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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LONG ISLAND LIGHTING COMPANY
-----------------------------------------------------
(Name of Registrant As Specified In Charter)
LONG ISLAND LIGHTING COMPANY
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(Name of Person(s) Filing the Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), or 14A-6(i)(1), or
14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-111
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, schedule or registration statement no.:
(3) Filing Party:
(4) Date Filed:
------------------------
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
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[Lilco Letterhead]
March 1, 1994
Dear Shareowner:
You are cordially invited to the Annual Meeting of Long Island Lighting
Company Shareowners, scheduled to be held at 3:00 P.M., on Tuesday, April 12,
1994 at the Westbury Music Fair, Brush Hollow Road, Westbury, New York 11590.
Your Board of Directors and management hope that many shareowners will find it
convenient to attend the Annual Meeting and we look forward to greeting
personally those able to be present.
At this year's Annual Meeting, holders of Common Stock are being asked to
elect twelve Directors and ratify the appointment of Ernst & Young as
independent auditors for 1994.
Regardless of the size of your holdings, it is important that your shares
are represented and voted, whether or not you can join us at this Annual
Meeting. Accordingly, your prompt cooperation in signing, dating and returning
the enclosed proxy card is requested and will be greatly appreciated.
Thank you.
On behalf of the Board of Directors,
Sincerely,
/s/ W. J. Catacosinos
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[Lilco Letterhead]
March 1, 1994
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NOTICE OF ANNUAL MEETING OF SHAREOWNERS
---------------
The Annual Meeting of Shareowners of Long Island Lighting
Company will be held at the Westbury Music Fair, Brush Hollow Road, Westbury,
New York 11590, at 3:00 P.M., on Tuesday, April 12, 1994.
The purposes of the Annual Meeting are: (i) to elect twelve
Directors; (ii) to ratify the appointment of Ernst & Young as independent
auditors for the year 1994 and (iii) to take action on such other business as
may properly come before the Annual Meeting.
Only Common Stock shareowners of record at the close of business on
February 22, 1994 are entitled to notice of and are eligible to vote at the
Annual Meeting and at all postponements or adjournments thereof.
Please mark, sign and date the enclosed proxy card and return it promptly
in the postpaid return envelope provided. Returning the proxy card will not
affect your right to vote in person at the Annual Meeting should you decide to
attend.
By Order of the Board of Directors,
/s/ Kathleen A. Marion
KATHLEEN A. MARION
Corporate Secretary
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[Lilco Letterhead]
PROXY STATEMENT
OF
LONG ISLAND LIGHTING COMPANY
---------------
ANNUAL MEETING TO BE HELD APRIL 12, 1994
---------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Long Island Lighting Company (the "Company") of
proxies to be voted at the Annual Meeting of Shareowners to be held on April 12,
1994 (the "Annual Meeting") and at all postponements or adjournments thereof.
The Company anticipates that mailing of the proxy material to its shareowners
entitled to notice of and to vote at the Annual Meeting will commence on or
about March 1, 1994.
All shares will be voted with respect to each Item according to the
directions given by the holders of Common Stock. The Company has furnished to
each holder of Common Stock a proxy card upon which the names of three of the
Company's Directors, Phyllis S. Vineyard, John H. Talmage and Basil A. Paterson,
constituting the Board of Directors' Proxy Committee, appear as proxies to vote
as each shareowner directs on the card. To be voted, properly signed and dated
proxy cards should be received by mail prior to the Annual Meeting by The
Corporation Trust Company, P.O. Box 631, Wilmington, Delaware 19899, the
independent Inspector of Election for the Annual Meeting, or delivered in person
at the Annual Meeting to representatives of the Inspector of Election.
Shareowners who hold shares through a brokerage firm should return their proxy
cards directly to that firm well in advance of the Annual Meeting date for their
shares to be voted.
The proxy card of each owner of record of Common Stock shows the number of
shares of Common Stock registered in the shareowner's name as of February 22,
1994 (the "Record Date"). Each share of Common Stock has one vote. If the
shareowner is also a participant in the Company's Automatic Dividend
Reinvestment Plan (the "ADRP"), the proxy card shows separately the number of
shares of Common Stock held by the shareowner in the ADRP. The voting
instructions given on the proxy card provide that any shares owned by the
shareowner in the ADRP shall be voted in the same manner as the shares owned by
the shareowner and registered in the shareowner's own name. If the shareowner is
a participant in the ADRP and there are no shares registered in the shareowner's
own name, the proxy card shows the number of shares credited to the shareowner's
account in the ADRP.
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ITEM ONE -- ELECTION OF DIRECTORS
Directors are elected by the cumulative voting method. Proxies given to
members of the Proxy Committee pursuant to this solicitation will be voted
cumulatively for the election of one or more persons named below so as to elect
the maximum number of the Company's nominees or as otherwise directed. The
holders of Common Stock are entitled to cast as many votes as shall equal the
number of their shares held on the Record Date multiplied by the number of
Directors to be elected by them, which, for the purposes of this election, would
be twelve votes for each share. The votes may be cast for a single Director, for
any number of them, or for all of the Directors in any manner which the
shareowner may choose. Directors shall be elected by a plurality of the votes
cast by the holders of shares entitled to vote in the election. Abstentions and
votes not cast by brokers and nominees are not included.
The prior Annual Meeting of the Company's shareowners was held on April 20,
1993. The following Directors were nominated by the Company for election by
holders of Common Stock and were elected by a vote of 99% of the votes cast for
nominees, each receiving approximately 98 million votes: William J. Catacosinos,
Phyllis S. Vineyard, John H. Talmage, Winfield E. Fromm, Basil A. Paterson,
Anthony F. Earley, Jr., George Bugliarello, George J. Sideris, A. James Barnes,
Richard L. Schmalensee, Renso L. Caporali, Peter O. Crisp and Katherine D.
Ortega. Holders of Common Stock also ratified the appointment of Ernst & Young
as independent auditors for the year 1993.
Mr. Earley, who had been the President, Chief Operating Officer and a
Director of the Company since 1989, has resigned his positions with the Company
effective March 1, 1994. Mr. Fromm, who initially joined the Company as a
Director in 1978 and has reached the mandatory age for retirement, will not be
standing for election.
Currently, all nominees are Directors. Vicki L. Fuller was appointed a
Director of the Company by its Board of Directors effective January 1, 1994. If
elected, the twelve persons named below will hold office for one year or until
their successors are duly elected or chosen and qualified. Should any of the
persons hereinafter named advise the Corporate Secretary of the Company prior to
the Annual Meeting that they will be unable to serve after being elected, the
shares will be voted for the election of such other person or persons as the
present Board of Directors may recommend to the Proxy Committee. The Company
does not anticipate that any of the nominees named herein for election by the
holders of Common Stock will be unable to serve the full term of office to which
they may be elected.
THE COMPANY RECOMMENDS A VOTE FOR THE TWELVE PERSONS NAMED BELOW TO SERVE
AS MEMBERS OF THE BOARD OF DIRECTORS. THE COMPANY'S NOMINEES FOR ELECTION AS
DIRECTORS ARE:
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WILLIAM J. CATACOSINOS: Dr. Catacosinos has served as Chairman of the
Board of Directors and Chief Executive Officer of the Company since January
1984, and as Director since December 1978. Dr. Catacosinos also served as
President of the Company from March 1984 to January 1987. Dr. Catacosinos, 63, a
resident of Mill Neck, Long Island, earned a bachelor of science degree, a
masters degree in business administration and a doctoral degree in economics
from New York University. He is the former chairman and chief executive officer
of Applied Digital Data Systems, Inc., Hauppauge, New York, a manufacturer of
computer and related products. Previously, Dr. Catacosinos served as chairman of
the board and treasurer of Corometric Systems, Inc. of Wallingford, Connecticut
and was Assistant Director at Brookhaven National Laboratory. Dr. Catacosinos
currently chairs the Executive Committee of the Company's Board of Directors and
he is a member of the board of Utilities Mutual Insurance Co. and Ketema, Inc.,
a diversified manufacturer of, among other things, electrical and aerospace
equipment. In compliance with Section 305(b) of the Federal Power Act, Dr.
