<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CENTRAL MAINE POWER COMPANY
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CENTRAL MAINE POWER COMPANY
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
- --------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
[_] 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:
Notes:
<PAGE>
LOGO
CENTRAL MAINE POWER COMPANY
GENERAL OFFICE: 83 EDISON DRIVE, AUGUSTA, MAINE 04336
April 28, 1994
TO THE HOLDERS OF COMMON STOCK
AND 6% PREFERRED STOCK OF
CENTRAL MAINE POWER COMPANY:
The Annual Meeting of the Shareholders, formal notice of which, together with
a Proxy Statement, appears on the following pages, will be held on May 25,
1994. The place for the meeting will be the Augusta Civic Center, in Augusta,
Maine.
At the meeting, holders of Common Stock and 6% Preferred Stock will be asked
to elect Class I directors of the Company for a three-year term.
In addition, holders of Common Stock and 6% Preferred Stock will be asked to
consider proposals:
. To approve the Company's Long-Term Incentive Plan, under which certain
"key employees" of the Company may receive incentive compensation in the
form of shares of the Company's Common Stock; and
. To approve the appointment by the Company's Board of Directors of
Coopers & Lybrand, Boston, Massachusetts, as auditors of the Company for
the year 1994.
It is important for you and the Company that each shareholder participate in
this Annual Meeting. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. No postage
is necessary. Of course, if you attend the meeting, you will be able to vote
your shares in person.
A copy of the Company's Annual Report for 1993, containing copies of
certified financial statements, has been mailed to you.
Cordially yours,
/s/ David T. Flanagan
David T. Flanagan
President and Chief Executive Officer
URGENT. PLEASE SIGN, DATE AND RETURN ENCLOSED PROXY IMMEDIATELY.
<PAGE>
LOGO
CENTRAL MAINE POWER COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 25, 1994
AT 10:00 A.M.
You are hereby notified of and invited to attend the Annual Meeting of the
Shareholders of Central Maine Power Company (the "Company"), to be held at the
Augusta Civic Center, Augusta, Maine, on May 25, 1994, at 10:00 A.M., Eastern
Daylight Time, to hear reports on Company affairs and to consider and act upon
the following matters:
1. To elect three directors to Class I of the Company's Board of
Directors for a three-year term;
2. To approve the Company's Long-Term Incentive Plan, under which
certain "key employees" of the Company may receive incentive compensation
in the form of shares of the Company's Common Stock;
3. To approve the appointment by the Company's Board of Directors of
Coopers & Lybrand, Boston, Massachusetts, as the Company's auditors for the
year 1994; and
4. To consider and act upon any other matters that may properly come
before the meeting.
The close of business on April 1, 1994 has been fixed as the record date for
determination of shareholders entitled to notice of, and to vote at, the Annual
Meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ William M. Finn
William M. Finn
Secretary and Clerk
Augusta, Maine
April 28, 1994
<PAGE>
April 28, 1994
CENTRAL MAINE POWER COMPANY
LOGO 83 EDISON DRIVE
AUGUSTA, MAINE 04336
----------------
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies by
the Board of Directors of Central Maine Power Company for the Annual Meeting of
the Shareholders of Central Maine Power Company (the "Company"), to be held on
May 25, 1994, at 10:00 A.M. at the Augusta Civic Center, Augusta, Maine. It is
being mailed to the shareholders on or about April 28, 1994.
The Annual Report of the Company for the year ended December 31, 1993,
including certified financial statements, has been mailed to you.
VOTING RIGHTS
Only holders of record of shares of Common Stock and 6% Preferred Stock at
the close of business on April 1, 1994 are entitled to vote on all proposals at
the meeting. The total number of shares entitled to vote at the meeting will be
32,442,752 shares of Common Stock and 5,713 shares of 6% Preferred Stock.
Holders of Common Stock are entitled to one-tenth vote per share, and holders
of 6% Preferred Stock are entitled to one vote per share, regarding all matters
that are expected to be acted upon at the meeting. Accordingly, the holders of
Common Stock are entitled to 3,244,275 votes and the holders of 6% Preferred
Stock are entitled to 5,713 votes on all proposals at the meeting.
A majority of the total votes entitled to be cast at the meeting by the
holders of Common Stock and 6% Preferred Stock will constitute a quorum.
Abstentions, votes withheld from nominees for director, and broker non-votes
will be counted for the purpose of determining whether a quorum is present.
With respect to the election of directors, nominees who receive the greatest
number of votes cast by the holders of the Company's Common Stock and 6%
Preferred Stock, voting as a single class, will be elected, even though any
such nominee may not receive a majority of the votes cast. An affirmative vote
of a majority of the votes cast at the meeting by the holders of the Company's
Common Stock and 6% Preferred Stock, voting as a single class, is required for
approval of each of the matters presented to the shareholders for consideration
at the Annual Meeting. Votes withheld from nominees for director or abstentions
with respect to Proposal 2 or Proposal 3 will be counted in determining the
total number of votes cast on the matter to which the votes pertain and will
have the same effect as a vote against the matter. Broker non-votes will not be
included in determining the total number of votes cast on a matter and will
have no effect on that matter.
Under the By-Laws of the Company, the election of directors at the Annual
Meeting shall at the option of any shareholder be by cumulative voting.
Accordingly, each shareholder having the right to vote for directors shall be
entitled to as many votes as pertain to the shares of stock owned by such
shareholder multiplied by the number of directors to be elected, and may cast
all such votes for a single director or may distribute them among the number to
be voted for, or any two of them, as such shareholder may see fit. If any
shareholder entitled to vote for directors at the meeting either gives written
notice to the President of the Company before the time fixed for the meeting of
his or her intention to vote cumulatively or states his or her intention to
vote cumulatively at the meeting before the voting for directors commences, all
shareholders
<PAGE>
entitled to vote for directors at such meeting shall be entitled to cumulate
their votes. Any shareholder who wishes to vote cumulatively but who will not
be present at the meeting should give written notice to the President of the
Company of such intention before the meeting and should clearly indicate in
writing on the accompanying form of proxy the director or directors for whom he
or she wishes to vote and the number of votes he or she wishes to distribute to
each such director. If no written indication is made on the proxy, the votes
will be evenly distributed among all of the nominees. If any shareholder has
indicated his or her intention to vote cumulatively (either by written notice
or by a statement made at the meeting), each shareholder present at the meeting
who has not given his or her proxy or has revoked his or her proxy in the
manner described in the following paragraph may vote cumulatively at the
meeting by means of a written ballot distributed at the meeting.
Shareholders may vote at the meeting either in person or by duly authorized
proxy. The giving of a proxy by a shareholder will not affect the shareholder's
right to vote his or her shares if he or she attends the meeting and wishes to
vote in person. A proxy may be revoked or withdrawn by the person giving it, at
any time prior to the voting thereof, at the registration desk for the meeting
or by advising the Secretary of the Company. In addition, the proper execution
of a new proxy will operate to revoke a prior proxy. All shares represented by
effective proxies on the enclosed form, received by the Company, will be voted
at the meeting or any adjourned session thereof, all in accordance with the
terms of such proxies.
PROPOSAL 1
ELECTION OF DIRECTORS
It is intended that the persons named in the accompanying form of proxy will
vote to elect the first three persons listed below to serve as Class I
directors for a three-year term expiring at the 1997 Annual Meeting of the
Shareholders. However, if voting is cumulative, such proxies may cumulate the
total number of votes to which the shareholder executing the proxy is entitled
in favor of one or more of the nominees in such manner as such proxies shall in
their discretion determine, unless other instructions are given in the proxy by
the shareholder executing it. Nominees named in the accompanying form of proxy
who receive the greatest number of votes cast by the holders of the Company's
Common Stock and 6% Preferred Stock, voting as a single class, will be elected,
even though any such nominee may not receive a majority of the votes cast. The
remaining eight persons listed below as Class II and Class III directors will
continue in office for terms which expire at the 1995 and 1996 Annual Meeting
of the Shareholders, respectively, or, in each case, until their respective
successors are duly elected and qualified. Should any person named below as a
Class I director be unable or unwilling to serve as a director, persons acting
under the proxy intend to vote for such other person as management may
recommend, or the Board of Directors may exercise its exclusive power to fix
the number of directors at fewer than eleven.
On March 25, 1992, the Board fixed the number of directors at eleven. Gwain
H. Gillespie, a member of the Board since 1991 in Class III, retired from the
Board effective July 1, 1993. M. Anne Szostak was elected as a Class III
director effective July 1, 1993 to fill the vacancy created by Mr. Gillespie's
retirement. On December 15, 1993, the Board of Directors fixed the number of
directors at twelve and elected David T. Flanagan to Class III of the Board
effective January 1, 1994. In addition to the eleven directors listed below,
Matthew Hunter has been a member of the Board in Class I since 1989. Mr. Hunter
intends to retire from employment with the Company effective May 1, 1994 and
from service as a director effective as of the same date. In preparation for
Mr. Hunter's planned retirement, the Board, at its March 16, 1994 meeting,
fixed the number of directors at eleven effective May 1, 1994.
Set forth below is information about each nominee and continuing director.
Each person listed is currently serving as a director of the Company. In
addition, David T. Flanagan is President and Chief Executive Officer of the
Company, and Carlton D. Reed, Jr. serves as Chairman of the Board of Directors.
Since January 1, 1994, Matthew Hunter has served in the transitional position
of Chairman of the Company
2
<PAGE>
in preparation for his planned retirement effective May 1, 1994. Prior to that
date, Mr. Hunter served as President and Chief Executive Officer of the Company
from March 29, 1991 through December 31, 1993, and prior thereto, served as
Executive Vice President and Chief Operating Officer from July 1989.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
AND BUSINESS EXPERIENCE
DURING PAST FIVE
YEARS AND CURRENT FIRST
NAME AND DIRECTORSHIPS OF BECAME A
AGE PUBLIC COMPANIES DIRECTOR
-------- ----------------------- --------
<C> <S> <C>
CLASS I:
Charles H. Abbott (58).................. Chairman, Skelton, Tain- 1988
tor & Abbott, P.A. (At-
torneys)
Carlton D. Reed, Jr. (63)............... Chairman of the Board of 1971
the Company; Chairman of
the Board and Chief
Executive Officer, Reed
& Reed, Inc.
(Construction)
Kathryn M. Weare (45)................... Owner and Manager, The 1992
Cliff House (Resort and
conference center)
CLASS II:
E. James Dufour (59).................... Senior Vice President, 1971
Kyes Agency,
Inc. (General insurance
and real
estate); Partner,
Kyes/Philbrick
Real Estate
David M. Jagger (52).................... President and Treasurer, 1988
Jagger
Brothers, Inc.
(Textiles)
Charles E. Monty (67)................... Retired (1992) Chairman 1977
of the
Board, Maine Yankee
Atomic
Power Company (a);
Retired
(1989) Executive Vice
President
and Chief Operating
Officer of the
Company
Robert H. Reny (67)..................... President and Chief 1988
Executive
Officer, R. H. Reny,
Inc.
(Department stores);
President,
Downeast Wholesalers,
Inc.
(Wholesale dry goods);
President,
Renbro, Inc. (Real
estate);
Treasurer, Newman &
Beamis,
Inc. (Wholesale toys)
</TABLE>
- --------
(a) The Company owns 38 percent of the outstanding voting stock of Maine
Yankee Atomic Power Company.
3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
AND BUSINESS EXPERIENCE
DURING PAST FIVE
YEARS AND CURRENT FIRST
NAME AND DIRECTORSHIPS OF BECAME A
AGE PUBLIC COMPANIES DIRECTOR
-------- ----------------------- --------
<C> <S> <C>
CLASS III:
Charleen M. Chase (45).................. Executive Director, 1985
Community Concepts,
Inc. (Community action
agency)
David T. Flanagan (46).................. President and Chief Exec- 1994
utive Officer of the
Company, effective Janu-
ary 1, 1994; Executive
Vice President (July
1991 through December
1993); Senior Vice Pres-
ident, Finance and Law
(since September 1988);
Chairman of the Board of
Directors, Maine Yankee
Atomic Power Company (a)
Robert H. Gardiner (49)................. President, Maine Public 1992
Broadcasting
Corporation; previously
(1988 to 1992),
President and General
Manager, WCBB (Public
television)
M. Anne Szostak (43).................... Chairman, President and 1993
Chief Executive Officer,
Fleet Bank of Maine;
previously (1988 to
1991), Corporate Vice
President--Human
Resources, Fleet
Financial Group
</TABLE>
- --------
(a) The Company owns 38 percent of the outstanding voting stock of Maine
Yankee Atomic Power Company.
