<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
CONSUMERS WATER COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
<PAGE> 2
CONSUMERS WATER COMPANY
THREE CANAL PLAZA
PORTLAND, MAINE 04101
April 1, 1997
Dear Shareholder:
On behalf of the Board of Directors and the management of Consumers Water
Company, it is a pleasure to invite you to the 1997 Annual Meeting of our
Company. This year's meeting is being held at 11:00 a.m., May 7, 1997, at the
Portland Museum of Art, 7 Congress Square, Portland, Maine.
Refreshments will be served both before and after the meeting, at which
time you will be able to meet with Company management and board members as well
as with other shareholders. We look forward to seeing you at the Annual Meeting
to hear any questions, comments or suggestions you might have about the Company.
It is important that your shares be represented at the meeting. Please
sign, date and return the enclosed proxy card as soon as possible.
If you plan to attend, please check the appropriate box on the face of the
proxy card in order that we may anticipate how many shareholders will attend.
Your continuing interest in Consumers is appreciated.
Sincerely,
LOGO
PETER L. HAYNES
President
<PAGE> 3
CONSUMERS WATER COMPANY
THREE CANAL PLAZA
PORTLAND, MAINE 04101
------------------------------
NOTICE OF ANNUAL MEETING
Notice is hereby given that the Annual Meeting of the shareholders of
Consumers Water Company will be held at the Portland Museum of Art, 7 Congress
Square, Portland, Maine, on Wednesday, May 7, 1997, at 11:00 a.m. local time for
the following purposes:
1. To hear the report of Management on the condition of the Company;
2. To elect Directors for the ensuing year; and
3. To consider and act upon any matters incidental to the foregoing and to
transact such other business as may properly come before the meeting.
The Board of Directors has fixed the close of business on March 21, 1997,
as the record date and time for the determination of the shareholders entitled
to notice of, and to vote at, the Annual Meeting.
If you do not expect to be present at the meeting and wish your shares to
be voted, please indicate your voting instructions on the enclosed proxy card
and date, sign and return it promptly in the envelope provided.
A copy of the Annual Report for the fiscal year ended December 31, 1996, is
enclosed herewith.
By Order of the Board of Directors
BRIAN R. MULLANY
Clerk
Portland, Maine
April 1, 1997
YOUR VOTE IS IMPORTANT
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY CARD SO THAT
YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY
CARD, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, MAY AID THE COMPANY IN
REDUCING THE EXPENSE OF ADDITIONAL PROXY SOLICITATION. THE GIVING OF YOUR PROXY
DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE
MEETING.
<PAGE> 4
CONSUMERS WATER COMPANY
THREE CANAL PLAZA
PORTLAND, MAINE 04101
------------------------------
PROXY STATEMENT
This proxy statement and the accompanying form of proxy are planned to be
mailed to shareholders on or about April 1, 1997.
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of the Company of proxies to be voted at the Annual
Meeting of Shareholders on Wednesday, May 7, 1997.
Only the holders of common shares, par value $1.00 per share, and the
holders of Cumulative Preferred Stock, Series A, par value $100.00 per share, of
record at the close of business on March 21, 1997, are entitled to notice of,
and to vote at, the Annual Meeting. On that date the number of outstanding
common shares entitled to vote was 8,762,897 and the number of outstanding
shares of Cumulative Preferred Stock, Series A, entitled to vote was 10,481.
Each share of each class is entitled to one vote. The shareholders of both
classes will vote together as one class on all proposals to be presented at the
Annual Meeting.
NOMINEES FOR ELECTION AS DIRECTORS
Under the Company's Articles of Incorporation and bylaws, the number of
Directors may be fixed at no less than five and no more than 17 and each serves
until the next Annual Meeting of Shareholders and until a successor is elected
and qualified. Pursuant to the bylaws of the Company, the Board of Directors has
established the number of Directors to be elected at nine (9). The shareholders
or the Board may, by subsequent resolution, increase the number of Directors,
within the above limits, and elect additional Directors. It is intended to vote
the proxies in favor of the election of the nominees listed below to serve until
the next Annual Meeting and until their successors are elected and qualified.
David R. Hastings, II, who has been a Director since 1963 and who has served as
Chairman of the Board of the Company since 1984, has reached the retirement age
for Directors and has not been nominated for re-election as a Director. Elaine
D. Rosen, who has been a Director since 1993, has requested that she not be
renominated as a Director, and she has not been nominated for election to the
Board at the Annual Meeting. The following table sets forth the name and age of
each of the Board's nominees for Director, the periods during which each nominee
has served as a Director, a brief description of the principal occupation and
business experience during the last five years of each nominee, all
directorships of publicly-held companies presently held by each nominee, and
certain other information. No nominee has any family relationship with any other
nominee.
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE INFORMATION ABOUT NOMINEE
- ------------------------------ ---- ------------------------------------------------------
<S> <C> <C>
Michel Avenas 41 President of Anjou International Company, a subsidiary
of, and holding company for certain of the U.S.
investments of, Compagnie Generale des Eaux ("CGE").
Assistant to the Chairman of CGE, a French
conglomerate which provides various municipal services
such as water and wastewater treatment, from 1991 to
1997. See "Common Stock Ownership of Certain
Beneficial Owners and Managers" for a description of
the terms of the agreement pursuant to which Mr.
Avenas has been nominated.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
NAME OF NOMINEE AGE INFORMATION ABOUT NOMINEE
- ------------------------------ ---- ------------------------------------------------------
<S> <C> <C>
Peter L. Haynes 57 President and Chief Executive Officer of the Company
since 1992; formerly President of Quality Logistics
Management, Inc., a logistics management company. Mr.
Haynes has been a Director since 1992.
Jack S. Ketchum 66 Self-employed Financial Consultant. Mr. Ketchum has
been a Director since 1978.
John E. Menario 61 Special Assistant to the President of Peoples Heritage
Financial Group, Inc., a multi-bank holding company
since 1996. Senior Executive Vice President and Chief
Operating Officer of Peoples Heritage Financial Group,
Inc., from 1990 to 1996. Mr. Menario has been a
Director since 1980.
Jane E. Newman 51 Executive Vice President of Exeter Trust Company, a
bank, since January, 1996. President of Coastal
Broadcasting Corporation, owner of WZEA Radio,
Hampton, New Hampshire, from 1991 to 1995. Ms. Newman
is also a director of Perini Corp., NYNEX
Telecommunications and Public Service Company of New
Hampshire, and has been a Director of the Company
since 1993.
