<PAGE> 1
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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 14a-11(c) or Rule 14a-2
BayCorp Holdings, Ltd.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
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(4) Date Filed:
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<PAGE> 2
BAYCORP HOLDINGS, LTD.
COCHECO FALLS MILLWORKS
100 MAIN STREET, SUITE 201
DOVER, NEW HAMPSHIRE 03820-3835
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 1998
To the Stockholders:
The Annual Meeting of Stockholders of BayCorp Holdings, Ltd. (the
"Company") will be held at the offices of the American Stock Exchange, 86
Trinity Place, New York, New York, on Tuesday, May 5, 1998 at 10:00 a.m., local
time, to consider and act upon the following matters:
1. To elect a Board of Directors to serve until the next Annual Meeting of
Stockholders of the Company and until their successors are duly elected
and qualified.
2. To ratify the selection by the Board of Directors of Arthur Andersen LLP
as the Company's independent public accountants for the current fiscal
year.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on March 9, 1998 will be
entitled to notice of and to vote at the Meeting. The stock transfer books of
the Company will remain open for the purchase and sale of the Company's Common
Stock.
All stockholders are cordially invited to attend the Meeting.
By Order of the Board of Directors,
FRANK W. GETMAN JR., Secretary
Dover, New Hampshire
March 24, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE> 3
BAYCORP HOLDINGS, LTD.
COCHECO FALLS MILLWORKS
100 MAIN STREET, SUITE 201
DOVER, NEW HAMPSHIRE 03820-3835
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 5, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of BayCorp Holdings, Ltd. (the "Company") for
use at the Annual Meeting of Stockholders to be held on May 5, 1998 and at any
adjournment of that meeting (the "Meeting"). All proxies will be voted in
accordance with the instructions contained therein, and if no choice is
specified, the proxies will be voted in favor of the proposals set forth in the
Notice of Meeting. Any proxy may be revoked by a stockholder at any time before
it is exercised by giving written notice to that effect to the Secretary of the
Company.
The Company's Annual Report for the fiscal year ended December 31, 1997
(which consists in principal part of the Company's Annual Report on Form 10-K
for such year as filed with the Securities and Exchange Commission (the
"Commission")) is being mailed to stockholders with the mailing of this Notice
and Proxy Statement on or about March 31, 1998. A copy of the Exhibits to the
Company's Annual Report on Form 10-K for such year will be furnished to any
stockholder upon payment of an appropriate processing fee pursuant to a written
request sent to the Secretary, BayCorp Holdings, Ltd., Cocheco Falls Millworks,
100 Main Street, Suite 201, Dover, New Hampshire 03820-3835.
VOTING SECURITIES AND VOTES REQUIRED
On March 9, 1998, the record date for the determination of stockholders
entitled to notice of and to vote at the Meeting, there were outstanding and
entitled to vote an aggregate of 8,262,748 shares of Common Stock of the
Company, $.01 par value per share ("Common Stock"). Stockholders are entitled to
one vote per share.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the meeting shall be
necessary to constitute a quorum for the transaction of business. Abstentions
and "broker non-votes" will be considered as present for quorum purposes but
will not be counted as votes cast. Accordingly, abstentions and broker non-votes
will have no effect on the voting on a matter that requires the affirmative vote
of a certain percentage or a plurality of the votes cast or shares voting on a
matter.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present or represented at the meeting is required for the election of
directors. The affirmative vote of the holders of a majority of the shares of
Common Stock present or represented at the meeting is required for the
ratification of the selection of Arthur Andersen LLP as the Company's
independent accountants for the current fiscal year.
