<PAGE>
[LOGO]
25 Green Mountain Drive
P.O. Box 850
South Burlington, Vermont 05402
April 15, 1996
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
16, 1996, 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.
We urge you to read the accompanying materials carefully before voting on the
matters to be considered at the Meeting.
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 Green Mountain Power Corporation.
Sincerely,
DOUGLAS G. HYDE
President and
Chief Executive Officer
<PAGE>
MAP
<PAGE>
[LOGO]
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 16, 1996, at 10:00
o'clock in the forenoon (Eastern Daylight Savings Time), for the following
purposes:
Item 1. To elect four Class I Directors to serve until the Annual Meeting of
Shareholders in 1999; and
Item 2. 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 Green Mountain Power Corporation at the close of business on March 28, 1996,
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 15, 1996
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.
<PAGE>
PROXY STATEMENT
GREEN MOUNTAIN POWER CORPORATION
25 Green Mountain Drive
P.O. BOX 850
South Burlington, Vermont 05402
ANNUAL MEETING OF SHAREHOLDERS
May 16, 1996
April 15, 1996
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 16, 1996, 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 15, 1996.
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 $5,000, plus reimbursement 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 28, 1996, the record date for the Annual Meeting, the Company had
outstanding 4,852,820 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 election of Class I Directors (Item 1
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 or opposed to Item
1.
<PAGE>
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 election of
nominees for Class I Directors (Item 1 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 28, 1996.
The following table sets forth, as of March 28, 1996, information relating to
the ownership of the Company's Common Stock by each Director, by each of the
Executive Officers named in the Summary Compensation Table and by all Directors
and Executive Officers as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED
(1)
---------------------
<S> <C>
Robert E. Boardman......................................... 1,392
Nordahl L Brue............................................. 2,926 (2)
William H. Bruett.......................................... 2,000
Merrill O. Burns........................................... 1,776
Lorraine E. Chickering..................................... 256
John V. Cleary............................................. 2,306
Richard I. Fricke.......................................... 2,900 (3)
Douglas G. Hyde............................................ 10,130 (4)
Euclid A. Irving........................................... 619
Martin L Johnson........................................... 1,155
Ruth W. Page............................................... 1,100 (5)
Thomas P. Salmon........................................... 1,135
Christopher L. Dutton...................................... 2,950 (6)
Edwin M. Norse............................................. 1,829
A. Norman Terreri.......................................... 5,340 (7)
Stephen C. Terry........................................... 2,260 (8)
All directors and Executive Officers as a group (26
persons)................................................... 52,923
<FN>
(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 March 28, 1996, no Director, nominee or listed Executive
Officer owned beneficially as much as 1% of the Company's outstanding
Common Stock.
(2) Mr. Brue owns 2,777 of these shares directly. The remaining 149 shares are
owned by Mr. Brue's children for whom Mr. Brue serves as custodian; Mr.
Brue disclaims any other beneficial interest in the 149 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 9,730 of these shares 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 2,878 of these shares directly. The remaining 72 shares
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 72
shares owned by his children.
(7) Mr. Terreri owns 4,966 these shares directly. His wife owns the remaining
374 of these shares; Mr. Terreri disclaims any other beneficial interest
in the 374 shares owned by his wife.
(8) Mr. Terry owns 2,230 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.
</FN>
</TABLE>
2
<PAGE>
As of March 28, 1996, all Directors and Executive Officers of the Company as
a group (consisting of 26 persons) beneficially owned an aggregate of 52,923
shares (or approximately 1.1% of the outstanding shares) of Common Stock.
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
changes in ownership with the Securities and Exchange Commission and the New
York Stock Exchange. Based on a review of those reports and written
representations from the Directors and Executive Officers, the Company believes
that during 1995 all requirements applicable to Directors and Executive Officers
have been complied with.
ITEM 1. ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes, as
nearly equal in number as possible. Each class serves three years, with the
terms of office of the respective classes expiring in successive years. The term
of office of Directors in Class I expires at the 1996 Annual Meeting. The Board
of Directors proposes that the nominees described below, all of whom are
currently serving as Class I Directors, be elected to Class I for a new term of
three years and until their successors are duly elected and qualified. The Board
of Directors has no reason to believe that any of the nominees will not serve if
elected, but if any of them should become unavailable to serve as a Director,
and if the Board of Directors designates a substitute nominee, the persons named
as proxies will vote for the substitute nominee designated by the Board of
Directors.