Catacosinos has authorization from the Federal Energy Regulatory Commission to
hold the position of an officer or director of a public utility and at the same
time the position of an officer or director of a firm that supplies electrical
equipment to such public utility.
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PHYLLIS S. VINEYARD: Mrs. Vineyard has been a Director of the Company
since February 1974 and currently serves as a member of the Executive Committee,
the Nominating Committee and the Planning and Environment Committee. Mrs.
Vineyard, 70, is past chair of the Population Institute, Washington, D.C. and
presently serves as its representative to the Non-Governmental Organization of
the United Nations and is a member of the NGO Committees on Population and
Development and the Status of Women. She is a policy board member of New York
State's Early Childhood Investment Fund. She is a director of the Long Island
Community Foundation, a co-founder of the Corporate Initiative for Child Care
and Elder Care, an emeritus director of the Regional Plan Association and served
from 1978-1988 on the Old Westbury College Council, State University of New
York. Mrs. Vineyard has been president of the Suffolk Community Council, the
Women's Education and Counseling Service, the New York State Health Coordinating
Council and the Suffolk Division of the Nassau-Suffolk Health Systems Agency.
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JOHN H. TALMAGE: Mr. Talmage has been a Director of the Company since
1982, currently serves as Chairman of the Nominating Committee and is a member
of the Executive Committee and the Compensation and Management Appraisal
Committee. He currently is a partner of H. R. Talmage & Son Farm, Riverhead, New
York. Mr. Talmage, 64, is a graduate of the College of Agriculture and Life
Sciences, Cornell University. Mr. Talmage has served on the board of directors
of Agway, Inc. since 1967. He also served on the board of directors of Central
Suffolk Hospital Association from 1962 through 1969 and as its president in
1969. Mr. Talmage has been chairman of the board of directors of H. P. Hood,
Inc. of Boston, Massachusetts since 1980. Other directorships include director
from 1960 to date and currently president of Friar's Head Farm, Inc., Riverhead,
New York; director of Curtice Burns Foods, Inc., Rochester, New York from 1969
to 1984; and director of Suffolk County Federal Savings and Loan Association,
Centereach, New York from 1975 to 1982.
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BASIL A. PATERSON: A Director since January 1983, Mr. Paterson currently
chairs the Compensation and Management Appraisal Committee and serves on the
Executive Committee and the Nominating Committee. A partner in the law firm of
Meyer, Suozzi, English and Klein, P.C., Mineola, New York, Mr. Paterson, 67,
received a juris doctorate from St. John's University School of Law. Mr.
Paterson has served as a professor at a number of universities and is currently
a member of the board of editors of the New York Law Journal. He previously
served as Secretary of State of New York from 1979 to 1982, as Deputy Mayor of
New York City and as a New York State Senator. Mr. Paterson is chairman of the
Judicial Screening Committee for the Appellate Division of the New York State
Supreme Court, Second Department, and is on the board of directors of the Center
for National Policy.
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GEORGE BUGLIARELLO: Dr. Bugliarello became a Director of the Company in
April 1990 and has been President of Polytechnic University since 1973. Dr.
Bugliarello, 66, holds a doctor of science degree in engineering from the
Massachusetts Institute of Technology and several honorary degrees. He is a
member of the board of directors of the Lord Corporation, Symbol Technologies,
Comtech Telecommunications Corp., the Teagle Foundation and the Greenwall
Foundation. Dr. Bugliarello is a member of the Council on Foreign Relations, a
member of the National Academy of Engineering and a fellow of the American
Society of Civil Engineers, the American Association for the Advancement of
Science and the New York Academy of Medicine. He has held a NATO Senior Faculty
Fellowship at the Technical University of Berlin, the chairmanship of the
Committee on Science, Engineering and Public Policy of the American Association
for the Advancement of Science and a membership on the Scientific Committee of
the Summer School on Environmental Dynamics in Venice. Dr. Bugliarello currently
chairs the Planning and Environment Committee and serves on the Audit Committee
and the Compensation and Management Appraisal Committee.
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GEORGE J. SIDERIS: Mr. Sideris has been a Director of the Company since
May 1991 and currently serves as a member of the Nuclear Oversight Committee and
the Nominating Committee. He was the Company's Senior Vice President of Finance
from August 1987 until retirement in January 1992. Mr. Sideris, 67, joined the
Company in February 1984 as its Vice President of Finance and Chief Financial
Officer. He is currently a member of the board of directors of Utilities Mutual
Insurance Company. Previously, he has served as a vice president of Qualpeco
Services, Inc., and as a vice president and chairman of the Northeast Operations
Group of U.S. Industries, Inc. From 1981 until he joined the Company, Mr.
Sideris was self-employed as a management and financial consultant. He holds a
bachelors degree in economics from New York University.
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A. JAMES BARNES: Mr. Barnes joined the Board of Directors in January 1992
and currently serves as a member of the Planning and Environment Committee and
the Compensation and Management Appraisal Committee. He has been the Dean of the
Indiana University School of Public and Environmental Affairs since 1988. He
received his undergraduate degree from Michigan State University and holds a
juris doctorate from Harvard Law School. An expert in the field of environmental
policy, Mr. Barnes, 51, served as the Deputy Administrator, U.S. Environmental
Protection Agency, from 1985-88, as General Counsel for the agency from 1983-84,
and as General Counsel of the U.S. Department of Agriculture from 1981-83.
Previously, he was a partner in the law firm of Beveridge, Fairbanks and
Diamond, Washington, D.C. and also served with the U.S. Department of Justice.
He is the author of two books on business law and government regulation.
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RICHARD L. SCHMALENSEE: A member of the Board of Directors since January
1992, Dr. Schmalensee, 50, currently serves on the Compensation and Management
Appraisal Committee and the Planning and Environment Committee. He is currently
the director of the Massachusetts Institute of Technology ("MIT") Center for
Energy and Environmental Policy Research. He also serves as a consultant to a
variety of government agencies and private firms through the National Economic
Research Associates Inc. on a range of issues including aspects of utility
regulation. He holds a doctoral degree in economics and a bachelor of science
degree in economics, politics and science from MIT. He served as a member of the
President's Council of Economic Advisors from 1989 through 1991. Prior to
joining the Council, Dr. Schmalensee served as area head for Economics, Finance
and Accounting at MIT's Sloan School of Management, and as chairman of the
School's Doctoral Program Committee. From 1985-86, he was a visiting professor
at Harvard Business School and has authored several books and articles on, among
other topics, the economics of utility regulation.
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RENSO L. CAPORALI: Elected to the Board of Directors in April 1992, Dr.
Caporali serves on the Audit Committee and the Nuclear Oversight Committee. He
has been Chairman and Chief Executive Officer of Grumman Corporation since July
1990. Dr. Caporali began his career with Grumman in 1959 as a Structural Flight
Test Engineer, holding various positions of increasing responsibility, most
recently having served as Vice Chairman of Corporate Technology from July 1988
to July 1990, and President of the Aircraft Systems Division from January 1985.
Dr. Caporali, 60, holds a doctorate and two masters degrees in Aeronautical
Engineering from Princeton University and a masters of mechanical engineering
degree and bachelor of civil engineering degree from Clarkson College of
Technology. He is chairman of the Aerospace Industries Association's Board of
Governors and Executive Committee, a member of the American Society of
Mechanical Engineers' Advisory Board and the Naval Aviation Industry Council. He
serves as a director of Clarkson University and the Long Island Association and
serves on two Princeton University Advisory Councils. He is also a member of the
New York State Business Council, the International Executive Service Corps
Advisory Council, and the National Academy of Engineering.
