<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 / /
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 Section 240.14a-11(c) or Section
240.14a-12
Central Hudson Gas & Electric 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):
/ / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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 24, 1997
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 1, 1997. 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 OF SHAREHOLDERS
---------------------------------------------------
To the Holders of Common Stock:
NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of the
Central Hudson Gas & Electric Corporation:
<TABLE>
<S> <C>
TIME................. 10:30 a.m., on Tuesday, April 1,
1997
PLACE................ Office of the Corporation
284 South Avenue
Poughkeepsie, New York 12601
ITEMS OF BUSINESS.... (1) To elect directors for the
ensuing year
(2) To ratify the appointment of
Price Waterhouse LLP as independent
accountants for the year 1997;
and
(3) To take action upon any other
matters that may properly come
before the meeting
RECORD DATE.......... Holders of Common Stock of Record at
the close of business February 14,
1997 are entitled to vote at the
Meeting.
ANNUAL REPORT........ The Annual Report of the Corporation
for 1996, which is not a part of the
proxy soliciting material, is
enclosed.
PROXY VOTING......... It is important that your Shares be
represented and voted at the
Meeting. Please MARK, SIGN, DATE AND
RETURN PROMPTLY the enclosed proxy
card in the postage-paid envelope
furnished for that purpose. Any
proxy may be revoked in the manner
described in the accompanying Proxy
Statement at any time prior to its
exercise at the meeting.
</TABLE>
By Order of the Board of Directors,
ELLEN AHEARN
CORPORATE SECRETARY
February 24, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROXY STATEMENT............................................................................................ 1
Shareholders Entitled to Vote.............................................................................. 1
Proxies.................................................................................................... 1
Cost of Proxy Solicitation................................................................................. 1
Submission of Shareholder Proposals........................................................................ 1
Shareholder Communications................................................................................. 1
Security Ownership of Directors and Officers............................................................... 2
Section 16(a) Beneficial Ownership Reporting Compliance.................................................... 2
Ratification of Appointment of Independent Accountants..................................................... 3
ELECTION OF DIRECTORS...................................................................................... 4
BOARD OF DIRECTORS AND COMMITTEES.......................................................................... 6
Meetings and Attendance.................................................................................... 6
Committee on Audit......................................................................................... 6
Committee on Compensation/Interlocks and Inside Participation.............................................. 6
Compensation of Directors and Officers of the Board........................................................ 6
EXECUTIVE COMPENSATION..................................................................................... 8
Summary Compensation Table................................................................................. 8
Pension/Deferred Compensation Plans........................................................................ 9
Report on Executive Compensation........................................................................... 10
Performance Graph.......................................................................................... 14
OTHER MATTERS.............................................................................................. 15
</TABLE>
<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 1, 1997. This proxy statement and enclosed proxy are first being
sent to shareholders on or about February 24, 1997. The mailing address of the
principal executive office of the Corporation is 284 South Avenue, Poughkeepsie,
New York 12601-4879.
SHAREHOLDERS ENTITLED TO VOTE
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, 1997. At that date,
the Corporation had outstanding 17,532,987 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.
PROXIES
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 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.
COST OF PROXY SOLICITATION
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.
SUBMISSION OF SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1998 annual
meeting to be included in the proxy material relating to that meeting must be
received by the Corporation by October 24, 1997.
SHAREHOLDER COMMUNICATIONS
Highlights of the Annual Meeting will be included in the Corporation's May
1, 1997 Report to Shareholders.
Shareholders' comments related to any aspect of the Corporation's business
are welcome. Space for comments is provided on the proxy card given to
shareholders of record. Other shareholders may submit
1
<PAGE>
comments to the Corporation in care of the Corporate Secretary. Although
comments are not answered on an individual basis, they do assist the Directors
and management in addressing the needs of shareholders.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
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.................................................................. 11,138 less than 1%
Jack Effron....................................................................... 1,903 less than 1%
Frances D. Fergusson.............................................................. 1,283 less than 1%
Heinz K. Fridrich................................................................. 2,555 less than 1%
Edward F. X. Gallagher............................................................ 2,046 less than 1%
Paul J. Ganci..................................................................... 7,810(3) less than 1%
Charles LaForge................................................................... 3,212 less than 1%
John E. Mack, III................................................................. 11,508(3) less than 1%
Edward P. Swyer................................................................... 8,103 less than 1%
Joseph J. DeVirgilio, Jr. ........................................................ 1,415 less than 1%
Carl E. Meyer..................................................................... 1,355 less than 1%
Allan R. Page..................................................................... 2,409 less than 1%
All directors and executive officers as a group (19 persons)...................... 60,174 less than 1%
</TABLE>
- ------------------------
(1) Based on information furnished to the Corporation by the directors and
executive officers as of December 31, 1996.
