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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
FLORIDA PUBLIC UTILITIES COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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FLORIDA PUBLIC UTILITIES COMPANY
401 SOUTH DIXIE HIGHWAY
WEST PALM BEACH, FLORIDA 33401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 21, 1998
March 4, 1998
To the Common Stockholders of
FLORIDA PUBLIC UTILITIES COMPANY:
Notice is hereby given that the Annual Meeting of Stockholders of Florida
Public Utilities Company will be held at the Corporate Headquarters,401 South
Dixie Highway, West Palm Beach, Florida 33401, on Tuesday, April 21, 1998, at
11:00 A.M., local time, for the following purposes:
1. To elect two directors;
2. To consider and vote upon a proposal to approve and adopt an
amendment to the Company's Certificate of Reincorporation, to
increase the number of authorized shares of Common Stock from
2,000,000 to 3,500,000 shares;
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Further information regarding the business to be transacted at the
meeting is described in the accompanying Proxy Statement, which is hereby made
a part of this notice.
Only the holders of record of common stock at the close of business on
February 23, 1998 will be entitled to vote at the meeting or any adjournment
thereof. Whether or not you plan to attend the meeting, you are respectfully
requested to read the accompanying Proxy Statement and then date, sign and
return the enclosed proxy.
By order of the Board of Directors,
Jack R. Brown
Treasurer and Secretary
FLORIDA PUBLIC UTILITIES COMPANY
401 SOUTH DIXIE HIGHWAY
WEST PALM BEACH, FLORIDA 33401
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 21, 1998
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March 4, 1998
PROXY AND SOLICITATION
The accompanying proxy is solicited on behalf of the Board of Directors
of Florida Public Utilities Company (the "Company") for use at the Annual
Meeting of Stockholders of the Company (the "Annual Meeting") to be held on
Tuesday, April 21, 1998, and at any adjournment thereof. A stockholder who
gives a proxy retains the right to revoke it any time before it is voted and
such revocation is not limited or subject to compliance with any formal
procedure. A proxy when given and not so revoked will be voted. This Proxy
Statement and the accompanying proxy are being mailed to stockholders commencing
on or about March 4, 1998.
The cost of soliciting proxies is to be borne by the Company. The Company
has retained Kissel-Blake Inc., 110 Wall Street, New York, New York 10005 to
assist in the solicitation of proxies at an estimated cost of $4,000 plus
expenses. The Company will, upon request, pay brokers and other persons holding
stock in their names or in the names of nominees their expenses for sending
proxy material to principals and obtaining their proxies. In addition to the
solicitation of proxies by mail, proxies may be solicited by personal interview,
telephone or telegram by certain of the Company's employees without compensation
therefor.
STOCK OUTSTANDING AND VOTING RIGHTS
On February 23, 1998, the Company had outstanding 1,492,902 shares of
common stock (exclusive of 13,749 shares held of record by its wholly-owned
subsidiary, Flo-Gas Corporation, and 89,460 shares held of record as treasury
stock, none of which are entitled to vote), being the only class of stock
entitled to vote, the holders thereof being entitled to one vote for each share
held. Only stockholders of record at the close of business on February 23,
1998, the record date, will be entitled to vote at the Annual Meeting or any
adjournment thereof. Assuming a quorum is present, either in person or by
proxy, the affirmative vote of the holders of a majority of the votes present or
represented at the Annual Meeting is required for election of directors and the
proposal to amend the Certificate of Reincorporation. Therefore, any shares of
common stock which are not voted on these matters at the Annual Meeting, whether
by abstention, broker non-vote or otherwise, will have no effect on the election
of directors and the proposal to amend the Certificate of Reincorporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following are known to the Company to be the beneficial owners of
more than five percent of the Company's Common Stock:
Amount and Nature Percent
Title of Beneficial of
of Class Name of Beneficial Owner Ownership Class
-------- -------------------------------- ----------------- -------
Common Essex & Company 156,777 Trusts(1) 10.5%
First Union Corporation
1200 First Union Plaza
Charlotte, North Carolina 28288
Common Robert L. Terry 85,500 Direct 5.7%
401 South Dixie Highway
West Palm Beach, Florida 33401
Common Atlee M. Kohl 101,100 Trusts(2) 6.8%
18333 Preston Road #460
Dallas, Texas 75252
Common Chesapeake Utilities Corporation 109,232 Direct 7.3%
861 Silverlake Boulevard
Cannon Building
Dover, Delaware 19901
--------
(1) Robert L. Terry, a director of the Company, is Co-Trustee for trust
accounts established under the wills of his parents and shares voting and
dispositive powers for this stock.
