<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CHESAPEAKE UTILITIES CORPORATION
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
CHESAPEAKE UTILITIES CORPORATION
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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:
Notes:
<PAGE>
CHESAPEAKE UTILITIES CORPORATION
909 SILVER LAKE BOULEVARD
DOVER, DELAWARE 19904
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS OF
CHESAPEAKE UTILITIES CORPORATION: April 8, 1996
The Annual Meeting of Stockholders of Chesapeake Utilities Corporation will
be held at 10:00 a.m. on Tuesday, May 21, 1996, in the Board Room, PNC Bank,
Delaware, 222 Delaware Avenue, Wilmington, Delaware, for the following purposes:
(a) to elect three Class III directors for three-year terms ending in 1999
and until their successors are elected and qualified;
(b) to consider and vote upon the ratification of the selection of Coopers
& Lybrand, L.L.P. as independent auditors for the fiscal year ending
December 31, 1996; and
(c) to transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on March 22, 1996, will be
entitled to vote at the meeting and any adjournment thereof.
By Order of the Board of Directors,
/s/Wayne L. Hart
Wayne L. Hart
Secretary
STOCKHOLDERS ARE REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY
IN THE ENCLOSED ENVELOPE, WHETHER OR NOT THEY ARE PERSONALLY ABLE TO ATTEND.
<PAGE>
CHESAPEAKE UTILITIES CORPORATION
909 SILVER LAKE BOULEVARD
DOVER, DELAWARE 19904
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 21, 1996
--------------------------------
April 8, 1996
SOLICITATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Chesapeake Utilities Corporation ("Chesapeake" or the "Company")
for use at the Annual Meeting of Stockholders of Chesapeake to be held in the
Board Room, PNC Bank, Delaware, 222 Delaware Avenue, Wilmington, Delaware at
10:00 a.m. on May 21, 1996, and at any adjournment thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders. Solicitation
of proxies may be made by personal interview, mail, telephone or telegram by
directors, officers and regular employees of Chesapeake. Chesapeake may also
request banking institutions, brokerage firms, custodians, trustees, nominees
and fiduciaries to forward solicitation material to the beneficial owners of
capital stock held of record by such persons, and Chesapeake will reimburse any
such forwarding expenses. In addition, Chesapeake may engage professional proxy
solicitors, although it has no present plans to do so. All costs of preparing,
printing, assembling and mailing the form of proxy and the material used in the
solicitation thereof and all clerical and other expenses of solicitation will be
borne by Chesapeake. Regular employees of Chesapeake will not receive additional
compensation for soliciting proxies.
REVOCATION OF PROXY
The giving of a proxy does not preclude the right to vote in person should
the person giving the proxy so desire. In addition, the person giving the proxy
has the power to revoke the same at any time before it has been exercised by
simple notice in writing received by the Secretary of Chesapeake.
SIGNATURES OF PROXIES IN CERTAIN CASES
If a stockholder is a corporation, the accompanying proxy should be signed
in its corporate name by an authorized officer, and his or her title should be
indicated. If stock is registered in the name of two or more trustees or other
persons, the proxy should be signed by each of them. If stock is registered in
the name of a decedent, the proxy should be signed by an executor or an
administrator, there should be attached to the proxy appropriate instruments
showing his or her qualification and authority, and his or her title as such
should follow the signature. Proxies signed by a person as an agent, attorney,
administrator, executor, guardian or trustee should indicate such person's title
following his or her signature.
<PAGE>
ANNUAL REPORT
The annual report to stockholders, covering the fiscal year of Chesapeake
ended December 31, 1995, is enclosed herewith. The report, which includes
financial statements, does not form any part of the material for the
solicitation of proxies.
VOTING SECURITIES OUTSTANDING
Shares of common stock, 3,758,082 of which were outstanding as of March 22,
1996, are the only outstanding voting securities of the Company. Each share is
entitled to one vote. Only holders of common stock of record at the close of
business on March 22, 1996, will be entitled to vote at the Annual Meeting of
Stockholders.
BENEFICIAL OWNERSHIP OF THE COMPANY'S SECURITIES
BY MANAGEMENT
The following table sets forth the number of shares of Chesapeake's common
stock beneficially owned by each of Chesapeake's directors and nominees for
director, by each executive officer named in the Summary Compensation Table, and
by all directors and executive officers as a group, as of March 22, 1996.
Except as otherwise indicated, each individual named has sole investment and
voting power with respect to the securities shown.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF INDIVIDUAL OR GROUP BENEFICIAL OWNERSHIP/1/ OF CLASS
- --------------------------- ----------------------- --------
<S> <C> <C>
Ralph J. Adkins............................................. 58,597 1.54%
Richard Bernstein........................................... 400 *
Walter J. Coleman........................................... 1,400 *
John W. Jardine, Jr......................................... 25,908 *
Rudolph M. Peins, Jr........................................ 2,038 *
Robert F. Rider............................................. 5,500 *
John R. Schimkaitis......................................... 27,257 *
Jeremiah P. Shea............................................ 2,080 *
William G. Warden, III...................................... 230,399 /2/ 6.13%
Philip S. Barefoot.......................................... 3,542 *
Jeremy D. West.............................................. 21,185 *
Executive Officers and Directors as a Group (11 persons).... 378,306 /1/ 9.85%
</TABLE>
_______________
*Less than one percent (1%).
