VALLEY RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 8, 1998
To the Stockholders of
VALLEY RESOURCES, INC.
Notice is hereby given that the Annual Meeting of the Stockholders of
Valley Resources, Inc. (the "Corporation") will be held at the principal
office of the Corporation, 1595 Mendon Road, Cumberland, Rhode Island 02864-
0700, on Tuesday, December 8, 1998, at 10:00 a.m., for the following
purposes:
1. To elect three directors, each to serve for a term of three years
and until their successors are elected and qualified.
2. To consider and act upon such other matters as may properly come
before the meeting and any and all adjournments thereof.
Only Common Stockholders of record on the stock transfer books of the
Corporation at the close of business on October 20, 1998 will be entitled to
notice of and to vote at the meeting and at any and all adjournments
thereof.
Stockholders who are unable to attend the meeting in person and wish
to have their stock voted are requested to sign, date and return promptly
the accompanying Proxy in the enclosed envelope.
By Order of the Board of Directors,
K. W. Hogan, Secretary
Mailed: November 3, 1998
STOCKHOLDERS ARE REQUESTED TO EXECUTE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE PROVIDED, WHETHER OR NOT THEY EXPECT TO ATTEND THE
ANNUAL MEETING. A STOCKHOLDER NEVERTHELESS MAY VOTE IN PERSON IF HE DOES
ATTEND.
VALLEY RESOURCES, INC.
1595 Mendon Road
P. O. Box 7900
Cumberland, Rhode Island 02864-0700
PROXY STATEMENT
The accompanying proxy is solicited on behalf of the Board of
Directors of Valley Resources, Inc., a Rhode Island corporation (the
"Corporation"), for use at the Annual Meeting of the Stockholders of the
Corporation to be held at 10:00 a.m. on Tuesday, December 8, 1998, and at
any and all adjournments thereof. This Proxy Statement and the accompanying
proxy were first mailed to stockholders on or about November 3, 1998.
A stockholder who executes a proxy may revoke it at any time before it
is exercised by notifying the Secretary of the Corporation at the above
address to such effect in writing before the Annual Meeting, by filing with
the Corporation a superseding later-dated proxy, or by voting in person at
the meeting. All shares represented by effective proxies will be voted at
the Annual Meeting or any adjournment thereof. If the stockholder gives
instructions as to any matter to be acted upon, the shares will be voted as
so specified. If no instructions are indicated, proxies will be voted for
the election of the nominees for director set forth below.
VOTING STOCK OUTSTANDING AND VOTING RIGHTS
Holders of record of the Corporation's Common Stock, par value of $1
per share (the "Common Stock"), at the close of business on October 20, 1998
(the "record date") are entitled to vote at the meeting. On the record date
the Corporation had 4,985,423 shares of Common Stock outstanding. Each
stockholder has one vote per share on each matter voted on at the meeting.
A majority of the outstanding shares will constitute a quorum at the
meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of
business. Under applicable law, abstentions and broker non-votes will have
no effect on the outcome of the election of directors.
At the record date the following stockholders were known by the
Corporation to be the beneficial owners of more than 5 percent of the
outstanding Common Stock of the Corporation, being the only class of equity
security issued and outstanding. Unless otherwise stated, the holders have
sole voting and investment power.
<TABLE>
<CAPTION>
Amount of
Name and Address Beneficial Percent
of Beneficial Owner Ownership of Class
- ---------------------------------------------------------------------------
<S> <C> <C>
Wilmington Trust Company
1100 North Market Street
Wilmington, DE 19890-0001 829,632 16.6
- --------------------
<F*> Wilmington Trust Company holds these shares as trustee of the Valley
Resources, Inc. 401(k) Employee Stock Ownership Plan on behalf of
numerous participants.
</TABLE>
As of October 20, 1998, the nominees for election as directors, the
current directors, the executive officers named in the Summary Compensation
Table below, and all executive officers and directors as a group owned
beneficially Common Stock of the Corporation in the amount set forth
opposite their names (such ownership being reported to the Corporation by
the nominees). Unless otherwise stated, the holders have sole voting and
investment power.
