<PAGE>
NEW ENGLAND ELECTRIC SYSTEM
25 RESEARCH DRIVE
WESTBOROUGH, MASSACHUSETTS 01582
March 11, 1996
Re: NEES Companies Incentive Thrift Plan
NEES Companies Incentive Thrift Plan II
Yankee Thrift Plan
Yankee Thrift Plan II
Dear NEES Shareholder:
---------------------
Under the thrift plans, NEES common shares are
held by the trustee. As beneficial owner of NEES
common shares through one or more of the plans, you
have a right to direct the trustee how to vote at the
1996 New England Electric System Annual Meeting of
shareholders. Shareholders who own NEES common shares
directly vote through a proxy. Plan participants have
a somewhat different procedure. Included in this
package is a voting instruction card on which you
instruct the trustee how to vote. Your share balance
in each of the plans in which you participate appears
at the top of the enclosed voting instruction card.
Please note that all of the shares in the plans must be
voted. Therefore, the trustee will vote shares for
which it does not receive instructions in the same
proportion as those for which it does.
We would appreciate your voting on the election of
directors and other matters as set forth in the
accompanying proxy statement. Please take the time to
review the proxy material, complete your voting
instruction card, and mail the card in the enclosed
envelope. Your voting instruction will be kept
confidential by an independent proxy tabulator.
Sincerely,
(Facsimile Signature) (Facsimile Signature)
JOAN T. BOK JOHN W. ROWE
Chairman President and
of the Board Chief Executive Officer
<PAGE>
NEW ENGLAND ELECTRIC SYSTEM
25 RESEARCH DRIVE
WESTBOROUGH, MASSACHUSETTS 01582
March 11, 1996
Dear Shareholders:
The directors and officers of New England Electric
System invite you to attend the Annual Meeting of
shareholders to be held on Tuesday, April 23, 1996, at
10:30 A.M. at Faneuil Hall in Boston, Massachusetts.
Faneuil Hall is located along the Freedom Trail in the
heart of historic Boston and adjacent to Quincy Market.
The Hall is handicapped accessible.
The business part of the meeting is fully
described in the accompanying Notice of Annual Meeting
and Proxy Statement. At the conclusion of the formal
portion of the meeting, there will be a discussion of
the Company's operations, followed by a question and
answer period.
We would appreciate your voting, signing and
dating the proxy, and mailing it promptly in the
enclosed postage-paid envelope, even if you plan to
attend the meeting in person. Please enclose a note
if you would like to receive a map of the area,
directions to the meeting, and information on parking
arrangements.
Sincerely,
(Facsimile Signature) (Facsimile Signature)
JOAN T. BOK JOHN W. ROWE
Chairman President and
of the Board Chief Executive Officer
<PAGE>
NEW ENGLAND ELECTRIC SYSTEM
25 RESEARCH DRIVE
WESTBOROUGH, MASSACHUSETTS 01582
NOTICE OF ANNUAL MEETING
________________________
The 1996 Annual Meeting of the shareholders of New
England Electric System will be held at Faneuil Hall in
Boston, Massachusetts, on Tuesday, April 23, 1996, at
10:30 A.M., E.D.S.T., for the following purposes, all
as set forth in the accompanying proxy statement:
1. To elect directors;
2. To consider and vote on a shareholder
proposal if presented at the meeting;
and
3. To transact such other business as may
properly come before the meeting or any
adjournment thereof.
Shareholders of record at the close of business on
March 11, 1996, will be entitled to vote at the
meeting.
By order of the Board of Directors,
(Facsimile Signature)
Cheryl A. LaFleur,
Secretary
March 11, 1996
<PAGE>
PROXY STATEMENT
NEW ENGLAND ELECTRIC SYSTEM
25 RESEARCH DRIVE
WESTBOROUGH, MASSACHUSETTS 01582
ANNUAL MEETING OF SHAREHOLDERS, APRIL 23, 1996
_______________________________________________
The Board of Directors of New England Electric
System is soliciting proxies in the accompanying form.
Proxies may be revoked at any time prior to being used
by completing a new proxy, by notifying the Company in
writing of such revocation, or by voting in person at
the Annual Meeting. All shares represented by properly
executed proxies will be voted at the Annual Meeting or
any adjournment thereof as specified in such proxies.
The Company's annual report for 1995, which
includes financial statements and a summary of
important developments during 1995, is being mailed to
shareholders on or about March 12, 1996. The
approximate date on which the proxy statement and form
of proxy are first being sent is March 20, 1996.
Holders of common shares of record at the close of
business on March 11, 1996, are entitled to vote at the
Annual Meeting. At that date there are 64,824,369
common shares outstanding and each share is entitled to
one vote.
An affirmative vote of a majority of the shares
present in person or represented by proxy at the
meeting and entitled to vote is required for approval
of each of the items being submitted to the
shareholders for their consideration. Votes for
directors will be counted by the Company as (i) For and
(ii) Withhold Authority; abstentions have the same
effect as "Withhold Authority" votes. Votes concerning
other matters will be counted by the Company as (i)
For, (ii) Against, or (iii) Abstain; abstentions are
counted separately, but have the same effect as
"Against" votes. Broker non-votes (shares held by
brokers or nominees as to which instructions have not
been received from the beneficial owners and the broker
or nominee does not have discretionary voting power on
a particular matter) are counted as not represented at
the meeting for all matters.
<PAGE>
1. ELECTION OF DIRECTORS
The persons named on the accompanying proxy will
vote, unless otherwise directed, for the election of
the eleven nominees listed below as directors of the
Company. All of the elected directors will hold office
until the next annual meeting of shareholders or the
special meeting held in lieu thereof and until their
respective successors are chosen and qualified.
The Company knows of no reason why any of the
nominees would be unable to act as a director, but, if
any of them should become unavailable to serve, the
persons named on the accompanying proxy have the
authority to vote for any other person nominated and
recommended by the Executive Committee. If an
alternative nominee is not recommended by the
Nominating Committee, the number of directors will be
reduced.
Certain information regarding each nominee for
director is given below. This information has been
furnished to the Company by the respective nominees.
