SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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by Rule 14a-6(e)(2))
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DOMINION RESOURCES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
<PAGE>
[DOMINION RESOURCES LOGO]
1999 Proxy Statement
Dominion Resources, Inc.
Vote Your Proxy
-> By Internet
-> By Telephone
-> By Mail
Dominion Resources, Inc.
P.O. Box 26532
Richmond, Virginia 23261
<PAGE>
1999 Proxy Statement Contents
Notice of Annual Meeting 2
The Proxy Process 3
The Board 5
Share Ownership Table 11
Organization, Compensation & 12
Nominating Committee Report
Executive Compensation 16
Amendments to Dominion 23
Resources Articles of
Incorporation
Incentive Compensation
Plan 24
Other Information 27
<PAGE>
Notice of Annual Meeting
Dominion Resources, Inc.
P.O. Box 26532
Richmond, Virginia 23261
[DOMINION RESOURCES LOGO]
March 17, 1999
Dear Shareholder:
On Friday, April 16, 1999, Dominion Resources, Inc. will hold its Annual
Meeting of Shareholders in the auditorium of Roanoke Island Festival Park, One
Festival Park, Manteo, North Carolina. The meeting will begin at 9:30 a.m.
Eastern Daylight Time.
Only shareholders who owned stock at the close of business on February 19,
1999 may vote at this meeting or any adjournments that may take place. At the
meeting we propose to:
o Elect four directors;
o Amend the Articles of Incorporation to eliminate the classification
of the Board of Directors and to increase the maximum number of Directors
to 17;
o Amend the Dominion Resources, Inc. Incentive Compensation Plan;
and
o Attend to other business properly presented at the meeting.
We recently mailed a copy of our 1998 Annual Report to all shareholders. The
approximate date of mailing this proxy statement and card is March 17, 1999. I
hope you will be able to attend the meeting, but even if you cannot, please vote
your proxy as soon as you can.
By order of the Board of Directors,
Patricia A. Wilkerson
Corporate Secretary
2
<PAGE>
The Proxy Process
Your Board of Directors is soliciting this proxy for the 1999 Annual Meeting of
Shareholders and encourages you to vote in favor of all the Director nominees
and proposals outlined in this proxy.
Record Date
All shareholders who owned stock at the close of business February 19, 1999 are
entitled to vote at the Annual Meeting. There were 193,325,666 shares of
Dominion Resources, Inc. common stock outstanding on that date.
Voting
Methods. You may vote in person at the Annual Meeting or by proxy. This year
you have three ways to vote by proxy:
1. Connect to the Internet at
www.votefast.com;*
2. Call 1-800-250-9081;* or
3. Complete the proxy card and mail it back to us.
Complete instructions for voting your proxy can
be found on your proxy card included with this
proxy statement.
Rights. Each of your shares will be counted as one vote. If you vote and change
your mind on any issue, you may revoke your proxy at any time before the close
of voting at the Annual Meeting. There are four ways to revoke your proxy:
1. Connect to the website listed in the previous column*;
2. Call the 800 number listed in the
previous column*;
3. Write to our Corporate Secretary; or
4. Vote your shares at the Annual Meeting.
A majority of the shares outstanding on February 19, 1999 constitutes a quorum
for this meeting. Abstentions and shares held by a broker or nominee (Broker
Shares) that are voted on any matter are included in determining a quorum.
The four nominees for director receiving the most votes will be elected.
The amendments to our Articles of Incorporation will be adopted if at least
two-thirds of the shares entitled to vote approve the amendments. The
amendments to the Dominion Resources, Inc. Incentive Compensation Plan
will be approved if the number of votes in favor of the Plan exceeds the
number against it. Broker shares not voted and abstentions have
no effect on the final vote counted.
* Not for Beneficial Owners
3
<PAGE>
Registered Shareholders and Dominion Direct Participants. Your proxy card shows
the number of full and fractional shares you own. If you are a participant in
our Dominion Direct Investment stock purchase plan, the number includes shares
we hold in your Dominion Direct Investment account. All shares will be voted
according to your instructions if you properly vote your proxy by one of the
methods listed on p. 3. If you sign your proxy and do not make a selection, it
will be voted as recommended by the Board of Directors. If you are a Dominion
Direct Investment participant and do not vote your proxy, we will vote all
shares held in that account according to the Board's recommendations. No vote
will be recorded for registered shares that are not properly voted.
Employee Savings Plan Participants. You will receive a request for Voting
Instructions from Mellon Bank, N.A., the Savings Plan trustee. The share amounts
listed on that form include the full and fractional shares in your Savings Plan
account. You may instruct Mellon by:
1.Connecting to www.votefast.com;
2.Calling 1-800-250-9081; or
3.Returning your Voting Instructions in the enclosed envelope (not to
Dominion Resources).
Complete instructions can be found on the Voting Instruction Card included
with the proxy statement.
Whichever method you choose, Mellon Bank will vote according to your
instructions and will keep your vote confidential. If you do not vote
your Savings Plan shares, Mellon Bank generally will vote your shares according
to the Board's recommendations.
Beneficial Owners (Broker Shares). If your shares are held in street name with
your broker, please follow the instructions found on the Voting Instruction Card
enclosed with this proxy statement.
Solicitation and Tabulation
We will pay for soliciting proxies from our shareholders, and some of our
employees may telephone shareholders after the initial mail solicitation. In
addition, we may reimburse brokerage firms and other custodians, nominees and
fiduciaries for their reasonable expenses in sending proxy materials to the
beneficial owners of stock. We have retained Corporate Election Services, Inc.
to tabulate the proxies and to assist with the Annual Meeting. We have also
retained Georgeson & Co., Inc., a proxy solicitation firm, to assist in the
solicitation of proxies for a fee of $14,000 and reimbursement of expenses.
4
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The Board
Item One. Election of Directors
If Item Two on p. 23 is approved by the shareholders, each director's term of
office will end at the next Annual Meeting of Shareholders in April 2000. If
Item Two is not approved, the nominees will, if elected, serve three-year terms
ending in 2002 and the directors whose terms have not expired will continue to
serve until the expiration of their terms. Four directors will be elected at the
1999 Annual Meeting. The nominees are: John W. Harris, Kenneth A. Randall,
Judith B. Warrick and David A. Wollard. Mr. Randall and Ms. Warrick are
incumbent directors, while Mr. Harris and Mr. Wollard are new nominees.
Information about each nominee and the other directors is listed below. If the
year listed for a director is earlier than 1983, when Dominion Resources became
the parent corporation of Virginia Electric and Power Company, that year
represents the year first elected as a director of Virginia Power.
Your proxy will be voted to elect the nominees unless you tell us otherwise.
If any nominee is not available to serve (for reasons such as death or
disability), your proxy will be voted for a substitute nominee if the Board of
Directors nominates one.
Nominees for Election (Terms Expiring in 2002)
<TABLE>
<CAPTION>
Nominee Directors Year First Elected Year First Elected
a Director to an a Director of
Affiliate Company Dominion Resources
<S> <C> <C>
JOHN W. HARRIS, 51, President, Lincoln Harris,
LLC, a real estate consulting firm, Charlotte, North
Carolina. He is a Director of Piedmont Natural Gas
Company, Inc. and US Airways Group, Inc. [PHOTO] 1994
KENNETH A. RANDALL, 71, Corporate director for
various companies, Williamsburg, Virginia.
He is a Director of Virginia Power, Oppenheimer
Funds, Inc., Kemper Insurance Companies and Prime
Retail, Inc. [PHOTO] 1971
JUDITH B. WARRICK, 50, Senior Advisor, as of September 1,
1995, Morgan Stanley & Co., Inc., an investment banking
firm, New York, New York (prior to September 1,
1995, Advisor). She is a Director of Virginia Power. [PHOTO] 1989 1994
DAVID A. WOLLARD, 61, Chairman of the Board of Exempla
Healthcare, Denver, Colorado (prior to January 1, 1996,
President of Bank One Colorado, N.A.). [PHOTO] 1994
The Board of Directors recommends that you vote FOR these Nominees.
