<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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
UGI CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
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BOX 858 VALLEY FORGE, PA 19482--610-337-1000
[LOGO OF UGI CORPORATION APPEARS HERE]
LON R. GREENBERG
Chairman, President and
Chief Executive Officer
December 29, 1997
Dear Shareholder,
On behalf of our entire Board of Directors, I cordially invite you to attend
our Annual Meeting of Shareholders on Tuesday, February 24, 1998. At the
meeting, we will review UGI's performance for fiscal year 1997 and our
expectations for the future.
Information about the matters to be acted on at the meeting is contained in
the accompanying Notice of Meeting and Proxy Statement. Also enclosed with this
Proxy Statement are your proxy voting card and the 1997 Annual Report. I would
like to take this opportunity to remind you that your vote is important. Please
take a moment now to complete, sign and date the enclosed proxy voting card and
return it in the postage-paid envelope we have provided.
I look forward to seeing you at the meeting and addressing your questions and
comments.
Sincerely,
/s/ Lon R. Greenberg
Lon R. Greenberg
460 NORTH GULPH ROAD, KING OF PRUSSIA, PA 19406
<PAGE>
- - -------------------------------------------------------------------------------
BOX 858 VALLEY FORGE, PA 19482--610-337-1000
[LOGO OF UGI CORPORATION APPEARS HERE]
December 29, 1997
Notice of the 1998
annual meeting of shareholders
The Annual Meeting of Shareholders of UGI Corporation will be held on
Tuesday, February 24, 1998, at 10:00 a.m., at the Sheraton Valley Forge Hotel,
Grand Ballroom, North Gulph Road and First Avenue, King of Prussia,
Pennsylvania to consider and take action on the following matters:
1. Election of seven directors to serve until the next annual meeting of
shareholders;
2. Ratification of the appointment of Arthur Andersen LLP as independent
certified public accountants for fiscal year 1998; and
3. Transaction of other business that is properly raised at the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "IN FAVOR OF" THE TWO PROPOSALS.
Barton D. Whitman,
Corporate Secretary
460 NORTH GULPH ROAD, KING OF PRUSSIA, PA 19406
i
<PAGE>
TABLE OF CONTENTS
______________________________________________________________
<TABLE>
<S> <C>
Notice of Meeting of Shareholders......................................... i
Annual Meeting Information................................................ 1
Securities Ownership of Management........................................ 2
Securities Ownership of Certain Beneficial Owners......................... 4
Item 1--Election of Directors............................................. 4
Nominees................................................................ 4
Board Committees and Meeting Attendance................................. 7
Compensation of Directors................................................. 9
Directors' Equity Compensation Plan..................................... 9
Report of the Compensation and Management Development Committee of the
Board of Directors..................................................... 10
Corporate Performance..................................................... 14
Compensation of Executive Officers........................................ 16
Summary of Compensation................................................. 16
Option Grants in Fiscal 1997............................................ 18
Option Exercises in Fiscal 1997 and Fiscal Year-End Option Values....... 19
Retirement Benefits..................................................... 20
Severance Pay Plan for Senior Executive Employees....................... 21
Change of Control Agreements............................................ 21
Stock Ownership Policy and Indebtedness of Management................... 22
Item 2--Ratification of Appointment of Independent Certified Public
Accountants............................................................ 23
Item 3--Other Matters..................................................... 24
Glossary.................................................................. 25
</TABLE>
ii
<PAGE>
UGI CORPORATION
460 North Gulph Road
King of Prussia, PA 19406
- - --------------------------------------------------------------------------------
PROXY STATEMENT
- - --------------------------------------------------------------------------------
ANNUAL MEETING INFORMATION
_____________________________________________________
The Annual Meeting of Shareholders of UGI Corporation will be held on February
24, 1998. At the Annual Meeting, you will be asked to elect directors and
appoint independent certified public accountants for the Company.
This proxy statement was prepared under the direction of the Company's Board of
Directors to solicit your proxy for use at the Annual Meeting. It is being
mailed to shareholders on December 29, 1997.
VOTING RIGHTS
___________________________________________________________________
Only shareholders owning our Common Stock at the close of business on
December 12, 1997, may vote at the Annual Meeting. As of December 12, 1997,
there were outstanding 33,073,365 shares of Common Stock. Each Shareholder has
one vote per share on all matters to be voted on at the Annual Meeting.
ChaseMellon Shareholder Services, Inc., our Transfer Agent, will tabulate the
votes cast by proxy or in person at the Annual Meeting.
The director nominees will be elected by a plurality of the votes cast at the
Annual Meeting. All other matters to be considered at the meeting require the
affirmative vote of a majority of the votes cast at the meeting to be approved.
Abstentions are counted for purposes of determining the presence or absence of a
quorum, but are not considered a vote cast under Pennsylvania law. Shares held
by brokers in street name and for which the beneficial owners have withheld from
brokers the discretion to vote are called "broker non-votes." They are counted
to determine if a quorum is present, but are not considered a vote cast under
Pennsylvania law. They will not affect the outcome of a vote on a particular
matter.
USE AND REVOCATION OF PROXIES
___________________________________________________
Each properly executed proxy received in time for the meeting will be voted
according to the choices marked on it. If you sign your proxy, but do not mark
your choices, your Proxies will vote for the persons nominated for election as
directors and in favor of ratification of the appointment of Arthur Andersen
as independent certified public accountants for fiscal year 1998.
You can revoke your proxy at any time before it is exercised. To do so, you must
give written notice of revocation to the Corporate Secretary, UGI Corporation,
460 North Gulph Road, King of Prussia, Pennsylvania 19406, submit another
properly signed proxy with a more recent date, or vote in person at the meeting.
<PAGE>
SOLICITATION OF PROXIES
_________________________________________________________
Proxies are being solicited by mail from all shareholders of record of our
Common Stock. In addition to the solicitation by mail, certain directors,
officers and regular employees of the Company and its subsidiaries, without
additional compensation, may solicit proxies personally or by telephone or
facsimile. The Company has also engaged Corporate Investor Communications, Inc.
to solicit proxies for the Company for a fee of $6,000 plus expenses. Banks,
brokerage firms and other institutions, nominees, custodians and fiduciaries
will, upon request, be reimbursed by the Company for reasonable expenses
incurred for sending proxy materials to beneficial owners and obtaining their
instructions.
SHAREHOLDER PROPOSALS
___________________________________________________________
Shareholders may submit proposals on matters appropriate for shareholder
action at future annual meetings by following regulations adopted by the
Securities and Exchange Commission. Proposals intended for inclusion in next
year's proxy statement and proxy must be received by the Company not later than
September 2, 1998. Proposals should be addressed to the Corporate Secretary.
SECURITIES OWNERSHIP OF MANAGEMENT
_____________________________________________
The table below shows the number of shares of Common Stock beneficially owned
by each director, nominee and Named Executive, and by the directors, nominees
and all of the Company's executive officers as a group. The table shows
ownership as of December 9, 1997.
AmeriGas Propane is the General Partner of AmeriGas Partners, L.P. The table
below also shows, as of December 9, 1997, the number of Common Units
beneficially owned by each director, nominee and Named Executive and by the
directors, nominees and all of the Company's executive officers as a group.
Mr. Greenberg beneficially owns approximately 1.2% of the outstanding Common
Stock. Each other person named in the table beneficially owns less than 1% of
the outstanding Common Stock. Directors, nominees and executive officers as a
group own approximately 2.7% of the outstanding Common Stock and less than 1%
of the outstanding Common Units.
2
<PAGE>
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------
SECURITY OWNERSHIP OF DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
- - -----------------------------------------------------------------------------------------------
AGGREGATE NUMBER
AGGREGATE NUMBER OF AMERIGAS
OF SHARES OF UGI PARTNERS, L.P.
COMMON STOCK UNITS HELD UNDER COMMON UNITS
BENEFICIALLY DIRECTORS' EQUITY EXERCISABLE BENEFICIALLY
NAME OWNED (1) PLAN (2) OPTIONS OWNED (1) (3)
- - -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James W. Stratton 1,428 7,351 5,000 1,000
...............................................................................................
Robert C. Forney 4,828 7,358 4,000 1,600
...............................................................................................
