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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a
</TABLE>
NORTHEAST UTILITIES
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[NORTHEAST UTILITIES LOGO]
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2000 ANNUAL MEETING OF SHAREHOLDERS
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Dear Shareholder:
It is my pleasure to invite you to attend the 2000 Annual Meeting of
Shareholders of Northeast Utilities on Tuesday, May 9, 2000, at 10:30 a.m., at
the Springfield Marriott, Springfield, Massachusetts (directions are on the
reverse side).
Information concerning the matters to be acted upon at the meeting is
provided in the accompanying Notice of Annual Meeting and Proxy Statement. In
addition, our meeting agenda will include a discussion of the operations of
Northeast Utilities system companies and a question and answer period.
Whether or not you plan to attend the meeting, it is important that you
complete, date, sign and return your proxy in the enclosed envelope as soon as
possible. This will ensure that your shares will be represented at the meeting
in accordance with your wishes.
On behalf of your Board of Trustees, thank you for your continued support
and interest in Northeast Utilities.
Very truly yours,
/s/ Michael G. Morris
Michael G. Morris
Chairman of the Board, President and
Chief Executive Officer
March 31, 2000
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SPRINGFIELD MARRIOTT
1500 MAIN STREET
SPRINGFIELD, MASSACHUSETTS 01115
413-781-7111
(Corner of Boland Way and Columbus Avenue)
TRAVELING ON I-91 NORTH FROM HARTFORD, NEW YORK CITY:
Follow I-91 North to Exit 6 in Massachusetts -- Columbus Avenue,
Springfield Center. The exit will put you immediately onto Columbus Avenue. Go
through two lights and the hotel will be immediately on the right. Go up the
ramp into the garage to Level C, take the elevator on this level for the hotel
entrance. Parking validation will be provided.
TRAVELING ON I-91 SOUTH FROM NORTHERN MASSACHUSETTS, VERMONT:
Follow I-91 South to Exit 7 in Massachusetts -- Springfield Center,
Columbus Avenue. Go to the first light and make a left under the highway. At the
next light (Columbus Avenue) make another left and the hotel will be immediately
on your right. Go up the ramp into the garage to Level C, take the elevator on
this level for the hotel entrance. Parking validation will be provided.
<PAGE> 4
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 9, 2000
To the Shareholders of Northeast Utilities:
The Annual Meeting of Shareholders of Northeast Utilities will be held on
Tuesday, May 9, 2000, at 10:30 a.m., at the Springfield Marriott, Springfield,
Massachusetts, for the following purposes:
1. To fix the number of Trustees at thirteen;
2. To elect thirteen Trustees for the ensuing year;
3. To ratify the selection of Arthur Andersen LLP as independent auditors
for 2000; and
4. To transact any other business that may properly come before the
meeting or any adjournment thereof.
Only shareholders of record at the close of business on March 10, 2000 are
entitled to receive notice of and to vote at the meeting or any adjournment
thereof. You are cordially invited to be present at the meeting and to vote.
Whether or not you plan to attend the meeting, please complete, date and sign
the enclosed proxy card and return it in the envelope enclosed for that purpose.
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By order of the Board of Trustees,
[/s/ CHERYL W. GRISE]
107 Selden Street Cheryl W. Grise
Berlin, Connecticut Senior Vice President, Secretary
and General Counsel
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Mailing Address:
Post Office Box 270
Hartford, Connecticut 06141-0270
March 31, 2000
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IMPORTANT
SHAREHOLDERS CAN HELP AVOID THE NECESSITY AND EXPENSE OF FOLLOW-UP LETTERS
TO ENSURE THAT A QUORUM IS PRESENT AT THE ANNUAL MEETING BY PROMPTLY RETURNING
THE ENCLOSED PROXY. THE ENCLOSED ENVELOPE REQUIRES NO POSTAGE, IF MAILED IN THE
UNITED STATES.
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<PAGE> 5
PROXY STATEMENT
The accompanying proxy is solicited on behalf of the Board of Trustees of
Northeast Utilities for use at the Annual Meeting of Shareholders to be held on
May 9, 2000, and at any adjournment thereof.
Please read this proxy statement and fill in, date, sign and return the
enclosed form of proxy. The proxy may be revoked at any time before it is voted
by filing a letter with the Secretary of Northeast Utilities or by a duly
executed proxy card bearing a later date. Properly executed proxies not revoked
will be voted according to their terms.
Only holders of common shares of record at the close of business on March
10, 2000 (the record date) are entitled to receive notice of and to vote at the
meeting or any adjournment thereof. On the record date, there were 148,528,006
common shares outstanding. Each such share is entitled to one vote on each
matter to be voted on at the Annual Meeting of Shareholders.
The principal office of Northeast Utilities is located at 174 Brush Hill
Avenue, West Springfield, Massachusetts. The general offices of Northeast
Utilities and its subsidiaries are located at 107 Selden Street, Berlin,
Connecticut (mailing address: Post Office Box 270, Hartford, Connecticut
06141-0270). This proxy statement and the accompanying proxy card are being
mailed to shareholders commencing March 31, 2000.
An affirmative vote of a majority of the common shares outstanding as of
the record date will be required to fix the number of Trustees at thirteen and
to elect the thirteen nominees named below.
1. NUMBER OF TRUSTEES
2. ELECTION OF TRUSTEES
Unless a shareholder specifies otherwise, the enclosed proxy will be voted
to fix the number of Trustees for the ensuing year at thirteen and to elect the
thirteen nominees named below as Trustees to serve until the next Annual Meeting
and until their successors have been elected and shall have qualified. The
nominees who have not been previously elected as Trustees by shareholders are
Messrs. Sanford Cloud, Jr., John H. Forsgren, and Emery G. Olcott. Mr. Forsgren
has served as an Associate Trustee of the Board since September 14, 1999. As an
Associate Trustee, Mr. Forsgren provided advice and counsel to the Board. He had
no responsibilities or powers given to Trustees under the Declaration of Trust
of Northeast Utilities. In connection with Northeast Utilities' merger with
Yankee Energy System, Inc. (Yankee), Messrs. Cloud and Olcott, former Directors
of Yankee, are being nominated to the Board.
If one or more of the nominees should become unavailable for election, the
proxy may be voted for a substitute person or persons. However, there is no
reason to anticipate that any of the nominees will not be available.
<PAGE> 6
Set forth below is each nominee's name, age, date first elected as a
Trustee, and a brief summary of the nominee's business experience during the
past five years.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE TO FIX THE NUMBER
OF TRUSTEES AT THIRTEEN AND FOR ELECTION OF THE THIRTEEN NOMINEES LISTED BELOW.
<TABLE>
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[PHOTO OF COTTON MATHER COTTON MATHER CLEVELAND
CLEVELAND] (47 YEARS) 1992
President of Mather Associates, New London, New Hampshire (a
firm specializing in leadership and organizational
development for corporate and non-profit organizations).
