<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Equitable Resources, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
Logo
ERI
Equitable Resources, Inc.
420 Boulevard of the Allies
Pittsburgh, PA 15219
Notice of Annual Meeting of Shareholders
To Be Held May 22, 1998
The Annual Meeting of Shareholders of Equitable Resources, Inc. will be held
on Friday, May 22, 1998, at 10 a.m., Eastern Daylight Time, in the Union Trust
Building at Two Mellon Bank Center, 10th Floor, 501 Grant Street, Pittsburgh,
Pennsylvania, for the following purposes:
(1) To elect three directors, each to serve for a term of three years.
(2) To ratify the appointment of the firm of Ernst & Young LLP as independent
auditors for the year 1998.
(3) To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on April 1, 1998, as
the record date for determining shareholders entitled to notice of, and to vote
at, the meeting or any adjournment thereof.
If you plan to attend the meeting, please complete and return the form which
is attached to the proxy card. An admission card will be mailed to you prior to
the meeting. Presentation of the admission card upon arrival will expedite
registration.
By Order of the Board of Directors
/s/ Audrey C. Moeller
AUDREY C. MOELLER
Vice President and Corporate Secretary
April 13, 1998
YOUR VOTE IS IMPORTANT. PLEASE SIGN, DATE AND
----------------------------------------------
MAIL THE ENCLOSED PROXY AS SOON AS POSSIBLE
-------------------------------------------
<PAGE>
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Equitable Resources, Inc. (the "Company" or
"ERI") for use at the Annual Meeting of Shareholders of the Company on Friday,
May 22, 1998, and at any adjournment thereof. Any proxy given pursuant to this
solicitation may be revoked at any time by written or oral notice to the
Corporate Secretary prior to exercise of the proxy. The shares represented by
the proxy will be voted in accordance with the specification made. Proxies
submitted with abstentions and broker non-votes will be included in determining
whether or not a quorum is present. Abstentions and broker non-votes will not
be counted in tabulating the number of votes cast on proposals presented to
shareholders. This proxy statement and accompanying proxy will be mailed to
holders of common stock on or about April 13, 1998.
VOTING SECURITIES AND RECORD DATE
Shareholders of record at the close of business on April 1, 1998, are
entitled to notice of and to vote at the Annual Meeting. As of that date,
37,095,662 shares of common stock were outstanding and entitled to be voted.
Treasury shares are not included in the total. Record holders are entitled to
one vote for each share held on all matters to be voted upon at the Annual
Meeting and have cumulative voting rights for the election of directors.
If a shareholder is a participant in the Company's Dividend Reinvestment and
Stock Purchase Plan, the proxy card represents the number of shares in the
participant's dividend reinvestment account on the record date, as well as
shares registered in the participant's name. Employees holding Company stock in
the Employee Savings Plan, the Employee Savings and Protection Plan, the
Employee Stock Purchase Plan, and/or the Executive Retention Program will
receive separate proxy cards and their votes will be cast by the Trustee or
Administrator of said Plans, in accordance with the instructions on the returned
proxy cards.
Except as set forth below, the Company does not know of any holder who has or
shares voting or investment power over more than 5% of the Company's common
stock.
<TABLE>
<CAPTION>
Shares Percent of
Beneficially Common Stock
Name and Address Owned Outstanding
---------------- ------------ -------------
<S> <C> <C>
Wellington Management Company, LLP 4,797,550/1/ 13.04%
75 State Street
Boston, MA 02109
Brandywine Asset Management, Inc. 2,335,970/2/ 6.40%
201 North Walnut Street, Suite 1200
Wilmington, DE 19801
</TABLE>
- - -------------------------
/1/This information is based on a Schedule 13G for the year ended December 31,
1997, filed with the Securities and Exchange Commission, reporting that
Wellington Management Company, LLP has shared voting power over 1,134,250 shares
and shared dispositive power over 4,797,550 shares.
/2/This information is based on a Schedule 13G for the year ended December 31,
1997, filed with the Securities and Exchange Commission, reporting that
Brandywine Asset Management, Inc. has sole voting and dispositive power over
1,878,245 shares.
1
<PAGE>
As of April 1, 1998, no nominee, director or officer beneficially owned more
than .60% of the outstanding shares of the Company's common stock and all
nominees, directors and officers as a group beneficially owned approximately
.83% of such shares. In computing the percentage ownership for each individual
and all nominees, directors and officers as a group, the shares subject to
acquisition within 60 days by the particular individual and group are deemed
outstanding.
ITEM NO. 1
ELECTION OF DIRECTORS
Pursuant to the Company's Articles, the Board of Directors is divided into
three classes and the term of one class expires each year. At the Annual
Meeting, three nominees will stand for election. The terms of Paul Christiano,
Ph.D., Donald I. Moritz and J. Michael Talbert as Directors expire at the Annual
Meeting. All nominees were previously elected by the shareholders.
To be eligible for election as directors, persons nominated other than by the
Board of Directors must be nominated in accordance with the procedures set forth
in the By-Laws which require that notice be received by the Corporate Secretary
at least 60 days, but not more than 90 days, prior to the date of the Annual
Meeting, containing certain information regarding the person or persons to be
nominated and the shareholder giving such notice.
Record holders of common stock have cumulative voting rights with respect to
the election of directors. Cumulative voting entitles each record shareholder
to as many votes as shall equal the number of whole shares held by such
shareholder multiplied by the number of directors to be elected, and each such
shareholder may cast all of such votes for a single nominee or may distribute
them among any two or more nominees as such shareholder sees fit. The nominees
receiving the highest number of votes are elected.