BOARD COMMITTEES, MEETINGS AND COMPENSATION
CERTAIN COMMITTEES OF THE BOARD
The Board's Audit Committee, which has as its members David M. Jagger
(Chair), Charleen M. Chase, Charles E. Monty and Kathryn M. Weare, held three
meetings in 1993. The Audit Committee recommends to the Board the independent
accountants to be selected by the Company and reviews the plan and scope of the
audit as well as the results and costs of the audit. The Committee also reviews
with the independent accountants and management the Company's internal
accounting procedures and controls, and the adequacy of the accounting services
provided by the Company's personnel.
The Governance Committee, now composed of Carlton D. Reed, Jr. (Chair),
Charles H. Abbott, Charleen M. Chase, E. James Dufour, David M. Jagger and
Robert H. Reny, has among its concerns the selection, performance, evaluation
and compensation of directors. The Committee will consider for nomination to
the Board individuals whose names have been submitted by shareholders in
writing. Supporting information should accompany any submission. The Governance
Committee also oversees the Company's long-range corporate planning and
succession planning, and evaluates the performance of the President and Chief
Executive Officer and may make recommendations to the Board concerning his
compensation, based on the recommendations of the Compensation and Benefits
Committee. The Governance Committee held three meetings in 1993.
4
<PAGE>
The Compensation and Benefits Committee, whose members are Robert H. Reny
(Chair), E. James Dufour, Robert H. Gardiner, David M. Jagger and M. Anne
Szostak, held six meetings in 1993. This committee reviews and makes
recommendations to the Board concerning compensation and benefit programs for
all executive officers and may also make recommendations to the Governance
Committee with respect to the compensation of the President and Chief Executive
Officer. The Compensation and Benefits Committee also administers the Company's
1987 Executive Incentive Plan.
MEETINGS OF THE BOARD
The Board held 14 meetings (including regularly scheduled and special
meetings) in 1993. Each director attended more than 75 percent of the aggregate
of the total number of Board meetings and the total number of meetings of all
committees on which that director served that were held during periods he or
she served as a director.
COMPENSATION OF DIRECTORS
In accordance with the established guidelines for the Board of Directors of
the Company, the Chairman of the Board receives an annual retainer of $25,200,
the Vice Chairman of the Board (a position that is currently vacant) receives
an annual retainer of $10,000, and each director (other than the Chairman or
Vice Chairman) who is the Chair of a committee of the Board and not an
executive officer of the Company receives an annual retainer of $8,400. Each
other director who is not an officer of the Company (an "outside director")
receives an annual retainer of $6,800. All retainers are payable quarterly. In
addition to ordinary travel expenses, all outside directors receive $600 for
each meeting of the Board attended, and all outside directors serving on a
committee of the Board receive $300 for each committee meeting attended on a
day on which they have also attended a meeting of the full Board or another
committee and $600 for any other committee meeting attended. A fee of $300 is
paid to outside directors for participating in a telephone meeting of the Board
or one of its committees.
In March 1988, the Company established a voluntary deferred compensation plan
for outside directors. Under the plan, a director who receives a retainer as
described above may elect to have all or a specified portion, in increments of
25 percent, of such director's retainer (but not meeting fees) for the calendar
year following the election and subsequent calendar years credited to a
deferred compensation account, maintained at the election of the director
either as a cash account or an account in units based on the value of the
Common Stock of the Company ("compensation units"). Compensation units will be
credited, to the extent of 50 percent, with matching compensation units.
Amounts credited to a director's cash account will accrue earnings equivalent
to interest, at an annual rate equal to the rate of return on equity earned by
the Company in the prior calendar year, and amounts credited as compensation
units and matching compensation units will be credited with the equivalent of
dividends on the Company's Common Stock. Such deferred amounts will be paid
solely in cash, in a lump sum or in installments commencing on the first
business day of the calendar year following the year in which the director
ceases to serve on the Board of Directors or of a specified calendar year
thereafter, as irrevocably elected in advance by the director.
In September 1991, the Board of Directors adopted a retirement plan for
outside directors. Under the plan each outside director who has completed five
or more years of service is eligible to receive, at the later of the attainment
of age 62 or when he or she ceases to serve on the Board, an annual benefit
equal to the amount of the director's basic annual retainer for the year the
director ceases to serve on the Board, payable monthly for a period equal to
the number of months the individual has served as an outside director. No death
benefit is provided under the plan. For 1993, the basic annual retainer for
each outside director, including the Chairman of the Board and each committee
Chair, was $6,800. This amount is included in the annual retainers for the
Chairman and the committee Chairs discussed above.
During 1993, the law firm of Skelton, Taintor & Abbott, P.A., of which Mr.
Abbott is Chairman, rendered legal services to the Company on a matter related
to the Company's business. The Company was
5
<PAGE>
charged the customary rate for such legal services and paid total fees of
$3,009.80 for the services received. Legal services rendered by, and payments
made to, the law firm were unrelated to Mr. Abbott's duties as a director of
the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Ms. Szostak, who is Chairman of the Board, President and Chief Executive
Officer of Fleet Bank of Maine, has served on the Compensation and Benefits
Committee of the Company's Board of Directors since July 21, 1993. Richard A.
Crabtree, Vice President, Retail Operations, of the Company served in 1993 and
continues to serve as a director of Fleet Bank of Maine.
SECURITY OWNERSHIP
The following table lists the number of shares of the Common Stock of the
Company beneficially owned as of March 21, 1994 by each director of the Company
and each of the executive officers of the Company named in the Summary
Compensation Table contained in this Proxy Statement. The total number of such
shares beneficially owned as of March 21, 1994 by all directors and executive
officers of the Company as a group is also listed. Shares listed as
beneficially owned include shares as to which the directors and executive
officers have or share the power to vote or the power to dispose. For non-
employee directors, listings include, where appropriate, shares of Common Stock
credited under the Company's Dividend Reinvestment and Common Stock Purchase
Plan ("DRP"). For executive officers, shares listed include, where appropriate,
DRP shares, restricted shares awarded under the Company's 1987 Executive
Incentive Plan, and shares credited under the Employee Savings and Investment
Plan for Non-Union Employees.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
DIRECTORS AND NAMED EXECUTIVE OFFICERS OWNED
-------------------------------------- ------------
<S> <C>
Charles H. Abbott.............................................. 535
Charleen M. Chase.............................................. 994
E. James Dufour................................................ 4,505
David T. Flanagan.............................................. 4,304
Robert H. Gardiner............................................. 100
Matthew Hunter................................................. 8,926
David M. Jagger................................................ 1,000
Charles E. Monty............................................... 1,837
Carlton D. Reed, Jr. .......................................... 2,862
Robert H. Reny................................................. 600
M. Anne Szostak................................................ 100
Kathryn M. Weare............................................... 118
Richard A. Crabtree............................................ 5,122
David E. Marsh................................................. 2,559
Arthur W. Adelberg............................................. 2,699
Donald F. Kelly................................................ 2,408
All directors and executive officers as a group (including per-
sons listed above)............................................ 46,932
</TABLE>
The number of shares of Common Stock of the Company beneficially owned as of
March 21, 1994 by each of the directors and named executive officers, and the
aggregate number of such shares beneficially
6
<PAGE>
owned as of that date by all of the directors and executive officers of the
Company as a group, constituted less than one percent of the total shares of
that class then outstanding. As of March 21, 1994, Mr. Abbott's spouse held
sole voting and investment power over 200 shares of the total number of shares
listed for Mr. Abbott and all shares listed for Ms. Chase were held jointly. Of
the shares listed for Mr. Crabtree and Mr. Kelly, 1,640 and 1,881 shares,
respectively, were held jointly as of that date. The total number of shares
held jointly for all directors and executive officers as a group as of March
21, 1994 was 4,515 shares. No director or officer owned as of March 21, 1994
any shares of 6% Preferred Stock or of any other class of the Company's equity
securities.
As of April 1, 1994, there was no person who was known to be the beneficial
owner of more than five percent of the Common Stock and the 6% Preferred Stock
of the Company in the aggregate. Christine M. Nyhan, trustee, 1825 Spindrift
Lane, La Jolla, California 92037, owned of record 1,675 shares of the Company's
6% Preferred Stock. The outstanding shares of Common Stock and 6% Preferred
Stock will vote together as a single class at the meeting. Shares held by
Christine M. Nyhan, trustee, represent approximately .05 percent of the
combined voting power of Common Stock and 6% Preferred Stock and approximately
29.31 percent of the voting power of the 6% Preferred Stock.
With respect to the reports on ownership and changes in ownership of the
stock of the Company required to be filed with the Securities and Exchange
Commission by directors and officers of the Company, Arthur W. Adelberg and
David E. Marsh, who are officers of the Company, each inadvertently filed late
one required report on Form 4 covering one transaction in connection with the
division of marital property.
7
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table presents information on compensation
to Matthew Hunter for the years during which Mr. Hunter held the position of
President and Chief Executive Officer and to other executive officers of the
Company for 1991, 1992 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------- ------------
NAME RESTRICTED
AND STOCK ALL OTHER
PRINCIPAL AWARD(S) COMPENSATION
POSITION(1) YEAR SALARY ($) BONUS ($)(4) ($)(5) ($)(6)
----------- ---- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Matthew Hunter.......... 1993 285,550.00 17,242.50 22,640.63 4,963.88
President and 1992 287,216.67 14,962.50 22,681.26 5,236.80
Chief Executive Offi-
cer(2) 1991 229,014.79 8,339.10 11,240.63
David T. Flanagan....... 1993 151,633.36 7,193.09 9,450.00 4,575.82
Executive Vice Presi-
dent 1992 147,699.92 6,195.00 9,382.88 4,425.00
1991 145,933.28 4,156.76 5,610.01
Richard A. Crabtree..... 1993 151,783.36 6,208.77 8,150.63 4,578.40
Senior Vice President, 1992 147,849.92 5,420.63 8,213.01 4,425.00
Customer Services and 1991 146,083.28 3,876.51 5,238.76
Division Operations
David E. Marsh.......... 1993 126,016.72 5,152.34 6,759.38 3,795.09
Senior Vice President, 1992 122,700.00 4,498.20 6,804.38 3,672.00
Finance, and Chief 1991 97,116.12 1,906.33 2,578.13
Financial Officer
Arthur W. Adelberg...... 1993 125,866.72 5,152.34 6,759.38 3,790.28
Senior Vice President, 1992 122,600.00 4,498.20 6,804.38 3,672.00
Law and Governmental 1991 105,266.64 1,996.27 2,701.88
Relations
Donald F. Kelly(3)...... 1993 135,345.71 5,265.08 6,916.88 687,526.79
Senior Vice President, 1992 150,889.92 5,530.88 8,380.13 4,439.73
Production, Engineering 1991 148,999.92 3,952.76 5,321.25
and Power Supply
</TABLE>
- --------
(1) The principal positions listed were held as of December 31, 1993 by the
executive officers named in the Summary Compensation Table other than Mr.
Kelly, who retired from employment with the Company effective November 1, 1993.
Mr. Flanagan was elected President and Chief Executive Officer effective
January 1, 1994. Mr. Hunter has served in the transitional position of Chairman
of the Company since
8
<PAGE>
January 1, 1994 in preparation for his planned retirement effective May 1,
1994. As a result of the reorganization of the Company effective as of March 1,
1994, the other named executive officers now hold the following principal
positions: Mr. Crabtree, Vice President, Retail Operations; Mr. Marsh, Vice
President, Corporate Services, and Chief Financial Officer; and Mr. Adelberg,
Vice President, Law and Power Supply.
