<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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 (S) 240.14a-11(c) or (S) 240.14a-12
KeySpan Corporation
- --------------------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
One MetroTech Center
Brooklyn, New York
11201-3850
[LOGO OF KEYSPAN]
KEYSPAN CORPORATION
d/b/a KeySpan Energy
Notice of 2000 Annual Meeting of Shareholders and
Proxy Statement
<PAGE>
One MetroTech Center
Brooklyn, New York 11201-3850
LETTER TO SHAREHOLDERS
March 27, 2000
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
KeySpan Corporation d/b/a KeySpan Energy at 10:00 a.m. Eastern Time, on
Thursday, May 11, 2000, at the Tilles Center for the Performing Arts, C.W.
Post Campus, Long Island University, 720 Northern Boulevard, Greenvale, New
York.
We will review our 1999 performance with you, our plans for the future and the
acquisition of Eastern Enterprises.
This year we have prepared a proxy statement in what we believe is a simple
and easy to understand format. We have also introduced a procedure by which
you may provide a proxy by telephone or through the Internet in order to cast
your vote more easily. Whether you choose to provide a written proxy card, or
one by telephone or through the Internet, please vote as soon as possible. We
hope you find these changes more convenient for you and welcome your comments.
I look forward to seeing you on May 11 at the Annual Meeting. Enclosed with
the Proxy Statement is your voting card. I would like to take this opportunity
to remind you that your vote is important.
/s/ Robert B. Catell
Robert B. Catell
Chairman and Chief Executive Officer
<PAGE>
One MetroTech Center
[LOGO OF KEYSPAN] Brooklyn, New York
11201-3850
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 27, 2000
Dear Shareholder:
The Annual Meeting of Shareholders of KeySpan Corporation d/b/a KeySpan Energy
("KeySpan" or the "Company") will be held on Thursday, May 11, 2000, at 10:00
a.m. Eastern Time, at the Tilles Center for the Performing Arts, C.W. Post
Campus, Long Island University, 720 Northern Boulevard, Greenvale, New York,
to consider and take action on the following proposals:
1. Election of thirteen directors;
2. Ratification of Arthur Andersen LLP as independent public accountants
for the Company for the fiscal year ending December 31, 2000; and
3. Transact any other business properly before the Annual Meeting or any
adjournment thereof.
Shareholders of record as of the close of business on March 13, 2000 are
entitled to vote at the Annual Meeting or any postponement or adjournment
thereof.
If your shares are held through a bank or brokerage firm and you plan to
attend the meeting, please request a letter or some other evidence of
ownership from your bank or firm as well as proper authorization if you wish
to vote your shares in person.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. EVEN IF YOU
PLAN TO ATTEND THE MEETING, WE HOPE THAT YOU WILL READ THE ENCLOSED PROXY
STATEMENT AND THE VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, AND THEN
VOTE (1) BY COMPLETING, SIGNING, DATING AND MAILING THE PROXY CARD IN THE
ENCLOSED POSTAGE-PAID ENVELOPE, (2) CALLING THE TOLL-FREE NUMBER LISTED ON THE
PROXY CARD, OR (3) THROUGH THE INTERNET AS INDICATED ON THE PROXY CARD. THIS
WILL NOT AFFECT YOUR RIGHT TO ATTEND OR VOTE AT THE MEETING.
By Order of the Board of Directors,
/s/ Robert R. Wieczorek
Robert R. Wieczorek
Vice President, Secretary and Treasurer
<PAGE>
PROXY STATEMENT OF KEYSPAN CORPORATION
ANNUAL MEETING TO BE HELD ON MAY 11, 2000
Proxies are being solicited on behalf of the Board of Directors of the Company
for use at the Annual Meeting of Shareholders on May 11, 2000, and any
adjournments thereof. This Proxy Statement is first being mailed to the
shareholders of the Company on or about March 27, 2000.
Q: What am I voting on?
A: Election of thirteen directors, ratification of Arthur Andersen LLP as
independent public accountants for the fiscal year ending December 31,
2000, and any other business properly before the meeting.
Q: Who is entitled to vote?
A: Common stock shareholders as of the close of business on March 13, 2000
(the "Record Date"). Each share of KeySpan's common stock, par value $.01
per share (the "Common Stock") is entitled to one vote.
Q: How do I vote?
A: You may submit a proxy with your voting instructions by completing, signing
and mailing the enclosed proxy card, or by submitting your proxy with
voting instructions by toll-free telephone or through the Internet.
Q: How do I submit a written proxy by mail?
A: To submit a written proxy by mail, you should complete, sign and mail the
enclosed proxy card in accordance with its instructions. If a shareholder
wishes to give a proxy to someone other than the individuals named as
proxies on the proxy card, he or she may cross out the names appearing on
the proxy card, insert the name of some other person or persons, sign, date
and give the proxy card to such person or persons for use at the meeting.
Q: How does discretionary authority apply?
A: If you sign and return a proxy card without indicating your voting
instructions with respect to any or all proposals, you give the named
proxies the authority to vote on each proposal. A properly signed and dated
proxy card (or a proxy properly delivered by telephone or through the
Internet) gives the named proxies the authority to vote, in their
discretion, on any other matter that may arise at the meeting.
Q: How do I submit my proxy by telephone or through the Internet?
A: Alternatively, you may submit your proxy with voting instructions, by
telephone or through the Internet, by following the instructions that are
set forth on the enclosed proxy card. If you are a shareholder of record on
the Record Date, you may call 1-877-779-8683 (or 1-201-536-8073, outside
the U.S. or Canada) or visit the Web site listed on the enclosed proxy
card.
If you choose to submit your proxy with voting instructions by telephone or
through the Internet, you will be required to provide your assigned control
number noted on the enclosed proxy card before your proxy will be accepted.
In addition to the instructions that appear on the enclosed proxy card,
step-by-step instructions will be provided by recorded telephone message or
at the designated Web site on the Internet. Once you have indicated how you
will vote, in accordance with those instructions, you will receive
confirmation that your proxy has been successfully submitted by telephone
or through the Internet.
Q: Is my vote confidential?
A: Yes. Only the inspector of election, EquiServe and certain employees have
access to your card. All comments will remain confidential, unless you ask
that your name be disclosed.
Q: Who will count the votes?
A: EquiServe will tabulate the votes and act as inspector of election.
Q: What if I get more than one proxy card?
A: Your shares are probably registered differently or are in more than one
account. Sign and return all proxy cards to ensure that all your shares are
voted. Please have all of your accounts registered exactly in the same name
and social security number. You may do this by contacting our transfer
agent, EquiServe, by calling 1-800-482-3638.
1
<PAGE>
Q: What constitutes a quorum?
A: As of the close of business on March 13, 2000, the Record Date, 133,876,426
shares of Common Stock were issued and outstanding. A majority of the
outstanding shares, present or represented by proxy, constitutes a quorum.
For purposes of determining the presence of a quorum, shares represented by
abstentions and "broker non-votes" will be counted as present. If you vote
by proxy card or give a proxy by telephone or through the Internet, you
will be considered part of the quorum. In the absence of a quorum, the
Annual Meeting may be adjourned.
Q: What percentage of stock do the directors and officers own?
A: The directors and certain executive officers own approximately 0.14 percent
of our Common Stock, as of February 29, 2000.
Q: When are the shareholder proposals due for the 2001 Annual Meeting?
A: Shareholder proposals for the 2001 Annual Meeting must be received by
KeySpan at its offices at One MetroTech Center, Brooklyn, New York 11201-
3850, Attention: Secretary, not less than 120 calendar days prior to the
anniversary date of the release of the Company's Proxy Statement to
shareholders in connection with the 2000 Annual Meeting, to be considered
by the Company for possible inclusion in the proxy materials for the 2001
Annual Meeting. In addition, all shareholder proposals or nominations for
election as director for the 2001 Annual Meeting must be submitted to the
Company in accordance with Section 2.7 of the Company's By-Laws not less
than 60 nor more than 90 calendar days in advance of the first anniversary
date of the 2000 Annual Meeting.
VOTING METHODS
You have the right to revoke your proxy any time before its use at the Annual
Meeting by delivering to the Company (attn: Robert R. Wieczorek, Vice
President, Secretary and Treasurer) a written notice of revocation or a duly
executed proxy bearing a later date or by attending the Annual Meeting and
voting in person. A proxy given by telephone or through the Internet can be
revoked by calling the numbers listed below in the telephone and Internet
proxy instructions and re-entering your voting instructions or by either of
the methods described in the preceding sentence.
Three methods of voting are available to you:
PROXY CARD VOTING
1. Mark your selections on the card.
2. Date and sign your name exactly as it appears on the card.
3. Return your card in the postage-paid envelope we have provided.
TELEPHONE PROXY--24 HOURS A DAY, 7 DAYS A WEEK
Use any touch-tone telephone to give your proxy. Have your proxy card in
hand when you call.
Dial 1-877-779-8683 (or 1-201-536-8073 outside the U.S. or Canada) and
follow the instructions.
INTERNET PROXY--24 HOURS A DAY, 7 DAYS A WEEK
Access the Web site at http://www.eproxyvote.com/kse to vote through the
Internet.
2
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR each of the thirteen
nominees named below to serve as members of the Board of Directors for a one-
year term:
Nominees for election this year are:
. Lilyan H. . James R. Jones
Affinito . Stephen W.
. George McKessy
Bugliarello . Edward D. Miller
. Robert B. Catell . Basil A. Paterson
. Howard R. Curd . James Q. Riordan
. Richard N. Daniel . Vincent Tese
. Donald H. Elliott
. Alan H. Fishman
Each director has served since May 1998 (except for Ms. Affinito, who has
served since December 1998) and, if elected, will hold office for one year or
until their successors are duly elected or chosen and qualified.
