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 [ ]
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[ ] 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
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1) Title of each class of securities to which transaction applies:
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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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[ ] 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 30, 2008
PLEASE TAKE NOTICE that the 2008 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
30, 2008 at 10:00 o'clock A.M., local time, for the following purposes:
(1) To elect four 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; and
(2) 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 February 29, 2008 will be entitled to
vote.
By Order of the Board of Directors
MARIE A. ANGELINI
Secretary and General Counsel
PROVIDENCE AND WORCESTER RAILROAD COMPANY
Worcester, Massachusetts
March 28, 2008
Proxy cards for Common Stock and Preferred Stock of the Company will be
mailed separately. If you are the holder of record of both Common Stock and
Preferred Stock of the Company, you will receive two packages, each containing a
proxy card. Kindly fill in, date and sign the enclosed proxy card 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 30, 2008
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Providence
and Worcester Railroad Company (the "Company") in connection with the annual
meeting of the shareholders to be held April 30, 2008; 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 2007, including financial statements, this
proxy statement and the accompanying proxy or proxies are expected to be first
sent to shareholders on or about March 28, 2008. 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 February 29, 2008
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" with respect to
the election of any particular nominee for director 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 election 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 4,793,909 shares of the Company's Common
Stock and 640 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 current directors of
the Company, which include each of the nominees standing for election at the
2008 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 of Directors
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 No executive officer of the Company serves on the Stock Option &
Compensation Committee or the Audit Committee of the Company. Other
than Mr. Eder, no executive officer of the Company serves 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 2007 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, four 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 with the exception of Paul F. Titterton. Mr. Titterton has been
nominated as the designee of GATX Corporation ("GATX") in accordance with the
terms of the Common Stock Purchase Agreement entered into between the Company
and GATX dated January 10, 2008. Mr. Titterton's nomination was confirmed by the
unanimous vote of the Board of Directors at its quarterly meeting on January 30,
2008. 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 (60) President and Chief Investment Officer of 1998
Massachusetts Capital Resource Company; Senior
Vice President from 1986 through 2007
Robert H. Eder (75) Chairman of the Company 1965
John J. Healy (72) 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 2003
Paul F. Titterton (32) Vice President, Strategic Growth, GATX Corporation;
Director, Fleet Portfolio Management
from 2002 through 2005 and promoted to
Vice President, Fleet Portfolio
Management in 2005
Preferred Stock Director Nominees:
----------------------------------
Frank W. Barrett (68) Retired; Executive Vice President of TD Bank North, 1995
N.A. (formerly Banknorth Massachusetts) from 2002
through April 2006
P. Scott Conti (50) President of the Company; Vice President Engineering 2005
from 1999 through 2005
J. Joseph Garrahy (77) President of J. Joseph Garrahy & Associates, Inc. 1992
(business consultants)
James C. Garvey (51) President and CEO of Flagship Bank & Trust Company 2005
Charles M. McCollam, Jr. (75) President of Bertha M. McCollam, Inc.; Vice President 1996
and Secretary of Kronholm & McCollam (insurance
firms) and President of McCollam Associates
(consultants)
Craig M. Scott (44) 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. Effective January 2008, he was promoted to President and
Chief Investment Officer 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 as Vice President and was promoted to Senior Vice
President in 1986. Mr. Anderson is also a director of Valpey Fisher Corporation,
a company specializing in frequency control devices.
Frank W. Barrett, Director. Mr. Barrett has been a Director of the Company
since 1995. In April 2006, Mr. Barrett retired from TD Bank North, N.A. as
Executive Vice President after working in the banking industry for over forty
years.
P. Scott Conti, President, Chief Operating Officer and Director. Mr. Conti
became the Company's President and Chief Operating Officer in November 2005, and
was elected to the Company's Board of Directors in April 2006. Mr. Conti began
working at the Company in June 1988, serving as Engineering Manager through
December 1997, Chief Engineer from 1998 until March 1999, and Vice President
Engineering from March 1999 until he was appointed to his current position.
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 of
Directors 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.
James C. Garvey, Director. Mr. Garvey has been a Director of the Company
since 2005. Mr. Garvey has been President and CEO of 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 consultants) from 1997 to 2003.
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 a partner of the Providence-based law firm of Duffy, Sweeney &
Scott, Ltd. and served as its Managing Partner in 2004-2005.
