SCHEDULE 14A INFORMATION
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the Securities Exchange Act of 1934
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GENERAL PUBLIC UTILITIES CORPORATION
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GENERAL PUBLIC UTILITIES CORPORATION
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Notes:<PAGE>
GENERAL PUBLIC UTILITIES CORPORATION
100 Interpace Parkway Parsippany, New Jersey 07054-1149
Notice of Annual Meeting of Stockholders to be Held May 2, 1996
Notice is hereby given that the Annual Meeting of
Stockholders of General Public Utilities Corporation will be held
at The Morris Museum, Six Normandy Heights Road, Morristown, New
Jersey on Thursday, May 2, 1996 at 10:00 o'clock in the morning
(local time):
1. To elect one director of the Corporation to hold office
for a three-year term beginning upon his election at
the 1996 Annual Meeting.
2. To consider amendments to the Restricted Stock Plan for
Outside Directors as described in the accompanying
Proxy Statement.
3. To consider the ratification of the selection by the
Board of Directors of Coopers & Lybrand L.L.P. as
independent auditor for the year 1996.
4. To consider, if submitted, the stockholder proposal set
forth in the accompanying Proxy Statement. <PAGE>
5. To transact such other business as may properly come
before the meeting.
Only holders of record of issued and outstanding shares of
Common Stock of the Corporation at the close of business on
March 11, 1996 will be entitled to vote at the meeting. Such
stockholders may vote in person or by proxy. If your shares are
registered in the name of a brokerage firm or trustee and you
plan to attend the meeting, please obtain from the firm or
trustee a letter or other evidence of your beneficial ownership
of those shares to facilitate your admittance to the meeting.
The stock transfer books of the Corporation will not be closed.
By order of the Board of Directors,
MARY A. NALEWAKO, Secretary
March 27, 1996
The 1995 Annual Report was previously transmitted to
stockholders. It is expected that the annexed Proxy Statement
and enclosed form of Proxy will be first sent to stockholders on
or about March 27, 1996.
If you wish to receive, without charge, a copy of the GPU
System Statistics or the Corporation's 1995 Annual Report to the
Securities and Exchange Commission on Form 10-K, direct your
request to: Stockholder Relations, General Public Utilities
Corporation, 100 Interpace Parkway, Parsippany, New Jersey
07054-1149, or call (201) 263-6600.<PAGE>
You Are Cordially Invited to Attend the Annual Meeting
If you plan to attend the meeting in person, please mark
your Proxy in the space provided for that purpose. Please bring
the lower portion of the form (the Speaker and Admission Card
sections) with you to the meeting.
Whether or not you attend the meeting, we hope that you will
sign and return the enclosed Proxy as promptly as possible. Your
vote is important.<PAGE>
TABLE OF CONTENTS
Page
Number
PROXY STATEMENT
Stockholders Entitled to Vote 1
DIRECTORS' PROPOSALS
1. ELECTION OF DIRECTOR 2
Standing Committees of the Board of Directors 4
Security Ownership of Certain Beneficial
Owners and Management 6
Remuneration of Executive Officers 7
Personnel, Compensation and
Nominating Committee Report 7
Summary Compensation Table 11
Long-Term Incentive Plans - Awards
in Last Fiscal Year 13
Comparison of Five Year Cumulative Total Return 14<PAGE>
Employment, Termination and Change
in Control Arrangements 15
Benefit Protection Trusts 15
Retirement Plans 15
Supplemental Pensions 17
Remuneration of Directors 17
Retirement Plan for Outside Directors 18
Restricted Stock Plan for Outside Directors 18
2. AMENDMENTS TO RESTRICTED STOCK PLAN FOR
OUTSIDE DIRECTORS 19
3. SELECTION OF AUDITOR 20
STOCKHOLDER PROPOSAL 20
OTHER MATTERS 22
ANNEX A 23<PAGE>
GENERAL PUBLIC UTILITIES CORPORATION
100 Interpace Parkway Parsippany, New Jersey 07054-1149
Proxy Statement for Annual Meeting - May 2, 1996
STOCKHOLDERS ENTITLED TO VOTE
Holders of record at the close of business on March 11, 1996
of the outstanding Common Stock (consisting of 120,470,559
shares) are entitled to vote at the Annual Meeting of
Stockholders of the Corporation ("GPU").
Stockholders have cumulative voting rights for the election
of directors and one vote per share for all other purposes.
Cumulative voting means that each stockholder is entitled to as
many votes as are equal to the number of shares owned multiplied
by the number of directors to be elected and that the stockholder
may cast all of such votes for a single director or may
distribute them among the number to be voted for, or any two or
more of them, as the stockholder may see fit. Elections of
directors are to be determined by a plurality vote. Other
matters are to be determined by vote of the holders of a majority
of the shares present or represented at the meeting and voting on
such matters.
1<PAGE>
The Proxies hereby solicited vest in the proxy holders
cumulative voting rights with respect to the election of
directors (unless the stockholder marks the Proxy so as to
withhold such authority) and all other voting rights of the
stockholders signing such Proxies. The shares represented by
each duly executed Proxy will be voted and, where a choice is
specified by the stockholder on the Proxy, the Proxy will be
voted in accordance with the specification so made. As provided
by Pennsylvania law and the Corporation's By-Laws, abstentions,
broker non-votes and withheld votes will not be included in the
total number of votes cast, and therefore will have no effect on
the election of directors, the ratification of the selection of
auditors or other matters. Signed but unmarked Proxies will be
voted in accordance with the directors' recommendations.
The Proxy is revocable, at any time before exercise, by a
written instrument signed in the same manner as the Proxy and
received by the Secretary of the Corporation at or before the
Annual Meeting. If you attend the meeting, you may, if you wish,
revoke your Proxy by voting in person.
You are encouraged to voice your preference by marking the
appropriate boxes on the enclosed Proxy. However, it is not
necessary to mark any boxes if you wish to vote in accordance
with the directors' recommendations; merely sign, date and return
the Proxy in the enclosed postpaid envelope.
2<PAGE>
DIRECTORS' PROPOSALS
1. ELECTION OF DIRECTOR
The Board of Directors consists of three classes of
directors with overlapping three-year terms. One class of
directors is to be elected each year with terms expiring at the
third succeeding Annual Meeting after such election.
At the 1996 Annual Meeting, one Class II director will be
elected to hold office for a three-year term beginning upon his
election at the 1996 Annual Meeting.
The votes applicable to the shares represented by Proxies in
the accompanying form received from stockholders will be cast in
favor of the election of the nominee listed below. If such
nominee should be unable to serve (an event which is not
anticipated), the proxy holders reserve the right to vote for a
substitute nominee designated by the Personnel, Compensation and
Nominating Committee of the Board of Directors.
Information about the Nominee
Nominee for Class II Director for
Term Expiring in 1999
3<PAGE>
Name Age Year first elected a director
THEODORE H. BLACK 67 1988
Mr. Black is a director of Ingersoll-Rand Company, an industrial
machinery manufacturer, and served as its Chairman, President and
Chief Executive Officer from 1988 until his retirement in 1993.
Mr. Black is a director of CPC International Inc. and McDermott
International.
Information concerning the other directors of the Corporation
whose terms do not expire at the Annual Meeting is as follows:
Class III Directors with
Terms Expiring in 1997
Name Age Year first elected a director
PAUL R. ROEDEL 68 1979
Mr. Roedel retired in 1992 as Chairman and Chief Executive
Officer of Carpenter Technology Corporation, manufacturers,
fabricators and marketers of specialty metals. He joined
Carpenter in 1949 and became Chief Executive Officer in 1981 and
Chairman in 1987. He is a director of Carpenter Technology
Corporation, Meridian Bancorp, Inc. and Meridian Bank and the
4<PAGE>
P.H. Glatfelter Co. He is Chairman of the Berks Business
Education Coalition, President of the Wyomissing Foundation and a
member of ASM International. Mr. Roedel is also Chairman of the
Board of Gettysburg College and a director of the Pennsylvania
2000 Education Coalition.
Name Age Year first elected a director
CARLISLE A. H. TROST 66 1990
Admiral Trost served in the United States Navy from 1953 until
his retirement in 1990, including a four-year term from 1986 to
1990 as Chief of Naval Operations. Admiral Trost is also a
member of the Board of Directors of GPU Nuclear Corporation, and
the Chairman of that Board's Nuclear Safety and Compliance
Committee. He is Chairman of the Board of Directors of Bird-
Johnson Co., and a director of General Dynamics Corporation,
Louisiana Land & Exploration Company, Precision Components
Corporation and Lockheed Martin Corporation.
PATRICIA K. WOOLF, Ph.D. 61 1983
Dr. Woolf is a consultant, author, and Lecturer in the Department
of Molecular Biology at Princeton University. From 1988-1989,
Dr. Woolf was a Lecturer at the Woodrow Wilson School of Public
and International Affairs, Princeton University. Dr. Woolf is a
director of Crompton and Knowles Corporation and the National
5<PAGE>
Life Insurance Company of Vermont. She is also a trustee of the
New Economy Fund and a director of the American Balanced Fund,
the Income Fund of America, the Growth Fund of America and Small
Cap World Fund, all of The Capital Group of Los Angeles.
