<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 [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] 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)
Kurt Mohlman
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(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
March 29, 1995
Dear Fellow Shareowner:
You are cordially invited to attend the Annual Meeting of the Shareowners of
The United Illuminating Company, which will be held on Wednesday, May 17, 1995
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 17.
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 SHAREOWNERS
TO THE SHAREOWNERS:
Notice is hereby given that the Annual Meeting of the Shareowners of The
United Illuminating Company will be held at the New Haven Lawn Club, 193
Whitney Avenue, New Haven, Connecticut, on Wednesday, May 17, 1995 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 L.L.P. as the firm of independent public accountants
to audit the books and affairs of the Company for the fiscal year 1995.
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 13, 1995 as
the record date for determination of the shareowners 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 29th day of March, 1995.
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
March 29, 1995, to security holders of record as of the close of business on
March 13, 1995, in connection with the solicitation of proxies for use at the
Annual Meeting of the Shareowners of The United Illuminating Company to be held
at the New Haven Lawn Club, 193 Whitney Avenue, New Haven, Connecticut on
Wednesday, May 17, 1995 at 10:00 a.m. for the purposes set forth in the
enclosed Notice of Annual Meeting of the Shareowners. 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,
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.
SHAREOWNERS ENTITLED TO VOTE:
At the close of business on March 13, 1995, the record date for the meeting,
14,086,691 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 Shareowners 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 shareowners 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. The Bank of
New York, the Company's 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 L.L.P. as
independent auditors for the fiscal year 1995; 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 shareowner 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
shareowner 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.
Under Connecticut law and the Company's Certificate of Incorporation and
Bylaws, action by the shareowners 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.
<PAGE>
PRINCIPAL SHAREOWNERS:
At the close of business on March 13, 1995, there was no shareowner 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 Marc C. Breslawsky were elected directors at the
last annual meeting. In accordance with the retirement policy of the Board,
William S. Warner, a director since 1986, is not a candidate for re-election
this year.
<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>
Marc C. Breslawsky 52
Vice Chairman, Pitney Bowes, Inc., Stamford, Connecticut. Also,
Director, Pitney Bowes Credit Corp., the Computer and Business
Equipment Manufacturers Association and Health Systems, Inc.;
and Member, Corporate Council of Western Connecticut State
University
David E. A. Carson 60 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, Business Ad-
visory Committee of Connecticut Commission on Children, Bridge-
port Area Foundation and Savings & Community Bankers of Ameri-
ca; Trustee of Connecticut Public Broadcasting; Director of Old
State House, Hartford, Connecticut, Connecticut Mutual Invest-
ment Accounts and American Skandia Trust; and Member, Board of
Overseers, The Bushnell, Hartford, Connecticut and Bridgeport
Financial Review Board.
John F. Croweak 58 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, ProMed Sys-
tems, Inc., OPTIMED Medical Systems and Signal Medical Servic-
es, Inc..; and Director of BCS Financial, The New Haven Savings
Bank and Quinnipiac College.
J. Hugh Devlin 52 1989
Managing Director and Consultant, Barr Devlin Associates, In-
corporated, New York, New York. From 1975 through 1988, Mr.
Devlin was a Managing Director of Morgan Stanley & Co, Inc.,
during which time he served as head of its Public Utility
Group. From January 1989 to April 1990 Mr. Devlin served as Ad-
visory Director of Morgan Stanley & Co., Inc. Also, Chairman of
the Board of Trustees, Riverview Medical Center.
John D. Fassett 69 1972
Consultant; Author. Also, Director of The New Haven Savings
Bank and former Chairman of the Board of Directors and Chief
Executive Officer of the Company.
Robert L. Fiscus 57 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 1990 to May 1991. Also, Di-
rector of The Aristotle Corporation; Chairman of the Board of
Directors of Griffin Health Services Corporation and Griffin
Hospital; Member, Board of Governors of University of New Haven
and United Way of Greater New Haven.
