SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
..............................................................................
(Name of Registrant as Specified In Its Charter)
..............................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
.....................................................................
2) Aggregate number of securities to which transaction applies:
.....................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
.....................................................................
4) Proposed maximum aggregate value of transaction:
.....................................................................
5) Total fee paid:
.....................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.............................................
2) Form, Schedule or Registration Statement No.:
.............................................
3) Filing Party:
.............................................
4) Date Filed:
.............................................
<PAGE>
March 30, 1998
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 5,
1998 at the Holiday Inn, Route 7 South, Rutland, Vermont. Refreshments will
be served at 9 a.m.
At this meeting you will be asked to elect one director to serve for a three-
year term. Also, you will be asked to approve a Stock Option Plan for Non-
employee Directors similar to the plan approved in 1993.
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>
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
77 Grove Street
Rutland, Vermont 05701
______________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 5, 1998
To the Holders of Common Stock:
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 5, 1998, at 10 A.M., for the following purposes:
1. To approve the 1998 Stock Option Plan for Non-employee Directors.
2. To elect one Director for a term of three years; and
3. To act upon any matters incidental to or in furtherance of the
foregoing and upon any matters which may properly come before the meeting or
at any adjournments thereof.
Each of the above items is described in the Proxy Statement which
accompanies this Notice.
The Board of Directors has fixed the close of business on February 25,
1998, 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, Vice President,
Secretary and General Counsel
Rutland, Vermont
March 30, 1998
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>
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
77 Grove Street
Rutland, Vermont 05701
______________________
March 30, 1998
PROXY STATEMENT
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 solicited proxies 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 5, 1998 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. If no direction is
given, proxies will be voted FOR the 1998 Stock Option Plan for Non-employee
Directors, and FOR the election, as Director, of the one nominee listed on the
proxy. Any proxy may be revoked by written notice or by a duly executed proxy
bearing a later date delivered to the Secretary of the Company at any time
before it is exercised, or by attending the Annual Meeting and voting in
person.
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 1997 accompanies this Proxy Statement.
The Proxy Statement and form of Proxy were first sent to stockholders on
or about the date of this Notice.
VOTING SECURITIES
There were 11,423,401 outstanding shares of Common Stock, each share
being entitled to one vote, at the close of business on February 25, 1998, 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 the nominee 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 votes entitled to be cast in person or by
proxy on the matter. Abstentions are counted in determining whether a quorum
has been reached on a particular matter. If a quorum exists, action on a
matter is approved if the votes cast favoring the action exceed the votes cast
opposing the action. Abstentions are not counted as opposing votes.
A plurality of the votes cast by the shares entitled to vote in the
election is required for the election of Directors (i.e. the nominees
receiving the greatest number of votes will be elected at a meeting at which a
quorum is present). Abstentions are not counted for purposes of the election
of Directors.
ARTICLE 1.
1998 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
In order to enhance the ability of the Company to attract and retain
individuals of superior managerial ability and to motivate such individuals to
exert their best efforts towards the future progress and profitability of the
Company, and its subsidiaries, the Board of Directors has adopted, subject to
stockholder approval, the 1998 Stock Option Plan for Non-employee Directors
("Directors' Plan"). This Directors' Plan is a successor to the plan adopted
by the stockholders in 1993. By encouraging the acquisition of stock by
Directors, the Directors' Plan will more closely ally the interests of the
Company's management with the interests of the stockholders and provide
incentives for management to increase stockholder value.
The text of the Directors' Plan is included as Schedule A.
The Directors' Plan
The Directors' Plan provides for the automatic granting of options to
purchase shares of Common Stock of the Company to all Non-employee Directors
of the Company. At present eight (8) non-employee Directors will participate
in the Directors' Plan. All options granted under the Directors' Plan will be
non-qualified Stock Options. The per share option price for all options
granted under the Directors' Plan will be equal to the Fair Market Value of a
share of the Company's Common Stock on the date of the grant.
The total number of shares of Common Stock of the Company which may be
issued with respect to awards under the Directors' Plan may not exceed 112,500
shares, subject to proportional adjustments to reflect certain stock changes,
such as stock dividends and stock splits. No options have been granted under
the Directors' Plan.
On May 6, 1998, each non-employee Director will be granted an option to
purchase 2,250 shares of Common Stock of the Company. Thereafter, on the next
business day after each of the 1999, 2000, 2001 and 2002 Annual Meetings of
Stockholders, each non-employee Director then in office will be granted an
option to purchase 2,250 shares of the Company's Common Stock.
The Board of Directors of the Company may from time to time amend or
discontinue the granting of stock options or terminate the Directors' Plan;
provided, however, that no such action may, without the approval of
stockholders, materially increase the maximum number of shares of Common
Stock available for awards under the Directors' Plan.
Description of Awards Under the Plan
Stock Options
Each stock option granted under the Directors' Plan will be exercisable
during the period beginning six months after the date of grant and ending five
years thereafter. In the event a stock option expires when a limited trading
period is in effect, the period during which the option may be exercised shall
be extended for a period of 30 days following termination of such limited
trading period. A limited trading period is a period during which the Company
has advised directors and officers to refrain from trading in the Company's
Common Stock due to the existence of material information concerning the
Company's affairs which has not yet been made public.
The Directors' Plan provides that in the event of a director's death,
retirement or disability, stock options which are then exercisable shall
remain exercisable for up to one year after the director's death, retirement
or disability but in no event more than five years after the date of the
grant. When a Director ceases to be a member of the Board of Directors for
any reason other than death, retirement or disability, stock options then
exercisable shall remain exercisable for up to three months after the Director
ceased to be a member of the Board of Directors, but in no event more than
five years after the date of the grant.
If an outstanding stock option granted under the Directors' Plan expires
or terminates unexercised, the shares of Common Stock allocable to the
unexercised or terminated portion of such option may thereafter again be made
subject of grants under that Directors' Plan.
Federal Income Tax Treatment
The following brief summary of the effect of federal income taxation upon
the participant and the Company with respect to the exercise of options under
the Directors' Plan does not purport to be complete and reference should be
made to the applicable provisions of the Code. In addition, this summary does
not discuss the provisions of the income tax laws of any municipality, state
or foreign country in which the participant may reside. Because the following
is only a brief summary of the general federal income tax rules, recipients of
options under the Directors' Plan should not rely solely on this summary for
individual tax advice, as each recipient's situation and the consequences of
any particular transaction will vary depending upon the specific facts and
circumstances involved. Each recipient is advised to consult with his or her
own tax advisor for particular federal, as well as state and local, income and
any other tax advice.
