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SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
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Unitil Corporation
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(Name of Registrant as Specified in Its Charter)
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[Unitil Logo]
March 18, 1999
Dear Fellow Shareholder,
The Annual Meeting of Common Shareholders is scheduled to be held on
Thursday, April 15, 1999, at 10:30 A.M., at the office of the Company,
6 Liberty Lane West, Hampton, New Hampshire.
Enclosed you will find a 1998 annual report, a notice of meeting, a proxy
statement and a proxy card to be used in connection with the meeting. This
year, shareholders are being asked to vote on the election of three
Directors.
We hope that you are able to attend the Annual Meeting. Your vote is
important whether you own one share or many. Whether or not you plan to be
present, we urge you to sign and promptly return the enclosed proxy card in
the envelope provided.
Thank you for your continued interest in the Company.
Sincerely,
/s/ Robert G. Schoenberger
Robert G. Schoenberger
Chairman of the Board of Directors
and Chief Executive Officer
[Unitil Logo]
NOTICE OF ANNUAL MEETING OF COMMON SHAREHOLDERS
Hampton, New Hampshire
March 18, 1999
To the Common Shareholders:
You are hereby notified that the annual meeting of common
shareholders of Unitil Corporation will be held at the office of the
Company, 6 Liberty Lane West, Hampton, New Hampshire, on Thursday, April
15, 1999, at 10:30 A.M., for the following purposes:
1. To elect three Directors.
2. To act on such other matters as may properly come before the
meeting and any adjournments thereof.
The enclosed form of proxy has been prepared at the direction of the
Board of Directors of Unitil and is sent to you at its request. The
persons named in said proxy have been designated by the Board of Directors.
Regardless of whether or not you plan to attend the meeting, you can
be sure your shares are represented at the meeting by promptly signing,
dating and returning the proxy card enclosed in the postage-paid envelope,
also enclosed. If for any reason you desire to revoke or change your
proxy, you may do so at any time before it is voted.
The Board of Directors fixed March 1, 1999 as the date for
determining holders of record of Common Stock who are thereby entitled to
notice of and to vote at this meeting and any adjournments thereof.
By Order of the Board of Directors,
Mark H. Collin
Treasurer & Secretary
[Unitil Logo]
6 Liberty Lane West
Hampton, New Hampshire 03842-1720
March 18, 1999
Proxy Statement
ANNUAL MEETING OF COMMON SHAREHOLDERS, APRIL 15, 1999
This proxy statement is furnished in connection with the solicitation
by the Board of Directors of proxies in the accompanying form for use at
the 1999 annual meeting of common shareholders of Unitil Corporation
("Unitil" or "the Company"). Each proxy can be revoked at any time before
it is voted by written notification to the Secretary of Unitil at the above
address prior to the meeting, or in person at the meeting. Every properly
signed proxy will be voted unless previously revoked.
Unitil presently has seven subsidiaries, Concord Electric Company
("CECo"), Exeter & Hampton Electric Company ("E&H"), Fitchburg Gas and
Electric Light Company ("FG&E"), Unitil Power Corp. ("Unitil Power"),
Unitil Realty Corp. ("Unitil Realty"), Unitil Resources, Inc. ("Unitil
Resources") and Unitil Service Corp. ("Unitil Service").
The annual report of Unitil for the year 1998 is enclosed herewith
and includes consolidated financial statements which are not part of this
proxy statement.
The voting securities of Unitil issued and outstanding on March 1,
1999 consisted of 4,660,556 shares of Common Stock, no par value, entitling
the holders thereof to one vote per share. Holders of Common Stock of
record on such date are entitled to notice of and to vote at the annual
meeting and any adjournments thereof. A majority of the outstanding shares
of Common Stock constitutes a quorum.
Except as set forth below, no person owns of record and, to the
knowledge of Unitil, no person owns beneficially more than five percent of
the Common Stock of Unitil which may be voted at the meeting and any
adjournments thereof.
Name and Address Shares of Common Stock Percent of Shares
of Beneficial Owner Beneficially Owned Outstanding
- - --------------------------------------------------------------------------
Charles H. Tenney II 271,055 (1) 5.99%
30 Cedar Road
Chestnut Hill, MA 02167
- - --------------------------------------------------------------------------
NOTES:
Based on information provided by Mr. Tenney. Total shares of Common
Stock owned by Mr. Tenney include 3,547 shares which are held in
trust under the terms of the Unitil Tax Deferred Savings and
Investment Plan ("401(k)"). Mr. Tenney has voting power only with
respect to the shares credited to his account. (See "Other
Compensation Arrangements"). Mr. Tenney is the former Chairman and
CEO of the Company. Mr. Tenney is also a Director of the Company who
is not standing for re-election in 1999 as a result of the age
limitation policy adopted by the Board of Directors in 1998. See also
"As to the Election of Directors."
The fourteen Directors and the officers of Unitil as a group have
beneficial ownership as of March 1, 1999 of 373,428 shares (8.01%) of
Common Stock, of which they have direct beneficial ownership of 217,249
shares (4.66%), which excludes options to purchase 26,824 shares (0.58%)
pursuant to the exercise of those options, and indirect beneficial
ownership of 156,179 shares (3.35%). To the knowledge of Unitil, each of
said Directors and officers has voting and investment power with respect to
the shares directly owned. With regard to certain of the indirect
beneficial ownership by said group, see the footnotes to the table
contained in the section of this proxy statement entitled "As to the
Election of Directors" setting forth certain information about the
Directors of Unitil.
