<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 sec.240.14a-11(c) or sec.240.14a-2
BayCorp Holdings, Ltd.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
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:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
BAYCORP HOLDINGS, LTD.
20 INTERNATIONAL DRIVE, SUITE 301
PORTSMOUTH, NEW HAMPSHIRE 03801-6809
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 1999
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 Wednesday, April 28, 1999 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 1, 1999 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.
President and Chief Executive
Officer
Portsmouth, New Hampshire
March 31, 1999
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.
20 INTERNATIONAL DRIVE, SUITE 301
PORTSMOUTH, NEW HAMPSHIRE 03801-6809
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
APRIL 28, 1999
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 April 28, 1999 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, 1998
(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, 1999. 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., 20 International Drive,
Suite 301, Portsmouth, New Hampshire 03801-6809.
VOTING SECURITIES AND VOTES REQUIRED
On March 1, 1999, 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 8,192,000 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 28, 1999,
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
<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) 33.1%
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) 24.3%
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...................................... 830,103(5) 10.1%
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) 8.2%
c/o CNA Financial Corp.
CNA Plaza
Chicago, IL 60685
Directors and Executive Officers:
Kenneth A. Buckfire..................................... 42,000(7) *
Stanley I. Garnett, II.................................. 26,667(8) *
Frank W. Getman Jr...................................... 78,000(9) *
Michael R. Latina....................................... 20,000(10) *
Lawrence M. Robbins..................................... 2,730,500(11) 33.1%
John A. Tillinghast..................................... 171,100(12) 2.1%
All directors and executive officers as a group (6
individuals).......................................... 3,068,267(10)(11)(13) 37.5%
</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 28, 1999.
2
<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 8,192,000 shares outstanding
as of February 28, 1999, 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 28, 1999.
(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 12, 1999 (the "1999 Report"). SC Fundamental Value Fund, L.P.
("Fund") reported beneficial ownership of 544,630 shares. SC Fundamental
Value BVI Ltd. ("BVI") reported beneficial ownership of 285,473 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
1999 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 upon, written
information provided by Continental Casualty Company and Continental
Assurance Company on behalf of Continental Assurance Company Pension
Investment Fund as of March 10, 1999 and a Schedule 13G filed by the
indicated stockholders with the Commission on February 13, 1998. Each of
the indicated stockholders
3
<PAGE> 6
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 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 147,569 shares and Continental Assurance Company is the
direct owner of 520,273 shares. 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 40,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
(8) Consists of 26,667 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
(9) Consists of 75,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
(10) Consists of 20,000 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. Latina is a portfolio manager
for Elliott Associates, L.P. Mr. Latina disclaims beneficial ownership of
all shares deemed beneficially owned by the Elliott Group.
(11) Includes 2,710,500 shares deemed beneficially owned by the Omega Group. See
footnote (3) above. Also includes 20,000 shares of Common Stock issuable
upon exercise of outstanding stock options granted under the Company's 1996
Stock Option Plan. Mr. Robbins is a general partner of investment
partnerships within the Omega Group. Mr. Robbins disclaims beneficial
ownership of all shares deemed beneficially owned by the Omega Group.
(12) Includes 165,000 shares of Common Stock issuable upon exercise of
outstanding stock options granted under the Company's 1996 Stock Option
Plan.
(13) Includes 346,667 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. 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 28, 1999, appears under
"Security Ownership of Certain Beneficial Owners and Management."
4
<PAGE> 7
KENNETH A. BUCKFIRE, age 40, 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
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 54, has served as a director of the Company since
June 1997. Mr. Garnett has been a senior advisor to PHB Hagler Bailly, an
economic and management consulting firm, since September 1998. Mr. Garnett was
an Executive Vice President of Florida Progress Corporation, an electric
utility, from April 1997 to August 1998. 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 35, has served as President and Chief Executive
Office of the Company and Great Bay since May 1998. From September 1996 until
May 1998, Mr. Getman was Chief Operating Officer of the Company and Great Bay.
Mr. Getman served as Vice President, Secretary and General Counsel of Great Bay
from August 1995 to May 1998. 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.
MICHAEL R. LATINA, age 26, has served as a director of the Company since
February 1999. Mr. Latina has been a portfolio manager for Stonington Management
Corporation, an affiliate of Elliott Associates, L.P., since March 1996. Mr.
Latina is a director of F-W Oil Interests, Inc., an independent oil and gas
exploration and production company, Odyssea Marine, Inc., a marine services
company, and Pegasus Drilling Technologies LLC, a provider of drilling tools to
the oil and gas and utility industries. He served as a Director of Solid State
Geophysical, Inc. from 1996 to 1997 and, from 1994 to 1995, worked as an
investment banker with Bear, Stearns & Co., Inc. Mr. Latina holds a B.S. in
Finance from New York University's Stern School of Business.
