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 14a-6(e)(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)
----------------------------------------------------------------------
(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:
<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 15, 1996 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
Price Waterhouse LLP as the firm of independent public accountants to audit
the books and affairs of the Company for the fiscal year 1996.
3. To vote on the approval of The United Illuminating Company Non-Employee
Directors Common Stock and Deferred Compensation Plan.
4. 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, 1996 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 28th day of March, 1996.
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 inside
of the back cover of the Proxy Statement.
<PAGE>
PROXY STATEMENT
This statement and the accompanying proxy form are furnished on or about
March 28, 1996, to security holders of record as of the close of business on
March 13, 1996, 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 15, 1996 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, 1996, the record date for the
meeting, 14,100,091 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 Price Waterhouse LLP as independent auditors for
the fiscal year 1996; (c) 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 Company's Non-Employee Directors Common Stock and Deferred
Compensation Plan; and (d) 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, approval of the
Non-Employee Directors Common Stock and Deferred Compensation Plan, 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
D-2
<PAGE>
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 SHAREOWNERS:
At the close of business on March 13, 1996, 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 that
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 Thelma R. Albright were elected directors at the
last annual meeting.
<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>
Thelma R. Albright 49 1995
President, Carter Products Division, Carter-Wallace, Inc., Cranbury, New Jersey.
From 1994 through 1995, Ms. Albright was General Manager and Executive Vice
President of Revlon Beauty Care Division. From 1991 through 1993 Ms. Albright
was Executive Vice President of Marketing of Carter-Wallace, Inc. Also,
Director, Cosmetics, Toiletry and Fragrance Association.
Marc C. Breslawsky 53 1995
Vice Chairman, Pitney Bowes, Inc., Stamford, Connecticut. Also, Director, Pitney
Bowes Credit Corp., the Computer and Business Equipment Manufacturers
Association, Danbury Health Systems Inc. and United Way of Eastern Fairfield
County; and Member, Corporate Council of Western Connecticut State University.
David E. A. Carson 61 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 Advisory Committee of Connecticut Commission on Children and
Bridgeport Area Foundation; Trustee of Connecticut Public Broadcasting; Director
of Old State House, Hartford, Connecticut, Connecticut Mutual Investment
Accounts and American Skandia Trust; and Member, Board of Directors, The
Bushnell, Hartford, Connecticut, Hartford Stage Company and Bridgeport Financial
Review Board.
John F. Croweak 59 1987
Chairman of the Board of Directors, President and Chief Executive Officer, Blue
Cross & Blue Shield of Connecticut, Inc., North Haven, Connecticut. Also,
Chairman of the Board of Directors, Connecticut American Life Insurance Company,
ProMed Systems, Inc., OPTIMED Medical Systems and Signal Medical Services, Inc.;
and Director of BCS Financial, The New Haven Savings Bank, Quinnipiac College
and Opticare.
</TABLE>
D-3
<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>
J. Hugh Devlin 53 1989
Managing Director and Consultant, Barr Devlin Associates, Incorporated, 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 Advisory
Director of Morgan Stanley & Co., Inc. Also, Chairman of the Board of Trustees,
Riverview Medical Center.
Robert L. Fiscus 58 1992
President since May 1991, Director since May 1992 and Chief Financial Officer
since August 1983, The United Illuminating Company. Mr. Fiscus served as
Executive Vice President of the Company during the period January 1991 to May
1991. Also, Director of The Aristotle Corporation, Bridgeport Regional Business
Council, Greater Bridgeport Area Foundation, United Way of Greater New Haven and
Susquehanna University; Chairman of the Board of Directors of Griffin Health
Services Corporation; and Member, Board of Governors of University of New Haven
and Board of Trustees, Central Connecticut Coast Young Men's Christian
Association, Inc.
Richard J. Grossi 60 1988
Chairman of the Board of Directors and Chief Executive Officer since May 1991,
The United Illuminating Company. Mr. Grossi served as President and Chief
Operating Officer of the Company during the period January 1991 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 Association; Trustee of Yale-New Haven
Hospital; Chairman, North American Electric Reliability Council, Connecticut
Public Broadcasting, Inc., New Haven Regional Leadership Council and Executive
Committee of the Seabrook Joint Owners.
Betsy Henley-Cohn 43 1989
Chairman of the Board of Directors, Joseph Cohn & Son, Inc., New Haven,
Connecticut. Also, Chairwoman of Birmingham Utilities, Inc.; Chairman, Board of
Commissioners, 9th Square Tax District, City of New Haven; and Director of The
Aristotle Corporation.
John L. Lahey 49 1994
President, Quinnipiac College, Hamden, Connecticut. Also, President, Connecticut
Chapter of The Newcomen Society; Director of Council for the Advancement and
Support of Education, Yale-New Haven Hospital and Long Wharf Theater; Vice
Chairman and Director Regional Plan Association Board, New York, New York;
Co-Chairman, Connecticut Committee of the Regional Plan Association Board; and
Member, Greater New Haven Regional Leadership Council.
F. Patrick McFadden, Jr. 58 1987
President and Chief Executive Officer and Director, The Bank of New Haven and
BNH Bancshares, Inc., New Haven, Connecticut. Also, 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. 66 1989
Retired; former President, Long Wharf Capital Partners, Inc. 1988-1990; retired
Chairman, President and Chief Executive Officer, Armtek Corporation 1986-1988;
President and Chief Operating Officer, Armstrong Rubber Company 1980-1986; and
Director of Aetna Life and Casualty Company and Southern New England
Telecommunications Corporation.
</TABLE>
D-4
<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>
James A. Thomas 57 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, Sea
Research Foundation and Shubert Theater, New Haven, Connecticut.
</TABLE>
- -------------------------
(1) Age at May 15, 1996. 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.
The Board of Directors held 9 meetings during 1995. The average attendance
record of the directors was 94% for meetings of the Board of Directors and its
committees held during 1995.
Ms. Henley-Cohn and Messrs. Croweak, Grossi and McFadden 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 1995.
Mmes. Albright and Henley-Cohn and Messrs. Carson, Devlin, Lahey, McFadden
and Thomas 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 four meetings during 1995.
Ms. Henley-Cohn and Messrs. Breslawsky, Croweak, 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 four meetings during 1995.
Ms. Albright and Messrs. Breslawsky, 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 1995.
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 1995. 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.
D-5
<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, by each of
the five most highly compensated officers during 1995 and by all directors and
officers as a group, as of March 13, 1996:
<TABLE>
<CAPTION>
SHARES
NAME OF INDIVIDUAL OR BENEFICIALLY
NUMBER OF PERSONS IN OWNED DIRECTLY
GROUP OR INDIRECTLY(1)
-----------------------------------------------------------
<S> <C>
Thelma R. Albright 204
Marc C. Breslawsky 909
David E.A. Carson 2,957
John F. Croweak 841
J. Hugh Devlin 3,041
Robert L. Fiscus 85,850
Richard J. Grossi 89,319
Betsy Henley-Cohn 2,386
John L. Lahey 333
F. Patrick McFadden, Jr. 833
Frank R. O'Keefe, Jr. 906
James A. Thomas 581
James F. Crowe 49,388
David W. Hoskinson 4,613
Albert N. Henricksen 10,655
24 Directors and Officers
as a group, including those named above 308,098
</TABLE>
- -------------------------
(1) Based on reports furnished by the directors 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 Robert L. Fiscus, 75,500 shares, Richard J. Grossi, 81,000 shares, James
F. Crowe, 43,500 shares, David W. Hoskinson, 2,400 shares, Albert N.
Henricksen, 8,400 shares and Directors and Officers as a group, 251,400
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. Breslawsky, Carson, Devlin, O'Keefe and Thomas have been credited
with 705, 2,502, 2,437, 98 and 71 shares of Common Stock, respectively, in
stock accounts under the Company's Directors' Deferred Compensation Plan,
described below at "Director Compensation", which is proposed to be amended
as described below at "Approval of Non-Employee Directors Common Stock and
Deferred Compensation Plan". Shares represented in stock accounts under the
existing 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. As proposed to be amended, shares
represented in stock accounts under the Plan will be payable, in an
equivalent number of shares of the Company's Common Stock, upon termination
of service on the Board of Directors.
