<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14C-5(D)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
New York State Electric & Gas Corporation
.................................................................
(Name of Registrant as Specified In Its Charter)
New York State Electric & Gas Corporation
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Notes:
<PAGE>
NEW YORK STATE ELECTRIC & GAS CORPORATION
ITHACA, NEW YORK
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1995
------------
To the Holders of Common Stock of New York State Electric & Gas Corporation:
You are cordially invited to attend the Annual Meeting of Stockholders of
New York State Electric & Gas Corporation which will be held at the
Corporation's General Office on Route 13 (Ithaca-Dryden Road) in the Town of
Dryden, Tompkins County, New York, on May 12, 1995 at 11:00 A.M. (Eastern
Daylight Saving Time). The meeting is being held for the following purposes:
(1) To elect four directors to serve in Class II for a term expiring at the
1998 Annual Meeting;
(2) To consider and act upon a stockholder proposal;
and for the transaction of any other business properly brought before the
meeting or any adjournment thereof.
Holders of record of Common Stock at the close of business on March 23, 1995
will be entitled to notice of and to vote at the meeting.
Whether or not you expect to be present at the Annual Meeting, the Board of
Directors requests you to mark, sign and date the accompanying form of proxy
and return it in the enclosed envelope. The proxy is revocable by you at any
time before the exercise thereof, and the giving of such proxy will not affect
your right to vote in person, if you attend the Annual Meeting.
By Order of the Board of Directors,
James A. Carrigg Chairman,
President and Chief Executive
Officer
Daniel W. Farley Vice
President and Secretary
Dated: March 31, 1995
Please mark, sign and date the enclosed proxy and return it in the envelope
enclosed for your convenience.
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 12, 1995
------------
This statement is furnished in connection with the solicitation of proxies
on behalf of the Board of Directors of New York State Electric & Gas
Corporation, to be used at the Annual Meeting of Stockholders of the
Corporation to be held on May 12, 1995 at the Corporation's General Office in
the Town of Dryden, New York. This statement and the form of proxy were first
mailed to holders of Common Stock on or about March 31, 1995. The mailing
address of the Corporation's principal executive office is P. O. Box 3607,
Binghamton, NY 13902-3607.
ANNUAL REPORT
An Annual Report to Stockholders for the year ended December 31, 1994,
including consolidated financial statements, has been mailed to all
stockholders of record. The Annual Report is not a part of this Proxy
Statement.
OUTSTANDING VOTING SECURITIES OF THE CORPORATION
The close of business on March 23, 1995 has been fixed as the date for
determining the holders of Common Stock entitled to vote at the meeting.
As of March 23, 1995, the Corporation had outstanding 71,502,827 shares of
Common Stock. Holders of Common Stock have cumulative voting rights for the
election of directors and one vote per share for all other purposes.
Cumulative voting means that the total number of votes which a stockholder may
cast for the election of directors shall equal the number of directors to be
elected multiplied by the number of shares held, and the stockholder may cast
all of such votes for a single nominee for director or may distribute them
among all or several nominees, as the stockholder sees fit.
COMMON STOCK REPRESENTED BY YOUR PROXY
The proxy represents the number of shares registered in your name as well as
the number of whole shares credited to your account under the Corporation's
Dividend Reinvestment and Stock Purchase Plan. If you are an employee of the
Corporation and participate in the Tax Deferred Savings Plans, the proxy
constitutes an instruction for the trustee of such Plans to vote the whole
shares in your account in such Plans in the manner specified on the proxy. If
you are an employee of the Corporation and participate in the Tax Reduction
Act Employee Stock Ownership Plan, the proxy constitutes an instruction to
vote all your shares in such Plan in the manner specified on the proxy.
ELECTION OF DIRECTORS
The Board of Directors of the Corporation presently consists of eleven
directors divided into three classes, as nearly equal in number as possible.
One class of directors is elected at each annual meeting of stockholders for a
term expiring at the third succeeding annual meeting of stockholders.
<PAGE>
The nominees for election at this Annual Meeting to serve as directors in
Class II for a term expiring at the 1998 Annual Meeting of Stockholders and
thereafter until their successors shall be elected and shall qualify are:
James A. Carrigg, Paul L. Gioia, Ben E. Lynch, and Charles W. Stuart. James A.
Carrigg, Paul L. Gioia, Ben E. Lynch, and Charles W. Stuart were elected to
Class II at the 1992 Annual Meeting of Stockholders for a term expiring at the
1995 Annual Meeting of Stockholders.
Unless otherwise specified on the proxy, shares represented by proxies in
the accompanying form received on behalf of the Board of Directors will be
voted for the election of James A. Carrigg, Paul L. Gioia, Ben E. Lynch, and
Charles W. Stuart. Proxy holders reserve the right to exercise cumulative
voting rights and to cast the votes at the meeting in such manner, and for
such lesser number of said nominees, as they may deem best, in order, so far
as possible, to secure the election of said nominees. While it is not
anticipated that any of the nominees will be unable to qualify or accept
office, if one or more should be unable to do so, the proxy holders reserve
the right to vote for any substitute nominee or nominees designated by the
Board of Directors. The four nominees receiving the highest number of
affirmative votes cast by stockholders entitled to vote shall be elected to
serve as directors in Class II. Abstentions and broker non-votes are voted
neither "for" nor "against," and have no effect on the vote.
During 1994, there were thirteen meetings of the Board of Directors. All of
the directors attended 75% or more of the total number of meetings of the
Board of Directors and the Committees of the Board on which they served.
The following sets forth information for each nominee for election at this
Annual Meeting and for each director continuing in office.