LAWRENCE M. ROBBINS, age 29, has served as a director of the Company since
February 1999. Mr. Robbins is a general partner of Omega Advisors, Inc., where
he has been a portfolio manager since January 1995. From July 1992 to January
1995, Mr. Robbins was an analyst and associate at Gleacher & Co., an investment
bank specializing in merger and acquisition advisory services. Mr. Robbins is a
Certified Public Accountant and graduated from the University of Pennsylvania,
earning degrees from the Wharton School and the Moore School of Engineering.
JOHN A. TILLINGHAST, age 71, has served as a director of the Company since
November 1994 and was the Chief Executive Officer of the Company from April 1995
until May 1998. Mr. Tillinghast continues to serve as the Company's Chief
Engineer. 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.
5
<PAGE> 8
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 1998, 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 that one of the Company's directors, Kenneth A. Buckfire,
did not timely file a Form 4 with the Commission in connection with his receipt
on May 5, 1998 of an option to purchase 20,000 shares of the Company's Common
Stock, but reported that option grant on a Form 5 filed on February 10, 1999.
BOARD AND COMMITTEE MEETINGS
The Board of Directors met seven times (including by telephone conference
and by written consent) during 1998. 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 Compensation Committee 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, Latina and Robbins.
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 April 1999 to review the results
of the audit of fiscal year 1998. The current members of the Audit Committee are
Messrs. Buckfire, Garnett, Latina and Robbins.
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 $2,500 per quarter, plus reasonable
expenses. Non-employee directors are also eligible to receive stock option
grants in accordance with a formula specified in the 1996 Stock Option Plan.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth certain
information concerning the compensation of the Company's Chief Executive Officer
and the Company's former Chief Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------- OTHER ANNUAL ------------------
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($)(1) COMPENSATION($) OPTIONS/SARS(#)(2)
--------------------------- ---- ------------ ----------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Frank W. Getman Jr............ 1998 $130,045 $50,000 $25,000(3) 93,750(4)
President and 1997 100,000 41,163 25,000(3) 0
Chief Executive Officer 1996 100,000 35,436 25,000(3) 37,500(4)
John A. Tillinghast........... 1998 134,583 0 0 165,000(4)
Former President and 1997 130,000 0 0 0
Chief Executive Officer 1996 95,000 0 0 0
</TABLE>
- ---------------
(1) Amounts shown represent cash compensation earned by the Named Executive
Officers for the fiscal years presented.
(2) The option exercise price is equal to the fair market value of the Common
Stock on the date of grant. Mr. Getman also holds a contingent stock
appreciation right relating to an option granted under his employment
agreement. See "Employment Agreements."
6
<PAGE> 9
(3) Amount shown represents compensation in the form of partial forgiveness of a
loan to Mr. Getman. See "Employment Agreements."
(4) The Company repriced all outstanding options on December 18, 1998. See
"Option Repricing."
Option/SAR Grant Table. The following table sets forth certain information
regarding options and SARs granted during 1998 by the Company to its executive
officers. All of the options described below were issued in connection with the
Company's option repricing on December 18, 1998. See "Option Repricing."
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------
PERCENT OF
NUMBER OF TOTAL POTENTIAL REALIZABLE
SECURITIES OPTIONS/ VALUE AT ASSUMED RATES
UNDERLYING SARS OF STOCK PRICE
OPTIONS/ GRANTED TO APPRECIATION FOR
SARS EMPLOYEES EXERCISE OR OPTION TERM(2)
GRANTED IN FISCAL BASE PRICE EXPIRATION -----------------------
NAME (#) YEAR ($/SH)(1) DATE 5%($) 10%($)
---- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Frank W. Getman Jr............... 56,250 13.5% $4.90 8/01/2002 $ 52,752 $112,632
37,500 9.0 4.90 9/16/2006 83,962 199,691
John A. Tillinghast.............. 150,000 35.9 4.90 4/24/2002 145,634 308,504
15,000 3.6 4.90 5/05/2005 28,444 65,390
</TABLE>
- ---------------
(1) The exercise price is equal to the fair market value of the Company's Common
Stock on the date of grant. The exercisability of these options is
accelerated upon the occurrence of a change in control (as defined in the
1996 Stock Option Plan). Each executive officer also holds a contingent
stock appreciation right relating to his option pursuant to his respective
employment agreement. See "Employment Agreements."
