<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE COLUMBIA GAS SYSTEM, INC.
(Name of Registrant as Specified in Its Charter)
THE COLUMBIA GAS SYSTEM, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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 registrations 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:
- --------------------------------------------------------------------------------
- ---------------
(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1994
You are cordially invited to attend the Annual Meeting of Stockholders of The
Columbia Gas System, Inc., a Delaware corporation, which will be held at the
Hotel duPont, 11th and Market Streets, Wilmington, Delaware, on Thursday, April
28, 1994, at 1 p.m. (EDT), to consider and act upon the following proposals:
1. The election of six Directors, each to serve for a term of
three years;
2. The election of Arthur Andersen & Co. as independent public
accountants; and
3. The transaction of such other business as may properly come
before the meeting or any adjournment thereof.
The Board of Directors fixed the close of business on February 28, 1994, as the
record date for determination of stockholders entitled to notice of and to vote
at the Annual Meeting or any adjournment thereof.
PLEASE VOTE, SIGN, DATE, AND MAIL THE ENCLOSED PROXY. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES.
By order of the Board of Directors.
Daniel L. Bell, Jr.
Secretary
Wilmington, Delaware
March 14, 1994
The Columbia Gas System, Inc.
20 Montchanin Road, P.O. Box 4020
Wilmington, Delaware 19807-0020
<PAGE> 3
20 Montchanin Road, P.O. Box 4020
Wilmington, Delaware 19807-0020
March 14, 1994
PROXY STATEMENT
This statement is furnished in connection with the solicitation of proxies made
on behalf of the Board of Directors of The Columbia Gas System, Inc., a
Delaware corporation (the "Corporation"), to be used at the Annual Meeting of
Stockholders to be held on April 28, 1994.
On July 31, 1991, the Corporation and its wholly-owned subsidiary, Columbia Gas
Transmission Corporation ("Columbia Transmission"), filed separate petitions
seeking protection under Chapter 11 of the Federal Bankruptcy Code. Both
companies are operating their businesses as debtors-in-possession under the
jurisdiction of the United States Bankruptcy Court for the District of
Delaware.
The cost of preparing, assembling and mailing the proxy material and of
reimbursing brokers, nominees and fiduciaries for the out-of-pocket and
clerical expense of transmitting copies of the proxy material to the beneficial
owners of stock held in their names will be borne by the Corporation. The
Corporation does not intend to solicit proxies other than by the use of the
mails, but certain officers and regular employees of the Corporation or its
subsidiaries, without additional expense, may use their personal efforts, by
telephone or otherwise, to obtain proxies. Kissel-Blake Inc. has been retained
to assist in the solicitation of broker and nominee proxies at a cost of
approximately $13,500 plus out-of-pocket expenses.
A stockholder signing and returning a proxy has the power to revoke it at any
time before the exercise thereof.
ANNUAL REPORT
An Annual Report for the year ended December 31, 1993, containing financial and
other information about the Corporation and its subsidiaries, has been mailed
to all stockholders of record.
VOTING SECURITIES OUTSTANDING
At the close of business on February 28, 1994, the record date for the meeting,
the Corporation had outstanding 50,559,225 shares of Common Stock, each of
which is entitled to one vote.
Presence at the Annual Meeting, in person or by proxy, of the holders of a
majority of the outstanding shares as of the record date shall constitute a
quorum. Votes cast at the Annual Meeting will be tabulated by inspectors of
election appointed by the Corporation. Shares of stock represented by a
properly signed and returned proxy will be treated as present at the Annual
Meeting for purposes of determining a quorum, without regard as to whether the
proxy is marked as casting a vote or abstaining. Likewise, where the record
holder has
<PAGE> 4
indicated on the proxy card or has otherwise notified the Corporation that it
does not have power to vote shares represented by the proxy ("a broker
non-vote"), the shares will be treated as present at the Annual Meeting for
purposes of determining a quorum.
Other than with respect to the election of Directors, all other matters that
come before the Annual Meeting require an approval of the majority of the
shares of stock present and entitled to vote thereon. Therefore, abstentions
as to particular proposals will have the same effect as votes against such
proposals. Broker non-votes will be treated as shares not entitled to vote and
will not be included in the calculation of the number of votes constituting a
majority.
1. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes. Directors of only one
class are elected at each annual meeting so that the regular term of only one
class of Directors will expire annually and any particular Director stands for
election only once in each three-year period. In the event a vacancy occurs on
the Board of Directors, the remaining Directors are authorized to fill the
vacancy for the entire unexpired term.
To be elected, a nominee must receive the affirmative vote of a plurality of
the votes cast by the shares present and entitled to vote, in person or by
proxy, at the Annual Meeting. Accordingly, abstentions or broker non-votes as
to the election of Directors will not affect the election of the candidates
receiving the plurality of the votes.
Six Directors are to be elected at the 1994 Annual Meeting.
CUMULATIVE VOTING FOR DIRECTORS entitles each stockholder to votes equal to the
number of shares of stock the stockholder owns multiplied by the number of
directors to be elected -- in this case six. All votes can be cast for one
nominee or divided among more than one. A vote marked "withheld" from a
nominee(s) on the proxy will not be treated as an indication of an intention to
vote cumulatively. To vote cumulatively, the stockholder should write the name
of the nominees for whom votes are withheld on the line provided and write
"cumulate" or "vote all shares for other nominees" on the line as well. In a
case where a proxy is signed but not marked, the proxies will not be voted
cumulatively; shares will be voted for all nominees.
NOMINEES. It is the intention of the Proxies named in the enclosed form of
proxy to vote all duly-executed proxies at this meeting, unless authority is
withheld, for the election of the following six nominees, who are now serving
as Directors of the Corporation: Wilson K. Cadman, John H. Croom, James P.
Heffernan, W. Frederick Laird, Ernesta G. Procope and James R. Thomas, II. If,
at the time of the meeting, any of the nominees named is not available to serve
as a Director, the proxies may be voted for a substitute nominee designated by
the Board or the Board may reduce the number of directors as authorized under
the By-Laws.
<PAGE> 5
INFORMATION REGARDING THE DIRECTORS (1)
<TABLE>
<CAPTION> SHARES OF
FIRST END OF COMMON STOCK
NAMES OF DIRECTORS, PRINCIPAL OCCUPATION YEAR AS CURRENT OWNED
AND OTHER INFORMATION: DIRECTOR TERM BENEFICIALLY
- --------------------------------------------- -------- ------ ------------
<S> <C> <C> <C>
Nominees for Director for a new term to
expire in 1997 are:
Wilson K. Cadman, 66, Private investor since 1992.