</TABLE>
- 2 -
<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 59 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 1990 to May 1991 and Chief Operating Officer of the Company
during the period January 1990 to May 1991. Also, Director of
Tennis Foundation of Connecticut, Inc., The New Haven Savings
Bank, Blue Cross & Blue Shield of Connecticut, Inc., Edison
Electric Institute and Connecticut Business and Industry Asso-
ciation; Trustee of Yale-New Haven Hospital and North American
Electric Reliability Council; and Chairman, Connecticut Public
Broadcasting, Inc., New Haven Regional Leadership Council,
Electric Council of New England and Executive Committee of the
Seabrook Joint Owners.
Betsy Henley-Cohn 42 1989
Chairman of the Board of Directors, Joseph Cohn & Son, Inc.,
New Haven, Connecticut. Also, Chairwoman of Birmingham Utili-
ties, Inc.; Chairman, Board of Commissioners, 9th Square Tax
District, City of New Haven; and Director of The Aristotle Cor-
poration.
John L. Lahey 48 1994
President, Quinnipiac College, Hamden, Connecticut. Also,
Chairman of the Board, Connecticut Conference of Independent
Colleges; President, Connecticut Chapter of The Newcomen Socie-
ty; Director of Oakdale Theater, Wallingford, Connecticut and
Council for the Advancement and Support of Education; Vice
Chairman, Regional Plan Association Board, New York, New York;
Co-Chairman, Connecticut Committee of the Regional Plan Associ-
ation Board; and Member, Greater New Haven Regional Leadership
Council.
F. Patrick McFadden, Jr. 57 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; and Director of The Community Foundation
for Greater New Haven.
Frank R. O'Keefe, Jr. 65 1989
Retired; former President, Long Wharf Capital Partners Inc.
1988-1990; retired Chairman, President and Chief Executive Of-
ficer, Armtek Corporation 1986-1988; President and Chief Oper-
ating Officer, Armstrong Rubber Company 1980-1986; and Director
of Aetna Life and Casualty Company and Southern New England
Telecommunications Company.
James A. Thomas 56 1992
Master, Saybrook College, Yale University and Associate Dean,
Yale Law School. Also, Trustee of Yale-New Haven Hospital and
People's Mutual Holdings; Advisory Director of People's Bank;
and Director of People's Bank Holding Company and Shubert The-
ater, New Haven, Connecticut.
</TABLE>
------------
/1/ Age at May 17, 1995. 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.
- 3 -
<PAGE>
The Board of Directors held 10 meetings during 1994. The average attendance
record of the directors was 99.0% for meetings of the Board of Directors and
its committees held during 1994.
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, met once during 1994.
Ms. Henley-Cohn and Messrs. Carson, Fassett, Lahey, McFadden, 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 three meetings during 1994.
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 five meetings during 1994.
Ms. Henley-Cohn and Messrs. Carson, Croweak, Devlin, Lahey 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 1994.
Messrs. Carson, Devlin, McFadden, O'Keefe and Thomas serve on the Committee
on Directors. The Committee on Directors, a standing committee that recommends
policy with respect to the composition, organization, practices and
compensation of the Board of Directors and performs the nominating function for
the Board, held five meetings in 1994. The Committee on Directors will consider
nominees for election as directors recommended by shareowners 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.
- 4 -
<PAGE>
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
1994 and by all directors, the nominee director and officers as a group, as of
March 13, 1995:
<TABLE>
<CAPTION>
Shares
Name of Individual or Beneficially
Number of Persons in Owned Directly
Group or Indirectly(/1/)
------------------------------------------------------------------
<S> <C>
Marc C. Breslawsky 100
David E. A. Carson 323(/2/)
John F. Croweak 728
J. Hugh Devlin 500(/2/)
John D. Fassett 9,100(/2/)
Robert L. Fiscus 74,416
Richard J. Grossi 67,998
Betsy Henley-Cohn 2,269
John L. Lahey 220
F. Patrick McFadden, Jr. 728
Frank R. O'Keefe, Jr. 737
James A. Thomas 388(/2/)
William S. Warner 728
James F. Crowe 41,519
David W. Hoskinson 5,920
Albert N. Henricksen 7,971
25 Directors, the Nominee Director and Officers as
a group, including those named above 257,801
</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, 60,000 shares, Robert L.
