[MIDDLESEX
WATER COMPANY LOGO]
1500 Ronson Road
P.O. Box 1500
Iselin, New Jersey 08830-0452
Tel. (732) 634-1500
Fax (732) 750-5981
NASDAQ Stock Market Symbol: MSEX
April 15, 2005
Dear Stockholder:
I am pleased to invite you to attend Middlesex Water Company's Annual
Meeting of Stockholders that will take place on Wednesday, May 25, 2005, at
11:00 a.m., at the office of the Company, 1500 Ronson Road, Iselin, New Jersey.
YOUR VOTE IS IMPORTANT TO US. Whether or not you plan to attend the annual
meeting, I urge you to vote. Please specify your choice by marking the
appropriate boxes on the enclosed proxy card and sign, date and return your
proxy in the enclosed postpaid return envelope as promptly as possible. If you
date, sign and return your proxy card without indicating your choices, the
persons designated as proxies will vote your shares in accordance with the
recommendations of the Directors and management.
The primary business of the meeting will be the election of directors and
the transaction of such other business as may properly come before the meeting.
During the meeting, we will report to you on the Company's financial
status, operations and other activities during 2004, together with our goals for
2005. We welcome this opportunity to meet with our stockholders and look forward
to your comments and questions.
I look forward to seeing you on May 25th.
Sincerely,
/s/ J. Richard Tompkins
J. Richard Tompkins
Chairman of the Board
Quality Water Service Since 1897
TABLE OF CONTENTS
Page
----
SOLICITATION AND REVOCATION OF PROXIES 2
SHARES ENTITLED TO VOTE 2
VOTE REQUIRED AND METHOD OF COUNTING VOTES 2
GENERAL INFORMATION 2
ELECTION OF DIRECTORS 4
NOMINEES FOR ELECTION AS DIRECTOR WITH TERM 5
EXPIRING IN 2008 - CLASS III
DIRECTORS WHOSE TERMS CONTINUE BEYOND THE 2005 ANNUAL MEETING 6
COMPENSATION OF DIRECTORS 7
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS 8
EXECUTIVE COMPENSATION 9
Summary Compensation Table 9
Compensation Pursuant to Pension Plans 10
Compensation Committee Interlocks and Insider Participation 11
COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION 11
AUDIT COMMITTEE REPORT 12
STOCK PERFORMANCE GRAPH 14
INDEPENDENT REGISTERED Public ACCOUNTING FIRM FEES 15
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS 15
OTHER MATTERS 15
MINUTES OF 2004 MEETING OF STOCKHOLDERS 16
EXHIBIT A - AUDIT COMMITTEE CHARTER 17
[MIDDLESEX
WATER COMPANY LOGO]
1500 Ronson Road
Iselin, New Jersey 08830-0452
732-634-1500
www.middlesexwater.com
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2005
AND
PROXY STATEMENT
---------------
To the Stockholders of Middlesex Water Company
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MIDDLESEX
WATER COMPANY will be held at the office of the Company, 1500 Ronson Road,
Iselin, New Jersey, on Wednesday, May 25, 2005, at 11:00 a.m., for the following
purposes:
1. To elect three members of Class III of the Board of Directors to hold
office until the Annual Meeting of Stockholders in the year 2008, and
in each case until their respective successors are elected and
qualify.
2. To transact such other business as may properly come before the
meeting and any adjournment thereof.
Only holders of record of Common Stock at the close of business on March
31, 2005, will be entitled to notice of and to vote at the meeting or any
adjournment thereof.
The Company's Annual Report for the year ended December 31, 2004, has also
been mailed to stockholders with this Notice of Meeting and Proxy Statement.
If you are unable to be present at the meeting but desire to have your
shares voted, please execute the enclosed proxy and return it in the
accompanying envelope, to which no postage need be affixed if mailed in the
United States.
By Order of the Board of Directors,
/s/ Kenneth J. Quinn
KENNETH J. QUINN
Vice President, General Counsel,
Secretary and Treasurer
April 15, 2005
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
To assure your representation at the meeting, please
mail the enclosed proxy promptly.
- --------------------------------------------------------------------------------
[MIDDLESEX
WATER COMPANY LOGO]
1500 Ronson Road
Iselin, New Jersey 08830-0452
732-634-1500
www.middlesexwater.com
---------------
PROXY STATEMENT
---------------
Notice of the Annual Meeting of Stockholders of Middlesex Water Company to
be held on May 25, 2005 is attached. You are cordially invited to attend the
meeting. If you are unable to attend, you are requested to sign and complete the
enclosed proxy and return it in the accompanying envelope.
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of the Company. The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, the Company may make arrangements with
brokerage houses and other custodians, nominees, and fiduciaries to send proxies
and proxy material to their principals and will reimburse them for their
expenses in so doing. The solicitations will be initially by mail, and it may
later be decided to make further solicitations by mail, telephone, telegram,
facsimile, electronic mail or in person by Directors, Officers and employees of
the Company. This proxy statement and the accompanying proxy are first being
sent to stockholders on or about April 15, 2005.
The giving of a proxy does not preclude the right to vote in person should
the stockholder giving the proxy so desire, and a proxy may be revoked by giving
notice to the Secretary of the Company in writing at any time prior to the
commencement of the meeting or in open meeting prior to the taking of the vote
to which such revocation relates.
SHARES ENTITLED TO VOTE
As of March 31, 2005, there were outstanding 11,377,403 shares of Common
Stock, which is the only class of capital stock entitled to vote at the Annual
Meeting. Each holder of Common Stock is entitled to one vote for each share
held. As stated in the Notice of Meeting, holders of record of Common Stock at
the close of business on March 31, 2005, will be entitled to vote at the meeting
or any adjournment thereof.
VOTE REQUIRED AND METHOD OF COUNTING VOTES
The affirmative vote of a plurality of the votes cast at the meeting is
required for the election of Directors. In the case of any other matter that may
properly come before the meeting, the affirmative vote of the holders of a
majority of the shares represented, in person or by proxy, and entitled to vote
on the item will be required. Abstentions and broker non-votes will not be
included in determining the number of votes cast concerning any matter.
GENERAL INFORMATION
Management of the Company is under the general direction of the Board of
Directors who are elected by the stockholders. The Board of Directors holds
regular monthly meetings and meets on other occasions when required in special
circumstances. The Board of Directors held fourteen meetings and the Board
Committees held twenty-two meetings during the year 2004. Each incumbent
Director attended 95% or more of the total number of meetings of the Board and
Committees on which each served.
2
Committees of the Board
Audit Committee
The Audit Committee, consisting of Annette Catino, John C. Cutting, John R.
