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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
DQE, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(4) Date Filed:
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Notes:
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[Logo DQE]
Notice of 1999 Annual Meeting and Proxy Statement
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March 10, 1999
To the Stockholders of DQE, Inc.:
The Annual Meeting of Stockholders of DQE, Inc. ("DQE" or the "Company")
will be held at the Manchester Craftsmen's Guild Auditorium, 1815 Metropolitan
Street, Pittsburgh, PA 15233 on Tuesday, April 27, 1999, at 11:00 a.m., for the
following purposes:
(1) To elect two directors to serve until the Annual Meeting in the year 2002;
(2) To ratify the appointment, by the Board of Directors, of Deloitte & Touche
LLP (D&T) as independent public accountants to audit the books of the
Company for the year ended December 31, 1999; and
(3) To consider and act upon other matters that may properly come before the
meeting.
Stockholders of record of DQE Common Stock and DQE Preferred Stock, Series
A, at the close of business on February 17, 1999, the record date, are entitled
to notice of the Annual Meeting and are entitled to vote at the meeting. THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2.
If you are a stockholder of record as of February 17, 1999, and wish to
attend the meeting, please fill in the form at the end of the Proxy Statement
and return it with your proxy card so that we can send you an admittance ticket.
If your shares are registered in the name of a brokerage firm or trustee and you
plan to attend the meeting, please obtain a letter or account statement of your
beneficial ownership from the brokerage firm or trustee. Only stockholders with
the proper credentials will be admitted to the meeting.
We hope you can join us. But whether or not you plan to attend the meeting
in person, your vote is important; please fill in, sign, date, and promptly
return the enclosed proxy card.
By Order of the Board of Directors
Diane S. Eismont, Corporate Secretary
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TABLE OF CONTENTS
Voting Information......................................................... 2
Proposals
Election of Directors................................................. 3
Ratification of Deloitte & Touche LLP as Independent
Accountants for 1999................................................. 24
Beneficial Ownership Table............................................... 9
Board of Directors
Board Compensation.................................................... 7
Board Committees...................................................... 8
Compensation Committee Report.............................................. 12
Performance Graph.......................................................... 16
Summary Compensation Table................................................. 17
Option Grant Table......................................................... 19
Option Exercise and Year-End Value Tables.................................. 21
Retirement Plan............................................................ 22
Other Information.......................................................... 25
Ticket Request............................................................. 27
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Proxy Statement
For the Annual Meeting of Stockholders
to be Held April 27, 1999
We are sending this Proxy Statement to you in connection with the
solicitation of proxies by the Board of Directors of DQE for the Annual Meeting
of Stockholders to be held on Tuesday, April 27, 1999. These proxy materials
will be first mailed to stockholders on or about March 10, 1999.
The specific proposals to be considered and voted upon at the Annual
Meeting are summarized in the Notice of Annual Meeting of Stockholders on the
preceding page. Each proposal is described in more detail in this Proxy
Statement beginning on page 3.
Voting and Revocation of Proxies
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There were 77,385,175 shares of Common Stock outstanding and entitled to
vote at the close of business on February 17, 1999, the record date. Each
Common stockholder is entitled to one vote for each whole share held on all
matters to be voted upon at the Annual Meeting of Stockholders.
The holders of DQE Preferred Stock, Series A (Convertible), are entitled to
vote on all matters submitted to a vote of the holders of Common Stock, voting
together with the holders of Common Stock as one class. Each share of Preferred
Stock, Series A (Convertible), is currently entitled to three votes. As of the
close of business on February 17, 1999, the record date, there were 376,543
shares of Preferred Stock, Series A (Convertible), outstanding and entitled to
vote.
A majority of the outstanding shares, present or represented by proxy,
constitutes a quorum for transacting business at the Annual Meeting. Proxies
marked as abstaining (including proxies containing broker non-votes) on any
matter to be acted upon by shareholders will be treated as present at the Annual
Meeting for purposes of a quorum.
All stockholders have cumulative voting rights with respect to the election
of directors. Cumulative voting means each stockholder has the right to
multiply the number of votes to which he or she may be entitled (i.e., one vote
per share of Common Stock and three votes per share of Preferred Stock, Series A
(Convertible)) by the total number of directors to be elected. Each stockholder
may cast all of those votes for a single nominee or may distribute them among
the nominees as the stockholder sees fit. A stockholder's votes for the
election of directors by a proxy solicited on behalf of the Board of Directors
will be cumulated selectively (at the discretion of the holders of the proxy)
among those nominees for whom the stockholder has not withheld authority to
vote.
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With respect to Proposal 1, the election of directors, the two persons
receiving the highest number of votes will be elected as directors of the
Company. Approval of Proposal 2 requires the affirmative vote of a majority of
the votes cast by all stockholders entitled to vote. Proxies marked as
abstaining (including proxies containing broker non-votes) will not be
considered as votes cast with respect to this proposal and will not have the
same legal effect as a vote "Against" the proposal. The shares represented by
the proxy will be voted as you instruct us on the proxy. If you sign and return
your proxy without voting instructions, it will be voted "FOR" approval of each
nominee for election as director named in this Proxy Statement and "FOR"
ratification of the appointment of Deloitte & Touche LLP (D&T) as independent
public accountants of the Company for 1999. In addition, if other matters come
before the Annual Meeting, the persons named in the accompanying form of proxy
will vote in accordance with their best judgment in respect to such matters.
You may revoke your proxy at any time before the polls close at the Annual
Meeting, but the revocation shall not be effective until written notice has been
given to the Corporate Secretary of the Company.
Confidentiality
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We keep proxies, ballots, and voting tabulations that identify individual
stockholders confidential, except in a contested proxy solicitation or as may be
necessary to meet applicable legal requirements. Proxies, ballots, and other
voting documents are available for examination only by the judges of election
and those associated with processing proxy cards and tabulating the vote, who
must agree in writing to comply with our policy of confidentiality.
PROPOSAL NO. 1
Election of Directors
Two directors are to be elected by the stockholders at the 1999 Annual
Meeting. They will continue to serve until the Annual Meeting in the year 2002
and thereafter until their successors are chosen and qualified. We intend to
vote proxies solicited on behalf of the Board of Directors for the nominees
named below. If, because of events not presently known or anticipated, any
nominee is unable to serve or for good cause will not serve, the proxies voted
for the election of that director may be voted (in the discretion of the holders
of the proxies) for other nominees not named below. Unless otherwise indicated
in the biographies, the business positions have been held for the past five
years. Duquesne Light Company ("Duquesne Light") is the Company's major
subsidiary.
