<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
WASHINGTON GAS LIGHT 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] No fee required.
[ ] 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> 2
WASHINGTON GAS LIGHT COMPANY
1100 H STREET, N.W.
WASHINGTON, D.C. 20080
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The annual meeting of stockholders of Washington Gas Light Company will be
held at The Willard Inter-Continental Hotel, 1401 Pennsylvania Ave., N.W.,
Washington, D.C. 20004, on Friday, February 20, 1998, at 10:00 a.m. for the
following purposes, as more fully set forth in the annexed Proxy Statement:
(1) To elect directors for the ensuing year;
(2) To ratify the appointment of independent public accountants for
1998;
(3) To consider and take action with respect to a stockholder proposal
relating to cumulative voting, if such proposal is brought before
the meeting; and
(4) To transact any other business properly brought before the meeting
or any adjournment thereof.
Each holder of Common Stock and of Serial Preferred Stock, $4.25 Series;
$5.00 Series; $4.80 Series; $4.60 Convertible Series; and $4.36 Convertible
Series is entitled to one vote for each share of such stock standing in the name
of such holder on the records of the Company at the close of business on January
2, 1998.
By order of the Board of Directors,
Douglas V. Pope
Secretary
January 21, 1998
------------------
IMPORTANT NOTICE
ADMISSION PROCEDURES
ADMISSION TO THIS YEAR'S MEETING WILL BE LIMITED TO PERSONS WHO (i) ARE
LISTED ON THE COMPANY'S RECORDS AS SHAREHOLDERS AS OF JANUARY 2, 1998 (THE
"RECORD DATE"), OR (ii) BRING A STATEMENT TO THE MEETING SHOWING THEIR
BENEFICIAL OWNERSHIP OF COMPANY STOCK THROUGH A BROKER, A BANK OR OTHER
INSTITUTION AS OF THE RECORD DATE.
<PAGE> 3
WASHINGTON GAS LIGHT COMPANY
1100 H STREET, N.W.
WASHINGTON, D.C. 20080
January 21, 1998
PROXY STATEMENT
To the Stockholders:
This Proxy Statement is furnished in connection with a solicitation of
proxies by the Board of Directors of Washington Gas Light Company (Company) to
be used at the annual meeting of stockholders of the Company to be held on
Friday, February 20, 1998, and at any adjournment thereof. The meeting will be
held at The Willard Inter-Continental Hotel, 1401 Pennsylvania Ave., N.W.,
Washington, D.C. at 10:00 a.m. If the enclosed proxy card is executed and
returned, it will be voted in the manner directed, but if not otherwise marked,
proxies will be voted "FOR" proposals (1) and (2) and "AGAINST" proposal (3).
The proxy may be revoked at any time by notice to the Company or by execution of
a later proxy card, to the extent that it has not been exercised.
Each holder of Common Stock and of Serial Preferred Stock, $4.25 Series;
$5.00 Series; $4.80 Series; $4.60 Convertible Series; and $4.36 Convertible
Series is entitled to one vote for each share of such stock standing in the name
of such holder on the records of the Company at the close of business on January
2, 1998. Outstanding voting securities as of January 2, 1998, consisted of:
43,624,963 shares of Common Stock; 70,600 shares of Serial Preferred Stock,
$4.25 Series; 60,000 shares of Serial Preferred Stock, $5.00 Series; 150,000
shares of Serial Preferred Stock, $4.80 Series; 572 shares of Serial Preferred
Stock, $4.60 Convertible Series; and 1,958 shares of Serial Preferred Stock,
$4.36 Convertible Series. Total outstanding voting securities as of January 2,
1998 were 43,908,093 shares. The matters to be voted upon at the annual meeting
are described in this Proxy Statement.
With respect to the election of Directors, the eight nominees receiving the
greatest number of votes shall be elected. With respect to the stockholder
proposal, a majority of shares voting on the proposal is required for approval.
Abstentions and broker non-votes will not be counted either for or against
matters submitted for vote by the stockholders.
1
<PAGE> 4
(1) ELECTION OF DIRECTORS
At the meeting, eight directors (constituting the entire Board of
Directors) are to be elected to hold office for the ensuing year.
It is the intention of the persons named in the enclosed proxy card to vote
such proxy for the election of the nominees named below, all of whom are now
serving as directors, unless such authority is withheld. The Company does not
contemplate that any of such nominees will become unavailable for any reason,
but if that should occur before the meeting, proxies will be voted for another
nominee, or other nominees, to be selected by the Board of Directors.
<TABLE>
<S> <C>
Q S MICHAEL D. BARNES, age 54, is a partner in the Washington, D.C.
