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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
[X] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of 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
BIW LIMITED
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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BIW LIMITED
230 BEAVER STREET
ANSONIA, CT 06401-0426
April 7, 2003
Dear Fellow Stockholder:
You are cordially invited to attend the annual meeting of stockholders of BIW
Limited, which we will hold at 2:00 p.m., local time, on Wednesday, May 7, 2003
at the New Haven Lawn Club, 193 Whitney Avenue, New Haven, Connecticut 06511.
Company officials will be available at 1:30 p.m. should you wish to arrive
early. At the annual meeting, we will ask you to elect ten nominees to serve on
our Board of Directors for the ensuing year and ratify the selection of Dworken,
Hillman, LaMorte & Sterczala, P.C. as our independent auditors for the year
ending December 31, 2003.
Only stockholders of record who hold shares of BIW Limited common stock at the
close of business on March 10, 2003, the record date for the annual meeting,
will be entitled to vote at the annual meeting. A list of stockholders entitled
to vote will be kept at the offices of BIW Limited, 230 Beaver Street, Ansonia,
Connecticut, for the ten days prior to the annual meeting.
It is important that your shares be represented and voted at the annual meeting,
whether or not you are able to attend personally. You are therefore urged to
complete, sign, date, and return the enclosed proxy card promptly in the
accompanying envelope, which requires no postage if mailed in the United States.
You are, of course, welcome to attend the meeting and vote in person, even if
you have previously returned your proxy card. I look forward to your support.
Sincerely,
/s/ John S. Tomac
President
BIW LIMITED
----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------------------
Notice is hereby given that the Annual Meeting of Stockholders of BIW
Limited (the "Company") will be held on Wednesday, May 7, 2003 at 2:00 p.m., at
the New Haven Lawn Club, 193 Whitney Avenue, New Haven, Connecticut 06511, for
the following purposes:
(1) To elect ten directors of the Company to serve for the ensuing
year;
(2) To consider and vote on the approval of Dworken, Hillman,
LaMorte & Sterczala, P.C. as the Company's independent auditors
for the year ending December 31, 2003; and
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Stockholders of record at the close of business on March 10, 2003 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. All stockholders are cordially invited to attend the Annual Meeting in
person. Stockholders who are unable to attend the Annual Meeting in person are
requested to complete and date the enclosed form of proxy and return it promptly
in the envelope provided. No postage is required if mailed in the United States.
Stockholders who attend the Annual Meeting may revoke their proxy and vote their
shares in person.
By Order of the Board of Directors
John S. Tomac
PRESIDENT
Ansonia, Connecticut
April 7, 2003
BIW LIMITED
230 BEAVER STREET
ANSONIA, CT 06401-0426
-----------------------
PROXY STATEMENT
-----------------------
GENERAL INFORMATION
PROXY SOLICITATION
This proxy statement and the accompanying proxy card are furnished to the
holders of common stock of BIW Limited in connection with the solicitation of
proxies for use at the annual meeting of stockholders to be held on Wednesday,
May 7, 2003, or at any adjournment of the annual meeting. The purposes of the
meeting and the matters to be acted upon are described in the accompanying
Notice of Annual Meeting of Stockholders.
Proxies for use at the meeting are being solicited by BIW Limited. Proxies
will be mailed to stockholders on or about April 7, 2003 and will be solicited
chiefly by mail. We will make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy material to the
beneficial owners of the shares and will reimburse them for their expenses in so
doing. Should it appear desirable to do so in order to ensure adequate
representation of shares at the meeting, our officers, agents and employees may
communicate with stockholders, banks, brokerage houses and others by telephone,
e-mail, facsimile, or in person to request that proxies be furnished. We will
pay all expenses incurred in connection with this solicitation.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the annual meeting and a return envelope for the
proxy are enclosed. Stockholders may revoke the authority granted by their
execution of proxies at any time before their effective exercise by filing with
our Secretary a written notice of revocation or a duly executed proxy bearing a
later date, or by voting in person at the meeting. Shares of common stock
represented by executed and unrevoked proxies will be voted in accordance with
the choice or instructions specified. If no specifications are given, the
proxies intend to vote the shares represented to approve Proposals No. 1 and 2
as described in the accompanying Notice of Annual Meeting of Stockholders and in
accordance with their best judgment on any other matters which may properly come
before the meeting.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on March 10, 2003 are
entitled to notice of and to vote at the annual meeting or any adjournment of
the annual meeting. On March 10, 2003 there were 1,637,076 shares of common
stock outstanding. Each share is entitled to one vote on each of the matters to
be presented at the annual meeting. The holders of a majority of the outstanding
shares of common stock, present in person or by proxy, will constitute a quorum
at the annual meeting. Abstentions and broker non-votes will be counted for
purposes of determining the presence or absence of a quorum. "Broker non-votes"
are shares held by brokers or nominees which are present in person or
represented by proxy, but which are not voted on a particular matter because
instructions have not been received from the beneficial owner. Under Connecticut
law, the effect of broker non-votes on a particular matter depends on whether
the matter is one as to which the broker or nominee has discretionary voting
authority under the applicable rule of the American Stock Exchange. The effect
of broker non-votes on the specific items to be brought before the annual
meeting is discussed under each item.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Our By-laws provide for not less than seven nor more than fifteen directors
to be elected at the Annual Meeting of Stockholders, each to serve for the
ensuing year and until his or her successor is elected and has qualified. The
Board of Directors currently consists of ten persons. Each person named below is
now a director of BIW Limited. All nominees have consented to be named and have
indicated their intent to serve if elected. BIW Limited has no reason to believe
that any of the nominees will be unable to serve or that any vacancy on the
Board of Directors will occur. In the event any of these nominees will be unable
to serve as a director, the shares represented by the proxy will be voted for
the person, if any, who is designated by the Board of Directors to replace the
nominee.
