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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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.
- --------------------------------------------------------------------------------
(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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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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[LOGO] (R) DQE
Notice of Annual Meeting and Proxy Statement for the year 2000
==============================================================
March 27, 2000
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 Thursday, May 25, 2000, at 11:00 a.m., for the
following purposes:
(1) To elect one director to serve until the Annual Meeting in the year 2002;
to elect two directors to serve until the Annual Meeting in the year 2003;
(2) To ratify the appointment, by the Board of Directors, of Deloitte & Touche
LLP ("D&T") as independent auditors to audit the books of the Company for
the year ended December 31, 2000; 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 (Convertible), at the close of business on March 10, 2000, 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 March 10, 2000, 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.
For further information about DQE, please visit our web site at
www.dqe.com.
We hope you can join us. But whether or not you plan to attend the meeting
in person, your vote is important; please vote.
By Order of the Board of Directors,
Diane S. Eismont, Corporate Secretary
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Voting Information....................................................................... 2
Proposals:
Election of Directors............................................................... 4
Ratification of Deloitte & Touche LLP as Independent Auditors for 2000.............. 4
Board of Directors:
Board Compensation.................................................................. 7
Board Committees.................................................................... 7
Beneficial Ownership Table............................................................... 9
Compensation Committee Report............................................................ 11
Performance Graph........................................................................ 14
Summary Compensation Table............................................................... 15
Option Grant Table....................................................................... 17
Option Exercise and Year-End Value Tables................................................ 19
Retirement Benefits...................................................................... 20
Other Information........................................................................ 21
Ticket Request........................................................................... 23
</TABLE>
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Proxy Statement
For the Annual Meeting of Stockholders
to be Held May 25, 2000
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 Thursday, May 25, 2000. These proxy materials
will be first mailed to stockholders on or about March 27, 2000.
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 4.
Voting and Revocation of Proxies
- --------------------------------
There were 70,264,447 shares of Common Stock outstanding and entitled to
vote at the close of business on March 10, 2000, 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 March 10, 2000, the record date, there were 416,182 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.
With respect to Proposal 1, the election of directors, the three persons
receiving the highest number of votes will be elected as directors of DQE.
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"
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ratification of the appointment of D&T as independent auditors of DQE for the
year 2000. 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 DQE.
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.
Officer/Director Update
- -----------------------
David D. Marshall, who had been serving as President and Chief Executive
Officer, was also elected to the position of Chairman of the Board effective
July 19, 1999. Concurrently with the election of Mr. Marshall as Chairman, the
Board decided that the position of Lead Director was no longer required and
abolished it.
No person over the age of 70 as of the date of the Annual Meeting of
Stockholders can stand for election to the Board of Directors. Messrs. William
H. Knoell and Thomas J. Murrin are no longer eligible to stand for election. We
appreciate the outstanding leadership, wisdom, and dedication that they have
provided during their years of distinguished service to DQE and Duquesne Light
Company.
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PROPOSALS TO BE VOTED
PROPOSAL NO. 1
Election of Directors
Three directors are to be elected by the stockholders at the year 2000
Annual Meeting. One will serve until the Annual Meeting in the year 2002 and
thereafter until his successor is chosen and qualified. Two will continue to
serve until the Annual Meeting in the year 2003 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.
The Board of Directors unanimously recommends that stockholders approve
the election of the nominees for director.
PROPOSAL NO. 2
Ratification of Appointment of Independent Auditors
Action is to be taken at the Annual Meeting of Stockholders to ratify the
appointment, by the Board of Directors, of independent auditors to audit the
books of DQE and its subsidiaries for the year ended December 31, 2000. The
Board recommends the ratification of the appointment of D&T as independent
auditors for the year 2000.
D&T provided a variety of professional services for DQE and its
subsidiaries during 1999. 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 1999, 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 auditors 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 auditors.