Fiscus, 65,000 shares, James F. Crowe, 36,000 shares, David W. Hoskinson,
4,000 shares, Albert N. Henricksen, 6,000 shares and Directors and
Officers as a group, 256,400 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 1,479,
1,763, 237 and 66 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, 6,765 shares with
respect to Mr. Fiscus, 100 shares with respect to Mr. Grossi, 110 shares with
respect to Mr. Thomas, 523 shares with respect to Mr. Crowe, 405 shares with
respect to Mr. Henricksen and 9,621 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: 108 shares with respect to Mr. Carson, 5,723
shares with respect to Mr. Grossi, 2,035 shares with respect to Ms. Henley-
Cohn, 618 shares with respect to Mr. O'Keefe, 50 shares with respect to Mr.
Thomas, 10 shares with respect to Mr. Crowe, and 9,598 shares with respect to
all directors, the nominee director and officers as a group.
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 14,086,691
shares of Common Stock outstanding as of March 13, 1995. The number of shares
of Common Stock beneficially owned by all of the directors, the nominee
director and officers as a group represents approximately 1.8% of the
outstanding shares of Common Stock as of March 13, 1995.
- 5 -
<PAGE>
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, 1994 all
Section 16(a) filing requirements applicable to its directors, officers and
greater-than-ten-percent shareowners were complied with.
EXECUTIVE COMPENSATION
The following table shows the annual and long-term compensation, for services
in all capacities to the Company for the years 1994, 1993 and 1992, of those
persons who were, at December 31, 1994 (i) the chief executive officer and (ii)
the other four most highly compensated executive officers of the Company:
<TABLE>
<CAPTION>
Long-Term Compensation
--------------------------------------
Annual Compensation (/1/) Awards Payouts
------------------------- --------------------- ----------------
Name and Securities Underlying LTIP All Other
Principal Position Year Salary ($) Bonus ($)(/2/) Options (#)(/3/) Payouts ($)(/4/) Compensation ($)(/5/)
------------------ ---- ---------- -------------- --------------------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Grossi 1994 $300,000 $ 75,200 7,000 $ 0 $4,620
Chairman of the Board 1993 $280,000 $100,000 14,000 $102,935 $4,497
of Directors and 1992 $250,000 $101,000 0 $ 0 $4,364
Chief Executive
Officer
Robert L. Fiscus 1994 $210,000 $ 43,600 3,500 $ 0 $4,620
President and Chief 1993 $200,000 $ 60,000 7,000 $ 93,550 $4,497
Financial Officer 1992 $190,000 $ 62,900 0 $ 0 $4,364
James F. Crowe 1994 $169,500 $ 32,800 2,500 $ 0 $4,620
Executive Vice 1993 $160,000 $ 45,000 5,000 $ 64,183 $4,497
President 1992 $139,700 $ 42,400 0 $ 0 $3,526
David W. Hoskinson 1994 $132,700 $ 25,500 800 $ 0 $4,620
Vice President 1993 $128,000 $ 33,400 1,600 $ 0 $4,080
1992 $122,600 $ 35,200 0 $ 0 $3,086
Albert N. Henricksen 1994 $123,600 $ 25,100 800 $ 0 $4,620
Vice President 1993 $106,500 $ 27,100 1,600 $ 0 $3,318
1992 $102,000 $ 26,200 0 $ 0 $2,494
</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 amounts appearing in this column are awards paid pursuant to the
Company's Executive Incentive Compensation Program described below.
