<PAGE>
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
----------------------------------------------------
(Name of Person(s) Filing the Information 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 0-11(1)
(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.
<PAGE>
[LOGO] LILCO LONG ISLAND LIGHTING COMPANY
EXECUTIVE OFFICES: 175 EAST OLD COUNTRY ROAD
o HICKSVILLE, NEW YORK 11801
WILLIAM J CATACOSINOS
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
April 12, 1995
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 Wednesday, May 24,
1995 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 look forward to personally greeting
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 LLP as
independent auditors for 1995.
If you plan to attend the Annual Meeting, please bring the enclosed
admission card or proof of ownership. If your shares are held through a bank or
brokerage firm, please request a letter or some other evidence of ownership from
your bank or firm as well as proper authorization if you wish to vote your
shares in person.
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. Therefore, please promptly sign, date and return the enclosed proxy
card. Your cooperation in complying with this request is greatly appreciated.
Thank you.
On behalf of the Board of Directors,
Sincerely,
/s/ W. J. Catacosinos
<PAGE>
[LOGO] LILCO LONG ISLAND LIGHTING COMPANY
EXECUTIVE OFFICES: 175 EAST OLD COUNTRY ROAD
o HICKSVILLE, NEW YORK 11801
KATHLEEN A. MARION
CORPORATE SECRETARY
and
VICE PRESIDENT OF
CORPORATE SERVICES
April 12, 1995
---------------
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 Wednesday, May 24, 1995.
The purposes of the Annual Meeting are: (i) to elect twelve Directors; (ii)
to ratify the appointment of Ernst & Young LLP as independent auditors for the
year 1995 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 April
4, 1995 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, whether or not you expect to attend
the Annual Meeting. 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
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION............................................................................ 1
VOTING.................................................................................. 1
ITEM ONE--ELECTION OF DIRECTORS......................................................... 3
BOARD OF DIRECTORS...................................................................... 8
REPORT OF THE COMPENSATION AND MANAGEMENT
APPRAISAL COMMITTEE ON EXECUTIVE COMPENSATION......................................... 10
STOCK PERFORMANCE GRAPH................................................................. 12
COMPENSATION PAID TO EXECUTIVE OFFICERS................................................. 13
SECURITY OWNERSHIP OF MANAGEMENT........................................................ 17
TRANSACTIONS WITH MANAGEMENT AND OTHERS................................................. 18
ITEM TWO--APPOINTMENT OF INDEPENDENT AUDITORS........................................... 19
ADDITIONAL INFORMATION.................................................................. 20
</TABLE>
<PAGE>
[INSERT LETTERHEAD]
PROXY STATEMENT
OF
LONG ISLAND LIGHTING COMPANY
---------------
ANNUAL MEETING TO BE HELD MAY 24, 1995
---------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Long Island Lighting Company (the
'Company') for the Annual Meeting of Shareowners to be held on May 24, 1995 (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 April 12,
1995.
VOTING
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. Only holders of record of Common Stock at the close of
business on April 4, 1995 (the 'Record Date') are eligible to vote at the Annual
Meeting and at all postponements or adjournments thereof.
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 Proxy Committee, appear as
proxies to vote as each shareowner directs on the card. If a shareowner wishes
to give a proxy to someone other than the Proxy Committee, 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.
1
<PAGE>
Proxies shall be voted in accordance with the instructions given by the
shareowner. To be voted, properly signed and dated proxy cards should be: (i)
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 (ii) 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 for their shares to be voted.
Each proxy card shows the number of shares of Common Stock registered in
the shareowner's name as of the close of business on the Record Date. Each share
of Common Stock is entitled to one vote at the Annual Meeting, except with
respect to the election of Directors described on page three. 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.
If the shareowner signs the proxy card without providing restrictions or
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 Annual 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
whose shares are held through 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.
2
<PAGE>
ITEM ONE -- ELECTION OF DIRECTORS
All Directors are elected annually 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 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 that 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 for purposes of
determining the number of votes cast, but are counted for purposes of
determining whether a quorum is present at the meeting.
Currently, all nominees are Directors. 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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<TABLE>
<S> <C> <C>
WILLIAM J. CATACOSINOS--Age 65
Chairman of the Board, Director since 1978
Chief Executive Officer and President LILCO shares owned 9,300
Board/Board committee attendance 100%
</TABLE>
Chairman--Executive Committee
Chairman of the Board of Directors and Chief Executive Officer of the
Company since January 1984; President of the Company from March 1984 to January
1987 and from March 1994 to present. Resident of Mill Neck, Long Island.
