CITIZENS UTILITIES CO, DEF 14A, 1994-03-30

CITIZENS UTILITIES CO
DEF 14A, 1994-03-30
ELECTRIC & OTHER SERVICES COMBINED

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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

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12

CITIZENS UTILITIES COMPANY
------------------------------------------------
(Name of Registrant as Specified In Its Charter)

CITIZENS UTILITIES COMPANY
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).

[_] $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:*

(4) Proposed maximum aggregate value of transaction:
- --------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.

[_] 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>

LOGO OF CITIZENS UTILITIES Administrative Offices
High Ridge Park, Stamford, CT 06905
(203) 329-8800
- --------------------------------------------------------------------------------

March 31, 1994

Dear Fellow Stockholder:

I am pleased to invite you to attend the 1994 Annual Meeting of the
Stockholders of Citizens Utilities Company which will be held at the Fairfield
Glade Conference Center, Peavine Road, Fairfield Glade, Tennessee, on Friday,
May 20, 1994, at 10:00 a.m., Central Time.

Our 1994 meeting site is centrally located in the service territory of our
recently acquired Tennessee telephone property. For the first time,
stockholders and participants in our Employee Stock Purchase Plan who live in
the area will be able to participate personally in the Company's affairs.

At last year's Annual Meeting, more than 80 percent of Citizens' outstanding
shares were represented. We hope that the percentage will be higher at the
forthcoming meeting. It is important that your shares be represented whether or
not you attend the meeting. In order to insure that you will be represented, we
ask that you promptly sign, date, and return the enclosed proxy card. If
present, you may revoke your proxy and vote in person.

Attendance at the Annual Meeting will be limited to employees and
stockholders as of the record date or their authorized representative. Because
of space limitations, admission to the Annual Meeting will be by ticket only.
Registered stockholders planning to attend the meeting should complete and
return the advance registration form on the back page of this Proxy Statement.
An admission card will be mailed to you about two weeks before the meeting. If
your shares are held through an intermediary such as a bank or broker, you
should request a ticket by writing to Shareholder Services, Citizens Utilities
Company, High Ridge Park, Stamford, CT 06905. Please include proof of ownership
such as a bank or brokerage firm account statement or a letter from the broker,
trustee, bank or nominee holding the stock confirming your beneficial
ownership.

We look forward to seeing and meeting with you at the annual meeting.

Cordially,

/S/Leonard Tow
Chairman and Chief Executive Officer

LOGO
Printed on recycled paper
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LOGO OF CITIZENS UTILITIES Administrative Offices
High Ridge Park, Stamford, CT 06905
(203) 329-8800
- --------------------------------------------------------------------------------

March 31, 1994

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

----------------

To the Stockholders of
CITIZENS UTILITIES COMPANY:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Citizens
Utilities Company will be held at the Fairfield Glade Conference Center,
Peavine Road, Fairfield Glade, Tennessee, on Friday, May 20, 1994, at 10:00
a.m., Central Time, for the following purposes:

1. To elect directors; and

2. To transact such other business as may properly be brought before the
meeting.

The Board of Directors has fixed the close of business on March 24, 1994 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting.

A complete list of stockholders entitled to vote at the meeting will be open
to the examination of stockholders during ordinary business hours, for a period
of ten days prior to the meeting, at the office of the Company in Crossville,
Tennessee.

By Order of the Board of Directors

Charles J. Weiss
Secretary
<PAGE>

PROXY STATEMENT

This statement is furnished in connection with the solicitation of proxies by
the Board of Directors of Citizens Utilities Company (the "Company") to be
voted at the annual meeting of stockholders of the Company referred to in the
foregoing notice. The mailing address of the administrative offices of the
Company is High Ridge Park, P.O. Box 3801, Stamford, Connecticut 06905. The
approximate date on which this proxy statement and form of proxy are first
being sent or given to stockholders is March 31, 1994. All proxies received
pursuant to this solicitation will be voted in favor of the election of the
nominees unless contrary instructions are given. Stockholders who execute
proxies may revoke them at any time before they are voted.

The Company had outstanding 129,183,710 shares of Common Stock Series A and
52,785,875 shares of Common Stock Series B, each of which is entitled to one
vote at the annual meeting by stockholders of record at the close of business
on March 24, 1994.

No person or "group" of persons is known by the Company to own as much as 5%
of the common stock of the Company.

ELECTION OF DIRECTORS

At the meeting, eleven directors are to be elected to hold office until the
next annual meeting and until their successors have been elected and qualified.
Directors will be elected by a plurality of the votes of the holders of shares
of Common Stock Series A and Series B, voting together, present in person or
represented by proxy at the meeting. It is the intention of the persons named
in the enclosed proxy to vote for the election as directors of the nominees
specified. In case any such nominee should become unavailable for any reason,
the proxy holders reserve the right to substitute another person of their
choice. The information concerning the nominees and their security holdings has
been furnished by them to the Company. Leonard Tow and Claire Tow are husband
and wife. There are no other family relationships between any of the nominees.

<TABLE>
<CAPTION>
Shares of Common
Stock Beneficially
Year Owned as of
First February 28, 1994
Elected a ----------------------
Name Background Information Director Series A Series B
- ---- ---------------------- --------- --------- ---------
<S> <C> <C> <C> <C>
Elwood A. Rickless(b) Managing Partner, London, England office of 1989 5,781 3,702
law firm of Whitman Breed Abbot & Morgan,
1984 to present; Partner, law firm of
Graham & James, London, England, 1973-1983;
during 32 years of practice, has
specialized in the fields of international
corporate, tax, financing, and copyright
law and litigation; residence in Santa Fe,
New Mexico. Age 64.
John L. Schroeder(a)(d) Executive Vice President and Chief 1980 4,345
Investment Officer, The Home Insurance
Company, August 1991 to present; Chairman
of the Board and Chief Investment Officer,
Axe-Houghton Management, Inc., and Axe-
Houghton Funds, April 1983 to June 1990;
President and Director, USF&G Investment
Management Group, Inc., June 1990 to May
1991. Age 64.
Robert D. Siff(a) Consultant, CoreStates Financial Corp., 1989 3,598,651(2) 1,819
April 1, 1987 to present; Consultant,
Citizens Utilities Company, February 15,
1990, to November 14, 1991; Executive Vice
President in charge of commercial banking,
Chittenden Bank, April 1, 1987 to February
15, 1990; Director, Century Communications
Corp. Age 69.
Robert A. Stanger(a)(b) Chairman, Robert A. Stanger & Company, 1992 816
investment banking and consulting services.
Publisher, The Stanger Report. Age 54.
Edwin Tornberg President and Director, Edwin Tornberg & 1992 6,506
Company, brokers, management consultants
and appraisers serving the communications
industry; President and Director, Radio
780, Inc. (Washington, D.C.); Vice
President and Director, Radio One Five
Hundred, Inc. (Indianapolis, Ind.);
Chairman and Director, New World Radio,
Inc. (Washington, D.C.). Age 68.
Claire L. Tow Senior Vice President since August 1992 and 1993 3,598,651(2) 2,585,020(3)
Vice President and Director since 1988 of 7,957(4) 3,562(4)
Century Communications Corp., a cable
television company. Claire L. Tow is the
wife of Leonard Tow. Age 63.
Leonard Tow(c) Chairman, Chief Executive Officer and Chief 1989 3,598,651(2) 2,585,020(3)
Financial Officer, Citizens Utilities 7,957(4) 3,562(4)
Company, July 1, 1990 to present; Chairman
of the Board, Chief Executive Officer,
Chief Financial Officer and Director of
Century Communications Corp., a cable
television company, since its organization
in 1973 to the present, and President from
1973 until October 1989. Leonard Tow is the
husband of Claire L. Tow. Age 65.
</TABLE>
- --------
(a) Member of Audit Committee.
(b) Member of Compensation Committee.
(c) Member of Executive Committee.
(d) Member of Nominating Committee.
(1) 3,938 Series A shares and 4,967 Series B shares are owned by Mr. Botwinik's
wife; beneficial ownership of these shares is disclaimed by Mr. Botwinik.

