----------------------------------------------------------------
<S> <C>
David E. A. Carson 300(/2/)
John F. Croweak 608
J. Hugh Devlin 500(/2/)
John D. Fassett 9,100(/2/)
Robert L. Fiscus 80,516
Richard J. Grossi 81,582
Betsy Henley-Cohn 2,143
John L. Lahey -
F. Patrick McFadden, Jr. 608
Leland W. Miles 1,108
Frank R. O'Keefe, Jr. 608
James A. Thomas 268(/2/)
William S. Warner 608
James F. Crowe 46,173
David W. Hoskinson 7,237
Leon A. Morgan 10,356
25 Directors, the Nominee Director and Officers as
a group, including those named above 294,324
</TABLE>
- -------------
(/1/) Based on reports furnished by the directors, the nominee director and
officers. The shares include, in some instances, shares held by the
immediate families of directors and officers or entities controlled by
directors and officers, the reporting of which is not to be construed as
an admission of beneficial ownership. The number of shares includes
those held for the benefit of officers in the Company's Employee Stock
Ownership Plan and, in the cases of Richard J. Grossi, 74,000 shares,
Robert L. Fiscus, 72,000 shares, James F. Crowe, 41,000 shares, David W.
Hoskinson, 5,600 shares, Leon A. Morgan, 6,000 shares and Directors and
Officers as a group, 243,400 shares, subject to options under the
Company's 1990 Stock Option Plan. See "Stock Option Plan" below.
(/2/) In addition to the shares beneficially owned directly or indirectly,
Messrs. Carson, Devlin, Fassett and Thomas have been credited with
480.2, 1,092.2, 107.2 and 61.5 shares of Common Stock, respectively, in
stock accounts under the Company's Directors' Deferred Compensation
Plan, described below at "Director Compensation". Shares represented in
stock accounts under the Plan are payable, in cash only, upon
termination of service on the Board of Directors, based on the fair
market value of the Company's Common Stock on the date of termination.

Each of the persons included in the foregoing table has sole voting and
investment power as to the shares of Common Stock beneficially owned, directly
or indirectly, by him or her, except for the following (i) as to which such
powers are shared: 1,000 shares with respect to Mr. Fassett, 6,214 shares with
respect to Mr. Fiscus, 2,507 shares with respect to Mr. Grossi, 110 shares with
respect to Mr. Thomas, 480 shares with respect to Mr. Crowe, 1,606 shares with
respect to Mr. Morgan and 13,206 shares with respect to all directors, the
nominee director and officers as a group, (ii) as to which such powers are held
by other people or entities: 100 shares with respect to Mr. Carson, 116 shares
with respect to Mr. Grossi, 2,035 shares with respect to Ms. Henley-Cohn, 608
shares with respect to Mr. O'Keefe, 50 shares with respect to Mr. Thomas, 10
shares with respect to Mr. Crowe, 1,094 shares with respect to Mr. Morgan and
3,068 shares with respect to all directors, the nominee director and officers
as a group.

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<PAGE>

The number of shares of Common Stock beneficially owned by each of the
persons included in the foregoing table is less than 1% of the 14,084,291
shares of Common Stock outstanding as of March 14, 1994. The number of shares
of Common Stock beneficially owned by all of the directors, the nominee
director and officers as a group represents approximately 1.9% of the
outstanding shares of Common Stock as of March 14, 1994.

Mr. Fiscus owns, indirectly, 300 shares of the Company's $25 par value
Preferred Stock, which is less than 1% of the shares of that class outstanding
as of March 14, 1994. The Company has been advised that no other officer,
director or nominee director beneficially owns, directly or indirectly, any
shares of any class of the Preferred Stock of the Company.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the
Securities and Exchange Commission (SEC) and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Directors, officers and
greater-than-ten-percent shareowners are required by SEC regulations to furnish
the Company with copies of all Section 16(a) forms they file.

To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1993 all
Section 16(a) filing requirements applicable to its directors, officers and
greater-than-ten-percent shareowners were complied with, except that Mr. Robert
H. Hyde, Vice President--Customer Services, sold 45.4 shares of Common Stock
registered in his name as custodian for one of his children and reported this
sale in a year-end report for 1993 rather than in a change of ownership report
for August 1993.

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<PAGE>

EXECUTIVE COMPENSATION

The following table shows the annual and long-term compensation, for services
in all capacities to the Company for the years 1993, 1992 and 1991, of those
persons who were, at December 31, 1993 (i) the chief executive officer and (ii)
the other four most highly compensated executive officers of the Company:
<TABLE>
<CAPTION>
Long-Term Compensation(/2/)
--------------------------------------
Annual Compensation (/1/) Awards Payouts
------------------------- --------------------- ----------------
Name and Securities Underlying LTIP All Other
Principal Position Year Salary ($) Bonus ($)(/3/) Options/SARS (#)(/4/) Payouts ($)(/5/) Compensation ($)(/6/)
------------------ ---- ---------- -------------- --------------------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Grossi 1993 $280,000 $100,000 14,000 $102,935 $4,497
Chairman of the Board 1992 $250,000 $101,000 0 0 $4,364
of Directors and 1991(/7/) $227,000 $ 74,400 0 0
Chief Executive
Officer
Robert L. Fiscus 1993 $200,000 $ 60,000 7,000 $ 93,550 $4,497
President and Chief 1992 $190,000 $ 62,900 0 0 $4,364
Financial Officer 1991(/7/) $181,700 $ 50,500 0 0
James F. Crowe 1993 $160,000 $ 45,000 5,000 $ 64,183 $4,497
Executive Vice 1992 $139,700 $ 42,400 0 0 $3,526
President 1991 $129,000 $ 32,300 0 0
David W. Hoskinson 1993 $128,000 $ 33,400 1,600 0 $4,080
Senior Vice President 1992 $122,600 $ 35,200 0 0 $3,086
1991 $120,200 $ 31,700 0 0
Leon A. Morgan 1993 $122,500 $ 26,600 0 0 $2,569
Senior Vice President 1992 $117,300 $ 27,900 0 0 $2,880
1991 $115,000 $ 26,300 0 0
</TABLE>
- ---------
(/1/)None of the persons named received any cash compensation in any of the
years shown other than the amounts appearing in the columns captioned
"Salary," "Bonus" and "All Other Compensation." None of these persons
received, in any of the years shown, any cash-equivalent form of
compensation, other than through participation in the Company's group life,
health and hospitalization plans, which are available on a uniform basis to
all salaried employees of the Company and the dollar value of which,
together with the dollar value of all other non-cash perquisites and other
personal benefits received by such person, did not exceed 10% of the total
salary and bonus compensation received by him for such year.