Class I Directors with
Terms Expiring in 1998
Name Age Year first elected a director
HENRY F. HENDERSON, JR. 67 1989
Mr. Henderson is President, Chief Executive Officer and a
director of H. F. Henderson Industries, designers and
manufacturers of process control and engineered systems for
government and industry, including industrial process controls
and defense electronics. He is also President and Chief
Executive Officer of Sanitec, Inc., manufacturer of medical waste
disinfecting systems for commercial and hospital use. He is a
Commissioner of the Port Authority of New York and New Jersey and
a director of the Partnership for New Jersey, the New Jersey
State Chamber of Commerce, Delta Dental Plan and the Port
Authority Trans-Hudson Corporation. He is also Chairman of the
Board of Governors of the Club at the World Trade Center and a
trustee of Stevens Institute of Technology, New York Theological
Seminary, New Jersey State Employment and Training Commission,
6<PAGE>
and Paterson Economic Development Corporation and a member of the
Defense Orientation Conference Association.
Name Age Year first elected a director
JAMES R. LEVA 63 1992
Mr. Leva is Chairman, President and Chief Executive Officer of
General Public Utilities Corporation. He is also Chairman,
President, Chief Executive Officer and a director of GPU Service
Corporation (GPUSC); Chairman of the Board, Chief Executive
Officer and a director of Jersey Central Power & Light Company
(JCP&L), Metropolitan Edison Company (Met-Ed) and Pennsylvania
Electric Company (Penelec); Chairman of the Board and a director
of GPU Nuclear Corporation; Chairman, Chief Executive Officer and
a director of GPU Generation Corporation; and Chairman and a
director of Energy Initiatives, Inc. (EI), EI Power, Inc., and EI
Energy, Inc., all subsidiaries of GPU. Mr. Leva has been
associated with the GPU System since 1952, and has served as
President of Penelec and, from 1986 until his election to his
current positions in 1991, as President of JCP&L. Mr. Leva is
also a director of Utilities Mutual Insurance Company, the New
Jersey Utilities Association, the New Jersey Chamber of Commerce
and Fairleigh Dickinson University. He is a trustee of St.
Clares-Riverside Foundation and Tri-County Scholarship Fund,
Chairman of the 1996 National U.S. Savings Bond Campaign, a
7<PAGE>
member of the Board of Overseers of the New Jersey Institute of
Technology and a member of the Prosperity New Jersey Commission.
Name Age Year first elected a director
JOHN M. PIETRUSKI 63 1989
Mr. Pietruski served as Chairman of the Board and Chief Executive
Officer of Sterling Drug Inc. from 1985 until his retirement in
1988. Currently, he is Chairman of the Board of Texas
Biotechnology Corporation, a pharmaceutical research and
development company. He also serves as President of Dansara
Company, a management consulting firm. He is a director of
Hershey Foods Corporation, Lincoln National Corporation and
McKesson Corporation. He is also a Regent of Concordia College.
CATHERINE A. REIN 53 1989
Ms. Rein has been Executive Vice President - Corporate
Development, Planning and Services of Metropolitan Life Insurance
Company since 1989, and served as Senior Vice President of that
company from 1988 to 1989 and as Vice President of Human
Resources from 1985 to 1988. Ms. Rein is a director of The Bank
of New York, Corning Inc. and INROADS, and is a member of the
Board of Trustees of the National Urban League and a trustee of
the New York University Law Center Foundation.
8<PAGE>
Standing Committees of the Board of Directors
There are four standing committees of the Board, namely, the
Audit Committee, the Corporate and Public Responsibilities
Committee, the Finance Committee and the Personnel, Compensation
and Nominating Committee. The membership and functions of these
Committees are as follows:
The Audit Committee recommends to the Board, subject to
ratification by the stockholders, the engagement of the
independent auditor and reviews with the independent auditor the
plan, scope and results of the audit and any comments by the
auditor on the internal accounting control systems of the
Corporation and its subsidiaries. All material non-audit
services proposed to be performed by the independent auditor are
reviewed by the Committee. The Committee also reviews with the
Corporation's internal auditors the plan, scope and results of
internal audits and their comments on the internal accounting
control systems. It reviews with the officers of the
Corporation, the independent auditor and the Corporation's
internal auditors the following: the accounting principles to be
applied in reporting the financial results of the Corporation as
contained in the financial statements and related footnotes
presented in the annual report to stockholders; the results of
audits by governmental agencies; and the reports on audit
procedures relating to possible corporate expenditures for
political purposes.
9<PAGE>
The Chairman of the Audit Committee is Mr. Roedel. The
other members are Messrs. Appell and Henderson and Ms. Rein.
During 1995, the Committee held four meetings.
The Corporate and Public Responsibilities Committee reviews
the Corporation's policies on public issues having broad social
significance and the implementation of those policies and reports
relating to compliance with the Corporation's Code of Ethics and
the Corporation's conduct as a responsible corporate citizen.
The Chairman of the Corporate and Public Responsibilities
Committee is Mr. Henderson. The other members are Messrs. Black
and Trost and Dr. Woolf. During 1995, the Committee held four
meetings.
The Finance Committee assists the Board in fulfilling the
Board's fiduciary responsibilities relating to the financial
policies, plans and programs of the Corporation and its
subsidiaries.
The Committee reviews a range of financial policies and
plans including dividend policy, capital structure and credit
quality goals, financing plans, and the Corporation's capital and
operating budgets. Additionally, the Committee reviews the
investment policies, funding and investment results of the
Corporation's trusteed plans.
10<PAGE>
The Chairman of the Finance Committee is Mr. Pietruski. The
other members are Messrs. Roedel and Trost and Dr. Woolf. During
1995, the Committee held five meetings.
The Personnel, Compensation and Nominating Committee
recommends to the Board the election of officers of the
Corporation and the presidents of the Corporation's direct
subsidiaries, and the compensation and other benefits of those
officers and of presidents and directors of the Corporation and
its direct subsidiaries. The Committee also reviews plans for
management succession and executive development, compensation and
other benefit goals for the GPU System companies.
The Personnel, Compensation and Nominating Committee also
recommends to the Board from time to time, within the limitations
imposed by the By-Laws, the size and composition of the Board and
candidates for membership on the Board. The Committee also
recommends to the Board the composition and membership of the
various Board Committees.
A stockholder proposal for a nominee for election as a
director should be sent by mail, addressed to Secretary, General
Public Utilities Corporation, 100 Interpace Parkway, Parsippany,
New Jersey 07054-1149. All such proposals must be received by
the Corporation not later than 30 nor more than 75 days prior to
the scheduled date of the next annual meeting and must contain
11<PAGE>
certain information regarding the identity and background of the
stockholder's proposed nominee as required by Section 10(e) of
the Corporation's By-Laws, which also sets forth additional
requirements with respect to such stockholder proposals. A copy
of Section 10(e) of the By-Laws will be furnished to stockholders
upon request made to the Secretary of the Corporation.
The Committee will also consider recommendations by
stockholders of candidates for director nominees. Recommendations
should be sent to the Secretary of the Corporation.
The Chairman of the Personnel, Compensation and Nominating
Committee is Ms. Rein. The other members are Messrs. Appell,
Black, and Pietruski. During 1995, the Committee held five
meetings.
There were 11 regular meetings and one organization meeting
of the Board during 1995. All directors attended at least 75% of
the aggregate of (i) the total number of 1995 meetings of the
Board and (ii) the total number of 1995 meetings of all
committees of the Board on which he or she served.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of February 1, 1996, the
beneficial ownership of equity securities of GPU System companies
of each of the GPU directors and each of the executive officers
12<PAGE>
named in the Summary Compensation Table, and of all directors and
executive officers of GPU as a group. The shares owned by all
directors and executive officers as a group constitute less than
1% of the total shares outstanding. The Corporation has been
advised that as of December 31, 1995, Franklin Resources, Inc.
("Franklin"), 777 Mariners Island Boulevard, San Mateo,
California 94404, beneficially owned (with shared dispositive
power) 7,003,402 shares of GPU Common Stock, or 5.8% of the
outstanding shares on such date, of which 6,964,120 shares
Franklin also beneficially owned with sole voting power.
Amount and Nature
of Beneficial
Name Title of Security Ownership(1)
Louis J. Appell, Jr. . GPU Common Stock 2,000 shares-Direct
4,274 shares-Indirect
Theodore H. Black . . . GPU Common Stock 7,359 shares-Direct
Philip R. Clark . . . . GPU Common Stock 4,306 shares-Direct
362 shares-Indirect
John G. Graham . . . . GPU Common Stock 4,321 shares-Direct
1,180 shares-Indirect
Fred D. Hafer . . . . . GPU Common Stock 4,756 shares-Direct
124 shares-Indirect
Henry F. Henderson, Jr. GPU Common Stock 2,811 shares-Direct
1,200 shares-Indirect
Ira H. Jolles . . . . . GPU Common Stock 5,515 shares-Direct
James R. Leva . . . . . GPU Common Stock 4,376 shares-Direct
100 shares-Indirect
13<PAGE>
John M. Pietruski . . . GPU Common Stock 4,000 shares-Direct
Catherine A. Rein . . . GPU Common Stock 2,562 shares-Direct
Paul R. Roedel . . . . GPU Common Stock 2,600 shares-Direct
Carlisle A. H. Trost . GPU Common Stock 2,117 shares-Direct
Robert L. Wise . . . . GPU Common Stock 4,982 shares-Direct
Patricia K. Woolf . . . GPU Common Stock 3,277 shares-Direct
All GPU Directors and
Executive Officers
as a Group . . . . . GPU Common Stock 65,502 shares-Direct
11,183 shares-Indirect
(1) The number of shares owned and the nature of such ownership,
not being within the knowledge of GPU, have been furnished
by each individual.
