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 Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
PROVIDENCE AND WORCESTER RAILROAD COMPANY
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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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:
PROVIDENCE AND WORCESTER RAILROAD COMPANY
75 Hammond Street
Worcester, Massachusetts 01610
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 26, 2006
PLEASE TAKE NOTICE that the 2006 annual meeting of the shareholders of
Providence and Worcester Railroad Company (the "Company") will be held at the
Crowne Plaza, 10 Lincoln Square, Worcester, Massachusetts, on Wednesday, April
26, 2006 at 10:00 o'clock A.M., local time, for the following purposes:
(1) To elect three directors (by the holders of Common Stock only) and six
directors (by the holders of Preferred Stock only) to serve for terms of
one year and until their successors are elected and qualified;
(2)To approve an amendment to the Company's By-Laws eliminating the
requirement that salaries of all officers of the Company be fixed by the
Board of Directors (by the holders of Common Stock and Preferred Stock,
voting as separate classes); and
(3) To transact such other business, if any, as may properly come before
the meeting or any adjournment or adjournments thereof (by the holders of
Common Stock and Preferred Stock, voting as separate classes).
Holders of record of the Common Stock or Preferred Stock on the books of
the Company as of the close of business on March 3, 2006 will be entitled to
vote.
By Order of the Board of Directors
MARY A. TANONA
Secretary and General Counsel
PROVIDENCE AND WORCESTER RAILROAD COMPANY
Worcester, Massachusetts
March 24, 2006
If you are the holder of record of only one class of the Company's capital
stock, only one proxy card is enclosed. If you are the holder of record of both
Common Stock and Preferred Stock, two proxy cards are enclosed. Kindly fill in,
date and sign the enclosed proxy card(s) and promptly return the same in the
enclosed addressed envelope, which requires no postage if mailed in the United
States. If you are personally present at the meeting, the proxy or proxies will
not be used without your consent.
PROVIDENCE AND WORCESTER RAILROAD COMPANY
PROXY STATEMENT
Annual Meeting of Shareholders
April 26, 2006
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy or proxies are solicited by the Board of Directors
of Providence and Worcester Railroad Company (herein called the "Company") in
connection with the annual meeting of the shareholders to be held April 26,
2006; the Company will bear the cost of such solicitation. It is expected that
the solicitation of proxies will be primarily by mail. Proxies may also be
solicited personally by regular employees of the Company at nominal cost. The
Company may reimburse brokerage houses and other custodians, nominees and
fiduciaries holding stock for others in their names, or in those of their
nominees, for their reasonable out-of-pocket expenses in sending proxy materials
to their principals or beneficial owners and obtaining their proxies. Any
shareholder giving a proxy has the power to revoke it at any time prior to its
exercise, but the revocation of a proxy will not be effective until notice
thereof has been given to the Secretary of the Company. Notice of revocation may
be delivered in writing to the Secretary prior to the meeting or may be
transmitted orally to the Secretary at the meeting. Every properly signed proxy
will be voted in accordance with the specifications made thereon.
The Company's Annual Report for 2005, including financial statements, this
proxy statement and the accompanying proxy or proxies are expected to be first
sent to shareholders on or about March 24, 2006. Neither the Annual Report nor
the financial statements therein are incorporated in this Proxy Statement and do
not form any part of the material for the solicitation of proxies.
VOTING AT MEETING
Only shareholders of record at the close of business on March 3, 2006 will
be entitled to vote at the meeting. Under the Company's charter, the holders of
the Company's Common Stock, voting separately as a class, are entitled to one
vote for each share held in the election of one-third (1/3) of the Board of
Directors of the Company proposed to be elected at the meeting (or the nearest
larger whole number, if such fraction is not a whole number). The holders of the
Company's Preferred Stock, voting separately as a class, are entitled to one
vote for each share held in the election of the balance of the Board of
Directors proposed to be elected at the meeting. The holders of the Company's
Common Stock and the holders of the Company's Preferred Stock are entitled to
one vote per share, voting as separate classes and not together, upon all other
matters presented to the shareholders for their approval.
Common Stock directors will be elected in each case by vote of the holders
of a majority of the Common Stock present or represented at the meeting, and the
Preferred Stock directors will be similarly elected by vote of the holders of a
majority of the Preferred Stock.
Shares represented by proxies which are marked "withhold authority" with
respect to the election of any particular nominee for director, "abstain" with
respect to the approval of the amendment to the Company's By-Laws, or to deny
discretionary authority on any other matters will be counted as shares present
and entitled to vote, and, accordingly, any such marking of a proxy will have
the same effect as a vote against the proposal to which it relates.
Brokers who hold shares in street name may lack authority to vote such
shares on certain items, absent specific instructions from their customers.
Shares subject to such "broker non-votes" will not be treated as shares entitled
to vote on the matters to which they relate and therefore will be treated as not
present at the meeting for those purposes, but otherwise will have no effect on
the outcome of the voting on such matters. It is not currently anticipated that
any matter that might be the subject of a "broker non-vote" will come before the
annual meeting.
On the record date, there were 4,509,092 shares of the Company's Common
Stock and 645 shares of the Company's Preferred Stock outstanding and entitled
to vote at the meeting.
COMPOSITION OF THE BOARD OF DIRECTORS
The Board of Directors has determined that all of the nominees standing for
election at the 2006 annual meeting, other than Robert H. Eder and P. Scott
Conti, are independent of the Company in that such nominees have no material
relationship with the Company either directly, or as a partner, shareholder or
affiliate of an organization that has a relationship with the Company. The board
has made this determination based on the following:
o Other than Messrs. Eder and Conti, no nominee for director is an
officer or employee of the Company or its subsidiaries or affiliates;
o No nominee for director has an immediate family member who is an
officer of the Company or its subsidiaries or has any current or past
material relationship with the Company;
o No nominee for director, other than Messrs. Eder and Conti, has worked
for, consulted with, been retained by, or received anything of
substantial value from the Company aside from his compensation as a
director;
o No nominee for director is, or was within the past three years,
employed by the independent auditors for the Company;
o Other than Mr. Eder, no executive officer of the Company serves on the
Compensation Committee of the Company or on the Board of Directors of
any corporation that employs a nominee for director or a member of the
immediate family of any nominee for director;
o No nominee for director is an executive officer of any entity which
the Company's annual sales to or purchases from exceeded one percent
of either entity's annual revenues for the last fiscal year; and
o No nominee for director serves as a director, trustee, executive
officer or similar position of a charitable or non-profit organization
to which the Company or its subsidiaries made charitable contributions
or payments in fiscal year 2005 in excess of five percent of the
organization's consolidated gross revenues, or $200,000, whichever is
more, at any time during the past three years.