Middleton, M.D. and John P. Mulkerin (who has been designated as the Audit
Committee Financial Expert), reviews with the independent registered public
accounting firm the scope of the annual audit; receives and reviews the
independent registered public accounting firm's annual report; reviews the
independence of the independent registered public accounting firm, services
provided by them and their fees; recommends to the Board of Directors the
inclusion of the audited financial statements in the Company's Annual Report to
the Securities and Exchange Commission on Form 10-K; and is directly responsible
for the appointment of an independent registered public accounting firm for the
following calendar year. The Board of Directors has adopted a written Charter
for the Audit Committee, a copy of which is attached as Exhibit A, and which is
also available on the Company's website at www.middlesexwater.com. The Committee
----------------------
held eight meetings during the year 2004. All of the members of the Audit
Committee have been determined by the Board to be independent directors as
defined in the listing standards of NASDAQ.
Capital Improvement Committee
The Capital Improvement Committee, consisting of John C. Cutting, Walter G.
Reinhard and J. Richard Tompkins, reviews the Capital Budget and monitors the
capital projects and expenditures during the year. The Committee reports its
findings to the Board of Directors. The Committee held three meetings during
2004. Stephen H. Mundy served as a member of this Committee prior to his
retirement from the Board of Directors effective January 25, 2005.
Compensation Committee
The Compensation Committee, consisting of Annette Catino, John R.
Middleton, M.D., and Jeffries Shein, reviews and makes recommendations to the
Board of Directors as to the salaries and benefits of the Executive Officers of
the Company and administers the Restricted Stock Plan. (Please refer to page 12
for a description of the Restricted Stock Plan.) The Board of Directors has
adopted a written Charter for the Compensation Committee which is available on
the Company's website at www.middlesexwater.com. The Committee held three
----------------------
meetings during 2004. Stephen H. Mundy served as chairman of this Committee
prior to his retirement from the Board of Directors effective January 25, 2005.
All of the members of the Compensation Committee have been determined by the
Board to be independent directors as defined in the listing standards of NASDAQ.
Corporate Governance Committee
The Corporate Governance Committee, consisting of John R. Middleton, M.D.,
John P. Mulkerin and Walter G. Reinhard, reviews and makes recommendations
relating to the governance of the Company, the performance and composition of
the Board and Board committees, succession planning and significant organization
changes. The Board of Directors has adopted a written Charter for the Corporate
Governance Committee which is available on the Company's website at
www.middlesexwater.com. The Committee held three meetings during the year 2004.
- ----------------------
Nominating Committee
The Nominating Committee, consisting of Annette Catino, John P. Mulkerin
and Jeffries Shein, makes recommendations to the Board of Directors with respect
to nominations for the Board. The Committee did not meet during the year 2004.
The Nominating Committee acts as a screening committee for candidates considered
for election to the Board. In this capacity, it concerns itself with the
composition of the Board with respect to depth of experience, balance of
professional interests, required expertise and other factors and evaluates
prospective nominees identified by the Nominating Committee or referred by other
Board members, management, shareholders or external sources. Stephen H. Mundy
served as a member of this Committee prior to his retirement from the Board of
Directors effective January 25, 2005. The Board of Directors has adopted a
written Charter for the Nominating Committee which is available on the Company's
website at www.middlesexwater.com. All of the members of the Nominating
----------------------
Committee have been determined by the Board to be independent directors as
defined in the listing standards of NASDAQ.
The Nominating Committee will consider stockholders' recommendations for
nominees for election to the Board of Directors. Recommendations should be sent
to Middlesex Water Company, Office of the Secretary, 1500 Ronson Road, P.O. Box
1500, Iselin, New Jersey 08830-0452; or sent via the internet to the following
e-mail address:
3
kquinn@middlesexwater.com. Nominations must be accompanied by the written
consent of any such person to serve if nominated and elected and by biographical
material to permit evaluation of the individual recommended, including
appropriate references. The Committee shall make inquiry of all references and
any other areas deemed appropriate in fulfilling its obligations. The Secretary
of the Company should receive any nominations for Director by the close of
business on December 15, 2005, in order to be considered for inclusion in the
Company's proxy statement and form of proxy relating to the 2006 Annual Meeting
of Stockholders.
Pension Committee
The Pension Committee, consisting of John C. Cutting, John P. Mulkerin and
Jeffries Shein, reviews investment policies and determines recommended
investment objectives for the Company's Pension Plan. The Committee meets
quarterly with the Company's Investment Managers. The Board of Directors has
adopted a written Charter for the Pension Committee which is available on the
Company's website at www.middlesexwater.com. The Committee held four meetings
----------------------
during the year 2004.
Ad Hoc Pricing Committee
The ad hoc Pricing Committee, consisting of John C. Cutting, John P.
Mulkerin and Jeffries Shein, meets, as needed, to review financial matters
including, but not limited to, the pricing and issuance of common stock and of
corporate bonds. The Committee held one meeting in 2004.
The Board of Directors has also adopted a Code of Conduct that applies to
all of our Directors, Officers and employees. Links to these materials can be
found on our website at www.middlesexwater.com.
----------------------
ELECTION OF DIRECTORS
The Nominating Committee has recommended to the Board the following
candidates for election at the Annual Meeting of Stockholders: John R.
Middleton, M.D., Jeffries Shein, and J. Richard Tompkins. These three Directors
are to be elected each to hold office until the Annual Meeting of Stockholders
in the year 2008, and until their respective successors are elected and
qualified. The present terms of these three Directors, included in Class III,
expire at the year 2005 Annual Meeting.
Proxies in the accompanying form will be voted for these nominees, unless
authority to vote for one or more of them shall have been withheld by so marking
the enclosed proxy. Directors shall be elected by a plurality of the votes cast
at the election. If at the time of the meeting any of the nominees listed should
be unable to serve, which is not anticipated, it is the intention of the persons
designated as proxies to vote, in their discretion, for other nominees, unless
the number of Directors constituting a full Board is reduced.
There is shown as to each nominee, and as to each Director whose term of
office will continue after the year 2005 Annual Meeting, age as of the date of
the Annual Meeting, Class, the period of service as a Director of the Company,
and business experience during the last five years.
4
NOMINEES FOR ELECTION AS
DIRECTORS WITH TERMS EXPIRING IN 2008 - CLASS III
[PHOTO OMITTED] JOHN R. MIDDLETON, M.D., age 60, became a director of the
Company in 1999. He is Chair of the Department of Medicine
and Chief Medical Officer of Raritan Bay Medical Center. He
is a Fellow of the American College of Physicians and Member
of the Infectious Diseases Society of America. Dr. Middleton
is a Member of the Audit Committee, Compensation Committee
and Corporate Governance Committee. (1)
[PHOTO OMITTED] JEFFRIES SHEIN, age 65, became a director of the Company in
1990. He is a Managing Partner, JGT Management Co., LLC, a
management and investment firm, since 2003 and formerly a
Partner of Jacobson, Goldfarb & Tanzman Associates, a
commercial real estate brokerage firm, since 1972,
Woodbridge, New Jersey. He is Director of Raritan Bay
Medical Center and a Director of The Provident Bank. Mr.
Shein is Chairman of the Nominating Committee and ad hoc
Pricing Committee and a Member of the Compensation and
Pension Committees. With the retirement of Mr. Mundy, Mr.
