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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CONSUMERS WATER COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
CONSUMERS WATER COMPANY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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 registrations 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:
- --------------------------------------------------------------------------------
- ---------------
(1)Set forth the amount on which the filing fee is calculated and state
how it was determined.
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CONSUMERS WATER COMPANY
THREE CANAL PLAZA
PORTLAND, MAINE 04101
March 31, 1994
Dear Shareholder:
On behalf of the Board of Directors and the management of Consumers Water
Company, it is a pleasure to invite you to the 1994 Annual Meeting of our
Company. This year's meeting is being held at 11:00 AM, May 4, 1994, at the
Sheraton Tara Hotel, 363 Maine Mall Road, South Portland, Maine.
Refreshments will be served after the meeting, at which time you will be
able to meet with Company management and board members as well as with other
shareholders. We look forward to seeing you at the Annual Meeting to hear any
questions, comments or suggestions you might have about the Company.
It is important that your shares be represented at the meeting. Please
sign, date and return the enclosed proxy card as soon as possible.
If you plan to attend, please check the appropriate box on the face of the
proxy card in order that we may anticipate how many shareholders will attend.
Your continuing interest in Consumers is appreciated.
Sincerely,
PETER L. HAYNES
President
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CONSUMERS WATER COMPANY
THREE CANAL PLAZA
PORTLAND, MAINE 04101
------------------------------
NOTICE OF ANNUAL MEETING
Notice is hereby given that the annual meeting of the shareholders of
Consumers Water Company will be held at the Sheraton Tara Hotel, 363 Maine Mall
Road, South Portland, Maine, on Wednesday, May 4, 1994, at 11:00 a.m. local time
for the following purposes:
1. To hear the report of Management on the condition of the Company;
2. To elect Directors for the ensuing year; and
3. To consider and act upon any matters incidental to the foregoing and to
transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on March 14, 1994,
as the record date and time for the determination of the shareholders entitled
to notice of, and to vote at, such annual meeting.
If you do not expect to be present at the meeting and wish your shares to
be voted, please indicate your voting instructions on the enclosed proxy card,
sign it and return it promptly in the envelope provided.
A copy of the Annual Report for the fiscal year ended December 31, 1993, is
enclosed herewith.
By Order of the Board of Directors
BRIAN R. MULLANY
Clerk
Portland, Maine
March 31, 1994
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY CARD SO THAT
YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY
CARD, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, MAY AID THE COMPANY IN
REDUCING THE EXPENSE OF ADDITIONAL PROXY SOLICITATION. THE GIVING OF YOUR PROXY
DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE
MEETING.
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CONSUMERS WATER COMPANY
THREE CANAL PLAZA
PORTLAND, MAINE 04101
------------------------------
PROXY STATEMENT
This proxy statement and the accompanying form of proxy are planned to be
mailed to shareholders on or about March 31, 1994.
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of the Company of proxies to be voted at the annual
meeting of the shareholders on Wednesday, May 4, 1994.
Only the holders of common shares, par value $1.00 per share, and the
holders of Cumulative Preferred Stock, Series A, par value $100.00 per share, of
record at the close of business on March 14, 1994, are entitled to notice of,
and to vote at, the annual meeting. On such date the number of outstanding
common shares entitled to vote was 8,113,833 and the number of outstanding
shares of Cumulative Preferred Stock, Series A, entitled to vote was 10,694.
Each share of each class is entitled to one vote. The shareholders of both
classes shall vote together as one class on all proposals to be presented at the
annual meeting.
NOMINEES FOR ELECTION AS DIRECTORS
Under the Company's Articles of Incorporation and bylaws the number of
Directors may be fixed at no less than 5 and no more than 17 and each serves
until the next annual meeting of shareholders and until his or her successor is
elected and qualified. Pursuant to the bylaws of the Company, the Board of
Directors has established the number of Directors to be elected at 11. The
shareholders or the Board may, by subsequent resolution, increase the number of
Directors as thus fixed, within the above limits, and elect additional
Directors. It is intended to vote the proxies in favor of the election of the
nominees listed below to serve until the next annual meeting and until their
successors are elected and qualified. Eliot B. Payson, who has been a Director
since 1960, has reached the retirement age for directors and has not been
nominated for election as a Director at the 1994 Annual Meeting. The following
table sets forth the name and age of each of the Board's nominees for Director,
the periods during which each nominee has served as a Director, if any, a brief
description of the principal occupation and business experience during the last
five years of each nominee, all directorships of publicly-held companies
presently held by each nominee, and certain other information. No nominee has
any family relationship with any other nominee.
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NAME OF NOMINEE AGE INFORMATION ABOUT NOMINEE
- ----------------------------- --- ------------------------------------------------------
Claudio Elia 51 President and Chief Executive Officer of Anjou
International Company, a United States subsidiary of
Compagnie Generale des Eaux ("CGE") and holding
company for certain of CGE's U.S. investments, since
1988. See "Common Stock Ownership of Certain
Beneficial Owners and Management" for description of
the terms of the agreement pursuant to which Mr. Elia
has been nominated. Mr. Elia has been a Director since
1990.
David R. Hastings, II 69 Chairman of the Board of the Company; President,
Hastings Law Office, P.A., attorneys. Mr. Hastings has
been a Director since 1963.