(2) The percentage ownership calculation for each owner has been made on the
basis that there are outstanding 17,532,987 shares of Common Stock on the
record date.
(3) Includes shares owned by the respective spouses of the named individuals as
follows: Mrs. Mack--777 shares and Mrs. Ganci--1,395 shares. The shares
owned by Mrs. Mack and Mrs. Ganci are considered to be beneficially owned by
Mr. Mack and Mr. Ganci, 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 on a timely basis in 1996.
2
<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 1997 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 past 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.
3
<PAGE>
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>
PRINCIPAL OCCUPATION OR EMPLOYMENT
AND POSITIONS AND OFFICES WITH THE BUSINESS EXPERIENCE PERIOD OF SERVICE
NAME AND AGE(1) CORPORATION(1) DURING PAST FIVE YEARS(1) AS DIRECTOR BEGAN
- ------------------------------ ------------------------------------- ------------------------------ -----------------
<S> <C> <C> <C>
L. Wallace Cross.............. Retired from the Corporation as Chairman of the Board of 1990
67 Executive Vice President and Chief Directors, Christian Herald
Financial Officer; Member of the Association, Inc., 1992-1995
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
63 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.
Frances D. Fergusson.......... President and Professor of Art, Present positions 1993
52 Vassar College; Member, Board of
Trustees of the Ford Foundation and
Chair of its Education, Media, Arts
and Culture Committee; Trustee of
the Mayo Foundation and Chair of its
Development Committee; Trustee of
Historic Hudson; Director, Marine
Midland Bank, N.A. and Chair of its
Personnel Committee Poughkeepsie,
N.Y.
Heinz K. Fridrich............. Courtesy Professor, University of Present positions, except Vice 1988
63 Florida at Gainesville; Chairman of President-- Manufacturing,
Committee on Audit International Business
Fernandina Beach, FL. Machine Corporation, April
1992-September 1993; former
Member, Board of Trustees of
Mount St. Mary College,
1992-1993
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT
AND POSITIONS AND OFFICES WITH THE BUSINESS EXPERIENCE PERIOD OF SERVICE
NAME AND AGE(1) CORPORATION(1) DURING PAST FIVE YEARS(1) AS DIRECTOR BEGAN
- ------------------------------ ------------------------------------- ------------------------------ -----------------
<S> <C> <C> <C>
Edward F. X. Gallagher........ Owner of Gallagher Transportation Present position 1984
63 Services, 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 Present position 1989
58 of the Corporation
Poughkeepsie, N.Y.
Charles LaForge............... President of Wayfarer Inns and owner Present positions 1987
66 of the 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 Present positions 1981
62 Executive Officer of the
Corporation; Chairman of the
Executive, Finance and Retirement
Committees
Poughkeepsie, N.Y.
Edward P. Swyer............... President of the Swyer Companies, a Present position, except 1990
47 real estate firm engaged in the Managing Partner of WTZA-TV
construction, development and Associates, a UHF television
management of commercial properties station, 1992-1993
in the Capital District Region
Albany, N.Y.
</TABLE>
- ------------------------
(1) Based on information furnished to the Corporation by the nominees as of
December 31, 1996.
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.
5
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
MEETINGS AND ATTENDANCE
During 1996, 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 1996 was 95.1%.
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 and
LaForge. The Committee had three meetings during 1996, 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) and Swyer and Dr. Fergusson. The Compensation Committee had one
meeting during 1996. 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 1996.