ELECTION OF DIRECTORS
At the annual meeting, three Common Stock directors and six Preferred Stock
directors are to be elected, and each will hold office until the next annual
meeting and until his successor is elected and qualified. The proxies named in
the accompanying proxy or proxies, who have been designated by the Board of
Directors, intend to vote, unless otherwise instructed, for the election to the
Board of Directors of the persons named below, all of whom are now directors of
the Company. Certain information concerning such nominees is set forth below:
Principal Occupation Director
Name and Age During Past Five Years Since(a)
- ------------ ---------------------- --------
Common Stock Director Nominees:
-------------------------------
Richard W. Anderson Senior Vice President of Massachusetts Capital 1998
(58) Resource Company
Robert H. Eder (73) Chairman of the Company 1965
John J. Healy (70) Director of Manufacturing Advancement Center and 1991
Director of Operations for the Massachusetts
Manufacturing Extension Partnership; President
of Worcester Affiliated Mfg. L.L.C. (manufacturing
consultant) from 1997 to 2006
Preferred Stock Director Nominees:
----------------------------------
Frank W. Barrett Executive Vice President of TD Banknorth N.A. 1995
(66) (formerly Banknorth Massachusetts) (prior to
January 2002, Executive Vice President of First
Massachusetts Bank, N.A.)
P. Scott Conti (48) President of the Company (prior to November 2005 2005
Vice President Engineering)
J. Joseph Garrahy President of J. Joseph Garrahy & Associates, Inc. 1992
(75) (business consultants)
James C. Garvey (49)President and CEO of Flagship Bank & Trust Company 2005
Charles M. President of Bertha M. McCollam, Inc. and Vice 1996
McCollam, Jr. (73) President and Secretary of Kronholm & McCollam
(insurance firms) and President of McCollam
Associates (consultant)
Craig M. Scott (42) Partner of Duffy, Sweeney & Scott, Ltd. 2004
(a) Dates of directorships include directorships of the Company's predecessors.
Brief Biographies
Richard W. Anderson, Director. Mr. Anderson has been a Director of the
Company since 1998. He is Senior Vice President of Massachusetts Capital
Resource Company ("MCRC"), a private investment firm funded by major
Massachusetts based life insurance companies providing high risk growth capital
to Massachusetts businesses. He began working at MCRC in 1981. Mr. Anderson is
also a director of Valpey Fisher Corporation, a company specializing in
frequency control devices, and Polar Beverages, Inc.
Frank W. Barrett, Director. Mr. Barrett has been a Director of the Company
since 1995. Effective January 1, 1999, he became Executive Vice President and
Chief Lending Officer of Family Bank. Family Bank became First Massachusetts
Bank, N.A. upon the acquisition of Bank North Group by Peoples Heritage
Financial Group (which then changed its name to BankNorth Group). Effective June
2000, he became Executive Vice President of First Massachusetts Bank, N.A.
Effective January 2002, First Massachusetts Bank, N.A. merged into Banknorth
Massachusetts. No change in Mr. Barrett's responsibility was effected as a
result of the merger. Effective March 2005, Banknorth Massachusetts was
purchased by Toronto Dominion Bank and changed its name to TD Banknorth, NA.
P. Scott Conti, President, Chief Operating Officer and Director. Mr. Conti
joined the Company in June 1988 as Engineering Manager, a position he held until
December 1997. He was promoted to Chief Engineer in January 1998, and to Vice
President Engineering in March 1999. In November 2005 the Company's Board of
Directors elected Mr. Conti to succeed the late Orville R. Harrold as President
and to fill the vacancy on the Board that resulted from Mr. Harrold's death.
Robert H. Eder, Chairman of the Board and Chief Executive Officer. Mr. Eder
became President of the Company in 1966 and led the Company through its efforts
to become an independent operating company. He has been Chairman of the Board
since 1980. He is a graduate of Harvard College and Harvard Law School. He is
also Chairman of the Board, and (with his wife) beneficial or direct owner of a
majority of the stock, of Capital Properties, Inc., a real estate holding
company of which he is also a Director. Mr. Eder is admitted to practice law in
Rhode Island and New York.
J. Joseph Garrahy, Director. Mr. Garrahy has been a Director of the Company
since 1992. He is a former four term Governor of Rhode Island and, since 1990,
has been an independent business consultant in the State of Rhode Island. Mr.
Garrahy is also a director of SENESCO, the Southeastern New England Shipbuilding
Corporation.
James C. Garvey, Director. Mr. Garvey has been a Director of the Company
since 2005. Mr. Garvey has been President and CEO of the Worcester-based
Flagship Bank & Trust Company ("Flagship Bank") since 2001. He began working at
Flagship Bank in 1999 as Executive Vice President.
John J. Healy, Director. Mr. Healy has been a Director of the Company since
1991. Mr. Healy is Director of the Manufacturing Advancement Center and Director
of Operations for the Massachusetts Manufacturing Extension Partnership, an
independent consulting organization dedicated to assisting small manufacturing
enterprises in becoming globally competitive. He was President of Worcester
Affiliated Mfg. L.L.C. (manufacturing consultant) from 1997 to 2006.
Charles M. McCollam, Jr., Director. Mr. McCollam has been a Director of the
Company since 1996. He is President of Bertha M. McCollam, Inc. and Vice
President and Secretary of Kronholm & McCollam (insurance firms), as well as
owner and President of McCollam Associates, a consulting firm in the State of
Connecticut. He was the Chief of Staff to a former governor of Connecticut.
Craig M. Scott, Director. Mr. Scott has been a Director of the Company
since 2004. He is partner of the Providence-based law firm of Duffy, Sweeney &
Scott, Ltd. and served as its Managing Partner in 2004 - 2005.
Committees of the Board of Directors
The Board of Directors has an Executive Committee, a Stock Option &
Compensation Committee and an Audit Committee. The Board of Directors does not
have a nominating committee. In accordance with the By-laws of the Company, the
Executive Committee, currently comprising Robert H. Eder, Chairman, John J.
Healy and P. Scott Conti, exercises the authority of the Board of Directors when
formal Board action is required between meetings, subject to the limitations
imposed by law, the By-laws or the Board of Directors. The Executive Committee
acts on routine matters such as authorizing the execution of government
contracts for reimbursement for Company work on highway projects adjacent to the
railroad and grade crossing rehabilitation.
The Stock Option & Compensation Committee, currently comprising Charles M.
