View:
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential. For Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Middlesex Water Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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.
[LOGO]
April 21, 1998
Dear Stockholder:
YOUR VOTE IS IMPORTANT TO US! Whether or not you plan to attend the
Stockholders' 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 your Directors and management.
You are cordially invited to attend your Company's 1998 Annual Meeting of
Stockholders which will be held at the office of the Company, 1500 Ronson Road,
Iselin, New Jersey, on Wednesday, May 27, 1998, at 11:00 a.m.
Following the Annual Meeting you are also invited to tour our Company
headquarters facilities and to remain for luncheon.
I hope you will be able to attend.
Sincerely,
/s/ J. RICHARD TOMPKINS
----------------------------------
J. Richard Tompkins
Chairman of the Board and President
TABLE OF CONTENTS
Page
----
SOLICITATION AND REVOCATION OF PROXIES..................................
SHARES ENTITLED TO VOTE.................................................
GENERAL INFORMATION.....................................................
PROPOSAL 1 - ELECTION OF DIRECTORS .....................................
NOMINEES FOR ELECTION AS DIRECTOR WITH TERM EXPIRING IN 2001 -
CLASS II .............................................................
DIRECTORS WHOSE TERMS CONTINUE BEYOND THE 1998 ANNUAL MEETING...........
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS.....................................................
EXECUTIVE COMPENSATION
Summary Compensation Table.........................................
Compensation of Directors..........................................
Compensation Committee Interlocks and Insider
Participation....................................................
Compensation Pursuant to Pension Plans.............................
REPORT OF THE EXECUTIVE DEVELOPMENT AND COMPENSATION COMMITTEE..........
STOCK PERFORMANCE GRAPH.................................................
PROPOSAL 2 - APPOINTMENT OF INDEPENDENT AUDITORS........................
PROPOSAL 3 - AMENDMENT TO THE RESTATED CERTIFICATE
OF INCORPORATION TO INCREASE THE
AUTHORIZED COMMON STOCK FROM 6,000,000
SHARES TO 10,000,000 SHARES..............................
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS............................
OTHER MATTERS...........................................................
MINUTES OF LAST PREVIOUS MEETING OF STOCKHOLDERS........................
APPENDIX A - PROPOSED AMENDMENT OF ARTICLE 7A OF THE RESTATED
CERTIFICATE OF INCORPORATION..........................................
[LOGO]
------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1998
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 27, 1998, at 11:00 a.m., for the following
purposes:
1. To elect two members of Class II of the Board of Directors and to
elect and reclassify one member from Class I to Class II to hold
office until the Annual Meeting of Stockholders in the year 2001, and
in each case until their respective successors are elected and
qualify.
2. To consider and act upon the approval of the appointment of Deloitte &
Touche LLP as independent auditors for the year 1998.
3. To amend the Restated Certificate of Incorporation to increase the
authorized Common Stock from 6,000,000 shares to 10,000,000 shares.
4. 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 April 1,
1998, will be entitled to notice of and to vote at the meeting.
The Company's Annual Report for the year ended December 31, 1997, has
already been mailed to stockholders.
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/ MARION F. REYNOLDS
---------------------------------
Marion F. Reynolds
Secretary
April 21, 1998
- ------------------------------------------------------------------------------
IMPORTANT
To assure your representation at the meeting, please
mail the enclosed proxy promptly.
- ------------------------------------------------------------------------------
[LOGO]
------------
PROXY STATEMENT
------------
Notice of the Annual Meeting of Stockholders of Middlesex Water Company to
be held on May 27, 1998, 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, telegraph, or
personal calls 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 21, 1998.
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 April 1, 1998, there were outstanding 4,315,632 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 April 1, 1998, will be entitled to vote at the meeting
or any adjournment thereof.