5
<PAGE>
Incumbent Directors
<CAPTION>
Directors with Terms Expiring in 2001 Year First Elected Year First Elected
a Director to an a Director of
Affiliate Company Dominion Resources
JOHN B. ADAMS, JR., 54, President and Chief Executive
Officer of Bowman Companies, a manufacturer and
bottler of alcohol beverages, Fredericksburg, Virginia.
He is a Director of Pluma, Inc. and Virginia Power. [PHOTO] 1987 1994
BENJAMIN J. LAMBERT, III, 62, Optometrist, Richmond,
Virginia. He is a Director of Consolidated Bank and
Trust Company, Virginia Power and Student Loan Marketing
Association (Sallie Mae). [PHOTO] 1992 1994
RICHARD L. LEATHERWOOD, 59, Retired, Baltimore, Maryland.
Former President and Chief Executive Officer, CSX Equipment,
an operating unit of CSX Transportation, Inc. He is a
Director of Virginia Power and CACI International Inc. [PHOTO] 1994
FRANK S. ROYAL, M.D., 59, Physician, Richmond, Virginia.
He is a Director of Columbia/HCA Healthcare Corporation,
SunTrust Banks, Inc., Chesapeake Corporation, CSX
Corporation and Virginia Power. [PHOTO] 1994
6
<PAGE>
Incumbent Directors
Directors with Terms Expiring in 2000 Year First Elected Year First Elected
a Director to an a Director of
Affiliate Company Dominion Resources
JOHN B. BERNHARDT, 69, Managing Director, Bernhardt/
Gibson Financial Opportunities, financial
services, Newport News, Virginia. He is a Director of
Virginia Power and Resource Bank Shares. [PHOTO] 1981
THOS. E. CAPPS, 63, Chairman, President and Chief
Executive Officer of Dominion Resources (from August
15, 1994 to September 1, 1995, Chairman and
Chief Executive Officer; prior to August 15,
1994, Chairman, President and
Chief Executive Officer). He is Chairman and a
Director of Virginia Power and a Director of
Bassett Furniture Industries, Inc. [PHOTO] 1986
S. DALLAS SIMMONS, 59, President of Virginia Union
University, Richmond, Virginia. He is a Director of
Virginia Power. [PHOTO] 1992
ROBERT H. SPILMAN, 71, President, Spilman
Properties, Inc., Bassett, Virginia
(before that, Chairman and Chief Executive Officer of
Bassett Furniture Industries, Inc., until his retirement
in 1997). He is a Director of Jefferson-Pilot
Corporation, The Pittston Company, International
Home Furnishing Center and Virginia Power. [PHOTO] 1994
</TABLE>
7
<PAGE>
Committees.
In 1998, committee memberships were changed. Each director now serves on just
one com mittee in order to provide greater focus to his or her committee's work.
Meeting Attendance
The Board met 10 times in 1998. Each Board member attended at least 91% of the
total number of meetings of the Board and committees on which he or she served.
<TABLE>
<CAPTION>
Committee Members Description
<S> <C>
Audit Harvey L. Lindsay, Jr. These three non-employee directors consult with
William T. Roos the independent and internal auditors regarding
S. Dallas Simmons, Chairman the examination of Dominion Resources' and its
subsidiaries' (collec tively, the Company)
financial statements and the adequacy of internal
controls. The Committee reports to the Board of
Directors on these matters and recommends the
independent auditors to be designated for the next
year. In 1998, this committee met two times.
Finance John B. Adams, Jr., Chairman These three non-employee directors review the
Benjamin J. Lambert, III Company's financing strategies and consider
Judith B. Warrick dividend policy. In 1998, this committee met three
times.
Organization, Compensation John B. Bernhardt These five non-employee directors work closely
and Nominating Richard L. Leatherwood with independent consultants and management to
Kenneth A. Randall, Chairman review the Company's organizational and
Frank S. Royal compensation structure. They make recommendations
Robert H. Spilman on these matters to the Board of Directors and
administer certain compensation plans. They also
review the qualifications of director candidates
suggested by Board members, management,
shareholders and others, and recommend nominees
for election as Directors. In 1998, this committee
met nine times.
</TABLE>
8
<PAGE>
Compensation and Other Programs
Fees. During 1998, non-employee directors were paid an annual retainer of
$19,000 in cash plus $19,000 in stock. They also received $900 in cash per Board
or committee meeting attended.
Deferred Cash Compensation Plan. Directors may elect to defer their cash fees
under this plan until they reach retirement or a specified age. The deferred
fees are credited to either an interest bearing account or a Dominion Resources
common stock equivalent account. Interest or dividend equivalents accrue until
distributions are made. A director will be paid in cash or stock according to
the election made.
Stock Compensation Plan. The stock portion of the directors' retainer is paid
under this plan. Directors have the option to defer receipt of the stock. If a
director elects this option, the shares are held in trust until the director's
retirement and the dividends on those shares are reinvested. However, the
director retains all voting and other rights as a shareholder.
Stock Accumulation Plan. Upon election to the Board, a non-employee director
receives a one-time award under this plan. The award is in Stock Units, which
are equivalent in value to Dominion Resources common stock. The award amount is
determined by multiplying the director's annual cash retainer by 17, then
dividing the result by the average price of Dominion Resources common stock on
the last trading days of the three months before the director's election to the
Board. The Stock Units awarded to a director are credited to a book account. A
separate account is credited with additional Stock Units equal in value to
dividends on all Stock Units held in the director's account. A director must
have 17 years of service to receive all of the Stock Units awarded and
accumulated under this plan. Reduced distributions may be made where a director
has at least 10 years of service.
Charitable Contribution Program. As part of its overall program of charitable
giving, the Company offers the directors participation in a Directors'
Charitable Contribution Program. The Program is funded by life insurance
policies purchased by the Company on the directors. The directors derive no
financial or tax benefits from the Program, because all insurance proceeds and
charitable tax deductions accrue solely to the Company. However, upon the death
of a director, the Company will donate an aggregate of $50,000 per year for ten
years to one or more qualifying charitable organizations recommended by that
director.
Matching Gifts Program. Directors may give up to $1,000 per year to 501(c)(3)
organizations of their choice and the Company will match their donations on a
1-to-1 basis. If their donation is to an organization for which they volunteer
more than 50 hours of work during a year, the Company will match the donation on
a 2-to-1 basis.
9
<PAGE>
Director Nominations
Under our Bylaws, if you wish to nominate a director at a shareholders' meeting
you must be a shareholder and deliver written notice to our Corporate Secretary
at least 60 days before the meeting. If the meeting date has not been publicly
announced 70 days before the meeting, then notice can be given 10 days following
the public announcement. Any notice must include the following information:
1. your name and address;
2. each nominee's name and address;
3. a statement that you are entitled to vote at the meeting and intend to
appear in person or by proxy to nominate your nominees;
4. a description of all arrangements or undertakings between you and each
nominee and any other person concerning the nomination;
5. other information about the nominee that would be included in a proxy
statement soliciting proxies for the election of directors; and
6. the consent of the nominee to serve as a director.
10
<PAGE>
Share Ownership Table
The table below shows the amount of Dominion Resources common stock beneficially
owned as of February 19, 1999 by each director and the executive officers named
in the compensation table on p. 16. Also included in this table is stock
ownership for all directors and executive officers as a group.
