<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
ROCHESTER & PITTSBURG COAL COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
<PAGE> 2
ROCHESTER & PITTSBURGH COAL COMPANY
INDIANA, PENNSYLVANIA 15701
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, MAY 13, 1997
------------------------
To the Shareholders of
ROCHESTER & PITTSBURGH COAL COMPANY:
The Annual Meeting of Shareholders of Rochester & Pittsburgh Coal Company
(the "Company") will be held at the principal office of the Company, 655 Church
Street, Indiana, Pennsylvania, on Tuesday, May 13, 1997, at 1:00 O'CLOCK IN THE
AFTERNOON, local time, for the following purposes:
1. To elect four Class A Directors of the Company to hold office for a
three-year term and until their respective successors shall have been duly
elected;
2. To consider and act upon the selection of Ernst & Young LLP,
independent public accountants, as the Company's auditors for the year
ending December 31, 1997; and
3. To transact such other business as may properly come before the
Annual Meeting and any adjournment, postponement or continuation thereof.
Shareholders of record at the close of business on March 7, 1997, are
entitled to notice of and to vote at the Annual Meeting.
A copy of the Company's Annual Report for its fiscal year ended December
31, 1996, is being mailed to shareholders with this Notice.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
URGED TO FILL IN, SIGN, DATE, AND PROMPTLY RETURN THE ENCLOSED FORM OF PROXY IN
THE ENVELOPE PROVIDED.
By Order of the Board of Directors,
PETER ISELIN, Secretary
April 18, 1997
<PAGE> 3
ROCHESTER & PITTSBURGH COAL COMPANY
INDIANA, PENNSYLVANIA 15701
------------------------
PROXY STATEMENT
This Proxy Statement and the form of Proxy enclosed herewith are furnished
in connection with the solicitation of proxies by the Board of Directors of
Rochester & Pittsburgh Coal Company (hereinafter called the "Company") to be
voted at the Annual Meeting of Shareholders to be held on Tuesday, May 13, 1997,
and at any adjournment, postponement or continuation thereof, at the Company's
principal executive office at 655 Church Street, Indiana, Pennsylvania 15701.
The approximate date on which this Proxy Statement and the accompanying
form of proxy are first being sent to holders of Common Stock is April 18, 1997.
Shares represented by proxies in the accompanying form, if properly signed
and returned, will be voted in accordance with the directions made thereon by
the shareholders. Unless otherwise indicated, a proxy will be voted FOR the
election of the nominees for Class A Director named below, and FOR selection of
Ernst & Young LLP, independent public accountants, as the Company's auditors for
the year ending December 31, 1997. Any proxy given pursuant to this solicitation
may be revoked at any time prior to the voting thereof, but such revocation
shall not be effective until written notice thereof has been given to the
Secretary of the Company. A proxy may also be revoked by furnishing a duly
executed proxy bearing a later date to the Secretary of the Company or by
attending the Annual Meeting and voting in person.
The cost of solicitation of proxies in the accompanying form will be borne
by the Company, including expenses in connection with preparing and mailing this
Proxy Statement. Such solicitation will be made by mail and may also be made on
behalf of the Company in person or by telephone or telegram by the Company's
regular officers and employees, none of whom will receive special compensation
for such services. The Company, upon request therefor, will also reimburse
brokers or persons holding shares in their names or in the names of nominees for
their reasonable expenses in sending proxies and proxy material to beneficial
owners.
Only holders of Common Stock of record as of the close of business on March
7, 1997, are entitled to notice of and to vote at the Annual Meeting. Cumulative
voting rights exist with respect to the election of Directors. Thus, each
shareholder has the right, in person or by proxy, to multiply the number of
votes to which he is entitled by the number of Directors in the class to be
elected, and to cast the whole number of such votes for one candidate or to
distribute such votes, in any manner, among two or more candidates in such
class. The persons named in the proxy will have the right to vote cumulatively
and to distribute their votes among nominees as they consider advisable. On all
other matters to come before the Annual Meeting, each share of Common Stock is
entitled to one vote. As of March 7, 1997, 3,440,984 shares of Common Stock of
the Company were outstanding.
As of March 7, 1997, Peter Iselin, Emilie I. Wiggin and O'Donnell Iselin II
were collectively the beneficial owners of 1,749,665 shares of the Company's
Common Stock, or approximately 50.8% of the Company's outstanding Common Stock.
Such persons have advised the Company that they will vote their shares for the
election of L. Blaine Grube, Peter Iselin, William G. Kegel and Gordon B.
Whelpley, Jr. as Class A Directors, and for the selection of Ernst & Young LLP
as auditors for the Company for 1997. Accordingly, L. Blaine Grube, Peter
Iselin, William G. Kegel and Gordon B. Whelpley, Jr. are virtually certain of
being elected as Directors and Ernst & Young will be selected as auditors for
the Company for 1997, regardless of the votes of the Company's shareholders
other than Peter Iselin, Emilie I. Wiggin and O'Donnell Iselin II.
