SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
[X] Filed by the Registrant
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
Central Vermont Public Service Corporation
(Exact name of registrant as specified in its charter)
Payment of Filing Fee
[X] $125 per Exchange Act 14a-6(i) (1) of Sechedule 14a.
[ ] $500 per each party to the controversy pursuant to Exchange
Act
PAGE
<PAGE>
March 25, 1996
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of Central Vermont Public Service Corporation at 10:00 a.m. on Tuesday,
May 7, 1996 at the Holiday Inn, Route 7 South, Rutland, Vermont.
Refreshments will be served at 9 a.m.
The meeting will consider the election of three Directors to serve on
the Board with terms continuing until the Annual Meeting of Stockholders
in 1999 and for the transaction of any other business properly brought
before the meeting.
Your vote is very important to us. In order to ensure that your shares
may be represented at the meeting and to avoid additional expense of
solicitation, we urge that you promptly vote, sign and return the
enclosed proxy in the return envelope provided. If you do plan on
attending the Annual Meeting, which we hope you will, you may revoke
your proxy and vote your shares in person.
Thank you for your confidence and continued support.
Sincerely,
ROBERT H. YOUNG
President and
Chief Executive Officer
PAGE
<PAGE>
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
77 Grove Street
Rutland, Vermont 05701
______________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 7, 1996
To the Holders of Common Stock:
You are hereby notified that the Annual Meeting of Stockholders of
Central Vermont Public Service Corporation will be held at the Holiday
Inn, Route 7 South, Rutland, Vermont, on Tuesday, May 7, 1996, at 10
A.M., (Eastern Daylight Saving Time), for the following purposes:
1. To elect that class of three directors whose terms commence at
the 1996 Annual Meeting of Stockholders and expire at the 1999 Annual
Meeting of Stockholders.
2. To act upon any matters incidental to or in furtherance of the
foregoing and upon any matters which may properly come before the
meeting.
Any of the foregoing may be considered or acted upon at said
meeting, or at any and all adjournments thereof.
The Board of Directors has fixed the close of business on February
28, 1996, as the record date for the determination of the holders of the
Company's Common Stock entitled to notice of, and to vote at, the
meeting and any adjournments thereof.
By Order of the Board of Directors,
Joseph M. Kraus, Secretary
and General Counsel
Rutland, Vermont
March 25, 1996
YOUR VOTE IS IMPORTANT
All holders of Common Stock, whether or not they plan to attend the
meeting in person, are urged to VOTE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY in the envelope provided.
PAGE
<PAGE>
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
77 Grove Street
Rutland, Vermont 05701
______________________
PROXY STATEMENT
March 25, 1996
This statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Central Vermont Public Service
Corporation ("CVPS", the "Company" or the "Corporation"), a Vermont
corporation. The proxies solicited hereby will be voted at the Annual
Meeting of Stockholders to be held at the Holiday Inn, Route 7 South,
Rutland, Vermont at 10:00 a.m. on May 7, 1996 and at any and all
adjournments thereof.
Proxies in the accompanying form, unless previously revoked, will
be voted as directed by the stockholders giving such proxy. Any proxy
may be revoked by written notice delivered to the Secretary of the
Company at any time before it is exercised. If no direction is given,
proxies will be voted FOR the election, as directors, of the three
nominees listed on the proxy.
The Company will bear the cost of solicitation hereunder. The
solicitation of proxies by mail may be followed by solicitation by
officers or other employees or representatives of the Company. In
addition, the Company has retained Morrow & Co., a proxy solicitation
firm, to assist in the solicitation of proxies for the meeting. The
estimated fee for such services is $6,500 plus reimbursement of
reasonable out-of-pocket expenses. The Company will request banks,
brokers and other similar agents or fiduciaries to forward these proxy
materials to beneficial owners of stock, and, if requested, will
reimburse them for the costs thereof.
A copy of the Annual Report of the Company containing its audited
financial statements for 1995 accompanies this Proxy Statement.
The Proxy Statement and form of Proxy were first sent to
stockholders on or about March 25, 1996.
VOTING SECURITIES
There were 11,590,748 outstanding shares of Common Stock (excluding
195,100 of such shares held by the Company as Treasury Stock), each
share being entitled to one vote, at the close of business on February
28, 1996, the record date for determination of stockholders entitled to
notice of and to vote at the meeting.
In accordance with Securities and Exchange Commission ("SEC")
rules, boxes and a blank space are provided on the proxy card for
stockholders to designate whether they wish to vote "FOR" or to
"WITHHOLD AUTHORITY" to vote for one or more of the nominees for
director. Under Vermont law, in order for action to be taken on a
matter, a quorum must exist as to that matter, which is defined for this
purpose as a majority of the outstanding shares entitled to vote on the
matter. While abstentions are counted in determining whether a quorum
has been reached on a particular matter, broker non-votes are not
counted as they are not deemed to be "entitled to vote" on such matter.
A broker non-vote will occur when a broker who holds shares in street
name for a customer does not have the authority under the rules of the
New York Stock Exchange ("NYSE") to cast a vote on a particular matter
because the matter is deemed by the NYSE to be non-discretionary and the
broker's customer has not furnished voting instructions on the matter.
The election of directors will be determined by a plurality of the
votes cast. In tabulating votes in the election of directors, neither
broker non-votes nor votes to withhold authority to vote for a nominee
will affect the outcome of the election except that votes to withhold
authority to vote for any of management's nominees in the case of a
contested election would have the effect of aiding the challenger.
ARTICLE 1.
ELECTION OF DIRECTORS
The Company's Articles of Incorporation and By-Laws provide for the
division of the Board of Directors into three classes having staggered
terms of office. The Directors whose terms will expire at the 1996
Annual Meeting of Stockholders, consisting of the three nominees listed
below, will stand for re-election to a three-year term expiring in 1999.
Mr. Robert P. Bliss, Jr. will retire from the Board upon expiration of
his current term. The directors have chosen not to fill the vacancy
created upon Mr. Bliss' retirement from the Board and in accordance with
the Company's By-Laws, the Board has fixed at nine (9) the number of
directors for the ensuing year.
Proxies will be voted (unless otherwise instructed) in favor of the
election of the three nominees as indicated in the table below. While
it is not anticipated that any of the persons listed will be unable to
serve as a director, then the proxies will vote for such other person or
persons as the present Board of Directors shall determine.
The following table sets forth certain information regarding the
three nominees for director, as well as all directors presently serving
on the Board whose terms will expire after the 1996 Annual Meeting.
Except for Mr. Young, each of the individuals listed in the table has
been employed by the firm or has had the occupation set forth under his
or her name for the past five years. Mr. Young, who was elected
President and Chief Executive Officer of the Company upon the retirement
of Mr. Thomas C. Webb in December and appointed to fill Mr. Webb's seat
on the Board of Directors, has held a number of executive positions with
the Company during the past five years. In general, the business
experience of each of these persons during this time was typical of a
person engaged in the principal occupation listed for each.