PHOTO law firm of Hogan & Hartson. Mr. Barnes was previously a partner
in the law firm of Arent, Fox, Kintner, Plotkin & Kahn
R T (1987-1993). Mr. Barnes was United States Representative from
Maryland's 8th Congressional District from 1979 to 1987. He was
Commissioner of the Maryland Public Service Commission and Vice
Chairman of the Washington Metropolitan Area Transit Commission
from 1975 to 1978. Mr. Barnes is a graduate of the University of
North Carolina and the George Washington University National Law
Center, where he received his law degree with honors. Mr. Barnes
is active in several civic and business groups, including the
Center for National Policy, the University of Maryland
Foundation, the International Human Rights Law Group, and the
Council on Foreign Relations. Mr. Barnes has been a Director of
Washington Gas Light Company since 1991.
Q S FRED J. BRINKMAN, age 69, retired in 1991 as a Senior Partner
PHOTO with the firm of Arthur Andersen & Co., independent public
accountants (Arthur Andersen & Co. is now Arthur Andersen LLP).
R T From 1981-1989, Mr. Brinkman was Area Managing Partner for the
Asia-Pacific Area and Managing Partner of the Washington, D.C.
office of Arthur Andersen & Co. From 1989 to June 1991, at which
time he retired, he was Senior Partner consulting on global
initiatives of Arthur Andersen & Co. From 1991 to present, he has
engaged in consulting. Mr. Brinkman is a member of several
professional and civic organizations, including the American
Institute of CPAs, the Boards of Directors of SHARE, Inc. and
Special Olympics International. Mr. Brinkman also serves on the
Boards of Charles E. Smith Residential Realty, Inc., Figgie
International, Inc. and Washington Mutual Investors Fund. Mr.
Brinkman has been a Director of Washington Gas Light Company
since 1992.
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C>
Q S DANIEL J. CALLAHAN, III, age 65, is Vice Chairman and Treasurer
PHOTO of The Morris and Gwendolyn Cafritz Foundation. Mr. Callahan
retired in 1995 as Chairman and Chief Executive Officer of USLICO
R T Corporation, an insurance holding company, a position he held
since 1992. Mr. Callahan was previously Vice Chairman of American
Security Bank (1991-1992) and served as President of MNC
Financial Inc. (1987-1991) and Chairman of the Board and Chief
Executive Officer of American Security Corporation and American
Security Bank, N.A. from 1985-1991. Mr. Callahan also is a
Director of Washington Mutual Investors Fund, and of Ferris,
Baker, Watts, Inc. Mr. Callahan is on the Atlantic Council, the
Federal City Council and is a former Chairman of the Greater
Washington Research Center. He has been a Director of Washington
Gas Light Company since 1989 and serves as Chairman of the
Personnel and Compensation Committee.
Q S ORLANDO W. DARDEN, age 67, is President of OWD Enterprises Inc, a
PHOTO real estate investment firm and is a partner in several real
estate limited partnerships. He is a graduate of Howard
R T University. Mr. Darden founded and was President and Chief
Executive Officer of Community Federal Savings and Loan
Association of Washington, D.C., from 1974 to 1981. He has served
as Director of the Pennsylvania Avenue Development Corporation
(PADC). He also was a trustee and Chairman of the Investment
Committee of the District of Columbia Retirement Board. He is a
member of the Board of Trustees of the Consortium of Universities
of the Washington Metropolitan Area and he is also a member of
The Greater Washington Board of Trade. He has been a Director of
Washington Gas Light Company since 1979 and serves as Chairman of
the Audit Review Committee.
Q S JAMES H. DEGRAFFENREIDT, JR., age 44, is President and Chief
PHOTO Executive Officer of the Company. Mr. DeGraffenreidt joined the
Company in 1986 as managing attorney, and was promoted to senior
R T managing attorney in 1988, and then Vice President of Rates and
Regulatory Affairs in 1991. He was elected Senior Vice President
in May 1993, President and Chief Operating Officer effective
December 1, 1994 and President and Chief Executive Officer
effective January 1, 1998. Prior to joining Washington Gas, Mr.
DeGraffenreidt was a partner with a Washington, D.C. law firm
where he specialized in public utilities, telecommunications and
public finance. Previous to that, he was assistant people's
counsel in the Maryland Office of People's Counsel. Mr.
DeGraffenreidt earned his Juris Doctor and Master of Business
Administration degrees from Columbia University and his Bachelor
of Arts degree from Yale College. He is admitted to the District
of Columbia Bar and the Maryland Bar, and is a member of the
Washington Bar Association and the National Bar Association. Mr.
DeGraffenreidt is also a member of the boards of directors of
Harbor Bank of Maryland, Medlantic Health Care Group, Southern
Gas Association, the Washington Performing Arts Society and the
District of Columbia Chamber of Commerce. He serves as a Trustee
of the Federal City Council. He has been a member of the Board of
Directors of the Company since 1994.