Former Chairman, President and Chief Executive
Officer, Kansas Gas & Electric Company and retired
Vice Chairman of Western Resources, Inc.
Director, El Paso Electric Co., Inc. and
Clark/Bardes Companies. 1993 1994 0
John H. Croom, 61, Chairman of the Board,
President and Chief Executive Officer of the
Corporation since August 1984. 1981 1994 34,862(2)
James P. Heffernan, 48, Managing Director and
President of Whitman Heffernan Rhein & Co., Inc.,
investment advisory and merchant banking firm
since 1987. General partner of WHR Management
Co., L.P. since 1989; general partner of Whitman
Heffernan Rhein Workout Fund, L.P.; President,
Chief Executive Officer and Managing Director of
the corporate general partner, WHR Management
Corporation, of Whitman Heffernan Rhein Workout
Funds II & II-A, L.P.; and Chief Operating Officer
and Director of Danielson Holding Corporation
since 1990 and Director of its subsidiary,
Danielson Trust Company since 1993. Director and
President of Herman's Holdings, Inc. and Director
of its subsidiary, Herman's Sporting Goods, Inc.,
since 1993. Director, HomeFed Trust Company. 1993 1994 0
W. Frederick Laird, 74, Retired Chairman of the
Board and Chief Executive Officer of the
Corporation. Director of Wilmington Trust
Company. (3) 1974 1994 30,482
Ernesta G. Procope, 64, President and Chief
Executive Officer, E. G. Bowman Co., Inc.,
commercial insurance brokerage firm, since 1953.
Director of Avon Products, Inc. and Chubb
Corporation. 1979 1994 1,161
James R. Thomas, II, 68, Private investor since
1983. Retired President and Chief Executive
Officer of Carbon Industries, Inc. Director of
One Valley Bank, N.A.; Camcare, Inc.; and 1990 1994 300
Shoney's, Inc.
</TABLE>
<PAGE> 6
<TABLE>
<S> <C> <C> <C>
THE BOARD RECOMMENDS THAT STOCKHOLDERS
VOTE FOR EACH OF THE ABOVE NOMINEES.
Current Directors who are not standing
for re-election because their terms do
not expire until 1995 are:
Thomas S. Blair, 71, Chairman of the Board, Blair
Strip Steel Company, producer of cold-rolled and
strip steel, since 1949. Director of Tuscarora
Incorporated. 1962 1995 1,500
John D. Daly, 57, Executive Vice President of the
Corporation from September 1990 to December 1993.
Chairman of the Board and Chief Executive Officer
of Columbia Gas Transmission Corporation from 1985
to 1990. 1990 1995 9,163
Robert H. Hillenmeyer, 72, Retired Chairman of the
Board and Chief Executive Officer, Hillenmeyer
Nurseries, Inc. Director of GTE South. 1970 1995 2,193
George P. MacNichol, III, 70, Private investor
since 1979. Retired Officer and Director of
Libbey-Owens-Ford Company and retired Director of
Fifth Third Bank of Toledo, N.A. 1971 1995 600
Gerald E. Mayo, 61, Chairman of the Board,
President and Chief Executive Officer of The
Midland Mutual Life Insurance Company since 1980.
Chairman of the Board of U.S. Health Corporation
and Grant Medical Center. Director, Compuserve,
Inc.; HBO & Co. of Atlanta; and Huntington
Bancshares Inc. 1994 1995 500
Current Directors who are not standing
for re-election because their terms do
not expire until 1996 are:
Robert H. Beeby, 62, Chairman of the Board of
Service America Corporation, a vending and food
service company, since 1992(4). Former President
and Chief Executive Officer of Frito-Lay, Inc.
from 1989 through 1991 and Pepsi-Cola
International from 1984 to 1988. Director of
Church & Dwight Co., Inc. 1993 1996 1,000
Sherwood L. Fawcett, 74, Chairman of the Board,
Transmet Corporation since 1990, producer of
rapidly solidified metals. Consultant in research
and development management from 1985 to 1989.
Director of Sedum Corporation and Research
Dynamics Inc. and retired Chairman of the Board of
Trustees and Chief Executive Officer of Battelle
Memorial Institute.(3) 1984 1996 1,626
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C> <C>
Malcolm T. Hopkins, 65, Private investor since
1984. Retired Vice Chairman, Chief Financial
Officer and Director of the former St. Regis
Corporation. Director of Metropolitan Series
Fund, Inc. and MetLife Portfolios, Inc.; MAPCO,
Inc.; KinderCare Learning Centers, Inc.; Wangner
Systems Corporation; and U.S. Home Corporation and
Trustee of The Biltmore Funds. 1982 1996 5,512
William E. Lavery, 63, President Emeritus and
Professor, Virginia Polytechnic Institute and
State University; President from 1975 to 1987.
Director of First Union Corporation of Virginia
and Shenandoah Life Insurance Company. 1985 1996 750
William R. Wilson, 66, Private investor since
1992. Retired Chairman of the Board and Chief
Executive Officer of Lukens Inc., manufacturer of
steel and industrial products. Director of Acme
Metals Incorporated and Provident Mutual Life
Insurance Company. 1987 1996 5,000
</TABLE>
(1) After the announcement in June, 1991 of the Corporation's and Columbia
Transmission's financial difficulties, seventeen complaints were filed
in the United States District Court for the District of Delaware
purporting to be class actions and alleging violations of certain
antifraud provisions of the federal securities laws and Delaware law.
In addition, three derivative actions were filed in Delaware Chancery
Court alleging that Directors had breached their fiduciary duty. All
Directors holding office as of the date that bankruptcy petitions were
filed and some officers of the Corporation have been named defendants
in both the securities and derivative suits. These suits have been
stayed by either Bankruptcy Court order or by stipulation of the
parties.
(2) Includes 14,522 shares which is an estimate of the shares of Common
Stock of the Corporation held by the Trustee under the Employees'
Thrift Plan attributable to the interest of Mr. Croom. Does not
include shares of Common Stock covered under exercisable options. This
information is included in the stock option table on page 13.
(3) It is expected that Mr. Laird will retire from the Board after he
reaches the normal retirement age for Directors in July, 1994.
Similarly, it is expected that Dr. Fawcett will retire after he reaches
normal retirement age for Directors in December, 1994.
