[LOGO]
CTG Resources, Inc. o P.O. BOX 1500 o 100 COLUMBUS BOULEVARD o HARTFORD, CONN.
06144-1500 o (860) 727-3000
December 26, 1997
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
CTG Resources, Inc., scheduled to be held on Tuesday, January 27, 1998, at the
office of the Company, 100 Columbus Boulevard, Hartford, Connecticut, commencing
at 10:30 a.m. Your Board of Directors and management look forward to greeting
personally those shareholders able to attend. Parking will be available.
At the meeting you will be asked to elect four Directors and to ratify the
appointment of the Company's independent public accountants.
You are requested to give prompt attention to these matters, which are more
fully described in the accompanying Proxy Statement. You are urged to read the
Proxy Statement carefully. Your Board of Directors recommends a vote "FOR"
Proposals 1 and 2.
Regardless of the number of shares you own, it is important that they be
represented and voted at the meeting, whether or not you plan to attend.
Accordingly, you are requested to exercise your vote, sign, date and mail the
enclosed proxy. A postage prepaid return envelope is provided for your
convenience.
Your interest and participation in the affairs of the Company are sincerely
appreciated.
Sincerely,
/s/Victor H. Frauenhofer
------------------------
Victor H. Frauenhofer
Chairman and Chief Executive Officer
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[LOGO]
CTG RESOURCES, INC.
P.O. BOX 1500, 100 COLUMBUS BOULEVARD, HARTFORD, CONNECTICUT 06144-1500
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 26, 1997
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of CTG Resources, Inc. will be held at
the office of the Company, 100 Columbus Boulevard, Hartford, Connecticut, on
Tuesday, January 27, 1998, at 10:30 a.m., for the following purposes:
1. To elect four Directors;
2. To ratify the appointment of a firm of independent public accountants to
audit the books and records of the Company for the fiscal year ending
September 30, 1998 and;
3. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on December 8, 1997
as the record date for the purpose of determining the shareholders who are
entitled to notice of and to vote at the meeting.
Admission to the Meeting will be by Admission Ticket only. If you are a
shareholder of record or an Employee Savings Plan participant and plan to
attend, please detach your Proxy from your Admission Ticket and present the
ticket for admission to the meeting. If your shares are not registered in your
own name, please advise the shareholder of record (your bank, broker, etc.) that
you wish to attend. That firm will request an Admission Ticket for you or will
provide you with evidence of your ownership that will enable you to gain
admittance to the Meeting.
/s/Reginald L. Babcock
----------------------
Reginald L. Babcock,
Vice President,
General Counsel & Secretary
Please fill in, sign, date and mail the accompanying proxy without delay,
even if you expect to be present in person at the Meeting.
<PAGE>
CTG RESOURCES, INC.
P.O. BOX 1500, 100 COLUMBUS BOULEVARD, HARTFORD, CONNECTICUT 06144-1500
PROXY STATEMENT
INTRODUCTION
At the 1997 Annual Meeting of Shareholders of Connecticut Natural Gas
Corporation ("CNG"), the shareholders of CNG approved and adopted the Agreement
and Plan of Exchange, dated as of December 20, 1996 (the "Exchange Agreement"),
by and between CNG and CTG Resources, Inc. ("CTG" or the "Company"), then a
wholly owned subsidiary of CNG, providing for, among other things, the exchange
(the "Exchange") of each outstanding share of the common stock, par value $3.125
per share, of CNG ("CNG Common Stock") for one share of the common stock,
without par value, of CTG ("CTG Common Stock"). The Exchange was consummated as
of the close of business on March 31, 1997, and as a result thereof, the common
shareholders of CNG became shareholders of CTG and CNG became a controlled
subsidiary of CTG. As used in this proxy statement, all references to the
"Company" shall be deemed to mean and refer to CNG and its consolidated
subsidiaries for all periods prior to the effectiveness of the Exchange and to
CTG and its consolidated subsidiaries for all periods from and after the
effectiveness of the Exchange. All references to the "Common Stock" of the
Company shall be deemed to mean and refer to the CNG Common Stock and the CTG
Common Stock, as appropriate.
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of the
Company for use at the Annual Meeting of Shareholders to be held on January 27,
1998. The proxy, when signed and received by the Secretary prior to the meeting,
will be voted unless revoked. Any shareholder giving a proxy has the power to
revoke it at any time prior to voting, by giving written notice of revocation to
the Secretary, submitting a properly executed proxy of later date, or attending
the meeting and voting in person. The proxy will be voted as specified thereon.
Unless specifically directed otherwise, all properly executed proxies will be
voted for the election of directors and for the ratification of the appointment
of the indicated independent public accountants.
If a shareholder participates in the Company's Dividend Reinvestment Plan,
any shares held in his or her account will be voted in accordance with the proxy
returned by the shareholder unless other instructions are received.
Only shareholders of record at the close of business on December 8, 1997
will be entitled to vote at the meeting. On that date there were 8,663,474
shares of Common Stock issued and outstanding, the holders of which are entitled
to one vote per share. There is no provision in the Company's Certificate of
Incorporation for cumulative voting.
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Under the applicable provisions of the Connecticut Business Corporation Act
(the "CBCA"), shares entitled to vote as a separate voting group may take action
on a particular matter at the Annual Meeting only if a quorum of those shares
exists with respect to that matter. A majority of the votes entitled to be cast
on the matter by the voting group constitutes a quorum of that voting group for
action on that matter. For this purpose, only shares of Common Stock held by
those present at the Annual Meeting or for which signed proxies are returned
will be considered to be represented at the Annual Meeting. All shares of Common
Stock represented at the Annual Meeting will be counted without regard to
abstentions as to any particular item.
All duly executed proxies received prior to the Annual Meeting will be
voted in accordance with the terms of such proxies. Shares of Common Stock
represented by proxies that are returned signed but without instructions for
voting will be voted as recommended by management. Shares of Common Stock
represented by proxies that are returned unsigned or improperly marked will be
treated as abstentions for voting purposes and, in the case of unsigned proxies
only, not counted for purposes of determining a quorum. Abstentions and broker
non-votes are not counted in the tally of shares cast for or against a
particular matter.
