<PAGE> 1
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:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
ORANGE AND ROCKLAND UTILITIES
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
ORANGE AND ROCKLAND UTILITIES
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[O&R LOGO]
ORANGE AND ROCKLAND One Blue Hill Plaza, Pearl River, New York 10965
March 10, 1995
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Orange and Rockland Utilities, Inc. to be held in the auditorium of the
Company's Operations Center, 390 West Route 59, Spring Valley, New York, on
Wednesday, April 12, 1995, at 10:30 A.M.
As always, your management looks forward to the Annual Meeting as an
opportunity to report to you with regard to all matters, and to hear your
comments and suggestions, which in the past have often proved valuable. If you
plan to attend the meeting, please mark the box provided on the enclosed proxy
card.
The vote of every shareholder is important. Whether or not you plan to
attend the meeting, please fill in, date, sign and return your proxy promptly.
Returning your completed proxy will not prevent you from voting in person at the
meeting if you wish to do so.
Sincerely yours,
/s/ H. KENT VANDERHOEF
H. KENT VANDERHOEF
Chairman of the Board of Directors
<PAGE> 3
ORANGE AND ROCKLAND UTILITIES, INC.
ONE BLUE HILL PLAZA
PEARL RIVER, NEW YORK 10965
------------------------
NOTICE OF ANNUAL MEETING OF COMMON SHAREHOLDERS
TO THE COMMON SHAREHOLDERS:
You are hereby notified that the Annual Meeting of Shareholders of Orange
and Rockland Utilities, Inc. will be held at the Company's Operations Center
located at 390 West Route 59, Spring Valley, New York, on Wednesday, April 12,
1995, at 10:30 A.M. for the following purposes:
1. To elect four Directors.
2. To authorize the appointment of the firm of Arthur Andersen LLP as
independent public accountants for the year 1995.
3. To act on such other matters as may properly come before the meeting or
any adjournments thereof.
The enclosed form of proxy has been prepared at the direction of the Board
of Directors of the Company and is sent to you at its request. The persons named
in said proxy have been designated by the Board of Directors.
IF YOU DO NOT EXPECT TO BE PRESENT PERSONALLY AND YOU WISH YOUR SHARES VOTED AT
THE MEETING, PLEASE SIGN, DATE AND RETURN THE PROXY BY MAIL IN THE POSTAGE-PAID
ENVELOPE SENT YOU HEREWITH FOR THAT PURPOSE. IF YOU LATER FIND THAT YOU CAN BE
PRESENT OR FOR ANY OTHER REASON DESIRE TO REVOKE OR CHANGE YOUR PROXY, YOU MAY
DO SO AT ANY TIME BEFORE IT IS VOTED.
The Board of Directors has fixed the close of business on March 3, 1995 as
the time when shareholders entitled to notice of and to vote at such meeting
shall be determined and all persons who are holders of record of Common Stock at
such time, and no others, shall be entitled to notice of and to vote at such
meeting and any adjournments thereof.
By Order of the Board of Directors,
H. KENT VANDERHOEF
Chairman of the Board of Directors
G. D. CALIENDO
Vice President, General Counsel
and Secretary
March 10, 1995
<PAGE> 4
ORANGE AND ROCKLAND UTILITIES, INC.
ONE BLUE HILL PLAZA
PEARL RIVER, NEW YORK 10965
March 10, 1995
PROXY STATEMENT
ANNUAL MEETING OF COMMON SHAREHOLDERS, APRIL 12, 1995
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of proxies in the accompanying form for use at the 1995
Annual Meeting of Shareholders of Orange and Rockland Utilities, Inc.
("Company") and any and all adjournments thereof. Each proxy may be revoked at
any time before its exercise. Every properly signed proxy will be voted unless
previously revoked. A shareholder may revoke his proxy at any time before it is
voted by filing with the Company a written revocation or a duly executed proxy
bearing a later date. A shareholder attending the meeting in person may revoke
his proxy and vote in person if he desires to do so, but attendance at the
meeting will not itself revoke his proxy. Every properly signed proxy will be
voted (or not voted) in accordance with the shareholder's specifications thereon
and will be voted as recommended by the Board of Directors if no instructions
are indicated. Should any matter other than as indicated herein properly come
before the meeting for a vote (including any proposed adjournment), the persons
designated as proxies will vote thereon in accordance with their best judgment.
If any proposal has not received sufficient votes for approval at the Annual
Meeting, management will consider one or more adjournments to permit additional
voting on the proposal.
The annual report of the Company for the year 1994 containing financial
statements, which is not a part of this proxy statement, was mailed to
shareholders commencing February 27, 1995.
The voting securities of the Company issued and outstanding on March 3,
1995 consisted of 13,653,075 shares of Common Stock, $5 par value per share
("Common Stock"), entitling the holders thereof to one vote per share. Holders
of Common Stock of record at the close of business on that date are entitled to
notice of and to vote at the Annual Meeting and any adjournments thereof.
IF A SHAREHOLDER PARTICIPATES IN A DIVIDEND REINVESTMENT AND STOCK PURCHASE
PLAN, ANY PROXY GIVEN BY SUCH SHAREHOLDER WILL ALSO GOVERN THE VOTING OF ALL
FULL SHARES OF COMMON STOCK HELD FOR THE SHAREHOLDER'S ACCOUNT UNDER SUCH PLAN,
UNLESS CONTRARY INSTRUCTIONS ARE RECEIVED.
A majority of the votes entitled to be cast at the Annual Meeting
constitutes a quorum. Abstentions, votes withheld from Director nominees and
broker non-votes will be included in determining whether a quorum is present.
The election of Director nominees requires a plurality of the votes cast.
Each other matter presented to the shareholders requires the affirmative vote of
a majority of the votes cast at the Annual Meeting. Abstentions, votes withheld
from Director nominees and broker non-votes will not be included in determining
the number of votes cast on a matter.
<PAGE> 5
1. ELECTION OF DIRECTORS
Under the Company's Certificate of Incorporation and By-Laws, the members
of the Board of Directors are classified into three classes, one of which is
elected at each annual meeting of common shareholders to hold office for a
three-year term until successors of such class are elected and qualified. There
are currently nine Directors. At the 1995 Annual Meeting four Directors are to
be elected, three of whom shall be members of the class of 1998 and one of whom
shall be a member of the class of 1996.
The Board of Directors has designated James F. O'Grady, Jr., D. Louis
Peoples and H. Kent Vanderhoef as nominees for election as Directors for
three-year terms expiring at the 1998 Annual Meeting of Shareholders and
Frederic V. Salerno as a nominee for a one-year term expiring at the 1996 Annual
Meeting of Shareholders. All nominees are presently Directors of the Company.
Mr. O'Grady and Mr. Vanderhoef were each elected as members of the class of 1995
at the 1992 annual meeting. Mr. Peoples was elected by the Board of Directors on
July 14, 1994 to fill a newly-created directorship and Mr. Salerno was elected
to the Board of Directors on February 2, 1995 to fill a newly-created
directorship. Mr. Salerno's election became effective on March 3, 1995 upon
receipt of Federal Energy Regulatory Commission approval, which was required
under the terms of the Federal Power Act. Victor J. Blanchet, Jr. resigned as
President, Chief Operating Officer and a Director effective March 1, 1995. Frank
A. McDermott, Jr. will retire from the Board of Directors at the 1995 Annual
Meeting and is not a candidate for reelection.
