<PAGE>1
NIAGARA MOHAWK POWER CORPORATION
300 ERIE BOULEVARD WEST, SYRACUSE, NEW YORK 13202
To the Shareholders of
Niagara Mohawk Power Corporation
You are cordially invited to attend the Annual Meeting of your
Corporation to be held at 10:30 a.m. on Tuesday, May 2, 1995 at the
BUFFALO MARRIOTT, 1340 MILLERSPORT HIGHWAY, AMHERST, NEW YORK
14221.
The matters to be acted upon are described in the accompanying
Notice of Annual Meeting and Proxy Statement. A current report on
business operations of the Corporation will be presented at the
meeting and shareholders will have an opportunity to ask questions.
Your vote is important. Whether or not you plan to attend the
Annual Meeting, please sign, date and return your proxy card in the
enclosed envelope to ensure that your shares will be represented at
the Annual Meeting. Last year, proxies were received from over
57,000 shareholders representing 89.8% of the outstanding stock.
We are hopeful that an equally fine response will be forthcoming
this year.<PAGE>
<PAGE>2
Prompt return of your voted proxy card will reduce the cost of
further mailings and other follow-up work. You may revoke your
voted proxy at any time prior to the meeting or vote in person if
you attend the meeting.
We are grateful for your assistance and express our
appreciation in advance.
Sincerely yours,
William E. Davis
Chairman of the Board and Chief Executive Officer
March 21, 1995<PAGE>
<PAGE>3
NOTICE OF ANNUAL MEETING
Please take notice that the Annual Meeting of Shareholders of
Niagara Mohawk Power Corporation will be held at the Buffalo
Marriott, 1340 Millersport Highway, Amherst, New York 14221 on
Tuesday, May 2, 1995 at 10:30 a.m. for the following purposes:
(1) To elect four directors to serve in Class I for a term
expiring at the 1998 Annual Meeting;
(2) To consider and act upon a shareholder proposal relating
to a Company report on carbon dioxide emissions; and
(3) To transact such other business as may be properly
brought before the meeting or any adjournment thereof.
Shareholders entitled to vote at the meeting are the holders
of the Common Stock of record at the close of business on March 14,
1995.
By order of the Board of Directors
Kapua A. Rice
Secretary<PAGE>
Dated: March 21, 1995
<PAGE>4
PROXY STATEMENT
Niagara Mohawk Power Corporation
300 Erie Boulevard West, Syracuse, New York 13202
The enclosed Proxy is solicited by the Board of Directors of
Niagara Mohawk Power Corporation ("Corporation") for use at the
Annual Meeting of Shareholders to be held on May 2, 1995 and at any
adjournment thereof. This proxy statement and the form of proxy,
together with the 1994 Annual Report, are being mailed to
shareholders of record commencing on or about March 21, 1995.
The close of business on March 14, 1995 has been fixed as the
date for determining the holders of Common Stock entitled to vote
at the meeting. Shareholders of Common Stock whose names appeared
of record on the books of the Corporation at the close of business
on March 14, 1995, will be entitled to vote at the meeting and at
any adjournment thereof. On the record date for the meeting there
were 144,330,482 shares of Common Stock outstanding and entitled to
vote. Each share of Common Stock is entitled to one vote.
(1). PROPOSAL TO ELECT FOUR CLASS I DIRECTORS
The Corporation presently has fifteen directors. Mr. John G.
Haehl, Jr., who has served as Director for 25 years, will retire
from the Board of Directors at the 1995 Annual Meeting and is not
a candidate for reelection. In addition, Mr. John M. Endries,
President of the Corporation and Board member since 1988, elected
to take early retirement, effective upon the election of his
successor. As a result, as of the 1995 Annual Meeting, the
Corporation will have fourteen Directors. The Board of Directors
is deeply appreciative of the contributions made by Messrs. Haehl<PAGE>
and Endries.
<PAGE>5
The Corporation's Certificate of Incorporation, as amended,
provides for classification of the Directors into three classes,
composed of as nearly equal a number of Directors as possible. One
class of Directors is elected at each Annual Meeting of
Shareholders to hold office for a term expiring at the third Annual
Meeting of Shareholders after such election. Of the directors
identified below, four are nominees for election as Class I
Directors for a term expiring at the 1998 Annual Meeting. All
nominees are members of the present Board of Directors.
Unless otherwise instructed, proxies received in response to
this solicitation will be voted in favor of the election of the
persons nominated to the class of directors identified below. If
any of them should be unable or unwilling to serve, the proxy may
be voted for the election of such other person as the Board of
Directors may recommend in his or her place. The management has no
reason to believe that any nominee will become unavailable to
serve.
As applicable to each nominee and continuing Director, the
name, age as of March 1, 1995, principal occupation, business
experience for the last five years or more, other directorships and
the year in which first elected a Director, are set forth below.
BUSINESS BACKGROUND OF NOMINEES AND DIRECTORS
NOMINEES FOR CLASS I DIRECTORS - TERMS EXPIRING IN 1998
[PHOTO] ALBERT J. BUDNEY, JR.
Albert J. Budney, Jr., age 47, was elected
President of the Corporation effective April 1995.
Mr. Budney was previously employed by UtiliCorp
United, Inc. as Corporate Managing Vice President<PAGE>
of the UtiliCorp Power Services Group and as
President of the Missouri Public Service Division.
<PAGE>6
From 1990-1992, he held the position of Vice
President with Stone & Webster Inc. Prior to that
he was General Manager of Strategic Planning,
Budgeting and Financial Analysis of Public Service
Enterprise Group. Until March 1995, he was Vice
Chairman of MoKan Power Pool and a director of
Southwest Power Pool.
Mr. Budney was elected to the Board, effective
April, 1995.
[PHOTO] EDMUND M. DAVIS
Edmund M. Davis, age 65, is a Partner of Hiscock
& Barclay, Syracuse, N.Y., Attorneys-at-Law. Mr.
Davis has been associated with the law firm since
1957. Member of the Central Region Advisory Board
of Directors of Marine Midland Bank. Trustee of
Clarkson University.
Mr. Davis has been a director of this Corporation
since 1970.
[PHOTO] DR. BONNIE GUITON HILL
Bonnie Guiton Hill, age 53, is the Dean and
Professor of Commerce of the McIntire School of
Commerce at the University of Virginia. Dr. Hill
has held her present position since 1992. Prior
to that, she served as the Secretary of State and
Consumer Services Agency for the State of
California. During 1990 she was President and
Chief Executive Officer of Earth Conservation
Corps. and from 1989 to 1990, she served as<PAGE>
Special Advisor to the President and Director of
the United States Office Of Consumer Affairs.
Director of AK Steel Corporation; Crestar
<PAGE>7
Financial Corporation; Hershey Foods Corporation;
Joint Center for Political and Economic Studies;
Louisiana-Pacific Corporation; National
Environmental Education and Training Foundation
and RREEF America, Inc. Member of the Consumer
Affairs Advisory Committee of the Securities and
Exchange Commission.
Dr. Hill has been a director of this Corporation
since 1991.
[PHOTO] HENRY A. PANASCI, JR.
Henry A. Panasci, Jr., age 66, is Chairman of the
Board and Chief Executive Officer of Fay's
Incorporated. Mr. Panasci has held his present
position since 1976. Prior to that he co-founded
Fay's Drug Co., Inc. with his father in 1958 and
was elected president in 1966. Director of the
National Association of Chain Drug Stores.
Trustee of Syracuse University.
Mr. Panasci has been a director of this Corporation
since 1988.
CONTINUING CLASS II DIRECTORS - TERMS EXPIRING IN 1996
[PHOTO] WILLIAM F. ALLYN<PAGE>
William F. Allyn, age 59, is President of Welch
Allyn, Inc., Skaneateles Falls, N.Y. Mr. Allyn
joined Welch Allyn, Inc. in 1962 and was elected
<PAGE>8 to his present position in 1980. Director of the
Business Council of New York State; Community
General Hospital; Manufacturers Association of
Central New York; ONBANCorp., Inc.; Oneida
Limited; Perfex Corporation and Syracuse Research
Corporation. Trustee of Syracuse University.