Assuming the presence of a quorum, the election of directors requires the
affirmative vote of a plurality of the votes cast by the holders of the
outstanding shares of Common Stock. Ratification of the appointment of Arthur
Andersen LLP and approval of any other matter to be voted upon at the Annual
Meeting is achieved if the votes cast by the holders of the outstanding shares
of Common Stock in favor of the proposal exceed the votes cast against the
proposal.
Any shares represented by broker proxies which are not voted with respect
to any matter will not be counted in determining whether a quorum is present for
consideration of such matter and will not be considered for purposes of
determining the tally of shares cast for or against such matter. Proxies marked
to abstain from voting with respect to any matter to be voted upon at the Annual
Meeting will be counted in determining whether a quorum is present for
consideration of such matter, but will not be considered for purposes of
determining the tally of shares cast for or against such matter.
The cost of solicitation of proxies will be paid by the Company. In
addition to the solicitation by use of the mail, directors, officers or regular
employees of the Company may solicit proxies personally or by telephone or
electronic means, and the Company may request persons holding stock for others
in their names or in the names of nominees to obtain proxies from and send proxy
material to their principals, and it may reimburse such persons for their
expense in so doing. The Company has retained the firm of D.F. King & Co., Inc.
to aid in the solicitation of proxies, for which services the Company will pay a
fee not exceeding $8,000, plus out-of-pocket disbursements.
The Company's Annual Report for the fiscal year ended September 30, 1997 is
being mailed together with this Proxy Statement. The proxy and this proxy
statement were first mailed to the shareholders on or about December 26, 1997.
2
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ITEM 1
ELECTION OF DIRECTORS
The Company's Board of Directors is divided into three classes, and each
class of directors is elected for a three year term. At each Annual Meeting of
Shareholders, directors are elected to succeed those in the class whose terms
are expiring.
In connection with the consummation of the Exchange and the formation of
the Company's current holding company structure, the designations of the classes
of the current directors were changed to preserve the then-current terms of the
directors in office immediately prior to the effectiveness of the Exchange. As a
result of this redesignation, the persons who were previously designated as
Class II directors are now designated as Class I directors and the terms of
these directors are scheduled to expire on the date of the Annual Meeting. Mr.
Fonteyne, Mr. Mullane, Mr. Shima and Mr. Tomasso have been nominated to succeed
themselves. If elected, they will each serve three year terms that expire at the
Annual Meeting of Shareholders to be held in 2001 or when their successors are
elected and qualified.
The Board of Directors has a policy which requires an incumbent director
who has reached the age of 70 to submit his or her resignation as a director
effective as of the date of the Annual Meeting of Shareholders of the Company
following the month in which such director's 70th birthday falls. Mr. James F.
English, Jr. who was most recently re-elected for a three year term at the
Annual Meeting of Shareholders held in 1997, reached the age of 70 during the
past year. Accordingly, his resignation will become effective as of the date of
the Annual Meeting.
The Board of Directors has determined not to nominate a candidate to fill
the vacancy created by the resignation of Mr. English. Accordingly, the vacancy
will continue to exist after the Annual Meeting. Under the applicable provisions
of the Connecticut Business Corporation Act and the governing instruments of the
Company, the Board will have the power and authority, in its sole and absolute
discretion, to fill the vacancy created by the resignation of Mr. English
without any further action by the shareholders.
IT IS INTENDED THAT VOTES WILL BE CAST PURSUANT TO THE ENCLOSED PROXY FOR
THE ELECTION OF THE FOUR NOMINEES SET FORTH BELOW UNLESS AUTHORITY TO VOTE FOR
ONE OR MORE OF THE NOMINEES IS WITHHELD BY SUCH PROXY, IN WHICH CASE IT IS
INTENDED THAT VOTES WILL BE CAST FOR THOSE NOMINEES, IF ANY, WITH RESPECT TO
WHOM AUTHORITY HAS NOT BEEN WITHHELD. EACH OF THE NOMINEES IS NOW A MEMBER OF
THE BOARD OF DIRECTORS. IN THE EVENT THAT ANY OF THE NOMINEES SHOULD BECOME
UNABLE OR UNWILLING TO SERVE AS A DIRECTOR, A CONTINGENCY WHICH MANAGEMENT HAS
NO REASON TO EXPECT, IT IS INTENDED THAT THE PROXY WILL BE VOTED, UNLESS
AUTHORITY IS WITHHELD, FOR THE ELECTION OF SUCH PERSON, IF ANY, AS SHALL BE
DESIGNATED BY THE BOARD OF DIRECTORS. THE PROXY CANNOT BE VOTED FOR MORE THAN
FOUR NOMINEES.
3
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BIOGRAPHICAL INFORMATION
The biographical information which follows includes the names and
photographs of the nominees for Class I directorships and of incumbent Class II
and Class III directors; the principal current occupation or employment of each
for the past five years, the number of shares of stock of the Company reported
by each as beneficially owned, directly or indirectly, as of November 1, 1997,
the year each person became a director of the Company, the age of the director,
the Board Committee(s) on which each serves, and the principal directorships
held by such persons and other affiliations.
NOMINEES FOR CLASS I DIRECTORS FOR TERMS COMMENCING IN 1998 AND EXPIRING IN
2001
- - --------------------------------------------------------------------------------
Name, Age
Year Elected a Director,
Shares Owned and
Board Committee Membership Principal Occupation and Other Information
- - ---------------------------- ------------------------------------------
[PHOTO]
HERMAN J. FONTEYNE, 58
1993
2,354 common shares
Audit Committee
Compensation Committee
President and Chief Executive Officer
Ensign-Bickford Industries, Inc.
Simsbury, Connecticut
- - ---------------------------------------------------------------------
Mr. Fonteyne received his B.S. Degree in Chemical Sciences from
Louvain University in Belgium. After serving in the Belgian Army he
started his career with UCB/Fabelta in their textile manufacturing
group. In 1966 he joined Monsanto in Europe where he held numerous
positions in both the Europe/Africa and U.S. Operations before
becoming Managing Director of Monsanto Agricultural Products Com-
pany and Corporate Vice President. Mr. Fonteyne joined Ensign-
Bickford Industries Inc. in 1982 as its President and Chief Executive
Officer. Mr. Fonteyne is a director of Ensign-Bickford Industries,
Inc. He also currently serves on the World Affairs Council Board, the
AMA General Management Council, the Board of Junior Achievement of
North Central Connecticut, and the Executive Council of the Confer-
ence Board.
