SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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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 20, 1999
March 3, 1999
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 20, 1999, at
11:00 A.M., local time, for the following purposes:
1. To elect four directors;
2. 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, 1999 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
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 20, 1999
---------------------
March 3, 1999
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 20, 1999, 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 3, 1999.
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, 1999, the Company had outstanding 3,006,341 shares of
common stock (exclusive of 18,681 shares held of record by its wholly-owned
subsidiary, Flo-Gas Corporation, and 178,920 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,
1999, 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.
Therefore, any shares of common stock which are not voted on this matter at the
Annual Meeting, whether by abstention, broker non-vote or otherwise, will have
no effect on the election of directors.
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 313,554 Trusts(1) 10.4%
First Union Corporation
1200 First Union Plaza
Charlotte, North Carolina 28288
Common Robert L. Terry 171,000 Direct 5.7%
401 South Dixie Highway
West Palm Beach, Florida 33401
Common Atlee M. Kohl 184,000 Trusts(2) 6.1%
18333 Preston Road #460
Dallas, Texas 75252
Common Chesapeake Utilities Corporation 218,464 Direct 7.3%
909 Silver Lake Boulevard
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 58,000 shares, 60,000 shares, 60,000 shares and
6,000 shares owned by Woodland Investment Company, Nicole Kohl Gift
Trust, Woodland Investment Trust and the Nicole F. and Atlee Kohl Family
Foundation, respectively.
NOMINEES AND CONTINUING DIRECTORS
Three directors are to be elected for terms expiring at the Annual
Meeting in 2002 and one director is to be elected for a term expiring at the
Annul 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, 1999, 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 2002
E. James Carr, Jr. (1)(2) 72 1990 1,000 Less than 1%
Retired business executive
Gordon O. Jerauld (2) 77 1969 19,664 Less than 1%
Retired utility executive
Paul L. Maddock, Jr. 49 1998 16,400 Less than 1%
President of Palamad Development
Company, West Palm Beach, Florida
TO BE ELECTED FOR TERM ENDING IN 2001
Rudy E. Schupp 48 1998 500 Less than 1%
Chairman and Chief Executive Officer
of Republic Security Bank,
West Palm Beach, Florida
TO CONTINUE IN OFFICE UNTIL 2001
Franklin C. Cressman(3)(4) 65 1981 24,237 Less than 1%
Retired utility executive
Richard C. Hitchins (1) 53 1995 600 Less than 1%
President of R.C. Hitchins & Co.,P.A.,
a CPA firm, West Palm Beach, Florida
TO CONTINUE IN OFFICE UNTIL 2000
Daniel Downey(1)(2)(3)(5) 76 1974 1,000 Less than 1%
Partner in the law firm of Downey
& Downey, P.A., Palm Beach, Florida
John T. English 55 1994 7,406 Less than 1%
Chief Executive Officer of the Company
since October 1998 and President and
Chief Operating Officer of the Company
since May 1997
Robert L. Terry(3)(6) 79 1952 171,000 5.7%
Chairman of the Executive Committee
of the Company
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 5,266
Charles L. Stein Senior Vice President 2,432
Darryl L. Troy Vice President 4,446
All directors and executive officers as a group (12 individuals)
beneficially owned 253,951 shares (8.4%) 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 2,086 shares of
common stock as to which Mr. Cressman disclaims any beneficial
ownership.
(5) In addition, Daniel Downey's wife owns 5,338 shares of common stock
as to which Mr. Downey disclaims any beneficial ownership.
(6) 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. English is the President, Chief Executive
Officer and Chief Operating 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, 1998, 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 1998 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 1998, the Executive Committee, the Audit Committee and the Compensation
Committee each met one time.
The functions of the Audit Committee are to: (1) recommend the selection,
retention and termination of the Company's independent auditors; (2) approve in
advance the types of professional services for which the Company would retain
the independent auditors and consider whether any such service would impair
their independence; (3) review the overall scope of the audit, the financial
statements and audit results and the independent auditors' constructive service
comments to management and (4) provide any 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 executive officers;
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, 1998 and each of the
other most highly compensated executive officers whose total annual compensation
exceeded $100,000 for 1998:
SUMMARY COMPENSATION TABLE
Name and
Principal Position Year Salary
John T. English 1998 $122,500
President, Chief Executive 1997 106,973
Officer and Chief Operating 1996 97,344
Officer
C.L. Stein 1998 $103,392
Senior Vice President 1997 97,540
1996 90,856
Jack R. Brown 1998 $104,280
Treasurer and Secretary 1997 101,244
1996 97,344
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, 1998.
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
On June 1, 1997 the Company entered into severance agreements with
certain executive officers 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.
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 compen-
sation practices of other regulated utilities of similar size. 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.
The Compensation Committee is comprised of three members appointed by
the Board of Directors. Two of the members are directors who are not, and have
not been, employees of the Company; the third member is a former executive
officer of the Company. The Compensation Committee periodically directs
management to perform a study of executive compensation levels in order to
establish salary ranges. The study is based on comparable positions in companies
from the small electric, gas and combination regulated utility sector using
publically available information and operational data from other public utility
companies similar in size to the Company. 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 executive officers. 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. 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 full Board of
Directors, except that the Chief Executive Officer and one other director, who
is also an officer of the Company, does not 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 Directors' Compensation Committee are E.
James Carr, Jr. (Chairman), Daniel Downey and Gordon O. Jerauld. Mr. Downey is
a partner in the Palm Beach, Florida law firm of Downey & Downey, P.A., whose
firm occasionally renders legal services to the Company in the ordinary course
of its business. Mr. Jerauld was a Senior Vice President of the Company when
he retired in 1991. 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 and 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
1993 1994 1995 1996 1997 1998
Florida Public Utilities Company $100.00 $ 92.07 $114.76 $133.07 $166.95 $243.27
S&P 500 $100.00 $101.32 $139.37 $171.35 $228.50 $293.80
S&P Utilities $100.00 $ 92.04 $130.71 $134.78 $168.02 $192.79
EMPLOYEE STOCK PURCHASE PLAN
This Plan was approved by the stockholders on April 19, 1966. It provides
that eligible employees of the Company who participate 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 1998, cash credits
for purchases under the Plan amounted to less than $700 for John T. English.
Future cash credits for Mr. English 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 $ 3,800 $ 5,000 $ 6,300 $ 7,500 $ 8,800 $ 10,000
40,000 7,500 10,000 12,500 15,000 17,500 20,000
60,000 11,300 15,000 18,800 22,500 26,300 30,000
80,000 17,300 22,200 26,900 31,900 37,100 42,400
100,000 23,500 30,400 37,200 44,200 51,400 58,800
120,000 29,600 38,600 47,400 56,500 65,800 75,200
140,000 35,800 46,800 57,700 68,800 80,100 91,600
160,000 41,900 55,000 67,900 81,100 94,500 108,000
180,000 41,900 55,000 67,900 81,100 94,500 108,000
200,000 41,900 55,000 67,900 81,100 94,500 108,000
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. English, Mr. Stein and Mr. Brown have
completed 25, 19 and 10 years, respectively, 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.
STOCKHOLDER PROPOSALS
Stockholder proposals intended for inclusion in the 2000 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 1, 1999. 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, 1998, 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.