Overseer of the School of Nursing, Syracuse
University; Thayer School of Engineering,
Dartmouth College and the Schools of Engineering
at the University of Rochester and Syracuse
University.
Mr. Allyn has been a director of this Corporation
since 1988.
[PHOTO] WILLIAM E. DAVIS
William E. Davis, age 52, was elected Chairman of
the Board and Chief Executive Officer in 1993.
Mr. Davis joined the Corporation in 1990 as Vice
President-Corporate Planning, was elected Senior
Vice President in April 1992, serving in that
capacity until elected Vice-Chairman of the Board
of the Corporation in November 1992. Prior to
that, Mr. Davis was executive deputy commissioner
of the New York State Energy Office. Director of
Opinac Energy Corporation, a wholly-owned
subsidiary of the Corporation, and its subsidiary,
Canadian Niagara Power Company, Limited;
Association of Edison Illuminating Companies;
Business Alliance for a New, New York; Center for
Clean Air Policy; Crouse-Irving Memorial Hospital;
Edison Electric Institute; Metropolitan
Development Association of Syracuse and Central
New York, Inc.; The Nuclear Energy Institute;<PAGE>
Syracuse University and Utilities Mutual Insurance
Company. Trustee of Niagara Mohawk Foundation,
Inc. Chairperson of the Executive Committee of the
<PAGE>9
Energy Association of New York and President's
Council of Syracuse University of New York College
of Environmental Science and Forestry. Committee
Member of The Energy and Transportation Task Force
of President Clinton's Council on Sustainable
Development; Harvard Electricity Policy Group and
Partners for a Drug Free New York.
Mr. Davis has been a director of this Corporation
since 1992.
[PHOTO] WILLIAM J. DONLON
William J. Donlon, age 65, retired in 1993 as
Chairman of the Board and Chief Executive Officer
of the Corporation with 45 years service as an
active employee. Director of Opinac Energy
Corporation, a wholly-owned subsidiary of the
Corporation, and its subsidiary, Canadian Niagara
Power Company, Limited; Metropolitan Development
Association of Syracuse and Central New York,
Inc.; ONBANCorp., Inc.; and Utilities Mutual
Insurance Company. Trustee of Siena College and
Syracuse University.
Mr. Donlon has been a director of this
Corporation since 1980.
[PHOTO] EDWARD W. DUFFY
Edward W. Duffy, age 68, retired in 1983 as
Chairman of the Board and Chief Executive Officer<PAGE>
of Marine Midland Banks, Inc. Mr. Duffy's
association with the Marine Midland Bank system
began in 1952. Mr. Duffy retired as a director of
Marine Midland Bank on September 1, 1993.
<PAGE>10
Director of Columbus McKinnon Corporation; Graphic
Arts National Insurance Company; Oneida Limited;
Utica Mutual Insurance Company; Utica National
Insurance Group and W.R. Grace & Co.
Mr. Duffy has been a director of this Corporation
since 1973.
[PHOTO] DR. PATTI McGILL PETERSON
Patti McGill Peterson, age 51, is President of St.
Lawrence University, Canton, N.Y. Dr. Peterson
has held her present position since 1987.
Director of John Hancock Advisors, Inc. and
Security Mutual Life Insurance Company. Trustee
of Northwood School; Consortium for Independent
Colleges and Universities; Association of American
Colleges and The Nelson A. Rockefeller Institute
of Government. Member of the American Council on
Education's Commission on National Challenges in
Higher Education.
Dr. Peterson has been a director of this
Corporation since 1988.
CONTINUING CLASS III DIRECTORS - TERMS EXPIRING IN 1997
[PHOTO] LAWRENCE BURKHARDT, III<PAGE>
Lawrence Burkhardt, III, age 62, is an independent
consultant with the Atlas Consulting Group. Prior
to his retirement in 1990, Mr. Burkhardt was
employed by the Corporation and served as
<PAGE>11
Executive Vice President of Nuclear Operations.
He was elected to the Board of Directors on
October 21, 1988 and contracted to become an
employee of the Corporation for a two-year period
ending on November 15, 1990. Director of
Management Analysis Company.
Mr. Burkhardt has been a director of this
Corporation since 1988.
[PHOTO] DOUGLAS M. COSTLE
Douglas M. Costle, age 55, is a Distinguished
Senior Fellow of the Institute for Sustainable
Communities in Montpelier, Vt. Mr. Costle served
as Dean of the Vermont Law School in South
Royalton, Vermont from 1987 until 1991. Former
Administrator of the U.S. Environmental Protection
Agency. Co-founder of the Environmental Testing
and Certification Corporation, a national
laboratory that tests chemical wastes. Director
of Air and Water Technologies Corporation; Clean
Sites, Inc.; John Hancock Advisors, Inc.; The
Keystone Center; MITRE Corporation; National
Audubon Society; Vermont Land Trust; and Vermont
Symphony.
Mr. Costle has been a director of this Corporation
since 1991.
[PHOTO] DONALD B. RIEFLER<PAGE>
Donald B. Riefler, age 67, is self-employed as a
Financial Market Consultant and is an advisor to
J. P. Morgan, Florida FSB. Prior to his
retirement in 1991, Mr. Riefler was Chairman of
the Market Risk Committee for J. P. Morgan & Co.
<PAGE>12
Incorporated and Morgan Guaranty Trust Company of
New York. Director of Bank of Tokyo Trust Company
and Liberty Brokerage Inc.
Mr. Riefler has been a director of this
Corporation since 1978.
[PHOTO] STEPHEN B. SCHWARTZ
Stephen B. Schwartz, age 60, retired in 1992 as
Senior Vice President, Market-Driven Quality, of
International Business Machines Corporation.
Mr. Schwartz joined IBM in 1957 and was elected
Senior Vice President in 1990. Prior to that and
from 1978 he served as an officer in a wide
variety of sales, development, manufacturing,
staff and general management positions. Director
of Integrated Surgical Systems and Western Digital
Corporation.
Mr. Schwartz has been a director of this
Corporation since 1992.
[PHOTO] JOHN G. WICK
John G. Wick, age 70, retired in June, 1994, as of
counsel to Falk & Siemer, Buffalo, N.Y.,
Attorneys-at-Law. Mr. Wick had been a partner with<PAGE>
Falk & Siemer since 1985 and has engaged in the
practice of law since 1981.
Mr. Wick has been a director of this Corporation
since 1976.
<PAGE>13
BOARD OF DIRECTORS AND COMMITTEES
Meetings and Attendance
During 1994, ten meetings of the Corporation's Board of
Directors (the "Board of Directors" or the "Board") were held.
Each Director serving in 1994 attended 75% or more of the combined
total of meetings of the Board of Directors and the Committees on
which he or she served.
There are six standing Committees of the Board, namely, the
Audit Committee, the Compensation and Succession Committee, the
Committee on Corporate Public Policy and Environmental Affairs, the
Executive Committee, the Finance Committee and the Nuclear
Oversight Committee. The Board does not have a standing Nominating
Committee to nominate candidates for Board membership, but
functions as a committee of the whole. Any nomination may be made
from the floor by any shareholder who has made a written request to
the Corporation to have such nomination considered at the annual
meeting. Information with respect to the Audit Committee and the
Compensation and Succession Committee is set forth below.