Received bachelor of science degree and masters degree in business
administration and a doctoral degree in economics from New York University.
Member, boards of U. S. Life Corporation; Austin International Communications;
Edison Electric Institute; Long Island Association; German American Chamber of
Commerce; Business Alliance for a New, New York and a member of the Advisory
Committee of the Huntington Township Chamber Foundation. Former chairman and
chief executive officer of Applied Digital Data Systems, Inc., Hauppauge, New
York, a manufacturer of computer and related products. Previously served as
chairman of the board and treasurer of Corometric Systems, Inc. of Wallingford,
Connecticut and assistant director at Brookhaven National Laboratory. Member,
boards of Utilities Mutual Insurance Company from November 1985 through December
1994 and Ketema, Inc. from June 1988 through December 1994. Ketema is a
diversified manufacturer of, among other things, electrical and aerospace
equipment. In compliance with Section 305(b) of the Federal Power Act, Dr.
Catacosinos had authorization 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.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PHYLLIS S. VINEYARD--Age 71
Representative to Non-Governmental Director since 1974
Organization of the United Nations LILCO shares owned 732
Board/Board committee attendance 100%
</TABLE>
Member--Executive Committee,
Nuclear Oversight Committee and the
Planning and Environment Committee
Past chair of the Population Institute, Washington, D.C. and presently its
representative to the Non-Governmental Organization ('NGO') of the United
Nations. Member of the NGO Committees on Population and Development and the
Status of Women. Member of the Executive Committee of the United Nations
Association for the United States. Policy board member of New York State's Early
Childhood Investment Fund. Director of the Long Island Community Foundation, a
co-founder of the Corporate Initiative for Child Care and Elder Care; emeritus
director of the Regional Plan Association. Served from 1978-1988 on the Old
Westbury College Council, State University of New York. Served as 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.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
JOHN H. TALMAGE--Age 65
Partner, H. R. Talmage & Son Farm Director since 1982
Riverhead, New York LILCO shares owned 532
Board/Board committee attendance 100%
</TABLE>
Chairman--Nominating Committee
Member--Executive Committee and the Compensation and
Management Appraisal Committee
Graduate of the College of Agriculture and Life Sciences, Cornell
University. Chairman, board of directors, H.P. Hood, Inc. of Boston,
Massachusetts since 1980; president since 1992 and director since 1960, Friar's
Head Farm, Inc.; director, Agway, Inc. since 1967, Curtice Burns Foods, Inc.,
1969 to 1984 and Suffolk County Federal Savings and Loan Association, 1975 to
1982.
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<TABLE>
<S> <C> <C>
BASIL A. PATERSON--Age 68
Partner, Law Firm of Director since 1983
Meyer, Suozzi, English and Klein, P.C. LILCO shares owned 864
Board/Board committee attendance 100%
</TABLE>
Chairman--Audit Committee
Member--Executive Committee
Received juris doctorate from St. John's University School of Law. 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. Partner in the law firm of Meyer, Suozzi,
English and Klein, P.C., Mineola, New York. Served as a professor at a number of
universities; member of the board of editors of the New York Law Journal;
member, New York State Commission on Judicial Nomination; commissioner, the Port
Authority of New York and New Jersey.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
GEORGE BUGLIARELLO--Age 68
Chancellor, Polytechnic University Director since 1990
LILCO shares owned 500
Board/Board committee attendance 79%
</TABLE>
Chairman--Compensation and Management
Appraisal Committee
Member--Executive Committee and
Nuclear Oversight Committee
Received doctor of science degree in engineering from Massachusetts
Institute of Technology and several honorary degrees from other institutions.
President of Polytechnic University from 1973 to July 1994, presently holds the
position of Chancellor. Member, board of directors of the Lord Corporation,
Symbol Technologies, Comtech Telecommunications Corp., the Teagle Foundation,
the Jura Corp., the Greenwall Foundation and Spectrum Information Technologies,
Inc. Member of the Council on Foreign Relations and National Academy of
Engineering. Fellow, the American Society of Civil Engineers, the American
Association for the Advancement of Science and the New York Academy of Medicine.
Chairman, Board of Infrastructure and Constructed Environment, National Research
Council. Previously held a NATO Senior Faculty Fellowship at the Technical
University of Berlin and the chairmanship on the Committee on Science,
Engineering and Public Policy of the American Association for the Advancement of
Science. Former member of the Scientific Committee of the Summer School on
Environmental Dynamics in Venice.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
GEORGE J. SIDERIS--Age 68
Retired Senior Vice President, Director since 1991
Long Island Lighting Company LILCO shares owned 3,883
Board/Board committee attendance 100%
</TABLE>
Chairman--Nuclear Oversight Committee
Member--Nominating Committee and
Planning and Environment Committee
Received bachelors degree in economics from New York University.
