Telephone . 603/772-0775
Investor Relations . 800/999-6501
March 17, 1995
Dear Fellow Shareholder,
The Annual Meeting of Common Shareholders is scheduled to be held on
Thursday, April 20, 1995, at 10:30 a.m., at The Sheraton Portsmouth Hotel,
250 Market Street, Portsmouth, New Hampshire.
Enclosed you will find a 1994 annual report, a notice of meeting, a proxy
statement and a proxy card to be used in connection with the meeting. This
year, shareholders are being asked to vote on the election of four Directors.
We hope that you are able to attend the Annual Meeting. Your vote is
important whether you own one share or many. Whether or not you plan to
be present, we urge you to sign and promptly return the enclosed proxy
card in the envelope provided.
Thank you for your continued interest in the Company.
Sincerely,
/s/ Peter J. Stulgis
Peter J. Stulgis
Chairman of the Board of Directors
and Chief Executive Officer
UNITIL Corporation
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NOTICE OF ANNUAL MEETING OF COMMON SHAREHOLDERS
Exeter, New Hampshire
March 17, 1995
To the Common Shareholders:
You are hereby notified that the annual meeting of common
shareholders of UNITIL Corporation will be held at The Sheraton
Portsmouth Hotel, 250 Market Street, Portsmouth, New Hampshire, on
April 20, 1995, at 10:30 A.M., for the following purposes:
1. To elect four Directors.
2. To act on such other matters as may properly come
before the meeting and any
adjournments thereof.
The enclosed form of proxy has been prepared at the
direction of the Board of Directors of UNITIL and is sent to you
at its request. The persons named in said proxy have been
designated by the Board of Directors.
IF YOU DO NOT EXPECT TO BE PRESENT PERSONALLY AND YOU WISH
YOUR STOCK VOTED AT THE MEETING, PLEASE SIGN, DATE AND RETURN THE
PROXY CARD ENCLOSED HEREWITH BY MAIL IN THE POSTAGE-PAID ENVELOPE,
ALSO ENCLOSED. IF YOU LATER FIND THAT YOU CAN BE PRESENT, OR FOR
ANY OTHER REASON DESIRE TO REVOKE OR CHANGE YOUR PROXY, YOU MAY DO
SO AT ANY TIME BEFORE IT IS VOTED.
The Board of Directors fixed March 6, 1995 as the record
date for the determination of those shareholders entitled to
notice of and to vote at this meeting and all persons who were
holders of record of Common Stock on such date and no others are
entitled to notice of and to vote at this meeting and any
adjournments thereof.
By Order of the Board of
Directors,
Gail A. Siart
Secretary
March 17, 1995
proxy statement
ANNUAL MEETING OF COMMON SHAREHOLDERS, APRIL 20, 1995
This proxy statement is furnished in connection with the
solicitation by the Board of Directors of proxies in the
accompanying form for use at the 1995 annual meeting of common
shareholders of UNITIL Corporation ("UNITIL" or "the Company").
Each proxy can be revoked at any time before it is voted by
written notification to the Secretary of UNITIL at the above
address prior to the meeting, or in person at the meeting. Every
properly signed proxy will be voted unless previously revoked.
UNITIL presently has seven subsidiaries, Concord Electric
Company ("CECo"), Exeter & Hampton Electric Company ("E&H"),
Fitchburg Gas and Electric Light Company ("FG&E"), UNITIL Power
Corp. ("UNITIL Power"), UNITIL Realty Corp. ("UNITIL Realty"),
UNITIL Resources, Inc. ("UNITIL Resources") and UNITIL Service
Corp. ("UNITIL Service").
The annual report of UNITIL for the year 1994 is enclosed
herewith and includes financial statements which are not part of
this proxy statement.
The voting securities of UNITIL issued and outstanding on March
6, 1995 consisted of 4,281,140 shares of Common Stock, no par
value, entitling the holders thereof to one vote per share.
Holders of Common Stock of record on such date are entitled to
notice of and to vote at the annual meeting and any adjournments
thereof. A majority of the outstanding shares of Common Stock
constitutes a quorum.
Except as set forth below, no person owns of record and, to the
knowledge of UNITIL, no person owns beneficially more than five
percent of the Common Stock of UNITIL which may be voted at the
meeting and any adjournments thereof.
Name and Address Shares of Common Stock Percent of Shares
of Beneficial Owner Beneficially Owned Outstanding
Charle H. Tenney II 267,808 (1) 6.20%
300 Friberg Parkway
Westborough, MA
01581
NOTES:
(1) Based on information provided by Mr. Tenney. See notes 2,
3 and 8 to the table below under the heading "As to the
Election of Directors."
The twelve Directors and the officers of UNITIL as a group
have beneficial ownership as of March 1, 1995 of 312,001 shares
(7.29%) of Common Stock, of which they have direct beneficial
ownership of 156,832 shares (3.66%), which excludes options to
purchase 119,266 shares (2.79%) pursuant to the exercise of those
options, and indirect beneficial ownership of 155,169 shares
(3.63%). To the knowledge of UNITIL, each of said Directors and
officers has voting and investment power with respect to the
shares directly owned. With regard to certain of the indirect
beneficial ownership by said group, see the footnotes to the table
contained in the section of this proxy statement entitled "AS TO
THE ELECTION OF DIRECTORS" setting forth certain information about
the Directors of UNITIL.