Directors will be elected by a majority of the votes cast at the Annual
Meeting. If elected, all nominees are expected to serve until the 1999 Annual
Meeting and until their successors are duly elected and qualified.
CLASS I
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
(Term Expiring in 1999)
<TABLE>
<CAPTION>
Director
Since
-----------
<S> <C> <C>
William H. Bruett Senior Vice President, Group Product Manager of 1986
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. (52)
Richard I. Fricke Director Emeritus of National Life Insurance Company; 1984
Director of Sentinel Group Funds, Inc. and of Sentinel
Pennsylvania Tax-Free Fund, Inc. from 1977 to 1995,
Chairman from 1977 to 1983; 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.
(74)
Martin L. Johnson President of The Johnson Company (environmental and 1991
engineering consultants) since 1978; Secretary of the
State of Vermont Agency of Environmental Conservation
from 1973 to 1978. (68)
3
<PAGE>
Thomas P. Salmon Chairman of the Board of the Company since 1983; 1978
President of the University of Vermont since 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. (63)
CLASS II
DIRECTORS CONTINUING IN OFFICE
(Term Expiring in 1997)
Robert E. Boardman Chairman of Hickok and Boardman, Inc. (insurance 1974
agency); Director of Key Bank, of National Life
Insurance Company and of Mount Mansfield Corporation
(recreation); Trustee of Lake Champlain Maritime Museum.
(63)
Merrill O. Burns Senior Vice President and Executive Corporate 1988
Development Officer, BankAmerica Corporation since 1991;
President and Managing Director, BankAmerica
International from 1988 to 1991. (49)
Douglas G. Hyde President, Chief Executive Officer and Chairman of the 1986
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 Vermont Business
Roundtable, and of Howard Bank. (53)
Ruth W. Page Writer, Editor and Radio Commentator; past member of the 1985
Northeast Energy Council of the United States Department
of Energy. (75)
CLASS III
DIRECTORS CONTINUING IN OFFICE
(Term Expiring in 1998)
Nordahl L. Brue Chairman of Bruegger's Corporation (quick-service 1992
restaurants); Chairman of the Executive Committee of
Waterbury Holdings, LLC (specialty food 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
Vermont Business Roundtable; Member of the Governor's
Council of Economic Advisors. (51)
4
<PAGE>
Lorraine E. Chickering President of Public and Operator Services of Bell 1994
Atlantic Corporation since 1993; Vice President,
Quality, and 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. (45)
John V. Cleary Retired Chief Executive Officer and President of the 1980
Company; Chief Executive Officer, President and Chairman
of the Executive Committee of the Company from 1983 to
1993. (67)
Euclid A. Irving Partner, Paul, Hastings, Janofsky & Walker, Attorneys, 1993
New York, New York, since 1990; Partner, Mudge Rose
Guthrie Alexander & Ferdon, Attorneys, New York, New
York from 1984 to 1990. (43)
</TABLE>
BOARD COMPENSATION, OTHER RELATIONSHIPS
MEETINGS AND COMMITTEES
Compensation
During 1995, 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
1995. The President was not paid any fees for service as a Director. The
Chairmen of the Audit, Compensation, Nominating, Special Issues and Subsidiaries
Oversight 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.
Other Relationships
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 1996. The Company paid Sheehey Brue Gray & Furlong, P.C.
$156,236 for legal services rendered in 1995.
Meetings of the Board
During 1995, the Board of Directors held seven regular meetings and one
special meeting. During such year, no Director attended less than 86% of the
aggregate number of meetings of the Board of Directors and the committees on
which such Director served.
5
<PAGE>
Committees of the Board
The Board of Directors has six standing committees, an Executive Committee,
an Audit Committee, a Nominating Committee, a Compensation Committee, a Special
Issues Committee and a Subsidiaries Oversight Committee. Members of the
Committees are appointed annually by the Board of Directors.
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. The present members of the Executive Committee are
Douglas G. Hyde, Chairman, William H. Bruett, Merrill O. Burns, John V. Cleary,
Richard I. Fricke and Thomas P. Salmon. During 1995, the Executive Committee did
not meet.
The Audit Committee annually recommends to the Board of Directors the
appointment of independent public accountants of the Company, reviews the scope
of audits and receives, reviews and takes action deemed appropriate with respect
to audit reports submitted and other audit matters. The present members of the
Audit Committee are Richard I. Fricke, Chairman, William H. Bruett, Merrill O.
Burns, Lorraine E. Chickering, Euclid A. Irving, Martin L. Johnson and Ruth W.