Unless authority to do so is withheld by the shareholder, it is intended that
the proxies solicited by the Board of Directors will be voted for the nominees
named. Unless otherwise indicated on the proxy by the shareholder, the votes
represented by any proxy may be cumulated and voted at the discretion of the
persons named as proxies in favor of any one or more of the nominees. The
effect of cumulation and voting in accordance with this discretionary authority
may be to offset the effect of a shareholder's having withheld authority to vote
for individual nominees because the persons named as proxies will be able to
allocate the votes of shareholders who have not withheld authority to vote in
any manner they determine among the nominees. If any of the nominees becomes
unavailable for election for any reason, the persons named as proxies in the
accompanying proxy intend to vote for such substitute nominees as the Board may
propose, unless the Board adopts a resolution reducing the number of directors.
The information set forth below is given as of April 1, 1998. Each nominee
for election at this meeting and each director continuing in office has had the
same principal occupation during the past five years unless otherwise indicated.
Each individual has sole voting power and sole investment power with respect to
the shares shown, except as indicated in the footnotes below.
2
<PAGE>
CLASS III NOMINEES FOR ELECTION AS DIRECTORS
WITH TERMS EXPIRING IN 2001
Photo PAUL CHRISTIANO, Ph. D. Age 55 Director since May 1996
Paul Christiano
Ph.D. Provost of Carnegie Mellon University (private co-educational
research university) since July 1991.
Member of the Audit Committee.
Shares Owned: 214
Photo DONALD I. MORITZ Age 70 Director since June 1972
Donald I. Moritz
Interim President and Chief Executive Officer of the Company
since July 17, 1997; Chairman and Chief Executive Officer of
the Company, December 1993 until retirement in December 1994;
President and Chief Executive Officer, August 1978 through
December 1993.
Chairman of the Executive Committee and a member of the
Corporate Governance Committee.
Shares owned: 223,292 (a) (b) (c)
Photo J. MICHAEL TALBERT Age 51 Director since May 1995
J. Michael
Talbert Chairman and Chief Executive Officer of Transocean Offshore
Inc. (owns and operates offshore drilling rigs) since September
1994; President and Chief Executive Officer, Lone Star Gas
Company, January 1991 through August 1994. Also a director of
Transocean Offshore Inc.
Member of the Compensation, Corporate Governance and Executive
Committees.
Shares owned: 1,000
3
<PAGE>
CLASS I DIRECTORS WITH TERMS EXPIRING IN 1999
Photo JAMES E. ROHR Age 49 Director since May 1996
James E. Rohr
President of PNC Bank Corp. (financial services) since January
1992; President and Chief Executive Officer of PNC Bank, N.A.
since April 1988. Also a director of Allegheny Teledyne, Inc.
and PNC Bank Corp.
Member of the Compensation and Executive Committees.
Shares Owned: 5,500
Photo PHYLLIS A. DOMM, Ed. D. Age 51 Director since May 1996
Phyllis A.
Domm, Ed.D Vice President - Human Resources, Helix Health Systems (health
care services) since March 1998; President, Management and
Marketing Solutions, Inc. (marketing, public relations and
human resources consulting) July 1997 to March 1998; Senior
Vice President - Health Care Services, Intracoastal Health
Systems, Inc. April 1995 to July 1997; Vice President - Human
Resources, Inova Health System, October 1992 to March 1995.
Member of the Audit and Compensation Committees.
Shares Owned: 200
Photo DAVID S. SHAPIRA Age 56 Director since May 1987
David S. Shapira
Chairman and Chief Executive Officer of Giant Eagle, Inc.
(retail grocery store chain) since February 1994; Chief
Executive Officer of Giant Eagle, April 1992 to February 1994;
Chairman of the Board of Phar-Mor, Inc. (retail chain of
general merchandise and variety stores), February 1993 to
September 11, 1995. Also a director of Action Industries, Inc.
and Mellon Bank Corporation.
Member of the Audit and Corporate Governance Committees.
Shares owned: 1,575 (d)
4
<PAGE>
CLASS II DIRECTORS WITH TERMS EXPIRING IN 2000
Photo E. LAWRENCE KEYES, JR. Age 68 Director since May 1988
E. Lawrence
Keyes Jr. Partner, The Fortune Group (management consulting firm) since
January 1987.
Chairman of the Compensation Committee.
Shares owned: 1,200
Photo THOMAS A. McCONOMY Age 64 Director since May 1991
Thomas A.
McConomy Chairman of the Board and interim President and Chief Executive
Officer of Calgon Carbon Corporation (manufacturer and marketer
of activated carbon and related products and services) since
February 19, 1998; Chairman of the Board of Calgon Carbon
Corporation from July 1994 to February 19, 1998; President and
Chief Executive Officer of Calgon Carbon Corporation from
January 1990 through June 1994.
Chairman of the Corporate Governance Committee and a member of
the Audit and Compensation Committees.
Shares owned: 1,200 (a)
Photo GUY W. NICHOLS Age 72 Director since July 1997
Guy W. Nichols
Retired Chairman and Chief Executive Officer, New England
Electric System (electric utility).
Shares owned: 2,000
Photo MALCOLM M. PRINE Age 69 Director since May 1982
Malcolm M.
Prine Chairman of the Board, Core Materials Corp. (manufacturer of
plastics moulding) since January 1997; President, Malcar, Inc.
(housing business) since January 1990; Chairman and Chief
Executive Officer, Bundy Industries, Inc., December 1989
through August 1995. Also a director of Core Materials Corp.
and Pennsylvania Capital Bank.
Chairman of the Audit Committee and a member of the Corporate
Governance and Executive Committees.
Shares owned: 1,767
5
<PAGE>
All nominees, directors and officers (including those named above) 307,459
shares (a)(b)(c)(d)(e)(f)
_____________________________
(a) Includes shares held jointly with spouse as to which voting power and
investment power are shared.