Assuming a quorum is present, the favorable vote of a majority of the
shares of Common Stock represented and voting will be required for approval
of all matters, including the election of Directors, which may come before
the meeting.
As to the Election of Directors
---------------------------------------------
The By-Laws of Unitil provide for a Board of between nine and fifteen
Directors divided into three classes, each class being as nearly equal in
number as possible, and each with their respective terms of office arranged
so that the term of office of one class expires in each year, at which time
a corresponding number of Directors is elected for a term of three years.
Unitil currently has fourteen Directors.
In 1998, the Board of Directors adopted a stock ownership policy of
the Board that no person be nominated as a candidate for Director for
election to a second term as part of the slate of Directors proposed by the
Company unless he or she is a beneficial owner, either directly or
indirectly, of at least 1,000 shares of Unitil Common Stock. Also in 1998,
the Board of Directors approved an age limitation policy of the Board,
effective as of January 1999, that no person be nominated as a candidate
for Director for reelection as part of the slate of Directors proposed for
election by the Company after he or she has reached age 70. Douglas K.
Macdonald, Charles H. Tenney II and William W. Treat will not stand for re-
election this year as a result of this policy.
Information about Nominees for Directors
---------------------------------------------
Each nominee has been a member of the Board of Directors since the
date indicated. Proxies will be voted for the persons whose names are set
forth below unless instructed otherwise. If any nominee shall be unable to
serve, the proxies will be voted for such person as may be designated by
management to replace such nominee. Each of the nominees has consented to
being named in this proxy statement and to serve if elected. Unless
otherwise indicated, all shares shown represent sole voting and investment
power.
Nominees for Directors whose terms will expire in the year 2002
- - --------------------------------------------------------------------------
Common Stock Owned
Beneficially on
Director March 1, 1999(1)
Since Shares
- - --------------------------------------------------------------------------
Albert H. Elfner, III, Age 54 1999(2) 1,000
Chairman (since 1994) and Chief
Executive Officer (since 1995) of
Evergreen Investment Management
Company, Boston, MA. Mr. Elfner
is also Chairman and a Director of
Keystone Trust Company, Portsmouth, NH,
since 1995, a Director of Polaris
International Investment Trust Company,
Taipei, Taiwan, ROC, and a Director of
Investment Mutual Insurance Company,
Washington, DC, since 1998.
Ross B. George, Age 66 1999(2) 0
Director (since 1988) and Chief
Executive Officer of Simonds
Industries, Inc., Fitchburg, MA,
since 1995. From 1998 until 1995,
President and Chief Operating Officer,
also at Simonds Inductries, Inc.
(industrial cutting tools manufacturing
company)
M. Brian O'Shaughnessy, Age 56 1998(2) 300
Chairman of the Board, Chief
Executive Officer and President
of Revere Copper Products, Inc.,
Rome, NY, since 1988.
Information About Directors
Whose Terms of Office Continue
----------------------------------------
Common Stock Owned
Beneficially on
Director Term to March 1, 1999(1)
Since Expire Shares
- - --------------------------------------------------------------------------
Michael J. Dalton, Age 58 1984 2001 42,112(3)(4)(5)
President and Chief Operating
Officer of Unitil. Mr.
Dalton is also a Director
(since 1996) and Secretary
(since 1997) of the University
of New Hampshire Foundation,
and Chairman of the University
of New Hampshire President's
Council since 1995.
Information About Directors
Whose Terms of Office Continue, continued
-----------------------------------------
Common Stock Owned
Beneficially on
Director Term to March 1, 1999(1)
Since Expire Shares
- - --------------------------------------------------------------------------
Bruce W. Keough, Age 42 1998 2001 2,200
Real estate developer and
private equity investor since
1991. Mr. Keough is a former
New Hampshire State Senator
(1994-1996); Trustee of the
University System of New
Hampshire since 1997 and a
member of the Board of
Governors of New Hampshire
Public Television since 1997.
J. Parker Rice, Jr., Age 73 1992 2001 1,652
Director, former President
and Treasurer of Hyland/Rice
Office Products, Inc.,
Fitchburg, MA (office products
dealer).
Robert G. Schoenberger, Age 48 1997 2000 27,824(6)
Chairman of the Board and
Chief Executive Officer of
Unitil since 1997. Prior to
his employment with Unitil,
Mr. Schoenberger was President
and Chief Operating Officer at
New York Power Authority
(NYPA) from 1993 until 1997.
Prior to 1993, Executive Vice
President--Finance and
Administration, also a NYPA
(state owned public power
enterprise). Mr. Schoenberger
is also a Director of the
Seacoast (NH) United Way since
1998, and a Director of Exeter
Health Resources, Exeter, NH,
since 1998.
Charles H. Tenney III, Age 51 1992 2000 2,730
Corporate Secretary of
Northern Utilities, Inc.,
Portsmouth, NH (natural gas
distributor) and Corporate
Secretary of Granite State Gas
Transmission, Inc.,
Portsmouth, NH, since 1997.
Mr. Tenney is also the former
Clerk (1991--1999) of Bay
State Gas Company, a subsidiary
of NIPSCO Industries, Inc.,
Merrillville, IN (utility
holding company).
W. William VanderWolk, Jr., Age 75 1984 2000 17,563
Owner of Horizon Management,
Manchester, NH (property and
restaurant management).
Joan D. Wheeler, Age 61 1994 2001 1,200
Owner of the Russian Gallery,
Marblehead, MA (art gallery).
Ms. Wheeler is a former Director
of Shaw's Supermarkets, Inc.