Page. The Audit Committee met twice during 1995.
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.
The present members of the Nominating Committee are William H. Bruett, Chairman,
Nordahl L. Brue, John V. Cleary, Douglas G. Hyde, Martin L. Johnson, Ruth W.
Page and Thomas P. Salmon. This Committee met once during 1995. 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 of Directors any needed
revisions to the compensation of Officers and of otherwise assisting the Board
of Directors in discharging its responsibilities in connection with the
compensation of Officers. The present members of the Compensation Committee are
Merrill O. Burns, Chairman, Robert E. Boardman, William H. Bruett, Lorraine E.
Chickering, Richard I. Fricke, Euclid A. Irving and Thomas P. Salmon. The
Compensation Committee met five times during 1995; two of such meetings were
held by conference telephone.
The Special Issues Committee addresses unusual, extraordinary or
miscellaneous issues that confront the Company from time to time. The present
members of the Special Issues Committee are John V. Cleary, Chairman, Nordahl L.
Brue, Douglas G. Hyde, Euclid A. Irving and Thomas P. Salmon. The Special Issues
Committee met three times during 1995.
The Subsidiaries Oversight Committee oversees the non-utility operations of
the Company. The present members of the Subsidiaries Oversight Committee are
Martin L. Johnson, Chairman, and Euclid A. Irving. The Subsidiaries Oversight
Committee met four times during 1995.
6
<PAGE>
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 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Annual Compensation(1) Long-Term Compensation
------------------------------------------------------------
Awards Payouts
------------------------------
Restricted
Stock All Other
Incentive Other Award(s) Options LTIP compensation
Name and Principal Position Year Salary (2) (4) (3) SARS payouts (3)(5)
=========================== ==== ======== =========== ========= ============ ======= ======== ==========
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Douglas G. Hyde 1995 $215,754 $ -- $ 3,888 -- $0 $0 $5,545
President and Chief 1994 $206,468 $56,930 $21,337 $56,929 $0 $0 $6,144
Executive Officer 1993 $179,243 $ 0 $ --$ -- $0 $0 $5,681
A. Norman Terreri 1995 $161,344 $ -- $ 2,886 $ -- $0 $0 $5,630
Executive Vice President
and 1994 $153,839 $42,240 $20,837 $42,238 $0 $0 $5,211
Chief Operating Officer 1993 $144,023 $ 0 $ --$ -- $0 $0 $5,207
Edwin M. Norse 1995 $139,520 $ -- $ 1,185 $ -- $0 $0 $4,623
Vice President and
General 1994 $120,247 $31,672 $20,837 $15,836 $0 $0 $4,192
Manager, Energy Resources
and Sales 1993 $110,373 $ 0 $ --$ -- $0 $0 $3,679
Christopher L. Dutton 1995 $125,703 -- $ 1,098 $ -- $0 $0 $4,284
Vice President, Finance
and 1994 $112,102 $29,326 $20,837 $14,664 $0 $0 $3,543
Administration, Chief
Financial Officer and
Treasurer 1993 $103,268 $ 0 $ --$ -- $0 $0 $3,351
Stephen C. Terry 1995 $123,476 $ -- $ 1,023 $ -- $0 $0 $4,154
Vice President and
General 1994 $103,717 $27,324 $21,337 $13,663 $0 $0 $3,731
Manager, Retail Energy
Services 1993 $ 94,814 $ 0 $ --$ -- $0 $0 $3,040
- --------------------------------------------------------------------------------------------------------------
- ------------
<FN>
(1) Amounts shown include salary and incentive earned by the Named Executive
Officers on the basis of the Company's operating results in 1993 and 1994,
as well as amounts earned but deferred at the election of those officers.
The amount of the incentive to be awarded for 1995 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
(the "Compensation Program"). 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 restricted share awards for 1994 were made in accordance with the
Company's Compensation Program. No restricted share awards have yet been
made for 1995. See Compensation Committee Report. Regular quarterly
dividends are paid on the shares and reported as part of other
compensation. At December 31, 1995, the aggregate value of all restricted
stock holdings, based on the market value of the shares at December 31,
1995, without giving effect to the diminution of value attributed to the
restrictions on such stock, of Messrs. Hyde, Terreri, Norse, Dutton, and
Terry, respectively, were $61,355, $45,538, $17,066, $15,818, and $14,735.
(4) The 1995 amounts shown in this column represent dividends paid on
restricted shares awarded under the Compensation Program. The 1994 amounts
shown in this column represent a one-time payment to each of the Named
Executive Offiicers for purchase of their Company assigned vehicle in
conjunction with the elimination of Company provided vehicles.