Effective April 26, 2000, Frederic V. Salerno will resign as a director of the
Company to pursue other business interests. Mr. Salerno has served as a
director since May 1998 and is a member of the Board's Executive and
Compensation and Nominating Committees. The Board and the Company extend their
gratitude to Mr. Salerno for his service as a valued director.
If any director is unable to stand for election, the Board may provide for a
lesser number of directors or designate a substitute. In the latter event,
shares represented by proxies may be voted for a substitute director. KeySpan
does not anticipate that any of the individuals listed above will be unable to
serve the full term of office to which they may be elected. The affirmative
vote of a plurality of the shares of KeySpan Common Stock cast is required for
the election of directors.
Nominees for the Board of Directors
LILYAN H. AFFINITO--Age 68
Retired Vice Chairman of the Board of Maxxam Group, Inc.
(formerly Simplicity Pattern Co.). Served as Controller,
[PHOTO] Treasurer and Chief Financial Officer for Maxxam Group from 1968
to 1976, President and Chief Operating Officer from 1976 to
1987, and Director from 1972 to 1991. Serves on the Boards of
Caterpiller Inc., Jostens Inc. and Kmart Corporation. Also
serves on the Board of the Mayo Foundation.
GEORGE BUGLIARELLO--Age 72
Chancellor of Polytechnic University, since 1994. President of
[PHOTO] Polytechnic University from 1973 to 1994. Serves on the Boards
of the Lord Corporation, Symbol Technologies, Comtech
Telecommunications Corp., the Teagle Foundation, the Jura Corp.,
the Greenwall Foundation and Anser Corporation.
3
<PAGE>
ROBERT B. CATELL--Age 63
Chairman and Chief Executive Officer of KeySpan since July 1998.
Joined KeySpan's subsidiary, The Brooklyn Union Gas Company, in
1958 and was elected Assistant Vice President in 1974, Vice
President in 1977, Senior Vice President in 1981 and Executive
Vice President in 1984. Elected Brooklyn Union's Chief Operating
Officer in 1986 and President in 1990. Mr. Catell served as
[PHOTO] President and Chief Executive Officer from 1991 to 1996 when he
was elected Chairman and Chief Executive Officer. Serves on the
Boards of Alberta Northeast Gas, Ltd., Boundary Gas Inc., Taylor
Gas Liquids, Ltd., The Houston Exploration Company, Gas Research
Institute, Edison Electric Institute, New York State Energy
Research and Development Authority, Independence Community Bank
Corp., Business Council of New York State, Inc., New York City
Investment Fund, New York City Partnership and Long Island
Association.
HOWARD R. CURD--Age 61
Chairman and Chief Executive Officer of Uniroyal Technology
Corporation, since 1992, a developer and manufacturer of
proprietary plastic products and specialty chemical and polymer
products. Served as President and Chief Executive Officer of
Uniroyal from 1991 to 1992. Formed his own business in 1972 and,
[PHOTO] during the period 1972 to 1982, acquired controlling interests
in a 100-year old investment banking firm, Polycast Technology
Corporation and the U.S. Playing Card Corporation. Served on the
Board of Emcore Corporation.
RICHARD N. DANIEL--Age 64
Retired Chairman and Chief Executive Officer of Handy & Harman,
a diversified industrial manufacturer and the parent company of
a group of materials engineering and specialty manufacturing
[PHOTO] companies. Joined Handy & Harman in 1971 and held various
officer positions from Vice President and Controller to
President and Chairman. Serves on the Board of the Treasurer's
Fund, Inc.
DONALD H. ELLIOTT--Age 67
Partner in the law firm of Hollyer Brady Smith Troxell Barrett
Rockett Hines & Mone LLP, since 1995. Attorney in the law firm
[PHOTO] of Webster & Sheffield from 1957 to 1965 and Partner from 1973
to 1991. Counsel to the Mayor of New York City and then Chairman
of the New York City Planning Commission from 1966 to 1973.
Partner in the law firm of Mudge Rose Guthrie Alexander and
Ferdon from 1991 to 1995. Trustee of Independence Community Bank
Corp. and Long Island University. Serves on the Board of
Independence Savings Bank and an honorary member of the New York
Chapter of the American Institute of Architects.
4
<PAGE>
ALAN H. FISHMAN--Age 54
President and Chief Executive Officer of ContiFinancial
Corporation, a diversified financial services company, since
1999. Formerly Managing Partner at Columbia Financial Partners,
L.P. Joined Chemical Bank in 1969, named Chief Financial Officer
in 1979 and elected Senior Vice President responsible for
[PHOTO] worldwide investment banking activities in 1983. Joined
Neuberger & Berman in 1988 and was responsible for an investment
partnership. Joined American International Group, Inc. in 1989
as a Senior Vice President and elected President of AIG
Financial Services Group. Joined the firm of Adler & Shaykin in
1990 as a Managing Partner. Also Chairman of Affinity Technology
Group, Inc. and Vice Chairman of the Brooklyn Academy of Music.
JAMES R. JONES--Age 61
Senior Counsel to the law firm of Manatt, Phelps & Phillips and
Chairman of GlobeRanger.com. Retired President of Warnaco,
Inc.--International Division. White House Staff, Special
[PHOTO] Assistant and Appointments Secretary from 1965 to 1969 and
Congressman from Oklahoma from 1973 to 1987. Partner in the law
firm of Dickstein Shapiro Morin & Oshinsky LLP from 1987 to
1989. Chairman and Chief Executive Officer of the American Stock
Exchange from 1989 to 1993. Served as United States Ambassador
to Mexico from 1993 to 1997.
STEPHEN W. McKESSY--Age 62
Retired Vice Chairman of PriceWaterhouseCoopers. Served in
various officer positions at Coopers & Lybrand from 1960 to
[PHOTO] 1997. Serves as a Director for the Greater Boy Scouts of
America, the Board of Advisors of St. John's University College
of Business Administration, the Board of Governors of the Silver
Spring Country Club and the Board of the Sailfish Point Golf
Club.
EDWARD D. MILLER--Age 59
President and Chief Executive Officer of AXA Financial, Inc.,
formerly The Equitable Companies Incorporated and Chairman and
[PHOTO] Chief Executive Officer of The Equitable Life Assurance Society
of the United States, the principal insurance subsidiary of AXA
Financial, Inc. Chairman and Chief Executive Officer of AXA
Client Solutions, LLC. Serves on the Board of AXA Financial,
Inc. and Equitable Life and the Boards of Alliance Capital
Management Corporation and Donaldson, Lufkin & Jenrette, Inc.,
both Equitable investment subsidiaries. Since January 1999,
serves on the Management Board and, since 1997, serves on the
Executive Board of the AXA Group, Equitable's majority
shareholder. Services on the Board of Phoenix House. Current
Chairman of United Way of Tri-State, a Trustee of Pace
University, The New York City Police Foundation, the Inner-City
Scholarship Fund and the New York Blood Center.
5
<PAGE>
BASIL A. PATERSON--Age 74
Partner in the law firm of Meyer, Suozzi, English and Klein,
P.C., since 1982. Served as Secretary of State of the State of
[PHOTO] New York from 1979 to 1982, as Deputy Mayor of New York City, as
a New York State Senator and as a commissioner of the Port
Authority of New York and New Jersey. Served as a professor at a
number of universities, as a member of the board of editors of
the New York Law Journal and is a member of the New York State
Commission on Judicial Nominations.
JAMES Q. RIORDAN--Age 72
Retired Vice Chairman and Chief Financial Officer of Mobil Corp.
Joined Mobil in 1957 as Tax Counsel, named a Director and Chief
Financial Officer in 1969 and served as Vice Chairman from 1986
[PHOTO] until his retirement from Mobil Corp. in 1989. Joined Bekaert
Corporation in 1989 and served as President until his retirement
in 1992. Serves on the Boards of The Houston Exploration Company
and Tri-Continental Corporation. Director/Trustee of the mutual
funds in the Seligman Group of investment companies, Trustee of
the Brooklyn Museum and a member of its Committee for Economic
Development and a member of the Policy Council of the Tax
Foundation.
VINCENT TESE--Age 57
Chairman of Wireless Cable International, Inc., since 1995. New
York Superintendent of Banks from 1983 to 1985 and Chairman and
Chief Executive Officer of the Urban Development Corporation
[PHOTO] from 1985 to 1994. Director of Economic Development for New York
State from 1987 to 1994. Serves on the Boards of The Bear
Stearns Companies Inc., Allied Waste Industries, Inc., Bowne &
Co., Inc., Cablevision, Inc., Custodial Trust Co., Mack-Cali
Realty Corporation, New York University School of Law, and the
New York and Presbyterian Hospital.
6
<PAGE>
Board of Directors--Committees
The Board of Directors is responsible, under New York law and the Company's
Certificate of Incorporation and By-Laws, with overseeing the business and
management of the Company. The Board of Directors met ten times between
January 1 and December 31, 1999. The Board maintains four standing committees
and, during 1999, maintained two additional committees. The function of such
committees, number of meetings held and composition of such committees are
described below:
<TABLE>
<CAPTION>
Committee
Compensation
and Corporate Shareholder
Director Executive Nominating Audit Responsibility Special Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
L.H. Affinito X X X
- ---------------------------------------------------------------------------------------------
G. Bugliarello X X
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R.B. Catell X (Chair) X
- ---------------------------------------------------------------------------------------------
H.R. Curd X X X
- ---------------------------------------------------------------------------------------------
R.N. Daniel X X X
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D.H. Elliott X X
- ---------------------------------------------------------------------------------------------
A.H. Fishman X X (Chair) X (Chair)
- ---------------------------------------------------------------------------------------------
J.R. Jones X X
- ---------------------------------------------------------------------------------------------
S.W. McKessy X X
- ---------------------------------------------------------------------------------------------
E.D. Miller X X (Chair) X
- ---------------------------------------------------------------------------------------------
B.A. Paterson X X (Chair)
- ---------------------------------------------------------------------------------------------
J.Q. Riordan X
- ---------------------------------------------------------------------------------------------
F.V. Salerno X X X
- ---------------------------------------------------------------------------------------------
V. Tese X X X
- ---------------------------------------------------------------------------------------------
Meetings held from
January 1 to December
31, 1999 13 10 4 1 3 3
</TABLE>
X: Member.