(2) Atlee M. Kohl is deemed to be the beneficial owner and shares voting and
dispositive powers for 38,100 shares, 30,000 shares, 30,000 shares and
3,000 shares owned by Woodland Investment Company, Nicole Kohl Gift
Trust, Woodland Investment Trust and the Nicole F and Atlee Kohl Family
Foundation, respectively.
1. NOMINEES AND CONTINUING DIRECTORS
Two directors are to be elected for terms expiring at the Annual Meeting
in 2001, or until their respective successors are duly elected and qualified.
There are no arrangements or understandings between any director and any other
person pursuant to which the director was elected.
The shares represented by the proxies which are executed and returned
will be voted at the Annual Meeting for the election, as directors, of the
nominees named in the table set forth below unless authority to vote for the
nominees is expressly withheld.
Should any of the nominees become unavailable for any reason (which is
not anticipated), the proxies (except for those marked to the contrary) may be
voted for such other person or persons as may be selected by the Board of
Directors of the Company.
As of February 23, 1998, the nominees for directors and directors whose
terms of office as directors will continue after the Annual Meeting beneficially
owned stock of the Company in the amounts set forth opposite their names (such
ownership being as reported by these individuals to the Company.
Securities Owned
Nominee or Identity of Group, First Shares of Common Stock
Principal Occupation for Became a Beneficial Percent
Last Five Years Age Director Ownership of Class
- - ------------------------------ --- -------- ---------- --------
TO BE ELECTED FOR TERMS ENDING IN 2001
Franklin C. Cressman(3)(4) 64 1981 11,751 Less than 1%
Chairman of the Board since
May 1997 and Chief Executive
Officer of the Company
Richard C. Hitchins (1) 52 1995 200 Less than 1%
President of R.C. Hitchins & Co.,P.A.,
a Florida CPA firm
TO CONTINUE IN OFFICE UNTIL 2000
Daniel Downey(1)(2)(3)(5) 75 1974 400 Less than 1%
Partner in the Palm Beach,
Florida law firm of Downey
& Downey, P.A.
John T. English 54 1994 3,457 Less than 1%
President and Chief Operating
Officer of the Company since May
1997; Senior Vice President January
1993 to April 1997
Robert L. Terry(3)(6)(7) 78 1952 85,500 5.7%
Chairman of the Executive
Committee of the Company
TO CONTINUE IN OFFICE UNTIL 1999
E. James Carr, Jr. (1)(2) 71 1990 400 Less than 1%
Retired business executive
Gordon O. Jerauld (2) 76 1969 9,732 Less than 1%
Retired utility executive
In addition to the directors named above, the following executive
officers of the Company individually and beneficially owned the shares of common
stock as set forth opposite their respective names.
SHARES
NAME TITLE BENEFICIALLY OWNED
----------------- ------------------------ ------------------
Jack R. Brown Treasurer and Secretary 2,633
Charles L. Stein Senior Vice President 1,289
Darryl L. Troy Vice President 2,253
All directors and executive officers as a group (10 individuals)
beneficially owned 117,615 shares (7.9%) of common stock of the Company.
NOTES:
(1) Member of Audit Committee: Daniel Downey, Chairman.
(2) Member of Compensation Committee: E. James Carr, Jr., Chairman.
(3) Member of Executive Committee: Robert L. Terry, Chairman.
(4) In addition, Franklin C. Cressman's wife owns 1,043 shares of
common stock as to which Mr. Cressman disclaims any beneficial
ownership.
(5) In addition, Daniel Downey's wife owns 2,669 shares of common stock
as to which Mr. Downey disclaims any beneficial ownership.
(6) In addition, Robert L. Terry's wife owns 3,260 shares of common
stock as to which Mr. Terry disclaims any beneficial ownership.
(7) Robert L. Terry may be considered a control person.
All of the above are also directors of Flo-Gas Corporation, a
wholly-owned subsidiary, of which Mr. Cressman is the Chairman of the Board and
Chief Executive Officer.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires each of the Company's directors and executive officers, and any
beneficial owner of more than 10% of the Company's common stock, to file with
the Securities and Exchange Commission (the "SEC") initial reports of
beneficial ownership of the Company's common stock and reports of changes in
such beneficial ownership. Such persons are also required by SEC regulations
to furnish the Company with copies of such reports. To the Company's knowledge,
based solely on its review of the copies of such reports furnished to the
Company and on the written representations made by such persons that no other
reports were required, during the fiscal year ending December 31, 1997, no
director, officer or 10% beneficial owner failed to file on a timely basis the
reports required by Section 16(a).
