<PAGE>
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
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PEOPLES ENERGY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
PEOPLES ENERGY CORPORATION
[LOGO]
Notice of Annual Meeting of Shareholders
and Proxy Statement
February 28, 1997 at 11:00 a.m.
Harris Trust and Savings Bank
Eighth Floor -- Auditorium
115 S. LaSalle Street
Chicago, Illinois
<PAGE>
PEOPLES ENERGY CORPORATION - 130 East Randolph Drive - Chicago, Illinois 60601
RICHARD E. TERRY
Chairman of the Board
December 31, 1996
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Peoples Energy Corporation, to be held on Friday, February 28, 1997. The meeting
will begin at 11:00 a.m. in the auditorium on the eighth floor of Harris Trust
and Savings Bank, located at 115 S. LaSalle Street, Chicago, Illinois.
It is important that your shares be represented at this meeting. Therefore,
whether or not you plan to attend, please sign the enclosed proxy and return it
promptly in the envelope provided. If you attend the meeting, you may, at your
discretion, withdraw your proxy and vote in person.
If you plan to attend the meeting, please save the admission ticket that is
attached to your proxy and present it at the door. In accordance with our
regular practice, a summary of the proceedings will be sent to all shareholders
after the meeting.
Let me again urge you to return your proxy at your earliest convenience.
Sincerely,
[SIGNATURE]
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 28, 1997
The regular Annual Meeting of Shareholders of PEOPLES ENERGY CORPORATION
will be held in the auditorium on the eighth floor of Harris Trust and Savings
Bank, located at 115 S. LaSalle Street, Chicago, Illinois, at 11:00 a.m., on
Friday, February 28, 1997, for the following purposes:
1. To elect directors of Peoples Energy Corporation.
2. To ratify the appointment of independent public accountants.
3. To act upon such other matters as may properly come before the meeting.
All shareholders, whether or not they expect to be present at the meeting,
are requested to sign, date, and mail the accompanying proxy in the envelope
enclosed with this Notice. Shareholders who are present at the meeting may
withdraw their proxies and vote in person.
If you plan to attend the meeting, please save the admission ticket that is
attached to your proxy and present it at the door. Attendance at the meeting
will be limited to shareholders of record as of the record date and their guests
or their authorized representatives, not to exceed two per shareholder, and to
guests of the Company.
Shareholders of record as of December 30, 1996, will be entitled to vote at
the meeting and at any adjournment thereof.
EMMET P. CASSIDY
Secretary
Chicago, Illinois
December 31, 1996
<PAGE>
PEOPLES ENERGY CORPORATION - 130 East Randolph Drive - Chicago, Illinois 60601
RICHARD E. TERRY
Chairman of the Board
December 31, 1996
PROXY STATEMENT
This Proxy Statement is being mailed to shareholders on or about December
31, 1996, in connection with the solicitation of proxies on behalf of the Board
of Directors of Peoples Energy Corporation (the Company), to be voted at the
Annual Meeting of Shareholders of the Company. The meeting will be held at 11:00
a.m. on Friday, February 28, 1997, in the auditorium on the eighth floor of
Harris Trust and Savings Bank, located at 115 S. LaSalle Street, Chicago,
Illinois. The shares represented by the proxies received are to be voted in
accordance with the specifications contained in the proxy. Proxies are revocable
at any time prior to use.
The Company has borne the cost of preparing, assembling, and mailing this
proxy soliciting material. In addition to solicitation by mail, there may be
incidental personal solicitations made by directors, officers, and regular
employees of the Company. The cost of solicitation, including payments to
brokers, nominees, or fiduciaries who mail such material to their clients, will
be borne by the Company.
The Company has retained Corporate Investor Communications, Inc., 111
Commerce Road, Carlstadt, New Jersey, to assist with the solicitation of proxies
from certain shareholders, for which services Corporate Investor Communications
will receive a fee that is expected to be about $6,500 plus reimbursement for
certain expenses.
OUTSTANDING VOTING SECURITIES
Only holders of common shares of record as of December 30, 1996, are
entitled to vote at the meeting or any adjournment thereof. As of December 30,
1996, there were outstanding 34,979,929 shares of common stock of the Company.
The Annual Report of the Company for the fiscal year ended September 30,
1996, including financial statements, is being mailed on or about December 31,
1996, together with this Proxy Statement, to all shareholders of record as of
December 30, 1996.
CUMULATIVE VOTING RIGHTS
In the election of directors, shareholders have cumulative voting rights.
Cumulative voting rights consist of the right to vote, in person or by proxy,
the number of shares owned by the shareholder, for as many persons as there are
directors to be elected, or to cumulate said shares and give one candidate as
many votes as the number of directors multiplied by the number of his or her
shares shall equal, or to distribute such number of votes among the candidates
as he or she shall think fit.
ITEM 1. ELECTION OF DIRECTORS
All directors are to hold office for a term of one year or until their
respective successors shall be duly elected. Unless otherwise specified, votes
represented by the proxies will be cast equally for the election of the below-
named nominees to the office of director; however, the votes may be cast
cumulatively for less than the entire number of nominees if any situation arises
that, in the opinion of the proxy holders, makes such action necessary or
desirable. If any of the nominees should be unable to serve or will not serve,
which is not anticipated, management reserves discretionary authority to vote
for a substitute.
1
<PAGE>
INFORMATION CONCERNING NOMINEES FOR ELECTION AS DIRECTORS
PASTORA SAN JUAN CAFFERTY, 56. Director since 1988. Professor,
since 1985, at the University of Chicago, Chicago, Illinois, where
[PHOTO] she has been on the faculty since 1971. Mrs. Cafferty is also a
director of Kimberly-Clark Corporation, and WMX Technologies, Inc.
J. BRUCE HASCH, 58. Director since 1987. President and Chief
Operating Officer (1990) of the Company. Mr. Hasch is also
[PHOTO] President, Chief Operating Officer (1990), and a Director (1986) of
The Peoples Gas Light and Coke Company and North Shore Gas Company,
subsidiaries of the Company engaged primarily in the purchase,
storage, distribution, sale, and transportation of natural gas.