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PETER O. CRISP: Elected to the Board of Directors in April 1992, Mr.
Crisp, 61, currently serves as a member of the Nominating Committee and the
Audit Committee. He has been a General Partner of Venrock Associates, a venture
capital limited partnership, since 1969. He has been the President of Venrock,
Inc., the corporation which manages Venrock Associates, since May 1980. Mr.
Crisp earned his bachelors degree at Yale University and his masters degree in
business administration at the Harvard Business School. Mr. Crisp is also a
director of the following public companies: American Superconductor Corporation,
Apple Computer, Inc., Evans & Sutherland Computer Corporation, Thermo Power
Corporation, Thermedics Inc., Thermo Electron Corporation, ThermoTrex
Corporation and U.S. Trust Corporation as well as a number of other private
companies. In addition, Mr. Crisp is a member of the boards of the Memorial
Sloan Kettering Cancer Center and North Shore University Hospital.
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KATHERINE D. ORTEGA: Ms. Ortega was elected to the Board of Directors in
April 1993. She was Treasurer of the United States from September 1983 through
June 1989. In addition, she served as a commissioner of the Copyright Royalty
Tribunal, a member of the President's Advisory Committee on Small and Minority
Business and an alternate representative to the United Nations General Assembly.
Before entering government, Ms. Ortega practiced as a certified public
accountant with Peat, Marwick, Mitchell & Co., in Los Angeles from 1969 to 1972,
was Vice President of the Pan American National Bank of Los Angeles from 1972 to
1975 and President and Director of the Santa Ana State Bank from 1975 to 1978.
Ms. Ortega, 59, received a bachelor of arts degree in business and economics
from Eastern New Mexico University and holds three honorary doctor of law
degrees and a honorary doctor of social science degree. Currently, Ms. Ortega
serves on the board of directors of Diamond Shamrock, Inc., The Kroger Company,
Ralston Purina Company, Paul Revere Corporation, Catalyst, Quest International,
and is also a member of the Comptroller General's Consultant Panel.
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VICKI L. FULLER: Appointed by the Board of Directors, Ms. Fuller, 36,
became a Director of the Company in January 1994. She has been a Vice President
of Alliance Capital Management Corporation ("ACMC") since July 1993. ACMC is the
sole general partner of Alliance Capital Management L.P. ("Alliance"). As a
fixed income portfolio manager, she is responsible for managing high yield and
emerging markets portfolios. Previously she was an employee of Equitable Capital
Management Corporation ("ECM"), an investment subsidiary of The Equitable Life
Assurance Society of the United States. ECM was acquired by Alliance in July
1993. Ms. Fuller began her career with ECM in 1985 as a senior investment
manager, holding various positions of increasing responsibility, most recently
having served as a Managing Director from 1989 to 1993. Prior to joining ECM,
Ms. Fuller served as a rating officer at Standard & Poor's Corporation from 1984
to 1985 and as an associate in Morgan Stanley and Co.'s corporate finance
department from 1981 to 1983. Ms. Fuller earned her bachelors degree at
Roosevelt University and her masters degree in business administration at the
University of Chicago. Currently, Ms. Fuller, a Certified Public Accountant,
serves on the Board of Directors of the Odyssey Foundation of New York and the
Board of Trustees of North Carolina Agricultural & Technology University.
Section 305(b) of the Federal Power Act provides, in part, that without
authorization from the Federal Energy Regulatory Commission, no person may hold
the position of an officer or director of a public utility and at the same time
the position of an officer or director of a firm that is authorized to
underwrite or participate in the marketing of the securities of a public
utility. Alliance is an indirect majority-owned subsidiary of The Equitable
Companies Incorporated ("Equitable"). ACMC is an indirect wholly-owned
subsidiary of Equitable. Although Alliance and ACMC are not authorized by law to
underwrite or participate in the marketing of securities, Donaldson, Lufkin &
Jenrette Securities Corporation, also an indirect wholly-owned subsidiary of
Equitable, is so authorized. Accordingly, Ms. Fuller has applied to the Federal
Energy Regulatory Commission for authorization to hold the position of director
of the Company while serving as a Vice President of ACMC. The application is
pending.
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COMPENSATION PAID TO DIRECTORS
The annual retainer fee paid to each Director in 1993 was $25,000, except
for Dr. Catacosinos and Mr. Earley, who, as Officers of the Company, did not
receive compensation for serving as Directors. The fee paid to each Director who
is not also an Officer of the Company for attending each meeting of the Board of
Directors or of one of its committees is $500. During 1993, the Board of
Directors held nine meetings. In addition, the various committees of the Board
of Directors, which are described in detail below, met a total of 15 times in
1993. All Directors perform their responsibilities throughout the year not only
at Board of Director and committee meetings but through numerous personal
meetings and other communications, including considerable telephone
conversations, with the Chairman and other Directors regarding all matters of
importance to the Company.
The Company has entered into consulting agreements with Lionel M. Goldberg
and Eben W. Pyne, former Directors of the Company naming them as Consulting
Directors. These agreements provide that each Consulting Director will advise
and counsel the Board and any of its committees on various matters and will
receive an annual retainer of $25,000 plus an additional $500 for each Board or
Committee meeting attended.
Directors may elect to defer the receipt of any portion of their
compensation under the Deferred Compensation Plan for Directors. Amounts
deferred may be allocated to a deferred compensation account. Each participating
Director's account accrues interest, compounded quarterly, at the prime rate
plus 1/2%. The Deferred Compensation Plan is unfunded and any accounts under
the Plan will be general obligations of the Company. Distributions from a
deferred compensation account commence upon termination of membership on the
Board of Directors, death or disability, or at a date previously designated by
the participating Director. Distributions from the deferred compensation account
may be made by lump-sum payment or annually over either a five or ten-year
period. Currently, none of the Directors are participating in the Deferred
Compensation Plan.
The Company has a Retirement Plan for Directors, providing benefits to
Directors who are not or who have not been Officers of the Company. Directors
who have served in that capacity for more than five years qualify as
participants under the Plan. The Plan provides for a monthly benefit equal to
one-twelfth of the highest annual retainer paid to each participant. A full
benefit is available for participants who serve for ten years with a reduction
of one-sixtieth for each month of service less than ten years. Under the Plan,
payment of benefits is to begin when the Director ceases to serve as a Director
or Consulting Director or reaches age 65, whichever is later. Currently, Messrs.
Paterson and Talmage and Mrs. Vineyard would be entitled to be paid full
benefits were they to retire at this time. Mr. Fromm, who will retire as a
Director following the Annual Meeting, will also be entitled to be paid full
benefits under the Plan. Benefits are provided on a straight-life annuity basis
except that if the Director is married at the time benefits begin, a joint and
50% survivor benefit may be paid on an actuarially equivalent basis. The
benefits are unfunded and are general obligations of the Company.
The Company entered into an agreement in 1987 with Mr. Sideris, while he
was an Officer of the Company, which provides retirement benefits supplementing
the benefits to which he is entitled under the Company's Retirement Income and
Supplemental Death and Retirement Benefits Plans, both discussed below. The
Company has established a trust for the payment of the retirement benefits.
Notwithstanding the creation of the trust, the Company continues to be primarily
liable for the retirement benefits and will make such payments to the extent
that the trust does not.
Pursuant to the New York Business Corporation Law (the "BCL") and the
Company's By-laws, the Company has entered into agreements with its Directors
and Officers providing for indemnification and advancement of expenses in
defending certain actions or proceedings in advance of their final disposition
subject to refund if they are found not to be entitled to indemnification. The
Company has established a trust, the Long Island Lighting Company Officers' and
Directors' Protective Trust, to fund the Company's obligations under these
agreements.