Chair: Committee Chairperson.
7
<PAGE>
Committees
- -------------------------------------------------------------------------------
Executive Committee: Acts on behalf of the Board of Directors whenever the Board
is not in session, except for certain matters as prescribed by New York law.
Audit Committee: Reviews auditing, accounting, financial reporting and internal
control functions. Recommends independent public accountants and reviews their
services. All members are non-employee directors.
Corporate Responsibility Committee: Oversees ethics, community development,
environmental issues and equal employment opportunity.
Compensation and Nominating Committee: Administers executive compensation
programs, policies and practices. Conducts director searches and recommends
directors. All members are non-employee directors. The Committee will not accept
nominations for election by shareholders at the Annual Meeting, unless such
nominations were received within the time period prescribed in Section 2.7 of
the Company's By-Laws.
Special Committee: Reviewed the payment by the Long Island Lighting Company
("LILCO") to its former officers of retirement benefits, incentive compensation
and benefits pursuant to contracts with LILCO, including litigation,
investigations and other inquiries.
Shareholder Value Committee: Reviewed means to enhance shareholder value through
the creation of shareholder protective measures.
- -------------------------------------------------------------------------------
Each of the directors attended 75% or more of all meetings of the Board and
each committee of which he or she was a member during the period from January
1 to December 31, 1999.
Director Compensation
The directors receive the following compensation:
. Non-employee directors:
$25,000 annual retainer,
$1,500 meeting fee (for each meeting of the Board of Directors and
each meeting of a committee of the Board of Directors attended),
$3,000 committee chairman retainer, and
500 share annual Common Stock equivalent grant.
Reimbursement for expenses incurred in attending Board and committee
meetings.
. Employee directors:
Receive no additional compensation other than their normal salary
for serving on the Board or its committees.
The Board of Directors has adopted the Directors' Deferred Compensation Plan
to directly align the non-employee directors' financial interest with those of
the shareholders. The Directors' Deferred Compensation Plan requires all non-
employee directors to defer a minimum of 50% of their compensation as
directors in exchange for Common Stock equivalents as well as 100% of their
annual Common Stock equivalent grant, as referred to above. Common Stock
equivalents are valued by reference to the average of the high and low price
per share of KeySpan's Common Stock reported on the New York Stock Exchange
Composite Transactions on the first trading day of the calendar month.
Compensation not subject to mandatory deferral into a Common Stock equivalent
account may, at the director's option, be deferred into a cash account bearing
interest at the prime rate. Upon retirement, death or termination of service
as a director, all amounts in a director's Common Stock equivalent account and
cash account shall, at the director's election, (i) be paid in a lump sum in
cash; (ii) be deferred for up to five years; and/or (iii) be paid in the
number of annual installments, up to ten, specified by the director.
8
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table presents the annual compensation paid to or accrued for
the Chief Executive Officer and the four other most highly compensated
executive officers (the "Named Executive Officers"). The information shown for
1998 represents compensation paid by the Company and its predecessors for the
twelve months ended December 31, 1998. Similarly, the information shown for
1997 represents compensation paid by the Company's predecessors for the twelve
months ended December 31, 1997.
<TABLE>
<CAPTION>
Annual
Compensation Long-Term Compensation
Restricted
Stock Shares LTIP
Salary Bonus Award(s) Underlying Payouts All Other
Name Year ($) ($) ($) (1) Options ($) Comp ($)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert B. Catell 1999 700,000 317,665 343,643 461,000 0 25,673(3)
Chairman & CEO 1998 562,917 223,583 N/A 0 274,641(2) 25,673(3)
1997 465,000 495,690 N/A 125,000 358,096(2) 20,520(3)
- ---------------------------------------------------------------------------------------------
Craig G. Matthews 1999 445,833 153,758 286,250 355,000 0 14,618(3)
President & COO 1998 372,372 345,842 N/A 0 175,419(2) 109,520(3)(4)
1997 335,833 297,815 N/A 75,000 261,703(2) 6,204(3)
- ---------------------------------------------------------------------------------------------
Anthony Nozzolillo 1999 250,061 62,340 0 146,000 0 3,650(3)
Executive Vice 1998 205,000 94,121 N/A 0 152,594(5) 57,189(3)(4)
President 1997 202,424 144,197 N/A 0 113,748(5) 269,880(3)(6)
- ---------------------------------------------------------------------------------------------
Wallace P. Parker Jr. 1999 248,000 62,340 0 146,000 0 3,711(3)
Executive Vice 1998 201,417 142,158 N/A 0 18,513 58,683(3)(4)
President 1997 187,500 99,671 N/A 17,000 0 2,080(3)
- ---------------------------------------------------------------------------------------------
Robert J. Fani 1999 250,000 59,570 0 146,000 0 578(3)
Executive Vice 1998 197,667 141,492 N/A 0 0 54,757(3)(4)
President 1997 176,392 97,006 N/A 17,000 0 1,005(3)
</TABLE>
FOOTNOTES:
(1) As of December 31, 1999, the aggregate value of the restricted stock
awards, number of shares awarded and date such shares fully vest are as
follows: Mr. Catell--$294,441, $12,698, July 31, 1999; Mr. Matthews--
$231,880, $10,000, September 30, 2000. No other shares of restricted stock
have been awarded. Holders of restricted stock are entitled to receive any
dividends paid to holders of Common Stock.
(2) Includes Long-Term Incentive Compensation paid by subsidiaries of KeySpan.
(3) Includes the cost of life insurance paid by KeySpan and allocated to the
named individual for income tax purposes during 1999, 1998 and 1997, as
follows: Mr. Catell--$25,673, $25,673, $20,520; Mr. Matthews--$14,618,
$9,520, $6,204; Mr. Nozzolillo--$3,650, $939, $706; Mr. Parker--$3,711,
$2,433, $2,080; and Mr. Fani--$578, $1,007, $1,005.
(4) Includes amounts paid upon election as an officer of the Company in August
1998, as follows: Mr. Matthews--$100,000; Mr. Nozzolillo--$56,250; Mr.
Parker--$56,250 and Mr. Fani--$53,750.
(5) Represents Long-Term Incentive Awards paid by LILCO.
(6) Includes $66,750 and $202,424 paid by LILCO for accrued and unused
vacation and in connection with the termination of a supplemental
retirement benefit plan, respectively.
9
<PAGE>
Compensation and Nominating Committee Report on Executive Compensation
The Compensation and Nominating Committee (the "Committee") of the Board of
Directors, composed of six independent, non-employee directors, administers
KeySpan's executive compensation program. The members of the Committee are
Donald H. Elliott, James R. Jones, Edward D. Miller, Basil A. Paterson,
Frederic V. Salerno and Vincent Tese. None of such members is or has been an
officer or employee of KeySpan or any of its subsidiaries.
During 1999, the Committee met periodically throughout the year and utilized
outside consultants from the Hay Group to review the compensation levels of
KeySpan's officers, including the Named Executive Officers, and to provide
advice with respect to incentive compensation plan design. The Committee also
reviews, recommends and approves changes to the Company's compensation
policies and programs for the Chief Executive Officer, other senior executives
and certain key employees. In addition, the Committee makes recommendations
concerning the Company's employee benefit policies and exercises such powers
and makes such other compensation-related determinations as are entrusted to
the Committee by the Board of Directors. After review and approval by the
Committee, all issues relating to executive compensation are submitted to the
entire Board for ratification. There were no material decisions of the
Committee which were overruled or revised by the Board.
Executive Compensation Philosophy and Policies
Upon the recommendation of the Compensation and Nominating Committee, on July
29, 1999 the KeySpan's Board of Directors adopted resolutions setting forth
the policies and procedures of KeySpan with respect to executive compensation
and corporate governance. A copy of such resolutions is attached as Appendix
A. The philosophy of KeySpan with respect to executive compensation is that
the Chief Executive Officer and other executives should be compensated at
market-competitive levels to attract, motivate, and retain talented executives
needed to achieve KeySpan's vision of becoming a premier energy company.
Through the Committee, the Board of Directors has developed a "pay for
performance" executive compensation philosophy and approved the implementation
of a total compensation plan designed to focus attention on KeySpan's
strategic business initiatives and financial performance objectives. The
Committee adheres to the following compensation policies which are intended to
facilitate the achievement of KeySpan's business strategies and further the
Company's vision:
. The executive compensation program should emphasize pay for performance
and encourage retention of those employees who enhance KeySpan's
performance.
. Compensation arrangements shall maintain a reasonable balance between
base salary, annual and long-term incentive compensation and be designed
to focus such executives on the long-term interests of shareholders and
creating value for the shareholders.
. The incentive compensation program for executives shall strengthen the
link of incentive compensation to the achievement of financial goals
which are set in advance by the Compensation and Nominating Committee.
. In determining executive compensation levels for base salary, annual and
long-term compensation, the compensation levels shall be competitive to
peer energy companies as well as executive positions of similar scope
for the metropolitan New York City area for general industry. If
KeySpan's performance exceeds that of the comparable group, compensation
should be above the median; likewise, if KeySpan's performance falls
below that of the group, the compensation paid to executives should be
below the median of the comparable companies.