David I. J. Wang 14,448 6,466 5,000 5,000
...............................................................................................
Richard C. Gozon 6,428 5,340 5,000 0
...............................................................................................
Quentin I. Smith, Jr. 2,428 5,643 5,000 0
...............................................................................................
Stephen D. Ban 5,281 3,424 3,400 0
...............................................................................................
Anne Pol 1,353 2,923 0 0
...............................................................................................
Lon R. Greenberg 90,360 0 293,959 1,500
...............................................................................................
Marvin O. Schlanger (4) 0 0 0 0
...............................................................................................
Thomas F. Donovan 0 0 0 1,000
...............................................................................................
Richard L. Bunn 62,600 0 75,000 0
...............................................................................................
Charles L. Ladner 47,607 0 50,000 1,000
...............................................................................................
Michael J. Cuzzolina 13,891 0 60,000 0
...............................................................................................
Brendan P. Bovaird 8,147 0 40,000 200
...............................................................................................
Directors and executive
officers as a group (14
persons including those
listed above) 273,836 38,505 596,359 11,300
- - -----------------------------------------------------------------------------------------------
</TABLE>
(1) This column shows Shares held in the individual's name, individually or
jointly with others, or in the name of a bank, broker or nominee for the
individual's account. It includes 2,000 shares held directly by Mr. Bunn's
spouse. Also included are shares represented by Units held in the UGI Stock
Fund of the 401(k) Employee Savings Plan, based on September 30, 1997
Savings Plan statements.
(2) The Directors' 1997 Plan provides that Units will be converted to shares of
Common Stock and paid out to directors upon their retirement or termination
of service.
(3) Mr. Greenberg's adult children own 1,000 Common Units; 500 Common Units are
held by Mr. Greenberg as custodian for a dependent child.
(4) Mr. Schlanger will fill a vacancy on the Board effective January 1, 1998.
3
<PAGE>
SECTION 16 (A) -- BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
____________________________________________________________
Based on the Company's records and written representations, UGI believes its
directors and officers complied with all SEC filing requirements applicable to
them for Fiscal 1997.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
______________________________
The following table shows informa tion regarding each person known by the
Company to have been the beneficial owner of more than 5% of the Company's
Common Stock. The ownership information shown below is based on information re-
ceived from Technimetrics, Inc. reporting a Form 13F filed with the Securities
and Exchange Commission by Sasco Capital, Inc. in September 1997.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
- - -----------------------------------------------------------------------------------
TITLE OF NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (1)
- - -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock Sasco Capital, Inc. 2,974,000 shares 9.05%
Ten Sasco Hill Road
Fairfield, CT 06430
</TABLE>
(1) Based on 32,862,016 shares of Common Stock issued and outstanding at
September 30, 1997.
- - --------------------------------------------------------------------------------
ITEM 1 -- ELECTION OF DIRECTORS
- - --------------------------------------------------------------------------------
NOMINEES
________________________________________________________________________
Seven directors will be elected at the Annual Meeting. Directors will serve
until the next annual meeting or until their earlier resignation or removal. If
any nominee is not available for election, proxies will be voted for another
person nominated by the Board of Directors or the size of the Board will be
reduced. Five members of the Board of Directors elected at last year's annual
meeting are standing for election this year. Robert C. Forney and Quentin I.
Smith, Jr. will retire from the Board at the end of their current term. Mr.
Cyrus H. Holley, a director since 1990, and also a director of Atlantic Energy,
Inc., resigned from the Board during 1997 due to a potential conflict of
interest. Mrs. Anne Pol, a director since 1993, is resigning on December 31,
1997 because of conflicting business commitments.
On October 28, 1997, the Board of Directors elected Mr. Marvin O. Schlanger a
director effective January 1, 1998 to fill a vacancy on the Board. In addition,
Mr. Thomas F. Donovan has been nominated to
4
<PAGE>
fill the vacancy arising from Mrs. Pol's resignation. The nominees are as
follows:
- - --------------------------------------------------------------------------------
JAMES W. STRATTON
Director Since 1979
Age 61
- - --------------------------------------------------------------------------------
Mr. Stratton is the President of Stratton Management Company (since 1972), an
investment advisory and financial consulting firm. He is also Chairman and Chief
Executive Officer of FinDaTex, a financial services firm. Mr. Stratton serves as
a director of UGI Utilities, Inc.; AmeriGas Propane, Inc.; Stratton Growth Fund;
Stratton Monthly Dividend Shares, Inc.; Stratton Small-Cap Yield Fund; Unisource
Worldwide, Inc.; and Teleflex, Inc.
- - --------------------------------------------------------------------------------
DAVID I. J. WANG
Director Since 1988
Age 65
- - --------------------------------------------------------------------------------
In 1991, Mr. Wang retired as Executive Vice President--Timber and Specialty
Products and a Director of International Paper Company, positions he had held
since 1987. Mr. Wang serves as a director of UGI Utilities, Inc.; AmeriGas
Propane, Inc.; and Weirton Steel Corp.
- - --------------------------------------------------------------------------------
RICHARD C. GOZON
Director Since 1989
Age 59
- - --------------------------------------------------------------------------------
Mr. Gozon is Executive Vice President of Weyerhaeuser Company (an integrated
forest products company), a position he has held since 1994. He was formerly
Director (1984 to 1993), President and Chief Operating Officer of Alco Standard
Corporation (a provider of paper and office products) (1988 to 1993); Executive
Vice President and Chief Operating Officer (1987); Vice President (1982 to
1988); and President (1979 to 1987) of Paper Corporation of America. He also
serves as a director of UGI Utilities, Inc.; AmeriSource Health Corporation; and
Triumph Group, Inc.
5
<PAGE>
- - --------------------------------------------------------------------------------
STEPHEN D. BAN
Director Since 1991
Age 57
- - --------------------------------------------------------------------------------
Dr. Ban is President and Chief Executive Officer of the Gas Research Institute
(gas industry research and development), a position he has held since 1987). He
was formerly Executive Vice President of Gas Research Institute until 1986 and
Vice President, Research and Development of Bituminous Materials, Inc. until
1981. Dr. Ban also serves as a director of UGI Utilities, Inc. and Energen
Corporation.
- - --------------------------------------------------------------------------------
LON R. GREENBERG
Director Since 1994
Age 47
- - --------------------------------------------------------------------------------
Mr. Greenberg has been Chairman of the Board of Directors of UGI since August
1996, Chief Executive Officer since August 1995, and President since 1994. He
was formerly Vice Chairman of the Board from 1995 to 1996, and Senior Vice
President--Legal and Corporate Development from 1989 to 1994. Mr. Greenberg also
serves as a director of UGI Utilities, Inc.; AmeriGas Propane, Inc.; and Mellon
PSFS Advisory Board.
- - --------------------------------------------------------------------------------
MARVIN O. SCHLANGER
Age 49
- - --------------------------------------------------------------------------------
Mr. Schlanger is Executive Vice President and Chief Operating Officer (since
1994) and a director (since 1989) of ARCO Chemical Company. Previously, he was
Senior Vice President of ARCO Chemical Company and President of ARCO Chemical
Americas Company (1992 to 1994).
- - --------------------------------------------------------------------------------
THOMAS F. DONOVAN
Age 64
- - --------------------------------------------------------------------------------
Mr. Donovan retired as Vice Chairman of Mellon Bank on December 31, 1996, a
position he had held since 1988. He continues to serve as a consultant and an
advisory board member to Mellon Bank Corp. Mr. Donovan also serves as a director
of AmeriGas Propane, Inc.; Nuclear Electric Insurance Co.; and Merrill Lynch
International Bank, Inc.
6
<PAGE>
BOARD COMMITTEES AND MEETING ATTENDANCE
________________________________________
The Board of Directors has five committees, the Audit, Compensation and
Management Development, Executive/Nominating, Planning and Finance, and Public
Affairs Committees. Committees report their actions to the full Board at its
next regular meeting. A description of the duties of each committee follows the
Committee Membership and Meetings Held table below.