McCollam, Jr., Chairman, Craig M. Scott and James C. Garvey, is responsible for
establishing the amount of option shares to be granted to the Company's
employees under the Stock Option Plan and for approving and reporting to the
Board the executive compensation plan (including incentive awards) of the
Chairman of the Board and the President and any other officer who is a member of
the Board.
The Audit Committee of the Board of Directors, currently comprising J.
Joseph Garrahy, Chairman, Frank W. Barrett and Richard W. Anderson, all of whom
are independent as defined by the American Stock Exchange ("AMEX") listing
standards, is responsible for providing independent, objective oversight of the
Company's accounting functions and internal controls. The Company has, and will
continue to have, an Audit Committee that consists of at least three members,
each of whom meets the independence requirements of AMEX and the Securities and
Exchange Commission (the "SEC") and the financial sophistication requirements of
AMEX. The Board has determined that Frank W. Barrett meets the standards set
forth in Item 401(h)(2) of SEC Regulation S-K to qualify as an audit committee
financial expert, as that term is defined in Item 401(h)(2).
The Audit Committee operates under a written charter first adopted and
approved by the Board of Directors on April 26, 2000. The Company reviews the
charter annually, and modified it in January 2004 to comply with the
requirements of the Sarbanes-Oxley Act of 2002 and new AMEX requirements. A copy
of the Audit Committee Charter is attached to this Proxy Statement as Appendix
A.
The Company does not have a written procedure for shareholders to make
nominations to the Board of Directors, but the Company does consider such
nominations. The holders of the Preferred Stock elect a majority of the members
of the Board of Directors. Mr. Eder, who owns a majority of the Preferred Stock
and who serves as the Chairman of the Board of Directors of the Company,
involves himself in the screening and selection of directors of the Company when
vacancies occur on the Board of Directors and the Board of Directors has voted
to sit as a committee of the whole to consider any recommendations made by
shareholders and/or other directors of persons to be directors of the Company
and in determining whether to nominate any such recommended person for election
by the shareholders. Thus, the Board of Directors has determined that (i) the
Company shall not have a nominating committee; and (ii) the Board of Directors
shall consider the competencies and experience of such recommended person as
they relate to the business of the Company, together with such person's age,
reputation and ability to carry out the requirements to serve as a director of
the Company. In addition, because the Company is a "controlled" company as
defined in Section 801(a) of the AMEX Company Guide, the Company is not subject
to the AMEX Company Guide requirement that a listed company adopt a formal
written charter or board resolution addressing the nominations process.
The Board of Directors held five meetings, the Audit Committee held four
meetings, the Stock Option & Compensation Committee held two meeting and the
Executive Committee held six meetings during the fiscal year ended December 31,
2005. All directors attended at least 75% of all meetings.
Shareholder Communications
Shareholders of the Company may communicate directly with the members of the
Board of Directors by writing directly to those individuals at the following
address: Providence and Worcester Railroad Company, 75 Hammond Street,
Worcester, Massachusetts 01610, and the Company shall forward, and not
intentionally screen, any mail received at the Company's corporate office that
is sent directly to an individual director or to the directors generally unless
the Corporation believes that the communication may pose a security risk. The
Board of Directors sits as a committee of the whole to address any inquiries
made by shareholders.
Transactions with Management
The law firm of Hinckley, Allen & Snyder LLP, of which Stephen J. Carlotti is a
partner, provides legal services to the Company. Mr. Carlotti is trustee of the
Robert H. Eder 2005 Trust and Linda Eder 2005 Trust which trusts hold in the
aggregate greater than 10% of the Company's outstanding common stock. Subject to
the right of each settlor to terminate their respective trusts at time periods
set forth in each trust, Mr. Carlotti has the sole right to vote and direct the
disposition of the Company's common stock held in these trusts. The total amount
of fees paid to Hinckley, Allen & Snyder LLP for services rendered in the 2005
calendar year was $70,915.50.
Audit Committee Report
Management is responsible for the Company's internal controls and financial
reporting process. The independent accountants are responsible for performing an
audit of the Company's consolidated financial statements in accordance with
generally accepted auditing standards and to issue a report thereon. The Audit
Committee's responsibility is to appoint, compensate, retain and oversee any
independent auditor engaged for the purpose of preparing or issuing an audit
report or performing other audit, review or attest services, and otherwise to
monitor and oversee these processes.
The responsibilities of the Audit Committee include engaging an accounting
firm as the Company's independent accountants. Additionally, and as appropriate,
the Audit Committee reviews and evaluates, and discusses and consults with the
Company's management and independent accountants regarding the scope of the
audit plan, the results of the audit, the Company's financial statement
disclosure documents, the adequacy and effectiveness of the Company's accounting
and financial controls and changes in accounting principles, and the auditor's
performance and independence. The Audit Committee also oversees the receipt and
processing of complaints by employees related to accounting, internal controls
or auditing-related matters and reviews related-party transactions.
In connection with these responsibilities, the Audit Committee reviewed and
discussed the audited financial statements with management and the Company's
independent accountants, Deloitte & Touche LLP. The Audit Committee also
discussed with Deloitte & Touche LLP the matters required by Statement on
Auditing Standards No. 61. The Audit Committee received from Deloitte & Touche
LLP written disclosures and the letter regarding its independence as required by
Independence Standards Board Standard No. 1. The Audit Committee discussed this
information with Deloitte & Touche LLP and also considered the compatibility of
non-audit services provided by Deloitte & Touche LLP with its independence.
Based on the review of the audited financial statements and these various
discussions, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-K, to be filed with the SEC.
Audit Committee:
J. Joseph Garrahy, Chairman
Frank W. Barrett
Richard W. Anderson
Compensation of Directors
During the fiscal year ended December 31, 2005, each director who was not
an employee of the Company received a base fee of $500 for each attended meeting
of the Board of Directors plus $50 per attended meeting for each year of service
as a director, and each member of the Audit Committee and the Stock Option &
Compensation Committee received $300 for each attended meeting of the committee
(other than the Chairman of the Committee, who received $350).
During the month of January of each year, directors of the Company who were
serving as such on the preceding December 31 and who are not full time employees
of the Company are granted options for the purchase of 100 shares of the Common
Stock of the Company, plus options for an additional ten shares for each full
year of service to the Company. The exercise price is the last sale price of the
Common Stock on the last business day of the preceding year, and the term of
each option is ten years (subject to earlier termination if the grantee ceases
to serve as a director), provided, however, that no option is exercisable within
six months following the date of grant.
On January 3, 2005, each director of the Company who was serving as such on
December 31, 2004 and was not a full time employee of the Company was granted
options for the purchase of 100 shares of Common Stock of the Company, plus
options for an additional ten shares for each full year of service to the
Company. The exercise price for such options is $13.49.
