<PAGE>
VALLEY RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 14, 1999
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 14, 1999, 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 26, 1999 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,
Sharon Partridge, Secretary
Mailed: November 9, 1999
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 OR SHE DOES
ATTEND.
<PAGE>
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 14, 1999, and at any and all adjournments thereof.
This Proxy Statement and the accompanying proxy were first mailed to
stockholders on or about November 9, 1999.
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 26, 1999 (the
"record date") are entitled to vote at the meeting. On the record date the
Corporation had 4,975,955 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.
<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 850,622 17.1
</TABLE>
- ----------
*Wilmington Trust Company holds these shares as trustee of the Valley Resources,
Inc. 401(k) Employee Stock Ownership Plan on behalf of numerous participants. As
a result, it has shared voting and dispositive power.
As of October 26, 1999, 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
1
<PAGE>
ownership being reported to the Corporation by the nominees). Unless otherwise
stated, the holders have sole voting and investment power.
<TABLE>
<CAPTION>
Amount of
Name Beneficial Percent
of Beneficial Owner Ownership of Class
- ------------------- --------- --------
<S> <C> <C>
Ernest N. Agresti 30,997 (2) (1)
Melvin G. Alperin 4,402 (3) (1)
C. Hamilton Davison 385 (1)
Don A. DeAngelis 7,591 (1)
Alfred P. Degen 9,508 (4)(10) (1)
James M. Dillon 1,012 (5) (1)
Jonathan K. Farnum 8,590 (6) (1)
John F. Guthrie, Jr 1,879 (7) (1)
Eleanor M. McMahon 4,218 (8) (1)
Virginia Roberts 0
Charles K. Meunier 12,483 (9)(10) (1)
Richard G. Drolet 10,366 (10) (1)
Jeffrey P. Polucha 4,748 (10) (1)
Sharon Partridge 6,084 (10) (1)
All Directors and Officers
as a group (14 persons) 102,263 (10) 2.1
</TABLE>
- ---------------------
(1) Ownership amounts to one percent or less.
(2) Shares are held in a living trust of which Mr. Agresti is sole trustee with
sole voting and investment power.
(3) Shares are held in living trusts of which Melvin G. Alperin and his wife are
Trustees with voting and investment powers.
(4) Includes 4,608 shares in which Mr. Degen shares voting and investment power
with his wife.
(5) Shares are held in a living trust of which Mr. Dillon is sole trustee with
sole voting and investment power.
(6) Includes 3,531 shares held by Mr. Farnum's wife to which he disclaims
beneficial ownership.
(7) Includes 100 shares held by Mr. Guthrie's children in which he shares voting
and investment power.
(8) Shares are held in a living trust of which Dr. McMahon is sole trustee with
sole voting and investment power.
(9) Includes 2,362 shares in which Mr. Meunier shares voting and investment
power with his wife.
(10) Includes shares held in the Valley Resources 401(k) Employee Stock
Ownership Plan based upon information as of October 26, 1999 provided
by the plan Trustee.
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 listed
below be elected to serve three year terms. Messrs. Agresti and DeAngelis are
presently directors whose terms expire at this meeting. Dr. Eleanor M. McMahon,
whose term expires at this meeting, is not standing for reelection having
reached the mandatory retirement age of 70. Virginia Roberts has been nominated
to fill the vacancy created by Dr. McMahon's retirement. There are six other
directors whose terms do not expire at this time. In
2
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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.
Position Held First Served Business Experience
with in the During
Name Age Corporation Position Last Five Years
---- --- ----------- -------- ---------------
Directors nominated for a term of three years:
Ernest N. Agresti 69 Director 1975 Retired; Partner in the law
(2)(3) firm of Edwards & Angell, LLP,
Providence, Rhode Island, for
more than five years prior to
retirement
Don A. DeAngelis 60 Director 1976 Vice Chairman and Chief
(2)(3) Executive Officer, Murdock
Webbing Co., Inc., a manu-
facturer of narrow fabric,
Central Falls, Rhode Island.
Virginia Roberts 48 Senior Vice President, Fleet
National Bank since 1995;
Vice President, Fleet National
Bank from 1985 to 1995.