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COMMITTEES OF THE BOARD OF DIRECTORS
The Executive Committee has the authority during the intervals between
regular Board meetings to exercise all the powers of the Board, except for
certain powers reserved exclusively to the Board, which includes the power to
submit matters to shareowners for approval. Dr. Catacosinos is Chairman of the
Executive Committee, whose other members include Messrs. Fromm, Paterson and
Talmage and Mrs. Vineyard. The Executive Committee met six times during 1993.
The Audit Committee, which met three times during 1993, is composed
entirely of outside Directors and is responsible for the substantive review of
the scope and results of the independent auditors' examination, the internal
audit activity of the Company and other pertinent auditing and internal control
matters. The Audit Committee also recommends to the Board of Directors the
appointment of outside auditors. Mr. Fromm is Chairman of the Audit Committee,
whose other members are Drs. Bugliarello and Caporali and Mr. Crisp.
The Nuclear Oversight Committee, which met twice during 1993, is
responsible for reviewing and assessing all of the nuclear activities of the
Company. Mr. Fromm is Chairman of the Nuclear Oversight Committee. The other
members are Dr. Caporali and Mr. Sideris. Mr. Earley, who resigned his position
as a Director of the Company effective March 1, 1994, served on the Nuclear
Oversight Committee until that date.
The Compensation and Management Appraisal Committee, which met once during
1993, is composed entirely of outside Directors and is authorized to review and
recommend to the Board of Directors compensation levels of the Company's
Directors and Officers. In addition, this Committee reviews the procedures
involved in establishing management compensation. Drs. Bugliarello and
Schmalensee and Messrs. Barnes and Talmage serve on the Compensation and
Management Appraisal Committee. Mr. Paterson is its Chairman.
The Nominating Committee, which met once during 1993, determines criteria
for qualification and selection of Directors and provides the Board of Directors
with recommendations relating to the Director selection process. It evaluates
possible candidates for the Board of Directors and assists in attracting
qualified candidates. Mr. Talmage chairs the Nominating Committee, whose other
members are Messrs. Paterson, Crisp and Sideris and Mrs. Vineyard. Shareowners
wishing to recommend candidates for nomination to the Board of Directors should
submit to the Corporate Secretary of the Company the name, a statement of
qualifications and the written consent of the candidate. Recommendations may be
submitted at any time and will be brought to the attention of the Nominating
Committee.
The Planning and Environment Committee, which met twice during 1993,
reviews the Company's objectives, strategies and plans, considers and recommends
various options and opportunities available to the Company for its long-term
growth and development and monitors its progress toward the accomplishment of
its goals. Dr. Schmalensee, Mr. Barnes and Mrs. Vineyard serve as members of the
Planning and Environment Committee which is chaired by Dr. Bugliarello.
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REPORT OF THE COMPENSATION AND MANAGEMENT APPRAISAL COMMITTEE
ON EXECUTIVE COMPENSATION
The disclosure contained in this section of the Proxy Statement shall not
be deemed incorporated by reference into any prior filing by the Company
pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934
that incorporate future filings or portions thereof (including this Proxy
Statement or any part thereof).
The Compensation and Management Appraisal Committee reviews and recommends
to the Board of Directors the compensation levels of the Company's Directors and
Officers. The Committee's members are Basil A. Paterson, George Bugliarello,
John H. Talmage, A. James Barnes and Richard L. Schmalensee. The Committee uses
an outside consultant, the Hay Group, in annually reviewing the compensation
levels of the Company's top executives. In addition, management also supplies
comparisons to industry data.
Compensation Committee Interlocks and Insider Participation: The
Compensation and Management Appraisal Committee is made up entirely of outside
Directors. There are no interlocking relationships between any members of the
Committee and any other Directors or Executive Officers.
Executive Compensation Philosophy: The Company employs a
"base-salary-only" approach to executive compensation, consistent with the
Company's past history and the environment in which the Company operates. It is
important to note, however, that our present executive compensation philosophy
differs from the majority of utilities and industrial companies whose executive
compensation programs consist of a combination of base salary, annual incentives
and long-term incentives, particularly stock options.
The sensitivity of the Company's customers and other stakeholders resulting
from the continuing long-term effect of the Shoreham controversy on both rates
and the financial condition of the Company, has, to date, dictated the
"base-salary-only" approach to executive compensation. Clearly, its adoption
forgoes the opportunity for upside increases in compensation to the Company's
executives based on performance-related incentives.
As we move beyond the Shoreham issue and its transition and focus on
positioning the Company to meet the competitive challenges of the future through
the strategy of unparalleled service and aggressive cost control, we will need
to reassess our compensation philosophy to more appropriately reflect our future
challenges and demands.
Given the increasing competitiveness of both the gas and electric utility
business environment, and the criticality of the customer service and cost
control initiatives to the future success of the Company, it may become
beneficial to introduce the use of incentives and other variable
performance-based pay in order to directly link executive pay to specific
enhancements to performance and customer service.
The Committee understands the need for strong, talented executive
leadership and the need to retain and attract a strong leadership team that can
meet the Company's short and long-term strategic objectives. Accordingly, it
will work to ensure that the executive compensation program supports the
long-term objectives of the Company and its stakeholders.
Determination of Executive Salary Levels: The Committee uses its outside
consultant, the Hay Group, to annually review the compensation levels of the
Company's top executives relative to the external marketplace. The Committee
also reviews the results of Edison Electric Institute's Annual Compensation
Survey. LILCO's executive compensation policy is to set a base salary range that
is at the average of the Hay Group's regional utility database. Individual
salary increases are then determined based on several factors, including the
competitiveness of the individual's current base salary, the overall financial
performance of LILCO and the executive's individual accomplishments during the
year.
CEO Compensation: The total compensation package for Dr. Catacosinos is
significantly below the national and regional utility markets. This is due to
the fact that Dr. Catacosinos' pay consists solely of a base salary while almost
all other comparable companies provide their CEO with annual and long-term
incentive opportunities in addition to their base salary.
8
<PAGE> 12
For 1993, the Board increased Dr. Catacosinos' base salary by 8.3 percent
in recognition of his strong leadership and the weak competitive position of his
total compensation. In reviewing his performance, the Committee considered his
superior performance in developing and leading the customer service and cost
control initiatives, as well as the strong financial performance of the Company.
During 1992, the Company increased the level of its annual Common Stock dividend
by 4 cents per share, aggressive refinancing of the Company's high cost
securities continued resulting in a decrease in financing charges cost totalling
$70 million per year, budget "targets" were underrun by 4.1 percent and an
additional 6.0 cents per share above the allowed rate of return was earned
through the PSC Incentive Plan. In addition, during 1992 the Company generated
$21 million in overearnings by effectively managing total costs (Operating and
Maintenance Budgets and Capital Budgets). These overearnings were shared equally
between ratepayers and shareowners, with the shareowner portion amounting to
more than 9.0 cents per share above the allowed rate of return.
However, this level of compensation increase was below the national average
for all electric utility CEO's of 11.5 percent. It continues to reflect the
below-average competitiveness of Dr. Catacosinos' current pay compared with
positions of similar scope in utilities and in general industry despite the high
level of corporate performance indicated in the graph on page 10. Including the
8.3 percent salary increase in 1993, Dr. Catacosinos' total compensation remains
well below the market average.
Basil A. Paterson -- Chairman
A. James Barnes
George Bugliarello
Richard L. Schmalensee
John H. Talmage
9
<PAGE> 13
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative return of Long Island
Lighting Company, the Standard & Poor 500 Composite Stock Index ("S&P 500") and
the S&P 24 Electric Utilities Index ("S&P 24"). The graph assumes a $100 initial
investment on December 31, 1988 and a reinvestment of dividends in Long Island
Lighting Company and each of the companies reported in the indices.
