<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
EASTERN UTILITIES ASSOCIATES
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
EASTERN UTILITIES ASSOCIATES
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LETTERHEAD OF EASTERN UTILITIES APPEARS HERE]
March 27, 1995
To Our Shareholders:
We extend our personal invitation to join us at the Annual Meeting of
Shareholders on May 15, 1995.
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>
[LETTERHEAD OF EASTERN UTILITIES APPEARS HERE]
NOTICE OF ANNUAL MEETING
March 27, 1995
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 15, 1995, at 9:30 a.m., 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 17, 1995 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 15, 1995
March 27, 1995
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 15, 1995 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 20,061,508 common shares, the holders of which are
entitled, for each share held of record at the close of business on March 17,
1995, 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 affect vote totals for that nominee. Broker non-votes will
not affect 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 Jacek Makowski, elected to their
present term of office at the Annual Meeting of Shareholders held on May 16,
1994. Mr. Makowski was elected by the Trustees on February 21, 1995, to be
effective March 22, 1995, to fill the vacancy caused by the retirement of John
F.G. Eichorn, Jr. Mr. Makowski has been Chairman and Chief Executive Officer of
J. Makowski Company, Inc., for more than five years.
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; 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
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.
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, Data
General Corporation, Providence Journal Company and Bradley Real Estate Inc.
and a Trustee of the Putnam Funds. In February 1994, Mr. Thorndike accepted
appointment as a successor trustee of private trusts in which he has no
beneficial interest, and concurrently became, serving until October 1994,
Chairman of the Board of two privately owned corporations controlled by such
trusts that filed voluntary petitions for relief under chapter 11 of the United
States Bankruptcy Code in August 1994.
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 6,
Name 1994 Principal Occupation Since 1995(a)
<S> <C> <C> <C> <C>
Russell A. Boss (A,P) 56 President and Chief Executive Officer, 1989 1,000(b)
A.T. Cross Company (writing
instruments manufacturer), Lincoln
Rhode Island
Richard M. Burns 57 Comptroller of the Association -- 1,963(c)
Paul J. Choquette, Jr. (A,P) 56 President of Gilbane Building 1992 805
Company (building construction),
Providence, Rhode Island
Peter S. Damon, (F,P) 59 President and Chief Executive Officer 1991 650(d)
Bank of Newport, Newport Rhode
Island
Peter B. Freeman (A,C) 62 Corporate Director and Trustee, 1979 2,344
Providence, Rhode Island
Arthur A. Hatch 64 Executive Vice President of the -- 7,740(c)
Association
Larry A. Liebenow (A,F) 51 President and Chief Executive Officer 1994 1,000
of Quaker Fabric Corporation
(upholstery manufacturer), Fall
River, Massachusetts
Wesley W. Marple. Jr. (C,P) 62 Professor of Business Administration 1976 1,885(e)
Northeastern University, Boston,
Massachusetts
Jacek Makowski (F,P) 64 Chairman and Chief Executive 1995 --
Officer of J. Makowski Company,
Inc., (power supply ventures),
Boston, Massachusetts
Donald G. Pardus 54 Chairman of the Board of Trustees 1982 23,558(c)
and Chief Executive Officer of the
Association
Robert G. Powderly 47 Executive Vice President of the -- 5,936(c)
Association
Margaret M. Stapleton (C,F) 58 Vice President, John Hancock Mutual 1977 1,238
Life Insurance Company, Boston,
Massachusetts
John R. Stevens 54 President and Chief Operating Officer 1990 13,372(c)
of the Association
W. Nicholas Thorndike (C,F) 61 Corporate Director and Trustee, 1991 2,042
Brookline, Massachusetts
Trustees and executive
officers as a group..... 70,266(f)
</TABLE>
- ----------------
(A), (C), (F), and (P) indicate member of Audit, Compensation and Nominating,
Finance or Pension Trust Committees, respectively.
(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 221, 2,139, 4,065, 1,241 and 1,336
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, 4,083, 10,307, 3,919 and 8,098 shares held
under the Eastern Utilities Associates Restricted Stock Plan by Messrs.
Burns, Hatch, Pardus, Powderly and Stevens, respectively, as to which
(Footnotes continued on following page)
4
<PAGE>
(Footnotes continued from preceding page)
each has voting power. Also included are 55, 1,257, 1,515 and 634 shares
individually owned by Messrs. Burns, Hatch, Pardus and Powderly.
