<PAGE>
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 (S) 240.14a-11(c) or (S) 240.14a-12
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
UGI CORPORATION
- --------------------------------------------------------------------------------
(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:
UGI CORPORATION
-------------------------------------------------------------------------
(4) Date Filed:
12/22/99
-------------------------------------------------------------------------
Notes:
<PAGE>
UGI
CORPORATION
[_]Notice of February 29, 2000
Annual Meeting and
Proxy Statement _______________
<PAGE>
BOX 858 VALLEY FORGE, PA 19482 -- 610-337-1000
UGI
CORPORATION
LON R. GREENBERG
Chairman, President and
Chief Executive Officer
December 29, 1999
Dear Shareholder,
On behalf of our entire Board of Directors, I cordially invite you to
attend our Annual Meeting of Shareholders on Tuesday, February 29, 2000. At the
meeting, we will review UGI's performance for fiscal year 1999 and our
expectations for the future.
A notice of the meeting and Proxy Statement follow. You will also find
enclosed your proxy voting card and the 1999 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 on February 29th and addressing your
questions and comments.
Sincerely,
Lon R. Greenberg
460 NORTH GULPH ROAD, KING OF PRUSSIA, PA 19406
<PAGE>
BOX 858 VALLEY FORGE, PA 19482 -- 610-337-1000
UGI
CORPORATION
December 29, 1999
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of UGI Corporation will be held on
Tuesday, February 29, 2000, at 10:00 a.m., at The Desmond Hotel and Conference
Center, Ballrooms A and B, One Liberty Boulevard, Malvern, Pennsylvania. This
will be a new location for our Annual Meeting. Directions to The Desmond
Conference Center are included in our Proxy Statement. Shareholders will
consider and take action on the following matters:
1. Election of eight directors to serve until the next annual
meeting of shareholders;
2. Approval of the Company's 2000 Stock Incentive Plan;
3. Approval of the Company's 2000 Directors' Stock Option Plan;
4. Ratification of the appointment of Arthur Andersen LLP as
independent certified public accountants for fiscal year 2000; and
5. Transaction of any other business that is properly raised at the
meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "IN FAVOR OF" ALL FOUR
PROPOSALS.
Brendan P. Bovaird,
Corporate Secretary
460 NORTH GULPH ROAD, KING OF PRUSSIA, PA 19406
<PAGE>
<TABLE>
<CAPTION>
[_]TABLE OF CONTENTS____________________________________________________________________________
<S> <C>
Annual Meeting Information............................................................. 1
Who is entitled to vote?............................................................ 1
What am I voting on?................................................................ 1
How does the Board of Directors recommend I vote on the proposals?.................. 1
How do I vote?...................................................................... 2
What is a quorum?................................................................... 2
What vote is required to approve each item?......................................... 2
Who will count the vote?............................................................ 2
What are the deadlines for shareholder proposals for next year's
Annual Meeting?................................................................. 2
How much did this proxy solicitation cost?.......................................... 3
Securities Ownership of Management..................................................... 3
Securities Ownership of Certain Beneficial Owners...................................... 5
Item 1 -- Election of Directors........................................................ 5
Nominees............................................................................ 5
Board Committees and Meeting Attendance............................................. 9
Compensation of Directors.............................................................. 11
Directors' Equity Compensation Plan................................................. 12
Report of the Compensation and Management Development Committee
of the Board of Directors............................................................. 12
Corporate Performance.................................................................. 17
Compensation of Executive Officers..................................................... 19
Summary of Compensation............................................................. 19
Option Grants in Fiscal Year 1999................................................... 21
Option Exercises in Fiscal Year 1999 and Fiscal Year-End Option Values.............. 23
Retirement Benefits................................................................. 24
Severance Pay Plan for Senior Executive Employees................................... 25
Change of Control Arrangements...................................................... 25
Stock Ownership Policy and Indebtedness of Management............................... 26
Item 2 -- Approval of Proposed 2000 Stock Incentive Plan............................... 27
Item 3 -- Approval of Proposed 2000 Directors' Stock Option Plan....................... 32
Item 4 -- Ratification of Appointment of Independent Certified Public Accountants...... 35
Item 5 -- Other Matters................................................................ 36
Glossary............................................................................... 37
Directions to location of Annual Meeting............................................... 39
</TABLE>
ii
<PAGE>
UGI CORPORATION
460 North Gulph Road
King of Prussia, Pennsylvania 19406
PROXY STATEMENT
- ----------------------------------------------------------------------
ANNUAL MEETING INFORMATION
This proxy statement contains information related to the Annual Meeting of
Shareholders of UGI Corporation to be held on Tuesday, February 29, 2000,
beginning at 10:00 a.m., at The Desmond Hotel and Conference Center, One Liberty
Boulevard, Malvern, Pennsylvania, and at any postponements or adjournments
thereof. Please refer to the map showing the meeting location which appears at
the back of this booklet. 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 will be mailed to shareholders on December 29, 1999.
Who is entitled to vote?
Shareholders owning our Common Stock on December 10, 1999, are entitled to
vote at the Annual Meeting, or any postponement or adjournment of the meeting.
Each Shareholder has one vote per share on all matters to be voted on. On
December 10, 1999, there were 27,290,069 shares of Common Stock outstanding.
What am I voting on?
You will be asked to elect nominees to serve on the Board of Directors,
approve the 2000 Stock Incentive Plan and the 2000 Directors' Stock Option Plan,
and to ratify the appointment of our independent accountants for fiscal year
2000. 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 will vote in accordance with their best
judgment.
How Does the Board of Directors
recommend I vote on the proposals?
The Board recommends a vote FOR each of the nominees, FOR approval of both
compensation plans, and FOR the ratification of the appointment of Arthur
Andersen LLP as our independent certified public accountants for fiscal year
2000.
<PAGE>
How do I vote?
Sign and date each proxy card you receive and return it in the prepaid
envelope. If you sign your proxy, but do not mark your choices, your Proxies
will vote for the persons nominated for election as directors, in favor of
approval of the 2000 Stock Incentive Plan and the 2000 Directors' Stock Option
Plan, and in favor of ratifying the appointment of Arthur Andersen LLP as
independent certified public accountants for fiscal year 2000. 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.
What is a quorum?
A "quorum" is the presence at the meeting, in person or represented by Proxy,
of the holders of the majority of the outstanding shares. There must be a quorum
for the meeting to be held. 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 the discretion to vote from brokers 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. Broker non-votes will not
affect the outcome of a vote on a particular matter.
What vote is required to approve each item?
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 on the item to
be approved.
Who will count the vote?
ChaseMellon Shareholder Services, Inc., our Transfer Agent, will tabulate the
votes cast by proxy or in person at the Annual Meeting.
What are the Deadlines for shareholder
proposals for next year's Annual Meeting?
Shareholders may submit proposals on matters appropriate for shareholder
action at future annual meetings by following the rules of the Securities and
Exchange Commission. Proposals intended for inclusion in next year's proxy
statement and proxy card must be received by the Company not later than August
31, 2000. If the Company does not receive notice of any other matter that a
shareholder wishes to raise at the Annual Meeting in 2001 by November 13, 2000
and a matter is raised at that meeting, the Proxies
2
<PAGE>
will have discretionary authority to vote on the matter. All proposals and
notifications should be addressed to the Corporate Secretary.
How much did this proxy solicitation cost?
The Company has engaged Corporate Investor Communications, Inc. to solicit
proxies for the Company for a fee of $6,000 plus expenses. We also reimburse
banks, brokerage firms and other institutions, nominees, custodians and
fiduciaries for their reasonable expenses for sending proxy materials to
beneficial owners and obtaining their voting instructions. Certain directors,
officers and regular employees of the Company and its subsidiaries may solicit
proxies personally or by telephone or facsimile without additional compensation.
SECURITIES OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of Common Stock beneficially
owned by each director, by each of the executive officers named in the Summary
Compensation Table on page 19, and by all directors and executive officers as a
group. The table shows ownership as of October 31, 1999.
Our subsidiary AmeriGas Propane, Inc. is the General Partner of AmeriGas
Partners, L.P. The table also shows, as of October 31, 1999, the number of
Common Units of AmeriGas Partners beneficially owned by each director and
executive officer and by all directors and executive officers as a group.
Mr. Greenberg beneficially owns approximately 1.5% of the outstanding Common
Stock. Each other person named in the table beneficially owns less than 1% of
the outstanding Common Stock. Directors and executive officers as a group own
approximately 3.2% of the outstanding Common Stock and less than 1% of the
outstanding Common Units of AmeriGas Partners. For purposes of reporting total
beneficial ownership, Shares which may be acquired through stock option
exercises are included.
3
<PAGE>
<TABLE>
<CAPTION>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
- -----------------------------------------------------------------------------------------------------------------------
Aggregate Number Aggregate Number of
of Shares of UGI AmeriGas
Common Stock Units Held Partners, L.P.
Beneficially Under Directors' Exercisable COMMON UNITS
Name Owned (1) Equity Plan (2) Options BENEFICIALLY OWNED (1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James W. Stratton 1,693 (3) 9,478 5,000 1,000 (3)
David I. J. Wang 14,693 8,494 5,000 10,000
Richard C. Gozon 6,693 10,970 5,000 0
Stephen D. Ban 6,770 (4) 5,109 2,900 0
Lon R. Greenberg 125,438 (5) 0 293,959 4,500 (5)
Marvin O. Schlanger 1,565 2,480 0 300 (6)
Thomas F. Donovan 1,665 1,298 0 1,000
Anne Pol 1,373 3,445 0 0
Anthony J. Mendicino 44,435 (7) 0 30,000 5,000 (7)
Robert J. Chaney 16,720 (8) 0 92,528 0
Michael J. Cuzzolina 33,921 (9) 0 60,000 0
Brendan P. Bovaird 23,054 (10) 0 35,007 500 (10)
Bradley C. Hall 16,437 (11) 0 50,000 0
Directors and executive
officers as a group (13
persons) 294,457 41,274 579,394 22,300
</TABLE>
(1) Sole voting and investment power unless otherwise specified.
(2) The Directors' Equity Compensation Plan provides that Units will be
converted to Shares and paid out to directors upon their retirement or
termination of service.
(3) Mr. Stratton's Shares and Common Units are held jointly with his spouse.
(4) Dr. Ban's Shares are held jointly with his spouse.
(5) Mr. Greenberg holds 88,220 Shares jointly with his spouse and 5,178 Shares
represented by units held in the UGI Stock Fund of the 401(k) Employee
Savings Plan, based on September 30, 1999 statements. The AmeriGas Partners
Common Units shown are held by Mr. Greenberg's adult children.
(6) The Common Units shown are held by Mr. Schlanger's spouse.
(7) Mr. Mendicino holds 86 Shares jointly with his spouse. He holds the AmeriGas
Partners Common Units shown jointly with his spouse.
(8) Mr. Chaney holds 2,561 Shares jointly with his spouse.
(9) Mr. Cuzzolina's ownership includes 10,030 Shares represented by units held
in the UGI Stock Fund of the 401(k) Employee Savings Plan, based on
September 30, 1999 statements.
(10) Mr. Bovaird holds 12,993 Shares jointly with his spouse and 3,061 Shares
represented by units held in the UGI Stock Fund of the 401(k) Employee
Savings Plan, based on September 30, 1999 statements. He holds the AmeriGas
Partners Common Units shown jointly with his spouse.
(11) Mr. Hall's ownership includes 3,588 Shares held by a family trust and 2,620
Shares represented by units held in the UGI Stock Fund of the 401(k)
Employee Savings Plan, based on September 30, 1999 statements.
4
<PAGE>
Section 16(a) -- Beneficial Ownership
Reporting Compliance
Based on our records, we believe that during Fiscal 1999 our directors and
officers complied with all SEC filing requirements applicable to them.
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table shows information regarding each person known by the
Company to be the beneficial owner of more than 5% of the Company's Common
Stock. The ownership information was provided to the Company in November 1999 by
the beneficial owners named below.
<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. 2,641,970 9.68%
10 Sasco Hill Road
Fairfield, CT 06430
Common Stock Snyder Capital Management LP 2,675,200 9.80%
350 California Street, Suite 1460
San Francisco, CA 94104-1436
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on 27,290,069 Shares of Common Stock issued and outstanding at
December 10, 1999.
ITEM 1 -- ELECTION OF DIRECTORS
- ----------------------------------------------------------------------
NOMINEES
Eight 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. Seven members of the Board of Directors elected at last year's annual
meeting are standing for election this year. On December 14, 1999, the Board of
Directors increased the size of the board from seven to eight members and
elected Anne Pol to fill the vacancy in the Board.
The nominees are as follows:
5
<PAGE>
JAMES W. STRATTON
Director since 1979
Age 63
Mr. Stratton is the President and Chief Executive Officer of Stratton
Management Company (since 1972), an investment advisory and financial consulting
firm. He is also Chairman and Chief Executive Officer of EFI, 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; and Teleflex, Inc.
DAVID I. J. WANG
Director since 1988
Age 67
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.; BE&K Inc.; Emsource Inc.; and Forest Resources LLC.
RICHARD C. GOZON
Director since 1989
Age 61
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.; AmeriGas Propane, Inc.; AmeriSource
Health Corporation; and Triumph Group, Inc.
6
<PAGE>
STEPHEN D. BAN
Director since 1991
Age 59
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 49
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
Director since 1998
Age 51
Mr. Schlanger is a Principal in the firm of Cherry Hill Chemical Investments,
L.L.C. (management services and capital for chemical and allied industries)
(October 1998 to present). He also serves as interim President of OneChem, Ltd.
Mr. Schlanger was previously President and Chief Executive Officer (May 1998 to
October 1998), Executive Vice President and Chief Operating Officer (1994 to May
1998) and a director (1994 to 1998) of ARCO Chemical Company. He also held the
position of Senior Vice President of ARCO Chemical Company and President of ARCO
Chemical Americas Company (1992 to 1994). Mr. Schlanger also serves as a
director of UGI Utilities, Inc.; OneChem, Ltd.; and Wellman, Inc.
7
<PAGE>
THOMAS F. DONOVAN
Director since 1998
Age 66
Mr. Donovan retired as Vice Chairman of Mellon Bank on January 31, 1997, a
position he had held since 1988. He continues to serve as an advisory board
member to Mellon Bank Corp. Mr. Donovan also serves as a director of UGI
Utilities, Inc.; AmeriGas Propane, Inc.; Nuclear Electric Insurance Co.; and
Merrill Lynch International Bank, Ltd.
