UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No. )
Filed by
the Registrant þ
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Definitive
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Soliciting
Material Pursuant to §240.14a-12
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Middlesex
Water Company
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(Name
of Registrant as Specified In Its
Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
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1500
Ronson Road
P.O.
Box 1500
Iselin,
New Jersey 08830-0452
Tel.
(732) 634-1500
Fax
(732) 638-7515
NASDAQ
Stock Market Symbol: MSEX
April
11, 2008
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Dear
Stockholder:
You are cordially invited to attend
Middlesex Water Company’s Annual Meeting of Stockholders. The meeting
will be held on Wednesday, May 21, 2008 at 11:00 a.m. at the office of the
Company, 1500 Ronson Road, Iselin, New Jersey.
Information
about the meeting is presented in the following Notice of Annual Meeting of
Stockholders and Proxy Statement. The Company’s Annual Report for the
year ended December 31, 2007 accompanies this proxy statement.
At the
meeting, management will report on the company’s financial status, operations
and other activities during 2007 and our outlook and goals for
2008. We welcome this opportunity to meet with our stockholders and
look forward to your comments and questions.
We hope
that you will plan to attend the annual meeting. If you are unable to
attend in person, we urge you to participate in the meeting by voting your
shares of common stock by signing, dating and completing the enclosed proxy and
returning it in the accompanying envelope. Please refer to the
instructions on the enclosed proxy card.
We look
forward to seeing you on May 21st.
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Sincerely,
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J.
Richard Tompkins
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Chairman
of the Board
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A
Provider of Water, Wastewater and Related Products and Services
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TABLE
OF CONTENTS
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PROXY
STATEMENT
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ABOUT
THE ANNUAL MEETING
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(This page intentionally left
blank.)
1500 Ronson Road
Iselin,
New Jersey 08830-0452
732-634-1500
www.middlesexwater.com
NOTICE
OF 2008 ANNUAL MEETING OF STOCKHOLDERS 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 21, 2008 at 11:00 a.m. to consider and vote upon the following
proposals:
1.
Election
of three members of Class III of the Board of Directors to hold office until the
Annual Meeting of Stockholders in the year 2011, and in each case until their
respective successors are elected and qualify.
2.
Approval
of the new 2008 Restricted Stock Plan.
3.
Approval
of an Outside Director Stock Compensation Plan.
We may
also transact any other business as may properly come before the
meeting.
Shareholders
of record of the Company’s common stock as of the close of business on March 14,
2008 are entitled to receive notice of the annual meeting and to
vote. Shareholders who hold shares in street name may vote through
their brokers, banks or other nominees.
YOUR VOTE
IS IMPORTANT. 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.
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Sincerely,
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By
Order of the Board of Directors,
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KENNETH
J. QUINN
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Vice
President, General Counsel,
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Secretary
and Treasurer
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April
11, 2008
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YOUR
VOTE IS IMPORTANT!
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To
assure your representation at the meeting, please mail
the enclosed proxy promptly.
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1
ABOUT THE ANNUAL MEETING
Questions
and Answers
Why have I
received these materials? The enclosed proxy is
solicited by and on behalf of the Board of Directors of Middlesex Water Company
for use at the Annual Meeting of Stockholders to be held on May 21,
2008. This proxy statement, together with the proxy card and our 2007
Annual Report, is being mailed to stockholders on or about April 11,
2008.
How are proxies
being solicited? 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. The cost of soliciting proxies will be borne by the
Company.
Who may
vote? You are entitled to vote if our records show you held
one or more shares of the company’s common stock at the close of business on
March 14, 2008, which we refer to as the record date. At
that time, 13, 262,182 shares of common stock were outstanding and
entitled to vote. Each holder of Common Stock is entitled to one vote for each
share held.
How do I vote
shares registered in my name? If you owned shares of
common stock in your own name on the record date, then you are a holder of
record. This means you may use the enclosed proxy card to tell the
company representatives how to vote your shares. Be sure to sign,
date and mail the proxy card in the envelope that we have included with the
proxy card.
How do I vote
shares held by a broker? If a broker, bank
or other nominee holds shares of common stock for your benefit, and the shares
are not in your name on the company’s stock transfer records, then you are
considered a “beneficial owner” of those shares. Shares held this way
are sometimes referred to as being held in “street
name.” In that case, your broker, bank or other nominee
will send you instructions on how to vote.
What am I voting
on? You are
voting on THREE proposals. 1) Election of three
members of Class III of the Board of Directors to hold office until the Annual
Meeting of Stockholders in the year 2011, and in each case until their
respective successors are elected and qualify. 2) Approval of the new
2008 Restricted Stock Plan, and 3) Approval of an Outside Director Stock
Compensation Plan.
What are the
voting recommendations of the Board? The Board’s
recommendation for each proposal is set forth in this proxy statement together
with the description of each proposal. In summary, the Board
recommends a vote: FOR Proposal 1 to elect three Class III directors; FOR
Proposal 2 to approve the new 2008 Restricted Stock Program; and FOR Proposal 3
to approve the Outside Director Stock Compensation Plan.
Will any other
matters be voted on? We are not aware
of any other matters that you will be asked to vote on at the Annual
Meeting.
Votes required
for approval. The affirmative vote of
a plurality of the votes cast at the meeting is required for the election of
Directors. For the approval of the new 2008 Restricted Stock Plan and the
Outside Director Compensation Stock Plan, 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.
Can I change my
vote after I have returned my proxy card? Yes. 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.
Who will count
the vote? Votes will be counted by representatives of our
transfer agent, Registrar & Transfer. Its representatives will
serve as inspectors of the election.
2
What does it mean
if I get more than one proxy card? It means your shares are
held in more than one account. You should vote the shares on all your
proxy cards using the methods available.
Who can attend
the Annual Meeting? All shareholders
of record as of the close of business on March 14, 2008 can attend the meeting.
Seating, however, is limited. Attendance at the Annual Meeting will be on a
first arrival basis.
Will there be a
management presentation at the Annual Meeting? Yes. Management
will give a brief presentation during the meeting.
Can I bring a
guest? While bringing a guest is not prohibited, please be
aware that seating availability at the Annual Meeting may be
limited.
When are
shareholder proposals due for the 2009 Annual Meeting? Should a
stockholder intend to present a proposal at the annual meeting to be held in the
year 2009, 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 12, 2008, in order to be considered for inclusion in the Company's
proxy statement and form of proxy relating to the 2009 Annual
Meeting.
Is this proxy
statement available online? Yes. This proxy statement and our
2007 Annual Report is available on our website at www.
middlesexwater.com
3
GOVERNANCE
Board
Matters
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 twelve meetings and the
Board Committees held twenty-three meetings during the year
2007. Each incumbent Director attended 95% or more of the total
number of meetings of the Board and Committees on which each
served.
The table
below provides committee assignments for each of the Board Committees during
2007:
Board
Committee Assignments
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NAME
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AUDIT
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CAPITAL
IMPROVEMENT
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COMPENSATION
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CORPORATE
GOVERNANCE
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NOMINATING
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PENSION
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AD
HOC
PRICING
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Annette Catino
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x
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x*
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John
C. Cutting
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x
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x*
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x*
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x
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John
R., Middleton, M.D.
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x
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John
P. Mulkerin
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x*+
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x
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x
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Walter
G. Reinhard
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x
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x*
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x
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Jeffries
Shein
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x*
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x
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x*
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x
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J.
Richard Tompkins
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x
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*
Indicates Committee Chair
+
Indicates Audit Committee Financial Expert
Committees
of the Board
Audit
Committee
The Audit Committee 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. In February 2008,
the Board of Directors re-approved the written Charter for the Audit
Committee. The Committee held four meetings and one teleconference
meeting during 2007. 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
reviews and approves the Capital Budget and the long-term capital planning
needs. The Committee also monitors capital projects and expenditures
during the year. In April 2007, the Board of Directors approved a
written Charter for the Capital Improvement Committee. The
Committee held three meetings during 2007.
Compensation
Committee
The Compensation Committee reviews and
makes recommendations to the Board of Directors as to the salaries, benefits and
incentive compensation of the Executive Officers of the Company. Executive
Officer incentive compensation is awarded under the Restricted Stock
Plan. (Please refer to page 13 for a description of the Restricted
Stock Plan.) In February 2008, the Board
4
of
Directors re-approved a written Charter for the Compensation
Committee. The Committee held four meetings and one teleconference
meeting during 2007. 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
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. In February 2008, the
Board of Directors re-approved a written Charter for the Corporate Governance
Committee. The Committee held four meetings during 2007.
Nominating
Committee
The Nominating Committee makes
recommendations to the Board of Directors with respect to nominations for the
Board. The Nominating Committee screens candidates considered for
election to the Board. In this capacity, the Committee 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. In January 2008, the Board of Directors re-approved a
written Charter for the Nominating Committee. The Committee held two
meetings during 2007. 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, except for J. Richard Tompkins. Mr.
Tompkins is Chairman of the Board and past president of the
Company. His professional expertise and role as a community resource
are particularly useful in service on this Committee. While he is not an
independent director under NASDAQ listing rules, the Board has determined that
the best interests of the Company and its shareholders would be served by Mr.
Tompkins’ appointment to this Committee.
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: 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 12, 2008, in order
to be considered for inclusion in the Company’s proxy statement and form of
proxy relating to the 2009 Annual Meeting of Stockholders.