Components of Compensation
The Committee compares total compensation levels for KeySpan's senior
executives to the compensation paid to executives in comparable general
industry and peer energy companies. In this regard, the Committee uses
10
<PAGE>
analyses prepared by the Hay Group, a national compensation consultant, to
review the compensation levels of executives in the utility industry in the
regional and national marketplace. In addition, the Committee reviews
compensation data for executive positions comparable in scope to those in
general industry companies. The companies analyzed in this process tend to
have national business operations and have positions that are similar in scope
with comparable revenue size or employment levels. Through this process, the
Committee identifies the median compensation level, both with respect to base
salary and the overall executive compensation program.
The Committee strives to ensure that compensation for the Company's executive
officers provides a direct link to strategic financial measures and
shareholder value. To achieve this performance linkage, KeySpan has
established three programs for the direct compensation of executive officers:
the Base Salary Program, the Corporate Annual Incentive Compensation Plan and
the Long-Term Performance Incentive Compensation Plan. The intent of these
programs is to place increased emphasis on performance-based pay and reduced
emphasis on base salary in determining total compensation.
Each of the three programs is discussed in greater detail below.
The Base Salary Program
In setting base salary levels for each executive officer, the Committee
considers the competitive market data for executives in comparable positions
in other utility and general industry markets. In setting base salary levels,
KeySpan currently targets the 50th percentile of the comparable labor market.
The Committee also considers the experience level and actual performance
achieved by the executive as it relates to KeySpan's corporate goals in
setting such executive's base salary.
When Mr. Catell was promoted to and elected as Chairman and Chief Executive
Officer on July 31, 1998, KeySpan entered into an employment agreement with
Mr. Catell that provides a base salary of $700,000 per year, subject to such
increases that may be approved by the Board. The base salary level for the
Chief Executive Officer and other Named Executive Officers, compared to
competitive market data, is generally at or below the 50th percentile of
comparable positions at this time, as the Company continues to align base pay
to competitive market data. Mr. Catell's base salary was not increased during
1999. For the year 2000, the Committee has taken into consideration Mr.
Catell's performance in connection with among other things, increase in
overall earnings per share and the implementation of the Company's acquisition
growth strategy, and the fact that his base salary is below the median of
comparable positions in the market place and has approved an increase in base
salary effective January 1, 2000 to $786,000 paid annually.
The Corporate Annual Incentive Compensation Plan
The Board of Directors adopted the Corporate Annual Incentive Compensation
Plan (the "Corporate Plan") for KeySpan in September 1998. The awards to be
earned under this plan will be paid as cash based upon annual performance
results. For 1999, the performance measurement period included the twelve-
month period from January 1, 1999 to December 31, 1999. The awards for this
period were to be paid in March 2000. The Corporate Plan provides annual
incentive awards to officers and all management employees who, by the nature
and scope of their positions, regularly and directly make a significant
contribution to the success of KeySpan in the achievement of corporate goals
that the Committee believes are important to the shareholders of KeySpan. The
specific corporate goals for the Corporate Plan are established by management
and reviewed and approved by the Committee and the Board of Directors. The
goals are intended to improve corporate performance and include objectives
which encourage increase in total return to shareholders, improved corporate
earnings results, improved competitive position, improved customer
satisfaction and control of operating expenses. Incentive awards as a
percentage of base salary are based upon both Company and strategic business
group performance. The incentive award ranges are established annually by the
Committee for eligible officers and management employees in the Corporate
Plan. Incentive award levels are intended to provide awards that are
competitive within the industry at target award levels when performance
results are achieved.
11
<PAGE>
The Corporate Plan provides for award opportunities to executives which range
from zero to a maximum of 60% of base salary at target levels of performance.
For 1999, the Chief Executive Officer had a target award of 60% of base salary
with performance criteria based upon total shareholder return and consolidated
earnings per share. Based upon actual 1999 results, an award payout of 48% of
base salary was approved by the Committee. Upon the recommendation of the Hay
Group (compensation consultant) for the year 2000, the Chief Executive
Officer's target award has been set at 70% of base salary to place further
emphasis upon achieving earnings and shareholder return goals. All executives
in the Corporate Plan have a portion of their incentive award linked directly
to overall corporate performance goals for total return to shareholders and
consolidated earnings per share and to the results achieved in their
respective strategic business group.
The Long-Term Performance Incentive Compensation Plan
As a result of the Committee's review of the competitiveness of KeySpan's
total compensation program, and an independent consultant review of the long-
term incentive plans used by a majority of utilities, the Committee
recommended, and the Board of Directors adopted, the KeySpan Long-Term
Performance Incentive Compensation Plan (the "Incentive Plan") in March 1999.
The Incentive plan was subsequently approved by the shareholders at the May
1999 Annual Meeting of Shareholders. The Incentive Plan provides for the award
of incentive stock options, non-qualified stock options, performance stock
awards and restricted shares to key employees and non-employee directors and
consultants of KeySpan and its subsidiaries as determined by the Committee.
The purpose of the Incentive Plan is to optimize KeySpan's performance through
incentives that directly link the participant's personal interests to those of
KeySpan's shareholders and to attract and retain participants who make
significant contributions to the success of KeySpan.
The stock option component of the Incentive Plan entitles the participants to
purchase shares of Common Stock at an exercise price per share determined by
the Committee which is no less than the closing price of the Common Stock on
the New York Stock Exchange on the date of the grant. Following adoption of
the Incentive Plan, the Committee approved an initial annual grant for Mr.
Catell of 70,000 non-qualified stock options with three year pro-rata vesting,
and 235,000 non-qualified stock options as a retention grant, vesting in
August 1999, to purchase shares of KeySpan's Common Stock at an exercise price
of $27.75.
In addition, the Committee approved an award to Mr. Catell in recognition of
the extraordinary efforts required to accomplish the transaction involving
LILCO. This award provided for the grant of 111,000 non-qualified stock
options, vesting December 1999, to purchase shares of KeySpan's Common Stock
at an exercise price of $29.375. The Committee also awarded Mr. Catell 12,698
shares of restricted Common Stock, which restrictions lapsed on July 31, 1999.
On May 20, 1999, based upon the performance of the Chief Executive Officer,
the Committee approved a grant of 280,000 non-qualified stock options with
three year pro-rata vesting to purchase shares of KeySpan's Common Stock at an
exercise price of $27.06.
In determining award size, the Committee considers both the performance level
of the Chief Executive Officer and the overall total compensation provided by
base salary, annual awards and long-term compensation for comparable executive
positions in shareholder-owned utilities and natural gas companies nationwide.
During 1999, an aggregate of 2,766,000 non-qualified stock options and 22,698
shares of restricted Common Stock have been granted to the executive officers
as a group. The grants of non-qualified stock options and restricted Common
Stock were made to executives generally determined on the basis of the
executive's performance and position within KeySpan and the level of such
executive's compensation to focus such executives on the long-term interests
of shareholders.
The Committee believes that stock options are directly linked to KeySpan's
performance and shareholder value. As the value of KeySpan's Common Stock is
generally considered the strongest indicator of overall corporate performance,
stock option awards allow executives to benefit by appreciation in stock price
at no direct cost to
12
<PAGE>
KeySpan and provide a strong incentive to participants by linking compensation
to the future value of KeySpan's Common Stock.
Policy with Respect to Section 162(m) Deduction Limit
Under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), the Company cannot deduct compensation in excess of $1,000,000 paid
in any year to the Chief Executive Officer or any of the four other most
highly compensated executive officers whose compensation must be detailed in
the proxy statement. Certain benefit plans and compensation paid under plans
that are performance-based is not subject to the $1,000,000 annual limit if
certain requirements are satisfied. Although the Company's compensation policy
is generally designed to relate compensation to performance, certain payments
do not meet such requirement because they allow the Committee to exercise
discretion in setting compensation. The Committee is of the opinion that it is
in the Company's best interest for the Committee to retain discretion in order
to preserve flexibility in compensating such executive officers, especially in
light of an increasingly competitive marketplace.
Conclusion
The Committee believes that KeySpan's executive compensation policies and
programs serve both the interests of KeySpan and its shareholders effectively.
The various compensation programs are appropriately balanced to provide the
motivation for executives to contribute to KeySpan's overall success and
enhance the value of KeySpan for the shareholders' benefit.
The Committee will continue to monitor the effectiveness of KeySpan's total
compensation program to meet the current and the future needs of KeySpan.
Compensation and Nominating
Committee
Edward D. Miller, Chairman
Donald H. Elliott
James R. Jones
Basil A. Paterson
Frederic V. Salerno
Vincent Tese
13
<PAGE>
Stock Option Grants
The following table provides information on stock option grants for the Named
Executive Officers and the value of such officers unexercised options at
December 31, 1999.