2
<PAGE>

(2) Owned by Century Investors Inc., a wholly owned subsidiary of Century
Communications Corp. of which Robert Siff is a Director, Leonard Tow is
Chairman of the Board, Chief Executive Officer, Chief Financial Officer and
a Director and Claire Tow is Senior Vice President and a Director. The same
shares of Common Stock Series A are included in the above table for Robert
Siff, Leonard Tow and Claire Tow as required by the definition of
beneficial ownership of the Securities and Exchange Commission. By reason
of the definition of beneficial ownership, Leonard Tow and Claire Tow are
deemed to have an approximate 50% ownership interest in the Common Stock of
Century Communications Corp. and thereby both Leonard Tow and Claire Tow
have an indirect beneficial interest in such shares. Except to the extent
of such indirect interest, both Leonard Tow and Claire Tow disclaim
ownership interests in any of these shares of Common Stock of the Company.
Certain of the Common Stock of Century Communications Corp. previously
referred to is held jointly by Leonard Tow and Claire Tow or solely by
Claire Tow, in a fiduciary capacity for the benefit of members of their
family. Leonard Tow and Claire Tow each disclaims any ownership interest in
shares held solely by the other. Robert Siff and members of his family have
no direct interest in these shares of Common Stock of the Company. Citizens
owns 7.9% of the Series A Common Stock of Century Communications Corp.
(3) Includes beneficial ownership of shares held in the Company's 401(k) plan,
shares of restricted stock and shares which are acquirable within 60 days
upon the exercise of stock options granted pursuant to the Management
Equity Incentive Plan, which options are currently exercisable. The
restrictions on such restricted shares expire at the rate of 20% of the
grant annually and in full upon the event of death, disability or
retirement on or after age 65. Leonard Tow has the current right to vote
said restricted shares. Claire Tow and Leonard Tow each disclaims
beneficial ownership of shares owned by the other.
(4) Held by Claire Tow as custodian under the Uniform Gift to Minors Act for
minor grandchildren. Leonard Tow and Claire Tow each disclaims beneficial
ownership of shares held by the other.

Ownership of Common Stock for all directors, executive officers and immediate
families as a group (including shares owned by Century Communications Corp. of
which Mr. Siff is a Director, Dr. Tow is the Chairman of the Board, Chief
Executive Officer, Chief Financial Officer and a Director and Mrs. Tow is
Senior Vice President and Director) totaled 6,937,383 shares, or 3.8% of total
Common Stock outstanding. The total number of shares given in the above table
opposite the names of Mr. Siff and Dr. and Mrs. Tow constitute approximately
2%, 3.4% and 3.4% respectively of total Common Stock outstanding. All other
directors and executive officers own less than 1%. Common Stock Series A is
convertible into Common Stock Series B on a share-for-share basis. Under the
definition of beneficial ownership of the Securities and Exchange Commission,
each owner of Series A shares may be deemed to be the owner of the same number
of Series B shares. If any such conversion were to occur, the number of shares
of Common Stock owned by, and the percentage ownership of Common Stock of, a
stockholder would not change.

The Board of Directors held twelve meetings in 1993. All incumbent directors
attended at least 75% of Board and appropriate committee meetings. The Board
has a Compensation Committee comprised solely of independent directors which
makes compensation policy and sets compensation of executive and other officers
of the Company. The Compensation Committee met four times in 1993. The
Executive Committee did not meet in 1993, and the Audit Committee met four
times in 1993. The entire Board acted as the Nominating Committee during 1993.
A Nominating Committee comprised solely of independent directors was
established by action of the Board of Directors on February 8, 1994. The
Committee is in the process of establishing its procedures.

3
<PAGE>

In June 1993, several stockholders commenced purported derivative actions in
the Delaware Court of Chancery against the Company's Board of Directors. These
actions have since been consolidated under the name of the first-filed action,
Goodman, et al. v. Botwinik, et al. (the "Consolidated Action"). Another action
(Thorpe) was also filed in June 1993 in the same court. These stockholders had
alleged that the compensation approved by the Board of Directors for the
Company's Chairman is excessive and seek, among other things, an accounting for
alleged corporate waste and a declaration that the Chairman's employment
agreement and existing stock options are invalid. These stockholders further
allege that certain corporate transactions involving the Company and Century
Communications Corp. ("Century") benefitted Century to the detriment of the
Company. In Thorpe, the plaintiffs have also asserted individual and purported
class claims based upon the Company's alleged failure to disclose facts
relating to the Chairman's compensation and certain stock options granted to
members of the Company's Board of Directors and the allegedly improper
accounting treatment with respect to Citizens' investment in Centennial
Cellular Corp. ("Centennial"). In November 1993, another purported derivative
action (Biggs) was filed in the Court of Chancery against the Company's Board
of Directors and Century. Plaintiffs challenge both the Chairman's compensation
and the merger which resulted in the creation of Centennial. The Company's
Board of Directors has moved to dismiss the complaints for failure to state a
claim and for failure to comply with the demand requirements applicable to a
derivative suit. The motions are currently pending.