John E. Palmer, Jr. 60 Chairman of the Board of Down-East Concepts, Inc., a
manufacturer and wholesaler of stationery and
handcrafted gifts. Mr. Palmer has been a Director
since 1978.
William B. Russell 63 President, Chief Executive Officer and Treasurer of
New England Cablevision of Massachusetts, Inc., an
owner and operator of cable television properties,
since 1994; real estate consultant from 1993 to 1994
and President of Fifty Associates, a real estate
investment firm prior to 1993. Mr. Russell has been a
Director since 1970.
John H. Schiavi 56 President of Schiavi Enterprises, a holding company
for entities involved in the ownership and operation
of nursing homes and the ownership of real estate. Mr.
Schiavi has been a Director since 1983.
Robert O. Viets 53 President and Chief Executive Officer of CILCORP, a
holding company for energy services businesses. In
addition to being a director of CILCORP, Mr. Viets is
also a director of RLI Corporation, FOA and Central
Illinois Light Company.
</TABLE>
On September 14, 1994, the Penobscot Indian Nation filed a complaint in
United States District Court naming, among others, the Company, certain
subsidiaries of the Company and Mr. Schiavi as defendants. The suit arises out
of the 1986 sale by Schiavi Homes, Inc., then a subsidiary of the Company, of
its assets to a partnership including the Penobscot Indian Nation. Mr. Schiavi,
as a Director of the Company, is a party to an Indemnification Agreement with
the Company providing him with indemnification in connection with any suit or
proceeding brought against him by reason of the fact that he is or was a
Director of the Company. Under certain circumstances, Mr. Schiavi is entitled to
receive an advance of expenses in connection with an indemnifiable claim. On
October 25, 1995, the Company, its subsidiaries and Mr. Schiavi were granted
summary judgment and the case was dismissed as to them. The Penobscot Indian
Nation has appealed the
2
<PAGE> 6
dismissal of its case to the U.S. First Circuit Court of Appeals, where the
appeal is now pending. Pursuant to his Indemnification Agreement, Mr. Schiavi
was reimbursed $7,844 during 1996 for indemnifiable expenses.
In addition to an Executive Committee, the Board of Directors has
established an Audit Committee, a Corporate Governance Committee (formerly known
as the Compensation Committee) and a Retirement Committee. The Executive
Committee, whose current members are Directors Haynes (Chairman), Menario,
Hastings and Palmer, is authorized to exercise all of the powers of the Board of
Directors, to the extent that such powers may be delegated legally, when the
Board of Directors is not in session. During 1996, there were nine meetings of
the Board of Directors, one meeting of the Executive Committee, two meetings of
the Audit Committee, two meetings of the Corporate Governance Committee and one
meeting of the Retirement Committee.
The Audit Committee reviews with the auditors the scope and results of the
audit, Company and subsidiary financial statements and internal accounting and
control procedures and recommends to the full Board the engagement or discharge
of independent auditors. Current members of the Audit Committee are Directors
Newman (Chairman), Ketchum and Russell. The Corporate Governance Committee,
which currently consists of Directors Menario (Chairman), Palmer, Rosen and
Russell, makes recommendations to the Board of Directors with respect to officer
and key employee compensation, reviews the performance of the Board of Directors
and administers the Company's various employee compensation plans. The Corporate
Governance Committee also serves as a nominating committee and, as such, will
consider recommendations from shareholders. Recommendations should be submitted
in writing to the Secretary of the Company. The Retirement Committee makes
recommendations to the full Board with respect to retirement plans and also
administers the Company's Retirement Plan, the Employee 401(k) Savings Plan and
Trust and the Supplemental Executive Retirement Plan. The Retirement Committee's
current members are Directors Russell (Chairman), Menario, Newman and Schiavi.
Management does not know of any nominee who will be unable to serve, but,
if any nominee should be unable to serve, the proxies may be voted with
discretionary authority for a substitute or substitutes designated by the Board.
3
<PAGE> 7
COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Persons known to be the beneficial owners of more than 5% of the Company's
common shares as of April 1, 1997 are as follows:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------ ----------------- --------
<S> <C> <C>
Compagnie Generale 1,890,954 shares 21.6%
des Eaux
52 Rue D'Anjou
75384 Paris, France
</TABLE>
The amount listed in the above table is based upon statements on Schedule
13-D and Forms 4 and 5 filed with the Securities and Exchange Commission (the
"Commission") by Compagnie Generale des Eaux ("CGE") and includes 8,935 shares
which CGE has an option to acquire at the market price and 60,000 shares held by
a subsidiary of CGE. The remaining shares listed as being owned by CGE are held
by it directly. As the result of an agreement entered into in connection with
the 1986 acquisition of common shares from certain of the Company's shareholders
by a subsidiary of CGE, the Company obtained certain rights of first refusal
with respect to shares now held by CGE, and, in return, granted certain rights
to CGE to register shares of the Company which it acquired or might acquire in
the future for public resale, as well as the right to nominate a person to serve
on the Company's Board of Directors, commencing with the 1987 Annual Meeting of
Shareholders. The right to nominate a person to serve on the Board is subject to
certain limitations. Michel Avenas, an officer of a subsidiary of CGE, has been
nominated for election as a Director of the Company pursuant to the Agreement
with CGE.
The following table sets forth the beneficial ownership of the Company's
common shares by the Directors, nominees and executive officers of the Company
named in the Summary Compensation Table below, determined in accordance with
applicable regulations of the Commission. The number of shares reflected may
include shares held in the name of a spouse, minor child or certain other
relatives sharing the same home as the Director or officer, or held by the
Director, officer or spouse of the Director or officer, as a trustee or as a
custodian for minor children, as to all of which beneficial ownership is
disclaimed by the respective Directors and officers except as otherwise noted
below, as well as shares held in the Company's various employee plans and shares
which officers currently have the right to acquire through the exercise of
options. Mr. Haynes currently has the right to acquire 19,150 common shares, Mr.
