<PAGE> 1
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 [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a
</TABLE>
CONNECTICUT WATER SERVICE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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
[CONNECTICUT WATER LOGO]
Connecticut Water Service, Inc.
93 West Main Street
Clinton, Connecticut 06413
March 17, 2000
Dear Shareholder:
You are cordially invited to the Annual Meeting of Shareholders of
Connecticut Water Service, Inc., scheduled to be held on April 28, 2000, in the
auditorium of the Mashantucket Pequot Museum & Research Center, 110 Pequot
Trail, Mashantucket, Connecticut, beginning at 2:00 PM. If you plan to attend,
please call 1-800-428-3985, Extension 305, and leave your name, address and
telephone number. Directions for the meeting are printed on the back of the
proxy statement. Your Board of Directors and executive officers look forward to
personally meeting you.
At the meeting, you will be asked to elect three directors and to appoint
independent auditors for the calendar year ending December 31, 2000.
In addition to the specific matters to be voted on, there will be a report
on the progress of the Company and an opportunity for you to ask questions of
general interest to shareholders. Important information is contained in the
accompanying proxy statement which you are urged to carefully read.
It is important that your shares are represented and voted at the meeting,
regardless of the number you own or whether you attend. Accordingly, please vote
by mail, telephone or internet. It is also very helpful to us if you would call
and let us know if you plan to attend. We need to reserve a ticket so that after
the meeting you will be able to tour the museum free as our guest.
Your interest and participation in the affairs of the Company are
appreciated.
Sincerely,
CONNECTICUT WATER SERVICE, INC.
/s/ Marshall T. Chiaraluce
Marshall T. Chiaraluce
Chairman, President and CEO
CNSCM-PS-00
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Notice of Meeting...........................................
General Information......................................... 1
Voting of Shares............................................ 1
PROPOSAL (1) -- ELECTION OF DIRECTORS....................... 2
Committees.................................................. 6
Director Compensation....................................... 7
Certain Relationships and Related Transactions.............. 8
Section 16(a) Beneficial Ownership Reporting Compliance..... 8
Management Compensation..................................... 9
Retirement Plans............................................ 11
Employment Contracts, Change in Control, and Termination
Arrangements.............................................. 12
Compensation Committee Report............................... 14
Performance Comparison Graph................................ 18
Security Ownership of Certain Beneficial Owners and
Management................................................ 19
PROPOSAL (2) -- APPOINTMENT OF AUDITORS..................... 20
OTHER MATTERS............................................... 20
Shareholder Proposals and Nominations for Directors for the
2001 Annual Meeting....................................... 20
Map and Directions to Annual Meeting........................ 22
</TABLE>
<PAGE> 4
CONNECTICUT WATER SERVICE, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AUDITORIUM, MASHANTUCKET PEQUOT MUSEUM & RESEARCH CENTER
110 PEQUOT TRAIL, MASHANTUCKET, CONNECTICUT
Notice is hereby given that the Annual Meeting of Shareholders of Connecticut
Water Service, Inc. (the "Company") will be held on April 28, 2000, 2:00 PM, in
the auditorium of the Mashantucket Pequot Museum & Research Center, 110 Pequot
Trail, Mashantucket, Connecticut, for the following purposes:
1. To elect three directors;
2. To appoint Arthur Andersen LLP, independent public accountants, as
independent auditors for the Company for the calendar year ending December
31, 2000; and
3. To transact such other business as may properly come before the meeting.
Only holders of the Company's Common Stock and its Cumulative Preferred Stock --
Series A of record at the close of business on March 1, 2000 are entitled to
notice of and to vote at this meeting.
Shareholders are urged to attend the meeting in person.
By order of the Board of Directors,
/s/ Michelle G. DiAcri
Michele G. DiAcri, Secretary
March 17, 2000
<PAGE> 5
CONNECTICUT WATER SERVICE, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 28, 2000
GENERAL INFORMATION
The accompanying proxy is solicited by the Board of Directors of the Company for
use at the Annual Meeting of Shareholders to be held in the auditorium of the
Mashantucket Museum & Research Center, 110 Pequot Trail, Mashantucket,
Connecticut, on April 28, 2000, at 2:00 PM.
VOTING OF SHARES
Only holders of the Company's Common Stock and its Cumulative Preferred Stock --
Series A of record at the close of business on March 1, 2000 are entitled to
notice of and to vote at the meeting. On March 1, 2000, the Company had
outstanding 4,828,075 shares of Common Stock, 15,000 shares of Cumulative
Preferred Stock -- Series A, $20 par value, and 29,499 shares of $.90 Cumulative
Preferred Stock, $16 par value. Each share of Common Stock is entitled to three
votes and each share of Cumulative Preferred Stock -- Series A is entitled to
one vote on all matters coming before the meeting. The holders of shares of $.90
Cumulative Preferred Stock, $16 par value have no general voting rights.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE USE ONE OF THREE VOTING
OPTIONS:
- MAIL -- You may submit your proxy by signing your proxy card and mailing
it in the enclosed, postage prepaid and addressed envelope. For shares
you hold in street name, you may sign the voting instruction card
included by your broker or nominees and mail it in the envelope provided.
- TELEPHONE -- If you live in the U.S. or Canada, you may submit your proxy
by following the "Vote by Telephone" instructions on the proxy card.
- INTERNET -- If you have internet access, you may submit your proxy from
any location in the world by following the "Vote by Internet"
instructions on the proxy card.
You may change your proxy instructions at any time prior to the vote at the
Annual Meeting. For shares held directly in your name, you may do this by
granting a later-dated proxy, submitting a later vote by telephone or computer
or by attending the annual meeting and voting in person. Attendance at the
meeting will not cause your previously granted proxy to be revoked, unless you
specifically request it. You may change your proxy instructions for beneficially
held shares by submitting new voting instructions to your broker or nominee.
<PAGE> 6
Proxy solicitation costs will be paid by the Company. In addition to this
solicitation by mail being made initially on or about March 17, 2000, officers
and regular employees of the Company may make solicitations by telephone, mail,
or personal interviews, and arrangements may be made with banks, brokerage
firms, and others to forward proxy material to their principals. The Company has
retained Morrow & Company, Inc. to assist in the solicitation of proxies at an
estimated cost of $9,000, including expenses, which will be paid by the Company.
PROPOSAL (1) -- ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for a Board of no less than
nine or more than fifteen directors, the exact number of directorships to be
determined from time to time by resolution adopted by affirmative vote of a
majority of the Board. The directors are divided into three classes, I, II and
III, as nearly equal in number as practicable, with members to hold office until
successors are elected and qualified. Each class is to be elected for a
three-year term at successive annual meetings. As a result, only one class of
directors is to be elected at each annual meeting.