(/2/)The Company has never awarded restricted stock or stock appreciation rights
(SARs) to any employee; and there were no payouts prior to 1993 to any
employee under the Company's 1987 Long-Term Incentive Plan.

(/3/)The amounts appearing in this column are awards paid pursuant to the
Company's Executive Incentive Compensation Program described below.

(/4/)Information with respect to the options appearing in this column, and a
description of the nature and terms of the options awarded, is set forth
below at "Stock Option Plan." The stock options granted in 1993 were
awarded together with Dividend Equivalent Units described below at
"Dividend Equivalent Program".

(/5/)The amounts appearing in this column are the values at payout of shares of
the Company's Common Stock earned for a 1989-1992 performance period under
the Company's 1987 Long-Term Incentive Plan. This Plan was terminated in
1993.

(/6/)The amounts appearing in this column are cash contributions by the Company
to its 401(k) Plan, described below at "Retirement Plans," on behalf of
each of the persons named to match pre-tax elective deferral contributions
by him to that plan from his salary compensation (included in the column
captioned "Salary").

(/7/)Mr. Grossi and Mr. Fiscus have served as Chairman of the Board of Directors
and Chief Executive Officer, and as President and Chief Financial Officer,
respectively, since May 1991. Their prior positions are described at
"Nominees for Election as Directors" above.

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<PAGE>

The Company's Executive Incentive Compensation Program was established in
1985 for the purposes of (i) helping to attract and retain executives and key
managers of high ability, (ii) heightening the motivation of those executives
and key managers to attain goals that are in the interests of shareholders and
customers, and (iii) encouraging effective management teamwork among the
executives and key managers of the Company. Under this program, cash awards may
be made each year to officers and key employees based on their achievement of
pre-established performance levels with respect to specific shareholder goals,
customer goals and individual goals for the preceding year, and upon an
assessment of the officers' performance as a group with respect to strategic
opportunities during that year. Eligible officers and key employees,
performance levels and specific goals are determined in advance of each year by
directors who are not employees of the Company, and incentive awards are paid
following action by the Board of Directors after the close of the year.
Incentive awards are made from individual target incentive award amounts, which
are prescribed percentages of the individual participants' salaries, ranging
from 20% to 35% depending on each participant's payroll salary grade. A
participant may, by achieving his or her pre-established performance levels
with respect to specific shareholder goals, customer goals and individual goals
for a year, become eligible for an incentive award of up to 150% of his or her
target incentive award amount for that year.

The above table shows, in the column captioned "Bonus," the incentive awards
paid for the years 1991, 1992 and 1993, pursuant to this program, to the
persons named.

In January 1988, the Company entered into employment agreements with Messrs.
Grossi, Fiscus and Crowe, each of which will continue in effect until
terminated by the Company on three years' notice or by the officer on six
months' notice. These agreements provide that the annual salary rates of
Messrs. Grossi, Fiscus and Crowe will be $141,000, $128,500 and $102,000,
respectively, subject to upward revision by the Board of Directors at such
times as the salary rates of other officers of the Company are reviewed by the
directors, and subject to downward revision by the Board of Directors
contemporaneously with any general reduction of the salary rates of other
officers of the Company, except in the event of a change in control of the
Company. The salaries paid to Messrs. Grossi, Fiscus and Crowe in 1991, 1992
and 1993, shown on the above table, were paid pursuant to these agreements.
Each of these agreements also provides that when the officer's employment by
the Company terminates after he has served in accordance with its terms, the
Company will pay him an annual supplemental retirement benefit in an amount
equal to the excess, if any, of (A) over (B), where (A) is 2.2% of his highest
three-year average total compensation from the Company times the number of
years (not to exceed thirty) of his service deemed as an employee of the
Company, and (B) is the annual benefit payable to him under the Company's
pension plan. If the Company terminates the officer's employment without cause,
he will be paid the actuarial present value of this supplemental retirement
benefit. In the event of a change in control of the Company, a trust fund will
be established by the Company to ensure the performance of its payment
obligations under each of these employment agreements.

Mr. Morgan has elected early retirement under the Voluntary Early Retirement
Program offered, in November 1993, to all non-union employees who were eligible
to begin receiving pension benefits in 1994. Pursuant to this program, it is
anticipated that Mr. Morgan, who is 59 years old, will retire during 1994 and
that he will receive a single lump sum payment of $30,625, a Social Security
bridge payment of $550 per month until he is 62 years old, the same group
health and life insurance coverage that the Company provides to employees
retiring at 62 years of age, and an aggregate combination of

- 10 -
<PAGE>

six additional years of service and/or years of age for purposes of the
Company's pension plan that will produce an annual pension benefit payable as a
single life annuity of approximately $75,700.