Schumann currently has the right to acquire 9,850 shares, Mr. Isacke currently
has the right to acquire 9,850 shares, Mr. Noran currently has the right to
acquire 3,750 shares, Mr. Snellen currently has the right to acquire 3,750
shares, and all Directors and executive officers as a group currently have the
right to acquire 52,950 shares pursuant to the
4
<PAGE> 8
exercise of options. In accordance with applicable regulations of the
Commission, such shares have been included in the amounts listed below.
<TABLE>
<CAPTION>
AMOUNT OF
BENEFICIAL PERCENT
NAME OWNERSHIP OF CLASS
- ---------------------------------------- --------- -------------
<S> <C> <C>
DIRECTORS AND NOMINEES
Michel Avenas(1) 100 Less than 1%
David R. Hastings, II(2) 38,577 Less than 1%
Peter L. Haynes 43,584 Less than 1%
Jack S. Ketchum 5,267 Less than 1%
John E. Menario 2,413 Less than 1%
Jane E. Newman 773 Less than 1%
John E. Palmer, Jr. 4,632 Less than 1%
Elaine D. Rosen(3) 100 Less than 1%
William B. Russell 3,567 Less than 1%
John H. Schiavi 17,469 Less than 1%
Robert O. Viets 200 Less than 1%
OTHER NAMED EXECUTIVE OFFICERS
Paul D. Schumann(4) 18,695 Less than 1%
John F. Isacke 18,976 Less than 1%
Paul F. Noran 10,872 Less than 1%
Jerry D. Snellen 4,621 Less than 1%
ALL DIRECTORS AND EXECUTIVE OFFICERS 177,390 2.0%
</TABLE>
- ------------------------------------
(1) Mr. Avenas is an officer of a subsidiary of CGE. CGE holds 1,890,954 common
shares of the Company. See above.
(2) Mr. Hastings will not stand for re-election at the 1997 Annual Meeting due
to the Board's retirement policy.
(3) Pursuant to her request, Ms. Rosen will not stand for re-election at the
1997 Annual Meeting.
(4) Mr. Schumann also beneficially owns 250 common shares of Consumers New
Jersey Water Company, a subsidiary of the Company, and 10 common shares of
Consumers Maine Water Company, a subsidiary of the Company, which in each
case represents less than 1% of the issued and outstanding common shares of
such companies.
OTHER EXECUTIVE OFFICERS
In addition to Mr. Haynes, the other executive officers of the Company,
their names, ages, positions with the Company, terms of office and the periods
during which they have served, are set forth in the following table:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES TERM OF SERVED AS
NAME AGE WITH THE COMPANY OFFICE OFFICER SINCE
- ---------------------------- --- ----------------------------------- --------- -------------
<S> <C> <C> <C> <C>
Paul D. Schumann 46 Senior Vice President -- Operations One Year 1987
John F. Isacke 43 Senior Vice President -- Chief One Year 1978
Financial Officer
Paul F. Noran 53 Vice President -- Engineering One Year 1979
Brian R. Mullany 51 Vice President and Secretary One Year 1978
Jerry D. Snellen 57 Vice President -- Information One Year 1987
Services
Robert E. Ervin 36 Vice President and Treasurer One Year 1994
</TABLE>
Prior to becoming the Vice President and Treasurer of the Company, Mr.
Ervin was Accounting Manager and Treasurer of Inter-State Water Company, then a
subsidiary of the Company located in Danville, Illinois.
5
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION.
The following table shows, for fiscal years ending December 31, 1994, 1995
and 1996, the cash compensation paid by the Company and its subsidiaries, as
well as certain other compensation paid or accrued for those years, to each of
the five most highly compensated executive officers of the Company whose 1996
total annual salary and bonuses exceeded $100,000 (the "Named Executive
Officers"), as calculated pursuant to rules promulgated by the Commission, in
all capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING ALL OTHER
SALARY OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) BONUS(1)($) SARS(#) ($)(2)
- ------------------------------------------- ----- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Peter L. Haynes 1996 228,885 0 5,000 1,040
President 1995 213,423 45,300 5,000 1,040
1994 200,154 49,800 5,000 76,040(3)
Paul D. Schumann 1996 152,923 0 3,000 1,040
Senior Vice President -- Operations 1995 143,846 16,275 3,000 1,040
1994 137,769 17,900 3,000 1,040
John F. Isacke 1996 150,385 0 3,000 1,040
Senior Vice President -- Chief Financial 1995 143,154 16,275 3,000 1,040
Officer 1994 136,385 17,900 3,000 1,040
Paul F. Noran 1996 115,923 0 1,000 1,040
Vice President -- Engineering 1995 113,077 6,975 1,000 1,040
1994 110,138 7,700 1,000 1,040
Jerry D. Snellen 1996 105,569 0 1,000 1,040
Vice President -- Information Services 1995 99,323 6,975 1,000 1,040
1994 94,769 7,700 1,000 1,040
</TABLE>
- ------------------------------------
(1) Bonuses were awarded under the Company's 1993 Incentive Compensation Plan,
under which bonuses may be awarded to any of the regular, full-time
employees of the Company or its subsidiaries.
(2) For all officers, includes a $1,040 matching contribution in each year under
the Company's 401(k) Employees Savings Plan and Trust. Under this Plan,
participants may elect to have their employer contribute a portion of their
compensation to the Plan instead of having such amounts paid as salary. The
Company makes matching contributions, determined in accordance with a
specific formula and subject to certain limits, on behalf of all employees
who participate in the Plan.
(3) Includes $75,000 to reimburse Mr. Haynes for the loss incurred by him in
selling his home in New York following his move to the Portland, Maine area
pursuant to an employment agreement entered into prior to Mr. Haynes
becoming President and Chief Executive Officer of the Company on August 5,
1992, and a $1,040 matching contribution under the Company's 401(k) Employee
Savings Plan and Trust.
6
<PAGE> 10
STOCK OPTIONS.