2
<PAGE>
/1/ Includes shares of common stock subject to options that are currently
exercisable as follows: Mr. Adkins - 39,327; Mr. Schimkaitis - 24,021; Mr.
Barefoot - 2,210; and Mr. West - 17,555. Includes shares acquired pursuant
to the Company's Retirement Savings Plan as to which executive officers have
the authority to direct voting of their shares as follows: Mr. Adkins -
7,580; Mr. Schimkaitis - 2,839; Mr. Barefoot - 1,207; and Mr. West - 1,698.
/2/ Includes (1) 886 shares as to which Mr. Warden has sole voting and
investment power and 15,262 shares as to which he shares voting and
investment power and (2) 214,251 shares (5.70% of Chesapeake's outstanding
common stock) held by Cawsl Enterprises, Inc., a company that Mr. Warden may
be deemed to control (see "Beneficial Ownership of the Company's Securities
- By Others" below). Mr. Warden disclaims beneficial ownership of the shares
held by Cawsl Enterprises, Inc.
BY OTHERS
The following table sets forth the number of shares of Chesapeake's common
stock beneficially owned by the only parties known to Chesapeake's management to
own more than 5% of Chesapeake's common stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
-------------------- -------------------- --------
<S> <C> <C>
Cawsl Enterprises, Inc. 214,251/1/ 5.70%
P.O. Box 7048
103 Silverside Road
Wilmington, Delaware 19803
Atlee M. Kohl 202,000/2/ 5.38%
3007 Skyway Circle North
Irving, Texas 75038
</TABLE>
_______________
/1/ These shares are also included in the table captioned "Beneficial Ownership
of the Company's Securities - By Management" in connection with William G.
Warden, III. Cawsl Enterprises, Inc., is a wholly owned subsidiary of
Superior Group, Inc. (formerly Cawsl Corp.).
/2/ Includes 61,000 shares owned by Woodland Investment Company; 104,250 shares
held by the Kohl Gift Trust; 18,000 shares held by Woodland Investment
Trust; and 18,750 shares held by the Nicole F. and Atlee Kohl Family
Foundation, as to all of which Mr. Kohl shares voting and investment power.
ELECTION OF DIRECTORS
At the annual meeting to be held on May 21, 1996, three Class III Directors
will be elected to serve until the Annual Meeting of Stockholders in 1999 and
until their successors are elected and qualified. Chesapeake's nominees are
Walter J. Coleman, John R. Schimkaitis and Jeremiah P. Shea, all of whom are
currently Class III Directors of Chesapeake whose present terms expire this
year.
3
<PAGE>
Directors are elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors.
Unless you instruct otherwise, it is intended that properly executed proxies
in the enclosed form will be voted FOR the election of each of the nominees
listed below. If, when the election occurs, any of the nominees shall not be a
candidate (an eventuality not anticipated), it is intended that these proxies
will be voted for any substitute nominee who may be designated by the Nominating
Committee.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND NOMINEES
The following information with respect to the principal occupation and
employment of each director and nominee and the name and principal business of
the organization in which such occupation and employment is carried on, and
information with respect to certain other affiliations and to business
experience during the past five years, has been furnished to the Company by the
respective directors and nominees:
CLASS I DIRECTORS (TERM EXPIRES 1997)
RICHARD BERNSTEIN (age 53)
Mr. Bernstein is President and Chief Executive Officer of BAI Aerosystems, Inc.,
located in Easton, Maryland. BAI is a manufacturer of lightweight, low cost
Unmanned Aerial Vehicles (UAVs). Mr. Bernstein is the owner of several other
companies in which he is actively involved, including: Salisbury Pewter, a
manufacturer of pewter for the gift and premium markets; Frankoma Pottery, with
unique designs in sculptured earthenware; and Easton Mills, the home of several
lines of children's apparel. He has been a director of Chesapeake since 1994.
JOHN W. JARDINE, JR. (age 69)
Mr. Jardine is Chairman of the Board of Chesapeake, a position he has held since
1989. He served as Chesapeake's Chief Executive Officer from 1983 through 1990.
Mr. Jardine has also served as President, Executive Vice President, Vice
President, Secretary, Treasurer, Assistant Secretary and Assistant Treasurer of
Chesapeake. He has been a director of Chesapeake since 1972.
RUDOLPH M. PEINS, JR. (age 66)
Mr. Peins retired in February 1993 as Chief Financial Officer and Secretary of
Hunt Manufacturing Co. located in Philadelphia, Pennsylvania. Hunt is a leading
international manufacturer and distributor of art/craft and office supplies,
materials and equipment. He has been a director of Chesapeake since 1993.
CLASS II DIRECTORS (TERM EXPIRES 1998)
RALPH J. ADKINS (age 53)
Mr. Adkins is President and Chief Executive Officer of Chesapeake. He has
served as President and Chief Executive Officer since 1990. His present term as
President and Chief Executive Officer will expire on May 21, 1996. Prior to
holding his present position, Mr. Adkins served as President and Chief Operating
Officer, Executive Vice President, Senior Vice President, Vice President and
Treasurer of Chesapeake. Mr. Adkins is also Chairman and
4
<PAGE>
Chief Executive Officer of Eastern Shore Natural Gas Company and Sharp Energy,
Inc. and Chairman, President and Chief Executive Officer of Chesapeake Service
Company, all wholly owned subsidiaries of Chesapeake. He has been a director of
Chesapeake since 1989.