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Nominees for Directors
Term Expiring in the Year 2002:
[PHOTO OF Daniel Berg, Age 70, Director of DQE since 1989. Institute
DANIEL BERG] Professor and Acting Director, Services Research and Education
Center, of Rensselaer Polytechnic Institute. Also a director of
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).
Terms Expiring in the Year 2003:
[PHOTO OF Robert P. Bozzone, Age 66, Director of DQE since 1990. A Lead
ROBERT P. Director from August, 1996 through June, 1999. Vice Chairman of
BOZZONE] Allegheny Technologies, Inc. (specialty metals production) and
its predecessor Allegheny Teledyne, Inc. which was formed in
August 1996 and Allegheny Ludlum Inc. from 1994 to 1996. Also a
director of Allegheny Technologies, Inc, Teledyne Technologies,
Inc., The Pittsburgh Foundation, non-executive Chairman of
Waterpik Technologies, a trustee of Rensselaer Polytechnic
Institute, a life member of ASM International (engineering
technical society), and a member of the Greater Pittsburgh
Council- Boy Scouts of America Board, and The Salvation Army
Advisory Board. Also former Chairman of the Pittsburgh Branch of
the Federal Reserve Bank of Cleveland.
[PHOTO OF Steven S. Rogers, Age 42, Director of DQE since January 27, 2000.
STEVEN S. Clinical Professor of Finance and Management at the J. L. Kellogg
ROGERS] Graduate School of Management of Northwestern University. Also a
director of S. C. Johnson & Son, Inc. (manufacturer of household
cleaning, personal care and insecticide products) and Supervalu,
Inc. (supermarket retailer and food distributor).
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Standing Directors
The other members of the Board of Directors currently serving terms
expiring as noted are as follows:
Terms Expiring in the Year 2001:
[PHOTO OF Doreen E. Boyce, Age 65, Director of DQE since 1989. President of
DOREEN E. the Buhl Foundation (charitable institution for educational and
BOYCE] public purposes). Also a director of Microbac Laboratories, Inc.
(analytical testing laboratory group), Orbeco Analytical Systems,
Inc. (manufacturer of hand held water testing equipment) and
Dollar Bank, Federal Savings Bank and Chair of Franklin &
Marshall College Board of Trustees.
[PHOTO OF David D. Marshall, Age 47, Director of DQE since 1995. Chairman
DAVID D. of DQE since July, 1999. President and Chief Executive Officer of
MARSHALL] DQE since August, 1996 and Duquesne Light Company from August
1996 to August 1999. Previously Executive Vice President of DQE
and President and Chief 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 Company and the Allegheny
Conference on Community Development.
Terms Expiring in the Year 2002:
[PHOTO OF Sigo Falk, Age 65, Director of DQE since 1989. Management of
SIGO FALK] personal investments. Chairman of The Maurice Falk Medical Fund
and Leon Falk Family Trust. 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 70, Director of DQE since 1989. Of Counsel,
ERIC W. Horty, Springer & Mattern, P.C. (attorneys-at-law). Also a
SPRINGER] Trustee of The Maurice Falk Medical Fund, a Trustee Emeritus of
Presbyterian University Hospital and the University of Pittsburgh
Medical Center, and Past President of the Allegheny County Bar
Association.
6
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Directors' Fees and Plans
Directors who are employees of the Company or any of its affiliates do not
receive fees for their services as directors.
Directors who are not employees are compensated for their Board service by
a combination of an annual grant of DQE Common Stock, options to purchase shares
of DQE Common Stock and cash. The cash component consists of an annual Board
retainer of $22,000, payable in twelve monthly installments and a fee of $1,000
for each Board or Committee meeting attended. The stock component includes an
annual grant of stock options in respect of 4,370 shares under the DQE, Inc.
Long Term Incentive Plan, and 250 shares of DQE Common Stock. The stock option
component was added to further increase directors' stock-based compensation and
thus strengthen the link between directors' compensation and stockholder
interests. Stock option grants will be made with an exercise price equal to
fair market value of the optioned shares on the date of grant, so that no
compensation will be realized unless stockholder value also increases.