LONG ISLAND LIGHTING COMPANY
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
LILCO VS. S&P 500 AND S&P 24 UTILITIES
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
LILCO 100 163 183 226 254 256
S&P 500 100 133 137 178 188 212
S&P 24 UTILITIES 100 132 128 166 179 197
</TABLE>
*This graph traces the growth of an initial investment of $100 based upon the 5
year cumulative return for LILCO, S&P 500 and S&P 24.
10
<PAGE> 14
COMPENSATION PAID TO EXECUTIVE OFFICERS
Summary Compensation Table: The following table illustrates the
compensation paid by the Company during the past three years to each of its most
highly compensated Executive Officers(1):
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION
---------------------------------- AWARDS
OTHER ----------------------- PAYOUTS- ALL
ANNUAL RESTRICTED OPTIONS/ LTIP OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION STOCK SARS PAYOUTS COMPENSATION
OR NUMBER IN GROUP YEAR ($)(2) ($) ($) AWARD(S) ($) (#) ($) ($)(3)
- --------------------------- ---- ------- ----- ------------ ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. Catacosinos 1993 534,370(4) 0 N/A* 0 0 0 17,453
-- CEO 1992 493,270(4) 0 N/A 0 0 0 13,962
1991 455,000(4) 0 N/A 0 0 0 11,575
Anthony F. Earley, Jr. 1993 301,413 0 N/A 0 0 0 5,897
-- President 1992 271,520 0 N/A 0 0 0 7,682
1991 238,750 0 N/A 0 0 0 6,074
James T. Flynn 1993 212,788 0 N/A 0 0 0 4,786
-- Executive Vice President 1992 194,395 0 N/A 0 0 0 5,498
1991 169,000 0 N/A 0 0 0 4,299
Robert J. Grey 1993(5) 193,746 0 32,990 0 0 0 3,497
-- General Counsel 1992(5) 86,720 0 40,523 0 0 0 1,794
1991 N/A N/A N/A N/A N/A N/A N/A
Ralph T. Brandifino 1993(6) 183,580 0 N/A 0 0 0 2,922
-- Senior Vice President 1992 158,603 0 N/A 0 0 0 4,484
1991 145,917 0 N/A 0 0 0 3,712
John D. Leonard 1993 151,113 0 N/A 0 0 0 18,503(7)
-- Vice President 1992 148,470 0 N/A 0 0 0 19,206(7)
1991 145,350 0 N/A 0 0 0 18,702(7)
</TABLE>
* N/A -- Not Applicable.
- ---------------
Notes to Summary Compensation Table:
(1) Includes an officer who resigned prior to the end of 1993.
(2) The Company has in place separate 401(k) Capital Accumulation Plans for
Non-Union and Union employees (the "Plans"), both of which qualify for
favorable tax treatment under the Internal Revenue Code of 1986 (the
"Code"). The Plans are designed to provide for salary reduction
contributions by participants under Section 401(k) of the Code that permit
employees to defer a portion of their current compensation and therefore a
portion of their current federal and, in most instances, state and local
income taxes. Although the Plans allow the Company to make matching
contributions to these deferred amounts, no such matching contributions have
been made to date. The amounts shown for annual salary in the Summary
Compensation Table for each individual officer include amounts deferred by
those individuals into the Plans.
(3) The Company has a noncontributory Supplemental Death and Retirement Benefits
Plan for its Officers and certain other senior management employees.
Currently, death benefits are, for the Chairman and the President, five
times highest annual salary and, for each other Officer, three times highest
annual salary. The cost of life insurance, paid by the Company for coverage
under this Plan, is included in All Other Compensation for each of the
individuals listed. During 1991, 1992 and a portion of 1993 insurance
coverage was provided by a group term life insurance policy. During the
remaining portion of 1993, insurance coverage for these death benefits was
provided by split-dollar life insurance policies on the life of each plan
participant. The cost of the term insurance for the years 1991, 1992 and a
portion of 1993 represents the average premium cost charged to the Company
for all participants in the Supplemental Death and Retirement Benefits Plan.
The amount shown for each participant represents, for the balance of 1993,
the actuarial value of the benefit of the split-dollar life insurance policy
purchased for that individual.
(4) A portion of Dr. Catacosinos' salary in each of these years has been
deferred at his request and is reflected in the amounts shown.
(5) Robert J. Grey assumed duties as General Counsel effective September 1,
1992. Prior to that date, Mr. Grey was in the private practice of law in
Seattle, Washington. Amounts shown in the column headed Other Annual
Compensation for these years represents relocation allowances.
(6) Ralph T. Brandifino resigned as Senior Vice President of Finance and Chief
Financial Officer effective September 30, 1993.
(7) The amount shown as paid to Mr. Leonard includes payments pursuant to
arrangements made at the time he joined the Company in 1984. The Company
agreed at that time to compensate him upon his reaching age 55, for loss of
pension payments occasioned by his change of employment when he joined the
Company. These payments, which total $15,000 in each year, are included in
All Other Compensation.
- ---------------
11
<PAGE> 15
Supplemental Death and Retirement Benefits Plan: Officers and certain
other senior management employees eligible to participate in the Company's
Supplemental Death and Retirement Benefits Plan are provided with death
benefits, generally funded by life insurance, equal to five times highest annual
salary for the Chairman and the President and three times highest annual salary
for each other Officer. Participants who have retired (or who retire in the
future) will receive continued death benefit coverage or may elect to receive
monthly retirement benefits, a partial lump-sum distribution, or a combination
of each. For a participant who retires on or after age 65 and elects the death
benefit, the death benefit coverage will be continued up to five times the
highest annual salary for the Chairman and the President and up to three times
the highest annual salary for each Officer. For a participant who retires on or
after age 65 and elects the monthly retirement income benefit, the annual
retirement benefits payable under the 15-year certain option will be up to 25%
of the Chairman's and President's highest annual salary and up to 15% of each
other Officer's highest annual salary with other available options to take
payment on an actuarially equivalent basis through a lifetime annuity, a joint
and survivor annuity or an increasing income annuity. Retirement benefits under
this Plan are not available to participants who retire prior to age 60. A
participant will vest upon the earlier of attainment of age 60 with ten years of
service or upon attainment of his or her normal retirement date. If a vested
participant retires prior to age 65, reduced benefits are payable.
The projected annual retirement benefits payable under the Supplemental
Death and Retirement Benefits Plan utilizing the 15-year certain retirement
income payment election for each of the individuals listed, at normal retirement
age, 65, assuming continuation of employment to normal retirement date and the
election by the Plan Participant of annuity benefits rather than death benefits,
based upon compensation in effect for 1993, are as follows: Dr. Catacosinos,
$133,489; Mr. Earley, $77,000; Mr. Flynn, $32,400; Mr. Grey, $30,000; Mr.
Brandifino, $28,800 and Mr. Leonard, $22,980. Neither Mr. Earley nor Mr.
Brandifino, both of whom have resigned from the Company, will receive any
benefits under the Plan. Dr. Catacosinos has made an assignment of his rights to
death benefits and therefore will not receive the retirement benefits under this
Plan.
The Company recognizes the cost of these benefits as an expense on its
income statements for each year. The Company has also established a trust to
provide for payments of its obligations to the participants in the Supplemental
Death and Retirement Benefits Plan. Notwithstanding the creation of the trust,
the Company continues to be primarily liable for the death or retirement
benefits payable to the participants and is currently making such payments to
such retired participants. The costs of this Plan are borne by the Company's
shareowners. There has been no funding of the trust for the benefit of the
listed individuals during any of the years listed in the Summary Compensation
Table.
Retirement Income Plan: Generally, all Company employees (except certain
leased employees and part-time union employees) are eligible for inclusion in
the Retirement Income Plan upon completion of one year of employment with the
Company. A participant will vest upon completion of five years of service. This
Plan is currently noncontributory and provides fixed-dollar pension benefits.
