DEF 14A
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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    ☒

Filed by a Party other than the Registrant    ☐

Check the appropriate box:

 

☐   Preliminary Proxy Statement

 

☐    Confidential, For Use of the

Commission Only (as permitted by

Rule 14a-6(e)(2))

☒   Definitive Proxy Statement

 

☐   Definitive Additional Materials

 

☐   Soliciting Material Under Rule 14a-12

 

UNITIL CORPORATION

 

(Name of Registrant as Specified in Its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

☒    No fee required.

☐    Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

  1.   Title of each class of securities to which transaction applies:

 

 

  2.   Aggregate number of securities to which transaction applies:

 

 

  3.   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

  4.   Proposed maximum aggregate value of transaction:

 

 

  5.   Total fee paid:

 

 

☐    Fee paid previously with preliminary materials.

☐    Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

 

  1.   Amount previously paid:

 

 

  2.   Form, Schedule or Registration Statement No.:

 

 

  3.   Filing Party:

 

 

  4.   Date Filed:

 

 


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Unitil Corporation

2021 Proxy Statement

Notice of Annual Meeting of Shareholders

 

 

LOGO

 

 

LOGO

Annual Meeting        Wednesday, April 28, 2021

11:30 a.m. EDT

Hampton, New Hampshire

 

 

 

 

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LOGO

March 25, 2021

Dear Fellow Shareholder,

I am pleased to invite you to the Unitil Corporation Annual Meeting of Shareholders to be held on Wednesday, April 28, 2021, at 11:30 a.m. Eastern time, at our corporate headquarters, 6 Liberty Lane West, Hampton, New Hampshire, as well as online via live webcast.

This year, we are asking shareholders to vote on the election of three directors, and on the ratification of the selection of independent registered public accountants. Also this year, shareholders will be presented with an advisory vote on executive compensation.

Your vote is very important. I encourage you to vote to ensure that your voice is represented at the meeting, and to play a part in our future. The enclosed proxy materials provide important information to assist you with your voting decisions, as well as details regarding how to participate in the Annual Meeting online via live webcast, and instructions to submit your vote.

I would like to thank you for choosing to invest in Unitil Corporation. Our Vision, Mission and Values reflect our deep commitment to our shareholders, customers, employees, local communities and partners. We provide more than just electricity and gas services and products. Energy for life is the statement we use to describe this commitment.

On behalf of the Board of Directors and management of Unitil Corporation, thank you for your continued support and confidence in 2021.

Sincerely,

 

LOGO

Thomas P. Meissner, Jr.

Chairman of the Board,

Chief Executive Officer and

President

 

 

 

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LOGO

 

   Hampton, New Hampshire

March 25, 2021

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The Unitil Corporation (the “Company”) 2021 Annual Meeting of Shareholders will be held at the office of the Company, 6 Liberty Lane West, Hampton, New Hampshire, as well as online via live webcast, on Wednesday, April 28, 2021, at 11:30 a.m. Eastern time for the following purposes:

 

  1.

Election of three Directors of the Company in Class III, nominated by the Board of Directors, each to serve a term of three years;

 

  2.

Ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2021;

 

  3.

Approval, on an advisory basis, of the compensation of the Company’s named executive officers; and

 

  4.

Transaction of any other business as may properly be brought before the meeting.

The Board of Directors set February 19, 2021, as the date for determining holders of record of common stock who are entitled to notice of and to vote at the meeting or at any adjournments or postponements of the meeting. The Board of Directors has directed the Company to prepare this notice, the accompanying proxy statement, and the accompanying annual report, and to send them to you.

If you plan to attend the online live webcast, please review and follow the registration instructions outlined in the Information About the Annual Meeting section of this proxy statement.

By Order of the Board of Directors,

Sandra L. Whitney

Corporate Secretary

 

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON

WEDNESDAY, APRIL 28, 2021

 

This notice, the accompanying proxy statement and the accompanying annual report to shareholders are available for shareholders to view at www.proxydocs.com/UTL.

 

 

 

 

 

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YOUR VOTE IS IMPORTANT

Your vote is important. To ensure a quorum is present at the Annual Meeting of Shareholders, please be sure your shares are represented at the meeting.

You may vote in one of the following ways:

 

  Shareholders of Record    Beneficial Holders

  By Mail

 

   LOGO

  

Sign, date and return the enclosed proxy card (a self-addressed envelope is enclosed for your convenience)

 

    

By Mail

 

   LOGO

   Direct your bank, broker or other nominee on how to vote your shares in accordance with the instructions provided
to you.

 

  Via the Internet

  (in advance of the meeting)

 

   LOGO

  

 

Submit your proxy at www.investorvote.com/UTL

      

 

Via the Internet

(in advance of the meeting)

 

   LOGO

 

 

  Online via Live

  Webcast

  (at the meeting)

 

   LOGO

  

 

Check in for the live webcast, click on the “Cast Your Vote” button and follow the instructions provided

      

 

Online via Live

Webcast

(at the meeting)

 

   LOGO

 

  

Check in for the live webcast, click on the “Cast Your Vote” button and follow the instructions provided

 

A LEGAL PROXY IS REQUIRED, which can be obtained from your bank broker or other nominee; ADVANCE REGISTRATION IS REQUIRED. Please see Advance Registration instructions below.

 

  In Person at the

  Meeting

 

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  Please see the Notice below.

  

 

A meeting ballot will be provided for voting at the meeting.

      

 

In Person at the

Meeting

 

   LOGO

 

Please see the Notice below.

  

 

A LEGAL PROXY IS REQUIRED, which can be obtained from your bank broker or other nominee; a meeting ballot will be provided for voting at the meeting.

 

 

If for any reason you desire to revoke or change your proxy, you may do so at any time prior to the meeting by following the procedures described in the accompanying proxy statement or at the meeting.

 

      

 

If for any reason you desire to revoke or change your voting instructions, you must contact your bank, broker or other nominee and follow its procedures for revoking or changing your voting instructions.

 

 

 

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ATTENDING THE ANNUAL MEETING OF SHAREHOLDERS

Please see the Notice below.

All shareholders may attend the Annual Meeting of Shareholders. However, to ensure that the meeting remains orderly and secure, you must follow certain procedures for admittance whether in person or online.

Attending in Person

Shareholders of record will need to provide their name and government-issued picture identification. Beneficial owners will need to provide a copy of an account statement from the bank, broker or nominee holding the shares as proof of ownership as of the Record Date, as well as government-issued picture identification.

 

 

NOTICE REGARDING COVID-19

 

The World Health Organization declared COVID-19 a global pandemic on March 11, 2020, and it remains so today. As a business operating in the states of Maine, Massachusetts and New Hampshire, we follow safety protocol guidance issued by each state as well as the Centers for Disease Control and Prevention.

 

We are required by the New Hampshire Business Corporation Act to hold our 2021 Annual Meeting in person. However, we believe encouraging any group gathering at our meeting would not be prudent or socially responsible due to the ongoing public health impact and inherent danger of COVID-19. For your safety and the safety of others, we respectfully request that you seriously consider the implications of COVID-19 in deciding whether to attend the meeting in person.

 

If you wish to attend the meeting, we encourage you to do so online via the live webcast. Information about the webcast and how to participate is available in the Information About the Annual Meeting section of this Proxy Statement, as well as on our website at unitil.com/investors.

 

We encourage you to vote your shares using one of the methods described above to ensure that your voice is represented at the meeting. Your vote is very important. If you have any questions, please contact us at InvestorRelations@unitil.com or by calling toll free 800-999-6501.

 

 

We fully recognize that the ongoing COVID-19 pandemic continues to create a challenging environment for everyone. The health and safety of our employees and the public at large is of primary importance. If you should elect to attend the Annual Meeting in person, you will be expected to:

 

  1)

Wear a mask at all times

 

  2)

Respect all social distancing protocols

 

  3)

Follow all directions from Company personnel while inside our corporate office

 

 

 

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Attending Online via Live Webcast

The Annual Meeting will begin promptly at 11:30 a.m. Eastern time. You will need the following information for online check-in:

 

 

Website: www.meetingcenter.io/295795918

 

Your Unique Control Number

 

Meeting Password: UTL2021

 

 

Please allow at least 10 minutes to complete the online check-in process before the meeting begins.

Your Control Number

If you are a shareholder of record, your unique Control Number can be found on your proxy card in the shaded box. No advance registration is required.

If you are a beneficial holder, which means that you hold your shares through an intermediary, such as a bank, broker or other nominee, you must register in advance to request a Control Number, which will be assigned to you by our transfer agent, Computershare. Advance registration must completed by 5:00 p.m., Eastern time, on Thursday, April 22.

Additional information about the Annual Meeting webcast, including detailed advance registration instructions and how to join the meeting, is outlined in the Information About the Annual Meeting section of this Proxy Statement, as well as on our website at unitil.com/investors.

 

 

 

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TABLE OF CONTENTS

PROXY STATEMENT

 

INFORMATION ABOUT THE ANNUAL MEETING    1  

ENERGY FOR LIFE

     7  

RECENT EVENTS

     9  

DESCRIPTION OF MANAGEMENT

     10  

SHARE OWNERSHIP

     11  

Beneficial Ownership

     11  

Section 16(a) Beneficial Ownership Reporting Compliance

     13  

CORPORATE GOVERNANCE

     14  

Director Independence

     14  

Risk Oversight

     15  

Leadership Structure

     17  

Board Succession Plan

     17  

Retirement Policy

     18  

Directors’ Stock Ownership & Retention Policy

     18  

Resignation Policy

     18  

Code of Ethics

     19  

Executive Compensation Recovery Policy

     20  

Executive Stock Ownership & Retention Policy

     21  

Prohibition on Hedging and Pledging Company Stock

     21  

Shareholder Rights

     23  

QUALIFICATIONS  & SKILLS OF DIRECTORS

     24  

Board Diversity

     25  

SUSTAINABILITY

     27  

COMMITTEES OF THE BOARD

     31  

AUDIT MATTERS

     34  

Audit Committee Report

     34  

Principal Accountant Fees & Services

     35  

Audit Committee Pre-Approval Policy

     35  

COMPENSATION

     36  

Compensation Committee Operations

     36  

Compensation Committee Interlocks & Insider Participation

     37  

Risk and Broad-Based Compensation Programs

     37  

Compensation Discussion and Analysis

     38  

2020 Performance Metrics, Goals and Results

     55  

Compensation Committee Report

     61  

Compensation of Named Executive Officers

     62  

Potential Payments Upon Termination or Change of Control

     76  

Compensation of Directors

     84  

PROPOSAL 1:

     89  

Election of Three Directors in Class III for a Term of Three Years

  

PROPOSAL 2:

     96  

Ratification of Selection of Deloitte & Touche LLP, as Independent Registered Public Accounting Firm for 2021.

  

PROPOSAL 3:

     97  

Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers

  

OTHER MATTERS

     99  

Shareholder Proposals

     99  

Solicitation of Proxies

     100  

Company Documents & Information

     100  
 

 

 

 

 

 

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LOGO

Unitil Corporation

6 Liberty Lane West

Hampton, NH 03842-1720

March 25, 2021

PROXY STATEMENT

Unitil Corporation (“Unitil” or the “Company”) is providing this proxy statement and the accompanying annual report (which includes the Company’s Annual Report on Form 10-K for fiscal year 2020) to shareholders in connection with our 2021 Annual Meeting of Shareholders (the “Annual Meeting”). Unitil’s Board of Directors (the “Board”) is soliciting your designation of a proxy to vote your shares at the Annual Meeting. As a shareholder of Unitil, you are invited to the Annual Meeting, as well as entitled and requested to vote (if you are a shareholder of record) or to provide voting instructions (if you beneficially own your shares in street name) on the proposals described in this proxy statement. This proxy statement provides information to assist you in voting your shares or in providing voting instructions with respect to your shares.

Unitil has the following subsidiaries, which are referred to throughout this proxy statement: Fitchburg Gas and Electric Light Company (“Fitchburg”); Granite State Gas Transmission, Inc. (“Granite”); Northern Utilities, Inc. (“Northern”); Unitil Energy Systems, Inc. (“Unitil Energy”); Unitil Power Corp.; Unitil Realty Corp.; Unitil Resources, Inc.; and Unitil Service Corp.

We may also refer to Unitil as “we” or “our” or “us” throughout this proxy statement.

 

INFORMATION ABOUT THE ANNUAL MEETING

 

Date, Time and Place

The Annual Meeting will be held on Wednesday, April 28, 2021, at 11:30 a.m. Eastern time, both at our corporate office, 6 Liberty Lane West, Hampton, New Hampshire 03842-1720, as well as online via live webcast.

Online Live Webcast

We are very pleased to offer the option to attend this year’s Annual Meeting online via live webcast. Online attendance will allow you to participate in the Annual Meeting, vote your shares electronically at the meeting, and submit your questions prior to and during the meeting.

Please review carefully the important information concerning the online live webcast outlined below.

 

 

 

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 Q:  How can I attend the online live webcast of the Annual Meeting?

 

 A:

The 2021 Annual Meeting will include the option to attend online via live webcast. You are entitled to participate in the Annual Meeting webcast only if you are a shareholder as of the close of business on the Record Date, February 19, 2021, or if you hold a valid proxy for the Annual Meeting.

To participate in the Annual Meeting webcast, you will need the following information:

Website: www.meetingcenter.io/295795918

Your Unique Control Number

Meeting Password:    UTL2021

The Annual Meeting webcast will begin promptly at 11:30 a.m., Eastern Time, on Wednesday, April 28, 2021. We encourage you to access the meeting at least 10 minutes prior to the start time to allow enough time to complete the check-in process.

If you need technical assistance, it will be available online when you check in as well as during the webcast.

 

 Q:  What is a Control Number and where can I find mine?

 

 

 A:

A Control Number is a unique number, assigned specifically to you, that confirms your ownership of our common stock. Control Numbers are required for security of the meeting.

If you are a shareholder of record, which means you hold your shares through an account with our transfer agent, Computershare, your Control Number can be found in the shaded box on the proxy card that we mailed to you.

If you are a beneficial holder, which means that you hold your shares through an intermediary, such as a bank, broker or other nominee, you must register in advance to request a Control Number, which will be assigned to you by our transfer agent, Computershare. Advance registration must be completed by 5:00 p.m., Eastern time, on Thursday, April 22. Please follow the instructions below for advance registration.

If you have any questions with regard to whether you are a shareholder of record or a beneficial holder, please contact us toll-free at 800-999-6501 or via email at InvestorRelations@unitil.com.

 

 

 

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 Q:  How do I register to attend the Annual Meeting webcast?

 

 

 A:

If you are a shareholder of record, you do not need to register in advance to attend the Annual Meeting webcast.

If you are a beneficial holder, you must register in advance to attend the Annual Meeting webcast.

Advance Registration Procedure:

 

  1)

Contact your bank or broker to obtain a legal proxy. A legal proxy is proof of your ownership of Unitil Corporation common stock as of the Record Date (February 19, 2021) and therefore evidence of your proxy power.

 

  2)

Submit a copy of your legal proxy, along with your name and email address to our transfer agent, Computershare. Options for submission of your documentation are outlined below.

 

  3)

Requests for registration must be labeled as “Legal Proxy” and must be received no later than 5:00 p.m., Eastern Time, on Thursday, April 22, 2021.

 

  4)

You will receive a confirmation of your registration (your Control Number) by email after we receive and confirm your ownership documentation.

 

  5)

You may then use your assigned Control Number to check in and attend the Annual Meeting webcast, to vote your shares (if you have not voted prior to the Meeting), and to ask a question(s) at the Meeting.

Requests for registration should be directed to our transfer agent, Computershare, in one of the following ways:

By email:

Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com

By mail:

Computershare

Unitil Corporation Legal Proxy

P.O. Box 43001

Providence, RI 02940-3001

We strongly encourage you to submit your request for registration via email if at all possible to make sure your request is received before the deadline on April 22, 2021.

 

 

 

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 Q:  How can I ask a question at the Annual Meeting webcast?

 

 

 A:

We welcome the questions and comments of all shareholders. Questions may be submitted before, during or after the formal business of the Annual Meeting by following the instructions that will be provided by the meeting operator.

Questions will be addressed during the Question and Answer Session, which will be announced by the meeting operator at the appropriate time.

All submitted questions will be monitored and communicated to the Chairman of the Board and shareholder attendees by a member of management. We will, however, observe the purpose of the Meeting and will not address questions or comments that are:

 

 

irrelevant to our business;

 

 

related to pending or threatened litigation;

 

 

related to undisclosed, non-public information;

 

 

substantially repetitious of questions asked or statements made by other shareholders;

 

 

related to personal grievances; or

 

 

in conflict with our Annual Meeting Rules of Conduct which will be available with other meeting documents during the webcast.

If you have any questions with regard to the Annual Meeting live webcast or any information presented above please contact us toll-free at 800-999-6501 or via email at InvestorRelations@unitil.com.

Anticipated Mailing Date

We anticipate first mailing definitive copies of this proxy statement, the accompanying proxy card, and the accompanying annual report to shareholders on or about March 25, 2021.

MEETING SUMMARY

This year, we are seeking your vote on the following proposals:

 

  1)

Election of three Directors of the Company in Class III. The Board has nominated Suzanne Foster, Thomas P. Meissner, Jr., and Justine Vogel for election to the Board each to serve a term of three years. The Board recommends a vote FOR these nominees. Information on Proposal No. 1 is included in the section entitled Proposal 1: Election of Directors.

 

  2)

Ratification of the selection of Unitil’s independent registered public accounting firm, Deloitte & Touche LLP, for fiscal year 2021. The Board recommends a vote FOR this proposal. Information on Proposal No. 2 is included in the section entitled Proposal 2: Ratification of Selection of Deloitte & Touche LLP as Independent Registered Public Accounting Firm for 2021.

 

 

 

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  3)

Approval, on an advisory basis, of the compensation of the Company’s named executive officers. The Board recommends a vote FOR this proposal. Information on Proposal No. 3 is included in the section entitled Proposal 3: Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers.

 

  4)

Transaction of any other business that may properly be brought before the Annual Meeting.

 

RECORD DATE & NUMBER OF SHARES OUTSTANDING     

 

You are entitled to receive notice of and to vote at the Annual Meeting if you owned shares of Unitil common stock as of the close of business on February 19, 2021 (the “Record Date”). As of the Record Date, there were 15,036,991 shares of common stock issued and outstanding and entitled to vote at the Annual Meeting.

 

    

 

Record Date:

February 19, 2021  

 

Shares Outstanding:  

15,036,991

 

QUORUM & REQUIRED VOTE

A majority of the outstanding shares of common stock entitled to vote at the Annual Meeting must be present in person (physically or online via live webcast) or represented by proxy to conduct the Annual Meeting. This is referred to as a quorum.

If a quorum is present, the nominees standing for election as a Director will be elected by a plurality of the votes cast by the shareholders. Votes withheld and broker non-votes will not be counted toward the achievement of a plurality. Additional information concerning the election of directors appears in the sections entitled Corporate Governance – Resignation Policy and Proposal 1 – Election of Directors. With respect to all other matters that may come before the Annual Meeting, action on a matter is approved if the votes cast favoring the action exceed the votes cast opposing the action. Therefore, abstentions and broker non-votes will have no effect on the other matters. Representatives of our transfer agent will count the votes and certify the results.

VOTING RIGHTS AND PROCEDURES

As an owner of Unitil common stock, it is your legal right to vote (or to provide voting instructions) on all matters to be considered at a shareholder meeting. We hope you will exercise your legal right and fully participate as a shareholder in the Annual Meeting. You may cast one vote for each share of common stock that you own on all matters presented at the Annual Meeting.

The Board has selected and approved Thomas P. Meissner, Jr. and Robert B. Hevert as proxies for the Annual Meeting to vote your shares in the manner that you specify on the proxy card or via the Internet, or if you do not give any specification on your proxy card or submitted proxy with respect to a matter, FOR such matter. Your designation of a proxy will not affect your right to attend the Annual Meeting and vote at the meeting.

 

 

 

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Record Holders

If your shares of common stock were registered directly in your name with our transfer agent as of the Record Date, then you are considered a shareholder of record of the shares (a “Record Holder”) and we have sent the proxy materials and the accompanying proxy card directly to you.

Beneficial Holders

If your shares of common stock were registered in the name of a bank, broker or other nominee as of the Record Date, then you are considered a beneficial owner (“Beneficial Holder”) of the shares that are registered in street name and your bank, broker or other nominee has sent this proxy statement and voting instructions to you. As a Beneficial Holder, your shares may be voted even if voting instructions are not provided.

Brokerage firms have the authority under New York Stock Exchange rules to vote shares for which their customers do not provide voting instructions on routine matters. The ratification of the selection of our independent registered public accounting firm, Deloitte & Touche LLP, for fiscal year 2021 is considered a routine matter. When a proposal is not routine and the brokerage firm has not received voting instructions from its customers, the brokerage firm cannot vote the shares on that proposal. Those shares are considered “broker non-votes.” Please note that, under New York Stock Exchange rules, this means that brokers may not vote your shares on Proposals 1 and 3 at the 2021 Annual Meeting if you have not given specific instructions as to how to vote to the broker. Please be sure to give specific voting instructions to your broker so that your vote can be counted.

 

 

 

 

Record Holders

 

  You may vote your shares in one of the following ways:

 

  at the Annual Meeting or online during the live webcast

 

  by designating another person (the “proxy”) to vote on   your behalf by delivering a properly completed proxy
  card or submitting a proxy via the Internet at   www.investorvote.com/UTL

 

  You may revoke your designation of a proxy at any time   before the vote is taken at the Annual Meeting in one of   the following ways:

 

  file with Unitil’s Corporate Secretary a later-dated written   notice of revocation

 

  deliver to Unitil’s Corporate Secretary a properly   completed, later-dated proxy card relating to the same   shares

 

  submit a later-dated proxy via the Internet if the original   designation of a proxy was made via the Internet

 

  attend the Annual Meeting and vote your shares   (although attendance at the Annual Meeting will not in   and of itself constitute a revocation of a proxy)

 

 

   

 

 

Beneficial Holders

 

You may vote your shares in one of the following ways:

 

  at the Annual Meeting or online during the live   webcast

 

you must obtain a properly completed legal proxy from your bank, broker or other nominee that will provide you with the right to vote the shares at the Annual Meeting; a legal proxy and advance registration is required to vote your shares online during the live webcast

 

  direct your bank, broker or other nominee on how to   vote your shares by following the instructions   provided by the bank, broker or other nominee

 

You may change how your bank, broker, or other nominee will vote your shares before the vote is taken at the Annual Meeting:

 

  follow the procedures provided by your bank, broker   or other nominee to make a change

 

 

 

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ENERGY FOR LIFE

 

A MESSAGE FROM TOM MEISSNER, CHAIRMAN AND CEO

By any measure, 2020 proved to be a challenging year for our Company, our shareholders, our customers, and our employees. The year began with the warmest winter heating season in decades, negatively impacting our natural gas sales and earnings. As the calendar turned to spring, we found ourselves in the grip of a worldwide health emergency not witnessed in over a century. Efforts to contain the COVID-19 pandemic led to the lockdown of our economy, plunging our nation into a deep recession. Ensuring the health and safety of our employees required immediate and extensive operational changes, all while continuing to deliver safe and reliable service to our customers.