<PAGE> 4
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of March 7, 1997, the amount and
percentage of the Company's outstanding Common Stock beneficially owned by (i)
each person who is known by the Company to own beneficially more than 5% of its
Common Stock, (ii) each Director, (iii) each executive officer named in the
Summary Compensation Table and (iv) all Directors and executive officers as a
group.
<TABLE>
<CAPTION>
SHARES PERCENT OF
NAME OF INDIVIDUAL BENEFICIALLY OUTSTANDING
OR IDENTITY OF GROUP OWNED(1) COMMON STOCK(2)
- -------------------------------------------------- ---------------- ---------------
<S> <C> <C>
5% HOLDERS:
Peter Iselin
40 Wall Street
New York, New York 10005
Emilie I. Wiggin 1,749,665 shares(3)(4) 50.8%
106 Pear Tree Point Road
Darien, Connecticut 06820
O'Donnell Iselin II
40 Wall Street
New York, New York 10005
DIRECTORS:(5)
David H. Davis.................................... 2,663
Thomas W. Garges, Jr. ............................ 5,940
L. Blaine Grube................................... 7,258
Thomas M. Hyndman, Jr. ........................... 1,260
Columbus O'D. Iselin, Jr. ........................ 14,908
William G. Kegel.................................. 3,482
John L. Schroder, Jr. ............................ 1,497
Gordon B. Whelpley, Jr. .......................... 21,796
EXECUTIVE OFFICERS:(6)
W. Joseph Engler, Jr. ............................ 3,200
George M. Evans................................... 812
A. W. Petzold..................................... 250
Thomas M. Majcher................................. 250
All Directors and executive officers as a group
(15 persons).................................... 1,798,133 52.3%
</TABLE>
- ---------------
(1) Information furnished by each individual. Includes shares that are owned
jointly, in whole or in part, with the individual's spouse, or individually
by his or her spouse.
(2) Less than 1% unless otherwise indicated.
(3) Under the rules of the Securities and Exchange Commission (the "SEC"), a
person is deemed to be the beneficial owner of securities if he has, or
shares, "voting power" (which includes the power to vote, or to direct the
voting of, such securities) or "investment power" (which includes the power
to dispose, or to direct the disposition, of such securities). Under these
rules, more than one person may be deemed the beneficial owner of the same
securities. The information set forth in the above table includes all shares
of Common Stock of the Company over which Peter Iselin, Emilie I. Wiggin,
and O'Donnell Iselin II,
2
<PAGE> 5
individually or together, exercise voting power or investment power,
adjusted, however, to eliminate repeated reporting of shares so as not to
overstate the aggregate beneficial ownership of such persons.
(4) Under the rules of the SEC, the maximum number of shares of the Company's
Common Stock that Peter Iselin, Emilie I. Wiggin, and O'Donnell Iselin II,
individually could be deemed to beneficially own is 1,713,161 shares
(49.8%), 1,646,633 shares (47.8%), and 909,050 shares (26.4%), respectively.
(5) Excludes Directors listed under 5% Holders.
(6) Excludes Executive Officers listed under Directors.
SECTION 16 COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers, Directors, and persons who own more than 10% of
a class of the Company's equity securities registered under the Exchange Act, to
file reports of their ownership of such securities as well as monthly statements
of any changes in such ownership with the SEC and the Company. Based solely on
its review of the copies of the Section 16(a) reports received by the Company,
and written representations from the Company's officers, Directors, and greater
than 10% shareholders, the Company believes that during 1996 all filing
requirements applicable to its officers, Directors, and greater than 10%
shareholders were timely met.
DIRECTORS AND NOMINEES FOR ELECTION AS DIRECTOR
Four Class A Directors of the Company are to be elected at the Annual
Meeting, each to serve for a term of three years and until his or her respective
successor has been duly elected. Unless otherwise instructed, the proxies
solicited by the Board of Directors will be voted for the four nominees named
below, all of whom are currently Class A Directors of the Company. If events not
now known or anticipated make any of the nominees unwilling or unable to serve,
the proxies will be voted for a substitute nominee or nominees designated by the
Board of Directors. Any vacancy occurring on the Board of Directors for any
reason may be filled for the remainder of the unexpired term by a majority of
the Directors then in office. Shares held by brokers or nominees as to which
instructions have not been received from the beneficial owner or person
otherwise entitled to vote and as to which the broker or nominee does not have
discretionary voting power, i.e., broker non-votes, will be treated as not
present and not entitled to vote for nominees for election as Director.
Abstentions from voting on election of Directors will have no effect insofar as
they will not represent votes cast for the purpose of electing Directors. The
four nominees for Class A Director receiving the highest number of votes from
the shareholders voting shall be elected.