ANNE POL
Director 1993 through 1997 and
since December 1999
Age 52
Mrs. Pol is Senior Vice President, Thermo Electron Corporation (environmental
monitoring, and analytical instruments and a major producer of recycling
equipment, biomedical products and alternative energy systems), a position she
has held since 1998. She previously served as Vice President (1996 to 1998). As
Senior Vice President, she is responsible for Human Resources, Government
Relations, Information Technology and the Thermo Coleman Group of companies.
Mrs. Pol also served as President, Pitney Bowes Shipping and Weighing Systems
Division, a business unit of Pitney Bowes Inc. (mailing and related business
equipment) (1993 to 1996); Vice President, New Product Programs in the Mailing
Systems Division of Pitney Bowes Inc. (1991 to 1993); and Vice President,
Manufacturing Operations in the Mailing Systems Division of Pitney Bowes Inc.
(1990 to 1991).
8
<PAGE>
BOARD COMMITTEES AND MEETING ATTENDANCE
The Board of Directors has four committees, the Audit, Compensation and
Management Development, Executive/Nominating and Planning and Finance
Committees. Committees report their actions to the full Board at its next
regular meeting. A description of the duties of each committee follows the table
below.
<TABLE>
<CAPTION>
Committee Membership and Meetings Held in Fiscal 1999
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Compensation
and Planning
Management Executive/ and
Name Audit Development Nominating Finance
- -------------------------------------------------------------------------------------------
J. W. Stratton X* X
D. I. J. Wang X X X*
R. C. Gozon X*
S. D. Ban X*
L. R. Greenberg X X
T. F. Donovan X X
M. O. Schlanger X
No. of Meetings in
Fiscal 1999** 2 4 1 0
</TABLE>
X Member
* Chairperson
** The Board held 14 meetings in Fiscal 1999. All directors attended at least
75% of the aggregate of all meetings of the Board of Directors and Committees
of the Board.
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 recommendations to the Board as to
their selection.
. Receives reports from the internal auditors and reviews the scope of the
internal audit program.
9
<PAGE>
Compensation and Management
Development Committee
. Establishes executive compensation policies and programs.
. Recommends to the Board base salaries and target bonus levels for executive
officers.
. 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.
. 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 for director qualified persons recommended by
directors, management and shareholders. Written recommendations for director
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 notifying the Corporate Secretary 45 days prior to the
anniversary of the mailing date of the Company's proxy statement for the
previous year's annual meeting. 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.
10
<PAGE>
COMPENSATION OF DIRECTORS
The table below shows the components of director compensation for Fiscal 1999.
<TABLE>
<CAPTION>
Directors' Compensation (1)
- ---------------------------------------------------------------------------------------------------------
Cash Equity
Component (2) Component
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Annual retainer $18,500 (3) 148 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 --
Fee for special service related to Board business $ 1,000 --
rendered at the request of the Chairman of the Board
</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. Gozon and Schlanger elected this
deferral option.
(3) $18,500 of the annual retainer of $22,000 is paid in cash and $3,500 is
paid in whole shares of Common Stock pursuant to the Directors' Equity
Compensation Plan described below. Fractional Shares are paid in cash.
Each Share had a fair market value of $23.626.
(4) An award of Units was made effective January 1, 1999 pursuant to the
Directors' Equity Compensation Plan described below.
During 1999, the Company engaged the services of Towers Perrin, its
compensation consultant, to conduct a review of the Company's compensation
program for outside directors. Following its review, Towers Perrin made
recommendations to management and the Compensation and Management Development
Committee of the Board. After evaluating these recommendations, the Committee
and the Board of Directors approved the addition of stock options to the
directors' compensation program, to be issued under the proposed UGI Corporation
2000 Directors' Stock Option Plan. The Plan is summarized beginning on page 32.
11
<PAGE>
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. A Unit represents an
interest equivalent to one share of Common Stock. 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.
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.
All Units and dividend equivalents are fully vested when credited to the
participant's account. Account balances become payable in Shares upon retirement
or termination of service, unless the director elected to defer receipt of those
benefits.
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.
12
<PAGE>
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
opportunities are provided on a long-term basis under the Company's 1997 Stock
Option and Dividend Equivalent Plan through 2000, and, subject to approval by
shareholders, a new 2000 Stock Incentive Plan.
A total of 103,000 restricted Shares were issued to 10 senior executives of
the Company and its subsidiaries during 1999. The Committee recommended approval
of, and the Board approved, these awards in order to permit management to focus
without undue distraction on the significant strategic issues facing the Company
following the termination of the proposed merger with Unisource Worldwide, Inc.
These awards were also made to ensure continued retention of the services of the
recipients. These Shares will be restricted for up to four years. If, after June
2001, the average price of the Company's Common Stock exceeds $26 per share for
a period of ten consecutive trading days, the restrictions will lapse sooner and
the executives will receive the Shares.
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 1999, 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, the American Gas Association's Executive
Compensation Survey, and Edison Electric Institute's Executive Compensation
Survey. 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, job
duties, scope and responsibilities, 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 targets. For
Messrs. Greenberg, Mendicino, Bovaird and Cuzzolina, the sole objective in 1999
was achieving financial performance for the Company. For Mr. Hall, payment was
contingent on (i) achieving the Company's current financial performance
objective, (ii) the financial and business performance of the Hearth USA (TM)
retail store, and (iii) the progress of international business development
activities. Mr. Chaney is covered under the UGI Utilities, Inc. Annual Bonus
Plan. For Mr. Chaney, the sole objective was achieving the financial
13
<PAGE>
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 determines and recommends
to the Board cash bonus payments under the terms of the Annual Bonus Plan. The
financial objective for fiscal year 1999 for UGI Corporation for executives
other than Mr. Hall was based on the weighted achievement of the AmeriGas
Partners, L.P. financial and business performance goals and the UGI Utilities,
Inc. financial goal. Weighting was based on the Company's approximate business
mix. The objectives for Mr. Hall were weighted equally. For executives whose
sole objective 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 Corporation (other than utility and domestic propane business performance)
on overall Company financial performance. During fiscal year 1999, the financial
objective for UGI Utilities, Inc. was net earnings after preferred stock
dividends. For AmeriGas Partners, the financial objective was earnings before
interest, taxes, depreciation and amortization ("EBITDA"), while business
performance objectives measured improvement in customer growth, customer
satisfaction and employee satisfaction. Of these objectives, the financial
objective has the greatest weight.
Periodically the Committee reviews the overall competitiveness of the Annual
Bonus Plan with its compensation consultant. For 1999, 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 Committee believes that the Company competes for key executives from a
broad pool of companies. This pool of companies is much larger than the group of
peer companies against which total shareholder return would typically be
compared. Therefore, the survey companies used to determine competitive pay
practices and establish base salary ranges as well as Annual Bonus Plan target
opportunities are not the same as the group of peer companies shown in the
"Corporate Performance" section of this Proxy Statement.
The Company's long-term equity based 1997 Stock Option and Dividend Equivalent
Plan (the "1997 SODEP") was approved by the Company's shareholders in February
of 1997. The performance period that commenced January 1, 1997 under that plan
will end December 31, 1999. A new 2000 Stock Incentive Plan (the "2000 Plan")
has been approved by this Committee and the Board of Directors and is being
submitted for approval by shareholders at the 2000 Annual Meeting. The Committee
oversees these Plans for executives. The 1997 SODEP consists of non-qualified
stock option grants, some of which provided an opportunity to earn during a
three-year performance period an amount equivalent to or greater than the
dividends paid on shares covered by options. Payment of dividend equivalents is
subject to a comparison of the total return realizable on a share of the
Company's Common Stock with the total return achieved by each member of a group
of comparable peer companies over the 1997 SODEP's
14
<PAGE>
three-year performance period. (A list of the comparable peer companies
appears under the heading "Corporate Performance" following this report.) No
payment of dividend equivalents is expected to be made to executives when the
current three-year performance period ends on December 31, 1999.
The 2000 Plan being recommended is an omnibus plan that permits grants of (i)
stock options, (ii) dividend equivalents, and (iii) restricted stock. All
dividend equivalents and restricted stock grants will be subject to objective
performance-based goals. The Committee is recommending a plan that provides a
strong incentive for improved financial performance and greater flexibility in
establishing incentives than was afforded under the prior SODEP-type plans. The
Committee will select performance criteria designed to reconfirm the Company's
long-standing goal of providing superior shareholder returns. The Committee
expects to make the initial awards under the 2000 Plan after the Company's
fiscal year 2000 results are known.
Fiscal Year 1999 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 1999, the Committee determined that Mr. Greenberg's base
salary be increased by 5.0% over the level set for fiscal year 1998. The
Committee's determination was based on Mr. Greenberg's position in salary range,
his overall leadership and his performance in achieving strategic goals and
minimizing the impact of adverse weather conditions on the Company's
performance. Mr. Greenberg is not separately compensated in his base salary for
his responsibilities as Chief Executive Officer of AmeriGas Propane.
Long-Term Incentive. During 1999, after consultation with Towers Perrin, the
Board made a grant of 225,000 options under the 1997 Stock Option and Dividend
Equivalent Plan and a grant of 30,000 Shares of restricted Stock to Mr.
Greenberg. The award of restricted Stock was made as a part of the award of
restricted Stock to senior executives described earlier in this Report. The
award of options was made in recognition of Mr. Greenberg's serving without
additional compensation as Chief Executive Officer of AmeriGas Propane since
1996, as well as for the same purposes for which the awards of restricted Stock
were made to the other senior executives. The options will vest in equal
increments over four years.
Annual Bonus. For 1999, Mr. Greenberg earned the annual bonus shown on page 19
based on the formula for the UGI Corporation Annual Bonus Plan, as described
previously in this Report. Under that formula, UGI Utilities, Inc. achieved a
significant portion of its financial performance goal and AmeriGas Partners
modestly exceeded the threshold level for payment of annual bonuses.
15
<PAGE>
Policy on Deductibility of Compensation
Section 162(m) of the Internal Revenue Code limits the tax deduction to
$1,000,000 for compensation paid to the Chief Executive Officer and the 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 2000 Plan has been designed
to meet the requirements of Section 162(m) and is being submitted to the
Company's shareholders for approval.
To the extent possible, the Committee intends to preserve deductibility of
compensation, but it may choose to provide compensation that is not deductible,
such as the special restricted Stock awards made in 1999, in order to maximize
shareholder return and to retain and reward high-performing executives.
Compensation and Management
Development Committee
Richard C. Gozon, Chairman
Thomas F. Donovan
David I. J. Wang
16
<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 two other indexes: the S&P 500 Index
and a peer group of diversified utilities referred to as the "1997 SODEP Peer
Index."* The graph covers the five years ended September 30, 1999. The
annualized returns reflected in the graph for the Company, the S&P 500 Index and
the 1997 SODEP Peer Index were 11.17%, 25.03% and 14.78%, respectively.
[Graph of Comparison of 5 Year Cumulative Total Shareholder Return Among UGI
Corporation, S&P 500 and 1997 SODEP Peer Index]
1994 1995 1996 1997 1998 1999
- -------------------------------------------------------------------------
UGI Corporation 100.00 117.71 142.92 178.36 157.93 169.80
S&P 500 100.00 129.74 156.12 219.27 239.11 305.59
1997 SODEP Peer Index 100.00 125.79 135.97 154.51 202.66 199.19
The performance illustrated assumes that $100 was invested in UGI Common Stock
and each index on September 30, 1994, and that all dividends were reinvested.
17
<PAGE>
* The 1997 SODEP Peer Index consists of the S&P Utility Index, modified by
eliminating all telecommunication companies. It includes American Electric
Power Company, Inc., Carolina Power & Light Company, Central and South West
Corporation, Cinergy Corp., The Coastal Corporation, Columbia Energy Group
(previously The Columbia Gas System, Inc.), Consolidated Edison, Inc.,
Consolidated Natural Gas Company, Constellation Energy Group, Inc.
(previously Baltimore Gas and Electric Company)/(1)/, Dominion Resources,
Inc., DTE Energy Company, Duke Energy Corporation (previously Duke Power
Company), Eastern Enterprises, Edison International, Enron Corp., Entergy
Corporation, FPL Group, Inc., GPU, Inc., Niagara Mohawk Power Corporation,
NICOR INC., Northern States Power Company, ONEOK, INC., Pacificorp, PECO
Energy Company, Peoples Energy Corporation, PG&E Corporation, PP&L
Resources, Inc., Public Service Enterprise Group Incorporated, Reliant
Energy, Incorporated (previously Houston Industries Incorporated), Sonat
Inc., The Southern Company, Texas Utilities Company, Unicom Corporation,
and The Williams Companies, Inc.
Previously, Ohio Edison Company, NorAm Energy Corp., Pacific Enterprises,
PanEnergy Corp., and Union Electric Company were included in the 1997 SODEP
Peer Index. These entities have formed business combinations with other
companies.
/(1)/On April 30, 1999, Baltimore Gas and Electric Company was reorganized into
a holding company structure.
18
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary of Compensation
The following table shows cash and other compensation paid or accrued during
the last three fiscal years to the Company's Chief Executive Officer and each of
the five other most highly compensated executive officers.
<TABLE>
<CAPTION>
Summary Compensation Table
- ----------------------------------------------------------------------------------------------------------------------
Long Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
- ----------------------------------------------------------------------------------------------------------
Securities
Other Under- All
Annual Restricted lying Other
Name and Principal Fiscal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus (1) sation (2) Awards (3) SARs Payouts sation (4)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Lon R. Greenberg 1999 $587,139 $ 266,776 $11,359 $611,260 225,000 (5a) $0 $18,273
Chairman, Presi- 1998 $559,616 $ 225,000 $ 8,209 $ 0 0 $0 $22,154
dent and Chief 1997 $509,827 $ 425,000 $ 7,671 $ 0 200,000 (5b) $0 $14,233
Executive Officer
Anthony J. Mendicino 1999 $247,499 $ 77,740 $ 0 $305,625 0 $0 $ 5,778
Vice President - 1998 $ 7,615 $ 9,281 $ 0 $ 0 30,000 (5b) $0 $ 0
Finance and Chief
Financial Officer (6)
Robert J. Chaney 1999 $221,445 $ 72,109 $ 7,817 $142,625 5,556 (5b) $0 $ 5,742
President and Chief 1998 $171,801 $ 33,777 $ 4,528 $ 0 8,333 (5b) $0 $ 5,023
Executive Officer, 1997 $164,396 $ 51,457 $ 4,272 $ 0 43,639 (5b) $0 $ 4,921
UGI Utilities, Inc.