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: 7,328 shares with respect to Mr. Fiscus, 100 shares with
respect to Mr. Grossi, 110 shares with respect to Mr. Thomas, 566 shares with
respect to Mr. Crowe, 405 shares with respect to Mr. Henricksen and 9,241 shares
with respect to all directors and officers as a group, (ii) as to which such
powers are held by other people or entities: 120 shares with respect to Mr.
Carson, 5,723 shares with respect to Mr. Grossi, 2,035 shares with respect to
Ms. Henley-Cohn, 628 shares with respect to Mr. O'Keefe, 50 shares with respect
to Mr. Thomas, 10 shares with respect to Mr. Crowe, and 9,644 shares with
respect to all directors and officers as a group.
D-6
<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 14,100,091 shares
of Common Stock outstanding as of March 13, 1996. The number of shares of Common
Stock beneficially owned by all of the directors and officers as a group
represents approximately 2.2% of the outstanding shares of Common Stock as of
March 13, 1996.
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, 1995 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 1995, 1994 and 1993, of
those persons who were, at December 31, 1995 (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 1995 $ 318,000 $150,000 $ 4,500
Chairman of the Board of Directors1994 $ 300,000 $75,200 7,000 $ 4,620
and Chief Executive Officer 1993 $ 280,000 $100,000 14,000 $102,935 $ 4,497
Robert L. Fiscus 1995 $ 220,500 $80,000 $ 4,500
President and Chief Financial 1994 $ 210,000 $43,600 3,500 $ 4,620
Officer 1993 $ 200,000 $60,000 7,000 $93,550 $ 4,497
James F. Crowe 1995 $ 178,000 $60,000 $ 4,500
Executive Vice President 1994 $ 169,500 $32,800 2,500 $ 4,620
1993 $ 160,000 $45,000 5,000 $64,183 $ 4,497
David W. Hoskinson 1995 $ 138,100 $42,000 $ 4,500
Vice President 1994 $ 132,700 $25,500 800 $ 4,620
1993 $ 128,000 $33,400 1,600 $ 4,080
Albert N. Henricksen 1995 $ 130,000 $40,000 $ 4,500
Vice President 1994 $ 123,600 $25,100 800 $ 4,620
1993 $ 106,500 $27,100 1,600 $ 3,318
</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
D-7
<PAGE>
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 earned in the years 1993,
1994 and 1995 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").
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.
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 1993, 1994 and 1995, 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.
D-8
<PAGE>
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 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 than 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.
D-9
<PAGE>
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. 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. No NSOs were awarded to the Chief Executive Officer
or any of the other four most highly compensated executive officers of the
Company in 1995.
STOCK OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES
The following table shows aggregated Common Stock option exercises during
1995 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, 1995. Also reported are the values as of December 31, 1995 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.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES(1)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End(#)(1) at FY-End ($)(4)
----------------------- ----------------
Shares
Acquired on Value
Name Exercise(#) Realized($)(2) Exercisable Not Exercisable(3) Exercisable Not Exercisable(3)
- ---- ----------- ----------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Richard J. Grossi........... 0 $ 0 60,000 21,000 $405,000 $52,500
Robert L. Fiscus............ 0 $ 0 65,000 10,500 $438,750 $26,250
James F. Crowe.............. 0 $ 0 36,000 7,500 $243,000 $18,750
David W. Hoskinson.......... 4,000 $13,250 0 2,400 $ 0 $ 6,000
Albert N. Henricksen........ 0 $ 0 6,000 2,400 $ 40,500 $ 6,000
</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, 1995, 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, 1995 ($37.50) less exercise
price.
D-10
<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.
There were no Dividend Equivalent Units awarded in 1995 by the Board of
Directors.
D-11
<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)
---------------- -------- -------- -------- -------- --------
<C> <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, 1995 and 1996. 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 and 1996). 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 38, 23, 31, 38 and 32 years of
service, respectively.
* * * *
BOARD OF DIRECTORS
COMPENSATION AND EXECUTIVE DEVELOPMENT COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
All of the members of the Compensation and Executive Development
Committee of the Board of Directors (the Committee) are non-employee Directors.
The Committee formulates all of the objectives and policies relative to
the compensation of the officers of the Company, subject to approval by the
entire Board of Directors; and the Committee recommends to the Board of
Directors all of the elements of the officers' compensation arrangements,
including the design and adoption of compensation programs, the identity of
program participants, salary grades and structure, annual payments of salaries
and any annual awards under the long-term incentive program.
The Company's basic executive compensation program consists of three
components: annual salaries, bonuses under an annual incentive compensation
program, and long-term incentive plan awards. The overall objective of this
program is to attract and retain qualified executives and to produce strong
financial performance for
D-12
<PAGE>
the benefit of the Company's shareholders while providing a high level of
customer service and value for its customers. Accordingly, all of the
Committee's decisions, in 1995 and in prior years, have ultimately been based on
the Committee's assessment of the Company's overall performance relative to
other electric utilities of comparable size, the compensation practices and
programs of other companies that are most likely to compete with the Company for
services of executive officers, the Company's strategic objectives, and the
challenges it faces.
The Committee formulates annual salary ranges for officers by periodic
comparisons to rates of pay for comparable positions in other electric utilities
as reported in the Edison Electric Institute's Executive Compensation Survey
(the EEI Survey). Within the applicable range, each individual officer's annual
salary is then set at a level that will compensate the officer for day-to-day
performance, in the light of the officer's level of responsibility, past
performance, prior year's salary and bonus, and potential future contributions
to the Company's strategic objectives.
As described in detail above at "Executive Compensation", "Stock Option
Plan" and "Dividend Equivalent Program", the Company's annual bonus program and
its long-term incentive plans have somewhat different purposes. Under the annual
Executive Incentive Compensation Program, cash awards may be made each year to
officers based on their achievement of performance levels formulated by the
Committee with respect to (1) specific shareowner goals, (2) specific customer
goals, (3) specific individual goals, and (4) a qualitative assessment of the
officers' performance as a group with respect to strategic opportunities of the
Company during that year. The Company's long-term incentive plans, consisting of
the Stock Option Plan and the Dividend Equivalent Program, reward officers for
achieving a return to shareowners over multi-year periods of time. The Stock
Option Plan's rewards are measured by the performance of the Company's common
stock price on the New York Stock Exchange; and the Dividend Equivalent Program
links long-term incentive awards to total return to shareowners compared to a
peer group of electric utilities. Although these long-term incentive plans are
designed to provide strong incentives for superior future performance, they also
encourage officers to continue serving the Company, because the exercisability
of stock options and the receipt of dividend equivalent awards are conditioned
upon the officer's continued service for specified periods of time.
For 1995, the annual bonus opportunities of the Company's officers were
targeted by the Committee such that the combination of each officer's 1995
salary and annual Executive Incentive Compensation Program award, assuming that
pre-established performance goals were met, would approximate on average the
50th percentile of compensation for comparable positions as reported in the 1994
EEI Survey. Goals were established to focus the officers' attention on specific
operating performance and customer satisfaction criteria -- and a prerequisite
threshold level of earnings per share of the Company's Common Stock was
specified in order for any bonus to be earned. The pre-established performance
goals for 1995 included, depending on the officership position, measures of:
internal generation of funds, customer satisfaction, sales margin and utility
costs. These quantitative elements comprised 80% of the Committee's bonus award
in each instance. Some of the officers' achievements with respect to 1995
pre-established performance goals were especially strong, including 120% of the
earnings per share goal, 125% of the sales margin goal, 145% of the utility
costs goal, 150% of the internal generation of funds goal, and 150% of the
customer satisfaction goals. The remaining 20% of the Committee's awards for
1995 were based on the Committee's qualitative assessment of the performance of
the Company's officers as a group with respect to strategic opportunities during
1995. For 1995, this assessment focused on the officers' strong public and
private leadership in stimulating economic development in the Company's service
territory and in the surrounding region, and in their guiding the Company
through a reorganization process that will reduce future costs, increase
productivity and further improve customer service. Overall, the Committee's
bonus awards for 1995 under the Executive Incentive Compensation Program were
35% above the total of the pre-established target awards, reflecting a strong
performance by the Company's officers.