From 1991 until 1998, Ms. Cleveland was the founding
Executive Director of Leadership New Hampshire. She is
currently a Director of The National Grange Mutual Insurance
Company and of the Ledyard National Bank and serves on the
Board of the New Hampshire Center for Public Policy. Ms.
Cleveland is an Incorporator for the Upper Valley Community
Foundation. She has served on the University System of New
Hampshire Board of Trustees as Chair, Vice Chair and a
member and served on the Bank of Ireland First Holdings
Board of Directors from 1986 to 1996. She was formerly
Co-Chair of the Governor's Commission on New Hampshire in
the 21st Century and an Incorporator for the New Hampshire
Charitable Foundation.
[PHOTO OF SANFORD
CLOUD, JR.] SANFORD CLOUD, JR.
(55 YEARS)
President and Chief Executive Officer of The National
Conference for Community and Justice, New York, New York.
From 1993 to 1994, he was a partner in the law firm of
Robinson and Cole, Hartford, Connecticut. Previously, Mr.
Cloud was Vice President of Aetna Life and Casualty Company
and served for two terms as a State Senator of Connecticut.
He is a Director of The Advest Group, Incorporated and Tenet
Healthcare Corporation and Chairman of the Board of The
Childrens Fund of Connecticut.
</TABLE>
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<TABLE>
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WILLIAM F. CONWAY
[PHOTO OF WILLIAM F. (69 YEARS) 1997
CONWAY] President of William F. Conway & Associates, Inc., Scottsdale, Arizona (a management
consulting firm to the nuclear power industry). From 1989 to 1994 (retired July 1994),
Mr. Conway was Executive Vice President -- Nuclear of Arizona Public Service Company,
Phoenix, Arizona. Prior to that, he was Senior Vice President of Nuclear Operations at
Florida Power & Light Company, Juno Beach, Florida. He is a member of the American
Nuclear Society. He served on the Board of Directors of the Nuclear Utilities Management
and Resources Council and its Issues Management Committee. He has also served on the
Research Advisory Committee of the Electric Power Research Institute and served as
Chairman of its Nuclear Power Division Advisory Committee. A former Chairman of the ABB
Combustion Engineering Owners Group Executive Committee, Mr. Conway currently serves on
its Advanced Light Water Reactor Executive Advisory Committee. Having been a member of
the Institute of Nuclear Power Operations (INPO) Board of Directors, he currently serves
on INPO's Advisory Council and is a member of the Accrediting Board of its National
Academy for Nuclear Training. Mr. Conway is a Director of First Energy Corporation and is
Chairman of its Nuclear Committee. He also serves on the Nuclear Safety Review Board at
several nuclear facilities.
E. GAIL DE PLANQUE
[PHOTO OF E. GAIL DE (55 YEARS) 1995
PLANQUE] President, Strategy Matters, Inc., and Director Energy Strategies Consultancy, Ltd. From
1991 to 1995, Dr. de Planque was a Commissioner with the United States Nuclear Regulatory
Commission. In 1967, Dr. de Planque joined the Health and Safety Laboratory of the United
States Atomic Energy Commission. She served at the Laboratory, now known as the
Environmental Measurements Laboratory, until December 1991, as Deputy Director beginning
in 1982 and as Director in 1987. She is a Fellow and past President of the American
Nuclear Society, a member of the National Academy of Engineering and the National Council
on Radiation Protection and Measurements, a Director of British Nuclear Fuels, Inc. and
President of the International Nuclear Societies Council. She is a member of the Texas
Utilities Electric Operations Review Committee; the External Advisory Committee, Amarillo
National Resource Center for Plutonium; the visiting Committee for the Department of
Nuclear Engineering, Massachusetts Institute of Technology; and a consultant to the
United Nation's International Atomic Energy Agency.
</TABLE>
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<TABLE>
<CAPTION>
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[PHOTO OF JOHN H. FORSGREN] JOHN H. FORSGREN
(53 YEARS)
Executive Vice President and Chief Financial Officer of Northeast
Utilities and a Director of two of its principal subsidiaries, Public
Service Company of New Hampshire and Western Massachusetts
Electric Company. From 1995 to 1996, Mr. Forsgren was a Managing
Director of the Chase Manhattan Bank. Prior to that, he was Senior
Vice President of The Walt Disney Company. He is also a Director of
NorthEast Optic Network, Inc. and The Circle Trust Company and a
member of the Board of Regents of Georgetown University.
[PHOTO OF RAYMOND L.
GOLDEN] RAYMOND L. GOLDEN
(62 YEARS) 1999
Independent Consultant. Previously served as Chairman Emeritus of BT
Wolfensohn, New York, New York, a business unit of BT Alex Brown
Incorporated. From August 1996 to December 1997, Mr. Golden was
Chairman of BT Wolfensohn. Prior to that, he served as President of
Wolfensohn & Company. Mr. Golden serves as a Trustee on the National
Wildlife Federation Endowment and the Board of the Jewish Federation
of Palm Beach County.
[PHOTO OF ELIZABETH T. ELIZABETH T. KENNAN
KENNAN] (62 YEARS) 1980
President Emeritus of Mount Holyoke College, South Hadley,
Massachusetts. Previously President of Mount Holyoke College. Dr.
Kennan is a Director of Bell Atlantic, The Putnam Funds, Franklin
Pierce College, Talbots and Kentucky Home Mutual Insurance. She is a
member of the Folger Shakespeare Library Committee.
[PHOTO OF MICHAEL G.
MORRIS] MICHAEL G. MORRIS
(53 YEARS) 1997
Chairman of the Board, President and Chief Executive Officer of
Northeast Utilities and Chairman, Chief Executive Officer and a
Director of Western Massachusetts Electric Company and Chairman of
Public Service Company of New Hampshire. From 1994 to 1997, Mr.
Morris was President and Chief Executive Officer of Consumers Energy
Company, Dearborn, Michigan. Prior to that, he was Executive Vice
President and Chief Operating Officer of Consumers Energy Company. He
is a Director of the Institute of Nuclear Power Operations, the
Nuclear Energy Institute, the Edison Electric Institute, the
Association of Edison Illuminating Companies, Nuclear Electric
Insurance Limited and the Connecticut Business & Industry
Association. Mr. Morris is also a Regent of Eastern Michigan
University.
</TABLE>
4
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<TABLE>
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[PHOTO OF EMERY G. EMERY G. OLCOTT
OLCOTT] (61 YEARS)
Chairman, President and Chief Executive Officer of Packard BioScience Company (f/k/a
Canberra Industries Incorporated), provider of systems and reagents for the life science
and genomics industries and radiation detection instrumentation for environmental
monitoring and clean up. He is Vice Chairman and Trustee of the Loomis Chaffee School and
serves on the Dean's Advisory Council for the Sloan School of Management at the
Massachusetts Institute of Technology.
[PHOTO OF WILLIAM J. WILLIAM J. PAPE II
PAPE II] (68 YEARS) 1974
Publisher, Waterbury Republican-American, Waterbury, Connecticut (newspaper). Mr. Pape is
President of American-Republican, Inc. He is a Director of Platt Bros. & Co. and Paper
Delivery, Inc. He is a Trustee of the Connecticut Policy and Economic Council, Inc. and
the Waterbury Y.M.C.A.