The Board of Directors selected the three nominees listed below for election.
Two Class III nominees, Ms. Thibdaue and Mr. Engle, are new to the Company. The
remaining Class III nominee, Mr. Wilbur, a board member since 1993, was
redesignated from his previous Class II designation to make the three classes of
directors as nearly equal in number as practicable. Of the remaining directors,
the Class I terms of Messrs. Chiaraluce, Neal and Reeds and Ms. Hincks expire in
2001 and the Class II terms of Messrs. Bigler and Lengyel and Ms. Hanley expire
in 2002. Messrs. Baker, Luginbuhl and Moger reached the Board's age limit and
are not standing for reelection. Mr. Packard, who is presently a director, will
be retiring as of the date of the Annual Meeting. The Board of Directors has
determined to fix the number of directorships for the ensuing year at eleven,
leaving a vacancy resulting from this retirement. No nominee has been proposed
for election to fill this vacancy. The Board of Directors is in the process of
seeking a qualified individual to fill such vacancy, but anticipates that it
will not elect a candidate to fill such vacancy before the Annual Meeting.
Proxies cannot be voted for a greater number of persons than the number of
nominees named.
UNLESS OTHERWISE DIRECTED, IT IS INTENDED THAT THE ENCLOSED PROXY WILL BE VOTED
FOR THE ELECTION OF MS. THIBDAUE AND MESSRS. ENGLE AND WILBUR. If any nominee
is unable or declines to serve, the persons named in the proxy may vote for some
other person(s). Under Connecticut law, directors are elected by a plurality of
the votes cast. Votes withheld and broker non-votes are counted for purposes of
determining whether a quorum is present at the meeting but are not considered as
voted in the election of directors. Broker non-votes and abstentions are,
therefore, not counted as votes cast and have no effect.
2
<PAGE> 7
CLASS I -- DIRECTORS WHOSE TERMS CONTINUE UNTIL 2001.
<TABLE>
<C> <S> <C>
- ----------------------------------------------------------------------------------------------
Marshall T. Chiaraluce, age 57, has been a
[PHOTO OF MARSHALL T. director since 1992. He is Chairman of the Board
CHIARALUCE] of Directors, President and Chief Executive
Officer of the Company.
- ----------------------------------------------------------------------------------------------
Marcia L. Hincks, age 64, presently serves on the
Audit (Chairman), Compensation and Strategic
[PHOTO OF MARCIA L. HINCKS] Planning Committees and has been a director since
1983. She retired as Vice President and Senior
Counsel of Aetna Life & Casualty in December 1993.
- ----------------------------------------------------------------------------------------------
Robert F. Neal, age 65, presently serves on the
Compensation (Chairman), Pension Trust and
[PHOTO OF ROBERT F. NEAL] Strategic Planning Committees and has been a
director since 1990. He retired as Senior Vice
President-Network Services of Southern New England
Telecommunications Corporation in June 1994.
- ----------------------------------------------------------------------------------------------
Arthur C. Reeds, age 56, presently serves on the
Corporate Governance and Pension Trust Committees
and he has been a director since 1999. He is CEO
[PHOTO OF ARTHUR C. REEDS] and Director of Conning Corporation, an investment
banking firm, and Director of U.S. Alliance Funds
and U.S. Alliance VIP Funds. He was the Chief
Investment Officer at Cigna Corporation until his
retirement from Cigna in November 1997.
- ----------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 8
CLASS II -- DIRECTORS WHOSE TERMS CONTINUE UNTIL IN 2002.
<TABLE>
<C> <S> <C>
- ----------------------------------------------------------------------------------------------
Harold E. Bigler, age 68, presently serves on the
Compensation, Finance and Strategic Planning
[PHOTO OF HAROLD E. BIGLER] Committees and has been a director since 1983. He
retired as Chairman of Bigler Investment
Management Company, Inc. in April 1999.
- ----------------------------------------------------------------------------------------------
Mary Ann Hanley, age 42, presently serves on
Corporate Governance and Strategic Planning
Committees and has been a director since 1999. She
is Assistant to the President of St. Francis
[PHOTO OF MARY ANN HANLEY] Hospital & Medical Center and Director of The
Valencia Society, the endowment fund for the
hospital. From January 1995 to February 1998, she
was legal counsel to the Governor's Office, State
of Connecticut.
- ----------------------------------------------------------------------------------------------
Ronald D. Lengyel, age 61, presently serves on the
Audit and Corporate Governance Committees and has
[PHOTO OF RONALD D. LENGYEL] been a director since 1999. He is Treasurer and
Chairman of the Board of Naugatuck Valley Savings
& Loan Association.
- ----------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 9
CLASS III -- NOMINEES FOR ELECTION AT THIS MEETING FOR TERMS EXPIRING IN 2003.
<TABLE>
<C> <S> <C>
- ----------------------------------------------------------------------------------------------
Roger Engle, age 62, is a nominee for the Board of
Directors. He retired as President of Crystal
[PHOTO OF ROGER ENGLE] Water Utilities Corporation/The Crystal Water
Company of Danielson in January 2000. He also is a
Director of the Savings Institute of Willimantic,
Connecticut, a mutual savings bank.
- ----------------------------------------------------------------------------------------------
Lisa Thibdaue, age 47, is a nominee for the Board
of Directors. She has been the Vice President,
Rates, Regulatory Affairs and Compliance at
[PHOTO OF LISA THIBDAUE] Northeast Utilities since 1998. From 1996 to 1997,
she was Executive Director, Rates and Regulatory
Affairs at Consumers Energy, a natural gas and
electric utility located in Michigan.
- ----------------------------------------------------------------------------------------------
Donald B. Wilbur, age 58, presently serves on the
Compensation, Corporate Governance and Strategic
Planning Committees and has been a director since
[PHOTO OF DONALD B. WILBUR] 1993. He is Plant Manager of Unilever Home and
Personal Care, a personal products manufacturer,
and is a Director of Middlesex Hospital and a
Director of Liberty Bank.
- ----------------------------------------------------------------------------------------------
</TABLE>
With the exception of Ms. Hanley, who was formerly legal counsel to the
Governor's Office, State of Connecticut, from January 1995 to February 1998, and
Mr. Reeds, who retired from Cigna Corporation in November 1997, each of the
nominees and directors listed above has had the same employment for more than
the past five years either in the position indicated or in other similar or
executive capacities with the same company or a predecessor.