Paul F. Titterton, Nominee. Mr. Titterton has been Vice President,
Strategic Growth, of GATX Corporation since April 2007. He began working at GATX
Corporation in 1997, serving as Director, Fleet Portfolio Management from 2002
until July 2005, and as Vice President, Fleet Portfolio Management from July
2005 until he was promoted to his current position.
Recommendation of Board of Directors. The Board of Directors recommends that the
shareholders vote FOR approval of the slate of four (4) common stock director
nominees and six (6) preferred stock director nominees set forth above.
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. Each of the Stock Option & Compensation and Audit
Committees has a written charter approved by the Board of Directors.
In accordance with the By-laws of the Company, the Executive Committee,
currently comprising P. Scott Conti, Chairman, John J. Healy and James C.
Garvey, 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 sale of surplus real estate and 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, all of whom are
independent (as defined by applicable American Stock Exchange ("AMEX") listing
standards and Securities and Exchange Commission ("SEC") rules), non-employee
directors. The Committee is charged with the broad responsibility of seeing that
executive officers are effectively compensated in a manner which is internally
equitable based on such officer's responsibilities and length of service to the
Company. 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 compensation of the chief executive officer and all other
officers be determined, or recommended to the Board of Directors for
determination, either by a compensation committee comprised of independent
directors or by a majority of the independent directors on its Board of
Directors. However, the Company's Stock Option & Compensation Committee charter
provides that the Stock Option & Compensation Committee shall approve and report
to the Board of Directors the executive compensation plan (including incentive
awards) of the Chairman of the Board, the President and any other officer who is
a member of the Board of Directors.
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 AMEX listing standards, is responsible for
providing independent, objective oversight of the Company's accounting functions
and internal controls. The Board of Directors has determined that all three
members of the Audit Committee satisfy the financial literacy requirements of
the AMEX listing standards and are independent as defined under the AMEX listing
requirements and applicable rules of the SEC. The Board of Directors 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 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 six meetings, the Audit Committee held five
meetings, the Stock Option & Compensation Committee held three meetings and the
Executive Committee held three meetings during the fiscal year ended December
31, 2007. All directors attended at least 75% of all meetings of the Board of
Directors and the committees on which each such director serves. The Board of
Directors has adopted a policy that requires members of the Board of Directors
to make every effort to attend each annual shareholders meeting. All then
current members of the Board of Directors attended the 2007 annual shareholders
meeting.
Code of Ethics
The Company has adopted a Code of Ethics applicable to all directors,
officers and employees, which meets the requirements of a "code of ethics" as
defined in Item 406 of Regulation S-K.
Shareholder Communications
Shareholders of the Company may communicate directly with 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.
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. 114. 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
The Board of Directors, upon recommendation of the Stock Option &
Compensation Committee, is responsible for determining compensation of the
directors. During the fiscal year ended December 31, 2007, 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 (other than the chairman of each
Committee, who received $350) for each attended meeting of the committee.
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 closing market price
of such shares 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 2, 2007, each director of the Company who was serving as such on
December 31, 2006 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 $19.50.
The following table provides information regarding the compensation paid or
accrued by each individual who was a director during the 2007 fiscal year other
than the Chairman and the President.
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
Name Total Fees earned or Stock Option Non-Stock All Other
($) paid in cash Awards Awards ($) Incentive Plan Compensation
($) ($) (a) Compensation ($)
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
Richard W. Anderson 8,640 6,050 N/A 2,590 N/A 0
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
Frank W. Barrett 10,522 7,500 N/A 3,022 N/A 0
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
P. Scott Conti (b), (c) (b) N/A N/A (c) N/A 0
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
Robert H. Eder (b) (b) N/A N/A N/A 0
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
J. Joseph Garrahy 13,854 10,400 N/A 3,454 N/A 0
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
James C. Garvey 6,283 4,700 N/A 1,583 N/A 0
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
John J. Healy 11,148 7,550 N/A 3,598 N/A 0
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
Charles M. McCollam, Jr. 9,828 6,950 N/A 2,878 N/A 0
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
Craig M. Scott 4,777 3,050 N/A 1,727 N/A 0
- ------------------------------ ---------- ---------------- ----------- ------------- ----------------- ----------------
(a) As of 12/31/07, each director had the following number of options
outstanding:
Richard W. Anderson - 1,260 shares
Frank Barrett - 1,530 shares
P. Scott Conti - 1,286 shares
J. Joseph Garrahy - 850 shares
James C. Garvey - 110 shares
John J. Healy - 1,890 shares
Charles M. McCollam, Jr. - 200 shares
Craig M. Scott - 230 shares
(b) The Company does not pay director fees to directors who are full-time
employees of the Company.