(b) Includes the following shares which may be acquired within 60 days of April
1, 1998, through the exercise of stock options: Mr. Moritz--135,000 shares;
all nominees, directors and officers as a group, including such person--
164,100 shares.
(c) Does not include 1,350 shares owned by Mr. Moritz's wife as to which he
disclaims beneficial ownership.
(d) Shares are held in a trust of which Mr. Shapira is a co-trustee and has a
beneficial interest and shares voting and investment power.
(e) Includes shares allocated under the Company's Employee Savings Plan:
all officers--5,050 shares.
(f) Includes shares allocated under the Company's Employee Stock Purchase Plan:
all officers--3,206 shares.
6
<PAGE>
Board of Directors and its Committees
The Board of Directors held six regular meetings and four special meetings
during 1997. The standing committees of the Board are the Audit, Compensation,
Corporate Governance and Executive Committees. The Pension Trust Investment
Committee was disbanded on October 16, 1997. As a result of certain changes in
the Company's pension plans, it was determined that it was not necessary to have
a separate Board committee to oversee pension fund investment issues. The Board
of Directors will continue to review all matters previously monitored by the
Pension Trust Investment Committee. During 1997, attendance of the directors at
Board and Committee meetings averaged 95%.
The Audit Committee consists of five non-employee directors. It reviews the
annual financial statements of the Company, examines and considers the scope and
adequacy of audits performed by the independent auditors and the Company's
internal auditing staff, as well as other financial affairs of the Company;
recommends to the Board of Directors an independent auditing firm to audit the
Company's financial statements; reviews the adequacy of internal controls and
management's implementation of recommendations made by the independent auditors
and by the internal auditors with respect to their audit activities; and
approves fees charged by the independent auditors. It also reviews
environmental matters, audits and compliance programs and monitors the overall
environmental strategy of the Company. The Committee held four meetings in
1997.
The Compensation Committee consists of five non-employee directors. It
reviews the salaries of all executive officers and makes recommendations to the
Board of Directors for its approval. It also administers the Key Employee
Restricted Stock Option and Stock Appreciation Rights Incentive Compensation
Plan, the Short-Term Incentive Compensation Plan, the Long-Term Incentive Plan
and the Non-Employee Directors' Stock Incentive Plan. It addresses, recommends
and approves any other compensation and benefits issues which apply to the
officers of the Company, including perquisites that require Board approval. The
Committee held eleven meetings in 1997.
The Corporate Governance Committee consists of four non-employee directors
and Mr. Moritz who is serving as interim Chief Executive Officer. The Committee
is responsible for recommending to the Board of Directors persons to be
nominated for election as directors of the Company and monitoring and
recommending enhancements to the Company's corporate governance framework,
particularly with respect to the structure, processes, and proceedings of the
Board of Directors. In performing the nominating function, the Committee
attempts to locate candidates for Board membership who have attained a prominent
position in their field of endeavor and whose backgrounds indicate that they
have broad knowledge and experience and the ability to exercise sound business
judgment. The Committee will consider nominees recommended by shareholders.
Any such recommendation, together with the nominee's qualifications and consent
to be considered as a nominee, should be sent to the Corporate Secretary. The
Committee is also responsible for recommending the level of compensation and
other fringe benefits for the Directors. The Committee held two meetings in
1997.
The Executive Committee consists of three non-employee directors and Mr.
Moritz who is serving as interim Chief Executive Officer. It examines proposed
acquisitions and similar new ventures and advises management with regard to the
expansion or disposition of the Company's businesses through mergers,
acquisitions, sales and similar transactions. It also reviews and makes
recommendations to the Board with respect to the Company's financial policies
and condition, its dividend policies, bank credit arrangements, financing
investments and other financial matters. The Committee has the authority to act
in all matters that the full Board may act upon when the
7
<PAGE>
Board is not in session, unless limited by a resolution of the Board and except
to the extent limited by law. The Committee held seven meetings in 1997.
Directors' Compensation and Retirement Program
Directors of the Company receive (i) an annual retainer of $24,000 payable
quarterly; (ii) a fee of $1,000 for each Board meeting attended; (iii) a fee of
$1,000 for each Committee meeting attended; and (iv) a fee of $500 for
telephonic participation in a meeting. Under a deferred compensation plan for
non-employee directors, these fees may be deferred until termination of services
as a director or such earlier time as the director may elect.
All non-employee directors who have reached age 58 at the date of retirement
as a director with at least 60 months of service as a director qualify for
benefits under a retirement program for the directors. A qualified director who
retires as a director after reaching age 72 with at least 60 months of service,
or retires prior to age 72 with at least 120 months of service, is entitled to
receive a benefit equal to the quarterly retainer for 40 quarters or until
death, whichever occurs first. A qualified director who retires as a director
prior to age 72 with less than 120 months of service is entitled to receive a
benefit payable for 40 quarters or until death, whichever occurs first, equal to
50% of the quarterly retainer, plus 10% for each additional 12 months of service
in excess of 60 months.
In recognition of services rendered by non-employee directors and in
furtherance of its community support, the Company uses a life insurance program
to fund contributions to qualified organizations upon the death of a director.
Each participating director is insured for $500,000 under policies owned by the
Company. Where possible, policies are written on two directors' lives, with
$500,000 payable at each death. The program restricts bequests to civic,
charitable and educational organizations with emphasis on those in the Company's
operating/service areas. New directors will qualify for participation after
serving on the Board for 36 months. The cost of the program is nominal.