Peter L. Haynes 54 President and Chief Executive Officer of the Company
since August, 1992; formerly President of Quality
Logistics Management, Inc., a logistics management
company; and, from 1985 to 1990, President and Chief
Executive Officer of NYNEX Enterprises, a subsidiary
of NYNEX, Inc. and a materials management company with
sales of approximately $1 billion and over 2,000
employees. Mr. Haynes has been a Director since 1992.
Jack S. Ketchum 63 Self-employed Financial Consultant. Mr. Ketchum has
been a Director since 1978.
John E. Menario 58 Senior Executive Vice President and Chief Operating
Officer of Peoples Heritage Financial Group, Inc., a
multi-bank holding company, since 1988. Mr. Menario
has been a Director since 1980.
Jane E. Newman 48 President of Coastal Broadcasting Corporation, owner
of WZEA Radio, Hampton, New Hampshire, since 1991;
Assistant to the President of the United States for
Management and Administration from 1989 to 1991; and
President of the New England Business Council since
1988. Ms. Newman is also a director of Perini Corp.
and Public Service Company of New Hampshire, and has
been a Director of the Company since 1993.
John E. Palmer, Jr. 57 Chairman of the Board of Cape Shore, Inc., a
manufacturer and wholesaler of stationery and
handcrafted gifts. Mr. Palmer has been a Director
since 1978.
Elaine D. Rosen 41 Senior Vice President, Employee Benefits Disability of
UNUM Life Insurance Company of America since 1990,
with responsibility for UNUM's Long Term and Short
Term Disability businesses, which employ approximately
800 employees and have an annual budget in excess of
$200 million; and Senior Vice President, Long Term
Disability, UNUM Life Insurance Company of America,
from 1988 to 1990. Ms. Rosen has been a Director since
1993.
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NAME OF NOMINEE AGE INFORMATION ABOUT NOMINEE
- ----------------------------- --- ------------------------------------------------------
William B. Russell 60 Private trustee and real estate consultant since 1993.
Formerly President of Fifty Associates, a real estate
investment firm. Mr. Russell has been a Director since
1970.
John H. Schiavi 53 President of Schiavi Enterprises, holding company for
entities involved in the ownership and operation of
nursing homes and the ownership of real estate. Mr.
Schiavi has been a Director since 1983.
John W. L. White 70 Retired; Vice Chairman of the Board of the Company;
formerly Chairman of the Board and Chief Executive
Officer, from 1981 to 1984, and President, from 1966
to 1981, of the Company. Mr. White has been a Director
since 1957.
In addition to an Executive Committee, the Board of Directors has
established an Audit Committee, a Compensation Committee, a Retirement Committee
and a Board Evaluation Committee. The Executive Committee, whose current members
are Directors Haynes (chairman), Elia, Hastings, Menario and Payson, serves as a
Nominating Committee, and, as such, will consider recommendations of
shareholders. Recommendations should be submitted in writing to the Secretary of
the Company. During 1993, there were 11 meetings of the Board of Directors, one
meeting of the Executive Committee, four meetings of the Audit Committee, three
meetings of the Compensation Committee, one meeting of the Retirement Committee
and one meeting of the Board Evaluation Committee.
The Audit Committee reviews with the auditors the scope and results of the
audit, Company and subsidiary financial statements and internal accounting and
control procedures and recommends to the full Board the engagement or discharge
of independent auditors. Current members of the Audit Committee are Directors
Palmer (chairman), Elia, Ketchum and Newman. The Compensation Committee, which
currently consists of Directors Ketchum (chairman), Palmer, Payson, Rosen and
White, makes recommendations to the Board of Directors with respect to officer
and key employee compensation and also administers the Company's various
incentive compensation plans. The Retirement Committee makes recommendations to
the full Board with respect to retirement plans and also administers the
Company's Retirement Plan and the Employee 401(k) Savings Plan and Trust. The
Retirement Committee's current members are Directors Menario (chairman),
Russell, Schiavi and White. The Board Evaluation Committee reviews the
performance of the Board of Directors. The Committee's current members are
Directors Ketchum (Chairman), Hastings, Menario, Newman and Rosen.
Management does not know of any nominee who will be unable to serve, but,
if any nominee should be unable to serve, the proxies may be voted with
discretionary authority for a substitute or substitutes designated by the Board.
REQUIRED VOTE FOR MATTERS TO BE ACTED UPON AT ANNUAL MEETING
With respect to the election of directors, both the bylaws of the Company
and Maine law provide that those candidates receiving the greatest number of
votes cast at a meeting of shareholders duly called and at which a quorum is
present shall be deemed elected. Unless otherwise provided in the bylaws, under
Maine law, a majority of the shares entitled to vote thereat shall constitute a
quorum at a meeting of shareholders. The Bylaws of the Company provide that at
any meeting of the shareholders, a majority of the shares entitled to vote,
issued and outstanding, represented by shareholders of record, in person or
proxy, shall constitute a quorum. As a consequence of these provisions and the
prior action of the Board of Directors in establishing 11 as the number of
Directors to serve following the annual meeting of shareholders, those 11
nominees for
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Director receiving the greatest number of votes shall be deemed elected,
regardless of whether they receive a majority of the votes cast. Abstentions and
broker non-votes will be treated as not voting for the election of Directors and
will have no effect in determining the Directors receiving the most affirmative
votes.
