<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
PP&L Resources, Inc.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
PP&L Resources, Inc.
Notice of Annual Meeting
April 24, 1996
and
Proxy Statement
<PAGE>
PP&L RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
APRIL 24, 1996
The Annual Meeting of Shareowners of PP&L Resources, Inc. ("Resources" or
"the Company") will be held at Lehigh University's Stabler Arena, at the
Goodman Campus Complex located in Lower Saucon Township, outside Bethlehem,
Pennsylvania, on Wednesday, April 24, 1996, at 1:30 p.m., for the purposes
stated below and more fully described in the accompanying Proxy Statement, and
to transact such other business as may properly come before the Meeting or any
adjournments thereof:
1. The election of three directors for a term of three years.
2. The ratification of the appointment of Price Waterhouse LLP as
independent auditors for the year ending December 31, 1996.
The Board of Directors is not aware of any other matters to be presented for
action at the Annual Meeting. If any other business should properly come
before the meeting, it is the intention of the Board of Directors that the
persons named as proxies will vote in accordance with their best judgment.
After reading the Proxy Statement, please mark, sign, date and return your
Proxy as soon as possible, to assure your representation at the meeting. Only
Shareowners of record at the close of business on Wednesday, February 28,
1996, will be entitled to vote at the Annual Meeting or any adjournments
thereof. If the Annual Meeting is interrupted or delayed for any reason, the
Shareowners attending the adjourned Meeting shall constitute a quorum and may
act upon such business as may properly come before the Meeting.
By Order of the Board of
Directors.
/s/ Robert J. Grey
Robert J. Grey
Secretary
March 15, 1996
<PAGE>
PROXY STATEMENT
The Company's principal executive offices are located at Two North Ninth
Street, Allentown, Pennsylvania 18101, telephone number (610) 774-5151. This
Proxy Statement and the accompanying Proxy, solicited on behalf of the Board
of Directors, were first released to Shareowners on or about March 15, 1996.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has established Wednesday, February 28, 1996, as the
record date for Shareowners entitled to vote at the Annual Meeting (the
"Record Date"). The transfer books of the Company will not be closed. The
Resources Articles divide Resources' voting stock into two classes: Common and
Preferred. There were no shares of Preferred Stock outstanding on the Record
Date. A total of 160,046,906 shares of Common Stock was outstanding on the
Record Date. Each outstanding share of Common Stock entitles the holder to one
vote upon any business properly presented to the Annual Meeting.
Execution of the Proxy will not affect a Shareowner's right to attend the
Annual Meeting and vote in person. Any Shareowner giving a Proxy has the right
to revoke it at any time before it is voted by giving notice in writing to the
Secretary. Shares represented by Proxy will be voted in accordance with the
instructions given. In the absence of instructions to the contrary, the Proxy
solicited hereby will be voted FOR the election of directors, and FOR the
Ratification of the Appointment of Independent Auditors. Abstentions and
broker non-votes are not counted as either "yes" or "no" votes.
Full and fractional shares held by Resources for each participant in the
Dividend Reinvestment Plan will be voted by Resources, as the registered owner
of such shares, in the same manner as shares held of record by that
participant are voted. If a participant owns no shares of record, full and
fractional shares credited to that participant's account will be voted in
accordance with the participant's instructions on the Proxy. Shares held in
the Dividend Reinvestment Plan will not be voted if proxies are not returned.
To preserve voter confidentiality, Resources voluntarily limits access to
Shareowner voting records to a few designated employees. These employees sign
a confidentiality agreement which prohibits them from disclosing the manner in
which a Shareowner has voted to any employee of Resources or to any other
person (except the person in whose name the shares are registered), unless
otherwise required by law.
In order to be approved, Proposal 2 (the Ratification of the Appointment of
Independent Auditors) must receive a majority of the votes cast, in person or
by proxy, by the Shareowners voting as a single class. Regarding Proposal 1
(the election of directors), the nominees receiving the highest number of
votes, up to the number of directors to be elected, will be elected. Authority
to vote for any individual nominee can be withheld by striking a line through
that person's name in the list of nominees on the accompanying Proxy. Shares
will be voted for the remaining nominees on a pro rata basis.
PROPOSAL 1: ELECTION OF DIRECTORS
Resources has a classified Board of Directors, currently consisting of
fifteen directors divided into three classes. These classes consist of six
directors whose terms will expire at the 1996 Annual Meeting, four directors
whose terms will expire at the 1997 Annual Meeting, and five directors whose
terms will expire at the 1998 Annual Meeting. Since the directors of Resources
also serve as the directors of Pennsylvania Power & Light Company ("PP&L"),
terms and length of service for Resources include PP&L tenure.
The nominees this year are William J. Flood, William F. Hecht and Frank A.
Long. All of the nominees are currently serving as directors and were elected
by the Shareowners at the 1993 Annual Meeting. If elected by the Shareowners,
the above nominees will serve until the 1999 Annual Meeting and until their
successors shall be elected and qualified. Following their election and the
retirement of certain directors as discussed below, there will be eleven
members of the Board of Directors, consisting of the following classes: four
directors whose terms will expire at the 1997 Annual Meeting, four directors
whose terms will expire at the 1998 Annual Meeting, and three directors whose
terms will expire at the 1999 Annual Meeting.
1
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The Board of Directors has no reason to believe that any of the nominees
will become unavailable for election, but, if any nominee should become
unavailable prior to the meeting, the accompanying Proxy will be voted for the
election of such other person as the Board of Directors may recommend in place
of that nominee.
THE BOARD OF DIRECTORS
RECOMMENDS THAT SHAREOWNERS VOTE FOR PROPOSAL 1
NOMINEES FOR DIRECTORS:
- ---------------- WILLIAM J. FLOOD, 60, is Secretary-Treasurer of Highway
Equipment & Supply Co. (HESCO), Harrisburg, Pa., supplier of
heavy equipment for highway construction, industry and
[PHOTO OF general contractors. Mr. Flood received a B.A. from Dartmouth
WILLIAM J. FLOOD College and joined HESCO in 1960. He is a director of HESCO,
APPEARS HERE] Geisinger Foundation, Hescorp, Inc. and PNC Bank (Northeast
PA). A member of the Audit and Nominating Committees, Mr.
Flood has been a director since 1990.
- ----------------
- ---------------- WILLIAM F. HECHT, 52, is Chairman, President and Chief
Executive Officer of both Resources and PP&L. Mr. Hecht
received a B.S. and M.S. in Electrical Engineering from
[PHOTO OF Lehigh University. Employed since 1964, he was elected
WILLIAM F. HECHT President and Chief Operating Officer in 1991, was named to
APPEARS HERE] his present PP&L position in 1993, and to his Resources
position in February 1995. Mr. Hecht is a director of a
number of civic and charitable organizations. He is chair of
- ---------------- the Executive Committees of the Board and of the Corporate
Leadership Council, an internal committee comprised of the
senior officers of Resources. He has been a director since
1990.
- ---------------- FRANK A. LONG, 55, is Executive Vice President of Resources
and Executive Vice President and Chief Operating Officer of
PP&L. Mr. Long received a B.S. in Electrical Engineering from
[PHOTO OF Northeastern University, and joined PP&L in 1963. He was
FRANK A. LONG elected Senior Vice President -- System Power & Engineering
APPEARS HERE] in 1990, was named to his present PP&L position in 1993, and
to his Resources position in February 1995. Mr. Long is a
member of the Executive Committee of the Pennsylvania
- ---------------- Electric Association, a trustee of the North American
Electric Reliability Council, and a director of the
Homemaker/Home Health Aide Services of Lehigh County. He has
been a director since 1993.