In general, there are no tax consequences to the optionee or to the
Company on the grant of a stock option (a "non-qualified stock option"). On
exercise, however, the optionee generally will recognize ordinary income equal
to the excess of the fair market value of the shares as of the exercise date
over the purchase price paid for such shares, and the Company will be entitled
to a deduction equal to the amount of ordinary income recognized by the
optionee. Upon a subsequent disposition of the shares received under a non-
qualified stock
option, the difference between the amount realized on such
disposition and the tax basis of the shares on the date of exercise generally
will be treated as a capital gain or loss. The tax basis will generally equal
the amount paid for the shares upon exercise, plus the amount included as
ordinary income as a result of such exercise. In respect of any such
disposition, the Company will not be entitled to a tax deduction. Optionees
subject to the Section 16(b) insider trading rules generally are now subject
to the same tax consequences with respect to a non-qualified stock option as
any other optionee.
Special rules will apply in cases where a recipient of an option pays the
exercise price by delivering previously owned shares of Common Stock. The
surrender of such shares will not result in the recognition of gain with
respect to such surrendered shares, but a like number of shares acquired will
have a carryover basis. If an optionee surrenders shares of Common Stock to
satisfy applicable withholding tax requirements, the surrender of such shares
may result in the recognition of gain or loss in respect thereof.
The terms of the Directors' Plan accelerate the ability of the recipient
to exercise the option in connection with a change in ownership or control of
the Company. In that event and depending upon the individual circumstances of
the recipient, certain amounts with respect to such options may constitute
"excess parachute payments" under the provisions of the Code.
Pursuant to these provisions, a recipient will be subject to a 20% excise
tax on any "excess parachute payments" and the Company will be denied any
deduction with respect to such "excess" payments. Recipients of options
should consult their own tax advisors as to whether accelerated vesting of an
option in connection with a change of ownership or control of the Company
would give rise to an excess parachute payment.
Approval of the Plan
To become effective, the votes cast in favor of the Directors' Plan must
exceed the votes cast opposing the Plan provided that a quorum is present.
Abstentions are not treated as votes against the proposal. In addition,
because the Company is a regulated utility, the Directors' Plan may not become
effective without the approval of the Vermont Public Service Board.
The Board of Directors recommends a vote FOR approval of this proposal. If
not otherwise specified, proxies will be voted FOR Article 1.
ARTICLE 2.
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 as nearly equal in number as possible. In accordance with the
Company's By-Laws, the Board of Directors has fixed at nine (9) the number of
Directors for the ensuing year. The nominee for election at this Annual
Meeting of Stockholders to serve as Director for a term which expires at the
year 2001 Annual Meeting is Luther F. Hackett. Mr. Hackett was elected at the
1995 Annual Meeting of Stockholders and has served as a Director since 1979.
Mr. F. Ray Keyser, Jr., whose term as Director was to expire at the 1998
Annual Meeting of Stockholders, retired effective December 31, 1997. Also, a
vacancy was created in the class of directors whose terms will expire at the
1998 Annual Meeting by the death of Gordon P. Mills in January 1997. The
Directors have chosen not to fill the vacancies created by Mr. Keyser's
retirement and Mr. Mills' death.
Proxies will be voted (unless otherwise instructed) in favor of the
election of the nominee as indicated in the table below. Mr. Hackett, as
nominee, has consented to serve as a Director if elected. While it is not
anticipated that Mr. Hackett will be unable to serve as a Director, if he is
unable to serve, then the proxies will vote for such other person as the
present Board of Directors shall determine.
The following sets forth certain information, including business
experiences during the past five years, regarding the nominee for Director, as
well as all Directors presently serving on the Board whose terms will expire
after the 1998 Annual Meeting.
Director
Since
_________
Nominee for Director whose term will expire in year 2001:
Luther F. Hackett, age 64, President, Hackett, 1979
Valine & MacDonald, Inc., Burlington, Vermont
(Insurance Agents).
Mr. Hackett is also Director of Catamount Energy
Corporation, Vermont Electric Transmission Company,
Inc., and Chairman and Director of Vermont Electric
Power Company, Inc. and Banknorth Group, Inc.
Directors whose terms will expire in year 2000:
Frederic H. Bertrand, age 61, Chairman of the Board of the 1984
Company since October 1, 1997; Retired Chairman
of the Board and Chief Executive Officer,
National Life Insurance Co., Montpelier, Vermont since
February 1997. Mr. Bertrand is also a Director of
Catamount Energy Corporation, The Chittenden Corporation
and Vermont Electric Power Company, Inc.
Mary Alice McKenzie, age 40, President, McKenzie of Vermont, 1992
Burlington, Vermont (Manufacturer of Meat Products).
Ms. McKenzie is also a Director of Vermont Electric
Power Company, Inc.
Robert L. Barnett, age 57, Executive Vice President, 1996
Motorola, Inc. and President, Land Mobile Products
Sector, Schaumburg, Illinois (Communications
Equipment); President, Nexteps, Inc. (Telecommunications
Consulting Firm), Lake Forest, Illinois from 1993 to 1995.
Mr. Barnett is also a Director of Johnson Controls,
Inc., U.S.G., Inc., and Objective Communications, Inc.
Robert G. Clarke, age 47, President, Vermont Technical 1997
College, Randolph Center, Vermont. Mr. Clarke is also a
Director of Connecticut Valley Electric Company Inc.,
Vermont Electric Power Company, Inc. and the Granite
Savings Bank.
Directors whose terms will expire in year 1999:
Patrick J. Martin, age 57, President, Canadian & Americas 1997
Customer Operations from 1996 to present and President,
Office Document Products Division from 1993 to 1996
at Xerox Corporation, Rochester, New York (Office
Products); President and General Manager, Americas
Operations, Xerox Corporation, Stamford, Connecticut
from 1991 to 1993. Mr. Martin is also a Director of
Comptek Research.