Shein became Chairman of the Compensation Committee. (1),
(2)
[PHOTO OMITTED] J. RICHARD TOMPKINS, age 66, became a director of the
Company in 1981. He has served as Chairman of the Board of
the Company since May 1990 and President from May 1981-2003.
He currently serves as a consultant to the Company. Mr.
Tompkins is past President of the National Association of
Water Companies and the New Jersey Utilities Association.
Mr. Tompkins was a Director of Tidewater Utilities, Inc.
(TUI) and Director of White Marsh Environmental Systems,
Inc., a subsidiary of TUI, until April 2004, at which time
he resigned from the Tidewater and White Marsh Boards. Mr.
Tompkins is a member of the Capital Improvement Committee.
(1) This director has been determined by the Board of Directors to be
independent under the applicable listing standards of NASDAQ.
(2) The Company has established a $7,000,000 line of credit with Provident
Savings Bank, formerly First Savings Bank, Perth Amboy, New Jersey.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE ABOVE CANDIDATES.
---
5
DIRECTORS WHOSE TERMS CONTINUE BEYOND THE 2005 ANNUAL MEETING
AND WHO ARE NOT SUBJECT TO ELECTION THIS YEAR
Class I - Directors Whose Terms Expire in 2006
[PHOTO OMITTED] JOHN C. CUTTING, age 68, became a director of the Company in
1997. Prior to his retirement he served as Senior Engineer,
Science Applications International Corporation, specialists
in information, energy and military systems, Pittsburgh,
Pennsylvania. He is Chairman of the Pension Committee and
Capital Improvement Committee and a Member of the Audit
Committee and ad hoc Pricing Committee. Mr. Cutting serves
as a Director of Tidewater Utilities, Inc. (TUI), Tidewater
Environmental Services, Inc. and White Marsh Environmental
Systems, Inc. (1)
[PHOTO OMITTED] JOHN P. MULKERIN, age 67, became a director of the Company
is 1997. Prior to his retirement, he served as President and
Chief Executive Officer of First Sentinel Bancorp, Inc.,
Holding Company for First Savings Bank, Perth Amboy, New
Jersey and was a member of the Boards of Directors of said
Companies. During 2004, First Sentinel Bancorp, Inc. was
acquired by Provident Financial Services, Inc., the Holding
Company for The Provident Bank. Mr. Mulkerin currently
serves on the Boards of Directors of both of those
Companies. Mr. Mulkerin is a Director of Raritan Bay Medical
Center, Daytop Village Foundation, Middlesex County College
and Catholic Charities of the Diocese of Metuchen. He is
Chairman of the Audit Committee and the Audit Committee
Financial Expert; a Member of the Corporate Governance
Committee, Nominating Committee, Pension Committee and ad
hoc Pricing Committee. (1), (2).
[PHOTO OMITTED] DENNIS G. SULLIVAN, 63, became a director of the Company in
1999. He has served as President and Chief Executive Officer
of the Company since January 2003; prior to that date he was
President and General Counsel since May 2001; Senior Vice
President and General Counsel since July 2000 and Vice
President and General Counsel since May 1990. Mr. Sullivan
is a Director and Chairman of Tidewater Utilities, Inc.
(TUI), Tidewater Environmental Services, Inc.; Pinelands
Water Company and Pinelands Wastewater Company; Utility
Service Affiliates, Inc., Utility Service Affiliates (Perth
Amboy) Inc.; Bayview Water Company, and White Marsh
Environmental Systems, Inc., a subsidiary of TUI.
(1) This director has been determined by the Board of Directors to be
independent under the applicable listing standards of NASDAQ.
(2) The Company has established a $7,000,000 line of credit with Provident
Savings Bank, formerly First Savings Bank, Perth Amboy, New Jersey.
6
DIRECTORS WHOSE TERMS CONTINUE BEYOND THE 2005 ANNUAL MEETING
AND WHO ARE NOT SUBJECT TO ELECTION THIS YEAR
Class II - Directors Whose Terms Expire in 2007
[PHOTO OMITTED] ANNETTE CATINO, age 48, became a director of the Company in
2003. She is President and CEO of QualCare Alliance
Networks, Inc. Piscataway, New Jersey, a managed care
organization, since 1991. Ms. Catino is a Director of Caucus
NJ Educational Corporation, Jersey Shore Medical Center
Foundation, Executive Women of New Jersey and Northfield
Savings. She is a Member of Somerset Medical Center, Women's
Health Advisory Board and The Val Skinner Foundation. Ms.
Catino is a Member of the Audit Committee, the Compensation
Committee and the Nominating Committee. (1)
[PHOTO OMITTED] WALTER G. REINHARD, age 59, became a director of the Company
in 2002. He is a Member of the law firm of Norris,
McLaughlin & Marcus, P.A. of Bridgewater, New Jersey, since
1984. Mr. Reinhard serves as a Director of the
Fanwood-Scotch Plains YMCA. Mr. Reinhard is Chairman of the
Corporate Governance Committee and a Member of the Capital
Improvement Committee. (3)
(1) This director has been determined by the Board of Directors to be
independent under the applicable listing standards of NASDAQ.
(2) The Company has established a $7,000,000 line of credit with Provident
Savings Bank, formerly First Savings Bank, Perth Amboy, New Jersey.
(3) Norris, McLaughlin & Marcus, P.A., has provided legal services to the
Company in the areas of corporate and regulatory matters for over 30 years.
COMPENSATION OF DIRECTORS
A Director who is not an officer of the Company or its subsidiaries is paid
an annual retainer of $12,000 and a fee of $800 for each meeting attended; a fee
of $400 for Special Board meetings via communication facilities; a fee of $500
for each Committee meeting attended; and a fee of $200 for Special Committee
meetings via communication facilities. The annual retainer for the Chairman of
the Board is $24,000 per year. Each Committee Chairperson is paid an additional
annual retainer fee of $1,000. A Director who is an officer of the Company or
its subsidiaries is paid a fee of $400 for each meeting attended.
DIRECTOR EMERITUS
Mr. Stephen H. Mundy retired from the Company's Board of Directors
effective January 25, 2005. He had served as a Director of the Company since
1977 and in 2004, Mr. Mundy served as Chairman of the Compensation Committee and
as a Member of the Capital Improvement Committee and Nominating Committee. Mr.
Mundy has been designated by the Board to serve as a Director Emeritus. In this
capacity, he may attend Board meetings but does not have any voting privileges.
As a Director Emeritus, he will be paid an annual retainer fee of $6,000 and a
Board meeting fee of $500 for each meeting attended.
7
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 31, 2005, beneficial ownership
of Middlesex Water Company Common Stock by the elected Directors, Executive
Officers named in the table appearing under Executive Compensation and all
elected Directors and Executive Officers as a group. Jeffries Shein owned 2.61%
of the shares outstanding on March 31, 2005. All other individual elected
Directors and Executive Officers owned less than 1% of the shares outstanding on
March 31, 2005.