DIRECTORS CONTINUING IN OFFICE:
- ---------------- E. ALLEN DEAVER, 60, is Executive Vice President, a member of
the President's Office, and a director of Armstrong World
Industries, Inc., Lancaster, Pa., a manufacturer of interior
[PHOTO OF furnishings and specialty products. He graduated from the
E. ALLEN DEAVER University of Tennessee with a B.S. in Mechanical Engineering
APPEARS HERE] and joined Armstrong in 1960. Mr. Deaver has served as
Executive Vice President and a director of Armstrong since
1988. He is a director of the National Association of
- ---------------- Manufacturers, the Pennsylvania Economy League, the
Pennsylvania Chamber of Business and Industry, and
Internacional de Ceramica S.A. (Mexico). Mr. Deaver, chair of
the Management Development and Compensation Committees and a
member of the Unregulated Businesses Oversight Committee, has
been a director since 1991; his term ends in 1997.
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<PAGE>
- ----------------- NANCE K. DICCIANI, 48, is Vice President and Business
Director, Petroleum Chemicals Division, Rohm and Haas
Company, Philadelphia, Pa. Dr. Dicciani received a B.S. from
[PHOTO OF Villanova University, an M.S. from the University of
NANCE K. DICCIANI Virginia, an M.B.A. from the Wharton School of Business and a
APPEARS HERE] Ph.D. from the University of Pennsylvania. Prior to joining
Rohm and Haas in 1991 as Business Unit Director, Petroleum
Chemicals, Dr. Dicciani had been named General Manager,
- ----------------- Business Development and Technology (Chemicals group), at Air
Products and Chemicals, Inc. in 1990. She is a director of
the World Affairs Council and Villanova University. Dr.
Dicciani, a member of the Unregulated Businesses Oversight
Committee and chair of the Nuclear Oversight Committee, has
been a director since 1994; her term ends in 1997.
- ----------------- ELMER D. GATES, 66, is Vice Chairman of Fuller Company,
Bethlehem, Pa., a company involved in the design and
manufacture of plants, machinery and equipment used in the
[PHOTO OF cement, paper, power and processing industries. He has a B.S.
ELMER D. GATES in Mechanical Engineering from Clarkson College. Prior to
APPEARS HERE] joining Fuller Company as President in 1982, Mr. Gates spent
thirty-one years at General Electric Company. Mr. Gates
assumed his present position at Fuller Company in 1990. Mr.
- ----------------- Gates is vice chairman and a director of Ambassador Bank and
president of the Lehigh Valley Partnership. He is also
Chairman, Chief Executive Officer and a director of Birdsboro
Ferrocast, Inc., a steel foundry located in Birdsboro, Pa. In
1992, Birdsboro Ferrocast filed a voluntary petition under
Chapter 11 of the Bankruptcy Code. Mr. Gates, chair of the
Unregulated Businesses Oversight Committee and a member of
the Management Development and Compensation Committees, has
been a director since 1989; his term ends in 1997.
- ----------------- DEREK C. HATHAWAY, 51, is Chairman, President and Chief
Executive Officer of Harsco Corporation, Camp Hill, Pa., a
diversified multi-national manufacturing company. In 1966,
[PHOTO OF Mr. Hathaway founded Dartmouth Investments Ltd. in the United
DEREK C. HATHAWAY Kingdom and built a group of engineering businesses into a
APPEARS HERE] public corporation, which was acquired by Harsco in 1979.
After coming to the U.S. in 1984, Mr. Hathaway became a
citizen in 1991. Mr. Hathaway served as Senior Vice
- ----------------- President -- Operations of Harsco's Engineered Products Group
from 1986 until 1991, when he became President and Chief
Operating Officer. He was elected to his present position in
1994. Mr. Hathaway is a director of Harsco, Dauphin Deposit
Corporation and a number of civic and charitable
organizations, including the National Association of
Manufacturers, the Pennsylvania Business Roundtable, the
Pennsylvania Chamber of Business and Industry, and the
Polyclinic Medical Center. Mr. Hathaway, a member of the
Audit and Unregulated Businesses Oversight Committees, has
been a director since April 1995; his term ends in 1998.
- ----------------- STUART HEYDT, 56, is President and Chief Executive Officer of
Geisinger Health System, Danville, Pa. Dr. Heydt, who
specializes in maxillofacial surgery, attended Dartmouth
[PHOTO OF College and received an M.D. from the University of Nebraska.
STUART HEYDT He had been President and Chief Executive Officer of
APPEARS HERE] Geisinger Medical Center since May 1990, and then was
President and Chief Operating Officer of Geisinger Foundation
until being appointed to his present position in December
- ----------------- 1991. He is past president of the American College of
Physician Executives and a director of Bucknell University,
Wilkes University, PNC Bank (Northeast PA) and PNC Bank, N.A.
A member of the Management Development and Compensation and
Nominating Committees, Dr. Heydt has been a director since
1991; his term ends in 1998.
- ----------------- CLIFFORD L. JONES, 68, served as President of the Capital
Region Economic Development Corporation, Camp Hill, Pa., from
1992 until 1994. Prior to that, he served as President of the
[PHOTO OF Pennsylvania Chamber of Business and Industry from 1983 until
CLIFFORD L. JONES his retirement in 1991. Mr. Jones received a B.A. from
APPEARS HERE] Westminster College. He served from 1981 to 1983 as a member,
and then as Chairman, of the Pennsylvania Public Utility
Commission. From 1979 until his appointment to the PUC, Mr.
- ----------------- Jones was Secretary of the Pennsylvania Department of
Environmental Resources. He is also a director of U.S. Radio,
Inc. and Mercom, Inc., a Michigan-based cable television
company. A member of the Corporate Responsibility and
Nominating Committees, Mr. Jones has been a director since
1989; his term ends in 1998.
3
<PAGE>
- ----------------- RUTH LEVENTHAL, 55, is Professor of Biology at the Milton S.
Hershey Medical College of Penn State University. She
previously had served as Provost and Dean of Penn State
[PHOTO OF Harrisburg, a position which she held from 1984 through 1994.
RUTH LEVENTHAL Dr. Leventhal earned a B.S. in Medical Technology, a Ph.D. in
APPEARS HERE] Parasitology and an M.B.A. from the University of
Pennsylvania. From 1981 until 1984, Dr. Leventhal was Dean of
the School of Health Sciences and Professor of Medical
- ----------------- Laboratory Sciences at Hunter College of The City University
of New York. She previously served four years as Acting Dean
of The School of Allied Medical Professions at the University
of Pennsylvania. Dr. Leventhal is a director of Mellon Bank
(Commonwealth region) and founding chair of the Council for
Public Education. She is active in a number of charitable,
civic and professional organizations. Dr. Leventhal, a member
of the Audit and Nuclear Oversight Committees, has been a
director since 1988; her term ends in 1998.
- ----------------- NORMAN ROBERTSON, 68, retired as Senior Vice President and
Chief Economist of Mellon Bank N.A., Pittsburgh, Pa. in 1992.
Mr. Robertson received a B.S. in Economics from the
[PHOTO OF University of London, England, and attended the London School
NORMAN ROBERTSON of Economics. He joined Mellon Bank in 1963 and advanced to
APPEARS HERE] Vice President and Chief Economist in 1970 and Senior Vice
President and Chief Economist in 1973. Mr. Robertson is a
director of Mellon Bank (Maryland) and Economics America--
- ----------------- Pennsylvania Council on Economic Education. He is also an
Adjunct Professor of Economics at Carnegie Mellon University.
Mr. Robertson, chair of the Nominating Commitee and a member
of the Executive and Management Development and Compensation
Committees, has been a director since 1969; his term ends in
1997.
DIRECTORS RETIRING AS OF THE 1996 ANNUAL MEETING:
The Company wishes to acknowledge with gratitude the many years of service
provided by the following directors who will retire as of the 1996 Annual
Meeting. In addition to serving as a director for many years, John Kauffman
was also an employee of the Company for 41 years, beginning his employment
with Pennsylvania Water & Power Co. at the Holtwood hydroelectric station in
1950. Each of the following directors has provided valued advice and
leadership to the Company, and we wish them well in their retirements and
future endeavors.