(1979--1987) and of Granite Bank
(1984--1989), Keene, NH, and a
former Trustee of Franklin Pierce
College.
Information About Directors
Whose Terms of Office Continue, continued
---------------------------------------------
Common Stock Owned
Beneficially on
Director Term to March 1, 1999(1)
Since Expire Shares
- - --------------------------------------------------------------------------
Franklin Wyman, Jr., Age 77 1992 2000 5,200
Chairman of the Board and
Treasurer of Wright Wyman,
Inc., Boston, MA (corporate
financial consultants).
Mr. Wyman is also a Trustee
of Brookline Bank Corp, MHC,
Brookline, MA and a Director
and Vice President of
Brookline Savings Bank,
Brookline, MA.
- - --------------------------------------------------------------------------
NOTES:
Except as otherwise noted, each of the persons named above has held
his present position (or another executive position with the same employer)
for more than the past five (5) years.
Based on information furnished to Unitil by the nominees and
continuing Directors. No Director standing for election, no Director
whose term is continuing and no officer owns more than one percent of
the total outstanding shares.
Director nominees elected to the Board by the Board of Directors upon
recommendation by the Executive Committee between June, 1998, and
January, 1999. Director nominees have not previously been elected by
the shareholders of the Company.
Included are 4,208 shares which are held in trust for Mr. Dalton
under the terms of the Unitil Tax Deferred Savings and Investment
Plan ("401(k)"). Mr. Dalton has voting power only with respect to
the shares credited to his account. For further information regarding
401(k), see "Other Compensation Arrangements - Tax-Qualified Savings
and Investment Plan" below.
Included are 100 shares held by Mr. Dalton jointly with his wife with
whom he shares voting and investment power.
Included are 9,501 shares held by a member of Mr. Dalton's family.
He has no voting rights or investment power with respect to, and no
beneficial interest in, such shares.
Included are 26,824 shares which Mr. Schoenberger has the right to
purchase pursuant to the exercise of options under the Key Employee
Stock Option Plan ("KESOP" or "Option Plan"). (See "Other
Compensation Arrangements").
The Board of Directors met six times in 1998. During 1998, Directors
attended an average of 97% of all meetings of the Board of Directors held
and of all meetings held by all Committees of the Board on which they
served, if any.
Section 17(a) of the Public Utility Holding Company Act of 1935 and
Section 16(a) of the Securities Exchange Act of 1934 require the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file certain
reports of ownership and changes in share ownership with the Securities and
Exchange Commission and the American Stock Exchange and to furnish the
Company with copies of all Section 17(a) and Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that such forms were
not required for those persons, the Company believes that all filing
requirements applicable to its officers and directors during 1998 and
through March 1, 1999 were met.
Compensation of Directors
---------------------------------------------
In 1998, members of the Board of Directors who are not officers of
Unitil or any of its subsidiaries received an annual retainer fee of $7,000
in cash and $5,500 in Unitil Common Stock, and $500 for each Board meeting
attended. Members of the Executive Committee, who are not officers of
Unitil or any of its subsidiaries, received an annual retainer fee of
$3,000 and $400 for each meeting attended. The Chairman of the Executive
Committee received an annual retainer fee of $15,000. Members of the Audit
Committee and Compensation Committee received an annual retainer fee of
$1,000 and $400 for each meeting attended. The Chairman of the Audit
Committee and the Chairman of the Compensation Committee received an annual
retainer fee of $2,000, respectively. Those Directors of Unitil who also
serve as Directors of CECo, E&H or FG&E and who are not officers of Unitil
or any of its subsidiaries received a meeting fee of $100 per subsidiary
meeting attended and no annual retainer fee from CECo, E&H or FG&E. All
Directors are entitled to reimbursement of expenses incurred in connection
with attendance at meetings of the Board of Directors and any Committee on
which they serve.
Committees of the Board of Directors
---------------------------------------------
Executive Committee
----------------------------------------
The Executive Committee of the Board of Directors held ten meetings
in 1998. Its members are Robert G. Schoenberger, William W. Treat
(Chairman), W. William VanderWolk, Jr., Joan D. Wheeler and Franklin Wyman,
Jr. This Committee's responsibility is to review and oversee corporate
policies related to the Company's long-range strategic business, financial
and operating plans. In addition, the Executive Committee also acts as a
nominating committee. In its function as a nominating committee, the
committee coordinates suggestions or searches for potential nominees for
Board members; reviews and evaluates qualifications of potential Board
members; and recommends to the Board of Directors nominees for vacancies
occurring from time to time on the Board of Directors. The Committee will
consider nominees recommended by shareholders upon timely submission of the
names of such nominees with qualifications and biographical information
forwarded to the Executive Committee of the Board of Directors. In January
1998, the Board of Directors approved the expansion of the duties of the
Executive Committee to include the review and recommendation of corporate
governance standards and the annual review of Board member performance.
Audit Committee
----------------------------------------
The Audit Committee of the Board of Directors, which held two
meetings in 1998, consists of W. William VanderWolk, Jr. (Chairman), J.
Parker Rice, Jr. and Charles H. Tenney III. The duties of this Committee
encompass making recommendations on the selection of Unitil's independent
auditors; conferring with such auditors regarding, among other things, the
scope of their examination, with particular emphasis on areas where special
attention should be directed; reviewing the accounting principles and
practices being followed by Unitil; assessing the adequacy of Unitil's
interim and annual financial statements; reviewing the internal audit
controls of Unitil and its subsidiaries; performing such other duties as
are appropriate to monitor the accounting and auditing policies and
procedures of Unitil and its subsidiaries; and reporting to the full Unitil
Board from time to time. In addition, beginning in 1998, the Audit
Committee also has the responsibility of monitoring the Company's progress
regarding the Year 2000 date recognition problem. At the Committee's
meetings, it receives reports from management regarding the Company's Year
2000 remediation and testing efforts. Additionally, the Committee, at its
discretion, meets independently with the Company's external auditors and/or
the Company's internal auditor.