</TABLE>
3
<PAGE> 6
<TABLE>
<S> <C>
Q S MELVYN J. ESTRIN, age 55, is Chairman of the Board and Chief
PHOTO Executive Officer of Avatex Corp., involved in medical and beauty
products investments. Mr. Estrin is also Chairman of the Board
R T and Chief Executive Officer of Phar- Mor, Inc., retail drug
stores. He is also Chairman of the Board and Chief Executive
Officer of Human Service Group, Inc. (trading as Estrin Interna-
tional) (1983-present) and is President and a director of HSG
Acquisition Co. (1986-present), both of which are private
management and investment firms. He served as Trustee of the
University of Pennsylvania and is active with several charitable
organizations, including serving as a Director of The National
Council for the Performing Arts and the Endowment Board of the
Kennedy Center. Mr. Estrin is a member of The Washington Board of
Trade, The Economic Club of Washington and The Business
Roundtable. He is a former Commissioner of the National Capital
Park and Planning Commission. Mr. Estrin is a graduate of the
University of Pennsylvania's Wharton School of Finance and is a
director of Avatex Corporation, Grandbanc, Inc., Carson, Inc.,
Imagyn Systems, Inc., Phar-Mor Inc., AM Cosmetics, and is a
managing partner of Centaur Partners, Inc. Mr. Estrin has been a
Director of Washington Gas Light Company since 1991.
Q S PATRICK J. MAHER, age 61, is Chairman of the Board of the
PHOTO Company. Mr. Maher joined the Company in 1974 as Vice President
and Chief Financial Officer and was elected Executive Vice
R T President--Finance and Administration in 1980. He was President
of the Company from October 1987 to November 1992, Chief
Executive Officer from February 1992 through December 1997 and
Chairman of the Board since November 1992. Mr. Maher is active in
several industry and business groups, including the American Gas
Association, where he is a member of the Board of Directors. Mr.
Maher serves on the Boards of Directors of the Institute of Gas
Technology, the Greater Washington Research Center, the Greater
Washington Board of Trade and the Corporation Against Drug Abuse.
Mr. Maher is on the Board of Directors of Crestar Financial
Corporation, AEGIS Insurance Services, Inc. and has been a
Director of Washington Gas Light Company since 1988.
Q S KAREN HASTIE WILLIAMS, age 53, is a Partner with the Washington,
PHOTO D.C. law firm of Crowell & Moring, where she specializes in
public contract law. Prior to joining Crowell & Moring, Ms.
R T Williams served as Administrator for the Office of Federal
Procurement Policy at the Office of Management and Budget
(1980-81) and she was Chief Counsel of the Senate Committee on
the Budget (1977-1980). Ms. Williams is a member of many
professional and civic organizations, including serving as Chair
of the American Bar Association Section of Public Contract Law
(from 1992-1993). Ms. Williams is a Director of Crestar Financial
Corporation, the Federal National Mortgage Association,
Continental Airlines Company, Gannett Co. and SunAmerica, Inc.
Ms. Williams has been a director of Washington Gas Light Company
since 1992.
</TABLE>
4
<PAGE> 7
THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
(INFORMATION ON COMMITTEE MEMBERSHIP IS FOR FISCAL YEAR 1997)
The Board has established four standing committees:
The Executive Committee members are: Patrick J. Maher (Chairman), Daniel J.
Callahan, III, Orlando W. Darden, James H. DeGraffenreidt, Jr. and Stephen G.
Yeonas. There are four alternate members: Michael D. Barnes, Fred J. Brinkman,
Melvyn J. Estrin and Karen Hastie Williams. This committee may exercise all of
the authority of the Board of Directors when the Board is not in session. This
committee did not meet during the fiscal year which ended September 30, 1997
(fiscal year 1997).
The Audit Review Committee members are: Orlando W. Darden (Chairman), Fred
J. Brinkman, Daniel J. Callahan, III, Karen Hastie Williams and Stephen G.
Yeonas. Functions of the Audit Review Committee include recommending the
independent public accountants to be engaged by the Company, reviewing with the
independent public accountants the financial statements and their accompanying
report and reviewing the Company's system of internal controls and the adequacy
of the internal audit program. This committee held five meetings during fiscal
year 1997.
The Nominating Committee members are: Stephen G. Yeonas (Chairman), Michael
D. Barnes, Patrick J. Maher and Karen Hastie Williams. Functions of the
Nominating Committee include maintaining a roster of persons for consideration
as members of the Board of Directors and recommending procedures for filling
vacancies on the Board of Directors. The Nominating Committee will consider
nominees recommended by stockholders; the name and resume of each such nominee
should be sent to the Chairman of the Nominating Committee. This committee did
not meet during fiscal year 1997.
The Personnel & Compensation Committee members are: Daniel J. Callahan, III
(Chairman), Fred J. Brinkman and Melvyn J. Estrin. The Personnel & Compensation
Committee considers compensation and benefits for directors and officers of the
Company and succession planning matters. There were three meetings of this
committee during fiscal year 1997.
The Board of Directors held 13 meetings during fiscal year 1997.