Joan T. Bok Director since 1979
Chairman of the Board. Mrs. Bok, 66 years of age,
was elected Chairman in 1984 and held that
position through 1993. From July 26, 1988 until
February 13, 1989, she also served as President
and Chief Executive Officer. Mrs. Bok is a
director of each of the Company's subsidiaries,
including Massachusetts Electric Company, The
Narragansett Electric Company, and New England
Power Company. She is also a director of Avery
Dennison Corporation, John Hancock Mutual Life
Insurance Company, and Monsanto Company, and is a
Trustee of the Boston Athenaeum.
Paul L. Joskow Director since 1987
Professor of Economics and Management and
Chairman, Department of Economics, Massachusetts
Institute of Technology, Cambridge, Massachusetts.
Professor Joskow, 48 years of age, teaches and
conducts research in the fields of industrial
organization, government regulation, antitrust law
and economics, and energy economics. He was named
Chairman of the Economics Department in 1994.
Professor Joskow is a director of State Farm
Indemnity Company and the Whitehead Institute for
Biomedical Research. He is also President of the
Yale University Council and a Special Consultant
<PAGE>
to National Economic Research Associates, Inc.
John M. Kucharski Director since 1989
Chairman, President, and Chief Executive Officer
of EG&G, Inc., Wellesley, Massachusetts. Mr.
Kucharski, 60 years of age, is a director of State
Street Boston Corporation, Nashua Corporation, and
Eagle Industry Co., Ltd. He also serves as
Trustee of George Washington University and
Marquette University.
Edward H. Ladd Director since 1974
Chairman of Standish, Ayer & Wood, Inc.
(investment counselors), Boston, Massachusetts.
Mr. Ladd, 58 years of age, is a director of
Harvard Management Company and Greylock Management
Company. He is also a Trustee of Wheelock
College.
Joshua A. McClure Director since 1978
Former President of American Custom Kitchens,
Inc., Providence, Rhode Island. Mr. McClure, 64
years of age, is a member of the Westerly
Substance Abuse Task Force, the Westerly Housing
Authority Task Force, and the Washington County
Housing Authority.
John W. Rowe Director since 1989
President and Chief Executive Officer. Mr. Rowe,
50 years of age, served as President and Chief
Executive Officer of Central Maine Power Company
from 1984 until joining the Company as Chief
Executive Officer in February, 1989. He is a
director of a number of the Company's
subsidiaries, including Massachusetts Electric
Company, The Narragansett Electric Company, and
New England Power Company. Mr. Rowe is also a
director of Bank of Boston Corporation and UNUM
Corporation. He is Chairman of the Massachusetts
Business Roundtable and serves as a director of
Jobs for Massachusetts, Inc., the Alliance to Save
Energy, the Edison Electric Institute, and the
Electric Power Research Institute. Mr. Rowe is
also a Trustee of Bryant College.
George M. Sage Director since 1975
President and Treasurer of Bonanza Bus Lines,
Inc., Providence, Rhode Island. Mr. Sage, 64 years
<PAGE>
of age, is a director of Collette Travel Inc. and
Business Development of Rhode Island. Mr. Sage
also serves as a director of United Way of
Southeastern New England and is a director and
member of the Executive Committee of Business
Development of Rhode Island.
Charles E. Soule Director since 1994
President and Chief Executive Officer of Paul
Revere Insurance Group, Worcester, Massachusetts.
The Paul Revere Insurance Group is a subsidiary of
Textron Inc. Mr. Soule, 61 years of age, serves
as a director of the Paul Revere Investment
Management Company and Trustee for the Westboro
Savings Bank. He was a member of the
Massachusetts Electric Company Board of Directors
from 1991 to 1993.
Anne Wexler Director since 1981
Chairman of The Wexler Group (management
consultants), Washington, D.C. The Wexler Group
is a subsidiary of Hill and Knowlton. Ms. Wexler,
66 years of age, served as Assistant to the
President of the United States from 1978 to 1981
with responsibility for liaison with the business
community and other major interest groups. She is
a director of Alumax, Inc., Comcast Corporation,
Dreyfus Index Funds, Dreyfus Mutual Funds, and
NOVA Corporation.
James Q. Wilson Director since 1982
Professor of Management at The University of
California at Los Angeles, Los Angeles,
California. Professor Wilson is 64 years of age.
He is a director of State Farm Insurance Company
and a Trustee of the American Enterprise
Institute, the RAND Corporation, and the Randolph
Foundation.
James R. Winoker Director since 1991
Chief Executive Officer of Belvoir Properties,
Inc. (real estate investment), Providence, Rhode
Island. Mr. Winoker, 64 years of age, has served
as Chief Executive Officer of Belvoir Properties,
Inc. since 1994. He was Treasurer of Belvoir
Properties, Inc. from 1980 to 1994 and President
of B.B. Greenberg Co. (jewelry manufacturers) from
1970 to 1994. A receiver was appointed for B.B.
Greenberg Co. in 1994. Mr. Winoker served as a
<PAGE>
director of The Narragansett Electric Company from
1990 to 1991. He is also a director of Original
Bradford Soap Works Inc.
BOARD STRUCTURE AND COMPENSATION
The Company has an Executive Committee, an Audit
Committee, a Compensation Committee, and a Corporate
Responsibility Committee. The committee memberships
listed below are as of January 1, 1996. In February
1996, the Company established a Nominating Committee to
be comprised of those members of the Executive
Committee who are not present or past officers or
employees of the Company.
The members of the Executive Committee are Mrs.
Bok, Mr. Ladd, Mr. Rowe, Mr. Sage, and Ms. Wexler.
Mrs. Bok serves as the Chairman of this Committee.
During the intervals between meetings of the Board of
Directors, the Executive Committee has all the powers
of the Board that may be delegated.
The members of the Nominating Committee are Mr.
Ladd, Mr. Sage, and Ms. Wexler. Mr. Ladd serves as
Chairman of this Committee. This Committee considers
written recommendations from shareholders for nominees
to the Board.
The members of the Audit Committee are Messrs.
Joskow, Soule, and Winoker. Mr. Joskow serves as the
Chairman of this Committee. The Audit Committee
reviews with the independent public accountants the
scope of their audit and management's financial
stewardship for the current and prior years. This
Committee also selects and recommends, subject to the
Board of Directors' approval, the independent public
accountants to be engaged for the coming year.
The members of the Compensation Committee are
Messrs. Kucharski, Sage, and Winoker. Mr. Sage serves
as the Chairman of this Committee. The Compensation
Committee is responsible for executive compensation,
including the administration of certain of the
Company's incentive compensation plans.