Assuming a quorum is present, the favorable vote of a majority
of the shares of Common Stock represented and voting will be
required for approval of all matters, including the election of
Directors, which may come before the meeting.
-------------------------------
AS TO THE ELECTION OF DIRECTORS
-------------------------------
The By-Laws of UNITIL provide for a Board of between nine
and fifteen Directors divided into three classes, each class being
as nearly equal in number as possible, and each with their
respective terms of office arranged so that the term of office of
one class expires in each year, at which time a corresponding
number of Directors is elected for a term of three years. UNITIL
currently has twelve Directors. Upon the retirement of Endicott
Smith, who will not stand for re-election this year as a Director,
the UNITIL Board will consist of eleven directors.
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Information About Nominees for Directors
Each nominee has been a member of the Board of Directors
since the date indicated. Proxies will be voted for the persons
whose names are set forth below unless instructed otherwise. If
any nominee shall be unable to serve, the proxies will be voted
for such person as may be designated by management to replace such
nominee. Each of the nominees has consented to being named in this
proxy statement and to serve if elected. Unless otherwise
indicated, all shares shown represent sole voting and investment
power.
Common Stock Owned
Director Beneficially on March 1, 1995 (1)
Since Shares
Michael J. Dalton, Age 54 1984 52,383 (2)(3)(5)(6)
President and Chief
Operating Officer of UNITIL
G. Arnold Haynes, Age 66 1992 2,444
President and Principal of Haynes
Mgmt, Inc., Wellesley Hills,
MA (real estate development and
management).
J. Parker Rice, Jr., Age 69 1992 1,015
Director, former President and
Treasurer of Hyland/Rice Office
Products, Inc., Fitchburg, MA
(office products dealer).
----------------------------------------------------------------------
Information about Nominees for Directors ... continued
Common Stock Owned
Director Beneficially on March 1, 1995 (1)
Since Shares
Joan D. Wheeler, Age 57 1994 1,000
Owner of the Russian Gallery,
Marblehead, MA (art gallery
specializing in works on paper and
crafts from artists living and
working in Russia). Ms. Wheeler is
a former Director of Shaw's
Supermarkets, Inc. (1979-1987) and
of Granite Bank (1984-1989),
Keene, NH, and a former Trustee of
Franklin Pierce College. She is
also Moderator of the Hollis-
Brookline (NH) School District.
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Information About Directors Whose Terms of Office Continue
Common Stock Owned
Director Term to Beneficially on March 1, 1995 (1)
Since Expire Shares
Douglas K. Macdonald, Age 66 1984 1996 924
Retired since 1988, Prior
to his retirement, Mr.
Macdonald was Vice
President and Controller
of UNITIL and President of
CECo.
Peter J. Stulgis, Age 44 1984 1997 43,866 (2)(3)(5)(7)
Chairman of the Board and
Chief Executive Officer of
UNITIL.
Charles H. Tenney II, Age 76 1984 1996 267,808 (2)(3)(4)(5)(8)
Retired since 1992. Prior
to his retirement, Mr.
Tenney was Chairman of the
Board and Chief Executive
Officer of UNITIL and
FG&E. Mr. Tenney is also
Chairman of the Board of
Directors of Bay State Gas
Company, Westborough, MA
(natural gas distributor).
Charles H. Tenney III, Age 47 (4) 1992 1997 2,109
Elected officer (Clerk) of
Bay State Gas Company,
Westborough, MA (natural
gas distributor).
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Information About Directors Whose Terms of Office Continue ... continued
Common Stock Owned
Director Term to Beneficially on March 1, 1995 (1)
Since Expire Shares
William W. Treat, Age 76 1984 1996 20,276 (9)
Lawyer, sole private
practice, former Director
and Chairman of the Board
of Directors of Bank
Meridian, Hampton, NH, and
a former Director of
Amoskeag Bank Shares,
Inc., Manchester, NH. Mr.
Treat is also a Director
of the Colonial Group,
Inc., Boston, MA
(investments).
W. William VanderWolk, Jr. Age 71 1984 1997 14,208 (10)
Owner of Horizon
Management, Manchester, NH
(property and restaurant
management).
Franklin Wyman, Jr., Age 73 1992 1997 5,000
Chairman of the Board and
Treasurer of Wright Wyman,
Inc., Boston, MA
(corporate financial
consultants). Mr. Wyman is
a Trustee and Vice
President of Brookline
Savings Bank, Brookline,
MA.
NOTES:
Except as otherwise noted, each of the persons named above has
held his present position (or another executive position with the
same employer) for more than the past five (5) years.
(1) Based on information furnished to UNITIL by the nominees
and continuing Directors.
(2) Included are 454, 225 and 251 shares which are held in
trust for Messrs. Stulgis, Dalton and Tenney, respectively,
under the terms of the UNITIL Tax Deferred Savings and
Investment Plan ("401(k)"); they have voting power only with
respect to the shares credited to their accounts. For further
information regarding 401(k), see "Other Compensation
Arrangements - Tax-Qualified Savings and Investment Plan"
below.