Directors whose terms expire in 2000:
Melvin G. Alperin 63 Director 1979 President, Brewster Industries,
(1)(3) real estate investments,
Pawtucket, Rhode Island
Alfred P. Degen 52 Chairman, 1997 Chairman since December
Chief Executive 1995 1997, Chief Executive Officer
Officer since March 1995; President,
President and 1994 since July 1994.
Director
Directors nominated for a term of three years:
C. Hamilton Davison 40 Director 1995 President and Chief Executive
(1) Officer of Paramount Cards,
Inc., a designer, manufacturer,
distributor and retailer of
greeting cards, Pawtucket,
Rhode Island. Mr. Davison is
also a director of Tufco
Technologies, Inc., a specialty
printer and converter of
custom paper and nonwoven
material.
3
<PAGE>
Position Held First Served Business Experience
with in the During
Name Age Corporation Position Last Five Years
---- --- ----------- -------- ---------------
Directors whose terms expire in 2001:
James M. Dillon 66 Director 1983 Retired; Director of
(1) Development, The Roman Catholic
Diocese, Bridgeport,
Connecticut from November 1993
to December 1994.
Jonathan K. Farnum 60 Director 1983 Chairman and President,
(1)(2)(3) Wardwell Braiding Machine
Company, a manufacturer of
special design machinery,
Central Falls, Rhode Island.
John F.Guthrie, Jr. 55 Director 1979 Vice President, New England
(2)(3) Financial, an insurance and
financial services company,
Boston, Massachusetts.
________________________________
(1) Member, Audit Committee
(2) Member, Compensation Committee
(3) Member, Development Committee
GOVERNANCE OF THE CORPORATION
During the fiscal year ended August 31, 1999, 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, 1999.
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, 1999.
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. The Development Committee
met once in fiscal 1999.
4
<PAGE>
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, 1999, 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 non-employee 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.
5
<PAGE>
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 1999:
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Annual Compensation
-------------------
Name and All Other
Principal Position Year Salary Bonus Compensation(1)
- ------------------- ---- ------ ----- ---------------
<S> <C> <C> <C> <C>
Alfred P. Degen 1999 198,704 36,500 3,935
Chairman, President and 1998 188,365 35,239 3,621
Chief Executive Officer 1997 179,536 38,235 4,316
Kenneth W. Hogan 1999 117,496 19,000 1,398
Senior Vice President, 1998 136,966 20,021 1,868
Chief Financial Officer, 1997 131,809 18,836 1,813
and Secretary (2)
Charles K. Meunier 1999 112,954 10,500 2,014
Vice President, 1998 107,997 10,060 1,423
Operations 1997 103,686 10,917 3,032
Richard G. Drolet 1999 106,013 9,750 2,054
Vice President, 1998 103,128 10,060 2,005
Information Systems and 1997 98,555 10,917 2,851
Corporate Planning
Jeffrey P. Polucha 1999 98,059 9,750 1,924
Vice President, 1998 92,694 10,060 1,838
Marketing and 1997 84,968 10,917 2,329
Development
Sharon Partridge 1999 95,800 7,100 1,916
Vice President, 1998 90,267 7,187 1,605
Chief Financial Officer, 1997 86,633 7,800 1,858
Secretary and Treasurer
</TABLE>
- ----------------------------
(1) 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 Corpo-
ration may make discretionary contributions as approved by the Board of
Directors. Employer contributions follows: Mr. Degen $3,935 in 1999,
$3,621 in 1998, and $4,316 in 1997; Mr. Hogan $1,398 in 1999, $1,868
in 1998 and $1,813 in 1997; Mr. Meunier $2,014 in 1999, $1,423 in 1998
and $3,032 in 1997; Mr. Drolet $2,054 in 1999, $2,005 in 1998 and $2,851
in 1997; Mr. Polucha $1,924 in 1999, $1,838 in 1998 and $2,329 in 1997; and
Ms. Partridge $1,916 in 1999, $1,605 in 1998 and $1,858 in 1997.
(2) Mr. Hogan resigned effective May 16, 1999.
6
<PAGE>
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 $6,270,736.
The Corporation also maintains a supplemental retirement plan for Mr.