CLASS II
DIRECTORS NOMINATED FOR TERMS EXPIRING IN 1998
YEAR FIRST
NAME AND AGE ELECTED A
DIRECTOR
James A. Carrigg, 61 1983
Chairman, President and Chief Executive Officer of the
Corporation, Binghamton, NY. Director and Past President
of Empire State Electric Energy Research Corporation, New
York, NY; Chairman, Board of Trustees of Broome Community
College, Binghamton, NY; Director of: Business Council of
New York State, Albany, NY; Security Mutual Life
Insurance Company of New York, Binghamton, NY; Home
Mutual Insurance Company, Binghamton, NY; Utilities
Mutual Insurance Company, New York, NY; First Empire
State Corporation, Buffalo, NY; New York Business
Development Corporation, Albany, NY; United Health
Services, Inc., Binghamton, NY; United MedManagement,
Inc., Binghamton, NY; United Health Services Hospitals,
Inc., Binghamton, NY; and Chairman, Director's Advisory
Council, M & T Bank--Southern Division, Endicott and
Ithaca, NY. Mr. Carrigg has been Chairman, President and
Chief Executive Officer of the Corporation since January
1, 1991. He was Chairman and Chief Executive Officer of
the Corporation from May 13, 1988 to December 31, 1990.
Prior to that time Mr. Carrigg was President and Chief
Operating Officer of the Corporation.
2
<PAGE>
NAME AND AGE YEAR FIRST
ELECTED A
DIRECTOR
Paul L. Gioia, 52 1991
Partner, LeBoeuf, Lamb, Greene & MacRae/1/, Albany, NY;
attorneys at law. Director of Berkshire Gas Company,
Pittsfield, MA. Mr. Gioia was a Senior Vice President of
First Albany Corporation from May 1, 1987 to October 31,
1993. Prior to that time Mr. Gioia served as a member and
was Chairman of the Public Service Commission of the
State of New York and also served as a member of the New
York State Energy Research and Development Authority.
Ben E. Lynch, 57 1987
President of Winchester Optical Company, Elmira, NY.
Chairman of Arnot-Ogden Medical Center, Elmira, NY; Past
President of Horseheads Board of Education, Horseheads,
NY. Mr. Lynch has been President of Winchester Optical
Company since 1965.
Charles W. Stuart, 69 1971
Chairman and Chief Executive Officer of C. W. Stuart &
Co. Inc., Newark, NY; interstate trucking concern. Former
Chairman of the Board, C. H. Stuart, Inc., Newark, NY;
diversified business, manufacturer of jewelry.
CLASS III
DIRECTORS WHOSE TERMS EXPIRE IN 1996
Alison P. Casarett, 64 1979
Special Assistant to the President, Cornell University,
Ithaca, NY. Professor of Radiation Biology, New York
State College of Veterinary Medicine, Cornell University.
Dr. Casarett was Dean of The Graduate School at Cornell
University from July 1, 1979 to July 31, 1993.
3
<PAGE>
NAME AND AGE YEAR FIRST
ELECTED A
DIRECTOR
John M. Keeler, 61 1989
Managing Partner, Hinman, Howard & Kattell/2/,
Binghamton, NY; attorneys at law. Director of Security
Mutual Life Insurance Company of New York, Binghamton,
NY; Chairman, The Harpur Forum of Binghamton University
Foundation, Binghamton, NY; Past President of Broome
County Bar Association, Binghamton, NY; Past President of
Broome County United Way.
David R. Newcomb, 71 1979
Former President and Chief Executive Officer, Buffalo
Forge Company, Buffalo, NY; manufacturer of heating,
ventilation, and air conditioning equipment. Director of:
Pratt & Lambert, Inc., Buffalo, NY; Rigidized Metals,
Inc., Buffalo, NY; Utica Mutual Insurance Company, Utica,
NY; Utica National Life Insurance Company, Utica, NY; and
Buffalo General Hospital, Buffalo, NY.
CLASS I
DIRECTORS WHOSE TERMS EXPIRE IN 1997
Everett A. Gilmour, 73 1980
Chairman of the Board, The National Bank and Trust
Company of Norwich, Norwich, NY and N.B.T. Bancorp, Inc.,
Norwich, NY. Director of: Preferred Mutual Insurance
Company, New Berlin, NY; Deposit Telephone Company,
Deposit, NY; Norwich Aero Products Corporation, Norwich,
NY; and Delaware Otsego Corporation, Cooperstown, NY.
Allen E. Kintigh, 70 1987
Former President and Chief Operating Officer of the
Corporation, Binghamton, NY. President, Royal Equipment,
Inc., Vestal, NY. Director of Acres Incorporated,
Toronto, Ontario, Canada. Former President and Director
of Somerset Railroad Corporation, a wholly-owned
subsidiary of the Corporation. Mr. Kintigh was President
and Chief Operating Officer of the Corporation from May
13, 1988 to December 31, 1990. Mr. Kintigh was Executive
Vice President of the Corporation from December 1, 1987
to May 13, 1988. Prior to that time Mr. Kintigh was
Senior Vice President-Generation of the Corporation.
4
<PAGE>
NAME AND AGE YEAR FIRST
ELECTED A
DIRECTOR
Alton G. Marshall, 73 1971
President of Alton G. Marshall Associates, Inc., New
York, NY, a real estate investment corporation. Director
of EQK Partners, Atlanta, GA. Independent General Partner
of Equitable Capital Partners and Equitable Capital
Partners (Retirement Fund), New York, NY; Trustee of
Hudson River Trust, New York, NY; Governor of The Real
Estate Board of New York, Inc., New York, NY. From March
1984 to December 31, 1990, Mr. Marshall was Chairman and
Chief Executive Officer of Lincoln Savings Bank, FSB,
Brooklyn, NY.