(3) Included are 36,168, 37,824 and 36,168 shares which
Messrs. Stulgis, Dalton and Tenney, respectively, have the
right to purchase pursuant to the exercise of options under
the Key Employee Stock Option Plan. (See "Other Compensation
Arrangements - Key Employee Stock Option Plan").
(4) Charles H. Tenney II is the father of Charles H. Tenney
III.
(5) With the exception of Messrs. Stulgis, Dalton and Tenney,
who own shares totaling 1.02%, 1.21% and 6.20%, respectively,
of the total outstanding shares, no Director or officer owns
more than one percent of the total outstanding shares.
(6) Included are 11,249 shares held by Mr. Dalton jointly with
his wife with whom he shares voting and investment power.
Included are 46 shares held by Mr. Dalton as custodian for
one of his children; he has voting and investment power with
respect to such shares.
(7) Included are 4,648 shares held by Mr. Stulgis jointly with
his wife with whom he shares voting and investment power.
(8) Included are 124,552 shares (2.91%) owned by two trusts of
which Mr. Tenney is Co-Trustee with shared voting and
investment power; he has a 1/6 beneficial interest in both
trusts and disclaims any beneficial ownership of such shares
other than such 1/6 beneficial interest.
(9) Included are 5,386 shares owned by three trusts of which
Mr. Treat is Trustee with voting and investment power; he has
no beneficial interest in such shares. Also included are
10,500 shares owned by one organization in which Mr. Treat
has shared voting and investment power and a 1/3 beneficial
interest.
(10) Included are 3,063 shares owned by a member of Mr.
VanderWolk's family; he has no voting or investment power
with respect to, and no beneficial interest in, such shares.
The Board of Directors met five times in 1994. During 1994,
Directors attended an average of 95% of all meetings of the Board
of Directors held and of all meetings held by all Committees of
the Board on which they served, if any.
Section 17(a) of the Public Utility Holding Company Act of 1935
and Section 16(a) of the Securities Exchange Act of 1934 require
the Company's officers and directors, and persons who own more
than ten percent of a registered class of the Company's equity
securities, to file certain reports of ownership and changes in
share ownership with the Securities and Exchange Commission and
the American Stock Exchange and to furnish the Company with copies
of all Section 17(a) and Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that
such forms were not required for those persons, the Company
believes that all filing requirements applicable to its officers
and directors during 1994 and through March 1, 1995 were met,
without exception.
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Compensation of Directors
Members of the Board of Directors who are not officers of
UNITIL or any of its subsidiaries receive an annual retainer fee
of $7,000 and $500 for each Board meeting attended. Members of the
Executive Committee, who are not officers of UNITIL or any of its
subsidiaries, receive an annual retainer fee of $2,000 and $400
for each meeting attended. Members of the Audit Committee and
Compensation Committee receive an annual retainer fee of $1,000
and $400 for each meeting attended. Those Directors of UNITIL who
also serve as Directors of CECo, E&H or FG&E and who are not
officers of UNITIL or any of its subsidiaries receive a meeting
fee of $100 per subsidiary meeting attended and no annual retainer
fee from CECo, E&H or FG&E. All Directors are entitled to
reimbursement of expenses incurred in connection with attendance
at meetings of the Board of Directors and any Committee on which
they serve.
In 1992, the Company entered into a Senior Advisory Agreement
with Charles H. Tenney II. Mr. Tenney was Chief Executive Officer
and Chairman of the Board of the Company until his retirement in
1992. The agreement, which is reviewed on an annual basis,
provides that Mr. Tenney will be compensated $105,000 per annum
for his role as Chairman of the Executive Committee of the Board
of the Company, as well as for other advisory services which he
will provide. In consideration of this Agreement, Mr. Tenney is
waiving all Board-related fees and retainers that he is otherwise
entitled to receive as a Director of the Company.
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Committees of the Board of Directors
Executive Committee
-------------------
The Executive Committee of the Board of Directors held four
meetings in 1994. Its members are Charles H. Tenney II
(Chairman), Peter J. Stulgis, William W. Treat, W. William
VanderWolk, Jr. and Franklin Wyman, Jr. This Committee's
responsibility is to review and oversee corporate policies related
to the Company's long-range strategic business, financial and
operating plans. In addition, the Executive Committee also acts
as a nominating committee. In its function as a nominating
committee, the committee coordinates suggestions or searches for potential
nominees for Board members; reviews and evaluates qualifications
of potential Board members; and recommends to the Board of
Directors nominees for vacancies occurring from time to time on
the Board of Directors. The Committee will consider nominees
recommended by shareholders upon timely submission of the names of
such nominees with qualifications and biographical information
forwarded to the Executive Committee of the Board of Directors.
Audit Committee
---------------
The Audit Committee of the Board of Directors, which held two
meetings in 1994, consists of William W. Treat (Chairman), J.
Parker Rice, Jr. and W. William VanderWolk, Jr. The duties of this
Committee encompass making recommendations on the selection of
UNITIL's independent auditors; conferring with such auditors
regarding, among other things, the scope of their examination,
with particular emphasis on areas where special attention should
be directed; reviewing the accounting principles and practices
being followed by UNITIL; assessing the adequacy of UNITIL's
interim and annual financial statements; reviewing the internal
audit controls of UNITIL and its subsidiaries; performing such
other duties as are appropriate to monitor the accounting and
auditing policies and procedures of UNITIL and its subsidiaries;
and reporting to the full UNITIL Board from time to time.
