IMPORTANT
Stockholders are cordially invited to attend the annual stockholders'
meeting. If you will be unable to attend in person, it is important that
you fill out, sign and return the enclosed proxy promptly in order to insure
a proper representation at the meeting.
BANGOR HYDRO-ELECTRIC COMPANY
NOTICE OF ANNUAL MEETING
DECEMBER 19, 2001
To The Stockholders:
The Annual Meeting of the stockholders of Bangor Hydro-Electric Company will
be held on Wednesday, December 19, 2001 at 9:00 o'clock a.m. at the Sheraton
Four Points Hotel, 308 Godfrey Boulevard, Bangor, Maine (adjacent to Bangor
International Airport) for the following purposes:
1) To elect nine directors to serve staggered terms;
2) To amend the Articles of Incorporation of the Company to reduce the
minimum number of Directors of the Company from 9 directors to 3 directors;
3) To amend the By-Laws of the Company to eliminate the requirement that
Directors be stockholders of the Company;
4) To amend the By-Laws of the Company to remove references to and special
conditions related to the 8.76% series of non-voting preferred stock, such
series having been redeemed in 1999;
5) To ratify and approve the actions of the Officers and the Board of
Directors taken since the most recent Annual Meeting of Shareholders; and
6) To transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on November 21,
2001 as the record date for the determination of stockholders of the Company
entitled to notice of and to vote at the Annual Meeting. Accordingly, only
stockholders of record at the close of business on November 21, 2001 will be
entitled to vote at said meeting.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, YOU ARE URGED TO DATE, SIGN
and RETURN the enclosed proxy. An addressed envelope, which requires no
postage if mailed in the United States, is provided for your use.
By Order of the Board of Directors
Andrew Landry
Clerk
Bangor, Maine
November 30, 2001
BANGOR HYDRO-ELECTRIC COMPANY
33 State Street
Bangor, Maine 04401
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 19, 2001
The accompanying proxy to be mailed on or about November 30, 2001 is
solicited by the Board of Directors of Bangor Hydro-Electric Company and the
cost of such solicitation will be paid by the Company. The person giving the
proxy has the power to revoke it at any time before it is exercised (1) by
delivery to the Clerk of the Company of any written instrument which by its
terms revokes the proxy, (2) by duly executed proxy subsequent in time to
the original proxy, (3) by the presence of the stockholder at the Annual
Meeting and the giving of notice to the Clerk of the Company of such
revocation, or 4) by giving notice in open meeting at the Annual Meeting of
such revocation.
The Company will bear the cost of the solicitation of proxies,
including the charges and expenses of brokerage firms and others for
forwarding solicitation material to beneficial owners of shares of the
Company's Common Stock and Preferred Stock. In addition to the use of the
mail, proxies may be solicited by employees of the Company, by personal
interview, by telephone or by telegraph.
VOTING SECURITIES OUTSTANDING AND PRINCIPAL HOLDERS THEREOF
The Company has outstanding 47,340 shares of Preferred Stock having
general voting rights of one vote per share and 7,363,424 shares of Common
Stock having general voting rights of one-twelfth of one vote per share.
Stockholders of record at the close of business on November 21, 2001 will be
entitled to vote at the Annual Meeting.
The following table sets forth as of November 21, 2001 information with
respect to persons known to management to be the beneficial owners of more
than 5% of any class of voting securities of the Company:
Title of Class
- ---------------
Common Stock
Name and Address of Beneficial Owner
- -------------------------------------
BHE Holdings Inc.
566 Washington Road
Rye, New Hampshire 03870
Amount and Nature of Beneficial Ownership
- ------------------------------------------
7,363,424 shares
Percent of Class
- -----------------
100.0%
The following table sets forth as of November 21, 2001 information with
respect to the beneficial ownership of equity securities by directors,
nominees for the office of director and named executive officers:
Title of Class Name of Beneficial Owner Beneficially Owned*
- --------------------------------------------------------------------
Common Robert S. Briggs 1
Preferred Robert S. Briggs 28
Common Jane J. Bush 1
Common Christopher G. Huskilson 1
Common Paul A. LeBlanc 0
Common Norman A. Ledwin 1
Common Carroll R. Lee 1
Common Elizabeth A. MacDonald 1
Common David McD. Mann 1
Common Frederick S. Samp 0
Common Richard J. Smith 1
Common Ronald E. Smith 1
Common Directors & Executive
Officers as a group (11) 9
Preferred Directors & Executive
Officers as a group (11) 28
* The directors and executive officers of the Company as a group own a
beneficial interest in less than 1% of the Company's Common and Preferred
Stock.