BAYCORP HOLDINGS, LTD. AS SUCCESSOR TO GREAT BAY POWER CORPORATION
As a result of a corporate restructuring that was effective on January 24,
1997 (the "Restructuring Date"), the Company's principal asset is its 100%
equity interest in Great Bay Power Corporation ("Great Bay"). Unless the context
requires otherwise, references in this Proxy Statement to the Company for events
and time periods before the Restructuring Date reflect treatment of the Company
as the successor to Great Bay.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of February 27, 1998,
regarding the ownership of the Company's Common Stock by (i) the only persons
known by the Company to own more than five percent of the outstanding shares,
(ii) all directors and nominees of the Company, (iii) each of the executive
officers of
1
<PAGE> 4
the Company named in the Summary Compensation Table (the "Named Executive
Officers") and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
SHARES OF COMMON PERCENTAGE OF
NAME AND ADDRESS STOCK BENEFICIALLY COMMON STOCK
OF BENEFICIAL OWNER OWNED(1) OUTSTANDING(2)
------------------- ------------------ --------------
<S> <C> <C>
5% Stockholders
Group consisting of:
Leon G. Cooperman,
Omega Capital Partners, L.P.,
Omega Institutional Partners, L.P. and
Omega Advisors, Inc. (the "Omega Group")................. 2,710,500(3) 32.2%
c/o Omega Advisors, Inc.
Wall Street Plaza
88 Pine Street
New York, NY 10005
Group consisting of:
Elliott Associates, L.P.,
Westgate International, L.P. and
Martley International, Inc.
(the "Elliott Group").................................... 1,987,208(4) 23.6%
c/o Elliott Associates, L.P.
712 Fifth Avenue
36th Floor
New York, NY 10019
Group consisting of:
SC Fundamental Fund, L.P.,
SC Fundamental Inc.,
SC Fundamental Value BVI, Inc.,
Gary N. Siegler and
Peter M. Collery......................................... 940,903(5) 11.2%
c/o Siegler, Collery & Co.
10 East 50th Street
New York, NY 10022
Group consisting of:
CNA Financial Corp.,
Continental Insurance Company and
Loews Corporation........................................ 667,842(6) 7.9%
c/o CNA Financial Corp.
CNA Plaza
Chicago, IL 60685
Directors and Executive Officers:
Kenneth A. Buckfire........................................ 62,000(7) *
Stanley I. Garnett......................................... 20,000(8) *
Andrew J. Kurtz............................................ 60,000(9) *
Charles A. Leeds, Jr....................................... 2,710,500(10) 32.2%
John A. Tillinghast........................................ 201,100(11) 2.3%
Frank W. Getman Jr......................................... 80,000(12) *
All directors and executive officers as a group (6
individuals)............................................. 3,133,600(9)(10)(13) 35.6%
</TABLE>
- ---------------
* Less than 1% of the total number of outstanding shares of Common Stock of
the Company.
(1) The number of shares of Common Stock beneficially owned by each person or
entity is determined under rules promulgated by the Commission. Under such
rules, beneficial ownership includes any shares as to which the person or
entity has sole or shared voting power or investment power, and also
includes any shares which the person or entity has the right to acquire
within 60 days after February 27, 1998.
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<PAGE> 5
Unless otherwise indicated, each person or entity referred to above has
sole voting and investment power with respect to the shares listed. The
inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of such shares.
(2) Number of shares deemed outstanding includes 8,412,800 shares outstanding
as of February 27, 1998, plus any shares subject to options held by the
person or entity in question that are currently exercisable or exercisable
within 60 days after February 27, 1998.
(3) Represents holdings based on information provided to the Company by the
indicated stockholders and contained in a Schedule 13D filed by the
indicated stockholders with the Commission on February 25, 1997. Leon G.
Cooperman reported beneficial ownership of 2,710,500 shares, with sole
voting and dispositive power with respect to 2,266,520 of such shares and
shared voting and dispositive power with respect to 443,980 of such shares.
Omega Capital Partners, L.P. ("Omega Capital") reported beneficial
ownership of 1,031,760 shares, with sole voting and dispositive power as to
all such shares. Omega Institutional Partners, L.P. ("Omega Institutional")
reported beneficial ownership of 76,520 shares, with sole voting and
dispositive power as to such shares. Omega Advisors, Inc. ("Omega
Advisors") reported beneficial ownership of 1,602,220 shares with sole
voting and dispositive power with respect to 1,158,240 of such shares and
shared voting and dispositive power with respect to 443,980 of such shares.