Report on Executive Compensation
The Stock Option & Compensation Committee of the Board (the "Committee") is
composed entirely of independent (as defined by AMEX and the SEC), non-employee
directors. From time to time Mr. Conti meets with the Committee to review the
compensation program. The Committee is charged with the broad responsibility of
seeing that executive officers are effectively compensated in a manner which is
internally equitable and externally competitive. Because the Company is a
"controlled" company as defined in Section 801(a) of the AMEX Guide, the Company
is not subject to the AMEX Guide requirement that compensation of the chief
executive officer and all other officers be determined, or recommended to the
Board for determination, either by a compensation committee comprised of
independent directors or by a majority of the independent directors on its
Board. However, the Company's Compensation Committee Charter provides that the
Compensation Committee shall approve and report to the Board the executive
compensation plan (including incentive awards) of the Chairman of the Board and
the President and any other officer who is a member of the Board. The Board of
Directors shall set the compensation of the Chairman of the Board and the
President.
Executive Compensation Philosophy. The Company's executive compensation
philosophy seeks to link executive officer compensation with the values,
objectives, business strategy, management initiatives and financial performance
of the Company. The overall objectives of the program are to attract and retain
highly qualified individuals in key executive positions, to motivate executives
to achieve goals inherent in the Company's business strategy, and to link
executives' and shareholders' interests. The Company also seeks to achieve a
balance of the compensation paid to a particular individual and the compensation
paid to other executives both inside the Company and at comparable railroad
companies.
Base Salary. Base salaries for executive officers are substantially
dependent upon the base salaries paid for comparable positions at similar
companies, the responsibilities of the position held, and the experience level
of the particular executive officer. The base salary for executive officers is
set by reviewing compensation for competitive positions in the market and the
historical compensation levels of the executives.
Bonus. All bonuses for executive officers are determined at the discretion
of the Committee, taking into consideration the Company's objectives and
profitability.
Stock Options. Total compensation at the executive level also includes
long-term incentives afforded by stock options granted under the 1993
Non-Qualified Stock Option Plan ("Plan"). The objectives of the program are to
align executive and shareholder long-term interests by creating a strong and
direct link between executive pay and total shareholder return, and to enable
executives (other than any executive who owns a majority of either class of the
Company's stock) to develop and maintain long-term stock ownership positions in
the Company's Common Stock. Annual grants of stock options are made in
accordance with the terms of the Plan. Options are granted at fair market value.
Simplified Employee Pension Plan ("SEPP"). Total compensation at the
executive level also includes a contribution by the Company on behalf of each
"eligible employee", as defined under the 1979 SEPP, as amended, of an amount
not to exceed 12% of said employee's "eligible compensation" for the preceding
year ending December 31. "Eligible compensation", as defined under the SEPP,
means all taxable compensation of an "eligible employee" paid by the Company in
any calendar year, excluding any contribution made by the Company under the
SEPP, provided, however, that "eligible compensation" shall be limited to no
more than $200,000, or such amount as permitted under Section 401(a)(17) of the
Internal Revenue Code. Such contribution is made directly to an individual
retirement account or individual retirement annuity as determined by the
"eligible employee".
Compensation of Chief Executive Officer. Mr. Eder is eligible to
participate in the same executive compensation plans available to other senior
executives other than the Company's Non-Qualified Stock Option Plan. The
Compensation Committee regularly reviews Mr. Eder's salary, and adjusts it as
deemed appropriate to be consistent with salary levels among executives in
comparable positions within the railroad industry. In addition, Mr. Eder
receives cost of living adjustments in salary provided to all Company employees.
Conclusion. The Committee believes that the compensation program for
executive officers is competitive and that the program effectively ties
executive compensation to the Company's performance and resultant stock price
performance.
Stock Option & Compensation Committee:
Charles M. McCollam, Jr., Chairman
Craig M. Scott
James C. Garvey
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid or accrued by the
Company during the three year period ended December 31, 2005, to its Chief
Executive Officer and each of its executive officers who earned more than
$100,000 in salary and bonus in 2005 (the "Named Executive Officers"), for
services rendered in all capacities to the Company during 2005.
Long-Term
Annual Compensation Compensation
------------------- ------------
Securities
Underlying All
Other Options to Other
Annual Purchase Compen-
Salary Compen- Common sation
Name and Principal Position Year ($)(a) Bonus($) sation($) Stock ($)(b)
- ---------------------------- ---- ------ ------ -------- ------------ ------
Robert H. Eder............. 2005 374,899 0 5,101 0 47,608
Chairman of the Board and 2004 364,985 0 28,127(c) 0 41,367
Chief Executive Officer 2003 357,512 0 2,274 0 44,132
Orville R. Harrold(d)...... 2005 297,945 0 0 1,159 53,139
2004 314,140 0 0 1,086 44,460
2003 308,037 0 0 1,149 39,328
P. Scott Conti............. 2005 137,508 0 0 316 9,371
President and Chief 2004 132,155 0 0 296 8,920
Operating Officer(e) 2003 127,661 0 0 246 8,661
Robert J. Easton........... 2005 152,529 0 0 354 10,296
Treasurer 2004 147,151 0 0 333 10,005
2003 143,783 0 0 353 9,730
David F. Fitzgerald........ 2005 118,581 0 0 377 8,090
Vice President(f) 2004 112,687 0 0 357 7,616
2003 109,407 0 0 369 7,440
Frank K. Rogers............ 2005 102,367 0 0 184 6,910
Vice President(g) 2004 96,516 0 0 130 6,515
2003 93,819 0 0 136 6,333
Mary A. Tanona............. 2005 124,636 0 0 172 8,413
Secretary and General 2004 119,949 0 0 108 8,097
Counsel 2003 116,843 0 0 114 7,887
(a) Includes amounts taxable to employees for personal use of Company-owned
vehicles, other than Mr. Eder and Ms. Tanona, who do not have personal use
of a Company-owned vehicle.
(b) Includes amounts paid directly to the retirement accounts of management
staff under the Company's simplified employee pension plan, and, in the
case of Robert H. Eder and Orville R. Harrold, includes for 2005 premiums
paid for life insurance coverage in the amounts of $33,433 and $38,964,
respectively.
(c) Includes the cost of a vehicle for Mr. Eder.
(d) Mr. Harrold was President and Chief Operating Officer until his death in
November 2005.
(e) Mr. Conti was Vice President Engineering prior to succeeding Mr. Harrold as
President and Chief Operating Officer in November 2005.
