<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
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
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Central Hudson Gas & Electric Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Merrill-Burrups
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
284 SOUTH AVENUE
POUGHKEEPSIE, NEW YORK 12601-4879
February 23, 1996
To the Holders of Common Stock:
The annual meeting of shareholders will be held at the Corporation's office
in Poughkeepsie, N.Y. on April 2, 1996. A formal Notice of the Annual Meeting
and Proxy Statement are attached hereto.
We request that you sign, date, and mail the enclosed proxy card promptly.
Prompt return of your voted proxy will reduce the cost of further mailings. You
may revoke your voted proxy at any time prior to the meeting or vote in person
if you attend the meeting.
Last year, proxies were received from over 26,000 shareholders representing
85% of the outstanding stock. We hope that an equally fine response will be
forthcoming this year.
You are cordially invited to attend the annual meeting in person. It is
always a pleasure for me and the other members of the Board of Directors to meet
with our shareholders. We look forward to greeting as many of you as possible at
the meeting.
John E. Mack, III
CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
284 SOUTH AVENUE
POUGHKEEPSIE, NEW YORK 12601-4879
------------------------
NOTICE OF ANNUAL MEETING
------------------------
February 23, 1996
To the Holders of Common Stock:
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of
Central Hudson Gas & Electric Corporation will be held at the office of the
Corporation, 284 South Avenue, in the City of Poughkeepsie, Dutchess County, New
York, on TUESDAY, APRIL 2, 1996, AT 10:30 A.M., for the following purposes:
(1)To elect directors for the ensuing year;
(2)To ratify the appointment of Price Waterhouse LLP as independent
accountants for the year 1996; and
(3)To take action upon any other matters that may properly come before the
meeting.
By Order of the Board of Directors,
Ellen Ahearn
SECRETARY
<PAGE>
------------------------
PROXY STATEMENT
------------------------
The enclosed proxy is being solicited by the Board of Directors of the
Corporation for use in connection with the annual meeting of shareholders to be
held on April 2, 1996. This proxy statement and enclosed proxy are first being
sent to shareholders on or about February 23, 1996. The mailing address of the
principal executive office of the Corporation is 284 South Avenue, Poughkeepsie,
New York 12601-4879. The cost of preparing, printing and mailing the notice of
meeting, proxy, proxy statement and annual report will be borne by the
Corporation. Proxy solicitation other than by use of the mail may be made by
regular employees of the Corporation by telephone and personal solicitation.
Banks, brokerage houses, custodians, nominees and fiduciaries are being
requested to forward the soliciting material to their principals and to obtain
authorization for the execution of proxies, and may be reimbursed for their
out-of-pocket expenses incurred in that connection. In addition, the Corporation
has retained D.F. King & Co., Inc. of New York, New York, a proxy solicitation
organization, to assist in the solicitation of proxies. The fee of such
organization in connection therewith is estimated to be $7,000, plus reasonable
out-of-pocket expenses. Any shareholder giving the enclosed proxy has the right
to revoke it at any time before it is voted. To revoke a proxy, the shareholder
must file with the Secretary of the Corporation either a written revocation or a
duly executed proxy bearing a later date.
The record of shareholders entitled to notice of, and to vote at, the annual
meeting was taken at the close of business on February 14, 1996. At that date,
the Corporation had outstanding 17,546,834 shares of Common Stock ($5.00 par
value) of the Corporation ("Common Stock"). Each share of Common Stock is
entitled to one vote. No other class of securities is entitled to vote at this
meeting.
The proxies given pursuant to this solicitation will be voted at the meeting
or any adjournment thereof. Abstentions and broker non-votes are voted neither
"for" nor "against," and have no effect on the vote, but are counted in the
determination of a quorum.
ELECTION OF DIRECTORS
Nine directors are to be elected by a plurality of the votes cast at the
annual meeting of shareholders by holders of shares entitled to vote. Such
directors shall hold office until the next annual meeting of shareholders or
until their successors are duly elected and qualify. The Board of Directors
proposes the following nominees, all of whom are now directors of the
Corporation, and recommends a vote in favor thereof:
<TABLE>
<CAPTION>
PERIOD OF
PRINCIPAL OCCUPATION OR EMPLOYMENT AND SERVICE AS
POSITIONS AND OFFICES WITH THE BUSINESS EXPERIENCE DIRECTOR
NAME AND AGE (1) CORPORATION (1) DURING PAST FIVE YEARS (1) BEGAN
- ---------------------- -------------------------------------------- ------------------------------- -------------
<S> <C> <C> <C>
L. Wallace Cross Retired from the Corporation as Executive Present position 1990
66 Vice President and Chief Financial Officer;
Chairman of the Board of Directors,
Christian Herald Association, Inc., a
not-for-profit charitable organization
Poughkeepsie, N.Y.