BOARD OF DIRECTORS AND COMMITTEES
During 1997 the directors held four meetings. All of the directors
attended at least 75% of the meetings of the Board of Directors and the
committees on which they served.
Each director who is not also an officer or employee of the Company
receives an annual retainer in the form of 100 shares of the Company's common
stock and is paid $300 and $100 in cash for attendance at each meeting of the
Boards of Directors of the Company and of Flo-Gas Corporation, a wholly-owned
subsidiary, respectively, and an annual fee of $300 in cash for each
board-constituted committee on which he serves, plus reasonable expenses.
Directors who are employees of the Company receive no compensation for attending
board meetings or serving on committees.
Members of the Board of Directors are elected to various committees. The
present committees of the Board and their respective chairmen are: Executive
Committee, Robert L. Terry; Audit Committee, Daniel Downey; and Compensation
Committee, E. James Carr, Jr. The Company does not have a Nominating Committee.
During 1997, the Audit Committee and the Compensation Committee each met one
time. The Executive Committee held no meetings in 1997.
The functions of the Audit Committee are to: (1) recommend the selection,
retention and termination of the Company's external auditors; (2) approve in
advance the types of professional services for which the Company would retain
the external auditors and consider whether any such service would impair the
independence of the external auditors; (3) review the overall scope of the audit
with external auditors, the financial statements and external audit results and
recommendations of the independent audit with management; and (4) provide
whatever additional function it deems necessary in connection with the internal
accounting and reporting practices of the Company.
The functions of the Compensation Committee are to: (1) develop and
define a company executive compensation policy; (2) review and recommend to the
Board of Directors adjustments to the salaries of elected officers of the
Company; and (3) perform such related duties as may be requested by the Board.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to the Company's
chief executive officer during the year ended December 31, 1997 and each of the
other most highly compensated executive officers whose total annual compensation
exceeded $100,000 for 1997.
SUMMARY COMPENSATION TABLE
Name and
Principal Position Year Salary
------------------------ ---- --------
Franklin C. Cressman 1997 $153,036
Chairman of the Board and 1996 148,937
Chief Executive Officer 1995 144,696
John T. English 1997 $106,973
President and Chief 1996 97,344
Operating Officer 1995 93,150
Jack R. Brown 1997 $101,244
Treasurer and Secretary 1996 97,344
1995 93,150
The Company had no stock option plan, bonus plan, long-term incentive
plan or any other form of executive compensation during the three-year period
ended December 31, 1997.
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
On June 1, 1997 the Company entered into severance agreements with all
executive officers, except Robert L. Terry, under which payments will be made
under certain circumstances following a change in control of the Company. A
change in control means in general the acquisition by any person of 20% or more
of the Common Stock or the change in a majority of the directors. The
agreements provide that the assignment to the officer of any duties not
consistent with his present position or a change in job title or office, or any
failure to re-elect the officer to any position held on the date of the change
of control; or a reduction in salary or the discontinuance of any bonus or
specific stock option plans in effect on the date of the change of control; or
a change in geographical location which results in a relocation of the officer's
position to some place in excess of fifty miles distance from its present
location, or which requires travel in excess of the officer's current normal
business travel, that the Company will make a lump sum severance payment to the
officer of approximately three times the annual salary and taxable fringe
benefits. Each agreement also provides that if it becomes necessary for the
officer to incur legal expenses to enforce his rights under the agreement, the
Company will reimburse the officer an amount equal to twice the total amount of
all legal expenses incurred by the officer to successfully enforce his rights
under the agreement. These agreements are effective for an initial term of
three years; two years with respect to the agreement with Franklin C.
Cressman. All agreements provide that in the event of a change in control,
the term shall be automatically extended for three years, commencing on the
effective date of the change of control.
COMPENSATION COMMITTEE REPORT
The Company's executive compensation philosophy is to establish and
maintain appropriate executive compensation levels comparable to the
compensation practices of other regulated utilities of similar size based on
annual revenues and number of employees. The philosophy is essentially to
maintain compensation near the average for the comparable survey group. The
Compensation Committee establishes and administers the Company's executive
compensation program to achieve objectives which support the long-term success
of the Company. These objectives include the ability to attract and retain high
caliber executives, to motivate and reward executive and company performance
and to align the interests of executives with those of the Company's
stockholders. Executive compensation has been, and will continue to be, tax
deductible.
The Compensation Committee is comprised of three members appointed by
the Board of Directors. Two of the members of the Compensation Committee are
independent directors who are not, and have not been, employees of the Company.