<TABLE>
<CAPTION>
Amount of
Beneficial Percent
Name of Beneficial Owner Ownership of Class
- ---------------------------------------------------------------------------
<S> <C> <C>
Ernest N. Agresti 32,037(2) (1)
Melvin G. Alperin 4,402(3) (1)
C. Hamilton Davison 368 (1)
Don A. DeAngelis 7,147 (1)
Alfred P. Degen 7,102(9) (1)
James M. Dillon 1,012(4) (1)
Jonathan K. Farnum 13,158(5) (1)
John F. Guthrie, Jr. 1,775(6) (1)
Eleanor M. McMahon 4,218(7) (1)
Kenneth W. Hogan 7,582(9) (1)
Charles K. Meunier 11,688(8)(9) (1)
Richard G. Drolet 9,780(9) (1)
Jeffrey P. Polucha 4,354(9) (1)
All Directors and Officers
as a group (14 persons) 110,240(9) 2.2
- --------------------
<F1> Ownership amounts to one percent or less.
<F2> Includes 400 shares in an IRA in Mr. Agresti's wife's name to which he
disclaims beneficial ownership, and 30,997 shares held in a living
trust of which Mr. Agresti is sole trustee with sole voting and
investment power.
<F3> Shares are held in the Melvin G. Alperin and Patricia N. Alperin
Living trusts of which Melvin G. Alperin and Patricia N. Alperin are
Trustees with voting and investment powers.
<F4> Shares are held in a living trust of which Mr. Dillon is sole trustee
with sole voting and investment power.
<F5> Includes 8,395 shares held by Mr. Farnum's wife and children to which
he disclaims beneficial ownership.
<F6> Includes 100 shares held by Mr. Guthrie's children in which he shares
voting and investment power.
<F7> Shares are held in a living trust of which Dr. McMahon is sole trustee
with sole voting and investment power.
<F8> Includes 2,224 shares in which Mr. Meunier shares voting and
investment power with his wife.
<F9> Includes shares held in the Valley Resources 401(k) Employee Stock
Ownership Plan based upon information as of October 20, 1998 provided
by the plan Trustee.
</TABLE>
--------------------
ELECTION OF DIRECTORS
The Articles of Incorporation of the Corporation provide that the
Board of Directors shall be divided into three classes with each class to be
as nearly equal in number as possible, and that one class shall be elected
each year for a term of three years. Accordingly, it is proposed that the
three nominees, Messrs. Dillon, Farnum and Guthrie, who are presently
directors and whose terms expire at this meeting, be elected to serve three-
year terms. There are six other directors whose terms do not expire at this
time. In accordance with the Rhode Island Business Corporation Act,
directors are elected by a majority of votes of the shares represented at
the Meeting and entitled to vote thereon.
It is intended that the shares represented by proxy will be voted to
elect the three nominees named below, unless authority to do so has been
withheld by proxy.
Should any of the nominees be unable to serve, the proxy will be voted
for a substitute nominee designated by the Board of Directors. Each of the
nominees has indicated a willingness to serve if elected, and the Board of
Directors has no reason to believe that any nominee will be unavailable.
The nominees for election as directors as well as those directors
whose terms have not expired are named below.
<TABLE>
<CAPTION>
Position First
Held Served
with in the Business Experience
Name Age Corporation Position During Last Five Years
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Directors nominated for a term of three years:
James M. Dillon (1) 65 Director 1983 Retired; Director of Development, The Ro-
man Catholic Diocese, Bridgeport, Connecti-
cut from November 1993 to December 1994.
Jonathan K. Farnum (1)(2)(3) 59 Director 1983 Chairman and President, Wardwell Braiding
Machine Company, a manufacturer of
special design machinery, Central Falls,
Rhode Island.
John F. Guthrie, Jr. (2)(3) 54 Director 1979 Vice President, The New England, an insur-
ance and financial services company, Boston,
Massachusetts.
Directors whose terms expires in 1999:
Ernest N. Agresti (2)(3) 68 Director 1975 Retired; Partner in the law firm of Edwards
& Angell, LLP, Providence, Rhode Island, for
more than five years prior to retirement.
Don A. DeAngelis (2)(3) 59 Director 1976 Vice Chairman and Chief Executive Officer,
Murdock Webbing Co., Inc., a manufacturer
of narrow fabric, Central Falls, Rhode Island.
Eleanor M. McMahon (1) 69 Director 1984 Distinguished Visiting Professor, A. Alfred
Taubman Center for Public Policy, Brown
University, Providence, Rhode Island.
Directors whose terms expire in 2000:
Melvin G. Alperin (1)(3) 62 Director 1979 President, Brewster Industries, real estate in-
vestments, Pawtucket, Rhode Island.