5
<PAGE> 10
COMMITTEES
The Company's Board of Directors met five times during 1999. In addition,
the Company has a number of committees, including an Audit Committee, a Finance
Committee, a Pension Trust Committee, a Compensation Committee, a Corporate
Governance Committee, and a Strategic Planning Committee, which met periodically
during the year. In 1999, all directors attended more than 80% of the aggregate
number of meetings of the Board and Committees on which they served while they
were directors.
The Audit Committee, composed of Ms. Hincks (Chairman) and Messrs. Lengyel,
Luginbuhl, Moger, and Packard, reviews the activities, procedures and
recommendations of the independent auditors of the Company and The Connecticut
Water Company, and recommends annually the appointment of independent auditors
for the year. The Committee met twice during 1999.
The Finance Committee, composed of Messrs. Baker, Bigler, Moger, and Reeds,
makes recommendations to and advises the Board of Directors on financial policy
and issuance of securities. The Committee did not meet in 1999.
The Pension Trust Committee, composed of Messrs. Baker, Moger, Neal,
Packard, and Reeds, reviews the Pension Trust Fund of The Connecticut Water
Company Employee Retirement Fund, the VEBA Trust Fund for retiree medical
benefits, and the Supplemental Executive Retirement Program, reviews and
determines actuarial policies and investment guidelines, and selects the
investment managers. The Committee met six times during 1999.
The Compensation Committee, composed of Ms. Hincks and Messrs. Baker,
Bigler, Neal (Chairman) and Wilbur, makes recommendations to and advises the
Board of Directors on officer compensation and the promotion and hiring of
officers, reviews Company fringe benefit plans other than retirement plans and
administers the Performance Stock Program. The Committee met four times during
1999.
The Corporate Governance Committee, composed of Ms. Hanley and Messrs.
Baker, Lengyel, Reeds, and Wilbur (Chairman), recommends director nominees to
the Board of Directors, reviews the overall effectiveness of the Board, and
recommends to the Board chief executive succession. The Committee met twice
during 1999.
The Strategic Planning Committee, composed of Mesdames Hanley and Hincks
and Messrs. Bigler, Luginbuhl, Moger, Neal, Packard, and Wilbur, oversees the
preparation and implementation of the Company's Strategic Plan. The Committee
met once during 1999.
Pursuant to the Company's Bylaws, nominations for directors may be made by
any shareholder entitled to vote for the election of directors at the meeting
who complies with the following procedures. A nomination by a shareholder shall
be made only if a shareholder has given proper and timely notice in writing to
the Secretary of the Company of a shareholder's intent to make such nomination.
To be timely, a shareholder's notice must be delivered to or mailed and received
by the Secretary of the Company at the General Offices of the Company not later
than (i) with respect to an election to be held at
6
<PAGE> 11
an annual meeting of shareholders, the close of business on a day which is not
less than 120 days prior to the anniversary date of the immediately preceding
annual meeting, and (ii) with respect to an election to be held at a special
meeting of shareholders called for the election of directors, the close of
business on the tenth day following the date on which notice of such meeting is
first mailed to shareholders. Each notice must set forth: (a) the name and
address of the person or persons to be nominated; (b) the name and address, as
they appear on the Company's books, of the shareholder making such nomination;
(c) the class and number of shares of the Company which are beneficially owned
by the shareholder; (d) a representation that the shareholder is a holder of
record of stock of the Company entitled to vote at such meeting and intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (e) a description of all arrangements or understandings
between the shareholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations are to
be made by the shareholder; (f) such other information regarding each nominee
proposed by the shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission; and (g) the consent of each nominee to serve as a director of the
Company if so elected. Any notice of nominations for consideration at the 2001
Annual Meeting must be received by the Company's Secretary by the close of
business on December 28, 2000. The presiding officer at the meeting shall
determine if the facts warrant a determination that such nomination was not made
in accordance with the provisions of the Company's Bylaws, and if the officer
should so determine, he shall so declare to the meeting and any nominations not
properly made shall be disregarded.
DIRECTOR COMPENSATION
Since the Boards of Directors of the Company and The Connecticut Water
Company are identical, regular meetings of each are generally held on the same
day. Following is the current listing of fees paid to Board members.
<TABLE>
<CAPTION>
Fee for each regular Fee for each special
meeting of the Board meeting of the Board Annual retainer Annual
and each regular and each special for each retainer for
Company committee meeting committee meeting Board Member* committee chairs*
<S> <C> <C> <C> <C>
Connecticut Water
Service, Inc. $250 $300 None None
- --------------------------------------------------------------------------------------------------------
The Connecticut
Water Company $450 $500 $6,000 $2,000
</TABLE>
* Note: In 1999 the annual retainer was increased to $6,000 from $4,000 and the
annual retainer for committee chairs became effective.
Mr. Chiaraluce, Chairman, President and Chief Executive Officer, receives
the same retainer and meeting fees as other directors; he does not receive a fee
for committee meetings. These amounts are included in the Summary Compensation
Table on Page 9. Directors who are not officers are not entitled to retirement
benefits from the Company.
7
<PAGE> 12
Pursuant to a Directors Deferred Compensation Plan, the directors of the
Company and The Connecticut Water Company may elect to defer receipt of all or a
specified portion of the compensation payable to them for services as directors
until after retiring as directors. Any amounts so deferred are credited to
accounts maintained for each participating director, and interest at an annual
rate of 10.74% is currently credited monthly to all deferred amounts.
Distribution of amounts deferred and accumulated interest may be made, at the
election of each participating director, in a lump sum or in annual installments
over a period of years specified by the director, such distribution to commence
in the year following the year in which the individual ceases to be a director.
In 1999, four directors elected to participate in the Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
Mr. Engle retired as President of Crystal Water Utilities Corporation/The
Crystal Water Company of Danielson on December 31, 1999, having served in that
position since 1978. As part of the arrangements relating to the Company's
acquisition of Crystal Water Utilities Corporation/The Crystal Water Company of
Danielson on September 30, 1999, Connecticut Water Service entered into an
employment/consulting agreement with Mr. Engle which covered his employment for
the three-month period prior to his retirement and which provides that,
beginning January 1, 2000, Mr. Engle will receive a $16,000 annual consulting
fee from The Crystal Water Company of Danielson. This consulting agreement will
terminate on the earlier of December 31, 2009 or Mr. Engle's death or
resignation. Upon completion of the consulting agreement, Mr. Engle will receive
a $16,000 annual supplemental retirement benefit until his death.