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
COMMITTEE MEMBERSHIP AND MEETINGS HELD
- - --------------------------------------------------------------------------------
COMPENSATION
AND PLANNING
MANAGEMENT EXECUTIVE/ AND PUBLIC
NAME AUDIT DEVELOPMENT NOMINATING FINANCE AFFAIRS
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
J. W. Stratton x* x
................................................................................
R. C. Forney x* x
................................................................................
D. I. J. Wang x x x*
................................................................................
R. C. Gozon x* x
................................................................................
Q. I. Smith, Jr. x x
................................................................................
S. D. Ban x x
................................................................................
A. Pol x x
................................................................................
L. R. Greenberg x x
................................................................................
No. of Meetings in Fiscal
1997** 2 3 2 2 2
- - --------------------------------------------------------------------------------
</TABLE>
* Chairperson
** The Board held 10 meetings in Fiscal 1997. Each of the incumbent directors,
except Mrs. Pol, attended at least 75% of the aggregate of all meetings of
the Board of Directors and Committees of the Board on which he or she served.
AUDIT COMMITTEE
_________________________________________________________________
. Examines the activities of the Company's independent auditors and internal
audit department to determine whether these activities are reasonably
designed to assure the soundness of accounting and financial procedures.
. Reviews the Company's accounting policies and the objectivity of its financial
reporting.
. Considers annually the qualifications of the Company's independent auditors
and the scope of their audit and makes recom-
7
<PAGE>
mendations to the Board as to their selection.
. Receives reports from the internal auditors and reviews the scope of the
internal audit program.
COMPENSATION AND MANAGEMENT
DEVELOPMENT COMMITTEE
___________________________________________________________
. Establishes executive compensation policies and programs.
. Reviews the Company's management development and succession planning
policies.
. Approves the awards and payments to be made to employees of the Company and
its subsidiaries under its long-term compensation plans.
. Recommends to the Board base salaries and target bonus levels to be paid to
executive officers.
. Makes recommendations to the Board of Directors concerning outside director
compensation.
EXECUTIVE/NOMINATING COMMITTEE
__________________________________________________
. Has the full power of the Board between meetings of the Board, with specified
limitations relating to major corporate matters.
. Reviews the qualifications of persons eligible to stand for election as
directors and makes recommendations to the Board on this matter.
. Considers as nominees qualified persons recommended by directors, management
and shareholders. Written recommendations for nominees should be delivered
to the Corporate Secretary, UGI Corporation, 460 North Gulph Road, King of
Prussia, PA 19406. The Company's bylaws do not permit Shareholders to nominate
candidates from the floor at an annual meeting without giving 45 days' prior
notification to the Corporate Secretary. Notification must include certain
information detailed in the Company's bylaws. If you intend to nominate a
candidate from the floor at an annual meeting, please contact the Corporate
Secretary.
PLANNING AND FINANCE COMMITTEE
__________________________________________________
. Reviews the overall business and financial planning of the Company and its
capital expenditures and operating budgets.
PUBLIC AFFAIRS COMMITTEE
________________________________________________________
. Monitors significant public issues affecting the Company and reviews the
Company's charitable contributions, community affairs programs and policies
and practices responsive to governmental and regulatory requirements.
8
<PAGE>
COMPENSATION OF DIRECTORS
______________________________________________________
The following table shows all components of director compensation for Fiscal
1997:
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
DIRECTORS' COMPENSATION (1)
- - --------------------------------------------------------------------------------
CASH EQUITY
COMPONENT (2) COMPONENT
- - --------------------------------------------------------------------------------
<S> <C> <C>
Annual Retainer $18,500 153 shares (3)
630 Units (4)
................................................................................
Annual Retainer for Committee Chair $ 2,500 --
................................................................................
Annual Retainer for Executive/
Nominating Committee member $ 1,500 --
................................................................................
Board Attendance Fee (per meeting) $ 1,000 --
................................................................................
Committee Attendance Fee (per meeting) $ 1,000 --
- - --------------------------------------------------------------------------------
</TABLE>
(1) A director who is an officer or employee of the Company or its
subsidiaries is not compensated for service on the Board or on any
Committee of the Board.
(2) Directors can defer, until they leave the Board or reach age 70, the
receipt of all or a part of the cash retainers and fees payable to them
for services as a director. Messrs. Forney and Gozon and Mrs. Pol elected
this deferral option.
(3) $3,500 of the Annual Retainer of $22,000 is paid in whole shares of Common
Stock pursuant to the Directors' 1997 Plan described below. Fractional
Shares are paid in cash. On February 26, 1997, directors received Shares
having a fair market value of $22.75 per share.
(4) An award of Units was made effective January 1, 1997 pursuant to the
Directors' 1997 Plan described below. Each Unit had a market value of
$22.125.
DIRECTORS' EQUITY COMPENSATION PLAN
_____________________________________________
The Directors' Equity Compensation Plan provides for annual awards to
directors of (i) shares of Common Stock and (ii) 630 Units. Directors' annual
retainer fees in excess of $18,500 are paid in Common Stock. The fair market
value of the Stock is determined as of the first day of the calendar year. The
Stock is issued promptly after the first meeting of the Board of Directors in
each calendar year. The amount of the annual retainer fee and the corresponding
grant of Stock is prorated for any director who commences service during a
calendar year. Fractional Shares are paid in cash. Prior to the beginning of
each calendar year, participants may elect to defer any portion of their meeting
fees and the cash portion of their annual retainer into Units.
On January 1, 1997, Directors with accrued benefits under the former
Directors' Retirement Plan had credited to their
9
<PAGE>
account an initial award of Units equal in value to their accrued retirement
benefits. To determine the number of Units to be credited, the value of accrued
retirement benefits for each participant was divided by the average of the
closing sales prices for the Common Stock as reported on the New York Stock Ex-
change Composite Transactions tape for each trading day in the period October 1,
1996 through December 31, 1996. On January 1, 1997, Messrs. Stratton, Forney,
Wang, Gozon, Holley, Smith and Ban and Mrs. Pol had credited to their accounts
6,721, 6,007, 5,836, 4,046, 4,257, 5,013, 2,794 and 1,466 Units, respectively.
All whole Units credited to a director earn dividend equivalents on each
record date for the payment of a dividend by the Company on its Common Stock. A
dividend equivalent is an amount determined by multiplying the number of Units
credited to a participant's account by the per-share cash dividend, or the per-
share fair market value of any non-cash dividend, paid by the Company on its
Shares on a dividend payment date. Accrued dividend equivalents are converted to
additional whole Units annually, on the last day of the calendar year.
REPORT OF THE COMPENSATION AND MANAGEMENT DEVELOPMENT
COMMITTEE OF THE BOARD OF DIRECTORS
____________________________________________
ROLE OF THE COMMITTEE
___________________________________________________________
The Committee establishes and oversees the Company's executive compensation
policies and programs. The Committee also recommends to the Board of Directors
base salaries, target bonus levels, actual bonuses, and long-term incentive
awards to be paid to executive officers. In carrying out these functions, we
believe it is important to align executive compensation with business objectives
and strategies, management initiatives, financial performance and enhanced
shareholder value.
Our Committee is comprised of independent outside directors, none of whom is
or was an officer or employee of the Company or its subsidiaries. Periodically
we solicit and receive recommendations and advice from independent third party
compensation consultants. Towers Perrin has acted in this capacity since 1986.
Compensation for the chief executive officer of UGI Utilities, Inc. is
determined by its Compensation Committee and Board of Directors under the same
process described in this report.
EXECUTIVE COMPENSATION PROGRAM
__________________________________________________
The executive compensation program is designed to attract and retain key
executives with outstanding abilities and to motivate them to perform to the
full extent of their abilities. We believe that executives should have a
greater portion of their compensation at risk than other employees, and that
executive compensation, as stated above, should be tied to the performance of
the business and be aligned with benefits realized by the Company's
shareholders.
Compensation for Company executives consists of both cash and equity based
opportunities. The annual cash compensation consists of (i) base salary and
(ii) annual bonus opportunity under the Company's Annual Bonus Plan. Equity
based opportuni-
10
<PAGE>
ties are provided on a long-term basis under the Company's 1997 Stock Option
and Dividend Equivalent Plan ("1997 SODEP"), which was approved by shareholders
at the 1997 Annual Meeting. That plan succeeded the 1992 Stock Option and
Dividend Equivalent Plan ("1992 SODEP"), which is no longer a source for option
grants.
