<PAGE> 1
Consolidated Natural Gas Company Notice of Annual Meeting
CNG Tower and Proxy Statement
625 Liberty Avenue 1995
Pittsburgh, Pennsylvania 15222-3199 CNG
Consolidated Natural Gas Company
Gas Distribution
The East Ohio Gas Company
Cleveland, Ohio
The Peoples Natural Gas Company
Pittsburgh, Pennsylvania
Virginia Natural Gas, Inc.
Norfolk, Virginia
Hope Gas, Inc.
Clarksburg, West Virginia
West Ohio Gas Company
Lima, Ohio
Gas Transmission
CNG Transmission Corporation
Clarksburg, West Virginia
Exploration and Production
CNG Producing Company
New Orleans, Louisiana
Energy Services
CNG Energy Services Corporation
Pittsburgh, Pennsylvania
CNG Power Company
Pittsburgh, Pennsylvania
CNG
<PAGE> 2
CONSOLIDATED NATURAL GAS COMPANY
March 22, 1995
Dear Stockholder:
You are cordially invited to attend the 1995 Annual Meeting of
Stockholders to be held on Tuesday, May 16, 1995, at 9:00 a.m. Eastern
Time at the Sheraton Gateway Hotel, Atlanta Airport, 1900 Sullivan
Road, College Park, Georgia 30337.
The business items to be acted on during the Meeting are listed in the
Notice of Meeting and are described more fully in the Proxy Statement.
The Board of Directors has given careful consideration to these
proposals and believes that Proposals 1 and 2 are in the best interests
of the Company and that Proposal 3 is not in the best interests of the
Company. The Board recommends that you vote FOR Proposals 1 and 2 and
AGAINST Proposal 3.
It is important that you be represented at the Annual Meeting in person
or by proxy. Whether or not you plan to attend, we urge you to mark,
sign, date and return the enclosed proxy card promptly in the postage
paid envelope provided. If you plan to attend, please check the
appropriate box on the proxy card.
Thank you for your cooperation.
Sincerely,
GEORGE A. DAVIDSON, JR.
George A. Davidson, Jr.
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
CONSOLIDATED NATURAL GAS COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Consolidated Natural Gas Company will be held on
Tuesday, May 16, 1995, at 9:00 a.m. Eastern Time at the Sheraton
Gateway Hotel, Atlanta Airport, 1900 Sullivan Road, College Park,
Georgia 30337. Stockholders of record at the close of business on
March 22, 1995, will be entitled to vote at the Meeting and any
adjournment thereof.
The agenda for the Meeting includes:
1. Election of four Directors.
2. Ratification of the appointment of Price Waterhouse as
independent accountants.
3. Action on a stockholder-proposed resolution.
4. Transaction of any other business which may properly be
brought before the Meeting.
In the event you cannot be present in person, please sign and promptly
return the enclosed proxy card in the accompanying postage paid
envelope so that your shares will be represented at the Meeting.
Prompt return of proxies will save the Company the expense of further
requests for proxies to insure a quorum.
By order of the Board of Directors,
LAURA J. MCKEOWN
Laura J. McKeown
Secretary
Pittsburgh, Pennsylvania
March 22, 1995
ATTENTION: Stockholders Participating in the Dividend Reinvestment Plan
The accompanying proxy card reflects the total shares of Common Stock
registered in your name directly, as well as any full shares credited
to your Dividend Reinvestment Plan account.
<PAGE> 4
CONSOLIDATED NATURAL GAS COMPANY
PROXY STATEMENT
This statement and proxy card, mailed to stockholders commencing March
31, 1995, are furnished in connection with the solicitation by the
Board of Directors of Consolidated Natural Gas Company of proxies to be
voted at the Annual Meeting of Stockholders, and any adjournment
thereof, for the purposes stated in the Notice of the Annual Meeting.
Any stockholder who cannot attend is requested to sign and return the
accompanying proxy card promptly. The proxy reflects the number of
shares registered in a stockholder's name directly and, for
participants in the Company's Dividend Reinvestment Plan, includes full
shares credited to a participant's Dividend Reinvestment Plan account.
Proxies so given will be voted on all matters brought before the
Meeting and, as to the matters with respect to which a choice is
specified, will be voted as directed. The cost of solicitation will be
paid by the Company. In addition to the use of the mails, proxies may
be solicited personally, or by telephone or telecopy, by employees of
the Company and its subsidiaries with no special compensation to these
employees. Kissel-Blake Inc., 25 Broadway, New York, New York 10004,
has been retained to assist in the solicitation of proxies at an
estimated cost of $10,000. The Company will reimburse brokerage houses
and other custodians, nominees and fiduciaries for expenses incurred in
sending proxy material to their principals.
Any proxy given pursuant to this solicitation may be revoked at any
time prior to exercise by written notice to the Corporate Secretary, by
filing a later dated executed proxy, or by attending and voting at the
Annual Meeting. The address of the principal executive offices of the
Company is Consolidated Natural Gas Company, CNG Tower, 625 Liberty
Avenue, Pittsburgh, Pennsylvania 15222-3199.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF. Holders of Common
Stock, $2.75 par value, of record on March 22, 1995, have one vote for
each share held. On March 13, 1995, 93,067,185 shares of Common Stock
were outstanding. A majority of the outstanding shares will constitute
a quorum at the meeting. Abstentions and broker non-votes are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in tabulations of the
votes cast on proposals presented to stockholders. Broker non-votes
are not counted for purposes of determining whether a proposal has been
approved.
The following table indicates the beneficial ownership, as of January
31, 1995, of the Company's Common Stock with respect to the only person
known to the Company to be the beneficial owner of more than 5% of such
Common Stock. On January 31, 1995, 93,029,650 shares of Common Stock
were outstanding.
<PAGE> 5
Amount and Nature Percent
Name and Address of of Beneficial of Outstanding
Beneficial Owner Ownership Common Stock
__________________________________________________________________________
Trustees, Alternate Thrift Trust of
Employees Thrift Plans
CNG Tower, 625 Liberty Avenue
Pittsburgh, PA 15222-3199 11,788,835(1) 12.7%
____________________
(1) Such shares are beneficially owned in varying amounts by 7,194
employees, no one of whom beneficially owned in excess of 14,000
shares in the Plans, or 2/100ths of 1% of the shares outstanding.
Such shares are voted pursuant to confidential instructions of
participating employees and in the absence of instructions such
shares are not voted. A Registration Statement relating to various
investment options available to participants in the Plans has been
made effective under the Securities Act of 1933 and is on file with
the Securities and Exchange Commission (SEC).
__________________________________________________________________________
The Board of Directors does not know of any other persons or groups
who beneficially own 5% or more of the outstanding shares of Common
Stock.
ANNUAL REPORT. Commencing on or about March 15, 1995, the Company's
Annual Report for the year ended December 31, 1994, including financial
statements, was mailed to stockholders of record on March 1, 1995, and
will be mailed to any additional persons who were not stockholders on
that date but are stockholders of record on March 22, 1995. The
Company will provide a copy of the Annual Report to any stockholder of
record after March 22, 1995, upon request in writing to the Corporate
Secretary, Consolidated Natural Gas Company, CNG Tower, 625 Liberty
Avenue, Pittsburgh, Pennsylvania 15222-3199.