Michael J. Cuzzolina 1999 $190,768 $ 53,327 $ 9,425 $203,750 0 $0 $ 5,331
Vice President; 1998 $183,446 $ 46,146 $ 8,183 $ 0 0 $0 $ 6,747
President and Chief 1997 $176,370 $ 71,990 $ 7,569 $ 0 30,000 (5b) $0 $ 4,527
Executive officer of
FLAGA (7)
Brendan P. Bovaird 1999 $189,600 $ 53,048 $14,399 $142,625 7,000 $0 $ 5,215
Vice President and 1998 $176,677 $ 42,188 $ 4,075 $ 0 0 $0 $ 5,425
General Counsel 1997 $164,653 $ 64,449 $ 3,769 $ 0 30,000 (5b) $0 $ 4,196
Bradley C. Hall 1999 $160,714 $ 52,575 $ 4,820 $ 0 0 $0 $ 4,765
Vice President - 1998 $146,844 $ 51,063 $ 5,102 $ 0 0 $0 $ 4,195
New Business 1997 $131,723 $ 39,600 $ 3,740 $ 0 35,000 (5b) $0 $ 3,740
Development
</TABLE>
(1) Bonuses earned under the Annual Bonus Plan are for the year reported,
regardless of the year paid. The Company's Annual Bonus Plan is based on the
achievement of business and/or financial performance objectives which
support business plans and goals. Bonus opportunities vary by position and
for Fiscal 1999 ranged from 0% to 148% of base salary for Mr. Greenberg, 0%
to 102% for Messrs. Mendicino, Cuzzolina and Bovaird, 0% to 53% for Mr.
Chaney and 0% to 74% for Mr. Hall.
(2) Amounts represent tax payment reimbursements for certain benefits.
19
<PAGE>
(3) (a) On June 4, 1999, the Board of Directors of UGI Corporation approved
restricted Stock awards to certain executives of the Company. The
dollar values shown above represent the aggregate value of each award
on the date of grant, determined by multiplying the number of shares
awarded by the closing price of UGI Common Stock on the New York Stock
Exchange on June 4, 1999. Holders of restricted Shares have the right
to vote and to receive dividends during the restriction period.
(b) Based on the closing stock price of UGI Common Stock on the New York
Stock Exchange on September 30, 1999, Mr. Greenberg's 30,000 share
grant had a market value of $697,000; Mr. Mendicino's 15,000 share
grant had a market value of $348,750; Mr. Cuzzolina's 10,000 share
grant had a value of $232,500 and Mr. Chaney's and Mr. Bovaird's 7,000
share grant each had a market value of $162,750.
(4) Amounts represent Company contributions in accordance with the provisions of
the UGI Utilities, Inc. Employee 401(k) Savings Plan and allocations under
the Supplemental Executive Retirement Plan. During fiscal years 1999, 1998,
and 1997, the following contributions were made to the Named Executives: (i)
under the Employee Savings Plan: For each of Messrs. Greenberg and
Cuzzolina, $3,600, $3,600 and $3,375; Mr. Mendicino, $3,600, $107 and $0;
Mr. Chaney, $3,600, $3,600 and $3,375; Mr. Bovaird, $3,509, $3,600 and
$3,375; Mr. Hall, $3,506, $3,600 and $3,375; and (ii) under the Supplemental
Executive Retirement Plan: Mr. Greenberg, $14,673, $18,554, and $10,858; Mr.
Mendicino, $2,178, $0 and $0; Mr. Cuzzolina, $1,731, $3,147 and $1,152; Mr.
Chaney, $2,142, $1,423 and $1,546; Mr. Bovaird, $1,706, $1,825 and $821; Mr.
Hall, $1,258, $595 and $0.
(5) (a) Non-qualified stock options granted on June 4, 1999 under the 1997
SODEP without the opportunity to earn dividend equivalents described
below.
(b) Non-qualified stock option grants made under the 1997 SODEP, which
include 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 return 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 period 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 Performance."
(6) Mr. Mendicino was elected Vice President - Finance and Chief Financial
Officer on September 8, 1998.
(7) Mr. Cuzzolina was named President and Chief Executive Officer of FLAGA
Beteiligungs Aktiengesellschaft on September 21, 1999.
20
<PAGE>
Option Grants in Fiscal 1999
The table below shows option grants to each of the Named Executives:
<TABLE>
<CAPTION>
Option Grants in Fiscal 1999
- --------------------------------------------------------------------------------------------------------------------------
Grant Date
Individual Grants Value
- --------------------------------------------------------------------------------------------------------------------------
% of Total
Number of Options
Securities Granted to Grant Date
Underlying Employees in Exercise or Expiration Present
Name Options Granted Fiscal 1999 (1) Base Price Date Value (3)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lon R. Greenberg 225,000 (2) 97.06% $20.375 6/03/2009 $ 641,857 (3a)
Anthony J. Mendicino 0 0% $ 0 -- $0
Robert J. Chaney 5,556 (4) 2.40% $21.250 2/22/2009 $ 12,704 (3b)
Michael J. Cuzzolina 0 0% $ 0 -- $0
Brendan P. Bovaird 0 0% $ 0 -- $0
Bradley C. Hall 0 0% $ 0 -- $0
</TABLE>
(1) A total of 231,806 options were granted to employees and executive officers
of the Company during fiscal year 1999 under the 1997 SODEP and the 1992
Non-Qualified Stock Option Plan. Under the 1992 Non-Qualified Stock Option
Plan, the option exercise price is not less than 100% of the fair market
value of UGI's Common Stock on the date of grant. Options granted on and
after December 10, 1996 are generally fully vested on the date of grant.
Options under the 1992 Plan are nontransferable and generally exercisable
only while the optionee is employed by the Company or an affiliate. Options
are subject to adjustment in the event of recapitalizations, stock splits,
mergers, and other similar corporate transactions affecting UGI's Common
Stock.
(2) Non-qualified stock options granted on June 4, 1999 under the 1997 SODEP.
This grant does not include the opportunity to earn an amount equivalent to
the dividends paid during the performance period on Shares covered by
options. The option exercise price is the fair market value of UGI's Common
Stock determined on the date of the grant. These options will vest at the
rate of 25% per year on the anniversary of the grant date. Options granted
under the Plan are nontransferable and are generally exercisable only while
the optionee is employed by the Company or an affiliate. Options are subject
to adjustment in the event of recapitalizations, stock splits, mergers, and
other similar corporate transactions affecting UGI's Common Stock.
21
<PAGE>
(3) Based on the Black-Scholes options pricing model. The assumptions used in
calculating the grant date present value are as follows:
(a) Three years of closing monthly stock price observations were used to
calculate the stock volatility and dividend yield assumptions.
.Stock volatility 22.39%
.Stock's dividend yield 6.18%
.Length of option term 10 years
.Annualized risk-free 6.14%
interest rate
.Discount of risk of 3% per year
forfeiture
(b) Three years of closing monthly stock price observations were used to
calculate the stock volatility and dividend yield assumptions.
.Stock volatility 17.13%
.Stock's dividend yield 5.97%
.Length of option term 10 years
.Annualized risk-free interest 5.39%
rate
.Discount of 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.
(4) Non-qualified stock options granted on February 23, 1999 under the 1997
SODEP. This grant also includes the opportunity to earn an amount equivalent
to the dividends paid during the performance period on Shares covered by
options. The option exercise price is the fair market value of UGI's Common
Stock determined on the date of the grant. These options were fully vested
on the date of grant. Options granted under the Plan are nontransferable and
are generally exercisable only while the optionee is employed by the Company
or an affiliate. Options are subject to adjustment in the event of
recapitalizations, stock splits, mergers, and other similar corporate
transactions affecting UGI's Common Stock.
22
<PAGE>
Option Exercises in Fiscal 1999
and Fiscal Year-End Option Values
The table below shows the number and value of stock options (exercised and
unexercised) for each of the Named Executives:
<TABLE>
<CAPTION>
Option Exercises In Fiscal 1999
And Fiscal Year-End Option Values
- --------------------------------------------------------------------------------------------------------------------------
Value of
Number of Securities Unexercised
Underlying Unexercised In-The-Money
Number of Options at Options at
Shares Fiscal Year End Fiscal Year End
Acquired on Value --------------------------------------------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lon R. Greenberg 0 $0 200,000 225,000 $125,000 (1) $ 646,875 (3)
93,959 0 $ 93,622 (2) $ 0
- -------------------------------------------------------------------------------------------------------------------------
Anthony J. Mendicino 0 $0 30,000 0 $ 26,250 (5) $ 0
- -------------------------------------------------------------------------------------------------------------------------
Robert J. Chaney 0 $0 35,000 0 $ 21,875 (1) $ 0
43,639 0 $136,372 (2) $ 0
5,556 0 $ 11,112 (4) $ 0
8,333 0 $ 7,291 (5) $ 0
- -------------------------------------------------------------------------------------------------------------------------
Michael J. Cuzzolina 0 $0 30,000 0 $ 18,750 (1) $ 0
30,000 0 $ 93,750 (2) $ 0
- -------------------------------------------------------------------------------------------------------------------------
Brendan P. Bovaird 0 $0 30,000 0 $ 18,750 (1) $ 0
5,007 0 $ 15,647 (2) $ 0
- -------------------------------------------------------------------------------------------------------------------------
Bradley C. Hall 0 $0 35,000 0 $ 21,875 (1) $ 0
13,000 0 $ 40,625 (2) $ 0
2,000 0 $ 6,250 (6) $ 0
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Value is calculated using the difference between $22.625 (1997 SODEP option
grant price at December 10, 1996) and $23.25 (1999 fiscal year-end closing
stock price) multiplied by the number of Shares underlying the option.
(2) Value is calculated using the difference between $20.125 (1992 SODEP option
price) and $23.25 (1999 fiscal year-end closing stock price) multiplied by
the number of Shares underlying the option.
(3) Value is calculated using the difference between $20.375 (1997 SODEP option
grant price at June 4, 1999) and $23.25 (1999 fiscal year-end closing stock
price) multiplied by the number of Shares underlying the option.
(4) Value is calculated using the difference between $21.250 (1997 SODEP grant
price at February 23, 1999) and $23.25 (1999 fiscal year-end closing stock
price) multiplied by the number of Shares underlying the option.
(5) Value is calculated using the difference between $22.375 (1997 SODEP grant
price at September 29, 1998) and $23.25 (1999 fiscal year-end closing stock
price) multiplied by the number of Shares underlying the option.
(6) Value is calculated using the difference between $20.125 (1992 Non-Qualified
Stock Option Plan option exercise price) and $23.125 (1999 fiscal year-end
closing stock price) multiplied by the number of Shares underlying the
option.
23
<PAGE>
<TABLE>
<CAPTION>
Retirement Benefits
The following Pension Plan Benefits Table shows the annual benefits payable
upon retirement to the Named Executives under the Company's Retirement Plan
and its Supplemental Executive Retirement Plan. The amounts shown assume the
executive retires in 1999 at age 65, and that the aggregate benefits are not
subject to statutory maximums. Messrs. Greenberg, Mendicino, Chaney,
Cuzzolina, Bovaird and Hall had, respectively, 19 years, 7 years, 35 years,
25 years, 4 years and 17 years of credited service under these Plans at
September 30, 1999.
- ---------------------------------------------------------------------------------------------------
Pension Plan Benefits Table
- ---------------------------------------------------------------------------------------------------
Annual Benefit for Years of Credited Service Shown (2)
- ---------------------------------------------------------------------------------------------------
Final 5-Year
Average Annual 15 20 25 30 35 40
Earnings (1) Years Years Years Years Years 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 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.
24
<PAGE>
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 without fault on their part. Benefits are payable to a senior
executive covered by the Severance Plan if the senior executive's employment is
involuntarily 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 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
participant will receive a pro-rated target bonus, or the actual annual bonus
which would have been paid after the end of the fiscal year, had the
participant's entire bonus been contingent on meeting the Company's financial
performance goal. The Plan also provides for separation pay equal to one day's
pay for each month of service, not to exceed an amount equal to one year's
compensation. Certain employee benefits are continued under the Plan 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
termination.
Change of Control Arrangements
Messrs. Greenberg, Chaney, Mendicino, Cuzzolina, Bovaird and Hall each have an
agreement with the Company which provides certain benefits in the event of a
change of control of the Company. The agreements operate independently of the
Severance Plan, continue through July 2004, and are automatically extended in
one-year increments thereafter 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 in the following instances:
. Any person (other than certain persons or entities affiliated with the
Company), together with all affiliates and associates of such person,
acquires securities representing 20% or more of either (A) the then
outstanding shares of Common Stock or (B) the combined voting
25
<PAGE>
power of the Company's then outstanding voting securities; or
. 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; or
. the Company 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, respectively, the outstanding common stock and the combined
voting power of the then outstanding voting securities of the surviving or
acquiring corporation; or
. 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 a change
of control 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, 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 also receive an amount to satisfy the executive's
additional tax burden. In addition, upon a change of control, the agreement
provides for an immediate cash payment equal to the market value of any pending
target award under the Company's long-term compensation plan.
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 begin at 40% of base salary and range up to 450% of base salary for
the Company's Chief Executive Officer. The policy is designed to encourage
growth in shareholder 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, interest-bearing loans are available from a
subsidiary of the Company. Each loan is full recourse to the
26
<PAGE>
borrower and is secured by a pledge of the Stock purchased. The loans mature in
10 years.
Five of the Company's executive officers obtained loans to finance the
purchase of Stock to comply with the policy. The largest amounts outstanding
under these loans during Fiscal 1999 were: Mr. Greenberg, $1,597,089; Mr.
Mendicino, $518,230; Mr. Cuzzolina, $126,132; Mr. Bovaird, $341,890; and Mr.
Hall, $241,448. The executive officers' outstanding loan amounts as of October
31, 1999 were: Mr. Greenberg, $1,517,905; Mr. Mendicino, $508,495; Mr.
Cuzzolina, $114,931; Mr. Bovaird, $327,694; and Mr. Hall, $227,807.