Served as
Director Principal Occupation and
Name and Age Since Business Experience
- - ------------ --------- -------------------------
Nominees whose terms will expire in 1999:
Elizabeth Coleman - 58 1990 President, Bennington
College, Bennington,
Vermont
Preston Leete Smith - 65 1977 Chief Executive Officer,
S-K-I Ltd., West Lebanon,
New Hampshire (Ski
Business)
Served as
Director Principal Occupation and
Name and Age Since Business Experience
- - ------------ --------- -------------------------
Robert H. Young - 48 1995 President and Chief
Executive Officer of the
Company; Executive Vice
President and Chief
Operating Officer of the
Company from 1993
to 1995; Senior Vice
President and Chief
Financial Officer of
the Company from 1988 to
1993; Vice President and
Chief Financial Officer of
the Company from 1987 to
1988
Directors whose terms will expire in 1998:
Luther F. Hackett - 62 1979 President, Hackett, Valine
& MacDonald, Inc.,
Burlington, Vermont
(Insurance Agents)
F. Ray Keyser, Jr. - 68 1980 Chairman of the Board of
the Company; Of Counsel,
Keyser, Crowley, Meub,
Layden, Kulig & Sullivan,
P.C., Rutland, Vermont
(Lawyers)
Gordon P. Mills - 59 1980 Chairman, EHV-Weidmann
Industries, Inc.,
St. Johnsbury, Vermont
(Manufacturer of Electric
Transformer Insulation)
Directors whose terms will expire in 1997:
Frederic H. Bertrand - 59 1984 Chairman of the Board and
Chief Executive Officer,
National Life Insurance
Co., Montpelier, Vermont
Mary Alice McKenzie - 38 1992 President and Chief
Executive Officer, John
McKenzie Packing Co., Inc.,
Burlington, Vermont
(Manufacturer of Meat
Products)
Robert D. Stout - 69 1985 Retired President and
Chief Executive Officer,
Putnam Memorial Health
Corporation, Bennington,
Vermont
Certain of the nominees and incumbent directors serve as officers
and/or directors of subsidiaries and other companies in which the
Company has substantial investments and of companies registered or
filing reports under the Securities Exchange Act of 1934, or investment
companies registered under the Investment Company Act of 1940, as
follows:
Connecticut Valley Electric Company Inc., Mr. Young (Director,
President and Chief Executive Officer), Mr. Mills (Director).
Catamount Energy Corporation, ("Catamount") Mr. Young (Director,
President and Chief Executive Officer), Messrs. Hackett, Keyser, Mills
and Smith (Directors).
Vermont Electric Power Company, Inc., ("VELCO") Mr. Hackett
(Director and Chairman), Messrs. Bliss, Keyser, Smith and Young
(Directors).
Vermont Electric Transmission Company, Inc., Messrs. Hackett and
Young (Directors).
Vermont Yankee Nuclear Power Corporation, ("Vermont Yankee") Mr.
Young (Director and Chairman) and Mr. Keyser (Director).
Mr. Bertrand is also a Director of The Chittenden Corporation.
Mr. Hackett is also Chairman and Director of Banknorth Group, Inc.
Ms. McKenzie is also a Director of Eastern Bancorp.
Mr. Keyser is also a Director/Trustee of Keystone Group, Inc.
Mr. Smith is also a Director of S-K-I Ltd. and Arrow Financial
Corporation.
Vote Required
The election of a director requires the affirmative vote of a
plurality of the votes cast by the shares entitled to vote in the
election.
The Directors recommend a vote FOR Article 1.
RETIREMENT OF DIRECTORS
After twenty-three years of distinguished service as a director,
Robert P. Bliss, Jr., will retire from the Board of Directors in May.
His insight, experience and good cheer will be missed.
Also, Thomas C. Webb, retired on December 30, 1995 as Director,
President and Chief Executive Officer after 11 years of service. Mr.
Webb served the Company and its subsidiaries with dedication and helped
the Company through its restructuring process, the initial deregulation
of the utility industry and the myriad of complex issues facing the
utility industry today.
MEETINGS OF THE BOARD
During 1995, the directors held 12 regular meetings and one special
meeting of the Board. Each director attended at least 75% of the
aggregate of all meetings of the Board and committees of which he or she
was a member except for Elizabeth Coleman and Robert Stout who attended
57% and 74%, respectively, of the meetings. Ms. Coleman's absences were
due to conflicting business commitments and Mr. Stout's absences were
due to health reasons.
COMMITTEES OF THE BOARD
The Company has standing executive, audit, compensation and
nominating committees of its Board of Directors. Members of the
committees are appointed annually by the Board of Directors.
The Executive Committee has substantially all powers of the Board
of Directors in the management of the business and affairs of the
Company between meetings of the Board. The present members of the
Executive Committee are F. Ray Keyser, Jr., Chairman, Robert P. Bliss,
Jr., Luther F. Hackett, Preston Leete Smith and Robert H. Young. During
1995, the Executive Committee held one meeting.
The Audit Committee reviews and reports to the Board of Directors
on the findings and recommendations of the Company's independent public
accountants, the Company's internal audit procedures, examinations by
regulatory authorities and matters having material effect on the
Company's financial operations. The present members of the Audit
Committee are Luther F. Hackett, Chairman, Elizabeth Coleman, Mary Alice
McKenzie, Gordon P. Mills and Robert D. Stout. During 1995, the Audit
Committee held four meetings.
The Nominating Committee is responsible for recommending candidates
for election as directors of the Company. The Nominating Committee will
consider recommendations by the stockholders for nomination as
Directors. Recommendations should be forwarded to the Secretary of the
Company on or before December 1 preceding the Annual Meeting for which
such nomination is sought. The present members of the Nominating
Committee are Robert P. Bliss, Jr., Chairman, F. Ray Keyser, Jr., Mary
Alice McKenzie, Robert D. Stout and Robert H. Young. During 1995, the
Nominating Committee held one meeting.
Information regarding the Company's Compensation Committee is set
forth below under the caption "Compensation Committee Interlocks and
Insider Participation".
DIRECTORS' COMPENSATION
Directors of CVPS receive an annual retainer of $7,200 and members
of the Executive Committee are paid an additional retainer of $400. The
Chairman of each committee receives an additional $1,600 retainer.
Directors are also paid $520 plus expenses for each directors' meeting
attended and $260 for each committee meeting attended if held on the
same day as a meeting of the Board or held by telephone, and a fee of
$520 plus expenses for attendance at each other meeting of such
committee. These fees and retainers represent a reduction of 20% from
amounts paid in previous years. The Chairman of the Board does not
receive a salary, however, is paid an annual retainer of $30,000. As
President and Chief Executive Officer, Mr. Young receives no director's
retainer or other fees for serving on the Board or any of its committees
or for services performed for consolidated subsidiary companies.
Certain of the directors have elected to defer receipt of all or a
portion of their fees pursuant to the Company's Deferred Compensation
Plan for Directors, described below under the caption entitled "Deferred
Compensation Plan".