Alfred P. Degen 51 Chairman, 1997 Chairman since December 1997, Chief Ex-
Chief Executive 1995 ecutive Officer of Valley Resources, Inc.
Officer since March 1995; President, Valley
President and 1994 Resources, Inc. from July 1994; Execu-
Director tive Vice President, Philadelphia Gas
Works for more than 5 years prior to July
1994.
C. Hamilton Davison (1) 39 Director 1995 President and Chief Executive Officer of
Paramount Cards, Inc., a designer, manufac-
turer and distributor of greeting cards,
Pawtucket, Rhode Island. Mr. Davison is also
a director of Tufco Technologies, Inc., a spe-
cialty printer and converter of custom paper
and nonwoven material.
- --------------------
<F1> Member, Audit Committee
<F2> Member, Compensation Committee
<F3> Member, Development Committee
</TABLE>
GOVERNANCE OF THE CORPORATION
Under the Articles of Incorporation and Bylaws of the Corporation, the
Corporation is managed under the direction of the Board of Directors and by
the officers to whom authority has been delegated. The Board is charged
with the responsibility of selecting and evaluating senior officers,
providing financial reports to the stockholders and considering other
fundamental corporate matters, including dividends, issuance of stock and
major corporate borrowings.
During the fiscal year ended August 31, 1998, the Board met four
times. Each member of the Board of Directors attended at least 75% of the
aggregate of the meetings of the Board and its committees on which they
served in that year.
The Board has an Audit Committee consisting of Messrs. Alperin
(Chairman), Davison, Dillon, Farnum and Dr. McMahon. The Audit Committee of
the Board of Directors, composed solely of directors who are not officers or
employees of the Corporation, meets periodically with management and the
Corporation's independent certified public accountants to discuss their
evaluation of internal accounting controls, the quality of financial
reporting and related matters. The independent auditors have free access to
the Audit Committee, without management present, to discuss the results of
their audits. The Audit Committee also reviews quarterly and annual filings
made with the Securities and Exchange Commission. The Committee met once
during the fiscal year ended August 31, 1998.
The Board has a Compensation Committee consisting of Messrs. DeAngelis
(Chairman), Agresti, Farnum and Guthrie. The Compensation Committee is
charged with reviewing the salary administration program for management
personnel, implementing the plan for that program and making appropriate
recommendations to the Board of Directors. The Compensation Committee met
once during the fiscal year ended August 31, 1998.
The Board has a Development Committee consisting of Messrs. Farnum
(Chairman), Agresti, Alperin, DeAngelis and Guthrie. The Development
Committee meets periodically with management to discuss and evaluate plans
to develop the overall strategic direction of the Corporation. The
Committee makes appropriate recommendations to the Board regarding these
plans. Work generally conducted by the Development Committee was undertaken
by the entire board in fiscal 1998. The Committee did not meet during the
fiscal year ended August 31, 1998.
The Board of Directors has no nominating committee as the Board as a
whole studies the qualifications and recommends to the stockholders the
election of directors of the Corporation. Stockholders may recommend
nominees for election as directors by writing to the President of the
Corporation.
All directors, except Mr. Degen, receive an annual retainer fee of
$6,000 and a fee of $600 per meeting attended. The members of the Audit,
Compensation and Development Committees of the Board receive a fee of $600
per meeting attended with the chairman of each committee receiving a fee of
$750. Under a formal plan, directors may elect to defer all or a portion of
their fees earned for services as a director. Under the terms of the plan a
director's deferred election includes a payment schedule specifying the date
on which payment shall begin, which shall not be earlier than the Director's
65th birthday, nor later than the first day of the month following the date
the Director attains age 70. At August 31, 1998, Messrs. Agresti, Alperin,
Dillon, Farnum and Dr. McMahon had so elected to defer their fees. The
Corporation has adopted a Director's Retirement Plan pursuant to which
nonemployee directors who (i) have completed a minimum of 10 years of board
service and retire from the board at or after age 60 or (ii) retire from the
board at or after age 70, are entitled to receive an annual retirement
benefit for a 10-year period following retirement from the Board. The
annual retirement benefit equals the annual director's retainer being paid
on the date of retirement from the Board, with such amount being pro-rated
in the case of directors with less than 10 years of service on the date of
retirement.