In February 1994, a memorandum of understanding was executed among counsel
for several of the stockholders in the Consolidated Action in the Delaware
Court of Chancery and counsel for the Company's Board of Directors. The parties
to the memorandum of understanding will attempt to agree upon, execute and
present to the Delaware Court of Chancery a stipulation of settlement resolving
all of the claims in the Consolidated Action. The memorandum of understanding
contemplates, inter alia: (a) modification of the Chairman's employment
agreement (see "Employment Agreement" herein) and elements of his prior
incentive compensation (i) to substitute split-dollar life insurance payable to
his estate or heirs as a replacement for the supplemental retirement payments
provision in the employment agreement, (ii) to terminate a portion of certain
Centennial stock options granted to him, (iii) to treat a 1993 option grant and
a 1992 award of restricted stock so that the vesting rate shall coincide with
the rate of return to stockholders and (b) the adoption of certain governance
provisions that will (i) provide for enactment of by-laws creating a Nominating
Committee and requiring that all of the members of the Nominating Committee and
Compensation Committee and a majority of the Board of Directors be independent
directors and (ii) expand the Board of Directors to twelve and the Compensation
Committee to four by the addition of an independent director to each.
Consummation of the proposed settlement will be subject to: (a) the drafting
and execution of a stipulation of settlement; (b) the completion by plaintiffs
of appropriate confirmatory discovery in the Consolidated Action; (c) notice to
all stockholders of the Company of the terms of the proposed settlement; and
(d) final approval of the settlement by the Delaware Court of Chancery and
dismissal of the Consolidated Action with prejudice. It is contemplated that
the stipulation of settlement will provide for the complete release and
settlement of all claims of the plaintiffs and all derivative claims of the
Company against the Company's Board of Directors arising out of the allegations
in the Consolidated Action. It is also contemplated that plaintiffs' counsel
will seek an award of attorneys' fees and expenses in connection with the
settlement. No understanding has been reached with respect to the amount of
fees and expenses to be sought, but it is contemplated that the Company will
pay, on behalf of the defendant directors, the amount of fees and expenses, if
any, to be awarded by the Delaware Court of Chancery to plaintiffs' counsel.
The Company intends

4
<PAGE>

to seek reimbursement of the costs incurred on behalf of the independent
directors in the stockholders' suits under its Directors' and Officers'
insurance policy.

In June 1993, a stockholder of the Company (Berlin) commenced a purported
class action in the United States District Court for the District of Delaware
against the Company and the Company's Board of Directors. The stockholder's
complaint, amended in July 1993, alleges that the proxy statements disseminated
by the Company from 1990 to 1993 failed to disclose material information
regarding, among other things, Dr. Tow's compensation and certain purported
related-party transactions and thereby violated federal and state disclosure
requirements. The relief sought includes a declaration that the results of the
1993 Annual Meeting of the stockholders are null and void, a declaration that
Dr. Tow's Employment Agreement is invalid, and unspecified damages. Defendants
have filed a motion to dismiss this action. The motion is currently pending.

DIRECTORS' COMPENSATION

Each Director is entitled to a $20,000 annual retainer and fee of $2,000 for
each board meeting attended in person and $1,000 for each board meeting
attended telephonically. Committee chairs are paid a fee of $2,000 and
committee members $1,000 for each meeting attended. All such fees are eligible
for deferral until termination of service. Deferred amounts are credited with
an interest component. Directors who are not Citizens employees and who have
completed five years of service become participants in the Directors'
Retirement Plan. At termination of service a participant receives benefits for
a term of years equal to the sum of 50% of average compensation as a Director
for the three most highly compensated years plus 2.5% of such average
compensation for each year of service in excess of ten years but not in excess
of twenty years. Generally, the annual benefit will be payable over a period of
years equal to a participant's years of service or may be paid in a discounted
lump sum at the participant's election.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors (the "Committee") is
composed of independent Directors, who are responsible for setting and
administering compensation, including Base Salaries, Annual Incentives, and
stock-based awards paid or awarded to the senior executive groups (Vice
President and above) of the Company. The following report represents the
actions of the Committee and the Board regarding compensation paid to the named
executive officers during 1993.

COMPENSATION OF THE SENIOR EXECUTIVE GROUP

The following section discusses the Company's strategy underlying the
compensation program, excluding the Company's Chief Executive Officer, whose
compensation is discussed separately later in this report.

EXECUTIVE COMPENSATION STRATEGY

The Committee's senior executive compensation policy has the following
objectives:

. To align the interests of its senior executives and other key employees
with those of the Company's customers, shareholders and employees.

. To link compensation to the performance of the Company and to the
individual contribution of each executive to that performance.

. To compensate executives at a level that is competitive in the marketplace
so that the Company can continue to attract, motivate and retain
executives with outstanding abilities.

5
<PAGE>

. To establish Base Salaries at about the 50th percentile and Total Annual
Cash Compensation (Base Salary plus Annual Incentive) at about the 75th
percentile of three comparison groups (general industries of similar
revenue size, telecommunications companies and utilities) recommended by
its compensation consultants, The Hay Group. The three comparison groups
are used to represent the labor markets in which the Company competes.
Within each group, the Company makes comparisons between the compensation
of the Company's senior executives and the compensation the comparison
groups offer for jobs of similar responsibility levels. In addition, the
Company considers other factors such as cost of living that are necessary
to attract and retain a highly competent senior management group in the
Stamford, Connecticut area. The groups were chosen to represent the labor
markets in which the Company competes. They differ in some respects from
the peer companies used in this proxy's performance graphs.

. To offer significant levels of risk-based compensation in the form of stock
options and restricted stock grants so that the rewards ultimately
realized by the Company's executives will parallel shareholder returns.

BASE SALARY

The Committee reviews recommendations and sets the salary levels of the
senior executives in the spring of each year before the annual meeting of the
Board of Directors. This review is based upon the duties and responsibilities
which the Company expects each executive to discharge during the current year
and upon the executive's performance during the previous year. The standards
the Company uses are the confidential rankings and assessments described more
fully in the "Annual Incentives" section of this report.

The Company has found that its Base Salary levels for the senior executives
are within +/- 5 percent of the 50th percentile of each of the three comparison
groups described above.

AT-RISK COMPENSATION

The Company's Annual Incentives and Long-term Incentives introduce elements
of risk into the executive compensation program.

ANNUAL INCENTIVES

The review and determination of awards under the Incentive Deferred
Compensation Plan ("IDCP") for all senior executive participants is based upon
their performance for the previous year. The incentive awards made in 1993 were
based upon accomplishment of 1992 results.