The Committee determines base salary ranges for executive officers based upon
competitive pay practices in the businesses and industries in which the Company
competes. The base salary ranges for all executive officers were set at the
50th percentile of the survey companies. For fiscal year 1997, as has been the
practice in the past, the Committee reviewed a report from Towers Perrin which
compared base salary ranges for executive officers with base salary ranges for
similar positions as reported in published survey results in Towers Perrin's
Executive Compensation Survey of 639 national non-utility, non-financial compa-
nies, the American Gas Association's Executive Compensation Survey of 87 utility
companies, and Edison Electric Institute's Executive Compensation Survey of 85
utility companies. This comparison was weighted to reflect the Company's
approximate business mix.
Annually the Committee recommends to the Board of Directors changes in actual
salaries of executive officers based on judgments of past performance,
expanded job duties, scope and responsibilities (if any), and expected future
contributions. The most recent past performance is the prime determinant.
The Committee also oversees the Company's Annual Bonus Plan for executive
officers. We establish challenging objectives based on business prospects. For
Mr. Greenberg and Mr. Ladner, the sole objective is achieving financial per-
formance for the Company. For Mr. Cuzzolina and Mr. Bovaird, payments are
contingent on achieving both the current financial performance objective and
individual management objectives, with greater weight (75%) given to the
current financial performance objective. Mr. Bunn is covered under the UGI
Utilities, Inc. Annual Bonus Plan. For Mr. Bunn, the sole objective is achieving
the financial performance goal for UGI Utilities, Inc.
Each year, after completion of the audit of the Company's financial
statements, the Committee reviews business results and the individual
performance of each executive officer and determines and recommends to the
Board cash bonus payments under the terms of the Annual Bonus Plan. The
financial objective for fiscal year 1997 for UGI Corporation executives was
based on the weighted achievement of financial performance goals by AmeriGas
Partners, L.P. ("AmeriGas Partners") and UGI Utilities, Inc. Weighting was
based on the Company's approximate business mix. For executives whose sole ob-
jective is achieving a financial performance goal, bonus payments are subject to
a maximum 15% adjustment of the calculated bonus based on the individual's
contribution having a significant impact on corporate performance. In addition,
for all participants, the financial performance factor is subject to a maximum
10% adjustment based on the positive or negative contribution from UGI Cor-
poration (other than utility and propane business performance) on overall
Company financial performance. During fiscal year 1997, the financial objective
for UGI Utilities, Inc. was net earnings after preferred stock dividends. For
AmeriGas Partners, the financial objective was based on earnings before
interest, taxes, depreciation and amortization
11
<PAGE>
("EBITDA"), adjusted for interest, capital expenditures, and Partnership
distributions as well as for real volume growth, net customer gains or losses,
and return on assets. In applying the AmeriGas Partners' formula, the
Committee adjusted certain non-financial targets under the Plan.
Periodically the Committee reviews the overall competitiveness of the Annual
Bonus Plan with its compensation consultant. For 1997, using the published
survey sources and methodology previously identified, the Annual Bonus Plan
target bonus opportunity for each executive remained at the 75th percentile of
the survey companies. The 75th percentile level was determined to be appropriate
in light of the Committee's view that the annual bonus opportunities should have
a high reward potential to recognize the difficulty of achieving the annual
goals and the significant corporate impact of doing so.
The 1997 SODEP consists of non-qualified stock option grants, with an
opportunity to earn during a three-year performance period an amount equivalent
to or greater than the dividends paid on the number of shares covered by
options. Payment of dividend equivalents will be based on the Company's total
shareholder return relative to a group of peer companies over a three-year
performance period. The peer group consists of the S&P Utility Index, modified
by eliminating all telecommunication companies. (A list of the thirty-eight
companies which now comprise the peer group appears under the heading "Corporate
Performance" following this report.)
The Committee believes that a shareholder's investment in the Company and the
long-term return on that investment can be judged on a relative basis against
comparable investment opportunities and that it is, in turn, appropriate to
relate this judgment to an executive's long-term compensation. The Committee
believes that grants made under the 1997 SODEP will focus executives on
increasing shareholder value. Stock option awards were determined utilizing
Towers Perrin's Long-Term Incentive Plan Survey comprised of 515 national
companies and competitive award levels recommended to the Committee by Towers
Perrin. The awards were valued by the Black-Scholes model. A total of 410,000
options were granted to Messrs. Greenberg, Bunn, Ladner, Cuzzolina and Bovaird
in December 1996.
FISCAL YEAR 1997 CEO COMPENSATION
_______________________________________________
The compensation for Mr. Greenberg recommended to the Board of Directors was
based upon a number of factors and criteria. These include the procedure for
determining base salary ranges, actual salaries within ranges, Annual Bonus
Plan targets and long-term incentive awards described earlier in this report.
Base Salary. For 1997, the Committee determined that Mr. Greenberg's base
salary be increased by 9.7% over the level set for fiscal year 1996. The Commit-
tee's determination was based on the fact that Mr. Greenberg was compensated at
the low end of his salary range and the Committee felt it was appropriate that
his base salary be advanced further in the range in light of the Company's
improved financial performance. In addition, Mr. Greenberg's overall performance
in building a new leadership team for AmeriGas Propane, Inc. was considered
outstanding. The Committee also considered the additional duties and respon-
12
<PAGE>
sibilities Mr. Greenberg assumed in August 1996 when he became Chairman of the
Board. Mr. Greenberg is not separately compensated in his base salary for his
responsibilities as interim Chief Executive Officer of AmeriGas Propane.
Annual Bonus. For 1997, Mr. Greenberg earned the annual bonus shown on page 16
based on (i) the fact that UGI Utilities, Inc. exceeded its predetermined
financial goal, (ii) the financial performance of AmeriGas Partners, taking
into account the factors previously discussed, and (iii) Mr. Greenberg's
individual contribution as CEO of both UGI and AmeriGas Propane to these strong
financial results.
Long-Term Incentive. In December 1996, Mr. Greenberg was awarded 200,000 stock
options (each with a corresponding dividend equivalent) under the 1997 SODEP.
Previously Mr. Greenberg was awarded a total of 143,959 stock options under the
1992 SODEP. Mr. Greenberg is currently vested in all 343,959 of these options.
All grants made under both plans were based on competitive award levels.
Dividend equivalent payments under the 1997 SODEP are contingent on superior
performance compared to a group of peer companies over a three-year performance
period.
POLICY ON DEDUCTIBILITY OF COMPENSATION
_________________________________________
Section 162(m) of the Internal Revenue Code limits the tax deduc tion to
$1,000,000 for compensation paid to the Chief Executive Officer and other Named
Executive Officers unless certain requirements are met. One of the requirements
is that compensation over $1,000,000 must be based upon attainment of
performance goals approved by shareholders. The 1997 SODEP was approved by the
Company's shareholders and was designed to meet the requirements of Section
162(m) with respect to stock option and dividend equivalent awards. Most options
awarded under the 1992 SODEP are also not subject to the deductibility cap. At
this time, the Committee is not recommending that any of the Company's other
existing executive compensation plans be amended to meet the requirements of
Section 162(m) for exclusion from the deductibility cap, given the relatively
small amounts, if any, that might exceed the cap.
Compensation and Management
Development Committee
Robert C. Forney, Chairman
Richard C. Gozon
Quentin I. Smith, Jr.
David I. J. Wang
13
<PAGE>
CORPORATE PERFORMANCE
__________________________________________________________
The line graph shown below shows a five-year comparison of the cumulative
total shareholder return on the Common Stock of the Company as compared to the
cumulative total return of three other indexes: the S&P 500 Index, a peer group
of diversified utilities referred to as the "1997 SODEP Peer Index"* and a peer
group of natural gas distributors referred to as the "1992 SODEP Peer Index"**.
In Fiscal 1997, the companies in the 1997 SODEP Peer Index were selected as the
Company's peer group, replacing the companies in the 1992 SODEP Peer Index. The
graph covers the five years ended September 30, 1997. The annualized returns
reflected in the graph for the Company, the S&P 500 Index, the 1997 SODEP Peer
Index, and the 1992 SODEP Peer Index were 24.79%, 40.45%, 13.67% and 19.49%,
respectively.