GENERAL INFORMATION
Management of the Company is under the general direction of a Board of
Directors 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 thirteen meetings and the Board
Committees held ten meetings during the year 1997. Each incumbent Director
attended more than 83% of the total number of meetings of the Board and
Committees on which each served. Attendance at Board and Committee meetings by
Directors as a group averaged 95% in 1997.
The Board of Directors has an Audit Committee which reviews the scope of
the audit and receives and reviews the auditors' annual report. The Committee
held two meetings during the year 1997.
The Board of Directors has an Executive Development and Compensation
Committee which 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 1989 Restricted Stock Plan. The Committee held four meetings
during the year 1997.
The Board of Directors has a Pension Committee which reviews investment
policies and determines recommended investment objectives for the Company's
Pension Plan and meets periodically with the Company's Investment Managers. The
Committee held four meetings during the year 1997.
1
The Board of Directors appoints an ad hoc Pricing Committee from time to
time as needed. In September 1997 such a Committee was appointed to approve the
terms of the proposed sale in 1998 of First Mortgage Bonds. The Committee did
not meet in 1997.
The Board of Directors appoints an ad hoc Nominating Committee from time to
time as needed. Such a Committee was not appointed in 1997. The Company does not
currently have a Nominating Committee. Qualified nominations for Directors
recommended by stockholders will be considered by a Nominating Committee when
appointed. Recommendations should be sent to Middlesex Water Company, Office of
the Secretary, 1500 Ronson Road, P.O. Box 1500, Iselin, New Jersey 08830-0452.
Any nominations for Director should be received by the Secretary on or before
December 22, 1998.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders two members of Class II of the Board
of Directors are to be elected and one member of Class I is to be reclassified
as a member of Class II each to hold office until the Annual Meeting of
Stockholders in the year 2001, and until their respective successors are elected
and qualify. The present terms of the two Directors included in Class II of the
Board of Directors expire at the 1998 Annual Meeting. The present term of the
one Director in Class I, Ernest C. Gere, expires at the 2000 Annual Meeting. His
election and reclassification at this meeting will extend that term. The
reclassification of one member from Class I to Class II is necessary in order
that each Class of Director contains the same number of members.
The nominees listed were selected by the Board of Directors of the Company.
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 1998 Annual Meeting, age as of the date of the
Annual Meeting, the period of service as a Director of the Company, and business
experience during the last five years.
NOMINEES FOR ELECTION AS
DIRECTOR WITH TERM EXPIRING IN 2001 - Class II
EXPIRATION BUSINESS EXPERIENCE
NAME, PERIOD SERVED AS DATE OF DURING PAST FIVE YEARS
DIRECTOR OF COMPANY AGE NEW TERM AND OTHER AFFILIATIONS
------------------- --- -------- -----------------------
Ernest C. Gere 65 2001 Retired. Formerly Senior Vice
Director since 1988 President and Chief
Financial Officer of the
Company.
Chairman of Pension and Pricing
Committees and Member of
Executive Development and
Compensation Committee.
Stephen H. Mundy 64 2001 Retired. Formerly Vice
Director since 1977 President, A. Stanley Mundy,
Inc., Public Utility
Contractor, Virginia Beach,
Virginia.
Chairman of Executive
Development and Compensation
Committee.
2
DIRECTORS WHOSE TERMS CONTINUE BEYOND
THE 1998 ANNUAL MEETING AND ARE NOT
SUBJECT TO REELECTION THIS YEAR
EXPIRATION BUSINESS EXPERIENCE
NAME, PERIOD SERVED AS DATE OF TERM DURING PAST FIVE YEARS
DIRECTOR OF COMPANY AGE AND CLASS AND OTHER AFFILIATIONS
------------------- --- --------- ----------------------
Richard A. Russo 52 2001 Executive Vice President of the
Director since 1994 Company since May 1995 and prior to
that date was Vice
President-Operations since 1989.