The Company sets its targeted Total Annual Compensation levels at the 75th
percentile of the competition. Each executive is assigned a bonus opportunity
which, when combined with salary, will result in the appropriate Total Annual
Cash Compensation level. According to the IDCP formula, the maximum amount
which can be distributed for any one year to management employees and the CEO
is the greater of 3% of the net income before taxes for the year or 3% of the
average net income before taxes for the three calendar years ending with and
including the year. The amount in 1993 for all 189 Plan participants totaled 1%
of 1992 net income before taxes.

The awards earned by the senior executives in 1993 were based, with equal
weighting, on the Company's financial performance and individual
accomplishments. The Company assesses

6
<PAGE>

performance against predetermined corporate, sector, and business unit goals
for operating income before interest and taxes. In 1992, the Company and its
sectors exceeded those goals. Individual performance was measured using (1)
confidential survey rankings of customer satisfaction and employee
satisfaction, (2) peer and superior evaluations of each executive's
contributions toward financial results and (3) leadership in the Company-wide
improvement initiative called "Target: Excellence," which is dedicated to the
continuous improvement of every aspect of the Company's management and
performance. The improvements are measured and documented by internal and
external surveys and evaluations.

The Company's 1993 Total Annual Cash Compensation levels for the senior
executives are approximately 10 percent below the 50th percentile of general
industrial and telecommunications companies and 10 percent above utilities
companies.

LONG-TERM INCENTIVES

The Company's equity-based incentives include awards of stock options and
restricted stock under the Management Equity Incentive Plan ("MEIP"). These
awards are intended to provide incentives for high performance and productivity
and a close identification with the Company's financial performance and image
by enabling senior executives to participate as stockholders in the Company's
growth and earnings.

The criteria for MEIP awards include the Company's performance to date
compared to its corporate and sector targeted returns on investment. The
Company selects the companies for its comparisons to parallel the Company's and
its sectors' size and business mix. The size of each executive's award was also
based on a confidential survey of each executive's peers, including criteria
such as demonstrated leadership in the Company's "Target: Excellence"
initiative. Prior option awards held by an executive are also taken into
account. MEIP awards made in November 1993 reflected the fact that the
financial performance for the Company and each of its business sectors was
ahead of 1993 financial targets.

The Company's Total Direct Compensation levels for the senior executives are
at or above the 90th percentile of the three comparison groups: general
industrial, telecommunications companies and utilities. The Compensation
Committee, in addition to the guidelines established, also employs experience
and judgment in determining compensation for senior executives, and considers
as well that the Company's ten-year record annual return to investors (1982-
1992) was higher than 82% of Fortune 500 companies and its ten-year annual
earnings growth record was higher than 88% of these companies. The Company's
performance since Dr. Tow became Chief Executive Officer far exceeded the
performance of both the broad based index and peer group index as shown on the
three-year performance graph on Page 15. The amount of the 1993 option grants
embodied the Committee's strong belief that long-term, equity-based
compensation should produce executive rewards which parallel shareholder return
and performance of the Company's stock. For this reason in 1993 the Committee
determined that a portion of the executive's targeted annual incentive
opportunities should be in the form of stock options.

COMPENSATION OF THE CHIEF EXECUTIVE OFFICER

The elements of the compensation for the Chief Executive Officer were
established by the employment agreement as of July 1, 1990, negotiated between
Dr. Tow's attorney and the

7
<PAGE>

Compensation Committee. Although Dr. Tow had been a Director of the Company
prior to July 1, 1990, he had not been an employee of the Company and had not
assumed the responsibilities of Chief Executive Officer. This employment
agreement is summarized elsewhere in this proxy statement.

Compensation elements for 1993 set according to the contract included base
salary of $968,000 and certain items included in "Other Annual Compensation"
and "All Other Compensation." These were, in "Other Annual Compensation,"
personal expenses of $50,000 and certain legal and accounting fees payable
annually as incurred, which were not paid until 1993, in the amount of $97,260.
The "All Other Compensation" column includes $3,500,000, accrued but not paid,
for the 1993 portion of an accrual being made over the six years of his
employment term for supplemental retirement benefits to be paid subsequent to
his retirement. This amount and all prior amounts accrued for this purpose will
be negated by a split-dollar life insurance program which was established in
1994 and provides for the funding of the supplemental retirement benefits.
Future costs to the Company will be significantly lower than the future costs
that would have resulted absent this funding through insurance.

In reaching its judgment regarding the annual incentive and stock option
awards to Dr. Tow in 1993, the Compensation Committee recognized Dr. Tow's
vision and tenacity that resulted in his achievements in carrying out the
direction of the Board of Directors to expand and enlarge the Company's
activities and alter the manner in which the Company historically has conducted
its business so as to better position it to meet competition by preparing to
enter new markets and improve its efficiency. These changes, which include the
ongoing program of prudent growth through acquisitions and the "Target:
Excellence" program, which has already produced outstanding successes, are
viewed by the Committee as vital to the Company. The level of awards to Dr. Tow
also recognize that the Company's strong results were in considerable part due
to his individual performance.

In 1993, Dr. Tow earned an Annual Incentive of $485,000 under the IDCP. Under
the MEIP, also described above, Dr. Tow was awarded 250,000 stock options on
April 6, 1993 at an exercise price of $33.75 and 150,000 options on November
16, 1993 at $18.68. (Please note that the amount of options and exercise prices
as shown in the compensation tables have been adjusted for intervening stock
dividends and stock splits.) Both option grants have a ten-year life. The first
grant becomes exercisable in its entirety after one year; the second grant
vests in equal installments over a five-year period, with the first installment
becoming exercisable one year from the grant date. IDCP and MEIP awards to Dr.
Tow were based upon the Committee's judgment of his importance in the
attainment of the Board's direction articulated above and the Company's ongoing
strong results during his tenure as Chief Executive Officer. This performance
is highlighted on the three-year performance graph on Page 15.

The Company believes that all compensation paid to Dr. Tow and its senior
executives will qualify as deductible business expenses.

Robert Stanger Stanley Harfenist Elwood A. Rickless
Chairman

8
<PAGE>

SUMMARY COMPENSATION TABLE

The following table sets forth the compensation paid by the Company for each
of the last three years to its Chief Executive Officer and the four other most
highly compensated executive officers.