[LINE GRAPH APPEARS HERE]
Comparison of 5 Year Cumulative Total Shareholder Return Among
UGI Corporation, S & P 500, 1997 SODEP Peer Index and 1992
SODEP Peer Index
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
UGI Corp 100.00 122.77 100.64 118.46 143.84 179.49
S & P 500 100.00 113.00 117.17 152.02 182.93 256.92
1992 SODEP Peer Group 100.00 122.67 108.22 119.92 144.45 172.61
1997 SODEP Peer Group 100.00 122.44 99.12 124.68 134.76 153.19
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
UGI Corporation 100.00 122.77 100.64 118.46 143.84 179.49
................................................................................
S&P 500 100.00 113.00 117.17 152.02 182.93 256.92
................................................................................
1997 SODEP Peer Index 100.00 122.44 99.12 124.68 134.76 153.19
................................................................................
1992 SODEP Peer Index 100.00 122.67 108.22 119.92 144.45 172.61
- - --------------------------------------------------------------------------------
</TABLE>
The performance illustrated assumes that $100 was invested in UGI Common
Stock and each index on September 30, 1992, and that all dividends were
reinvested.
* The 1997 SODEP Peer Index includes American Electric Power Company, Inc.,
Baltimore Gas & Electric Company, Carolina Power & Light Company, Central &
South West Corporation, Cinergy Corporation, Coastal Corporation, Columbia
Gas System, Inc., Consolidated Edison Co. of N.Y., Inc., Consolidated Natural
Gas Company, Dominion Resources, Inc., DTE Energy Company, Duke Power Compa-
ny, Eastern Enterprises, Edison International, Enron Corporation, Entergy
Corporation, FPL Group, Inc., GPU, Inc., Houston Industries, Inc., Niagara
Mohawk Power Corporation, NICOR, Inc., NorAm Energy Corp. (1), Northern
States Power Company, Ohio Edison Company, ONEOK, Inc., Pacific Enterprises,
Pacificorp, PanEnergy Corp. (2), PECO Energy Company, Peoples Energy Corpora-
tion, PG&E Corp., PP&L Resources, Inc., Public Service Enterprise Group,
Inc., Sonat, Inc., Southern Company, Texas Utilities Company, Unicom Corpora-
tion, Union Electric Company and The Williams Companies, Inc.
(1) Acquired by Houston Industries, Inc.
(2) Acquired by Duke Power Company
** The 1992 SODEP Peer Index includes AGL Resources, Inc., Atmos Energy Corpo-
ration, Bay State Gas Company, Cascade Natural Gas Corporation, Colonial Gas
Company, Connecticut Energy Corporation, CTG Resources, Inc., Energen Corpo-
ration, Indiana Energy, Inc., KeySpan Energy Corp., Laclede Gas Company, Na-
tional Fuel Gas Company, New Jersey Resources Corporation, Northwest Natural
Gas Company, Peoples Energy Corporation, Piedmont Natural Gas Company, Inc.,
Providence Energy Corporation, Public Service Company of North Carolina,
Inc., South Jersey Industries, Inc., United Cities Gas Company (1), Washing-
ton Energy Company (2) and Washington Gas Light Company.
(1) Acquired by Atmos Energy Corporation
(2) Acquired by Puget Sound Energy
15
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
_____________________________________________
SUMMARY OF COMPENSATION
_________________________________________________________
The following table shows cash and other compensation paid or accrued to the
Company's Chief Executive Officer and each of the other four most highly
compensated executive officers.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- - ------------------------------------------------------------------------------------------
LONG-TERM
COMPENSATION
- - ------------------------------------------------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
- - ------------------------------------------------------------------------------------------
SECURITIES
OTHER UNDER-
ANNUAL LYING
COMPEN- OPTIONS/ LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS SATION SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) (1) ($) (2) (#) ($) ($) (3)
- - ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Lon R. Greenberg 1997 $ 509,827 $ 425,000 $ 7,671 200,000(4) $ 0 $ 14,233
Chairman, 1996 $ 465,000 $ 122,760 $ 7,359 0 $ 0 $ 10,462
President and 1995 $ 381,923 $ 0 $ 7,365 14,167(5) $ 0 $ 11,439
Chief Executive
Officer,
UGI Corporation
..........................................................................................
Richard L. Bunn 1997 $ 318,089 $ 139,073 $ 7,696 75,000(4) $ 0 $ 10,254
President and Chief 1996 $ 305,900 $ 137,655 $ 5,855 0 $ 0 $ 10,579
Executive Officer, 1995 $ 305,900 $ 164,268 $ 6,684 0 $ 0 $ 9,732
UGI Utilities, Inc.
..........................................................................................
Charles L. Ladner 1997 $ 254,762 $ 136,216 $ 8,235 75,000(4) $ 0 $ 6,923
Senior Vice 1996 $ 245,000 $ 52,920 $ 8,881 0 $ 0 $ 6,480
President--Finance, 1995 $ 245,000 $ 42,998 $ 8,851 0 $ 0 $ 8,219
UGI Corporation
..........................................................................................
Michael J. Cuzzolina 1997 $ 176,370 $ 71,990 $ 7,569 30,000(4) $ 0 $ 4,527
Vice President-- 1996 $ 168,000 $ 28,843 $ 7,955 0 $ 0 $ 4,336
Accounting and 1995 $ 168,000 $ 24,696 $ 8,090 0 $ 0 $ 5,223
Financial Control
UGI Corporation
..........................................................................................
Brendan P. Bovaird 1997 $ 164,653 $ 64,449 $ 3,769 30,000(4) $ 0 $ 4,196
Vice President and 1996 $ 149,999 $ 21,853 $ 1,299 0 $ 0 $ 1,363
General Counsel, 1995 $ 66,346 $ 8,663 $ 0 10,000(5) $ 0 $ 0
UGI Corporation
- - ------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
(1) Bonuses earned under the Annual Bonus Plan are for the year reported, re-
gardless of the year paid. The Company's Annual Bonus Plan is based on the
achievement of business and/or financial performance objectives which sup-
port business plans and goals. Bonus opportunities vary by position and for
Fiscal 1997 ranged from 0% to 148% of base salary for Mr. Greenberg, 0% to
52% for Mr. Bunn, from 0% to 102% for Mr. Ladner, and from 0% to 65% for
Messrs. Cuzzolina and Bovaird. Bonus payments in fiscal years 1996 and 1995
for all Named Executives except Mr. Bunn were adversely affected by the
failure of AmeriGas Propane to achieve its predetermined financial perfor-
mance goals.
(2) Amounts represent tax payment reimbursements for certain benefits.
(3) Amounts represent Company contributions in accordance with the provisions
of the UGI Utilities, Inc. Employee Savings Plan and allocations under the
Company's Supplemental Executive Retirement Plan. During fiscal years 1997,
1996, and 1995, the following contributions were made to the Named Execu-
tives: (i) under the Employee Savings Plan: For each of Messrs. Greenberg,
Bunn, Ladner and Cuzzolina, $3,375, $3,375, and $3,375; Mr. Bovaird,
$3,375, $1,363 and $0; and (ii) under the Supplemental Executive Retirement
Plan: Mr. Greenberg, $10,858, $7,087, and $8,064; Mr. Bunn, $6,879, $7,204,
and $6,357; Mr. Ladner, $3,548, $3,105, and $4,844; Mr. Cuzzolina, $1,152,
$961, and $1,848; and Mr. Bovaird, $821, $0 and $0.
(4) Non-qualified stock options granted on December 10, 1996 under the 1997
SODEP. The 1997 SODEP consists of non-qualified stock option grants and the
opportunity for participants to earn an amount equivalent to the dividends
paid on shares covered by options, subject to a comparison of the total re-
turn on a share of the Company's Common Stock with the total return
achieved by each member of the 1997 SODEP Peer Group over a three-year pe-
riod beginning January 1, 1997 and ending December 31, 1999. Total return
encompasses both changes in the per share market price and dividends paid
on a share of Common Stock. See the graph under the heading "Corporate Per-
formance."
(5) Non-qualified stock options granted under the 1992 SODEP.