Pension
Committee
The Pension Committee reviews
investment policies and determines recommended investment objectives for the
Company’s Pension and Retiree Welfare Plans. The Committee also
reviews the performance of the Company’s 401(k) Plan Administrator and reviews
options offered in the Company’s 401(k) plan. The Committee meets
quarterly with the Company’s outside Investment Managers. In January
2008, the Board of Directors re-approved a written Charter for the Pension
Committee. The Committee held four meetings during 2007.
Ad
Hoc Pricing Committee
The ad hoc Pricing Committee meets, as
needed, to review financial matters including, but not limited to, the pricing
and issuance of common stock and corporate bonds. The Committee did
not meet in 2007.
Availability
of Corporate Governance Materials
The Board
of Directors has adopted a Code of Conduct that applies to all of our Directors,
Officers and employees. The Company’s Code of Conduct as well
as the charters for the Audit, Capital Improvement, Compensation, Corporate
Governance, Nominating and Pension Committees are available on our website www.middlesexwater.com
under the heading Investor Relations—(Corporate Governance). The
foregoing information is available in print to any shareholder who
requests it. Requests should be addressed to Kenneth J. Quinn, Vice
President, General Counsel, Secretary and Treasurer, Middlesex Water Company,
1500 Ronson Road, P.O. Box 1500, Iselin, New
Jersey 08830-0452.
5
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT
AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of
March 14, 2008, 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 2.15% of the shares outstanding on March
14, 2008. All other individual elected Directors and Executive Officers owned
less than 1% of the shares outstanding on March 14, 2008.
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Name
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Amount and Nature of Beneficial
Ownership (1)
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Directors
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Annette
Catino
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8,421 | |||
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John
C. Cutting
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36,611 | |||
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John
R. Middleton, M.D.
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6,641 | |||
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John
P. Mulkerin
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25,000 | |||
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Walter
G. Reinhard
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2,280 | |||
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Jeffries
Shein
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284,958 | |||
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J.
Richard Tompkins
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38,962 | |||
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Named
Executive Officers
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Dennis
W. Doll
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12,511 | |||
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A.
Bruce O’Connor
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29,510 | |||
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Kenneth
J. Quinn
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4,026 | |||
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Richard
M. Risoldi
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11,273 | |||
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Ronald F. Williams
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19,385 | |||
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All
elected Directors and Executive Officers as a group including
those named above.
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495,211 | * | ||
* 3.73%
of the shares outstanding on March 14, 2008.
The
following table sets forth information made known to the Company as of March 14,
2008, of any person or group to be the beneficial owner of more than five
percent of the Company's Common Stock:
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Name
and Address
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Number
of Shares Beneficially Owned and Nature of Beneficial
Ownership
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Percent
of Class
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Verona
Construction Company
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700,000
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5.28%
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Wilmington,
Delaware 19801
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(1) Beneficial owner has
sole power to vote and dispose of such shares.
6
PROPOSAL 1 – 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 candidates are to be elected each to hold
office until the Annual Meeting of Stockholders in the year 2011, and until
their respective successors are elected and qualified. The present
terms of Class III directors expire at the year 2008 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 2008
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.
RECOMMENDATION
The
Board of Directors unanimously recommends that stockholders vote FOR Proposal 1,
the election of John R. Middleton, M.D., Jeffries Shein and J. Richard
Tompkins.
NOMINEES FOR ELECTION AS
DIRECTORS
WITH TERMS EXPIRING IN 2011 – CLASS III
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JOHN R. MIDDLETON,
M.D., age 63, became a director of the Company in
1999. He is the former Chair of the Department of Medicine and
former Chief Medical Officer of Raritan Bay Medical Center and is
currently engaged in the private practice of Infectious
Diseases. He is a Fellow of the American College of Physicians
and a Fellow of the Infectious Diseases Society of America. Dr.
Middleton is a Member of the Audit Committee, the Compensation Committee
and the Corporate Governance Committee. (1)
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JEFFRIES
SHEIN, age 68, became a director of the Company in 1990.
He is a Managing Partner of JGT Management Co., LLC, a management and
investment firm, since 2003 and formerly a Partner of Jacobson, Goldfarb
& Tanzman Associates, Woodbridge, New Jersey, a commercial real estate
brokerage firm, since 1972. He is a Director of Raritan Bay
Medical Center and a Director of The Provident Bank. Mr. Shein
is Chairman of the Compensation Committee and the Nominating Committee and
a Member of the Corporate Governance Committee, Pension Committee and the
ad hoc Pricing Committee. (1)
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J. RICHARD
TOMPKINS, age 69, became a director of the Company in
1981. He has served as Chairman of the Board of the Company
since May 1990 and was President from May 1981-2003. Mr.
Tompkins is a past President of the National Association of Water
Companies and the New Jersey Utilities Association. He is past
Director and Chairman of Tidewater Utilities, Inc. (TUI), White Marsh
Environmental Systems, Inc., (a subsidiary of TUI), Pinelands Water
Company, Pinelands Wastewater Company, Utility Service Affiliates, Inc.,
Utility Service Affiliates (Perth Amboy) Inc., and Bayview Water
Company. He currently serves as a member of the Capital
Improvement Committee, the Nominating Committee and the ad hoc Pricing
Committee.
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(1)
This
director has been determined by the Board of Directors to be independent under
the applicable listing standards of NASDAQ.
7
DIRECTORS WHOSE TERMS CONTINUE BEYOND THE 2008 ANNUAL MEETING AND
WHO
ARE NOT SUBJECT TO ELECTION THIS YEAR
Class
I – Directors Whose Terms Expire in 2009
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JOHN C.
CUTTING, age 71, 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)
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JOHN P.
MULKERIN, age 70, 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. 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 and Middlesex County
College. He is Chairman of the Audit Committee and the Audit
Committee Financial Expert; and a Member of the Corporate Governance
Committee, Nominating Committee and Pension Committee.
(1)
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DENNIS W.
DOLL, age 49, was named President and Chief
Executive Officer and became a Director of Middlesex effective January 1,
2006. Mr. Doll joined the Company in November 2004 as Executive
Vice President. Prior to joining the Company, Mr. Doll was
employed by Elizabethtown Water Company since 1985, serving most recently
as a member of the senior leadership team of the Northeast Region of
American Water, which was comprised of Elizabethtown Water Company, New
Jersey-American Water Company and Long Island Water Corporation and
included other regulated and non-regulated subsidiaries. Mr.
Doll serves as Director and Chairman of Tidewater Utilities, Inc. (TUI),
Tidewater Environmental Services, Inc.; White Marsh Environmental Systems,
Inc., a subsidiary of TUI; Pinelands Water Company and Pinelands
Wastewater Company; Utility Service Affiliates, Inc., and Utility Service
Affiliates (Perth Amboy) Inc. since January 1,
2006.
|
(1) This
director has been determined by the Board of Directors to be independent under
the applicable listing standards of NASDAQ.
8
DIRECTORS
WHOSE TERMS CONTINUE BEYOND THE 2008 ANNUAL MEETING AND
WHO
ARE NOT SUBJECT TO ELECTION THIS YEAR
Class
II – Directors Whose Terms Expire in 2010
 |
ANNETTE CATINO, age 51,
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, of which she serves as a
Director. Ms. Catino is a Director of Caucus NJ Educational
Corporation, Northfield Savings Bank, Corp. and The Val Skinner
Foundation. Ms. Catino is Chairwoman of the ad hoc Pricing
Committee and a Member of the Audit Committee, the Compensation Committee
and the Nominating Committee. (1)
|
|
 |
WALTER G. REINHARD, age
62, became a director of the Company in 2002. He is a Partner
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 and the Pension Committee.
(2).
|
(1) This
director has been determined by the Board of Directors to be independent under
the applicable listing standards of NASDAQ.
(2) Norris,
McLaughlin & Marcus, P.A., provides legal services to the Company in the
areas of corporate and regulatory matters.
9
PROPOSAL 2 – APPROVAL OF THE NEW 2008 RESTRICTED STOCK
PLAN
The Board of Directors unanimously
recommends that the stockholders approve the adoption of the new 2008 Restricted
Stock Plan.
The
Company proposes to issue up to 300,000 shares of Common Stock, No Par Value,
through its 2008 Restricted Stock Plan (hereinafter the “Plan”). A
copy of the Plan is attached hereto as Exhibit A.
The purpose of the Plan is to advance
the interests of the Company and its stockholders by providing long-term
incentives, in addition to current compensation, to attract and retain certain
key executives and other employees of the Company who have contributed, or are
likely to contribute, significantly to the long-term performance and growth of
the Company. Among the factors generally considered in determining eligibility
for an award under the Plan are (a) Financial Goals, designed to continuously
improve shareholder returns; (b) Operational Goals, a focus on training,
development, operational excellence and service quality; and (c) Leadership
Goals, designed to instill a Company culture based on ethical behavior, mutual
respect, open and honest communications and continued improvement and
accountability of performance.
The Plan is to be administered by the
Compensation Committee of the Company’s Board of Directors. This
Committee shall have the general administrative authority concerning the Plan
and shall have the exclusive power to select the officers and other employees to
be granted awards under the Plan.
The Plan
is similar to its predecessor, the 1997 Plan, which, by its terms, has now
ended.
RECOMMENDATION
The
Board of Directors unanimously recommends that stockholders vote FOR Proposal
2.
10
PROPOSAL 3 – APPROVAL OF AN OUTSIDE DIRECTOR STOCK
COMPENSATION PLAN
The Board
of Directors unanimously recommends that the stockholders approve the adoption
of an Outside Director Stock Compensation Plan. A Copy of the Plan is
attached hereto as Exhibit B.