ROBERT F. RIDER (age 67)
Mr. Rider is Chairman of the Board and Chief Executive Officer of O. A. Newton &
Son Company located in Bridgeville, Delaware. The company engages in millwright
work and metal fabrication and sells farm equipment, modular homes and materials
handling systems. Mr. Rider is also a director of PNC Bank, Delaware, Blue
Cross Blue Shield of Wilmington, Delaware, and Burris Foods. He is a trustee of
the University of Delaware. Mr. Rider also serves as a Governor of the United
States Postal Service. He has been a director of Chesapeake since 1977.
WILLIAM G. WARDEN, III (age 64)
Mr. Warden is Chairman of the Board of Superior Group, Inc., a holding company
engaged through subsidiaries in the manufacture and distribution of metal tubing
and provision of financial services, located in Wynnewood, Pennsylvania. He has
been a director of Chesapeake since 1969.
CLASS III DIRECTORS AND NOMINEES
WALTER J. COLEMAN (age 61)
Mr. Coleman retired in December 1995 as the Chief Executive Officer of Pyramid
Realty and Mortgage Corporation, a diversified company involved in real estate,
mortgages, insurance and business brokerage. He is also the former Chairman of
Real Estate Title Services, Inc., a title insurance and trust company. Mr.
Coleman is a professor at Florida Southern College specializing in strategic and
human resources management. He has been a director of Chesapeake since 1992.
JOHN R. SCHIMKAITIS (48)
Mr. Schimkaitis is Executive Vice President, Chief Operating and Chief Financial
Officer and Assistant Treasurer of Chesapeake. He has served as Executive Vice
President and Chief Operating Officer since February 1996. Prior to that, Mr.
Schimkaitis served as Senior Vice President and Chief Financial Officer since
1993. His present term will expire on May 21, 1996. Mr. Schimkaitis has also
served as Vice President, Treasurer and Assistant Secretary of Chesapeake. He
became a director of Chesapeake on February 23, 1996.
JEREMIAH P. SHEA (age 69)
Mr. Shea retired in February 1990 as the Chairman and Chief Executive Officer of
Bank of Delaware Corporation, located in Wilmington, Delaware. He is a director
of FCC National Bank and a former trustee of St. Francis Hospital, both located
in Wilmington, Delaware. He has been a director of Chesapeake since 1981.
5
<PAGE>
DIRECTORS' COMPENSATION
Directors who are not officers of the Company are awarded 400 shares of the
Company's common stock annually, in advance at the time of the Company's annual
meeting, pursuant to Chesapeake's Directors Stock Compensation Plan. Directors
are also paid an attendance fee of $600 for each Board and committee meeting
attended. No additional attendance fees are paid if a director attends more than
one meeting on the same day.
COMMITTEES OF THE BOARD
The Audit Committee was established in 1976. It must be comprised of
directors who are not employees of the Company or any of its subsidiaries. In
general, the Audit Committee is charged with reviewing the internal auditor's
reports of practices and procedures as well as the reports of Chesapeake's
independent auditors relating to the results of their audit and the adequacy of
internal controls. The Audit Committee has the responsibility to make
recommendations to management arising from the aforementioned reviews. The Audit
Committee held three meetings during 1995. The current members of the Audit
Committee are: Rudolph M. Peins, Jr., Robert F. Rider, and William G. Warden,
III, Chairman.
The Compensation Committee, established in 1979, has the responsibility of
fixing the salaries of officers and directors. The Compensation Committee held
two meetings during 1995. The current members of the Compensation Committee are:
John W. Jardine, Jr., Jeremiah P. Shea, Chairman, and William G. Warden, III.
The Plan Committee was established in 1992 for the purpose of administering
the Chesapeake Utilities Corporation Performance Incentive Plan and Cash Bonus
Plan. The Plan Committee held one meeting during 1995. The members of the Plan
Committee are: John W. Jardine, Jr., Jeremiah P. Shea, Chairman, and William G.
Warden, III.
The Nominating Committee was established in 1979. The principal function of
the Nominating Committee is to identify candidates for election to and
membership on the Board of Directors. The Nominating Committee held one meeting
during 1995. The current members of the Nominating Committee are: Richard
Bernstein, Walter J. Coleman, John W. Jardine, Jr., Chairman, and Robert F.
Rider. The Nominating Committee will consider nominees recommended by
stockholders. Nominations by stockholders are required by the Company's bylaws
to be in the form of a notice which sets forth (a) as to each nominee (i) the
name, age, business address and, if known, residence address of such nominee
(ii) the principal occupation or employment of such nominee (iii) the number of
shares of stock beneficially owned by the nominee (iv) the consent of the
nominee to serve as a director of the Corporation if so elected (v) a
description of all arrangements or understandings among the stockholder and the
nominee and any other person or persons pursuant to which the nomination is to
be made by the stockholder and (vi) any other information relating to the
nominee required to be disclosed in solicitations of proxies for election of
directors, or otherwise required pursuant to Regulation 14A under the Securities
and Exchange Act of 1934, as amended, and (b) as to the stockholder giving the
notice (i) the name and address, as they appear on the Company's books, of such
stockholder and (ii) the number of shares beneficially owned by such
stockholder. All recommendations received by the Secretary will be brought to
the attention of the Nominating Committee.