<PAGE> 6
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors consists of twelve members divided into three
classes. Each class has a three-year term, and only one class is
elected each year. There are no family relationships among any of the
nominees, Continuing Directors and Executive Officers of the Company nor
any arrangement or understanding between any Director or Executive
Officer or any other person pursuant to which any of the nominees has
been nominated.
During 1994, each of the members of the Board of Directors attended
more than 75% of the aggregate of the Board meetings and meetings held
by all committees of the Board on which the Director served during the
periods that the Director served.
On recommendation of the Nominating Committee of the Board of
Directors, four incumbent Class II Directors have been designated
nominees for reelection; each has consented to be a nominee and to serve
if elected. The remaining Directors will continue to serve in
accordance with their previous elections. Professor Levitt, having
reached the mandatory retirement age, will retire on the date of the
Annual Meeting, at which time the size of the Board shall be decreased
from twelve to eleven members. The names and other information
concerning the four persons nominated for a term of three years and the
seven continuing Board members are set forth by Class on pages 7 through
12 of this Proxy Statement. The personal information has been furnished
to the Company by the nominees and other Directors. Unless you specify
otherwise on your signed proxy card, your shares will be voted FOR the
election of the four persons named below to three-year terms as
Directors. In the event of an unexpected vacancy on the slate of
nominees, your shares will be voted for the election of a substitute
nominee if one shall be designated by the Board. If any nominee for
election as Director is unable to serve, which the Board of Directors
does not anticipate, the persons named in the proxy may vote for another
person in accordance with their judgment.
VOTE NEEDED FOR ELECTION OF DIRECTORS
Directors are elected by a plurality of the votes of the shares of
Common Stock present in person or represented by proxy and entitled to
vote at the Annual Meeting. Any shares not voted (whether by
abstention, broker non-vote or votes withheld) are not counted as votes
cast for such individuals and will be excluded from the vote.
BOARD RECOMMENDATION
The Board recommends that stockholders vote FOR Proposal 1, and the
accompanying proxy will be so voted, unless a contrary specification is
made.
<PAGE> 7
DIRECTORS NOMINATED FOR ELECTION TO THE BOARD WITH A TERM EXPIRING MAY
1998
(photo J. W. CONNOLLY Chair: Financial Policy
omitted) Age 61 Committee
Director since 1984 Member: Compensation and
Benefits Committee
Executive Committee
Nominating Committee
Mr. Connolly served as Senior Vice President and Director of
H. J. Heinz Company, Pittsburgh, Pennsylvania, a processed
food products manufacturer, from 1985 to his retirement in
December 1993. He served as President and Chief Executive
Officer of Heinz U.S.A., a division of the H. J. Heinz Company, from
1980 to 1985, and served as Executive Vice President of that company
from 1979 to 1980. He was President and Chief Executive Officer of The
Hubinger Company, a Heinz Company subsidiary, from 1976 to 1979,
Treasurer of H. J. Heinz Company from 1973 to 1976, and a Vice President
of Ore-Ida Foods, Inc., a Heinz Company subsidiary, from 1967 to 1973.
An attorney by profession, Mr. Connolly joined the Law Department of the
H. J. Heinz Company in 1961. He is a Director of Mellon Bank
Corporation, Mellon Bank, N.A., Presbyterian-University Health System
and the University of Pittsburgh Medical Center System. He is also a
Trustee of the University of Pittsburgh.
(photo GEORGE A. DAVIDSON, JR. Chair: Executive Committee
omitted) Age 56 Member: Financial Policy
Director since 1985 Committee
Nominating Committee
Mr. Davidson has served as Chairman of the Board and Chief
Executive Officer of the Company since May 1987, and has been
employed by the Consolidated System since 1966. He served as
Vice Chairman and Chief Operating Officer of the Company from
January 1987 to May 1987, and Vice Chairman from October 1985 to January
1987. He served as President of CNG Transmission Corporation (1) from
1984 through 1985. He had been Vice President, System Gas Operations,
for Consolidated Natural Gas Service Company, Inc.,(1) from 1981 to
1984, and was Assistant Vice President, Rates and Certificates, of that
company from 1975 to 1981. Mr. Davidson held various other positions in
the Rates and Certificates Department from 1966 to 1975. Mr. Davidson
serves on the National Petroleum Council and the Allegheny Conference on
Community Development. He is a Director of the American Gas
Association, PNC Bank Corp. and B. F. Goodrich Company. He is also a
Trustee of the University of Pittsburgh.
(1) Wholly owned subsidiary of the Company.
<PAGE> 8
DIRECTORS NOMINATED FOR ELECTION TO THE BOARD WITH A TERM EXPIRING MAY
1998
(photo LESTER D. JOHNSON
omitted) Age 63
Director since 1992
Mr. Johnson has served as Vice Chairman and Chief Financial
Officer of the Company since January 1995 and Director since
May 1992, and has been employed by the Consolidated System
since 1955. He served as Executive Vice President and Chief
Financial Officer of the Company from March 1992 to December 1994,
Senior Vice President and Chief Financial Officer from 1986 to 1992, and
Vice President and Chief Financial Officer from 1984 to 1986. He had
been Vice President and Treasurer from 1982 to 1984, Treasurer from 1979
to 1982 and Assistant Treasurer from 1970 to 1979. He joined The
Peoples Natural Gas Company(1) in 1955 and held a succession of
financial posts. He is a member of the Finance Committee of the
American Gas Association.
(photo RICHARD P. SIMMONS Chair: Audit Committee
omitted) Age 63 Member: Ethics Committee
Director since 1990 Executive Committee
Nominating Committee
Mr. Simmons has served as Chairman and Chairman of the
Executive Committee of Allegheny Ludlum Corporation,
Pittsburgh, Pennsylvania, a specialty steel manufacturer,
since 1990. He served as Chairman and Chief Executive
Officer from 1980 to 1990, and as a Director of that company since 1980.
He had been a Director of Allegheny Ludlum Industries from 1973 to 1980
and a member of the Executive Office of that company from 1978 to 1980.
Mr. Simmons is a Director of PNC Bank Corp. He is a member of the
Massachusetts Institute of Technology Corporation and Development
Committee, Director and Chairman of the Pittsburgh Symphony Society,
President and a member of the Executive Committee of the Allegheny
Conference on Community Development and a member of the Executive
Committee and Director of the Southwestern Pennsylvania United Way.
(1) Wholly owned subsidiary of the Company.
<PAGE> 9
CONTINUING DIRECTORS WITH A TERM EXPIRING MAY 1996
(photo PAUL E. LEGO Member: Compensation and
omitted) Age 64 Benefits Committee
Director since 1991 Executive Committee
Financial Policy
Committee
Nominating Committee
Mr. Lego served as Chairman and Chief Executive Officer of
Westinghouse Electric Corporation, an electronic products and
services, environmental systems, equipment and broadcasting
company, Pittsburgh, Pennsylvania, from 1990 to his
retirement in January 1993. He served that company as President and
Chief Operating Officer from 1988 to 1990 and as a Director from 1988 to
1993. He had been Senior Executive Vice President, Corporate Resources
from 1985 to 1988, Executive Vice President, Westinghouse Industries &
International Group from 1983 to 1985 and Executive Vice President,
Westinghouse Industry Products from 1980 to 1983. Prior thereto, he
served in various engineering and management capacities with
Westinghouse since 1956. Mr. Lego is the non-executive Chairman of the
Board of Commonwealth Aluminum Corporation and a Director of the Lincoln
Electric Company and USX Corporation. He is a member of the Business
Council and a Trustee of the University of Pittsburgh.