(f) Mr. Fitzgerald was named Vice President in November 2005.
(g) Mr. Rogers was named Vice President in November 2005.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of the end of the Company's most
recently completed fiscal year with respect to compensation plans (including
individual compensation arrangements) under which equity securities of the
Company are authorized for issuance.
Number of Securities Number of
to be Issued Upon Weighted Average Securities
Exercise of Exercise Price of Remaining
Outstanding Options, Outstanding Options, Available For
Plan Category Warrants and Rights Warrants and Rights Future Issuance
------------- ------------------- ------------------- ---------------
Equity compensation plans 44,668 $10.20 323,008
approved by security holders
Equity compensation plans not N/A N/A 195,641
approved by security holders
Total 44,668 $10.20 518,649
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table contains information concerning the grant of stock
options under the Company's Non-Qualified Stock Option Plan to the Named
Executive Officers during the Company's last fiscal year. The Company does not
issue stock appreciation rights.
% of Total
Number of Options
Securities Granted To
Underlying Employees Grant Date
Options In Fiscal Exercise Expiration Present
Name Granted(a) 2005 Price($) Date Value($)(b)
------ ---------- --------- ------ -------- -----------
Robert H. Eder(c)..... 0 0 0 0 0
Orville R. Harrold.... 1,159 16.55 13.49 01/03/15 9,295
P. Scott Conti........ 316 4.51 13.49 01/03/15 2,534
Robert J. Easton...... 354 5.06 13.49 01/03/15 2,839
David F. Fitzgerald... 377 5.39 13.49 01/03/15 3,024
Frank K. Rogers....... 184 2.63 13.49 01/03/15 1,476
Mary A. Tanona........ 172 2.46 13.49 01/03/15 1,379
(a) All options were granted on January 3, 2005 and became exercisable on July
3, 2005.
(b) Amounts represent fair value of options and were estimated to be $8.02 per
share as of the date of grant using Black-Scholes options-pricing model
with the following weighted average assumptions: expected volatility of
65%; expected life 7 years; and risk free interest rate of 3.94%. Dividends
at the rate of 1.19% per share were assumed for purposes of this estimate.
(c) Under the terms of the Company's Non-Qualified Stock Option Plan, Mr. Eder
is not eligible to receive a grant of stock options.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth individual exercises of stock options during
2005 and the year-end values of options to purchase Common Stock held by the
Named Executive Officers as of December 31, 2005.
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money at
December 31, 2005 December 31, 2005(b)
----------------- --------------------
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized($)(a) Unexercisable Unexercisable($)
---- ----------- -------------- ------------- ----------------
Robert H. Eder....... 0 0 0/0 0/0
Orville R. Harrold... 2,030 2,182 1,011/0 0/0
P. Scott Conti....... 246 1,328 1,123/0 4,197/0
Robert J. Easton..... 0 0 2,844/0 14,536/0
David F. Fitzgerald.. 303 2,494 3,198/0 16,768/0
Frank K. Rogers...... 0 0 1,045/0 5,437/0
Mary A. Tanona....... 0 0 596/0 3,319/0
(a) Based on the last sale price of the Common Stock on the date of exercise
minus the exercise price.
(b) Based on the difference between the exercise price of each grant and the
closing price of the Company's Common Stock on the AMEX on December 31,
2005, which was $14.90.
PERFORMANCE GRAPH
PREPARED BY BURNHAM SECURITIES INC. FOR PROVIDENCE AND WORCESTER RAILROAD
COMPANY.
5 - Year Return
Providence and Worcester Railroad Company,
U.S. Railroad Index and Russell 2000(R) Index
[GRAPHIC OMITTED]
Fiscal Years Ended December 31
------------------------------
2000 2001 2002 2003 2004 2005
- -------------------------- ----- ----- ----- ----- ----- -----
- -------------------------- ----- ----- ----- ----- ----- -----
PWX 100.0 97.0 119.9 121.9 162.5 120.2
U.S. Railroad Index 100.0 71.3 71.8 84.8 93.0 120.3
S&P Industrials 100.0 96.8 75.9 110.3 129.1 139.2
- -------------------------- ----- ----- ----- ----- ----- -----
The Russell 2000(R) Index measure the performance of small capitalization US
companies by measuring the performance of the 2,000 smallest securities in the
Russell 3000(R) Index. The Russell 2000(R) Index is being used in place of the
S&P Industrials Index as that index has been discontinued. The U.S. Railroad
Index is compiled by Burnham Securities Inc. and includes 10 railroad-operating
companies.
The Board of Directors recognizes that the market price of stock is influenced
by many factors, only one of which is issuer performance. The Company's stock
price may also be influenced by market perception, economic conditions and
government regulation. The stock price performance shown in the graph is not
necessarily an indicator of future price performance.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table set forth below reflects the only persons (including any "group"
as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934)
who, to the best of the Company's knowledge, were on March 3, 2006 the
beneficial owners of more than five percent of the Company's outstanding Common
Stock, $.50 par value, or Preferred Stock, $50 par value. Each share of the
Company's outstanding Preferred Stock is convertible at any time, at the option
of the holder, into one hundred shares of Common Stock of the Company. The
footnote to the table below sets forth the percentages of the outstanding Common
Stock which would be held by the indicated owners if such owners' Preferred
Stock were converted in whole into Common Stock.
Percent
Name and Address Number of Shares Owned of Class
- ---------------- ---------------------- --------
Robert H. and Linda Eder 842,742 (Common) 18.7%(a)
120 Sunset Avenue 500 (Preferred) 77.5%
Palm Beach, Florida 33480
Steinberg Asset Management, LLC 519,500 (Common) 11.5%
Michael A. Steinberg & Company, Inc.
Michael A. Steinberg
12 East 49th Street
Suite 1202
New York, New York 10017
Keeley Asset Management Corp. 345,970 (Common) 7.7%
Kamco Performance Limited Partnership
Kamco Limited Partnership No. 1
401 South LaSalle Street
Chicago, Illinois 60605
(a) Robert H. Eder and Linda Eder are husband and wife. The shares
beneficially owned by Mr. and Mrs. Eder as reported herein include 768,162
shares held by The Robert H. Eder 2005 Trust, Stephen J. Carlotti, trustee,
which trust is currently revocable by Mr. Eder, 74,580 shares held by the Linda
Eder 2005 Trust, Stephen J. Carlotti, trustee, which trust is currently
revocable by Mrs. Eder and 500 shares of Preferred Stock held directly by Robert
H. Eder.
(b) Assuming no conversion of Preferred Stock. If their Preferred Stock
were converted in whole to Common Stock, Mr. and Mrs. Eder would own 19.5% of
the outstanding Common Stock.