STOCK OPTION PLAN

On May 23, 1990, the shareholders of the Company approved a stock option and
stock appreciation rights plan, The United Illuminating Company 1990 Stock
Option Plan (the "Plan"). The Plan is intended to promote the profitability of
the Company and its subsidiaries by: (i) providing certain officers and key
full-time employees with incentives to contribute to the success of the
Company, and (ii) enabling the Company to attract, retain and reward the best
available managerial employees. The Plan became effective as of January 22,
1990 and, unless terminated sooner by the Board of Directors, will terminate on
January 21, 2000. After termination, no further options or stock appreciation
rights will be granted under the Plan, although options and rights outstanding
on the termination date will not be canceled by the termination.

A maximum of 750,000 shares of the Company's no par value Common Stock may be
acquired by participants in the Plan. The shares acquired will be either
authorized but unissued shares or treasury shares, in the discretion of the
Company. Options under the Plan may be granted as Incentive Stock Options
("ISOs"), intended to qualify for favorable tax treatment under federal tax
law, or as Nonqualified Stock Options ("NSOs"). When ISOs or NSOs become
exercisable and are exercised by the employee to whom they have been granted,
the employee pays to the Company the exercise price per share fixed on the date
of the option grant and receives shares of Common Stock equal to the number of
ISOs or NSOs exercised. All proceeds received by the Company from the exercise
of options will be used for general corporate purposes. Stock Appreciation
Rights ("SARs") may also be granted under the Plan, but only in tandem with
ISOs or NSOs. When SARs become exercisable and are exercised, the employee
receives shares of Common Stock having an aggregate fair market value on the
exercise date equal to the difference between the fair market value per share
of the Common Stock on that date and the exercise price per share of the tandem
ISOs or NSOs, multiplied by the number of SARs exercised. The exercise of an
ISO or NSO automatically extinguishes any tandem SAR; and the exercise of an
SAR automatically extinguishes its tandem ISO or NSO.

The Plan requires that the exercise price per share for all options be equal
to or greater than the fair market value of the Common Stock on the date of the
grant of the option. In the case of the grant of any ISO to an optionee who, at
the time of the grant, owns more than 10% of the total combined voting power of
all classes of stock of the Company or any subsidiaries, the Plan requires that
the option exercise price per share be equal to or greater than 110% of the
fair market value of shares of Common Stock on the date the option is granted.
Fair market value on any date is determined by averaging the high and low sale
prices on that date of the Common Stock on the New York Stock Exchange. The
exercise price of an option is payable in cash or in shares of Common Stock
having a fair market value on the date the option is exercised equal to the
aggregate exercise price of the options being exercised, or any combination of
cash and such shares.

The Company's Board of Directors, exclusive of any Director who is also an
employee, administers the Plan. The Board selects the optionees, determines the
number of stock options to be granted to each optionee, whether such stock
options will be NSOs or ISOs, and whether such stock options will have tandem
SARs. The Board also determines the period within which each stock option
granted will be exercisable, and may provide that the stock options will become
exercisable in

- 11 -
<PAGE>

installments. The following rules must be observed: (i) no stock option or SAR
may be exercisable less than one year, or more than ten years, from the date it
is granted, (ii) no more that 1/3 of the number of stock options or SARs
granted to any optionee on any date may first become exercisable in any twelve-
month period, (iii) in the case of the grant of an ISO to an optionee who, at
the time of the grant, owns more than 10% of the total combined voting power of
all classes of stock of the Company or any of its subsidiaries, in no event may
such ISO or any tandem SAR be exercisable more than five years from the date it
is granted, (iv) in the case of ISOs, the number of stock options granted to an
optionee on any date that may first become exercisable in any calendar year
must be limited to $100,000 divided by the exercise price per share, (v) stock
options may be exercised only in quantities of 500 or more shares, and (vi)
except as otherwise provided in the Plan, an optionee may exercise a stock
option or SAR only if he or she is, and has continuously been since the date
the stock option was granted, a full-time employee of the Company or one of its
subsidiaries.

Upon the termination of an optionee's full-time employment, whether as a
result of retirement, death, disability, or voluntary or involuntary
separation, all of the optionee's options (and any tandem SARs) that are not
then exercisable will automatically expire. Stock options (and any tandem SARs)
exercisable on the date of termination due to death will be exercisable for a
period of one year after the date of death. ISOs (and any tandem SARs)
exercisable on the date of termination due to retirement will be exercisable
for a period of three months after such termination. ISOs (and any tandem SARs)
exercisable on the date of termination due to a disability will be exercisable
for a period of one year after such termination. NSOs (and any tandem SARs)
exercisable on the date of termination due to retirement or disability will be
exercisable for a period of three years after such termination. All stock
options (and any tandem SARs) exercisable on the date of voluntary or
involuntary termination of full-time employment due to any cause other than
death, retirement, disability or termination in connection with an optionee's
acceptance of full-time employment by another business entity will be
exercisable as follows: ISOs will be exercisable within three months after the
date of termination and NSOs will be exercisable within five months after the
date of termination. However, if an optionee is terminated for cause or engages
in an occupation or business that is a competitor of the Company or any of its
subsidiaries, all of such optionee's unexercised stock options (and any tandem
SARs) may be canceled by the Board of Directors.

No ISOs or SARs have been awarded under the 1990 Stock Option Plan; and no
NSOs were awarded to the Chief Executive Officer or any of the other four most
highly compensated executive officers of the Company in 1991 or 1992. On
December 20, 1993, 14,000 NSOs were granted to the Chief Executive Officer and
13,600 NSOs were granted to the other four most highly compensated executive
officers of the company, as shown in the Long-Term Compensation Awards column
in the Executive Compensation table above and described in the following table,
together with Dividend Equivalent Units that are described at "Dividend
Equivalent Program" below.