Since 1996, new non-employee directors have been entitled to 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.
As part of its overall program to promote charitable giving, DQE 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,
DQE 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 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 a pro-rated donation. The program does not result in any
material cost to DQE.
DQE 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
DQE.
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 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
DQE.
The Board and Its Committees
The DQE Board held 11 regular meetings during 1999. Attendance by the
directors at Board and Committee meetings in 1999 averaged 99.3%. No director
attended less than 95% of the Board and Committee meetings of DQE. The Board
has standing committees which meet periodically, including the Audit,
Compensation, Corporate Governance, Business Development, Employment and
Community Relations Committees and an Executive Committee. Actions taken by all
Committees of the Board are reported to the full Board.
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Audit Committee
The Audit Committee is composed of four independent directors as defined
in the NYSE listing standards and has a written charter. The members are Dr.
Berg and Messrs. Bozzone, Rogers, and Springer. The Audit Committee recommends
the independent auditors 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 auditors and the results of
the annual audit performed by the accountants. The Audit Committee monitors
DQE'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 1999.
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
1999 were Dr. Boyce and Messrs. Bozzone and Falk. The Compensation Committee met
four times during 1999.
Corporate Governance Committee
The Corporate Governance Committee replaced the Nominating Committee in
January, 2000. The Corporate Governance Committee reviews and makes
recommendations concerning Corporate Governance policies. The Committee also
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 Corporate Secretary of the Company. The
members of the Committee are Messrs. Falk, Knoell, and Springer. The Committee
met once during 1999.
Business Development Committee
The Business Development Committee replaced the Finance Committee in
January, 2000. The Committee reviews major financial matters, including the
review of all major investments, the review of tax planning and subsidiary
performance. The members of the Committee are Dr. Berg, and Messrs. Falk,
Knoell, Marshall, Murrin, and Rogers. The Committee met four times during 1999.
Employment and Community Relations Committee
The Employment and Community Relations Committee considers social
responsibility and employee issues. The members of the Committee are Dr. Boyce,
Messrs. Springer, and Marshall. The Committee met once during 1999.
Executive Committee
The Executive Committee was formed on December 17, 1999, to address
matters that arise between regular Board meetings. It has all the power and
authority of the Board except as restricted by state law. The members are
Messrs. Bozzone, Falk, Knoell, and Marshall.
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Beneficial Ownership of Stock
The following table shows all equity securities of DQE beneficially owned,
directly or indirectly, as of March 10, 2000, by each director and by each
executive officer named in the Summary Compensation Table:
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Total Shares of Shares of Common Stock/
Common Stock Nature of Ownership (1)
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Daniel Berg 7,439 5,789 VP, IP
1,650 Joint, SVP, SIP
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Doreen E. Boyce 6,494 6,494 VP, IP
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Robert P. Bozzone 19,445 (2) 11,677 VP, IP
7,000 VP, IP
768 VP
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Sigo Falk 8,395 (3) 6,895 VP, IP
1,500 SVP, SIP
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William H. Knoell 8,037 (4) 7,002 VP, IP
1,035 SVP, SIP
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David D. Marshall 191,088 (5) 32,534 Joint, SVP, SIP
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Thomas J. Murrin 6,579 5,829 VP, IP
750 Joint, SVP, SIP
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Steven S. Rogers 4,150 (6) 4,150 VP
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Eric W. Springer 9,134 (7) 8,127 VP, IP
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Victor A. Roque 94,699 (5) 466 VP, IP
9,100 Joint, SVP, SIP
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Gary L. Schwass 78,242 (5) 25,985 VP, IP
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Morgan K. O'Brien 26,173 (5) 2,244 VP, IP
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William J. DeLeo 100,850 (5) 20,925 VP, IP
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Directors, Nominees and Executive 578,246 (5)
Officers as a Group (15 persons)
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None of the individuals named in the table owned beneficially more than
one percent of the outstanding shares of DQE Common Stock. The directors and
executive officers as a group beneficially owned less than one percent of the
outstanding shares of DQE Common Stock as of March 10, 2000.