Jack Effron President of Efco Products, a bakery Present positions 1987
62 ingredients corporation; member of the St.
Francis Health Care Foundation; Chairman of
the Chief Executive's Network for
Manufacturing of the Council of Industry of
Southeastern New York; Chairman of
Committee on Compensation and Succession
Poughkeepsie, N.Y.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PERIOD OF
PRINCIPAL OCCUPATION OR EMPLOYMENT AND SERVICE AS
POSITIONS AND OFFICES WITH THE BUSINESS EXPERIENCE DIRECTOR
NAME AND AGE (1) CORPORATION (1) DURING PAST FIVE YEARS (1) BEGAN
- ---------------------- -------------------------------------------- ------------------------------- -------------
<S> <C> <C> <C>
Frances D. Fergusson President and Professor of Art, Vassar Present positions 1993
51 College; Member, Board of Trustees of the
Ford Foundation and Chair of its Education
and Culture Committee; Trustee of the Mayo
Foundation; Trustee of Historic Hudson;
Director, Marine Midland Bank, N.A.;
Director, National Association of
Independent Colleges and Universities
Poughkeepsie, N.Y.
Heinz K. Fridrich Courtesy Professor, University of Florida at Present position, except Vice 1988
62 Gainesville; Chairman of Committee on Audit President -- Manufacturing,
Fernandina Beach, FL. International Business
Machines Corporation, April
1991 - September 1993; former
Member, Board of Trustees of
Mount St. Mary College,
1991-1993
Edward F. X. Gallagher Owner of Gallagher Transportation Services, Present position 1984
62 a group of companies engaged in the sale
and leasing of commercial motor vehicles,
the distribution of wholesale automotive
parts and the operation, under the trade
name of Leprechaun Lines and Tours, of
several bus companies
Newburgh, N.Y.
Paul J. Ganci President and Chief Operating Officer of the Present position 1989
57 Corporation
Poughkeepsie, N.Y.
Charles LaForge President of Wayfarer Inns and owner of the Present positions 1987
65 Beekman Arms in Rhinebeck, N.Y.; Trustee of
Rondout Savings Bank in Kingston, N.Y.;
Trustee emeritus of the Culinary Institute
of America in Poughkeepsie, N.Y.
Rhinebeck, N.Y.
John E. Mack, III Chairman of the Board and Chief Executive Present positions 1981
61 Officer of the Corporation; Chairman of the
Executive and Retirement Committees
Poughkeepsie, N.Y.
Edward P. Swyer President of the Swyer Companies, a real Present positions, except 1990
46 estate firm engaged in the construction, Managing Partner of WTZA-TV
development and management of commercial Associates, a UHF television
properties in the Capital District Region station, 1991-1993
Albany, N.Y.
</TABLE>
- ------------------------------
(1) Based on information furnished to the Corporation by the nominees as of
December 31, 1995.
IT IS THE INTENTION OF THE PERSONS NAMED IN THE PROXY FORM TO VOTE SUCH
PROXIES FOR THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED ABOVE. ALTHOUGH THE
BOARD OF DIRECTORS DOES NOT CONTEMPLATE THAT ANY OF THE NOMINEES WILL BE UNABLE
TO SERVE, SHOULD SUCH A SITUATION ARISE PRIOR TO THE MEETING, THE PROXIES WILL
BE VOTED IN ACCORDANCE WITH THE BEST JUDGMENT OF THE PERSONS ACTING THEREUNDER.
3
<PAGE>
SECURITY OWNERSHIP
The following table lists the number of shares of Common Stock beneficially
owned by all the directors, and nominees for election as directors, each
executive officer listed in the table under the caption "Executive Compensation"
and by all directors and executive officers of the Corporation as a group:
<TABLE>
<CAPTION>
NO. OF % OF
NAME SHARES (1) CLASS (2)
- ------------------------------------------------------------------- --------------- ---------------
<S> <C> <C>
L. Wallace Cross................................................... 10,835 less than 1%
Jack Effron........................................................ 1,800 less than 1%
Richard H. Eyman................................................... 2,060(3)(4) less than 1%
Frances D. Fergusson............................................... 975 less than 1%
Heinz K. Fridrich.................................................. 2,020 less than 1%
Edward F. X. Gallagher............................................. 1,943 less than 1%
Paul J. Ganci...................................................... 7,289(3) less than 1%
Charles LaForge.................................................... 2,902 less than 1%
John E. Mack, III.................................................. 10,833(3) less than 1%
Howard C. St. John................................................. 4,000(4) less than 1%
Edward P. Swyer.................................................... 4,900(5) less than 1%
Joseph J. DeVirgilio, Jr........................................... 1,320 less than 1%
Carl E. Meyer...................................................... 1,188 less than 1%
Allan R. Page...................................................... 2,230 less than 1%
All directors and executive officers as a group (21 persons)....... 59,515 less than 1%
</TABLE>
- ------------------------
(1) Based on information furnished to the Corporation by the directors and
executive officers as of December 31, 1995. No other equity securities are
owned beneficially by any such directors and officers, except that Mr. St.