Robert A. Plane, 67 1982
President Emeritus of Wells College, Aurora, NY.
President Emeritus of Clarkson University, Potsdam, NY.
Mr. Plane was President of Wells College from October 8,
1991 to February 3, 1995 and served as Interim President
from March 11, 1991 to October 7, 1991. Mr. Plane was
Director of the New York State Agricultural Experiment
Station from November 1, 1986 to July 1, 1990. Mr. Plane
was President of Clarkson University prior to July 1,
1985.
- --------
(1) The law firm of which Mr. Gioia is a member provided legal services to the
Corporation in 1994 and is expected to provide legal services to the
Corporation in 1995.
(2) The law firm of which Mr. Keeler is a member provided legal services to
the Corporation in 1994 and is expected to provide legal services to the
Corporation in 1995.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates the amount and percentage of equity securities
of the Corporation beneficially owned by each person known to the Corporation
to be the owner of more than 5% of the Corporation's equity securities.
<TABLE>
<CAPTION>
NAME AND ADDRESS COMMON STOCK PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
------------------- ------------------- --------
<S> <C> <C>
Franklin Resources, Inc.* 5,212,800 7.3%
777 Mariners Island Blvd.
San Mateo, CA 94404
</TABLE>
- --------
* Based on an amendment to Schedule 13G filed with the Securities and Exchange
Commission for the period ended December 31, 1994. The shares were acquired
in the ordinary course of business and not for the purpose of changing or
influencing the control of the Corporation. Franklin Resources, Inc., a
mutual fund investment company, has sole voting power and shared disposition
power with respect to all of the shares.
5
<PAGE>
The following table indicates the number of shares of equity securities of
the Corporation beneficially owned by each director and nominee, each of the
executive officers named in the Summary Compensation Table included elsewhere
herein, and by the 22 current executive officers and directors as a group and
the percent of the outstanding securities so owned.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED PERCENT
NAME FEBRUARY 14, 1995 OF CLASS
---- ------------------ --------
<S> <C> <C>
John J. Bodkin................................ 4,363 *
James A. Carrigg.............................. 11,095 *
Alison P. Casarett............................ 437 *
Richard P. Fagan ............................. 4,093 *
Russell Fleming, Jr.**........................ 531 *
Everett A. Gilmour............................ 2,436 *
Paul L. Gioia ................................ 1,749 *
John M. Keeler ............................... 887 *
Allen E. Kintigh ............................. 923 *
Ben E. Lynch.................................. 1,115 *
Alton G. Marshall............................. 200 *
David R. Newcomb.............................. 3,208 *
Robert A. Plane .............................. 750 *
Vincent W. Rider***........................... 2,601 *
Jack H. Roskoz................................ 4,628 *
Charles W. Stuart ............................ 400 *
22 current executive officers and directors as
a group....................................... 55,430**** *
</TABLE>
- --------
* Less than 1/5 of 1% of the outstanding Common Stock.
** Mr. Fleming's stock ownership is reported as of August 31, 1994, the date
of his death.
*** Mr. Rider's stock ownership is reported as of January 1, 1995, the
effective date of his retirement.
**** Includes 4,777 shares held by an officer as nominee for the Employees'
Stock Purchase Plan.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's directors and executive officers, and persons holding ten
percent or more of the Corporation's equity securities to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Such reporting persons are also
required to provide the Corporation with copies of all Section 16(a) forms
they file. Specific due dates for these reports have been established by SEC
regulations. Based solely on its review of the copies of the reports received
by it and certain written representations from certain reporting persons, the
Corporation believes that during 1994 all filing requirements were satisfied
by its directors and executive officers, except Mr. Ben E. Lynch. Mr. Ben E.
Lynch, a director of the Corporation, was inadvertently late in filing one
report relating to one transaction involving Common Stock of the Corporation.
6
<PAGE>
EXECUTIVE COMPENSATION
Compensation for services to the Corporation for each of the last three
fiscal years of the chief executive officer and the next four highest
compensated executive officers of the Corporation who served in such
capacities on December 31, 1994, and of an executive officer of the
Corporation who passed away on August 31, 1994, is shown by the following:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) COMPENSATION (2)
- --------------------------- ---- -------- ------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
James A. Carrigg........ 1994 $438,000 $ 0 $3,040 $ 2,490
Chairman, President and 1993 413,123 0 0 2,429
Chief Executive Officer 1992 386,665 0 0 2,362
Jack H. Roskoz.......... 1994 259,250 0 1,392 2,310
Senior Vice President 1993 251,000 0 0 2,249
1992 241,000 21,187 0 2,182
Richard P. Fagan........ 1994 196,725 0 411 2,310
Senior Vice President 1993 191,400 0 0 2,249
1992 185,000 0 0 2,171
Vincent W. Rider (3).... 1994 155,625 0 118 18,116
Vice President 1993 151,500 0 0 0
1992 143,000 9,805 0 0
Russell Fleming, Jr. (4). 1994 147,500 0 40 5,802
Senior Vice President 1993 215,000 0 0 1,747
1992 207,000 0 0 1,164
John J. Bodkin.......... 1994 137,200 0 0 2,000
Vice President 1993 133,300 0 0 2,000
1992 127,000 8,910 0 1,905
</TABLE>
- --------
(1) In 1994, the Corporation made payments for Messrs. Carrigg, Roskoz, Fagan,
Rider, and Fleming of $3,040, $1,392, $411, $118, and $40, respectively,
for their share of the Medicare tax due on the increase in the vested
value of certain of their deferred compensation arrangements.
