SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 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
PECO ENERGY COMPANY
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(Name of Registrant as Specified In Its Charter)
T.D. CUTLER; H.D. WILLIAMS (PECO ENERGY);
T. ROCH (ALLEN, LANE AND SCOTT (THIRD PARTY FILER))
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(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), 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>
PECO ENERGY COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
APRIL 12, 1995
Dear Shareholder:
YOU ARE CORDIALLY INVITED TO ATTEND THE 1995 ANNUAL MEETING
OF SHAREHOLDERS WHICH WILL BE HELD ON WEDNESDAY, APRIL 12, 1995,
AT 9:30 A.M. IN THE DELAWARE/NEW JERSEY ROOM AT THE VALLEY FORGE
CONVENTION CENTER, 1200 FIRST AVENUE, KING OF PRUSSIA, PENNSYLVANIA.
THE VALLEY FORGE CONVENTION CENTER IS LOCATED APPROXIMATELY
TWO MILES NORTHWEST OF THE KING OF PRUSSIA MALL. (SEE MAP AND
DIRECTIONS LOCATED ON PAGES 23 AND 24.)
The purposes of the Meeting are as follows:
1. To elect five Class II directors to serve for three-year
terms;
2. To approve the appointment of Coopers & Lybrand as
auditors for the year 1995;
3. To consider and take action on the shareholder proposals
beginning on page 19 of the Proxy Statement (if such proposals
are presented at the Meeting); and
4. To transact any other business that may properly come
before the Meeting.
Holders of Common Stock of record at the close of business
February 22, 1995, are eligible to vote upon each of the matters
listed above. The number of shares indicated on your proxy
represents the total number of shares of Common Stock held by you
as of February 22, 1995, including any shares held under the
Dividend Reinvestment and Stock Purchase Plan.
At the Meeting, we will present a report on our current
operations and future plans, followed by a question and answer
period during which we will welcome comments and questions from
those present.
We hope you will indicate your continuing interest in the
Company and your support of the Board of Directors by completing,
signing and mailing your proxy promptly. In order to have your
proxy voted, please allow the postal service sufficient time to
return your proxy prior to the meeting date of April 12, 1995.
K. K. DODD J. F. PAQUETTE, JR.
Corporate Secretary Chairman of the Board
Philadelphia, Pennsylvania 19101
March 6, 1995
<PAGE>
PECO ENERGY COMPANY
2301 MARKET STREET
P.O. BOX 8699
PHILADELPHIA, PENNSYLVANIA 19101-8699
PROXY STATEMENT
The accompanying proxy, solicited by the Board of Directors,
may be revoked by the shareholder at any time prior to its
exercise by attending the Meeting and voting in person, by
notifying the Company's Corporate Secretary in person or in
writing, or by filing a later-dated proxy. If the shareholder
specifies a choice with respect to any matter to be acted upon,
the shares will be voted accordingly. If no choice is specified,
the proxy will be voted as set forth below.
The approximate date on which this Proxy Statement and proxy
are being sent to shareholders is March 6, 1995. The
solicitation of proxies generally will be by mail. The Company
has engaged the firm of Morrow & Co. to solicit proxies on its
behalf at a cost of approximately $70,000; however, some
personal solicitation may be conducted by Company employees. The
Company will bear all costs of solicitation together with the
expenses of banks and brokers which, at the Company's request,
will forward proxies to beneficial owners of shares held of
record by such banks and brokers.
On February 22, 1995, the Company had outstanding 221,669,673
shares of Common Stock. Record holders of Common Stock as of
that date are entitled to one vote per share on all matters
presented to the Meeting.
* * *
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors presently consists of fifteen members,
divided into three equal classes of five directors. The terms of
the classes are staggered so that the term of a class expires at
each Annual Meeting.
The terms of the five directors in Class II are scheduled to
expire at the April 12, 1995 Annual Meeting. These directors are
being nominated for reelection at the Meeting.
If one or more of these nominees becomes unable or unwilling
to serve at the time of the Meeting, the shares represented by
proxy will be voted for the remaining nominees and for any
substitute nominee(s) designated by the Board of Directors or, if
none, the size of the Board of Directors will be reduced
accordingly. The Board of Directors does not anticipate that any
nominee will be unavailable or unable to serve.
The election of directors requires the affirmative vote of
the holders of a majority of the shares present, in person or by
proxy, and entitled to vote at the Meeting. Abstentions and
broker non-votes will not constitute or be counted as "votes"
cast for purposes of the Meeting. Shares represented by properly
executed proxies will be voted for the five Class II nominees
listed below unless otherwise specified on a shareholder's proxy
card. Any shareholder who wishes to withhold authority from the
proxyholders to vote for the election of directors, or to
withhold authority to vote for any individual nominee, may do so
by marking the proxy to that effect. No proxy may be voted for a
greater number of persons than the number of nominees named.
<PAGE>
EQUITY SECURITIES BENEFICIALLY
OWNED ON DECEMBER 31, 1994
------------------------------
NUMBER OF COMMON SHARES
-----------------------------------------
BENEFICIALLY
NOMINEES FOR DIRECTOR OWNED ACQUIRABLE (A) TOTAL
- ------------------------------------------------------------------------------
CLASS II--TERM EXPIRING IN 1998
SUSAN W. CATHERWOOD 1,202 8,000 9,202
NELSON G. HARRIS 3,533 (B) 8,000 11,533
EDITHE J. LEVIT 4,999 8,000 12,999
JOHN M. PALMS 344 8,000 8,344
JOSEPH F. PAQUETTE, JR. 29,840 (B) 250,499 280,339
INCUMBENT DIRECTORS
- -------------------------------------
CLASS III--TERM EXPIRING IN 1996
M. WALTER D'ALESSIO 774 8,000 8,774
JAMES A. HAGEN 1,216 (B) 8,000 9,216
JOSEPH C. LADD 562 8,000 8,562
KINNAIRD R. McKEE 704 (C) 3,000 3,704
RONALD RUBIN 1,202 (B) 8,000 9,202
CLASS I--TERM EXPIRING IN 1997
RICHARD G. GILMORE 1,204 (B)(C) 3,000 4,204
RICHARD H. GLANTON 1,379 3,000 4,379
JOSEPH J. McLAUGHLIN 2,970 (B) 8,000 10,970
CORBIN A. McNEILL, JR. 4,867 198,500 203,367
ROBERT SUBIN 1,022 5,000 6,022
OTHER EXECUTIVE OFFICERS
- -------------------------------------
WILLIAM L. BARDEEN 6,774 45,000 51,774
JAMES W. DURHAM 10,597 70,000 80,597
DICKINSON M. SMITH 4,026 124,753 128,779
All current executive officers
and directors as a group
(37 persons) (D) 112,803 (C) 1,383,856 1,496,659 (E)
- ------------
NOTE A--Shares which may be acquired within 60 days upon the exercise
of stock options granted under the Company's Long-Term
Incentive Plan.
NOTE B--Does not include an aggregate of 519,793 shares of Common
Stock held under PECO Energy Company's Service Annuity Plan.
Messrs. Gilmore, Hagen, Harris, McLaughlin, Paquette and
Rubin are members of the Executive Committee which monitors
the investment policy and performance of the investments
under the plan. For a more detailed description of the
Executive Committee, see "Audit, Compensation, Executive,
Nominating, Nuclear and Ad Hoc Finance Committees" section
beginning on page 7.