(c) Mr. Conti is awarded options in his capacity as President under the
Company's Non-Qualified Stock Option Plan, which options are disclosed
in the table under the section entitled Grants of Plan Based Awards
set forth herein.
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 February 29, 2008, 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) 17.8%(a)
130 Sunrise Avenue 500 (Preferred) 78.1%
Palm Beach, Florida 33480
Steinberg Asset Management, LLC 523,100 (Common) 10.9%
Michael A. Steinberg
12 East 49th Street
Suite 1202
New York, New York 10017
Keeley Asset Management Corp. 396,425 (Common) 8.3%
401 South LaSalle Street
Chicago, Illinois 60605
(a) Assuming no conversion of Preferred Stock. If their Preferred Stock
were converted in whole to Common Stock, Mr. and Mrs. Eder would own 18.4% of
the outstanding Common Stock.
Of the shares owned by Mr. and Mrs. Eder, 768,162 shares of Common Stock
and 500 shares of Preferred Stock were held directly by Mr. Eder, and 74,580
shares of Common Stock were held directly by Mrs. Eder. By reason of their
ownership, Mr. and Mrs. Eder may be deemed to be "control persons" with respect
to the Company.
The following table reflects, as of February 29, 2008, the beneficial
ownership of the Common Stock of the Company by directors, nominees for
director, Named Executive Officers and all officers and directors as a group.
Name Number Percentage
- ---- ------ ----------
Richard W. Anderson(a)......................... 201,960 4.2%
Marie A. Angelini(b)........................... 776 *
Frank W. Barrett(c)............................ 2,140 *
P. Scott Conti(d).............................. 7,805 *
Robert J. Easton(e)............................ 7,539 *
Robert H. Eder(f).............................. 892,742 18.4%
David F. Fitzgerald(g)......................... 6,324 *
J. Joseph Garrahy(h)........................... 1,250 *
James C. Garvey(i)............................. 410 *
John J. Healy(j)............................... 2,890 *
Charles M. McCollam, Jr.(k).................... 3,950 *
Frank K. Rogers(l)............................. 2,736 *
Craig M. Scott(m).............................. 1,230 *
Paul F. Titterton(n)........................... 239,523 4.9%
All executive officers and directors as a group
(14 persons)(o)............................. 1,371,275 28.2%
* 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 President and Chief Investment Officer of Massachusetts Capital
Resource Company. Also includes 1,260 shares of Common Stock issuable under
stock options exercisable within 60 days.
(b) Includes 79 shares of Common Stock issuable under stock options exercisable
within 60 days.
(c) Includes 1,530 shares of Common Stock issuable under stock options
exercisable within 60 days.
(d) Includes 1,286 shares of Common Stock issuable under stock options
exercisable within 60 days.
(e) Includes 118 shares of Common Stock held by Mr. Easton's wife in her name
and 3,233 shares of Common Stock issuable under stock options exercisable
within 60 days.
(f) Includes 74,580 shares of Common Stock held by Mr. Eder's wife in her name
and assumes the conversion of the 500 shares of Preferred Stock owned by
Mr. Eder.
(g) Includes 20 shares of Common Stock held by Mr. Fitzgerald's wife in her
name and 3,381 shares of Common Stock issuable under stock options
exercisable within 60 days.
(h) Includes 850 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 1,890 shares of Common Stock issuable under stock options
exercisable within 60 days.
(k) Includes 200 shares of Common Stock issuable under stock options
exercisable within 60 days.
(l) Includes 1,358 shares of Common Stock issuable under stock options
exercisable within 60 days.
(m) Includes 230 shares of Common Stock issuable under stock options
exercisable within 60 days.
(n) Includes 239,523 shares of Common Stock held by GATX Corporation of which
Mr. Titterton disclaims beneficial ownership. Mr. Titterton is Vice
President, Strategic Growth of GATX Corporation.
(o) Includes 50,000 shares of Common Stock issuable upon conversion of
Preferred Stock and 15,407 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 2007 its officers, directors and greater than
ten-percent beneficial owners complied with all applicable Section 16(a) filing
requirements.