Prior to becoming President, Mr. Hasch was Executive Vice President
(1985-1990) of the Company and its subsidiaries and Vice President
(1981-1985) of both subsidiary companies. Mr. Hasch has been an
employee of the Company and/or its subsidiaries since 1960,
including 16 years with Natural Gas Pipeline Company of America, a
former subsidiary.
FREDERICK C. LANGENBERG, 69. Director since 1985. Chairman of the
Board (1991), until his retirement in April 1991, of The Interlake
[PHOTO] Corporation, Lisle, Illinois, a diversified manufacturer of metals
and materials handling products. Prior to that, Mr. Langenberg was
Chairman of the Board and Chief Executive Officer (1982-1991) of The
Interlake Corporation. Mr. Langenberg is also a director of The
Interlake Corporation and Carpenter Technology Corporation.
HOMER J. LIVINGSTON, JR., 61. Director since 1989. President and
Chief Executive Officer (1993-1995) until his retirement in May
[PHOTO] 1995, of the Chicago Stock Exchange, Chicago, Illinois. Prior to
that, Mr. Livingston was Chairman of the Board and Chief Executive
Officer (1988-1992) of H. Livingston & Company, L.P. Mr. Livingston
is also a director of American National Can Corp. and Everen Capital
Corp.
WILLIAM G. MITCHELL, 65. Director since 1982. Vice Chairman (1986)
and Director (1977), until his retirement in May 1987, of Centel
[PHOTO] Corporation, Chicago, Illinois, a telephone utility and
business-related communications firm. Prior to becoming Vice
Chairman, Mr. Mitchell was President (1977-1986) of Centel. Mr.
Mitchell is also a director of The Sherwin-Williams Company, The
Northern Trust Corporation, and The Interlake Corporation.
2
<PAGE>
<TABLE>
<C> <S>
EARL L. NEAL, 68. Director since 1985. Principal, since 1955, of
Earl L. Neal & Associates, Chicago, Illinois, a private law firm.
[PHOTO] During 1983, Mr. Neal was Chairman of the Board of First Federal
Savings and Loan Association of Chicago, Chicago, Illinois. Mr. Neal
is also a director of Chicago Title and Trust Company, Chicago Title
Insurance Company, Lincoln National Corporation, and First National
Chicago/NBD Corporation.
MICHAEL S. REEVES, 61. Director since 1991. Executive Vice
President (1987) of the Company. Mr. Reeves is also Executive Vice
[PHOTO] President (1987) and Director (1988) of The Peoples Gas Light and
Coke Company and North Shore Gas Company, subsidiaries of the
Company engaged primarily in the purchase, storage, distribution,
sale, and transportation of natural gas. Prior to becoming Executive
Vice President, Mr. Reeves was Vice President (1977-1987) of both
subsidiary companies. Mr. Reeves has been an employee of the Company
and/or its subsidiaries since 1956.
RICHARD E. TERRY, 59. Director since 1984. Chairman of the Board
and Chief Executive Officer (1990) of the Company. Mr. Terry is also
[PHOTO] Chairman of the Board and Chief Executive Officer (1990), and a
Director (1982) of The Peoples Gas Light and Coke Company and North
Shore Gas Company, subsidiaries of the Company engaged primarily in
the purchase, storage, distribution, sale, and transportation of
natural gas. Prior to becoming Chairman, Mr. Terry was President and
Chief Operating Officer (1987-1990), Executive Vice President
(1984-1987), and Vice President and General Counsel (1981-1984) of
the Company and its subsidiaries. Mr. Terry has been an employee of
the Company and/or its subsidiaries since 1972. Mr. Terry is also a
director of Bankmont Financial Corp., Harris Bankcorp, Inc., Harris
Trust and Savings Bank, and Amsted Industries.
RICHARD P. TOFT, 60. Director since 1988. Chairman of the Board and
Chief Executive Officer (1996) of Alleghany Asset Management, Inc.,
[PHOTO] Chicago, Illinois, an investment management, and advisory service
subsidiary of Alleghany Corp. In addition, since August, 1996, Mr.
Toft has been non-executive Chairman of Chicago Title and Trust
Company. From 1994 to August, 1996 Mr. Toft was Chairman of the
Board and Chief Executive Officer of Chicago Title and Trust
Company. From 1982-1994 Mr. Toft was President and Chief Executive
Officer of Chicago Title and Trust Company. Mr. Toft is also a
director of Chicago Title Insurance Company, and The Cologne Life
Reinsurance Company.
ARTHUR R. VELASQUEZ, 58. Director since 1985. President and Chief
Executive Officer, since 1989, of Azteca Foods, Inc., Chicago,
[PHOTO] Illinois, a Mexican food products company. Prior to that, Mr.
Velasquez was President and Chief Executive Officer (1971-1987) of
Azteca Corn Products Corporation. Mr. Velasquez was also President
of CID Broadcasting, Inc. (1980-1995) and President of Crescent
Communications of California, Inc. (1993-1995). Mr. Velasquez is
also a director of Arvin Industries, Inc., and LaSalle National
Corporation.
</TABLE>
3
<PAGE>
MEETINGS AND FEES OF THE BOARD OF DIRECTORS
The Board of Directors held eight meetings during fiscal 1996. All incumbent
directors attended 94% of the aggregate number of meetings of the Board and of
those committees on which such directors served.
Directors who are not employees receive an annual retainer of $19,000 and a
meeting fee of $850 for each Board and each committee meeting attended. In
addition, any non-employee director who serves as chairman of a committee of the
Board receives a $3,000 annual retainer. Officers of the Company who serve on
the Board receive no compensation as directors. Effective January 1, 1997,
non-employee directors will receive an annual retainer of $25,000 and a meeting
fee of $1,000 for each Board and each committee meeting attended.
The Company offers non-employee directors an opportunity to defer their
director's compensation. Under the Directors Deferred Compensation Plan, a
director may elect to defer the receipt of compensation earned as a director
until a future date and to receive such compensation at that time in the form of
cash, Company common stock, or a combination of both. An election to defer, or
to cease to defer, compensation earned as a director of the Company is effective
only with respect to compensation earned in the calendar year following the year
in which the election is made, but in no event with respect to compensation
earned within six months after the date on which the election is made.
A bookkeeping account is maintained for each participant. The account
reflects the amount of cash and/or the number of share equivalents to which the
participant is entitled under the terms of the plan.
