Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14(a)-11(c) or Rule
14a-12
EASTERN UTILITIES ASSOCIATES
.................................................................
(Name of Registrant as Specified in Its Charter)
EASTERN UTILITIES ASSOCIATES
.................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
1. Title of each class of securities to which transaction
applies:
......................................................
2. Aggregate number of securities to which transaction
applies:
......................................................
3. Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
......................................................
4. Proposed maximum aggregate value of transaction:
......................................................
<PAGE>
Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
form or schedule and the date of its filing.
(1) Amount Previously Paid:
...........................................................
(2) Form, Schedule or Registration Statement No.:
...........................................................
(3) Filing Party:
...........................................................
(4) Date Filed:
...........................................................
<PAGE>
March 28, 1994
To Our Shareholders:
We extend our personal invitation to join us at the Annual Meeting of
Shareholders on May 16, 1994.
The formal Notice of Meeting and Proxy Statement appear on the following
pages and contain details of the business to be conducted at the Annual Meeting.
It is important that you promptly sign and return the enclosed proxy card
for the annual election of Trustees.
We appreciate your attention to this important action and look forward to
seeing you at our Annual Meeting.
Sincerely,
DONALD G. PARDUS
Chairman of the Board
<PAGE>
NOTICE OF ANNUAL MEETING
March 28, 1994
To Our Shareholders:
Notice is hereby given that the Annual Meeting of the Shareholders of
Eastern Utilities Associates, a voluntary association formed under a Declaration
of Trust dated April 2, 1928, as amended, will be held in the Enterprise Room on
the 5th floor of the State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts, on Monday, May 16, 1994, at 9:30 o'clock in the forenoon,
for the following purposes:
1. To elect eleven (11) Trustees of the Association for the ensuing year.
2. To transact such other business as may properly come before the meeting.
Only Common Shareholders of record on the transfer books of the Association
at the close of business March 18, 1994 will be entitled to vote at the meeting
of which notice is hereby given and at any and all adjournments thereof. In the
election of Trustees, the holders of common shares have the right of cumulative
voting as provided in Article 28 of the Declaration of Trust, as amended.
You are urged to sign, date and return the enclosed proxy at your earliest
convenience to The First National Bank of Boston, Shareholder Services Division,
Post Office Box 1878, Boston, Massachusetts 02105. An envelope is enclosed for
that purpose.
You are invited to be present at the meeting and in the event you do
attend, any proxy previously signed may be revoked and your shares voted in
person at the meeting.
By Order of the Trustees,
WILLIAM F. O'CONNOR, Secretary
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 16, 1994
March 28, 1994
The accompanying proxy is solicited on behalf of the Trustees of Eastern
Utilities Associates for use at the Annual Meeting of the Shareholders to be
held in the Enterprise Room on the 5th floor of the State Street Bank and Trust
Company, 225 Franklin Street, Boston, Massachusetts, on Monday, May 16, 1994 for
the purposes set forth in the foregoing Notice of Annual Meeting and at any and
all adjournments thereof.
The person giving such a proxy may revoke it at any time before it is
voted, by a later dated proxy delivered pursuant to this solicitation, by other
written revocation received by the Secretary, or by oral revocation in person at
the meeting.
An Annual Report, including financial statements, accompanies this
statement.
There are outstanding 19,592,277 common shares, the holders of which are
entitled, for each share held of record at the close of business on March 18,
1994, to one vote per share in person or by proxy, on all matters acted on at
the meeting, except that, as provided in Article 28 of the Declaration of Trust,
as amended, the election of Trustees will be by cumulative voting, namely, each
holder of common shares will be entitled to as many votes as will equal the
number of his shares multiplied by the number of Trustees to be elected, and he
may cast all of such votes in person or by proxy for a single candidate or
distribute them among any two or more candidates as he shall elect. The only
candidates eligible for election as Trustees will be those who have been
nominated by notice given in writing to the Secretary at least twenty-four (24)
hours prior to the time fixed for the calling to order of the meeting at which
the vote is to be taken.