Faced with these challenges, we persevered and achieved solid results both operationally and financially.

We implemented our investment plan, which included grid modernization projects, infrastructure replacement, and customer growth initiatives, and we remained focused on our commitment to sustainability. We delivered exceptional service to customers, achieving our highest customer satisfaction ratings ever. We continued our exceptional track record in gas pipeline safety, achieving our best emergency response performance ever. Above all, we kept our employees, our greatest asset, safe throughout a challenging year.

Equally important, we advanced our strategic priorities. We continue to prepare for the future with the alignment of our strategies with the goals and aspirations of our stakeholders, as well as with our sustainability and corporate responsibility priorities. Decarbonized energy solutions for the energy, heating and transportation sectors continue to create new policy goals and initiatives in our region, as well as new opportunities, as we move toward lower carbon alternatives. Our Vision is to transform the way people meet their evolving energy needs to create a clean and sustainable future. We fully support the transition to clean energy and believe this is the best way to position our Company for true sustainability and long-term success.

While much attention has been directed toward carbon reduction, other important industry drivers like public safety, grid resiliency and cyber security remain at the forefront of our efforts as well. Working to ensure the core elements of our business, including safety, reliability and top-tier customer service, remain sustainable is an important focus for our Company and a critical factor for our future success. As a provider of essential services, we power the daily lives of our customers and communities even under the most difficult circumstances. Never before has the idea of energy for life been more meaningful.

As we begin 2021, I have confidence that the initiatives and actions we are taking now to achieve both our Mission and our Vision will shape the successes of tomorrow, and I’m very happy you are here to share in our journey.

 

-

Thomas P. Meissner, Jr.

March 25, 2021

 

 

 

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VISION, MISSION & VALUES

 

 

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VISION

 

Our Vision is to transform the way
people meet their evolving energy
needs to create a clean and
sustainable future.

  

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MISSION

 

Our Mission is to safely and reliably
deliver energy for life and provide
our customers with affordable and
sustainable energy solutions.

 

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VALUES

 

Our values are grouped into four important components: Respect, Integrity, Stewardship and Excellence, otherwise known as “RISE”. Together, these value categories are central to assuring that customer experience, employee engagement and our corporate responsibilities support both our Vision and our Mission.

 

ACTING ON OUR VALUES

Our RISE values are the guiding principles behind our actions, but they are only as good as they are meaningful and measurable. Continued focus on the importance of these values will drive our commitment to deliver ‘energy for life’ and the achievement of our Vision of a clean and sustainable future for all of our stakeholders.

 

 

 

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RECENT EVENTS

 

On March 11, 2021, we announced that Laurence M. Brock will retire as senior vice president of the Company on July 1, 2021.

In 2020, Mr. Brock was instrumental in the smooth transition of Robert B. Hevert to senior vice president, chief financial officer and treasurer of the Company, as well as the transition of Daniel J. Hurstak to chief accounting officer and controller of the Company. Mr. Brock will continue to contribute to the ongoing continuity of Unitil’s financial leadership until his retirement.

Additional information concerning Mr. Brock’s background and employment history with us can be found in the Management Information Table on the follow page.

 

 

 

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DESCRIPTION OF MANAGEMENT

 

The table below shows Executive Officers’ biographical information as of the date of this proxy statement, including the Named Executive Officers.

MANAGEMENT INFORMATION TABLE

 

 

 

Name and Principal Position    

 

  

 

   Age   

 

  

 

Description

 

 

Thomas P. Meissner, Jr.

Chairman of the Board, Chief Executive Officer & President

   58   

Mr. Meissner has been Unitil’s chairman of the Board, chief executive officer and president since April 2018. Mr. Meissner served as Unitil’s senior vice president and chief operating officer from June 2005 until April 2018, and as senior vice president, operations, from February 2003 through June 2005. Mr. Meissner joined Unitil in 1994 and served as Unitil’s director of engineering from 1998 to 2003.

 

 

Todd R. Black

Senior Vice President,

External Affairs &
Customer Relations

   56   

Mr. Black has been Unitil’s senior vice president, external affairs and customer relations, since September 2009. Mr. Black joined Unitil in 1998 and served as vice president of sales and marketing for Usource, Inc. (“Usource”), the Company’s former energy brokering subsidiary, from 1998 until 2003, and president of Usource from 2003 until September 2009.

 

 

Laurence M. Brock

Senior Vice President

   67   

Mr. Brock has been a senior vice president of Unitil since March 2020. Mr. Brock also served as the Company’s chief financial officer and treasurer during the period of March – July 2020, as well as chief accounting officer and controller from June 2005 until March 2020. Mr. Brock joined Unitil in 1995 as vice president and controller. Mr. Brock is a Certified Public Accountant in the state of New Hampshire.

 

 

Robert B. Hevert

Senior Vice President,

Chief Financial Officer &

Treasurer

   60   

Mr. Hevert has been Unitil’s senior vice president, chief financial officer and treasurer since July 2020. Prior to joining Unitil, Mr. Hevert most recently served as Partner and Practice Area Leader of Rates, Regulation and Planning at ScottMadden, Inc. (“ScottMadden”) where he practiced since June 2016. Prior to ScottMadden, Mr. Hevert was founder and Managing Partner of Sussex Economic Advisors, LLC from 2012 until it was acquired by ScottMadden in June 2016, and also President of Concentric Energy Advisors, Inc. from 2002 until 2012. Mr. Hevert also served in several senior consulting and management positions prior to 2002. Mr. Hevert is a CFA® Charterholder.

 

 

Daniel J. Hurstak

Chief Accounting Officer & Controller

   40   

Mr. Hurstak has been Unitil’s chief accounting officer and controller since March 2020. Prior to joining Unitil, Mr. Hurstak served as vice president, corporate accounting, at Fidelity Investments (“Fidelity”) from June 2016 until February 2020. Prior to Fidelity, Mr. Hurstak was a senior manager at PricewaterhouseCoopers LLP (“PwC”) from September 2009 until May 2016, and also began his career at PwC in September 2001. Mr. Hurstak is a Certified Public Accountant in the Commonwealth of Massachusetts.

 

 

Christopher J. LeBlanc

Vice President,

Gas Operations

   54   

Mr. LeBlanc has been Unitil’s vice president of gas operations since January 2017. Mr. LeBlanc joined Unitil in 2000 and served as director of gas operations from 2008 until January 2017, and in several other gas operations management positions from 2000 until 2008.

 

 

Sandra L. Whitney

Corporate Secretary

   57   

Ms. Whitney has been Unitil’s corporate secretary and secretary of the Board since February 2003. Ms. Whitney joined Unitil in 1990 and has also served as the corporate secretary of Unitil’s subsidiary companies since 2004.

 

 

 

 

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SHARE OWNERSHIP

 

The following table sets forth information on the beneficial ownership of our common stock as of the Record Date, by (i) each person known to us to be the beneficial owner of more than five percent of our common stock, (ii) each Director and nominee for Director, (iii) each executive officer named in the Summary Compensation Table in the section entitled Compensation - Compensation of Named Executive Officers (the “Named Executive Officers”) and (iv) all Directors and executive officers of Unitil as a group. Except as otherwise indicated, to our knowledge, the beneficial owners listed have sole voting and sole dispositive power with respect to the shares beneficially owned by them. The address of each of Unitil’s Directors and executive officers is c/o Unitil Corporation, 6 Liberty Lane West, Hampton, New Hampshire 03842-1720.

BENEFICIAL OWNERSHIP

 

   Name of Beneficial Owner   

    Common    

Stock

  

Restricted

    Stock Units    

  

    Percent    

of Class

              

5% Owners:

 

                                

BlackRock, Inc. (1)

              

55 East 52nd Street, New York, NY 10055

 

      

 

1,252,324

 

 

      

 

 

 

      

 

8.30%

 

 

 

Caisse dépôt et placement du Québec (2)

              

1000, Place Jean-Paul-Riopelle, Montréal, Québec, H2Z 2B3

 

      

 

948,469

 

 

      

 

 

 

      

 

6.30%

 

 

 

The Vanguard Group (3)

              

100 Vanguard Boulevard, Malvern, PA 19355

 

      

 

916,576

 

 

      

 

 

 

      

 

6.11%

 

 

 

Renaissance Technologies Holdings Corporation (4)

              

800 Third Avenue, New York, NY 10022

 

      

 

753,951

 

 

      

 

 

 

      

 

5.02%

 

 

 

              
              

Directors: (5) (6)

 

                                

Robert V. Antonucci (7)

 

       11,354               *  

Winfield S. Brown

 

       1,792               *  

David P. Brownell (7)

 

       14,168               *  

Mark H. Collin

 

       49,596               *  

Lisa Crutchfield

 

              12,471        *  

Albert H. Elfner, III (7)

 

       18,273               *  

Suzanne Foster

 

       2,893               *  

Edward F. Godfrey

 

       6483        10,673        *  

Michael B. Green

 

       5,530        13,941        *  

Thomas P. Meissner, Jr. (8)

 

       75,949               *  

Eben S. Moulton

 

       20,801        13,941        *  

 

 

 

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   Name of Beneficial Owner   

    Common    

Stock

  

Restricted

    Stock Units    

  

    Percent    

of Class

M. Brian O’Shaughnessy (7)

 

       26,028               *  

Justine Vogel

 

       2,893               *  

David A. Whiteley

 

       1,791        10,673        *  
              

Named Executive Officers: (5)

                                

Thomas P. Meissner, Jr. (8)

 

       75,949               *  

Robert B. Hevert (9) (10)

 

       5,320               *  

Todd R. Black (11)

 

       29,085               *  

Laurence M. Brock (12)

 

       15,554               *  

Christopher J. LeBlanc (13)

 

       11,871               *  

Christine L. Vaughan (14)

 

       809               *  
                                  

All Directors and Executive Officers as a Group (21 Persons) (5)(15)

 

       365,455        61,699        2.02%  

 

*

Represents less than 1% of the Company’s outstanding common stock.

 

 

NOTES:

 

  (1)

Information obtained from the Schedule 13G/A filed by BlackRock, Inc. on behalf of itself, BlackRock (Netherlands) B.V., BlackRock Advisors, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, National Association, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management, LLC, BlackRock Life Limited, and BlackRock Fund Managers Ltd with the Securities and Exchange Commission on January 21, 2021. BlackRock, Inc. is the beneficial owner of 1,252,324 shares of common stock, of which it has sole voting power with respect to 1,225,612 shares and sole dispositive power with respect to 1,252,324 shares.

 

  (2)

Information obtained from the Schedule 13G/A filed by Caisse dépôt et placement du Québec with the Securities and Exchange Commission on February 12, 2021. Caisse dépôt et placement du Québec is the beneficial owner of 948,469 shares of common stock, of which it has sole voting power with respect to 948,469 shares and sole dispositive power with respect to 948,469 shares.

 

  (3)

Information obtained from the Schedule 13G/A filed by The Vanguard Group, on behalf of itself, Vanguard Fiduciary Trust Company, Vanguard Investments Australia, Ltd., Vanguard Asset Management, Limited, Vanguard Global Advisors, LLC, Vanguard Group (Ireland) Limited, Vanguard Investments Canada Inc., Vanguard Investment Hong Kong Limited, and Vanguard Investments UK, Limited with the Securities and Exchange Commission on February 8, 2021. The Vanguard Group is the beneficial owner of 916,576 shares of common stock, of which it has shared voting power with respect to 16,939 shares, shared dispositive power with respect to 29,845 shares, and sole dispositive power with respect to 886,731 shares.

 

  (4)

Information obtained from the Schedule 13G/A jointly filed by Renaissance Technologies Holdings Corporation and Renaissance Technologies, LLC with the Securities and Exchange Commission on February 11, 2021. Renaissance Technologies, LLC is the beneficial owner of 753,951 shares of common stock, of which it has sole voting power with respect to 735,551 shares, and sole dispositive power with respect to 753,951 shares. Renaissance Technologies Holdings Corporation is the majority owner of Renaissance Technologies, LLC and therefore is deemed to be the beneficial owner of shares of common stock owned by Renaissance Technologies, LLC.

 

 

 

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  (5)

Based on information furnished to Unitil by its Directors, Directors who retired in 2020, executive officers, and by Ms. Vaughan, a former executive officer.

 

  (6)

Restricted Stock Units (“RSUs”) are granted to the Directors who have elected to receive RSUs in lieu of common stock as the equity portion of the annual retainer for Board service for the particular year. RSUs will settle as 70% stock and 30% cash upon retirement or other separation from the Board. RSUs were granted annually from October 2012 through and including October 2020 and include cumulative dividend equivalents earned as of December 31, 2020. If a Director is subject to the specified employee payment provision in Section 409A of the Internal Revenue Code, payment of the RSUs may be delayed for six months and the RSUs would not be paid within 60 days of the Record Date.

 

  (7)

Dr. Antonucci, Mr. Brownell, Mr. Elfner and Mr. O’Shaughnessy retired from the Board on April 29, 2020.

 

  (8)

Included are 2,313 shares that are held in trust for Mr. Meissner under the terms of Unitil’s 401(k). Mr. Meissner has sole voting and dispositive power only with respect to the shares credited to his account. Also included are 25,636 shares of unvested restricted stock granted under the terms and conditions of the Company’s Second Amended and Restated 2003 Stock Plan (the “Stock Plan”).

 

  (9)

Mr. Hevert was appointed Senior Vice President, Chief Financial Officer and Treasurer of the Company on July 28, 2020.

 

  (10)

Included are 4,970 shares of unvested restricted stock granted under the terms and conditions of the Stock Plan.

 

  (11)

Included are 3,647 shares of unvested restricted stock granted under the terms and conditions of the Stock Plan.

 

  (12)

Included are 4,406 shares of unvested restricted stock granted under the terms and conditions of the Stock Plan.

 

  (13)

Included are 2,806 shares of unvested restricted stock granted under the terms and conditions of the Stock Plan.

 

  (14)

Ms. Vaughan resigned as Senior Vice President, Chief Financial Officer & Treasurer of the Company on March 16, 2020.

 

  (15)

Included are 2,345 shares that are held in trust for the Executive Officers under the terms of Unitil’s 401(k) and 43,349 shares of unvested restricted stock granted under the terms and conditions of the Company’s Stock Plan. No shares held by any Director or Executive Officer have been pledged.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 (“Exchange Act”) requires our executive officers, Directors, and persons who beneficially own more than ten percent of a registered class of our equity securities to file certain reports of ownership and changes in share ownership with the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange (“NYSE”). Based upon our review of such forms that were filed in 2020, and written representations from certain reporting persons that such forms were not required to be filed by those persons for the reporting year 2020, we believe that all filing requirements applicable to our officers and Directors during 2020 and through March 2021, were met.

 

 

 

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CORPORATE GOVERNANCE

Unitil’s Board and management are committed to comprehensive and effective corporate governance practices. The Board believes that good corporate governance is the key to our long-term success, and the foundation to ensuring that the Company is operated in the best interest of shareholders and all other stakeholders. Accordingly, the Board has unconditionally adopted Corporate Governance Guidelines and Policies of the Board (the “Guidelines”), as described below, to assist Directors in the pursuit of superior Board function, effectiveness, communication and transparency in the governance of the Company. The Board and management believe that the ethical character, integrity and principles of the Board and senior management remain the most important safeguards of good corporate governance. Our RISE values require that solid governance practices are intrinsic to our Company culture, and are critical to long-term value creation and, ultimately, the sustainability of the Company.

The Guidelines represent the current view of the Board on governance and should not be viewed as rigid restraints. We will continue to monitor new developments and regulations, as well as emerging issues concerning corporate governance and financial disclosure, and will adopt changes and new policies, as appropriate. These Guidelines are reviewed regularly and are subject to modification from time to time by the Board. The Guidelines are available for review on the Corporate Governance page of the Investor Relations section of our website at unitil.com/investors, and are available in print to any shareholder or other interested party free of charge upon request to the Corporate Secretary at 1-800-999-6501 or at the address listed in the section entitled Information about the Annual Meeting.

 

ROLE OF THE BOARD

 

The Board is elected by the shareholders to oversee the long-term health and overall success of our business and to ensure our ongoing financial strength. The Board serves as the Company’s ultimate decision-making body on all matters, except for those reserved for or shared with the shareholders or committees of the Board. In the pursuit of excellence in corporate governance, all members of the Board are expected to adhere to a set of core values and our Code of Ethics, without exception.

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DIRECTOR INDEPENDENCE

Our Guidelines stipulate that a majority of the members of the Board, and all members of the Audit, Compensation, and Nominating and Governance Committees, must be independent (as defined in Section 303A.02 of the NYSE Listed Company Manual—Corporate Governance Standards). As a listed

 

 

 

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company on the NYSE, we must adhere to the independence standards set forth by the NYSE, and the Board has formally adopted independence criteria corresponding to the NYSE rules for director independence. The NYSE Listed Company Manual includes additional independence requirements for Audit Committee and Compensation Committee members. In addition, Rule 10A-3 of the Securities Exchange Act of 1934 (the “Exchange Act”) includes additional independence requirements for Audit Committee members.

Our Corporate Governance Guidelines, as well as the NYSE independence standards, require that the Board annually affirm the independent status of non-employee or “outside” Directors. The Board makes this affirmation annually in January, and based on its last comprehensive review on January 27, 2021, the Board determined at that time, with the exceptions of Mr. Meissner and Mr. Collin, all of the current Board members are independent.

 

During its annual independence review and affirmation, the Board applies the independence standards set forth in our Guidelines and by the NYSE. Under these requirements, the members of the Board who qualify as independent must be free from any material relationship that would interfere with the exercise of independent judgment as a member of the Board. An independent Director is one for whom the Board has affirmatively determined that he or she, individually or through a member of his or her immediate family, does not have or has not had management responsibility with the Company or otherwise been affiliated with Unitil for the past three years and who has no material relationship, either

   

 

Affirmed as Independent

January 27, 2021

 

    WinfieldS. Brown

    LisaCrutchfield

    SuzanneFoster

    EdwardF. Godfrey

    MichaelB. Green

    EbenS. Moulton

    JustineVogel

    DavidA. Whiteley

directly or as a partner, shareholder or officer of an organization with such a relationship with Unitil. This definition generally leaves the Board the discretion to determine, on a case-by-case basis, what constitutes a “material relationship” with us. The Board exercises this discretion in a manner that is consistent with applicable NYSE and SEC regulations and standards. In addition, members of the Board are obligated to notify the full Board of any material changes in their relationships that may affect their independence status as determined by the Board. The obligation encompasses all relationships between Directors and Unitil and its subsidiaries and/or members of senior management.

RISK OVERSIGHT

The Board is responsible for the oversight of management, the development of Company policy and strategy, and the ongoing assessment of the Company’s operational effectiveness and financial strength, which includes the oversight of risk. The Board’s ultimate goals are to ensure that Unitil continues as a successful and sustainable business, to optimize financial returns in light of the business risks, to increase shareholder value over time, and to protect the interests of all stakeholders.

We have a formal Enterprise Risk Management (“ERM”) program which has been in place since 2014. The Board has definitive oversight responsibility for the ERM program in accordance with its fiduciary duty. Management provides the Board with a formal report annually, as well as with quarterly status updates, and any other updates as needed, which could include the identification of a new risk, or a change in risk

 

 

 

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velocity or mitigation strategy. The Board also receives a quarterly presentation on a specific risk topic selected from the ERM program for greater depth of understanding of the selected risk.

The ERM program is a foundation for risk management that is relevant, sustainable and scalable. The ERM program is designed to identify potential risks, and to manage risks within our risk appetite in order to sustain operations and achieve business and strategic objectives. In building the ERM program, the potential risks relating to our business were defined using a comprehensive set of risk disclosures which are described in Part I, Item 1A. Risk Factors of our 2020 Annual Report on Form 10-K filed with the SEC on February 2, 2021.

In its oversight role, the Board is supported by the Risk and Compliance Committee (the “RCC”), a multi-function management committee created to provide recommendations on systems, policies and processes to achieve objectives, mitigate risk and ensure compliance. The RCC, chaired by Mr. Hevert, works with Mr. Meissner to evaluate and provide direction with respect to risk identification and assessment, risk management and mitigation, and the specific guidelines and policies governing the process. The RCC also works directly with functional managers on emerging risks and mitigation plans. The RCC provides quarterly reports on the status of the ERM program to the Board, as well as an annual report at the strategic planning meeting.

Like all companies, we face a variety of risks, both internal and external, and many factors work simultaneously to affect our overall business risk. The Board recognizes that our business risk is not static, and that it is not possible to mitigate all risk and uncertainty. The Board works within a climate of respect and candor, fostering a culture of open dialog between Board members and senior management, which includes comprehensive knowledge of Unitil’s many elements of risk. Overall, the Board believes that a systematic and proactive approach to properly oversee risk management has been defined and enhanced by the ERM program, which will continue to evolve through ongoing review and assessment of the existing and emerging risks facing the Company.

 

 

 

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LEADERSHIP STRUCTURE

 

The current leadership structure of the Board consists of a combined chairman and chief executive officer (“CEO”) position which has been held by Mr. Meissner since April 2018.

 

At this time, the Board believes that as a small-cap domestic corporation, the combination of these two positions is the optimal structure to guide the Company and maintain the focus required to achieve our long-term strategic goals. The CEO and president is the direct link between senior management and the Board. As a utility professional with over 30 years of industry experience, Mr. Meissner provides both critical insight and perception to the Board as well as valuable feedback to senior management through his comprehensive understanding of the issues at hand.

 

In July 2020, the Board re-appointed Mr. Green to serve as the lead independent director (the “Lead Director”) for the coming year. In his role as Lead Director, Mr. Green, who also serves as the chair of both the Audit Committee and the Executive Committee, presides at all meetings of the Board in executive session. The Lead Director Charter outlines the responsibilities and expectations of the Lead Director.

 

The existence and activities of the Lead Director do not alter the traditional roles and responsibilities of the Board as a whole, or Unitil’s management.

    

 

Lead Director

Responsibilities & Expectations

 

Leadership:

Provide leadership and guidance to the Board on the fulfillment of its fiduciary duties, as well as the organization’s mission, vision, corporate governance and strategic direction.

 

Meeting Management:

Chair all meetings of the Board in executive session, as well as Board meetings at which the Chairman is not present. Encourage meeting participation, information sharing, and candid discussion with the goal of prudent decision-making and efficient and effective meetings.

 

Relationship Management:

Provide independent advice and counsel to the Chairman and CEO with particular emphasis on Board relations and matters of strategic importance; provide a communication conduit between the Board and the Chairman and CEO, as needed or requested.