- --------------------------------------------------------------------------------
ITEM 2 -- APPROVAL OF PROPOSED
UGI CORPORATION 2000 STOCK INCENTIVE PLAN
- --------------------------------------------------------------------------------
Introduction and Purpose of the Plan
The Board of Directors is recommending shareholder approval of the 2000 Stock
Incentive Plan to be effective as of January 1, 2000. The 2000 Plan succeeds the
Company's 1997 Stock Option and Dividend Equivalent Plan, which in turn
succeeded two prior stock option and dividend equivalent plans. Each of the
prior plans was successful in achieving its objective of aligning long-term
executive compensation with shareholder return. Long-term executive compensation
will continue to be based on growth in shareholder value. The Board believes
that the 2000 Plan will enhance the Company's ability to attract and retain
individuals with exceptional managerial and professional talent.
In 1999 the Company engaged the services of its compensation consultant,
Towers Perrin, to examine the Company's long-term executive compensation
policies in light of current competitive long-term compensation practices. The
recommendations of Towers Perrin were presented to the Compensation and
Management Development Committee of the Board of Directors, which is comprised
solely of outside directors. Towers Perrin recommended an approach that is
intended to give the Compensation and Management Development Committee of the
Board flexibility to focus executives on the importance of executing the
Company's business plan to grow its core businesses and accelerate growth in
related and complementary businesses. Specifically, the 2000 Plan permits the
Committee to:
. choose performance goals from a wide variety of objective, performance-
based criteria, which may include comparing the Company's total
shareholder return with that of other companies in a peer group;
. grant restricted Shares alone or in combination with options to purchase
Stock;
. grant dividend equivalents; and
. use its discretion to reduce the payout of dividend equivalents or
restricted Shares if qualitative goals are not met.
27
<PAGE>
Towers Perrin also recommended award levels for participants in the 2000 Plan,
however, no awards have been made. The Committee expects to establish one or
more performance goals and make initial awards early in fiscal year 2001.
The Committee thoroughly reviewed the 2000 Plan and submitted its
recommendations to the entire Board of Directors of the Company. The Board of
Directors approved the 2000 Plan on December 14, 1999.
Shareholders receive the benefits of an investment in the Company's Common
Stock through dividends and through appreciation in the price of their Stock.
The recommended 2000 Plan will reward key executives in essentially the same
way. Stock options will attain value for the key executives only if our Share
price increases. In addition, the key executives may be afforded the opportunity
to earn Shares or an amount equivalent to or greater than the dividends paid on
the Shares covered by options if they achieve objective performance goals set by
the Committee and designed to enhance shareholder value. The Board of Directors
believes that the 2000 Plan continues a focus of directly aligning participant
interest to shareholder interest.
Summary of Key Features of the Plan
The following is a summary of the key features of the 2000 Plan.
Administration. The Compensation and Management Development Committee of the
Board will be responsible for the administration of the 2000 Plan. All
ministerial functions will be performed by an administrative committee of the
Company.
Eligible Participants. Approximately 30 key employees are eligible to
participate in the 2000 Plan. The Committee will determine which employees will
receive awards, as well as the types of awards to be made to individual
employees.
Maximum Number of Shares. Up to 1,100,000 shares of Common Stock may be issued
in connection with stock options and grants of restricted Stock. The maximum
number of shares of Common Stock that may be issued as restricted Stock under
the 2000 Plan is 500,000. In addition, no participant may be granted awards
relating to more than 500,000 Shares in any calendar year. The maximum number of
restricted Shares that may be granted to any participant in any calendar year is
100,000. These numbers may be adjusted by the Committee for changes in the
Company's capital structure, such as a stock split.
Types of Awards. The 2000 Plan permits the granting of the following types of
awards:
. Stock options
. Dividend Equivalents
. Restricted Stock
Stock Options. The Committee will determine when options will be granted, the
number of shares subject to each option, the vesting, the option price per
share, and whether the option will include Dividend Equivalents. The purchase
price per Share may not be less than 100% of the fair market value of the Stock
on the effective date of the option. The Committee will also determine the term
of options, but such term will not end later than ten years from the
28
<PAGE>
effective date of the option. Unless the Committee determines otherwise, all
options will vest in equal increments over three years. Options may be exercised
by paying the purchase price in cash or its equivalent, in Stock held for at
least six months, by applying Dividend Equivalents payable to the participant in
an amount equal to the option price, by payment through a broker, by such other
method as the Committee may approve, or by any combination of the above.
Options are generally exercisable only while the participant is employed by
the Company or its subsidiaries. If a participant terminates employment because
of retirement under one of the Company's retirement plans or due to disability,
all options will continue to vest and will remain exercisable until the earlier
of the expiration date of the option or 36 months after the participant
terminates employment. If a participant dies, his options will automatically
accelerate, and will remain exercisable until the earlier of the expiration date
of the option or 12 months from the date of death. When employment is terminated
for the convenience of the Company or a subsidiary, the options then exercisable
will remain exercisable until the earlier of the expiration date of the option
or 13 months after the employee's termination.
Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to participants in the 2000 Plan. Dividend Equivalents provide
participants with the opportunity to earn an amount that is equivalent to the
dividends paid on the shares covered by their options. Dividend Equivalents will
be paid to participants in cash, credits to be applied toward the payment of an
option, or a combination of cash and credits as determined by the Committee.
Dividend Equivalents will be paid only if the Company meets the performance goal
determined by the Committee. Dividend Equivalents will cease to accrue if the
participant terminates employment for any reason prior to the end of the
relevant performance period. Participants who terminate prior to the end of the
performance period, other than those who choose to resign, will be awarded
Dividend Equivalents at the end of the performance period provided the
performance criteria are met.
Other Stock Based Awards. The Committee is also authorized to grant to
participants awards of Stock that are subject to restrictions that will lapse
upon the achievement of performance goals determined by the Committee. The
Committee will select the employees to whom the restricted Stock awards are to
be made, the times at which the awards will be made, the number of shares to be
granted, and all other terms and conditions of the awards. Restricted Stock may
be issued for no cash consideration or for consideration determined by the
Committee. Participants with restricted Stock may have rights as a Shareholder
during the restriction period, including the right to receive dividends, if the
Committee so provides.
If a participant terminates employment with the Company before the performance
conditions for any restricted Stock award have been met, the participant will
generally forfeit and return those Shares for which the restrictions have not
lapsed. A participant will not forfeit restricted Stock if the participant
terminates employment because of retirement under one of the Company's
retirement plans or due to disability. In those cases, the participant will be
entitled to receive the number of Shares for which performance goals are met
within 36 months of the date of the participant's retirement or
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<PAGE>
disability. When employment is terminated due to the participant's death, the
estate will be entitled to receive that number of Shares, if any, for which the
performance goals are met at the end of the performance period.
Performance-Based Compensation. Section 162(m) of the Internal Revenue Code
limits the Company's income tax deduction for executive compensation paid to the
Named Executives in excess of $1 million unless it qualifies as performance-
based compensation. The Compensation and Management Development Committee of the
Board of Directors intends to have compensation paid to Company executives
qualify as performance-based compensation. In order to qualify stock options and
restricted Stock under IRS rules, the 2000 Plan will impose a 500,000 share
limit on the maximum number of shares that may be the subject of awards to a
participant in any one year. The Plan also provides that no more than 100,000
shares of restricted Stock may be granted, and no more than $1,000,000 of
Dividend Equivalents may accrue, to a participant in any calendar year.
Grants to participants of restricted Stock and Dividend Equivalents will be
contingent upon the Company meeting performance-based goals determined by the
Committee in accordance with the Plan. The Committee will set the performance-
based goals that must be met, the performance period during which the goals must
be met, the maximum amounts that will be paid if the goals are met, and any
other conditions deemed appropriate by the Committee. In selecting the
performance-based goals, the Committee will use one or more of the following
objective criteria:
. stock price
. earnings per share
. net earnings
. operating earnings
. return on assets
. shareholder return
. return on equity
. growth in assets
. unit volume
. sales
. cash flow
. market share
. relative performance to a group of companies comparable to the Company
. strategic business criteria consisting of one or more objectives based on
the Company meeting specified revenue goals, market penetration goals,
geographic business expansion goals, cost targets or goals relating to
acquisitions or divestitures.
Change in Control Provisions. In order to maintain the rights of participants
in the event of a change of control of the Company, the 2000 Plan generally
provides for the automatic acceleration and exercisability of all outstanding
options, for the lapse of all restrictions and conditions on outstanding
restricted Stock, and for all Dividend Equivalents to become payable. In a
change of control where the Company is not the surviving corporation (or if the
Company survives as a subsidiary of another corporation), the 2000 Plan provides
that all outstanding options will be assumed by or replaced with comparable
options of the surviving corporation, and other outstanding grants will be
converted to similar grants of the surviving corporation. Notwithstanding the
above, the Committee may take either of the following actions:
30
<PAGE>
. require participants to surrender their outstanding options in exchange for
payment by the Company in an amount by which the then fair market value of
the shares of Stock subject to the participant's unexercised option exceeds
the option price; or
. terminate all outstanding unexercised options after giving participants a
chance to exercise the options.
Transferability of Awards. Except as otherwise provided by the Committee,
options, restricted Stock, and Dividend Equivalents granted under the 2000 Plan
are generally nontransferable, except by will or laws of descent and
distribution.
Tax Consequences of the Plan. The grant of a stock option will not result in
taxable income at the time of the grant for the participant or the Company. Upon
exercising a stock option, the participant will recognize ordinary income in the
amount by which the fair market value of the Stock exceeds the option price; the
Company will be entitled to a deduction for the same amount. The tax treatment
to a participant of a disposition of Shares acquired through the exercise of an
option is dependent upon the length of time the Shares have been held. There
will be no tax consequence to the Company in connection with the disposition of
Shares acquired upon exercise of an option.
There are no federal tax consequences to participants or to the Company upon
the grant of restricted Stock if at the time of grant the Shares are subject to
a substantial risk of forfeiture or are not transferable. Once the restrictions
lapse and the Shares become transferable, the participant will recognize
ordinary income in an amount equal to the fair market value of the Shares; the
Company will be entitled to a deduction for the same amount, subject to the
application of Section 162(m) of the Internal Revenue Code. The tax treatment to
a participant of a disposition of Shares acquired after the restrictions lapse
is dependent upon the length of time the Shares have been held. There will be no
tax consequence to the Company in connection with the disposition of Shares
acquired under a restricted Stock award.
A participant will have ordinary income at the time that Dividend Equivalents
are paid, and the Company will have a corresponding deduction, subject to the
application of the provisions of Section 162(m) of the Internal Revenue Code. If
a participant chooses to defer receipt of Dividend Equivalents, the income to
the participant, and the Company's corresponding deduction, will be deferred
until such time as elected by the participant.
Amendments
Subject to Board approval, the Committee may at any time amend, suspend or
terminate the 2000 Plan without shareholder approval. Shareholder approval is
necessary, however, if required by federal or state law or the rules of any
stock exchange on which the Company's Common Stock is listed, or if the
Committee determines that shareholder approval is advisable. The Committee or
its delegate may make minor amendments to the 2000 Plan which will not
materially affect the rights of participants or significantly increase the
Company's costs. Written
31
<PAGE>
consent of a participant is required if a change by the Committee will adversely
affect any option, restricted Stock award, and Dividend Equivalents granted to
the participant.
Stock Price Information
The closing price of the Company's Common Stock as reported on the New York
Stock Exchange Composite Transactions tape on December 14, 1999 was $21.0625.
Future Grants and Awards
No awards have been made under the 2000 Plan. The Committee has not yet
determined the number of Shares that future awards will cover.
Vote Required for Approval
For this proposal to be adopted, a majority of the votes cast by shareholders
must be voted for approval.
The Board of Directors recommends a vote FOR approval of the UGI Corporation
2000 Stock Incentive Plan.
ITEM 3 -- APPROVAL OF PROPOSED
UGI CORPORATION 2000 DIRECTORS' STOCK OPTION PLAN
- ----------------------------------------------------------------------
Introduction and Purpose of the Plan
During 1999, the Company engaged the services of Towers Perrin to conduct a
review of its compensation program for outside directors. As a result of this
review, and in keeping with the philosophy of directly aligning directors'
compensation with shareholder interests, Towers Perrin recommended the adoption
of the UGI Corporation 2000 Directors' Stock Option Plan. On December 14, 1999,
the Board of Directors approved the 2000 Directors' Plan, to be effective
January 1, 2000 subject to shareholder approval. The purpose of the 2000
Directors' Plan is to further encourage the ownership of the Company's Common
Stock by non-employee directors, thereby aligning such directors' interests more
closely with the interests of shareholders of the Company. The 2000 Directors'
Plan is also intended to assist the Company in securing and retaining highly
qualified persons to serve as non-employee directors, in which position they may
contribute to the long-term growth and profitability of the Company. Only non-
employee directors will participate in the Plan.
32
<PAGE>
Summary of Key Features of the Plan
The following is a summary of the key features of the 2000 Directors' Plan.
Administration. The Compensation and Management Development Committee of the
Board will be responsible for the administration of the Directors' Option Plan.
All ministerial functions will be performed by an administrative committee of
the Company.
Eligible Participants. Seven non-employee directors are eligible to
participate in the Plan. Directors eligible to receive options under the Plan
are those who, on the date of the grant, are not employees of the Company or its
subsidiaries, and who are not retirees under the Company's or any subsidiary's
retirement income or pension plans. Directors who are serving on the Company's
Board of Directors in accordance with the provisions of any debt instrument,
preferred stock, underwriting agreement, or other contract entered into by the
Company, are not eligible to receive grants under the 2000 Directors' Plan.
Maximum Number of Shares. Up to 200,000 shares of UGI Common Stock may be
issued upon exercise of options granted under the Plan. This number may be
adjusted by the Committee for changes in the Company's capital structure, such
as a stock split.
Types of Awards. The 2000 Directors' Plan permits the granting of stock
options.
Stock Options. Subject to Board approval, and based upon management's
recommendation after consultation with independent compensation consultants, the
Committee will determine when options will be granted, the number of shares
subject to each option, the vesting period for each option, and the option price
per Share. No participant may be granted options relating to more than 10,000
Shares in any calendar year. The option price per share may not be less than
100% of the fair market value of the Stock on the effective date of the option.
The Committee will also determine the term of options, but the term will not end
later than ten years from the effective date of the option. Except as otherwise
provided by the Committee, all options will be fully vested on the date of
grant. Subject to shareholder approval of the 2000 Directors' Plan, each of the
options granted on December 14, 1999 is fully vested and immediately
exercisable. Options may be exercised by paying the purchase price in cash or
its equivalent or in Company stock held for at least six months, by payment
through a broker, by such other method as the Committee may approve, or by any
combination of the above.