[PHOTO OF ROBERT E.
PATRICELLI] ROBERT E. PATRICELLI
(60 YEARS) 1993
Chairman, President and Chief Executive Officer of Women's Health USA, Inc., Avon,
Connecticut (provides women's health care services). From 1987 to 1997, he was Chairman,
President and Chief Executive Officer of Value Health, Inc., Avon, Connecticut.
Previously Executive Vice President of CIGNA Corporation and President of CIGNA's
Affiliated Businesses Group. Mr. Patricelli has held various positions in the federal
government, including White House Fellow in 1965; counsel to a United States Senate
Subcommittee; Deputy Undersecretary of the Department of Health, Education and Welfare;
and Administrator of the United States Urban Mass Transportation Administration. He is a
Director of Hartford Life, Inc., Curagen Corporation, the Connecticut Business & Industry
Association, The Bushnell and a Trustee of Wesleyan University.
[PHOTO OF JOHN F. JOHN F. SWOPE
SWOPE] (61 YEARS) 1992
President and Chief Executive Officer, Public Broadcasting Service, Alexandria, Virginia
from 1999 to March 1, 2000. Retired in 1997 as of counsel to the law firm of Sheehan
Phinney Bass + Green, Professional Association, Manchester, New Hampshire. Previously
President of Chubb Life Insurance Company of America, Concord, New Hampshire (retired
December, 1994). He is a Director of the Public Broadcasting Service and PBS Enterprises
and the New Hampshire Business Committee for the Arts. Mr. Swope is President of The
Currier Gallery of Art and a Trustee of Tabor Academy.
</TABLE>
5
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<TABLE>
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JOHN F. TURNER
[PHOTO OF JOHN F. (57 YEARS) 1995
TURNER] President and Chief Executive Officer of The Conservation Fund, Arlington, Virginia (a
national nonprofit organization dedicated to land and water conservation and economic
development). From 1989 to 1993, Mr. Turner was Director of the United States Fish &
Wildlife Service in the United States Department of the Interior. He has also served as
President of the Wyoming State Senate. A former Chairman of the Board of Directors of the
Bank of Jackson Hole, Mr. Turner continues as a partner in the family ranch business in
Wyoming. He is assisting schools of natural resources at the University of Wyoming,
University of Michigan and Yale University with wildlife and land use projects. He is a
member of the National Coal Council and a Director of Land Trust Alliance and National
Wildlife Refuge Association.
</TABLE>
BOARD COMMITTEES AND RESPONSIBILITIES
The Board of Trustees of Northeast Utilities has Audit, Compensation,
Corporate Affairs, Corporate Governance, Executive, Finance and Nuclear
Committees. The Board of Trustees does not have a Nominating Committee.
The Audit Committee meets independently with the internal and independent
auditors of Northeast Utilities and its subsidiaries to review the auditors'
activities, procedures and recommendations. Following each meeting, the
Committee reports to the full Board. The Committee recommends annually the
appointment of Northeast Utilities' independent auditors for the coming year.
The Audit Committee met five times in 1999. The members of the Committee are
Messrs. Swope (Chair), Conway, Golden and Turner and Drs. de Planque and Kennan,
none of whom is an employee of Northeast Utilities or its subsidiaries.
The Compensation Committee reviews and adjusts, as appropriate, the
compensation policies of Northeast Utilities and its subsidiaries and
establishes and implements an evaluation process for the Chief Executive Officer
in conjunction with the Corporate Governance Committee. Following each meeting,
the Committee reports to the full Board. The Compensation Committee met six
times in 1999. The members of the Committee are Messrs. Patricelli (Chair), Pape
and Swope, Ms. Cleveland, and Drs. de Planque and Kennan, none of whom is an
employee of Northeast Utilities or its subsidiaries. A report from this
Committee with respect to executive compensation is included in this proxy
statement.
The Corporate Affairs Committee reviews the policies and practices of
Northeast Utilities and its subsidiaries on public issues in areas such as
health, safety, environment and equal employment opportunity. Following each
meeting, the Committee reports to the full Board. The Corporate Affairs
Committee met four times in 1999. The members of the Committee are Messrs.
Turner (Chair), Pape and Swope, Dr. Kennan and Ms. Cleveland, none of whom is an
employee of Northeast Utilities or its subsidiaries.
The Corporate Governance Committee recommends criteria for new Trustees and
identifies prospective Board candidates. The Committee also evaluates the
Board's performance and, in conjunction with the Compensation Committee,
establishes and implements an evaluation process for the Chief Executive
Officer. Following each meeting, the Committee reports to the full Board. The
Corporate Governance Committee met seven
6
<PAGE> 11
times in 1999. The members of the Committee are Dr. Kennan (Chair), Ms.
Cleveland and Mr. Turner, none of whom is an employee of Northeast Utilities or
its subsidiaries.
The Executive Committee is empowered to exercise all the authority of the
Board, subject to certain limitations set forth in Northeast Utilities'
Declaration of Trust, during the intervals between meetings of the Board. The
Executive Committee met four times in 1999. The members of the Executive
Committee are Messrs. Morris (Chair), Patricelli and Swope and Drs. de Planque
and Kennan. Other than Mr. Morris, no Committee member is an employee of
Northeast Utilities or its subsidiaries.
The Finance Committee assists the Board in fulfilling its fiduciary
responsibilities relating to financial plans, policies and programs for
Northeast Utilities and its subsidiaries. Following each meeting, the Committee
reports to the full Board. The Finance Committee met four times in 1999. The
members of the Finance Committee are Messrs. Golden (Chair), Morris and
Patricelli and Dr. Kennan. Other than Mr. Morris, no Committee member is an
employee of Northeast Utilities or its subsidiaries.
The Nuclear Committee provides the Board with an independent basis for
overseeing the safety and effectiveness of the nuclear program of the Northeast
Utilities system. More recently, specific attention has been given to oversight
of the recovery of Millstone Units 2 and 3; operation of Seabrook Unit 1;
decommissioning activities of Connecticut Yankee Atomic Power Station and
Millstone Unit 1; management's attention to nuclear safety; progress in
resolving issues with the Nuclear Regulatory Commission, the Institute of
Nuclear Power Operations and other independent evaluations of nuclear
operations; and progress in resolving employee and community concerns. With the
exception of meetings held by conference telephone, following each meeting the
Committee reports to the full Board. The Nuclear Committee met twenty-three
times in 1999. The members of the Committee are Dr. de Planque (Chair), Ms.
Cleveland and Messrs. Conway, Pape and Turner, none of whom is an employee of
Northeast Utilities or its subsidiaries.
In 1999, the Board of Trustees held 16 meetings and the Board and
Committees of the Board held a total of 69 meetings. All of the nominees for
Trustee attended 75 percent or more of the aggregate number of meetings of the
Board and the Committees of which they were members.