- ------------------ DANIEL G. GAMBET is President of Allentown College of St.
Francis de Sales, Center Valley, Pa. Father Gambet received a
Ph.D. in Classical Studies from the University of
[PHOTO OF Pennsylvania. He joined Allentown College in 1965 as Academic
DANIEL G. GAMBET Dean, became Vice President in 1970 and President in 1978. He
APPEARS HERE] is a director of a number of civic and charitable
organizations, including Lehigh Valley Hospital and Health
Network, Inc. and the Better Business Bureau of Eastern
- ------------------ Pennsylvania. A director since 1986, Father Gambet has served
as a member of the Executive Committees and chair of the
Corporate Responsibility Committee.
- ------------------ JOHN T. KAUFFMAN was Chairman and Chief Executive Officer of
PP&L from October 1991 until his retirement on December 31,
1992. He had served as PP&L Chairman, President and Chief
[PHOTO OF Executive Officer from 1990 to October 1991. Mr. Kauffman
JOHN T. KAUFFMAN earned a B.S. in Mechanical Engineering from Purdue
APPEARS HERE] University and a B.S. in Marine Engineering from the U.S.
Merchant Marine Academy. He is past chairman of the
Pennsylvania Electric Association, chairman of Lehigh Valley
- ------------------ 2000: Business-Education Partnerships and a director of
Conestoga Title Insurance Company, Alliance for the
Chesapeake Bay, the Eastern Pennsylvania Chapter of The
Nature Conservancy, the AMERICA 2000 Coalition and the Center
for Workforce Preparation and Quality Education, an affiliate
of the U.S. Chamber of Commerce. Mr. Kauffman has served in
recent years as a member of the Executive Committees and of
the Nuclear Oversight Committee. A director since 1978, Mr.
Kauffman provided valuable leadership to the Company
throughout this period of industry change.
- ------------------ VICE ADMIRAL ROBERT Y. KAUFMAN, USN (RET.) is Chairman and
President of Yogi, Inc., a consulting firm located in
[PHOTO OF Potomac, Md. Admiral Kaufman received a B.S. at the U.S.
VICE ADMIRAL Naval Academy and an M.S. in International Affairs at George
ROBERT Y. KAUFMAN, Washington University. Admiral Kaufman participated in the
USN (RET.) early planning, development and operation of nuclear
APPEARS HERE] submarines, including Polaris, Trident and the newest attack
submarines. He served as a Navy representative to the Atomic
- ------------------ Energy Commission. Before retiring from the U.S. Navy in
1980, he was director of Command, Control & Communications,
Office of Chief of Naval Operations. A noted wildlife and
nature photographer, Admiral Kaufman has also served as a
technical adviser for the Discovery Channel on cable
television. A director since 1992, Admiral Kaufman has served
as a member of the Corporate Responsibility Committee and was
a charter member of the Nuclear Oversight Committee.
4
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- ----------------- DAVID L. TRESSLER is Executive Director of the Northeast
Pennsylvania Physicians' Organization in Clarks Summit, Pa.
From 1991 through 1995 he had been Executive Director of the
[PHOTO OF Center for Public Initiatives at the University of Scranton,
DAVID L. TRESSLER and President, Chief Executive Officer and a director of the
APPEARS HERE] Northeast Regional Cancer Institute in Scranton. Mr. Tressler
is a graduate of The Pennsylvania State University, the
University of Pittsburgh and Stonier Graduate School of
- ----------------- Banking (Rutgers University). He had served as Chairman and
Chief Executive Officer of Northeastern Bank of Pennsylvania
from 1982 to 1991. Mr. Tressler is past president of
Economics America -- Pennsylvania Council on Economic
Education, and a trustee of Lackawanna Industrial Fund
Enterprises. He is a director of the Pennsylvania Industrial
Development Authority and PHICO Insurance Company. A director
since 1981, Mr. Tressler has served as chair of the Audit
Committee and a member of the Executive Committees.
FORMER DIRECTOR:
- ----------------- RICHARD S. BARTON, a Corporate Vice President of Xerox
Corporation, Rochester, New York, and a Stanford University
Sloan Fellow, resigned from the Board effective September 25,
[PHOTO OF 1995, due to conflicting professional time commitments. Mr.
RICHARD S. BARTON Barton earned his B.A. from Adelphi University and completed
APPEARS HERE] the Wharton Executive Development Program at the University
of Pennsylvania. He previously held the position of Chairman,
President and Chief Executive Officer of Xerox Canada Inc.
- ----------------- From 1989 to 1991, he was Vice President, North American
Systems Sales, for the Xerox Integrated Systems Operations,
and was elected to his current position in 1993. Mr. Barton
serves on the boards of Avon Products, Inc. and the American
Management Association. Mr. Barton was a member of the
Corporate Responsibility and Management Development and
Compensation Committees of the Board. A director since
January 1994, Mr. Barton provided a business perspective
which we valued highly.
GENERAL INFORMATION REGARDING DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR ATTENDANCE AT BOARD MEETINGS
The Board of Directors held nine meetings during 1995. Each incumbent
director attended more than 75% of the meetings held by the Board and the
Committees during the year, except for Admiral Kaufman, who attended 67% due
to family health reasons. The average attendance of incumbent directors at
Board and Committee meetings held during 1995 was 95%.
COMPENSATION OF DIRECTORS
Directors who are Company employees receive no separate compensation for
service on the Board of Directors or Committees of the Board of Directors.
Non-employee directors receive a retainer of $20,500 per year, of which a
minimum of $2,500 is allocated to a deferred stock account; a fee of $750 for
attending Board of Directors meetings, Committee meetings and other meetings
at the Company's request; and a fee of $150 for participating in meetings held
by telephone conference call. Only one attendance fee is paid when the Boards
of Resources and PP&L meet on the same day, and when "dual" committee meetings
are held on the same day. Also, only one retainer is paid for services on the
Boards of both the Company and PP&L.
Non-employee directors may elect to defer all or any part of the retainer
and fees, together with applicable interest, pursuant to the Directors
Deferred Compensation Plan ("DDCP"). Under this Plan, these directors can
defer compensation into a cash account or a deferred stock account. Payment of
these amounts and applicable interest or dividends can be deferred until after
the directors' retirement from the Board of Directors, at which time they can
receive these funds in one or more annual installments for a period of up to
ten years.
In addition, the Company has established a Retirement Plan for non-employee
directors. Upon completion of at least three years of service on the Board,
these directors are eligible for a retirement benefit payable at age 65, or
the date of retirement, whichever is later. This benefit cannot exceed 50% of
the annual retainer in effect during the last year of their service on the
Board and is payable for ten years.
5
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STOCK OWNERSHIP
All directors and executive officers as a group own less than 1% of
Resources' common stock. The following table sets forth certain ownership of
the Company's stock as of December 31, 1995:
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
BENEFICIALLY
NAME OWNED (1)
---- ------------
<S> <C>
R. G. Byram 6,195
E. A. Deaver 1,482
N. K. Dicciani 1,400
R. D. Fagan 100
W. J. Flood 2,726
D. G. Gambet 1,427
E. D. Gates 6,022
D. C. Hathaway 274
W. F. Hecht 16,578
S. Heydt 2,064
R. E. Hill 6,164
C. L. Jones 513
J. T. Kauffman 17,480
R. Y. Kaufman 179
R. Leventhal 702
F. A. Long 10,983
N. Robertson 1,525
D. L. Tressler 2,472
All 20 executive officers and directors as a group 78,817
</TABLE>
(1) The number of shares beneficially owned includes: (i) shares directly
owned by certain relatives with whom directors or officers share voting or
investment power; (ii) shares held of record individually by a director or
officer or jointly with others or held in the name of a bank, broker or
nominee for such individual's account; (iii) shares in which certain directors
or officers maintain exclusive or shared investment or voting power whether or
not the securities are held for their benefit; (iv) with respect to executive
officers, shares held for their benefit by the Trustee under the Employee
Stock Ownership Plan; and (v) with respect to certain directors, shares
credited to their deferred stock account under the DDCP, as follows: Mr.