The persons named in the enclosed form of proxy, or their substitutes, will
vote, unless otherwise specified, shares represented by executed proxies for the
election as Directors of each of the four nominees. In the event that, due to
unforeseen circumstances, any nominee is unable to serve, the persons named in
the form of proxy, or their substitutes, may vote in their discretion for a
substituted nominee. The Board of Directors has no reason to believe that any
nominee will be unable to serve.
Shown below as to each nominee and each Director continuing in office is
the person's age as of February 28, 1995, business experience for the past five
years, membership on committees of the Board of Directors of the Company, as
applicable, and period of service as a Director of the Company.
NOMINEES FOR ELECTION AS DIRECTORS
ONE-YEAR TERM EXPIRING IN 1996
<TABLE>
<C> <S>
FREDERIC V. SALERNO, AGE 51, DIRECTOR SINCE FEBRUARY
1995
Vice Chairman -- Finance and Business Development, and
[PHOTO] a member of the Board of Directors, of NYNEX
Corporation, White Plains, New York, a
telecommunications company, since 1991. President and
Chief Executive Officer of New York Telephone Company
from 1987 to 1991.
Director of Avnet Inc., The Bear Stearns Companies
Inc. and Viacom Inc.
Member, World Telecommunications Advisory Council of
the International Telecommunication Union.
Chairman of the Board of Trustees, State University of
New York; Trustee, Inner-City Scholarship Fund. Local
Initiatives Support Corporation.
</TABLE>
2
<PAGE> 6
THREE-YEAR TERM EXPIRING IN 1998
<TABLE>
<C> <S>
JAMES F. O'GRADY, JR., AGE 67, DIRECTOR SINCE 1980
President, O'Grady and Associates, Goshen, New York, a
media brokerage and consulting firm he founded in
1986, Vice President, Allcom Marketing Corp., Goshen,
[PHOTO] New York, since 1987 and President, Branson Country
Radio Network, Inc., Branson, Missouri, a satellite
network serving United States and international radio
stations, from 1993 to 1994.
Director, SFX Broadcasting, Inc., Video for Broadcast,
Inc. and The Insurance Broadcast System, Inc.
Mr. O'Grady, an attorney, has been Of Counsel to the
law firm of Cahill & Cahill, Brooklyn, New York, since
1986.
Trustee, St. John's University. Honorary Director,
Horton Memorial Hospital. Director, Coalition for
Lithuanian Development. Chairperson, Communications
Advisory Council for Marist College. Member,
Communications Arts Advisory Council of St. John's
University.
Chairman, Compensation Committee and Member, Executive
Committee.
D. LOUIS PEOPLES, AGE 54, DIRECTOR SINCE 1994
Vice Chairman of the Board of Directors and Chief
Executive Officer of the Company, Pearl River, New
[PHOTO] York, and of Rockland Electric Company ("Rockland
Electric") and Pike County Light & Power Company
("Pike"), the Company's utility subsidiaries, since
July 1994.
Mr. Peoples was Executive Vice President, and a member
of the Board of Directors, of Madison Gas and Electric
Company, Madison, Wisconsin, an investor-owned
electric and gas utility, from 1992 to 1993. He was
Senior Vice President of RCG/Hagler, Bailly, Inc., San
Francisco, California, a management consulting firm
specializing in energy and environmental affairs, from
1991 to 1992, and was Senior Vice President, and a
member of the Board of Directors, of the Nuclear
Services Division of Tenera, L.P., Berkeley,
California, a consulting firm specializing in nuclear
power regulatory and management issues, from 1990 to
1991. Mr. Peoples was a Vice President of Bechtel
Power Corporation, San Francisco, California, an
international engineering-construction firm, from 1981
to 1990.
Director, Rockland Economic Development Corporation.
Member, Executive Board, Boy Scouts of
America -- Rockland County Council.
Member, Executive Committee.
</TABLE>
3
<PAGE> 7
<TABLE>
<C> <S>
H. KENT VANDERHOEF, AGE 72, DIRECTOR SINCE 1976
Chairman of the Board of Directors of the Company,
Pearl River, New York and of Rockland Electric and
[PHOTO] Pike since July 1994.
Mr. Vanderhoef was acting Chairman of the Board of
Directors of the Company from October 7, 1993 to July
14, 1994.
Director, Rockland Electric and Pike since March 1994.
Chairman, Executive Committee and Member, Audit Com-
mittee.
</TABLE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING IN 1997
<TABLE>
<C> <S>
J. FLETCHER CREAMER, AGE 68, DIRECTOR SINCE 1987
Chairman of the Board of Directors, J. Fletcher
Creamer & Son, Inc., Hackensack, New Jersey, a
[PHOTO] construction company.
Trustee, Hackensack Medical Center, D.A.R.E. of New
Jersey and 200 Club of Bergen County. Director,
Commerce and Industry Association of Northern New
Jersey and the New Jersey Alliance for Action.
Member, Audit Committee.
KENNETH D. MCPHERSON, AGE 60, DIRECTOR SINCE 1993
Senior Partner, Waters, McPherson, McNeill, P.A.,
Secaucus, New Jersey, a law firm, since 1963.
[PHOTO] Director, Bally Gaming International, Inc.
Member, Hudson County Bar Association, New Jersey
State Bar Association, American Bar Association.
Member, Compensation Committee.
</TABLE>
4
<PAGE> 8
<TABLE>
<C> <S>
LINDA C. TALIAFERRO, AGE 47, DIRECTOR SINCE 1990
Taliaferro & Associates, Harrisburg and Philadelphia,
Pennsylvania, established in 1991.
[PHOTO]
Ms. Taliaferro was a partner in the law firm of Reed
Smith Shaw & McClay, Harrisburg, Pennsylvania from
1988 to 1991.
Ms. Taliaferro was a Commissioner of the Pennsylvania
Public Utilities Commission from 1979 until 1988, and
served as its Chair from 1983 until 1987.
Director, Resources of the Future, Washington, DC. Pro
bono Counsel to the Interfaith Coalition on Energy of
Philadelphia.
Member, The Urban League of Washington, DC, American
Association of Blacks in Energy, American Bar
Association.
Member, Audit Committee.
</TABLE>
TERM EXPIRING IN 1996
<TABLE>
<C> <S>
RALPH M. BARUCH, AGE 71, DIRECTOR SINCE 1983
Consultant to Viacom International, Inc., New York,
New York, a diversified communications and
[PHOTO] entertainment company, since 1987.
Mr. Baruch was President of Ralph M. Baruch, Inc., a
communications consulting firm, from 1987 to 1992.
Mr. Baruch was the founder, and served as Chief
Executive Officer of Viacom from 1971 until 1983, and
Chairman of the Board of Directors of Viacom from 1983
until 1987. Mr. Baruch was a Senior Fellow, Gannett
Center for Media Studies at Columbia University from
1987 until 1988.
Trustee, Carnegie Hall and Lenox Hill Hospital.