The account of a participant who elects to defer compensation in the form of
cash is credited with the dollar amount of compensation so deferred on each date
that the participant is entitled to payment for services as a director. Interest
on the cash balance of the account is computed and credited quarterly as of
March 31, June 30, September 30, and December 31 of each year at the prime
commercial rate in effect at Harris Trust and Savings Bank, Chicago, Illinois.
The account of a participant who elects to defer compensation in the form of
stock is credited with share equivalents on each date that the participant is
entitled to a payment for services as a director. The number of share
equivalents so credited is determined by dividing the compensation so deferred
by the mean price of a share of Company common stock on the New York Stock
Exchange on such date. Additional share equivalents are credited to the
director's account on each date that the Company pays a dividend on the common
stock. During the fiscal year ended September 30, 1996, plan participants as a
group were credited with 2,247.538 share equivalents for compensation deferred
in the form of stock, with an average per-share base price of $32.39. During the
same period, such participants were credited with $23,584 for compensation
deferred in the form of cash.
COMMITTEES OF THE BOARD OF DIRECTORS
The standing committees of the Board of Directors of the Company during
fiscal 1996 were the Audit, Compensation-Nominating, Public Policy, and
Executive Committees.
The Audit Committee makes recommendations to the Board concerning the
appointment of the Company's independent public accountants and reviews with the
accountants the scope and nature of the audit engagement, the fees for services
performed by the firm, and the results of the completed audit. The Committee
also reviews and discusses with the internal audit department, management, and
the Board, such matters as accounting policies, internal controls, and
procedures for preparation of financial statements. In addition, the Committee
oversees the selection of independent public accountants to perform audits of
certain Company-sponsored employee benefit plans and reviews reports regarding
the results of such audits. The members of the Audit Committee are Messrs. Cole
(Chairman), Langenberg, Mitchell, Toft, Velasquez, and Mrs. Cafferty. Due to
mandatory retirement at age 70, Mr. Cole will not be standing for re-election to
the Board. The Committee held two meetings in fiscal 1996.
The Compensation-Nominating Committee considers and makes recommendations to
the Board concerning salary compensation for elected officers of the Company and
its subsidiaries. The Committee also considers,
4
<PAGE>
reviews and grants awards under the Company's Long-Term Incentive Compensation
Plan (LTIC Plan) and Short-Term Incentive Compensation Plan (STIC Plan) to
officers (and, with respect to the LTIC Plan, other key employees) of the
Company and its subsidiaries other than the Chief Executive Officer. With
respect to the Chief Executive Officer, the Committee considers, reviews and
makes awards under the LTIC Plan and the STIC Plan subject to the approval of
the non-employee directors of the Board.
The Committee also makes recommendations to the Board regarding nominees for
election as members of the Board of the Company. The Committee will consider
written recommendations from shareholders of the Company regarding potential
nominees for election as directors. To be considered for inclusion in the slate
of nominees proposed by the Board at the next Annual Meeting of Shareholders of
the Company, such recommendations should be received in writing by the Secretary
of the Company no later than November 17, 1997. In addition, the Committee
maintains, with the approval of the Board, formal criteria for selecting
directors, and also considers other matters, such as the size and composition of
the Board, directors' compensation, benefits, and other forms of remuneration.
The members of the Compensation-Nominating Committee are Messrs. Livingston
(Chairman), Langenberg, Mitchell, Neal, and Toft. The Committee held three
meetings in fiscal 1996.
The Public Policy Committee prepares reports to the Board and provides
advice to management on major public issues affecting the Company or the gas
industry in general. The Committee also considers and makes recommendations to
the Board regarding the Company's Contributions Program and Budget and reviews
and monitors corporate policy with respect to charitable and philanthropic
giving. Members of the Public Policy Committee are Messrs. Neal (Chairman),
Cole, Livingston, Velasquez, and Mrs. Cafferty. The Committee held two meetings
in fiscal 1996.
The Executive Committee, in the recess of the Board, has the authority to
act upon most corporate matters that require Board approval. The members of the
Executive Committee are Messrs. Terry (Chairman), Mitchell (Vice Chairman),
Cole, Langenberg, Livingston, Neal, Toft, Velasquez, and Mrs. Cafferty. The
Committee held no meetings in fiscal 1996.
5
<PAGE>
SHARE OWNERSHIP OF DIRECTOR NOMINEES,
AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the beneficial
ownership, as of November 30, 1996, of the Company's Common Stock by (a) each
director, the Chief Executive Officer and the four most highly paid executive
officers of the Company and (b) all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF NOVEMBER
DIRECTORS & OFFICERS 30,1996(1)
- ------------------------------------------------------------------------------------------ ----------------------
<S> <C>
Pastora San Juan Cafferty................................................................. 2,800
Patrick J. Doyle, Jr...................................................................... 9,388(3)
J. Bruce Hasch............................................................................ 49,441(2)(3)
James Hinchliff........................................................................... 29,713(2)(3)
Frederick C. Langenberg................................................................... 4,000
Homer J. Livingston, Jr................................................................... 8,070(4)
William G. Mitchell....................................................................... 20,188(4)
Earl L. Neal.............................................................................. 19,092(4)
Michael S. Reeves......................................................................... 28,960(2)
Richard E. Terry.......................................................................... 64,416(2)(3)
Richard P. Toft........................................................................... 7,353(4)
Arthur R. Velasquez....................................................................... 3,876(4)
Directors and executive officers as a group............................................... 361,736
</TABLE>
- --------------------------
(1) The total shares held by all directors and executive officers as a group
comprise approximately 1.03 per cent of the Company's outstanding common
stock. Unless otherwise indicated, each individual has sole voting and
investment power with respect to the shares of common stock attributed to
him or her in the table.
(2) Includes shares of restricted stock awarded under the Long-Term Incentive
Compensation Plan of the Company, the restrictions on which had not lapsed
as of November 30,1996, as follows: Messrs. Hasch, 7,990; Hinchliff, 5,130;
Reeves, 5,130; Terry, 14,020; and all executive officers as a group, 43,545.
Owners of shares of restricted stock have the right to vote such shares and
to receive dividends thereon, but have no investment power with respect to
such shares until the restrictions thereon lapse.