7
<PAGE>
(5) 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 $1,045, Mr. Terreri $1,839, Mr. Norse $437, Mr. Dutton $513,
and Mr. Terry $450.
(ii) Company matching contributions to the Employee Savings and
Investment Plan: Mr. Hyde $4,500, Mr. Terreri $3,791, Mr. Norse
$4,186, Mr. Dutton $3,771, and Mr. Terry $3,704.
</FN>
</TABLE>
Variable Compensation Plan Awards for 1995 Performance
As of April 1996, 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 1995 operating
results for 1995. See Compensation Committee Report.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Board") is
responsible for administering executive compensation plans as authorized by the
Board and recommending executive compensation plans and compensation levels for
the officers of the Company, including the Chief Executive Officer, to the Board
for approval. The Compensation Committee is also responsible for reviewing and
making recommendations to the Board regarding incentive awards pursuant to the
Compensation Program for executives and certain key management personnel. The
Compensation Committee considers all executive compensation issues and makes
recommendations on such issues to the full Board for approval. Set forth below
is the report of the Compensation Committee describing the Company's
Compensation Program and the basis upon which the 1995 compensation
determinations were made.
Compensation Philosophy
It is the philosophy of the Company that executive compensation should be
competitive in the marketplace, aligned with corporate performance, and promote
the strategic objectives of the Company. Specifically, base compensation for
executives should compare favorably with organizations competing for similar
talent; should provide an opportunity for officers and other key management
personnel to share in the success of the Company by aligning a portion of
compensation (variable compensation) to corporate performance results; should
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 should foster and reinforce teamwork among officers and other
key management personnel. The Company's Compensation Program for Officers and
Certain Key Management Personnel is designed to meet these objectives. It
comprises two components, base salary and incentive compensation, which are
described below.
Base Salary
Base salaries under the Compensation Program are intended to provide a
competitive rate of fixed compensation. Base salary levels are assessed by
compiling and analyzing salary information from various survey sources on an
annual basis. Survey sources include the Mercer Finance Accounting & Legal
Compensation Survey, the Wyatt Top Management Report, and the Edison Electric
Executive Compensation Survey. The companies utilized from such surveys 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
Duff & Phelps Electric Utility Index and the S&P 500 Composite Index used for
the Performance Graphs.
Base salaries are intended to be managed within a plus or minus 10% range
around the market average of base salaries for similar positions, as determined
from the survey analysis. The market average and the range may or may not change
from year to year depending on movement in the market and, therefore, base
salaries may not be increased annually. Actual base compensation within the
market range depends on internal equity, overall scope of responsibilities of
the position, recruitment needs, and significant individual performance
variations.
8
<PAGE>
The market ranges have been incorporated into three organization bands (in
lieu of job grades). These bands may be modified from time to time by direction
of the Board or the Chief Executive Officer. These bands reflect functional
similarities of the positions and their impact on the organization.
Additionally, these bands signify varying levels of participation in the
variable compensation component. The band assignments are determined on the
basis of survey data and the functions of the position. Band A includes the
President and Chief Executive Officer and the Executive Vice President and Chief
Operating Officer; Band B includes the Vice Presidents and General Counsel; Band
C includes all other Executive Officers and key management personnel.
Variable Compensation
Each Executive Officer is eligible to earn additional compensation under the
Compensation Program when the Company's performance meets or exceeds various
performance objectives. The purpose of the variable compensation component is to
tie compensation directly to the achievements of key corporate-wide objectives.
Awards earned are paid in cash, stock grants and restricted stock grants as
deemed appropriate by the Compensation Committee. Each organization band has a
different variable compensation opportunity with threshold, target and maximum
percentage requirements, as set forth below.
Award Table
VARIABLE COMPENSATION
OPPORTUNITIES
AS A % OF BASE SALARY
BAND THRESHOLD TARGET MAXIMUM
- ---- ---------- ------ -------
A .... 25% 50% 75%
B..... 17.5% 35% 52.5%
C..... 12.5% 25% 37.5%
Corporate performance measures have been established for purposes of
generating the variable compensation award. The measures used to determine
variable compensation are: Return on Equity; Total Shareholder Return; Rates;
Customer Satisfaction; and Reliability. These measures are expected to remain
substantially the same from year-to-year. They may change, however, as the
Company revisits its strategic and operational plans. Performance objectives
associated with these measures are established for each fiscal year by the
Compensation Committee and reviewed by the Board.