3
<PAGE> 6
The names of the nominees for Class A Directors, all of whom are presently
Class A Directors, and certain information regarding them are:
CLASS A DIRECTORS
<TABLE>
<CAPTION>
YEAR
TERM
PRINCIPAL OCCUPATION DIRECTOR WILL
NAME AGE FOR PAST FIVE YEARS SINCE EXPIRE
- ---------------------------------------- --- --------------------------------- -------- ------
<S> <C> <C> <C> <C>
L. Blaine Grube(3)(4)................... 80 Retired Vice President and
Treasurer of the Company 1986 2000*
Peter Iselin(1)(2)...................... 76 Vice President - Finance and
Secretary of the Company since
1965 1954 2000*
William G. Kegel(1)(3).................. 75 Chairman of the Board of the
Company; Retired President and
Chief Executive Officer of the
Company 1973 2000*
Gordon B. Whelpley, Jr.(2)(4)........... 43 President since 1996 - Goodnow &
Whelpley, Inc., Residential
Building Company; Project Manager
1986-1996 - Louis E. Lee Co.
Builders, Commercial and
Residential Contractors 1987 2000*
</TABLE>
- ---------------
* If elected at the Annual Meeting.
The names of the Class B and Class C Directors who will continue in office
after the Annual Meeting until the expiration of their respective terms and
certain information regarding them are:
CLASS B DIRECTORS
<TABLE>
<CAPTION>
YEAR
TERM
PRINCIPAL OCCUPATION DIRECTOR WILL
NAME AGE FOR PAST FIVE YEARS SINCE EXPIRE
- ---------------------------------------- --- --------------------------------- -------- ------
<S> <C> <C> <C> <C>
Columbus O'D. Iselin, Jr.(1)(4)......... 65 Independent
Consultant - Aerospace and
Defense 1967 1998
David H. Davis(1)(4).................... 85 Coal Consultant 1976 1998
John L. Schroder, Jr.(1)................ 78 Retired Dean, College of Mineral
and Energy Resources, West
Virginia University 1983 1998
Thomas W. Garges, Jr.(3)................ 57 President and Chief Executive
Officer of the Company since
October 1988 1988 1998
</TABLE>
4
<PAGE> 7
CLASS C DIRECTORS
<TABLE>
<CAPTION>
YEAR
TERM
PRINCIPAL OCCUPATION DIRECTOR WILL
NAME AGE FOR PAST FIVE YEARS SINCE EXPIRE
- ---------------------------------------- --- --------------------------------- -------- ------
<S> <C> <C> <C> <C>
Thomas M. Hyndman, Jr.(1)(3)(4)......... 72 Of Counsel since 1993, Partner
(1957-1992), Duane, Morris &
Heckscher, Attorneys at Law(5) 1972 1999
O'Donnell Iselin II(1)(2)(4)............ 43 Manager, Finance Staff, Hughes
Electronics Corporation since
1989 1983 1999
</TABLE>
- ---------------
(1) Member, Compensation Committee. The Compensation Committee, composed of
seven Directors, administers the Company's Key Executives Incentive
Compensation Plan (the "Incentive Plan"), recommends certain executives for
participation in such plan and bonuses to be paid pursuant thereto, and
considers and recommends compensation arrangements for executive personnel.
See "Compensation Committee Interlocks and Insider Participation." During
1996, the Compensation Committee met three times.
(2) Mr. Peter Iselin is the father of Mr. O'Donnell Iselin II and the uncle of
Mr. Gordon B. Whelpley, Jr. Mr. O'Donnell Iselin II and Mr. Gordon B.
Whelpley, Jr. are cousins.
(3) Mr. Garges is a Director and Messrs. Grube and Kegel are Directors Emeriti
of S&T Bancorp, Inc., Indiana, PA. Mr. Hyndman is a Director of Penn
Engineering & Manufacturing Corp., Danboro, PA.
(4) Member, Audit Committee. The Audit Committee, composed of six Directors,
recommends the selection of independent auditors, reviews the regular annual
audits, and performs such other functions related to accounting and auditing
as determined by the Audit Committee or the Board of Directors. During 1996,
the Audit Committee met twice.
(5) The law firm to which Mr. Hyndman is Of Counsel rendered legal services to
the Company during 1996.
There is no nominating committee of the Board of Directors. During 1996,
the Board of Directors held ten meetings. During 1996, each Director attended
not less than 75% of the aggregate number of meetings of the Board of Directors
and meetings of all Committees on which he served, except Messrs. Davis and
Schroder because of health reasons. Mr. Davis attended 60% and Mr. Schroder
attended 66% of the aggregate number of Board and Committee meetings.
5
<PAGE> 8
DIRECTOR COMPENSATION
The Company's non-employee Directors receive a fee of $1,200 per month. In
addition, all of the Company's Directors receive a fee of $500 for each meeting
of the Board of Directors and each committee meeting attended.