Except as otherwise provided by the Committee, options granted under the 2000
Directors' Plan are generally nontransferable, except by will or laws of descent
and distribution.
Options are generally exercisable only while the participant is a member of
our Board of Directors. If a participant holding an option terminates his or her
position as a director because of:
. retirement at or after age 65, with at least five years of service,
. after 10 years of service regardless of age, or
. due to disability,
33
<PAGE>
all options will terminate upon the earlier of the expiration date of the option
or 36 months after the participant's termination of service as a director. If a
participant's termination is due to death, all options will terminate upon the
earlier of the expiration date of the option or 12 months from the date of
death. If a participant terminates service as a director and becomes an employee
of the Company or one of its subsidiaries, the participant will not be deemed to
have terminated service as a director; however, the participant will not be
eligible to receive any additional grants under the 2000 Directors' Plan.
Change in Control Provisions. In order to maintain the rights of participants
in the event of a change of control of the Company, the 2000 Directors' Plan
generally provides for the automatic acceleration and exercisability of all of
the outstanding options, to the extent that they are not already exercisable. In
a change of control where the Company is not the surviving corporation (or if
the Company survives as a subsidiary of another corporation), the Plan provides
that all outstanding options will be assumed by or replaced with comparable
options of the surviving corporation. Notwithstanding the above, the Committee
may take either of the following actions in the event of a change of control:
. require participants to surrender their outstanding options in exchange for
payment by the Company in an amount by which the then fair market value of
the Shares subject to the participant's unexercised option exceeds the
option price; or
. terminate all of the outstanding unexercised options after giving
participants a chance to exercise the options.
Tax Consequences of the Plan. The grant of a stock option will not result in
taxable income at the time of the grant for the participant or the Company. Upon
exercising a stock option, the participant will recognize ordinary income in the
amount by which the fair market value of the Stock exceeds the option price; the
Company will be entitled to a deduction for the same amount. The tax treatment
to a participant of a disposition of Shares acquired through the exercise of an
option is dependent upon the length of time the Shares have been held. There
will be no tax consequence to the Company in connection with the disposition of
shares acquired upon exercise of an option.
Amendments
Subject to Board approval, the Committee may at any time amend, suspend, or
terminate the 2000 Directors' Plan without shareholder approval. Shareholder
approval is necessary, however, if required by federal or state law or the rules
of any stock exchange on which the Company's Common Stock is listed, or if the
Committee determines that shareholder approval is advisable. The Committee or
its delegate may make minor amendments to the 2000 Directors' Plan which will
not materially affect the rights of participants or significantly increase the
Company's costs. Written consent of a participant is required if a change by the
Committee will adversely affect any option granted to the participant.
34
<PAGE>
Grants Made Subject to Shareholder Approval
Subject to shareholder approval of the 2000 Directors' Plan, options to
purchase an aggregate of 28,000 shares of UGI Common Stock were granted to
current non-employee directors of the Company as set forth below (7 persons).
The effective date of these options is January 1, 2000. The option price will be
the fair market value of UGI Common Stock on January 1, 2000.
<TABLE>
<CAPTION>
2000 DIRECTORS' STOCK OPTION PLAN
- ----------------------------------------------------------------------------------
Name Number Of Options
- ----------------------------------------------------------------------------------
<S> <C>
James W. Stratton 4,000
David I. J. Wang 4,000
Richard C. Gozon 4,000
Stephen D. Ban 4,000
Marvin O. Schlanger 4,000
Thomas F. Donovan 4,000
Anne Pol 4,000
</TABLE>
Stock Price Information
The closing price of the Company's common stock as reported on the New York
Stock Exchange Composite Transactions tape on December 14, 1999 was $21.0625.
Vote Required for Approval
For this proposal to be adopted, a majority of the votes cast by shareholders
must be voted for approval. The Board of Directors recommends a vote FOR
approval of the UGI Corporation 2000 Directors' Stock Option Plan.
ITEM 4-- 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 fiscal year 2000 and recommends that the
Shareholders ratify the appointment. If the Shareholders do not ratify the
appointment of Arthur Andersen, the Audit Committee and the Board of Directors
will consider the appointment of other independent
35
<PAGE>
certified public accountants. 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.
ITEM 5 -- OTHER MATTERS
- ----------------------------------------------------------------------
The Board of Directors is not aware of any other matter 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.
36
<PAGE>
<TABLE>
<CAPTION>
GLOSSARY
<S> <C>
1992 SODEP UGI Corporation 1992 Stock Option and Dividend
Equivalent Plan.
1997 SODEP UGI Corporation 1997 Stock Option and
Dividend Equivalent Plan.
1997 SODEP Peer Group A group of comparable companies (see description under
heading "Corporate Performance").
2000 Directors' Plan UGI Corporation 2000 Directors' Stock Option Plan.
AmeriGas Partners or Partnership 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 Annual Meeting of Shareholders of UGI Corporation to
be held February 29, 2000.
Arthur Andersen Arthur Andersen LLP.
Board or Board of Directors Board of Directors of UGI Corporation.
Common Stock or Stock or Shares UGI Corporation Common Stock.
Common Unit A limited partnership interest in AmeriGas Partners,
L.P.
Directors' Equity Compensation Plan UGI Corporation Directors' Equity Compensation Plan.
Dividend Equivalent A dividend equivalent is an amount determined by
multiplying the number of Shares underlying an option
granted with Dividend Equivalents 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.
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Fiscal 1999 The Company's fiscal year ended September 30, 1999.
Named Executives The Company's Chief Executive Officer and each of the
five 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 The United States Securities and Exchange Commission.
or SEC or Commission
Severance Plan UGI Corporation Severance Pay Plan for Senior
Executive Employees.
Shareholder A holder of UGI Common Stock.
Stock Incentive Plan or 2000 Plan UGI Corporation 2000 Stock Incentive Plan
UGI or Company UGI Corporation.
Unit A single unit granted under the UGI Corporation
Directors' Equity Compensation Plan that represents an
interest equivalent to one share of Common Stock.
</TABLE>
38
<PAGE>
[MAP]
DIRECTIONS TO THE DESMOND GREAT VALLEY HOTEL
AND CONFERENCE CENTER
Directions from Philadelphia. Take the Schuylkill Expressway (I-76) West. Follow
I-76 West to Route 202 South. Take Route 202 South to the Great Valley/Route 29
North Exit. At the end of the ramp, proceed through the light onto Liberty
Boulevard. The Desmond will be on the right.
Directions from South Jersey. Take I-95 South to Route 322 West. Take 322 West
to Route 1 South to Route 202 North. Take Route 202 North to Great Valley/Route
29 North Exit. Turn right onto Route 29 North. Turn right at second light onto
Liberty Boulevard. The Desmond will be on the left.
Directions from Philadelphia Airport. Take I-95 South to 476 North. Follow 476
North to the Schuylkill Expressway (I-76) West to Route 202 South. Take Route
202 South to the Great Valley/Route 29 North Exit. At the end of the ramp,
proceed through the light onto Liberty Boulevard. The Desmond will be on the
right.
Directions from Wilmington and Points South (Delaware and Maryland). Take I-95
North to Route 202 North to the Great Valley/Route 29 North Exit. Turn right
onto Route 29 North. Turn right at second light onto Liberty Boulevard. The
Desmond will be on the left.
Directions from New York and Points North. Take the New Jersey Turnpike South to
Exit 6, the Pennsylvania Turnpike extension. Follow the Turnpike West to Exit
24, Valley Forge. Take Route 202 South to the Great Valley/Route 29 North Exit.
At the end of the ramp, proceed through the light onto Liberty Boulevard. The
Desmond will be on the right.
Directions from Harrisburg and Points West. Take the Pennsylvania Turnpike East
to Exit 24, Valley Forge. Take Route 202 South to Great Valley/Route 29 North
Exit. At the end of the ramp, proceed through the light onto Liberty Boulevard.
The Desmond will be on the right.
39
<PAGE>
Appendix A
UGI CORPORATION
2000 STOCK INCENTIVE PLAN
1. Purpose and Design
The purpose of this Plan is to assist the Company in securing and retaining
key corporate executives of outstanding ability, who are in a position to
significantly participate in the development and implementation of the Company's
strategic plans and thereby contribute materially to the long-term growth,
development and profitability of the Company, by affording them an opportunity
to purchase its Stock under options or an opportunity to acquire stock by the
achievement of specific performance goals. The Plan is designed to align
directly long-term executive compensation with tangible, direct and identifiable
benefits realized by the Company's shareholders.
2. Definitions
Whenever used in this Plan, the following terms will have the respective
meanings set forth below:
2.01 "Board" means UGI"s Board of Directors as constituted from time to
time.
2.02 "Change of Control" means a change of control as defined in a
change of control agreement between a Participant's respective employer and
certain of its employees.
2.03 "Committee" means the Compensation and Management Development
Committee of the Board or its successor.
2.04 "Company" means UGI Corporation, a Pennsylvania corporation, any
successor thereto and any Subsidiary.
2.05 "Comparison Group" means the group determined by the Committee (no
later than ninety (90) days after the commencement of a Performance Period)
consisting of the Company and such other companies deemed by the Committee (in
its sole discretion) to be reasonably comparable to the Company.
2.06 "Date of Grant" means the effective date of an Option grant;
provided, however, that no retroactive grants will be made.
2.07 "Dividend Equivalent" means an amount determined by multiplying the
number of shares of Stock subject to an Option granted in conjunction with the
Dividend Equivalent (whether or not the Option is ever exercised with respect to
any or all shares of Stock subject thereto), subject to any adjustment under
Section 13, by the per-share cash
1
<PAGE>
dividend, or the per-share fair market value (as determined by the Committee) of
any dividend in consideration other than cash, paid by the Company on its Stock
on a dividend payment date that falls within the relevant Performance Period.
2.08 "Employee" means a regular full-time salaried employee (including
officers and directors who are also employees) of the Company.
2.09 "Fair Market Value" of Stock means the average of the highest and
lowest sales prices thereof on the New York Stock Exchange on the day on which
Fair Market Value is being determined, as reported on the Composite Tape for
transactions on the New York Stock Exchange. In the event that the New York
Stock Exchange does not express sales prices in decimal form, the average will
be rounded to the next highest one-eighth of a point (.125). Notwithstanding
the foregoing, in the case of a cashless exercise pursuant to Section 7.4(iv),
the Fair Market Value will be the actual sale price of the shares issued upon
exercise of the Option. In the event that there are no Stock transactions on
the New York Stock Exchange on such day, the Fair Market Value will be
determined as of the immediately preceding day on which there were Stock
transactions on that exchange.
2.10 "Option" means the right to purchase Stock pursuant to the relevant
provisions of this Plan at the Option Price for a specified period of time, not
to exceed ten years from the Date of Grant, which period of time will be subject
to earlier termination prior to exercise in accordance with Section 7.3(b) of
this Plan.
2.11 "Option Price" means an amount per share of Stock purchasable under
an Option designated by the Committee on the Date of Grant of an Option to be
payable upon exercise of such Option. The Option Price will not be less than
100% of the Fair Market Value of the Stock determined on the Date of Grant.
2.12 "Participant" means an Employee designated by the Committee to
participate in the Plan.
2.13 "Performance Goal" means the objective goal or goals that must be
met in order for Dividend Equivalents to be paid and restrictions on Restricted
Stock to lapse. All Performance Goals must meet the requirements of Section 10.
2.14 "Performance Period" means the performance period during which
performance will be measured for Performance Goals. Performance Periods must
meet the requirements of Section 10.
2.15 "Plan" means this 2000 Stock Incentive Plan.
2.16 "Restricted Stock" means shares of Stock that are subject to
restrictions which lapse upon the achievement of Performance Goals within the
relevant Performance Period.
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2.17 "Stock" means the Common Stock of UGI or such other securities of
UGI as may be substituted for Stock or such other securities pursuant to Section
13.
2.18 "Subsidiary" means any corporation or partnership, at least 20% of
the outstanding voting stock, voting power or partnership interest of which is
owned respectively, directly or indirectly, by the Company.
2.19 "Termination without Cause" means termination for the convenience
of the Company for any reason other than (i) misappropriation of funds, (ii)
habitual insobriety or substance abuse, (iii) conviction of a crime involving
moral turpitude, or (iv) gross negligence in the performance of duties, which
gross negligence has had a material adverse effect on the business, operations,
assets, properties or financial condition of the Company. The Committee will
have the sole discretion to determine whether a significant reduction in the
duties and responsibilities of a Participant will constitute a Termination
without Cause.
2.20 "UGI" means UGI Corporation, a Pennsylvania corporation or any
successor thereto.
3. Maximum Number of Shares Available for Options and Restricted Stock Grants
The number of shares of Stock which may be made the subject of Options and
the number of shares of Restricted Stock that may be granted under this Plan may
not exceed 1,100,000 in the aggregate, subject, however, to the adjustment
provisions of Section 13 below, and provided that the maximum number of
Restricted Shares issued hereunder is 500,000. With regard to grants to any one
individual in a calendar year: (i) the number of shares of Restricted Stock that
may be issued will not exceed 100,000, and (ii) the number of shares of
Restricted Stock together with the number of shares of Stock which may be the
subject of grants of Options will not exceed 500,000. If any Option expires or
terminates for any reason without having been exercised in full or if Restricted
Stock is forfeited, the unpurchased shares subject to the Option or the
forfeited shares of Restricted Stock will again be available for the purposes of
the Plan. Shares of Restricted Stock and shares which are the subject of
Options may be previously issued and outstanding shares of Stock reacquired by
the Company and held in its treasury, or may be authorized but unissued shares
of Stock, or may be a combination of both.
4. Duration of the Plan
The Plan will remain in effect until all Stock subject to it has been
transferred to Participants or all Options have terminated or been exercised and
all shares of Restricted Stock have been vested or forfeited. Notwithstanding
the foregoing, Options and Restricted Stock may not be granted after December
31, 2009.
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5. Administration
The Plan will be administered by the Committee. Subject to the express
provisions of the Plan, the Committee will have authority, in its complete
discretion, to determine the Employees to whom, and the time or times at which
grants will be made. In making such determinations, the Committee may take into
account the nature of the services rendered by an Employee, the present and
potential contributions of the Employee to the Company's success and such other
factors as the Committee in its discretion deems relevant. Awards under a
particular Section of the Plan need not be uniform as among Participants.