The nominees, their ages, the year in which each first became a director
and their principal occupations or employment during the past five years are:
Year First Principal Occupation
Nominee Age Became Director During the Past Five Years
------- --- --------------- --------------------------
Michael J. Adanti 62 2000 President, Southern Connecticut State
University, since 1984.
Mary Jane Burt 49 2000 Associate, H. Pearce, Real Estate
Company; Principal, The Laurel Group
(Business Consultants) since 1998.
Previously Director, INSITE ONE;
President, Burt Medical Lab (1984-1998).
James E. Cohen 56 1982 Lawyer in private practice in Derby, CT
since 1971; Attorney Trial Referee for
the Connecticut Superior Court since
1996.
Betsy Henley-Cohn 50 1981 Chairwoman of the Board of Directors of
the Company since 1992;
Chairperson/Treasurer, Joseph Cohn &
Sons, Inc. (construction
subcontractors) since 1979; Director,
UIL Holdings Corporation, since 1990;
Director, Aristotle Corp. since 1995;
Director, Citizens Bank of Connecticut
(1997-1999).
Alvaro da Silva 57 1997 President, DSA Corp. (a management
company) since 1979; President B.I.D.,
Inc. (land development and home
building company); Managing Partner,
Connecticut Commercial Investors, LLC
(a commercial real estate and
investment partnership) since 1976;
Director of Great Country Bank
(1991-1995).
Themis Klarides 37 2001 Lawyer in practice in Shelton, CT since
1998; State Representative, 114
District Connecticut General Assembly,
since 1998.
Aldore J. Rivers, Jr. 69 1986 Retired; President of the Company until
September 30, 1998
B. Lance Sauerteig 57 1996 Principal in BLS Strategic Capital,
Inc. (financial and investment advisory
company) since 1994; Principal in
Tortoise Capital Partners, LLC (real
estate investments) since 2000;
Director of United Aluminum Corporation
since 2002.
2
Kenneth E. Schaible 61 1994 Real Estate Developer and Director of
AuthX, Inc.; previously, Senior Vice
President, Webster Bank, 1995-1996;
President, Shelton Savings Bank and
Shelton Bancorp., Inc. 1972-1995.
John S. Tomac 49 1999 President of Company since October 1,
1998; Treasurer of the Company since
December 1997; previously, Vice
President of Company (December 1,
1997-September 30, 1998); Assistant
Controller, BHC Company, (1991-1997).
INFORMATION REGARDING BOARD OF DIRECTORS
BIW Limited became the holding company for Birmingham Utilities, Inc. in
June 2002. Where the context requires in this proxy statement, references to
"the Company" or "us" with respect to events prior to June 2002 refer to our
current subsidiary Birmingham Utilities, Inc.
The Board of Directors' Executive Committee consists of Ms. Henley-Cohn and
Messrs. Tomac, Rivers, Cohen and Sauerteig. The Executive Committee met seven
times in 2002. The Executive Committee reviews strategic planning alternatives
and advises the Board of Directors on financial policy, issuance of securities
and other high priority issues.