(3) Includes shares that the following have a right to acquire within 60 days
following November 30,1996, through the exercise of Options granted under
the Long-Term Incentive Compensation Plan of the Company: Messrs. Doyle,
2,400; Hasch, 15,400; Hinchliff, 6,200; Terry, 14,500; and all executive
officers of the Company as a group, 92,900.
(4) Includes 7,070; 7,852; 17,220; 7,053; and 3,876 shares to which Messrs.
Livingston, Mitchell, Neal, Toft, and Velasquez, respectively, are
prospectively entitled pursuant to the Directors Deferred Compensation Plan
of the Company.
EXECUTIVE COMPENSATION
The following tables set forth information concerning annual and long-term
compensation and grants of stock options, stock appreciation rights and
restricted stock awards under the Company's Long-Term Incentive Compensation
Plan. All compensation was paid by the Company and its subsidiaries for services
in all capacities during the three fiscal years set forth below to (i) the Chief
Executive Officer and (ii) the four most highly paid executive officers of the
Company other than the Chief Executive Officer.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
--------------------------------
ANNUAL COMPENSATION RESTRICTED STOCK ALL OTHER
---------------------- AWARD(S)(1)(2) OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (#) (3)($)
- ------------------------------ --------- ---------- ---------- ---------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Richard E. Terry 1996 $ 473,500 $ 191,600 $ 145,722 21,200 $ 14,205
Chairman and Chief 1995 455,300 137,200 137,119 21,400 12,354
Executive Officer 1994 421,250 117,100 113,281 14,400 12,638
J. Bruce Hasch 1996 332,600 86,000 80,803 11,800 9,978
President and Chief 1995 319,800 61,500 76,606 11,800 9,594
Operating Officer 1994 304,500 75,300 73,438 9,400 9,135
Michael S. Reeves 1996 250,700 54,500 51,797 7,600 7,521
Executive Vice 1995 241,100 39,000 48,925 7,600 7,233
President 1994 229,500 47,800 47,656 6,200 6,885
James Hinchliff 1996 250,700 54,500 51,797 7,600 7,521
Senior Vice President 1995 241,100 39,000 48,925 7,600 7,233
and General Counsel 1994 229,500 47,800 47,656 6,200 6,885
Patrick J. Doyle, Jr. 1996 193,700 39,900 33,150 4,800 5,811
Former Vice President 1995 188,100 25,000 30,900 4,800 5,643
of Subsidiary (4) 1994 179,050 29,600 29,688 3,800 5,372
</TABLE>
- --------------------------
(1) Restricted stock awards are valued at the closing market price as of the
date of grant. The total number of restricted shares held by the named
executive officers and the aggregate market value of such shares at
September 30,1996 were as follows: Mr. Terry, 14,055 shares, valued at
$477,870; Mr. Hasch, 8,240 shares, valued at $280,160; Mr. Reeves, 5,290
shares, valued at $179,860; Mr. Hinchliff, 5,290 shares, valued at $179,860;
and Mr. Doyle, 3,355 shares, valued at $114,070. Dividends are paid on the
restricted shares at the same time and at the same rate as dividends paid to
all shareholders of common stock. Aggregate market value is based on a per
share price of $34.00, the closing price of the Company's stock on the New
York Stock Exchange on September 30, 1996.
(2) Restricted stock awards granted to date vest in equal annual increments over
a five-year period. If a recipient's employment with the Company terminates,
other than by reason of death, disability, or retirement after attaining age
65, the recipient forfeits all rights to the unvested portion of the
restricted stock award. In addition, the Compensation-Nominating Committee
(and with respect to the CEO, the Compensation-Nominating Committee, subject
to the approval of the non-employee directors) may, in its sole discretion,
accelerate the vesting of any restricted stock awards granted under the
Long-Term Incentive Compensation Plan. Total restricted stock awarded to the
named individuals for 1994 constitutes 9,975 shares, of which 1,995 shares
vested in 1995; 1,995 shares vested in 1996; 1,995 shares will vest in 1997;
1,995 shares will vest in 1998; and the remaining 1,995 shares will vest in
1999. Total restricted stock awarded to the named individuals for 1995
constitutes 13,300 shares of which 2,660 shares vested in 1996; 2,660 shares
will vest in 1997; 2,660 shares will vest in 1998; 2,660 shares will vest in
1999; and the remaining 2,660 shares will vest in 2000. Total restricted
stock awarded to the named individuals for 1996 constitutes 13,150 shares,
of which 2,630 shares will vest in 1997; 2,630 shares will vest in 1998;
2,630 shares will vest in 1999; 2,630 shares will vest in 2000; and the
remaining 2,630 shares will vest in 2001.
(3) Company contributions to the Capital Accumulation Plan accounts of the named
executive officers during fiscal years 1994-1996. Employee contributions
under the plan are subject to a maximum limitation under the Internal
Revenue Code of 1986. The Company pays an employee who is subject to this
limitation an additional 50 cents for each dollar that the employee is
prevented from contributing solely by reason of such limitation. The amounts
shown in the table above reflect, if applicable, this additional Company
payment.
(4) Mr. Doyle retired as of November 1, 1996.
7
<PAGE>
OPTIONS/SAR GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------
% OF TOTAL OPTIONS/
OPTIONS/SARS SARS GRANTED TO EXERCISE OR GRANT DATE
GRANTED EMPLOYEES IN FISCAL BASE PRICE PRESENT VALUE
NAME (#)(1) YEAR (2) ($/SH) EXPIRATION DATE ($)(3)
- -------------------------- ------------ -------------------- ----------- --------------- -------------
<S> <C> <C> <C> <C> <C>
Richard E. Terry 21,200 12% $ 27.50 04-Oct-05 $97,732
Chairman and Chief
Executive Officer
J. Bruce Hasch 11,800 7 27.50 04-Oct-05 54,398
President and Chief
Operating Officer
Michael S. Reeves 7,600 4 27.50 04-Oct-05 35,036
Executive Vice President
James Hinchliff 7,600 4 27.50 04-Oct-05 35,036
Senior Vice President and
General Counsel
Patrick J. Doyle, Jr. 4,800 3 27.50 04-Oct-05 22,128
Former Vice President of
Subsidiary (4)
</TABLE>
- --------------------------
(1) The grant of an Option enables the recipient to purchase Company common
stock at a purchase price equal to the fair market value of the shares on
the date the Option is granted. The grant of an SAR enables the recipient to
receive, for each SAR granted, cash in an amount equal to the excess of the
fair market value of one share of Company common stock on the date the SAR
is exercised over the fair market value of such common stock on the date the
SAR was granted. Options or SARs that expire unexercised become available
for future grants. Before an Option or SAR may be exercised, the recipient
must complete 12 months of continuous employment subsequent to the grant of
the Option or SAR. Options and SARs may be exercised within 10 years from
the date of grant, subject to earlier termination in case of death,
retirement, or termination of employment.