Subject to the express provisions of the Plan, the Committee will also have
authority to construe and interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, to determine the terms and provisions of
the respective stock option agreements required by Section 7.2 of the Plan and
the terms and provisions of the restrictions relating to Restricted Stock (none
of which need be identical), and to make all other determinations (including
factual determinations) necessary or advisable for the orderly administration of
the Plan. All ministerial functions, in addition to those specifically
delegated elsewhere in the Plan, shall be performed by a committee comprised of
Company employees ("Administrative Committee") appointed by the Committee.
6. Eligibility
Grants hereunder may be made only to Employees (including directors who are
also Employees of the Company) who, in the sole judgment of the Committee, are
individuals who are in a position to significantly participate in the
development and implementation of the Company's strategic plans and thereby
contribute materially to the continued growth and development of the Company and
to its future financial success.
7. Options
7.1 Grant of Options. Subject to the provisions of Sections 2.11 and 3:
(i) Options may be granted to Participants at any time and from time to time as
may be determined by the Committee; and (ii) the Committee will have complete
discretion in determining the Options to be granted, the number of shares of
Stock to be subject to each Option, the Option Price to be paid for the shares
upon the exercise of each Option, the period within which each Option may be
exercised, the vesting schedule associated with the Option, and whether the
Option will include Dividend Equivalents.
7.2 Option Agreement. As determined by the Committee on the Date of Grant,
each Option will be evidenced by a stock option agreement that will, among other
things, specify the Date of Grant, the Option Price, the duration of the Option,
the number of shares of Stock to which the Option pertains, the Option's vesting
schedule, and whether the Option will include Dividend Equivalents.
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7.3 Exercise and Vesting.
(a) Except as otherwise specified by the Committee in the stock
option agreement, the Option shall become exercisable in equal one-third (1/3)
installments on the first, second and third anniversaries of the Date of Grant.
Notwithstanding the foregoing, in the event that any such Options are not by
their terms immediately exercisable, the Committee may accelerate the
exercisability of any or all outstanding Options at any time for any reason. No
Option will be exercisable on or after the tenth anniversary of the Date of
Grant.
(b) Except as otherwise specified by the Committee, in the event
that a Participant holding an Option ceases to be an Employee, the Options held
by such Participant will terminate on the date such Participant ceases to be an
Employee. The Committee will have authority to determine whether an authorized
leave of absence or absence on military or governmental service will constitute
a termination of employment for the purposes of this Plan. However, if a
Participant holding an Option ceases to be an Employee by reason of (i)
Termination without Cause, (ii) retirement, (iii) disability, or (iv) death, the
Option held by any such Participant will thereafter become exercisable pursuant
to the following:
(i) Termination Without Cause. If a Participant terminates
employment on account of a Termination without Cause, the Option held by such
Participant will thereafter be exercisable only with respect to that number of
shares of Stock with respect to which it is already exercisable on the date such
Participant ceases to be an Employee; and such Option will terminate upon the
earlier of the expiration date of the Option or the expiration of the 13 month
period commencing on the date such Participant ceases to be an Employee.
(ii) Retirement. If a Participant terminates employment on
account of a retirement under the Company's retirement plan applicable to that
Participant, the Option held by such Participant will thereafter become
exercisable as if such Participant had remained employed by the Company for 36
months after the date of such retirement; and such Option will terminate upon
the earlier of the expiration date of the Option or the expiration of such 36
month period. Retirement for Employees of Amerigas Propane, Inc. ("API') means
termination of employment with API after attaining age 55 with ten or more years
of service with API and its affiliates.
(iii) Disability. If a Participant is determined to be
"disabled" (as defined under the Company's long-term disability plan), the
Option held by such Participant will thereafter become exercisable as if such
Participant had remained employed by the Company for 36 months after the date of
such disability; and such Option will terminate upon the earlier of the
expiration date of the Option or the expiration of such 36 month period.
(iv) Death. In the event of the death of a Participant
while employed by the Company, the Option theretofore granted to such
Participant will be fully and immediately exercisable (to the extent not
otherwise exercisable by its terms) at any time prior to the earlier
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of the expiration date of the Option or the expiration of the 12 month period
following the Participant's death. Death of a Participant after such Participant
has ceased to be employed by the Company will not affect the otherwise
applicable period for exercise of the Option determined pursuant to Sections
7.3(b)(i), 7.3(b)(ii) or 7.3(b)(iii). Such Option may be exercised by the estate
of the Participant, by any person to whom the Participant may have bequeathed
the Option, any person the Participant may have designated to exercise the same
under the Participant's last will, or by the Participant's personal
representatives if the Participant has died intestate.
(c) Notwithstanding anything contained in this Section 7.3, with
respect to the number of shares of Stock subject to an Option with respect to
which such Option is or is to become exercisable, no Option, to the extent that
it has not previously been exercised, will be exercisable after it has
terminated, including without limitation, after any termination of such Option
pursuant to Section 7.3(b) hereof.
7.4 Payment. The Option Price upon exercise of any Option will be payable
to the Company in full (i) in cash or its equivalent, (ii) by tendering shares
of previously acquired Stock already beneficially owned by the Participant for
more than one year and having a Fair Market Value at the time of exercise equal
to the total Option Price, (iii) by applying Dividend Equivalents payable to the
Participant in accordance with Section 8 of the Plan in an amount equal to the
total Option Price, (iv) by payment through a broker in accordance with
procedures permitted by Regulation T of the Federal Reserve Board, (v) by such
other method as the Committee may approve, or (vi) by a combination of (i),
(ii), (iii), (iv) and/or (v). The cash proceeds from such payment will be added
to the general funds of the Company and will be used for its general corporate
purposes.
7.5 Written Notice. A Participant wishing to exercise an Option must give
written notice to the Company in the form and manner prescribed by the
Administrative Committee, indicating the date of award, the number of shares as
to which the Option is being exercised, and such other information as may be
required by the Administrative Committee. Full payment for the shares pursuant
to the Option must be received by the close of business on the day the Option is
exercised. Except as provided in Section 7.3(b), no Option may be exercised at
any time unless the Participant is then an Employee of the Company.
7.6 Issuance of Stock. As soon as practicable after the receipt of written
notice and payment, the Company will, without stock transfer taxes to the
Participant or to any other person entitled to exercise an Option pursuant to
this Plan, deliver to, or credit electronically on behalf of, the Participant,
the Participant's designee or such other person the requisite number of shares
of Stock.
7.7 Privileges of a Shareholder. A Participant or any other person
entitled to exercise an Option under this Plan will have no rights as a
shareholder with respect to any Stock covered by the Option until the due
exercise of the Option and issuance of such Stock.
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7.8 Partial Exercise. An Option granted under this Plan may be exercised
as to any lesser number of shares than the full amount for which it could be
exercised. Such a partial exercise of an Option will not affect the right to
exercise the Option from time to time in accordance with this Plan as to the
remaining shares subject to the Option.
8. Dividend Equivalents
8.1 Amount of Dividend Equivalents Credited. If the Committee so
specifies, as of the Date of Grant in the stock option agreement, from the Date
of Grant of an Option to a Participant (or, in the case of an Option granted
after the date of commencement of a Performance Period to a new Participant or
to a Participant with changed responsibilities, in which event, from such date
not earlier than the date of commencement of the Performance Period as is
designated by the Committee) until the earlier of (i) the end of the applicable
Performance Period or (ii) the date of disability, death or termination of
employment for any reason (including retirement), of a Participant, the Company
will keep records for such Participant ("Account") and will credit on each
payment date for the payment of a dividend made by UGI on its Stock an amount
equal to the Dividend Equivalent associated with such Option. Notwithstanding
the foregoing, a Participant may not accrue during any calendar year Dividend
Equivalents in excess of $1,000,000. Except as set forth in Section 8.5 below,
no interest will be credited to any such Account.
8.2 Payment of Credited Dividend Equivalents. Payment of Dividend
Equivalents will be made only upon the determination by the Committee that the
Performance Goals associated with such Dividend Equivalents have been achieved
as prescribed in accordance with Section 10.
8.3 Timing of Payment of Dividend Equivalents.
(a) Except as otherwise determined by the Committee, in the
event of the (i) termination of an Option prior to exercise pursuant to Section
7.3(b) hereof, or (ii) acceleration of the exercise date of an Option pursuant
to Section 7.3(a) hereof, in either case prior to the end of the applicable
Performance Period, no payments of Dividend Equivalents associated with any
Option will be made (A) prior to the end of the applicable Performance Period
and (B) to any Participant whose employment by the Company terminates prior to
the end of the applicable Performance Period for any reason other than
retirement under the Company's retirement plan, death, disability or Termination
without Cause. As soon as practicable after the end of such Performance Period,
the Committee will certify and announce the results for each Performance Period
prior to any payment of Dividend Equivalents and unless a Participant will have
made an election under Section 8.6 to defer receipt of any portion of such
amount, a Participant will receive the aggregate amount of Dividend Equivalents
payable to that Participant in the form specified by the Committee.
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(b) Notwithstanding anything to the contrary in this Section 8.3,
unless a payment of Dividend Equivalents associated with an Option is being made
upon full exercise or termination of such Option, no Dividend Equivalents will
be paid (either at the end of the applicable Performance Period or on a date
such Dividend Equivalents are scheduled to be paid pursuant to a deferral
election) if the average Fair Market Value of Stock for a period of thirty (30)
consecutive business days immediately preceding the end of the applicable
Performance Period or the date such deferred payment is scheduled to be made (as
the case may be) is less than the exercise price of the Option to which such
Dividend Equivalents were associated, and such payment will instead be made at
the earlier of (i) such time as the average Fair Market Value of Stock over a
period of ninety (90) consecutive business days thereafter exceeds the exercise
price of such Option, or (ii) the termination or expiration date of such Option.
8.4 Form of Payment for Dividend Equivalents. The Committee will have the
sole discretion to determine whether the Company's obligation in respect of
payment of Dividend Equivalents will be paid solely in credits to be applied
toward payment of the Option Price, solely in cash or partly in such credits and
partly in cash.
8.5 Interest on Dividend Equivalents. From a date which is thirty (30)
days after the end of the applicable Performance Period until the date that all
Dividend Equivalents associated with such Option and payable to a Participant
are paid to such Participant, the Account maintained by the Company in its books
and records with respect to such Dividend Equivalents will be credited with
interest at a market rate determined by the Administrative Committee. The
interest rate will be no higher than the prime interest rate as quoted in the
Wall Street Journal on the last day of the month preceding the end of the
Performance Period, or the preceding business day if the last day of the month
is not a business day.
8.6 Deferral of Dividend Equivalents. A Participant will have the right to
defer receipt of any Dividend Equivalent payments associated with an Option if
the Participant elects to do so on or prior to December 31 of the year preceding
the beginning of the last full year of the applicable Performance Period (or
such other time as the Administrative Committee will determine is appropriate to
make such deferral effective under the applicable requirements of federal tax
laws). The terms and conditions of any such deferral (including the period of
time thereof) will be subject to approval by the Administrative Committee and
all deferrals will be made on a form provided a Participant for this purpose.
9. Restricted Stock
9.1 Grant of Restricted Stock. Subject to the provisions of Section 3,
shares of Restricted Stock may be granted to Participants at any time and from
time to time as may be determined by the Committee. Shares issued or
transferred pursuant to Restricted Stock awards may be issued or transferred for
consideration or for no consideration, and will be subject to Performance Goals
meeting the requirements of Section 10.
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9.2 Requirement of Employment or Service. If the Participant ceases to be
employed by, or provide service to, the Company before the specified conditions
are met, the Restricted Stock award will terminate as to all shares covered by
the grant as to which the restrictions have not lapsed, and those shares of
Stock must be immediately returned to the Company. However, if a Participant
holding Restricted Stock ceases to be an Employee by reason of (i) retirement,
(ii) disability, or (iii) death, the restrictions on Restricted Stock held by
any such Participant will lapse pursuant to the following:
(a) Retirement. If a Participant terminates employment on account of
a retirement under the Company's retirement plan applicable to that Participant,
the restrictions on such Participant's Restricted Stock will lapse with regard
to any Performance Period that ends within 36 months after the date of such
retirement; provided that the Performance Goals associated with such Performance
Period are achieved within that 36 month period. Retirement for Employees of
API means termination of employment with API after attaining age 55 with ten or
more years of service with API and its affiliates.
(b) Disability. If a Participant is determined to be "disabled" (as
defined under the Company's long-term disability plan), the restrictions on such
Participant's Restricted Stock will lapse with regard to any Performance Period
that ends within 36 months after the date of such disability; provided that the
Performance Goals associated with such Performance Period are achieved within
that 36 month period.
(c) Death. In the event of the death of a Participant while employed
by the Company, the restrictions on such Participant's Restricted Stock will
lapse at the end of the Performance Period associated with such Restricted Stock
upon the achievement of the related Performance Goals.
(d) Committee Discretion. The Committee may, however, provide for the
complete or partial lapse of restrictions upon a termination on account of
retirement or disability.
9.3 Restrictions on Transfer and Legend on Stock Certificate. Until the
Performance Goals are met, a Participant may not sell, assign, transfer, pledge
or otherwise dispose of the shares of Restricted Stock. Each certificate for a
share of a Restricted Stock will contain a legend giving appropriate notice of
the restrictions in the grant. The Participant will be entitled to have the
legend removed from the stock certificate covering the shares subject to
restrictions when all restrictions on such shares have lapsed. The
Administrative Committee may determine that the Company will not issue
certificates for Restricted Stock until all restrictions on such shares have
lapsed, or that the Company will retain possession of certificates for shares of
Restricted Stock until all restrictions on such shares have lapsed.
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9.4 Privileges of a Shareholder.
(a) Unless the Committee determines otherwise, during the
Performance Period, a Participant issued certificates under Section 9.3 will
have the right to vote shares of Restricted Stock and to receive any dividends
or other distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee.
(b) Unless the Committee determines otherwise, an account will
be established for a Participant who is not issued certificates under Section
9.3 to which will be credited dividends and other distributions attributable to
the Restricted Stock grant. Such account will bear interest at a rate determined
under Section 8.5 of the Plan.