Mr. Cooperman is the managing partner of each of Omega Capital Partners,
L.P. and Omega Institutional Partners, L.P. and is the President of Omega
Advisors, Inc. These stockholders may be deemed to be a group for purposes
of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(4) The information presented herein is as reported in, and based upon, two
Form 4s, each filed with the Commission on February 5, 1998, one by Elliott
Associates, L.P., a Delaware limited partnership ("Elliott"), and one by
Westgate International, L.P., a Cayman Islands limited partnership
("Westgate"). Elliott reported beneficial ownership of 894,209 shares and
Westgate reported beneficial ownership of 1,092,999 shares. In a Schedule
13D filed by the indicated stockholders with the Commission on February 17,
1997, Martley International, Inc., a Delaware corporation and investment
manager for Westgate ("Martley"), and Westgate reported shared voting and
dispositive power with respect to all shares reported as beneficially owned
by Westgate. Mr. Paul E. Singer and Braxton Associates, L.P., a New Jersey
limited partnership, which is controlled by Mr. Singer, are the general
partners of Elliott. Hambledon, Inc., a Cayman Islands corporation, is the
sole general partner of Westgate. Martley expressly disclaimed equitable
ownership of and pecuniary interest in any Common Stock. The stockholders
identified in this note may be deemed to be a group for purposes of Rule
13d-3 promulgated under the Exchange Act.
(5) The information presented herein is as reported in, and based upon, written
information provided by the indicated stockholders to the Company as of
March 10, 1998 (the "1998 Report"). SC Fundamental Value Fund, L.P.
("Fund") reported beneficial ownership of 601,480 shares. SC Fundamental
Value BVI Ltd. ("BVI") reported beneficial ownership of 316,923 shares. SC
Fundamental Savings Plan ("Plan") reported beneficial ownership of 15,000
shares. In a Schedule 13D filed by the indicated stockholders with the
Commission on July 13, 1995 (the "1995 Schedule 13D") with respect to Great
Bay Power Corporation, a wholly-owned subsidiary of the Company, Fund
identified its general partner as SC Fundamental Inc. ("SC"). According to
the 1995 Schedule 13D, Mr. Siegler is a controlling stockholder, president
and a director of SC and BVI and Mr. Peter M. Collery is a controlling
stockholder, vice president and a director of SC and BVI. According to the
1998 Report, Mr. Collery has shared investment authority over 7,500 shares
held by a student sponsorship partnership. Fund, BVI, Plan, and Messrs.
Siegler and Collery disclaimed any and all beneficial ownership with
respect to the shares held by the student sponsorship partnership. These
stockholders may be deemed to be a group for purposes of Rule 13d-3
promulgated under the Exchange Act.
(6) The information presented herein is as reported in, and based solely upon,
a Schedule 13G filed by the indicated stockholders with the Commission on
February 13, 1998. Each of the indicated stockholders reported beneficial
ownership of all of the 667,842 shares with shared voting and dispositive
power with respect to all of these shares. Loews Corporation holds in
excess of 84% of the equity of CNA Financial
3
<PAGE> 6
Corp., which in turn owns 100% of the equity of Continental Casualty
Company, an Illinois domiciled insurance company. Continental Casualty
Company is the direct owner of the stock ownership reported. The Schedule
13G states that under Illinois Law, assets owned by Continental Casualty
Company are solely under the control of the board of directors of the
insurer. The characterization of shared dispositive power with the parent
holding company is made solely as a consequence of Commission
interpretations regarding control of the subsidiary. CNA Financial Corp.
and Loews Corporation disclaim beneficial ownership of all shares held by
Continental Casualty Company. The stockholders identified in this note may
be deemed to be a group for purposes of Rule 13d-3 promulgated under the
Exchange Act.
(7) Includes 60,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
(8) Consists of 20,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
(9) Consists of 60,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan. Excludes the 1,987,208 shares deemed beneficially owned by the
Elliott Group. See footnote (4) above. Mr. Kurtz is an analyst and
portfolio manager for Stonington Management Corporation, an affiliate of
Elliott Associates, L.P. Mr. Kurtz disclaims beneficial ownership of all
shares deemed beneficially owned by the Elliott Group.
(10) Includes the 2,710,500 shares deemed beneficially owned by the Omega Group.