NOTE C--In addition, Admiral McKee, Mr. Gilmore and an executive
officer own, respectively, 600, 200, and 250 shares of 9%
Cumulative Monthly Preferred Securities (MIPS). Another
executive officer owns 300 shares of $7.96 Preferred Stock.
NOTE D--In the course of reviewing his ownership of PECO Energy stock
for purposes of reporting under Section 16 of the Securities
Exchange Act of 1934, an executive officer, Gerald R. Rainey,
discovered that he did not include 200 shares of PECO Energy
Common Stock and 300 shares of $7.96 Preferred Stock that were
held in a brokerage account in the initial report of
beneficial ownership he filed when he became an officer of the
Company in 1992. Mr. Rainey subsequently reported his
ownership of these additional shares.
NOTE E--Beneficial ownership represents less than one percent of the
shares of Common Stock outstanding.
* * *
2
<PAGE>
BUSINESS BACKGROUND OF NOMINEES AND DIRECTORS
NOMINEES FOR DIRECTOR--TERMS EXPIRING IN 1998
|-----------| Susan W. Catherwood, age 51, was elected to the
| | Board of Directors in 1988. From 1978 to 1984,
| | Mrs. Catherwood was Program Coordinator for the
| | Academy of Music Anniversary Concerts. From 1982
| | to 1991, she was Chairman, Board of Overseers,
| | University Museum, University of Pennsylvania.
|-----------| In 1991, she became Chairman, Trustee Board,
[Photo of University of Pennsylvania Health System
Susan W. (formerly University of Pennsylvania Medical
Catherwood] Center). She also is a director of The Glenmede
Corporation, The Glenmede Trust Company and The
Glenmede Trust Company of New Jersey.
|-----------| Nelson G. Harris, age 68, was elected to the
| | Board of Directors in 1989. From 1981 to 1991,
| | Mr. Harris was President and Chief Executive
| | Officer of Tasty Baking Company, a diversified
| | company engaged in the manufacture and
| | distribution of food products. In 1991, Mr.
|-----------| Harris was elected Chairman and Chief Executive
[Photo of Officer of Tasty Baking Company. In 1992, he
Nelson G. retired as Chairman and Chief Executive Officer
Harris] and was elected Chairman of Tasty Baking
Company's Executive Committee. Mr. Harris also
is a director and Vice Chairman of American Water
Works Company, Inc. and director of CoreStates
Financial Corporation, Tasty Baking Company and
PrimeSource Corporation.
|-----------| Edithe J. Levit, M.D., age 68, was elected to the
| | Board of Directors in 1980. Dr. Levit is
| | President Emeritus and a life member of the
| | National Board of Medical Examiners, an
| | independent, non-profit agency, providing
| | evaluation services for the medical profession.
|-----------| Prior to 1987, she was President and Chief
[Photo of Executive Officer of that agency.
Edithe J.
Levit, M.D.]
|-----------| John M. Palms, age 59, was elected to the Board
| | of Directors in 1990. From 1982 to 1988, Dr.
| | Palms served as Vice President for Academic
| | Affairs at Emory University. In 1988, he became
| | a Charles Howard Chandler Professor of Physics at
| | Emory University. Dr. Palms was elected
|-----------| President of Georgia State University in 1989
[Photo of and, in 1991, was elected President of the
John M. University of South Carolina. He also is a
Palms] director of Fortis Holdings Inc., NationsBank,
N.A. (of the Carolinas) and Policy Management
System Corporation.
3
<PAGE>
|-----------| Joseph F. Paquette, Jr., age 60, was elected to
| | the Board of Directors and President, Chief
| | Operating Officer in March 1988. In April 1988,
| | he was elected Chairman of the Board and Chief
| | Executive Officer. He is also a director of
| | Associated Electric & Gas Insurance Services
|-----------| Limited, Meridian Bancorp, Inc. and Meridian
[Photo of Bank. See footnote 1 on page 6.
Joseph F.
Paquette, Jr.]
INCUMBENT DIRECTORS--TERMS EXPIRING IN 1996
|-----------| M. Walter D'Alessio, age 61, was elected to the
| | Board of Directors in 1983. Since 1982, Mr.
| | D'Alessio has been President and Chief Executive
| | Officer of Legg Mason Real Estate Services
| | (previously Latimer & Buck, Inc.), commercial
| | mortgage banking and pension fund advisors. He
|-----------| also is a director of the Philadelphia Stock
[Photo of Exchange and Pennsylvania Blue Shield.
M. Walter
D'Alessio]
|-----------| James A. Hagen, age 62, was elected to the Board
| | of Directors in 1990. From 1985 to 1988, Mr.
| | Hagen served as Executive Vice President--Sales &
| | Marketing, CSX Transportation. In 1988, he
| | became President--Distribution Services Group,
| | CSX Transportation. Mr. Hagen was elected
|-----------| Chairman and Chief Executive Officer of Conrail,
[Photo of Inc. in 1989.
James A.
Hagen]
|-----------| Joseph C. Ladd, age 68, was elected to the Board
| | of Directors in 1977. Mr. Ladd served as
| | President, Chief Executive Officer and Director
| | of Fidelity Mutual Life Insurance Co. from 1971
| | to 1984. He served as Chairman of the Board and
| | Chief Executive Officer of Fidelity Mutual Life
|-----------| Insurance Co. until 1989 and as Chairman of the
[Photo of Board from 1989 to 1992. Mr. Ladd also is a
Joseph C. director of Philadelphia Suburban Corporation.
Ladd]
4
<PAGE>
|-----------| Kinnaird R. McKee, age 65, was elected to the
| | Board of Directors in 1989. In 1988, Admiral
| | McKee retired from the U.S. Navy. From 1982
| | until 1988, he served as Director, Navy Nuclear
| | Propulsion. His career included service as
| | Director of Naval Warfare, Commander of the U.S.
|-----------| Third Fleet, and Superintendent, U.S. Naval
[Photo of Academy. He is currently an engineering
Kinnaird R. consultant. He also is a director of Entergy
McKee] Corporation and Entergy Operations Inc.
|-----------| Ronald Rubin, age 63, was elected to the Board of
| | Directors in 1988. From 1976 to 1992, Mr. Rubin
| | was a General Partner of Richard I. Rubin & Co.
| | Inc., a real estate development and management
| | company. In 1992, that organization became The
| | Rubin Organization, Inc. and he became its CEO.
|-----------|
[Photo of
Ronald
Rubin]
INCUMBENT DIRECTORS--TERMS EXPIRING IN 1997
|-----------| Richard G. Gilmore, age 67, was first elected to
| | the Board of Directors in 1979. In 1983, he
| | resigned from the Board when he accepted the
| | position of Finance Director of the City of
| | Philadelphia. At that time, he was also Vice
| | President and Treasurer of The Girard Company
|-----------| (now Mellon Bank Corporation) and Executive Vice
[Photo of President and Treasurer of Girard Bank, its
Richard G. subsidiary, by which he had been employed since
Gilmore] 1972. He resigned from the position of Finance
Director in December 1985, at which time he was
re-elected to the Board. In 1986, he was elected
Senior Vice President, Finance and Chief
Financial Officer of the Company and served until
1991 when he retired. Mr. Gilmore also is a
director of CSS Industries, Inc. and a member of
the Board of Trustees of eleven Legg Mason
mutual funds.
|-----------| Richard H. Glanton, age 48, was elected to the
| | Board of Directors in 1991. Since 1987, he has
| | been a partner of the law firm of Reed Smith Shaw
| | & McClay. From 1983 to 1986, Mr. Glanton was a
| | partner of the law firm of Wolf, Block, Shorr &
| | Solis-Cohen. He also is a director of General
|-----------| Accident Insurance Company of North America and
[Photo of President of the Barnes Foundation. See footnote
Richard H. 2 on page 6.