Audit Committee
The Audit Committee, consisting of John G. Wick, Chairperson,
William F. Allyn, Bonnie Guiton Hill, Patti McGill Peterson and
Donald B. Riefler, all of whom are non-employee directors, met six
times in 1994. Duties performed by the Audit Committee include: <PAGE>
meeting with the independent accountants, chief internal auditors
and certain personnel of the Corporation to discuss the planned
scope of auditing examinations and the adequacy of internal
controls and interim and annual financial reporting; reviewing the
results of the annual examination of the consolidated financial
statements and periodic internal audit examinations; reviewing the
services and fees of the Corporation's independent accountants;
<PAGE>14
overseeing matters involving compliance with Corporate business
ethics policies; reviewing management's assessment of financial
risks; authorizing and participating in special projects and
studies; and performing any other duties or functions deemed
appropriate by the Board. (See Art. IV of Exhibit A, attached
hereto.)
Compensation and Succession Committee
The Compensation and Succession Committee, consisting of
Edward W. Duffy, Chairperson, William F. Allyn, Edmund M. Davis,
Henry A. Panasci, Jr. and Stephen B. Schwartz, all of whom are non-
employee directors, met eight times during 1994. The Committee
reviews the annual and incentive compensation of the elected
officers of the Corporation, the Corporation's pension and health
benefit funds, savings fund, nuclear decommissioning trust funds,
and officer development and succession plans, and makes
recommendations to the Board of Directors with respect to these
matters; regularly reviews the assets held by the various Trustees
for the Corporation's trust funds and meets with investment
managers to review earnings on assets held in the Trust funds when
appropriate; selects, appoints or terminates investment managers
and investment advisors and recommends to the Board of Directors
continuation or replacement of any of the Trustees for these funds;
and meets with the Corporation's actuarial advisor to review the
advisor's annual reports and progress toward funding the Pension
Plan.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows all shares of the Corporation's
Common Stock beneficially owned by each Director, the Executive
Officers named in the Summary Compensation Table below and by all
Directors and Executive Officers as a group.
<PAGE>15 Beneficial
Ownership(a)
William F. Allyn ....................... 1,000
Lawrence Burkhardt, III ................ 382
Douglas M. Costle ...................... 500
Edmund M. Davis ........................ 2,274
William E. Davis ....................... 1,218(b)
William J. Donlon ...................... 15,944
Edward W. Duffy ........................ 3,234
John M. Endries ........................ 10,433(b)
John G. Haehl, Jr. ..................... 34,524(c)
Bonnie Guiton Hill ..................... 700
Henry A. Panasci, Jr. .................. 3,500(d)
Patti McGill Peterson .................. 500
Donald B. Riefler ...................... 1,000
Stephen B. Schwartz .................... 500
John G. Wick ........................... 1,211
B. Ralph Sylvia ........................ 3,053(b)
John W. Powers ......................... 12,153(b)
Michael P. Ranalli ..................... 28,295(b)
All Directors and Executive Officers as a group (24). 132,139
_______________
(a) Based on information furnished to the Corporation by the
Directors and Executive Officers. In each instance the number
indicated represents shares of Common Stock beneficially owned
as of December 31, 1994. As of such date, no Director or
Executive Officer individually owned more than .02 percent of
the Corporation's Common Stock issued and outstanding and all
such persons as a group owned less than .09 percent of such<PAGE>
Common Stock.
(b) Includes shares of Common Stock credited under the Employee
Savings Fund Plan as of December 31, 1994.
<PAGE>16
(c) Includes shares of Common Stock owned by a member or members
of immediate family, as to which beneficial ownership is
disclaimed.
(d) Includes shares of Common Stock held by an estate of which the
named person is co-executor.
In addition to the shares of the Corporation's Common Stock,
John G. Wick and John W. Powers beneficially own 1,200 and 1,600
shares of the Corporation's Preferred Stock, 9 1/2% Series,
respectively.
Section 16(a) of the Securities and Exchange Act of 1934
requires the Corporation's Directors and Executive Officers to file
initial reports of ownership and reports of changes in ownership of
the Corporation's equity securities with the Securities and
Exchange Commission ("SEC") and the New York Stock Exchange. Based
solely on a review of the copies of such forms and written
representations from the Corporation's Directors and Executive
Officers, the Company believes that all Section 16(a) filing
requirements applicable to the Corporation's Directors and
Executive Officers were complied with except that one transaction
was reported late. Mr. John G. Wick, a director, inadvertently
failed to timely file a report with the SEC reflecting his
beneficial ownership of 1,200 shares of Preferred Stock, 9 1/2%
Series. A report of such acquisition was promptly filed with the
SEC upon discovery of the oversight on Form 5.
BOARD OF DIRECTORS' COMPENSATION AND SUCCESSION COMMITTEE<PAGE>
REPORT ON EXECUTIVE COMPENSATION
The Compensation and Succession Committee of the Board of
Directors (the "Committee") is comprised entirely of non-employee
directors. The Committee has responsibility for approving officer
<PAGE>17
salary increases and for the administration of the Corporation's
annual officer incentive compensation plan, performance share unit
plan, and stock option plan. The Committee operates on behalf of
the Board of Directors which has final approval responsibility for
officer compensation determinations.
This Committee report describes the Corporation's officer
compensation program strategy, the components of the program, and
the manner in which 1994 compensation determinations were made for
the Corporation's Chairman of the Board and Chief Executive
Officer, Mr. William E. Davis, and the other four officers
(collectively referred to as the "Executive Officers") whose 1994
compensation is disclosed in the Summary Compensation Table of this
Proxy Statement.
Base Salary
The Committee seeks to ensure that salaries of the Executive
Officers remain competitive with levels paid to comparable
positions among 23 Eastern Region investor-owned electric and gas
utilities (the same companies included in the peer group shown on
the performance graph on page 14) and other U.S. electric and gas
utilities with comparable revenues. The Committee believes that
competitive salaries provide the foundation of the Corporation's
officer compensation program and are essential for the Corporation
to attract and retain qualified senior officers, expecially in
light of the increasing competition within the industry. Each<PAGE>
officer position has been assigned to a competitive salary range.
The Committee annually evaluates the continued competitiveness of
these ranges and approves adjustments based on compensation survey
data for the aforementioned utilities. The Committee intends to
administer salaries within the 25th to 75th percentiles of practice
with respect to those comparable utilities. The Committee also
annually evaluates each officer's performance and salary position
within the range to which that position has been assigned. Taking
<PAGE>18
these factors into account, the Committee independently determines
the salary of the Chief Executive Officer (CEO) and reviews
recommendations submitted by the CEO in approving the salaries of
the other Executive Officers as well as all other officers.
Mr. Davis became CEO on May 1, 1993. At that time, his annual
salary rate was established at $420,000. During 1994, Mr. Davis'
salary was increased by 7.3% to his present annual level of
$450,500. In 1994 the Corporation discontinued payment of Board of
Directors' meeting fees to employee board members, including
Mr. Davis. The salaries of the other four Executive Officers were
increased between 3.5% and 14.9% or an average of 6.8% in 1994 .
The Committee has been advised by its consultant that Mr. Davis'
1994 salary approximates the median relative to the CEOs of the 23
Eastern Region utilities. The average salaries of the other four
Executive Officers approximate the 75th percentile relative to the
salaries of the other executive officers in the Eastern Region
utility comparator group. However, Niagara Mohawk's revenues
position it within the highest quartile (i.e., above the 75th
percentile) of this utility group. Taking into account the size of
Niagara Mohawk's revenues relative to the revenues and salaries at
these utilities, Mr. Davis' salary falls below 50th percentile
levels. In addition, the average salaries of the other four
Niagara Mohawk Executive Officers also fall below 50th percentile
levels on a revenue adjusted basis.
Annual Officer Incentive Compensation Plan (OICP)<PAGE>
On December 13, 1990 the Board of Directors adopted the
Corporation's OICP and the Management Incentive Compensation Plan
("MICP"). The officer OICP is structured and administered so that
a significant component of each Executive Officer's annual cash
compensation must be earned on the basis of the Corporation's and
the officer's annual performance. Incentive award opportunities
for 1994 were set by the Committee at 35% of salary for Mr. Davis,
<PAGE>19
Mr. Endries, and Mr. Sylvia. Award opportunities for Messrs.