The following table contains information concerning the grant of stock
options under the Company's 1993 Incentive Stock Option Plan to the Named
Executive Officers during the last fiscal year. The Company has not granted
stock appreciation rights ("SARs") to any executive officer.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
--------------------------------------------------------------------- STOCK PRICE
NUMBER OF APPRECIATION
SECURITIES % OF TOTAL FOR OPTION
UNDERLYING OPTIONS/SARS EXERCISE OR BASE TERM(3)
OPTIONS/SARS GRANTED TO EMPLOYEES PRICE -----------------
NAME GRANTED(#)(1) IN FISCAL YEAR ($/SH)(2) EXPIRATION DATE 5%($) 10%($)
- ------------------ ------------ -------------------- ---------------- --------------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Peter L. Haynes 5,000 16.6% 17.50 3/5/01 24,176 53,419
Paul D. Schumann 3,000 10.0% 17.50 3/5/01 14,506 32,051
John F. Isacke 3,000 10.0% 17.50 3/5/01 14,506 32,051
Paul F. Noran 1,000 3.3% 17.50 3/5/01 4,835 10,684
Jerry D. Snellen 1,000 3.3% 17.50 3/5/01 4,835 10,684
</TABLE>
- ------------------------------------
(1) The options granted will become exercisable in cumulative installments to
the extent of not more than 50% of the number of shares covered thereby
within the first year of the term thereof and to the extent of not more than
an additional 25% within each of the second and third years of the term
thereof. None of the options has tandem rights.
(2) The exercise prices for the options granted were, in each case, 100% of the
fair market value of the common shares on the date of grant.
(3) These amounts represent assumed rates of appreciation only. Actual gains, if
any, on stock option exercises will depend on overall market conditions and
on the future performance of the Company and its common shares.
7
<PAGE> 11
OPTIONS EXERCISES AND HOLDINGS.
The following table sets forth information with respect to the exercise of
options by the Named Executive Officers during the last fiscal year and
unexercised options held by such officers as of the end of the fiscal year. The
Company has not granted SARs to any executive officer.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR,
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END(#) AT FY-END($)
SHARES ACQUIRED VALUE --------------------- ---------------------
ON EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------ --------------- -------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Peter L. Haynes 0 0 18,650/3,750 9,688/2,813
Paul D. Schumann 400 200 9,950/2,250 6,613/1,688
John F. Isacke 0 0 9,650/2,250 6,138/1,688
Paul F. Noran 600 300 4,250/750 2,188/563
Jerry D. Snellen 0 0 3,850/750 2,088/563
</TABLE>
PENSION PLANS.
The following table shows the estimated annual pension benefit payable to
covered participants at normal retirement age under the Company's pension plans,
based on covered compensation and years of service with the Company and its
subsidiaries:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
5 YEAR AVERAGE 15 20 25 30 35
ANNUAL EARNINGS YEARS YEARS YEARS YEARS YEARS
------------------------------ ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000...................... $22,500 $30,000 $ 37,500 $ 45,000 $ 52,500
$125,000...................... $28,125 $37,500 $ 46,875 $ 56,250 $ 65,625
$150,000...................... $33,750 $45,000 $ 56,200 $ 67,500 $ 78,750
$175,000...................... $39,375 $52,500 $ 65,625 $ 78,750 $ 91,875
$200,000...................... $45,000 $60,000 $ 75,000 $ 90,000 $105,000
$225,000...................... $50,625 $67,500 $ 84,395 $101,250 $118,125
$250,000...................... $56,250 $75,000 $ 93,750 $112,500 $131,250
$275,000...................... $61,875 $82,500 $103,125 $123,750 $144,375
</TABLE>
The Company's qualified defined benefit pension plan (the "Pension Plan")
provides that upon reaching the normal retirement age of 65, a covered
employee's pension is to be the equivalent of a single life annuity in an amount
equal to the sum of 1.5% of the employee's average compensation over the five
consecutive years of service which will produce the highest average, multiplied
by the lesser of the employee's years of service or 35. Compensation for
purposes of the Pension Plan is equal to a covered employee's annual salary as
of
8
<PAGE> 12
January 1, in any year. Under the Internal Revenue Code, effective January 1,
1994, the maximum annual compensation that may be considered in determining
benefits under the Pension Plan is limited to $150,000 to be indexed for
inflation, after 1993. On February 7, 1996, the Board of Directors adopted the
Consumers Water Company Supplemental Executive Retirement Plan (the "SERP"). The
SERP is designed to replace the pension benefits lost by certain executive
officers of the Company as a result of the 1994 reduction in the maximum annual
compensation which may be considered in determining qualified pension benefits.
The retirement benefit provided under the SERP is equal to the benefit which
would have been paid to a participant under the Pension Plan but for the
compensation limit, less the benefit the participant is entitled to receive
under the Pension Plan. Covered compensation for the Named Executive Officers
for 1996 was: Mr. Haynes: $218,500; Mr. Schumann: $146,000; Mr. Isacke:
$145,000; Mr. Noran: $114,000 and Mr. Snellen: $108,800. The estimated years of
service for each named executive is as follows: Mr. Haynes: five years; Mr.
Schumann: 25 years; Mr. Isacke: 19 years; Mr. Noran: 18 years and Mr. Snellen:
16 years.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
John W. L. White, who was an officer of the Company prior to 1984 and a
Director of the Company from 1957 to 1996, served as a member of the Corporate
Governance Committee of the Company's Board of Directors during a portion of the
last completed fiscal year. The Corporate Governance Committee serves as a
compensation committee.
There are no compensation committee interlocks.
AGREEMENTS WITH OFFICERS AND DIRECTORS.
The Company has an insurance policy which, among other things, provides
indemnification to each Director and officer of the Company from and against any
liabilities incurred in connection with registration statements under the
Securities Act of 1933, as amended. The Company paid all of the $153,424 annual
premium for 1996. In addition, the Company has purchased a $100,000 accidental
death and dismemberment insurance policy covering Directors and certain
employees, payable to a beneficiary of the insured's choice. The Company paid
all of the $648 aggregate annual premiums on such policies for 1996.
The Company has entered into indemnification agreements with each of its
Directors and executive officers. The form and execution of the indemnification
agreements were approved by shareholders at the Company's 1989 Annual Meeting.
Each indemnification agreement requires the Company to indemnify the Director or
executive officer who is a party thereto to the fullest extent permitted by
applicable Maine law and requires the advance to an indemnified Director or
executive officer of litigation expenses upon receipt of a written affirmation
of the Director or officer's good faith belief that the Director or officer's
conduct was not knowingly fraudulent, deliberately dishonest or willful
misconduct. By the terms of each indemnification agreement, its benefits are not
available with respect to matters giving rise to a claim against the indemnified
Director or executive officer (a) if the Director or executive officer has (i)
violated Section 16(b) of the Securities Exchange Act of 1934 or analogous
provision of law, (ii) received remuneration or other payment in violation of
law, or (iii) engaged in conduct finally adjudged to be knowingly fraudulent,
deliberately dishonest or intentional misconduct, or (b) if a final court
decision determines that such indemnification is not lawful.