John owns 100 shares of the Corporation's 4 1/2% Cumulative Preferred Stock
and Mrs. St. John owns 100 shares of the Corporation's 7.72% Cumulative
Preferred Stock. Such shares owned by Mr. and Mrs. St. John represent in the
aggregate less than 1% of the total of the shares of Cumulative Preferred
Stock outstanding. Said 100 shares of 7.72% Cumulative Preferred Stock owned
by Mrs. St. John are considered to be beneficially owned by Mr. St. John
only for the purpose of this proxy statement and he disclaims any beneficial
interest in such shares for all other purposes. (Note: The Corporation
redeemed, on January 1, 1996, its 7.72% Series of Cumulative Preferred
Stock.)
(2) The percentage ownership calculation for each owner has been made on the
basis that there are outstanding 17,546,834 shares of Common Stock on the
record date.
(3) Includes shares owned by the respective spouses of the named individuals as
follows: Mrs. Mack -- 725 shares; Mrs. Ganci -- 1,294 shares; and Mrs. Eyman
-- 100 shares. The shares owned by Mrs. Mack, Mrs. Ganci and Mrs. Eyman are
considered to be beneficially owned by Mr. Mack, Mr. Ganci and Mr. Eyman,
respectively, only for the purpose of this proxy statement and the
respective named individuals disclaim any beneficial interest in such shares
for all other purposes.
(4) Messrs. Eyman and St. John are not standing for reelection to the
Corporation's Board of Directors.
(5) Includes 1,900 shares owned by a trust for the benefit of Mr. Swyer's
sisters, under which trust Mr. Swyer is a co-trustee with power of
investment. Said shares held in trust are considered to be beneficially
owned by Mr. Swyer only for the purpose of this proxy statement and he
disclaims any beneficial interest in such shares for all other purposes.
4
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and directors and persons who own more than ten percent
of a registered class of the Corporation's equity securities ("Reporting
Persons") to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission ("SEC") and the New York
Stock Exchange. Such Reporting Persons are required by SEC regulations to
furnish the Corporation with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms furnished to the Corporation and
written representations from the Corporation's officers and directors, all
requisite filings were made in 1995, except that Mr. Heinz K. Fridrich, a
director, inadvertently failed to file a timely report with the SEC as to the
acquisition of 419 shares of Common Stock. A report of such acquisition was
filed by Mr. Fridrich with the SEC.
BOARD OF DIRECTORS AND COMMITTEES
MEETINGS AND ATTENDANCE
During 1995, there were 12 meetings of the Board of Directors. All directors
attended at least 75% of the aggregate of the total number of Board meetings and
meetings of Committees of the Board on which they served. The average attendance
at all such meetings during 1995 was 95%.
The five standing Committees of the Board of Directors are the Committee on
Audit, the Committee on Compensation and Succession, the Executive Committee,
the Committee on Finance and the Retirement Committee. Information with respect
to the Committee on Audit and the Committee on Compensation and Succession is
set forth below.
COMMITTEE ON AUDIT
The members of this Committee are Messrs. Fridrich (Chairman), Cross, Eyman
and St. John. The Committee had three meetings during 1995, which were attended
by representatives of the Corporation's independent accountants, Price
Waterhouse LLP. The Committee examines the adequacy of the Corporation's
internal audit activities, reviews the scope of the audit by Price Waterhouse
LLP and related matters pertaining to the examination of the financial
statements, reviews the nature and extent of any non-audit services provided by
the Corporation's independent accountants, consults at least three times a year
with them and makes recommendations to the Board of Directors with respect to
the foregoing matters as well as with respect to the appointment of the
Corporation's independent accountants.
COMMITTEE ON COMPENSATION AND SUCCESSION/INTERLOCKS AND INSIDER PARTICIPATION
The members of this Committee ("Compensation Committee") are Messrs. Effron
(Chairman), Eyman and Swyer and Dr. Fergusson. The Compensation Committee had
three meetings during 1995. The Compensation Committee considers and recommends
to the Board of Directors the compensation (and special terms, if any, of
employment) of directors, officers of the Board of Directors and the salaries of
officers of the Corporation. The Compensation Committee also considers and
recommends to the Board of Directors the candidates to be nominated for election
to the Board and candidates for appointment by the Board as officers of the
Corporation. The Compensation Committee is charged with receiving
recommendations of nominees by shareholders for election of the Board of
Directors and reviewing and comparing the qualifications of such nominees with
those of other potential nominees. Any shareholder desiring to submit the name
of a nominee should send it, together with a statement of the candidate's
qualifications, to the Committee on Compensation and Succession, c/o the
Secretary, Central Hudson Gas & Electric Corporation, 284 South Avenue,
Poughkeepsie, New York 12601-4879.