Glanton]
5
<PAGE>
|-----------| Joseph J. McLaughlin, age 67, was elected to the
| | Board of Directors in 1974. In 1974, Mr.
| | McLaughlin was elected President and Chief
| | Executive Officer of the Beneficial Mutual
| | Savings Bank. He retired from those positions in
| | 1993. He also is a director of the Beneficial
|-----------| Mutual Savings Bank and Paper Manufacturers
[Photo of Company.
Joseph J.
McLaughlin]
|-----------| Corbin A. McNeill, Jr., age 55, was elected to
| | the Board of Directors in 1990. From 1985 to
| | 1987, Mr. McNeill served as Vice President,
| | Nuclear, Public Service Electric and Gas Company.
| | In 1987, he was appointed Senior Vice President,
| | Nuclear, Public Service Electric and Gas
|-----------| Company. In 1988, he was named the Company's
[Photo of Executive Director, Nuclear, on loan from Public
Corbin A. Service Electric and Gas Company, and later was
McNeill, Jr.] elected Executive Vice President, Nuclear of the
Company. In 1990, he was elected President and
Chief Operating Officer. See footnote 1 on page 6.
|-----------| Robert Subin, age 56, was elected to the Board of
| | Directors in 1994. In 1988, Mr. Subin was
| | elected Corporate Vice President of Campbell Soup
| | Company. In May 1990, he became Vice President--
| | Grocery Sector, Campbell North America, and was
| | then promoted to Executive Vice President,
|-----------| International Division in November 1990. In
[Photo of 1992, Mr. Subin was named President, Campbell
Robert Europe/America Division and, in 1993, was named
Subin] President, International Specialty Foods. In
August 1994, he was appointed to his present
position as Senior Vice President of Campbell
Soup Company, President, Bakery, and
Confectionary Division.
(1) On January 30, 1995, the Board of Directors announced its
intention to elect Corbin A. McNeill, Jr. to the additional position
of Chief Executive Officer at the Company's Organization Meeting on
April 12, 1995. Joseph F. Paquette, Jr. will continue as Chairman of
the Board and Chairman of the Executive Committee until his retirement
in 1997.
(2) Richard H. Glanton is a partner of the law firm of Reed Smith Shaw
& McClay, which provided legal services to the Company during 1994.
* * *
MEETINGS OF DIRECTORS
The total number of regular and special meetings of the Board of
Directors during 1994 was 13. Each director attended more than
seventy-five percent of the meetings of the Board and the meetings of
committees of which he or she was a member except Mr. Subin, who
became a member of the Board on October 1, 1994.
* * *
6
<PAGE>
AUDIT, COMPENSATION, EXECUTIVE, NOMINATING, NUCLEAR AND
AD HOC FINANCE COMMITTEES
The Audit Committee consists of S. W. Catherwood (Chairman),
M. W. D'Alessio, R. H. Glanton, J. C. Ladd and K. R. McKee. The
Committee meets quarterly. At each meeting, the Company's internal
auditor reports on completed audits and the audit program. During
the year, the Committee meets with the Company's independent
auditors to review their audit of the consolidated financial
statements; to review the auditors' Report to Management for the
preceding year; to review their plans for conducting the audit for
the current year; to approve their services and fees; and to be
informed of proposed or new accounting practices. The Audit
Committee met four times during 1994.
The Compensation Committee consists of J. A. Hagen (Chairman),
N. G. Harris, J. C. Ladd and R. Rubin. The Committee meets as
necessary on call of the Chairman of the Committee. The Committee
makes decisions pertaining to compensation for the positions of
Director, Chairman, President, Senior Vice President and Vice
President. These decisions, except for certain decisions under the
Long-Term Incentive Plan, are reviewed by the full Board. The
Committee also reviews and monitors management development programs
for officers and employees. The Compensation Committee met twice
during 1994.
The Executive Committee consists of J. F. Paquette, Jr.
(Chairman), R. G. Gilmore, J. A. Hagen, N. G. Harris, J. J.
McLaughlin and R. Rubin. The Committee meets quarterly. During
intervals between meetings of the Board of Directors, the Executive
Committee may exercise all powers of the Board of Directors in the
management of all affairs of the Company. This Committee also has
fiduciary responsibilities associated with the Company's Service
Annuity Plan, including setting and monitoring the investment policy
and reviewing the transactions and performance of the investment
managers. The Executive Committee met five times during 1994.
The Nominating Committee consists of M. W. D'Alessio (Chairman),
S. W. Catherwood, R. H. Glanton and J. M. Palms. The Committee
recommends to the Board of Directors candidates for election to the
Board of Directors, with such candidates to be sought from an
appropriate variety of sources such as those with managerial
experience as business executives or with suitable academic or
scientific backgrounds. While the Committee normally expects to be
able to identify from its own resources an ample number of
qualified candidates, it will review recommendations from shareholders
of persons to be considered as nominees at the 1996 Annual Meeting
of Shareholders if such recommendations are submitted in writing to
the Secretary of the Company at the address of the Company set forth
on page 1. The determination of nominees recommended by the
Committee is within the sole discretion of the Committee, and the
final selection of nominees is within the sole discretion of the
Board of Directors. Therefore, no assurance can be given that
persons recommended by shareholders will be nominated as directors.
The Company's bylaws do not permit shareholders to nominate
candidates from the floor at the Annual Meeting without prior
notification to the Corporate Secretary. Any such notification
would have to include certain information detailed in the Company's
bylaws. Shareholders who desire to nominate a candidate from the
floor at the 1995 Annual Meeting should contact the Company's
Corporate Secretary, Ms. K. K. Dodd. Nominations must be received
14 days prior to the Annual Meeting (March 29, 1995). The
Nominating Committee met twice during 1994.
7
<PAGE>
The Nuclear Committee consists of J. M. Palms (Chairman), R. G.
Gilmore, E. J. Levit, K. R. McKee and J. J. McLaughlin. The
Committee was established in 1987 to assist the Board of Directors
in the proper discharge of the Board's responsibilities for
oversight of the nuclear operations of the Company. The Nuclear
Committee met thirteen times during 1994.
In 1994, the Board established an Ad Hoc Finance Committee to
assist management in reviewing financial and other opportunities.
The Committee consists of R. G. Gilmore (Chairman), M. W. D'Alessio
and J. C. Ladd. The Committee met twice during 1994.
* * *
REMUNERATION OF DIRECTORS
Directors who are not officers of the Company are remunerated as
set forth below and are reimbursed expenses, if any, for attendance
at meetings:
$21,000 annual Board retainer
$ 1,000 per meeting attended
$ 2,000 annual retainer for Chairmanship of Audit, Nuclear and
Special Committees
$ 1,000 annual retainer for Chairmanship of Compensation and
Nominating Committees
In addition to the remuneration stated above, directors who are
not officers of the Company receive options for 5,000 shares of the
Company's Common Stock when first elected to the Board, and receive
options for 3,000 shares at each three-year anniversary of their
election.
Directors who are also officers of the Company do not receive
directors' fees.