TRUSTEE COMPENSATION
During 1999, each Trustee who was not an employee of Northeast Utilities or
its subsidiaries was compensated at an annual rate of $20,000 cash plus 500
common shares of Northeast Utilities, and received $1,000 for each meeting
attended of the Board or its Committees. A non-employee Trustee who participates
in a meeting of the Board or any of its Committees by conference telephone
receives $675 per meeting. Also, a non-employee Trustee who is asked by either
the Board of Trustees or the Chairman of the Board to perform extra services in
the interest of the Northeast Utilities system may receive additional
compensation of $1,000 per day plus necessary expenses. The Chairs of the Audit,
the Compensation, the Corporate Affairs, the Corporate Governance and the
Nuclear Committees were compensated at an additional annual rate of $3,500. In
addition to the above compensation, Dr. Kennan is paid at the annual rate of
$30,000 for the extra services performed as Lead Trustee. The Chair of the
Nuclear Committee receives an additional retainer at the rate of $25,000 per
year.
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Under the terms of the Northeast Utilities Incentive Plan (Incentive Plan)
adopted by shareholders at the 1998 Annual Meeting, each non-employee Trustee is
eligible for stock-based grants. During 1999 each such Trustee was granted
non-qualified options to purchase 2,500 common shares of Northeast Utilities.
Receipt of shares acquired on exercise of these options may be deferred pursuant
to the terms of the Northeast Utilities Deferred Compensation Plan for
Executives.
In February 2000 each non-employee Trustee was granted nonqualified options
to purchase 2,500 common shares.
Prior to the beginning of each calendar year, each non-employee Trustee may
irrevocably elect to have all or any portion of the annual retainer fee paid in
the form of common shares of Northeast Utilities. Pursuant to the Northeast
Utilities Deferred Compensation Plan for Trustees, each Trustee may also
irrevocably elect to defer receipt of some or all cash and/or share
compensation.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Trustees and
certain officers of Northeast Utilities and persons who beneficially own more
than ten percent of the outstanding common shares of Northeast Utilities to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (SEC) and the New York Stock Exchange. Based on review of copies of
such forms furnished to Northeast Utilities, or written representations that no
Form 5 was required, Northeast Utilities believes that for the year ended
December 31, 1999, all such reporting requirements were complied with in a
timely manner.
COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table provides, as of December 31, 1999, information with
respect to persons who are known to Northeast Utilities to beneficially own more
than five percent of the common shares of Northeast Utilities. Northeast
Utilities has no other class of voting securities.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ------------------- -------------------- ----------
<S> <C> <C>
Barrow, Hanley, Mewhinney &
Strauss, Inc. 13,099,288(1) 9.9%
One McKinney Plaza
3232 McKinney Avenue, 15th Floor
Dallas, TX
Capital Research and Management Company 7,525,000(2) 5.7%
333 South Hope Street
Los Angeles, California 90071
</TABLE>
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(1) According to an amendment to Schedule 13G dated February 8, 2000, Barrow,
Hanley, Mewhinney & Strauss, Inc. holds 13,099,288 common shares of
Northeast Utilities. According to the Schedule 13G, Barrow, Hanley,
Mewhinney & Strauss, Inc. has sole voting power for 9,552,488 shares, shared
voting power for 3,546,800 shares and sole dispositive power for 13,099,288
shares.
(2) According to Schedule 13G dated February 10, 2000, Capital Research and
Management Company holds 7,525,000 common shares of Northeast Utilities.
According to the Schedule 13G, Capital Research and Management Company has
sole voting power for 0 shares, shared voting power for 0 shares, sole
dispositive power for 7,525,000 shares and shared dispositive power for 0
shares. The Schedule 13G states that beneficial ownership is disclaimed
pursuant to Rule 13d-4.
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<PAGE> 13
COMMON STOCK OWNERSHIP OF MANAGEMENT
The following table provides information as of February 24, 2000, as to the
beneficial ownership of the common shares of Northeast Utilities by each nominee
for Trustee, each of the five highest paid executive officers of Northeast
Utilities and its subsidiaries, and all nominees for Trustee and executive
officers as a group. Unless otherwise noted, each nominee and executive officer
has sole voting and investment power with respect to the listed shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP OF CLASS(1)
---- -------------------- -----------
<S> <C> <C>
Cotton Mather Cleveland 9,449(2)
Sanford Cloud, Jr. --
William F. Conway 11,191(2)(3)
E. Gail de Planque 9,023(2)
John H. Forsgren 78,746(4)
Raymond L. Golden 8,516(5)
Cheryl W. Grise 32,347(6)
Elizabeth T. Kennan 10,454(2)
Bruce D. Kenyon 87,377(7)
Hugh C. MacKenzie 35,034(8)
Michael G. Morris 400,496(9)
Emery G. Olcott 6,400
William J. Pape II 8,999(2)
Robert E. Patricelli 14,535(2)
John F. Swope 12,508(2)
John F. Turner 7,188(2)(10)
All Trustees and Executive Officers
as a Group (19 persons) 785,811(11)
</TABLE>
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(1) As of February 24, 2000, the Trustees and executive officers of Northeast
Utilities, as a group, beneficially owned less than one percent of the
Northeast Utilities common shares outstanding.
(2) Includes 6,250 shares that could be acquired by the beneficial owner
pursuant to currently exercisable options.
(3) Includes 4,941 shares held jointly by Mr. Conway and his wife, who share
voting and investment power.
(4) Includes 174 shares held in an employee stock ownership plan and 5,475
restricted shares, as to which Mr. Forsgren has sole voting power but no
dispositive power. Includes 59,739 shares that could be acquired by Mr.
Forsgren pursuant to currently exercisable options.
(5) Includes 3,750 shares that could be acquired by Mr. Golden pursuant to
currently exercisable options.
(6) Includes 3,285 restricted shares, as to which Mrs. Grise has sole voting
power, but no dispositive power. Includes 15,182 shares that could be
acquired by Mrs. Grise pursuant to currently exercisable options. Includes
261 shares held by Mrs. Grise's husband as custodian for her children, with
whom she shares voting and dispositive power.
(7) Includes 305 shares held in an employee stock ownership plan and 3,467
restricted shares, as to which Mr. Kenyon has sole voting power but no
dispositive power. Includes 21,092 shares that could be acquired by Mr.
Kenyon pursuant to currently exercisable options.
(8) Includes 3,285 restricted shares, as to which Mr. MacKenzie has sole voting
power but no dispositive power. Includes 16,902 shares that could be
acquired by Mr. MacKenzie pursuant to currently exercisable options.
(9) Includes 265 shares held in an employee stock ownership plan and 20,939
restricted shares, as to which Mr. Morris has sole voting power but no
dispositive power. Includes 349,167 shares that could be acquired by Mr.
Morris pursuant to currently exercisable options. Includes 13,095 shares
held jointly by Mr. Morris and his wife, who share voting and investment
power.
(10) Includes 938 shares held jointly by Mr. Turner and his wife, who share
voting and investment power.