Director and President of Tidewater
Utilities, Inc., (TUI); Pinelands
Water Company; Pinelands Wastewater
Company; Director and Executive
Vice President of Utility Service
Affiliates, Inc.; subsidiaries of
the Company and Director and
President of Public Water Supply
Company, Inc., and White Marsh
Environmental Systems, Inc.,
subsidiaries of TUI.
John C. Cutting 61 2000 Consulting Engineer, Science
Director since 1996 Class I Applications International
Corporation, specialists in
information, energy and military
systems, Pittsburgh, Pennsylvania,
since 1998 and prior to that date
was Senior Engineer since 1987.
Member of Audit and Pension
Committees.
John P. Mulkerin (1) 60 2000 President, Chief Executive
Director since 1996 Class I Officer and Director of First
Savings Bank/SLA of Perth Amboy,
New Jersey, since 1996 and prior to
that date was Executive Vice
President, Chief Operating Officer
and Corporate Secretary since 1987
and General Counsel since 1993.
Director of FSB Financial Corp.;
Raritan Bay Medical Center and
Daytop Village Foundation.
Member of Audit and Pricing
Committees.
Philip H. Reardon 61 2000 President and Chief Executive
Director since Class I Officer, Essex County Gas
1991 Company, Amesbury,
Massachusetts. Director of
Essex County Gas Company,
New England Gas Association,
American Gas Association and
First & Ocean National Bank.
Chairman of Pension Committee
and Member of Audit
Committee.
William E. Scott 78 1999 Retired. Formerly Senior
Director since Class III Executive Vice President,
1978 Public Service Electric and
Gas Company, Newark, New
Jersey. Trustee of Delta
Dental Plan of New Jersey,
Inc.
Chairman of Audit Committee.
Jeffries Shein (1) 57 1999 Partner, Jacobson, Goldfarb &
Director since 1990 Class III Tanzman, Industrial and
Commercial Brokerage Firm,
Woodbridge, New Jersey.
Director of First Savings
Bank/SLA, Perth Amboy, New
Jersey, and Chairman of the
Board of Raritan Bay Medical
Center.
Member of Executive Development
and Compensation Committee
and Pricing Committee.
3
DIRECTORS WHOSE TERMS CONTINUE BEYOND
THE 1998 ANNUAL MEETING AND ARE NOT
SUBJECT TO REELECTION THIS YEAR
EXPIRATION BUSINESS EXPERIENCE
NAME, PERIOD SERVED AS DATE OF TERM DURING PAST FIVE YEARS
DIRECTOR OF COMPANY AGE AND CLASS AND OTHER AFFILIATIONS
------------------- --- --------- ----------------------
J. Richard Tompkins 59 1999 Chairman of the Board and
Director since 1981 Class III President of the Company. Past
President of National Association
of Water Companies, Director of
New Jersey Utilities Association
and Raritan Bay Healthcare
Foundation. Director and Chairman
of Tidewater Utilities, Inc.,
(TUI); Pinelands Water Company;
Pinelands Wastewater Company;
Director and President of Utility
Service Affiliates, Inc.,
subsidiaries of the Company, and
Director of Public Water Supply
Company, Inc., and White Marsh
Environmental Systems, Inc.,
subsidiaries of TUI.
(1) In addition to maintaining lines of credit totaling $20,000,000 with 3
other financial institutions, the Company has proposed to establish a
$10,000,000 line of credit with First Savings Bank/SLA of Perth Amboy, New
Jersey. All such lines of credit may be drawn on for short terms at market
rates.
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 1, 1998, beneficial ownership
of Middlesex Water Company Common Stock by the Directors, Executive Officers
named in the table appearing under Executive Compensation and all Directors and
Executive Officers as a group. Jeffries Shein owned 1.46% of the shares
outstanding on April 1, 1998. All other individual Directors and Executive
Officers owned less than 1% of the shares outstanding on April 1, 1998.