As to matters other than the election of Directors that may be brought
before the annual meeting, Maine law provides that any corporate action to be
taken at a shareholders' meeting at which a quorum is present shall be
authorized by a majority of the votes cast by the holders of shares entitled to
vote on the subject matter, except to the extent that a greater vote is required
by the corporation's articles or bylaws. The bylaws of the Company provide that
the affirmative vote of the holders of a majority of the shares represented at a
meeting of shareholders (provided a quorum is present) shall decide any question
brought before the shareholders. As to matters other than the election of
directors, abstentions and broker non-votes will be treated as not voting for
such matter and will have the same effect as a vote against the matter brought
before the shareholders at the annual meeting.
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Persons known to be the beneficial owners of more than 5% of the Company's
common shares as of March 14, 1994 are as follows:
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ---------------------------- ----------------- --------
Compagnie Generale des Eaux 1,575,738 shares 19.4%
52 Rue D'Anjou
75384 Paris, France
The amount listed in the above table is based upon statements on Schedule
13-D and Forms 4 and 5 filed with the Securities and Exchange Commission (the
"Commission") by Compagnie Generale des Eaux ("CGE") and includes 8,935 shares
which CGE has an option to acquire at the market price and 60,000 shares held by
a subsidiary of CGE. The remaining shares listed as being owned by CGE are held
by it directly. As the result of an agreement entered into in connection with
the 1986 acquisition of common shares from certain of the Company's shareholders
by a subsidiary of CGE, the Company obtained certain rights of first refusal
with respect to shares now held by CGE, and, in return, granted certain rights
to CGE to register the Consumers shares which it acquired or might acquire in
the future for public resale, as well as the right to nominate a person to serve
on the Company's Board of Directors, commencing with the 1987 annual meeting of
shareholders. The right to nominate a person to serve on the Board is subject to
certain limitations. Claudio Elia, an officer of a subsidiary of CGE, has been
nominated for election as a Director of the Company pursuant to the agreement
with CGE.
The following table sets forth the beneficial ownership of the Company's
common shares by the Directors, nominees and executive officers of the Company
named in the Summary Compensation Table below (the "named executive officers"),
determined in accordance with applicable regulations of the Commission. The
number of shares reflected may include shares held in the name of a spouse,
minor child or certain other relatives sharing the same home as the Director or
officer, or held by the Director or officer or spouse of the Director or
officer, as a trustee or as a custodian for minor children, as to all of which
beneficial ownership is disclaimed by the respective Directors and officers
except as otherwise noted below, as well as shares held in the Company's various
employee plans and shares which the Directors or officers currently have the
right to acquire through the exercise of options. Mr. Haynes currently has the
right to acquire 8,050
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common shares, Mr. Schumann currently has the right to acquire 5,875 shares, Mr.
Isacke currently has the right to acquire 4,000 shares, Mr. Noran currently has
the right to acquire 2,920 shares, and all Directors and executive officers as a
group have the right to acquire 27,178 shares pursuant to the exercise of
options. In accordance with applicable regulations of the Commission, such
shares have been included in the amounts listed below.
AMOUNT OF
BENEFICIAL PERCENT
NAME OWNERSHIP OF CLASS
- --------------------------------------- ---------- -------------
DIRECTORS AND NOMINEES
Claudio Elia 100 Less than 1%
David R. Hastings, II 36,311 Less than 1%
Peter L. Haynes 21,472 Less than 1%
Jack S. Ketchum 3,075 Less than 1%
John E. Menario 1,173 Less than 1%
Jane E. Newman 209 Less than 1%
John E. Palmer, Jr. 3,767 Less than 1%
Eliot B. Payson(1) 36,388 Less than 1%
Elaine D. Rosen 100 Less than 1%
William B. Russell 3,567 Less than 1%
John H. Schiavi 14,281 Less than 1%
John W. L. White 23,854 Less than 1%
NAMED EXECUTIVE OFFICERS
Paul D. Schumann(2) 13,455 Less than 1%
John F. Isacke 12,779 Less than 1%
Paul F. Noran 9,146 Less than 1%
ALL DIRECTORS AND EXECUTIVE OFFICERS 188,632 2.3%
- ------------------------------------
(1) Mr. Payson will not stand for re-election at the 1994 Annual Meeting due to
Board's retirement policy.
(2) Mr. Schumann also beneficially owns 80 common shares of Garden State Water
Company, a subsidiary of the Company, which represents less than 1% of the
issued and outstanding common shares of Garden State.
OTHER EXECUTIVE OFFICERS
In addition to Mr. Haynes, the other executive officers of the Company,
their names, ages, positions with the Company, terms of office and the periods
during which they have served, are set forth in the following table:
POSITIONS AND OFFICES TERM OF SERVED AS
NAME AGE WITH THE COMPANY OFFICE OFFICER SINCE
- --------------------------------- --- ------------------------------ --------- -------------
Paul D. Schumann 45 Senior Vice President -- One Year 1987
Operations
John F. Isacke 40 Senior Vice President -- Chief One Year 1978
Financial Officer
Paul F. Noran 50 Vice President -- Engineering One Year 1979
Brian R. Mullany 48 Vice President and Secretary One Year 1978
Jerry D. Snellen 54 Vice President -- Information One Year 1987
Systems
Robert E. Ervin 33 Vice President and Treasurer One Year 1994
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Prior to becoming the Vice President and Treasurer of the Company, Mr.
Ervin was Accounting Manager and Treasurer of Inter-State Water Company, a
subsidiary of the Company located in Danville, Illinois which serves
approximately 16,800 customers. As Accounting Manager and Treasurer of
Inter-State, Mr. Ervin was responsible for the accounting and financial
management functions of that company.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION.