No Compensation Committee interlock relationship existed in 1995.
REMUNERATION OF DIRECTORS AND OFFICERS OF THE BOARD AND RELATED MATTERS
Each non-employee member of the Board of Directors ("Outside Directors")
(Messrs. Mack and Ganci are employee-directors), receives an annual retainer of
$14,000, $700 for attendance at each
5
<PAGE>
meeting of the Board and $600 for attendance at each meeting of any committee of
the Board of which such director is a member if such meeting is held on the same
day as a meeting of the Board, and $700 for such committee meeting if held on a
day other than that on which a Board meeting is held. Chairpersons of Committees
of the Board received additional annual compensation in 1995 as follows: Mr. St.
John, as Chairman of the Committee on Finance -- $5,000; Mr. Effron, as Chairman
of the Compensation Committee -- $2,500; Mr. Fridrich, as Chairman of the
Committee on Audit for nine months of 1995 -- $1,875; and Mr. Eyman, as Chairman
of the Committee on Audit for three months of 1995 -- $625.
DIRECTORS' DEFERRED COMPENSATION PLAN
The Corporation's Directors' Deferred Compensation Plan applies to Outside
Directors of the Corporation, and permits a director to elect at any time or
from time to time to defer all or part of such director's compensation for
services thereafter rendered to the Corporation. For purposes of such Plan,
compensation is defined to include the amount of money to be paid to the
director for serving as a member of the Board of Directors and any committee of
the Board, for serving as an officer of the Board of Directors and any committee
of the Board and for any other services rendered individually by agreement with
the Corporation. A director's compensation deferred in accordance with such Plan
is paid to said director (together with an interest equivalent computed by
applying monthly a rolling average of the United States Treasury Bill rate to
the amount of compensation then deferred from the time the compensation would
ordinarily have been paid until the time it is actually paid) at such time as
the director ceases being a member of the Board of Directors or at such other
time after ceasing to be a director as the director may specify when making the
original election to defer compensation. The commencement of such pay-out
period, however, must be at least one year after the effective date of such
election.
STOCK PLAN FOR OUTSIDE DIRECTORS
In response to suggestions by shareholders that at least a portion of
compensation of the Outside Directors of the Corporation be made in the form of
Common Stock, the Board of Directors adopted, effective January 1, 1996, a
"Stock Plan for Outside Directors" ("Stock Plan"). The Stock Plan is not only
responsive to shareholders' interests, but will also continue to enable the
Corporation to retain and attract qualified Outside Directors.
Pursuant to the terms of the Stock Plan, for each full quarterly period of
each year of service, an Outside Director is credited with 25 Share Equivalents
(a Share Equivalent being equal to one share of Common Stock). Generally, Share
Equivalents credited to an Outside Director are distributed quarterly to the
participant in the form of shares of Common Stock. In addition, when an Outside
Director ceases to be a director for any reason, other than removal for cause,
that director will receive, quarterly, 25 shares of Common Stock for each full
quarterly period (but not beyond 40 such periods) during which that director
served as an Outside Director, including periods prior to January 1, 1996;
however, no such distribution will be made after that director's death.
6
<PAGE>
EXECUTIVE COMPENSATION
The Summary Compensation Table set forth below includes compensation
information on the Chairman of the Board and Chief Executive Officer of the
Corporation and each of the Corporation's four most highly compensated executive
officers whose salary in 1995 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY (1) BONUS COMPENSATION (2)
- ------------------------------------------------- --------- ----------- ------------- -----------------
<S> <C> <C> <C> <C>
John E. Mack, III, Chairman of the Board and 1995 $ 321,750 $ 30,264(3) $ 4,620
Chief Executive Officer 1994 312,000 12,480(3) 4,500
1993 307,750 0 4,497
Paul J. Ganci, President and Chief Operating 1995 253,750 19,500(3) 4,620
Officer 1994 247,500 10,000 4,500
1993 236,250 0 4,497
Carl E. Meyer, Vice President -- Customer 1995 164,000 1,298 4,500
Services 1994 153,000 0 3,750
1993 140,125 0 3,503
Allan R. Page, Vice President -- Corporate 1995 145,250 1,192 4,620
Services 1994 137,750 0 4,132
1993 128,750 0 3,862
Joseph J. DeVirgilio, Jr., Vice President -- 1995 141,500 1,169 4,620
Human Resources & Administration 1994 135,125 0 4,054
1993 127,375 0 3,821
</TABLE>
- ------------------------
(1) This base salary amount includes amounts deferred pursuant to the
Corporation's (i) Flexible Benefits Plan, which Plan is established pursuant
to Section 125 of the Internal Revenue Code of 1986, as amended ("Code")
which permits those electing to participate to defer salary, within
specified limits, to be applied to qualified medical and/or child care
benefit payments, and (ii) Savings Incentive Plan ("SIP"), a "defined
contribution" plan which meets the requirements of the Code, including Code
Section 401(k), which, among other things, permits, within limitations,
participants to tax-defer base salary, and, within limits, provides for
Corporation contributions to participants.