<TABLE>
<CAPTION>
Total Number of
Percent of Securities
Number of Total Grant Date Underlying Value of In-
Securities Number of Option Present Unexercised The-Money
Underlying Shares Exercise Value of Options at FYE Options at
Options Granted to Price Expiration Options(/1/) Exercisable/ FYE
Name Granted Employees ($/Share) Date ($) Unexercisable (unexercised)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R.B. Catell 235,000(2) 6.10 27.75 Aug. 12, 2008 843,650 649,333 326,666 N/A
--------------------------------------------------------------------
70,000(3) 1.82 27.75 Aug. 12, 2008 251,300
--------------------------------------------------------------------
111,000(4) 2.88 29.375 Dec. 15, 2008 398,490
--------------------------------------------------------------------
280,000(5) 7.26 27.0625 May 20, 2009 1,052,800
- -----------------------------------------------------------------------------------------------------------
C.G. Matthews 183,000(2) 4.75 27.75 Aug. 12, 2008 656,970 362,333 159,666 N/A
--------------------------------------------------------------------
37,000(3) .95 27.75 Aug. 12, 2008 132,830
--------------------------------------------------------------------
135,000(5) 3.50 27.0625 May 20, 2009 507,600
- -----------------------------------------------------------------------------------------------------------
A. Nozzolillo 84,000(2) 2.18 27.75 Aug. 12, 2008 301,560 89,666 56,333 N/A
--------------------------------------------------------------------
17,000(3) .44 27.75 Aug. 12, 2008 61,030
--------------------------------------------------------------------
45,000(5) 1.17 27.0625 May 20, 2009 169,200
- -----------------------------------------------------------------------------------------------------------
W.P. Parker Jr. 84,000(2) 2.18 27.75 Aug. 12, 2008 301,560 131,666 56,333 N/A
--------------------------------------------------------------------
17,000(3) .44 27.75 Aug. 12, 2008 61,030
--------------------------------------------------------------------
45,000(5) 1.17 27.0625 May 20, 2009 169,200
- -----------------------------------------------------------------------------------------------------------
R.J. Fani 84,000(2) 2.18 27.75 Aug. 12, 2008 301,560 110,966 56,333 N/A
--------------------------------------------------------------------
17,000(3) .44 27.75 Aug. 12, 2008 61,030
--------------------------------------------------------------------
45,000(5) 1.17 27.0625 May 20, 2009 169,200
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Options have been valued using the Black-Scholes option pricing model
adapted to reflect the specific provisions of the Company's Long-Term
Performance Incentive Compensation Plan and related assumptions regarding
exercisability. The values shown are theoretical and do not necessarily
reflect the actual values which may be realized upon the future exercise
of the options. Any actual value will result to the extent that the market
value of the common shares at a future date exceeds the exercise price.
Assumptions for modeling are based on the dividend yield, risk-free rate
of return, standard deviation of prices over a relevant period as of the
grant date and the expected lives of the options.
(2) Options vested on August 13, 1999.
(3) Options vest ratably over a three-year period from August 13, 1998.
(4) Options vest one year from December 16, 1999, the grant date.
(5) Options vest ratably over a three-year period from May 20, 1999, the grant
date.
14
<PAGE>
Security Ownership of Management
The following table sets forth information as of February 29, 2000, with
respect to the number of shares of Common Stock beneficially owned and Common
Stock equivalents credited to each director, each executive officer of KeySpan
named in the Summary Compensation Table and all directors and executive
officers as a group. Unless otherwise indicated, each person shown below has
the sole power to vote and the sole power to dispose of the shares of Common
Stock listed as beneficially owned. The percentage of shares held by any one
person, or all directors and officers as a group, does not exceed 1% of all
outstanding shares of KeySpan's Common Stock.
<TABLE>
<CAPTION>
Total of Common
Name of Stock Beneficially Common Stock Common Stock
Beneficial Owner Owned & Equivalents Beneficially Owned(/1/) Equivalents(/2/)
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
L.H. Affinito 4,086 1,000 3,086
- -----------------------------------------------------------------------------------
G. Bugliarello 11,319 5,589 5,730
- -----------------------------------------------------------------------------------
R.B. Catell 782,594 782,296 298
- -----------------------------------------------------------------------------------
H.R. Curd 24,624 20,000 4,624
- -----------------------------------------------------------------------------------
R.N. Daniel 3,913 1,000 2,913
- -----------------------------------------------------------------------------------
D.H. Elliott 17,910 1,783 16,127
- -----------------------------------------------------------------------------------
A.H. Fishman 12,250 3,073 9,177
- -----------------------------------------------------------------------------------
J.R. Jones 4,140 1,275 2,865
- -----------------------------------------------------------------------------------
S.W. McKessy 7,193 1,420 5,773
- -----------------------------------------------------------------------------------
E.D. Miller 17,331 7,773 9,558
- -----------------------------------------------------------------------------------
B.A. Paterson 5,501 1,328 4,173
- -----------------------------------------------------------------------------------
J.Q. Riordan 36,350 21,500 14,850
- -----------------------------------------------------------------------------------
F.V. Salerno 8,471 2,000 6,471
- -----------------------------------------------------------------------------------
V. Tese 6,520 0 6,520
- -----------------------------------------------------------------------------------
C.G. Matthews 431,221 430,923 298
- -----------------------------------------------------------------------------------
A. Nozzolillo 110,973 110,973 0
- -----------------------------------------------------------------------------------
W.P. Parker Jr. 153,164 153,088 76
- -----------------------------------------------------------------------------------
R.J. Fani 130,483 130,440 43
- -----------------------------------------------------------------------------------
All directors and
executive
officers as a
group, including
those named above,
a total of
30 persons 2,591,434 2,498,803 92,631
</TABLE>
(/1/) Includes shares issuable pursuant to options that are either currently
exercisable or exercisable within 60 days of the date of this Proxy
Statement as follows: Mr. Catell--742,666 shares; Mr. Matthews--407,333
shares; Mr. Nozzolillo--104,666 shares; Mr. Parker--146,000 shares; Mr.
Fani--125,966 shares.
(/2/) The term Common Stock Equivalents refers to units of value which track the
performance of Common Stock. Such units do not possess voting rights and
have been issued pursuant to the Directors' Deferred Compensation Plan
(discussed below) or the Company's employee stock savings plan.
Security Ownership of Certain Beneficial Owners
As of December 31, 1999, there were no beneficial owners of more than 5% of
the Company's Common Stock.
15
<PAGE>
Performance Graph
The following graph presents, for the period beginning May 28, 1998 through
December 31, 1999, a comparison of cumulative total shareholder returns for
KeySpan, the Standard & Poor's Utilities Index and the Standard & Poor's 500
Index.
[LINE GRAPH]
<TABLE>
<CAPTION>
May 28, December 31, December 31,
1998 1998 1999
------- ------------ ------------
<S> <C> <C> <C>
KeySpan.................................... $100.00 $ 93.99 $ 74.96
S&P Utilities Index........................ $100.00 $108.57 $ 99.66
S&P 500 Index.............................. $100.00 $113.65 $127.87
</TABLE>
Assumes $100 invested on May 28, 1998 in shares of KeySpan Common Stock, the
S&P Utilities Index and the S&P 500 Index, and that all dividends were
reinvested.
16
<PAGE>
Compensation Under Retirement Plans
The Company's Retirement Plan provides retirement benefits based upon the
individual participant's years of service and final average annual
compensation (as defined below). The following table sets forth the estimated
annual retirement benefits (exclusive of Social Security payments) payable to
participants in the specified compensation and years-of-service categories,
assuming continued active service until normal retirement age and that the
Company's Retirement Plan is in effect at such time.
<TABLE>
<CAPTION>
Years of Service
-----------------------------------------------------
Remuneration 20 25 30 35 40 45
- ------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$200,000.................. $ 60,000 $ 75,000 $ 90,000 $105,000 $120,000 $135,000
$250,000.................. $ 75,000 $ 93,750 $112,500 $131,250 $150,000 $168,750
$300,000.................. $ 90,000 $112,500 $135,000 $157,500 $180,000 $202,500
$350,000.................. $105,000 $131,250 $157,500 $183,750 $210,000 $236,250
$400,000.................. $120,000 $150,000 $180,000 $210,000 $240,000 $270,000
$450,000.................. $135,000 $168,750 $202,500 $236,250 $270,000 $303,750
$500,000.................. $150,000 $187,500 $225,000 $262,500 $300,000 $337,500
$550,000.................. $165,000 $206,250 $247,500 $288,750 $330,000 $371,250
$600,000.................. $180,000 $225,000 $270,000 $315,000 $360,000 $405,000
$650,000.................. $195,000 $243,750 $292,500 $341,250 $390,000 $438,750
$700,000.................. $210,000 $262,500 $315,000 $367,500 $420,000 $472,500
$750,000.................. $225,000 $281,000 $337,500 $393,750 $450,000 $506,250
$800,000.................. $240,000 $299,500 $360,000 $420,000 $480,000 $540,000
$850,000.................. $255,000 $318,000 $382,500 $446,250 $510,000 $573,750
$900,000.................. $270,000 $336,500 $405,000 $472,500 $540,000 $607,500
$950,000.................. $285,000 $355,000 $427,500 $498,750 $570,000 $641,250
</TABLE>
For purposes of the Retirement Plan, the final average annual compensation is
the average annual compensation for the highest five consecutive years of
earnings during the last ten years of credited service. The annual salary and
bonus for the current year for the Named Executive Officers is indicated in
the Annual Compensation column of the Summary Compensation Table.
The number of years of credited service for the Chief Executive Officer and
each of the Named Executive Officers currently employed by the Company, other
than Mr. Nozzolillo, based on continued service to age 65, normal retirement
age, will be as follows: R.B. Catell--44 years, C.G. Matthews--43 years, W.P.
Parker Jr.--43 years and R.J. Fani--42 years.
Former LILCO employees, including Mr. Nozzolillo, participate in a separate
retirement plan assumed by the Company in connection with the transaction
involving LILCO. Under this plan, which is currently noncontributory and
provides fixed-dollar pension benefits, a participant will vest upon
completion of five years of service.
The plan uses a career average pay formula which provides a credit for each
year of participation. For service before January 1, 1992, pension benefits
are determined based on the greater of the accrued benefit as of December 31,
1991, or by multiplying a moving five-year average of plan compensation, not
to exceed the January 1, 1992 salary, by a certain percentage determined by
years of participation in the retirement plan at December 31, 1991. For
service after January 1, 1992, pension benefits are equal to 2% of "plan
compensation" through age 49 and 2 1/2% thereafter. "Plan compensation" is
defined in this plan as the base rate of pay plus incentive compensation
payments in effect on January 1 of each year and may differ for Mr. Nozzolillo
from the amounts reported under the heading "Salary" in the Summary
Compensation Table. Any difference is primarily attributable to the timing of
annual salary increases for Mr. Nozzolillo which impacts the amount paid to
him and reported for a given year.