Rhonda L. Brooks, age 45, President of the Roofing System 1996
Business, December 1997-Present; Vice President,
Investor Relations, January to December 1997,
and Vice President, Marketing, Composites, from 1995 to 1996
at Owens Corning, Toledo, Ohio, (Building Materials and
Fiberglass Composites); Senior Vice President and General
Manager, PlyGem Industries, Inc. from 1994 to 1995;
Vice President, Oral Care and New Product Strategies,
Warner-Wellcome and Vice President, Marketing,
Warner-Lambert Company from 1990 to 1994.
Preston Leete Smith, age 67, Retired Chief 1977
Executive Officer, S-K-I Ltd. (Ski Business)
in 1996. Mr. Smith is also a Director of
Catamount Energy Corporation.
Robert H. Young, age 50, President and Chief Executive 1995
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; Mr. Young is also
Director, President and Chief Executive Officer
of Connecticut Valley Electric Company Inc.,
and Catamount Energy Corporation; Director and
Chairman of Vermont Yankee Nuclear Power
Corporation; Director of Vermont Electric
Power Company, Inc., Vermont Electric
Transmission Company, Inc. and Yankee Atomic
Electric.
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 at a meeting
at which a quorum is present.
The Board of Directors recommends a vote FOR Article 2.
RETIREMENT OF DIRECTOR
After eighteen years of dedicated service as a Director, fourteen of
which he served as Chairperson of the Board of Directors, Mr. Keyser retired
from the Board of Directors in December 1997. His contributions and
leadership will be missed.
Meetings of the Board
During 1997, the Directors held eleven regular meetings 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 Robert L.
Barnett and Patrick J. Martin who attended 72% and 71% of the meetings,
respectively.
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
Frederic H. Bertrand, Chairperson, Luther F. Hackett, Preston Leete Smith and
Robert H. Young. No meeting was held during 1997.
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,
Chairperson, Robert L. Barnett, Rhonda L. Brooks, Robert G. Clarke and Mary
Alice McKenzie. During 1997, the Audit Committee held five meetings.
The Compensation Committee of the Board is composed entirely of outside
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
and Restricted Stock Plan for Non-employee Directors and Key Employees. The
present members of the Compensation Committee are Preston Leete Smith,
Chairperson, Frederic H. Bertrand, Rhonda L. Brooks and Patrick J. Martin.
During 1997, the Compensation Committee held five 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 Mary Alice
McKenzie, Chairperson, Robert L. Barnett, Patrick J. Martin and Robert H.
Young. During 1997, the Nominating Committee held two meetings.
Mr. Keyser was a member of the Executive, Compensation and Nominating
Committees until his retirement in December 1997.
Directors' Compensation
Directors of the Company are paid an annual retainer of $10,000. After
approval from the Vermont Public Service Board, under the 1997 Restricted
Stock for Non-employee Directors and Key Employees ("Restricted Plan"), the
non-employee Directors will receive 50% of their annual retainer in Common
Stock (instead of cash) with a three-year vesting period. This Restricted
Plan was approved by stockholders at the 1997 Annual Meeting of Stockholders.
Members of the Executive Committee are paid an additional retainer of $500.
The Chairman of the Board receives an additional $30,000 retainer and the
Chairperson of each committee receives an additional $2,000 retainer.
Directors are also paid $700 plus expenses for each directors' meeting
attended and $350 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 $700 plus
expenses for attendance at each other meeting of such committee. 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.
The Directors may elect to defer receipt of all or a portion of their
fees pursuant to a deferred compensation plan maintained by the Company.
Stock Option Plan for Non-employee Directors
Under the 1993 Stock Option Plan for Non-employee Directors (the "Plan"),
each of the non-employee Directors received during 1997 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, Nominee and Executive Officers and Certain Beneficial
Owners". The exercise price of the options issued to Participant Directors in
1997 was $10.9325 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. The new Directors' Plan, which requires stockholder approval, is
described in Article 1.
During 1997, no stock options granted under this Plan were exercised by
any of the Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 New York Stock Exchange. In making this
statement, the Company has relied on copies of reports that have been filed
with the Commission.
Based solely on a review of the copies of such reports prepared and filed
with the Commission during 1997 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.
STOCK OWNERSHIP OF DIRECTORS, NOMINEE, EXECUTIVE OFFICERS AND
CERTAIN
BENEFICIAL OWNERS
The following table sets forth the number of shares of Common Stock of
the Company beneficially owned by (1) each director, (2) each nominee
director, (3) each of the executive officers named in the Summary Compensation
Table, (4) each person known by the Company to beneficially own more than 5%
of the outstanding shares of Common Stock as of February 17, 1998 and (5) by
all the directors, nominee director and executive officers as a group as of
January 30, 1998.
Shares of Common Stock Percent
Name Beneficially Owned (1)(2)(3)(4) of Class
____ _______________________________ ________
L. Douglas Barba 21,550
Robert L. Barnett 3,250
Frederic H. Bertrand 12,965 (5)
Francis J. Boyle 20,900
Rhonda L. Brooks 2,750
Kent R. Brown 21,073
Robert G. Clarke 3,250 (6)
Luther F. Hackett 17,259 (7)
Joseph M. Kraus 19,115
Patrick J. Martin 3,250
Mary Alice McKenzie 11,627 (8)
Preston Leete Smith 13,549
Robert H. Young 71,809 (9)
Merrill Lynch, Pierce,
Fenner & Smith Inc. 647,950 (10) 5.67%
World Financial Center
250 Vesey Street
New York, NY 10281
All directors, nominee
director and executive
officers as a group (16) 288,877 2.5%
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 individuals
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, Hackett, Smith and Ms.
McKenzie, 11,250 shares; and Messrs. Barnett, Clarke, Martin and Ms. Brooks,
2,250 shares. No shares were awarded under the 1997 Restricted Stock Plan for
Non-employee Directors and Key Employees, approved by stockholders at the 1997
Annual Meeting and pending approval by the Vermont Public Service Board.
(3) Includes shares that the named executive officers have a right to acquire
pursuant to options granted under the 1988 and 1997 Stock Option Plans for Key
Employees as follows: Mr. Barba, 21,550 shares; Mr. Boyle, 18,400 shares; Mr.