(2) In 1994, the Corporation contributed for Messrs. Carrigg, Roskoz, Fagan,
Fleming, and Bodkin, $2,310, $2,310, $2,310, $1,475, and $2,000,
respectively, under the Tax Deferred Savings Plan, and $180 for Mr.
Carrigg under the Employees' Stock Purchase Plan. The Corporation made
payments to Messrs. Rider and Fleming of $18,116 and $4,327, respectively,
in lieu of vacation.
(3) Mr. Rider retired effective January 1, 1995.
(4) Mr. Fleming held this position until his death on August 31, 1994 and is
included in the Summary Compensation Table in accordance with the rules of
the Securities and Exchange Commission.
7
<PAGE>
The following table sets forth the maximum retirement benefits payable to
executive officers who retire at age 60 or later, in specified compensation
and years of service classifications, pursuant to the Corporation's Retirement
Benefit Plan and the Corporation's Supplemental Executive Retirement Plan as
they presently exist, and assuming no optional payment form is elected. The
amounts listed below reflect the deduction for Social Security benefits. There
are no other offset amounts.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
ANNUAL --------------------------------------------------------------
SALARY* 10 15 20 25 30 35 40**
- ------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$600,000................ $269,300 $300,900 $332,400 $363,900 $395,400 $427,000 $485,500
550,000................ 245,700 274,600 303,500 332,400 361,300 390,200 419,100
500,000................ 222,000 248,300 274,600 300,900 327,100 353,400 379,700
450,000................ 198,400 222,000 245,700 269,300 293,000 316,600 340,300
400,000................ 174,800 195,800 216,800 237,800 258,800 279,800 300,900
350,000................ 151,100 169,500 187,900 206,300 224,700 243,100 261,500
300,000................ 127,500 143,200 159,000 174,800 190,500 206,300 222,000
250,000................ 103,800 117,000 130,100 143,200 156,400 169,500 182,600
200,000................ 80,200 90,700 101,200 111,700 122,200 132,700 143,200
150,000................ 56,500 64,400 72,300 80,200 88,100 95,900 103,800
100,000................ 32,900 38,200 43,400 48,700 53,900 59,200 64,400
</TABLE>
- --------
* Average of the salaries (not including amounts listed under "Bonus", "Other
Annual Compensation", and "All Other Compensation" in the Summary
Compensation Table) for the five highest paid consecutive years during the
last ten years of employment service. The average of the highest three years
of salary within the last ten years of employment for the Supplemental
Executive Retirement Plan was assumed to be approximately 5% higher than
each salary shown.
** Maximum years of employment service for Retirement Benefit Plan and
Supplemental Executive Retirement Plan purposes.
The Corporation's Retirement Benefit Plan provides retirement benefits for
its hourly and salaried employees, including executive officers, based on
length of service and the average salary for the five highest paid consecutive
years during the last ten years of employment service. The Retirement Benefit
Plan is non-contributory and is funded under a trust arrangement and an
insurance contract. Amounts paid into the Retirement Benefit Plan are computed
on an actuarial basis. The Retirement Benefit Plan provides for normal, early,
or disability retirement benefits.
The Corporation's Supplemental Executive Retirement Plan provides that all
salaried employees, including executive officers, shall receive the full
benefits of the Corporation's Retirement Benefit Plan without regard to any
limitations imposed by the federal tax law and by including certain amounts
deferred under the Corporation's Deferred Compensation Plan for Salaried
Employees. In addition, it provides that officers and certain other key
employees, who have at least ten years of service, who have served in key
capacities for at least five years and who retire at age 60 or later, shall
receive a total retirement benefit (including benefits under the Retirement
Benefit Plan and Social Security), based on years of service, of up to 75% of
the average of their highest three years of salary within the last ten years
of employment with the Corporation.
8
<PAGE>
Messrs. Carrigg, Roskoz, Fagan, Rider, and Bodkin have 36, 32, 23, 36, and
26 credited years of service, respectively, under the Retirement Benefit Plan
and Supplemental Executive Retirement Plan.
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
The Corporation has entered into an agreement with Mr. Carrigg which
provides for his employment as Chairman, President and Chief Executive Officer
of the Corporation for a term ending on December 31, 1996, with automatic one-
year extensions unless either Mr. Carrigg or the Corporation gives notice that
the agreement is not to be extended. The agreement was unanimously approved by
the Board of Directors and provides for a base salary, currently $455,000
subject to increase by the Board of Directors, and for Mr. Carrigg's continued
eligibility for participation in the Corporation's other compensation and
benefit plans. The agreement also provides that in the event of the
termination of Mr. Carrigg's employment by the Corporation without cause (as
defined in the agreement) prior to a change in control (as defined in the
agreement) of the Corporation, Mr. Carrigg will receive a lump sum amount
equal to the present value of the aggregate base salary otherwise payable to
Mr. Carrigg through the end of the term of the agreement. However, if within
two years following a change in control, or, if longer, within the two-year
period following consummation of a merger or consolidation, Mr. Carrigg's
employment is terminated either by the Corporation without cause or by Mr.