Compensation Committee
----------------------------------------
The Compensation Committee of the Board of Directors, which held four
meetings in 1998, consists of Franklin Wyman, Jr. (Chairman), Bruce W.
Keough and Joan D. Wheeler. The duties of this Committee include studying
and making recommendations to the Board of Directors of Unitil and the
appropriate Board of each of its subsidiaries with respect to salaries and
other benefits to be paid to the officers of Unitil and such subsidiaries.
In March 1998, the Board of Directors approved the expansion of the
Compensation Committee's duties to include the annual review of management
succession planning and the duties of the KESOP Committee.
Report of the Compensation Committee
---------------------------------------------
Upon the recommendation of the Compensation Committee, the Board of
Directors votes to approve the compensation of the Chief Executive Officer.
The Committee reports all of its decisions to the Board. The Board
unanimously has accepted each of the recommendations described below made
in 1998 and to date in 1999. The Committee also votes the compensation of
all other Company executive officers listed in the Summary Compensation
Table, as well as other senior employees. The Board has ratified the
compensation decision for these executive officers.
The overall objective of the Company's Board of Directors, and
specifically this Compensation Committee, in setting compensation for
Unitil's executive officers is to attract, retain and reward managers who
are committed to solid financial performance and foster excellence in the
management of the assets of the Company and who can successfully lead the
Company as the industry undergoes unprecedented change and restructuring.
To help meet these objectives, the Committee believes it is important for
the Company to provide compensation to its executive officers which varies
directly with the performance of the Company and to make payment of annual
compensation with both cash and Company stock.
The Company pays both "base" and "variable" compensation to its
officers. The base component of compensation is determined under Unitil's
salary policy which is reviewed from time to time by outside consultants as
to its competitiveness. Variable compensation is based on factors that
measure the success of the Company for any given year and is governed by
Unitil's Management Performance Compensation Plan ("MPCP"). The factors
under the MPCP relate to the earnings of the Company and the rate of return
achieved on shareholder-provided equity as well as cost control and the
competitiveness of the rates charged to Unitil's utility customers. In
addition, to further bolster ownership in the Company by the executive
officers and consistently align the interest of the Company's management
with shareholders and customers, the Company, in 1989, instituted a Key
Employee Stock Option Plan ("KESOP" or "Option Plan") with the approval of
the Company's shareholders. This plan was tailored to emphasize dividend
and stock value growth as a prerequisite to the maximization of value to
the participants.
The compensation of the Chief Executive Officer ("CEO"), is governed
by these same plans and objectives. As Chairman of the Board and CEO, Mr.
Schoenberger was paid an annual base salary of $245,000 in 1998. This
amount, which was included in the terms of Mr. Schoenberger's employment
agreement, was determined in accordance with Unitil's salary policy and
also a 1996 review and recommendation of an outside salary consultant who
analyzed competitive pay levels in similar companies in the New England
Region. Mr. Schoenberger did not participate in the Company's MPCP program
in 1998 because he had just joined the Company in November, 1997. Mr.
Schoenberger's employment agreement with the Company is further detailed on
page 13.
The Committee periodically reviews each component of the Company's
executive compensation program to ensure that pay levels and incentive
opportunities are competitive and that incentive opportunities are linked
to Company performance. During 1998, the Company engaged a nationally
known compensation consulting firm to review the competitiveness of the
total compensation package for the CEO and other executive positions. As a
result of this review, the Company adopted a new salary policy, new base
salary ranges, a new Management Incentive Plan (see "Other Compensation
Arrangements") and a new non-qualified Stock Option Plan (see "Other
Compensation Arrangements"). These new policies and plans were adopted to
bring the Company's compensation practices into line with current market
conditions for competitive pay levels of utility executives, and to better
support the achievement of the Company's mission and strategies.
The new Management Incentive Plan replaces the Management Performance
Compensation Plan (described above). The new plan provides a cash
incentive opportunity if the Company meets certain targets for earnings per
share and a high performing work force. The bonus opportunities are set by
level of the executive position according to other companies in the utility
industry.
The new 1998 Stock Option Plan replaces the 1989 Key Employee Stock
Option Plan (described above). The new plan will provide grants of options
to buy common shares of Company Stock. The Plan anticipates the granting
of options over the next five years, and each grant will vest over a three
year period. Each option grant is priced at the market price on the date
of the grant. This new plan emphasizes long-term growth of the price of
the Company's common stock.
Compensation Committee Members
---------------------------------------------
Franklin Wyman, Jr., Chairman,
Bruce W. Keough, and Joan D. Wheeler
Stock Performance Graph and Information
---------------------------------------------
Comparative Five-Year Cumulative Total Returns
- - --------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
-------------------------------------------------------
Unitil 100.00 89.16 123.40 125.62 163.18 $180.48
Peer Group 100.00 90.33 113.71 94.98 121.27 $145.87
S&P 100.00 100.60 137.82 168.28 222.47 $281.80
The graph to the left assumes $100 invested on December 31, 1993, in each
category and the reinvestment of all dividends during the period. The Peer
Group is comprised of the eleven investor-owned New England electric
utilities.