See footnote (3) above. Mr. Leeds is a general partner of Omega Capital and
Omega Institutional. Mr. Leeds disclaims beneficial ownership of all shares
deemed beneficially owned by the Omega Group.
(11) Includes 200,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
(12) Consists of 80,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
(13) Includes 400,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
ELECTION OF DIRECTORS
The persons named in the enclosed proxy card (John A. Tillinghast and Frank
W. Getman Jr.) will vote to elect the six nominees named below as Directors of
the Company unless authority to vote for the election of any or all of the
nominees is withheld by marking the proxy card to that effect. Each nominee is
presently serving as a director, except for Mr. Getman, who currently serves as
the Company's Chief Operating Officer. Each nominee has consented to being named
in this Proxy Statement and to serve if elected.
Each director will be elected to hold office until the next annual meeting
of stockholders or until his successor is elected and qualified. If for any
reason any nominee should become unavailable for election prior to the Meeting,
the person acting under the proxy may vote the proxy for the election of a
substitute. It is not presently expected that any of the nominees will be
unavailable.
Set forth below are the name and age of each person nominated to serve on
the Company's Board of Directors and the positions and offices held by him, his
principal occupation and business experience during the past five years, the
names of other publicly held companies of which he serves as a director and the
year of the commencement of his term as a director of the Company. Information
with respect to the number of shares of Common Stock beneficially owned by each
director, directly or indirectly, as of February 27, 1998, appears under
"Security Ownership of Certain Beneficial Owners and Management."
KENNETH A. BUCKFIRE, age 39, has served as a director of the Company since
November 1994. Mr. Buckfire has been a Managing Director at Wasserstein Perella
& Co., Inc. since February 1996. Mr. Buckfire served with Lehman Brothers, Inc.
from September 1994 to January 1996 as a Senior Vice President of High Yield
Banking and from March 1991 to August 1994 as a Vice President of High Yield
4
<PAGE> 7
Banking. Mr. Buckfire is Chairman of the Board of Directors of WebFacts LLC. Mr.
Buckfire holds a B.A. from the University of Michigan and an M.B.A. from
Columbia University.
STANLEY I. GARNETT, age 53, has served as a director of the Company since
June 1997. Mr. Garnett has been an Executive Vice President of Florida Progress
Corporation, an electric utility, since April 1997. From March 1996 until March
1997, Mr. Garnett was a senior advisor with Putnam, Hayes & Bartlett, an
economic and management consulting firm. From September 1981 until December
1995, he was a senior executive at Allegheny Power System, Inc., an electric
utility, serving as the company's chief legal officer and CFO from 1990 until
December 1995. Mr. Garnett holds a B.A. in Business Administration from Colby
College, an M.B.A. from the Wharton Graduate School of Commerce and Finance and
a J.D. from New York University School of Law.
FRANK W. GETMAN JR., age 34, has served as Chief Operating Officer of the
Company and its predecessor since September 17, 1996 and Vice President,
Secretary and General Counsel of Great Bay since August 1, 1995. From September
1991 to August 1995, Mr. Getman was an attorney with the law firm of Hale and
Dorr LLP, Boston, Massachusetts. Mr. Getman holds J.D. and M.B.A. degrees from
Boston College and a B.A. in Political Science from Tufts University.
ANDREW J. KURTZ, age 32, has served as a director of the Company since May
1995. Mr. Kurtz has been an analyst and portfolio manager for Stonington
Management Corporation, an affiliate of Elliott Associates, L.P., since July
1994. From August 1992 to July 1994, Mr. Kurtz was an attorney at Weil, Gotshal
and Manges in New York. Mr. Kurtz was employed by Chemical Realty Corporation, a
division of Chemical Bank, from 1988 to 1989. Mr. Kurtz holds a B.S. in
Economics from the Wharton School of Business at the University of Pennsylvania
and a J.D. from the University of Pennsylvania.
CHARLES A. LEEDS, JR., age 46, has served as a director of the Company
since November 1995. Mr. Leeds has served as the Investment Advisor for Omega
Advisors, Inc. since 1991. Mr. Leeds holds a B.A. in Economics from the
University of Pennsylvania and an M.B.A. from Columbia University.