(2) Mr. Hunter served as President and Chief Executive Officer effective
March 29, 1991 through December 31, 1993. Compensation reported for 1991
includes compensation received in his position as President and Chief Executive
Officer and in his previous position as Executive Vice President and Chief
Operating Officer of the Company.
(3) Mr. Kelly retired from employment with the Company effective November 1,
1993.
(4) Amounts listed are cash incentive payments under the Company's 1987
Executive Incentive Plan.
(5) Awards listed were granted pursuant to the 1987 Executive Incentive Plan.
At December 31, 1993, the number of shares and value of the aggregate
restricted stock holdings of each of the named executive officers were as
follows: Mr. Hunter, 2,002 shares and $30,030; Mr. Flanagan, 1,019 shares and
$15,285; Mr. Crabtree, 952 shares and $14,280; Mr. Marsh, 581 shares and
$8,715; and Mr. Adelberg, 598 shares and $8,970. Pursuant to the terms of the
1987 Executive Incentive Plan, the shares awarded to Mr. Kelly under the Plan
became unrestricted on the effective date of his retirement (November 1, 1993).
Dividends on shares of restricted stock are earned at the same rate as
dividends on the unrestricted Common Stock of the Company and are paid either
during the 3-year restriction period applicable to these shares or at the end
of the restriction period.
(6) For 1993, amounts of All Other Compensation include (i) matching
contributions by the Company to the Employee Savings and Investment Plan for
Non-Union Employees in the amount of $4,800 for Mr. Hunter, $4,543 for Mr.
Flanagan, $4,543 for Mr. Crabtree, $3,770 for Mr. Marsh, $3,770.08 for Mr.
Adelberg, and $4,050.28 for Mr. Kelly; (ii) fees in the amount of $4,800 paid
to Mr. Kelly for consulting services rendered to the Company by Mr. Kelly after
his retirement, pursuant to an agreement between the Company and Mr. Kelly;
(iii) the value of term life insurance premiums paid under universal life
insurance policies for the effective period of such policies in 1993 (October
14, 1993 through December 31, 1993) in the amount of $163.88 for Mr. Hunter,
$32.82 for Mr. Flanagan, $35.40 for Mr. Crabtree, $25.09 for Mr. Marsh, and
$20.20 for Mr. Adelberg. The Company has purchased universal life insurance
policies for Mr. Hunter, Mr. Flanagan, Mr. Crabtree, Mr. Marsh and Mr.
Adelberg, who have no immediate right to receive the cash surrender value of
the policies and may never have any right to receive the cash surrender value.
The respective interests of these five executive officers in the cash surrender
value of the policies will vest only if certain conditions are first satisfied.
If an executive officer's interest in the cash surrender value vests, the
retirement benefits payable to the executive officer by the Company under its
Supplemental Executive Retirement Plan (the "SERP"), a defined benefit
retirement income plan, will be reduced dollar for dollar by the amount of the
cash surrender value of the policy at the time it vests. The premium paid on
each of these policies is designed to produce a cash surrender value which is
equal to, but which may be less than, the benefits payable under the SERP. Due
to Mr. Kelly's planned retirement on November 1, 1993, a life insurance policy,
such as the universal life insurance policies purchased on October 14, 1993 for
the other named executive officers, was not a suitable means of satisfying the
Company's obligation under the SERP to pay retirement benefits to Mr. Kelly
since there was insufficient time to allow the buildup of cash surrender value
for that purpose. To satisfy its obligation to pay retirement benefits to Mr.
Kelly under the SERP, the Company purchased an annuity contract for Mr. Kelly
at the purchase price of $386,845.61. The annuity contract is designed to
provide Mr. Kelly with substantially the same monthly retirement benefit to
which he is entitled under the SERP and operates to satisfy completely the
Company's obligation to pay SERP benefits to Mr. Kelly. To maintain the level
of SERP benefits payable to Mr. Kelly through the annuity contract, the Company
paid certain associated income taxes in the amount of $291,830.90 on Mr.
Kelly's behalf.
9
<PAGE>
LONG-TERM INCENTIVE PLAN--AWARDS FOR LAST FISCAL YEAR(1)
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
NON-STOCK PRICE-BASED PLANS(3)
---------------------------------
NUMBER OF PERFORMANCE
PERFORMANCE PERIOD UNTIL
RESTRICTED MATURATION
NAME SHARES(2) OR PAYOUT THRESHOLD(#) TARGET(#) MAXIMUM(#)
- ---- ----------- ------------ ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Matthew Hunter...... 4,889 3 years 0 4,889 7,333
David T. Flanagan... 1,959 3 years 0 1,959 2,938
Richard A. Crabtree. 1,475 3 years 0 1,475 2,212
David E. Marsh...... 1,475 3 years 0 1,475 2,212
Arthur W. Adelberg.. 1,475 3 years 0 1,475 2,212
</TABLE>
- --------
(1) In Proposal 2 in this Proxy Statement, the Company asks the holders of
Common Stock and 6% Preferred Stock to consider approval of the Company's Long-
Term Incentive Plan, which was adopted by the Board of Directors at its
February 16, 1994 meeting subject to shareholder approval. As provided in the
Long-Term Incentive Plan, awards granted prior to any approval by the holders
of the Company's Common Stock and 6% Preferred Stock are conditioned on such
approval at the 1994 Annual Meeting of the Shareholders. The material features
of the Long-Term Incentive Plan are described in Proposal 2.
(2) Awards are contingent grants of shares of performance restricted Common
Stock of the Company which were made in April 1994 due to the timing of
adoption of the Long-Term Incentive Plan. Dividends on these shares are
reinvested in additional shares of performance restricted Common Stock during
the performance period until any payout.
(3) At the end of the 3-year performance period, the number of shares,
including shares resulting from dividend reinvestment, actually paid out will
be based on the average percentage change over the performance period in the
Company's total shareholder return (stock price plus dividends) as compared
with the 3-year average percentage change in the total shareholder return of
the 100 other utilities against which the Company's performance is measured in
the performance graph in the Proxy Statement for the 1993 Annual Meeting. The
number of shares listed as estimated threshold, target and maximum payouts do
not reflect the addition of shares resulting from dividend reinvestment or the
subtraction of shares necessary to satisfy tax withholding obligations.
Regardless of the Company's performance against the peer group of utilities, no
award payout will be made for a performance period during which the dividend on
the Company's Common Stock has been reduced by action of the Company's Board of
Directors declaring a reduced dividend. In that event, the Compensation and
Benefits Committee of the Board of Directors is given the discretion under the
Long-Term Incentive Plan to determine whether and to what extent to defer award
payouts. Any award payouts will be distributed in the form of unrestricted
Common Stock of the Company.
PENSION PLAN TABLES AND EMPLOYMENT ARRANGEMENTS
BASIC PENSION PLAN
The Company makes payments to the Retirement Income Plan for Non-Union
Employees (the "Basic Pension Plan") for virtually all full-time non-union
employees of the Company, including the executive officers. Estimated annual
retirement benefits payable by the Company under the Basic Pension Plan,
assuming retirement on December 31, 1993 at age 65, for average salary levels
and credited years of service specified in the following Basic Pension Plan
Table are as set forth in the Table.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------
AVERAGE ANNUAL SALARY FOR
5 HIGHEST CONSECUTIVE YEARS
PRECEDING RETIREMENT 15 20 25 30 35
--------------------------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000............................. $35,265 $47,037 $58,817 $ 70,607 $ 73,370
175,000............................. 41,640 55,537 69,443 83,357 86,751
200,000............................. 48,012 64,037 80,068 96,107 100,126
225,000............................. 52,917 70,573 88,238 105,911 110,411
250,000............................. 52,917 70,573 88,238 105,911 110,411
275,000............................. 52,917 70,573 88,238 105,911 110,411
300,000............................. 52,917 70,573 88,238 105,911 110,411
325,000............................. 52,917 70,573 88,238 105,911 110,411
350,000............................. 52,917 70,573 88,238 105,911 110,411
375,000............................. 52,917 70,573 88,238 105,911 110,411
400,000............................. 52,917 70,573 88,238 105,911 110,411
</TABLE>
10
<PAGE>
For the executive officers named in the Summary Compensation Table other than
Mr. Hunter, compensation covered by the Basic Pension Plan consists of base
salary, including base salary shown in the Salary column of that Table. Because
the amount of compensation that could be taken into account in determining
retirement benefits under the Basic Pension Plan was limited by federal tax law
to $235,840 in 1993, Mr. Hunter's 1993 covered compensation under the Basic
Pension Plan was limited to that amount. Effective January 1, 1994, the annual
limit on compensation that can be taken into account in determining benefits
under the Basic Pension Plan was decreased to $150,000. Messrs. Hunter,
Flanagan, Crabtree, Marsh, Adelberg and Kelly have been credited with 34, 9,
21, 19, 8 and 28 years of service, respectively. Benefits listed in the Basic
Pension Plan Table are payable as a single life annuity and reflect an offset
for estimated Social Security benefits payable upon attainment of age 65.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
The Company maintains a Supplemental Executive Retirement Plan (the "SERP")
that provides supplemental retirement income to selected executive officers of
the Company. Estimated annual retirement benefits payable by the Company under
the SERP, assuming retirement on December 31, 1993 at age 65, for average
compensation levels and credited years of service specified in the following
SERP Table are as set forth in the Table.
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
AVERAGE ANNUAL
COMPENSATION
FOR 3 HIGHEST YEARS 15 20 25 30 35
------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000........................... $ 23,235 $ 30,963 $ 38,683 $ 26,893 $ 24,130
175,000........................... 26,610 35,463 44,307 30,393 26,999
200,000........................... 29,988 39,963 49,932 33,893 29,874
225,000........................... 34,833 46,427 58,021 40,339 35,839
250,000........................... 44,583 59,427 74,262 56,589 52,089
275,000........................... 54,333 72,427 90,512 72,839 68,339
300,000........................... 64,083 85,427 106,762 89,089 84,589
325,000........................... 73,833 98,427 123,012 105,339 100,839
350,000........................... 83,583 111,427 139,262 121,589 117,089
375,000........................... 93,333 124,427 155,512 137,839 133,339
400,000........................... 103,083 137,427 171,762 154,089 149,589
</TABLE>
For the executive officers named in the Summary Compensation Table,
compensation covered by the SERP consists of base salary and incentive awards
received under the Company's 1987 Executive Incentive Plan, including amounts
shown in the Salary, Bonus and Restricted Stock Awards columns of that Table.
Messrs. Hunter, Flanagan, Crabtree, Marsh, Adelberg and Kelly have been
credited with 34, 9, 21, 19, 8 and 28 years of service, respectively. Years of
credited service up to 25 years are taken into account in computing retirement
benefits under the SERP. Benefits listed in the SERP Table reflect the
deduction of benefits payable under the Basic Pension Plan upon attainment of
age 65, as shown in the Basic Pension Plan Table. SERP benefits payable by the
Company to Messrs. Hunter, Flanagan, Crabtree, Marsh and Adelberg will be
further reduced, dollar for dollar, by the amount of the cash surrender value
of universal life insurance policies, which have been purchased for these five
executive officers, at such time as their respective interests in the cash
surrender value may vest. Benefits are also subject to offset by any amount
payable as a retirement benefit under any employment agreement between the
Company and a named executive officer.
EMPLOYMENT AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
On October 20, 1993, the Company entered into an employment agreement with
Mr. Hunter which replaced the employment agreement between the Company and Mr.
Hunter dated August 28, 1991. Under the October 1993 agreement, Mr. Hunter
agreed to serve as President and Chief Executive Officer, subject to
11
<PAGE>
the Company's By-Laws and other customary regulation, for a period determined
by the Company's Board of Directors not extending later than February 1, 1995.
The agreement provides for Mr. Hunter to be paid an annual salary fixed at
$285,000 during the period he is employed by the Company. During the term of
the agreement, Mr. Hunter is required to devote his full time and attention to
the business of the Company.