(4) In 1992, when Mr. Beeby had been with Service America Corporation for
two months, Service America Corporation filed a voluntary petition for
reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Robert A. Oswald resigned from the Board effective October 27, 1993 and Ronald
W. Skeddle resigned effective August 27, 1993.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock by
stockholders who own greater than 5% of the outstanding shares, as of February
24, 1994, by those of the five most highly-compensated current executive
officers who are not Directors (see "Information Regarding Directors" for
security ownership by Directors), and by all Directors and executive officers
of the Corporation as a group. Except as otherwise noted, the persons named in
the table below have sole voting and investment power with respect to all
shares shown as beneficially owned by them.
<PAGE> 8
<TABLE>
<CAPTION>
(3) (4)
(1) (2) Percent of
Title of Name and Address Amount and Nature of Class
Class Beneficial Ownership
Shared Sole Shared Sole
Voting Voting Investment Investment Total
Power Power Power Power Owned
<S> <C> <C> <C> <C> <C> <C> <C>
Common Prudential Insurance
Corp. of America
Prudential Plaza 2,590,604 21,000 2,598,304 21,000 2,619,000 5.44%
Newark, NJ 07102-3777
FMR
Common 82 Devonshire Street 0 108,785 2,752,452 0 2,752,452 5.2%
Boston, MA 02109
Common C. R. Tilley 6,947(1) *
Common D. L. Bell, Jr. 8,551(1) *
Common J. P. Holland 2,556(1) *
Common L. W. Wallingford 6,359(1) *
Common All Executive Officers and 126,174
Directors (22 Persons)
as a Group *
</TABLE>
(1) Includes an allocation of shares held by the Trustee of the
Employees' Thrift Plan. Does not include shares of Common Stock
covered by exercisable options. This information is shown on
the stock option table on page 13.
* Stock ownership (including exercisable options) as a
percentage of class is less than 1%.
STANDING COMMITTEES OF THE BOARD
AUDIT COMMITTEE--The Audit Committee, which had three meetings during 1993,
recommends to the Board of Directors the independent public accountants who are
to examine the financial statements for the ensuing year; meets periodically
with the independent public accountants to review the scope of their audits,
the internal accounting controls, the operation of the Internal Audit
Department and significant financial reporting matters; reviews management's
plans for engaging the Corporation's independent public accountants for
management advisory services; meets periodically with the Vice President and
General Auditor to review the internal Audit Department charter, the annual
program of audits and the Corporation's internal controls; and reviews issues
with the independent public accountants, management and/or the Vice President
and General Auditor which could have material impacts on the Corporation's
financial position. Members are: Robert H. Beeby; Sherwood L. Fawcett; Robert
H. Hillenmeyer; William E. Lavery; Ernesta G. Procope; James R. Thomas, II,
Chairman; and William R. Wilson.
COMPENSATION COMMITTEE--The Compensation Committee, which had three meetings
during 1993, reviews and approves periodically a general compensation policy
and salary structure for management and professional personnel, approves all
changes in base salaries of officers of the Corporation and its subsidiaries
who are in a position to exercise discretionary judgment which can
substantively influence the affairs of the Corporation, oversees and
administers incentive compensation programs in a manner consistent with the
terms of such plans as approved by the Board of Directors, reviews and makes
recommendations on changes in major benefit programs of the Corporation's
subsidiaries, consults with and advises senior management on major policies
affecting human resources and monitors plans for management development and
succession planning for the Corporation and its subsidiaries. Members are:
Robert H. Beeby; Thomas S. Blair; Wilson K. Cadman; Sherwood L. Fawcett; James
P. Heffernan; Malcolm T. Hopkins; George P. MacNichol, III; Ernesta G. Procope;
and William R. Wilson, Chairman.
EXECUTIVE COMMITTEE--The Executive Committee has the authority to act in the
intervals between the meetings of the Board of Directors upon most matters
requiring Board approval. During 1993, there was one meeting of the Executive
<PAGE> 9
Committee. Members are: Thomas S. Blair; John H. Croom, Chairman; Robert H.
Hillenmeyer; Malcolm T. Hopkins; and W. Frederick Laird.
FINANCE COMMITTEE--The Finance Committee, which had two meetings during 1993,
reviews and monitors the annual capital expenditure program, reviews financial
plans and dividend policy, and reviews the management of investments of the
Corporation's benefit plans. Members are: Thomas S. Blair; Wilson K. Cadman;
James P. Heffernan; Robert H. Hillenmeyer; Malcolm T. Hopkins, Chairman;
William E. Lavery; George P. MacNichol, III; and James R. Thomas, II.
CORPORATE GOVERNANCE COMMITTEE --The Corporate Governance Committee, which had
eight meetings during 1993, was established by the Board in June, 1993 to
provide counsel to the Board in regard to Board organization, membership and
function. The Committee is responsible to the Board for the review and
recommendation of director candidates; the recommendation of a class of
directors for election at the Annual Meeting of Stockholders; recommendations
regarding director retirement age, tenure and removal for cause; review of all
board committee charters and recommendations regarding their number, structure,
membership and function; and recommendations involving succession planning for
the Chairman of the Board, the Chief Executive Officer and other members of
senior executive management. Members are: Sherwood L. Fawcett, Chairman;
William E. Lavery; and James R. Thomas, II. Shareholders wishing to submit
names of candidates for consideration by the Committee should contact Daniel L.
Bell, Jr., Senior Vice President, Chief Legal Officer and Secretary, for a copy
of the procedures to be followed.
AD HOC COMMITTEES
AD HOC BANKRUPTCY COMMITTEE -- An Ad Hoc Committee, which was established in
1991 to work with management in connection with the bankruptcy proceedings, met
fourteen times in 1993. Members are: James P. Heffernan, Malcolm T. Hopkins
and William R. Wilson.
AD HOC SEARCH COMMITTEE -- At a meeting of the Board on December 15, 1993, an
Ad Hoc Search Committee comprised of William E. Lavery, Chairman; Wilson K.
Cadman; Malcolm T. Hopkins; James R. Thomas, II; and William R. Wilson, was
established to search for a candidate for the position of Chairman and Chief
Executive Officer. The Committee did not meet in 1993. Shareholders wishing
to submit names of candidates for consideration by the Committee should contact
Daniel L. Bell, Jr., Senior Vice President, Chief Legal Officer and Secretary,
for a copy of the procedures to be followed.