- - --------------------------------------------------------------------------
Compensation of Officers
---------------------------------------------
The tabulation below shows the compensation Unitil, or any of its
subsidiaries, has paid to its Chief Executive Officer and its most highly
compensated officers whose total annual salary and bonus were in excess of
$100,000 during the year 1998.
SUMMARY COMPENSATION TABLE
- - --------------------------------------------------------------------------
Long Term Compensation
-----------------------------------
Annual Compensation Awards Payout
------------------------------ ----------------------- ---------
Other
Name and Annual Restricted All Other
Principal Salary Bonus Comp. Stock LTIP Comp.
Position(1) Year ($) ($)(2) ($) Awards($) Options(3) Payout ($)
- - ------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
- - ------------------------------------------------------------------------------------------------------------------------
Robert G. Schoenberger(3) 1998 $245,003 -- -- -- -- -- $88,160(6)
Chairman of the Board & 1997 65,833(4) -- -- -- 25,000(5) --
Chief Executive Officer -- -- -- -- -- -- --
Michael J. Dalton 1998 $190,005 $67,959 -- -- -- -- $14,224(7)
President & Chief 1997 174,000 63,834 -- -- -- --
Operating Officer 1996 169,200 61,959 -- -- -- --
Anthony J. Baratta, Jr.(8) 1998 $107,501(9) -- -- -- -- -- $32,955(10)
Senior Vice President & -- -- -- -- -- -- --
Chief Financial Officer -- -- -- -- -- -- --
James G. Daly 1998 $142,092 $39,314 -- -- -- -- $ 6,516(11)
Senior Vice President, 1997 125,625 33,568 -- -- -- --
Unitil Service 1996 95,625 32,580 -- -- -- --
George R. Gantz 1998 $120,399 $39,314 -- -- -- -- $ 6,070(12)
Senior Vice President, 1997 104,475 33,568 -- -- -- --
Unitil Service 1996 95,625 32,580 -- -- -- --
NOTES:
Officers of the Company also hold various positions with subsidiary
companies. Compensation for those positions is included in the above
table.
Bonus amounts are comprised of Management Performance Compensation
Program (MPCP) cash and stock awards. In 1998, Unitil maintained a
management performance compensation program ("MPCP") for certain
management employees, including Executive Officers. The MPCP provides
for awards to be calculated annually and paid in a combination of
cash and Unitil Common Stock. Awards are based on several factors
designed to reflect the Company's performance and the attainment of
individual performance goals. In December, 1998, the MPCP was
replaced by the Unitil Management Incentive Plan (see "Other
Compensation Arrangements").
Robert G. Schoenberger was elected Chairman of the Board and Chief
Executive Officer in October 1997. Mr. Schoenberger was not employed
by the Company or any of its subsidiary companies prior to October
1997.
Base salary paid to Mr. Schoenberger for 1997 includes salary for the
months of November and December, and a $25,000 payment received on
his first day of employment with the Company. Mr. Schoenberger's
annual base salary in 1997 was $245,000.
Options were granted to Mr. Schoenberger on November 3, 1997 under
the Key Employee Stock Option Plan (see "Other Compensation
Arrangements" and subsequent notes).
All Other Compensation for Mr. Schoenberger for the year 1998
includes 401(K) company contribution, the Supplemental Life Insurance
payment, Group Term Life Insurance payment, and taxable relocation
payment valued at $4,800, $2,651, $1,534 and $79,175, respectively.
All Other Compensation for Mr. Dalton for the year 1998 includes,
401(K) company contribution, Supplemental Life Insurance payment and
Group Term Life Insurance payment, valued at $5,700, $5,644 and
$2,880, respectively.
Anthony J. Baratta, Jr. began his employment with the Company as
Senior Vice President and Chief Financial Officer in April, 1998.
Mr. Baratta was not employed by the Company or any of its subsidiary
companies prior to April, 1998.
Base salary paid to Mr. Baratta for 1998 includes salary for the
months of April through December. Mr. Baratta's annual salary in
1998 was $150,000.
All Other Compensation for Mr. Baratta for the year 1998 includes,
401(K) company contribution, Group Term Life Insurance payment, and
taxable relocation payment valued at $1,125, $750 and $31,080,
respectively.
All Other Compensation for Mr. Daly for the year 1998 includes 401(K)
company contribution, Supplemental Life Insurance payment and Group
Term Life Insurance payment, valued at $5,085, $957 and $475,
respectively.
All Other Compensation for Mr. Gantz for the year 1998 includes
401(K) company contribution, Supplemental Life Insurance payment and
Group Term Life Insurance payment, valued at $4,434, $1,012 and $654,
respectively.
Other Compensation Arrangements
---------------------------------------------
The table below provides information with respect to options to
purchase shares of the Company's Common Stock exercised in fiscal 1998 and
the value of unexercised options granted in prior years under the Key
Employee Stock Option Plan ("Option Plan") to the named executive officers
in the Summary Compensation Table and held by them as of December 31, 1998.