JOHN A. TILLINGHAST, age 70, has served as President, Treasurer and a
director of the Company since November 1994 and Chief Executive Officer since
April 1995. Since 1987, Mr. Tillinghast has served as President and the sole
stockholder of Tillinghast Technology Interests, Inc. ("TILTEC"), a private
consulting firm. From 1986 to 1993, Mr. Tillinghast served as Chairman of the
Energy Engineering Board of the National Academy of Sciences. He holds an M.S.
in Mechanical Engineering from Columbia University.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and holders of more than 10% of the Company's Common Stock to
file with the Commission initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Such
persons are required by Commission regulations to furnish the Company with
copies of all Section 16(a) forms filed by such person with respect to the
Company.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company believes
that during 1997, its directors, executive officers and holders of more than 10%
of the Company's Common Stock complied with all Section 16(a) filing
requirements, except as follows. Elliott Associates, L.P. ("Elliott") sold
373,600 shares of the Company's Common Stock to Westgate International, L.P.
("Westgate"), an affiliate of Elliott, on December 24, 1997. Each of Elliott and
Westgate were late in filing Form 4s with the Commission, which they filed on
February 9, 1998. Two of the Company's directors, Kenneth A. Buckfire and Andrew
J. Kurtz, did not timely file Form 4s with the Commission in connection with
their receipt on April 29, 1997 of options to purchase 20,000 shares of the
Company's Common Stock.
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<PAGE> 8
BOARD AND COMMITTEE MEETINGS
The Board of Directors met 14 times (including by telephone conference and
by written consent) during 1997. All directors attended at least 75% of the
meetings of the Board of Directors and of the committees on which they served.
The Board of Directors has a Compensation Committee, which makes
recommendations concerning salaries and incentive compensation for employees of
and consultants to the Company and administers and grants stock options pursuant
to the Company's 1996 Stock Option Plan (the "1996 Plan"). The Compensation
Committee did not meet in 1997, but met in March 1998 to review and ratify
officer compensation for 1997 and establish compensation policies for 1998. The
current members of the Compensation Committee are Messrs. Buckfire, Garnett,
Kurtz and Leeds.
The Board of Directors has an Audit Committee, which reviews the results
and scope of the audit and other services provided by the Company's independent
public accountants. The Audit Committee met in March 1998 to review the results
of the audit of fiscal year 1997. The current members of the Audit Committee are
Messrs. Buckfire, Garnett and Kurtz.
The Company has no nominating committee of the Board of Directors.
COMPENSATION OF DIRECTORS
Employee directors do not receive any compensation for serving on the
Board. Non-employee directors receive $2,500 per quarter, plus reasonable
expenses. Non-employee directors are also eligible to receive stock option
grants in accordance with a formula specified in the 1996 Plan. Mr. Leeds, a
non-employee director of the Company, has waived his rights to all compensation
available to non-employee directors, including his right to receive stock
options pursuant to the 1996 Plan.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth certain
information concerning the compensation of the Company's Chief Executive Officer
and the Company's other executive officer who was serving as an executive
officer on December 31, 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------- OTHER ANNUAL ------------------
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1) COMPENSATION($) OPTIONS/SARS(#)(2)
- --------------------------- ---- ------------ ----------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
John A. Tillinghast.................. 1997 $130,000 $ 0 $ 0
President and 1996 95,000 0 0 0
Chief Executive Officer 1995 95,000 0 0 200,000
Frank W. Getman Jr................... 1997 100,000 41,163 25,000(3) 0
Chief Operating Officer 1996 100,000 35,436 25,000(3) 50,000
and Secretary 1995(4) 41,667 0 0 75,000
</TABLE>
- ---------------
(1) Amounts shown represent cash compensation earned by the Named Executive
Officers for the fiscal years presented.
(2) The option exercise price is equal to the fair market value of the Common
Stock on the date of grant. Each executive officer also holds a contingent
stock appreciation right relating to his option pursuant to his respective
employment agreement. See "Employment Agreements."
(3) Amount shown represents compensation in the form of partial forgiveness of a
loan to Mr. Getman. See "Employment Agreements."
(4) Mr. Getman's employment with the Company commenced on August 1, 1995.
