DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO.
)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-2. |
Connecticut Water Service, Inc.
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy Statement, if
other than Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12. |
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(1) |
Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): |
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(4) |
Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing. |
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(1) |
Amount Previously Paid: |
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(2) |
Form, Schedule or Registration Statement No.: |
Connecticut Water Service, Inc.
93 West Main Street
Clinton, Connecticut 06413
April 11, 2006
Dear Shareholder:
You are cordially invited to the Annual Meeting of Shareholders
of Connecticut Water Service, Inc., scheduled to be held on
May 11, 2006, at the Great Cedar Hotel Ballroom, Foxwoods
Resort, Route 2, Mashantucket, Connecticut, beginning at
2:00 PM. If you plan to attend, please call
1-800-428-3985,
Extension 3016, and leave your name, address, and telephone
number. Directions to the Great Cedar Hotel are printed on the
back of the proxy statement. Your Board of Directors and
executive officers look forward to personally meeting you.
At the meeting, you will be asked to elect four directors and
ratify the appointment of independent auditors for the calendar
year ending December 31, 2006.
In addition to the specific matters to be voted on, there will
be a report on the progress of the Company and an opportunity
for you to ask questions of general interest to shareholders.
Important information is contained in the accompanying proxy
statement which you are urged to carefully read.
It is important that your shares are represented and voted at
the meeting, regardless of the number you own or whether you
attend. Accordingly, please vote by mail, telephone, or
internet. It is also very helpful to us if you would call and
let us know if you plan to attend.
Your interest and participation in the affairs of the Company
are appreciated.
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Sincerely, |
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Marshall T. Chiaraluce
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Chairman |
TABLE OF CONTENTS
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PROXY STATEMENT
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Back Cover |
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CONNECTICUT WATER SERVICE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Great Cedar Hotel, Foxwoods Resort, Route 2,
Mashantucket, Connecticut
Notice is hereby given that the Annual Meeting of Shareholders
of Connecticut Water Service, Inc. (the Company)
will be held on May 11, 2006, at 2:00 PM, at the Great
Cedar Hotel Ballroom, Foxwoods Resort, Route 2,
Mashantucket, Connecticut, for the following purposes:
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1. |
to elect four (4) directors; |
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2. |
to ratify the appointment of PricewaterhouseCoopers LLP,
independent public accountants, as independent auditors for the
Company for the calendar year ending December 31, 2006; and |
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3. |
to transact such other business as may properly come before the
meeting. |
Only holders of the Companys Common Stock and its
Cumulative Preferred Stock Series A of record
at the close of business on March 16, 2006 are entitled to
notice of and to vote at this meeting.
Shareholders are welcome to attend the meeting in person.
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By order of the Board of Directors, |
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Michele G. DiAcri
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Corporate Secretary |
April 11, 2006
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CONNECTICUT WATER SERVICE, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 11, 2006
General Information
The accompanying proxy is solicited by the Board of Directors of
the Company for use at the Annual Meeting of Shareholders to be
held at the Great Cedar Hotel Ballroom, Foxwoods Resort,
Route 2, Mashantucket, Connecticut, at 2:00 PM, on
May 11, 2006.
Voting of Shares
Only holders of the Companys Common Stock and its
Cumulative Preferred Stock Series A of record
at the close of business on March 16, 2006 are entitled to
notice of and to vote at the meeting. On March 16, 2006,
the Company had outstanding 8,144,051 shares of Common
Stock, 15,000 shares of Cumulative Preferred
Stock Series A, $20 par value, and
29,499 shares of $.90 Cumulative Preferred Stock,
$16 par value. Each share of Common Stock is entitled to
three votes and each share of Cumulative Preferred
Stock Series A is entitled to one vote on all
matters coming before the meeting. The holders of shares of $.90
Cumulative Preferred Stock, $16 par value, have no general
voting rights.
Whether or not you plan to attend the meeting, please use one
of three voting options:
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Mail You may submit your proxy by signing
your proxy card and mailing it in the enclosed, postage prepaid
and addressed envelope. For shares you hold in street name, you
may sign the voting instruction card included by your broker or
nominees and mail it in the envelope provided. |
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Telephone If you live in the U.S. or
Canada, you may submit your proxy by following the Vote by
Telephone instructions on the proxy card. |
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Internet If you have internet access, you may
submit your proxy from any location in the world by following
the Vote by Internet instructions on the proxy card. |
You may change your proxy instructions at any time prior to the
vote at the Annual Meeting. For shares held directly in your
name, you may do this by granting a later-dated proxy,
submitting a later vote by telephone or computer, or by
attending the Annual Meeting and voting in person. Attendance at
the meeting will not cause your previously-granted proxy to be
revoked, unless you specifically request it. You may change your
proxy instructions for beneficially held shares by submitting
new voting instructions to your broker or nominee.
Under Connecticut law, adoption of Proposal (1), the election of
directors, requires a plurality of the votes cast by the holders
of shares present in person or by proxy and voting at the
meeting. Adoption of Proposal (2), ratification of the
appointment of the Companys independent auditor, requires
the affirmative vote of a majority of the shares present in
person or by proxy and voting at the meeting.
Votes withheld and broker non-votes will not be
counted as votes cast for or against any of the Proposals, but
the withheld and broker non-votes will be counted for purposes
of determining whether a quorum is present at the meeting. If
your shares are held by a broker or other nominee, your broker
or nominee can vote on your behalf of Proposals 1 and 2.
Proxy solicitation costs will be paid by the Company. In
addition to this solicitation by mail being made initially on or
about April 17, 2006, officers and regular employees of the
Company may make solicitations by telephone, mail, or personal
interviews, and arrangements may be made with banks, brokerage
firms, and others to forward proxy material to their principals.
The Company has retained Morrow & Company, Inc. to
assist in the solicitation of proxies at an estimated cost of
$4,500, plus expenses, which will be paid by the Company.
1
Section 16(a) Beneficial Ownership Reporting
Compliance
Under Section 16 of the Securities Exchange Act of 1934,
directors, officers and certain beneficial owners of the
Companys equity securities are required to file reports of
their transactions in the Companys equity securities with
the Securities and Exchange Commission on specified due dates.
In 2005, reports of transactions by all directors, officers and
such beneficial holders were timely filed, except a late
Form 4 for each of Marshall T. Chiaraluce, Peter J.
Bancroft, David C. Benoit, Thomas R. Marston, Terrance P.
ONeill, and Maureen P. Westbrook was filed on
January 13, 2006. In making this statement, the Company has
relied on the written representations of its directors,
officers, and five percent shareholders and copies of the
reports that they have filed with the Securities and Exchange
Commission.
CORPORATE GOVERNANCE
Board Independence
The Board has determined that Mesdames Hanley, Hincks, Thibdaue,
and Wallace and Messrs. Kachur, Lengyel, Lentini, Neal,
Reeds, and Wilbur are independent directors under Nasdaq listing
standards. Mr. Chiaraluce and Mr. Thornburg, employees
of the Company, are not considered independent directors.
Code of Conduct
Annually, employees are sent the Companys Code of Conduct.
Thereafter, each employee acknowledges their understanding and
compliance with the code, including the establishment of a
Company hotline for reporting Code of Conduct violations. To
date, the Company hotline has received no reports of conduct
violations. In addition to the Code of Conduct, the Board has
adopted an additional Code of Conduct as a result of the
Sarbanes-Oxley Act of 2002.
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The Board promotes honest and ethical conduct, including the
ethical handling of actual and apparent conflicts of interest
between personal and professional relationships; full, fair,
accurate, timely and understandable disclosure in the periodic
reports required to be filed by the Company; and compliance with
applicable governmental laws and regulations and the
Companys own governing documents. |
The public can access the Companys Code of Conduct on the
Companys Internet website (www.ctwater.com) or by
contacting the Company at the address appearing on Page 23.
Committee Charters
The Audit, Compensation, and Corporate Governance Committees of
the Board have adopted written charters. Shareholders and the
public can obtain copies of charters of the Audit, Compensation,
and Corporate Governance Committees at the Companys
website or by contacting the Company at the address appearing on
Page 23 to request copies.
2
Board and Committee Membership and Attendance
The Companys Board of Directors met five times during 2005
and conducts regular executive sessions of outside directors
without management present. In addition, the Companys
Board of Directors maintains a number of committees; their
composition and functions in 2005 follows. In 2005, each
director attended at least 81% of the aggregate number of
meetings of the Board and Committees on which they served. All
directors attended the 2005 Annual Meeting of Shareholders.
Directors are expected, but not required, to attend the 2006
Annual Meeting of Shareholders.
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Committees |
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Committee Meetings and Functions |
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Audit |
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Meetings: 3 plus 8 conference calls |
Marcia L. Hincks (Chairman)
Ronald D. Lengyel
Arthur C. Reeds
Lisa Thibdaue
Carol P. Wallace |
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Appoints, compensates, and oversees the work of the independent
auditors of the Company and The Connecticut Water Company, and
monitors the Companys financial reporting process and
internal control system. |
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Compensation |
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Meetings: 3 |
Marcia L. Hincks
David A. Lentini
Robert F. Neal (Chairman)
Donald B. Wilbur |
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Determines officer compensation and the promotion and hiring of
officers, reviews Company fringe benefit plans other than
retirement plans, and administers the Companys Performance
Stock Programs. |
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Corporate Governance |
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Meetings: 1 |
Mary Ann Hanley
Ronald D. Lengyel
Arthur C. Reeds
Donald B. Wilbur (Chairman) |
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Reviews the qualifications and independence standards of
director nominees and makes recommendation to the Board, and
reviews the overall effectiveness of the Board. |
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Executive |
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Meetings: 4 plus 2 conference calls |
Marcia L. Hincks
Robert F. Neal
Arthur C. Reeds
Donald B. Wilbur |
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Acts on behalf of the Board whenever the Board is not in session
and recommends chief executive officer succession. |
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Pension Trust and Finance |
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Meetings: 4 |
Mark G. Kachur
David A. Lentini
Robert F. Neal
Arthur C. Reeds (Chairman)
Carol P. Wallace |
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Reviews the Pension Trust Fund of The Connecticut Water
Company Employee Retirement Fund, the employee Savings Plan
(401(k)), the VEBA Trust Fund for retiree medical benefits,
and the Supplemental Executive Retirement Program, reviews and
determines actuarial policies and investment guidelines, selects
the investment managers, and makes recommendations to and
advises the Board of Directors on financial policy issues and
the issuance of securities. |
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Strategic Planning |
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Meetings: 1 |
Roger Engle
Mary Ann Hanley
Marcia L. Hincks
Mark G. Kachur
Robert F. Neal
Lisa Thibdaue
Donald B. Wilbur |
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Oversees the preparation and implementation of the
Companys Strategic Plan. |
3
Mandatory Retirement
According to the Companys Bylaws, no director shall be
eligible for re-election as a director of the Company after such
directors has attained the age of 70.