Brown, 20,000 shares; Mr. Kraus, 17,550 shares; Mr. Young, 70,000 shares; and
all executive officers as a group, 213,000 shares. The 1997 Stock Option Plan
for Key Employees, approved by stockholders at the 1997 Annual Meeting, is
pending Vermont Public Service Board approval.
(4) Includes shares that the named executive officers hold indirectly under
the Company's Employee Savings and Investment (401(k)) and Employee Stock
Ownership Plans as follows: Mr. Kraus, 310 shares; and Mr. Young, 1,443
shares.
(5) Includes 1,715 shares held jointly with his spouse over which Mr.
Bertrand has voting and investment power.
(6) Includes 1,000 shares held jointly with his spouse over which voting and
investment power for all shares is shared.
(7) Includes 3,000 shares owned by corporations over which Mr. Hackett has
voting and investment power.
(8) Includes 150 shares held jointly with her spouse over which Ms. McKenzie
has voting and investment power.
(9) Includes one share held by Mr. Young's spouse as custodian for his son
over which Mr. Young disclaims beneficial ownership.
(10) Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") has
discretionary investment authority in respect to certain customer accounts
holding in the aggregate 250 shares of the Common Stock of the Company. Such
shares are held on behalf of persons who have the right to receive, or the
power to direct the receipt of dividends from, or the proceeds from the sale
of, such securities. MLPF&S has sole voting and dispositive power.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION
Compensation Philosophy
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.
Executive Officers' Compensation
Base Annual Salary
It is the policy of the Committee to establish salaries for the Chief
Executive Officer and other executive officers 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. Due to
the fact that the Company is pursuing more unregulated endeavors, comparisons
are also made to executive pay for companies of different sectors of industry
with annual revenues of $300 million.
Within this range the salary is determined based on an evaluation of the
individual's qualifications, experience and performance. The Chief Executive
Officer recommends the base salary, for those reporting to him, to the
Committee.
Historically, increases have been 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. As we move to a
more competitive industry model, it is expected that increases will be
primarily in the form of long and short-term incentives rather than
adjustments in base pay.
Chief Executive Officer Compensation
Base Annual Salary
The Committee determines the base salary of the Chief Executive Officer.
Mr. Young's promotion from Chief Operating Officer to Chief Executive Officer
in 1996 and his current placement in the salary range was determined by the
Compensation Committee and approved by the Board of Directors. His current
salary is based upon factors such as his level of experience in his position,
Company performance and executive team performance.
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
incentive payment is earned. A well-directed Incentive Plan, in conjunction
with competitive salaries and benefits, 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 1997,
ten executive officers were eligible to participate including the named
executive officers in the Summary Compensation Table.
There exists a financial performance threshold, below which no incentive
awards would be paid. The threshold is calibrated against the return on
equity. The degree to which the return on equity is achieved generates a pool
which is available to fund incentive payouts.
However, 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.
Customer Satisfaction Measures. Measures the customers' satisfaction
with how CVPS handled their last inquiry or service requests.
Individual Performance. Based on advice and recommendation from the
Chief Executive Officer ("CEO") for others reporting to him, the Committee
evaluates individual officer performance, and also evaluates the performance
of the CEO.
If the maximum payout on all of the standards were to be achieved, the
total incentive award would represent 35% of base salary for the Chief
Executive Officer; 25% for the Chief Financial Officer and Senior Vice
President Engineering and Operations; 20% for Vice President, General Counsel
and Secretary, Vice President and General Manager for Business Development,
Vice President and Controller, Vice President of Regulatory Affairs and
Strategic Analysis and Vice President, Marketing and Public Affairs; and 15%
for Treasurer. The amount of the payout, if any, to be awarded under the
Company's Incentive Plan for 1997 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 an 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. Amounts paid under the Catamount Incentive
Plan are set forth in the Incentive Award column of the Summary Compensation
Table.
Long-Term Incentives
The Committee views the Company's current 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 focus management attention on increasing stockholder
value.
The options are granted to executive officers annually by the full Board
on recommendation of the Committee. In 1997, 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. 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 current Stock Option Plan is effective for ten years terminating in
year 2007. This Stock Option Plan was approved by stockholders at the 1997
Annual Meeting of Stockholders but is still pending approval by the Vermont
Public Service Board.
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 one year
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.
1998 Management Incentive Plan for Executive Officers
The Board of Directors adopted a revised Management Incentive Plan ("the
1998 Plan") to be effective for the 1998 Plan (fiscal) year. The 1998 Plan
changes the 1997 Officer Incentive Plan by shifting from a financial
measurement of utility return on equity to consolidated earnings per share to
be more consistent with Company goals.
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 Company maintains the tax treatment applicable to other
employee compensation.
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.
COMPENSATION COMMITTEE MEMBERS:
Preston Leete Smith, Chairperson
Frederic H. Bertrand
Rhonda L. Brooks
Patrick J. Martin
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 Index"), because the Board feels it is the most comprehensive and
representative in as much as it includes stock performance data for investor-
owned electric utility
companies.
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
CENTRAL VERMONT, EEI INDEX, S & P 500
<S> <C> <C> <C> <C> <C> <C>
1992 1993 1994 1995 1996 1997
CVPS 100 90.18 63.85 67.11 64.19 87.58
EEI Index 100 111.15 98.29 128.78 130.32 166.00
S&P 500 100 110.00 111.38 152.85 187.52 249.57
Assumes $100 Invested on December 31, 1992
*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 Chief
Executive Officer and the four most highly compensated executive officers
whose salary and incentive awards for services rendered to the Company and its
subsidiaries in all capacities for 1997 exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation Awards
______________________________ ______________
Securities
Underlying
Option/ All Other
Name and Principal Salary Bonus SARs Compensation
Position (1) Year ($) (2) ($)(3) ($) ($) (4)
______________________ ____ ________ _______ _____________ _____________
<S> <C> <C> <C> <C> <C>
A. Robert H. Young 1997 246,758 9,897 35,500/0 7,049
President and Chief 1996 231,420 50,601 12,000/0 6,906
Executive Officer 1995 178,423 51,298 6,000/0 5,876
B. Kent R. Brown (5) 1997 176,081 -0- 12,500/0 2,114
Senior Vice President 1996 42,500 5,113 7,500/0
Engineering and
Operations
C. Francis J. Boyle(6) 1997 159,175 4,654 12,500/0 6,589
Senior Vice President, 1996 150,550 23,312 5,900/0 482
Chief Financial 1995 25,529 4,917 - 164
Officer and Treasurer
D. Joseph M. Kraus 1997 119,494 4,654 6,500/0 4,952
Vice President 1996 115,018 18,835 3,550/0 12,130
Secretary and General 1995 102,485 33,070 3,000/0 8,820
Counsel
E. L. Douglas Barba 1997 143,702 32,990 9,000/0 5,583
Senior Vice President 1996 128,389 27,946 3,550/0 5,490
and General Manager 1995 121,537 42,378 3,000/0 5,127
Catamount Energy
Corporation
(Subsidiary of the Company)
</TABLE>
(1) - The principal positions listed were held as of December 31, 1997.