ELECTION OF DIRECTORS
It is intended, unless otherwise instructed in the enclosed proxy, to
vote the proxies in favor of the election of the nominees named in the table
on the following page as directors to hold office until the expiration of
their respective terms and until their successors shall have been duly
elected and qualified. The nominees are now members of the Board of
Directors of the Company, each having served continuously since first
elected.
If, for any reason, any of the nominees are unable to serve (which
event is not now anticipated) it is intended that such proxies will be voted
for the election of such other person or persons as may be designated by a
majority of the directors.
The following table sets forth the nominees and the directors whose
terms continue, their ages, other positions held by them with the Company,
the date when they first became a director and their business experience
during the last five years (including any other directorship held by them in
any company with a class of securities registered pursuant to Section 12 of
the Securities Exchange Act of 1934 or subject to the requirements of
Section 15(d) of that Act, or in any company registered as an investment
company under the Investment Company Act of 1940 (referred to in the table
as "Reporting Companies")):
Name and Became Business Experience During Last 5 Years
Postion (Age) Director and Other Directorships
- ----------------------------------------------------------------------------
- -
CLASS I (NOMINEES FOR TERM EXPIRING IN 2002)
Robert S. Briggs (57)
Director 1985 Retired Chairman of the Board, President
and Chief Executive Officer of the Company;
Trustee of Eastern Maine Medical Center
Norman A. Ledwin (59)
Director 1996 President and Chief Executive
Officer and a Director of Eastern
Maine Healthcare, a healthcare
organization made up of not-for-
profit and for-profit entities
(including Eastern Maine Medical
Center, a not-for-profit regional
acute care hospital facility)
Elizabeth A. MacDonald (55)
Director 2001 Vice President, Human Resources of
Emera Inc., a parent of the Company;
From March 2, 1997 until November 9,
2001 was Vice President - Human
Resource of Nova Scotia Power Inc.;
Prior to March 2, 1997 was a self-
employed consultant
CLASS II (NOMINEES FOR TERM EXPIRING IN 2003)
Jane J. Bush (56)
Director 1990 President and co-owner of Coastal
Ventures, a retailing company
David McD. Mann (62)
Chairman 2001 President and Chief Executive Officer
and Director of Emera Inc., a parent
of the Company and a company traded
on the Toronto Stock Exchange;
President and Chief Executive Officer
and Director of Nova Scotia Power Inc.,
an affiliate of the Company and a company
with classes of securities traded
on the Toronto Stock Exchange; Director
of Logistec Corporation, a company
traded on the Toronto Stock Exchange;
Member of Maritimes and Northeast
Pipeline, LLC Management Committee;
Member of Maritimes and Northeast
Pipeline, LP Management Committee;
until July 22, 1996 was a senior
partner with the Halifax, Nova Scotia
law firm of Cox Downie
Richard J. Smith (49)
Director 2001 Corporate Secretary and General
Counsel of Emera Inc., a parent
of the Company; Corporate Secretary
and General Counsel of Nova Scotia
Power Inc., an affiliate of the Company
CLASS III (NOMINEES FOR TERM EXPIRING IN 2004)
Christopher G. Huskilson (44)
Vice Chairman 2001 Chief Operating Officer of Nova Scotia
Power Inc., an affiliate of the Company;
Member of the Planning Committee of the
Northeast Power Coordinating Council
Carroll R. Lee (52)
President & Chief Operating Officer
and Director 1991 President and Chief Operating
Officer of the Company;
President of the Board of Community
Health and Counseling Service, a not-for-
profit supplier of home and mental health
care services
Ronald E. Smith (51)
Director 2001 Senior Vice President and Chief
Financial Officer of Emera Inc.,
a parent of the Company; Director of
Clear Picture Corporation; Director
of CrossOff Inc., a company traded on
the Toronto Stock Exchange; Director and
Chair of Audit Committee of Atlantic Blue
Cross Care; from September 1999 to October
2000 was an independent consultant; from
March 1999 to September 1999 was Chief
Financial Officer, Telecommunications,
for Aliant Inc.; prior to March 1999 was
Chief Financial Officer for Maritime Tel &
Tel Co. Ltd.
In 2000, the Board met on fourteen occasions.
