[LOGO -- GREEN]
25 Green Mountain Drive
P.O. Box 850
South Burlington, Vermont 05402
April 12, 1995
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Green Mountain Power Corporation, which will be held at the headquarters
building, 25 Green Mountain Drive, South Burlington, Vermont, on Thursday,
May 18, 1995, at 10:00 a.m., EDST. The accompanying Notice of Meeting and
Proxy Statement describe the matters to be acted on at the Meeting.
For your convenience, a map showing the location of the corporate
headquarters is printed on the reverse side of this letter.
Regardless of the number of shares you own, it is important that your
shares be represented at the Meeting. We hope that you will be able to
attend personally and urge you to do so if it is at all possible. In any
event, we ask that you sign and complete the enclosed proxy and return it
to us promptly. If you are able to attend the Meeting, you may revoke the
proxy at that time and vote your shares personally. If for any reason you
are not able to attend the Meeting, your signed proxy will assure proper
representation of your ownership interests in Green Mountain Power
Corporation.
This year, in addition to electing the Board of Directors, you are being
asked to approve an amendment to the Company's By-laws which provides for
the division of the Board of Directors into three classes wherein the
terms of office would result in the election of one-third of the Directors
each year. If approved, election of the classified Board of Directors
will begin with this Annual Meeting. You are also being asked to approve
the Compensation Program for Officers and Certain Key Management Personnel
that was adopted by the Board of Directors.
We urge you to read the accompanying materials carefully before voting on
the matters to be considered at the Meeting. These matters have been
given thorough consideration by your Board of Directors. They are of
importance to the well-being of your Company, and the Directors recommend
that you vote in favor of each of the items on which a vote is requested
from you on the proxy. Affirmative vote of a majority of the shares
outstanding is required to effectuate these proposals.
Commencing at 9:00 a.m., prior to the Meeting, refreshments will be
served. You are encouraged to arrive in sufficient time to complete
registration before the Meeting convenes at 10:00 a.m. Following the
Meeting, you are invited to attend a picnic lunch to be served on the lawn
at the headquarters building.
To help us to plan for the Meeting and lunch, we would appreciate your
completing the enclosed reply card and returning it to us.
Thank you for your continued interest in the Company.
Sincerely,
Douglas G. Hyde
President and
Chief Executive Officer
MAP
[LOGO -- BLACK]
25 Green Mountain Drive
P.O. Box 850
South Burlington, Vermont 05402
NOTICE OF MEETING
To the Shareholders of
Green Mountain Power Corporation:
Notice is hereby given that the Annual Meeting of the Shareholders of
Green Mountain Power Corporation will be held at the headquarters
building, 25 Green Mountain Drive, South Burlington, Vermont, on Thursday,
May 18, 1995, at 10:00 o'clock in the forenoon (Eastern Daylight Savings
Time), for the following purposes:
Item 1. To approve an amendment to the By-laws regarding
classification of the Board of Directors;
Item 2. To elect a Board of Directors;
Item 3. To approve the Compensation Program for Officers and Certain
Key Management Personnel; and
Item 4. To vote on such other matters as may properly come before the
Meeting and any and all adjournments thereof;
all as set forth in the Proxy Statement accompanying this notice.
Only holders of record of Common Stock as shown on the stock transfer
books of the Company at the close of business on March 30, 1995, will be
entitled to vote at the Meeting or any adjournments thereof.
By Order of the Board of Directors,
DONNA S. LAFFAN
Secretary
Date: April 12, 1995
IMPORTANT
If you cannot be present and desire to have your stock voted at the
Meeting, please MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY in the
envelope provided.
PROXY STATEMENT
GREEN MOUNTAIN POWER CORPORATION
25 Green Mountain Drive
P.O. Box 850
South Burlington, Vermont 05402
ANNUAL MEETING OF SHAREHOLDERS
May 18, 1995
April 12, 1995
PROXY AND SOLICITATION
The accompanying proxy is solicited on behalf of the Board of Directors of
Green Mountain Power Corporation (the "Company") for use at the Annual
Meeting of Shareholders of the Company to be held on Thursday, May 18,
1995, and at any and all adjournments thereof. This proxy statement and
the accompanying form of proxy are being sent to the shareholders on or
about April 12, 1995.
The cost of soliciting proxies by the Board of Directors will be borne by
the Company, including the charges and expenses of brokers and others for
sending proxy material to beneficial owners of Common Stock. In addition
to the use of the mails, proxies may be solicited by personal interview,
by telephone or by telegraph by certain of the Company's employees without
compensation therefor. The Company has retained Morrow & Co. to assist
in the solicitation of proxies at an estimated cost of $15,000, plus reim-
bursement of reasonable out-of-pocket expenses.
Shareholders who execute proxies retain the right to revoke them by
notifying the Corporate Secretary by mail at the above address or in
person at the Annual Meeting before they are voted. A proxy in the
accompanying form when it is returned properly executed will be voted at
the Annual Meeting in accordance with the instructions given, and if no
instructions are given, the proxy will be voted in accordance with the
recommendation of the Board of Directors.
STOCK OUTSTANDING AND VOTING RIGHTS
On March 30, 1995, the record date for the Annual Meeting, the Company had
outstanding _,___,___ shares of Common Stock (excluding 15,856 of such
shares held by the Company as Treasury Stock), which is the only class of
stock entitled to vote at the Annual Meeting. Each holder of record of
Common Stock on the record date is entitled to one vote for each share of
Common Stock so held.
The affirmative vote by the holders of a majority of the shares
represented at the Annual Meeting is required for the amendment to the By-
laws regarding the reclassification of the Board of Directors (Item 1
herein) (the "Board Classification Amendment"), the election of directors
(Item 2 herein), and the approval of the Compensation Program for Officers
and Certain Key Management Personnel (Item 3 herein).
Abstentions and broker non-votes (when shares are represented at the
Annual Meeting by a proxy specifically conferring only limited authority
to vote on particular matters) will not be counted as votes in favor of
Item 1, Item 2 or Item 3 herein.
The shares of Common Stock represented by each properly executed proxy
received by the Board of Directors will be voted at the Annual Meeting in
accordance with the instructions specified therein. If no instructions
are specified, such shares of Common Stock will be voted FOR the Board
Classification Amendment (Item 1 herein), FOR the election of nominees for
Directors (Item 2 herein), and FOR the Compensation Program for Officers
and Certain Key Management Personnel (Item 3 herein). The Board of
Directors knows of no other business to come before the Annual Meeting.
However, if any other matters are properly presented at the Annual
Meeting, or any adjournment thereof, the persons voting the proxies will
vote them in accordance with their best judgment. Any proxy may be
revoked by notifying the Secretary of the Company in writing at any time
prior to the voting of the proxy.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
To the knowledge of the Company, no person owned beneficially more than 5%
of the outstanding Common Stock of the Company on March 30, 1995.
The following table sets forth, as of January 31, 1995, information
relating to the ownership of the Company's Common Stock by each nominee
for Director, by each of the Executive Officers named in the Summary
Compensation Table and by all Directors and Executive Officers as a group.
Common Stock
Beneficially Owned
(1)
Robert E. Boardman 1,328
Nordahl L. Brue 2,892 (2)
William H. Bruett 1,500
Merrill O. Burns 1,673
Lorraine E. Chickering 150
John V. Cleary 2,120
Richard I. Fricke 2,900 (3)
Douglas G. Hyde 6,114 (4)
Euclid A. Irving 342
Martin L. Johnson 1,089
Ruth W. Page 1,100 (5)
Thomas P. Salmon 1,044
Christopher L. Dutton 1,564 (6)
Edwin M. Norse 961
A. Norman Terreri 2,784 (7)
Stephen C. Terry 1,400 (8)
All Directors and Executive 37,395
Officers as a group (26 persons)
(1) Each listed individual exercises sole voting and investment power
over all of the shares of Common Stock beneficially owned, except as
noted herein below. As of January 31, 1995, no Director, nominee or
listed Executive Officer owned beneficially as much as 1% of the
Company's outstanding Common Stock.
(2) Mr. Brue owns 2,755 of these shares directly. The remaining 137
shares are owned by Mr. Brue's children for whom Mr. Brue serves as
custodian; Mr. Brue disclaims any other beneficial interest in the
137 shares owned by his children.
(3) Mr. Fricke owns 2,500 of these shares directly. His wife owns the
remaining 400 of these shares; Mr. Fricke disclaims any other
beneficial interest in the 400 shares owned by his wife.
(4) Mr. Hyde owns 5,714 of these directly. His wife owns the remaining
400 of these shares; Mr. Hyde disclaims any other beneficial interest
in the 400 shares owned by his wife.