<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
----------------------------------- ---------------------------------
Awards Payouts
----------------------- ---------
Long-Term All
Other Annual Restricted(2) Options/ Incentive Other
Name & Salary Bonus(1) Compensation Stock Awards SARS(3) Payouts Compensation
Position Year $ $ $ $ (#) $ $
-------- ---- ---------- -------- ------------ ------------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
L. Tow(5)............... 1993 $1,003,000(6) $485,000 $167,580(7) $ 0 667,160 $ 0 $3,504,497(4)
Chairman 1992 913,500 330,000 58,480(7) 6,949,813 1,426,979 0 3,004,364(4)
C.E.O., C.F.O. 1991 800,000 200,000 0 252,699 0
D.A. Ferguson........... 1993 343,742 170,000 5,000 107,250 75,750 0 4,497(4)
President 1992 326,666 130,000 5,000 229,938 73,938 0 4,364(4)
C.O.O. 1991 298,333 100,000 0 134,790 0
R.L. O'Brien............ 1993 222,567 40,000 0 39,325 26,260 0 4,497(4)
Vice President 1992 215,833 40,000 0 123,813 31,686 0 4,364(4)
1991 249,104 35,000 0 67,393 0
D.K. Roberton........... 1993 165,133 50,000 0 107,250 26,260 0 4,497(4)
Vice President 1992 160,000 60,000 15,833 53,063 31,686 0 4,364(4)
1991 136,724 0 47,972 0
C.R. Aldrich............ 1993 154,107 21,000 0 0 24,240 0 4,497(4)
Vice President 1992 144,491 0 0 0 12,675 0 4,364(4)
1991 140,424 0 0 0
</TABLE>
- --------
(1) All amounts in the column were paid under the Incentive Deferred
Compensation Plan except in the instance of the 1992 payment to D.K.
Roberton. Amounts paid in any year are attributable to performance in the
immediately prior year.
(2) Recipients of Restricted Stock have rights to receive dividends. Value
shown in table is as of date of grant. Restrictions lapse at the rate of
20% per year for 1992 grants and in three equal amounts over a 2-1/2 year
period for the 1993 grants. As of December 31, 1993, the aggregate number
of restricted shares held by each executive officer listed above and the
market value of such shares on that date were as follows: Dr. Tow, 500,689,
$9,008,802; Dr. Ferguson, 17,023, $306,414; Mr. O'Brien, 8,457, $152,226;
Mr. Roberton, 7,102, $127,836; and Mr. Aldrich, 3,969, $71,442. As of such
date, the total number of restricted shares held by the executive officers
as a group was 556,305 and the aggregate market value of the shares on that
date was $10,013,490.
(3) Options/SARs adjusted to reflect intervening stock dividends, the 3-for-2
stock split paid July 1992 and the 2-for-1 stock split paid August 1993.
(4) $3,500,000 and $3,000,000 represents the 1993 and 1992 portions of accrual
over six years for supplemental retirement benefits. These amounts will be
negated by a split-dollar life insurance program which was established in
1994 and provides for the funding of the supplemental retirement benefits.
Future costs to the Company will be significantly lower than the costs that
would have resulted absent this funding through insurance. Remaining
amounts represent the Company's matching contribution to each executive's
401(k) plan.

9
<PAGE>

(5) Please refer to Page 4 of this proxy statement for information regarding
certain litigation, the settlement of which will change certain elements of
Dr. Tow's compensation.
(6) Includes salary of $968,000 and Director's fees of $35,000.
(7) $50,000 of the amount shown in this column represents payment for expenses
for 1993. $97,260 represents payment of certain legal and accounting fees
for the period July 1, 1990 through December 31, 1993, both payments
pursuant to Dr. Tow's employment agreement.

In accordance with the transitional provisions applicable to the revised
rules on executive officer and director compensation disclosure adopted by the
Securities and Exchange Commission, as informally interpreted by the
Commission's staff, amounts of "Other Annual Compensation" and "All Other
Compensation" were excluded for the Company's 1991 fiscal year.

1993 OPTION GRANTS AND STOCK APPRECIATION RIGHTS

The following table sets forth options granted to the named executive
officers in 1993. No stock appreciation rights were granted in 1993.

<TABLE>
<CAPTION>
Number of (1) % of Total
Option/SARs Options/SARs Exercise (2)
Granted Granted To or Base
Series B Employees In Price Expiration Grant Date
Name Common Stock Fiscal Year At Grant Date Present Value (3)(4)
---- ------------- ------------ ------------ ---------- --------------------
<S> <C> <C> <C> <C> <C>
L. Tow.................. 151,500 7.9% $18.37 11/16/03 $ 1,488,000
515,660 27.2% $16.36 04/06/03 $ 4,177,500
D.A Ferguson............ 75,750 4.0% $18.37 11/16/03 $ 744,000
R.L. O'Brien............ 26,260 1.4% $18.37 11/16/03 $ 257,920
D.K. Roberton........... 26,260 1.4% $18.37 11/16/03 $ 257,920
C.R. Aldrich............ 24,240 1.3% $18.37 11/16/03 $ 238,080
--------------
$ 7,163,420
--------------
</TABLE>
<TABLE>
- --------
<S> <C>
COMPARABLE VALUE FOR ALL SHAREHOLDERS (5).................................. $1,761,497,950
NAMED EXECUTIVES GRANT DATE
PRESENT VALUE AS A % OF ALL
STOCKHOLDER GAIN.......................................................... 0.4%
</TABLE>

(1) Number of shares as of December 31, 1993 adjusted to reflect stock
dividends and, in the instance of the 515,660 grant, a 2-for-1 stock split
since date of grant. The option covering 515,660 shares of Common Stock
Series B becomes exercisable on April 4, 1994. All other options become
exercisable at the rate of 20% per year on November 16 in each of 1994,
1995, 1996, 1997 and 1998. The 515,660 share option was an option for
250,000 shares at the date of grant in April 1993.
(2) Exercise price as of December 31, 1993, reflecting intervening stock
dividends and, in the instance of the 515,660 grant, a 2-for-1 stock split.
(3) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, an executive may realize
will depend on the excess of the stock

10
<PAGE>

price over the exercise price on the date the option is exercised, so that
there is no assurance the value realized, if any, by an executive will be at
or near the value estimated by the Black-Scholes model. The estimated values
under that model are based on arbitrary assumptions as to variables such as
interest rates, stock price volatility and future dividend yield. The
pricing model assumes for the 515,660 share option a dividend yield of 0%, a
riskless rate of return of 6.063%, a ten-year term to exercise and
volatility of 0.19909. The pricing model for the remaining options assumes a
dividend yield of 0%, a riskless rate of return of 5.625%, a ten-year term
to exercise and volatility of 0.28373.
(4) Assuming that Dr. Tow's employment termination date is as provided for in
his employment agreement, the Grant Date Present Value of the options
granted to him would be $748,800 and $2,092,500 rather than the amounts
shown above which assume a full ten-year term to exercise. Pursuant to the
MEIP, options expire three months after termination of employment.
(5) Based upon the number of shares outstanding on November 16, 1993 (the
latest grant date) multiplied by $9.82 (the per share value determined by
the Black-Scholes option pricing model for the options granted on November
16, 1993).

