<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
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
AQUARION COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $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:
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Notes:
<PAGE>
[LOGO] AGUARION
NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
APRIL 23, 1996
To The Shareholders:
In celebration of the 15th anniversary of Aquarion Company's (the
"Company") acquisition of Timco, Inc., the Company's timber processing
subsidiary, the Annual Meeting of Shareholders of the Company will be held at
10:00 a.m. on Tuesday, April 23, 1996, at Timco Inc., William S. Warner Custom
Building, Depot Street, Center Barnstead, New Hampshire, for the purposes set
forth below.
1. To elect three directors to Class II of the Board of Directors.
2. To ratify the selection of Price Waterhouse as the Company's
independent public accountants for the coming year.
3. To consider and vote upon a shareholder proposal relating to the
retirement plan for non-employee directors, as described in the
proxy statement.
4. To transact such other business as may properly come before the
meeting.
Shareholders of record at the close of business on March 5, 1996 will be
entitled to vote at the meeting.
By Order of the Board of Directors
LARRY L. BINGAMAN
Secretary
- -------------------------------------------------------------------------------
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO THE MEETING. WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING, HOWEVER, PLEASE SIGN AND DATE THE PROXY CARD AND PROMPTLY
MAIL IT IN THE ENCLOSED ENVELOPE. YOU MAY REVOKE YOUR PROXY AT ANY TIME PRIOR TO
THE MEETING AND VOTE IN PERSON. IF YOU PLAN TO ATTEND, PLEASE CHECK THE BOX
PROVIDED ON YOUR PROXY CARD. UPON RECEIPT OF YOUR PROXY WITH THE BOX CHECKED, WE
WILL SEND YOU AN ADMISSION CARD WITH DIRECTIONS TO THE ANNUAL MEETING.
- --------------------------------------------------------------------------------
<PAGE>
AQUARION COMPANY
835 MAIN STREET
BRIDGEPORT, CONNECTICUT 06601
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1996
The enclosed Proxy is solicited by the Board of Directors of the
Company for use at the Annual Meeting of Shareholders to be held on April 23,
1996, and any adjournment thereof.
Holders of the Common Stock of the Company of record at the close of
business on March 5, 1996 are entitled to notice of and to vote at the meeting.
On the record date, there were 6,884,334 outstanding shares of Common Stock,
which is the only class of capital stock of the Company entitled to vote at the
meeting. Each shareholder is entitled to one vote for each share of Common
Stock held.
A proxy may be revoked by a shareholder at any time before it is voted
by mailing his or her revocation or a subsequent proxy to the Secretary of the
Company at the above address or by filing a written revocation at the meeting
with the Secretary of the Company. Each valid proxy will be voted at the
meeting, and such vote will be cast in accordance with the shareholder's
direction specified in the proxy.
The cost of soliciting proxies, which will be borne by the Company, is
estimated to total $6,500. In addition to solicitation by mail, directors,
officers and regular employees of the Company may solicit proxies personally or
by telephone. Banks, brokerage houses and other custodians, nominees or
fiduciaries who hold stock in their names will be requested to solicit proxies
from the persons owning such stock. D.F. King & Co., Inc., 77 Water Street, New
York, New York 10005, has been retained by the Company to assist in such
solicitation.
The Proxy Statement and Proxy are being mailed to shareholders
beginning on March 21, 1996.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES AND BENEFICIAL OWNERSHIP
The Board of Directors of the Company is divided into three classes.
At the Annual Meeting, three directors will be elected to Class II for a three-
year term. At the 1997 Annual Meeting of Shareholders, directors will be
elected to Class III for a three-year term and at the 1998 Annual Meeting of
Shareholders, directors will be elected to Class I for a three-year term.
Information with respect to the three nominees proposed for election to Class II
and information with respect to the eight other directors is set forth below.
All nominees have been nominated by the Board of Directors for election as
directors. It is intended that the proxies will be voted for the three nominees
hereinafter named, all of whom have indicated their willingness to serve if
elected, unless otherwise indicated on any proxy. All nominees are presently
directors of the Company. In accordance with the retirement policy of the
Board, Mr. Larry Pflieger, a director since 1985, is not a candidate for re-
election this year. Each nominee has held the principal occupation shown for
the past five years unless otherwise indicated. Directors are elected by
plurality vote. Abstentions and broker non-votes will not have the effect of
votes in opposition to a director.