The agreement provides that upon Mr. Hunter's retirement, or in the event the
Company terminates Mr. Hunter's employment prior to February 1, 1995 for any
reason other than cause as defined in the agreement, he will be entitled to
receive an annual benefit of 65 percent of his total compensation for the
preceding 12-month period, including base salary and incentive compensation
under the Company's 1987 Executive Incentive Plan but excluding any long-term
incentive compensation. The annual benefit under the agreement would be reduced
by retirement benefits payable to Mr. Hunter under the Company's Basic Pension
Plan and the SERP. After effecting such reductions, it is anticipated that the
incremental annual benefit payable to Mr. Hunter under the agreement would be
approximately $41,000.
Under the terms of the agreement, the Company may terminate Mr. Hunter's
employment for cause, without obligation for any payments under the agreement.
The agreement provides that if Mr. Hunter dies prior to February 1, 1995 and to
receiving any benefits under the agreement, his spouse will be entitled to
receive one-half of Mr. Hunter's benefit entitlement, but if he dies having
received benefits under the agreement, his spouse will receive one-half of the
benefit he was receiving at the time of his death.
On November 1, 1993, after 29 years of service with the Company, Mr. Kelly
retired from employment with the Company. To satisfy its obligation to pay
retirement benefits to Mr. Kelly under the SERP, the Company purchased an
annuity contract for Mr. Kelly. The annuity contract is designed to provide Mr.
Kelly with substantially the same monthly retirement benefit to which he is
entitled under the SERP and operates to satisfy completely the Company's
obligation to pay SERP benefits to Mr. Kelly. To maintain the level of SERP
benefits payable to Mr. Kelly through the annuity contract, the Company paid
certain associated income taxes on Mr. Kelly's behalf. The purchase price of
the annuity contract and the amount of the tax payment are shown in the Summary
Compensation Table in this Proxy Statement. Additional discussion of the
annuity contract and tax payment is contained in footnote number 6 to the
Summary Compensation Table.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation policies that are applied by the Compensation and Benefits
Committee of the Board of Directors of the Company (the "Committee") to all of
the Company's executive officers, including the President and Chief Executive
Officer and the other executive officers listed in the Summary Compensation
Table, with respect to base salary and incentive compensation reflect two
fundamental principles that apply to every employee of the Company. These
principles are (i) that the Company strives to offer competitive compensation
to attract and retain well-qualified employees and periodically reviews and
adjusts compensation to take into account individual contributions and
performance, and (ii) that part of every employee's compensation is tied
directly to Company performance for the benefit of its shareholders, customers
and employees.
With respect to all executive officers of the Company, including the
President and Chief Executive Officer, the first compensation principle is
implemented by base salary, which is a fixed amount measured against comparable
positions in the electric utility industry that also takes into account
individual performance. The second principle is implemented in part through
short-term incentive compensation, which is a variable amount paid only if and
to the extent certain financial and operating goals established annually by the
Committee are met. A new long-term incentive compensation program for the
President and Chief Executive Officer and other selected executive officers,
under which variable incentive compensation may be paid based on Company
performance measured by total shareholder return, also will implement the
compensation principle of pay for performance.
12
<PAGE>
BASE SALARY. The base salary of each executive officer of the Company,
including the President and Chief Executive Officer, is measured against the
median base pay level for positions with comparable functional responsibilities
at electric utilities with revenues that are comparable in size to the
Company's revenues. Median base pay levels for this segment of the electric
utility market are developed for the Company by a nationally-recognized
independent compensation consultant, based on an annual study of compensation
paid by electric utilities which are members of the Edison Electric Institute
("EEI"), a trade association for investor-owned electric utilities of which the
Company is also a member. The study of EEI member utilities takes into account
similarities in functional responsibilities of executive officer positions and
actual base salaries earned by electric utility officers in functionally
equivalent positions. A recommended salary range for each position is then
developed for the Company by the consultant, using the median market salary as
the midpoint of the range.
To preserve the Company's ability to attract and retain highly-qualified
persons in key executive management positions, the Committee annually reviews
and evaluates the salary study information compiled and analyzed each year by
the independent compensation consultant, which serves as an adviser to the
Committee. In addition, the Committee annually reviews recommended salary
ranges for executive officer positions. The Committee periodically takes
actions on base salaries based on this information and the recommendations of
its adviser, using the median market salary for comparable positions as a
benchmark for developing salary recommendations while taking into account
economic conditions in Maine.
While the median market salary for comparable positions is the standard
against which base salary for each of the Company's executive officers is
measured and a salary range is established for each of the Company's executive
officer positions and not for individual officers, salary adjustments may be
made by the Committee to recognize individual contributions and performance. In
addition, the Committee may make other adjustments to base salary in connection
with an increase in the scope of responsibilities of an executive officer's
position.
In 1993, the Committee adjusted salary ranges by 3 percent for executive
officer positions, including the position of President and Chief Executive
Officer, to take into account the electric utility market's planned upward
adjustment of salary ranges for top management positions for that year.
Although adjustments in salary ranges were also made in 1992 to reflect upward
movement in the salary ranges of electric utility executive positions, in
recognition of economic conditions in Maine, the Committee did not put into
effect in 1992 any salary increases corresponding to those adjustments in
salary ranges. In 1993, the Committee supported a 4 percent salary increase for
all executive officers other than the President and Chief Executive Officer to
move executive officer salaries closer to the median market base pay level at
which base salary for each of the Company's executive officers is targeted. The
Committee believes that in view of the absence of any salary adjustments in
1992 to correspond to the upward adjustment in salary ranges during that year
and the average 13 percent disparity in 1992 between base salaries of the
Company's executive officers and higher median market salaries, the 4 percent
increase will help to ensure the retention of persons in key executive
management positions by placing them within range of the market for their
positions.
Mr. Hunter agreed to forgo any increase in base salary in 1993 and any future
base salary increases in consideration of an increase from 50 percent to 65
percent of the final twelve months of total compensation earned by him,
excluding any long-term incentive compensation, available as retirement income
under his employment contract with the Company. The increase in the applicable
percentage is consistent with the percentage applied under the Company's
Supplemental Executive Retirement Plan (the "SERP") to the compensation base to
determine retirement benefits for Mr. Hunter and the other executive officers
listed in the Summary Compensation Table under the SERP. The percentage of
compensation available as retirement income under the SERP was developed from
New England electric utility market information and is approximately 10 percent
below the average percentage applied to determine benefits under supplemental
retirement income plans in that market. Amounts payable to Mr. Hunter under his
employment contract continue to be subject to reduction by all benefits payable
to him under the SERP and the Company's basic pension plan.
13
<PAGE>
As a result of these actions, in 1993 the base salaries of the Company's
executive officers, including the President and Chief Executive Officer, were
within a competitive range of, but lower than, the median base salaries of
executive officers with comparable functional responsibilities at electric
utilities with comparable revenues. Specifically, the base salaries of the
Company's executive officers were, on average, approximately 11 percent below
the median base salaries for comparable positions in the electric utility
market segment indicated. The 1993 base salary of the President and Chief
Executive Officer was approximately 16 percent below the median market salary
for chief executive officers in the same market segment. In acknowledgment of
the economic climate, the Committee did not grant any increases in the base
salaries of the Company's executive officers in 1993 to reflect individual
contributions and performance.
SHORT-TERM INCENTIVE COMPENSATION. In 1993, the Company's short-term
incentive compensation program for its executive officers, including the
President and Chief Executive Officer, was tied to both the Company's short-
term financial performance and the Company's achievement of certain operating
goals for the benefit of its shareholders, customers and employees. Since
approval in 1988 by the shareholders of the Company of the short-term incentive
compensation program for the Company's executive officers in the form of the
1987 Executive Incentive Plan (the "Plan"), the Committee has adopted specific
and measurable performance goals annually. Incentive compensation under the
Plan, which has been a combination of the Common Stock of the Company and cash,
has been and for 1993 was awarded based on the degree of achievement of these
goals.
The performance goals set by the Committee under the Plan take into
consideration the Company's annual and longer-term planning and measurement
processes evidenced by its Corporate Goals and Objectives, which are adopted
annually by the Board of Directors. In this way, the incentive compensation
program under the Plan, as administered by the Committee, supports the
Company's financial and operating goals.
For 1993, the Committee adopted five performance goals: earning a targeted
return on equity; attaining a targeted three-year average differential between
the Company's price of electricity and the higher prices of a peer group of New
England electric utilities; assuring customer satisfaction as evidenced by a
targeted customer favorability rating developed from survey data; reducing
safety incidents, including lost workdays and the number of accidents, to
specified levels; and continuing the Company's demand-side management ("DSM")
efforts by maintaining a DSM presence in each of the markets served by the
Company, treating at least 4,500 residences with energy saving measures,
conducting at least 400 informational home visits for certain high-usage
customers, and establishing at least five total quality management teams with
commercial or industrial customers or both to address energy efficiency issues.
For all executive officers, including the President and Chief Executive
Officer, 30 percent of the potential maximum award payable for attainment of
targeted levels of performance for 1993 was based on the earnings goal, 30
percent on the price of electricity goal, 12.5 percent on the customer
satisfaction goal, 12.5 percent on the safety goal, and 15 percent on the DSM
goal. The potential maximum award payout to the President and Chief Executive
Officer was 20 percent of base salary and ranged from 10 percent to 16 percent
of base salary for the other executive officers depending on their respective
positions.
As in each prior year for which the Plan has been in effect, in 1993 the
earnings goal was the keystone to awards of incentive compensation for that
year. Under this approach, no incentive compensation is awarded under any of
the performance goals set by the Committee unless a threshold return on equity
equal to 90 percent of the targeted return is exceeded. Exceeding the return on
equity threshold results in a payout only under the earnings goal. Payouts for
performance above the threshold but below the target are based on the degree of
achievement of this goal and are proportionately higher for a greater level of
performance.
In adopting the 1993 performance goals, the Committee provided that a
threshold that was approximately 75 percent of the targeted level of
performance under the price of electricity goal must be
14
<PAGE>
exceeded for any payout to be made under that goal. Performance above the
threshold was designed to result in payouts, in increments of 20 percent of the
portion of the total incentive award payable for satisfaction of this goal
based on the extent of the differential between the Company's electricity price
and the higher prices of the peer group, up to 100 percent of this amount for
targeted performance. In addition, the Committee decided that incentive
compensation under the customer satisfaction, safety and DSM goals,
respectively, would be awarded only if the respective targets under these goals
were attained in full. By requiring performance to exceed the threshold level
under the price of electricity goal and correlating performance and payout
levels under that goal, and by tying the availability of awards under the
customer satisfaction, safety and DSM goals to full satisfaction of those
goals, the Plan also serves to promote benefits to the Company's customers.
In 1993, the Company exceeded the threshold return on equity and reached 93
percent of the targeted performance level. Mr. Hunter received an award of 1.8
percent of his 1993 base salary for the level of performance achieved under
this goal, and would have received an award of 6 percent of base salary if the
targeted return on equity had been attained, with potentially higher payouts
for performance exceeding the target. The Company's performance under the price
of electricity goal exceeded the threshold level of performance established for
1993 and represented 98.8 percent of targeted performance, resulting in a
payout to Mr. Hunter of 4.8 percent of his 1993 base salary out of a potential
maximum payout of 5 percent of his base salary in connection with this goal.
The customer satisfaction and DSM goals were attained in full in 1993,
resulting in payouts to the President and Chief Executive Officer of 2.5
percent of his base salary with respect to the customer satisfaction goal and 3
percent of base salary for the DSM goal. These amounts represent the maximum
percentages of base salary for this position available for awards in 1993 for
attainment of these performance goals. The Company did not attain its safety
goal in 1993. Accordingly, there was no payout in connection with that goal.
Awards of incentive compensation to the other executive officers of the Company
were made under the earnings, price of electricity, customer satisfaction and
DSM goals at percentages of base salary lower than the percentages applied to
the President and Chief Executive Officer, depending on the officers'
respective positions in the Company. Awards under the performance goals for
1993 as well as potential awards based on attainment of all goals at specified
levels of performance represent the same proportions of total short-term
incentive compensation for all executive officers, including the President and
Chief Executive Officer.