- 12 -
<PAGE>

STOCK OPTION GRANTS IN 1993

<TABLE>
<CAPTION>
Number of
Securities % of Total
Underlying Options/SARs
Options/SARs Granted To Exercise
Granted Employees or Base Expiration Grant Date
Name (#)(/1/) In 1993 Price(/2/) Date Present Value(/3/)
- ---- ------------ ------------ ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Richard J. Grossi....... 14,000 39% $39.5625 12/20/03 $46,760
Robert L. Fiscus........ 7,000 19% $39.5625 12/20/03 23,380
James F. Crowe.......... 5,000 14% $39.5625 12/20/03 16,700
David W. Hoskinson...... 1,600 4% $39.5625 12/20/03 5,344
Leon A. Morgan(/4/)..... 0 0 - - -
</TABLE>
- ---------
(/1/) Options granted to each person in 1993. The Company has never awarded
stock appreciation rights (SARs) to any employee. One third of these
options become exercisable on each anniversary of the grant of the
options. Additionally, each of these options was granted together with a
dividend equivalent unit under the Company's "Dividend Equivalent
Program" described below, and the options cannot be exercised until the
Company's Board of Directors has confirmed the dividend equivalent
performance results for the related dividend performance period.
(/2/) Fair market value of the Company's Common Stock on the date of the grant
of the option--December 20, 1993.
(/3/) Estimated using the Binomial option pricing model and assuming expected
annual volatility of .117, yield of 6.66%, risk-free rate of 6.10%, and
discounted at a compound rate of 3% per year to reflect the risk of
forfeiture due to termination before the options become exercisable.
(/4/) Mr.Morgan has elected early retirement under a Voluntary Early Retirement
Program. See "Executive Compensation" above.

STOCK OPTION EXERCISES IN 1993 AND YEAR-END OPTION VALUES

The following table shows aggregated Common Stock option exercises during
1993 by the Chief Executive Officer and each of the other four most highly
compensated executive officers of the Company, including the aggregate value of
gains on the dates of exercise. In addition, this table shows the number of
shares covered by both exercisable and non-exercisable options as of December
31, 1993. Also reported are the values as of December 31, 1993 for "in-the-
money" options, calculated as the positive spread between the exercise price of
existing options and the year-end fair market value of the Company's Common
Stock. The Company has never awarded stock appreciation rights (SARs) to any
employee.

- 13 -
<PAGE>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at FY-End(#) at FY-End ($)(/3/)
-------------------------------- --------------------------------
Shares Acquired
Name on Exercise(#) Value Realized($)(/1/) Exercisable Not Exercisable(/2/) Exercisable Not Exercisable(/2/)
---- --------------- ---------------------- ----------- -------------------- ----------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Grossi. 0 $ 0 22,000 52,000 $202,125 $354,375
Robert L. Fiscus.. 0 $ 0 27,000 45,000 $248,063 $351,750
James F. Crowe.... 0 $ 0 12,000 29,000 $110,250 $222,375
David W.
Hoskinson........ 4,000 $46,000 0 5,600 $ 0 $ 37,350
Leon A. Morgan.... 4,000 $44,500 2,000 4,000 $ 18,375 $ 36,750
</TABLE>
- ---------
(/1/) Fair market value at exercise date less exercise price.
(/2/) The shares represented could not be acquired by the persons named as of
December 31, 1993, and future exercisability of the options is subject
to the persons' remaining employed by the Company for varying periods of
time, absent retirement, death or total disability.
(/3/) Fair market value of shares at December 31, 1993 ($39.9375) less exercise
price.

DIVIDEND EQUIVALENT PROGRAM

In 1993 the Board of Directors formulated a Dividend Equivalent Program for
officers of the Company. The purpose of this program is to increase the
alignment between the long-term incentive program and the Company's long-term
objective of achieving a superior total return to shareholders compared to peer
electric utilities. Under the program, an initial two-year Performance Period
and an initial three-year Performance Period commenced on January 1, 1994 and a
series of three-year Performance Periods will commence on January 1, 1995 and
on each January 1 thereafter to and including January 1, 2003. At or prior to
the commencement of each Performance Period, the Board of Directors designates
the officers of the Company, if any, who will be participants in the program
for that Performance Period, the number of Dividend Equivalent Units to be
awarded each officer-participant for that Performance Period, and a peer group
of investor-owned electric utility companies comparable to the Company for that
Performance Period. Each Dividend Equivalent Unit ("Unit") is an amount of
money equal to the sum of all dividends paid per share of the Company's Common
Stock during the Performance Period. At the end of each Performance Period, the
number of Units earned for the Performance Period is calculated on the basis of
the Company's total shareholder return during the Performance Period relative
to the peer group of companies preselected by the Board of Directors. Total
shareholder return for the Company and each member of the peer group for a
Performance Period is measured by the formula:

Change in Market Price from Dividends Paid
+
Beginning to End of Period During the Period
-----------------------------------------------
Market Price at Beginning of Period

If the Company's total shareholder return for the Performance Period ranks at
the 60th percentile among the total shareholder returns of the peer group
companies, the number of Units earned will

- 14 -
<PAGE>

equal the number of Units awarded for the Performance Period. If the Company's
total shareholder return ranks at the 90th percentile or higher among those of
the peer group, the number of Units earned will be twice the number awarded. If
the Company's total shareholder return ranks at the 30th percentile or lower
among those of the peer group, no Units will be earned for the Performance
Period. If the Company's total shareholder return ranks between the foregoing
percentiles, the number of Units earned will be calculated by interpolating on
a straight-line basis from zero to two times the number of Units awarded.
However, no Units awarded will be earned if the Company's total shareholder
return for the Performance Period does not at least equal the average Ask Yield
quoted on the first trading day of the Performance Period for United States
Treasury notes maturing during the month of January following the end of the
Performance Period.