The members of the Corporate Responsibility
Committee are Mrs. Bok, Mr. McClure, Mr. Rowe, Ms.
Wexler, and Mr. Wilson. Mr. Wilson serves as the
Chairman of this Committee. The Corporate
Responsibility Committee is responsible for reviewing
compliance with laws and regulations, offering guidance
in considering public policy issues, and helping to
<PAGE>
assure ethical conduct.
The Chairman of the Executive Committee receives
an annual retainer of $7,000. Other members of the
Executive Committee, except Mr. Rowe, receive an annual
retainer of $5,000. The Chairman of the Nominating
Committee receives an annual retainer of $2,000. There
is no retainer for the other members of the Nominating
Committee. The Chairmen of the Audit, Compensation,
and Corporate Responsibility Committees each receive an
annual retainer of $6,000. Other members of these
Committees, except Mr. Rowe, receive annual retainers
of $4,000. All directors participating in a Committee
meeting, except Mr. Rowe, receive a meeting fee of $850
plus expenses.
Members of the Board of Directors, except Mr.
Rowe, receive annually a retainer of $14,000 and 200
common shares of the Company (300 shares commencing May
1996), and a meeting fee of $850 plus expenses.
The Company permits directors to defer all or a
portion of any retainers and meeting fees under a
deferred compensation plan. Under the plan, at
retirement directors may elect to receive lump sum
payments of all amounts deferred with interest, or
either lifetime annuities or ten year annuities,
depending upon the specific deferral arrangement. A
special account is maintained on the Company's books
showing the amounts deferred and the interest accrued
thereon. This plan also provides certain death and
disability benefits. Group life insurance of $72,000
is provided to each member of the Board of Directors.
Director contributions to qualified charities are
matched by the Company under a matching gift program.
Pursuant to a director retirement plan, non-
employee directors who have served on the Board of the
Company for 5 years or more will receive a retirement
benefit upon the later of the director's retirement
from the Board or age 60. The benefit level is 100% of
the annual retainer for directors who served on the
Board for 10 or more years and 75% of the annual
retainer for directors who served between 5 and 10
years. There are no death benefits under the plan.
The Board of Directors held 7 meetings in 1995.
The Executive, Audit, Compensation, and Corporate
Responsibility Committees held 3, 3, 6, and 4 meetings,
respectively, in 1995. With the exception of Messrs.
Kucharski, Soule, and Wilson, all directors attended at
least 75% of the aggregate number of meetings of the
Board of Directors and the committees of which they
<PAGE>
were members.
During 1995, Mr. Joskow did consulting work for
the Company or subsidiaries of the Company under a
separate consulting contract for which he was paid
approximately $30,000. These consulting services were
not related to his duties as a Board member. The
Company and its subsidiaries retain from time to time
National Economic Research Associates, Inc. (NERA).
During 1995, NERA invoiced subsidiaries of the Company
for approximately $96,000 to prepare testimony and
reports on regulatory matters. Mr. Joskow is a special
consultant to NERA.
Mrs. Bok serves as a consultant to the Company.
Under the terms of her contract, she receives an annual
retainer of $100,000. Mrs. Bok also serves as a
director for each of the Company's subsidiaries. She
has agreed to waive the normal fees and annual
retainers otherwise payable for services by non-
employees on these boards and receives in lieu thereof
a single annual stipend of $60,000.
<PAGE>
TOTAL COMMON EQUITY BASED HOLDINGS
The following table lists the holdings of Company
common shares and deferred incentive shares by the
Company's directors, the executive officers named in
the Summary Compensation Table, and for directors and
all executive officers as a group. The information as
to common share ownership includes all whole shares
beneficially owned, directly or indirectly, as of March
1, 1996.
Name Shares Deferred
Beneficially Share
Owned (a) Equivalents(b)
_________ _____________ ________
Joan T. Bok 22,157
Frederic E. Greenman* 11,154 1,729
Alfred D. Houston 12,260 3,410
Paul L. Joskow 2,251
John M. Kucharski 2,200
Edward H. Ladd 5,037
Joshua A. McClure 1,566
John W. Rowe 21,799 9,082
George M. Sage 3,000
Richard P. Sergel 7,728 2,534
Charles E. Soule 848
Jeffrey D. Tranen 7,451 2,610
Anne Wexler 1,711
James Q. Wilson 2,471
James R. Winoker 1,200
All of the above and
other executive 121,162(c) 23,745
officers, as a group
(18 persons)
* Retired as of December 31, 1995
<PAGE>
(a) Number of shares beneficially owned includes: (i)
shares directly owned by certain relatives with
whom directors or officers share voting or
investment power; (ii) shares held of record
individually by a director or officer or jointly
with others or held in the name of a bank, broker,
or nominee for such individual's account; (iii)
shares in which certain directors or officers
maintain exclusive or shared investment or voting
power whether or not the securities are held for
their benefit; and (iv) with respect to the
executive officers of the Company, allocated
shares in the Incentive Thrift Plan described
below.
(b) Deferred share equivalents are held under the
Company's Deferred Compensation Plan or pursuant
to individual deferral agreements. Under the Plan
or deferral agreements, executives may elect to
defer cash compensation and share awards. There
are various deferral periods available under the
plans. At the end of the deferral period, the
compensation may be paid out in the Company's
common shares, cash, or a combination thereof.
The rights of the executives to payment are those
of general, unsecured creditors. While deferred,
the shares do not have voting rights or other
rights associated with ownership. As cash
dividends are declared, the number of deferred
share equivalents will be increased as if the
dividends were reinvested in the Company's common
shares.
(c) Amount is less than 1% of the total number of
shares of the Company outstanding.
Listed below are the only persons or groups known
to the Company as of March 11, 1996 to beneficially own
5% or more of the Company's common shares. However, T.
Rowe Price Trust Company disclaims beneficial ownership
of all such shares. The quantity of shares listed
below is as of December 31, 1995.
<PAGE>
Amount and Nature
Name and Address of of Beneficial Percent of
Beneficial Owner Ownership Common Shares
________________ _______________ ___________
T. Rowe Price Trust 5,410,147 shares 8.3%
Company as trustee for
100 East Pratt StreetCompany employee
Baltimore, MD 21202 benefits plans,
including those
discussed herein.
Franklin 4,702,010 shares 7.2%
Resources, Inc.