Pursuant to the terms of an Employment and Deferred Compensation Agreement,
as amended, with Mr. Kegel, effective December 31, 1988, Mr. Kegel retired as an
employee of the Company. He continues to serve as a Director, Chairman of the
Board, and as an independent consultant to the Company. In 1996, he received
remuneration of $25,000 for services to the Company in addition to fees received
as a Director of the Company. In addition, in 1996, under terms of the
Agreement, as amended, Mr. Kegel was paid, as deferred compensation, an
aggregate of $59,801. The Agreement, as amended, provides for aggregate payments
of $538,211 in 108 equal consecutive monthly installments which commenced in
January 1990, and will continue through December 1998.
EXECUTIVE COMPENSATION
The following table sets forth the compensation for the past three years of
each of the Company's five most highly compensated executive officers, including
the Chief Executive Officer, (collectively the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------------- OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) COMPENSATION($)
- ----------------------------------- ---- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Thomas W. Garges, Jr............... 1996 329,500 35,000(2) 40,710(5) 7,608(6)
President and Chief Executive 1995 319,900 50,000(3) 7,805(6)
Officer(1) 1994 314,521 54,500(4) 7,805(6)
A. W. Petzold...................... 1996 180,250 18,025(2) 750(7)
Vice President - Operations 1995 175,000 5,000(3) 750(7)
1994 172,137 5,000(4) 750(7)
George M. Evans.................... 1996 167,500 16,750(2) 2,750(8)
Vice President and Treasurer 1995 159,500 15,000(3) 2,750(8)
1994 156,773 15,000(4) 2,750(8)
W. Joseph Engler, Jr............... 1996 153,500 15,350(2) 2,750(8)
Vice President and 1995 146,200 15,000(3) 2,750(8)
General Counsel 1994 143,708 12,000(4) 2,750(8)
Thomas M. Majcher.................. 1996 149,200 14,920(2) 750(7)
Vice President - 1995 144,800 15,000(3) 750(7)
Corporate Development 1994 142,358 10,000(4) 750(7)
</TABLE>
- ---------------
(1) Mr. Garges is employed pursuant to the terms of an Employment Agreement. See
"Employment and Change in Control Agreements."
(2) The 1996 figure represents cash bonuses.
(3) The figure includes a bonus of 1,709 shares of the Company's Common Stock
having a value of $50,000 on the date of issue to Mr. Garges. In February
1996, Mr. Garges received a cash payment of $40,710 to cover income taxes in
respect of such issuance. Such amount is reported herein under the caption
"Other
6
<PAGE> 9
Annual Compensation." The figure represents cash bonuses of $5,000 paid to
Mr. Petzold and $15,000 paid to each of Messrs. Evans, Engler, and Majcher.
(4) The figure includes a cash bonus of $37,500 and 500 shares of the Company's
Common Stock having a value of $17,000 on the date of issue to Mr. Garges.
Mr. Garges paid the taxes on the value of the stock issuance. The figure
represents cash bonuses of $15,000 paid to Mr. Evans, $5,000 paid to Mr.
Petzold, $12,000 paid to Mr. Engler, and $10,000 paid to Mr. Majcher.
(5) The figure represents an amount sufficient to pay income taxes due on bonus
payments.
(6) The 1996 figures include the Company's $750 contribution to the Rochester &
Pittsburgh Coal Company 401(k) Savings and Retirement Plan (the "401(k)
Plan"), $564 in insurance premiums paid by the Company for additional
insurance on Mr. Garges's life and $6,294 in Directors' fees paid by the
Company and certain of its subsidiaries to Mr. Garges. The 1995 and 1994
figures include the Company's $750 contribution to the 401(k) Plan, $564 in
insurance premiums paid by the Company for additional insurance on Mr.
Garges's life and $6,491 in Directors' fees paid by the Company and certain
of its subsidiaries to Mr. Garges. See "Employment and Change in Control
Agreements."
(7) The figure represents the Company's contribution to the 401(k) Plan.
(8) The figures include the Company's $750 contribution to the 401(k) Plan and
$2,000 in Directors' fees paid by two of the Company's subsidiaries to
Messrs. Engler and Evans.
EMPLOYMENT AND CHANGE IN CONTROL AGREEMENTS
In 1993, the Company entered into an Employment Agreement with Mr. Garges,
effective as of May 1, 1992, (the "1992 Agreement"). Under the 1992 Agreement,
Mr. Garges's term of employment is for a period of three years and, until notice
of termination is given by either party, Mr. Garges's employment is extended
each day for one additional day so that at all times his term of employment is
for a period of three years. Under the 1992 Agreement, Mr. Garges is paid an
annual base salary of not less than $300,000, plus such additional compensation
as may be determined from time to time by the Board of Directors, in its sole
discretion.