Powers and Ranalli were set at 25% of salary. The opportunities
represent the maximum OICP payment an Executive Officer could earn
with respect to 1994. OICP award opportunities are intended to
position executive officer annual compensation (salary + OICP
awards) within the 25th to 75th percentile of comparably sized
utility practice depending on company financial, business and
support unit performance.
For the 1994 plan year, an incentive pool funding mechanism
was used in the OICP as well as the MICP to calculate the total
amounts available for payment of awards under these Plans. The
funding mechanism related the size of the incentive pool to
earnings per share ("EPS") results for the plan year. If actual
EPS was below budgeted EPS, there would be no incentive pool and
consequently no payments to officers or management employees. If
actual EPS equalled budgeted EPS, i.e., $1.73, 15% of the maximum
awards would be placed into the incentive pool and paid to officers
and management employees if the additional performance criteria
described below were satisfied. The incentive pool would be funded
at maximum award levels if actual EPS exceeded budgeted EPS by 10%.
Actual EPS would be determined after the cost of the awards under
the Plans. In addition to the incentive pool funding mechanism,
awards from the OICP and MICP were predicated on the maintenance of
1994 dividend payments at least equal to 1993 levels.
Payment of 1994 OICP awards for Messrs. Davis and Endries was
based on the following criteria: EPS measured against budgeted
standards and the achievement of business and support unit cost
management and other performance goals established at the start of<PAGE>
the year. Thirty-one other officers were eligible for the 1994
OICP and 3,305 management, supervisory, technical, professional,
and administrative employees were eligible for the Corporation's
1994 MICP.
<PAGE>20
Since 1994 EPS did not attain the requisite threshold level of
$1.73, no OICP or MICP awards were paid with respect to 1994
performance.
Performance Share Unit Plan
On January 30, 1992, the Board of Directors adopted the
Performance Share Unit Plan to provide officers, and other key
employees of the Corporation and its subsidiaries, with the
opportunity to earn longer-term incentive awards, payable in cash
at the end of a three-year period (the "Performance Cycle"), based
on the achievement of performance results which provide appropriate
financial returns to the Corporation's shareholders and quality
services to its customers.
In 1992 the Committee approved the grant of performance share
units ("Units") to nine executive officers for a 1992-1994
Performance Cycle. No performance units were earned with respect
to this cycle which ended on December 31, 1994 because actual
results were below threshold levels of performance required by the
plan.
Early in 1994, the Committee approved the grant of 25,000
Units to Mr. Davis, 15,000 to Mr. Endries, 10,000 to Mr. Sylvia,
and 6,000 each to Messrs. Powers and Ranalli. Dividends will be
credited with respect to all Units granted during the Performance
Cycle. These dividend credits will be re-invested at the
prevailing stock price thereby increasing the number of Units<PAGE>
available to be earned during the Performance Cycle. The number of
Units that are earned at the end of the 1994-1996 Performance Cycle
will be based on (1) total shareholder return i.e., market
appreciation plus dividends (75% of Units), and (2) the quality of
service the Corporation provides its customers (25% of Units)
during the 1994-1996 Performance Cycle measured relative to 23
Eastern Region investor-owned electric and gas utilities. To earn
<PAGE>21
all the Units, the Corporation's relative ranking on both
performance criteria would have to equal or exceed the 75th
percentile of these comparator utilities. The earning of any Units
under (1) above is conditioned on the Corporation's 3-year total
return to shareholders equaling the 50th percentile for the 23
comparator utilities. The cash payment value of each Unit earned
will be equal to the Corporation's average daily closing stock
price during the fourth quarter of the last year of the Performance
Cycle.
The number of Units, and stock options as described below,
which were granted each year was based on an evaluation of the
long-term incentive award opportunities provided by the 23 other
Eastern Region utilities. The Committee endeavors to position
long-term incentive grants in the top quartile relative to the
practices of these utilities. However, the competitiveness of
awards realized from such grants is largely dependent upon the
competitiveness of returns the Corporation generates for its
shareholders during the 3-year Performance Cycle.
Stock Option Plan
On May 5, 1992, the shareholders approved the Corporation's
1992 Stock Option Plan. The purpose of this plan, as stated in the
text approved by stockholders, is "to promote the interests of the
Corporation, its shareholders, and its ratepayers by ensuring
continuity of management and increased incentive on the part of
officers and other key employees of the Corporation and its
subsidiaries, responsible for major contributions with effective<PAGE>
management, through facilitating their acquisition of equity
interests in the Corporation."
On January 26, 1994 the Corporation granted 10,000 stock
options to Mr. Davis, 6,000 to Mr. Endries, 5,000 to Mr. Sylvia,
and 3,000 each to Messrs. Powers and Ranalli. These options become
exercisable on January 26, 1997 and expire on January 26, 2004, ten
years following the date they were granted.
<PAGE>22
On June 21, 1994 the Corporation granted 10,000 additional
stock options to Mr. Davis. These options become exercisable on
June 21, 1997 and expire on June 21, 2004, ten years following the
date they were granted.
Dividends are credited on all outstanding options. These
credits are regarded as having been reinvested to purchase shares
of the Corporation's common stock. At the time the option is
exercised, the Executive Officer receives a cash payment equal to
the value of the dividend share credits.
The Committee is aware of the limitations that recent tax
legislation has placed on the tax deductibility of compensation in
excess of $1 million which is earned in any year by an Executive
Officer. Currently none of the Executive Officers has earned
compensation subject to such limitations. One of the determinants
of deductibility is that compensation be "performance based."
Although the Committee believes OICP payments, performance share
unit payments, and stock option grants are performance based, it
will continue to monitor developments in this area and take
appropriate actions to preserve the tax deductibility of
compensation paid to Executive Officers, should this become
necessary.
In summary, the Compensation and Succession Committee believes
the Corporation's Executive Officer Compensation Programs are
competitive with the programs of the 23 comparator Eastern Region<PAGE>
investor-owned electric and gas utility corporations and other
utilities of comparable revenue size. The Committee further
believes that the Executive Officer Compensation Program is
appropriately structured and administered in a manner consistent
with the Committee's and the Corporation's strategy of making a
substantial component of officer total compensation dependent upon,
and directly related to, the achievement of the Corporation's
longer-term mission of becoming "the most responsive and efficient
energy services company in the Northeast" and its business strategy
<PAGE>23
of achieving maximum value for our shareholders and our customers.
Through the combination of base salary, OICP awards,
performance share unit and stock option grants, the Committee seeks
to focus the efforts of Executive Officers toward the execution of
business strategies directed toward improving, annually and over
the longer-term, both the quality of service to customers and
financial returns for its shareholders.
Edward W. Duffy, Chairperson
William F. Allyn
Edmund M. Davis
Henry A. Panasci, Jr.
Stephen B. Schwartz
EXECUTIVE COMPENSATION
The table below sets forth all compensation paid by the
Corporation and its wholly-owned subsidiaries for services rendered
in all capacities during the fiscal years ended December 31, 1994,
December 31, 1993 and December 31, 1992, to the Chairman of the
Board and Chief Executive Officer and to each of the other four
most highly compensated Executive Officers of the Corporation whose<PAGE>
compensation exceeded $100,000.