Minimum Stock Ownership
Each Board member is required to own at least 200 shares of
Connecticut Water Service, Inc. common stock.
Director Compensation
Since the Boards of Directors of the Company and the Connecticut
Water Company are identical, regular meetings of each are
generally held on the same day. Following is the current list of
fees paid to Board members in 2005. Every three years, the
Corporate Governance Committee conducts a review of the
Boards compensation. That review was last conducted in
October 2004. Currently, each board and committee meeting fee is
$700 for regular meetings; $800 for special meetings; whether
they participate in person or by phone. There were no special
meetings of the Board or any Committee in 2005. Committee
members who participate in scheduled committee telephone
conference calls are paid $350 per call. Each board member
is paid an annual retainer of $8,000 in quarterly installments.
Each committee chair is paid an additional retainer of $1,500 in
quarterly installments. There are currently no equity awards
made to the independent members of the Board of Directors.
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Total Paid in | |
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Stock Awards/ | |
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All Other | |
Directors |
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Cash in 2005 | |
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Option Awards | |
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Compensation | |
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Roger Engle
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$ |
11,000 |
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-0- |
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-0- |
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M. T. Chiaraluce(1)
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$ |
11,500 |
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-0- |
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-0- |
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M. Hanley
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$ |
12,400 |
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-0- |
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-0- |
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M. L. Hincks*
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$ |
22,175 |
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-0- |
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-0- |
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M. G. Kachur
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$ |
13,800 |
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-0- |
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-0- |
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R. D. Lengyel
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$ |
14,850 |
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-0- |
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-0- |
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D. A. Lentini*
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$ |
15,200 |
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-0- |
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-0- |
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R. F. Neal*
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$ |
20,775 |
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-0- |
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-0- |
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A. C. Reeds*
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$ |
20,775 |
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-0- |
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-0- |
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L. J. Thibdaue
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$ |
15,200 |
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-0- |
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-0- |
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E. W. Thornburg
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-0- |
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-0- |
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-0- |
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C. P. Wallace
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$ |
17,300 |
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-0- |
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-0- |
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D. B. Wilbur*
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$ |
16,575 |
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-0- |
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-0- |
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(1) |
Mr. Chiaraluce, Chairman and Executive Officer, and Eric W.
Thornburg, President and Chief Executive Officer, receives the
same retainer and meeting fees as other directors;
Mr. Chiaraluce does not receive a fee for committee
meetings. Mr. Chiaraluces retainer and meeting fees
are included in the Summary Compensation Table on Page 23.
Directors who are not officers are not entitled to retirement
benefits from the Company. |
Pursuant to a Directors Deferred Compensation Plan, Directors
may elect to defer receipt of all or a specified portion of the
compensation payable to them for services as Directors until
after retiring as Directors. Any amounts so deferred are
credited to accounts maintained for each participating Director,
and interest at an annual rate of 10.74% is currently credited
on a monthly basis to all deferred amounts. Distribution of
amounts deferred and accumulated interest may be made, at the
election of each participating Director, in a lump sum or in
annual installments over a period of years specified by the
Director, such distribution to commence in the year following
the year in which the individual ceases to be a Director. In
2005, one Director
4
elected to participate in the Plan. Four of the Companys
retired directors are currently receiving payments under the
Plan.
The Board Nomination Process
The Corporate Governance Committee identifies director nominees
based primarily on recommendations from management, Board
members, shareholders, and other sources, such as water industry
and state industry associations. All candidates submitted by a
shareholder or shareholder group are reviewed and considered in
the same manner as all other candidates. The Committee
recommends to the Board nominees that are independent and
possess qualities such as personal and professional integrity,
sound business judgment, and utility, financial, or political
expertise. The Committee also considers age and diversity
(broadly construed to mean a variety of opinions, perspectives,
personal, and professional experiences and backgrounds, such as
gender, race, and ethnicity differences, as well as other
differentiating characteristics) in making its recommendations
for nominees to the full Board. In addition, the Committee
considers whether potential director nominees live in The
Connecticut Water Companys service regions in sufficient
numbers to satisfy the representation requirements of
Connecticut Statute 16-62a, and also evaluates other factors
that it may deem are in the best interests of the Company and
its shareholders. The Committee may, under its charter, retain
at the Companys expense one or more search firms to
identify potential board candidates. The Committee does not
currently employ an executive search firm, or pay a fee to any
other third party, to locate qualified candidates for director
positions.
Shareholder Recommendations
Shareholders recommending director nominees may submit the name
and biographical information of any person to the Corporate
Secretary at the address listed on Page 23. The Corporate
Secretary will pass such shareholder recommendations onto the
Chairman of the Corporate Governance Committee for
consideration. The shareholder will be informed of the status of
his/her recommendation after it is considered by the Corporate
Governance Committee.
Pursuant to the Companys Bylaws, nominations for directors
may be made by any shareholder entitled to vote for the election
of directors at the meeting who complies with the following
procedures. A nomination by a shareholder shall be made only if
a shareholder has given proper and timely notice in writing to
the Secretary of the Company of a shareholders intent to
make such nomination. To be timely, a shareholders notice
must be delivered to or mailed and received by the Secretary of
the Company at the General Offices of the Company not later than
(i) with respect to an election to be held at an annual
meeting of shareholders, the close of business on a day which is
not less than 120 days prior to the anniversary date of the
immediately preceding annual meeting, and (ii) with respect
to an election to be held at a special meeting of shareholders
called for the election of directors, the close of business on
the tenth day following the date on which notice of such meeting
is first mailed to shareholders. Each notice must set forth:
(a) the name and address of the person or persons to be
nominated; (b) the name and address, as they appear on the
Companys books, of the shareholder making such nomination;
(c) the class and number of shares of the Company which are
beneficially owned by the shareholder; (d) a representation
that the shareholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or
persons specified in the notice; (e) a description of all
arrangements or understandings between the shareholder and each
nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to
be made by the shareholder; (f) such other information
regarding each nominee proposed by the shareholder as would be
required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission; and
(g) the consent of each nominee to serve as a director of
the Company if so elected. Any notice of nominations for
consideration at the 2007 Annual Meeting must be received by the
Companys Secretary by the close of business on
January 11, 2007. The presiding officer at the meeting
shall determine if the facts warrant a determination that such
nomination was not made in accordance with the provisions of the
Companys Bylaws, and if the officer should so determine,
he shall so declare to the meeting and any nominations not
properly made shall be disregarded.
5
The 2005 Nomination Process
The Corporate Governance Committee met on October 6, 2005
to consider the renomination of Directors Engle, Thibdaue,
Wallace, and Wilbur whose terms expire at the 2006 Annual
Meeting of Shareholders. The Committee reviewed the attendance,
performance, and independence of these Directors, but determined
to withhold the Committees recommendation of these
Directors as Director nominees to the Board in order to allow
interested shareholders to make either (i) recommendations
to the Committee for Director nominees to be considered by the
Board for inclusion on the Companys proxy card, or
(ii) formal Director nominations, which, pursuant to the
Companys Bylaws procedures (described above) were due by
January 2, 2006. The Committee did not receive a formal
shareholder self-nomination for director candidate. After
consideration of all candidates, the Committee recommended to
the Board, and the Board approved, that the number of Board
members should remain at 13 and that Mesdames. Thibdaue and
Wallace and Mr. Wilbur should be submitted to shareholders
as the Companys director nominees. The Committee
determined not to re-nominate Mr. Engle to an additional
term as a Director.
The Companys Board of Directors unanimously elected Eric
W. Thornburg, the Companys President and Chief Executive
Officer, to fill a newly created vacancy on the Companys
Board of Directors, effective as of January 11, 2006.
Mr. Thornburg has been nominated to serve as a
Class III director to serve a term expiring at the 2009
annual meeting of shareholders.
Communications with Directors
Any shareholder wishing to communicate with a Director may do so
by contacting the Companys Corporate Secretary, at the
address and telephone number listed on Page 23, who will
pass to the Director a written,
e-mail, or phone
communication. The Corporate Secretary has been authorized by
the Board to screen frivolous or unlawful communications or
commercial advertisements.
Certain Relationships and Related Transactions
Mr. Engle, whose term as a director will end at the 2006
Annual Meeting, retired as President of Crystal Water Utilities
Corporation/ The Crystal Water Company of Danielson on
December 31, 1999, having served in that position since
1978. As part of the arrangements relating to the Companys
acquisition of Crystal Water Utilities Corporation/ The Crystal
Water Company of Danielson on September 29, 1999, the
Company entered into an employment/consulting agreement with
Mr. Engle which covered his employment for the three-month
period prior to his retirement and which provides that,
beginning January 1, 2000, Mr. Engle will receive a
$16,000 annual consulting fee from The Crystal Water Company of
Danielson. This consulting agreement terminates on the earlier
of December 31, 2009 or Mr. Engles death or
resignation. Upon completion of the consulting agreement,
Mr. Engle will receive a $16,000 annual supplemental
retirement benefit until his death. In addition, Mr. Engle
receives health insurance benefits of approximately $9,271 under
an employment/consulting agreement which amount is paid by the
Company.