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(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. 768 shares will vest in May of 2000 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, O'Brien,
and DeLeo include shares of Common Stock which they have the right to
acquire within 60 days of March 10, 2000 through the exercise of stock
options granted under the Long-Term Incentive Plan in the following
amounts: 158,554; 85,133; 52,257; 23,929; and 79,925, respectively, and all
executive officers as a group: 414,162 shares.
(6) These shares of restricted stock were granted under the DQE, Inc. 1996
Stock Plan for Non-Employee Directors in 1/2000; 50% to vest after five
years of service as a director and an additional 10% per year in years six
through ten.
(7) 1,007 of these shares are held by Mr. Springer's wife. Mr. Springer
disclaims beneficial ownership of such shares.
Messrs. Marshall, Roque, Schwass, and DeLeo also beneficially own 1,033,
492, 1,034, and 872 shares, respectively, of Duquesne Light Company Preference
Stock, Plan Series A as of December 31, 1999. Mr. O'Brien has no Duquesne Light
Company Preference Stock, Plan Series A. 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 747,395 shares of Preference Stock, Plan Series A, outstanding as of
December 31, 1999.
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 :
(1) February 9, 2000, of more than five percent of the outstanding shares of
------------------------------------------------------------------------
DQE Common Stock:
-----------------
Common Stock Owned Beneficially
-------------------------------
Name Address Number of Shares Percent of Class
---- ------- ---------------- ----------------
Wellington Management 75 State Street 5,324,390 7.07
Company, LLP Boston, MA 02109
Wellington Management Co. LLP has shared voting power over 2,106,910 shares
and shared dispositive power over 5,324,040 shares.
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(2) March 10, 2000, of more than five percent of the outstanding shares of DQE
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Preferred Stock, Series A (Convertible):
----------------------------------------
<TABLE>
<CAPTION>
Preferred 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
Charles S. Verdery P. O. Box 8030 51,060 12.11
Amelia Island, FL 32034
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
George E. Conner 17303 Shaw Road 21,447 5.09
Cypress, TX 77429
</TABLE>
(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 Internal Revenue Code Section 162(m) limiting the deductibility of
executive compensation for officers of public companies. DQE believes that all
compensation paid by DQE and its subsidiaries in 1999 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 DQE and its stockholders.
The primary objective of the Compensation Committee is to ensure that DQE's
senior management compensation programs and strategies are designed and
administered to attract, retain, and motivate the necessary and important talent
required to achieve DQE'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 DQE's strategic
compensation plans, the Committee has adhered to a results-based approach by
linking a significant percentage of total
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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 DQE's CEO and other senior officers that responds
in direction and magnitude to the results of the Corporation and business unit.
DQE'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 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 utility
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
- -------------
No 1999 base salary increases were made to the named officers. 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 DQE'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 14.
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, system reliability) in determining whether
a base salary increase, as well as annual or long-term awards, were granted in
1999.
Annual Performance Awards
- -------------------------
If a predetermined corporate financial performance threshold is met, there
is an opportunity for executives 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 1999 related to DQE's earnings per share. DQE met this goal in
1999. 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 DQE, 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 DQE'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 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 within the Company and the community.
In the aggregate, annual incentives ranged from twenty to fifty percent of
base salary in 1999. 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.
12
<PAGE>
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 1999 in the amount
of 57,227 to Mr. Marshall, 15,540 to Mr. Roque, 20,144 to Mr. Schwass, 12,086 to
Mr. O'Brien and 13,122 to Mr. DeLeo. Fifty percent of the annual stock options
awarded for 1999 vested upon award, and there is a one-year wait before the
officer is vested in and able to exercise the remaining fifty percent.
Long-Term Performance Awards
- ----------------------------
Long-Term Incentive Plan performance-based stock options awarded in 1999
were granted in 1997 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 DQE 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 within the Company and 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 for 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 O'Brien received all of their awards for
the first two years.
