<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 Section240.14a-11(c) or
Section240.14a-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):
/X/ 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
284 SOUTH AVENUE
POUGHKEEPSIE, NEW YORK 12601-4879
March 2, 1998
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 7, 1998. 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 24,000 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 7,
1998
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 1998;
and
(3) To take action upon any other
matters that may properly come
before the Meeting
RECORD DATE.......... Holders of Common Shares of Record
the close of business February 17,
1998 are entitled to vote at the
Meeting.
ANNUAL REPORT........ The Annual Report of the Corporation
for 1997, 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
March 2, 1998
<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 7, 1998. This proxy statement and enclosed proxy are first being
sent to shareholders on or about March 2, 1998. 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 17, 1998. At that date,
the Corporation had outstanding 17,242,387 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 1999 annual
meeting to be included in the proxy material relating to that meeting must be
received by the Corporation by October 30, 1998.
SHAREHOLDER COMMUNICATIONS
Highlights of the Annual Meeting will be included in the Corporation's May
1, 1998 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 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
1
<PAGE>
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............................................... 11,247(3) less than 1%
Jack Effron.................................................... 2,012 less than 1%
Frances D. Fergusson........................................... 1,636 less than 1%
Heinz K. Fridrich.............................................. 2,766 less than 1%
Edward F. X. Gallagher......................................... 2,282 less than 1%
Paul J. Ganci.................................................. 9,338(4) less than 1%
Charles LaForge................................................ 3,525 less than 1%
John E. Mack, III.............................................. 12,014(4) less than 1%
Edward P. Swyer................................................ 8,212 less than 1%
Joseph J. DeVirgilio, Jr....................................... 1,408 less than 1%
Carl E. Meyer.................................................. 1,519 less than 1%
Allan R. Page.................................................. 2,584 less than 1%
All directors and executive officers as a group less than 1%
(19 persons)................................................. 63,082
</TABLE>
- - ------------------------
(1) Based on information furnished to the Corporation by the directors and
executive officers as of December 31, 1997.
(2) The percentage ownership calculation for each owner has been made on the
basis that there are outstanding 17,242,387 shares of Common Stock on the
record date.
(3) Mr. Cross is not standing for reelection to the Corporation's Board of
Directors.
(4) Includes shares owned by the respective spouses of the named individuals as
follows: Mrs. Mack--828 shares and Mrs. Ganci--2,020 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 1997.
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 1998 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.
2
<PAGE>
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
Eight 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 PERIOD OF
AND POSITIONS AND OFFICES WITH THE BUSINESS EXPERIENCE SERVICE AS
NAME AND AGE(1) CORPORATION(1) DURING PAST FIVE YEARS(1) DIRECTOR BEGAN
- - ------------------------------ ------------------------------------- ------------------------------ -----------------
<S> <C> <C> <C>
Jack Effron................... President of Efco Products, a bakery Present positions 1987
64 ingredients corporation; member of
the St. Francis Health Care
[LOGO] 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
53 Vassar College; Member, Board of
Trustees of the Ford Foundation and
[LOGO] 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 1988
64 Florida at Gainesville; Chairman of VicePresident--
Committee on Audit Manufacturing, International
[LOGO] Fernandina Beach, FL. Business Machines
Corporation, April-September
1993; former Member, Board of
Trustees of Mount St. Mary
College
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT PERIOD OF
AND POSITIONS AND OFFICES WITH THE BUSINESS EXPERIENCE SERVICE AS
NAME AND AGE(1) CORPORATION(1) DURING PAST FIVE YEARS(1) DIRECTOR BEGAN
- - ------------------------------ ------------------------------------- ------------------------------ -----------------
<S> <C> <C> <C>
Edward F. X. Gallagher........ Owner of Gallagher Transportation Present position 1984
64 Services, a group of companies
engaged in the sale and leasing of
[LOGO] 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
59 of the Corporation
Poughkeepsie, N.Y.
[LOGO]
Charles LaForge............... President of Wayfarer Inns and owner Present positions 1987
67 of the Beekman Arms in Rhinebeck,
N.Y.; Trustee of Rondout Savings
[LOGO] Bank in Kingston, N.Y.; Trustee
emeritus of the Culinary Institute
of America in Poughkeepsie, N.Y.
Rhinebeck, N.Y.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT PERIOD OF
AND POSITIONS AND OFFICES WITH THE BUSINESS EXPERIENCE SERVICE AS
NAME AND AGE(1) CORPORATION(1) DURING PAST FIVE YEARS(1) DIRECTOR BEGAN
- - ------------------------------ ------------------------------------- ------------------------------ -----------------
<S> <C> <C> <C>
John E. Mack, III............. Chairman of the Board and Chief Present positions 1981
63 Executive Officer of the
Corporation; Chairman of the
[LOGO] Executive, Finance and Retirement
Committees
Poughkeepsie, N.Y.