(2) Based on 90,200 Options and 90,200 SARs granted to all employees under the
Company's Long-Term Incentive Compensation Plan during fiscal 1996.
(3) Present value is determined using a variation of the Black-Scholes Model.
The model assumes: a) that Options and SARs are exercised two years after
the date of grant -- the average time Options and SARs were held by
recipients under the Company's Long-Term Incentive Compensation Plan over
the past ten years; b) use of an interest rate equal to the interest rate on
a U.S. Treasury security with a maturity date corresponding to the assumed
exercise date; c) a level of volatility calculated using weekly stock prices
for the two years prior to the date of grant; d) no expected dividend yield;
and e) that no adjustments were made for non-transferability or risk of
forfeiture. This is a theoretical value for the Options and SARs. The amount
realized from an Option or an SAR ultimately depends upon the excess of the
market value of the Company's stock over the exercise price on the date the
Option or SAR is exercised.
(4) Mr. Doyle retired as of November 1, 1996.
8
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL 1996
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT FISCAL OPTIONS/SARS AT
ACQUIRED ON YEAR-END (#) FISCAL YEAR-END ($)
(OPTION/SAR) VALUE --------------------------- ---------------------
NAME EXERCISE(#)(1) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ----------- --------- ----------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Richard E. Terry 21,400 $185,859 29,000 21,200 $97,780 $137,800
Chairman and Chief
Executive Officer
J. Bruce Hasch 11,800 104,696 19,000 11,800 64,080 76,700
President and Chief
Operating Officer
Michael S. Reeves 13,800 91,938 6,200 7,600 19,344 49,400
Executive Vice
President
James Hinchliff 7,600 66,006 12,400 7,600 41,788 49,400
Senior Vice President
and General Counsel
Patrick J. Doyle, Jr. 12,600 61,649 0 4,800 0.00 31,200
Former Vice President
of Subsidiary (2)
</TABLE>
- --------------------------
(1) Includes cash-only SARs exercised by the named executive officers in the
following amounts: Mr. Terry, 10,700; Mr. Hasch, 5,900; Mr. Reeves, 6,900;
Mr. Hinchliff, 3,800; and Mr. Doyle, 6,300.
(2) Mr. Doyle retired as of November 1, 1996.
9
<PAGE>
PENSION PLAN TABLE
The following table illustrates various annual straight-life benefits at
normal retirement (age 65) for the indicated levels of average annual
compensation and various periods of service, assuming no future changes in the
Company's pension benefits. The compensation used in the computation of annual
retirement benefits is substantially equivalent to the salary and bonus reported
in the Summary Compensation Table. The benefit amounts shown reflect reduction
for applicable Social Security benefits.
<TABLE>
<CAPTION>
YEARS OF SERVICE
----------------------------------------------------------
AVERAGE ANNUAL COMPENSATION 20 25 30 35 40
------------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$150,000............................. $ 54,943 $ 68,679 $ 82,414 $ 91,789 $ 101,164
200,000............................. 74,943 93,679 112,414 124,914 137,414
250,000............................. 94,943 118,679 142,414 158,039 173,664
300,000............................. 114,943 143,679 172,414 191,164 209,914
350,000............................. 134,943 168,679 202,414 224,289 246,164
400,000............................. 154,943 193,679 232,414 257,414 282,414
450,000............................. 174,943 218,679 262,414 290,539 318,664
500,000............................. 194,943 243,679 292,414 323,664 354,914
550,000............................. 214,943 268,679 322,414 356,789 391,164
600,000............................. 234,943 293,679 352,414 389,914 427,414
650,000............................. 254,943 318,679 382,414 423,039 463,664
700,000............................. 274,943 343,679 412,414 456,164 499,914
750,000............................. 294,943 368,679 442,414 489,289 536,164
</TABLE>
Average annual compensation is the average 12-month compensation for the
highest 60 consecutive months of the last 120 months of service prior to
retirement. Compensation is total salary paid to an employee by the Company
and/or its subsidiary companies, including bonuses under the Company's
Short-Term Incentive Compensation Plan, pre-tax contributions under the
Company's Capital Accumulation Plan, pre-tax contributions under the Company's
Health and Dependent Care Spending Accounts Plan, and pre-tax contributions for
life and health care insurance, but excluding moving allowances, exercise of
stock options and SARs, and other compensation that has been deferred.
As of September 30,1996, the credited years of retirement benefit service
for the individuals listed in the Summary Compensation Table were as follows:
Mr. Terry, 32 years; Mr. Hasch, 36 years; Mr. Reeves, 40 years; Mr. Hinchliff,
24 years; and Mr. Doyle, 32 years. The benefits shown in the foregoing table are
subject to maximum limitations under the Employee Retirement Income Security Act
of 1974, as amended, and the Internal Revenue Code of 1986, as amended. Should
these benefits at the time of retirement exceed the then-permissible limits of
the applicable Act, the excess would be paid by the Company as supplemental
pensions pursuant to the Company's Supplemental Retirement Benefit Plan. The
benefits shown give effect to these supplemental pension benefits.
SEVERANCE AGREEMENTS
The Company has entered into separate severance agreements with certain key
executives including each of the executives named in the Summary Compensation
Table, except Mr. Doyle who retired in November, 1996 (reference to named
executives in this description shall be deemed to exclude Mr. Doyle). The intent
of the severance agreements is to assure the continuity of the Company's
administration and operations in the event of a Change in Control of the Company
(as described below). The severance agreements were developed in accordance with
the advice of outside consultants.