EXECUTIVE OFFICER COMPENSATION
The following tables and notes set forth the compensation provided by
the Corporation to its Chief Executive Officer and the Corporation's other
most highly compensated executive officers (the "Named Officers"), whose
total compensation was in excess of $100,000 in fiscal 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
Name and ------------------- All Other
Principal Position Year Salary Bonus Compensation(1)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alfred P. Degen 1998 188,365 35,239 3,621
Chairman, President and 1997 179,536 38,235 4,316
Chief Executive Officer 1996 167,447 15,000 4,500
Kenneth W. Hogan 1998 136,966 20,021 1,868
Senior Vice President, 1997 131,809 18,836 1,813
Chief Financial Officer, 1996 127,976 8,000 -0-
and Secretary
Charles K. Meunier 1998 107,997 10,060 1,423
Vice President, 1997 103,686 10,917 3,032
Operations 1996 99,763 5,000 1,970
Richard G. Drolet 1998 103,128 10,060 2,005
Vice President, 1997 98,555 10,917 2,851
Information Systems and 1996 93,673 4,500 1,780
Planning
Jeffrey P. Polucha 1998 103,024 10,060 1,838
Vice President, 1997 95,885 10,917 2,329
Marketing and 1996 81,650 4,500 840
Development
- --------------------
<F1> All full-time employees of Valley Resources who have completed one
year of service are eligible to participate in the 401(k) Employee
Stock Ownership Plan. Under this plan, a participating employee may
contribute up to 20% of base pay, and the Corporation will contribute
each year from profits an amount equal to at least 50% of the
participant's contribution to a maximum of 2% of base pay. The plan
permits a participant to make contributions on a pretax basis under
Section 401(k) of the Internal Revenue Code, thereby reducing the
participant's taxable compensation. In addition, the Corporation may
make discretionary contributions as approved by the Board of
Directors. Employer contributions under this plan for the benefit of
executive officers named above were as follows: Mr. Degen $3,621 in
1998, $4,316 in 1997 and $4,500 in 1996; Mr. Hogan $1,868 in 1998,
$1,813 in 1997; Mr. Meunier $1,423 in 1998, $3,032 in 1997, and $1,970
in 1996; and Mr. Drolet $2,005 in 1998, $2,851 in 1997 and $1,780 in
1996; and Mr. Polucha $1,838 in 1998, $2,329 in 1997, and $840 in
1996.
</TABLE>
Pension Plan
The Corporation maintains a defined benefit plan (Employees'
Retirement Plan) covering all management and nonbargaining unit employees
except the Corporation's subsidiaries, Morris Merchants, Inc. and Alternate
Energy Corporation. Covered compensation under the plan includes only
regular salary, excluding any fees, bonuses or other additional types of
compensation. The covered compensation for the most recently available plan
year was $5,824,005.
The Corporation also maintains a supplemental retirement plan for
certain officers of the Corporation, including Messrs. Degen and Hogan.
This plan provides that the officer's retirement payment will approximate 65
percent of the combination of final year base salary plus the average of the
incentive compensation paid to the officer over the last three years.
The following table sets forth the annual retirement benefit, using a
straight life annuity, at the normal retirement age of 65, which would
accrue for each year of credited service, using a formula based upon 1-1/2
percent of final average compensation times years of credited service and
reduced by 1 percent of the employee's Social Security benefit multiplied by
the number of years of credited service over the amount of the retirement
annuity, at the indicated rates of compensation, assuming receipt of Social
Security benefits of $1,000 per month. At August 31, 1998, Mr. Degen has
three years of credited service, Mr. Hogan has 21 years, Mr. Meunier has 35
years and Mr. Drolet has 25 years. Table A sets forth the annual retirement
benefit for participants in the supplemental retirement plan and Table B
sets forth the benefit for all other pension plan participants.
Table A
<TABLE>
<CAPTION>
Average Benefits for Years of
Final Year Compensation Credited Service Indicated
Plus Average of Last Three --------------------------------------------
Years Incentive Award 15 years 30 years 35 years 40 years
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$100,000 $ 53,000 $ 53,000 $ 53,000 $ 53,000
125,000 69,250 69,250 69,250 69,250
150,000 85,500 85,500 85,500 85,500
175,000 101,750 101,750 101,750 101,750
200,000 118,000 118,000 118,000 118,000
225,000 134,250 134,250 134,250 134,250
250,000 150,500 150,000 150,000 150,000
300,000 183,000 183,000 183,000 183,000
400,000 248,000 248,000 248,000 248,000
450,000 292,500 292,500 292,500 292,500
500,000 313,000 313,000 313,000 313,000
</TABLE>
Table B
<TABLE>
<CAPTION>
Average Benefits for Years of
Average Year Compensation Credited Service Indicated
for Five Consecutive Highest --------------------------------------------
of the Last Ten Years 15 years 30 years 35 years 40 years
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$100,000 $ 20,700 $ 41,400 $ 48,300 $ 55,200
125,000 26,325 52,650 61,425 70,200
150,000(1) 31,950 63,900 74,550 85,200
- --------------------
<F1> Maximum compensation under the plan.