777 Mariners
Island Blvd
San Mateo, CA
94403-7777
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's total compensation package is designed to
attract and retain superior managers who can successfully lead the
Company as our industry becomes increasingly competitive and whose
backgrounds are not necessarily limited to our Company or industry.
This package consists of Base Salary, Incentive Compensation
(performance based, at risk compensation), and Benefits. The
Committee periodically reviews each component of the Company's
executive compensation program to ensure that pay levels and
incentive opportunities are competitive and that incentive
opportunities are linked to Company performance. The Company's
general compensation philosophy is that the Base Salary ranges
should be competitive. A significant portion of management
compensation should be tied to achievement of corporate goals in
order to maintain a sharp focus on corporate performance and to
consistently align the interest of management and the Company's
shareholders and customers. An ever higher percentage of total
compensation should be at risk as one moves upward through
management. The compensation of Mr. Rowe, the Chief Executive
Officer, is based on the same considerations and structure as that
of the other executive officers.
Given that Mr. Rowe has stated his intention to continue to
defer his incentive share plan awards, which adds a margin under
the tax law, and that the compensation for each of the Company's
executive officers is still below the $1 million threshold at which
tax deductions are limited under the recent revisions to the
Internal Revenue Code, the Committee has not had to address issues
<PAGE>
related thereto but continues to monitor them.
The Board of Directors votes the compensation of Mr. Rowe,
acting upon recommendations of the Compensation Committee, which is
described on page ___. The Committee reports its decisions to the
Board of Directors. After meeting in executive session and
discussing the reports made by the Committee, the Board of
Directors has unanimously accepted each of the recommendations made
in 1995 and to date in 1996. The Compensation Committee votes the
compensation of all other Company executive officers listed in the
Summary Compensation Table, as well as other senior employees.
Although Company management may be present during Committee
discussions of officers' compensation, Committee decisions with
respect to the compensation of Mr. Rowe are reached in executive
session.
Base Salary
____________
Base Salary levels are established after consideration of the
appropriate market to determine the average salary for a position.
Extensive salary survey analyses are compiled annually and
presented to the Committee for review. Salary ranges are then
defined on the basis of those market surveys. These surveys may
include some of the same companies included in incentive
compensation plan comparisons or in the corporate performance
chart.
In November 1994, after consideration of multiple surveys
prepared by various consulting organizations and industry groups,
the Committee had recommended the base salary for Mr. Rowe be set
at $537,600 for 1995. In 1995, with the implementation of the
Long-Term Performance Share Award Plan, described below, and with
Mr. Rowe's inclusion in the Retirement Supplement Plan, the
Committee did not recommend any change in the base salary for Mr.
Rowe for 1996.
In November 1995, the Committee reviewed the performance of
each individual in the compensation group below Mr. Rowe, the
relative position of these individuals compared to the market
surveys discussed above, and the Committee's subjective analysis of
the performance of those individuals. The Committee adopted salary
recommendations.
Performance Based Incentive Compensation
________________________________________
Performance Based Incentive Compensation (at risk compensation
or bonus) is designed to deliver rewards above base salary, if the
<PAGE>
Company and the individual executives perform well.
Annual Target Plans
___________________
The incentive components of the annual target compensation
plans are based on formulae with difficult threshold targets.
Under the formulae, in order for any plan bonuses to be awarded,
the Company must achieve a return on equity that places the Company
in the top 50% of the approximately 90 electric utilities listed in
the Duff & Phelps Utility Group (the National Grouping) or in the
top 50% of the New England/New York regional utilities (the
Regional Grouping). See the Return on Equity graph, below. The
Board of Directors, in response to extraordinary events, may
enhance or curtail the actual return on equity used to determine
whether the Company met the targets. They did not do so for 1995.
In February 1996, the Committee voted the bonuses under these
plans.
For the maximum incentive to be awarded, the Company must
achieve a return on equity in the top 25% of both the National and
Regional Groupings and the Company's cost per kilowatthour must be
the lowest or next lowest of a selected group of New England
electric utilities. In 1995, if only one of the return on equity
targets had been met, Mr. Rowe would have received a bonus (cash
and incentive shares as described below) of 19.2% of base pay. The
maximum would have been 80% of base pay. Based on the performance
described below, his formula bonus (cash and shares) was 76.5% of
base pay.
For purposes of determining the bonus amount for 1995, the
Company placed in the 65th and the 75th percentiles in return on
shareholder equity of the National and Regional Groupings,
respectively. The Company placed next to the lowest in the
Regional Grouping with respect to customer cost per kilowatthour in
1995.
No bonus awards are made if earnings are not sufficient to
cover dividends, even if the return on equity targets are met. The
Committee may authorize special bonuses but did not do so in 1995
for Mr. Rowe or the other senior officers identified in the Summary
Compensation Table.
Mr. Rowe's bonus under the plan is directly related to
achievement of the above described corporate targets. The
incentive compensation plan bonuses of the other executives are
additionally dependent upon the achievement of individual goals.
The participants in the incentive compensation plans are also
awarded common shares of the Company under an incentive share plan,
approved by the shareholders in 1990. Shares are only awarded
against the annual target incentive compensation plan cash awards
<PAGE>
generated by the formulae. No discretion is exercised by the
Committee in the awarding of the shares. An individual's award of
shares under the incentive share plan is a fixed percentage of her
or his cash award for that year from the incentive compensation
plan in which she or he participates. For Mr. Rowe, the percentage
is 60%. If no cash award is made, no shares are distributed.
Further, total awards of shares in any calendar year cannot exceed
one-half of one percent (0.5%) of the number of outstanding shares
at the end of the previous calendar year. (The incentive shares
awarded, including those deferred, for 1995 were 0.06% of the
number of outstanding shares.) The Committee voted to approve the
bonuses upon which the share awards are based on February 26, 1996.
Three-Year Target Plan
______________________
In order to increase executive focus on multi-year performance
of the Company, the Committee recommended to the Board the
establishment of the Long-Term Performance Share Award Plan
described below. No payout will be made under this plan until the
Spring of 1999.