Due to an ongoing review of the structure of the Company's long-term
incentive plans, no long-term incentive compensation plan awards, either stock
options or Dividend Equivalent Program awards, were granted for a performance
period beginning in 1995.
It is not expected that any compensation paid to an executive officer
during 1996 will become non-deductible under Internal Revenue Code Section
162(m) (the "million dollar pay cap").
D-13
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION FOR 1995
In December of 1994, the Committee recommended, and the Board of
Directors approved, a 1995 annual salary of $318,000 for Mr. Grossi, as Chairman
of the Board of Directors and Chief Executive Officer of the Company. This
annual salary was below the median salary for this officership position at other
electric utilities of comparable size, as reported in the 1994 EEI Survey; but
it was consistent with the Committee's judgment that a greater proportion of the
targeted combination of base salary and targeted annual performance bonus should
be shifted to the performance bonus component of his compensation. Mr. Grossi's
annual bonus performance target for 1995, under the Executive Incentive
Compensation Program, was set at $110,000, consisting of an earnings per share
of Common Stock threshold and pre-established goals with respect to internal
generation of funds, customer satisfaction, sales margin and utility costs. At
the conclusion of 1995, the Committee recommended, and the Board of Directors
approved, a 1995 bonus award of $150,000 to Mr. Grossi, representing 135% of his
targeted annual performance bonus. As detailed above, earnings per share and
sales margin for 1995 exceeded target goals, and utility costs, internal
generation of funds and customer satisfaction significantly exceeded target
goals; and the Committee's qualitative assessment of the performance of the
officers as a group with respect to strategic opportunities during 1995 was
positive and, in the judgment of the Committee, reflected favorably on Mr.
Grossi's leadership.
COMPENSATION AND EXECUTIVE
DEVELOPMENT COMMITTEE
Frank R. O'Keefe, Jr., Chairman
Marc C. Breslawsky
John F. Croweak
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 1995 was, during 1995 or at any time
prior thereto, an officer or employee of the Company. During 1995 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.
D-14
<PAGE>
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 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 present 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. The Directors' Retirement Program is proposed to be replaced, for
all current and future members of the Board of Directors, by the Non-Employee
Directors Common Stock and Deferred Compensation Plan, as described below at
"Approval of Non-Employee Directors Common Stock and Deferred Compensation
Plan".
Under the Company's existing Directors' Deferred Compensation Plan, each
non-employee director has an option to defer the payment of all or part of his
or her retainer, committee chairperson fees and meeting attendance fees. Under
the plan, amounts deferred are credited when payable, 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. The
Directors' Deferred Compensation Plan is proposed to be amended as part of the
Non-Employee Directors Common Stock and Deferred Compensation Plan as described
below at "Approval of Non-Employee Directors Common Stock and Deferred
Compensation Plan".
D-15
<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 1991 and ended 1995.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE-YEAR CUMULATIVE
TOTAL RETURN
AMONG UIL, S&P 500 INDEX, S&P PUB. UTILITY INDEX AND S&P ELEC. PWR. CO. INDEX
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
UIL $100 $133 $150 $156 $125 $170
S&P 500 100 130 134 154 156 213
S&P PUB. UTY. 100 114 123 140 129 182
S&P EL. CO. 100 129 136 156 135 176
</TABLE>
* ASSUMES THAT THE VALUE OF THE INVESTMENT IN THE COMPANY'S COMMON STOCK AND
EACH INDEX WAS $100 ON DECEMBER 31, 1990 AND THAT ALL DIVIDENDS WERE REINVESTED.
FOR PURPOSES OF THIS GRAPH, THE YEARLY PERCENTAGE CHANGE IN CUMULATIVE
SHAREOWNER 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 THE 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.
EMPLOYMENT OF INDEPENDENT PUBLIC ACCOUNTANTS:
The Board of Directors of the Company, at a meeting held on December 11,
1995, and in accordance with the recommendation of its Audit Committee, voted to
employ the firm of Price Waterhouse LLP to make an audit of the books and
affairs of the Company for the fiscal year 1996. One or more representatives of
Price Waterhouse LLP 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.
The engagement of Coopers & Lybrand L.L.P., which audited the books and
affairs of the Company for the fiscal years 1994 and 1995, terminated with that
firm's audit of the Company's financial statements for the fiscal year 1995. The
reports of Coopers & Lybrand L.L.P. on the Company's financial statements for
the fiscal years 1994 and 1995 have not contained any adverse opinion or a
disclaimer of opinion, and neither of these reports was qualified or
D-16
<PAGE>
modified as to uncertainty, audit scope or accounting principles. During the
fiscal years 1994 and 1995, and through March 1, 1996, the Company had no
disagreement with Coopers & Lybrand L.L.P. on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, and none of the following kinds of events (each of which would have
been a "reportable event" under the regulations of the Securities and Exchange
Commission) occurred, i.e. Coopers & Lybrand L.L.P. did not advise the Company:
that internal controls necessary for the Company to develop reliable financial
statements did not exist; that information had come to the attention of Coopers
& Lybrand L.L.P. that led it to no longer be able to rely on the representations
of the Company's management or made it unwilling to be associated with the
financial statements prepared by management; that there existed a need to expand
significantly the scope of the audit of Coopers & Lybrand L.L.P.; that
information had come to the attention of Coopers & Lybrand L.L.P. that if
further investigated might (i) materially impact the fairness or reliability of
either an audit report previously issued by Coopers & Lybrand L.L.P. or the
financial statements underlying such report or the financial statements to be
issued covering the fiscal period subsequent to December 31, 1995 (including
information that might prevent Coopers & Lybrand L.L.P. from rendering an
unqualified audit report on the Company's financial statements for the fiscal
year 1995), or (ii) cause Coopers & Lybrand L.L.P. to be unwilling to rely on
the representations of the Company's management or be associated with the
Company's financial statements; or that information had come to the attention of
Coopers & Lybrand L.L.P. that it had concluded materially impacted the fairness
or reliability of either (i) an audit report previously issued by Coopers &
Lybrand L.L.P. or the financial statements underlying such report, or (ii) the
Company's financial statements to be issued covering the fiscal period
subsequent to December 31, 1995 (including information that, unless resolved to
the satisfaction of Coopers & Lybrand L.L.P., would prevent that firm from
rendering an unqualified audit report of the Company's financial statements for
the fiscal year 1995). 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.
Neither the Company, nor any other person acting on behalf of the Company,
has, at any time during the fiscal year 1994, the fiscal year 1995, or through
March 1, 1996, consulted Price Waterhouse LLP regarding either (i) the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements, or (ii) the subject matter of a disagreement
with Coopers & Lybrand L.L.P. or a reportable event.
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
Price Waterhouse LLP as independent auditors, their employment will be
reconsidered by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOREGOING PROPOSAL.
APPROVAL OF NON-EMPLOYEE DIRECTORS COMMON STOCK AND DEFERRED COMPENSATION PLAN
On March 25, 1996, the Board of Directors adopted, subject to shareholder
approval, a Common Stock and deferred compensation plan for non-employee
directors of the Company. This Plan (the "Director Plan") will replace the
existing Directors' Retirement Program, which is described above at "Director
Compensation", for all current and future members of the Board of Directors; and
its terms and provisions are contained in an amended version of the existing
Directors' Deferred Compensation Plan, which is described above at "Director
Compensation". The Director Plan is designed to strengthen and enhance the
alignment of the interests of the directors with those of the Company's other
shareowners, and to enable the Company to continue to attract and retain
qualified individuals to serve on its Board of Directors. The Common Stock
feature of the Director Plan has two components: ongoing annual awards; and
one-time retirement program termination awards. The deferred compensation
feature of the Director Plan consists of two accounts for each participating
director: a cash account for the accumulation of director's fees payable in cash
that the director elects to defer, on which interest accrues at the prime rate
in effect at the beginning of each month at Citibank, N.A.; and a stock account,
for the accumulation of units that are equivalent in value to shares of the
Company's Common Stock ("Stock Units"), on which amounts equal to cash dividends
on the Stock Units in the account accrue as additional Stock Units.
