<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the
Commission only (as permitted by
[X] Definitive Proxy Statement Rule 14C-5(d)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (s) 240.14a-11(c) or (s) 240.14a-12
Rochester Gas and Electric Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
David C. Heiligman
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[Logo of Rochester Gas and Electric Corp.]
Rochester Gas and Electric Corporation
89 East Avenue . Rochester, NY 14649-0001
(716) 546-2700
============================================================
NOTICE OF ANNUAL MEETING
OF SHAREHOLDERS TO BE HELD
APRIL 24, 1996
============================================================
We would like to invite you to attend our 1996 annual meeting of
shareholders. This year the meeting will be held at the Rochester Riverside
Convention Center on Wednesday, April 24, 1996 at 11 A.M. The convention
center is located at 123 East Main Street in downtown Rochester, New York.
The purpose of the meeting is to elect four Class I directors to serve for
three-year terms expiring in 1999 and to transact any other business properly
brought before the meeting or any adjournments.
Common shareholders of record at the close of business on March 5, 1996 are
entitled to notice of and to vote on all matters at the meeting.
The proxy statement accompanying this notice contains information of
importance to you as a shareholder. We urge you to review this information and
sign and return your proxy in the enclosed envelope.
By order of the Board of Directors,
Roger W. Kober
Chairman of the Board, President and
Chief Executive Officer
David C. Heiligman
Vice President, Finance and
Corporate Secretary
March 12, 1996
============================================================
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING
PLEASE SIGN AND RETURN YOUR PROXY PROMPTLY
============================================================
<PAGE>
Rochester Gas and Electric Corporation
89 East Avenue . Rochester, NY 14649-0001
(716) 546-2700
========================================
PROXY STATEMENT
========================================
General
The enclosed proxy is solicited by the Board of Directors of Rochester
Gas and Electric Corporation (Company) for voting at the annual meeting of
shareholders on April 24, 1996, or at any adjournments thereof. Shareholders
may revoke their proxies at any time before they are voted.
Common shareholders of record at the close of business on March 5, 1996
are entitled to notice of the meeting. Each share is entitled to one vote on
each matter presented at the meeting. As of February 1, 1996, the Company had
outstanding 38,600,782 shares of Common Stock.
Voting of Proxies
The enclosed proxy is for shares of Common Stock held in your name. The
proxy includes any shares held for you under the Automatic Dividend
Reinvestment and Stock Purchase Plan (ADRP) as a shareholder, as well as your
RG&E Savings Plus Plan or Employee Stock Ownership Plan (ESOP) shares if you
are an employee. Your shares will be voted in accordance with your instructions
on the proxy. If you sign and return a proxy but do not provide voting
instructions, your shares will be voted for the election of nominees for
directors. If you do not return a proxy and you are an RG&E Savings Plus Plan
participant, the trustee will vote your Savings Plus shares for the election of
nominees for directors. If you are an ADRP or ESOP participant, your shares
will not be voted unless you return a proxy.
Under the Company's bylaws, a majority of the shares entitled to vote
must be present in person or represented by proxy before any action can be
taken at the meeting. The election of the nominees for directors will be
decided by plurality vote. Shareholder proxies will be received and tabulated
by an independent agent, and the vote will be certified by an independent
Inspector of Election. If a shareholder withholds a vote for one or more
directors, the shareholder's shares will be counted in determining the quorum
for the meeting but will not be counted in determining the votes for those
directors. If a shareholder holds shares in a broker account and has given
specific instructions, the shares will be voted in accordance with those
instructions. If no voting instructions are given, under New York Stock
Exchange rules the broker may exercise discretionary authority and vote for the
Board of Directors nominees.
Election of Directors
The Board of Directors presently consists of ten members and one
vacancy, divided into three classes as nearly equal in number as possible,
designated as Class I, Class II and Class III with terms expiring at the 1996,
1997 and 1998 annual meetings, respectively.
The following identifies the nominees standing for election as Class I
directors at the 1996 annual meeting and the continuing Class II and Class III
directors, including each individual's principal occupation and business
experience for at least five years. The Class I directors will be elected for a
three-year term expiring at the 1999 annual meeting. Samuel T. Hubbard, Jr. is
standing for election as a Class I director to fill the position of William F.
Fowble who died on February 1, 1996 after serving as a director for the past
six years. The other three Class I nominees, namely William Balderston III,
Roger W. Kober and Constance M. Mitchell are incumbent directors. Mr.