While it is not anticipated that any of the nominees will be unable to serve as
a director, if that should occur, the proxies will be voted for such other
person or persons as the present Board of Directors shall determine, or the
Board of Directors may reduce the number of directors to eliminate the vacancy.
1
<PAGE>
NOMINEES FOR ELECTION AS CLASS II DIRECTORS TO SERVE THREE-YEAR TERMS ENDING AT
THE 1999 ANNUAL MEETING OF SHAREHOLDERS
<TABLE>
<CAPTION>
DIRECTOR
AGE PRINCIPAL OCCUPATION SINCE
---------------------------------------------------------------------------------
<S> <C> <C> <C>
JANET D. GREENWOOD 52 Partner, Heidrick and Struggles (since 1994); 1988
consultant 1992 to 1994. President Emeritus
(since 1991) of the University of Bridgeport.
Founding President of the Long Island Sound
Foundation.
DONALD M. HALSTED, JR. 69 Independent businessman. Director 1975
of Bancroft Convertible Fund, Inc.
and Ellsworth Convertible Growth and
Income Fund, Inc.
JOHN A. URQUHART 67 President, John A. Urquhart Associates, a 1990
management consulting firm (since 1991).
Vice Chairman of Enron Corp. (since 1991).
Director of TECO Energy, Inc., Enron Corp.,
Hubbell Incorporated and The Weir Group PLC.
<CAPTION>
CLASS III DIRECTORS WHOSE THREE-YEAR TERMS END AT THE 1997 ANNUAL MEETING OF SHAREHOLDERS
DIRECTOR
AGE PRINCIPAL OCCUPATION SINCE
---------------------------------------------------------------------------------
<S> <C> <C> <C>
GEORGE W. EDWARDS, JR. 56 Retired. Formerly President and Chief Executive 1988
Officer (1991-May 1995) of Kansas City Southern
Railway Co. Director of Hubbell Incorporated
and El Paso Electric Company.
EUGENE D. JONES 71 Senior Vice President of Greiner, Inc., 1992
a consulting engineering firm specializing
in transportation-related facilities. Trustee of
Clarkson University.
G. JACKSON RATCLIFFE 59 Chairman, President and Chief Executive 1982
Officer of Hubbell Incorporated, a manufacturer
of electrical/electronic components and systems.
Director of Praxair, Inc. and Olin Corporation.
WILLIAM S. WARNER 71 Vice Chairman of the Board of Directors 1956
(since October 1995), Chairman of the Board (1987-
October 1995) of the Company.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CLASS I DIRECTORS WHOSE THREE-YEAR TERMS END AT THE 1998 ANNUAL MEETING OF SHAREHOLDERS
DIRECTOR
AGE PRINCIPAL OCCUPATION SINCE
-------------------------------------------------------------------------------
<S> <C> <C> <C>
GEOFFREY ETHERINGTON 67 Chairman and President of Etherington Industries, 1976
a group of six privately held industrial companies.
EDGAR G. HOTARD 52 Director (since 1992) and President of Praxair, Inc., 1995
an industrial gases supplier and supplier of metal
and ceramic coatings and powders. Director of Iwatani
Industrial Gases, Inc., Osaka, Japan.
JACK E. MCGREGOR 61 Chairman of the Board (since October 1995); 1987
President and Chief Executive Officer (1990-
October 1995) of the Company. Principal,
Bridgeport Waterfront Investors, LLC; and
Business and Economic Development Advisor,
Cohen & Wolf, P.C. (since October 1995).
Director of Bay State Gas Company and
People's Bank. Past President and Director,
National Association of Water Companies.
Trustee of Barnum Museum and Mystic
Marinelife Aquarium.
RICHARD K. SCHMIDT 51 President and Chief Executive Officer (since 1995
October 1995) and formerly Senior Vice President
(1993-1995) of the Company. President (1992-1995)
and Chief Executive Officer (since 1992) of Industrial
and Environmental Analysts, Inc., a subsidiary of the
Company. Formerly President and Chief Operating
Officer of Mechanical Technology, Inc. (1984-1992).