On December 20, 1993, Dividend Equivalent Units were awarded by the Board of
Directors for the initial two-year and three-year Performance Periods under
this program, together with Stock Options (as shown in the Long-Term
Compensation Awards column in the Executive Compensation table above), as
described in the following table. The Board of Directors selected the companies
comprising the S&P Electric Power Companies Index as the peer group for each of
these Performance Periods.

LONG-TERM INCENTIVE PLANS
DIVIDEND EQUIVALENT UNITS AWARDS IN 1993

<TABLE>
<CAPTION>
Estimated Future Payouts
under Non-Stock Price-
Number Performance Based Plans
of Shares, or Other ---------------------------
Units Period Until Maximum
or Other Maturation Threshold Target (#
Name Rights(#)(/1/) or Payout (# Units) (# Units) Units)
- ---- -------------- --------------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Richard J. Grossi... 7,000 1/1/94-12/31/95 1 7,000 14,000
7,000 1/1/94-12/31/96 1 7,000 14,000
Robert L. Fiscus.... 3,500 1/1/94-12/31/95 1 3,500 7,000
3,500 1/1/94-12/31/96 1 3,500 7,000
James F. Crowe...... 2,500 1/1/94-12/31/95 1 2,500 5,000
2,500 1/1/94-12/31/96 1 2,500 5,000
David W. Hoskinson.. 800 1/1/94-12/31/95 1 800 1,600
800 1/1/94-12/31/96 1 800 1,600
Leon A. Morgan(/2/). 0 - - - -
</TABLE>
- ---------
(/1/) Dividend Equivalent Units awarded to each person in 1993.
(/2/) Mr. Morgan has elected early retirement under a Voluntary Early Retirement
Program. See "Executive Compensation" above.

It is anticipated that the Board of Directors will make awards of Dividend
Equivalent Units in 1994, and each year thereafter through 2002, for one three-
year Performance Period commencing on January 1 of the following year.

RETIREMENT PLANS

The following table shows the estimated annual benefits payable as a single
life annuity under the Company's qualified defined benefit pension plan on
retirement at age 65 to persons in the earnings

- 15 -
<PAGE>

classifications and with the years of service shown. Retirement benefits under
the plan are determined by a fixed formula, based on years of service and the
employee's average annual earnings from the Company during the three years
during which the employee's earnings from the Company were the highest, applied
uniformly to all employees.

<TABLE>
<CAPTION>
Employee's Average
Annual Earnings During Estimated Annual Benefits Payable at Age 65
the Highest 3 ----------------------------------------------------------------
Years of Service(/1/) 20 Years 25 Years 30 Years 35 Years 40 Years
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $37,162 $ 46,953 $ 47,944 $ 48,889 $ 49,760
$150,000 $57,162 $ 71,953 $ 72,944 $ 73,889 $ 74,760
$200,000 $77,162 $ 96,953 $ 97,944 $ 98,889 $ 99,760
$250,000 $91,498(/2/) $114,874(/2/) $115,864(/2/) $116,809(/2/) $117,681(/2/)
$300,000 $91,498(/2/) $114,874(/2/) $115,864(/2/) $116,809(/2/) $117,681(/2/)
$350,000 $91,498(/2/) $114,874(/2/) $115,864(/2/) $116,809(/2/) $117,681(/2/)
$400,000 $91,498(/2/) $114,874(/2/) $115,864(/2/) $116,809(/2/) $117,681(/2/)
$450,000 $91,498(/2/) $114,874(/2/) $115,864(/2/) $116,809(/2/) $117,681(/2/)
</TABLE>
- -------------
(/1/) Earnings include annual salary and cash bonus awards paid pursuant to the
Company's Executive Incentive Compensation Program.
(/2/) Internal Revenue Code Section 401(a)(17) limits earnings used to calculate
qualified plan benefits to $235,840 for 1993 and $150,000 for 1994. The
1993 limit was used in the preparation of this table. (In addition,
qualified plan benefits cannot exceed an Internal Revenue Code Section
415(b) limit of $118,800 for 1994).

The Board of Directors adopted a plan in 1986 that affords each officer of
the Company an option to defer the payment of up to 25% of his or her salary,
or up to 100% of any incentive program award to him or her. Under the plan, the
officer is credited quarterly with interest on the deferred amounts (and
previously credited interest) equal to the then prime rate at Fleet Bank. The
deferred amounts plus interest are paid beginning with the fourth or the
eleventh calendar year following the calendar year in which the officer's
salary or award was payable, or beginning with the calendar year following the
termination of his or her employment by the Company, as elected by the officer.
Payment is either in a lump sum or in not more than ten equal annual
installments, as the officer specifies. For tax purposes, the amounts deferred
plus interest are income only upon receipt by the officer and are a deduction
for the Company in the year of actual payment.

The Company has in effect an Employee Savings Plan (the "401(k) Plan") in
which substantially all employees of the Company are eligible to participate.
The 401(k) Plan enables employees to defer receipt of up to 15% or a dollar
amount that is adjusted from time to time by the United States Secretary of the
Treasury ($8,994 in 1993 and $9,240 in 1994), whichever is less, of their
compensation and to invest such funds in a number of investment alternatives.
Contributions to the 401(k) Plan through payroll deductions reduce an
employee's income for federal and State income tax purposes to the extent of
such contributions. In addition, federal and State income taxes on earnings
from such investments are deferred.

Subject to certain conditions, the Company makes matching contributions to
the 401(k) Plan for the account of each participating employee up to a maximum
amount equal to a percentage of such

- 16 -
<PAGE>

employee's annual compensation. Such matching contributions for 1991, 1992,
1993 and 1994 are as follows:

<TABLE>
<CAPTION>
Period Contribution
--------------------------------------------------------------------------
<C> <S>
2/1/91-1/31/92 50c for each $1.00 of participant's compensation deferred,
but not more than 1% of participant's annual compensation
2/1/92-1/31/93 50c for each $1.00 of participant's compensation deferred,
but not more than 2% of participant's annual compensation
2/1/93-1/31/94 50c for each $1.00 of participant's compensation deferred,
but not more than 2.5% of participant's annual
compensation
2/1/94-1/31/95 50c for each $1.00 of participant's compensation deferred,
but not more than 3.0% of participant's annual
compensation
</TABLE>

All Company contributions are invested in Common Stock of the Company. A
participant's interest in the funds contributed to the 401(k) Plan by the
Company is fully vested from the date of such contribution.