Of the total short-term incentive compensation awarded for 1993 to the
Company's executive officers, including the President and Chief Executive
Officer, approximately one-half was awarded in the form of shares of the
Company's Common Stock, at the election of the respective officers, and the
remaining portion was paid out in cash. The Company matched each share of stock
awarded with one-half share of Common Stock. All shares of stock, including
matching stock, are subject to a three-year restriction period from the date of
the award. During this period the stock may not be sold or otherwise
transferred and the matching stock is subject to forfeiture if an officer's
employment with the Company terminates for any reason other than retirement,
disability or death. At the end of the three-year period, the shares of stock
awarded for 1993 and the related matching stock will be distributed to the
executive officers and will no longer be subject to restrictions.
The deferred payout of awards of stock and matching stock creates a tie
between a portion of annual compensation and the future price of the Company's
Common Stock since the actual value of the stock award and the matching stock
when distributed will be equal to the market price of the Company's stock at
that time. This link provides incentives for the Company's executive officers
to work towards achieving growth in value for shareholders by aligning the
interests of executive management with those of the Company's shareholders over
the longer term.
LONG-TERM INCENTIVE COMPENSATION. On the recommendation of the Committee, the
Board of Directors of the Company has adopted a long-term incentive
compensation program, in the form of the
15
<PAGE>
Long-Term Incentive Plan ("LTIP"), for the President and Chief Executive
Officer and selected other executive officers whose contributions and
responsibilities are likely to have a significant impact on the future of the
Company. The LTIP is intended to focus the attention of this group of executive
officers more sharply on a performance objective that is designed to increase
value to shareholders over the longer term. In addition, the LTIP is intended
to provide compensation opportunities that are competitive with those offered
by other electric utilities, as recommended in the final report of the auditors
in connection with the management audit of the Company initiated by the Maine
Public Utilities Commission.
The LTIP seeks to accomplish these objectives by providing for contingent
grants of performance restricted shares of the Common Stock of the Company for
each three-year performance period. For the performance period beginning
January 1, 1993, Mr. Hunter was granted 4,889 shares of performance restricted
Common Stock, and the other participating executive officers listed in the
Long-Term Incentive Plan Awards Table in this Proxy Statement were granted
lesser amounts, as shown in that Table. As provided in the LTIP, all awards for
1993 are conditioned on the approval of the LTIP by the holders of the
Company's Common Stock and 6% Preferred Stock at the 1994 Annual Meeting of the
Company's Shareholders.
The number of shares contingently granted to each of these executive
officers, including the President and Chief Executive Officer, reflects a fixed
percentage of the midpoint of the salary range for that executive officer's
position. The percentage applied to midpoint represents an average percentage
of median base salary awarded as long-term incentive compensation at electric
utilities included in the EEI compensation study. Unlike median base salaries,
which vary by size of utility revenues, average levels of long-term incentive
compensation do not vary across the total sample of utilities in the EEI study.
For this reason, the reference group is the group of all electric utilities
with long-term incentive compensation programs rather than a segment of this
market. Since the midpoint of the salary ranges for the Company's executive
officers is equivalent to the median market salaries for their respective
positions, the level of contingent grants under the LTIP is competitive with
market levels of long-term incentive compensation.
During the three-year performance period that began as of January 1, 1993,
the shares of performance restricted stock that were contingently granted for
that period, as well as additional shares resulting from the reinvestment of
dividends on the shares granted, will remain completely at risk and subject to
forfeiture to the extent performance results are not achieved. At the end of
the performance period, the number of shares, including shares resulting from
dividend reinvestment, actually paid out will be based on the average
percentage change over the performance period in the Company's total
shareholder return (stock price plus dividends) as ranked against the three-
year average percentage change in the total shareholder return of the 100 other
utilities against which the Company's performance is measured in the
performance graph in the Proxy Statement for the 1993 Annual Meeting.
Performance demonstrating higher returns to shareholders will yield payouts of
a larger number of the shares contingently granted and the shares resulting
from dividend reinvestment, with performance above the targeted level designed
to result in a payout of a supplemental number of shares. No shares will be
paid out for performance resulting in a ranking in the lowest quarter.
Regardless of the Company's performance against the peer group of utilities, no
award payout will be made for a performance period during which the dividend on
the Company's Common Stock has been reduced by action of the Company's Board of
Directors declaring a reduced dividend. In that event, the Committee may
exercise its discretion under the LTIP to determine whether and to what extent
to defer award payouts. Any award payouts will be distributed in the form of
unrestricted Common Stock of the Company.
Together with the 1987 Executive Incentive Plan, the LTIP places a portion of
total pay for executive officers at risk by conditioning awards of incentive
compensation on achievement of performance results. By conditioning awards of
short-term incentive compensation on attainment of specific financial and
operating goals and by tying the ultimate value of the stock portion of the
award and the matching stock to the market price of Company stock, the
Company's short-term incentive compensation program focuses the attention of
the Company's executive officers more keenly on the interests of the Company's
shareholders, customers and employees. Likewise, by providing a close link
between shareholder returns and compensation opportunities
16
<PAGE>
and delivering pay only if and to the extent performance results are achieved,
the LTIP will serve to sharpen the long-term focus on increasing shareholder
value.
ALL OTHER COMPENSATION. For 1993, amounts of All Other Compensation in the
Summary Compensation Table include matching contributions by the Company to the
Employee Savings and Investment Plan for Non-Union Employees, which is
available to all non-union employees of the Company on the same terms, in the
amount of $4,800 for Mr. Hunter and in lesser amounts for the other executive
officers of the Company. The amount of matching contributions made for the
Company's non-union employees, including its executive officers, participating
in the plan is equal to 60 percent of the first 5 percent of salary invested in
the plan by an employee, up to a specified maximum salary for the executive
officers.
Compensation reported also includes the value of term life insurance premiums
paid under universal life insurance policies for the effective period of such
policies in 1993 (October 14, 1993 through December 31, 1993) in the amount of
$163.88 for Mr. Hunter and in lesser amounts for the executive officers listed
in the Summary Compensation Table other than Mr. Kelly. The Company has
purchased universal life insurance policies for Mr. Hunter, Mr. Flanagan, Mr.
Crabtree, Mr. Marsh and Mr. Adelberg, who have no immediate right to receive
the cash surrender value of the policies and may never have any right to
receive the cash surrender value. The respective interests of these five
executive officers in the cash surrender value of the policies will vest only
if certain conditions are first satisfied. If an executive officer's interest
in the cash surrender value vests, the retirement benefits payable to the
executive officer by the Company under its Supplemental Executive Retirement
Plan (the "SERP"), a defined benefit retirement income plan, will be reduced
dollar for dollar by the amount of the cash surrender value of the policy at
the time it vests. The premium paid on each of these policies is designed to
produce a cash surrender value which is equal to, but which may be less than,
the benefits payable under the SERP.
On November 1, 1993, after 29 years of service with the Company, Mr. Kelly
retired from employment with the Company. Due to Mr. Kelly's planned retirement
on November 1, 1993, a life insurance policy, such as the universal life
insurance policies purchased on October 14, 1993 for the other named executive
officers, was not a suitable means of satisfying the Company's obligation under
the SERP to pay retirement benefits to Mr. Kelly since there was insufficient
time to allow the buildup of cash surrender value for that purpose. To satisfy
its obligation to pay retirement benefits to Mr. Kelly under the SERP, the
Company purchased an annuity contract for Mr. Kelly. The annuity contract is
designed to provide Mr. Kelly with substantially the same monthly retirement
benefit to which he is entitled under the SERP and operates to satisfy
completely the Company's obligation to pay SERP benefits to Mr. Kelly. To
maintain the level of SERP benefits payable to Mr. Kelly through the annuity
contract, the Company paid certain associated income taxes on Mr. Kelly's
behalf. The payments made in connection with the Company's obligation to pay
retirement benefits to Mr. Kelly under the SERP were intended to address the
particular circumstances arising from the timing of Mr. Kelly's planned
retirement and do not reflect a policy determination.
Compensation and Benefits Committee
Robert H. Reny (Chair)
E. James Dufour
Robert H. Gardiner
David M. Jagger
M. Anne Szostak
17
<PAGE>
SHAREHOLDER RETURN COMPARISON
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company with the cumulative total return on the S&P 500
Index and the Edison Electric Institute Index of 100 other investor-owned
electric utilities ("EEI 100 Index") at December 31 for each of the last five
fiscal years (assuming the investment of $100 in the Company's Common Stock,
the S&P 500 Index and the EEI 100 Index on December 31, 1988, and the
reinvestment of all dividends).
[GRAPH]
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Central Maine Power Company....................... $100 $120 $115 $157 $173 $117
S&P 500 Index..................................... $100 $132 $128 $166 $179 $197
EEI 100 Index..................................... $100 $130 $132 $169 $182 $203
</TABLE>
The foregoing Compensation Committee Report on Executive Compensation and
Shareholder Return Comparison (including but not limited to the graph) will not
be deemed incorporated by reference by any general statement incorporating or
purporting to incorporate by reference this Proxy Statement into any filing
under the Securities Act of 1933 or under the Securities Exchange Act of 1934,
or any other filing with the Securities and Exchange Commission, whether such
statement was made prior to, or is made contemporaneously with or after, the
date of this Proxy Statement.
18
<PAGE>
PROPOSAL 2
APPROVAL OF
LONG-TERM INCENTIVE PLAN
The Board of Directors of the Company has adopted, subject to shareholder
approval, the Central Maine Power Company Long-Term Incentive Plan (the "Long-
Term Plan"), under which incentive compensation in the form of the Company's
Common Stock may be paid to selected key employees of the Company depending on
the extent to which a performance objective is attained. The purpose of the
Long-Term Plan is to motivate key employees to attain and surpass a long-range
performance objective that is intended to enhance total shareholder return, and
to provide competitive compensation opportunities in accordance with the
recommendation in the June 1993 final report of the auditors in connection with
the management audit of the Company initiated by the Maine Public Utilities
Commission. The Long-Term Plan was given effect as of January 1, 1993, subject
to approval by the affirmative votes of a majority of the votes cast by the
holders of the Company's Common Stock and 6% Preferred Stock, voting as a
single class, present or represented at the Annual Meeting.
If shareholders approve the Long-Term Plan, grants and payouts of shares
under the Long-Term Plan will be exempt from the operation of Section 16(b) of
the Securities Exchange Act of 1934 under the exemption made available by Rule
16b-3 adopted by the Securities and Exchange Commission, provided that the
other requirements of that Rule are also met. Section 16(b), which governs
transactions in a company's equity securities by directors and officers of that
company, provides that any profit realized from any purchase and sale, or any
sale and purchase, of equity securities of a company within a six-month period
will inure to and be recoverable by that company, regardless of the intentions
of the director or officer involved in the transaction. The Securities and
Exchange Commission has made available through Rule 16b-3 an exemption from the
operation of Section 16(b) for grants and awards of equity securities under an
employee benefit plan if the requirements of Rule 16b-3 are met, including the
requirement of shareholder approval of the benefit plan under which the grants
or awards will be made, which, in this case is the Long-Term Plan. In the event
shareholder approval of the Long-Term Plan is not obtained, all grants and any
additional shares of performance restricted stock resulting from the
reinvestment of dividends will be forfeited and the Long-Term Plan will be
cancelled.
The Long-Term Plan is administered by the Compensation and Benefits Committee
of the Board of Directors (the "Committee"), which is composed entirely of
outside directors.
Key employees selected by the Committee are eligible to participate in the
Long-Term Plan. Such key employees may include executive officers of the
Company and other Company employees whose contributions and responsibilities
have a significant impact on the future of the Company, in the judgment of the
Committee. The Committee may also consider the recommendations of the President
and Chief Executive Officer in selecting other key employees for participation
in the Long-Term Plan. With respect to the three-year performance period
beginning on January 1, 1993, the Committee has selected the five executive
officers listed in the New Plan Benefits Table below for participation in the
Long-Term Plan. These five persons and another executive officer of the
Company, Gerald C. Poulin, have been selected by the Committee for
participation in the Long-Term Plan with respect to the three-year performance
period beginning on January 1, 1994.
The Long-Term Plan provides for contingent grants of performance restricted
shares of the Common Stock of the Company for each performance period.