4
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Name, Age
Year Elected a Director,
Shares Owned and
Board Committee Membership Principal Occupation and Other Information
- - ---------------------------- ------------------------------------------
[PHOTO]
DENIS F. MULLANE, 67
1973
2,000 common shares
Chair, Committee on Directors
Executive Committee
Pension & Investment
Committee
Principal
Mullane Enterprises
West Hartford, Connecticut
- - ----------------------------------------------------------------------
Mr. Mullane served four years with the U. S. Army in Germany follow-
ing his graduation from the U. S. Military Academy at West Point. Mr.
Mullane recently retired as Chairman after a 38 year career with Con-
necticut Mutual Life. He joined Connecticut Mutual in 1956 as an agent
and became its President in 1976 and Chief Executive Officer in 1983.
He has been active in community and insurance industry affairs
throughout his career. Mr. Mullane is currently active with St.
Francis Hospital and Medical Center, The American Leadership Forum,
the West Point Association of Graduates and the American College, Bryn
Mawr, Pennsylvania. Mullane Enterprises provides advice to its clients
about retirement, estate planning and charitable giving.
[PHOTO]
RICHARD J. SHIMA, 58
1987
6,870 common shares
Chair, Compensation Committee
Executive Committee
Corporate Advisor
West Hartford, Connecticut
- - ----------------------------------------------------------------------
Mr. Shima is a graduate of Harvard University. He served as an officer
in the U.S. Navy. He is a member of the American Academy of Actuaries,
a trustee of Saint Joseph College, and a director of Hartford
Hospital and the Greater Hartford YMCA. He serves as a director of
Enhance Financial Services Group, Inc., Associated Electric & Gas
Insurance Services, Ltd. (AEGIS), The Trust Company of Connecticut,
the Evergreen-Keystone Mutual Funds and Middlesex Mutual Assurance
Co. Mr. Shima joined Travelers Companies in 1961 and held several
positions in corporate accounting and finance. He became Executive
Vice President for all casualty-property business in 1980, Executive
Vice President and Chief Investment Officer in 1985, and served as
Vice Chairman and Chief Investment Officer until 1991.
5
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Name, Age
Year Elected a Director,
Shares Owned and
Board Committee Membership Principal Occupation and Other Information
- - ---------------------------- ------------------------------------------
[PHOTO]
MICHAEL W. TOMASSO, 44
1996
1,176 common shares
Pension & Investment Committee
Audit Committee
Principal
Tomasso Brothers, Inc.
New Britain, Connecticut
- - ----------------------------------------------------------------------
Mr. Tomasso holds a B.A. degree from Tufts University and an M.B.A.
from Babson College. Prior to his joining Tomasso Brothers in 1993,
Mr. Tomasso was President, CEO and a Director of Geodyne Resources,
Inc. in Houston, Texas, then an affiliate of PaineWebber, Inc. and
traded on the American Stock Exchange. Prior to joining Geodyne he was
Executive Vice President of Snyder Exploration Company. In this
position, he was involved in the natural gas and oil acquisition,
development and production businesses. He was also a member of the
Board of Directors of PaineWebber Properties. He is currently a member
of the Board of Trustees of the Kingswood-Oxford School and is a
corporator of the New Britain General Hospital, American Savings Bank,
the Boys' and Girls' Club of New Britain and the New Britain-Berlin
YMCA. He is also a member of the Steering Committee of Central
Connecticut State University's Institute of Indus- trial and
Engineering Technology.
6
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CLASS II DIRECTORS WHOSE TERMS COMMENCED IN 1997 AND EXPIRE IN 1999
- - --------------------------------------------------------------------------------
Name, Age
Year Elected a Director,
Shares Owned and
Board Committee Membership Principal Occupation and Other Information
- - ---------------------------- ------------------------------------------
[PHOTO]
BESSYE W. BENNETT, 59
1987
708 common shares
Audit Committee
Committee on Directors
Principal
Law Offices of Bessye W. Bennett
Bloomfield, Connecticut
- - ----------------------------------------------------------------------
Mrs. Bennett is a 1958 graduate of Radcliffe College with a B.A.
Degree in Government, cum laude. She also holds an M.A. Degree in
Education from Trinity College and a J.D. degree from the University
of Connecticut Law School. She has been in corporate practice as
Associate Counsel and Assistant Vice President at Society for Sav-
ings and from 1983 to 1984 as General Counsel to the Connecticut State
Employees Retirement Commission. From 1985 to 1991 she served as
part-time Deputy Town Attorney for the Town of Bloomfield and from
1992 to 1993 as the Chairman of the Connecticut Commis- sion on Victim
Services. Since 1993 Mrs. Bennett has been engaged in the private
practice of law. She also serves as a Corporator of the Hartford
Public Library, St. Francis Hospital and Medical Center/Mt. Sinai
Hospital and The Bushnell and as a trustee of Hartford College for
Women, the Hartford Symphony Orchestra, the YMCA, the New Samaritan
Corporation and Connecticut Womens' Hall of Fame. She is also a
director of The Trust Company of Connecticut.
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Name, Age
Year Elected a Director,
Shares Owned and
Board Committee Membership Principal Occupation and Other Information
- - ---------------------------- ------------------------------------------
[PHOTO]
BEVERLY L. HAMILTON, 51
1982
1,144 common shares
Chair, Pension & Investment
Committee
President
ARCO Investment Management Company
Los Angeles, California
- - ----------------------------------------------------------------------
A homeowner in Connecticut since 1980, Mrs. Hamilton is a graduate of
the University of Michigan where she received a B.A. with honors. She
also studied at New York University's Graduate School of Business.