(11) Includes 264 shares held in an employee stock ownership plan and 6,881
restricted shares held by executive officers other than those named in the
table above as to which they have sole voting power but no dispositive
power. Includes 21,126 shares that could be acquired by them pursuant to
currently exercisable options, and 37,500 shares that could be acquired by
them pursuant to options becoming exercisable within sixty days.
9
<PAGE> 14
EXECUTIVE COMPENSATION
The following tables present the cash and non-cash compensation received by
the Chief Executive Officer and the next four highest paid executive officers of
Northeast Utilities, in accordance with rules of the SEC:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------- -------------------------- ---------
LONG
OTHER RESTRICTED SECURITIES TERM
ANNUAL STOCK UNDERLYING INCENTIVE ALL OTHER
COMPEN- AWARD(S) OPTIONS/STOCK PROGRAM COMPENSATION
NAME AND PRINCIPAL SALARY BONUS SATION ($) ($) APPRECIATION PAYOUTS ($)
POSITION YEAR ($) ($) (NOTE 1) (NOTE 2) RIGHTS (#) ($) (NOTE 3)
- ------------------ ---- ------- --------- ---------- ---------- ------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael G. Morris 1999 783,173 1,253,300 92,243 348,611 118,352 -- 23,210
Chairman of the 1998 757,692 891,000 134,376 255,261 64,574 -- 22,731
Board, President 1997 258,333 1,350,000 -- -- 500,000 -- --
and Chief
Executive Officer
Bruce D. Kenyon 1999 500,000 -- -- 77,690 20,804 462,500 15,000
President -- 1998 500,000 300,000 -- -- 21,236 -- 14,800
Generation Group 1997 500,000 300,000 -- 306,522 139,745 -- --
John H. Forsgren 1999 429,904 400,000 -- 122,682 32,852 87,003 12,888
Executive Vice 1998 373,077 -- -- -- 73,183 -- 104,800
President and 1997 350,000 -- -- 378,787 184,382 -- 50,000
Chief Financial
Officer
Hugh C. MacKenzie 1999 270,000 250,000 -- 73,612 19,712 -- 108,100
President -- Retail 1998 270,000 -- -- -- 15,496 42,972 7,500
Business Group 1997 270,000 -- -- 189,778 142,549 26,998 4,800
Cheryl W. Grise 1999 244,712 250,000 -- 73,612 19,712 -- 82,247
Senior Vice President, 1998 209,231 -- -- -- 12,916 20,720 6,123
Secretary and 1997 200,000 -- -- 119,109 89,467 15,188 4,800
General Counsel
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
GRANT DATE
INDIVIDUAL GRANTS VALUE
-------------------------------------------------------------------------- ----------
NUMBER OF
SECURITIES
UNDERLYING % OF TOTAL OPTIONS/SARS EXERCISE OR GRANT DATE
OPTIONS/SARS GRANTED TO EMPLOYEES BASE PRICE EXPIRATION PRESENT
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE VALUE ($)
- ---- --------------- ----------------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Michael G. Morris 93,352 (Note 4) 14.7% 14.9375 2/23/2009 620,791
25,000 (Note 5) 3.9% 17.5625 9/13/2009 198,000
Bruce D. Kenyon 20,804 (Note 4) 3.3% 14.9375 2/23/2009 138,347
John H. Forsgren 32,852 (Note 4) 5.2% 14.9375 2/23/2009 218,466
Hugh C. MacKenzie 19,712 (Note 4) 3.1% 14.9375 2/23/2009 131,085
Cheryl W. Grise 19,712 (Note 4) 3.1% 14.9375 2/23/2009 131,085
</TABLE>
10
<PAGE> 15
AGGREGATED OPTIONS/SAR EXERCISES IN LAST
FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
SHARES WITH NUMBER OF SECURITIES
RESPECT TO UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
WHICH OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SARS WERE VALUE AT FISCAL YEAR END (#) AT FISCAL YEAR-END ($)
EXERCISED REALIZED ---------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael G. Morris -- -- 318,049 364,877 2,992,333 3,350,961
Bruce D. Kenyon 98,509 332,468 52,410 27,883 344,674 147,108
John H. Forsgren 129,974 438,662 99,259 57,247 582,727 288,471
Hugh C. MacKenzie 100,486 339,140 49,351 24,877 334,118 132,831
Cheryl W. Grise 63,067 212,851 33,101 24,017 218,741 129,176
</TABLE>
NOTES TO SUMMARY COMPENSATION AND OPTION/SAR GRANTS TABLES:
1. Other annual compensation for Mr. Morris consists of 1998 and 1999 relocation
expense reimbursements.
2. The aggregate restricted stock holdings by the five individuals named in the
table were, at December 31, 1999, 51,989 shares with a value of $1,069,024.
Awards shown for 1997 have vested. Awards shown for 1999 vest one-third on
February 23, 2000, one-third on February 23, 2001, and one-third on February
23, 2002. A total of 51,989 restricted shares were awarded to these
individuals during 1999. Dividends paid on restricted stock are either paid
out or reinvested into additional shares.
3. "All Other Compensation" for 1999 consists of employer matching contributions
under the Northeast Utilities Service Company 401k Plan, generally available
to all eligible employees ($4,800 for each named officer), matching
contributions under the Deferred Compensation Plan for Executives (Mr.
Morris -- $18,710, Mr. Kenyon -- $10,200, Mr. Forsgren -- $8,088, Mr.
MacKenzie -- $3,300, and Mrs. Grise -- $2,447), and retention payments (Mr.
MacKenzie -- $100,000 and Mrs. Grise -- $75,000).
4. These options were granted on February 23, 1999 under the Incentive Plan. All
options granted vest one-third on February 23, 2000, one-third on February
23, 2001 and one-third on February 23, 2002. Valued using the Black-Scholes
option pricing model, with the following assumptions: Volatility: 36.52
percent (36 months of monthly data); Risk-free rate: 5.61 percent; Dividend
yield: 1.89 percent; Exercise date: February 23, 2009.
5. These options were granted on September 14, 1999 and were fully exercisable
on the date of grant. Valued using the Black-Scholes option pricing model,
with the following assumptions: Volatility: 34.66 percent (36 months of
monthly data); Risk-free rate: 6.45 percent; Dividend yield: 1.89 percent;
Exercise date: September 13, 2009.
11
<PAGE> 16
PENSION BENEFITS
The following table shows the estimated annual retirement benefits payable
to an executive officer of Northeast Utilities upon retirement, assuming that
retirement occurs at age 65 and that the officer is at that time not only
eligible for a pension benefit under the Northeast Utilities Service Company
Retirement Plan (the Retirement Plan) but also eligible for the make-whole
benefit and the target benefit under the Supplemental Executive Retirement Plan
for Officers of Northeast Utilities System Companies (the Supplemental Plan).