The Company has no compensation plan under which Stock Appreciation Rights
(SARs) are granted.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR (FY)
AND FY-END OPTION VALUES (1)
- - --------------------------------------------------------------------------
Number of Unexercised Value of Unexercised
Shares Options at In-the-Money Options
Acquired FY-End (#)(2) at FY-End ($)
On Value -------------------------- -------------------------
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- - ----------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
- - ----------------------------------------------------------------------------------------------------------------
Robert G. Schoenberger -- -- exercisable 25,000(3) exercisable $206,938
Chairman of the Board & unexercisable 0 unexercisable $ 0
Chief Executive Officer
Michael J. Dalton 12,000 $243,480 exercisable 12,000(4) exercisable $218,010
President & unexercisable 0 unexercisable $ 0
Chief Operating Officer
Anthony J. Baratta, Jr. -- -- exercisable 0 exercisable $ 0
Senior Vice President & unexercisable 0 unexercisable $ 0
Chief Financial Officer
James G. Daly 5,032 $ 70,951 exercisable 0 exercisable $ 0
Senior Vice President, unexercisable 0 unexercisable $ 0
Unitil Service
George R. Gantz -- -- exercisable 5,078(5) exercisable $ 80,981
Senior Vice President unexercisable 0 unexercisable $ 0
Unitil Service
NOTES:
The Option Plan authorizes the Compensation Committee to provide in
the award agreements that the participant's right to exercise the
options provided for therein will be accelerated upon the occurrence
of a "Change in Control" of Unitil. The term "Change in Control" is
defined in substantially the same manner as in the Severance
Agreements as defined on pages 12 and 13. All of the award
agreements entered into with participants in the Option Plan to date
contain such a "Change in Control" provision. Each award agreement
also provides that, upon the exercise of an option on or after a
Change in Control, Unitil shall pay to the optionee, within five
business days, a lump sum cash amount equal to the economic benefit
of the optionee's outstanding options and associated dividend
equivalents that the optionee would have received had the option
remained unexercised until the day preceding the expiration of the
grant. Upon the exercise of any option by an employee and upon
payment of the option price for shares of Unitil Common Stock as to
which the option was granted (the "Primary Shares"), Unitil will
cause to be delivered to such employee (i) the Primary Shares and
(ii) the number of shares of Unitil Common Stock (the "Dividend
Equivalent Shares") equal to the dollar amount of dividends which
would have been paid on the Primary Shares (and previously accrued
Dividend Equivalent Shares) had they been outstanding, divided by the
fair market value of Unitil Common Stock determined as of the record
date for each dividend. All options, with the exception of Mr.
Schoenberger's options (see Note 3), associated with the Option Plan
have been exercised as of March 7, 1999.
Amounts listed in column (d) in the table above do not include non-
preferential dividend equivalents associated with options
outstanding.
In accordance with the terms of Mr. Schoenberger's employment
agreement, on November 3, 1997, he received 25,000 options to
purchase shares of Company stock under the Option Plan. The options
granted to Mr. Schoenberger became exercisable on November 3, 1998.
In 1998, the Compensation Committee extended the expiration date for
Mr. Schoenberger's options until November 3, 2007 (ten years from the
date of the grant), because the Option Plan originally provided ten
years between the grant and expiration of options.
Mr. Dalton exercised his remaining 12,000 stock options in February,
1999.
Mr. Gantz exercised his 5,078 stock options in February, 1999.
In December, 1998, the Unitil Board of Directors adopted the Unitil
Corporation 1998 Stock Option Plan. The Company intends to grant stock
options each year through March 1, 2004 under the plan to certain employees
and directors, for the purchase of up to 350,000 shares of Unitil Common
Stock. Each option grant will vest over a three year period and each grant
will expire ten years after the date of grant.
The purpose of the plan is to provide an incentive to key employees
and directors of Unitil and its affiliates who are in a position to
contribute materially to the long-term success of Unitil and/or its
affiliates, to increase their interest in the welfare of Unitil and its
affiliates, and to attract and retain employees and directors of
outstanding ability. The Compensation Committee will administer the plan.
The Committee will have authority to interpret the plan and to designate
recipients of the stock options.
Stock options granted under the plan will entitle the holders of
those options to purchase up to the number of shares of common stock
specified in the grant at a price established by the Committee. All grants
will be issued at 100% of market value. Under the plan, stock options for
shares constituting not more than five percent of the common stock may be
issued in any one year.
The Company adopted a new Management Incentive Plan and a new
Employee Incentive Plan in December, 1998, to provide cash incentive
payments which are tied directly to achievement of the Company's strategic
goals for earnings per share and a high performance work force. Annual
goals are established each year by the Board of Directors and payment of
awards will be made in February of the year following achievement of the
goals. Target incentive payments have been established which vary based
upon the grade level of each position. Actual awards can be less than or
greater than the target payout depending upon actual results achieved.
Unitil maintains a tax-qualified defined benefit pension plan and
related trust agreement (the "Retirement Plan"), which provides retirement
annuities for eligible employees of Unitil and its subsidiaries. Since the
Retirement Plan is a defined benefit plan, no amounts were contributed or
accrued specifically for the benefit of any officer of Unitil under the
Retirement Plan. Directors of Unitil who are not and have not been officers
of Unitil or any of its subsidiaries are not eligible to participate in the
Retirement Plan.
The table below sets forth the estimated annual benefits (exclusive
of Social Security payments) payable to participants in the specified
compensation and years of service classifications, assuming continued
active service until retirement. The average annual earnings used to
compute the annual benefits are subject to a $160,000 limit.