Amount and Nature
of Beneficial
Name Ownership
- ---- ---------
Directors
Annette Catino 6,096
John C. Cutting 33,090
John R. Middleton, M.D 5,427
John P. Mulkerin 20,000
Walter G. Reinhard 1,603
Jeffries Shein 297,398
Dennis G. Sullivan 14,828
J. Richard Tompkins 36,483
Named Executive Officers
A. Bruce O'Connor 21,816
Ronald F. Williams 14,972
Gerard L. Esposito 5,966
Richard M. Risoldi 7,588
Dennis W. Doll 1,000
All elected Directors and Executive Officers
as a group including those namedabove. 466,267*
* 4.10% of the shares outstanding on March 31, 2005.
The following table sets forth information made known to the Company as of
March 31, 2005, of any person or group to be the beneficial owner of more than
five percent of the Company's Common Stock:
Number of Shares
Beneficially Owned
and Nature of Percent
Name and Address Beneficial Ownership (1) of Class
- ---------------- ------------------------ --------
Verona Construction Company 680,000 5.97%
Wilmington, Delaware 19801
(1) Beneficial owner has sole power to vote and dispose of such shares.
8
EXECUTIVE COMPENSATION
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the years 2004,
2003 and 2002 for the Chief Executive Officer and the most highly compensated
executive officers of the Company (Named Executive Officers).
SUMMARY COMPENSATION TABLE
Name and Restricted All Other Annual
Principal Position Year Salary Stock Award Compensation
- ------------------ ---- ------ ----------- ------------
(1) (2)
Dennis G. Sullivan 2004 $267,192 $ 32,049 $ 12,038
President and 2003 $251,714 $ 37,883 $ 10,902
Chief Executive Officer 2002 $192,731 $ 26,856 $ 8,943
A. Bruce O'Connor 2004 $172,424 $ 23,147 $ 6,410
Vice President and 2003 $170,094 $ 30,306 $ 6,348
Chief Financial Officer 2002 $153,722 $ 22,380 $ 5,590
Ronald F. Williams 2004 $165,645 $ 19,586 $ 6,623
Vice President - Operations 2003 $163,469 $ 25,255 $ 5,987
and Chief Operating Officer 2002 $147,025 $ 22,380 $ 6,222
Gerard L. Esposito 2004 $139,006 $ 19,586 $ 4,851
President 2003 $129,404 $ 30,306 $ 4,515
Tidewater Utilities, Inc. 2002 $114,631 $ 22,380 $ 3,998
Richard M. Risoldi 2004 $130,916 $ 12,463 $ 4,000
Vice President- 2003 $124,546 $ 15,153 $ 3,732
Subsidiary Operations 2002 $105,003 $ 8,952 $ 3,843
Dennis W. Doll (3) 2004 $ 31,253 $ -- $ 69
Executive Vice President
(1) The number and value of Restricted Stock held in escrow as of December 31,
2004, were as follows: Mr. Sullivan - 7,800/$147,732; Mr. O'Connor -
6,633/$125,629; Mr. Williams - 6,166/$116,784; Mr. Esposito -
4,833/$91,357; and Mr. Risoldi -3,233/$61,233. Generally the restrictions
lapse on these awards five years from the date of grant. The restrictions
also lapse in the event of a change in control of the Company. All
dividends on these shares are paid to the awardees.
(2) Includes employer contributions to the Company's defined contribution plan
and life insurance premiums for 2004: Mr. Sullivan ($9,280 and $2,758), Mr.
O'Connor ($6,034 and $376), Mr. Williams ($5,593 and $1,030), Mr. Esposito
($4,851 and $-0-), Mr. Risoldi ($3,736 and $264) and Mr. Doll ( $-0- and
$69); for 2003: Mr. Sullivan ($8,167 and $2,735), Mr. O'Connor ($5,953 and
$395), Mr. Williams ($5,411 and $576), Mr. Esposito ($4,515 and $-0-), and
Mr. Risoldi ($3,469 and $263); for 2002: Mr. Sullivan ($7,000 and $1,943),
Mr. O'Connor ($5,374 and $216), Mr. Williams ($5,732 and $490), Mr.
Esposito ($3,998 and $-0-), and Mr. Risoldi ($3,648 and $195).
(3) Mr. Doll was hired on November 1, 2004 at a base salary of $200,000 per
year.
9
COMPENSATION PURSUANT TO PENSION PLANS
Annual Benefit based on Average Annual Compensation and Years of Service
-------------------------------------------------------------------------
Remuneration Years of Service
- ------------ -------------------------------------------------------------------------
15 20 25 30 35 45
-------------------------------------------------------------------------
$100,000 $ 52,572 $ 52,572 $ 52,572 $ 52,572 $ 52,572 $ 68,470
$125,000 $ 71,322 $ 71,322 $ 71,322 $ 71,322 $ 71,595 $ 88,220
$150,000 $ 90,072 $ 90,072 $ 90,072 $ 90,072 $ 90,072 $107,970
$175,000 $108,822 $108,822 $108,822 $108,822 $108,822 $127,720
$200,000 $127,572 $127,572 $127,572 $127,572 $127,572 $147,470
$225,000 $146,322 $146,322 $146,322 $146,322 $146,322 $151,420
$250,000 $165,072 $165,072 $165,072 $165,072 $165,072 $165,072
$300,000 $202,572 $202,572 $202,572 $202,572 $202,572 $202,752
All employees, including the named executive Officers, who receive pay for
1,000 hours during the year, are included in the Company's Qualified Defined
Benefit Pension Plan (Qualified Plan). Under the noncontributory Qualified Plan,
current service costs are funded annually as allowed under Internal Revenue
Service guidelines. The Company's annual contribution is determined on an
actuarial basis. Benefits are measured from the member's entry date and accrue
to normal retirement date or date of early retirement. Benefits are calculated,
at normal retirement, at 1.25% of pay up to the employee's benefit integration
level, plus 1.9% of such excess pay, multiplied by service to normal retirement
date, capped at 35 years of such excess pay, multiplied by service to normal
retirement date of age 65. Average pay is the highest annual average of total
pay during any 5 consecutive years within the 10 calendar-year period prior to
normal retirement date. The benefit integration level is based on the 2004
Summary Compensation Table. The benefit amounts are not subject to any deduction
for Social Security benefits or other offset amounts.
During the year 2004, the Company was required to make a statutory
contribution to the Qualified Plan in the amount of $0.5 million. All assets of
the Qualified Plan are held in a trust.
The estimated credited years of service based on normal retirement at age
65 includes 22 years, 19 years, 33 years, 19 years, 18 years and 32 years for
Messrs. Sullivan, Doll, O'Connor, Williams, Esposito and Risoldi, respectively.
Supplemental Executive Retirement Plan - The Named Executive Officers and
other executive officers are eligible to participate in the deferred
compensation plan known as the Supplemental Executive Retirement Plan (Executive
Plan) at the discretion of the Board of Directors.