AMOUNT AND NATURE
OF BENEFICIAL
NAME OWNERSHIP
---- ---------
Walter J. Brady 7,583
John C. Cutting 16,147
Ernest C. Gere 4,920
John P. Mulkerin 3,500
Stephen H. Mundy 35,287
Philip H. Reardon 9,696
Richard A. Russo 6,582
William E. Scott 5,833
Jeffries Shein* 70,350
Dennis G. Sullivan 4,076
J. Richard Tompkins** 20,706
Ronald F. Williams 1,119
All Directors and Executive Officers
as a group (14) 198,073***
- -------------
* Includes 7,429 shares over which Mr. Shein has
shared voting powers. Mr. Shein also disclaims
beneficial ownership of 1,775 additional shares.
** Disclaims beneficial ownership of 202 additional
shares.
*** 4.58% of the shares outstanding on April 1, 1998.
The following table sets forth information made known to the Company as of
December 31, 1997, 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 329,800 7.73%
1201 Market Street
Wilmington, Delaware 19801
- ------------
(1) Beneficial owner has sole power to vote and dispose of such shares.
4
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 1997,
1996 and 1995 of certain officers whose total annual salary amounted to $100,000
or more.
SUMMARY COMPENSATION TABLE
Restricted All
Name and Stock Other Annual
Principal Position Year Salary Award Compensation
------------------- ---- ------ ---------- -------------
(1)
J. Richard Tompkins 1997 $239,350 $25,462 $ 8,372(2)
Chairman of the Board 1996 $229,350 $40,844 $ 8,285(2)
and President 1995 $217,261 $42,188 $10,074
Richard A. Russo 1997 $155,350 $13,580 $ 6,497(2)
Executive Vice 1996 $143,350 $21,239 $ 5,989(2)
President 1995 $132,885 $16,875 $ 5,483
Walter J. Brady 1997 $119,950 $ 6,790 $ 5,373(2)
Vice President- 1996 $115,350 $11,436 $ 5,170(2)
Administration 1995 $111,350 $10,125 $ 4,569
Dennis G. Sullivan 1997 $115,750 $ 6,790 $ 5,168(2)
Vice President & 1996 $111,350 $13,070 $ 4,974(2)
General Counsel and 1995 $106,816 $13,500 $ 4,350
Assistant Secretary &
Assistant Treasurer
Ronald F. Williams 1997 $108,550 $ 6,790 $ 4,047(2)
Vice President- 1996 $104,350 $ 8,169 $ 4,023(2)
Operations 1995 $ 76,408(3) -- $ 1,202
- ------------
(1) The number and value of Restricted Stock held in escrow as of December 31,
1997, were as follows: Mr. Tompkins - 8,900/$198,025; Mr. Russo -
4,600/$102,350; Mr. Brady - 2,800/$62,300; Mr. Sullivan - 3,200/$71,200;
and Mr. Williams - 900/$20,025. 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 contribution to the Company's defined contribution plan
and life insurance premiums for 1997: Mr. Tompkins ($5,542 and $2,830), Mr.
Russo ($5,425 and $1,072), Mr. Brady ($4,186 and $1,187), Mr. Sullivan
($4,039 and $1,129) and Mr. Williams ($3,648 and $399).
(3) Mr. Williams began his employment with the Company in March 1995.
COMPENSATION OF DIRECTORS
A Director who is not an officer of the Company or its subsidiaries is paid
an annual retainer of $6,000 and a fee of $500 for attendance at Board of
Directors (Board) meetings; a fee of $250 for attendance at special meetings of
the Board and a fee of $150 for attendance at special Board Committee meetings
by means of communications facilities and a fee of $350 for each committee
meeting attended. Committee chairmen receive an additional $200 for each
committee meeting chaired. Directors who are officers of the Company are paid a
fee of $250 for each meeting of the Board attended.