Mrs. Hamilton is President of ARCO Investment Management Company, a
subsidiary of Atlantic Richfield, where she also has been a Vice
President since 1991. She served as Deputy Comptroller for the City of
New York for four years. Mrs. Hamilton joined United Technologies in
1980, and served as a Vice President from 1981 to 1987. For the
previous five years she was a Vice President of Morgan Stanley &
Co., Inc. Prior to that she was a Vice President and principal with
Auerbach, Pollak, and Richardson, a trust officer at Manufacturers
Hanover, and a research analyst with ITT Corporation. Mrs. Hamilton is
a director of United Asset Management Corp., as well as the Stanford
(University) Management Company, the American Funds Emerging Markets
Growth Fund, and Mass Mutual's Institutional and Series Funds.
[PHOTO]
HARVEY S. LEVENSON, 57
1990
3,018 common shares
Compensation Committee
Chair, Executive Committee
President, Retired
Kaman Corporation
Bloomfield, Connecticut
- - ----------------------------------------------------------------------
Mr. Levenson holds B.A. and J.D. degrees from Drake University and an
L.L.M. from Georgetown University. He was an attorney with the
Treasury Department, Washington, D.C. until 1968. From 1968 to 1982,
he practiced law at the Hartford law firm of Murtha, Cullina, Richter
and Pinney. In 1996, Mr. Levenson retired as President and Chief
Operating Officer of Kaman Corporation, which he joined in 1982. Mr.
Levenson is a managing member of Hamleg Enterprises, L.L.C., a private
investment company, and currently serves as a corporator of St.
Francis Hospital, Hartford Hospital, and The Institute of Living.
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Name, Age
Year Elected a Director,
Shares Owned and
Board Committee Membership Principal Occupation and Other Information
- - ---------------------------- ------------------------------------------
CLASS III DIRECTORS WHOSE TERMS COMMENCED IN 1997 AND EXPIRE IN 2000
- - --------------------------------------------------------------------------------
[PHOTO]
VICTOR H. FRAUENHOFER, 64
1978
40,671 common shares
Executive Committee
Chairman and Chief Executive Officer
CTG Resources, Inc.
Hartford, Connecticut
- - ----------------------------------------------------------------------
Mr. Frauenhofer joined the Company in 1961 and held various posi-
tions until he was elected President in 1983. He was named to the
additional positions of Chief Executive Officer in 1987 and Chairman
in 1991. He is a graduate of Bentley College and Harvard AMP. He is
Chairman, and a director of each of the Company's subsidiaries. He
serves on the Board of Directors of Spencer Turbine Company and the
Connecticut Capitol Region Growth Council, Inc. He is a trustee of the
Connecticut Policy and Economic Council, Inc. He is a past chairman of
the New England Gas Association and a past member of the Board of
Directors of the American Gas Association.
[PHOTO]
ARTHUR C. MARQUARDT, 50
1996
10,250 common shares
President and Chief Operating Officer
CTG Resources, Inc.
Hartford, Connecticut
- - ----------------------------------------------------------------------
Mr. Marquardt has been the President and Chief Operating Officer of
the Company since December 1, 1996. Prior to joining the Company, he
was the Senior Vice President at the Long Island Lighting Company's
Gas Business Unit. Mr. Marquardt has had extensive and varied business
experience at Combustion Engineering, Inc.; General Electric
Company; Quadrex Corporation; and Pacific Nuclear Systems, Inc. where
he was President and Chief Operating Officer. He also serves as a
Director of the Hartford Ballet and the Hartford Downtown Council.
9
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Name, Age
Year Elected a Director,
Shares Owned and
Board Committee Membership Principal Occupation and Other Information
- - ---------------------------- ------------------------------------------
[PHOTO]
LAURENCE A. TANNER, 51
1993
1,321 common shares
Compensation Committee
Pension & Investment
Committee
President and Chief Executive Officer
New Britain General Hospital
New Britain, Connecticut
- - ----------------------------------------------------------------------
Mr. Tanner is a graduate of the University of Rhode Island and Yale
University where he received a Master's degree. Mr. Tanner joined New
Britain General Hospital and its affiliated corporations as Presi-
dent and Chief Executive Officer in 1987. He also serves as Presi-
dent and Chief Executive Officer of the Central Connecticut Health
Alliance, which is a holding company for New Britain General Hospital
and several affiliated corporations. Prior to joining New Britain Gen-
General Hospital, he was the President and Chief Executive Officer of
Bristol Hospital. Mr. Tanner is a past Chairman of the Association for
the Advancement of Medical Instrumentation, a national organization
located in Washington, D.C. In addition, he is a director of the New
Britain Chamber of Commerce, the Voluntary Hospitals of America,
Southern New England Chapter, and the Connecticut Hospital
Association. He is a corporator of the New Britain/Berlin YMCA, The
Hospital for Special Care, the Connecticut Children's Medical Center
and the Klingberg Family Center, and a trustee of the Jerome Home of
New Britain.
The indicated shares include shares held by spouses, children and relatives
sharing a director's home as to which beneficial ownership has been disclaimed
and in the case of Mr. Frauenhofer, shares held for his account in the Company's
Employee Savings Plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors as well as persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes of ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Based solely on the Company's review of the
copies of such forms received or written representations from certain reporting
persons that no reporting was required, the Company believes during fiscal year
1997 all filing requirements were met.
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BOARD COMMITTEES
The Board of Directors has an Audit Committee, a Compensation Committee, an
Executive Committee, a Pension and Investment Committee, and a nominating
committee known as the Committee on Directors.
Audit Committee members are Mr. English, Chair, Mrs. Bennett and Messrs.
Fonteyne and Tomasso. This Committee recommends to the Board of Directors a firm
of independent public accountants to audit the books and accounts of the
Company. The Committee reviews the reports prepared by the independent public
accountants and recommends to the Board any actions deemed appropriate in
connection with the reports. The Company's director of internal audit reports
annually to the Committee on internal auditing activities and is authorized to
report directly to the Committee more frequently should the need arise. The
Audit Committee held three meetings during the most recent fiscal year.
Compensation Committee members are Mr. Shima, Chair, and Messrs. Levenson,
Fonteyne and Tanner. The Committee establishes salaries and benefits for all
officers of the Company and its subsidiaries, subject to Board approval. The
Committee reviews all compensation and benefit programs offered by the Company
and its subsidiaries. The Compensation Committee met nine times during the most
recent fiscal year.