A participant who retires on his normal retirement date is entitled to an
annual retirement benefit equal to 75% of his compensation (and in the case of
two participants, 50% of his compensation) reduced by his primary Social
Security benefit and further reduced by any benefit payable from the Qualified
Plan. In certain cases further reductions are made for benefits from other
employment. Generally, a participant is vested at 10 years of service. Annual
retirement benefits are payable for 15 years either to the participant or his
beneficiary. Retirement benefits may be in the form of single life annuity,
joint and 50% survivors annuity, joint and 100% survivors annuity, single life
annuity with a 10-year certain period and single life annuity with a 15-year
certain period paid on an actuarial equivalent basis.
The Company is not obligated to set aside or earmark any monies or other
assets specifically for the purpose of funding the Executive Plan, except that
upon a change of control the Company would be obligated to make contributions to
a trust anticipated to be sufficient to meet its obligations under the Executive
Plan. In any event, the benefits are in the form of an unfunded obligation of
the Company. The Company has elected to purchase corporate-owned life insurance
as a means of satisfying its obligation under the Executive Plan. The Company
reserves the right to terminate any plan or life insurance at any time; however,
a participant is entitled to any benefits he would have been entitled to under
the Executive Plan provisions. For the year 2004 the Company paid life insurance
premiums totaling $0.1 million for the Named Executive Officers, which provides
a pre-retirement net death benefit of 1-1/2 times base salary at date of death.
10
Defined Contribution Plan - Under its 401(k) Plan, the Company matches 100%
of that portion of the employee contribution that does not exceed 1% of base
pay, plus an additional 50% of that portion from 2% to 6% of base pay.
Distributions under the 401(k) Plan are made upon normal retirement, total and
permanent disability or death and are subject to certain vesting provisions as
to Company contributions.
Change of Control Agreements - The Company has change of control
termination agreements with the named executive officers and other executive
officers. These agreements generally provide that if the executive is terminated
by the Company, other than for death, disability, cause (as defined in the
agreement) or good reason (as defined in the agreement) within three years after
a change of control, the executive is entitled to receive (a) a lump sum
severance payment equal to the sum of three times the executive's average total
compensation for the five years prior to the termination; (b) continued coverage
for three years under any health or welfare plan in which the executive and the
executive's dependents were participating; and (c) an additional amount
sufficient to pay any additional tax liability resulting from the severance
payments and benefits under this, and any other plans or agreements. In
addition, the executive will be entitled to receive benefits under the Executive
Plan, at the executive's otherwise normal retirement date, with such benefits
calculated as if the executive had continued employment to age 65, unless the
executive elects to receive such benefits at a lesser amount at termination.
Further, all restricted stock held by the executive will become unrestricted
(with respect to the plan's five year holding period) upon a change of control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the 2004 Compensation Committee were Annette Catino, John R.
Middleton, M.D., Stephen H. Mundy and Jeffries Shein. During 2004, no member of
the Compensation Committee was an officer or employee of the Company or a
subsidiary.
COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
Overview
The Compensation Committee of the Board of Directors administers the
compensation program for executive officers of the Company. The Committee for
the year 2004 was composed of four independent Directors: Annette Catino
(appointed in September 2004), John R. Middleton, M.D., Stephen H. Mundy and
Jeffries Shein. Mr. Mundy retired from the Board of Directors effective January
25, 2005. Mr. Shein currently serves as Chairman of this Committee. The
Committee is responsible for setting and administering the policies that govern
annual compensation and Restricted Stock awards. The full Board of Directors
approves policies and plans developed by the Committee. The Board of Directors
has adopted a written Charter for the Compensation Committee, which is available
on the Company's website at www.middlesexwater.com.
----------------------
The Committee's compensation policies and plans applicable to the executive
officers seek to enhance the profitability of the Company and shareholder value,
as well as to control costs and maintain reasonable rates for the customers. The
Committee's practices reflect policies that compensation should (1) attract and
retain well-qualified executives, (2) support short and long-term goals and
objectives of the Company, (3) reward individuals for superior contributions to
the Company's success, (4) be meaningfully related to the value created for
shareholders, and (5) relate to maintenance of good customer relations and
reasonable rates.
The Committee meets with the Chief Executive Officer to evaluate the
performance of the other executive officers and meets in the absence of the
Chief Executive Officer to evaluate his performance. The Committee reports on
all executive evaluations to the full Board of Directors.
Salary Compensation
Base salary levels are reviewed annually using compensation data produced
by an independent compensation consultant for comparable companies and similar
positions. Base salaries for satisfactory performance are targeted at the median
of the competitive market. Individual performance of the executive is assessed
and taken into account when setting salaries against the competitive market
data. The Committee reviews, as well, the individual's efforts at cost control
and his or her
11
contributions to the results of the year. The Committee also reviews the
Company's financial results compared with prior years and compared with other
companies. It compares salaries with both water utility companies and general
industry.
The factors and criteria upon which the Chief Executive Officer's
compensation was based generally include those discussed with respect to all the
executive officers. Specifically, however, his salary is based on his overall
performance and that of the Company. His salary was set based on the Board's
assessment of his individual performance as well as time in the position and the
competitive rates of pay among comparably sized utilities and general industry
firms. In addition, in evaluating the performance of the Chief Executive
Officer, the Committee has taken particular note of management's success with
respect to the continuing growth of the Company.
Restricted Stock
The Company maintains a Restricted Stock Plan for the purpose of attracting
and retaining key executives and other employees having managerial or
supervisory responsibility who have contributed, or are likely to contribute,
significantly to the long-term performance and growth of the Company and its
subsidiaries. This plan is designed to enhance financial performance, customer
service and corporate efficiency through a performance-based stock award. Annual
stock awards are based upon several factors including the participant's ability
to contribute to the overall success of the Company.
The level of awards and the value of the performance are reviewed annually
by the Committee. The Committee submits reports on all executive evaluations and
restricted stock awards to the full Board of Directors for approval.
Year 2005 Compensation Committee
Jeffries Shein, Chairman
Annette Catino
John R. Middleton, M.D.
AUDIT COMMITTEE REPORT
The Audit Committee of the Board of Directors is composed of four
independent directors, one of whom is designated by the Board as the "Audit
Committee Financial Expert," as defined by the Securities and Exchange
Commission. The Committee for the year 2004 was composed of: Annette Catino,
John C. Cutting, John R. Middleton, M.D. and John P. Mulkerin. The Audit
Committee operates under a written Charter adopted by the Board of Directors and
reviewed annually by the Committee. The Board of Directors has adopted a written
Charter for the Audit Committee, which is available on the Company's website at
www.middlesexwater.com.
- ----------------------
Management is responsible for the Company's financial statements and
internal controls. The independent accountants of Middlesex Water, Deloitte &
Touche LLP, are responsible for performing an independent audit of the Company's
annual consolidated financial statements in accordance with generally accepted
auditing standards and for issuing a report thereon. The Committee's
responsibility is to oversee the quality and integrity of the Company's
accounting, auditing and financial reporting practices.