The Compensation Committee periodically directs an independent consulting firm
to perform a study of executive compensation levels in order to establish salary
grade ranges. The study is based on comparable positions in companies from the
small electric, gas and combination utility sector selected by the consultant.
The comparable company group is not used as an index for the corporate
performance graph included as a part of this proxy statement.
Annually, the Chief Executive Officer informs the Committee as to
management proposals for remuneration of the Company's executive officers other
than that of the Chief Executive Officer. Factors considered by the Chief
Executive Officer are typically subjective and include his perception of the
individual's performance, decision-making responsibility, experience and
leadership skills. Performance is considered the single most important factor
and half of the weight is placed in this area. The remaining factors are
weighted equally in the total measurement. The recommendations of the
Compensation Committee are reviewed for approval.
The Compensation Committee reviews the Chief Executive Officer's annual
recommendations on executive compensation, compares them to the established
salary ranges, makes adjustments, if any, and recommends the adjusted
compensation levels to the Board of Directors for approval. The recommendations
of the Committee are reviewed and approved by the Board of Directors, except
that the Chief Executive Officer and other directors who are also officers or
employees of the Company do not attend that portion of the Board meeting at
which their compensation is discussed, nor do they participate in the review or
vote on the approval of their compensation.
The Company's executive compensation program contains no incentive
components such as stock options, bonus plans, excess pension awards or
long-term incentive plans. All executives are covered by the Company's non-
contributory defined benefit pension plan, as set forth in another section of
this proxy statement, and are eligible to participate in the Company's employee
stock purchase plan according to the terms and conditions available to all
employees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Board of Director's Compensation Committee are E.
James Carr, Jr. (Chairman), Daniel Downey and Gordon O. Jerauld. Mr. Jerauld
was a Senior Vice President of the Company when he retired in 1991. Mr. Downey
is a partner in the Palm Beach, Florida law firm of Downey & Downey, P.A., whose
firm occasionally renders various legal services to the Company in the ordinary
course of its business. In addition, no executive officer or director serves on
the Board of Directors or Compensation Committee of another company where an
executive officer or director of the other company also serves on the Board of
Directors or Compensation Committee of the Company.
CORPORATE PERFORMANCE GRAPH
The following graph compares total shareholder returns over the last five
calendar years to the Standard & Poor's 500 Stock Index (S&P 500) and Standard
& Poor's Utilities Index (S&P Utilities). Total return values for Florida Public
Utilities Company, the S&P 500, S&P Utilities were calculated based on
cumulative total return values assuming reinvestment of dividends. The
shareholder return shown on the graph below is not necessarily indicative of
future performance.
Comparison of Five Year Cumulative Total Shareholders Return
Among Florida Public Utilities Company, S&P 500 and S&P Utilities
Florida S&P
Public 500 S&P
Measurement Period Utilities Stock Utilities
(Fiscal Year Covered) Company Index Index
--------------------- ---------- -------- ---------
1992 $100.00 $100.00 $100.00
1993 100.24 110.06 114.44
1994 92.29 111.51 105.33
1995 115.03 153.39 149.58
1996 133.39 188.59 154.25
1997 167.35 251.48 192.28
EMPLOYEE STOCK PURCHASE PLAN
This Plan was approved by the stockholders on April 19, 1966. It
provides that eligible employees of the Company who are participants in the
Plan may save regularly by payroll deductions and twice each year use these
savings to purchase common stock of the Company at a price of 90% of the
closing price on the American Stock Exchange on the date such option is
granted, or on the last preceding day such quotation is available. The
maximum allowable amount of payroll deduction is 15% of the employee's
regular pay. In 1997, cash credits for purchases under the Plan amounted to
$1,806 for Franklin C. Cressman. Future cash credits will be based on the
number of shares purchased, option price, fair market value and whether the
Plan continues in effect.
RETIREMENT PLAN
The Company maintains a defined benefit Pension Plan for substantially
all employees. Plan benefits are based on an employee's years of credited
service and average Plan compensation during his highest three consecutive years
in his last ten years of service. The following table shows estimated annual
benefits payable upon normal retirement to persons in specified remuneration and
year-of-service classifications.