Under the new plan, awards are based upon various measures of
Company performance over a three-year period. Each award factor or
measurement functions independently. The factors include financial
and operating performance. The factors may be related to those in
the incentive plans but with higher thresholds. Performance is
rated on rolling three-year periods, with a new cycle beginning
each year. An individual's potential award under the plan is a
fixed percentage of her or his base pay on the January 1 of the
first year of the plan measurement period. For Mr. Rowe, that
percentage was 50%. Percentages for other executives range from
15% to 50%. No dividends accrue on the allocated shares. At the
end of the three-year cycle, the participant receives actual shares
based upon the performance against the various factors. For
example, for the first cycle, 20% of the shares are dependent upon
total shareholder return compared to other regional utilities. The
factors are established by the Committee at the beginning of each
cycle. All participants share the same factors and factor weights.
Benefits
________
The executive benefits are designed both to provide a
competitive package and to retain Company flexibility in staffing
management to meet changing conditions.
The Company had offered to its previous chief executive
officers a retirement supplement plan providing an annual
adjustment to their pension benefits. The amount of the adjustment
is equal to the rate of interest on AAA bonds for the prior year
<PAGE>
less two percent (but in no case more than the increase in the cost
of living). In order to retain Mr. Rowe's services during the
period of transition to a competitive industry, the Compensation
Committee endorsed offering the retirement supplement plan to Mr.
Rowe, subject to his remaining in the employ of the Company until
December 31, 2000. See Plan Summaries and Retirement Plans, below.
Deferred Compensation Plan
__________________________
The Committee voted to extensively revise the Deferred
Compensation Plan to increase the number of executives who might
participate and to offer an election to have the value of their
deferral tied either to prime rate or to Company shares.
Executive Health
________________
It has been the Company's policy to contribute fully to post-
retirement health benefits for senior executives. The Compensation
Committee voted to restrict this benefit for new participants in
the incentive plans.
Share Ownership Guidelines
__________________________
At its meeting in October 1995, the Committee voted that the
Company has long recognized the importance of consistent alignment
of executive interests with those of shareholders. Therefore, it
is expected that executives will own shares or share equivalents to
certain minimum levels within five years of being subject to this
requirement. For Mr. Rowe, the level is 40,000 shares. For the
other executives listed in the Summary Compensation Table, the
level is 15,000 shares. Other executives are expected to hold from
2,000 to 7,000 shares, depending upon their compensation levels and
bonus plans. In view of the establishment of these guidelines, the
Committee determined it was no longer necessary to place
restrictions on the sale of shares granted in the future, under the
Incentive Share Plan.
At its meeting on February 27, 1996, the Board of Directors
voted that members of the Board were expected to own 2,500 shares,
within five years of being subject to this requirement.
New England Electric System Compensation Committee
John M. Kucharski
George M. Sage
James R. Winoker
<PAGE>
CORPORATE PERFORMANCE
Total Return
The following graph shows total shareholder return for the
Company (capital appreciation plus reinvested dividends) for the
years 1990 through 1995 as compared to the Standard & Poor's 500
Index and the Edison Electric Institute (EEI) Index of 100
investor-owned electric companies assuming the investment of $100
on December 31, 1990.
<TABLE>
<CAPTION>
NEES S & P 500 EEI Index
_____ ________ __________
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 138.99 130.47 128.87
1992 177.68 140.40 138.69
1993 190.57 154.55 154.11
1994 167.12 156.60 136.28
1995 220.81 215.44 178.55
</TABLE>
Note: The share price performance shown on the graph above is
not necessarily indicative of future price performance.
<PAGE>
Return on Equity
The following graph shows the return on equity of Company common
shares for the years 1991 through 1995 compared to a national
grouping of approximately 90 electric utilities (those utilities
listed in the Duff & Phelps Utility Group) and a regional grouping
of utilities in the New York and New England area. As discussed in
the report of the Compensation Committee, return on equity is a key
driver of the Company's incentive compensation program.
<TABLE>
<CAPTION>
NEES National Regional
Grouping Grouping
____ _______ ________
<S> <C> <C> <C>
1991 12.64% 12.13% 11.30%
1992 12.58% 11.32% 11.84%
1993 12.64% 11.90% 11.41%
1994 12.73% 11.42% 11.40%
1995 12.78% 11.72% 10.43%
</TABLE>
Note: The return on equity shown for each grouping is the
median at the date of incentive compensation
determination. The earnings performance shown on
the graph above is not necessarily indicative of
future performance.
<PAGE>
EXECUTIVE COMPENSATION
The following table gives information with respect to all
compensation for services in all capacities for the Company and its
subsidiaries for the years 1993 through 1995 to or for the benefit
of the Chief Executive Officer and the four other most highly
compensated executive officers of the Company.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Compen-
Annual Compensation (b) sation
_______________________ __________
Other Restricted
Name and Annual Share All Other
Principal Salary Bonus Compensa- Awards Compensa-
Position (a) Year ($) ($)(c) tion ($)(d) ($)(e) tion ($)(f)
- ------------ ---- ------ ------ ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
John W. Rowe, 1995 537,600 427,213 9,568 --- 4,750(g)
President 1994 501,156 284,540 9,517 160,974 4,526
and Chief 1993 433,908 268,323 5,548 129,873 5,711
Executive
Officer
Alfred D. 1995 262,008 177,663 5,753 --- 4,180(h)
Houston, 1994 244,860 132,370 5,501 62,040 4,027
Executive 1993 212,904 152,939 3,522 44,465 5,082
Vice
President
Frederic E. 1995 225,876 149,515 5,934 --- 4,404(i)
Greenman, 1994 219,288 139,475 5,671 53,427 4,238
Senior Vice 1993 212,904 129,239 3,670 39,276 5,355
President
and Secretary *
Jeffrey D. 1995 200,100 143,254 5,268 --- 3,578(j)
Tranen, 1994 187,356 98,357 5,049 45,804 3,466
Vice 1993 175,330 122,896 3,260 35,906 3,906
President
Richard P. 1995 184,956 139,373 4,877 --- 3,424 (k)
Sergel, 1994 168,600 94,801 4,934 44,352 3,324
Vice 1993 157,340 119,627 2,784 34,807 3,421
President
</TABLE>
<PAGE>
* Retired as of December 31, 1995
(a) Officers of the Company also hold various
positions with subsidiary companies.
Compensation for these positions is included in
this table.
(b) Includes deferred compensation in category and
year earned.
(c) The bonus figure represents cash bonuses under an
incentive compensation plan, the value of
unrestricted shares under the incentive share
plan, special bonuses, the goals program award,
and the variable portion of the incentive thrift
plan match by the Company. See description under
Plan Summaries.