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Under the 1993 Stock Option Plan for Non-Employee Directors (the
"Plan"), each of the nine non-employee directors received during 1995
stock options with respect to 2,250 shares of Common Stock. Optioned
shares are reflected in the individual stockholdings of the directors
set forth below under "Stock Ownership of Directors and Executive
Officers". The exercise price of the options issued to Participant
Directors in 1995 was $13.625 per share, which represents the Fair
Market Value of the Company's Common Stock on the date of grant. For
purposes of the Plan, the Fair Market Value of stock is defined as the
average high and low trading prices reported on the composite tape on
the date specified, or if no sale takes place on such date, the average
of the bid and asked prices on such date. Stock options are exercisable
during the period beginning six months after the date of grant and
ending five years thereafter except in the event the option expires
during a limited trading period, in which case the exercise period shall
be extended for 30 days following termination of the limited trading
period. All stock options are exercisable at a fixed price equal to the
Fair Market Value of the Common Stock on the date the option is granted.
The total number of shares that may be issued under the Plan may not
exceed 150,000 in the aggregate, subject to proportional adjustments,
and such shares may be either authorized but unissued shares or shares
previously issued and reacquired by the Company. The Plan is effective
for five years, terminating in 1998.
During 1995, no stock options granted under the Stock Option Plans,
were exercised by any of the directors.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of Common Stock
of the Company beneficially owned by each director and nominee director,
each of the executive officers named in the Summary Compensation Table
and by all the directors, nominee directors and executive officers as a
group as of January 31, 1996.
<TABLE>
<CAPTION>
Shares of Common Stock Percent
Name Beneficially Owned (1)(2)(3)(4) of Class
---- ---------------------------- --------
<S> <C> <C>
Frederic H. Bertrand 11,278 (5)
Elizabeth Coleman 6,850
Luther F. Hackett 12,432 (6)
Thomas J. Hurcomb 23,928
F. Ray Keyser, Jr. 15,062 (7)
Robert G. Kirn 14,468
Joseph M. Kraus 8,765
Mary Alice McKenzie 8,602 (8)
Gordon P. Mills 42,856 (9)
Preston Leete Smith 10,549
Robert de R. Stein 24,349
Robert D. Stout 13,780
Thomas C. Webb 44,129
Robert H. Young 23,195 (10)
All directors and executive
officers as a group (19) 280,579 2.4%
</TABLE>
No director, nominee for director or executive officer owns any
shares of the various classes of the Company's outstanding non-voting
preferred stock.
(1) No director, nominee for director or executive officer owns
beneficially in excess of 1% of CVPS' outstanding Common Stock. Except
as otherwise indicated in the footnotes to the table, each of the named
individual possesses sole voting and investment power over the shares
listed.
(2) Includes shares that the named individuals have a right to acquire
pursuant to options granted under the 1988 and 1993 Stock Option Plans
for Non-Employee Directors as follows: Messrs. Bertrand, Keyser, Mills
and Stout, 9,750 shares; Ms. McKenzie and Mr. Smith, 8,250 shares; Ms.
Coleman and Mr. Hackett, 6,750 shares.
(3) Includes shares that the named executive officers have a right to
acquire pursuant to options granted under the 1988 Stock Option Plan for
Key Employees as follows: Mr. Hurcomb, 21,000 shares; Mr. Kirn, 14,250
shares; Mr. Kraus, 7,500 shares; Mr. Stein, 24,000 shares; Mr. Webb,
30,000 shares; Mr. Young, 22,500 shares; and all executive officers as a
group, 159,170 shares.
(4) Includes shares that the named executive officers hold indirectly
under the Company's Employee Savings and Investment and Employee Stock
Ownership Plans as follows: Mr. Hurcomb, 2,913 shares; Mr. Kraus, 102
shares; Mr. Webb, 9,628 shares; and Mr. Young, 339 shares.
(5) Includes 1,528 shares held jointly with his wife over which Mr.
Bertrand has voting and investment power.
(6) Includes 3,000 shares owned by corporations over which Mr. Hackett
has voting and investment power.
(7) Includes 1,562 shares held jointly with his wife and 3,750 shares
held in a Keogh Trust over which Mr. Keyser has voting and investment
power.
(8) Includes 150 shares held jointly with her husband over which Ms.
McKenzie has voting and investment power.
(9) Includes 15,000 shares held in a pension trust over which Mr. Mills
has voting and investment power.
(10) Includes one share held by Mr. Young's wife as custodian for his
son over which Mr. Young disclaims beneficial ownership.
The Company knows of no person, entity or group (within the meaning
of Section 13(d)(3) of the Securities Exchange Act of 1934) which owns
beneficially more than 5% of any class of the Company's outstanding
equity securities.
REPORTS OF BENEFICIAL OWNERSHIP
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers to file reports of ownership
and changes in ownership of Company securities with the SEC and to
furnish the Company with copies of all such reports. It also requires
directors, officers and persons who beneficially own more than ten
percent (10%) of the Company's stock to file initial reports of
ownership and subsequent reports of changes in ownership with the SEC
and the NYSE. In making this statement, the Company has relied on copies
of reports that have been filed with the Commission.
In 1995, Mr. Robert H. Young inadvertently failed to file with the
SEC on a timely basis a Form 4 report involving the sale of 250 shares
of Common Stock of the Company which he beneficially owns. Except for
the foregoing, based solely on a review of the copies of such reports
prepared and filed with the Commission during 1995 by the Company's
executive officers and directors, and on written representations that no
other reports were required, the Company believes its directors and
executive officers have complied with all Section 16(a) filing
requirements. The Company does not have a ten percent holder.
LEGAL PROCEEDINGS
On December 30, 1994, a lawsuit was filed in the United States
District Court for the District of Vermont, Civil Action No. 2:94-CV386,
by Bradford E. White, Michel J. Messier and John A. Wasik, against the
Company, its present directors and certain former directors. This
lawsuit (the "Shareholder Suit"), which purports to be on behalf of a
class of consumers as well as on behalf of the Company's stockholders in
enforcing the rights of the Company, alleges, among other things, (i)
that F. Ray Keyser, Jr., Chairman of the Company's Board of Directors,
violated Section 8 of the Clayton Act, 15 U.S.C. Subchapter 19, which
precludes certain interlocking directorships, (ii) that Mr. Keyser
violated his fiduciary duties to the Company's stockholders by acquiring
and operating a series of businesses in competition with the Company
without offering those business opportunities to the Company, (iii) that
the remaining individual defendants violated their fiduciary duties to
the Company's stockholders by failing to analyze, or to cause management
to analyze, diversification into propane and fossil fuels, and by
failing to make the Company an effective competitor of alternative fuel
companies, and (iv) that the Company violated the applicable provision
of the Vermont General Corporation Law by failing to provide a list of
the Company's stockholders. The Shareholder Suit seeks an unspecified
amount of damages (including treble damages against Mr. Keyser),
attorney's fees and costs, a list of the Company's stockholders, and a
court order to enjoin the defendants from alleged continuing violations
of the law. Each of the individual defendants and the Company itself
deny the allegations against them and intend to vigorously defend the
Shareholder Suit. The Company and its directors have filed a Motion to
Dismiss which is currently pending before the Court. Information
regarding the Company's advancement of expenses incurred by the
Company's directors in connection with the Shareholder Suit is set forth
below under the captions "Report of Indemnification and Advancement of
Expenses" and "Compensation Committee Interlocks and Insider
Participation".