<PAGE>24
<TABLE>
<CAPTION> SUMMARY COMPENSATION TABLE
Fiscal Years 1994, 1993 and 1992
Annual Compensation
Other
Fiscal Annual
Name Position Year Salary(A) Bonus(B) Compensation
<S> <C> <C> <C> <C> <C>
W. E. Davis Chairman of the 1994 $457,867 $ 0 $ 0
Board and Chief 1993 394,045 40,632 65,314
Executive Officer 1992 165,002 33,175 0
J. M. Endries President 1994 326,165 0 0
1993 312,805 31,184 0
1992 284,091 52,089 0
B. R. Sylvia Executive Vice 1994 290,834 0 0
President 1993 280,834 58,921 0
Nuclear 1992 242,050 45,678 0
J. W. Powers Senior Vice 1994 206,683 0 0
President 1993 196,651 27,899 0
1992 190,550 29,761 0
M. P. Ranalli Senior Vice 1994 188,818 0 0
President 1993 181,792 23,008 0
1992 173,834 37,824 0
Long-Term
Compensation<PAGE>
All Other
Name Options(#) Compensation
<S> <C> <C>
W. E. Davis 20,000 28,591
11,125 123,692
1,500 6,418
J. M. Endries 6,000 14,572
6,000 12,177
6,000 9,908
B. R. Sylvia 5,000 8,061
5,000 7,970
3,000 6,592
J. W. Powers 3,000 8,454
3,000 8,383
3,000 6,541
M. P. Ranalli 3,000 10,721
3,000 10,337
3,000 7,773
</TABLE>
(A) Includes all employee contributions to the Employee Savings
Fund Plan; and for Messrs. Davis, Endries and Powers,
Directors' fees received from Opinac Energy Corporation.
<PAGE>25
(B) Cash awards under the Annual Incentive Compensation Plan.
(C) All Other Compensation for 1994 includes:
Employer contributions to the Corporation's Employee Savings Fund
Plan: Mr. Davis ($3,000), Mr. Endries ($4,500), Mr. Sylvia
($3,000), Mr. Powers ($4,500), and Mr. Ranalli ($4,500); Taxable<PAGE>
portion of life insurance premiums: Mr. Davis ($8,821), Mr.
Endries ($3,127), Mr. Sylvia ($2,228), Mr. Powers ($3,203), and Mr.
Ranalli ($5,032); Employer contributions to the Corporation's
Excess Benefit Plan: Mr. Davis ($7,841), Mr. Endries ($6,945), Mr.
Sylvia ($2,308), Mr. Powers ($751), and Mr. Ranalli ($1,189);
Payments under the Corporation's Relocation Policy: Mr. Davis
($8,929); and Surplus Flex Benefit Dollars: Mr. Sylvia ($525).
The following table discloses, for the Chairman of the Board and
Chief Executive Officer, Mr. William E. Davis and the other named
executives, the number and terms of options granted during the
fiscal year ended December 31, 1994.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
Number of % of Total
Securities Options
Underlying Granted to
Options Employees Exercise or Grant Date
Granted In Fiscal Base Price Expiration Present
Name Group (#) (A) Year Per Share(B) Date Value (C)
<S> <C> <C> <C> <C> <C>
W. E. Davis 10,000 12.03% $19.375 1/26/2004 $38,750
<PAGE>26
W. E. Davis 10,000 12.03% 15.375 6/21/2004 30,750
J. M. Endries 6,000 7.22% 19.375 1/26/2004 23,250
B. R. Sylvia 5,000 6.02% 19.375 1/26/2004 19,375
J. W. Powers 3,000 3.61% 19.375 1/26/2004 11,625
M. P. Ranalli 3,000 3.61% 19.375 1/26/2004 11,625
/TABLE
<PAGE>
(A) The issuance of common stock pursuant to the Stock Option
Plan is subject to approval by the New York State Public
Service Commission.
(B) Options become exercisable January 26, 1997 and June 21,
1997.
(C) The Grant Date Present Value is calculated using the
Black-Scholes Option Pricing Module with the following
assumptions: market price of the stock at January 26, 1994
grant date ($19.375) and at June 21, 1994 grant date
($15.375); exercise price of options that expire on January
26, 2004 ($19.375) and options that expire on June 21, 2004
($15.375); stock volatility (0.1138); dividend yield (3.41%);
risk free rate (6.25%); exercise term (10 years);
Black-Scholes ratio (0.2); and Black-Scholes value ($3.875)
for options that expire on January 26, 2004 and ($3.075) for
options that expire on June 21, 2004.
NOTE: The Black-Scholes values do not reflect dividend share
equivalents credited on all outstanding options which will be
paid when the associated options are exercised.
The following table summarizes exercises of options by the
Chairman of the Board and Chief Executive Officer, Mr. William E.
Davis, and the other named executives, the number of unexercised
options held by them and the spread (the difference between the
current market price of the stock and the exercise price of the
option) on those unexercised options for fiscal year ended
December 31, 1994.
<PAGE>27
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of Securities Value of<PAGE>
Underlying Unexercised Unexercised
Options at Fiscal Options at Fiscal
Year-End (#)(A) Year-End (B)
<S> <C> <C>
W. E. Davis 32,625 $0
J. M. Endries 18,000 0
B. R. Sylvia 13,000 0
J. W. Powers 9,000 0
M. P. Ranalli 9,000 0
</TABLE>
(A) No options were exercised or exercisable in 1994.
(B) The closing market price of the Corporation's common stock on
December 30, 1994 was $14.25 which is less than the exercise
price of all unexercised options.
The following table outlines the awards granted to the
Chairman of the Board and Chief Executive Officer, Mr. William E.
Davis, and the other named executives under the Corporation's
Performance Share Unit Plan, a long-term incentive plan, for
the fiscal year ended December 31, 1994.
<PAGE>28
<TABLE>
<CAPTION>
Long-Term Incentive Plan - Awards in Last Fiscal Year
Estimated Future Payouts<PAGE>
Under Non-Stock Price-Based Plans
Number Performance
of Share or Other
Units or Period Until
Other Rights Maturation Threshold Threshold
Name Group (#) Or Payout (#) ($)(A)
<S> <C> <C> <C> <C>
W. E. Davis 25,000 1997 6,250 $107,031
J. M. Endries 15,000 1997 3,750 64,219
B. R. Sylvia 10,000 1997 2,500 42,813
J. W. Powers 6,000 1997 1,500 25,688
M. P. Ranalli 6,000 1997 1,500 25,688
Estimated Future Payouts
Under Non-Stock Price-Based Plans
Target Target Maximum Maximum
Name Group (#) ($)(B) (#) ($)(C)
<S> <C> <C> <C> <C>
W. E. Davis 12,500 $240,625 25,000 $531,250
J. M. Endries 7,500 144,375 15,000 318,750
B. R. Sylvia 5,000 96,250 10,000 212,500
J. W. Powers 3,000 57,750 6,000 127,500
M. P. Ranalli 3,000 57,750 6,000 127,500
</TABLE>
(A) Based on the assumption of an average stock price of $17.125
during the fourth quarter of 1996.
(B) Based on the assumption of an average stock price of $19.250
during the fourth quarter of 1996, which represents the half
way point between the threshold and maximum.
(C) Based on the assumption of an average stock price of $21.250
during the fourth quarter of 1996.
All performance share units contingently granted, and all
accumulated dividend share units credited, would be earned if the<PAGE>
Corporation's relative ranking is at the 75th percentile or above
on all performance criteria. Please see Compensation and
Succession Committee Report above for discussion of the plan and
performance criteria.
<PAGE>29
NOTE: Values identified do not include accumulated dividend share
units.
The following graph illustrates the performance of the
Corporation's cumulative total return to shareholders from the
beginning of 1990 to the end of 1994 in comparison to the Standard
& Poor's 500 Stock Index ("S&P") and a peer group of Eastern Region
Utilities. This peer group is the same as that to which the
Corporation is being compared to when measuring achievement of its
Change Vision and the Total Return to Shareholders goal of the
Performance Share Unit Plan.
The graph reflects the Corporation's performance during a period
when financial results were affected significantly by various
internal and external factors. During 1990, the Corporation's
financial results were still adversely affected by its nuclear
operations. In 1991, the common stock dividend, which was
eliminated in 1989, was reinstated. Since reinstatement, the
Corporation has paid regular and increasing dividends. The period
from 1991 through 1993 was marked by a gradual financial recovery
which was greatly influenced by significant improvements in nuclear
operations and aggressive cost management initiatives. During
1994, although these internal initiatives continued, declining
interest rates (which affect utility stocks generally) and adverse
actions by regulators resulted in a decline in total shareholder
return for the Corporation and its peer group.