As noted above, the Company reimbursed Mr. Schiavi $7,844 in indemnifiable
expenses during 1996 in connection with a suit brought against Mr. Schiavi by
the Penobscot Indian Nation as to which Mr. Schiavi has been granted summary
judgment in his favor, but as to which the Penobscot Indian Nation has appealed.
9
<PAGE> 13
On March 6, 1996, the Board of Directors of the Company adopted the
Consumers Water Company Executive Severance Plan (the "Severance Plan"). The
Severance Plan is intended to allow senior management of the Company to
represent shareholder interests fairly without concern for their own tenure as
officers of the Company. It provides benefits to members of senior management of
the Company in the event that their employment with the Company is terminated
under certain circumstances following a "change in control." Under the Severance
Plan, a "change in control" is deemed to have occurred upon (1) an entity,
person or group becoming entitled to exercise more than 30 percent of the
outstanding voting power of all capital stock of the Company entitled to vote;
(2) a merger or consolidation of the Company, as a result of which the holders
of the outstanding voting shares of the Company immediately prior to such merger
hold less than 50 percent of the voting power of the surviving or resulting
corporation; (3) the transfer of a substantial portion of the Company's property
other than to an entity of which the Company owns at least 50 percent of voting
power; or (4) the election to the Board of Directors of the Company of
candidates who were not recommended for election by the Board of Directors in
office immediately prior to the election, if such candidates constitute a
majority of those elected in that particular election.
Employees covered by the Severance Plan are the Chief Executive Officer
("CEO"), President and each Vice President of the Company.
If at any time within 24 months after a change in control the employment of
a covered employee is terminated other than for good cause, or is terminated by
the employee for good reason, the covered employee, if the CEO, President or a
Senior Vice President, will receive a severance benefit of three years' salary,
while other Vice Presidents will receive a severance benefit of two times their
annual salary. Good cause will be deemed to exist only if the employee has
engaged in acts or omissions constituting dishonesty, intentional breach of
fiduciary obligation or intentional wrongdoing which results in substantial harm
to the business or property of the Company or is convicted of a criminal
violation involving fraud or dishonesty. "Good reason" will be deemed to exist
if, without the employee's express written consent; the employee is assigned
duties materially inconsistent with the employee's present duties,
responsibilities and status; there is a reduction in the employee's rate of base
salary or bonus; or the Company changes by 100 miles or more the principal
location at which the employee is required to perform services.
In addition to the payment of this salary benefit, covered employees are to
continue to be covered under any welfare plan of the Company for a period of 24
months, and each covered employee shall be deemed to continue to be employed by
the Company for 24 months following termination after a change in control for
the purpose of any pension plan.
The Severance Plan prohibits covered employees from soliciting for
employment any employee of the Company and requires employees to maintain the
confidentiality of business information of the Company. A breach of these
obligations will result in the employee forfeiting benefits under the Severance
Plan.
If any portion of the payments to a covered employee under the Severance
Plan would constitute a "parachute payment" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"), then the amount
of such payments will be reduced to the extent necessary so that no portion
thereof will be subject to the excise tax imposed by Section 4999 of the Code.
10
<PAGE> 14
BOARD COMPENSATION COMMITTEE REPORT
In accordance with rules established by the Securities and Exchange
Commission the Corporate Governance Committee, which also serves as a
compensation committee (the "Committee"), at the direction of the Board of
Directors, has prepared the following report for inclusion in the Proxy
Statement:
The Committee is composed entirely of directors who are not officers of the
Company. The Committee is responsible for setting and administering the policies
that govern annual compensation of executive officers of the Company and the
Company's short-term and long-term incentive compensation plans. The Company's
compensation plans are designed to attract and retain key executives critical to
the long-term success of the Company.
The Committee annually evaluates the Company's corporate performance and
compensation compared with its industry group, which is made up of companies in
the Water Utility Index described below. The Committee does not believe that
comparison to the S&P 500 or other commonly used market indices is an
appropriate measure of the Company's performance, because of the specialized
nature of the Company's primary business of owning regulated water utility
companies. A more appropriate comparison is the Water Utility Index which is
depicted in the following chart. In addition, in evaluating the Company's
overall performance, the Committee looks to the attainment of goals that were
set prior to the start of the year. Other factors, discussed below, are also
used in determining the compensation of the Named Executive Officers.
Annual compensation of the Named Executive Officers, as well as other
senior executives, consists of a base salary, annual incentive compensation
awarded under the Company's 1993 Incentive Compensation Plan and long-term
incentive compensation. During 1996, long-term incentive compensation was
provided in the form of options granted under the Company's 1993 Incentive Stock
Option Plan. For 1997 and future years, long-term incentive compensation will be
provided in the form of performance units granted under the Company's Senior
Management Long-Term Incentive Plan approved by shareholders at the 1996 Annual
Meeting.
The salary ranges for each position, or group of positions, are based on a
market survey of similar positions within the industry, conducted by an outside
consultant. The base compensation for each Named Executive Officer is set within
the range for the position of that officer, as indicated by the survey. The
salary of an officer is determined to lie within that range based on the
officer's performance and experience. The base compensation for the Named
Executive Officers ranges from the lower third of the salary range to the
maximum of the range based on the individual's performance and length of service
within the range.
The Chief Executive Officer recommends salary adjustments to the Committee
for officers of the Company, other than himself, based on a structured annual
review. The annual review considers the decision-making responsibilities of each
position and the experience, skills and performance of each officer during the
period being reviewed. To help quantify these measures, the Committee has, from
time to time, enlisted the assistance of a compensation consultant. After
review, the Committee recommends final salary changes to the Board of Directors,
which makes the final salary decisions.