In 2000, the Board of Directors had three standing committees: an Audit
Committee, an Investment Committee and a Compensation Committee. The Audit
Committee reviews with the independent public accountants the scope and
results of their audit and other services to the Company, reviews the
adequacy of the Company's internal accounting controls and reports to the
Board as necessary. The Audit Committee presently consists of Jane J. Bush,
Norman A. Ledwin, Richard J. Smith and Ronald E. Smith. Neither Richard J.
Smith nor Ronald E. Smith are independent under the listing standards of the
New York Stock Exchange since both are employees of Emera Inc., a parent of
the Company. With respect to Mr. Ledwin, the Board determined that Mr.
Ledwin's affiliation with Eastern Maine Healthcare, which has an indirect
business relationship with the Company, does not interfere with his exercise
of independent judgment. Prior to the completion of the Company's merger
with Emera Inc., the Audit Committee was composed of Ms. Bush as Chair, and
former Directors David M. Carlisle, Marion M. Kane and James E. Rier, Jr.,
each of whom was independent under the listing standards of the New York
Stock Exchange. The Audit Committee met five times during 2000. Prior to
the completion of the Company's merger with Emera Inc., the Compensation
Committee reviewed the Company's executive compensation and compensation
policies in general, and makes recommendations to the full Board of
Directors. The Compensation Committee was composed of Mr. Ledwin and former
Directors William C. Bullock, Jr., chair, and Joseph H. Cyr and met once
during 2000. Prior to the completion of the Company's merger with Emera
Inc., the Investment Committee, oversaw the investments of the Company's
pension funds. The Investment Committee was composed of Mr. Briggs and
former Directors William C. Bullock, Jr., chair, David M. Carlisle and
Marion M. Kane and met twice during 2000. Effective with the completion of
the Company's merger with Emera Inc., the responsibilities of the
Compensation and Investment Committees have been assumed by the full Board
of Directors. The Board does not have a nominating or similar committee.
Prior to the completion of the Company's merger with Emera Inc. on
October 10, 2001, the members of the Audit Committee and the Compensation
Committee were appointed by those Directors who were not employees of the
Company from their own number. Other committee assignments were made by the
Chairman of the Board. Effective with the Company's merger with Emera Inc.,
the members of the Audit Committee are appointed by those Directors who are
not employees of the Company.
AUDIT COMMITTEE REPORT
In overseeing the preparation of the Company's financial statements,
the Committee met with both management and the Company's outside auditors to
review and discuss all financial statements prior to their issuance and to
discuss significant accounting issues. Management advised the Committee
that all financial statements were prepared in accordance with generally
accepted accounting principles, and the Committee discussed the statements
with both management and the outside auditors. The Committee's review
included discussion with the outside auditors of matters required to be
discussed pursuant to Statement on Auditing Standards No. 61 (Communication
With Audit Committees).
With respect to the Company's outside auditors, the Committee, among
other things, discussed with PricewaterhouseCoopers LLP matters relating to
its independence, including the disclosures made to the Committee as
required by the Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees).
On the basis of these reviews and discussions, the Committee
recommended to the Board of Directors that the Board approve the inclusion
of the Company's audited financial statements in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 2000, for filing with
the Securities and Exchange Commission.
AUDIT COMMITTEE (Until October 10, 2001)
Jane J. Bush, Chair
David M. Carlisle
Marion M. Kane
James E. Rier, Jr.
AUDIT COMMITTEE CHARTER
On January 11, 2000, the Audit Committee of the Board of Directors
adopted a formal written Charter. The Charter sets forth the purpose of the
Audit Committee, established criteria for assuring the independence of the
Committee's members, and describes the duties of the Committee. A copy of
the Charter is attached hereto as Appendix I.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows, for the fiscal years ending December 31,
2000, 1999, and 1998, the cash compensation paid by the Company to the Chief
Executive Officer and to the other executive officers whose total salary and
bonus exceeded $100,000:
SUMMARY COMPENSATION TABLE - ANNUAL COMPENSATION
Other Annual
Name and Principal Position Year Salary Bonus Compensation*
- -------------------------------------------------------------------------
Robert S. Briggs** 2000 $236,102 $6,564 $3,400
Chairman of the Board, President 1999 $207,549 $66,499 $3,200
& Chief Executive Officer 1998 $200,981 $41,726 $3,200
Carroll R. Lee** 2000 $180,289 $5,029 $3,400
Senior Vice President & 1999 $161,149 $37,968 $3,200
Chief Operating Officer 1998 $153,645 $24,468 $3,200
Frederick S. Samp 2000 $131,206 $3,664 $3,046
Vice President-Finance & Law 1999 $112,574 $21,457 $2,527
1998 $101,807 $14,337 $2,159
Paul A. LeBlanc 2000 $121,285 $3,383 $2,800
Vice President-Human Resources 1999 $101,031 $19,197 $2,246
& Information Services 1998 $ 94,961 $12,093 $1,984
* For each named executive officer, Other Annual Compensation consists of
the Company's matching contribution to a 401(k) Plan.