Self-employed as a management and financial consultant, 1981-1984. Joined the
Company in 1984 as Vice President of Finance and Chief Financial Officer. Became
Senior Vice President of Finance in 1987 and retired in January 1992. Member,
board of directors of Utilities Mutual Insurance Company through December 1994.
Previously 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.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
A. JAMES BARNES--Age 52
Dean, Indiana University School Director since 1992
of Public and Environmental Affairs LILCO shares owned 500
Board/Board committee attendance 100%
</TABLE>
Chairman--Planning and Environment Committee
Member--Compensation and Management
Appraisal Committee
Received undergraduate degree from Michigan State University and juris
doctorate from Harvard Law School. Served as General Counsel of the U.S.
Department of Agriculture from 1981 to 1983, as General Counsel of the U.S.
Environmental Protection Agency from 1983 to 1984 and as Deputy Administrator of
the Agency from 1985 to 1988. Previously 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. Joined the Indiana University School of Public and
Environmental Affairs as its Dean in 1988.
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5
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
RICHARD L. SCHMALENSEE--Age 51
Director, Massachusetts Institute of Technology Director since 1992
Center for Energy and Environmental Policy Research LILCO shares owned 100
Board/Board committee attendance 77%
</TABLE>
Member--Compensation and Management
Appraisal Committee and
Planning and Environment Committee
Received doctoral degree in economics and bachelor of science degree in
economics, politics and science from the Massachusetts Institute of Technology
('MIT'). Visiting Professor at Harvard Business School from 1985 to 1986. 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 prior to
1989. Served as member of the President's Council of Economic Advisors from 1989
to 1991. Currently director of the MIT Center for Energy and Environmental
Policy Research. 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.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
RENSO L. CAPORALI--Age 61
Former Chairman and CEO, Director since 1992
Grumman Corporation LILCO shares owned 965
Board/Board committee attendance 100%
</TABLE>
Member--Audit Committee and
Nuclear Oversight Committee
Received 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. Served as
President of Grumman Corporation's Aircraft Systems Division since 1985, Vice
Chairman of Corporate Technology 1988 to 1990 and Chairman and Chief Executive
Officer from 1990 to June 1994. Serves on two Princeton University Advisory
Councils. Consultant to and member of the board of directors of Northrop-Grumman
from June 1994 to March 1995. Former Chairman of the Aerospace Industries
Association's Board of Governors and Executive Committee. Director of Clarkson
University; former director of the Long Island Association. Former member of the
American Society of Mechanical Engineers' Advisory Board, Naval Aviation
Industry Council, New York State Business Council, International Executive
Service Corps Advisory Council and the National Academy of Engineering.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PETER O. CRISP--Age 62 Director since 1992
President, Venrock, Inc. LILCO shares owned 1,000
Board/Board committee attendance 93%
</TABLE>
Member--Nominating Committee and
Audit Committee
Received bachelors degree from Yale University and masters degree in
business administration from Harvard Business School. General Partner, Venrock
Associates, a venture capital limited partnership, since 1969. President,
Venrock, Inc., the corporation which manages Venrock Associates, since 1980.
Director of 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. Member of the boards of the
Memorial Sloan Kettering Cancer Center and North Shore University Hospital.
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6
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
KATHERINE D. ORTEGA--Age 60
Former Treasurer of the United States Director since 1993
LILCO shares owned 683
Board/Board committee attendance 100%
</TABLE>
Member--Nominating Committee and
Audit Committee
Received bachelor of arts degree in business and economics from Eastern New
Mexico University and three honorary doctor of law degrees and an honorary
doctor of social science degree. Treasurer of the United States from 1983 to
1989. 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. Member of the
board of directors of Diamond Shamrock, Inc., The Kroger Company, Ralston Purina
Company, Paul Revere Corporation, Rayonier Inc., Catalyst and Quest
International. Member of the Comptroller General's Consultant Panel.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
VICKI L. FULLER--Age 37
Senior Vice President, Director since 1994
Alliance Capital Management Corporation LILCO shares owned 300
Board/Board committee attendance 80%
</TABLE>
Received bachelors degree at Roosevelt University and masters degree in
business administration at the University of Chicago and is a Certified Public
Accountant. Served as an associate in Morgan Stanley and Co.'s corporate finance
department from 1981 to 1983. Served as a rating officer at Standard & Poor's
Corporation from 1984 to 1985. Joined Equitable Capital Management Corporation
('ECM') in 1985 as a senior investment manager, holding various positions
including Managing Director from 1989 to 1993. Vice President of Alliance
Capital Management Corporation ('Alliance'), which acquired ECM, from 1993 to
1994; currently holds the position of Senior Vice President of Alliance. Member
of the Board of Trustees of North Carolina Agricultural & Technology University.