Name Stock Ownership Director Plan
Accounts (1)
John B. Adams, Jr. 3,997 9,647
John B. Bernhardt 2,000* 9,647
Thos. E. Capps 65,231 (2) --
John W. Harris 5,479 9,647
Benjamin J. Lambert, III 590* 11,086
Richard L. Leatherwood* 1,500 19,886
Harvey L. Lindsay, Jr. 879 9,647
Kenneth A. Randall 3,713 9,647
William T. Roos* 11,262 9,647
Frank S. Royal 500* 11,067
S. Dallas Simmons 3,332 11,983
Robert H. Spilman 1,666 9,647
Judith B. Warrick 1,500* 15,460
David A. Wollard 1,315 9,647
Norman B. Askew 3,425 (2) --
Thomas N. Chewning 11,924 (2) --
Thomas F. Farrell, II 17,113 (2) --
David L. Heavenridge 14,218 (2)
All directors and executive officers as a
group (22 persons) (3) 190,461 (2)(4)
- -------------------------------------------------------------------------------
*Includes 500 shares held in trust under Dominion Resources Stock Compensation
Plan as described on p. 9.
(1) Amounts in this column represent share equivalents accumulated under
directors' plans described on page 9. Balances of 9,647 shares are the
amounts accumulated under the Stock Accumulation Plan. Because of the plan's
vesting provisions, these amounts will not necessarily be distributed to a
director. Any balance in excess of 9,647 is an amount of share equivalents
accumulated--at the director's election--under the Deferred Cash
Compensation plan and will be distributed in actual shares to the director.
(2) Amounts include restricted stock as follows:
Mr. Capps, 33,153 shares; Mr. Askew, 2,057 shares; Mr. Chewning, 5,281
shares; Mr. Farrell, 14,467 shares; Mr. Heavenridge, 5,281 shares; and all
directors and executive officers as a group, 84,716 shares.
(3) All current directors and executive officers as a group own less than one
percent of the number of shares outstanding as of February 19, 1999.
(4) Beneficial ownership is disclaimed for a total of 399 shares.
11
<PAGE>
Organization, Compensation & Nominating Committee Report
Compensation Philosophy
Our Committee and management believe it is vitally important to align our
officers' financial success with the financial success of our shareholders. We
have renewed our focus on stock ownership as a key measure of such alignment. We
work closely with management in our oversight and administration of the
Company's organization and compensation. We also recognize that, as our industry
redefines itself, our programs must attract, retain and motivate high caliber
employees.
Guided by this necessity, we have approved pay programs that link executive
compensation to company performance. Each year, we put a significant portion of
our executives' pay at risk. This creates annual opportunities for
executives--through individual business unit performance and consolidated
performance--to increase significantly their total compensation, both in cash
and in stock.
Our work includes review of the CEO's total compensation package and
performance. Mr. Capps is not present when we discuss his compensation.
1998 Compensation
Our executive compensation program consists of three basic components:
o Base Salary
o Annual Incentives
o Long-Term Incentives
Base Salary
Our Committee positions our executive base salaries to be at the median base
salaries of similar positions at a peer group of diversified utilities and other
businesses with which we compete on a national basis. We also consider
individual performance and competitive pressures.
Executive Officers. We selected an independent compensation consultant, who
analyzed our executives' salaries and compared them to our competitive labor
market. Our Committee also reviewed individual executive performance. Based on
our review and the consultant's report, we approved base salary increases
effective January 1, 1998.
Chief Executive Officer. The independent compensation consultant also reviewed
with us competitive compensation information for CEOs in a peer group of
diversified electric utility companies. After thoroughly evaluating this
material, considering our compensation philosophy, and recognizing Mr. Capps'
increased challenges as a CEO in a rapidly changing industry, we approved a base
salary of $780,000 for Mr. Capps, effective January 1, 1998.
12
<PAGE>
Annual Incentives
Under the annual incentive program, if goals are fully met or exceeded, the
executive's total cash compensation for the year may be more than the median
total cash compensation for similar positions at companies in our executive
labor market.
Under this program our Committee establishes "target awards" for each
executive officer. These target awards are expressed as a percentage of the
individual executive's base salary (for example, 30% x base salary). The target
award is the amount of cash that will be paid, at year-end, if the executive
achieves 100% of the goals established at the beginning of the year.
We also establish a "threshold"--or minimum acceptable level of financial
performance. If this threshold is not met, no employee receives an annual bonus.
Actual bonuses, if any, are based on a pre-established formula and may exceed
100% of the target award.
Executive Officers. For Dominion Resources' executive officers, 1998 net income
was used as the performance measure under the annual incentive plan. Each
executive's goals were weighted heavily toward the net income contribution of
the business unit for which they were responsible, but also included a
consolidated net income goal. Awards under this plan for Mr. Askew and Mr.
Farrell were pro-rated based on their relative responsibilities for Dominion
Resources and Virginia Power.
Our Committee established and approved the goals at the beginning of 1998. At
year-end, we compared actual financial performance with the consolidated and
business unit net income goals. For 1998, these goals were achieved or
surpassed. Net income for the business units is reported in the Management
Discussion and Analysis of Operations section of our 1998 Annual Report to
Shareholders.
Mr. Askew and Mr. Farrell also participated in the Virginia Power annual
incentive plan during 1998 based on their relative responsibilities for that
business unit. Under the Virginia Power plan, they received a pro-rated award
based on individual goal achievement. Mr. Askew's and Mr. Farrell's goals were
weighted 90% Virginia Power financial goals (operating profit and net cash flow)
and 10% stewardship goals (safety, environmental impact and affirmative action).
Annual bonuses paid to the named executives are detailed in the Summary
Compensation Table on p. 16.
Chief Executive Officer. At the beginning of 1998, we approved net income
goals for Mr. Capps. Eighty percent was weighted to the net income
contribution of the consolidated business units (excluding Virginia Power) and
20% to consolidated Dominion Resources net income. Because our net income
goals for 1998 were surpassed, we approved an annual cash bonus of $594,344
for Mr. Capps.
13
<PAGE>
Long-Term Incentives
We believe the long-term incentive programs we approve play a critical part in
our compensation practices and philosophy. As a result, at least half of the
long-term incentive component is paid in company stock--a long-term investment.
We believe this form of payout underscores commitment to the company while
rewarding performance.
Our Committee establishes and approves long-term goals at the beginning of a
performance cycle (typically three years). At the end of the performance cycle,
actual results are compared with the established goals.
Executive Officers. Dominion Resources' goals were established in 1996 for the
1996-1998 performance cycle. The performance measure used for the executive
officers was growth in the combined net worth of Dominion Capital and Dominion
Energy. Based on 1998 year-end net worth, which exceeded the performance goal,
we awarded the executives shares of restricted stock and cash (see the LTIP
Payout column of the Summary Compensation Table on p. 16). The shares awarded
are restricted for two years. They cannot be sold and will be forfeited if the
executive terminates employment during the two-year restricted period.
During 1998, the Committee approved awards of restricted stock and related tax
payments to certain executive officers to recognize their extraordinary
achievement for the Company's shareholders resulting from the investment in and
the sale of East Midlands Electricity, plc. (See the Summary Compensation Table
on p. 16.) These shares are restricted for one year and cannot be sold during
that period.
Mr. Askew and Mr. Farrell also participated, on a pro-rated basis, in
Virginia Power's long-term program for the 1996-1998 performance cycle. The
performance measure used was cumulative Economic Value Added for the same
three-year period. Based on their accomplishment level, Mr. Askew and Mr.
Farrell received their award in the form of 50% cash and 50% restricted stock.
The shares are restricted for two years. They cannot be sold and will be
forfeited if the executive terminates employment during the two-year
restricted period (see LTIP Payout column of the Summary Compensation Table on
p. 16.)