D-17
<PAGE>
GENERAL
- -------
Eligibility: Only the Company's outside directors are eligible to
participate in the Director Plan. No director who is an officer or employee of
the Company or any affiliate or subsidiary of the Company may participate. The
Company currently has ten outside directors. Participation in the Director Plan
is mandatory for the outside directors.
Shares Available under the Plan: The Director Plan authorizes the issuance
of up to 200,000 shares of the Company's Common Stock (the "Stock"). However,
the number of shares issuable under the Director Plan will be adjusted by the
Board of Directors in the event of a stock dividend, stock split, combination,
reclassification, recapitalization or other capital adjustment of all shares of
Stock; and shares of Stock payable to a director under the Director Plan may be
either unissued shares or issued and outstanding shares purchased by the Company
in the market for that purpose.
Administration: The Director Plan operates pursuant to procedures and
guidelines set forth in the Director Plan itself. Other than the Board of
Directors' determination of the total amount payable to outside directors as
retainer and/or meeting and special fees, no discretion regarding awards of
Stock or Stock Units, or the accumulation of interest or Stock Units, under the
Director Plan is vested in the Board of Directors or any other officer of the
Company.
ANNUAL AWARDS
- -------------
Under the Director Plan, an award of Stock Units to each outside director's
deferred compensation stock account will be made on or about the first day of
March in each year, commencing with the year 1997 and continuing through the
year 2010 (each such date a "Grant Date"). However, each outside director may
elect to receive shares of Stock, in lieu of having an equivalent number of
Stock Units credited to his or her deferred compensation stock account, provided
that an appropriate written election is made at least six months before the
Grant Date. Each annual award will consist of a number of whole and fractional
Stock Units equal to the sum of 200 plus the quotient resulting from dividing
(a) twenty-five percent (25%) of the annual retainer fee by (b) the Market Value
of the Stock on the Grant Date. For purposes of the Director Plan, the "Market
Value" of the Stock will be the average of the high and low sale prices reported
on the New York Stock Exchange composite tape. Stock Units credited to a
director's stock account in the Director Plan as a result of annual awards will
at all times be fully vested and nonforfeitable, and will be payable, in an
equivalent number of shares of Stock, only upon termination of the director's
service on the Board of Directors.
Because annual awards are subject to retainer fee levels, and the value of
these awards will be determined based on the Market Value of the Stock in the
future, the amount and value of the annual awards to be received under the
Director Plan by the outside directors cannot be determined in advance. However,
if the Director Plan had been in effect during 1995, each of the ten outside
Directors would have been awarded, on March 1, 1995, 304.065 Stock Units valued,
on that date, at $38.4375 each, or 304 shares of Stock and a fractional share
cash payment of $2.50.
D-18
<PAGE>
RETIREMENT PROGRAM TERMINATION AWARDS
- -------------------------------------
As of May 15, 1996, a specified number of Stock Units will be credited to
the deferred compensation stock account of each of the Company's current outside
directors, each of whom has irrevocably waived any benefits payable under the
Company's existing Directors' Retirement Program, contingent upon shareholder
approval of the Director Plan. The number of Stock Units for each current
outside director is based on a formula that assigns actuarial value to the
vested benefits that could have been paid to each outside director under the
existing retirement program; and the aggregate number of Stock Units credited to
the ten outside directors will be 7,333. The Stock Units credited to a
Director's stock account in the Director Plan as a result of a retirement
program termination award will at all times be fully vested and nonforfeitable,
and will be payable, in an equivalent number of shares of Stock, only upon
termination of the director's service on the Board of Directors.
ELECTION TO DEFER FEES
- ----------------------
The Director Plan permits outside directors to elect to defer receipt of
all or part of the seventy-five percent (75%) portion of the annual retainer
fee, committee chairperson fees and meeting fees payable in cash, provided that
an appropriate written election to defer is made at least six months before the
date that the fee is payable. All amounts deferred are credited when payable, at
the director's election, to either the director's cash account or to the
director's stock account (in a number of whole and fractional Stock Units based
on the Market Value of the Stock on the date the fee is payable). All amounts so
credited to a director's cash account or stock account in the Director Plan will
at all times be fully vested and nonforfeitable, and will be payable, the cash
account in cash and the stock account in an equivalent number of shares of
Stock, only upon termination of the director's service on the Board of
Directors.
TERMINATION; AMENDMENT
- ----------------------
Unless sooner terminated by the Board of Directors, no annual awards will
be made under the Director Plan after March 1, 2010, although Stock Units may be
awarded and paid after that date to the extent of the remaining shares of Stock
authorized for issuance under the Director Plan. In the event of a merger,
consolidation or other corporate reorganization transaction with a shareholder
or group of shareholders holding 25% or more of the outstanding Stock, all of
the cash accounts and stock accounts in the Director Plan will be terminated and
become payable, in cash, immediately. The Board of Directors may terminate,
suspend or amend the Director Plan, provided that certain material amendments
will be submitted for shareholder approval if and to the extent necessary for
the Director Plan to satisfy the requirements of the exemption from the
short-swing profits rules under Section 16 of the Securities and Exchange Act of
1934. The Director Plan provisions that establish the amount, price and time of
annual awards may not be amended more than once every six months.
The following resolution will be submitted to the meeting:
"RESOLVED: That The United Illuminating Company Non-Employee Directors
Common Stock and Deferred Compensation Plan be approved."
THE AFFIRMATIVE VOTES OF A MAJORITY OF SHARES OF COMMON STOCK REPRESENTED
AT THE MEETING WILL BE REQUIRED TO APPROVE THE NON-EMPLOYEE DIRECTORS COMMON
STOCK AND DEFERRED COMPENSATION PLAN. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THIS PLAN.
D-19
<PAGE>
DATE FOR SUBMISSION OF PROPOSALS BY SECURITY HOLDERS:
Shareowners who intend to present proposals for action at the 1997 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,
1996 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,
1995. 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.
- -------------------------
BY ORDER OF THE BOARD OF DIRECTORS
March 28, 1996 KURT MOHLMAN, Treasurer and Secretary
D-20
<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 15, 1996 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 Price Waterhouse LLP as the firm of independent public accountants
to audit the books and affairs of the Company for the fiscal year
1996.
3. To vote on the approval of The United Illuminating Company
Non-Employee Directors Common Stock and Deferred Compensation Plan.
4. 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, 1996 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 attached proxy in the accompanying envelope, which
requires no postage if mailed in the United States.
Dated at New Haven, Connecticut, this 28th day of March, 1996.
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 inside
of the back cover of the Proxy Statement.
DETACH PROXY CARD HERE
<PAGE>
(1) ELECTION OF A BOARD OF
DIRECTORS
FOR all nominees
listed below [_]
WITHHOLD AUTHORITY to vote
for all nominees listed below. [_]
*EXCEPTIONS [_]
Nominees: Thelma R. Albright, Marc C. Breslawsky, David E. A. Carson, John F.
Croweak, J. Hugh Devlin, Robert L. Fiscus, Richard J. Grossi, Betsy
Henley-Cohn, John L. Lahey, F. Patrick McFadden, Jr., Frank R. O'Keefe,
Jr., James A. Thomas,
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.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box and write that nominee's name in the space provided below.)
*Exceptions
-------------------------------------------------------------------
(2) Approval of the employment of Price Waterhouse LLP as independent auditors
for fiscal year 1996. (Proposed by the Board of Directors.)
FOR [_] AGAINST [_] ABSTAIN [_]
(3) Approval of The United Illuminating Company Non-Employee Directors Common
Stock and Deferred Compensation Plan. (Proposed by the Board of Directors.)
FOR [_] AGAINST [_] ABSTAIN [_]
(4) In their discretion on any other matters that may properly come before said
meeting or any adjournment thereof.
Change of Address and/or
Comments Mark 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.
Dated: , 1996
-------------------
-------------------------------
-------------------------------
PLEASE SIGN HERE
Votes MUST be indicated
(x) in Black or Blue ink. [_]
Please sign, date and return the proxy card promptly using the enclosed
envelope.
<PAGE>
ADMISSION TICKET
THE UNITED ILLUMINATING COMPANY
ANNUAL MEETING OF SHAREOWNERS
MAY 15, 1996 AT 10:00 A.M.