The term of each severance agreement is for the longer of 36 months after
the date in which a Change in Control of the Company occurs or 24 months after
the completion of the transaction approved by shareholders described in (iii)
below of the description of a Change in Control. A Change in Control is defined
as occurring when (i) the Company receives a report on Schedule 13D filed with
the Securities and Exchange Commission pursuant to Section 13(d) of the
Securities Exchange Act of 1934, as amended, disclosing that any person, group,
corporation, or other entity is the beneficial owner, directly or indirectly, of
20% or more of the common stock of the
10
<PAGE>
Company; (ii) any person, group, corporation, or other entity (except the
Company or a wholly-owned subsidiary), after purchasing common stock of the
Company in a tender offer or exchange offer, becomes the beneficial owner,
directly or indirectly, of 20% or more of such common stock; (iii) the
shareholders of the Company approve (a) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation,
other than a consolidation or merger in which holders of the Company's common
stock prior to the consolidation or merger have substantially the same
proportionate ownership of common stock of the surviving corporation immediately
after the consolidation or merger as immediately before; (b) any consolidation
or merger in which the Company is the continuing or surviving corporation, but
in which the common shareholders of the Company immediately prior to the
consolidation or merger do not hold at least 90% of the outstanding common stock
of the continuing or surviving corporation or 90% of the common stock of a
corporation which owns all of the common stock of the Company; (c) any sale,
lease, exchange or other transfer of all or substantially all of the assets of
the Company, except where the Company owns all of the outstanding stock of the
transferee entity or the Company's common shareholders immediately prior to such
transaction own at least 90% of the transferee entity or group of transferee
entities immediately after such transaction; (d) any consolidation or merger of
the Company where, after the consolidation or merger, one entity or group of
entities owns 100% of the shares of the Company, except where the Company's
common shareholders immediately prior to such merger or consolation own at least
90% of the outstanding stock of such entity or group of entities immediately
after such consolidation or merger; or (iv) a change in the majority of the
members of the Company's Board of Directors within a 24-month period, unless
approved by two-thirds of the directors then still in office who were in office
at the beginning of the 24-month period.
Each severance agreement provides for payment of severance benefits to the
executive in the event that, during the term of the severance agreement, (i) the
executive's employment is terminated by the Company, except for "cause" as
defined therein; or (ii) the executive's employment is terminated due to a
constructive discharge, which includes (a) a material change in the executive's
responsibilities, which change would cause the executive's position with the
Company to become of less dignity, responsibility, prestige or scope; (b)
reduction, which is more than de minimis, in total compensation; (c) assignment
without the executive's consent to a location more than 50 miles from the
current place of employment; or (d) liquidation, dissolution, consolidation,
merger, or sale of all or substantially all of the assets of the Company, unless
the successor corporation has a net worth at least equal to that of the Company
and expressly assumes the obligations of the Company under the executive's
severance agreement.
The principal severance benefits payable under each severance agreement
consist of the following: (i) the executive's base salary and accrued benefits
through the date of termination, including a pro rata portion of awards under
the Company's STIC Plan and LTIC Plan; (ii) three times the sum of the
individual's base salary, the average of the STIC Plan awards for the prior
three years and the value of the LTIC Plan awards in the prior calendar year;
and (iii) the present value of the executive's accrued benefits under the
Company's Supplemental Retirement Benefits Plan (SRBP) that would be payable
upon retirement at normal retirement age, computed as if the executive had
completed three years of additional service. In addition, the executive will be
entitled to continuation of life insurance and medical benefits for the longer
of (a) a period of three years after termination or (b) a period commencing
after termination and ending when the executive may receive pension benefits
without actuarial reduction, provided that the Company's obligation for such
benefits under the severance agreement shall cease upon the executive's
employment with another employer that provides life insurance and medical
benefits. Each severance agreement also provides that the executive's Options
and SARs shall become exercisable upon a Change in Control and that all Options
and SARs shall remain exercisable for the shorter of (a) three years after
termination or (b) the term of such Options and SARs. Any restricted stock
previously awarded to the executive under the LTIC Plan would vest upon a Change
in Control if such vesting does not occur due to a Change in Control under the
terms of the LTIC Plan. The Company is also obligated under each severance
agreement to pay an additional amount to the executive sufficient on an
after-tax basis to satisfy any excise tax liability imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended. The benefits received by the
executive under each agreement are in lieu of benefits under the Company's
termination allowance plan and the executive's benefits under the SRBP. Each
executive would be required to waive certain claims prior to receiving any
severance benefits.
11
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
COMPOSITION OF COMMITTEES
The Compensation-Nominating Committee (Committee) is appointed by the Board
from the membership of the Outside Directors. The Outside Directors are all of
the directors who are not officers or employees of the Company or its
subsidiaries.
OFFICER COMPENSATION GENERALLY
The Board has established a comprehensive officer compensation program
designed to provide equitable and generally competitive cash compensation and
incentives to its officers so as to attract and retain skilled and experienced
officers. Officer compensation is comprised of cash compensation, consisting of
base salary and bonus, and long-term compensation, consisting of non-qualified
stock options (Options), stock appreciation rights (SARs) and restricted stock
awards. The Board annually reviews the competitiveness of each component of
compensation and total compensation with the assistance of the Committee and a
nationally recognized compensation firm (Independent Consultant).
In 1993, the Internal Revenue Code of 1986, as amended, was amended to add
Section 162(m). Section 162(m) places a limit of $1,000,000 on the amount of
certain compensation that may be deducted by the Company in any year with
respect to certain of the Company's highest paid executives. No Company
executive officer received compensation in excess of the Section 162(m) limit
during fiscal 1996. The Committee will continue to monitor this situation and
will determine an appropriate policy if circumstances change.
BASE SALARY
Salaries for elected officers are established by the Board based on
recommendations of the Committee. The Committee's recommendations are based on
advice and information from the Independent Consultant, a compensation report
prepared by the Human Resources Division of the Company's wholly owned utility
subsidiary, The Peoples Gas Light and Coke Company, and, for officers other than
the Chairman of the Board and Chief Executive Officer (CEO), the recommendations
of the CEO.