(2) These are amounts contributed by the Corporation for the benefit of the
named individual under the SIP.
(3) Compensation paid pursuant to the terms of the Corporation's Executive
Incentive Compensation Plan ("Incentive Plan"), which terms are more fully
described below under the caption "Report on Executive Compensation".
RETIREMENT INCOME PLAN
The Corporation's Retirement Income Plan ("Retirement Plan") is a "defined
benefit" plan, which meets the requirements of the Code, and applies to all
employees of the Corporation. In 1995, there were no contributions made to the
Retirement Plan as a result of its full-funding status for Federal income tax
purposes. The Retirement Plan provides for retirement benefits related to the
participant's annual base salary for each year of eligible employment.
Retirement Plan benefits depend upon length of service, age at retirement and
earnings during years of participation in the Retirement Plan and any
predecessor plans. A participant's benefits under the Retirement Plan are
determined as the accumulation, over that participant's career, of a percentage
of each year's base salary. For periods on and after October 1, 1994, the
percentage is 2% of base salary, except that for years in which the participant
is over 50 years of age such percentage is increased to 2.5%. The Retirement
Plan also provides a benefit for service prior to October 1, 1994 based on a
percentage of a
7
<PAGE>
participant's average earnings at October 1, 1994 (being 50% of each of the base
salaries at October 1, 1991 and 1994 and 100% of each of the base salaries at
October 1, 1992 and 1993) and the number of years of service while a member of
the Retirement Plan prior to October 1, 1994, all subject to certain
limitations. A cash balance account benefit provided by the Corporation is also
available on retirement under the Retirement Plan, which benefit, generally,
provides for a credit to those participants in the Retirement Plan, on January
1, 1987, of 10% of their base salary on that date and for a further credit to
those participants in the Retirement Plan, on September 30, 1991, of 5% of their
base salary on that date, with, in both cases, annual interest earned thereon.
While the amount of the contribution payment or accrual with respect to a
specified person is not and cannot readily be separately or individually
calculated by the regular actuaries for the Retirement Plan, estimated annual
benefits under the Retirement Plan upon retirement at age 65 for the individuals
listed in the table under the above caption "Executive Compensation", assuming
continuation of present annual salaries and giving effect to applicable benefit
limitations in the Code, are as follows: Mr. Mack -- $120,000; Mr. Ganci --
$120,000; Mr. Meyer -- $116,494; Mr. Page -- $109,333 and Mr. DeVirgilio --
$114,558.
RETIREMENT BENEFIT RESTORATION PLAN
Effective May 1, 1993, the Corporation adopted an unfunded, uninsured
pension benefit plan for a select group of highly compensated management
employees called the Retirement Benefit Restoration Plan ("RBRP"). The RBRP
provides an annual retirement benefit to those participants in the Retirement
Plan who hold the following offices with the Corporation: Chairman of the Board
and Chief Executive Officer, President and Chief Operating Officer, Vice
President (including all levels thereof), Secretary, Treasurer, Controller, and
Assistant Vice President. Such benefit is equal to the difference between (i)
that received under the Retirement Plan, giving effect to applicable salary and
benefit limitations under the Code, and (ii) that which would have been received
under the Retirement Plan, without giving effect to such limitations under the
Code. None of the individuals listed in the table under the above caption
"Executive Compensation" have a current salary level which, if continued to
retirement at age 65, would provide a benefit under the RBRP, except for Messrs.
Mack, Ganci and Meyer, whose estimated annual benefits under the RBRP upon
retirement at age 65, assuming the continuation of their present salaries, are
$85,389, $56,947 and $7,417 respectively.
EXECUTIVE DEFERRED COMPENSATION PLAN
The Corporation's Executive Deferred Compensation Plan covers a select group
of highly compensated management employees as an incentive for them to remain
with the Corporation. Under that Plan, an annual benefit is payable, commencing
on retirement, to eligible participants (who retire at age 60 or older and with
10 or more years of service) for 10 years of the following percentage of annual
base compensation at retirement: 60 to 63 -- 10%; 63 to 65 -- 15%; 65 or over --
20%. In view of changes in the Code which became effective January 1, 1994, the
Plan was amended prior thereto so that eligible participants, who reached age 55
at December 31, 1993, are considered to have accrued benefits under this Plan as
if they were age 60 and had 10 years of service with the Corporation at December
31, 1993. No amounts were paid under such Plan for the individuals named in the
table under the above caption "Executive Compensation" for the year 1995.