Assuming continuation of employment to September 1, 2013, his normal
retirement date, and 41 years 2 months of credited service, the projected
annual retirement benefit payable to Mr. Nozzolillo on a straight-life annuity
basis pursuant to this plan at the appropriate rate of plan compensation would
be $154,525.
17
<PAGE>
The Code limits the annual compensation taken into consideration for and the
maximum annual retirement benefits payable to a participant under each of the
Company's retirement plans. For 1999, these limits were $160,000 and $130,000,
respectively. Annual retirement benefits attributable to amounts in excess of
these limits are provided under the Excess Benefit Plan (the "Benefit Plan")
and not under the Company's retirement plans.
AGREEMENTS WITH EXECUTIVES
Employment Agreements
In September 1998, KeySpan entered into an employment agreement with Mr.
Robert B. Catell relating to his services as Chairman and Chief Executive
Officer which has been amended February 24, 2000. The agreement covers the
period beginning July 31, 1998 and ending July 31, 2003. In addition to base
salary, annual and long-term incentive compensation and other employee
benefits, Mr. Catell's employment agreement provides for severance benefits to
be paid to him in the event his employment is terminated by KeySpan without
cause or if Mr. Catell terminates his employment for good reason. The
severance benefits to be provided during the severance period would include:
(a) payment to Mr. Catell in a single lump sum of (i) all accrued obligations
and (ii) the aggregate amount of salary and annual incentive compensation that
he would have received had he remained employed through the end of the
employment period; (b) continued accrual of Supplemental Executive Retirement
Plan benefits (as provided in the agreement) during the severance period; and
(c) continuation of all other employment benefits, as if he had remained
employed by KeySpan during the severance period. If Mr. Catell voluntarily
terminates his employment, other than for good reason, the Company shall pay
the accrued obligations to Mr. Catell and he shall be entitled to supplemental
retirement benefits. If Mr. Catell's employment is terminated due to a "change
of control" of KeySpan (as defined in the agreement), the severance period is
defined to mean the period from the date of termination through the end of the
employment period, or, if longer, the third anniversary of the date of
termination.
KeySpan also is party to an employment agreement entered into on September 1,
1999 with Mr. Craig G. Matthews relating to his services as President and
Chief Operating Officer. The agreement covers the period beginning September
1, 1999 and ending August 31, 2003. In addition to base salary, annual and
long-term incentive compensation and other employee benefits, Mr. Matthews
employment agreement provides for severance benefits to be paid to him in the
event his employment is terminated by KeySpan without cause or if Matthews
terminates his employment for good reason. The severance benefits to be
provided during the severance period would include: (a) payment to Mr.
Matthews in a single lump sum of (i) all accrued obligations and (ii) the
aggregate amount of salary and annual target incentive compensation that he
would have received had he remained employed through the end of the employment
period; (b) continued accrual of benefits under the Benefit Plan during the
severance period; and (c) continuation of all other employment benefits, as if
he had remained employed by KeySpan during the severance period. If Mr.
Matthews voluntarily terminates his employment, other than for good reason,
the Company shall pay the accrued obligations to Mr. Matthews and he shall be
entitled to supplemental retirement benefits provided by the Benefit Plan. If
Mr. Matthews employment is terminated due to a "change of control" of KeySpan
(as defined in the agreement), he is eligible to receive the severance
benefits provided under his agreement or the Senior Executive Change of
Control Severance Plan (the "Change of Control Plan"), whichever is greater.
KeySpan also is party to an employment agreement entered into on July 29, 1999
with Mr. Gerald Luterman relating to his services as Senior Vice President and
Chief Financial Officer. The agreement covers the period beginning July 29,
1999 and ending July 31, 2002. In addition to base salary, annual and long-
term incentive compensation and other employee benefits, Mr. Luterman's
employment agreement provides for severance benefits to be paid to him in the
event his employment is terminated by KeySpan without cause or if Mr. Luterman
terminates his employment for good reason. The severance benefits to be
provided during the severance period would include: (a) payment to Mr.
Luterman in a single lump sum of (i) all accrued obligations and (ii) the
aggregate amount of salary and annual target incentive compensation that he
would have received had he remained employed through the end of the employment
period; (b) continued accrual and vesting of benefits under the Benefit Plan
during the severance period; and (c) continuation of all other employment
18
<PAGE>
benefits, as if he had remained employed by KeySpan during the severance
period. If Mr. Luterman voluntarily terminates his employment, other than for
good reason, the Company shall pay the accrued obligations to Mr. Luterman and
he shall be entitled to supplemental retirement benefits provided by the
Benefit Plan. If Mr. Luterman's employment is terminated due to a "change of
control" of KeySpan (as defined in the agreement), he is eligible to receive
the severance benefits provided under his agreement as an offset, and not in
addition to, any severance payments from the Change of Control Plan.
Senior Executive Change of Control Severance Plan
In February 2000, the Board of Directors approved an amendment to the Change
of Control Plan initially adopted in October 1998. With the exception of Mr.
Catell, all 34 officers of the Company are participants in the plan. The
Change of Control Plan, as amended, provides for the payment of severance and
other benefits upon certain qualifying terminations of such executives within
two (2) years of a "change of control of the Company" (as defined in the
Change of Control Plan). The protection period under the plan commences upon
the date that KeySpan enters into a definitive agreement, the transaction
contemplated by which will, when consummated, constitute a change of control
under the plan. The benefits payable under the Change of Control Plan
generally provide for (i) the payment of the sum of the executive's base
salary, incentive compensation and compensation previously deferred by the
executive, all through the date of termination; (ii) the payment of an amount
equal to three times an executive's base salary and incentive compensation for
the President and Chief Operating Officer, Executive Vice Presidents and all
Senior Vice Presidents and two times an executive's base salary and incentive
compensation for Vice Presidents of the Company; (iii) the payment of amounts
under retirement plans; and (iv) the continuation of certain other benefits
for a period of two to three years depending on the executive's position with
the Company. The Change of Control Plan expires October 30, 2003, unless
extended for an additional period by the Board of Directors; provided, that
following a "change of control," the Change of Control Plan shall continue
until after all the executives who become entitled to any payments thereunder
shall have received such payments in full.
The Change of Control Plan supersedes any and all prior severance plans and
agreements between or binding the Company or any predecessor thereof with
respect to a change of control that occurred after October 1998, except that
in certain circumstances some of the executives may be able to elect to
receive payments and benefits provided pursuant to a prior agreement or plan
rather than the payments and benefits provided under the Change of Control
Plan.
Other
The Company has entered into a consulting agreement with Robert R. Wieczorek,
who retired from the Company in August 1999. The agreement, as amended,
provides for Mr. Wieczorek to continue to serve in the capacity as Vice
President, Secretary and Treasurer until August 25, 2000 and to receive an
annual fee of $219,000 plus reimbursement for expenses he incurs on behalf of
the Company.
PROPOSAL 2. RATIFICATION OF ARTHUR ANDERSEN LLP AS
INDEPENDENT PUBLIC ACCOUNTANTS
In accordance with the recommendations of its Audit Committee, the Board of
Directors recommends that the shareholders ratify the appointment of the firm
of Arthur Andersen LLP ("Arthur Andersen"), independent public accountants, to
audit the books, records and accounts of KeySpan and its subsidiaries for the
fiscal year ending December 31, 2000.
On September 10, 1998, the Board of Directors of KeySpan, on recommendation of
its Audit Committee, named Arthur Andersen as independent public accountants
for KeySpan's nine-month period ending December 31, 1998. On May 20, 1999, the
shareholders ratified the appointment of Arthur Andersen as independent public
accountants for the fiscal year ending December 31, 1999. Arthur Andersen were
independent public accountants for KeySpan Energy Corporation ("KSE") and The
Brooklyn Union Gas Company ("Brooklyn Union"), and Ernst & Young LLP ("Ernst &
Young") were independent public accountants for LILCO, during such
corporations' respective fiscal years prior to consummation of the transaction
involving such entities.
19
<PAGE>
During the past two fiscal years, there has been no report on the financial
statements of KSE and Brooklyn Union by Arthur Andersen or of LILCO by Ernst &
Young, which contained an adverse opinion or a disclaimer of opinion, or was
qualified or modified as to uncertainty, audit scope, or accounting
principles. During the past two fiscal years and the interim period through
September 10, 1998, there have been no disagreements with Arthur Andersen or
Ernst & Young on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which, if not resolved to
the satisfaction of Arthur Andersen or Ernst & Young, would have caused either
of such firms to make reference to the subject matter of such disagreements in
connection with its report.
Arthur Andersen representatives have direct access to the Audit Committee and
regularly attend the Committee's meetings. An Arthur Andersen representative
will attend the Annual Meeting to answer shareholder questions and will have
the opportunity to make a statement if he or she desires to do so.
The affirmative vote of a majority of the votes cast at the meeting is
required for approval of this proposal.
The Board of Directors unanimously recommends a vote FOR this proposal.
OTHER INFORMATION
Directors and Officers Liability Insurance and Indemnity
KeySpan currently has in place director and officer ("D&O") liability
insurance for the purpose of reimbursing the Company when it has indemnified
its directors and officers. D&O liability insurance also provides direct
payment to KeySpan's directors and officers under certain circumstances when
KeySpan has not previously provided indemnification. KeySpan also has
liability insurance which provides fiduciary coverage for KeySpan, its
directors, officers and employees for any alleged breach of fiduciary duty
under the Employee Retirement Income Security Act. The D&O liability and
fiduciary liability insurances were purchased from Associated Electric & Gas
Insurance Services for a one-year period commencing May 28, 1999 at a total
cost of $576,099. The Company will renew the D&O liability and fiduciary
insurances for a one year period commencing May 28, 2000 at a total cost of
$576,099.