Under the leadership of Mr. Marshall, the management team continued to
achieve excellent results with respect to DQE's long-term corporate objectives.
In 1999, DQE continued to demonstrate a solid track record of financial and
operational performance. In November, an increase of eight cents (5.3%) in the
annual dividend was declared beginning in January 2000. DQE's dividend growth
rate over the past five years is among the highest and most consistent in the
industry at 6.3 percent. DQE is one of only 2 electric utilities to increase
its dividend by 5 percent or more each year throughout this decade. As shown by
the performance graph on page 14, DQE's Common Stock has had a total return
which exceeded the S&P Electric Companies over the same period. A full report
on DQE's financial performance can be found in the 1999 Annual Report to
Shareholders. These results are consistent with the objective to achieve
measurable and meaningful increases in the value of our stockholders'
investment. Further information on DQE's 1999 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 DQE's knowledge, based solely on review of the copies of such reports
furnished to DQE and written representations that no other reports were
required, during the year ended December 31, 1999, all such Section 16(a) filing
requirements were met.
13
<PAGE>
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 1999
or at any other time an officer or employee of the Company.
No executive officer of DQE served on the Board of Directors or
Compensation Committee of any entity which has one or more executive officers
serving as a member of DQE's Board of Directors or Compensation Committee.
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, 1994 and
ending on December 31, 1999.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
DQE, S+P Electrics AND S+P 500 INDEX
--- ------------- -------
Measurement Period DQE S+P Electrics S+P 500 Index
----------- ------------- -------------
(Fiscal year Covered) Index Index
- --------------------- ----------- ------------- -------------
<S> <C> <C> <C>
Measurement PT -
12/31/94 $ 100 $ 100 $ 100
FYE 12/31/95 $ 163 $ 131 $ 138
FYE 12/31/96 $ 161 $ 131 $ 169
FYE 12/31/97 $ 204 $ 165 $ 226
FYE 12/31/98 $ 265 $ 191 $ 290
FYE 12/31/99 $ 217 $ 154 $ 351
</TABLE>
Assumes $100 Invested on December 31, 1994
*Total Return Assumes Reinvestment of Dividends
14
<PAGE>
Compensation
The following Summary Compensation Table sets forth certain information as
to cash and noncash compensation earned and either paid to, or accrued for the
benefit of, the Chairman, President and Chief Executive Officer and the four
other highest-paid executive officers of DQE for services rendered in all
capacities to DQE and its subsidiaries during the years indicated.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
---------------------------------------------------------
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Other Securities
Annual Restricted Underlying All Other
Compen- Stock Performance LTIP Compen-
Name and Salary Bonus sation Award(s) Options/SARs Payouts sation
Principal Position Year ($) ($)(1) ($)(2) ($) (#)(3) ($) ($)(4)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D. D. Marshall 1999 500,000 248,600 10,302 0 63,490 0 4,783
Chairman, President 1998 383,333 137,131 42,842 0 156,881 0 2,391
& Chief Exec. Officer 1997 358,455 122,039 36,719 0 141,074 0 4,750
- ------------------------------------------------------------------------------------------------------------------------------
V. A. Roque 1999 225,000 67,500 78,189 0 18,264 0 4,782
Exec. Vice Pres. & 1998 195,833 58,749 0 0 48,143 0 2,352
General Counsel 1997 181,250 54,375 0 0 48,692 0 4,750
- ------------------------------------------------------------------------------------------------------------------------------
G. L. Schwass 1999 250,000 87,500 46,558 0 54,176 0 4,756
Exec. Vice Pres. & 1998 250,000 75,000 80,606 0 98,831 0 2,365
Chief Financial 1997 250,000 87,500 64,508 0 114,548 0 4,746
Officer
- ------------------------------------------------------------------------------------------------------------------------------
M. K. O'Brien 1999 175,000 52,500 5,321 0 0 0 0
Exec. Vice Pres. - 1998 133,333 40,000 21,684 0 33,450 0 0
Corp. Development 1997 106,250 20,625 0 0 14,165 0 0
- ------------------------------------------------------------------------------------------------------------------------------
W. J. DeLeo 1999 190,000 57,000 14,715 0 33,356 0 4,783
Vice President & 1998 165,000 49,500 14,374 0 45,937 0 2,392
Chief Admin. Officer 1997 158,750 47,623 8,559 0 48,669 0 4,695
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<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) 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. Once granted, the stock options can
be exercised only if they become awarded and vested. The award of options
is based on Company and individual performance and achievement of specified
goals and objectives over a specified award period. Some options are
vested immediately upon award while others are subject to time-based
vesting following the award date.