Estimated annual benefits under this Plan upon retirement at age 65 for such
named individuals, assuming continuation of their present annual salaries, are
as follows: Mr. Mack -- $65,000; Mr. Ganci -- $51,000; Mr. Meyer -- $33,300; Mr.
Page -- $29,400 and Mr. DeVirgilio -- $28,600.
REPORT ON EXECUTIVE COMPENSATION
The following disclosure is made over the name of each Outside Director, on
the date hereof, and shall be considered a report of the Outside Directors and
the Compensation Committee:
As described above under the caption "Board of Directors and Committees --
Committee on Compensation and Succession/Interlocks and Insider Participation,"
the members of the Compensation Committee are Messrs. Effron, Eyman and Swyer
and Dr. Fergusson. Among the responsibilities
8
<PAGE>
of the Compensation Committee are consideration and recommendation to the Board
of Directors of the salaries of officers of the Corporation. Annual salary
determinations by the Board of Directors become effective as of April 1 of each
year and continue until the following March 31.
COMPENSATION PHILOSOPHY
The Compensation Committee based its 1995 officers' compensation
recommendations to the Board of Directors on an evaluation of each of the
following three factors, giving balanced weight to each, which factors reflect a
long-standing executive compensation philosophy of the Corporation:
(1) Compensation comparisons of other comparable executive officers.
Comparisons are made to the compensation of officers of other New
York State utilities and of other utilities with revenues and other
characteristics similar to those of the Corporation, using data received
from the Edison Electric Institute and the American Gas Association, which
utilities are some, but not all, of the utilities included on the graph
under the below caption "Performance Graph." And, every two years, an
executive compensation study is performed by an independent consultant
engaged by the Corporation. Such independent study was performed for the
period covered by this Report. The data obtained by these various sources
was evaluated and compensation levels for the Corporation's officers were
established based generally on averages of comparative salary ranges.
(2) The experience, responsibility and contribution of each individual
officer to the Corporation's performance.
(3) The incumbent's performance in carrying out the responsibilities and
duties of his or her office, as described below:
The performance of each officer of the Corporation (other than Messrs.
Mack and Ganci, as discussed below) was also evaluated, by the Compensation
Committee, on the basis of how he or she contributed to the extent
applicable, to furthering the Corporation's mission:
to provide customers with safe, reliable utility service at the lowest
reasonable price;
to provide a competitive return to the Corporation's shareholders;
to provide a safe working environment that will attract, retain and
motivate employees; and
to provide corporate resources to enhance the quality of life in the
Corporation's service territory.
With the exception of (1) above, the performance criteria set forth above
for Mr. Mack and each other officer of the Corporation were subjectively
evaluated by the Board of Directors in its deliberations related to compensation
for each officer, based on an assessment of the degree to which each such
officer (i) met the criteria set forth in his/her position description and (ii)
accomplished the Corporation's strategic goals and objectives for which such
officers were responsible.
SECTION 162(M) OF THE CODE
The Compensation Committee and the Board of Directors is aware of and has
considered the qualifying compensation regulations established in Section 162(m)
of the Code, which provides that, unless an appropriate exemption applies, a tax
deduction for the Corporation for remuneration of any officer named in the above
caption -- "Executive Compensation -- Summary Compensation Table" will not be
allowed to the extent such remuneration in any taxable year exceeds $1 million.
As no officer of the Corporation received remuneration during the 1995 fiscal
year approaching $1 million, the Corporation has not developed an executive
compensation policy with respect to qualifying compensation paid to its
executive officers for deductibility under Section 162(m) of the Code.
9
<PAGE>
INCENTIVE PLAN
The Incentive Plan, established January 1, 1993 and applicable to the
Chairman of the Board and Chief Executive Officer, was amended, effective
January 1, 1995, to include the President and Chief Operating Officer.
The Incentive Plan establishes the compensation for the incumbents in such
offices based on two components: annual base salary (which becomes effective as
of April 1 of each year and continues until the following March 31) and an
incentive feature (which provides an award, as noted below, for performance for
the most recently ended calendar year). The determination of annual base salary
and incentive compensation, if any, is determined by the Outside Directors, for
Mr. Mack; and for Mr. Ganci, by the Outside Directors and Mr. Mack.
Under the incentive component of the Incentive Plan, Messrs. Mack and Ganci
have the opportunity to earn up to an additional 10% of their base salaries,
based on a formula which measures the Corporation's achievement of goals within
the following four categories: (i) shareholder value; (ii) level of customer
electric and gas prices and reliability; (iii) employee safety and (iv)
community involvement.
A determination as to whether any incentive compensation is earned is made
within 90 days after the end of each calendar year; and if an award is made,
compensation will be made in a lump sum within 30 days of such determination.