COMPENSATION OF DIRECTORS AND OFFICERS OF THE BOARD
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 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. Only Outside Directors serving as chairpersons of
Committees of the Board received additional annual compensation in
6
<PAGE>
1996 as follows: Mr. Effron, as Chairman of the Compensation Committee--$2,500;
and Mr. Fridrich, as Chairman of the Committee on Audit--$2,500.
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.
7
<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 1996 exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------------------
<S> <C> <C> <C> <C>
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2)
- -------------------------------------------------------------- --------- ---------- --------- -----------------
John E. Mack, III,............................................ 1996 $ 336,250 $ 19,500(3) $ 4,750
Chairman of the Board and Chief Executive Officer 1995 321,750 30,264(3) 4,620
1994 312,000 12,480(3) 4,500
Paul J. Ganci,................................................ 1996 263,250 10,200(3) 4,750
President and Chief Operating Officer 1995 253,750 19,500(3) 4,620
1994 247,500 10,000 4,500
Carl E. Meyer,................................................ 1996 176,625 1,024(4) 4,750
Senior Vice President--Customer Services 1995 164,000 1,298(4) 4,500
1994 153,000 0 3,750
Allan R. Page,................................................ 1996 156,000 991(4) 4,750
Senior Vice President--Corporate Services 1995 145,250 1,192(4) 4,620
1994 137,750 0 4,132
Joseph J. DeVirgilio, Jr.,.................................... 1996 146,860 966(4) 4,750
Vice President--Human Resources & Administration 1995 141,500 1,169(4) 4,620
1994 135,125 0 4,054
</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 ("Executive Incentive Plan"), which terms are
more fully described below under the caption "Report on Executive
Compensation--Executive Incentive Plan".
(4) Compensation paid pursuant to the terms of the Corporation's Management
Incentive Plan, which terms are more fully described below under the caption
"Report on Executive Compensation-- Management Incentive Plan."
8
<PAGE>
PENSION/DEFERRED COMPENSATION PLANS
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 1996, 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 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--$125,000; Mr. Ganci-- $125,000; Mr. Meyer--$120,406; Mr. Page--$113,903
and Mr. DeVirgilio--$116,939.
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. The individuals listed in the table under the above caption "Executive
Compensation", except for Mr. DeVirgilio, have a current salary level which, if
continued to retirement at age 65, would provide a benefit under the RBRP. The
estimated annual benefits under the RBRP upon retirement at age 65 for those
individuals, assuming the continuation of their present salaries, are as
follows: Mr. Mack--$81,296; Mr. Ganci--$53,757; Mr. Meyer--$8,854; Mr.
Page--$45.
9
<PAGE>
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 1996.
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--$68,000; Mr. Ganci--$53,200; Mr. Meyer--$36,000; Mr.
Page--$31,800; and Mr. DeVirgilio-- $29,600.
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 and
Swyer and Dr. Fergusson. Among the responsibilities 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 1996 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 not 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:
10
<PAGE>
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
captioned--"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 1996 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.
MANAGEMENT INCENTIVE PLAN
The Management Incentive Plan, effective January 1, 1991, is a cash bonus
program which bases its awards on the Corporation meeting certain "Incentive
Goals," as such term is defined in that Plan. All management employees are
eligible to receive awards except for: (i) the Chairman of the Board and Chief
Executive Officer (Mr. Mack), the President and Chief Operating Officer (Mr.
Ganci) and any other officer(s) which the Chairman shall determine from time to
time, (ii) temporary employees and (iii) those employees whose employment is
terminated in a year in which an Incentive Award is made unless such termination
is a retirement.
The Incentive Goal is established each fiscal year by the Board of
Directors. After the audited financial results of the Corporation for a fiscal
year have been made public, the Board of Directors of the Corporation determines
whether or not the Incentive Goal has been met for that fiscal year, which
determination is final. The resulting award is allocated among and paid to each
eligible management employee in the same proportion that each such employee's
compensation for the fiscal year bears to base compensation paid to all such
eligible management employees for that fiscal year.
11
<PAGE>
EXECUTIVE INCENTIVE PLAN
The Executive 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 Executive 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 Executive 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 EXECUTIVE INCENTIVE COMPENSATION
The performance of the Chairman of the Board and Chief Executive Officer was
evaluated, by the Outside Directors, under the Executive Incentive Plan.