Compensation Committee
----------------------
The Compensation Committee of the Board of Directors, which
held three meetings in 1994, consists of Charles H. Tenney II
(Chairman), J. Parker Rice, Jr. and Endicott Smith. The duties of
this Committee include studying and making recommendations to the
Board of Directors of UNITIL and the appropriate Board of each of
its subsidiaries with respect to salaries and other benefits to be
paid to the officers of UNITIL and such subsidiaries.
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Compensation Committee Interlocks and Insider Participation
Charles H. Tenney II served as the Chairman of the Compensation
Committee during fiscal 1994. Mr. Tenney is the former Chairman
of the Board of Directors and Chief Executive Officer of the
Company, serving as such until his retirement in April 1992. He
currently has a Senior Advisory Agreement with the Company (see
"Compensation of Directors") and is also Chairman of the Executive
Committee of the Board of Directors.
-----------------------------------------------------------------
Director Emeritus
The Company has a directors' advisory council composed of
retired members of the Company's Board of Directors. Each member,
known as a Director Emeritus, is appointed yearly by the Board of
Directors to render advisory services to the Board. Directors
Emeriti have no vote with respect to any matter acted upon by the
Board, nor is their presence counted for purposes of determining a
quorum. In April, 1995, upon the expiration of his current term
as Director, Endicott Smith will be appointed Director Emeritus.
Mr. Smith will join Directors Emeriti Richard L. Brickley, Philip
H. Bradley and Theodore C. Haffenreffer, Jr. who were appointed to
their positions in 1992, 1993 and 1994, respectively. Directors
Emeriti receive an annual retainer of $7,000 and $500 for each
Board meeting attended, as well as reimbursement for any expenses
incurred in connection with attendance at any meeting.
------------------------------------------------------------------
Report of the Compensation Committee
The overall objective of the Company's Board of Directors, and
specifically this Compensation Committee, in setting compensation
for UNITIL's executive officers is to foster excellence in the
management of the assets of the Company. To help meet this
objective, the Committee believes it is important for the Company
to provide compensation to its executive officers which varies
directly with the performance of the Company and to make payment
of annual compensation with both cash and Company stock in place
of all-cash.
Accordingly, the Company pays both "base" and "variable"
compensation to its officers. The base component of compensation
is determined under the UNITIL System's salary matrix which is
reviewed from time to time by outside consultants as to its
competitiveness. Variable compensation is based on factors that
measure the success of the Company for any given year and is
governed by the System's Management Performance Compensation Plan
("MPCP") and the profitability of the System's non-utility
subsidiary, UNITIL Resources. The factors under the MPCP relate
to the earnings of the Company and the rate of return achieved on
shareholder-provided equity as well as cost control and the
competitiveness of the rates charged to the UNITIL System's
utility customers. (See "Other Compensation Arrangements" for a
detailed discussion of these factors.) In addition, to further
bolster ownership in the Company by the executive officers, the
Company, in 1989, instituted a "Key Employee Stock Option Plan"
with the approval of the Company's shareholders. This plan was
tailored to emphasize dividend and stock value growth as a
prerequisite to the maximization of value to the participants.
(See "Other Compensation Arrangements" for a more detailed
discussion of this plan.)
The compensation of the Chief Executive Officer ("CEO"), Peter
J. Stulgis, is governed by these same plans and objectives. The
base compensation for Mr. Stulgis was increased by approximately
3.1% in 1994 which reflected the percentage increase in the UNITIL
System's salary matrix which covers all non-bargaining unit
employees. The variable compensation paid to Mr. Stulgis in 1994
was based upon the UNITIL System's operating results for 1993
under the MPCP discussed above and a distribution from a
performance pool related to the 1994 results of the System's newly
formed non-utility subsidiary, UNITIL Resources. Under the MPCP,
Mr. Stulgis received a payment in cash and Company stock which
represented 23% of his total compensation. This MPCP payment is
formula-driven and reflected the achievement in 1993 of earnings
which were above target levels; a rate of return which was in the
72nd percentile of peer companies; cost control results which were
at the 100th percentile of peer companies; and residential utility
rates which were at the 93rd percentile of the peer group. The
distribution from the UNITIL Resources 1994 performance pool was
based upon its contribution to System earnings and was equal to
7.9% of his total compensation. In setting the compensation of
Mr. Stulgis for 1994, the Committee independently reviewed the
current compensation data for over fifty companies which included
all of the companies used as the peer group in the Stock
Performance Graph shown on the following page. Based upon this
review, the Committee found that the total compensation to be paid
to the CEO fell within the same range of compensation paid to the
CEO's of companies of like size, location and industry, and
believes it was appropriately linked to corporate performance.
The Committee also approved the compensation of UNITIL's other
executive officers for 1994 following the principles and
procedures outlined in this report.