(photo MARGARET A. MCKENNA Member: Compensation and
omitted) Age 49 Benefits Committee
Director since 1994 Ethics Committee
Nominating Committee
Ms. McKenna has served as President of Lesley College,
Cambridge, Massachusetts, since 1985. She served as Vice
President, Program Planning, Radcliffe College from 1982 to
1985 and as Director of its Bunting Institute from 1981 to
1985. Prior thereto, she has served as Deputy Under Secretary of the
U.S. Department of Education, Deputy Counsel to the President of the
United States, and in posts with the International Association of Human
Rights agencies and U.S. Department of Justice. Ms. McKenna is a
Director of Best Products and The Stride Rite Corporation.
<PAGE> 10
CONTINUING DIRECTORS WITH A TERM EXPIRING MAY 1996
(photo WALTER R. PEIRSON Member: Audit Committee
omitted) Age 68 Financial Policy
Director since 1989 Committee
Nominating Committee
Mr. Peirson served as a Director of Amoco Corporation,
Chicago, Illinois, an integrated oil company and producer of
natural gas, from 1976 to 1989, and as an Executive Vice
President of that company from 1978 until his retirement in
1989. Mr. Peirson served as President of Amoco Oil Company from 1974 to
1978, Executive Vice President from 1971 to 1974 and Vice
President-Marketing of that company from 1968 to 1971. He was President
of Toloma Gas Products Co., subsidiary of Standard Oil Company
(Indiana), from 1964 to 1968. He served as President of General Gas
Corporation from 1962 to 1964 and Executive Vice President of that
company from 1961 to 1962. He was an attorney at Standard Oil Company
of Indiana from 1955 to 1961. He is a Director of American National
Bank & Trust Company of Chicago, American National Corporation and the
Federal Signal Corporation. He is also a Trustee of the Museum of
Science and Industry in Chicago, Illinois.
CONTINUING DIRECTORS WITH A TERM EXPIRING MAY 1997
(photo WILLIAM S. BARRACK, JR. Member: Audit Committee
omitted) Age 65 Ethics Committee
Director since 1994 Nominating Committee
Mr. Barrack served as Senior Vice President of Texaco Inc.,
Harrison, New York, an integrated oil company and a producer
of natural gas, from 1983 to his retirement in 1992. He
served as a Senior Director of Caltex Petroleum Corporation
from 1982 to 1992, President of Texaco Oil Trading & Supply Company from
1983 to 1984, Chairman and Chief Executive Officer of Texaco
Limited-London from 1980 to 1983. Prior thereto, he served in various
marketing, producing and management positions with Texaco Inc. since
1953. Mr. Barrack is a Director of Standard Commercial Corporation and
the International Executive Services Corp.
<PAGE> 11
CONTINUING DIRECTORS WITH A TERM EXPIRING MAY 1997
(photo RAY J. GROVES Member: Audit Committee
omitted) Age 59 Financial Policy
Director since 1994 Committee
Nominating Committee
Mr. Groves served as Chairman and Chief Executive Officer of
Ernst & Young, New York, New York, a public accounting firm
from 1991 to his retirement in 1994. He served as Co-Chief
Executive Officer of the firm from 1989 to 1991 and served as
Chairman and Chief Executive Officer of Ernst & Whinney from 1977 to 1989.
Mr. Groves was admitted as a Partner in the firm in 1966, having joined
the firm in 1957. Mr. Groves is a Director of Marsh & McLennan
Companies, Inc., and serves as a Trustee of The Business Council for the
United Nations and as a Managing Director and Treasurer of the
Metropolitan Opera Association.
(photo STEVEN A. MINTER Chair: Compensation and
omitted) Age 56 Benefits Committee
Director since 1988 Member: Ethics Committee
Nominating Committee
Mr. Minter has been the Executive Director and President of
The Cleveland Foundation, Cleveland, Ohio, since 1984, an
organization supporting health, human services, cultural and
educational programs in the greater Cleveland area. He had
been Associate Director and Program Officer of The Cleveland Foundation
from 1975 to 1980 and from 1981 to 1983. He served as Under Secretary
of the U.S. Department of Education, Washington, D.C., from 1980 to
1981. He was the Commissioner of Public Welfare for the Commonwealth of
Massachusetts from 1970 to 1975. Mr. Minter is a Director of Goodyear
Tire & Rubber Company, Rubbermaid Inc. and KeyCorp. He is also a
Trustee of the College of Wooster and of The Foundation Center.
<PAGE> 12
CONTINUING DIRECTORS WITH A TERM EXPIRING MAY 1997
(photo LOIS WYSE Chair: Ethics Committee
omitted) Age 68 Member: Compensation and
Director since 1978 Benefits Committee
Nominating Committee
Ms. Wyse has been President of Wyse Advertising, Inc., a
Cleveland-based advertising agency with offices in New York,
New York, since February 1979, and prior thereto had been an
Executive Vice President of the same firm since 1970. She is
a Contributing Editor of Good Housekeeping magazine, a syndicated
columnist for United Features Syndicate, and a widely published author.
She is a Trustee of Beth Israel Medical Center.
DIRECTOR RETIRING IN MAY 1995
(photo THEODORE LEVITT Chair: Nominating Committee
omitted) Age 70 Member: Audit Committee
Director since 1982 Financial Policy
Committee
Professor Levitt is the Edward W. Carter Professor of
Business Administration, Emeritus, Harvard University
Graduate School of Business Administration in Boston,
Massachusetts. He served as Editor of the Harvard Business
Review from September 1985 to December 1989, and became a member of the
faculty of the Graduate School of Business Administration, Harvard
University in 1959, serving as head of its marketing area for six years.
He was a full-time economic and marketing consultant to Standard Oil
Company (Indiana) from 1955 to 1959, has been consultant to senior
management of a large variety of major corporations and industries, and
has authored numerous books on marketing theory and practice. He is a
Director of Landmark Graphics Corporation, Melville Corporation, Sanford
C. Bernstein Fund, Inc., Saatchi & Saatchi Company PLC and The Stride
Rite Corporation.
<PAGE> 13
THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES THEREOF
BOARD OF DIRECTORS
The Company is managed under the direction of the Board of Directors,
which met eight times in 1994. To assist it in various areas of
responsibility, the Board has established several standing committees
that are briefly described below.
AUDIT COMMITTEE
The Audit Committee is composed of five non-employee Directors. Among
its functions are: reviewing the scope and effectiveness of audits by
the independent accountants and the Company's internal auditing staff;
selecting and recommending to the Board of Directors the employment of
independent accountants, subject to ratification by the stockholders;
receiving and acting on comments and suggestions by the independent
accountants and by the internal auditors with respect to their audit
activities; approving fees charged by the independent accountants; and
reviewing the Company's annual financial statements before their
release. The Committee met four times in 1994.
COMPENSATION AND BENEFITS COMMITTEE
The Compensation and Benefits Committee is composed of five
non-employee Directors. The Committee approves the salary budgets for
all non-union employees and fixes the salaries of the Officers and
other personnel on the executive payroll of the Company and its
subsidiaries.
The Committee also has general supervision over the administration of
all non-union employee pension, compensation and benefit plans of the
Company and its subsidiaries; reviews proposals with respect to the
creation of and changes in such plans; and makes appropriate
recommendations with respect thereto to the Board of Directors. The
Committee met four times in 1994.
ETHICS COMMITTEE
The Ethics Committee consists of five non-employee Directors. Its
function is to review and act on all situations subject to the
provisions and procedures of the Company's Business Ethics Policy and
to monitor the Company's environmental compliance activities. The
Committee met four times in 1994.
FINANCIAL POLICY COMMITTEE
The Financial Policy Committee consists of five non-employee Directors
and the Chairman of the Board. Its function is to oversee the
short-term and long-term financial activities and planning of the
Company including dividend actions. The Committee met three times in 1994.
<PAGE> 14
NOMINATING COMMITTEE
The Nominating Committee currently consists of ten non-employee
Directors and the Chairman of the Board. It reviews the qualifications
of Director candidates on the basis of recognized achievements and
their ability to bring skills and experience to the deliberations of
the Board. It also recommends qualified candidates to the Board,
including the slate of nominees submitted to the stockholders at the
Annual Meeting; reviews the size and composition of the Board; and
monitors the Company's management succession program. The Committee
met five times in 1994.
Stockholders who wish to propose candidates to the Nominating
Committee for election to the Board at the 1996 Annual Meeting should
write to the Corporate Secretary, Consolidated Natural Gas Company, CNG
Tower, 625 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3199, between
March 21, 1996 and April 19, 1996, stating in detail the qualifications
of such candidates for consideration by the Committee. Any such
recommendation should be accompanied by a written statement from the
candidate of his or her consent to be considered as a candidate and, if
nominated and elected, to serve as a Director.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
The following table lists the beneficial ownership, as of January 31,
1995, of the Company's Common Stock by each current Director, named
executive and all current Directors and Officers as a group.
Number of Number of
Shares Shares Under Percent of
Name of Beneficially Exercisable Outstanding
Beneficial Owner Owned(1) Options(2) Common Stock
__________________________________________________________________________
W. S. Barrack, Jr. 500 .001
J. W. Connolly 800 .001
G. A. Davidson, Jr. 42,919 54,715 .105
R. R. Gifford 16,115 16,314 .035
R. J. Groves 1,000 .001
D. P. Hunt 16,261 21,528 .041
L. D. Johnson 17,024 21,954 .042
P. E. Lego 600 .001
T. Levitt 900 .001
M. A. McKenna 100 -(3)
<PAGE> 15
Number of Number of
Shares Shares Under Percent of
Name of Beneficially Exercisable Outstanding
Beneficial Owner Owned(1) Options(2) Common Stock
__________________________________________________________________________
S. A. Minter 930 .001
W. R. Peirson 2,100 .002
R. P. Simmons 1,100 .001
L. J. Timms, Jr. 21,088 18,762 .043
L. Wyse 500 .001
Directors and Officers of the
Company as a group
(21 persons) 161,436 171,046 .357
____________
(1) Includes shares owned by spouses and, in the case of
employees, shares beneficially owned under the Alternate Thrift Trust
of the Employees Thrift Plans and the Employee Stock Ownership Plan.
Unless otherwise noted, the Directors and Officers have sole voting
and investment power.
(2) Includes shares subject to options exercisable on January 31, 1995,
and options which will become exercisable within 60 days thereafter.
(3) Less than .001% of outstanding shares.
__________________________________________________________________________
<PAGE> 16
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the named Executive
Officers for the last three completed fiscal years of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
____________________________ ___________________
Other All
Annual Restricted Shares Other
Compen- Stock Under- Compen-
Name and Bonus sation Award(s) lying sation
Principal Position Year Salary (1) (2) (3) Options (4)
____________________ ____ ________ ________ ________ __________ _______ ________
<S> <C> <C> <C> <C> <C> <C> <C>
G. A. Davidson, Jr. 1994 $564,400 $ 0 $ 9,119 29,607 $42,617
(Chairman and 1993 511,100 280,400 3,012 27,310 38,654
Chief Executive 1992 483,400 219,103 3,000 35,013 36,364
Officer, Director)
R. R. Gifford 1994 221,100 0 3,958 5,891 22,394
(President, CNG 1993 187,600 96,600 312 5,434 19,082
Energy Services) 1992 176,100 87,573 334 6,966 15,196
D. P. Hunt 1994 266,200 0 3,497 10,226 26,908
(President, 1993 229,600 129,200 8,385 9,566 20,703
CNG Producing) 1992 216,000 61,819 10,889 8,430 16,414
L. D. Johnson 1994 307,100 0 5,051 11,622 30,994
(Vice Chairman, 1993 273,700 156,000 793 15,790 27,687
Chief Financial 1992 255,400 165,755 762 12,262 25,495
Officer, Director)
L. J. Timms, Jr. 1994 266,200 0 5,952 10,226 26,908
(President, CNG 1993 232,800 137,000 708 9,566 18,796
Transmission) 1992 219,300 114,967 866 12,262 16,620
____________________
</TABLE>
(1) Amounts shown for 1992 bonus include cash bonus and 1992
restricted stock bonus priced at $47.00 per share (closing price on
March 15, 1993, the grant date). The restrictions on the stock lapsed
six months after the grant date. The 1993 bonus was paid entirely in
cash.
(2) Includes only tax reimbursements. No amounts are included in this
column for the Executive Split Dollar Life Insurance Plan because the
executives' contributions to this plan are greater than or equal to
the term life insurance costs that apply to the underlying life
insurance policies. No amounts are included for perquisites or
<PAGE> 17
personal benefits because, for each Executive Officer, the aggregate
amount of such compensation was less than $50,000 and less than 10% of
that executive's base salary and bonus.
(3) Restricted Stock Award Grants are reported at aggregate market
value at the date of grant. Restrictions on the awards lapse in 25%
increments, beginning with the first anniversary and on each of the
next three anniversaries of the grant date. Dividends are paid on the
shares from the date of grant. Restricted Stock Award Grants are
based on the individual's level of performance and responsibility. At
December 31, 1994, the number of restricted stock holdings for each of
the named Executive Officers was: Mr. Davidson, 7,866; Mr. Gifford,
2,476; Mr. Hunt, 2,862; Mr. Johnson, 2,729; and Mr. Timms, 2,624. The
aggregate values of such holdings at December 31, 1994, at the
year-end closing price of $35.50 per share, for each of the named
Executive Officers was: Mr. Davidson, $332,581; Mr. Gifford,
$114,511; Mr. Hunt, $121,049; Mr. Johnson, $115,470; and Mr. Timms,
$111,388.
(4) Comprised of annual employer matching thrift plan contributions and
ESOP allocations.
The following table contains information concerning the grant of stock
options under the Company's 1991 Stock Incentive Plan to the named
Executive Officers as of the end of the last fiscal year of the
Company. No SARs (stock appreciation rights) have been granted.
<PAGE> 18
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
________________________________
% of
Number Total Potential
of Options Realizable Value at
Shares Granted Exercise Assumed Annual
Under- to Em- or Rates of Stock
lying ployees Base Price Appreciation
Options in Price Expir- for Option Term (2)
Granted Fiscal Per ation ____________________________________
Name (1) Yr. Share Date 0% 5% 10%
___________________ _______ _______ _______ ______ ___ ______________ ______________
<S> <C> <C> <C> <C> <C> <C> <C>
G. A. Davidson, Jr. 29,607 4.55% $44.125 2004 0 $ 821,594 $ 2,082,079
R. R. Gifford 5,891 .91 44.125 2004 0 163,475 414,278
D. P. Hunt 10,226 1.57 44.125 2004 0 283,771 719,132
L. D. Johnson 11,622 1.79 44.125 2004 0 322,510 817,304
L. J. Timms, Jr. 10,226 1.57 44.125 2004 0 283,771 719,132
_________________________________________________________________________________________
All Shareholders N/A N/A N/A N/A 0 $2,581,570,500 $6,542,206,506
_________________________________________________________________________________________
All Optionees 650,493 100.00 $34.750- 2004 0 $ 18,051,165 $ 45,745,196
$45.125
_________________________________________________________________________________________
Optionee Gain as
% of All
Shareholder Gain N/A N/A N/A N/A N/A .7% .7%
_________________________________________________________________________________________
</TABLE>
(1) All material terms of the Non-Qualified Stock Options granted in
1994 are as follows: Non-Qualified Stock Options are granted at the
fair market value of a share on the date of grant of the option. The
option expires on the tenth anniversary of the grant date and is
exercisable in installments of up to 25% of the shares on or after the
second, third, fourth and fifth anniversaries of the grant. If the
employee retires from CNG, his or her options expire the earlier of
the option expiration date or three years after he or she retires. If
an employee otherwise leaves CNG, his or her options expire the
earlier of the option expiration date or three months after he or she
ceases to be employed by CNG. Subject to the vesting schedule,
options are exercisable from time to time up to the expiration date.
Non-Qualified Stock Option Award grants are based on the individual's
level of performance and responsibility.
<PAGE> 19
(2) Based on actual option term (10-year) and annual compounding at
rates shown. The dollar amounts under these columns are the result of
calculations at 0% and at the 5% and 10% rates set by the Securities
and Exchange Commission and therefore are not intended to forecast
possible future appreciation, if any, of the Company's stock price.
No gain to the optionees is possible without stock price appreciation,
which will benefit all shareholders commensurately. A 0% gain in
stock price appreciation will result in 0 dollars for the optionees.
The Company did not use an alternative formula for a grant date
valuation, as the Company is not aware of any formula which will
determine with reasonable accuracy a present value based on future
unknown or volatile factors.
_______________________________________________________________________
The following table sets forth information with respect to the named
Executive Officers concerning the exercise of options during the last
fiscal year of the Company and unexercised options held as of the end
of the fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND DECEMBER 31, 1994, YEAR-END OPTION VALUES
Number of Value of
Shares Underlying Unexercised,
Unexercised Options In-the-Money Options
Held at Year-End at Year-End (2)
Shares ___________________ ____________________
Acquired Value
On Realized Exercis- Unexercis- Exercis- Unexercis-
Name Exercise (1) able able able able
___________________ ________ ________ ________ __________ ________ __________
G. A. Davidson, Jr. 0 $ 0 29,165 99,843 $6,565 $19,694
R. R. Gifford 0 0 11,095 19,999 2,123 3,918
D. P. Hunt 0 0 13,665 31,823 1,581 4,742
L. D. Johnson 0 0 11,139 42,755 2,300 6,897
L. J. Timms, Jr. 0 0 9,948 34,690 2,300 6,897
__________________
(1) Market value of underlying shares at time of exercise minus the
exercise price.
(2) Market value of underlying shares at year-end market price of
$35.50 per share minus the exercise price.
<PAGE> 20
LONG-TERM INCENTIVE PLAN AWARDS IN THE LAST FISCAL YEAR
No Restricted Stock Awards were made to the named executives under the
Long-Term Incentive Plan in 1994.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AGREEMENTS
Messrs. Davidson, Gifford, Hunt, Johnson and Timms entered into
agreements with the Company dated November 14, 1989, that have
provisions which become operative upon a defined change of control of
the Company. Such agreements preserve for three years following a
change of control the annual salary levels and employee benefits as are
then in effect for these executives and provide that, in the event of
certain terminations of employment, these executives shall receive
severance payments equal to 2.99 times their respective annual
compensation prior to severance.
COMPENSATION AND BENEFITS COMMITTEE REPORT
The Company's executive compensation programs are administered by the
Compensation and Benefits Committee of the Board of Directors (the
"Committee"), which is composed of five non-employee Directors. The
Committee reviews and approves all issues pertaining to executive
compensation. Total compensation is designed in relationship to
compensation paid by competitor organizations. Base salary and
long-term incentive compensation are targeted to median market levels
and short-term incentive compensation is goal-based and structured to
be comparable to that paid by competitor organizations. The objective
of the Company's three compensation programs (base salary, short-term
incentive and long-term incentive) is to provide a total compensation
package that will enable the Company to attract, motivate and retain
outstanding individuals and align their success with that of the
Company's shareholders.
Competitor organizations are defined annually as part of the
compensation administration process and include fully integrated
natural gas companies as well as broader industry comparatives, e.g.,
comparably-sized general industrial companies and, where appropriate,
specific energy companies.
The level of base salary paid to executives for 1994 was determined on
the basis of performance and experience. The Company measures or
identifies its base salary structure by range midpoints in comparison
to base salaries offered by competitors. Salary levels are targeted
to, and in 1994, correspond to the median range of compensation paid by
competitor organizations. These are not the same companies that
comprise the American Gas Association Diversified Gas Index shown on
the shareholder return performance presentation. The specific
competitive marketplace which the Company and its subsidiaries use in
base salary analysis is determined based on the nature and level of the
positions being analyzed and the labor markets from which individuals
would be recruited. The Committee also considered the competitiveness
of the entire compensation package in its determination of salary
levels.
<PAGE> 21
Short-term incentive compensation plans are used at both corporate and
subsidiary levels. The appropriateness of applying an incentive
compensation arrangement to any given position is determined based on
the nature of the position, its potential for contribution and the
then-current competitive environment. Short-term incentive opportunity
is structured so that awards are competitive at a level commensurate
with the performance level achieved by the employee with consideration
for the employee's level of responsibility. The short-term incentive
plan has threshold, target and maximum bonus levels for the various
executive levels based on competitive data. For the named Executive
Officers, the threshold bonus level is 18% to 20% of base pay, the
target bonus level is 45% to 50% of base pay, and the maximum bonus
level is 63% to 70% of base pay. At the corporate level, the primary
form of short-term incentive compensation is a cash or stock bonus pool
arrangement, for which all employees on the Company's System executive
payroll are eligible. The bonus pool is established as a percentage of
corporate net income based on a weighted differential between
established goals and actual performance; the pool is then, in turn,
allocated to individual participants based on the achievement of their
individual and respective company goals. At 85% of goal achievement,
the threshold bonus pool is created; at 100% of goal, the target bonus
pool is achieved; at 115% or greater of goal achievement, the maximum
bonus pool is achieved. At less than the threshold level, there is no
bonus pool. The performance measures (weighted as indicated) are based
on the Company's fixed charge coverage ratio (20%), return on equity
(40%), net income (20%) and cash flow (20%), with performance goals
established based on the Company's annual long-range forecast, actual
prior year performance and business plan reviews. Performance targets
are set to meet or exceed the performance of peer companies. For the
last fiscal year, the overall goal achievement was 84.0% with return on
equity achieving 83.5% of goal, fixed charge coverage ratio achieving
95.4% of goal, net income achieving 89.8% of goal, and cash flow
achieving 67.3% of goal. Based on 1994 performance, no bonus pool was
established.
Long-term incentive compensation plans are limited to only those
employees who are in positions which can affect the long-term success
of the Company, including both the establishment and execution of the
Company's business strategies. The 1991 Stock Incentive Plan is the
principal method for long-term incentive compensation, and compensation
thereunder principally takes the form of Non-Qualified Stock Option
grants and Restricted Stock Awards. The purposes of long-term
incentive compensation are to: (i) focus key executives' efforts on
performance which will increase the value of the Company to its
shareholders; (ii) align the interests of management with those of the
shareholders; (iii) provide a competitive long-term incentive and
capital accumulation opportunity; and (iv) provide a retention
incentive for selected key executives. Performance criteria used in
long-term incentives are tied directly to the individual participant's
performance over time and his or her impact on increasing the economic
performance of the Company. Previous awards of options or retricted
stock are not considered in the determination of an award. Executive
performance against stated position responsibilities and goals is
evaluated annually. Such performance rating is used with the level of
responsibility in determining the amount of the award. At expected
levels of performance, the long-term incentive award is structured at
the median range; at levels of performance that exceed expectations,
the grant is structured at the 75th percentile; if
<PAGE> 22
performance is outstanding, the grant is structured at the 90th
percentile.
The Committee utilizes the services of an independent compensation
consultant to assess market relativity of executive compensation
ranges. Consistent with the Company's compensation philosophy,
adjustments are made to any executive compensation ranges necessary to
achieve levels of compensation at the median market position.
Effective for the tax-year ended December 31, 1994, the Revenue
Reconciliation Act of 1993 placed certain limits on the deductibility
of non-performance based executive compensation. Current and
anticipated levels of executive compensation do not subject the Company
to these limitations. At such time that executive compensation levels
subject the Company to deductibility limits, the Committee will
consider the Company's alternatives with respect to qualifying
executive compensation for deductibility.
Mr. Davidson's compensation for 1994 was determined in the general
context of the programs described above. Mr. Davidson's 1994 incentive
compensation goals were based in part on the following measures of the
Company's performance (weighted as shown): net income (10%), cash flow
(defined as net income plus depreciation plus deferred taxes minus
dividends) (5%), return on equity (compared to peer companies) (10%),
credit rating of the Company's long-term debt (15%), price to earnings
ratio (compared to published summary data) (10%), and the continued
improvement in System exploration and production financial performance
(20%). In addition, Mr. Davidson's 1994 incentive compensation goals
were based upon his support for CNG Energy Services Corporation to
ensure its success in 1994 (10%) and discretion of the Committee (20%).
Mr. Davidson's threshold bonus level is 20% of base pay, his target
bonus level is 50% of base pay and his maximum bonus level is 70% of
base pay. The Compensation and Benefits Committee awarded no incentive
compensation to Mr. Davidson for 1994 because, as described on page 21,
no bonus pool was established for 1994 performance.
S. A. Minter, Chair
J. W. Connolly
P. E. Lego
M. A. McKenna
L. Wyse
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly cumulative total
shareholder return on CNG's Common Stock against the cumulative total
return of the S&P 500 Stock Index and the American Gas Association
(AGA) Diversified Gas Index for the period of five years commencing
December 31, 1989, and ended December 31, 1994.
<PAGE> 23
The AGA is the primary trade association for the natural gas industry.
The AGA's Diversified Gas Index is published in the AGA Financial
Quarterly Review. This publication is sent to industry executives and
security analysts and is provided to anyone who requests a copy. The
index was prepared in January 1995, under the direction of the AGA
Finance Committee. All companies contained in the index are members of
the AGA. Those companies are: Chesapeake Utilities Corp., Columbia
Gas System, Inc., Consolidated Natural Gas Company, Eastern
Enterprises, Energen Corporation, ENSERCH Corporation, Equitable
Resources, K N Energy, Inc., NICOR Inc., Noram Energy, ONEOK Inc.,
Pacific Enterprises, Pennsylvania Enterprises, Inc., Questar
Corporation, South Jersey Industries, Inc., Southwest Gas Corporation,
Southwestern Energy, UGI Corporation, Valley Resources, Inc.,
Washington Energy Company and WICOR, Inc.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
(line graph omitted)
1989 1990 1991 1992 1993 1994
_______________________________________________________
CNG $100 $ 91 $ 93 $102 $110 $ 88
S&P 500 100 97 126 136 150 152
AGA 100 89 78 82 93 81
_______________________________________________________
*Assumes $100 investment on December 31, 1989, and
reinvestment of dividends.
NON-EMPLOYEE DIRECTORS' COMPENSATION
Non-employee Directors are currently paid a $24,000 annual retainer, a
$2,000 per diem fee for attending each Board meeting including all
Board Committee meetings held in conjunction with such Board meeting,
and a $1,000 per diem fee for participating in telephonic Board or
Board Committee meetings. Committee Chairpersons receive an additional
annual fee of $3,000. Such Directors may elect to defer receipt of
these payments until after retirement from the Board. Such payments
are deferred in the form of cash credits or Consolidated Natural Gas
Company Common Stock credits. Such stock credits are valued as Common Stock
<PAGE> 24
equivalents equal to the number of shares that could have been
purchased at the closing price on the date the compensation was earned.
As of the date any dividend is paid on the Company's Common Stock, a
credit is made to each participant's deferred account equal to the
number of shares of Common Stock that could have been purchased on such
date with the dividend paid. Amounts deferred in the form of cash
credits earn interest, compounded quarterly, at a rate equal to the
closing prime commercial rate at The Chase Manhattan Bank N.A. on the
last day of each quarter. The annual retainer paid to non-employee
Directors, as set by the Board of Directors from time to time, shall
continue to be paid for life to each non-employee Director retired at
age 70, or at an earlier age due to disability, provided the
non-employee Director served a minimum of four years and agrees to be
generally available as a consultant. Employee Directors do not receive
any compensation for service as Directors.
As approved by the shareholders in May 1994, under the Non-Employee
Directors' Restricted Stock Plan, non-employee Directors receive an
annual grant of 100 shares of the Company's Common Stock, par value
$2.75 per share, subject to restrictions. Such grant is made on the
date of the Annual Meeting of Stockholders. The restrictions on such
stock shall lapse in 25% installments on the anniversary date of each
grant or shall lapse in total upon the Director's retirement at age 70
or the Director's ceasing to serve due to death or disability.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1994, the following Directors served as members of the
Compensation and Benefits Committee: S. A. Minter, Chair, J. W.
Connolly, P. E. Lego, M. A. McKenna and L. Wyse.
The Company has Credit Agreements totalling $300 million with a group
of banks. Each participating bank is compensated with a commitment fee
of 1/8 of 1% on its respective commitment amounts. The Company also
maintains commercial paper back-up lines with various banks that total
$475 million. Each commercial paper back-up line bank receives a
commitment fee of 1/10 of 1% on its line amount.
Currently, PNC Bank, Pittsburgh, Pennsylvania, the subsidiary of PNC
Bank Corp., of which Messrs. Davidson and Simmons are Directors,
provides a commitment of $30 million under the Credit Agreement and a
commercial paper back-up line of $130 million. Mellon Bank, N.A.,
Pittsburgh, Pennsylvania, of which Mr. Connolly is a Director, provides
a commitment of $40 million under the Credit Agreement and a commercial
paper back-up line of $130 million. Society National Bank, Cleveland,
Ohio, the subsidiary of KeyCorp (formerly Society Corporation), of
which Mr. Minter is a Director, provides a commitment of $40 million
under the Credit Agreement and a commercial paper back-up line of $50
million. At some points during 1994, a maximum of $15 million in
borrowings from PNC Bank Corp. were outstanding under the Credit
Agreements, but no amounts were outstanding under the commercial paper
back-up line arrangement. There were no amounts outstanding from
either Mellon Bank, N.A., or Society National Bank during 1994 under
the Credit Agreements or the commercial paper back-up line arrangement.
<PAGE> 25
The Company has, since 1977, retained Wyse Advertising, Inc., of
which Ms. Wyse is the President and a principal stockholder. Wyse
Advertising plans, creates, writes and designs media communications at
commission rates and billing practices which are comparable to such
rates and practices charged by non-affiliated firms. During 1994, the
Company paid aggregate commissions of $376,205 to Wyse Advertising.
LIFE INSURANCE AND RELATED BENEFIT PLANS
The Company maintains a program composed of Split Dollar Life Insurance
Plans and Supplemental Death Benefit Plans for employees on the
executive payroll of the Company and its subsidiaries, as well as
non-employee Directors, which provides death benefits to beneficiaries
of those individuals. There were 160 eligible employees on December
31, 1994, and 122 were participating. Seven non-employee Directors were
also participating. The plans are under the general supervision of the
Compensation and Benefits Committee of the Board. Continuation of the
plans beyond retirement requires the Committee's approval. The costs
for the Split Dollar Life Insurance Plans are shared by the Company and
the participants. Each year an employee participant pays a premium
based on age and amount of individual coverage, which is approximately
twice annual salary. Each year Director participants pay a premium
based on age and amount of individual coverage. The Company pays all
additional premiums and expects to receive proceeds approximately equal
to its investment in the policy through the total coverage exceeding
the participant's individual coverage. The Supplemental Death Benefit
Plans provide for payments to a deceased participant's beneficiaries
over a period of years.
RETIREMENT PROGRAMS
A non-contributory Pension Plan is maintained for employees who are not
represented by a recognized union, including Officers of the Company
and its subsidiaries. On December 31, 1994, all 3,481 eligible
employees of the Company and its subsidiary companies were
participating in the Pension Plan.
The Company also maintains an unfunded Short Service Supplemental
Retirement Plan for certain management employees whose commencement of
service with the Company occurred after the employee had acquired
experience of considerable value to the Company and who will have less
than 32 years of service at normal retirement.
The following table illustrates maximum annual benefits--including
any supplemental payment described above but before being reduced by
the required offset--at normal retirement date (age 65) on the
individual life annuity basis for the indicated levels of final average
annual salary and various periods of service.
<PAGE> 26
PENSION PLAN TABLE
_______________________________________________________________________
Annual Pension Benefit
for Years of Service Indicated
_________________________________________________________
Average
Annual Salary 15 20 25 35 40
_______________________________________________________________________
$100,000 . . $ 34,000 $ 45,300 $ 55,000 $ 59,500 $ 68,000
150,000 . . 51,000 68,000 82,500 89,300 102,000
200,000 . . 68,000 90,700 110,000 119,000 136,000
250,000 . . 85,000 113,300 137,500 148,800 170,000
300,000 . . 102,000 136,000 165,000 178,500 204,000
350,000 . . 119,000 158,700 192,500 208,300 238,000
400,000 . . 136,000 181,300 220,000 238,000 272,000
450,000 . . 153,000 204,000 247,500 267,800 306,000
500,000 . . 170,000 226,700 275,000 297,500 340,000
550,000 . . 187,000 249,300 302,500 327,300 374,000
600,000 . . 204,000 272,000 330,000 357,000 408,000
650,000 . . 221,000 294,700 357,500 386,800 442,000
700,000 . . 238,000 317,300 385,000 416,500 476,000
The 1994 salaries, projected service to age 65, and estimated annual
retirement benefits on the individual life form of annuity, assuming
continuation of their December 1994 salaries until age 65 for each of
the individuals in the Summary Compensation table, are as follows:
ESTIMATED ANNUAL RETIREMENT BENEFITS
Years of
Service at Years of Estimated Annual
1994 Year-End Service Retirement Benefits
Name Salary 1994 at Age 65 at Age 65
__________________________________________________________________________
G. A. Davidson, Jr. . $564,400 28 37 $354,090
R. R. Gifford . . . . 221,100 32 42 161,340
D. P. Hunt . . . . . . 266,200 31 43 190,895
L. D. Johnson . . . . 307,100 36 39 187,955
L. J. Timms, Jr. . . . 266,200 31 38 168,615
__________________________________________________________________________
The Company also maintains a Supplemental Retirement Benefit Plan
under which payments may be made, at the sole discretion of the
Compensation and Benefits Committee of the Board, to individuals
comprising the executive payroll. As of December 31, 1994, there were
160 potentially eligible employees. The decision to grant a
Supplemental Retirement Benefit is based on a review of the retiring
employee's total available benefits. Payments under such Plan during
1994 amounted to $311,100. The maximum annual supplemental annuity
under this Plan is 10% of an individual's final average annual salary.
Assuming continuation of their December 1994 salaries until age 65, the
five individuals named in
<PAGE> 27
the Summary Compensation table would be eligible to receive the
following maximum annual supplemental retirement benefits:
Mr. Davidson, $56,800; Mr. Gifford, $23,410; Mr. Hunt, $26,810;
Mr. Johnson, $29,025; and Mr. Timms, $26,810.
The benefits described above have not been reduced by the limitations
imposed on qualified plans by the Internal Revenue Code. As permitted
by the Code, the Board of Directors has adopted a policy whereby
supplemental payments may be made, as necessary, to maintain the
benefit levels earned under the benefit plans.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Based on the Company's review of copies of all Section 16(a) forms
filed by the Officers and Directors of the Company, the Company
believes that in 1994, all filing requirements applicable to its
Officers and Directors were complied with, except that one report
covering a 417-share sale transaction for Mr. Timms was filed late.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Price Waterhouse has audited the accounts of the Company and its
subsidiaries since 1943. On recommendation of the Audit Committee, the
Board of Directors has, subject to ratification by the stockholders,
appointed Price Waterhouse to audit the accounts of the Company and its
subsidiaries for the fiscal year 1995. Audit fees to Price Waterhouse
in 1994 incurred by the Company and its subsidiaries were approximately
$1,086,900. A representative of Price Waterhouse will be present at
the Meeting to respond to appropriate questions and will have an
opportunity to make a statement if he or she desires to do so.
Accordingly, the following resolutions will be offered at the Meeting:
RESOLVED, That the appointment, by the Board of Directors of the
Company, of Price Waterhouse to audit the accounts of the Company and
its subsidiary companies for the fiscal year 1995, effective upon
ratification by the stockholders be, and it hereby is, ratified; and
FURTHER RESOLVED, That a representative of Price Waterhouse shall
attend the next Annual Meeting and any special meetings of stockholders
that may be held in the interim.
VOTE NEEDED FOR APPOINTMENT OF INDEPENDENT ACCOUNTANTS
An affirmative vote of the holders of a majority of the Company's
Common Stock, represented in person or by proxy and entitled to vote at
the Meeting, is necessary for ratification. If the stockholders do not
ratify the appointment of Price Waterhouse, the selection of
independent accountants will be reconsidered by the Audit Committee and
the Board of Directors.
<PAGE> 28
BOARD RECOMMENDATION
The Board recommends that stockholders vote FOR Proposal 2, and the
accompanying proxy will be so voted, unless a contrary specification is
made.
PROPOSAL 3
STOCKHOLDER'S PROPOSAL CONCERNING NON-EMPLOYEE RETIREMENT PLANS
Mr. Kenneth Steiner of 14 Stoner Avenue, Great Neck, New York, who owns
389 shares of the Company's Common Stock has informed management that
he will propose the resolution set forth below at the Annual Meeting.
THE STOCKHOLDER'S PROPOSAL
NON-EMPLOYEE RETIREMENT PLANS RESOLUTION
"RESOLVED, That the shareholders assembled in person and by proxy,
recommend (i) that all future non-employee directors not be granted
pension benefits and (ii) current non-employee directors voluntarily
relinquish their pension benefits."
THE STOCKHOLDER'S SUPPORTING STATEMENT
Aside from the usual reasons, presented in the past, regarding "double
dipping", that is outside (non-employee) directors who are in almost
all cases amply rewarded with their pension at their primary place of
employment, and in many instances serving as outside pensioned
directors with other companies, there are other more cogent reasons
that render this policy as unacceptable.
Traditionally, pensions have been granted in both the private and
public sectors for long term service. The service component usually
represents a significant number of hours per week. The practice of
offering pensions for consultants is a rarity. Outside directors'
service could logically fit the definition of consultants and pensions
for this type of service is an abuse of the term.
But more importantly, outside directors, although retained by
corporate management, namely the C.E.O., are in reality representatives
of shareholders. Their purpose is to serve as an impartial group to
which management is accountable. Although outside directors are
certainly entitled to compensation for their time and expertise,
pensions have the pernicious effect of compromising their impartiality.
In essence, pensions are management's grants to outside directors to
insure their unquestioning loyalty and acquiescence to whatever policy
management initiates, and at times, serving their own self interests.
Thus, pensions become another device to enhance and entrench
management's controls over corporate policies while being accountable
only to themselves. As a founding member of the Investors Rights
Association of America I feel this practice perpetuates a culture of
corporate management "cronyism" that can easily be at odds with
shareholder and company interest.
<PAGE> 29
A final note in rebuttal to management's contention that many
companies offer their outside directors pensions, so they can attract
and retain persons of the highest quality. Since there are also
companies that do not offer their outside directors pensions, can
management demonstrate that those companies that offer pensions have a
better performance record then their non-pensioned peers? In addition,
do we have any evidence of a significant improvement in corporate
profitability with the advent of pensions for outside directors?
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION.
MANAGEMENT'S COMMENTS
The best interests of the Company and its shareholders are served by
having high caliber, talented and experienced individuals serving as
outside Directors. To attract and retain these highly-sought-after
individuals, the Company must provide a competitive total compensation
package for its outside Directors. Retirement benefits are a common
element of Director compensation packages at large corporations. The
Conference Board reports that for companies similar in size to CNG by
sales, 75% of the companies that it surveyed provided retirement
benefits for their outside Directors.
The Company has determined that payment of annual retainers to
outside Directors who have served a minimum of four years and who agree
to remain available to consult with management after their retirement
from the Board is appropriate. This program, and other programs which
are described elsewhere in this Proxy Statement, provide an incentive
to the Board to remain long enough to gain experience and knowledge of
the Company's business, and to remain available after retirement. The
benefits to which outside Directors are entitled recognize the
ever-increasing time commitment, diligence and risks associated with
Board service. For these reasons, we unanimously recommend a vote
against this proposal.
VOTE NEEDED FOR APPROVAL OF THE PROPOSAL
Approval of this proposal requires an affirmative vote by the holders
of the majority of the shares present in person or represented by proxy
and entitled to vote. An abstention, broker non-vote or vote withheld
will have the same effect as a vote against this proposal.
BOARD RECOMMENDATION
The Board recommends that stockholders vote AGAINST Proposal 3, and the
accompanying proxy will be so voted, unless a contrary specification is
made.
<PAGE> 30
PROCEDURE FOR SUBMISSION OF 1996 STOCKHOLDER PROPOSALS
Proposals by stockholders for inclusion in the 1996 Annual Meeting
Proxy Statement must be received by the Corporate Secretary,
Consolidated Natural Gas Company, CNG Tower, 625 Liberty Avenue,
Pittsburgh, Pennsylvania 15222-3199, prior to December 2, 1995. All
such proposals are subject to the applicable rules and requirements of
the Securities and Exchange Commission.
OTHER BUSINESS
The Board of Directors does not intend to bring any business before the
Meeting other than that listed in the foregoing Notice and is not aware
of any business intended to be presented to the Meeting by any other
person. Should other matters properly come before the Meeting, the
persons named in the accompanying proxy will vote said proxy in such
manner as they may, in their discretion, determine.
LAURA J. MCKEOWN
Laura J. McKeown
Secretary
March 22, 1995
NOTE: YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN AND RETURN
YOUR PROXY CARD, OR ATTEND THE MEETING AND VOTE IN PERSON.
<PAGE> 31
(FORM OF PROXY - SIDE 1)
CNG CONSOLIDATED NATURAL GAS COMPANY
PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS MAY 16, 1995.
P The undersigned hereby appoints G.A. Davidson, Jr., L.D. Johnson and S.E.
Williams, and each or any of them, proxies with full power of substitution
R to vote the stock of the undersigned, as directed hereon, at the Annual
Meeting of Stockholders of CONSOLIDATED NATURAL GAS COMPANY to be held at
O the Sheraton Gateway Hotel, Atlanta Airport, 1900 Sullivan Road, College
Park, Georgia 30337, on Tuesday, May 16, 1995, at 9:00 a.m. (EDT), and at
X any adjournment thereof, and, in their discretion, on any other matters
that may properly come before the Meeting.
Y
(change of address)
ELECTION OF DIRECTORS
_____________________________
Nominees: J.W. Connolly, G.A. Davidson, Jr.,
L.D. Johnson and R.P. Simmons
_____________________________
_____________________________
_____________________________
(If you have written in the
above space, please mark the
"Change of Address" box on
the reverse side of this
card.)
PLEASE SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE
REVERSE SIDE. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH YOUR INSTRUCTIONS, OR, IF YOU GIVE NO INSTRUCTIONS, THIS PROXY WILL
BE VOTED FOR ITEMS 1 and 2 AND AGAINST ITEM 3.
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/ SEE REVERSE /
/ SIDE /
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<PAGE> 32
(FORM OF PROXY - SIDE 2)
Please mark your SHARES IN YOUR NAME REINVESTMENT SHARES
/x/ votes as in this
example.
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 2. Ratification
Directors / / / / of Price / / / / / /
(see reverse) Waterhouse
as indepen-
dent account-
ants.
For, except vote withheld
from the following nominee(s):
______________________________
FOR AGAINST ABSTAIN
3. Adoption of a
shareholder-proposed / / / / / /
resolution.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR ITEMS 1 AND 2
AND AGAINST ITEM 3.
Change
of / /
Address
Attend
Meeting / /
(no ticket
required)
SIGNATURE(S) ______________________________________ DATE _______________
SIGNATURE(S) ______________________________________ DATE _______________
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such. If signing on behalf of a
corporation, please sign the full corporate name by authorized officer.