6
<PAGE>
The Corporate Governance Committee was established in 1994 for the purpose of
reviewing and advising the Board on general corporate governance and structure
issues. The Corporate Governance Committee held one meeting during 1995. The
members of the Corporate Governance Committee are: Walter J. Coleman, Chairman,
Richard Bernstein, Rudolph M. Peins, Jr. and Jeremiah P. Shea.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met six times during 1995. Each director (other than
Mr. Schimkaitis, who became a director in 1996) attended 75% or more of the
aggregate of (1) the total number of meetings of the Board of Directors and (2)
the total number of meetings held by each committee of the Board on which he
served.
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of
the Company's Chief Executive Officer and other executive officers for each of
the Company's last three fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION
-------------------
NAME AND SHARES UNDERLYING
PRINCIPAL FISCAL SALARY BONUS OPTIONS/SARS ALL OTHER
POSITION YEAR ($) ($) (#) COMPENSATION ($)
- -------------------------- ------- -------- -------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
Ralph J. Adkins .......... 1995 219,500 91,494 0 10,968/2/
President, Chief 1994 212,500 53,986 19,161/1/ 7,271
Executive Officer 1993 203,750 33,210 0 8,475
and Director
John R. Schimkaitis....... 1995 152,250 56,017 0 10,021/2/
Executive Vice President, 1994 145,250 31,421 11,223/1/ 6,045
Chief Operating and 1993 137,500 17,430 0 5,203
Chief Financial Officer
and Director
Philip S. Barefoot/3/..... 1995 102,000 27,562 0 4,208/2/
Senior Vice President 1994 84,859 10,703 6,630/1/ 2,846
Jeremy D. West............ 1995 128,500 33,488 0 5,346/2/
Vice President 1994 123,000 20,758 7,892/1/ 4,979
1993 118,750 11,700 0 4,662
</TABLE>
7
<PAGE>
_______________
/1/ Options to acquire shares of common stock pursuant to Tandem Stock Option
and Performance Share Agreements dated November 18, 1994 under the
Company's Performance Incentive Plan (the "Plan"), for the award period
beginning January 1, 1995 and ending December 31, 1997 (the "1994 Tandem
Agreements"). The option exercise price may be paid in cash, in shares of
common stock or in any other form of consideration approved by the
Company's Plan Committee. With respect to each recipient, one-third of
these options will become exercisable on each of January 1, 1996, 1997 and
1998. In the event of a change in control, as defined in the Plan, all
options become immediately exercisable. The options listed were granted in
tandem with the right to receive, without any additional payment, certain
performance shares if, during the period from January 1, 1995 through
December 31, 1997 (the "Award Period"), the Company meets certain
performance goals (including specified target levels of net income and
return on equity) which were set at the time the 1994 Tandem Agreements
were entered into. If the target levels are met or exceeded, the number of
performance shares received would be as follows: Mr. Adkins - 9,724 to
18,418; Mr. Schimkaitis - 6,019 to 11,444; Mr. Barefoot - 3,431 to 6,494;
and Mr. West - 4,081 to 7,725. In the event of a change in control, as
defined in the Plan, the minimum number of performance shares set forth
above, prorated based on the proportion of the Award Period expired, shall
be deemed earned. The performance shares remain unissued until, after the
Award Period, it is determined that the performance goals have been
achieved. Thus the named executive officers currently have no dividend or
voting rights with respect to such shares. Exercise of the options and
receipt of the performance shares are mutually exclusive; exercise of any
portion of the option will cancel the right to receive a proportionate
number of performance shares, while issuance of the performance shares will
cancel any unexercised portion of the option.
/2/ Consists of the Company's contribution to its Retirement Savings Plan on
behalf of such officer (Mr. Adkins - $9,240; Mr. Schimkaitis - $9,135; Mr.
Barefoot - $3,672; and Mr. West - $4,626) and term life insurance premiums
paid by the Company on behalf of such officer (Mr. Adkins - $1,728; Mr.
Schimkaitis - $886; Mr. Barefoot - $536; and Mr. West - $720).
/3/ Mr. Barefoot became an executive officer of the Company on May 17, 1994.
AGGREGATED OPTION/SAR EXERCISES DURING 1995 FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table sets forth information concerning options exercised by
the named executive officers during the 1995 fiscal year and the number and
value of options and warrants held by such officer at fiscal year end.