Member, The New York City Cultural Affairs Advisory
Commission.
Member, Compensation Committee and Executive
Committee.
MICHAEL J. DEL GIUDICE, AGE 52, DIRECTOR SINCE 1988
Investment Banker, Lazard Freres & Co., New York, New
York, an investment banking firm. General Partner
[PHOTO] since 1987.
Trustee, The City University of New York. Chairman,
Hudson River Park Conservancy, Chairman, Governor's
Committee on Scholastic Achievement. Member of the
Board, Hazelden Foundation.
Chairman, Audit Committee and Member, Executive Com-
mittee.
</TABLE>
5
<PAGE> 9
During 1994 the Board of Directors held 16 meetings. In addition, the
following Committees of the Board of Directors held the following meetings: the
Audit Committee held 13 meetings; the Compensation Committee held 10 meetings;
the Executive Committee held 14 meetings; and the Special Committee held 14
meetings.
The Audit Committee, composed of outside Directors, assists the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial information to be provided to shareholders and others, the systems of
internal controls which management and the Board of Directors have established,
and the audit process. The Audit Committee is also responsible for oversight of
the Company's ethics program. The Compensation Committee, also composed of
outside Directors, reviews and recommends to the Board of Directors compensation
levels of all Company officers. The Special Committee, comprised of outside
directors, was created in August 1993 to conduct an independent investigation of
issues arising out of the arrest by the Rockland County District Attorney of a
then Vice President of the Company on charges of grand larceny, commercial
bribery and making campaign contributions under a false name. The Special
Committee was disbanded on September 8, 1994 following the presentation to the
Board of Directors of its report on the independent investigation.
The Executive Committee of the Board of Directors acts as the Nominating
Committee. It evaluates candidates for nomination to the Board of Directors and
aids in attracting qualified candidates. The Executive Committee will consider
the names of qualified persons recommended in writing by shareholders.
Shareholders wishing to recommend candidates for nomination to the Board of
Directors should submit the name, qualifications and a written consent of the
candidate to H. Kent Vanderhoef, Chairman of the Board of the Company. Such
submissions will be accepted at any time and will be considered when vacancies
occur.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
James F. O'Grady, Jr., a member of the Compensation Committee, at the
request of the Board of Directors of the Company, is assisting a subsidiary of
the Company in effecting the sale of the subsidiary's radio broadcasting
properties. The sale of such properties, which it is anticipated will be
completed during the second quarter of 1995, is expected to be for an aggregate
purchase price of approximately $7,275,000. Mr. O'Grady will receive a payment
of $900 per day for each day he devotes to effecting these transactions. Mr.
O'Grady was paid $45,900 with respect to such services performed during 1994.
COMPENSATION OF DIRECTORS
Directors who are not current or former officers of the Company or its
subsidiaries each are paid an annual retainer of $20,000 and a fee of $900 for
each meeting of the Board of Directors such Director attends, except that the
Chairman of the Board of Directors is paid a fee of $1,800 for each such meeting
attended. Each such Director is also paid a fee for each Committee meeting
attended in the amount of $700 if the Committee meeting is held on the same day
as a meeting of the Board of Directors or $800 if held on a separate day. Each
such Director was also paid a fee in the amount of $900 for each meeting of the
Special Committee attended. The independent Directors of the Company approved
the payment of $50,000 to Ms. Taliaferro, Chair of the Special Committee, for
extraordinary services performed in 1994. Pursuant to a deferred compensation
plan for non-employee Directors, eligible Directors may elect to defer all or
any part of their compensation for services as a Director. In the event of a
change in control of the Company, all deferred amounts would be payable
immediately.
The Company has a Post-Director Service Retainer Continuation Program
("Program") for non-employee Directors. To be eligible for the Program, a
Director must have served on the Board of Directors for a period of at least
five years ("Eligible Director"). The Program provides for the continuation to
the Eligible Director of the annual Board service retainer and any annual
Committee service retainer for a period equal to the Eligible Director's years
of service on the Board. Payments commence (i) if the Eligible Director is
living, as of the later of the Eligible Director's attaining age 65 or ceasing
to be a member of the Board of Directors or (ii) in the case of the death of an
Eligible Director prior to the commencement of payments, following the 65th
anniversary of the Director's birth. In the event an Eligible Director dies,
either while serving on the
6
<PAGE> 10
Board or after retiring from the Board, and where payments remain to be made,
the remaining payments will be made to the Director's beneficiary. In the event
of the death of a beneficiary to whom payments are due, the remaining payments
will be made to the beneficiary's estate. Under the Company's By-Laws, a
Director cannot be 70 years of age or older upon election except those Directors
elected on or before April 11, 1990 and who were 60 years of age or older on
that date cannot be 75 years of age or older upon election. In the event of a
change in control of the Company, a Director's benefits would vest and be paid
in a lump sum cash amount equal to the present value of the payments that would
otherwise have been made.
J. Fletcher Creamer & Son, Inc., of which Mr. J. Fletcher Creamer is
Chairman of the Board, has for many years performed excavation and related work
for the Company and its New Jersey utility subsidiary. Payments of $120,676 were
made in 1994 for work performed, all of which was contracted for pursuant to
competitive bid.
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows all of the Company's equity securities
beneficially owned as of February 28, 1995 by each present Director, each
executive officer (including three former officers and two other employees who
are not officers but perform policy-making functions) named on the Summary
Compensation Table ("named executive officers") and by all Directors and
executive officers, including named executive officers, as a group.
<TABLE>
<CAPTION>
COMMON
SHARES OWNED
NAME BENEFICIALLY(1)(2)
--------------------------------------- ---------------------
<S> <C>
Ralph M. Baruch 3,995
Robert J. Biederman, Jr. 0
Victor J. Blanchet, Jr. 3,224
George V. Bubolo, Jr. 20
J. Fletcher Creamer 6,111
Michael J. Del Giudice 500
Frank E. Fischer 429
R. Lee Haney 0
Robert J. McBennett 200
Frank A. McDermott, Jr. 697
Kenneth D. McPherson 1,000
James F. O'Grady, Jr. 600
D. Louis Peoples 199
Victor A. Roque 0
Frederic V. Salerno 0
Linda C. Taliaferro 57
Vincent R. Tummarello 601
H. Kent Vanderhoef 2,572
18 Directors and executive officers as a group 20,205
</TABLE>
- ---------------
(1) Based on information furnished to the Company by the Directors and
executive officers. Includes shares owned beneficially pursuant to the Company's
Management Employees' Savings Plan through December 31, 1994, the latest date
for which such information is available.
(2) As of February 28, 1995, no Director owned beneficially more than
0.044% of the outstanding shares of Common Stock of the Company, no named
executive officer owned more than 0.023% of such shares, and Directors and
officers as a group owned 0.147% of such shares.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and executive officers to file with the Securities and Exchange
Commission ("SEC") reports on Forms 3, 4 and 5 disclosing ownership and changes
in ownership of Company stock. The Directors and executive officers are also
required to furnish the Company with copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of reports furnished to
it or written representations of certain Directors and executive officers that
no reports were required with respect to their beneficial ownership
7
<PAGE> 11
of Company stock during fiscal year 1994, the Company believes that during its
1994 fiscal year all Section 16(a) filing requirements applicable to its
Directors and officers were complied with except that a report on Form 5 was
filed late by former Director John F. White and the Company did not receive a
copy of a Form 5 from former executive officer Patrick J. Chambers, Jr. or
former Director James F. Smith.