In compliance with Section 305(b) of the Federal Power Act, Ms. Fuller has
authorization 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 is
authorized to underwrite or participate in the marketing of the securities of a
public utility.
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7
<PAGE>
BOARD OF DIRECTORS
The business and affairs of the Company are managed under the direction of
its Board of Directors. The Board has responsibility for establishing broad
corporate policies and for the overall performance of the Company rather than
the day-to-day management of its operations.
At the Board meetings, the directors generally discuss significant
developments affecting the Company and take action on various matters including
the declaration of dividends, the review and approval of the Company's corporate
goals, business plans, earnings plan, expense and capital budgets and other
financial and securities related matters. The Board also approves the annual
report to shareowners, the annual report on Form 10-K and the proxy statement.
Members of the Board are kept informed of the Company's business by various
reports and documents sent to them each month, as well as by reports presented
at meetings of the Board and its committees by officers and employees of the
Company and other individuals, if required. Directors also perform their
responsibilities throughout the year by numerous personal meetings and other
communications, including frequent telephone conversations with the Chairman and
other Directors regarding all matters of importance to the Company.
The Board of Directors, which generally meets every other month and
conducts special meetings as required, met a total of ten times during 1994. In
addition, the various standing committees of the Board, which are described in
greater detail below, met a total of fifteen times in 1994. The Company's
By-laws provide that the Board consist of not less than seven nor more than
fifteen directors. The number of directors, as may be fixed from time to time by
the Board, is currently set at twelve.
COMPENSATION PAID TO DIRECTORS
The annual retainer fee paid to each Director in 1994 was $25,000, except
for Dr. Catacosinos who, as an Officer of the Company, does not receive
compensation for serving as a Director. 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 was $500.
The Company has entered into consulting agreements with Winfield E. Fromm,
Lionel M. Goldberg and Eben W. Pyne, former Directors of the Company, naming
them 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. Consulting Directors do not have
the right to vote at meetings of the Board or at meetings of committees of the
Board.
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, each of
the Company's Consulting Directors as well as Messrs. Paterson and Talmage and
Mrs. Vineyard would be entitled to be paid full benefits were they to cease to
serve as Consulting Directors or Directors at this time. Benefits are provided
on a straight-life annuity basis except that if the Director is married
8
<PAGE>
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 the trust will make such payments to the
extent that the Company does not.
Pursuant to the New York Business Corporation Law 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.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board has established six standing committees to assist it in
performing its duties. The principal responsibilities of each committee are
described below. Each committee reports to the Board all action taken either by
written report or at a subsequent Board meeting. The Director biography portion
of this Proxy Statement identifies the members of the various committees.
The Executive Committee, composed of five members, 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. The Executive
Committee met six times during 1994.
The Audit Committee, which met three times during 1994, is composed of four
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.
The Nuclear Oversight Committee, which met twice during 1994, is composed
of four members and is responsible for reviewing and assessing all of the
nuclear activities of the Company.
The Compensation and Management Appraisal Committee, which met once during
1994, is composed of four 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.
The Nominating Committee consists of four members and 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. The Nominating Committee met once during 1994. 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 1994,
consists of four members and reviews the Company's general and environmental
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.
9
<PAGE>
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 is made up entirely of outside Directors. Its members
are George Bugliarello, A. James Barnes, Richard L. Schmalensee and John H.
Talmage. The Committee uses an outside consultant, the Hay Group, to annually
review the compensation levels of the Company's top executives. In addition,
management also supplies comparisons to industry data.
EXECUTIVE COMPENSATION PHILOSOPHY
In contrast to other utility companies, the Company continues a very
conservative approach to executive compensation. General industry, and the
utility sector in particular, has moved aggressively over the past year in
expanding their utilization of annual and long-term incentives as part of
executive compensation. In contrast, the Company has continued to utilize base
salary only. The Compensation Committee, although aware that a majority of
utilities and industrial companies have executive compensation programs that
combine base salary with annual and long-term incentives, particularly stock
options, nevertheless has for each year, including 1994, concluded that
base-salary-only compensation best met the expectations of the Company's
customers, its regulators and other stakeholders.