Under the 1992 Agreement, in the event that Mr. Garges's employment
continues for such period of time as will entitle him to receive a pension under
the Company's Pension Plan, the Company will pay to Mr. Garges or his spouse,
upon the commencement of the payment of the pension benefits under the Pension
Plan, a monthly supplement consisting of the sum of (i) an amount equal to the
monthly pension benefit Mr. Garges or his spouse would have received pursuant to
the Pension Plan, without regard to certain limitations imposed by the Internal
Revenue Code of 1986 (the "Code"), and (ii) the difference between the monthly
pension benefits actually paid to Mr. Garges or his spouse under the Pension
Plan and the monthly pension benefit which would have been payable to Mr. Garges
or his spouse under the Pension Plan without application of said limitations.
The supplemental pension payments will terminate at the earlier of (i) the
expiration of ten years from the date of the first monthly supplemental pension
payment or (ii) the termination of pension payments under the Pension Plan to
Mr. Garges, his spouse or the survivor of them, if applicable. Should Mr. Garges
die prior to July 22, 2001, and his spouse become eligible to receive pension
benefits under the Pension Plan, no monthly supplement shall be paid to her. In
addition to life insurance under the Company's existing benefit program, under
the 1992 Agreement, the Company has agreed to pay the premium cost of life
insurance on Mr. Garges's life (payable to such beneficiaries as he may
designate) in such amount as is necessary to bring the total face amount of
insurance on Mr. Garges's life paid for by the Company to $1,200,000. Upon Mr.
Garges reaching age 62, the face amount of life insurance shall be reduced to
$500,000.
7
<PAGE> 10
In February 1997, the Company and Mr. Garges entered into an amendment (the
"Amendment") to the 1992 Agreement. The Amendment provides that (i) the
three-year term of the 1992 Agreement may be terminated by either the Company or
Mr. Garges upon 90 days written notice following a change in control of the
Company and that, in the event of a change in control of the Company, (ii) the
Company would pay Mr. Garges an amount equal to three times his then annual
salary upon the change in control without regard to whether Mr. Garges continues
in the employ of the Company, (iii) Mr. Garges would be entitled to a
continuation of his medical benefits (as defined in the Amendment) for a period
of 36 months following the change in control and (iv) for the purposes of
computing the monthly pension supplement to which Mr. Garges is entitled Mr.
Garges would be given credit for his actual years of service with the Company
plus three years.
In 1997, the Company entered into change in control agreements (the
"Agreements") with the Named Executive Officers (other than Mr. Garges) and
certain other key employees (the "Executives"). The term of each of the
Agreements is until the earlier of (a) the termination of the Executive's
employment with the Company for any reason prior to a change in control of the
Company or (b) December 31, 1999, and the term is automatically extended for
successive one-year periods beginning on December 31, 1999. A change in control
occurs during the term of the Agreement if (i) any "person" or "group" (as such
items are used in Rule 13d-3 under the Securities Exchange Act of 1934) other
than the Executive or a group of which the Executive is a member acquires shares
of the Company in a transaction or series of transactions that result in such
person or group directly or indirectly first owning beneficially more than 50%
of the outstanding shares of the Company's Common Stock after the date of the
Agreement or (ii) as the result of or in connection with any cash tender offer
or exchange offer, merger or other business combination, sale of assets or
contested election of directors, or any combination of the foregoing
transactions (a "Transaction"), the persons who were the directors of the
Company before the Transaction shall cease to constitute a majority of the Board
of Directors of the Company or any successor to the Company after the
Transaction. In the event of a change in control, and subject to the possibility
of reduction under certain enumerated circumstances, the Executive will receive
varying amounts depending upon the salary and length of service of such
Executive, payable over two or three year periods (depending on the amount
received) and medical benefits (as defined in the Agreements) for 24-month or
36-month periods (consistent with the length of time payment is made under the
Agreement), each without regard to whether the Executive continues in the employ
of the Company or any successor to the Company following a change in control of
the Company.
PENSION PLAN
Under the Company's Pension Plan covering officers and other management
employees, annual benefits are payable monthly upon retirement. Such benefits
are, in general, based upon an employee's (i) average monthly earnings during
the five highest four calendar quarter periods out of the last ten four calendar
quarter periods of management service prior to retirement and (ii) length of
management service, with a maximum of 35 years. Pension benefits are subject to
a deduction for 50% of Social Security benefits. The full cost of such pension
program is paid by the Company. There is no requirement that employees retire at
a designated age. With some exceptions, benefits are payable on a reduced basis
upon retirement between the ages of 55 and 62.