17
<PAGE>
Option Grants in Fiscal 1997
------------------------------
The two following tables show information on stock options for each of the
Named Executives:
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------
Option Grants In Fiscal 1997
- - -----------------------------------------------------------------------------------------
Grant Date
Individual Grants Value
- - -----------------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Grant Date
Options Employees in Exercise or Expiration Present
Name Granted(1) Fiscal 1997(2) Base Price Date Value(3)
- - -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lon R. Greenberg 200,000 30.59% $ 22.625 12/09/06 $ 486,000
.........................................................................................
Richard L. Bunn 75,000 11.47% $ 22.625 12/09/06 $ 182,250
.........................................................................................
Charles L. Ladner 75,000 11.47% $ 22.625 12/09/06 $ 182,250
.........................................................................................
Michael J. Cuzzolina 30,000 4.59% $ 22.625 12/09/06 $ 72,900
.........................................................................................
Brendan P. Bovaird 30,000 4.59% $ 22.625 12/09/06 $ 72,900
- - -----------------------------------------------------------------------------------------
</TABLE>
(1) Non-qualified stock options granted on December 10, 1996 under the 1997
SODEP. Each grant also includes the opportunity to earn an amount equiva-
lent to the dividends paid during the performance period on shares covered
by options. The option exercise price is not less than 100% of the Fair
Market Value of the Company's Common Stock on the date of the grant. These
options were fully vested on the date of grant. Options granted under the
1997 SODEP are nontransferable and are generally exercisable only while the
optionee is employed by the Company or a subsidiary. Options are subject to
adjustment in the event of recapitalizations, stock splits, mergers, and
other similar corporate transactions affecting the Company's Common Stock.
(2) A total of 653,750 options were granted to employees of UGI Corporation and
its subsidiaries in Fiscal 1997 under the 1997 SODEP and the 1992 Non-Qual-
ified Stock Option Plan.
(3) Based on the Black-Scholes options pricing model. The assumptions used in
calculating the grant date present value are as follows:
. Three years of closing monthly stock price observations were used to
calculate the stock volatility and dividend yield assumptions
. Stock volatility -- .1676
18
<PAGE>
. Stock's dividend yield -- 6.54%
. Length of option term -- 10 years
. Annualized risk-free interest rate -- 6.36%
. Discount for risk of forfeiture -- 0%
All options were granted at fair market value. The actual value, if any, the
executive may realize will depend on the excess of the stock price on the date
the option is exercised over the exercise price. There is no assurance that the
value realized by the executive will be at or near the value estimated by the
Black-Scholes model.
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------
Option Exercises in Fiscal 1997
And Fiscal Year-End Option Values
- - -----------------------------------------------------------------------------------------------------------
Number of Securities Value of
No. of Underlying Unexercised
Shares Unexercised In-The-Money
Acquired on Value Options at Options at
Name Exercise Realized Fiscal Year-End Fiscal Year-End
---------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- - -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lon R. Greenberg 0 $ 0 143,959 0 $ 1,079,693(1) $ 0
200,000 0 $ 1,000,000(2) $ 0
...........................................................................................................
Richard L. Bunn 0 $ 0 87,500 0 $ 656,250(1) $ 0
75,000 0 $ 375,000(2) $ 0
...........................................................................................................
Charles L. Ladner 87,500 $527,595 75,000 0 $ 375,000(2) $ 0
...........................................................................................................
Michael J. Cuzzolina 0 $ 0 30,000 0 $ 225,000(1) $ 0
30,000 0 $ 150,000(2) $ 0
...........................................................................................................
Brendan P. Bovaird 0 $ 0 10,000 0 $ 75,000(1) $ 0
30,000 0 $ 150,000(2) $ 0
- - -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Value is calculated using the difference between the 1992 SODEP option
exercise price ($20.125) and $27.625 (fiscal year-end closing stock price)
multiplied by the number of shares underlying the option.
(2) Value is calculated using the difference between $22.625 (1997 SODEP option
exercise price) and $27.625 (fiscal year-end closing stock price)
multiplied by the number of shares underlying the option.
19
<PAGE>
RETIREMENT BENEFITS
_____________________________________________________________
The following Pension Plan Benefit Table shows the annual benefits upon
retirement at age 65 in 1997, without regard to statutory maximums, for various
combinations of final average earnings and lengths of service which may be
payable to the Named Executives under the Company's Retirement Plan and its
Supplemental Executive Retirement Plan. Messrs. Greenberg, Bunn, Ladner,
Cuzzolina and Bovaird had, respectively, 16 years, 38 years, 23 years, 22
years, and 2 years of credited service under these Plans at September 30, 1997.
<TABLE>
<CAPTION>
PENSION PLAN BENEFITS TABLE
- - --------------------------------------------------------------------------------
ANNUAL BENEFIT FOR YEARS OF CREDITED SERVICE
SHOWN (2)
------------------------------------------------------------------
FINAL 5-YEAR
AVERAGE
ANNUAL
EARNINGS
(1) 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- - --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 57,000 $ 76,000 $ 95,000 $114,000 $133,000 $136,800 (3)
................................................................................
$ 300,000 $ 85,500 $114,000 $142,500 $171,000 $199,500 $205,200 (3)
................................................................................
$ 400,000 $114,000 $152,000 $190,000 $228,000 $266,000 $273,600 (3)
................................................................................
$ 500,000 $142,500 $190,000 $237,500 $285,000 $332,500 $342,000 (3)
................................................................................
$ 600,000 $171,000 $228,000 $285,000 $342,000 $399,000 $410,400 (3)
................................................................................
$ 700,000 $199,500 $266,000 $332,500 $399,000 $465,500 $478,800 (3)
................................................................................
$ 800,000 $228,000 $304,000 $380,000 $456,000 $532,000 $547,200 (3)
................................................................................
$ 900,000 $256,500 $342,000 $427,500 $513,000 $598,500 $615,600 (3)
................................................................................
$1,000,000 $285,000 $380,000 $475,000 $570,000 $665,000 $684,000 (3)
................................................................................
$1,200,000 $342,000 $456,000 $570,000 $684,000 $798,000 $820,800 (3)
................................................................................
$1,400,000 $399,000 $532,000 $665,000 $798,000 $931,000 $957,600 (3)
- - --------------------------------------------------------------------------------
</TABLE>
(1) Consists of (i) base salary, commissions and cash payments under the Annual
Bonus Plan, and (ii) deferrals thereof permitted under the Internal Revenue
Code.
(2) Annual benefits are computed on the basis of straight life annuity amounts.
These amounts include pension benefits, if any, to which a participant may
be entitled as a result of participation in a pension plan of a subsidiary
during previous periods of employment. The amounts shown do not take into
account exclusion of up to 35% of the estimated primary Social Security
benefit. The Retirement Plan provides a minimum benefit equal to 25% of a
participant's final 12-months' earnings, reduced proportionately for less
than 15
20
<PAGE>
years of credited service at retirement. The minimum Retirement Plan benefit
is not subject to Social Security offset.
(3) The maximum benefit under the Retirement Plan and the UGI Supplemental
Executive Retirement Plan is equal to 60% of a participant's highest
consecutive 12 months' earnings during the last 120 months.
SEVERANCE PAY PLAN FOR SENIOR
EXECUTIVE EMPLOYEES
_____________________________________________________________
The UGI Corporation Severance Pay Plan for Senior Executive Employees assists
certain senior level employees of the Company in the event their employment is
terminated with-out fault on their part. Benefits are payable to a senior
executive covered by the Severance Plan if the senior executive's employment is
in-voluntarily terminated for any reason other than for cause or as a result
of the senior executive's death or disability.
The Severance Plan provides for cash payments equal to a participant's
compensation for a period of time ranging from 3 months to 15 months (30 months
in the case of Mr. Greenberg), depending on length of service. In addition, a
participant receives the cash equivalent of his or her target bonus under the
Annual Bonus Plan, pro-rated for the number of months served in the fiscal year.