Annually, the Compensation Committee considers the need to reassess its
compensation philosophy. The Committee recognizes the increased value that the
management team brings to the Company. It understands the need to retain,
motivate and attract a strong leadership team that can meet the Company's short
and long-term strategic objectives. Accordingly, it seeks to ensure that the
executive compensation program supports the long-term objectives of the Company
and its stakeholders to restore the Company to financial health and to meet the
competitive challenges of the future by delivering unparalleled service and
aggressively controlling costs.
In recent years, the Compensation Committee has set as an objective its
intention to review the use of incentives and other variable performance-based
pay programs in order to link executive pay and enhancements to performance and
customer service. In 1994, reflecting investor concerns about the industry-wide
impact of competition and continuously high and increasing rates for electricity
and gas, utility stock prices nationwide, including those of the Company,
dropped significantly as represented in the stock performance graph on page 12.
In this climate of increased competition, the Compensation Committee is closely
studying incentive compensation programs in order to maintain the
competitiveness of the Company's executive compensation program and ensure the
retention and attraction of a strong management team to lead the Company through
these and other challenges ahead.
Determination of Executive Salary Levels: The base-salary-only
compensation philosophy governed the Compensation Committee's deliberations in
late 1993 when it set Dr. Catacosinos' compensation for 1994 and when, during
1994, it considered increases in compensation of the Company's other executives.
The Committee uses the Hay Group to annually review the compensation levels of
the Company's top executives relative to the external marketplace, including the
compensation paid to the chief executive officers ('CEO's') of nine Northeast
utility companies (the 'Hay Group Utilities'). Two of these utilities are also
included in the Standard & Poor's Electric Utility Index shown in the
performance graph on page 12. The Committee also reviews the results of Edison
Electric Institute's Annual Compensation Survey of 118 utilities (the 'EEI
Utilities'), and considers the compensation paid to the CEO's of other New York
utilities as well.
The Company's executive compensation policy is to set a base salary range
for each executive position with a midpoint that is at the average of the
compensation paid to the executives of the Hay Group Utilities. The Committee
annually considers the competitiveness of these ranges relative to the external
comparisons mentioned above and approves adjustments to the salary ranges.
Individual salary increases within those ranges are then subjectively determined
based on several factors. These factors include the competitiveness of the
individual's current base salary, the overall financial performance of the
Company, the executive's individual
10
<PAGE>
accomplishments during the year and the length of time in his or her position.
The decisions regarding increases in executive compensation for 1994 were
influenced by the improvements in the Company's financial health, through the
end of 1993, moderated by the Company's desire to control its operations and
maintenance expenses to support its December 1993 electric rate case filing
discussed below. Annual adjustments granted in 1994 to the Executive Officers
named in the compensation table on page 13, other than Dr. Catacosinos,
including increases associated with taking on increased responsibilities and
promotions ranged from 0% to 13.2%.
CEO Compensation: The 1994 total compensation paid to Dr. Catacosinos was
significantly below the average total compensation paid to the CEO's of both the
EEI Utilities and the Hay Group Utilities and was consistent with the total
compensation paid to the CEO's of the New York utilities based on the relative
size of these utilities. The increase granted to Dr. Catacosinos in 1994 was in
recognition of his strong leadership and the weak competitive position of his
total compensation and, yet, only brought his total compensation to the average
levels of the base salaries of his peers for the prior year, many of whom,
unlike Dr. Catacosinos, were also beneficiaries of performance incentive awards.
Specifically, of the nine other EEI Utilities with annual revenues between
$2 and $3 billion, Dr. Catacosinos' 1993 base salary was $534,000 while the 1993
average total compensation, which includes bonuses and other incentive awards
paid to the CEO's of these companies, was $631,484. Long Island Lighting Company
remains the only company in this revenue group with neither an annual nor
long-term executive incentive plan. Among the Hay Group Utilities, Dr.
Catacosinos' total compensation of $534,000 remained well below the average base
compensation of $587,000 paid to the CEO's in this group for the year 1993,
despite his 8.4% base salary increase in 1994. His 1994 total compensation was
approximately 30% below the average total compensation of $764,900, which
includes bonuses and other incentive awards, paid in 1993 to the CEO's of the
Hay Group's Utilities.