5
COMPENSATION PURSUANT TO PENSION PLANS
Annual Benefit based on Compensation and Years of Service
Final
Year's
Compensation Years of Service
- ------------ -----------------------------------------------------------
15 20 25 30 35 45
-- -- -- -- -- --
$100,000 $ 59,125 $ 59,125 $ 59,125 $ 59,125 $ 59,125 $ 72,726
$125,000 $ 77,875 $ 77,875 $ 77,875 $ 77,875 $ 77,875 $ 92,476
$150,000 $ 96,625 $ 96,625 $ 96,625 $ 96,625 $ 96,625 $112,226
$175,000 $115,375 $115,375 $115,375 $115,375 $115,375 $120,126
$200,000 $134,125 $134,125 $134,125 $134,125 $134,125 $134,125
$225,000 $152,875 $152,875 $152,875 $152,875 $152,875 $152,875
$250,000 $171,625 $171,625 $171,625 $171,625 $171,625 $171,625
$300,000 $209,125 $209,125 $209,125 $209,125 $209,125 $209,125
All employees who receive pay for 1,000 hours during the year are included
in the Qualified Pension Plan. Under the noncontributory trusteed defined
benefit plan current service costs are funded annually. 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 Executive'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 1997 Summary Compensation Table. The benefit
amounts are not subject to any deduction for Social Security benefits or other
offset amounts.
During the year 1997, the Company made a statutory contribution to the
Pension Plan in the amount of $50,000. Remuneration covered under the Pension
Plan includes base wages only and not Directors' fees.
The estimated credited years of service based on normal retirement at age
65 includes 22 years, 20 years, 44 years, 22 years and 19 years for Messrs.
Tompkins, Russo, Brady, Sullivan, and Williams, respectively.
Supplemental Executive Retirement Plan - All executive officers are
eligible to participate in the deferred compensation plan known as the
Supplemental Executive Retirement 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 reduced by his
primary Social Security benefit and further reduced by any benefit payable from
the Qualified Pension Plan. In certain cases further reductions are made for
benefits from other employment.
Vesting provisions start at 50% for 5 years of service and increases 10%
for each year of service for a maximum of 100% vesting 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 Plan. 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 this 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 Plan provisions. For the year 1997 the
Company paid life insurance premiums totaling $109,000 for Messrs. Tompkins,
Russo, Brady, Sullivan and Williams, which provides a preretirement net death
benefit of 1-1/2 times base salary at date of death.
Defined Contribution Plan - The Company matches 100% of that portion of the
contribution which does not exceed 1% of basic pay plus an additional 50% of
that portion from 2% to 6% of basic pay. Distributions under the Plan are made
upon normal retirement, total and permanent disability or death and are subject
to certain vesting provisions as to Company contributions. In 1995, this Plan
was converted from an after tax plan to a 401(k) pretax plan.
6
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the 1997 Executive Development and Compensation Committee
were Stephen H. Mundy, Carolina M. Schneider and Jeffries Shein. The members of
the 1998 Executive Development and Compensation Committee, appointed in
September 1997, are Ernest C. Gere, Stephen H. Mundy and Jeffries Shein. During
1997, no member of the Executive Development and Compensation Committee was an
officer or employee of the Company or a subsidiary. Stephen H. Mundy has a
financial interest in a construction company that was awarded a contract by the
Company in the amount of $0.7 million in 1997. Ms. Schneider retired as a
Director of the Company on November 18, 1997, and was formerly
Secretary-Treasurer of the Company. Mr. Gere was formerly Senior Vice President
of the Company.
REPORT OF THE EXECUTIVE DEVELOPMENT AND COMPENSATION COMMITTEE
The compensation program for executive officers of the Company is
administered by the Executive Development and Compensation Committee of the
Board of Directors. The 1997 Committee was composed of three independent
Directors: Stephen H. Mundy, Jeffries Shein and Carolina M. Schneider. (Ms.
Schneider retired as a Director of the Company on November 18, 1997.) The
Committee is responsible for setting and administering the policies which govern
annual compensation and Restricted Stock awards. Policies and plans developed by
the Committee are approved by the full Board of Directors.