Deaver, 374 shares, Dr. Dicciani, 364 shares, Mr. Gates, 741 shares, Dr.
Heydt, 455 shares, Dr. Leventhal, 169 shares, Mr. Tressler, 135 shares, and
Messrs. Flood, Hathaway, Jones, Kauffman, Kaufman, Robertson and Fr. Gambet,
56 shares each. Under the DDCP, these directors do not have voting or
dispositive power over these shares.
BOARD COMMITTEES
The Board of Directors has five standing committees -- the Executive, Audit,
Management Development and Compensation, Nominating and Unregulated Businesses
Oversight Committees. Each non-employee director usually serves on two or more
of these and PP&L's committees. (PP&L's committees include the Executive,
Corporate Responsibility, Management Development and Compensation and Nuclear
Oversight Committees.) The Audit, Management Development and Compensation,
Nominating and Unregulated Businesses Oversight Committees are composed
entirely of directors who are not Company employees.
EXECUTIVE COMMITTEE. The Executive Committee exercises during the periods
between Board meetings all of the powers of the Board of Directors, except
that the Executive Committee may not elect directors, change the membership of
or fill vacancies in the Executive Committee, fix the compensation of the
directors or change the Bylaws. The Executive Committee of the Company met
seven times in 1995. (Prior to the formation of the holding company, the PP&L
Executive Committee met once in 1995.) The members of the Executive Committee
are Mr. Hecht (chair), Fr. Gambet, and Messrs. Kauffman, Robertson and
Tressler.
AUDIT COMMITTEE. The principal functions of the Audit Committee are to
provide governance and assist the Company's Board of Directors in the
oversight of executive management's responsibilities related to the Company's
internal control process. This internal control process is designed to provide
reasonable assurance regarding the achievement of the Company's objectives in
the areas of effectiveness and efficiency of operations, reliability of
financial reporting, and compliance with laws, regulations and standards of
integrity. The Audit Committee of the Company met once in 1995. (Prior to the
formation of the holding company, the PP&L Audit Committee met four times in
1995.) The members of the Audit Committee are Mr. Tressler (chair), Messrs.
Flood and Hathaway and Dr. Leventhal.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE. The principal functions
of the Management Development and Compensation Committee are to review and
evaluate at least annually the performance of the
6
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chief executive officer and other senior officers of the Company and its
subsidiaries, and to set their remuneration, including incentive awards; to
review the fees paid to outside directors for their services on the Board of
Directors and its Committees; and to review management's succession planning.
For those individuals who are senior officers of both the Company and PP&L,
the Management Development and Compensation Committees of both companies act
jointly to set remuneration for services to both companies. The Management
Development and Compensation Committee of the Company met four times in 1995.
(Prior to the formation of the holding company, the PP&L Management
Development and Compensation Committee met once in 1995.) The members of the
Management Development and Compensation Committee for both the Company and
PP&L are Mr. Deaver (chair), Messrs. Gates and Robertson and Dr. Heydt.
NOMINATING COMMITTEE. The principal functions of the Nominating Committee
are to develop and review criteria for the qualifications of potential Board
members and to identify and recommend to the Board of Directors new candidates
for election to the Board. The Nominating Committee of the Company met twice
during 1995. (Prior to the formation of the holding company, the PP&L
Nominating Committee met once in 1995.) The members of the Nominating
Committee are Mr. Robertson (chair), Dr. Heydt, and Messrs. Flood and Jones.
Nominees for directors may be proposed by Shareowners in accordance with the
procedures set forth in the Bylaws. Recommendations for the 1997 Annual
Meeting must be received by seventy-five days prior to the 1997 Annual
Meeting. Shareowners interested in recommending nominees for directors should
submit their recommendations in writing to the Chair of the Nominating
Committee, c/o Secretary, Two North Ninth Street, Allentown, Pennsylvania
18101.
UNREGULATED BUSINESSES OVERSIGHT COMMITTEE. The principal functions of the
Unregulated Businesses Oversight Committee are to review the activities of the
unregulated subsidiaries of the Company, and to recommend future direction.
The Committee focuses especially on management systems and processes
concerning regulatory compliance and investment guidelines. The Unregulated
Businesses Oversight Committee met four times in 1995. The members of the
Unregulated Businesses Oversight Committee are Mr. Gates (chair), Dr.
Dicciani, and Messrs. Deaver and Hathaway.
RETIREMENT PLANS FOR EXECUTIVE OFFICERS
PP&L officers who retire from the Company are eligible for benefits under
Resources' Retirement Plan and the Supplemental Executive Retirement Plan
("SERP"). The following table shows the estimated annual retirement benefits
for executive officers payable under these Plans.
ESTIMATED
ANNUAL RETIREMENT BENEFITS
AT NORMAL RETIREMENT AGE OF 65
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS
------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 200,000 66,024 93,024 103,024 113,024
250,000 86,274 120,024 132,524 145,024
300,000 106,524 147,024 162,024 177,024
350,000 126,774 174,024 191,524 209,024
400,000 147,024 201,024 221,024 241,024
450,000 167,274 228,024 250,524 273,024
500,000 187,524 255,024 280,024 305,024
550,000 207,774 282,024 309,524 337,024
600,000 228,024 309,024 339,024 369,024
650,000 248,274 336,024 368,524 401,024
</TABLE>
Benefits under both the Retirement Plan and the SERP benefit formulas are
based on length of service and the average compensation for the highest 60
consecutive months in the final 120 months of employment. For purposes of
calculating benefits under the Retirement Plan, the compensation used is base
salary less amounts deferred pursuant to the Officers Deferred Compensation
Plan. Base salary, including any amounts deferred, is listed in the Summary
Compensation Table which follows. (Of the officers listed in that Table, Mr.
Long deferred $39,860, $32,094, and $26,000 of compensation for the years
1993, 1994 and 1995, respectively. For 1995, Mr. Hecht deferred $52,000 of
compensation.) For purposes of calculating benefits under the SERP, the
compensation used is base salary, bonus and the value of any restricted stock
grant for the year in which earned, as listed in the Table, as well as
dividends paid on restricted stock.
7
<PAGE>
Benefits payable under the Retirement Plan are subject to limits set forth
in the Internal Revenue Code and are not subject to any deduction for Social
Security benefits or other offset. They are computed on the basis of the life
annuity form of pension at the normal retirement age of 65. Benefits payable
under the SERP are computed on the same basis; are offset by Retirement Plan
benefits, the maximum Social Security benefit payable at the time of
retirement and, in some cases, by pensions received from prior employment; and
are reduced for retirement prior to age 60.
As of January 1, 1996, the years of credited service under the Retirement
Plan for Messrs. Hecht, Long, Byram and Hill were 25.8, 28.4, 19.3 and 26.4,
respectively. The years of credited service under the SERP for each of these
officers are three years less than under the Retirement Plan (except in the
case of Mr. Byram, who is entitled to nine months of additional credited
service under the SERP).
In the event of certain changes in control and termination of service, PP&L
officers would be eligible for benefits under the Executive Retirement
Security Plan ("ERSP"). For purposes of this Plan, compensation and years of
credited service are the same as under the SERP, except that, under this Plan,
benefits become immediately vested for participants, salary levels used to
determine benefits are based on earnings for the twelve consecutive month
period of the highest earnings in the final 60 consecutive months immediately
preceding termination and the penalties for early retirement are eliminated.
Under the Plan, executive officers terminated by the Company within 36 months
after such change in control for reasons other than cause or disability are
entitled to the greater of the actuarial equivalent of (a) the sum of three
times the executive's annual base salary and incentive compensation; or (b)
the benefit payable under the SERP formula unreduced for early retirement. The
Plan provides that benefits payable thereunder will be reduced to the extent
necessary so that no such benefits will be subject to an excise tax under
Section 4999 of the Internal Revenue Code, unless absent such reduction, the
participant would receive a higher aggregate benefit.