Executive Committee members are Mr. Levenson, Chair, and Messrs. Shima,
Frauenhofer and Mullane. Pursuant to the Bylaws, the Executive Committee has
charge of all matters which may be referred to it by the Board of Directors and
generally has oversight and authority with regard to all business of the Company
when the Board of Directors is not in session; except that it may not: (i)
authorize distributions; (ii) approve or propose to shareholders action for
which Connecticut law requires shareholder approval; (iii) fill vacancies on the
Board or any Board committee; (iv) amend the Certificate of Incorporation when
the Board is permitted to do so without shareholder approval; (v) adopt, amend
or repeal the Bylaws; (vi) approve a plan of merger not requiring shareholder
approval; (vii) authorize or approve the reacquisition of shares of Company
stock, except according to a formula or method prescribed by the Board; or
(viii) authorize or approve the issuance or sale or contract for sale of shares,
or determine the designation and relative rights, preferences and limitations of
a class or series of shares unless authorized by the Board within specifically
prescribed limits. The Executive Committee met nine times during the most recent
fiscal year.
The Pension & Investment Committee is composed of Mrs. Hamilton, Chair, and
Messrs. Mullane, Tanner, and Tomasso. The Pension & Investment Committee
oversees the financial management of all qualified and non-qualified plans of
deferred compensation, trusts relating to such plans, and similar arrangements
sponsored by the Company. The Committee recommends contributions and amendments
to such plans and has the authority to select, remove, review the performance
of, and allocate assets among managers, trustees, insurance companies and other
financial advisors as necessary to fully discharge its duties. The Committee met
three times during fiscal year 1997.
11
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The Committee on Directors is composed of Mr. Mullane, Chair, Mrs. Bennett,
and Mr. English. This Committee considers candidates for vacancies on the Board,
including written shareholder recommendations, and recommends nominees to the
Board when the need arises. The Company's Bylaws provide that, in order for a
shareholder to nominate a candidate for election as a director of the Company, a
shareholder must provide written notice to the Secretary of the Company of such
shareholder's intention to so nominate a candidate not less than seventy days
nor no more than ninety days prior to the Annual Meeting of Shareholders (See
"1999 Annual Meeting-shareholder Proposals" below). The Committee met twice
during fiscal year 1997.
During the 1997 fiscal year the Board of Directors held ten meetings and
there were twenty-six committee meetings. All directors attended at least 75% of
the aggregate number of meetings of the Board and committees on which they
serve.
COMPENSATION OF DIRECTORS
During the 1997 fiscal year, directors received an annual retainer fee of
$11,000 plus $800 for each Board or committee meeting attended. A chairperson of
a committee received $850 for each committee meeting chaired in lieu of $800. A
plan of deferred compensation for services as a director is made available to
directors. No director who also is an employee of the Company receives any fees
for service on the Board.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation Policy
The Compensation Committee's compensation program for officers of the
Company and its subsidiaries, including the Chief Executive Officer, is designed
to relate total compensation to corporate performance. Such compensation is
comprised of base salary and distributions pursuant to the Annual Incentive Plan
and Executive Restricted Stock Plan. As a result, a significant percentage of an
officer's total compensation is dependent upon corporate financial performance.
The program offers total compensation opportunities which are competitive with
other leading gas utilities and which enable the Company to compete for and
recruit executive talent critical to the Company's long term success.
1997 Executive Compensation
The first component of each officer's compensation, including the Chief
Executive Officer, Mr. Frauenhofer, is base salary. To determine base salaries,
the Committee chiefly relies upon data for executives in similar positions in
comparable, or peer group, companies and selects as a target the average salary
of this group. Base salaries are targeted to the average level of industry peers
in recognition that the potential for additional compensation offered by the
Annual Incentive Plan and Executive Restricted Stock Plan provides incentive to
improve corporate performance and increase shareholder value. The companies
which comprise the industry peer
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group generally used by the Committee are listed below in the discussion under
Corporate Performance Graph.
Under the Annual Incentive Plan, cash awards are made to participants based
upon the performance of the Company in the prior fiscal year. Plan participants
are eligible for awards that are targeted amounts, stated as percentages of
salaries that range from 5 to 30 percent. The performance of the Company in
achieving specified return-on-equity goals for the regulated and non-regulated
operations, and a specified earnings-per-share goal for consolidated operations
is measured at year-end on a scale from 0 to 100 percent. Using these criteria,
the overall performance rating for awards paid in 1997 with respect to
performance in 1996 was 73%. This result is then applied to each officer's
targeted award to determine the actual award.
The Executive Restricted Stock Plan promotes the achievement of long term
corporate goals by providing key employees an opportunity to achieve a greater
ownership interest in the Company. Under the Plan, 200,000 shares of the Common
Stock of the Company have been reserved for issuance in the form of restricted
stock awards to principal officers and other key personnel of the Company who
are designated by the Board of Directors as being eligible to participate. The
vesting of all restricted share awards under the plan is contingent upon the
"total return" to shareholders over multi-year periods as compared to a peer
group of 18 gas companies whose identities are listed below under Corporate
Performance Graph. Total return is comprised of changes in average value of the
Common Stock plus dividends. Vesting of such awards is also contingent upon
continued employment. A total of 25,520 shares were awarded to 12 individuals,
effective October 1994 and another 41,800 shares were awarded to 11 individuals
effective October 1996.
Company Performance and CEO Compensation
The foregoing principles and plans were used by the Committee and the Board
of Directors to determine Mr. Frauenhofer's 1997 annual compensation, as well as
compensation levels of the Company's other officers. Accordingly, Mr.
Frauenhofer's total compensation was determined with reference to compensation
paid by peer companies, the Company's financial performance in 1996, and the
Committee's overall assessment of his individual performance.
Limitation on Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
denies a publicly held corporation, such as the Company, a federal income tax
deduction for compensation in excess of $1 million per year paid or accrued for
each of its chief executive officer and four other most highly compensated
executive officers. Certain "performance based" compensation is not subject to
the limitation of deductibility provided that certain shareholder approval and
independent director requirements are met.