Chief Executive Officer. Goals for Mr. Capps were established in 1996 for the
1996-1998 performance cycle. We determined that his entire award, if any,
should be paid in Dominion Resources common stock. The goals were:
- -------------------------------------------------------------------------------
Mr. Capps' Goals Weight
- -------------------------------------------------------------------------------
Total return to shareholders superior 50%
to the S&P Utility Index
- -------------------------------------------------------------------------------
Specified annual growth in
earnings per share 25%
- -------------------------------------------------------------------------------
Cost control of utility
operating costs 25%
Subject to achievement of these goals, we granted Mr. Capps 14,602 shares of
restricted stock at the beginning of the performance cycle. During the
performance cycle, Mr. Capps' dividends were re-invested to purchase additional
shares of stock. Because the first goal was not met, Mr. Capps forfeited all but
4,868 of the 14,602 originally granted, and retained only 33% of the shares
purchased through dividend reinvestment during the performance cycle.
14
<PAGE>
The Committee approved a supplemental long-term incentive program for the
CEO for the period 1996-1998 based on findings by the independent compensation
consultant that the CEO's long-term target award level was substantially below
the market. Mr. Capps' long-term target award level was increased and this
change was made effective with the 1996-1998 performance cycle. Consolidated
net income goals were approved by the Committee. At the end of 1998, Mr.
Capps' performance under this plan was evaluated. Based on his performance, an
award was made in cash and in shares of company stock as reported in the LTIP
Payout column of the Summary Compensation Table on p. 16.
During 1998, the Committee recognized Mr. Capps' extraordinary performance and
leadership in negotiating the sale of East Midlands Electricity and awarded Mr.
Capps shares of restricted stock and related tax payments as reported in the
Summary Compensation Table on p. 16. These shares are restricted for one year.
Deductibility of Compensation
Under Section 162(m) of the Internal Revenue Code, Dominion Resources may not
deduct certain forms of compensation in excess of $1 million paid to
our CEO or any of the four other most highly compensated
executive officers. However, certain performance-based compensation is
specifically exempt from the deduction limit.
It is our intent to provide competitive executive compensation while
maximizing the Company's tax deduction. However, we reserve the right to
approve, and in some cases have approved, non-deductible compensation if we
believe it is in the Company's best interest.
Kenneth A. Randall, Chairman
John B. Bernhardt
Frank S. Royal
Richard L. Leatherwood
Robert H. Spilman
15
<PAGE>
Executive Compensation
The table below shows the total salary and awarded to or earned by the CEO and
the four other most highly compensated executive officers (as of December 31,
1998).
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------
Name and
Principal Position Annual Compensation Awards Payouts
------ -------
Other
Annual Restricted LTIP All Other
Compen- Stock Payouts Compen-
Year Salary(1) Bonus sation(2) Awards(3) (4) sation(5)
---- --------- ----- ------- ------ --- -------
<S> <C>
Thos. E. Capps
Chairman, President & CEO
1998 $795,000 $594,344 $848,902 $995,312 $639,126 $4,800
1997 775,172 491,015 7,708 0 129,675 4,800
1996 668,075 345,538 0 286,875 122,348 4,500
Norman B. Askew
Executive Vice President
(President & CEO--
Virginia Power)
1998 500,000 375,089 0 0 183,266 0
1997 393,006 279,175 17,782 0 124,730 206,482
Thomas F. Farrell, II
Senior Vice President
(Executive Vice Pres-
ident--Virginia Power) 1998 314,471 239,289 419,098 497,656 178,644 4,800
1997 268,144 154,956 0 0 67,598 4,800
1996 180,000 87,343 0 0 24,790 4,800
David L. Heavenridge
Executive Vice President
(President & CEO--Dominion
Capital, Inc.)
1998 321,058 224,274 105,554 124,414 196,742 4,800
1997 322,199 167,456 571 0 105,939 243,770
1996 250,338 118,762 0 0 61,237 4,500
Thomas N. Chewning
Executive Vice President
(President & CEO--Dominion Energy,
Inc.) 1998 318,786 224,274 104,868 124,414 196,742 4,800
1997 303,730 167,706 418 0 105,939 247,112
1996 232,838 118,762 0 0 61,237 4,925
</TABLE>
Note: For at least the past three years, Dominion Resources has not issued
stock options.
Footnotes to the Summary Compensation Table
16
<PAGE>
1. Salary. Amounts shown may include vacation sold back to the Company.
2. Other Annual Compensation. None of the named executives received perquisites
or other personal benefits in excess of $50,000 or 10% of their total cash
compensation. The amounts listed in this column for 1998 are amounts reimbursed
during the fiscal year for the payment of taxes.
3. Restricted Stock. The amount shown for 1998 is the value of restricted stock
awarded as follows: Mr. Capps, 25,000 shares; Mr. Heavenridge, 3,125 shares; Mr.
Chewning, 3,125 shares; and Mr. Farrell, 12,500 shares. These shares cannot be
sold for one year. Dividends are paid on restricted stock. The number and value
of each executive's restricted stock holdings at year-end, based on a December
31, 1998 closing price of $46.75, were as follows:
- ----------------------------------------------------
Officer Number Value
of Restricted
Stock Shares
- ----------------------------------------------------
Thos. E. Capps 39,602 $1,851,394
Norman B. Askew 1,290 60,308
Thomas F. Farrell, II 13,323 622,850
David L. Heavenridge 4,415 206,401
Thomas N. Chewning 4,415 206,401
- -----------------------------------------------------
4. LTIP Payouts. Amounts in this column represent payouts under two long-term
plans (Dominion Resources and Virginia Power) for performance cycles that ended
in 1998, as described on pages 14 and 15. The chart below details these amounts
for each executive.
- -------------------------------------------------------------------------------
Officer Restricted Cash Award
Stock Award
- -------------------------------------------------------------------------------
Thos. E. Capps 9,868 $200,000
Norman B. Askew 2,057 177,040
Thomas F. Farrell, II 1,967 91,958
David L. Heavenridge 2,156 100,800
Thomas N. Chewning 2,156 100,800
- -------------------------------------------------------------------------------
5. All Other Compensation. The amounts listed for 1998 are company matching
contributions on Employee Savings Plan accounts for the named executives.
17
<PAGE>
Long-Term Incentive Plans -- Awards for Last Fiscal Year
<TABLE>
<CAPTION>
Officer
Number of Shares, Performance Estimated Future Payouts Under
Units or Other or Other Non-Stock Price-Based Plans
Rights (#) Period Until
Maturation Threshold Target
or Payout ($ or #) ($ or #)
<S> <C>
Thos. E. Capps $772,200 3 years $386,100 $772,200
Norman B. Askew 390,800 3 years 195,400 390,800
Thomas F. Farrell, II 242,200 3 years 121,100 242,200
David L. Heavenridge 246,200 3 years 123,100 246,200
Thomas N. Chewning 246,200 3 years 123,100 246,200
</TABLE>
Footnote to LTIP Table
The above table reflects the value of awards that will be made to our executives
for the 1998-2000 performance cycle of the long-term incentive programs if
specified goals are achieved. The established Dominion Resources' goal for
executives is cumulative net income over the three-year performance period. The
established Virginia Power goals are operating profit and cash flow. These goals
are weighted as follows:
- -------------------------------------------------------------------------------
Officer Consolidated Dominion Dominion Dominion Virginia
Companies Capital Energy Power
- -------------------------------------------------------------------------------
Thos. E. Capps 50% 50%
Norman B. Askew 50% 50%
Thomas F. Farrell, II 50% 50%
David L. Heavenridge 50% 50%
Thomas N. Chewning 50% 50%
- -------------------------------------------------------------------------------
18
<PAGE>
At the end of the 1998-2000 performance cycle, actual performance will be
measured against these pre-established goals. At 100% goal achievement, the
target value will be paid 50% cash and 50% in shares of restricted stock. The
stock will be restricted for two years. During this time the shares cannot be
sold and will be forfeited by the executive if he terminates employment.
No awards will be paid if the threshold level of performance, which was
established at the beginning of the performance cycle, is not reached. Above the
threshold level, performance will be measured and awards will be paid based on
the percent of goal achievement, and may exceed 100%.