Balderston will reach age 70 in December of 1997 and, if elected a director at
the 1996 annual meeting, will retire from the Board at the 1998 annual meeting
as required by Company policy.
2
<PAGE>
Nominees - Class I
For Term Expiring in 1999
William Balderston III, age 68, served as Executive Vice President of The
Chase Manhattan Corporation (bank holding company) from August 1991 until his
retirement in December 1993. Mr. Balderston previously held numerous executive
positions at Chase Lincoln First Bank, a former subsidiary of The Chase
Manhattan Corporation, serving as Vice Chairman to January 1993, as President
and Chief Executive Officer from January 1991 to September 1991 and as Chairman
of the Board, Chief Executive Officer and President from July 1986 to January
1991. He is a director of Bausch & Lomb Incorporated and Home Properties of New
York, Inc. Mr. Balderston has been a director of the Company since 1982.
Samuel T. Hubbard, Jr., age 46, has served as President and Chief Executive
Officer of The Alling and Cory Company (a wholesale distributor of fine
printing paper, industrial and business products) since 1986. Prior to joining
Alling and Cory, Mr. Hubbard held various management positions with Chase
Lincoln First Bank, a former subsidiary of The Chase Manhattan Corporation. He
is a director of First Empire Corporation and the Genesee Corporation.
Roger W. Kober, age 62, was named Chairman of the Board, President and Chief
Executive Officer of the Company in January 1992. Mr. Kober was President and
Chief Executive Officer of the Company from June 1991 to January 1992 and
President and Chief Operating Officer from December 1988 to June 1991. Mr.
Kober is a director of Home Properties of New York, Inc. He has been a director
of the Company since 1988.
Constance M. Mitchell, age 67, was Program Director of the Industrial
Management Council of Rochester, New York, Inc. until her retirement in June
1989. She previously served as Community Relations Coordinator of the
Industrial Management Council. Mrs. Mitchell serves as a board member or
officer of numerous civic and philanthropic organizations, including the Urban
League of Rochester and United Way of Greater Rochester. Mrs. Mitchell has been
a director of the Company since 1981.
Continuing Directors - Class II
Term Expiring in 1997
Allan E. Dugan, age 55, has served as Senior Vice President, Corporate
Strategic Services, Xerox Corporation (provider of document products and
services) since February 1992. Prior to assuming his current position, Mr.
Dugan was Senior Vice President and General Manager, Manufacturing Operations
Worldwide. Mr. Dugan has been a director of the Company since 1991.
Theodore L. Levinson, age 62, was President and Chief Executive Officer of
Star Supermarkets, Inc. (former retail food chain) until 1982. He was appointed
Vice President of Peter J. Schmitt Co., Inc. in 1982 and President and Chief
Executive Officer of Martek Investors, Inc. (formerly Star Supermarkets, Inc.)
in 1983, positions he held until retiring in 1986. Mr. Levinson has been a
director of the Company since 1979.
Arthur M. Richardson, age 69, has served as President of the Richardson
Capital Corporation (venture capital) since 1985. He previously held numerous
executive positions at Security Norstar Bank, Security New York State
Corporation and its predecessor banks before retiring as Chairman of the Board
of Security Norstar Bank in 1985. Mr. Richardson is a director of Goulds Pumps,
Inc., Raymond Corporation and Transmation, Inc. He has been a director of the
Company since 1982.
M. Richard Rose, age 63, was President of the Rochester Institute of
Technology from 1979 until his retirement in June 1992. He was previously
President of Alfred University. Dr. Rose is a director of Raymond Corporation,
Baldwin Technologies Corporation and Webcraft Technologies, Inc. He has been a
director of the Company since 1988.
3
<PAGE>
Continuing Directors - Class III
Term Expiring in 1998
Angelo J. Chiarella, age 62, serves as President and Chief Executive Officer
of Midtown Holdings Corp. (real estate development and leasing), a position he
has held since 1971. He is a director of Transmation, Inc. and has been a
director of the Company since 1992.
Jay T. Holmes, age 53, was named Executive Vice President and Chief
Administrative Officer of Bausch & Lomb Incorporated (healthcare and optics) in
March 1995. He served as Senior Vice President and Chief Administrative Officer
of Bausch & Lomb from November 1994 to March 1995 and previously as Senior Vice
President - Corporate Affairs and Secretary. Mr. Holmes is a director of Bausch
& Lomb and has been a director of the Company since 1992.