The following table shows, for fiscal years ending December 31, 1991, 1992
and 1993, the cash compensation paid by the Company and its subsidiaries, as
well as certain other compensation paid or accrued for those years, to each of
the four most highly compensated executive officers of the Company whose 1993
total annual salary and bonuses exceeded $100,000, as calculated pursuant to
rules promulgated by the Commission, in all capacities in which they served:
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
SALARY OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) BONUS($)(1) SARS(#) ($)(2)
- ----------------------------------------- ---- ------- ----------- ------------ ------------
Peter L. Haynes, 1993 198,000 17,070 2400 15,547(3)
President 1992 103,385 0 5000 53,455(4)
Paul D. Schumann, 1993 137,423 6,150 1600 4,640(5)
Senior Vice President 1992 124,346 19,591 1600 8,240(6)
1991 112,992 11,441 1300 11,840(7)
John F. Isacke, 1993 132,402 6,150 1600 1,040
Senior Vice President 1992 119,445 18,795 1300 1,040
1991 112,992 11,441 1300 1,040
Paul F. Noran, 1993 110,907 2,640 1000 1,040
Vice President-Engineering 1992 102,269 12,894 1000 1,040
1991 97,326 13,337 800 1,040
- ------------------------------------
(1) Bonuses for 1993 were awarded under the Company's 1993 Incentive
Compensation Plan under which bonuses may be awarded to any of the regular,
full time employees of the Company or its subsidiaries. Bonuses for prior
years were awarded pursuant to the Company's 1988 Stock Bonus Plan, under
which regular, full-time employees of the Company and its subsidiaries were
eligible to receive bonuses in cash and/or common shares of the Company.
(2) For all officers, except Mr. Haynes, includes a $1040 matching contribution
in each year under the Company's 401(k) Employees Savings Plan and Trust.
Under this Plan, participants may elect to have their employer contribute a
portion of their compensation to the Plan instead of having such amounts
paid as salary. The Company makes matching contributions, determined in
accordance with a specific formula and subject to certain limits, on behalf
of all employees who participate in the Plan.
(3) Reimbursement of moving expenses paid to Mr. Haynes pursuant to an
employment agreement entered into prior to Mr. Haynes becoming President and
Chief Executive Officer of the Company on August 5, 1992. See below under
"Board Compensation Committee Report."
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(4) Includes $50,000 paid to Mr. Haynes to compensate him for the business he
relinquished by joining the Company and $3,455 paid to Mr. Haynes for
temporary living accommodations and travel expenses during the first two
months of his employment by the Company. See below under "Board Compensation
Committee Report."
(5) Includes $1040 matching contribution under the Company's 401(k) Employee
Savings Plan and Trust and $3,600 cost of living adjustment paid to Mr.
Schumann in connection with his move to the Portland area in 1987 to become
an officer of the Company.
(6) Includes $1,040 matching contribution under the Company's 401(k) Employees
Savings Plan and Trust, and $7,200 cost of living adjustment paid to Mr.
Schumann in connection with his move to the Portland area in 1987 to become
an officer of the Company.
(7) Includes $1040 matching contribution under the Company's 401(k) Employee
Savings Plan and Trust and $10,800 cost of living adjustment paid to Mr.
Schumann in connection with his move to the Portland area in 1987 to become
an officer of the Company.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options under the Company's 1988 Incentive Stock Option Plan to the named
executive officers during the last fiscal year. The Company has not granted
stock appreciation rights to any executive officer.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZED VALUE
AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
------------------------------------------------------------------------ STOCK PRICE
NUMBER OF APPRECIATION
SECURITIES % OF TOTAL FOR OPTION
UNDERLYING OPTIONS/SARS TERM(3)
OPTIONS/SARS GRANTED TO EMPLOYEES EXERCISE OR BASE -----------------
NAME GRANTED(#)(1) IN FISCAL YEAR PRICE ($/SH)(2) EXPIRATION DATE 5%($) 10%($)
- ------------------- ------------ -------------------- ---------------- --------------- ------ ------
Peter L. Haynes 2,400 7.0% 18.25 3/2/98 12,102 26,740
Paul D. Schumann 1,600 4.6% 18.25 3/2/98 8,068 17,827
John F. Isacke 1,600 4.6% 18.25 3/2/98 8,068 17,827
Paul F. Noran 1,000 2.9% 18.25 3/2/98 5,042 11,142
- ------------------------------------
(1) The options granted will become exercisable in cumulative installments to
the extent of not more than 50% of the number of shares covered thereby
within the first year of the term thereof and to the extent of not more than
an additional 25% within each of the second and third years of the term
thereof. None of the options has tandem rights.
(2) The exercise prices for the options granted were, in each case, 100% of the
fair market value of the common shares on the date of grant.
(3) These amounts represent assumed rates of appreciation only. Actual gains, if
any, on stock option exercises will depend on overall market conditions and
on the future performance of the Company and its common shares.
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OPTIONS EXERCISES AND HOLDINGS.