Shareholder Rights Plan
On March 30, 1999, the Board of Directors entered into a Rights Agreement
pursuant to which one preferred stock purchase right (a "Right") per share of
Common Stock will be distributed as a dividend to shareholders of record on
the close of business on April 14, 1999. Each Right, when exercisable, will
entitle the holder thereof to purchase one one-hundredth of a share of Series
D Preferred Stock at a price of $95.00 per share. The Rights will be
exercisable only if a person or a group acquires 20% or more of the
outstanding shares of Common Stock or announces a tender offer following which
it would hold 20% or more of such outstanding Common Stock. The Rights entitle
the holders, other than the acquiring person, to purchase Common Stock having
a market value of two times the exercise price of the Right. If, following the
acquisition by a person or group of 20% or more of KeySpan's outstanding
shares of Common Stock, KeySpan were acquired in a merger or other business
combination, each Right would be exercisable for that number of the acquiring
company's shares of common stock having a market value of two times the
exercise price of the Right. Subject to the terms of the Rights Agreement,
KeySpan may redeem the Rights at one cent per Right at any time until ten days
following the occurrence of an event that causes the Rights to become
exercisable for Common Stock. The Rights expire in ten years.
The foregoing description of the Rights Agreement, and of the Rights is
qualified in its entirety by the terms of the Rights Agreement, dated March
30, 1999, by and between KeySpan and the Rights Agent, a copy of which has
been filed as an exhibit to KeySpan's Current Report on Form 8-K dated March
30, 1999.
20
<PAGE>
Deadline For Shareholder Proposals
Shareholder proposals for the 2001 Annual Meeting must be received by the
Secretary at KeySpan's principal executive office, not less than 120 calendar
days prior to the anniversary date of the release of the Company's Proxy
Statement to shareholders in connection with the 2000 Annual Meeting, to be
considered by the Company for possible inclusion in the proxy materials for
the 2001 Annual Meeting.
In addition, all shareholder proposals for the 2001 Annual Meeting must be
submitted to the Company in accordance with Section 2.7 of the Company's By-
Laws not less than 60 nor more than 90 calendar days in advance of the
anniversary date of the 2000 Annual Meeting.
Additional Information
KeySpan's Annual Report for the period ended December 31, 1999 is being mailed
to shareholders on or about the date of this Proxy Statement. KeySpan files an
Annual Report on Form 10-K with the Securities and Exchange Commission (the
"SEC") which includes additional information concerning KeySpan and its
operations. The Company's Annual Report or Annual Report on Form 10-K, except
for exhibits, will be furnished at no cost to shareholders upon written
request to The Secretary, KeySpan, One MetroTech Center, Brooklyn, New York
11201-3850.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires KeySpan's directors, executive
officers and persons who own more than ten percent (10%) of a registered class
of KeySpan's equity securities to file with the SEC initial reports of
beneficial ownership and reports of changes in beneficial ownership of Common
Stock and other equity securities of KeySpan. Executive officers, directors
and greater than ten percent (10%) shareholders are required by SEC regulation
to furnish KeySpan with copies of all Section 16(a) forms which they file.
To KeySpan's knowledge, based solely on review of information furnished to
KeySpan, reports filed through KeySpan and representations that no other
reports were required, all Section 16(a) filing requirements applicable to its
directors, executive officers and greater than ten percent (10%) beneficial
owners were complied with during the twelve-month period ended December 31,
1999, except that Messrs. George Bugliarello and James R. Jones each filed a
late report in connection with a purchase of KeySpan Common Stock during 1999.
Method and Cost of Solicitation of Proxies
KeySpan will bear the cost of soliciting proxies. In addition to the use of
the mails, proxies may be solicited personally or by telephone by KeySpan
directors, officers and employees for no additional compensation. In addition,
KeySpan will reimburse brokers, bank nominees and other institutional holders
for their reasonable out-of-pocket expenses in forwarding proxy materials to
the beneficial owners of the Company's Common Stock.
Disclosure of "Broker Non-Votes" And Abstentions
Securities and Exchange Commission rules provide that specifically designated
blank spaces are provided on the proxy card for shareholders to mark if they
wish either to withhold authority to vote for one or more nominees for
director or to abstain on one or more of the proposals. Votes withheld in
connection with the election of one or more of the nominees for director will
not be counted as votes cast for or against such individuals. With respect to
the proposal relating to selection of auditors, abstentions are not counted in
determining the number of votes cast in connection with these proposals, since
New York State law requires a majority of only those votes cast "for" or
"against" approval, while broker non-votes are treated as shares not entitled
to vote, thus giving both abstentions and non-votes no effect. All abstentions
and broker non-votes are counted towards the establishment of a quorum.
21
<PAGE>
Confidential Voting
KeySpan has adopted a policy to the effect that all proxy (voting instruction)
cards, ballots and vote tabulations which identify the particular vote of a
shareholder are to be kept secret from KeySpan, its directors, officers and
employees. Accordingly, proxy cards are returned in envelopes addressed to the
tabulator, EquiServe, which receives and tabulates the proxies and is
independent of KeySpan. The final tabulation is inspected by inspectors of
election who also are independent of KeySpan, its directors, officers and
employees. The identity and vote of any shareholder shall not be disclosed to
KeySpan, its directors, officers or employees, nor to any third party except
(i) to allow the independent inspectors of election to certify the results of
the vote to KeySpan, its directors, officers and employees; (ii) as necessary
to meet applicable legal requirements and to assert or defend claims for or
against KeySpan; (iii) in the event of a proxy solicitation based on an
opposition proxy statement filed, or required to be filed, with the Securities
and Exchange Commission; or (iv) in the event a shareholder has made a written
comment on such form of proxy.
Other Matters
As of the date of this Proxy Statement, KeySpan knows of no business that will
be presented for consideration at the Annual Meeting of Shareholders other
than the proposals discussed above. If any matter is properly brought before
the meeting for action by the shareholders, proxies in the form returned to
KeySpan will be voted in accordance with the recommendation of the Board of
Directors or, in the absence of such a recommendation, in accordance with the
judgment of the proxy holder.
By Order of the Board of Directors
/s/ Robert B. Catell
Robert B. Catell
Chairman and Chief Executive Officer
22
<PAGE>
One MetroTech Center
KEYSPAN [LOGO] Brooklyn, New York 11201-3850
KEYSPAN CORPORATION
d/b/a KeySpan Energy
APPENDIX A
<PAGE>
WHEREAS, the Corporation has entered into a Stipulation and Agreement of
Settlement (the "Settlement Agreement") pursuant to which it has agreed to
settle shareholder class and derivative litigation relating to certain
payments by LILCO to its former officers in connection with the transactions
involving the Corporation, LILCO and the Long Island Power Authority
consummated in May 1998.
WHEREAS, the Corporation has entered into an agreement, dated as of March 18,
1999, with Eliot Spitzer, Attorney General of the State of New York (the
"Attorney General") settling certain issues raised by the Attorney General in
connection with an investigation of the aforementioned payments by LILCO to
its former officers (the "Attorney General Settlement").
WHEREAS, pursuant to the Settlement Agreement and the Attorney General
Settlement, the Corporation has agreed to adhere to certain corporate
governance and executive compensation policies and procedures.
WHEREAS, the Board wishes to adopt resolutions implementing such policies and
procedures, effective upon the issuance of final, non-appealable orders by the
applicable State and Federal courts approving the Settlement (the "Settlement
Approvals").