(/3/)The Company has never awarded restricted stock or stock appreciation rights
(SARs) to any employee. 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 and 1994 were awarded together with Dividend Equivalent
Units described below at "Dividend Equivalent Program".
(/4/)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. There were no payouts prior to 1993 to any employee under the
Company's 1987 Long-Term Incentive Plan.
(/5/)The amounts appearing in this column are cash contributions by the Company
to its 401(k) Plan on behalf of each of the persons named to match pre-tax
elective deferral contributions by him to that plan from his salary and
bonus compensation (included in the columns captioned "Salary" and
"Bonus").
- 6 -
<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 shareowners 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 shareowner 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 shareowner 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 1992, 1993 and 1994, 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 1992, 1993
and 1994, 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. A trust fund has been established by the Company for the funding of
the supplemental retirement benefits accruing under these employment agreements
and to ensure the performance of the Company's other payment obligations under
each of these employment agreements in the event of a change in control of the
Company.
STOCK OPTION PLAN
On May 23, 1990, the shareowners 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
- 7 -
<PAGE>
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 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, unless the number of shares subject to stock
options exercisable by the optionee is less than 500, in which event the
optionee may exercise all, but not less than all, of such exercisable stock
options, 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
- 8 -
<PAGE>
Company in 1992. On December 20, 1993 and December 19, 1994, 14,000 and 7,000
NSOs, respectively, were granted to the Chief Executive Officer and 15,200 and
7,600 NSOs, respectively, 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.
STOCK OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
Number of
Securities % of Total
Underlying Options
Options Granted To Exercise
Granted Employees or Base Expiration Grant Date
Name (#)(/1/) In 1994 Price(/2/) Date Present Value(/3/)
---- ---------- ---------- ---------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Richard J. Grossi....... 7,000 38% $30.00 12/19/04 $21,700
Robert L. Fiscus........ 3,500 19% $30.00 12/19/04 $10,850
James F. Crowe.......... 2,500 13% $30.00 12/19/04 $ 7,750
David W. Hoskinson...... 800 4% $30.00 12/19/04 $ 2,480
Albert N. Henricksen.... 800 4% $30.00 12/19/04 $ 2,480
</TABLE>
--------
(/1/)Options granted to each person in 1994. 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 19, 1994.
(/3/)Estimated using the Binomial option pricing model and assuming expected
annual volatility of .124, yield of 7.09%, risk-free rate of 7.50%, and
discounted at a compound rate of 3% per year to reflect the risk of
forfeiture due to termination before the options become exercisable.
STOCK OPTION EXERCISES IN 1994 AND YEAR-END OPTION VALUES
The following table shows aggregated Common Stock option exercises during
1994 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, 1994. Also reported are the values as of December 31, 1994 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.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES(/1/)
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised Options In-the-Money Options
at FY-End(#)(/1/) at FY-End ($)(/4/)
-------------------------------- --------------------------------
Shares Acquired
Name on Exercise(#) Value Realized($)(/2/) Exercisable Not Exercisable(/3/) Exercisable Not Exercisable(/3/)
---- --------------- ---------------------- ----------- -------------------- ----------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Grossi. 0 $ 0 41,000 40,000 $ 0 $ 0
Robert L. Fiscus.. 0 $ 0 46,000 29,500 $ 0 $ 0
James F. Crowe.... 0 $ 0 24,000 19,500 $ 0 $ 0
David W.
Hoskinson........ 0 $ 0 2,000 4,400 $ 0 $ 0
Albert N.
Henricksen....... 0 $ 0 4,000 4,400 $ 0 $ 0
</TABLE>
--------
(/1/)The Company has never awarded stock or stock appreciation rights (SARs) to
any employee.
(/2/)Fair market value at exercise date less exercise price.
(/3/)The shares represented could not be acquired by the persons named as of
December 31, 1994, 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.