Dividends on these shares are reinvested in additional shares of performance
restricted stock during the performance period. A performance period is a
period of three or more years over which performance is measured, as determined
by the Committee.
Amounts of contingent grants will be determined by the Committee based on
factors which the Committee, in its discretion, deems relevant. Such factors
may include the key employee's position with the Company, market levels of
similar compensation, and the market value of the Company's Common Stock.
19
<PAGE>
The number of shares of performance restricted stock contingently granted to
the participants in the Long-Term Plan with respect to the performance period
beginning on January 1, 1993, conditioned on approval of the holders of the
Company's Common Stock and 6% Preferred Stock, is as set forth in the following
New Plan Benefits Table.
NEW PLAN BENEFITS
LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF
PERFORMANCE
RESTRICTED
NAME AND POSITION(1) SHARES
- -------------------- -----------
<S> <C>
Matthew Hunter..................................................... 4,889
President and Chief Executive Officer
David T. Flanagan.................................................. 1,959
Executive Vice President
Richard A. Crabtree................................................ 1,475
Senior Vice President, Customer Services
and Division Operations
David E. Marsh..................................................... 1,475
Senior Vice President, Finance, and
Chief Financial Officer
Arthur W. Adelberg................................................. 1,475
Senior Vice President, Law and
Governmental Relations
Donald F. Kelly.................................................... 0
Senior Vice President, Production,
Engineering and Power Supply
Executive Group 11,273
Non-Executive Officer Group........................................ 0
Non-Executive Officer Employee Group............................... 0
</TABLE>
- --------
(1) The positions listed were held as of December 31, 1993 by the executive
officers named in the New Plan Benefits Table other than Mr. Kelly, who
retired from employment with the Company effective November 1, 1993. Mr.
Flanagan was elected President and Chief Executive Officer effective January
1, 1994. Mr. Hunter has served in the transitional position of Chairman of
the Company since January 1, 1994 in preparation for his planned retirement
effective May 1, 1994. As a result of the reorganization of the Company
effective as of March 1, 1994, the other named executive officers now hold
the following positions: Mr. Crabtree, Vice President, Retail Operations; Mr.
Marsh, Vice President, Corporate Services, and Chief Financial Officer; and
Mr. Adelberg, Vice President, Law and Power Supply.
Subject to adjustment for certain stock splits, reclassifications or other
corporate transactions, in any calendar year, the aggregate of the shares
contingently granted and the shares resulting from dividend reinvestment cannot
exceed 1 percent of the number of outstanding shares of Common Stock at the end
of the previous calendar year.
Following the close of a performance period, the Committee will evaluate
performance results by reference to the performance measure and any other
performance standards established for that performance period. The performance
measure will be the Company's total shareholder return, or a change or
improvement in the Company's total shareholder return on a basis determined by
the Committee, as ranked against the total shareholder return or a change in
the total shareholder return of the 100 other electric
20
<PAGE>
utilities against which the Company's performance is measured in the
performance graph in proxy statements provided in connection with annual
meetings of the Company's shareholders. Based on its evaluation, the Committee
will determine whether and to what extent any award payout will be made. The
number of shares to be paid out, including shares resulting from dividend
reinvestment, will be based on the level of performance attained under the
performance measure. The shares to be paid out will be decreased by the number
of shares whose market value is sufficient to pay federal and state tax
withholding obligations.
Even if the level of performance under the performance measure or any other
performance standard is otherwise sufficient for an award payout, no payout
will be made for a performance period during which the dividend on the Common
Stock of the Company may have been reduced. In that event, the Committee may
exercise its discretion to determine whether and to what extent to defer a
payout and the conditions of any such deferral.
Until a payout determination is made, all shares contingently granted and
additional shares resulting from dividend reinvestment remain subject to the
satisfaction of performance conditions and to restrictions on transfer. If a
key employee's employment with the Company terminates for any reason, all
shares contingently granted and additional shares resulting from dividend
reinvestment will be forfeited by the key employee unless the Committee, in its
sole discretion, determines otherwise.
The Board of Directors may, at any time, amend or terminate the Long-Term
Plan, and, except in the case of amendments that materially modify eligibility
requirements, materially increase the benefits provided under the Long-Term
Plan, or materially increase the maximum number of shares of performance
restricted stock available under the Long-Term Plan, shareholder approval of
amendments is not required.
Holders of the Company's Common Stock and 6% Preferred Stock, present or
represented by proxy, will be entitled to vote on Proposal 2 at the Annual
Meeting. The affirmative vote of a majority of the votes cast at the meeting by
the holders of the Company's Common Stock and 6% Preferred Stock, voting as a
single class, is required for approval of Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE LONG-TERM
INCENTIVE PLAN.
PROPOSAL 3
APPROVAL OF
INDEPENDENT PUBLIC ACCOUNTANTS
At the regular meeting held on January 19, 1994, the Board of Directors of
the Company acted to appoint Coopers & Lybrand, Boston, Massachusetts, as
auditors for the Company for the year 1994. At the Annual Meeting it is the
intention of the persons named in the proxy enclosed herewith to vote in favor
of the approval of such action by the Board of Directors. Representatives of
Coopers & Lybrand and of the previous auditors, Arthur Andersen & Co., will
attend the meeting and, if they so desire, make a statement; they will also
respond to appropriate questions.
The appointment of Coopers & Lybrand by the Board of Directors is based on
the recommendation of the Audit Committee, which had requested proposals from
major accounting firms consistent with its policy of periodically reviewing
accounting services. The affirmative vote of a majority of the votes cast by
the holders of the Company's Common Stock and 6% Preferred Stock, voting as a
single class, entitled to vote at the Annual Meeting, is sought for approval of
the appointment.
During 1991, the Company was considering a change in the accounting treatment
of deferred investment tax credits. After discussion with its auditors at that
time, Arthur Andersen & Co., who disagreed with the proposed accounting, and
with the Office of the Chief Accountant of the Securities and Exchange
Commission, the Company rejected the proposed change. The 1991 disagreement was
discussed with the Audit Committee of the Company by Arthur Andersen & Co. The
Company has authorized Arthur Andersen & Co. to respond fully to any inquiries
by Coopers & Lybrand concerning the disagreement. Arthur Andersen & Co. has
agreed in writing with the information in this paragraph.
21
<PAGE>
During the period of the disagreement neither the Company nor anyone acting
on its behalf consulted Coopers & Lybrand regarding any matter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 3.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1995 Annual Meeting
of the Shareholders must be received on or before December 29, 1994, for
inclusion in the proxy materials relating to that meeting. Any such proposals
should be sent to William M. Finn, Secretary and Clerk, Central Maine Power
Company, 83 Edison Drive, Augusta, Maine 04336.
OTHER MATTERS
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Central Maine Power Company for use at the Annual Meeting of the
Shareholders to be held on May 25, 1994 or any adjournments thereof. The cost
of solicitation will be paid by the Company. No solicitation is to be made by
specially engaged employees or other paid solicitors except that Beacon Hill
Partners will solicit shareholders of record and broker nominees on behalf of
the Company, for which it will receive a fee of approximately $4,500, plus
reasonable expenses. Banks, brokerage firms and other custodians, nominees and
fiduciaries will be reimbursed by the Company for reasonable expenses incurred
in sending proxy materials to beneficial owners of the Company's Common Stock
and 6% Preferred Stock. In addition, directors, officers or employees of the
Company may solicit proxies by telephone or in person, the costs of which will
be nominal.
The Board of Directors of the Company does not know of any matter, other than
the matters set forth in this Proxy Statement, to be acted upon at this Annual
Meeting. However, if any other matter shall be properly brought before the
meeting, the proxies will be voted in respect thereof in accordance with the
judgment of the person or persons voting the proxies.
By Order of the Board of Directors
/s/ David T. Flanagan
David T. Flanagan
President and Chief Executive
Officer
Augusta, Maine
April 28, 1994
Again, we call your attention to the enclosed Proxy. We would appreciate
it very much if you would VOTE, DATE, SIGN and RETURN IT PROMPTLY,
regardless of whether you plan to attend the meeting.
22
<PAGE>
CENTRAL MAINE POWER COMPANY
PROXY SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS OF CENTRAL MAINE POWER COMPANY
(COMMON AND 6% PREFERRED SHAREHOLDERS)
The undersigned hereby appoints Arthur W. Adelberg, Richard A. Crabtree and
David E. Marsh and each of them singly, proxies, with power of substitution, to
represent the undersigned at the Annual Meeting of the Shareholders of Central
Maine Power Company, to be held at 10 A.M., E.D.T., on May 25, 1994, at the
Augusta Civic Center, Augusta, Maine, and at any adjournments thereof; to vote
the number of shares which the undersigned would be entitled to vote if present
in person in such manner as such proxies may determine, all as indicated in the
Notice of the Meeting and Proxy Statement, receipt of which is acknowledged;
and to vote on the following proposals as specified below by the undersigned.
(1) Election of Class I Directors:
[_] VOTE FOR all nominees listed below (except as marked to the contrary
below)
[_] WITHHOLD AUTHORITY to vote for
all nominees listed below
CHARLES H. ABBOTT, CARLTON D. REED, JR., KATHRYN M. WEARE
(INSTRUCTION--TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW)
-------------------------------------------------------
(2) Proposal to approve the Long-Term Incentive Plan, as set forth in the Proxy
Statement:
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to approve the appointment of Coopers & Lybrand as auditors of the
Company for the year 1994, as set forth in the Proxy Statement:
[_] FOR [_] AGAINST [_] ABSTAIN
PLEASE SIGN AND DATE ON THE OTHER SIDE
<PAGE>
ANNUAL MEETING OF This proxy when properly executed will be voted
in the manner directed herein by the undersigned
CENTRAL MAINE POWER shareholder. IN THE ABSENCE OF SPECIFIED DIREC-
COMPANY TION, THIS PROXY WILL BE VOTED IN FAVOR OF THE
ELECTION OF ALL NOMINEES NAMED IN THIS PROXY AND
83 EDISON DRIVE IN FAVOR OF ALL PROPOSALS SET FORTH IN THIS
AUGUSTA, ME 04336 PROXY. The proxies are also authorized to vote
in their discretion upon such other matters as
may properly come before the meeting or any ad-
journment thereof.
Please date, sign exactly as name(s) appear below and return promptly in the
enclosed envelope.
If signing as attorney,
administrator, executor,
guardian, trustee or as a
custodian for a minor, please
add your title as such. If a
corporation, please sign in
full corporate name and
indicate the signer's office.
If a partner, please sign in
the partnership's name.
X
--------------------------------
X
--------------------------------
Dated _____________________ 1994
<PAGE>
THE CENTRAL MAINE POWER COMPANY LONG-TERM INCENTIVE PLAN (THE "PLAN") IS NOT
PART OF THE DEFINITIVE PROXY STATEMENT OF CENTRAL MAINE POWER COMPANY AND IS NOT
BEING FURNISHED TO THE COMPANY'S SHAREHOLDERS. THE PLAN IS BEING FILED PURSUANT
TO INSTRUCTION NO. 3 TO ITEM 10 OF SCHEDULE 14A OF THE COMMISSION'S REGULATION
14A.