The Board of Directors' Audit Committee consists of Messrs. Schaible, da
Silva, Adanti and Ms. Burt. The Audit Committee met five times in 2002. The
Audit Committee recommends to the Board of Directors the appointment of BIW
Limited independent auditors and reviews the degree of their independence;
approves the scope of the audit engagement, including the cost of the audit;
reviews any non-audit services rendered by the auditors and the fees therefor;
reviews with the auditors and management our policies and procedures with
respect to internal accounting and financial controls and, upon completion of an
audit, the results of the audit engagement; and reviews internal accounting and
auditing procedures with our financial staff and the extent to which
recommendations made by the independent auditors have been implemented. All
members of the Audit Committee are independent as defined in the listing
standards of the American Stock Exchange. On June 13, 2000, the Board of
Directors adopted an Audit Committee Charter that meets the current requirements
of the Securities and Exchange Commission and the American Stock Exchange.
The Board of Directors' Personnel and Pension Committee consists of Messrs.
Sauerteig, Rivers, Adanti, Ms. Burt and Ms. Klarides. The Personnel and Pension
Committee met five times in 2002. The Personnel and Pension Committee reviews
executive officer compensation and proposes the same to the full Board of
Directors for action. It also proposes to the full Board overall payroll pool
levels and pension plan arrangements for all employees.
The Committee on Directors consists of Messrs. Cohen, da Silva, Schaible
and Ms. Henley-Cohn. The committee met once in 2002. That Committee makes
recommendations to the Board of Directors for Board replacements when they
become available and for compensation levels for the Board of Directors.
Ms. Henley-Cohn is an ex-officio member on all committees of the Board of
Directors on which she is not listed as a member.
In 2002 the Board of Directors held eight meetings. Each director, other
than Ms. Klarides, attended at least 75% of the aggregate number of meetings of
the full Board of Directors and any Committee(s) of the Board of Directors on
which such director served during 2002.
3
Mr. Cohen is a partner in the law firm of Cohen & Thomas, which has
represented BIW Limited and its subsidiaries on occasion in past years; BIW
Limited may continue to employ that firm on occasion in the future.
COMPENSATION OF DIRECTORS
The Company's directors, other than Ms. Henley-Cohn, Mr. Tomac and Mr.
Rivers, received an annual fee of $5,000 plus $600 for each full Board meeting
attended. Each director received $400 for each Committee meeting attended on or
prior to June 7, 2002 and $500 for each Committee meeting attended after June 7,
2002.
VOTE REQUIRED
The nominees receiving the affirmative vote of holders of a majority of the
shares of common stock issued, outstanding and entitled to vote, present or
represented at the meeting, a quorum being present, shall be elected as
directors. Broker non-votes with respect to this matter will be treated as
neither a vote "for" nor a vote "against" the matter, although they will be
counted in determining if a quorum is present. However, instructions on the
accompanying proxy card to withhold authority to vote for one or more nominees
will be considered in determining the number of votes required to attain a
majority of the shares present or represented at the meeting and entitled to
vote. Accordingly, an instruction to withhold authority by a stockholder present
in person or by proxy at the meeting has the same legal effect as a vote
"against" the nominee because it represents a share present or represented at
the meeting and entitled to vote, thereby increasing the number of affirmative
votes required to approve the nominee.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 1 - ELECTION OF DIRECTORS" TO BE
IN THE BEST INTERESTS OF BIW LIMITED AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
"FOR" APPROVAL OF THIS PROPOSAL.
EXECUTIVE COMPENSATION
RETIREMENT PLAN
Birmingham Utilities, Inc., a wholly-owned subsidiary of the Company, has a
noncontributory defined benefit plan, which covers substantially all employees.
The retirement plan generally provides a retirement benefit based upon the
participant's years of credited service and his or her final average earnings,
with final average earnings consisting of the total compensation (including
salary, bonus and overtime earnings) of the participant during the five years of
highest total compensation of the participant in the 10 years preceding the
participant's retirement or termination date. Retirement benefits are payable
either as a straight life annuity, a joint and survivor annuity or in other
optional forms. Normal retirement is at age 65, but certain early retirement
benefits may be payable to participants who have attained age 55 and completed
10 years of continuous service, and survivor benefits may be payable to the
surviving spouse of a vested participant who dies prior to early or normal
retirement. A participant's benefit under the retirement plan vests after five
years of credited service, all benefits funded by Birmingham Utilities, Inc. are
based upon actuarial computations, and no contributions are made by
participants.
The following table shows estimated annual benefits payable under the plan
to participants in specified compensation (final average earnings) and
years-of-service classifications on a straight life annuity basis, assuming
normal retirement at age 65 in 2003. The benefits listed in the following table
are not subject to any deduction for social security or other offset amounts.