8
<PAGE>
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SHARES UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SAR'S OPTIONS/SAR'S
AT FY-END (#) AT FY-END ($)
SHARES ACQUIRED VALUE -------------------------- ----------------------------
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- --------------- ------------ ----------- ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Ralph J. Adkins 0 0 32,940 19,161 61,762 38,322
John R. Schimkaitis 0 0 20,280 11,223 38,025 22,446
Philip S. Barefoot 0 0 0 6,630 0 13,260
Jeremy D. West 0 0 14,925 7,892 27,984 15,784
</TABLE>
PENSION PLAN TABLE
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE AT NORMAL RETIREMENT AGE
AVERAGE ----------------------------------------------------------
EARNINGS 15 20 25 30 35 40
- -------- ------- ------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
$100,000 $26,444 $35,259 $44,074 $52,889 $61,704 $61,704
$125,000 $33,663 $44,884 $56,105 $67,326 $78,547 $78,547
$150,000 $40,882 $54,509 $68,137 $81,764 $95,391 $95,391
$175,000 $48,101 $64,134 $80,168 $96,201 $112,235 $112,235
$200,000 $55,319 $73,759 $92,199 $110,639 $129,079 $129,079
$225,000 $62,538 $83,384 $104,230 $125,076 $145,922 $145,922
$250,000 $69,757 $93,009 $139,514 $162,766 $162,766 $162,766
$275,000 $76,976 $102,634 $128,293 $153,951 $179,610 $179,610
$300,000 $84,194 $112,259 $140,324 $168,389 $196,454 $196,454
</TABLE>
The above table sets forth the estimated annual retirement benefits payable
under the Company's retirement plan to its regular employees, including
officers, in the final average earnings and years of service classifications
indicated. The retirement plan is funded solely by the Company. Benefits
normally are paid in the form of a straight life annuity or joint and survivor
annuity and are not subject to any deduction for Social Security or other offset
amounts.
Annual compensation used to determine final average earnings under the plan
includes salary, as set forth in the Summary Compensation Table, commissions,
and, with respect to employees earning a salary less than a stated amount (which
for 1995 was $66,000), bonus payments. Compensation covered by the plan for 1995
was as follows: Mr. Adkins - $219,500; Mr. Schimkaitis - $152,250; Mr. Barefoot
- - $102,000; and Mr. West - $128,500. The calculation of benefits under the plan
generally is based on average earnings for the highest five consecutive years of
the ten years preceding retirement.
9
<PAGE>
For 1995, the Internal Revenue Code of 1986, as amended, generally limits
the annual benefits which may be paid under the plan to $120,000 and limits the
amount of annual compensation that may be taken into account in determining
final average earnings to $150,000. The table above does not reflect these
limits. However, these limits may increase in future years. Furthermore,
benefits earned before the limits went into effect generally are not affected by
the limits. The Company has adopted a plan that is not a tax-qualified plan to
provide the benefits that would have been provided under the Company's
retirement plan but for these limits. The plan was effective January 1, 1995.
The plan is unfunded but is required to be funded in the event of a change in
control of the Company.
As of December 31, 1995, the number of years of credited service under the
retirement plan for each of the named executive officers were as follows: Ralph
J. Adkins - 33 years; John R. Schimkaitis - 10 years; Philip S. Barefoot - 7
years; and Jeremy D. West - 6 years.
EMPLOYMENT CONTRACTS AND CHANGE IN CONTROL PROVISIONS
Chesapeake has entered into employment agreements with Messrs. Adkins,
Schimkaitis, Barefoot, and West. These agreements are designed to help retain
such officers who are essential to the proper supervision of Chesapeake's
business by assuring them of equitable treatment in the event of a termination
of employment following a change in control of the Company. Under the
agreements, if a change in control occurs, the failure to elect or re-elect the
officer to, or the removal of the officer from, the office held by the officer,
or the failure to elect or re-elect the officer to, or the removal of the
officer from, the Board of Directors of the Company (if the officer shall have
been a member of the Board immediately prior to a change in control) would
entitle the officer to terminate his employment and to receive certain
termination payments as described below. An officer's good faith determination
that the nature or scope of his duties has been significantly altered subsequent
to a change in control would also entitle him to terminate his employment and to
receive the termination payments provided in the agreement.
The agreements with Mr. Adkins and Mr. Schimkaitis were entered into on
March 26, 1992, and provide for the employment of Mr. Adkins as the Company's
President and Chief Executive Officer and of Mr. Schimkaitis as the Company's
Vice President and Treasurer at salaries of $200,000 and $130,000, respectively,
or such greater or lesser amounts as the Company's Board of Directors may
determine (Mr. Schimkaitis has since then been promoted to Executive Vice
President, Chief Operating and Chief Financial Officer). The agreements with
Messrs. Barefoot and West were entered into on March 26, 1995, and provide for
the employment of Mr. Barefoot as Senior Vice President and of Mr. West as Vice
President of the Company at salaries of $105,000 and $148,000, respectively, or
such greater or lesser amounts as the Company's Board of Directors may
determine. Actual compensation for each of the officers is described in the
Summary Compensation Table. Each of the agreements expires on March 26, 1997,
and provides that if a change in control occurs prior to that date, the
agreements will be automatically extended for a maximum of five years commencing
on the date the change in control occurred (the "extension period").