Compensation Committee Members
------------------------------
Charles H. Tenney II, Chairman
J. Parker Rice, Jr.
Endicott Smith
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Stock Performance Graph and Information
----------------------------------------------
COMPARATIVE FIVE-YEAR CUMULATIVE TOTAL RETURNS
----------------------------------------------
Measurement Period Total Peer UNITIL
(Fiscal Year Covered) Group S&P 500 Corporation
--------------------- ---------- ------- -----------
1989 $100.00 $100.00 $100.00
1990 $ 94.51 $ 96.90 $ 96.21
1991 $123.64 $126.36 $115.30
1992 $149.03 $135.96 $136.64
1993 $150.73 $149.69 $157.96
1994 $136.16 $150.59 $140.84
-------------------
The graph to
the left
assumes $100
invested on
Decemebr 31,
1989, in each
category and
the
reinvestment
of all
[GRAPH APPEARS HERE] dividends
during the
period. The
Peer Group is
comprised of
the 11
investor-owned
New England
electric
utilities
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Compensation of Officers
The tabulation below shows the compensation UNITIL, or any of
its subsidiaries, has paid to its Chief Executive Officer and its
most highly compensated officers whose total annual salary and
bonus were in excess of $100,000 during the year 1994.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual Compensation Awards Payouts
Name and Other Restricted Option All Other
Principal Salary Bonus Annual Stock SARs LTIP Compensation
Position (1) Year ($) ($) (2) Comp.($) Awards ($) (#) Payouts ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Peter J. Stulgis (3) 1994 $208,300 $94,394 - - - - $16,760 (4)
Chairman of the Board & 1993 202,00 74,307 - - - -
Chief Executive Officer 1992 174,925 18,914 - - - -
Michael J. Dalton 1994 $159,600 $61,932 - - - - $16,575 (5)
President & Chief 1993 155,000 50,216 - - - -
Operating Officer 1992 150,200 25,023 - - - -
Gail A. Siart (6) 1994 $ 79,033 $24,928 - - - - $ 3,525 (7)
Chief Financial Officer, 1993 75,100 17,558 - - - -
Treasurer & Secretary 1992 68,80 8,099 - - - -
James G. Daly (6) 1994 $ 76,517 $29,128 - - - - $ 3,717 (8)
Senior Vice President, 1993 72,150 21,216 - - - -
UNITIL Service 1992 68,075 4,813 - - - -
George R. Gantz (6) 1994 $ 78,408 $27,228 - - - - $ 4,012 (9)
Senior Vice President, 1993 75,050 19,558 - - - -
UNITIL Service 1992 71,750 7,151 - - - -
NOTES:
(1) Officers of the Company also hold various positions
with subsidiary companies. Compensation for those positions
is included in the above table.
(2) Bonus amounts for the years 1993 and 1994 are comprised
of Management Performance Compensation Program (MPCP) cash
and stock awards (see "Other Compensation Arrangements") and
distributions from the System's non-utility subsidiary,
UNITIL Resources (see "Other Compensation Arrangements").
(3) Mr. Stulgis was elected Chairman of the Board and named
Chief Executive Officer in April, 1992.
(4) All Other Compensation for Mr. Stulgis for the year
1994 includes the company's contribution to the Tax Qualified
Savings and Investment Plan ("401(K)"), company funding of
Supplemental Executive Retirement Plan ("SERP"), Supplemental
Life Insurance payment, and Group Term Life Insurance
payment, valued at $4,500, $5,410, $6,136 and $714,
respectively.
(5) All Other Compensation for Mr. Dalton for the year
1994 includes, 401(K) company contribution, company funding
of SERP, Supplemental Life Insurance payment and Group Term
Life Insurance payment, valued at $4,500, $7,968, $2,558, and
$1,549, respectively.
(6) Ms. Siart was named Chief Financial Officer of the
Company and Senior Vice President of UNITIL Service in
December 1994. Mr. Daly and Mr. Gantz were named Senior
Vice Presidents of UNITIL Service in December, 1994.
(7) All Other Compensation for Ms. Siart for the year 1994
includes 401(K) company contribution, Supplemental Life
Insurance payment and Group Term Life Insurance payment,
valued at $3,016, $369 and $140, respectively.
(8) All Other Compensation for Mr. Daly for the year 1994
includes 401(K) company contribution, Supplemental Life
Insurance payment and Group Term Life Insurance payment,
valued at $3,067, $517 and $134, respectively.
(9) All Other Compensation for Mr. Gantz for the year 1994
includes 401(K) company contribution, Supplemental Life
Insurance payment and Group Term Life Insurance payment,
valued at $3,067, $732 and $214, respectively.
In 1988, in order to enhance quality of service and
shareholder value, UNITIL adopted a management performance
compensation program ("MPCP") for certain management employees,
including Executive Officers. The MPCP provides for awards to be
calculated annually and paid in a combination of cash and UNITIL
Common Stock. Awards are based on the following criteria: (i)
UNITIL's performance as measured by (a) the achievement of
earnings per share sufficient to provide adequate coverage of
common dividends paid, (b) return on common equity measured over a
three-year performance period as compared to that achieved by a
specified group of other electric utility companies, (c) cost per
customer measured over a two-year performance period as compared
to that of a specified group of other electric utility companies,
and (d) residential electric rates measured over a one-year
performance period as compared to residential electric rates of a
specified group of other electric utility companies; and (ii)
achievement of annual individual performance goals. Target
incentive awards are established each year for individuals
participating in MPCP and are calculated as a percentage of the
individual's assigned base salary range midpoint. The target
incentive awards for participants range from 10% to 25% of salary
range midpoints. Depending on UNITIL meeting its objectives and
the achievement of annual individual performance goals,
individuals can receive from 0% of their target award to 150% of
their target award. A discretionary award may also be made to
certain management employees in recognition of their contribution
to the profitability of the System's non-utility subsidiary,
UNITIL Resources. Amounts paid under these arrangements to
Executive Officers during 1994 are shown in column (d) in the
Summary Compensation Table shown on the preceding page.