Degen. 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, 1999, Mr. Degen has four years of credited
service, Mr. Hogan has 22 years, Mr. Meunier has 32 years, Mr. Drolet has 26
years, Mr. Polucha has 14 years and Ms. Partridge has 18 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>
Final Year Compensation Average Benefits for Years of
Plus Average of Last Three Credited Service Indicated
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 .................... 150,500 150,500 150,500 150,500
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>
Table B
<CAPTION>
Average Year Compensation Average Benefits for Years of
for Five Consecutive Highest Credited Service Indicated
of the Last Ten Years 15 years 30 years 35 years 40 years
- --------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$100,000..................... $ 20,700 $ 41,400 $248,300 $ 55,200
125,000..................... 26,325 52,650 61,425 70,200
150,000(1).................. 31,950 63,900 74,550 85,200
</TABLE>
_______________________
(1) Maximum compensation under the plan.
7
<PAGE>
Certain Compensation Arrangements
The Corporation has entered into termination agreements with Messrs. Degen,
Meunier, Drolet, Polucha and Ms. Partridge 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 of the beneficial ownership of 20% or more of the
voting power of the Corporation's stock, a change in a majority of the directors
during any period of two consecutive years or the disposition of assets relating
to which the officers' services are principally performed. Benefits are payable
under the agreement in the event of termination of employment by the Corporation
unless such termination is due to death, retirement or disability; by the
Corporation for cause; or by the officer for Good Reason. Good Reason is defined
as any significant change in duties and responsibilities; any reduction in base
salary; relocation; the failure of the Corporation to continue any compensation
plan; any material reduction in benefit plans; the failure by the Corporation to
pay any portion of current or deferred compensation; and any failure by the
Corporation to obtain a satisfactory agreement from any successor to assume the
terms of this agreement.
Executives may terminate the agreement for Good Reason at any time within
fifteen months after the later of a change in control or the expiration of six
months in which the officers agree to remain in the employ of the Corporation
after a potential change in control. A potential change in control is defined as
any agreement the Corporation enters into which would result in a change in
control; any person publicly announces an intention to take actions which would
constitute a change in control; the acquisition of any person of the beneficial
ownership of 9.5% or more of the voting power of the Corporation's stock; or the
Board adopts a resolution to the effect that a potential change in control has
occurred under the agreement.
The agreements provide, upon occurrence of a change in control, for a lump
sum payment consisting of the following: (a) an amount equal to the officers
unpaid base salary plus amounts due under any compensation plan; (b) three times
covered compensation (annual salary at date of change in control plus cash
portion of Executive Incentive Compensation for the plan year in which the
change in control occurs) for Mr. Degen and two times covered compensation for
the other Named officers; (c) the continuation of life, disability, accident and
health insurance benefits for three years in the case of Mr. Degen and two years
for the other named officers; and (d) a lump sum cash payment of the actuarial
present value equivalent of the excess retirement pension which would have
accrued after the termination date for that number of additional months for
which severance is paid and the retirement pension which had accrued.
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 are intended 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.
8
<PAGE>
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 1998, the Committee met to review the data analysis
that had been prepared by an independent compensation consultant to establish
the base salary for calendar 1999 for each of the named officers. For calendar
1999 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 90 percent of the comparison group of
companies. The other executive officers approximate 80 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 zero 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 December 1998, the Committee met to evaluate the fiscal 1998 results of
operations. The net income of the Corporation on a normalized basis exceeded the
threshold based upon the budget established for fiscal 1998 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 13 percent. The Corporation's market-to-book ratio did not meet
the Peer Group, resulting in no bonus allocation for this factor. The current
year operation and maintenance expense ratio to base revenues equaled the three
year average. All these operating and
9
<PAGE>
performance results generated a portion of the bonus pool. In addition to these
performance criteria the Committee also considered the Corporation's stable
earnings despite weather related sales losses and the continuation of the
employee training and development initiative. The incentive award of the Chief
Executive Officer approximates 62 percent of the comparison group of companies.
The incentive award for the other officers approximates 46 percent of the
comparison group. The base salary plus the incentive award of the Chief
Executive Officer approximates 84 percent of the comparison group and 76 percent
for the other executive officers.