At the Company's 1994 Annual Meeting, shareholders approved two
amendments to the Company's Articles of Incorporation subject to
obtaining the necessary regulatory approval. One of the amendments was
a so-called Fair Price provision. The other amendment served to limit
The Board of Directors' liability in certain circumstances. Because,
under Vermont law, the Company cannot amend its Articles of
Incorporation without the Public Service Board's ("PSB") permission, the
Company filed a petition seeking the necessary regulatory approval. The
Department of Public Service vigorously opposed both amendments,
significantly decreasing the likelihood of obtaining PSB approval. The
case was further complicated by the participation of Mr. Bradford White,
a plaintiff in the lawsuit discussed in the aforementioned paragraph.
In light of the limited prospect of obtaining regulatory approval, as
well as the ongoing costs associated with the proceeding, the Company
decided to withdraw the petition with prejudice. Accordingly, on
October 17, 1995, the Company filed a notice of withdrawal, which the
PSB granted.
On October 17, 1995, the Company filed with the Vermont Public
Service Board ("PSB") for a 14.6% or $31.0 million general rate increase
to become effective on July 1, 1996. The filing was unanimously
supported by the Company's Board of Directors. Five individuals or
entities asked the PSB for permission to intervene in the proceeding.
The request of four of them, including Killington, Ltd. ("Killington")
was ultimately granted by the PSB. Subsequently, the Company and the
Department of Public Service negotiated a settlement of the rate case.
The settlement requires the approval of the PSB and hearings on the
settlement have been scheduled for the week of March 18, 1996. The
Company does not believe that Killington's intervention is of itself an
action that is adverse to the Company's interests, and the Company does
not know at this time whether Killington's intervention will result in
its taking any action or legal positions adverse to the Company and if
so whether such action or legal positions would be considered material
to the Company.
Killington is a wholly owned subsidiary of S-K-I, Ltd. ("S-K-I"), a
publicly held holding company. Killington owns and operates the
Killington Ski Area and is one of the Company's largest customers.
Preston Leete Smith, a director of the Company since 1977, is S-K-I's
Chief Executive Officer and Chairman of its Executive Committee. He is
also Chairman of the Board of Directors of Killington. Mr. Smith has
informed the Company that because he recuses himself from all matters
concerning Killington's relationship with the Company, he learned of
Killington's request to intervene after the fact and as a matter of
policy continues to recuse himself from all discussions related to the
intervention, as well as other matters related to Killington's
relationship with the Company. Similarly, as a matter of policy, Mr.
Smith would recuse himself from consideration of any matters by the
Company involving Killington or S-K-I.
REPORT OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES
As described above under the caption "Legal Proceedings" each of
the directors and certain former directors of the Company are named
defendants in the Shareholder Suit. In accordance with Article XI of
the Company's By-Laws and applicable provision of the Vermont Business
Corporation ACT ("VBCA"), the Company during 1995 advanced funds to pay
the cost of such directors defense of the Shareholder Suit, in the
aggregate amount of approximately $367,000. As required by the
Company's By-Laws and the VBCA each of such directors have agreed to
repay advances made by the Company on his or her behalf if it is
ultimately determined that such director did not meet applicable
standards of conduct. Such standards require that the director have
acted in good faith and in a manner that he or she reasonably believed
(as to actions in his or her official capacity with the Company) was in
the Company's best interests, or (in all other cases) was at least not
opposed to the Company's best interests. The Company intends to
continue to advance funds for payment of the defendants' expenses in the
Shareholder Suit to the extent permitted under the Company's By-Laws and
the VBCA.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee consists of non-employee directors and
is responsible for reviewing and making recommendations to the Board of
Directors concerning the compensation of officers of the Company and
certain subsidiaries. The members of the Compensation Committee are
also responsible for the administration of the Stock Option Plan for Key
Employees. During 1995, the Compensation Committee held five meetings.
During 1995, the Compensation Committee of the Board consisted of
Preston Leete Smith, Frederic H. Bertrand, Elizabeth Coleman, F. Ray
Keyser, Jr. and Gordon P. Mills. Thomas C. Webb, retired President and
Chief Executive Officer, served as a member of the Board of Directors of
S-K-I Ltd., its Stock Option Committee and Profit Sharing Retirement
Trust Committee but not on its Executive Committee which generally
performs the functions of a compensation committee. Preston Leete
Smith, Chief Executive Officer of S-K-I Ltd., serves as a Director of
CVPS and as Chairman of its Compensation Committee.
Each of the members of the Compensation Committee is a named
defendant in the Shareholder Suit. As described above, during 1995 the
Company advanced, and intends to advance during 1996, the cost of the
directors' defense of the Shareholder Suit in accordance with applicable
provisions of the Company's By-Laws and Vermont law. See "Report of
Indemnification and Advancement of Expenses" above.
REPORT OF THE COMPENSATION COMMITTEE OF CENTRAL VERMONT PUBLIC
SERVICE
CORPORATION
Executive Compensation
The philosophy of the Compensation Committee ("Committee"), with
regard to executive compensation, is to maintain a total compensation
pay package which, by virtue of its design and target levels, enables
the Company to recruit the best talent for our jobs, to retain high
performing employees by strongly rewarding exceptional performance, to
encourage employees to develop their skills and abilities; and
encourages and supports performance and decisions that strengthen the
Company financially and strategically, including service to the
customer.
Base Annual Salary
It is the policy of the Committee to establish salaries within a
range that surrounds the 50th percentile of salaries of similar
positions as reported in the annual Executive Compensation Survey
conducted by the Edison Electric Institute, adjusted to reflect the size
of the Company as determined by revenues.
Within this range the salary is determined based on an evaluation
of the individual's qualifications, experience and performance.
Increases are limited by a merit increase budget pool, which is
established annually. The size of the pool, which is then distributed
among executive officers based on an evaluation of their contribution,
is based on published salary management planning surveys, which report
the planned merit increase budgets of other companies.
Management Incentive Compensation Plans
The Company's executive officers participate in the core utility
Management Incentive Plan (the "Incentive Plan"). The purpose of the
Incentive Plan is to focus the efforts of the executive team on the
achievement of challenging and demanding corporate objectives. When
corporate performance reaches or exceeds the specified annual
performance objectives, an award is granted. A well-directed incentive
plan, in conjunction with competitive salaries, provides a level of
compensation which fully rewards the skills and efforts of the
executives.