The following table reflects, as of March 3, 2006, the beneficial ownership
of the Common Stock of the Company by directors, nominees for directors, Named
Executive Officers and all officers and directors as a group.
Name Number Percentage
- ---- ------ ----------
Richard W. Anderson(a) ....................... 201,610 4.4%
Frank W. Barrett(b)........................... 1,850 *
P. Scott Conti(c)............................. 6,282 *
Robert J. Easton(d) .......................... 6,608 *
Robert H. Eder(e)............................. 892,742 19.5%
David F. Fitzgerald(f)........................ 5,960 *
J. Joseph Garrahy(g).......................... 1,200 *
James C. Garvey............................... 300 *
John J. Healy(h).............................. 2,400 *
Charles M. McCollam, Jr.(i)................... 3,560 *
Frank K. Rogers(j)............................ 2,214 *
Craig M. Scott................................ 1,000 *
Mary A. Tanona(k)............................. 2,416 *
All executive officers and directors as a group
(14 persons)(l)............................ 1,128,554 24.7%
* Less than one percent
(a) Includes 200,000 shares of common stock held by Massachusetts Capital
Resource Company of which Mr. Anderson disclaims beneficial ownership. Mr.
Anderson is Senior Vice President of Massachusetts Capital Resource
Company. Also includes 910 shares of Common Stock issuable under stock
options exercisable within 60 days.
(b) Includes 1,350 shares of Common Stock issuable under stock options
exercisable within 60 days.
(c) Includes 1,123 shares of Common Stock issuable under stock options
exercisable within 60 days.
(d) Includes 118 shares of Common Stock held by Mr. Easton's wife in her name
and 2,844 shares of Common Stock issuable under stock options exercisable
within 60 days.
(e) Robert H. Eder and Linda Eder are husband and wife. The shares beneficially
owned by Mr. and Mrs. Eder as reported herein include 768,162 shares held
by The Robert H. Eder 2005 Trust, Stephen J. Carlotti, trustee, which trust
is currently revocable by Mr. Eder, 74,580 shares held by the Linda Eder
2005 Trust, Stephen J. Carlotti, trustee, which trust is currently
revocable by Mrs. Eder and 500 shares of Preferred Stock held directly by
Robert H. Eder.
(f) Includes 20 shares of Common Stock held by Mr. Fitzgerald's wife in her
name and 3,198 shares of Common Stock issuable under stock options
exercisable within 60 days.
(g) Includes 530 shares of Common Stock issuable under stock options
exercisable within 60 days.
(h) Includes 1,710 shares of Common Stock issuable under stock options
exercisable within 60 days.
(i) Includes 110 shares of Common Stock issuable under stock options
exercisable within 60 days.
(j) Includes 1,045 shares of Common Stock issuable under stock options
exercisable within 60 days.
(k) Includes 596 shares of Common Stock issuable under stock options
exercisable within 60 days.
(l) Includes 412 shares of Common Stock owned by an officer of the Company who
is not a Named Executive Officer, 50,000 shares of Common Stock issuable
upon conversion of Preferred Stock and 13,416 shares of Common Stock
issuable under stock options exercisable within 60 days.
COMPLIANCE WITH SECTION 16 (a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities to file reports of securities ownership and changes in such
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten-percent beneficial owners also are required by rules
promulgated by the Securities and Exchange Commission to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company or written representations that no Form 5 filings were required, the
Company believes that during 2005 its officers, directors and greater than
ten-percent beneficial owners complied with all applicable Section 16(a) filing
requirements.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee (composed of independent [as defined by AMEX and the
SEC] non-employee directors) of the Board of Directors has appointed Deloitte &
Touche LLP, who acted as independent auditors of the accounts of the Company for
2005, as independent auditors of the accounts of the Company for the year 2006.
The Company has recently been advised by Deloitte & Touche LLP that they have no
direct financial interest or any material indirect financial interest in the
Company, nor have they had any connection during the past four years with the
Company in the capacity of promoter, underwriter, voting trustee, director,
officer or employee.
It is expected that a representative of Deloitte & Touche LLP will be
present at the annual meeting with the opportunity to make a statement if he/she
so desires, and that such representative will be available to respond to
appropriate questions.
Audit Fees and Services
Aggregate fees for professional services rendered for the Company by
Deloitte & Touche LLP as of or for the fiscal years ended December 31, 2005 and
2004 are set forth below. The aggregate fees included in the Audit category are
billed for the fiscal years for the audit of Company's annual financial
statements and review of financial statements or engagements. The aggregate fees
included in each of the other categories are fees billed in the fiscal years.
Fiscal Year 2005 Fiscal Year 2004
---------------- ----------------
Audit Fees $171,800 $153,456
Audit-Related Fees --- $31,500
Tax Fees $5,000 $5,890
All Other Fees --- ---
Audit Fees for the fiscal years ended December 31, 2005 and 2004 were for
professional services rendered for the audits of the financial statements of the
Company, quarterly review of the financial statements included in the Company's
Quarterly Reports on Form 10-Q, consents and other assistance required to
complete the year end audit of the consolidated financial statements.
Audit-Related Fees as of the fiscal year ended December 31, 2004 were for
employee benefit plan audits and advice relating to an SEC Comment Letter. There
were no such services rendered in 2005.
Tax Fees as of the fiscal years ended December 31, 2005 and 2004 were for
services rendered for review of tax returns and tax advice.
All Other Fees. As of the fiscal years ended December 31, 2005 and 2004
there were no other fees.
The Audit Committee has determined that the provision of the above services
is compatible with maintaining Deloitte & Touche LLP's independence.
Policy on Audit Committee Pre-Approval. The Audit Committee pre-approves
all audit and non-audit services provided by the independent accountants prior
to the engagement of the independent accountants with respect to such services.
Unless a type of service to be provided by the independent auditor has received
general pre-approval, it will require specific pre-approval by the Audit
Committee. Any proposed services exceeding pre-approved cost levels require
specific pre-approval by the Audit Committee. The Audit Committee may delegate
pre-approval authority to one or more of its members and that member shall
report any pre-approval decisions to the Audit Committee at its next scheduled
meeting.
BY-LAWS
The Company's By-Laws currently provide that salaries of all of the
Company's officers shall be fixed by the Board of Directors. The Board of
Directors has determined that it is in the best interests of the Company to
amend the By-Laws of the Company to eliminate the requirement, set forth in
Article IV, Section 3 thereof, that the salaries of all officers of the Company
be fixed by the Board of Directors.