PENSION PLAN TABLE
- - --------------------------------------------------------------------------
ANNUAL PENSION
-------------------------------------------------
Average Annual Earnings 10 Years 20 Years 30 Years 40 Years
Used for Computing Pension of Service of Service of Service of Service
- - ------------------------------------------------------------------------------
$100,000 20,000 40,000 50,000 55,000
125,000 25,000 50,000 62,500 68,750
150,000 30,000 60,000 75,000 82,500
160,000 32,000 64,000 80,000 88,000
The present formula for determining annual benefits under the
Retirement Plan's life annuity option is (i) 2% of average annual salary
(average annual salary during the five consecutive years out of the last
twenty years of employment that give the highest average salary) for each
of the first twenty years of benefit service, plus (ii) 1% of average
annual salary for each of the next ten years of benefit service and (iii)
1/2% of average annual salary for each year of benefit service in excess of
thirty, minus (iv) 50% of age 65 annual Social Security benefit (as defined
in the Retirement Plan), and (v) any benefit under another Unitil
retirement plan of a former employer for which credit for service is given
under the Retirement Plan. A participant is eligible for early retirement
at an actuarially reduced pension upon the attainment of age 55 with at
least 15 years of service with Unitil or one of its subsidiaries. A
participant is 100% vested in his benefit under the Retirement Plan after 5
years of service with Unitil or one of its subsidiaries. As of January 1,
1999, Messrs. Schoenberger, Dalton, Baratta, Daly and Gantz had 1, 31, .75,
10 and 15 credited years of service, respectively, under the Retirement
Plan.
Unitil also maintains a Supplemental Executive Retirement Plan
("SERP"), a non-qualified defined benefit plan. SERP provides for
supplemental retirement benefits to executives selected by the Board of
Directors. At the present time, Messrs. Schoenberger and Dalton are
eligible for SERP benefits upon attaining normal or early retirement
eligibility. Annual benefits are based on a participant's final average
earnings less the participant's benefits payable under the Retirement Plan,
less other retirement income payable to such participant by Unitil or any
previous employer and less income that a participant receives as a primary
Social Security benefit. Early retirement benefits are available to a
participant, with the Unitil Board's approval, if the participant has
attained age 55 and completed 15 years of service. Should a participant
elect to begin receiving early retirement benefits under SERP prior to
attaining age 60, the benefits are reduced by 5% for each year that
commencement of benefits precedes attainment of age 60. If a participant
terminates employment for any reason prior to retirement, the participant
will not be entitled to any benefits. Under the SERP, Messrs. Schoenberger
and Dalton would be entitled to receive an annual benefit of $48,957 and
$42,490, respectively, assuming normal retirement at age 65 and that their
projected final average earnings are equal to the average of their
respective three consecutive years of highest compensation prior to
retirement.
Unitil and certain subsidiaries maintain severance agreements (the
"Severance Agreements") with certain management employees, including
Executive Officers. The Severance Agreements are intended to help assure
continuity in the management and operation of Unitil and its subsidiaries
in the event of a proposed "Change in Control". Each Severance Agreement
only becomes effective upon the occurrence of a Change in Control of Unitil
as defined in the Severance Agreements. If an employee's stipulated
compensation and benefits, position, responsibilities and other conditions
of employment are reduced during the thirty-six month period following a
Change in Control, the employee is entitled to a severance benefit.
The severance benefit is a lump sum cash amount equal to (i) the
present value of three years' base salary and bonus; (ii) the present value
of the additional amount the employee would have received under the
Retirement Plan if the employee had continued to be employed for such
thirty-six month period; (iii) the present value of contributions that
would have been made by Unitil or its subsidiaries under the 401(k) if the
employee had been employed for such thirty-six month period; and (iv) the
economic benefit on any outstanding Unitil stock options and associated
dividend equivalents, assuming such options remained unexercised until the
day preceding the expiration of the grant, including the spread on any
stock options that would have been granted under the Option Plan if the
employee had been employed for such thirty-six month period. Each Severance
Agreement also provides for the continuation of all employee benefits for a
period of thirty-six months, commencing with the month in which the
termination occurred. In addition, pursuant to each Severance Agreement,
Unitil is required to make an additional payment to the employee sufficient
on an after-tax basis to satisfy any additional individual tax liability
incurred under Section 280G of the Internal Revenue Code of 1986, as
amended, in respect to such payments.
The Company entered into an employment agreement with Mr.
Schoenberger on November 1, 1997. The term of the agreement is for three
years and the expiration date is October 31, 2000. Under the terms of the
employment agreement, Mr. Schoenberger will receive an annual base salary
of $245,000 which is subject to annual review by the Board for
discretionary periodic increases in accordance with the Company's
compensation policies. Mr. Schoenberger is entitled to participate in the
Company's SERP, Executive Supplemental Life Insurance Program, Management
Performance Compensation Program and all other employee benefit plans made
available by the Company. On November 3, 1997, Mr. Schoenberger also
received 25,000 options to purchase shares of Company stock under the
Company's Key Employee Stock Option Plan. Mr. Schoenberger shall be
reimbursed for all reasonable interim living and reasonable travel
expenses. In addition, in 1998, Mr. Schoenberger was reimbursed for all
direct moving expenses and received $50,000 when he relocated to the area,
as was stipulated in the terms of his employment agreement. The agreement
also provides that the Company and Mr. Schoenberger will enter into a
Severance Agreement, more fully described above. Mr. Schoenberger and the
Company entered into said Severance Agreement in February, 1998. The
Company, by action of the Board, may terminate Mr. Schoenberger's
employment for any reason. If Mr. Schoenberger's employment is terminated
by the Company during the term of the agreement for any reason other than
Cause, death or disability, the Company shall pay Mr. Schoenberger's base
pay at the rate in effect on the date of employment termination and
benefits until the end of the term of the agreement, or if employment
termination is after November 1, 1999, for one year.