CUNO, Inc., a filter manufacturer for which Mr. Kachur
served as President and Chief Executive Officer in 2005, made
payments of $275,340 to the Company during 2005 for water
services provided to CUNO during the year. CUNO paid the
Companys prevailing rates for water services. In addition,
during 2005 the Company paid $2,089,910 to Northeast Utilities,
for which Ms. Thibdaue serves as a Vice President, for
electric utility services. The Company paid Northeast Utilities
prevailing rates for electric utility services. Northeast
Utilities made payments of $6,529 to the Company during 2005 for
water.
Security Ownership of Certain Beneficial Owners and
Management
The following table lists, to the Companys knowledge, the
ownership of the Companys Common Stock and the nature of
such ownership for each Director and nominee for Director, for
each executive officer named in the Summary Compensation Table,
for all executive officers and Directors of the Company as a
group, and for each person who beneficially owns in excess of
5 percent of the outstanding shares of any class of the
Companys voting securities. Unless otherwise noted, each
holder has sole voting and dispositive power with respect to the
shares listed. All information is given as of March 16,
2006 and assumes that shares which the named person has a
contractual right to acquire within 60 days have been
acquired and are outstanding.
6
Directors and Executive Officers Stock Ownership
(Ownership as of March 16, 2006)
|
|
|
|
|
|
|
|
|
|
|
Total Amount | |
|
|
Name of Beneficial Owners |
|
Beneficially | |
|
Percent of | |
(* denotes non-employee Director) |
|
Owned | |
|
Class | |
|
|
| |
|
| |
David C. Benoit(1)
|
|
|
42,611 |
|
|
|
** |
|
Marshall T. Chiaraluce(2)
|
|
|
123,047 |
|
|
|
|
|
Roger Engle
|
|
|
11,571 |
|
|
|
** |
|
Mary Ann Hanley*
|
|
|
1,350 |
|
|
|
** |
|
Marcia L. Hincks*
|
|
|
1,620 |
|
|
|
** |
|
Mark G. Kachur*
|
|
|
200 |
|
|
|
** |
|
Ronald D. Lengyel*
|
|
|
1,125 |
|
|
|
** |
|
David A. Lentini*
|
|
|
2,000 |
|
|
|
** |
|
Thomas R. Marston(3)
|
|
|
22,106 |
|
|
|
** |
|
Robert F. Neal*
|
|
|
1,500 |
|
|
|
** |
|
Terrance P. ONeill(4)
|
|
|
21,066 |
|
|
|
** |
|
Arthur C. Reeds*
|
|
|
1,500 |
|
|
|
** |
|
Lisa J. Thibdaue*
|
|
|
700 |
|
|
|
** |
|
Eric W. Thornburg(5)
|
|
|
14,787 |
|
|
|
** |
|
Carol P. Wallace*
|
|
|
200 |
|
|
|
** |
|
Maureen P. Westbrook(6)
|
|
|
38,451 |
|
|
|
** |
|
Donald B. Wilbur(7)
|
|
|
3,548 |
|
|
|
** |
|
Directors and Officers as a Group
|
|
|
287,382 |
|
|
|
|
|
The above ownership individually or as a group is less than 5%
of the outstanding shares of Connecticut Water Service, Inc.
|
|
** |
indicates ownership of less than 1% of the class of securities. |
|
|
(1) |
Includes 3,378 shares of restricted stock, 5,931
unrestricted performance share units, 956 restricted performance
share units, and 30,068 exercisable stock options under the
Companys Performance Stock Program, and 2,278
directly-owned shares. |
|
(2) |
Includes 5,585 shares of restricted stock, 37,385
unrestricted performance share units, 67,092 exercisable stock
options under the Companys Performance Stock Program,
10,601 directly-owned shares, and 2,384 shares in the
Companys 401(k). |
|
(3) |
Includes 2,979 shares of restricted stock, 2,528 restricted
performance share units, 21 unrestricted performance share
units, 14,169 exercisable stock options under the Companys
Performance Stock Program, 1,454 directly-owned shares, and
955 shares in the Companys 401(k). |
|
(4) |
Includes 2,979 shares of restricted stock, 981 unrestricted
performance share units, 2,107 restricted performance share
units, 13,671 exercisable stock options under the Companys
Performance Stock Program, and 1,328 directly-owned shares. |
|
(5) |
Includes 14,787 shares of restricted stock under the
Companys Performance Stock Program. |
|
(6) |
Includes 2,979 shares of restricted stock, 3,342
unrestricted performance share units, 1,685 restricted
performance share units, 26,812 exercisable stock options under
the Companys Performance Stock Program, 2,758
directly-owned shares, and 875 shares in the Companys
401(k). |
|
(7) |
Mr. Wilburs spouse owns 3,548 shares. |
Other Security Holders
The Company knows of no person who has or shares voting and/or
investment power with respect to more than 5 percent of the
shares of the Companys Common Stock or Preferred A Stock.
7
PROPOSAL (1) ELECTION OF DIRECTORS
The Companys Amended and Restated Certificate of
Incorporation provides for a Board of no less than nine or more
than fifteen directors, the exact number of directorships to be
determined from time to time by resolution adopted by
affirmative vote of a majority of the Board. The Directors are
divided into three classes, I, II and III, as nearly
equal in number as practicable, with members to hold office
until successors are elected and qualified. Each class is to be
elected for a three-year term at successive annual meetings.
During 2005, the Board of Directors consisted of twelve
(12) persons. On January 11, 2006, the Board created a
new vacancy on the Board and elected Eric W. Thornburg, the
Companys President and CEO, to fill this vacancy until the
election of directors scheduled for the May 11, 2006 Annual
Meeting of Shareholders. Until May 11, 2006, the Board of
Directors will consist of thirteen (13) persons, including
Roger Engle who is not standing for re-election. Thereafter, the
Board will consist of twelve (12) persons.
The Corporate Governance Committee recommended, and the Board of
Directors selected, the four nominees listed below for election;
three are Class III nominees standing for re-election and
one nominee, Mr. Eric W. Thornburg was appointed as a
Director on January 11, 2006. Of the remaining Directors,
the Class I terms of Directors Chiaraluce, Hincks, Neal,
and Reeds will expire in 2007. The Class II terms of
Directors Hanley, Kachur, Lengyel, and Lentini will expire in
2008. The Board of Directors has determined to fix the number of
directorships for the ensuing year at twelve. Proxies cannot be
voted for a greater number of persons than the number of
nominees named.
Unless otherwise directed, it is intended that the enclosed
proxy will be voted for the election of Mesdames Thibdaue and
Wallace and Messrs. Thornburg and Wilbur.
If any nominee is unable or declines to serve, the persons named
in the proxy may vote for some other person(s).
8
Class III Nominees for Election at this
Meeting for Terms Expiring in 2009 (age in 2006)
|
|
|
|
|
|
|
|
Lisa J. Thibdaue, age 53, serves on the Audit and Strategic
Planning Committees and has been a director since 2000. She has
been the Vice President, Rates, Regulatory Affairs and
Compliance at Northeast Utilities since 1998. From 1996 to 1997,
she was Executive Director, Rates and Regulatory Affairs at
Consumers Energy, a natural gas and electric utility located in
Michigan. She is also on the Advisory Board of Michigan State
University Institute of Public Utilities. |
|
|
|
|
|
Eric W. Thornburg, age 46, was appointed President and
Chief Executive officer of the Company, effective March 1,
2006. Prior to his appointment, Mr. Thornburg served as
President of Missouri-American Water, a subsidiary of American
Water Works Corporation, from 2000 to 2004. He has most recently
served as Vice President-External Affairs for American Water in
the Midwest. |
|
|
|
|
|
Carol P. Wallace, age 51, presently serves on the Audit and
Pension Trust and Finance Committees. She has served as the
Chairman of Cooper-Atkins Corporation, a manufacturer of
temperature acquisition instruments, since 2004, and as its
President and Chief Executive Officer since 1994. She is also a
Director of Zygo Corporation, and serves as a Commissioner of
the Connecticut State Ethics Commission. |
|
|
|
|
|
Donald B. Wilbur, age 64, presently serves on the
Compensation, Corporate Governance (Chairman), Executive, and
Strategic Planning Committees and has been a director since
1993. He retired as the Plant Manager of Unilever HPC, USA, a
personal products manufacturer, on December 31, 2002. He is
a Director of Liberty Bank. |
|
|
|
9
Class I Directors Continuing in Office Whose
Terms Expire in 2007 (age in 2006)
|
|
|
|
|
|
|
|
Marshall T. Chiaraluce, age 64, has been a director since
1992. He is Chairman of the Board of Directors and served as the
President and Chief Executive Officer of the Company from 1992
until March 1, 2006. He also serves on the Board of
Directors of Cooper-Atkins Corporation. |
|
|
|
|
|
Marcia L. Hincks, age 71, presently serves on the Audit
(Chairman), Compensation, Executive, and Strategic Planning
Committees and has been a director since 1983. She retired as
Vice President and Senior Counsel of Aetna Life &
Casualty in December 1993. |
|
|
|
|
|
Arthur C. Reeds, age 62, presently serves on the Audit,
Corporate Governance, Executive, Pension Trust and Finance
(Chairman) Committees and has been a director since 1999. He is
also a Trustee of USAllianz Variable Insurance Products Trust, a
mutual fund group affiliated with Allianz Life Insurance Company
of North America. He was Senior Investment Officer of the
Hartford Foundation for Public Giving September 2000 until
January 2003. From August 1999 to March 2000, he served as the
CEO and as a Director of Conning Corporation, an investment
banking firm. He was the Chief Investment Officer at Cigna
Corporation until his retirement from Cigna in November 1997. |
|
|
|
10
Class II Directors Continuing in Office
Whose Terms Expire in 2008 (age in 2006)
|
|
|
|
|
|
|
|
Mary Ann Hanley, age 49, presently serves on the Corporate
Governance and Strategic Planning Committees and has been a
director since 1999. She is Assistant to the President of St.