The Association's Declaration of Trust provides that a quorum for the
meeting shall consist of the representation in person or by proxy at the meeting
of shareholders entitled to a majority or more of the votes that could be cast
at the meeting. The election of Trustees is by plurality vote, such that the 11
nominees with the highest vote totals will be elected. Withheld votes as to a
particular nominee effect vote totals for that nominee. Broker non-votes will
not effect the outcome of the election. If an individual has signed a proxy card
but has not voted on a particular matter, such proxy will be voted in favor of
management's recommendation with respect to such matter in accordance with the
discretion granted to the proxies.
2
<PAGE>
ELECTION OF TRUSTEES AND OWNERSHIP OF COMMON SHARES
It is proposed to elect eleven (11) Trustees to serve for the ensuing year
until the next Annual Meeting of the Shareholders or until succeeding Trustees
have been chosen and qualified. Unless a contrary specification is made in the
accompanying form of proxy, the persons named in it, including any substitutes,
will vote such proxy for the nominees in the following list, or for the election
as Trustees of such other nominees as may be approved by a majority of the
Trustees if, for any reason, any of the nominees are unable to serve, or in
their discretion will cast cumulatively among any number of such nominees any or
all votes represented by proxies in which they are named.
All of the nominees in the following table are at present Trustees of the
Association and were, with the exception of Larry A. Liebenow, elected to their
present term of office at the Annual Meeting of Shareholders held on May 17,
1993. Mr. Liebenow was elected by the Trustees on March 21, 1994 to fill the
vacancy caused by the retirement of John E. Conway. Mr. Liebenow has been
President and Chief Executive Officer of Quaker Fabric Corporation since
September 1989 having previously been President and Chairman of Nortex
International from 1983 to 1989.
Each of the other nominees has served in the capacity indicated in the list
for more than five years, with the exceptions of Russell A. Boss, who was Chief
Operating Officer of A.T. Cross Company until April 1993; John F. G. Eichorn,
Jr., who served as Chief Executive Officer of the Association until April 1989
and as Chairman of the Board of Trustees of the Association until June 1990;
Donald G. Pardus, who was elected Chairman of the Board of Trustees of the
Association in June 1990 and was designated Chief Executive Officer of the
Association in April 1989 and served as President of the Association until June
1990 and Chief Operating Officer from January 1988 to April 1989; John R.
Stevens who was elected to the position of President of the Association in June
1990 and was designated Chief Operating Officer of the Association in January
1990 and served as Senior Executive Vice President from January 1990 to June
1990 and Executive Vice President from June 1987 to December 1989; and W.
Nicholas Thorndike, who served for more than five years as Chairman and Managing
Partner of Wellington Management Company until 1989.
In addition to their principal occupations in the table below, the nominees
are trustees or directors of publicly held companies as follows: Mr. Boss is a
Director of A.T. Cross Company and Brown & Sharpe Manufacturing Co.; Mr.
Choquette is a Director of Fleet Financial Group and Carlisle Companies, Inc.;
Mr. Freeman is a Trustee or Director of Providence Journal Company, Amica Mutual
Insurance Company, Amica Life Insurance Company and of thirteen of the
registered mutual funds for which Scudder, Stevens & Clark is investment
advisor; Mr. Liebenow is a Director of Quaker Fabric Corporation; Mr. Marple is
a Trustee of thirteen of the registered mutual funds for which Scudder, Stevens
& Clark is investment advisor; Ms. Stapleton is a Director of Colonial Gas
Company; and Mr. Thorndike is a Director of Courier Corporation and Providence
Journal Company and a Trustee of Bradley Real Estate Trust and the Putnam Funds.
Various Trustees also are directors of subsidiaries of the Association
having registered securities outstanding as follows: Mr. Freeman, Blackstone
Valley Electric Company; Mr. Pardus, Blackstone Valley Electric Company and
Eastern Edison Company; and Mr. Stevens, Blackstone Valley Electric Company and
Eastern Edison Company.
3
<PAGE>
The table below also sets forth the information concerning beneficial
ownership by the nominees, by each of the executive officers named in the
Summary Compensation Table on page 5 and by all Trustees and executive officers
as a group.