In addition, based on an evaluation performed in February 1995 it was
determined that as a result of a November 1, 1994 internal restructuring of
responsibilities and duties, two Company employees, George V. Bubolo, Jr. and
Vincent R. Tummarello, now perform policy-making functions for the Company.
These individuals filed Form 3 Initial Statements of Beneficial Ownership of
Securities with the SEC in February 1995 referencing the November 1, 1994 date
of the restructuring.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's compensation program for executive officers is established
and administered by the Compensation Committee of the Board of Directors. All
members of the Compensation Committee are independent, non-employee Directors
who are not eligible to participate in any part of the executive compensation
program.
In designing its 1994 executive compensation program, the Company
endeavored to link the compensation paid to executive officers with enhanced
shareholder value and customer service. This program was intended to align the
financial interests of its executive officers and shareholders while rewarding
executives for achievements which benefit the Company's customers. The
Compensation Committee, working with independent compensation consultants
retained by it, is revising the compensation program for 1995, consistent with
the Company's compensation philosophy, so as to further strengthen the link
between executive compensation and enhanced shareholder value and customer
service.
COMPENSATION PHILOSOPHY
The Company believes that executive officer compensation should reflect
corporate and individual performance, rewarding, when appropriate, the execution
of business strategies and operating results which enhance shareholder value and
customer service. Based on this philosophy, the Company's executive compensation
arrangements are designed to:
- provide a strong and direct link between executive pay and Company
performance on behalf of its shareholders and customers;
- attract, motivate and retain key executives;
- compensate executives for their successful long-term strategic management
of the Company;
- establish compensation opportunities based on competitive practices of
comparably-sized companies which represent potential markets for the
executives' talent; and
- base actual compensation on the achievement of the Company's annual
goals, long-term strategic objectives and performance relative to other
utilities.
SALARY AND TOTAL COMPENSATION LEVELS
1994 base salaries were positioned within the mid-=range of practice for
comparably-sized utilities. Total compensation opportunities, comprised of base
salary plus incentives, for 1994 were positioned to approximate the average of
general and utility industry median total pay levels. This positioning was
chosen to ensure that compensation accurately reflects the Company's marketplace
for talent, which is broader than the utility industry.
The utilities used for pay comparisons were a broader group of electric and
gas utilities than in the Standard & Poor's Utilities Index referenced in the
performance graph on page 11. The Committee believes these utilities are
representative of the industry. The Company uses companies of comparable
revenue-size in the Standard & Poor's 500 Index for its general industry
comparisons.
8
<PAGE> 12
INCENTIVE COMPENSATION
An element of executive compensation for a number of years has been
incentive awards for the achievement of one-year and three-year goals under an
incentive compensation plan which covers officers and certain other key
management employees of the Company.
The Company's Incentive Compensation Plan which was in effect during 1994
(the "Incentive Plan") was designed to recognize and reward, where appropriate,
outstanding management achievement, and to foster efficient, quality service to
customers while returning a competitive yield to shareholders.
Under the Incentive Plan, the Compensation Committee approved the setting
of goals and objectives upon which incentive compensation awards were based,
subject to the review and approval of the Board of Directors. There are two
components to the Incentive Plan: an annual incentive plan, based on the
attainment of one-year objectives (the "one-year goals"), and a long-term
incentive plan, based on the attainment of performance objectives covering a
three-year period (the "three-year goals"). The maximum payout level for
performance that substantially exceeded expectations was 150% of target payment
levels for goals set prior to 1994 and 120% of target payment levels for goals
set in 1994. The Incentive Plan provides that no payment is made if performance
is below specified levels.
ONE-YEAR GOALS
In 1994, the Company had three one-year goals: (1) maintain a high level of
customer service by minimizing field service and customer inquiry response time
and achieving an acceptable level of customer service reliability; (2) meet
earnings per average common share goals for calendar year 1994; and (3) reduce
electrical energy production cost. The first and third of these goals were each
weighted 25% and the second goal was weighted 50%. During 1994, performance of
the first two goals was somewhat below target, resulting in payouts of 75% and
65% of target awards, respectively, and the third goal was exceeded in an amount
sufficient to result in the maximum payout of 120% of target. The weighted
average of these factors combined to result in an 81% payout level. The
Committee recommended, and the Board of Directors approved, applying this payout
percentage to previously-established incentive opportunities (which were
determined as described above under "Salary and Total Compensation Levels"), and
reducing such amounts to reflect service for less than the full year in certain
cases. The Committee also decided that no incentive awards would be paid to
certain executives whose employment with the Company terminated in 1994.
The Committee also considered whether to make payment with respect to
achievement of the 1993 one-year goals, which decision had previously been
deferred, and concluded that such awards would not be paid to any of the
executive officers.
THREE-YEAR GOALS
The Company's long-term incentive goals for 1992-94 were: (1) earn the
Company's allowed rate of return on equity; (2) achieve favorable retail price
comparisons based on specific measures for each energy category; and (3) achieve
demand-side management objectives for the three-year period in order to satisfy
the electric peak demand requirements of the Company's customers. These three
goals were weighted at 50%, 30% and 20%, respectively. These goals resulted in a
payout level of 55%, 112%, and 150% of target levels, respectively, for a
weighted average payout of 91% of target. The Committee recommended, and the
Board of Directors approved, applying this payout percentage to
previously-established incentive opportunities (which were determined as
described above under "Salary and Total Compensation Levels"), and reducing such
amounts to reflect service for less than the full three-year performance period
in certain cases. The Committee also decided that no incentive awards would be
paid to certain executives whose employment with the Company terminated in 1994.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Peoples was named Vice Chairman of the Board of Directors and Chief
Executive Officer of the Company effective July 14, 1994. Mr. Peoples' base
salary for his service to the Company was set with reference to the mid-range of
practice with respect to chief executive officers at comparably-sized utilities.
9
<PAGE> 13
His incentive opportunity was set so that the sum of salary and incentive
opportunity would approximate the average of general and utility industry median
total pay levels.
Mr. Blanchet was Acting Chief Executive Officer of the Company from October
7, 1993 to July 14, 1994. Mr. Blanchet's base salary for his service to the
Company as Acting Chief Executive Officer was set with reference to the
mid-range of practice with respect to chief executive officers at
comparably-sized utilities, and his incentive opportunity was set so that the
sum of salary and incentive opportunity would approximate the average of general
and utility industry median total pay levels.
In the case of both Mr. Peoples and Mr. Blanchet, payment under the
Incentive Plan was based on the objectively-determined payout percentages
described above, with Mr. Peoples' awards pro rated to reflect his period of
service with the Company.