 

Corporate Governance:

Facilitate, with the assistance of the Corporate Secretary, the annual board evaluation on key Board and committee-related matters.

 

Board Culture and Conduct:

Promote the continuation of a collegial and mutually respectful Board culture. Intervene, when necessary, in instances involving conflict of interest, confidentially, director performance, and other Board policies.

 

BOARD SUCCESSION PLAN

The Board is engaged in ongoing succession planning, which is led by the Nominating and Governance Committee. The Board Succession Plan addresses upcoming retirements, committee membership and rotation, class balancing, skill set requirements and gaps, and planning for unforeseen events. The Board Succession Plan is also directly linked to both new director recruitment actions and diversity goals.

 

 

 

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RETIREMENT POLICY

No Director may be nominated as a candidate for re-election as part of the slate of Directors that we propose, nor may any person be nominated as a candidate for election, after he or she has reached age 75. Directors are not, however, subject to specific term limits. Due to the complexity of the utility industry, we value the insight that a Director is able to develop over a period of time. The Board believes that tenure provides an enhanced contribution to the Board, including the benefits of valuable experience and familiarity, which is in the best interest of shareholders.

DIRECTORS’ STOCK OWNERSHIP AND RETENTION POLICY

The Board believes that its members should own a significant number of shares of our common stock to properly align their interests with those of our shareholders. All non-employee Directors must own shares of common stock in the equivalent value of three times the current annual cash retainer for Board service. Shares of restricted stock and restricted stock units (“RSUs”) are counted towards this total. The ownership requirement is calculated annually on January 1, and as of January 1, 2021, the ownership requirement is currently $195,000 in value. Mr. Collin, Ms. Crutchfield, Mr. Godfrey, Mr. Green, Mr. Moulton, and Mr. Whiteley meet the stock ownership requirement. Any new Director who joins the Board has four years from the date of first election to the Board by shareholders to accumulate the required number of shares of common stock, which currently applies to Mr. Brown, who has served on the Board for one year, as well as Ms. Foster and Ms. Vogel, both of whom have served on the Board for two years and are standing for re-election at the Annual Meeting. Additionally, all members of the Board are required to hold all forms of equity received from the Company until retirement or other separation from the Company. For Board members, this includes all forms of equity received as part of the annual retainer for Board service. The Board, in its sole discretion, may approve a waiver to this policy as circumstances may warrant. To date, no such waivers have been proposed or approved.

RESIGNATION POLICY

A Director is required to tender his or her resignation if he or she receives a “withhold” vote greater than 50% of the shares voted at the annual meeting of shareholders in an uncontested election. If an incumbent Director fails to receive the required vote for re-election, the Nominating and Governance Committee will act on an expedited basis to determine whether to recommend the acceptance of the Director’s resignation and will submit such recommendation for prompt consideration by the Board. The Director whose resignation is under consideration shall abstain from participating in any decision regarding that resignation. The Nominating and Governance Committee and the Board may consider any factors they deem relevant in deciding whether to accept a Director’s resignation.

The Board nominates for election or re-election to the Board only candidates who agree to tender, promptly following the annual meeting at which they face election or re-election as Director, irrevocable resignations that will be effective upon (i) the failure to receive the required vote at the annual meeting at which they face re-election and (ii) Board acceptance of such resignation. In addition, the Board fills board

 

 

 

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seat vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other Directors in accordance with this policy. All candidates proposed for election or re-election at the Annual Meeting have agreed in writing to abide by this policy.

MEETING ATTENDANCE

Directors are expected to make a determined effort to attend all meetings of the Board and applicable committees upon which they serve. In 2020, the Board held five meetings, and its committees held a total of 35 meetings, collectively. No Director attended less than 75% of the aggregate number of meetings of the Board and applicable committees. In 2020, for the second year in a row, perfect attendance was achieved with all Directors attending 100% of the meetings held in 2020. Directors are encouraged to attend the Annual Meeting, although there is no formal requirement to attend. In 2020, due to the restrictions of the COVID-19 pandemic and the inherent danger of group gatherings, the Annual Meeting was abbreviated to address formal business only, and one Director was in attendance.

EXECUTIVE SESSIONS

Non-employee members of the Board have the opportunity to meet in executive session, without members of management present, either prior to the start or following the adjournment of each Board and committee meeting. During 2020, the Board met in executive session on four occasions. Mr. Green, the Lead Director, presided at all four meetings.

CODE OF ETHICS

Our Code of Ethics (the “Code of Ethics”) is a statement of our high standards for ethical behavior, legal compliance and financial disclosure, and is applicable to all of our Directors, officers and employees. The Board unanimously approved the Code of Ethics in 2004, and along with all management personnel, annually affirms understanding of, and agreement and compliance with, the Code of Ethics. The Nominating and Governance Committee reviews the Code of Ethics annually for any required or desirable revisions. Should the Board adopt any changes to, or waivers of, the Code of Ethics, those changes or waivers will be promptly disclosed and posted on our website at the address noted below. To date, there have been no changes to or waivers requested or granted with regard to the Code of Ethics. A copy of the Code of Ethics can be viewed on our website at unitil.com/investors.

MANAGEMENT SUCCESSION PLANNING

Effective executive leadership is critical to our success. The Board oversees the senior management succession planning process to ensure that effective plans are in place for succession of the CEO, as well as other senior management positions. The succession plan addresses contingencies for retirement,

 

 

 

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resignation, death, disability, or other untimely departure of the CEO and/or other members of senior management for a smooth transition on both an interim and long-term basis. In 2019, the management succession plan was evaluated for gaps and other risk factors. As a result of that evaluation, in 2020, the management succession plan was expanded and developed further to include middle management and other key positions, including long-serving employees nearing retirement. The management succession plan is an ongoing and fluid process that is reviewed and updated regularly to address both immediate needs and long-term goals. Also in 2020, in light of the COVID-19 pandemic, management established a Crisis Succession Plan for key officers to establish clear succession protocol in the event of an emergency. The Crisis Succession Plan is a stand-alone plan and does not replace or reduce ongoing management succession planning efforts.

EXECUTIVE COMPENSATION RECOVERY POLICY

In the event we are required to prepare an accounting restatement of our financial statements due to the material noncompliance with any financial reporting requirement under the securities laws, we shall be entitled to recover any excess performance-based compensation received by any current or former covered executive during the three-year period immediately preceding the date on which we are required to prepare an accounting restatement. To the extent allowed by applicable law and the listing standards of the New York Stock Exchange, we may seek to recover any such excess performance-based compensation at the direction of the Compensation Committee after consideration of the costs and benefits of doing so, and as approved by Board.

 

 

“Performance-based compensation” includes all annual incentives and long-term incentives (whether in cash, in equity, or otherwise) with performance features based on Unitil’s or a group’s performance, the award or size of the award of which was contingent upon such performance.

 

The policy does not apply to restatements that the Board determines are required or permitted under generally accepted accounting principles in connection with the adoption or implementation of a new accounting standard or caused by our decision to change one or more accounting practices as permitted by applicable law.

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EXECUTIVE STOCK OWNERSHIP POLICY

 

 

  Chairman, CEO and President    

    4X      

  Chief Financial Officer

    3X      

  All Other Named Executive Officers    

    2X      

All Named Executive Officers are required to own shares of our common stock in the equivalent value of a multiple of base salary. All shares of our common stock that are owned directly or beneficially, shares of restricted stock that are awarded, whether vested or unvested, as well any shares of Unitil common stock held in the Tax Deferred Savings and Investment Plan will be counted towards the required total. Any newly appointed Named Executive Officer will have four years from the date of appointment to obtain the required shares of stock. The required equivalent value for all Named Executive Officers will be recalculated annually on January 1. Any executive officer who may regress into a shortfall position as a result of the January 1 recalculation after expiration of the initial phase-in period will have until December 31 of that calendar year to meet the new required equivalent value. As of the date of this proxy statement, all current Named Executive Officers have met the stock ownership requirement, with the exception of Mr. Hevert. Mr. Hevert was appointed Senior Vice President, Chief Financial Officer and Treasurer of the Company in July 2020, and he will have until July 2024 to meet the ownership requirement.

EXECUTIVE STOCK RETENTION POLICY

The Board believes that our executive officers should own a significant number of shares of our common stock to properly align their interests with those of the shareholders. All Named Executive Officers are required to hold all forms of equity received as compensation until retirement or other separation from the Company. The Board, in its sole discretion, may approve a waiver to this policy as circumstances may warrant. To date, no such waivers have been proposed or approved.

PROHIBITION ON HEDGING AND/OR PLEDGING COMPANY STOCK POLICY

All members of our Board and our executive officers are prohibited from engaging in short sales or engaging in any hedging transaction with respect to our common stock, as well as engaging in any transactions that result in pledging, or using as collateral, shares of our common stock in order to secure personal loans or other obligations, including any shares that may be a margin account.

COMMUNICATION WITH THE BOARD

Shareholders and other interested parties who desire to communicate with the Board, a committee of the Board, the non-management or independent Directors as a group, or an individual member of the Board may do so in writing by sending a letter c/o Corporate Secretary, Unitil Corporation, 6 Liberty Lane West, Hampton, New Hampshire 03842-1720 or via email to whitney@unitil.com. The Corporate Secretary will screen all correspondence for security purposes, and will also determine whether the communication relates to business matters that are relevant to us. If the correspondence meets these standards, it will be promptly forwarded to the appropriate Director(s).

 

 

 

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NOMINATIONS

The Nominating and Governance Committee is responsible for recommending to the Board the slate of Director nominees for election by our shareholders. The Board reviews and, as appropriate, approves all Director nominees to be presented to our shareholders for election. As provided in Article III of our Bylaws, any vacancy occurring in the Board, whether due to the death, resignation or other inability to serve of any Director previously elected may be filled by the affirmative vote of a majority of the remaining Directors.

General Nomination Process

The Nominating and Governance Committee determines the required selection criteria and qualifications of Director nominees based upon the needs of the Company at the time nominees are considered. See also the section entitled Qualifications and Skills of Directors below. Director candidates will be selected based on input from Directors, executive officers, and if the Committee deems appropriate, a third-party search firm. Minimum criteria for Director nominees are set forth below, as well as in the Corporate Governance Guidelines. A candidate must possess the ability to apply good business judgment and must be in a position to properly exercise his or her duties of loyalty and care. Candidates with potential conflicts of interest will be identified and disqualified, as appropriate. In addition, the Committee will consider criteria including independence, proven leadership capabilities, business experience, areas of expertise, and factors relating to the composition of the Board, such as size, structure, and diversity. The Board seeks to include diversity of backgrounds, perspectives, experience and skills among its members. The Committee will consider these criteria for nominees identified by the Committee, by other Directors, by shareholders, or through another source. When current Board members are considered for nomination for reelection, the Committee also takes into consideration their prior Board contributions, performance, and meeting attendance records.

The Committee makes a preliminary assessment of each proposed nominee based upon his or her resume and biographical information, an indication of his or her willingness to serve and other background information. This information is evaluated against the criteria set forth above as well as our specific needs at the time. Based upon a preliminary assessment of the candidate(s), those who appear best suited to meet our needs may be invited to participate in a series of interviews, which are used for further evaluation. On the basis of information collected during this process, the Committee determines which nominee(s) to recommend to the Board for approval to submit for election at the next annual meeting of shareholders, or to fill vacancies on the Board that occur between shareholder meetings. The Committee uses the same process for evaluating all nominees, regardless of the source of the nomination. The Board may elect, at its discretion, to participate in an additional round(s) of interviews with one or all candidate(s) recommended by the Committee.

The Committee’s dedicated actions and well-planned process resulted in the addition of four outstanding and highly qualified Board members in the past two years, all of whom have varied and extensive experience in numerous important areas that have proven to enhance the Board’s strong skill set and diversity goals. The Board is dedicated to the importance of diversity in all respects, including professional experience, unique skill sets, age, and gender for sustainability in the long-term and ongoing value creation for our shareholders.

 

 

 

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Shareholder Nominations

Shareholders who wish to recommend a nominee for consideration by the Committee may do so by sending the following information to the Committee c/o the Corporate Secretary at the address listed in the section entitled Corporate Governance – Governance Policies of the Board—Communication with the Board: (1) the name of the candidate with brief biographical information and his or her resume; (2) contact information for the candidate and a document evidencing the candidate’s willingness to serve as a Director if elected; and (3) a signed statement as to the submitting shareholder’s current status as a shareholder and proof of ownership of the number of shares currently held.

 

Additionally, nominations of persons for election to the Board made by any of our shareholders must comply with all procedures set forth in Article IV – Nomination of Directors of our Bylaws.

 

No candidates for Director nominees were submitted to the Committee by any shareholder in connection with the Annual Meeting.

 

SHAREHOLDER RIGHTS

 

Our shareholders are entitled to certain rights by law as well as those granted in our Bylaws and Articles of Incorporation.

    

 

Shareholder Rights

 

We do not have classes of stock with unequal voting rights.

 

All shareholders are entitled to vote for all current director nominees.

 

We do not have a poison pill in effect.

 

No shareholder has a preemptive right.

 

The Board is authorized to issue only shares of common stock, no par value; no preferred stock is authorized.

 

Our Articles of Incorporation and our Bylaws may be amended by shareholders with a simple majority vote.

 

Shareholder approval is required to materially modify our capital structure.

 

 

 

 

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QUALIFICATIONS & SKILLS OF DIRECTORS

 

The Board believes there are general qualifications that all Directors must exhibit, and other qualifications, attributes, skills and experience that should be represented on the Board as a whole, but not necessarily by each Director.

Qualifications Required of All Directors

The Board requires that each Director be a person of high integrity and superior ethical character with a proven record of leadership and accomplishment in his or her chosen field. Each Director must demonstrate innovative and independent thinking, understand complex principles of business, finance, and utility regulation, and demonstrate familiarity with and respect for corporate governance requirements and practices. Directors must also comply unequivocally with the Code of Ethics, and be free of conflicts or potential conflicts of interest, and a sufficient number of Directors must meet the requirements of independence as set forth by the NYSE, as appropriate. Directors must be willing and able to dedicate the proper amount of time and effort to service on the Board as necessary to fulfill his or her responsibilities as a Director, and must not serve on more than two public company boards if currently holding a position of chief executive officer or an equivalent position, or on more than three public company boards if serving in an alternate role, or if retired.

Qualifications, Attributes, Skills and Experience to be Represented on the Board

The Board has identified certain qualifications, skills, experience and background that it believes are important to be represented on the Board. The Nominating and Governance Committee is charged with the

responsibility of tracking the Directors’ professional experience and skill sets with a board inventory matrix (the “Skills Matrix”). The Skills Matrix lists 19 categories of skills and attributes considered by the Board and the Committee to be advantageous to the regulated utility business, as well as for a company of our size and complexity. The Committee uses this information to assess overall Board composition and to identify existing and potential gaps. This information is also used for recruiting and evaluation purposes when there is a vacancy, or an expected vacancy, on the Board. The Skills Matrix has proven to be a valuable tool in this assessment exercise. The Board strives to represent a meaningful cross-section of business and industry experience, education, and specialized skill sets with a  

 

 

 

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group of diverse individuals who add an element of quality to our corporate governance framework, and who fairly and without compromise execute their fiduciary duty to serve the best interests of our shareholders and all of our stakeholders.

 

 

 

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The Skills Matrix Summary outlines certain essential key qualifications and experience that the Board believes should be represented on the Board for optimal oversight of our business and the effective exercise of its fiduciary duty to shareholders. Directors standing for re-election are also evaluated by the Committee for recommendation to the Board using a set procedure based on the expectations of Board members, which is provided to all members of the Board and reviewed annually. The evaluation includes contribution to the Board and committees served upon; unique skills, expertise and attributes; attendance and preparedness; and willingness to continue serving. Overall continuity and chemistry of the Board are also considerations, as well as factors relating to the composition of the Board, such as size and structure, and the diversity of backgrounds, perspectives, experience and skills among its members. Tenure on the Board is considered to be a uniquely valuable qualification in the highly regulated utility industry.

The Nominating and Governance Committee periodically reviews and, as needed, updates, the Skills Matrix. This generally involves a self-evaluation by each Board member concerning what they perceive to be their own primary and secondary skills within the Skills Matrix. This helps to ensure the Skills Matrix is current and relevant, and also defines the Board’s strongest skill sets, which are currently C-Suite experience, financial expertise, strategic planning, and utility operations and regulation.

BOARD DIVERSITY

 

Although the Board does not have a formal diversity policy, it believes that diversity, including gender diversity, is essential for a well-functioning board, the creation of shareholder value, and ultimately, the sustainability of Unitil over the long term. The Board seeks to maintain an optimal diversity mix
through an appropriate balance diverse backgrounds, perspectives, tenure, professional experience and skills among its members. The Board feels strongly that a variety of points of view and experiences contribute to a more effective decision-making process, and considers diversity of gender, age, competencies, and professional experience in the  

 

 

 

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evaluation of all candidates for Board membership. The Board also considers how the experience and skill set of any new Director nominee complements those of existing Directors and fellow Director nominees to create a balanced Board with diverse viewpoints and deep expertise. The Board’s current diversity profile is illustrated above.

TRANSACTIONS WITH RELATED PERSONS

The Audit Committee is responsible for reviewing and approving, as appropriate, all Related Person Transactions (as defined below), in accordance with its charter (the “Audit Committee Charter”). As a result, the Committee has adopted procedures for such review and approval and included such procedures in our

 

 

 

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Corporate Governance Guidelines. We had no Related Person Transactions requiring disclosure in 2020, and there are no Related Person Transactions requiring disclosure currently proposed for 2021. “Related Person” and “Related Person Transaction” are defined in Item 404(a) of SEC Regulation S-K.

Transactions between Unitil or one or more of its subsidiaries and one or more Related Person may present risks or conflicts of interest or the appearance of conflicts of interest. Our Code of Ethics generally requires all employees, officers and Directors to avoid engagement in activities or relationships that conflict, or would be perceived to conflict, with our interests or adversely affect our reputation. It is understood, however, that certain relationships or transactions may arise that would be deemed acceptable and appropriate upon full disclosure of the transaction, following review and approval to ensure there is a legitimate business reason for the transaction and that the terms of the transaction are no less favorable to us than could be obtained from an unrelated person.

 

RELATED PERSON TRANSACTIONS

Review & Approval Procedure

Requirements

 

 all Related Person Transactions and all material terms of the transactions shall be communicated to the Audit Committee for evaluation, including, but not limited to the approximate dollar value of the amount involved in the transaction, and all material facts as to the Related Person’s direct or indirect interest in, or relationship to, the Related Person Transaction

 

 each Related Person Transaction, and any material amendment or modification to any Related Person Transaction, must be reviewed and approved or ratified by the Audit Committee

     

RELATED PERSON TRANSACTIONS

Basis for Audit Committee

Evaluation of Transactions

 

 information provided by members of the Board during the required annual affirmation of independence, at which the members of the Audit Committee will be present

 

 applicable responses on Directors’ and Officers’ Questionnaires submitted by Directors and officers and provided to the Audit Committee by the Corporate Secretary or Internal Auditor

 

 background information on nominees for Director provided by the Nominating and Governance Committee

 

 any other applicable information provided by any Director or officer of the Company

 

In connection with the review and approval or ratification, if appropriate, of any Related Person Transaction, the Audit Committee will consider whether the transaction will compromise our professional standards included in its Code of Ethics. In the case of any Related Person Transaction involving an outside Director or nominee for Director, the Committee will also consider whether the transaction will compromise the Director’s status as an independent Director as prescribed in the NYSE Listed Company Manual, Section 303A, Independent Directors. The procedures followed by the Committee to evaluate transactions with Related Persons are also available in the Corporate Governance portion of the Investor Relations section of our website at unitil.com/investors.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The subsection entitled Section 16(a) Beneficial Ownership Reporting Compliance within the Share Ownership section of this proxy statement is incorporated herein by reference.

 

 

 

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SUSTAINABILITY

 

 

Sustainability is central to our Mission and Vision. It is fully embedded in our key initiatives and strategies, our leadership development and workforce planning, our RISE values (Respect, Integrity, Stewardship and Excellence) and the tone at the top. We believe continued focus on our Mission, Vision, values and goals, and managing the critical success factors outlined in our strategic plan will ensure ongoing profitability and long-lasting growth for the benefit of our customers, employees, investors, and all stakeholders.    LOGO

Our Approach to Sustainability

Our approach to corporate sustainability reflects a broad set of objectives including superior customer service, affordable rates, service to our communities, environmental stewardship, a steadfast commitment to safety, and the growth and well-being of our employees. Our values state clearly that sustainability initiatives are fundamental to and firmly rooted in our culture. This top-to-bottom emphasis on the very nature of sustainability assures long term benefits and value creation, and reflects our commitment to our corporate responsibilities to our investors, employees, customers, and society at large.

Sustainability Practices and Priorities

We have defined four key areas we believe will be central to the utility industry as the transition to a sustainable future continues. By looking closely at each area, we have identified practices and priorities that demonstrate our commitment to sustainability in support of our stakeholders while simultaneously illustrating our corporate culture in action.

 

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CUSTOMER ENGAGEMENT AND COMMUNITIES

 

We have a responsibility to put the customer first and to be a vital part of the communities in which we operate. Priorities in this area include superior customer service, community relations and charitable giving, energy affordability for our customers, and economic development in the communities we serve. Superior customer service is also tied directly to one of the metrics we measure for our Incentive Plan.

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SAFETY AND RELIABILITY

 

Safety is in our DNA; we work to make sure we deliver safe and reliable service to our customers. Priorities in this area include system reliability and resiliency, integrity of gas delivery infrastructure, emergency preparedness, and data privacy and cyber security. Electric reliability and gas emergency response time are also each tied directly to a metric we measure for our Incentive Plan.

 

 

 

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PEOPLE

 

We fully recognize that the people who make up our workforce are what makes us special. Finding and retaining quality, highly motivated employees assures that our culture continues to thrive and our Mission is successful. Priorities in this area include workplace safety and sustainability, employee development and engagement, and diversity and inclusion.

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ENERGY & THE ENVIRONMENT

 

We believe that proactive energy resource planning with an emphasis toward lowering greenhouse gas emissions is a central philosophy and a critical element in a sustainable future. Priorities in this area include facilitation of distributed energy resources and storage alternatives, support of utility-scale renewables and lower emissions, end use efficiency and demand, and environmental stewardship.

Sustainability and Strategic Planning

Sustainability is a central element of our strategic planning process. We consider the landscape of the energy industry, our role in that space today, and what we see as our role going forward in the annual development of our plan. We have identified key areas of focus within both our Mission and Vision, and setting and achieving milestones in each Mission focus area while also creating new initiatives closely aligned with our Vision will position us for success today and for years to come.