Cornelius J. Murphy, age 65, has served as Senior Vice President of Goodrich
& Sherwood Company (management consulting and human resource services) since
1990. Prior to assuming his current responsibilities, Mr. Murphy held a number
of senior management positions at Eastman Kodak Company, where he served as
Senior Vice President and Project Manager, Office of the Chief Executive until
March 1989. He is a director of Transmation, Inc. and has been a director of
the Company since 1981.
Security Ownership of Management
The following table shows beneficial ownership of the Company's Common
Stock as of February 1, 1996 for each director and nominee, as well as each
executive officer named in the Summary Compensation Table. No director, nominee
or executive officer beneficially owns over .02% of the outstanding shares, and
the total beneficially owned by all directors, nominees and executive officers
as a group represents .09% of the shares outstanding.
<TABLE>
<CAPTION>
Total Shares of
Shares of Accrued Common Stock or
Common Stock Common Stock Common Stock
Name of Beneficial Owner Beneficially Owned (1) Equivalent Units (2) Equivalent Units
<S> <C> <C> <C>
William Balderston III 1,291 5,744 7,035
Angelo J. Chiarella 1,335 5,147 6,482
Allan E. Dugan 300 2,826 3,126
David C. Heiligman 3,768 3,318 7,086
Jay T. Holmes 600 4,882 5,482
Samuel T. Hubbard, Jr. (3) 0 0 0
Roger W. Kober 7,322 15,654 22,976
Theodore L. Levinson 1,100 6,769 7,869
Robert C. Mecredy 3,364 3,318 6,682
Constance M. Mitchell 525 6,622 7,147
Cornelius J. Murphy 2,792 7,567 10,359
Thomas S. Richards 2,094 6,690 8,784
Arthur M. Richardson 200 7,618 7,818
M. Richard Rose 734 6,926 7,660
Robert E. Smith 3,750 6,963 10,713
All Directors, Nominees
and Executive Officers as
a group (19 Individuals) 33,770 98,270 132,040
</TABLE>
(1) Includes shares over which the director, nominee or executive officer
has direct or indirect voting or investment power, as well as indirect
family holdings of which the following persons disclaim beneficial
ownership: Mr. Chiarella, 237 shares; Mr. Heiligman, 108 shares; and
Mr. Kober, 3,306 shares.
(2) Includes Common Stock equivalent units accrued under the Company's Long
Term Incentive Plan, 401k Restoration Plan, Directors' Deferred
Compensation Plan and Deferred Stock Unit Plan for Non-Employee
Directors for which the director, nominee or executive officer does not
have voting rights.
(3) New nominee.
4
<PAGE>
Meetings and Standing Committees of the Board of Directors
The Board of Directors met ten times during 1995. All nominees attended
at least 75% of the total meetings of the Board and the committees on which they
served, except Mr. Balderston, who attended all Board meetings and 68% of Board
and Committee meetings in the aggregate.
Executive and Finance Committee. The Executive and Finance Committee,
with certain exceptions, possesses all of the authority of the Board of
Directors. During 1995, the Committee met four times. Messrs. Balderston, Dugan,
Kober, Murphy and Richardson (Chairman) are currently members of the Committee.
Audit Committee. It is the function of the Audit Committee to monitor on
behalf of the Board of Directors the integrity of the Company's financial
statements and its financial reporting process. In pursuit of this function,
the Committee monitors the systems of internal control which management has
established to safeguard the assets of the Company and the internal policies
and procedures that exist to provide that the Company is in compliance with all
applicable laws, regulations and ethical business practices. The Committee also
recommends to the Board the independent accounting firm to be retained by the
Company for the ensuing year, reviews the results of the accounting firm's
examination of the Company's financial statements and recommends any action
deemed necessary. During 1995, the Committee met three times. Messrs.
Chiarella, Dugan, Levinson, Rose and Mrs. Mitchell (Chairman) are currently
members of the Committee.
Committee on Management. The Committee on Management is responsible for
the review and recommendation to the Board of the Company's executive
compensation and benefits program, including awards under the Company's annual
Executive Incentive Plan and the Long Term Incentive Plan. The Committee sets
the compensation of the Chief Executive Officer and reviews the compensation
levels of members of management proposed by the Chief Executive Officer. The
Committee reviews organizational structure, corporate goals and objectives and
management development, including management succession. During 1995, the
Committee met three times. Messrs. Balderston, Murphy (Chairman), Richardson
and Rose are currently members of the Committee.