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Nominees for Directors
Terms Expiring in the Year 2002:
Photo of Sigo Falk, Age 64, Director of DQE since 1989. Management of personal
Sigo investments. Chairman of The Maurice Falk Medical Fund and Leon Falk
Falk Family Trust and a director of Duquesne Light. Also Chair of the
Chatham College Board of Trustees and a board member of the Historical
Society of Western Pennsylvania and the Allegheny Land Trust.
Photo of Eric W. Springer, Age 69, Director of DQE since 1989. Of Counsel,
Eric Horty, Springer & Mattern, P.C. (attorneys-at-law). Also a director of
W. Duquesne Light, a Trustee of The Maurice Falk Medical Fund, a Trustee
Springer Emeritus of Presbyterian University Hospital and the University of
Pittsburgh Medical Center, and Past President of the Allegheny County
Bar Association.
The Board of Directors unanimously recommends that stockholders
approve the election of the nominees for director.
Standing Directors
The other members of the Board of Directors currently serving terms
expiring as noted are as follows:
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Terms Expiring in 2000:
Photo of Daniel Berg, Age 69, Director of DQE since 1989. Institute Professor
Daniel and Acting Director, Services Research and Education Center, of
Berg Rensselaer Polytechnic Institute. Also a director of Duquesne Light,
Hy-Tech Machine, Inc. (manufacturer of specialty parts and equipment),
and Joachim Machinery Company, Inc. (distributor of machine tools),
and Chairman of the Board of Crystek Crystal Corporation (manufacturer
of high reliability crystals for microprocessors and oscillators).
Photo of Robert P. Bozzone, Age 65, Director of DQE since 1990. A Lead Director
Robert since August, 1996. Vice Chairman of Allegheny Teledyne, Inc.
P. (specialty metals production) since its formation through the merger
Bozzone of Allegheny Ludlum Corporation and Teledyne, Inc. in August 1996.
Formerly Vice Chairman from 1994-1996 and President and Chief
Executive Officer from 1990-1994 of Allegheny Ludlum. Also a director
of Duquesne Light Company and Allegheny Teledyne, Inc., a trustee of
Rensselaer Polytechnic Institute, a life member of ASM International
(engineering technical society), and a board member of the Greater
Pittsburgh Council Boy Scouts of America, The Salvation Army, and
Catholic Charities. Also former Chairman of the Pittsburgh Branch of
the Federal Reserve Bank of Cleveland, and a former member of the
Advisory Board of the Electric Power Research Institute (EPRI).
Photo of William H. Knoell, Age 74, Director of DQE since 1989. A Lead Director
William since August, 1996. Retired Chairman of the Board and Chief Executive
H. Officer of Cyclops Industries, Inc. (basic and specialty steels and
Knoell fabricated steel products, industrial and commercial construction).
Also a director of Duquesne Light, Cabot Oil & Gas Corporation and St.
Clair Memorial Hospital and a life trustee of Carnegie Mellon
University.
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Photo of Thomas J. Murrin, Age 69, Director of DQE since 1991. Dean of the A.
Thomas J. Palumbo School of Business Administration of Duquesne University
J. since 1990. Prior to that, Deputy Secretary of the U.S. Department of
Murrin Commerce and President of the Energy and Advanced Technology Group of
Westinghouse Electric Corporation. Also a director of Duquesne Light
and Motorola, Inc. (manufacturer of electronic equipment and
components) and a member of the Executive Committee of the U.S.
Council on Competitiveness and Chairman of the Pennsylvania Governor's
Tech 21 Project; Chairman of the Financial and Educational Program
Assessment Panel of the Pittsburgh Public School System, and Chairman
of the Pittsburgh Tissue Engineering Institute.
Terms Expiring in 2001:
Photo of Doreen E. Boyce, Age 64, Director of DQE since 1989. President of the
Doreen Buhl Foundation (charitable institution for educational and public
E. purposes). Also a director of Duquesne Light, Microbac Laboratories,
Boyce Inc., Orbeco Analytical Systems, Inc. and Dollar Bank, Federal Savings
Bank and Chair of Franklin & Marshall College Board of Trustees.
Photo of David D. Marshall, Age 46, Director of DQE since 1995. President and
David Chief Executive Officer of DQE and Duquesne Light since August, 1996.
D. Previously Executive Vice President of DQE and President and Chief
Marshall Operating Officer of Duquesne Light Company since 1995. Vice President
of DQE from 1989 to 1995, and Executive Vice President of Duquesne
Light Company from 1992 to 1995. Also a director of Duquesne Light and
Trustee of Penn's Southwest Association (economic development).
Directors' Fees and Plans
Directors who are not employees are compensated for their Board service by
a combination of DQE Common Stock and cash. They receive an annual Board
retainer of $15,000 in cash for service to the Company and its affiliates,
payable in twelve monthly installments, and 250 shares of DQE Common Stock.
Each director also receives a fee of $1,000 for each Board
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and Committee meeting attended. Directors who are employees of the Company or
any of its affiliates do not receive fees for their services as directors.
In order to increase directors' stock-based compensation and thus
strengthen the link between directors' compensation and stockholder interests,
the Board adopted a new stock plan in 1996 under which new non-employee
directors will each receive up to 4,150 shares of restricted DQE Common Stock
that will vest at the rate of 50% after five years of service as a director plus
an additional 10% per year in years six through ten. Unvested shares are
forfeited if the recipient ceases to be a director.
Each director under the age of 72 who is not an employee may elect under a
directors' deferred compensation plan to defer receipt of a percentage of his or
her director's remuneration until after termination of service as a director.
Deferred compensation may be received in one to ten annual installments
commencing, with certain exceptions, on the 15th day of January of the year
designated by the director. Interest accrues quarterly on all deferred
compensation at a rate equal to a specified bank's prime lending rate. Dr. Berg
elected to participate in the plan for 1998.
As part of its overall program to promote charitable giving, the Company
has a Charitable Giving Program for all directors funded by Company-owned life
insurance policies on the directors. In general, upon the death of a director,
the Company will donate up to five hundred thousand dollars, payable in ten
equal annual installments, to one or more qualifying charitable organizations
recommended by the director and reviewed and approved by the Duquesne Light
Company Employment and Community Relations Committee. A director must have
Board service of 60 months or more in order to qualify for the full donation
amount, with service of less than 60 months qualifying for an incremental
donation. The program does not result in any material cost to the Company.
The Company provides Business Travel Insurance to its non-employee
directors as part of its Business Travel Insurance Plan for Management
Employees. In the event of accidental death or dismemberment, benefits of up to
$400,000 per individual are provided. The program does not result in any
material cost to the Company.