** On October 10, 2001, Mr. Briggs retired as Chairman of the Board,
President and Chief Executive Officer and Mr. Lee assumed the position of
President and Chief Operating Officer
The executive officers participate in a tax qualified defined benefit
pension plan that is also applicable to all employees. In addition, the
executive officers are parties to Supplemental Benefit Agreements with the
Company under which additional retirement benefits are to be paid. Said
agreements define the total pension amount to be paid to the executive
officer by the Company, with the supplemental amount defined as the
difference between this total amount due and the amount due to the executive
officer under the tax qualified pension plan applicable to all employees.
The total amount of pension benefit, as defined under the Supplemental
Benefit Agreements, is a function of the executive officer's age at
retirement and his average total compensation over a three-year period.
Under the Supplemental Benefit Agreements, no pension amount would be due
until the executive officer reaches age 55. At age 55, the executive
officer would be entitled to receive 50% of his or her average total
compensation over a three-year period. The total pension amount to be paid
upon retirement would increase proportionately until a retirement age of 62,
at which point the executive officer would be entitled to receive upon
retirement 75% of his or her average total compensation over a three-year
period. The following table sets forth estimated annual benefit amounts
payable upon retirement after age 55 to the executive officers:
Age at Retirement
- ----------------------------------------------------------------------------
Average Total
Compensation 55 56 57 58 59 60 61 62+
$100,000 $50,000 $53,000 $57,000 $60,000 $64,000 $68,000 $72,000 $75,000
$150,000 75,000 79,500 85,500 90,000 96,000 102,000 108,000 112,500
$200,000 100,000 106,000 114,000 120,000 128,000 136,000 144,000 150,000
$250,000 125,000 132,500 142,500 150,000 160,000 170,000 180,000 187,500
$300,000 150,000 159,000 171,000 180,000 192,000 204,000 216,000 225,000
Compensation covered under the defined plan applicable to all employees
is total basic compensation exclusive of overtime, bonuses, and other extra,
contingent or supplemental compensation, and inclusive of compensation
deferred pursuant to the Company's Section 401(k) Plan. Compensation
covered under the tax qualified pension plan is limited to the amount set
forth in IRC Section 415. Subject to this limitation, it is essentially the
same as the amount shown as "Salary" in the Summary Compensation Table
above. Compensation covered by the Supplemental Benefit Agreements is total
compensation inclusive of bonuses, and other, contingent or supplemental
compensation, and compensation deferred pursuant to the Company's Section
401(k) Plan. It is essentially the same as the amount shown as "Salary" and
"Bonus" in the Summary Compensation Table above.
"Average Total Compensation" for both plans is computed using the
average of the total annual compensation actually paid by the Company to the
Executive during the three (3) consecutive calendar years in which the
Executive's total compensation from the Company was the highest.
The total annual pension amounts shown in the Pension Plan Table above
are payable for the remainder of the executive officer's life after
retirement. If the executive officer's spouse survives the executive
officer, the spouse will receive an annual benefit for the remainder of her
life equal to 50% of the annual benefit to the executive officer. The total
annual pension amounts shown in the Pension Plan Table are not subject to
any deduction for Social Security or other offset amounts.
Mr. Briggs was a party to such a Supplemental Benefit Agreement at the
time of his retirement effective October 10, 2001.
The named executive officers are parties to agreements under which in
the event 1) of a change of control of the Company as defined in the
agreements and 2) the covered party leaves the employment of the Company
within one year after the change of control, he would be entitled to receive
a payment equal to two years' salary based upon his average salary over the
past three years. He would also be entitled to receive the Company's
standard health, life insurance and disability benefits for a period of two
years. Based upon the completion of the Company's merger with Emera Inc.,
the named executive officers would be entitled to receive this benefit upon
leaving the employment of the Company prior to October 10, 2002. Mr.
Briggs' retirement effective October 10, 2001 constituted such a termination
of employment pursuant to the terms of such an agreement.