The Company has an unfunded Deferred Compensation Plan for
non-officer directors which permits such directors to defer all or a
portion of their remuneration. Amounts deferred will be credited
with interest, compounded quarterly, equal to the average prime
commercial lending rate of The Chase Manhattan Bank, N.A., in effect
on the 15th day of each month, plus one-half of one percent. The
amounts deferred and the interest credited thereon are unfunded
obligations of the Company and may not be distributed to the
participant (except to meet a financial hardship) until that person
ceases to be a director, retires or reaches age 65.
The Company also has a retirement plan for directors. Benefits
under the plan are based upon years of service as a non-employee
director. A minimum of five years of service as a non-employee
director is required to be entitled to benefits. Unless a direct or
selects early retirement, benefit payments will commence at the age
of 70 and will be paid quarterly for life and cease upon death. The
annual pension payable at normal retirement will be equal to 50% of
the annual Board retainer at the time of retirement for five full
years of service, with an additional 10% for each additional full
year of service up to ten years. For ten or more years of
non-employee director service, a director is entitled to 100% of the
annual retainer at the time of retirement.
* * *
EXECUTIVE COMPENSATION DISCLOSURE
The following three tables show information relating to the
Chief Executive Officer and the four most highly compensated
executive officers during the calendar year 1994.
8
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ALL OTHER
COMPENSATION
ANNUAL COMPENSATION LONG-TERM COMPENSATION ($)
-------------------------------- ---------------------------------------- ------------
AWARDS PAYOUTS
----------------------------------------
RESTRICTED LONG-TERM
STOCK INCENTIVE PLAN
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OTHER ($) AWARD(S) ($) OPTIONS (#) PAYOUTS ($)
- ---------------------------------- ---------- --------- --------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joseph F. Paquette, Jr. 1994 485,332 305,670 0 0 50,000 0 0
Chairman of Board and 1993 425,534 403,262 0 0 40,000 0 0
Chief Executive Officer 1992 420,151 376,567 0 0 100,000 139,500 0
Corbin A. McNeill, Jr. 1994 379,386 135,857 0 0 30,000 0 0
President and Chief 1993 350,990 186,697 0 0 24,000 0 0
Operating Officer 1992 331,471 174,339 0 0 70,000 105,563 0
William L. Bardeen (A) 1994 304,532 88,072 0 0 20,000 0 0
Senior Vice President 1993 292,319 115,372 0 0 15,000 0 0
and Group Executive, 1992 238,008 99,113 0 0 60,000 0 0
Consumer Energy
Services Group
James W. Durham (B) 1994 262,757 83,712 0 0 20,000 0 0
Senior Vice President 1993 253,222 97,781 0 0 15,000 0 0
and General Counsel 1992 234,840 91,302 0 0 35,000 87,188 0
Dickinson M. Smith 1994 236,298 87,200 0 0 20,000 0 0
Senior Vice President, 1993 220,502 85,558 0 0 15,000 0 0
Nuclear Generation 1992 203,615 83,998 0 0 35,000 46,219 0
Group and Chief
Nuclear Officer
</TABLE>
(A) Mr. Bardeen began his employment with the Company on February 18, 1992.
(B) Mr. Durham was granted a restricted stock award of 500 Common Shares
on February 25, 1991 valued at $19.50 per share, the closing price
of the Company's Common Stock on that day. The shares vest at the
rate of 100 shares per year beginning February 25, 1992. On
December 31, 1994, Mr. Durham held 200 restricted shares of the
Company's Common Stock valued at $3,900. Dividends are paid on
these shares.
9
<PAGE>
OPTION GRANTS IN 1994
GRANT DATE
INDIVIDUAL GRANTS VALUE
-------------------- ----------
NUMBER % OF
OF TOTAL GRANT
SECURITIES OPTIONS EXERCISE DATE
UNDERLYING GRANTED TO OR BASE EXPIRA- PRESENT
OPTIONS EMPLOYEES PRICE TION VALUE
NAME GRANTED(#) IN 1994 ($/SH) DATE ($)(A)
- ---- ---------- ---------- -------- ------- --------
Joseph F. Paquette, Jr. 50,000 5.5% $26.875 2/27/04 $183,000
Chairman of Board and
Chief Executive Officer
Corbin A. McNeill, Jr. 30,000 3.3 $26.875 2/27/04 $109,800
President and Chief
Operating Officer
William L. Bardeen 20,000 2.2 $26.875 2/27/04 $ 73,200
Senior Vice President,
and Group Executive,
Consumer Energy
Services Group
James W. Durham 20,000 2.2 $26.875 2/27/04 $ 73,200
Senior Vice President
and General Counsel
Dickinson M. Smith 20,000 2.2 $26.875 2/27/04 $ 73,200
Senior Vice President,
Nuclear Generation
Group and Chief
Nuclear Officer
(A) Values indicated are an estimate based on the Black-Scholes option
pricing model. The actual value realized will be determined by
the excess of the stock price over the exercise price on the date
the option is exercised. There is no certainty the actual value
realized will be at or near the value estimated by the
Black-Scholes option pricing model.
Assumptions used for the Black-Scholes model are as follows:
risk-free interest rate 6.5%
volatility .1357
dividend yield 5.172%
time of exercise 10 years
Dividend equivalent units, which were not granted in 1994, are not
considered in the Black-Scholes option pricing model.
Although executives face uncertain risks of forfeiture, these
risks are not factored into the calculated values.
10
<PAGE>
AGGREGATED OPTION EXERCISES IN 1994
AND OPTION VALUES AT DECEMBER 31, 1994
SECURITIES
UNDERLYING VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
12/31/94 12/31/94(1)
SHARES
ACQUIRED (#) ($)
ON VALUE EXERCISABLE EXERCISABLE
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ------------- -------------
Joseph F. Paquette, Jr. 0 0 E--200,499 E--$274,366
Chairman of Board and U-- 50,000 U-- 0
Chief Executive Officer
Corbin A. McNeill, Jr. 0 0 E--168,500 E--$358,125
President and Chief U-- 30,000 U-- 0
Operating Officer
William L. Bardeen 0 0 E-- 25,000 E-- 0
Senior Vice President, U-- 20,000 U-- 0
and Group Executive,
Consumer Energy
Services Group
James W. Durham 0 0 E-- 50,000 E-- 0
Senior Vice President U-- 20,000 U-- 0
and General Counsel
Dickinson M. Smith 0 0 E--104,753 E--$277,214
Senior Vice President, U-- 20,000 U-- 0
Nuclear Generation
Group and Chief
Nuclear Officer
- ------------
(1) Market value of underlying securities at the year-end price of
$24.50 per share, minus the value of underlying securities at the
exercise or base price. All options whose exercise or base price
exceeds the market value are valued at zero.
11
<PAGE>
EXECUTIVE COMPENSATION--COMPENSATION COMMITTEE REPORT
EXECUTIVE COMPENSATION PHILOSOPHY
The Company's compensation philosophy reflects a commitment to
compensate executives competitively with other companies in the
industry while rewarding executives for achieving levels of
operational excellence and financial returns which ensure positive
short- and long-term business performance and continual growth in
shareholder value. The Board of Directors believes that the
Company's overall compensation program must be competitive in order
to attract and retain the qualified individuals necessary to manage
the Company and address the significant challenges facing the
Company and the industry.