Directors can participate in the Duquesne Light Company College Matching
Gift Program which provides a dollar-for-dollar match of a gift of cash or
securities, up to a maximum of $5,000
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per donor during any one calendar year to an accredited, nonprofit,
non-proprietary, degree granting college, university, or junior college located
within the United States or one of its possessions which is recognized by the
Internal Revenue Service as eligible to receive tax- deductible contributions.
The program does not result in any material cost to the Company.
The Board and Its Committees
The DQE Board held twelve regular and two special meetings during 1998.
Attendance by the directors at Board and Committee meetings in 1998 averaged
98.8%. No director failed to attend at least 95% of the Board and Committee
meetings of the Company. The Board has standing committees which meet
periodically, including the Audit, Compensation, Nominating and Finance
Committees. Actions taken by all Committees of the Board are reported to the
full Board.
Audit Committee
The Audit Committee is composed of three directors who are not employees of
the Company. The members are Dr. Berg and Messrs. Bozzone and Springer. The
Audit Committee recommends the independent public accountants which are
appointed by the Board and ratified by the stockholders. The Audit Committee
also reviews the Company's financial statements and the related report of the
independent public accountants and the results of the annual audit performed by
the accountants. The Audit Committee monitors the Company's system of internal
accounting control, the adequacy of the internal audit function, and oversees
corporate compliance and ethics. The Audit Committee meets quarterly, and met
four times during 1998.
Compensation Committee
The Compensation Committee, composed of three non-employee directors, makes
recommendations to the Board regarding compensation and benefits provided to
executive officers and members of the Board and the establishment or amendment
of various employee benefit plans. The members of the Committee in 1998 were
Dr. Boyce and Messrs. Bozzone and Falk. The Compensation Committee met four
times during 1998.
Nominating Committee
The Nominating Committee recommends to the Board candidates for election
and reelection to or to fill vacancies on the Board. The Committee considers
nominees recommended to it in writing by stockholders and sent to the Secretary
of the Company. The Nominating Committee also considers corporate governance
matters. The members of the Nominating Committee are Messrs. Falk, Knoell, and
Springer. The Committee met once during 1998.
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Finance Committee
The Finance Committee considers financial matters and approves the terms
and conditions of the Company's financial offerings. The members of the Finance
Committee are Messrs. Falk, Knoell, Marshall and Murrin. The Committee met six
times during 1998.
Beneficial Ownership of Stock
The following table shows all equity securities of DQE beneficially owned,
directly or indirectly, as of February 17, 1999, by each director and by each
executive officer named in the Summary Compensation Table:
<TABLE>
<CAPTION>
Total Shares of Shares of Common Stock/
Common Stock Nature of Ownership (1)
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<S> <C> <C>
Daniel Berg............................................ 7,189 5,539 VP, IP
1,650 Joint, SVP, SIP
Doreen E. Boyce........................................ 6,244 6,244 VP, IP
Robert P. Bozzone...................................... 19,195 (2) 10,658 VP, IP
7,000 VP, IP
1,537 VP
Sigo Falk.............................................. 8,145 (3) 6,645 VP, IP
1,500 SVP, SIP
William H. Knoell...................................... 7,787 (4) 6,752 VP, IP
1,035 SVP, SIP
David D. Marshall...................................... 103,211 (5,6) 5,000 VP
27,996 Joint, SVP, SIP
Thomas J. Murrin....................................... 6,329 (7) 3,668 VP, IP
1,911 VP
750 Joint, SVP, SIP
Eric W. Springer....................................... 8,844 (8) 7,877 VP, IP
Victor A. Roque........................................ 67,591 (5) 448 VP, IP
8,382 Joint, SVP, SIP
Gary L. Schwass........................................ 68,982 (5) 25,691 VP, IP
William J. DeLeo....................................... 92,158 (5) 17,952 VP, IP
James D. Mitchell...................................... 30,734 (5) 4,751 Joint, SVP, SIP
Directors, Nominees and Executive
Officers as a Group (14 persons).................... 448,482 (5)
</TABLE>
None of the individuals named in the table above owned beneficially
more than one percent of the outstanding shares of DQE Common Stock. The
directors and executive officers
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as a group beneficially owned less than one percent of the outstanding shares of
DQE Common Stock as of February 17, 1999.
(1) The term "Joint" means owned jointly with the person's spouse. The
initials "VP" and "IP" mean sole voting power and sole investment power,
respectively, and the initials "SVP" and "SIP" mean shared voting power and
shared investment power, respectively.
(2) 7,000 of these shares are held by a foundation established for charitable
purposes, for which Mr. Bozzone is the trustee but not an income
beneficiary. 1,537 shares remain to vest over two years from a grant under
the DQE, Inc. 1996 Stock Plan for Non-Employee Directors.
(3) 1,500 of these shares are held by a trust in which Mr. Falk is an income
beneficiary but not a trustee.
(4) 1,035 of these shares are held by a trust in which Mr. Knoell is a trustee
and the income beneficiary.
(5) The amounts shown as owned by Messrs. Marshall, Roque, Schwass, DeLeo, and
Mitchell include shares of Common Stock which they have the right to
acquire within 60 days of February 17, 1999 through the exercise of stock
options granted under the Long-Term Incentive Plan in the following
amounts: 70,215; 58,761; 43,291; 74,206; and 25,983, respectively, and all
executive officers as a group: 289,777 shares.
(6) The amount shown as being owned by Mr. Marshall includes a grant of 5,000
shares of restricted stock which is subject to performance vesting for a
three-year period, 1996-1999.
(7) 1,911 shares will vest in May of 1999 from a grant under the DQE, Inc. 1996
Stock Plan for Non-Employee Directors.
(8) 967 of these shares are held by Mr. Springer's wife. Mr. Springer
disclaims beneficial ownership of such shares.
Messrs. Marshall, Roque, Schwass, DeLeo, and Mitchell also beneficially own
883, 372, 884, 731, and 472 shares, respectively, of Duquesne Light Company
Preference Stock, Plan Series A as of September 30, 1998. The Preference shares
are held by the Duquesne Light Employee Stock Ownership Plan trustee for
Duquesne Light Company's 401(k) Plan on behalf of the Executive Officers, who
have voting but not investment power. The Preference shares are redeemable for
DQE Common Stock or cash on retirement, termination of employment, death, or
disability. There were 780,557 shares of Preference Stock, Plan Series A,
outstanding as of September 30, 1998. Mr. Roque is not vested in these
Preference shares.
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The directors and executive officers do not own any shares of Duquesne
Light Preferred Stock or DQE Preferred Stock, Series A (Convertible).