4
FINAL AVERAGE YEARS OF SERVICE (B)
------------- --------------------
EARNINGS (A) 15 20 25 30 35
------------ -- -- -- -- --
125,000 24,375 32,500 40,625 48,750 56,875
150,000 29,250 39,000 48,750 58,500 68,250
175,000 34,125 45,500 56,875 68,250 79,625
200,000 39,000 52,000 65,000 78,000 91,000
(a) The current final average earnings as of December 31, 2002 for Betsy
Henley-Cohn and John S. Tomac are $66,868 and $120,576, respectively.
(b) Years of credited service under the retirement plan as of December 31,
2002 for Betsy Henley-Cohn and John S. Tomac are 7 and 5, respectively.
EMPLOYMENT CONTRACTS
John S. Tomac
-------------
Effective October 1, 1998, we entered into an employment agreement with our
President, John S. Tomac. The agreement has a three-year term with automatic
three-year extensions, unless either party gives written notice that the
agreement will no longer be automatically extended. No notice was given in 2001
and this agreement was extended to September 30, 2004. The employment agreement
terminates upon the death of Mr. Tomac or upon mutual agreement of the parties.
The agreement can be terminated by us: (i) for "cause" (as defined in the
employment agreement), (ii) in the event Mr. Tomac becomes disabled, or (iii)
without cause, during a six month period during each term; provided however,
that if Mr. Tomac is terminated without cause during such six month period, he
is entitled to receive a severance package equal to his base salary plus
benefits for one year from the date of such termination. Mr. Tomac may terminate
the agreement in the event of a Change of Control (as defined in the employment
agreement) or in the event that we breach this agreement. If Mr. Tomac elects to
terminate the agreement upon a Change of Control, he will be entitled to receive
a lump sum payment, payable within 90 days of making the election, equal to two
times the greater of (x) his compensation during the last full fiscal year
immediately preceding the election and (y) his average annual compensation with
respect to the two most recent fiscal years preceding such election. Mr. Tomac's
compensation for purposes of the foregoing calculation includes base salary,
bonus and any other cash incentives paid to him. If Mr. Tomac does not elect to
terminate the agreement upon a Change of Control, the agreement will continue in
effect for a period of three years from the Change of Control and then
terminate.
The employment agreement provides for an annual salary of $100,000 and
provides that the Board of Directors shall review Mr. Tomac's salary annually.
In addition, we agree to provide an automobile for Mr. Tomac and agree to pay
all expenses in connection with the operation of the vehicle, including fuel
expenses. Pursuant to the employment agreement, Mr. Tomac is entitled to four
weeks paid vacation, to be taken each year and is also entitled to participate
in any employee welfare and retirement plan or program available generally to
our employees including hospital, medical and dental benefits.
Under the employment agreement, we agree to indemnify Mr. Tomac to the
fullest extent possible under Connecticut law against all costs, charges and
expenses incurred by him in connection with any action, suit or proceeding to
which he may be made a party by reason of his being or having been a director,
officer or employee of the Company or his serving or having served any other
enterprise as a director, officer or employee at the request of the Company. In
addition, Mr. Tomac is entitled to the protection of any insurance policies the
Company may elect to maintain generally for the benefit of its directors and
officers with respect to such costs, charges and expenses.
5
Aldore J. Rivers, Jr.
--------------------
Effective September 30, 1998, we entered into a consulting agreement with
our former president, Aldore J. Rivers. The agreement terminated Mr. Rivers'
prior employment agreement and released him from his duties as an officer and
employee of the Company.
The consulting agreement provides that Mr. Rivers will provide consulting
services to the Company until September 30, 2003, provided that either party may
terminate the consulting arrangement upon three months written notice. Under the
agreement, Mr. Rivers provides up to 100 hours of consulting services per year
at the request of the Company and in exchange, receives $30,000 per year. Under
the agreement, Mr. Rivers also serves on the Board of Directors of the Company
and receives no additional compensation as a non-employee director.
The consulting agreement also provides Mr. Rivers with supplemental pension
benefits of $2,400 per month for fifteen years and provides that in the event of
his death during that fifteen year period, his designated beneficiaries shall
receive $1,200 per month for the remainder of the period.
EXECUTIVE OFFICERS: ANNUAL AND LONG-TERM EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation paid
or accrued by the Company to those persons who were the Chief Executive Officer
and the executive officers of the Company at the end of 2002 whose total annual
salary exceeded $100,000 (collectively, the "Named Executive Officers"), for
services rendered by them in all capacities in which they served the Company
during 2000, 2001 and 2002. The following table does not contain a column for
"Other Annual Compensation" because the amount of perquisites and other personal
benefits received by the Named Executive Officers was less than the lesser of
$50,000 or 10% of the total salary and bonus reported for each person.