The incentive award for fiscal 1999, if any, will be determined in December
1999 based on a new set of criteria designed to even more closely align the
interests of management and stockholders. This new incentive compensation plan
was adopted by the Board based upon recommendations by the Board's compensation
consultant to move to a plan more consistent with industry standards. 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 discretion of the officer.
This report has been provided by the Compensation Committee.
Don A. DeAngelis (Chairperson)
Ernest N. Agresti
Jonathan K. Farnum
John F. Guthrie, Jr.
CORPORATE PERFORMANCE
The following charts compare 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.
Berkshire Gas Company
Colonial Gas Company
Connecticut Energy Corporation
CTG Resources, Inc.
Delta Natural Gas
Energynorth, Inc.
Energy South, Inc.
Providence Energy Corporation
Roanoke Gas Corporation
Semco Energy
Yankee Gas Services
10
<PAGE>
<TABLE>
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG VALLEY RESOURCES, INC., THE S & P NATURAL GAS INDEX,
THE AMEX MARKET VALUE INDEX AND A PEER GROUP
<CAPTION>
Cumulative Total Return
8/94 8/95 8/96 8/97 8/98 8/99
<S> <C> <C> <C> <C> <C> <C>
VALLEY RESOURCES, INC 100 92 107 107 121 148
PEER GROUP 100 100 114 131 136 197
S & P NATURAL GAS 100 113 153 185 180 285
AMEX MARKET VALUE 100 118 123 147 129 181
</TABLE>
*$100 INVESTED ON 8/31/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING AUGUST 31.
11
<PAGE>
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 Form 4
for the month of May 1999 for Alfred P. Degen was filed one date late for the
purchase of 1,000 shares of Common Stock. Due to a clerical error, dividend
reinvestment plan acquisitions on Form 5 for Messrs. DeAngelis, Farnum, Davison
and Guthrie were filed 16 days late.
2000 ANNUAL MEETING PROPOSALS
Stockholders may submit proposals for inclusion in the Proxy Statement for
the Annual Meeting of Stockholders to be held on December 12, 2000 provided the
proposal is received at the principal executive office of the Corporation, 1595
Mendon Road, Cumberland, Rhode Island 02864-0700, prior to July 3, 2000.
Stockholders who intend to submit proposals at the 2000 Annual Meeting without
including them in the Proxy Statement for such meeting must notify the
Corporation of this intention no later than September 17, 2000.
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 1999. 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,
Sharon Partridge, Secretary
Cumberland, Rhode Island
November 9, 1999
12
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VALLEY RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 14, 1999
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 14, 1999, 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 26, 1999 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,
S. Partridge, Secretary
Mailed: November 9, 1999
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. PROXY/VOTING INSTRUCTION CARD
- --------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors of
VALLEY RESOURCES, INC. for the Annual Meeting on December 14, 1999
The stockholder appoints A. P. Degen, S. Partridge 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 14, 1999 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.
VALLEY RESOURCES, INC.
P. O. BOX 11419
NEW YORK, NY 10203-0419
(Continued, and to be signed and dated on reverse side.)
13
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VOTE BY INTERNET
24 HOURS A DAY, 7 DAYS A WEEK
INTERNET MAIL
http://proxy.shareholder.com/vr
Use the Internet to vote your proxy. Mark, sign and date your proxy card
Have your proxy card in hand when and return it in the postage-paid
you access the website. You will be envelope we have provided.
prompted to enter your control
number, located in the box below, to
create an electronic ballot.
Your Internet vote authorizes the named If you have submitted your proxy by
proxies to vote your shares in the same the Internet there is no need for
manner as if you marked, signed and you to mail back your proxy.
returned the proxy card.
____________________________________
CONTROL NUMBER FOR
INTERNET VOTING
___________________________________
DETACH PROXY CARD HERE IF YOU ARE NOT
VOTING BY THE INTERNET
1. Election of Directors FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below for all nominees listed below
Nominees: Ernest N. Agresti, Don A. DeAngelis, Virginia Roberts
(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
(Please sign, date and return this proxy in
the enclosed postage prepaid envelope.) Votes must be indicated (X) in
Black or Blue ink.