Under the terms of the Non-Employee Directors' Stock Incentive Plan, on June
1 of each year each non-employee director is granted an option to purchase 500
shares of the Company's common stock at an exercise price which is 100% of the
fair market value of a share on the date of such grant. The option is
exercisable upon the earlier of three years from the date of grant or upon
termination of service as a director by reason of retirement, disability or
death. Newly elected directors, on the first day of June following their
election, shall automatically be granted an initial option grant for 2,500
shares of the Company's common stock at an exercise price of 100% of the market
value of a share on the grant date, in addition to receiving the annual option
grant for 500 shares which all non-employee directors automatically receive on
June 1 of each year. No options will be granted under this Plan after June
1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and any persons who own more than ten percent
of the Company's common stock to file with the Securities and Exchange
Commission and the New York Stock Exchange various reports as to ownership of
such common stock. Such persons are required by Securities and Exchange
Commission regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on information provided to the Company by individual officers
and directors, the Company believes that during 1997 its officers and directors
have timely complied with all filing
8
<PAGE>
requirements applicable to them except for Craig G. Goodman, former Vice
President - Regulatory Affairs and Public Policy, who was late in reporting one
transaction.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation of the
Company's interim chief executive officer and each of the other four most highly
compensated executive officers of the Company at the end of the last completed
fiscal year, as well as the compensation of Frederick H. Abrew who retired as
President and Chief Executive Officer on July 17, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
---------------------------------------------------------------------------------
Awards
-----------------------------------
Other Securities
Annual Restricted Stock Underlying All Other
Salary Bonus Compensation Award(s) Options/SARs Compensation
Name and Principal Position Year ($) ($) (1) ($) ($) (2) # ($)(3)(4)(5)
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Donald I. Moritz/4/ 1997 238,823 355,000 0 0 0/0 70,704
Director, Interim President 1996
and Chief Executive Officer 1995
- - -----------------------------------------------------------------------------------------------------------------------------------
Frederick H. Abrew/5/ 1997 274,600 0 0 0 0/0 1,685,556
Director, President and 1996 450,000 270,000 893 0 0/0 21,673
Chief Executive Officer 1995 440,835 0 137 0 150,000/0 13,698
- - -----------------------------------------------------------------------------------------------------------------------------------
R. Gerald Bennett 1997 245,600 160,000 0 187,217 0/0 28,866
Senior Vice President 1996 140,000 91,000 0 0 33,400/0 1,800
1995
- - -----------------------------------------------------------------------------------------------------------------------------------
John C. Gongas, Jr. 1997 220,810 160,000 0 170,340 0/0 27,117
Senior Vice President 1996 207,004 115,000 0 0 0/0 9,365
1995 196,254 0 0 0 50,000/0 4,582
- - -----------------------------------------------------------------------------------------------------------------------------------
Edward J. Meyer/6/ 1997 211,960 0 0 165,393 16,700/0 24,265
Sr. Vice Pres. - Market and 1996 33,334 20,000 0 0 0/0 0
Business Development 1995
- - ----------------------------------------------------------------------------------------------------------------------------------
Gregory R. Spencer 1997 172,894 110,000 0 133,579 0/0 18,585
Senior Vice President and 1996 156,600 95,000 0 0 17,400/0 5,304
Chief Administrative Officer 1995 139,000 0 0 0 24,000/0 0
</TABLE>
Mr. Moritz became interim President and Chief Executive Officer on July 17,
1997.
Mr. Bennett became an executive officer of the Company on June 1, 1996.
Mr. Meyer became an executive officer of the Company on October 28, 1996.
_____________________________
/1/ Paid under the Company's Short-Term Incentive Compensation Plan. Included
in the amount for Mr. Bennett in 1996 is a $36,000 bonus paid upon
commencement of his employment with the Company.
9
<PAGE>
/2/ Restricted stock awards were granted to the following named executives on
September 5, 1997. Dividends will be paid on the restricted stock. The
vesting of these awards is contingent upon attainment of specific stock
price targets and the continued employment of the executives until January
1, 2001. No other restricted stock is held by the named executives. Mr.
Meyer's restricted stock holdings were forfeited upon his termination of
employment.
<TABLE>
<CAPTION>
No. of Shares Value at 12/31/97
------------- -----------------
<S> <C> <C>
R. Gerald Bennett 5,979 $211,507
John C. Gongas, Jr. 5,440 192,440
Edward J. Meyer 5,282 186,851
Gregory R. Spencer 4,266 150,910
</TABLE>
/3/ Includes the term insurance benefit and interest on cumulative Company funds
used to pay the remaining premium for split-dollar life insurance policies
(each based on applicable Internal Revenue Service rates), matching
contributions to the Company's Employee Savings Plan and annual contribution
to the Defined Contribution Plan, as follows:
<TABLE>
<CAPTION>
Term Savings Plan Defined
Insurance Interest Contribution Contribution Plan
----------------- ---------------- ------------------- -----------------------
<S> <C> <C> <C> <C>
Donald I. Moritz $989 $25,215 $ - $ -
Frederick H. Abrew 228 17,491 4,750 14,107
R. Gerald Bennett - - 2,050 26,816
John C. Gongas, Jr. 38 6,229 3,218 17,632
Edward J. Meyer - - 2,000 22,265
Gregory R. Spencer 22 1,013 4,750 12,800
</TABLE>
/4/ Mr. Moritz was employed as interim President and Chief Executive Officer on
July 17, 1997. Mr. Moritz received $44,500 in Directors' fees.
/5/ Mr. Abrew was a Director and President and Chief Executive Officer until
July 17, 1997. Mr. Abrew became entitled to receive $1,567,800 under the
terms of a Confidential Agreement and Release; $36,180 for 1997 unused
vacation; and $45,000 representing a settlement of all future life insurance
obligations.