<TABLE><CAPTION>
COMMON
SHARES OF THE
ASSOCIATION
BENEFICIALLY
AGE AT OWNED AT
DECEMBER 31, TRUSTEE JANUARY 7,
NAME 1993 PRINCIPAL OCCUPATION SINCE 1994(a)
<S> <C> <C> <C> <C>
Russell A. Boss (A,C) 55 President and Chief Executive Officer, 1989 1,000(b)
A.T. Cross Company (writing instruments
manufacturer), Lincoln, Rhode Island
Richard M. Burns 56 Comptroller of the Association -- 1,941(c)
Paul J. Choquette, Jr. (A,P) 55 President of Gilbane Building Company 1992 511
(building construction), Providence,
Rhode Island
Peter S. Damon (F,P) 58 President and Chief Executive Officer, 1991 392(d)
Bank of Newport, Newport, Rhode Island
John F. G. Eichorn, Jr. (F,P) 69 Retired Chairman of the Board of Trustees 1971 4,460
of the Association
Peter B. Freeman (A,C) 61 Corporate Director and Trustee, 1979 2,190
Providence, Rhode Island
Arthur A. Hatch 63 Executive Vice President of the -- 8,918(c)
Association
Larry A. Liebenow (A,F) 50 President and Chief Executive Officer of 1994 --
Quaker Fabric Corporation (upholstery
manufacturer), Fall River, Massachusetts
Wesley W. Marple, Jr. (F,P) 61 Professor of Business Administration, 1976 885(e)
Northeastern University, Boston,
Massachusetts
Donald G. Pardus 53 Chairman of the Board of Trustees and 1982 21,864(c)
Chief Executive Officer of the
Association
Robert G. Powderly 46 Executive Vice President of the -- 5,771(c)
Association
Margaret M. Stapleton (A,C) 57 Vice President, John Hancock Mutual Life 1977 1,156
Insurance Company, Boston, Massachusetts
John R. Stevens 53 President and Chief Operating Officer of 1990 12,345(c)
the Association
W. Nicholas Thorndike (C,P) 60 Corporate Director and Trustee, Brookline, 1991 1,668
Massachusetts
Trustees and executive officers
as a group....................... 69,264(f)
</TABLE>
- ---------------
(A), (C), (F) and (P) indicate member of Audit, Compensation and Nominating,
Finance or Pension Trust Committees, respectively.
<TABLE>
<S> <C>
(a) Unless otherwise indicated, beneficial ownership is based on sole investment and voting power. Each nominee's
ownership represents less than two-tenths of one percent of the outstanding common shares of the Association.
(b) In addition, Mr. Boss owns 5 shares of Blackstone Valley Electric Company's 4.25% Preferred Stock.
(c) Jointly owned with spouse except for 75, 1,832, 3,649, 1,003, and 1,098 shares held under the Association's
Employees' Savings Plan for Messrs. Burns, Hatch, Pardus, Powderly and Stevens, respectively, as to which
each has voting power, and 1,687, 5,433, 13,607, 3,919 and 9,798 shares received under the Eastern Utilities
Associates Restricted Stock Plan by Messrs. Burns, Hatch, Pardus,
</TABLE>
(Footnotes continued on following page)
4
<PAGE>
(Footnotes continued from preceding page)
<TABLE>
<S> <C>
Powderly and Stevens, respectively, as to which each has voting power. Also included are 179, 1,408, 977, 401
and 1,449 shares individually owned by Messrs. Burns, Hatch, Pardus, Powderly and Stevens. Mr. Powderly holds
324 shares in a fiduciary capacity.
(d) Jointly owned with spouse.
(e) In addition, Mr. Marple's spouse owns 263 common shares. Mr. Marple disclaims any beneficial interest in such
shares.
(f) Represents less than four-tenths of one percent of total outstanding common shares.
</TABLE>
The Association was informed by statements filed on Schedule 13G that the
groups listed in the table below were the beneficial owners of 5% or more of the
Association's outstanding common shares. The table sets forth information
concerning such ownership as of December 31, 1993.