Performance Graph
The table below shows the five year cumulative total return comparison between
Dominion Resources, the S&P 500 Index and the S&P Utility Index.
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C>
Dominion Resources $100.00 $84.68 $103.84 $103.63 $122.70 $143.31
S&P 500 100.00 101.32 139.40 171.40 228.59 293.91
S&P Utilities 100.00 92.06 130.74 134.83 168.07 192.89
</TABLE>
Retirement Plans
The table below shows the estimated annual straight life benefit that the
Company would pay to an employee at normal retirement (age 65) under the benefit
formula of the Retirement Plan.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Final Average Earnings Estimated Annual Benefits Payable Upon Retirement--Credited Years of Service
15 20 25 30
- ---------------------------------------------------------------------------------------------------------
<S> <C>
$300,000 $86,407 $115,210 $144,012 $172,814
350,000 101,632 135,510 169,387 203,264
400,000 116,857 155,810 194,762 233,714
450,000 132,082 176,110 220,137 264,164
500,000 147,307 196,410 245,512 294,614
550,000 162,532 216,710 270,887 325,064
600,000 177,757 237,010 296,262 355,514
650,000 192,982 257,310 321,637 385,964
750,000 223,432 297,910 372,387 446,864
800,000 238,657 318,210 397,762 477,314
- -------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
Dominion Resources Retirement Plan. Benefits under the Retirement Plan are
based on:
o average base salary over a five year
period when base pay is highest;
o years of credited service;
o age at retirement; and
o the offset of Social Security benefits.
In addition, certain officers, if they reach a specified age while still
employed, will be credited with additional years of service. For the executives
named in the Summary Compensation Table on p. 16, credited years of service at
age 60 would be 30 years. Other retirement agreements and arrangements for the
named executives are described on below.
Dominion Resources Benefit Restoration Plan. The Retirement Plan pays a benefit
that is calculated on average base salary over a five-year period. In some years
our executives' base salaries are set below the competitive market median in
order to more closely link annual pay to company performance through the
incentive programs. Under this Restoration Plan, we calculate a "market-based
adjustment" to base salary in those years when base salary was below the market
median. The difference between the benefit calculated on the market-based salary
and the benefit paid by the Retirement Plan is paid to the executive under the
Restoration Plan.
In 1998, a market-based adjustment to Dominion Resources' executive base
salaries was not necessary. Virginia Power's executives (Mr. Askew and Mr.
Farrell on a pro-rated basis) received an 11% adjustment for calculating the
Retirement benefit under the Restoration Plan.
Also, the Internal Revenue Code imposes certain limits related to Retirement
Plan benefits. Any resulting reductions in an executive's Retirement Plan
benefit will be compensated for under the Restoration Plan.
East Midlands Electricity Pension Plan. Mr. Askew participates in the pension
plans of Dominion Resources' former subsidiary, East Midlands Electricity,
plc. East Midlands was sold in July 1998. Benefits under this retirement plan
are based on:
o Highest salary in final 5 years of service
o Years of pensionable service
Because Mr. Askew no longer participates in this plan, his fixed annual
benefit at age 60 is $11,010 adjusted annually for inflation.
East Midlands Supplemental Retirement Benefit Plan. The U.K. Inland Revenue
also imposes limits on Pension Plan benefits. Under this benefit plan (known
in the U.K. as an Unfunded Unapproved Retirement Benefit Scheme), any Pension
Plan benefits reduced to these limitations will be reimbursed by this plan.
Mr. Askew's annual benefit at age 60 is expected to be $59,475. Mr. Askew's
payments under the Dominion Resources Retirement Plan will be reduced by the
amount he receives from this benefit plan and the East Midlands Pension Plan.
Executive Supplemental Retirement Plan.
The Supplemental Plan provides an annual retirement benefit equal to 25% of a
participant's final cash compensation (base salary plus target annual bonus).
To retire with full benefits under the Supplemental Plan, an executive must be
55 years old and have been employed by the Company for at least five years.
Benefits under the plan are provided either as a lump sum cash payment at
retirement or as a monthly annuity paid out, typically, over 10 years. Based
on 1998 cash compensation, the estimated annual benefit under this plan for
certain executives named in the Summary Compensation Table on p. 16 are: Mr.
Capps: $302,250; Mr. Askew: $187,500; Mr. Heavenridge: $118,125; Mr. Chewning:
$118,125; and Mr. Farrell: $116,250.
20
<PAGE>
Other Executive Agreements
and Arrangements
Companies that are in a rapidly changing industry such as ours require the
expertise and loyalty of exceptional executives. Not only is the business itself
competitive, but so is the demand for such executives. In order to secure the
continued services and focus of key management executives, the Company has
entered into employment agreements with them, including those named in the
Summary Compensation Table on p. 16.
Employment Agreement--Chief Executive Officer. The Board of Directors determined
in June 1997 that it was in the Company's best interest to secure Mr. Capps'
employment as CEO and President of Dominion Resources until December 31, 2002.
As a result, Mr. Capps and the Company entered into an agreement providing for
his employment as CEO and President until 2002. During his employment, the
agreement provides for the following:(1) an annual base salary of at least
$715,000, (2) incentive compensation awards based on performance and (3)
continued eligibility for all employee benefit and incentive plans provided by
the Company to its senior management. When his employment ends (whether or not
before the end of the term of the agreement), Mr. Capps will: (1) receive a
retirement benefit calculated on the highest base salary rate during his
employment, (2) receive a Supplemental Plan benefit payable for life, (3) become
fully vested in outstanding restricted stock and (4) receive a payment of
$950,000 plus an amount equal to the present value of his salary and annual cash
incentives for the calendar year 2002. During the term of the agreement, the
Company may terminate Mr. Capps for cause only. Mr. Capps also receives age and
service credit and continued benefit plan coverage through the end of the
contract period in the event of termination for cause or resignation for cause.
Employment Agreements--Other Executives. Messrs. Heavenridge, Chewning and
Farrell have an employment agreement for a three-year period ending September
12, 2000. Mr. Askew has an employment agreement that terminates November 1,
2002. During employment, each of these executives will continue to receive a
salary at least equal to his salary on the date of the agreement and will be
eligible for bonuses and all employee benefits provided by the Company to its
senior management. The agreements also provide executives with enhanced
retirement benefits. If Dominion Resources terminates the executive's employment
without cause or reduces or does not pay the executive's salary, incentives and
other benefits during the contract period or demotes the executive to a position
that is not a senior management position, the executive will (subject to notice
and remedy provisions): (1) receive a lump sum payment equal to the present
value of salary and, in the case of Mr. Heavenridge, Mr. Chewning and Mr.
Farrell, cash bonus for the balance of the contract period, (2) vest in his out
21
<PAGE>
standing restricted stock and (3) receive age and service credit and continued
benefit plan coverage through the end of the contract period. The agreements
also provide benefits in the event of death or disability. In the case of a
change in control*, the executive will not receive pay under this agreement as a
result of his termination of employment for any reason if he receives payment
under his Employment Continuity Agreement (described on this page). Mr. Askew's
agreement also provides that he will not compete with the Company in the UK for
a one year period beginning with the date of termination of employment.
Special Arrangements. Dominion Resources has entered into employment continuity
agreements with executives named in the Summary Compensation Table (but not Mr.
Capps), which provide benefits in the event of a change in control. Each
agreement has a three-year term and is automatically extended for an additional
year, unless cancelled by the Company.
The agreements provide for the continuation of salary and benefits for a
maximum period of three years after either (1) a change in control, (2)
termination without cause following a change in control or (3) a reduction of
responsibilities, salary and incentives following a change in control (if the
executive gives 60 days notice). Payment of this benefit will be made in either
a lump sum or installments over three years. In addition, the agreements
indemnify the executives for potential penalties related to the Internal Revenue
Code and fees associated with the enforcement of the agreements. If an executive
is terminated for cause, the agreements are not effective.