The Supplemental Plan is a non-qualified pension plan providing supplemental
retirement income to system officers. The make-whole benefit under the
Supplemental Plan, available to all officers, makes up for benefits lost through
application of certain tax code limitations on the benefits that may be provided
under the Retirement Plan, and includes as "compensation" awards under the
executive incentive plans and deferred compensation (as earned). The target
benefit further supplements these benefits and is available to officers at the
Senior Vice President level and higher who are selected by the Board of Trustees
to participate in the target benefit and who remain in the employ of Northeast
Utilities companies until at least age 60 (unless the Board of Trustees sets an
earlier age).
The benefits presented below are based on a straight life annuity beginning
at age 65 and do not take into account any reduction for joint and survivorship
annuity payments. Final average compensation for purposes of calculating the
target benefit is the highest average annual compensation of the participant
during any 36 consecutive months compensation was earned. Compensation taken
into account under the target benefit described above includes salary, bonus,
restricted stock awards, and long-term incentive payouts shown in the Summary
Compensation Table, but does not include employer matching contributions under
the 401k Plan. In the event that an officer's employment terminates because of
disability, the retirement benefits shown above would be offset by the amount of
any disability benefits payable to the recipient that are attributable to
contributions made by Northeast Utilities and its subsidiaries under long term
disability plans and policies.
ANNUAL TARGET BENEFIT
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
----------------------------------------------------
FINAL AVERAGE COMPENSATION 15 20 25 30 35
- -------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 72,000 $ 96,000 $120,000 $120,000 $120,000
250,000 90,000 120,000 150,000 150,000 150,000
300,000 108,000 144,000 180,000 180,000 180,000
350,000 126,000 168,000 210,000 210,000 210,000
400,000 144,000 192,000 240,000 240,000 240,000
450,000 162,000 216,000 270,000 270,000 270,000
500,000 180,000 240,000 300,000 300,000 300,000
600,000 216,000 288,000 360,000 360,000 360,000
700,000 252,000 336,000 420,000 420,000 420,000
800,000 288,000 384,000 480,000 480,000 480,000
900,000 324,000 432,000 540,000 540,000 540,000
1,000,000 360,000 480,000 600,000 600,000 600,000
1,100,000 396,000 528,000 660,000 660,000 660,000
1,200,000 432,000 576,000 720,000 720,000 720,000
</TABLE>
12
<PAGE> 17
Each of the executive officers of Northeast Utilities named in the Summary
Compensation Table on page 10 is currently eligible for a target benefit, except
Messrs. Morris and Kenyon, whose Employment Agreements provide specially
calculated retirement benefits, based on their previous arrangements with CMS
Energy/Consumers Energy Company (CMS) and South Carolina Electric and Gas,
respectively. Mr. Morris's agreement provides that upon retirement after
reaching the fifth anniversary of his employment date (or upon disability or
termination without cause or following a change in control, as defined) he will
be entitled to receive a special retirement benefit calculated by applying the
benefit formula of the CMS Supplemental Executive Retirement Plan to all
compensation earned from the Northeast Utilities system (the Company) and to all
service rendered to the Company and CMS. If Mr. Kenyon retires with at least
three years of service with the Company, he will be deemed to have two extra
years of service for purpose of his special retirement benefit. If after
achieving three years of service he voluntarily terminates employment following
a "substantial change, in responsibilities resulting from a material change in
the business of Northeast Utilities", he will be deemed to have an additional
year of service for purpose of his special retirement benefit, and if he retires
with at least three years of service with the Company, he will receive a lump
sum payment of $500,000.
In addition, Mr. Forsgren's Employment Agreement provides for supplemental
pension benefits based on crediting up to ten years additional service and
providing payments equal to 25 percent of salary for up to 15 years following
retirement, reduced by four percentage points for each year that his age is less
than 65 years at retirement.
As of December 31, 1999, the five current executive officers named in the
Summary Compensation Table had the following years of credited service for
purposes of calculating target benefits under the Supplemental Plan (or in the
case of Messrs. Morris and Kenyon, for purposes of calculating the special
retirement benefits under their respective Employment Agreements): Mr.
Morris -- 21, Mr. Kenyon -- 5, Mr. Forsgren -- 3, Mr. MacKenzie -- 34, and Mrs.
Grise -- 19. In addition, Mr. Forsgren had 6 years of service for purposes of
his supplemental pension benefit and would have 25 years of service for such
purpose if he were to retire at age 65. Assuming that retirement were to occur
at age 65 for these officers, retirement would occur with 33, 13, 15, 41 and 37
years of credited service, respectively.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Northeast Utilities Service Company (NUSCO) has entered into employment
agreements (the Officer Agreements) with each of the named executive officers.
The Officer Agreements are also binding on Northeast Utilities and on each
majority-owned subsidiary of Northeast Utilities.
Each Officer Agreement obligates the officer to perform such duties as may
be directed by the NUSCO Board of Directors or the Northeast Utilities Board of
Trustees, protect the Company's confidential information, and refrain, while
employed by the Company and for a period of time thereafter, from competing with
the Company in a specified geographic area. Each Officer Agreement provides that
the officer's base salary will not be reduced below certain levels without the
consent of the officer, and that the officer will participate in specified
benefits under the Supplemental Executive Retirement Plan or other supplemental
retirement programs (see Pension Benefits, above) and/or in certain executive
incentive programs at specified incentive opportunity levels.
13
<PAGE> 18
Each Officer Agreement provides for a specified employment term and for
automatic one-year extensions of the employment term unless at least six months'
notice of non-renewal is given by either party. The employment term may also be
ended by the Company for "cause", as defined, at any time (in which case no
supplemental retirement benefit, if any, shall be due), or by the officer on
thirty days' prior written notice for any reason. Absent "cause", the Company
may remove the officer from his or her position on sixty days' prior written
notice, but in the event the officer is so removed and signs a release of all
claims against the Company, the officer will receive one or two years' base
salary and annual incentive payments, specified employee welfare and pension
benefits, and vesting of stock appreciation rights, options and restricted
stock.
Under the terms of an Officer Agreement, upon any termination of employment
following a change of control, as defined, between (a) the earlier of the date
shareholders approve a change of control transaction or a change of control
transaction occurs and (b) the earlier of the date, if any, on which the Board
of Trustees abandons the transaction or the date two years following the change
of control, if the officer signs a release of all claims against the Company,
the officer will be entitled to certain payments including a multiple (not to
exceed four) of annual base salary, annual incentive payments, specified
employee welfare and pension benefits, and vesting of stock appreciation rights,
options and restricted stock. Certain of the change in control provisions may be
modified by the Board of Trustees prior to a change in control, on at least two
years' notice to the affected officer(s).
Besides the terms described above, the Officer Agreements of Messrs.
Morris, Kenyon and Forsgren provide for a specified salary, cash, restricted
stock and/or stock options upon employment, special incentive programs and/or
special retirement benefits. See Pension Benefits, above, for further
description of these provisions. During 1999, the Officer Agreements of Messrs.