Remuneration of Executive Officers
Personnel, Compensation and Nominating Committee Report
The executive compensation program at GPU was revised in
1995 to increase the portion of pay that is based on business
results and to strengthen the link between compensation and
shareholder value. Accordingly, the Corporation modified each of
the three interrelated programs of executive compensation - the
Base Salary Program, the Incentive Compensation Program and the
1990 Stock Plan - in 1995.
14<PAGE>
Compensation Philosophy and Market Comparisons
GPU's overall philosophy of executive compensation remains
unchanged. The Corporation's objective is to attract and retain
high caliber executive talent and to provide appropriate rewards
when business objectives are achieved. Pay levels are intended
to vary with the achievement of business objectives and with
individual contribution to that achievement.
GPU continues to target executive pay at the median or 50th
percentile of the competitive market when business objectives
have been fully achieved. Actual pay levels will vary and may be
above or below the median in any given year based on actual
business results for the year.
In defining median competitive pay levels, GPU retains a
major compensation consulting firm to provide an objective
analysis. The competitive market data is developed based on
other companies which are believed to employ executives with
similar levels of skill, experience and expertise and in
positions similar to those at GPU. These companies are
primarily, but not exclusively, other large electric utilities.
The companies used for compensation comparisons include most but
not all of the companies in the S&P Electric Utility Index shown
in the performance graph on page 33. In addition, some companies
not included in the Index are also used for comparison because
15<PAGE>
GPU competes for executive talent in a larger market than is
reflected in the Index.
Base Salary Program
Base salary is the most stable portion of executive
compensation and does not directly vary with business results.
The program has historically been designed and managed to provide
a range of salary opportunities for each position with the middle
of the range approximating the market median. For many years,
the Board traditionally reviewed the salaries of executives each
year considering market data, individual performance and
contribution, and the Corporation's financial resources in
determining if any increases were appropriate. This process,
which involves subjective judgment, typically resulted in merit
salary increases for most executives.
Similarly, in 1995, competitive market data and the Board's
assessment of executive performance made salary increases
appropriate. As part of the Corporation's shift to increased
variable pay with a greater emphasis on the link to business
results, however, the Board determined not to make any normal
increases in base salaries for executives. Instead, executives
were provided with an opportunity to earn higher levels of annual
incentive compensation, but only to the extent business results
were achieved.
16<PAGE>
Neither Mr. Leva nor any of the other named executives
received salary increases in 1995. Salary levels continue on
average to approximate the median of the competitive market.
Differences between full year salaries for 1994 and 1995 shown in
the Summary Compensation Table on page 30 result from increases
granted mid-year in 1994. Salary levels established at that time
have not been adjusted.
This decreased emphasis on base salary compensation and
corresponding increase in annual incentive compensation
opportunity is part of a planned two year program that will be
continued in 1996 when the Board intends to again eliminate
normal salary increases in favor of additional increased
incentive opportunity.
Incentive Compensation Program
The Incentive Compensation Program provides executives with
an opportunity to earn additional cash compensation if business
objectives are achieved. As indicated above, this program was
modified in 1995. Targeted levels of annual incentive
compensation for executives were increased to offset the
elimination of base salary increases. These target levels are
designed to approximate the competitive median.
Actual awards of incentive compensation for named executives
other than Mr. Leva are based on the achievement of specific
17<PAGE>
business objectives established for the GPU company to which the
executive is assigned and on the achievement of the Corporation's
return on equity objective. In addition, the individual
performance and contribution of each executive is considered.
The Board uses subjective judgment in assessing this individual
performance and contribution.
For the utility subsidiaries (JCP&L and Met-Ed/Penelec),
objectives were earnings (50%), capital spending (20%), the all-
in price to customers per kilowatt-hour sold (15%), and efforts
to deal with industry change (15%).
For GPU Nuclear, objectives were safety (50%), budget
management (30%) and generation (20%). For the fossil generation
function, objectives were performance, defined as plant
availability and efficiency and structuring the company (25%),
budget management (45%), safety (15%) and environmental factors
(15%).
For the corporate functions at GPU Service Corporation,
objectives were system-wide budget management (40%), efforts to
position the Corporation for the changing industry (30%) and
future positioning of the Corporation with regard to the cost of
energy supply (30%).
Overall results were above target at the utility companies
and earnings goals were exceeded at each company. One company
18<PAGE>
significantly exceeded its capital spending objective while the
other was slightly under target. The all-in price to customer
goal was under target at one company and slightly above at the
other. Both JCP&L and Met-Ed/Penelec significantly exceeded
objectives in their efforts to respond to the changing industry.
GPU Nuclear significantly exceeded each of its objectives.
Each measure of nuclear safety was at or above target. Both
operating nuclear plants received an "exemplary" safety rating
from the Institute of Nuclear Power Operations. Budget
management objectives were also exceeded, and generation levels
were well above targets with the Oyster Creek facility setting
new plant performance records.
At the fossil generation function, the performance objective
was achieved while the budget management, safety and
environmental goals were each exceeded.
For GPU Service, each of the established objectives was
exceeded. System-wide budget management was above target and the
two future positioning goals were exceeded.
The Corporation's return on equity objective was exceeded
for the year. Achievement of this objective serves as a
"multiplier" applied to individual company results in determining
incentive awards.
19<PAGE>
Award for Mr. Leva
Mr. Leva's award was based on some of the same criteria used
to determine awards for other executives; however, different
weightings were used reflecting his overall responsibility for
the Corporation's success. Mr. Leva's award was based on
objectives of return on equity (40%), nuclear safety (20%),
efforts to position the Corporation for the changing industry
(20%) and future positioning of the Corporation with regard to
the cost of energy supply (20%).
The return on equity objective, as noted, was exceeded and
nuclear safety measures were at or above target.
Efforts to position the Corporation for the changing utility
industry were deemed to be well above objectives. Among the
accomplishments resulting from Mr. Leva's leadership were
specific actions taken to enhance the Corporation's competitive
position including the sale of an additional 5 million shares of
stock and refinancing of significant long-term debt at more
favorable rates. GPU also took a leadership position in
supporting legislative and regulatory changes considered
essential if the Corporation is to compete effectively in the
future.
A new Corporate Development function was established to
investigate and pursue new business opportunities in areas such
20<PAGE>
as distributed generation, retail energy services and nuclear
decommissioning services. In addition, the Energy Initiatives
Group expanded its independent power development contracts to
take advantage of opportunities in Australia and South America in
1995.
Mr. Leva continued to provide both leadership and a personal
example of support for the cultural change efforts at GPU. These
culture change efforts include initiatives to educate employees
on the need to increase their focus on business results. Among
these initiatives is a newly implemented program of expanded
incentive pay opportunities whereby most of the GPU workforce now
have a portion of pay linked to achievement of business results.
Efforts to enhance the Corporation's future position with
regard to energy supply and cost were also deemed to have
exceeded target. Again under Mr. Leva's leadership, a number of
highly uneconomic contracts with non-utility power generators
were successfully terminated or renegotiated. As part of efforts
to increase the Corporation's technical competence in the power
supply market, a Power Marketing group was formed with
responsibility to develop appropriate benchmarks and a
comprehensive business plan. A rigorous analysis of existing
generating facilities and their future potential was undertaken
as part of an overall strategic plan for generation.
21<PAGE>
Consistent with plan design, actual incentive pay awards for
the named executives for 1995 were, on average, somewhat above
competitive medians reflecting the achievement levels described.
1990 Stock Plan
The 1990 Stock Plan, which was approved by shareholders,
provides the Board with the discretion to use several different
stock compensation vehicles. In 1995, the Board initiated the
use of performance restricted units reflecting its judgment that
such units provide a stronger link to increases in shareholder
value.
Performance restricted units give the executive the right to
receive shares of GPU Common Stock (or cash at the discretion of
the Committee) provided that certain performance objectives are
achieved. For the 1995 grants, the performance measure is GPU's
total shareholder return compared to the total return of
companies in the S&P Electric Utility Index. The percentile
ranking of GPU's total shareholder return among the Index
companies, calculated quarterly over the five year performance
period and averaged, will determine how many shares, if any, are
actually received by the executive at the end of the performance
period.
Executives are awarded a specific number of units and
dividend equivalents are paid on these units and reinvested in
22<PAGE>
additional units. The number of units that vest at the end of
the performance period, however, may differ significantly from
the number initially awarded. The awarded number of units (plus
reinvested dividend equivalents) will vest if GPU's total return
is at the targeted level of the 55th percentile of Index
companies. Additional units will vest if total return is at a
higher level and fewer will vest if total return is lower. No
units will vest if total return is below the 40th percentile.
Awards to executives reflect median competitive levels and
the individual contribution and performance of the executive.
These factors are not weighted and the Board uses subjective
judgment in determining specific awards.