Participants are designated annually by the Board of Directors. In
1995, eleven executive officers were eligible to participate including
the named executive officers in the Summary Compensation Table.
During 1995 the Compensation Committee restructured the Incentive
Plan as follows:
It established a financial performance threshold, below which no
incentive awards would be paid. The threshold is calibrated against the
allowed return on equity. The degree to which the allowed return on
equity is achieved generates a pool which is available to fund incentive
payouts.
The pool funds awards, but performance measures must also be met in
the following areas to receive an award. Each measure is equally
weighted.
Return on equity. While this measure is used to establish the
incentive pool, it is also one of the measures which is assessed in
determining distribution of the pool.
Operating costs and efficiency. Measures the cost of operating and
maintenance expense expressed as a percent of kilowatt hour sales, as
compared to budgeted expense levels.
Retail customer satisfaction index. Measures service reliability
by compiling the combined number and duration of outages in the current
year, and the result of this calculation must be a 5% reduction as
measured against the previous five-year average.
Individual performance. Based on advice and recommendation from
the Chief Executive Officer for others reporting to him, the Committee
evaluates individual officer performance.
If the maximum payout on all of the standards were to be achieved,
the total award would represent 30% of base salary for the Chief
Executive Officer, 25% of base salary for the Chief Operating Officer,
20% for Senior Vice Presidents and Vice Presidents, and 15% for
designated Assistant Officers. The amount of the payout, if any, to be
awarded under the Company's Incentive Plan for 1995 has not yet been
determined.
Catamount Energy Corporation, a wholly owned subsidiary of the
Company, also has an Incentive Plan for officers of Catamount approved
annually by its Board of Directors. Officers of the Company who are
also officers of Catamount may be granted a discretionary award by the
Board based upon the performance of Catamount and the Board's subjective
evaluation of each officer's individual contribution to that
performance.
The amounts paid under the Catamount Incentive Plan were based
solely on the profitable sale of a portion of the Company's interest in
the Appomattox project. Amounts paid under the Catamount Incentive Plan
for 1995 are set forth in the Bonus column of the Summary Compensation
Table.
Long-Term Incentives
The Committee views the Company's long-term Stock Option Plan for
Key Employees ("Stock Option Plan"), approved by the stockholders, as an
important component in its strategy for attracting and retaining
executives of high caliber and helps to motivate them to increase
shareholder value.
The options are granted to executive officers annually by the full
Board on recommendation of the Committee. In 1995, ten of the Company's
executive officers received options including the named executive
officers in the Summary Compensation Table. The number of options is
determined by reference to the annual Edison Electric Institute
Executive Compensation Survey, with data statistically adjusted to
reflect company size. This determination is further validated by
calculations made in accordance with the Black-Scholes option pricing
model. All awards are provided by means of non-qualified stock options
which have an exercise price equal to 100% of the Fair Market Value of
the Common Stock of the Company on the date of grant. The options will
have value only if the Company's stock price increases. The Committee's
policy is that the exercise price of stock options should not be amended
after grant, except in the event of a stock dividend, stock split or
other change in corporate structure or capitalization affecting the
Company's Common Stock.
The Stock Option Plan is effective for ten years terminating in
1997. Any new plan will require stockholder approval.
Stock options are exercisable in whole or in part from the date of
grant for a period of ten years and one day but in no event later than
three years after retirement from the Company. Options granted under
the Stock Option Plan are not transferrable except upon the death of the
optionee and during his or her lifetime are exercisable only by him or
her. The options terminate immediately upon termination of employment
for cause or after a specified period in the case of termination of
employment for any other reason.
It is the policy of the Committee not to compensate officers
through the use of perquisites. A car is provided to the Chief
Executive Officer and periodic medical examinations for all officers.
There are no other perquisites provided to any officer.
The Company is eligible for tax deductions for compensation paid to
its officers, as each officer's compensation is less than the one
million dollar pay cap enacted by Congress as part of the Omnibus Budget
Reconciliation Act effective 1994.
The Committee retains the services of an independent expert to
advise it with respect to the extent to which its pay practices are
consistent with prevailing industry standards. With the assistance of
its advisor, it aggressively reviews its plans each year to assure that
it competitively pays and rewards executives to act in the interests of
the ratepayers and the shareholders.
Preston Leete Smith, Chairman
Frederic H. Bertrand
Elizabeth Coleman
F. Ray Keyser, Jr.
Gordon P. Mills
FIVE-YEAR SHAREHOLDER RETURN COMPARISON
The Securities and Exchange Commission requires that the Company
include in this proxy statement a line-graph presentation comparing
cumulative, five-year shareholder returns on an indexed basis with the
S&P 500 Stock Index and either a published industry or line-of-business
index or an index of peer companies selected by the Company. The Board
of Directors has selected for its peer group index a stock index
compiled by the Edison Electric Institute ("EEI"), because the Board
feels it is the most comprehensive and representative in as much as it
includes stock performance data for 100 investor-owned electric utility
companies.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
CENTRAL VERMONT, EEI 100 ELECTRICS, S & P 500
<CAPTION>
Measurement Period CVPS EEI S&P
(Fiscal Year Covered) ---- --- ---
---------------------
<S> <C> <C> <C>
Measurement Pt-12/31/90 $100 $100 $100
FYE 12/31/91 $136.21 $128.87 $130.34
FYE 12/31/92 $157.85 $138.69 $140.25
FYE 12/31/93 $142.35 $154.11 $154.32
FYE 12/31/94 $100.79 $136.28 $156.42
FYE 12/31/95 $105.93 $178.55 $214.99
*Total Return Assumes Quarterly Reinvestment of Dividends
</TABLE>
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS
The following table sets forth all cash compensation paid or to be
paid by the Company and its subsidiaries, as well as the number of stock
option awards earned during the last three fiscal years by the Company's
current and retired Chief Executive Officer and the four other most
highly compensated executive officers whose salary and incentive awards
for services rendered to the Company and its subsidiaries in all
capacities for 1995 exceeded $100,000.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
------------------------------ ------------
Securities
Other Underlying
Annual Option/ All Other
Name and Principal Salary Bonus Compensation SARs Compensation
Position (1) Year ($) (2) ($)(3) ($) (4) (#) ($) (5)
- - ---------------------- ----- ------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
A. Robert H. Young 1995 178,423 12,500 - 6,000/0 5,876
President and Chief 1994 153,756 0 - 6,000/0 4,927
Executive Officer 1993 141,769 35,995 - 6,000/0 4,533
B. Robert de R. Stein 1995 124,153 - - 4,500/0 4,874
Senior Vice President- 1994 119,606 0 - 4,500/0 4,873
Energy Resources and 1993 114,677 16,804 - 4,500/0 3,988
External Markets
C. Thomas J. Hurcomb 1995 109,765 - - 3,000/0 5,536
Vice President 1994 104,115 0 - 3,000/0 4,534
Marketing and 1993 98,382 15,606 - 3,000/0 4,996
Public Affairs
D. Robert G. Kirn 1995 108,602 - - 3,000/0 4,554
Vice President - 1994 98,201 0 - 3,000/0 4,264
Engineering and 1993 93,736 15,750 - 3,000/0 3,574
Operations
E. Joseph M. Kraus 1995 102,485 12,500 - 3,000/0 8,820
Corporate Secretary 1994 96,657 0 - 3,000/0 8,551
and General Counsel 1993 78,553 16,612 - 1,500/0 4,791
F. Thomas C. Webb 1995 280,898 12,500 9,584 8,000/0 9,792
Retired President 1994 260,759 0 - 8,000/0 7,946
and Chief Executive 1993 248,755 67,183 - 8,000/0 12,453
Officer
</TABLE>
(1) - The principal positions listed were held as of December 31, 1995 by
the executive officers named in the Summary Compensation Table other than
Mr. Webb who retired from employment with the Company effective December
30, 1995.