(2) - Includes compensation deferred at the election of executive officers
named, and includes for Mr. Young - director's retainers and fees earned from
Vermont Electric Power Company and compensation for services performed for
Vermont Yankee for which the Company was reimbursed.
(3) - Includes incentive awards by Catamount Energy Corporation, as follows
for: A: 1997 - $9,897, 1996 - $10,000, 1995 - $17,500; C: 1997 - $4,654, 1996
- - - $5,000; D: 1997 - $4,654, 1996 - $5,000, 1995 - $17,500; E: 1997 - $32,990,
1996 - $27,946, 1995 - $42,378
(4) - The total amounts shown in this column for 1997 are comprised as
follows:
- Company matching contributions to the Employee Savings and Investment
Plan (401(k)) includes for A: $6,333; B: $1,608; C: $6,133; D: $4,780; E:
$5,211
- 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: $716; B: $506; C: $456; D: $172; E:
$372
- Pay-in-lieu of taking vacation based on Company policy for employees
who qualify for E: $4,798
(5) - Compensation data for Mr. Brown is provided only for 1997 and a portion
of 1996 because he was employed by the Company commencing September 23, 1996
(6) - Compensation data for Mr. Boyle is provided only for 1996, 1997 and a
portion of 1995 because he was employed by the Company commencing October 23,
1995
STOCK OPTIONS
_____________
The following table sets forth stock options granted to the Company's
current most highly compensated executive officers during 1997 under the
Company's 1997 Stock Option Plan for Key Employees ("Key Employee Plan"). The
Key Employee Plan is pending Vermont Public Service Board approval. Under SEC
regulations, companies are required to project an estimate of appreciation of
the underlying shares of stock during the option term. The Company has chosen
a binomial model approved by the SEC. However, the ultimate value will depend
on the market value of the Company's stock at a future date, which may or may
not correspond to the projections below.
Option/Stock Appreciation Rights Grants Table
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants
_____________________________________________
% of
Number of Total
Securities Options/
Underlying SARs
Options/ Granted to Exercise Grant
SARs Employees Or Base Expira- Date
Granted In Fiscal Price tion Present
Name (#) (1) Year ($/Sh) Date Value($)(2)
____________________ __________ _________ __________ ________ __________
<S> <C> <C> <C> <C> <C>
Robert H. Young 35,500/0 33.3% $10.9375 5/07/07 $54,010
Kent R. Brown 12,500/0 11.7% 10.9375 5/07/07 19,018
Francis J. Boyle 12,500/0 11.7% 10.9375 5/07/07 19,018
Joseph M. Kraus 6,500/0 6.1% 10.9375 5/07/07 9,889
L. Douglas Barba 9,000/0 8.4% 10.9375 5/07/07 13,693
</TABLE>
_________________
(1) A total of 106,500 shares were awarded to all plan participants under
the 1997 Stock Option Plan for Key Employees, approved by stockholders but
still pending Vermont Public Service Board approval. These stock options will
become exercisable upon the receipt of such approval and shall remain
exercisable until the tenth anniversary of the grant.
(2) Per a binomial model as certified by an independent consultant. The
assumptions used for the Model are as follows: Volatility- .1808 based on
monthly stock prices for the period of April 30, 1994 to April 30, 1997; Risk
free rate of return-6.50%; Dividend Yield-7.13% over the period of April 30,
1994 to April 30, 1997; and a ten year exercise term.
Year-End Option Table
The following table sets forth stock options exercised by the Company's
Chief Executive Officer and the four other most highly compensated executive
officers during 1997, and the number and value of all unexercised options at
year-end. The value of "in-the-money" options refers to options having an
exercise price which is less than the market price of the Company's Common
Stock on December 31, 1997.
<TABLE>
<CAPTION>
Aggregated Option/SAR Exercises in Last Fiscal Year(FY)
and Fiscal Year-End Option/SAR Values
_______________________________________________________
(a) (b) (c) (d) (e)
_______________ _________ ___________ _________________________
___________________________
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired On Value Options/SARs at FY-End(#) /SARs at FY-End ($)
Name Exercise(#) Realized(1) Exercisable Unexercisable Exercisable Unexercisable(2)
_______________ __________ __________ ___________ ____________ ___________
______________
<S> <C> <C> <C> <C> <C> <C>
Robert H. Young -0- $-0- 34,500 35,500 $24,000 $150,875
Kent R. Brown -0- -0- 7,500 12,500 19,875 53,125
Francis J. Boyle -0- -0- 5,900 12,500 7,006 53,125
Joseph M. Kraus -0- -0- 11,050 6,500 9,091 27,625
L. Douglas Barba -0- -0- 12,550 9,000 9,091 38,250
</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.
(2) Market value of underlying securities at year-end, minus the exercise
price. Options awarded under the 1997 Stock Option Plan for Key Employees
will become exercisable upon receipt of approval by the Vermont Public Service
Board.
Officers' Insurance and Supplemental Retirement Plan
The Officers' Insurance and Supplemental Retirement Plan (the "SERP") is
designed to supplement the retirement benefits available through the Company
Pension Plan to the Company's executive 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.
Brown, Boyle, Kraus and Barba, three times.