The compensation program for executives consists of base salary,
annual incentive and long-term incentive components. The combination
of these elements balances short- and long-term business performance
goals and aligns executive financial rewards with those of the
Company's shareholders.
Annual incentive awards are earned based on the Company's
financial and operational results in comparison to goals established
at the start of the year. See "Management Incentive Compensation
Plan."
Long-term incentive awards in the form of stock options and
dividend equivalents relate directly to increases in shareholder
value, which determines any economic gain for executives. See
"Long-Term Incentive Plan."
The compensation levels of the Company's officers are reviewed
each year by a nationally recognized, independent compensation
consulting firm, and the results are presented to the Compensation
Committee of the Board of Directors. The Compensation Committee
makes its decisions on officer salary levels based upon the
consultants' evaluations and other factors, such as the individual's
performance and the Company's financial condition. These decisions,
except for certain decisions under the Long-Term Incentive Plan,
are reviewed by the full Board. Among other things, the independent
consulting firm compares officer compensation levels to those of
other electric and gas utilities. The latest comparison continues
to verify that the Company's executive compensation levels are
competitive within the utility industry and are below the levels
typically found in general industry. Mr. Paquette's total
compensation is generally comparable to CEO compensation levels of
similarly sized utilities in the survey.
The Company's cash compensation levels are well within the $1
million compensation cap for tax-deduction purposes as outlined in
the Omnibus Budget Reconciliation Act of 1993. The Company will
make every effort to maximize deductions within this cap; however,
the Company reserves the right to make adjustments based on
competitive pay levels or necessitated by other unforeseen
circumstances.
EXECUTIVE SALARIES
Executive salaries are established at competitive levels based
upon survey information from other comparably sized major electric
and gas utility companies, including most of the
12
<PAGE>
companies in the Dow Jones Utility Average. Executive salaries
correspond to approximately the median salaries of comparable
executives of the companies in the survey. The base pay levels
indicated in the Summary Compensation Table include an annual salary
increase granted in 1994 to the CEO and other officers in the Table.
A greater portion of Mr. Paquette's compensation is linked to the
performance of the Company. As a result, Mr. Paquette's salary
continues to be below competitive levels, i.e., his salary is below
the median salary level of CEO's of comparably sized utilities. The
salaries of all executive level positions are reviewed by a nationally
recognized, independent compensation consulting firm, to ensure the
comparable salary data is valid and appropriate.
MANAGEMENT INCENTIVE COMPENSATION PLAN
In 1988, the Board of Directors established a Management
Incentive Compensation Plan (Management Plan) for individuals in the
upper levels of management. The Management Plan replaced a previous
incentive compensation plan. The bonuses paid under the Management
Plan are targeted at the 75th percentile of major electric
utilities, which is consistent with median bonuses paid in general
industry. Each year, a participant is assigned a base bonus
percentage which is directly related to the participant's position.
Each participant's base bonus percentage is determined by using
bonus percentage data of comparably sized utilities gathered from
surveys and by the internal system of valuing PECO Energy positions.
This base bonus percentage is then multiplied by an individual
corporate goals multiplier. This multiplier is a percentage based
on the achievement of corporate goals established by the Board of
Directors. This multiplier can range from 0% to a maximum of 125%
if the Company exceeds achievement of corporate goals. This amount
is then multiplied by an individual performance multiplier based on
the participant's performance during the year, which can range from
0% to a maximum of 125% if the participant had exceptional job
performance. The resulting percentage is multiplied by the midpoint
of the participant's salary range, and the product equals the
participant's bonus.
Corporate goals are established based upon critical business
factors necessary to achieve short- and long-term strategic
objectives. Although these measures may vary from year to year,
they typically include earnings per share, operating and maintenance
costs, capital expenditures, power generation and a measure relating
to customer service objectives. A participant's individual
performance is rated by individual achievement of pre-established
goals which include and/or support the key business objectives
outlined above.
For awards paid in February 1995 for performance in 1994, the
factors used in determining corporate performance of the Chairman
and all Management Plan participants, as measured against
predetermined objectives, were earnings per share, operating and
maintenance costs, capital expenditures, safety, nuclear generation
capacity factor, preparation of a deregulation strategy, and
customer satisfaction. The most critical of these factors were
earnings per share (weighted 30%), operating and maintenance costs
(weighted 15%), and capital expenditures (weighted 15%). The
remaining factors were each weighted 10%. Corporate performance was
measured by comparing actual results to predetermined goals on each
of the seven performance factors. The corporate performance for the
1994 Management Plan award was as follows: nuclear generation
exceeded target levels; capital expendi-
13
<PAGE>
tures, safety and deregulation strategy met target levels; earnings
per share, operating and maintenance costs, and customer satisfaction
did not meet target levels.
Consistent with the determination of awards for all
participants, the Chairman's 1994 Management Plan award shown in the
Summary Compensation Table was based on a combination of corporate
and individual performance. In addition to the financial and operating
goals cited above, the bonus amounts in the Summary Compensation
Table incorporate an evaluation of the officers' individual
performance. Mr. Paquette discussed with the Committee the
performance of the officers and made recommendations regarding their
individual performance ratings.
In evaluating the Chairman's individual performance, the
Committee made an assessment of Mr. Paquette's leadership in achieving
the Company's long-term strategies and business goals. In the
judgment of the Committee, Mr. Paquette has made great progress in
positioning the Company to adapt and succeed in an industry marked
by rapid change. Among the specific results taken into
consideration were a number of extraordinary accomplishments during
the year, examples of which include: (1) implementation of a
voluntary separation plan for employees and information systems
outsourcing, both resulting in major future operational cost
reductions; (2) overall financial benefits resulting from
outstanding performance of the Company's nuclear generating
stations; (3) contract for the sale of Conowingo Power Company; (4)
outstanding safety record representing the best Company performance
in a decade; (5) retail wheeling response to the Pennsylvania Public
Utility Commission; and (6) increased shareholder dividend.
LONG-TERM INCENTIVE PLAN
In 1989, the Board of Directors approved and the Company's
shareholders ratified the Long-Term Incentive Plan (Incentive Plan).
The types of long-term incentive awards which may be granted under
the Incentive Plan are stock options to purchase shares of the
Company's Common Stock, dividend equivalents and shares of
restricted Common Stock.
The combined value of stock options and dividend equivalents
granted to the Chairman and other executives indicated on the
Summary Compensation Table and the Option Grant Table are granted at
levels competitive with other major utility companies. Stock
options and dividend equivalents are granted to executives at
approximately the mean level of grants to comparable executives at
other major electric utility companies.
The purpose of stock options is to reward executives for
strategic and operational activities associated with growth in
shareholder value, since the ultimate value to the executive is
determined by share price appreciation. The individual receiving an
option is entitled to purchase a share of the Company's Common
Stock at a specified price (option exercise price) within a
specified period of time. The option exercise price is equal to at
least the closing price of the Company's Common Stock on the New York
Stock Exchange as reported on the composite tape on the date of
the grant or the last business day preceding the grant date, when
applicable. Stock options granted under the Incentive Plan may not
be exercised more than ten years after the date of the grant.
