PROVIDENCE ENERGY CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
January 18, 1996
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 18, 1996 at 10
o'clock a.m., for the following purposes:
(1) To elect four directors for terms expiring at the time
of the 1999 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 4, 1995 will be entitled to notice of and to vote at the
annual meeting.
ALYCIA L. GOODY, Secretary
Providence, Rhode Island
December 20, 1995
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 18, 1996
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 18, 1996. The
cost of such solicitation will be borne 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 20, 1995.
VOTING AT MEETING
Only shareholders of record at the close of business on
December 4, 1995 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 4, 1995, there were 5,691,825 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 Messrs. John H. Howland, Douglas H. Johnson and
Romolo A. Marsella will expire at the time of the 1996 annual
meeting, and the Executive Committee of the Board of Directors has
nominated Messrs. Howland, Johnson and Marsella for re-election at
the annual meeting, to serve for terms expiring at the 1999 annual
meeting. In addition, the Executive Committee of the Board of
Directors has nominated William Kreykes for election as a director
at the annual meeting, also to serve for a three-year term.
It is intended that stock in respect of which proxies are
given pursuant to this solicitation will be voted for the election
of Messrs. John H. Howland, Douglas H. Johnson, William Kreykes and
Romolo A. Marsella as members of the Board of Directors for terms
expiring at the time of the 1999 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.
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.......(65) Chairman and former President,
Frontier Manufacturing
Company (textiles);former Vice
President, Valley Lace Co. and
Esten Dyeing and Finishing Co.,
Inc.
Director Since(1) Expiration of Term
1980 1998
Name and Age Principal Occupation
James H. Dodge ...........(55) Chairman since January 1992 and
President and Chief Executive
Officer of the Corporation since
August 1990
Director Since(1) Expiration of Term
1991 1997
<PAGE>
Name and Age Principal Occupation
John H. Howland ...........(49) President and Chief Operating
Officer, Original Bradford Soap
Works, Inc.
Director Since(1) Expiration of Term
1993 1996
Name and Age Principal Occupation
Douglas H. Johnson .......(52) Since October 1991: Vice
President and Managing Partner,
Van Leesten & Johnson, Inc.
(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 ........(70) Retired Senior Vice President,
Treasurer and Corporate Secretary,
Taco, Inc. (manufacturers of
pumping, heat transfer and
hydronic control equipment)
Director Since(1) Expiration of Term
1976 1997
Name and Age Principal Occupation
William Kreykes...........(57) President and Chief Executive
Officer, Lifespan Corporation
(health care system)
Director Since(1) Expiration of Term
Name and Age Principal Occupation
Paul F. Levy..............(45) From 1992 to 1995, Visiting
Lecturer, and from September 1995
to present, Adjunct Professor,
Massachusetts Institute of
Technology; from 1987 to 1992:
Executive Director,
Massachusetts Water Resources
Authority (a public authority)
Director Since(1) Expiration of Term
1995 1998
Name and Age Principal Occupation
Romolo A. Marsella .......(54) President, Marsella Development
Corporation (real estate
development)
Director Since(1) Expiration of Term
1993 1996
Name and Age Principal Occupation
M. Anne Szostak............(45) Since April 1994: Senior Vice
President, Fleet Financial Group;
since 1991: Chairman, and from
1991-1994: President and Chief
Executive Officer, Fleet Bank of
Maine; and from 1988-1991: Vice
President, Fleet Financial Group
Director Since(1) Expiration of Term
1995 1998
Name and Age Principal Occupation
Kenneth W. Washburn.......(58) Chairman and President, Union
Wadding Company (manufacturers of
non-woven textiles)
Director Since(1) Expiration of Term
1975 1997
Name and Age Principal Occupation
W. Edward Wood............(54) Since May 1991: President, BDS
Management Group (management and
consulting services to a variety
of private businesses); from
November 1990 to May 1991: Chief
of Staff to Governor-elect and
Governor of Rhode Island; from
January to November 1990: Chief
of Staff, Phoenix Associates III
(private investment group).
Director Since Expiration of Term
1995 1998
(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, 1995.