AVERAGE FINAL
COMPENSATION
DURING THE
MEMBER'S HIGHEST
3 OF THE LAST ESTIMATED ANNUAL RETIREMENT BENEFIT AT AGE 65 OF A
10 YEARS OF NEW PLAN MEMBER FOR REPRESENTATIVE YEARS OF SERVICE
CREDITED ----------------------------------------------------------
SERVICE 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
$ 20,000 $ 3,750 $ 5,000 $ 6,250 $ 7,500 $ 8,750 $ 10,000
40,000 8,565 11,420 14,274 17,129 19,984 22,839
60,000 14,715 19,620 24,524 29,429 34,334 39,239
80,000 20,865 27,820 34,774 41,729 48,684 55,639
100,000 27,015 36,020 45,024 54,029 63,034 72,039
120,000 33,165 44,220 55,274 66,329 77,384 88,439
140,000 39,315 52,420 65,524 78,629 91,734 104,839
160,000 45,465 60,620 75,774 90,929 106,084 121,239
180,000 51,615 68,820 86,024 103,229 120,434 137,639
200,000 57,765 77,020 96,274 115,529 134,784 154,039
Compensation under the Plan is the regular salary paid to an employee
for service rendered to the Company, including commissions but excluding any
bonuses and pay for overtime or special pay. Mr. Cressman has completed 36
years of credited service in the Plan.
The benefits shown in the above table are straight-life annuity amounts.
They are not subject to any deduction for Social Security or other offset
amounts. The benefit formula is dependent in part on each employee's Social
Security Covered Compensation which varies by year of birth and is an average
of Social Security taxable wage bases.
2. APPROVAL OF PROPOSED AMENDMENT TO CERTIFICATE OF REINCORPORATION
The Company's Certificate of Reincorporation presently authorizes the
Company to issue 2,000,000 shares of Common Stock, par value $1.50 per share.
At February 23, 1998 there were 1,492,902 shares of Common Stock outstanding;
in addition, 16,739 shares were reserved for issuance under the dividend
reinvestment plan and 16,992 were reserved for issuance under the employee stock
purchase plan.
The Board of Directors recommends the approval of an amendment to the
Certificate of Reincorporation to increase the number of authorized shares of
Common Stock from 2,000,000 to 3,500,000 shares. The Board of Directors
believes it is advisable to authorize additional shares of Common Stock so that
there will be sufficient shares available for issuance for purposes that the
Board of Directors may determine to be in the best interests of the Company.
Such purposes could include the raising of new capital, the declaration of stock
dividends, stock splits and similar distributions, the funding of employee
benefit and other compensation plans and other general corporate purposes.
The additional authorized shares of Common Stock will be available for
future issuance for proper corporate purposes by the Board of Directors without
further stockholder approval, subject, however, to prior authorization by the
Florida Public Service Commission. The Company has no present plans,
arrangements, understandings or commitments for the issuance of these additional
shares. Holders of Common Stock have no preemptive rights.
The affirmative vote of the holders of a majority of the outstanding
Common Stock of the Company is required to adopt the resolution to be presented
at the Annual Meeting of the Stockholders authorizing the amendment of Article
3 of the Certificate of Reincorporation to increase the number of authorized
shares of Common Stock from 2,000,000 shares of the par value of $1.50 per share
to 3,500,000 shares of the par value of $1.50 per share. The Board of Directors
is of the opinion that the proposed change in the authorized shares of Common
Stock is in the best interests of the Company and its Stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THE APPROVAL AND ADOPTION
OF THE PROPOSED AMENDMENT TO THE CERTIFICATE OF REINCORPORATION. Proxies
solicited by management will be voted FOR this proposal unless a vote against
this proposal or abstention is specifically indicated.
STOCKHOLDER PROPOSALS
Stockholder proposals intended for inclusion in the 1999 proxy and proxy
statement must be received by the Secretary of the Company, 401 South Dixie
Highway, West Palm Beach, Florida 33401, not later than November 2, 1998. It
is suggested that proponents submit their proposals by certified mail, return
receipt requested. No stockholder proposals were received for inclusion in this
proxy statement.
ANNUAL REPORT
The financial statements and auditors' opinion are contained in the
Company's Annual Report for the year ended December 31, 1997, which has been
mailed to all stockholders of the Company.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Deloitte & Touche LLP, independent public accountants, has
been appointed by the Board of Directors each year for many years to examine
the accounts of the Company. Representatives of Deloitte & Touche LLP are
expected to be present at the Annual Meeting and will have the opportunity to
make a statement if they so desire and to respond to appropriate questions.
DISCRETIONARY AUTHORITY
The Company has no knowledge of any business to be brought before the
Annual Meeting other than that which is specified in the notice of such meeting
or may arise in connection with or for the purpose of effecting the same.
Should any other business properly come before the meeting, it is intended
that proxies will be voted in respect thereof in accordance with the judgment
of the person or persons voting the proxies.