/6/ Mr. Meyer became an executive officer of the Company on October 28, 1996. He
was Senior Vice President until December 1, 1997. He resigned as Senior Vice
President - Market and Business Development on February 15, 1998.
10
<PAGE>
OPTIONS/SAR GRANTS IN 1997
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
- - ----------------------------------------------------------------------------------------- Value at Assumed
Percent of Total Annual Rates of Stock
Options/SARs Price Appreciation for a
Granted to Exercise or Ten-Year Option Term 3
Options/SARs Employees Base Price Expiration ------------------------
Name Granted/1/ In 1997 Per Share Date/2/ 5% 10%
- - --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Donald I. Moritz None
- - --------------------------------------------------------------------------------------------------------------------
Frederick H. Abrew None
- - --------------------------------------------------------------------------------------------------------------------
R. Gerald Bennett None
- - --------------------------------------------------------------------------------------------------------------------
John C. Gongas, Jr. None
- - --------------------------------------------------------------------------------------------------------------------
Edward J. Meyer 16,700/4/ 20.00% $29.47 July 20, 2005 $309,508 $784,338
- - --------------------------------------------------------------------------------------------------------------------
Gregory R. Spencer None
- - --------------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ There were no SARs granted.
/2/ If Equitable Resources, Inc. meets the criteria set for return to
shareholders, the participant's total shares are vested. Stock which vests
on a performance basis may be exercised at any time prior to July 20, 2005.
Stock which does not vest on a performance basis will vest for one day at
the end of the vesting period; i.e., July 21, 1998.
/3/ The option values presented were calculated based on a share price of $29.47
as of the date of grant at assumed 5% and 10% annualized rates for the term
of the grant. The actual value, if any, that an optionee may realize upon
exercise will depend on the excess of the market price of the common stock
over the option exercise price on the date the option is exercised. There is
no assurance that the actual value realized by an optionee upon the exercise
of an option will be at or near the value estimated under the model
described above.
/4/ Mr. Meyer's options were forfeited upon his termination of employment.
AGGREGATED OPTION/SAR EXERCISES IN 1997
AND YEAR-END 1997 OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Year End 1997 Year-End 1997
Shares (#) ($) 1
Acquired on Value ---------------------------------------
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- - ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Donald I. Moritz Options 0 0 135,000/0 211,275/0
SARs 0 0 0/0 0/0
- - ---------------------------------------------------------------------------------------------------------
Frederick H. Abrew Options 0 0 0/0 0/0
SARs 0 0 0/0 0/0
- - ---------------------------------------------------------------------------------------------------------
R. Gerald Bennett Options 0 0 0/33,400 0/263,025
SARs 0 0 0/0 0/0
- - ---------------------------------------------------------------------------------------------------------
John C. Gongas, Jr. Options 0 0 19,000/50,000 21,128/337,500
SARs 0 0 0/0 0/0
- - ---------------------------------------------------------------------------------------------------------
Edward J. Meyer/2/ Options 0 0 0/16,700 0/ 98,614
SARs 0 0 0/0 0/0
- - ---------------------------------------------------------------------------------------------------------
Gregory R. Spencer Option 0 0 0/ 41,400 0/ 299,025
SARs 0 0 0/0 0/0
- - ---------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
___________________________
/1/ The dollar values were calculated by determining the difference between the
fair market value of the underlying shares of common stock and the various
applicable exercise prices of outstanding options at the end of 1997 for the
named executive officers. The last reported sale price of the Company's
common stock on the New York Stock Exchange on December 31, 1997 was $35.375
per share.
/2/ Mr. Meyer's options were forfeited upon his termination of employment.
SHAREOWNER RETURN PERFORMANCE PRESENTATION
The following graph compares the five-year cumulative total return on the
Company's Common Stock with the cumulative total return of the S&P 500 Index and
the Value Line Investment Survey--Natural Gas (Diversified) Industry Group. The
graph assumes a $100 investment made on December 31, 1992, and the reinvestment
of all dividends.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG EQUITABLE RESOURCES, S&P 500 INDEX AND VL PEER GROUP
<CAPTION>
Measurement period
(Fiscal year Covered) EQUITABLE RESOURCES S&P 500 VL PEER GROUP
- - --------------------- ------------------- ------- ------------
<S> <C> <C> <C>
Measurement PT -
12/31/92 $100 $100 $100
FYE 12/31/93 $113 $110 $122
FYE 12/31/94 $ 86 $112 $115
FYE 12/31/95 $104 $153 $154
FYE 12/31/96 $103 $189 $198
FYE 12/31/97 $127 $251 $236
</TABLE>
12
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Compensation for the executive officers of the Company is administered under
the direction of the Compensation Committee of the Board (the "Committee") which
currently consists of five independent directors. There are no "Compensation
Committee Interlocks" or "Insider Participation" which the Securities and
Exchange Commission regulations would require to be disclosed in this proxy
statement. The Committee submits its recommendations for executive base salary
changes to the full Board of Directors. All other components of executive
compensation are acted upon by the Committee and those actions taken are
reported to the Board of Directors. The Committee oversees all compensation
arrangements applicable to the executive officers including base salaries,
benefits, annual incentives and stock based awards.
The following is the Compensation Committee's report, in its role as overseer
of the Company's executive pay programs, on 1997 compensation practices for the
executive officers of the Company.
Compensation Policies Attributable to Executive Officers
Equitable Resources, Inc. is a fully integrated energy marketing company. It
offers energy solutions to the wholesale and retail markets with innovative
products and services developed through its Supply and Logistics, Utilities, and
Energy Services business segments. Equitable is also engaged in the production
of natural gas liquids and crude oil. A major portion of the Company's storage,
transportation and distribution of natural gas is subject to rate regulation by
federal and state authorities. The Company's compensation arrangements are
designed to meet the requirements of each of these business segments in terms of
their unique business and human resource needs and goals, while reinforcing the
Company's ultimate objective of creating value for shareholders.