1993 OPTION EXERCISES AND VALUE OF
OUTSTANDING OPTIONS AT DECEMBER 31, 1993

The following table sets forth option and stock appreciation rights exercised
by the named executive officers during 1993 and the number and value of options
held by them at December 31, 1993. There were no outstanding stock appreciation
rights at December 31, 1993.

<TABLE>
<CAPTION>
Value of
Number of Unexercised
Shares Unexercised in-the-Money
Acquired on Options/SARs Options/SARs
Name Exercise (#) at Fiscal Year-End(#) at Fiscal Year-End($)
---- Series B Value ------------------------- -------------------------
Common Stock Realized Exercisable Unexercisable Exercisable Unexercisable
------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
L. Tow.................. 0 $ 0 1,409,773 937,091 $5,609,508 $2,580,587
D.A. Ferguson........... 0 $ 0 44,668 221,622 $ 319,850 $ 981,143
R.L. O'Brien............ 14,470 $135,876 27,592 97,894 $ 214,504 $ 509,787
D.K. Roberton........... 2,853 $ 31,046 13,077 87,144 $ 81,278 $ 472,024
C.R. Aldrich............ 8,100 $ 84,563 50,113 58,167 $ 583,578 $ 251,449
</TABLE>

All numbers are as of December 31, 1993, reflecting stock splits and
quarterly dividends where applicable. Market price of Common Stock Series B on
December 31, 1993 = $18.00. Dollar amounts shown under all columns other than
"Value Realized" have not been, and may never be, realized. The underlying
options have not been, and may never be, exercised, and actual gains, if any,
on exercise will depend on the value of the Company's stock on the date of
exercise.

11
<PAGE>

CITIZENS UTILITIES COMPANY PENSION PLAN

The Company has a noncontributory retirement plan covering substantially all
employees which provides benefits based on formulas related to base salary and
years of service. Benefits shown are not subject to reduction for Social
Security payments. The following table illustrates the estimated annual plan
pension benefits (ten years certain for those who became participants prior to
1976) available to all covered employees (other than Kauai Division employees
and LGS employees covered by separate plans) upon retirement at age 65 in the
classifications specified assuming a preretirement death benefit election of
100% joint and survivorship benefits. The remuneration classifications are
based on the highest five-year average annual salary and the years of service
represent years of credited service. Under federal tax law, remuneration above
a specified annual limit may not be credited in the computation of retirement
benefits under qualified plans. For 1993, this limit was $235,840. Mr. Aldrich
is a participant in the LGS Pension Plan. Should Mr. Aldrich, who has 22 years
of credited service, retire at age 65 and receive annual salary increases of 5%
per year until that time, his projected annual pension benefit would be
$85,596.

PENSION PLAN TABLE

<TABLE>
<CAPTION>
Years of Service
----------------
Remuneration
(000 Omitted) 5 10 15 20 25 30
------------- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
$150.............................................. $10 $20 $30 $41 $51 $61
250.............................................. 17 34 52 69 86 103
</TABLE>

Full years of credited service for individuals participating in the plan and
listed in the Summary Compensation Table are two for Dr. Tow, three for Dr.
Ferguson, seventeen for Mr. O'Brien and two for Mr. Roberton. It should be
noted that effective in 1994, remuneration above $150,000 (subject to inflation
adjustments) may not be credited in the computation of benefits under qualified
plans. For this reason, remuneration above $250,000 has not been included.

12
<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

13
<PAGE>

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG CITIZENS UTILITIES
COMPANY, DOW JONES INDUSTRIAL AVERAGE (DJIA) AND DOW JONES UTILITY AVERAGE
(DJUA).

The annual changes for the five- and three-year periods shown in the graphs
on this and facing page are based on the assumption that $100 had been
invested in Citizens stock (weighted average of Series A and Series B) and in
each index on December 31, 1988 as required by SEC rules and on December 31,
1990, respectively, and that all quarterly dividends were reinvested at the
average of the closing stock prices at the beginning and end of the quarter.
The total cumulative dollar returns shown on the graphs represent the value
that such investments would have had on December 31, 1993.

[GRAPH APPEARS HERE]

<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG CITIZENS UTILITIES COMPANY, DOW JONES INDUSTRIAL AVERAGE, AND DOW JONES
UTILITY AVERAGE

<CAPTION>
Measurement period Citizens Dow Jones Dow Jones
(Fiscal year Covered) Utilities Industrial Utility
Company Average Average
- --------------------- --------- ---------- ---------------
<S> <C> <C> <C>
Measurement PT -
12/31/88 $ 100 $ 100 $ 100

FYE 12/31/89 $ 116 $ 132 $ 136
FYE 12/31/90 $ 73 $ 131 $ 129
FYE 12/31/91 $ 117 $ 163 $ 149
FYE 12/31/92 $ 150 $ 175 $ 155
FYE 12/31/93 $ 196 $ 204 $ 170
</TABLE>

STOCK PERFORMANCE GRAPHS

The year-end cumulative total return for the DJIA Industrial and the DJUA
for calendar years 1989, 1990, 1991, 1992 and 1993 were respectively $132,
$131, $163, $175 and $204 and $136, $129, $149, $155 and $170. Return for the
Company is shown on the graphs. It should be noted that the cumulative return
of the DJIA and the DJUA does not take into account the fact that a large
majority of investors would be required to pay state and federal income taxes
on cash dividends received and thus not have total proceeds to reinvest.
Unlike most of the companies constituting the indices, Citizens has paid stock
dividends on Series A shares during the period 1989-1993 and stock dividends
on Series B shares during the period 1990-1993. As there was no income tax
payable upon the receipt of dividends paid by Citizens (except for
(TEXT CONTINUES ON BOTTOM OF PAGE 15)

14
<PAGE>

COMPARISON OF THREE-YEAR CUMULATIVE TOTAL RETURN AMONG CITIZENS UTILITIES
COMPANY, DOW JONES INDUSTRIAL AVERAGE (DJIA) AND DOW JONES UTILITY AVERAGE
(DJUA).

The graph below shows the cumulative total return to Citizens stockholders
since December 31, 1990, shortly after Dr. Tow became Chief Executive Officer
in July 1990, compared with the same indices shown on the previous graph, thus
illustrating the relative performance of the Company during his tenure in the
position.