14
<PAGE>
Dividend equivalents are granted in conjunction with stock
options on a three-year cycle; no dividend equivalents were granted
in 1994 to the Chairman/CEO and other executives in the Summary
Compensation Table. Not all option grants include dividend
equivalents Dividend equivalents granted under the Incentive Plan
provide the opportunity for the Chairman and other executive
officers to earn an amount equal to the dividends that would have
been paid had the participant acquired the shares underlying the
options at the time the options were granted. All or a portion of
the dividend equivalents are paid, as determined by the Compensation
Committee, based on the Company's performance measured over a
three-year period. For the performance period 1992 to 1994, the
measure used to determine dividend equivalents paid to the Chairman
and other executive officers was total shareholder return as
compared with the 50 largest investor-owned electric utilities,
including most of the companies in the Dow Jones Utility Average.
Total shareholder return (TSR) is defined as the sum of share price
appreciation and dividends as follows:
(Average 12/94 Stock Price - Average 12/91 Stock Price)
+ Cumulative 1992-1994 Dividends Paid
- ----------------------------------------------------------------------
Average 12/91 Stock Price
The value of accumulated dividend equivalents was adjusted to
50% for the three-year 1992-1994 performance period based upon PECO
Energy's three-year TSR ranking in the third quintile against the
three-year TSR of the 50 largest investor-owned utilities.
For the 1989 to 1991 performance period payout reported in the
Summary Compensation Table in 1992, a value of 75% of the dividend
equivalent amounts was used. Instead of a specific formula, this
payment was based upon consideration of the Company's overall
performance over the period highlighted by lowering costs,
completion of Limerick Generating Station Unit No. 2, restart of the
Peach Bottom Atomic Power Station and completion of a Company
reorganization. Consideration was also given to the Company's TSR
over the 1989-91 period compared to the group of 50 largest
utilities.
Restricted stock awards are shares of Common Stock subject to
limitation on their sale, transfer or pledge until the expiration of
a restriction period of not less than 12 months as determined by the
Compensation Committee at the time of the grant. During the
restriction period, the recipient of an award is entitled to receive
dividends and vote the shares of restricted stock. After the
restriction period, the shares will be distributed to the
participant. As indicated in the Summary Compensation Table,
restricted stock has been used sparingly, awarded only at the
conclusion of a highly unusual accomplishment of major importance.
SHAREHOLDER RETURN COMPARISON COMPANIES VERSUS
EXECUTIVE COMPENSATION COMPARISON COMPANIES
Although the companies used for these two purposes are
substantially the same, they do differ slightly. The shareholder
return comparison companies are those included in the Dow Jones
Utility Average. Those companies used for executive pay comparisons
are major electric utilities participating in the Edison Electric
Institute compensation surveys, the most commonly recognized,
accepted and reliable source of compensation data for electric
utilities. Performance comparison for Incentive Plan purposes is
the 50 largest investor
15
<PAGE>
owned electric utilities. Seventy percent of the companies in
the Dow Jones Utility Average (excluding PECO Energy) are used for
executive compensation and performance compensation purposes.
COMPARISON OF CUMULATIVE SHAREHOLDER RETURN
As noted on the graph shown on page 17, an investment of $100 in
the Company's Common Stock on December 31, 1989 would have grown in
value to $142.77, assuming reinvestment of dividends, at December
31, 1994. For the five-year period ending December 31, 1994, the
total cumulative return for holders of the Company's Common Stock
amounted to 42.8%, or the equivalent of 7.4% per year compounded.
That return significantly exceeded the comparable Dow Jones Utility
Average and was marginally below the return of the Standard & Poor's
500 Stock Index.
COMPENSATION COMMITTEE MEMBERS:
J. A. Hagen (Chairman) J. C. Ladd
N. G. Harris R. Rubin
* * *
16
<PAGE>
SHAREHOLDER RETURN COMPARISON
Shown below is a line graph comparing the yearly dollar change
in the cumulative total shareholder return on the Company's Common
Stock against the cumulative total return of the S&P 500 Stock Index
and the Dow Jones Utility Average for the period 1990 through 1994.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
1990-1994
DOLLARS DOLLARS
$175 ID: LINE GRAPH SHOWING $175
$150 PECO ENERGY (as solid rule) $150
$125 S&P 500 (as dashes) $125
$100 DJ UTILITIES (as dot leaders) $100
$ 75 $ 75
$ 50 Footnote (A) appears at approximately the $ 50
$ 25 $88 Million mark for the year 1991 $ 25
$ 0 $ 0
1990 1991 1992 1993 1994
(A) An adverse electric base rate order issued by the Pennsylvania
Public Utility Commission in April 1990 necessitated various
write-offs and lowered the Company's earnings power.
Consequently, the Company reduced its common stock dividend,
effective June 1990, which caused a decline in the price of the
Common Stock and the total yearly return.
[Data points represented by the following table.]
- ------------------------------------------------------------------------------
DECEMBER 31,
-------------------------------------------------
1989 1990 1991 1992 1993 1994
-------------------------------------------------
PECO Energy Company $100 $84.36 $128.65 $136.83 $166.78 $142.77
- ------------------------------------------------------------------------------
S&P 500 Stock Index $100 $96.90 $126.42 $136.05 $149.76 $151.74
- ------------------------------------------------------------------------------
Dow Jones Utility Average $100 $95.44 $109.99 $114.48 $125.50 $106.31
- ------------------------------------------------------------------------------
Assumptions:
1. $100 invested on December 31, 1989 in PECO Energy Company
Common Stock, S&P 500 Stock Index and Dow Jones Utility Average.
2. All dividends are reinvested.
* * *
17
<PAGE>
RETIREMENT PLANS. The following table shows the estimated
annual retirement benefit payable on a straight life annuity basis
to participating employees, including officers, in the earnings and
year of service classifications indicated, under the Company's
non-contributory retirement plans. The amounts shown in the table
are not subject to any deduction for Social Security or other offset
amounts.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
---------------------------------------------------------------------
AVERAGE ANNUAL
SALARY FOR YEARS OF SERVICE
HIGHEST CONSECUTIVE ---------------------------------------------------------------------
FIVE YEARS 10 15 20 25 30 35 40
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 19,649 $ 26,974 $ 34,298 $ 41,623 $ 48,947 $ 56,272 $ 63,596
200,000 40,149 55,224 70,298 85,373 100,447 115,522 130,596
300,000 60,649 83,474 106,298 129,123 151,947 174,772 197,596
400,000 81,149 111,724 142,298 172,873 203,447 234,022 264,596
500,000 101,649 139,974 178,298 216,623 254,947 293,272 331,596
600,000 122,149 168,224 214,298 260,373 306,447 352,522 398,596
700,000 142,649 196,474 250,298 304,123 357,947 411,772 465,596
800,000 163,149 224,724 286,298 347,873 409,447 471,022 532,596
900,000 183,649 252,974 322,298 391,623 460,947 530,272 599,596
1,000,000 204,149 281,224 358,298 435,373 512,447 589,522 666,596
</TABLE>
Covered compensation includes salary and bonus which is
disclosed in the Summary Compensation Table on page 9 for the five
named executive officers. The calculation of retirement benefits
under the plans is based upon average earnings for the highest
consecutive five-year period.
Messrs. Paquette, McNeill, Bardeen, Durham and Smith have 37,
27, 3, 12 and 14 credited years of service, respectively, under the
Company's pension program. If Mr. Bardeen completes five years of
continuous employment with the Company, then, upon his retirement,
his service with the Company for purposes of calculating his
benefits under the Company's pension program will be increased by 20
years. Mr. Durham and Mr. Smith are being granted one year of
additional service, for purposes of calculating their benefits
under the Company's pension program, for each year of service up to
a maximum of ten additional years.