Recommendations of Board of Directors. The Board of Directors recommends
that the shareholders vote FOR approval of the amendment to the By-Laws
eliminating the requirement that salaries of all officers of the Company be
fixed by the Board of Directors. The affirmative votes of the holders of
majorities of the outstanding Common Stock and Preferred Stock, voting as
separate classes, will be required for such approval.
PROPOSALS FOR 2007 ANNUAL MEETING
The 2007 annual meeting of the shareholders of the Company is scheduled to
be held April 25, 2007. If a shareholder intending to present a proposal at that
meeting wishes to have a proper proposal included in the Company's proxy
statement and form of proxy relating to the meeting, the shareholder must submit
the proposal to the Company not later than November 17, 2006.
OTHER MATTERS
No business other than that described above and/or set forth in the
attached Notice of Meeting is expected to come before the annual meeting, but
should any other matters requiring a vote of shareholders arise, including a
question of adjourning the meeting, the persons named in the accompanying proxy
will vote thereon according to their best judgment in the interests of the
Company. In the event any of the nominees for the office of director should
withdraw or otherwise become unavailable for reasons not presently known, the
persons named as proxies will vote for other persons in their place in what they
consider the best interests of the Company.
By Order of the Board of Directors
MARY A. TANONA
Secretary and General Counsel
PROVIDENCE AND WORCESTER RAILROAD COMPANY
Dated: March 24, 2006
Appendix A
PROVIDENCE AND WORCESTER RAILROAD COMPANY
AUDIT COMMITTEE CHARTER
PURPOSE
- -------
The primary function of the Providence and Worcester Railroad Company
(hereinafter "Company") Audit Committee is to report to and assist the Board of
Directors (hereinafter "Board") in fulfilling its oversight responsibilities by
reviewing: the financial reports provided by the Company to its stockholders and
the general public; the Company's systems of internal controls regarding finance
and accounting; and the Company's auditing, accounting and financial reporting
process. The Audit Committee's primary duties and responsibilities are to:
1. Serve as an independent and objective party to monitor and oversee the
integrity of the Company's financial reporting process and internal
control system.
2. Evaluate qualifications and independence of, appoint, oversee and,
where appropriate, replace the external auditors who are accountable
to the Audit Committee and the Board.
3. Provide an open avenue of communication among the external auditors,
financial and senior management, and the Board. 4. Oversee the system
of disclosure controls and system of internal controls regarding
finance, accounting, legal compliance and ethics.
The Audit Committee is responsible for the duties set forth in this charter
but is not responsible for either the preparation of the financial statements or
the auditing of the financial statements. Management has the responsibility of
preparing the financial statements and implementing internal controls and the
independent accountants have the responsibility of auditing the statements and
monitoring the effectiveness of the internal controls. The review of the
financial statements by the Audit Committee is not of the same quality as the
audit performed by the independent accountants. In carrying out its
responsibilities, the Audit Committee believes its policies and procedures
should remain flexible in order to best react to a changing environment.
The Audit Committee, and each member of the Audit Committee in his or her
capacity as such, shall be entitled to rely, in good faith, on information,
opinions, reports or statements, or other information prepared or presented to
them by officers and employees of the Company, whom such member believes to be
reliable and competent in the matters presented and on counsel, public
accountants or other persons as to matters which the member believes to be
within the professional competence of such person.
ORGANIZATION
- ------------
The Audit Committee shall be comprised of at least three directors as
determined by the Board, each of whom shall satisfy the independence standards
specified in the American Stock Exchange (hereinafter "Amex") Company Guide and
Rule 10A-3 under the Securities Exchange Act of 1934 and all other legal
requirements. Each member shall be free from any relationship that, in the
opinion of the Board, would interfere with the exercise of his/her independent
judgment as a member of the Audit Committee. All members shall be financially
literate and able to read and understand financial statements, including balance
sheets, income statements, and cash flow statements. The Audit Committee
chairman shall, by reason of experience and background, demonstrate a reasonably
high level of financial sophistication including, without limitation, being or
having been a chief executive officer, chief financial officer or other senior
officer with financial oversight responsibilities.
Determination of independence, Audit Committee financial expertise,
financial literacy and accounting or related financial management expertise
shall be made by the Board as the Board interprets such qualifications in its
business judgment and in accordance with applicable law and the listing
requirements of Amex.
The Audit Committee shall have the power to adopt its own operating rules
and procedures and to call upon assistance from officers and employees of the
Company and outside counsel and consultants without the consent of management.
RESPONSIBILITIES AND DUTIES
- ---------------------------
1. Be directly responsible for the appointment, compensation, retention
and oversight of any independent auditor engaged for the purpose of
preparing or issuing an audit report or performing other audit, review
or attest services. The external auditors shall report directly to the
Audit Committee.
2 Meet at least once each quarter and meet at least annually in
executive session with the external auditors without management
present.
3. Meet with the external auditors and financial management to review the
scope of the audit for the current year and the audit procedures to be
utilized. At the conclusion of the audit year, review the results of
the audit, including any comments or recommendations of the external
auditors.
4. Appraise with the external auditors and management the adequacy and
effectiveness of the accounting and financial controls of the Company
and the appropriateness of the Company's accounting principles. In
connection therewith:
o Elicit any recommendations for the improvement of such internal
controls and/or accounting principles; and o Review any
deficiencies identified by management in the design and operation
of internal controls for financial reporting and at least
annually consider, in consultation with management and the
independent auditors, the adequacy of the Company's internal
controls for financial reporting, including the resolution of
identified material weaknesses and reportable conditions, if any.
5. Prior to release of the Company's Annual Report to the shareholders
and the public, review the financial statements contained therein with
management and the external auditors to determine that the disclosures
and content of the financial statements are satisfactory and review
and discuss:
o Changes in accounting standards or rules promulgated by the
Financial Accounting Standards Board or the SEC that have an
impact on the financial statements;
o Estimates made by management having a material impact on the
financial statements;
o The effect of alternative assumptions, estimates or GAAP methods
on the Company's financial statements;
o Any changes from prior years in accounting principles applied in
the preparation of such financial statements; and
o Any material written communications between the independent
auditor and the Company's management, including any management
letter provided by the independent auditor and the Company's
response to that letter.
6. Annually review with management and the independent auditors the basis
for the disclosures made in the Annual Report to shareholders
regarding the Company's internal controls for financial reporting.
7. Ensure that retention of the independent auditor to perform audit and
nonaudit services is properly disclosed in the Company's proxy
statement and filings with the SEC.