In reviewing his performance in late 1993, the Committee considered his
strategies and initiatives to address competitive factors impacting the electric
and gas industries. Throughout the year, the Company pursued an aggressive
program to contain operations and maintenance expenses. Most notably, in
December 1993, the Company filed an electric rate case that provided for two
years without increases in base rates and for a third year with an increase of
only 4.3%, notwithstanding provisions in the 1989 Settlement resolving the
Shoreham nuclear power station controversy that targeted increases of 4.5% to
5.0%. In addition, during 1993, dividends were increased 4 cents per share and
aggressive refinancing of the Company's high cost securities continued,
resulting in annual cash flow savings of $18 million. Budget expense 'targets'
were underrun by 6.5%. The Company earned an additional 8.0 cents per share
above the allowed rate of return through the New York State Public Service
Commission Incentive Plan. Further, the quality of earnings was also improved
significantly as the percentage of non-cash earnings dropped from 54% in 1992 to
11% in 1993.
Thus, despite the improvements in the Company's financial condition under
Dr. Catacosinos' leadership, and the 8.4% increase granted in 1994, Dr.
Catacosinos total compensation remains well below the comparable average
compensation paid to CEO's of the Northeast and national utilities and industry
in general.
George Bugliarello--Chairman
John H. Talmage
A. James Barnes
Richard H. Schmalensee
11
<PAGE>
STOCK 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') over the past five-year period.
The graph assumes a $100 initial investment on December 31, 1989, and a
reinvestment of dividends in Long Island Lighting Company and each of the
companies reported in the indices.
LILCO S&P 500 S&P 24
----- ------- ------
1989 $100 $100 $100
1990 $113 $97 $103
1991 $139 $126 $134
1992 $156 $136 $141
1993 $157 $150 $159
1994 $110 $152 $138
12
<PAGE>
COMPENSATION PAID TO EXECUTIVE OFFICERS
Summary Compensation Table: The following table illustrates the
compensation paid by the Company during the past three years to each of its most
highly compensated Executive Officers:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------ ---------------------
OTHER RESTRICTED PAYOUTS- ALL
ANNUAL STOCK OPTIONS/ LTIP OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
OR NUMBER IN GROUP YEAR ($)(1) ($) ($) ($) (#) ($) ($)(2)
- ------------------------------ ---- ------- ----- ------------ ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. Catacosinos 1994 579,654(3) 0 N/A* 0 0 0 12,303
CEO and President 1993 534,370(3) 0 N/A 0 0 0 13,854
1992 493,270(3) 0 N/A 0 0 0 13,962
James T. Flynn 1994 235,178 0 N/A 0 0 0 2,116
COO and Executive 1993 212,788 0 N/A 0 0 0 4,350
Vice President 1992 194,395 0 N/A 0 0 0 5,498
Robert J. Grey 1994 200,845(4) 0 N/A 0 0 0 480
General Counsel 1993 193,746(4) 0 32,990 0 0 0 3,357
1992 86,720(4) 0 40,523 0 0 0 1,794
Edward J. Youngling 1994 169,512 0 N/A 0 0 0 591
Senior Vice President-- 1993 142,413 0 N/A 0 0 0 1,305
Electric Business 1992 131,103 0 N/A 0 0 0 896
Unit
Anthony Nozzolillo 1994 157,678 0 N/A 0 0 0 423
Senior Vice President-- 1993 129,413 0 N/A 0 0 0 770
Finance 1992 116,508 0 N/A 0 0 0 558
</TABLE>
* N/A--Not Applicable.
- ------------------
Notes to Summary Compensation Table:
(1) 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.
(2) The Company has a noncontributory Supplemental Death and Retirement Benefits
Plan for its Officers and certain other senior management employees.
Currently, death benefits for the Chairman are five times his highest annual
salary and, for each other Officer, three times their 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 1992 and a portion of 1993 insurance coverage was provided by
a group term life insurance policy. During the remaining portion of 1993 and
for 1994, 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 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 and for 1994, the amount
allocated to such participant for income tax purposes.
(3) A portion of Dr. Catacosinos' salary in each of these years has been
deferred at his request and is reflected in the amounts shown.
(4) Mr. Grey resigned as General Counsel of the Company effective March 5, 1995.
The amounts shown under Other Annual Compensation for 1993 and 1992
represent relocation allowances paid to him when he joined the Company in
September 1992.