Mission Focus

 

 

Our Mission is to safely and reliably deliver energy for life and provide our customers with affordable and sustainable energy solutions. In our 2021 Strategic Plan, we confirmed six key areas of focus that we believe continue to drive our Mission forward on a daily basis. Four of the six are tied directly to our sustainability priorities and are central to our pursuit of a sustainable future.

 

 

 

Strategic Focus:

 

Customer Engagement

Safety & Reliability

Energy Supply

People

Regulation

Growth

 

     

 

Sustainability Priorities:

 

Customer Engagement

Safety & Reliability

Energy Supply

People

 

Vision Focus

 

 

 

Vision Focus:

 

Transformative Customer Solutions Evolving Energy Systems Clean Energy Future

 

     

 

Our Vision is to transform the way people meet their evolving energy needs to create a clean and sustainable future. We see three key areas of focus within this Vision statement, each of which represents avenues we must fully explore as we work to achieve the Vision. Together, we believe concentration on these areas will help ensure our ability to achieve the Mission and continue to create value on a long-term basis for all stakeholders.

 

 

 

 

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Commitment to our Culture and our Employees

Our long-term success is dependent on both what we do and how we do it. Our employees reflect a long-standing culture of dedication to inspired teamwork, constant collaboration, loyalty, and the insistence on the highest possible standards for ethical business practices. Our RISE values (Respect, Integrity, Stewardship and Excellence) set the tone for our actions with all stakeholders, both internal and external. These values are shared by all employees in our organization, and are a source of pride and inspiration.

Our employees are our greatest asset and human capital management is paramount to our long-term success. Succession planning and leadership development have emerged as top priorities. We strive to be the employer of choice in the communities we serve. We work diligently to attract the best talent from a broad range of sources in order to meet the current and future demands of our business. We remain committed to pay equity for similar jobs across our organization, and to the continued fostering of a diverse and inclusive workplace for all employees.

 

Diversity and Inclusion

 

Diversity, equity, and inclusion are integral to our culture. In early 2021, our Human Resources and Sustainability teams undertook a 21-day learning challenge focused on racial equity. The materials and topics for this learning challenge were curated by the New Hampshire Businesses for Social Responsibility organization. The culmination of this learning challenge was to create an action plan that reflects our commitment to work for racial equity and social justice. The first components of our action plan are to expand this important conversation to all employees to begin a dialogue and create awareness, foster a culture of support, a safe pathway of communication to leadership, and actively pursue change through policy and programs. We understand that meaningful action starts with understanding the visible and non-visible ways that racism impacts our region and our industry. We are committed to cultivating and preserving a culture of inclusion and connectedness.

 

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Focus on Cybersecurity

Cybersecurity is and will continue to be a primary focus. The protection of our data, customer information and infrastructure is a company-wide initiative in which all employees participate. The Cybersecurity Employee Awareness Program was established in 2013, which includes annual attestation of our Written Information Security Program document, as well as quarterly training and monthly phishing test exercises with training and an escalation procedure for repeated failures. We also perform an annual Cyber Knowledge assessment of all employees to inform the direction of the program and address any knowledge gaps identified.

 

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As we transform our business to meet the needs of future generations, we are fully committed to the environmental, social and governance priorities that matter most to our investors and other stakeholders.

Corporate Sustainability and Responsibility Report

 

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To learn more about the actions, projects and initiatives that enhance the sustainability of our Company, our communities, and our planet, our 2020 Corporate Sustainability and Responsibility Report can be viewed in its entirety on our website at unitil.com/company/sustainability.

 

We anticipate issuing our 2021 Corporate Sustainability and Responsibility Report in October 2021, which will provide information about our accomplishments in 2020 and our progress in 2021 in support of our sustainability initiatives and priorities.

 

 

 

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COMMITTEES OF THE BOARD

 

The Board has the following standing committees: Audit Committee; Compensation Committee; Executive Committee; and Nominating and Governance Committee. The tables below provide a summary of each committee with respect to membership and primary responsibilities.

Audit Committee

 

 

 

  Committee Members

 

  

Robert V.

Antonucci

  

Suzanne

Foster

  

Edward F.

Godfrey

  

Michael B.

Green  LOGO

  

Justine

Vogel

  

David A.

Whiteley

Independent:

                 

Financial Expert:

                 

Meetings in 2020:

   3    1    5    5    5    5

Latest Charter Review:

   October 27, 2020

Primary Charter Directive

  

  To provide independent and objective oversight of the Company’s   accounting functions, internal controls and financial reporting

 

  Committee Chair   LOGO

 

 

 NOTES:

 

  (1)

Dr. Antonucci retired from the Board on April 29, 2020.

 

  (2)

Ms. Foster joined the Committee on July 29, 2020.

The Audit Committee is a separately-designated standing audit committee established in accordance with section 3(a)(58)(A) of the Exchange Act. Each member of the Committee is financially literate, knowledgeable and qualified to review financial statements. The Committee operates under a written charter, which it reviews annually, and adopts amendments, if necessary, to reflect changes governing financial reporting and accounting requirements or its responsibilities. The Audit Committee Report, which appears in the section entitled Audit Matters, more fully describes the activities and responsibilities of the Committee.

 

 

 

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Compensation Committee

 

 

 

  Committee Members

 

   Robert V.
Antonucci
  

Winfield S.

Brown

  

David P.

Brownell

  

Lisa

Crutchfield  LOGO

  

Suzanne

Foster

  

Eben S.

Moulton

  Independent:

                 

  Meetings in 2020:

   2    4    2    5    5    5

  Latest Charter Review:

   October 27, 2020

  Primary Charter Directives

  

  To establish objectives and interpret the terms of the Company’s   compensation policies for base salary, incentive compensation,   equity compensation, and benefits programs

  

  Annual Review of CEO performance (jointly with the Executive   Committee)

  

  Approval of executive-level base salaries and approval and   recommendation to the Board of base salaries for Named Executive   Officers

  

  Administration of merit and incentive compensation plans for all   appropriate personnel

  

  Review and approval of annual performance measures and   approval of annual incentive compensation plan awards

 

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 NOTES:

 

  (1)

Dr. Antonucci and Mr. Brownell retired from the Board on April 29, 2020.

 

  (2)

Mr. Brown joined the Committee on January 29, 2020.

The Compensation Committee operates under a written charter, which it reviews annually and, as appropriate, amends to reflect changes in its responsibilities. The specific activities and responsibilities of the Committee are described in greater detail in the section entitled Compensation Committee Operations.

Executive Committee

 

 

 

  Committee Members

 

  

Lisa

Crutchfield

   Edward F.
Godfrey
  

Michael B.

Green  LOGO

   Thomas P.
Meissner, Jr.
  

David A.

Whiteley

  Independent:

              

  Meetings in 2020:

   1    1    1    1    1

  Latest Charter Review:

   January 26, 2021

  Primary Charter Directives

  

  To act on behalf of the Board when necessary between scheduled   Board meetings

  

  Annual Review of CEO performance (jointly with the   Compensation Committee)

 

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The Executive Committee operates under a written charter, which it reviews annually and, as appropriate, amends to reflect changes in its responsibilities. Committee membership includes the Chairman of the Board, the lead director, and the chairs of the Audit, Compensation, and Nominating and Governance Committees of the Board, as well as any additional Board members appointed at the discretion of the Board.

 

 

 

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Nominating & Governance Committee

 

 

 

  Committee Members

 

 

Winfield S.

Brown

 

David P.

Brownell

  Lisa
Crutchfield
 

Albert H.

Elfner, III

  Michael B.
Green
 

M. Brian

O’Shaughnessy

 

Justine

Vogel

 

David A.    

Whiteley  LOGO     

  Independent:

               

  Meetings in 2020:

  1   2   4   2   4   2   1   4

  Latest Charter Review:

  October 27, 2020

  Primary Charter Directives

 

  The review and oversight of corporate governance standards

 

  To coordinate searches for potential nominees for Board members, review and evaluate   qualifications of potential Board members, and recommend to the Board nominees for   vacancies occurring from time to time on the Board

 

  To recommend committee membership for Board approval

 

  To review Board member performance prior to recommendation for nomination to stand for   election to an additional term

 

  The annual review and evaluation of Directors’ compensation and recommendation of any   changes to the Board

 

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 NOTES:

 

  (3)

Mr. Brownell, Mr. Elfner and Mr. O’Shaughnessy retired from the Board on April 29, 2020.

 

  (4)

Mr. Brown and Ms. Vogel joined the Committee on July 29, 2020.

The Nominating and Governance Committee operates under a written charter, which it reviews annually and, as appropriate, amends to reflect changes in its responsibilities.

All Committees

 

The existence and activities of all committees of the Board do not alter the traditional roles and responsibilities of Unitil’s management. All committees may delegate authority to individuals or subcommittees when they deem appropriate, subject to applicable laws, rules or regulations. However, in delegating authority, a committee shall not be absolved from the responsibilities designated under the terms of its respective charter. All committees shall undertake any other action or exercise such other powers, authority, duties and responsibilities as necessary or appropriate to the discharge of the duties and responsibilities set forth in their respective charters or our Bylaws, or otherwise required by the listing standards of the NYSE or other applicable laws, rules or regulations, or as shall otherwise be determined by or assigned by the Board.

The charters for each of the standing committees are available in the Corporate Governance section of the Investor Relations section of our website at unitil.com/investors, or in print to any shareholder or other interested party, free of charge upon request to the Office of the Secretary, Unitil Corporation, 6 Liberty Lane West, Hampton, NH 03842-1720; or to InvestorRelations@unitil.com; or by calling toll free 800-999-6501.

 

 

 

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AUDIT MATTERS

 

AUDIT COMMITTEE REPORT

The following report is submitted by the Audit Committee with respect to Unitil’s audited financial statements for the fiscal year ended December 31, 2020.

In discharging its oversight responsibility regarding the audit process, the Audit Committee has discussed with Deloitte & Touche LLP (“Deloitte”), the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2020, the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Volume 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. In addition, the Committee has received the written disclosures and the letter from Deloitte required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte’s communications with the Committee concerning independence and has discussed with Deloitte the firm’s independence with respect to Unitil.

During 2020, the Audit Committee members received Unitil’s quarterly financial information for review and comment prior to the filing of each of Unitil’s Forms 10-Q with the SEC. In fulfilling its responsibilities relating to the financial statements, the Committee also reviewed and discussed Unitil’s significant accounting policies and the audited financial statements for the fiscal year ended December 31, 2020, with management and Deloitte. Based on the review and discussions with management and Deloitte, the Committee recommended to the Board that the audited financial statements be included in Unitil’s Annual Report on Form 10-K for fiscal year ended December 31, 2020, for filing with the SEC.

Audit Committee Members

 

Suzanne Foster, Edward F. Godfrey, Michael B. Green (chair), Justine Vogel and David A. Whiteley

 

 

 

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PRINCIPAL ACCOUNTANT FEES & SERVICES

The following table presents fees for professional services rendered by Deloitte, Unitil’s independent registered public accounting firm, for the fiscal years ended December 31, 2020, and December 31, 2019.

 

     

 

Fiscal 2020

    

 

Fiscal 2019

 

Audit Fees

   $     993,157    $     1,060,000

Audit-Related Fees

   $ 0      $ 30,000

Tax Fees

   $ 0    $ 0

All Other Fees

   $ 0    $ 0

Total Fees

 

 

   $

 

 

993,157

 

 

 

 

   $

 

 

1,090,000

 

 

 

 

Audit Fees

In 2020 and 2019, this category includes fees incurred for professional services rendered by Deloitte for reviewing the quarterly financial statements included in our Quarterly Reports on Form 10-Q, auditing our annual financial statements included in our Annual Report on Form 10-K, and auditing our internal control over financial reporting.

Audit-Related Fees

In 2020, Deloitte did not perform any audit-related services. In 2019, this category includes fees incurred of approximately $30,000 for professional services rendered by Deloitte in connection with registration statements we filed with the Securities and Exchange Commission.

Tax Fees

In 2020 and 2019, Deloitte did not perform any tax services.

All Other Fees

In 2020 and 2019, Deloitte did not perform any services that are not included in the above categories.

AUDIT COMMITTEE PRE-APPROVAL POLICY

The Audit Committee has a formal policy concerning approval of audit and non-audit services to be provided by the independent registered public accounting firm engaged to audit our consolidated financial statements. The policy requires that all services to be provided by the independent registered public accounting firm, including audit services and permitted audit-related and non-audit services, must be pre-approved by the Committee. The Committee pre-approved all audit, audit-related, tax and all other services provided by Deloitte during fiscal 2020 and 2019.

 

 

 

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COMPENSATION

 

COMPENSATION COMMITTEE OPERATIONS

The Compensation Committee is appointed annually by the Board and is responsible for oversight of the executive compensation program. The Committee has overall authority to establish goals and objectives and to interpret the terms of our compensation policies, including base salary, incentive compensation, equity compensation, and all benefits programs. The Committee discharges its oversight responsibilities by carrying out the specific functions and exercising the authority provided in its charter (the “Compensation Committee Charter”). See the section entitled Compensation - Compensation of Named Executive Officers - Compensation of Directors for information on the Nominating and Governance Committee’s work regarding Directors’ compensation.

The Committee has the authority to delegate some of its responsibilities to individuals or subcommittees of the Committee’s choice, subject to applicable laws, rules or regulations. However, such delegation does not absolve the Committee from the responsibilities that it bears under the terms of the Compensation Committee Charter.

The Committee has the authority to invite executive officers, members of management or other guests to attend its meetings, to perform research, or to provide relevant information or recommendations. In 2020, at the Committee’s request, the CEO and the Vice President of People, Shared Services and Organizational Effectiveness served the Committee in a consultative capacity, providing data and analytical support, as well as management perspective and recommendations relative to employee compensation and benefits, including executive compensation.

The Committee also has the authority to retain or obtain the advice of outside counsel, compensation consultants or other advisors to advise the Committee as it deems necessary. The Committee is directly responsible for the appointment, retention terms (including compensation), and oversight of the work of any adviser it retains. Prior to retaining or obtaining advice from an adviser, the Committee will consider factors relevant to the adviser’s independence from management to the extent required by the NYSE listing standards.

The Committee has periodically engaged a compensation consultant, Willis Towers Watson (“Willis Towers”), to provide compensation study data, including data from selected peer companies and compensation marketplace survey analysis, as well as to provide various recommendations based on study findings and industry trends for the Committee’s consideration. Willis Towers is engaged by and reports directly to the Compensation Committee. Willis Towers receives compensation only for services related to executive compensation, employee benefits and general compensation matters, and neither it nor any affiliated company provides any other services to us or our subsidiaries.

In October 2020, the Compensation Committee engaged Willis Towers to conduct a review of our Executive Stock Ownership Policy compared to competitive market practices for similar utility companies. The Committee requested the review in order to assess this policy with regard to the alignment with

 

 

 

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competitive market practice in the context of holding requirements, time to achieve and level of long-term incentive compensation provided under the long-term incentive plan. The Committee elected to take no action with regard to the Executive Stock Ownership Policy, but may consider engagement of Willis Towers for further evaluation of long-term incentive compensation in 2021.

See the section entitled Compensation - Compensation Discussion and Analysis for additional information on the comprehensive compensation analysis prepared by Willis Towers in 2019 and the Committee’s work in 2019 regarding compensation-related matters for the 2020 compensation year.

In 2020, we incurred total expenses of $22,186 for services rendered by Willis Towers. The services were approved by the Compensation Committee as part of the Willis Towers 2020 engagement.

In addition, we requested and received information from Willis Towers to assist the Committee in determining whether its work raised any conflict of interest. Based on the responses provided by Willis Towers in its completed Conflict of Interest Questionnaire, there were no conflicts of interest in 2020.

COMPENSATION COMMITTEE INTERLOCKS & INSIDER PARTICIPATION

The current members of the Compensation Committee are not current or former officers or employees of Unitil. No member of the Committee has any relationship requiring disclosure under Item 404 of Regulation S-K, Transactions with Related Persons. In addition, none of our executive officers serve on the board of directors or compensation committee of another company where an executive officer of the other company also serves on the Board or Compensation Committee.

RISK AND BROAD-BASED COMPENSATION PROGRAMS

We believe the risks that may arise from our compensation policies and practices, which include, but are limited to, the annual incentive award performance metrics, variable and non-variable pay mix, and limited non-performance payouts are not likely to have a material adverse effect on us because of multiple factors that work together.

 

Our compensation program is designed with performance metrics sufficiently difficult to motivate management to strive for strong performance without encouraging imprudent or excessive risk-taking.

 

    The Compensation Committee has significant discretion in its determination of incentive compensation awards.
   

We do not use incentives that encourage short-term, high-risk strategies at the expense of long-term performance and value.

 

    The Compensation Committee considers distinct quantitative factors with regard to incentive compensation.
   

The variable and non-variable pay mix is proportionally weighted for executive officers and all employees.

   

The Compensation Committee considers qualitative

factors, such as the unexpected challenges faced during the year, to encourage employees and executive officers and to balance all aspects of our Strategic Plan, both short- and long-term.

 

 

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

2020 PERFORMANCE REVIEW

 

 

Challenges:

 

As a Company, 2020 was one of the most challenging years we have ever faced. Our financial results in 2020 were significantly impacted by two atypical circumstances - the exceptionally warm winter heating season and the financial impact of the COVID-19 pandemic. At year end, we delivered 2020 earnings of $2.15 per share compared to $2.971 per share in 2019. We estimate that the negative financial impact of the warmer-than-normal winter was approximately $3.1 million, or $0.20 per share, and the negative financial impact of the COVID-19 pandemic was approximately $1.4 million, or $0.09 per share. Although these were not the financial results we had hoped for, we remain financially strong with a robust pipeline of future investment opportunities, and the foundational elements of our business - the safe, reliable and affordable delivery of electricity and natural gas to our customers – remain strong.

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Successes:

While 2020 presented us with significant challenges on many levels, we accomplished noteworthy operational successes that are a testament to our resiliency and commitment to continued execution of the fundamentals of our business for sustained growth over the long term. A summary of some of these successes is below.

Customer Service

 

 

We continued to deliver exceptional service to customers, achieving our highest customer satisfaction ratings ever.

Safety

 

 

We achieved our best gas emergency response ever, responding to 87.4% of gas odor calls in less than 30 minutes. We were again selected as a Leading Practice Company by the American Gas Association, this time in the area of emergency response and preparedness.

 

 

We responded to an unusual number of storm events in 2020, including Tropical Storm Isaias in early August following which we restored electric service to all affected customers in under 24 hours. We also won Edison Electric Institute’s Emergency Response (Assistance) Award for the third time in four years.

 

 

We exceeded all safety targets for the year and achieved a DART (days away, restricted or transferred) rate that placed us in the top third of the industry.

 

1 

Actual 2019 earnings included a one-time net gain of $9.8 million, or $0.66 per share, on the Company’s divestiture of its non-regulated business subsidiary, Usource, Inc. in the first quarter of 2019.

 

 

 

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Employee Satisfaction

 

 

We continued to sustain exceptionally high levels of employee pride and engagement. Our employee survey results indicated that 90% of employees are proud to work for us, and 91% of employees would recommend Unitil as a place to work.

Sustainability

 

 

We completed a new LEED-Certified state-of-the-art 54,000 square foot operations center for our seacoast New Hampshire electric operations group, which includes advanced sustainability features to address indoor air quality, as well as the reduction of energy and water usage.

 

 

Along with the other Massachusetts utilities, we received the top ranking in the nation for “utility-sector” efficiency programs by the American Council for an Energy Efficient Economy.

Infrastructure Investments

 

 

We completed a major upgrade of all customer metering systems to achieve state-of-the art advanced metering functionality.

 

 

We completed a major upgrade of our Outage Management System.

 

 

We completed a state-of-the-art grid modernization project in Townsend, Massachusetts, including a two megawatt battery storage system to support clean energy resources on our distribution system.

In addition to the operational successes noted above, we also continued to advance our long-term strategic planning efforts, specifically in the areas of Customer Choices, Advancing the Grid, Smart Heating and Transportation Solutions, and Future of Natural Gas. And we continued our unbroken record of annual dividend payments since Unitil common stock began trading on the open market in 1984 with an annualized dividend of $1.50 per share in 2020. On January 27, 2021, the Board of Directors voted to increase the 2021 annualized dividend to $1.52 per share.

EXECUTIVE COMPENSATION POLICIES

 

EXECUTIVE COMPENSATION RECOVERY POLICY

In the event we are required to prepare an accounting restatement of our financial statements due to the material noncompliance with any financial reporting requirement under the securities laws, we are entitled to recover any excess performance-based compensation2 received by any current or former covered executive during the three-year period immediately preceding the date on which we are required to prepare an accounting restatement. To the extent allowed by applicable law and the listing standards of the New York Stock Exchange, we may seek to recover any such excess performance-based compensation at the direction of the Compensation Committee after consideration of the costs and benefits of doing so, and as approved by Board.

 

2 

For the purposes of the Executive Compensation Recovery Policy, performance-based compensation is defined as all annual incentives and long-term incentives, whether in cash, in equity, or otherwise, with performance features based on Unitil’s or a group’s performance.

 

 

 

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EXECUTIVE STOCK OWNERSHIP POLICY

 

All Named Executive Officers of the Company are required to own shares of our common stock in the equivalent value of a multiple of base salary. Any newly appointed Named Executive Officer will have four years from the date of      

 

Chairman, CEO and President

     4X              
     

Chief Financial Officer

     3X     
     

All Other Named Executive Officers

    

 

2X

 

 

 

  

appointment to obtain the required shares of stock. Additional information concerning the current share ownership of our Directors and officers can be found in the section entitled Share Ownership —Beneficial Ownership.

EXECUTIVE STOCK RETENTION POLICY

The Board believes that our executive officers should own a significant number of shares of our common stock to properly align their interests with those of our shareholders. All Named Executive Officers are required to hold all forms of equity received as compensation until retirement or other separation from the Company. The Board, in its sole discretion, may approve a waiver to this policy as circumstances may warrant. To date, no such waivers have been proposed or approved.

PROHIBITION ON HEDGING AND/OR PLEDGING COMPANY STOCK POLICY

All members of the Board and the executive officers are prohibited from engaging in short sales or engaging in any hedging transaction with respect to Unitil common stock, as well as engaging in any transactions that result in pledging, or using as collateral, shares of Unitil common stock in order to secure personal loans or other obligations, including any shares that may be held in a margin account.

Compensation Philosophy and Administration

 

 

The Compensation Committee is responsible for oversight of our executive compensation program. The Committee, the Board and the Company recognize the value and importance of sound principles for the development and administration of competitive compensation and benefit programs. We believe that our executive compensation program (i) is instrumental in the achievement of its short-term and long-term strategic and business objectives,    

 

Executive Compensation – Guiding Principles

 

  Annual compensation (currently defined as base salary, cash incentive and equity compensation for the Company’s employees, including the Executive Officers) should generally target the national market median, which is defined as the middle, or the 50th percentile, of the compensation marketplace.