In order to attract, motivate, and retain talented executives, the Company's
compensation policy considers the skills, talents, and experience necessary for
the successful operation and growth of each major business segment, as well as
the unique risk characteristics of each segment. To support the Company's
financial performance and shareholder value enhancement objectives, incentive
arrangements that focus on achievement of key annual business objectives and the
creation of long-term value are in place for the Company's executives.
The Compensation Committee adheres to an executive compensation strategy as
the framework for managing the compensation program for executive officers which
includes the following objectives and guidelines:
.To establish base salaries at approximately the 50th percentile and
potential total cash compensation at the 75th percentile of two comparison
groups (peer group and general industry companies of similar revenue size).
Competitive practices are determined using independent industry surveys
provided by compensation consultants and publicly available compensation
information from peer companies.
.To link short-term bonus compensation opportunities to the overall
performance of the Company and to the individual contribution of each
executive. Short-term (annual) incentives are funded when pre-established
earnings per share goals are attained. Awards are distributed to Plan
participants based on achievement of corporate, business segment and
individual performance goals identified annually.
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<PAGE>
.To provide long-term reward programs that encourage share ownership by
management, reinforce value creation imperatives, align management's
interest to shareholder interests and help assure retention of key
executive contributors.
The Compensation Committee believes that stock ownership by management is a
crucial tool for focusing management on the enhancement of the Company's
shareholder value. Thus, the Committee views stock options and other equity-
related arrangements as a key element of the executive compensation program.
Base Salaries
The executive salary structure is based upon studies prepared by independent
compensation consultants, primarily using salary surveys of peer group
companies, including the Company, that comprise The Value Line Investment
Survey--Natural Gas (Diversified) Industry Group. This survey data is
supplemented by data from the gas utility and oil/gas exploration and production
industries, as well as data from major Pittsburgh-based corporations. The base
salary levels are generally targeted at the 50th percentile of the combined
survey group. The consultants' study concluded that the base compensation for
the executive officers of the Company was below the 50th percentile of the
comparison groups.
Individual salary increases are based primarily upon individual performance,
taking into account competitive salaries. Factors included in salary increases
are revenue growth, shareholder appreciation, achievement of strategic
initiatives and personal goals. General economic conditions and marketplace
compensation trends are also considered. Independent compensation consultants
assist in the evaluation of the marketplace compensation trends.
Pursuant to these guidelines, annual base salaries of the named executive
officers in the Summary Compensation Table on page 9 increased at the following
rates: Donald I. Moritz (interim CEO effective July 17, 1997), 0%; Frederick H.
Abrew, 16.1%; R. Gerald Bennett, 4.0%; John C. Gongas, Jr., 7.1%; Edward J.
Meyer, 10.2%; and Gregory R. Spencer, 7.6%. Messrs. Abrew's and Meyer's
increases included a market competitive salary adjustment. The increases in
1997 are reflective of competitive practices, individual performance and the
Company's 1996 earnings.
Annual Incentives
The Company's Short-Term Incentive Compensation Plan (the "Plan") is
structured so that bonus payments are made when the Company has met pre-
established Board approved earnings per share goals. Once the thresholds have
been met, a bonus pool is funded based on pre-established targets for each
participant. Awards are based on market competitive bonus targets, individual
performance and the amount of dollars funded into the bonus pool. Participants
have individual performance goals established for their position which include
financial goals, strategic initiatives, operational and organizational
objectives, human resource management goals and environmental management goals
as appropriate. Individual participant's bonuses can be adjusted based on
corporate, business segment and individual performance to a maximum of 150% of
target and down to a minimum of 0% (no award payout).
The Committee approved the method of determining the 1997 goals for the
executive officers of the Company, together with the 1997 performance measures
for the regulated and unregulated business segments. They also set and approved
the maximum funding levels for the Plan. The total annual funding of the Plan
cannot exceed 2.5% of the Company's net income.
Mr. Moritz was given a targeted bonus of 65% of his annual base salary.
Messrs. Bennett, Gongas, Meyer and Spencer had annual incentive targets ranging
from 40% to 50% of their base salary. Incentive awards are capped at 100% of
base salary for all plan participants.
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<PAGE>
In the event that the Company's earnings per share target does not exceed the
business plan, no annual incentive payments are made. The incentive threshold
was exceeded in 1997 and bonus payments were made according to the provisions of
the Plan.
Long-Term Incentives
The Company may utilize combined stock options/stock appreciation rights and
restricted stock on a case-by-case basis to reinforce its shareholder value
creation imperatives, executive retention goals, and to support management
ownership as an effective means of aligning management to shareholder interests.
The award of stock options and/or restricted stock under the Company's 1994
Long-Term Incentive Plan is based on the overall financial performance of the
Company, primarily the Company's return to its total capitalization, and the
individual performance of the participant. Among the individual factors
considered are managerial ability, individual performance, succession planning,
and executive development. Stock based awards have been made without regard to
the size of prior grants or the amount of stock held by employees to whom such
awards were made.
During 1997, the Committee approved stock option awards to certain new hires
and senior level employees promoted into positions with increased
responsibility. The awards were based on the 50th percentile level of long-term
incentive opportunities for the same peer group of companies previously referred
to for executive officers' compensation. The Committee determined the level of
the stock options awarded using the Black-Scholes option pricing model.