The executive officers also participate in a long-term disability
income plan which is also applicable to all employees. Under the plan, after
90 days of disability, employees are entitled to receive 66 2/3% of their
basic monthly earnings up to a maximum monthly benefit of $5,000.
Directors who are not employees of the Company, Emera Inc. or other
Emera affiliates are paid a fee of $500 per meeting for attendance at
regular or special meetings of the Board, and $500 per meeting for
attendance at committee meetings (unless the committee meeting is held the
same day as another meeting for which a full meeting fee is paid, in which
case the fee is $250). The directors are also paid an annual retainer of
$6,000. Directors who are employees of the Company, Emera Inc. or other
Emera affiliates receive no fee for their services as directors.
COMPENSATION COMMITTEE INTERLOCKS
During 2000, Mr. Briggs, the Chairman of the Company's Board of
Directors and its President and Chief Executive Officer, served as a
Trustee of Eastern Maine Medical Center, a hospital facility located in
Bangor, Maine. Mr. Ledwin, who serves on the Board's Compensation Committee,
is President, Chief Executive Officer and a Director of Eastern Maine
Healthcare, the organization that owns and operates Eastern Maine Medical
Center.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2000, the Company made payments to Eastern Maine Healthcare, its
subsidiaries and affiliates, of $655,124. Mr. Ledwin, who serves on the
Company's Board of Directors, is President, Chief Executive Officer and a
Director of Eastern Maine Healthcare. Prior to the Company's merger with
Emera Inc. on October 10, 2001, Mr. Ledwin also served on the Compensation
Committee of the Company's Board of Directors. Subsequent to the Company's
merger with Emera Inc., Mr. Ledwin began serving on the Audit Committee of
the Company's Board of Directors.
Eastern Maine Healthcare owns and operates Eastern Maine Medical
Center, the second largest hospital in the State of Maine and the largest in
the region served by the Company, as well as several other health care
organizations in the region. The Company provides health care benefits to
its employees through a self insured managed care plan. An independent plan
administrator negotiates on behalf of the Company the rates for health care
services paid to individual providers under the plan, including Eastern
Maine Healthcare and its affiliates.
REPORT ON EXECUTIVE COMPENSATION
The Company manages its compensation programs in a manner intended to
attract, retain and motivate its people. Compensation, including executive
compensation, is intended to be established at competitive levels, with
progress within competitive ranges dependent upon qualifications, experience
and individual performance. In considering salary adjustments for the
president, the Board's determination is based upon its qualitative judgment
with respect to the president's performance in attending to the Company's
strategic priorities, and the Company's financial results as measured
against reasonable expectations.
The Company has been evolving toward a system that relies on base
salaries that are competitive, but that, especially at executive and senior
management levels, depends increasingly on incentive awards for the
achievement of predetermined performance criteria in order to earn
compensation at higher levels within the applicable competitive range.
However, the Company has had to maintain the competitiveness of the
compensation for management and employees at other levels in order to retain
talented people in critical functions. While the Board believed that this
concern should apply to the executive officers as well, the Board deferred
to the willingness of the Company's executives to forego attempts to keep
their compensation at competitive levels while the Company recovered its
financial health. In 1999 and 2000, adjustments were made to the base
salaries of the executives in order to move them closer to the competitive
range for such salaries. In addition, in 1999 the Compensation Committee of
the Board completed a long-pending project to implement revised supplemental
executive retirement plans to replace plans that are no longer appropriate,
a project that had been delayed in view of the more pressing priorities.
The Company still does not have a long-term incentive component to its
compensation program.
Since 1991, the Company has maintained an annual incentive bonus
program applicable to all employees including executive officers. For the
periods presented in the compensation table, the plan included objective
targets for all employees in the areas of cost control, customer
satisfaction, and workplace safety. In addition, as in prior years, there
was an employee satisfaction target for all management people. For the
senior management group (including the executive officers), which develops
and oversees the accomplishment of the Company's annual strategic plan,
additional targets were established with respect to the accomplishment of
components of the annual plan. The potential bonus opportunity ranged from
4% of wages and salaries generally, to 5% of salaries for middle management,
to 8% of salaries for senior management. Performance for 1998 and 1999
resulted payouts of approximately 7% and 6.5% of salaries for senior
management (inclusive of executive officers) during these respective years.
Performance for 2000 resulted in payouts of approximately 5.7% for senior
manager (exclusive of executive officers) and 2.8% for executive officers.