COMPENSATION DISCUSSION & ANALYSIS
The Stock Option & Compensation Committee is charged with the
responsibility of setting the compensation for each of the Chairman/Chief
Executive Officer (the "Chairman"), the President/Chief Operating Officer (the
"President") of the Company, and any other officer who is also a member of the
Board of Directors, and consulting with the Chairman and the President with
respect to the compensation of other executive officers. Our overall philosophy
in connection with compensation is to provide a compensation package which
attracts and retains qualified people. We also seek to obtain internal equity
within the compensation structure by providing appropriate salary levels to
reflect the responsibilities of individual executives. Historically, we have
adjusted executive compensation each year semi-annually by an amount
approximately equal to the increase in the cost of living over the previous
six-month period, which has the effect of rewarding executives for longevity
with the Company. We do not give significant weight to the compensation paid by
comparable railroads as there are few similar railroads in our region.
We have from time to time paid bonuses in connection with specific
situations requiring extraordinary effort. However, there is no formal plan. We
have not awarded a bonus to the Chairman since 1999 because we believe that his
stock ownership position sufficiently encourages him to perform in a way that
will maximize value to the Company and its shareholders.
To further align the interest of the executives of the Company, we have a
Non-Qualified Stock Option Plan in which all of the executives, other than the
Chairman, may participate. The plan is designed to make awards based upon
compensation and longevity and, therefore, to encourage executives to remain
with the Company.
We have not had, and do not expect to have, employment contracts with any
of our executives. We do have change-in-control agreements, including a
severance policy, for all executives other than the Chairman. This plan
generally provides higher benefits for longer-tenured executives. In lieu of any
defined benefit or 401(k) plans, we contribute to each executive's Simplified
Employee Pension plan ("SEP") which is available to all non-union employees on a
non-discriminatory basis.
The Chairman is not subject to a change-in-control agreement. However, we
pay the insurance premiums on a life insurance policy which provides a death
benefit of $1,600,000. With the exception of this policy, all other executive
benefits are made available to all non-union employees on a non-discriminatory
basis.
Salaries
The Chairman's compensation was set many years ago and has been adjusted
from time to time to reflect increases in the cost of living. The President's
compensation was set in early 2006 and was increased in November 2007 following
his completion of approximately two (2) years as President and discussions
between the Stock Option & Compensation Committee and the President. We consult
with the Chairman and the President from time to time with respect to the
compensation of other executives. In general, their philosophy, which is shared
by us, is that the compensation of other executives should relate to their
responsibilities attendant to their offices and their lengths of service with
the Company. Accordingly, we believe that the Chairman's salary should represent
the highest salary paid and the salaries of other executive officers should be
less than the Chairman's salary and should be governed by their levels of
responsibility within the Company. The President of the Company, therefore, is
the next highest paid employee. Similarly, other employees are paid in
accordance with what the Chairman and the President perceive to be the other
executive officers' responsibilities and we concur with their assessment. We
reward length of service through annual increases in amounts approximate to
increases in the cost of living.
Bonus Plan
We maintain no formal bonus plan. We do not anticipate paying a bonus to
the Chairman in the future for the reason that the Chairman has a substantial
equity interest in the Company and, therefore, exceptional performance by him is
likely to be translated into an increase in the value of his stock interest in
the Company. With respect to other individuals, the Chairman has from time to
time recommended bonuses on the occurrence of extraordinary events where
executives have put in an extraordinary amount of time and effort to achieve a
goal. We concur with this rationale.
Stock Option Plan
The Company maintains a Non-Qualified Stock Option Plan (the "Plan") for
its directors and executives, other than the Chairman. Pursuant to the terms of
the Plan, all employees of the Company who are not subject to a collective
bargaining agreement and have been an employee of the Company for more than one
year are eligible to participate in the Plan. Historically, we have allotted
seven thousand shares per year to be allocated among eligible employee
participants. By keeping the number constant, we eliminate year to year swings
and provide for a consistent long-term incentive. Pursuant to the terms of the
Plan, each employee participant's compensation is multiplied by a longevity
factor which is 1.5 for executives with more than five years' service increasing
ratably, in five year increments, up to 3.5 for executives with more than 25
years' service. The sum of all of the products computed for all employee
participants then becomes the denominator. Each employee participant is then
awarded the number of options equal to the product of (a) the total shares
allocated for such year, and (b) the ratio that his/her compensation multiplied
by his/her longevity factor bears to the products for all employee participants.