Award for Mr. Leva
Because Mr. Leva's normal retirement date is in 1997, the
Board determined that the program of annual performance unit
grants with a five year performance period would be inappropriate
for him. Consequently, the Board awarded Mr. Leva a one-time
grant in 1995 approximately equal in size to three median
competitive annual grants. This one-time grant has a three year
performance period from 1995 through 1997 and is subject to the
same performance requirements as described above. The Board does
not intend to make any additional Stock Plan awards to Mr. Leva
in the next two years.
23<PAGE>
Personnel, Compensation and Nominating
Committee Members
Louis J. Appell, Jr.
Theodore H. Black
John M. Pietruski
Catherine A. Rein
24<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
<CAPTION> Awards Payouts
Other
Name and Annual Restricted All Other
Principal Compen- Stock/Unit LTIP Compen-
Position Year Salary Bonus sation(1) Awards(2) Payouts(3) sation
<S> <C> <C> <C> <C> <C> <C> <C>
James R. Leva 1995 $585,000 $333,450 $ - $ - $ 44,131 $ 80,850(4)
Chairman, President and 1994 573,750 292,500 - 117,563 - 68,409
Chief Executive Officer, 1993 523,750 189,000 - 124,000 - 54,291
General Public Utilities
Corporation
Philip R. Clark 1995 331,692(5)150,600 181 - 316,779 25,871(6)
President, GPU 1994 304,750 84,000 277 44,021 - 21,329
Nuclear Corporation 1993 291,250 80,000 911 48,825 - 29,126
Ira H. Jolles 1995 331,000 116,000 - - 57,207 27,757(7)
Senior Vice President 1994 327,750 83,000 - 47,025 - 24,114
and General Counsel, 1993 314,750 69,000 - 49,600 - 23,724
General Public Utilities
Corporation
Robert L. Wise 1995 293,000 138,600 - - 44,131 29,862(8)
President, GPU 1994 290,000 81,000 - 41,931 - 23,945
Generation Corporation 1993 278,250 67,000 - 43,710 - 30,012
John G. Graham 1995 280,000 98,000 - - 42,292 32,234(9)
Senior Vice President and 1994 276,250 75,000 - 39,841 - 29,582
Chief Financial Officer, 1993 261,250 59,000 - 41,850 - 40,740
General Public Utilities
Corporation
Fred D. Hafer 1995 280,000 94,000 - - 40,454 23,076(10)
President, Metropolitan 1994 275,250 77,000 - 39,841 - 19,733
Edison Company and 1993 258,250 50,000 - 41,850 - 18,975
Pennsylvania Electric
Company
(1) "Other Annual Compensation" is composed entirely of the above-market interest accrued on the pre-retirement portion of
deferred compensation.
(2) The restricted units issued in 1995 under the 1990 Stock Plan for Employees of GPU Corporation and Subsidiaries (the
"1990 Stock Plan") are performance based as shown in "Long-Term Incentive Plans - Awards in Last Fiscal Year" table
(the "LTIP table"). Dividends are paid or accrued on the aggregate restricted shares/units awarded under the 1990
Stock Plan and reinvested.
The aggregate number and value (based on the stock price per share at December 31, 1995) of nonvested restricted
shares/units includes the amounts shown on the LTIP table and at the end of 1995 were:
25
<PAGE>
Aggregate Shares/Units Aggregate Value
James R. Leva 42,050 $1,429,700
Philip R. Clark 5,060 $ 172,040
Ira H. Jolles 10,675 $ 362,950
Robert L. Wise 9,700 $ 329,800
John G. Graham 8,925 $ 303,450
Fred D. Hafer 8,875 $ 301,750
(3) Consists of Performance Cash Incentive Awards paid on the 1990 restricted stock awards which have vested under the 1990
Stock Plan. These amounts are designed to compensate recipients of restricted stock/unit awards for the amount of
federal and state income taxes that are payable upon vesting of the restricted stock/unit awards. Amounts for Mr.
Clark include Performance Cash Incentive Awards of $44,131 on the 1990 restricted stock award, $180,248 on the 1992,
1993 and 1994 restricted stock awards which vested upon his retirement and $92,400 paid in cash in lieu of receiving
restricted units in 1995.
(4) Consists of the Corporation's matching contributions under the Savings Plan ($6,000), matching contributions under the
non-qualified deferred compensation plan ($29,100), the benefit of interest-free use of the non-term portion of
employer paid premiums for split-dollar life insurance ($38,988), and above-market interest accrued on the retirement
portion of deferred compensation ($6,762).
(5) Mr. Clark retired as president of GPU Nuclear Corporation effective December 31, 1995. The 1995 salary amount for Mr.
Clark includes $23,692 of accrued vacation paid upon his retirement.
(6) Consists of the Corporation's matching contributions under the Savings Plan ($6,000), matching contributions under the
non-qualified deferred compensation plan ($9,680), the benefit of interest-free use of the non-term portion of employer
paid premiums for split-dollar life insurance ($4,401), and above-market interest accrued on the retirement portion of
deferred compensation ($5,790).
(7) Consists of the Corporation's matching contributions under the Savings Plan ($6,000), matching contributions under the
non-qualified deferred compensation plan ($10,560), the benefit of interest-free use of the non-term portion of
employer paid premiums for split-dollar life insurance ($10,723), and above-market interest accrued on the retirement
portion of deferred compensation ($474).
(8) Consists of the Corporation's matching contributions under the Savings Plan ($6,000), matching contributions under the
non-qualified deferred compensation plan ($8,960), the benefit of interest-free use of the non-term portion of employer
paid premiums for split-dollar life insurance ($8,124), and above-market interest accrued on the retirement portion of
deferred compensation ($6,778).
(9) Consists of the Corporation's matching contributions under the Savings Plan ($6,000), matching contributions under the
non-qualified deferred compensation plan ($8,200), the benefit of interest-free use of the non-term portion of employer
paid premiums for split-dollar life insurance ($9,499), and above-market interest accrued on the retirement portion of
deferred compensation ($8,535).
(10) Consists of the Corporation's matching contributions under the Savings Plan ($6,000), matching contributions under the
non-qualified deferred compensation plan ($8,280), the benefit of interest-free use of the non-term portion of employer
paid premiums for split-dollar life insurance ($8,548), and above-market interest accrued on the retirement portion of
deferred compensation ($248).
NOTE: The split-dollar life insurance amounts reported in the "All Other Compensation" column are equal to the present value
of the interest-free use of the current year Corporation paid premiums to the projected date the premiums will be refunded to
the Corporation.
26
<PAGE>
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
<CAPTION>
Performance Estimated future payouts under
Number of or other non-stock price based plans(1)
shares, period until
units or maturation Threshold Target Maximum
Name other rights or payout ($ or #) ($ or #) ($ or #)
<S> <C> <C> <C> <C> <C>
James R. Leva (2) 27,750 3 year vesting $ 0 $943,500 $1,887,000
Philip R. Clark (3) - - $ 0 $ 0 $ 0
Ira H. Jolles 3,425 5 year vesting $ 0 $116,450 $ 232,900
Robert L. Wise 3,035 5 year vesting $ 0 $103,190 $ 206,380
John G. Graham 3,000 5 year vesting $ 0 $102,000 $ 204,000
Fred D. Hafer 2,900 5 year vesting $ 0 $ 98,600 $ 197,200
(1) The restricted units issued in 1995 under the 1990 Stock Plan provide for a
performance adjustment to the aggregate number of units vesting for the recipient
based on the annualized GPU Total Shareholder Return (TSR) percentile ranking against
all companies in the Standard & Poor's Electric Utility Index for the period between
the award and vesting dates. With a 55th percentile ranking, the performance
adjustment would be 100% as reflected in the "Target" column. In the event that the
percentile ranking is below the 55th percentile, the performance adjustment would be
reduced in steps reaching 0% at the 39th percentile as reflected in the "Threshold"
column. Should the TSR percentile ranking exceed the 59th percentile, then the
performance adjustment would be increased in steps reaching 200% at the 90th
percentile as reflected in the "Maximum" column. The estimated future payouts are
computed based on the number of restricted units awarded for 1995 multiplied by the
1995 year-end market value of $34 per share. Actual payouts under the Plan would be
based on the actual number of shares issued and the market value of those shares at
the time the restrictions lapse, and may be different from those indicated above.
(2) The 1995 award for Mr. Leva represents an amount intended to provide incentives for
1995, 1996 and 1997.
(3) The $92,400 in cash received by Mr. Clark in lieu of receiving restricted units in
1995 is disclosed in the Summary Compensation Table under LTIP Payouts.
27
</TABLE>
<PAGE>
[Tabular representation of Performance Graph is set forth below]
Comparison of Five Year Cumulative Total Return*
GPU, S&P 500 Index and S&P Electric Utility Index
($)
Amount
Invested
1/1/91 1991 1992 1993 1994 1995
GPU 100 127 137 161 146 202
S&P 500 100 131 140 155 157 215
S&P Electric Utility 100 130 138 155 135 177
* Cumulative Total Return includes reinvestment of dividends.