8
<PAGE> 11
The amounts shown in the following table, before a deduction for 50% of
Social Security benefits, are those payable in the event of retirement at age 65
in 1996:
<TABLE>
<CAPTION>
AVERAGE ANNUAL EARNINGS
DURING THE HIGHEST FIVE ANNUAL BENEFITS UPON RETIREMENT
OF THE FINAL TEN WITH YEARS OF SERVICE INDICATED
FOUR CALENDAR QUARTER PERIODS --------------------------------------------------------
OF MANAGEMENT SERVICE 10 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ----------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$150,000......................... $ 26,250 $ 52,500 $ 65,625 $ 78,750 $ 91,875
200,000......................... 35,000 70,000 87,500 105,000 122,500
250,000......................... 43,750 87,500 109,375 131,250 153,125
300,000......................... 52,500 105,000 131,250 157,500 183,750
350,000......................... 61,250 122,500 153,125 183,750 214,375
400,000......................... 70,000 140,000 175,000 210,000 245,000
450,000......................... 78,750 157,500 196,875 236,250 275,625
500,000......................... 87,500 175,000 218,750 262,500 306,250
</TABLE>
The compensation utilized for determination of benefits under the Pension
Plan as summarized in the table above is salary and bonus. Of the individual
officers named in the Summary Compensation Table, assuming retirement at age 65,
Mr. Garges, Mr. Petzold, Mr. Evans, Mr. Engler, and Mr. Majcher, will have 17,
16, 36, 35 and 28 years of service, respectively.
The information in the foregoing table does not reflect certain limitations
imposed on qualified plans by the Code. Beginning in 1994, the Code prohibits
the inclusion of earnings in excess of $150,000 per year (adjusted periodically
for cost-of-living increases) in the average earnings used to calculate
benefits. The Code also limits the maximum annual pension (currently $120,000,
but adjusted annually for cost-of-living increases) that can be payable to each
eligible employee at age 65.
NOTE: Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Exchange Act that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
report of the Compensation Committee and the Performance Graph on page 10 shall
not be incorporated by reference into any such filings, shall not be deemed
proxy solicitation material, shall not be deemed filed with the SEC under the
Exchange Act and shall not otherwise be subject to the liabilities of Section 18
of the Exchange Act.
COMPENSATION COMMITTEE
Under the rules established by the SEC, the Compensation Committee (the
"Committee") of the Board of Directors of the Company is required to provide
certain information about the Committee's compensation policies applicable to
the Company's executive officers, including the Chief Executive Officer and the
other Named Executive Officers. The Committee has furnished the following report
in fulfillment of the SEC's requirement:
9
<PAGE> 12
REPORT OF THE COMPENSATION COMMITTEE
In general, the policies followed by the Committee in fixing the
compensation of the Company's executive officers are designed to:
- Attract and retain executive officers who contribute to the long-term
success of the Company;
- Motivate executive officers to achieve strategic business objectives and
reward them for their achievement; and
- Compensate executive officers fairly based on their corporate and
individual performance and responsibilities.
The Committee fixes the base salaries of the executive officers, including
the Named Executive Officers. The normal practice is to adjust these salaries
annually as of January 1st of each year. In fixing the compensation of the
Company's executive officers, the Committee considers: (a) salary survey data
for comparable positions secured from independent sources, (b) the
recommendations of the Chief Executive Officer (except in the case of the Chief
Executive Officer's salary), (c) changes in the cost-of-living indices, (d)
length of service, (e) the performance of the executive officer, (f) the general
rates of compensation increases granted to other employees within the Company,
and (g) any other particular considerations which may be deemed appropriate by
the Committee.
Because of the poor operating results achieved by the Company during 1995,
no changes were made in the salaries paid to the Named Executive Officers of the
Company during 1995. As of January 1, 1996, the salaries of the Named Executive
Officers were increased by amounts ranging from 3% to 5%. The salary of the
Chief Executive Officer was increased by 3%. For the most part, the percentage
of increase approximated the increase in the cost of living since the last
increase in salaries granted to the Named Executive Officers on July 1, 1994 and
are consistent with the increases granted to other officers and salaried
employees of the Company in 1995.
Bonuses are paid annually to the Company's executive officers (other than
the Named Executive Officers and certain other officers) pursuant to the
provisions of the Incentive Plan, which was adopted by the Committee and the
Company's Board of Directors effective July 1, 1991. Under the provisions of the
Incentive Plan, the Committee adopts appropriate profit and individual
performance goals and objectives in December of each year for the following
year. Awards (bonuses) paid pursuant to the Incentive Plan are based upon the
achievement of the goals established for the year. These awards may range from
0% to 22% of the base salary of the participant. The Committee administers the
Incentive Plan, approves the participants in the Incentive Plan, and determines
the awards under the Incentive Plan annually.
The Named Executive Officers are not participants in the Incentive Plan.