The purchase price per share for options granted under the Plan is the closing
market price of such shares on the last business day of the preceding year, and
the term of each option is ten years in accordance with the Plan. Options may
not be exercised for the first six months following the grant date and,
thereafter, are exercisable at any time. Upon termination for any reason, the
options must be exercised within six months of the date of termination. As with
our other compensation, the option awards are designed to encourage longevity
with the Company.
Other Agreements
The Company has entered into change-in-control agreements with all its
executives, other than the Chairman, and all other management employees. The
terms of change-in-control agreements for executives are identical to those of
all other management employees. Under the terms of the change-in-control
agreements, a severance award is payable upon an event giving rise to a
change-in-control and upon the resignation of an executive following a
significant reduction of such executive's base salary occurring within two years
following a change-in-control. The amount of the severance award payable under
the change-in-control agreements is a function of salary and length of service.
An executive is entitled to a one-time severance payment equal to his/her then
current annual base salary if at the time of the event giving rise to the
change-in-control, he/she has been employed by the Company for fewer than nine
years. If employed by the Company for a period of ten to nineteen years, the
executive is entitled to receive a severance payment equal to one and one-half
times the executive's then current salary; and if employed by the Company for a
period of twenty to twenty-nine years, the executive is entitled to a severance
award of two times the executive's then current salary. Finally, if an executive
is employed by the Company for a period of thirty years or more, the
change-in-control agreements provide for a severance award of two and one-half
times the executive's then current salary. Notwithstanding the above, no
severance benefit is payable under the change-in-control agreements to any
executive who is a beneficial owner, directly or indirectly, of securities which
have the right to elect a majority of the Board of Directors or 50% of the
voting power of the entire capital stock of the Company.
In addition to the benefits outlined above, all management employees are
entitled to life and disability coverage under policies of insurance paid by the
Company. Life insurance benefits are in the amount of two times annual salary to
a maximum of $50,000 and disability benefits are equal to 60% of annual salary
up to a maximum of $8,000 per month.
Other than the life insurance benefit due Mr. Eder's designated beneficiary
upon death and the benefits described above, all benefits are available to both
our executive employees and other non-union employees on a non-discriminatory
basis.
STOCK OPTION & COMPENSATION COMMITTEE REPORT
The Stock Option & Compensation Committee has reviewed and discussed with
management the Compensation Discussion & Analysis included above. Based on these
reviews and discussions, the Stock Option & Compensation Committee has
recommended to the Board of Directors that the Compensation Discussion &
Analysis contained herein be included in the Company's Proxy Statement for the
fiscal year ended December 31, 2007 for filing with the SEC.
Stock Option & Compensation Committee:
Charles M. McCollam, Jr., Chairman
Craig M. Scott
James C. Garvey
EXECUTIVE COMPENSATION
Summary Compensation Table
The following Summary Compensation Table provides information regarding the
total compensation paid or accrued by the Company to each of its Chief Executive
Officer, Chief Financial Officer and the three most highly compensated executive
officers other than the CEO and CFO who earned more than $100,000 in total
compensation during the fiscal year ended December 31, 2007 and were employed by
the Company on December 31, 2007 (the "Named Executive Officers").
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
Name Year Salary Bonus Stock Option Non-Equity Change in All Other Total
and ($) ($) Awards Awards Incentive Pension Compen- ($)
Principal ($) ($) Plan Value and sation
Position (a) Compen- Non-Qualified ($)
sation Deferred
($) Compensation
Earnings
($)
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
Robert H. Eder 2007 398,468 0 0 0(b) 0 0 40,535(c) 439,003
2006 388,179 0 0 0(b) 0 0 87,442(d) 475,621
Chairman and CEO
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
P. Scott Conti 2007 186,925 0 0 6,332 0 0 12,222(e) 205,479
2006 175,949 0 0 4,098 0 0 12,120(e) 192,167
President and
Chief Operating
Officer
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
Robert J. Easton 2007 165,312 0 0 7,037 0 0 10,929(e) 183,278
2006 160,685 0 0 4,494 0 0 11,224(e) 176,403
Treasurer
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
David F. Fitzgerald 2007 140,933 0 0 6,735 0 0 9,161(e) 156,829
2006 136,205 0 0 4,954 0 0 9,194(e) 150,353
Vice President
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
Frank K. Rogers 2007 134,245 0 0 3,583 0 0 8,945(e) 146,773
2006 123,053 0 0 2,418 0 0 8,558(e) 134,029
Vice President
- -------------------- ------- ---------- -------- --------- --------- ----------- --------------- ------------ ----------
(a) The amounts reflect the dollar amount recognized for financial statement
reporting purposes for the fiscal year ended December 31, 2007, in
accordance with SFAS 123R.