---------------
NON-EMPLOYEE DIRECTOR COMPENSATION
Directors who are not employees of the Company are paid $1,000 per meeting
of the Board, committee of the Board and stockholders which they attend.
Directors are also paid a retainer of $10,000 per year and 600 shares of common
stock of the Company. A Retirement Plan for Outside Directors adopted in 1995
was terminated by the Board effective January 1, 1998, subject to vesting of
benefits earned by the Directors as of that date.
BUSINESS RELATIONSHIPS WITH
ASSOCIATES OF DIRECTORS
The law firm of Crowell & Moring, with which Ms. Williams is a partner,
performed legal services for the Company during fiscal year 1997.
5
<PAGE> 8
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership information as of
January 2, 1998, regarding the Company's outstanding equity securities by each
director, the executive officers named in the Summary Compensation Table in this
Proxy Statement, and all directors and executive officers as a group.
<TABLE>
<CAPTION>
AMOUNT
AND NATURE PERCENT
OF BENEFICIAL OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP* CLASS
- ------------------------------- --------------------------------- ------------- -------
<S> <C> <C> <C>
Common Stock................... Michael D. Barnes................ 2,306 **
Common Stock................... Fred J. Brinkman................. 3,056 **
Common Stock................... Daniel J. Callahan, III.......... 7,056 **
Common Stock................... Orlando W. Darden................ 1,456 **
Common Stock................... James H. DeGraffenreidt, Jr. .... 42,777 **
Common Stock................... Melvyn J. Estrin................. 8,823 **
Common Stock................... John K. Keane, Jr. .............. 17,028 **
Common Stock................... Frederic M. Kline................ 12,354 **
Common Stock................... Patrick J. Maher................. 64,569 **
Common Stock................... Joseph M. Schepis................ 32,049 **
Common Stock................... Karen Hastie Williams............ 1,484 **
Common Stock................... Stephen G. Yeonas................ 9,176 **
All directors and executive
officers as a group:
Common Stock................................................... 288,118 **
</TABLE>
- ---------------
* All shares are directly owned by persons shown in this table except the
following shares which are owned indirectly: (i) 26,287 shares are held by
executive officers in the Company's Savings Plan for Management Employees,
(ii) 2,000 shares are owned by Mr. Callahan's wife, and Mr. Callahan
disclaims beneficial ownership of those shares.
** Less than 1% of class outstanding.
6
<PAGE> 9
\
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------- -----------
OTHER RESTRICTED ALL
NAME AND FISCAL ANNUAL STOCK OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(3) AWARDS(4) COMPENSATION(6)
- ------------------------------- ---- -------- ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Patrick J. Maher............... 1997 $455,000 $450,000(1) $4,780 0 $6,300
Chairman of the Board and 1996 425,000 400,000(2) 3,064 $708,000(5) 6,000
Chief Executive Officer 1995 365,000 225,000 3,064 0 6,000
James H. DeGraffenreidt, Jr.... 1997 295,000 265,000 1,550 0 6,300
President and 1996 270,000 230,000 1,387 285,250(5) 6,000
Chief Operating Officer 1995 225,000 150,000 693 221,250(5) 6,000
1997 195,000 160,000 983 0 6,300
Joseph M. Schepis.............. 1996 185,000 140,000 755 207,250(5) 5,836
Senior Vice President 1995 145,000 90,000 647 101,406(5) 5,243
Frederic M. Kline.............. 1997 165,000 130,000 936 0 6,325
Vice President and 1996 145,000 100,000 454 97,500(5) 5,679
Treasurer 1995 123,000 45,000 467 0 4,730
John K. Keane, Jr. ............ 1997 170,000 110,000 1,710 0 6,175
Senior Vice President 1996 161,000 80,000 1,710 97,500(5) 6,000
and General Counsel 1995 161,000 65,000 1,755 0 6,000
</TABLE>
- ---------------
(1) The Board of Directors deferred payment of $125,000 of this incentive award
to Mr. Maher until fiscal year 1999.
(2) The Board of Directors deferred payment of this incentive award to Mr. Maher
as follows: 25% was paid on January 1, 1997; 25% was paid on January 1, 1998
and 50% is payable on January 1, 1999.
(3) This column reports taxes paid by the Company on behalf of the named
executive officer relating to group term life insurance coverage with
benefits exceeding $50,000.
(4) The number and value of the aggregate restricted stock holdings at the end
of fiscal year 1997 for the named executive officers was as follows: Patrick
J. Maher, 16,000 shares valued at $410,000; James H. DeGraffenreidt, Jr.,
21,000 shares valued at $538,125; Joseph M. Schepis, 10,750 shares valued at
$275,469; John K. Keane, Jr., 6,300 shares valued at $161,438 and Frederic
M. Kline, 4,800 shares valued at $123,000. The level of restricted stock
holdings at September 30, 1997 reported for Messrs. DeGraffenreidt and
Schepis does not include 12,000 shares and 6,000 shares, respectively,
granted on December 17, 1997. Additionally, the level of restricted stock
holdings at September 30, 1997 for all of the named executive officers
except Mr. Keane does not reflect shares returned to the Company as a result
of cashless withholding tax elections for shares that vested on November 1,
1997.