During 1999, the law firm of Day, Berry & Howard LLP, of which Michael F.
Halloran, Assistant Secretary of the Company and The Connecticut Water Company,
is a partner, performed certain legal services for the company and The
Connecticut Water Company. The Company believes that the charges made by said
firm for legal services were not more than others would have charged for similar
services.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16 of the Securities Exchange Act of 1934, directors,
officers and certain beneficial owners of the Company's equity securities are
required to file reports of their transactions in the Company's equity
securities with the Securities and Exchange Commission on specified due dates.
In 1999, reports of transactions by all directors, officers and such beneficial
holders were timely filed, except (i) a late-filed Form 4 for Francis E. Baker,
Jr., reporting the purchase of 100 shares of Connecticut Water Service, Inc. and
(ii) a late-filed Form 4 for reporting awards of stock options for Peter J.
Bancroft, David C. Benoit, Marshall T. Chiaraluce, James R. McQueen, Terrance P.
O'Neill, and Maureen Westbrook. In making this statement, the Company has relied
on the written representations of its directors, officers and ten percent
shareholders and copies of the reports that they have filed with the Securities
and Exchange Commission.
8
<PAGE> 13
MANAGEMENT COMPENSATION
The following tabulation sets forth the total compensation paid by the
Company and The Connecticut Water Company during 1999, 1998 and 1997 to each of
the executive officers, including the Chief Executive Officer of the Company,
receiving more than $100,000 aggregate compensation in 1999. The Company has no
employees. All officers are employees of The Connecticut Water Company and all
of their compensation is paid by The Connecticut Water Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation Awards
Securities
Name and Annual Restricted Stock Underlying All Other
Principal Position Year Compensation($) Awards($)(1) Stock Options(2) Compensation($)(3)
<S> <C> <C> <C> <C> <C>
Marshall T. Chiaraluce 1999 253,500(2) 66,164 35,223 4,910
Chairman, President 1998 238,000(2) 56,161 -- 3,457
and Chief Executive 1997 222,722(2) 52,320 -- 3,284
Officer
- ------------------------------------------------------------------------------------------------------------------
David C. Benoit, 1999 141,000 26,626 17,970 2,820
Vice President, 1998 130,500 19,621 -- 1,958
Finance and Chief 1997 118,000 17,888 -- 895
Financial Officer
- ------------------------------------------------------------------------------------------------------------------
James R. McQueen, 1999 139,000 26,626 17,040 2,780
Vice President, 1998 126,500 22,145 -- 1,897
Engineering and 1997 114,000 14,272 -- 1,679
Planning
- ------------------------------------------------------------------------------------------------------------------
Terrance P. O'Neill, 1999 139,000 26,626 17,040 2,780
Vice President of 1998 124,500 19,106 -- 1,868
Operations 1997 110,000 14,784 -- 1,565
- ------------------------------------------------------------------------------------------------------------------
Maureen P. Westbrook 1999 123,500 26,626 17,040 2,197
Vice President, 1998 99,500 16,840 -- 1,492
Administration and 1997 78,907 -- -- 882
Government Affairs
</TABLE>
(1) The values shown on the table above are based on shares actually earned in
the given year, valued at the closing market price of the Company's common
stock on the date vested: 1999 vested 2/17/00; 1998 vested 3/1/99; and 1997
vested 2/13/98. The value of the full number of shares of restricted stock
initially allocated to Messrs. Chiaraluce, Benoit, McQueen and O'Neill and
Ms. Westbrook was $104,500, $42,129, $42,129, $42,129 and $42,129
respectively in 1999; $56,092, $20,352, $20,352, $20,352 and $15,835
respectively in 1998; and $54,196, $19,664, $15,299, $15,299 and 0
respectively in 1997. Pursuant to the Company's Amended and Restated
Performance Stock Program, Messrs. Chiaraluce, Benoit, and McQueen elected
to defer 100% 50%, and 70% respectively of their 1999, 1998, and 1997
awards. At December 31, 1999, and prior to partial vesting (due to meeting
some but not all performance goals) on February 17, 2000, Mr. Chiaraluce
held 3,870 shares of restricted stock with an aggregate value of $123,840;
and Messrs. Benoit, McQueen and O'Neill and Ms. Westbrook each held 1,560
shares of restricted stock with an aggregate value of $49,920, respectively.
Dividends are paid on restricted stock.
(2) This amount includes Mr. Chiaraluce's fees as a director of the Company.
(3) "All Other Compensation" consists of employer matching contributions under
the The Connecticut Water Company 401(k) Plan.
9
<PAGE> 14
OPTION GRANTS IN LAST FISCAL YEAR
The following table shows certain information regarding stock options
granted under the Company's Performance Stock Program to the individuals names
in the Summary Compensation Table during the year ended December 31, 1999.
<TABLE>
<CAPTION>
Number of % of Total Potential Realizable Value
Securities Options at Assumed Annual
Underlying Granted to Rates of Stock Price
Options Employees Exercise Appreciation for
Granted in Fiscal Price Expiration 10-Year Option Term(2)
(#)(1) Year ($/share) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C>
Marshall T.
Chiaraluce 20,874 16% $22.25 04/23/09 $292,086 $740,207
14,349 11% $33.50 12/08/09 $302,302 $766,097
- ---------------------------------------------------------------------------------------------------------------
David C. Benoit 10,098 8% $22.25 04/23/09 $141,299 $358,082
7,872 6% $33.50 12/08/09 $165,846 $420,288
- ---------------------------------------------------------------------------------------------------------------
James R. McQueen 10,098 8% $22.25 04/23/09 $141,299 $358,082
6,942 5% $33.50 12/08/09 $146,253 $370,635
- ---------------------------------------------------------------------------------------------------------------
Terrance P. O'Neill 10,098 8% $22.25 04/23/09 $141,299 $358,082
6,942 5% $33.50 12/08/09 $146,253 $370,635
- ---------------------------------------------------------------------------------------------------------------
Maureen P. Westbrook 10,098 8% $22.25 04/23/09 $141,299 $358,082
6,942 5% $33.50 12/08/09 $146,253 $370,635
</TABLE>
(1) Options granted vest ratably over five years on each of the first five
anniversary dates of the grant date.