The Board has a Finance and Audit Committee, formerly called
the Audit Committee, consisting of Mrs. Kramer and Messrs. Bodell,
Levy and Marsella. The Finance and Audit Committee has
responsibility for overseeing the establishment and maintenance of
effective internal financial and audit controls; for recommending
to the Board the engagement of, and thereafter evaluating the
performance of, the Corporation's independent auditors; for making
recommendations to the Board with respect to the maintenance of
adequate working capital; and for monitoring compliance by officers
and employees with the Corporation's code of ethics.
The Board has an Executive Committee, consisting of Messrs.
Bodell, Dodge, Howland, Levy, Washburn and Wood. The Executive
Committee is generally authorized to exercise all of the powers of
the Board between meetings of the Board, with certain exceptions.
The Executive Committee also makes recommendations to the Board
with respect to the nomination of new directors.
The Board also has a Human Resources and Planning Committee,
formerly the Compensation Committee, consisting of Ms. Szostak and
Messrs. Howland, Johnson and Washburn. The Human Resources and
Planning Committee is responsible for ensuring the maintenance by
the Corporation of a human resources system which will attract and
retain high quality and experienced management; for monitoring
compliance by the Corporation's officers and employees with the
highest standards of fairness, honesty and integrity; for approving
salary increases for officers; for overseeing arrangements for and
making recommendations to the Board with respect to management
advancement and succession; and for making recommendations to the
Board with respect to the adoption of, and to monitor the execution
of, a strategic plan for the Corporation.
Lastly, the Board has a Public Policy Committee, consisting of
Messrs. Johnson, Levy, Marsella and Wood, which is responsible for
reviewing and overseeing the implementation of the Corporation's
public policies, regulatory strategy and legislative initiatives.
During the fiscal year ended September 30, 1995, the Finance
and Audit Committee held three meetings; the Executive Committee
held two meetings; the Human Resources and Planning Committee held
one meeting and the Public Policy Committee held one meeting. Each
director attended at least 75 percent of the meetings of the Board
of Directors and of the committees upon which he or she served.
The members of the Board of Directors of the Corporation and
of the Executive, Finance and Audit, Human Resources and Planning
and Public Policy 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.
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 annual 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 8,042, 7,117, and 8,017 shares of
common stock were granted during fiscal years 1995, 1994 and 1993,
respectively, to the Corporation's Directors. The option prices
were $15.625, $19.00, and $16.375 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
director, is an officer of Fleet Financial Group, the parent of
Fleet Bank. The highest outstanding borrowings during the year
ended September 30, 1995 from Fleet Bank under the lines of credit
and under additional credit facilities were $15 million. The terms
of such lines of credit and of the borrowings under such additional
credit facilities were obtained in arm's length transactions.<PAGE>
EXECUTIVE COMPENSATION
The following sets forth the compensation paid by the
Corporation to the Chief Executive Officer and the four other most
highly compensated executive officers of the Corporation for
services rendered during the last three fiscal years.
<PAGE>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name Other Restricted Securities
and Annual Stock Underlying LTIP All Other
Principal Compen- Award(s)Options/PayoutsCompensation
Position Year Salary($) Bonus($)(1) sation($) ($)(1) SARs ($) ($)(2)
James H. Dodge 1995 $248,843 $40,200 0 $26,800 0 $12,401
Chairman, 1994 $243,679 $44,142 0 $29,428 0 $ 9,399
President and 1993 $226,486 $44,251 0 $29,500 0 $ 8,399
Chief Executive
Officer
Robert W. Owens 1995 $142,518 $23,877 0 $10,233 0 $ 7,063
Vice President 1994 $140,051 $24,426 0 $13,153 0 $ 4,410
Operations 1993 $131,398 $26,523 0 $11,367 0 $ 3,722
James DeMetro 1995 $142,518 $23,877 0 $10,233 0 $ 3,719
Vice President 1994 $140,029 $24,426 0 $13,153 0 $ 2,182
Energy 1993 $128,959 $26,382 0 $11,307 0 $ 1,652
Services
William D. Mullin 1995 $121,957 $17,875 0 $ 7,660 0 $ 5,464
Vice President 1994 $121,591 $16,678 0 $ 8,981 0 $ 4,703
Corporate Relations 1993 $115,700 $19,191 0 $ 8,225 0 $ 4,135
Gary S. Gillheeney 1995 $112,311 $18,670 0 $ 8,002 0 $ 4,912
Vice President, 1994 $ 97,694 $17,033 0 $ 9,171 0 $ 2,871
Financial and 1993 $ 80,998 $13,465 0 $ 5,771 0 $ 2,157
Information Services,
Treasurer and
Assistant Secretary
<PAGE>
(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"). The cash awards were paid in December 1993, 1994 and
1995. The restricted stock awards for 1993 were paid on March 1,
1994; the awards for 1994 were paid on April 24, 1995; and the
awards for 1995 will be awarded in March 1996 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
portions 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.