In addition, in the event of a change in control or certain circumstances
that may lead to a change in control, the Management Development and
Compensation Committee of the Board of Directors may change or eliminate the
restriction period applicable to any outstanding restricted stock awards under
the Incentive Compensation Plan.
SUMMARY COMPENSATION TABLE
The following table summarizes all compensation for the Chief Executive
Officer and the next four most highly compensated executive officers for the
last three fiscal years, for service for Resources and its subsidiaries.
Messrs. Hecht and Long also served as directors but received no separate
remuneration in that capacity.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------------
OTHER ANNUAL RESTRICTED ALL OTHER
SALARY/1/ BONUS/1/ COMPENSATION/2/ STOCK AWARD/3/ COMPENSATION/4/
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) ($)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William F. Hecht 1995 489,024 0/5/ 0 413,920 4,149
Chairman, President and 1994 440,374 0/6/ 0 0/6/ 4,042
Chief Executive Officer 1993 375,000 45,000 0 71,070 3,346
Frank A. Long 1995 344,041 0/5/ 13,654 237,318 4,187
Executive Vice President 1994 295,434 24,375 7,050 42,525 4,078
1993 231,000 27,720 1,000 43,775 3,134
Robert D. Fagan 1995 225,004 54,558/7/ 0 114,067/7/ 0
President--Power 1994 21,635 50,000 0 0 0
Markets
Development Company 1993 0 0 0 0 0
Robert G. Byram 1995 232,717 0/5/ 4,616 134,640 3,496
Senior Vice President-- 1994 206,434 16,500 0 28,755 3,423
Nuclear--PP&L 1993 165,831 20,076 0 31,673 1,031
Ronald E. Hill 1995 199,315 0/5/ 8,808 113,883 3,936
Senior Vice President--
Financial 1994 171,950 12,975 1,100 22,680 3,840
and Treasurer 1993 144,200 11,611 0 16,480 2,481
- -----------------------------------------------------------------------------------------------------
</TABLE>
/1/ Salary and bonus data include deferred compensation. Bonus data include a
one-time employment bonus of $50,000 for Mr. Fagan for 1994.
/2/ Includes longevity pay (which is compensation for vacation earned, but not
taken) and fees earned by certain officers for serving as directors of Safe
Harbor, an affiliate of PP&L. The Safe Harbor fees earned are as follows:
Mr. Long -- $1,000 in 1993 and $800 in 1994; and Mr. Hill -- $1,100 in 1994
and $1,000 in 1995.
/3/ The dollar value of restricted common stock awards was calculated by
multiplying the number of shares awarded by the closing price per share on
the date of the grant. As of December 31, 1995, the officers listed in this
table held the following number of shares of restricted common stock, with
the following values: Mr. Hecht -- 5,400 shares ($135,000); Mr. Long --
5,390 shares ($134,750); Mr. Fagan -- 0 shares ($0); Mr. Byram -- 3,312
shares ($82,800); and Mr. Hill -- 2,368 shares ($59,200). These year-end
data do not include awards made in
8
<PAGE>
January 1996 for 1995 performance, or awards which had originally been
restricted and for which the restriction periods have lapsed or been lifted.
Dividends are paid currently on restricted stock awards. All outstanding
restricted stock awards have a restriction period of three years.
/4/ Includes Company contributions to the officers' Deferred Savings Plan and
the ESOP accounts.
/5/ Although the incentive program provides that the short-term award be paid in
cash, the Management Development and Compensation Committee instead made the
award in restricted stock based upon comments received from the senior
officers who felt that they should have greater personal investment in the
Company and thus should receive their short-term awards in Company stock
rather than in cash.
/6/ Mr. Hecht requested to forgo his incentive award for 1994.
/7/ As discussed below, two-thirds of Mr. Fagan's award (short-term and long-
term) was paid in restricted stock and the remainder in cash.
EMPLOYMENT AGREEMENT
Mr. Fagan has an employment agreement with the Company which provides for a
base annual salary in his first year of employment of $225,000, guaranteed for
three years unless he is terminated for cause. In addition, Mr. Fagan can
receive a short-term incentive award of up to $100,000 (two-thirds restricted
stock and one-third cash), based on the achievement of annual goals
established by the Management Development and Compensation Committee. For
1995, these goals were related to the following Power Markets Development
Company ("PMDC") startup activities: the development of financial controls and
investment guidelines; the establishment of a marketing plan; the preparation
of a financial plan; and adequate executive and professional staffing. Mr.
Fagan also is eligible for a long-term incentive award of up to $70,000
annually (two-thirds restricted stock and one-third cash), based on the
achievement of three-year goals established by the Committee. Initially, these
goals are related to the level of PMDC equity investments. Payment during the
first three years of the agreement is based on an assessment of the percentage
of the goal attained to date. The agreement also provides a retirement benefit
determined by multiplying Mr. Fagan's five-year annual average compensation
(salary and bonus) times 2% for each year of service completed by age 60. This
benefit is reduced for retirement prior to age 60 and, in some cases, by
pensions received from prior employment. As of January 1, 1996, the years of
credited service for Mr. Fagan for purposes of this benefit were 20.8.
Mr. Fagan is not a PP&L officer and is not covered by ERSP. Accordingly, the
Company has entered into an agreement with Mr. Fagan, providing that, in the
event of a change in control of the Company, he will be entitled to the
following payments if terminated within 36 months after such change in control
for reasons other than cause or disability: (i) all accrued compensation; and
(ii) the sum of three times his annual base salary and incentive compensation.
The agreement provides that benefits payable thereunder will be reduced to the
extent necessary so that no such benefits will be subject to an excise tax
under Section 4999 of the Internal Revenue Code, unless absent such reduction,
Mr. Fagan would receive a higher aggregate benefit.
9
<PAGE>
JOINT REPORT OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEES
REGARDING EXECUTIVE COMPENSATION
GENERALLY
PP&L Resources, Inc. (the "Company") is the parent holding company of
Pennsylvania Power & Light Company ("PP&L"), and PP&L is its principal
subsidiary. The members of the Company's Management Development and
Compensation Committee -- all independent outside directors -- and Board of
Directors also serve in the same capacity for PP&L. Certain senior officers of
the Company are also senior officers of PP&L. For those individuals,
references below to the Committee and Board of Directors refer to the
Committee and Board of Directors of both the Company and PP&L and discussions
of their compensation include compensation earned for services to both the
Company and PP&L.
During 1995, the Committee reviewed and evaluated the performance and
leadership of the Chief Executive Officer and the other senior officers who
are members of the Company's Corporate Leadership Council ("senior officers"),
which provides strategic direction for the Company and its subsidiaries. The
Committee established the compensation and benefit practices for these
individuals as senior officers of the Company and its subsidiaries, including
PP&L. These officers include: William F. Hecht, Chairman, President and Chief
Executive Officer of the Company; Frank A. Long, Executive Vice President of
the Company; Ronald E. Hill, Senior Vice President-Financial and Treasurer of
the Company; Robert G. Byram, Senior Vice President-Nuclear of PP&L; and
Robert D. Fagan, President of Power Markets Development Company (an
unregulated subsidiary of the Company created to pursue worldwide energy-
related business opportunities) ("PMDC"). Except for Mr. Fagan, these
individuals are also senior officers of PP&L./1/
The Company has in place two major components of executive compensation for
the senior officers and other officers of the Company and its subsidiaries --
base salary and incentive compensation. Base salaries reflect the value of
the various Company positions relative to similar positions -- both within the
Company and in other companies -- and variations in individual performance.