Francis Hospital & Medical Center and Director of The
Valencia Society, the endowment fund for the hospital. From
January 1995 to February 1998, she was legal counsel to the
Governors Office, State of Connecticut. |
|
|
|
|
|
Mark G. Kachur, age 63, presently serves on the Pension
Trust and Finance and Strategic Planning Committees. He served
as Chairman, President and Chief Executive Officer of CUNO, Inc.
(filter manufacturer) from November 1999 until his retirement in
February 2006. |
|
|
|
|
|
Ronald D. Lengyel, age 68, presently serves on the Audit
and Corporate Governance Committees and has been a director
since 1999. He is Chairman of the Board and Director of
Naugatuck Valley Savings & Loan, SB. |
|
|
|
|
|
David A. Lentini, age 60, presently serves on the
Compensation and Pension Trust and Finance Committees and has
been a director since 2001. He currently is Chairman, President
and Chief Executive Officer of The Connecticut Bank and Trust
Company. He retired in December 2001 as Senior Vice President of
Webster Bank where he had served since December 1999. From May
1993 to November 1999, he was President, Chief Executive Officer
and Chairman of New England Community Bancorp, Inc., a
multi-bank holding company. He also serves on the Board of
Cooper-Atkins Corporation. |
|
|
|
Each director listed above has had the same employment for more
than the past five years either in the position indicated or in
other similar or executive capacities with the same company or a
predecessor.
Compensation Committee Interlocks and Insider
Participation
None of the members of the Companys Compensation Committee
(Ms. Hincks and Messrs. Lentini, Neal or Wilbur) was
an officer or employee of the Company or any of its subsidiaries
during 2005. During 2005, no executive officer of the Company
served as a director of or as a member of the Compensation
Committee (or other board committee performing equivalent
functions) of another entity, one of whose executive officers
served as a director of the Company, or who served on the
Boards Compensation Committee.
11
AUDIT COMMITTEE REPORT
On March 11, 2005, the Board of Directors revised its
written charter for the Audit Committee of the Company. The
Board has determined that each member of the Audit Committee
qualifies as an independent director for purposes of
Nasdaq listing standards and also has determined that Carol P.
Wallace is a financial expert as defined under rules
of the Securities and Exchange Commission. In connection with
the preparation and filing of the Companys audited
financial statements for the fiscal year ended December 31,
2005 (the audited financial statements), the Audit
Committee performed the following functions:
|
|
|
|
|
The Audit Committee reviewed and discussed with senior
management and PricewaterhouseCoopers LLP, the Companys
independent auditors, the audited financial statements,
managements report on the effectiveness of the
Companys internal control over financial reporting and
PricewaterhouseCoopers LLPs evaluation of the
Companys internal control over financial reporting. |
|
|
|
The Audit Committee also discussed with PricewaterhouseCoopers
LLP the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit
Committees), as currently in effect. |
|
|
|
The Audit Committee received the written disclosures and the
letter from Pricewaterhouse-Coopers LLP required by Independence
Standards Board Standard No. 1 (Independence Discussions
With Audit Committees), and discussed with
PricewaterhouseCoopers LLP its independence from the Company,
including whether the provision of non-audit services by
PricewaterhouseCoopers LLP to the Company is consistent with
maintaining the auditors independence. |
Based upon functions performed, the Audit Committee recommended
to the Board of Directors, and the Board approved, that the
audited financial statements be included in the Companys
Annual Report on
Form 10-K for the
fiscal year ended December 31, 2005 for filing with the
U.S. Securities and Exchange Commission.
AUDIT COMMITTEE
Marcia L. Hincks (Chairman)
Ronald D. Lengyel
Lisa J. Thibdaue
Carol P. Wallace
Arthur C. Reeds
PROPOSAL (2) RATIFICATION OF APPOINTMENT OF
AUDITORS
Principal Accountants Fees and Services
During fiscal year 2005, the Company retained its principal
auditor, PricewaterhouseCoopers LLP, to provide services in the
following categories and amounts.
Audit Fees
The aggregate fees billed by PricewaterhouseCoopers LLP for
professional services rendered for the audit of the
Companys annual consolidated financial statements for the
fiscal years ended December 31, 2004 and December 31,
2005, and for the reviews of the financial statements included
in the Companys Quarterly Reports on
Form 10-Q and
Annual Report on
Form 10-K for
those fiscal years were $462,000 (1) and $380,000 (2),
respectively. Included in the 2004 and 2005 amounts are $358,600
(1) and $276,600 (2), respectively, in fees related to
Sarbanes Oxley Act Section 404 requirements for auditor
certification of managements report on the effectiveness
of the Companys internal controls over financial reporting.
12
PricewaterhouseCoopers LLP performed audit related professional
services as follows:
|
|
|
|
|
|
|
|
|
|
|
|
2004(1) | |
|
2005(2) | |
|
|
| |
|
| |
Audit of Benefit Plans
|
|
$ |
18,000 |
|
|
$ |
21,900 |
|
Preparation of Form 5500s
|
|
|
6,800 |
|
|
|
7,000 |
|
Form S-8 Registration Statement
|
|
|
1,650 |
|
|
|
-0- |
|
Bond Refinancing
|
|
|
4,000 |
|
|
|
10,000 |
|
|
Total
|
|
$ |
30,450 |
|
|
$ |
38,900 |
|
In addition to the services and fees stated above,
PricewaterhouseCoopers LLP billed the Company for the following.
|
|
|
|
|
|
|
|
|
|
|
2004(1) | |
|
2005(2) | |
|
|
| |
|
| |
Tax Services Fee
|
|
$ |
5,000 |
|
|
$ |
-0- |
|
Out-of-Pocket Expenses
|
|
$ |
13,900 |
|
|
$ |
16,500 |
|
|
|
(1) |
2004 numbers stated in the Companys 2004 proxy statement
were estimates. The numbers now stated are actual expense. |
|
(2) |
2005 numbers are estimates. |
In accordance with its charter, the Audit Committee pre-approved
all audit and non-audit fees for 2005 and 2004 listed above.
Representatives of PricewaterhouseCoopers LLP will attend the
Annual Meeting of Shareholders, will have the opportunity to
make a statement, if they desire to do so, and are expected to
be available to respond to appropriate questions.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
FOR PROPOSAL (2).
EXECUTIVE COMPENSATION
Equity Compensation Plan Information
The following table provides information about the
Companys Common Stock that may be issued upon the exercise
of options and other equity awards under all of the
Companys existing equity compensation plans as of
December 31, 2005. The table also includes information
about the Companys other equity compensation plans
previously adopted without shareholder approval.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average | |
|
Number of Securities | |
|
|
Number of Securities to | |
|
Exercise Price of | |
|
Remaining Available for | |
|
|
be Issued Upon | |
|
Outstanding | |
|
Issuance Under Equity | |
|
|
Exercise of Outstanding | |
|
Options, | |
|
Compensation Plans | |
|
|
Options, Warrants and | |
|
Warrants, and | |
|
(Excluding Securities | |
Plan Category |
|
Rights | |
|
Rights | |
|
Reflected in Column (a)) | |
|
|
| |
|
| |
|
| |
Equity compensation plans approved by security holders(1)
|
|
|
202,271 |
(2) |
|
$ |
24.04 |
(2) |
|
|
890,994 |
|
Equity compensation plans not approved by security holders(3)
|
|
|
-0- |
|
|
|
N/A |
|
|
|
592,227 |
|
Total
|
|
|
202,271 |
(3) |
|
$ |
24.04 |
|
|
|
1,483,221 |
(4) |
|
|
(1) |
Includes the Companys 1994 Performance Stock Program,
amended and restated as of April 26, 2002 and the 2004
Performance Stock Program, approved by shareholders on
April 23, 2004. |
13
|
|
(2) |
Includes 7,525 performance shares which are excluded from the
weighted average exercise price calculation. |
|
(3) |
Includes the Dividend Reinvestment and Common Stock Purchase
Plan (DRIP), amended and restated as of November 15, 2001.
Under the plan, customers and employees of the Company and
holders of Common Stock who elect to participate may
automatically reinvest all or specified percentages of their
dividends in additional shares of Common Stock and may also make
optional cash payments of up to $1,000 per month to
purchase additional shares of Common Stock. The Company may
issue shares directly to the Plans agent in order to meet
the requirements of the plan, or may direct the agent
administering the Plan on the Companys behalf to buy the
shares on the open market at its discretion.
1,500,000 shares have been registered with the Securities
and Exchange Commission for that purpose. Under the Plan,
907,773 shares have been issued by the Company as of
December 31, 2005. From late 1996 to January 31, 2004,
the Plans agent purchased shares on the open market. Since
February 2004, the Plans agent credits Plan participants
with shares issued by the Company from the DRIP reserve. |
|
(4) |
Revised to reflect all shares previously reserved by the
Companys Board of Directors and shares resulting from the
Companys 2001 3-for-2 stock split. |
Management Compensation
The following tabulation sets forth the total compensation paid
by the Company and The Connecticut Water Company during 2005,
2004, and 2003 to each of the executive officers, including the
Chief Executive Officer of the Company, receiving more than
$100,000 aggregate compensation in 2005. The Company has no
employees. All officers are employees of The Connecticut Water
Company and all of their compensation is paid by The Connecticut
Water Company.