10
<PAGE>
The agreements are intended to maintain compensation and benefits following
a change in control at levels generally comparable to those that such officers
could reasonably have expected in the absence of a change in control. The
agreements provide for the payment of compensation during the extension period
at a level equal to the rate existing immediately prior to the change in
control, adjusted throughout such period to reflect increases in the consumer
price index. Each agreement also provides for the officer's continued
eligibility during such extension period under the Company's employee benefit
plans. In the event of a termination of employment other than for cause, an
officer would receive under his agreement a termination payment equal to an
amount approximating the compensation and the value of certain benefits under
the Company's retirement, savings and stock option plans that he would have
received had he continued to be employed by the Company for the lesser of 24
months or the number of months remaining under the extended term of the
agreement. However, such termination payment could not exceed the maximum amount
that the Company could pay the officer without some part of the amount being
nondeductible by the Company under Section 280G of the Internal Revenue Code.
Each agreement also provides that the Company will indemnify the officer for any
expenses he incurs in successfully enforcing his right to payments or benefits
under his agreement and that the Company, upon the request of the officer, will
provide the officer with an irrevocable letter of credit from a bank in the
amount of $100,000 against which the officer may draw to pay any expenses he
incurs in attempting to enforce any of his rights under his agreement following
a change in control.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors hereby provides the
following report on executive compensation for the year ended December 31, 1995.
POLICIES AND GOALS
The Company's compensation goal is to enhance the profitability of the
Company, and thus increase stockholder value, by attracting high-quality
executive talent and closely aligning the financial interests of its senior
managers with those of its stockholders. To this end, the Company's executive
compensation program has been designed to provide competitive compensation
levels based upon the successful achievement of specific annual and long-term
objectives drawn from the Company's strategic plan.
COMPONENTS
The Company's executive compensation program relies on three interrelated
components, consisting of base salary, annual bonus and long-term equity-based
rewards.
BASE SALARY
The base salary structure for the Chief Executive Officer and the other
executives is determined by means of a study prepared by independent
compensation consultants, using comparison data from the same group of
diversified natural gas organizations which the Company uses in its stock
performance review (the
11
<PAGE>
"Industry Peer Group"). The midpoints of the recommended structure are set at or
reasonably close to comparison averages, thereby providing marketplace priced
compensation guidelines for executives. Annual salary adjustments are
subjectively made after giving consideration to the individual's performance and
contributions to the success of the Company. Executive base salaries generally
fall below, but close to, the comparison averages. Salaries for the Chief
Executive, Chief Financial, and other Executive Officers named in the Summary
Compensation Table are originally set by employment contracts (see "Management
Compensation - Employment Contracts and Change in Control Provisions"), but are
adjusted annually pursuant to the process described above.
ANNUAL INCENTIVE BONUS
Annual bonuses are paid under the Company's performance-based cash bonus plan,
adopted in January, 1992, based on the attainment of financial and non-financial
objectives relative to pre-established performance targets. At the beginning of
each year, the Committee selects the executives eligible to receive bonuses
based on the executives' seniority and responsibilities. The Committee
designates a target bonus amount for each executive, which is a percentage of
that executive's base salary ranging from 20% to 30%. Target bonus amounts are
determined separately for each of the Chief Executive Officer and other selected
executives to conform with the median prevailing practices for individuals in
similar positions in a group of approximately 1,000 organizations of comparable
size. Because size was the primary consideration in choosing this group it
includes some but not all of the companies in the Industry Peer Group. The
Committee also identifies performance goals for the year for each selected
executive, relating to one or more business segments, to the Company as a whole,
or both, and an aggressive target net income range for the Company or designated
segments. Bonus awards for the year are made to each selected executive, based
on successful attainment of the relevant goals, adjusted by applying a payout
factor (which may vary for each executive) that is determined by the
relationship between the actual net income of the Company or relevant segments
and the relevant aggressive target net income range. For 1995, most of the
performance goals were achieved, either entirely or to a significant extent,
including, approximately in order of relative weight: (1) restructuring of the
information technology unit; (2) achieving specified customer and volume growth
targets; (3) improving customer service; (4) accomplishing specified regulatory
initiatives; (5) implementation of various financial systems; (6) evaluation of
certain supply alternatives; (7) preparation for Open Access; and (8) completion
of various other operating goals. Based on these achievements, the Committee
determined that between 87% and 97% of the goals have been met. The Company and
relevant segments exceeded the high end of the aggressive target net income
range and a payout factor of 130% or 150% was applied, depending upon each
executive's responsibilities.
LONG-TERM PERFORMANCE INCENTIVE PLAN
Long-term equity-based awards are granted under the Company's Long-Term
Performance Incentive Plan, adopted in 1992, which permits the Committee
flexibility in providing different forms and levels of equity-based awards to
key employees. In 1994, the Company granted tandem option and performance share
awards designed to provide equity-based rewards for its executives keyed to
corporate performance for the three-year award period ending December 31, 1997.
Each award consists of a tandem (i.e. mutually
12
<PAGE>
exclusive) grant of (1) options to purchase the Company's common stock and
(2) the right to receive, upon achievement at the end of the three-year
period of pre-established aggressive goals for return on equity and net
income for the Company, a certain number of performance shares. The number
of options and performance shares were determined separately for each of
the Chief Executive Officer and other selected executives to conform with
the median prevailing practices for individuals in similar positions in
the group of organizations used to determine target bonus amounts. The
options and performance shares are more fully described in the Summary
Compensation Table.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
During 1995, the compensation of the Company's Chief Executive Officer,
Ralph J. Adkins, was determined based on the three-part program described above.