(/4/)Fair market value of shares at December 31, 1994 ($29.50) less exercise
price.
- 9 -
<PAGE>
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 shareowners 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 shareowner return during the Performance Period relative to
the peer group of companies preselected by the Board of Directors. Total
shareowner 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 shareowner return for the Performance Period ranks at
the 60th percentile among the total shareowner returns of the peer group
companies, the number of Units earned will equal the number of Units awarded
for the Performance Period. If the Company's total shareowner 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
shareowner 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 shareowner 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 shareowner 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 19, 1994, Dividend Equivalent Units were awarded by the Board of
Directors for a three-year Performance Period 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 1994
<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(#) or Payout (# Units) (# Units) Units)
---- ---------- --------------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Richard J. Grossi........ 7,000 1/1/95-12/31/97 1 7,000 14,000
Robert L. Fiscus......... 3,500 1/1/95-12/31/97 1 3,500 7,000
James F. Crowe........... 2,500 1/1/95-12/31/97 1 2,500 5,000
David W. Hoskinson....... 800 1/1/95-12/31/97 1 800 1,600
Albert N. Henricksen..... 800 1/1/95-12/31/97 1 800 1,600
</TABLE>
- 10 -
<PAGE>
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 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(/3/)
the Highest 3 --------------------------------------------------------------------------------
Years of Service(/1/)(/2/) 20 Years(/4/) 25 Years(/4/) 30 Years(/4/) 35 Years(/4/) 40 Years(/4/)
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$100,000 $37,117 $ 46,397 $ 46,997 $ 47,597 $ 48,197
$150,000 $57,117 $ 71,397 $ 71,997 $ 72,597 $ 73,197
$200,000 $75,729 $ 94,912 $114,432 $115,032 $115,632
$250,000 $89,348(/2/) $112,115(/2/) $114,432(/2/) $115,032(/2/) $115,632(/2/)
$300,000 $89,348(/2/) $112,115(/2/) $114,432(/2/) $115,032(/2/) $115,632(/2/)
$350,000 $89,348(/2/) $112,115(/2/) $114,432(/2/) $115,032(/2/) $115,632(/2/)
$400,000 $89,348(/2/) $112,115(/2/) $114,431(/2/) $115,032(/2/) $115,632(/2/)
$450,000 $89,348(/2/) $112,115(/2/) $114,431(/2/) $115,032(/2/) $115,632(/2/)
</TABLE>
--------
(/1/)Earnings include annual salary and cash bonus awards paid pursuant to the
Company's Executive Incentive Compensation Program. See "Executive
Compensation" above.
(/2/)Internal Revenue Code Section 401(a)(17) limits earnings used to calculate
qualified plan benefits to $150,000 for 1994 and 1995. This 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 $120,000 for
1995). The Board of Directors has adopted a supplemental executive
retirement plan that permits the Directors to award supplemental retirement
benefits to officers (other than Messrs. Grossi, Fiscus and Crowe)
individually selected by the Directors in amounts sufficient to prevent
these Internal Revenue Code limitations from adversely affecting their
retirement benefits determined by the pension plan's fixed formula.
(/3/)The amounts shown in the table are not subject to any deduction for Social
Security or other offset amounts.
(/4/)As of their last employment anniversary dates, Messrs. Grossi, Fiscus,
Crowe, Hoskinson and Henricksen had accrued 37, 22, 30, 37 and 31 years of
service, respectively.
* * * *
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 shareowner value, to attract and to retain
qualified executives, and to produce strong financial performance for the
benefit of our shareowners 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.
- 11 -
<PAGE>
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 shareowner, 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 shareowners 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 shareowner 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 shareowner return
target is met, approximates on average the 50th percentile of competitive
practice for comparably-salaried utility executives as reported in the EEI
Survey.
The Company does not anticipate that any compensation paid to executive
officers during 1995 will become non-deductible under Internal Revenue Code--
Section 162(m) (the "million dollar pay cap").