SUMMARY COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Compensation | |
|
|
|
|
|
|
| |
|
|
|
|
Annual Compensation | |
|
Restricted | |
|
|
|
|
|
|
| |
|
Performance | |
|
Securities | |
|
|
|
|
|
|
|
|
Other Annual | |
|
Share | |
|
Underlying | |
|
Cash | |
|
All Other | |
Name & Principal |
|
|
|
Salary | |
|
Bonus | |
|
Compensation | |
|
Awards | |
|
Options | |
|
Units | |
|
Compensation | |
Position |
|
Year | |
|
($) | |
|
($) | |
|
($)(1) | |
|
($)(2) | |
|
(#)(3) | |
|
($)(2) | |
|
(4) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Marshall T. Chiaraluce,
|
|
|
2005 |
|
|
|
341,000 |
(5) |
|
|
-0- |
|
|
|
4,100 |
|
|
|
99,059 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
5,382 |
|
Chairman, President/ CEO* |
|
|
2004 |
|
|
|
331,100 |
(5) |
|
|
-0- |
|
|
|
4,100 |
|
|
|
76,423 |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
5,836 |
|
|
|
|
2003 |
|
|
|
323,000 |
(5) |
|
|
-0- |
|
|
|
4,000 |
|
|
|
88,736 |
|
|
|
10,763 |
|
|
|
-0- |
|
|
|
4,168 |
|
David C. Benoit,
|
|
|
2005 |
|
|
|
184,600 |
|
|
|
-0- |
|
|
|
3,692 |
|
|
|
11,242 |
|
|
|
-0- |
|
|
|
29,953 |
|
|
|
6,397 |
|
VP-Finance/ CFO |
|
|
2004 |
|
|
|
174,200 |
|
|
|
-0- |
|
|
|
3,484 |
|
|
|
10,105 |
|
|
|
-0- |
|
|
|
23,268 |
|
|
|
6,065 |
|
|
|
|
2003 |
|
|
|
170,000 |
|
|
|
-0- |
|
|
|
3,400 |
|
|
|
11,938 |
|
|
|
5,209 |
|
|
|
22,571 |
|
|
|
4,374 |
|
Thomas R. Marston, VP,
|
|
|
2005 |
|
|
|
147,330 |
|
|
|
-0- |
|
|
|
2,946 |
|
|
|
9,936 |
|
|
|
-0- |
|
|
|
26,413 |
|
|
|
-0- |
|
Planning & Treatment |
|
|
2004 |
|
|
|
127,147 |
|
|
|
-0- |
|
|
|
2,543 |
|
|
|
3,046 |
|
|
|
-0- |
|
|
|
12,750 |
|
|
|
-0- |
|
|
|
|
2003 |
|
|
|
114,075 |
|
|
|
-0- |
|
|
|
2,282 |
|
|
|
3,595 |
|
|
|
-0- |
|
|
|
12,302 |
|
|
|
-0- |
|
Terrance P. ONeill,
|
|
|
2005 |
|
|
|
171,600 |
|
|
|
-0- |
|
|
|
3,432 |
|
|
|
12,395 |
|
|
|
-0- |
|
|
|
23,824 |
|
|
|
-0- |
|
VP, Operations |
|
|
2004 |
|
|
|
166,600 |
|
|
|
-0- |
|
|
|
3,332 |
|
|
|
11,146 |
|
|
|
-0- |
|
|
|
18,013 |
|
|
|
-0- |
|
|
|
|
2003 |
|
|
|
162,500 |
|
|
|
-0- |
|
|
|
2,625 |
|
|
|
13,146 |
|
|
|
4,593 |
|
|
|
17,486 |
|
|
|
-0- |
|
Maureen P. Westbrook,
|
|
|
2005 |
|
|
|
179,400 |
|
|
|
-0- |
|
|
|
3,588 |
|
|
|
19,847 |
|
|
|
-0- |
|
|
|
16,056 |
|
|
|
1,767 |
|
VP, Administration & |
|
|
2004 |
|
|
|
174,200 |
|
|
|
-0- |
|
|
|
3,484 |
|
|
|
17,823 |
|
|
|
-0- |
|
|
|
10,508 |
|
|
|
1,681 |
|
Government Affairs |
|
|
2003 |
|
|
|
170,000 |
|
|
|
-0- |
|
|
|
3,400 |
|
|
|
32,219 |
|
|
|
4,593 |
|
|
|
-0- |
|
|
|
1,079 |
|
|
|
* |
Mr. Chiaraluce retired as President and CEO, effective
March 1, 2006. Eric W. Thornburg assumed the position of
President and CEO as of that date. |
|
(1) |
Employer matching contributions under The Savings Plan of the
Connecticut Water Company (401(k)). |
|
(2) |
The values shown in the table above are based on shares actually
earned in the given year, valued at the closing market price of
the Companys common stock on the date vested: shares
earned in 2005 vested on March 24, 2006, shares earned in
2004 vested on March 11, 2005, and shares earned in 2003
vested on February 11, 2004. |
14
|
|
|
The value of the full number of shares of restricted stock,
performance shares, and cash units initially allocated, but
unearned, to Messrs. Chiaraluce, Benoit, Marston, and
ONeill and Ms. Westbrook was $145,619, $58,728,
$51,788, $51,788, and $51,788 in 2005; $140,695, $56,742,
$28,609, $50,036, $50,036, and $50,036 in 2004; $135,937,
$54,824, $27,641, $48,344, $48,344, and $48,344 respectively in
2003. |
|
|
Pursuant to the Companys Performance Stock Programs,
Messrs. Chiaraluce, Benoit, and Marston, and ONeill,
and Ms. Westbrook elected to defer 100%, 20%, 20%, 25% and
40% respectively for 2005, 2004, and 2003. At December 31,
2005 and prior to partial vesting (due to meeting some but not
all performance goals) on March 16, 2006,
Mr. Chiaraluce owned 5,448 shares of restricted
performance stock with an aggregate value of $133,530;
Mr. Benoit owned 439 shares of restricted performance
stock with an aggregate value of $10,760; Mr. Marston owned
388 shares of restricted performance stock with an
aggregate value of $9,510; Mr. ONeill owned
484 shares of restricted performance stock with an
aggregate value of $11,863; and Ms. Westbrook owned
775 shares of performance stock with an aggregate value of
$18,995. Dividends are paid on restricted performance stock. |
|
|
(3) |
The amounts shown represent stock options granted in each listed
year. No stock options were granted to any of the Companys
named executive officers in 2005. On December 1, 2005, the
Compensation Committee approved restricted shares awards to each
of the named executive officers of the Company in lieu of 2004
and 2005 stock option awards. |
|
(4) |
The amounts shown in the table represent the above-market
portion of the interest accrued on the balances of the deferred
compensation accounts maintained by the Company for each of
Messrs. Chiaraluce, Benoit, Marston, ONeill and
Ms. Westbrook pursuant to the non-qualified salary deferral
agreements entered into by the Company and each of such officers. |
|
(5) |
This amount includes Mr. Chiaraluces fees as a
director of the Company. |
Option Grants in Last Fiscal Year
There were no stock options granted under the Companys
Performance Stock Program to the individuals named in the
Summary Compensation Table during the fiscal year ended
December 31, 2005.
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values
The following table sets forth certain information with respect
to the individuals named in the Summary Compensation Table
regarding options held as of December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
Value of Unexercised In- | |
|
|
Shares | |
|
|
|
Underlying Unexercised | |
|
The Money Options At | |
|
|
Acquired | |
|
Value | |
|
Options at Fiscal Year | |
|
Fiscal Year-End ($)(1) | |
|
|
on | |
|
Realized | |
|
End (#) Exercisable/ | |
|
Exercisable/ | |
Name |
|
Exercise | |
|
($) | |
|
Unexercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
Marshall T. Chiaraluce
|
|
|
14,811 |
|
|
|
153,199 |
|
|
|
67,092/ 8,310 |
|
|
|
199,833/ -0- |
|
David C. Benoit
|
|
|
-0- |
|
|
|
-0- |
|
|
|
30,068/ 4,022 |
|
|
|
97,201/ -0- |
|
Thomas R. Marston
|
|
|
-0- |
|
|
|
-0- |
|
|
|
13,169/ 2,433 |
|
|
|
35,654/ -0- |
|
Terrance P. ONeill
|
|
|
10,550 |
|
|
|
57,125 |
|
|
|
13,671/ 3,546 |
|
|
|
13,423/ -0- |
|
Maureen P. Westbrook
|
|
|
6,059 |
|
|
|
57,673 |
|
|
|
26,812/ 3,546 |
|
|
|
49,161/ -0- |
|
|
|
(1) |
Based on the average of the high and low fair market value of
the Companys Common Stock as of December 30, 2005
($24.66), less the exercise price of the option. |
Retirement Plans
All employees and officers of The Connecticut Water Company are
entitled to participate in The Connecticut Water Company
Employees Retirement Plan (the Retirement
Plan), a non-contributory, qualified defined benefit plan.
Retirement benefits are based on years of credited service and
average annual earnings, which is defined to mean the highest
average regular basic compensation received by an individual
from the Company and The Connecticut Water Company during any
60 consecutive months. Retirement
15
benefits under the Retirement Plan are not reduced by
employees Social Security benefits. Contributions, which
are actuarially determined, are made to the Retirement Plan by
The Connecticut Water Company for the benefit of all employees
covered by the Retirement Plan.
The Internal Revenue Code of 1986, as amended (the
IRC), imposes limits upon the amount of compensation
that may be used in calculating retirement benefits and the
maximum annual benefit that can be paid to a participant from a
tax-qualified benefit plan. These limits affect the benefit
calculation for certain individuals and effectively reduce their
benefits under the Retirement Plan. In order to supplement
Retirement Plan benefits, The Connecticut Water Company has
entered into individual supplemental executive retirement
agreements with certain executives, including all of the current
and former executive officers named in the Summary Compensation
Table. If the executive meets the age and any applicable service
requirements under such an agreement, the annual retirement
benefit payable will be equal to 60% of average annual earnings,
as defined under the Retirement Plan but without the IRC
compensation limit, offset by his or her benefit payable under
the Retirement Plan. As of December 31, 2005, the estimated
years of credited service under the Retirement Plan for
Messrs. Chiaraluce, Benoit, and ONeill were 14,
10, and 25, respectively, and for Ms. Westbrook
17 years.