<TABLE><CAPTION>
AMOUNT OF % OF
NAME AND ADDRESS OF OUTSTANDING SHARES OUTSTANDING
BENEFICIAL OWNER BENEFICIALLY OWNED COMMON SHARES
- ------------------------------------------------------ ------------------- -----------------
<S> <C> <C>
Capital Research and Management Company(1)............ 1,000,000 5.25
333 South Hope Street
Los Angeles, CA 90071
FMR Corporation(2).................................... 1,440,512 7.57
82 Devonshire Street
Boston, MA 02109
</TABLE>
- ---------------
(1) Sole dispositive power; no power to direct the vote of the shares listed.
(2) Sole dispositive power; 852,100 shares owned with the sole voting power.
COMPENSATION AND OTHER TRANSACTIONS
SUMMARY COMPENSATION TABLE
Information is set out below as to compensation paid by the Association and
its subsidiaries for the years 1991, 1992 and 1993 to each of the five highest
paid executive officers of the Association whose aggregate cash compensation for
1993 exceeded $100,000.
<TABLE><CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- ---------------
INCENTIVE OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION(1) STOCK AWARDS(2) COMPENSATION(3)
- ---------------------------------------- ----------- ---------- ---------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Donald G. Pardus
Chairman and Chief Executive
Officer................................. 1993 $ 375,025 $ 137,500 $ 8,444 $ -- $ 8,438
1992 350,025 100,000 7,795 210,000 7,000
1991 335,025 70,000 -- -- --
John R. Stevens
President and Chief Operating
Officer................................. 1993 275,025 107,500 12,071 -- 6,188
1992 253,025 90,000 10,441 165,000 5,060
1991 238,025 45,000 -- -- --
Arthur A. Hatch
Executive Vice President.............. 1993 198,025 56,677 9,132 -- 4,455
1992 186,025 35,433 6,157 82,376 3,720
1991 177,025 24,375 -- -- --
Robert G. Powderly
Executive Vice President.............. 1993 143,025 44,559 8,710 -- 3,218
1992 122,825 24,194 9,241 66,606 2,456
1991 108,925 9,918 -- -- --
Richard M. Burns
Comptroller........................... 1993 125,025 25,621 -- -- 2,188
1992 117,125 35,000(4) -- 34,373 1,186
1991 111,125 6,756 -- -- --
</TABLE>
(Footnotes on following page)
5
<PAGE>
(Footnotes for preceding page)
- ---------------
(1) Represents amounts reimbursed for tax liability accruing as a result of
personal use of company-owned automobiles.
(2) Aggregate amount and value (including the value reflected in the table under
"Restricted Stock Awards") of shares granted under the Association's
Restricted Stock Plan to the officers listed above are as follows: Mr.
Pardus, 13,607 shares, $314,148; Mr. Stevens, 9,798 shares, $218,652; Mr.
Hatch, 5,433 shares, $124,982; Mr. Powderly, 3,919 shares, $87,120 and Mr.
Burns, 1,687 shares, $34,373. Dividends are paid on these shares.
(3) Contributions made under the Association's Employees' Savings Plan.
(4) Includes a bonus received by Mr. Burns in addition to his 1992 Incentive
Plan Bonus for extraordinary effort during the year.
The Employees' Retirement Plan of Eastern Utilities Associates and its
subsidiary companies (the "Plan") is a tax-qualified defined benefit plan
available to employees who have completed one year of service and have attained
the age of twenty-one. All of the officers referred to in the Summary
Compensation Table above participate in the Plan. Trustees who are not also
employees of the Association and its subsidiaries (the "EUA System") are not
covered by the Plan. The benefits of participants become fully vested after five
years of service. Annual lifetime benefits are determined under formulas
applicable to all employees, regardless of position, and the amounts depend on
length of credited service and salaries prior to retirement. Benefits are equal
to one and six tenths percent of salaries (averaged over the four years
preceding retirement) for each year of credited service up to thirty-five,
reduced for each year by one and two tenths percent of the participants'
estimated age sixty-five Social Security benefit, plus seventy-five hundredths
percent of salaries for each year of credited service in excess of thirty-five
years up to the Plan maximum of forty years.