However, the Named Executive Officers are eligible to receive incentive
compensation bonuses for each calendar year. The bonuses for the Named Executive
Officers other than the Chief Executive Officer are determined in the discretion
of the Committee, acting with the advice of the Chief Executive Officer. The
determination of the amount of the bonuses for these officers is based upon the
following considerations: (a) achievement of corporate profitability objectives
as established for the calendar year, (b) the actual amount of the Company's
operating profit for the year, (c) achievement of specified objectives related
to each executive's area of responsibility, (d) the Chief Executive Officer's
subjective evaluation of the executive's performance during the calendar year,
(e) the contribution of the officer to the overall success of the Company for
the year, (f) the nature and difficulty of any particular matters with which the
officer dealt during the year and the success achieved in dealing with such
matters, and (g) an analysis of competitive bonus practices based upon data
received from
10
<PAGE> 13
independent sources. These factors are applied by the Committee in a
discretionary and subjective manner with respect to each Named Executive Officer
other than the Chief Executive Officer.
The compensation of the Chief Executive Officer is governed by the terms of
the 1992 Agreement. See "Employment and Change in Control Agreements." Under the
terms of the 1992 Agreement, the Committee, which has discretionary authority to
set the base salary for the Chief Executive Officer above a contractual minimum
amount ($300,000), customarily fixes the Chief Executive Officer's base salary
annually effective July 1 of each year. In fixing the base salary, the Committee
takes into account all of the considerations referred to above in fixing
salaries of the other Named Executive Officers, except that it does not have the
recommendation of the Chief Executive Officer. Because of the Company's poor
results in 1995, no salary increase was granted to the Chief Executive Officer
in 1995. However, as indicated earlier, as of January 1, 1996, he was granted a
salary increase of 3%.
The Company's practice is also to pay an annual bonus to the Chief
Executive Officer which is determined in the discretion of the Committee. The
Committee takes into account all considerations which it deems appropriate,
including the criteria used in determining the other Named Executive Officers'
bonuses.
For the year 1996, the Company earned a profit before taxes of
approximately $15.2 million, compared to a loss of $3.9 million for the previous
year. While a significant part of these earnings resulted from the sale of
certain non-operating assets, the Company's mining operations were profitable
for the year, a significant improvement over the prior year. As a result, the
Committee determined that bonuses should be paid to the Company's executive
officers (including the Named Executive Officers) who do not participate in the
Company's Incentive Plan. Accordingly, bonuses were approved for the Company's
executive officers of approximately 10% of their respective base salaries. In
the case of the Chief Executive Officer, the bonus approved was $35,000, or
10.6% of his base salary, payable in cash. This bonus compares to a bonus for
the year 1995 of $50,000 payable in the Company's stock plus a cash bonus in an
amount sufficient to pay the income taxes due on the stock issued.
The Committee did not consider the deductibility for federal tax purposes
of the compensation paid to the Named Executive Officers and the Chief Executive
Officer under the provisions of Section 162(m) of the Code given their current
compensation levels. The Committee intends to take the necessary steps to
conform the Company's policies with respect to executive compensation in order
to comply with the provisions of Section 162(m) of the Code if and at such time
as the deductibility thereof would be affected by such provisions.
Compensation Committee:
David H. Davis, Chairman
Columbus O'D. Iselin, Jr.
John L. Schroder, Jr.
Peter Iselin
William G. Kegel
Thomas M. Hyndman, Jr.
O'Donnell Iselin II
11
<PAGE> 14
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total shareholder
return on the Company's Common Stock, based on the market price of the Common
Stock and assuming reinvestment of dividends, including stock dividends, with
the cumulative total return of companies on the Standard & Poor's 500 Stock
Index and a Peer Group Index.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG ROCHESTER & PITTSBURGH COAL COMPANY,
S&P 500 STOCK INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
ROCHESTER &
MEASUREMENT PERIOD PITTSBURGH COAL
(FISCAL YEAR COVERED) COMPANY S&P 500 INDEX PEER GROUP INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 89 108 68
1993 95 118 70
1994 89 120 70
1995 76 165 49
1996 73 203 61
</TABLE>
Assumes $100 invested on December 31, 1991 in the Company's Common Stock, the
S&P 500 Index and a Peer Group Index.
- ---------------
* Calendar year ended December 31
The Peer Group Index consists of Ashland Coal Company and Westmoreland Coal
Company. The cumulative total returns of each company have been weighted
according to each company's stock market capitalization as of December 31, 1991,
the beginning of the measurement period.
12
<PAGE> 15
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The following non-employee Directors serve on the Compensation Committee of
the Company's Board of Directors: Thomas M. Hyndman, Jr., Columbus O'D. Iselin,
Jr., David H. Davis, O'Donnell Iselin II, and John L. Schroder, Jr. Committee
members, Peter Iselin and O'Donnell Iselin II, are the beneficial owners of 5%
or more of the Company's outstanding Common Stock. Except for Peter Iselin, who
has served as Vice President -- Finance and Secretary of the Company since 1965,
and William G. Kegel, who was President and Chief Executive Officer of the
Company from 1979 until 1988 and currently serves as Chairman of the Board and
as a consultant to the Company, no member of the Committee is a former or
current officer or employee of the Company. Mr. Hyndman is Of Counsel to a law
firm which provided legal services to the Company in 1996. Furthermore, no
executive officer of the Company serves as a member of a compensation committee
of another entity, an executive officer of which serves on the Compensation
Committee of the Company or as a director of the Company, nor does any executive
officer of the Company serve as a director of another entity, an executive
officer of which serves on the Compensation Committee of the Company.