(5) Restricted stock awards are reported at the aggregate market value on the
date of the grant. The fiscal year 1995 restricted stock awards shown were
granted on October 25, 1994, effective November 1, 1994. The market value on
the grant date was $18.4375 per share. The number of restricted shares
granted in fiscal year 1995 for the named executive officers was as follows:
James H. DeGraffenreidt, Jr., 12,000 shares, and Joseph M. Schepis, 5,500
shares. The awards granted in fiscal year 1995 to Messrs. DeGraffenreidt and
Schepis vest in increments of 10% on each anniversary of the effective date
of the awards. The fiscal year 1996 restricted stock awards shown were
granted and effective on November 1 and November 28, 1995. The market values
on the grant dates were $19.50 per share on November 1, 1995 and $20.50 per
share on November 28, 1995. The number of restricted shares granted in
fiscal year 1996 for the named executive officers was as follows: Patrick J.
Maher, 36,000 shares; James H. DeGraffenreidt, Jr., 14,500 shares; Joseph M.
Schepis, 10,500 shares; John K. Keane, Jr., 5,000 shares; Frederic M. Kline,
5,000 shares. Shares granted on November 1, 1995 vest as follows: for Mr.
Maher, the shares vest in increments of 33.3% on each anniversary of the
award except the final increment, which vests on April 20, 1998; for Messrs.
DeGraffenreidt, Keane, Schepis and Kline, the shares vest in 20% increments
on each anniversary of the award, except that the final increment vests for
Mr. Keane on January 19, 2000. The shares granted to Messrs. Maher,
DeGraffenreidt and Schepis on November 28, 1995 vested on November 28, 1996.
Dividends are paid on restricted shares from the effective date of the
awards.
(6) This column reports the Company's matching contributions to the Company's
Savings Plan for Management Employees during the applicable fiscal years.
---------------
7
<PAGE> 10
The Company maintains a trusteed, noncontributory pension plan covering all
active employees and vested former employees of the Company and its utility
subsidiaries. Executive officers also participate in a Supplemental Executive
Retirement Plan (SERP). Upon normal retirement (age 65), or at age 60 with 30
years of benefit service, each eligible participant is entitled under the SERP
to an annual benefit that is based on both years of benefit service (up to a
maximum of 30 years) and the average of the participant's highest rates of
annual basic compensation, including any amounts paid or deferred under the
Executive Incentive Compensation Plan, on December 31 of the three years out of
the final five years of the participant's service as a participant. Under
certain conditions, participants may elect to have a portion of their SERP
benefit paid in the form of a lump sum.
The following table shows the estimated annual single life benefits payable
under the pension plan and SERP upon normal retirement (age 65) to executive
officers in various salary and years-of-service classifications:
<TABLE>
<CAPTION>
FINAL YEARS OF BENEFIT SERVICE
AVERAGE ------------------------------------
COMPENSATION 10 20 30
------------------------------- -------- -------- --------
<S> <C> <C> <C>
$100,000....................... $ 20,000 $ 40,000 $ 60,000
200,000....................... 40,000 80,000 120,000
400,000....................... 80,000 160,000 240,000
600,000....................... 120,000 240,000 360,000
700,000....................... 140,000 280,000 420,000
800,000....................... 160,000 320,000 480,000
950,000....................... 190,000 380,000 570,000
</TABLE>
Each of the five executive officers named above in the Summary Compensation
table has 30 years of benefit service except Mr. DeGraffenreidt, who has 17
years of benefit service. Benefits shown in the pension table are not subject to
reductions for Social Security.
---------------
EMPLOYMENT AGREEMENTS
During fiscal year 1997, the Company entered into employment agreements
with certain executive officers, including Messrs. Maher, DeGraffenreidt,
Schepis, Kline and Keane (the "Named Executive Officers"). The agreements with
the Named Executive Officers will be effective during the period of one year
prior to, and two years following, a change of control of the Company (the
"effective period"). A change of control is generally defined in these
agreements as (i) acquisition of 30% or more of the Company's voting stock; (ii)
a change in the majority of the Company's Board of Directors, or (iii) a merger,
reorganization, consolidation or sale of all or substantially all of the
Company's assets. With respect to all Named Executive Officers except Mr. Maher,
if the executive is terminated during the effective period for reasons other
than cause, or if the executive resigns for good reason as defined in the
agreements, the executive is entitled to severance pay equal to three times the
executive's average compensation (as defined in the agreement) and an extension
of certain other employment benefits for three years. Mr. Maher is entitled to
these severance pay and employment benefits if he is terminated for reasons
other than cause or he resigns during the effective period. Payments under these
agreements may be (i) reduced to an amount necessary to avoid imposition of an
excise tax under the Internal Revenue Code of 1986 (the "IRC"), or (ii) reduced
to two times the executive's average compensation, with a gross up for any
excise taxes payable under the IRC. Copies of these agreements have been filed
as exhibits to the Company's Form 10-Q dated August 11, 1997, for the quarter
ended June 30, 1997.