Executive Deferred Compensation Plan. Under this plan, executives may defer
any portion of their base salary, annual incentive cash award and/or
long-term incentive cash award. Deferrals are credited at the executive's
discretion, for bookkeeping purposes, with earnings and losses as if they were
invested in any of several mutual fund options or Dominion Resources common
stock. Distributions are made at the direction of the executive.
- ---------------------------
* A change in control shall be deemed to have occurred if (i) any person or
group becomes a beneficial owner of 20% or more of the combined voting power
of Dominion Resources' voting stock or (ii) as a direct or indirect result of,
or in connection with, a cash tender or exchange offer, merger or other
business combination, sale of assets, or contested election, the Directors
constituting the Dominion Resources Board before any such transactions cease
to represent a majority of Dominion Resources' or its successor's Board within
two years after the last of such transactions.
22
<PAGE>
Item Two: Amendments to Dominion Resources Articles of Incorporation
Introduction
Article V of Dominion Resources Articles of Incorporation requires that the
Board of Directors be divided into three classes, with each class serving a
three-year term of office. Article V also sets the maximum number of directors
at 16. Your Board of Directors is recommending that Article V be amended to
eliminate the staggered terms of office for directors and to increase the
maximum number of directors to seventeen.
While your Board recognizes that staggered terms can promote continuity of
experience and stability, it has concluded that these goals can also be met when
directors have one-year terms. The Board also recognizes that annual elections
are consistent with its views of good corporate governance. In addition, the
proposed amendments are consistent with the announced merger agreement between
your company and Consolidated Natural Gas Company. In that agreement, a copy of
which is on file with the Securities and Exchange Commission, the parties have
agreed to put in place at closing a board of seventeen members. PLEASE NOTE THAT
SHAREHOLDERS ARE NOT BEING ASKED TO VOTE ON THE MERGER AT THIS TIME. YOU WILL
HAVE THAT OPPORTUNITY AT A LATER DATE. THE AMENDMENTS ARE NOT CONDITIONED ON THE
MERGER AND, IF APPROVED, WILL TAKE EFFECT WITHOUT REGARD TO WHETHER OR WHEN THE
MERGER IS APPROVED.
On March 5, 1999, your Board unanimously approved these amendments. Each
director affected has consented to shorten his or her term of office.
Article V Amendments
Article V shall be amended, if approved by you, by deleting the first paragraph
of Article V and inserting the following in its place:
"The business and affairs of the Corporation shall be managed by or under
the direction of a Board of Directors consisting of not less than ten nor
more than seventeen Directors, the exact number of Directors to be
determined from time to time by resolution adopted by the affirmative vote
of a majority of the Directors then in office or at least two-thirds of the
shares entitled to vote at a meeting of Stockholders. Each Director shall
hold office until the next annual meeting and until his or her successor
shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. No
decrease in the number of directors shall shorten the term of any incumbent
Director."
Also, the following sentence from the third paragraph of Article V will be
deleted:
"In such event, the successor elected by the stockholders at the annual
meeting shall hold office for a term that shall coincide with the remaining
term of the class of Directors to which that person has been elected."
Your Board recommends that you vote infavor of the Amendments to Dominion
Resources Articles of Incorporation
23
<PAGE>
Item Three: Incentive Compensation Plan
Introduction
At the 1997 Annual Meeting of Shareholders, you approved the Dominion Resources,
Inc. Incentive Compensation Plan. Working closely with management, the Board's
Organization, Compensation and Nominating Committee and its independent
consultant, both recommended that the Plan be amended as described below, in
order to provide greater flexibility in awarding incentives. Also, in keeping
with the Company's focus on increased share-ownership among officers and
directors, management recommended to the Committee that the Directors be
eligible under this Plan.
The proposed amendments are:
1.To allow 11 million shares to be available for issuance under the
Incentive Plan;
2.To allow up to 1.5 million shares to be allocated to an Incentive Award
granted to any one participant in any one year;
3.To allow the Directors to be eligible for Incentive Awards under the
Incentive Compensation Plan; and
4.To re-approve Performance Criteria under the Plan in order to satisfy
certain IRS requirements.
A summary of the Incentive Plan follows and the full text, before amended, is
on file with the Securities and Exchange Commission.
Administration of the Plan; Eligibility
The Incentive Plan is administered by the Virginia Power Committee for Virginia
Power employees and those of its affiliates and by the Dominion Resources
Committee for Dominion Resources employees and those of its other subsidiaries.
All employees of Dominion Resources and its subsidiaries are eligible to receive
Incentive Awards under the Incentive Plan if a Committee determines that an
employee has contributed, or can be expected to contribute, significantly to
their employer. The Committees have the power and complete discretion to select
eligible employees to receive the Incentive Awards and to determine the type of
award and its terms and conditions. Approximately 11,000 employees may receive
awards under the Incentive Plan. Under the proposed Amendment, the non-employee
directors of Dominion Resources and its subsidiaries (currently, 18) would be
eligible to participate.
Amount of Stock Available for Incentive Awards
Under the proposed amendment, the shares available under the Plan would increase
from 3 million shares to 11 million shares and the annual limit of awards to any
one individual would increase from 200,000 shares to 1.5 million shares. These
increases will give the company greater flexibility for the type of awards made
in the future.
Types of Incentive Awards That May Be Granted Under the Plan
The following types of Incentive Awards may be granted under the Incentive
Plan: Performance Grants, Restricted Stock, Goal-Based Stock, Stock Options
and Stock Appreciation Rights.
24
<PAGE>
Performance Grants. Performance Grants are subject to the achievement of
pre-established Performance Goals and are administered to comply with the
requirements of Section 162(m). Performance Goals use objective and quantifiable
Performance Criteria that include measures such as asset growth; utility
earnings; generating unit efficiency; combined net worth; debt to equity ratio;
earnings per share; revenues; operating income; operating cash flow; net income,
before or after taxes; return on total capital, equity, revenue or assets;
nonutility generation cost exposure; power generation costs; safety measured in
fatalities, lost time, injuries and vehicle accidents; environmental protection
measured in reportable violations, notices of violations, and environmental
agency required corrective actions or enforcement actions; or economic value
added (net operating profit after tax less a charge for use of capital as
determined under a methodology approved by the Dominion Resources Committee or
Virginia Power Committee). The Committees set target and maximum amounts payable
under the Performance Grant. The employee receives the appropriate payments at
the end of the performance period if the Performance Goals (and other terms and
conditions of the award) were met. The actual payments under a Performance Grant
can be cash, Company Stock, or both.
The aggregate maximum cash amount payable under the Plan to any employee in
any year cannot exceed 0.5% of Dominion Resources consolidated operating income,
before taxes and interest. The Committee must make Performance Grants prior to
the 90th day of the period for which the Performance Grant relates or the
completion of 25% of such period.
Restricted Stock Awards. The Committees may grant Restricted Stock under the
Plan, which will be Company Stock subject to certain terms and conditions. The
employee will not be able to sell or transfer the Restricted Stock until the
restrictions stated in the award agreement have been met. The Restricted Stock
is forfeited if the restrictions are not met.
Goal-Based Stock Awards. The Committees may grant Goal-Based Stock, which is
Company Stock subject to Performance Goals. The stock is not issued to the
employee until a Committee certifies that the Performance Goals (and any other
terms and conditions) have been met.
Stock Options and Stock Appreciation Rights. The Committees may also grant
Options to eligible employees and establish the terms and conditions for
exercising an Option. Stock Appreciation Rights may be granted on all or any
part of an Option, and also are subject to terms and conditions set by a
Committee. Stock Appreciation Rights also may be granted separately.
The exercise price of an Option will be at least 100% of the Fair Market Value
of Company Stock on the date that the Option was granted by a Committee. The
Options may be either Incentive Stock Options or Nonstatutory Options.