(b) Under the terms of the Company's Non-Qualified Stock Option Plan, Mr. Eder
is not eligible to receive a grant of stock options.
(c) Includes $14,625 paid directly to Mr. Eder's retirement account under the
Company's SEP, $21,657 in life insurance premiums for 2007, and $4,253 in
car insurance paid on Mr. Eder's behalf.
(d) Includes $14,850 paid directly to Mr. Eder's retirement account under the
Company's SEP, $27,433 in life insurance premiums for 2006, $40,918 for
purchase of a vehicle for use by Mr. Eder and $4,241 in car insurance and
parking paid on Mr. Eder's behalf.
(e) Reflects amounts paid directly to officer's retirement account under the
Company's SEP.
Grants of Plan Based Awards
The following table provides information on all plan-based awards by the
Company in 2007 to each Named Executive Officer.
- --------------------------------------------------------------------------------------------------------------------------
Name Grant Estimated Future Payouts Estimated Future Payouts All Other All Other Exercise Grant
Date Under Non-Equity Under Equity Incentive Stock Option or Base Date Fair
Incentive Plan Awards Plan Awards Awards: Awards: Price of Value of
Number of Number of Option Stock and
Shares of Securities Awards Option
Stock or Underlying ($/Sh) Awards
Units Options ($)
(#) (#) (a)
-----------------------------------------------------
--------------------------------------------
Thresh-oldTarget Maxi-mum Thresh-olTarget Maxi-mum
($) ($) ($) ($) ($) ($)
- --------------------------------------------------------------------------------------------------------------------------
Robert H. N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Eder (b)
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
P. Scott 01/02/07 N/A N/A N/A N/A N/A N/A N/A 440 19.50 6,332
Conti
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Robert J. 01/02/07 N/A N/A N/A N/A N/A N/A N/A 489 19.50 7,037
Easton
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
David F. 01/02/07 N/A N/A N/A N/A N/A N/A N/A 468 19.50 6,735
Fitzgerald
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Frank K. 01/02/07 N/A N/A N/A N/A N/A N/A N/A 249 19.50 3,583
Rogers
- --------------------------------------------------------------------------------------------------------------------------
(a) Amounts represent fair value of options and were estimated to be $14.39 per
share as of the date of grant using Black-Scholes options-pricing model
with the following weighted average assumptions: expected volatility of
86.88%; expected life 7 years; and risk free interest rate of 4.68%.
Dividends at the rate of 1.07% per share were assumed for purposes of this
estimate.
(b) Under the terms of the Company's Non-Qualified Stock Option Plan, Mr. Eder
is not eligible to receive a grant of stock options.
Outstanding Equity Awards at Fiscal Year End
The following table provides information on all outstanding equity awards
held by each of the Named Executive Officers as of December 31, 2007.
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Name Number of Number of Equity Incentive Option exercise Option
securities securities Plan Awards: price expiration date
underlying underlying Number of ($)
unexercised unexercised securities
options options underlying
(#) exercisable (#) unexercisable unexercised
unearned options
(#)
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Robert H. Eder N/A N/A N/A N/A N/A
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
P. Scott Conti 147 0 N/A 12.375 01/05/09(a)
316 13.490 01/03/15(b)
383 14.900 01/03/16(c)
440 19.500 01/02/17(d)
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Robert J. Easton 346 0 N/A 12.375 01/05/09(a)
301 8.000 01/03/10(e)
281 7.125 01/02/11(f)
356 6.750 01/02/12(g)
353 7.750 01/02/13(h)
333 8.890 01/02/14(i)
354 13.490 01/03/15(b)
420 14.900 01/03/16(c)
489 19.500 01/02/17(d)
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
David F. Fitzgerald 333 0 N/A 12.375 01/05/09(a)
379 8.000 01/03/10(e)
364 7.125 01/02/11(f)
271 6.750 01/02/12(g)
369 7.750 01/02/13(h)
357 8.890 01/02/14(i)
377 13.490 01/03/15(b)
463 14.900 01/03/16(c)
468 19.500 01/02/17(d)
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Frank K. Rogers 86 0 N/A 12.375 01/05/09(a)
86 8.000 01/03/10(e)
127 7.125 01/02/11(f)
134 6.750 01/02/12(g)
136 7.750 01/02/13(h)
130 8.890 01/02/14(i)
184 13.490 01/03/15(b)
226 14.900 01/03/16(c)
249 19.500 01/02/17(d)
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
(a) Vested January 5, 1999
(b) Vested January 3, 2005
(c) Vested January 3, 2006
(d) Vested January 2, 2007
(e) Vested January 3, 2000
(f) Vested January 3, 2001
(g) Vested January 2, 2002
(h) Vested January 2, 2003
(i) Vested January 2, 2004
Options Exercised and Stock Vested
The following table provides information on all exercises of options by the
Named Executive Officers during the Company's 2007 fiscal year.