The following table sets forth information with respect to the exercise of
options by the named executive officers during the last fiscal year and
unexercised options held by such officers as of the end of the fiscal year. The
Company has not granted stock appreciation rights to any executive officer.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FY-END OPTION/SAR VALUE
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END(#) AT FY-END($)
SHARES ACQUIRED VALUE ------------- -------------
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------- --------------- -------- ------------- -------------
Peter L. Haynes 0 0 4,950/2,450 0/0
Paul D. Schumann 600 1,350 4,875/1,200 1,575/0
John F. Isacke 600 900 4,725/1,125 1,650/0
Paul F. Noran 500 1,250 2,720/750 670/0
PENSION PLANS
The following table shows the estimated annual pension benefit payable to a
covered participant at normal retirement age under the Company's qualified
defined benefit pension plan, based on remuneration that is covered under the
plan and years of service with the Company and its subsidiaries:
PENSION PLAN TABLE
5 YEAR AVERAGE 15 20 25 30 35
ANNUAL EARNINGS YEARS YEARS YEARS YEARS YEARS
--------------------------------- ------- ------- ------- ------- -------
$100,000......................... $22,500 $30,000 $37,500 $45,000 $52,500
$125,000......................... $28,125 $37,500 $46,875 $56,250 $65,625
$150,000 (and above)............. $33,750 $45,000 $56,200 $67,500 $78,750
The Company's pension plan provides that upon reaching the normal
retirement age of 65, a covered employee's pension is to be the equivalent of a
single life annuity in an amount equal to the sum of 1.5% of the employee's
average compensation over the five consecutive years of service which will
produce the highest average, multiplied by the lesser of the employee's years of
service or 35. Compensation for purposes of the pension plan is equal to a
covered employee's annual salary as of January 1 in any year. Under the Internal
Revenue Code, effective January 1, 1994, the maximum annual compensation that
may be considered in determining benefits under the pension plan is limited to
$150,000 to be indexed for inflation, after 1993. Covered compensation for the
named executive officers for 1993 was: Mr. Haynes: $180,000; Mr. Schumann:
$127,000; Mr. Isacke: $121,500 and Mr. Noran: $104,000. The estimated years of
service for each named executive is as follows: Mr. Haynes: two years; Mr.
Schumann: 22 years; Mr. Isacke: 16 years and Mr. Noran: 15 years.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
Mr. White, who was an officer of the Company prior to 1984, served as a
member of the Compensation Committee of the Company's Board of Directors during
the last completed fiscal year.
There are no Compensation Committee interlocks.
EMPLOYMENT CONTRACTS AND AGREEMENTS WITH OFFICERS AND DIRECTORS.
The Company has an insurance policy which, among other things, provides
indemnification to each Director and officer of the Company from and against any
liabilities incurred in connection with registration statements under the
Securities Act of 1933, as amended. The Company paid all of the $145,388 annual
premium for 1993. In addition, the Company has purchased a $100,000 accidental
death and dismemberment insurance policy for each Director, payable to a
beneficiary of that Director's choice. The Company paid all of the $64 aggregate
annual premiums on such policies for 1993.
The Company has also entered into indemnification agreements with each of
its Directors and executive officers. The form and execution of such
indemnification agreements were approved by shareholders at the Company's 1989
annual meeting. Each indemnification agreement requires the Company to indemnify
the Director or executive officer who is a party thereto to the fullest extent
permitted by applicable Maine law and requires the advance to an indemnified
Director or executive officer of litigation expenses upon receipt of a written
affirmation of the Director or officer's good faith belief that the Director or
officer's conduct was not knowingly fraudulent, deliberately dishonest or
willful misconduct. By the terms of each indemnification agreement, its benefits
are not available with respect to matters giving rise to a claim against the
indemnified Director or executive officer (a) if the Director or executive
officer has (i) violated Section 16(b) of the Securities Exchange Act of 1934 or
analogous provision of law, (ii) received remuneration or other payment in
violation of law, or (iii) engaged in conduct finally adjudged to be knowingly
fraudulent, deliberately dishonest or intentional misconduct, or (b) if a final
court decision determines that such indemnification is not lawful.
In connection with the acquisition by the Company of substantially all of
the assets of Schiavi Homes Corp. in March, 1983, the Company entered into a
noncompete agreement with Mr. Schiavi, who was a principal in and major
beneficial shareholder of Schiavi Homes Corp. The agreement, which will expire
in 1995, prohibits Mr. Schiavi from competing with the Company in the
manufacturing, sale, siting or leasing of manufactured housing. Burlington Homes
of New England, Inc., a subsidiary of the Company, leases its premises in
Oxford, Maine from Burlington Associates, a Pennsylvania general partnership in
which Mr. Schiavi was a partner during part of 1993. Lease payments during 1993
amounted to $96,000.
For a description of the employment agreement entered into with Peter L.
Haynes, the President and Chief Executive Officer of the Company, see below
under the caption "Board Compensation Committee Report -- Performance
Evaluation."
BOARD COMPENSATION COMMITTEE REPORT
In accordance with rules established by the Commission, the Compensation
Committee, at the direction of the Board of Directors, has prepared the
following report for inclusion in the Proxy Statement:
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of directors who are not currently officers of the Company.
The Committee is responsible for setting and administering the policies that
govern annual compensation of executives of the Company and the Company's
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incentive compensation and employee stock option plans. The Company's
compensation plans are designed to attract and retain key executives critical to
the long-term success of the Company.
The Committee annually evaluates the Company's corporate performance and
compensation compared with its industry group. The Compensation Committee does
not believe that comparison to the S&P 500 or any other broad market index is an
accurate measure of the Company's performance, because of the specialized nature
of the Company's primary business of owning regulated water utility companies.
In evaluating the Company's overall performance, the Committee looks to the
attainment of goals that had been set prior to the start of the year. Other
factors, discussed below, are also used in determining the compensation of the
named executive officers.