(2) The dollar amounts under these columns are the result of calculations
assuming 5 percent and 10 percent growth rates as set by the Securities and
Exchange Commission and therefore are not intended to forecast future price
appreciation, if any, of the Company's Common Stock. The "realizable value"
is based upon 10 years of appreciation.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information with respect to the
individuals named in the Summary Compensation Table regarding options held as of
December 31, 1999.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money
Shares Options at Fiscal Options at Fiscal
Acquired Value Year End(#) Year-End($)(1)
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Marshall T. Chiaraluce -0- -0- 0/35,223 $0.00/$187,866
- -----------------------------------------------------------------------------------------------------
David C. Benoit -0- -0- 0/17,970 $0.00/$90,882
- -----------------------------------------------------------------------------------------------------
James R. McQueen -0- -0- 0/17,040 $0.00/$90,882
- -----------------------------------------------------------------------------------------------------
Terrance P. O'Neill -0- -0- 0/17,040 $0.00/$90,882
- -----------------------------------------------------------------------------------------------------
Maureen P. Westbrook -0- -0- 0/17,040 $0.00/$90,882
</TABLE>
Note: No options were eligible to be exercised in 1999.
(1) Based on the fair market value of the Company's Common Stock as of December
31, 1999 ($32.00) less the exercise price of the option
10
<PAGE> 15
RETIREMENT PLANS
All employees and officers of The Connecticut Water Company are entitled to
participate in The Connecticut Water Company Employees' Retirement Plan (the
"Retirement Plan"), a non-contributory, qualified defined benefit plan.
Retirement benefits are based on years of credited service and average annual
earnings, which is defined to mean the highest average regular basic
compensation received by an individual from the Company and The Connecticut
Water Company during any 60 consecutive months. Retirement benefits under the
Retirement Plan are not reduced by employees' Social Security benefits.
Contributions, which are actuarially determined, are made to the Retirement Plan
by The Connecticut Water Company for the benefit of all employees covered by the
Retirement Plan.
The Internal Revenue Code of 1986, as amended (the "IRC), imposes limits
upon the amount of compensation that may be used in calculating retirement
benefits and the maximum annual benefit that can be paid to a participant from a
tax-qualified benefit plan. These limits affect the benefit calculation for
certain individuals and effectively reduce their benefits under the Retirement
Plan. In order to supplement Retirement Plan benefits, The Connecticut Water
Company has entered into individual supplemental executive retirement agreements
with certain executives, including all of the current executive officers named
in the Summary Compensation Table. If the executive meets the age and any
applicable service requirements under such an agreement, the annual retirement
benefit payable will be equal to 60% of average annual earnings, as defined
under the Retirement Plan but without the IRC compensation limit, offset by his
or her benefit payable under the Retirement Plan. As of December 31, 1999, the
estimated years of credited service under the Retirement Plan for Messrs.
Chiaraluce, Benoit, McQueen and O'Neill were 8, 4, 34 and 19, respectively, and
for Ms. Westbrook 11 years.
Examples of the annual benefit payable under the Retirement Plan and the
supplemental executive retirement agreements, based on a straight life annuity,
are presented in the table below.
<TABLE>
<CAPTION>
HIGHEST AVERAGE ANNUAL
COMPENSATION DURING ANNUAL
60 CONSECUTIVE MONTHS BENEFIT
<S> <C>
$100,000............................... $ 60,000
125,000............................... 75,000
160,000............................... 96,000
170,000............................... 102,000
200,000............................... 120,000
225,000............................... 135,000
250,000............................... 150,000
275,000............................... 165,000
300,000............................... 180,000
</TABLE>
11
<PAGE> 16
In the case of each of Mr. Chiaraluce and Mr. Benoit, the annual benefit
amounts are reduced by benefits payable under the retirement plan of a prior
employer.
EMPLOYMENT CONTRACTS, CHANGE-IN-CONTROL, AND TERMINATION ARRANGEMENTS
The Company and The Connecticut Water Company have entered into Amended and
Restated Employment Agreements with Messrs. Chiaraluce, Benoit, McQueen and
O'Neill and Ms. Westbrook. The intent of the agreements is to ensure continuity
in the management of the Company in the event of a change in control of the
Company. The agreements do not become effective until a change in control occurs
(the "Effective Date"). A change in control is deemed to occur when (i) any
person, other than the Company, The Connecticut Water Company or any employee
benefit plan sponsored by the Company or The Connecticut Water Company, becomes
the beneficial owner, directly or indirectly, of 20 percent or more of the
common stock of the Company or The Connecticut Water Company; (ii) the
stockholders of the Company or The Connecticut Water Company approve (A) any
consolidation or merger of the Company or The Connecticut Water Company in which
the Company or The Connecticut Water Company is not the continuing or surviving
corporation (other than a merger of the Company or The Connecticut Water Company
in which holders of the common stock of the Company or The Connecticut Water
Company have the same proportionate ownership of common stock of the surviving
corporation) or pursuant to which the common stock of the Company or The
Connecticut Water Company would be converted into cash, securities or other
property, or (B) any sale, lease, exchange or other transfer of all or
substantially all the assets of the Company or The Connecticut Water Company;
(iii) there is a change in the majority of the Board of Directors of the Company
or The Connecticut Water Company (the "Board") during a 24-month period, or (iv)
the Board adopts a resolution to the effect that a change in control has
occurred.
As of the Effective Date, The Connecticut Water Company agrees to employ
the executives for a continuously renewing three-year period commencing on the
Effective Date. Compensation under the agreements is paid by The Connecticut
Water Company and consists of (i) base salary, (ii) annual bonus, (iii)
participation in incentive, savings and retirement plans and welfare plans
applicable to executive employees, (iv) fringe benefits, (v) an office and
support staff, and (vi) if the executive is employed on the date the Board
approves a consolidation, merger, transfer of assets or other transaction
described in clause (ii) of the definition of change in control above, a stay-on
bonus equal to the executive's then-current base salary, plus an amount equal to
the target bonus under The Connecticut Water Company's Officers Incentive
Program for the year in which such date occurs, payable in a lump sum, provided
the executive is employed on the fifth day following the closing of such
transaction. The stay-on bonus is also payable if the executive's employment is
terminated following such approval but prior to the fifth day following the
closing of such transaction by the employer for any reason other than for cause,
death or attainment of age 65, or if employment is terminated because of the
executive's disability or if the executive voluntarily terminates employment
prior to such date for good reason.
12
<PAGE> 17
If the executive's employment is terminated for cause or by reason of the
executive's death or attainment of age 65 or voluntarily by the executive other
than for good reason, the obligations of The Connecticut Water Company under the
agreements cease and the executive forfeits all rights to receive any
compensation or other benefits under the agreement except compensation or
benefits accrued or earned and vested by the executive as of the date of
termination, including base salary through the date of termination and benefits
payable under the terms of any qualified or nonqualified retirement or deferred
compensation plans maintained by The Connecticut Water Company; provided, that
if the executive's employment is terminated by reason of the executive's death,
in addition to the preceding and any other death benefits which may become
payable, base salary continues to be paid at the then current rate for a period
of six months to the executive's beneficiary or estate.