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No Option/SAR Grants. The Company did not grant any options or SARs to any
of the Named Executive Officers during the fiscal year ended December 31, 1997.
Option Exercises and Year-End Values. The following table sets forth
certain information concerning each exercise of stock options during the fiscal
year ended December 31, 1997 by each of the Named Executive Officers and the
number and value of unexercised options held by each of the Named Executive
Officers on December 31, 1997:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT FISCAL OPTIONS/SARS AT
YEAR-END(#)(1) FISCAL YEAR-END($)(2)
SHARES ---------------------- ---------------------
ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
John A. Tillinghast............. 0 0 200,000/0 $0/$0
Frank W. Getman Jr.............. 0 0 80,000/45,000 $0/$0
</TABLE>
- ---------------
(1) Options granted under the Company's 1996 Stock Option Plan. Each executive
officer also holds a contingent stock appreciation right relating to his
option pursuant to his respective employment agreement. See "Employment
Agreements."
(2) Based on the fair market value of the Common Stock on December 31, 1997
($6.625).
EMPLOYMENT AGREEMENTS
Effective October 8, 1996, John A. Tillinghast, the President of the
Company, entered into an Employment Agreement with the Company (the "Tillinghast
Employment Agreement") pursuant to which Mr. Tillinghast agreed to serve not
less than 40 full-time days per quarter in his capacity as the President and
Chief Executive Officer of the Company. The termination date of the Tillinghast
Employment Agreement is December 31, 1998. The Tillinghast Employment Agreement
provides for an annual salary of $130,000. In addition, if during the term of
the Tillinghast Employment Agreement, a change of control of the Company occurs
(as that term is defined under the agreement), then at that time, the
Tillinghast Employment Agreement will terminate and the Company will pay to Mr.
Tillinghast a lump sum payment of $130,000. Additionally, the Tillinghast
Employment Agreement contains a two-year trailing non-solicitation and
noncompetition covenant.
Effective August 1, 1995 (the "Getman Commencement Date"), Frank W. Getman
Jr. commenced employment with the Company and entered into an Employment
Agreement (the "Getman Employment Agreement") pursuant to which Mr. Getman
agreed to serve as Vice President, General Counsel and Secretary through August
1, 1998. On September 17, 1996, the Company and Mr. Getman amended the Getman
Employment Agreement, broadening Mr. Getman's role to include primary authority
and responsibility for operational and managerial aspects of the Company. Mr.
Getman now serves as the Company's Chief Operating Officer and Secretary. The
Getman Employment Agreement provides for an annual salary of $100,000. In
addition, the Company loaned Mr. Getman $75,000 at the time he commenced
employment, of which $25,000 was forgiven on each of the first and second
anniversaries of the Getman Commencement Date. The remaining $25,000 of the
principal amount of the loan will be forgiven on the third anniversary of the
Getman Commencement Date, so long as Mr. Getman remains employed by the Company
on that date. If Mr. Getman's employment is terminated for cause (as defined in
the Getman Employment Agreement) or by Mr. Getman, he has agreed to repay to the
Company the outstanding principal amount of such loan at such time, less any
amounts forgiven by the Company, plus interest accrued on such adjusted
principal amount from the Getman Commencement Date at an interest rate of 6% per
year.
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<PAGE> 10
If Mr. Getman's employment with the Company terminates in a "Qualifying
Termination" in connection with a "Change in Control" (each as defined in the
Getman Employment Agreement), (i) Mr. Getman is entitled to receive in cash an
amount equal to the greater of the sum of his annual salary from the date of
termination until the date of expiration of the Getman Employment Agreement or
twice his annual salary (excluding loan forgiveness) at the date of such Change
in Control; (ii) the outstanding loan amount, to the extent not forgiven, shall
be immediately forgiven; and (iii) all outstanding stock options shall become
immediately exercisable. A Qualifying Termination will be treated as having
occurred if, prior to the second anniversary of a Change in Control, (i) Mr.