The Retirement Income Plan uses a career average pay formula which provides
a credit for each year of participation in the retirement plan. For service
before January 1, 1992, pension benefits are determined based on the greater of
the accrued benefit as of December 31, 1991, or by multiplying a moving
five-year average of plan compensation, not to exceed the January 1, 1992
salary, by a certain percentage determined by years of participation in the
retirement plan at December 31, 1991. For service after January 1, 1992, pension
benefits are equal to 2% of "plan compensation" (as defined in the Plan) through
age 49 and 2- 1/2% thereafter. "Plan compensation" is defined as the base rate
of pay in effect on January 1 of each year.
12
<PAGE> 16
The following table shows the projected annual retirement benefit payable
on a straight-life annuity basis pursuant to the Company's Retirement Income
Plan to each of the individuals listed in the Summary Compensation Table at
normal retirement age (which is the later of age 65 or five years of service),
assuming continuation of employment to normal retirement date at the rate of
plan compensation during 1993.
<TABLE>
<CAPTION>
ANNUAL CREDITED SERVICE NORMAL
RETIREMENT BENEFIT(1) AS OF 12/31/93 RETIREMENT DATE
--------------------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
William J. Catacosinos $113,338 9 years 11 months April 1, 1995
Anthony F. Earley, Jr. $189,428 8 years 7 months August 1, 2014
James T. Flynn $ 53,493 7 years 3 months January 1, 1999
Robert J. Grey $106,733 1 year 4 months September 1, 2015
Ralph T. Brandifino $ 86,383 6 years 4 months May 1, 2010
John D. Leonard $ 47,788 9 years 7 months March 1, 1998
</TABLE>
- ---------------
(1) These Retirement Income Plan benefits may be limited at retirement by the
maximum benefit limitation under Section 415 or the maximum compensation
limitation under Section 401(a)(17) of the Code. The benefits shown have
been calculated without the limitations. The Company has established the
Retirement Income Restoration Plan of Long Island Lighting Company to
restore qualified plan benefits which have been reduced pursuant to the
Code. In the event that the retirement benefits are reduced by operation of
either Section 415 or 401(a)(17) of the Code, the Company's Retirement
Income Restoration Plan would provide payment of plan formula pension
benefits which exceed those payable under the Code's maximum limitations.
For 1993 the maximum benefit limit set by Section 415 and applicable to the
amounts shown above was $115,641. For 1993 the maximum compensation limit
set by Section 401(a)(17) and applicable to the amounts shown above was
$235,840. For 1994 the maximum benefit limit set by Section 415 is $118,800
and the maximum compensation limit set by Section 401(a)(17) is $150,000.
- ---------------
Agreements with Executives: Under the terms of an employment contract
dated as of January 30, 1984, as amended (the "Contract"), Dr. Catacosinos has
agreed to serve as Chief Executive Officer of the Company until January 31,
1997. The Contract provides for a five-year consulting period following the
termination of his employment (other than, except after a change in control, for
cause). His consulting compensation will be 90% of his base annual salary at his
retirement during the first two years, 75% of such salary during the third and
fourth years and 50% of such salary during the fifth year. The Contract also
provides for supplemental disability benefits. Dr. Catacosinos' employment under
the Contract may be terminated by the Company for cause or for such other reason
as the Board of Directors may, in good faith, determine to be in the best
interests of the Company, and by Dr. Catacosinos if he determines it to be in
the best interests of the Company or for any reason after a change in control.
The Contract also provides for vested Contract Retirement Benefits commencing at
the earlier of Dr. Catacosinos' retirement or death, payable monthly to Dr.
Catacosinos and his wife as a joint and survivor annuity with a minimum
guaranteed period of ten years. The Contract Retirement Benefits in any year
will be reduced by benefits payable under the Company's other retirement plans.
The benefit will be based upon a formula that considers his age at retirement,
his annual salary at time of retirement, the highest bonus he has received and
his service to the Company including service as a Director, employee or
consultant. The benefit is also subject to certain annual cost of living
adjustments. Assuming his retirement on December 31st of the year in which he
turns 65, the total estimated retirement benefit payable under the Contract to
Dr. Catacosinos as of the January 1st following his retirement (assuming
continuation of his current salary) would be approximately $683,000. The Company
has established trusts to provide for payments of its obligations under the
Contract, the costs of which are borne by the Company's shareowners.
Notwithstanding the creation of the trusts, the Company continues to be
primarily liable for the death or retirement benefits payable to Dr. Catacosinos
and will make such payments to the extent that the trusts do not.
13
<PAGE> 17
The Company has entered into individual employment agreements ("Employment
Agreements") with each of its Officers to provide them with employment security
and to minimize distractions resulting from personal uncertainties and risks if
there is a threat or occurrence of a bid to acquire or a change in control of
the Company prior to December 31, 1994. The principal benefits, payable if the
Officer's employment is terminated for any reason (including voluntary
resignation) within three years of an actual change in control are: (i)
severance pay equal to one year's salary; (ii) accelerated retirement benefits
and (iii) continuation of life, medical and dental insurance for a period of not
more than one year. The Company has established a trust to provide for payments
of its obligations under these Employment Agreements, the costs of which are
borne by the Company's shareowners. Notwithstanding the creation of the trust,
the Company continues to be primarily liable for the compensation and retirement
benefits payable to the Officers and will make such payments to the extent that
the trust does not. In all years listed in the Summary Compensation Table, the
Company made no contributions to the trust and no payments were made to any
Officer under the Employment Agreements.
The Officers have also entered into indemnification agreements that are
described above under the heading "Compensation Paid to Directors."
No Director or Officer or associate of any Director or Officer has any
arrangement with any person with respect to any future employment by the Company
or its affiliates other than those described herein.
14
<PAGE> 18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below shows the number of shares of the Company's Common Stock
beneficially owned, as of February 22, 1994, by each Director, each Officer
listed in the Summary Compensation Table, and by all Directors and Officers as a
group. The address of each of the Directors and Officers is: c/o Long Island
Lighting Company, 175 East Old Country Road, Hicksville, New York 11801.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
---- ----------------
<S> <C>
A. James Barnes............................................................ 500
Ralph T. Brandifino........................................................ 0
George Bugliarello......................................................... 500
Renso L. Caporali.......................................................... 396
William J. Catacosinos..................................................... 9,300
Peter O. Crisp............................................................. 1,000
Anthony F. Earley, Jr...................................................... 2,335
James T. Flynn............................................................. 834
Winfield E. Fromm.......................................................... 1,208
Vicki L. Fuller............................................................ 0
Robert J. Grey............................................................. 0
John D. Leonard............................................................ 54
Katherine D. Ortega........................................................ 600
Basil A. Paterson.......................................................... 668
Richard L. Schmalensee..................................................... 100
George J. Sideris.......................................................... 3,883
John H. Talmage............................................................ 532
Phyllis S. Vineyard........................................................ 642
All Directors and Officers as a group,
including those named above,
a total of 34 persons.................................................... 29,092
</TABLE>
- ---------------
Notes to Security Ownership Table:
The percentage of shares held by any one person, or all Directors and
Officers as a group, did not exceed 0.05% of all outstanding shares of Common
Stock.
The number of shares shown above includes whole shares held under the
Company's ADRP.
The number of shares shown above includes Common Stock held or beneficially
owned by a spouse, parent or child for which beneficial ownership is disclaimed
as follows: Mr. Talmage, 287 shares.
- ---------------
15
<PAGE> 19
The following table sets forth certain information with respect to the
shares of Preferred Stock and Common Stock owned by each person known by the
Company to be the beneficial owner of more than 5% of such Preferred Stock and
Common Stock as of February 22, 1994.