In 1989, the shareholders ratified the Key Employee Stock
Option Plan ("Option Plan"). The Option Plan is administered by a
committee appointed by the Board of Directors which is comprised
of members of the Board who are not eligible to receive grants
under the Option Plan (the "Committee"). The Committee selects key
management employees, including Executive Officers, of UNITIL and
its subsidiaries who will receive grants under the Option Plan,
the amount or number of shares of UNITIL Common Stock subject to
each grant, the terms and conditions of each grant and whether and
to what extent key employees who receive grants will be allowed or
required to defer receipt of any grant upon the occurrence of
specified events, subject to certain limitations contained in the
Option Plan. The maximum exercise period for any option is ten
years, and no options may be granted under the Option Plan more
than ten years after its adoption.
Options granted under the Option Plan may be either incentive
stock options or non-qualified stock options. The option price per
share granted under the Option Plan is determined by the
Committee, but will not be less than: (i) in the case of an
incentive stock option, 100% of the fair market value of the
shares of UNITIL Common Stock subject to the option as of the date
the option is granted; and (ii) in the case of a non-qualified
stock option, at least 85% of the fair market value of the shares
of UNITIL Common Stock subject to the option as of the date the
option is granted. For purposes of the Option Plan, "fair market
value" means, as of the applicable date, the closing price of
UNITIL Common Stock on the American Stock Exchange ("AMEX"), or,
if no sales took place on such day, the closing price on the most
recent day on which selling prices were quoted.
Upon the exercise of any option by an employee and upon
payment of the option price for shares of UNITIL Common Stock as
to which the option was granted (the "Primary Shares"), UNITIL
will cause to be delivered to such employee (i) the Primary Shares
and (ii) the number of shares of UNITIL Common Stock (the
"Dividend Equivalent Shares") equal to the dollar amount of
dividends which would have been paid on the Primary Shares (and
previously accrued Dividend Equivalent Shares) had they been
outstanding, divided by the fair market value of UNITIL Common
Stock determined as of the record date for each dividend.
The Option Plan authorizes the Committee to provide in the
award agreements that the partici- pant's right to exercise the
options provided for therein will be accelerated upon the
occurrence of a "Change in Control" of UNITIL. The term "Change in
Control" is defined in substantially the same manner as in the
Severance Agreements, which are described below. All of the award
agreements entered into with participants in the Option Plan to
date contain such a "Change in Control" provision. Each award
agreement also provides that, upon the exercise of an option on or
after a Change in Control, UNITIL shall pay to the optionee,
within five business days, a lump sum cash amount equal to the
economic benefit of the optionee's outstanding options and
associated dividend equivalents that the optionee would have
received had the option remained unexercised until the day
preceding the expiration of the grant.
The table below provides information with respect to options
to purchase shares of the Company's Common Stock exercised in
fiscal 1994 and the value of unexercised options granted in prior
years under the Option Plan to the named executive officers in the
Summary Compensation Table and held by them as of December 31,
1994. No options were granted in fiscal 1994 to any of the named
Executive Officers. The Company has no compensation plan under
which Stock Appreciation Rights (SARs) are granted.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR (FY) AND FY-END OPTION/SAR
VALUES
Shares Number of Unexercised Value of Unexercised
Acquired Options/SARs at In-the-Money Options/SARs at
on Value FY-End (#) (1) FY-End ($)
Principal Exercise Realized Exercisable/ Exercisable/
(#) ($) Unexercisable Unexercisable
(a) (b) (c) (d) (e)
Peter J. Stulgis - - exercisable 24,000 exercisable $169,920
Chairman of the Board & - - unexercisable 0 unexercisable $0
Chief Executive Officer - -
Michael J. Dalton - - exercisable 24,000 exercisable $165,360
President & - - unexercisable 0 unexercisable $0
Chief Operating Officer
Gail A. Siart - - exercisable 2,078 exercisable $ 13,882
Chief Financial Officer, - - unexercisable 0 unexercisable $0
Treasurer & Secretary
James G. Daly - - exercisable 2,032 exercisable $ 10,180
Senior Vice President, - - unexercisable 0 unexercisable $0
UNITIL Service
George R. Gantz - - exercisable 2,078 exercisable $ 13,882
Senior Vice President, - - unexercisable 0 unexercisable $0
UNITIL Service
NOTES:
(1) Amounts listed in column (d) in the table above do not
include non-preferential dividend equivalents associated with
options outstanding.
UNITIL maintains a tax-qualified defined benefit pension plan
and related trust agreement (the "Retirement Plan"), which
provides retirement annuities for eligible employees of UNITIL and
its subsidiaries. Since the Retirement Plan is a defined benefit
plan, no amounts were contributed or accrued specifically for the
benefit of any officer of UNITIL under the Retirement Plan.