If the executive's employment is terminated for any reason other than
cause, death or attainment of age 65, or if the executive's employment is
terminated by reason of the executive's disability, or if the executive
voluntarily terminates employment for good reason, the obligations of The
Connecticut Water Company are, in addition to the stay-on bonus described above,
payment or provision of: (i) a lump-sum payment in consideration of the
executive's covenants regarding confidential information and non-competition
(the "Covenants"), in an amount determined by an independent expert to be the
reasonable value of such Covenants as the termination date (the "Covenant
Value"), but in no event greater than the aggregate value of the benefits
provided in subparagraphs (ii) -- (ix) below (the "Termination Benefits"); such
Termination Benefits are to be offset by the Covenant Value, provided, however,
that the executive may elect to receive any Termination Benefit that would be so
offset, but in such event the Covenant Value will be reduced by the value of
such Termination Benefit; (ii) an amount equal to three times the base salary of
the executive plus three times the target bonus for the executive under the
Officers Incentive Program for the year in which termination occurs, reduced by
any amount payable under any applicable severance plan, payable over the three
years following termination; (iii) the value of the aggregate amounts that would
have been contributed on behalf of the executive under any qualified defined
contribution retirement plan(s) then in effect, plus estimated earnings thereon
had the executive continued to participate in such plan(s) for an additional
three years; (iv) an amount equal to the difference between benefits which would
have been payable to the executive under any deferred compensation agreement had
the executive continued in the employ of The Connecticut Water Company for an
additional three years and the benefits actually payable; (v) additional
retirement benefits equal to the present value of the difference between the
annual pension benefits that would have been payable to the executive under The
Connecticut Water Company's qualified defined benefit retirement plan and under
any nonqualified supplemental executive retirement plan covering the executive
had the executive continued to participate in such plan(s) for an additional
three years and the benefits actually payable; (vi) if the executive's
employment is terminated by reason of disability, disability benefits at least
equal to the most favorable of those provided by The Connecticut Water Company
or the Company; (vii) all life, health, disability and similar welfare benefit
plans and programs of
13
<PAGE> 18
The Connecticut Water Company for a period of three years, plus three additional
years of credit for purposes of determining eligibility to participate in any
such plan for retirees; (viii) three additional years of all other perquisites
as the executive was receiving at the date of termination; and (ix) outplacement
services for one year.
In addition to the above, the executive will become fully vested in any
form of compensation previously granted, such as restricted stock options, and
performance share awards.
In the event that any payment or benefit received or to be received by the
executive under the agreement would be an "excess parachute payment", as defined
in IRC Section 280G, and subject to the federal excise tax imposed by IRC
Section 4999, then the payment or benefit will be reduced to the extent
necessary to avoid the application of such excise tax, but only if such
reduction would result in the executive's receipt of a greater payment or
benefit on an after-tax basis than would have been receivable had such excise
tax been paid.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is responsible for making recommendations to the Board on executive
compensation and administering the Company's Performance Stock Program.
EXECUTIVE COMPENSATION PRINCIPLES
The Company's executive compensation plan is designed to align executive
compensation with the Company's and/or The Connecticut Water Company's strategic
business planning, which includes management initiatives and business financial
performance. Through this process the Compensation Committee has established a
program to:
- - Attract and retain key executives critical to the long-term success of the
Company.
- - Reward executives for the accomplishment of strategic goals which reflect
customer service and satisfaction as well as the enhancement of shareholder
value.
- - Integrate compensation programs with both The Connecticut Water Company's
annual performance review and the Company's and/or The Connecticut Water
Company's strategic planning and measuring processes.
- - Support a performance-oriented environment that rewards performance with
respect to overall performance goals and performance on individual goals for
each participant in the plan.
EXECUTIVE COMPENSATION PROGRAM
The Company's Compensation Program in 1999 consisted of three components:
base salary, annual incentive compensation and stock options. The annual
compensation consists of a base salary and incentive compensation consists of
any Common Stock awarded through the Performance Stock Program. The Compensation
Committee recommends a
14
<PAGE> 19
salary range and a level of salary for executive officers. The Compensation
Committee determines the salary or salary range, incentive compensation and
stock options based upon competitive norms from periodic studies of a peer group
of other water companies. Actual salary changes are based upon such norms and
upon performance. Incentive compensation is provided through the Performance
Stock Program.(1) The Compensation Committee also reviews and approves the
participation of executive officers of The Connecticut Water Company under the
Performance Stock Program and the granting of stock options under the program.
The Compensation Committee also approves the award value of Performance Stock
each year as a percentage of base salary and the basis for judging performance
over the following year.
Each year, the Committee determines the maximum incentive award for each
participant, which is generally based on a percentage of the salary range
midpoint for the participant. The Committee also establishes corporate and
individual performance measures for the chief executive officer and other
executive officers based upon strategic priorities for the purpose of
determining the percentage of maximum incentive award a participant is entitled
to receive. The Committee may also determine the relative weights to be given to
corporate and individual goals.
Performance Stock awards for 1998 were based on whether the Company and/or
The Connecticut Water Company had met certain goals based on objective
performance criteria and attainment by participants of individual goals. The
criteria for the 1999 awards were based on The Connecticut Water Company's
customer value rating and water quality measures, the Company's return on
equity, other service and financial measures, and
- ---------------
(1) The Performance Stock Program provides for an aggregate maximum of up to
300,000 shares of Common Stock of the Company to be issued as either stock
option grants or awards of restricted stock to eligible employees. An award
of a share of restricted stock is an award to a participant of a share of
the Common Stock of the Company generally conditioned upon the attainment of
performance goals established by the Compensation Committee for the
performance period to which the award relates and the continued employment
of the participant with the Company or any majority-owned subsidiary of the
Company through the end of the performance period. During the performance
period, the participant has all of the rights of a shareholder of the
Company, including the right to receive dividends, except that the
participant does not have custody of the shares of Common Stock nor the
right to transfer ownership of the shares during the performance period.
Commencing with 1997 awards, the Program was amended to permit participants
to defer income taxation of all or a portion of such restricted stock awards
by electing instead to receive "performance shares" at the end of a chosen
deferral period. Until the end of the deferral period, a participant holding
performance shares has no rights as a shareholder of the Company. However,
dividend equivalents are credited to such participant as additional
performance shares. The Performance Stock Program was amended and restated,
effective April 23, 1999, at which time the Program authorized the
Compensation Committee to also issue stock options to eligible employees.