First, Mr. Adkins' base salary was determined to approximate the midpoint of
chief executive salaries paid by companies in the Industry Peer Group. Second,
Mr. Adkins was awarded a bonus of $91,494 or 41% of his base salary, determined
in accordance with the policies described under "Annual Incentive Bonus" above.
Mr. Adkins' target bonus was $66,300 or 30% of salary. The Committee determined
that 92% of his performance goals had been met by virtue of the accomplishment
of goals set forth for executive officers under "Annual Incentive Bonus" above.
This percentage was applied to the target bonus of $66,300 and a payout factor
of 150% was applied, representing the payout factor achieved as a result of
exceeding the high end of the aggressive target net income range for the year.
Finally, the long-term performance incentive component of Mr. Adkins'
compensation was determined as described under "Long-Term Performance Incentive
Plan" above.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
Internal Revenue Code Section 162(m), enacted in 1993, precludes any public
corporation from taking a deduction for compensation in excess of $1 million
paid to its chief executive officer and any of its other named executive
officers. Certain performance-based compensation is specifically exempted from
the deduction limit. No formal policy has been adopted by the Company with
respect to qualifying compensation paid to its executive officers from the
deduction limit. The Company does not anticipate that any compensation paid to
its executive officers in 1996 will exceed the dollar limit.
THE COMPENSATION COMMITTEE
John W. Jardine, Jr.
Jeremiah P. Shea (Chairman)
William G. Warden, III
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in the cumulative
total stockholder return on the Company's common stock during the five fiscal
years ended December 31, 1995, with the cumulative total return on the S&P 500
Index and an industry index consisting of 23 diversified natural gas companies
as published by
13
<PAGE>
Edward D. Jones & Co. The 23 companies in the Edward D. Jones & Co. industry
index are as follows: AlaTenn Resources, Inc., Chesapeake Utilities Corporation,
Columbia Gas System, Inc., Consolidated Natural Gas Company, Eastern
Enterprises, Energen Corporation, ENSERCH Corporation, Equitable Resources,
Inc., KN Energy, Inc., National Fuel Gas Company, National Gas & Oil Company,
NORAM Energy Corp., Oneok, Inc., Pacific Enterprises, Pennsylvania Enterprises,
Inc., Questar Corporation, South Jersey Industries, Inc., Southwest Gas
Corporation, Southwestern Energy Company, UGI Corporation, Valley Resources,
Inc., Washington Energy Company and WICOR, Inc. The comparison assumes $100 was
invested on December 31, 1990 in the Company's common stock and in each of the
foregoing indices and assumes reinvestment of dividends.
[GRAPH OF STOCK PERFORMANCE APPEARS HERE]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL STOCKHOLDER RETURN
----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1990 1991 1992 1993 1994 1995
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Chesapeake 100.0 113.1 111.9 140.1 124.0 151.8
S&P 500 100.0 130.3 140.3 154.3 156.4 215.0
Industry Index 100.0 86.0 91.4 103.9 90.3 122.8
</TABLE>
14
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Board's Compensation Committee and Plan Committee are Mr.
Jardine, Mr. Shea and Mr. Warden. Mr. Jardine was formerly Chief Executive
Officer of the Company from 1983 to 1990.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, following the recommendation of the Audit Committee,
appointed Coopers & Lybrand, L.L.P. to serve as Chesapeake's independent
accountants for the year ending December 31, 1995, to perform audits of the
financial statements of Chesapeake and its subsidiaries. The Board's selection
of Coopers & Lybrand, L.L.P. was ratified by the stockholders at the Company's
1995 Annual Meeting. Coopers & Lybrand, L.L.P. was also retained during 1995 to
render certain non-audit professional services.
It is not expected that a representative from Coopers & Lybrand, L.L.P. will
be present at the Annual Meeting of Stockholders.
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected the firm of Coopers & Lybrand, L.L.P. to
serve as the independent auditors of Chesapeake and its consolidated
subsidiaries for the fiscal year ending December 31, 1996. The Board is
submitting the selection of Coopers & Lybrand, L.L.P. for ratification by
stockholders.
Coopers & Lybrand, L.L.P. has served as independent auditors of Chesapeake
and its subsidiaries since 1982 (See "Relationship with Independent Public
Accountants"). The firm has wide experience in accounting and auditing for
public utilities and other companies. Coopers & Lybrand, L.L.P. is a member of
the Securities and Exchange Commission Practice Section of the American
Institute of Certified Public Accountants. By virtue of their membership in this
Section, they have agreed to undergo a review by an independent accounting firm
once every three years. Neither Coopers & Lybrand, L.L.P. nor any of its
partners has any direct or indirect financial interest in or any connection
(other than as independent auditors or with respect to non-audit professional
services) with Chesapeake or any of its subsidiaries. All of the professional
services provided by Coopers & Lybrand, L.L.P. are furnished at customary rates
and terms.
Based upon the recommendation of the Audit Committee, the Board of Directors
selected this firm to act as Chesapeake's independent auditors for the year
1996, subject to ratification by the stockholders, in the belief that Coopers &
Lybrand, L.L.P. is well qualified. Should the selection of Coopers & Lybrand,
L.L.P. as independent auditors of Chesapeake not be ratified by the
stockholders, the Board of Directors will reconsider the matter.