The total compensation paid or payable to each of the Company's executive
officers does not exceed $1 million per year. Therefore, the Committee does not
believe that the limitation on
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deductibility of executive compensation is currently material. The Committee
will continue to review the situation in light of future events with the
objective of achieving deductibility to the extent appropriate.
Compensation Committee:
Richard J. Shima, Chair
Harvey S. Levenson
Laurence A. Tanner
Herman J. Fonteyne
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As set forth above, the members of the Compensation Committee for fiscal
year 1997 were Messrs. Shima, Chair, Levenson, Fonteyne and Tanner. All four
members are non-employee directors and, except as set forth below, none has any
direct or indirect material interest in or relationship with the Company outside
of his position as director.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As part of the commercial and industrial marketing program of Connecticut
Natural Gas Corporation ("CNG"), CNG loaned $500,000 to New Britain General
Hospital in March, 1994. Laurence Tanner is the President and Chief Executive
Officer of the hospital and a director of CNG and the Company. The proceeds of
the loan were used to purchase and install gas air conditioning equipment. The
loan is to be repaid over a five year term at 7.5% interest, however a portion
of the interest payment may be returned to the hospital on a quarterly basis. As
of November 10, 1997 all payments have been made and the outstanding
indebtedness is $48,358. The foregoing terms are substantially similar to other
transactions CNG has entered into with other large gas customers.
To the Company's knowledge, there were no other interrelationships
involving either members of the Compensation Committee or other directors of the
Company requiring disclosure in this Proxy Statement.
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SUMMARY EXECUTIVE COMPENSATION
The following table provides certain information relating to the
compensation of the Company's Chief Executive Officer and its four other most
highly compensated executive officers for fiscal years 1997, 1996 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
-------------------------------- -------------
Other LTIP All Other
Name and Fiscal Salary Bonus Annual Payouts Comp.
Principal Position Year ($)(a) ($)(b) Comp. ($)(c) ($)(d) ($)(e)
- - -------------------------- -------- --------- --------- -------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Victor H. Frauenhofer 1997 329,967 70,036 59,095 0 114,678
Chairman, Chief 1996 318,000 40,510 5,531 48,603 57,212
Executive Officer 1995 307,500 106,650 4,863 50,368 72,850
Arthur C. Marquardt* 1997 228,551 76,731 0 0 14,953
President and Chief 1996 -- -- -- -- --
Operating Officer 1995 -- -- -- -- --
James P. Bolduc 1997 180,333 64,323 0 0 63,207
Executive Vice President 1996 150,350 15,961 293 11,286 18,692
and Chief Financial 1995 145,167 44,567 255 11,703 21,074
Officer
Anthony C. Mirabella 1997 142,250 20,220 13,142 0 34,996
Senior Vice President- 1996 137,833 12,137 545 10,109 17,175
Operations 1995 133,633 32,087 478 10,476 19,808
and Chief Engineer
Reginald L. Babcock 1997 137,267 19,506 0 0 45,088
Vice President, General 1996 132,850 8,463 515 19,224 17,699
Counsel and Secretary 1995 125,983 35,054 606 18,137 20,962
</TABLE>
* Mr. Marquardt joined the Company during fiscal year 1997.
a) For fiscal year 1997, the amount reported in this column includes $37,500
deferred at the election of Mr. Marquardt.
b) For fiscal year 1997, the amount reported in this column includes $10,110
deferred at the election of Mr. Mirabella.
c) Represents amount reimbursed to the officer by the Company for the payment
of taxes resulting from such officers' participation in the Executive Life
Insurance Program.
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<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(d) During fiscal year 1997, there were no restricted stock awards which vested.
The number and value of aggregate restricted stock holdings including dividends
reinvested as of September 30, 1997 for each of the listed officers was as
follows: Mr. Frauenhofer, 16,650 shares, $385,031 value; Mr. Marquardt, 10,250
shares, $237,031 value; Mr. Bolduc, 9,478 shares, $219,179 value; Mr. Mirabella,
5,673 shares, $131,188 value; and Mr. Babcock, 5,447 shares, $125,962 value.
Values are calculated based on the share price of $23.125 on September 30, 1997,
however, a portion of these restricted stock shares were forfeited pursuant to
the performance features of the Plan on October 1, 1997. The total aggregate
holdings (including restricted stock shares) of each of the listed officers as
of November 1, 1997 is listed on page 19 below in the table listing beneficial
ownership of company stock.
(e) For fiscal year 1997, amounts reported in this column consist of the
following: for Mr. Frauenhofer: $24,288-unvested dividends earned on restricted
stock as of September 30, 1997, $9,500-401(k) Plan, $70,641-executive life
insurance plan, $10,249-Deferred Compensation Plan B; for Mr. Marquardt:
$14,953-unvested dividends earned on restricted stock as of September 30, 1997;
for Mr. Bolduc: $13,826-unvested dividends earned on restricted stock as of
September 30, 1997, $7,790-401(k) Plan, $41,805-executive life insurance plan,
$326-Deferred Compensation B; for Mr. Mirabella: $8,276-unvested dividends
earned on restricted stock as of September 30, 1997, $8,535-401(k) Plan,
$18,185-executive life insurance plan; for Mr. Babcock: $7,938-unvested
dividends earned on restricted stock as of September 30, 1997, $6,176-401(k)
Plan, $30,974-executive life insurance plan.
</TABLE>
The Executive Life Insurance Program (split dollar life insurance) is available
to officers and other key employees in conjunction with the group term life
insurance generally provided to salaried employees. Under the plan, the Company
pays the entire amount of the premiums due on the policies but is reimbursed for
the aggregate amount of all such premiums out of the proceeds of the policies
upon the death of the covered executives. The amounts set forth above represent
the full amount of the annual premium paid on behalf of the named executive
officers.
For executives who were over the age of 52 at the inception of the program, the
program provides that the Company will continue to pay the premiums for a fixed
period of ten years from the inception of the policies which, in the case of
certain officers over the age of 52, means that the Company will pay the
premiums for some period of time after the regularly scheduled retirement date
of the officer. The Company has changed the methodology used to report the split
dollar information included in this proxy statement due to changes that were
made in the overall Executive Life Insurance Program which insure that the
Company will be reimbursed for aggregate premiums paid. Of the named executive
officers shown in the table, only Messrs. Frauenhofer and Mirabella were over
the age of 52 at the inception of their policies.