28
<PAGE>
Employment, Termination and Change in Control Arrangements
Mr. Jolles
Retirement and Disability - If Mr. Jolles retires on or
after his normal retirement date (the last day of the month in
which he attains age 65), he will receive (in addition to his
benefits under GPUSC's employee retirement plans) a supplemental
retirement pension from GPU System sources equal to the
additional pension he would have received under the GPUSC
employee retirement plans as if he had an additional 20 years of
past creditable service. If Mr. Jolles reaches his normal
retirement date while he is receiving disability income under
GPUSC's disability income plans, he will thereafter receive a
supplemental retirement pension from GPU System sources equal to
the additional pension he would have been paid under GPUSC's
employee retirement plans as if he had an additional 20 years of
past creditable service.
Upon retirement Mr. Jolles will also receive (a) an
extension of health insurance benefits to the later of his 62nd
birthday and the third anniversary of retirement and (b) an
amended split-dollar life insurance supplement to provide for
eligibility for full benefits at age 55 with 10 years of service.
Termination - (i) If Mr. Jolles' employment within the GPU
System terminates "involuntarily," as defined, within two years
29
<PAGE>
following the occurrence of a "change in control" of GPU, as
defined, or without cause, he shall receive from GPU System
sources a supplemental retirement pension which would have been
paid to him under GPUSC's employee retirement plans as if he had
an additional 20 years of past creditable service. (ii) If,
however, his employment terminates for any other reason (except
upon retirement or death), he will receive from GPU System
sources a supplemental retirement pension equal to the additional
pension he would have been paid under GPUSC's employee retirement
plans as if he had additional years of creditable service ranging
from two years up to a maximum of 20 years depending upon his
years of actual employment by GPUSC at the time of termination.
Mr. Jolles will also be entitled to receive such additional
monthly payment, if any, to ensure that the aggregate monthly
pension amount otherwise payable to him under GPUSC's retirement
plans is not less than: (a) $10,825.75 for each month beginning
after retirement and before the month beginning after Mr. Jolles'
62nd birthday or (b) $10,325.75 for each month beginning after
the later of his retirement date and his 62nd birthday.
Death - In the event of Mr. Jolles' death before he begins
receiving benefits under GPUSC's employee retirement plans, his
surviving spouse, if any, shall receive such benefits during her
lifetime, together with the supplemental retirement pension
benefits which would have been payable to him as described in
paragraph (ii) above.
30
<PAGE>
Other - To the extent relevant to the level of benefits
payable to Mr. Jolles under other benefit plans provided for
senior GPU executives, he will be treated as having the years of
creditable service as described in paragraph (ii) above.
Benefit Protection Trusts
The Corporation has entered into benefit protection trust
agreements to be used to fund the Corporation's obligations to
executive officers and directors under deferred compensation and
incentive programs and agreements, and with respect to certain
retirement and termination benefits, in the event of a change in
control. The trusts may also be used for the purpose of paying
legal expenses incurred in pursuing benefit claims under such
programs and agreements following a change in control. The
trusts are currently partially funded.
Retirement Plans
The GPU System pension plans provide for pension benefits,
payable for life after retirement, based upon years of creditable
service with the GPU System and the employee's career average
compensation as defined below. Under federal law, an employee's
pension benefits that may be paid from a qualified trust under a
qualified pension plan such as the GPU System plans are subject
to certain maximum amounts. The GPU System companies also have
adopted non-qualified plans providing that the portion of a
31
<PAGE>
participant's pension benefits which, by reason of such
limitations or source, cannot be paid from such a qualified trust
shall be paid directly on an unfunded basis by the participant's
employer.
The following table illustrates the amount of aggregate
annual pension from funded and unfunded sources resulting from
employer contributions to the qualified trust and direct payments
payable upon retirement in 1996 (computed on a single life
annuity basis) to persons in specified salary and years of
service classifications:
32
<PAGE>
<TABLE>
ESTIMATED ANNUAL RETIREMENT BENEFITS (2) (3) (4) (5)
BASED UPON CAREER AVERAGE COMPENSATION
(1996 Retirement)
<CAPTION>
Career
Average
Compen- 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years 45 Years
sation(1) of Service of Service of Service of Service of Service of Service of Service of Service
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 50,000 $ 9,378 $ 14,067 $ 18,756 $ 23,445 $ 28,134 $ 32,823 $ 37,236 $ 41,236
100,000 19,378 29,067 38,756 48,445 58,134 67,823 76,836 84,836
150,000 29,378 44,067 58,756 73,445 88,134 102,823 116,436 128,436
200,000 39,378 59,067 78,756 98,445 118,134 137,823 156,036 172,036
250,000 49,378 74,067 98,756 123,445 148,134 172,823 195,636 215,636
300,000 59,378 89,067 118,756 148,445 178,134 207,823 235,236 259,236
350,000 69,378 104,067 138,756 173,445 208,134 242,823 274,836 302,836
400,000 79,378 119,067 158,756 198,445 238,134 277,823 314,436 346,436
450,000 89,378 134,067 178,756 223,445 268,134 312,823 354,036 390,036
500,000 99,378 149,067 198,756 248,445 298,134 347,823 393,636 433,636
550,000 109,378 164,067 218,756 273,445 328,134 382,823 433,236 477,236
600,000 119,378 179,067 238,756 298,445 358,134 417,823 472,836 520,836
650,000 129,378 194,067 258,756 323,445 388,134 452,823 512,436 564,436
700,000 139,378 209,067 278,756 348,445 418,134 487,823 552,036 608,036
750,000 149,378 224,067 298,756 373,445 448,134 522,823 591,636 651,636
800,000 159,378 239,067 318,756 398,445 478,134 557,823 631,236 695,236
______________
(1) Career Average Compensation is the average annual
compensation received from January 1, 1984 to retirement and
includes Salary and Bonus. The career average compensation
amounts for the following named executive officers differ by
more than 10% from the three year average annual
compensation set forth in the Summary Compensation Table and
are as follows: Messrs. Leva - $414,445; Clark - $288,793;
Wise - $253,349; Graham - $263,920; and Hafer - $249,444.
(2) Years of Creditable Service at December 31, 1995: Messrs.
Leva - 44 years; Clark - 24 years; Jolles - 14 years; Wise -
32 years; Graham - 26 years; and Hafer - 33 years.
33
</TABLE>
<PAGE>
(3) Certain of these executives have supplemental pension
arrangements. Based on assumed retirement in 1996 with
current years of creditable service, the total pension
benefit amounts payable to Mr. Leva are $541,114 ($352,521
basic pension per the above table and $188,593 under
supplemental pension agreements); to Mr. Jolles are $129,909
($106,542 basic pension per the above table and $23,367
under a supplemental pension agreement); and to Mr. Graham
are $151,842 ($135,703 basic pension per the above table and
$16,139 under a supplemental pension agreement). Total
pension benefit amounts payable to Mr. Clark, who retired as
of December 31, 1995, are $200,795 ($135,838 basic pension
per the above table and $64,957 under a supplemental pension
agreement).
(4) Based on an assumed retirement at age 65 in 1996. To reduce
the above amounts to reflect a retirement benefit assuming a
continual annuity to a surviving spouse equal to 50% of the
annuity payable at retirement, multiply the above benefits
by 90%. The estimated annual benefits are not subject to
any reduction for Social Security benefits or other offset
amounts.
(5) Annual retirement benefits under the basic pension per the
above table cannot exceed 55% of the average compensation
during the highest paid 36 calendar months.
34
<PAGE>
Supplemental Pensions
The Corporation has adopted supplemental pension programs
for Messrs. Leva, Jolles, Graham and Clark as described below.
The supplemental pension payments are not funded, but are payable
from GPU System sources. The programs provide that supplemental
pension payments (assuming the lower scale payment described
below applies) are to be increased by 20% during the first year
following retirement.
Mr. Leva will receive an annual supplemental pension equal
to (a) 65% of his final average compensation (as defined),
reduced by (b) in general, the aggregate annual pension amount
payable to him under other GPUSC retirement plans. "Final
average compensation" is defined as Mr. Leva's average annual
salary and bonus compensation paid for the three years prior to
retirement. Assuming Mr. Leva retires at normal retirement age,
the estimated monthly pension payable to him under the foregoing
supplemental pension would be $15,406. Mr. Leva will also
receive upon retirement a separate supplemental pension payment
of $3,726 annually.
Mr. Jolles will receive supplemental pensions as described
above. See "Employment, Termination and Change in Control
Arrangements--Mr. Jolles."
35
<PAGE>
Mr. Graham will be entitled to receive such additional
monthly payment, if any, to ensure that the aggregate monthly
pension amount otherwise payable to him under GPUSC's retirement
plans is not less than: (a) $12,653.50 for each month beginning
after his retirement date and before the month beginning after
his 62nd birthday or (b) $12,153.50 for each month beginning
after the later of his retirement date and his 62nd birthday.
Mr. Graham will also receive (i) an extension of health insurance
benefits to the later of his 62nd birthday and the third
anniversary of retirement and (ii) an amended split-dollar life
insurance supplement to provide for eligibility for full benefits
under his policy at age 55 with 10 years of service.
The supplemental pensions payable to Messrs. Leva and Graham
will be paid in the form of a single life annuity, provided that
if the executive is married on his retirement date, it will be
payable to him at a reduced rate, and, following his death, his
surviving spouse, if any, will receive an annuity payable for
life equal to 50% of the supplemental pension payable to him. In
addition, in the event of the executive's death before he
retires, his surviving spouse, if any, will receive an annuity
payable for life equal to 50% of the supplemental pension that
would have been payable to him had he retired on the last day of
the month in which his death occurs.