Morris, Kenyon and Forsgren and Mrs. Grise were amended to provide that a
termination of employment initiated by such officer upon the imposition of a
limitation of scope of the officer's responsibilities following a change of
control such that the officer's responsibilities relate primarily to a company
whose common equity is not publicly held shall constitute a termination upon a
change of control. Mr. Kenyon's Officer Agreement also provides for a special
short term incentive compensation program in lieu of a portion of the Stock
Price Recovery Incentive Program. Under this special program Mr. Kenyon is
eligible to receive a payment up to 100 percent of base salary depending on his
fulfillment of certain incentive goals for each of the years ending August 31,
1997 and August 31, 1998, and for the 16 month period ending December 31, 1999.
The descriptions of the various agreements set forth above are for purpose
of disclosure in accordance with the proxy and other disclosure rules of the SEC
and shall not be controlling on any party; the actual terms of the agreements
themselves determine the rights and obligations of the parties.
14
<PAGE> 19
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW AND STRATEGY
The Compensation Committee of the Board of Trustees (the Committee) is the
administrator of executive compensation for the executives of the Northeast
Utilities system (the Company) with authority to establish and interpret the
terms of the Company's executive salary and incentive programs. The goal of the
Committee's executive compensation program for 1999 was to provide a competitive
compensation package to enable the Company to attract and retain key executives
with an eye towards the future in a more competitive environment. The Committee
further sought to align executive interests with those of Northeast Utilities'
shareholders and with Company performance by continuing with the increased use
of share-based incentives.
To help achieve these goals, the Committee drew upon information from a
variety of sources, including compensation consultants, utility and general
industry surveys, and other publicly available information, including proxy
statements. In 1999, the Company's comparison groups for purposes of executive
compensation consisted of a consultant's database of roughly 1,000 companies
from a broad variety of industries, a consultant's database of over 75 electric
and combination electric and gas utilities, and a smaller group of ten electric
utilities whose operating characteristics were substantially similar to those of
the Company in terms of generation mix and customer size. Nine of the ten
companies are included in the Standard & Poor's (S&P) Electric Companies Index,
which is the index used in the share performance chart shown on page 17.
BASE SALARY
The Committee sets the annual base salary for each executive officer except
for the Chief Executive Officer (CEO), whose base salary is set by the Board of
Trustees following a recommendation by the Committee pursuant to an evaluation
process developed by the Committee in conjunction with the Corporate Governance
Committee of the Board of Trustees. In 1999 the Committee reviewed the base
salary levels of the Company's entire officer group against those of the 75
utility market comparison group with a goal of targeting aggregate officer base
salary to the median. The Committee periodically adjusts officers' base salaries
to reflect considerations such as changes in responsibility, market sensitivity,
individual performance and internal equity. The CEO's base salary was increased
by 3.23 percent in 1999 based on the market review and the Committee's judgment
as to his past and expected future performance.
ANNUAL INCENTIVE AWARDS
The Committee again implemented an Annual Incentive Program during 1999.
The incentive payout target was 80 percent of base salary for the CEO, and
varied from 25 to 50 percent of base salary for the other officers. The Annual
Incentive Program was designed to calculate actual aggregate payouts based on
the Company's performance against an earnings per share goal and pre-established
individual goals. Individual awards were made in cash in February 2000. The CEO
received an award under this program of $1,253,300, or 200 percent of target,
determined solely on the fulfillment of the earnings-per-share goal. In
addition, during September 1999, the Board approved an award of 25,000 stock
options for the CEO on account of a highly successful year in 1999 including the
sale of the fossil/hydro plants and the restart of Millstone Unit 2.
15
<PAGE> 20
LONG-TERM INCENTIVE GRANTS
Long-term stock-based incentive grants were made in February 1999 to each
executive officer and other officers and certain key employees of the Company.
The Committee targeted these awards such that the total of base pay, target
annual incentive awards, and long-term incentive awards for the officer group
would be at the 75th percentile of the utility market comparison group.
Approximately one-half of the grants' intended value was made in restricted
stock and one-half was made in stock options. The CEO's grant was targeted at
110 percent of base salary based upon the consultant's survey database of
utilities and general industry and the Committee's goal of making long term
incentive awards competitive with these companies.
INTERNAL REVENUE SERVICE LIMITATION ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Committee believes that its compensation program adequately responds to
issues raised by the deductibility cap placed on executive salaries by Section
162(m) of the Internal Revenue Code because of the use of stock options and
qualified performance-based compensation in Company incentive programs.
Respectfully submitted,
Robert E. Patricelli, Chairman
William J. Pape II, Vice Chairman
Cotton Mather Cleveland
E. Gail de Planque
Elizabeth T. Kennan
John F. Swope
Dated: February 22, 2000
16
<PAGE> 21
SHARE PERFORMANCE CHART
The following chart compares the cumulative total return on an investment
in Northeast Utilities common shares with the cumulative total return of the S&P
500 Stock Index and the S&P Electric Companies Index over the last five fiscal
years, in accordance with the rules of the SEC:
(Assumes $100 invested on January 1, 1995 in Northeast Utilities (NU)
common shares, S&P 500 Index and S&P Electric Companies Index with all
dividends reinvested)
[NORTHEAST UTILITIES SHARE PERFORMANCE CHART]
<TABLE>
<CAPTION>
NU COMMON S&P ELECTRIC COMPANIES S&P 500
--------- ---------------------- -------
<S> <C> <C> <C>
100.00 100.00 100.00
1995 121.00 131.00 138.00
1996 72.00 131.00 169.00
1997 67.00 165.00 226.00
1998 90.00 191.00 290.00
1999 117.00 154.00 351.00
</TABLE>
3. RATIFICATION OF THE SELECTION OF AUDITORS
The firm of Arthur Andersen LLP, independent public accountants, was
selected by the Board of Trustees, and approved by the shareholders, to serve as
independent auditors of Northeast Utilities and its subsidiaries for 1999.
Pursuant to the recommendation of the Audit Committee, the Board of
Trustees recommends that shareholders ratify the selection by the Board of
Trustees of Arthur Andersen LLP to audit the accounts of Northeast Utilities and
its subsidiaries for 2000. Representatives of Arthur Andersen LLP are expected
to be present at the meeting. They will have the opportunity to make a
statement, if they desire to do so, and to respond to appropriate questions
raised at the meeting.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
4. OTHER MATTERS
The Board of Trustees knows of no matters other than the foregoing to come
before the meeting. However, if any other matters come before the meeting, the
persons named in the enclosed proxy will vote in their discretion with respect
to such other matters.
17
<PAGE> 22
ANNUAL REPORT
Northeast Utilities' Annual Report to Shareholders for the year ended
December 31, 1999, including financial statements, is being mailed with or prior
to this proxy solicitation material. An additional copy of the Annual Report
will be mailed to any shareholder upon request.
MERGER AGREEMENT
On October 13, 1999, Northeast Utilities and Consolidated Edison, Inc. (Con
Edison) agreed to a merger to combine the two companies. Under the agreement,
Con Edison will acquire all of the common shares of Northeast Utilities for $25
per share, subject to adjustment, in a combination of cash and Con Edison common
stock. A detailed explanation of the merger, which requires shareholder
approval, is set forth in the proxy statement dated February 29, 2000, relating
to the shareholder's special meeting scheduled to be held on April 14, 2000 at
which such approval will be sought.