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<PAGE>
CHANGE OF CONTROL
The Company has Change of Control Employment Agreements with its Chief
Executive Officer and eight other officers of the Company. The Agreements become
effective upon a Change of Control (as defined therein) and provide that for a
period of three years following a Change of Control in the event of termination
of a covered executive's employment without cause or for Good Reason by the
executive, the covered executive is entitled to a lump sum severance payment of
between 2 and 3 times his or her annual salary and annual bonus, together with
three years pension credit and continued welfare benefits. The Agreement also
provides for an additional payment to make the executive whole for any excise
taxes imposed by Section 4999 of the Internal Revenue Code on payments made to
him that are contingent on a Change of Control.
LONG TERM INCENTIVE PLAN
The following table provides information about long term incentive awards
granted during fiscal year 1997 to the officers named in the Summary
Compensation Table.
LONG TERM INCENTIVE PLAN AWARDS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
Performance or Estimated Estimated
Other Period Future Payouts Future Payouts
Number of Until Maturation Threshold Maximum
Name Shares or Payout ($) ($)
- - ----------------------- ----------- ------------------ ---------------- ---------------
<S> <C> <C> <C> <C>
Victor H. Frauenhofer 10,000 1998-1999 -0- $231,250
Arthur C. Marquardt 9,600 2000-2002 -0- $222,000
James P. Bolduc 6,600 2000-2002 -0- $152,625
Anthony C. Mirabella 3,500 2000-2002 -0- $80,938
Reginald L. Babcock 3,400 2000-2002 -0- $78,625
</TABLE>
The Executive Restricted Stock Plan (the "Restricted Stock Plan") provides
long term incentives to officers and other key employees of the Company. The
Restricted Stock Plan is designed to reward such officers and key employees for
the Company's achievement of long term financial performance in comparison to a
peer group of eighteen other gas utilities. Financial performance is measured
over various periods based on the Company's ranking of total shareholder return
against the peer group for the applicable measurement period.
During fiscal year 1997, each of the officers except the CEO named in the
Summary Compensation Table was granted an award of restricted stock, one-third
of which is scheduled to vest during each of 2000, 2001 and 2002, assuming the
performance criteria set forth in the agreements evidencing the awards are
satisfied. In the case of the CEO, one-half was scheduled to vest in fiscal
1998, the other half in fiscal 1999. The awards will be adjusted upward or
downward at the end of each measurement period, depending on the financial
performance of the Company. If the Company's total shareholder return for each
measurement period is in the top quartile of the peer group, 150% of the
original grant will vest and be distributed. If the Com-
17
<PAGE>
pany's total shareholder return for each measurement period is in the second
quartile, 75% of the original grant will vest and be distributed. If the
Company's total shareholder return for each measurement period is in the third
quartile, 25% of the original grant will vest and be distributed. Finally, if
the Company's total shareholder return for each measurement period is in the
fourth quartile, the original grant will be forfeited.
The amounts set forth in the Long Term Incentive Plan Awards Table show the
range in the value of estimated payouts under the fiscal 1997 awards assuming
the Company's total shareholder return for the measurement periods falls in
either the first or fourth quartile of performance. The amounts set forth are
based on the closing price of the Common Stock on September 30, 1997 of $23.125,
and are calculated without regard to the reinvestment of dividends during the
period between the date of grant and the vesting of the awards. Restricted stock
awards were also granted to certain executive officers and key employees during
fiscal 1994.
RETIREMENT PLANS
The Company maintains two noncontributory defined benefit retirement plans
which provide benefits for certain employees (except for employees covered by
collective bargaining agreements) who have completed one year of continuous
service and have met certain age requirements. One such plan is qualified under
the applicable provisions of the Internal Revenue Code (the "Pension Plan"), and
the other is a nonqualified supplemental Officers Retirement Plan (the "Officers
Retirement Plan").
Under the Pension Plan, retirement benefits are computed by multiplying the
average of the employee's five highest years of annual pensionable earnings out
of the last 15 by a specified percentage accrual based on years of credited
service. Benefits accrue at 2% per year of service up to 30 years of service and
thereafter an additional 1% per year up to 35 for a maximum accrual of 65%.
Benefits paid under the Pension Plan are offset by a portion of the employee's
social security benefits. The plan provides for several optional forms of
benefit payments, including a straight life annuity, various joint and survivor
options, and a continuous and certain benefit option. Employees are fully vested
under the Pension Plan after five years of continuous service with the Company.
The Officers Retirement Plan operates in conjunction with and as a
supplement to the Pension Plan. The benefits payable under the Officers
Retirement Plan are calculated as continuous and certain benefits for unmarried
individuals, and as joint and survivor benefits for married individuals.
Benefits paid under the Officers Retirement Plan are based on the highest rate
of annual base salary paid to the officer at any time throughout his or her
career. For purposes of the Officers Retirement Plan, the salary upon which
benefits are based excludes compensation received pursuant to the Annual
Incentive Plan, which amounts are reflected in the bonus category of the Summary
Compensation Table above. An officer is eligible to receive 60% of base salary
at age 60 and for officers with more than 25 years of service there is an
additional one
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<PAGE>
percent accrual for each year up to 30 for a maximum accrual of 65%. Such
benefits are offset by fifty percent of social security benefits payable to each
participant, and by the benefits computed under all other defined benefit
pension plans to which the officer is entitled from the Company or from previous
employment. Also, no officer's benefit (when combined with benefits under the
pension plan) will be less than the benefit that would be received under the
Pension Plan formula as determined without regard to the application of any
Internal Revenue Service limitations on compensation or benefits payable from a
qualified plan in determining the benefit level. In the case of any officer who
has been employed by the Companies for less than fifteen years at the time of
retirement, any benefits under the Officers' Retirement Plan are adjusted in
proportion that such officer's years of service are to fifteen.
The credited years of service as of September 30, 1997, for the five
individuals named in the Summary Compensation Table are as follows: Mr.
Frauenhofer, 36 years, Mr. Marquardt, 1 year, Mr. Bolduc, 27 years, Mr.