Under the SERP, each executive 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 (not including variable
pay, options or other form of remuneration). The applicable percentages for
the named executive officers in the Summary Compensation Table are as follows:
Mr. Young, 44%; Messrs. Boyle, Brown, Kraus, and Barba, 33%. A reduced
benefit is available at age 60 for officers who attain age 55 with ten years
of service. A death benefit of $100,000 is also provided to vested retirees
under this SERP. The SERP is financed through the Company's acquisition of
corporate-owned life insurance.
Shown below is the estimated Company provided benefit payable under the
SERP for the named executive officers in the Summary Compensation Table,
assuming they were to retire at age 65, and based on assumed final base pay
amount:
<TABLE>
<CAPTION>
Assumed Final
Annual Base Pay 33% 44%
($) ($) ($)
_______________ __________ _________
<S> <C> <C>
80,000 26,400 35,200
100,000 33,000 44,000
120,000 39,600 52,800
140,000 46,200 61,600
160,000 52,800 70,400
180,000 59,400 79,200
200,000 66,000 88,000
220,000 72,600 96,800
240,000 79,200 105,600
260,000 85,800 114,400
</TABLE>
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, 1997, based on
Final Average Earnings for various years of service, assuming the employee
would retire at age 65 in 1997.
<TABLE>
<CAPTION>
Assumed
5-Year Final Years of Service
_____________________________________________________
Average Earnings 15 20 25 30 35
_________________ _______ _______ _______ _______ _______
<S> <C> <C> <C> <C> <C>
$ 80,000 $18,549 $24,732 $30,914 $37,097 $39,097
100,000 23,799 31,732 39,664 47,597 50,097
120,000 29,049 38,732 48,414 58,097 61,097
140,000 34,299 45,732 57,164 68,597 72,097
160,000 (1) 39,549 52,732 65,914 79,097 83,097
</TABLE>
________
(1) Internal Revenue Code Section 401(a)(17) limits earnings used to
calculate qualified plan benefits to $150,000 for 1995 and 1996, and $160,000
for 1997.
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. Variable pay
or other forms of compensation are not included.
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, 1997, under the Pension
Plan for the named executive officers in the Summary Compensation Table were
as follows: Mr. Young, 10.5 years; Mr. Brown, 1.3 years; Mr. Boyle, 2.2
years; Mr. Kraus, 16.4 years, and Mr. Barba, 5.3 years.
Contracts with Management
The Company has entered into severance compensation agreements with
Messrs. Young, Brown, Boyle, Kraus, Barba and five other executive officers of
the Company. The agreements have a five-year 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, Brown, Boyle,
Kraus, Barba and five other executive officer will receive 2.999 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, is disabled, voluntarily resigns, or is dismissed for cause
following a change in control. 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.
A change of control occurs under the agreements 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.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP, independent public accountants, have
audited the accounts of CVPS for 1997. 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.
1999 ANNUAL MEETING
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS
A stockholder desiring to present a proposal at the Company's 1999 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 21, 1998. 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 5, 1998. 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>
Schedule A
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
1998 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Definitions
Various key terms used in this Plan are defined as follow:
1.1 "Board" - the Board of Directors of the Company.
1.2 "Code" - means the Internal Revenue Code of 1986 as amended from time to
time, and regulations and rulings under the Code.
1.3 "Change in Control " - the occurrence of any of the following events:
(i) a third person, including a "group" as such term is used in Section
13(d)(3) of The Securities Exchange Act of 1934 (the "Exchange Act") becomes
the beneficial owner, directly or indirectly, of 20% or more of the combined
voting power of the Company's outstanding voting securities ordinarily having
the right to vote for the election of directors of the Company;
(ii) individuals who, as of the date of adoption of the Plan by the Board of
Directors, constitute the members of the Board of Directors (the "Incumbent
Board") cease for any reason to constitute at least three-quarters of the
Board of Directors, provided that any person becoming a director subsequent to
the date of adoption of the Plan whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least three-quarters
of the directors comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule
14a-11 of Regulation
14A promulgated under the Exchange Act) shall be, for
purposes of the Plan, considered as though such person were a member of the
Incumbent Board; or
(iii) a third "person," as such terms is defined in the Public Utility
Holding Company Act of 1935 (the "1935 Act"), either directly or indirectly,
shall come to own, control or hold with power to vote 10% or more of the
outstanding voting securities of the Company, if immediately subsequent to the
acquisition of the Company's voting securities by such third person: (A) such
third person shall be a "public utility holding company" within the meaning of
the 1935 Act, whether or not exempt from registration thereunder, or (B) the
Company shall be in danger of losing its exemption under the 1935 Act or shall
otherwise be required to register under the 1935 Act.
1.4 "Common Stock" - shares of the Company's Common Stock, $6 Par Value.
1.5 "Company" - Central Vermont Public Service Corporation and its
subsidiaries or any successor thereto.
1.6 "Disability" - means permanent and total disability as defined by the
Company's benefits program for disability insurance program.
1.7 "Fair Market Value" - the average of the high and low quoted selling
price for a share of Common Stock as of any particular date as quoted in the
Eastern Edition of the Wall Street Journal or in a similarly readily available
public source on such date (or, if such date shall not be a business day, then
the next preceding day which shall be a business day); or if no sale takes
place, then the average of the bid and asked prices on such date.
1.8 "Participant" - A person who at the time of reference is a member of the
Board of Directors of the Company but who is not an officer or employee of the
Company or any of its subsidiaries. For purposes of this Plan, a Subsidiary
shall be any corporation in which the Company has a direct or indirect
ownership interest, including any corporation in which the Company acquires
any such interest after the adoption of this Plan, but only if the Company
owns or controls, directly or indirectly, stock possessing not less than 50%
of the total combined voting power of all classes of stock in such
corporation.
1.9 "Plan" - the Plan described herein and to be called the Central Vermont
Public Service Corporation 1998 Stock Option Plan for Non-employee Directors,
as amended from time to time.
2.0 "Retirement" - attainment of the age 70 for members of the Board of
Directors as defined in the By-laws of the Company.
2.1 "Stock Option" - an option to purchase shares of Common Stock of the
Company granted to a Participant pursuant to the terms of the Plan.
2. Purpose
The purpose of the Plan is to enhance the ability of the Company to
attract and retain individuals of high caliber to serve on the Board of
Directors by facilitating the participation of such persons as stockholders in
the future success and profitability of the Company.