15
<PAGE> 20
corporate goals. The Compensation Committee has approved and implemented an
award program for 2000 based upon similar criteria and corporate goals.
Awards granted as annual incentive compensation are payable in restricted
shares of the Company's Common Stock or, at the election of a participant,
deferred "performance shares". Any shares awarded are subject to certain
transfer restrictions imposed by the Committee. Each executive has a threshold,
target and maximum incentive amount expressed as a percentage of the salary
range midpoint. In 1999, these amounts were 15 percent, 30 percent and 45
percent, respectively, of the salary midpoint for the chief executive officer,
and 10 percent, 20 percent and 30 percent, respectively, for the other executive
officers. The plan is intended to pay fully competitive annual cash compensation
when performance against goals matches the target level. Based on a December 31,
1999 closing price, the Committee awarded $71,168 to Mr. Chiaraluce and $28,640
individually to Messrs. Benoit, McQueen, and O'Neill and Ms. Westbrook. Mr.
Chiaraluce elected to defer his award in performance stock only; Mr. Benoit and
Mr. McQueen elected to receive their awards split between restricted and
performance stock; and Mr. O'Neill and Ms. Westbrook elected to receive their
award in restricted stock only.
At the end of each fiscal year, the Committee reviews a management report
on results versus goals and meets with the chief executive officer to evaluate
the performance of the other executive officers. The Committee also meets in the
absence of the chief executive officer to evaluate his performance. This
performance, expressed as a percentage with threshold (80%), expected (100%),
and maximum probable (120%), is used in the determination of annual restricted
stock amounts. The Committee has the authority to modify the mathematical
results of applying the terms of the Program when the Committee, exercising
sound business judgment, deems it prudent to do so.
Also under the Performance Stock Program, the Committee has the authority
to award stock options to executive officers and other key employees. The
ability to grant a variety of awards enables the Committee to respond to
changing strategic, competitive, regulatory, tax and accounting forces in an
efficient manner. Over time and through the use of the grant of awards, the
Committee intends to grant options based on competitive norms and achieve the
objective of having the executive officers and other senior management become
significant shareholders of the Company so that their interests are aligned with
the interests of the Company's other shareholders.
Executive officers may also participate in the Company's Savings and
Investment 401(k) Plan and other benefit plans generally available to all levels
of salaried employees. Also, executive officers may elect to defer compensation
under a non-qualified salary deferral plan.
16
<PAGE> 21
CHIEF EXECUTIVE OFFICER COMPENSATION
The Compensation Committee determined the compensation for 1999 of Mr.
Chiaraluce, the Chief Executive Officer ("CEO"), based upon a number of factors
and criteria, including a review of the total compensation package of Chief
Executive Officers for similar companies of comparable size and capitalization
and a review by the Compensation Committee of the CEO's performance. The
Compensation Committee approved the CEO's participation in the Program for 1999.
The Committee noted the continued efforts of Mr. Chiaraluce to avoid having The
Connecticut Water Company request a general rate increase while achieving
consistently higher earnings and increasing shareholder value during his 8 years
as CEO. Mr. Chiaraluce was awarded 57.5% of the Common Stock allocated to him
under the Performance Stock Program in 1999 (2,224 of 3,870 shares originally
allocated) based upon his actual performance as measured against pre-established
objectives identified by the Committee. Mr. Chiaraluce also received stock
option grants in 1999 of 35,223 options, in each case exercisable at a price
equal to the market price of the Company's Common Stock on the date of the
grant.
COMPENSATION COMMITTEE
Robert F. Neal, Chairman
Francis E. Baker, Jr.
Harold E. Bigler, Jr.
Marcia L. Hincks
Donald B. Wilbur
17
<PAGE> 22
PERFORMANCE COMPARISON GRAPH
Set forth below is a line graph comparing the cumulative total shareholder
return for each of the years 1994 -- 1999 on the Company's Common Stock, based
on the market price of the Common Stock and assuming reinvestment of dividends,
with the cumulative total shareholder return of companies in the Standard &
Poor's 500 Stock Index and the Standard & Poor's Utilities Index.
[Performance Graph]
<TABLE>
<CAPTION>
CONNECTICUT WATER SERVICE,
INC. STANDARD & POOR'S 500 STANDARD & POOR'S UTILITIES
-------------------------- --------------------- ---------------------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 129.00 138.00 142.00
1996 146.00 169.00 146.00
1997 172.00 226.00 183.00
1998 225.00 290.00 210.00
1999 279.00 351.00 191.00
</TABLE>
18
<PAGE> 23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The table below shows the amount of the Company's voting securities owned
by directors, nominees, the named executive officers and beneficial owners of
more than 5% of a class of the Company's voting securities.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Amount Percent
Title of Name of Beneficially of
Class Beneficial Owner Owned(1) Class
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common OUTSIDE DIRECTORS
Stock Francis E. Baker, Jr. 288 *
-----------------------------------------------------------------------------
Harold E. Bigler, Jr. 3,500 *
-----------------------------------------------------------------------------
Mary Ann Hanley 200 *
-----------------------------------------------------------------------------
Marcia L. Hincks 520 *
-----------------------------------------------------------------------------
Ronald D. Lengyel 750 *
-----------------------------------------------------------------------------
Rudolph Luginbuhl 450 *
-----------------------------------------------------------------------------
Harvey G. Moger 3,517 *
-----------------------------------------------------------------------------
Robert F. Neal 1,000 *
-----------------------------------------------------------------------------
Warren E. Packard 700 *
-----------------------------------------------------------------------------
Arthur C. Reeds 300 *
-----------------------------------------------------------------------------
Donald B. Wilbur 1,298 *
-----------------------------------------------------------------------------
EXECUTIVE OFFICERS
Marshall T. Chiaraluce (& director)(2) 17,940 *
-----------------------------------------------------------------------------
David C. Benoit(3) 4,881 *
-----------------------------------------------------------------------------
James R. McQueen(4) 6,161 *
-----------------------------------------------------------------------------
Terrance P. O'Neill(5) 3,663 *
-----------------------------------------------------------------------------
Maureen P. Westbrook(6) 2,774 *
-----------------------------------------------------------------------------
Directors and Executive Officers as a Group 47,942 *
-----------------------------------------------------------------------------
DIRECTOR NOMINEES
Roger Engle 10,539 *
-----------------------------------------------------------------------------
Lisa Thibdaue 200 *
- ----------------------------------------------------------------------------------------------------
$.90 Cumulative None --
Preferred Stock, $16
par value
- ----------------------------------------------------------------------------------------------------
Cumulative Preferred Herbert Johnson 900 6%
Stock -- Series A, Annabelle Johnson
$20 par value 35 Carter Street,
Bolton, CT 06043
-----------------------------------------------------------------------------
Francis J. Prichard, Jr. 900 6%
Main Street, Box 379,
Ellington, CT 06029
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Indicates ownership of less than one percent of the class of securities.