8
<PAGE> 11
REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE
The Personnel and Compensation Committee of the Board of Directors (P & C
Committee) has responsibility for recommending levels of executive compensation
for consideration by the Company's Board of Directors. The objective of
executive compensation is to provide remuneration which fairly reflects
corporate performance and achievements and responsibilities of each executive
officer. Executive compensation is also intended to provide rewards and
incentive for achievement of long-term growth in shareholder value and to
attract and retain experienced corporate executives.
ELEMENTS OF EXECUTIVE COMPENSATION
The P & C Committee's philosophy is that total compensation for each of the
Company's officers should be competitive with executives having similar
experience and responsibility. This compensation should also reflect the
individual performance of each officer as well as corporate performance. To
accomplish these objectives, each officer's compensation is composed of base
salary and elements of short-term and long-term incentive compensation.
Short-term incentive compensation is "at risk," in that payment of any such
compensation depends upon performance of the individual officer and performance
of the Company as a whole. The value of long-term incentive compensation is
affected by the performance of the Company's stock.
The following is a description of these elements of each officer's
compensation.
Base Salary: The P & C Committee intends base salary levels of officers to
be set at a level somewhat below market levels for officers of similar
experience and responsibility. To reach a competitive level of total
compensation, the officer then has an opportunity to earn incentive
compensation, as described further below. This approach to determination of base
salary is seen by the P & C Committee as a way to better align the interests of
the officers of the Company with the interests of the stockholders.
To determine competitive compensation levels, management of the Company
obtains data on executive compensation paid by other utility and non-utility
companies. Based on that information and in consideration of each officer's
responsibility and performance, the Chairman and CEO of the Company makes
specific recommendations for salary adjustments for all executive officers
except himself. The P & C Committee reviews these recommendations in
consultation with an independent advisor retained by the P & C Committee. Based
on this consultation and the data on industry compensation levels, the P & C
Committee makes a final recommendation to the full Board of Directors as to all
executive officers, including the Chairman and CEO (whose compensation is
described further below).
For fiscal year 1997 (October 1, 1996 through September 30, 1997), the P &
C Committee decided that the officers' base salaries should generally be set at
approximately 90% of market levels based on a group of comparable utilities.
This approach was taken to generally place base salaries below overall market
rates, and to leave the opportunity for each officer to meet or exceed market
compensation through incentive pay. This practice is designed to encourage
higher levels of performance by the Company officers.
Short-Term Incentive Compensation: Short-Term incentive compensation for
executive officers is earned under the Company's Executive Incentive
Compensation Plan (EICP). Payments can only be made under the EICP if the
Company's rate of return on common stock equity exceeds a threshold amount
predetermined annually by the Board of Directors. For Fiscal Year 1997, that
minimum threshold was 10.9%.
9
<PAGE> 12
Since the Company earned a return of 14.1% on its common equity, the threshold
was exceeded, and individual awards were allowable under the EICP.
Individual awards under the EICP are considered by the P & C Committee
annually in conjunction with base salary adjustments. The Chairman and CEO makes
recommendations to the P & C Committee for EICP awards for each executive
officer except himself. These recommendations include evaluation of the
following factors applicable to the executive officers: (i) success in meeting
established corporate and departmental goals; (ii) managing resources within
established departmental budgets; (iii) effectiveness in areas of leadership,
planning and teamwork; (iv) peer evaluations; and (v) comparison to incentive
compensation in the natural gas distribution and other industries, based on data
supplied by the outside study of executive compensation. The P & C Committee
considers the amount and basis for these recommendations in consultation with
its independent advisor and makes final recommendations to the full Board of
Directors.
Long-Term Incentive Compensation: In February 1990, the stockholders of
the Company approved the adoption of a Long-Term Incentive Compensation Plan
(LTICP). The LTICP provides a long-term element of compensation for executive
officers. The plan is intended to promote achievement of long-term growth of the
Company by assisting in the recruiting and retention of key employees, including
the Executive Officers. Under the LTICP, there may be awards of Stock Options,
Restricted Stock, Stock Appreciation Rights, Performance Shares and Dividend
Units. The P & C Committee is the Administrator of the LTICP and has the
authority to grant awards under the LTICP. Specific awards are granted based
upon consideration of the individual officer's responsibility for, and
contribution toward, achievement of long-term objectives in enhancement of the
Company's shareholder value, financial stability and competitive position. To
date, awards have only been granted in the form of Restricted Stock. Awards were
made to three newly-elected officers under the LTICP during FY 1997.