(5) Mrs. Page owns 900 of these shares directly. Her husband owns the
remaining 200 of these shares; Mrs. Page disclaims any other
beneficial interest in the 200 shares owned by her husband.
(6) Mr. Dutton owns 1,498 of these shares directly. The remaining 66 are
owned by Mr. Dutton's children for whom Mr. Dutton's wife serves as
custodian; Mr. Dutton disclaims any other beneficial interest in the
66 shares owned by his children.
(7) Mr. Terreri owns 2,439 of these shares directly. His wife owns the
remaining 345 of these shares; Mr. Terreri disclaims any other
beneficial interest in the 345 shares owned by his wife.
(8) Mr. Terry owns 1,370 of these shares directly. His wife owns the
remaining 30 of these shares; Mr. Terry disclaims any other
beneficial interest in the 30 shares owned by his wife.
As of January 31, 1995, all Directors and Executive Officers of the
Company as a group (consisting of 26 persons) beneficially owned an
aggregate of 37,395 shares (or approximately 0.8% of the outstanding
shares) of Common Stock.
ITEM 1. PROPOSED BOARD CLASSIFICATION AMENDMENT
To enhance continuity and stability of the Board of Directors and the
policies formulated by the Board, the Board has unanimously approved and
is proposing an amendment to the By-laws, as amended, to provide for
classification of the Board of Directors. The Board Classification
Amendment will divide the Board of Directors into three classes, as nearly
equal in number as possible. After a transitional arrangement, directors
will serve for three years, with one class being elected each year.
In the opinion of the Board of Directors, the Board Classification
Amendment is desirable to help ensure stability and continuity in the
management of the Company's business and affairs. Although there have
been no problems with respect to stability or continuity of the Board of
Directors in the past, the Board believes that the longer time required to
elect a majority of a classified board will help to prevent the occurrence
of such problems in the future. The Board of Directors also believes that
the proposed amendment is desirable to help discourage hostile attempts to
take control of the Company.
Potential Effects of the Provisions
The provisions for classification of Directors will apply in all years,
even when no takeover or proxy contest is being proposed or when no change
in control has occurred. Change in the composition of the whole Board
would take up to three years and change of a majority of the Directors
would require two successive annual meetings. Therefore, the Board
Classification Amendment could make more difficult or discourage a merger,
tender offer, proxy contest or the assumption of control by a holder of a
substantial block of the Company stock or the removal of the incumbent
Board, irrespective of whether such action might be perceived by
shareholders holding a majority of the voting power to be beneficial to
the Company and its shareholders. The Board Classification Amendment
could also discourage a third party from acquiring a substantial block of
stock in the first instance, with a view to a subsequent bid for control
of the Company, irrespective of whether an initial acquisition might be
viewed as beneficial to the Company and its shareholders. Thus,
shareholders might not have the opportunity to dispose of their shares at
a price which may be substantially higher than the prevailing market
price. To the extent that the Board Classification Amendment delays a
change in control of the Board, the position of current management may be
strengthened, thereby assisting management personnel in retaining their
positions, even when the only reason for the change is the performance of
the directors.
At the 1987 annual meeting, shareholders approved "anti-takeover"
amendments to the Company's Articles of Association. In essence, the
amendments provide as follows:
o The Company may not, without special shareholder approval, pay a
premium price for any shares held by a substantial shareholder (5% or
more of the outstanding shares) for less than two years. This provision
is designed to discourage "greenmail", a practice in which a corporate
"raider" would buy a large number of shares of stock and then threaten
to disrupt the Company's business unless the Company repurchased the
shares at a premium.
o The "fair-price" provision requires a special shareholder approval for
any merger or business combination between the Company and a substantial
shareholder that has not been approved by the board of directors. In
addition, such a merger or business combination must satisfy certain
minimum price provisions and must ensure that all shareholders receive
the same price for the shares purchased in the merger or business
combination.
o The board of directors, in evaluating any proposed merger, would be
required to consider other factors in addition to the current market
value of the stock. Under the "business judgment" provision, factors
that must be considered by the directors in evaluating a merger include
the impact of the transaction on customers, suppliers, employees, and
the community served by the Company. The directors must also consider
the future market potential of the Company.
The provisions are intended to give the board of directors the time needed
to consider carefully the merits of a takeover proposal and some
additional bargaining leverage in negotiating with a takeover proponent.
The Board of Directors of the Company has carefully considered the
potential adverse effects of the Board Classification Amendment, and has
unanimously concluded that any risk of such consequences is substantially
outweighed by the increased protection which the Board Classification
Amendment will afford the Company and its shareholders, employees and
ratepayers.
The Board Classification Amendment requires the affirmative vote of at
least a majority of the outstanding shares of the Company's Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THIS ITEM 1.
ITEM 2. NOMINEES FOR ELECTION AS DIRECTOR
The shares of Common Stock represented by the proxies that are executed
and returned in the accompanying form will be voted at the Annual Meeting
(unless authority is withheld) to elect as Directors the nominees listed
below to serve until the next Annual Meeting of Shareholders (except as
described below with respect to the Board Classification Amendment) and
until their successors shall have been elected and qualified. Should any
of the nominees become unavailable for election for any reason, the
proxies will be voted for the election of such other person or persons as
may be designated by the Board of Directors.
The Board of Directors of the Company is currently composed of twelve
members. All of the current Directors have been nominated for re-election
at this meeting of shareholders. If the Board Classification Amendment is
approved by shareholders and each of the nominees is elected, William H.
Bruett, Richard I. Fricke, Martin L. Johnson and Thomas P. Salmon will be
elected for an initial term expiring at the 1996 Annual Meeting (Class I);
Robert E. Boardman, Merrill O. Burns, Douglas G. Hyde and Ruth W. Page
will be elected for an initial term expiring at the 1997 Annual Meeting
(Class II); and Nordahl L. Brue, Lorraine E. Chickering, John V. Cleary
and Euclid A. Irving will be elected for an initial term expiring at the
1998 Annual Meeting (Class III); and in all cases until their respective
successors have been duly elected and qualified. If the Board
Classification Amendment is not approved, all nominees elected as
Directors will serve until the 1996 Annual Meeting and until their
respective successors have been duly elected and qualified.
NOMINEES FOR DIRECTOR
Business Experience for the Past Five Director
Name Years and Other Information (Age) Since
____ _____________________________________ ________
Class I (*) Nominees whose terms will expire in 1996.
William H. Bruett Senior Vice President, Group Product Manager of 1986
(A)(B)(C)(D) PaineWebber, Inc.; Director of PaineWebber Trust
Co. and Chairman of PaineWebber International
Bank Ltd., London, subsidiaries of PaineWebber
Group, Inc., since 1990; President, Chief
Executive Officer and Director of Chittenden
Corporation and of Chittenden Trust Company
from 1984 to 1990. (51)
Richard I. Fricke Director Emeritus of National Life Insurance 1984
(A)(B)(D) Company; Director of Sentinel Group Funds,
Inc. and of Sentinel Pennsylvania Tax-Free
Fund, Inc.; President and Chief Executive
Officer of the Bank of Vermont from 1987 to
1989; Retired Chairman of the Board and
Chief Executive Officer of National Life
Insurance Company; Fellow of the American Bar
Foundation; Member of the Board of Overseers,
Middlebury College, of the Cornell University
Council and of the Cornell Law School
Advisory Council. (73)
Martin L. Johnson President of The Johnson Company (environmental 1991
(B)(C)(F) and engineering consultants) since 1978;
Secretary of the State of Vermont Agency of
Environmental Conservation from 1973 to 1978.
(67)
Thomas P. Salmon Chairman of the Board of the Company since 1983; 1978
(A)(C)(D)(E) President of the University of Vermont since
February 4, 1993; Interim President of the
University of Vermont from 1991 to 1993; On leave
from Salmon and Nostrand, Attorneys, Bellows Falls,
Vermont; Governor of the State of Vermont from
1973 to 1977; Director of Vermont Electric Power
Company, Inc., of National Life Insurance Company,
of Union Mutual Insurance Company and of BankNorth
Group, Inc. (62)
Class II (*) Nominees whose terms will expire in 1997.
Robert E. Boardman Chairman of Hickok and Boardman, Inc 1974
(D) (insurance agency); President of Hickok &
Boardman Realty, Inc.; Director of Bank of
Vermont, of National Life Insurance Company
and of Mount Mansfield Corporation (recreation);
Trustee of Lake Champlain Maritime Museum. (62)
Merrill O. Burns Senior Vice President and Executive Corporate 1988
(A)(B)(D) Development Officer, BankAmerica Corporation
since 1991; President and Managing Director of
BankAmerica International from 1988 to 1991.