COST OF SOLICITATION OF PROXIES
The cost of soliciting proxies on behalf of the Board of Trustees will be
borne by Northeast Utilities. In addition to the use of the mails, proxies may
be solicited by personal interview, telephone or telegraph, by Trustees,
officers or employees of Northeast Utilities or Northeast Utilities Service
Company, or by an independent company, Morrow & Co., Inc., which has been
retained to assist in the solicitation of proxies from banks, brokerage firms,
nominees and individual shareholders for a fee of $12,000 plus reimbursement for
expenses. Arrangements will be made to reimburse brokerage firms, nominees,
custodians and fiduciaries for expenses incurred in forwarding solicitation
materials to the beneficial owners of common shares held as of March 10, 2000.
LEGAL PROCEEDINGS
SHAREHOLDER SECURITIES CLASS ACTIONS -- CON EDISON MERGER
As previously disclosed in reports filed with the SEC pursuant to the
Securities Exchange Act of 1934, on October 13, 1999 and October 19, 1999,
virtually identical complaints were filed in the Supreme Court of New York
against Northeast Utilities and its Trustees. Both complaints purport to be
"class action complaints" and allege that the Trustees have breached their
fiduciary duties to the plaintiffs and other members of the class by not (i)
obtaining the best price for Northeast Utilities' assets and businesses and (ii)
entrenching themselves and their corporate offices in connection with the
proposed merger with Con Edison. The plaintiffs seek equitable relief, including
an order that the Trustees maximize shareholder value, and award attorneys'
fees. Northeast Utilities removed the cases from the state court to federal
court in New York City and has filed motions to dismiss the actions on various
grounds. Northeast Utilities believes that all of these class actions are
without merit and intends to vigorously defend against all such actions.
18
<PAGE> 23
MILLSTONE 3 JOINT OWNER LITIGATION
As previously disclosed in reports filed with the SEC pursuant to the
Securities Exchange Act of 1934, The Connecticut Light and Power Company (CL&P)
and Western Massachusetts Electric Company (WMECO), through Northeast Nuclear
Energy Company, a subsidiary of Northeast Utilities, operate Millstone Unit 3 on
behalf of the facility's joint owners. On August 7, 1997, the non-Northeast
Utilities owners of Millstone 3 (minority owners) filed demands for arbitration
with CL&P and WMECO, as well as three lawsuits in Massachusetts Superior Court
against Northeast Utilities and many of its current and former Trustees. The
minority owners raise a number of contract, tort and statutory claims, arising
out of the operation of Millstone 3, and seek to recover compensatory damages,
punitive damages, treble damages and attorneys' fees. Hearings in the
arbitration proceeding commenced on November 16, 1999, and an initial decision
on liability is not expected before the third quarter of 2000. One of the three
lawsuits has been dismissed as a result of the settlements discussed below. The
remaining lawsuits have been consolidated, but no firm trial date has been set.
NU, CL&P and WMECO have reached settlements with three of the minority
owners, who collectively own approximately 60 percent of the minority owners'
interest. The agreements involve the payment of certain fixed amounts to the
minority owners, and provide for the inclusion of their Millstone 3 interests in
CL&P's nuclear auction process. No agreements have been reached with the other
seven minority owners.
19
<PAGE> 24
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
To be included in the proxy statement and form of proxy for the 2001 Annual
Meeting of Shareholders, proposals by shareholders must be received no later
than December 1, 2000, and must satisfy the conditions established by the SEC.
Shareholder proposals submitted to be considered at the 2001 Annual Meeting
without inclusion in next year's proxy materials must be received no later than
February 14, 2001. If Northeast Utilities is not notified of a shareholder
proposal by February 14, 2001, then proxies held by management may provide the
discretion to vote against such proposal, even though such proposal is not
discussed in the proxy statement. Proposals should be addressed to O. Kay
Comendul, Assistant Secretary, Post Office Box 270, Hartford, Connecticut 06141-
0270.
By order of the Board of Trustees,
[/s/ CHERYL W. GRISE]
Cheryl W. Grise
Senior Vice President, Secretary
and General Counsel
ANNUAL REPORT ON FORM 10-K
Northeast Utilities will provide shareholders with a copy of its 1999
Annual Report on Form 10-K to the SEC, including the financial statements and
schedules thereto, without charge, upon receipt of a written request sent to:
O. KAY COMENDUL
ASSISTANT SECRETARY
NORTHEAST UTILITIES
POST OFFICE BOX 270
HARTFORD, CONNECTICUT 06141-0270
20
<PAGE> 25
PRINTED ON RECYCLED PAPER [RECYCLE LOGO]
<PAGE> 26
P R O X Y NORTHEAST UTILITIES P R O X Y
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - MAY 9, 2000
The undersigned appoints MICHAEL G. MORRIS and WILLIAM J. PAPE II, and either of
them, proxies of the undersigned, with power of substitution, to act for and to
vote all common shares of the undersigned at the Annual Meeting of Shareholders
of Northeast Utilities to be held on May 9, 2000, and any adjournment thereof,
upon the matters set forth in the notice of said meeting as indicated below.
The proxies are further authorized to vote, in their discretion, upon such
other business as may properly come before the meeting or any adjournment
thereof.
When properly executed, this proxy will be voted as specified by the
undersigned. Unless otherwise instructed, this proxy will be voted FOR
proposals 1, 2 and 3.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
(OVER)
The Board of Trustees recommends a vote FOR proposals 1, 2 and 3.
1. Fix the number of Trustees at thirteen. [ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Election of the thirteen Trustees nominated.
[ ] FOR [ ] FOR ALL EXCEPT AS MARKED [ ] WITHHELD
TO VOTE FOR ALL NOMINEES, MARK THE "FOR" BOX. TO WITHHOLD VOTING FOR A
PARTICULAR NOMINEE(S), MARK THE "FOR ALL EXCEPT AS MARKED" BOX AND STRIKE A
LINE THROUGH THE NAME OF THE NOMINEE(S) IN THE LIST BELOW. TO WITHHOLD
VOTING ON ALL NOMINEES, MARK THE "WITHHELD" BOX. Cotton Mather Cleveland,
Sanford Cloud, Jr., William F. Conway, E. Gail de Planque, Raymond L.
Golden, John H. Forsgren, Elizabeth T. Kennan, Michael G. Morris, Emery G.
Olcott, William J. Pape II, Robert E. Patricelli, John F. Swope, John F.
Turner.
3. Ratification of Arthur Andersen LLP as independent auditors for 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned hereby acknowledges
receipt of notice of meeting and
related proxy statement.
Date .........................2000
Signed ...........................
Signed ...........................
Please sign in the same form as name
appears hereon. If the shares are
registered in more than one name,
each joint owner or fiduciary should
sign. Fiduciaries and corporate
officers should indicate their
titles.
I PLAN TO ATTEND THE MEETING.
[ ] YES [ ] NO