Principal Shareholders
The following tables set forth, to the knowledge of the Company, the
beneficial owners, as of February 17, 1999, of more than five percent of the
outstanding shares of:
<TABLE>
<CAPTION>
1. DQE Common Stock
Common Stock Owned Beneficially
-----------------------------------
Name Address Number of Shares Percent of Class
---- ------- ---------------- -----------------
<S> <C> <C> <C>
Wellington Management 75 State Street 6,028,850 7.75%
Company, LLP Boston, MA 02109
</TABLE>
Wellington Management Co. LLP has shared voting power over 3,239,770 shares
and shared dispositive power over 6,028,400 shares.
2. DQE Preferred Stock, Series A (Convertible)
-------------------------------------------
<TABLE>
<CAPTION>
Common Stock Owned Beneficially
-----------------------------------
Name Address Number of Shares Percent of Class
---- ------- ---------------- -----------------
<S> <C> <C> <C>
Malcolm Bailey 9513 Bayou Brook 87,732 23.30
Houston, TX 77063
Doug Bailey 1221 Rocky River 48,000 12.75
Houston, TX 77056
Otheil J. Erlund, Jr. & Route 1, Box 35J 30,850(1) 8.19
Rachel Erlund, jt. ten. Comfort, TX 78031
Tommy C. Bussell 19 Villa Bend 28,491 7.57
Houston, TX 77069
</TABLE>
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(1) Includes 21,244 shares held jointly, as to which voting and investment
power is shared. Also includes 9,606 shares held solely by Mr. Erlund, as
to which he has sole voting power and shared investment power.
All principal shareholders of the DQE Preferred Stock, Series A
(Convertible) listed have sole voting and investment power except as noted.
Compensation Committee Report on Executive Compensation
Compensation for senior management is approved by the Compensation
Committee and ratified by the Board of Directors based on the recommendations of
the Compensation Committee, which is composed entirely of non-employee
directors.
On December 20, 1995, the Internal Revenue Service issued final regulations
under Code Section 162(m) limiting the deductibility of executive compensation
for officers of public companies. All compensation paid by DQE and its
subsidiaries in 1998 was fully tax deductible. It is the present intention of
the Committee to seek to ensure that all compensation that is otherwise tax
deductible will continue to be tax deductible. The amendments to the Long-Term
Incentive Plan, which were approved by the stockholders in 1996, were designed
to allow the Committee, in its discretion, to grant stock options that comply
with the final regulations. However, the Committee reserves the right to take
whatever action with respect to senior management compensation that it deems
appropriate and in the best interest of the Company and its stockholders.
The primary objective of the Compensation Committee is to ensure that the
Company's senior management compensation programs and strategies are designed
and administered to attract, retain, and motivate the necessary and important
talent required to achieve the Company's overall mission of creating and
enhancing value for its stockholders, customers, and employees, as well as for
the community in which it operates.
Throughout the development and administration of the Company's strategic
compensation plans, the Committee has adhered to a results-based approach by
linking a significant percentage of total compensation to the creation of
shareholder value and achievement of long-term strategic goals. The Committee
has purposely placed an emphasis on the at-risk elements of compensation for the
Company's CEO and other senior officers that responds in direction and magnitude
to the results of the Corporation and business unit. The Company's awards under
these incentive programs are tied to corporate and individual performance. The
accomplishment of goals and objectives is at the center of the Committee's
decision to make awards under these incentive programs and strengthens the
relationship
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between stockholder interests and ultimate total compensation. The Committee
exercises a degree of discretion in administering these incentive plans which
the Committee believes encourages continual focus on building long-term
stockholder value.
An independent outside consultant with industry expertise has determined
that a greater percentage of senior management's total compensation is variable
and placed at risk, when benchmarked against a comparative panel of key service
companies of similar operating revenue size. All stock options are performance-
based and are granted under the Long-Term Incentive Plan, which was approved by
the stockholders.
Periodically, the Committee reviews and determines base salary levels,
annual incentive compensation, and long-term performance-based stock option
vesting, based on competitive pay levels, individual performance and potential,
and changes in duties and responsibilities.
Base Salaries
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Base salaries are competitively benchmarked with the averages of
comparative utility and general industry panels of companies of similar revenue
and operating characteristics, reflecting the diversification of the Company's
business operations. Some of the utility companies in the utility industry
panel are also included in the Standard & Poor's Electric Companies Index used
in the performance graph on page 16.
In addition to the panel comparisons, the Committee considered results in
the areas of customer service levels, cost-effective management, and operational
performance (including, for example, generating plant performance and system
reliability) in determining whether a base salary increase, as well as annual or
long-term awards, were granted in 1998. Messrs. Marshall, Roque, DeLeo, and
Mitchell received increases in base salary in 1998.
Annual Performance Awards
- -------------------------
If a predetermined corporate financial performance threshold is met, there
is an opportunity to earn annual cash and stock option performance awards by
meeting short-term operating and financial goals. The threshold recommended by
the Compensation Committee and approved by the Board of Directors for 1998
related to the Company's earnings per share. The Company met this goal in 1998.
At the beginning of each year, individual objectives also are established for
each officer and approved by the Compensation Committee. The CEO's performance
is evaluated for annual and long-term awards on the basis of the overall
performance of the Company, the performance of the other members of his
management team and, as discussed in more detail below, his leadership in
developing and implementing operating and strategic plans to further the
Company's long-term corporate objectives. The Committee reviews individual
results and the corporate performance with the full Board of Directors. The
Board of Directors, upon the recommendation of the Compensation Committee,
approves the
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number of annual performance awards granted to each officer based on the
achievement of corporate and individual objectives.
Specific individual annual objectives considered by the Committee in
determining the annual performance compensation awards earned support one or
more of five major corporate objectives, including maximizing long-term
stockholder value; providing quality service and superior customer satisfaction;
managing assets cost effectively; maintaining excellent operational performance;
and providing leadership in the community.
In the aggregate, annual incentives ranged from twenty to fifty percent of
base salary in 1998. The actual percentage of annual cash incentive awards
varies, depending upon the degree to which performance objectives are met. See
the Summary Compensation Table for the annual cash incentive compensation awards
earned.
The number of performance stock options awarded from the prior year's
annual grants is determined by use of a cash incentive performance multiplier
based on the amount of increase in earnings per share of DQE Common Stock. The
Compensation Committee awarded annual performance options for 1998 in the amount
of 35,565 to Mr. Marshall, 17,208 to Mr. Roque, 22,643 to Mr. Schwass, 14,491 to
Mr. DeLeo, and 11,774 to Mr. Mitchell. Fifty percent of the annual stock
options awarded for 1998 vested upon award, and there is a one-year wait before
the officer is able to exercise the remaining fifty percent.