In general, increasing competition within the industry has resulted
in uncertainty on the part of the investment community. The April
1994 announcement of aggressive market reforms in California <PAGE>
heightened this level of concern. At the state level, the market
reacted negatively to the New York Public Service Commission
Staff's recommendation to reduce the Corporation's electric rates
and the Commission's decision allowing an unregulated generator to
sell power directly to one of the Company's largest industrial
customers. Management is aggressively attempting to make the
<PAGE>30
Corporation more competitive in its cost structure by reducing
unregulated generator payments, excessive business taxes and all
elements of internal costs. In addition, the Corporation continues
to strongly advocate, with regulators and other constituencies,
that the transition to competition be addressed comprehensively and
with fairness and equity.
NIAGARA MOHAWK POWER CORPORATION
Comparison of Five Year Cumulative Total Return
vs. S&P 500 and Peer Group of Eastern Region Utilities
[ILLUSTRATION OF PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
<S> <C> <C> <C> <C> <C> <C>
NIAGARA MOHAWK 100.00 91.30 126.71 141.11 155.87 117.49
S&P 500 100.00 96.89 126.42 136.05 149.76 151.74
PEER GROUP 100.00 95.76 123.64 141.82 154.79 133.12
/TABLE
<PAGE>
Assumes $100 invested on 12/31/89 in Niagara Mohawk stock, S&P 500
and Eastern Region utilities. All dividends reinvested over
period.
<PAGE>31
<TABLE>
<CAPTION>
NOTE 1 EASTERN REGION UTILITIES:
<S> <C> <C>
Allegheny Power System Inc. DQE, Inc. Northeast Utilities
Atlantic Energy, Inc. Delmarva Power & Light Co. Orange & Rockland Utilities Inc.
Baltimore Gas & Electric Company Eastern Utilities Associates Pennsylvania Power & Light Co.
Boston Edison Company General Public Utilities Corp. PECO Energy Company
Brooklyn Union Gas Company Long Island Lighting Co. Public Service Enterprise Group Inc.
Central Hudson Gas & Electric Corp. National Fuel Gas Company Rochester Gas & Electric Corp.
Central Maine Power Co. New England Electric System The United Illuminating Company
Consolidated Edison Co. of New York, Inc. New York State Electric & Gas Corp.
</TABLE>
NOTE 2
Total returns for each Eastern Region Utility were determined in
accordance with the Securities and Exchange Commission's
regulations, i.e., weighted according to each such issuer's stock
market capitalization.
Retirement Benefits
The following table illustrates the maximum aggregate pension
benefit, integrated with Social Security, payable by the
Corporation under the Niagara Mohawk Pension Plan (the "Basic
Plan") and the Corporation's Supplemental Executive Retirement Plan
(the "Supplemental Plan") to an officer in specified average salary<PAGE>
and years-of-service classifications. Such benefit amounts have
been calculated as though each officer selected a straight life
annuity and retired on December 31, 1994 at age 65. The amount of
compensation taken into account under a tax-qualified plan is
subject to certain annual limits (adjusted for increases in the
cost of living, $150,000 in 1994 and $150,000 for 1995). This
limitation may reduce benefits payable to highly compensated
<PAGE>32
individuals.
<TABLE>
<CAPTION>
Annual Retirement Allowance
3-Year Average 10 Years 20 Years 30 Years 40 Years 45 Years
Annual Salary Service* Service Service Service Service
<C> <C> <C> <C> <C> <C>
$150,000 $21,090 $ 82,758 $ 82,758 $ 87,270 $ 94,770
225,000 27,534 127,758 127,758 127,758 127,758
300,000 27,961 172,758 172,758 172,758 172,758
375,000 27,961 217,758 217,758 217,758 217,758
450,000 27,961 262,758 262,758 262,758 262,758
525,000 27,961 307,758 307,758 307,758 307,758
</TABLE>
_____________
*Subject to five-year average annual salary.
The credited years of service under the Basic and Supplemental
Plans for the individuals listed in the Summary Compensation Table
are Mr. Davis, 5 years; Mr. Endries, 22 years; Mr. Sylvia, 4 years;
Mr. Powers, 31 years; Mr. Ranalli, 36 years.
The Basic Plan, a noncontributory, tax-qualified defined benefit<PAGE>
plan, provides all employees of the Corporation with a minimum
retirement benefit related to the highest consecutive five-year
average compensation. Compensation covered by the Basic Plan
includes only the participant's base salary or pay, subject to the
maximum annual limit noted above. Directors who are not employees
are not eligible to participate.
<PAGE>33
The Supplemental Plan is an unfunded, nonqualified, noncontributory
defined benefit plan providing additional benefits to certain
officers of the Corporation upon retirement after age 55 who have
20 or more years of employment. The Committee may grant exceptions
to these requirements. The Supplemental Plan provides for payment
monthly of an amount equal to the greater of (i) 60% of monthly
base salary averaged over the final 36 months of employment, less
benefits payable under the Basic Plan, retirement benefits accrued
during previous employment and one-half of the maximum Social
Security benefit to which the participant may be entitled at the
time of retirement, or (ii) benefits payable under the Basic Plan
without regard to the annual benefit limitations imposed by the
Internal Revenue Code. Effective January 1, 1995, participants in
the Supplemental Plan may elect to receive their benefit in a lump
sum payment provided certain established criteria are met.
Employee Agreements
In 1993, the Corporation entered into employment agreements with
Messrs. Davis, Endries, Sylvia, Powers and Ranalli. The agreements
have an initial three-year term, and, unless either party gives
notice to the contrary, the agreement will be extended annually for
one-year periods. The agreements provide that the executive will
be able to participate in the Corporation's incentive compensation
plans according to their terms. If at any time the executive's
employment is terminated by the Corporation without cause or,<PAGE>
following a change in control, the executive terminates employment
for good reason (as defined in the agreement), the executive will
be entitled to a severance benefit paid over two years in an amount
equal to two times the executive's base salary plus an amount equal
to two times the greater of the executive's (i) most recent annual
incentive award or (ii) average annual incentive award paid over
the previous three years. The employment agreements also provide
that the executive's benefits under the Corporation's Supplemental
Executive Retirement Plan will be based on the executive's salary
<PAGE>34
and annual incentive award and, further, that if the executive's
employment terminates under the conditions noted above, the
executive will be deemed fully vested under such plan. The
agreements restrict under certain circumstances the executive's
ability to compete with the Corporation and to use confidential
information concerning the Corporation. In the event of a dispute
over an executive's rights under the executive's agreement
following a change in control of the Corporation, the Corporation
will pay the executive's reasonable legal fees with respect to the
dispute unless the executive's claims are found to be frivolous.
In November, 1994, the Corporation entered into a supplemental
agreement with Mr. Powers in exchange for his foregoing retirement
under the Corporation's Voluntary Employee Reduction Program and
continuing employment with the Corporation until December 31, 1996.
Under this agreement, Mr. Powers became entitled to a lump sum
payment following the successful closing of the sale of HYDRA-CO
Enterprises, Inc., and, upon his retirement on December 31, 1996,
Mr. Powers will be entitled to (i) a severance allowance equal to
one-half of his annual salary then in effect and (ii) a benefit
under the Corporation's Supplemental Executive Retirement Plan no
less than his benefit calculated as of November, 1994, and based on
his salary and annual incentive award as disclosed in the Summary
Compensation Tables of the Corporation's proxy statement for the
years 1994, 1995 and 1996.<PAGE>
COMPENSATION OF DIRECTORS
Directors who are not employees of the Corporation receive an
annual retainer of $20,000 and $1,000 per Board meeting attended.