In establishing the annual base salary component for Mr. Mack under the
Executive Incentive Plan, which for the period April 1, 1996 to March 31, 1997
is $340,000, the Outside Directors reviewed Mr. Mack's performance during 1995
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 1995 to Mr.
Mack's base salary for 1996, the Outside Directors determined that performance
by Mr. Mack of his duties in 1995 more than satisfied the related performance
criteria, as described above. Not all of these performance criteria lend
themselves to objective measurement. However, during 1995, the Corporation's (i)
earnings per share of
12
<PAGE>
common stock were $2.74, a 2% increase compared to 1994, (ii) book value of
common stock increased to $25.96 at year's end, from $25.34 the previous year,
(iii) 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, (iv) the dividend paid to shareholders in 1995
increased by 1% from $2.07 in 1994 to $2.09 in 1995 and (v) the Corporation's
residential, commercial, and industrial rates continued to be among the lowest
in New York. In addition, as part of the Company's program to strengthen its
common equity ratio, the Company, in 1995, redeemed its 7.44% Series Preferred
Stock ($12 million) using a portion of its cash reserves to fund such
redemption. This action, combined with increased retained earnings, led to an
increase in the common equity ratio from 47.8% at December 31, 1994 to 49.7% at
December 31, 1995.
The median total direct compensation ("compensation") of the chief executive
officers of the 28 Northeast utility company peer group for 1996 was $425,000.
Mr. Mack's actual 1996 compensation was 15% below the median compenstaion of
such peer group.
Mr. Mack did not participate in the determination of his 1996 compensation.
Mr. Ganci did not participate in the determination of either his or Mr. Mack's
1996 compensation.
L. Wallace Cross
Jack Effron
Frances D. Fergusson
Heinz K. Fridrich
Edward F. X. Gallagher
Charles LaForge
Edward P. Swyer
13
<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 INDEX EEI INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 116 108 110
1993 120 118 123
1994 113 120 107
1995 143 165 137
1996 155 203 136
</TABLE>
YEAR ENDING DECEMBER 31,
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
Central Hudson...... $ 100 $ 116 $ 120 $ 113 $ 143 $ 155
S&P 500 Index....... $ 100 $ 108 $ 118 $ 120 $ 165 $ 203
EEI Index........... $ 100 $ 110 $ 123 $ 107 $ 137 $ 136
</TABLE>
* Assumes $100 invested on January 1, 1992 in the Corporation's Common Stock,
the S&P 500 Index and the EEI Index
14
<PAGE>
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
CORPORATE SECRETARY
February 24, 1997
15
<PAGE>
ROUTE TO CENTRAL HUDSON
[MAP]
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 CORORATION
Proxy of Common Shareholders
Solicited on Behalf of the Board of Directors
P The undersigned hereby appoints JOHN E. MACK III, JACK EFFRON,
Heinz K. Fridrich and PAUL J. GANCI, or any one or more of them,
R proxy, with full power of substitution, to vote, as designated on
the reverse hereof, all shares of Common Stock owned by the undersigned
O at the annual meeting of shareholders of Central Hudson Gas & Electric
Corporation to be held at the office of the Corporation, 284 South Avenue,
X in the City of Poughkeepsie, Dutchess County, New York, on April 1, 1997,
or any adjournment thereof, upon all such matters as may properly come
Y before the meeting, including the following proposals described in the
Proxy Statement, dated February 24, 1997, 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.
(This Proxy continues and must be signed on the reverse side)
Comments (If Any)
- --------------------------------------------------
- --------------------------------------------------
- --------------------------------------------------
(If you have written in the above space, please mark
the corresponding box on the reverse side of this card)
<PAGE>
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.
The Directors recommend a vote "FOR" this item
1. Election of 2. Ratification of
Directors Appointment of
(see reverse) Price Waterhouse LLP
FOR / / WITHHELD / / as Independant
Public 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 / /
For, except vote withheld from the following nominee(s):
CHANGE OF ADDRESS
SIGNATURE(S)_________________________________ DATE ____________ , 1997
SIGNATURE(S)_________________________________ DATE ____________ , 1997
NOTE: Please sign exactly as name appears here on. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee, or guardian,
please give full title as such.