A participant in the 401(k) Plan is entitled to receive distributions of
amounts allocated to his or her account following termination of employment
with the Company or upon attainment of age 59 1/2. A Pension Committee, whose
members are appointed by the Board of Directors, may authorize distributions to
be made under certain other circumstances involving financial hardship of a
participant. Distributions following termination of employment may be made in
either a lump sum or, if the amount in a participant's account exceeds $3,500,
over a period extending beyond the participant's termination date.

Benefits under the Company's Employee Stock Ownership Plan (ESOP) have been
available to all employees upon their attaining 21 years of age and completing
three years of service with the Company. Directors who are not employees of the
Company do not participate in this plan. Through 1987, under the plan, the
Company reduced its Federal income taxes by taking a tax credit and
contributing to the ESOP either an equivalent amount of cash, with which the
ESOP purchased shares of the Company's outstanding Common Stock in the market,
or an equivalent dollar amount of shares of the Company's authorized but
unissued Common Stock at a value per share equal to the average market value of
the Company's outstanding Common Stock for the 20 trading days immediately
preceding the date of contribution. The contributed shares were divided among
the accounts of the employee-participants in the ESOP in proportion to the
amounts of their annual compensation. Through 1986, an additional tax credit
and Company contribution of cash or Common Stock to the ESOP was permitted to
the extent that it was matched, dollar-for-dollar, by voluntary employee
contributions, which were used to purchase additional shares of Common Stock in
the market or from the Company on the same value per share basis. The available
voluntary matching contribution opportunity was allocated among employee-
participants in proportion to the amounts of their annual compensation, and the
additional contributed and purchased matching contribution shares were credited
to the ESOP accounts of the voluntary contributors. Neither the Company nor the
employee-participants have made any contributions to the ESOP since 1987. The
Common Stock in each employee-participant's ESOP account is held in trust and
distributed to the employee when his or her employment terminates.

* * * *

- 17 -
<PAGE>

BOARD OF DIRECTORS COMPENSATION AND
EXECUTIVE DEVELOPMENT COMMITTEE
REPORT ON EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION PHILOSOPHY

The objective of the Company's executive compensation program is to link
executive compensation with shareholder value, to attract and to retain
qualified executives, and to produce strong financial performance for the
benefit of our shareholders while providing a high level of customer service
and value for our customers. In order to meet this objective, the compensation
program is designed to be competitive with the compensation programs provided
by other electric utilities of comparable size with which we compete for
executives.

EXECUTIVE COMPENSATION PROGRAM

Each year the Compensation and Executive Development Committee recommends to
the Board of Directors compensation arrangements for senior officers, including
the review and approval of annual salaries, salary grades and structure, annual
and long-term incentive plan awards, standards of performance for new awards,
payouts from past awards, program participation and program design.

The Company's executive compensation program is comprised of three
components: salary, annual incentive compensation, and long-term incentive
plans.

Salary ranges are set by periodic comparison to external rates of pay for
comparable positions in other electric utilities as reported in the Edison
Electric Institute's Executive compensation survey (the EEI Survey).

Annual Executive Incentive Compensation Program (EICP) opportunities are
targeted such that the combination of base salary and annual incentive
compensation awards, assuming pre-established performance levels for the
current year are met, approximates on average the 50th percentile of
competitive practice for comparable positions as reported in the EEI Survey.
Goals are established for shareholder, customer, and individual performance,
with achievement of a threshold level of earnings per share required in order
for any annual incentive compensation to be earned.

In 1993, the Company modified its long-term incentive program by introducing
performance-indexed dividend equivalent units to accompany annual stock option
grants. The purpose of this modification was to increase the alignment between
the long-term incentive program and the Company's long-term objective of
achieving a superior total return to shareholders compared to peer electric
utilities. By granting dividend equivalent units in addition to stock options,
the program links long-term incentive compensation to total return rather than
to stock price appreciation only. Further, the number of dividend equivalent
units earned is dependent on the Company's total shareholder return relative to
peer utilities over a three-year performance period and on the Company's
achieving a total return at least equal to the yield on a three-year Treasury
note at the beginning of the period. Long-term incentive opportunities are
targeted such that the combination of salary, annual incentive at targeted
performance, and long-term incentives assuming the relative shareholder return
target is met, approximates on average the 50th percentile of competitive
practice for comparably-salaried utility executives as reported in the EEI
Survey.

- 18 -
<PAGE>

The Company believes that its senior executives should own significant, yet
affordable, amounts of the Company's stock. The Committee has adopted a
requirement that, over a three-year period and based on position level,
officers should own directly or indirectly from 500 to 5000 shares of Company
stock in order to continue to be eligible to participate in the Company's
incentive compensation programs.

The Company does not anticipate that any compensation paid to executive
officers during 1994 will become non-deductible under Internal Revenue Code--
Section 162(m) (the "million dollar pay cap").

CHIEF EXECUTIVE OFFICER AND SENIOR OFFICER COMPENSATION--1993

Based on the advice of professional consultants independently employed by
this Committee and coupled with our individual business judgments, the
Compensation and Executive Development Committee and the Board of Directors
reviewed and approved the level and form of senior officer compensation for
1993.