INCENTIVE COMPENSATION PROGRAM. Consumers Water Company established the
1993 Incentive Compensation Plan to reward certain employees of the Company for
achieving annual objectives in both financial and other measures. The Plan was
designed with the assistance of a compensation consultant and is based on two or
three factors, depending on whether the participant works for the Corporate
entity or a subsidiary business unit. Corporate officers' target incentives are
based 60% on the attainment of net income targets, exclusive of gains on the
sales of properties, and 40% on the achievement of team goals. Income targets
under the plan are
11
<PAGE> 15
based, among other criteria, upon a targeted return on equity and an expected
Net Income for the entire organization. Awards for the participants from
subsidiary business units are based on 20% on the Company's corporate income
targets, 40% on the business unit's net income target and 40% on the unit's team
goals. The team goals, for both the Corporate unit and subsidiary units, are
primarily based on the continued implementation of a quality management system,
the achievement of certain cost containment goals, the implementation of
customer service consolidation, the realignment of corporate and subsidiary
roles and the achievement of system growth goals.
Financial and team goals are established using historic patterns of Company
performance and agreed upon strategic objectives. A performance threshold for
each measure ensures that incentive compensation is not paid for substandard
accomplishments. In addition, each measure also has a cap to limit the potential
compensation expense under the Incentive compensation Plan. Payments are based
on the midpoint of an individual's salary range so that incentive compensation
is not paid for the attainment of longevity.
Awards for 1996 were not paid to any Named Executive Officer under the
Incentive Compensation Plan as the financial and team targets established prior
to the year were not achieved.
LONG TERM INCENTIVE COMPENSATION. The Company's 1993 Incentive Stock
Option Plan was approved by shareholders at the 1993 Annual Meeting. The 1993
Incentive Stock Option Plan is substantially similar to prior incentive stock
option plans approved by the Company's shareholders. Incentive stock options
awarded during the last three calendar years are included in the Summary
Compensation Table under the heading "Long-Term Compensation
Awards -- Securities Underlying Options/SARs." SARs are not awarded by the
Company. Options, including those awarded to the Company's Chief Executive
Officer, were based on the recipients's level of responsibility within the
Company and the recipient's ability to influence Company performance and are
designed to provide eligible employees with a greater personal interest in the
success of the Company. The number of options already held by eligible employees
is not considered in the granting of new options, provided the individual
employee is within the plan limit for the maximum options which may be granted
to any one employee.
At the 1996 Annual Meeting, shareholders of the Company approved the
adoption of the Company's Senior Management Long-Term Incentive Plan (the
"LTIP"). The LTIP is intended to provide a long-term incentive to executive
officers of the Company through the granting of performance "units" to senior
managers of the Company and its affiliates. As a result of the adoption of the
LTIP, the Committee has determined not to recommend the granting of any
additional stock options under the Company's 1993 Incentive Stock Option Plan.
Under the LTIP, which became effective January 1, 1997, the Committee has
the discretion to select the senior managers who may receive grants of units, to
determine the amounts of such units and the form of any distribution, and to
establish the performance period and applicable performance criteria with
respect to the awards. At the time units are granted, the Committee is required
to establish a performance period of three or more years, and the performance
criteria for the period. At the conclusion of the performance period, the
Committee will determine the percentage of units granted that will be
distributed, if any, based on the degree to which the specified financial and
other performance objectives are met. During the year in which units are granted
and thereafter until distribution, cash payments are to be made to participants
in an amount equal to the dividends paid on a number of shares equal to the
number of units granted. These dividend equivalents will be paid on a current
basis and will not depend on the distribution that actually occurs at the end of
the performance period. Distribution of units determined earned based on the
performance criteria will be made in
12
<PAGE> 16
the form of a number of common shares equal to the number of those units, cash
equal to the then current value of the number of shares, or partly in shares and
partly in cash, as determined by the Committee.
The Committee anticipates that awards under the LTIP will be based on the
extent to which the total return to Consumers shareholders exceeds the total
return for the water utility index (as calculated by Edward D. Jones & Co.,
L.P.) for a three-year period coinciding with the Company's three-year business
plan, and that no incentive compensation will be paid unless the total return to
Consumers Water Company shareholders at least equals the average weighted total
return for companies in the water utility index during the performance period.
PERFORMANCE EVALUATION. Each year the Committee meets with Chief Executive
Officer to evaluate his performance, using input from the full Board, and
reports on that evaluation to the independent outside Directors. The Chief
Executive Officer and the Committee evaluate the performance of the rest of the
executive officers and together recommend salary adjustments to the full Board.
CHIEF EXECUTIVE COMPENSATION. The Chief Executive Officer of the Company,
Peter L. Haynes, was elected on August 5, 1992. During 1996 the Committee voted
to recommend to the Board an increase in Mr. Haynes' base salary to $232,000.
The Committee's recommendation to increase Mr. Haynes' salary (which was
accepted by the Board) was based on his having met the Board's expectations,
including the continued expansion of Quality Management programs and the
continued revitalization of the management group. The increase was also
consistent with other increases provided under the Company's Salary Plan, which
takes into account the participant's performance as well as his or her position
within the participant's salary range.
In March of 1997 the Committee recommended, and in March the Board voted,
not to pay Mr. Haynes a bonus for 1996 as the Company did not meet the
objectives established for the year.
COMPENSATION DEDUCTION LIMIT. Under the Revenue Reconciliation Act of
1993, publicly-held companies are limited to a maximum deduction for income tax
purposes of $1 million per year for "applicable employee remuneration" paid to
each "covered employee". Covered employees for the Company are those listed in
the "Summary Compensation Table" above and "applicable employee remuneration"
includes salary and bonus. Applicable employee remuneration also includes (1)
any gain recognized by an employee who, prior to the holding period to receive
favorable income tax treatment, sells or otherwise disposes of Company stock
acquired pursuant to the exercise of an option granted under either the 1988
Incentive Stock Option Plan or the 1993 Incentive Stock Option Plan and (2) the
difference between the consideration paid by an employee and the fair market
value at the time of exercise of Company shares acquired pursuant to the
exercise of an option issued pursuant to the 1993 Incentive Option Plan which
includes a provision that such option is not an incentive option for purposes of
the Internal Revenue Code. The Committee has no current intention of issuing
options under the 1993 Incentive Option Plan containing a provision that such
stock option is not an incentive stock option for tax purposes.