The Committee evaluates the competitiveness of the Company's elected officer
salaries in light of competitive market data for comparable companies, primarily
gas distribution companies having revenues of similar size to those of the
Company. Officer salaries are established by reference to salary range midpoints
that are set slightly above the average for the comparison companies. Actual
salaries may be above or below the midpoint, depending upon the length of
incumbency, the performance of job responsibilities and other factors. The
information used by the Committee is derived from market data collected and
surveys prepared by the Human Resources Division and the Independent Consultant.
The Committee considers the recommendations of the CEO (for officers other than
the CEO), as well as market data, in making its recommendations. The Committee's
recommendations consider not only the general competitiveness of the elected
officers' salary ranges and proposed salaries, but also take into account each
individual officer's performance of his or her job responsibilities.
For fiscal 1996, the Board accepted the Committee's recommendation and
approved a base salary increase for Mr. Terry of $18,200. The Committee's
recommendation was based on the need to maintain the market competitiveness of
Mr. Terry's base salary, while being consistent with the salary budgets for 1996
for other officers and other management employees.
SHORT-TERM INCENTIVE COMPENSATION PLAN
In October 1992, the Board approved a Short-Term Incentive Compensation Plan
(STIC Plan). The Board adopted the STIC Plan based on competitive considerations
and in order to make a portion of executive cash compensation directly related
to the Company's short-term performance.
12
<PAGE>
The STIC Plan provides that cash bonuses may be awarded to officers of the
Company and its subsidiaries based on levels of achievement under performance
measures established at the beginning of each fiscal year. The purposes of the
STIC Plan are:(i) to provide meaningful incentives to participants that will
benefit shareholders and customers through improvements in performance in areas
of strategic concern to the Company; (ii) to provide competitive levels of
compensation to enable the Company to attract and retain people who are able to
make a significant contribution to the Company's success; and (iii) to encourage
teamwork and cooperation in the achievement of Company goals.
The STIC Plan is administered by the Committee. At the beginning of each
fiscal year, the Committee identifies the officers who will be participants for
the year and establishes award opportunities for each participant based on the
participant's salary range midpoint. The Committee also establishes performance
measures and aligns the measures with award opportunities for each participant.
Awards are computed at the end of each year on the basis of achievement of the
performance measures. The final awards are based on these computed amounts,
adjusted at the Committee's discretion for all participants other than the CEO,
and, with respect to the CEO at the Committee's discretion subject to the
approval of the Outside Directors. The Committee decided that for fiscal 1996,
awards would be paid under the STIC Plan only if the Company achieved dividend
coverage on a weather normalized basis for the year and did not reduce its
common stock dividend during the year.
For fiscal year 1996, awards for certain participants, including Mr. Terry,
were based entirely on corporate performance measures. Other participants'
awards were based partly on corporate performance measures and partly on
individual or divisional performance measures. The Committee established the
corporate performance measures under two categories -- financial and
customer-oriented -- with two measures within each category. The STIC Plan award
opportunities were divided evenly among the four measures. Return on equity and
interest coverage ratio were the two financial measures; gas costs and operation
and maintenance (O&M) expenses were the two customer-oriented measures. The
Company's performance under each measure was ranked with the performance of
other comparable gas utilities for the 12 months ended June 30, 1996. An award
percentage for each performance measure was determined by the Company's rank
within the applicable comparator group. Companies in the financial measure
comparator group were those that the Company believes are often cited by
investment analysts as alternate investment opportunities to the Company. The
comparator companies used under the gas cost measure all serve large midwestern
urban areas within a five hundred mile radius of Chicago. Companies outside the
region were excluded because of differences in pipeline access, storage
availability, and seasonal and peak-day requirements that affect gas costs. The
comparator group selected for the O&M cost performance measure consisted of
companies that serve major metropolitan areas in the midwest or the eastern
United States.
The award percentages determined under the corporate performance measures
were then added together, resulting in a composite award percentage of 49.25
percent of the maximum award opportunity for each participant, including Mr.
Terry, whose award was based solely on corporate performance measures. Based on
these results, the Committee decided upon, and the Outside Directors approved,
an award to Mr. Terry of $191,600.
LONG-TERM INCENTIVE COMPENSATION PLAN
The Long-Term Incentive Compensation Plan (LTIC Plan) is administered by the
Committee for employees other than the CEO and, with respect to the CEO, by the
Committee subject to the approval of the Outside Directors. The Committee has
the duty to select the individuals to whom Options, SARs and restricted stock
awards, or combinations thereof, will be granted, determine the amount and the
extent of such individuals' participation, interpret provisions of the plan, and
promulgate, amend and rescind rules for its administration. With respect to the
CEO, the Committee prescribes the form and content of Options, SARs and
restricted stock granted and is authorized to interpret the plan, to prescribe,
amend or rescind rules relating to it, and to make all other determinations
necessary or advisable for the plan's administration, subject to the approval of
the Outside Directors.
13
<PAGE>
The purpose of the LTIC Plan is to align the interests of key employees with
those of shareholders, thereby increasing those employees' interest in the
financial success and growth of the Company. In selecting employees who receive
awards under the LTIC Plan, the Committee considers the individual's position
and responsibilities, nature of service to the Company, and past, present and
potential contributions to the success of the Company.
The grant of an Option enables the recipient to purchase Company common
stock at a purchase price equal to the fair market value of the shares on the
date the Option was granted. The grant of an SAR entitles the recipient to
receive, for each SAR granted, cash in an amount equal to the excess of the fair
market value of one share of Company common stock on the date the SAR is
exercised over the fair market value of such common stock on the date the SAR
was granted. Before an Option or SAR may be exercised, the recipient must
complete 12 months of continuous employment subsequent to the grant of the
Option or SAR. Options and SARs may be exercised within 10 years from the date
of grant, subject to earlier termination in case of death, retirement, or
termination of employment for other reasons.
The grant of a restricted stock award entitles the recipient to vote the
shares of Company common stock covered by such award and to receive dividends
thereon. The recipient may not transfer or otherwise dispose of such shares
until the restrictions thereon lapse. Restricted stock awards granted to date
vest in equal annual increments over a five-year period from the date of grant.