Mr. Grossi's salary, as Chairman of the Board of Directors and Chief
Executive Officer, for 1993 was $280,000 which is below the median salary for
this position at other electric utilities of comparable size as reported in the
EEI Survey. The Committee recommended, and the Board approved, a 1993 EICP
award of $100,000 to Mr. Grossi, representing 102% of his targeted annual
incentive award for 1993. Eighty percent of the award was based on the
Company's performance against pre-established goals with respect to the
following measures: earnings per share (20%), internal generation of funds
(20%), customer satisfaction (16%), total price/kilowatthour (KWH) relative to
inflation (12%), and industrial price/KWH relative to inflation (12%). During
1993, earnings per share, internal generation of funds and total price/KWH
relative to inflation were slightly below target while customer satisfaction
and industrial price/KWH relative to inflation significantly exceeded target.
The remaining 20% of the award was based on the Committee's qualitive
assessment of the performance of the Company's officers as a group with respect
to strategic opportunities during 1993. This assessment focused on the
officers' leadership in stimulating economic development in the region and
guiding the Company through a reorganization process which will reduce future
costs, increase productivity and further improve customer service.

On December 20, 1993, two separate grants of dividend equivalent units
accompanied by stock options were made to Mr. Grossi. He was granted 7,000
dividend equivalent units in connection with the initial two-year (1994-95)
performance period under the Company's new dividend equivalent program,
together with 7,000 stock options. He also was granted 7,000 dividend
equivalent units in connection with the three-year performance period beginning
in 1994, together with 7,000 stock options. In addition, during 1993 Mr. Grossi
was awarded shares of Common Stock and a partial cash payment in an aggregate
amount equivalent to 2,380 shares of Common Stock pursuant to the Company's
1987 Long-Term Incentive Program (LTIP). For the 1989-92 performance period,
the last period for which grants were made under the 1987 LTIP, the Company's
total shareholder return was at the 82nd percentile of the pre-established peer
group, generating an award equal to 85% of the total shares granted.

For the other executive officers of the Company, total compensation for 1993
was approximately at target due to achievement, on average, of corporate and
individual goals under the EICP. In 1993, Messrs. Fiscus and Crowe also were
awarded shares of Common Stock and a partial cash payment in

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<PAGE>

amounts equivalent to 2,163 shares and 1,484 shares, respectively, of Common
Stock earned under the 1989-92 cycle of the 1987 LTIP.

COMPENSATION AND EXECUTIVE
DEVELOPMENT COMMITTEE

John F. Croweak Frank R. O'Keefe,
J. Hugh Devlin Jr.
Betsy Henley-Cohn James A. Thomas

* * * *

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No director of the Company who served as a member of the Compensation and
Executive Development Committee during 1993 was, during 1993 or at any time
prior thereto, an officer or employee of the Company. During 1993 no director
of the Company was an executive officer of any other entity on whose Board of
Directors an executive officer of the Company served, except that John F.
Croweak, a director of the Company and a member of the Compensation and
Executive Development Committee of the Company's Board of Directors, served as
Chairman of the Board of Directors, President and Chief Executive Officer of
Blue Cross & Blue Shield of Connecticut, Inc., and Richard J. Grossi, Chairman
of the Board of Directors and Chief Executive Officer of the Company, served as
a director of Blue Cross & Blue Shield of Connecticut, Inc.

DIRECTOR COMPENSATION

The remuneration of directors of the Company includes a retainer fee of
$4,000 per quarter year (one fourth of which is payable in shares of Common
Stock or by credit to a stock account under the Directors' Deferred
Compensation Plan described below), plus a fee of $600 for each meeting of the
Board of Directors or committee of the Board of Directors attended. Committee
chairpersons receive an additional retainer fee of $500 per quarter year.
Directors who are employees of the Company receive no retainer or meeting
attendance fees. Non-employee directors are also provided travel/accident
insurance coverage in the amount of $200,000.

Under the Company's Directors' Retirement Program, each director retiring
with at least five years but less than ten years of non-employee service on the
Board of Directors receives a retirement benefit for a number of years equal to
his or her years of non-employee service as a director. Each director retiring
after his or her 65th birthday with ten or more years of non-employee service
receives a lifetime retirement benefit. In either case, the retirement benefit
is paid at the rate of the director's retainer fee in effect at the time of his
or her retirement, and is subject to periodic review and revision by the Board
of Directors thereafter. If a director dies either while in service or
subsequent to his or her retirement but prior to the payment of retirement
benefits for the number of years that the director served on the Board of
Directors, the amount of earned but unpaid retirement benefits is paid to the
director's beneficiary, provided that the director has served on the Board of
Directors for at least five years.

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Under the Company's Directors' Deferred Compensation Plan, each non-employee
director has an option to defer the payment of all or part of his or her
retainer and meeting attendance fees. Under the plan, amounts deferred are
credited quarterly, at the director's election, to either a stock account
(based on the fair market value of the Company's Common Stock on the date
payment of the fee or retainer accrues) or a cash account. Amounts equal to
cash dividends on the shares represented in the stock account are credited to
the stock account. The cash account accrues interest quarterly at the then
prime rate at Citibank, N.A. Shares represented in a stock account are payable,
in cash only, upon termination of service on the Board of Directors, based on
the fair market value of the Company's Common Stock on the date of termination.
For income tax purposes, the amounts deferred plus interest are income only
upon receipt by the director and are a deduction for the Company in the year of
actual payment.

SHAREHOLDER RETURN PRESENTATION

Set forth below is a line graph comparing the yearly percentage change in the
Company's cumulative total shareholder return on its Common Stock with the
cumulative total return on the S&P Composite--500 Stock Index, the S&P Public
Utility Index and the S&P Electric Power Companies Index for the period of five
fiscal years commencing 1989 and ended 1993.