</TABLE>
3
<PAGE>
STOCK OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth the number of shares of Common Stock of
the Company beneficially owned, directly or indirectly, by each director, by
each of the five most highly compensated executive officers, and by all
directors and executive officers as a group, as of March 5, 1996:
NAME OF INDIVIDUAL OR SHARES BENEFICIALLY OWNED PERCENT OF
NUMBER OF PERSONS IN GROUP DIRECTLY OR INDIRECTLY (1)(2)(3) CLASS (4)
- -------------------------- ------------------------------- -----------
- -----------------------------------------------------------------------------
George W. Edwards, Jr............... 1,500 *
- -----------------------------------------------------------------------------
Geoffrey Etherington................ 5,466 *
- -----------------------------------------------------------------------------
Janet D. Greenwood................. 200 *
- -----------------------------------------------------------------------------
Donald M. Halsted, Jr............... 5,902 *
- -----------------------------------------------------------------------------
Edgar G. Hotard..................... 105 *
- -----------------------------------------------------------------------------
Eugene D. Jones..................... 362 *
- -----------------------------------------------------------------------------
Jack E. McGregor.................... 161,431 2.3%
- -----------------------------------------------------------------------------
Larry L. Pflieger................... 3,043 *
- -----------------------------------------------------------------------------
G. Jackson Ratcliffe................ 3,822 *
- -----------------------------------------------------------------------------
Richard K. Schmidt.................. 24,500 *
- -----------------------------------------------------------------------------
John A. Urquhart.................... 500 *
- -----------------------------------------------------------------------------
William S. Warner................... 19,812 *
- -----------------------------------------------------------------------------
Larry L. Bingaman................... 33,838 *
- -----------------------------------------------------------------------------
Janet M. Hansen..................... 20,748 *
- -----------------------------------------------------------------------------
James S. McInerney.................. 43,545 *
- -----------------------------------------------------------------------------
Directors and Officers as a group.. 324,774 4.7%
- -----------------------------------------------------------------------------
- -----------------
4
<PAGE>
(1) Based on reports furnished by the directors and officers. The shares
include, in some instances, shares held by the immediate families of
directors and officers or entities controlled by directors and officers,
the reporting of which is not to be construed as an admission of beneficial
ownership. The number of shares includes options to purchase shares that
may be acquired within 60 days through the exercise of stock options under
the Company's stock option plan as follows: Jack E. McGregor, 152,500
shares; Larry L. Bingaman, 32,916 shares; Janet M. Hansen, 17,583 shares;
James S. McInerney, 41,916 shares; Richard K. Schmidt, 23,166 shares;
and, directors and executive officers as a group, 268,081. See
"Compensation of Directors and Executive Officers" below.
(2) Each of the directors and officers included in the foregoing table has sole
voting and investment power as to the shares of Common Stock beneficially
owned, directly or indirectly, by him or her, except for the following: (i)
as to which such powers are shared, 922 shares with respect to Mr.
Bingaman, 1,004 shares with respect to Mrs. Hansen, and 83 shares with
respect to Mr. Schmidt; (ii) as to which such powers are held by other
people or entities, 494 shares with respect to Mr. Etherington, 409 shares
with respect to Mr. McGregor, 3,294 shares with respect to Mr. Halsted,
18,460 shares with respect to Mr. Warner, 125 shares with respect to Mr.
McInerney; and, (iii) as to which there are restrictions as to the
disposition of shares, 334 shares with respect to Mr. McInerney.
(3) Does not include share units, each representing one share of Common Stock
credited to and held under the Company's deferred compensation program for
directors who are not employees of the Company, as discussed below under
"Compensation of Directors." As of March 1, 1996, the following stock
units have been credited under the deferred compensation program:
Etherington, 18,230 units; Greenwood, 50 units; Hotard, 50 units;
Ratcliffe, 50 units; and, Urquhart, 50 units.
(4) Asterisk denotes percentage of beneficial stock ownership less than one
percent of the outstanding Common Stock of the Company.
BOARD OF DIRECTORS MEETINGS
Eight meetings of the Board of Directors were held during 1995.
Average attendance at Board and Committee meetings was approximately 94 percent.
COMMITTEES OF THE BOARD
The Board of Directors has four standing committees: an Audit
Committee, a Compensation Committee, an Environmental and Public Affairs
Committee, and a Finance Committee. All members of the Committees are non-
employee directors. The Board does not have a standing Nominating Committee, as
this function is handled by the full Board. Shareholders desiring to recommend
directors should communicate with the Secretary of the Company.