Committee on Directors. The Committee on Directors is responsible for
all matters relating to directors, including evaluation of director performance,
director compensation, director succession and corporate governance issues. The
Committee recommends to the Board of Directors candidates to be nominated for
election as directors at the annual meeting of shareholders and to fill any
vacancies on the Board. During 1995, the Committee met five times. Messrs.
Balderston, Holmes (Chairman), Richardson and Mrs. Mitchell are currently
members of the Committee. Shareholders wishing to recommend candidates for
nomination to the Board should submit in writing to the Secretary of the
Company the name of the nominee, a statement of qualifications and the written
consent of the person so named. Suggestions received prior to October 1, 1996
will be considered by the Committee when recommending nominees for election at
the 1997 annual meeting of shareholders.
Report of the Committee on Management on Executive Compensation
The Committee on Management is appointed by the Board of Directors of
the Company. Its objective is to assure that executive compensation is fair and
reasonable to customers, shareholders and employees by providing competitive
compensation linked to the achievement of Company goals. The Committee provides
to the Board a detailed review of all aspects of compensation for the senior
officer positions and the Executive Leadership Team. Members of the Committee
and other members of the Board are available to meet with the management team
or with individual members of management to discuss Company matters as needed.
The Committee has retained the services of a compensation consulting
firm to advise the Committee on the reasonableness of compensation paid to
senior officers of the Company as compared to the external market for
executives, including both utility companies and general industry. To facilitate
this process, the Committee has sponsored three consultant studies regarding
executive
5
<PAGE>
compensation in the last eight years. The studies indicated that Company
executive compensation levels were below the average for comparable utility
companies, and based on the studies, the Committee adjusted the Company's
compensation objectives to the targets discussed below. The studies also
facilitated establishment of short and long term incentive programs.
Components of Compensation. The executive compensation program consists
of three components. The first component is base salary, which is predicated on
competitive market conditions, positional qualifications, including years of
experience, and the individual performance level of the executive. The
Company's target base compensation objective for its top five executive
positions is to be fully competitive with utility companies in the Edison
Electric Institute (EEI) revenue class of $600 million to $2 billion (35 parent
companies) in the second highest paid quartile of this class. The average base
pay for RG&E's executives in 1995 was 9.4% below the median base pay of the
companies in the EEI salary comparison group.
The second component is annual incentive compensation. A substantial
portion of the annual compensation of each officer relates to, and is
contingent upon, the performance of the Company, as well as the individual
contribution of each officer. As a result, a portion of each officer's total
potential compensation is variable.
The Company established an Executive Incentive Plan in 1992, which
provides for the payment of annual performance bonus awards to key employees of
the Company if established performance objectives are met. Awards may range
from 5% to 25% of the midpoint of a participant's salary grade, and the amount
of an award earned, if any, will depend upon the level of the performance goal
met. If certain exceptional performance is achieved, awards could be doubled.
Performance goals are established annually by the Committee on Management and
approved by the Board of Directors. The annual award will be paid in cash in the
year following the year in which it was earned.
The Executive Incentive Plan objectives for 1995, which were equally
weighted, consisted of three categories: (1) return on common equity, (2) price
of product, and (3) four corporate operating objectives pertaining to customer
satisfaction and service, employee safety, affirmative action, and employee
productivity which were approved by the Committee. Due to the adverse financial
impact of the gas price on customers during January and February of 1995, the
Board, upon the recommendation of senior management (Messrs. Kober, Smith, and
Richards), cancelled the 1995 Executive Incentive Plan for the senior officer
group. The Committee continued to monitor the Company's performance regarding
the Plan's objectives throughout the year. Based upon 1995 performance results,
the computations of which were reviewed by the Company's independent auditors,
the Company's financial achievement as measured by the return on common equity
was below the threshold to generate an Executive Incentive Plan payout.
However, due to the unusual nature of the gas capacity situation and to
recognize the accomplishments of the non-senior officers and other members of
the Executive Leadership Team (18 employees in total), the Board excluded the
impact of the gas capacity issue from the Plan. As a result, the Company
achieved 60% of the combined financial, price and corporate operating
objectives set under the Plan. The bonus awards for 1995 for the non-senior
officers, as reported in the Summary Compensation Table, reflect the
achievement of earning 60% of the Targeted Plan Award for 1995, as determined
by the Committee and as approved by the Board of Directors. Twenty percent of
the bonus awards was based upon the achievement of individual performance
objectives.