COMPENSATION OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER
In October 1996, the P & C Committee increased Mr. Maher's salary for
fiscal year 1997 to a level of approximately 90% of the market base salary for a
position of similar responsibilities. This reflects the approach by the P & C
Committee that a significant percentage of the total compensation of the
Chairman and CEO should be derived from incentive compensation rather than
salary.
10
<PAGE> 13
Mr. Maher was awarded an incentive payment under the EICP applicable to FY
1997 of $450,000, which was 99% of his base salary. The Board of Directors
deferred payment of a portion of this incentive award to Mr. Maher as described
in footnote (1) to the Summary Compensation Table appearing in this proxy
statement. EICP payments are incentive compensation which is variable from year
to year depending upon performance of the Company compared to its industry peers
and accomplishment of established corporate objectives. Mr. Maher's incentive
compensation for FY 1997 was based on substantial corporate achievements
attained in FY 1997, including: (i) a return on common equity of 14.1%; (ii)
record earnings for a sixth consecutive fiscal year; and (iii) continued
development of effective strategic plans for the Company to successfully compete
in an increasingly deregulated market.
PERSONNEL AND COMPENSATION COMMITTEE
Daniel J. Callahan, III (Chairman)
Fred J. Brinkman
Melvyn J. Estrin
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11
<PAGE> 14
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly cumulative total
shareholder return on Washington Gas Light Company's Common Stock against the
cumulative total return of the Standard & Poor's 500 Stock Index and the Dow
Jones Utility Average for the period of five years commencing September 30,
1992, and ended September 30, 1997.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURNS*
<TABLE>
<CAPTION>
MEASUREMENT PERIOD WASHINGTON GAS STANDARD & POOR'S DOW JONES UTILITY
(FISCAL YEAR COVERED) LIGHT COMPANY 500 AVERAGE
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 123.19 113.02 119.66
1994 102.83 117.18 92.94
1995 121.07 152.03 117.22
1996 141.50 182.95 125.62
1997 172.91 256.95 145.02
</TABLE>
* Assumes reinvestment of dividends daily for Standard & Poor's 500, quarterly
for the Dow Jones Utility Average and Washington Gas Light Company. This
calculation is based on $100 invested on September 30, 1992.
12
<PAGE> 15
(2) RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends that the stockholders ratify the
appointment of Arthur Andersen LLP, independent public accountants, to audit the
books, records and accounts of the Company for fiscal year 1998. The appointment
was made upon the recommendation of the Audit Review Committee, which is
composed of directors who are not officers or otherwise employees of the
Company. This firm has been similarly employed by the Company since 1949.
Representatives of Arthur Andersen LLP will be present at the annual meeting
with the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL (2).
(3) STOCKHOLDER PROPOSAL
Mrs. Evelyn Y. Davis, whose address is The Watergate Office Building, 2600
Virginia Ave., N.W., Suite 215, Washington, D.C. 20037, has given the Company
notice of her intention to present a proposal for consideration by the
stockholders at the annual meeting. The proposal of Mrs. Davis, who is owner of
record of 280 shares of common stock of the Company, is set forth below in the
form of a resolution along with her supporting statement.
YOUR BOARD OF DIRECTORS AND THE MANAGEMENT OF THE COMPANY OPPOSE THE
ADOPTION OF THE FOLLOWING PROPOSAL FOR THE REASONS STATED AFTER THE PROPOSAL
AND, THEREFORE, RECOMMEND THAT STOCKHOLDERS VOTE AGAINST THE PROPOSAL.
STOCKHOLDER PROPOSAL
RESOLVED, "That the stockholders of Washington Gas Light, assembled in
annual meeting in person and by proxy, hereby request the Board of Directors to
take the necessary steps to provide for cumulative voting in the election of
directors which means each stockholder shall be entitled to as many votes as
shall equal the number of shares he or she owns multiplied by the number of
directors to be elected, and he or she may cast all of such votes for a single
candidate, or any two or more of them as he or she may see fit."
The statement submitted by Mrs. Davis in support of her resolution is as
follows:
REASONS: "Many states have mandatory cumulative voting, so do National
Banks." "In addition, many corporations have adopted cumulative voting."
Last year the owners of 6,182,823 shares, representing approximately 23.6%
of the shares voting, voted for this proposal.
"If you AGREE, please mark your proxy FOR this resolution."
OPPOSITION OF YOUR BOARD OF DIRECTORS AND THE MANAGEMENT
AND REASONS THEREFOR:
Your Board of Directors believes it is important for each member of the
Board to represent all stockholders, not just a particular interest group or
faction.
13
<PAGE> 16
Persons serving on this Company's Board of Directors have wide experience
in law, public accounting, business and finance. Directors are not elected to
represent a particular viewpoint, and the Directors do not believe it is
desirable to select candidates for election in that manner.