STANDARD DIRECTORS' COMPENSATION
<TABLE>
<CAPTION>
1993 Directors' Compensation for Board and Committee Meetings:
Retainer Meeting Fee Chairman's Fee
$ $ $
<S> <C> <C> <C>
Board 22,000 1,000 -
Audit - 1,000 2,000
Compensation - 1,000 2,000
Executive 6,000 800 -
Finance - 1,000 2,000
Corporate Governance - 1,000 2,000
Ad Hoc Committees - 1,000 -
</TABLE>
No officer received any compensation for services as a Director while also
serving as an officer of the Corporation. The Board held twelve meetings
during 1993. Each incumbent Director attended at least 75 percent of the total
number of meetings of the Board and Board Committees on which he or she served.
<PAGE> 10
The Corporation offers medical coverage to nonemployee Directors and pays the
premium associated with their participation. The Corporation also reimburses
them for the cost of Medicare Part B, if applicable. Nonemployee Directors may
elect to defer compensation for distribution at a later date. Deferred amounts
will accrue interest at the rate for six-month Treasury bills and may be paid
in a lump sum or in annual installments over ten years. Deferred amounts will
be automatically paid in a lump sum following certain specified changes in
control of the Corporation.
Each nonemployee Director with a minimum of five years' service on the Board
who retires after attaining age 70 or becomes disabled will receive annual
retirement payments equal to the amount of the annual retainer at the time of
retirement. These payments will cease at the death of the Director. In the
event of certain specified changes in control of the Corporation, a Director
(regardless of years of service on the Board) may elect a lump-sum payment
equal to the present value of the retainer at the time of the election times
the number of years of Board service, with a minimum of ten years.
DIRECTOR AND OFFICER SECURITIES REPORTS
The federal securities laws require the Corporation's Directors and officers,
and persons who own more than ten percent of a registered class of the
Corporation's equity securities, to file with the Securities and Exchange
Commission and the New York Stock Exchange initial reports of ownership and
reports of changes in ownership of any securities of the Corporation.
To the Corporation's knowledge, based solely on review of the copies of such
reports furnished to the Corporation and written representations that no other
reports were required, all greater than ten percent beneficial owners and all
of the Corporation's officers and Directors (except for Messrs. Beeby and
Cadman) made all required filings during the fiscal year ended December 31,
1993 on a timely basis. Due to his absence from the country when he was
elected a Director, Mr. Beeby filed his initial report on Form 3 two days late.
Due to a delay in mail delivery, Mr. Cadman's initial report on Form 3 was not
received by the Securities and Exchange Commission until three days after the
due date and therefore was three days late.
<PAGE> 11
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
EXECUTIVE COMPENSATION REPORT TO STOCKHOLDERS
GENERAL - Through its Compensation Committee ("Committee"), the Board of
Directors has developed an executive compensation philosophy and programs to
implement that philosophy. These programs combine to form the basis of the
Corporation's total compensation plan for senior management.
COMPENSATION PHILOSOPHY - The Board of Directors believes that total
compensation is not only payment for services rendered to the Corporation but
also a means to provide a strong motivational vehicle for the achievement of
key financial and strategic goals. The Corporation provides executives with
the opportunity to increase their total compensation above base salary through
annual and longer-term incentive compensation programs. Incentive compensation
goals are established such that their achievement will result in added value to
the Corporation over reasonable periods of time. This is how compensation is
linked to corporate performance. The Corporation's executive compensation
program is designed to:
-- provide annual cash compensation and benefit levels that target the
median of the marketplace in similar-sized utility and industrial
companies;
-- maintain equitable relationships among the compensation levels
established for all jobs within the Corporation;
-- provide for the recognition of performance delivered year-to-year and
over the long term; and
-- ensure that appropriate controls are in place for compensation to be
fully earned.
Because of the Corporation's size and integrated nature, a number of well-known
utility and industrial executive compensation surveys are utilized to determine
competitive remuneration for executives. Most of the companies in the S&P
Natural Gas Utility Index are included in one or more of these surveys.
However, no single executive compensation survey covers all of the companies in
the S&P Natural Gas Utility Index.
The Corporation's incentive compensation programs were suspended in 1991 due to
the reduction in the dividend on Common Stock and the filing for bankruptcy
protection by the Corporation. This suspension has been continued through 1993
for stock- based incentive programs.
IMPLEMENTATION OF PHILOSOPHY - The Corporation's executive compensation program
is administered by the Committee. The Committee is composed of nine
independent, nonemployee Directors. The Corporation's executive "total
compensation" program consists of the following:
(1) Base Salary Program,
(2) Annual Incentive Compensation Plan,
(3) Long-Term Incentive Plan,
(4) Performance Share Program,
(5) Benefit Plans, and
(6) Other Arrangements.
(1) Base Salary - A base salary range is established for each executive
position based on an overall evaluation of the position's content and a
comparison of compensation levels of similar positions in the external
market. Competitive base salary levels are needed to attract and retain
competent executives. Individual performance reviews are conducted at
least annually and are used, along with the relative position of the
individual's salary within the salary range, to determine if any increase
to base salary is warranted. Increases are based on individual performance
and are not automatic. Based on the utility and industrial compensation
surveys referred to above, the base salary levels for the named executive
officers as a group approximates the median for similar executives with
corporations of similar size and complexity. A range of merit
opportunities is pre-established on a uniform basis and the level of
increase within that range is based on an assessment of an individual's
managment skills and achievement against a variety of pre-established
<PAGE> 12
corporate and operating company goals. These goals include specific Return
on Invested Capital ("ROIC") and Earnings Before Interest and Taxes
("EBIT") performance measures as well as other organizational goals
pertaining to their individual business unit. Each of the goals is
weighted and assigned to each individual according to its importance and
impact on the business unit. The achievement of financial measures is
given high priority but the percentage will vary based on the individual's
position within the organization.
(2) Annual Incentive Compensation Plan - This Plan, which was adopted in 1987,
provides the opportunity for payment of cash awards to key employees for
attainment of specific goals which contribute directly to the present and
future financial health of the Corporation. The Committee determines
eligibility and individual award opportunity levels and establishes annual
corporate and subsidiary company performance targets. These targets
include return on invested capital and other measures for improving
stockholder value. Additionally, individual performance goals are
established each year in accordance with business plans. Award opportunity
levels may range from 15 percent to a maximum of 60 percent of base salary.