- ------------------
13
<PAGE>
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 the highest
annual salary for the Chairman and President and three times the highest annual
salary for each other Officer. Prior to retirement, participants elect either to
receive continued death benefit coverage or 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 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, for the Chairman and
President, up to 25% of the highest annual salary and, for each other Officer,
up to 15% of such Officer's highest annual salary, with other options available
to make 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 in the Summary
Compensation Table at normal retirement age, 65, based upon compensation in
effect for 1994, are as follows: Dr. Catacosinos, $144,702; Mr. Flynn, $35,700;
Mr. Grey, $30,000; Mr. Youngling, $25,800; and Mr. Nozzolillo, $23,850. The
terms of Dr. Catacosinos' employment agreement, discussed below, provide for his
continued employment beyond normal retirement age. In addition, 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, which are borne by the
Company's shareowners, 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.
Retirement Income Plan: Generally, all Company employees (except certain
leased and part-time 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 and may differ from the amounts reported
under the heading 'Salary' in the Summary Compensation Table. Any difference is
primarily attributable to the timing of annual salary increases for the named
executive officers which impacts the amount paid to such officer and reported
for a given year.
14
<PAGE>
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 1994.
<TABLE>
<CAPTION>
ANNUAL RETIREMENT CREDITED SERVICE NORMAL
BENEFIT(1) AS OF 12/31/94 RETIREMENT DATE
------------------- ------------------- ------------------
<S> <C> <C> <C>
William J. Catacosinos $ 114,740 10 years 11 months April 1, 1995(2)
James T. Flynn $ 55,693 8 years 3 months January 1, 1999
Robert J. Grey $ 106,733 2 years 4 months September 1, 2015
Edward J. Youngling $ 124,178 26 years 9 months August 1, 2009
Anthony Nozzolillo $ 114,418 22 years 6 months September 1, 2013
</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 1994 the maximum benefit limit set by Section 415 and applicable to the
amounts shown above was $118,800. For 1994 the maximum compensation limit
set by Section 401(a)(17) and applicable to the amounts shown above was
$242,280. For 1995 the maximum benefit limit set by Section 415 is $120,000
and the maximum compensation limit set by Section 401(a)(17) and to be
utilized for Plan benefits accrued in 1995 is $245,000.
(2) Dr. Catacosinos' employment agreement, discussed below, provides for his
continued employment beyond his normal retirement date.
- ------------------
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
the length of 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 upon expiration of the Contract on
January 31, 1997, the amount of the estimated retirement benefit payable under
the Contract to Dr. Catacosinos as of January 1, 1998 (assuming continuation of
his current salary) would be approximately $760,000. 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 all amounts payable
to Dr. Catacosinos and the trusts will make such payments to the extent that the
Company does not.
15
<PAGE>
The Company has entered into individual employment agreements with each of
its Officers to provide them with employment security and to minimize
distractions resulting from personal uncertainties and risks of a
change in control of the Company. Currently, the principal benefits under these
agreements, payable if the Officer's employment is terminated for any reason
(including voluntary resignation) within three years of an actual change in
control, through acquisition or otherwise, prior to December 31, 1999, are: (i)
severance pay equal to three years' salary; (ii) accelerated supplemental
retirement benefits which are enhanced by three years of service; and (iii)
continuation of life, medical and dental insurance for a period of three years.
The costs associated with these arrangements will be borne by the Company's
shareowners. Notwithstanding the creation of a trust to support payment of its
obligations, the Company is primarily liable for the compensation and retirement
benefits payable to the Officers and the trust will make such payments only to
the extent that the Company does not.
The Officers have also entered into indemnification agreements that are
described below under the heading 'Transactions with Management and Others.'
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.
16
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The table below shows the number of shares of the Company's Common Stock
beneficially owned, as of April 4, 1995, 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
George Bugliarello.............................................................................. 500
Renso L. Caporali............................................................................... 965
William J. Catacosinos.......................................................................... 9,300
Peter O. Crisp.................................................................................. 1,000
James T. Flynn.................................................................................. 1,396
Vicki L. Fuller................................................................................. 300
Robert J. Grey.................................................................................. 221
Anthony Nozzolillo.............................................................................. 45
Katherine D. Ortega............................................................................. 683
Basil A. Paterson............................................................................... 864
Richard L. Schmalensee.......................................................................... 100
George J. Sideris............................................................................... 3,883
John H. Talmage................................................................................. 532
Phyllis S. Vineyard............................................................................. 732
Edward J. Youngling............................................................................. 1,234
All Directors and Officers as a group,
including those named above,
a total of 31 persons......................................................................... 27,087
</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.
- ------------------
17
<PAGE>
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 December 31, 1994.