A Stock Appreciation Right entitles the employee to receive an amount equal
to the excess of (i) the fair market value on the date of exercise of stock
covered by the surrendered Stock Appreciation Right over (ii) the price of the
stock on the date the Stock Appreciation Right was granted. The award can be
paid in stock or cash, or both.
Transferability of Awards; Modification of Awards
When granting Incentive Awards, the Committees can allow the awards to become
fully exercisable or vested upon a Change of Control.
25
<PAGE>
Employees cannot sell, transfer or pledge their interest in Performance
Grants and Goal-Based Stock awards. Employees cannot sell, transfer or pledge
shares of Restricted Stock until it becomes unrestricted as provided in an award
agreement. Options and Stock Appreciation Rights may be transferable by a
Participant according to the terms and conditions for such Awards.
Term; Modification of Plan
Following shareholder approval at the 1997 Annual Meeting, the Incentive Plan
became effective as of January 1, 1997. The Incentive Plan will terminate at the
close of business on December 31, 2006 unless the Dominion Resources Board of
Directors terminates it prior to that date.
The Dominion Resources Board of Directors can amend or terminate the
Incentive Plan with respect to Dominion Resources participants and the Virginia
Power Board of Directors can amend or terminate the Incentive Plan with respect
to Virginia Power participants, except that only shareholders can approve
amendments that would (i) increase the number of shares of Company Stock that
are reserved and available for issuance under the Incentive Plan; (ii)
materially change or impact which employees are eligible to participate in the
Incentive Plan; or (iii) materially change the benefits that eligible employees
may receive under the Incentive Plan. However, the Dominion Resources and
Virginia Power Boards can amend the Incentive Plan as necessary and without
shareholder approval to ensure that the Incentive Plan continues to comply with
Section 162(m) of the Code and Rule 16b-3. Federal Income Tax Consequences
An employee will not incur federal income tax liabilities when granted a
Nonstatutory Stock Option, an Incentive Stock Option, a Stock Appreciation Right
or Restricted Stock.
Upon exercise of a Nonstatutory Option or a Stock Appreciation Right, the
employee, in most circumstances, will be treated as having received ordinary
income equal to the difference between the fair market value of Company Stock on
the date of the exercise and the Option Price. This income is subject to income
tax withholding by the company. No income is received for tax purposes when an
Incentive Stock Option is exercised, unless an employee is subject to the
alternative minimum tax.
The company usually will be entitled to a business expense deduction at the
time and in the amount that the recipient of an Incentive Award recognizes
ordinary income. As stated above, this usually occurs upon exercise of
Nonstatutory Options and Stock Appreciation Rights and the lapse of restrictions
on restricted stock. No deduction is allowed in connection with an Incentive
Stock Option unless the employee disposes of Company Stock received upon
exercise in violation of the holding period requirements. Also there can be
circumstances when the deduction is not allowed for certain transfers of Company
Stock or payments to an employee upon the exercise of an Incentive Award that
has been accelerated as a result of a Change of Control.
The Board of Directors recommends that YOU vote IN FAVOR of the Amendments to
the Dominion Resources, Inc. Incentive Compensation Plan.
26
<PAGE>
Auditors
The Board of Directors has re-appointed Deloitte & Touche LLP, independent
certified public accountants, as auditors of the 1999 consolidated financial
statements of Dominion Resources. Representatives of Deloitte & Touche LLP will
be present at the Annual Meeting and will have an opportunity to make a
statement if they desire to do so and will be available to respond to
shareholder questions.
Other Information
Matters Before the 1999
Annual Meeting
The management and directors are not aware of any matters which may come before
the Annual Meeting other than the matters stated in this Notice of Annual
Meeting.
Proposals for the
2000 Annual Meeting
Under our Bylaws, if you wish to bring any
matter (other than shareholder nominations of director candidates) before the
2000 Annual Meeting, you must notify the Corporate Secretary
in writing no later than January 24, 2000. Regarding each matter, the notice
must contain:
o a brief description of the business to be brought before the Annual
Meeting, including the complete text of any related resolutions to be
presented and the reasons for conducting such business at the meeting;
o the name and address of record of the shareholder proposing
such business;
o the class and number of shares of stock that are beneficially
owned by the shareholder; and
o any material interest of the shareholder in such business.
If you do not provide the proper notice by January 24, 2000, the Chairman of
the meeting may exclude the matter, and it will not be acted upon at the
meeting. If the Chairman does not exclude the matter, the proxies may vote in
the manner they believe is appropriate, as the Securities and Exchange
Commission's rules allow.
For a shareholder proposal to be considered for possible inclusion in the 2000
Proxy Statement, it must be received by the Corporate Secretary of Dominion
Resources no later than November 15, 1999. Dominion Resources plans to hold its
2000 Annual Meeting on April 21, 2000.
1998 Form 10-K
You may request, without charge, a copy of Dominion Resources' Annual Report
filed with the Securities and Exchange Commission for 1998 on Form 10-K,
excluding exhibits, by: (1) writing to the Corporate Secretary, Dominion
Resources, Inc., P.O. Box 26532, Richmond, Virginia 23261; (2) sending us an
e-mail at [email protected]; or (3) calling us at 804-819-2000.
27
<PAGE>
<TABLE>
<S> <C>
1. Election of Directors 1. John W. Harris 2. Kenneth A. Randall
[ ] FOR the following nominees: 3. Judith B. Warrick 4. David A. Wollard
[ ] Withhold Authority to vote for all nominees listed above. To withhold
authority to vote for any individual nominee, write that nominee's name
in the following space:
...............................................................................
2.Proposal to amend the Articles of Incor-poration to eliminate classification
of Board of Directors and to increase the maximum number of Directors to 17.
[ ] For [ ] Against [ ] Abstain
3.Proposal to approve amendments to the Dominion Resources, Inc., Incentive
Compensation Plan.
[ ] For [ ] Against [ ] Abstain
The undersigned appoints John B. Adams, Jr., Frank S. Royal, M.D. and Patricia
A. Wilkerson, or any one of them, with the power of substitution, proxies to
vote all shares of the undersigned at the Annual Meeting of Shareholders on
April 16, 1999, and at any and all adjournments thereof.
Date ................................................................... , 1999
...............................................................................
Signature
...............................................................................
Signature (if held jointly)
This Proxy is solicited on behalf of the Board of Directors. The Board of
Directors Recommends a Vote "FOR" Items 1, 2 and 3.
[DOMINION RESOURCES LOGO]
<PAGE>
The 1999 Proxy Card [DOMINION RESOURCES LOGO]
This Proxy is solicited on behalf of the Board of Directors.
Dominion Resources, Inc.
P.O. Box 26532
Richmond, Virginia 23261
Please mark, date, sign and mail in the enclosed envelope.
In their discretion, the proxies are authorized to vote on any matters that
properly come before the meeting.
This proxy when properly executed will be voted as directed by the signed
shareholder. If no direction is made, this proxy will be voted "FOR" Items 1,
2 and 3.
Please sign exactly as your name appears on the reverse side of this proxy.
When shares are held by joint tenants, both shareholders should sign.
When signing in a representative capacity, please give your representative
title. If 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>
Vote Your Proxy
- -> By Internet Access the Website at http://www.votefast.com
- -> By Telephone Call toll-free 1-800-250-9081
- -> By Mail Return your proxy in the postage-paid envelope provided.
Your Control Number Is:
Dominion Resources is pleased to offer you three ways to vote your 1999 Proxy.
When voting by internet or telephone, you will be prompted to enter your
control number. Simple prompts will be presented to you to record your vote.
Internet and telephone votes must be received by 5:00 p.m. EDT on Tuesday, April
13, 1999 to be counted in the final tabulation.
If you vote by internet or telephone, do not return your proxy card by mail.
If you choose to vote by mail, please mark, date and sign your proxy card.