The Plan provisions state that no award will be paid for any year in which
the Corporation's dividend level is reduced. This Plan was suspended in
mid-1991 and continued in suspension throughout 1992 and 1993. An interim
cash performance award program was authorized by the Compensation Committee
in 1992. Eligibility for consideration in the Interim Cash Performance
Award Program is based on the individual's level of responsibility within
the organization and ability to contribute to the financial performance of
the company. The award opportunities in 1993 range from zero to 15 percent
of an individual's annual salary based on performance against pre-set
goals. The higher the achievement and contribution to the company, the
larger the potential award could be. Performance measures include specific
EBIT and ROIC financial targets as reflected in the company's strategic
business plan and other organizational goals which can contribute to the
success of the company. The award for 1992 performance was awarded in
1992. The award for 1993 performance will not be determined nor awarded
until 1994. The funding for the interim 1992 and 1993 program is
approximately 33% of the level of the Annual Incentive Plan funding prior
to bankruptcy.
(3) Long-Term Incentive Plan - The Long-Term Incentive Plan, which was adopted
in 1986, provides additional incentives to officers and other key employees
of System companies through the granting of incentive stock options,
nonqualified stock options, stock appreciation rights and/or contingent
stock awards. The Plan is administered by the Committee, no member of
which is eligible to participate in the Plan. The Committee considers both
organizational level and individual performance in determining eligibility
and the number of shares to be awarded. This Plan was suspended in
mid-1991 and continued in suspension throughout 1992 and 1993.
(4) Performance Share Program - This Program, which was adopted in 1990,
provides for the payment of contingent stock awards to senior executives if
specific predetermined financial targets are attained in future years. The
objective of this Program is to focus executive attention on longer-term
strategic performance. Two separate performance measures are used for this
Plan. They are return on equity and total stockholder return equal to or
better than the median of a peer group of companies in each of the three
subsequent years. This program was suspended in mid-1991 and continued in
suspension throughout 1992 and 1993.
(5) Benefit Plans - The Corporation maintains Thrift, Retirement, Medical,
Dental, Long-Term Disability, Life Insurance and other benefit plans of
general applicability. Federal regulations establish limits on the
benefits which may be paid under Thrift and Retirement Plans qualified
under the Internal Revenue Code. To maintain compliance, the Corporation
caps benefits under the qualified plans at the required levels. To provide
comparable benefits to more highly-compensated employees, the Corporation
has established a Thrift Restoration Plan and a Pension Restoration Plan,
both of which are nonqualified and unfunded. The Pension Restoration Plan
may be funded through a trust arrangement at the election of the
beneficiary. The Compensation Committee views these supplemental plans as
part of base compensation. The Corporation suspended the Thrift
Restoration Plan in June, 1991. Due to changes in the Internal Revenue
Code, a larger number of executives would become subject to the cap on the
qualified plan benefits and eligible for participation in the Thrift
Restoration Plan. Therefore, in June, 1993, the Compensation Committee
authorized the resumption of the Thrift Restoration Plan retroactive to
January 1, 1993.
(6) Other Arrangements - When circumstances warrant, the Corporation can enter
into agreements seeking to retain the services of experienced management
during periods of financial uncertainty. Such agreements were entered into
in July, 1991 and expired in 1993. In order to retain experienced
management, the Compensation Committee authorized the execution of new
agreements upon approval by the Bankruptcy Court. For a more detailed
description of the agreements, please see "Employment and Retention
Agreements" below.
<PAGE> 13
EVALUATION PROCESS - Each year, the Board of Directors of the Corporation
reviews and approves Strategic Business and Financial Plans for the Corporation
and each of its subsidiaries. In addition to various business strategies,
these plans include specific financial targets such as ROIC or other measures
to evaluate whether stockholder value has increased.
The goals set forth in these Strategic Plans are the bases for performance of
the CEO of the Corporation and other senior executives whose compensation falls
under the direct purview of the Committee. Attainment of meaningful strategic
objectives over reasonable time periods increase value to stockholders, and the
increased compensation opportunities for executives are directly linked to the
attainment of these objectives.
At their December 15, 1992 meeting, the Committee evaluated Corporate financial
performance on the basis of ten months' actual and two months' projected for
1992 in ascertaining the performance of the CEO, John H. Croom. Since ROIC
targets were achieved, in aggregate, and significant progress was made towards
resolving the bankruptcy status of the Corporation, the Committee authorized an
increase to Mr. Croom's base salary of five percent to $652,000 per year,
effective January 1, 1993. No other compensation or incentive awards were
granted to Mr. Croom.
At the October 20, 1993 Compensation Committee meeting, it was decided that
performance evaluations for the 1993 calendar year would be determined in March
of 1994. This change was taken to enhance the Committee's ability to determine
actual results of performance against calendar-year goals and to more closely
coordinate the timing of merit and incentive plan reviews. As a result of this
decision, no performance-based compensation actions for the named executives
have been made since December, 1992.
COMPENSATION COMMITTEE:
William R. Wilson, Chairman James P. Heffernan
Robert H. Beeby Malcolm T. Hopkins
Thomas S. Blair George P. MacNichol, III
Wilson K. Cadman Ernesta G. Procope
Sherwood L. Fawcett
<PAGE> 14
The compensation for services in all capacities paid during the year 1993 to
the executive officers of the Corporation was as follows:
<TABLE>
<CAPTION>
S U M M A R Y C O M P E N S A T I O N T A B L E
Long-Term Compensation
ANNUAL COMPENSATION
Awards Payouts
(a) (b) (c) (d) (f) (g) (h) (i)
Name and
Principal Restricted Options - LTIP All Other
Position (1) Year Salary Bonus Stock Awards SARs Payouts Comp. (2)
$ $ $ # $ $
<S> <C> <C> <C> <C> <C> <C> <C>
J. H. CROOM 1993 652,000 (3) -0- -0- -0- 39,432
Chairman, CEO 1992 615,725 -0- -0- -0- -0- 13,732
& President 1991 589,375 -0- -0- -0- -0- 23,003
C. R. TILLEY 1993 331,900 (3) -0- -0- -0- 19,882
Chairman & CEO 1992 302,099 -0- -0- -0- -0- 13,732
Corporation's Gas 1991 279,096 -0- -0- -0- -0- 14,899
Distribution
Segment
D. L. BELL, JR. 1993 292,600 (3) -0- -0- -0- 17,584
Senior Vice 1992 283,218 -0- -0- -0- -0- 13,732
President, Chief 1991 262,392 -0- 184,950(4) -0- -0- 14,617
Legal Officer &
Secretary
J. P. HOLLAND 1993 273,180 (3) -0- -0- -0- 12,271
Chairman & CEO of 1992 256,900 -0- -0- -0- -0- 10,299
Corporation's Gas 1991 239,200 -0- -0- -0- -0- 10,500
Transmission
Segment
L.W. 1993 238,700 (3) -0- -0- -0- 10,733
WALLINGFORD 1992 223,432 22,590(5) -0- -0- -0- 9,966
Senior Vice 1991 203,262 -0- -0- -0- -0- 9,211
President of
Columbia Gas
System Serv. Corp.