(4) Amounts of All Other Compensation shown are Company matching contributions
during 1997, 1998, and 1999 under the Duquesne Light Company 401(k)
Retirement Savings Plan for Management Employees.
16
<PAGE>
Supplemental Tables
The following tables provide information with respect to options to purchase
DQE Common Stock and tandem stock appreciation rights in 1999 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 $34.623 per share to $51.938 per share),
stockholder value would increase an estimated $1.285 billion, while the value of
the grants to the individuals listed below would increase an estimated two-
tenths of one percent ($2,140,378) of the total gain realized by all
stockholders.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
Number of % of Total
Securities Options/SARs Exercise Grant
Underlying Granted to or Base Date
Options/SARs Employees Price Expiration Present
Name Granted (#)(1) in Fiscal Year ($/Sh)(2) Date Value ($)(3)*
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
D. D. Marshall 14,192 6.4 39.5938 7/22/07 70,392
8,936 4.0 39.5938 8/30/04 50,220
5,501 2.5 39.5938 8/30/04 30,916
14,686 6.7 38.0938 7/22/07 86,060
7,635 3.4 38.0938 8/30/04 45,657
3,540 1.6 38.0938 8/30/04 21,169
7,435 3.4 38.0938 2/19/02 37,547
1,565 0.7 38.0938 7/23/01 6,808
- --------------------------------------------------------------------------------------------------------
V. A. Roque 2,002 0.9 40.1875 3/28/05 10,991
1,682 0.7 40.1875 11/01/04 9,503
4,971 2.2 40.1875 7/22/07 25,203
7,404 3.3 38.0938 7/22/07 41,907
2,205 1.0 38.0938 11/01/04 13,164
- --------------------------------------------------------------------------------------------------------
G. L. Schwass 7,141 3.2 39.5938 7/22/07 35,419
7,132 3.2 39.0312 7/22/07 34,875
654 0.2 39.0312 8/30/04 3,656
1,484 0.6 39.0312 7/23/01 7,272
225 0.1 39.0312 8/30/04 1,258
9,628 4.4 39.0312 8/30/04 53,821
14,298 6.5 40.0938 7/22/07 92,222
12,035 5.5 40.0938 8/30/04 78,468
1,579 0.7 40.0938 8/30/04 10,295
- --------------------------------------------------------------------------------------------------------
M. K. O'Brien None N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------
W. J. DeLeo 5,640 2.5 39.3438 8/30/04 31,866
6,729 3.0 39.3438 3/28/05 36,538
2,088 0.9 39.3438 2/27/06 11,254
12,240 5.6 40.1875 7/22/07 78,826
6,659 3.0 40.1875 7/23/01 29,300
- --------------------------------------------------------------------------------------------------------
</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.
17
<PAGE>
(1) 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.
(2) 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.
(3) 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 1.75 to 8.45 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 6.17% to 4.79%); an initial quarterly
dividend immediately following the option grant date (i.e., from $0.38 to
$0.40), with an expected growth rate of 5.0% per year as estimated by
"Value Line Ratings and Reports", dated September 10, 1999; and an expected
monthly stock price volatility as reported by Bloomberg Financial Markets
over approximately the same length of time as the option life as of the
month of the grant, (i.e., from 15.33% to 21.344%). No adjustments to the
grant date present values have been made with respect to exercise
restrictions, forfeiture, or early exercise.