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<PAGE>

COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN*

[GRAPH APPEARS HERE]

* Assumes that the value of the investment in the Company's Common Stock and
each index was $100 on December 31, 1988 and that all dividends were
reinvested. For purposes of this graph, the yearly percentage change in
cumulative total shareholder return is measured by dividing (i) the sum of
(A) the cumulative amount of dividends for the year, assuming dividend
reinvestment, and (B) the difference in fair market value at the end and the
beginning of the year, by (ii) the fair market value at the beginning of the
year. The changes displayed are not necessarily indicative of future returns
measured by this, or any, method.

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EMPLOYMENT OF INDEPENDENT PUBLIC ACCOUNTANTS:

The Board of Directors of the Company, at a meeting held on January 24, 1994,
and in accordance with the recommendation of its Audit Committee, voted to
employ the firm of Coopers & Lybrand to make an audit of the books and affairs
of the Company for the fiscal year 1994. This firm has audited the books and
affairs of the Company since 1938. In accordance with Coopers & Lybrand's
general policy, the staff assigned to the examination of the Company's books
and affairs is appropriately rotated. One or more representatives of Coopers &
Lybrand will attend the annual meeting, will be afforded the opportunity to
make a statement if they desire to do so and will be available to answer
questions that may be asked by shareholders.

If the shareholders do not, by the affirmative vote of a majority of the
shares of Common Stock represented at the meeting, approve the employment of
Coopers & Lybrand as independent auditors, their employment will be
reconsidered by the Board of Directors.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING PROPOSAL.

DATE FOR SUBMISSION OF PROPOSALS BY SECURITY HOLDERS:

Shareholders who intend to present proposals for action at the 1995 Annual
Meeting of the Shareholders of the Company are advised that such proposals must
be received at the principal executive offices of the Company by December 9,
1994 in order to be included in the Company's proxy statement and form of proxy
for that meeting.

----------------------------------------------------------
THE COMPANY HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, PURSUANT
TO RULE 13A-1 OF THE COMMISSION UNDER SECTION 13 OF THE SECURITIES EXCHANGE ACT
OF 1934, AN ANNUAL REPORT (FORM 10-K) FOR THE FISCAL YEAR ENDED DECEMBER 31,
1993. THE COMPANY WILL PROVIDE A COPY OF SAID FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, WITHOUT CHARGE, TO EACH PERSON
FROM WHOM THE BOARD OF DIRECTORS HAS SOLICITED A PROXY FOR USE AT THE ANNUAL
MEETING OF THE SHAREHOLDERS OF THE COMPANY AS SET FORTH IN THE FOREGOING PROXY
STATEMENT, ON THE WRITTEN REQUEST OF SUCH PERSON DIRECTED TO KURT MOHLMAN,
TREASURER AND SECRETARY, THE UNITED ILLUMINATING COMPANY, 157 CHURCH STREET,
NEW HAVEN, CONNECTICUT 06506. COPIES OF SAID FORM 10-K FURNISHED WITHOUT CHARGE
WILL NOT INCLUDE ALL OF THE EXHIBITS THERETO. THE COMPANY WILL FURNISH A COPY
OF ANY SUCH EXHIBIT UPON THE PAYMENT OF A FEE TO DEFRAY THE COMPANY'S EXPENSE
(10 CENTS PER PAGE, PLUS POSTAGE) OF FURNISHING IT.
----------------------------------------------------------

BY ORDER OF THE BOARD OF DIRECTORS

Kurt Mohlman, Treasurer and
Secretary

April 8, 1994

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[ART TO BE PASTED]

<PAGE>

Shown on the back cover of the Proxy Statement is a map with
directions to The New Haven Lawn Club.

<PAGE>

THE UNITED ILLUMINATING COMPANY COMMON STOCK PROXY
The undersigned hereby appoints John D. Fassett, F. Patrick McFadden, Jr. and
William S. Warner agents, for and in the name of the undersigned and with all
powers the undersigned would possess if personally present, to vote all shares
of the Common Stock of The United Illuminating Company which the undersigned is
entitled to vote at the Annual Meeting of the Shareholders to be held on
Wednesday, May 18, 1994, and at any adjournments thereof:

(1) ELECTION OF A BOARD OF DIRECTORS

[_] FOR all nominees listed below (except as instructed below):

[_] WITHHOLD AUTHORITY to vote for all nominees listed below:

David E.A. Carson John D. Fassett
John F. Croweak Robert L. Fiscus
J. Hugh Devlin Richard J. Grossi

Betsy Henley-Cohn Frank R. O'Keefe, Jr.
John L. Lahey James A. Thomas
F. Patrick McFadden, Jr. William S. Warner

and, in their discretion, such other person or persons as the present
Board of Directors shall determine, if one or more of said nominees is
unable to serve.

*INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
PRINT THAT NOMINEE'S NAME IN THIS SPACE:

(2) APPROVAL OF THE EMPLOYMENT OF COOPERS & LYBRAND AS INDEPENDENT AUDITORS
FOR FISCAL YEAR 1994. (Proposed by the Board of Directors.)

[_] FOR [_] AGAINST [_] ABSTAIN

(Continued and to be signed on reverse side)

<PAGE>

(3) In their discretion on any other matters which may properly come before
said meeting or any adjournments thereof.

This proxy, when properly signed and returned to the Company, will be voted
in the manner directed above. UNLESS OTHERWISE DIRECTED ABOVE, THE
UNDERSIGNED'S VOTE WILL BE CAST FOR THE ELECTION OF ALL OF THE NOMINEES LISTED
ABOVE TO THE BOARD OF DIRECTORS AND FOR ITEM (2).

Dated , 1994
----------------

----------------------------

----------------------------
PLEASE SIGN HERE

When signing as attorney,
executor, administrator,
trustee or guardian, give
title as such. If the
signer is a corporation,
sign in the corporate name
by duly authorized officer.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS