PROVIDENCE ENERGY CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JANUARY 19, 1995
The annual meeting of the shareholders of Providence Energy
Corporation will be held at the Inn at the Crossings, 800 Greenwich
Avenue, Warwick, Rhode Island, on Thursday, January 19, 1995 at 10
o'clock a.m., for the following purposes:
(1) To elect four directors for terms expiring at the time
of the 1998 annual meeting.
(2) To transact such other business as may properly come
before the meeting.
Only shareholders of record at the close of business on
December 2, 1994 will be entitled to notice of and to vote at the
annual meeting.
Alycia L. Goody, Secretary
Providence, Rhode Island
December 19, 1994
IF YOU ARE UNABLE TO ATTEND THE ANNUAL MEETING IN PERSON, YOU
ARE URGED TO EXECUTE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED.
PROVIDENCE ENERGY CORPORATION
PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
JANUARY 19, 1995
This proxy statement has been prepared in connection with the
solicitation on behalf of the Board of Directors of Providence
Energy Corporation (the "Corporation") of proxies in the
accompanying form to be used at the annual meeting of the
shareholders of the Corporation to be held January 19, 1995. The
cost of such solicitation will be born by the Corporation.
Solicitation of proxies will be by mail, except for some personal
solicitations which may be made by regular officers and employees
of the Corporation, without special compensation. Any shareholder
giving a proxy will have the right to revoke it at any time prior
to the voting thereof, by giving the Secretary notice in writing of
such revocation. Any shareholder may also revoke his or her proxy
in person by so notifying the Secretary at the annual meeting.
Unless a proxy received by the Board of Directors is so revoked,
the shares represented by such proxy will be voted at the annual
meeting in accordance with the specifications made thereon.
The address of the principal offices of the Corporation is 100
Weybosset Street, Providence, Rhode Island 02903. The approximate
date upon which this proxy statement and related proxies are first
to be sent to shareholders is December 19, 1994.
VOTING AT MEETING
Only shareholders of record at the close of business on
December 2, 1994 will be entitled to notice of and to vote at the
annual meeting, and each such shareholder will be entitled to one
vote for each share registered in such shareholder's name. On
December 2, 1994, there were 5,602,156 shares of the common stock
of the Corporation outstanding and entitled to be voted at the
annual meeting.
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, with the
terms of office of each class ending in successive years. The
terms of office of four of the present directors, Mrs. Dorothy G.
Kramer and Messrs. Gilbert R. Bodell, Jr., Robert P. Freeman and
Louis R. Hampton, will expire at the time of the 1995 annual
meeting, and Messrs. Freeman and Hampton and Mrs. Kramer are not
standing for reelection. Accordingly, four directors are to be
elected at the annual meeting, for terms expiring at the 1998
annual meeting.
It is intended that stock in respect of which proxies are
given pursuant to this solicitation will be voted for the election
of Mrs. M. Anne Szostak and Messrs. Gilbert R. Bodell Jr., Paul F.
Levy and W. Edward Wood as members of the Board of Directors for
terms expiring at the time of the 1998 annual meeting. In the
event that any of such nominees should become unavailable for
election, which is not now expected, a substitute nominee or
nominees may be designated by the Board of Directors. Cumulative
voting is not permitted in the election of directors.
Dr. Diane M. Disney and William W. Bennett, presently
directors of the Corporation with terms of office expiring at the
time of the 1997 annual meeting, have submitted their resignations
effective upon the adjournment of the 1995 annual meeting. In
accordance with the Corporation's bylaws, the Board has elected
Mrs. Kramer to fill the vacancy to be created by Mr. Bennett's
resignation, to serve for the unexpired portion of Mr. Bennett's
term. At the present time the Board has no plans for filling the
vacancy to be created by Dr. Disney's resignation, although it may
elect a successor at some time subsequent to the annual meeting.
Certain information with respect to the nominees to be
presented at the annual meeting and the directors whose terms of
office will continue after the annual meeting is as follows:
<PAGE>
Name and Age Principal Occupation
Gilbert R. Bodell,Jr. .....(64) President, Frontier Manufacturing
Company (textiles);former Vice
[Picture of Mr. Bodell] President, Valley Lace Co. and
Esten Dyeing and Finishing Co.,
Inc.
Director Since(1) Expiration of Term
1980 1995
Name and Age Principal Occupation
James H. Dodge ...........(54) Chairman since January, 1992 and
President and Chief Executive
Officer of the Corporation since
[Picture of Mr. Dodge] August, 1990; from 1984
through August, 1990: President
and Chief Executive Officer of
Vermont Gas Systems, Inc. and
affiliated companies
Director Since(1) Expiration of Term
1991 1997
<PAGE>
Name and Age Principal Occupation
John H. Howland ...........(48) President and Chief Operating
Officer, Original Bradford Soap
[Picture of Mr. Howland] Works, Inc.
Director Since(1) Expiration of Term
1993 1996
Name and Age Principal Occupation
Douglas H. Johnson .......(51) Since October, 1991: Vice
President and Managing Partner,
Van Leesten & Johnson, Inc.
[Picture of Mr. Johnson] (business and urban planning
consultants); from 1980 to
October, 1991: President and
Chief Executive Officer, Peerless
Precision, Inc. (aerospace
manufacturing company)
Director Since(1) Expiration of Term
1993 1996
Name and Age Principal Occupation
Dorothy G. Kramer ........(69) Retired Senior Vice President,
Treasurer and Corporate Secretary,
Taco, Inc. (manufacturers of
[Picture of Mrs. Kramer] pumping, heat transfer and
hydronic control equipment)
Director Since(1) Expiration of Term
1976 1995
Name and Age Principal Occupation
Paul F. Levy..............(44) Since February, 1992: Visiting
Lecturer, Massachusetts Institute
of Technology; from 1987 to 1992:
[Picture of Mr. Levy] Executive Director, Massachusetts
Water Resources Authority (a
public authority)
Director Since(1) Expiration of Term
Name and Age Principal Occupation
Romolo A. Marsella .......(53) President, Marsella Development
Corporation (real estate
[Picture of Mr. Marsella] development)
Director Since(1) Expiration of Term
1993 1996
Name and Age Principal Occupation
M. Anne Szostak............(44) Since April, 1994: Senior Vice
President, Fleet Financial Group;
from 1991-1994: Chairman,
[Picture of Ms. Szostak] President and Chief Executive
Officer, Fleet Bank Maine; and
from 1988-1991: Vice
President, Fleet Financial Group
Director Since(1) Expiration of Term
Name and Age Principal Occupation
Kenneth W. Washburn.......(57) Chairman and President, Union
Wadding Company (manufacturers of
[Picture of Mr. Washburn] non-woven textiles)
Director Since(1) Expiration of Term
1975 1997
Name and Age Principal Occupation
W. Edward Wood............(53) Since May 1991: President, BDS
Management Group (management and
consulting services to a variety
of private businesses); from
November, 1990 to May, 1991: Chief
[Picture of Mr. Wood] of Staff to Governor-elect and
Governor of Rhode Island; from
January to November, 1990: Chief
of Staff, Phoenix Associates III
(private investment group); and
from October 1984-January 1990:
Principal Consultant, Telesis Inc.
(corporate strategy consulting
firm)
Director Since Expiration of Term
(1) The dates before 1981 set forth in this table reflect the
years in which certain of the directors were elected
directors of The Providence Gas Company ("Providence Gas"),
which became a wholly-owned subsidiary of the Corporation on
February 1, 1981.
None of the directors' employers (other than Providence Gas)
is an affiliate of the Corporation.
Except as noted in the foregoing table, all of the directors
have been engaged in their present principal occupations in the
same or similar capacities during the past five years.
<PAGE>
The Board of Directors held a total of 11 meetings during
the fiscal year ended September 30, 1994. The Board has an Audit
Committee, consisting of Messrs. Bodell and Marsella, Dr. Disney
and Mrs. Kramer. The Audit Committee has responsibility for
overseeing the establishment and maintenance of an effective
financial control environment, for overseeing the procedures for
evaluating the system of internal accounting control, and for
evaluating audit performance. The Board has an Executive
Committee, consisting of Messrs. Bennett, Bodell, Dodge, Hampton,
Howland and Washburn and Mrs. Kramer. The Executive Committee is
generally authorized to exercise all of the powers of the Board
between meetings of the Board, with certain exceptions. The Board
also has a Compensation Committee, consisting of Messrs.
Bennett, Howland, Johnson and Washburn. The Compensation
Committee makes recommendations to the Board with respect to the
compensation to be paid to the Corporation's executive officers.
Additionally, the Board has a Nominating Committee, consisting of
Messrs. Hampton, Howland, Johnson and Marsella. The Nominating
Committee identifies possible candidates and nominates new
directors subject to approval by the Board in accordance with the
bylaws. The Nominating Committee will consider nominees recommended
by shareholders. Suggestions may be directed to the Committee in
care of the Secretary of the Corporation at its principal offices.
The Audit Committee held two meetings during the fiscal year ended
September 30, 1994. During such fiscal year, the Executive
Committee held no meetings, the Compensation Committee held three
meetings and the Nominating Committee held one meeting. Each
director, with the exception of Dr. Disney and Mr. Freeman, who
were precluded from attending certain meetings due to scheduling
conflicts, attended at least 75 percent of the meetings of the
Board of Directors and the committees upon which he or she served.
The members of the Board of Directors of the Corporation and
of the Executive, Audit and Compensation Committees of the Board
also constitute the Board of Directors of Providence Gas and the
corresponding committees of that board. The directors of the
Corporation (who are also directors of Newport America Corporation,
another wholly-owned subsidiary of the Corporation) receive annual
retainers of $7,000 (except for Mr. Dodge) plus $500 for attendance
at each meeting or set of concurrent meetings of the boards of
directors of the three corporations. The chairmen of the various
committees receive an additional $500 annually for serving in such
capacity. Members of committees of the several boards (other than
members who are full-time employees of the Corporation or of
Providence Gas) receive $400 for attendance at each meeting or set
of concurrent meetings of such committees.<PAGE>
Directors who are not full-time employees of the Corporation
are awarded stock options annually on the first business day of
each calendar year, the number of shares of the Corporation's
common stock covered by such options being determined, in the case
of each director, by dividing his or her compensation for services
as a director during the preceding year by the closing trading
price of the shares on the American Stock Exchange on the last
trading day of the preceding year. The closing price on the next
business day is the exercise price of the option. The term of each
option is 10 years, but no option is exercisable during the first
year following its date of grant.
Options for an aggregate of 7,117, 8,017 and 7,193 shares of
common stock were granted during fiscal years 1994, 1993 and 1992,
respectively, to the Corporation's directors. The option prices
were $19.00, $16.375 and $17.125 per share, respectively.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Corporation and Providence Gas have established lines of
credit with five banks, including Fleet Bank. M. Anne Szostak, a
nominee for director, is an officer of Fleet Financial Group, the
parent of Fleet Bank. The highest outstanding borrowings during the
year ended September 30, 1994 from Fleet Bank under the lines of
credit and under additional credit facilities were $12 million.
The terms of such lines of credit and of the borrowings under such
additional credit facilities were comparable to those which would
have been obtained in arm's length transactions.
EXECUTIVE COMPENSATION
The following sets forth the compensation paid by the Corporation
to the Chief Executive Officer and the four other most highly
compensated executive officers of the Corporation for services rendered
during the last three fiscal years.
Summary Compensation Table
Annual Compensation
(a) (b) (c) (d) (e)
Name Other
and Annual
Principal Compen-
Position Year Salary($) Bonus($)(1) sation($)
James H. Dodge 1994 $243,679 $44,142 0
Chairman, 1993 $226,486 $44,251 0
President and 1992 $210,088 0
Chief Executive
Officer
Robert W. Owens 1994 $140,051 $24,426 0
Vice President 1993 $131,398 $26,523 0
Operations 1992 $121,590 0
James DeMetro 1994 $140,029 $24,426 0
Vice President 1993 $128,959 $26,382 0
Energy 1992 $100,000 0
Services
William D. Mullin 1994 $121,591 $16,678 0
Vice President 1993 $115,700 $19,191 0
Corporate Relations 1992 $108,353 0
Bruce G. Wilde 1994 $100,518 $14,721 0
Vice President 1993 $ 98,845 $16,104 0
Human Resources 1992 $ 89,454 0
<PAGE>
Long Term Compensation
Awards Payouts
(a) (f) (g) (h) (i)
Name Restricted Securities
and Stock Underlying LTIP All Other
Principal Award(s) Options/ Payouts Compensation
Position ($)(1) SARs ($) ($)(2) (3)
James H. Dodge $29,428 0 $10,009
Chairman, $29,500 0 $ 9,044
President and 0
Chief Executive
Officer
Robert W. Owens $13,153 0 $ 4,585
Vice President $11,367 0 $ 4,060
Operations 0
James DeMetro $13,153 0 $ 2,182
Vice President $11,307 0 $ 1,652
Energy 3,000 0
Services
William D. Mullin $ 8,981 0 $ 4,931
Vice President $ 8,225 0 $ 4,624
Corporate Relations 0
Bruce G. Wilde $ 7,926 0 $ 4,141
Vice President $ 6,902 0 $ 3,891
Human Resources 0
(1) Represents the value of cash awards made (column (d)) and
restricted stock awards to be made (column (f)) under the
Corporation's 1992 Performance and Equity Incentive Plan (the
"Plan"). Because of the Corporation's poor financial results
in 1992, there were no awards for that year. The cash awards
were paid in December 1993 and 1994. The restricted stock
awards for 1993 were paid on March 1, 1994 and, for 1994,
will be awarded in March 1995 in the form of shares of common
stock of the Corporation valued at the average of the closing
prices for such shares on the American Stock Exchange on the
last five trading days of February. The stock portion of the
awards will not vest until the expiration of five years from
the date of grant, and each grant is subject to forfeiture in
the event that the recipient is not employed by the
Corporation or a subsidiary throughout the five-year period.
Notwithstanding, earlier vesting may occur at the discretion
of the Board of Directors and will occur upon the happening
of certain events, including the termination of the
recipient's employment by reason of his or her death or
disability, or a "change in control" of the Corporation, as
defined in the Plan.
(2) In accordance with transitional provisions of the executive
officer compensation disclosure rules adopted by the
Securities and Exchange Commission, amounts of "All Other
Compensation" are excluded for 1992.
(3) Consists of (i) premiums paid under a group life insurance
plan for insurance on officers' lives and attributable to
term life insurance coverage, and (ii) contributions to the
Corporation's Voluntary Investment Plan. Such premiums and
contributions for fiscal year 1994 were as follows:
<PAGE>
Voluntary
Life Insurance Premiums Investment Plan
Mr. Dodge $5,472 $4,537
Mr. Owens $2,187 $2,399
Mr. DeMetro $2,182 0
Mr. Mullin $1,884 $3,047
Mr. Wilde $1,560 $2,581
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal
Year-End Option/SAR Values
No options were exercised during the last fiscal year by any
of the executive officers named in the Summary Compensation
Table. No stock appreciation rights have been issued by the
Corporation. The following table reflects the value of
unexercised options held by the named executive officers at
fiscal year end:
(a) (b) (c)
Shares Acquired
Name on Exercise(#) Value Realized($)
Mr. Dodge None N/A
Mr. Owens None N/A
Mr. DeMetro None N/A
Mr. Mullin None N/A
Mr. Wilde None N/A
(1) All options are exercisable.
<PAGE>
(a) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
FY-End(#) FY-End($)
Exercisable/ Exercisable/
Name Unexercisable(1) Unexercisable(1)
Mr. Dodge 15,000 $13,125
Mr. Owens 5,000 $ 3,625
Mr. DeMetro 3,000 $10,125
Mr. Mullin 3,000 $ 2,000
Mr. Wilde 2,000 $ 1,188
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Executive Compensation Design
The Corporation's compensation policies are designed to
provide competitive levels of compensation integrating pay with the
Corporation's performance goals, reward above average corporate
performance, recognize individual initiatives and achievements, and
assist the Corporation in attracting and retaining qualified
executives in the competitive market in which the Corporation
operates.
The Corporation's executive compensation philosophy embodies
the following principles:
-- utilizes significant at-risk compensation to meet market
pay norms
-- evaluates success through a balance of ratepayer,
shareholder and company criteria
-- utilizes a combination of internal and external performance
criteria to evaluate success
-- limits executive salary to market norms
-- promotes executive stock ownership and retention
-- promotes shared accountability and team success while
recognizing individual contribution.
Compensation for officers consists of two components: base
salary and potential for awards of cash and common stock in
accordance with the Corporation's Performance and Equity Incentive
Plan, which was approved by the directors in 1992 and by the
shareholders at the 1993 annual meeting. The Corporation's current
compensation philosophy does not include the award of stock options
to officers, the last such grant having been made in 1992.
The Corporation's target total direct compensation potential,
consisting of base salary, cash and stock-based variable pay is
designed to achieve external market norms for gas utilities of
comparable scope and complexity. Total direct compensation is
designed to exceed market norms when the Corporation's results
surpass target levels. The Corporation's external gas utility
market "model" consists of:
-- gas utilities which are investor-owned and freestanding
-- gas utilities of a revenue size primarily spanning
approximately $75 to $300 million
-- gas utilities which are headquartered primarily in the
Northeast region of the United States.
The compensation of the Corporation's officers is established
by the Board of Directors based on recommendations of the
Compensation Committee (the "Committee").
Base Salary
The base salaries of the Corporation's officers are capped at
levels intended to reflect the approximate medians of salaries
payable to the officers' peers in positions of comparable
responsibility within the natural gas distribution industry.
Commencing in fiscal year 1995, officers will be compensated within a
fixed compensation band, based on their contributions to the
Corporation's performance goals rather than on their individual grade
levels, thereby permitting flexibility in changing officers'
assignments without the attendant problems associated with movement
between grade levels.
Incentive Compensation
Under the Corporation's Performance and Equity Incentive Plan
annual awards in the forms of cash and common stock of the
Corporation are paid as compensation to officers based on
individual and corporate performance as measured against
established goals and objectives. There are three primary
categories for the granting of awards under the Plan, namely
ratepayer interests, shareholder interests and Committee/Management
discretion. The first two categories, ratepayer interests and
shareholder interests, are measured quantitatively by reference to
the Corporation's performance (as described below). There are also
three levels of award participation (threshold, target and maximum)
based on achievement of performance goals of the Corporation.
Included within the ratepayer interests category, which is
weighted at 40 percent, are the following two performance criteria,
which have been assigned equal weight:
-- actual three-year average gas cost per Mcf versus regional
peer group (20 percent)
-- actual three-year operations and maintenance expense per
customer versus regional peer group (20 percent).
Included within the shareholder interests category, which is
weighted at 40 percent, are the following two performance criteria,
which have been assigned equal weight:
-- actual annual net income as compared to budget on a one-
year basis, absent normalization for the effect of weather
(20 percent)
-- actual annual return on equity versus national peer group
(20 percent).
The third category, Committee/Management discretion, is
weighted at 20 percent and is an annual assessment of the
individual contribution of each officer. The Committee makes
that assessment with regard to Mr. Dodge. Mr. Dodge makes that
assessment with regard to the other officers.
The awards made and to be made under the Incentive Plan to
the officers named in the Summary Compensation Table for the 1994
fiscal year are set forth in the Table.
CEO Compensation
Consistent with its approach to the base salary levels for
all other executive officers, the Committee arrived at the fiscal
year 1994 salary for Mr. Dodge by reviewing published market
compensation survey results provided by an independent
compensation consultant. In arriving at his base compensation for
fiscal year 1994, the Committee also considered the substantial
improvement in the Corporation's earnings in fiscal year 1993,
Mr. Dodge's leadership in the development of and progress on a
strategic plan for the Corporation and Providence Gas, and
continued profitability of the Corporation's North Attleboro Gas
Company subsidiary. In addition, incentive compensation
aggregating $73,570 has been or will be paid under the Incentive
Plan to Mr. Dodge as set forth in the Summary Compensation Table,
based on the achievement of established corporate goals for
fiscal 1994. With respect to the specific performance criteria
set forth above, the Corporation's 1994 performance produced the
following results: exceeded targeted performance for net income;
exceeded the threshold but fell short of targeted performance
with respect to gas cost per Mcf and operation and maintenance
expense per customer; and exceeded the threshold but fell short
of the targeted performance with regard to return on equity. The
Committee determined that Mr. Dodge's performance was very
satisfactory and at target level relative to the discretionary
component. Among the factors contributing to this determination
were the significant improvement in the Corporation's profits,
the implementation of the Corporation's strategic business plan
and the display of exemplary leadership skills by Mr. Dodge.
William W. Bennett, Chairman
John H. Howland
Douglas H. Johnson
Kenneth W. Washburn<PAGE>
[To appear above heading of five year graph]
Set forth below is a graph comparing the total returns
(assuming reinvestment of all dividends) of investments in the
Corporation's common stock, the Standard & Poor's Composite Index
of 500 Stocks and Edward D. Jones & Co. Natural Gas Distribution
Index. The graph assumes $100 invested on September 30, 1989 in
the common stock and in each of the indices.
Comparison of Five Year Cumulative Total Return
Providence Energy Corporation, S&P 500 Index and
Edward D. Jones & Co. Natural Gas Distribution Index
[Five Year Performance Graph-- See Form SE]
<PAGE>
Certain Compensation Arrangements
Providence Gas has entered into agreements with certain of
its executive officers, including Messrs. DeMetro, Dodge, Mullin,
Owens and Wilde, pursuant to which each of them is employed by
Providence Gas for an indefinite period, subject to termination
by either party on 30 days' notice to the other. In the case of
termination by Providence Gas of any executive officer, without
cause, that officer will be entitled to continuance of his or her
compensation over the ensuing 12 months.
If following a "Change in Control" there has been a "Change
in Employment Conditions" prior to the exercise by an officer of
his or her termination rights under his or her agreement, or if
the termination of employment of the officer by the Company is
without cause, the officer is entitled to be paid an amount equal
to (i) the aggregate of his or her base compensation paid or
payable with respect to the 36 months of employment next
proceeding the date of termination plus (ii) the aggregate of the
amounts paid or payable under the Corporation's Performance and
Equity Incentive Plan (or such other incentive plan of the
Corporation as may be in effect from time to time) for the three
full fiscal years next preceding the date of termination. Such
amount is payable over the 24 month period next following the
date of termination.
A Change in Control is defined in the agreements as,
generally, any transfer of all or substantially all of the assets
of Providence Gas, certain reorganizations of the Corporation,
and the acquisition by any person of the beneficial ownership of
30 percent or more of the common stock of Providence Gas or the
Corporation. A Change in Employment Conditions is defined in the
agreements as, in general, any substantial change in the nature
of the officer's employment by Providence Gas, including any
substantial change in his or her position, duties,
responsibilities and status with Providence Gas (other than
changes occasioned by his or her retirement, permanent disability
or death), any failure by Providence Gas to increase the
officer's salary at a rate commensurate with the average rate of
increases, from time to time, in the salaries of all of the
officers of Providence Gas, or any relocation of the principal
executive offices of Providence Gas or the officer's place of
employment from the Providence, Rhode Island area.
In each case, the officer's annual compensation under his or
her employment agreement will be established by the Board of
Directors of Providence Gas from time to time, subject to a
minimum equivalent to the previous year's base compensation.
<PAGE>
Retirement Plan
Providence Gas presently has in effect non-contributory
retirement plans for the benefit of its bargaining unit and non-
bargaining unit employees, respectively. The retirement plan for
the non-bargaining unit employees (the "Plan") provides for the
payment of fixed benefits upon normal retirement at age 65 on the
basis of years of service and covered compensation of each
employee. Officers are eligible to participate in the Plan, but
directors are not eligible unless they are otherwise full-time
employees of Providence Gas. Covered compensation includes basic
compensation, and does not include overtime, premium pay or
bonuses. All covered compensation of executive officers for
fiscal year 1994 is included in the Summary Compensation Table
set forth above. Annual retirement benefits are equal to two
percent of the employee's "average pay" (the average of the total
annual compensation during the 36 months immediately preceding
retirement) less one and two-thirds percent of the employee's
primary Social Security benefit, multiplied by the Employee's
years of credited service (not exceeding 30 years), plus one and
one-half percent of the employee's "average pay" times the number
of the employee's years of credited service in excess of 30
years.
Examples of maximum annual full retirement benefits payable
under the Plan to employees, including officers, are set forth in
the table below, and are based on the assumption that an employee
shall have retired at the normal retirement age of 65.
Years of Service
Average Pay 15 20 25 30 35
$ 100,000 .........26,558 35,411 44,264 53,117 60,617
$ 125,000 .........34,058 45,411 56,764 68,117 77,492
$ 150,000 .........41,558* 55,411* 69,263* 83,117* 94,367*
$ 175,000 .........41,558* 55,411* 69,263* 83,117* 94,367*
$ 200,000 .........41,558* 55,411* 69,263* 83,117* 94,367*
$ 225,000 .........41,558* 55,411* 69,263* 83,117* 94,367*
$ 250,000 .........41,558* 55,411* 69,263* 83,117* 94,367*
$ 300,000 .........41,558* 55,411* 69,263* 83,117* 94,367*
$ 350,000 .........41,558* 55,411* 69,263* 83,117* 94,367*
* The maximum permissible compensation limit payable under a
qualified plan in 1994.
For the fiscal year ended September 30, 1994, the years of
service credited for retirement benefits for the individuals
named in the Summary Compensation Table are as follows: James
DeMetro - one year; James H. Dodge - three years; William D.
Mullin - 20 years; Robert W. Owens - 15 years; and Bruce G. Wilde
- - 22 years.
In addition to the Plan discussed above, Providence Gas
maintains a Supplemental Retirement Plan (the "Supplemental
Plan") which, on an unfunded basis, provides for additional
retirement benefits for all executive officers, including those
named in the Summary Compensation Table. In the case of an
officer retiring at age 65, the annual benefits under the
Supplemental Plan are equal to 65 percent of one-third of the
officer's highest total compensation over any consecutive 36
months during the last 120 months of his or her employment, less
(i) the normal retirement benefits payable to the officer under
the Plan described above or under any other retirement plan of
any third party and (ii) the officer's annual Social Security
benefit. A participant who has reached age 60 with at least 10
years of employment by Providence Gas is eligible for early
retirement, in which case, if the officer's early retirement date
falls on or after his or her 62nd birthday and has attained 25
years of credited service, he or she is entitled to receive his
or her full unreduced benefit commencing on his or her actual
retirement date. If the officer's early retirement date falls
prior to his or her 62nd birthday, he or she is entitled to
receive a benefit which is the actuarial equivalent of the
foregoing benefit, commencing on his or her actual retirement
date, plus a temporary annuity, commencing on the later of his or
her retirement and his or her 60th birthday and payable until his
or her 62nd birthday, of an amount equal to his or her Social
Security benefit. If a participant becomes disabled and
thereafter receives monthly disability payments under the
Providence Gas long term disability insurance plan, he or she
will receive no retirement benefits until he or she reaches age
65, at which time benefits will commence to be payable in the
same amount as if the participant had retired at age 65.
<PAGE>
Voluntary Investment Plan
Effective October 1, 1991, the Corporation adopted a
Voluntary Investment Plan (the "Plan") for the non-bargaining
unit employees of the Corporation and its subsidiaries. The Plan
was extended to certain bargaining-unit employees effective
January 1, 1992. Each employee who has attained age 21 and has
earned at least 1,000 hours of service during his or her first 12
months of employment, or during any calendar year thereafter, is
eligible to participate in the Plan.
A participating employee may contribute from one percent to
18 percent of his or her compensation to the Plan, up to the
$9,240 annual maximum currently permitted by the Internal Revenue
Service.
The Corporation will contribute $.40 for each $1.00 contributed
by a participating employee, up to six percent of the employee's
compensation. At the option of the employee, the contributions
are invested in one or more of a variety of funds, including a
fund consisting solely of shares of the Corporation's common
stock.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
On December 2, 1994, to the best of the Corporation's
knowledge, no person (including any "group", as that terms is
used in Section 13(d)(3) of the Securities Exchange Act of 1934)
was the beneficial owner of more than five percent of the
Corporation's outstanding common stock, $1 par value (there being
no other voting securities of the Corporation outstanding).
The following table reflects as of December 2, 1994, the
beneficial ownership of shares of common stock of the Corporation
(ignoring fractional shares) by directors, nominees for director,
and officers of the Corporation (all shares being owned directly,
except as otherwise noted):
Shares Beneficially Owned*
Name of Individual or Shares Subject
Identification of Group Issued Shares to Options**
William W. Bennett .............. 1,171 (1) 4,102
Gilbert R. Bodell, Jr. .......... 1,094 (2) 4,475
James DeMetro ................... 873 3,000
Diane M. Disney ................. 200 none
James H. Dodge .................. 2,793 (3) 15,000
Robert P. Freeman ............... 900 4,660
Louis R. Hampton ................ 13,467 (4) 3,591
John H. Howland ................. 100 702
Douglas H. Johnson .............. 75 687
Dorothy G. Kramer ............... 2,324 4,385
Paul F. Levy..................... 200 none
Romolo A. Marsella .............. 1,256 (5) 682
William D. Mullin ............... 3,388 3,000
Robert W. Owens ................. 1,812 (6) 5,000
M.Anne Szostak................... 100 none
Kenneth W. Washburn ............. 450 4,724
Bruce G. Wilde................... 480 2,000
W. Edward Wood................... 200 none
All Directors, Nominees and Officers
as a Group ...................... 33,461 (7) 58,508
* The beneficial ownership of shares of directors and
officers of the Corporation (including shares subject to options)
in no individual case exceeded one percent of the outstanding
common stock of the Corporation. Such ownership represented in
the aggregate approximately one percent of the outstanding common
stock.
** To the extent exercisable within 60 days.
_____________
(1) Includes 1,138 shares held as custodian for Mr. Bennett's
children.
(2) Includes 792 shares held by Mr. Bodell's wife.
(3) Includes 1,100 shares held by Mr. Dodge's wife.
(4) Includes 7,588 shares held by Mr. Hampton's wife.
(5) Includes 578 shares held by Mr. Marsella's wife as custodian
for a child.
(6) Includes 492 shares held by Mr. Owens' wife as custodian for
their children.
(7) Includes 20,603 shares held directly, and 12,858 shares held
indirectly.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires certain persons, including directors of the Corporation,
to file reports with the Securities and Exchange Commission
reflecting their transactions in shares of the Corporation's
common stock.
During 1993 Raymond F. Allen, who resigned as Vice President
of the Corporation in March 1994, inadvertently failed to file
reports reflecting the reallocation of Company stock in a 401(k)
Plan. Mr. Allen reflected the transaction in his amended Form 5
filed following the end of the current fiscal year.
Romolo A. Marsella, a director of the Corporation,
inadvertently failed to file a Form 4 reflecting the purchase in
January, 1994 of 560 shares as custodian for a child and 560
shares by his wife as custodian for a child. The purchases were
reported in his Form 4 filed in March 1994.
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen, LLP acted as independent public accountants
to audit the books of the Corporation for the fiscal year ended
September 30, 1994. It is expected that a representative of
Arthur Andersen, LLP will be present at the annual meeting with
the opportunity to make a statement, if he or she so desires, and
that such representative will be available to respond to
appropriate questions. No accountants have yet been selected to
audit the books of the Corporation for the fiscal year ending
September 30, 1995; the Board of Directors is currently reviewing
various alternatives in an effort to secure the highest quality
auditing services at the most reasonable costs.
ADDITIONAL INFORMATION
The Corporation will provide without charge to each
shareholder entitled to vote at the annual meeting, on the
written request of any such shareholder, a copy of the
Corporation's annual report to the Securities and Exchange
Commission on Form 10-K for the year ended September 30, 1994.
Requests for copies of such report should be addressed to the
Corporation at 100 Weybosset Street, Providence, Rhode Island
02903, Attention: Investor Relations.
PROPOSALS FOR 1996 ANNUAL MEETING
If a shareholder intending to present a proposal at the 1996
annual meeting (presently anticipated to be held during the month
of January, 1996) wishes to have such proposal included in the
Corporation's proxy statement and form of proxy relating to the
meeting, the shareholder will be required to submit the proposal
to the Corporation not later than August 25, 1995.
OTHER MATTERS
No business other than that set forth in the attached notice
of meeting is expected to come before the annual meeting, but
should any other matters requiring a vote of shareholders arise,
including a question of adjourning the meeting, the persons named
in the accompanying proxy will vote thereon according to their
best judgment in the interest of the Corporation. In the event
any of the nominees for the office of director should withdraw or
otherwise become unavailable for reasons not presently known, the
persons named as proxies will vote for other persons in their
place in which they consider the best interests of the
Corporation.
You are urged to sign and return your proxy promptly to make
certain your shares will be voted at the meeting. You may revoke
your proxy at any time before it is voted.
By Order of the Board of Directors
Alycia L. Goody, Secretary
Dated: December 19, 1994