NEW HAVEN LAWN CLUB
193 WHITNEY AVENUE
NEW HAVEN, CONNECTICUT
DIRECTIONS:
FROM I-95:
Follow signs to I-91 and then follow directions below.
FROM I-91:
Take Exit #3 (Trumbull Street Exit). Go straight two blocks to Whitney Avenue.
Right on Whitney. Club sign and entrance on right.
FROM WILBUR CROSS PARKWAY (ROUTE 15):
Exit 61
Take Whitney Avenue Exit. Go towards New Haven approximately five miles. Club
sign and entrance on left.
FROM DOWNTOWN NEW HAVEN:
Take Church Street towards Hamden. Church Street becomes Whitney Avenue. The
club is on the right hand side (diagonally across from the Peabody Museum).
Small sign at Club's entrance.
- ---------------------------------------------
Please note: The Club is set back on Whitney Avenue. (You must go down a long
driveway to see it.) There are buildings in front of it making it difficult
to see from Whitney Avenue.
<PAGE>
THE UNITED ILLUMINATING COMPANY
COMMON STOCK PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Betsy Henley-Cohn, John L. Lahey, and F.
Patrick McFadden, Jr. 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 Shareowners to be
held on Wednesday, May 15, 1996, and at any adjournments thereof.
THIS PROXY, WHEN PROPERLY SIGNED AND RETURNED TO THE COMPANY, WILL BE
VOTED IN THE MANNER INDICATED ON THE REVERSE SIDE. UNLESS OTHERWISE DIRECTED ON
THE REVERSE SIDE, THE UNDERSIGNED'S VOTE WILL BE CAST FOR THE ELECTION OF ALL
NOMINEES LISTED TO THE BOARD OF DIRECTORS AND FOR ITEM (2) AND ITEM (3).
(Continued, and to be signed and dated, on reverse side.)
THE UNITED ILLUMINATING COMPANY
P.O. BOX 11031
NEW YORK, N.Y. 10203-0031
THE UNITED ILLUMINATING COMPANY
NON-EMPLOYEE DIRECTORS COMMON STOCK AND
DEFERRED COMPENSATION PLAN
SECTION 1. ESTABLISHMENT OF THE PLAN
-------------------------
1.01 ESTABLISHMENT OF THE PLAN. THE UNITED ILLUMINATING COMPANY (the "Company")
hereby amends and restates its Directors' Deferred Compensation Plan for
the benefit of its Eligible Directors, as originally adopted on December
22, 1980, and previously amended and restated on July 23, 1990 and December
17, 1990, renaming it the Non-Employee Directors Common Stock and Deferred
Compensation Plan and amending and restating it in other respects as set
forth herein (the "Plan"). This amendment and restatement of the Plan shall
be effective, subject to its approval by the shareholders of the Company by
the affirmative vote of the holders of a majority of the votes cast by the
shareholders of the Company present, or represented, and entitled to vote
at the annual meeting of the shareowners of the Company to be held on May
15, 1996 in accordance with the laws of the State of Connecticut, on May
15, 1996 (the "Effective Date").
1.02 APPLICABILITY OF THE PLAN. The provisions set forth herein are applicable
only to Directors serving on the Board of the Company on or after the
Effective Date. The benefits of Directors terminating Service prior to that
date shall be governed by the terms of the Plan in effect on the date each
of them terminated Service.
1.03 PURPOSE OF THE PLAN. The purpose of the Plan is to provide for payment to
each Eligible Director of a portion of his or her compensation for Service
as a Director in shares of the Company's Stock, and to allow each Eligible
Director to defer the payment of part of the Fees payable to him or her for
Service as a Director of the Company, including Fees payable to an Eligible
Director for Service as the chairperson or a member of one or more
committees of the Board. It is also the purpose of the Plan to provide an
incentive for Eligible Directors to continue to contribute to the growth
and profitability of the Company by enabling them to share in the
appreciation of the value of the Company's Stock.
SECTION 2. DEFINITIONS
-----------
2.01 Whenever used in the Plan, the following terms shall have the respective
meanings set forth below, unless otherwise expressly provided in the Plan:
(a) "Beneficiary" or "Beneficiaries" shall mean the person or persons
designated by a Participant in accordance with Subsection 6.02 hereof.
(b) "Board" shall mean the Board of Directors of the Company.
<PAGE>
(c) "Cash Account" shall mean the unfunded memorandum sub-account
maintained by the Company to record that portion of an Eligible
Director's Fees that he or she has elected to have deferred and
credited with interest pursuant to Subsection 5.02(a) of the Plan,
together with the amount of the interest credited from time to time to
such sub-account.
(d) "Change in Control" shall mean any of the following events:
(1) any merger or consolidation of the Company with any corporate
shareholder holding twenty-five percent (25%) or more of the
Stock of the Company or with any other corporation that is, or
after such merger or consolidation would be, controlled by a
shareholder or group of shareholders owning at least twenty-five
percent (25%) of the Stock of the Company (an "affiliate" of such
shareholder or group of shareholders); or
(2) any sale, lease, exchange, mortgage, pledge, transfer or
disposition, other than the payment of quarterly cash dividends,
to or with any shareholder or group of shareholders holding
twenty-five per cent (25%) or more of the Stock of the Company,
or any affiliate of such shareholder or group of shareholders, of
any assets of the Company having an aggregate fair market value
of $40 million or more; or
(3) the issuance or sale by the Company of any securities of the
Company to any shareholder or group of shareholders holding
twenty-five per cent (25%) or more of the Stock of the Company,
or to any affiliate of such shareholder or group of shareholders,
in exchange for cash, securities or other consideration having an
aggregate fair market value of $50 million or more; or
(4) the implementation of any plan or proposal for the liquidation or
dissolution of the Company proposed by or on behalf of any
shareholder or group of shareholders owning at least twenty-five
per cent (25%) of the Stock of the Company, or any affiliate of
such shareholder or group of shareholders; or
(5) any reclassification of securities (including a reverse stock
split) or recapitalization of the Company, or any other
transaction, which has the effect, direct or indirectly, of
increasing the proportionate share of outstanding shares of any
class of equity securities, or securities convertible into any
equity securities, of the Company, that is directly or indirectly
owned by a shareholder or group of shareholders owning at least
twenty-five percent (25%) of the Stock of the Company, or any
affiliate of such shareholder or group of shareholders.
-2-
<PAGE>
(e) "Committee" shall mean the Committee on Directors of the Board.
(f) "Company" shall mean The United Illuminating Company and any
successor.
(g) "Deferred Compensation Account" shall mean the unfunded memorandum
account maintained by the Company to record that portion of an
Eligible Director's Stock Awards and Fees deferred under the Plan,
their hypothetical investment in either a Cash Account, Phantom Stock
Unit Account, or some combination thereof, and the accretions to and
payments from each such Account.
(h) "Director" shall mean any person who is duly elected and qualified to
serve on the Board and renders Service to the Company.
(i) "Eligible Director" shall mean a person who renders Service to the
Company on or after May 15, 1996 at a time when he or she is not an
employee of the Company.
(j) "Fair Market Value" shall mean the average on a particular date of the
high and low per share sale prices of shares of Stock on the New York
Stock Exchange, as reported on the composite tape, or, if there is no
sale on such date, then such average price on the last previous date
on which a sale is reported.
(k) "Fees" shall mean amounts earned for Service as an Eligible Director,
including quarterly retainers, Board meeting fees and Board committee
chairperson and meeting fees.
(l) "Grant Date" shall mean a date, on or about March 1, in each of the
years 1997 through 2010, inclusive, on which the New York Stock
Exchange conducts business; and, unless another date is designated as
the Grant Date for such year by the Secretary of the Company (the
"Corporate Secretary") on or before February 1 of such year, the Grant
Date for such year shall be the first day in March on which the New
York Stock Exchange conducts business.
(m) "Participant" shall mean a person for whom a Deferred Compensation
Account has been established and is being maintained under the Plan.
(n) "Phantom Stock Unit" shall mean a unit of measurement equivalent to
one share of Common Stock of the Company, but excluding all of the
attendant rights of a shareholder of such Stock (for example, the
right to own, control and vote such Stock) other than the right to be
credited with dividends thereon.