Mirabella, 26 years, and Mr. Babcock, 18 years. The estimated annual benefits
payable upon retirement under the plans are as follows: Mr. Frauenhofer,
$207,907; Mr. Marquardt, $141,696; Mr. Bolduc, $101,900; Mr. Mirabella $84,940
Mr. Babcock, $81,240.
CORPORATE PERFORMANCE GRAPH
The following graph compares the total shareholder returns produced by the
Company over the last five fiscal years to the Standard & Poor's 500 Stock Index
("S & P 500") and the "CTG Peer Group." The CTG Peer Group consists of the
following Companies: Atmos Energy Corporation, Bay State Gas Company, Colonial
Gas Company, Connecticut Energy Corporation, Energen Corporation, Indiana
Energy, Inc., Laclede Gas Company, New Jersey Resources Corporation, Northwest
Natural Gas Company, NUI Corporation, Pennsylvania Enterprises, Piedmont Natural
Gas, Inc., Providence Energy Corporation, Public Service Company of North
Carolina, Inc., South Jersey Industries, Inc., SEMCO, Southern Union Company,
and Yankee Energy Systems, Inc. Total return values for the S & P 500, the CTG
Peer Group and the Company were calculated based on cumulative total return
values assuming reinvestment of dividends.
The CTG Peer Group is the same group generally used by the Compensation
Committee in its analysis and evaluation of employee compensation.
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<PAGE>
[THE FOLLOWING TABLE REPRESENTS A GRAPH IN THE PRINTED PIECE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG CTG RESOURCES, INC., THE S & P 500 INDEX
AND THE CTG PEER GROUP
CTG RESOURCES, INC. PEER GROUP S & P 500
9/92 100 100 100
9/93 146 130 113
9/94 113 114 117
9/95 114 122 152
9/96 133 147 183
9/97 136 175 257
* $100 INVESTED ON 9/30/92 IN STOCK OR INDEX--
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
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<PAGE>
OWNERSHIP OF COMPANY STOCK
The following shows the Company's Common Stock beneficially owned by each
of the named Officers listed in the Summary Compensation Table above and the
beneficial ownership of all directors and executive officers as a group as of
November 1, 1997.
Amount
Name of Beneficial Beneficially
Title of Class Owner Owned*
- - -------------- ------------------ ------------
Common Stock Victor H. Frauenhofer 40,671
Common Stock Arthur C. Marquardt 10,250
Common Stock James P. Bolduc 15,690
Common Stock Anthony C. Mirabella 14,209
Common Stock Reginald L. Babcock 10,107
Amount Beneficially
Owned by all
Executive Officersand Directors
-------------------------------
Common Stock .......................... 117,736
- - ------------
* No officer or director owns more than one percent of any class of the
Company's stock. The percentage of shares owned by all officers and directors
as a group is 1.1% percent of the Company's Common Stock.
The Company is aware of no shareholders who owned beneficially more than 5%
of a class of its voting securities on November 1, 1997.
ITEM 2
APPOINTMENT OF AUDITORS
The Board of Directors has reappointed Arthur Andersen LLP as auditors for
the fiscal year ending September 30, 1998, subject to shareholder ratification
of such appointment at the Annual Meeting. In the event that shareholders do not
ratify the appointment of Arthur Andersen LLP, the Board of Directors will
consider the selection of other independent public accountants.
Arthur Andersen LLP has advised the Board of Directors that neither such
firm nor any member nor associate thereof has any financial interest, direct or
indirect, in the Company or any of its subsidiaries or has had any connection
during the past three years with the Company or any of its subsidiaries in the
capacity of promoter, underwriter, voting trustee, director, officer or
employee. A representative of such firm is expected to be available at the
Annual Meeting to respond to appropriate questions and to be afforded the
opportunity to make a statement.
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<PAGE>
1999 ANNUAL MEETING-SHAREHOLDER PROPOSALS
From time to time, shareholders of the Company may desire to submit
proposals which they believe should be voted upon at the Annual Meeting or to
nominate persons for election to the Board of Directors. The Company's Bylaws
provide that, in order for a shareholder to nominate a candidate for election as
a director of the Company or to propose other business to be brought before an
Annual Meeting, a shareholder must deliver a written notice to the Secretary of
the Company at the principal executive offices of the Company not less than
seventy nor more than ninety days prior to the first anniversary of the
preceding year's Annual Meeting. In the event that the date of the Annual
meeting is advanced by more than twenty days or delayed by more than seventy
days from such anniversary date, such written notice must be delivered not
earlier than the ninetieth day prior to the Annual meeting and not later than
the close of business on the later of the seventieth day prior to the Annual
Meeting or the tenth day following the day on which public announcement of the
date of the meeting is first made.
Any such written notice must set forth (a) as to each person whom the
shareholder proposes to nominate for election or reelection as a director, all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), including such person's written consent to
being named in the proxy statement as a nominee and to serving as a director if
elected; and (b) as to any other business that the shareholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting and
any material interest in such business of such shareholder and the beneficial
owner, if any, on whose behalf the proposal is made; and (c) as to the
shareholder giving the notice and the beneficial owner, if any, on whose behalf
the nomination or proposal is made (i) the name and address of such shareholder,
as they appear on the Company's books, and of such beneficial owner and (ii) the
class and number of shares of the Company which are owned beneficially and of
record by such shareholder and such beneficial owner.
Pursuant to applicable rules promulgated under the Exchange Act, some
shareholder proposals may be eligible for inclusion in the Company's proxy
statement distributed in connection with the next Annual Meeting of
Shareholders. To be eligible for inclusion, any such proposal must be submitted
in writing to the Secretary of the Company no later than August 26, 1998.
Shareholders interested in submitting such a proposal are advised to contact
legal counsel knowledgeable with respect to the detailed requirements of such
securities rules.
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OTHER MATTERS
The Board of Directors and management of the Company do not know of any
other matters that are to be presented for action at the meeting. Should any
other matter come before the meeting, however, the persons named in the enclosed
proxy will have discretionary authority to vote all proxies with respect to such
matter in accordance with their judgment.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/REGINALD L. BABCOCK
-----------------------
REGINALD L. BABCOCK,
Vice President,
General Counsel & Secretary
December 26, 1997
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