Any contributions to provide benefits under the Plan are made by the EUA
System in amounts determined by the Plan's actuaries to meet the funding
standards established by the Employee Retirement Income Security Act of 1974.
Any contributions are actuarially determined and cannot appropriately be
allocated to individual participants. The annual benefits shown in the table
below are straight life annuity amounts, without reduction for primary Social
Security benefits as described above. Federal law limits the annual benefits
payable from qualified pension plans in the form of a life annuity, after
reduction for Social Security benefits, to $115,641 plus adjustments for
increases in the cost of living. The number of years of service credited at
present under the Plan to Messrs. Pardus, Stevens, Hatch, Powderly and Burns are
thirty-one, twenty-eight, forty, fourteen and eighteen, respectively.
PENSION PLAN TABLE
<TABLE><CAPTION>
YEARS OF SERVICE
AVERAGE ANNUAL ----------------------------------------------------------------------------------
SALARY 15 20 25 30 35 40
- -------------------
<S> <C> <C> <C> <C> <C> <C>
$100,000................. $ 24,000 $ 32,000 $ 40,000 $ 48,000 $ 56,000 $ 59,750
200,000................. 48,000 64,000 80,000 96,000 112,000 119,500
300,000................. 72,000 96,000 120,000 144,000 168,000 179,250
400,000................. 96,000 128,000 160,000 192,000 224,000 239,000
500,000................. 120,000 160,000 200,000 240,000 280,000 298,750
600,000................. 144,000 192,000 240,000 288,000 336,000 358,500
</TABLE>
The Association has a non-qualified supplemental retirement plan for
certain officers of the Association and its subsidiaries. This plan provides for
the annual payment of supplemental retirement benefits equal to 25% of the
officer's base salary when he retires, for a period of fifteen (15) years
following the date of retirement. In addition, in the event of the death of the
participant prior to retirement an amount equal to 200% of the officer's base
salary at that time will be paid to his beneficiary. The Association, through
its subsidiary, EUA Service Corporation, maintains life insurance on the
participants to fund, in whole or in part, its future liabilities under the
plan, and that
6
<PAGE>
Corporation is the owner and beneficiary of all such life insurance. Any amounts
not covered by insurance will be paid out of other funds available to the EUA
System. In the event of a change in control of the Association, a trust fund
will be established by the Association to ensure the performance of its payment
obligations under the supplemental retirement plan.
The Association maintains a non-qualified, unfunded Retirement and Savings
Restoration Plan (the "Restoration Plan"). The purpose of the Restoration Plan
is to restore benefits under the qualified plans' formulas which can not be paid
from, or into, the qualified plan trusts due to federal limitations on either
earnings, contributions or benefits. Payments or contributions which exceed the
applicable federal limitations are made outside the qualified plans in the same
manner and under the same conditions as are applicable to benefits payable from,
or contributions payable to, the qualified plans. In the event of a change in
control of the Association, a trust fund will be established by the Association
to ensure the performance of its payment obligations under the Restoration Plan.
CHANGE-IN-CONTROL ARRANGEMENTS
Severance agreements with all executive officers of the Association provide
that an officer's rate of compensation, benefits, position, responsibilities and
other conditions of employment will not be reduced during the term of the
agreement, which is thirty-six months commencing upon the date on which a Change
in Control, as defined in the agreements, of the Association occurs. If within
thirty-six months after a Change in Control the officer's employment is
terminated for any reason other than Cause, as defined in the agreements, the
Association will, subject to certain limitations to comply with provisions of
the Internal Revenue Code, pay the officer within five business days a lump-sum
cash amount equal to three times the present value of such officer's annualized
total compensation, continue or vest certain fringe benefits and common share
grants, and reimburse legal fees and expenses incurred as a result of the
termination or to enforce the provisions of the severance agreement. If the
officer leaves the employ of the Association or a subsidiary following a
reduction in his position, compensation, responsibilities, authority or other
benefits existing prior to the Change in Control, or suffers a relocation of
regular employment of more than fifty miles, such departure will be deemed to be
a termination for reasons other than Cause.