In the case of each of Mr. Chiaraluce and Mr. Benoit,
the annual benefit amounts are reduced by benefits payable under
the retirement plan of a prior employer.
Mr. Chiaraluces supplemental executive retirement
agreement provides an early retirement benefit if
Mr. Chiaraluce retires from service to the Company at any
age between 55 and 65. As of December 31, 2005,
Mr. Chiaraluce was 63 years of age and thus had
satisfied the age requirement necessary to entitle him to the
payment of this benefit upon his retirement. If he had retired
as of such date, Mr. Chiaraluce would have been entitled to
a benefit of approximately $154,682 under his agreement.
In December 2003, the Supplemental Executive Retirement
Agreements of Messrs. Benoit, Chiaraluce, Marston,
ONeill and Ms. Westbrook were amended to include in
the definition of Average Earnings, for individuals
retiring on or after age 62, the value of Performance Share
Units, Performance Cash Units, and Restricted Stock awarded to
such Executives under the Companys Performance Stock
Program. Also, the agreements between the Company and
Mr. Benoit and Ms. Westbrook have been further amended
to permit early retirement upon or after attainment of
age 55 and prior to attainment of age 65, to align
their agreements with those for Messrs. Chiaraluce and
ONeill.
Examples of the annual benefit payable under the Retirement Plan
and the supplemental executive retirement agreements, based on a
straight life annuity, are presented in the table below.
|
|
|
|
|
Highest Average Annual Compensation |
|
|
During 60 Consecutive Months |
|
Annual Benefit | |
|
|
| |
$100,000
|
|
$ |
60,000 |
|
125,000
|
|
|
75,000 |
|
160,000
|
|
|
96,000 |
|
170,000
|
|
|
102,000 |
|
200,000
|
|
|
120,000 |
|
225,000
|
|
|
135,000 |
|
250,000
|
|
|
150,000 |
|
275,000
|
|
|
165,000 |
|
300,000
|
|
|
180,000 |
|
Employment Contracts,
Change-in-Control, and
Termination Arrangements
During May 2001, the Company and The Connecticut Water Company
entered into Amended and Restated Employment Agreements with
Messrs. Chiaraluce, Benoit, and ONeill and
Ms. Westbrook. In December 2004, the Company and The
Connecticut Water Company entered into an employment agreement
with Mr. Marston and on March 16, 2006, the Company
and The Connecticut Water Company entered into
16
an employment agreement with Eric W. Thornburg. The intent of
the agreements is to ensure continuity in the management of the
Company in the event of a change in control of the Company. The
agreements do not become effective until a change in control
occurs (the Effective Date). A Change in Control is
deemed to occur when (i) any person, other than the
Company, The Connecticut Water Company or any employee benefit
plan sponsored by the Company or The Connecticut Water Company,
becomes the beneficial owner, directly or indirectly, of twenty
(20%) percent or more of the common stock of the Company or The
Connecticut Water Company; (ii) the stockholders of the
Company or The Connecticut Water Company approve (A) any
consolidation or merger of the Company or The Connecticut Water
Company in which the Company or The Connecticut Water Company is
not the continuing or surviving corporation (other than a
consolidation or merger of the Company or The Connecticut Water
Company in which holders of the common stock of the Company or
The Connecticut Water Company have the same proportionate
ownership of common stock of the surviving corporation) or
pursuant to which the common stock of the Company or The
Connecticut Water Company would be converted into cash,
securities or other property, or (B) any sale, lease,
exchange or other transfer of all or substantially all the
assets of the Company or The Connecticut Water Company;
(iii) there is a change in the majority of the Board of
Directors of the Company or The Connecticut Water Company during
a 24-month period, or
(iv) the Board adopts a resolution to the effect that a
change in control has occurred.
As of the Effective Date, The Connecticut Water Company agrees
to employ the executives for a continuously renewing three-year
period commencing on the Effective Date. Compensation under the
agreements is paid by The Connecticut Water Company and consists
of (i) base salary, (ii) annual bonus,
(iii) participation in incentive, savings and retirement
plans and welfare plans applicable to executive employees,
(iv) fringe benefits, (v) an office and support staff,
and (vi) if the executive is employed on the date the Board
approves a consolidation, merger, transfer of assets or other
transaction described in clause (ii) of the definition of
Change in Control above, a stay-on bonus equal to the
executives then-current base salary, plus an amount equal
to the target bonus under the Officers Incentive
Program for the year in which such date occurs, payable in
a lump sum, provided the executive is employed on the fifth day
following the closing of such transaction. The stay-on bonus is
also payable if the executives employment is terminated
following such approval but prior to the fifth day following the
closing of such transaction by the employer for any reason other
than for cause, death or attainment of age 65, or if
employment is terminated because of the executives
disability or if the executive voluntarily terminates employment
prior to such date for good reason.
If the executives employment is terminated for cause or by
reason of the executives death or attainment of
age 65 or voluntarily by the executive other than for good
reason, the obligations of The Connecticut Water Company under
the agreements cease and the executive forfeits all rights to
receive any compensation or other benefits under the agreement
except compensation or benefits accrued or earned and vested by
the executive as of the date of termination, including base
salary through the date of termination and benefits payable
under the terms of any qualified or nonqualified retirement or
deferred compensation plans maintained by The Connecticut Water
Company; provided, that if the executives employment is
terminated by reason of the executives death, in addition
to the preceding and any other death benefits which may become
payable, base salary continues to be paid at the then current
rate for a period of six months to the executives
beneficiary or estate.
If the executives employment is terminated for any reason
other than cause, death or attainment of age 65, or if the
executives employment is terminated by reason of the
executives disability, or if the executive voluntarily
terminates employment for good reason, the obligations of The
Connecticut Water Company are, in addition to the stay-on bonus
described above, payment or provision of: (i) a lump-sum
payment in consideration of the executives covenants
regarding confidential information and non-competition (the
Covenants), in an amount determined by an
independent expert to be the reasonable value of such Covenants
as the termination date (the Covenant Value), but in
no event greater than the aggregate value of the benefits
provided in subparagraphs (ii) (ix) below
(the Termination Benefits); such Termination
Benefits are to be offset by the Covenant Value, provided,
however, that the executive may elect to receive any Termination
Benefit that would be so offset, but in such event the Covenant
Value will be reduced by the value of such Termination Benefit;
(ii) an amount equal to three times the base salary of the
executive plus
17
three times the target bonus for the executive under the
Officers Incentive Program for the year in which termination
occurs, reduced by any amount payable under any applicable
severance plan, payable over the three years following
termination; (iii) the value of the aggregate amounts that
would have been contributed on behalf of the executive under any
qualified defined contribution retirement plan(s) then in
effect, plus estimated earnings thereon had the executive
continued to participate in such plan(s) for an additional three
years; (iv) an amount equal to the difference between
benefits which would have been payable to the executive under
any deferred compensation agreement had the executive continued
in the employ of The Connecticut Water Company for an additional
three years and the benefits actually payable;
(v) additional retirement benefits equal to the present
value of the difference between the annual pension benefits that
would have been payable to the executive under The Connecticut
Water Companys qualified defined benefit retirement plan
and under any nonqualified supplemental executive retirement
plan covering the executive had the executive continued to
participate in such plan(s) for an additional three years and
the benefits actually payable; (vi) if the executives
employment is terminated by reason of disability, disability
benefits at least equal to the most favorable of those provided
by The Connecticut Water Company or the Company; (vii) all
life, health, disability and similar welfare benefit plans and
programs of The Connecticut Water Company for a period of three
years, plus three additional years of credit for purposes of
determining eligibility to participate in any such plan for
retirees; (viii) three additional years of all other
perquisites as the executive was receiving at the date of
termination; and (ix) outplacement services for one year.
In addition to the above, the executive will become fully vested
in any form of non-cash compensation previously granted, such as
previously-granted stock options, awards of shares of restricted
stock, and performance share awards.
In the event that any payment or benefit received or to be
received by the executive under the agreement would be an
excess parachute payment, as defined in IRC
Section 280G, and subject to the federal excise tax imposed
by IRC Section 4999, then a
gross-up
payment will be made to the executive in the event that
the benefits payable to the Executive under the Agreement are
subject to the excise tax on excess parachute payments. The
gross-up payment would
compensate the executive for the initial twenty percent (20%)
excise tax payable on their excess parachute payments plus the
income and excise taxes then becoming payable on the
gross-up payment. As a
result of the gross-up
payment, the executive will receive an after-tax amount equal to
the amount the executive would have received under the agreement
had no excise tax been payable.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the
Compensation Committee) is responsible for
determining executive compensation and administering the
Companys 1994 and 2004 Performance Stock Programs.
Executive Compensation Principles
The Companys executive compensation plan is designed to
align executive compensation with the Companys and/or The
Connecticut Water Companys strategic business planning,
which includes management initiatives and business financial
performance. Through this process the Compensation Committee has
established a program to:
|
|
|
|
|
Attract and retain key executives critical to the long-term
success of the Company. |
|
|
|
Reward executives for the accomplishment of strategic goals
which reflect customer service and satisfaction as well as the
enhancement of shareholder value. |
|
|
|
Integrate compensation programs with both The Connecticut Water
Companys annual performance review and the Companys
and/or The Connecticut Water Companys strategic planning
and measuring processes. |
|
|
|
Support a performance-oriented environment that rewards
performance with respect to overall performance goals and
performance on individual goals for each participant in the plan. |
18
Executive Compensation Program
The Companys Compensation Program in 2005 consisted of two
components: base salary and annual incentive compensation. Stock
options are part of the 2004 Performance Stock Program; however,
no stock options were granted in 2005. The annual compensation
consists of a base salary. Incentive compensation consists of
Common Stock performance shares, restricted shares, and cash
units previously awarded through the 1994 Amended and Restated
Performance Stock Program (the 1994 Program) and
currently awarded through the 2004 Performance Stock Program
(the 2004 Program). The Compensation Committee
recommends a salary range and a level of salary for executive
officers. The Compensation Committee determines the salary or
salary range, incentive compensation and stock options based
upon competitive norms from periodic studies of a peer group of
other water companies. Actual salary changes are based upon such
norms and upon performance. Incentive compensation was
historically provided through the Companys 1994 Program.