The third component of executive compensation is long term incentive
compensation, which is designed to ensure the continuing success of the Company
and is directly tied to the Company's Common Stock performance. The Company
established a Long Term Incentive Plan (LTIP) in 1993. The Committee may
recommend to the Board of Directors the granting of annual awards to key
employees of 500 to 4,000 Performance Shares based on the participant's salary
grade. The Performance Shares are RG&E Common Stock equivalents and will
accumulate reinvested dividends over a three-year performance cycle (for
phase-in purposes, the first performance cycle was two years). At the end of
the three-year performance cycle, the Company's three-year annualized
shareholder return on Common Stock will be ranked with the companies which
comprise the Edison Electric Institute 100 Index (EEI 100 Index) of
investor-owned electric utilities. The Committee on
6
<PAGE>
Management may award from 0% to 200% of each participant's Performance Share
Account based on the Company's ranking in the peer comparison. The number of
Performance Shares payable to a participant will be valued based on the average
of the closing price of RG&E Common Stock during December of the year prior to
the awarding of such shares.
The first LTIP performance cycle concluded in December 1995. The total
shareholder return during the two-year performance cycle, as compared to the
EEI 100 Index, placed RG&E in 83rd position out of 98 companies. Based upon
RG&E's relative performance compared to the EEI 100 Index, the Committee on
Management recommended to the Board of Directors that no payout be made for
1995 for Performance Shares that were granted in 1993.
The Company's total executive compensation objective for its top five
executive positions is to be fully competitive at the target level of the
salary comparison group. Total compensation is defined as the combination of
base salary and short and long term incentives. With a 60% Executive Incentive
Plan payout in 1995 (excluding senior officers) and no Long Term Incentive Plan
payout for the performance cycle ending in 1995, the average total compensation
for RG&E's top five executives is 39.4% below the median of the EEI salary
comparison group. Had a target Executive Incentive Plan award and 100% award
for the Long Term Incentive Plan been earned, the average total compensation
for RG&E's top five executives would have been 13.7% below the median of the
same comparison group.
Chief Executive Officer Compensation. With respect to Mr. Kober's base
salary for 1995, the Committee assessed his overall leadership of the Company,
including the continued implementation and adherence to a long range
comprehensive business plan to appropriately position the Company in the
competitive and rapidly changing utility environment of the 1990s, his
effectiveness in leading the corporation through this transition as well as a
major employment downsizing program, his combined responsibilities as Chief
Executive Officer and President, and the depth of his experience and his job
performance.
The Board of Directors was favorably impressed with Mr. Kober's
performance and achievement in 1994. However, the Board, upon recommendation of
senior management, opted to freeze the base pay of the senior officers for 1995,
including Mr. Kober's, due to the adverse financial impact of the gas price on
customers during January and February of 1995. The Board also, upon the
recommendation of senior management, cancelled the 1995 Executive Incentive Plan
for the senior officer group. As a result, Mr. Kober's base pay for 1995 is 8.6%
below the median of the EEI salary comparison group.
As Mr. Kober did not receive a short or long term bonus for 1995, his
total compensation is 46.4% below the median of the EEI salary comparison group.
Had Mr. Kober received the target award for both of these plans, his total
compensation would have been 16.4% below the median of the same comparison
group.
Mr. Kober was granted 4,000 Performance Shares in 1995 under the Long
Term Incentive Plan which was previously summarized. The performance cycle for
these shares will end on December 31, 1997 and will be evaluated at end of
cycle, as previously summarized. For comparative purposes, the dollar equivalent
value of the grant would be approximately 27% below the median value of the long
term incentive award granted or paid in 1995 to the highest paid officer in the
salary comparison group.
Performance shares under the Long Term Incentive Plan link executive
compensation directly with shareholder interest since both the targets and the
payouts are measured in terms of shareholder value.