In attempting to advance the goal discussed above of having a greater
portion of executive compensation be derived from incentive compensation,
for the periods presented in the compensation table the Compensation
Committee of the Board recommended, and the Board approved, discretionary
bonus plans for the executive officers. In 1998, the Board adopted a
revised plan establishing Mr. Briggs' potential award as chief executive
officer at 30% of salary, Mr. Lee's potential award as senior vice president
and chief operating officer at 20% of salary, and the remaining executive
officers at 15% of salary. Awards were once again dependent upon a review
of progress with respect to enumerated priorities. In addition, payments
were conditional upon the Company's 1998 financial performance and the
status of common dividend reinstatement at year-end. The Board was of the
opinion that the efforts of these executives contributed substantially to
the Company's progress in 1998, and that their maximum award potentials had
been earned. However, in view of the then-continuing suspension of common
dividends, the award payments to these officers under this plan were limited
to one-half of their respective award potentials. For 1999 and 2000 a
similar plan with the same award potentials was adopted for these
executives. The Committee evaluated the executives' performance soon after
the end of each of these years, and determined that they had earned an award
equal to 85% of their respective award potentials for 1999. For 2000, the
threshold level of earnings per share were not attained and thus no payout
was made under the plan.
November 21, 2001 BOARD OF DIRECTORS*
Jane J. Bush
Christopher G. Huskilson
Norman A. Ledwin
Elizabeth A. MacDonald
David McD. Mann
Richard J. Smith
Ronald E. Smith
* - During the period 1998 though 2001, neither Mr. Briggs nor Mr. Lee
participated in any deliberations of the Company's Board of Directors
concerning executive officer compensation.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers, LLP, One Post Office Square, Boston,
Massachusetts 02109, were the independent public accountants for the Company
for the 2000 fiscal year. Ernst & Young LLP, P.O. Box 2007, Station CRO,
13th Floor, 1959 Upper Water Street, Halifax, N.S. B3J 2Z1 has been
appointed for the 2001 and 2002 fiscal years. Ernst & Young serves as
independent auditors to Emera Inc., a parent of the Company.
The Company does not expect that representatives of
PricewaterhouseCoopers or Ernst & Young will be present at the Annual
Meeting, have the opportunity to make a statement, or be available to
respond to appropriate questions.
With respect to the change in accountants, at a regularly scheduled
meeting of the Board of Directors held on November 21, 2001, the Board
appointed Ernst & Young to serve as the Company's Independent Public
Accountants for the Company's 2001 fiscal year, thereby discontinuing the
Company's retention of PricewaterhouseCoopers in this capacity. The
decision to change accountants was approved by the Audit Committee of the
Board. PricewaterhouseCoopers's report on the financial statements for each
of the past two years did not contain any adverse opinion or a disclaimer of
opinion, nor was it qualified or modified as to uncertainty, audit scope, or
accounting principles.
During the Company's two most recent fiscal years and during 2001, the
Company had no disagreements with PricewaterhouseCoopers on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreement(s), if not resolved to the
satisfaction of the former accountant, would have caused it to make
reference to the subject matter of the disagreement(s) in connection with
its report. During the two most recently completed fiscal years or during
2001, PricewaterhouseCoopers (A) did not advise the Company that the
internal controls necessary for the Company to develop reliable financial
statements do not exist; (B) did not advise the Company that information had
come to their attention that had led them to no longer be able to rely on
management's representations, or that had made them unwilling to be
associated with the financial statements prepared by management; (C) did not
advise the Company of the need to expand significantly the scope of its
audit, or that information had come to their attention during the two most
recently completed fiscal years or during 2001, that if further investigated
may: (i) materially impact the fairness or reliability of either: a
previously issued audit report or the underlying financial statements; or
the financial statements issued or to be issued covering the fiscal
period(s) subsequent to the date of the most recent financial statements
covered by an audit report (including information that may prevent it from
rendering an unqualified audit report on those financial statements), or
(ii) cause them to be unwilling to rely on management's representations or
be associated with the Company's financial statements, and therefore the
discontinuation of the retention of PricewaterhouseCoopers did not prevent
such an expansion of the scope of their audit or their ability to conduct
such further investigation; and (D)(1) did not advise the Company that
information had come to their attention that they had concluded materially
impacted the fairness or reliability of either (i) a previously issued audit
report or the underlying financial statements, or (ii) the financial
statements issued or to be issued covering the fiscal period(s) subsequent
to the date of the most recent financial statements covered by an audit
report (including information that, unless resolved to
PricewaterhouseCoopers' satisfaction, would prevent them from rendering an
unqualified audit report on those financial statements), and therefore the
dismissal of PricewaterhouseCoopers' did not prevent the resolution of any
issue that had not been resolved to PricewaterhouseCoopers' satisfaction
prior to discontinuation of the retention of PricewaterhouseCoopers.