 

  The compensation methodology for determining base pay increases should be the same for all executive positions including the CEO and other Named Executive Officers.

 

  The compensation methodology should include a consistent formula for determining each component of annual compensation based on both objective and verifiable market data and on attainment of selected performance measures from the Company’s approved strategic plan (the “Strategic Plan”).

 

  The compensation program(s) for all employees should ensure pay equity for similar jobs across the organization.

 

 

 

 

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(ii) provides appropriate rewards for the fulfillment of strong operational and financial performance and (iii) provides appropriate rewards for practicing our core values and principles, which creates lasting value for our shareholders and other stakeholders.

The Compensation Committee utilizes a set of guiding principles in the design and implementation of the Company’s executive compensation program, which are outlined above. The primary goal of the guiding principles is to ensure consistency and fairness in all aspects of the Committee’s oversight of compensation policy. Additional information concerning the processes and operational procedures followed by the Committee can be found in the section entitled Compensation—Compensation Committee Operations.

Compensation Policy & Process

 

The principal objective of our executive compensation program is to attract, motivate, retain and reward highly qualified employees who are committed to the achievement of solid financial performance, outstanding service to customers, and excellence in the management of our assets. It is our belief that a strong sense of teamwork and shared responsibility are vital to achieving strong performance. Our incentive compensation reflects and supports this philosophy with an appropriate balance of financial and operational goals that apply to the entire management team. See the section entitled Compensation - Compensation Discussion and Analysis - Elements of Compensation for a discussion of the specific goals set, and results achieved, for 2020. We also believe that retention of talented and dedicated key executives will help ensure continued focus on the achievement of long-term growth in shareholder value and overall sustainability, which in turn will provide significant benefits to all of our stakeholders, including shareholders, customers and employees.

 

 

 

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Compensation Policy – What We Do and What We Don’t Do

 

The Compensation Committee continuously strives to make improvements to our executive compensation policies. Below is a summary of what we do and what we do not do with respect to executive compensation, the totality of which the Committee and the Board believe aligns with the long-term interests of our shareholders as well as with today’s commonly accepted best practices in the market.

 

 

 

 

WHAT WE DO

 

  Apply balanced performance metrics   (financial, operations, customer satisfaction)

 

  Align performance metrics with management   and shareholder interests

 

  Practice prudent goal setting aligned with   Strategic Plan

 

  Ensure a majority of the CEO’s annual   compensation* is variable based on   performance

 

  Enforce significant stock ownership and   holding policy

 

  Adopted executive compensation recovery   policy

 

  Allow only double-trigger change of control   provisions

 

  Monitor pay equity across the Company

 

 

    

 

 

WHAT WE DON’T DO

 

  Provide excise tax gross ups of any kind in any Change of Control Agreements or in Mr. Meissner’s Employment Agreement

 

  Allow hedging, pledging or short sale   transactions in Company stock

 

  Encourage unreasonable risk taking

 

  Grant equity awards discounted at values   below 100% fair market value

 

  Allow single-trigger change of control   provisions

 

  Provide excessive executive prerequisites

 

  Allow new entrants into the SERP (the
SERP   was closed in 2018)

 

* The Committee defines “annual compensation” in its Guiding Principles as “base salary, cash incentive and equity compensation.”

Compensation Decisions for 2020

 

In 2019, the Committee engaged Willis Towers to conduct a comprehensive review and assessment of senior management compensation, including CEO, CFO, and other Named Executive Officers’ compensation, non-union employee compensation, employee benefits, and Directors’ compensation (the “2019 Compensation Analysis” or the “Analysis”) in the context of market practices and our Compensation Philosophy. The Committee requested Willis Towers provide an assessment of current levels of competitive compensation and broad-based benefit programs to use as a tool to assist the Committee with its decisions concerning 2020 compensation.

The Committee’s standard practice is to engage a compensation consultant to prepare a comprehensive study of all elements of compensation approximately every five years, with updates on executive compensation annually or as needed. The last comprehensive analysis was performed in 2014.

 

 

 

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2019 Compensation Analysis - Summary

 

The 2019 Compensation Analysis scope included an overall analysis of our compensation as it relates to and supports our business strategy, alignment with the compensation philosophy, peer group identification, detailed information on executive, non-union staff and Directors’ compensation, as well as a review of the research methodology and process, key findings with regard to base salary and incentive compensation, program assessment, and several recommendations for the Committee’s consideration.

 

General Methodology

 

Towers Watson used both compensation data from published compensation surveys focused on comparably sized organizations in the utility sector and general industry sector (for “cross industry” positions), and compensation data from proxy filings of our approved peer group of 13 publicly traded utility companies with annual revenues between $275 million and $1.6 billion (the “2019 Peer Group”)3, which was approved by the Compensation Committee in April 2019 for the purposes of this Analysis.

  

2019 Compensation Analysis Scope

 

Review of Total Compensation Philosophy

 

Senior Management Competitive Assessment:

Detailed review of total direct compensation* for approximately 20 executive positions, including the CEO, CFO and other Named Executive Officers

 

  Confirmation of competitive marketplace and   peer group

  Assessment of pay level competitiveness and   mix of total compensation

  Competitiveness of cash and equity incentive   levels

 

Non-Union Staff Competitive Assessment:

Competitive assessment of non-union staff cash compensation for 75 jobs covering approximately 150 incumbents

 

  Cash compensation

  Appropriateness of salary structure

  Analysis of incentive targets

 

Directors’ Competitive Assessment:

Competitive assessment of total direct compensation* for outside Board members

 

  Confirmation of peer group

  Assessment of pay elements including board and   committee annual retainers, meeting fees, board   and committee leadership premiums

 

Broad Based Benefit Program Assessment:

Review of program design to ensure competitiveness as an element of total compensation

 

*For the purposes of this analysis, total direct compensation is defined as base salary, annual incentives and long-term incentives.

 

Compensation Data from Published Compensation Surveys

Compensation data from published compensation surveys focused on comparably sized organizations in the utility sector and general industry sector (for “cross industry” positions)4. Published survey data were size-adjusted based on revenue, employee regression and/or scope parameters. Because the surveys are confidential, the specific data selected by Willis Towers did not indicate survey participants by company name.

 

3 

The 2019 selected group includes ALLETE, Inc., Avista Corporation, Chesapeake Utilities Corporation, El Paso Electric Company, Genie Energy, Ltd., MGE Energy, Inc., Northwestern Corporation, Northwest Natural Gas Company, ONE Gas, Inc., Otter Tail Corporation, PNM Resources, Inc., Pattern Energy Group, Inc., South Jersey Industries, Inc.

4 

The primary sources of data were the Willis Towers Watson CDB Executive Energy Services and General Industry Compensation Databases that provide market compensation data on over 1,000 U.S. organizations, as well as other published survey sources including the Mercer Executive Compensation Survey Report.

 

 

 

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Compensation Data from Proxy Filings

Compensation data was also extracted from the 2019 Peer Group proxy filings. The Compensation Committee used this data to analyze only the CEO’s and CFO’s compensation, with the objective of ensuring that CEO and CFO total compensation was reasonable, competitive and consistent with pay practices at peer companies.

 

Published compensation surveys generally provide a broader sample of data upon which to base compensation decisions, which is essential when analyzing a large number of positions as was the case with the 2019 Compensation Analysis. Data from peer company proxy filings generally validate published survey information with definitive executive compensation data from specific companies.

 

 

2019 Compensation Analysis

Pay Elements Focus

 

  Base salary

 

  Total cash compensation (base salary plus annual incentive)

 

  Total direct compensation (base salary plus annual incentive plus long-term incentive)

 

Methodology: Published Surveys

 

 

Published survey data for all positions included in the Analysis were collected.

 

 

Survey data for both general industry and utilities market segments reflected the size and scope similar to ours through the use of regression analysis or tabular grouping, where regression data are not available.

 

 

Survey data were aged using an annualized rate of 3% to a common date of July 1, 2019 to ensure data consistency, where 3% represents the projected movement in senior executive compensation base pay levels for 2019.

 

 

Survey data cover a large number of benchmark positions, and the median (50th percentile) of this data set approximated the 25th percentile of the smaller proxy-based data set.

Methodology: Peer Group Proxy Filings

 

 

A benchmarking assessment was prepared using position-specific market data to compare current compensation levels for the CEO and the CFO with compensation levels for comparable positions.

 

 

Market data for total direct compensation elements were extracted for the 25th percentile, the 50th percentile (median), and the 75th percentile.

 

 

Based on the size of the 2019 Peer Group companies relative to our financial profile (based on fiscal year-end 2018 revenues and number of employees), Towers Watson recommended that we focus on the 25th percentile information within this data set.

 

 

 

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2019 Compensation Analysis

Key Findings

 

Executive Compensation

 

  Base salary: Market positioning for executives, on average, is slightly below the current targeted philosophy.

 

  Target Total Cash (Base salary + target annual incentive compensation): Target annual incentive opportunities for the broader executive group are generally consistent with median market practices.

 

  Actual Total Direct Compensation (base salary + actual annual incentive compensation + expected value of long-term incentives granted in the current year): Actual total direct compensation is 95% of market median, on average.

 

  

 

Willis Towers completed the 2019 Compensation Analysis in July 2019, and provided a comprehensive report outlining the findings of the Analysis and associated recommendations to the Committee for review and consideration.

 

The 2019 Compensation Analysis allowed the Committee to gain a greater understanding of current compensation in the context of market practices, establish a benchmark upon which to base its compensation decisions for the 2020 compensation year, and accurately assess the competitiveness of each executive officer’s, including the CEO’s and CFO’s, overall compensation and alignment with the Committee’s Compensation Philosophy.

 

Salary Administration

 

Our Salary Administration Policy has three objectives:

 

 

to provide a compensation program equal to or better than the median of compensation programs provided by geographically comparable businesses;

 

 

to manage base salaries in a manner that recognizes and appropriately rewards performance within prescribed budgetary limits; and

 

 

to provide base salary opportunities that are competitive with external pay practices for substantially comparable work.

The Salary Administration Policy includes three important components:

 

 

Job Description
Every employee of the Company has a job description that represents his or her
position within the Company. All job descriptions are written using a requisite format
describing the position purpose, principal accountabilities, competencies, challenges,
decision making authority, qualifications, and scope and quantitative dimensions.

 

Job Evaluation
We use a variety of published salary sources and survey data to assist in the review and
evaluation of non-executive, non-union job descriptions in order to confirm reasonable
and appropriate base compensation for each position. See also the section entitled
Compensation - Base Salary below. This practice provides for internal equity between
comparable positions as well as external comparability with other companies. The end
result of the job evaluation process is that each job is assigned a pay grade that
translates into a salary range. Executive level positions (including the Named Executive
Officers) are reviewed and evaluated independently by Willis Towers.

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Market Analysis & Salary Range

Each year we participate in numerous salary market studies to ensure that the competitiveness of base salaries is maintained. We adjust the salary ranges each year based upon the results of these surveys to ensure that we maintain our salary ranges at the median market level. Historically, the salary ranges are adjusted by approximately 2% annually based on market survey data. The midpoint of the base salary range is set at the median level of the broad-based published compensation survey group when compared to similar positions at comparable companies. The minimum in the salary range is determined by multiplying the midpoint by 80%, and the maximum is determined by multiplying the midpoint by 120%. In general, the salary range minimum is commonly the lowest amount we will pay a new employee in the job, with the aim of employees reaching the midpoint of the range within five years. The midpoint is where we strive to pay fully trained, fully competent employees. The midpoint to maximum range is where high-performing employees and long-term employees tend to be paid. Exceptions are occasionally made based on experience, skills, education, and other factors.

Base Salary

 

We set base salary ranges for every job grade and position based upon salary survey data provided by Willis Towers and in accordance with the Salary Administration Policy described above. In relation to each Named Executive Officer, base salary is set within the salary range based upon individual experience, skills, and education, as well as performance relative to individual annual goals. This process is used for both executive and non-executive positions.

Incentive Compensation – Cash Incentive

 

We set annual target cash incentive awards equal to the median of the broad-based published compensation survey group for the executive officers’ target cash incentive awards at other comparable companies based on data provided by Willis Towers. The Committee also used information from the proxy statements of our peer group, at the 25th percentile target, as a secondary source to set the CEO’s and CFO’s annual target cash incentive award. We have developed a “balanced score card” approach to setting goals for the annual incentive awards, which includes certain goals from the Strategic Plan that represent success in financial results, electric reliability, gas safety, customer service and distribution cost per customer. The Compensation Committee approves the quantitative goals, also referred to as performance metrics, for these awards annually. See the section entitled Compensation - Compensation Discussion and Analysis— Elements of Compensation for a discussion of the balanced score card.

Incentive Compensation – Equity Compensation

 

We grant shares of restricted stock to executive participants in the Stock Plan annually. The size of the annual restricted stock award is based upon our achievement of the key performance metrics, which are selected from the Strategic Plan and approved by the Compensation Committee. Each participant’s target award is based on market data for the median of the broad-based published compensation survey group size grant at peer group and other comparable companies, as calculated using data provided by Willis Towers. The Compensation Committee also uses information from the proxy statements of our peer group,

 

 

 

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at the 25th percentile target, as a secondary source to set the CEO’s and CFO’s target restricted stock award. The shares of restricted stock vest over a period of four years, and all Named Executive Officers are required to hold all forms of equity, vested or unvested, received as compensation until retirement or other separation from Unitil. The Board, in its sole discretion, may approve a waiver to this policy as circumstances may warrant. However, to date, no such waiver has been requested or granted.

 

Performance-Related Incentive Compensation      
In addition to individual performance, Unitil’s performance is a critical component in the determination of how each individual executive is paid relative to the market median of the broad-based published compensation survey group, as described above. For 2020, compensation directly related to our performance, or “at risk” compensation, for each Named Executive Officer, is shown in the table to the right. Ms. Vaughan was not included in this calculation due to her resignation on March 16, 2020. See also the section entitled Compensation – Compensation of Named Executive Officers– Proportional Compensation for additional information on performance-related compensation.   

 

    Named Executive     Officer

 

  

 

2020 At Risk*   Compensation  

 

  

    Mr. Meissner

    Mr. Hevert

    Mr. Black

    Mr. Brock

    Mr. LeBlanc

    Ms. Vaughan

 

  

52.2%  

46.4%  

29.9%  

38.8%  

32.2%  

N/A  

 

  

*At risk compensation is defined as incentive compensation as a percentage of salary plus incentive compensation as reported in columns C, E and G in the Summary Compensation Table.

 

CEO Pay Ratio

 

Summary

As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the Securities and Exchange Commission adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer. Our principal executive officer is Mr. Meissner (the “CEO”).

We believe the compensation program and salary administration policy should be consistent and internally equitable to motivate all employees to perform in ways that enhance shareholder value. We also believe that our compensation philosophy and processes yield an equitable result for all employees, which is reflected in the resulting ratio.

Methodology

To reasonably identify the median employee, we prepared a list of all active employees (excluding the CEO) as of December 31, 2020. The list included part-time employees. As of December 31, 2020, we employed 512 people of which 347 were non-union employees and 165 were union employees covered by a collective bargaining agreement.

Next, we extracted the taxable wages number reported in Box 1 of the 2020 Form W-2 from our payroll records for each employee, excluding the CEO. We did not annualize wages and salaries for those employees that were not employed for the full year of 2020. The median employee was then identified. Once identified, we calculated the median employee’s total annual compensation in the same manner as the “Total Compensation” shown for the CEO in the Summary Compensation Table in the section entitled Compensation – Compensation of Named Executive Officers.

 

 

 

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Results

The table below shows the information used for the calculation of the ratio of the estimated annual total compensation of the median employee identified using the methodology described above to the annual total compensation of Mr. Meissner as calculated for the Summary Compensation Table.

 

 

2020 PAY RATIO TABLE

 

 
    Year    

Salary

($)

   

Stock

Awards (1)

   

Non-Equity

Incentive Plan

Compensation (2)

   

Change in

Pension
Value
(3)

   

All Other

Compensation (4)

    Total  
                                                   

 

 Thomas P. Meissner, Jr.

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

$597,740

 

 

 

 

 

 

 

 

 

$388,210

 

 

 

 

 

 

 

 

 

$314,710

 

 

 

 

 

 

 

 

 

$2,445,349

 

 

 

 

 

 

 

 

 

$281,621

 

 

 

 

 

 

 

 

 

$3,977,630

 

 

 

 

 

 Median Employee

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

 

 

$90,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$5,226

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$9,621

 

 

 

 

 

 

 

 

 

$104,847

 

 

 

 

                                                         
   

 Ratio of Median Employee’s to Mr. Meissner’s Annual Total Compensation

 

    1:38  

 

 

NOTES :

 

  (1)

The value shown represents the grant date fair value, calculated in accordance with FASB ASC Topic 718, of the award of restricted stock granted under the Stock Plan on January 26, 2021 for results attained for 2020 performance. The grant date fair value is based on the closing price of Unitil common stock of $39.19 on January 26, 2021. See also the Summary Compensation Table in the section entitled Compensation of Named Executive Officers.

 

  (2)

The values shown include cash incentive awarded on January 26, 2021 for 2020 Management Incentive Plan results. See also the Summary Compensation Table in the section entitled Compensation - Compensation of Named Executive Officers.

 

  (3)

The value shown for Mr. Meissner includes the change Pension value and the change in the SERP value. See also the Summary Compensation Table in the section entitled Compensation - Compensation of Named Executive Officers.

 

  (4)

The value shown for Mr. Meissner for the year 2020 includes an annual vehicle allowance, the Company’s contributions to 401(k) and HSA accounts, non-preferential dividends earned in 2020 on the shares of restricted stock awarded in 2020, and the tax adjustment on the shares of restricted stock that vested for tax purposes in 2020 in accordance with the provisions of the Stock Plan. The value shown for the median employee includes the Company’s contribution to 401(k) and HSA accounts, as well as the employee wellness benefit payment. See also the Summary Compensation Table in the section entitled Compensation - Compensation of Named Executive Officers.

 

 

 

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Shareholder Advisory Vote on Executive Compensation

 

As required by the Dodd-Frank Act, we must provide the opportunity for shareholders to vote, on an advisory basis, on the compensation of executives (commonly known as a “say-on-pay” proposal). We present the say-on-pay proposal to our shareholders annually. Our shareholders will next be asked to vote on the desired frequency of the advisory say-on-pay proposal at the 2023 annual meeting, as required.

  

 

LOGO

 

2020 Voting Result

At the 2020 annual meeting of shareholders, we presented the required non-binding advisory say-on-pay vote on the compensation of our Named Executive Officers as Proposal 3. As we reported in the Form 8-K, filed with the SEC on May 5, 2020, 95% of shareholders approved by advisory vote the compensation of our Named Executive Officers. The Compensation Committee continues to believe the significant compensation and governance-related changes initiated following the 2018 Annual Meeting are reflected in the superior results of both the 2019 and 2020 say-on-pay advisory vote.

 

 

Compensation-Related Policies

 

   No excise tax gross up provision in any Change of   Control Agreements (“COC”)

 

   No excise tax gross up provisions in Mr. Meissner’s   Employment Agreement

 

   Executive Compensation Recovery Policy

 

   Executive Stock Ownership Policy

 

   Stock Retention Policy for Directors and Executives

 

   Anti-Hedging and/or Pledging of Company Stock Policy

 

  

 

Compensation Committee Commitment

 

In response to investor feedback at the 2018 Annual Meeting, the Compensation Committee committed to meeting the objective that our compensation policies and practices are contemporary, transparent, meet shareholder expectations, and in line with corporate governance best practices. Upon the recommendation of both the Compensation and the Nominating and Governance Committees, the Board approved six new compensation and

governance-related policies. The Compensation Committee remains committed to this objective. Details on all compensation and governance-related policies are outlined in the section of this proxy statement entitled Corporate Governance.

Our 2021 say-on-pay proposal is included in this proxy statement as Proposal 3: Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers.

 

 

 

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ELEMENTS OF COMPENSATION

 

Base Salary

 

Every employee is paid a base salary. The purpose of base salary is to reward employees for the expertise and value they bring to their jobs. Base salary is determined according to our salary policy, which assigns each position a grade and a corresponding salary range. We set salary ranges for every position based upon comparative salary data provided by Willis Towers. The midpoint of the salary range is set at the median level of the broad-based published compensation survey group when compared to similar positions at comparable companies. The minimum parameter in the salary range is determined by multiplying the midpoint by 80%, and the maximum parameter is determined by multiplying the midpoint by 120%. The salary range is then used to manage each employee’s salary, which is based on merit, within the range. For each employee (including Named Executive Officers), base salary is set within the salary range based upon individual performance relative to individual annual goals. The elements of individual performance differ depending on the individual position, but generally include: quality of work; successful completion of established goals; ability to initiate creative solutions; adaptability to change; and impact on our overall performance. The salaries of all employees (including the Named Executive Officers) are reviewed annually, as well as at the time of a promotion or change in responsibilities.

 

Each position (including all executive officer positions) has a job description that outlines the accountabilities and competencies required. Merit increases are considered at the end of the year based on the evaluation of each person’s performance as related to each accountability listed in the individual job description, as well as the achievement of individual goals established at the beginning of the year. Merit increases are generally effective as of January 1 of each year. Merit increases also are one of the methods used to reach one

  

 

Named Executive Officer

 

 

 

 

 

 

         Cumulative 2020
  Base Salary Increase
      

 

 

 
 

 

   Mr. Meissner     4.50%        
  

Mr. Hevert

    N/A*        
   Mr. Black     3.00%        
   Mr. Brock     8.11%        
   Mr. LeBlanc     5.94%        
  

Ms. Vaughan

 

   

 

-74.50%      

 

 

 

  

*Mr. Hevert began his employment with us on July 23, 2020.

 

 

of our competitive compensation guiding principles, which is to ensure that employees are paid at or near the market median of the broad-based published compensation survey group. Merit increases may also be adjusted by the Compensation Committee to reflect the market value of a job when compared to similar positions at other companies within our peer group, as recommended by Willis Towers.

The process followed to determine base salary increases for the Named Executive Officers begins with an annual summary and evaluation of Unitil’s overall performance provided to the Board by the CEO, which generally occurs in mid-January. The Compensation Committee and the Executive Committee meet jointly in executive session to discuss the evaluation of our overall performance, as well as to discuss the CEO’s performance in relation to our performance for the year, taking into account both the quantitative and qualitative aspects of the performance of both the CEO and Unitil as a whole. The Compensation Committee uses the feedback gained in the joint meeting along with the market competitive salary information previously described to determine an appropriate base salary increase for the CEO based on both merit and market conditions. The CEO provides a recommendation to the Compensation Committee for base salary increases for the other Named Executive Officers. The Compensation Committee then reviews and recommends the

 

 

 

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base salaries of all of the Named Executive Officers to the full Board for discussion and approval. The Committee’s recommendations are based on the performance evaluations and market information for each of the Named Executive Officers. For 2020, each Named Executive Officer received the base salary increase percentage set forth opposite his or her name in the table above. Ms. Vaughan’s negative 2020 salary increase reflects only her salary for the period of employment prior to resignation in 2020, which was January 1 – March 16, 2020.