Mr. Clark, who retired effective December 31, 1995, receives
an annual supplemental pension of $77,949 during 1996 and $64,957
36
<PAGE>
annually thereafter. Following his death, his surviving spouse,
if any, will receive a life annuity of $32,479 per year.
Remuneration of Directors
Non-employee directors receive an annual retainer of
$15,000, a fee of $1,000 for each Board meeting attended and a
fee of $1,000 for each Committee meeting attended. Committee
Chairmen receive an additional retainer of $2,500 per year.
Retirement Plan for Outside Directors
Under the Corporation's Retirement Plan for Outside
Directors, an individual who completes 54 months of service as a
non-employee director is entitled to receive retirement benefits
equal to the product of (A) the number of months of service
completed and (B) the monthly compensation paid to the director
at the date of retirement. Retirement benefits under this plan
are payable to the directors (or, in the event of death, to
designated beneficiaries) in monthly installments of 1/12 of the
sum of (x) the then annual retainer paid at time of retirement
plus (y) the cash value of the last award under the Restricted
Stock Plan for Outside Directors per month, over a period equal
to the director's service as such, unless otherwise directed by
the Personnel, Compensation and Nominating Committee, commencing
at the later of age 60 or upon retirement. As of December 31,
1995, the following directors had at least 54 months of service:
37
<PAGE>
Director Months of Service
Louis J. Appell, Jr. 263
Theodore H. Black 94
Henry F. Henderson, Jr. 83
Paul R. Roedel 204
John M. Pietruski 83
Catherine A. Rein 83
Carlisle A. H. Trost 60
Patricia K. Woolf 149
Restricted Stock Plan for Outside Directors
The Corporation has adopted a Restricted Stock Plan for
Outside Directors ("Directors Plan") which was initially approved
by stockholders at the 1989 Annual Meeting. Under the Directors
Plan, each director who is not an employee of the Corporation or
any of its subsidiaries ("Outside Director") is paid a portion of
his or her annual compensation in the form of 300 shares of GPU
Common Stock.
A total of 40,000 shares of GPU Common Stock (subject to
adjustment for stock dividends, stock splits, recapitalizations
and other specified events) has been authorized for issuance
under the Directors Plan. Any shares awarded which are forfeited
as provided by the Directors Plan will again be available for
issuance.
38
<PAGE>
Shares of Common Stock are awarded to Outside Directors on
the condition that the director serves or has served as an
Outside Director until (i) death or disability, (ii) failure to
stand for re-election at the end of the term upon reaching
age 70, (iii) resignation or failure to stand for re-election
with the consent of the Board, which is defined in the Directors
Plan to mean approval thereof by at least 80% of the directors
other than the affected director or (iv) failure to be re-elected
to the Board after being duly nominated. Termination of service
for any other reason, including any involuntary termination
effected by action or inaction of the Board, will result in
forfeiture of all shares awarded.
Until termination of service, an Outside Director may not
dispose of any shares of Common Stock awarded under the Directors
Plan, but has all other rights of a shareholder with respect to
such shares, including voting rights and the right to receive all
cash dividends paid with respect to awarded shares.
The Directors Plan is proposed to be amended as described
below.
2. AMENDMENTS TO RESTRICTED STOCK PLAN FOR OUTSIDE DIRECTORS
As described above, the Directors Plan currently provides
for the payment to the Corporation's Outside Directors of a
portion of their annual compensation in the form of 300 shares of
39
<PAGE>
GPU Common Stock. The Directors Plan further provides that
termination of service as an Outside Director -- other than upon
retirement at age 70, death or disability or as otherwise
permitted -- will result in forfeiture by the Outside Director of
all shares awarded.
On June 1, 1995, the Board of Directors adopted, subject to
approval of the stockholders at the 1996 Annual Meeting, proposed
amendments to the Directors Plan which would modify this
forfeiture provision in the event of a Change in Control (as
defined) of GPU. Specifically, the proposed amendments provide
that termination of an Outside Director's service for any reason
at any time after the occurrence of a Change in Control will not
result in forfeiture of shares awarded under the Directors Plan.
The proposed amendments would also restrict the ability of the
Administrative Committee to deny benefits following a Change in
Control, and make certain other minor and technical changes to
the Directors Plan.
A Change in Control for purposes of the Directors Plan would
be defined as follows:
A "Change in Control" is deemed to occur
at the time when either (i) any entity,
person (within the meaning of Section 14(d)
of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) or group
(within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) (other than any
Company, or any subsidiary of any Company, or
any savings, pension or other plan for the
benefit of employees of any Company or its
subsidiaries) which theretofore was
beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of less than 20% of
the Corporation's then outstanding Common
40
<PAGE>
Stock either (x) acquires shares of Common
Stock of the Corporation in a transaction or
series of transactions that results in such
entity, person or group directly or
indirectly owning beneficially 20% or more of
the outstanding Common Stock of the
Corporation, or (y) acquires by proxy or
otherwise the right to vote for the election
of directors, for any merger, combination or
consolidation of the Corporation or any of
its direct or indirect subsidiaries, or for
any other matter or question more than 20% of
the then outstanding voting securities of the
Corporation (except where such acquisition is
made by a person or persons appointed by at
least a majority of the Board of Directors of
the Corporation to act as proxy for any
purpose); or (ii) the election or
appointment, within a twelve-month period, of
persons to the Corporation's Board of
Directors who were not directors of the
Corporation at the beginning of such twelve-
month period, and whose election or
appointment was not approved by a majority of
those persons who were directors at the
beginning of such period, where such newly
elected or appointed directors constitute 30%
or more of the directors of the Board of
Directors of the Corporation.
The Board believes the proposed amendments are necessary to
assure that Outside Directors will receive previously awarded
shares to which they would otherwise be entitled in the event of
a recomposition of the Board as a result of an acquisition or
merger of the Corporation. To this end, the Board has determined
that it is appropriate to include in the Directors Plan a change
of control vesting provision similar to that contained in the
1990 Stock Plan for Employees of GPU and Subsidiaries. This will
also help GPU attract and retain qualified individuals to serve
as directors.
At February 1, 1996, there were a total of 15,800
outstanding share awards to the eight Outside Directors under the
41
<PAGE>
Directors Plan, having a market value as of such date of
$533,250.
The complete text of the Directors Plan as proposed to be
amended is set forth in Annex A to the Proxy Statement. Adoption
of the proposed amendments to the Directors Plan requires the
affirmative vote of a majority of the shares present and voting
at the meeting.
The Board of Directors recommends that stockholders vote FOR
the proposed amendments to the Directors Plan.
3. RATIFICATION OF SELECTION OF COOPERS & LYBRAND L.L.P. AS
INDEPENDENT AUDITOR FOR THE YEAR 1996
The Board of Directors has selected the firm of Coopers &
Lybrand L.L.P. ("C&L"), independent certified public accountants,
to audit the accounts of the Corporation for 1996. Although
submission to stockholders of the appointment of the independent
auditor is not required by law, the Board, in accordance with its
long-standing policy of seeking annual stockholder ratification
of the selection of auditors, believes it appropriate that such
selection be ratified by the stockholders. C&L has acted as the
auditor for the Corporation and its subsidiaries since 1946. C&L
has advised the Corporation that neither that firm nor any of its
partners has any direct or indirect material relationship with
the Corporation or its subsidiaries.
42
<PAGE>
The services rendered by C&L for 1995 included an audit of
the consolidated financial statements of the Corporation and its
subsidiaries for the year ending December 31, 1995 contained in
the annual report to stockholders and audits of the individual
and consolidated financial statements of the Corporation and its
subsidiaries and related schedules filed annually with the
Securities and Exchange Commission. C&L also performed audits as
necessary to report upon compliance with the accounting
requirements of the Federal Energy Regulatory Commission for
certain financial statements included in the reports which are
required to be filed annually with that Commission by the
subsidiary companies.
Fees paid to C&L for 1995 for services aggregated $1,150,000
excluding reimbursement for out-of-pocket expenses.
It is expected that representatives of C&L will be present
at the Annual Meeting, will be available to respond to
appropriate questions and will have an opportunity to make a
statement if they desire to do so.
STOCKHOLDER PROPOSAL
4. STOCKHOLDER PROPOSAL
Immaculate Heart Missions, Inc., 4651 North 25th Street,
Arlington, Virginia 22207, the holder of 8,100 shares of GPU
43
<PAGE>
Common Stock, has informed GPU that it plans to present the
following resolution for action by the stockholders at the Annual
Meeting:
UTILITIES, ENERGY CONSERVATION, CARBON DIOXIDE EMISSIONS and
CLIMATE CHANGE
WHEREAS WE BELIEVE:
The U.S. performs poorly in energy efficiency, compared to
other industrialized countries, ranking 9th out of the 10 OECD
nations, and using nearly twice as much energy/$ GNP as Japan or
Sweden.
Electric utilities are the largest source of carbon dioxide
(CO2) accounting for 35% of all emissions. CO2, in turn, is the
most important greenhouse gas, trapping solar heat and causing a
'greenhouse' effect;
The risk of climate change - to economic welfare, public
health, environmental stability, agricultural production, and the
level of the sea - would affect many people both in the U.S. and
around the world.