CHIEF EXECUTIVE OFFICER'S BASE SALARY AND INCENTIVE COMPENSATION
The performance of the Chairman of the Board and Chief Executive Officer was
evaluated, by the Outside Directors, under the Incentive Plan.
In establishing the annual base salary component for Mr. Mack under the
Incentive Plan, which for the period April 1, 1995 to March 31, 1996 is
$325,000, the Outside Directors reviewed Mr. Mack's performance during 1994
related to his policies and leadership in the goal of building a more profitable
corporation and thereby increasing shareholder value while providing reliable
service at reasonable prices. As a measure of this goal, his performance was
evaluated pursuant to the following criteria:
Has the confidence of the financial community and the Corporation's
shareholders been maintained and/or enhanced? Key financial indices, credit
ratings, total return to shareholders and the adequacy of cash flow are
significant quantitative factors.
Does the Corporation have effective management and other personnel so as to
assure a high quality of customer service and to meet the changing needs of
its customers?
Has the Corporation's physical plant and equipment been maintained and/or
improved so as to assure that the Corporation continues to meet its
objective of providing highly reliable utility service at the lowest
reasonable price?
Is the Corporation's strategic plan effective in keeping the Corporation
abreast of or ahead of changes that occur as a result of competition,
technology changes and new regulation?
With respect to the relationship of the Company's performance in 1994 to Mr.
Mack's base salary for 1995, the Outside Directors determined that performance
by Mr. Mack of his duties in 1994 more than satisfied the related performance
criteria, as described above. Not all of these performance criteria lend
themselves to objective measurement. However, during 1994, the Corporation's (i)
book value of common stock increased to $25.34 at year's end, from $24.65 the
previous year, (ii) credit ratings on its First Mortgage Bonds were maintained
at "A" by one rating agency and at "A-" or the equivalent by three other
agencies, despite the view by the financial community that utilities generally
represented a greater risk than previously determined, (iii) dividend paid to
shareholders in 1994 increased by 2% from $2.03 in 1993 to $2.07 in 1994 and
(iv) residential, commercial, and industrial rates continued to be among the
lowest in New York.
10
<PAGE>
Based on the recommendation of the Compensation Committee, the Board of
Directors, on April 4, 1995, awarded Mr. Mack 9.7% (or $30,264) of his 1994 base
salary as incentive compensation.
Mr. Mack did not participate in the determination of his 1995 compensation.
Mr. Ganci did not participate in the determination of either his or Mr. Mack's
1995 compensation.
L. Wallace Cross
Jack Effron
Richard H. Eyman
Frances D. Fergusson
Heinz K. Fridrich
Edward F. X. Gallagher
Charles LaForge
Howard C. St.John
Edward P. Swyer
11
<PAGE>
PERFORMANCE GRAPH
The line graph set forth below provides a comparison of the Corporation's
cumulative total shareholder return on its Common Stock with the Standard &
Poor's 500 Index and, as a Corporation determined peer comparison, the EEI
Combination Gas and Electric Investor-Owned Utilities' Index ("EEI Index"). Such
shareholder return is the sum of the dividends paid and the change in the market
price of stock.
COMPARISON OF THE CORPORATION'S FIVE YEAR TOTAL
CUMULATIVE RETURN WITH THE S&P 500 INDEX AND
THE EEI INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CENTRAL HUDSON S&P 500 EEI
<S> <C> <C> <C>
1990 100 100 100
1991 125 130 130
1992 145 140 143
1993 151 155 159
1994 142 157 139
1995 179 215 177
</TABLE>
YEAR ENDING DECEMBER 31,
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Central Hudson............ $ 100 $ 125 $ 145 $ 151 $ 142 $ 179
S&P 500................... $ 100 $ 130 $ 140 $ 155 $ 157 $ 215
EEI....................... $ 100 $ 130 $ 143 $ 159 $ 139 $ 177
</TABLE>
*Assumes $100 invested on January 1, 1991 in the Corporation's Common Stock, the
S&P 500 Index and the EEI Index
12
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of Price Waterhouse LLP as
independent accountants for the Corporation for the year 1996 and recommends to
shareholders ratification of such appointment.
The appointment of the independent accountants is approved annually by the
Board of Directors and is based on the recommendation of the Committee on Audit,
which reviews the qualifications of independent accountants and which reviews
and approves the audit scope, reasonableness of fees and also the types of
nonaudit services for the coming year.
While there is no legal requirement that this appointment be submitted to a
vote of shareholders for ratification, such action is being requested, in
response to suggestions by shareholders and also because the Board of Directors
believes that the selection of the independent accountants to audit the books,
records and accounts of the Corporation is of sufficient importance to seek such
ratification. If this action were not ratified, the Board of Directors would, in
due course and having regard for the requirements of an orderly transition,
select other independent accountants upon the recommendation of the Committee on
Audit.