- ----------------------------------------------------------------------------------------------------------------
Option Awards Stock Awards
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Name Number of Value Realized Number of Value Realized
Shares on Exercise Shares on Vesting
Acquired ($) Acquired ($)
on Exercise on Vesting
(#) (#)
- ----------------------------------------------------------------------------------------------------------------
Robert H. Eder 0 0 N/A N/A
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
P. Scott Conti 296 2,459.76 N/A N/A
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Robert J. Easton 0 0 N/A N/A
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
David F. Fitzgerald 0 0 N/A N/A
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
Frank K. Rogers 0 0 N/A N/A
- ----------------------------------------------------------------------------------------------------------------
Pension Benefits
The Company makes payments directly to the retirement accounts of
management staff (including the Named Executive Officers) under the Company's
Simplified Employee Pension plan, a qualified defined contribution plan.
Nonqualified Deferred Compensation Plans
There are no nonqualified deferred compensation plans for the Company's
management staff (including the Named Executive Officers).
Potential Payments Upon Termination or Change-in-Control
As of December 31, 2007, the Company was not obligated to any member of
management for any payments or benefits (including, without limitation,
insurance benefits for health, life, disability or any other matter,
outplacement services, tax gross ups or any other payment or benefit) upon the
event of termination from the Company, whether upon the basis of retirement
(including voluntary retirement, early retirement or retirement upon attaining
the age on which full retirement benefits are payable), involuntary termination
(including termination for cause, not for cause and for good reason, other than
change-in-control), disability or death.
In the event that a management employee's position with the Company is
terminated other than for cause as a result of a change-in-control of the
Company, such employee is eligible to receive a payment, as detailed below. A
change-in-control is deemed to have occurred upon (1) the occurrence of a change
in the beneficial ownership directly or indirectly of securities representing
more than 50% of the voting power of the Company's stock, (2) the sale of all or
substantially all of the Company's assets, (3) a transaction in which the
Company is not the surviving entity, or (4) complete liquidation of the Company
(each, a "Change-in-Control Event"). In such case the management employee is
entitled to a lump sum severance payment within two years of the effective date
of a
Change-in-Control Event to be determined as of the date of termination, as
adjusted based on the Change-in-Control Event and the date of termination, as
follows:
Years of Service at
--------------------
Date of Termination Severance Benefit
------------------- -----------------
0-9 Years One (1) times Annual Base Salary
10-19 Years One and one-half (1-1/2) times Annual Base Salary
20-29 Years Two (2) times Annual Base Salary
30 Years or More Two and one-half (2-1/2) times Annual Base Salary
Annual Base Salary means the management employee's annual rate of base pay
in effect immediately prior to the effective date of the Change-in-Control
Event.
The management employee is entitled to a pro rata portion of the Severance
Benefit if the management employee is terminated other than for cause by the
Company at any time within two (2) years following a Change-in-Control Event.
In accordance with the terms set forth above, the following payments would
have been due the following management employees as of December 31, 2007 had a
Change-in-Control Event taken place.
P. Scott Conti - $280,388 (1.5 X Annual Base Salary)
Robert J. Easton - $330,624 (2 X Annual Base Salary)
Robert H. Eder - N/A
David F. Fitzgerald - $352,333 (2.5 X Annual Base Salary)
Frank K. Rogers - $201,368 (1.5 X Annual Base Salary)
Under the terms of the life insurance policy for the benefit of Mr. Eder,
Mr. Eder's designated beneficiary would have been entitled to receive $1,600,000
had a termination of his employment occurred on December 31, 2007 as a result of
his death.