Incentive compensation is awarded based on corporate performance and
shareowner value. The incentive program has two separate components. A short-
term incentive plan makes cash awards available to the senior officers based
on the achievement of key corporate goals, as well as individual goals for the
other officers. A long-term incentive plan grants restricted Company stock
and/or stock options to officers based on the Company's return on common stock
equity. Both plans and their associated goals and performance targets were
developed by the Committee.
BASE SALARIES
In general, the Committee's objective is to provide salary levels that are
sufficiently competitive with comparable electric utilities to enable the
Company to attract and retain high-quality executive talent. To meet this
objective, the Committee regularly reviews salary information for similar
companies. In July 1994, the Committee established a goal to bring executive
compensation in line with comparable companies. At that time, PP&L's average
base pay for senior officers was 25.3% below average and total compensation
was 52.5% below average. In assessing the senior officer salaries, the
Committee also reviews the internal salary structure of PP&L and seeks to
maintain equity within the Company.
In January 1995, the Committee reviewed salary ranges for Messrs. Hecht,
Long, Hill and Byram by comparing these salary levels with levels for similar
positions of responsibility at 12 comparable electric utilities./2/ All of the
comparison companies were included in the EEI (Edison Electric Institute) 100
Index of Investor-owned Electric Utilities. This index is displayed in the
stock performance graph on page 14. The electric utilities used for comparison
purposes in 1995 were selected based on their similarity to PP&L in terms of
annual revenues, service territory characteristics or economic conditions.
After reviewing salary data for similar positions in the comparable
utilities, the Committee reviewed the actual salaries and performance
appraisals of each of the senior officers. In the case of the Chief Executive
Officer, the
- -------
/1/ Mr.Fagan has no position with PP&L, but is a member of the Corporate
Leadership Council and a "senior officer" of Resources by virtue of his
position as President of PMDC. The other member of the Company's Corporate
Leadership Council is Robert J. Grey, Vice President, General Counsel and
Secretary of the Company and PP&L. (Effective March 1, 1996, Mr. Grey became
Senior Vice President, General Counsel and Secretary of the Company and
PP&L.)
/2/ The 1995 base salary for Mr. Fagan -- who joined the Company in November
1994 -- was established under a contract reviewed and approved by the
Committee, based on levels for similar positions at other companies.
10
<PAGE>
Committee considered directors' individual appraisals of his performance in
determining his salary. The Committee then solicited input and recommendations
from the Chief Executive Officer regarding the performance and individual
salaries of the other senior officers.
Upon completion of this review, the Committee set the 1995 salaries of the
senior officers. As of January 1995, Mr. Hecht's total compensation was about
34% less than the average total compensation of the chief executive officers
of the comparable companies. Also, the total compensation of the senior
officers as a group was approximately 28% less than the average paid to their
counterparts at these companies. Considering this information and individual
performance, a salary increase was given to Mr. Hecht effective in August
1995, Messrs. Long and Byram effective in May 1995, and Mr. Hill effective in
February 1995. It is anticipated that the revised short- and long-term
incentive plans established at the beginning of 1995 will contribute to
bringing the Company's overall senior pay levels up to the average for the
marketplace.
Regarding the base salaries of other corporate officers, the Board of
Directors has delegated the authority to review and set the salaries of these
officers to the senior officers. This enables the senior officers to establish
the salaries of the officers who report to them./3/ As a result, officers'
salaries closely reflect their individual performance and contribution to the
achievement of corporate goals.
INCENTIVE AWARDS
In establishing the second component of executive compensation -- incentive
awards -- the Committee reviews annually the Company's performance in relation
to specific corporate objectives and the Company's overall return on common
equity. This component of compensation is intended to relate executive
compensation directly to corporate performance and shareowner value.
Based on the Committee's recommendation, effective for calendar year 1995
the Company established a new executive compensation incentive award program.
The program has two separate components: a Short-Term Incentive Plan and a
Long-Term Incentive Plan.
SHORT-TERM INCENTIVE PLAN
In establishing the Short-Term Incentive Plan, the Board of Directors and
the Committee concluded that basing a larger portion of officer compensation
on the achievement of key corporate goals was appropriate in the increasingly
competitive industry marketplace. The Short-Term Incentive Plan achieves this
objective by providing the opportunity to base approximately 20% of the
officer group's total compensation on the achievement of such annual goals. It
also is simpler in design than the prior plan, tracks far fewer but more
independent variables and more appropriately correlates compensation to the
particular accountabilities of the various officers.
The Short-Term Incentive Plan makes cash awards available to officers for
the achievement of specific, independent goals established for each calendar
year. Annual award targets based on accountability level are established for
each officer according to the following table:
<TABLE>
<CAPTION>
SHORT-TERM INCENTIVE PLAN
PERCENT OF BASE SALARY TARGET
-----------------------------
<S> <C>
Chief Executive Officer 40 %
Executive Vice President 35 %
Sr. Vice President 30 %
Vice President 17.5%
</TABLE>
Annual awards are determined by applying these target percentages to the
percentage of short-term goal attainment. The performance goals for each year
are established by the Committee, and the Committee reviews actual results at
each year-end to determine the appropriate goal attainment percentage to apply
to the salary targets. The following are the goal categories for 1995:
I. FINANCIAL -- based on net income and total return on common stock.
II. OPERATIONAL -- based on customer satisfaction indices, power plant
performance, minimizing work-related accidents, environmental performance
and affirmative action results.
- -------
/3/ The 1995 base salary for Mr. Grey -- who joined the Company in March 1995 --
was established by contract based on levels for similar positions at other
companies.
11
<PAGE>
III. CORPORATE STRATEGY -- based on achievement of the holding company
restructuring and development of business plans for PMDC.
In addition to these goals for senior officers, specific individual goals
are set for each of the other officers who then establish goals for
subordinates.
The weightings for each of these general categories vary by the level of the
individual officers to reflect the different levels of influence they have on
attainment of the goals, as follows:
GOAL CATEGORY
<TABLE>
<CAPTION>
OFFICER LEVEL FINANCIAL OPERATIONAL STRATEGIC INDIVIDUAL
------------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Chief Executive Officer 50% 25% 25% 0%
Executive Vice President 30 50 20 0
Sr. Vice President 25 60 15 0
Vice President 20 40 0 40
</TABLE>
When the level of goal attainment in each of the above categories is
measured at the end of each year and the category weightings shown above are
multiplied by the annual award target for each position, each officer's cash
award is determined for the prior year's performance.
LONG-TERM INCENTIVE PLAN
Also effective for 1995, the Company amended its existing Incentive
Compensation Plan to establish a Long-Term Incentive Plan which focuses solely
on increasing shareowner value. A major purpose of this component of
compensation is to encourage long-term decision-making by senior management.
The Plan establishes objectives for return on common equity (ROE) that require
the Company to compare favorably with a peer group of companies and also to
maintain appropriate levels of absolute ROE performance. Greater emphasis is
placed on the Company's relative ROE performance than on absolute ROE
performance. The logic for this approach is that relative ROE performance is
more closely correlated to the performance of Company management, whereas
external factors such as long-term interest rates have a major impact on
absolute ROE performance.
Awards are granted annually based on a review of the Company's average ROE
performance over the prior three calendar years. Each year, a new three-year
average ROE is calculated for comparative purposes. This three-year average
avoids the excessive impact of short-term fluctuations in Company or peer
group performance that may not reflect long-term achievement.
The annual award compensation target for individual officers covered by the
Long-Term Incentive Plan varies by accountability levels, as follows:
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE AWARD
PERCENT OF BASE SALARY TARGET
-----------------------------
<S> <C>
Chief Executive Officer 40 %
Executive Vice President 35 %
Sr. Vice President 30 %
Vice President 17.5%
</TABLE>
Under the Long-Term Incentive Plan, awards are made in the form of
restricted stock and/or stock options equivalent to the dollar value of the
percentage applied to base pay in effect at the end of the year. This stock
award encourages stock ownership on the part of the officers and aligns the
interests of management and shareowners.