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 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 outstanding 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 Mr. Tompkins to evaluate the performance of the
other executive officers and meets in the absence of Mr. Tompkins to evaluate
his performance. The Committee reports on all executive evaluations to the full
Board of Directors.
Base salary levels are reviewed annually using compensation data produced
by an outside compensation expert for similar positions and comparable
companies. Base salaries for satisfactory performance are targeted at the median
of the competitive market. Individual performance of the executive is determined
and taken into account when setting salaries against the competitive market
data. The Committee reviews, as well, the individual's efforts on cost control
and his or her 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 and general industry
salaries.
The factors and criteria upon which Mr. Tompkins' 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 at a rate which was approximately the median
of the utility market and below that of the general industry. In addition, in
evaluating the performance of the CEO, the Committee has taken particular note
of management's success with respect to the growth of the Company.
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.
1998 Executive Development
and Compensation Committee
Stephen H. Mundy, Chairman
Ernest C. Gere
Jeffries Shein
7
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total return (which includes reinvestment of dividends) on a $100
investment for the Company's Common Stock, the NASDAQ and a peer group of
investor-owned water utilities for the period of five years commencing December
31, 1992. The peer group includes Aquarion Company, California Water Service
Company, Connecticut Water Service, Inc., Consumers Water Company, E'town
Corporation, Philadelphia Suburban Corporation, SJW Corporation, Southern
California Water Company, Southwest Water Company, United Water Resources and
the Company. For 1997, the peer group was reduced by one company, IWC Resources
Corporation, which was acquired in 1997.
[GRAPHICAL REPRESENTATION OF CHART BELOW]
--------------------------------------------------------------------
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
--------------------------------------------------------------------
MSEX $100 $132 $107 $128 $127 $179
--------------------------------------------------------------------
NASDAQ 100 115 112 159 195 240
--------------------------------------------------------------------
Peer Group 100 115 106 122 155 211
--------------------------------------------------------------------
8
PROPOSAL 2
APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Deloitte & Touche LLP of Parsippany, New Jersey, as independent
auditors to make the annual audit of the books of account and supporting records
of the Company for 1998, subject to the approval of the stockholders entitled to
vote for the election of Directors, by a majority of the votes cast on the
question of such approval, provided a quorum is present, at the Annual Meeting
of Stockholders.
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.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 3
AMENDMENT OF THE RESTATED CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED COMMON STOCK FROM
6,000,000 SHARES TO 10,000,000 SHARES
The Board of Directors unanimously recommends that the stockholders approve
an amendment to the Company's Restated Certificate of Incorporation increasing
the authorized Common Stock, without par value, from 6,000,000 shares to
10,000,000 shares. The text of the proposed amendment is attached hereto as
Appendix A.
As of April 1, 1998, 4,315,632 shares of the 6,000,000 shares of Common
Stock presently authorized were outstanding. 1,684,368 shares were available for
issuance for other purposes, including the Dividend Reinvestment and Common
Stock Purchase Plan.
The Board of Directors believes that it would be in the best interests of
the Company to have additional shares available for issuance at its discretion
for acquisitions, financings, stock dividends or splits, and other corporate
purposes. The proposed amendment would not change the terms of the Common Stock,
which does not have preemptive rights. No further stockholder authorization for
the issuance of the additional shares will be solicited prior to issuance.
The power of the Board of Directors to issue additional shares of Common
Stock (within the limits imposed by applicable law) with voting or other rights
which might impede or discourage a takeover attempt, may make the Company a less
attractive takeover candidate, and may deter takeover attempts not approved by
the Board in which stockholders might receive for some or all of their shares a
substantial premium above market value at the time such takeover bid is made.