(d) Includes amounts reimbursed by the Company for
the payment of taxes.
(e) For the 1993 awards, shares were awarded that
become unrestricted after five years. Those
shares receive the same dividends as the other
common shares of the Company. The awards made
for 1994 were, at the exective's option, in the
form of restricted shares (with a five-year
restriction) or deferred share equivalents, which
have been deferred for receipt for at least five
years. As cash dividends are declared, the
number of deferred share equivalents will be
increased as if the dividends were reinvested in
shares. See also Payments Upon a Change in
Control below. The shares awarded for 1995 were
unrestricted and the value of the awards is
included in the bonus column. As of December 31,
1995, the following executive officers held the
amount of restricted and deferred share
equivalents with the value indicated: Mr. Rowe
20,370 shares, $807,161 value; Mr. Houston 6,404
shares, $253,758 value; Mr. Greenman 5,961
shares, $236,204 value; Mr. Tranen 4,582 shares,
$181,561 value; and Mr. Sergel 4,355 shares,
$172,567 value. The value was calculated by
multiplying the closing market price on December
29, 1995, by the number of shares.
<PAGE>
(f) Includes Company contributions to life insurance
and the incentive thrift plan that are not bonus
contributions. See description under Plan
Summaries. The life insurance contribution is
calculated based on the value of term life
insurance for the named individuals. The premium
costs for most of these policies have been or
will be recovered by the Company.
(g) For Mr. Rowe, the type and amount of compensation
in 1995 is as follows: $ 3,000 for contributions
to the thrift plan and $1,750 for life insurance.
(h) For Mr. Houston, the type and amount of
compensation in 1995 is as follows: $3,000 for
contributions to the thrift plan and $1,180 for
life insurance.
(i) For Mr. Greenman, the type and amount of
compensation in 1995 is as follows: $3,000 for
contributions to the thrift plan and $1,404 for
life insurance.
(j) For Mr. Tranen, the type and amount of
compensation in 1995 is as follows: $3,000 for
contributions to the thrift plan and $578 for
life insurance.
(k) For Mr. Sergel, the type and amount of
compensation in 1995 is as follows: $3,000 for
contributions to the thrift plan and $424 for
life insurance.
PAYMENTS UPON A CHANGE OF CONTROL
The Company has agreements with certain of its executives,
including those named in the Summary Compensation Table, which
provide severance benefits in the event of certain terminations of
employment following a Change in Control of the Company (as defined
below). If, following a Change of Control, the executive's
employment is terminated other than for cause (as defined) or if
the executive terminates employment for good reason (as defined),
the Company will pay to the executive a lump sum cash payment equal
to three times (two times for some executives) the sum of the
executive's most recent annual base compensation and the average of
his or her bonus amounts for the prior three years. If Mr. Rowe
receives payments under his severance agreement that would subject
him to any federal excise tax due under section 280G of the
Internal Revenue Code, he will receive a cash "gross-up" payment so
he would be in the same net after-tax position he would have been
in had such excise tax not been applied. In addition, the Company
will provide disability and health benefits to the executive for
<PAGE>
two to three years, provide such post-retirement health and welfare
benefits as the executive would have earned within such two to
three years, and grant two or three additional years of pension
credit. Mr. Rowe would become eligible for benefits under the
Retirement Supplement Plan described below prior to the five-year
vesting term.
Change in Control, including potential change of control,
occurs (1) when any person becomes the beneficial owner of 20% of
the voting securities of the Company, (2) when the prior members of
the Board no longer constitute a 2/3 majority of the Board, or (3)
the Company enters into an agreement that could result in a Change
in Control.
The terms of the agreements are for three years with automatic
annual extensions, unless terminated by the Company.
The Company's bonus plans, including the incentive
compensation plans described in the Compensation Committee report,
the Incentive Thrift Plan I, and the Goals Program, provide for
payments equal to the average of the bonuses for the three prior
years in the event of a Change of Control. This payment would be
made in lieu of the regular bonuses for the year in which the
Change in Control occurs. The new Long-Term Performance Share
Award Plan provides for a cash payment equal to the value of the
performance shares in the participant's account times the average
target achievement percentage for the Incentive Thrift Plan I for
the three prior years. The Company's Retirees Health and Life
Insurance Plan I has provisions preventing changes in benefits
adverse to the participants for three years following a Change in
Control. The Incentive Share Plan and related Incentive Share
Deferral Agreements provide that, upon the occurrence of a change
in control (defined more narrowly than in the other plans), any
restrictions on shares and account balances would cease.
PLAN SUMMARIES
A brief description of the various plans through which
compensation and benefits are provided to the named executive
officers is presented below to better enable shareholders to
understand the information presented in the tables shown earlier.
The general provisions of the incentive compensation plans are
described in the report of the Compensation Committee. The amounts
of compensation and benefits provided to the named executive
officers under the plans described below are presented in the
Summary Compensation Table.
<PAGE>
Goals Program
The goals program covers all employees who have completed one
year of service with the Company's subsidiaries. Goals are
established annually. For 1995, these goals related to earnings
per share, customer costs, safety, absenteeism, demand-side
management results, generating station availability, transmission
reliability, environmental and OSHA compliance, and customer
satisfaction. Some goals apply to all employees, while others
apply to particular functional groups. Depending upon the number
of goals met, and provided the minimum earnings goal is met,
employees may earn a cash bonus of 1% to 4-1/2% of their
compensation.
Incentive Thrift Plan
The incentive thrift plan (a 401(k) program) provides for a
match of 40% of up to the first 5% of base compensation contributed
to the Company's incentive thrift plan (shown under All Other
Compensation in the Summary Compensation Table) and, based on an
incentive formula tied to earnings per share, may fully match the
first 5% of base compensation contributed (the additional amount,
if any, is shown under Bonus in the Summary Compensation Table).
Under Federal law, contributions to these plans are limited. In
1995, the contribution amount was limited to $9,240.
Deferred Compensation Plan
Those executives whose contributions to the Incentive Thrift
Plan were limited by Federal law may make further contributions to
the Deferred Compensation Plan and the Company will match them
under the Deferred Compensation Plan on the same terms as if the
full amount had been contributed to the Incentive Thrift Plan.
However, these amounts under the Deferred Compensation Plan may
only be invested at the then applicable prime rate or in Company
shares.