J. D. DALY 1993 338,296 (3) -0- -0- -0- 56,452(6)
Retired Executive 1992 351,921 -0- -0- -0- -0- 13,732
Vice President 1991 336,854 -0- -0- -0- -0- 16,497
R. A. OSWALD 1993 274,973 (3) -0- -0- -0- 93,419(7)
Former Executive 1992 317,706 -0- -0- -0- -0- 13,159
Vice President & 1991 304,079 -0- -0- -0- -0- 11,715
Chief Financial
Officer
</TABLE>
(1) Includes CEO and four most highly-compensated executives whose salary and
bonus exceed $100,000 ("Named Executive Officers"), and Mr. Oswald and
Mr. Daly who otherwise would have been included in the table had they been
executive officers at December 31, 1993.
(2) Unless otherwise stated, reflects company contributions to the Employees'
Thrift Plan which is qualified under the Internal Revenue Code and the
Thrift Restoration Plan, a nonqualified plan.
(3) Amounts, if any, earned with respect to 1993 performance were not
determined prior to the distribution of this Proxy Statement and will be
reported in the next Proxy Statement.
(4) On February 21, 1991 Mr. Bell was granted 4,110 shares of Common Stock
contingent upon his continued employment through September 30, 1994.
Based on the average high-and-low- market value for that date, the value
for those shares, if issued, would have been $184,950. The market value
for these shares as of December 31, 1993 would have been $91,961 @
$22.375. No dividends are associated with this award.
(5) Received pursuant to the 1992 Interim Cash Performance Award Program (see
"Compensation Committee of the Board of Directors Executive Compensation
Report to Stockholders") when Mr. Wallingford was not a Named Executive
Officer.
(6) Consists of $20,376 in contributions to thrift plans and $36,076 received,
in lieu of vacation, upon Mr. Daly's retirement effective December 1,
1993.
<PAGE> 15
(7) During 1993, Mr. Oswald received $59,777 pursuant to his employment
agreement approved by the Compensation Committee and Bankruptcy Court
(reflected in Column (i)). This amount is equivalent to his base salary
from the date of termination to December 31, 1993. The agreement is
described in more detail under "Employment and Retention Agreements". Mr.
Oswald also received, in lieu of vacation, $13,519 which is included in
Column (i).
<PAGE> 16
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants Potential Realizable Value at
Assumed Annual Rates of Stock Price
Appreciation for Option Term
(a) (b) (c) (d) (e) (f) (g)
<S> <C> <C> <C> <C> <C> <C>
Name Options/SARs % of Total Options/SARs Exercise or Expiration 5% ($) ($)
Granted Granted to Employees in Base Price Date
Fiscal Year ($/Sh)
---NO STOCK OPTION GRANTS WERE MADE BY THE CORPORATION DURING 1993---
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Number of Unexercised Value of Unexercised
Options/SARs at In-the-Money Options/SARs
Year-End at Year-End ($)
Number of Value Realized Exercisable/ Exercisable/
Name Shares Acquired ($) (1) Unexercisable Unexercisable (1)
on Exercise
<S> <C> <C> <C> <C>
J. H. Croom -0- -0- 83,100/12,500 0/0
C. R. Tilley -0- -0- 13,500/3,000 0/0
D. L. Bell, Jr. -0- -0- 21,350/2,050 0/0
J. P. Holland -0- -0- 7,960/3,000 0/0
L. W. Wallingford -0- -0- 12,440/2,050 0/0
J. D. Daly -0- -0- 10,500/0 0/0
R. A. Oswald -0- -0- 14,935/3,750 0/0
</TABLE>
(1) Market value of underlying securities at exercise or year-end,
minus the exercise or base price.
<PAGE> 17
PERFORMANCE GRAPH
The following graph demonstrates a five-year comparison of cumulative total
returns for the Corporation, the S&P 500, and the S&P Natural Gas Utility
Index.
FIVE-YEAR COMPARISON OF CUMULATIVE TOTAL RETURN(1)
CHART
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C>
Columbia Gas 100 158.22 149.15 56.12 62.55 73.18
S&P 500 Index 100 131.69 127.60 166.47 179.15 197.21
S&P Natural Gas 100 155.51 136.12 118.34 131.93 156.63
Utility Index
</TABLE>
(1) Assumes $100 invested on December 31, 1988 and reinvestment of dividends.
RETIREMENT INCOME PLAN - A noncontributory defined benefit pension plan is
maintained for all employees of the Corporation's participating subsidiaries
who are at least 21 years of age. The annual benefit (payable monthly) under
the pension plan is based upon final average annual compensation and years of
credited service. Final average annual compensation is calculated using base
compensation (shown in the "Summary Compensation Table" as "Salary") paid to
the employee for the highest 36 months of the last 60 months prior to
retirement.
Estimated annual benefits payable upon retirement are as follows with respect
to the specified remuneration and years of credited service.
Estimated Annual Benefits as of January 1, 1993 from Retirement Income Plan(1)
<TABLE>
<CAPTION>
Representative Years of Credited Service (2)
Final Average --------------------------------------------------------
Annual Compensation 20 25 30 35 40
- ------------------- ------- ------- ------- ------- -------
$ $ $ $ $ $
<S> <C> <C> <C> <C> <C>
200,000 57,879 72,349 86,818 91,818 96,818
300,000 87,879 109,849 131,818 139,318 146,818
400,000 117,879 147,349 176,818 186,818 196,818
500,000 147,879 184,849 221,818 234,318 246,818
600,000 177,879 222,349 266,818 281,818 296,818
700,000 207,879 259,849 311,818 329,318 346,818
</TABLE>
(1) Estimates are based upon a straight-life annuity and the assumptions that
(a) the Corporation's present retirement plan will be maintained and (b)
retirement will not occur before age 65. These benefits are not subject
to deduction for social security or other charges. Should an annual
benefit exceed limitations imposed by federal law, the excess will be
paid by the participating subsidiary as a supplemental pension under the
Pension Restoration Plan. If the supplemental pension liability exceeds
$100,000, then this liability may be either unfunded or funded through a
trust arrangement at the option of the individual. The following
executive officers have elected to have their accrued supplemental
pension funded through a trust arrangement. Contributions made in 1993
were as
<PAGE> 18
follows: Mr. Croom - $114,700; Mr. Daly - $132,800; Mr. Oswald -
$65,300; Mr. Tilley - $83,000; Mr. Bell - $14,700 and Mr. Wallingford -
$42,700. Mr. Holland's liability has not yet reached $100,000 so no
contributions have been made on his behalf. Such supplemental pensions
are not available to these executives until retirement or termination of
employment. Upon Mr. Daly's retirement on December 1, 1993, he elected a
lump-sum settlement from the Retirement Income Plan and the Pension
Restoration Plan. In addition, a final payment of $460,178 was made in
January, 1994 to discharge all remaining pension liabilities to Mr. Daly
pursuant to the Pension Restoration Plan. Mr. Daly has executed a
secured note in the amount of $67,464 to protect the Columbia Gas System
Service Corporation from certain potential state tax liabilities related
to the distribution.