(48)
Douglas G. Hyde President, Chief Executive Officer and Chairman 1986
(A)(C)(E) of the Executive Committee of the Company since
1993; Executive Vice President and Chief Operating
Officer of the Company from 1989 to 1993; Executive
Vice President from 1986 to 1989; Director of
Vermont Yankee Nuclear Power Corporation, of Vermont
Electric Power Company, Inc., of Edison Electric
Institute, of Associated Edison Illuminating
Companies, of Vermont Business Roundtable, and
of the Howard Bank; Member of the Board of Trustees
of Fletcher Allen Health Care. (52)
Ruth W. Page Writer, Editor and Radio Commentator; past 1985
(B)(C) member of the Northeast Energy Council of the
United States Department of Energy. (74)
Class III (*) Nominees whose terms will expire in 1998.
Nordahl L. Brue Chairman of Bruegger's Corporation (quick-service 1992
(C)(E) restaurants); Chairman of Executive Committee
of Franklin County Cheese and Frank Hahn, Inc.
(dairy manufacturing and distribution business);
Principal of Champlain Management Services, Inc.
(real estate development and management enterprises);
Director of BankNorth Group, Inc.; Stockholder,
Sheehey Brue Gray & Furlong, P.C., Attorneys,
Burlington, Vermont; Director and Officer of the
Vermont Business Roundtable; Member of the
Governor's Council of Economic Advisors. (50)
Lorraine E. President of Public and Operator Services of 1994
Chickering Bell Atlantic Corporation since 1993; Vice
(B)(D) President, Quality, 1993; Vice President,
Operations and Engineering of Chesapeake and
Potomac Telephone Company, a subsidiary of Bell
Atlantic Corporation, from 1991 to 1993;
Assistant Vice President, Marketing Operations
of Bell Atlantic Corporation from 1989 to 1991.
(44)
John V. Cleary Retired Chief Executive Officer and President of 1980
(A)(C)(E) the Company; Chief Executive Officer, President
and Chairman of the Executive Committee of the
Company from 1983 to 1993. (66)
Euclid A. Irving Partner, Paul, Hastings, Janofsky & Walker, 1993
(B)(D)(E)(F) Attorneys, New York, New York, since 1990;
Partner, Mudge Rose Guthrie Alexander & Ferdon,
Attorneys, New York, New York from 1984 to 1990.
(42)
(A) Member of Executive Committee
(B) Member of Audit Committee
(C) Member of Nominating Committee
(D) Member of Compensation Committee
(E) Member of Special Issues Committee
(F) Member of Subsidiaries Oversight Committee
(*) Classification assumes that the amendment to the By-laws is approved
and becomes effective before the Annual Meeting is adjourned and
proxies are voted in accordance with Item 1 of the Proxy card.
BOARD COMPENSATION, OTHER RELATIONSHIPS,
MEETINGS AND COMMITTEES
Compensation and Other Relationships
During 1994, each Director of the Company, except the President earned an
annual fee of $9,500 for service as a Director. In addition to the annual
fee, the Chairman of the Board earned $22,500 for service as Chairman of
the Board in 1994. The President was not paid any fees for service as a
Director. The Chairmen of the Audit, Compensation, Nominating and Special
Issues Committees earned annual fees of $2,500 each for service in such
capacity. The President, who is Chairman of the Executive Committee, was
not paid any fee for service in such capacity. For attendance at meetings
of the Board of Directors and of all committees of the Board, Directors
other than the President earned $650 for each meeting attended in person
(plus $350 for any meeting that occurred on the same day as another
meeting) and $350 for participation by means of conference telephone.
Travel and lodging expenses incurred by Directors attending Board or
committee meetings are paid by the Company. The Company also maintains a
Deferred Compensation Plan for Directors pursuant to which Directors may
defer receipt of all or part of the fees otherwise payable to them for
service as Directors.
Mr. Nordahl L. Brue, a Director of the Company, is a stockholder in the
law firm of Sheehey Brue Gray & Furlong, P.C. In prior years, the Company
has retained the services of Sheehey Brue Gray & Furlong, P.C. as special
counsel and has retained Sheehey Brue Gray & Furlong, P.C. to represent
the Company in certain matters during 1995. The Company paid Sheehey Brue
Gray & Furlong, P.C. $264,372 for legal services rendered in 1994.
Mr. Martin L. Johnson, a Director of the Company, is the President of The
Johnson Company, an environmental and engineering consulting firm. In
1994, the Company retained the services of The Johnson Company to assist
with environmental matters and has retained The Johnson Company to provide
expert advice and analysis regarding these matters in 1995. The Company
paid The Johnson Company $801,570 for services rendered in 1994.
Meetings
During 1994, the Board of Directors held seven regular meetings and one
special meeting, which was held by conference telephone. During such
year, no Director attended less than 75% of the aggregate number of
meetings of the Board of Directors and the committees on which such
Director served.
Committees
The committees of the Board of Directors include an Executive Committee,
an Audit Committee, a Nominating Committee, a Compensation Committee, a
Special Issues Committee and a Subsidiaries Oversight Committee, the
members of which are identified on the foregoing table.
The Executive Committee is vested with the powers of the Board of
Directors in the management of the current and ordinary business of the
Company, except as otherwise provided by law. During 1994, the Executive
Committee held one meeting.
The Audit Committee (1) annually recommends to the Board of Directors the
appointment of independent public accountants of the Company, (2) reviews
the scope of audits and (3) receives, reviews and takes action deemed
appropriate with respect to audit reports submitted and other audit
matters. The Audit Committee met twice during 1994; one of such meetings
was held by conference telephone.
The function of the Nominating Committee is to recommend to the Board of
Directors persons selected by the Committee for nomination to the Board of
Directors. The Committee also reviews the Company's organizational plans
and activities to assure the development and continuity of management
leadership. This Committee met twice during 1994; one of such meetings
was held by conference telephone. The Nominating Committee will consider
nominees recommended by shareholders. The names of any such nominees
should be forwarded to the Corporate Secretary, Green Mountain Power
Corporation, 25 Green Mountain Drive, P.O. Box 850, South Burlington,
Vermont 05402, who will submit them to the Nominating Committee for its
consideration.
The Compensation Committee is charged with the responsibility of reviewing
and making recommendations to the Board of Directors regarding the annual
salaries of Officers and incentive awards of Officers and key management
personnel of the Company, recommending to the Board any needed revisions
to the compensation of Officers and of otherwise assisting the Board in
discharging its responsibilities in connection with the compensation of
Officers. The Compensation Committee met five times during 1994; one of
such meetings was held by conference telephone.
The Special Issues Committee addresses unusual, extraordinary or
miscellaneous issues that confront the Company from time to time. The
Special Issues Committee met three times during 1994.
The Subsidiaries Oversight Committee, a newly formed committee of the
Board, will oversee the non-utility operations of the Company. The
Committee did not meet during 1994.
ITEM 3. COMPENSATION PROGRAM FOR OFFICERS AND
CERTAIN KEY MANAGEMENT PERSONNEL
The Board of Directors has adopted a Compensation Program for Officers and
Certain Key Management Personnel (the "Compensation Program" or the
"Program"). The Company is now seeking approval of the Program from
Shareholders. The Program document is set forth in Appendix B hereto.
The Compensation Program is intended to ensure that total compensation,
composed of base and variable compensation components, is competitive in
the marketplace and promotes the Company's strategic objectives. More
specifically, the purposes of the Compensation Program are to: ensure
that base compensation compares favorably with regard to organizations
competing for similar talent; provide an opportunity for officers and
other key management personnel to share in the success of the Company by
linking a portion of compensation (variable compensation) to corporate
performance results; encourage a longer-term view by paying part of an
earned variable compensation award in common stock that is subject to
five-year restriction and forfeiture provisions; and foster and reinforce
teamwork among officers and other key management personnel.
The Company is asking Shareholders to approve the Compensation Program,
for which a reserve of 50,000 shares of the Common Stock of the Company
from the authorized but unissued shares that have been previously approved
by shareholders will be established.
Eligibility
Participants in the program are the senior officers of the Company and
other key management personnel who are in positions to make a substantial
contribution to the management, growth and success of the Company and have
been designated by the Board of Directors as eligible. At present, 16
persons are eligible to participate in the Compensation Program. The
Board of Directors has the power to otherwise modify the eligibility
requirements of the Compensation Program. The eligible participants are
listed in Appendix I to the Program document (see Appendix B hereto).
Program Administration
The program will be administered by the Chief Executive Officer ("CEO")
with the approval of the Compensation Committee. The Compensation
Committee will review the operation of the program no less frequently than
annually and, as it deems necessary, recommend appropriate actions to the
Board of Directors. The Board of Directors will have the full power and
authority to: interpret the program; designate the participants; act on
the CEO's recommendations; amend or terminate the Program, subject to
required shareholder and regulatory approval; and approve the CEO's base
and variable compensation.