1995 COMPENSATION PROGRAM
Beginning in 1995, the Compensation Committee intends to move in the
direction of reducing the percentage of an executive officer's total
compensation consisting of fixed salary, and increasing the percentage
represented by incentive compensation. Incentive compensation will continue to
have a one-year and a three-year component. Like the current program, the
one-year awards will be based on attainment of objective criteria established by
the Committee at the beginning of the year, and may include some of the same
performance criteria. The three-year goals under the Incentive Plan will be
replaced by a three-year Performance Share Plan. Cycles under this plan would be
overlapping, whereas under the Incentive Plan a new cycle begins only after the
prior cycle has ended. The Committee believes that this structure will better
reflect the nature of long-term planning, in which long-term goals evolve from
year to year. At the start of each cycle, participants will be contingently
granted a number of performance share units. Dividends will be credited on all
share units to increase the number of share units granted. To the extent the
units are earned, they will be paid out based on the market price of the
Company's common stock at the end of the cycle. Although the performance
criteria have not yet been established, the Committee expects that one of the
criteria will be total shareholder return compared to a peer group of companies.
By virtue of this factor and because the value of a share unit will be based on
the market price of the Company's stock, the Committee believes that this
program will further link executive compensation with enhanced shareholder
value.
POLICY WITH RESPECT TO SECTION 162(M)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), provides that, unless an appropriate exemption applies, a tax deduction
for the Company for remuneration of certain officers named on the Summary
Compensation Table will not be allowed to the extent such remuneration in any
taxable year exceeds $1 million. As no officer of the Company received
remuneration during the 1994 fiscal year approaching $1 million, the Company has
not developed an executive compensation policy with respect to qualifying
compensation paid to its executive officers for deductibility under Section
162(m) of the Code.
COMPENSATION COMMITTEE
<TABLE>
<S> <C>
James F. O'Grady, Jr., Chairman Frank A. McDermott, Jr.
Ralph M. Baruch Kenneth D. McPherson
</TABLE>
March 2, 1995
10
<PAGE> 14
PERFORMANCE GRAPH AND INFORMATION
Comparison of Five Year Cumulative Total Return*
Orange and Rockland Utilities, Inc., Standard & Poor's 500 Index
and Standard & Poor's Utilities Index
<TABLE>
<CAPTION>
Measurement Period Orange and
(Fiscal Year Covered) Rockland S&P 500 S&P Utilities
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 106.50 96.89 97.44
1991 140.42 126.42 111.69
1992 161.30 136.05 120.72
1993 166.58 149.76 138.15
1994 143.65 151.74 127.18
</TABLE>
* Assumes $100 invested on December 31, 1989 and reinvestment of
dividends.
As can be seen from the performance graph and data in the Cumulative Total
Return Table, the value of an investment in the Company's Common Stock,
including the reinvestment of dividends, consistently increased during the four
year period from December 31, 1989 to December 31, 1993. For the one year ended
December 31, 1994, the value of an investment in the Company's Common Stock,
including the reinvestment of dividends, declined 13.8%.
For the year ended December 31, 1994, the value of the Standard & Poor's
Utilities Index declined 7.9%, partly due to rising interest rates. New York
electric and gas utilities, however, experienced greater declines in value than
the average for the industry in 1994. The average decline in the total return
for the New York utilities (excluding the Company) for the one year ended
December 31, 1994 was 20.5%. This percentage was calculated by compounding the
sum of the change in each company's market price and dividends declared, on a
monthly basis, for 1994 (the same methodology used in compiling the data used in
the Cumulative Total Return Table) and averaging the annual results for the six
companies.
11
<PAGE> 15
SUMMARY COMPENSATION TABLE
The table below shows all compensation awarded to, earned by or paid to
persons serving as Chief Executive Officer in 1994 and the seven other most
highly compensated executive officers (including two other former officers and
two other employees who are not officers but perform policy-making functions) of
the Company for services rendered in all capacities to the Company and its
subsidiaries during the fiscal years ended December 31, 1994, December 31, 1993
and December 31, 1992:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------- ------------
OTHER PAYOUTS ALL
ANNUAL ------------ OTHER
SALARY BONUS COMPENSATION LTIP PAYOUTS COMPENSATION
NAME & PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) ($)(3) ($)(4)
- ------------------------------------------ ----- ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
D. Louis Peoples(5) 1994 150,900 39,487 0 0 0
Vice Chairman of the
Board and Chief
Executive Officer
Victor J. Blanchet, Jr.(6) 1994 300,000 72,900 0 47,083 13,475
Former President, Chief 1993 256,401 0 0 0 12,808
Operating Officer, and Former 1992 227,000 72,216 0 94,168 9,601
Acting Chief Executive Officer
R. Lee Haney(7) 1994 59,830 10,530 0 0 0
Vice President and
Chief Financial Officer
Robert J. Biederman, Jr. 1994 146,200 15,147 0 11,544 2,349
Vice President 1993 134,500 0 0 2,751
1992 127,250 31,060 0 23,083 2,437
Robert J. McBennett 1994 106,500 8,626 0 10,964 1,869
Treasurer 1993 105,375 0 0 0 2,425
1992 100,700 15,504 0 21,928 2,099
George V. Bubolo, Jr. 1994 124,358 7,867 0 9,062 1,895
Director, Engineering and
System Operations
Vincent R. Tummarello 1994 117,879 8,303 0 8,172 1,416
Division Vice President,
Electric Production
Frank E. Fischer(8) 1994 137,500 0 0 20,060 3,602
Former Vice President 1993 163,250 0 2,825 0 5,212
1992 156,250 35,945 1,637 40,122 4,432
Victor A. Roque 1994 132,262 0 0 19,784 3,338
Former Vice President, General 1993 163,250 0 221 0 4,483
Counsel and Secretary 1992 156,250 29,645 51 39,568 4,236
</TABLE>
- ---------------
(1) Pursuant to the Incentive Plan (described in the Compensation Committee
Report on Executive Compensation), the amount of annual awards depends upon the
level of achievement of one-year goals and such awards are paid at the
discretion of the Board of Directors. If performance is below a minimum level,
no award is earned. No annual awards were paid for 1993.
(2) Interest in excess of 120% of the long-term federal rate, with
compounding, prescribed under section 1274(d) of the Internal Revenue Code, paid
or payable on compensation deferred at the officer's election.
(3) Pursuant to the Incentive Plan, the amount of long-term awards depends
upon the achievement of long-term goals. Such awards are paid at the discretion
of the Board of Directors. If performance is below a minimum level, no award is
earned. Installments of long-term incentive awards earned for the period
1989-1991 were payable in three annual installments beginning in 1992. The first
installment was paid in February 1992. The second installment, which ordinarily
would have been paid in February 1993, was approved by the Board of Directors
for payout in December 1992 and, consequently, no payment of the long-term
incentive award was made in 1993. The third annual installment was paid in
February 1994.
(4) Interest earned on long-term incentive awards which were deferred under
the terms of the Incentive Plan and not at the election of the officer.
(5) Mr. Peoples was appointed Vice Chairman of the Board and Chief
Executive Officer effective July 14, 1994.
(6) Mr. Blanchet, who served as Acting Chief Executive Officer from October
7, 1993 until July 14, 1994, resigned as President, Chief Operating Officer and
a Director effective March 1, 1995.
(7) Mr. Haney was appointed Vice President and Chief Financial Officer on
September 8, 1994.
(8) The amounts of incentive compensation for Mr. Fischer are currently
being held in escrow.