Carrigg for good reason, Mr. Carrigg will instead receive a lump-sum payment
equal to two times the sum of (i) his then-annual base salary and (ii) the
higher of the award he received pursuant to the Corporation's Annual Executive
Incentive Compensation Plan (AEICP) in the fiscal year preceding the date of
termination or the average amount so paid in the three fiscal years preceding
the year in which the change in control occurs. In the event of such
termination, Mr. Carrigg will also be entitled to continuation of his life,
disability, accident and health insurance benefits for a period of twenty-four
months and shall receive an amount equal to all earned but unpaid awards under
the AEICP and a pro rata portion of any award under the AEICP with respect to
the year in which the termination occurs, calculated by assuming that the
threshold performance goals for such year have been met and using such
adjustments to the variable performance goals as have been approved by the
Board of Directors in order to produce an appropriate pro rata award;
provided, however, that there shall be no duplication of payments made
pursuant to the agreement and the AEICP. Also, in the event of such
termination, Mr. Carrigg will be given an additional two years of age and
service credit under the Supplemental Executive Retirement Plan. Termination
of employment by Mr. Carrigg for good reason means Mr. Carrigg's termination
of his own employment following, among other things, a reduction in his
compensation or benefits, a diminution of his duties or responsibilities or
the assignment to him of duties inconsistent with his position. In the event
Mr. Carrigg's employment is terminated for cause, Mr. Carrigg is entitled to
receive only amounts earned through the date of termination. The agreement
also provides for payments in the event of the termination of Mr. Carrigg's
employment due to disability.
The Corporation has entered into severance agreements with Messrs. Roskoz
and Fagan in order to provide for certain payments if within two years
following a change in control or, if longer, within the two-year period
following consummation of a merger or consolidation, the individual's
employment is terminated either by the Corporation without cause or by the
individual for good reason. The severance agreements have terms ending on
December 31, 1996, with automatic one-year extensions unless either the
individual or the Corporation gives notice that the agreement is not to be
extended. The agreements were unanimously approved by the Board of Directors.
The benefits consist of a lump-sum severance payment equal to one and one-half
times the sum of (i) the individual's then-annual base salary, and (ii) the
higher of the award the individual received pursuant to the AEICP in the
fiscal year preceding the date of termination or the average amount so paid in
the three fiscal years preceding the year in which the change in control
occurs. In the event of such termination, the individual
9
<PAGE>
will be entitled to continuation of his life, disability, accident and health
insurance benefits for a period of eighteen months and shall also receive an
amount equal to all earned but unpaid awards under the AEICP and a pro rata
portion of any award under the AEICP with respect to the year in which the
termination occurs, calculated by assuming that the threshold performance
goals for such year have been met and using such adjustments to the variable
performance goals as have been approved by the Board of Directors in order to
produce an appropriate pro rata award; provided, however, that there shall be
no duplication of payments made pursuant to the agreement and the AEICP. Also,
in the event of such termination, the individual will receive outplacement
counseling and shall be given an additional one and one-half years of age and
service credit under the Supplemental Executive Retirement Plan.
The Corporation has also entered into a severance agreement with Mr. Bodkin
which provides the same benefits as the severance agreements described in the
immediately preceding paragraph except that the lump-sum severance payment
described therein shall be calculated by using a multiple of one, the
insurance benefits shall continue for a period of twelve months and the age
and service credit under the Supplemental Executive Retirement Plan shall be
one year.
In the event of a change in control (as defined in the AEICP), the
Corporation will pay participants in the AEICP, including executive officers,
an amount which includes all earned but unpaid awards, and a pro rata portion
of any award with respect to the year in which the change in control occurs,
calculated by assuming that the threshold performance goals for such year have
been met and using such adjustments to the variable performance goals as have
been approved by the Board of Directors in order to produce an appropriate pro
rata award.
In the event of a change in control (as defined in the Performance Share
Plan), the Corporation will pay participants in the Performance Share Plan,
including executive officers, an amount which includes all earned but unpaid
awards and an award with respect to the year in which the change in control
occurs, based on the Corporation's achieving certain performance measures
involving the market-to-book ratio of the Corporation's Common Stock and one-
year average total stockholder return of the Corporation as compared to the
top 100 utilities by revenue.
After a change in control (as defined in the Supplemental Executive
Retirement Plan), officers and certain other key employees, who have at least
ten years of service, who have served in key capacities for at least five
years, and whose employment is terminated at age 55 or later, other than for
cause (as defined in the Supplemental Executive Retirement Plan), shall
receive a total retirement benefit (including benefits under the Retirement
Benefit Plan and Social Security), based on years of service, of up to 75% of
the average of their highest three years of salary during the last ten years
of employment with the Corporation. However, in the case of termination prior
to age 60, such total retirement benefit will be determined by applying the
same reduction in benefits as is applied to benefits upon retirement prior to
age 60 under the Retirement Benefit Plan.
DIRECTORS' COMPENSATION
Directors of the Corporation, other than officers, receive an annual
retainer of $18,000, plus $700 for each directors' meeting attended. Members
of the Executive Committee, other than officers, receive compensation of
$1,500 annually. Members of committees, including the Executive Committee,
other than officers, receive $600 for each committee meeting attended, except
that if the committee meeting is held on the same day and at the same location
as a directors' meeting, the fee is $500. If a directors' meeting or committee
meeting is held by
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means of a conference telephone, the fee is $250. The Chairperson of each
standing committee receives additional compensation of $1,000 for serving as
Chairperson of such committee. Under the terms of the Corporation's Deferred
Compensation Plan for Directors, directors can elect to defer a portion or all
of their compensation. Such deferred compensation, together with interest
thereon, is payable in a lump sum or over a period of years following
retirement as a director.