Committee on Management
Cornelius J. Murphy, Chairman
William Balderston III
Arthur M. Richardson
M. Richard Rose
7
<PAGE>
Executive Compensation
Executive Officers. The following tables show the compensation earned by
the Company's chief executive officer and each of its five highest compensated
executive officers over the past three years.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
----------------------------------- All Other
Salary Bonus LTIP Payouts Compensation
Name and Principal Position Fiscal Year ($) ($) (1) ($) (2) ($) (3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ROGER W. KOBER 1995 361,647 0 0 9,041
Chairman of the Board, 1994 361,647 133,586 N/A 9,041
President and 1993 329,603 108,844 N/A 8,240
Chief Executive Officer
ROBERT E. SMITH 1995 208,975 0 0 5,224
Senior Vice President, 1994 208,943 53,274 N/A 5,224
Energy Operations 1993 202,846 43,407 N/A 5,071
THOMAS S. RICHARDS 1995 191,852 0 0 4,796
Senior Vice President, 1994 191,852 53,274 N/A 4,796
Energy Services 1993 173,567 33,174 N/A 3,945
DAVID C. HEILIGMAN 1995 148,783 11,339 0 3,720
Vice President, Finance 1994 145,851 30,466 N/A 3,646
and Corporate Secretary 1993 141,593 24,823 N/A 3,540
ROBERT C. MECREDY 1995 144,120 12,598 0 3,603
Vice President, 1994 138,578 30,466 N/A 3,464
Nuclear Operations 1993 134,333 24,823 N/A 3,358
DAVID K. LANIAK 1995 173,596 0 0 5,110
(former) Executive Vice President 1994 208,315 59,752 N/A 5,208
and Chief Operating Officer (4) 1993 202,275 43,407 N/A 5,057
</TABLE>
N/A - Not Applicable
(1) Pursuant to the Executive Incentive Plan guidelines, the amount of
annual awards depends upon the level of achievement of one-year goals.
If performance is below a minimal level, no award is earned. Actual
amounts of annual awards earned under the plan are shown.
(2) Pursuant to the Long Term Incentive Plan guidelines, the amount of
annual awards depends upon the total shareholder return over a
three-year period (two years in first performance cycle) as compared to
the companies which comprise the Edison Electric Institute 100 Index of
investor-owned electric utilities. Actual amounts earned at the end of
the performance cycle under the plan are shown.
(3) Company contributions to RG&E Savings Plus Plan (401k) and the 401k
Restoration Plan.
8
<PAGE>
(4) Mr. Laniak retired on November 1, 1995 at age 60 with 41 years of
service. In addition to receiving his normal retirement benefit from the
funded and unfunded retirement plans, he will receive benefits
equivalent to the Temporary Employee Retirement Plan (TREP) benefits
available to all employees except officers in 1994. These retirement
benefits consist of $800 per month until age 62 and $1,612 per month for
life. Mr. Laniak will also receive $467 per month under the retiree life
insurance program discussed on page 12.
Long Term Incentive Plan - Grants in Last Fiscal Year (1995)
<TABLE>
<CAPTION>
Estimated Future Payouts
Under Non-Stock Price-Based
Plans
- --------------------------------------------------------------------------------------------
Number of
Common Performance
Stock or Other
Equivalent Period Until
Name and Units Maturation Threshold Target Maximum
Principal Position (1) or Payout (No.) (No.) (No.)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ROGER W. KOBER 4,000 3 Years 0-3,999 4,000 8,000
Chairman of the Board,
President and
Chief Executive Officer
ROBERT E. SMITH 2,000 3 Years 0-1,999 2,000 4,000
Senior Vice President,
Energy Operations
THOMAS S. RICHARDS 2,000 3 Years 0-1,999 2,000 4,000
Senior Vice President,
Energy Services
DAVID C. HEILIGMAN 1,000 3 Years 0-999 1,000 2,000
Vice President, Finance
and Corporate Secretary
ROBERT C. MECREDY 1,000 3 Years 0-999 1,000 2,000
Vice President,
Nuclear Operations
</TABLE>
(1) Pursuant to the Long Term Incentive Plan, officers were granted a
specific number of Performance Shares based upon their salary grade.
Each Performance Share is deemed to be equivalent to one share of RG&E
Common Stock. Stock dividend equivalents will be deemed to be paid and
reinvested during the length of a performance cycle. The Committee on
Management may award from 0% to 200% of each officer's Performance Share
Account at the end of a three-year performance cycle (1997 for this
cycle) based on the Company's ranking against the Edison Electric
Institute 100 Index of investor-owned electric utilities for total
shareholder return on a three-year average basis. The number of shares
payable, if any, will be based on the average closing price of RG&E
Common Stock for December 1997. Any award will be paid in cash by March
1, 1998.
9
<PAGE>
The Company has entered into change in control agreements for an
indefinite term with Messrs. Kober, Richards and Smith. The agreements provide
that each of the officers that is a party to the agreements is entitled to
specified compensation if, within two years after a change in control of the
Company (as defined in the agreements), the officer's employment is
involuntarily terminated by the Company other than termination for cause (as
defined in the agreements) or by reason of death, disability or normal
retirement. Involuntary termination also includes the employee's resignation
following a change in duties or the employment relationship as defined in the
agreements. If an involuntary termination occurs within the two-year covered
period, Mr. Kober will receive a lump sum payment equal to three times his
annual salary and bonus (final year or final three-year average, whichever is
higher), and the other senior officers will receive two times their annual
salary and bonus, subject to reduction in order to maximize the after-tax effect
to the officer. If Mr. Kober were to reach his normal retirement (age 65) prior
to three years following his termination date (two years for the other
officers), the lump sum payment would be reduced pro-rata with a minimum payment
of one times annual salary and bonus. A payment of one times annual salary and
bonus would be payable in the case of voluntary termination during the two-year
period with a pro-rata reduction in the payment if termination occurs within one
year prior to normal retirement.