12
<PAGE> 16
LONG-TERM COMPENSATION
The Company's Incentive Plan provides for one-year awards (which are
reported in the Bonus column of the Summary Compensation Table) and three-year
awards. The Incentive Plan provides for discrete three-year performance cycles,
with a new cycle beginning only after completion of the prior cycle. At the
beginning of a cycle, the Compensation Committee of the Board of Directors
designates, subject to approval by the full Board of Directors, the goals for
the cycle, the participants for the cycle, and each participant's target award
as a percentage of base salary (which percentage is applied to the participant's
base salary for each year in the performance period). The Board of Directors has
discretion to make subsequent adjustments in the criteria established for any
award period, whether before or after the end of the award period, to assure the
incentive characteristics of the Incentive Plan and to avoid distortions in
implementation. At the end of the cycle, the Compensation Committee, subject to
approval by the full Board of Directors, determines the extent to which the
goals for the cycle were satisfied, and the percent of the target award which is
to be paid out to each participant. Payment of the award is generally made in
three annual installments beginning in the year after completion of the cycle,
but may be deferred at the discretion of the Board of Directors until the
participant's retirement, death, disability or severe hardship.
The cycle covering 1994 performance is the cycle which began in 1992, at
which time goals and target awards were set. The goals for the period were (1)
to earn the Company's allowed rate of return on equity; (2) to achieve favorable
retail price comparisons for electric and gas operations; and (3) to achieve
demand-side management objectives for the three-year period in order to satisfy
the electric peak demand requirements of the Company's customers. The only
target award set during 1994 was for Mr. Peoples, who commenced employment with
the Company during the year. His target for his period of service in 1994 was
$48,750, with a threshold award (for the minimum below-target performance at
which an award will be paid) of $6,100 and a maximum award (for exceptional
performance) of $50,000.
PENSION PLANS
The following table sets forth as of December 31, 1994 the estimated
aggregate annual benefit payable under the Company's non-contributory Employees'
Retirement Plan ("Retirement Plan") as well as under the Officers' Supplemental
Retirement Plan ("Supplemental Plan") to participants in the Supplemental Plan
upon retirement at age 65.
SUPPLEMENTAL PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
100,000 50,000 60,000 62,500 65,000 67,500
125,000 62,500 75,000 78,125 81,250 84,375
150,000 75,000 90,000 93,750 97,500 101,250
175,000 87,500 105,000 109,375 113,750 118,125
200,000 100,000 120,000 125,000 130,000 135,000
225,000 112,500 135,000 140,625 146,250 151,875
250,000 125,000 150,000 156,250 162,500 168,750
300,000 150,000 180,000 187,500 195,000 202,500
400,000 200,000 240,000 250,000 260,000 270,000
450,000 225,000 270,000 281,250 292,500 303,750
500,000 250,000 300,000 312,500 325,000 337,500
</TABLE>
Compensation covered by the Retirement Plan consists of regular
compensation, which excludes any bonus, overtime, special pay or incentive
compensation. Compensation covered by the Supplemental Plan consists of regular
compensation and, in addition, for officers who have completed at least 11 years
of service, incremental portions of an amount equal to the scheduled one-year
annual award (the "Annual Award") under the Company's Incentive Plan, up to 100
percent of such amount for officers with 20 years or more of service. Pursuant
to arrangements with the Company, incremental portions of Mr. Peoples' Annual
Award, beginning with his date of election as an officer, are included in his
compensation covered by the Supplemental Plan and 100% of his Annual Award will
be included by the end of five years of service under the
13
<PAGE> 17
Supplemental Plan. With respect to Mr. Haney, upon completion of six years of
service under the Supplemental Plan, incremental portions of his Annual Award
will be included in his compensation covered by the Supplemental Plan. The
current compensation covered by the Supplemental Plan for each of the
individuals listed on the Summary Compensation Table who are participants in the
Supplemental Plan is as follows: Mr. Peoples, $160,650; Mr. Blanchet, $323,806;
Mr. Haney, $59,830; Mr. Biederman, $151,281; Mr. McBennett, $114,611; Mr.
Fischer, $174,785; and Mr. Roque, $172,776. The amounts shown in the
Supplemental Plan Table are calculated on the basis of years of credited service
under the Supplemental Plan. The years of credited service for the individuals
named in the Summary Compensation Table who are participants in the Supplemental
Plan are as follows: Mr. Peoples, 1 year; Mr. Blanchet, 18 years; Mr. Haney, 2
years; Mr. Biederman, 21 years; Mr. McBennett, 24 years; Mr. Fischer, 17 years;
and Mr. Roque, 16 years.
The Retirement Plan provides for benefits based on modified career average
earnings. The benefit formula is (1) an amount equal to 2% of compensation for
each year of credited service after December 31, 1987 (including two additional
years of credited service at the final rate of base pay limited to $150,000) and
(2) an additional amount equal to 1 1/2% of the annual rate of compensation as
of January 1, 1988 multiplied by the number of years of credited service prior
to that date. The Retirement Plan also provides a pension supplement of $600 per
month to employees between the ages of 60 and 62. This supplement becomes
payable on the retirement date of the individual and will remain in place until
the first of the month on or before attaining their 62nd birthday. A
participant's benefits become vested upon completion of five years of eligible
service or on reaching age 65. Benefits payable under the Retirement Plan at age
65 are reduced 1/3 of 1% for each month the participant is under 60 years of age
at the time benefits commence. Benefits under the Retirement Plan are not
subject to Social Security or any other offset amounts. Directors who are not
employees of the Company are not covered by the Retirement Plan. In the event of
a change in control of the Company, benefits would vest immediately and could be
increased to the extent of surplus funds held under the Retirement Plan. As of
December 31, 1994, Messrs. Bubolo and Tummarello, who are not participants in
the Supplemental Plan, have 15 years and 16 years of credited service,
respectively, under the Retirement Plan. Their estimated annual benefits payable
under the Retirement Plan upon retirement at age 65, are, respectively, $31,352
and $29,585.
The Supplemental Plan is designed to provide additional retirement benefits
to officers of the Company who are participants in the Supplemental Plan and
have at least five years of service as officers. The Supplemental Plan provides
for benefits calculated by applying a percentage based on years of service to
average compensation over the three years of highest compensation, reduced by
the participant's Retirement Plan benefit. For unvested participants, benefits
would vest upon termination of employment following a change in control of the
Company. The Company has established a trust under the Supplemental Plan.
Notwithstanding the creation of the trust, the Company continues to be primarily
liable for the benefits payable under the Supplemental Plan and will be
obligated to make such payments to the extent the trust does not.