Incentive Compensation

 

Management Incentive Plan

The Unitil Corporation Management Incentive Plan (the “Management Incentive Plan”) provides annual cash incentive payments based upon the attainment of specified goals selected from the Strategic Plan. The Compensation Committee selects participants in the plan and establishes their individual target awards. All

executives (including the Named Executive Officers) are     
participants in the Management Incentive Plan. The purpose of the Management Incentive Plan, which is consistent with our principal compensation objective, is to provide executives with significant incentives related to performance, thereby providing motivation to maximize efforts on behalf of all of our stakeholders. The Management Incentive Plan is further intended to provide executives with competitive target levels of total compensation when considered with base salaries.  

 

    Named Executive
    Officer

 

  

 

        Target Award     (% of Base Salary)    

 

      Mr. Meissner    65%    
 

    Mr. Hevert

   45%    
 

    Mr. Black

   35%    
 

    Mr. Brock

   45%    
 

    Mr. LeBlanc

   35%    
 

    Ms. Vaughan

 

  

45%    

 

    

For the annual incentive awards, annual quantitative performance goals are established by the Compensation Committee. These goals, which relate to key performance metrics selected from the Strategic Plan, are the same for all employees (including executive officers) to ensure that employees are focused on common bottom-line business, customer service, and operational results. These goals are discussed below in the subsection entitled Incentive Compensation Performance Metrics and Goals. Under the Management Incentive Plan, executive officers receive a cash award if the quantitative goals that are set by the Committee are met. Each executive officer’s Management Incentive Plan target award is established as a percentage of base salary based on the market median of the broad-based published compensation survey group for his or her position when compared to other comparable companies, calculated using data provided by Willis Towers. The Committee also used information from the proxy statements of our peer group, at the 25th percentile target, as a secondary source to set the CEO’s and CFO’s Management Incentive Plan target award. The table above shows the Management Incentive Plan target awards for 2020 as a percentage of base salary for the Named Executive Officers.

Actual awards may be less than or greater than the target awards depending upon actual results achieved. In addition, the Committee has the authority to increase or decrease the annual incentive award under our incentive plans, including the Management Incentive Plan, and restricted stock awards under the Stock Plan. The Committee also has the authority to decide to pay no award when one would otherwise be paid. The Committee has in the past exercised its discretion to both increase and decrease award payments when

 

 

 

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such calculation did not properly balance the interests of employees and shareholders, but chose not to do so from 2013 through 2019. With regard to the award for 2020 results, the Committee exercised its authority to adjust the award. For additional information on the Committee’s decision to adjust the award, please see the subsection entitled Incentive Compensation Performance Metrics and Goals.

Second Amended and Restated 2003 Stock Plan    

 

 

Stock Plan Objectives

 

  Optimize profitability and growth through   incentives that link the personal interests of   participants to those of shareholders through   the ownership of Unitil common stock

 

  Provide participants with an incentive for   excellence in individual performance

 

  Promote teamwork among participants

 

  Encourage stock ownership in the Company   for all employee participants in the Stock   Plan

 

  

The Unitil Corporation Second Amended and Restated 2003 Stock Plan (as amended, the “Stock Plan”) was initially approved by shareholders at the 2003 annual meeting of shareholders, amended and restated on March 24, 2011, and again amended and restated, effective April 19, 2012. Participation in the Stock Plan is currently limited to Directors, executive officers and other employees and consultants selected by the Compensation Committee. Restricted Stock and Restricted Stock Units (“RSUs”) may be issued to participants in the Stock Plan. The objectives of the Stock Plan are directly tied to the principal compensation objective.

 

 

The Committee feels that equity-based compensation ensures that executive officers have a continuing stake in our long-term success. Executive officers are subject to both stringent stock ownership requirements as well as a retention requirement which stipulates that all forms of equity received as compensation from Unitil be held until retirement or other separation from the Company. The Committee believes that the retention requirement provides an additional element of incentive to increase shareholder      
  

 

Named Executive

Officer

 

Mr. Meissner

Mr. Hevert

Mr. Black

Mr. Brock

Mr. LeBlanc

Ms. Vaughan

  

 

Stock Plan  

2020 Target Award  

 

$647,543  

$148,203  

$82,570  

$148,203  

$82,570  

$0  

value over the long term. The details of the stock ownership and retention requirements are discussed in greater detail below.

Generally, in late January or early February of each year, the Committee approves annual awards of restricted stock to current executive officers and employee participants in the Stock Plan based upon the attainment of a set of specified goals as discussed above. As with the annual cash incentive awards, target awards are established for each participant that generally vary based upon the job grade level of each participant’s position in accordance with survey data provided by Willis Towers. Each executive officer’s target restricted stock award is set by the Committee based upon recommendations from Willis Towers, with the goal of granting a target award with a value equal to the market median of the broad-based published compensation survey group at the time of grant, which translates to the Stock Plan target award value being set as the job grade salary range midpoint.

 

 

 

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LOGO

  

Awards of restricted stock generally vest fully over a period of four years at a rate of 25% each year subject to continued employment with us. Participants holding restricted stock have the same rights as all shareholders, including the right to vote the restricted stock and to collect any cash dividends paid on the restricted stock prior to vesting. The Committee also used information from the proxy statements of our peer group, at the 25th percentile target, as a secondary source to set the CEO’s and CFO’s target award. The values of the target restricted stock awards based on 2020 performance are shown in the table above. Ms. Vaughan resigned from the Company on March 16, 2020, and therefore was not eligible to receive an award of restricted stock for 2020 performance.

 

The value of each possible award extends from a minimum threshold of 50% of the target restricted stock award amount to a maximum of 150% of the target award amount. This award is then reduced for anticipated income taxes and Medicare taxes, with Stock Plan participants receiving the shares net of such taxes, subject to the vesting schedule. As the shares vest, they become taxable income to the participant, and the taxes, previously accounted for, are credited back to participants. This procedure

reduces both the dilutive effect of the Stock Plan by granting fewer shares than would otherwise be granted, and the volatility of the Company’s stock in the market by eliminating stock sales that would otherwise be completed to pay personal income taxes. The net restricted stock award provides a market competitive award while minimizing both dilution and volatility.

Stock Ownership and Holding Requirement for Executive Officers

 

 

The Board believes that executive officers of the Company should own a significant number of shares of our common stock to properly align their interests with those of our shareholders. All Named Executive Officers are required to   

 

Chairman, CEO and President

Chief Financial Officer

All Other Named Executive Officers

 

  

 

4X  

3X  

2X  

 

own shares of Unitil common stock in the equivalent value of a multiple of base salary. All shares of Unitil common stock that are owned directly or beneficially, shares of restricted stock that are awarded, whether vested or unvested, as well any shares of stock held in the Unitil Stock Fund of the Tax Deferred Savings and Investment Plan will be counted towards the required total. Any newly appointed Named Executive Officer will have four years from the date of appointment to obtain the required shares of stock. The required equivalent value for all Named Executive Officers is recalculated annually on January 1. As of the date of this proxy statement, all Named Executive Officers have met the ownership requirement, with the exception of Mr. Hevert, who began his employment with us on July 23, 2020. Mr. Hevert will have until July 2024 to meet the share ownership requirement.

All Named Executive Officers are also required to hold all forms of equity received as compensation until retirement or other separation from the Company. The Board, in its sole discretion, may approve a waiver to this policy as circumstances may warrant. To date, no such waivers have been proposed or approved.

 

 

 

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Additional information concerning the share ownership of Named Executive Officers can be found in the section of this proxy statement entitled Share Ownership - Beneficial Ownership.

Incentive Compensation Performance Metrics and Goals

 

We have two compensation plans in which the Named Executive Officers participate where performance metrics and goals are integrally and directly linked to the compensation awarded—the Management Incentive Plan and the Stock Plan. The performance metrics and goals are also directly linked to the Strategic Plan.

Selecting the Performance Metrics and Setting the Goals

Performance metrics and goals are recommended by management annually as part of the strategic planning process. In the Strategic Plan, performance metrics and goals are aligned with the strategies defined for the coming year. The Strategic Plan includes suggested targets for each performance metric, which are reviewed and approved by the Board each year. The Compensation Committee then selects the key performance metrics to be applied to the Management Incentive Plan and the Stock Plan.

 

LOGO   When selecting the key performance metrics, the Committee considers a number of factors, including the appropriate mix of financial, operations, and customer-centric metrics, as well as the obligation to meet the various state public utility regulatory requirements to include a certain percentage of operations and customer-focused metrics. The Committee also reviews prior years’ goals and results to ensure stretch goals are set, and may also consider recommendations from Willis Towers when selecting the optimal combination for the coming year. The Committee believes that a prudently set and balanced mix of key performance metrics provides the opportunity, and the incentive, for all employees to contribute to our measurements of success.

 

 

 

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The table below shows the performance metrics selected and goals set by the Committee for the

2020 annual incentive awards under our incentive plans, including the Management Incentive Plan and the Stock Plan, as well as the performance results calculated for 2020.

2020 PERFORMANCE METRICS, GOALS AND RESULTS

 

 

Metric: 2020

 

 

Award Category

& Goals

 

 

Result

 

  

Target

Weight

 

  

Factor

 

  

 

Weighted

Performance
Factor

 

Earnings Per Share

 

Threshold: $2.19

Target: $2.31

Maximum: $2.43

 

 

$2.24 5

(adjusted)

 

[above threshold, below target]

 

   40%    0.71    28%

Gas Safety

 

Threshold: 84%

Target: 86%

Maximum: 88%

 

 

87.4%

 

[above target,

below maximum]

 

   10%    1.35    14%

Electric Reliability

 

Threshold: 150 minutes

Target: 118 minutes

Maximum: 85 minutes

 

 

125 minutes

 

[above threshold,

below target]

 

   10%    0.88    9%

Customer Satisfaction

 

Threshold: 82%

Target: 87%

Maximum: 92%

 

93%

 

[maximum]

   10%    1.50    15%

Cost Per Customer

 

Electric

Threshold: $491

Target: $395

Maximum: $374

 

$377

 

[target]

   15%    1.00    15%
   

Gas 6

Threshold: $258

Target: $312

Maximum: ($34)

 

 

$471

 

[below threshold]

  

15%

  

0.00

  

0%

TOTAL

           100%         81%

 

5 

Actual EPS result was $2.15. The Compensation Committee made a discretionary $0.09 adjustment to account for the financial impact of the COVID-19 pandemic.

6 

The Gas Cost Per Customer metric threshold (defined as lower than the most costly third) and maximum (defined as within the least costly third) are both median-based calculations, which means the value in the middle of the range of each of the most costly third and the least costly third. The target is set as an average of all peer company costs. For the 2020 threshold and maximum calculations, one of our defined peer companies experienced an extraordinary event that caused its O&M cost per customer to decrease significantly (in fact, a negative cost per customer was realized) below all other peer companies, which is why the maximum is a negative value, and threshold is lower than target. However, when calculating peer-based metrics results, it is our policy to not exclude an extraordinary event that may occur, including our own, should that be the case.

 

 

 

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The Weighted Performance Factor of 81% for 2020 indicates the payout percentage relative to Target used to calculate the actual awards for Management Incentive Plan and Stock Plan participants using the applicable formulas described in the section entitled Incentive Compensation Formulas.

2020 Key Performance Metrics and Goals: Defined

Earnings Per Share (“EPS”)

The goals for the EPS metric are set as a target based on the approved 2020 EPS budget of $2.31 with a plus/minus 5% range to maximum and threshold, respectively, from the target value. The Compensation Committee set the 2020 EPS target equivalent to our budgeted 2020 EPS of $2.31, and agreed that a 5% range from the approved budget to the threshold and a 5% range from the approved budget to the maximum are reasonable stretch goals and provided symmetry in the goals for this metric. The goals for 2020 represent an approximate increase of 6.2% compared to those set for 2019 performance.

Gas Safety

Gas safety is measured as the percentage of the response time to natural gas odor calls answered within a pre-set response time window. In 2020, the response time target is based on a best in class 30-minute response standard. Similar to electric reliability, described below, the shorter the response time standard, the more rigorous the target. In defining the threshold, the Committee considered the minimum acceptable percentage to be not less than 84% and the maximum percentage to be at least 88% of the natural gas odor calls responded to in person be within 30 minutes. For 2020, we responded to 87.4% of our natural gas odor calls within the 30-minute pre-set response time window.

Electric Reliability

Electric reliability is benchmarked using an industry standard index, SAIDI (System Average Interruption Duration Index). SAIDI represents the total length of time the average customer is without electric service during the year, measured in minutes. For added perspective on this metric, a lower number of minutes (without electric service) equates to a more stringent target. The target for reliability performance is determined in accordance with SAIDI using a blend of Massachusetts Department of Public Utilities Service Quality Index, and the New Hampshire 10-year performance history with IEEE (Institute of Electrical and Electronics Engineers) exclusionary rules. For 2020, our SAIDI was calculated as 124.5 minutes.

Customer Satisfaction

Customer satisfaction is measured using direct customer survey feedback to the question “How satisfied are you with the service, excluding price, you are receiving from Unitil?” as compared to the current national benchmark for residential customer satisfaction as compiled by Escalent, an independent human behavior and analytics firm. Escalent administers the survey twice each year from a system-generated random selection of customers from our database. The national benchmark in 2020 is 87%, which was set as the target. In 2020, we achieved a five-year high of 93% in overall customer satisfaction. From a benchmarking perspective, we ranked tenth

 

 

 

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nationally among the 114 participating utilities for overall customer satisfaction. Compared to our defined utility peer groups (Eastern U.S. and Northeast U.S. regions), we ranked second among 23 Eastern U.S. utilities, and first among eight Northeast U.S. utilities.

Cost Per Customer

Distribution cost per customer is measured against same-year performance of the weighted average of peer group utility companies located in the northeastern United States, based on data reported in Federal Electric Regulatory Commission (“FERC”) and other state reports. Results are weighted 50% electric and 50% gas. The threshold is defined as a lower operations and maintenance (“O&M”) rate per customer than the most costly third of peer utility companies; target is defined as a lower O&M rate per customer than the peer average; maximum is defined as an O&M rate per customer within the least cost third of peer utility companies.7 For the “peer utility companies” referenced in this metric, actual performance is compared to a select group of utility subsidiary companies that have service territory characteristics comparable to ours. O&M per customer data reflects 2019 actual results as reported in regulatory filings. For 2020, our O&M cost per customer for electric division customers was $377, and for gas division customers was $471.

The Role of the Compensation Committee

 

The Compensation Committee meets annually in the first fiscal quarter to review the performance metrics and results for the previous year, and to approve the annual cash incentive awards and the annual grant of restricted stock awards under the Stock Plan.

For awards for 2020 performance, the Committee exercised its discretionary authority, as provided in its Charter, and applied a qualitative adjustment to the EPS performance metric result after careful consideration of several factors, including the key concern that the preset EPS metric goals for 2020 no longer provided a meaningful measure of the Company’s true performance due to the considerable impact of the COVID-19 pandemic on financial results.

The adjusted result for the 2020 EPS metric includes the Company’s actual EPS of $2.15 with an adjustment for the negative effects of the COVID-19 pandemic on net income of $0.09, for an adjusted EPS result of $2.24. In July 2020, the Committee requested that management track and quantify the financial impact of the COVID-19 pandemic on net income for the full year in order to assist the Committee with any possible qualitative adjustment decision at year end. Additionally, the Committee required the COVID-19 pandemic adjustment be consistent with the amount reported externally to shareholders in the press release issued on February 2, 2021, announcing our 2020 earnings. The Committee decided that the $0.09 adjustment represents a reasonable and fair allowance for unplanned events far outside of management’s control and better aligns the interests of employees with those of shareholders after a very difficult and challenging year.

The Committee approved the annual cash incentive awards and the annual grant of restricted stock awards under the Stock Plan for 2020 performance on January 26, 2021.

 

7 

2020 electric peer companies include Algonquin Power & Utilities Corp., Avangrid, Energir (formerly, Gaz Metro), Eversource Energy, Fortis, Inc., National Grid, and Versant (formerly, Emera, Inc.). 2020 gas peer companies include Algonquin Power & Utilities Corp., Avangrid, Bangor Natural Gas, Eversource Energy, Fortis, Inc., National Grid and Nisource, Inc.

 

 

 

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Incentive Compensation Formulas

 

 

Performance Factor

 

For purposes of the restricted stock awards under the Stock Plan, the Performance Factor was determined based upon the Weighted Performance Factor as shown below.

 

The Weighted Performance Factor, as shown in the formulas to the right, is the total actual quantitative performance calculation derived by multiplying each “weight” by the corresponding “factor” and adding the results. The “factor” is based upon where the actual performance results fall on the continuum of threshold—target—maximum, with “target” assigned a “factor” of 100%, “threshold” assigned a “factor” of 50%, and

  

 

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“maximum” assigned a “factor” of 150%. Additional credit, or “weight,” is not provided for performance that achieves values greater than the maximum determined by the Committee, and no credit is given for performance that fails to achieve the threshold determined by the Committee.

 

 

 

  Weighted Performance

  Factor

 

  50% to 69%

  70% to 89%

  90% to 109%

  110% to 129%

  130% to 150%

 

 

 

Performance        

Factor        

 

50%        

75%        

100%        

125%        

150%        

 

Other Benefits

 

Unitil Corporation Retirement Plan (the “Retirement Plan”)

The Retirement Plan is a traditional Defined Benefit Pension Plan covering certain employees of Unitil and our subsidiary companies that provides retirement income benefits based upon years of service, age at retirement and final five-year average salary. The Retirement Plan is closed to new participants, effective January 1, 2010. Employees hired after January 1, 2010 participate in an enhanced 401(k) plan instead of the Retirement Plan. In addition, at the time of closure of the Retirement Plan, existing employee participants were offered a one-time opportunity to elect to remain an active participant in the Retirement Plan, or to accept a frozen Retirement Plan benefit and move to the enhanced 401(k) Plan.

 

 

 

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Supplemental Executive Retirement Plan (“SERP”)

 

The purpose of the SERP is to provide enhanced retirement benefits to certain key executives selected by the Board in order to encourage continued service by these executives until retirement. Currently, only Mr. Meissner and Mr. Black have been named by the Board to participate in the SERP. The SERP was closed to any new entrants in 2018.  

 

SERP Enhancement of Retirement Plan Benefits

 

   all cash compensation towards the benefits formula is counted which   provides a bypass to the compensation limits imposed by the Internal   Revenue Service (the “IRS”)

 

   compensation received from the annual cash incentive awards in the   benefits calculation is included

 

   a final three-year average of salary and annual cash incentive   compensation is used to determine the benefits from the SERP

 

 

See also the Pension Benefits Table in the section entitled Compensation - Compensation of Named Executive Officers for the present value of the accumulated benefit for each Named Executive Officer.

Deferred Compensation Plan

The Unitil Corporation Deferred Compensation Plan (the “DC Plan”) is a non-qualified deferred compensation plan that provides a vehicle for participants to accumulate tax-deferred savings to supplement retirement income. The DC Plan is open to senior management or other highly compensated employees with a salary grade of 23 or higher and who do not participate in the SERP. The DC Plan may also be used as a tool for recruitment and retention purposes for newly hired senior executives. The DC Plan design mirrors our Tax Deferred Savings and Investment Plan formula, but provides for contributions on compensation above the IRS limit, which will allow participants to defer up to 85% of base salary, and up to 85% of any cash incentive for retirement. We may also elect to make discretionary contributions on behalf of any participant in an amount determined by the Board. Mr. Brock is the only current Named Executive Officer who has elected to participate in the DC Plan. We anticipate that additional executive officers will participate in the DC Plan in the future.

Change of Control Agreements

We provide certain executives with protection from job loss due to a change of control in the Company in the form of Change of Control Agreements (“COC Agreements”). This protection is primarily provided so that the executives will make decisions and take actions that are in the best interest of shareholders and not unduly influenced by the fear of job loss. We maintain both two-year (originally executed in 2001 and later) and three-year (originally executed before 2001) COC Agreements. Mr. Black and Mr. Brock each have a three-year COC Agreement, and Mr. Meissner, Mr. Hevert and Mr. LeBlanc each have, and prior to her resignation on March 16, 2020, Ms. Vaughan had, a two-year COC Agreement.

All existing COC Agreements are “double trigger” agreements, meaning that two events must occur in order for payments to be made: (i) a change of control must occur; and (ii) an adverse employment action must

 

 

 

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occur, meaning that we must terminate the executive’s employment other than for cause or disability or the executive must terminate his or her employment for good reason. Double trigger agreements were chosen to protect the shareholders from executives choosing to leave Unitil as result of a change of control where there is no adverse employment action. No existing COC Agreements contain any excise tax or other gross up provision of any kind. We believe that all COC Agreements comply with the provisions of IRS Code Section 409A. See also the section entitled Compensation - Compensation of Named Executive Officers –Potential Payments Upon Termination or Change of Control for a full description of “change of control” as defined in the COC Agreements.

Employment Agreement – Thomas P. Meissner, Jr.    

We entered into an employment agreement (the “Employment Agreement”) with Mr. Meissner upon his transition to Chairman, CEO and President on April 25, 2018, for a term of three years. For a detailed description of the Employment Agreement, see the sections entitled Compensation - Compensation of Named Executive OfficersEmployment Agreement of the Chief Executive Officer and Compensation - Compensation of Named Executive OfficersPotential Payments Upon Termination or Change of Control.

Executive Perquisites

We limit the use of perquisites as a method of compensation. In 2020, Mr. Meissner and Ms. Vaughan, prior to her resignation on March 16, 2020, both received a monthly automobile allowance, and Mr. LeBlanc was provided with a Company-owned automobile for business and personal use. Please see the All Other Compensation column of the Summary Compensation Table in the section entitled Compensation—Compensation of Named Executive Officers. The perquisites provided to Mr. Meissner are pursuant to his employment agreement, and with the exception of Ms. Vaughan and Mr. LeBlanc as described above, no perquisites are provided to any other Named Executive Officer.

INTERNAL REVENUE CODE SECTION 162(M)

 

In general, under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), we cannot deduct, for federal income tax purposes, compensation in excess of $1,000,000 paid to the CEO, CFO and certain executive officers. However, for prior to the 2018 tax year, this deduction limitation did not apply to compensation that constituted “qualified performance-based compensation” within the meaning of Section 162(m) of the Code and applicable regulations, as then in effect. In 2018, the “qualified performance-based compensation” exception under Section 162(m) of the Code was eliminated, other than with respect to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017 and is not materially modified after that date. For the 2020 tax year, the deduction limitation applied to all Named Executive Officers. The Committee reserves its right to authorize executive compensation that may or may not be subject to the deduction limitations of Section 162(m) of the Code when it believes that such compensation is appropriate and in the best interests of Unitil and our shareholders.