[GRAPH APPEARS HERE]

<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG CITIZENS UTILITIES COMPANY, DOW JONES INDUSTRIAL AVERAGE AND DOW JONES
UTILITY AVERAGE

<CAPTION>
Measurement period Citizens Dow Jones Dow Jones
(Fiscal year Covered) Utilities Industrial Utility
Company Average Average
- --------------------- --------- --------- ---------
<S> <C> <C> <C>
Measurement PT -
__/__/__ $ 100 $ 100 $ 100

FYE 12/31/89 $ -- $ 127 $ 126
FYE 12/31/90 $ -- $ 121 $ 113
FYE 12/31/91 $ 160 $ 146 $ 121
FYE 12/31/92 $ 205 $ 152 $ 119
FYE 12/31/93 $ 268 $ 173 $ 123
</TABLE>

Series B shares in 1989), the value that would be realized after taxation upon
receipt of dividends by holders of the DJIA and DJUA would be diminished as
compared to Citizens. For illustration's sake, the year-end cumulative returns
of the DJIA and DJUI have been decreased to reflect after-tax reinvestment
assuming the maximum federal (only) tax rate payable by individuals. These
rates were 33% for 1989 and 1990, 31% for 1991 and 1992 and 36% for 1993. The
adjusted cumulative total returns for the DJIA and DJUA for calendar years
1989, 1990, 1991, 1992 and 1993 are $127, $121, $146, $152 and $173 and $126,
$113, $121, $119 and $123, respectively.

15
<PAGE>

EMPLOYMENT AGREEMENT

Dr. Tow is covered by an employment agreement providing for his service as
Chairman and Chief Executive Officer of the Company for the employment Term,
July 1, 1990 through December 31, 1996, and as a consultant for an additional
five-year Advisory Period. The following constitutes a summary of certain of
the provisions of the agreement. Under the terms of the agreement, Dr. Tow's
base annual salary for 1991 was $800,000 which will be increased annually
thereafter during the Term, by the greater of 10% or the annual increase in the
consumer price index. During the Advisory Period the Company will pay Dr. Tow a
base salary of 25% of the base salary for the last year of the Term. In the
event of termination of employment for any reason, except for termination by
the Company for good cause or certain voluntary resignations by Dr. Tow,
payments at least equal to annual bonuses and benefit plan contributions for
the remainder of the Term and payments at the base salary rates provided in the
agreement for the remainder of the Term and for the Advisory Period will
continue to be owing, to be paid in a commuted lump sum. In the event of
termination of employment by Dr. Tow occasioned by breach of the agreement by
the Company, the Company will also pay Dr. Tow $1 million. Failure of Dr. Tow
to be elected or retained as Chairman and Chief Executive, or a reduction in
his authority, functions, duties or responsibilities, or a change in control
(see below) constitute breaches of the agreement by the Company which entitle
Dr. Tow to terminate his employment. The amount of benefits under employee
benefit plans will be determined by the amount of his then base salary and
bonus. Accelerated vesting of contributions under the IDCP is provided for
termination of employment. In the event that Dr. Tow's entitlements constitute
excess parachute payments for tax purposes, the Company will pay any taxes
resulting to him. Dr. Tow's continued employment and association with Century
Communications Corp. is acknowledged under the agreement. His employee and
retirement benefits are nonforfeitable except in certain circumstances which
are materially detrimental to the Company. Dr. Tow is entitled during his
lifetime to life insurance coverage of the greater of the amount provided by
the Company's formula for executive officers based on salary, or $3,000,000, or
equivalent. Dr. Tow and his wife during their lifetimes will continue to
participate in the Company's health and other benefit plans, and, after
retirement from full-time employment, the Company will provide offices and
support staff equivalent to the offices and support services provided during
employment. Dr. Tow is entitled to an annual retirement benefit, commencing at
December 31, 1996, or the earlier termination of his employment, equal to two-
thirds of final total compensation, which is defined as the amount of
remuneration payable to Dr. Tow for the twelve most highly compensated
consecutive calendar months of the executive's employment with the Company.
Remuneration is defined so as to include, generally, all forms of taxable
income and employee benefits, with certain exceptions for stock-related
benefits. If Dr. Tow voluntarily resigns before specified dates on or prior to
June 30, 1996, his supplemental annual retirement entitlement will be reduced
by stated percentages. The annual entitlement will be preserved in constant
dollars by adjustments and entitlements reflecting increases in the consumer
price index and is payable at the option of Dr. Tow, and in some instances must
be paid, as commuted lump sums. Please refer to Page 4 of this proxy statement
for information regarding certain litigation, the settlement of which will
change certain elements of Dr. Tow's compensation.

Dr. Tow's employment agreement provides that a change in control, as defined,
which includes, among other events, the acquisition by a person or group of 9%
or more of the Company's voting securities and certain changes in the Board of
Directors, shall be a breach of the agreement by the Company and shall entitle
Dr. Tow to terminate his employment without reduction of post-employment
benefits. If a threatened change of control, as defined, shall occur, Dr. Tow
shall

16
<PAGE>

thereafter have the option exercisable by notice to the Company to acquire up
to 2,000,000 shares of common stock at a price per share equal to the fair
market value of the stock on the date such notice is given. The stated number
of shares subject to the option shall be adjusted to reflect after July 1, 1990
any declaration or payment of dividends in form of stock, stock splits, stock
divisions or new issuances to holders of common stock of options, warrants,
rights to acquire additional shares or similar events.

CERTAIN TRANSACTIONS

Fleischman and Walsh, of which Aaron Fleischman (a Director) is Senior
Partner, performed legal services for the Company for which it paid in 1993
approximately $549,000. The Company proposes to retain Fleischman and Walsh
during the current year.

During 1993, the Company advanced $300,000 to Robert J. DeSantis, Vice
President and Treasurer of the Company, as a bridge loan in conjunction with
the purchase of a primary residence. The indebtedness was repaid in 1993 with
interest at the Applicable Federal Rate pursuant to the Internal Revenue Code.
The indebtedness was secured by a mortgage on his primary residence. The
Company also advanced to Donald K. Roberton, Vice President of the Company,
$329,800 for the purpose of purchasing a primary residence, which amount was
outstanding at the end of the year. Interest is payable on the indebtedness at
the Applicable Federal Rate pursuant to the Internal Revenue Code. The
indebtedness is secured by a mortgage on his primary residence.

OTHER

The Company and Century Communications Corp. have entered into agreements to
purchase cable television systems serving approximately 45,000 subscribers in
southern California. The agreements are subject to transfer of franchises,
other regulatory approvals and customary closing conditions. The companies
expect to enter into a management agreement that will provide that a subsidiary
of Century Communications Corp. will manage the two systems for a fee to be
negotiated. The systems will be held as an equally owned joint venture of the
two companies.