In this context, the Committee has met and held discussions with management
and the independent accountants. Management represented to the Committee that
the Company's consolidated financial statements were prepared in accordance with
generally accepted accounting principles, and the Committee has reviewed and
discussed the consolidated audited financial statements with management and the
independent accountants. The Committee discussed with the independent
accountants the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended (Communication with Audit Committees), which
includes, among other things:
o Changes in significant accounting policies;
o The process used by management in formulating accounting estimates and
the basis for the auditors' conclusions regarding the reasonableness
of these estimates;
o Any disagreements, if any, with management over the application of
accounting principles;
o Audit adjustments; and
o Disclosures in the financial statements.
12
The independent accountants also provided to the Committee the written
disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees), and the Committee discussed
with the independent accountants the firm's independence with respect to
Middlesex Water and its management. The Committee has the sole authority to
preapprove permitted non-audit services performed by the independent accountants
and has considered whether the independent accountants' provision of non-audit
services to the Company is compatible with maintaining their independence.
Based on the Committee's discussions with management and the independent
accountants, the Committee's review of the audited financial statements, the
representations of management regarding the audited financial statements and the
report of the independent accountants to the Committee, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2004, for filing with the Securities and Exchange Commission.
The Committee also discussed with senior management the process used for
the establishment and maintenance of disclosure controls and procedures in
quarterly and annual reports which is required by the Securities and Exchange
Commission (SEC) and the Sarbanes-Oxley Act of 2002 for certain of the Company's
filings with the SEC. In that connection, the Committee noted that in April
2004, the Company filed an amended 2003 Form 10-K with the SEC to reflect
restated financial results. Separately, the Company also filed an amended Form
10-Q for each of the first, second and third quarters of 2003 reflecting
reclassifications regarding Restricted Cash. The changes made in the 2003 Form
10-K/A and the reclassifications made in the 2003 Form 10-QA's and the 2003 Form
10-K did not affect the Company's total assets, net income, earnings applicable
to common stock, cash flows from operations or liquidity.
The Committee met privately with the independent auditors who have
unrestricted access to the Audit Committee.
Year 2005 Audit Committee
John P. Mulkerin, Chairman
Annette Catino
John C. Cutting
John R. Middleton, M.D.
13
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the cumulative
total return (which includes reinvestment of dividends) of a $100 investment for
the Company's Common Stock, a peer group of investor-owned water utilities, and
the Dow Jones Wilshire 5000 Stock Index for the period of five years commencing
December 31, 1999. The current peer group includes American States Water
Company, Aqua America Inc., Artesian Resources Corp., California Water Service
Company, Connecticut Water Service, Inc., Pennichuck Corp., SJW Corp., Southwest
Water Company, York Water Company and the Company. The Dow Jones Wilshire 5000
Stock Index measures the performance of all U.S. headquartered equity securities
with readily available price data.
Comparison of 5 Year Cumulative Total Return*
Among Middlesex Water Company, The Dow Jones Wilshire 5000 Index
and a Peer Group
[GRAPH OMITTED]
* $100 invested on 12/31/99 in stock or index, including reinvestment of
dividends. Fiscal year ending December 31.
- --------------------------------------------------------------------------------
12/99 12/00 12/01 12/02 12/03 12/04
- --------------------------------------------------------------------------------
Peer Group $100 $116 $130 $125 $159 $184
- --------------------------------------------------------------------------------
Middlesex $100 $110 $115 $111 $148 $143
- --------------------------------------------------------------------------------
Dow Jones Wilshire 5000 $100 $ 89 $ 79 $ 63 $ 83 $ 93
- --------------------------------------------------------------------------------
14
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
Aggregate fees billed to the Company for the years ending December 31, 2004
and 2003 by the Company's independent registered public accounting firm,
Deloitte & Touche LLP are as follows:
Year ended December 31,
2004 2003
-------- --------
Audit Fees {a} $493,900 $231,000
Audit-Related Fees {b} 21,000 20,000
-------- --------
Total audit and audit-related fees $514,900 $251,000
Tax Fees {c} $ 18,235 $ 19,000
All Other Fees -- --
-------- --------
Total Fees $533,135 $270,000
{a} In 2004, audit fees were incurred for audits of the financial
statements and internal control over financial reporting of the
Company, an audit of the financial statements of a subsidiary of the
Company, reviews of the financial statements included in the Company's
quarterly reports on Form10-Q and for services rendered in connection
with certain financing transactions. In 2003, audit fees were incurred
for audits of the financial statements of the Company, an audit of the
financial statements of a subsidiary of the Company, reviews of the
financial statements included in the Company's quarterly reports on
Form 10-Q and for services rendered in connection with certain
financing transactions.
{b} Includes 2004 and 2003 fees for the audits of employee benefit plans
of $21,000 and $20,000, respectively
{c} Includes 2004 and 2003 fees for the preparation of tax returns of
$18,235 and $19,000, respectively.
The Audit Committee has established pre-approval policies and procedures
for all audit and non-audit services to be performed by Deloitte & Touche LLP.
The Audit Committee approves 100% of the services related to Audit-Related Fees,
Tax Fees and All Other Fees.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ATTENDANCE AT ANNUAL MEETING
Representatives of Deloitte & Touche LLP will be present at the meeting and
will be afforded an opportunity to make a statement, if they so desire, and to
respond to appropriate questions.
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission. Should a stockholder intend to present a proposal at the annual
meeting to be held in the year 2006, you must submit your proposal to the
Secretary of the Company at 1500 Ronson Road, P.O. Box 1500, Iselin, New Jersey
08830-0452, not later than December 15, 2005, in order to be considered for
inclusion in the Company's proxy statement and form of proxy relating to the
2006 Annual Meeting.
OTHER MATTERS
The management of the Company does not intend to bring any other matters
before the meeting and has no reason to believe any will be presented to the
meeting. If, however, other matters properly do come before the meeting, it is
the intention of the persons named in the accompanying proxy to vote in
accordance with their judgment in such matters.
15
MINUTES OF 2004 MEETING OF STOCKHOLDERS
The minutes of the 2004 meeting of Stockholders will be submitted at the
meeting for the correction of any errors or omissions but not for the approval
of the matters referred to therein.
By Order of the Board of Directors,
/s/ Kenneth J. Quinn
KENNETH J. QUINN
Vice President, General Counsel,
Secretary and Treasurer
Iselin, New Jersey
April 15, 2005
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and files an Annual Report on Form 10-K with the Securities
and Exchange Commission. Additional copies of the 2004 Annual Report on Form
10-K filed by the Company, including the financial statements and schedules, but
without exhibits, can be mailed without charge to any shareholders. The exhibits
are obtainable from the Company upon payment of the reasonable cost of copying
such exhibits. The 2004 Annual Report on Form-10-K can also be found on the
Company's website at www.middlesexwater.com. Shareholders can request this
information by phone at 732-634-1500, ext. 216, e-mail kquinn@middlesexwater.com
or by mail to Kenneth J. Quinn, Vice President, General Counsel, Secretary and
Treasurer, Middlesex Water Company, 1500 Ronson Road, Iselin, New Jersey 08830.