If a recipient's employment with the Company terminates, other than by reason of
death, disability or retirement after attaining age 65, the recipient forfeits
all rights to the unvested portion of the restricted stock award. In addition,
the Committee (and, with respect to the CEO, the Committee subject to the
approval of the Outside Directors) may, in its discretion, accelerate the
vesting of any restricted stock awards granted under the LTIC Plan.
Grants of Options, SARs and restricted stock are made by the Committee by
general application of the LTIC Plan guidelines. The Committee also considers
the recommendations of the CEO for recipients other than the CEO. Under the
guidelines, the number of Options and SARs is determined for recipients by
applying percentages of salary range midpoints (this percentage varies with the
recipient's position in the Company), and dividing that amount by the Company's
common stock price on or shortly before the date on which Options and SARs will
be granted. To the extent restricted stock is awarded, the recipient's Options
and SARs that would otherwise be granted are reduced at the rate of two Options
and two SARs for each share of restricted stock granted. The Committee's
practice has been to limit an award of restricted stock for a recipient to
one-quarter of the total shares of Options and SARs under the guidelines. All
awards under the LTIC Plan (except for the CEO) are subject to the discretion
and approval of the Committee. With respect to the CEO, the Committee awards
under the LTIC Plan are subject to the discretion and approval of the Outside
Directors. Each year, prior to Committee approval, the Independent Consultant
reviews the LTIC Plan and evaluates the appropriateness of the continued use of
the plan, its guidelines and the value of the grants to be made thereunder.
Based on the application of the guideline formula and the recommendation of
the Independent Consultant, the Committee granted, and the Outside Directors
approved, awards to Mr. Terry of 10,600 Options, 10,600 SARs, and 5,275 shares
of restricted stock.
Submitted by:
THE COMPENSATION-NOMINATING COMMITTEE
Homer J. Livingston, Jr. (Chairman)
Frederick C. Langenberg
William G. Mitchell
Earl L. Neal
Richard P. Toft
14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
Company common stock to the cumulative total return of the S&P 500 Index and the
S&P Utility Index over a five-year period ending September 30, 1996. The graph
assumes that the value of investment in Company common stock and each index was
$100 on September 30, 1991 and that all dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PEOPLES ENERGY S&P 500 S&P 500
<S> <C> <C> <C>
Corporation Index Utilities Index
Sep-91 $100.00 $100.00 $100.00
Sep-92 $128.71 $111.05 $114.37
Sep-93 $138.86 $125.49 $142.31
Sep-94 $122.26 $130.11 $123.67
Sep-95 $137.15 $168.82 $157.78
Sep-96 $179.20 $203.14 $169.62
</TABLE>
[PERFORMANCE GRAPH FILED UNDER COVER FORM SE]
15
<PAGE>
ITEM 2. APPOINTMENT OF AUDITORS
Shareholders will be asked to ratify the recommendation of the Audit
Committee and the appointment by the Board of Directors of Arthur Andersen LLP
as the independent public accountants for the Company and its subsidiaries for
the fiscal year ending September 30, 1997. Arthur Andersen LLP has been engaged
as the independent public accountants of the Company or The Peoples Gas Light
and Coke Company since 1932.
A representative of Arthur Andersen LLP is expected to be present at the
meeting and will be available to respond to appropriate questions or to make a
statement if said representative so desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR SUCH APPOINTMENT.
OTHER MATTERS
Management does not know of any matters to be presented at the meeting other
than those mentioned in the Notice of Annual Meeting of Shareholders. However,
if other matters come before the meeting, it is the intention of the persons
named in the accompanying proxy to vote said proxy in accordance with their
judgment on such matters.
SHAREHOLDER PROPOSALS
Any proposals by shareholders that are intended to be presented for action
at the 1998 Annual Meeting of Shareholders of the Company must be received by
the Company by September 2, 1997, to be considered for inclusion in the proxy
statement and form of proxy relating to such meeting.
EMMET P. CASSIDY
Secretary
December 31, 1996
16
<PAGE>
PEOPLES ENERGY CORPORATION
PLEASE MARK VOTE IN BOX USING DARK INK ONLY.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1. Election of Directors: For All Except
P. Cafferty, J. B. Hasch, For Withheld Nominee(s) written below
F. C. Langenberg, / / / / / /
H. J. Livingston, Jr., ---------------------------
W. G. Mitchell, E. L. Neal,
M. S. Reeves,
R. E. Terry, R. P. Toft
and A. R. Velasquez
2. Ratify the appointment of For Against Abstain
Arthur Andersen LLP as / / / / / /
independent public
accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATION MADE. IF NO
CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS.
Dated , 1997
---------------------
- -----------------------------------------------
Signature
- -----------------------------------------------
Signature
NOTE: Please sign exactly as your name(s) appears. For joint accounts, each
owner should sign. When signing as executor, administrator, attorney, trustee
or guardian, etc., please give your full title.
- -------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN AND DETACH THE ABOVE PROXY
CARD AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
ADMISSION TICKET
PEOPLES ENERGY CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
FRIDAY, FEBRUARY 28, 1997
11 A.M.
HARRIS TRUST AND SAVINGS BANK
8TH FLOOR AUDITORIUM
115 SOUTH LASALLE
CHICAGO, ILLINOIS
ENTER AT THE SOUTHEAST CORNER OF MONROE AND LASALLE STREETS
<PAGE>
PEOPLES ENERGY CORPORATION
ANNUAL MEETING OF SHAREHOLDERS - FEBRUARY 28, 1997
The undersigned hereby appoints J. Bruce Hasch, William G. Mitchell and
Richard E. Terry, and each of them, with power of substitution in each, as
proxies, with the powers the undersigned would possess if personally present, to
vote all of the undersigned's shares of stock in the Company at the Annual
Meeting of Shareholders of the Company to be held at Harris Trust and
Savings Bank, 115 South LaSalle, Chicago, Illinois, on February 28, 1997, at
11:00 a.m., and at any adjournment thereof, upon all matters that may
properly come before the meeting, including the matters described in the
Company's Notice of Annual Meeting of Shareholders and Proxy Statement dated
December 31, 1996, subject to any directions indicated on the reverse side of
this card. If any of the nominees should be unable to serve or for good
cause will not serve, which is not anticipated, management reserves
discretionary authority to vote for a substitute.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
IMPORTANT- To be signed and dated on the reverse side.