</TABLE>
Termination Agreements
The Corporation has entered into "termination agreements" with Messrs.
Degen, Hogan, Meunier, Polucha and Drolet, which provide certain benefits to
those officers in the event of certain terminations of employment occurring
after a change in control of the Corporation. A change in control is
defined as the acquisition by any person or group of 20% or more of the
voting power of the Corporation's stock or a change in a majority of the
directors during any period of two consecutive years. Benefits payable in
the event of a termination of employment by the Corporation other than for
cause or by the officer for good reason (defined as a reduction in base
salary or vacations, a significant change in duties, a failure by the
Corporation to continue certain benefit plans or relocation) after a change
in control include severance pay equal to 2.99 times base salary in the case
of Mr. Degen, 2.5 times base salary in the case of Mr. Hogan and one times
base salary in the case of Messrs. Meunier, Polucha and Drolet. Severance
benefits are payable for a period of 15 months after a change in control at
2 times base salary in the case of Mr. Degen and one year's base salary in
the case of Messrs. Hogan, Meunier, Polucha and Drolet. The termination
agreements also provide for continuation of insurance benefits and a payment
in lieu of continued participation in the Corporation's retirement plan, in
each case measured by the same period of time as would apply to the
termination payment referred to above. The termination agreements are
automatically renewed each year for one year unless cancelled by the
Corporation.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION DESIGN
The design of the Corporation's executive compensation system is
intended to attract, retain and motivate high quality executives with an
individual and corporate performance-based compensation package that
promotes achievement of both corporate and operating company goals for the
benefit of both customers and stockholders. The program is designed to
provide a competitive annual salary, and through variable performance
elements, act as a mechanism to integrate the subsidiaries by common
performance criteria. The goals defined within the incentive compensation
components of the program act to focus management attention on annual and
long-term business objectives. The Compensation Committee of the Board of
Directors of Valley Resources, Inc. (the "Committee"), comprised solely of
outside directors, is responsible for establishing, reviewing and
administering the compensation plan for executive officers of the
Corporation and its subsidiaries.
The compensation package of each executive officer consists of base
salary and the potential for an annual incentive award. The base salary
component is based primarily upon comparative market-derived compensation
data for jobs of comparable positions and breadth of responsibilities within
the utility industry in New England and nationally. The annual incentive
award is based upon the Corporation's standings among a comparison group of
companies in the utility industry. The comparison companies (the "Peer
Group") are those companies used for measuring the Corporation's performance
as set forth below under "Corporate Performance." For an executive officer
to receive the targeted level of compensation the Corporation must meet
certain shareholder and customer value criteria established by the
Committee. This places a portion of the executive officer's compensation at
risk and tied to annual and long-term corporate performance. The total of
the base salary and incentive award is designed to meet the prevailing
market level of compensation for a comparison group of companies when
targeted levels of performance are achieved. When targeted levels of
performance are exceeded the total compensation should surpass the market
level.
A discussion of the two components of executive officer compensation
and decisions made by the Committee concerning the Named Officers and the
Chief Executive Officer follows.
BASE SALARY
The base salary portion of the executive officers' compensation is
market-based and not tied to corporate performance. The objective of the
Committee is to establish a compensation level that approaches the midpoint
of a sample group of companies with similar sales and complexities as the
Corporation. In December 1996, the Committee met to review the data
analysis that had been prepared by an independent compensation consultant to
establish the base salary for calendar 1997 for each of the named officers.
For calendar 1997 the base salary of each executive officer was adjusted to
reflect changes in the market after consultation with the consultant. The
base salary of the Chief Executive Officer approximates 92 percent of the
comparison group of companies. The other executive officers approximate 92
percent of the comparison group.