Many scientists have called for 20% reductions in CO2
emissions by the year 2000. The U.S. ratified the 1994 UN treaty
on climate change, supporting plans to reduce CO2 emissions to
1990 levels by the year 2000. Moreover, certain U.S.
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corporations have adopted 20% reduction goals for their own
energy consumption and CO2 emissions.
While sensitive to the regulatory environment in which our
Company operates, we believe our Company can play an important
role in controlling CO2 emissions - through its choices of fuel,
plant operation, and investment in customer efficiency programs
known as Demand-Side Management (DSM). The U.S. Congress' Office
of Technology Assessment says we can cost-effectively reduce
electricity needs by 20-45% by the year 2000 with available
energy efficiency technologies. Moreover, technology exists to
derive another 5% of electricity from renewable energy by that
date. Both would maintain full energy services to customers yet
reduce CO2 emissions.
Energy options which lower CO2 emissions can create
financial security for our Company by reducing or eliminating the
need for new electricity-generating capacity. Integrating CO2
reductions into planning now will also minimize possible large
compliance costs of future CO2 regulations, comparable to the
large costs that some companies face now with the 1990 Clean Air
Act. DSM can also result in lower costs and increased profits
for the utility and lower bills for the customer. Our company
can achieve financial and regulatory stability by taking
leadership in this area.
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RESOLVED: Shareholders request the Company to make a report
publicly available by August 1996 (prepared at reasonable cost
and omitting proprietary information), describing: (a) plans and
commitments to action that will reduce carbon dioxide emissions;
(b) the financial implications of these plans, actions, or lack
thereof; and (c) the ensuing impact upon shareholders.
SUPPORTING STATEMENT
We believe an effective report should discuss costs and
savings for all feasible measures that would reduce CO2
emissions, including demand-side management, development of
renewable sources of energy, and fuel switching to lower-carbon-
content fuels. Beginning to make cost-effective reductions in
emissions now can make the Company more competitive; help retain
large customers; create jobs in the local economy; protect both
short- and long-term financial health; and increase shareholder
value. Shareholders should vote FOR this resolution to minimize
the costs of climate change - both to the company and to society
at large.
1996 Resolution
The Board of Directors recommends that stockholders vote AGAINST
this proposal.
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The Board of Directors believes that preparation of a report
specifically addressed to the GPU System's carbon dioxide
reduction plans would be largely duplicative of information
already publicly available. In particular, the Corporation's
1995 Annual Report on Form 10-K ("Form 10-K") reported that the
Corporation had signed an Accord with the U.S. Department of
Energy ("DOE") as part of the DOE's Climate Challenge Program.
GPU was one of approximately 150 electric utilities to sign
accords with the DOE under that Program, which is part of the
Clinton Administration's Climate Change Action Plan which has an
overall goal of reducing through voluntary initiatives United
States greenhouse gas emissions to 1990 levels by the year 2000.
The Accord, which is also publicly available, describes the
utility industry and GPU-specific programs for the management of
greenhouse gases. As stated in the Form 10-K, the GPU System's
greenhouse gas management program is expected to avoid or reduce
the equivalent of 8 million tons of carbon dioxide emissions
between 1995 and 2000. In light of the information contained in
the Form 10-K and the Accord, as well as in annual resource plans
filed by GPU's electric operating subsidiaries with their state
regulatory commissions -- which plans identify generation
requirements and the proposed sources of energy and capacity to
meet these requirements (including demand-side management
initiatives) -- the Board believes that preparation of a further
report on this subject would involve needless expense which
should not be borne by the stockholders at large.
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For these reasons, the Board believes the proposal is not in
the best interests of the stockholders and recommends a vote
AGAINST the proposal.
OTHER MATTERS
The Board of Directors does not intend to bring any other
matters before the meeting and it is not informed of any other
business which others may bring before the meeting. However, if
any other matters should properly come before the meeting, or any
adjournment thereof, it is the intention of the persons named in
the accompanying Proxy to vote on such matters as they, in their
discretion, may determine.
GPU will pay all costs of soliciting Proxies in the
accompanying form. Solicitation will be made by mail, and
directors and officers of GPU, and officers and employees of
GPUSC, may also solicit Proxies by telephone, telegraph or
personal interview. The Corporation has also retained Chemical
Mellon Shareholder Services, L.L.C. to aid in the solicitation of
Proxies, at an estimated cost of $8,000, plus reimbursement of
reasonable out-of-pocket expenses. In addition, GPU will request
persons who hold stock in their names for others to forward
copies of this proxy soliciting material to them, and to request
authority to execute Proxies on the accompanying form, and will
reimburse such persons for their out-of-pocket and reasonable
clerical expenses in doing this.
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Deadline for Stockholder Proposals
If a stockholder wishes to submit a proposal for inclusion
in the Proxy Statement for the 1997 Annual Meeting of
Stockholders, such proposal must be received by the Corporation
not later than December 2, 1996.
By order of the Board of Directors,
MARY A. NALEWAKO, Secretary
March 27, 1996
YOUR VOTE IS IMPORTANT
You are encouraged to voice your preference by marking the
appropriate boxes on the enclosed Proxy. However, it is not
necessary to mark any boxes if you wish to vote in accordance
with the directors' recommendations; merely sign, date and return
the Proxy in the enclosed postpaid envelope.
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ANNEX A
Set forth below is the text of the restricted Stock Plan for
Outside Directors (marked to show changes to reflect the proposed
amendments).
GENERAL PUBLIC UTILITIES CORPORATION
RESTRICTED STOCK PLAN FOR OUTSIDE DIRECTORS
1. Purpose. The purpose of this restricted Stock Plan for
Outside Directors (the "Plan") is to enable General Public
Utilities Corporation ("GPU") to attract and retain persons of
outstanding competence to serve on its Board of Directors by
paying such persons a portion of their compensation in GPU Common
Stock pursuant to the terms hereof.
2. Definitions.
(a) The term "Change in Control" shall have the same meaning
as assigned to such term under the definition of such term
contained in Section 7(c) of the 1990 Stock Plan for Employees of
General Public Utilities Corporation and Subsidiaries.
(b) [BEGIN STRIKEOUT](a)[END STRIKEOUT] The term "Outside
Director" or "Participant" means a member of the Board of
Directors of GPU who is not an employee (within the meaning of
the Employee Retirement Income Security Act of 1974) of GPU or
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any of its Subsidiaries. A director of GPU who is also an
employee of GPU or any of its Subsidiaries shall become eligible
to participate in this Plan and shall be entitled to receive an
award of restricted stock upon the termination of such
employment.
(c) [BEGIN STRIKEOUT](b)[END STRIKEOUT] The term
"Subsidiary" means any corporation 50% or more of the outstanding
Common Stock of which is owned, directly or indirectly, by GPU.
(d) [BEGIN STRIKEOUT](c)[END STRIKEOUT] The term "Service"
shall mean service as an Outside Director.
3. Eligibility. All Outside Directors of GPU shall receive
stock awards hereunder.
4. Stock Awards.
(a) A total of 33,000(1) shares of GPU Common Stock shall be
(1) Initially, 20,000 shares were authorized to be issued under
the Plan. On May 29, 1991, GPU effected a two-for-one stock
split by way of a stock dividend, leaving 33,000 shares
available for issuance under the Plan on and after
July 1, 1991 after giving effect to shares previously
awarded.
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available for awards under the Plan. Such shares shall be either
previously unissued shares or reacquired shares. Any restricted
shares awarded under this Plan with respect to which the
restrictions do not lapse and which are forfeited as provided
herein shall again be available for other awards under the plan.
(b) [BEGIN STRIKEOUT]Effective June 1993,[END STRIKEOUT]
Each Outside Director shall receive an annual award of 300 shares
of GPU Common Stock with respect to each calendar year or portion
thereof, during which he or she serves as an Outside Director,
beginning with the calendar year [BEGIN STRIKEOUT]in[END
STRIKEOUT] 1993. Awards shall be made in January of each year.
However, for the calendar year in which an Outside Director
commences Service, the award of shares to such Outside Director
for such year shall be made in the month in which his or her
Service commences, if his or her Service commences after January
31 of such year. All awards of shares made hereunder shall be
subject to the restrictions set forth in Section 5.
(c) Subject to the provisions of Section 5, certificates
representing shares of GPU Common Stock awarded hereunder shall
be issued in the name of the respective Participants. During the
period of time such shares are subject to the restrictions set
forth in Section 5, such certificates shall be endorsed with a
legend to that effect, and shall be held by GPU or an agent
therefor. The Participant shall, nevertheless, have all the
other rights of a shareholder, including the right to vote and
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<PAGE>
the right to receive all cash dividends paid with respect to such
shares.
Subject to the requirements of applicable law, certificates
representing such shares shall be delivered to the Participant
within 30 days after the lapse of the restrictions to which they
are subject.
(d) If as a result of a stock dividend, stock split,
recapitalization (or other adjustment in the stated capital of
GPU), or as the result of a merger, consolidation, or other
reorganization, the common shares of GPU are increased, reduced,
or otherwise changed, the number of shares available and to be
awarded hereunder shall be appropriately adjusted, and if by
virtue thereof a Participant shall be entitled to new or
additional or different shares, such shares to which the
Participant shall be entitled shall be subject to the terms,
conditions, and restrictions herein contained relating to the
original shares. In the event that warrants or rights are
awarded with respect to shares awarded hereunder, and the
recipient exercises such rights or warrants, the shares or
securities issuable upon such exercise shall be likewise subject
to the terms, conditions, and restrictions herein contained
relating to the original shares.