Pursuant to agreements with the Company, Mr. Peoples and Mr. Haney became
participants in the Supplemental Plan upon their appointment as officers and are
treated as having satisfied the five years of service as an officer requirement
for participation in the Supplemental Plan. Under his agreement Mr. Peoples'
Supplemental Plan benefit percent is currently 14% of an aggregate of his base
salary and a specified percentage of his Annual Award and this benefit percent
will increase in increments to 70% of the aggregate of his base salary and his
Annual Award by the end of five years of service. Under Mr. Haney's agreement,
he will receive credit under the Supplemental Plan for two years of service for
each of his first five years of service and his benefit formula will be
calculated accordingly.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company has entered into severance agreements with two of its officers
which provide for certain payments in the event of an involuntary termination
other than for cause, or termination by the individual for good reason, in each
case within 24 months following a change in control of the Company. The
principal benefits consist of a lump-sum severance payment equal to three times
the individual's five-year average annual W-2 compensation, less one dollar, and
continuation of the individual's life, medical and dental insurance for a period
of 24 months. Payments to be made would be reduced to the extent of payments
that
14
<PAGE> 18
the individual receives under the Company's Severance Pay Plan (described
below). Payments in an amount which would otherwise cause the imposition of the
parachute payment excise tax under section 280G of the Internal Revenue Code of
1986, as amended, could be further reduced to prevent imposition of such tax.
The Company has established a trust which, in the event of a change in control
of the Company, will be used for the payment of its obligations to its officers
under these severance agreements. Notwithstanding the creation of the trust, the
Company continues to be primarily liable for the compensation and benefits
payable to its officers (whether before or after any such change in control) and
will be obligated to make such payments to the extent that the trust does not.
Mr. Blanchet resigned as a Director and officer of the Company and its
subsidiaries effective March 1, 1995. Mr. Blanchet and the Company have entered
into a Separation Agreement ("Separation Agreement") pursuant to which Mr.
Blanchet will, for a period of 18 months, receive the sum of $25,000 per month
(which sum may be reduced in certain circumstances). The Separation Agreement
also provides for Mr. Blanchet's continued eligibility with respect to certain
of the Company's benefit plans during the 18-month period.
The Company has a Severance Pay Plan ("Severance Plan") applicable to all
non-bargaining unit personnel with one or more years of service. The Severance
Plan provides eligible employees with specified severance pay upon a termination
of employment for the Company's convenience or following a change in control of
the Company. An employee terminated for the convenience of the Company or within
two years after a change in control of the Company is entitled to receive a
severance payment calculated under formulas based on years of service and salary
grades, with higher benefits being paid to employees in higher salary grades.
Aggregate severance payments, which cannot exceed an employee's annual
compensation, are payable monthly at the employee's final rate of compensation
or, in the event of a change in control of the Company, immediately. In
addition, life and health insurance benefits are continued for eligible
employees following termination of employment for the severance period.
In addition to his participation in the Severance Plan, Mr. Peoples,
pursuant to an arrangement with the Company, in the event of his termination
without cause or an involuntary termination, will be entitled to payment of two
years base salary (based on the salary rate at the time of such termination)
plus any annual and long-term incentives accrued to the date of such
termination. Mr. Haney, pursuant to an arrangement with the Company, will be
entitled, if his employment is terminated by the Company for convenience other
than for cause, to receive a severance payment under the Severance Plan equal to
his annual rate of base pay at the time of such termination.
The Company maintains insurance providing for reimbursement, with certain
exclusions and deductions, to the Company for payments it makes to indemnify
directors, officers and certain other persons for losses, costs and expenses
incurred by them in actions brought against them in connection with their acts
in those capacities and to directors and officers for such losses, costs and
expenses for which they are not indemnified by the Company. In addition, such
insurance covers directors and officers and certain other persons against
certain liabilities which could arise in connection with the administration of
the Company's retirement and benefit plans. The Company's current contracts for
such insurance, which became effective May 16, 1994, are with National Union
Fire Insurance Company of Pittsburgh, Pennsylvania and the Aetna Casualty and
Surety Company. The aggregate annual premium cost is $323,000.
2. AS TO THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
In accordance with the recommendation of its Audit Committee, the Board of
Directors recommends that the shareholders authorize the appointment of the firm
of Arthur Andersen LLP, independent public accountants, to audit the books,
records and accounts of the Company and its subsidiaries for the year 1995.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting. They will be afforded the opportunity to make a statement, should they
desire to do so, and to respond to appropriate questions.
While there is no legal requirement that this proposal be submitted to a
vote of the shareholders, approval of the shareholders is being requested
because the Board of Directors believes that the selection of independent public
accountants to audit the books, records and accounts of the Company and its
subsidiaries is of sufficient
15
<PAGE> 19
importance to seek such approval. If this proposal is rejected, the Board of
Directors would, in due course and having regard for the requirements of orderly
procedure, select other independent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
3. AS TO OTHER MATTERS TO COME BEFORE THE MEETING
The Board of Directors does not intend to bring any matters before the
meeting other than those referred to above and knows of no other matters which
may come before the meeting. If any other matters or motions come before the
meeting, it is the intention of the persons named in the accompanying form of
proxy to vote such proxy in accordance with their judgment on such matters or
motions, including any matters dealing with the conduct of the meeting.
DEADLINE FOR SHAREHOLDER PROPOSALS
November 10, 1995 is the date by which proposals of shareholders of the
Company intended to be presented at the 1996 Annual Meeting of Shareholders of
the Company must be received by the Company for inclusion in the Company's proxy
statement and form of proxy relating to that meeting.
SETTLEMENT OF DERIVATIVE ACTION
On August 31, 1993, a shareholder of the Company commenced a shareholder
derivative action in the Supreme Court of the State of New York, New York
County, entitled Patents Management Corporation v. Orange and Rockland
Utilities, Inc., et al., No. 93-122186. The defendants were the Company (a
nominal defendant), all but one of the then directors of the Company, including
James F. Smith, and Linda Winikow, Paul Pickard, Maria Pickard, Communications
Strategies International, Devotion, Inc., Stanford Silverman and Justin
Schwartz. An amended complaint later added Thomas A. Griffin, Jr. as a
defendant.
As amended, the Patents Management complaint alleged that the Board of
Directors had failed to detect or prevent the wrongdoing detailed in the Report
of the Special Committee discussed in the 1994 Annual Report, including misuse
of Company funds by Mr. Smith, Ms. Winikow, Mr. Griffin, and others. The
complaint sought unspecified damages and punitive damages.
On December 22, 1994, the plaintiff, the Company and the defendants who
remained directors of the Company (the "Remaining Directors") entered into an
agreement to settle the litigation (the "Settlement Agreement"), subject to
approval by the Court. In the Settlement Agreement, the plaintiff recognized the
remedial actions taken by the Board of Directors after the wrongdoing at the
Company was discovered and the Patents Management action was commenced, and the
Company undertook to carry those measures to completion.
The Settlement Agreement also required the Company to pay the plaintiff's
attorney's fees and expenses in an amount set by the Court. It further provided
that the Patents Management action would be dismissed with prejudice as to the
Company and the Remaining Directors, so as to effect a full and final settlement
as to them of all claims arising out of the complaint or the Stier Report, but
without prejudice as to the other defendants. At a hearing on February 23, 1995,
the Settlement Agreement was approved by the Court, which awarded the plaintiff
$155,000 in attorney's fees and expenses and entered a final order and judgment
dismissing the action in accordance with the terms of the Settlement Agreement.
No action is required in connection with this settlement by any shareholder.