ANNUAL INCENTIVE AWARD
The annual incentive award is determined by a formula based upon the
performance of the Corporation against the Peer Group during the fiscal year
as measured against certain customer and stockholder value criteria on both
a short and long term basis. The amount of the incentive award is a
percentage of the officer's base salary and can range from 5 to 30 percent
depending upon the level of performance and the position of the individual
corporate officer. The criteria that are used and the weighted percentage
of the award that is granted for that specific criteria are: net income,
normalized for the impact of weather, as compared to budgeted net income, at
25 percent; 3-year average return on equity at 12.5 percent; market-to-book
ratio at 12.5 percent; the ratio of long-term utility operating expenses to
the long-term utility operating revenues at 25 percent; and Board of
Directors discretion at 25 percent. If the weather normalized earnings
result for the fiscal year does not equal at least 90 percent of the budget,
then no incentive award is payable under the provisions of the plan.
In November 1997, the Committee met to evaluate the fiscal 1997
results of operations. The net income of the Corporation on a normalized
basis exceeded the threshold based upon the budget established for fiscal
1997 and thus the Compensation Committee considered the award of incentive
compensation to eligible members of management. The three year average
return on equity of the Corporation exceeded the three year average return
on equity of the Peer Group by approximately 18 percent. The Corporation's
market-to-book ratio slightly exceeded the Peer Group. The current year
operation and maintenance expense ratio to base revenues was 1.8 percent
below the three year average. All these operating and performance results
generated a portion of the bonus pool. In addition to these performance
criteria the Committee also considered improvements made in enhancing the
competitive position of the Corporation's utilities through the
implementation of a transportation tariff for large commercial and
industrial users, a significant refinancing involving both debt and equity
to better balance the capital structure of the Corporation in accordance
with the long-term Corporate plan, continuation of the employee training and
development initiative, negotiation of a new labor agreement with the
bargaining unit of the utilities three months before expiration of the
existing contract and the significant improvement in nonutility earnings.
The incentive award of the current Chief Executive Officer approximates 61
percent of the comparison group of companies. The incentive award for the
other officers approximates 86 percent of the comparison group. The base
salary plus the incentive award of the current Chief Executive Officer
approximates 85 percent of the comparison group and 91 percent for the other
executive officers.
The incentive award for fiscal 1998, if any, will be determined in
December 1998 using the same criteria as fiscal 1997 and earlier. The Board
adopted a new plan in June 1998 to be effective with fiscal year 1999 which
includes a new set of criteria designed to even more closely align the
interests of management and stockholders. The criteria for fiscal 1999 and
subsequently will be: (1) net income, unadjusted for weather, with failure
to make the dividend resulting in no incentive award being paid under the
provisions of the plan at 35 percent; (2) total shareholder return at 25
percent; (3) cost of service ratio (utility expenditures as a percentage of
base utility revenues) at 20 percent and Board discretion at 20 percent.
The new plan calls for approximately one-third of the incentive compensation
to be paid in Valley Resources, Inc. common stock that will be restricted
for a period of two years following award. The remainder of the award will
be payable in cash or stock at the direction of the officer.
This report has been provided by the Compensation Committee.
Don A. DeAngelis (Chairperson)
Ernest N. Agresti
James M. Dillon
Jonathan K. Farnum
John F. Guthrie, Jr.
CORPORATE PERFORMANCE
The following chart compares the Corporation's performance, as
measured by the change in price of its common stock plus reinvested
dividends, with the Standard & Poor's natural gas index, the AMEX stock
index and a group of comparative diversified-energy companies. The Peer
Group consolidation was done on a weighted average basis (market
capitalization basis, adjusted at the end of each quarter). The graph
assumes $100 invested in the Corporation and each of the indices at August
31, 1994. The Peer Group consists of the following companies, which are also
used to determine the annual incentive award.
Bay State Gas Company Essex County Gas Company
Berkshire Gas Company Energy South, Inc.