<PAGE>
CENTRAL MAINE POWER COMPANY
LONG-TERM INCENTIVE PLAN
<PAGE>
CENTRAL MAINE POWER COMPANY
LONG-TERM INCENTIVE PLAN
Table of Contents
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
1. Purpose....................................................... 1
2. Definitions................................................... 2
3. Grant of Awards............................................... 4
a. Authority................................................. 4
b. Eligibility............................................... 5
c. Amount of Award........................................... 5
d. Limitations on Awards..................................... 6
4. Restriction Period............................................ 7
a. Transfer Restrictions..................................... 7
b. Termination of Employment................................. 7
c. Stock Certificates........................................ 8
5. Award Payouts................................................. 9
6. Beneficiary................................................... 10
a. Designation............................................... 10
b. No Beneficiary............................................ 10
7. Administration of the Plan.................................... 11
a. Section 16 Compliance..................................... 11
b. Decisions and Interpretations............................. 11
c. Procedure................................................. 12
d. Advisors.................................................. 12
e. Indemnification........................................... 12
8. Amendment or Discontinuance................................... 13
9. Purchase of Stock............................................. 14
a. Agent and Purchases by Agent.............................. 14
b. Custody and Sales by Agent................................. 14
</TABLE>
- i -
<PAGE>
<TABLE>
<S> <C> <C>
10. Miscellaneous.................................................. 15
a. No Claim or Right.......................................... 15
b. Leave...................................................... 16
c. Incapacity................................................. 16
d. No Assignment.............................................. 17
e. Plan Documents............................................. 17
f. Applicability of Laws...................................... 17
g. Notices.................................................... 17
h. Successors Bound........................................... 17
i. Captions................................................... 18
11. Effective Date and Shareholder Approval........................ 18
</TABLE>
- ii -
<PAGE>
CENTRAL MAINE POWER COMPANY
LONG-TERM INCENTIVE PLAN
1. PURPOSE
The purpose of the Central Maine Power Company Long-Term Incentive Plan is
to motivate Key Employees of Central Maine Power Company to attain and surpass
long-range performance objectives intended to provide the shareholders of the
Company sound returns on their investment. Under the Plan, the motivation of
Key Employees to improve performance is enhanced by providing them with
incentive awards that are payable only to the extent that performance results
in shareholder benefits. The Plan further aligns the interests of Key
Employees with those of the Company's shareholders by providing for such
incentive awards to be paid in the form of the Common Stock of the Company
subject to performance and other restrictions set forth in the Plan. The Plan
is also designed to attract and retain persons of ability as Key Employees of
the Company by providing them with compensation opportunities that are
competitive with those offered by other utilities.
The long-range performance objectives under the Plan are intended to
complement certain performance objectives under the Company's 1987 Executive
Incentive Plan that are designed to benefit the Company's customers.
Together, the Plan and the 1987 Executive Incentive Plan place a greater
portion of total pay offered to Key Employees at risk by providing for that
portion of compensation to be paid only to the extent that performance has
resulted in benefits for the Company's shareholders and customers.
<PAGE>
2. DEFINITIONS
When used herein, the following terms shall have the following meanings:
"Award" means a contingent grant to any Key Employee, in accordance with
the provisions of the Plan, of Performance Restricted Stock or other Common
Stock of the Company, as may be determined by the Compensation and Benefits
Committee.
"Award Payout" means any shares of Performance Restricted Stock including
the shares of Performance Restricted Stock resulting from the reinvestment of
dividends, after the lapse of the Restriction Period applicable thereto, and
any additional shares of the Common Stock of the Company, actually distributed
to any Key Employee based on the level of performance achieved for the
relevant Performance Period as measured by reference to the Performance
Measure and any other performance standards established by the Compensation
and Benefits Committee.
"Beneficiary" means the beneficiary or beneficiaries designated pursuant
to Section 6 to receive an Award Payout or Award Payouts, if any, under the
Plan upon the death of a Key Employee.
"Company" means Central Maine Power Company and its successors and
assigns.
"Compensation and Benefits Committee" means the Central Maine Power
Company Compensation and Benefits Committee appointed by the Board of
Directors of the Company and responsible for the administration of the Plan.
"Key Employee" means an employee, including without limitation any
officer, of the Company whose contributions and responsibilities have
-2-
<PAGE>
a significant impact on the future of the Company, in the judgment of the
Compensation and Benefits Committee.
"Market Value" means, as of any specified date, the reported closing price
based upon composite transactions on the New York Stock Exchange for one share
of the common stock of any specified electric utility, including without
limitation the Company, on such exchange, or, if no sales of that utility's
common stock have taken place on such exchange on that date, the reported
closing price on the most recent earlier trading day on which sales of such
common stock were reported.
"Performance Measure" means the Company's Total Shareholder Return or a
change, on a basis determined by the Compensation and Benefits Committee, in
the Company's Total Shareholder Return as ranked against the Total Shareholder
Return of other electric utilities designated by the Compensation and Benefits
Committee or a change in such other utilities' Total Shareholder Return, and,
alternatively, also means improvement in the ranking of the Company's Total
Shareholder Return or in the ranking of the level of change therein, in each
case based on levels of performance established by the Compensation and
Benefits Committee.
"Performance Period" means a period of three (3) or more years, as
determined by the Compensation and Benefits Committee, beginning on the first
day of the first year of such period or at such other time as may be
determined by the Compensation and Benefits Committee, over which performance
is measured by reference to the Performance Measure and any other performance
standards established by the Compensation and Benefits Committee.
-3-
<PAGE>
"Performance Restricted Stock" means the Common Stock of the
Company granted under the Plan for no consideration but subject to the
requirements and restrictions of Sections 3 and 4 hereof and such other
restrictions as the Compensation and Benefits Committee deems appropriate or
desirable, and includes additional shares of Performance Restricted Stock
resulting from the reinvestment of dividends.
"The Plan" or "this Plan" means the Central Maine Power Company Long-Term
Incentive Plan, as the same may be amended, administered or interpreted from
time to time.
"Restriction Period" means the period described in Section 4.a of this
Plan.
"Total Disability" means the complete and permanent inability of a Key
Employee to perform all of his or her duties under the terms of his or her
employment with the Company, as determined by the Compensation and Benefits
Committee upon the basis of such evidence, which may include independent
medical reports and data, as the Compensation and Benefits Committee deems
appropriate or necessary.
"Total Shareholder Return" means the appreciation or depreciation in the
Market Value of the common stock of an electric utility, including without
limitation the Company, plus dividends thereon, as measured at any point in,
or as averaged over, a Performance Period.
3. GRANT OF AWARDS
a. Authority. Subject to the provisions of the Plan, the Compensation and
---------
Benefits Committee shall have the full power and authority to (i) determine
and designate from time to time the Key
-4-
<PAGE>
Employees or groups of Key Employees to whom Awards may be granted;
(ii) determine the amount, terms and conditions of each Award,
including, in addition to the Performance Measure and any part thereof, any
performance standards pertaining to the Company or otherwise and any other
criteria that must be satisfied as a condition to any Award Payout; (iii)
determine the form or forms of Awards that may be granted; and (iv) determine
the timing of any Award and Award Payout, including Performance Periods and
whether and to what extent an Award or Award Payout shall be deferred and the
conditions of any such deferral.
b. Eligibility. The Compensation and Benefits Committee shall determine
-----------
and designate from time to time the Key Employees or groups of Key Employees
eligible to participate in the Plan, based upon the Key Employee's
contribution towards the achievement of the Company's long-range corporate
objectives, the recommendations of the President and Chief Executive Officer
of the Company with respect to Key Employees other than the President and
Chief Executive Officer, and such other factors as the Compensation and
Benefits Committee, in its discretion, deems relevant.
c. Amount of Award. Subject to the provisions of the Plan, Key Employees
---------------
participating in the Plan shall be granted an Award of a specified number of
shares of Performance Restricted Stock for each Performance Period under the
Plan. The number of shares of Performance Restricted Stock granted to any Key
Employee shall be determined by the Compensation and Benefits Committee,
taking into account the purposes of the Plan and such factors as the
Compensation and Benefits Committee, in its discretion, deems relevant. Such
factors may include the value
-5-
<PAGE>
of the Key Employee's position with the Company, market levels of similar
compensation, and the Market Value of the Company's Common Stock, and the
Compensation and Benefits Committee may develop a formula based on these or
other factors deemed relevant by the Compensation and Benefits Committee. Any
such formula shall not be revised more than once in any six (6) month period.
Subject to the restrictions set forth in or established by the Compensation
and Benefits Committee pursuant to this Plan, each Key Employee who receives
an Award shall, upon the issuance of a certificate for the shares of
Performance Restricted Stock awarded as provided in Section 4.c hereof, have
all of the rights of a shareholder with respect to such shares, including the
right to vote the shares and receive dividends and other distributions for his
or her account. Dividends on shares of Performance Restricted Stock shall be
payable at the same rate as paid on the unrestricted shares of the Common
Stock of the Company and shall be reinvested in additional shares of
Performance Restricted Stock during the Performance Period until any Award
Payout. Such additional shares shall be added to the shares of Performance
Restricted Stock constituting the Award and shall be subject in all respects
to the provisions of Sections 4.a, 4.b and 5 of this Plan and to other
applicable provisions hereof.
d. Limitations on Awards. Subject to the provisions of this Section 3.d,
---------------------
in any calendar year, grants of Awards, together with additional shares of
Performance Restricted Stock resulting from the reinvestment of dividends,
shall not exceed one percent (1%) of the number of outstanding shares of the
unrestricted Common Stock of the Company on the last day of the preceding
calendar year. In the event of
-6-
<PAGE>
any recapitalization, reclassification, split-up or consolidation of
shares of the Common Stock of the Company, merger or consolidation of the
Company into, or consolidation of the Company with, or sale by the Company of
all or substantially all of its assets to, another company, or other
restructuring or event which could distort the implementation of the Plan or
the value of the Awards or affect the realization of the objectives of the
Plan, the Compensation and Benefits Committee may make such adjustments in any
Awards, or in the terms, conditions or restrictions pertaining to the
Performance Restricted Stock or the Awards, as the Compensation and Benefits
Committee deems equitable.
4. RESTRICTION PERIOD
a. Transfer Restrictions. Each Award of Performance Restricted Stock and
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additional shares of Performance Restricted Stock resulting from the
reinvestment of dividends on the shares constituting the Award as provided in
Section 3.c of this Plan shall be subject to a Restriction Period, which shall
mean a period commencing on the date the Award is granted and ending as of the
date of any Award Payout relating to such Award. No shares of Performance
Restricted Stock received or held for the account of a Key Employee as
provided in this Plan shall be sold, assigned, exchanged, pledged or otherwise
transferred or disposed of during the Restriction Period. The Compensation
and Benefits Committee may provide for the lapse of restrictions in
installments in circumstances it deems appropriate.
b. Termination of Employment. If a Key Employee's employment with the
-------------------------
Company terminates due to the Key Employee's death, Total
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Disability, retirement, voluntary resignation or for any other reason,
all Awards granted for Performance Periods that have not yet closed as of the
date of any such event and all additional shares of Performance Restricted
Stock resulting from the reinvestment of dividends on shares constituting such
Awards shall be forfeited by the Key Employee and all such shares shall be
acquired by the Company unless the Compensation and Benefits Committee, in its
sole discretion, otherwise determines. In making any determination under this
Section 4.b, the Compensation and Benefits Committee may, in its discretion,
permit an Award Payout relating to all or a portion of any relevant
Performance Period and impose any terms and conditions, consistent with the
provisions of this Plan, as it deems appropriate.
c. Stock Certificates. After compliance with any applicable requirements
------------------
of federal and state securities laws and regulations and the rules of any
stock exchange on which the Common Stock of the Company is then listed, a
certificate for the number of shares of Performance Restricted Stock granted
to a Key Employee shall be issued and shall be registered in the name of the
Key Employee and bear an appropriate legend reciting the restrictions
applicable to such shares or shall be registered in nominee name. All
certificates issued under the Plan shall be subject to appropriate stop-
transfer orders, including such stop-transfer orders and other restrictions as
the Compensation and Benefits Committee may deem advisable under any
applicable federal or state securities laws and rules, regulations or other
requirements of the Securities and Exchange Commission and any stock exchange
on which the Common Stock of the Company is then listed. All certificates
representing Awards and all additional shares of Performance Restricted
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<PAGE>
Stock resulting from the reinvestment of dividends shall be received and
held by the Company or a bank or other institution, as determined by the
Compensation and Benefits Committee, during the Restriction Period for the
account of each individual Key Employee who was granted an Award.
5. AWARD PAYOUTS
Following the close of each Performance Period, the Compensation and
Benefits Committee shall evaluate performance results by reference to the
Performance Measure and any other performance standards established for that
Performance Period. Based on its evaluation and the consideration of any
other factors it may deem appropriate, the Compensation and Benefits Committee
shall determine whether and to what extent any Award Payouts shall be made.