Compensation Components
Under the Program, base salaries are intended to provide a competitive
rate of fixed compensation. Base salary levels will be assessed by
compiling and analyzing salary information from various published survey
sources on an annual basis, and are intended to be managed to the market
average (in any event, within a plus or minus 10% range around the market
average) as determined from the survey analysis. Actual base compensation
within the market range will depend on internal equity, overall scope of
responsibilities of the position, recruitment needs, and significant
individual performance variations.
The variable compensation component of the Program will tie compensation
directly to the achievement of key corporate-wide objectives. Awards
earned will be paid in cash, stock grants, and restricted stock (The
Company will impose two restrictions of a five year duration: no
transferability and forfeiture of the stock upon termination of employment
with the Company, except for retirement, death or disability). The stock
award provisions are effective only upon shareholder and other required
regulatory approval.
Opportunities for variable compensation awards for officers or key
management employees will vary depending upon the "band" in which they
fall --Band A, B or C -- such "bands" signifying differences in the nature
of the positions and their impact on the organization. At present,
sixteen persons are eligible to participate in the Program; two in Band A,
five in Band B and nine in Band C. The Board of Directors is authorized
to increase or decrease the size of each band. Depending on the extent to
which the Company's objectives are met or exceeded on appropriate
performance measures, the awards can range from a threshold of 12.5% to a
maximum of 75% of base salary. The award delivery feature is intended to
motivate officers and other key management employees toward the annual
attainment of critical corporate objectives consistent with the need to
manage the Company to achieve longer-term success.
Appropriate corporate performance measures and the performance objectives
associated with them will be determined annually but are expected to
remain in substantially the same form year-to-year. The performance
measures will be weighted to reflect the Company's strategic plan and the
impact each organization band/officer position has on performance; the
extent to which variable compensation is paid will be a function of the
Company's performance against the objectives on each of the performance
measures. The performance measures, their weighting and the performance
objectives for the first year of the Program, 1994, are set forth in
Appendix II to the Program document.
After the close of each year, the Compensation Committee, with input from
the CEO, will ascertain the degree to which these performance objectives
were accomplished to determine if variable awards are to be paid. If the
threshold level of performance is not met, an award will not be paid with
respect to that specific performance measure.
In addition, the program incorporates a circuit breaker to protect
shareholder investment. The circuit breaker ensures that awards will not
be paid unless earnings, after subtracting the variable awards, are
greater than dividends paid in the year for which variable compensation is
to be awarded.
Participants must be employed on the date the award is paid in order to
receive an award unless the participant has retired, is disabled or is
deceased, or the Compensation Committee determines that the circumstances
under which the participant terminated employment warrant special
consideration.
The Company presently is seeking regulatory approvals to reserve for
issuance and to use 50,000 shares of common stock for awards in the
Program. The 50,000 shares are expected to be used over the course of
five years. At the Compensation Committee's discretion, participants may
be granted Restricted Shares, Stock Grants or any combination of these
provided that the combined total numbers of shares granted does not exceed
the overall share authorization described above.
Restricted Shares that are forfeited in accordance with the Program shall
again be available for award under the Program.
In the event of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations, exchanges of shares, spin-offs,
liquidations, reclassifications or other similar changes in the
capitalization of the Company, the number of shares of Common Stock
available for grant under the Program shall be adjusted proportionately or
otherwise by the Board, and where deemed appropriate, the number of shares
covered by Restricted Shares outstanding. In the event of any other
changes affecting the Common Stock reserved under the Program, such
adjustments, if any, as may be deemed equitable by the Board, shall be
made to give proper effect to such event.
Effective Dates
The Program, except for the stock award provisions, became effective as of
January 1, 1994. The stock award provisions of the Program will become
effective upon approval by shareholders of the Company and approval of the
issuance of shares by the Vermont Public Service Board. The Program and
all outstanding awards shall remain in effect until all outstanding awards
have been earned, have been exercised or repurchased, have expired or have
been canceled.
The Board of Directors believes that the Program is designed to improve
the performance of the Company and to serve the best interest of the
shareholders. By encouraging ownership of the Company's stock among those
who play significant roles in the Company's success, implementation of the
Program will more closely align the interests of Executive Officers and
key management employees with those of its shareholders. The Program will
also have a positive effect on the Company's ability to attract, motivate
and retain employees of outstanding leadership and management ability.
The affirmative vote of a majority of the outstanding shares is required
for the approval of the Compensation Program for Officers and Certain Key
Management Personnel.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THIS ITEM 3.
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation earned by the
Executive Officers named in the table (the "Named Executive Officers") for
services rendered to the Company during fiscal years 1994, 1993 and 1992.
SUMMARY COMPENSATION TABLE
Name and Principal Annual Compensation(1) All Other
Position Year Salary Incentive Other Compensation
(2) (3) (4)
Douglas G. Hyde 1994 $206,468 $ --- $21,337 $6,141
President and Chief 1993 $179,243 $ 0 $ 0 $5,681
Executive Officer 1992 $149,046 $37,200 $ 0 $4,434
A. Norman Terreri 1994 $153,839 $ --- $20,837 $4,192
Executive Vice 1993 $144,023 $ 0 $ 0 $5,207
President and Chief 1992 $135,600 $29,800 $ 0 $4,509
Operating Officer
Edwin M. Norse 1994 $120,247 $ --- $20,837 $4,192
Vice President and 1993 $110,373 $ 0 $ 0 $3,679
General Manager, Energy 1992 $106,508 $21,300 $ 0 $3,098
Resources and Sales
Christopher L. Dutton 1994 $112,102 $ --- $20,837 $3,543
Vice President, Finance 1993 $103,268 $ 0 $ 0 $3,351
and Administration, 1992 $ 98,481 $19,700 $ 0 $2,796
Chief Financial Officer
and Treasurer
Stephen C. Terry 1994 $103,717 $ --- $21,337 $3,731
Vice President and 1993 $ 94,814 $ 0 $ 0 $3,040
General Manager, Retail 1992 $ 91,092 $18,200 $ 0 $2,598
Energy Services
1 Amounts shown include salary and incentive earned by the Executive
Officers on the basis of the Company's operating results in 1992 and
1993, as well as amounts earned but deferred at the election of those
officers. The amount of the incentive to be awarded for 1994 has not
yet been determined.
2. Certain of the Company's officers, including the Named Executive
Officers, were designated to participate in the Company's Management
Incentive Plan, adopted in December 1985 and amended in December 1990.
Annual awards could have amounted to a maximum of 10% to 30% of a
participant's salary depending on such participant's position and
certain corporate performance standards. Distributions to participants
could have been made in three annual installments, depending on the
amount of the award. The Management Incentive Plan as it applied to
officers was superseded in 1994 by the Compensation Program for
Officers and Certain Key Management Personnel. Payments made in the
last three years under the Management Incentive Plan, based on the
Company's and the participants' performance in those years, are set
forth in the Incentive column of this Summary Compensation Table.
3 The total amounts shown in this column represent a one-time payment to
each of the Named Executive Officers for purchase of their Company
assigned vehicle in conjunction with the elimination of Company
provided vehicles.
4 The total amounts shown in this column for the last fiscal year consist
of the following:
(i) Benefits attributable to Company-owned life insurance policy: Mr.
Hyde $1,643, Mr. Terreri $1,601, Mr. Norse $584, Mr. Dutton $420, and
Mr. Terry $619.
(ii) Company matching contributions to the Employee Savings and
Investment Plan: Mr. Hyde $4,501 Mr. Terreri $3,610, Mr. Norse $3,608,
Mr. Dutton $3,123, and Mr. Terry $3,112.