Life Insurance
The Company has established for certain senior executives life
insurance plans funded by individual policies. The combined death
benefit under these insurance plans is three times the
participant's annual salary.
After termination of employment, participants in one of the
insurance plans may elect, commencing at age 55 or later, to
receive an annuity income equal to 40% of annual salary. In that
event, the life insurance is reduced over fifteen years to an
amount equal to the participant's final annual salary. Due to
changes in the tax law, this plan was closed to new participants,
and an alternative was established with only a life insurance
benefit. The individuals listed in the Summary Compensation Table
<PAGE>
are in one or the other of these plans. These plans are structured
so that, over time, the Company should recover the cost of the
insurance premiums.
Financial Counselling
The Company pays for personal financial counselling for senior
executives. As required by the IRS, a portion of the amount paid
is reported as taxable income for the executive. Financial
counselling is also offered to other employees through a limited
number of seminars conducted at various locations each year.
Other
The Company does not have any share option plans.
RETIREMENT PLANS
The following chart shows estimated annual benefits payable to
executive officers under the qualified pension plan and the
supplemental retirement plan, assuming retirement at age 65 in
1996.
<TABLE>
PENSION TABLE
<CAPTION>
FIVE-YEAR 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
AVERAGE SERVICE SERVICE SERVICE SERVICE SERVICE SERVICE
COMPENSATION
____________ _______ ______ ______ _______ ______ ________
<S> <C> <C> <C> <C> <C> <C>
$300,000 87,800 115,100 141,600 168,100 184,800 193,800
$350,000 102,800 134,800 165,800 196,900 216,600 227,100
$400,000 117,800 154,500 190,100 225,700 248,300 260,300
$500,000 147,900 193,900 238,600 283,300 311,700 326,700
$600,000 177,900 233,300 287,100 340,900 375,200 393,200
$700,000 208,000 272,700 335,600 398,500 438,600 459,600
$800,000 238,000 312,100 384,100 456,100 502,100 526,100
$900,000 269,100 351,500 432,600 513,700 565,500 592,500
$1,000,000 298,100 390,900 481,100 571,300 629,000 659,000
$1,100,000 328,200 430,300 529,600 628,900 692,400 725,400
</TABLE>
For purposes of the retirement plans, Messrs. Rowe, Houston,
Tranen, and Sergel currently have 18, 33, 26, and 17 credited years
of service, respectively. At his retirement on December 31, 1995,
Mr. Greenman had 30 credited years of service.
<PAGE>
Benefits under the pension plans are computed using formulae
based on percentages of highest average compensation computed over
five consecutive years. The compensation covered by the pension
plan includes salary, bonus, and incentive share awards. Long Term
Share Awards will not be included. The benefits listed in the
pension table are not subject to deduction for Social Security and
are shown without any joint and survivor benefits.
The Pension Table above does not include annuity payments to
be received in lieu of life insurance for Messrs. Rowe, Houston,
and Greenman. The policies are described above under Plan
Summaries.
Under the Retirement Supplement Plan, participants receive an
annual adjustment to their pension benefits. The amount of the
adjustment is equal to the rate of interest on AAA bonds for the
prior year less two percent (but in no case more than the increase
in the cost of living).
The Company covers the full cost of post-retirement health
benefits for the senior executives listed in the Summary
Compensation Table.
2. SHAREHOLDER PROPOSAL REGARDING SPLITTING OF SHARES
Mr. and Mrs. Russell G. Gilmore, 100 Tamarack Drive, East
Greenwich, Rhode Island 02818, owners of 5,300 common shares of the
Company, have stated their intention to present a proposal
concerning the splitting of the Company's shares for consideration
by the shareholders at the Annual Meeting.
The Board of Directors is opposed to Mr. and Mrs. Gilmore's
proposal.
The following are the text of the proposal and supporting
statement supplied by Mr. and Mrs. Gilmore:
Resolved:
That the shareholders of New England Electric System recommend
that the Board of Directors take the necessary action to split the
shares of NEES Stock.
Supporting Statement:
A stock split of any amount would lower the price per share of
NEES on the New York Stock Exchange. The Proponents consider that
the price of NEES common shares are above the industry average.
The last time the Board of Directors split the shares of NEES Stock
was January 24, 1986 with the price per share on the New York Stock
Exchange slightly above the present price per share.
<PAGE>
The issuance of additional shares will not alter the ownership
interest of any shareholder but it will lower the price of NEES
common shares which the proponents consider will give several
benefits to all investors especially the small to average investor.
Specifically, the proponents want to enhance the chance of an
individual small investor to buy and sell NEES Common Shares at a
reduced price of a round lot (100 shares) of the common stock,
giving the possibility of additional diversification of new small
investors and most important, reduce the odd lot brokerage costs.
In addition most investors view stock splits with a positive
attitude which could result in a favorable public relations image
for NEES. It further will portray the faith which the Board of
Directors has for the future outlook of the System.
The proponents believe a stock split would be in the best long
term interests of all NEES stock holders, especially the small
individual investor as well as the Institutional Investors.
A stock split of NEES of any amount will place the market
price per share in a range more competitive with similar companies
listed on the NYSE. The proponents consider the benefits of a
stock split far out weigh the cost to the share holders.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote AGAINST the proposal.
The Board of Directors of the Company periodically considers
whether to split the Company's common shares. In fact, the Board
did take the necessary actions to split the Company's shares in
1986. The Company notes that a share split may not always result
in increased liquidity and market price of shares. In addition,
while a stock split may lower the brokerage costs for new
shareholders, existing shareholders may have to pay higher
brokerage fees to carry out transactions in the split shares. A
share split is also costly to carry out. The Company carefully
monitors all the relevant financial information and will continue
to evaluate if and when it is appropriate to split the shares.
OTHER MATTERS
The Company is not aware of any matter that may properly be
presented for action at the meeting other than the matters set
forth herein. If any other matter should be presented at the
meeting upon which a vote properly may be taken, the proxies in the
accompanying form confer upon the persons named therein, or their
substitutes, discretionary authority to vote in respect of any such
<PAGE>
matter in accordance with their judgment.
The firm of Coopers & Lybrand L.L.P. is the independent
certified public accountant selected by the Board of Directors for
the Company for the current calendar year. Representatives of
Coopers & Lybrand L.L.P. are expected to be present at the Annual
Meeting and available to respond to appropriate questions on the
financial statements of the Company and may make a statement if
they so desire.