Annual compensation of the named executive officers, as well as other
senior executives, consists of a base salary, incentive compensation awarded
under the Company's 1993 Incentive Compensation Plan and long-term incentive
compensation in the form of options granted under the Company's Incentive Stock
Option Plans.
The salary ranges for each position, or group of positions, are established
based on a market survey of similar positions within the industry. The base
compensation for each named executive officer is set within the range for the
position of that officer, as indicated by the survey. The actual salary of an
officer is set within that range based on the officer's performance and
experience. The base compensation for the named executive officers listed within
the Summary Compensation Table above approximates the median compensation for
similar officers in the industry, reflecting Consumers' relative position within
the industry.
The Chief Executive Officer makes salary recommendations to the
Compensation Committee for officers of the Company other than himself in a
structured annual review. The annual review considers the decision-making
responsibilities of each position and the experience, skills and performance of
each officer. To help quantify these measures, the Committee has, from time to
time, enlisted the assistance of a compensation consultant.
After review, the Committee recommends final salary changes to the Board of
Directors, which makes the final salary decisions.
INCENTIVE COMPENSATION PROGRAM. Consumers Water Company established the
1993 Incentive Compensation Plan to reward certain employees of the Company for
achieving annual objectives in both financial and other measures. The Plan was
designed with the assistance of a compensation consultant and is based on two or
three factors, depending on whether the participant works for the Corporate
entity or a business unit. Corporate officers' target incentives are based 60%
on the attainment of net income targets, exclusive of gains on the sales of
properties and 40% on the achievement of team goals. Income targets under the
plan are based, among other criteria, upon a targeted return on equity. Awards
for the participants from subsidiary business units are based 20% on corporate
income targets, 40% on the business unit's income target and 40% on the unit's
team goals. The team goals, for both the Corporate unit and the subsidiary
units, are predominantly non-financial, such as the implementation of a quality
control management system, installation of new technology and achievement of
system growth goals.
Financial and team goals are established on the basis of historic patterns
of Company performance and strategic objectives. A performance threshold for
each measure ensures that incentive compensation is not paid for substandard
accomplishments. In addition, each measure also has a cap to limit the potential
compensation expense under the Incentive Compensation Plan. Payments are based
on the midpoint of an individual's salary range so that bonuses are not paid for
longevity.
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Awards for 1993 were paid in cash in February of 1994, subsequent to the
review by the Compensation Committee of the results achieved against targets
established prior to the year. The Board of Directors made the awards based on
the recommendations of the Compensation Committee. Each of the officers of the
Company and of its subsidiaries who are eligible to participate in the Incentive
Compensation Plan may receive an award based on the performance of their unit.
These awards are included in the Summary Compensation Table for 1993 under the
column "Bonus."
LONG-TERM INCENTIVE COMPENSATION. The Company's 1993 Incentive Stock
Option Plan was approved by shareholders at the 1993 Annual Meeting. The Plan is
substantially similar to prior incentive stock option plans approved by the
Company's shareholders. Incentive Stock Options awarded during the last three
calendar years are included in the Summary Compensation Table under the heading
"Long Term Compensation Awards -- Securities Underlying Options/SARS." Stock
appreciation rights are not awarded by the Company. Options, including those
awarded to Peter L. Haynes, the Company's Chief Executive Officer, are awarded
based on the recipient's level of responsibility within the Company and the
recipient's ability to influence Company performance and are designed to provide
eligible employees with a greater personal interest in the success of the
Company.
PERFORMANCE EVALUATION. Each year the Committee meets with the Chief
Executive Officer to evaluate his performance, using input from the rest of the
Board, and reports on that evaluation to the independent directors. The Chief
Executive Officer and the Committee evaluate the performance of the rest of the
executive officers and recommend salary adjustments to the full Board.
The Chief Executive Officer of the Company, Peter L. Haynes, was elected on
August 5, 1992 to succeed John van C. Parker, who retired at that time. Mr.
Haynes' compensation during 1993 was paid pursuant to an Agreement entered into
between the Company and Mr. Haynes prior to his becoming President of the
Company. The Agreement was negotiated on behalf of the Company by a Committee of
directors who were not officers of the Company. The Agreement has a two year
term, and provided for Mr. Haynes to receive a salary at an annual rate of
$180,000 through May 1, 1993, subject to adjustment thereafter, provided that
Mr. Haynes' annual salary during the term of the Agreement would not be less
than $180,000, as adjusted for inflation. In the event that Mr. Haynes'
employment with the Company is terminated for any reason, other than an illegal
act or willful misconduct, Mr. Haynes is to continue to receive the base salary
provided for under the contract, as adjusted for inflation, during its remaining
term. During 1993 the Committee voted to increase Mr. Haynes' base salary to
$196,000. The Committee's decision to increase Mr. Haynes' base salary was based
on his having met the Committee's expectations, including the introduction of
new programs and the revitalization of the management group. The increase was
also consistent with other increases provided under the Company's new salary
Plan, which takes into account the participant's performance as well as his or
her position within the participant's salary range.
In February of 1994, the Committee voted to pay Mr. Haynes a bonus of
$17,070 under the Company's 1993 Incentive Compensation Plan. The bonus awarded
to Mr. Haynes, which amounted to 8.7% of his base salary, was based on the
attainment of three-quarters of the 40% allocated to the Company's Team Goals,
which were non-financial business goals. The Company did not meet its overall
financial goals and, thus, no bonus was awarded to executive officers based on
financial goals.