- Mr. Young was elected Director, President and Chief Executive Officer
effective December 30, 1995. Compensation reported for 1995 includes
compensation received in his position as Executive Vice President and
Chief Operating Officer.
(2) - Includes compensation deferred at the election of all executive
officers named, and directors' retainers and fees earned from VELCO by
Mr. Webb.
- Includes compensation for services performed by Mr. Webb for Vermont
Yankee and by Mr. Stein for VELCO for which the Company was reimbursed.
(3) - Includes incentive awards by Catamount, as follows for:
A: 1995 - $12,500, 1993 - $10,000; E: 1995 - $12,500, 1993 - $7,500;
F: 1995 - $12,500, 1993 - $10,000.
(4) - Payment of $9,584 for the Federal Insurance Contribution Assessment
tax on the present value of future benefits to be paid on the Supplemental
Retirement Plan.
(5) - The total amounts shown in this column for the last fiscal year are
comprised as follows:
- Company matching contributions to the Employee Savings and Investment
Plan includes for A: $5,525; B: $4,620; C: $4,391; D: $4,341; E: $4,096;
F: $5,994.
- Taxable term cost on executive split-dollar insurance. (An insurance
plan that gives both employer and employee an interest in the policy death
benefit on the employee's life.) for A: $351; B: $254; C: $639; D: $213;
E: $109; F: $2,279.
- Includes accrued above-market interest on deferred compensation for
C: $506 and F: $1,519.
- Pay-in-lieu of taking vacation based on Company policy for employees
who qualify for E: $4,615.
STOCK OPTIONS
The following table sets forth stock options granted to the
Company's current and retired Chief Executive Officer and the four other
most highly compensated executive officers during 1995 under the
Company's 1988 Stock Option Plan for Key Employees. Under SEC
regulations, companies are required to project an estimate of
appreciation of the underlying shares of stock during the option term.
The Company has chosen the Black-Scholes model formula approved by the
SEC. However, the ultimate value will depend on the market value of the
Company's stock at a future date, which may or may not correspond to the
projections below.
Options/Stock Appreciation Rights ("SARs") Grants Table
<TABLE>
Option/SAR Grants in Last Fiscal Year
<CAPTION>
Grant Date
Individual Grants Value
- - ------------------- ---------- --------- ---------- -------- ----------
% of
Number of Total
Securities Options/
Underlying SARs
Options/ Granted to Exercise Grant
SARs Employees Or Base Expira- Date
Granted In Fiscal Price tion Present
Name (#) 1/ Year ($/Sh) Date Value 2/
- - -------------------- ---------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C>
Robert H. Young 6,000/0 15.8% $13.5625 5/3/05 $10,253
Robert de R. Stein 4,500/0 11.8 13.5625 5/3/05 7,690
Thomas J. Hurcomb 3,000/0 7.9 13.5625 5/3/05 5,127
Robert G. Kirn 3,000/0 7.9 13.5625 5/3/05 5,127
Joseph M. Kraus 3,000/0 7.9 13.5625 5/3/05 5,127
Thomas C. Webb 8,000/0 21.1 13.5625 12/30/98 10,850
</TABLE>
1/ A total of 38,000 shares were awarded to all plan participants in
1995. Stock Options are exercisable in whole or in part from the date of
the grant for a period of ten years and one day but in no event later
than three years after retirement from the Company.
2/ Per Black-Scholes model as certified by an independent consultant.
The assumptions used for the Model are as follows: Volatility-.1776
based on monthly stock prices for the period of 12/31/92 to 12/31/95;
Risk free rate of return-7.5%; Dividend Yield-6.88% over the period of
12/31/92 to 12/31/95; and a ten year exercise term. For a three year
exercise term, the assumptions used are as follows for the same periods:
Volatility-.1776; Risk free rate of return-6.9%; and Dividend Yield-6.88%.
The following table sets forth stock options exercised by the
Company's current and retired Chief Executive Officer and the four other
most highly compensated executive officers during 1995, and the number
and value of all unexercised options at year-end. The value of
"in-the-money" options refers to options having an exercise price which
is less than the market price of the Company's Common Stock on December
29, 1995.
Option/SAR Exercises and Year-end Value Table
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Value
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
At FY-End (#) At FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($)1/ Unexercisable Unexercisable
- - ------------------- --------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Robert H. Young - - 22,500/0 -/-
Robert de R. Stein - - 24,000/0 -/-
Thomas J. Hurcomb - - 21,000/0 -/-
Robert G. Kirn - - 14,250/0 -/-
Joseph M. Kraus - - 7,500/0 -/-
Thomas C. Webb - - 30,000/0 -/-
</TABLE>
1/ The dollar values in columns (c) and (e) are calculated by determining
the difference between the fair market value of the securities underlying
the options and the exercise or base price of the options at exercise or
fiscal year end, respectively.
Deferred Compensation Plan
Employees of the Company who are officers are eligible to defer
receipt of a portion of their compensation pursuant to the Company's
Deferred Compensation Plan (the "Deferred Plan") for Officers. Also,
certain of the directors of the Company have elected to defer receipt
of all or a portion of their fees under a similar plan for directors.
Under the Deferred Plan approved effective January 1, 1990
directors and officers of the Company may elect to defer over a 5-year
period receipt of a specified amount of compensation or fees otherwise
currently payable to them until retirement at age 65 (age 70 for
directors), or until their death, disability, or resignation. Officers
may receive a reduced benefit beginning at age 60 with 10 years of
service. Amounts deferred are not currently taxable for state and
federal income taxes. The benefit is equal to the compensation deferred
plus interest credited by the Company. The Deferred Plan is a defined
contribution program under which the Company recovers any costs,
including the cost of capital, through the proceeds of the supporting
life insurance policies. In addition, if death of a director occurs
before age 70, an additional survivor benefit equal to the annual amount
deferred will be paid to the beneficiary each year for fifteen years.
This benefit is also financed by life insurance proceeds.
Pension Plan
The Pension Plan of Central Vermont Public Service Corporation and
Its Subsidiaries (the "Pension Plan") is a defined benefit plan which
covers employees, among others, who are officers. The Company pays the
full cost of the Pension Plan.