Directors who are not employees and who chair any of the standing
Board Committees receive an additional annual fee of $3,000 and
those who serve on any of the standing Board Committees, including
<PAGE>35
the chair, receive $850 per Committee meeting attended. The
Corporation also reimburses its Directors for travel, lodging and
related expenses they may incur in attending Board and Committee
meetings.
The Corporation has an unfunded, nonqualified retirement plan for
Directors who have not been employees of the Corporation. Under
the plan, a Director retiring at age 65 or older after ten years of
service as a Director is entitled to an annual benefit equal to
such Director's annual retainer, including Chairperson's fee if
applicable, at the time of retirement. If a Director of such age
retires after serving less than ten years, but more than five
years, such Director will receive a pro-rated benefit based on
years of service. If a Director serves on the Board less than five
years or leaves before reaching age 65, no benefit is available.
The Corporation provides certain health and life insurance benefits
to Directors who are not employees of the Corporation. During
1994, the following Directors received the indicated benefits under
the foregoing arrangements: Mr. Allyn ($5,606), Mr. Burkhardt
($3,363), Mr. Costle ($3,459), Mr. Edmund Davis ($5,258), Mr.
Donlon ($30), Mr. Duffy ($4,998), Mr. Haehl ($58), Dr. Hill ($342),
Mr. Panasci ($182), Dr. Peterson ($3,316), Mr. Riefler ($5,267) and
Mr. Wick ($6,313).<PAGE>
Mr. Burkhardt received a consulting fee of $42,000 during 1994.
COMPENSATION AND SUCCESSION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
Directors Allyn, Duffy, Edmund Davis, Panasci and Schwartz, all of
whom are non-employee directors, are members of the Compensation
and Succession Committee.
<PAGE>36
Edmund Davis and Director Donlon's son, Robert M. Donlon, are each
partners with the law firm of Hiscock and Barclay. The Corporation
retained Hiscock and Barclay to represent the Corporation on
certain litigation matters and to provide legal counsel on
corporate matters.
The Corporation paid that firm a total of $1,602,138 for services
rendered during 1994.
John M. Endries is a Director of Marine Midland Bank, which
extended credit to the Corporation of $123,135,000. During 1994,
the maximum loan at Marine Midland Bank at any time was
$90,129,667; interest on all loans was $5,061,277; fees for credit
facilities were $71,237; and fees for bank services were $291,385.
Onbank and Trust of ONBANCorp., Inc. of which William F. Allyn and
William J. Donlon are Directors, has extended credit to the
Corporation of $500,000. During 1994, fees for the credit
facilities were $6,250.
The terms of these borrowings and credit facilities are as
favorable as those available from comparable unaffiliated sources.<PAGE>
SECURITIES HELD BY CERTAIN BENEFICIAL OWNERS
The following table sets forth the shares of Common Stock of the
Corporation that the Corporation believes are or may be owned as of
December 31, 1994 by persons with more than five percent of the
Corporation's Common Stock.
<TABLE>
<CAPTION>
<PAGE>37
Amount
and
Nature of
Beneficial Percent
Title of Class Name and Address of Beneficial Owner Ownership of Class
<S> <C> <C> <C>
Common Stock Fidelity Management Trust Company 11,227,094(1) 7.78%
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
___________
(1) Fidelity Management Trust Company is Trustee of the
Corporation's Employee Savings Fund Plans for Non-Represented
Employees and Represented Employees. The Trustee will vote
all shares of Common Stock held in the Trust established for
the Plans in accordance with the directions received from the
employees participating in the Plans. The Trustee will vote
shares for which it receives no instructions in the same
proportion as it votes shares for which it receives
instructions.
The Corporation believes that holders of approximately 80.9% of the
Corporation's Common Stock outstanding as of December 31, 1994
elected to hold their shares, not in their own names, but in the<PAGE>
names of banking or financial intermediaries. Accordingly, as of
that date, 116,843,583 shares were registered in the nominee name
of The Depository Trust Company, Cede & Co.
(2). SHAREHOLDER PROPOSAL TO ISSUE A REPORT ON CARBON DIOXIDE
EMISSIONS
The Dominican Sisters, Sparkill, New York 10976, who own 3,000
shares of the Corporation's Common Stock, have advised the
Corporation that they intend to present the following proposal at
<PAGE>38
the 1995 Annual Meeting of Shareholders:
"RESOLVED: Shareholders request the Company to make a report
publicly available by September 1995 (prepared at reasonable cost
and omitting proprietary information), describing: (a) plans or
actions that will reduce carbon dioxide emissions; (b) the
financial implications of these plans, actions or lack thereof, and
(c) the ensuing impact upon shareholders."
In Support of the Foregoing Resolution, the Proponent States:
"We believe an effective report should discuss costs and savings
for all feasible measures that would reduce CO2 emissions,
including demand side management, development of renewable sources
of energy, and fuel switching to lower-carbon-content fuels.
Beginning to make cost-effective reductions in greenhouse gas
emissions now can make the Company more competitive and help retain
large customers; create jobs in the local economy; and protect both
short- and long-term financial health and shareholder value.
Shareholders should vote FOR this resolution if they wish to
minimize costs - both to the company and to society at large - of
minimizing climate change."
The affirmative vote of a majority of the votes cast at the meeting
is required for approval of the foregoing proposal.<PAGE>
Board of Directors' Response to the Shareholder Proposal
The Corporation is committed to pursuing a comprehensive
environmental agenda which it believes is in the best interests of
the Corporation and its shareholders and does not feel passage of
the proposed resolution regarding issuing a report would in any way
further those interests. Our existing policies take us beyond mere
compliance with the law, and we have taken a lead nationally in the
reduction of greenhouse gas emissions.
<PAGE>39
Therefore, the Board of Directors recommends that you vote AGAINST
the proposal to issue a report on carbon dioxide emissions.
CHANGE TO BY-LAWS
The Board of Directors amended the provisions of Sections 8 and 9
of Article II and Section 3 of Article IV of the By-Laws of the
Corporation to adopt confidential voting and to expand the role and
responsibilities of the Audit Committee. The text of these
amendments is attached as Exhibit A to this Proxy Statement. No
shareholder approval was necessary for these amendments.
ADDITIONAL INFORMATION
The Directors and Officers of the Corporation and its subsidiaries
are insured against obligations which may be incurred as a result
of the Corporation's indemnification of its Directors and officers.
The coverage also insures the Directors and officers against
liabilities for which they may not be indemnified by the
Corporation or its subsidiaries, except a dishonest act or breach
of trust. The insurance was purchased from the National Union Fire
Insurance Company, Associated Electric & Gas Insurance Services,<PAGE>
Ltd., Aetna Casualty and Surety Company, Federal Insurance Company,
CNA Insurance Company and ACE Insurance Company, Ltd. for the term
from January 31, 1995 to January 30, 1996 for an aggregate premium
of $2,047,380.
INDEPENDENT ACCOUNTANTS
The Corporation has selected the independent accounting firm of
Price Waterhouse LLP to examine the financial statements of the
Corporation and its subsidiaries for the year ended December 31,
<PAGE>40
1995. Representatives of Price Waterhouse LLP will be present at
the meeting with the opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.
OTHER MATTERS
The management does not know of any matters of business other than
the foregoing to be presented at the Annual Meeting. However, if
other matters are properly brought before the meeting or any
adjournment thereof, the proxies will be voted accordingly to the
best judgment of the persons authorized thereby.
Expenses incurred in connection with this solicitation will be
borne by the Corporation. The firm of D. F. King & Co., Inc., New
York, New York, has been engaged to aid in the solicitation of
proxies for a fee of $10,500. Directors, officers or employees of
the Corporation may solicit proxies in person, by telephone, or by
mail but without extra compensation. Upon request, brokerage
houses or other nominees or fiduciaries will be reimbursed by the
Corporation for the expense of forwarding proxy material to
beneficial owners of stock.<PAGE>
Shareholders are urged to sign the accompanying form of proxy,
solicited on behalf of the Board of Directors, and return it at
once in the envelope provided for that purpose. The proxy does not
affect the right to vote in person at the meeting and if voted, may
be revoked at any time prior to the meeting. Proxies will be voted
in accordance with the shareholders' directions. If no directions
are given, proxies will be voted for the election of the nominees
for directors set forth in this Proxy Statement and against the
shareholder-proposed resolution relating to carbon dioxide
emissions.