MISCELLANEOUS
This solicitation is by the Board of Directors of the Company and the
expenses of solicitation, including reimbursement for postage and clerical
expenses to brokerage houses and other custodians, nominees or fiduciaries for
forwarding documents to beneficial owners of Common Stock held in their names,
will be borne by the Company. The Company has retained Kissel-Blake Inc. to
assist with the solicitation of proxies for a
16
<PAGE> 20
fee of $8,500, plus reimbursement of out-of-pocket expenses. In addition,
Directors, officers or employees of the Company may solicit proxies by telephone
or in person, the costs of which will be nominal.
By Order of the Board of Directors,
H. KENT VANDERHOEF
Chairman of the Board of Directors
THE COMPANY WILL FURNISH WITHOUT CHARGE TO ANY SHAREHOLDER ENTITLED TO VOTE
AT THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 12, 1995 A COPY OF ITS
ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES
THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR
THE YEAR 1994, UPON WRITTEN REQUEST TO THE OFFICE OF THE TREASURER, ORANGE AND
ROCKLAND UTILITIES, INC., ONE BLUE HILL PLAZA, PEARL RIVER, NEW YORK 10965.
17
<PAGE> 21
ORANGE AND ROCKLAND UTILITIES, INC.
COMMON STOCK PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 12, 1995
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, appoints H. KENT
VANDERHOEF, D. LOUIS PEOPLES and R. LEE HANEY, and each of them, proxies, with
power of substitution to each to vote and act at the Annual Meeting of
Shareholders of ORANGE AND ROCKLAND UTILITIES, INC. to be held at 390 West
Route 59, Spring Valley, New York, on Wednesday, April 12, 1995, at 10:30 A.M.,
and at any adjournments thereof, on and with respect to the Common Stock of the
undersigned, or on and with respect to which the undersigned is entitled to
vote or act, as indicated on the reverse side, and as set forth in the notice
and proxy statement dated March 10, 1995.
(Continued, and to be dated and signed, on other side)
<PAGE> 22
I PLAN TO ATTEND MEETING / /
EVERY PROPERLY SIGNED PROXY WILL BE VOTED (OR NOT VOTED) IN ACCORDANCE WITH
SPECIFICATIONS MADE BELOW, AND WILL BE VOTED FOR THE ELECTION OF ALL PERSONS
NAMED AND FOR THE ACTIONS PROPOSED IF NO SPECIFICATIONS ARE INDICATED.
-------------------- --------------------
COMMON D.R.S.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
EACH OF THE FOLLOWING PROPOSALS.
<TABLE>
<S> <C>
Item 1-To elect the following directors Item 2-To appoint Arthur Andersen LLP as
3-Year Term- James F. O'Grady, Jr. independent public accountants for 1995.
D. Louis Peoples
H. Kent Vanderhoef FOR AGAINST ABSTAIN
1-Year Term-Frederic V. Salerno / / / / / /
Item 3-In their discretion, the proxies are authorized
To withhold authority to vote for any individual nominee(s), print that to act on such other matters as may properly come
nominee's name below: before the meeting or any adjournments thereof.
All powers may be exercised by a majority of said
proxies or said substitutes voting or acting or,
if only one votes and acts, then by that one.
Dated: , 1995
------------------------------------------
-------------------------------------------------------
Signature
-------------------------------------------------------
Signature
(NOTE: Signature should agree with name imprinted
hereon. Executors, administrators, trustees,
guardians and attorneys should so indicate when
signing. If stock is registered in more than one name,
each joint owner should sign.)
</TABLE>
IMPORTANT: PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 23
[O&R LOGO]
ORANGE AND ROCKLAND One Blue Hill Plaza, Pearl River, New York 10965
March 10, 1995
Dear Employee:
As a participant in the Orange and Rockland Utilities, Inc. Management
Employees' Savings Plan (the "Plan"), you have designated a portion of your
contributions to the Plan for investment in Common Stock of the Company. Such
stock is held in trust for you by Mellon Bank, N.A., as Trustee.
You have the right to give instructions as to how you wish the Trustee to
vote your Plan shares on all matters presented to the Company's shareholders.
Accordingly, enclosed are copies of the Company's proxy material and proxy card
to be used in instructing the Trustee to vote your Plan shares at the Annual
Meeting of Shareholders of the Company to be held on April 12, 1995. The proxy
card must be received no later than April 7, 1995.
YOU MUST SIGN AND RETURN THE ENCLOSED PROXY CARD IF YOU WISH YOUR PLAN
SHARES TO BE VOTED, REGARDLESS OF WHETHER YOU HAVE EXECUTED A PROXY RELATING TO
OTHER COMPANY SHARES OWNED BY YOU. THE PROXY CARD FOR YOUR PLAN SHARES MUST BE
RECEIVED BY APRIL 7, 1995. IN THE EVENT YOU DO NOT RETURN THE PROXY CARD, THE
TRUSTEE WILL VOTE YOUR SHARES IN THE SAME PROPORTIONS ON EACH ISSUE AS THE
SHARES FOR WHICH THE TRUSTEE HAS RECEIVED INSTRUCTIONS.
I urge you to fill in, date, and sign and return this proxy promptly. Your
confidential voting instructions will be seen only by the Trustee and the
Trustee's authorized agent, Chemical Bank.
Sincerely yours,
/s/ D. LOUIS PEOPLES
D. LOUIS PEOPLES
Vice Chairman of the
Board of Directors and
Chief Executive Officer
<PAGE> 24
[O&R LOGO]
ORANGE AND ROCKLAND One Blue Hill Plaza, Pearl River, New York 10965
March 10, 1995
Dear Employee:
As a participant in the Orange and Rockland Utilities, Inc. Hourly Group
Savings Plan (the "Plan"), you have designated a portion of your contributions
to the Plan for investment in Common Stock of the Company. Such stock is held in
trust for you by Mellon Bank, N.A., as Trustee.
You have the right to give instructions as to how you wish the Trustee to
vote your Plan shares on all matters presented to the Company's shareholders.
Accordingly, enclosed are copies of the Company's proxy material and proxy card
to be used in instructing the Trustee to vote your Plan shares at the Annual
Meeting of Shareholders of the Company to be held on April 12, 1995. The proxy
card must be received no later than April 7, 1995.
YOU MUST SIGN AND RETURN THE ENCLOSED PROXY CARD IF YOU WISH YOUR PLAN
SHARES TO BE VOTED, REGARDLESS OF WHETHER YOU HAVE EXECUTED A PROXY RELATING TO
OTHER COMPANY SHARES OWNED BY YOU. THE PROXY CARD FOR YOUR PLAN SHARES MUST BE
RECEIVED BY APRIL 7, 1995. IN THE EVENT YOU DO NOT RETURN THE PROXY CARD, THE
TRUSTEE WILL VOTE YOUR SHARES IN THE SAME PROPORTIONS ON EACH ISSUE AS THE
SHARES FOR WHICH THE TRUSTEE HAS RECEIVED INSTRUCTIONS.
I urge you to fill in, date, and sign and return this proxy promptly. Your
confidential voting instructions will be seen only by the Trustee and the
Trustee's authorized agent, Chemical Bank.
Sincerely yours,
/s/ D. LOUIS PEOPLES
D. LOUIS PEOPLES
Vice Chairman of the
Board of Directors and
Chief Executive Officer