9.5 Form of Payment for Restricted Stock. The Committee will have the sole
discretion to determine whether the Company's obligation in respect of payment
of Restricted Stock awards for a Participant who is not issued certificates
under Section 9.3 will be paid in Stock, solely in cash or partly in Stock and
partly in cash.
10. Requirements for Performance Goals and Performance Periods
10.1 Designation as Qualified Performance-Based Compensation. Grants of
Restricted Stock and Dividend Equivalents on Options will qualify as "qualified
performance-based compensation" under Section 162(m) of the Internal Revenue
Code ("Code"), including the requirement that the achievement of the goals be
substantially uncertain at the time they are established and that the goals be
established in such a way that a third party with knowledge of the relevant
facts could determine whether and to what extent the Performance Goals have been
met. The Committee will not have discretion to increase the amount of
compensation that is payable upon achievement of the designated Performance
Goals, but may, in its sole discretion, reduce the amount of compensation that
is payable upon achievement of the designated Performance Goals.
10.2 Requirements for Performance Goals. When Restricted Stock and
Dividend Equivalents are granted, the Committee will establish in writing
Performance Goals either before the beginning of the Performance Period or
during a period ending no later than the earlier of (i) 90 days after the
beginning of the Performance Period or (ii) the date on which 25% of the
Performance Period has been completed, or such other date as may be required or
permitted under applicable regulations under Section 162(m) of the Code. The
Performance Goal must specify (A) the objective Performance Goal(s) that must be
met in order for restrictions on the Restricted Stock to lapse or the Dividend
Equivalents to be paid, (B) the Performance Period during which the Performance
Goals must be met, (C) the maximum amounts that may be paid if the Performance
Goals are met, and (D) any other conditions that the Committee deems appropriate
and consistent with the Plan and the requirements of Section 162(m) of the Code
for qualified performance based compensation.
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10.3 Criteria Used for Performance Goals. The Committee will use
objectively determinable Performance Goals based on one or more of the following
criteria: stock price, earnings per share, net earnings, operating earnings,
return on assets, shareholder return, return on equity, growth in assets, unit
volume, sales, cash flow, market share, relative performance to a Comparison
Group, or strategic business criteria consisting of one or more objectives based
on meeting specified revenue goals, market penetration goals, geographic
business expansion goals, cost targets or goals relating to acquisitions or
divestitures. The Performance Goals may relate to the Participant's business
unit or the performance of the Company and its subsidiaries as a whole, or any
combination of the foregoing. Performance Goals need not be uniform as among
Participants.
10.4 Announcement of Grants. The Committee will certify and announce the
results for each Performance Period to all Participants as promptly as
practicable following the completion of the Performance Period. If and to the
extent that the Committee does not certify that the Performance Goals have been
met, the applicable grants of Restricted Stock or Dividend Equivalents for the
Performance Period will be forfeited.
11. Non-Transferability of Options
No Option, Restricted Stock, rights to Dividend Equivalents or other rights
granted under the Plan will be transferable otherwise than by will or the laws
of descent and distribution, and an Option may be exercised, during the lifetime
of the Participant, only by the Participant.
12. Consequences of a Change of Control
12.1 Notice and Acceleration. Upon a Change of Control, unless the
Committee determines otherwise, (i) the Company will provide each Participant
with outstanding grants written notice of such Change of Control, (ii) all
outstanding Options will automatically accelerate and become fully exercisable,
(iii) the restrictions and conditions on all outstanding Restricted Stock grants
will immediately lapse, and (iv) Dividend Equivalents will become payable in
cash in such amounts as the Committee may determine.
12.2 Assumption of Grants. Upon a Change of Control where the Company is
not the surviving corporation (or survives only as a subsidiary of another
corporation), unless the Committee determines otherwise, all outstanding Options
that are not exercised will be assumed by, or replaced with comparable options
or rights by, the surviving corporation (or a parent of the surviving
corporation), and other outstanding grants will be converted to similar grants
of the surviving corporation (or a parent of the surviving corporation).
12.3 Other Alternatives. Notwithstanding the foregoing, subject to Section
12.4 below, in the event of a Change of Control, the Committee may take any of
the following actions with respect to any or all outstanding Options: the
Committee may (i) require that Participants
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surrender their outstanding Options in exchange for a payment by the Company, in
cash or Stock as determined by the Committee, in an amount equal to the amount
by which the then Fair Market Value of the shares of Stock subject to the
Participant's unexercised Options exceeds the Option Price of the Options, as
applicable, or (ii) after giving Participants an opportunity to exercise their
outstanding Options, terminate any or all unexercised Options at such time as
the Committee deems appropriate. Such surrender, termination or settlement will
take place as of the date of the Change of Control or such other date as the
Committee may specify.
12.3 Committee. The Committee making the determinations under this Section
12 following a Change of Control must be comprised of the same members as those
on the Committee immediately before the Change of Control. If the Committee
members do not meet this requirement, the automatic provisions of Sections 12.1
and 12.2 will apply, and the Committee will not have discretion to vary them.
12.4 Limitations. Notwithstanding anything in the Plan to the contrary, in
the event of a Change of Control, the Committee will not have the right to take
any actions described in the Plan (including without limitation actions
described in this Section 12) that would make the Change of Control ineligible
for pooling of interests accounting treatment or that would make the Change of
Control ineligible for desired tax treatment if, in the absence of such right,
the Change of Control would qualify for such treatment and the Company intends
to use such treatment with respect to the Change of Control.
13. Adjustment of Number and Price of Shares, Etc.
Notwithstanding anything to the contrary in this Plan, in the event any
recapitalization, reorganization, merger, consolidation, spin-off, combination,
repurchase, exchange of shares or other securities of UGI, stock split or
reverse split, extraordinary dividend, liquidation, dissolution, significant
corporate transaction (whether relating to assets or stock) involving UGI, or
other extraordinary transaction or event affects Stock such that an adjustment
is determined by the Committee to be appropriate in order to prevent dilution or
enlargement of Participants' rights under the Plan, then the Committee may, in a
manner that is equitable, adjust (i) any or all of the number or kind of shares
of Stock reserved for issuance under the Plan, (ii) the maximum number of shares
of Stock which may be the subject of grants to any one individual in any
calendar year, (iii) the number or kind of shares of Stock to be subject to
grants of Restricted Stock and Options thereafter granted under the Plan, (iv)
the number and kind of shares of Stock issuable upon exercise of outstanding
Options, (v) the Option Price per share thereof, (vi) the number of shares of
Restricted Stock, (vii) the terms and conditions applicable to Restricted Stock,
and/or (viii) the terms and conditions applicable to Dividend Equivalents,
provided that the number of Restricted Shares and the number of shares subject
to any Option will always be a whole number. Any such determination of
adjustments by the Committee will be conclusive for all purposes of the Plan and
of Restricted Shares and of each Option, whether a stock option agreement with
respect to a particular Option has been theretofore or is thereafter executed.
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14. Limitation of Rights
Nothing contained in this Plan will be construed to give an Employee any
right to a grant hereunder except as may be authorized in the discretion of the
Committee. A grant under this Plan will not constitute or be evidence of any
agreement or understanding, expressed or implied, that the Company will employ a
Participant for any specified period of time, in any specific position or at any
particular rate of remuneration.
15. Amendment or Termination of Plan
Subject to Board approval, the Committee may at any time, and from time to
time, alter, amend, suspend or terminate this Plan without the consent of the
Company's shareholders or Participants, except that any such alteration,
amendment, suspension or termination will be subject to the approval of the
Company's shareholders within one year after such Committee and Board action if
such shareholder approval is required by any federal or state law or regulation
or the rules of any stock exchange or automated quotation system on which the
Stock is then listed or quoted, or if the Committee in its discretion determines
that obtaining such shareholder approval is for any reason advisable. No
termination or amendment of this Plan may, without the consent of the
Participant to whom any Option or Restricted Share has previously been granted,
adversely affect the rights of such Participant under such Option or Restricted
Share, including the Dividend Equivalents associated with such Option.
Notwithstanding the foregoing, the Administrative Committee may make minor
amendments to this Plan which do not materially affect the rights of
Participants or significantly increase the cost to the Company.
16. Tax Withholding
Upon the lapse of restrictions on Restricted Stock or Dividend Equivalents
or upon exercise of any Option under this Plan, the Company will require the
recipient of the Stock to remit to the Company an amount sufficient to satisfy
federal, state and local withholding tax requirements. However, to the extent
authorized by rules and regulations of the Administrative Committee, the Company
may withhold or receive Stock and make cash payments in respect thereof in
satisfaction of a recipient's tax obligations in an amount that does not exceed
the recipient's minimum applicable withholding tax obligations. In the event
the Company receives Stock in satisfaction of a recipient's minimum applicable
withholding tax obligations, the Stock must have been held by the recipient for
more than six months.
13
<PAGE>
17. Governmental Approval
Each share of Restricted Stock and each Option will be subject to the
requirement that if at any time the listing, registration or qualification of
the shares covered thereby upon any securities exchange, or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of or in connection with the granting of
such Restricted Share or Option or the purchase of shares thereunder, no such
Option may be exercised in whole or in part unless and until such listing,
registration, qualification, consent or approval has been effected or obtained
free of any conditions not acceptable to the Board.
18. Effective Date of Plan and Shareholder Approval
18.1 Effective Date. This Plan will become effective as of January 1,
2000, subject to ratification by the Company's shareholders prior to March 31,
2000.
18.2 Shareholder Approval for "Qualified Performance-Based Compensation."
This Plan must be reapproved by the shareholders of UGI no later than the first
shareholders meeting that occurs in the fifth year following the year in which
the shareholders previously approved the provisions of Section 10, if required
by section 162(m) of the Code or the regulations thereunder.
19. Successors
This Plan will be binding upon and inure to the benefit of the Company, its
successors and assigns and the Participant and his heirs, executors,
administrators and legal representatives.
20. Governing Law
The validity, construction, interpretation and effect of the Plan and
option agreements issued under the Plan will be governed exclusively by and
determined in accordance with the law of the Commonwealth of Pennsylvania.
14
<PAGE>
Appendix B
UGI CORPORATION
2000 DIRECTORS' STOCK OPTION PLAN
1. Purpose and Design
The purpose of this Plan is to (1) encourage ownership of Company Stock by
non-employee directors and thereby align such directors' interests more closely
with the interests of shareholders of the Company, and (2) assist the Company in
securing and retaining highly qualified persons to serve as non-employee
directors, in which position they may contribute materially to the long-term
growth and profitability of the Company, by affording them an opportunity to
acquire Stock.
2. Definitions
Whenever used in this Plan, the following terms will have the respective
meanings set forth below:
2.01 "Board" means the Company's Board of Directors as constituted from
time to time.
2.02 "Change of Control" means a change of control as defined in a
change of control agreement between the Company and certain of its employees.
2.03 "Committee" means the Compensation and Management Development
Committee of the Board or its successor.
2.04 "Company" means UGI Corporation, a Pennsylvania corporation and any
successor thereto.
2.05 "Date of Grant" means the effective date of an Option grant;
provided, however, that no retroactive grants will be made.
2.06 "Fair Market Value" of Stock means the average of the highest and
lowest sales prices thereof on the New York Stock Exchange on the day on which
Fair Market Value is being determined, as reported on the Composite Tape for
transactions on the New York Stock Exchange. In the event that the New York
Stock Exchange does not express sales prices in decimal form, the average will
be rounded to the next highest one-eighth of a point (.125). Notwithstanding
the foregoing, in the case of a cashless exercise pursuant to Section 7.4(iii),
the Fair Market Value will be the actual sale price of the shares issued upon
exercise of the Option. In the event that there are no Stock transactions on
the New York Stock Exchange on such day, the Fair Market Value will be
determined as of the immediately preceding day on which there were Stock
transactions on that exchange.
1
<PAGE>
2.07 "Option" means the right to purchase Stock pursuant to the relevant
provisions of this Plan at the Option Price for a specified period of time, not
to exceed ten years from the Date of Grant, which period of time will be subject
to earlier termination prior to exercise in accordance with Section 7.3(b) of
this Plan.
2.08 "Option Price" means an amount per share of Stock purchasable under
an Option designated by the Committee on the Date of Grant of an Option to be
payable upon exercise of such Option. The Option Price will not be less than
100% of the Fair Market Value of the Stock determined on the Date of Grant.
2.09 "Participant" means a non-employee director who is eligible to
receive, and is granted, Options under the Plan.
2.10 "Plan" means this 2000 Directors' Stock Option Plan.
2.11 "Stock" means the Common Stock of the Company or such other
securities of the Company as may be substituted for Stock or such other
securities pursuant to Section 10.
2.12 "Subsidiary" means any corporation or partnership, at least 20% of
the outstanding voting stock, voting power or partnership interest of which is
owned respectively, directly or indirectly, by the Company.
3. Number and Source of Shares Available for Options -- Maximum Allotment
The number of shares of Stock which may be made the subject of Options
under this Plan at any one time may not exceed 200,000 in the aggregate,
including shares acquired by Participants through exercise of Options under this
Plan. The number of shares of Stock which may be the subject of grants of
Options to any one individual in a calendar year will not exceed 10,000. The
foregoing limits will be subject to the adjustment provisions of Section 10
below. If any Option expires or terminates for any reason without having been
exercised in full, the unpurchased shares subject to the Option will again be
available for the purposes of the Plan. Shares which are the subject of Options
may be previously issued and outstanding shares of the Stock reacquired by the
Company and held in its treasury, or may be authorized but unissued shares of
Stock, or may be a combination of both.
4. Duration of the Plan
The Plan will remain in effect until all Stock subject to it has been
purchased pursuant to the exercise of Options or all such Options have
terminated without exercise. Notwithstanding the foregoing, no Option may be
granted after December 31, 2009.
2
<PAGE>
5. Determination of Grants - Administration of Plan
5.1 Determination of Grants. The Company, after consultation with outside
compensation consultants, shall make recommendations to the Committee as to the
grants to be made under the Plan. Subject to the express provisions of the
Plan, the Committee will have the authority to determine the non-employee
directors to whom, and the time or times at which, Options will be granted, the
number of shares to be subject to each Option, the Option Price to be paid for
the shares upon the exercise of each Option, and the period within which each
Option may be exercised. Grants made by the Committee will be subject to the
approval of the Board.
5.2 Administration of Plan. The Plan will be administered by the
Committee. Subject to the express provisions of the Plan, the Committee will
also have authority to construe and interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, and to make all other
determinations (including factual determinations) necessary or advisable for the
orderly administration of the Plan. All ministerial functions, in addition to
those specifically delegated elsewhere in the Plan, shall be performed by a
committee comprised of Company employees ("Administrative Committee") appointed
by the Committee.