-3-
<PAGE>
(o) "Phantom Stock Account" shall mean the unfunded memorandum sub-account
maintained by the Company pursuant to Subsection 5.02(b) of the Plan
to record the number of Phantom Stock Units resulting from Stock
Awards and an election by an Eligible Director to have some portion of
all of his or her deferred Fees invested in Phantom Stock Units, and
shall include all Phantom Stock Units credited as a result of the
reinvestment of dividends on Phantom Stock Units.
(p) "Service" shall mean service as a Director, including service as a
member of a committee or committees of the Board.
(q) "Stock" shall mean the Common Stock of the Company.
(r) "Stock Award" shall mean a number of whole and fractional Phantom
Stock Units, computed to three decimal places, equal to the sum of 200
plus the quotient resulting from dividing (a) the quarterly retainer
Fee payable to an Eligible Director for Service during the first
quarter of each fiscal year of the Company during the period
commencing January 1, 1997 and ending December 31, 2010, by (b) the
Fair Market Value of the Stock on the Grant Date of such year.
SECTION 3. STOCK AWARDS
------------
3.01 ANNUAL AWARDS. On each Grant Date, in lieu of the quarterly retainer Fee
payable to each Participant who has served as a Director for at least six
(6) months immediately preceding such Grant date, a Stock Award shall be
credited to the Phantom Stock Account of such Participant.
3.02 ELECTION TO RECEIVE ANNUAL AWARD IN SHARES OF STOCK. With respect to each
Grant Date, each Eligible Director who would receive a Stock Award pursuant
to Subsection 3.01 of the Plan may elect to waive such Stock Award and
receive a whole number of shares of Stock, issued by the Company or
purchased by the Company for and in the name of such Eligible Director, in
lieu of such Stock Award. To the extent that the formula for such Stock
Award, as set forth in Subsection 2.01(r) of the Plan does not result in a
whole number of shares of Stock, the result shall be rounded downwards to
the next whole number, and the value of the fractional share shall be
distributed and paid to the Eligible Director promptly in cash. The stock
certificate for shares of Stock issued to or purchased for and in the name
of an Eligible Director pursuant to this Subsection 3.02 shall be held by
the Company for a period of six (6) months following the Grant Date and
shall be distributed to him or her as soon as practicable following the
expiration of such period; and during such period he or she shall have all
the rights of a shareholder of the Company with respect to such shares of
Stock, except that such shares of Stock shall not be transferrable other
than by will or the laws of descent and distribution. An election to waive
a Stock Award
-4-
<PAGE>
pursuant to this Subsection 3.02 shall be irrevocable and must be made at
least six (6) months in advance of the Grant Date.
3.03 RETIREMENT PROGRAM TERMINATION AWARDS. On and as of the Effective Date,
each Eligible Director serving as such on the Effective Date who makes or
has made an irrevocable election to waive participation in, and any and all
benefits under, any prior retirement program maintained by the Company for
Directors, shall have credited to the Phantom Stock Account of such
Participant a number of Phantom Stock Units as follows: Ms. Albright 88;
Mr. Breslawsky 127; Mr. Carson 717; Mr. Croweak 1,343; Mr. Devlin 672; Ms.
Henley-Cohn 326; Mr. Lahey 183; Mr. McFadden 1,250; Mr. O'Keefe 2,059; Mr.
Thomas 568.
SECTION 4. DEFERRAL OF FEES
----------------
4.01 GENERAL PARTICIPATION RULE. An Eligible Director may elect to defer payment
of all or a specific portion of all Fees (other than the quarterly retainer
Fee payable during the first quarter of a fiscal year of the Company during
the period commencing January 1, 1997 and ending December 1, 2010) payable
to the Eligible Director more than six (6) months after the date of such
election until he or she (i) elects to revoke or alter such election with
respect to such Fees payable more than six (6) months after the date of
such election to revoke, or (ii) terminates Service, or (iii) is paid upon
a Change in Control in accordance with Subsection 6.01(d) of the Plan.
Elections shall be made by written notice delivered to the Corporate
Secretary. Fees shall be considered deferred on the date on which they
would have been paid absent the election to defer (the "Deferral Date").
Any Fees deferred pursuant to the Plan shall not be affected by any
revocation of a Participant's election and shall be paid only in accordance
with Section 6 of the Plan, together with increments thereon determined in
accordance with Subsection 5.02 of the Plan.
4.02 ELECTION ALTERNATIVES. The election made pursuant to Subsection 4.01 shall
designate some portion or all of such Fees treated as if invested in the
Participant's (a) Cash Account, or (b) Phantom Stock Account, or some
combination thereof. Investment elections shall be made in multiples of
twenty-five per cent (.25) (for example, seventy-five per cent (.75) of
such deferred Fees treated as being invested in a Cash Account and
twenty-five per cent (.25) treated as being invested in a Phantom Stock
Account).
4.03 PRE-EFFECTIVE DATE ELECTIONS. Each election by a Participant under and
pursuant to the Directors' Deferred Compensation Plan of the Company in
effect prior to the Effective Date, shall be and remain in effect under the
Plan until revoked in accordance with Subsection 4.01 of the Plan; and each
amount in such Participant's Cash Account and number of whole and
fractional Phantom Stock Units in such Participant's Phantom Stock Account
on the Effective date shall be
-5-
<PAGE>
and remain in such Participant's Cash Account and Phantom Stock Account,
respectively, on and as of the Effective Date.
SECTION 5. ACCOUNTING FOR AWARDS AND DEFERRALS; HYPOTHETICAL
INVESTMENT OF DEFERRALS.
------------------------
5.01 SEPARATE ACCOUNTS. The Company shall maintain a Deferred Compensation
Account for each Participant. Such Account shall be maintained with enough
specificity to enable the Company to determine the amounts credited, at any
particular point in time, to the Participant's Cash Account and/or Phantom
Stock Account.
5.02 HYPOTHETICAL INVESTMENT OF DEFERRED COMPENSATION ACCOUNTS.
(a) Credits to Cash Account. A Participant's Cash Account shall be
credited on each Deferral Date with the amount of Fees then deferred
and elected to be invested in a Cash Account. On the first day of each
calendar quarter, interest shall be credited to the Cash Account of
each Participant for each month of the preceding quarter, calculated
on the basis of 30-day months and a 360-day year and the balance of
such Account on the first day of each month of the preceding quarter
(including interest for the preceding month) at the prime rate of
Citibank, N.A., its successor, or any other bank approved by the
Committee for such purpose, in effect on the first day of each such
month.
(b) Crediting of Phantom Stock Units; Reinvestment of Dividends in Phantom
Stock Account; Capital Adjustments. The number of whole and fractional
Phantom Stock Units, computed to three decimal places, to be credited
to the Phantom Stock Account of a Participant on each Deferral Date
shall be equal to the amount of Fees then deferred and elected to be
invested in a Phantom Stock Account, divided by Fair Market Value on
the Deferral Date. On each dividend payment date with respect to the
Stock, the Phantom Stock Account of a Participant shall be credited
with an additional number of whole and fractional Phantom Stock Units,
computed to three decimal places, equal to the product of the dividend
per share then payable, multiplied by the number of Phantom Stock
Units then credited to such account, divided by Fair Market Value on
the dividend payment date.
In the event that the number of outstanding shares of Common Stock of
the Company shall be increased or decreased by reason of a stock
split, stock dividend, recapitalization, reclassification or other
similar change in the Company's capital structure, the number of
Phantom Stock Units credited to a Participant's Phantom Stock Account
shall be adjusted accordingly by and at the direction of the Board.
-6-
<PAGE>
In the event of a Change of Control or of a termination of the Plan
pursuant to Subsection 8.03 of the Plan, the Phantom Stock Units
credited to a Participant's Phantom Stock Account shall be converted
immediately into a cash equivalent amount and credited to, and shall
thereafter be treated in all respects as part of, such Participant's
Cash Account. The cash equivalent amount added to the Cash Account
pursuant to the preceding sentence shall be determined by multiplying
the number of Phantom Stock units then standing to the Participant's
credit by the highest Fair Market Value on any day within the sixty
(60) calendar days preceding the Change in Control or termination of
the Plan.