Edward P. Swyer............... President of the Swyer Companies, a Present position, except 1990
48 real estate firm engaged in the Managing Partner of WTZA-TV
construction, development and Associates, a UHF television
[LOGO] management of commercial properties station
in the Capital District Region
Albany, N.Y.
</TABLE>
- - ------------------------
(1) Based on information furnished to the Corporation by the nominees as of
December 31, 1997.
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.
6
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES
MEETINGS AND ATTENDANCE
During 1997, there were 13 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 1997 was 95.8%.
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 and Dr. Fergusson. The Committee had three meetings during 1997, 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 1997. 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 1997.
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
$15,000, $750 for attendance at each meeting of the Board and $650 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 $750 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 1997 as
follows: Mr. Effron, as Chairman of the Compensation Committee--$2,500; and Mr.
Fridrich, as Chairman of the Committee on Audit--$2,500.
7
<PAGE>
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.
8
<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 1997 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,............................................ 1997 $ 355,000 $ 34,000(3) $ 4,750
Chairman of the Board and Chief Executive Officer 1996 336,250 19,500(3) 4,750
1995 321,750 30,264(3) 4,620
Paul J. Ganci,................................................ 1997 280,250 21,280(3) 4,750
President and Chief Operating Officer 1996 263,250 10,200(3) 4,750
1995 253,750 19,500(3) 4,620
Carl E. Meyer,................................................ 1997 186,750 6,331(4) 4,750
Senior Vice President--Customer Services 1996 176,625 1,024(4) 4,750
1995 164,000 1,298(4) 4,500
Allan R. Page,................................................ 1997 165,750 6,331(4) 4,750
Senior Vice President--Corporate Services 1996 156,000 991(4) 4,750
1995 145,250 1,192(4) 4,620
Joseph J. DeVirgilio, Jr.,.................................... 1997 152,720 6,194(4) 4,750
Vice President-Human Resources & Administration 1996 146,860 966(4) 4,750
1995 141,500 1,169(4) 4,620
</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."
PENSIONS/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 1997, there were
9
<PAGE>
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, a
credit to those participants in the Retirement Plan, on September 30, 1991, of
5% of their base salary on that date and a further credit to those participants
in the Retirement Plan, on September 30, 1997, of 5% of their base salary on
that date, with, in all three 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--$130,000; Mr. Ganci--$130,000; Mr.
Meyer--$120,406; Mr. Page--$114,133 and Mr. DeVirgilio--$119,676.
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--$77,004; Mr. Ganci--$51,409; Mr. Meyer--$12,240; Mr.
Page--$3,097.
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 1997.
Estimated annual benefits under this Plan upon retirement
10
<PAGE>
at age 65 for such named individuals, assuming continuation of their present
annual salaries, are as follows: Mr. Mack--$72,000; Mr. Ganci--$57,000; Mr.
Meyer--$37,800; Mr. Page--$33,600; and Mr. DeVirgilio-- $30,800.
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 1997 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.
11
<PAGE>
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 1997 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.
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.
12
<PAGE>
In establishing the annual base salary component for Mr. Mack under the
Executive Incentive Plan, which for the period April 1, 1997 to March 31, 1998
is $360,000, the Outside Directors reviewed Mr. Mack's performance during 1996
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 1996 to Mr.
Mack's base salary for 1997, the Outside Directors determined that performance
by Mr. Mack of his duties in 1996 more than satisfied the related performance
criteria, as described above. Not all of these performance criteria lend
themselves to objective measurement. However, during 1996, the Corporation's (i)
earnings per share of common stock were $2.99, a 9% increase compared to 1995,
(ii) book value of common stock increased to $26.87 at year's end, from $25.96
the previous year, (iii) Duff & Phelps Credit Rating Company upgraded its credit
rating of the Company's First Mortgage Bonds from A- to A in March 1996, and the
credit ratings of the other three rating agencies were maintained (one at "A";
two at "A-" or the equivalent), (iv) the dividend paid to shareholders in 1996
increased by 1% from $2.09 in 1995 to $2.11 in 1996 and (v) the Corporation's
residential, commercial, and industrial rates continued to be among the lowest
in New York. In addition, in furtherance of the Company's program to strengthen
its common equity ratio, the Company, in 1996, redeemed (a) its 7.72% Series
Cumulative Preferred Stock ($13.1 million) and (b) its $30 million 8 3/4% Series
First Mortgage Bonds. These redemptions were funded through a combination of
cash reserves and short-term borrowings. This action, combined with increased
retained earnings, led to an increase in the common equity ratio from 49.7% at
December 31, 1995 to 52.0% at December 31, 1996.
Based on the recommendation of the Compensation Committee, the Board of
Directors, on April 1, 1997, awarded Mr. Mack 10.0% (or $34,000) of his 1996
base salary as incentive compensation.
Mr. Mack did not participate in the determination of his 1997 compensation.