Variable Compensation Plan Awards for 1994 Performance
As of April 1995, the Compensation Committee of the Board of Directors has
not determined the amounts of any incentive awards to be paid to the Named
Executive Officers under the Compensation Program on the basis of 1994
operating results. See Compensation Committee Report.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is charged with the responsibility of reviewing and making
recommendations to the Board of Directors regarding the annual salaries
and incentive awards paid to the Executive Officers of the Company. The
process involved in determining the executive compensation for fiscal 1994
is summarized below.
o In March and April 1994, an independent compensation consultant
compiled information regarding executive compensation from a number
of nationwide surveys of similarly-sized utility companies and from
surveys of other businesses. The companies in such surveys operate
in the Northeast United States, or are of a similar size, or have
other operating characteristics similar to the Company. The
Compensation Committee believes these companies are representative of
the Company's main competition for executive talent. Consequently,
the compensation survey groups include companies that are different
from the companies in the S&P Electric Companies Index and the S&P
500 Composite Index used for the Performance Graphs.
o In April 1994, the consultant provided a report to the Compensation
Committee recommending changes in salary ranges as well as salary
increase percentages reflecting meritorious job performance and cost
of living factors. The report discussed how marketplace data was
used to prepare the recommendations. Through regression analysis,
with adjustments to maintain internal equity, the market data were
used to derive a salary range midpoint, which was the average for
each Executive Officer position salary range. The recommended salary
ranges were then established from these midpoints.
o The competitive market data were reviewed with the Company's Chief
Executive Officer for each Executive Officer position except that of
the Chief Executive Officer. In addition, each position, except
that of the Chief Executive Officer, was reviewed together with each
Executive Officer's individual performance for 1993 and objectives
for the year 1994. The Company's performance for 1993 and
performance targets for 1994 were also reviewed.
o Based on the foregoing, the Chief Executive Officer recommended to
the Compensation Committee a base salary for each executive level
position excluding the Chief Executive Officer.
o The Compensation Committee reviewed the salary of the Chief Executive
Officer and compared it to salaries paid to chief executives of
utility companies of similar size and to other companies. After
discussion, the Compensation Committee recommended a base salary,
which was approved by the Board of Directors. Specifically, the
Compensation Committee considered, among other factors, the following
matters (in descending order of importance without any specific
weight being assigned to any of such factors) in establishing the
Chief Executive Officer's base salary: the Company's achievement in
1993 of the return on equity target set by the Vermont Public Service
Board; the Company's continuing to have the lowest retail electricity
rates among the major investor-owned utilities in New England; the
Company's maintenance in 1993 of its standing as having the second
highest credit rating among New England's investor-owned utilities;
and the continued favorable assessment of the Company by its
customers in 1993 as reflected in an independent professional survey.
These factors were also considered with respect to the Compensation
Committee's deliberations on the base salaries for the other
Executive Officers. The base salary of the Chief Executive Officer
in 1994 was within the second quartile of the base salary paid by the
surveyed companies.
o In May 1994, the Compensation Committee reviewed the consultant's
recommendations, performance evaluations and survey data. After
discussion, the Compensation Committee recommended a base salary
which was approved by the Board of Directors.
o In March 1994, the Compensation Committee considered the incentive
awards to be made in 1994 to the Named Executive Officers listed in
the Summary Compensation Table pursuant to the Management Incentive
Plan, as amended, in light of the Company's performance in 1993.
Because the Company's earned return on equity in 1993 did not
materially exceed the minimum level of performance allowing for
incentive awards to be made under the Management Incentive Plan, as
amended, the Compensation Committee concluded that no incentive
awards should be paid in 1994 to the Named Executive Officers on the
basis of the Company's performance in 1993.
o In April 1994, the Company reviewed its policy of providing Company-
owned vehicles to several dozen employees, including the Named
Executive Officers. The Compensation Committee determined that it
was appropriate to provide a one-time payment to the affected
employees in light of the elimination of the Company-owned vehicle
benefit. The one-time payment provided to the Named Executive
Officers is shown in the Summary Compensation Table.
o In May 1994, the Compensation Committee presented its report and
recommendations to the Board of Directors for approval.
o In April 1995, the Compensation Committee will consider the base
salaries and the variable awards that the Committee will recommend be
paid to the Named Executive Officers as of May 1995. The
recommendations of the Compensation Committee to the Board of
Directors in this respect will be based on a new report by a
compensation consultant, new market survey data, and the Company's
goals and objectives.
o A new Section 162(m) was added to the Internal Revenue Code when
Congress enacted the Omnibus Budget Reconciliation Act of 1993 on
August 10, 1993. The Company has reviewed its compensation policies
with respect to executive officers and determined that Section 162(m)
should have no impact on its executive compensation policies in 1994
because no executive officer will receive compensation in such year
in excess of the $1 million threshold.
Compensation Committee
Robert E. Boardman Richard I. Fricke
William H. Bruett Euclid A. Irving
Merrill O. Burns, Chairman Thomas P. Salmon
Lorraine E. Chickering
PERFORMANCE GRAPHS
The following graphs compare the total return on investment (change in
stock price plus reinvested dividends) performance of the Company with
that of Duff & Phelps Electric Utility Index as calculated by Duff &
Phelps, the S&P 500 Composite Index and the S&P Electric Companies Index
calculated by Standard & Poor's Corporation. For this proxy statement and
subsequent statements, the Company has elected to change the comparative
peer group from the S&P Electric Companies Index to that of the Duff &
Phelps Electric Utility Index. The Duff & Phelps Electric Utility Index
is comprised of 89 electric utility companies. Company performance as
compared to this index is used to determine a portion of awards under the
Company's Compensation Program for Officers and key management personnel.
The comparison of total return on investment for each of the periods
assumes $100 was invested on December 31, 1989 (for the five-year graph)
or December 31, 1984 (for the 10-year graph) in each of: the Company; the
Duff & Phelps Electrics; the S&P 500 Composite Index; and the S&P Electric
Companies Index. The performances of the compared investments on a total
return basis are quite sensitive to the market price prevailing on the
date when the periods that are depicted on the graphs begin.
Five-Year Comparison Of Return
Assuming Quarterly Reinvestment of Dividends
1989 1990 1991 1992 1993 1994
GMP $100.00 $93.09 $134.61 $159.45 $158.72 $154.55
D&P
Electrics $100.00 $99.10 $127.53 $138.40 $151.69 $135.37
S&P 500 $100.00 $96.81 $126.37 $135.92 $149.59 $151.55
S&P
Electric
Cos $100.00 $102.61 $133.58 $141.43 $159.25 $138.44
<TABLE>
<CAPTION>
Ten-Year Comparison Of Return
Assuming Quarterly Reinvestment of Dividends
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GMP $100.00 145.74 209.67 219.38 207.39 256.46 238.75 345.22 408.92 407.05 396.35
S&P
Elec. $100.00 135.62 178.71 162.14 191.66 242.39 240.21 309.11 335.47 367.67 328.13
S&P
500 $100.00 131.64 156.23 164.43 191.65 252.32 244.27 318.85 342.95 377.45 382.40
S&P
Elec.
Cos $100.00 126.46 162.68 150.41 176.91 235.60 241.75 314.81 333.21 375.19 326.16
</TABLE>
PENSION PLAN INFORMATION
The following table shows annual pension benefits payable pursuant to the
Company's Retirement Plan to all covered employees, including Executive
Officers, upon retirement at age 65, in various compensation and years-of-
service classifications, assuming the election of a retirement allowance
payable as a life annuity. The retirement benefits in connection with the
separate life insurance plan referred to below are in addition to those
described in the following table.
PENSION PLAN TABLE
Annual Average
Base Estimated Annual Retirement Benefits
Compensation in at Normal Retirement Age of 65 Years
3 Consecutive Credited Years of Service*
Highest
Paid Years Out
of Last
10 Years
Preceding
Retirement 15 20 25 30 35 & Over
$ 75,000 16,155 21,540 26,925 32,310 37,695
$100,000 22,155 29,540 36,925 44,310 51,695
$125,000 28,155 37,540 46,925 56,310 65,695
$150,000 34,155 45,540 56,925 68,310 79,695
$200,000** 42,155 56,207 70,258 84,310 98,362
* Credited years of service (including service credited with other
companies), as of December 31, 1994, for each of the following Executive
Officers were as follows: D. G. Hyde 16.9 years; A. N. Terreri 32.5
years; E. M. Norse 24.6 years; C. L. Dutton 9.8 years; and S. C. Terry 8.8
years.
** Compensation cap for 1992 is $228,860; for 1993 is $235,840; and for
1994 is $150,000.
All employees, including Executive Officers of the Company are covered by
the Company's Retirement Plan if they have been employed for more than a
year. This Plan is a defined benefit plan providing for normal retirement
at age 65. Early retirement may be taken commencing with the first of any
month following the attainment of age 55, provided at least five years of
credited service have been completed. For employees with at least 10
years of credited service, the accrued benefits are reduced as follows if
retirement occurs prior to age 62:
Age at Retirement Reduction of Benefits
61 5%
60 10%
59 15%
58 20%
57 25%
56 32%
55 37%
For employees with less than 10 years of credited service who retire
before age 65, benefits are actuarially reduced. If retirement occurs
after age 62 and completion of at least 10 years of credited service, the
full accrued benefit is payable. Retirement benefits are not subject to
any deductions for Social Security or other offset amounts.
Retirement benefits are based on final average base compensation and
length of service. Final average compensation is the average of the
compensation (limited to base salary for Executive Officers, which is
shown in the Salary column of the Summary Compensation Table for the Named
Executive Officers, and straight-time payroll wages for other employees)
for the three highest consecutive years out of the final 10 years of
employment. Effective January 1, 1989, the normal retirement benefit is
equal to 1.1% of the final average compensation up to covered compensation
plus 1.6% of final average compensation over covered compensation
multiplied by each year of credited service up to 35 years.