COMPENSATION OF TRUSTEES
Each non-management Trustee of the Association receives, as a standard
arrangement, a retainer fee for all services as a Trustee in the amount of
$12,000 annually, with an additional $750 fee for each Trustees' or Committee
meeting attended. Upon leaving the Board, each non-management Trustee who has
attained the age of sixty and who has served as a member of the Board of
Trustees for at least ten years is entitled to an annual amount, equal to the
then current annual retainer paid to active Trustees, for as many full years as
that Trustee has served as a Trustee. In the event of a change in control of the
Association, a trust fund will be established by the Association to ensure the
performance of its payment obligations under this retirement plan.
REPORT OF THE COMPENSATION AND NOMINATING COMMITTEE
ON COMPENSATION OF EXECUTIVE OFFICERS
The compensation philosophy of the Board of Trustees' Compensation and
Nominating Committee (the "Committee") and the Association is to be competitive
with prevailing utility industry compensation norms when satisfactory results
are achieved and surpass market norms when exceptional results are reached.
Compensation of executive officers, including the Chief Executive Officer
("CEO"), is a mix of three components, base salary, annual cash incentives and
long-term incentives ("Stock Grants"). In recent years, the Association has
moved toward linking a greater percentage of compensation to the overall
performance of the Association through the use of annual cash incentives and
Stock Grants.
7
<PAGE>
BASE SALARY
The Committee, working with an independent compensation consultant,
annually reviews the base salary of the CEO and the four other executive
officers named in the Summary Compensation Table on page 5. Each executive
officer, including those named above, is assigned a salary range which is
established using compensation data for comparable executive officer positions
in other utilities. These other utilities: 1) generally have the same level of
annual revenue as the Association; 2) operate in generally the same geographic
area as the Association; and 3) have other characteristics similar to the
Association. None of the comparative utilities are included in the Standard &
Poor's 24 Electric Power Utility Index ("S&P Electric Utilities Index") because
their level of annual revenue is less than those utitilities included in that
Index.
Each salary range has a minimum amount, a position value (reasonably
equivalent to market value) and an excess amount which is 10% above the position
value. Base salary is limited to no more than the excess amount. The Committee
sets the base salaries for each of the executives listed in the Summary
Compensation Table based on factors such as overall performance of the
Association, observed individual performance, time in current position, existing
base salary relative to position value, and except for the CEO, input of the
CEO. Generally, the base salary of the CEO and the four other executive officers
approximates the averages for similar positions in the comparable utilities
described above.
ANNUAL CASH INCENTIVES
The Association has had an Annual Cash Incentive Plan since 1987. The 1993
version of the Incentive Plan applicable to executives, other than the CEO and
Chief Operating Officer ("COO"), contained two Performance Objectives which were
approved by the Committee in early 1993. One Objective measures Earnings Per
Average Common Share against a budgeted target and the other measures the Cost
of Service Per Customer against a peer group of 20 New England utilities. Each
Performance Objective represents 40% of the total objectives. The targets for
both Performance Objectives were significantly exceeded in 1993.
With respect to the peer group of 20 New England utilities, none are
included in the S&P Electric Utilities Index. The peer group used to measure the
Cost of Service Per Customer was selected because it includes virtually all of
the electric utilities located in the same geographic area as the Association
(New England).
The remaining 20% of the total Objective was discretionary. Each executive
had several individual goals which formed the primary basis for determining the
level of discretionary payments.
The Committee also considers and sets Annual Cash Incentive Awards to the
CEO and the COO. Approximately 40% of their 1993 Cash Incentive Award was
determined using the same Performance Objectives described above (Earnings Per
Average Common Share and Cost of Service Per Customer). An additional
Performance Objective of Total Return Versus the S&P Electric Utilities Index
was also utilized in 1993 for the CEO and COO. This Objective equaled 20% of the
award. The Association's Total Return for 1993 exceeded the Average for the S&P
Electric Utilities Index.