<TABLE>
<CAPTION>
TITLE OF NAME AND PERCENTAGE
CLASS ADDRESS OWNED OF CLASS
-------- -------- ----- ----------
<S> <C> <C> <C>
Common Stock The Capital Group, Inc. 10,305,000 8.70%
333 South Hope Street
Los Angeles, CA 90071
Common Stock Franklyn Resources, Inc. 6,648,000 5.61%
777 Mariners Island Blvd.
P.O. Box 7777
San Mateo, CA 94404
</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, 1994. 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 New York Business Corporation Law 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 under certain circumstances when the Company has not previously
provided indemnification. The Company has D&O liability insurance which it has
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, 1994. The Company also has liability insurance effective July 1,
1994 purchased from AEGIS and 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
$1,653,993 in 1994.
The Company's By-laws provide for the mandatory indemnification of
Directors and Officers to the extent not expressly prohibited by the New York
Business Corporation Law. 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 New York Business
Corporation Law. 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.
18
<PAGE>
ITEM TWO--APPOINTMENT OF INDEPENDENT AUDITORS
Ernst & Young LLP, 395 North Service Road, Melville, New York, audited the
Company's 1994 financial statements. Audit related services performed by Ernst &
Young LLP for 1994 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 all securities.
A representative of Ernst & Young LLP will be present at the Annual
Meeting, shall have the opportunity to make a statement if he or she 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 Director biography portion of this
Proxy Statement identifies the members of the Audit Committee. 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 LLP as
independent auditors for the year 1995. 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 LLP by the Board
of Directors of Long Island Lighting Company as independent
auditors to audit the Company's 1995 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 LLP AS INDEPENDENT AUDITORS OF THE
COMPANY FOR 1995.
19
<PAGE>
ADDITIONAL INFORMATION
OTHER BUSINESS
It is not anticipated that any business not otherwise discussed in this
Proxy Statement will be presented at the Annual Meeting, and the Board was not
aware, a reasonable time prior to this solicitation of proxies, of any other
matters which may properly be presented for vote at the meeting. Should any
other matter be presented at the Annual Meeting, the Proxy Committee will have
discretionary authority to vote all proxies as they deem appropriate.
1996 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
1996 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 December 12, 1995.
OUTSTANDING VOTING STOCK
On April 4, 1995, the Record Date, there were 119,044,385 shares of Common
Stock, 1,466,492 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.
SOLICITATION OF PROXIES
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.
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 Seven World Trade Center,
Suite 1300, New York, New York 10048. 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.
20
<PAGE>
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.
LONG ISLAND LIGHTING COMPANY
/s/ KATHLEEN A. MARION
KATHLEEN A. MARION
Corporate Secretary
21
<PAGE>
LILCO
LONG ISLAND LIGHTING
NOTICE OF ANNUAL MEETING
AND
PROXY STATEMENT
1995
[LOGO]
Printed on Recycled Paper
<PAGE>
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, R
JOHN H. TALMAGE and BASIL A. PATERSON and each or any of them with the
power of substitution as Proxies to vote, as designated herein, all O
shares of Common Stock which the Shareowner is entitled to vote at the
Annual Meeting of Shareowners of the Company on May 24, 1995 and any X
adjournments thereof. 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 UNDERSIGNED
SHAREOWNER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE
NOMINEES AND FOR ITEM TWO ON THE OTHER SIDE.
THIS PROXY IS CONTINUED ON THE OTHER SIDE.
PLESE SIGN ON THE OTHER SIDE AND RETURN PROMTPLY.
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
/ / / / / /
/ / Discontine mailing the Annual Report to this account.
PLEASE SIGN AND DATE BELOW
Date , 1995
- --------------------------------------------------------------------
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>
[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 Wednesday May 24, 1995 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.
PLEASE NOTE: If you are a registered shareowner and duplicate copies of
the Company's Annual Report are sent to your household, you may discontinue the
mailing of such report to this account by checking the appropriate box on the
proxy card.
Sincerely,
/s/ KATHLEEN A. MARION
----------------------
Kathleen A. Marion
Vice President &
Corporate Secretary
<PAGE>
ADMISSION CARD
LILCO Annual Meeting of Shareowners -- May 24, 1995 -- 3:00 p.m.
Name(s):
----------------------------------------------------------------------
Address:
----------------------------------------------------------------------
----------------------------------------------------------------------
Share 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,
----------------------
Kathleen A. Marion
Vice President &
Corporate Secretary
Westbury Music Fair -- Brush Hollow Road -- Westbury, New York 11590