<TABLE>
<CAPTION>
PERCENTAGE
TITLE OF CLASS NAME AND ADDRESS OWNED OF CLASS
- -------------- ---------------- ----- ----------
<S> <C> <C> <C>
Common Stock The Capital Group, Inc. 8,955,000 7.96%
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
The Company has not been advised, nor is it aware, of any additional shares
to which anyone has the right to acquire beneficial ownership.
The Company is required to identify any Director, Officer, or person who
owns more than ten percent of a class of equity securities who failed to timely
file with the Securities and Exchange Commission (the "SEC") a required report
relating to ownership and changes in ownership of the Company's equity
securities. Based on information provided to the Company by such persons, all
Company Officers and Directors made all required filings during the fiscal year
ended December 31, 1993. The Company does not know of any person beneficially
owning more than 10% of a class of equity securities.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Indemnification of Directors and Officers: For many years prior to 1986,
statutory provisions of the BCL permitted corporations, including the Company,
under certain circumstances in connection with litigation in which its Directors
and Officers were defendants, to indemnify them for, among other things,
judgments, amounts paid in settlement and reasonable expenses. To reimburse it
when it has indemnified its Directors and Officers, the Company began in 1970,
pursuant to statutory authorization, to purchase Director and Officer ("D&O")
liability insurance in each year. D&O liability insurance also provides direct
payment to the Company's Directors and Officers in those instances in which the
Company is required, or has elected, to provide indemnification. The Company has
D&O liability insurance which it purchased from Associated Electric & Gas
Insurance Services Ltd. ("AEGIS"), Energy Insurance Mutual ("EIM"), Columbia
Casualty, Steadfast Insurance Company, A.C.E. Insurance Company and XL Insurance
Company, all with the effective date of August 26, 1993. The Company also has
liability insurance effective July 1, 1993 purchased from Associated Electric &
Gas Insurance Services Ltd. ("AEGIS") and Energy Insurance Mutual ("EIM") which
provides fiduciary liability coverage for the Company, its Directors, Officers
and employees for any alleged breach of fiduciary duty under ERISA. The total
annual premium for all these coverages was $1,881,328 in 1993.
The Company's By-laws provide for the mandatory indemnification of
Directors and Officers to the extent not expressly prohibited by the BCL. In
addition, the By-laws authorize the Board of Directors to grant indemnity rights
to employees and other agents of the Company. Such provisions are effective as
to all claims for indemnification, whether the acts or omissions giving rise to
a claim for such indemnification occurred or the expenses for which indemnity is
sought were incurred, before or after the provisions of the By-laws were
adopted. One of the provisions of the By-laws authorized the Board of Directors
to enter into indemnification agreements with any of the Company's Directors or
Officers extending rights to indemnification and advancement of expenses to such
person to the fullest extent permitted by applicable law. The Company has
entered into such agreements, which are described under the heading
"Compensation Paid to Directors," with each of its Directors and Officers.
Pursuant to the terms of those agreements and the provisions of the By-laws, the
Company has also established a trust to fund the Company's obligations under the
agreements.
The Company's Restated Certificate of Incorporation (the "Certificate of
Incorporation") limits the personal liability of Directors for certain breaches
of duty in such capacity pursuant to provisions of the BCL. The Certificate of
Incorporation does not bar litigation against Directors but provides that
Directors are still required to defend themselves in litigation in which acts or
omissions to act are alleged for which they might be held liable. Furthermore,
the Certificate of Incorporation provides protection to Directors only and does
not affect the liability of Officers of the Company for breaches of the
fiduciary duties of care and loyalty.
16
<PAGE> 20
ITEM TWO -- APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young, 395 North Service Road, Melville, New York, audited the
Company's 1993 financial statements. Audit related services performed by Ernst &
Young for 1993 consisted principally of the audit of the financial statements of
the Company, the review of the unaudited quarterly financial statements and
assistance and consultation in connection with filings with the SEC and the
Federal Energy Regulatory Commission and in connection with the issuance of
tax-exempt securities to fund Company projects.
A representative of Ernst & Young will be present at the Annual Meeting,
shall have the opportunity to make a statement if he desires to do so and will
be available to answer questions by shareowners concerning the financial
statements of the Company.
The appointment of auditors is approved annually by the Board of Directors
and is subsequently submitted to the shareowners for ratification. The decision
of the Board of Directors is based upon the recommendation of the Audit
Committee of the Board of Directors. The membership of the Company's Audit
Committee is described in this Proxy Statement under the heading "Committees of
the Board of Directors." In making its recommendation, the Audit Committee
reviews the audit scope for the coming year.
The Board of Directors has, subject to ratification by holders of the
outstanding shares of the Company's Common Stock, appointed Ernst & Young as
independent auditors for the year 1994. Ratification requires a favorable vote
by a majority of the votes cast at a meeting of the holders of shares entitled
to vote on the proposal. Abstentions and votes not cast by brokers and nominees
are not included. Accordingly, the following resolution, identified on the proxy
card as Item Two, will be proposed for ratification by such shareowners at the
Annual Meeting:
RESOLVED, that the appointment of Ernst & Young by the Board of
Directors of Long Island Lighting Company as independent
auditors to audit the Company's 1994 financial statements and to
perform other appropriate accounting services, is hereby
ratified.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE HOLDERS OF THE OUTSTANDING
SHARES OF THE COMPANY'S COMMON STOCK VOTE FOR ITEM TWO TO RATIFY THE APPOINTMENT
BY THE BOARD OF DIRECTORS OF ERNST & YOUNG AS INDEPENDENT AUDITORS OF THE
COMPANY FOR 1994.
17
<PAGE> 21
1995 SHAREOWNER PROPOSALS
Proposals to be submitted by shareowners under the regulations of the SEC
for consideration for inclusion in the Company's Proxy Statement relating to the
1995 Annual Meeting must be received by the Company at its offices at 175 East
Old Country Road, Hicksville, New York 11801, Attention: Corporate Secretary,
not later than October 28, 1994.
GENERAL
Only holders of record of Common Stock at the close of business on the
Record Date are eligible to vote at the Annual Meeting and at all postponements
or adjournments thereof. On February 22, 1994, the Record Date, there were
112,527,542 shares of Common Stock, 1,515,369 shares of Preferred Stock, $100
par value, and 22,658,000 shares of Preferred Stock, $25 par value, issued and
outstanding. Holders of shares of Preferred Stock are not entitled to vote on
any of the matters to be considered at this Annual Meeting. Holders of shares of
Common Stock may vote on all matters. The stock books will not be closed.
The presence, in person or by proxy in writing, of the holders of a
majority of the outstanding shares of the Common Stock of the Company entitled
to vote at the Annual Meeting shall constitute the quorum required before action
can be taken at the Annual Meeting. In the absence of a quorum, the Annual
Meeting may be adjourned.
If a shareowner wishes to give a proxy to someone other than the Proxy
Committee of the Board of Directors, the shareowner may cross out the names of
the members of the Proxy Committee appearing on the proxy card, insert the name
or names of another person or persons (not more than three) and make, if
necessary, other appropriate changes providing unambiguous instructions to the
person or persons named. The Company reserves the right to limit the number of
persons named as proxy by a shareowner who may attend the Annual Meeting.
Proxies shall be voted in accordance with the instructions given by the
shareowner. If the shareowner signs the proxy card without providing
instructions as to how the person or persons named are directed to vote with
respect to any Item, or with respect to other matters which may properly come
before the Annual Meeting on which the shareowner is entitled to vote, then the
shares will be voted in accordance with the recommendations of the Board of
Directors. The proxy confers discretionary authority to vote on certain
shareowner proposals, on certain matters related to the election of Directors,
on matters incident to the conduct of the meeting, including adjournments
thereof, and on any other matters that may come before the meeting. The New York
Stock Exchange has informed the Company that all of the matters to be considered
at this meeting are considered "discretionary" items upon which brokerage firms
holding shares in street or nominee name may vote in their discretion on behalf
of their clients if such clients have not furnished voting instructions ten days
prior to the shareowners' meeting.