 

 

 

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OTHER EMPLOYEE BENEFITS

 

Active Employee Benefits

 

Our employees are the backbone of our Company, and finding and retaining quality, highly motivated employees is critical to sustaining our exceptional culture as well as to our overall success. Our employees reflect a long-standing dedication to inspired teamwork, constant collaboration, and the insistence on the highest possible standards for ethical business practices. To continue to attract and retain the best people, we provide a comprehensive package of employee benefits to substantially all active employees.

 

Retired Employee Benefits

 

We provide company-paid life insurance, as well as company-subsidized medical insurance, to qualifying retirees. For non-union employees hired before December 31, 2009 and retiring on or after January 1, 2010, we subsidize post-retirement

   

 

Active Employee Benefits

 

  Healthcare Insurance Plans

 

  Dental Insurance Plan

 

  Vision Insurance Plan

 

  Group Life and Supplemental Life, and   Accident and Supplemental Accident   Insurance Plans

 

  Sick Pay and Short Term Disability Pay

 

  Long Term Disability Insurance

 

  Defined Benefit Pension Plan

 

  401(k) Retirement Savings Plan

 

  Flexible Spending Accounts: Flexible   Spending Account and Healthcare   Savings Account

 

  Retirement Planning Services

 

  Wellness Program

 

  Payroll Deduction Stock Purchase Plan

 

  Education Assistance

 

  Employee Assistance Counseling   Program

 

  Annual Flu Shots

 

  Paid Time Community Service Benefit

 

medical premiums at the same percentage as active employees. For employees hired after December 31, 2009, this subsidy ends when the retiree attains age 65. Post-retirement benefits for employees represented by unions are administered in accordance with the applicable collective bargaining agreement.

COMPENSATION COMMITTEE REPORT

This report is submitted by the Compensation Committee of Unitil with respect to the review and approval of the Compensation Discussion and Analysis, which appears above.

In discharging its oversight responsibility, the Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management, and has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement for the Annual Meeting.

Compensation Committee Members

 

Winfield S. Brown, Lisa Crutchfield (chair), Suzanne Foster and Eben S. Moulton

 

 

 

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COMPENSATION OF NAMED EXECUTIVE OFFICERS

Summary Compensation Table

 

The table below shows the information specified in paragraph (c)(2) of Item 402 of Regulation S-K concerning the compensation of the CEO, the CFO, and our three other most highly compensated officers for each of fiscal years 2018, 2019 and 2020. Compensation for Ms. Vaughan, our former CFO who resigned from the Company on March 16, 2020, is also included, as required.

 

 

SUMMARY COMPENSATION TABLE

 

 
Name and Principal
Position
(1)
  Year     Salary     Bonus    

Stock

Awards (2)

   

Option

Awards

   

Non-Equity

Incentive

Plan
Comp
 (3)

   

Change in

Pension Value &

Non-Qualified

Deferred

Comp

Earnings (4)

   

All Other

Comp

    Total  
(a)   (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)     (j)  

Thomas P. Meissner, Jr.

    2020       $597,740             $338,210             $314,710       $2,445,349       $281,621  (5)      $3,977,630  

Chairman of the Board, Chief

    2019       $572,000             $755,416             $527,956       $1,465,308       $271,428       $3,592,108  

Executive Officer & President

    2018       $487,721             $710,155             $459,677       $   710,845       $  72,746       $2,441,144  

Robert B. Hevert (6)

    2020       $153,910             $  77,204             $  56,100             $  15,484  (7)      $   302,698  

Senior Vice President, Chief

    2019                                                  
Financial Officer & Treasurer     2018                                                  

Todd R. Black

    2020       $301,378             $  43,109             $  85,411       $   546,779       $  42,657  (8)      $1,019,364  

Senior Vice President, External

    2019       $292,600             $  95,865             $145,422       $   578,881       $120,303       $1,233,071  

Affairs & Customer Relations

    2018       $275,333             90,669             $139,732       $     41,024       $  39,103       $   585,861  

Laurence M. Brock

    2020       $286,000             $  77,204             $104,247       $   170,958       $134,405  (9)      $   772,814  

Senior Vice President

    2019       $264,546             $  95,865             $131,479       $   194,010       $115,108       $   801,008  
      2018       $226,886             $  90,669             $115,144       $   (31,491)       $  31,768       $   464,467  

Christopher J. LeBlanc

    2020       $224,125             $  43,109             $  63,539       $   229,443       $  42,319  (10)      $   602,535  

Vice President, Gas Operations

    2019       $211,550             $  95,865             $  90,120       $   229,825       $  35,519       $   662,879  
      2018       $202,650             $  36,758             $  88,153       $       2,319       $  31,467       $   361,347  

Christine L. Vaughan (11) (12)

    2020       $  84,150                               $     27,308       $328,221  (13)      $   439,679  

Former Senior Vice President,

    2019       $330,000       $150,000       $172,557             $210,870             $  60,964       $   924,391  

Chief Financial Officer & Treasurer

    2018                                                  

 

 

NOTES:

 

  (1)

Officers also hold various positions with subsidiary companies. Compensation for those positions is included in the above table.

 

  (2)

Values shown in column (e) represent the grant date fair value, calculated in accordance with FASB ASC Topic 718 and based on the closing price of Unitil common stock on the date of grant, of awards of restricted stock granted under the Stock Plan for results attained during the years 2018 – 2020. Stock Plan grants were made January 29, 2019 for 2018 results at a price of $49.01, January 28, 2020 for 2019 results at a price of $63.91, and January 26, 2021 for 2020 results at a price of $39.19. See also the Grants of Plan-Based Awards Table in the section entitled Compensation - Compensation of Named Executive Officers.

 

  (3)

The terms of the Management Incentive Plan provide a cash incentive opportunity if we meet certain pre-established performance targets (see the section entitled Compensation- Compensation Discussion and Analysis). The amounts shown for each Named Executive Officer reflect the cash incentive awarded on January 29, 2019 for 2018 results, January 28, 2020 for 2019 results, and January 26, 2021 for 2020 results. See also the Grants of Plan-Based Awards Table in the section entitled Compensation – Compensation of Named Executive Officers.

 

 

 

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  (4)

The amounts shown reflect the change in pension value (for Mr. Meissner, Mr. Black, Mr. Brock, and Mr. LeBlanc) plus the change in the SERP value (for Mr. Meissner and Mr. Black) plus earnings under the Deferred Compensation Plan in 2020 (for Mr. Brock and Ms. Vaughan). Mr. Hevert does not participate in the Retirement Plan, the SERP, or the Deferred Compensation Plan.

 

  (5)

All Other Compensation for Mr. Meissner for the year 2020 includes an annual vehicle allowance, Unitil’s contributions to 401(k) and HSA accounts, non-preferential dividends earned in 2020 on the 11,820 shares of restricted stock awarded in 2020, which is valued at $16,920, and the tax adjustment on the 11,820 shares of restricted stock that vested for tax purposes in 2020 in accordance with the provisions of the Stock Plan, which is valued at $243,151. Under the terms of the Stock Plan, all unvested shares become fully vested upon retirement. According to IRS regulations, shares of restricted stock become taxable as current income when they become non-forfeitable. Mr. Meissner reached retirement eligibility age in 2017, and under the provisions of the Unitil Corporation Retirement Plan his restricted stock would vest if he elected retirement. The IRS therefore requires us to treat all of Mr. Meissner’s unvested restricted stock as taxable income. Taxes were paid on this additional taxable income in accordance with the tax adjustment provision of the Stock Plan. This tax adjustment is further described in the section entitled Compensation – Compensation of Named Executive Officers – Equity Compensation Plan Information.

 

  (6)

Mr. Hevert’s employment with us commenced on July 23, 2020, and therefore he was not a Named Executive Officer in fiscal years 2018 or 2019. His compensation information for those years is excluded in accordance with Question 119.01 of the SEC’s Division of Corporation Finance’s Compliance and Disclosure Interpretations.

 

  (7)

All Other Compensation for Mr. Hevert for the year 2020 includes a relocation expense reimbursement, which is valued at $13,234, and the non-preferential dividends earned in 2020 on the 3,000 shares of restricted stock awarded on July 28, 2020 in connection with his acceptance of the position of Senior Vice President, Chief Financial Officer and Treasurer.

 

  (8)

All Other Compensation for Mr. Black for the year 2020 includes Unitil’s contribution to his HSA account, non-preferential dividends earned in 2020 on the 1,500 shares of restricted stock awarded in 2020, and the tax adjustment on the 1,500 of restricted stock that vested for tax purposes in 2020 in accordance with the provisions of the Stock Plan, which is valued at $30,857. Under the terms of the Stock Plan, all unvested shares become fully vested upon retirement. According to IRS regulations, shares of restricted stock become taxable as current income when they become non-forfeitable. Mr. Black reached retirement eligibility age in 2019, and under the provisions of the Unitil Corporation Retirement Plan restricted stock would vest if he elected retirement. The IRS therefore requires us to treat all of Mr. Black’s unvested restricted stock as taxable income. Taxes were paid on this additional taxable income in accordance with the tax adjustment provision of the Stock Plan. This tax adjustment is further described in the section entitled Compensation – Compensation of Named Executive Officers – Equity Compensation Plan Information.

 

  (9)

All Other Compensation for Mr. Brock for the year 2020 includes Unitil’s contributions to 401(k) and HSA accounts, the contribution to his DC Plan account, which is valued at $91,748, non-preferential dividends earned in 2020 on the 1,500 shares of restricted stock awarded in 2020, and the tax adjustment on the 1,500 shares of restricted stock that vested for tax purposes in 2020 in accordance with the provisions of the Stock Plan, which is valued at $30,857. Under the terms of the Stock Plan, all unvested shares become fully vested upon retirement. According to IRS regulations, shares of restricted stock become taxable as current income when they become non-forfeitable. Mr. Brock reached retirement eligibility age in 2008, and under the provisions of the Unitil Corporation Retirement Plan his restricted stock would vest if he elected retirement. The IRS therefore requires us to treat all of Mr. Brock’s unvested restricted stock as taxable income. Taxes were paid on this additional taxable income in accordance with the tax adjustment provision of the Stock Plan. This tax adjustment is further described in the section entitled Compensation – Compensation of Named Executive Officers – Equity Compensation Plan Information.

 

  (10)

All Other Compensation for Mr. LeBlanc for the year 2020 includes the use of a Company-owned vehicle, Unitil’s contributions to 401(k) and HSA accounts, non-preferential dividends earned in 2020 on the 1,500 shares of restricted stock awarded in 2020, and the tax adjustment on the 825 shares of restricted stock that vested in 2020 in accordance with the provisions of the Stock Plan, which is valued at $21,818.

 

 

 

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  (11)

Ms. Vaughan’s employment with us commenced in January 2019, and therefore she was not a Named Executive Officer in fiscal year 2018. Her compensation information for this year is excluded in accordance with Question 119.01 of the SEC’s Division of Corporation Finance’s Compliance and Disclosure Interpretations.

 

  (12)

Ms. Vaughan resigned as Senior Vice President, Chief Financial Officer and Treasurer of the Company on March 16, 2020.

 

  (13)

All Other Compensation for Ms. Vaughan for the year 2020 includes the severance payment received per the terms of her Separation Agreement, which is valued at $254,925, the outplacement services included in the provisions of her Separation Agreement, Unitil’s contribution to her 401(k) account, which is valued at $16,499, the contribution to her DC Plan account, which is valued at $29,585, the contribution to her HSA account, a vehicle allowance, the tax adjustment on the 830 shares of restricted stock that vested for tax purposes in 2020 in accordance with the provisions of the Stock Plan, which is valued at $18,411, and the non-preferential dividends earned on February 28, 2020, only on the 2,700 shares of restricted stock awarded in 2020. Ms. Vaughan forfeited the 2,700 shares of restricted stock granted in 2020 upon her resignation on March 16, 2020, and therefore received no additional dividend payments on those shares.

 

 

 

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Reported

Compensation Versus Realized Pay in 2020

 

Since total reported compensation for each Named Executive Officer in the 2020 Summary Compensation Table is comprised of a significant amount of potential pay, we also report pay actually realized each year. This total may include incentive compensation paid in 2020 for the prior year, and equity compensation that was granted in prior years, but vested in 2020. Generally, realized pay does not include the change in pension value or the value of restricted stock that is unvested at the time of grant. The table below shows realized pay in 2020 for each Named Executive Officer, as well as the percentage of realized pay to reported pay. For the years 2018 to 2020, in the aggregate, excluding Ms. Vaughan in 2020, realized pay was an average of 65.3% of reported pay.

 

2020 REALIZED PAY

 

 
   Name   Salary     Bonus     Value of
Restricted Stock
Vested in 2020
 (1)
    Non-Equity
Incentive Plan
Compensation
 (2)
    All Other
Compensation 
(3)
    Total    

Percentage

of 2020

Reported Pay (4)

 
(a)   (b)     (c)     (d)     (e)     (f)     (g)     (h)  

 

Thomas P. Meissner, Jr.

 

 

 

 

 

 

$597,740

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$406,349

 

 

 

 

 

 

 

 

 

$527,956

 

 

 

 

 

 

 

 

 

$281,621

 

 

 

 

 

 

 

 

 

$1,813,666

 

 

 

 

 

 

 

 

 

45.6

 

 

 

 

Robert B. Hevert (5)

 

   

 

$153,910

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

 

 

 

   

 

$15,484

 

 

 

   

 

$169,394

 

 

 

   

 

56.0

 

 

 

Todd R. Black

 

   

 

$301,378

 

 

 

   

 

 

 

 

   

 

$128,115

 

 

 

   

 

$145,422

 

 

 

   

 

$42,657

 

 

 

   

 

$617,572

 

 

 

   

 

60.6

 

 

 

Laurence M. Brock

 

   

 

$286,000

 

 

 

   

 

 

 

 

   

 

$81,259

 

 

 

   

 

$131,479

 

 

 

   

 

$134,405

 

 

 

   

 

$633,143

 

 

 

   

 

81.9

 

 

 

Christopher J. LeBlanc

 

   

 

$224,125

 

 

 

   

 

 

 

 

   

 

$52,453

 

 

 

   

 

$90,120

 

 

 

   

 

$42,319

 

 

 

   

 

$409,017

 

 

 

   

 

67.9

 

 

       

Christine L. Vaughan (6)

    $84,150             $52,547       $210,870       $328,221       $675,788       153.7

 

 

NOTES:

 

  (1)

The values shown in column (d) represent the total value of shares of Restricted Stock that vested in 2020, and includes (i) shares that vested on January 27, 2020 at a closing price of $63.77 pursuant to the terms of the restricted stock awards granted on January 26, 2016, (ii) shares that vested on January 30, 2020 at a closing price of $63.90 pursuant to the terms of the restricted stock awards granted on January 30, 2017, (iii) shares that vested on January 29, 2020 at a closing price of $63.31 pursuant to the terms of the restricted stock awards granted on January 29, 2018, and (iv) shares that vested on January 29, 2020 a closing price of $63.31 pursuant to the terms of the restricted stock awards granted on January 29, 2019. This information is also included in the Options Exercised and Stock Vested Table in the section entitled Compensation – Compensation of Named Executive Officers.

 

  (2)

The amounts shown for each Named Executive Officer reflect the cash incentive awarded on January 28, 2020 for 2019 Management Incentive Plan results. Each cash award was paid at 142% of Target. See also column (g) of the Summary Compensation Table in the section entitled Compensation – Compensation of Named Executive Officers.

 

  (3)

The amounts shown for each Named Executive Officer reflect the amounts also shown in column (i) of the Summary Compensation Table. Compensation in the “All Other Compensation” category for 2020 was fully realized.

 

  (4)

The values shown for each Named Executive Officer reflect the percentage of total reported compensation as shown in the Summary Compensation Table on the preceding pages.

 

 

 

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  (5)

Mr. Hevert’s employment with us commenced on July 23, 2020, and therefore he did not receive a cash incentive award for 2019 Management Incentive Plan results, and no vesting of Restricted Stock occurred in 2020.

 

  (6)

Ms. Vaughan resigned as Senior Vice President, Chief Financial Officer and Treasurer of the Company on March 16, 2020.

Grants of Plan-Based Awards

 

The table below provides information with respect to the grants of plan-based awards, including Management Incentive Plan awards and Stock Plan awards, made to the Named Executive Officers for the year 2020.

 

GRANTS OF PLAN-BASED AWARDS: FISCAL YEAR 2020

 

 
         

Estimated Future Payouts ($)

Under Non-Equity

Incentive Plan Awards (1)

   

Estimated Future Payouts (# Shares)

Under Equity Incentive Plan

Awards (2)

    All Other
Stock
Awards:
Number of
Shares of
Stock or Units
 

Grant
Date Fair
Value of

Stock and
Option
Awards

 
Name   Grant
Date
    Threshold     Target     Max     Threshold     Target     Max  
(a)   (b)     (c)     (d)     (e)     (f)     (g)     (h)     (i)   (j)  

Thomas P. Meissner, Jr.

    1/26/21 (3)      $194,266       $388,531       $582,797                            
      1/26/21 (4)                        5,760       11,510       17,270         $338,210  

Robert B. Hevert (5)

    1/26/21 (6)      $34,630       $69,260       $103,889                            
      1/26/21 (7)                        1,320       2,630       3,950         $77,204  

Todd R. Black

    1/26/21 (8)      $52,741       $105,482       $158,223                            
      1/26/21 (9)                        740       1,470       2,210         $43,109  

Laurence M. Brock

    1/26/21 (10)      $64,350       $128,700       $193,050                            
      1/26/21 (11)                        1,320       2,630       3,950         $77,204  

Christopher J. LeBlanc

    1/26/21 (12)      $39,222       $78,444       $117,666                            
      1/26/21 (13)                        740       1,470       2,210         $43,109  

Christine L. Vaughan (14)

                                                 
                                                   

 

 

NOTES:

 

  (1)

The “Threshold” reference shown in the table means the minimum cash incentive award if the minimum threshold performance level is met. Failure to meet the minimum threshold for all performance measures would result in no award.

 

  (2)

The “Threshold” reference shown in the table means the minimum stock award if the minimum threshold performance level is met. Failure to meet the minimum threshold for all performance measures would result in no award. See the section entitled Compensation – Compensation of Named OfficersEquity Compensation Plan Information below for additional information on the mechanics of the Stock Plan.

 

  (3)

The Compensation Committee selected the performance metrics and goals for the 2020 Management Incentive Plan awards on January 28, 2020, and payment was made on January 26, 2021. The estimated future payout information shown for the Management Incentive Plan is for a payment in 2021 based on 2020 performance. Mr. Meissner’s actual award was 81% of Target, for a total award of $314,710. See also column (g) of the Summary Compensation Table in the section entitled Compensation – Compensation of Named Executive Officers.

 

  (4)

The estimated future payout information shown for the Stock Plan is for a grant in 2021 based on 2020 performance. Mr. Meissner’s actual stock award was 75% of Target, for a total award of 8,630 shares of restricted

 

 

 

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  stock with a closing market price of $39.19 per share on the date of grant. See also column (e) of the Summary Compensation Table in the section entitled Compensation – of Named Executive Officers.

 

  (5)

Mr. Hevert began his employment with us on July 23, 2020, and therefore his award under the Management Incentive Plan is based on the portion of his base salary paid in 2020.

 

  (6)

The Compensation Committee selected the performance metrics and goals for the 2020 Management Incentive Plan awards on January 28, 2020, and payment was made on January 26, 2021. The estimated future payout information shown for the Management Incentive Plan is for a payment in 2021 based on 2020 performance. Mr. Hevert’s actual award was 81% of Target, for a total award of $56,100. See also column (g) of the Summary Compensation Table in the section entitled Compensation – Compensation of Named Executive Officers.

 

  (7)

The estimated future payout information shown for the Stock Plan is for a grant in 2021 based on 2020 performance. Mr. Hevert’s actual stock award was 75% of Target, for a total award of 1,970 shares of restricted stock with a closing market price of $39.19 per share on the date of grant. See also column (e) of the Summary Compensation Table in the section entitled Compensation – of Named Executive Officers.

 

  (8)

The Compensation Committee selected the performance metrics and goals for the 2020 Management Incentive Plan awards on January 28, 2020, and payment was made on January 26, 2021. The estimated future payout information shown for the Management Incentive Plan is for a payment in 2021 based on 2020 performance. Mr. Black’s actual award was 81% of Target, for a total award of $85,441. See also column (g) of the Summary Compensation Table in the section entitled Compensation – Compensation of Named Executive Officers.

 

  (9)

The estimated future payout information shown for the Stock Plan is for a grant in 2021 based on 2020 performance. Mr. Black’s actual stock award was 75% of Target, for a total award of 1,100 shares of restricted stock with a closing market price of $39.19 per share on the date of grant. See also column (e) of the Summary Compensation Table in the section entitled Compensation – of Named Executive Officers.

 

  (10)

The Compensation Committee selected the performance metrics and goals for the 2020 Management Incentive Plan awards on January 28, 2020, and payment was made on January 26, 2021. The estimated future payout information shown for the Management Incentive Plan is for a payment in 2021 based on 2020 performance. Mr. Brock’s actual award was 81% of Target, for a total award of $104,247. See also column (g) of the Summary Compensation Table in the section entitled Compensation – Compensation of Named Executive Officers.

 

  (11)

The estimated future payout information shown for the Stock Plan is for a grant in 2021 based on 2020 performance. Mr. Brock’s actual stock award was 75% of Target, for a total award of 1,970 shares of restricted stock with a closing market price of $39.19 per share on the date of grant. See also column (e) of the Summary Compensation Table in the section entitled Compensation – of Named Executive Officers.

 

  (12)

The Compensation Committee selected the performance metrics and goals for the 2020 Management Incentive Plan awards on January 28, 2020, and payment was made on January 26, 2021. The estimated future payout information shown for the Management Incentive Plan is for a payment in 2021 based on 2020 performance. Mr. LeBlanc’s actual award was 81% of Target, for a total award of $63,539. See also column (g) of the Summary Compensation Table in the section entitled Compensation – Compensation of Named Executive Officers.

 

  (13)

The estimated future payout information shown for the Stock Plan is for a grant in 2021 based on 2020 performance. Mr. LeBlanc’s actual stock award was 75% of Target, for a total award of 1,100 shares of restricted stock with a closing market price of $39.19 per share on the date of grant. See also column (e) of the Summary Compensation Table in the section entitled Compensation – of Named Executive Officers.

 

  (14)

Ms. Vaughan resigned as Senior Vice President, Chief Financial Officer and Treasurer of the Company on March 16, 2020, and therefore was not eligible to receive an award under the terms of the Management Incentive Plan or a grant of restricted stock under the terms of the Stock Plan for 2020 performance.