Representatives of Price Waterhouse LLP will be present at the annual
meeting of shareholders and will have an opportunity to make a statement if they
desire to do so. They will be available to respond to appropriate questions.
DEADLINE FOR SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1997 annual
meeting to be included in the proxy material relating to that meeting must be
received by the Corporation by October 25, 1996.
OTHER MATTERS
The Board of Directors does not know of any matters to be brought before the
meeting other than those referred to in the notice hereof. If any other matters
properly come before the meeting, it is the intention of the persons named in
the form of proxy to vote such proxy in accordance with their judgment on such
matters.
By Order of the Board of Directors,
Ellen Ahearn
SECRETARY
February 23, 1996
13
<PAGE>
ROUTE TO CENTRAL HUDSON
[MAP]
<PAGE>
FROM NEW YORK CITY AREA:
- - Taconic State Parkway North to Interstate 84 (I-84)
- - I-84 West to Exit 13 (Route 9)
- - Turn right off ramp onto Route 9 North
- - Route 9 approximately 12 miles to the Academy Street/South Avenue Exit
- - Bear left at end of ramp and go under the overpass
- - Turn right into Central Hudson entrance
FROM CONNECTICUT:
- - I-84 West to Exit 13 (Route 9)
- - Continue as above.
FROM PENNSYLVANIA:
- - I-84 East to Exit 13 (Route 9)
- - Turn left off ramp onto Route 9 North
- - Continue as above.
FROM NEW JERSEY AND UPSTATE NEW YORK:
- - New York Thruway (I-87) to Exit 18 (New Paltz)
- - Turn right onto Route 299 East
- - Route 299 approximately 5 miles, turn right onto Route 9W South
- - Route 9W approximately 2 miles, bear right for Mid-Hudson Bridge
- - After crossing bridge take first right (Route 9 South)
- - Route 9 approximately 1 mile to Academy Street/ South Avenue Exit
- - Bear right off exit ramp into Central Hudson entrance
<PAGE>
Appendix to Electronic Format Document
Pursuant to Reg. 232.304 of Regulation S-T, this appendix describes all
graphic and image information in the foregoing document which will appear in the
paper format of such document:
1. A line graph which sets forth a comparison of the Corporation's five
year total cumulative shareholder return on its common stock with the
Standard & Poor's 500 Index and, as a Corporation determined peer
comparison, the EEI Combination Gas and Electric Investor-Owned
Utilities' Index appears on page 14.
2. A map providing directions to the Corporation's offices at which the
annual meeting of shareholders will be held appears on page 16.
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
PROXY OF COMMON SHAREHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY
The undersigned hereby appoints JOHN E. MACK III, JACK EFFRON, HEINZ K. FRIDRICH
and PAUL J. GANCI, or any one or more of them, proxy, with full power of
substitution, to vote, as designated on the reverse hereof, all shares of Common
Stock owned by the undersigned at the annual meeting of shareholders of Central
Hudson Gas & Electric Corporation to be held at the office of the Corporation,
284 South Avenue, in the City of Poughkeepsie, Dutchess County, New York, on
April 2, 1996, or any adjournment thereof, upon all such matters as may properly
come before the meeting, including the following proposals described in the
Proxy Statement, dated February 23, 1996, a copy of which has been received by
the undersigned:
1. Election of Directors, Nominees:
L. Wallace Cross, Jack Effron, Frances D. Fergusson, Heinz K. Fridrich, Edward
F. X. Gallagher, Paul J. Ganci, Charles LaForge, John E. Mack III, Edward P.
Swyer.
2. Ratification of Appointment of Independent Accountants.
Comments (If Any)
------------------------------------------
------------------------------------------
------------------------------------------
(If you have written in the above space, please mark
the corresponding box on the reverse side of this card.)
(THIS PROXY CONTINUES AND MUST BE SIGNED ON THE REVERSE SIDE)
SEE REVERSE SIDE
<PAGE>
1535
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEM 1 AND FOR
ITEM 2.
THE DIRECTORS RECOMMEND A VOTE "FOR" THIS ITEM
1. Election of Directors (see reverse)
For, except vote withheld from the following nominee(s):
FOR / / WITHHELD / /
THE DIRECTORS RECOMMEND A VOTE "FOR" THIS ITEM
2. Ratification of Appointment of Price Waterhouse LLP as
Independent Accountants
FOR / / AGAINST / / ABSTAIN / /
If you plan to attend the Annual Meeting, place an X
in this box. / /
If you indicated a change of address below or comments on reverse side,
place an X in this box. / /
CHANGE OF ADDRESS
--------------------------------------------
--------------------------------------------
--------------------------------------------
SIGNATURE(S)______________________________ DATE_______________, 1996
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such.