(See
footnote 1.)
The Companys current incentive compensation is provided
through the 2004 Program, which is described in
footnote 2.)
The Compensation Committee also reviews and approves the
participation of executive officers of The Connecticut Water
Company under the 2004 Program and the
|
|
1 |
The 1994 Performance Stock Program, amended and restated as of
April 26, 2002, provides for an aggregate maximum of up to
700,000 shares of Common Stock of the Company to be issued
as either stock option grants or awards of restricted stock to
eligible employees. An award of a share of restricted stock is
an award to a participant of a share of the Common Stock of the
Company generally conditioned upon the attainment of performance
goals established by the Compensation Committee for the
performance period to which the award relates and the continued
employment of the participant with the Company or any
majority-owned subsidiary of the Company through the end of the
performance period. During the performance period, the
participant has all of the rights of a shareholder of the
Company, including the right to receive dividends, except that
the participant does not have custody of the shares of Common
Stock nor the right to transfer ownership of the shares during
the performance period. Commencing with 1997 awards, the 1994
Program was amended to permit participants to defer income
taxation of all or a portion of such restricted stock awards by
electing instead to receive performance shares at
the end of a chosen deferral period. Until the end of the
deferral period, a participant holding performance shares has no
rights as a shareholder of the Company. However, dividend
equivalents are credited to such participant as additional
performance shares. Since April 23, 1999, the 1994 Program
authorized the Compensation Committee to also issue stock
options to eligible employees. To date, options covering
345,285 shares have been issued under the 1994 Program. The
1994 Program terminated on April 22, 2004 and no future
awards will be made under the 1994 Program. |
|
|
2 |
The 2004 Performance Stock Program, approved by shareholders on
April 23, 2004, provides for an aggregate maximum of up to
700,000 shares of Common Stock of the Company to be issued
as either stock option grants or awards of restricted stock to
eligible employees. An award of a share of restricted stock is
an award to a participant of a share of the Common Stock of the
Company generally conditioned upon the attainment of performance
goals established by the Compensation Committee for the
performance period to which the award relates and the continued
employment of the participant with the Company or any
majority-owned subsidiary of the Company through the end of the
performance period. During the performance period, the
participant has all of the rights of a shareholder of the
Company, including the right to receive dividends, except that
the participant does not have custody of the shares of Common
Stock nor the right to transfer ownership of the shares during
the performance period. The 2004 Program permits participants to
defer income taxation of all or a portion of such restricted
stock awards by electing instead to receive performance
shares at the end of a chosen deferral period. Until the
end of the deferral period, a participant holding performance
shares has no rights as a shareholder of the Company. However,
dividend equivalents are credited to such participant as
additional performance shares. The 2004 Program authorizes the
Compensation Committee to also issue stock options to eligible
employees. To date, no stock options have been issued under the
2004 Program. Based on recommendations of an executive
compensation study, on December 1, 2005,
Messrs. Chiaraluce, Benoit, Marston, and ONeill and
Ms. Westbrook entered into a Performance Award Restricted
Stock Agreement, covering, respectively, 5,585, 3,378, 2,979,
3,979 and 2979 shares of restricted stock. The awards were
based on 2006 salary midpoint and a per share price of $25.24. |
19
granting of equity based awards under the 2004 Program. The
Compensation Committee awards for 2005, based on the 2005
Strategic Plan and the 2004 Program, were made in December 2004
and vested on March 16, 2006. The Compensation Committee
awards for 2006, based on the 2006 Strategic Plan and the 2004
Program, were made in December 2005 and will vest in March 2007.
The Compensation Committee also approves the award value of
Performance Stock each year as a percentage of base salary and
the basis for judging performance over the following year.
Each year, the Committee determines the maximum incentive award
for each participant, which is based on a percentage of the
salary range midpoint for the participant. The Committee also
establishes corporate and individual performance measures for
the Chief Executive Officer and the Chairman and other executive
officers based upon strategic priorities for the purpose of
determining the percentage of maximum incentive award a
participant is entitled to receive. The Committee may also
determine the relative weights to be given to corporate and
individual goals.
Performance awards for the years 1999 through 2005 were based
25% on The Connecticut Water Companys customer value
rating and water quality measures, 50% on the Companys
return on equity and other service and financial measures, and
25% on other objective corporate goals. In 2005, the Company
received a 88% rating on an independent customer service survey;
total shareholder return was below the Edward D. Jones Utilities
Index; water quality complaints per customer were 1.1 for every
1,000 customers; there were only 6 emergency main breaks per
100 miles of water main; 490 customers are serviced per
equivalent employee a key indicator of productivity;
and a revenue increase in the Companys services and
rentals segment. In addition to these indicators of performance,
the executive team had seven shared strategic goals. One of the
goals could not be achieved with the 2005 year; however,
six other strategic goals were achieved.
Awards granted as annual incentive compensation are payable in
restricted shares of the Companys Common Stock or, at the
election of a participant, deferred performance
shares or performance cash units. Any shares
awarded are subject to certain transfer restrictions imposed by
the Committee. Each executive officer has a threshold, target,
and maximum incentive amount expressed as a percentage of the
salary range midpoint. In 2005, these amounts were
15 percent, 30 percent, and 45 percent,
respectively, of the salary midpoint for the chief executive
officer, and 10 percent, 20 percent and
30 percent, respectively, for the other executive officers.
The plan is intended to pay fully competitive annual cash
compensation when performance against goals matches the target
level.
Based on a December 31, 2005 closing price for the
Companys Common Stock, the Committee awarded $94,805 to
Mr. Chiaraluce; $40,713 to Mr. Benoit; $35,923 to
Mr. Marston; $35,687 to Mr. ONeill, and $35,051
to Ms. Westbrook. Mr. Chiaraluce elected to receive
his award in performance stock only; Mr. Benoit and
Mr. ONeill and Ms. Westbrook elected to receive
their awards split between cash and performance stock; and
Mr. Marston elected to receive his award in cash and
restricted stock.
In January 2006, the Board included Eric W. Thornburg in the
2006 Strategic Plan incentive awards. On March 1, 2006 he
was awarded 4,507 restricted common shares. On March 16,
2006, Mr. Thornburg was awarded an additional 5,365
restricted common shares under a short-term incentive agreement
and 5,365 restricted common shares under a long-term incentive
agreement. Due to complying with the Economic Growth and Tax
Relief Reconciliation Act of 2001, Mr. Thornburg was not
able to elect to receive his award in the form of performance
shares.
At the end of each fiscal year, the Committee reviews a
management report on results versus goals and meets with the
Chief Executive Officer to evaluate the performance of the other
executive officers. The Committee also meets in the absence of
the chief executive officer to evaluate his performance. This
performance, expressed as a percentage with threshold
(80%), expected (100%), and maximum probable
(120%), is used in the determination of annual restricted
stock amounts. The Committee has the authority to modify the
mathematical results of applying the terms of the Program when
the Committee, exercising sound business judgment, deems it
prudent to do so.
20
Also under the Companys 2004 Program, the Committee has
the authority to award incentive stock options and/or other
equity-based awards to executive officers and other key
employees. The ability to grant a variety of awards enables the
Committee to respond to changing strategic, competitive,
regulatory, tax, and accounting forces in an efficient manner.
Over time and through the use of the grant of equity awards, the
Committee intends to grant equity compensation based on
competitive norms and achieve the objective of having the
executive officers and other senior management become
significant shareholders of the Company so that their interests
are aligned with the interests of the Companys other
shareholders.
Executive officers may also participate in the Savings Plan
(401(k)) of The Connecticut Water Company, as amended in August
2004, and other benefit plans generally available to all levels
of salaried employees. Also, executive officers may elect to
defer compensation under a non-qualified salary deferral plan.
Certain executive officers may elect to defer compensation under
non-qualified deferred compensation agreements entered into by
the Company with each of Mr. Chiaraluce, Mr. Benoit,
and Ms. Westbrook (each, a Deferred Compensation
Agreement). Each Deferred Compensation agreement permits
the officer to elect to defer, prior to the beginning of each
calendar year, an amount up to 12% of their annual cash salary.
Such salary deferral amounts are credited to a deferred
compensation account maintained by the Company on behalf of the
officer. Amounts deferred to the account are credited with
interest paid by the Company on a semi-annual basis at an
interest rate equal to Moodys AAA Corporate Bond Yield
Average rate, plus an additional
11/2
%- 3%. Compensation deferred under the Deferred
Compensation Agreement, plus all accrued interest, shall be paid
to each officer (or to the officers designated
beneficiary) upon termination of employment by the Company
either in the form of an annual annuity payment, or a lump sum
payment if determined by the Committee. If the officer is
terminated for cause as defined in the Deferred
Compensation Agreement, the officer shall be entitled only to a
return of amount deferred without payment of accrued interest.