Please use the postage-paid envelope to return your proxy.
If you are voting by mail, please fold and detach card at perforation before
mailing in the enclosed envelope.
1. Election of Directors 1. John W. Harris 2.
Kenneth A. Randall
FOR the following nominees: 3. Judith B. Warrick 4.
David A. Wollard
Withhold Authority to vote for all nominees listed above. To withhold
authority to vote for any individual nominee, write that nominee's name
in the following space:
...............................................................................
This Proxy is solicited on behalf of the Board of Directors. The Board of
Directors Recommends a Vote "FOR" Items 1, 2 and 3.
2.Proposal to amend the Articles of Incor-poration to eliminate classification
of Board of Directors and to increase the maximum number of Directors to 17.
For Against Abstain
3.Proposal to approve amendments to
the Dominion Resources, Inc., Incentive Compensation Plan.
For Against Abstain
Date , 1999
...............................................................................
Signature
...............................................................................
please date and sign on other sidE.
The 1999 Proxy Card
This Proxy is solicited on behalf of the Board of Directors.
Dominion Resources, Inc.
Employee Savings Plan
Dominion Subsidiary Savings Plan
Virginia Power Hourly
Employee Savings Plan
Voting Instructions are solicited by
Mellon Bank, N.A., the Plan's Trustee
For the Annual Meeting
of Shareholders, April 16, 1999
I acknowledge receipt of the Notice of Annual Meeting, Proxy Statement and
Annual Report relating to the Annual Meeting of Shareholders of Dominion
Resources and I hereby instruct Mellon Bank, N.A., as Trustee of the Dominion
Resources, Inc. Employee Savings Plan, the Dominion Subsidiary Savings Plan, and
the Virginia Power Hourly Employee Savings Plan, to vote the shares of Dominion
Resources Common Stock, relating to my Plan account for which I have the right
to give voting instructions
under the Plan, at such Annual Meeting in the manner set forth hereon. If this
card is not received on or before the close of business on April 13, 1999, the
Trustee cannot ensure that your voting instruc-tions will be tabulated and
counted. This voting instruction card, when properly executed, will be voted as
directed. If such card is returned executed with no direction given or is not
returned at all, the Trustee generally will vote your shares according to the
Board's recommendations.
Your instructions will be kept confidential.
<PAGE>
Vote Your Proxy
3
3
3
Your Control Number Is:
Dominion Resources is pleased to offer you three ways to vote your 1999 Proxy.
When voting by internet or telephone,
you will be prompted to enter your control number. Simple prompts will be
presented to you to record your vote. Internet and telephone votes must be
received by 5:00 p.m. EDT on Thursday, April 15, 1999 to be counted in the final
tabulation.
If you vote by internet or telephone, do not return your proxy card by mail.
If you choose to vote by mail, please mark, date and sign your proxy card. Please
use the postage-paid envelope to return your proxy.
If you are voting by mail, please fold and detach card at perforation before
mailing in the enclosed envelope.
1. Election of Directors 1. John W. Harris 2. Kenneth A. Randall
FOR the following nominees: 3. Judith B. Warrick 4. David A. Wollard
Withhold Authority to vote for all nominees listed above. To withhold
authority to vote for any individual nominee, write that nominee's name
in the following space:
....................................................................................
2.Proposal to amend the Articles of Incor-poration to eliminate classification
of Board of Directors and to increase the maximum number of Directors to 17.
For Against Abstain
3.Proposal to approve amendments to
the Dominion Resources, Inc., Incentive Compensation Plan.
For Against Abstain
The undersigned appoints John B. Adams, Jr., Frank S. Royal, M.D. and Patricia A.
Wilkerson, or any one of them, with the power of substitution, proxies to vote all
shares of the undersigned at the Annual Meeting of Shareholders on April 16, 1999,
and at any and all adjournments thereof.
Date , 1999
....................................................................................
Signature
....................................................................................
Signature (if held jointly)
This Proxy is solicited on behalf of the Board of Directors. The Board of
Directors Recommends a Vote "FOR" Items 1, 2 and 3.
please date and sign on other sidE.
The 1999 Proxy Card
This Proxy is solicited on behalf of the Board of Directors.
Dominion Resources, Inc.
P.O. Box 26532
Richmond, Virginia 23261
In their discretion, the proxies are
authorized to vote on any matters that properly come before the meeting.
This proxy when properly executed will be voted as directed by the signed
shareholder. If no direction is made, this proxy will be voted "FOR" Items 1, 2
and 3.
Please sign exactly as your name appears on the reverse side of this proxy.
When shares are held by joint tenants, both shareholders should sign.
When signing in a representative capacity, please give your representative
title. If 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.
</TABLE>
<PAGE>
DOMINION RESOURCES, INC.
INCENTIVE COMPENSATION PLAN
AMENDMENT to the Dominion Resources, Inc. Incentive Compensation Plan
(the "Plan") by Dominion Resources, Inc. (the "Company").
The Company maintains the Plan for the benefit of its employees. By
action of its Board of Directors, the Company has the power to amend the Plan,
and now wishes to do so.
I. Section 2(v) of the Plan is amended to read as follows:
(a) "Performance Criteria" means any of the following areas of
performance of DRI, Virginia Power, any Nonregulated Subsidiary or any
Affiliate: asset growth; utility earnings; generating unit efficiency; combined
net worth; debt to equity ratio; earnings per share; revenues; operating income;
operating cash flow; net income, before or after taxes; return on total capital,
equity, revenue or assets; nonutility generation cost exposure; power generation
costs; safety measured in fatalities, lost time, injuries and vehicle accidents;
environmental protection measured in reportable violations, notices of
violations, and environmental agency required corrective actions or enforcement
actions; or economic value added (net operating profit after tax less a charge
for use of capital as determined under a methodology approved by the DRI
Committee or Virginia Power Committee).
II. Section 4 of the Plan is amended by deleting the first sentence and
inserting the following in its place:
Subject to Section 15 of the Plan, there shall be reserved for issuance
under the Plan an aggregate of eleven million (11,000,000) shares of Company
Stock, which shall be authorized, but unissued shares.
III. Section 4 of the Plan is further amended by deleting the last sentence and
inserting the following in its place:
No more than one million five hundred thousand (1,500,000) shares may
be allocated to the Incentive Awards, including the maximum amounts payable
under a Performance Grant, that are granted to any individual Participant during
any single Taxable Year.
IV. A new Section 19 is added to the Plan as follows:
19. Grants To Outside Directors. In addition to the Awards otherwise provided
under the Plan, the Plan also permits the award of Nonstatutory Stock Options
and Restricted Stock to directors on the DRI Board, the Virginia Power Board or
the board of any Affiliate or Nonregulated Subsidiary if such directors are not
employees of DRI, Virginia Power, or any Affiliate or Nonregulated Subsidiary
("Outside Directors"). The DRI Board shall have the power and complete
discretion to select Outside Directors of DRI or any Nonregulated Subsidiary to
receive Awards. The DRI Board shall have the complete discretion, under
provisions consistent with Section 12 as to Participants, to determine the terms
and conditions, the nature of the award and the number of shares to be allocated
as part of each Award for each Outside Director of DRI or a Nonregulated
Subsidiary. The Virginia Power Board shall have the power and complete
discretion to select Outside Directors of Virginia Power or any Affiliate to
receive Awards. The Virginia Power Board shall have the complete discretion,
under provisions consistent with Section 12 as to Participants, to determine the
terms and conditions, the nature of the award and the number of shares to be
allocated as part of each Award for each Outside Director of Virginia Power or
an Affiliate. The grant of an Award shall not obligate DRI, Virginia Power or
any Affiliate or Nonregulated Subsidiary to make further grants to the Outside
Director at any time thereafter or to retain any person as a director for any
period of time.
V. In all respects not amended, the Plan is ratified and confirmed.