The Corporation has a Retirement Plan for Directors pursuant to which
directors of the Corporation qualify for annual retirement benefits. A
director who serves on the Board of Directors for a minimum of five years
qualifies for annual retirement benefits equal to 50% of the highest annual
retainer in effect for that director during the period of the director's
service on the Board of Directors. A director with ten years or more of
service on the Board of Directors qualifies for annual retirement benefits
equal to 100% of the highest annual retainer in effect for that director
during the period of the director's service on the Board of Directors, while a
director with between five and ten years of service qualifies for pro rated
amounts. Under the Plan, retirement benefit payments generally commence upon
the later of the director's attaining age 65 or retirement from the Board of
Directors. The Plan provides for the payment of annual retirement benefits to
continue for a period equal to the greater of the director's life or ten
years. Directors elected prior to the effective date of the Plan will have
their prior service as directors included in establishing their eligibility
and the amount of their retirement benefits. A director who is also an officer
of the Corporation would qualify for retirement benefits only if the director
serves as a director after the director ceases to be an officer or served as a
director before election as an officer. In either case, the director's service
as a director while also an officer will be included in establishing the
amount of the director's retirement benefits.
COMMITTEES
The Corporation's Board of Directors has an Audit Committee, a Nominating
Committee, and an Executive Compensation and Succession Committee.
The Audit Committee, which consists of Robert A. Plane, Chairman, Paul L.
Gioia, John M. Keeler, and Ben E. Lynch, had four meetings in 1994. Alison P.
Casarett has been designated as an alternate member of the Audit Committee and
serves in the absence of any regular member. The Audit Committee recommends
the appointment of the independent accountants and reviews with them the audit
plan and results of the audit. It also meets with the independent accountants,
internal auditor, and management to discuss the adequacy of the Corporation's
system of internal controls and financial reporting, and meets with the
internal auditor to discuss the results of completed internal audits.
The Nominating Committee, which consists of Alton G. Marshall, Chairman,
Alison P. Casarett, Everett A. Gilmour, and David R. Newcomb, had one meeting
in 1994. The Nominating Committee is responsible for recommending candidates
to fill vacancies on the Board of Directors. The Committee makes
recommendations to the Board of Directors regarding criteria for nomination as
a candidate to the Board of Directors. Stockholders wishing to recommend
candidates for consideration by the Nominating Committee should submit to the
Secretary of the Corporation the name, a statement of qualifications and the
written consent of the candidate. Recommendations will be brought to the
attention of the Nominating Committee.
The Executive Compensation and Succession Committee, which consists of
Everett A. Gilmour, Chairman, Alison P. Casarett, Ben E. Lynch, Alton G.
Marshall, and David R. Newcomb, had six meetings in 1994. That Committee,
among other things, recommends compensation for officers, awards under the
Annual Executive Incentive Compensation Plan, and candidates for election as
officers.
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REPORT OF EXECUTIVE COMPENSATION AND SUCCESSION COMMITTEE ON EXECUTIVE
COMPENSATION
The Executive Compensation and Succession Committee reviews the compensation
levels of members of management, evaluates the performance of management, and
considers management succession and related matters. In addition, the
Committee administers the Corporation's incentive plans, which include an
annual incentive plan and a long-term performance plan.
The compensation policy of the Committee is that executive compensation,
including compensation of the Chief Executive Officer, should consist of base
salary and incentive compensation.
In determining base salaries for 1994 for executive officers, including the
Chief Executive Officer, the Committee considered its policy that, in general,
executive officers of the Corporation, including the Chief Executive Officer,
should be compensated at competitive levels to attract, motivate and retain
talented executives. To that end, the Committee reviewed certain compensation
data from New York State combination electric and gas utilities, 15
comparably-sized utility companies and several comparably-sized general
industry companies located in or near the Corporation's service area, as well
as certain portions of the draft report of Williams, Thacher & Rand for the
Public Service Commission of the State of New York (PSC) on the Executive
Compensation Study of New York State Utilities, in order to assist in its
decision-making. Some of these utility companies and comparably-sized general
industry companies are included in the comparison indices in the Stock
Performance Graph included elsewhere herein.
The Committee also considered the following factors subjectively in
determining base salaries for executive officers, including the Chief
Executive Officer: the Corporation's financial results for 1993, streamlining
of the field organization and other cost-cutting measures to meet competition,
efforts to reduce the cost of unnecessary and uneconomical electricity from
non-utility generators, the efficiency and reliability of the Corporation's
generating system, the implementation of a flexible rate for high-use electric
customers, the service the Corporation provides to its customers, the steps
the Corporation has taken in preparation for the impact of Federal Energy
Regulatory Commission Order 636, whether certain rewards or penalties were
earned or imposed under the three year rate settlement agreement with the PSC,
the performance of the Corporation's Common Stock compared to certain other
utilities' common stock, the Corporation's diversification efforts and whether
certain stockholder and customer related goals were achieved. With respect to
Mr. Carrigg's base salary for 1994, the Committee also considered Mr.
Carrigg's employment agreement, his effectiveness in leading the Corporation
to plan for changes in the competitive, rapidly changing utility industry
through the development of a strategic plan, his responsibilities, the depth
of his experience and his job performance.
Taking into consideration all of the above factors, together with the policy
of the Committee that executive officers of the Corporation, including the
Chief Executive Officer, should be compensated at competitive levels, the
Committee targeted base salary at approximately the median level for the
comparably-sized utility company group, subject to adjustment depending on the
individual's performance. The 1994 base salaries for the named executive
officers, including Mr. Carrigg, were approximately at such median level.
In order to further ensure the achievement of a link between corporate
performance and executive compensation, the Corporation has an Annual
Executive Incentive Compensation Plan (AEICP) pursuant to which executive and
other officers of the Corporation qualify for cash incentive awards if goals
which will create benefits for stockholders and customers of the Corporation
are achieved during the year. Performance goals are established each year on a
corporate level. For 1994, an incentive award would have been made under the
AEICP if certain customer service and threshold earnings per share performance
goals were met. The customer service
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and threshold earnings per share performance goals were not met for 1994 and
thus no awards were made under the AEICP. The amount of the incentive award,
if any, is based on a percentage, starting at 7.5% of a participant's salary
grade midpoint. For 1994, the amount of the incentive award could have
increased, subject to a cap, by amounts ranging from 0.75% to 1.5% of a
participant's salary grade midpoint for every one cent ($.01) per share over
the threshold earnings per share performance goal. Individual incentive
awards, if any, are approved by the Board of Directors after review and
recommendation by the Committee.