The
purpose of the Outside Director Stock Compensation Plan (the “Plan”) is to
promote the interests of the Company and its stockholders by attracting and
retaining Outside Directors of outstanding ability and strengthening the link
between the Company’s Outside Directors and the Company’s stockholders by paying
such directors a portion of their compensation in Common Stock, thereby
increasing their vested interest in the future successes of the
Company.
The Plan
shall be administered by the Board. The Board shall have the
authority, subject to the terms of this Plan, to determine the amount of annual
Grants to each member of the Board (which need not be the same for each member),
any restrictions or terms applicable to such Grants, and to interpret the terms
of this Plan. Any determination made by the Board in accordance with
the provisions of the Plan with respect to any Grant shall be made in the sole
discretion of the Board, and all decisions made by the Board pursuant to the
provisions of the Plan shall be final and binding on all persons, including the
Company and all persons having an interest in the Plan.
Participation
in this plan will be limited to Outside Directors of the Company. The
Plan shall be effective as of July 1, 2008 provided it is approved by the
Company’s stockholders at the Annual Meeting to be held on May 21, 2008 or, in
any event, not later than twelve months following the proposed Effective Date,
and further provided that all required regulatory approvals have been
obtained.
All costs and expenses of the adoption
and administration of the Plan shall be borne by the Company and none of such
expenses shall be charged to any Participant.
RECOMMENDATION
The
Board of Directors unanimously recommends that stockholders vote FOR Proposal
3.
11
COMPENSATION DISCUSSION & ANALYSIS
The Compensation Discussion &
Analysis (CD&A) describes the Company’s compensation objectives, policies
and basis for determinations of Compensation for the Named Executive Officers
and the other executive officers of the Company (hereinafter, collectively
referred to as the “Executive Officers”).
The Company’s compensation objectives
and policies applicable to the Executive Officers seek to incent the advancement
of three corporate priorities which are desirable and necessary for the Company
to achieve its expressed vision and strategy in the creation of long-term
shareholder value. Those corporate priorities are (1) profitable
growth; (2) operational excellence; and (3) developing the technical and
management skills of the Company employees. In order to achieve the
vision of the Company, and execute the strategies needed to achieve that
vision, the Company’s compensation and benefits programs are designed
to (a) attract and retain qualified executives; (b) support short and long-term
goals and objectives of the Company and; (c) appropriately reward individuals
for their contribution to the Company’s success. These programs are
directly related to the creation of value for shareholders through progress in
the three corporate priorities listed above.
In order to achieve progress in the
three priorities above, the Company, through the Executive Officers, sets goals
each year for incentive compensation purposes which are consistent with those
priorities. Each goal is designed to be specific, measurable,
achievable with effort, relevant and time-bound.
Consistent with the Company’s corporate
priorities, expectations are established for the Executive Officers in the
following three areas:
A. Financial – Executive Officers
are expected to deliver appropriate shareholder returns to ensure competitive
performance in relation to the Company’s peer group of publicly-traded
companies.
B. Operational –Executive
Officers continue to diligently implement and manage the Company’s policies,
procedures, processes and programs for compliance with regulatory
requirements. The Executive Officers are expected to attract and
retain qualified employees and keep appropriate focus on training and
development. The Executive Officers fully develop, implement and
manage succession plans. They are expected to maintain open, honest and frequent
communications with employees at all levels regarding their professional
development, career paths, performance and other areas of opportunity for both
themselves and for the Company. The Executive Officers develop and
execute plans to grow the business, in terms of both customers and
profits. The Company, through its Executive Officers, continues to
manage to high standards for water quality, service delivery, asset management
and other disciplines. At the same time, the Executive Officers seek
to control operating costs to the extent possible, to maximize shareholder
returns and to maintain reasonable customer rates.
C. Leadership –Executive Officers
are expected to instill a Company culture based on ethical behavior, mutual
respect, open and honest communications and a commitment to learning and
continued improvement and accountability for performance. By setting
an example and “tone at the top” these values and behaviors are diligently
instilled throughout the Company.
ELEMENTS
OF COMPENSATION
The elements of compensation relevant
to the Executive Officers consist of base salary, eligibility for incentive
compensation through participation in the Company’s Restricted Stock Plan and
participation in a Supplemental Executive Retirement Plan (SERP). In addition,
the Executive Officers participate under the same terms and conditions in
retirement, health and welfare plans that are generally available to all
eligible employees. All elements of compensation are further detailed
in the tables contained herein.
Base salary levels are reviewed
annually and are benchmarked against other companies, both utilities and
non-utilities, at the State and national levels. Independent salary
studies are periodically conducted with the assistance of an outside consultant
retained by the Compensation Committee. Salaries for satisfactory
performance are targeted at the median of the competitive
market. Individual performance of the executive is given appropriate
consideration when setting salaries against the competitive market
data.
The factors and criteria upon which the
Chief Executive Officer’s (CEO) compensation is based generally include those
discussed with respect to the other Executive Officers. In addition,
the Compensation Committee examines the effectiveness with which the CEO is
managing the performance of the executive team. Among the criteria to
be used for evaluation are the following: (a) Financial – to review
the establishment and achievement of appropriate short and long-term financial
objectives. (b) Operational – to determine that appropriate policies,
procedures, processes and programs have been established and implemented so the
Company is compliant under relevant regulatory polices; to ensure the
development of effective recruitment, training, retention and personnel
communications plans; to ensure the Company is both developing and executing
initiatives on a timely basis; to promote efficiency and continuous improvement
so results are tied to the strategic plan and budget that are focused on
increased shareholder value, the quality of service delivery and employee
satisfaction; and (c) Leadership – to ensure the CEO is
12
leading
the Company and setting strategies. The Compensation Committee
reviews the CEO’s performance in light of the corporate priorities mentioned
above to determine how effectively the CEO is contributing to the delivery of
the Company’s strategy and how effectively the CEO is aligning the organization
to execute the strategies in order to achieve the desired results.
The Executive Officers are eligible to
participate in a Supplemental Executive Retirement Plan (SERP) at the discretion
of the Board of Directors. A participant who retires on their normal
retirement date, as defined in the SERP, is entitled to an annual retirement
benefit of up to 75% of compensation, reduced by the primary social security
benefit, and further reduced by any benefit payable from the Company’s qualified
defined benefit pension plan. Further reductions are made for
benefits from prior employment where such benefits have
accrued. Generally, a participant is vested at ten (10) years of
service, in the event of retirement or death or in the event of a Change In
Control as described further herein. Vesting does not occur with
respect to separation from employment other than in the event of retirement,
death or immediately, upon termination in connection with a Change In
Control. Annual benefits are generally payable, upon achieving normal
retirement, for fifteen (15) years either to the participant or the
participant’s beneficiary. Retirement benefits may also be in the
form of a single life annuity, joint and 50% survivor’s annuity, joint and 100%
survivor’s annuity, single life annuity with a ten (10) year certain period or
single life annuity with a fifteen (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 SERP, except that upon a Change In Control, the Company would be
obligated to make contributions to a trust anticipated to be sufficient to meet
the obligations under the SERP. Absent a Change In Control, benefits
are in the form of an unfunded obligation of the Company.
For the year 2007, the Company paid
life insurance premiums for the Executive Officers which provides a
pre-retirement net death benefit of 3 times base salary at date of
death.
The Company has Change in Control
Termination Agreements with the Executive Officers and these Change in Control
Agreements are discussed hereinafter.
The Company maintains an incentive
compensation program in the form of a Restricted Stock Plan for the purpose of
attracting and retaining key executives and other employees having managerial
responsibility who have contributed, or are likely to contribute, significantly
to the short and long-term performance of the Company. Awards under
the Restricted Stock Plan are designed to enhance financial performance, quality
service delivery and corporate efficiency through a performance-based restricted
stock award. Awards to the Executive Officers, other than the CEO,
are recommended by the CEO and reviewed and approved by the Compensation
Committee. The CEO’s recommendations, and the Committee’s ultimate
approval, are based upon an assessment of the achievement of various financial
and non-financial objectives. The criteria used in such assessment
are selected and approved by the Committee. After full review by the
Compensation Committee, a report and recommendation is made to the full Board of
Directors for final approval of the proposed restricted stock
awards. With respect to the CEO, the Compensation Committee makes its
own evaluation and recommendation as to the amount of award to the CEO under the
Restricted Stock Plan. In determining the amount of the award for the
CEO, the Compensation Committee will consider the correlation between the
achievement of the Company’s goals and the incentive compensation
awards. The committee will ensure the CEO’s achievement of incentive
compensation goals is consistent with overall performance, that is, it will seek
to ensure critical core functions are not inappropriately compromised for the
direct purpose of obtaining incentive compensation awards. In
addition, the Compensation Committee will seek to determine that all critical
operational needs have been met before any consideration can be given to
incentive compensation awards, regardless of any positive overall financial
performance. These critical functions include regulatory compliance,
water quality, employee safety, reliability of assets, maintaining a
well-trained and motivated work force and other important aspects of operations
and administration. All of these factors are incorporated into the
determination of the Compensation Committee in terms of the amount of an award
to the CEO under the Restricted Stock Plan.
All awards of restricted stock to the
Executive Officers are made in accordance with the provisions of the Restricted
Stock Plan. Under such Plan, generally none of the awards of
restricted stock vest until five (5) years from the date of
grant. However, all unvested awards become fully vested in the event
of a Change In Control of the Company as defined in the Change In Control
Agreements. Under the provisions of the Restricted Stock Plan,
dividends on unvested shares are paid to the awardees quarterly.