The expense of preparing and mailing this proxy statement and
other incidental expenses of solicitation will be paid by the
Company. Arrangements will be made with brokerage houses and other
custodians, nominees, and fiduciaries to send proxies and proxy
material to their principals, and the Company will reimburse them
for the expense of doing so. Officers and regular employees of a
subsidiary of the Company may solicit proxies through the use of
the mails or by telephone, telegraph, or facsimile. Georgeson &
Company Inc., New York, New York has been retained to assist the
Company in the solicitation of proxies, primarily from brokers,
banks, and other nominees, at an estimated initial cost of $11,000
plus reimbursement of reasonable out-of-pocket expenses.
By completing the enclosed proxy you are voting the shares of
the Company held in your name and, in the event you are
participating therein, those held by you under the dividend
reinvestment and common share purchase plan and restricted shares
under the incentive share plan. In the event common shares are
held in trust for you as a participant in one or more thrift plans,
you will receive a separate form for instructing the trustee how to
vote those shares.
SHAREHOLDER PROPOSALS
From time to time shareholders present proposals which may be
proper subjects for inclusion in the proxy statement and for
consideration at the annual meeting. In order for a shareholder
proposal to be considered for inclusion in the proxy statement for
the Company's next regularly scheduled annual meeting of
shareholders, it must be received by the Company on or before
November 12, 1996. Please forward any proposal to the Secretary of
the Company.
<PAGE>
The name "New England Electric System" means the trustee or
trustees for the time being (as trustee or trustees but not
personally) under an agreement and declaration of trust dated
January 2, 1926, as amended, which is hereby referred to, and a
copy of which as amended has been filed with the Secretary of The
Commonwealth of Massachusetts. Any agreement, obligation or
liability made, entered into or incurred by or on behalf of New
England Electric System binds only its trust estate, and no
shareholder, director, trustee, officer or agent thereof assumes or
shall be held to any liability therefor.
By order of the Board of Directors
(Facsimile Signature)
Cheryl A. LaFleur,
Secretary
March 11, 1996
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
NEW ENGLAND ELECTRIC SYSTEM
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS ON APRIL 23, 1996
The Shareholder(s) listed on the reverse side appoints JOAN
T. BOK, CHERYL A. LAFLEUR, and JOHN W. ROWE, and each of them,
Proxies, with full power of substitution, to represent the
Shareholder(s) at the above annual meeting, and at any and all
adjournments thereof, and to vote thereat the number of shares
which the Shareholder(s) would be entitled to vote if then
personally present, with all the powers the Shareholder(s) would
then possess, but especially, without limiting the foregoing, to
vote as specified herein on the proposals set forth in the proxy
statement:
Election of Directors--The eleven nominees are J. T. Bok,
P. L. Joskow, J. M. Kucharski, E. H. Ladd, J. A. McClure, J. W.
Rowe, G. M. Sage, C. E. Soule, A. Wexler, J. Q. Wilson, and
J. R. Winoker.
To withhold authority to vote for any nominee, print that
nominee's name in the space provided below:
_____________________________________________________________
(PLEASE SIGN and DATE ON REVERSE SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1 AND AGAINST
ITEM 2
1. Election of the Nominees (except those I have
listed on the reverse side).
FOR WITHHOLD AUTHORITY
/ / / /
2. Shareholder proposal regarding the splitting of
shares.
FOR AGAINST ABSTAIN
/ / / / / /
<PAGE>
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NOT SPECIFIED ABOVE,
THE PROXIES WILL VOTE "FOR" ITEM 1 AND "AGAINST" ITEM 2.
A majority of the Proxies present and acting at the meeting
in person or by substitute (or, if only one shall be so
present, then that one) shall have and may exercise all of
the powers of said Proxies hereunder.
Dated: ___________, 1996
__________________________
__________________________
(Sign exactly as name
appears to the left.)
When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such. If more than one name
is shown, including the case of joint tenants, each party should
sign.
IMPORTANT: WE URGE YOU TO VOTE, SIGN, DATE AND MAIL THIS PROXY
PROMPTLY TO ASSURE YOUR REPRESENTATION AT THE MEETING.
<PAGE>
THIS VOTING INSTRUCTION CARD IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
NEW ENGLAND ELECTRIC SYSTEM
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON APRIL 23, 1996
To: T. ROWE PRICE, Trustee under the Thrift Plans.
As a participant in one or more of the thrift plans, I
hereby direct T. Rowe Price, Trustee, to vote or to give a proxy
to vote, in accordance with my directions on the reverse side,
the common shares of New England Electric System which are
allocated to my account (also a proportionate number of those
shares which have not been allocated to participants or for
which no instruction cards are received) at the above annual
meeting, and at any and all adjournments thereof, and in the
Trustee's discretion it is authorized to vote or to give a proxy
to vote upon such other business as may properly come before the
meeting.
Election of Directors -- The eleven nominees are J. T. Bok,
P. L. Joskow, J. M. Kucharski, E. H. Ladd, J. A. McClure, J. W.
Rowe, G. M. Sage, C. E. Soule, A. Wexler, J. Q. Wilson, and J.
R. Winoker.
To withhold authority to vote for any nominee, print that
nominee's name in the space provided below:
(PLEASE SIGN and DATE ON REVERSE SIDE)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1 AND AGAINST
ITEM 2
1. Election of the Nominees (except those I have listed
on the reverse side).
FOR WITHHOLD AUTHORITY
/ / / /
2. Shareholder proposal regarding the splitting of
shares.
FOR AGAINST ABSTAIN
/ / / / / /
<PAGE>
THIS INSTRUCTION CARD WILL BE VOTED AS SPECIFIED. IF NOT
SPECIFIED ABOVE, THE SHARES REPRESENTED BY THIS CARD WILL BE
VOTED "FOR" ITEM 1 AND "AGAINST" ITEM 2.
________________________________________________________________
Dated: , 1996
Signed:
(Sign exactly as name
appears to the left.)
When signing as attorney, executor, administrator, trustee, or
guardian, please give full title as such.
IMPORTANT: WE URGE YOU TO VOTE, SIGN, DATE AND MAIL THIS CARD
PROMPTLY TO ASSURE YOUR REPRESENTATION AT THE MEETING.