While attaining established corporate goals is an important component of
earning incentive awards, the Committee believes that compensation should also
be based upon the Corporation's performance as compared to the performance of
a group of companies in the same industry. Thus, the Corporation has a
Performance Share Plan (Plan) pursuant to which executive and other officers
of the Corporation qualify for cash incentive awards if certain long-term
performance measures of the Corporation involving the Corporation's rank
within the top 100 utilities by revenue are achieved. There have been no cash
payments made under the Plan since its inception on January 1, 1991. Under the
Plan, certain amounts of Performance Shares are granted to participants
depending upon their position. Performance Shares granted earn dividend
equivalents in the form of additional Performance Shares. If the average of
the Corporation's rankings with respect to market-to-book ratio of the
Corporation's Common Stock and with respect to the three-year average total
shareholder return of the Corporation, in both cases, compared to the top 100
utilities by revenue, meets or exceeds a certain level, cash payments
representing the value of a portion of the Performance Shares granted will be
made to participants. The Plan provides that achievement of: an average
ranking of 50th to 41st will result in a cash payment representing 10% of the
Performance Shares granted; an average ranking of 40th to 31st will result in
a cash payment representing an additional 20% of the Performance Shares
granted; an average ranking of 30th to 21st will result in a cash payment
representing an additional 30% of the Performance Shares granted; and an
average ranking of at least 20th will result in a cash payment representing
the remaining 40% of the Performance Shares granted. The value of the
Performance Shares will be measured by reference to the average of the daily
closing prices of a share of the Corporation's Common Stock for twenty
consecutive trading days immediately preceding the date the Corporation's
average ranking is calculated.
Executive Compensation and Succession
Committee
Everett A. Gilmour, Chairman Alton G. Marshall
Alison P. Casarett David R. Newcomb
Ben E. Lynch
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STOCK PERFORMANCE GRAPH
The yearly change in the cumulative total stockholder return on the
Corporation's Common Stock during the five years ending December 31, 1994,
compared with the cumulative total return on the Standard & Poor's Utilities
Index and Standard & Poor's 500 Index, assuming $100 was invested on December
31, 1989, and assuming reinvestment of dividends, is shown by the following:
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG NYSEG, S&P UTILITIES INDEX AND S&P 500 INDEX
<CAPTION>
Measurement period S&P UTILITIES S&P 500
(Fiscal year Covered) NYSEG INDEX INDEX
- --------------------- ----- ------- -------
<S> <C> <C> <C>
Measurement PT -
12/31/89 $100 $100 $100
FYE 12/31/90 $ 97.89 $ 97.44 $ 96.89
FYE 12/31/91 $118.42 $111.69 $126.42
FYE 12/31/92 $142.84 $120.72 $136.05
FYE 12/31/93 $144.10 $138.16 $149.76
FYE 12/31/94 $ 96.45 $127.18 $151.74
</TABLE>
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INDEPENDENT ACCOUNTANTS
The Corporation has appointed Coopers & Lybrand L.L.P., a firm of
independent certified public accountants, as auditors for the year 1995.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at the
meeting and will have an opportunity to make a statement if they desire to do
so. They will also be available to answer questions that may be asked by
stockholders. From time to time Coopers & Lybrand L.L.P. performs certain
management advisory services for the Corporation.
STOCKHOLDER PROPOSAL
Mr. and Mrs. Edward Rudy, Box 7077, Yorkville Station, New York, New York,
10128, who are the record holders of 1,698 shares of the Corporation's Common
Stock have advised the Corporation that they intend to present the following
proposal at the Annual Meeting of Stockholders:
"RESOLVED: That the stockholders of New York State Electric & Gas
Corporation, assembled in annual meeting in person and by proxy, hereby
request that the Board of Directors take the steps necessary to provide for
an immediate reduction in stipends, fees, salaries, stock options, and/or
other remuneration being paid to members of the Board of Directors,
including NYSEG officers and executives who also serve as directors, to the
exact percentage reduction which has been approved by the Board of
Directors for dividends payable to the shareholders of the corporation and,
furthermore, said reduction shall not be restored nor payments to all NYSEG
directors increased except in the exact same percentages as are approved
for future increases in shareholder common stock dividends."
The following statement was submitted by Mr. and Mrs. Rudy in support of the
proposal:
"SUPPORTING STATEMENT
Shareholders who are the owners of New York State Electric & Gas
Corporation have been subjected to a dividend reduction of 36.37% with the
explanation, by NYSEG Chairman, President and C.E.O. James Carrigg on
behalf of the NYSEG Board of Directors, that "we understand the importance
of the dividend. While difficult, this action is a crucial step in
positioning NYSEG for a competitive environment." We believe that the Board
of Directors should fully participate with the non-director shareholder
owners in this crucial step which they determined was necessary. It will
require a 57.14% increase in the dividend rate for restoration to its
former level. We believe that the members of the Board of Directors may
look more favorably upon restoring the dividend rate because, with the
approval of this resolution, the directors will benefit equally with the
shareholder owners.
If you agree, please mark your ballot in favor of this resolution;
otherwise it is automatically cast in opposition to this shareholder
proposal, unless you have indicated that you wish to abstain from voting on
this proposal."