The Internal Revenue Code of 1986, as amended, limits the annual
benefits which may be paid from a tax-qualified retirement plan. As
permitted by the Employee Retirement Income Security Act of 1974,
the Company has supplemental plans which authorize the payment out
of general funds of the Company of any benefits calculated under
provisions of the applicable retirement plan which may be above
these limits.
* * *
PROPOSAL 2. APPOINTMENT OF AUDITORS FOR 1995
The Board of Directors, subject to the approval of the
shareholders, has appointed Coopers & Lybrand, independent certified
public accountants, as the auditors of the Company for the year
1995. Unless otherwise directed, proxies will be voted "FOR" approval
of this appointment.
18
<PAGE>
Abstentions and broker non-votes will not constitute or be
counted as "votes" cast for purposes of the Meeting.
A representative of Coopers & Lybrand will be present at the
Annual Meeting to respond to appropriate questions and will have the
opportunity to make a statement, if that representative so desires.
* * *
PROPOSAL 3. SHAREHOLDER PROPOSAL A
A shareholder of the Company has advised the Company that he
will submit the proposal set forth below at the Annual Meeting. The
name and address of the proponent and the number of shares held by
the proponent will be furnished by the Company to any person,
orally or in writing as requested, promptly upon the receipt of an
oral or written request.
SHAREHOLDER PROPOSAL
Resolved: That the shareholders of PECO Energy Company recommend
that the Board of Directors institute a salary and compensation
ceiling such as to future employment contracts, no senior executive
or director of the Company receive combined salary and other
compensation which is more than two times the salary provided to the
President of the United States that is, no more than $400,000.
SUPPORTING STATEMENT
Reasons: There is no corporation which exceeds the size and
complexity of the United States government agencies of which the
President is the chief executive officer. Even most government
agencies exceed the size, as measured by personnel and budget, of
most private corporations. The President of the United States
receives a salary of $200,000; even agency heads and members of
Congress are paid only somewhat more than $100,000. The recommended
ceiling is sufficient to motivate any person to do his best.
The duties of the President of the United States are not
comparable to those of senior executive officers or directors. (The
President has a much more demanding job). While the President has
many valuable compensations which may exceed those of the Company
executives, we use the salary of the President only as a reference
point for shareholders to consider as they evaluate this resolution.
Officers and directors of public corporations are the employees
and not the owners, except as they may be shareholders in common
with other stockholders. Yet, they give the appearance that they
run the corporations primarily for their benefit and incidentally
for the shareholders. The Board of Directors is a closed group
which perpetuates itself, determines who is to be selected to the
Board and who is to be an officer of the Company as well as the
compensation to be received. Directors and officers can run the
corporation as if it were their property. Thus, officers may drain
away millions of dollars in salary, stock options and other
compensation. When the recommended ceiling on salary and
compensation is exceeded, it demonstrates an expression of greed and
abuse of power.
19
<PAGE>
Usually, there is no direct correlation between profitability of
a corporation to officers. In many corporations, compensations
increases as profits fall. High compensation need not serve as an
incentive for a better run or more profitable corporation. There
is no shortage of qualified people who could do as good a job as the
incumbent officers of the corporation and would have no hesitation
serving within the aforementioned ceiling.
Any officer who believes he can better the corporation should be
sufficiently motivated to purchase stock on the open market or to
receive stock options as part of his salary and compensation
package. To remain competitive in market we must cut our costs and
not over compensate directors and officers.
If you agree, please mark your proxy for this resolution.
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO SHAREHOLDER PROPOSAL:
The Board of Directors recommends that shareholders vote
"AGAINST" this proposal because it could severely limit the
Company's ability to attract and retain qualified personnel to
manage the Company. PECO Energy is committed to both rigorous cost
control and to appropriately compensating its senior executive
officers and directors.
As discussed in the Board Compensation Committee Report on
Executive Compensation beginning on page 8, the Company's
compensation programs are designed to link compensation to Company
performance, to enhance shareholder value, and to retain the
valuable talent necessary to ensure continued Company success. The
Board of Directors and the Compensation Committee of the Board must
consider compensation within the context of the highly competitive
market environment that characterizes the private corporate sector.
The private sector values the services of certain people at a level
in excess of that allowed by this proposal. Imposition of an
arbitrary below-market ceiling on the total compensation of senior
executives and directors, as suggested by this proposal, would, in
the opinion of the Board, preclude the Company from attracting and
retaining its management and, as a result, would have an adverse
affect on the quality of leadership, the Company's operations and,
ultimately, on shareholder value.
For all these reasons, the Board is of the opinion that limiting
the total compensation of Company senior executives and directors to
$400,000 is without merit. Therefore, the Board recommends a vote
"AGAINST" the shareholder's proposal. The affirmative vote of the
holders of a majority of the Company's Common Stock present at the
Meeting in person or by proxy is required for the adoption of this
proposal. Unless otherwise directed, proxies will be voted
"AGAINST" adoption of this shareholder's proposal. Abstentions and
broker non-votes will not constitute or be counted as votes cast for
purposes of the Meeting.
* * *
PROPOSAL 4. SHAREHOLDER PROPOSAL B
A shareholder of the Company has advised the Company that he
will submit the proposal set forth below at the Annual Meeting. The
name and address of the proponent and the number of shares held by
the proponent will be furnished by the Company to any person,
orally or in writing as requested, promptly upon the receipt of an
oral or written request.
20
<PAGE>
SHAREHOLDER PROPOSAL
Resolved that PECO Energy adopt the following policy:
That no lawyer shall be selected for the PECO slate of endorsed
candidates for director that either directly or indirectly derives
any compensation from any law firm that provides legal services to
PECO.
REASONS IN SUPPORT
Board Members have the duty of undivided loyalty to PECO. There
is an ample pool of candidates qualified to serve on PECO's Board
without conflicts of interest. Lawyer Board Members that derive
compensation from the providing of legal services to PECO raise
questions of conflict of interest including:
1. Can such a director be a vigorous advocate of policies
designed to reduce legal expenses by using internal legal staff to
the fullest extent possible, settling cases instead of litigation,
choosing the most cost effective law firms and strictly monitoring
activities and billing when external counsel must be used?
2. Can such a director be relied on to prudently limit top
management's salaries, stock options and other perquisites, when
offending top management by such limitation could result in an end
to income derived from providing legal services to PECO?
PECO has a history of lawyer directors whose law firms provide
legal services to PECO. The proponent of this resolution has asked
the PECO Board and its chief executive to stop this practice at a
number of recent annual meetings without success. PECO shareholders
should vote for this resolution.
BOARD OF DIRECTORS' STATEMENT REGARDING SHAREHOLDER PROPOSAL:
The Board of Directors recommends that shareholders vote
"AGAINST" this proposal. This proposal seeks to impose what the
Board believes to be an arbitrary and unnecessary policy relating to
director selection. An identical proposal was submitted to
shareholders at the prior Annual Meeting of Shareholders and was
disapproved, with only 12.4% of the vote cast in favor.
The Nominating Committee of the Board selects as nominees only
those persons who the Committee believes are well qualified to serve
as directors. It weighs, on a case by case basis, the potential
contribution it believes a potential nominee will make to PECO
Energy. This "case by case" approach is consistent with the
approach adopted by the New York Stock Exchange.
The Board has a policy that a director shall not enter into
transactions with the Company without first disclosing the
individual transaction and obtaining advance approval by the Board
of Directors. The Board believes that it is in the best interests
of the Company and its shareholders to maintain the ability to
utilize the business services of individual Board members.