The Company believes each element of
compensation and the Company’s decisions regarding such elements are consistent
with the Company’s overall compensation objectives as expressed
above. The Company believes each element of compensation for the
Executive Officers is fair and reasonable. Such elements of
compensation will help enable the Company to maintain a competitive compensation
program among comparably sized utilities and other firms in
general.
13
|
SUMMARY COMPENSATION TABLE – 2007
|
|||||||||||
|
Name
and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
(1)
Stock Awards
($)
|
Option
Awards
($)
|
Non-equity
Incentive Plan Compensation
($)
|
(2)
Change
in Pension Value and
Non-Qualified
Deferred Compensation Earnings
($)
|
(3)
All
other Compensation
($)
|
Total
($)
|
||
|
Dennis
W. Doll,
President
and Chief Executive Officer
|
2007
|
326,746
|
n/a
|
42,230
|
n/a
|
n/a
|
9,943
|
18,613
|
397,532
|
||
|
2006
|
298,477
|
n/a
|
28,875
|
n/a
|
n/a
|
7,494
|
17,630
|
352,477
|
|||
|
A.
Bruce O’Connor,
VP
and Chief
Financial
Officer
|
2007
|
195,116
|
n/a
|
28,001
|
n/a
|
n/a
|
23,816
|
15,385
|
262,318
|
||
|
2006
|
188,488
|
n/a
|
24,063
|
n/a
|
n/a
|
25,824
|
15,920
|
254,296
|
|||
|
Ronald
F. Williams,
VP
Operations and
Chief
Operating Officer
|
2007
|
186,419
|
n/a
|
17,171
|
n/a
|
n/a
|
37,389
|
15,088
|
256,067
|
||
|
2006
|
180,969
|
n/a
|
19,250
|
n/a
|
n/a
|
39,836
|
14,484
|
254,539
|
|||
|
Richard
M. Risoldi,
VP-Subsidiary
Operations
|
2007
|
165,181
|
n/a
|
24,257
|
n/a
|
n/a
|
23,518
|
14,533
|
227,489
|
||
|
2006
|
157,704
|
n/a
|
25,025
|
n/a
|
n/a
|
21,793
|
12,778
|
217,300
|
|||
|
Kenneth
J. Quinn, V.P. General Counsel,
Secretary
and Treasurer
|
2007
|
149,646
|
n/a
|
18,966
|
n/a
|
n/a
|
22,528
|
13,345
|
204,485
|
||
|
2006
|
144,269
|
n/a
|
19,250 | n/a | n/a | 14,349 | 12,734 | 190,602 | |||
(1) The
amounts in this column reflect the value of restricted stock awards made on
October 1, 2007 and October 2, 2006, respectively. Under the
Restricted Stock Plan, however, these awards generally do not vest to the
participants until the expiration of five years from the date of such
award. During such five-year period, the participants have contingent
ownership of such shares, including the right to vote the same and to receive
dividends thereon.
(2) The
Company does not have any non-qualified deferred compensation plans or related
earnings.
(3) The
detail of “All Other Compensation” recognized for the benefit of the Named
Executive Officers is set forth on Schedule A, as supplemental information to
the Summary Compensation Table.
|
SCHEDULE - A
|
|||||||||
|
SUMMARY
- ALL OTHER COMPENSATION – 2007
|
|||||||||
|
Dividends
on Restricted Stock
|
Personal
Automobile Use
|
(4)
Group
Term Life Insurance Premiums
|
Board
Fees
|
(4)
401(K)
- Employer Match
|
Club
Dues
|
Spouse
Travel
|
Total
- All Other Compensation
|
||
|
Name
|
Year
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|
Dennis
W. Doll
|
2007
|
1,633
|
3,070
|
792
|
4,800
|
7,700
|
-
|
618
|
18,613
|
|
2006
|
464
|
3,070
|
859
|
4,800
|
7,700
|
-
|
738
|
17,630
|
|
|
A.
Bruce O'Connor
|
2007
|
4,859
|
2,683
|
437
|
-
|
6,829
|
-
|
577
|
15,385
|
|
2006
|
4,536
|
2,683
|
418
|
-
|
6,317
|
1,000
|
966
|
15,920
|
|
|
Ronald
F. Williams
|
2007
|
4,090
|
3,289
|
1,185
|
-
|
6,524
|
-
|
-
|
15,088
|
|
2006
|
4,004
|
3,289
|
1,140
|
-
|
6,051
|
-
|
-
|
14,484
|
|
|
Richard
M. Risoldi
|
2007
|
3,233
|
4,589
|
546
|
-
|
5,781
|
-
|
384
|
14,533
|
|
2006
|
2,601
|
4,589
|
513
|
-
|
5,075
|
-
|
-
|
12,778
|
|
|
Kenneth
J. Quinn
|
2007
|
2,274
|
4,934
|
900
|
-
|
5,237
|
-
|
-
|
13,345
|
|
2006
|
1,560
|
4,863
|
856
|
-
|
4,830
|
-
|
625
|
12,734
|
|
|
(4) The
benefits available to the Named Executive Officers under these programs
are also available to all other employees of the
Company.
|
14
|
GRANTS OF PLAN-BASED AWARDS – 2007
|
||||||||||
|
Estimated
Future Payouts
Under
Non-equity
Incentive
Plan Awards
|
Estimated
Future Payouts
Equity
Incentive
Plan
Awards
|
All
Other Stock
Awards:
Number
of Shares
or Units
(#)
|
All
Other Option
Awards:
Number
of Securities
Underlying
Options
(#)
|
Exercise
or
Base Price
of Option
Awards
($/Sh)
|
||||||
|
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
($)
|
Target
($)
|
Maximum
(#)
|
|||
|
Dennis
W. Doll
|
10/1/2007
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
2,211
|
n/a
|
n/a
|
|
A.
Bruce O'Connor
|
10/1/2007
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
1,466
|
n/a
|
n/a
|
|
Ronald
F. Williams
|
10/1/2007
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
899
|
n/a
|
n/a
|
|
Richard
M. Risoldi
|
10/1/2007
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
1,270
|
n/a
|
n/a
|
|
Kenneth
J. Quinn
|
10/1/2007
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
993
|
n/a
|
n/a
|
|
OUTSTANDING EQUITY AWARDS – 2007
|
|||||||||
|
Option
Awards
|
Stock
Awards
|
||||||||
|
Name
|
Number
of Securities
Underlying
Unexercised
Options
(#) Exercisable
(#)
|
Number
of Securities
Underlying
Unexercised
Options
(#) Unexercisable
(#)
|
Equity
Incentive
Plan
Awards:
Number
of Securities
Underlying
Unexercised
Earned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of Stock
That Have
Not Vested
(#)
|
Market
Value
of
Shares or
Units
of Stock That
Have
Not
Vested
($)
|
Equity
Incentive Plan
Awards:
Number
of
Unearned
Shares,
Units
or Other
Rights
That Have
Not Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Values
of Unearned
Shares,
Units or
Other
Rights That
Have
Not Vested
($)
|
|
Dennis
W. Doll
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
4,011
|
76,008
|
n/a
|
n/a
|
|
A.
Bruce O'Connor
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
7,116
|
134,848
|
n/a
|
n/a
|
|
Ronald
F. Williams
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
5,582
|
105,779
|
n/a
|
n/a
|
|
Richard
M. Risoldi
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
5,220
|
98,919
|
n/a
|
n/a
|
|
Kenneth
J. Quinn
|
n/a
|
n/a
|
n/a
|
n/a
|
n/a
|
4,026
|
76,293
|
n/a
|
n/a
|
|
OPTION EXERCISES AND STOCK VESTED – 2007
|
||||
|
Option
Awards
|
Stock
Awards
|
|||
|
Name
|
Number
of Shares Acquired on Exercise
(#)
|
Value
Realized on Exercise
($)
|
Number
of shares Acquired on Vesting
(#)
|
Value
Realized on Vesting
($)
|
|
Dennis
W. Doll
|
n/a
|
n/a
|
-
|
-
|
|
A.
Bruce O’Connor
|
n/a
|
n/a
|
1,333
|
25,234
|
|
Ronald
F. Williams
|
n/a
|
n/a
|
1,333
|
25,234
|
|
Richard
M. Risoldi
|
n/a
|
n/a
|
533
|
10,090
|
|
Kenneth
J. Quinn
|
n/a
|
n/a
|
-
|
-
|
15
|
PENSION BENEFITS – 2007
|
||||
|
Name
|
Plan
|
Number
of Years Credited Service
(#)
|
Present
Value of Accumulated Benefit
($)
|
Payments
During Last Fiscal Year
($)
|
|
Dennis
W. Doll
|
MWC
Pension Plan
|
3
|
23,684
|
0
|
|
A.
Bruce O'Connor
|
MWC
Pension Plan
|
18
|
147,960
|
0
|
|
Ronald
F. Williams
|
MWC
Pension Plan
|
13
|
207,960
|
0
|
|
Richard
M. Risoldi
|
MWC
Pension Plan
|
18
|
116,663
|
0
|
|
Kenneth
J. Quinn
|
MWC
Pension Plan
|
6
|
69,947
|
0
|
All
employees, including the 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 Social Security 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 years of service achieved
and not to exceed number of years of service achieved at 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 amounts are not subject to any deduction for Social
Security benefits or other offset amounts.
Ronald F.