16
EXHIBIT A
MIDDLESEX WATER COMPANY
AUDIT COMMITTEE CHARTER
PREAMBLE
There shall be a standing committee of the Board of Directors (the "Board")
of Middlesex Water Company (the "Company") to be known as the Audit Committee
(the "Committee"). The Committee may also serve as the Audit Committee of the
Company's subsidiaries. Any reference herein to the Audit Committee shall refer
to the Audit Committee for either the Company or its subsidiaries as the case
may be.
The Committee shall be primarily responsible for oversight of the audit of
the Company's financial statements. It may be assigned additional
responsibilities by the Board from time to time, which may include (i) oversight
of the Company's internal audit functions and of audits or similar assessments
of the Company's information technology and compliance with public water utility
regulations; (ii) review of related party transactions with the Company; (iii)
determining whether to grant waivers with respect to the Company's Code of
Conduct and (iv) investigation of "whistleblower" complaints from Company
personnel. In all its actions, the Committee shall comply with the requirements,
rules and regulations of the Sarbanes-Oxley Act of 2002, NASDAQ Marketplace
listing standards and all other applicable federal and state laws, rules and
regulations.
The Committee shall provide assistance to the Board in fulfilling its
responsibility to the shareholders, potential shareholders and the investment
community relating to the corporate accounting and reporting practices of the
Company. In doing so, the Committee shall maintain free and open means of
communication between the Directors, the independent auditors (the "Independent
Auditors") and the financial management of the Company.
COMPOSITION AND APPOINTMENT
There shall be a minimum of three (3) members of the Committee, elected by
the Board. Each shall be an independent Director of the Company as defined by
applicable laws, regulations and listing requirements and as summarized herein.
In any instance where this summary is inconsistent with applicable laws,
regulations or listing requirements, the laws, regulations or listing
requirements shall control. To be considered independent, a member of the
Committee must not, other than in his or her capacity as a member of the
Committee, the Board, or any other Board committee, accept any consulting
advisory fee or other compensation from the Company, nor may a Family Member of
a member (as that term is defined by applicable NASDAQ listing standards) accept
any such fee or other compensation. Further, a member of the Committee must not,
other than in his or her capacity as a member of the Committee, the Board, or
any other Board committee, be affiliated with the Company or any of its
subsidiaries (except as a Director of the Company and/or its subsidiaries)
including, but not limited to, affiliation with any entity controlling,
controlled by or under common control with the Company. Additionally, a member
of the Committee may not be a beneficial owner of a controlling interest in the
voting stock of the Company or any subsidiary. A member of the Committee shall
not have participated in the preparation of the financial statements of the
Company or any current Company subsidiary at any time during the three years
prior to becoming a member of the Committee.
All Committee members must, as determined within the business judgment of
the Board at the time such members are appointed to the Committee, be able to
read and understand fundamental financial statements, including the Company's
balance sheet, income statement, and cash flow statement. Additionally, at least
one (1) member of the Committee must either fall within the definition of "Audit
Committee Financial Expert," as that term is defined by the Securities and
Exchange Commission ("SEC"), or, be capable of serving the functions expected of
such an audit committee expert, as determined by the Board within its business
judgment. In determining a member's financial expertise, the Board may consider
one's past employment experience in finance or accounting, requisite
professional certification in accounting, or any other comparable experience or
background resulting in the member's financial sophistication. The Board may
also take into consideration a member's status as, or having been, a chief
executive officer, chief financial officer or other senior officer with
financial oversight responsibilities.
The Board must determine annually that the Committee members are able to
read and understand fundamental financial statements as explained in this
Charter. The duties and responsibilities of a member of the Committee are in
addition to those duties set out for a member of the Board.
17
COMMITTEE MEETINGS
o The Committee shall meet at least four times each year.
o Regularly scheduled Committee meetings may be held in conjunction with
meetings of the full Board, provided the Committee meetings abide by all
the provisions contained herein and all applicable requirements, rules and
regulations of the Sarbanes-Oxley Act of 2002, NASDAQ Marketplace listing
standards and all other applicable federal and state laws, rules and
regulations.
o Special meetings of the Committee may be called by the Chairman of the
Committee or at the request of any two (2) Committee members. The Chairman
of the Board or the Chief Executive Officer may recommend to the Chairman
of the Committee that a special meeting be held.
o The Committee may request that members of management or outside consultants
be present to assist the Committee in the performance of its duties.
o Minutes of each meeting will be kept and distributed to the full Board.
GENERAL RESPONSIBILITIES
In carrying out its responsibilities, the Committee believes its policies
and procedures should remain flexible in order to best react to changing
conditions and ensure the Directors and shareholders that the corporate
accounting and reporting practices of the Company are in accordance with all
requirements and are of the highest quality.
In carrying out these responsibilities, the Committee shall:
o Review the adequacy of the Audit Committee Charter (the "Charter") annually
and submit Charter revisions to the Board for consideration and approval.
o Establish, enforce and periodically review procedures designed to identify
related party transactions material to the Company's financial statements
or which otherwise require disclosure under applicable listing standards,
rules, regulations or statutes. The Committee shall review each such
transaction and shall report to the Board whether the transaction is
approved.
o Review the Company's Form 10-K Annual Report and will recommend to the
Board the inclusion of the audited financial statements in the Company's
Form 10-K Annual Report to the Securities and Exchange Commission.
o Ascertain that the Board and senior officers of the Company have annually
submitted a compliance attestation confirming they have complied with the
Company's Code of Conduct. The Committee shall have the sole authority to
approve waivers of the Company's Code of Conduct and shall insure that such
waiver be promptly disclosed to shareholders, along with the reasons for
granting such waiver. Such disclosure shall be made in the Company's
regular public filings, not later than the next periodic report and may
also be posted on the Company's website.
o Ascertain that the Chief Executive Officer and the Chief Financial Officer
are in full compliance with Section 404 of the Sarbanes-Oxley Act of 2002
regarding certain attestations of the financial statements of the Company.
o Issue an annual Audit Committee Report for inclusion in the Company's Proxy
Statement.
18
o Investigate any matter brought to the Committee's attention, with the power
to engage independent counsel, accountants and any other advisors or
assistance it determines necessary to carry out its duties. The Committee
shall determine the compensation for such services. The Company is
obligated to fund, without limit, the compensation and all expenses related
to any independent counsel, accountants and any other advisors or
assistance the Committee retains. In addition, the Company shall provide
sufficient funding to pay for the administrative expenses of the Committee.
o Establish and maintain procedures for (i) the receipt, retention, and
treatment of complaints received by the Company regarding accounting,
internal accounting controls, or auditing matters and (ii) the
confidential, anonymous submission by Company employees, officers or
directors of concerns regarding questionable accounting or auditing
matters. As part of its responsibilities the Committee shall insure that
the Company communicates such procedures to all employees, officers and
directors at least annually.
o Perform such additional activities and consider such other matters within
or beyond the scope of its responsibilities as required by the Company's
Charter or By-laws, the Board, or applicable listing standards, rules,
regulations or statutes.