The table below shows the annual amounts payable under the present
provisions of the Pension Plan as amended through December 31, 1995,
based on Final Average Earnings for various years of service, assuming
the employee would retire at age 65 in 1996.
<TABLE>
<CAPTION>
Assumed Years of Service
5-Year Final -------------------------------------------------
Average Earnings 15 20 25 30 35
- - ----------------- ---------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 80,000 $18,828 $25,105 $31,381 $37,657 $39,657
100,000 24,078 32,105 40,131 48,157 50,657
120,000 29,328 39,105 48,881 58,657 61,657
140,000 34,578 46,105 57,631 69,157 72,657
150,000 37,203(1) 49,605(1) 62,006(1) 74,407(1) 78,157(1)
190,000 37,203(1) 49,605(1) 62,006(1) 74,407(1) 78,157(1)
230,000 37,203(1) 49,605(1) 62,006(1) 74,407(1) 78,157(1)
250,000 37,203(1) 49,605(1) 62,006(1) 74,407(1) 78,157(1)
280,000 37,203(1) 49,605(1) 62,006(1) 74,407(1) 78,157(1)
300,000 37,203(1) 49,605(1) 62,006(1) 74,407(1) 78,157(1)
</TABLE>
________
(1) Internal Revenue Code Section 401(a)(17) limits earnings used to
calculate qualified plan benefits to $150,000 for 1995.
Final Average Earnings is the highest five-year average of
consecutive years' Base Salary as set forth in the Salary column of the
Summary Compensation Table over an employee's career with the Company.
The amounts above are payable for the life of the retiree only, and
would be reduced on an actuarial basis if survivor options were chosen.
In addition, no Social Security offset applies to amounts above.
The credited years of service at December 31, 1995 under the
Pension Plan for the named executive officers in the Summary
Compensation Table were as follows: Mr. Young, 8.6 years; Mr. Stein,
7.7 years; Mr. Kraus, 14.5 years; Mr. Hurcomb, 28 years and Mr. Kirn,
4.8 years. At the time of his retirement, Mr. Webb had 11 years of
service with the Company.
Officers' Insurance and Supplemental Retirement Plan
The Officers' Insurance and Supplemental Retirement Plan (the
"SERP") is designed to supplement the retirement benefits available to
the Company's officers. The SERP is a part of the Company's overall
strategy for attracting and maintaining top managerial talent in the
utility industry. Under this SERP, the named executive officers in the
Summary Compensation Table are covered, while employed, by life
insurance at the following multiple of salary: Mr. Young, four times;
Messrs. Stein, Hurcomb, Kirn and Kraus, three times.
Under the SERP, each officer is entitled to receive, upon
retirement at age 65, fifteen annual payments in amounts equal to a
specified percentage of the officer's final year's Base Salary. The
applicable percentages for the named executive officers in the Summary
Compensation Table are as follows: Mr. Webb, 44.5%; Mr. Young, 44%;
Messrs. Stein, Hurcomb, Kirn, and Kraus, 33%. A reduced benefit is
available at age 60 for officers who attain age 55 with ten years of
service. Mr. Webb, who retired effective December 30, 1995, will
receive an unreduced annual benefit of $120,595 under this SERP per
approval of the Board of Directors. A paid-up life insurance of
$100,000 is also provided to vested retirees under this SERP. The SERP
is financed through the Company's acquisition of corporate-owned life
insurance.
Shown below is the estimated Company provided benefit payable under
the SERP for the named executive officers in the Summary Compensation
Table, assuming they were to retire at age 65, and based on assumed
final base pay amount:
<TABLE>
<CAPTION>
Assumed Final
Annual Base Pay 33% 44% 44.5%
--------------- ---------- --------- ---------
$ $ $ $
--------------- ---------- --------- ---------
<S> <C> <C> <C>
80,000 26,400 35,200 35,600
100,000 33,000 44,000 44,500
120,000 39,600 52,800 53,400
140,000 46,200 61,600 62,300
160,000 52,800 70,400 71,200
180,000 59,400 79,200 80,100
220,000 72,600 96,800 97,900
260,000 85,800 114,400 115,700
280,000 92,400 123,200 124,600
300,000 99,000 132,000 133,500
</TABLE>
Predecessor Deferred Compensation Plan
Between 1986 and 1990, the Company allowed officers to defer
receipt of compensation in return for fifteen annual payments of a
defined benefit amount upon retirement. The Company will pay the
difference, if any, between the defined benefit cost and the accumulated
value of deferred compensation.
Mr. Hurcomb, who elected to participate, will receive an estimated
annual Company-provided benefit, payable at age 65 of $13,900. Mr.
Webb, who retired December 30, 1995, receives an annual reduced benefit
of $26,100. Since these benefits do not apply to all of the named
executive officers, they have not been reflected in the foregoing
pension table.
Employee Savings and Investment Plan
Effective January 1, 1985 the Company adopted an Employee Savings
and Investment Plan (the "Plan") (also known as a 401(k) Plan) which
provides a means for eligible employees to accumulate savings and
investment income without payment of current income taxes. Presently
any employee of the Company who has completed at least one year of
service, as defined in the Plan, is eligible to participate
("Participant"). An eligible employee who elects to participate in the
Plan may authorize the Company to contribute to the Plan for his or her
account between 1% and 15% of their pre-tax base compensation for each
pay period. For 1995, the Plan limits the maximum annual deferral to
$9,240 per Participant. This maximum is adjusted annually for inflation
by the Internal Revenue Service. The Company matches 100% of the first
4% of the compensation the Participant contributes to the Plan. A
Participant may direct the investment of his or her Plan account among
six funds specified in the Plan and is at all times fully vested in his
or her Plan account. Generally, distribution of employee contributions
is deferred until the Participant's death, disability, retirement or
other termination of employment, except in cases of financial hardship.
Matching employer contributions, however, may be withdrawn by the
Participant at any time and for any reason, provided either the amount
withdrawn has been in the Plan for at least two years or the Participant
has been a member of the Plan for at least 5 years. Such in-service
withdrawals are generally subject to ordinary income tax and an
additional 10% tax plus a mandatory 20% rollover tax withholding
effective January 1, 1993. Distribution of Plan benefits may be in the
form of cash, an annuity, or in certain circumstances, Common Stock of
the Company. Amounts voluntarily deferred by the named executive
officers are included in the Salary column of the Summary Compensation
Table. Matching Company contributions credited to the Plan accounts of
the named executive officers during 1995 are set forth in the All Other
Compensation column of the Summary Compensation Table.
Contracts with Management
The Company has entered into severance compensation agreements with
Messrs. Young, Stein, Hurcomb, Kirn, Kraus and four other executive
officers of the Company. The agreements have a term of five years
provision for renewal. They provide that in the event of termination of
employment, or a significant change in employment status as defined in
the agreement, within three years following a change in control of the
Company, Messrs. Young, Stein, Hurcomb, Kirn, Kraus and one other
executive officer will receive 2.999 times and three other executive
officers will receive two times their average annual compensation for
the preceding five or fewer years of service and certain legal fees and
expenses incurred as a result of termination of employment.