TRANSACTIONS WITH MANAGEMENT
Potential conflicts of interest and related party transactions are referred
by the Board of Directors to the Audit Committee for review and approval. In
reviewing and evaluating potential conflicts of interest and related party
transactions, the Audit Committee uses applicable AMEX listing standards and SEC
rules as a guide.
INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has appointed Deloitte &
Touche LLP, who acted as independent auditors of the accounts of the Company for
2007, as independent auditors of the accounts of the Company for the year 2008.
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, 2007 and
2006 are set forth below. The aggregate fees included in the Audit category are
billed for the fiscal years for the audit of the 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 2007 Fiscal Year 2006
---------------- ----------------
Audit Fees $181,500 $205,500
Tax Fees $6,000 $5,000
All Other Fees --- ---
Audit Fees for the fiscal years ended December 31, 2007 and 2006 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, compliance with Section 404 of the
Sarbanes-Oxley Act and other assistance required to complete the year-end audit
of the financial statements.
Tax Fees as of the fiscal years ended December 31, 2007 and 2006 were for
services rendered for review of tax returns and tax advice.
All Other Fees. As of the fiscal years ended December 31, 2007 and 2006
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.
The Audit Committee has engaged Deloitte & Touche LLP for the calendar year
ending December 31, 2008.
PROPOSALS FOR 2009 ANNUAL MEETING
The 2009 annual meeting of the shareholders of the Company is scheduled to
be held April 29, 2009. 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 15, 2008.
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
MARIE A. ANGELINI
Secretary and General Counsel
PROVIDENCE AND WORCESTER RAILROAD COMPANY
Dated: March 28, 2008
[GRAPHIC OMITTED][GRAPHIC OMITTED]
- ------
X
- ------
Using a black ink pen, mark your votes with an X as shown in this example.
Please do not write outside the designated area.
PLEASE DATE, SIGN AND RETURN THIS PROXY USING THE ENCLOSED ENVELOPE.
================================================================================
Proxy - Providence and Worcester Railroad Company
================================================================================
This Proxy is Solicited on Behalf of the Board of Directors
April 30, 2008
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 February 29, 2008 at the annual meeting of
shareholders to be held on April 30, 2008 in Worcester, Massachusetts, and at
any adjournments thereof, as follows.
A. Proposal - The Board of Directors recommends a vote FOR the listed nominees.
1. Election of Directors:
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
2. In their discretion, upon such other matters as may properly come before
the meeting.
B. Non-Voting Items
Change of Address - Please print new address below.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C. Authorized Signatures - This section must be completed for your vote to be
counted. Date and Sign Below
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.
Date (mm/dd/yyyy) - Signature 1 - Please keep Signature 2 - Please keep
Please print date below. signature within the box. signature within the box.
- ------------------------- ------------------------- -------------------------
/ /
- ------------------------- ------------------------- -------------------------
[GRAPHIC OMITTED][GRAPHIC OMITTED]
================================================================================
Proxy - Providence and Worcester Railroad Company
================================================================================
This Proxy is Solicited on Behalf of the Board of Directors
April 30, 2008
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 February 29, 2008 at the annual meeting of
shareholders to be held on April 30, 2008 in Worcester, Massachusetts, and at
any adjournments thereof, as follows.
PLEASE DATE, SIGN AND RETURN THIS PROXY USING THE ENCLOSED ENVELOPE.
(Items to be voted appear on reverse side.)
[GRAPHIC OMITTED][GRAPHIC OMITTED]
- ------
X
- ------
Using a black ink pen, mark your votes with an X as shown in this example.
Please do not write outside the designated areas.
================================================================================
Annual Meeting Proxy Card
================================================================================
A. Proposals - The Board of Directors recommends a vote FOR the listed nominees.
1. Election of Directors.
For Withhold For Withhold For Withhold
--- -------- --- -------- --- --------
01-Richard Anderson 02-Robert Eder 03-John Healy
For Withhold
--- --------
04 - Paul Titterton
2. In their discretion, upon such other matters as may properly come before
the meeting.
B. Non-Voting Items
Change of Address - Please print new address below.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C. Authorized Signatures - This section must be completed for your vote to be
counted. Date and Sign Below
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.
Date (mm/dd/yyyy) - Signature 1 - Please keep Signature 2 - Please keep
Please print date below. signature within the box. signature within the box.
- ------------------------- ------------------------- -------------------------
/ /
- ------------------------- ------------------------- -------------------------