COMPENSATION DEDUCTION LIMIT. Under the Revenue Reconciliation Act of
1993, publicly-held companies are limited to a maximum deduction for federal
income tax purposes of $1 million per year for "applicable employee
remuneration" paid to each "covered employee." Covered employees for the Company
are those listed in the "Summary Compensation Table" above and "applicable
employee remuneration"
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includes salary and bonus. Applicable employee remuneration also includes (1)
any gain recognized by an employee who, prior to expiration of the holding
period to receive favorable income tax treatment, sells or otherwise disposes of
Company shares acquired pursuant to the exercise of an option granted under
either the 1988 Incentive Stock Option Plan or the 1993 Incentive Stock Option
Plan and (2) the difference between the consideration paid by an employee and
the fair market value at the time of exercise of Company shares acquired
pursuant to the exercise of an option issued pursuant to the 1993 Incentive
Stock Option Plan which includes a provision that such option is not an
incentive stock option for purposes of the Internal Revenue Code. The Committee
has no current intention of issuing options under the 1993 Incentive Stock
Option Plan containing a provision that such option is not an incentive stock
option for tax purposes.
As noted above, bonuses payable under the Company's 1993 Incentive
Compensation Plan are capped to limit the potential compensation expense to the
Company under that Plan. The Company's 1993 Incentive Stock Option Plan,
approved by shareholders at the 1993 Annual Meeting, limits the maximum number
of shares subject to options which may be granted to any one employee during the
life of the Plan to 25,000. Even though the ultimate value of outstanding
options cannot be calculated as it is dependent on future changes in the market
price of the Company's common shares, given the limits on the number of options
which may be granted and the amount of bonuses payable to employees, and given
the expected base compensation levels for covered employees, it is extremely
unlikely that the $1 million per covered employee maximum deduction would be
exceeded in the foreseeable future. In the event that the $1 million per covered
employee maximum deduction were exceeded, the Company would not receive a
deduction for federal income tax purposes for the amount of applicable employee
remuneration which exceeded that amount.
Jack S. Ketchum John E. Palmer, Jr.
Chairman, Compensation Committee Member, Compensation Committee
Eliot B. Payson Elaine D. Rosen
Member, Compensation Committee Member, Compensation Committee
John W. L. White
Member, Compensation Committee
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PERFORMANCE GRAPH
The following is line graph presentation comparing cumulative, five-year
returns (assuming the reinvestment of dividends) on an indexed basis of the
Company's common shares with the S&P 500 Stock Index and an index of
investor-owned water utility companies published by Edward D. Jones & Co.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
COMPANY, S&P 500 AND EDWARD D. JONES & CO.
INVESTOR-OWNED WATER UTILITY INDEX
MEASUREMENT PERIOD WATER UTILITY
(FISCAL YEAR COVERED) CONSUMERS INDEX S&P 500
1988 100.0 100.00 100.00
1989 96.9 107.6 131.6
1990 82.9 92.4 127.5
1991 135.5 139.2 166.3
1992 106.7 109.4 178.9
1993 103.3 114.7 197.0
DECEMBER 31,
----------------------------------------------------
1988 1989 1990 1991 1992 1993
------- ------- ------- ------- ------- -------
Consumers.............................. $ 100.0 $ 96.9 $ 82.9 $ 135.5 $ 106.7 $ 103.3
Water Utility Index.................... 100.0 107.6 92.4 139.2 109.4 114.7
S&P 500................................ 100.0 131.6 127.5 166.3 178.9 197.0
DIRECTOR COMPENSATION
Each Director is paid a retainer of $10,000 per annum. The Chairman of the
Board receives an additional $5,000 per year retainer for serving as such. In
addition, each Director receives $500 per meeting for each meeting of the Board
of Directors attended, and $500 for each committee meeting attended unless such
meeting is on the same day as a Board meeting, in which case Directors are paid
$300 for attending. Committee chairmen receive an additional $250 per meeting,
or $150 per meeting if the meeting occurs on the day there is a Board meeting.
Directors who are employed by the Company or a subsidiary are not paid an annual
retainer or meeting fees. All non-employee Directors receive travel expenses for
attending Board meetings and committee meetings.
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The Board of Directors has established two Deferred Compensation Plans for
Directors. One plan allows the deferral of all or a specified portion of a
Director's annual retainer and meeting fees with interest to be paid thereon at
a rate equal to the annual rate of return on the Company's common equity.
Amounts deferred under this plan may be paid only upon a date fixed in advance
of any deferral, or after a director ceases to serve as such or as an employee
of the Company. The second Plan allows the deferral of all or a specified
portion of a Director's retainer and fees with interest to be paid thereon at a
fixed rate based upon an announced bond index rate. The rate applicable under
this Plan averaged approximately 9.5% for 1993. Amounts deferred under the
second Plan are to be paid when a Director ceases to serve as such. Under
certain circumstances, the Committee appointed by the Board to administer this
Plan may provide for earlier payments upon the request of a Director. Generally,
payments of the amounts deferred under the second Plan will be made in equal
monthly installments over a period of ten years, unless the Committee upon the
request of a Director provides for payments over a shorter period of time or in
a lump sum. Each of the Plans is unfunded, with the rights of Directors who
participate being no greater than those of unsecured creditors. Elections under
each of the Plans must be made before the end of any year and will be effective
for the following year.