15
<PAGE>
SUBMISSION OF STOCKHOLDERS PROPOSALS
Any stockholder who wishes to submit a proposal for possible inclusion in
Chesapeake's proxy statement for the next annual meeting must submit the
proposal in writing to the Board of Directors on or before December 9, 1996.
Written proposals should be directed to Wayne L. Hart, Secretary, Chesapeake
Utilities Corporation, 909 Silver Lake Boulevard, Dover, Delaware 19904.
ANNUAL REPORT TO SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-K
CHESAPEAKE WILL PROVIDE WITHOUT CHARGE TO ANY PERSON, UPON THE WRITTEN
REQUEST OF SUCH PERSON, A COPY OF CHESAPEAKE'S ANNUAL REPORT ON FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, REQUIRED TO BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 13a-1 UNDER
THE SECURITIES EXCHANGE ACT OF 1934 FOR CHESAPEAKE'S FISCAL YEAR ENDED DECEMBER
31, 1995. WRITTEN REQUESTS SHOULD BE DIRECTED TO WAYNE L. HART, SECRETARY,
CHESAPEAKE UTILITIES CORPORATION, 909 SILVER LAKE BOULEVARD, DOVER, DELAWARE
19904.
COMPLIANCE WITH CERTAIN REGULATORY REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires each of the Company's directors and executive
officers, and any beneficial owner of more than 10% of the Company's common
stock, to file with the Securities and Exchange Commission (the "SEC") initial
reports of beneficial ownership of Chesapeake's common stock and reports of
changes in such beneficial ownership. Such persons also are required by SEC
regulations to furnish Chesapeake with copies of such reports. To Chesapeake's
knowledge, based solely on its review of the copies of such reports furnished to
Chesapeake and on the written representations made by such persons that no other
reports were required, during the fiscal year ending December 31, 1995, no
director, officer or 10% beneficial owner failed to file on a timely basis the
reports required by Section 16(a).
OTHER MATTERS
The Board of Directors knows of no other matter to be presented at the
meeting. If, however, any other business properly comes up for action at the
meeting or any adjournment thereof, it is intended that the persons acting under
the proxies in the form enclosed will vote in regard thereto according to their
discretion.
By Order of the Board of Directors,
Wayne L. Hart
Secretary
16
<PAGE>
CHESAPEAKE UTILITIES CORPORATION
A DIVERSIFIED UTILITY COMPANY
April 8, 1996
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Chesapeake Utilities Corporation to be held at 10:00 A.M. on May 21, 1996, in
the Board Room, PNC Bank, Delaware, 222 Delaware Avenue, Wilmington, Delaware.
Your Board of Directors looks forward to greeting personally those stockholders
able to attend. The Secretary's formal Notice of Annual Meeting of Stockholders
and the Proxy Statement appear on the enclosed pages and describe the matters
that will be submitted to a vote of stockholders at the meeting.
Whether or not you plan to attend, it is important that your shares are
represented at the meeting. Accordingly, you are requested to promptly sign,
date and mail the attached proxy in the envelope provided.
Thank you for your consideration and continued support.
Sincerely,
/s/ John W. Jardine, Jr.
JOHN W. JARDINE, JR.
Chairman of the Board
DETACH HERE
PLEASE MARK YOUR
[X] VOTES AS IN THIS
EXAMPLE.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1 AND 2.
<TABLE>
<CAPTION>
1. Election of Directors FOR AGAINST ABSTAIN
[_] [_] [_]
<S> <C> <C>
Nominees: Walter J. Coleman, John R. Schimkaitis, 2. For ratification of the selection
Jeremiah P. Shea of independent auditors.
FOR WITHHELD 3. In their discretion, the Proxies are authorized to vote upon such
[_] [_] other matters as may properly come before the meeting.
______________________ [_] MARK HERE
For all nominees except as noted above FOR ADDRESS
CHANGE AND
NOTE AT LEFT
PLEASE MARK, DATE, SIGN AND RETURN THE PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give the full title as such. If a corporation, please sign
in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Signature: ______________________________ Date: _________ Signature: ______________________________ Date: ___________
DETACH HERE
</TABLE>
1
<PAGE>
CHESAPEAKE UTILITIES CORPORATION
P 909 SILVER LAKE BOULEVARD
R DOVER, DELAWARE 19904
0
X SOLICITED BY THE BOARD OF DIRECTORS
Y FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 21, 1996 IN THE BOARD ROOM
PNC BANK, DELAWARE
222 DELAWARE AVENUE
WILMINGTON, DELAWARE 19899
The undersigned stockholder hereby appoints John W. Jardine, Jr. and
Ralph J. Adkins and each one of them, with power of substitution and
revocation, the attorneys of the undersigned to vote all shares in the name
of the undersigned on all matters set forth in the proxy statement and such
other matters as may properly come before the Annual Meeting and all
adjournments thereof.
The Shares represented by this proxy will be voted as directed by the
stockholder. If no direction is given, shares will be voted FOR Items 1 and
2.
The Board of Directors Recommends a Vote FOR Items 1 and 2.
(Continued and to be signed on the other side)
2