As to Other Matters to Come Before the Meeting
----------------------------------------------
The Board of Directors does not intend to bring before the meeting
any matters other than the one referred to above and knows of no other
matters which may properly come before the meeting. If any other matters or
motions come before the meeting, it is the intention of the persons named
in the accompanying form of proxy to vote such proxy in accordance with
their judgment on such matters or motions, including any matters dealing
with the conduct of the meeting.
The Board of Directors has selected and employed the firm of Grant
Thornton as Unitil's independent certified public accountants to audit
Unitil's financial statements for the fiscal year 1998.
A representative of the firm will be present at the meeting and will be
available to respond to appropriate questions. It is not anticipated that
such representative will make a prepared statement at the meeting; however,
he will be free to do so if he so chooses.
Any proposal submitted by a shareholder of Unitil for inclusion in
the proxy material for the 2000 annual meeting of shareholders must be
received by Unitil at its Corporate Headquarters not later than December
22, 1999.
Solicitation, Revocation and Use of Proxies
---------------------------------------------
Shares of Unitil Common Stock represented by properly executed
proxies received by Unitil prior to or at the meeting will be voted at the
meeting in accordance with the instructions specified on the proxies. If no
instructions are specified on such proxies, shares will be voted FOR the
election of the nominees for Directors. Abstentions and non-votes will
have the same effect as negative votes.
Any Unitil shareholder who executes and returns a proxy has the power
to revoke such proxy at any time before it is voted by filing with the
Secretary of Unitil, at the address of Unitil set forth above, written
notice of such revocation or a duly executed proxy bearing a later date, or
by attending and voting in person at the meeting. Attendance at the
meeting will not in and of itself constitute a revocation of a proxy.
Unitil will bear the costs of solicitation by the Board of Directors
of proxies from Unitil shareholders. In addition to the use of the mail,
proxies may be solicited by the Directors, officers and employees of Unitil
by personal interview, telephone, telegram or otherwise. Such Directors,
officers and employees will not be additionally compensated, but may be
reimbursed for out-of-pocket expenses in connection with such solicitation.
Arrangements also will be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of solicitation material to the
beneficial owners of stock held of record by such persons, and Unitil may
reimburse such custodians, nominees and fiduciaries for reasonable out-of-
pocket expenses in connection therewith.
By Order of the Board of Directors,
Mark H. Collin
Treasurer & Secretary
- - --------------------------------------------------------------------------
Unitil will furnish without charge to any shareholder entitled to vote and
to any beneficial owner of shares entitled to be voted at the annual
meeting of common shareholders, to be held April 15, 1999, a copy of its
annual report on Form 10-K, including financial statements and schedules
thereto, required to be filed with the Securities and Exchange Commission
for the fiscal year 1998, upon written request to Mark H. Collin,
Treasurer, Unitil Corporation, 6 Liberty Lane West, Hampton, NH 03842-
1720.
- - --------------------------------------------------------------------------
437-PS-99
PROXY
UNITIL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby appoints
ANTHONY J. BARATTA, JR., MARK H. COLLIN, MICHAEL J. DALTON and ROBERT G.
SCHOENBERGER, and each of them, proxies will full power of substitution to
each, to vote for the undersigned at the Annual Meeting of Common
Shareholders of Unitil Corporation (the "Company") to be held at the office
of the Company, 6 Liberty Lane West, Hampton, New Hampshire on Thursday,
April 15, 1999, at 10:30 A.M., and at any and all adjournments thereof,
with all powers the undersigned would possess if personally present and
voting and particularly with respect to the matters set forth on the
reverse side hereof.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE SIDE HEREOF
AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
- - ------------- -------------
|SEE REVERSE| |SEE REVERSE|
- - ------------- -------------
[Unitil Logo]
your energy choice
c/o Equiserve
P.O. Box 8040
Boston, MA 02266-8040
THIS IS YOUR PROXY. YOUR VOTE IS IMPORTANT.
Regardless of whether or not you plan to attend the Annual Meeting of
Shareholders, you can be sure your shares are represented at the Meeting by
promptly returning your proxy (attached below) in the enclosed envelope.
Thank you for your attention to this important matter.
Directions to Unitil's Corporate Headquarters
6 Liberty Lane West
Hampton, New Hampshire
From Route 95
- - -------------
Take New Hampshire Exit 2. Immediately after the toll booth (50 cents) bear
left onto Rte. 101 East. Cross back over Rte. 95, then take the first
right, follow signs for Liberty Lane/Rte 27. Take the first left to the
Liberty Lane entrance. Stay right on the access road until it crosses under
Rte. 95, then turn left at the Liberty Lane West sign. Continue straight,
1/2 mile to Unitil on the right.
From Route 101 East
- - -------------------
Cross over Rte. 95, then take the first right, follow signs for Liberty
Lane/Rte 27. Take the first left to the Liberty Lane entrance. Stay right
on the access road until it crosses under Rte. 95, then turn left at the
Liberty Lane West sign. Continue straight, 1/2 mile to Unitil on the right.
Please call 800/999-6501 if you would like additional information.
DETACH HERE
- - --------------------------------------------------------------------------
[x] Please mark
vote as in
this example.
This proxy will be voted in accordance with the instructions given below.
If no instructions are given, this proxy will be voted in favor of the
election of the three Directors listed in Item 1.
The Board of Directors recommends a vote "FOR" each of the nominees listed
below.
1. To elect three Directors:
Nominees: Albert H. Elfner, III, Ross B. George, M. Brian O'Shaughnessy
FOR [ ] [ ] WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ] ______________________________________
For all nominees except as noted above
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [ ]
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
Please sign exactly as your name appears hereon.
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such.
PLEASE RETURN THIS PROXY PROMPTLY.