(2) The amounts shown on this table represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. These gains are based on assumed rates of stock appreciation of 5% and
10%, compounded annually from the dates the respective options were granted
to their expiration dates. The gains shown are net of the option exercise
price, but do not include deductions for taxes or other expenses associated
with the exercise. Actual gains, if any, on stock option exercises will
depend on the future performance of the Company's Common Stock, the
optionholder's continued employment through the option period, and the date
on which the options are exercised.
Option Exercises and Year-End Values. The following table sets forth
certain information concerning each exercise of stock options during the fiscal
year ended December 31, 1998 by each of the Company's executive officers and the
number and value of unexercised options held by each of the these executive
officers on December 31, 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY
FISCAL OPTIONS/SARS AT
YEAR-END(#)(1) FISCAL YEAR-END($)(2)
SHARES ---------------------- ---------------------
ACQUIRED ON VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE
---- ----------- -------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
Frank W. Getman Jr............... 0 0 75,000/18,750 $0/$0
John A. Tillinghast.............. 0 0 165,000/0 $0/$0
</TABLE>
7
<PAGE> 10
- ---------------
(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, 1998
($3.50).
OPTION REPRICING
The following table sets forth certain information concerning stock option
repricing that occurred on December 18, 1998.
TEN-YEAR OPTION REPRICING
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES NUMBER OF MARKET PRICE EXERCISE ORIGINAL
UNDERLYING SECURITIES OF STOCK AT PRICE AT OPTION TERM
OPTIONS UNDERLYING TIME OF TIME OF NEW REMAINING AT
REPRICED OR NEW REPRICING OR REPRICING OR EXERCISE DATE OF
AMENDED OPTIONS AMENDMENT AMENDMENT PRICE REPRICING OR
NAME AND POSITION DATE (#) (#) ($) ($) ($) AMENDMENT
----------------- -------- ----------- ---------- ------------ ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Frank W. Getman Jr.................. 12/18/98 2,211 1,658 $4.25 $8.50 $4.90 43 months
President and 12/18/98 27,211 20,408 4.25 8.50 4.90 43 months
Chief Executive Officer 12/18/98 45,579 34,184 4.25 8.50 4.90 43 months
12/18/98 25,000 18,750 4.25 8.00 4.90 93 months
12/18/98 25,000 18,750 4.25 8.00 4.90 93 months
John A. Tillinghast................. 12/18/98 27,211 20,408 4.25 8.00 4.90 40 months
Former President and 12/18/98 165,579 124,184 4.25 8.00 4.90 40 months
Chief Executive Officer 12/18/98 7,210 5,408 4.25 8.00 4.90 76 months
12/18/98 20,000 15,000 4.25 7.25 4.90 76 months
</TABLE>
COMPENSATION COMMITTEE REPORT ON OPTION REPRICING
In late November and early December 1998, the Compensation Committee became
concerned that the Company's outstanding stock options might not continue to
provide the incentive and retention function for which those options originally
had been issued. This concern arose because the price of the Company's stock
declined from $8 when the Company last issued stock options to employees in
April 1996 to approximately $4.50 in early December 1998. In response to this
concern, the Compensation Committee analyzed the Company's existing stock
options and reviewed stock option repricing strategies. The Committee recognized
that, given stock prices between $4.38 and $4.75 during the first half of
December 1998, the option exercise price of all of BayCorp's outstanding options
exceeded the then-current market price by 70% to 100% of the then-current market
price.
The Compensation Committee learned that other companies confronted with
exclusively out-of-the-money options adjusted stock options in order to continue
to motivate their employees. The Committee also concluded that the loss of key
employees could have a significant adverse impact on the Company's performance.
In addition, the Committee recognized that option repricing could provide the
Company with an opportunity to reduce the number of outstanding options.
Based on these considerations, on December 3, 1998, the Compensation
Committee determined that it was in the best interests of the Company and its
stockholders to restore the incentive nature of outstanding options held by
employees (including executive officers) and directors by offering these
optionholders the opportunity to exchange their options for new options as
follows: (i) each employee (other than employee directors) forfeited his or her
outstanding options and received replacement options with an exercise price
equal to the average closing price of the Company's Common Stock over the two
week period ended December 18, 1998 ($4.45), (ii) each non-employee director
forfeited one-third of the total number of options he held and received
replacement options with an exercise price equal to 110% of the average closing
price of the Company's Common Stock over the two week period ended December 18,
1998 (110% of $4.45, or $4.90) and (iii) each employee director forfeited
one-fourth of the total number of options he held and also received replacement
options with an exercise price of $4.90. All other terms and conditions
applicable to the
8
<PAGE> 11
outstanding options remained the same, except that each of Messrs. Getman and
Tillinghast further agreed to delay the exercise date of 20,408
otherwise-exercisable options until January 1, 1999. All of the Company's
optionholders elected to participate in the option repricing.