Chief Executive Officer Compensation
The Compensation Committee determined the compensation for 2005
of Mr. Chiaraluce as Chief Executive Officer
(CEO) based upon a number of factors and criteria,
including a review of the total compensation package of chief
executive officers from a peer group of publicly-traded water
utilities. On a regular basis, the Committee hires an outside
consultant to prepare comparisons of executive compensation. In
August 2005, the Compensation Committee hired Pearl
Meyer & Partners to conduct an executive compensation
survey and to make recommendations. The Compensation Committee
reviews the CEOs performance in December, following the
Boards Strategic Planning Committees review of the
results of the current years strategic initiatives. The
Committee noted the continued significant and steady increases
in overall Company performance during 2005 and
Mr. Chiaraluces completion of 15 years of
successful leadership as the Companys President and CEO.
In addition to overall Company performance, Mr. Chiaraluce,
along with his executive team, satisfied 6 out of 7 strategic
goals for 2005 related to cost reduction, growth of the contract
business, and ensuring future water supplies. One of the goals
was not achieved as planned within the 2005 timeframe. As a
result, Mr. Chiaraluce was awarded 70% of the Common Stock
allocated to him under the 2004 Program in 2005, or 3,868 of
5,448 shares, originally allocated based upon his actual
performance as measured against pre-established objectives
identified by the Committee. Mr. Chiaraluce did not receive
any stock option grants in 2005.
COMPENSATION COMMITTEE
Robert F. Neal, Chairman
Marcia L. Hincks
David A. Lentini
Donald B. Wilbur
21
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total
shareholder return for each of the years 2000 2005
on the Companys Common Stock, based on the market price of
the Common Stock and assuming reinvestment of dividends, with
the cumulative total shareholder return of companies in the
Standard & Poors 500 Index and the
Standard & Poors 500 Utilities Index.
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2000 | |
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2001 | |
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2002 | |
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2003 | |
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2004 | |
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2005 | |
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Connecticut Water Service, Inc.
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100 |
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149.64 |
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131.63 |
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148.67 |
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146.93 |
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140.54 |
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Standard & Poors 500 Index
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100 |
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88.11 |
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68.64 |
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88.33 |
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97.94 |
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102.75 |
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Standard & Poors 500 Utilities Index
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100 |
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69.56 |
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48.70 |
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61.48 |
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76.41 |
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89.28 |
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(Source: Standard & Poors Institutional Market
Service)
Other Matters
The Board of Directors knows of no other matters which may be
presented for consideration at the meeting. However, if any
other matters properly come before the meeting, the persons
named in the enclosed proxy will vote in their discretion on
such matters.
REQUIREMENTS AND DEADLINES FOR PROXY PROPOSALS, NOMINATION
OF
DIRECTORS, AND OTHER BUSINESS OF SHAREHOLDERS
For business to be properly brought before an annual meeting by
a shareholder, the business must be an appropriate matter to be
voted by the shareholders at an annual meeting and the
shareholder must have given proper and timely notice in writing
to the Secretary of the Company. To be timely, a
shareholders notice must be delivered to or mailed and
received by the Secretary of the Company at the Main Offices of
the Company, 93 West Main Street, Clinton, CT 06413, no
later than the close of business on a day which is not less than
120 days prior to the anniversary date of the immediately
preceding annual meeting, which date for purposes of the 2007
Annual Meeting of Shareholders is January 11, 2007. A
shareholders notice to the Secretary must set forth as to
each matter the shareholder proposes to bring before the annual
meeting (a) a brief description of the business desired to
be brought before the annual meeting and the reasons for
conducting such business
22
at the annual meeting, (b) the name and address, as they
appear on the Companys books, of the shareholder proposing
such business, (c) the class and number of shares of the
Company which are beneficially owned by the shareholder and
(d) any material interest of the shareholder in such
business.
In addition, shareholder proposals intended to be presented at
the Annual Meeting of Shareholders in 2007 must be received by
the Company no later than December 1, 2006 in order to be
considered for inclusion in the Companys proxy statement
and form of proxy relating to the 2007 Annual Meeting of
Shareholders.
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Michele G. DiAcri |
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Corporate Secretary |
April 11, 2006
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
2005 Annual Report on
Form 10-K to be
filed by the Company, including the financial statements and
schedules, but without exhibits, will be mailed to any
shareholder upon written request without charge. The exhibits
are obtainable from the Company upon payment of the reasonable
cost of copying such exhibits. Shareholders can request this
information by phone at
1-800-428-3985, ext.
3012, by e-mail at
mdiacri@ctwater.com, or by mail to Michele G. DiAcri, Corporate
Secretary, Connecticut Water Service, Inc., 93 West Main
Street, Clinton, Connecticut 06413.
23
DIRECTIONS
Connecticut Water Service, Inc.
Annual Meeting of Shareholders
Held at the Great Cedar Hotel, Foxwoods Resort, Route 2,
Mashantucket, Connecticut
Thursday, May 11, 2006
Meeting at 2:00 PM Doors Open at 1:30 PM
IF YOU PLAN TO ATTEND THE MEETING, PLEASE CALL
1-800-428-3985,
EXT. 3016, AND LEAVE YOUR NAME, ADDRESS, AND TELEPHONE
NUMBER.
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From Southern Connecticut and New York: Take I-95 North
to Exit 92 in CT. Go left onto Route 2 West. Foxwoods
Resort is 8 miles west on Route 2 |
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From Providence and Boston: Take I-95 South to Exit 92 in
CT. Go straight at stoplight. At the next stop sign, go right
onto Route 2 West. Foxwoods Resort is 8 miles west on
Route 2 |
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From Hartford and Naugatuck: Take I-84 East to Exit
55 Route 2 East. Foxwoods Resort is located on Route
2 East, 9 miles past Norwich. |
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From Worcester: Take I-395 South to Exit 85 in CT. Go
straight to the second traffic light and take a left onto Route
164 South. Follow Route 164 for about 7 miles to the end.
Take a left onto Route 2 East. Foxwoods Resort is 1.5 miles
down on the right. |
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Parking is in the Great Cedar Garage or by valet. The Company
recommends that you use valet parking at the Great Cedar Hotel.
The Great Cedar Ballroom is on the lower level of the hotel. |
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INSTRUCTION CARD
CONNECTICUT WATER SERVICE, INC.
ANNUAL MEETING OF SHAREHOLDERS
May 11, 2006
2:00 PM local time
The undersigned shareholder of Connecticut Water Service, Inc. hereby appoints Marshall
T. Chiaraluce, David C. Benoit, Michele G. DiAcri, and Thomas R. Marston, or any one of them,
attorneys or proxies for the undersigned, with power of substitution, to act, and to vote, as
designated herein, with the same force and effect as the undersigned, all shares of the Companys
Common Stock and Preferred A Stock standing in the name of the undersigned at the Annual Meeting of
Shareholders of Connecticut Water Service, Inc. to be held at the Great Cedar Hotel, Ballroom,
Foxwoods Resort, Route 2, Mashuntucket, Connecticut, May 11, 2006, 2:00 PM, and at any adjournment
thereof.
PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS INSTRUCTION CARD PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE OR PROVIDE YOUR INSTRUCTIONS TO VOTE VIA THE
INTERNET OR BY TELEPHONE.
(Continued, and to be marked, dated and signed, on the other side)
ê FOLD AND DETACH HERE ê
CONNECTICUT WATER SERVICE, INC. ANNUAL MEETING, MAY 11, 2006
YOUR INSTRUCTIONS TO VOTE ARE IMPORTANT!
Proxy Materials are available on-line at:
https://proxyvotenow.com/ctw
You can provide your instructions to vote in one of three ways:
1. |
|
Call toll free 1-866-874-4878 on a Touch-Tone Phone anytime prior to 3 a.m. May 11, 2006.
There is NO CHARGE to you for this call. |
or
2. |
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Via the Internet at www.proxyvotenow.com/ctw. |
3. |
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Mark, sign and date your proxy card and return it promptly in the enclosed envelope. |
PLEASE SEE REVERSE SIDE FOR VOTING INSTRUCTIONS
CONNECTICUT WATER SERVICE, INC.
The Board of Directors recommends a vote FOR all nominees and FOR Proposal 2.
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Please mark as
indicated in this
example
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x |
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Withhold |
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For All |
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For |
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All |
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Except |
1.
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For election of Directors:
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(01) Lisa J. Thibdaue |
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(02) Eric W. Thornburg |
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(03) Carol P. Wallace |
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(04) Donald B. Wilbur |
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INSTRUCTION: To withhold authority to vote for any
nominee(s), mark For All Except and write that nominee(s)
name(s) or number(s) in the space provided below.
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Please be sure to date and sign
this Proxy card in the box below.
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Date |
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Sign above
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For |
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Against |
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Abstain |
2.
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Proposal to ratify the appointment of
PricewaterhouseCoopers LLP as independent
auditors for the year ending December 31, 2006.
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Mark here if you plan to attend the meeting
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Mark here for address change and note change
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Address Change/Comments
PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR(S) ON THIS CARD.
When signing as an attorney, executor, administrator,
trustee or guardian, please give full title.
+
XXX IF YOU WISH TO PROVIDE YOUR INSTRUCTIONS TO VOTE BY TELEPHONE OR INTERNET, PLEASE READ THE INSTRUCTIONS BELOW XXX
+
é FOLD AND DETACH HERE IF YOU ARE VOTING BY MAIL é
PROXY VOTING INSTRUCTIONS
Shareholders of record have three ways to vote:
1. |
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By Mail; or |
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2. |
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By Telephone (using a Touch-Tone Phone); or |
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3. |
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By Internet. |
A telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as
if you marked, signed, dated and returned this
proxy. Please note telephone and Internet votes must be cast prior to 3:00 a.m., May 11, 2006. It
is not necessary to return this proxy if you vote by
telephone or Internet.
Vote by Telephone
Call Toll-Free on a Touch-Tone Phone anytime prior to
3:00 a.m., May 11, 2006.
1-866-874-4878
Vote by Internet
anytime prior to
3:00 a.m., May 11, 2006 go to
https://www.proxyvotenow.com/ctw
Please note that the last vote received, whether by telephone, Internet or by mail, will be the vote counted.