Long-Term Performance Awards
- ----------------------------
Long-Term Incentive Plan performance-based stock options awarded in 1998
were granted under the provisions of a three-year plan approved and recommended
by the Compensation Committee and approved by the Board of Directors. Three-
year strategies were developed by each individual, and annual milestones
designed to enhance the general well-being of the Company were established by
the CEO and approved by the Compensation Committee. The long-term strategies
were designed to support the long-term corporate objectives of maximizing
stockholder value; providing quality service and superior customer satisfaction;
managing assets cost effectively; maintaining excellent operational performance;
and providing leadership in the community. Through a performance-based award
schedule, there is an opportunity to earn a percentage of the three-year grant
annually. The award opportunity is up to thirty percent of the total option
grant in the first year, up to sixty percent in the second year, and up to one
hundred percent in the third year. Each of Messrs. Marshall, Roque, Schwass,
DeLeo, and Mitchell received thirty percent for the first year.
Under the leadership of Mr. Marshall, the management team continued to
achieve excellent results with respect to the Company's long-term corporate
objectives. In 1998, DQE continued to demonstrate a solid track record of
financial and operational performance. In November, an increase of eight cents
(5.6%) in the annual dividend was declared beginning in
14
<PAGE>
January 1999. As shown by the performance graph on page 16, DQE's Common Stock
has had a total return which exceeded the S&P Electric Companies over the same
period. A full report on the Company's financial performance can be found in the
1998 Annual Report to Stockholders. These results are consistent with the
objective to achieve measurable and meaningful increases in the value of our
stockholders' investment. Further information on the Company's 1998 achievements
is also included in the Annual Report to Shareholders.
Robert P. Bozzone, Chairman
Doreen E. Boyce
Sigo Falk
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who beneficially own more than
ten percent of the Company's Common Stock, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock. Such persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1998, all such Section
16(a) filing requirements were met.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are Dr. Boyce and Messrs. Bozzone
and Falk. No member of the Compensation Committee was at any time during 1998
or at any other time an officer or employee of the Company.
No executive officer of the Company served on the Board of Directors or
Compensation Committee of any entity which has one or more executive officers
serving as a member of the Company's Board of Directors or Compensation
Committee.
15
<PAGE>
Performance Graph
The following graph represents a performance comparison of cumulative total
return on DQE Common Stock as compared to the S&P Electric Companies and the S&P
500 Index for the period of five fiscal years commencing December 31, 1993 and
ending on December 31, 1998.
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
DQE, S&P ELECTRICS AND S&P 500 INDEX
<CAPTION>
Measurement period
(Fiscal year Covered) DQE S&P ELECTRICS S&P 500 INDEX
- --------------------- -------- -------------- -------------
<S> <C> <C> <C>
Measurement PT -
12/31/1993 $100 $100 $100
FYE 12/31/1994 $ 91 $ 87 $101
FYE 12/31/1995 $148 $114 $139
FYE 12/31/1996 $146 $114 $171
FYE 12/31/1997 $185 $144 $229
FYE 12/31/1998 $241 $166 $294
</TABLE>
Assumes $100 Invested On December 31, 1993
*Total Return Assumes Reinvestment of Dividends
16
<PAGE>
Compensation
The following Summary Compensation Table sets forth certain information as
to cash and noncash compensation earned and either paid to, or accrued for the
benefit of, the President and Chief Executive Officer and the four other
highest-paid executive officers of DQE for services rendered in all capacities
to DQE and its subsidiaries during the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
--------------------------- ---------- ---------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Other Securities
Annual Restricted Underlying
Compen- Stock Performance All Other
Name and Salary Bonus sation Award(s) Otions/SARs LTIP Payouts Compensation
Principal Position Year ($) ($)(1) ($)(2) ($)(3) (#)(4) ($) ($)(5)
- ------------------ ---- ------ ------ ------ ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D. D. Marshall 1998 383,333 137,131 42,842 0 156,881 0 2,391
President and Chief 1997 358,455 122,039 36,719 0 141,074 0 4,750
Executive Officer 1996 289,486 101,367 71,190 141,250 (6) 56,645 0 4,469
5,725 (7)
V. A. Roque 1998 195,833 58,749 0 0 48,143 0 2,352
Exec. Vice Pres. and 1997 181,250 54,375 0 0 48,692 0 4,750
General Counsel 1996 175,000 52,500 2,906 5,540 (7) 17,391 0 4,482
G. L. Schwass 1998 250,000 75,000 80,606 0 98,831 0 2,365
Exec. Vice Pres. and 1997 250,000 87,500 64,508 0 114,548 0 4,746
Chief Financial Officer 1996 250,000 87,500 124,191 0 68,964 0 4,458
W. J. DeLeo 1998 165,000 49,500 14,374 0 45,937 0 2,392
Vice President and 1997 158,750 47,623 8,559 0 48,669 0 4,695
Chief Admin. Officer 1996 145,000 43,500 23,448 5,738 (7) 24,682 0 4,340
J. D. Mitchell 1998 137,507 41,249 14,062 0 36,486 0 1,964
Vice President 1997 130,008 39,000 52,912 0 46,973 0 3,510
1996 130,000 39,000 2,906 5,650 (7) 17,883 0 3,096
</TABLE>
17
<PAGE>
(1) The amount of any bonus compensation is determined annually based upon the
prior year's performance and either paid or deferred (via an eligible
participant's prior election) in the following year. The amounts shown for
each year are the awards earned in those years but established and paid or
deferred in the subsequent years.
(2) Amounts of Other Annual Compensation are connected to the funding of non-
qualified pension benefit accruals and/or compensatory tax payments on
restricted stock.
(3) The awards listed are the only restricted stock holdings of the named
officers.
(4) Includes total number of stock options granted during the fiscal year, with
or without tandem SARs and stock-for-stock (reload) options on option
exercises, as applicable, whether vested or not. See table titled
Option/SAR Grants in Last Fiscal Year. The stock options are subject to
vesting (exercisability) based on Company and individual performance and
achievement of specified goals and objectives.
(5) Amounts of All Other Compensation shown are Company matching contributions
during 1996, 1997, and 1998 under the Duquesne Light Company 401(k)
Retirement Savings Plan for Management Employees.
(6) In 1996, Mr. Marshall was granted 5,000 shares of restricted stock subject
to the achievement of performance goals over a three-year period. In each
of August of 1997and 1998, Mr. Marshall was awarded 2,000 shares out of
that grant. Final vesting will occur on June 30, 1999 if still employed by
the Company or an affiliate. The value of the 5,000 shares as of December
31, 1998 is $219,375. Dividends will be accrued and paid after the end of
the three-year period on the shares earned.