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5. Restrictions.
(a) Shares are awarded to a Participant on the condition
that he or she serves or has served as an Outside Director until:
(i) the Participant's death or disability, or
(ii) the Participant's failure to stand for re-
election at the end of the term during which the Participant
reaches age 70; or
(iii) the Participant's resignation or failure to stand
for re-election prior to the end of the term during which the
Participant reaches age 70 with the consent of the Board, i.e.,
approval thereof by at least 80% of the directors voting thereon,
with the affected director abstaining; or
(iv) the Participant's failure to be re-elected after
being duly nominated.
Termination of Service of a Participant for any other reason,
including, without limitation, any involuntary termination
effected by Board action, shall result in forfeiture of all
shares awarded. Notwithstanding the foregoing, upon the
occurrence of a Change in Control, the restrictions set forth in
Section 5(b) hereof to which any shares awarded to a Participant
are then still subject shall lapse, and the termination of the
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Participant's Service for any reason at any time after the
occurrence of such Change in Control shall not result in the
forfeiture of any such shares.
(b) Shares awarded hereunder may not be sold, exchanged,
transferred, pledged, hypothecated, or otherwise disposed of
(herein, "Transferred") other than to GPU pursuant to Section
5(a) during the period commencing on the date of the award of
such shares and ending on the date of termination of the Outside
Director's Service; provided, however, that in no event may any
shares awarded hereunder be Transferred for a period of six
months following the date of the award thereof, except in the
case of the recipient's death or disability, other than to GPU
pursuant to Section 5(a) hereof.
(c) Each Participant shall represent and warrant to and
agree with GPU that he or she (i) takes any shares awarded under
the Plan for investment only and not for purposes of sale or
other disposition and will also take for investment only and not
for purposes of sale or other disposition any rights, warrants,
shares, or securities which may be issued on account of ownership
of such shares, and (ii) will not sell or transfer any shares
awarded or any shares received upon exercise of any such rights
or warrants except in accordance with (A) an opinion of counsel
for GPU (or other counsel acceptable to GPU) that such shares,
rights, warrants, or other securities may be disposed of without
registration under the Securities Act of 1933, or (B) an
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applicable "no action" letter issued by the Staff of the
Commission.
6. Administrative Committee. An Administrative Committee (the
"Committee") shall have full power and authority to construe and
administer the Plan. Any action taken under the provisions of
the Plan by the Committee arising out of or in connection with
the administration, construction, or effect of the Plan or any
rules adopted thereunder shall, in each case, lie within the
discretion of the Committee and shall be conclusive and binding
under GPU and upon all Participants, and all persons claiming
under or through any of them. Notwithstanding the foregoing, any
determination made by the Committee after the occurrence of a
Change in Control that denies in whole or in part any claim made
by any individual for benefits under the Plan shall be subject to
judicial review, under a "de novo", rather than a deferential,
standard. The Committee shall have as members the Chief
Executive Officer of GPU and two officers of GPU or its
Subsidiaries designated by the Chief Executive Officer. In the
absence of such designation, the other members of the Committee
shall be the Chief Financial Officer and the Secretary of GPU.
7. Approval: Effective Date. The Plan is subject to the
approval of a majority of the holders of GPU's Common Stock
present and entitled to vote at a meeting of shareholders, and of
the Securities and Exchange Commission under the Public Utility
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Holding Company Act of 1935. The Plan shall be effective
January 1, 1989.
8. Amendment. The Plan may be amended or repealed by the Board
of Directors of GPU, provided that if any such amendment requires
shareholder approval to meet the requirements of the then
applicable rules under Section 16(b) of the Securities Exchange
Act of 1934, such amendment shall require the approval of a
majority of the holders of GPU's Common Stock present and
entitled to vote at a meeting of shareholders, and provided that
such action shall not adversely affect any Participant's rights
under the Plan with respect to awards which were made prior to
such action. Notwithstanding the foregoing, Section 4(b) of the
Plan may not be amended more often than once every six months
other than to comport with changes in the Internal Revenue Code
or the Employee Retirement Income Security Act, or the rules
thereunder.
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GENERAL PUBLIC UTILITIES CORPORATION
Proxy Solicited by the Board of Directors
for Annual Meeting to be held at 10:00 A.M. May 2, 1996
The Morris Museum
Six Normandy Heights Road
Morristown, New Jersey
The undersigned hereby appoints J. G. Graham,
F. A. Donofrio, and M. A. Nalewako, and each or any of them,
proxies to represent the undersigned at the Annual Meeting of
Stockholders, and at any adjournment thereof, and thereat to
vote all the shares of stock which the undersigned would be
entitled to vote, with all the power the undersigned would
possess if personally present, with full power of substitution,
upon the following items as set forth in the Notice of Annual
Meeting and Proxy Statement, each dated March 27, 1996 (receipt
of which is hereby acknowledged), and in their discretion upon
such other matters, if any, as may properly come before the
meeting.
Said proxies are instructed to vote for or against
proposals, as indicated by the undersigned (or, if no
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<PAGE>
indication is given, for Proposals 1, 2, 3 and against Proposal
4).
You are encouraged to voice your preference by marking the
appropriate boxes on the other side. However, you need not
mark any boxes if you wish to vote in accordance with the
directors' recommendations; just sign on the other side.
(continued and to be signed on the other side)
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<TABLE>
___ Please mark
| | your votes
| X | as this.
CHECK HERE __
IF YOU PLAN TO |__|
ATTEND THE MEETING.
The Directors Recommend a Vote "FOR" Proposals 1, 2 and 3:
(caption>
1 - Election of one Class II Director.
<S> <C> <C>
FOR the nominee listed on WITHHOLD AUTHORITY NOMINEE: Theodore H. Black
the right to vote for the nominee
listed on the right
__ __
| | | |
|__| |__|
2 - Amendments to the Outside Directors Restricted
Stock Plan as set forth in the accompanying Proxy
Statement dated March 27, 1996.
FOR AGAINST ABSTAIN Dated__________________1996
__ __ __ Signature__________________
| | | | | | Signature if held jointly
|__| |__| |__| ___________________________
Please date and sign
3 - Ratification of the selection of Coopers & In case of joint owners,
Lybrand L.L.P. as auditor. EACH joint owner should
sign. When signing
FOR AGAINST ABSTAIN as attorney, executor,
__ __ __ administrator, trustee,
| | | | | | guardian, corporate officer,
|__| |__| |__| etc., give full title.
The Directors Recommend a Vote "AGAINST" Proposal 4:
4 - Stockholder Proposal as set forth in the
accompanying Proxy Statement.
FOR AGAINST ABSTAIN
__ __ __
| | | | | |
|__| |__| |__|
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DETACH HERE AND MAIL IN THE ENCLOSED ENVELOPE
------------------------------------------------------------------------------------------
IF YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE BRING THIS ENTIRE LOWER PORTION OF THIS
CARD (SPEAKER CARD AND ADMISSION CARD) WITH YOU.
If you plan to speak at the Annual Meeting, please complete the following:
Stockholder Name __________________________________________________________ SPEAKER
(Please print clearly) CARD
City ______________________________________ State _________________________
PLEASE DO NOT DETACH
------------------------------------------------------------------------------------------
GPU 1996 ANNUAL MEETING OF STOCKHOLDERS
MAY 2, 1996 - 10:00 A.M.
The Morris Museum
Six Normandy Heights Road ADMISSION
Morristown, New Jersey CARD
Please bring this card with you
to the meeting. Its presentation
will assure your prompt admittance.
This card is not transferable
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<PAGE>
___ Please mark
| | your votes
| X | as this.
CHECK HERE __
IF YOU PLAN TO |__|
ATTEND THE MEETING.
The Directors Recommend a Vote "FOR" Proposals 1, 2 and 3:
<CAPTION>
1 - Election of one Class II Director.
<S> <C> <C>
FOR the nominee listed on WITHHOLD AUTHORITY NOMINEE: Theodore H. Black
the right to vote for the nominee
listed on the right
__ __
| | | |
|__| |__|
2 - Amendments to the Outside Directors Restricted
Stock Plan as set forth in the accompanying Proxy
Statement dated March 27, 1996.
FOR AGAINST ABSTAIN Dated__________________1996
__ __ __ Signature__________________
| | | | | | Signature if held jointly
|__| |__| |__| ___________________________
Please date and sign
3 - Ratification of the selection of Coopers & In case of joint owners,
Lybrand L.L.P. as auditor. EACH joint owner should
sign. When signing
FOR AGAINST ABSTAIN as attorney, executor,
__ __ __ administrator, trustee,
| | | | | | guardian, corporate officer,
|__| |__| |__| etc., give full title.
The Directors Recommend a Vote "AGAINST" Proposal 4: If you are planning to
attend the meeting, remember
4 - Stockholder Proposal as set forth in the to obtain from the record
accompanying Proxy Statement. holder a letter or other
evidence of your beneficial
FOR AGAINST ABSTAIN ownership of shares in GPU
__ __ __ to facilitate your
| | | | | | admittance to the meeting.
|__| |__| |__|
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