VOTING PROCEDURES
Under the Company's Certificate of Organization, as amended, the Board
of Directors shall consist of not less than nine nor more than fifteen
persons, the exact number to be fixed from time to time by the Board of
Directors. The Certificate of Organization also requires that the directors
be divided into three classes with staggered three-year terms and that the
classes be nearly as equal in number as may be. At a meeting on November
21, 2001, the Board of Directors fixed the number of Directors at nine and
divided them into three classes with three Directors in each class. The
terms of the three Directors in Class I will expire in 2002; the terms of
the three Directors in Class II will expire in 2003; and the terms of the
three Directors in Class III will expire in 2004. Terms will expire at the
annual meeting held in such year. Under Maine law, those candidates who
receive the greatest number of votes cast at the meeting, even if they do
not receive a majority of the votes cast, shall be deemed elected.
Consequently, as long as votes are cast for at least three candidates,
abstentions and broker non-votes will have no effect on the outcome of the
election of Directors.
PERFORMANCE GRAPH
Securities and Exchange Commission Regulation S-K, Item 402(l) requires
the inclusion of a performance graph for "a class of common stock registered
under section 12 of the Exchange Act". On October 10, 2001, all shares of
the common stock of the Company were acquired by Emera Inc. of Halifax, Nova
Scotia. On October 23, 2001, the Company filed Form 15 with the Securities
and Exchange Commission deregistering its common stock. The Company has no
remaining class of common stock registered under section 12 of the Exchange
Act. This item is therefore omitted.
ITEMS TO BE VOTED UPON
The following additional matters will be presented by the management at
the meeting:
1) Amend the Articles of Incorporation of the Company to reduce the minimum
number of Directors of the Company from 9 directors to 3 directors, thereby
conforming the Company's Articles with the minimum requirement under the
Maine Business Corporations Act.
2) Amend the By-Laws of the Company to eliminate the requirement that
Directors be stockholders of the Company, thereby conforming the Company's
By-Laws with the minimum requirement under the Maine Business Corporations
Act.
3) Amend the By-Laws of the Company to remove references to and special
conditions related to the 8.76% series of non-voting preferred stock, such
series having been redeemed in 1999.
4) Ratify and approve the actions of the Officers and the Board of
Directors taken since the most recent Annual Meeting of Shareholders.
The management has no knowledge of any other matter to come before or to be
acted upon at the meeting. If, however, any other matter properly comes
before the meeting, it is the intention of the persons named in the proxy to
vote thereon in accordance with their judgment.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any proposals of stockholders of the Company intended to be presented
at the 2001 Annual Meeting must be received by the Company on or before
December 31, 2001 for inclusion in the proxy statement and form of proxy
relating to that meeting.
By Order of the Board of Directors,
Andrew Landry
Clerk
Bangor, Maine
November 30, 2001
APPENDIX I
BANGOR HYDRO-ELECTRIC COMPANY
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. Purpose
The purpose of the Audit Committee is to assist the board in fulfilling its
oversight responsibilities by reviewing the financial information which will
be provided to the shareholders and others, the systems of internal controls
which management and the board of directors have established, and the audit
process.
II. Composition
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and
free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgement as a member
of the Committee. All members of the Committee shall have a working
familiarity with basic finance and accounting practices, and at least one
member of the Committee shall have accounting or related financial
management expertise. Committee members may enhance their familiarity with
finance and accounting by participating in educational programs conducted by
the Company or an outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified. Unless a Chair is elected by the full Board, the
members of the Committee may designate a Chair by majority vote of the full
Committee membership.
III. Duties and Responsibilities
To fulfill its duties and responsibilities the Audit Committee shall:
Documents / Reports Review
1. Review and update this Charter periodically as conditions dictate.
2. Review the organization's annual financial statements and any reports
or other financial information submitted to any governmental body, or
the public, including any certification, report, opinion, or review
rendered by the independent public accountants.
3. Review with financial management and the independent accountants the
10-Q and discuss with the independent accountants' immaterial
adjustments waived in the interim financial statements. These should
occur prior to the filings or prior to the release of earnings. The
Chair of the Committee may represent the entire Committee for
purposes of this review.