The provisions of the agreement do not apply if the executive
officer retires, dies, or is disabled, voluntarily resigns, or is
dismissed for cause. In exchange for agreeing to provide consulting
services as requested by the Company for one year and refraining from
working in competition with, or for a competitor of the Company for
three years, the agreement permits continued participation in and
retention of benefits under the Deferred Compensation Plan, Officers'
Insurance and Supplemental Retirement Plans, and health and disability
plans. The extent of these provisions depends on an individual's
participation and circumstances, and is specified in each agreement.
The officers with less than 10 years of service would receive a payment
actuarially equivalent to benefits received under the Company's Pension
Plan at age 65 with ten years of service, less any benefit paid under
the Pension Plan. The agreements also provide for the payment to
executive officers of an amount sufficient to offset any federal excise
tax on the termination payments under Section 4999 of the Internal
Revenue Code. Non-qualified stock options not immediately exercisable
will become exercisable in the event of a change of control of the
Company as defined in the Plan.
A change of control occurs under the agreement when (1) any person,
corporation, partnership or group acquires 20% or more of the combined
voting power of the Company's outstanding securities; (2) if those
members constituting a majority of the directors at any given date no
longer constitute a majority of the directors at the end of a period of
two consecutive years thereafter (unless the nomination of each new
director was approved by a vote of at least two-thirds of the directors
in office who were directors at the beginning of the period); or (3) if
a third party acquires ownership or voting power of 10% or more of the
outstanding voting securities of the Company, and subsequently is a
"public utility holding company" within the meaning of the Public
Utility Holding Company Act of 1935, or the Company loses its exemption
from or is required to register under that Act.
The Company entered into an agreement with Mr. Webb for consulting
services rendered to the Company after his retirement for 1996 and 1997
to provide for an orderly management succession and for his continued
service on the Vermont Yankee Board of Directors. The amount to be paid
will be $75,000 per year if all contractual arrangements are met.
During 1989, the Board also approved a severance plan in the event
of a change of control for key managers of the Company not covered by
the above plan. In the event of a change in control as described above
and a subsequent discharge from employment within eighteen months for
reason other than cause, certain managers will receive a severance
payment equal to one year's base salary, outplacement services, and
coverage under the Company's medical plan for one year at Company
expense. Currently, eighteen managers are subject to the Plan.
The Board of Directors believes that such agreements protect the
stockholders by ensuring officers and key managers can and will act in
stockholders' best interests without regard to personal situations or
concerns. The Board also believes that such agreements will better
ensure retention and recruitment of high caliber officers and key
managers.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP, independent public accountants,
have audited the accounts of CVPS for 1995. They have served as the
Company's independent public accountants since 1985. Representatives of
Arthur Andersen LLP are expected to be present at the Annual Meeting, to
be available to respond to appropriate questions, and to have the
opportunity to make a statement if they so desire.
1997 ANNUAL MEETING
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
A stockholder desiring to present a proposal at the Company's 1997
Annual Stockholders' Meeting and to have such proposal considered for
inclusion in the proxy materials for such meeting should submit such
proposal addressed to the Secretary, Joseph M. Kraus, no later than
November 20, 1996. Any such proposal must comply with Rule 14a-8 of
Regulation 14A of the proxy rules of the Securities and Exchange
Commission and will be omitted from or included in the proxy material at
the discretion of the Board of Directors of the Company in accordance
with such applicable laws and regulations.
OTHER MATTERS
The only business to be presented to the meeting, by any persons,
of which the Company is aware is that which is specified in said Notice
of Meeting, and any action in connection with or for the purpose of
effecting the same. If any other matters properly and legally come
before the meeting, the persons named as Proxies will vote upon them in
accordance with their best judgement. The Proxies have no knowledge of
any such other matters which may be so presented for action at the
meeting.
By Order of the Board of Directors
ROBERT H. YOUNG
President and Chief Executive Officer
It is hoped that all of the Common Stockholders will be represented
in person or by proxy at the Annual Meeting. The Board of Directors
earnestly urges that you VOTE, SIGN AND DATE the enclosed proxy, whether
or not you are able to attend the meeting in person. PROXIES SHOULD BE
MAILED IN THE ADDRESSED RETURN ENVELOPE ENCLOSED FOR THAT PURPOSE
IN
ORDER TO REACH THE OFFICE OF THE COMPANY NOT LATER THAN MAY 7, 1996.
The giving of such proxy will not affect your right to vote in person
should it later be found convenient for you to attend. Any proxy given
is revocable at any time prior to the voting of the share or shares
represented thereby.
<PAGE>
<PAGE>
APPENDIX
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
Proxy for Annual Meeting of Stockholders, May 7, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints LUTHER F. HACKETT, MARY ALICE McKENZIE
and GORDON P. MILLS as proxies,each with the power of substitution, and
hereby authorizes them to represent and to vote, as designated below,
all shares of Common Stock of Central Vermont Public Service Corporation
held of record by the undersigned on February 28, 1996 at the Annual
Meeting of Stockholders to be held May 7, 1996, at the Holiday Inn,
Route 7 South, Rutland, Vermont, or at any and all adjournments thereof.
ART. 1. ELECTION OF DIRECTORS (Directors recommend a vote FOR Article 1)
FOR Nominees listed below (except WITHHOLD AUTHORITY
as marked to the contrary below) to vote for all nominees
listed below.
Directors whose terms will expire in 1999:
Elizabeth Coleman, Preston Leete Smith, Robert H. Young
Instruction: To Withhold authority to vote for any individual
nominee, write nominee's name on space provided below:
___________________________________________________________________
(Continued, and to be signed on reverse side)
- - --------------------------------------------------------------------------------
Detach Card
IMPORTANT
Please send in your proxy today.
Please vote, sign, date and return the proxy card
above in the envelope provided. If you do so now,
the Company will avoid the expense of follow-up
solicitations.
PAGE
<PAGE>
2. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the meeting. If any
such other business is presented for action at the meeting, it is the
intention of the Proxies to vote all such matters in accordance with
their best judgment.
This proxy when properly executed will be voted in the manner
indicated herein by the undersigned stockholder. If no direction is
made, this proxy will be voted FOR Article 1.
Please vote, sign, date and return the proxy card promptly using
the enclosed envelope.
DATED -----------------------, 1996
------------------------------------
------------------------------------
Signature of Stockholder(s)
Please sign exactly as the name(s) appear. For shares held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name and indicate
the signer's office. If a partnership, please sign in partnership
name by authorized person.
- - --------------------------------------------------------------------------
Detach Card
IMPORTANT
Please send in your proxy today.
Please vote, sign, date and return the proxy card
above in the envelope provided. If you do so now,
the Company will avoid the expense of follow-up
solicitations.