<PAGE>
(2)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 1995 were as follows:
Voluntary Investment
Life Insurance Premiums Plan
Mr. Dodge $7,781 $4,620
Mr. Owens $2,293 $4,770
Mr. DeMetro $2,293 $1,426
Mr. Mullin $1,941 $3,523
Mr. Gillheeney $ 946 $3,966
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal
Year-End Option/SAR Values
No options were exercised during the last fiscal year by any
of the executive officers named in the Summary Compensation
Table. No stock appreciation rights have been issued by the
Corporation. The following table reflects the value of
unexercised options held by the named executive officers at
fiscal year end:
(a) (b) (c) (d) (e)
Value of
Number of Unexercised In-
Unexercised the-Money
Options/ Options/
SARs at SARs at
FY-End(#) FY-End($)
Exercisable/ Exercisable/
Shares Acquired Value Unexercis- Unexercis-
Name on Exercise (#) Realized ($) able(1) able (1)
Mr. Dodge None N/A 15,000 $5,625
Mr. Owens None N/A 5,000 $2,625
Mr. DeMetro None N/A 3,000 $6,375
Mr. Mullin None N/A 3,000 $1,750
Mr. Gillheeney None N/A none N/A
(1) All options are exercisable.
HUMAN RESOURCES AND PLANNING 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 Human Resources and Planning 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.
Officers are 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 thousand cubic
feet (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 in consultation with the Committee 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
1995fiscal year are set forth in the Table.
CEO Compensation
Consistent with its approach to offer competitive
compensation for all executive officers, the Committee arrived at
the fiscal year 1995 salary for Mr. Dodge by reviewing market
compensation survey results provided by an independent
compensation consultant. The Committee also considered Mr.
Dodge's successful efforts in restructuring the Corporation, and
the leadership he provided in the continuing development of a
long-range strategic direction for the Corporation.
In addition, $67,000 has been or will be paid under the
Incentive Plan to Mr. Dodge for 1995 fiscal year results as set
forth in the Summary Compensation Table. The Committee arrived
at this aggregate award by considering the five performance
categories set forth in the Incentive Plan. In respect to fiscal
1995 results, the five performance categories were assessed as
follows: 1) Three-year average gas costs fell between threshold
and target and improved over fiscal 1994's results. 2) Three-
year average operations and maintenance expenses per customer
were approximately on target and improved over fiscal 1994's
results. 3) Net income failed to achieve the 1995 threshold due
to unusually warm weather. 4) One-year return on equity
relative to a national peer group fell between threshold and
target and declined only one point from the previous year. 5)
The Committee evaluated Mr. Dodge's personal results as at target
for the Board discretion component. In reaching this conclusion
the Committee considered the Corporation's ability to control
costs and hence generate sufficient earnings to cover the
dividend despite unusually warm weather, the progress realized in
implementing the Corporation's strategic business plans, and Mr.
Dodge's demonstrated leadership skills. The aggregate fiscal 1995
incentive award for Mr. Dodge represents 27 percent of fiscal
1995 salary or three-quarters of the target incentive award. The
Committee determined Mr. Dodge's fiscal 1995 incentive award
would be divided 60-40 percent between cash compensation and
restricted common stock.
John H. Howland, Chairman
Douglas H. Johnson
M. Anne Szostak
Kenneth W. Washburn<PAGE>
[To Appear above the heading of the 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, 1990 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,
Gillheeney, Mullin and Owens, 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.