3. Shares Subject to the Plan
3.1 The aggregate number of shares of Common Stock as to which Stock Options
may be granted and delivered pursuant to the Plan shall not exceed 112,500
shares, subject, however, to adjustment pursuant to Section 6 below.
3.2 If any Stock Option granted under the Plan expires or terminates without
having been exercised in full, the number of shares of Common Stock as to
which the Stock Option has not been exercised shall be available for future
grants within the limitation prescribed in subsection 3.1.
3.3 Shares of Common Stock delivered upon the exercise of a Stock Option
shall consist of issued shares of Common Stock which were reacquired by the
Company and held in Treasury, or if from time to time there is not a
sufficient number of such shares, shares of authorized but unissued Common
Stock.
4. Grants of Stock Options
4.1 On May 6, 1998, each Participant shall be granted an option to purchase
2,250 shares of Common Stock.
4.2 On the first business day after each of the 1999, 2000, 2001 and 2002
annual meetings of stockholders of the Company, each Participant shall be
granted an option to purchase 2,250 shares of Common Stock.
4.3 The terms and provisions of each Stock Option granted under the Plan
shall be evidenced by an appropriate agreement containing the terms and
provisions of such option as set forth in the Plan.
5. Option Price and Exercise of Stock Options
5.1 Option Price
5.1.1 The Option Price per share of Common Stock under each Stock Option
shall be equal to the Fair Market Value of a share of Common Stock on the date
the option is granted.
5.1.2 Payment of the Option Price upon full or partial exercise of an option,
may be made in cash, or pursuant to the cashless exercise procedures described
in subsection 5.1.3 or by the tender of shares of Common Stock owned for more
than six months having an aggregate Fair Market Value as of the exercise date
equal to the Option Price of the Stock Option or portion thereof being
exercised.
5.1.3 A Participant may elect to pay for the exercise of a Stock Option
through the following cashless exercise procedures: The Participant shall
notify the Corporate Secretary of his or her intent to exercise. Written
instructions will then be prepared and delivered to the Company and the broker
indicating the Participant's cashless election and instructing the Company to
deliver to the broker the Common Stock issuable upon exercise. The exercise
of the Participant's Stock Options will be executed on the same day that the
broker is able to sell the stock. The broker will then withhold from the
proceeds of the sale and deliver to the Company an amount, in cash, equal to
the option price. An additional amount for federal and state tax withholdings
may also be withheld and delivered to the Company at the Participant's
election.
5.1.4 A Participant may elect, upon exercise of a Stock Option, to have the
Company satisfy federal and state income tax withholding requirements
applicable to the exercise, by having the Company retain from the shares
deliverable to the Participant upon exercise that number of shares of Common
Stock having a Fair Market Value equal to the amount of the withholding
liability.
5.2 Option Period
5.2.1 Each Stock Option shall be exercisable in whole, or in part, at any
time during the period beginning six months after the date of grant and ending
five years after the date of grant. Each Stock Option not otherwise presently
exercisable pursuant to the preceding sentence shall become immediately
exercisable in full upon a Change in Control.
5.2.2 In the event that the period for exercise of a Stock Option expires at
a time when a limited trading period has been declared by the Corporate
Secretary and is in effect, the period during which such option may be
exercised shall be automatically extended for a period of thirty (30) days
following termination of such limited trading period by the Corporate
Secretary. This provision shall not apply to any exercise of a Stock Option
pursuant to Section 5.3.1.
5.3 Exercise Rights Upon Ceasing To Be A Director
5.3.1 In the event of a Participant's death or the cessation of services due
to Disability or Retirement at a time when he is entitled to exercise a Stock
Option, then at any time within one year after such death or the cessation of
services due to Disability or Retirement, such Stock Option may be exercised
in full or in part as to shares which the Participant was entitled to purchase
at the time of any such termination or his death by the participant or his
executor or administrator or other person to whom the Stock Option is
transferred by will or the applicable laws of descent and distribution, but in
no event may any Stock Option be exercised in such circumstances more than
five years after the date of grant of such option.
5.3.2 In the event a Participant ceases to be a member of the Board of
Directors at a time when he is entitled to exercise a Stock Option for any
reason other than death, then at any time within three months after he ceases
to be a member of the Board of Directors such Stock Option may be exercised in
full or in part as to shares which the Participant was entitled to purchase at
the date he ceased to be a member of the Board of Directors, but, except as
otherwise provided in Section 5.2.2, no such Stock Option may be exercised
more than five years after the date of grant of such option.
5.4 Nontransferability of Stock Options. Each Stock Option shall be
nonassignable and nontransferable by the Participant other than by will or the
laws of descent and distribution. Each Stock Option shall be exercisable
during a Participant's lifetime only by the Participant.
5.5 Effect of Exercise Of Options. The right of a Participant to exercise a
Stock Option shall terminate to the extent that the Stock Option is exercised.
6. Adjustment Upon Changes in the Common Stock
In the event of a stock dividend, stock split or other change in corpo-
rate structure or capitalization affecting the Common Stock which becomes
effective after the adoption of the Plan by the Board of Directors, the Board
of Directors shall make appropriate adjustments, designed to retain the same
value to Participants, in:
(i) the number and kind of shares of stock with respect to which Stock
Options are thereafter granted hereunder;
(ii) the number and kind of shares of stock remaining subject to each Stock
Option outstanding at the time of such change; and
(iii) the Option Price.
The Board of Director's determination shall be binding on all persons
concerned. Subject to any required action by the stockholders, if the Company
shall be the surviving corporation in any merger or consolidation (other than
a merger or consolidation in which the Company survives but in which a
majority of its outstanding shares are converted into securities of another
corporation or are exchanged for the consideration), any Stock Option granted
hereunder shall pertain and apply to the securities which a holder of the
number of shares of stock of the Company then subject to the Stock Option
would have been entitled to receive, but a dissolution or liquidation of the
Company or a merger or consolidation in which the Company is not the surviving
corporation or in which a majority of its outstanding shares are so converted
or exchanged shall cause every Stock Option hereunder to terminate; provided
that if any such dissolution, liquidation, merger or consolidation is
contemplated, the Company shall either arrange for any corporation succeeding
to the business and assets of the Company to issue to the Participants
replacement Stock Options on such corporation's stock which will to the extent
possible preserve the value of the outstanding Stock Options or shall make the
outstanding Stock Options fully exercisable at least 20 days before the
effective date of any such dissolution, liquidation, merger or consolidation.