However, if the termination occurs in the last two months of the fiscal year,
the Chief Executive Officer has the discretion to determine whether the par-
ticipant will receive a pro-rated target bonus, or the actual annual bonus which
would have been paid after the end of the fiscal year, assuming that the
participant's entire bonus was contingent on meeting the Company's financial
performance goal. The Plan also continues certain employee benefits for a
period of up to 15 months (30 months in the case of Mr. Greenberg). The Company
has the option to pay a participant the cash equivalent of those employee
benefits.
In order to receive benefits under the Severance Plan, a senior executive is
required to execute a release which discharges the Company and its subsidiaries
from liability for any claims the senior executive may have against any of them,
other than claims for amounts or benefits due the executive under any plan,
program or contract binding on UGI or its subsidiaries. The senior executive is
also required to cooperate in attending to matters pending at the time of his
or her termination.
CHANGE OF CONTROL AGREEMENTS
____________________________________________________
Messrs. Greenberg, Bovaird, Bunn, Ladner and Cuzzolina each have an Agreement
with the Company which provides certain benefits in the event of a change of
control. The Agreements operate independently of the Severance Plan, continue
through July 2002, and are automatically extended in one-year increments there-
after unless, prior to a change of control, the Company terminates an Agreement.
In the absence of a change of control, each Agreement will terminate when, for
any reason, the executive terminates his employment with the Company or its
subsidiaries.
A change of control is generally deemed to occur if: (i) any person (other
than certain persons or entities affiliated with the Company), together with
all affiliates and associates of such person, acquires
21
<PAGE>
securities representing 20% or more of either (A) the then outstanding shares of
Common Stock of the Company or (B) the combined voting power of the Company's
then out-standing voting securities, in either case unless the members of the
Executive Committee in office immediately prior to such acquisition determine
that the circumstances do not warrant the implementation of the provisions of
the Agreement; (ii) individuals, who at the beginning of any 24-month period
constitute the Board of Directors (the "Incumbent Board") and any new director
whose election by the Board of Directors, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
Incumbent Board, cease for any reason to constitute a majority; (iii) the Com-
pany is reorganized, merged or consolidated with or into, or sells all or
substantially all of its assets to, another corporation in a transaction in
which former shareholders of the Company do not own more than 50% of the
outstanding common stock and the combined voting power, respectively, of the
then outstanding voting securities of the surviving or acquiring corporation
after the transaction, in any such case, unless the Executive Committee deter-
mines at the time of such transaction that the circumstances do not warrant the
implementation of the provisions of the Agreement; or (iv) the Company is
liquidated or dissolved.
The Agreements provide for payment of severance benefits if there is a
termination of the executive's employment without cause at any time within
three years after a change of control. In addition, following a change of
control, the executive may elect to terminate his employment without loss of
severance benefits in certain situations, including termination of officer
status; a significant adverse change in authority, duties, responsibilities or
compensation; the failure of the Company to comply with any of the terms of the
Agreement; or a substantial relocation or excessive travel requirements.
An executive terminated with rights to severance compensation under an
Agreement will receive an amount equal to 1.0 or 1.5 (2.5 in the case of Mr.
Greenberg) times his average total cash remuneration for the preceding five
calendar years. If the severance compensation payable under the Agreement,
either alone or together with other payments to an executive, would constitute
"excess parachute payments," as defined in Section 280G of the Internal Revenue
Code of 1986, as amended, the executive will receive an additional amount, such
that the net amount retained after payment of applicable taxes is equal to the
total severance compensation payable.
STOCK OWNERSHIP POLICY AND
INDEBTEDNESS OF MANAGEMENT
_____________________________________________________
The Board of Directors established a policy effective October 1, 1997 that
requires individuals in key management positions in the Company and its
subsidiaries to own significant amounts of Common Stock. The required levels of
ownership range from 40% of base salary to 450% of base salary for the Company's
Chief Executive Officer. The policy is designed to encourage growth in share-
holder value by closely linking executives' risks and rewards with the
Company's total shareholder return. To assist employees in purchasing Stock to
comply with the policy, low-interest loans
22
<PAGE>
(4%) are available from a subsidiary of the Company. Each loan is full recourse
to the borrower and is secured by a pledge of the Stock purchased. The loans
mature in 10 years.
Four of the Company's six executive officers have obtained loans to finance
the purchase of Stock to comply with the new policy. The executive officers'
loan amounts are as follows: Mr. Greenberg, $1,631,500; Mr. Cuzzolina, $126,819;
Mr. Bovaird, $228,095; and Mr. Hall, $242,983.
- - -------------------------------------------------------------------------------
ITEM 2-- RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- - -------------------------------------------------------------------------------
The Board of Directors appointed Arthur Andersen LLP as independent certified
public accountants to examine and report on the consolidated financial
statements of the Company for the 1998 fiscal year and recommends that the
Shareholders approve the appointment. If the Shareholders do not approve the
appointment of Arthur Andersen, the Audit Committee and the Board of Directors
will consider the appointment of other independent certified public accoun-
tants. One or more representatives of Arthur Andersen will be present at the
Annual Meeting. They will have the opportunity to respond to appropriate
questions and to make a statement if they wish to do so.
On July 11, 1997, the Company ended its independent auditor relationship with
Coopers & Lybrand L.L.P. and appointed Arthur Andersen LLP as UGI's principal
auditor for Fiscal 1997 in order to respond to comments received from the staff
of the Securities and Exchange Commission. Coopers & Lybrand previously served
as the Company's independent certified public accountants for many years. The
decision to change the Company's accountants was made during Fiscal 1997 after
consideration of various ways of complying with the accounting rules and prac-
tices of the Commission's staff. Under those rules and practices, a company's
principal auditor is expected to audit and assume responsibility for reporting
on at least 50% of the assets and revenues of the consolidated entity. In
fiscal years 1996 and 1995, AmeriGas Propane, Inc. engaged Arthur Andersen to
audit its financial statements. Except for 1995 revenues, those financial
statements reflected total assets and revenues greater than 50% of the
consolidated assets and revenues of UGI Corporation.
Management's decision to change the Company's principal auditor was not
recommended or approved by the Audit Committee of the Board of Directors.
However, it was discussed with the Chairman of the Audit Committee and ratified
by the Company's full Board of Directors. Coopers & Lybrand's reports on the
Company's consolidated financial statements for 1996 and 1995 contained no ad-
verse or disclaimed opinion, and were not qualified or modified as to
uncertainty, audit scope or accounting principles and insofar as they related
to amounts included for AmeriGas Propane, were based solely on the reports of
Arthur Andersen.
During the Company's two fiscal years ended September 30, 1996 and 1995 and
through July 11, 1997, the Company had no
23
<PAGE>
disagreements with Coopers & Lybrand on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to the satisfaction of Coopers & Lybrand, would have
caused the firm to refer to such matter in its report on the consolidated
financial statements of the Company for such years.
During the Company's two fiscal years ended September 30, 1996 and 1995 and
through July 11, 1997, the Company had no reportable events as defined in Item
304 (a) (1) (v) of Regulation S-K issued by the Securities and Exchange
Commission.
During the Company's two fiscal years ended September 30, 1996 and September
30, 1995 and through the date of engagement of Arthur Andersen on July 11,
1997, the Company had not consulted with Arthur Andersen regarding any of the
matters specified in Item 304 (a) (2) of Regulation S-K issued by the Securi-
ties and Exchange Commission.
- - -------------------------------------------------------------------------------
ITEM 3 -- OTHER MATTERS
- - -------------------------------------------------------------------------------
The Board of Directors is not aware of any other matters to be presented for
action at the meeting. If any other matter requiring a vote of the shareholders
should arise, the Proxies (or their substitutes) will vote in accordance with
their best judgment.
24
<PAGE>
GLOSSARY
_______________________________________________________________________
<TABLE>
<C> <S>
1992 SODEP........................... UGI Corporation 1992 Stock Option
and Dividend Equivalent Plan.
1997 SODEP........................... UGI Corporation 1997 Stock Option
and Dividend Equivalent Plan.
1992 SODEP Peer Group................ Each member of a group of
comparable companies (see
description under heading
"Corporate Performance").
1997 SODEP Peer Group................ Each member of a group of
comparable companies (see
description under heading
"Corporate Performance").
AmeriGas Partners.................... AmeriGas Partners, L.P., a master
limited partnership whose Common
Units trade on the New York Stock
Exchange.