The Committee determines the applicable restriction period for the stock at
the time of grant, which, under the terms of the Long-Term Incentive Plan,
must be at least three years and not more than ten years from the date of
grant. That is, the officer can be divested of this stock during the
restriction period if he or she terminates employment with the Company. The
Plan also provides that, upon retirement, death or disability of an officer,
the outstanding restricted stock awards made to that officer will be prorated.
In such cases, the Committee may provide the officer with the entire award
rather than the prorated portion.
In this way, grants of restricted stock serve as an incentive for senior
management to continue their employment with the Company and, therefore,
contribute to continuity in top management. In the past, the grants
12
<PAGE>
of restricted stock made under the Incentive Compensation Plan have been
restricted for a period of three years. No awards of stock options have ever
been made under this plan.
The Committee based the senior officers' incentive awards for 1995 solely on
the corporate goals and return on common equity achieved. In January 1996, the
Committee reviewed performance achieved during 1995 for each of the corporate
goals under the Short-Term Incentive Plan. During 1995, the Company achieved
100% of the financial goals, 65% of the operational goals and 100% of the
corporate strategy goals. As a result of the weighting system described above,
the senior officers received the following Short-Term Incentive Plan awards as
a percent of base salary: Mr. Hecht -- 36.4%; Mr. Long -- 29.1%; Mr. Byram --
23.7%; and Mr. Hill -- 23.7%. Although the incentive program provides that
this short-term award be paid in cash, the Committee instead made this award
in restricted stock based upon comments received from the senior officers who
felt that they should have greater personal investment in the Company and thus
should receive their Short-Term Incentive Plan awards in Company stock rather
than in cash.
In January 1996, the Committee also reviewed the Company's ROE performance
for the Long-Term Incentive Plan. During 1995, the Company achieved an ROE of
12.78%, resulting in a three-year average ROE of 11.58%. The peer group of
comparable companies achieved an average ROE of 12.30% and a three-year
average of 10.62%. Applying the formula for comparative and absolute ROE
performance adopted by the Committee in January 1995, the senior officers
received the following Long-Term Incentive Plan awards as a percent of base
salary: Mr. Hecht -- 43.2%; Mr. Long -- 37.8%; Mr. Byram -- 32.4%; and Mr.
Hill -- 32.4%./4/
The 1995 incentive awards made to the five most highly compensated executive
officers are shown in the Summary Compensation Table./5/
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In establishing Mr. Hecht's 1995 salary, in January 1995 the Committee
reviewed the salaries of the chief executive officers of the 12 comparison
electric utilities referenced above. In conducting this review, the Committee
concluded that Mr. Hecht's 1994 salary was lower than the average earned by
incumbents in similar positions at those utilities.
As a result of this review and Mr. Hecht's performance, the Committee set
his 1995 salary at $520,000, effective August 1, 1995. This salary level is
still below the average paid to incumbents in comparable positions.
Based on the Company's performance in 1995 on the specific corporate goals
under the Short-Term Incentive Plan, Mr. Hecht received a Short-Term Incentive
Plan award of restricted stock equal to approximately 36.4% of his year-end
salary. Based on the Company's three-year return on common equity through
1995, Mr. Hecht received a Long-Term Incentive Plan award of restricted stock
equal to approximately 43.2% of his year-end salary.
The Management Development
and Compensation Committee
E. Allen Deaver, Chair
Elmer D. Gates
Stuart Heydt
Norman Robertson/6/
- -------
/4/ As a Vice President of the Company and PP&L, Mr. Grey received a Short-Term
Incentive Plan award of 12.0% of base salary, and a Long-Term Incentive Plan
award of 15.8% of base salary. As with the senior officers, Mr. Grey
received his entire incentive award in restricted stock.
/5/ Mr. Fagan's 1995 short-term incentive award of 44.4% of base salary (1/3 in
cash and 2/3 in restricted stock) was not based on the Company's general
incentive award program but, under the terms of his employment contract, on
the following separate goals approved by the Committee related to the
startup of PMDC operations: the development of financial controls and
investment guidelines; the establishment of a marketing plan; the
preparation of a financial plan; and adequate executive and professional
staffing. In addition, the Committee granted Mr. Fagan a long-term incentive
award equal to 30.5% of his base salary (1/3 in cash and 2/3 in restricted
stock).
/6/ Effective September 25, 1995, Mr. Richard S. Barton resigned from the
Company's Board of Directors. Mr. Robertson replaced Mr. Barton on the
Committee.
13
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph depicts the performance of the Company's common stock
over the past five years. For comparison purposes, two other indices are also
shown. The Standard & Poor's 500 Index provides some indication of the
performance of the overall stock market, and the EEI 100 Index of Investor-
owned Electric Utilities reflects the performance of electric utilities' stock
generally. The EEI 100 Index is a comprehensive, widely recognized industry
index that includes approximately 100 investor-owned domestic electric utility
companies. These companies serve 99% of the customers of the investor-owned
domestic electric utility industry.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
For PP&L Resources, Inc., S&P 500 Index, and
EEI 100 Index of Investor-owned Electric Utilities*
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PP&L Resources, Inc.** $100.00 $128.41 $141.32 $148.15 $113.10 $160.64
S&P 500 Index 100.00 130.47 140.41 154.56 156.60 215.45
EEI 100 Index of Investor-
owned Electric Utilities 100.00 128.87 138.69 154.11 136.28 178.55
</TABLE>
* Assumes investing $100 on 12/31/90 and reinvesting dividends in PP&L common
stock, S&P 500 Index, and EEI 100 Index of Investor-owned Electric
Utilities.
** Effective April 27, 1995, all of the outstanding shares of common stock of
Pennsylvania Power & Light Company became shares of common stock of PP&L
Resources, Inc. Therefore, through April 26, 1995 these data are for the
common stock of Pennsylvania Power & Light Company.
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, which is composed of
directors who are not Company employees, the Board of Directors of the Company
appointed Price Waterhouse LLP to serve as independent auditors for the year
ending December 31, 1996, for Resources and its subsidiaries.
14
<PAGE>
Representatives of Price Waterhouse LLP are expected to be present at the
Annual Meeting. They will have an opportunity to make a statement if they want
to do so, and they will also be available to respond to appropriate questions.
Deloitte & Touche LLP ("Deloitte") served as independent auditors of PP&L
for the year ended December 31, 1994. Based upon a recommendation of its Audit
Committee, the Board of Directors of PP&L decided on January 25, 1995 that
Deloitte would not be retained as PP&L's independent auditors for the year
ended December 31, 1995. Deloitte's reports on PP&L's financial statements for
the fiscal years ended December 31, 1993 and 1994, did not contain any adverse
opinion or disclaimer of opinion, nor were the reports modified or qualified
in any manner. During the period of such two fiscal years and during the
period from December 31, 1994 through January 25, 1995, there were no
disagreements with Deloitte on any matter of accounting principles or
practices, financial statement disclosure or auditing scope or procedure.
During such periods, there were no "reportable events" as that term is defined
in Item 304(a)(1)(v) of Regulation S-K promulgated by the Securities and
Exchange Commission.
The Board of Directors has determined that it would be desirable to request
an expression of opinion from the Shareowners on the appointment of Price
Waterhouse LLP. If the Shareowners do not ratify the selection of Price
Waterhouse LLP, the selection of independent auditors will be reconsidered by
the Board of Directors.
THE BOARD OF DIRECTORS
RECOMMENDS THAT SHAREOWNERS VOTE FOR PROPOSAL 2
MISCELLANEOUS
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 Shareowners
should arise, it is intended that the persons named as proxies will vote in
accordance with their best judgment.
METHOD AND EXPENSE OF SOLICITATION OF PROXIES
The cost of soliciting proxies on behalf of the Board of Directors will be
paid by the Company. In addition to the solicitation by mail, a number of
regular employees may solicit proxies in person or by telephone, telegraph or
facsimile. (The Company has retained Corporate Investor Communications ("CIC")
to assist in the solicitation of proxies for the Annual Meeting. It is
expected that the remuneration to CIC for its services will not exceed
$6,000.) Brokers, dealers, banks and their nominees who hold shares for the
benefit of others will be asked to send proxy material to the beneficial
owners of the shares, and the Company will reimburse them for their expenses.