Getman's employment is terminated other than for cause or (ii) Mr. Getman
voluntarily resigns following, generally, any material impairment or material
adverse change in his working conditions, authority, position or compensation as
compared with that in effect immediately prior to the Change in Control.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company's Board of Directors is
responsible for establishing compensation policies with respect to the Company's
executive officers. The objectives of the Company's executive compensation
program are to establish compensation levels designed to enable the Company to
attract, retain and reward executive officers who contribute to the long-term
success of the Company so as to enhance stockholder value. Stock options granted
under the 1996 Plan are a key component of the executive compensation program
and are intended to provide executives with an equity interest in the Company so
as to link a meaningful portion of the compensation of the Company's executives
with the performance of the Company's Common Stock.
To date, the Company has only two executive officers, both of whom serve
pursuant to employment agreements. See "Employment Agreements."
In October 1996, the Compensation Committee approved a new employment
agreement with John A. Tillinghast pursuant to which Mr. Tillinghast agreed to
serve as the President and Chief Executive Officer of the Company at an annual
salary of $130,000. See "Employment Agreements." The Committee determined Mr.
Tillinghast's compensation based on their judgment of Mr. Tillinghast's
historical and expected contributions to the Company and the value of his
experience and knowledge of the Company's industry.
In September 1996, the Compensation Committee approved an amendment to the
Company's employment agreement with Frank W. Getman Jr., pursuant to which Mr.
Getman's role was broadened to include primary authority and responsibility for
operational and managerial aspects of the Company. See "Employment Agreements."
As in the case of its determination of Mr. Tillinghast's compensation, the
Committee sought to further align the interests of Mr. Getman with those of the
Company's stockholders. Accordingly, the Compensation Committee approved a grant
to Mr. Getman in 1996 of an incentive stock option to purchase 50,000 shares of
Common Stock, at an exercise price of $8.00 per share, on which options to
purchase 25,000 shares of Common Stock will become exercisable only in the event
of a "Change of Control" of the Company (as defined in the Getman Employment
Agreement).
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1,000,000 paid to its chief
executive officer and each of its four other most highly compensated executive
officers. Qualifying performance-based compensation will not be subject to the
deduction limit if certain requirements are met. Based on the compensation
awarded to Mr. Tillinghast and Mr. Getman, it does not appear that the Section
162(m) limitation will have any impact on the Company in the near term. While
the Committee does not currently intend to qualify its incentive awards as a
performance-based plan, it will continue to monitor the impact of Section 162(m)
on the Company.
COMPENSATION COMMITTEE
Kenneth A. Buckfire
Stanley I. Garnett
Andrew J. Kurtz
Charles A. Leeds, Jr.
8
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Company's Compensation Committee are Messrs.
Buckfire, Kurtz and Leeds. No executive officer of the Company has served as a
director or member of the compensation committee (or other committee serving an
equivalent function) of any other entity, whose executive officers served as a
director of or member of the Compensation Committee of the Company.
STOCK PERFORMANCE GRAPH
The following graph compares cumulative total stockholder return on the
Company's Common Stock and in the case of periods before the Restructuring Date,
on the Common Stock of Great Bay Power Corporation, the Company's predecessor
and currently a wholly owned subsidiary of the Company, with the cumulative
total return for the S&P 500 Stock Index and the Philadelphia Stock Exchange
Utility Index. Great Bay's Common Stock was first registered under Section 12 of
the Exchange Act on April 17, 1995. This graph assumes the investment of $100 on
April 17, 1995 in Great Bay's Common Stock, the S&P 500 Stock Index and UTY
Philadelphia Stock Exchange Utility Index and assumes dividends are reinvested.
Measurement points are at April 17, 1995, December 31, 1995, December 31, 1996
and December 31, 1997.
COMPARATIVE TOTAL RETURNS(1)
BAYCORP HOLDINGS, LTD.(2), S&P 500, UTY UTILITY INDEX
(Performance results through 12/31/97)
[GRAPH]
<TABLE>
<S> <C> <C> <C> <C>
4/17/95 12/31/95 12/31/96 12/31/97
BayCorp Holdings, Ltd. $100.00 $114.29 $119.64 $ 94.64
S&P 500 $100.00 $123.29 $152.36 $203.21
UTY Index $100.00 $117.97 $109.03 $131.75
</TABLE>
- ---------------
(1) Assumes $100 invested at the close of trading on April 17, 1995 in the
Common Stock of Great Bay Power Corporation (the Company's predecessor and
currently a wholly owned subsidiary of the Company), the S&P 500, and the
UTY Utility Index. Cumulative total return assumes reinvestment of
dividends.