NOW, THEREFORE, IT IS
RESOLVED, That, effective upon the issuance of all required Settlement
Approvals, the Board of Directors of the Corporation shall adhere to the
following corporate governance policies:
(a) at least two-thirds of the Board shall be "Independent Directors" as the
term is defined below;
(b) to be deemed an "Independent Director" in any calendar year, a director
must satisfy the following qualifications:
(i) the director shall not have been employed by the Corporation or its
subsidiaries, affiliates or predecessors in interest in an executive capacity
within the last three (3) calendar years;
(ii) the director a) shall not have been, and shall not be employed by an
organization that is an adviser or consultant to the Corporation, or its
subsidiaries, affiliates or predecessors in interest, and b) within the last
three (3) years shall not have had, and shall not be affiliated with a company
which has had, any business relationship with the Corporation, its
subsidiaries, affiliates, or predecessors in interest, where the advisory,
consulting or business relationship in a) or b) above is one for which
disclosure is required pursuant to Item 404 of Regulation S-K of the
Securities and Exchange Commission (or any successor to such rule);
(iii) the director is not a member of the immediate family of any person
described in ii) above; and,
(iv) the director does not have any financial relationship, other than as a
shareholder of the Corporation, that could materially affect the exercise of
his or her judgment as a director;
(c) the Independent Directors of the Board shall meet at least once a year
without the Corporation's Chief Executive Officer or any other management
director present, to recommend any action as the Independent Directors shall
deem advisable consistent with the powers of the full Board;
(d) the Independent Directors shall have access to any and all senior
management of the Corporation at the discretion of the Independent Directors;
RESOLVED, That, effective upon the issuance of all required Settlement
Approvals, the Audit Committee of the Board of Directors shall consist of not
less than six (6) Independent Directors, as that term is defined above, and
shall meet at least semi-annually;
RESOLVED, That, effective upon the issuance of all required Settlement
Approvals, the Corporation shall adhere to the following compensation
policies:
(a) compensation arrangements shall emphasize pay for performance and
encourage retention of those employees who enhance the Corporation's
performance;
A-1
<PAGE>
(b) compensation arrangements shall maintain a reasonable balance between base
salary on the one hand, and long-term and annual compensation on the other;
(c) in determining executive compensation, compensation arrangements at peer
energy companies shall be taken into consideration;
(d) cash incentive compensation plans for senior executives shall link
incentive compensation to achievement of financial goals set in advance by the
Compensation and Nominating Committee;
(e) the Compensation and Nominating Committee shall consist of not less than
six (6) Independent Directors, as that term is defined above;
(f) the Compensation and Nominating Committee shall meet at least semi-
annually;
(g) the Compensation and Nominating Committee shall set annual and long-term
goals for the Chief Executive Officer and other executives and evaluate their
performance against such goals and the performance of the Corporation's peer
energy companies;
(h) executive compensation packages, and any material alterations thereto,
shall be subject to approval by the Compensation and Nominating Committee and
the Board, at regularly scheduled meetings;
(i) no severance shall be paid to any executive upon the occurrence of any
change in control in which such executive retains an equivalent executive
position at the Corporation, its subsidiaries, affiliates, or successors in
interest following such change of control (provided that this provision shall
not preclude the Corporation from entering into short-term (one year or less)
consulting arrangements with former executives for the purposes of effecting a
transition with regard to the position vacated by the executive receiving
severance);
(j) executive compensation arrangements shall be designed to promote
productive tenure rather than reward an executive for leaving;
(k) the Compensation and Nominating Committee shall review the range of
possible payouts under the terms of executive officers' compensation/change in
control agreements and consider same before a package is awarded;
(l) the Compensation and Nominating Committee shall compile detailed
information to be provided to shareholders in the Corporation's Proxy
Statement explaining the terms of all executive compensation agreements;
(m) if an executive officer of the Corporation attends a meeting of the
Compensation and Nominating Committee, the purpose of such attendance will be
stated in detail in the minutes of the Committee meeting;
(n) any compensation agreement which may result in compensation to an
executive of $10,000,000 or more in any year, excluding (i) any payments made
pursuant to qualified Corporation pension or benefit plans in accordance with
the terms of such plans; (ii) any payment pursuant to non-qualified
Corporation pension or benefit plans adopted prior to the effective date of
the Settlement in accordance with the terms of such plans; and (iii) the value
of stock options and restricted stock granted prior to the effective date of
the Settlement, shall be subject to an affirmative vote of the majority of the
shareholders casting ballots at the next annual meeting after the date of the
compensation agreement (or the next annual meeting after any amendment to the
agreement or change in circumstances which would make the agreement subject to
this provision), with such advance disclosure to the shareholders as is
required by the rules of the Securities and Exchange Commission in these
circumstances, this provision (n) shall not act to invalidate any compensation
agreement, but shall limit payments thereunder to a maximum of $10,000,000;
(o) the Compensation and Nominating Committee shall have standing
authorization, on their own decision, to retain legal and/or other advisors of
their choice, which advisors shall report directly to the Committee;
RESOLVED, That the policies and procedures set forth in each of the foregoing
resolutions shall not be amended or rescinded by either the Board or either
the Audit or Compensation and Nominating Committee, as the case may be, until
after January 1, 2002;
A-2
<PAGE>
RESOLVED, That the proper officers of the Corporation are hereby authorized
and directed to cause the corporate governance and executive compensation
policies and procedures described herein to be set forth in the next Proxy
Statement distributed by the Corporation to its shareholders;
RESOLVED, That the proper officers of the Corporation are hereby authorized
and directed to provide any and all notices to the Attorney General, as
required under paragraph 5 of the Attorney General Settlement, concerning the
satisfaction of the Corporation's obligations under the Attorney General
Settlement and the Settlement Agreement, including but not limited to the
implementation of the policies and procedures set forth in the foregoing
resolutions;
RESOLVED, That the proper officers of the Corporation hereby are, and each of
them with full authority to act without the others hereby is, authorized,
empowered and directed, in the name and on behalf of the Corporation, to do
and to perform, and to cause to be done and performed, any and all such acts
and things, and to execute and deliver any and all such documents, instruments
and agreements as they may deem necessary, convenient or appropriate in
connection with and in order to carry out and effectuate the intent of the
foregoing resolutions, the Attorney General Settlement or the Settlement
Agreement, the taking of any such action or the delivery of any such document,
instrument or agreement by such officer or officers to be conclusive evidence
of the approval thereof; and
FURTHER RESOLVED, That each of the Chairman, the President, the General
Counsel, any Vice President, the Treasurer and the Secretary of the
Corporation shall be considered a proper officer of the Corporation for the
purposes of each of the foregoing resolutions.
A-3
<PAGE>
PROXY
Keyspan Corporation d/b/a KeySpan Energy Proxy/Voting Instruction Card
This proxy is solicited on behalf of the Board of Directors of KeySpan
Corporation d/b/a KeySpan Energy for the Annual Meeting of Shareholders on May
11,2000
The undersigned appoints Richard N. Daniel and Alan H. Fishman, and each of
them, with full power of substitution in each, the proxies of the undersigned to
represent the undersigned and vote all shares of KeySpan Corporation d/b/a
KeySpan Energy Common Stock which the undersigned may be entitled to vote at the
Annual Meeting of Shareholders to be held on May 11, 2000, and at any
adjournment or postponement thereof, as indicated on the reverse side. In their
discretion, the proxies are authorized to vote upon such other business as may
properly come before the meeting, including, without limitation, any motion to
adjourn the meeting to another time or place (including for the purpose of
soliciting additional proxies).
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is given, this proxy will be
voted FOR all proposals and as said proxies deem advisable on such other matters
as may properly come before the meeting.
Comments:________________________________
_________________________________________
_________________________________________
If you have written in the above space, please mark the
comments notification box on the reverse side.
Keyspan Corporation d/b/a KeySpan Energy
P.O. Box 11278
New York, N.Y. 10203-0278
[SEE REVERSE SIDE]
(Continued, and to be signed and dated on the reverse side.)
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/\ Fold and Detach Here /\
Admission Ticket
Keyspan Corporation
d/b/a KeySpan Energy
Annual Meeting of Shareholders
may 11, 2000 at 10:00 A.M.
Tilles Center For the Performing Arts
C.W. Post Campus
Long Island University
720 Northern Boulevard
Greenvale, New York 11548
Directions
By Car:
From New York City:
Queens Midtown Tunnel to Route 495 East, Long Island Expressway. Exit 39,
GlenCove Road. Turn left at light to travel north on Glen Cove Road.
Approximately two (2) miles, right on Route 25A (Northern Boulevard). There is a
Pathmark Supermarket on the right at this intersection. Right turn at fifth
traffic light. Entrance to C.W. Post Campus. Tilles Center is the large blue and
silver building about 100 yards in and to your left.
From Eastern Long Island:
Long Island Expressway West. Exit 41N, routes 106 and 107 North. Bear left onto
Route 107 North. Approximately three (3) miles, left on Route 25A (Northern
Boulevard) West. There is an Exxon Gas Station on your right at this
intersection. Left turn at second traffic light. C.W. Post West Gate. As above
to Tilles Center.
By Public Transportation from New York City:
Long Island Railroad from Pennsylvania Station to Greenvale (Oyster Bay Line).
Cab from Greenvale Station to C.W. Post (Approximately 10 minutes, cost $5.50)
OR
Long Island Railroad to Hicksville (Huntington Line) or to Manhasset (Port
Washington Line). Cabs from either station take about 15 minutes and cost about
$10.00.
The N20 Bus (MSBA) is available at the Hicksville Station and on Northern
Boulevard in Manhasset (three blocks South of the train station). This bus stops
on the C.W. Post Campus and runs roughly hourly until about 9:30 p.m. Allow at
least 30 minutes from either station.
<PAGE>
Please mark your
X votes as in this
example.
The shares represented by this proxy when signed and returned will be voted as
directed by the shareholder. If no direction is given, such shares will be voted
FOR all proposals and as said Proxies deem advisable on such other matters as
may properly come before the meeting.
The Board of Directors recommends a vote "FOR" all proposals.
1. Election of FOR WITHHELD
Directors [ ] [ ]
For, except vote withheld from the following nominee(s):
________________________________________________________
Nominees:
01 Lilyan H. Affinito
02 George Bugliarello
03 Robert B. Catell
04 Howard R. Curd
05 Richard N. Daniel
06 Donald H. Elliott
07 Alan H. Fishman
08 James R. Jones
09 Stephen W. McKessy
10 Edward D. Miller
11 Basil A. Paterson
12 James Q. Riordan
13 Vincent Tese
2. Ratification of Arthur Andersen LLP as independent FOR AGAINST ABSTAIN
public accountants. I have included comments, or [ ] [ ] [ ]
have included a change of address. I already
receive an Annual Report and do not wish to receive
one for this account.
I have included comments, or have included a change of address.
I already receive an Annual Report and do not wish to receive one for this
account.
I plan to attend the Annual Meeting.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, ad-ministrator, trustee or guardian, please give
full title as such. If more than one trustee, all should sign.
______________________________________
SIGNATURE(S) DATE
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/\ Fold and Detach Here /\
[KEYSPAN LOGO]
PROXY VOTING INSTRUCTION CARD
Your vote is important. Casting your vote in one of the three ways described on
this instruction card votes all common shares of KeySpan Corporation that you
are entitled to vote and gives voting instructions for any common shares held on
your behalf in the KeySpan Energy 401(k) Plan.
Please consider the issues discussed in the proxy statement and cast your vote
by:
[GRAPHIC] Accessing the World Wide Web site http://www.eproxyvote.com/kse to
vote via the Internet. You can also register at this site to access
future proxy materials electronically.
[GRAPHIC] Using a touch-tone telephone to vote by phone toll free from the U.S.
or Canada. Simply dial 1-877-779-8683 and follow the instructions.
For shareholders from other locations, please call 1-201-536-8073.
When you are finished voting, your vote will be confirmed and the
call will end.
[GRAPHIC] Completing, dating, signing and mailing the proxy card in the
postage-paid envelope included with the proxy statement or sending it
to KeySpan Corporation, P.O. Box 8535, Edison, NJ 08818-9402
You can vote by phone or via the Internet anytime prior to May 11, 2000. You
will need the control number printed at the top of this instruction card to vote
by phone or via the Internet. If you do so, you do not need to mail in your
proxy card.