18
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities
Underlying Value of
Unexercised Unexercised
Number of Options/SARs at in-the-Money
Securities Fiscal Year-End Options/SARs at
-----------------------
Underlying Value (#) Year-End ($)(5)
----------------------- -----------------------------
Options/SARs Realized Exercisable/ Exercisable/
Name Exercised (#) ($)(3) Unexercisable (4) Unexercisable (4)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
D. D. Marshall 69,385 (2) 556,018 77,297/159,975 34,101/107,749
- --------------------------------------------------------------------------------------------------------------------------
V. A. Roque 5,000 (1) 61,875 59,150/50,523 189,165/47,744
20,332 (2) 194,120
- --------------------------------------------------------------------------------------------------------------------------
G. L. Schwass 58,638 (2) 417,444 55,224/90,450 26,070/97,452
- --------------------------------------------------------------------------------------------------------------------------
M. K. O'Brien 0 0 14,825/32,790 36,173/26,084
- --------------------------------------------------------------------------------------------------------------------------
W. J. DeLeo 27,304 (1) 318,580 47,219/54,828 61,937/45,579
40,034 (2) 530,262
- --------------------------------------------------------------------------------------------------------------------------
</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) 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.
(4) The numbers set forth include options/SARs previously granted (including
those granted in 1999) 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.
(5) 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, 1999.
19
<PAGE>
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>
$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.
The current covered compensation and current years of credited service for
Messrs. Marshall, Roque, Schwass, O'Brien, and DeLeo respectively, are $452,069
and 23; $234,706 and 10; $370,044 and 28; $135,066 and 15; and $203,419 and 24.
Severance and Employment Agreements
DQE entered into Severance Agreements with certain officers, including
those named in the Summary Compensation Table. The Severance Agreements, which
go into effect upon the occurrence of an event constituting a "change in
control" under the Severance Agreements, provide for payments if the officer's
employment is terminated other than for cause, death or disability, beginning on
the date on which a change of control occurs 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.
20
<PAGE>
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, under the Company's 401(k)
Plan and an amount equal to the present value of benefits that would have
accrued under qualified and non-qualified defined benefit retirement plans had
the officer continued to participate for 36 months following termination,
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 a change of control, under certain circumstances, or for
reduction of the payments to avoid excise taxes.
Messrs. Marshall and Schwass each have an Employment Agreement with DQE
(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.
DQE has stand-alone non-competition agreements with Messrs. Marshall,
Roque, O'Brien, and DeLeo. 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.
DQE is a party to three-year Employment Agreements with Mr. Marshall and
Mr. Schwass. Each agreement is subject to automatic one-year extensions as of
each annual anniversary of the effective date unless prior written notice of
termination is given by the executive or the Company.
Mr. Marshall's agreement provides, among other things, that Mr. Marshall
will serve as Chairman of the Board, President, and Chief Executive Officer of
DQE at an annual base salary of at least $500,000. Mr. Schwass' agreement
provides that he will serve in his present position at an annual base salary of
at least $250,000. The agreements state that each executive's base salary is
subject to periodic review, and provide for the executive's participation in
executive compensation and other employee benefit plans of the Company.
If either executive is discharged other than for cause (as defined) or
resigns for good reason (as defined), then, in addition to any amounts earned
but not paid as of the date of termination, he will receive the balance of his
base salary and bonus for the remaining term of the agreement, payable as
specified in the agreement. Upon any such termination, the executive will also
receive a lump sum payment equal to the actuarial equivalent of the additional
pension he would have accrued had his service for pension purposes continued
until the expiration of the agreement and be entitled to immediate vesting (or
the redemption in cash) of all of his stock-based awards. Mr. Marshall's
agreement also provides for reimbursement for any additional tax liability
incurred as a result of excise taxes imposed on payments deemed to be
attributable to a change of control, under certain circumstances, or for
reduction of the payments to avoid excise taxes and allows an additional year to
exercise stock options under certain circumstances.