(2) As of January 1, 1994, the credited years of service for the individuals
named in the Summary Compensation Table were as follows: Mr. Croom, 39
years; Mr. Tilley, 36 years; Mr. Bell, 35 years; Mr. Holland, 18 years;
Mr. Wallingford, 38 years; Mr. Daly, 36 years; and Mr. Oswald, 24 years.
EMPLOYMENT AND RETENTION AGREEMENTS
Employment Agreements which were effective July 19, 1991, for Messrs. J. H.
Croom; J. D. Daly; R. A. Oswald; D. L. Bell, Jr.; C. R. Tilley; and J. P.
Holland, expired on July 18, 1993. The Compensation Committee, in order to
retain incumbent management through the ongoing Bankruptcy process, authorized
the execution of modified Employment Agreements with the aforementioned six
executives and Mr. R. L. Robinson, President of Columbia Gas Transmission
Corporation, effective July 19, 1993. These contracts were approved by the
Bankruptcy Court on October 20, 1993.
The Employment Agreements, executed in 1993 by the Corporation and Messrs. J.
H. Croom, J. D. Daly, D. L. Bell, Jr. and R. A. Oswald, each provide for
retention payments equivalent to one year's base salary if the individual
remains employed at the date of confirmation of the Corporation's
reorganization plan by the Bankruptcy Court. The Employment Agreements with
Messrs. J. P. Holland and R. L. Robinson provide for retention payments
equivalent to one year's base salary if the individual is still in the employ
of Columbia Gas Transmission Corporation or the Corporation at the date of
confirmation by the Bankruptcy Court of a Plan of Reorganization for Columbia
Gas Transmission Corporation. The Employment Agreement for Mr. C. R. Tilley,
Chairman and CEO of the distribution companies, is a two-year agreement which
expires July 19, 1995 and provides for the payment of an amount equivalent to
one year's base pay on July 19, 1994, if Mr. Tilley has continued in his
position with the distribution companies until that date.
Each Employment Agreement also states that the employee may treat his
employment as terminated without cause if one of the following occurs: (1) a
reduction in the employee's fixed salary or other benefits to which such
employee is entitled (other than a reduction affecting all employees
generally); (2) a liquidation, dissolution, consolidation or merger, or
transfer of all or substantially all of the Corporation's assets (other than a
transaction in which the successor corporation has a net worth equal to or
greater than that of the Corporation and assumes the agreement and all its
obligations and undertakings); or (3) a change in control of the Corporation
(as defined in the agreement) or a material reduction of the employee's rank or
responsibilities. In the event of such an election by an employee to treat the
agreement as terminated or in the event of a termination by the Corporation not
permitted by the agreement, the employee is entitled to continue to receive his
fixed salary and specified fringe benefits for a period of 12 months but is not
entitled to a retention award. If such a termination occurs during the 180-day
period immediately following a change in control, the employee is entitled to
receive, in lieu of the retention payments just described, a lump-sum
termination payment equal to the present value of all amounts otherwise payable
under the agreement (except certain fringe benefits), discounted by the
interest rate specified in the agreement. In addition, if their employment is
terminated other than for cause, Messrs. R. A. Oswald, J. P. Holland and R. L.
Robinson each would be entitled to receive supplemental income payments and
medical/dental benefits from the first anniversary of the termination to the
attainment of age 55, the earliest date under which they could qualify for
retirement benefits under the Corporation's retirement program. These
supplemental income payments approximate 60% of the annual pension income
earned as of the date of execution of the employment agreements and payable at
age 55.
As of January 1, 1994, annual salaries for the named executives with Employment
Agreements are as follows: Mr. Croom - $652,000; Mr. Tilley - $331,900; Mr.
Bell - $292,600; Mr. Holland - $273,180; and Mr. Robinson -
<PAGE> 19
$222,645. Mr. Daly retired effective December 1, 1993; therefore his
Employment Agreement is no longer in effect. Mr. Oswald's employment
terminated effective October 27, 1993 and payments pursuant to his agreement
are shown in the "All Other Comp" column of the Summary Compensation Table.
On July 19, 1991, the Corporation entered into 31 Retention Agreements with key
management employees of various subsidiary companies. These agreements
provided for specified individual awards. Mr. L. W. Wallingford is a holder of
such a Retention Agreement providing for the payment of an award in the amount
of $94,445 on July 19, 1994, if he has continued to be in the employ of
Columbia Gas System Service Corporation or the Corporation until that date.
2. ELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
At the meeting, independent public accountants to examine the financial
statements of the Corporation and its subsidiaries which will be included in
the Annual Report to Stockholders for the year 1994 will also be elected.
Arthur Andersen & Co. has been recommended as such independent public
accountants by the Board of Directors of the Corporation.
Representatives of Arthur Andersen & Co. will be present at the Annual Meeting.
They will have an opportunity to make a statement if they desire and be
available to respond to appropriate questions by stockholders.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION OF ARTHUR ANDERSEN
& CO. AS INDEPENDENT PUBLIC ACCOUNTANTS.
Unless they are otherwise directed by the stockholders, the Proxies intend to
vote FOR Proposal 2.
3. OTHER MATTERS
The Board of Directors knows of no business constituting a proper subject for
action by the stockholders which will be presented for consideration at the
meeting other than that shown above. However, if any other business shall come
before the meeting, the persons named in the enclosed form of proxy or their
substitutes will vote said proxy with respect to any such business in
accordance with their best judgment.
PROPOSALS OF STOCKHOLDERS FOR THE 1995 ANNUAL MEETING
Proposals of stockholders of record to be presented for a vote at the April 27,
1995 Annual Meeting of Stockholders must be received at the principal executive
office of the Corporation, 20 Montchanin Road, Wilmington, Delaware 19807-0020,
no later than November 14, 1994.