(7) Represents 200 shares, with a value of $8,775 as of December 31, 1998, of
DQE Common Stock awarded as part of the consideration for the signing of a
Non-Competition and Confidentiality Agreement. Dividends are paid
quarterly.
Supplemental Tables
The following tables provide information with respect to options to
purchase DQE Common Stock and tandem stock appreciation rights in 1998 under the
DQE, Inc. Long-Term Incentive Plan.
Option grants are structured to align compensation with the creation of
value for Common stockholders. For example, should DQE stock rise 50% in value
over the ten-year option term (from $43.875 per share to $65.8125 per share),
stockholder value would increase an estimated $1,697,379,576, while the value of
the grants to the individuals listed below would increase an estimated four-
tenths of one percent ($7,401,474) of the total gain realized by all
stockholders.
18
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e) (f)
Number of % of Total
Securities Options/SARs Exercise Grant
Underlying Granted to or Base Date
Options/SARs Employees Price Expiration Present
Name Granted (#) in Fiscal Year ($/Sh)(4) Date Value ($)(5)*
- --------------- ------------ -------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
D. D. Marshall 38,038 (1) 6.5 33.125 1/26/08 134,274
641 (2) .1 33.5313 7/23/01 2,372
5,837 (2) 1.0 33.5313 7/23/01 21,597
4,963 (2) .8 35.2188 7/23/01 20,894
13,166 (2) 2.2 35.2188 8/30/04 60,300
586 (2) .1 35.2188 2/19/02 2,696
4,212 (2) .7 35.0625 2/19/02 19,038
3,107 (2) .5 35.0625 8/30/04 13,888
86,331 (3) 14.8 43.4375 12/18/08 484,317
V. A. Roque 17,208 (1) 2.9 33.125 1/26/08 60,744
3,423 (2) .5 34.75 11/01/04 15,027
4,202 (2) .7 34.75 3/28/05 17,648
23,310 (3) 3.9 43.4375 12/18/08 130,769
G. L. Schwass 26,416 (1) 4.5 33.125 1/26/08 93,248
16,989 (2) 2.9 33.5313 8/30/04 64,728
3,098 (2) .5 35.25 8/30/04 14,096
4,535 (2) .7 35.25 8/30/04 20,634
12,668 (2) 2.1 35.0625 8/30/04 56,626
4,909 (2) .8 35.0625 8/30/04 21,943
30,216 (3) 5.1 43.4375 12/18/08 169,512
W. J. DeLeo 14,491 (1) 2.4 33.125 1/26/08 51,153
11,763 (2) 2.0 34.7188 8/30/04 51,404
19,683 (3) 3.3 43.4375 12/18/08 110,422
J. D. Mitchell 11,774 (1) 2.0 33.125 1/26/08 41,562
3,268 (2) .5 35.0625 3/28/05 13,856
1,219 (2) .2 40.5625 8/30/04 6,436
2,096 (2) .3 40.5625 8/30/04 11,067
18,129 (3) 3.1 43.4375 12/18/08 101,704
</TABLE>
* The actual value, if any, an executive may realize will depend on the
difference between the actual stock price and the exercise price on the
date the option is exercised. There is no assurance that the value
ultimately realized by an executive, if any, will be at or near the value
estimated.
19
<PAGE>
(1) These grants represent 1998 performance stock options with tandem stock
appreciation rights and stock-for-stock (reload) options.
(2) These grants represent stock-for-stock (reload) options received upon
exercise of stock options by the applicable officer electing to use
previously owned DQE stock to exercise the options under the terms of the
Plan. These reload options include tandem stock appreciation rights and
dividend equivalent accounts and stock-for-stock options.
(3) These grants represent 1999 performance stock options with tandem stock
appreciation rights and stock-for-stock (reload) options.
(4) The exercise price of the options is the fair market value of DQE Common
Stock on the date such options were granted. The exercise price may be
payable in cash or previously owned shares of DQE Common Stock held for at
least six months.
(5) The grant date present value shown in column (f) gives the theoretical
value of the options listed in column (b) on the grant dates using the
Black-Scholes option pricing model, modified to account for the payment of
dividends. The theoretical value of the option was calculated assuming an
option life equal to the time period between the grant date and expiration
date (i.e., from 3.44 to 10.00 years); a periodic risk-free rate of return
equal to the yield of the U.S. Treasury note having a similar maturity date
as the option expiration date, as reported by Bloomberg Financial Markets
on the grant date (i.e., from 5.62% to 4.55%); an initial quarterly
dividend immediately following the option grant date (i.e., from $0.36 to
$0.38), with an expected growth rate of 5.0% per year as estimated by
"Value Line Ratings and Reports", dated December 11, 1998; and an expected
monthly stock price volatility as reported by Bloomberg Financial Markets
over approximately the same length of time as the option life as of the
month of the grant, (i.e., from 14.27% to 18.66%). No adjustments to the
grant date present values have been made with respect to exercise
restrictions, forfeiture, or early exercise.
20
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of
Securities Unexercised
Underlying Unexercised in-the-Money
Number of Options/SARs at Options/SARs at
Securities Fiscal Year-End (#) Year-End ($)(6)
Underlying Value --------------------- ------------------
Options/SARs Realized Exercisable/ Exercisable/
Name Exercised (#) ($)(4) Unexercisable (5) Unexercisable (5)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
D. D. Marshall 29,985 (1) 98,826 58,487 / 100,822 755,441 / 1,110,861
34,940 (2) 226,255
V. A. Roque 9,142 (2) 126,535 52,553 / 40,878 766,160 / 461,915
G. L. Schwass 44,075 (2) 169,292 35,317 / 88,376 411,363 / 980,157
28,986 (3) 88,769
W. J. DeLeo 6,597 (1) 117,440 74,342 / 42,004 1,183,531 / 467,248
14,125 (2) 203,193
9,417 (3) 109,963
J. D. Mitchell 26,633 (1) 174,559 18,591 / 34,107 250,330 / 370,116
7,962 (2) 103,390
</TABLE>
(1) Stock appreciation rights exercised for stock and cash.
(2) Stock options exercised for stock by tendering shares of previously-owned
DQE Common Stock.
(3) Stock appreciation rights exercised for cash.
(4) Represents the difference between the exercise price of the options or SARs
and the fair market value of DQE Common Stock on the New York Stock
Exchange on the date of exercise.
(5) The numbers set forth include options/SARs previously granted (including
those granted in 1998) but not yet earned. The number to be earned will be
based on individual performance and may be earned by the officer over
future periods from one to three years as established with each option
grant.