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.
21
<PAGE>
Stockholder Proposals
- ---------------------
Any proposal which a stockholder intends to present at the Annual Meeting
of Stockholders in the year 2001, presently expected to be held on May 24, 2001,
and which the stockholder requests to be included in DQE's proxy statement and
form of proxy for the Annual Meeting of Stockholders in the year 2001, as well
as notice of any proposal a stockholder intends to raise at the meeting pursuant
to an independent solicitation, must be received by DQE by November 10, 2000.
Proposals received after November 10, 2000 cannot be submitted for action at the
2001 meeting. Requests must be in writing and directed to the Corporate
Secretary of DQE, Box 68, Pittsburgh, PA 15230-0068.
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 1999. Requests must be made in writing to the Corporate
Secretary of DQE, Box 68, Pittsburgh, PA 15230-0068.
The Audited Financial Statements and the Notes to the Audited Financial
Statements from the Company's 10-K are embodied in the Company's 1999 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 in person or by
telephone, electronic transmission or by facsimile transmission. DQE 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. DQE 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. DQE may reimburse them for reasonable out-of-pocket
expenses.
By Order of the Board of Directors
Diane S. Eismont
March 27, 2000 Corporate Secretary
22
<PAGE>
TICKET REQUEST
An admittance ticket will be sent to a stockholder whose request is
received by May 12, 2000. 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
DO NOT RETURN THIS FORM UNLESS YOU PLAN TO
ATTEND THE ANNUAL MEETING.
. Cut here .
- --------------------------------------------------------------------------------
I (We) will attend the Annual Meeting of Stockholders on May 25, 2000 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: ( )
-------------------------------
23
<PAGE>
[LOGO OF DQE]
Box 68
Pittsburgh, PA 15230-0068
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- May 25, 2000
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 stockholders(s) named on the reverse side hereof at the Annual
Meeting of Stockholders of DQE to be held on May 25, 2000 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>
[LOGO OF DQE]
ANNUAL MEETING OF STOCKHOLDERS -- May 25, 2000
DQE's Annual Meeting of Stockholders will be held on Thursday, May 25, 2000 at
the Manchester Craftsmen's Guild Auditorium, 1815 Metropolitan Street,
Pittsburgh, Pennsylvania 15233 at 11:00 a.m.
The lower portion of this form in your PROXY CARD. EACH PROPOSAL IS FULLY
EXPLAINED IN THE "NOTICE OF ANNUAL MEETING AND PROXY STATEMENT FOR THE YEAR
2000". If you will attend the Annual Meeting, please complete and return the
ticket request form found at the end of the proxy statement. A ticket will be
needed for admittance to the meeting.
You may vote by internet or telephone 24 hours a day, 7 days a week. The
internet and telephone voting facilities will close at 12:01 a.m. EDST on May
25, 2000.
TOUCH-TONE TELEPHONE:
---------------------
1-888-216-1298
Call the toll-free number at anytime
Enter the control number located
on the Proxy Card
Follow the simple instructions
INTERNET:
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http://www.directvote.com/dqe
Go to the website
Enter the control number located
on the Proxy Card
Follow the simple instructions
MAIL:
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Mark, Sign and Date the Proxy Card
Detach and Return the completed
Proxy Card in the enclosed
envelope
If you vote by telephone or internet, do not return the printed proxy card
DETACH HERE
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Please DIRECTORS RECOMMEND A VOTE PROXY
Vote "FOR" BOTH PROPOSALS.
Today -------------------------- ----------------
Control Number
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)
(01) Daniel Berg
(02) Robert P. Bozzone
(03) Steven S. Rogers
2. RATIFICATION OF AUDITORS:
Deloitte & Touche LLP
[ ] FOR [ ] AGAINST [ ]ABSTAIN
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SIGNATURE SIGNATURE
----------------------------- Stockholder(s) signature(s) should
DATE correspond to the name(s) appearing
on this proxy. Please give full
title if signing in the representative
capacity.