(d) Jointly owned with spouse.
(e) In addition, Mr. Marple's spouse owns 197 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.
The Association was informed by statements filed on Schedule 13G and 13D
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, 1994.
<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).............. 1,280,000 6.4
333 South Hope Street
Los Angeles, CA 90071
Ballantine Capital Management,
Inc. ......................... 1,134,600 5.7
10 Avon Meadow Lane
Avon, CT 06001
</TABLE>
- -------------------
(1) Sole dispositive power; no power to direct the vote of the shares listed.
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 1992, 1993 and 1994, to each of the five highest
paid executive officers of the Association whose aggregate cash compensation for
1994 exceeded $100,000.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------------------------------- ------------
Other Restricted
Fiscal Incentive Annual Stock All Other
Name and Principal Position Year Salary Bonus Compensation(1) Awards(2) Compensation(3)
- --------------------------- ------ ------ --------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Donald G. Pardus
Chairman and Chief Executive
Officer................................. 1994 $390,025 $100,000 $ 13,083 $ -- $9,750
1993 375,025 137,500 8,444 -- 8,438
1992 350,025 100,000 7,795 210,000 7,000
John R. Stevens
President and Chief Operating
Officer................................. 1994 $300,025 $ 80,000 $ 13,475 $ -- $7,500
1993 275,025 107,500 12,071 -- 6,188
1992 253,025 90,000 10,441 165,000 5,060
Arthur A. Hatch
Executive Vice President................ 1994 $213,025 $ 50,872 $ 12,194 $ -- $5,325
1993 198,025 56,677 9,132 -- 4,455
1992 186,025 35,433 6,157 82,376 3,720
Robert G. Powderly
Executive Vice President................ 1994 $156,025 $ 40,999 $ 8,350 $ -- $3,900
1993 143,025 44,559 8,710 -- 3,218
1992 122,825 24,194 9,241 66,606 2,456
Richard M. Burns
Comptroller............................. 1994 $130,025 $ 22,005 $ -- $ -- $3,245
1993 125,025 25,621 -- -- 2,188
1992 117,125 35,000(4) -- 34,373 1,186
(Footnotes on following page)
</TABLE>
5
<PAGE>
(Footnotes for preceding page.)
- -----------------------------
(1) Represents amount 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 held under the Association's Restricted
Stock Plan to the officers listed above are as follows; Mr. Pardus, 10,307
shares, $210,000; Mr. Stevens, 8,098 shares. $165,000; Mr. Hatch, 4,083
shares, $82,376; 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 $118,800 plus adjustments for
increases in the cost of living. The number of years of service credited at
present under the Plan to Mssrs. Pardus, Stevens, Hatch, Powderly and Burns are
thirty-two, twenty-nine, forty, fifteen and nineteen, respectively.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Average Annual
Salary Years of Service
- ------------------ ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
15 20 25 30 35 40
$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 Corporation is the owner
6
<PAGE>
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
$14,000 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 five 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.
(Since the total compensation for any executive is still significantly below the
$1 million threshold at which tax deductions are limited under the Internal
Revenue Code, the Committee has not had to address issues relative thereto.)
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 24 Electric Utilities Index")
because their level of annual revenue is less than those utilities 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. Although no
specific measure of corporate performance is used in determining base salary,
the Committee sets the base salaries for each of the officers listed in the
Summary Compensation Table after considering all of the following factors: 1)
the financial and operational performance of the Association; 2) observed
individual performance; 3) time in current position; 4) existing base salary
relative to position value; and, 5) except for the CEO, input of the CEO.
Generally, the base salary of the CEO and the four other officers approximates
the averages for similar positions in the comparable utilities described above.
Salary increases for 1994 were based on the five factors outlined above.
Annual Cash Incentives
The Association has had an Annual Cash Incentive Plan since 1987. The 1994
version of the Plan applicable to executives, other than the CEO and COO,
contained two Performance Objectives which were approved by the Committee in
early 1994. One Objective measures Earnings Per Average Common Shares against a
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 exceeded
in 1994.
With respect to the peer group of 20 New England utilities, none are
included in the S&P 24 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 officer
had several individual goals which formed the primary basis for determining the
level of their individual awards.