The remaining 40% in Cash Incentive Awards was discretionary. In
determining the level of discretionary awards to the CEO and COO, significant
weight was given to performance measured against a series of goals which were
selected on a basis designed to measure financial and operating performance.
Goals for 1993 related to Growth in Common Share Dividends, Return on Average
Common Equity, Earnings Contributions from Diversified Activities, Reduction in
Cost of Debt, Capitalization and other Qualitative measures. In all cases, the
goals were met or exceeded. The 1993 Cash Incentive Awards to the CEO and COO
are reflected in the Summary Compensation Table on page 5 under "Annual
Compensation--Incentive Bonus".
8
<PAGE>
LONG-TERM INCENTIVES (STOCK PLAN)
The Association established a restricted stock grant plan in 1989 which, as
amended since then, is now the Eastern Utilities Associates Restricted Stock
Plan. The purpose of the plan is to assist the Association in securing,
retaining and motivating key executives and to recognize their efforts on behalf
of the Association through awards of common shares of the Association. Such
grants may be awarded every third year and the currently outstanding awards vest
on the fifth anniversary of the date of the grant if the executive has continued
in the employment of the Association through that date. No awards were made in
1993 to any of the executives listed in the Summary Compensation Table on page
5.
COMPENSATION AND
NOMINATING COMMITTEE
Russell A. Boss Margaret M. Stapleton
Peter B. Freeman W. Nicholas Thorndike
CORPORATE PERFORMANCE GRAPH
The following table compares total shareholder returns over the last five
fiscal years to the Standard & Poors 500 Stock Index ("S&P 500") and the
Standard & Poors 24 Electric Power Utility Index ("S&P Electric Utilities").
Total return values for the S&P 500, S&P Electric Utilities and Eastern
Utilities Associates were calculated based on cumulative total return values
assuming reinvestment of dividends.
[Graph to Follow]
9
<PAGE>
THE FOREGOING REPORT OF THE COMMITTEE AND THE CORPORATE PERFORMANCE GRAPH
THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE SOLICITING
MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF 1934 OR INCORPORATED BY
REFERENCE IN ANY DOCUMENT SO FILED.
COMMITTEES
In addition to eleven meetings of the Trustees, meetings were held in 1993
of each of the four standing Committees of the Association: Audit Committee
(three); Compensation and Nominating Committee (two); Finance Committee (four);
and Pension Trust Committee (three). Each of the Trustees attended at least 75%
of the total number of meetings of the Trustees and of Committees on which he or
she served. All members of the Committees are non-management Trustees; the Chief
Executive Officer of the Association serves as Secretary of each Committee.
The general function of each standing Committee is outlined below.
The Audit Committee recommends the selection or retention of independent
auditors, consults with them with respect to the plan of audit, reviews with
them their audit report and consults with them and with the Association's
internal audit staff as to the adequacy of internal controls.
The Finance Committee monitors and reviews financial matters, including
financial forecasts. It makes recommendations to the Trustees with respect to
changes in dividend policy, the capital structures of the Association and of its
subsidiaries, and other financial issues.
The Pension Trust Committee reviews recommendations as to amendments to the
Retirement Plan and the Employees' Savings Plan, monitors the performance of the
investment managers for each plan's trust fund, determines overall objectives of
the trust funds, reviews the annual actuarial report, reviews the
appropriateness of certain actuarial assumptions and makes recommendations to
the Trustees.
The Compensation and Nominating Committee reviews the compensation of the
Chairman, the President, the Executive Vice Presidents and the Comptroller and
the amount of fees to be paid to Trustees, monitors the Executive Incentive Plan
and the Restricted Stock Plan, considers candidates (including candidates
recommended by Shareholders) to fill vacancies among the Trustees, reviews
membership on Committees of the Trustees and makes recommendations to the
Trustees. Shareholder recommendations should be submitted in writing to the
Chairman or the Secretary of the Association. This Committee would recommend a
successor to the Chief Executive Officer if that office became vacant and would
also deliberate on any plan in which officers or Trustees as a class would be
eligible to receive any additional compensation or related benefit such as
deferred compensation or stock options. All members are non-employee Trustees
and none has any direct or indirect material interest in or relationship with
the Association outside of his or her position as Trustee.