Williams and Kenneth Quinn are currently eligible to receive early retirement
benefits under the Retirement Plan in the event either of these two Named
Executive Officers retires. If either elected to receive early
retirement benefits, such benefits would be at a reduced level as defined under
the Retirement Plan for any eligible employee who elects early
retirement. No other Named Executive Officer has reached the minimum
age and service requirements to receive early retirement benefits under the
Retirement Plan. No lump sum payment of accumulated retirement
benefits is provided under the Plan.
|
DIRECTOR COMPENSATION – 2007
|
|||||||
|
Name
|
Fees
Earned or
Paid
in Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-equity
Incentive
Plan
Compensation
($)
|
Change
in Pension
Value and Non-qualified Deferred Compensation Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Annette
Catino
|
27,200
|
n/a
|
n/a
|
n/a
|
n/a
|
-
|
27,200
|
|
John
C. Cutting
|
29,300
|
n/a
|
n/a
|
n/a
|
n/a
|
-
|
29,300
|
|
John
R. Middleton, M.D.
|
28,000
|
n/a
|
n/a
|
n/a
|
n/a
|
-
|
28,000
|
|
Stephen
H. Mundy
|
6,500
(1)
|
n/a
|
n/a
|
n/a
|
n/a
|
-
|
6,500
|
|
John
P. Mulkerin
|
29,800
|
n/a
|
n/a
|
n/a
|
n/a
|
-
|
29,800
|
|
Walter
G. Reinhard
|
28,100
|
n/a
|
n/a
|
n/a
|
n/a
|
-
|
28,100
|
|
Jeffries
Shein
|
30,800
|
n/a
|
n/a
|
n/a
|
n/a
|
-
|
30,800
|
|
J.
Richard Tompkins
|
70,933
(2)
|
n/a
|
n/a
|
n/a
|
n/a
|
4,167
(3)
|
75,100
|
(1)
Mr.
Mundy earned the fees as a Director Emeritus.
(2)
Effective
February 1, 2007, Mr. Tompkins’ Chairman’s Retainer was increased to $50,000
annually, which along with the Annual Retainer of $12,000 brings his total
Retainer Fees to $62,000 annually.
(3)
Fees paid
to Mr. Tompkins under a Consulting Agreement which terminated January 31,
2007.
Note: Dennis
W. Doll, who is also a director, does not appear on this tale since his director
compensation appears in the “All Other Compensation” column of the Summary
Compensation Table.
16
DIRECTORS’ ANNUAL RETAINER AND MEETING FEES
For 2007, Middlesex Water Company paid
each of the Board members who are not employed by the Company (“outside
Directors”) an annual retainer of $12,000 payable in monthly
installments. In addition, effective February 1, 2007, the Chairman
of the Board received a Chairman’s retainer in the annual amount of $50,000
payable monthly. The annual retainer for the Director Emeritus was $6,000 and is
subject to review and approval annually.
The Board meeting fees for outside
Directors amounted to $800 per Director for each Board meeting
attended. The Board meeting fee for Board members who are employed by
the Company (“inside Directors”) amounted to $400 per meeting. The
Board meeting fee for any Director Emeritus was $500 per meeting.
The Board committee meeting fees for
outside Directors amounted to $500 per Director for each Board committee meeting
attended. Additionally, each Committee Chairperson is paid an annual
fee of $1,000, which is generally paid in October of each year. In
the event that a Special Board or a Special Committee meeting via teleconference
is held, the meeting fees for outside Directors are $400 and $200 per meeting,
respectively.
CHANGE IN CONTROL AGREEMENTS
The Company has Change In Control
Agreements with the Named Executive Officers and other Executive Officers of the
Company. These agreements generally provide that if the executive is
terminated by the Company, other than for death, disability, retirement, cause
(as defined in the agreement), or if the executive resigns for Good Reason (as
defined in the agreement) within three (3) years after a Change In Control of
the Company as defined in the agreement, the executive is entitled to receive,
(a) a lump sum severance payment equal to three (3) times the executive’s
average total compensation for the five (5) years prior to the termination; (b)
continued coverage for three (3) years under any health or welfare plan in which
the executive and the executive’s dependents were participating; and (c) an
additional amount equal to the amount of federal Excise Tax, if any, that is due
or determined to be due resulting from the severance payments or any other
payments under the agreement. The benefits under any health or
welfare benefit plan could end earlier than three (3) years from the date of
termination and would end on the earlier to occur of (i) the date the executive
becomes covered by a new employer’s health and welfare benefit plan, or (ii) the
date the executive becomes covered by Medicare. Also, coverage for
the executive’s dependents could end earlier than any of these dates if required
by the health or welfare benefit plan due to age eligibility.
After the third anniversary of a Change
In Control, if the executive’s employment by the Company shall be terminated by
the Company other than for cause, death, retirement or disability, or by the
executive for Good Reason, then the executive is entitled to receive a lump sum
severance payment equal to one and one half times the executive’s average total
compensation for the five (5) years prior to the occurrence of the circumstance
giving rise to the termination.
In addition to the benefits to be paid
to the executive as noted above on or before the third anniversary of the Change
in Control, the Company shall pay the executive any deferred compensation,
including, but not limited to, deferred bonuses allocated or credited to the
executive as of the date of termination. Also, any outstanding
restricted stock grants awarded to the executive under the Company’s stock
plans, which are not vested on termination, shall immediately vest.
A Change in Control may also lead to
the payment of benefits to the Named Executive Officers and other Executive
Officers, who are participants under the Company’s Supplemental Executive
Retirement Plan (“SERP”). Under the SERP, if an executive leaves the
Company’s employ, under the terms of a Change In Control agreement within five
years of the Change In Control under any of the following circumstances: (a) the
executive’s employment with the Company is terminated by the Company other than
for cause; (b) the nature and scope of the executive’s duties or activities with
the Company or its successor are reduced to a level significantly below that
which the executive had enjoyed immediately prior to the Change in Control; or
(c) the executive’s base salary is reduced; or (d) if the Change in Control is
preceded by the Company terminating the executive’s employment with the Company
without cause during the six month period prior to the occurrence of the Change
in Control, the executive shall be entitled to receive an annual retirement
benefit equal to 75% of the executive’s Compensation (and in some cases, 50% of
Compensation) reduced by certain other benefits as more particularly set forth
in the SERP. Such annual retirement benefits shall commence within
sixty days after the later of (a) the executive’s Normal Retirement Date, or (b)
the executive’s retirement or termination of employment with the Company or its
successor. Unless the executive elects and receives approval of an
alternative form of payment under the SERP, the executive shall receive the
annual retirement benefit each year for fifteen years payable in monthly
installments.
17
Notwithstanding the foregoing, if an
executive leaves the Company’s employ under the terms of a Change In Control
agreement and within the time frame and for the reasons discussed above, then,
at the executive’s sole option, the executive may elect to receive a reduced
benefit equal to 75% of the executive’s Compensation (and in some cases, 50% of
Compensation) reduced by certain other benefits as prorated as set forth in the
SERP. Such benefit shall commerce within sixty days after the
executive terminates employment with the Company or its successor.
The following table indicates the
potential value the Named Executive Officers would receive under the various
employment scenarios listed, including those relating to a Change In
Control. All scenarios use December 31, 2007, the last business day
of the Company’s last completed fiscal year, as the date for the triggering
event set forth in the schedule. Additionally, the potential values
to each of the Named Executive Officers also include the present value of
accumulated benefits under the SERP assuming that each Named Executive Officer
made an election to receive such benefits within sixty days after the executive
terminates employment with the Company or its successor.
|
Name
|
Compensation
paid during calendar year 2007 (using definition of “Compensation” under
the Agreement)
|
Termination
Before
Third
Anniversary
(1)
|
Termination
After
Third
Anniversary
(2)
|
|
Dennis
W. Doll
|
$309,493
|
$1,609,115
|
$1,028,815
|
|
A.
Bruce O’Connor
|
$218,446
|
$1,007,197
|
$ 597,610
|
|
Ronald
F. Williams
|
$204,070
|
$1,110,979
|
$ 728,348
|
|
Richard
M. Risoldi
|
$174,490
|
$ 831,916
|
$ 504,746
|
|
Kenneth
J. Quinn
|
$157,516
|
$ 837,190
|
$ 541,847
|
(1)
Compensation and other benefits paid following termination on or before the
third anniversary of the Change in Control.
(2)
Compensation and other benefits paid following termination after the third
anniversary of the Change in Control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The members of the 2007 Compensation
Committee were Annette Catino, John R. Middleton, M.D., and Jeffries Shein.
During 2007, no member of the Compensation Committee was an officer or employee
of the Company or a subsidiary.
18
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board
of Directors administers the compensation program for the Named Executive
Officers and the other executive officers of the Company (hereinafter,
collectively referred to as the “Executive Officers”). The Committee
for the year 2007 was composed of three independent
Directors: Annette Catino, John R. Middleton, M.D., and Jeffries
Shein. The Committee is responsible for setting and administering the
policies that govern annual base compensation and incentive
compensation. The full Board of Directors approves policies and
recommendations developed by the Committee. The Compensation
Committee annually reviews and adopts its Charter which it then recommends for
adoption by the Board of Directors. 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 Company’s compensation objectives
and policies applicable to the executive officers seek to incent the advancement
of three corporate priorities which are desirable and necessary for the Company
to achieve its expressed vision and strategy in the creation of long-term
shareholder value. Those corporate priorities are (1) profitable
growth; (2) operational excellence; and (3) developing the technical and
management skills of the Company employees. In order to achieve the
vision of the Company, and execute the strategies needed to achieve that vision,
the Company’s compensation and benefits programs are designed to (a) attract and
retain qualified executives; (b) support short and long-term goals and
objectives of the Company; and (c) appropriately reward individuals for their
contribution to the Company’s success. These programs are directly
related to the creation of value for shareholders through progress in the three
corporate priorities listed above.