21
<PAGE>
(6) Represents the difference between the exercise price of the options or SARs
and the fair market value of DQE Common Stock on the New York Stock
Exchange on December 31, 1998.
Retirement Plan
DQE and its subsidiaries maintain tax-qualified and non-qualified
defined benefit pension plans and arrangements that cover the named executive
officers, among others. The following table illustrates the estimated annual
straight-life annuity benefits payable at the normal retirement age of 65 to
management employees in the specified earnings classifications and years of
service shown:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Highest
Consecutive
Five-Year Years of Service
Average ------------------------------------------------------------------------------------------------------
Compensation 5 10 15 20 25 30 35
------------ ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 $ 8,000 $ 16,000 $ 24,000 $ 32,000 $ 39,000 $ 46,000 $ 51,000
$125,000 $10,000 $ 20,000 $ 30,000 $ 41,000 $ 51,000 $ 59,000 $ 65,000
$150,000 $12,000 $ 25,000 $ 37,000 $ 50,000 $ 62,000 $ 71,000 $ 79,000
$175,000 $15,000 $ 29,000 $ 44,000 $ 59,000 $ 73,000 $ 84,000 $ 93,000
$200,000 $17,000 $ 34,000 $ 51,000 $ 68,000 $ 84,000 $ 97,000 $107,000
$300,000 $26,000 $ 52,000 $ 78,000 $104,000 $129,000 $149,000 $164,000
$400,000 $35,000 $ 70,000 $105,000 $140,000 $174,000 $200,000 $220,000
$500,000 $44,000 $ 88,000 $132,000 $176,000 $219,000 $252,000 $277,000
$600,000 $53,000 $106,000 $158,000 $211,000 $264,000 $303,000 $333,000
</TABLE>
Compensation utilized for pension formula purposes includes salary and
bonus reported in columns (c) and (d) of the Summary Compensation Table and
stock option compensation prior to March 1, 1994. An employee who has at least
five years of service has a vested interest in the retirement plan. Benefits
are received by an employee upon retirement, which may be as early as age 55.
Benefits are reduced by reason of retirement if commenced prior to age 60 or
upon election of certain options under which benefits are payable to survivors
upon the death of the employee. Pension amounts set forth in the above table
reflect the integration with social security of the tax-qualified retirement
plans. Retirement benefits are also subject to offset by other retirement plans
under certain conditions.
22
<PAGE>
The current covered compensation and current years of credited service for
Messrs. Marshall, Schwass, DeLeo and Mitchell respectively, are $381,689 and 22;
$370,044 and 26; $188,800 and 23; and $156,072 and 20. The average covered
compensation and current years of credited service for Mr. Roque are $220,548
and 8. Mr. Roque is not vested in the Retirement Plan.
Severance and Employment Agreements
The Company entered into Severance Agreements with certain officers,
including those named in the Summary Compensation Table. The Severance
Agreements provide for payments if the officer's employment is terminated other
than for cause, death or disability, beginning on a date triggered by certain
events which constitute a change of control and ending 36 months after the
closing of the transactions constituting a change of control. Certain other
events which constitute "constructive discharge" may also trigger payment.
The officer is entitled to receive a lump sum severance payment equal to
three times the sum of the officer's current annual base pay and target bonus
opportunity, an amount intended to compensate the officer for the loss of long-
term benefits, the amount of forfeitures, if any, and expected contributions for
36 months following termination under the Company's 401(k) Plan together with
certain other payments and benefits, including continuation of employee
benefits. The officer is also entitled to such payments and benefits if he
voluntarily terminates his employment in the thirteenth month following the
closing of the transaction, provided that the 36-month payment and benefit
period would be reduced to 24 months and further if necessary to avoid excise
taxes.
The Agreements also provide for reimbursement for any additional tax
liability incurred as a result of excise taxes imposed on payments deemed to be
attributable to the change of control, under certain circumstances, or for
reduction of the payments to avoid excise taxes.
Messrs. Marshall and Schwass have prior Employment Agreements with the
Company (see below). When the Severance Agreements are in effect, the
Employment Agreements are not. When the Severance Agreements are not in effect,
the Employment Agreements are reinstated.
23
<PAGE>
The Company has stand-alone non-competition agreements with Messrs.
Marshall, Roque, DeLeo, and Mitchell. These agreements, as well as the
Severance Agreements, provide for non-disclosure of confidential information,
non-competition in a specified geographic area, non-solicitation of customers
and suppliers, among other provisions, for specified periods of time following
termination of employment.
The termination provisions of the Severance Agreements are in lieu of, and
not in addition to, termination payments and benefits under the Company's other
termination plans or agreements.
Prior to the Severance Agreements, DQE and Duquesne Light Company entered
into three-year Employment Agreements with Messrs. Schwass and Marshall. Each
agreement is subject to automatic one-year renewals unless prior written notice
of termination is given by the executive or the Company.
The agreements provide, among other things, that each executive serve in
his present position at an annual base salary of at least $190,000, subject to
periodic review, and for the participation of each in executive compensation and
other employee benefit plans of the companies.
If either of the officers is discharged other than for cause or resigns for
good reason, then, in addition to any amounts earned but not paid as of the date
of termination, he would receive in a cash lump sum the balance of his base
salary for the remaining term of the agreement, a bonus amount for the remaining
term of the agreement calculated at a rate equivalent to his prior year's bonus
and the actuarial equivalent of the additional pension he would have accrued had
his service for pension purposes continued until the expiration of the
agreement. In addition, the officer would be entitled to immediate vesting (or
the redemption in cash) of all of his stock-based awards.
PROPOSAL NO. 2
Ratification of Appointment of Independent Public Accountants
Action is to be taken at the Annual Meeting of Stockholders to ratify the
appointment, by the Board of Directors, of independent certified public
accountants to audit the books of DQE and its subsidiaries for the year ended
December 31, 1999. The Board recommends the ratification of the appointment of
Deloitte & Touche LLP (D&T) as independent certified public accountants for
1999.
24
<PAGE>
D&T provided a variety of professional services for DQE and its
subsidiaries during 1998. Included were the audit of the annual financial
statements of the Company; reviews of quarterly financial statements; services
related to filings with the Securities and Exchange Commission and the Federal
Energy Regulatory Commission; audits of certain employee benefit plans; and
consultations on matters related to accounting and financial reporting. Non-
audit services also were provided during 1998, including certain management
consulting services and advice and technical assistance relating to corporate
tax matters.
Representatives of D&T will be present at the meeting and have the
opportunity to make a statement if they desire and will also be available to
respond to appropriate questions from stockholders in attendance.