COMPLIANCE WITH BENEFICIAL OWNERSHIP REPORTING RULES
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors and persons who own more than 10% of a registered class
of the Company's equity securities to file reports of ownership and changes in
ownership with the Commission. Such officers, Directors and shareholders are
required by Commission regulations to furnish the Company with copies of all
such reports that they file.
Based solely on a review of copies of reports filed with the Commission
since December 31, 1992, and of written representations by certain officers and
Directors, all persons subject to the reporting requirements of Section 16(a)
filed the required reports on a timely basis, except as disclosed in the
Company's Proxy Statement in connection with the 1993 Annual Meeting, and except
that Compagnie Generale des Eaux filed one form in connection with a single
purchase of the Company's shares ten days late, Robert E. Ervin filed an initial
report in connection with his election as Vice President and Treasurer of the
Company in January of 1994 after the deadline therefor, and Jack S. Ketchum
filed late one annual form with respect to purchases during 1993 under the
Company's Dividend Reinvestment and Common Share Purchase Plan.
APPOINTMENT OF AUDITORS
The Board of Directors has appointed Arthur Andersen & Co. as independent
public accountant to audit the accounts of the Company for the fiscal year
ending December 31, 1994. Arthur Andersen & Co., which began auditing the
accounts of the Company in 1976, audited the accounts of the Company for the
fiscal year ended December 31, 1993. A representative of Arthur Andersen & Co.
is expected to be available at the Annual Meeting to respond to appropriate
questions and to make a statement on behalf of Arthur Andersen & Co. if he or
she so desires.
OTHER BUSINESS
Management is not aware of any matters to be presented for action at the
meeting other than those specified in the Notice of Annual Meeting and the
presentation of the annual report of the financial condition of the Company. No
action constituting approval or disapproval of any of the matters referred to in
said report is contemplated. However, if any other matters legally come before
the meeting, the persons named in the
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enclosed form of proxy intend to exercise the discretionary power conferred by
the proxy and to vote the proxy in accordance with their judgment on such
matters.
EXPENSES OF SOLICITATION
The cost of the solicitation of proxies for the Annual Meeting will be paid
by the Company. Brokerage houses, nominees, fiduciaries and other custodians
will be requested to forward soliciting material to beneficial owners of shares
held of record by them and will be reimbursed for their expenses. In addition to
solicitation by mail, in a limited number of instances, regular employees of the
Company may solicit proxies in person or by telegraph or telephone. Such persons
will receive no additional compensation for such services.
PROMPT RETURN OF PROXY REQUESTED
Shareholders are requested to indicate voting instructions on the enclosed
proxy, date, sign it and return it promptly in the accompanying envelope. No
postage is required if mailed in the United States. The proxy is revocable until
exercised; accordingly, shareholders who are present at the meeting, may
withdraw their proxies and vote, if they so desire, in person.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented to next year's Annual
Meeting of Shareholders, scheduled for May 3, 1995, must be received by the
Company by December 1, 1994 for inclusion in the Company's proxy material
relating to that meeting.
By Order of the Board of Directors
BRIAN R. MULLANY
Clerk
March 31, 1994
PLEASE NOTE ANY CHANGES IN ADDRESS ON THE ENCLOSED PROXY.
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, IS
AVAILABLE WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST TO BRIAN R.
MULLANY, SECRETARY, CONSUMERS WATER COMPANY, P.O. BOX 599 DTS, PORTLAND, MAINE
04112. COPIES OF THE EXHIBITS TO THE REPORT, WHICH ARE VOLUMINOUS, WILL BE
FURNISHED UPON THE PAYMENT OF A REASONABLE FEE TO OFFSET THE COST OF
REPRODUCTION AND MAILING.
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CONSUMERS WATER COMPANY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 4, 1994
The undersigned, hereby revoking any proxy heretofore given, hereby appoints
David R. Hastings, II, Jack S. Ketchum and John W.L. White, and of them
severally, proxies of the undersigned, with full power of substitution, to vote
as indicated below all common shares and shares of Cumulative Preferred Stock,
Series A of Consumers Water Company which the undersigned would be entitled to
vote if personally present at the annual meeting of the shareholders of the
Company to be held at South Portland, Maine, on May 4, 1994, and any
adjournments thereof.
The Board of Directors recommends a vote FOR Proposal 1.
1. Election of Directors.
NOMINEES: Claudio Elia, David R. Hastings, II, Peter L. Haynes, Jack S.
Ketchum, John E. Menario, Jane E. Newman, John E. Palmer, Jr., Elaine D. Rosen,
William B. Russell, John H. Schiavi, John W.L. White
[ ] FOR all nominees listed above [ ] AGAINST all nominees listed above
[ ] For election of Directors, except vote witheld from the following
nominee(s):
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(continued, and to be signed and dated, on the other side)
DISCRETIONARY AUTHORITY IS HEREBY CONFERRED UPON THE PROXIES WITH
RESPECT TO SUCH OTHER MATTERS AS MAY LEGALLY COME BEFORE THE MEETING. IF NO
INSTRUCTION IS SPECIFIED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED
FOR THE ELECTION OF DIRECTORS.
Please check here if you plan to attend the meeting [ ]
Dated , 1994
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Signature
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Signature
Please sign proxy exactly as name appears.
Joint owners should each sign personally.
Trustees and other fiduciaries should so
indicate when signing and where more than
one name appears, a majority must sign.