Colonial Gas Company National Gas & Oil Corporation
Connecticut Energy Corporation Providence Energy Corporation
CTG Resources, Inc. Roanoke Gas Corporation
Delta Natural Gas Southeastern Michigan Energy Enterprises
Energynorth, Inc. Yankee Gas Services
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
AMONG VALLEY RESOURCES, INC., THE AMEX MARKET VALUE INDEX,
THE S & P NATURAL GAS AND A PEER GROUP
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------------------------------
8/93 8/94 8/95 8/96 8/97 8/98
<S> <C> <C> <C> <C> <C> <C>
VALLEY RESOURCES, INC. 100.00 84.79 78.19 91.05 90.81 102.44
PEER GROUP 100.00 90.25 91.76 104.74 119.88 135.53
AMEX MARKET VALUE 100.00 99.07 116.55 122.08 145.66 128.21
S & P NATURAL GAS 100.00 89.62 101.55 137.52 166.24 161.00
<F*> $100 INVESTED ON 8/31/93 IN STOCK INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING AUGUST 31.
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's executive officers and directors and persons who own more than
10% of a registered class of the Corporation's equity securities
("insiders") to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Insiders are required by SEC
regulation to furnish the Corporation with copies of all Section 16(a) forms
they file. Based solely on review of the copies of such forms furnished to
the Corporation, the Corporation believes that during fiscal 1998 all
Section 16(a) filing requirements applicable to its insiders were in
compliance.
1999 ANNUAL MEETING PROPOSALS
Stockholders may submit proposals for inclusion in the Proxy Statement
for the Annual Meeting of Stockholders to be held on December 14, 1999
provided the proposal is received at the principal executive office of the
Corporation, 1595 Mendon Road, Cumberland, Rhode Island 02864-0700, prior to
July 5, 1999. Stockholders who intend to submit proposals at the 1999
Annual Meeting without including them in the Proxy Statement for such
meeting must notify the Corporation of this intention no later than
September 19, 1999.
AUDITORS
The Board of Directors has selected the firm of Grant Thornton LLP as
the independent certified public accountants for the Corporation to audit
its financial statements for the fiscal year 1998. This firm has served the
Corporation in this capacity for several years. A representative of Grant
Thornton LLP is expected to attend the Annual Meeting and will be available
to respond to appropriate questions. It is not anticipated such
representative will make a prepared statement at the meeting; however, he or
she will be free to do so if he or she chooses.
OTHER BUSINESS
As of the date of this Proxy Statement, management knows of no other
matters to be brought before the meeting. Should any other business
properly come before the meeting, it is intended that the shares represented
by proxies will be voted with respect thereto in accordance with the best
judgment of the persons named in such proxies.
SOLICITATION EXPENSES
The Corporation will bear the cost of the solicitation of proxies by
the Board of Directors, including the charges and expenses of brokerage
firms and others for forwarding solicitation material to beneficial owners
of stock. Although it is anticipated that proxies will be solicited
principally by mail, proxies may be solicited by personal interview,
telephone or telegraph, by certain of the Corporation's employees without
compensation therefor.
By Order of the Board of Directors,
K. W. Hogan, Secretary
Cumberland, Rhode Island
November 3, 1998
VALLEY RESOURCES, INC. PROXY/VOTING INSTRUCTION CARD
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This proxy is solicited on behalf of the Board of
Directors of VALLEY RESOURCES, INC.
for the Annual Meeting on December 8, 1998
The stockholder appoints A. P. Degen, K. W. Hogan and P. A. Morrison,
and each of them, with full power of substitution in each, the proxies of
the stockholder, to represent the stockholder and vote all shares of Valley
Resources, Inc. Common Stock which the stockholder may be entitled to vote
at the Annual Meeting of Stockholders to be held on December 8, 1998 and at
any adjournment or postponement thereof, as indicated on the reverse side.
This proxy, when properly executed will be voted in the manner
directed herein by the stockholder. If no direction is given, this proxy
will be voted FOR proposal 1.
(Continued, and to be signed and dated on reverse side.)
1. Election of Directors [ ] FOR all nominees listed below
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
[ ] *EXCEPTIONS
Nominees: James M. Dillon, Jonathan K. Farnum, John F. Guthrie, Jr.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below.)
*Exceptions_________________________________________________________________
2. To consider and act upon other matters as they may properly come before
the meeting and any and all adjournments thereof.
In their discretion the Proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment or
postponement thereof.
Change of Address or Comments Mark Here [ ]
The signature on this Proxy should correspond exactly with stockholder's
name as printed to the left. In the case of joint tenancies, co-executors,
or co-trustees, both should sign. Persons signing as Attorney, Executor,
Administrator, Trustee or Guardian should give their full title.
Dated: _________________________________, 199_____
__________________________________________________
Signature
__________________________________________________
Signature
Votes must be indicated (X) in Black or Blue ink.