SELECTION OF AUDITORS
Unless instructed to the contrary, the proxies solicited by the Board of
Directors will be cast for the selection of Ernst & Young LLP, independent
public accountants, as the Company's auditors for the year ending December 31,
1997. Ernst & Young LLP has been regularly engaged by the Company for many years
for audit of accounts and other purposes for which its customary fees are paid.
The Company has been advised by Ernst & Young LLP that none of its members has
any financial interest in the Company or its subsidiaries, nor has any of its
members had any connection during the past three years with the Company or any
of its parents or subsidiaries in the capacity of promoter, underwriter, voting
trustee, director, officer or employee. Selection of Ernst & Young LLP, which is
recommended by the Board of Directors on the advice of its Audit Committee, will
require the affirmative vote of the holders of a majority of the shares
represented in person or by proxy at the Annual Meeting. It is not expected that
representatives of Ernst & Young LLP will attend the Annual Meeting.
SHAREHOLDER PROPOSALS
Any shareholder who, in accordance with and subject to the provisions of
the proxy solicitation rules of the SEC, wishes to submit a proposal for
inclusion in the Company's proxy statement for the 1998 Annual Meeting of
Shareholders must deliver such proposal in writing to the Secretary of the
Company at the Company's office at 655 Church Street, Indiana, Pennsylvania,
15701 not later than December 13, 1997.
13
<PAGE> 16
OTHER MATTERS
The Board of Directors does not intend to present any matters at the Annual
Meeting other than the matters referred to in the Notice of Annual Meeting and
at this date the Board of Directors does not know of any matter that will be
presented by other parties. However, if any other matter shall properly come
before the Annual Meeting or any adjournment, postponement or continuation
thereof, it is the intention of the persons named in the enclosed form of proxy
to vote on such matters in accordance with their judgment.
By Order of the Board of Directors,
Peter Iselin, Secretary
April 18, 1997
- --------------------------------------------------------------------------------
SINGLE COPIES OF THE COMPANY'S 1996 ANNUAL REPORT ON SECURITIES AND
EXCHANGE COMMISSION FORM 10-K (WITHOUT EXHIBITS) WILL BE PROVIDED WITHOUT CHARGE
TO SHAREHOLDERS AFTER APRIL 18, 1997, UPON WRITTEN REQUEST DIRECTED TO THE VICE
PRESIDENT & GENERAL COUNSEL, ROCHESTER & PITTSBURGH COAL COMPANY, 655 CHURCH
STREET, INDIANA, PENNSYLVANIA 15701.
14
<PAGE> 17
ROCHESTER & PITTSBURGH COAL COMPANY
P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
R
TUESDAY, MAY 13, 1997
O
The undersigned hereby appoints Thomas M. Hyndman, Jr. and O'Donnell Iselin
X II, or any of them, proxies of the undersigned with full power of
substitution, to vote all shares of Rochester & Pittsburgh Coal Company
Y which the undersigned is entitled to vote at the Annual Meeting of
Shareholders to be held at the principal office of the Company, 655 Church
Street, Indiana, Pennsylvania, on Tuesday, May 13, 1997, at 1:00 p.m.,
local time, and at any adjournment, postponement or continuation thereof,
as follows:
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE
PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
------------------
SEE REVERSE SIDE
------------------
<PAGE> 18
/X/ Please mark your
votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ITEMS PROPOSED BY ROCHESTER &
PITTSBURGH COAL COMPANY LISTED BELOW. UNLESS OTHERWISE SPECIFIED THE VOTE
REPRESENTED BY THIS PROXY WILL BE CAST FOR ITEMS 1 AND 2.
1. Election of / / FOR all nominees / / WITHHOLD
Directors (except as marked AUTHORITY
to the contrary to vote for
below) all nominees
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), STRIKE A LINE
THROUGH THE NOMINEE(S) NAME IN THE LIST BELOW:
Nominees: L. Blaine Grube William G. Kegal
Peter Iselin Gordon B. Whelpley, Jr.
FOR AGAINST ABSTAIN
2. Selection of Ernst & Young
LLP as independent Auditors / / / / / /
of Rochester & Pittsburgh
Coal Company for 1997
3. In their discretion, upon such other matters as may properly come before the
meeting and any adjournment, postponement or continuation thereof.
PLEASE SIGN HERE exactly as your name appears on this Proxy. For joint
accounts, each joint owner should sign. When signing as attorney, executor,
administrator, trustee, guardian or other fiduciary, please give full title. If
the signer is a corporation, please sign full corporate name by duly authorized
officer.
______________________________________
______________________________________
SIGNATURE(S)__________________________
DATE__________________________________