After the close of each year, the Compensation Committee, with input from the
Chief Executive Officer, determines the degree to which these performance
objectives were accomplished to ascertain if variable compensation 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. No variable awards will
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.
Individual performance may be taken into consideration in determining the final
award.
An award earned for Band A individuals is paid as follows: one-fourth in
cash, one-fourth in stock grants and one-half in restricted stock grants. For
Band B and C individuals, the award is paid one-third in cash, one-third in
stock grants and one-third in restricted stock grants.
1995 Compensation Action
In late 1994, the Company made organizational changes that affected the
responsibilities of several of the Executive Officers of the Company. Consistent
with the program described above, the Chief Executive Officer made
recommendations regarding salary adjustments for these Executive Officers based
on market data for comparable positions compiled by an independent compensation
consultant. The recommended adjustments were approved by the Compensation
Committee and subsequently the Board of Directors effective January 1, 1995.
9
<PAGE>
In May 1995, the Company's Chief Executive Officer reviewed with the
Compensation Committee and the Board of Directors competitive market data for
each Executive Officer position, except that of the Chief Executive Officer,
together with each Executive Officer's individual performance for 1994 and
objectives for 1995. The Company's performance for 1994 and performance targets
for 1995 were also reviewed. Based on the foregoing, the Chief Executive Officer
recommended to the Compensation Committee that no base salary adjustments for
Executive Officers be made in May 1995. Based on the Company's 1994 performance,
the Chief Executive Officer also recommended to the Committee that variable
compensation awards be paid to the Executive Officers. The Compensation
Committee and, subsequently, the Board accepted the foregoing recommendations
and the variable compensation awards are reflected in the Summary Compensation
Table.
The Company has reviewed its compensation policies and programs in light of
Section 162(m) of the Internal Revenue Code and has determined that Section
162(m) will have no impact on its executive compensation program in 1995 because
no Executive Officer will receive compensation for such year in excess of the $1
million threshold.
Chief Executive Officer Compensation
The Compensation Committee reviewed the salary of the Chief Executive Officer
and compared it to salaries paid to chief executives of utility companies and of
other companies of similar size. The survey analysis and performance
measurements described above were used to determine the base salary and the
variable compensation for the Chief Executive Officer. In May 1995, the
Compensation Committee presented its report and recommendations to the Board of
Directors for approval. The Board accepted the Compensation Committee's
recommendations not to increase the base salary of the Chief Executive Officer
in May 1995, consistent with the action taken on all other officers base
compensation, but to approve a variable compensation award based on 1994
performance. That award is reflected in the Summary Compensation Table.
Variable compensation awards based on the year ended 1995 have not been
determined at this time.
Conclusion
The Compensation Committee believes the Company's executive compensation
program appropriately aligns executive compensation to individual and corporate
performance and shareholder value, is competitive with the market and is
sensitive to the concerns of customers, shareholders, and other constituencies.
Compensation Committee
--------------------------------------
Robert E. Boardman Richard I. Fricke
William H. Bruett Euclid A. Irving
Merrill O. Burns, Chairman Thomas P. Salmon
Lorraine E. Chickering
10
<PAGE>
PERFOMANCE GRAPHS
The following graphs compare the total return on investment (change in stock
price plus reinvested dividends) performance of the Company with that of the
Duff & Phelps Electric Utility Index as calculated by Duff & Phelps and the S&P
500 Composite Index calculated by Standard & Poor's Corporation. The Duff &
Phelps Electric Utility Index is comprised of 87 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, 1990 (for the five-year graph) or
December 31, 1985 (for the 10-year graph) in each of: the Company; the Duff &
Phelps Electrics; and the S&P 500 Composite 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
[Graph]
1990 1991 1992 1993 1994 1995
--------- --------- --------- --------- --------- ---------
GMP............ $100.00 $144.60 $171.28 $170.49 $166.01 $179.07
D&P Electrics . $100.00 $128.78 $140.25 $153.31 $137.05 $175.38
S&P 500........ $100.00 $130.34 $140.27 $154.35 $156.44 $215.01
11
<PAGE>
Ten-Year Comparison Of Return
Assuming Quarterly Reinvestment of Dividends
[Graph]
<TABLE>
<CAPTION>
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
--------- --------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GMP........... $100.00 $143.86 150.53 142.30 175.97 163.81 236.87 280.58 279.29 271.95 293.34
D&P
Electrics..... $100.00 131.75 119.66 141.53 178.83 177.32 228.35 248.68 271.84 243.01 310.99
S&P 500....... $100.00 118.62 124.76 145.34 191.25 185.30 241.51 259.92 286.00 289.88 398.41
</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
Compensation in 3 Retirement Benefits
Consecutive Highest at Normal Retirement Age
Paid Years out of Last of 65 Years
10 Years Preceding Credited Years of Service*
Retirement -----------------------------
-----------
15 20 25 30 35 & Over
-- -- -- -- ---------
$75,000................ 16,065 21,420 26,775 32,l30 37,485
$100,000............... 22,065 29,420 36,775 44,l30 51,485
$125,000............... 28,065 37,420 46,775 56,l30 65,485
$150,000**............. 34,065 45,420 56,775 68,130 79,485
- -----------
*Credited years of service (including service credited with other companies), as
of December 31, 1995, for each of the following Executive Officers were as
follows: D. G. Hyde 17.9 years; A. N. Terreri 33.5 years; E. M. Norse 25.6
years; C. L. Dutton 10.8 years; and S. C. Terry 9.8 years.