To ensure the presence of the required number of shares for voting, the
Board of Directors urges all shareowners to mark, sign, date and return their
proxy cards promptly. A shareowner who has mailed a proxy may also attend the
Annual Meeting and vote in person. Shareowners attending the Annual Meeting in
person whose shares are registered in the name of a bank or brokerage firm
should bring with them evidence of their holdings, such as an account statement,
and, in order to be eligible to vote, a validly executed and properly notarized
power of attorney from such bank or brokerage firm. A shareowner may revoke a
previously given proxy before it is exercised at any time prior to the closing
of the polls at the Annual Meeting. The shareowner may revoke a proxy before it
is exercised by writing to the Inspector of Election, c/o Corporate Secretary,
175 East Old Country Road, Hicksville, New York 11801, by submitting a later
dated proxy (in either case, provided that the revocation is received prior to
the Annual Meeting) or by voting in person at the Annual Meeting.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE SEC IS
AVAILABLE WITHOUT CHARGE TO SHAREOWNERS UPON WRITTEN REQUEST TO INVESTOR
RELATIONS, LONG ISLAND LIGHTING COMPANY, 175 EAST OLD COUNTRY ROAD, HICKSVILLE,
NEW YORK 11801. EXHIBITS TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH
THE SEC WILL BE FURNISHED UPON PAYMENT OF 25 CENTS PER PAGE.
18
<PAGE> 22
OTHER AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files reports and
other information with the SEC. Information as of particular dates concerning
Directors and Officers of the Company, their remuneration and any material
interest of such persons in transactions with the Company is disclosed in proxy
statements distributed to shareowners of the Company and filed with the SEC.
Such reports, proxy statements and other information can be inspected and copied
at the public reference facilities of the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices at 500
West Madison Street, Chicago, Illinois 60661 and at 75 Park Place, New York, New
York 10007. Copies of such materials can be obtained from the Public Reference
Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, certain securities of the Company are
listed on the New York Stock Exchange and the Pacific Stock Exchange where
reports, proxy statements and other information concerning the Company may be
inspected.
SOLICITATION
Proxies may be solicited in person, by mail, by telephone, by telegraph or
telefax. The cost of solicitation of Company proxies, which includes the
preparation, printing and mailing of the Notice of Annual Meeting of
Shareowners, the Proxy Statement and the proxy card, is to be borne by the
Company. Arrangements will be made with brokers and other custodians, nominees
and fiduciaries to forward the Company's solicitation materials to the
beneficial owners of stock held of record and the Company will reimburse them
for reasonable out-of-pocket expenses incurred. In addition, the Company has
retained D. F. King & Co., Inc., 77 Water Street, New York, New York 10005, to
assist in the solicitation of proxies for a fee estimated at $10,000 plus
reasonable out-of-pocket expenses. In addition to D. F. King & Co., Inc.,
regular employees of the Company may solicit proxies for which no additional
compensation will be paid.
LONG ISLAND LIGHTING COMPANY
/s/ Kathleen A. Marion
KATHLEEN A. MARION
Corporate Secretary
19
<PAGE> 23
[LILCO LOGO]
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
1994
[LOGO]
Printed on Recycled Paper
<PAGE> 24
PROXY FOR COMMON SHARES
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
LONG ISLAND LIGHTING COMPANY
The Shareowner hereby appoints, and if a participant in the Company's P
Automatic Dividend Reinvestment Plan (ADRP) hereby authorizes and directs
The Bank of New York as Agent to appoint, PHYLLIS S. VINEYARD, JOHN H. R
TALMAGE and BASIL A. PATERSON and each or any of them with the power of
substitution as Proxies to vote, as designated herein, all shares of Common O
Stock which the Shareowner is entitled to vote at the Annual Meeting of
Shareowners of the Company on April 12, 1994 and any adjournments thereof. X
In their discretion, the Proxies are authorized to vote upon such business
as may properly come before the meeting. Y
THE SHARES REPRESENTED BY THIS PROXY, WHEN SIGNED AND RETURNED, WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY THE SHAREOWNER. IF NO DIRECTION IS
GIVEN, SUCH SHARES WILL BE VOTED FOR THE NOMINEES AND FOR ITEM TWO ON THE OTHER
SIDE.
THIS PROXY IS CONTINUED ON THE OTHER SIDE.
PLEASE SIGN ON THE OTHER SIDE AND RETURN PROMPTLY.
THE SHARES REPRESENTED BY THIS PROXY WHEN SIGNED AND RETURNED WILL BE VOTED AS
DIRECTED BY THE SHAREOWNER. IF NO DIRECTION IS GIVEN, SUCH SHARES WILL BE
VOTED FOR THE NOMINEES NAMED BELOW AND FOR ITEM TWO.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES NAMED BELOW AND FOR
ITEM TWO.
<TABLE>
<CAPTION>
ITEM ONE-- Election of the following nominees as Directors: W.J. Catacosinos, P.S. Vineyard, J.H. Talmage, B.A. Paterson, G.
Bugliarello, G.J. Sideris, A.J. Barnes, R.L. Schmalensee, R.L. Caporali, P.O. Crisp, K.D. Ortega and V.L. Fuller.
<S> <C> <C>
FOR ALL WITHHELD for all Withheld for the following only:
nominees named above nominees (Write the name of the nominee(s) on the line below)
[ ] [ ]
------------------------------------------------------------------
</TABLE>
ITEM TWO-- Appointment of Independent Auditors
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PLEASE SIGN AND DATE BELOW
Date ,1994
- ----------------------------------------------------------------------
Signature (L.S.)
- ----------------------------------------------------------------------
Signature (L.S.)
- ----------------------------------------------------------------------
Signature of Common Shareowner(s)
PLEASE SIGN AS YOUR NAME APPEARS ABOVE AND RETURN IN THE ENCLOSED POSTAGE PAID
ENVELOPE. IF SIGNING AS EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC., YOU
SHOULD SO INDICATE. IF THE SIGNER IS A CORPORATION, PLEASE SIGN IN FULL
CORPORATE NAME, BY PRESIDENT OR OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP,
PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON.
<PAGE> 25
ADMISSION CARD
LILCO Annual Meeting of Shareowners -- April 12, 1994 -- 3:00 p.m.
Name(s):
----------------------------------------------------------------------
Address:
----------------------------------------------------------------------
----------------------------------------------------------------------
Shares Owned - Common No. of Shares:
--------------------
Dear Shareowner:
Please bring this to the Annual Meeting. It will expedite your
admittance when presented upon your arrival.
Very truly yours,
/s/ KATHLEEN A. MARION
----------------------
Kathleen A. Marion
Corporate Secretary
Westbury Music Fair -- Brush Hollow Road -- Westbury, New York 11590
<PAGE> 26
[LILCO LOGO] LONG ISLAND LIGHTING COMPANY
EXECUTIVE OFFICES: 175 EAST OLD COUNTRY ROAD (o) HICKSVILLE,
NEW YORK 11801
Dear Shareowner,
You are cordially invited to attend our annual meeting of shareowners
to be held at 3:00 p.m. on Tuesday April 12, 1994 at the Westbury Music Fair,
Brush Hollow Road, Westbury, New York 11590. The middle third of this form is
your admission card. Please bring the admission card with you if you plan to
attend the annual meeting. The bottom third is your proxy card which we ask
you to mark, sign and return in the enclosed envelope.
Your participation is important to us. Please complete and return the
enclosed proxy card at your earliest convenience.
Sincerely,
/s/ KATHLEEN A. MARION
----------------------
Kathleen A. Marion
Corporate Secretary