AUDITORS
Coopers & Lybrand, Certified Public Accountants, are the Association's
auditors. Audit services of Coopers & Lybrand for 1993 included the examination,
reporting and certification of the consolidated financial statements of the
Association contained in the Annual Report to Shareholders and services related
to certain filings with the Securities and Exchange Commission.
Representatives of Coopers & Lybrand will be present at the Annual Meeting,
will have an opportunity to make a statement, and will be available to answer
appropriate questions.
10
<PAGE>
OTHER MATTERS
Management does not intend to bring before the meeting any matters other
than those specified and has no knowledge of any other matters which may be
brought up by other persons. However, if any other matters not now known
properly come before the meeting or any adjournment thereof, the persons named
in the enclosed form of proxy, including any substitutes, are expected to vote
said proxy in accordance with their judgment on such matters.
EXPENSES
The expenses in connection with the solicitation of the enclosed form of
proxy will be borne by the Association. In order to obtain the requisite quorum
at the Annual Meeting, it may be necessary to solicit proxies by telephone,
telegraph or personal interview. The Association does not expect to pay any
compensation for the solicitation of proxies, but will pay brokers and other
persons holding shares in their names or in the names of nominees their
expenses, nominal in amount, for sending proxy material to principals and
obtaining their proxies.
SHAREHOLDER PROPOSALS
The 1995 Annual Meeting of Shareholders is tentatively scheduled to be held
on or about May 15, 1995. Proposals of Shareholders intended to be presented at
the meeting must be received by the Association on or before November 28, 1994.
THE ASSOCIATION WILL FURNISH WITHOUT CHARGE A COPY OF ITS ANNUAL REPORT ON FORM
10-K, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, REQUIRED TO BE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION FOR FISCAL YEAR 1993 UPON WRITTEN
REQUEST TO CLIFFORD J. HEBERT, JR., TREASURER, EASTERN UTILITIES ASSOCIATES,
P.O. BOX 2333, BOSTON, MASSACHUSETTS 02107.
11
<PAGE>
PROXY
-----
EASTERN UTILITIES ASSOCIATES
This Proxy is Solicited on Behalf of the Trustees
The undersigned hereby constitutes and appoints Russell A.
Boss, Donald G. Pardus and John R. Stevens, or any one or more of
them, as Attorney, with full power of substitution and
revocation, to appear and vote all common shares of Eastern
Utilities Associates standing in the name of the undersigned at
the close of business on March 18, 1994, with all the powers
which the undersigned would posess if then and there present, at
the Annual Meeting of the Shareholders of the Association to be
held in the Enterprise Room on the 5th floor of the State Street
Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts, on Monday, May 16, 1994 at 9:30 A.M., and at any
and all adjournments thereof, and especially (but without
limiting the general authorization hereby given) to vote at said
Annual Meeting (1) to elect Trustees, as provided in the Proxy
Statement and in accordance with any specification made on the
back hereof, and (2) with discretionary authority with respect to
any other matters which may properly come before the meeting,
hereby revoking any and all proxies heretofore given by the
undersigned with respect to such shares.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
[SEE REVERSE SIDE]
<PAGE>
[X] Please mark votes as in this example.
---
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. If no direction
is made, this proxy will be voted FOR the election of all of the
nominees listed below.
1. Election of Trustees.
Nominees: R.A. Boss, P.J. Choquette, Jr., P.S. Damon,
J.F.G. Eichorn, Jr., P.B. Freeman, L.A. Liebenow, W.W.
Marple, Jr., D.G. Pardus, M.M. Stapleton, J.R. Stevens, W.N.
Thorndike
FOR all nominees
[------]
WITHHELD from all nominees
[------]
------------------------
Withhold vote from the nominees that I/We have written on the
above line, or cumulate votes as I/We have instructed on the
above line.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
Please sign exactly as your name appears. When shares are held
by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
[----]
Signature: ___________________________ Date _________________
Signature: ___________________________ Date _________________