For 1994, the percentage which the cost to maintain the retirement fund
bore to the total participant covered compensation equaled 4.6%.
Executive Officers and key management personnel of the Company, including
the Named Executive Officers, participate in a separate life insurance
plan. Under this separate plan, the Company has purchased life insurance
on the lives of the Executive Officers and key management personnel to
provide life insurance benefits to them in an amount equal to four times
salary for the most senior Executive Officer (President and Chief
Executive Officer), three times salary for the next most senior Executive
Officers (Executive Vice President and Chief Operating Officer, and Vice
Presidents) and two times salary for the third most senior Executive
Officers and key management personnel (General Counsel, Assistant Vice
Presidents, Assistant General Counsel, Assistant Treasurer, Controller and
General Manager, Administrative Service). The plan also provides
retirement and survivor's benefits for a period of fifteen years following
retirement as a supplement to the Company's Retirement Plan in an amount
equal to 44% of final salary for the most senior Executive Officer, 33% of
final salary for the next most senior Executive Officers and 22% of final
salary for the third most senior Executive Officers and key management
personnel. Retirement benefits will be paid out of the Company's general
assets. The life insurance benefits are designed so that the Company does
not expect to incur any significant net expense in implementing this part
of the plan. The retirement benefits are partially covered by the life
insurance coverage obtained by the Company. These costs cannot be
properly allocated or determined for any one plan participant because of
the overall plan assumptions. The Company is recording the estimated cost
of this plan on a current basis and will record as income life insurance
benefits when they occur.
The Company has adopted a Deferred Compensation Plan pursuant to which
Executive Officers and key management personnel may elect to defer a
portion of their salaries. Amounts deferred are credited to a separate
account for each participant. The balance in a participant's account will
be paid to him or her or his or her beneficiary according to their
election form.
The Company has entered into severance contracts with 15 of its Executive
Officers and key management personnel, including the Named Executive
Officers, under which the Company has certain obligations to each affected
Executive Officer if there is a change in control of the Company (as
defined below), and if the Executive Officer's employment is involuntarily
terminated without cause or is voluntarily terminated by the Executive
Officer with good reason (as defined below) within two years after such
change in control. The severance contracts provide for payments of 2.99
times the base salaries of the affected Executive Officers, for
continuation of health, medical and other insurance programs for such
Executive Officers for twenty-four months after the termination of
employment of such Executive Officers following a "change in control" of
the Company and for payment of an amount equal to the actuarial value of
up to twenty-four additional months of credited service under the
Company's Retirement Plan after such termination. A "change in control of
the Company" will be deemed to have occurred under the severance contracts
when a person secures the beneficial ownership of 25% or more of the
voting power of the Company's then outstanding securities, when there has
been a new majority of members serving on the Board of Directors for two
consecutive years or when the Company's shareholders approve a merger or
consolidation of the Company with another corporation where the out-
standing voting securities of the Company do not continue to represent at
least 80% of the combined voting power of the Company or the surviving
entity. Under the severance contracts, the Board of Directors has limited
discretion to determine whether a change of control of the Company has, in
fact, taken place. An Executive Officer may terminate his or her
employment "with good reason" following a change in control if the
Executive Officer is assigned duties inconsistent with his or her respon-
sibilities before the change in control occurred, if the Company's
headquarters are relocated more than 50 miles from the present location,
if the Executive Officer is required to relocate more than 50 miles from
his or her present location, if the Executive Officer's compensation or
benefits are reduced or adversely affected (other than as part of an
overall adjustment of executive compensation or benefits) or if the
Company does not obtain an agreement from its successor to perform under
the severance contracts.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors on November 14, 1994, appointed the firm of Arthur
Andersen LLP to serve as independent certified public accountants for the
calendar year 1995. The appointment was made upon the recommendation of
the Audit Committee. Arthur Andersen LLP has served the Company in this
capacity continuously since 1988. Representatives of the firm are
expected to attend the Annual Meeting to make statements if they desire
and to respond to appropriate questions.
COMPLIANCE WITH THE SECURITIES EXCHANGE ACT
The Company's Directors and Executive Officers are required under Section
16(a) of the Securities Exchange Act of 1934 to file reports of ownership
and reports of changes in ownership with the Securities and Exchange
Commission and the New York Stock Exchange. Copies of those reports must
also be furnished to the Company.
Based solely on a review of those reports and written representations from
the Directors and Executive Officers, the Company believes that during
1994 all requirements applicable to Directors and Executive Officers have
been complied with.
1996 SHAREHOLDER PROPOSALS
A shareholder proposal must be received by the Secretary of the Company no
later than December 15, 1995, to be included in the proxy materials for
the Company's next Annual Meeting.
DISCRETIONARY AUTHORITY
While the Notice of Annual Meeting of Shareholders refers to such other
matters as may properly come before the Meeting, the only matters which
the Management intends to present or knows will be presented at the
Meeting are those matters set forth in the Notice of the Meeting.
However, the enclosed proxy gives discretionary authority to the persons
named therein to act in accordance with their best judgment in the event
any additional matters should be presented at the Meeting.
By Order of the Board of Directors
Donna S. Laffan
Secretary
South Burlington, Vermont
April 12, 1995
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<CAPTION>
This proxy will be voted as director or, in the basence of specific / X / Please mark
directions, FOR Item 1, FOR Item 2, FOR Item 3, and FOR Item 4 your votes as this
______________ _______________________________________
COMMON DIVIDEND REINVESTMENT SHARES
<S> <C> <C> <C>
For Against Abstain
Item 1 -- To approve an amendment to the By-laws regarding / X / / X / / X /
classification of the Board of Directors. The Board of
Directors recommends a vote FOR this item.
Withheld
For For All
Item 2 -- Election of the following nominees as Directors: / X / / X /
Class I: William H. Bruett, Richard I. Fricke, Martin L.
Johnson, Thomas P. Salmon; Class II: Robert E. Boardman,
Merrill O. Burns, Douglas G. Hyde, Ruth W. Page; and
Class III: Nordahl L. Brue, Lorraine E. Chickering, John V.
Cleary, Euclid A. Irving.
Withheld for the following nominee(s) only; print name(s)
______________________________
______________________________
For Against Abstain
Item 3 -- To approve the Compensation Program for Officers / X / / X / / X /
and Certain Key Management Personnel.
The Board of Directors recommends a vote FOR this item.
Item 4 -- To vote on such other matters as may properly come
before the Meeting and any and all adjournments thereof.
Signature(s) __________________________________________________ Date ______________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
</TABLE>
Proxy
GREEN MOUNTAIN POWER CORPORATION
25 Green Mountain Drive
South Burlington, Vermont
The undersigned hereby appoints Douglas G. Hyde, A. Norman Terreri
and Donna S. Laffan as Proxies, each with the power to appoint a
substitute, and hereby authorizes them to represent and to vote, as
designated on the reverse side, all the shares of Common Stock of
Green Mountain Power Corporation held of record by the undersigned on
March 30, 1995, at the Annual Meeting of Shareholders to be held on
May 18, 1995, or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
(Please date and sign on reverse side)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
This Trustee will vote as director or, in the absence of specific / X / Please mark
directions, FOR Item 1, FOR Item 2, FOR Item 3, and FOR Item 4 your votes as this
GREEN MOUNTAIN POWER CORPORATOIN
ESIP
CONFIDENTIAL VOTING INSTRUCTIONS TO
CHITTENDEN CORPORATION
AS TRUSTEE UNDER THE GREEN MOUNTAIN POWER CORPORATION
ESIP PLAN
I hereby direct that the voting rights pertaining to shares of stock of Green Mountain Power
Corporation held by the Trustee and allocated to my account shall be exercised at the Annual Meeting
of Shareholders of Green Mountain Power Corporation, to be held on May 18, 1995, and all
adjournments thereof:
For Against Abstain
Item 1 -- To approve an amendment to the By-laws regarding / / / / / /
classification of the Board of Directors. The Board of
Directors recommends a vote FOR this item.
Withheld
For For All
Item 2 -- Election of the following nominees as Directors: / / / /
Class I: William H. Bruett, Richard I. Fricke, Martin L.
Johnson, Thomas P. Salmon; Class II: Robert E. Boardman,
Merrill O. Burns, Douglas G. Hyde, Ruth W. Page; and
Class III: Nordahl L. Brue, Lorraine E. Chickering, John V.
Cleary, Euclid A. Irving.