SUMMARY COMPENSATION TABLE
--------------------------
ANNUAL COMPENSATION
-------------------
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS
--------------------------- ---- ---------- -----
John S. Tomac 2002 $133,233 $500
President and Director 2001 $116,600 $39,613
2000 $109,727 $ 0
Betsy Henley-Cohn 2002 $72,509 $ 0
Chairman of the Board 2001 $67,100 $20,000
and Chief Executive Officer 2000 $61,000 $ 0
No grants of stock options were made during the year ended December 31,
2002 to the named executive officers.
6
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
SHARES VALUE NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-
ACQUIRED REALIZED UNEXERCISED OPTIONS THE-MONEY OPTIONS AT FISCAL
ON EXERCISE(#) ($) AT FISCAL YEAR-END(#) YEAR-END($)(A)
-------------- --- --------------------- --------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
John. S. Tomac 3,712 $38,744 7,918 6,000 $80,498 $45,600
Betsy Henley-Cohn 0 -- 0 0 -- --
(a) Computed based upon the difference between the closing price of BIW Limited
common stock on December 31, 2002 ($18.35) and the exercise price.
PERSONNEL AND PENSION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors' Personnel and Pension Committee is comprised of
five independent non-employee directors. The Personnel and Pension Committee
consists of Messrs. Sauerteig, Rivers and Adanti, Ms. Burt, and Ms. Klarides. As
members of the Personnel and Pension Committee, it is our responsibility to
administer BIW Limited's executive compensation programs, monitor corporate
performance and its relationship to compensation of executive officers, and make
appropriate recommendations concerning matters of executive compensation.
Compensation Policies
---------------------
We have formulated a compensation philosophy that is designed to enable us
to attract, retain and reward capable employees who can contribute to the
success of the Company, principally by setting base salaries at the median of
the marketplace. Four key principles serve as the guiding framework for
compensation decisions for all employees of the Company:
o To attract and retain the most highly qualified management and
employee team.
o To pay competitively compared to similar water utility companies.
o To motivate senior executives to achieve annual and long-term business
goals by providing equity-based incentive opportunities.
o To strive for fairness in administration by emphasizing performance
related contributions as the basis of pay decisions.
To implement these policies, we have designed the framework for a
three-part executive compensation program consisting of base salary, long-term
incentive opportunities for senior management, and other employment benefits.
BASE SALARY. We will seek to maintain levels of compensation that are
competitive with similar water utility companies. Our philosophy regarding base
salaries is conservative, and will seek to maintain salaries for the aggregate
officer group at approximately the competitive industry average. Periodic
increases in base salary will relate to individual contributions evaluated
against established objectives, length of service, and the industry's annual
competitive pay practice movement. We have determined that the base salary for
2002 for our Chief Executive Officer and for the other executive officers was
generally at or below the competitive industry average.
7
LONG TERM INCENTIVES. We believe that a compensation program should provide
executives with an opportunity to increase their ownership in the Company and
gain financially from its stock price increases. By this approach, the best
interests of stockholders and executives are closely aligned. Therefore, Company
executives are eligible to receive stock options, giving them the right to
purchase shares of common stock at a specified price in the future. We believe
that the use of stock options as the basis for long-term incentive compensation
meets our defined compensation strategy and business needs by achieving
increased value for stockholders and retaining key employees.
OTHER BENEFITS. Our philosophy is to provide competitive health- and
welfare-oriented benefits to executives and employees, but to maintain a
conservative posture relative to executive benefits. Consistent with industry
practices, we provide a company automobile to certain executive officers.
Compliance With Section 162(m) of the Internal Revenue Code
-----------------------------------------------------------
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to a public corporation for compensation over $1 million paid to a
corporation's chief executive officer and four other most highly compensated
executive officers. Qualifying performance-based compensation will not be
subject to the cap if certain requirements are met. We intend to structure the
compensation of our executive officers in a manner that should ensure that the
Company does not lose any tax deductions because of the $1 million compensation
limit in the foreseeable future.
The salaries for our highest paid executives will be set, based on
independent studies, at levels approximating the average for companies of
comparable size in similar industries and are not expected to approach $1
million in the foreseeable future. We are a proponent of using more performance
and equity-based compensation, which can often be designed to ensure that tax
deductibility is not compromised.
2002 Compensation for the Chief Executive Officer
-------------------------------------------------
In 2002, Betsy Henley-Cohn received an annual base salary of $72,509.