Directors of UNITIL who are not and have not been officers of
UNITIL or any of its subsidiaries are not eligible to participate
in the Retirement Plan.
The table on the following page sets forth the estimated
annual benefits (exclusive of Social Security payments) payable to
participants in the specified compensation and years of service
classifications, assuming continued active service until
retirement. The average annual earnings used to compute the
annual benefits are subject to a $150,000 limit.
PENSION PLAN TABLE
Average Annual Earnings ANNUAL PENSION
Used for Computing 10 Years 20 Years 30 Years 40 Years
Pension of Service of Service of Service of Service
$100,000 20,000 40,000 50,000 55,000
125,000 25,000 50,000 62,500 68,750
150,000 30,000 60,000 75,000 82,500
175,000 35,000 70,000 87,500 96,250
The present formula for determining annual benefits under the
Retirement Plan's life annuity option is (i) 2% of average annual
salary (average annual salary during the five consecutive years
out of the last twenty years of employment that give the highest
average salary) for each of the first twenty years of benefit
service, plus (ii) 1% of average annual salary for each of the
next ten years of benefit service and (iii) 1/2% of average annual
salary for each year of benefit service in excess of thirty, minus
(iv) 50% of age 65 annual Social Security benefit (as defined in
the Retirement Plan), and (v) any benefit under another UNITIL
retirement plan of a former employer for which credit for service
is given under the Retirement Plan. A participant is eligible for
early retirement at an actuarially reduced pension upon the
attainment of age 55 with at least 15 years of service with UNITIL
or one of its subsidiaries. A participant is 100% vested in his
benefit under the Retirement Plan after 5 years of service with
UNITIL or one of its subsidiaries. As of January 1, 1995,
Executive Officers Stulgis, Dalton, Siart, Daly and Gantz had 15,
27, 12, 6 and 11 credited years of service, respectively, under
the Retirement Plan.
Effective January 1, 1987, UNITIL Service adopted a
Supplemental Executive Retirement Plan ("SERP"), a non-qualified
defined benefit plan. SERP provides for supplemental retirement
benefits to executives selected by the Board of Directors of
UNITIL Service (the "UNITIL Service Board"). At the present time,
Messrs. Stulgis and Dalton are eligible for SERP benefits upon
attaining normal or early retirement eligibility. The formula for
determining annual benefits under SERP at normal retirement date
is based on a participant's final average earnings less the
participant's benefits payable under the Retirement Plan and less
other retirement income payable to such participant by UNITIL.
Early retirement benefits are available to a participant, with the
UNITIL Service Board's approval, if the participant has attained
age 55 and completed 15 years of service. The above computation is
adjusted, if the participant has not attained age 62 by the early
retirement date, by multiplying 60% of the participant's final
average earnings by a fraction, the numerator of which is the
years of actual service and the denominator of which is the
service the participant would have completed if the participant
had remained employed by UNITIL until age 62. Should a participant
elect to begin receiving early retirement benefits under SERP
prior to attaining age 62, the benefits are reduced by 2% for each
year that commencement of benefits precedes attainment of age 62.
If a participant terminates employment for any reason prior to
retirement (as defined in the SERP), the participant will not be
entitled to any benefits under the SERP. A participant receiving
benefits or entitled to receive benefits will forfeit his benefits
if he engages in competition with UNITIL Service or is discharged
for cause or performs acts of willful malfeasance or gross
negligence in a matter of material importance to UNITIL Service.
Benefits under the SERP are to be paid from the general assets of
UNITIL Service. Under the SERP, Messrs. Stulgis and Dalton would
be entitled to receive an annual benefit of $71,401 and $64,187,
respectively, assuming their normal retirement at age 65 and that
their final average earnings are equal to the average of their
respective three consecutive years of highest compensation prior
to the date hereof.
In 1988, UNITIL and certain subsidiaries entered into
severance agreements (the "Severance Agreements") with certain
management employees, including Executive Officers, of UNITIL and
its subsidiaries. The Severance Agreements are intended to help
assure continuity in the management and operation of UNITIL and
its subsidiaries in the event of a proposed "Change in Control".
Each Severance Agreement only becomes effective upon the
occurrence of a Change in Control of UNITIL as defined below. Upon
the effectiveness of the Severance Agreements, each employee's
stipulated compensation and benefits, position, responsibilities
and other conditions of employment may not be reduced during the
thirty-six month period following a Change in Control. In the
event of such a reduction, the employee is entitled to a severance
benefit which is described hereafter. A "Change in Control" is
defined as occurring when (i) UNITIL receives a report on Schedule
13D filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, disclosing that any
person, group, corporation, or other entity (except UNITIL or a
wholly-owned subsidiary of UNITIL), is the beneficial owner,
directly or indirectly, of 25% or more of UNITIL Common Stock;
(ii) any person, group, corporation, or other entity (except
UNITIL or a wholly-owned subsidiary of UNITIL), after purchasing
UNITIL Common Stock in a tender offer or exchange offer, becomes
the beneficial owner, directly or indirectly, of 25% or more of
UNITIL Common Stock; (iii) the shareholders of UNITIL approve any
consolidation or merger in which UNITIL is not the continuing or
surviving corporation or pursuant to which the shares of UNITIL
Common Stock would be converted into cash, securities or other
property or any sale, exchange or other transfer of all or
substantially all of UNITIL's assets; or (iv) there is a change in
a majority of the members of the UNITIL Board of Directors within
a twenty-five month period unless approved by two-thirds of the
Directors then still in office who were in office at the beginning
of the twenty-five month period.