(2) For purposes of this chart, BayCorp Holdings, Ltd. is treated as the
successor to Great Bay Power Corporation. Trading of BayCorp Holdings, Ltd.
Common Stock commenced on January 28, 1997.
9
<PAGE> 12
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, on the recommendation of its Audit Committee, has
selected the firm of Arthur Andersen LLP, independent public accountants, as
accountants of the Company for the fiscal year ending December 31, 1998.
Although stockholder approval of the Board of Directors' selection of Arthur
Andersen LLP is not required by law, the Board of Directors believes that it is
advisable to give stockholders an opportunity to ratify this selection. If this
proposal is not approved at the Meeting, the Board of Directors will reconsider
its selection of Arthur Andersen LLP.
A representative of Arthur Andersen LLP is expected to be present at the
Meeting. The representative will have the opportunity to make a statement if he
or she desires to do so and will also be available to respond to appropriate
questions from stockholders.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons named in the accompanying proxy to
vote, or otherwise act, in accordance with their judgment on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph, facsimile and personal interviews. Brokers, custodians and
fiduciaries will be requested to forward proxy soliciting material to the owners
of stock held in their names. The Company will reimburse banks and brokers for
their reasonable out-of-pocket expenses incurred in connection with the
distribution of proxy materials.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Dover, New Hampshire not later than November 23, 1998 for inclusion in the
proxy statement for that meeting.
By Order of the Board of Directors,
FRANK W. GETMAN JR., Secretary
March 24, 1998
THE MANAGEMENT HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
10
<PAGE> 13
BAYCORP HOLDINGS, LTD.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 5, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY AND SHOULD BE RETURNED AS SOON AS POSSIBLE TO
AMERICAN STOCK TRANSFER & TRUST COMPANY
The undersigned, having received notice of the meeting and management's proxy
statement therefor, and revoking all prior proxies, hereby appoint(s) John A.
Tillinghast and Frank W. Getman Jr., each of them, attorneys or attorney of
the undersigned (with full power of substitution in them and each of them) for
and in the name(s) of the undersigned to attend the Annual Meeting of
Stockholders of BAYCORP HOLDINGS, LTD. (the "Company") to be held at the
American Stock Exchange, 86 Trinity Place, New York, New York on Tuesday, May 5,
1998, at 10:00 a.m., Eastern Standard Time, and any adjourned session
thereof, and there to vote and act upon the following matters in respect of all
shares of stock of the Company which the undersigned will be entitled to vote
or act upon, with all the powers the undersigned would possess if personally
present.
In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment thereof.
The proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. The shares represented by this Proxy will be voted
as directed by the undersigned. If no direction is given with respect to any
proposal, this proxy will be voted for such proposal. Attendance of the
undersigned at the meeting or at any adjournment thereof will not be deemed to
revoke this proxy unless the undersigned shall revoke this proxy in writing.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE URGED TO
COMPLETE, DATE, SIGN AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE.
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 14
[X] PLEASE MARK
YOUR VOTES AS IN THIS
EXAMPLE
NOMINEES: Kenneth A. Buckfire
Stanley I. Garnett
Frank W. Getman Jr.
FOR WITHHELD Andrew J. Kurtz
1.) To elect the Charles A. Leeds, Jr.
following [ ] [ ] John A. Tillinghast
Directors:
For, except withheld from the following nominee(s):
- -----------------------------------------------------------
FOR AGAINST ABSTAIN
2.) To ratify the appointment of Arthur Andersen [ ] [ ] [ ]
LLP as the Company's independent public
accountants for the current fiscal year.
3.) To transact such other business as may [ ] [ ] [ ]
properly come before the meeting or any
adjournment thereof.
Mark box at right if you plan to attend [ ]
the meeting
Mark box at right if comments or address [ ]
change have been noted on the reverse
side of this card
STOCKHOLDER______________________________________________DATE__________________
CO-HOLDER (IF ANY)_______________________________________
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