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 1995 is included in the Summary Compensation Table
set forth above. Annual retirement benefits are equal to two
percent of the employee's "average pay" (average of the total
annual compensation during the 36 consecutive months in which pay
was the highest out of the last 120 months with the company) 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 ..$26,400 $35,200 $44,000 $52,800 $60,300
$ 125,000 ..$33,900 $45,200 $56,500 $67,800 $77,175
$ 150,000*..$41,400 $55,200 $69,000 $82,800 $94,050
$ 175,000 ..$41,400 $55,200 $69,000 $82,800 $94,050
$ 200,000 ..$41,400 $55,200 $69,000 $82,800 $94,050
$ 225,000 ..$41,400 $55,200 $69,000 $82,800 $94,050
$ 250,000 ..$41,400 $55,200 $69,000 $82,800 $94,050
$ 300,000 ..$41,400 $55,200 $69,000 $82,800 $94,050
$ 350,000 ..$41,400 $55,200 $69,000 $82,800 $94,050
* The maximum permissible compensation which may be taken
into consideration in 1995 in establishing retirement benefits
under a qualified plan.
For the fiscal year ended September 30, 1995, the years of
service credited for retirement benefits for the individuals
named in the Summary Compensation Table are as follows: James
DeMetro - two years; James H. Dodge - four years; Gary S.
Gillheeney - 14 years; William D. Mullin - 21 years; and Robert
W. Owens - 16 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 60th birthday and has attained 25
years of credited service, or has attained age 62, 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 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 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 annual compensation to the Plan, up to
the $9,240 annual maximum currently permitted by the Internal
Revenue Service.
The Corporation will contribute $.50 for each $1.00
contributed by a participating employee, up to six percent of the
employee's annual 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
The stockholder listed below was the beneficial owner of
more than 5% of the outstanding common stock, $1.00 par value, of
the Corporation at the close of business on December 4, 1995.
Name and Address Amount and Nature Percent of
of Beneficial Owner of Beneficial Ownership Class
J.P. Morgan & Co. 414,320 shares, directly 7.3%
Incorporated and through subsidiaries
60 Wall Street
New York, New York 10260
SECURITY OWNERSHIP OF MANAGEMENT
The following table reflects as of December 4, 1995, the
beneficial ownership of shares of common stock of the Corporation
(ignoring fractional shares) by directors, nominees for director,
and executive 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**
Gilbert R. Bodell, Jr. .......... 1,150 (1) 5,288
James DeMetro ................... 2,067 3,000
James H. Dodge .................. 4,707 (2) 15,000
Gary S. Gillheeney .............. 1,602 none
John H. Howland ................. 100 1,565
Douglas H. Johnson .............. 75 1,689
Dorothy G. Kramer ............... 2,490 5,141
William Kreykes ................. 200 none
Paul F. Levy .................... 750 none
Romolo A. Marsella .............. 1,338 (3) 1,533
William D. Mullin ............... 6,242 3,000
Robert W. Owens ................. 3,295 (4) 5,000
M. Anne Szostak ................. 200 none
Kenneth W. Washburn ............. 450 5,657
W. Edward Wood .................. 500 none
All Directors, Nominees and Executive
Officers as a Group ............ 28,027 (5) 49,373
* The beneficial ownership of shares of directors and
executive 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 848 shares held by Mr. Bodell's wife.
(2) Includes 1,100 shares held by Mr. Dodge's wife.
(3) Includes 619 shares held by Mr. Marsella's wife as custodian
for a child and 619 shares held by Mr. Marsella as custodian
for a child.
(4) Includes 528 shares held by Mr. Owens' wife as custodian for
their children.
(5) Includes 21,790 shares held directly, and 6,237 shares held
indirectly.
<PAGE>
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires certain persons, including directors and executive
officers of the Corporation, to file reports with the Securities
and Exchange Commission reflecting their transactions in shares
of the Corporation's common stock.
Bruce G. Wilde, an executive officer of the Corporation,
inadvertently failed to file a Form 4 reflecting the partial
liquidation in July 1995 of 100 shares held for his account in
the Corporation's Employee Stock Purchase Plan. The sale was
reported in his Form 4 filed in September 1995.
William W. Bennett, who resigned as a director of the
Corporation in January 1995, inadvertently failed to file a Form
4 reflecting the sale of 438.0979 shares then held by him
individually and as custodian for his children. Mr. Bennett
reflected the transactions in his Form 5 filed following the end
of the fiscal year.<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, 1995. 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 30,1996; 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, 1995.
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 1997
annual meeting (presently anticipated to be held during the month
of January, 1997) 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, 1996.
<PAGE>
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 20, 1995
<PAGE>