PROPOSALS FOR 1997 ANNUAL MEETING
To be included in the proxy material for the 1997 Annual Meeting, any
proposal intended to be presented at that meeting by a Shareowner must be
received by the Secretary no later than November 15, 1996. To be properly
brought before the meeting, any proposal must be received by seventy-five days
prior to the 1997 Annual Meeting.
ANNUAL REPORT
A copy of Resources' Annual Report for 1995, including financial statements,
is being mailed to each Shareowner of record on February 28, 1996.
By Order of the Board of Directors.
Robert J. Grey
Secretary
March 15, 1996
15
<PAGE>
For any questions you may have or additional information you may require
about your account, change in stock ownership, dividend payments and the
reinvestment of dividends, please call the toll-free number listed below, or
write to:
George I. Kline, Manager
Investor Services Department
Pennsylvania Power & Light Company
Two North Ninth Street
Allentown, PA 18101
Toll-Free Phone Number: 800-345-3085
---------------
Resources files a Form 10-K Report annually with the Securities and Exchange
Commission. The Form 10-K Report for 1995 is available without charge by
writing to PP&L's Investor Services Department at the address printed above,
or by calling the toll-free number.
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, PLEASE MARK, DATE, SIGN AND
MAIL THE ACCOMPANYING PROXY AS SOON AS POSSIBLE. AN ENVELOPE, WHICH REQUIRES
NO POSTAGE IF MAILED IN THE UNITED STATES, IS INCLUDED FOR YOUR CONVENIENCE.
<PAGE>
PP&L Resources, Inc.
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Two North Ninth Street . Allentown, PA 18101-1179 . 610/774-5151
March 15, 1996
Dear Shareowner:
It is a pleasure to invite you to attend the 1996 Annual Meeting of
Shareowners, which will be held at 1:30 p.m. on Wednesday, April 24, 1996 at
Lehigh University's Stabler Arena, at the Goodman Campus Complex, located in
Lower Saucon Township, outside Bethlehem, Pennsylvania, following the Annual
Meeting of Shareowners of Pennsylvania Power & Light Company.
Detailed information as to the business to be transacted at the meeting is
contained in the accompanying Notice of Annual Meeting and Proxy Statement. We
will conclude the formal portion of the meeting with a discussion of the
Company's operations and a question and answer period will follow.
We hope that you will be able to attend in person. If you plan to attend,
please complete and return the enclosed reservation card to facilitate making
arrangements for the meeting. If you are unable to attend the meeting but have
any questions or comments on the Company's operations, we would like to hear
from you.
Your vote is important. Whether you own one share or many, please mark,
sign, date and return your Proxy as soon as possible so that you will be
represented at the meeting in accordance with your wishes.
Sincerely yours,
/s/ William F. Hecht
William F. Hecht
Chairman, President
and Chief Executive Officer
PP&L Resources, Inc.
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Two North Ninth Street . Allentown, PA 18101-1179
Proxy Solicited on Behalf of the Board of Directors for Annual Meeting of
Shareowners, April 24, 1996
Please Vote and Sign on Reverse Side and Return in the Enclosed Envelope
William F. Hecht, Frank A. Long and Norman Robertson, and each of
them, are hereby appointed proxies, with the power of substitution, to vote
the shares of the undersigned, as directed on the reverse side of this
proxy, at the Annual Meeting of the Shareowners of PP&L Resources, Inc. to
be held on April 24, 1996, and any adjournments thereof, and in their
discretion to vote and act upon any other matters as may properly come
before said meeting and any adjournments thereof.
Shares represented by all properly executed proxies will be voted at the Annual
Meeting in the manner specified. If properly executed and returned, and no
specification is made, votes will be cast "FOR" Items 1 and 2 on the reverse of
this proxy.
(over)
<PAGE>
Tear along perforation and return in the enclosed envelope
Indicate your vote by placing an (X) in the appropriate box
- --------------------------------------------------------------------------------
1. ELECTION OF DIRECTORS: Nominees for terms ending in 1999.
(1) William J. Flood (2) William F. Hecht (3) Frank A. Long
For All Withhold
For All Except (*) For All
[_] [_] [_]
(*) To withhold authority to vote for any individual nominee, strike a line
through the nominee's name in the list above and mark an (X) in the "For all
Except" box.
- --------------------------------------------------------------------------------
2. Ratification of appointment of Price Waterhouse LLP as independent auditors
for 1996.
For Against Abstain
[_] [_] [_]
PROXY
IMPORTANT: When signing as attorney,
executor, administrator, trustee or guardian,
please give your full title as such. In the
case of JOINT HOLDERS, all should sign.
Please date and sign
your name(s) exactly Date
as shown above and -------------------------- ------------
mail promptly in the Date
enclosed envelope -------------------------- ------------
<PAGE>
RE: ANNUAL MEETING OF SHAREOWNERS
April 24, 1996
PP&L RESOURCES INC.
To Participants in the Employee Stock Ownership Plan:
Mellon Bank has assumed the duties of trustee of the Pennsylvania Power &
Light Company Employee Stock Ownership Plan ("Plan"). As trustee, Mellon Bank
holds the shares in the Plan for your benefit.
The Company will continue to process monthly transactions, provide
quarterly statements and forward dividend payments.
Mellon Bank, Trustee, is forwarding to you the enclosed proxy materials
which relate to shares of PP&L Resources Inc. Common Stock credited to your
account under the Plan. As a participant in the Plan, you are entitled to
instruct Mellon Bank, Trustee, as record owner of your Plan shares as to how to
vote your shares. Full and fractional shares credited to your account under the
Plan as of February 28, 1996 will be voted by Mellon Bank, Trustee, in
accordance with your instructions. Shares that are voted will be held in
confidence by Mellon Bank.
Please review the information carefully and indicate how you wish your
shares to be voted at the annual meeting. Mark, sign, date and use the return
envelope for mailing your proxy to Mellon Bank's agent for tabulation. Timely
receipt of your instructions on a signed proxy form is extremely important.
Please return your signed proxy form by April 17, 1996.
If you do not return your proxy, or return it unsigned, the Plan provides
that the Trustee will vote your shares in the same percentage as shares held by
participants for which the Trustee has received timely voting instructions.
The enclosed Proxy shows your current share balance in the Plan and
reflects the recent allocation of Common Stock to your account for Plan year
1995. For each $10,000 in compensation (up to $55,000) you received in 1995,
1.981 shares were allocated to your account. For each $100 of dividends you
received on Plan shares in 1995, 2.871 shares were allocated to your account.
Details of this allocation will be shown on your statement of account for April.
<PAGE>
PP&L RESOURCES, INC.
ALLENTOWN, PENNSYLVANIA
If you plan to attend the Annual Meeting of Shareowners on April 24, 1996,
please fill out and return this reservation form so that an attendance card may
be sent to you. Please use the enclosed envelope for the return of both this
card and your proxy.
You may, of course, attend the meeting without a card upon proper
identification. However, by indicating your plans in advance, we can make the
necessary arrangements. Your cooperation is appreciated.
<PAGE>
ANNUAL MEETING RESERVATION
I
We .............................................................................
PLEASE TYPE OR PRINT NAME(S)
Address ........................................................................
PLEASE TYPE OR PRINT
............................................... Zip ...........................
plan to attend the Annual Meeting of Shareowners to be held at Lehigh
University's Stabler Arena, at the Goodman Campus Complex located in Lower
Saucon Township, outside Bethlehem, Pa., on Wednesday, April 24, 1996, at 1:30
p.m. Please send an attendance card.
HAVE YOU ENCLOSED YOUR SIGNED PROXY?