SECTION 6. PAYMENT OF DEFERRED COMPENSATION ACCOUNT
----------------------------------------
6.01 BENEFITS FOLLOWING TERMINATION OF SERVICE, TERMINATION OF THE PLAN, OR A
CHANGE IN CONTROL. Upon termination of a Participant's Service (other than
by death) or termination of the Plan pursuant to Subsection 8.03 of the
Plan:
(a) The amount of a Participant's Cash Account, together with interest
accrued thereon, shall be calculated and shall be distributed in
substantially equal annual installments (together with interest on the
undistributed amount, credited in accordance with Subsection 5.02(a)
of the Plan and payable annually, in arrears, with each annual
installment) over a period of five or ten years, as elected by the
Participant in accordance with Subsection 6.01(c) of the Plan. The
first installment (or the lump sum payment) shall be distributed,
except in the event of a subsequent Change of Control, promptly
following the calendar year in which the Participant's Service
terminates or the Plan is terminated; and subsequent installments
shall, except in the event of a subsequent Change of Control, be
distributed promptly at the beginning of each succeeding calendar year
until the entire amount credited to the Participant's Cash Account
shall have been distributed. All amounts distributed shall be paid in
cash.
(b) The number of Phantom Stock Units in a Participant's Phantom Stock
Account, including Phantom Stock Units credited as a result of
reinvested dividends, shall be calculated, and Stock shall be
distributed to the Participant, either in a single distribution
promptly after the date of such termination of Service or in
substantially equal annual installments (together with additional
Phantom Stock Units credited as a result of reinvested dividends) over
a period of five or ten years, as elected by the Participant in
accordance with Subsection 6.01(c) of the Plan. In the event of a
single distribution of Stock, (i) the value of any fractional Phantom
Stock Unit, calculated by reference to the Fair Market Value of a
share of Stock on the date of termination of the Participant's
Service, shall be distributed and paid in cash to the Participant, and
(ii) the whole number of Phantom Stock Units shall be and become
payable in an equal number
-7-
<PAGE>
of shares of Stock, issued by the Company or purchased by the Company
for and in the name of the Participant. In the event of payment of
Stock in installments, the first installment shall, except in the
event of a subsequent Change in Control, be distributed promptly
following the calendar year in which the Participant's Service
terminates, and subsequent installments shall, except in the event of
a subsequent Change in Control, be distributed promptly at the
beginning of each succeeding calendar year until the entire amount
credited to the Participant's Phantom Stock Account shall have been
distributed. To the extent that an installment calculation does not
result in a whole number, the result shall be rounded downwards to the
next whole number and that number of shares of Stock, issued by the
Company or purchased by the Company for and in the name of the
Participant, shall be distributed as and for that installment. Any
fractional Phantom Stock Unit payable as part of the final installment
shall be valued by reference to the Fair Market Value of a share of
Stock on the first business day of the calendar year of payment of the
installment and shall be distributed and paid in cash to the
Participant promptly. In the event of a single distribution of Stock,
or in connection with the first installment of a distribution of Stock
in installments, a stock certificate for any shares of Stock
distributable on account of Phantom Stock Units credited to the
Participant's Phantom Stock Account pursuant to Section 3 or Section 4
of the Plan within six (6) months prior to the date of such
termination of Service shall be held by the Company for a period of
six (6) months following such date and shall be distributed to the
former Director as soon as practicable following the expiration of
such period; and during such period the former Director shall have all
rights of a shareholder of the Company with respect to such shares of
Stock, except that such shares of Stock shall not be transferrable by
the former Director other than by will or the laws of descent and
distribution.
(c) An election pursuant to Subsection 6.01(a) or Subsection 6.01(b) of
the Plan must be made by written notice delivered to the Corporate
Secretary on or before December 31 of the calendar year prior to the
date on which the Participant terminates his or her Service or the
date of the Plan's termination. Upon written request of the Committee,
and in its absolute discretion, a Participant may receive a single
lump-sum distribution of his or her Cash Account. Such request must be
delivered to the Corporate Secretary prior to the date on which the
Participant's Service terminates or the Plan is terminated. In the
event that no timely filed payment election is on record with respect
to a Participant, and except in the event of a Change of Control,
payment of his or her cash Account and Phantom Stock Account shall be
made in installments over a five-year period. Except in the event of a
Change of Control or the termination of the Plan, no portion of a
Deferred Compensation Account shall be distributed to a Participant
prior to his or her termination of Service.
-8-
<PAGE>
(d) In the event of a Change of Control, whether the same occurs before or
after termination of the Participant's Service or after termination of
the Plan, all of the Phantom Stock Units credited to a Participant's
Phantom Stock Account, including Phantom Stock Units credited as a
result of reinvested dividends, shall be converted into a cash
equivalent amount, in accordance with Subsection 5.02(b) of the Plan,
and all amounts credited to a Participant's Deferred Compensation
Account, including the amounts converted into cash equivalents from
the Participant's Phantom Stock Account, shall be distributed and paid
in cash to the Participant immediately in a single lump sum.
6.02 DESIGNATION OF BENEFICIARIES. A Participant's spouse shall be the
Participant's Beneficiary under the Plan unless the Participant designates
a different Beneficiary and the Participant's spouse consents to such
designation. If a Participant leaves no surviving spouse, his or her estate
shall be the Beneficiary unless the Participant had designated a different
Beneficiary prior to his or her death. A Participant may designate, on a
form provided for that purpose by the Corporate Secretary, a Beneficiary or
Beneficiaries to receive the cash distributions and/or Stock payments from
the Participant's Deferred Compensation Account in the event of his or her
death, and the period or periods of payment (not to exceed ten years); and
a Participant may direct that such payments be divided in specific portions
among two or more Beneficiaries; but no such designation shall be effective
until it has been filed by the Participant during his or her lifetime with
the Corporate Secretary. Each Participant may, from time to time during his
or her lifetime, on a form filed with the Corporate Secretary, revoke or
change such designation in any or all respects; and the death of a
designated Beneficiary prior to or simultaneously with the death of the
designating Participant shall automatically revoke such designated
Beneficiary's status as a Beneficiary.
6.03 PAYMENTS UPON DEATH. Upon a Participant's death, the provisions of
Subsections 6.01(a) and 6.01(b) of the Plan shall become applicable to the
Participant's Deferred Compensation Account, except that distributions and
payments of cash and Stock shall be made to the Beneficiary or
Beneficiaries, at the time or times designated by the Participant;
provided, however, that in the event of a subsequent Change of Control, or
at the election of the executor or administrator of the estate of such
Participant, all of the Phantom Stock Units remaining credited to the
decedent's Phantom Stock Account, shall be converted into a cash equivalent
amount, in accordance with Subsection 5.02(b) of the Plan in the event of a
Change in Control, or determined by multiplying the number of such Phantom
Stock Units by the Fair Market Value of the Stock on the date of the
election of the decedent's executor or administrator, and distributed and
paid in cash, together with any amount remaining credited to the decedent's
Cash Account on such date, in a lump sum, to such Beneficiary or
Beneficiaries.
-9-
<PAGE>
6.04 PAYMENTS TO INCOMPETENTs. If a court of competent jurisdiction determines
that a person entitled to receive any cash amount or Stock to be
distributed or paid hereunder is under a legal disability or is otherwise
incapacitated so that he or she is unable to manage his or her financial
affairs to his or her own best interest and advantage, the Company shall
distribute or pay such cash amount or Stock (a) to such person's spouse,
(b) or his or her legal guardian or conservator, or (c) to any person, to
be held and/or used for such person's benefit, with no responsibility on
the part of the Committee or the Company to monitor the application of the
same. Distributions and/or payments made pursuant to this Subsection 6.04
shall operate as a complete discharge of the obligations under the Plan of
the Company and the Committee in respect of such Participant and all other
persons.
6.05 PROCEDURE FOR CLAIMING A PAYMENT. Any person who believes himself or
herself to be entitled to a distribution or payment pursuant to the Plan
may request, in writing, a review by the Committee of such person's
entitlement under the Plan. Such a request must be sent to the Corporate
Secretary within one year after the Director's termination of Service, or
the termination of the Plan or a Change of Control, or, in the case of a
Beneficiary, within on year after a Participant's death. After review, the
Committee shall, within a reasonable period of time, give, or cause to be
given, to the requesting person written notice of its decision. If
distribution of any cash amount or payment of any Stock claimed is denied,
the decision shall set forth the specific reason(s) for the denial.