The Committee meets with the Chief
Executive Officer to review his evaluation of the performance of the other
executive officers and meets with the Chief Executive Officer to evaluate his
performance. The Committee reports on all executive evaluations to
the full Board of Directors.
Base salary levels are reviewed
annually and are benchmarked against other companies, both utilities and
non-utilities, at the State and national levels. Independent salary
studies are periodically conducted with the assistance of an outside consultant
retained by the Committee. Salaries for satisfactory performance are
targeted at the median of the competitive market. Individual
performance of each executive is given appropriate consideration when setting
salaries against the competitive market data.
In late 2007, the Compensation
Committee retained the services of a national executive compensation consulting
firm to conduct a study with respect to the executive compensation and the
director compensation paid by the Company. The nature of the
assignment was to have an independent third party firm conduct a comprehensive
review of executive compensation to ensure the Company’s pay practices are
aligned with the market and best practices, and to review director compensation
relative to the market trends and practices related to board total
compensation. For analysis purposes, the consulting firm utilized a
direct water peer group, a water utility specialty survey, a general industry
survey and a broad utilities survey. The executive and director
compensation reported herein does not reflect any changes that may result from
the above study.
The factors and criteria upon which the
Chief Executive Officer’s compensation is based generally include those
discussed with respect to the other executive officers. In addition,
the Compensation Committee examines the effectiveness with which the CEO is
managing the performance of the executive team. Among the criteria to
be used for evaluation are the following: (a) Financial – to review
the establishment and achievement of appropriate short and long-term financial
objectives for the Company. (b) Operational – to determine that appropriate
policies, procedures, processes and programs have been established and
implemented so the Company is compliant under relevant regulatory polices and
that opportunities and vulnerabilities are appropriately managed; to ensure the
development of effective recruitment, training, retention and succession plans;
to ensure the Company is both developing and executing initiatives on a timely
basis; to promote efficiency and continuous improvement so results are tied to
the strategic plan and budget that are focused on increased shareholder value,
the quality of service delivery and employee satisfaction; and (c) Leadership –
to ensure the CEO is leading the Company and setting strategies and philosophies
that are well understood, widely supported, consistently applied and effectively
implemented and which include setting standards for strong safety and ethical
compliance.
The Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis with management of the
Company. Based on the review and discussions, the Compensation
Committee has recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in the Company’s Proxy and incorporated by
reference into the Company’s annual report on Form 10-K.
|
Year
2008 Compensation Committee
|
|
|
Jeffries
Shein, Chairman
|
|
|
Annette
Catino
|
|
|
John
R. Middleton, M.D.
|
19
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 2007
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 is reviewed and adopted
annually by the Committee and the Board of Directors. The Charter is
available on the Company’s website at www.middlesexwater.com.
Management is responsible for the
Company’s financial statements and internal controls. The Company’s independent
accountants, Beard Miller Company, LLP, are responsible for performing an
independent audit of the Company’s annual consolidated financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States) 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:
|
|
•
|
Changes
in significant accounting policies;
|
|
|
•
|
The
process used by management in formulating accounting estimates and the
basis for the auditors’ conclusions regarding the reasonableness of these
estimates;
|
|
|
•
|
Disagreements,
if any, with management over the application of accounting
principles;
|
|
|
•
|
Audit
adjustments; and
|
|
|
•
|
Disclosures
in the financial statements.
|
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 Company and its management. The
Committee has the sole authority to pre-approve permitted non-audit Company
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, 2007, 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.
The Committee met privately with the
independent auditors who have unrestricted access to the Audit
Committee.
|
Year
2008 Audit Committee
|
|
|
John
P. Mulkerin, Chairman
|
|
|
Annette
Catino
|
|
|
John
C. Cutting
|
|
|
John
R. Middleton, M.D
|
20
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
On March 31, 2006, Beard Miller Company
LLP was approved and appointed by the Audit Committee as the Company’s
independent registered accounting firm for the fiscal year ending December 31,
2006, succeeding Deloitte & Touche LLP. Aggregate fees billed to
the Company for the years ending December 31, 2007 and 2006 by Beard Miller
Company LLP are as follows:
|
Year
Ended December 31,
|
||||||||
|
2007
|
2006
|
|||||||
|
Audit
Fees {a}
|
$ | 306,715 | $ | 328,865 | ||||
|
Audit-Related
Fees
|
- | - | ||||||
|
Total
audit and audit-related fees
|
$ | 306,715 | $ | 328,865 | ||||
|
Tax
Fees {b}
|
$ | 13,650 | $ | 13,470 | ||||
|
All
Other Fees
|
- | - | ||||||
|
Total
Fees
|
$ | 320,365 | $ | 342,335 | ||||
{a} In
2007 and 2006, 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, and reviews of the
financial statements included in the Company’s quarterly reports on Form 10-Q.
Also in 2006, the audit fees include $25,163 for services rendered in connection
with the common stock offering.
{b} Includes
2007 and 2006 fees for the preparation of tax returns of $13,650 and $13,470,
respectively.
The Company paid Withum Smith + Brown
LLP $21,352 and $20,334 in fees during 2007 and 2006, respectively, for the
audits of the Company’s employee benefit plans.
The Audit Committee has established
pre-approval policies and procedures for all audit and non-audit services to be
performed by Beard Miller Company LLP. The Audit Committee approves
100% of the services related to Audit-Related Fees, Tax Fees and All Other Fees
in excess of $5,000.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ATTENDANCE
AT ANNUAL MEETING
Representatives of Beard Miller Company
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.
21
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 2009, 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 12, 2008, in order to be considered for inclusion in the Company's
proxy statement and form of proxy relating to the 2009 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.
MINUTES OF 2007 MEETING OF STOCKHOLDERS
The minutes of the 2007 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,
|
|
 |
|
|
KENNETH
J. QUINN
|
|
|
Vice
President, General Counsel,
|
|
|
Secretary
and Treasurer
|
Iselin,
New Jersey
April 11,
2008
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 2007 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 2007
Annual Report on Form 10-K can also be found on the Company 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, P.O. Box 1500, Iselin, New
Jersey 08830-0452.
22
EXHIBIT A
2008
RESTRICTED STOCK PLAN
1.
PURPOSE
The purpose of the 2008 Restricted
Stock Plan (the "Plan") is to advance the interests of Middlesex Water Company
(the "Company") and its stockholders by providing long-term incentives, in
addition to current compensation, to attract and retain for the Company and its
subsidiaries 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 such subsidiaries.
In
determining eligibility for an Award under the Plan, consideration is given to
the achievement of goals within each Plan year. Among the factors
generally considered are (a) Financial Goals, designed to continuously improve
shareholder returns;
(b)
Operational Goals, a focus on training, development, operational excellence and
service quality; and (c) Leadership Goals, designed to instill a Company culture
based on ethical behavior, mutual respect, open and honest communications and
continued improvement and accountability for performance.
2.
ADMINISTRATION
A. The Plan shall be
administered by the Compensation Committee (the "Committee") of the Board of
Directors (the "Board") of the Company, as such Committee is from time to time
constituted, provided,
however, that such Committee shall at all times be composed solely of
Non-Employee Directors (as that term is defined in applicable regulations of the
Securities and Exchange Commission) and shall at all times have at least two
members. If at any time the Committee is unable to meet those
requirements, the Board of Directors shall administer the Plan.
B. No member of the
Committee shall be an employee of the Company or a subsidiary of the Company or
shall have been eligible within one year prior to his appointment to receive
Awards under the Plan or to receive awards under any other plan of the Company
or its subsidiaries under which participants are entitled to acquire stock,
stock options or stock appreciation rights of the Company or any of its
subsidiaries.
C. The Committee shall have
all the powers vested in it by the terms of the Plan, such powers to include
exclusive authority (within the limitations described herein) to select the
employees to be granted Awards under the Plan, to determine the type, size, and
terms of the Awards to be made to each employee selected, to determine the time
when Awards will be granted, and to prescribe the form of the instruments
embodying Awards made under the Plan. The Committee shall be
authorized to interpret the Plan and the Awards granted under the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan, and
to make any other determinations which it believes necessary or advisable for
the administration of the Plan. The Committee may correct any defect
or supply any omission or reconcile any inconsistency in the Plan or in any
Award in the manner and to the extent the Committee deems desirable to carry it
into effect. Any decision of the Committee in the administration of
the Plan, as described herein, shall be final and conclusive.
D. No member of the
Committee or the Board of Directors shall be liable for any action or
determination made in good faith under the Plan or in connection with any Award,
except those resulting from such member's own gross negligence or willful
misconduct.
E. In addition to such other
rights of indemnification as they may have as members of the Board or the
Committee, the members of the Committee and any officer or employee acting on
behalf of the Committee shall be indemnified by the Company against all costs
and expenses reasonably incurred by them in connection with any action, suit or
proceeding to which they or any of them may be party by reason of any action
taken or failure to act under or in connection with the Plan or any Award
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding, except a judgment based upon a finding of bad faith;
provided that upon the institution of any such action, suit or proceeding a
Committee member or officer or employee, as the case may be, shall, in writing,
give the Company notice thereof and an opportunity, at its own expense, to
handle and defend the same before such Committee member, officer or
employee,
undertakes to handle and defend it on her or his own behalf.
3.
PARTICIPATION
A. Employees. The
Plan shall be a plan limited to officers and a select group of employees as determined
by the Committee. Subject to the
provisions of the Plan, the Committee shall have exclusive power to select the
officers and other
23
employees
of the Company and its subsidiaries to be granted Awards under the Plan, but no
Award shall be made to any member of the Committee.