8 Discuss with the external auditors and management, via telephone if
appropriate, the quarterly financial statements of the Company before
the results are released to the shareholders and the public.
9. Inquire of management (including the General Counsel), and the
external auditor, about significant risks or exposures that could
financially impact the Company and assess the steps management has
taken to minimize such risks.
10. Investigate any matter brought to its attention within the scope of
its duties, with the power to compensate and obtain advice and
assistance from outside legal, accounting or other advisors for this
purpose if, in its judgment, that is appropriate. Resolve any
disagreements between the external auditors and management. Determine
funding for the appropriate compensation of the independent auditors
and other advisors that the Audit Committee chooses to engage, with
such funding to be provided by the Company.
11. Submit the minutes of all meetings of the Audit Committee to, or
discuss the matters communicated at each meeting with, the full Board.
12. Review, at least annually, with management and the independent auditor
the qualifications, performance, independence and objectivity of the
independent auditor. In connection with such review and evaluation,
the Audit Committee shall
o Obtain and review a written report from the independent auditor
at least annually regarding the auditor's internal
quality-control procedures and any material issues raised by the
most recent quality-control review;
o Obtain an annual written statement from the independent auditor
delineating all relationships, both direct and indirect, between
the independent auditor and the Company, including each non-audit
service provided to the Company and at least the matters set
forth in Independence Standards Board No. 1;
o Consider whether the provision of non-audit services is
compatible with maintaining the auditor's independence, taking
into account the opinions of management;
o Discuss any relationships that may impair the auditor's
independence and take such actions as it deems appropriate or
make recommendations to the Board regarding actions to be taken
to remedy such impairment; and
o Ensure appropriate audit and concurring partner rotation as
required by law.
13. Review and approve any related-party transactions entered into by the
Company.
14. Review and pre-approve the engagement of independent accountants to
perform permissible non-audit services in accordance with policies
adopted by the Audit Committee and applicable laws and regulations.
Review any non-audit services performed on behalf of the Company by
the independent accountants that meet the de minimis exception under
applicable laws and regulations.
15. Establish procedures for receipt and processing of complaints related
to accounting, internal controls or auditing-related matters, and the
confidential, anonymous submission by employees of concerns regarding
questionable accounting or auditing practices.
16. Administer the Company's Code of Ethics for Chief Executive Officer
and Senior Financial Officers, including consideration of any waivers
and investigation of any alleged violations thereof.
ADOPTION AND EFFECTIVE DATE
- ---------------------------
This amended Audit Committee Charter was adopted by the Audit Committee
pursuant to a delegation of authority by vote of the Board of the Company on
January 28, 2004 and became effective immediately.
ANNUAL REVIEW
- -------------
At least annually, members of the Audit Committee shall review the terms
and scope of the Audit Committee charter to determine the adequacy of the
charter. Such review and any recommendations which follow thereafter shall be
reflected in the minutes of the meeting of the Audit Committee during which such
review was undertaken.
[GRAPHIC OMITTED]
----- Mark this box with an X if you have made changes to
your name or address details above.
================================================================================
Annual Meeting of Shareholders - April 26, 2006 Proxy Card
================================================================================
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned, whose signature appears below, hereby appoints Robert H. Eder,
P. Scott Conti, and Robert J. Easton, attorneys each with power of substitution
and with all the powers the undersigned would possess if personally present, to
vote the Preferred Stock of Providence and Worcester Railroad Company held of
record by the undersigned on March 3, 2006 at the annual meeting of shareholders
to be held on April 26, 2006 in Worcester, Massachusetts, and at any
adjournments thereof, as follows.
A. Election of Directors
1. The Board of Directors recommends a vote FOR the listed nominees.
For Withhold For Withhold For Withhold
--- -------- --- -------- --- --------
01-F. Barrett 02-S. Conti 03-J. Garrahy
For Withhold For Withhold For Withhold
--- -------- --- -------- --- --------
04-J. Garvey 05-C. McCollam, Jr. 06-C. Scott
B. Issues
The Board of Directors recommends a vote FOR the following proposal.
For Against Abstain
--- ------- -------
2. Amendment to the Company's Bylaws
eliminating the requirement that salaries
of all officers of the Company be fixed by
the Board of Directors.
3. In their discretion, upon such other
matters as may properly come before
the meeting.
C. Authorized Signatures - Sign Here - This section must be completed for your
instructions to be executed. PLEASE DATE, SIGN AND RETURN THIS PROXY USING
THE ENCLOSED ENVELOPE.
Sign exactly as your name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by duly authorized officer. If a
partnership, please sign in partnership name by authorized person. In case of
joint tenants or multiple owners, each party must sign.
Signature 1 - Signature 2 -
Please keep signature Please keep signature
within the box within the box Date (mm/ldd/yyyy)
- ------------------------- ------------------------- ---------------------
/ /
- ------------------------- ------------------------- ---------------------
[GRAPHIC OMITTED]
----- Mark this box with an X if you have made changes to
your name or address details above.
================================================================================
Annual Meeting of Shareholders - April 26, 2006 Proxy Card
================================================================================
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned, whose signature appears below, hereby appoints Robert H. Eder,
P. Scott Conti, and Robert J. Easton, attorneys each with power of substitution
and with all the powers the undersigned would possess if personally present, to
vote the Common Stock of Providence and Worcester Railroad Company held of
record by the undersigned on March 3, 2006 at the annual meeting of shareholders
to be held on April 26, 2006 in Worcester, Massachusetts, and at any
adjournments thereof, as follows.
A. Election of Directors
1. The Board of Directors recommends a vote FOR the listed nominees.
For Withhold For Withhold For Withhold
--- -------- --- -------- --- --------
01-Richard Anderson 02-Robert Eder 03-John Healy
B. Issues
The Board of Directors recommends a vote FOR the following proposal.
For Against Abstain
--- ------- -------
2. Amendment to the Company's Bylaws
eliminating the requirement that salaries
of all officers of the Company be fixed by
the Board of Directors.
3. In their discretion, upon such other
matters as may properly come before
the meeting.
C. Authorized Signatures - Sign Here - This section must be completed for your
instructions to be executed. PLEASE DATE, SIGN AND RETURN THIS PROXY USING
THE ENCLOSED ENVELOPE.
Sign exactly as your name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by duly authorized officer. If a
partnership, please sign in partnership name by authorized person. In case of
joint tenants or multiple owners, each party must sign.
Signature 1 - Signature 2 -
Please keep signature Please keep signature
within the box within the box Date (mm/ldd/yyyy)
- ------------------------- ------------------------- ---------------------
/ /
- ------------------------- ------------------------- ---------------------