In the event of a Change in Control each Severance Agreement
further provides that in the event (i) the employee's employment
is terminated by UNITIL, or the appropriate subsidiary, with the
exception of a termination because of the employee's acceptance of
a position with another company or for cause (as defined in the
Severance Agreement); or (ii) the employee terminates employment
due to (a) reduction in the employee's position and
responsibilities with UNITIL, or the appropriate subsidiary, (b)
reduction in the employee's total compensation, (c) assignment to
a location more than fifty miles from the employee's current place
of employment, (d) liquidation, merger, or sale of all the assets
of UNITIL, unless the successor corporation has a net worth at
least equal to that of UNITIL and assumes UNITIL's obligations
under the Severance Agreements, or (e) any other material breach
of the Severance Agreement by UNITIL, or the appropriate
subsidiary, the employee is entitled to a severance benefit. The
amount payable to the employee upon the occurrence of any of the
foregoing events is a lump sum cash amount, payable within five
business days of such termination (with the exception noted
below), equal to (i) the present value of three years' base salary
and bonus; (ii) the present value of the additional amount the
employee would have received under the Retirement Plan if the
employee had continued to be employed for such thirty-six month
period; (iii) the present value of contributions that would have
been made by UNITIL or its subsidiaries under the TDSIP if the
employee had been employed for such thirty-six month period; and
(iv) the economic benefit on any outstanding UNITIL stock options
and associated dividend equivalents, assuming such options
remained unexercised until the day preceding the expiration of the
grant, including the spread on any stock options that would have
been granted under the Option Plan if the employee had been
employed for such thirty-six month period. Generally, the spread
on any stock options which would have been granted under the
Option Plan shall be paid within five business days after the
expiration of the thirty-six month period. Each Severance
Agreement also provides for the continuation of all employee
benefits for a period of thirty-six months, commencing with the
month in which the termination occurred. In addition, pursuant to
each Severance Agreement, UNITIL is required to make an additional
payment to the employee sufficient on an after-tax basis to
satisfy any additional individual tax liability incurred under
Section 280G of the Internal Revenue Code of 1986, as amended, in
respect to such payments.
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AS TO OTHER MATTERS TO COME BEFORE THE MEETING
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The Board of Directors does not intend to bring before the
meeting any matters other than the one referred to above and knows
of no other matters which may properly come before the meeting. If
any other matters or motions come before the meeting, it is the
intention of the persons named in the accompanying form of proxy
to vote such proxy in accordance with their judgment on such
matters or motions, including any matters dealing with the conduct
of the meeting.
The Board of Directors has selected and employed the firm of
Grant Thornton as UNITIL's independent certified public
accountants to audit UNITIL's financial statements for the fiscal
year 1995.
A representative of the firm will be present at the meeting and
will be available to respond to appropriate questions. It is not
anticipated that such representative will make a prepared
statement at the meeting; however, he will be free to do so if he
so chooses.
Any proposal submitted by a shareholder of UNITIL for
inclusion in the proxy material for the 1996 annual meeting of
shareholders must be received by UNITIL at its office in Exeter,
New Hampshire, not later than December 20, 1995.
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Solicitation, Revocation and Use of Proxies
Shares of UNITIL Common Stock represented by properly
executed proxies received by UNITIL prior to or at the meeting
will be voted at the meeting in accordance with the instructions
specified on the proxies. If no instructions are specified on such
proxies, shares will be voted FOR the election of the nominees for
Directors. Abstentions and non-votes will have the same effect as
negative votes.
Any UNITIL shareholder who executes and returns a proxy has
the power to revoke such proxy at any time before it is voted by
filing with the Secretary of UNITIL, at the address of UNITIL set
forth above, written notice of such revocation or a duly executed
proxy bearing a later date, or by attending and voting in person
at the meeting. Attendance at the meeting will not in and of
itself constitute a revocation of a proxy.
UNITIL will bear the costs of solicitation by the Board of
Directors of proxies from UNITIL shareholders. In addition to the
use of the mail, proxies may be solicited by the Directors,
officers and employees of UNITIL by personal interview, telephone,
telegram or otherwise. Such Directors, officers and employees will
not be additionally compensated, but may be reimbursed for
out-of-pocket expenses in connection with such solicitation.
Arrangements also will be made with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of
record by such persons, and UNITIL may reimburse such custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses in
connection therewith.
By Order of the Board of Directors,
Gail A. Siart
Secretary
UNITIL will furnish without charge to any shareholder entitled to
vote and to any beneficial owner of shares entitled to be voted at
the annual meeting of common shareholders, to be held April 20,
1995, a copy of its annual report on Form 10-K, including
financial statments and schedules thereto, required to be filed
with the Securities and Exchange Commission for the fiscal year
1994, upon written request to Gail A. Siart, Chief Financial
Officer, UNITIL Corporation, 216 Epping Road, Exeter, New
Hampshire 03833-4571.