As noted above, bonuses payable under the Company's 1993 Incentive
Compensation Plan are capped to limit the potential compensation expense to the
Company under the Plan. The Company's 1996 Long Term Incentive Plan, approved by
the shareholders at the 1996 Annual Meeting, limits the maximum number of shares
which can be awarded to any one employee under the Plan to 5000 per annum. The
Company's 1993 Stock Option Plan, approved by the shareholders at the 1993
Annual Meeting, limits the maximum number of options which can be granted to any
one employee during the life of the Plan to 25,000. Even though the ultimate
value of outstanding options cannot be calculated as it is dependent on future
changes in the price of the Company's common shares, given the limits on the
number of options and the amount of bonuses payable
13
<PAGE> 17
to employees, and given the expected level of base compensation for covered
employees, it is extremely unlikely that the $1 million per covered employee
maximum deduction would be exceeded in the foreseeable future. In the event that
the $1 million per covered employee maximum deduction were exceeded, the Company
would not receive a tax deduction for federal income tax purposes for the amount
of applicable employee remuneration which exceeded that amount.
<TABLE>
<S> <C>
John E. Menario John E. Palmer, Jr.
Chairman, Governance Committee Member, Governance Committee
Elaine D. Rosen William B. Russell
Member, Governance Committee Member, Governance Committee
</TABLE>
14
<PAGE> 18
PERFORMANCE GRAPH
The following is a line graph presentation comparing cumulative, five-year
returns (assuming the reinvestment of dividends) on an indexed basis of the
Company's common shares with the S&P 500 Stock Index and an index of
investor-owned water utility companies published by Edward D. Jones & Co., L.P.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG COMPANY, S&P 500 AND EDWARD D. JONES & CO., L.P.
INVESTOR-OWNED WATER UTILITY INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD WATER UTILITY
(FISCAL YEAR COVERED) CONSUMERS INDEX S&P 500
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 106.7 110.8 107.6
1993 110.3 126.2 118.4
1994 119.6 118.0 120.0
1995 134.0 148.5 165.0
1996 141.4 181.5 202.7
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------
1991 1992 1993 1994 1995 1996
----- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Consumers............................... $ 100 $ 106.7 $ 110.3 $ 119.6 $ 134.0 $ 141.4
Water Utility Index*.................... 100 110.8 126.2 118.0 148.5 181.5
S&P 500................................. 100 107.6 118.4 120.0 165.0 202.7
</TABLE>
* The companies included in the Edward D. Jones & Co., L.P. investor-owned
water utility index are: American Water Works, Inc., Aquarion Company,
California Water Service Company, Connecticut Water Service, Inc.,
Consumers Water Company, Dominguez Services Corporation, Elizabethtown
Corporation, IWC Resources Corporation, Middlesex Water Company,
Philadelphia Suburban Water Company, SJW Corporation, Southern California
Water Company, Southwest Water Company and United Water Resources.
DIRECTOR COMPENSATION
Each Director is paid a retainer of $10,000 per annum. The Chairman of the
Board receives an additional $5,000 per year retainer for serving as such. In
addition, each Director receives $500 per meeting for each
15
<PAGE> 19
meeting of the Board of Directors attended, and $500 for each committee meeting
attended unless such meeting is on the same day as a Board meeting, in which
case Directors are paid $300 for attending. Committee chairmen receive an
additional $250 per meeting, or $150 per meeting if the meeting occurs on the
day there is a Board meeting. Directors who are employed by the Company or a
subsidiary are not paid an annual retainer or meeting fees. All non-employee
Directors receive travel expenses for attending Board meetings and committee
meetings.
The Board of Directors has established two Deferred Compensation Plans for
Directors. One Deferred Compensation Plan allows the deferral of all or a
specified portion of a Director's annual retainer and meeting fees with interest
to be paid thereon at a rate equal to the annual rate of return on the Company's
common equity. Amounts deferred under this plan may be paid only upon a date
fixed in advance of any deferral, or after a Director ceases to serve as such or
as an employee of the Company. The second plan allows the deferral of all or a
specified portion of a Director's retainer and fees with interest to be paid
thereon at a fixed rate based upon an announced bond index rate. The rate
applicable under this plan averaged approximately 9 1/2% for 1996. Amounts
deferred under the second plan are to be paid when a Director ceases to serve as
such. Under certain circumstances, the committee appointed by the Board to
administer this plan may provide for earlier payments upon the request of a
Director. Generally, payments of the amounts deferred under the second plan will
be made in equal monthly installments over a period of ten years, unless the
Committee appointed to administer the Deferred Compensation Plans, upon the
request of a Director, provides for payments over a shorter period of time or in
a lump sum. Each of the Deferred Compensation Plans is unfunded, with the rights
of Directors who participate being no greater than those of unsecured creditors.
Elections under each of the Deferred Compensation Plans must be made before the
end of any year and will be effective for the following year.
SECTION 16(A) OWNERSHIP REPORTING DELINQUENCIES
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and Directors and persons who own more than 10% of a registered class
of the Company's equity securities to file reports of ownership and changes in
ownership with the Commission. Such officers, Directors and shareholders are
required by Commission regulations to furnish the Company with copies of all
such reports that they file.
Based solely on a review of copies of reports filed with the Commission
since December 31, 1995, and of written representations by certain officers and
Directors, all persons subject to the reporting requirements of Section 16(a)
filed the required reports on a timely basis, except as disclosed in the
Company's Proxy Statement in connection with the 1996 Annual Meeting.
REQUIRED VOTE FOR MATTERS TO BE ACTED UPON AT ANNUAL MEETING
With respect to the election of Directors, both the bylaws of the Company
and Maine law provide that those candidates receiving the greatest number of
votes cast at a meeting of shareholders, duly called and at which a quorum is
present, shall be deemed elected. Unless otherwise provided in the bylaws, under
Maine law, a majority of the shares entitled to vote thereat shall constitute a
quorum at a meeting of shareholders. The bylaws of the Company provide that at
any meeting of the shareholders, a majority of the shares entitled to vote,
issued and outstanding, represented by shareholders of record in person or by
proxy, constitutes a quorum. Provided a quorum is present at the meeting, those
ten nominees for Director receiving the greatest number of votes will be
elected, regardless of whether they receive a majority of the votes cast.
Abstentions
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<PAGE> 20
and broker non-votes will be treated as not voting for the election of Directors
and will have no effect in determining the Directors receiving the most
affirmative votes.