<PAGE>41
A plurality of the votes cast at the meeting is required for the
election of Directors. Except where otherwise provided by law, an
affirmative vote of a majority of the votes cast at the meeting is
required for approval of all other items submitted to the
shareholders for their consideration. If a shareholder returns a
proxy indicating abstention, or a broker indicates on a proxy
either abstention or that it does not have discretionary authority
to vote certain shares, those shares will not be considered as
votes cast with respect to a particular matter, but will be counted
in the number of shares present in person or represented by proxy
for purposes of determining whether a quorum is present and for all
other matters relating to shares in attendance.
Voting is confidential, in accordance with the provisions of
Sections 8 and 9 of Article II of the By-Laws of the Corporation.
Tabulation of proxies and the votes cast at the meeting is
conducted by an independent agent and certified by independent
inspectors of election. Any information which would identify the
vote of any shareholder are held permanently confidential and will
not be disclosed to the Corporation, except as may be necessary to
meet legal requirements.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING<PAGE>
Proposals of shareholders intended to be presented at the 1996
Annual Meeting must be received by the Corporation on or before
November 25, 1995, to be considered for inclusion in the
Corporation's Proxy Statement and Form of Proxy relating to that
meeting.
<PAGE>42
By Order of the Board of Directors,
Kapua A. Rice
Secretary
Dated: March 21, 1995
<PAGE>
EXHIBIT A
BY-LAWS OF NIAGARA MOHAWK POWER CORPORATION
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 8. Voting: Whenever an action shall require the vote of
stockholders, the tabulations that identify the particular vote of
a stockholder on all proxies, consents, authorizations and
ballots shall be kept confidential, except as disclosure may be
required (i) by applicable law, (ii) in pursuit or defense of legal
proceedings, (iii) to resolve a bona fide dispute as to the
authenticity of one or more proxies, consents, authorizations or
ballots or as to the accuracy of any tabulation of such proxies,
consents, authorizations or ballots, (iv) if an individual
stockholder requests that his or her vote and identity be forwarded
to the corporation, or (v) in the event of a proxy or consent
solicitation in opposition to the solicitation of the Board of
Directors of the corporation; and the receipt and tabulation of
such votes will be by an independent third party not affiliated
with the corporation. Comments written on proxies, consents,
authorizations and ballots, will be transcribed and provided to the
secretary of the corporation without reference to the vote of the
stockholder, except where such stockholder has requested that the
nature of their vote be forwarded to the corporation.
Stockholders shall have such voting rights as may be granted by law
and the provisions of the corporate charter. All questions
presented to stockholders for decision shall be decided by a vote
of shares. Voting may be viva voce unless a stockholder present in
person or by proxy and entitled to vote at the meeting shall demand<PAGE>
a vote by ballot in which event a vote by ballot shall be taken.
Except where otherwise provided by law, the corporate charter or
these by-laws, elections shall be determined by a plurality vote
and all other questions that shall be submitted to stockholders for
decision shall be decided by a majority of the votes cast.
Section 9. Inspectors of Election: Two inspectors of election who
are not employees or directors of the corporation, shall be
appointed by the directors to serve at each meeting of
stockholders, or of a class of stockholders, such inspectors to
serve at such meeting and any adjournments thereof; and such
inspectors shall have authority to count and report upon the votes
cast at such meeting upon the election of directors and such other
questions as may be voted upon by ballot. In the event that any
such inspector of election shall not have been appointed by the
directors to serve at such meeting, or, having been appointed,
shall be absent from such meeting or adjournment or unable to serve
thereat, such inspector shall be appointed by the presiding officer
at such meeting or adjournment. The inspectors appointed to act at
any meeting of stockholders, before entering upon the discharge of
their duties, shall be sworn faithfully to execute the duties of
inspectors at such meeting with strict impartiality and according
to the best of their ability, and the oath so taken shall be
subscribed by them and shall be filed in the records of such
meeting.
The inspectors shall be responsible for determining the number of
shares outstanding, the voting power of each, the shares
represented at the meeting, the existence of a quorum, and the
validity and effect of any proxies. They shall also receive and
tabulate all votes, ballots or consents and determine the result of
any election, hear and determine all challenges and questions
arising in connection with any election and do such acts to conduct
the election according to the applicable provisions of law of the
State of New York.
<PAGE>
ARTICLE IV
COMMITTEES OF DIRECTORS
Section 3. Audit Committee: The Audit Committee shall recommend to
the board of directors the accounting firm to be selected by the
board or to be recommended by it for shareholder approval, as
independent auditor of the corporation and its subsidiaries; act on
behalf of the board in meeting and reviewing with the independent
auditors, the chief internal auditor and the appropriate corporate
officers matters relating to corporate financial reporting and
accounting procedures and policies, adequacy of internal controls
and the scope of the respective audits of the independent auditors
and the internal auditor; review the results of such audits with
the respective auditing agency and reporting thereon to the board;
review and make recommendations to the board concerning the
independent auditor's fees and services; review interim and annual
financial reports and disclosures and submit to the board any
recommendations it may have from time to time with respect to
financial reporting and accounting practices and policies; be
consulted, and its consent obtained, prior to the selection or
termination of the chief internal auditor; oversee matters
involving compliance with Corporate business ethics policies
including the work of the Business Ethics Council; review
management's assessment of financial risks; authorize special
investigations and studies, as appropriate, in fulfillment of its
function as specified herein or by resolution of the board of
directors; and perform any other duties or functions deemed
appropriate by the board of directors. The Committee will conduct
a self-assessment at least every three years of its performance in
relation to its powers and responsibilities. The membership of
such committee shall consist only of directors of the corporation
who are not, and have not been, officers of the company. <PAGE>
PROXY FORM NIAGARA PROXY FORM
MOHAWK
Niagara Mohawk Power Corporation
Proxy Solicited by the Board of Directors
for Annual Meeting to be held at 10:30 A.M. May 2, 1995
Buffalo Marriott
1340 Millersport Highway
Amherst, New York 14221
The undersigned hereby appoints William E. Davis, William F. Allyn,
Donald B. Riefler, and John G. Wick, and each or any of them,
proxies of the undersigned, with power of substitution to vote at
the Annual Meeting of Shareholders, and at any adjournment thereof.
Said proxies are instructed to vote for or against proposals, as
indicated by the undersigned (or, if no indication is given, for
Proposal 1 and against Proposal 2).
Please sign and mail promptly to assure your representation at the
meeting.
(continued and to be signed on the other side)<PAGE>
The Directors recommend a vote "FOR" Proposal 1:
(1) Election of Directors to Class I: Albert J. Budney, Jr.,
Edmund M. Davis, Bonnie G. Hill, Henry A. Panasci, Jr.
FOR WITHHOLD AUTHORITY (INSTRUCTIONS: To
all nominees to vote for all withhold authority to
listed above nominees above. vote for any individual
____ ____ nominee, write that
nominee's name in the
space provided below.)
_________________________
The Directors recommend a vote "AGAINST" Proposal 2:
FOR AGAINST ABSTAIN
(2) To consider and __ __ ___ (3) To transact
act upon a such other
shareholder business as
proposal relating may properly
to a Company come before
report on carbon the meeting.
dioxide emissions.
PLEASE MARK ALL
CHOICES LIKE THIS X
SIGNATURE _______________________DATE _______________
SIGNATURE _______________________DATE _______________
Please give your full title when signing as attorney, trustee,
executor, administrator, or guardian, etc.<PAGE>