**Compensation cap for 1993 is $235,840; and for 1994 and 1995 is $150,000.
12
<PAGE>
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 ten years of continuous service have
been completed. For employees with at least 10 years of continuous 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 at least five but less than 10 years of continuous service
who commence benefits before age 65, benefits are actuarially reduced. The
Company has amended the Plan to allow the full accrued benefit to be payable
after age 60 with 10 years of credited service, while maintaining the 37%
reduction at age 55, effective for members of the collective barganing unit.
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.
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 17 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
13
<PAGE>
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 outstanding 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 responsibilities 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 December 11, 1995 appointed the firm of Arthur
Andersen LLP to serve as independent certified public accountants for the
calendar year 1996. 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.
1997 SHAREHOLDER PROPOSALS
A shareholder proposal must be received by the Secretary of the Company no
later than December 13, 1996, 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 15, 1996
14
<PAGE>
Please mark [ x ]
your choices
like this
This proxy will be voted as directed, or in the absence of specific directions,
FOR Item 1.
Item 1 -- Election of the following nominees as Directors: Class I: William H.
Bruett, Richard I. Fricke, Martin L. Johnson, Thomas P. Salmon, to serve until
the 1999 Annual Meeting. WITHHELD
FOR FOR ALL
[ ] [ ]
Withheld for the following nominee(s) only; print name(s)
- ---------------------------------------------------------
Item 2. -- 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.
<PAGE>
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 28, 1996, at the Annual Meeting of Shareholders to be
held on May 16, 1996, or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
(Please date and sign on reverse side)
<PAGE>
CONFIDENTIAL VOTING INSTRUCTIONS TO
CHITTENDEN CORPORATION
AS TRUSTEE UNDER THE GREEN MOUNTAIN POWER CORPORATION
ESIP PLAN
The Trustee will vote as directed or, in the absence of specific
directions, FOR Item 1.
I hereby direct that 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 16, 1996, and all adjournments thereof:
Item 1 - Election of the following nominees as Directors: Class I: William H.
Bruett, Richard I. Fricke, Martin L. Johnson, Thomas P. Salmon, to serve until
the 1999 Annual Meeting.
Withheld for the following nominee(s) only; print name(s)
WITHHELD
FOR FOR ALL
[ ] [ ]
________________________________________________________
Item 2 - To vote on such other matters as may properly come before the Meeting
and any and all adjournments thereof.
_____________________________________________
Date
_____________________________________________
Signature of Participant
<PAGE>
You are invited to join us on May 16, 1996 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.
(please check box)
Meeting Lunch
- ---------------------------------------- [ ] [ ]
Your Name (Please Print)
- ---------------------------------------- [ ] [ ]
Spouse (Please Print)
- ---------------------------------------- [ ] [ ]
Guest (Please Print)
- ---------------------------------------- [ ] [ ]
Guest (Please Print)
PLEASE RETURN BY MAY 3, 1996. Thank you.
<PAGE>
NO POSTAGE
NECESSARY
IF MAILED
IN THE
UNITED STATES
BUSINESS REPLY MAIL
FIRST CLASS MAIL PERMIT NO. 286 SO. BURLINGTON, VT
Postage will be paid by addressee
PENNY J. COLLINS
GREEN MOUNTAIN POWER CORPORATION
P. O. BOX 850
BURLINGTON VT 05402-9917
<PAGE>