Withheld for the following nominee(s) only; print name(s)
__________________________ __________________________
For Against Abstain
Item 3 -- To approve the Compensation Program for Officers / / / / / /
and Certain Key Management Personnel.
The Board of Directors recommends a vote FOR this item.
Item 4 -- To vote on such other matters as may properly come
before the Meeting and any and all adjournments thereof.
_________________________
Date
_________________________
Signature of Participant
</TABLE>
You are invited to join us on May 18, 1995 for Green Mountain Power
Corporation's Annual Meeting of Shareholders. Each shareholder is welcome
to bring a guest. Please complete and return this card ONLY IF YOU PLAN
TO ATTEND. The return of this card is not required for attendance at the
meeting, but will assist us in making appropriate arrangements for you and
your guest.
(If you or your guest need special accommodations, please let us know.)
(please check box)
Meeting Lunch
____________________________________ / / / /
Your Name (Please Print)
____________________________________ / / / /
Spouse (Please Print)
____________________________________ / / / /
Guest (Please Print)
____________________________________ / / / /
Guest (Please Print)
PLEASE RETURN BY MAY 5, 1995. Thank you.
No Postage
Necessary
If Mailed
In The
United States
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 286 BURLINGTON, VT
Postage will be paid by addressee
BONNIE V. FAIRBANKS
GREEN MOUNTAIN POWER CORPORATION
P. O. BOX 850
BURLINGTON VT 05402-0850
EXHIBIT A
PROPOSED AMENDMENT TO THE BYLAWS TO
ESTABLISH A CLASSIFIED BOARD OF DIRECTORS
Section 2 of Article II of the Bylaws is amended to provide as follows:
Sections 2. Election. The board of directors shall consist of twelve
members and shall be elected at the annual meeting of the stockholders or
at a special meeting held in place thereof. Subject to law, to the
articles of association and to the other provisions of these bylaws, each
director shall hold office until his or her term of office expires and
until his or her successor shall have been elected and qualified. The
directors shall be divided, with respect to the terms for which they
severally hold office, into three classes, hereby designated as Class I,
Class II and Class III. Each class shall have at least three directors
and the three classes shall be as nearly equal in number as possible. The
initial terms of office of the Class I, Class II and Class III directors,
elected at the 1995 annual meeting of shareholders, shall expire at the
next succeeding annual meeting of shareholders, the second succeeding
annual meeting of shareholders and the third succeeding annual meeting of
shareholders, respectively. At each annual meeting of shareholders after
1995, the successors of the class of directors whose term expires at that
meeting shall be elected to hold office for a term expiring at the annual
meeting of shareholders to be held in the third year following the year of
their election. No director may be removed from office prior to the
expiration of his or her term of office except for cause. For purposes of
this Section, the term "cause" means a willful and continued failure to
perform the duties of a director (other than failure resulting from
incapacity due to physical or mental illness) or conduct which is
demonstrably and materially injurious to the corporation, monetarily or
otherwise. Such removal from office can be effected only upon the
affirmative vote of three quarters of the remaining membership of the
board of directors. The board of directors shall elect from its members a
chairman of the board of directors who will serve as such for one year or
during the balance of his or her term as a director, whichever is less,
and until a successor is elected and qualified.
EXHIBIT B
Green Mountain Power Corporation
Compensation Program for Officers
And Certain Key Management Personnel
Highlights Brochure/Program Document
Table of Contents
Page
Preamble 1
Purpose of Program 1
Participants 1
Effective Date 1
Definitions 1
Program Components 3
Base Salary 3
Variable Compensation 4
Determination of Award 7
Variable Compensation Award Payment 7
Program Administration 7
Appendix I
Appendix II
Preamble
This document describes and governs the Compensation Program for Officers
and Certain Key Management Personnel for Green Mountain Power Corporation
("GMP" or "the Company"). The program is intended to assure that total
compensation is competitive in the marketplace and promotes the Company's
strategic objectives.
Purpose of Program
The purpose of the Compensation Program is to:
o ensure that base compensation compares favorably with regard to
organizations competing for similar talent;
o provide an opportunity for officers and other key management
personnel to share in the success of GMP by linking a portion of
compensation (variable compensation) to corporate performance
results;
o encourage a longer-term view by paying part of an earned variable
compensation award in deferred/restricted stock; and
o foster and reinforce teamwork among officers and other key management
personnel.
Participants
Senior officers of GMP and other key management personnel, as designated
from time to time by the Board of Directors are eligible to participate in
this program. Appendix I to this document, as amended from time to time,
will list eligible participants so designated.
Effective Date
The stock award provisions contained herein shall be effective upon
shareholder and other required regulatory approval. The program is
otherwise effective January 1, 1994.
Definitions
The following definitions pertain to the program.
Circuit Breaker - a performance level below which no variable compensation
will be paid regardless of performance against the corporate measures.
For this program, no awards will be paid unless earnings, less provision
for awards, are greater than dividends paid in the year for which variable
compensation is to be awarded.
Compensation Committee - the Compensation Committee of the Board of
Directors.
Market Average - the average of salaries paid in the marketplace for
positions similar to those at GMP.
Market Range - a range running from 10% below to 10% above the market
average.
Marketplace - Companies that are determined by GMP to be those competing
for similar talent. Depending on the position within GMP, marketplace
companies can be utilities, general industry -- local, regional, national,
or any combination thereof.
Maximum - the maximum or optimal level of corporate performance with
respect to a corporate performance measure. This determination will be
applied separately to each performance measure. No variable compensation
with respect to a performance measure will be paid in excess of the
maximum level indicated.
Compensation Program - the compensation program, which consists of base
salary and the opportunity to earn variable compensation.
Organization Bands - tiers within which management positions are
clustered, to reflect the nature and scope of the jobs, reporting
relationships, and the like.
Peer Companies - a select group of utilities against which GMP's
performance will be measured.
Performance Measure - a critical factor used to measure the success of the
business.
Program Year - GMP's fiscal year.
Restricted Stock Grants - the portion of the variable compensation award
paid to participants in this program in the form of GMP common stock that
will be subject to two restrictions of a five (5) year duration: (1) no
transferability; and (2) forfeiture of the stock upon termination of
employment with the Company (except for retirement, death or disability).
During the five-year restriction period, dividends will be paid and
recipients will have voting rights. The value of restricted stock is
taxable when the restrictions lapse (after five years, or earlier in the
case of the participant's retirement, disability or death). The
restriction period begins on the date the awards are granted.
Stock Grants - the portion of the variable compensation award paid to
participants in the form of shares of GMP common stock. These shares are
the property of the participant upon grant and may be retained or sold.
Upon grant, shares are subject to current taxation.
Target - the desired level of corporate performance with respect to a
performance measure. This determination will be applied separately for
each performance measure.
Threshold - the acceptable level of corporate performance with respect to
a performance measure. This determination will be applied separately to
each performance measure. No variable compensation with respect to a
performance measure will be paid unless the threshold level is attained.
Total Compensation - an amount comprised of base salary and variable
compensation.
Variable Compensation - compensation that is earned based on the
achievement of corporate performance objectives and that may be paid in
cash, stock grants, or restricted stock grants.
Program Components
The Compensation Program is comprised of two compensation components:
o Base Salary
o Variable Compensation
Base Salary
Each officer or other key management employee is paid a base salary
intended to be competitive with base compensation paid for similar
positions in the marketplace.
Variable Compensation
Each officer or other key management employee is eligible to earn
additional compensation when GMP's performance meets or exceeds various
performance objectives.
Base Salary
Base salaries are intended to provide a competitive rate of fixed
compensation. Base salary levels will be assessed by compiling and
analyzing salary information from various published survey sources on an
annual basis. Survey sources include:
o Mercer Finance, Accounting & Legal Compensation Survey
o Wyatt Top Management Report
o Edison Electric Executive Compensation Survey
Within one year after the adoption of the program, base salaries are
intended to be managed to the market average (in any event, within a plus
or minus 10% range around the market average) as determined from the
survey analysis. The average and the range may or may not change from year
to year depending on movement in the market and, therefore, it is possible
that base salaries may not be increased annually. Appropriate adjustments
will be made in May of each year.
Actual base compensation within the market range will depend on internal
equity, overall scope of responsibilities of the position, recruitment
needs, and significant individual performance variations.
The market ranges have been incorporated into three organization bands (in
lieu of job grades), as set forth in Appendix I, which may be modified
from time to time by direction of the Board or the Chief Executive
Officer. These bands reflect the nature of the positions and their impact
on the organization. Additionally, these bands signify varying levels of
participation in the variable compensation component of the program. The
band assignments are determined on the basis of survey data and the role
of the position.