Each Award Payout to be made shall be reduced, prior to being made, by the
number of shares of the Common Stock of the Company whose Market Value is
sufficient to satisfy all applicable federal and state tax withholding
requirements. Notwithstanding the attainment of a level of performance under
the Performance Measure or any other performance standard established by the
Compensation and Benefits Committee otherwise sufficient for any Award Payout,
no Award Payout shall be made for a Performance Period during which the
dividend on the Common Stock of the Company may have been reduced. In such
event, the Compensation and Benefits Committee shall consider whether and to
what extent to defer an Award Payout and shall determine the conditions of any
such deferral, taking into account circumstances it deems appropriate. If the
Compensation and Benefits
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<PAGE>
Committee determines that no Award Payout shall be made at any time with
respect to a Performance Period, the Award for that Performance Period and any
additional shares of Performance Restricted Stock resulting from the
reinvestment of dividends shall be forfeited by the Key Employee and acquired
by the Company.
6. BENEFICIARY
a. Designation. Each Key Employee shall file with the Compensation and
-----------
Benefits Committee a written designation of one or more persons as the
Beneficiary who shall be entitled to receive an Award Payout or Award Payouts,
if any, under the Plan upon such Key Employee's death. A Key Employee may
from time to time revoke or change his or her Beneficiary designation, without
the consent of any prior Beneficiary (unless such consent is otherwise
required by law) by filing a new designation with the Compensation and
Benefits Committee. The last such designation received by the Compensation
and Benefits Committee shall be controlling; provided, however, that no
designation, or change or revocation thereof, shall be effective unless
received by the Compensation and Benefits Committee prior to the Key
Employee's death, and in no event shall it be effective as of a date prior to
such receipt.
b. No Beneficiary. If no Beneficiary designation is in effect at the time
--------------
of a Key Employee's death, or if such designation conflicts with law, or if no
designated Beneficiary survives the Key Employee, the Key Employee's estate
shall be entitled to receive an Award Payout or Award Payouts, if any, under
the Plan upon the Key Employee's death. If
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<PAGE>
the Compensation and Benefits Committee is in doubt as to the right of
any person to receive any Award Payout, the Company may retain such
Award Payout, without liability for any interest thereon, until the
Compensation and Benefits Committee determines the rights thereto, or the
Company may turn over such Award Payout to any court of appropriate
jurisdiction and such turnover shall be a complete discharge of any liability
of the Company in connection with such Award Payout.
7. ADMINISTRATION OF THE PLAN
a. Section 16 Compliance. The Plan shall be administered by the
---------------------
Compensation and Benefits Committee in conformance with the requirements of
Rule 16b-3 under the Securities Exchange Act of 1934 as said Rule may be
interpreted or amended from time to time, the intent of this Plan being that
all transactions hereunder shall comply with all applicable conditions of said
Rule 16b-3 or its successor.
b. Decisions and Interpretations. All decisions, determinations or
-----------------------------
actions of the Compensation and Benefits Committee made or taken pursuant to
grants of authority under this Plan shall be made or taken in the sole
discretion of the Compensation and Benefits Committee and shall be final,
conclusive and binding on all persons for all purposes. In addition, the
Compensation and Benefits Committee shall have full power, discretion and
authority to establish rules and guidelines, consistent with this Plan, for
the administration of the Plan and to interpret, construe and administer the
Plan and such rules and guidelines and any part thereof, and its
interpretations and constructions thereof shall be final, conclusive and
binding on all
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<PAGE>
persons for all purposes. The decisions and determinations of the
Compensation and Benefits Committee under the Plan need not be uniform
with respect to Key Employees, whether or not such Key Employees are similarly
situated.
c. Procedure. The Compensation and Benefits Committee shall keep minutes
---------
of its actions under the Plan. The act of a majority of the members of the
Compensation and Benefits Committee present at a meeting duly called and held
shall be the act of the Compensation and Benefits Committee, provided that at
least a majority of the members of the entire Compensation and Benefits
Committee is in attendance at such meeting. Any decision or determination
reduced to writing and signed by all members of the Compensation and Benefits
Committee shall be fully as effective as if made by unanimous vote at a
meeting duly called and held.
d. Advisors. The Compensation and Benefits Committee may employ such
--------
legal counsel, whether independent legal counsel or counsel regularly employed
by the Company, and consultants and agents as the Compensation and Benefits
Committee may deem appropriate for the
administration of the Plan and shall be fully protected in relying upon any
opinion received from any such counsel or consultant and any computations
received from any such consultant or agent. All expenses incurred by the
Compensation and Benefits Committee in interpreting and administering the
Plan, including without limitation meeting fees and expenses and professional
fees, shall be paid by the Company.
e. Indemnification. No member or former member of the Compensation and
---------------
Benefits Committee shall be liable for any action or
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<PAGE>
determination made in good faith with respect to the Plan or any Award
or Award Payout under the Plan. Each member or former member of the
Compensation and Benefits Committee shall be indemnified and held harmless by
the Company against all cost and expense (including counsel fees) and
liability (including any sum paid in settlement of a claim with the approval
of the Board of Directors of the Company) arising out of any action taken or
omitted in connection with the Plan unless arising out of such member's or
former member's own willful misconduct. Such indemnification shall be in
addition to any rights of indemnification the members or former members of the
Compensation and Benefits Committee may have as directors or under the bylaws
of the Company.
8. AMENDMENT OR DISCONTINUANCE
The Board of Directors of the Company may, at any time, amend or terminate
the Plan. The Plan may also be amended by the Compensation and Benefits
Committee, provided that all such amendments shall also be reported to and
acted upon by the Board of Directors. No amendment shall, without approval by
the holders of a majority of the shares of the Common Stock and 6% Preferred
Stock of the Company present, or represented, and entitled to vote at a
meeting duly called and held, (i) materially modify the requirements as to
eligibility for participation in the Plan, (ii) materially increase the
benefits provided under the Plan, or (iii) materially increase the maximum
number of shares of Performance Restricted Stock which are available under the
Plan. No amendment or termination shall retroactively impair any rights
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<PAGE>
of any person with respect to an Award or Award Payout, and all amendments
shall comply with the requirements of Rule 16b-3 of the Securities Exchange
Act of 1934 as said Rule may be interpreted or amended from time to time.
9. PURCHASE OF STOCK
a. Agent and Purchases by Agent. Notwithstanding any other provision of
----------------------------
this Plan, the Compensation and Benefits Committee shall appoint an agent for
Key Employees, and not for the Company, for the purchase of Common Stock of
the Company to be granted under the Plan and for the purchase of additional
shares of Common Stock representing reinvested dividends. Such agent shall
not be an affiliate of the Company. The agent (and not the Company or any
affiliate thereof) shall exercise all direct and indirect control and
influence over the times when, and the prices at which, the agent may purchase
or cause to be purchased Common Stock for the benefit or account of Key
Employees under the Plan, the amount of any such Common Stock to be purchased,
the manner in which any such Common Stock is to be purchased, and the
selection of a broker or dealer through which such purchases may be executed;
provided, however, that the Compensation and Benefits Committee may provide
the agent with any formula adopted by the Compensation and Benefits Committee
pursuant to Section 3.c of the Plan for determining the number of shares of
Common Stock to be purchased by the agent under the Plan and may provide the
agent with instructions which are not inconsistent with the provisions of this
Section 9.
b. Custody and Sales by Agent. The agent (or its delegate) shall
--------------------------
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<PAGE>
hold all shares of Common Stock purchased in connection with Awards granted
for the initial Performance Period under the Plan and all additional shares of
Common Stock resulting from the reinvestment of dividends thereon, in each
case on behalf of the particular Key Employee who was granted an Award. In
the event that the shareholders of the Company approve the Plan pursuant to
Section 11 hereof, then such Common Stock shall be held on behalf of the Key
Employees as directed by the Compensation and Benefits Committee, in
accordance with the terms of the Plan. In the event that such shareholder
approval is not obtained, the agent shall sell all shares of Common Stock
purchased, including shares representing reinvested dividends. The agent (and
not the Company or any affiliate thereof) shall exercise all direct and
indirect control and influence over the times when, and the prices at which,
the agent may sell or cause to be sold such Common Stock, the manner in which
any such Common Stock is to be sold, and the selection of a broker or dealer
through which such sales may be executed. All proceeds of such sales shall be
paid to the Company.
10. MISCELLANEOUS
a. No Claim or Right. Nothing in this Plan and no Award or Award Payout
-----------------
hereunder shall confer upon any Key Employee any right to continue in the
employ of the Company, or shall interfere in any way with the right (subject
to any separate contractual arrangement with such Key Employee) of the Company
to terminate his or her employment at any time. No Award or Award Payout
under the Plan shall be deemed salary or compensation for the purpose of
computing benefits under any
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<PAGE>
employee benefit plan, including any retirement or supplemental or excess
retirement benefit plan, or other arrangement of the Company for the benefit
of its employees unless the Compensation and Benefits Committee shall
determine otherwise. No Key Employee shall have any claim or right to any
Award or Award Payout until an Award Payout relating to a particular Award is
actually made under the Plan, and any such right shall be no greater than the
right of an unsecured general creditor of the Company. Nothing contained in
this Plan, and no action taken pursuant to its provisions, shall create or be
construed to create a trust of any kind between the Company and any Key
Employee.
b. Leave. Absence on leave approved by the President and Chief Executive
-----
Officer of the Company shall not be considered interruption or termination of
employment for any purposes of the Plan; provided, however, that the
Compensation and Benefits Committee shall determine, in its discretion,
whether an Award may be granted or an Award Payout may be made to a Key
Employee if he or she is absent on leave during the Performance Period.
c. Incapacity. If the Compensation and Benefits Committee shall find that
----------
any person entitled to receive any Award Payout under the Plan is unable to
care for his or her affairs because of illness or accident, or is a minor,
then any Award Payout due him or her may, if the Compensation and Benefits
Committee so directs the Company, be paid to his or her spouse, an institution
maintaining or having custody of such person, or any other person deemed by
the Compensation and Benefits Committee to be a proper recipient on behalf of
such person otherwise entitled to such Award Payout, unless a prior claim
therefor has been
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<PAGE>
made by a duly appointed legal representative. Any such Award Payout
shall be a complete discharge of any liability of the Company in connection
with such Award Payout.
d. No Assignment. The interest of any Key Employee or other person in any
-------------
Award or Award Payout under the Plan may not be assigned, transferred, pledged
or encumbered, except as provided in Section 6 with respect to the designation
of a Beneficiary or as may otherwise be required by law, and any such
assignment, transfer, pledge or encumbrance shall be void.
e. Plan Documents. Copies of the Plan and all amendments, administrative
--------------
rules and guidelines, and interpretations shall be made available to all Key
Employees at all reasonable times at the Company's headquarters.
f. Applicability of Laws. The Plan and Awards and Award Payouts hereunder
---------------------
shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any governmental or regulatory agency as
may be required.
g. Notices. All requests, notices and other communications from a Key
-------
Employee, Beneficiary or other person to the Compensation and Benefits
Committee, required or permitted under the Plan, shall be in such form as may
be prescribed from time to time by the Compensation and Benefits Committee and
shall be mailed by first class mail or delivered to the Company's headquarters
or such other location as may be specified by the Compensation and Benefits
Committee.
h. Successors Bound. The terms of the Plan shall be binding upon the
----------------
Company and its successors and assigns.
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i. Captions. Captions preceding the Sections and subsections
--------
hereof are inserted solely as a matter of convenience and in no way define or
limit the scope or intent of any provision hereof.
11. EFFECTIVE DATE AND SHAREHOLDER APPROVAL
The effective date of this Plan shall be January 1, 1993; provided,
however, that grants of Awards shall be conditioned upon approval of the Plan
by the holders of a majority of the shares of the Company's Common Stock and
6% Preferred Stock present, or represented, and entitled to vote at the 1994
Annual Meeting of the Shareholders of the Company. Notwithstanding anything in
the Plan to the contrary, Key Employees may be selected for participation in
the Plan, Award criteria may be determined and Awards conditioned on such
shareholder approval may be granted, all as provided herein, prior to
submission of the Plan for approval by the shareholders. In the event that
such shareholder approval is not obtained, all Awards and any additional
shares of Performance Restricted Stock resulting from the reinvestment of
dividends shall be forfeited and the Plan shall be cancelled.
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