These objectives of your Directors are fundamentally different from the
objectives of a cumulative voting procedure. Cumulative voting could permit a
relatively small group of stockholders to elect a particular Director. A
Director elected through cumulative voting might therefore become (or appear to
become) an advocate for a particular stockholder group. This result would be
directly opposite to the purpose of having each member of your Board of
Directors represent all stockholders.
For these reasons, the Board of Directors and the management oppose the
proposed resolution.
Mrs. Davis has submitted substantially the same proposal in the preceding
twelve years and it was defeated by a vote of over 75% of shares voting on the
proposal each year.
THE BOARD OF DIRECTORS AND THE MANAGEMENT OF THE COMPANY RECOMMEND A VOTE
AGAINST THE ADOPTION OF THIS STOCKHOLDER PROPOSAL.
---------------
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
meeting. However, if any other matters come before the meeting, it is the
intention of the persons named in the enclosed proxy card to vote in accordance
with their best judgment on such matters.
---------------
The Annual Report for 1997, including financial statements, was mailed to
stockholders on or about January 9, 1998.
UPON WRITTEN REQUEST, THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF ITS
MOST RECENT ANNUAL REPORT ON FORM 10-K. PLEASE DIRECT THESE REQUESTS TO: MARIA
FRAZZINI, MANAGER -- INVESTOR RELATIONS, WASHINGTON GAS LIGHT COMPANY, 1100 H
ST., N.W., WASHINGTON, D.C. 20080.
The solicitation of proxies is being made on behalf of the Board of
Directors, and the cost will be borne by the Company. Brokerage houses and other
custodians will be reimbursed by the Company for their expenses in forwarding
proxy materials to principals. Further solicitation of proxies may be made by
telephone or other communication by regular employees of the Company. Morrow &
Company has been retained by the Company for a fee of $7,500, plus expenses, to
assist in the solicitation of proxies.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Proposals by stockholders which are intended to be presented at the
Company's next annual meeting of stockholders must be received by the Company
not later than September 23, 1998.
14
<PAGE> 17
VOTING BY PROXY
Proxy cards will be voted as specified, but if not otherwise marked they
will be voted: "FOR" Proposals (1) and (2) and "AGAINST" Proposal (3).
By order of the Board of Directors,
Douglas V. Pope
Secretary
January 21, 1998
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<PAGE> 18
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 1.
<TABLE>
<S> <C> <C>
1. Election of all Directors FOR all nominees [X] WITHHOLD AUTHORITY to vote [X]
listed below for all nominees listed below
</TABLE>
Nominees: Michael D. Barnes, Fred J. Brinkman, Daniel J. Callahan, III, Orlando
W. Darden, James H. DeGraffenreidt, Jr., Melvyn J. Estrin, Patrick
J. Maher, Karen Hastie Williams
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME.)
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 2.
2. Ratification of the Appointment of Auditors.
FOR [X] AGAINST [X] ABSTAIN [X]
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "AGAINST" PROPOSAL 3.
3. Shareholder Proposal.
FOR [X] AGAINST [X] ABSTAIN [X]
<TABLE>
<S> <C>
4. In their discretion, the Proxies are authorized
to vote upon such other business as may
properly come before the meeting or any
adjournment thereof.
Change of Address
and or Comments [X]
Mark Here
Please sign exactly as name or names appear on this
proxy. If stock is held jointly, each holder
should sign. If signing as attorney, trustee,
executor, administrator, custodian, guardian or
corporate officer, please give full title.
Dated: , 19
------------------------------------- ---
---------------------------------------------------
Signature
---------------------------------------------------
Signature (if held jointly)
VOTES MUST BE INDICATED (X)
IN BLACK OR BLUE INK. [X]
</TABLE>
PLEASE SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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- --------------------------------------------------------------------------------
WASHINGTON GAS LIGHT COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING FEBRUARY 20, 1998
I (WE) here appoint Patrick J. Maher and James H. DeGraffenReidt, Jr.
and each of them as proxies, with full power of substitution to each, to act and
vote in the name of the undersigned with all the powers that the undersigned
would possess if personally present, on all matters, including the election of
Directors, which may come before the February 20, 1998 Annual Meeting of the
Shareholders of Washington Gas Light Company and any adjournment of such
meeting, hereby revoking any prior conflicting proxies. The meeting will be
held at the Willard Inter-Continental Hotel, 1401 Pennsylvania Ave., N.W.
Washington, D.C. on Friday, February 20, 1998 at 10 a.m.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES. SEE REVERSE SIDE. YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS RECOMMENDATIONS. THIS PROXY WHEN
PROPERLY EXECUTED AND PRESENTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2 AND AGAINST PROPOSAL 3.
(Continued and to be signed and dated on the reverse side.)
WASHINGTON GAS LIGHT COMPANY
P.O. BOX 11038
NEW YORK, N.Y. 10203-0038
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