The Company has no specific plans and there are no commitments, understandings
or negotiations at this time with respect to the issuance of additional shares
of Common Stock. The Company has stated that, in connection with financing the
cost of the upgrade, expansion and addition of facilities at its principle water
treatment plant and a related water intake station, the Company will consider an
offering of Common Stock depending upon the amount of funds generated internally
and from the sale of Common Stock under the Company's Dividend Reinvestment and
Common Stock Purchase Plan.
VOTE REQUIRED FOR PROPOSAL 3
The amendment of Article 7A of the Certificate of Amendment, which
constitutes Proposal 3, will require the affirmative vote of the holders of
two-thirds of the shares of the Company's Common Stock voting at the 1998 Annual
Meeting (assuming the presence of a quorum).
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 3.
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 next year's
annual meeting, it must be received by the Secretary of the Company at 1500
Ronson Road, P.O. Box 1500, Iselin, New Jersey 08830-0452, not later than
December 22, 1998, in order to be included in the Company's proxy statement and
form of proxy relating to that meeting.
9
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.
MINUTES OF LAST PREVIOUS MEETING OF STOCKHOLDERS
The minutes of the last previous 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/ MARION F. REYNOLDS
------------------------------------
Marion F. Reynolds
Secretary
Iselin, New Jersey
April 21, 1998
10
APPENDIX A
PROPOSED AMENDMENT OF FIRST SENTENCE OF ARTICLE 7A
OF THE RESTATED CERTIFICATE OF INCORPORATION
ARTICLE 7A. The total authorized capital stock of the Company is 10,249,980
shares, divided into 10,000,000 shares of common stock without nominal or par
value, 149,980 shares of preferred stock without nominal or par value and
100,000 shares of preference stock without nominal or par value.
A-1
[MIDDLESEX WATER COMPANY LOGO]
1500 Ronson Road,
Iselin New Jersey 08830-3020
732-634-1500
[MAP GOES HERE]
DIRECTIONS TO MIDDLESEX WATER COMPANY
FROM GARDEN STATE PARKWAY (NORTH OR SOUTH): Take Exit 131A to second traffic
light. Turn right onto Middlesex--Essex Turnpike and proceed (about 1/2 mile) to
first traffic light (Gill Lane). Turn right and go (about 1 mile) under railroad
underpass and make right onto Ronson Road. Proceed past three large mirror-sided
office buildings on the right. Make right into Middlesex Water Company at sign.
FROM NEW JERSEY TURNPIKE (NORTH OR SOUTH): Take Exit 11 onto 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.
Proceed past three large mirror-sided office buildings on the right. Make right
into Middlesex Water Company at sign.
|X| PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE MIDDLESEX WATER COMPANY
ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 1998
The undersigned stockholder(s) hereby appoint(s) John C. Cutting and J.
Richard Tompkins, 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 April 1, 1998, at the annual meeting of shareholders to be held
on May 27, 1998, at 11:00 a.m., local time or any adjournment thereof.
Please be sure to sign and date Date ___________
this Proxy in the box below.
- ----------------------------------------------------
____________________________________________________
Shareholder sign above Co-holder (if any) sign above
1. Election of Directors, Nominees for Class II term expiring in 2001:
FOR WITHHOLD FOR ALL EXCEPT
|_| |_| |_|
ERNEST C. GERE, STEPHEN H. MUNDY AND RICHARD A. RUSSO
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEES, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
________________________________________________________________________________
2. Approve the appointment of Deloitte & Touche LLP as auditors for the
Company for the year 1998.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. Amend the Restated Certificate of Incorporation by increasing the
authorized Common Stock, from 6,000,000 shares to 10,000,000 shares.
For Against Abstain
|_| |_| |_|
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, AND FOR PROPOSALS NUMBER 2, 3.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
- --------------------------------------------------------------------------------
DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
MIDDLESEX WATER COMPANY
[LOGO] C/O REGISTRAR AND TRANSFER COMPANY
10 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016-3572
- --------------------------------------------------------------------------------
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
YOUR NAME APPEARS ON THIS PROXY.
THANK YOU
- --------------------------------------------------------------------------------