Ms. Henley-Cohn's base salary and bonus are set below the industry average on
account of her significant equity ownership in BIW Limited. Her annual salary
was nonetheless increased in 2002 in response to her contributions to the
Company's performance. Total compensation for each executive depends upon the
executive's experience level and scope of responsibility within the company as
well as individual performance. No option or restricted stock grants were made
to Ms. Henley-Cohn in 2002, since the Committee believed that the level of her
equity ownership aligned her interests with those of the stockholders.
Summary
-------
The Board of Directors' Personnel and Pension Committee believes that we
have implemented a comprehensive compensation program for Company executives
that is appropriate and competitive with the total compensation programs
provided by other similar water utility companies with which we compete. We
believe our compensation philosophy ties compensation to stockholder returns and
thereby links compensation to the achievement of annual and longer-term
operational results of the Company on behalf of our stockholders. We look
forward to providing the stockholders with an update in our next annual report
to you.
Personnel and Pension Committee
of the Board of Directors
- B. Lance Sauerteig
- Aldore J. Rivers, Jr.
- Michael J. Adanti
- Themis Klarides
- Mary Jane Burt
8
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our
executive officers and directors, and persons who beneficially own more than ten
percent of our common stock, to file initial reports of ownership and reports of
changes in ownership with the SEC and the American Stock Exchange. Executive
officers, directors and greater than ten percent beneficial owners are required
by the SEC to furnish us with copies of all Section 16(a) forms they file.
Based upon a review of the copies of these forms furnished to us and
written representations from our executive officers and directors, we believe
that during fiscal 2002 all executive officers, directors and greater than ten
percent beneficial owners complied with Section 16(a) filing requirements,
except that Ms. Henley-Cohn and Mr. Tomac each filed one report in an untimely
manner.
COMPANY PERFORMANCE
The following graph shows the cumulative total stockholder return on
our common stock since January 1, 1998, compared to the returns of the American
Stock Exchange Market Index, and the reporting companies in SIC Code 4941 -
Water Supply Companies.
[LINE GRAPH APPEARS HERE]
9
- ------------------------ -----------------------------------------------------------------------------
FISCAL YEAR ENDED
- ------------------------ ------------ ------------ ------------ ------------ ------------ ------------
COMPANY/MARKET/INDEX 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/29/2001 12/31/2002
- ------------------------ ------------ ------------ ------------ ------------ ------------ ------------
BIW Limited 100.00 169.43 313.72 176.82 276.92 278.60
- ------------------------ ------------ ------------ ------------ ------------ ------------ ------------
Water Supply 100.00 125.39 124.44 150.80 194.71 138.67
- ------------------------ ------------ ------------ ------------ ------------ ------------ ------------
AMEX Market Index 100.00 98.64 122.98 121.47 115.87 111.25
- ------------------------ ------------ ------------ ------------ ------------ ------------ ------------
STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERS
The following tables set forth information as of March 10, 2003 with
respect to the only persons known to us to be the beneficial owners (for
purposes of the rules of the SEC) of more than 5% of the outstanding shares of
our common stock as of that date.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS
- ----------------- -------------------- --------
Group consisting of Betsy Henley-Cohn,
Cohn Realty & Investment, Betsy Cohn Spray
Trust and Betsy Cohn Income Trust, 80 Hamilton 168,796(1) 10.31%
Street, New Haven, Connecticut 06511
(1) Of the 168,796 shares owned by this Group, Cohn Realty & Investment (a
Connecticut general partnership consisting of three investment trusts whose
managing agent is Betsy Henley-Cohn, whose beneficiaries are certain members of
the Cohn Family and whose Trustees are Rhoda Cohn and Stanley Bergman) has
beneficial ownership of 68,300 shares; Betsy Cohn Spray Trust has beneficial
ownership of 59,176 shares; Betsy Cohn Income Trust has beneficial ownership of
21,320 shares; Betsy Henley-Cohn owns 20,000 shares directly; Betsy Henley-Cohn
has either a controlling or a beneficial interest in Cohn Realty & Investment,
Betsy Cohn Spray Trust and Betsy Cohn Income Trust. No member of the Group owns
or has the right to acquire, directly or indirectly, any other shares. Unless
otherwise indicated, the named beneficial owner of the shares has sole voting
and dispositive power with respect thereto.
The following table sets forth information as of March 10, 2003 with
respect to shares of BIW Limited common stock beneficially owned (for the
purpose of the rules of the SEC) by the Company's executive officers and
directors.