DQE is submitting the appointment of independent public accountants for
ratification by the stockholders, although ratification is not required. If
ratification is not obtained, the Board of Directors will reconsider its
appointment of D&T.
The Board of Directors unanimously recommends that stockholders
ratify the appointment of D&T as independent accountants.
OTHER INFORMATION
The Board of Directors does not intend to present any matters at the
meeting other than those referred to and at this date is unaware of anything
that will be presented by other parties. Other matters that properly come
before the meeting will be voted on by the persons named in the enclosed form of
proxy in accordance with their best judgment.
Stockholder Proposals
- ---------------------
Any proposal which a stockholder intends to present at the Annual Meeting
of Stockholders in the year 2000, presently expected to be held on April 25,
2000, and which the stockholder requests to be included in the Company's proxy
statement and form of proxy for the Annual Meeting of Stockholders in the year
2000, must be received by the Company by November 11, 1999. Requests must be in
writing and directed to the Corporate Secretary of DQE, Box 68, Pittsburgh, PA
15230-0068. Notice of any proposal a stockholder intends to raise at the
meeting pursuant to an independent solicitation is required by January 22, 2000.
10-K
- ----
If you hold or are a beneficial holder of DQE Common Stock on the record
date for the stockholder's meeting, we will send you, free upon request, a copy
of DQE's Annual Report on Form 10-K as filed with the Securities and Exchange
Commission for 1998. Requests must be made in writing to the Corporate
Secretary of DQE, Box 68, Pittsburgh, PA 15230-0068.
25
<PAGE>
The Audited Financial Statements and the Notes to the Audited Financial
Statements from the Company's 10-K are embodied in the Company's 1998 Annual
Report, which was mailed to all stockholders prior to, or at the same time as,
this proxy solicitation.
Proxy Solicitation
- ------------------
This solicitation of proxies is made on behalf of the Board and the cost
will be borne by DQE. In addition to the solicitation of proxies by mail,
officers, directors and regular employees may solicit proxies by telephone,
telegraph or personal interview. The Company has engaged Beacon Hill Partners,
90 Broad Street, New York, NY 10004, to assist through similar means in the
solicitation of brokers, nominees and other institutions. The anticipated cost
is approximately $3,500 plus reimbursement of related expenses. The Company
will also request brokerage firms and other nominees or fiduciaries to forward
copies of its proxy material to beneficial owners of stock held in their names.
The Company may reimburse them for reasonable out-of-pocket expenses.
By Order of the Board of Directors
Diane S. Eismont
March 10, 1999 Corporate Secretary
26
<PAGE>
DO NOT RETURN THIS FORM UNLESS YOU PLAN TO
ATTEND THE ANNUAL MEETING.
TICKET REQUEST
I (We) will attend the Annual Meeting of Stockholders on April 27, 1999 at
11:00 a.m. at the Manchester Craftsmen's Guild Auditorium, 1815 Metropolitan
Street, Pittsburgh, PA 15233.
NOTE: If you are not a stockholder of record or 401(K) participant, please
send proof of ownership if requesting a ticket.
PLEASE PRINT
ACCOUNT NO.:
---------------------------------------------------
NAME:
---------------------------------------------------
ADDRESS:
---------------------------------------------------
---------------------------------------------------
PHONE: ( )
-----------------------------
An admittance ticket will be sent to a stockholder whose request is
received by April 16, 1999. Stockholders without tickets will need to register
at the meeting. RETURN WITH FORM OF PROXY OR MAIL TO:
Diane S. Eismont, Corporate Secretary
DQE
Box 68
Pittsburgh, PA 15230-0068
27
<PAGE>
[Logo DQE] PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - APRIL 27, 1999
David D. Marshall, Victor A. Roque and Diane S. Eismont, or any of them,
are hereby appointed Proxy or Proxies, with full power of substitution, to vote
the shares of the stockholder(s) named on the reverse side hereof at the Annual
Meeting of Stockholders of DQE to be held on April 27, 1999 and at any
adjournments or postponements thereof as directed on the reverse side hereof and
in his, her or their discretion to act upon any other matters that may properly
come before the meeting or any adjournments or postponements thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and, when
properly executed and delivered, will be voted as you specify. If not specified,
this proxy will be voted FOR Proposals 1 and 2. A vote FOR Proposal 1 includes
discretionary authority to cumulate votes selectively among the nominees as to
whom authority to vote has not been withheld and to vote for a substitute
nominee if any nominee is unable to serve or for good cause will not serve.
Please mark, sign and date this proxy on the reverse side and return the
completed proxy promptly in the enclosed envelope.
<PAGE>
/\ DETACH HERE /\
VOTE THIS PROXY CARD TODAY!
-----
YOUR PROMPT RESPONSE WILL SAVE
THE EXPENSE OF ADDITIONAL MAILINGS.
[Logo DQE]
ANNUAL MEETING OF STOCKHOLDERS - APRIL 27, 1999
DQE's Annual Meeting of Stockholders will be held on Tuesday, April 27, 1999 at
the Manchester Craftsmen's Guild Auditorium, 1815 Metropolitan Street,
Pittsburgh, Pennsylvania, 15233 at 11:00 a.m.
The lower portion of this form is your PROXY CARD. EACH PROPOSAL IS FULLY
EXPLAINED IN THE "NOTICE OF 1999 ANNUAL MEETING AND PROXY STATEMENT". To vote
your proxy, please MARK, SIGN and DATE the proxy card. Then please DETACH and
RETURN the completed proxy card promptly in the enclosed envelope.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" BOTH PROPOSALS.
If you will attend the Annual Meeting, please complete the form found at the end
of the proxy statement and return it with your proxy card. An admittance ticket
will be sent to you. As in past years, a ticket will be needed for admittance to
the meeting.
\/ DETACH HERE \/
PROXY [Logo DQE]
DIRECTORS RECOMMEND A VOTE
"FOR" BOTH PROPOSALS.
------------------------------------------------
1. ELECTION OF DIRECTORS: (To withhold authority to
vote for any individual nominee, strike a line
through the nominee's name listed below.)
[ ] FOR ALL NOMINEES [ ] WITHHOLD AUTHORITY
(except those crossed out) (all nominees)
Sigo Falk
Eric W. Springer
2. RATIFICATION OF AUDITORS:
Deloitte & Touche LLP
[ ] FOR [ ] AGAINST [ ] ABSTAIN
- ----------------------------------- ----------------------------------------
SIGNATURE SIGNATURE
Stockholder(s) signature(s) should correspond to
- -------------------------- the name(s) appearing on this proxy. Please give
DATE full title if signing in a representative capacity.