Directors. Directors receive an annual retainer of $15,000, plus $700
for each Board or committee meeting attended. Committee chairmen and Executive
and Finance Committee members receive an additional retainer of $2,000 and
$1,500, respectively. If a director attends more than one Board or committee
meeting on the same day, the fee for each subsequent meeting is $600. Officers
of the Company receive no fees for their services as directors. The total
amount of compensation paid to directors is comparable to the total
compensation paid to directors of similar sized combination electric and gas
utility companies.
The Company has deferral plans under which a director's fees may either
be deferred with interest in a cash account or deferred and converted to Common
Stock equivalent units which earn dividends equal to dividends declared on the
Company's Common Stock. In either case, deferred amounts are paid in cash, in a
lump sum or over a period of up to ten years commencing no later than the
director's 70th birthday.
The Company has established a Deferred Stock Unit Plan for Non-Employee
Directors (the Plan), which will serve to align the directors' financial
interests with those of the shareholders. Each director's deferred stock
account will be based on the amount of the annual retainer, the number of
years of Board service and the price of the Company's Common Stock. Under the
Plan, each director will be credited annually with deferred stock units equal
to 75% of the annual retainer. Benefits under the Plan become partially vested
after five years of service and are fully vested after ten years. Upon
cessation of membership on the Board, deferred amounts will be payable in cash
in a lump sum or in up to ten annual installments as determined by each
director.
Shareholder Return Comparison
The following graph compares the cumulative total shareholder return on
the Company's Common Stock with the Edison Electric Institute 100 Index of
investor-owned electric utilities for the past five years. Total return was
calculated assuming investment of $100 on December 31, 1990 and reinvestment of
all dividends.
10
<PAGE>
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG RG&E, EEI 100 INDEX AND S&P 500 INDEX
<CAPTION>
Measurement period RG&E EEI 100 S&P 500
(Fiscal year Covered) Index Index
- --------------------- ------ ------- -------
<S> <C> <C> <C>
Measurement PT -
12/31/90 $100 $100 $100
FYE 12/31/91 $129 $129 $130
FYE 12/31/92 $146 $139 $140
FYE 12/31/93 $166 $154 $154
FYE 12/31/94 $143 $136 $156
FYE 12/31/95 $168 $179 $215
</TABLE>
Pension Plan Table
The Company has a non-contributory, tax qualified, defined benefit
pension plan, the RG&E Retirement Plan, and an unfunded, non-qualified plan, the
RG&E Unfunded Retirement Income Plan. All employees, including executive
officers, are eligible to participate in these plans. The annual pension benefit
under the plans, taken together, is determined by years of service and annual
compensation (salary and bonus). Under the Internal Revenue Code of 1986, the
annual benefit payable by the funded plan was limited to $120,000 for 1995. The
unfunded plan will provide those benefits which cannot be fully provided by the
funded plan. The table below may be used to calculate the approximate annual
benefits payable at normal retirement (age 65) under the two plans in specified
remuneration and years-of-service classifications. The benefits as shown may be
subject to deduction for Social Security benefits under the benefit formula.
<TABLE>
<CAPTION>
Average Retirement Benefits Based on Years of Service (2)
Annual Salary (1) 15 20 25 30 35 40 45
- ----------------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
$150,000 70,500 78,000 85,500 93,000 100,500 108,000 114,000
200,000 94,800 104,800 114,800 124,800 134,800 144,800 154,800
250,000 119,000 131,500 144,000 156,500 169,000 181,500 194,000
300,000 143,300 158,300 173,300 188,300 203,300 218,300 233,300
350,000 167,600 185,100 202,600 220,100 237,600 255,100 272,600
400,000 191,800 211,800 231,800 251,800 271,800 291,800 311,800
450,000 216,100 238,600 261,100 283,600 306,100 328,600 351,100
500,000 240,400 265,400 290,400 315,400 340,400 365,400 390,400
550,000 264,600 292,100 319,600 347,100 374,600 402,100 429,600
</TABLE>
(1) Average annual salary includes base pay (three highest consecutive
years) and annual bonus (three highest years) for the last ten years
before retirement. The amounts shown in the salary and bonus columns in
the Summary Compensation Table (see page 8) constitute qualifying
compensation under the plans.