As to matters other than the election of Directors that may be brought
before the Annual Meeting, Maine law provides that any corporate action to be
taken at a shareholders' meeting at which a quorum is present shall be
authorized by a majority of the votes cast by the holders of shares entitled to
vote on the subject matter, except to the extent that a greater vote is required
by law or by the Company's articles or bylaws. The bylaws of the Company provide
that the affirmative vote of the holders of a majority of the shares represented
at a meeting of shareholders (provided a quorum is present) shall decide any
question brought before the shareholders. As to any matter other than the
election of Directors, abstentions and broker non-votes will be treated as not
voting for such matter and will have the same effect as a vote against the
matter brought before the shareholders at the Annual Meeting.
APPOINTMENT OF AUDITORS
The Board of Directors has appointed Arthur Andersen LLP as independent
public accountant to audit the accounts of the Company for the fiscal year
ending December 31, 1997. Arthur Andersen LLP, which began auditing the accounts
of the Company in 1976, audited the accounts of the Company for the fiscal year
ended December 31, 1996. A representative of Arthur Andersen LLP is expected to
be available at the Annual Meeting to respond to appropriate questions and to
make a statement on behalf of Arthur Andersen LLP if he or she so desires.
OTHER BUSINESS
Management is not aware of any matters to be presented for action at the
meeting other than those specified in the Notice of Annual Meeting and the
presentation of the annual report of the financial condition of the Company. No
action constituting approval or disapproval of any of the matters referred to in
that report is contemplated. However, if any other matters legally come before
the meeting, the persons named in the enclosed form of proxy intend to exercise
the discretionary power conferred by the proxy and to vote the proxy in
accordance with their judgment on such matters.
EXPENSES OF SOLICITATION
The cost of the solicitation of proxies for the Annual Meeting will be paid
by the Company. Brokerage houses, nominees, fiduciaries and other custodians
will be requested to forward soliciting material to beneficial owners of shares
held of record by them and will be reimbursed for their expenses. In addition to
solicitation by mail, in a limited number of instances, regular employees of the
Company may solicit proxies in person or by telegraph or telephone. Such persons
will receive no additional compensation for such services.
PROMPT RETURN OF PROXY CARD REQUESTED
Shareholders are requested to indicate voting instructions on the enclosed
proxy card, and to date, sign and return it promptly in the accompanying
envelope. No postage is required if mailed in the United States. The proxy is
revocable until exercised; accordingly, shareholders who are present at the
meeting may withdraw their proxies and vote, if they so desire, in person.
17
<PAGE> 21
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented to next year's Annual
Meeting of Shareholders, scheduled for May 6, 1998, must be received by the
Company by December 2, 1997 for inclusion in the Company's proxy material
relating to that meeting.
By Order of the Board of Directors
BRIAN R. MULLANY
Clerk
April 1, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES THERETO, IS
AVAILABLE WITHOUT CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST TO BRIAN R.
MULLANY, SECRETARY, CONSUMERS WATER COMPANY, P.O. BOX 599, PORTLAND, MAINE
04112-0599. COPIES OF THE EXHIBITS TO THE REPORT, WHICH ARE VOLUMINOUS, WILL BE
FURNISHED UPON THE PAYMENT OF A REASONABLE FEE TO OFFSET THE COST OF
REPRODUCTION AND MAILING.
18
<PAGE> 22
PROXY FORM PROXY FORM
THE BOARD OF DIRECTORS SOLICITS THIS PROXY
The undersigned hereby appoint(s) the individuals listed on the reverse side,
and each of them, attorney, agent, and proxy of the undersigned, with full
power of substitution, to vote all shares of stock of the Company that the
undersigned would be entitled to cast if personally present at the Annual
Meeting of Shareholders of the Company, and at any postponement or adjournment
thereof.
This proxy will be voted as specified by the undersigned. If no choice is
specified, the proxy will be voted according to the director recommendations
indicated on the reverse side, and according to the discretion of the proxy
holders on any other matters that properly come before the meeting or any
postponement or adjournment thereof.
Please date, sign exactly as your name appears on the form and mail the proxy
promptly. When signing as an attorney, executor, administrator, trustee or
guardian, please give your full title as such. If shares are held jointly, both
owners must sign.
CONTINUED AND TO BE VOTED AND SIGNED ON REVERSE.
- -------------------------------------------------------------------------------
PLEASE ENSURE YOU FOLD THEN DETACH AND RETAIN THIS PORTION OF THE PROXY FORM
<PAGE> 23
CONSUMERS WATER COMPANY ANNUAL MEETING TO BE HELD ON 5/07/97 AT 11:00 A.M. EST
FOR HOLDERS AS OF 3/21/97
3 1-0001
CUSIP:
DIRECTORS CONTROL NO.
- ---------
DIRECTORS RECOMMEND: A VOTE FOR ELECTION OF THE FOLLOWING DIRECTORS 0010100
1- 01-MICHEL AVENAS, 02-PETER L. HAYNES, 03-JACK S. KETCHUM,
04-JOHN E. MENARIO, 05-JANE E. NEWMAN, 06-JOHN E. PALMER, JR.,
07-WILLIAM B. RUSSELL, 08-JOHN N. SCHIAVI, 09-ROBERT O. VIETS
DIRECTORS
PROPOSAL(S) RECOMMEND
- ----------- ---------
*NOTE* SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF
*NOTE* APPOINTEES: JOHN E. MENARIO, JACK S. KETCHUM AND
JOHN E. PALMER, JR.
FOLD AND DETACH HERE
CONSUMERS WATER COMPANY
05/07/97 AT 11:00 A.M. EDT 2 ITEM(S)
SHARES(S)
DIRECTORS
---------
(MARK "X" FOR ONLY ONE BOX)
1 / / FOR ALL NOMINEES
/ / WITHHOLD ALL NOMINEES
/ / WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE. WRITE
NUMBER(S) OF NOMINEE(S) BELOW.
USE NUMBER ONLY
------------------------------------------------
PLEASE INDICATE YOUR PROPOSAL SELECTION BY
FIRMLY PLACING AN "X" IN THE APPROPRIATE
NUMBERED BOX WITH BLUE OR BLACK INK ONLY. /X/
ACCOUNT NO:
CUSIP:
CONTROL NO:
CLIENT NO:
[FIRST UNION LOGO]
230 SOUTH TRYON
CHARLOTTE, NC 28288-1153
- -------------------------- --------------------------- ---------/----
SIGNATURE SIGNATURE DATE
FOLD AND DETACH HERE