(1) All amounts owned are as of February 17, 2000.
(2) Includes 7,644 unrestricted and 3,229 restricted performance share units
under the Company's Performance Stock Program.
19
<PAGE> 24
(3) Includes 1,390 unrestricted and 738 restricted performance share units and
738 shares of restricted stock under the Company's Performance Stock
Program.
(4) Includes 1,879 unrestricted and 911 restricted performance share units and
391 shares of restricted stock under the Company's Performance Stock
Program.
(5) Includes 1,302 shares of restricted stock under the Company's Performance
Stock Program.
(6) Includes 1,302 shares of restricted stock under the Company's Performance
Stock Program.
PROPOSAL (2) -- APPOINTMENT OF AUDITORS
Arthur Andersen LLP served as independent auditors for the Company and The
Connecticut Water Company for the calendar year ending December 31, 1999. One or
more representatives of Arthur Andersen LLP will attend the annual meeting, with
the opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
It is intended that unless otherwise specified, proxies will be voted in
favor of the appointment of Arthur Andersen LLP, independent public accountants,
of Hartford, Connecticut, as independent auditors for the Company and The
Connecticut Water Company for the calendar year ending December 31, 2000. The
Company's Audit Committee has recommended that Arthur Andersen LLP be so
appointed. Arthur Andersen LLP has no direct or indirect financial interest in
the Company. Proposal (2) will be approved if the votes cast at the meeting
favoring the appointment of Arthur Andersen LLP exceed the votes cast opposing
such appointment. Broker non-votes and abstentions are not counted as votes cast
and, therefore, have no effect.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL (2).
OTHER MATTERS
The Board of Directors knows of no other matters which may be presented for
consideration at the meeting. However, if any other matters properly come before
the meeting, the persons named in the enclosed proxy will vote in their
discretion on such matters.
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTORS FOR THE 2001 ANNUAL MEETING
For business to be properly brought before an annual meeting by a
shareholder, the business must be an appropriate matter to be voted by the
shareholders at an annual meeting and the shareholder must have given proper and
timely notice in writing to the Secretary of the Company. To be timely, a
shareholder's notice must be delivered to or mailed and received by the
Secretary of the Company at the Main Offices of the Company, 93 West Main
Street, Clinton, CT 06413, no later than the close of business on
20
<PAGE> 25
a day which is not less than 120 days prior to the anniversary date of the
immediately preceding annual meeting, which date for purposes of the 2001 Annual
Meeting of Shareholders is December 28, 2000. A shareholder's notice to the
Secretary must set forth as to each matter the shareholder proposes to bring
before the annual meeting (a) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (b) the name and address, as they appear on the Company's
books, of the shareholder proposing such business, (c) the class and number of
shares of the Company which are beneficially owned by the shareholder and (d)
any material interest of the shareholder in such business.
In addition, shareholder proposals intended to be presented at the Annual
Meeting of Shareholders in 2001 must be received by the Company no later than
November 17, 2000 in order to be considered for inclusion in the Company's proxy
statement and form of proxy relating to the 2001 Annual Meeting of Shareholders.
/s/ Michelle G. DiAcri
Michele G. DiAcri
Corporate Secretary
March 17, 2000
THE COMPANY IS SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF THE SECURITIES
EXCHANGE ACT OF 1934 AND FILES AN ANNUAL REPORT ON FORM 10-K WITH THE SECURITIES
AND EXCHANGE COMMISSION. A COPY OF FORM 10-K WAS SENT TO EACH SHAREHOLDER OF
RECORD AS OF MARCH 1, 2000. ADDITIONAL COPIES OF THE 1999 ANNUAL REPORT ON FORM
10-K FILED BY THE COMPANY, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES, BUT
WITHOUT EXHIBITS, CAN BE MAILED WITHOUT CHARGE TO ANY SHAREHOLDER. THE EXHIBITS
ARE OBTAINABLE FROM THE COMPANY UPON PAYMENT OF THE REASONABLE COST OF COPYING
SUCH EXHIBITS. SHAREHOLDERS CAN REQUEST THIS INFORMATION BY PHONE AT
1-800-428-3985, EXT. 305, OR BY MAIL TO MICHELE G. DIACRI, CORPORATE SECRETARY,
CONNECTICUT WATER SERVICE, INC., 93 WEST MAIN STREET, CLINTON, CONNECTICUT
06413.
21
<PAGE> 26
MAP TO CONNECTICUT WATER SERVICE, INC. ANNUAL MEETING OF SHAREHOLDERS
AUDITORIUM, MASHANTUCKET PEQUOT MUSEUM & RESEARCH CENTER
MASHANTUCKET, CONNECTICUT
FROM HARTFORD
Follow Route 2 East, take Exit 28 South to Route 395 South. From Route 395
South, take Exit 79A to Route 2A East, crossing the Mohegan-Pequot Bridge.
Continue along Route 2A East, which leads into Route 2 East. Continue past the
main entrance to Foxwoods Resort Casino on the right, and take a right at the
next traffic light onto Route 214. Drive 3/10 mile and turn right onto the
Pequot Trail. The Public Safety Building will be on the left. Continue until you
reach the museum parking lot.
FROM NYC/NEW HAVEN
Follow Route 95 North to Exit 92. At Exit 92, take a left onto Route 2 West.
Stay on Route 2 West for 7 miles. Turn left onto Route 214, drive 3/10 mile,
turn right onto Pequot Trail. The Public Safety Building will be on the left.
Continue until you reach the museum parking lot.
FROM RHODE ISLAND AND POINTS NORTH
Follow Route 95 South to Exit 92. At the Exit, go to the second stop sign and
take a right onto Route 2 West. Stay on Route 2 West for 7 miles. Turn left onto
Route 214, drive 3/10 mile, turn right onto Pequot Trail. The Public Safety
Building will be on the left. Continue until you reach the museum parking lot.
[Map & directions]
Friday, April 28, 2000
Meeting begins at 2:00 PM -- Doors open at 1:30 PM
If you plan to attend the meeting, please call 1-800-428-3985, Ext. 305
22