6. Eligibility
Each director of the Company who, on any date on which an Option is to be
granted (as specified in Section 7 of the Plan), is not an employee of the
Company or any parent or Subsidiary of the Company or an employee who has
retired under the Company's or any such parent's or Subsidiary's retirement
income or pension plan, will be eligible to receive Options under the Plan. The
foregoing notwithstanding, no director who is serving on the Board as a result
of a nomination or appointment pursuant to the terms of any debt instrument,
preferred stock, underwriting agreement, or other contract entered into by the
Company will be eligible to participate in the Plan. No person other than those
specified in this Section 6 will participate in the Plan.
7. Options
7.1 Grant of Options. Subject to the provisions of Sections 2.08 and 3:
(i) Options may be granted to Participants under substantially equal terms at
any time and from time to time as may be determined by the Committee, and (ii)
subject to approval of the Board, the Committee will have discretion in
determining the Options to be granted, the number of shares of Stock to be
subject to each Option, the Option Price to be paid for the shares upon the
exercise of each Option, the period within which each Option may be exercised
and the vesting schedule associated with the Option.
7.2 Option Agreement. As determined by the Committee on the Date of Grant,
each Option will be evidenced by a stock option agreement that will, among other
things, specify
3
<PAGE>
the Date of Grant, the Option Price, the duration of the Option, the number of
shares of Stock to which the Option pertains and the Option's vesting schedule.
7.3 Exercise and Vesting.
(a) Except as otherwise specified by the Committee in the stock
option agreement, an Option will be fully and immediately exercisable on the
Date of Grant. Notwithstanding the foregoing, in the event that any such Options
are not by their terms immediately exercisable, the Committee may accelerate the
exercisability of any or all outstanding Options at any time for any reason. No
Option will be exercisable on or after the tenth anniversary of the Date of
Grant.
(b) Except as otherwise specified by the Committee, each Option,
to the extent that it has not previously been exercised, will terminate when the
Participant holding such Option (while living) ceases to be a non-employee
director of the Company. However, if a Participant holding an Option ceases to
be a non-employee director by reason of (i) retirement, (ii) disability, or
(iii) death, the Option held by any such Participant will be fully and
immediately exercisable (to the extent not otherwise exercisable by its terms)
and will thereafter become exercisable pursuant to the following:
(i) Retirement. If a Participant ceases to serve as a
director of the Company on account of retirement, the Option theretofore granted
to such Participant may be exercised at any time prior to the earlier of the
expiration date of the Option or the expiration of the 36 month period following
the Participant's retirement. Retirement means cessation of service as a
director of the Company after (1) attaining age 65 with five or more years of
service with the Company, or (2) ten or more years of service with the Company.
(ii) Disability. If a Participant is determined to be
"disabled" (as defined under the Company's long-term disability plan), the
Option theretofore granted to such Participant may be exercised at any time
prior to the earlier of the expiration date of the Option or the expiration of
the 36 month period following the Participant's retirement.
(iii) Death. In the event of the death of a Participant
while serving as a director of the Company, the Option theretofore granted to
such Participant may be exercised at any time prior to the earlier of the
expiration date of the Option or the expiration of the 12 month period following
the Participant's death. Such Option may be exercised by the estate of the
Participant, by any person to whom the Participant may have bequeathed the
Option, any person the Participant may have designated to exercise the same
under the Participant's last will, or by the Participant's personal
representatives if the Participant has died intestate.
(c) If a Participant ceases serving as a director and,
immediately thereafter, is employed by the Company or any Subsidiary, then,
solely for purposes of Section 7.3(b) of the Plan, such Participant will not be
deemed to have ceased service as a director at that time,
4
<PAGE>
and his or her continued employment by the Company or any Subsidiary will be
deemed to be continued service as a director; provided, however, that such
former director will not be eligible for additional grants of Options under the
Plan.
7.4 Payment. The Option Price upon exercise of any Option will be payable
to the Company in full (i) in cash or its equivalent, (ii) by tendering shares
of previously acquired Stock already beneficially owned by the Participant for
more than one year and having a Fair Market Value at the time of exercise equal
to the total Option Price, (iii) by payment through a broker in accordance with
procedures permitted by Regulation T of the Federal Reserve Board, (iv) by such
other method as the Committee may approve, or (v) by a combination of (i), (ii),
(iii) and/or (iv). The cash proceeds from such payment will be added to the
general funds of the Company and will be used for its general corporate
purposes.
7.5 Written Notice. A Participant wishing to exercise an Option must give
written notice to the Company in the form and manner prescribed by the
Administrative Committee, indicating the date of award, the number of shares as
to which the Option is being exercised, and such other information as may be
required by the Administrative Committee. Full payment for the shares pursuant
to the Option must be received by the close of business on the day the Option is
exercised. Except as provided in Section 7.3(b), no Option may be exercised at
any time unless the Participant is then a non-employee director of the Company.
7.6 Issuance of Stock. As soon as practicable after the receipt of written
notice and payment, the Company will, without stock transfer taxes to the
Participant or to any other person entitled to exercise an Option pursuant to
this Plan, deliver to, or credit electronically on behalf of, the Participant,
the Participant's designee or such other person the requisite number of shares
of Stock.
7.7 Privileges of a Shareholder. A Participant or any other person
entitled to exercise an Option under this Plan will have no rights as a
shareholder with respect to any Stock covered by the Option until the due
exercise of the Option and issuance of such Stock.
7.8 Partial Exercise. An Option granted under this Plan may be exercised
as to any lesser number of shares than the full amount for which it could be
exercised. Such a partial exercise of an Option will not affect the right to
exercise the Option from time to time in accordance with this Plan as to the
remaining shares subject to the Option.
8. Non-Transferability of Options
No Option granted under the Plan will be transferable otherwise than by
will or the laws of descent and distribution, and an Option may be exercised,
during the lifetime of the Participant, only by the Participant.
5
<PAGE>
9. Consequences of a Change of Control
9.1 Notice and Acceleration. Upon a Change of Control, unless the
Committee determines otherwise, (i) the Company will provide each Participant
with outstanding grants written notice of such Change of Control, and (ii) all
outstanding Options will automatically accelerate and become fully exercisable.
9.2 Assumption of Grants. Upon a Change of Control where the Company is
not the surviving corporation (or survives only as a subsidiary of another
corporation), unless the Committee determines otherwise, all outstanding Options
that are not exercised will be assumed by, or replaced with comparable options
or rights by, the surviving corporation (or a parent of the surviving
corporation).
9.3 Other Alternatives. Notwithstanding the foregoing, subject to Section
9.4 below, in the event of a Change of Control, the Committee may take any of
the following actions with respect to any or all outstanding Options: the
Committee may (i) require that Participants surrender their outstanding Options
in exchange for a payment by the Company, in cash or Stock, as determined by the
Committee, in an amount equal to the amount by which the then Fair Market Value
of the shares of Stock subject to the Participant's unexercised Options exceeds
the Option Price of the Options, as applicable, or (ii) after giving
Participants an opportunity to exercise their outstanding Options, terminate any
or all unexercised Options at such time as the Committee deems appropriate.
Such surrender or termination will take place as of the date of the Change of
Control or such other date as the Committee may specify.
9.3 Committee. The Committee making the determinations under this Section
9 following a Change of Control must be comprised of the same members as those
on the Committee immediately before the Change of Control. If the Committee
members do not meet this requirement, the automatic provisions of Sections 9.1
and 9.2 will apply, and the Committee will not have discretion to vary them.
9.4 Limitations. Notwithstanding anything in the Plan to the contrary, in
the event of a Change of Control, the Committee will not have the right to take
any actions described in the Plan (including without limitation actions
described in this Section 9) that would make the Change of Control ineligible
for pooling of interests accounting treatment or that would make the Change of
Control ineligible for desired tax treatment if, in the absence of such right,
the Change of Control would qualify for such treatment and the Company intends
to use such treatment with respect to the Change of Control.
10. Adjustment of Number and Price of Shares, Etc.
Notwithstanding anything to the contrary in this Plan, in the event any
recapitalization, reorganization, merger, consolidation, spin-off, combination,
repurchase, exchange of shares or other securities of the Company, stock split
or reverse split, extraordinary dividend,
6
<PAGE>
liquidation, dissolution, significant corporate transaction (whether relating to
assets or stock) involving the Company, or other extraordinary transaction or
event affects Stock such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of Participants' rights
under the Plan, then the Committee may, in a manner that is equitable, adjust
(i) the number or kind of shares of Stock to be subject to Options thereafter
granted under the Plan, (ii) the number and kind of shares of Stock issuable
upon exercise of outstanding Options, and (iii) the Option Price per share
thereof, provided that the number of shares subject to any Option will always be
a whole number. Any such determination of adjustments by the Committee will be
conclusive for all purposes of the Plan and of each Option, whether a stock
option agreement with respect to a particular Option has been theretofore or is
thereafter executed.
11. Limitation of Rights
Nothing contained in this Plan will be construed to give a non-employee
director any right to a grant hereunder except as may be authorized in the
discretion of the Committee. A grant under this Plan will not constitute, nor
be evidence of, any agreement or understanding, expressed or implied, that a
Participant has any right to serve as a director of the Company.
12. Amendment or Termination of Plan
Subject to Board approval, the Committee may at any time, and from time to
time, alter, amend, suspend or terminate this Plan without the consent of the
Company's shareholders or Participants, except that any such alteration,
amendment, suspension or termination will be subject to the approval of the
Company's shareholders within one year after such Committee and Board action if
such shareholder approval is required by any federal or state law or regulation
or the rules of any stock exchange or automated quotation system on which the
Stock is then listed or quoted, or if the Committee in its discretion determines
that obtaining such shareholder approval is for any reason advisable. No
termination or amendment of this Plan may, without the consent of the
Participant to whom any Option has previously been granted, adversely affect the
rights of such Participant under such Option. Notwithstanding the foregoing,
the Administrative Committee may make minor amendments to this Plan which do not
materially affect the rights of Participants or significantly increase the cost
to the Company.
7
<PAGE>
13. Governmental Approval
Each Option will be subject to the requirement that if at any time the
listing, registration or qualification of the shares covered thereby upon any
securities exchange, or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of or in connection with the granting of such Option or the purchase
of shares thereunder, no such Option may be exercised in whole or in part unless
and until such listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions not acceptable to the Board.
14. Effective Date of Plan and Shareholder Approval
This Plan will become effective as of January 1, 2000, subject to
ratification by the Company's shareholders prior to March 31, 2000.
15. Successors
This Plan will be binding upon and inure to the benefit of the Company, its
successors and assigns and the Participant and his heirs, executors,
administrators and legal representatives.
16. Governing Law
The validity, construction, interpretation and effect of the Plan and
option agreements issued under the Plan will be governed exclusively by and
determined in accordance with the law of the Commonwealth of Pennsylvania.
8
<PAGE>
Please mark
your votes
as X
indicated in
this example
The Board of Directors recommends that you vote "FOR" Numbers 1, 2, 3 and 4.
1. ELECTION OF DIRECTORS
FOR WITHHOLD J.W. Stratton, D.I.J. Wang, R.C. Gozon,
all nominees AUTHORITY S.D. Ban, L.R. Greenberg, M.O. Schlanger,
(except as noted) (all nominees) T. F. Donovan, A. Pol
(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 UGI CORPORATION 2000 STOCK INCENTIVE PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVAL OF UGI CORPORATION 2000 DIRECTORS' STOCK OPTION PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. RATIFICATION 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)
Date ___________________________________________________________________________
[FOLD AND DETACH HERE]
UGI
CORPORATION
Dear Shareholder:
Enclosed are materials relating to UGI Corporation's February 29, 2000 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.
Brendan P. Bovaird
Corporate Secretary
UGI News & Reports You can obtain news and other
--------------------- information about UGI and our
24 Hours a day -- Every day! majority-owned AmeriGas Partners, L.P.
1-800-UGI-9453 or conveniently by telephone or by
http://www.ugicorp.com 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 29,
2000, 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, 2, 3 and 4.
1. ELECTION OF DIRECTORS
FOR WITHHOLD J.W. Stratton, D.I.J. Wang, R.C. Gozon,
all nominees AUTHORITY S.D. Ban, L.R. Greenberg, M.O. Schlanger,
(except as noted) (all nominees) T. F. Donovan, A. Pol
(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 UGI CORPORATION 2000 STOCK INCENTIVE PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVAL OF UGI CORPORATION 2000 DIRECTORS' STOCK OPTION PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. RATIFICATION 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)
Date ___________________________________________________________________________
[FOLD AND DETACH HERE]
UGI
CORPORATION
Dear Shareholder:
Enclosed are materials relating to UGI Corporation's February 29, 2000 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.
Brendan P. Bovaird
Corporate Secretary
UGI News & Reports You can obtain news and other
--------------------- information about UGI and our
24 Hours a day -- Every day! majority-owned AmeriGas Partners, L.P.
1-800-UGI-9453 or conveniently by telephone or by
http://www.ugicorp.com 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 29, 2000, 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
matter, 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 24, 2000, 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.
(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, 2, 3 and 4.
1. ELECTION OF DIRECTORS
FOR WITHHOLD J.W. Stratton, D.I.J. Wang, R.C. Gozon,
all nominees AUTHORITY S.D. Ban, L.R. Greenberg, M.O. Schlanger,
(except as noted) (all nominees) T. F. Donovan, A. Pol
(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 UGI CORPORATION 2000 STOCK INCENTIVE PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. APPROVAL OF UGI CORPORATION 2000 DIRECTORS' STOCK OPTION PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. RATIFICATION 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)
Date ___________________________________________________________________________
[FOLD AND DETACH HERE]
UGI
CORPORATION
Dear Shareholder:
Enclosed are materials relating to UGI Corporation's February 29, 2000 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.
Brendan P. Bovaird
Corporate Secretary
UGI News & Reports You can obtain news and other
--------------------- information about UGI and our
24 Hours a day -- Every day! majority-owned AmeriGas Partners, L.P.
1-800-UGI-9453 or conveniently by telephone or by
http://www.ugicorp.com 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 29, 2000, 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
matter, 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 24, 2000, 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.
(Continued and to be signed on reverse side)
[FOLD AND DETACH HERE]