The Committee also considers and sets Annual Cash Incentive Awards to the
CEO and the COO. A portion of their 1994 Cash Incentive Award was determined
using the same Performance Objectives described above (Earnings Per Average
Common Share (20% weight) and Cost of Service Per Customer (20% weight). An
additional Performance Objective of Total Return Versus the S&P 24 Electric
Utilities Index (20% weight) was also utilized for the CEO and COO. The
targets for the Earnings Per Average Common Share and Cost of Service Per
Customer were exceeded in 1994. The threshold for Total Return Versus the S&P
24 Electric Utilities Index was not met and no award was paid for that
Objective.
The remaining 40% in Cash Incentive Awards is discretionary. In
determining the level of discretionary awards to the CEO and COO, significant
weight was given to performance measured against a series of seven goals which
were designed to measure financial and operating performance. Goals for 1994
related to Return on Average Common Equity, Price/Earnings Ratio, Earnings
Contribution from EUA Cogenex, and four Qualitative measures. Five of the seven
goals were met in 1994. Goals with respect to Price/Earnings Ratio and Earnings
Contribution from EUA Cogenex were not met. In all other cases, the goals were
met or exceeded. The 1994 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
1994 to any of the executives listed in the Summary Compensation Table on
page 5.
COMPENSATION AND
NOMINATING COMMITTEE
Peter B. Freeman Margaret M. Stapleton
Wesley W. Marple, Jr. 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 24 Electric Utilities").
Total return values for the S&P 500, S&P 24 Electric Utilities and Eastern
Utilities Associated were calculated based on cumulative total return values
assuming reinvestment of dividends.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
S & P
Eastern 500
Measurement period Utils S & P ELECTRIC
(Fiscal Year Covered) Assoc. 500 COMPANIES
- --------------------- -------- -------- ---------
<S> <C> <C> <C>
Measurement PT -
12/89 $ 100 $ 100 $ 100
FYE 12/90 $ 62 $ 97 $ 103
FYE 12/91 $ 57 $ 126 $ 134
FYE 12/92 $ 73 $ 136 $ 141
FYE 12/93 $ 87 $ 150 $ 159
FYE 12/94 $ 73 $ 152 $ 138
</TABLE>
<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 1994
of each of the four standing Committees of the Association: Audit Committee
(two); Compensation and Nominating Committee (two); Finance Committee (four);
and Pension Trust Committee (four). 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 L.L.P., Certified Public Accountants, are the
Association's auditors. Audit services of Coopers & Lybrand L.L.P. for 1994
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 L.L.P. 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 of nominees their expenses, nominal in
amount, for sending proxy material to principals and obtaining their proxies.
SHAREHOLDER PROPOSALS
The 1996 Annual Meeting of Shareholders is tentatively scheduled to be held
on or about May 14, 1996. Proposals of Shareholders intended to be presented at
the meeting must be received by the Association on or before November 27, 1995.
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 1994 UPON WRITTEN
REQUEST TO CLIFFORD J. HEBERT, JR., TREASURER, EASTERN UTILITIES ASSOCIATES,
P.O. BOX 2333, BOSTON, MASSACHUSETTS 02107.
11
<PAGE>
EASTERN UTILITIES ASSOCIATES
This Proxy is Solicited on Behalf of the Trustees
P
R The undersigned hereby constitutes and appoints Peter B. Freeman,
O Donald G. Pardus and John R. Stevens, or any one or more of them, as
X Attorney, with full power of substitution and revocation, to appear and
Y vote all common shares of Eastern Utilities Associates standing in the name
of the undersigned at the close of business on March 17, 1995, with all the
powers which the undersigned would possess 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 15,
1995 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.
-----------
SEE REVERSE
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE) SIDE
-----------
[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. Makowski, P.B. Freeman,
L.A. Liebenow, W.W. Marple, Jr., D.G. Pardus, PLEASE MARK, SIGN, DATE AND
M.M. Stapleton, J.R. Stevens, W.N. Thorndike RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
FOR WITHHELD
all [_] [_] from all
nominees nominees 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
Withhold vote from the nominees that authorized officer. If a
I/We have written on the above line, partnership, please sign in
or cumulate votes as I/We have instructed partnership name by authorized
on the above line person.
MARK HERE [_]
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
Signature: Date
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Signature: Date
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