- ------------------------------------ ----------------------------- -----------
Common Shares Beneficially Percent of
Name Owned As of March 10, 2003(1) Class(2)
- ------------------------------------ ----------------------------- -----------
Michael J. Adanti 9,900 *
Mary Jane Burt 11,982 *
James E. Cohen 80,296 (3) 4.88%
Betsy Henley-Cohn 168,796 (4) 10.31%
Alvaro da Silva 14,400 *
Themis Klarides 1,450 *
Aldore J. Rivers, Jr. 4,312 *
B. Lance Sauerteig 10,400 *
Kenneth E. Schaible 12,960 *
John S. Tomac 11,630 *
Executive Officers, Directors 326,126 19.25%
and Nominees as a group, 10 in
number
- --------------------------------------------------------------------------------
* Less than 1%
10
(1) Includes options to purchase shares of common stock exercisable within 60
days of March 10, 2003, as follows: Mr. Cohen, 10,000; Mr. da Silva, 10,000; Mr.
Sauerteig, 10,000; Mr. Schaible, 10,000; Ms. Burt, 3,750; Mr. Adanti, 3,750; Ms.
Klarides, 1,250 and Mr. Tomac 7,918.
(2) For the purpose of calculating the percentage of common stock beneficially
owned (a) by the individual persons listed in the table, the number of options
held by such person is included in both the number of shares beneficially owned
by the person and in the total number of shares outstanding in the class with
respect to the individual person's percentage calculation, and (b) by the
directors and officers as a group, the total number of shares beneficially owned
by the group and the total number of shares outstanding includes the 56,668
shares issuable upon the exercise of options exercisable by all persons in the
group within 60 days of the record date.
(3) Includes 64,696 shares held by Mr. Cohen as Trustee for the David B. Cohen
Family Trust, and 3,600 shares held in a brokerage custodial account for Mr.
Cohen's benefit.
(4) Ms. Henley-Cohn is a member of the shareholder group described in the
preceding table. The 168,796 shares set forth in this table is the aggregate
number of shares held by all of the members of the group. See note (1) to the
preceding table for information concerning shares beneficially held by Ms.
Henley-Cohn.
PROPOSAL NO. 2 - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Dworken, Hillman, LaMorte & Sterczala,
P.C. as BIW Limited's independent auditors for the year ending December 31,
2003, and has directed that management submit the selection of independent
auditors for ratification by stockholders at the annual meeting. Representatives
of Dworken, Hillman, LaMorte & Sterczala, P.C. will be present at the Annual
Meeting to respond to questions of shareholders, but, although they have been
offered the opportunity to do so, they do not otherwise propose to make any
statement.
Stockholder ratification of the selection of Dworken, Hillman, LaMorte &
Sterczala, P.C. as BIW Limited's independent auditors is not required by our
Bylaws or otherwise. However, the Board is submitting the selection of Dworken,
Hillman, LaMorte & Sterczala, P.C. to the stockholders for ratification as a
matter of good corporate practice. If the stockholders fail to ratify the
selection, the Board will reconsider the selection of that firm. The Board in
its discretion may direct the appointment of a different independent accounting
firm at any time during the year if the Board determines that such a change
would be in the best interests of BIW Limited and its stockholders.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of common stock
issued, outstanding and entitled to vote, present or represented at the meeting,
a quorum being present, is required for the adoption of this proposal. Broker
non-votes with respect to this matter will be treated as neither a vote "for"
nor a vote "against" the matter, although they will be counted in determining if
a quorum is present. However, abstentions will be considered in determining the
number of votes required to attain a majority of the shares present or
represented at the meeting and entitled to vote. Accordingly, an abstention from
voting by a stockholder present in person or by proxy at the meeting has the
same legal effect as a vote "against" the matter because it represents a share
present or represented at the meeting and entitled to vote, thereby increasing
the number of affirmative votes required to approve this proposal.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL NO. 2 - RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS" TO BE IN THE BEST INTERESTS OF BIW LIMITED AND ITS
STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL OF THIS PROPOSAL.
11
AUDITOR MATTERS
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews BIW Limited's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process. BIW Limited's independent
auditors are responsible for expressing an opinion on the conformity of our
audited financial statements to generally accepted accounting principles.
In this context, the Audit Committee has reviewed and discussed with
management and the independent auditors, the audited financial statements for
the fiscal year ended December 31, 2002. The Audit Committee has discussed with
the independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees). In addition,
the Audit Committee has received from the independent auditors the written
disclosures required by Independence Standards Board No. 1 (Independence
Discussions with Audit Committees) and discussed with them their independence
from BIW Limited and its management. The Audit Committee has also considered
whether the provision of information technology services and other non-audit
services to BIW Limited by its independent auditors is compatible with the
auditor's independence.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and the Board has approved,
that the audited financial statements for the fiscal year ended December 31,
2002 be included for filing in the Company's annual report on SEC Form 10-K for
the year ended December 31, 2002.