DANIEL L. BELL, JR.
SECRETARY
JKH
proxy.94a
<PAGE> 20
Detach Here
THE COLUMBIA GAS SYSTEM, INC.
PROXY FOR APRIL 28, 1994, ANNUAL MEETING OF STOCKHOLDERS
(This Proxy is solicited on behalf of the Board of Directors)
The undersigned hereby appoints John H. Croom, James P. Heffernan, William
E. Lavery and any of them, Proxies, with full power of substitution, to
vote on behalf of the undersigned at the Annual Meeting of Stockholders
of The Columbia Gas System Inc., to be held at the Hotel duPont,
Wilmington, Delaware, on April 28, 1994, at 1 p.m. (EDT) and at any
adjournment thereof.
The shares represented hereby will be voted in accordance with the
specifications in the Proxy. WHERE A VOTE IS NOT SPECIFIED, THE PROXIES
WILL VOTE THE SHARES REPRESENTED BY THIS PROXY FOR THE ELECTION OF
DIRECTORS AND FOR ARTHUR ANDERSEN & CO., AS INDEPENDENT PUBLIC
ACCOUNTANTS.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
Please Sign and Date on Reverse Side and Return Promptly
Using the Enclosed Envelope.
<PAGE> 21
TO COLUMBIA GAS STOCKHOLDERS: [LOGO]
Columbia's Annual Meeting of Stockholders will be held at 1 p.m. (EDT) on
Thursday, April 28, 1994, in the duBarry Room of the Hotel duPont, 11th
and Market Streets, Wilmington, Delaware.
Attached is your 1994 proxy card. Please read both sides, and then mark, sign
and date it. Please detach and return the card promptly in the enclosed
business reply envelope. No postage is required if it is mailed in the United
States.
Thank you for voting on these very important proxy issues.
Daniel L. Bell, Jr., Secretary
[Detach Here]
PROXY
/X/ Please mark your vote as in this example.
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed / /WITHHOLD AUTHORITY
below (except those written below) to vote for all nominees
NOMINEES: W. K. Cadman, J. H. Croom, J. P. Heffernan,
W. F. Laird, E. G. Procope, J. R. Thomas, II
(To withhold authority to vote for any nominee, write that nominees's name on
the line below.)
- ----------------------------------------
2. THE ELECTION OF ARTHUR ANDERSEN & CO. AS INDEPENDENT PUBLIC ACCOUNTANTS:
/ / FOR / / AGAINST / / ABSTAIN
3. THE TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
SIGNED: DATED: , 1994
-------------------------------- ---------------
If you receive more than one proxy card, please vote, sign and return all cards
in the enclosed envelopes.
Executors, administrators, trustees, etc., should give full title. For joint
accounts, each joint owners should sign. Corporations should sign full
corporation name by duly authorized officer with the signature attested
by Corporate Secretary.
Return to The Columbia Gas System, Inc. c/o Harris Trust Company of New York,
P.O. Box 830, Chicago, IL 60690-9972.
<PAGE> 22
Detach Here
CONFIDENTIAL VOTING INSTRUCTIONS
TO: FIRST FIDELITY BANK, N.A., PA., TRUSTEE UNDER
EMPLOYEES' THRIFT PLAN OF COLUMBIA GAS SYSTEM
Proxy for April 28, 1994, Annual Meeting of Stockholders
(This Proxy is solicited on behalf of the Board of Directors)
First Fidelity Bank is hereby instructed to vote the equivalent number of
shares of Common Stock of The Columbia Gas System, Inc., represented by my
units, as indicated on the reverse side of this card, in the Columbia Gas
System Stock Fund and a proportionate share of any shares of common stock
held in the unallocated ESOP Suspense Account of the Employees' Thrift
Plan at the Annual Meeting of Stockholders to be held at the Hotel
duPont, Wilmington, Delaware, on Thursday, April 28, 1994, at 1 p.m.
(EDT) and at any adjournment thereof.
EVERY PROPERLY SIGNED VOTING INSTRUCTION FORM WILL BE VOTED IN ACCORDANCE
WITH THE SPECIFICATIONS MADE THEREON. IF NOT OTHERWISE SPECIFIED, THIS
VOTING INSTRUCTION FORM WILL BE VOTED FOR ALL NOMINEES FOR ELECTION AS
DIRECTOR AND FOR ARTHUR ANDERSEN & CO. AS INDEPENDENT PUBLIC ACCOUNTANTS.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE
Please Sign and Date on Reverse Side and Return Promptly
Using the Enclosed Envelope
<PAGE> 23
[LOGO]
Detach Here
/X/ Please mark your vote as in this example.
1. ELECTION OF DIRECTORS:
/ / FOR all nominees listed / / WITHHOLD AUTHORITY
below (except those written to vote for alL nominees
below)
NOMINEES: W. K. Cadman, J. H. Croom, J. P. Heffernan
W. F. Laird, E. G. Procope, J. R. Thomas, II
(To withhold authority to vote for any nominee, write that nominees's name on
the line below.)
- ----------------------------------------
2. THE ELECTION OF ARTHUR ANDERSEN & CO. AS INDEPENDENT PUBLIC ACCOUNTANTS:
/ / FOR / / AGAINST / / ABSTAIN
3. THE TRANSACTION OF SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
SIGNED:
--------------------------------------------------------
DATED: , 1994
--------------
Please promptly sign and return this form in the enclosed business reply
envelope. Your signed form must be received before April 27, 1994, for action
to be taken on your voting instructions.
<PAGE> 24
March 14, 1994
Dear Fellow Employee Stockholder:
I urge you to take a few minutes to read the enclosed proxy statement
and vote the shares of Columbia stock that are represented by your
participation in the Employees' Thrift Plan. Your proxy vote is as important
as those of other shareholders and by returning your ballot you will assure
that your opinion is represented at the Annual Meeting on April 28.
To vote the proxy, mark the boxes on the ballot to indicate your
preference, sign and date the card, and return it in the enclosed envelope as
soon as possible. No postage is required. Your vote is absolutely
confidential and will not be disclosed to anyone at Columbia.
With about 16 percent of outstanding Columbia Gas stock, employee
stockholders represent a large segment of the shareholder total. Last year
only half of these shares were voted, compared to about 80 percent of the
shares owned by independent stockholders.
Your vote is important. It is my earnest hope that you and all other
employees will exercise your rights to participate in the affairs of your
company by voting the proxy ballot.
Yours sincerely,
//s// John Croom