The existence of the Plan shall not prevent any such change or other
transaction, and no Participant shall have any right except as herein
expressly set forth.
7. Participant's Agreement
If, at the time of the exercise of any Stock Option, in the opinion of
counsel for the Company, it is necessary or desirable, in order to comply with
any then applicable laws or regulations relating to the sale of securities,
that the person exercising the Stock Option shall agree to hold any shares of
Common Stock issued to the individual for investment and without any present
intention to resell or distribute the same and that the person will dispose of
such shares only in compliance with such laws and regulations, the person
will, upon the request of the Company, execute and deliver to the Company a
further agreement to such effect.
8. Discontinuance, Amendment and Termination
The Board of Directors may from time to time or at any time amend the
Plan for the purpose of satisfying the requirements of any changes in applica-
ble laws or regulations or for any other purpose which may at the time be
permitted by law or may at any time terminate the Plan as to any further
grants of Stock Options, provided that any amendment which would effect a
material increase in the maximum number of shares available under the Plan
except as provided in Section 6 must be approved by the affirmative vote of at
least a majority of the shares of Common Stock represented in person or by
proxy at a meeting of stockholders:
The provision of the Plan governing the matter referred to above, or
matters relating to (i) the number of shares for which Stock Options may be
granted, (ii) the exercise price of options, (iii) the timing of awards or
(iv) the duration of option periods, may not be amended more than once every
six (6) months, except for amendments required to comport with the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.
9. Effective Date
The Plan shall be submitted to the stockholders of the Company for
approval. Shares may not be delivered under the Plan unless and until such
delivery is authorized by the Vermont Public Service Board. Options may be
granted hereunder prior to such approval and authorization but shall be
contingent upon obtaining such approval and authorization. The stockholders
of the Company shall be deemed to have approved the Plan only if it is
approved at a meeting of the stockholders duly held by vote taken in the
manner required by the laws of the State of Vermont.
10. Preemption By Applicable Laws and Regulations
Anything in the Plan to the contrary notwithstanding, if, at any time
specified herein for the making of any determination or the issue or other
distribution of shares of Common Stock, any law, regulation or requirement of
any governmental authority having jurisdiction in the premises shall require
either the Company or the Participant (or the Participant's beneficiary there-
of) to take any action in connection with any such determination or the shares
then to be issued or distributed, the issue or distribution of such shares
shall be deferred until such action shall have been taken.
11. Miscellaneous
11.1 No Right to Corporate Assets. Nothing contained in the Plan shall be
construed as giving a Participant, the Participant's beneficiaries, or any
other person or entity an interest of any kind in any assets of the Company or
any Subsidiary or creating a trust of any kind or a fiduciary relationship of
any kind between the Company or any Subsidiary and any such person.
11.2 No Restriction on Corporate Action. Nothing contained in the Plan shall
be construed to prevent the Company or any subsidiary from taking any
corporate action which is deemed by the Company or the Subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse affect on the Plan or any Stock Option granted under the Plan. No
Participant, beneficiary or other person shall have any claim against the
Company or any Subsidiary as a result of any such action.
11.3 Use of Proceeds. The proceeds received by the Company from the sale of
Common Stock pursuant to Stock Options will be used for the general purposes
of the Company.
11.4 Non-assignability. Neither a Participant nor a Participant's benefi-
ciary shall have the power or right to sell, exchange, pledge, transfer,
assign or otherwise encumber or dispose of such Participant's or beneficiary's
interest in the Plan or in any Stock Option granted under the Plan; nor shall
such interest be subject to seizure for the payment of Participant's or
beneficiary's debts, judgments, alimony, or separate maintenance or be
transferable by operation of law in the event of Participant's or
beneficiary's bankruptcy or insolvency.
The Company's obligations under the Plan are not assignable or
transferable except to a corporation which acquires all or substantially all
of the assets of the Company or to any corporation into which the Company may
be merged or consolidated.
11.5 No Fractional Shares. No Stock Option shall be exercised for a
fractional share.
11.6 Governing Law; Construction. All rights and obligations under the Plan
shall be governed by, and the Plan shall be construed in accordance with, the
laws of the State of Vermont. Titles and headings to Sections herein are for
purposes of reference only, and shall in no way limit, define or otherwise
affect the meaning or interpretation of any provisions of the Plan.
</PAGE>
IMPORTANT
Please send in your proxy today.
Please vote, sign, date and return the proxy card below in the envelope
provided. If you do so now, the Company will avoid the expense of follow-up
solicitations.
Detach here
- - ------------------------------------------------------------------------------
PROXY
CENTRAL VERMONT PUBLIC SERVICE CORPORATION
Proxy for Annual Meeting of Stockholders, May 5, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints FREDERIC H BERTRAND, ROBERT G. CLARKE AND
MARY
ALICE MCKENZIE 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 25, 1998, at the Annual Meeting of Stockholders to
be held May 5, 1998, at the Holiday Inn, Route 7 South, Rutland, Vermont, or
at any and all adjournments thereof.
SEE REVERSE SEE REVERSE
SIDE (Continued, and to be signed on reverse side) SIDE
</PAGE>
IMPORTANT
Please send in your proxy today.
Please vote, sign, date and return the proxy card below in the envelope
provided. If you do so now, the Company will avoid the expense of follow-up
solicitations.
Detach here
- - ------------------------------------------------------------------------------
[X] Please mark
votes as in
this example
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 Articles 1 and 2.
(1) APPROVAL of 1998 Stock Option Plan for Non-employee Directors.
(Directors recommend a vote FOR Article 1)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(2) ELECTION OF DIRECTOR
Nominee for term expiring in year 2001:
Luther F. Hackett
(Directors recommend a vote FOR Article 2)
[ ] FOR [ ] WITHHELD
(3) 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.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please vote, sign, date and return the proxy card
promptly using the enclosed envelope.
Please sign exactly as the name(s) appear. Joint
owners each must sign. When signing as attorney,
trustee, executor, administrator 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.
Signature:_______________________Date:__________
Signature:______________________ Date:__________<PAGE>