AmeriGas Propane..................... AmeriGas Propane, Inc., a
subsidiary of the Company and the
General Partner of AmeriGas
Partners, L.P.
Annual Meeting....................... 1998 Annual Meeting of
Shareholders of UGI Corporation.
Arthur Andersen...................... Arthur Andersen LLP.
Board or Board of Directors.......... Board of Directors of UGI
Corporation.
CEO.................................. Chief Executive Officer of UGI
Corporation.
Coopers & Lybrand.................... Coopers & Lybrand L.L.P.
Common Stock or Stock or Shares...... UGI Corporation Common Stock.
Common Unit.......................... A limited partnership interest in
AmeriGas Partners.
Directors' 1997 Plan................. UGI Corporation Directors' Equity
Compensation Plan.
Fiscal 1997.......................... The Company's fiscal year
commencing October 1, 1996 and
ending September 30, 1997.
</TABLE>
25
<PAGE>
<TABLE>
<C> <S>
Named Executives..................... The Company's Chief Executive
Officer ("CEO"), and each of the
four other most highly
compensated executive officers.
Proxies.............................. Lon R. Greenberg, James W.
Stratton and David I. J. Wang, or
any of them.
Retirement Plan...................... Retirement Income Plan for
Employees of UGI Utilities, Inc.
Securities and Exchange Commission or
SEC or Commission.................... The United States Securities and
Exchange Commission.
Severance Plan....................... UGI Corporation Severance Pay
Plan for Senior Executive
Employees.
Shareholder.......................... A holder of UGI Common Stock.
UGI or Company....................... UGI Corporation.
Unit................................. A single unit that represents a
phantom interest equivalent to
one share of Common Stock under
the UGI Corporation Directors'
Equity Compensation Plan.
</TABLE>
26
<PAGE>
Please mark
your votes as [X]
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" NUMBERS 1 AND 2.
1. ELECTION OF DIRECTORS
FOR WITHHOLD
all nominees AUTHORITY
(except as noted) (all nominees)
[_] [_]
J.W. Stratton, D.I.J. Wang, R.C. Gozon, S.D. Ban,
L.R. Greenberg, M.O. Schlanger, T. F. Donovan
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. APPROVAL OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS.
FOR AGAINST ABSTAIN
[_] [_] [_]
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign the full corporate name by duly
authorized officer.
--------------------------------------
Signature(s)
Dated ________________________________
FOLD AND DETACH HERE
[LOGO of UGI Corporation]
Dear Shareholder:
Enclosed are materials relating to UGI Corporation's 1998
Annual Meeting of Shareholders. The Notice of the Meeting and
Proxy Statement describe the formal business to be transacted
at the meeting.
Your vote is important to us. Please complete, sign and
return the attached proxy card in the accompanying postage-
paid envelope whether or not you expect to attend the meeting.
Barton D. Whitman
Corporate Secretary
UGI News & Reports You can obtain news and other
---------------------------- information about UGI and our
24 Hours a day -- Every day! majority-owned AmeriGasPartners, L.P.
1-800-UGI-9453 or conveniently by telephone or
http://www.ugicorp.com by the Internet.
<PAGE>
PROXY PROXY
UGI CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints James W. Stratton, Lon R. Greenberg and David
I. J. Wang, or any of them, with full power of substitution, as proxies to
represent and vote all shares of UGI Common Stock of the undersigned,
including any shares credited under the UGI Dividend Reinvestment Plan, at the
Annual Meeting of Shareholders of UGI Corporation to be held February 24,
1998, and any adjournments of the Annual Meeting, as indicated on the reverse
side of this proxy card and, in their discretion, upon any other matters that
arise at the meeting.
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED. ON
MATTERS FOR WHICH YOU DO NOT SPECIFY A CHOICE, YOUR SHARES WILL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as [X]
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" NUMBERS 1 AND 2.
1. ELECTION OF DIRECTORS
FOR WITHHOLD
all nominees AUTHORITY
(except as noted) (all nominees)
[_] [_]
J.W. Stratton, D.I.J. Wang, R.C. Gozon, S.D. Ban,
L.R. Greenberg, M.O. Schlanger, T. F. Donovan
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. APPROVAL OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS.
FOR AGAINST ABSTAIN
[_] [_] [_]
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign the full corporate name by duly
authorized officer.
--------------------------------------
Signature(s)
Dated ________________________________
FOLD AND DETACH HERE
[LOGO of UGI Corporation]
Dear Shareholder:
Enclosed are materials relating to UGI Corporation's 1998
Annual Meeting of Shareholders. The Notice of the Meeting and
Proxy Statement describe the formal business to be transacted
at the meeting.
Your vote is important to us. Please complete, sign and
return the attached proxy card in the accompanying postage-
paid envelope whether or not you expect to attend the meeting.
Barton D. Whitman
Corporate Secretary
UGI News & Reports You can obtain news and other
---------------------------- information about UGI and our
24 Hours a day -- Every day! majority-owned AmeriGasPartners, L.P.
1-800-UGI-9453 or conveniently by telephone or
http://www.ugicorp.com by the Internet.
<PAGE>
PROXY PROXY
FIDELITY MANAGEMENT TRUST COMPANY
Upon return of this Proxy to you, you are instructed to cause all UGI
Corporation Common Stock in my UGI Utilities, Inc. Savings Plan Account to be
voted at the Annual Meeting of Shareholders of UGI Corporation, to be held on
February 24, 1998, and any adjournment thereof, as follows:
As indicated by me on the reverse side, but, if I make no indication as to a
particular matter, then as recommended by the Board of Directors on such
matters, and in their discretion, upon such other matters as may properly come
before the meeting. The Trustee will keep my vote completely confidential.
If the Trustee does not receive my executed Proxy by February 19, 1998, I
understand the Trustee will vote the shares represented by this Proxy in the
same proportion as it votes those shares for which it does receive a properly
executed Proxy.
(OVER) (PLEASE SIGN ON REVERSE SIDE)
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as [X]
indicated in
this example
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" NUMBERS 1 AND 2.
1. ELECTION OF DIRECTORS
FOR WITHHOLD
all nominees AUTHORITY
(except as noted) (all nominees)
[_] [_]
J.W. Stratton, D.I.J. Wang, R.C. Gozon, S.D. Ban,
L.R. Greenberg, M.O. Schlanger, T. F. Donovan
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. APPROVAL OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS.
FOR AGAINST ABSTAIN
[_] [_] [_]
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign the full corporate name by duly
authorized officer.
--------------------------------------
Signature(s)
Dated ________________________________
FOLD AND DETACH HERE
[LOGO of UGI Corporation]
Dear Shareholder:
Enclosed are materials relating to UGI Corporation's 1998
Annual Meeting of Shareholders. The Notice of the Meeting and
Proxy Statement describe the formal business to be transacted
at the meeting.
Your vote is important to us. Please complete, sign and
return the attached proxy card in the accompanying postage-
paid envelope whether or not you expect to attend the meeting.
Barton D. Whitman
Corporate Secretary
UGI News & Reports You can obtain news and other
---------------------------- information about UGI and our
24 Hours a day -- Every day! majority-owned AmeriGasPartners, L.P.
1-800-UGI-9453 or conveniently by telephone or
http://www.ugicorp.com by the Internet.
<PAGE>
PROXY PROXY
FIDELITY MANAGEMENT TRUST COMPANY
Upon return of this Proxy to you, you are instructed to cause all UGI
Corporation Common Stock in my AmeriGas Propane, Inc. Savings Plan Account to
be voted at the Annual Meeting of Shareholders of UGI Corporation, to be held
on February 24, 1998, and any adjournment thereof, as follows:
As indicated by me on the reverse side, but, if I make no indication as to a
particular matter, then as recommended by the Board of Directors on such
matters, and in their discretion, upon such other matters as may properly come
before the meeting. The Trustee will keep my vote completely confidential.
If the Trustee does not receive my executed Proxy by February 19, 1998, I
understand the Trustee will vote the shares represented by this Proxy in the
same proportion as it votes those shares for which it does receive a properly
executed Proxy.
(OVER) (PLEASE SIGN ON REVERSE SIDE)
FOLD AND DETACH HERE