INDEPENDENT AUDITOR OVERSIGHT RESPONSIBILITIES
In carrying out these responsibilities, the Committee shall:
o Have sole authority to engage, review (at least annually), dismiss and
replace the Company's Independent Auditors. The Committee shall have sole
authority to review and set the fees to be paid to the Company's
Independent Auditors.
o Have the sole authority to preapprove each permitted non-audit service to
be performed by the Independent Auditors. As part of the exercise of that
authority, the Committee shall adopt a written policy governing the
preapproval of non-audit services to be performed by the Independent
Auditors. Any approval by the Committee of such services shall be disclosed
to investors in periodic reports required. The Committee shall have
authority to delegate preapproval authority of Independent Auditor
non-audit services to one (1) or more of its members. The decisions of any
member(s) to whom authority is delegated shall be presented to the full
Committee at each of its scheduled meetings.
o Meet with the Independent Auditors and financial management of the Company
to oversee and review the scope of the proposed audit for the current year
and the audit procedures to be utilized, and at the conclusion thereof,
review such audit, including any comments or recommendations of the
Independent Auditors.
o It is understood that the Independent Auditors are ultimately accountable
to the Board and the Committee, and that the Committee has the ultimate
power to appoint or remove the Independent Auditors.
o Review the financial statements contained in the annual shareholders
report, as well as major accounting reserves, with management and the
Independent Auditors to ascertain that management and the Independent
Auditors are satisfied with the disclosure and content of the financial
statements to be presented to the shareholders. Any changes in accounting
principles will also be reviewed.
o Review with the Independent Auditors and financial and accounting personnel
the adequacy and effectiveness of the accounting and financial controls of
the Company, and elicit any recommendations for the improvement of such
internal control procedures or particular areas where new or more detailed
controls or procedures are desirable.
o Obtain from the Independent Auditors a formal written statement regarding
the Independent Auditors full compliance with all applicable provisions of
the Sarbanes-Oxley Act of 2002, including, but not limited to, all "Auditor
Independence" provisions.
19
o Provide opportunity for the Independent Auditors to meet with members of
the Committee without members of management present. Among the items to be
discussed in these meetings will be the Independent Auditors' evaluation of
the Company's financial and accounting policies and the cooperation that
the Independent Auditors received during the course of the audit.
o Issue a report to be included in the Company's Proxy Statement indicating
that it has reviewed the audited financial statements with management and
the Independent Auditors (including a discussion of the quality of the
accounting principles and significant judgments affecting the financial
statements). The Committee shall state whether it has met privately to
discuss the information obtained from management and the Independent
Auditors, and, in reliance on that review, whether or not it has
recommended to the Board that the audited financial statements be included
in the Company's Annual Report on Form 10-K for filing with the Securities
and Exchange Commission.
20
[MIDDLESEX
WATER COMPANY LOGO]
1500 Ronson Road
Iselin, New Jersey 08830-0452
732-634-1500
www.middlesexwater.com
[MAP OMITTED]
DIRECTIONS TO MIDDLESEX WATER COMPANY
FROM GARDEN STATE PARKWAY (NORTH OR SOUTH): Take Exit 131A to fourth traffic
light. Turn right onto Middlesex-Essex Turnpike and proceed (about 1/2 mile) to
third traffic light (Gill Lane). Turn right and go (about 1/2 mile) under
railroad underpass and make right onto Ronson Road. Proceed past three large
mirror-sided office buildings on the right. At the sign, make a right into
Middlesex Water Company.
FROM NEW JERSEY TURNPIKE (NORTH OR SOUTH): Take Exit 11 onto the Garden State
Parkway North and follow above directions.
FROM US ROUTE NO. 1 (NORTH OR SOUTH): Proceed to the Woodbridge Center area and
follow signs to Gill Lane. When on Gill Lane, make left turn onto Ronson Road
and follow above directions.
[MIDDLESEX
WATER COMPANY LOGO]
1500 Ronson Road
Iselin, New Jersey 08830-0452
732-634-1500
www.middlesexwater.com
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE MIDDLESEX WATER COMPANY
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 2005
The undersigned stockholder(s) hereby appoint(s) John C. Cutting and John
P. Mulkerin, and each of them, proxies, with the power to appoint his
substitute, and hereby authorizes them to represent and to vote as designated,
all the shares of common stock of Middlesex Water Company held on record by the
undersigned on March 31, 2005, at the Annual Meeting of Shareholders to be held
on May 25, 2005, at 11:00 a.m., local time or any adjournment thereof.
With- For All
For hold Except
1. Election of Directors, Nominees for Class III term [_] [_] [_]
expiring in 2008 are:
John R. Middleton, M.D., Jeffries Shein
and J. Richard Tompkins
INSTRUCTION:To withhold authority to vote for any individual nominee, mark "For
All Except"and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
In their discretion, the Proxies are authorized to vote upon such other
business that may properly come before the meeting.
PLEASE CHECK BOX IF YOU PLAN [_]
TO ATTEND THE MEETING.
If this Proxy is properly executed and returned, the shares represented
hereby will be voted. If not otherwise specified, this Proxy will be voted FOR
the persons nominated as directors.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
------------------------
Please be sure to sign and date | Date |
this Proxy in the box below. | |
- --------------------------------------------------------------------------------
| |
| |
- -----------Stockholder sign above----------Co-holder (if any) sign above-------
- --------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
[MIDDLESEX WATER COMPANY LOGO]
c/o Registrar and TransferCompany
10 Commerce Drive
Cranford, New Jersey 07016-3572
www.middlesexwater.com
- --------------------------------------------------------------------------------
PLEASE DATE AND SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR ON THIS PROXY.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If signer is a corporation, please sign full corporate
name by authorized officer and attach a corporate seal. For joint account, each
joint owner should sign.
PLEASE ACT PROMPTLY
BE SURE TO COMPLETE, SIGN AND RETURN THIS PROXY, WHETHER OR NOT YOU ELECT TO BE
PRESENT IN PERSON. ALL SIGNATURES MUST APPEAR EXACTLY AS NAMES
APPEAR ON THIS PROXY.
THANK YOU
- --------------------------------------------------------------------------------
Annual Meeting of Shareholders - May 25, 2005, at 11:00 a.m.
Middlesex Water Company - 1500 Ronson Rd., Iselin, NJ
IF YOUR ADDRESS HAS CHANGED, PLEASE PRINT YOUR NEW ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH YOUR PROXY IN THE ENVELOPE PROVIDED.
- ---------------------------------
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