11
<PAGE>
(2) The table is based on Retirement Plan formula pertaining to employees
hired prior to July 1, 1965. The actual pension benefit for employees
hired after July 1, 1965 will be less than the table amounts. Messrs.
Kober, Smith, Richards, Heiligman and Mecredy have been credited with
30, 36, 12, 32 and 24 years of service, respectively, under the plans.
The RG&E Unfunded Retirement Income Plan will also pay Mr. Kober $292
per month, during retirement to replace retiree life insurance which the Company
cancelled in 1985. This amount is payable only after retirement and is limited
to a total of 120 monthly payments, which will continue to be made to a
designated beneficiary or to the estate of a recipient who dies prior to
expiration of the 120-month period.
Miscellaneous
The Company renewed a directors and officers liability insurance policy
provided by Associated Electric and Gas Insurance Services Limited (AEGIS) for
a one-year term, effective as of January 1, 1996. The policy insures the
Company against any obligations it may incur as a result of the indemnification
of its directors and officers. The premium cost was $918,000. However, the
Company received a member's continuity credit of $690,683 which reduced the
effective cost of coverage to $227,317 for 1996. In addition, the Company has a
policy with Energy Insurance Mutual Limited that provides excess coverage for
such insurance. The premium cost was $364,500 for a one-year term, effective as
of January 1, 1996. The Company also renewed a fiduciary liability insurance
policy carried with AEGIS, effective as of May 1, 1995. The premium cost for
this policy was $28,400 for a one-year term.
Independent Public Accountants
Price Waterhouse, the Company's independent certified public accounting
firm since 1958, was recommended by the Audit Committee and approved by the
Board of Directors to be the Company's independent accounting firm for the year
1996. Representatives of Price Waterhouse are expected to be present at the
meeting and will have the opportunity to make a statement if they so desire.
They will also be available to answer appropriate questions from shareholders.
Other Matters
The Board of Directors does not know of any other matters to come before
the meeting. If any other matters are properly brought before the meeting, it
is the intention of the persons named in the proxy to vote in accordance with
their judgment.
Proxies will be solicited by mail, and Company employees may also
solicit proxies by telephone or other electronic means. Morrow & Co. has been
retained to assist in soliciting proxies at a fee of $7,500, plus reasonable
out-of-pocket expenses. The Company will pay all costs associated with
soliciting proxies for the meeting. Proxy material will be mailed to
shareholders on or about March 12, 1996.
In order to be eligible for inclusion in the proxy material for the
Company's 1997 annual meeting, any shareholder proposal to take action at such
meeting must be received by the Company no later than November 12, 1996.
March 12, 1996
12
<PAGE>
ROCHESTER GAS AND ELECTRIC CORPORATION
P 89 East Avenue, Rochester, New York 14649-0001
R
O This Proxy is Solicited on Behalf of the Board of Directors
X The undersigned hereby appoints R.W. Kober, T.S. Richards and D.C.
Y Heiligman and each of them as proxies, with power of substitution, to
vote all Common Stock of the undersigned, as directed on the reverse side,
at the Rochester Gas and Electric Corporation Annual Meeting of Shareholders
to be held on April 24, 1996 or any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE LISTED NOMINEES.
---
SEE REVERSE
SIDE
(Continued and to be signed on reverse side)
<PAGE>
[X] Please mark
votes as in
this example.
1. ELECTION OF DIRECTORS 2. OTHER MATTERS
Nominees for Class I Directors: In their discretion, the proxies
are authorized to vote upon such
W. Balderston III, S.T. Hubbard, Jr., other business as may properly
R.W. Kober and C.M. Mitchell come before the meeting. As of
March 12, 1996 the Board of Directors
does not know of any other matters
to come before the meeting.
[ ] FOR [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ] MARK HERE
- -------------------------------------- FOR ADDRESS [ ]
For all nominees except as noted above CHANGE AND
NOTE AT LEFT
This proxy, when properly executed,
will be voted in the manner directed
herein by the undersigned shareholder.
If no direction is made, this proxy
will be voted FOR the election of
the listed nominees for directors.
(Please sign exactly as name appears
at left)
Signature: Date:
--------------- -------
Signature: Date:
--------------- -------