6.06 UNCLAIMED BENEFITS. Neither the Company nor the Committee shall be
responsible for locating any person to whom cash amounts or Stock are
distributable or payable pursuant to the Plan.
6.07 SUSPENSION OF DISTRIBUTIONS UPON RE-ELECTION TO THE BOARD. If a Participant
receiving distributions under the Plan returns to Service, distribution or
payment of any undistributed or unpaid cash amounts or Stock under the Plan
shall be suspended until his or her Service terminates again, or the Plan
is terminated pursuant to Subsection 8.02, or a Change of Control occurs,
at which time his or her Deferred Compensation Account shall be recomputed
and adjusted to give effect to any additional cash amounts or Stock
distributable or payable to him or her and to the cash amounts or Stock
previously distributed or paid.
SECTION 7. ADMINISTRATION OF THE PLAN
--------------------------
7.01 ACCOUNTS AND RECORDS. The accounts and all records necessary for the
administration of the Plan shall be maintained by the Corporate Secretary
and shall accurately disclose the history and status of each Participant's
Deferred Compensation Account and his or her Cash Account and/or Phantom
Stock Account, and all distributions and payments made to each Participant
or Beneficiary or other person under the Plan.
-10-
<PAGE>
7.02 EXPENSES. The expenses of administering the Plan shall be paid out of the
general funds of the Company.
SECTION 8. AMENDMENT OR TERMINATION OF THE PLAN
------------------------------------
8.01 AMENDMENT. The Plan may, at any time and from time to time, be amended or
modified in whole or in part by action of the Board; provided, however,
that:
(a) no such amendment shall become effective without the approval of the
shareholders of the Company, if and to the extent shareholder approval
is required in order to comply with Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act
of 1934; and
(b) the provisions of the Plan that set forth the amounts and the formula
for determining the amounts, pricing and timing of Stock Awards may
not be amended more than once every six (6) months, other than to
comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or rules promulgated by the Internal
Revenue Service thereunder; and
(c) unless required by law, no such amendment or modification shall
deprive a Participant of any portion of those Stock Awards and
deferred Fees that have been credited to the Participant's Deferred
Compensation Account as of the date of such amendment or modification;
and
(d) notice of every such amendment shall be given to each Director and
Beneficiary of a deceased Director.
8.02 TERMINATION OF STOCK AWARDS. Unless the Plan is sooner terminated, no Stock
Award shall be made after March 5, 2010.
8.03 TERMINATION OF PLAN. The Plan may be terminated prospectively at any time
by action of the Board; provided, however, that:
(a) the amounts then credited to the Deferred Compensation Accounts of the
Participants shall be distributed to the Participants as provided in
Section 6 of the Plan; and
(b) unless required by law, no such termination shall deprive a
Participant of any portion of those Stock Awards and deferred Fees
that have been credited to the Participant's Deferred Compensation
Account as of the date of such termination; and
-11-
<PAGE>
(c) the Board shall not terminate the Plan solely to accelerate the
payment of any amounts previously credited to a Participant's Cash
Account or Phantom Stock Account.
SECTION 9. MISCELLANEOUS PROVISIONS
------------------------
9.01 FUNDING. The Company's obligations under the Plan shall be unfunded; and
the Company is not, under any circumstances, required to fund its
obligations hereunder. The Company may, in its sole discretion, purchase
shares of Stock and/or set aside or invest funds to meet its obligations
hereunder in whole or in part. If the Company determines to make such
provisions, the manner of making it, and the continuance or discontinuance
of such provision is solely within the discretion of the Company.
9.02 A PARTICIPANT'S RIGHT TO ASSETS; ASSIGNMENTS; ENCUMBRANCES. Except with
respect to Stock purchased by the Company for and in the name of a
Participant pursuant to Subsection 3.02 or Subsection 6.01(b) of the Plan,
the Plan confers on a Participant no right, title or interest whatsoever in
or to any shares of Stock, or any specific funds or assets of the Company.
The Participant has the rights solely of a general, unsecured creditor with
respect to the enforcement of and payment from the Plan. Except as
aforesaid, if any Stock funds or assets are acquired by the Company in
connection with its obligations under this Plan, they shall not be deemed
to be held in trust or otherwise for the benefit of the Participant, and
the Participant shall have no property right or security interest in such
funds or assets; and any Stock funds or assets so acquired shall be, and
remain, the general, unpledged and unrestricted funds or assets of the
Company. A Participant's right to receive a Stock Award, a Retirement
Program Termination Award, shares of Stock in lieu of a Stock Award, and/or
payment with respect to Phantom Stock Units, under the Plan is not
assignable or transferrable and shall not be subject to any encumbrances,
liens, pledges or charges of the Participant or his or her creditors. Any
attempt to assign, transfer or hypothecate any such Stock Award, Retirement
Program Termination Award, shares of Stock or right to receive payment
shall be null and void and of no force or effect whatsoever.
9.03 STOCK. The aggregate number of shares of Stock that may be issued by the
Company under the Plan shall not exceed 200,000; provided, however, that in
the event of a stock split, stock dividend, recapitalization,
reclassification or other similar change in the Company's capital
structure, the number of shares of Stock that may be issued by the Company
under the Plan shall be appropriately adjusted by and at the direction of
the Board. The grant of Stock Awards and the crediting of Phantom Stock
Units to Phantom Stock Accounts under the Plan shall not affect in any way
the right, power or authority of the Company to issue additional Stocks or
other securities, to make adjustments, reclassifications, reorganizations
or other changes in its corporate, capital or other business
-12-
<PAGE>
structure, to participate in a merger, consolidation or share exchange, or
to transfer its assets, dissolve or liquidate.
9.04 GOVERNMENT REGULATIONS.
(a) The obligations of the Company to issue, or purchase, and deliver any
shares of Stock payable under the Plan shall be subject to all
applicable laws, rules and regulations, and to the obtaining of all
such approvals by governmental agencies as may be deemed necessary or
appropriate by the Board.
(b) Except as otherwise provided in Subsection 8.01 of the Plan, the Board
may make such changes in the Plan as may be necessary or appropriate
to comply with the rules and regulations of any governmental
authority.
9.05 EFFECT OF MISTAKE. In the event of a mistake or misstatement as to the
eligibility of any person, or the amount or kind of distributions or
payments made or to be made to a Participant or Beneficiary, the Committee
shall, to the extent it deems possible, make such adjustments as will in
its judgment accord to such Participant or Beneficiary the distributions
and payments to which he or she is properly entitled under the Plan. No
member of the Board and no officer or employee of the Company shall be
liable to any person for any action taken or omitted in connection with the
administration of the Plan, unless attributable to his or her own fraud or
wilful misconduct; and the Company shall not be liable to any person for
any such action, unless attributable to fraud or wilful misconduct on the
part of a Director, officer or employee of the Company.
9.06 NON-EXPANSION OF RIGHTS. Nothing contained in the Plan shall afford any
Director the right to be retained on the Board of Directors of the Company.
Neither the provisions of this Plan nor any act of the Committee or the
Company hereunder shall be construed as giving to any Director or other
person any legal or equitable right or claim against the Company for the
payment of any Stock Award or deferred Fees hereunder, except as otherwise
specifically provided in the Plan.
9.07 HEADINGS OF SECTIONS AND SUBSECTIONS. The headings of Sections and
Subsections are included solely for convenience of reference, and if there
is any conflict between such headings and text of the Plan, the text shall
control.
9.08 ILLEGALITY OF PARTICULAR PROVISION. The illegality of any particular
provision of the Plan shall not affect the other provisions thereof, but
the Plan shall be construed in all respects as if such invalid provision
were omitted.
9.09 APPLICABLE LAW. The validity, interpretation and administration of the
Plan, and the rights of any and all persons having or claiming any interest
in or under the Plan, shall be governed by the law of the State of
Connecticut, except to the extent preempted by federal law.
-13-