BOARD OF DIRECTORS' POSITION
The Board of Directors recommends a vote AGAINST adoption of the proposal
for the following reasons:
The proposal calls for the immediate reduction of all forms of compensation
paid to directors by the same percentage as the Common Stock dividend was
reduced and would tie director compensation to the level of the Common Stock
dividend. The intent, as stated in the supporting statement, is to ensure that
the directors "fully
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<PAGE>
participate with the non-director shareholder owners" in the dividend
reduction. Although the proponents are attempting to link director
compensation to the level of the Common Stock dividend, and thus, tie director
compensation to stockholder interests, the use of only the dividend level as
the linking factor would not ensure that director compensation is properly
tied to stockholder interests. Linking director compensation to the level of
dividends implies that the latter is the most important measure in
establishing director compensation whereas, to the contrary, the Corporation
considers many factors in establishing director compensation. The Board of
Directors does not believe director compensation should fluctuate based on
short-term results, either positive or negative, because in making decisions
it considers the best interests of the Corporation and its stockholders over
both the long-term and the short-term. The long-term achievement of increased
stockholder value requires more than merely tying director compensation to the
level of dividends. Under the proposal, all factors other than dividends would
be irrelevant in determining compensation paid to directors.
The Board of Directors also believes that it is in the best interest of the
stockholders to attract and retain the most highly qualified individuals as
directors. To do this, it is important to pay director fees which are
competitive with fees paid by other comparably-sized utility and general
industry companies. The proponent's resolution, if adopted, would not provide
the Board of Directors with the necessary flexibility in attracting and
retaining the most highly qualified individuals as directors. Such a
restriction on flexibility would make it extremely difficult for the
Corporation to attract qualified directors, particularly in a market where
other comparably-sized utility and general industry companies have no such
restriction.
The affirmative vote of the holders of a majority of the votes cast at the
meeting by stockholders entitled to vote is required to adopt the proposal.
Abstentions and broker non-votes are voted neither "for" nor "against" and
have no effect on the vote in connection with the proposal. If your proxy is
signed and returned without specifying a choice, the shares will be voted as
recommended by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THE PROPOSAL.
DEADLINE FOR STOCKHOLDER PROPOSALS
The date by which proposals of stockholders intended to be presented at the
1996 Annual Meeting must be received by the Corporation for inclusion in the
proxy statement and form of proxy relating to that meeting is December 2,
1995. Such proposals should be sent to the Secretary of the Corporation at
P.O. Box 3200, Ithaca, NY 14852-3200.
OTHER MATTERS
The Board of Directors does not know of any other matters of business to be
presented for action at the meeting. However, the enclosed form of proxy will
confer discretionary authority for the transacting of any such other and
further business if properly brought before the meeting or any adjournment
thereof. If any such business is so brought before the meeting, the persons
named in the enclosed form of proxy, or their substitutes, will vote according
to their discretion.
The proxy is revocable by you at any time before the exercise thereof, and
the giving of such proxy will not affect your right to vote in person, should
you later find it convenient to attend the meeting.
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State law requires the Corporation to inform stockholders of the initiation
or renewal of insurance indemnifying itself and its officers and directors.
The Corporation's Pension Trust Liability Insurance, which is carried with
Federal Insurance Company, covering the Corporation and its directors and
those officers considered fiduciaries under the Employee Retirement Income
Security Act of 1974, has been renewed for one year beginning October 1, 1994
at a premium of $64,009.
COST OF SOLICITATION
The accompanying proxy is solicited on behalf of the Board of Directors. The
cost of this solicitation, including reimbursement of charges of brokerage
houses and others for their expenses in forwarding proxy materials to
beneficial owners of stock, will be paid by the Corporation. In addition,
directors, officers, and employees of the Corporation may solicit proxies by
telephone, telegram or in person, without additional compensation.
By Order of the Board of Directors,
Daniel W. Farley,
Vice President and Secretary
Dated: March 31, 1995
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NEW YORK STATE ELECTRIC & GAS CORPORATION
PO Box 3200, Ithaca, NY 14852-3200
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
P The undersigned appoints J. A. Carrigg, R. P. Fagan, and D. W. Farley, or
R any one or more of them, with power of substitution, proxies of the
O undersigned, to vote, as specified, and in their discretion with respect to
X any other business properly brought before the meeting, all shares of
Y stock of New York State Electric & Gas Corporation which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of said Corporation
to be held on May 12, 1995, and at any adjournment thereof
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN PROPOSAL 1
(1) ELECTION OF DIRECTORS [ ] FOR ALL NOMINEES LISTED [ ] WITHHOLD AUTHORITY
BELOW (EXCEPT AS WRITTEN TO VOTE FOR ALL
TO THE CONTRARY ON THE NOMINEES
LINE PROVIDED BELOW)
J. A. CARRIGG, P. L. GIOIA,
B. E. LYNCH, C. W. STUART
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, PRINT
THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.
--------------------------------------------------------------------
(THIS PROXY IS CONTINUED ON THE REVERSE SIDE)
(PLEASE SIGN AND DATE ON THE REVERSE SIDE)
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" PROPOSAL 2
(2) THE STOCKHOLDER PROPOSAL RELATING TO A [ ] FOR [ ] AGAINST [ ] ABSTAIN
PERCENTAGE REDUCTION IN DIRECTOR
REMUNERATION BASED ON A DIVIDEND REDUCTION.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR ALL THE NOMINEES AND
AGAINST PROPOSAL (2).
Dated , 1995
----------------------
---------------------------------
---------------------------------
(Signature/s)
(Joint owners each must sign. When
signing as attorney, trustee,
administator, executor or
guardian, please give your full
title as such.)