4. Communicate in the Company's annual report that based on the review
and discussions of the audited financial statements with management
and discussions with independent accountants, the Audit Committee
recommended to the Board that the audited financial statements be
included in the Company's annual report on Form 10-K for the last
fiscal year for filing with the Commission.
Independent Accountants
1. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve
the fees and other compensation to be paid to the independent
accountants. On an annual basis, the Committee should review and
discuss with the accountants all significant relationships the
accountants have with the Company to determine the accountants'
independence.
2. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances
warrant.
3. Periodically consult with the independent accountants out of the
presence of management about internal controls and the fullness and
accuracy of the organization's financial statements.
4. Discuss the independent accountants' judgements about the quality,
and not just the acceptability, of the Company's accounting
principles and underlying estimates in the financial statements.
Financial Reporting Processes
1. In consultation with the independent accountants, review the
integrity of the organization's financial reporting processes, both
internal and external.
2. Consider the independent accountants' judgements about the quality
and appropriateness of the Company's accounting principles as applied
in its financial reporting.
3. Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by the
independent accountants or management.
Ethical and Legal Compliance
1. Review a Code of Ethical Conduct and ensure that management has
established a system to enforce this Code.
2. Review, with the organization's counsel, legal compliance matters.
3. Perform any other activities consistent with their Charter, the
Company's By-Laws and governing law, as the Committee or the Board
deems necessary or appropriate.
Established January 11, 2000
BANGOR HYDRO-ELECTRIC COMPANY
P.O. BOX 1599
BANGOR, ME 04402-1599
PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David McD. Mann and Richard J. Smith each
or either of them, with full power of substitution, proxies to vote all of
the stock of Bangor Hydro-Electric Company which the undersigned is entitled
to vote at the Annual Meeting of the Stockholders December 19, 2001, or at
any adjournment thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
BANGOR HYDRO-ELECTRIC COMPANY
C/O EquiServe
P. O. Box 8040
Boston, MA 02266-8040
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Annual Meeting of Shareholders,
you can be sure your shares are represented at the meeting by promptly
returning your proxy (attached below) in the enclosed envelope. Thank you
for your attention to this important matter.
---
| X | Please mark vote as in example.
---
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR SPECIFIC DIRECTIONS BELOW.
IF THE PROXY IS SIGNED AND RETURNED WITHOUT SUCH DIRECTIONS, IT WILL BE
VOTED
FOR ALL NOMINEES AND IN FAVOR OF THE RESOLUTIONS DESCRIBED HEREIN.
RETURNING
YOUR SIGNED PROXY SHALL ALSO AUTHORIZE THE PROXIES TO VOTE OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE MEETING IN THEIR DISCRETION.
1. Election of Directors
Nominees:
Class I: Robert S. Briggs, Norman A. Ledwin, Elizabeth A. MacDonald
Class II: Jane J. Bush, David McD. Mann, Richard J. Smith
Class III: Christopher G. Huskilson, Carroll R. Lee, Ronald E. Smith
FOR --- WITHHELD ---
ALL | | FROM ALL | |
NOMINEES | | NOMINEES | |
--- ---
---
| |
| |
--- --------------------------------------
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
2. Resolved to amend the Articles of Incorporation
of the Company to reduce the minimum number of
Directors of the Company from 9 directors to 3
directors.
FOR --- AGAINST ---
THE | | THE | |
RESOLUTION | | RESOLUTION | |
--- ---
3. Resolved to amend the By-Laws of the Company
to eliminate the requirement that Directors be
stockholders of the Company.
FOR --- AGAINST ---
THE | | THE | |
RESOLUTION | | RESOLUTION | |
--- ---
4. Resolved to amend the By-Laws of the Company
to remove references to and special conditions
related to the 8.76% series of non-voting
preferred stock, such series having been redeemed
in 1999.
FOR --- AGAINST ---
THE | | THE | |
RESOLUTION | | RESOLUTION | |
--- ---
5. Resolved to ratify and approve the actions of
the Officers and the Board of Directors taken
since the most recent Annual Meeting of Shareholders.
FOR --- AGAINST ---
THE | | THE | |
RESOLUTION | | RESOLUTION | |
--- ---
--- MARK HERE
| | FOR ADDRESS
| | CHANGE AND
--- NOTE AT LEFT
Please sign exactly as name appears hereon. Executors, Administrators,
Trustees, etc. should so indicate when signing. Joint owners should each
sign.
Signature: Date:
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Signature: Date:
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