COMPENSATION COMMITTEE
Kenneth A. Buckfire
Stanley I. Garnett
Michael R. Latina
Lawrence M. Robbins
EMPLOYMENT AGREEMENTS
On May 5, 1998, the Company entered into an employment agreement with Frank
W. Getman Jr. (the "Getman Employment Agreement") pursuant to which Mr. Getman
agreed to serve as the Company's President and Chief Executive Officer through
July 31, 2000. The Getman Employment Agreement provides for an initial annual
salary of $150,000 with an increase to $160,000 after May 5, 1999. In addition,
the Company loaned Mr. Getman $25,000 on May 5, 1998 to purchase the Company's
Common Stock. The Company will forgive $12,500 of the loan on each of May 5,
1999 and May 5, 2000, 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 since May 5, 1998 at an interest rate of 6% per year.
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. Under certain circumstances identified in the Getman
Employment Agreement, the Company may be required to pay to Mr. Getman
additional compensation such that the total of the amounts payable under clause
(i) above and the value of Mr. Getman's options (as defined in the Getman
Employment Agreement) is $500,000. 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.
On May 5, 1998, the Company entered into an employment agreement with John
A. Tillinghast (the "Tillinghast Employment Agreement") pursuant to which Mr.
Tillinghast agreed to serve as Chairman of the Company's Board of Directors and
Chief Engineer through May 5, 2000. Under the agreement, Mr. Tillinghast will
work for approximately 400 hours per year and will be paid $250 per hour.
Additionally, the Tillinghast Employment Agreement contains a one year trailing
non-solicitation and noncompetition covenant.
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. Currently, the Company's only executive officer is its
President and Chief Executive Officer. 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 Stock Option Plan are a key component of the
executive compensation program and are intended to provide executives with an
equity interest in the
9
<PAGE> 12
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.
In May 1998, the Compensation Committee approved a new employment agreement
with Frank W. Getman Jr. pursuant to which Mr. Getman agreed to serve as the
President and Chief Executive Officer of the Company at an annual salary of
$150,000 through May 4, 1999 and $160,000 for the following year. See
"Employment Agreements." The Committee determined Mr. Getman's compensation
based on their judgment of Mr. Getman's historical and expected contributions to
the Company and the value of his experience and knowledge of the Company's
industry.
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. 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
Michael R. Latina
Lawrence M. Robbins
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Company's Compensation Committee are Messrs.
Buckfire, Garnett, Latina and Robbins. 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.
10
<PAGE> 13
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,
December 31, 1997 and December 31, 1998.
COMPARATIVE TOTAL RETURNS (1)
BAYCORP HOLDINGS, LTD.(2), S&P 500, UTY UTILITY INDEX
(PERFORMANCE RESULTS THROUGH DECEMBER 31, 1998)
<TABLE>
<CAPTION>
BAYCORP HOLDINGS, LTD. S&P 500 UTY INDEX
---------------------- ------- ---------
<S> <C> <C> <C>
'4/17/95' 100.00 100.00 100.00
'12/31/95' 114.29 123.29 117.97
'12/31/96' 119.64 152.36 109.03
'12/31/97' 94.64 203.21 131.75
'12/31/98' 50.00 251.42 148.18
</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.
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, 1999.
Although stockholder approval of the Board of Directors' selection of Arthur
Andersen
11
<PAGE> 14
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 2000 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Portsmouth, New Hampshire not later than November 30, 1999 for inclusion in
the proxy statement for that meeting.
By Order of the Board of Directors,
FRANK W. GETMAN JR.,
President and Chief Executive
Officer
March 31, 1999
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.
12
<PAGE> 15
BAYCORP HOLDINGS, LTD.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD APRIL 28, 1999
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 Wednesday,
April 28, 1999, 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> 16
<TABLE>
<S> <C>
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
NOMINEES: Kenneth A. Buckfire
FOR WITHHELD Stanley I. Garnett FOR AGAINST ABSTAIN
1.) To elect the [ ] [ ] Frank W. Getman Jr. 2.) To ratify the appointment of Arthur [ ] [ ] [ ]
following Michael R. Latina Andersen LLP as the Company's
Directors: Lawrence M. Robbins independent public accountants for
John A. Tillinghast the current fiscal year.
For, except withheld from the following nominee(s): 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.
</TABLE>