Variable Compensation
The purpose of the variable compensation component of this program is to
tie compensation directly to the achievement of key corporate-wide
objectives. Awards earned will be paid in cash, stock grants, and
restricted stock as deemed appropriate by the Compensation Committee of
the Board of Directors. The initial variable award payments will be made
as set forth below. This award delivery feature is intended to motivate
participants toward the annual attainment of critical corporate objectives
consistent with the need to manage GMP to achieve longer-term success.
Variable Compensation Award Opportunities
Each band has a different variable compensation opportunity as noted in
the following table.
Award Table (AT)
Variable Cash Opportunities as a %
Band of Base Salary
Threshold Target Maximum
A 25% 50% 75%
B 17.5% 35% 52.5%
C 12.5% 25% 37.5%
Performance Measures - Establishment
At the beginning of each year, appropriate corporate performance measures
will be determined for purposes of generating the variable compensation
award. These measures are expected to remain in substantially the same
form year-to-year. They may change, however, as GMP revisits its
strategic and operational plans.
The measures are:
o Return on Equity
o Total Shareholder Return
o Rates
o Customer Satisfaction; and
o Reliability
Performance objectives associated with these measures are established for
each fiscal year by the Compensation Committee and reviewed by the Board
of Directors. (See Appendix II for measures and specific objectives for
1994, and years following, as indicated.)
After the close of each year, the Compensation Committee, with input from
the CEO, will determine the degree to which these performance objectives
were accomplished to determine if variable cash awards are to be paid. If
the threshold level of performance is not met, an award will not be paid
with respect to that specific performance measure.
In addition, the program incorporates a circuit breaker to protect
shareholder investment. The circuit breaker ensures that awards will not
be paid unless earnings, after subtracting the variable awards, are
greater than dividends paid in the year for which variable compensation is
to be awarded.
Performance Measures - Individual Performance Assessment
Individual performance may, on an exceptions basis, be taken into
consideration in determining the final award. However, the maximum shown
in the Award Table cannot be exceeded.
Performance Measures - Weighting
The performance measures will be weighted each year to reflect the
strategic plan and the impact each organization band/position has on
performance. The number of measures used will be limited to ensure that
the significance of the measures will not be diluted (weights less than
10% cannot be used).
The performance measures will be weighted as noted in Appendix II.
Determination of Award
An award will be determined in accordance with the following example.
Assume:
o Participant is in Band B
o Base Salary = $100,000
o Individual Performance = meets expectations
o Circuit Breaker = achieved required level
Performance Performance Award % Adjusted Award %
Measure Weight Results (from AT) Weight Time %
ROE 30% 75% ile 35% 10.5%
TSR
oD&P 15% Threshold 17.5% 2.625%
oSelect 15% Threshold 17.5% 2.625%
Rates 20% 80% ile 35% 7.0%
Customer
Satisfaction 10% 80% 35% 3.5%
Reliability
oSAII 3.3% Threshold 17.5% .583%
oSAIFI 3.3% Threshold 17.5% .583%
oCAIDI 3.3% Threshold 17.5% .583%
Total Award X = 28%
Award = $28,000
Variable Compensation Award Payment
An award earned will be paid in cash and, subject to shareholder and
required regulatory approval, stock grant and restricted stock grant in
accordance with the following schedule:
Band Cash Stock Grant Restricted
Stock
A 1/4 1/4 1/2
B&C 1/3 1/3 1/3
The Compensation Committee may make changes in this schedule, subject to
review by the Board of Directors.
Cash
The cash portion of the award will be paid in a separate check.
Stock Grants
The stock grant portion of the award will be paid in shares of GMP common
stock. The number of shares will be determined by dividing the portion of
the award to be paid in stock by the closing stock price on the day the
Board of Directors authorizes variable compensation payments (i.e., the
annual meeting). The number of shares so determined will be rounded up to
the nearest full share.
Relevant taxes (e.g., federal, FICA, State), based on the cash and stock
grant portions of the award, will be withheld.
Restricted Stock
The grant of restricted stock will be made upon execution of an agreement
between the participant and the Company that will provide, for a period of
five (5) years from the date of the grant, that: (a) the shares will not
be transferable; and (b) the shares will be forfeited upon termination of
employment with GMP, except where the termination of employment results
from retirement, disability or death.
The number of restricted stock shares to be awarded will be determined as
described immediately above with respect to stock grants.
Program Administration
The program will be administered by the Chief Executive Officer with
approval of the Compensation Committee.
The Compensation Committee will review the operation of the program no
less frequently than annually and, as it deems necessary, recommend
appropriate actions to the Board of Directors.
The Board of Directors will have the full power and authority to:
o Interpret the program
o Approve participants
o Act on the CEO's recommendations
o Amend or terminate the Program, subject to required shareholder and
regulatory approval
o Approve the CEO's award
Participation in the program does not confer any right or privilege
regarding continued employment with GMP upon a participant.
Payment of the cash and, subject to required shareholder and regulatory
approval, the stock grant portions, will be made during the second quarter
following the end of the program year.
Participants must be employed on the date the award is paid in order to
receive an award unless the participant has retired, is disabled or is
deceased, or the Compensation Committee determines that the circumstances
under which the participant terminated employment warrant special
consideration.
Payments of variable compensation awards will not affect a participant's
levels of entitlement to participate in other benefit plans unless
expressly stated in documentation for such plans existing as of January 1,
1994.
The program will be administered in accordance with the laws of the State
of Vermont.
Appendix I
Band* Position Role
A President and CEO Strategic
Senior VP & COO
B VP Finance & CFO Strategic
VP Law & Administration
VP External Affairs & Customer Service
VP Planning
General Counsel
C Controller Strategic /
AVP Engineering Tactical
AVP for Organizational Development
AVP Customer Operations
Central & Southern Divisions
AVP Customer Operations Wester
Division
Assistant General Counsel
Assistant Treasurer
General Manager, Administrative Services
*Band A applies generally to the CEO and COO; Band B applies generally to
Vice Presidents and General Counsel; and Band C applies generally to
Assistant Vice Presidents and other key management personnel.
Appendix II
Performance Measures -- Weights
o Return on Equity 30%
o Total Shareholder Return 30%
o Rates 20%
o Customer Satisfaction 10%
o Reliability 10%
Performance Measures -- Objectives
The objectives for 1994 for each of the performance measures are:
o Return on Equity
-- The peer group is the Duff & Phelps 90
-- To achieve threshold performance, GMP's ROE for electric operations
must be equal to or greater than the allowed ROE level, or equal to
or greater than 60% of the peer group
-- Target level is equal to or greater than 75% of the peer group
-- Maximum performance is equal to or greater than 90% of the peer
group
o Total Shareholder Return
-- Performance is measured using two different peer groups: the Duff &
Phelps 90, and a select peer group. The select group includes:
_ Atlantic Energy
_ Bangor-Hydro
_ Black Hills
_ Central Hudson
_ Central Vermont Public Service
_ Eastern Utilities Associates
_ Empire District
_ Idaho Power
_ Minnesota Power & Light
_ Otter Tail Power
-- Total Shareholder Return (TSR) is defined as dividends plus capital
appreciation using a three-year rolling average
-- To achieve threshold performance, GMP's TSR must be in the top half
of the peer group
-- Target performance is equal to or greater than 60% of the peer
group
-- Maximum performance is equal to or greater than 70% of the peer
group
o Rates
-- Performance is measured against 10 New England utilities. They are:
_ Central Maine Power
_ Bangor-Hydro
_ Public Service of New Hampshire
_ Central Vermont
_ Boston Edison
_ Commonwealth Energy
_ Massachusetts Electric
_ Connecticut Power & Light
_ United Illuminating
_ Narragansett Electric
-- To achieve threshold performance, GMP's rates must be equal to or
lower than 70% of the peer group
-- Target performance is achieved when GMP's rates are equal to or
lower than 80% of peer group
-- Maximum performance is reached when GMP's rates are lowest or second
lowest among the peer group
o Customer Satisfaction
-- Performance is measured using two surveys (i.e.,
Commercial/Industrial, Residential) with respect to the following
aspects of customer satisfaction: reliability of service,
responsiveness to trouble calls, responsiveness to customer
inquiries, accuracy of customers' bills, effectiveness of telephone
communications, effective delivery of DSM services.
-- To achieve threshold performance, 70% or more of customers must
indicate satisfaction
-- Target performance is achieved when 80% or more of customers
indicate satisfaction
-- Maximum performance is reached when 90% or more indicate
satisfaction
o Reliability
-- Performance is measured using three indices:
_ System average interruption index
_ System average interruption frequency index
_ Customer average interruption duration index
-- To reach threshold performance, GMP's performance must improve 5% or
more from that achieved in the previous year
-- Target performance is 10% or greater improvement from the previous
year
-- Maximum performance is 12% or greater improvement from the previous
year