21
<PAGE>
The Board believes, as a general matter, that any proposal
which, like this proposal, seeks to impose rigid eligibility
requirements for director nominations is not in the best interests
of shareholders because such requirements restrict, rather than
enhance, the Company's ability to identify the most qualified persons
to serve as directors.
For these reasons, the Board recommends a vote "AGAINST" the
shareholder's proposal. The affirmative vote of the holders of a
majority of the Company's Common Stock present at the Meeting in
person or by proxy is required for the adoption of this proposal.
Unless otherwise directed, proxies will be voted "AGAINST" adoption
of this shareholder's proposal. Abstentions and broker non-votes
will not constitute or be counted as votes cast for purposes of the
Meeting.
* * *
OTHER MATTERS
Other than the foregoing, the Board of Directors knows of no
other matters which will be presented at the Annual Meeting for
action by the shareholders. Nevertheless, if any other matters
properly come before the Meeting, or any adjournment thereof, it is
anticipated that the proxies will be voted according to the best
judgment of the persons acting by authorization of the proxies.
* * *
DEADLINE FOR FILING SHAREHOLDER PROPOSALS
FOR 1996 ANNUAL MEETING
Proposals intended for inclusion in next year's Proxy Statement
should be sent to the Corporate Secretary of the Company at 2301
Market Street, P.O. Box 8699, Philadelphia, PA, 19101-8699, and
must be received by November 6, 1995.
* * *
22
<PAGE>
VALLEY FORGE CONVENTION CENTER DIRECTIONS
BY CAR: FROM PHILADELPHIA: Take the Schuylkill Expressway to Exit
#25 (Mall Boulevard). Bear right at first light onto Mall
Boulevard. Turn right at next light onto North Gulph Road
and proceed approximately 1-1/2 miles to the fourth traffic
light at First Avenue. The Valley Forge Convention Plaza
sign is on the right. (See entrance instructions on
following page.)
FROM PENNSYLVANIA TURNPIKE: Take Turnpike Exit #24 (Valley
Forge). Take first exit immediately after toll (Exit 25--
Valley Forge) to North Gulph Road and proceed approximately
1-1/2 miles to the fourth traffic light at First Avenue. The
Valley Forge Convention Plaza sign is on the right. (See
entrance instructions on following page.)
FROM ROUTE 202: Take Pottstown Exit (422 West) to first
exit (Bridgeport--Route 23 East) and proceed east on Route
23 (Valley Forge Road). Turn right at first light onto
Moore Road. Turn right at next light onto First Avenue.
Proceed to next light and turn right onto North Gulph Road.
The Valley Forge Convention Plaza sign is on the right.
(See entrance instructions on following page.)
FROM ROUTE 422 EAST: Take King of Prussia Industrial Park
Exit to light and turn left onto North Gulph Road. The
Valley Forge Convention Plaza sign will be on the right,
after the turn. (See entrance instructions on following
page.)
BY BUS: SEPTA (215-580-7800): Route #125 bus departs daily from
Center City Philadelphia at both 16th Street and JFK
Boulevard and at the 29th Street side of 30th Street
Station. The bus stops at the Sheraton Plaza Hotel.
[MAP OF MAJOR ROUTES TO VALLEY FORGE CONVENTION CENTER.]
23
<PAGE>
ENTRANCE INSTRUCTIONS
From the traffic light at the intersection of North Gulph Road and
First Avenue, proceed on North Gulph Road to the second entrance on
the right, approximately 150 yards. Turn right at that entrance and
immediately turn left into the large parking lot. Proceed past the
Sheraton Plaza Hotel main entrance level to the next entrance at a
lower level. Inside the building follow the directions to the meeting
location. This entrance is easily accessible for the handicapped.
[MAP OF VALLEY FORGE CONVENTION CENTER.]
24
<PAGE>
APPENDIX OF
GRAPHIC AND IMAGE MATERIAL
OMITTED FROM ELECTRONIC FORMAT DOCUMENT
PURSUANT TO RULE 304 OF REGULATION S-T
Photographs of Nominees for Director and Incumbent Directors appear on
pages 3-6 of the Definitive Proxy Statement.
Performance Graph comparing cumulative total shareholder return on PECO
Energy's Common Stock against S&P 500 Stock Index and Dow Jones Utility
Average appears on page 17 of the Definitive Proxy Statement.
Map of major routes to Valley Forge Convention Center appears on page
23 of the Definitive Proxy Statement.
Map of Valley Forge Convention Center appears on page 24 of the
Definitive Proxy Statement.
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APPENDIX OF
FORM OF PROXY
PECO ENERGY COMPANY
1995 COMMON STOCK PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 12, 1995,
AT 9:30 A.M. IN THE DELAWARE/NEW JERSEY ROOM AT THE
VALLEY FORGE CONVENTION CENTER, 1200 FIRST AVENUE,
KING OF PRUSSIA, PENNSYLVANIA.
P Joseph C. Ladd, Joseph J. McLaughlin and J. Barry Mitchell,
or any of them, with power of substitution are hereby
appointed proxies to vote as specified all shares of Common
Stock which the Shareholder(s) named on the reverse side is
R entitled to vote at the above Annual Meeting or at any
adjournment thereof, and in their discretion to vote upon all
other matters as may properly be brought before the Meeting.
O First Chicago Trust Company of New York, as Custodian
under the Dividend Reinvestment and Stock Purchase Plan, and
PECO Energy Company, as Custodian for the 401(k) Employee
Savings Plan, are hereby authorized to execute a proxy with
X identical instructions for any shares of Common Stock held
for the benefit of the Shareholder(s) named on the reverse
side.
Y Nominees for election to the Board of Directors for
Class II terms expiring in 1998 are:
Susan W. Catherwood
Nelson G. Harris
Edithe J. Levit
John M. Palms
Joseph F. Paquette, Jr.
---------------
SEE REVERSE
SIDE
---------------
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|-----| PLEASE MARK YOUR 9172
| X | VOTES AS IN THIS
|-----| EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2 AND
AGAINST PROPOSALS 3 AND 4.
- ------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- ------------------------------------------------------------------------------
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of 2. Appointment
Directors. of auditors
(see reverse) --- --- for 1995 --- --- ---
For, except vote withheld from the following nominee(s):
----------------------------------------------------
- ------------------------------------------------------------------------------
THE BOARD RECOMMENDS A VOTE AGAINST PROPOSALS 3 AND 4.
- ------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
3. Shareholder Proposal A.
--- --- ---
4. Shareholder Proposal B.
--- --- ---
NOTE: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, give full
title as such.
- ------------------------------------------------------------
- ------------------------------------------------------------
SIGNATURE(S) DATE
A REMINDER
PECO ENERGY COMPANY
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 12, 1995
We previously sent to you proxy material concerning our upcoming Annual
Meeting of Shareholders.
According to our latest records, we have not yet received your
proxy. Whether your holdings are large or small, receiving your
signed proxy as soon as possible before the Meeting will be helpful
and will aid us in avoiding further expense and delay.
The time before the Meeting is short. Due to the possibility of
a delay in the mail, please sign, date and return the enclosed
duplicate proxy immediately, even if your original proxy was mailed.
We appreciate your cooperation.
K. K. DODD
Corporate Secretary
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PLEASE REMEMBER
TO SIGN AND DATE YOUR PROXY
---- --- ----