CHIEF EXECUTIVE OFFICER AND SENIOR OFFICER COMPENSATION--1994
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
1994.
Mr. Grossi's salary, as Chairman of the Board of Directors and Chief
Executive Officer, for 1994 was $300,000, 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 1994 EICP
award of $75,200 to Mr. Grossi, representing 72% of his targeted annual
incentive award for 1994. 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, internal generation of funds, customer
satisfaction, total price/kilowatthour (KWH) relative to inflation, and
industrial price/KWH relative to inflation. During 1994, 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 1994. This assessment focused on the officers' leadership in stimulating
economic development in the region and guiding the Company through a
reorganization process that will reduce future costs, increase productivity and
further improve customer service.
On December 19, 1994, a grant 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 three-year (1995-97) performance period under the
Company's dividend equivalent program, together with 7,000 stock options.
- 12 -
<PAGE>
For the other executive officers of the Company, total compensation for 1994
was approximately at target due to achievement, on average, of corporate and
individual goals under the EICP.
COMPENSATION AND EXECUTIVE
DEVELOPMENT COMMITTEE
Frank R. O'Keefe, Jr., Chairman Betsy Henley-Cohn
John F. Croweak James A. Thomas
J. Hugh Devlin
* * * *
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No director of the Company who served as a member of the Compensation and
Executive Development Committee during 1994 was, during 1994 or at any time
prior thereto, an officer or employee of the Company. During 1994 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 $700 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 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.
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 prime
rate in effect at the beginning of each month 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.
- 13 -
<PAGE>
SHAREOWNER RETURN PRESENTATION
Set forth below is a line graph comparing the yearly percentage change in the
Company's cumulative total shareowner 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 1990 and ended 1994.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG UIL, S&P 500 INDEX, S&P PUB. UTY, AND S&P EL. CO. INDEX
<TABLE>
<CAPTION>
S&P PUB. S&P EL.
Measurement period UTY. CO.
(Fiscal Year Covered) UIL S&P 500 Index Index
--------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Measurement PT -
12/31/89 $100 $100 $100 $100
FYE 12/31/90 $ 98 $ 97 $ 98 $103
FYE 12/31/91 $132 $126 $113 $134
FYE 12/31/92 $150 $136 $122 $141
FYE 12/31/93 $155 $150 $140 $159
FYE 12/31/94 $123 $152 $128 $138
</TABLE>
* Assumes that the value of the investment in the Company's Common Stock and
each index was $100 on December 31, 1989 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.
- 14 -
<PAGE>
EMPLOYMENT OF INDEPENDENT PUBLIC ACCOUNTANTS:
The Board of Directors of the Company, at a meeting held on January 23, 1995,
and in accordance with the recommendation of its Audit Committee, voted to
employ the firm of Coopers & Lybrand L.L.P. to make an audit of the books and
affairs of the Company for the fiscal year 1995. This firm has audited the
books and affairs of the Company since 1938. In accordance with the firm'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 L.L.P. 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 shareowners.
If the shareowners 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 L.L.P. 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:
Shareowners who intend to present proposals for action at the 1996 Annual
Meeting of the Shareowners of the Company are advised that such proposals must
be received at the principal executive offices of the Company by November 29,
1995 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,
1994. THE COMPANY WILL PROVIDE A COPY OF SAID FORM 10-K, INCLUDING THE
FINANCIAL STATEMENTS AND THE SCHEDULE THERETO, WITHOUT CHARGE, TO EACH PERSON
FROM WHOM THE BOARD OF DIRECTORS HAS SOLICITED A PROXY FOR USE AT THE ANNUAL
MEETING OF THE SHAREOWNERS 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,
P.O. BOX 1564 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.
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BY ORDER OF THE BOARD OF DIRECTORS
Kurt Mohlman, Treasurer and Secretary
March 29, 1995
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