 

 

 

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NON-EQUITY COMPENSATION PLAN INFORMATION

 

Management Incentive Plan

The Management Incentive Plan, in which all Named Executive Officers participate, was established in December 1998, and specifies that the Compensation Committee shall select participants in the plan and establish their individual target awards. The plan provides cash incentive payments that are tied directly to achievement of our performance metrics and goals. If we achieve the performance metrics and goals selected by the Committee, then cash incentive payments are provided to participants early in the year following such achievement.

On January 28, 2020, the Compensation Committee selected annual performance metrics and goals and target annual cash incentive awards for 2020 under the Management Incentive Plan. Based on 2020 achievement of performance goals, the Committee approved payments of 81% of the target amount for Management Incentive Plan participants on January 26, 2021. For more detailed information with regard to performance metrics and goals, see the section entitled Compensation – Compensation Discussion and Analysis.

EQUITY COMPENSATION PLAN INFORMATION

 

Stock Plan

The Stock Plan is an equity-based plan in which selected management employees, including all Named Executive Officers, participate. Awards under the Stock Plan vary each year based on the achievement of the prior year’s annual incentive award performance goals. For more detailed information with regard to performance metrics and goals, see the section entitled Compensation Discussion and Analysis.

Based on 2020 results described above, the Compensation Committee granted awards of restricted stock at 75% of the target amount on January 26, 2021. Grants of restricted stock generally vest at a rate of 25% per year beginning in the year following the year of the grant. All shares of restricted stock, regardless of vesting status, are eligible for quarterly dividend payments, as well as for participation in the Dividend Reinvestment and Stock Purchase Plan, and have full voting rights. In 2020, we paid four quarterly non-preferential dividends of $0.375 per share on all shares of common stock outstanding, which included all shares of unvested restricted stock, as of each respective record date.

The Committee sets the target restricted stock awards with the goal of granting a target award with a value equal to the market median of the broad-based published compensation survey group, as recommended by Willis Towers, at the time of the grant, which translates to the Stock Plan target award value being set as the job grade salary range midpoint. The Committee also used information from the proxy statements of our peer group, at the 25th percentile target, as a secondary source to set the CEO’s and CFO’s target award. The award is then reduced for anticipated income taxes and Medicare taxes, with plan participants

 

 

 

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receiving the shares net of such taxes, subject to the vesting schedule. As the shares vest, they become taxable income to the participant, and the taxes, previously accounted for by reducing the potential awards, are credited back to participants. This procedure reduces both the dilutive effect of the Stock Plan by granting fewer shares than would otherwise be granted, and the personal income tax burden of plan participants as shares vest. Additional information concerning the process for calculating grants of restricted stock is included in the section entitled Compensation – Compensation Discussion and Analysis.

The restricted stock may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated prior to vesting. Unvested restricted stock is subject to forfeiture if the participant’s employment is terminated for any reason other than the participant’s death, disability, retirement, or in connection with a change of control. Under the terms of the Stock Plan, all unvested shares become fully vested upon retirement. According to IRS regulations, shares of restricted stock become taxable as current income when they become non-forfeitable, which is defined as having reached the age of eligibility for retirement. Participants are required to pay taxes on this additional taxable income when they become eligible for retirement. Upon the occurrence of death, disability, or a change of control of the Company, unless otherwise specifically prohibited under applicable laws, any restrictions and transfer limitations imposed on restricted stock will immediately lapse. The term “change of control” is defined in the section entitled Compensation – Compensation of Named Executive Officers—Definition of Change of Control, Cause and Good Reason.

After vesting, Named Executive Officers are required to hold all forms of equity received as compensation until retirement or other separation from the Company as prescribed by the Executive Stock Retention Policy.

 

 

 

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Proportional Compensation

 

The table below shows the comparison of salary and performance-based compensation in proportion to various other elements to illustrate the “at risk” compensation for Named Executive Officers for the year 2020.

 

 

 

PROPORTIONAL COMPENSATION

 

                    AT RISK COMPENSATION
Name    2020 Salary       

Summary
Compensation Table
(“SCT”) Total

Compensation

     Salary as a % of SCT  
Total
  

  Performance-Based  
Compensation as

% of SCT Total (1)

  

  Performance-Based  
Compensation as

% of Annual
Compensation
(2)

 

(a)

 

  

 

(b)

 

  

 

(c)

 

  

 

(d)

 

  

 

(e)

 

  

 

(f)

 

         

Thomas P. Meissner, Jr.

   $597,740     $3,977,630    15.3%    16.4%    52.2%
         

Robert B. Hevert

   $153,910        $302,698    50.9%    44.0%    46.4%
         

Todd R. Black

   $301,378     $1,019,364    29.6%    12.6%    29.9%
         

Laurence M. Brock

   $286,000        $772,814    37.0%    23.5%    38.8%
         

Christopher J. LeBlanc

   $224,125        $602,535    37.2%    17.7%    32.2%
         

Christine L. Vaughan (3)

      $84,150        $439,679    19.1%    0.0%    0.0%

 

 

NOTES:

 

  (1)

Performance-based compensation is defined as the total of the Management Incentive Plan non-equity incentive payment and the Stock Plan grant of restricted stock value on the grant date.

 

  (2)

Annual compensation is defined as the total of salary and performance-based compensation.

 

  (3)

Ms. Vaughan resigned as Senior Vice President, Chief Financial Officer and Treasurer of the Company on March 16, 2020, and therefore received no performance-based compensation for 2020 results.

Option Exercises & Stock Vested

 

 

The table below provides information with respect to the shares of stock granted under the Stock Plan in previous years that vested during 2020.

 

OPTION EXERCISES AND STOCK VESTED

 

 
Name   Option Awards (1)     Stock Awards  
  Number of Shares
Acquired on
Exercise
    Value Realized
on Exercise
    Number of Shares
Acquired Upon
Vesting
    Value Realized
Upon Vesting
 (2)
($)
 
(a)   (b)     (c)     (d)     (e)  

Thomas P. Meissner, Jr.

                    —                                        —                        6,403       $406,349  

Robert B. Hevert (3)

                    —                                        —                               

Todd R. Black

                    —                                        —                        2,015       $128,115  

Laurence M. Brock

                    —                                        —                        1,280       $81,259  

Christopher J. LeBlanc

                    —                                        —                        825       $52,453  

Christine L. Vaughan (4)

                    —                                        —                        830       $52,547  

 

 

 

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NOTES:

 

  (1)

Unitil has no option plan and no option awards outstanding.

 

  (2)

Reflects the value of restricted stock based on a total of (i) the closing price of $63.77 for shares that vested on January 27, 2020 pursuant to the terms of the restricted stock awards granted on January 26, 2016, (ii) the closing price of $63.90 for shares that vested on January 30, 2020 pursuant to the terms of the restricted stock awards granted on January 30, 2017, (iii) the closing price of $63.31 for shares that vested on January 29, 2020 pursuant to the terms of the restricted stock awards granted on January 29, 2018, and (iv) the closing price of $63.31 for shares that vested on January 29, 2020 pursuant to the terms of the restricted stock awards granted on January 29, 2019.

 

  (3)

Mr. Hevert began his employment with us on July 23, 2020, and therefore no shares of restricted stock vested in 2020.

 

  (4)

Ms. Vaughan resigned as Senior Vice President, Chief Financial Officer and Treasurer of the Company on March 16, 2020.

 

 

 

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Outstanding Equity Awards at Fiscal Year End

 

 

The table below provides information with respect to the outstanding equity awards of the Named Executive Officers as of December 31, 2020, which includes unvested stock awards granted under the Stock Plan. Unitil has no option plan and no option awards outstanding.

 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Name   Stock Awards
 

Number of Shares or

Units of Stock

  That Have Not Vested  

 

  Market Value of Shares  

Or Units of Stock

That Have Not Vested (1)

 

Equity Incentive Plan

Awards: Number of
Unearned Shares,
Units or Other Rights

  That Have Not Vested  

 

Equity Incentive Plan

Awards: Market

or Payout Value of
Unearned Shares, Units or

Other Rights

That Have Not Vested

(a)   (b)   (c)   (d)   (e)

  Thomas P. Meissner, Jr.

       840 (2)    

  1,795 (3)    

10,868 (4)    

11,820 (5)    

    $37,187

  $79,465

$481,103

$523,271

 

 

 

  Robert B. Hevert

 

 

 

  3,000 (6)    

 

 

 

$132,810

 

 

 

 

 

 

 

  Todd R. Black

       470 (2)    

  1,000 (3)    

  1,388 (4)    

  1,500 (5)    

    $20,807

  $44,270

  $61,425

  $66,405

 

 

  Laurence M. Brock

       193 (2)    

     775 (3)    

  1,388 (4)    

  1,500 (5)    

      $8,522

  $34,309

  $61,425

  $66,405

 

 

  Christopher J. LeBlanc

       193 (2)    

     415 (3)    

     563 (4)    

  1,500 (5)    

      $8,522

  $18,372

  $24,902

  $66,405

 

 

  Christine L. Vaughan (7)

 

 

—      

 

 

 

 

 

 

 

 

 

 

 

 

NOTES:

 

  (1)

Based on the closing price of Unitil common stock as of December 31, 2020, which was $44.27.

 

  (2)

Shares of restricted stock were granted on January 30, 2017 pursuant to the Stock Plan which vested 25% on January 30, 2018, 25% on January 30, 2019 and 25% on January 30, 2020. The unvested shares shown in the table (25% of the total 2017 grant) vested the final 25% on January 29, 2021.

 

  (3)

Shares of restricted stock were granted on January 29, 2018 pursuant to the Stock Plan which vested 25% on January 29, 2019 and 25% on January 29, 2020. The unvested shares shown in the table (50% of the total 2018 grant) vested an additional 25% on January 29, 2021; and will further vest 25% on January 29, 2022.

 

  (4)

Shares of restricted stock were granted on January 29, 2019 pursuant to the Stock Plan which vested 25% on January 29, 2020. The unvested shares shown in the table (75% of the total 2019 grant) vested 25% on January 29, 2021; and will further vest 25% on January 29, 2022, and January 29, 2023, respectively.

 

  (5)

Shares of restricted stock were granted on January 28, 2020 pursuant to the Stock Plan. The unvested shares shown in the table (100% of the total 2020 grant) vested 25% on January 28, 2021; and will further vest 25% on January 28, 2022, January 28, 2023, and January 28, 2024, respectively.

 

 

 

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  (6)

Shares of restricted stock were granted on July 28, 2020 pursuant to Mr. Hevert’s offer of employment. The unvested shares shown in the table (100% of the total granted on July 28, 2020) will vest 25% on July 28, 2021, July 28, 2022, July 28, 2023 and July 28, 2024, respectively.

 

  (7)

Ms. Vaughan resigned as Senior Vice President, Chief Financial Officer and Treasurer of the Company on March 16, 2020, and, pursuant to the terms of the Stock Plan, forfeited all unvested shares of restricted stock upon resignation.

EMPLOYMENT AGREEMENT

 

Mr. Meissner is currently the only employee who has an Employment Agreement, the term of which is July 25, 2018 through April 25, 2021. The Employment Agreement also provides that Mr. Meissner will participate in the Management Incentive Plan, the SERP, other employee benefit plans available to the Company’s executives, and our stock plans (which include the Stock Plan). The Employment Agreement’s termination provisions are discussed below under the section entitled Compensation – Compensation of Named Executive OfficersPotential Payments Upon Termination or Change of Control.

THE RETIREMENT PLAN

 

 

The Retirement Plan is a tax-qualified defined benefit pension plan and related trust agreement that provides retirement annuities for eligible employees of Unitil and its subsidiaries. Since the Retirement Plan is a defined benefit plan, contributions are made by Unitil generally for all participants, and no amounts were contributed or accrued specifically for the benefit of any executive officer under the Retirement Plan. Directors of Unitil who are not or have not been officers of Unitil or any of its subsidiaries are not eligible to participate in the Retirement Plan. Please see the section entitled Compensation – Compensation Discussion and Analysis for information regarding the closure of the Retirement Plan, which became effective on June 1, 2013.

 

The Retirement Plan provides participants with early retirement benefits upon the attainment of age 55 with at least 15 years of service. The early retirement benefit is an unreduced pension at age 60 with a reduction of 5% per year for each year prior to age

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60. As of December 31, 2019, Mr. Meissner and Mr. Black are the Named Executive Officers eligible for early retirement benefits under the Retirement Plan. Mr. Brock is eligible for normal retirement. A participant is 100% vested for benefits under the Retirement Plan after five years of service with Unitil or one of our subsidiary companies. The formula for determining annual benefits under the Retirement Plan’s life annuity option is shown above.

 

 

 

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Pension Benefits

 

The table below provides information with respect to the actuarial present value of the accumulated benefit under the Retirement Plan and the SERP for all Named Executive Officers as of December 31, 2020.

 

       

PENSION BENEFITS

       

  Name

 

        Plan Name        

 

      Number of Years      

Credited

Service

 

 

  Present Value of  

Accumulated
Benefit
(1)

 

  Payments During  

Last Fiscal Year

 

(a)

 

 

        (b)        

 

 

(c)

 

 

(d)

 

 

(e)

 

Thomas P. Meissner, Jr.

 

Retirement Plan                

SERP

 

 

 

26

26

 

 

 

$1,632,923

$4,882,052

 

 

 

    —

 

 

Robert B. Hevert (2)

 

    —

 

 

 

 

 

 

    —

 

 

 

    —

 

 

Todd R. Black

 

Retirement Plan

SERP

 

 

 

23

23

 

 

 

$1,406,614

  $764,364

 

 

 

    —

 

 

Laurence M. Brock

 

Retirement Plan

 

 

 

26

 

 

 

$1,477,753

 

 

 

    —

 

 

Christopher J. LeBlanc

 

Retirement Plan

 

 

 

20

 

 

 

  $969,842

 

 

 

    —

 

 

Christine L. Vaughan (3)

 

    —

 

 

 

 

 

 

    —

 

 

 

    —

 

 

 

 

NOTES:

 

  (1)

The present value amounts calculated by our actuary are based on assumptions for the growth of Unitil’s 401(k) contribution (applies to the SERP only), participant’s salary, and participant’s age. The Retirement Plan present value of accumulated benefit was calculated using a discount rate of 2.47%. The SERP present value of accumulated benefit was calculated using a discount rate of 2.30%.

 

  (2)

Mr. Hevert does not participate in the Retirement Plan or the SERP as both plans were closed to new participants when he began his employment with us on July 23, 2020.

 

  (3)

Ms. Vaughan resigned as Senior Vice President, Chief Financial Officer and Treasurer of the Company on March 16, 2020.

THE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

 

We also maintain a SERP, a non-qualified defined benefit plan. The SERP provides for supplemental retirement benefits to executives selected by the Board. The SERP is closed to new participants.

As of December 31, 2020, Mr. Meissner and Mr. Black have been selected by the Board to receive SERP benefits upon attaining normal retirement eligibility, which occurs when the participant reaches age 65, or early retirement eligibility, which occurs when the participant reaches both age 55 and has completed 15 years of service. For a participant who elects to begin receiving early retirement benefits under the SERP prior to attaining age 60, the benefits are reduced by 0.417 of 1% for each full calendar month that commencement of benefits precedes attainment of age 60. As of December 31, 2020, both Mr. Meissner and Mr. Black are eligible for early retirement.

If a participant terminates employment for any reason prior to retirement, other than due to death or in connection with a change in control as described below, the participant will not be entitled to any benefits

 

 

 

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under the SERP. Annual benefits are based on an amount equal to 60% of a participant’s final average earnings, which includes annual salary and annual cash incentives. The annual benefit is offset by (i) the participant’s benefits payable under the Retirement Plan; (ii) other retirement income payable to the participant by Unitil or any previous employer; (iii) income that a participant receives as a primary Social Security benefit, and (iv) the balance of the 401(k) Company match.

If a change in control occurs and a participant’s employment terminates prior to the earlier to occur of the participant being eligible for retirement or early retirement, then the participant will begin to receive benefits on the earlier to occur of the date on which they would have attained normal or early retirement eligibility. In this case, the participant’s benefits would be determined by assuming the participant had remained employed and continued to accrue additional years of service. The term “change in control” as used in the SERP is defined in the section entitled Compensation – Compensation of Named Executive Officers—Definition of Change of Control, Cause and Good Reason.

DEFERRED COMPENSATION PLAN

 

The Unitil Corporation Deferred Compensation Plan (the “DC Plan”) is an unfunded, non-qualified deferred compensation plan that provides a vehicle for participants to accumulate tax-deferred savings to supplement retirement income. The DC Plan is open to senior management or other highly compensated employees as determined by the Board of Directors, and may also be used for recruitment and retention purposes for newly hired senior executives. The DC Plan design mirrors our Tax Deferred Savings and Investment Plan formula, but provides for contributions on compensation above the IRS limit, and which allows participants to defer up to 85% of base salary, and up to 85% of any cash incentive for retirement. We may also elect to make discretionary contributions on behalf of any participant in an amount determined by the Board. As an unfunded plan, the obligation of the Company to make payments under the Plan constitutes solely an unsecured (but legally enforceable) promise of the Company to make such payments, and no person, including any participant or beneficiary shall have any lien, prior claim or other security interest in any property of the Company as a result of the Plan. Any amounts payable under the DC Plan shall be paid out of the general assets of the Company and each participant and/or beneficiary shall be deemed to be no more than a general unsecured creditor of the Company.

In 2020, Ms. Vaughan and Mr. Brock participated in the DC Plan. Currently, only Mr. Brock participates in the DC Plan with regard to eligibility for contributions from the Company. We anticipate that additional executive officers will participate in the DC Plan in the future.

 

 

NON-QUALIFIED DEFERRED COMPENSATION

 

  Name   

Executive     
Contributions     

in Last FY     

  

Registrant     
Contributions     

in Last FY     

  

Aggregate Earnings     

in Last FY     

   Aggregate     
Withdrawals /     
Distributions     
  

Aggregate Balance     

at Last FYE     

(a)    (b)         (c)         (d)         (e)         (f)     

  Laurence M. Brock

   $54,896         $91,748              $781         —         $247,222     

  Christine L. Vaughan (1)

   $44,377         $29,585         $27,308         —         $184,705     

 

 

Notes:

 

  (1)

Ms. Vaughan resigned as Senior Vice President, Chief Financial Officer and Treasurer of the Company on March 16, 2020.

 

 

 

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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

 

Upon termination of employment following a change of control of the Company, severance benefits will be paid to the Named Executive Officers. The severance benefits for termination other than a change of control that are payable to Mr. Meissner are addressed in his Employment Agreement, discussed below, and he would receive the benefits provided to him under that agreement. The other Named Executive Officers are not covered under employment agreements and any severance benefits payable to them would be paid in the event of an adverse employment action following a change of control. In addition, the Stock Plan provides that unvested restricted stock will vest immediately upon (i) death, (ii) disability (as defined in the Company’s Long-Term Disability Plan), (iii) retirement or (iv) a change of control of the Company (as defined in the Stock Plan). The Management Incentive Plan also provides that unvested awards under the plan are forfeited if the participant’s employment terminates other than by reason of (i) death, (ii) disability (as defined in the Company’s Long-Term Disability Plan) or (iii) retirement at or after attaining age 55.

Change of Control

 

We maintain Change of Control Agreements (“COC Agreements”) with certain key management employees, including all Named Executive Officers, to provide continuity in the management and operation of the Company and its subsidiaries, and so that key management employees will make decisions and take actions that are in the best interest of shareholders and not unduly influenced by the fear of job loss in the event of a change of control. The Board approves all COC Agreements prior to execution. We maintain both two-year (originally executed in 2001 and later) COC Agreements and three-year (originally executed prior to 2001) COC Agreements. All existing COC Agreements are “double trigger” agreements, meaning that two events must occur in order for benefits to be paid: (i) a change of control must occur (upon which the agreement becomes effective); and (ii) an adverse employment action must occur during the term of the agreement, meaning that we must terminate the executive’s employment other than for cause or disability or the executive must terminate his employment for good reason. The term of each COC Agreement begins upon a change of control of the Company. Double trigger COC Agreements were chosen to discourage executives from choosing to leave the Company as the result of a change of control where there is no adverse employment action. There is no excise tax gross-up provision in any COC Agreement. The terms “change of control” and “cause” and “good reason” are defined in the section entitled Compensation – Compensation of Named Executive Officers—Definition of Change of Control, Cause and Good Reason.

 

 

 

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Estimated Present Value of Benefits

 

The following tables show the payments and benefits the Named Executive Officers would have received in connection with a variety of employment termination scenarios, as well as upon a change of control, assuming that employment termination or the change of control was effective as of December 31, 2020. The actual amounts that would be paid can only be determined at the time of an actual separation from the Company. All of the payments and benefits described below would be provided by Unitil or our subsidiary companies.

 

 

ESTIMATED PRESENT VALUE OF BENEFITS

 

 

 

  Thomas P. Meissner, Jr.

 

 

Termination

 

   

 

Retirement

 

   

 

Change in Control

 

 
 

By the Company
(not for
Death, Disability,

or Cause); or
Voluntary
Termination
for Good Reason
(no Change of
Control)
(1)

   

Due to Death
or Disability
(with or
without a
Change of
Control)
(2)(3)

   

By the Company
for Cause; or
Voluntary
Termination
other than for

Good Reason or
Retirement
(no Change of

Control) (4)

   

With or
Without a
Change of
Control
(2)(5)

   

Without
Adverse
Employment
Action
(2)

   

With
Adverse
Employment
Action
(6)

 
             

(a)

 

 

(b)

 

   

(c)

 

   

(d)

 

   

(e)

 

   

(f)

 

   

(g)

 

 

  Compensation:

           

Severance

    $1,862,494                               $2,009,406  

2020 Mgt Incentive Plan Award

             $314,710                $314,710              

  Benefits:

           

Additional Pension Benefit (7)

                                     $552,997  

Additional 401(k) Match

                                       $17,034  

Insurance Continuation (8)

         $69,770                                    $69,770  

Accelerated Vesting of
Restricted Stock (9)

          $1,121,027             $1,121,027       $1,121,027       $1,121,027  

 

  Total

    $1,932,264       $1,435,737             $1,435,737       $1,121,027       $3,770,234  
                                                 

 Robert B. Hevert

                                               

  Compensation:

           

Severance

                                  $1,026,962  

2020 Mgt Incentive Plan Award

               $56,100                          

  Benefits:

           

Additional Pension Benefit

                                   

Additional 401(k) Match

                                       $56,781  

Insurance Continuation (8)

                                         $1,811  

Accelerated Vesting of
Restricted Stock (9)

              $132,810                     $132,810          $132,810  

 

  Total

 

              $188,910                     $132,810       $1,218,364  

 

 

 

  LOGO  

 

 

77


Table of Contents

 

ESTIMATED PRESENT VALUE OF BENEFITS

 

 

 

   Todd R. Black