A performance measure was established relative to the vesting of all options
under this award. These awards will vest in accordance with a formula tied to
the Company's total shareholder return relative to the Company's peer group. In
the event that the employment of a Long-Term Incentive Plan participant
terminates, except for reasons of death or normal retirement, all awards that
have not vested are subject to forfeiture as of the effective date of
termination. The Options/SAR Grants in 1997 table on page 11 show the terms of
each award. Historically, stock option grants have been the primary means of
providing long-term incentive compensation to executives. No options vested in
1997.
Restricted stock awards equal to 75% of an employee's base salary were
granted to executives and certain key employees in 1997 as part of the
Company's Executive Retention Program. The vesting of these awards is
contingent upon attainment of specific stock price targets and the continued
employment of the participants until January 1, 2001.
Stock Ownership Guidelines
To promote stock ownership by management, the Committee approved personal
stock ownership guidelines for executives. These guidelines require executives
to purchase and hold shares of the Company's stock, the market value of which
would need to be as follows: Messrs. Bennett, Gongas, Meyer and Spencer are
required to acquire or hold stock valued at three times their annual salary.
Other executive officers are required to acquire or hold stock valued at three
or two times their annual salary. Each executive has five years to meet his or
her personal acquisition guidelines.
15
<PAGE>
Benefits Based on Retirement or Death Under Plans
Benefits are based on retirement or death under the Retirement Plan, the
Deferred Compensation Plan, and the optional Split-Dollar Life Insurance
Program. Company contributions to these plans for the benefit of the named
executives are shown in the Summary Compensation Table on page 9.
Policy Regarding Section 162(m) of the Internal Revenue Code
In 1993, the tax laws were amended to limit the deduction a publicly-held
company is allowed for compensation paid in 1994 and thereafter to the chief
executive officer and to the four most highly compensated executive officers
other than the chief executive officer. Generally, amounts paid in excess of $1
million to a covered executive, other than performance-based compensation,
cannot be deducted. Based on current compensation levels of the executive
officers, this deductibility limit has no impact on the Company. At such time
as the Committee deems it appropriate, it will take the necessary action to
insure that the deductibility of executive compensation is maximized.
Compensation of the Chief Executive Officer
Effective August 1, 1997, Frederick H. Abrew retired as President and Chief
Executive Officer. Donald I. Moritz was named interim Chief Executive Officer
while a search for a replacement for Mr. Abrew was conducted. Mr. Abrew
received a salary increase in May of 1997 for work accomplished in 1996. The
basis for Mr. Abrew's 1997 base salary, including the Committee's goals and
methodology, are discussed earlier in this report. The Committee also
considered that under Mr. Abrew, ERI exceeded its business plan net income and
earnings per share (EPS) targets in 1996. ERI had net income earnings in excess
of $59 million which resulted in $1.69 EPS. This exceeded the business plan
target net income of $55 million and $1.57 EPS. Mr. Abrew did not receive any
bonus from the Company's Short-Term Incentive Compensation Plan for work
performed in 1997.
Mr. Moritz assumed the role of interim Chief Executive Officer on July 17,
1997. Mr. Moritz is paid $43,550 on a monthly basis. This is the same salary
which was being paid to Mr. Abrew. In addition, Mr. Moritz was paid a bonus of
$355,000 based on his accomplishments relative to pre-established performance
objectives and the Company's financial performance under his leadership. The
following items were taken into consideration when awarding Mr. Moritz this
bonus:
. On December 31, 1997, the Company's common stock closed at $35.375. When
Mr. Moritz assumed the role of CEO on July 17, the stock price was
$28.3125. This represents over $254 million in stock appreciation for the
Company's shareholders.
. The Company exceeded business plan net income and earnings per share goals
in 1997.
. The Company met key strategic objectives including the divestiture of non-
strategic assets in the Supply and Logistics business segment. This
divestiture of exploration and production properties in the Rocky Mountain
area exceeded economic expectations.
16
<PAGE>
Based upon all of the information considered, the Committee believes that Mr.
Abrew's base salary increase and Mr. Moritz's base salary and bonus portray a
competitive compensation package as related to this Company's peers.
The foregoing report has been furnished by the Compensation Committee of the
Board of Directors.
E. Lawrence Keyes, Jr., Chairman
Phyllis A. Domm
Thomas A. McConomy
James E. Rohr
J. Michael Talbert
Employment Contracts and Change-in-Control Arrangements
Donald I. Moritz entered into an agreement with the Company, effective July
17, 1997, amended November 19, 1997, under which Mr. Moritz assumed the
responsibilities of the Chief Executive Officer on an interim basis at a monthly
salary of $43,550. Mr. Moritz was eligible to participate in the Company's
Short-Term Incentive Compensation Plan on a full-year basis for 1997 and
continued to receive applicable Board of Directors' fees. The term of the
agreement continues on a month-to-month basis until terminated by either party
upon thirty days' notice.
In connection with his retirement as President and Chief Executive Officer,
Frederick H. Abrew entered into an agreement with the Company effective August
1, 1997, under which Mr. Abrew will receive his base salary, to be paid in
accordance with the terms of the agreement, and continuance of medical benefits
for a period of thirty-six months, as well as a payment for unused 1997
vacation. Mr. Abrew also received cash representing the premiums which would
become payable through July 2000 on executive life insurance policies owned by
the Company. Additionally, the Company will continue to pay the premiums on the
split dollar life insurance policy covering Mr. Abrew through July 2000. The
agreement provides that Mr. Abrew will be subject to certain non-competition
obligations through July 2000.
In connection with his resignation as Senior Vice President - Market and
Business Development, Edward J. Meyer entered into an agreement with the Company
effective February 15, 1998, under which Mr. Meyer received twelve months of
base salary; payment for unused 1998 vacation; $59,874 representing the cash
value of one-third of the restricted stock he was granted under the Company's
Executive Retention Program; and $16,962 pursuant to a severance program. The
agreement provides that Mr. Meyer will be subject to certain non-competition
obligations for a period of one year.