Mr. Ganci did not participate in the determination of either his or Mr. Mack's
1997 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>
*DOLLARS
<S> <C> <C> <C>
Central Hudson S&P 500 Index EEI Index
1992 100 100 100
1993 104 110 112
1994 98 112 97
1995 123 153 124
1996 134 189 123
1997 201 252 159
</TABLE>
YEAR ENDING DECEMBER 31,
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Central Hudson 100 104 98 123 134 201
S&P 500 Index 100 110 112 153 189 252
EEI Index 100 112 97 124 123 159
</TABLE>
* Assumes $100 invested on January 1, 1993 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.
Pursuant to Section 727(d) of the New York Business Corporation Law, notice
is hereby given to shareholders that the Company has provided Directors' and
Officers' Liability insurance through various contracts. These contracts became
effective June 1, 1997 and provide aggregate coverage of $60 million with the
following carriers: Chubb Group of Insurance Companies, Associated Electric &
Gas Insurance Services, Ltd. and American Casualty Excess Insurance, Ltd.
The aggregate premium costs for this insurance which covers the Company and
its directors and executive officers, are approximately $583,000, a decrease of
$417,000 when compared to 1996.
By Order of the Board of Directors,
Ellen Ahearn
CORPORATE SECRETARY
March 2, 1998
15
<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.
<TABLE>
THE DIRECTORS RECOMMEND A VOTE "FOR" ITEM 1 AND "FOR" ITEM 2.
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of FOR WITHHELD 2. Ratification of FOR AGAINST ABSTAIN SPECIAL ACTION
Directors Appointment of / / / / / /
(see reverse) / / / / Price Waterhouse LLP If you plan to attend the Annual
as Independent Meeting, place an X in this box. / /
Accountants.
If you wish us to discontinue Annual
For, except vote withheld from the following nominee(s): Report mailing for this account,
place an X in this box. / /
_______________________________________ If you indicated a change of address
or comments on reverse side, place
an X in this box. / /
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.
_______________________________________________________
_______________________________________________________
SIGNATURE (S) DATE
</TABLE>
- - -------------------------------------------------------------------------------
FOLD AND DETACH HERE
From New York City Area:
o Taconic State Parkway North to
Interstate 84 (I-84)
o I-84 West to Exit 13 (Route 9)
o Turn right off ramp onto Route 9 North
o Route 9 approximately 12 miles
to the Academy Street/South
Avenue Exit
o Bear left at end of ramp and go
under the overpass
o Turn right into Central Hudson
entrance
From Connecticut:
[MAP OF CENTRAL o I-84 West to Exit 13 (Route 9)
HUDSON] o Continue as above
From Pennsylvania:
o I-84 East to Exit 13 (Route 9)
o Turn left off ramp onto Route 9 North
o Continue as above
From New Jersey and Upstate New York:
o New York Thruway (I-87) to
Exit 18 (New Paltz)
o Turn right onto Route 299
o Route 299 approximately 5 miles,
turn right onto route 9W South
o Route 9W approximately 2 miles,
bear right for Mid-Hudson Bridge
o After crossing bridge take first right
(Route 9 South)
o Route 9 approximately 1 mile to
Academy Street/South Avenue Exit
o Bear right off exit ramp into
Central Hudson entrance
<PAGE>
CENTRAL HUDSON GAS & ELECTRIC CORPORATION
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, proxy, with full
R 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
O shareholders of Central Hudson Gas & Electric Corporation to be held at the
office of the Corporation, 284 South Avenue, in the City of Poughkeepsie,
X Dutchess County, New York, on April 7, 1998, or any adjournment thereof,
upon all such matters as may properly come before the meeting, including the
Y following proposals described in the Proxy Statement, dated March 2, 1998, a
copy of which has been received by the undersigned.
1. Election of Directors, Nominees: Change of Address/Comments (If Any)
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. (If you have written in the above
space, please mark the
corresponding box on the reverse
side of the card)
See Reverse Side
- - -------------------------------------------------------------------------------
ADMISSION TICKET
Present this to the Central Hudson
Representative at the
entrance to the auditorium
CENTRAL HUDSON
YOUR ENERGY SOLUTIONS COMPANY-TM-
ANNUAL MEETING OF SHAREHOLDERS
April 7, 1998, 10:30 am
Office of the Corporation
284 South Avenue, Poughkeepsie, NY
AGENDA
Election of Eight Directors
o
Ratification of Price Waterhouse as Independent Accountants
o
Take action upon any other matters that may properly come before the meeting
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING, WHETHER OR NOT
YOU ATTEND THE MEETING IN PERSON. TO MAKE SURE YOUR SHARES ARE REPRESENTED, WE
URGE YOU TO COMPLETE AND MAIL THE PROXY CARD ABOVE.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE MARK THE APPROPRIATE BOX ON THE
REVERSE SIDE OF THIS PROXY CARD. PRESENT THIS ADMISSION TICKET TO THE
REPRESENTATIVE AT THE ENTRANCE TO THE ANNUAL MEETING ROOM.