B. Subsidiary. For
purposes of Awards under the Plan, an officer or employee of a subsidiary
of the Company shall be considered an employee of the Company. A
subsidiary shall include any company wholly or partially-owned by the
Company.
4.
AWARDS UNDER THE PLAN
A. Type of
Awards. Awards under the Plan shall consist of "Restricted Stock."
Restricted Stock are common shares which are issued pursuant to Paragraph
5.
B. Maximum Number of Shares
That May Be Issued. There may be issued under the Plan an aggregate
of not more than 300,000 common shares, subject to adjustment as provided in
Paragraph 7. If any shares of Restricted Stock shall be reacquired
pursuant to the right described in Paragraph 5 below, or if any common shares
awarded under the Plan shall be reacquired pursuant to restrictions imposed at
the time of award, such shares may again be awarded under the
Plan. Shares of stock which are to be awarded under the Plan may be
obtained by the Company from its treasury, by purchases on the open market or
from private sources, or by issuing authorized but unissued
stock. Any issuance of authorized but unissued stock shall be
approved by the Board or Committee.
C. Rights With Respect to
Shares. An employee to whom an Award of Restricted Stock has been
made shall have, after issuance of the Award and prior to the expiration of the
Restricted Period or the earlier reacquisition of such common shares as herein
provided, contingent ownership of such common shares, including the right to
vote the same and to receive dividends thereon, subject, however, to the rights,
restrictions and limitations imposed thereon pursuant to the Plan.
5.
RESTRICTED STOCK
Each Award of Restricted Stock under
the Plan may be evidenced by an instrument in such form as the Committee shall
prescribe from time to time in accordance with the Plan, or may be represented
in book entry form on the records of the Company’s transfer agent, or in such
other manner as the Committee may determine, and shall comply with the following
terms and conditions (and with such other terms and conditions as the Committee,
in its discretion, shall establish):
A. Number of
Shares. The Committee shall determine the number of common shares to
be issued to a participant pursuant to the Award, as may be noted in the Minutes
of Committee meetings.
B. Purchase
Price. Each participant eligible for an Award under the Plan shall
not be required to pay any consideration to the Company in connection with the
making of such Award, except as specified in paragraph 10(D).
C. Nontransferability. Common
shares issued to a participant in accordance with the Award may not be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, except by
Will or the laws of descent and distribution, for a period of five years, or
such other greater or lesser period as the Committee shall determine, from the
date on which the Award is granted (the "Restricted Period"), except as
otherwise set forth in this Plan.
D. Reacquisition
Right. If the participant's employment with the Company or any of its
subsidiaries terminates for any reason prior to the expiration of the Restricted
Period, then except as otherwise provided in subparagraph 5(F), the Company will
have the right to reacquire the shares subject to the Award. Such
right to reacquire shares shall be exercisable on such terms, in such manner and
during such period as shall be determined by the Committee.
E. Enforcement. In order
to enforce the restrictions imposed upon the shares under this Plan, the
Committee may require the participant to enter into an Escrow Agreement at the
time of the Award. The Escrow Agreement will provide that any
Certificates for common shares issued pursuant to Restricted Stock Awards shall
remain with the Company, as escrow holder, until all of the restrictions imposed
under the Plan have terminated, or that any shares awarded under the Plan may be
issued via book-entry into a segregated account maintained by the Company’s
transfer agent and which account will be restricted until such shares
vest. The Committee shall cause a legend to be placed on any such
Certificate issued under the Plan referencing the restrictions imposed under
this Plan.
F. Lapse of
Restrictions. If a participant's employment is terminated during the
Restricted Period as a result of his death, disability (as defined in Paragraph
6), or retirement after age 65, the right to reacquire (and any and all other
restrictions on transferability under this Paragraph 5) shall lapse and cease to
be effective as of the end of the month in which such termination of employment
occurred. If the participant retires before age 65, then with the
consent of the Committee, the right to reacquire shares (and all other
restrictions) shall lapse, as to a number of shares (rounded up to a whole
number of shares) equal to the number of shares in an Award multiplied by a
fraction, the numerator of which is the number of full months of the
Restricted
24
Period of
such Award which have elapsed since the date of the Award to the end of the
month in which his termination of employment occurs and the denominator of which
is the total number of months in the Restricted Period of such
Award. The right to reacquire shares shall remain exercisable as to
the balance of the shares. Notwithstanding the foregoing, the
Committee, upon recommendation of the Chief Executive Officer of the Company,
may determine, in the case of any participant, to cancel the right to reacquire
(and any and all other restrictions) any or all of the common shares subject to
such Award.
6.
DISABILITY
For the purposes of this Plan, a
participant shall be deemed to have terminated his employment by reason of
disability if the Committee shall determine that the physical or mental
condition of the participant by reason of which his employment terminated was
such at that time as would entitle him to payment of monthly disability benefits
under the Company's Long-term Disability Benefit Plan,
as may be in effect from time to time, or, if the participant is not eligible
for benefits under such plan, under any disability plan of the Company or a
subsidiary in which he is a participant. If the participant is not
eligible for benefits under any disability plan of the Company or a subsidiary,
he shall be deemed to have terminated his employment by reason of disability if
the Committee shall determine that his physical or mental condition would
entitle him to benefits under the Company's Long-term Disability Benefit Plan if
he were eligible therefor.
7.
DILUTION AND OTHER ADJUSTMENTS
In the event of any change in the
outstanding common shares of the Company by reason of any stock split, stock
dividend, recapitalization, merger, consolidation, reorganization, combination
or exchange of shares or other similar event, if the Committee shall determine,
in its sole discretion, that such change equitably requires an adjustment in the
number or kind of shares that may be issued under the Plan, such adjustment
shall be made by the Committee and shall be conclusive and binding for all
purposes of the Plan.
8.
DESIGNATION OF BENEFICIARY BY PARTICIPANT
A participant may name a beneficiary to
receive any share to which he may be entitled under the Plan in the event of his
death, on a form to be provided by the Committee. A participant may
change his beneficiary from time to time in the same manner. If no
designated beneficiary is living on the date on which any shares become payable
to a participant's beneficiary, such payment will be made to the participant's
executors or administrators, and the term "beneficiary" as used in the Plan
shall include such person or persons.
9.
CHANGE IN CONTROL
If any party or group acquires
beneficial ownership of 20 percent or more of the voting shares of the Company,
or such other percentage as the law may require, or if shareholder approval is
required for a transaction involving the acquisition of the Company through the
purchase or exchange of the stock or assets of the Company by merger or
otherwise, or if one-third or more of the Board elected in a 12-month period or
less are so elected without the approval of a majority of the Board as
constituted at the beginning of such period, then any rights the Company may
have to reacquire shares pursuant to Paragraph 5, together with any restrictions
on shares issued pursuant to this Plan under Paragraph 5, shall immediately
lapse if there occurs a "Change in Control Event,” as defined in this Paragraph
9. The occurrence of any one or more of the following events shall be
deemed a "Change in Control Event" for purposes of this Plan:
(a) a
transaction is effected that requires (and receives) approval by the
shareholders of the Company and such transaction is approved by the shareholders
over the recommendation of the Board of Directors of the Company;
(b) any
"person" (including any individual, trust, estate, partnership or corporation),
other than a person who on the effective date of this Plan is a director or
officer of the Company, becomes the owner, directly or indirectly, of securities
of the Company representing twenty (20%) percent or more of the combined voting
power of the Company's outstanding securities, or such other percentage as the
law may require; or
(c) if,
at an annual meeting of the shareholders of the Company, all of the persons
recommended by the Board of Directors of the Company for election as Directors
of the Company are rejected by the shareholders, and a like number of Directors
as proposed by the shareholders are elected in their place.
10.
MISCELLANEOUS PROVISIONS
A. No employee or other
person shall have any claim or right to be granted an Award under the
Plan. The adoption of the Plan shall not constitute a contract
between the Company and the employee. Neither the Plan nor any action
taken hereunder shall be construed as giving any employee any right to be
retained in the employ of the Company or any subsidiary.
25
B. A participant's rights
and interest under the Plan may not be assigned or transferred in whole or in
part either directly or by operation of law or otherwise (except by Will or the
laws of descent and distribution), including but not limited to transfers by
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other
manner, and no such right or interest of any participant in the Plan shall be
subject to any obligation or liability of such participant.
C. The Company may, but
shall not be obligated to, register the Plan or the shares received as Awards
with the Securities and Exchange Commission and any state securities law
commission or agency. In the absence of such registration, the
shares:
(a) will
be issued only pursuant to an exemption from registration;
(b) cannot
be sold, pledged, transferred or otherwise disposed of in the absence of an
effective registration statement or an opinion of counsel satisfactory to the
Company that such registration is not required; and
(c) will
bear an appropriate restrictive legend setting forth the statement contained in
subparagraph (b) above if issued in Certificate form.
The Company shall not be required to
sell or issue any shares under Plan if the issuance of such shares would, in the
judgment of the Committee, constitute or result in a violation by the
participant or the Company of any provision of law or regulation of any
governmental agency.
D. The Company and
its subsidiaries shall have the right to require a participant to prepay any and
all federal, state or local income or other taxes required by law to be deducted
or withheld with respect to any payment under the Plan. If the amount
requested is not paid, the Company may refuse to issue or transfer shares to a
participant upon expiration of the Restricted Period. The Committee
may also require, in its discretion, that a participant provide the Company with
an executed copy of any written election that the participant may elect to file
with the Internal Revenue Service pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended, within thirty days after such election is
filed.