Gregory R. Spencer has an agreement with the Company under which he will
receive, in addition to payments under the Company's normal severance pay plan,
severance equal to twelve months of his base salary if his employment is
terminated by the Company other than for good cause or if he resigns after
receiving a demotion and/or reduction in salary. The agreement provides that
Mr. Spencer would be subject to certain non-competitive obligations for a period
of one year after termination of employment.
The Company also has Change-in-Control Agreements with the executive
officers. These agreements were developed to ensure that during a change-in-
control situation, the interests of the shareholders are foremost on the minds
of key executives. The agreements provide for the following if a change-in-
control occurs followed by an involuntary or constructive termination of the
covered executive within two years after the change event: base salary
continuation; average incentive
17
<PAGE>
bonus payment earned over the past three years; immediate vesting of all
unvested cash awards and stock incentives; immediate delivery of Company stock
or payment of an amount equal to average grants received by the employee over
the preceding five years under applicable long-term incentive plans; medical,
dental, life and disability insurance; additional months of service and age
credit for determining benefit amounts and early retirement reductions;
outplacement assistance and legal fees in the event the contract is contested;
and the executive may elect a lump sum payment or payment of benefits over the
course of the agreement. Messrs. Bennett, Gongas and Spencer will receive 24
months of base salary, benefits continuance and retirement plan credits and two
times their average annual and long-term incentive awards under the provisions
of their agreements. Other executive officers were given agreements which
provide them with either 24 months or 18 months of change-in-control benefits.
Payments to an executive officer under any Change-in-Control Agreement shall
not exceed amounts deductible by the Company under the provisions of the
Internal Revenue Code (the "Code"). Payments under any other agreement to which
an executive officer is a party will not be limited to amounts deductible under
the provisions of the Code.
Pension Plan
Effective January 1, 1997, the Company adopted a revised pension program for
salaried employees. Most salaried employees, including all executive officers,
participate in a defined contribution plan pursuant to which the Company
contributes an amount equal to a percentage of each employee's base salary to an
individual investment account for such employee. Benefits earned under the
previously existing defined benefit plan through December 31, 1996 were, at each
employee's option, either contributed in lump sum form to such employee's
individual investment account or used to buy an individual annuity payable upon
retirement to such employee.
Item No. 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
reappointed Ernst & Young LLP, certified public accountants, as auditors to
examine the consolidated financial statements of the Company and its
subsidiaries for the calendar year 1998. Ernst & Young LLP, and its
predecessor, have acted as auditors for the Company since 1950. Although
shareholder approval is not required for the appointment of auditors, the Board
of Directors believes shareholders should participate through ratification. If
such ratification is not obtained, the Board will consider the appointment of
other auditors for the following year.
Representatives of Ernst & Young LLP expect to be present at the annual
meeting to respond to appropriate questions and to make a statement if they
desire to do so.
The Board of Directors recommends a vote FOR ratification of the appointment
of Ernst & Young LLP.
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1999 SHAREHOLDER PROPOSALS
To be eligible for inclusion in the Company's proxy statement, shareholder
proposals for the 1999 Annual Meeting of Shareholders must be received by the
Corporate Secretary, Equitable Resources, Inc., 420 Boulevard of the Allies,
Pittsburgh, Pennsylvania 15219, on or before December 14, 1998.
ADDITIONAL INFORMATION
Other Matters
No matters other than those set forth in the Notice of Meeting accompanying
this proxy statement are expected to be presented to shareholders for action at
the annual meeting. However, should other matters properly come before the
meeting, the persons named in the accompanying proxy will vote in such manner as
they may, in their discretion, determine.
Solicitation of Proxies
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, proxies may be solicited by directors, officers and
employees of the Company, personally or by telephone or telegraph. Brokerage
houses and other custodians, nominees and fiduciaries will be requested to
forward soliciting material to the beneficial owners of common stock held of
record by such persons and will be reimbursed by the Company for their expenses.
The Company may engage a professional proxy soliciting firm to solicit proxies
in the same manner.
Annual Report
The Annual Report of the Company to shareholders, including financial
statements, for the year ended December 31, 1997, has previously been mailed to
shareholders.
By Order of the Board of Directors
/s/ Audrey C. Moeller
AUDREY C. MOELLER
Vice President and Corporate Secretary
April 13, 1998
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LOGO
ERI Equitable Resources, Inc.
420 Boulevard of the Allies
Pittsburgh, PA 15219
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
Johanna G. O'Loughlin and Audrey C. Moeller are, and each of them is, hereby
appointed as proxies of the undersigned to vote all shares which the undersigned
is entitled to vote at the Annual Meeting of Shareholders of the Company to be
held on Friday, May 22, 1998, at 10 a.m. in the Union Trust Building at Two
Mellon Bank Center, 501 Grant Street, Pittsburgh, Pennsylvania, and at any
adjournment of such meeting. Where a vote is not specified, the proxies will
vote the shares represented by this Proxy FOR the election of directors and FOR
Item 2 and will vote in their discretion on such other matters that may
properly come before the meeting.
A vote FOR the election of nominees listed on the reverse side includes
discretionary authority to cumulate votes selectively among the nominees as to
whom authority to vote has not been withheld and to vote for the substitution if
any nominee becomes unavailable for election for any reason.
This Proxy is solicited on behalf of the Board of Directors of the Company and
may be revoked prior to its exercise. The Board of Directors recommends votes
FOR the election of all nominees for director and FOR Item 2.
Please Sign and Date on the Reverse Side and Return the Proxy Card Promptly
Using the Enclosed Envelope.