Audit Committee of the Board of Directors
- Kenneth E. Schaible
- Alvaro da Silva
- Mary Jane Burt
- Michael J. Adanti
AUDIT FEES
The aggregate fees billed to BIW Limited by our auditors Dworken, Hillman,
LaMorte & Sterczala, P.C. for professional services rendered in connection with
the audit of our annual financial statements for the 2002 fiscal year and the
reviews of the interim financial statements included in our Quarterly Reports on
Form 10-Q were $71,200.
ALL OTHER FEES
The aggregate fees billed to BIW Limited for professional services
rendered in 2002 by our auditors Dworken, Hillman, LaMorte & Sterczala, P.C.
other than for services specifically described above, were $22,400. This amount
included a fee of $8,300 billed to BIW Limited for the preparation of the 2002
corporate income tax return.
12
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the 2004
annual meeting of stockholders must be received by us no later than December 7,
2003 for inclusion in the Company's proxy statement and form of proxy relating
to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
annual meeting. However, if any other business properly comes before the annual
meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
Our annual report, including financial statements, for the year 2002 is
enclosed with this proxy mailing but is not a part of the proxy soliciting
material.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
annual meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
John S. Tomac
President
Ansonia, Connecticut
April 7, 2003
13
APPENDIX A
----------
BIW LIMITED
230 BEAVER STREET
ANSONIA, CT 06401
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 7, 2003
The undersigned hereby appoints Betsy Henley-Cohn and John Tomac as
proxies, each with the power to appoint his/her substitute, and hereby
authorizes them to represent and to vote all shares of common stock of BIW
Limited, held of record by the undersigned on March 10, 2003 at the annual
meeting of stockholders to be held on May 7, 2003, or any adjournment thereof.
Any and all proxies heretofore given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR PROPOSALS
NO. 1 AND 2.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
ANNUAL MEETING OF STOCKHOLDERS OF
BIW LIMITED
MAY 7, 2003
Please date, sign and mail
your proxy card in the
envelope provided as soon as possible.
~/ Please detach and mail in the envelope provided. ~/
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS
AND "FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE |X|
- --------------------------------------------------------------------------------
(1) To elect ten directors of the Company to serve for the ensuing year:
Nominees
[ ] FOR ALL NOMINEES ( ) M.J. Adanti
( ) M.J. Burt
[ ] WITHHOLD AUTHORITY ( ) J.E. Cohen
FOR ALL NOMINEES ( ) A. da Silva
( ) B. Henley-Cohn
[ ] FOR ALL EXCEPT ( ) T. Klarides
(See instructions below) ( ) A.J. Rivers
( ) B.L. Sauerteig
( ) K.E. Schaible
( ) J. Tomac
INSTRUCTION: To withhold authority to vote for any individual
nominee(s), mark "FOR ALL EXCEPT" and fill in the circle next to each nominee
you wish to withhold, as shown here: o
- --------------------------------------------------------------------------------
(2) To consider and vote on the approval of Dworken, Hillman, LaMorte &
Sterczala, P.C. as the Company's independent auditors for the year ending
December 31, 2003.
FOR AGAINST ABSTAIN
DISCRETIONARY AUTHORITY IS HEREBY GRANTED WITH RESPECT TO SUCH OTHER MATTERS AS
MAY PROPERLY COME BEFORE THE MEETING.
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished therewith.
- ------------------------------------------------------------------------------
To change the address on your account, please check the box at right
and indicate your new address in the address space above. Please note [_]
that changes to the registered name(s) on the account may not be
submitted via this method.
- ------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
Signature of Stockholder Date:
--------------------------- -------------
Signature of Stockholder Date:
--------------------------- -------------
NOTE: THIS PROXY MUST BE SIGNED EXACTLY AS THE NAME APPEARS HEREON. WHEN
SHARES ARE HELD JOINTLY, EACH HOLDER SHOULD SIGN. WHEN SIGNING AS AN
EXECUTOR, ADMINISTRATOR, ATTORNEY, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH. IF THE SIGNER IS A CORPORATION, PLEASE SIGN FULL
CORPORATE NAME BY DULY AUTHORIZED OFFICER, GIVING FULL TITLE AS SUCH.
IF SIGNER IS A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.