E. With respect to unissued
shares or Awards under the Plan, the Company shall not be required to establish
any special or separate fund or to make any other segregation of assets to
assure the payment or grant of any Award under the Plan and all assets of the
Company shall remain subordinate to the claims of the Company's general
creditors.
F. By accepting any Award or
other benefit under the Plan, each participant and each person claiming under or
through him shall be conclusively deemed to have indicated his acceptance and
ratification of, and consent to, any action taken under the Plan by the Company,
the Board or the Committee.
G. The masculine pronoun
also means the feminine and the singular also means the plural wherever
appropriate.
H. The appropriate officers
of the Company shall cause to be filed any reports, returns, or other
information regarding Awards hereunder or any common shares issued pursuant
hereto as may be required by Section 13 or 15(d) of the Securities Exchange Act
of 1934, as amended, or any other applicable statute, rule, or
regulation.
I. The expenses of the Plan
shall be borne by the Company.
11.
AMENDMENT OR DISCONTINUANCE
The Plan may be amended, terminated or
suspended at any time and from time to time and retroactively by the Board, but
no amendment of the Plan shall be made that would be inconsistent with the rules
of the Securities and Exchange Commission or the principal securities market on
which the shares are traded.
12.
EFFECTIVE DATE AND APPROVALS
The Plan shall become effective and
shall be deemed to have been adopted on April 1, 2008, subject, however, to (1) approval and
ratification of the Plan by the shareholders, and
(2) receipt of all regulatory approvals, if any, required or sought by the
Company in connection with the Plan. The Plan shall be submitted to
the shareholders of the Company for their approval and adoption on or before the
expiration of twelve months after the effective date of the Plan on April 1,
2008. The shareholders shall be deemed to have approved and adopted
the Plan only if it is approved and adopted at a meeting of the shareholders
duly held on or before that date by vote taken in the manner required by the
laws of the State of New Jersey.
No Award may be granted under this Plan
until such shareholder and regulatory approvals, if any, are
obtained. If such approvals are not obtained, then this Plan shall
terminate and all actions taken prior thereto shall be null and
void.
Further, no Awards may be made after
March 31, 2018; provided, however, that the Plan and all Awards outstanding on
such date shall remain in effect until all restrictions on such outstanding
Awards have either expired or been canceled.
26
EXHIBIT B
OUTSIDE
DIRECTOR STOCK COMPENSATION PLAN
1. PURPOSE
The
purpose of the Middlesex Water Company (the “Corporation”) Outside Director
Stock Compensation Plan (the “Plan”) is to promote the interests of the
Corporation and its stockholders by attracting and retaining Outside Directors
of outstanding ability and strengthening the link between the Corporation’s
Outside Directors and the Corporation’s stockholders by paying such directors a
portion of their compensation in Common Stock, thereby affording them an
opportunity to share in this future successes of the Corporation.
2. DEFINITIONS
Board – means the Board of
Directors of the Corporation.
Code – means the Internal
Revenue Code of 1986, as amended from time to time.
Common Stock – means the
common stock, no par value, of the Corporation.
Corporation – means Middlesex
Water Company.
Director Compensation – means
the compensation payable to an Outside Director on an annual
basis. Such compensation consists of cash and such Common Stock as
may be paid under this Plan.
Effective Date – means the
effective date as specified herein.
Eligible Persons – means any
Outside Director.
Grant – means the award of
shares of the Corporation’s common stock hereunder.
Outside Director – means any
Non-Employee member of the Board.
Participant – means any
Outside Director who receives compensation under this Plan.
Plan Year – means the
twelve-month period ending December 31 of each year.
Rule 16b-3 – means Rule
16b-3, as from time to time in effect and applicable to Participants,
promulgated by the Securities and Exchange Commission under Section 16 of the
Securities and Exchange Act of 1934, as amended.
Service – means service as an
Outside Director of Corporation.
Shares – means shares of
Common Stock of the Corporation.
3. ADMINISTRATION
The Plan
shall be administered by the Board. The Board shall have the
authority,
subject
to the terms of this Plan, to determine the amount of annual Grants to each
member of the Board (which need not be the same for each member), any
restrictions or terms applicable to such Grants, and to interpret the terms of
this Plan. Any determination made by the Board in accordance with the
provisions of the Plan with respect to any Grant shall be made in the sole
discretion of the Board, and all decisions made by the Board pursuant to the
provisions of the Plan shall be final and binding on all persons, including the
Corporation and all persons having an interest in the Plan.
4. PARTICIPATION
Participation
in this plan will be limited to Outside Directors of the
Corporation.
If an
Outside Director is elected subsequent to the beginning of the Plan Year, the
Director Compensation shall be pro-rated for the period of time remaining in the
Plan Year. In addition, to the extent an Outside Director ceases his
or her term prior to the end of any Plan Year, a pro rata portion of such
Outside Director’s Grant hereunder may be forfeited as the Board shall determine
in its sole discretion.
Participation
in the Plan ceases when a participant ceases to be an Outside
Director.
No
Outside Director and no person claiming by, under, or through a Director shall
have at any time a vested right or interest in any compensation proposed or
determined under the terms, conditions, and provisions of this
Plan. All determinations, decisions, and directions shall be made by
the Board and shall be final and conclusive. The interest of any
Outside Director or of any person claiming by, under, or through such Outside
Director shall not be assignable or transferable either by voluntary or
involuntary assignment or by operation of law and shall not be subject to the
claims of any creditor.
27
5. TYPE AND
TIMING OF PAYMENT
The Board
shall have the authority to determine the amount of the Grant for any Outside
Director. Grants shall be made annually at such time as the Board
shall deem appropriate.
6. SHARES SUBJECT
TO THE PLAN
Subject
to adjustment as provided herein, the total number of Shares of Common Stock
reserved and available for issuance under the Plan is 100,000. The
Shares shall be either previously authorized and unissued shares or treasury
shares. Any Shares issued under the Plan and which have been
forfeited as described above shall again be available for issuance under the
Plan.
7. MERGER,
CONSOLIDATION, OR OTHER ACQUISITION
In the
event of a merger, consolidation, or acquisition in which the Corporation is not
the
surviving
corporation, the Plan Year will be deemed to have ended as of the date of
consummation of such event.
8. RECAPITALIZATIONS
If as a result of the stock dividend,
stock split, recapitalization (or other adjustment in the stated capital of the
Corporation), or as the result of a similar transaction, the Common Stock of the
Corporation is increased, reduced, or otherwise changed, the appropriate number
of Shares of stock available for issuance hereunder shall be appropriately
adjusted.
9. APPROVAL AND
EFFECTIVE DATE
The Plan shall be effective as of July
1, 2008 provided it is approved by the Corporation’s shareholders at the annual
meeting of shareholders to be held on May 21, 2008 or, in any event, not later
than twelve months following the proposed Effective Date, and further provided
that all required regulatory approvals have been obtained.
10. CONTINUATION,
AMENDMENT, AND TERMINATION
Unless affected by terms of merger,
consolidation, or acquisition, this Plan shall continue in effect until such
time as it shall be amended, suspended, or terminated by resolution of the
Board, which specifically reserves the right to such amendment, modification,
suspension, or termination, subject to shareholder approval as required by law
or regulation.
11. AMENDMENT
The Plan may be amended, suspended or
terminated by the Board, unless any federal or state law or regulation or the
rules of any stock exchange or automated quotation system on which the Common
Stock may be listed requires shareholder approval.
12. EXPENSES OF
THE PROGRAM
All costs and expenses of the adoption
and administration of the Plan shall be borne by the Corporation and none of
such expenses shall be charged to any Participant.
13. COMPLIANCE
WITH RULE 16b-3
It is the intention of the Corporation
that the Plan comply in all respects with Rule 16b-3. Accordingly, if
any Plan provision is later found not to be in compliance with Rule 16b-3, that
provision shall be deemed null and void, and the remaining provisions of the
Plan shall continue in full force and effect.
14. GOVERNING
LAW
The Plan and all determinations made
and actions taken pursuant thereto shall be governed by and construed in
accordance with the laws of the State of New Jersey
28
1500 Ronson Road
Iselin,
New Jersey 08830-0452
732-634-1500
www.middlesexwater.com
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 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.
29
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blank.)
30
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blank.)
31
1500
Ronson Road
Iselin,
New Jersey 08830-0452
732-634-1500
www.middlesexwater.com
|
ý
|
PLEASE MARK
VOTES
AS IN THIS
EXAMPLE
|
REVOCABLE
PROXY
MIDDLESEX WATER
COMPANY
|
For
|
With-
hold
|
For All
Except
|
|
ANNUAL MEETING OF
SHAREHOLDERS
MAY 21,
2008
|
1. Election of
Directors, Nominees for Class III term expiring in 2011
are:
|
o
|
o
|
o
|
||
|
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 14, 2008, at the Annual Meeting of
Shareholders to be held on May 21, 2008, at 11:00 a.m., local time or any
adjournment thereof.
|
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.
|
|||||
|
For
|
Against
|
Abstain
|
||||
|
2. Approval of the
new 2008 Restricted Stock Plan.
|
o
|
o
|
o
|
|||
|
3. Approval
of the Outside Director Stock Compensation
Plan. |
o
|
o
|
o
|
|||
|
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
ª
|
o
|
|||||
|
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.
|
||||||
|
Please
be sure to sign and date
this
Proxy in the box below.
|
Date
|
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS.
|
||||
|
Shareholder
sign
above Co-holder
(if any) sign above
|
||||||
Ç Detach
above card, sign, date and mail in postage paid envelope provided. Ç
 |
MIDDLESEX WATER
COMPANY
c/o Registrar and Transfer
Company
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
21, 2008, 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.