GENERAL

Representatives of KPMG Peat Marwick, the Company's independent public
accountants, are expected to be present at the annual meeting with an
opportunity to make a statement if they desire to do so, and will be available
to respond to appropriate questions.

The Company, filing on behalf of Mr. Fleischman, inadvertently filed a report
relating to the purchase of Company securities one month late.

OTHER MATTERS

The management does not know of matters other than the foregoing that will be
presented for consideration at the meeting. However, if other matters properly
come before the meeting, it is the intention of the persons named in the
enclosed proxy to vote thereon in accordance with their judgment.

17
<PAGE>

STOCKHOLDER PROPOSALS

For proposals, if any, to be considered for inclusion in the proxy materials
for the 1995 annual meeting, they must be received by December 1, 1994.

The entire cost of soliciting management proxies will be borne by the
Company. Proxies will be solicited by mail and may be solicited personally by
directors, officers or regular employees of the Company, who will not be
compensated for such services. Morrow & Co. has been retained to assist in
soliciting proxies at a fee of $10,000, plus distribution costs and other
expenses.

By Order of the Board of Directors

Charles J. Weiss
Secretary

18
<PAGE>

CITIZENS UTILITIES COMPANY
1994 ANNUAL MEETING OF STOCKHOLDERS
10:00 A.M., CENTRAL TIME, MAY 20, 1994

FAIRFIELD GLADE CONFERENCE CENTER
PEAVINE ROAD
FAIRFIELD GLADE, TENNESSEE

CUT OFF AT DOTTED LINE
- --------------------------------------------------------------------------------

ADVANCE REGISTRATION FORM

Please send your completed and signed proxy form in the enclosed envelope.
Include this Advance Registration Form in the envelope if you plan to attend or
send a representative to the Annual Meeting.

Attendance at the Annual Meeting is limited to Citizens' stockholders, or their
authorized representative, and guests and employees of the Company.

(PLEASE PRINT)

Stockholder's
Name ___________________________________________________________________________

Address ________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________Zip

I am a Citizens Stockholder. My Representative at the Annual Meeting will be:

________________________________________________________________________________
(Admission card will be returned c/o the stockholder's address.)

________________________________________________________________________________
Stockholder's Signature
<PAGE>

CITIZENS UTILITIES

Please complete both sides of the Proxy Card,
detach and return in the enclosed envelope.

DETACH PROXY CARD HERE

CITIZENS UTILITIES COMPANY
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS

The undersigned hereby appoints Norman I. Botwinik, John L. Schroeder and Edwin
Tornberg or any of them with full power of substitution, proxies to vote at the
Annual Meeting of Stockholders of Citizens Utilities Company (the "Company") to
be held on Friday, May 20, 1994 at the Fairfield Glade Conference Center,
Peavine Road, Fairfield Glade, Tennessee, at 10:00 a.m., Central Time and at any
adjournments thereof, hereby revoking any proxies heretofore given, to vote all
shares of common stock of the Company held or owned by the undersigned as
directed on the reverse side, and in their discretion upon such other matters as
may come before the meeting.

Signature_______________________________

Date__________________________, 1994

NOTE: Please sign exactly as name appears
hereon. Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.

This proxy when properly executed will be voted in the manner directed by the
signatory stockholder. If no direction is made, this proxy will be voted "For"
all directors.
<PAGE>

FOR WITHHELD NOMINEES: Norman I. Botwinik
Aaron I. Fleischman
[_] [_] Stanley N. Harfenist
Andrew N. Heine
Elwood A. Rickless
John L. Schroeder
Robert D. Siff
Robert A. Stanger
Edwin Tornberg
Claire L. Tow
Leonard Tow

For, except vote withheld from the
following nominees(s):

__________________________________
<PAGE>

CITIZENS UTILITIES

Please complete both sides of the Proxy Card,
detach and return in the enclosed envelope.

DETACH PROXY CARD HERE

CUC 401(K) EMPLOYEE BENEFIT PLAN/TAX REDUCTION ACT
STOCK OWNERSHIP PLAN (TRASOP)

PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS

The undersigned hereby authorizes and directs PNC Bank as the Trustee under the
CUC 401(k) Employee Benefit Plan/TRASOP to vote all shares of stock allocable to
the undersigned under the provisions of the Plan and to appoint Norman I.
Botwinik, John L. Schroeder and Edwin Tornberg or any of them with full power of
substitution, proxies to vote at the Annual Meeting of Stockholders of Citizens
Utilities Company (the "Company") to be held on Friday, May 20, 1994 at the
Fairfield Glade Conference Center, Peavine Road, Fairfield Glade, Tennessee, at
10:00 a.m., Central Time, and at any adjournment or adjournments thereof. Said
Trustee is authorized and directed to execute and deliver a written proxy
appointing such individuals to act as proxies as indicated.

Signature_______________________________

Date__________________________, 1994

NOTE: Please sign exactly as name appears
hereon. Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.

This proxy when properly executed will be voted in the manner directed by the
signatory stockholder. If no direction is made, this proxy will be voted "For"
all directors.

<PAGE>

For, except vote withheld from the
following nominees(s):

__________________________________

<PAGE>

CITIZENS UTILITIES

Please complete both sides of the Proxy Card,
detach and return in the enclosed envelope.

DETACH PROXY CARD HERE

CITIZENS UTILITIES/401(K) SAVINGS PLAN

PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS

The undersigned hereby authorizes and directs PNC Bank as the Trustee under the
Citizens Utilities 401(k) Savings Plan to vote all shares of stock allocable to
the undersigned under the provisions of the Plan and to appoint Norman I.
Botwinik, John L. Schroeder and Edwin Tornberg or any of them with full power of
substitution, proxies to vote at the Annual Meeting of Stockholders of Citizens
Utilities Company (the "Company") to be held on Friday, May 20, 1994 at the
Fairfield Glade Conference Center, Peavine Road, Fairfield Glade, Tennessee, at
10:00 a.m., Central Time, and at any adjournment or adjournments thereof. Said
Trustee is authorized and directed to execute and deliver a written proxy
appointing such individuals to act as proxies as indicated.

Signature_______________________________

Date__________________________, 1994

NOTE: Please sign exactly as name appears
hereon. Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give full title as
such.

This proxy when properly executed will be voted in the manner directed by the
signatory stockholder. If no direction is made, this proxy will be voted "For"
all directors.

<PAGE>

For, except vote withheld from the
following nominees(s):

__________________________________