AUDIT COMMITTEE
The membership of the Audit Committee consisted of Messrs. Halsted,
Etherington, Hotard, Pflieger and Dr. Greenwood. The Committee met three times
during 1995, each time with representatives of Price Waterhouse, the Company's
accountants, present. The functions of the Audit Committee are to recommend the
selection of auditors to the Company's Board of Directors; review the scope of
the annual audit; consider specific problems and questions that may arise in the
course of the audit; monitor the adequacy of accounting and auditing controls
and report to the Board of Directors with respect to these matters.
5
<PAGE>
COMPENSATION COMMITTEE
The membership of the Compensation Committee consisted of Messrs.
Ratcliffe, Edwards, Halsted, Jones, and Urquhart. The Committee met six times
in 1995. The functions of the Committee are to formulate executive compensation
policy of the Company; to consult with management with respect thereto and to
present recommendations relating thereto to the Board of Directors; to
administer the Company's incentive compensation plans; to formulate Company
management succession plans; and, to advise the Board of Directors on such
matters as the composition of the Board of Directors and its Committees.
ENVIRONMENTAL AND PUBLIC AFFAIRS COMMITTEE
The membership of the Environmental and Public Affairs Committee
consisted of Dr. Greenwood, and Messrs. Edwards, Hotard, Jones and Warner. The
Committee met twice in 1995. The functions of the Committee are to oversee the
Company's policies, practices and procedures as to compliance with environmental
laws and regulations; to assist management in formulating plans and programs to
develop and enhance public understanding of the Company; to monitor compliance
by the Company and its personnel with laws and regulations relating to lobbying
and the political process; and, to oversee the Company's community relations
programs.
FINANCE COMMITTEE
The membership of the Finance Committee consisted of Messrs. Urquhart,
Etherington, Pflieger, Ratcliffe, and Warner. The Committee met six times
during 1995. The functions of the Finance Committee are to administer the Trust
Fund of the Company's retirement plans; to review and monitor the financial
planning and financial structure of the Company; and, to render advice, counsel
and assistance to the corporate financial officer in the execution of her
responsibilities.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company receives an annual
retainer of $15,000 plus $750 for each Board meeting and Committee meeting
attended. Committee chairmen are paid an additional annual retainer of $3,000.
Directors also receive $750 each time they render consulting services other than
part of a Board or Committee meeting. Directors who are employed by the Company
receive no additional compensation for their services as directors of the
Company. Pursuant to a deferred compensation plan any outside director may
defer payment of his or her annual retainer and meeting fees in cash or stock
units. Interest equivalents on payments deferred in the form of cash accrue
quarterly (and on previously credited interest) at the then prevailing prime
rate. Dividend equivalents are paid on the stock units and are converted into
additional stock units. The deferred amounts plus interest will be paid to such
a director beginning with the calendar year following the termination of his or
her service as a director, in either a lump sum or in any number of equal
installments as the director elects. Amounts credited to a director's stock
unit account shall be paid in the form of one share of Common Stock for each
stock unit, with a cash payment with any final installment for any fractions of
a stock unit remaining.
The Company has a directors' retirement plan related to service as a
non-employee director. After five years of such service, a director earns an
annual retirement benefit equal to 50 percent of the amount of the annual
retainer (the "Annual Retainer"). Annual Retainer fees shall not be considered
to the extent that they exceed $10,000. The amount of the retirement benefit
earned by a non-employee director increases for each year of service thereafter
by an amount equal to ten percent of the Annual Retainer in effect upon the
cessation of such director's service on the Board until the director has earned,
after ten years of non-employee Board service, an annual retirement benefit
equal to the full amount of the Annual Retainer not to exceed $10,000. The
Board may from time to time adjust the amount of the annual benefit, and any
such adjustment
6
<PAGE>
would be applicable to all individuals then receiving retirement benefits under
the plan. An annual retirement benefit not to exceed $10,000, subject to Board
adjustment, is also payable in the event of death or permanent and total
disability after five years as a non-employee director or upon termination as a
director in the event of a change in control of the Company. The benefit is
payable for the lifetime of the director and thereafter to the director's
designated beneficiary, to the extent that the director did not receive
retirement benefits for a period at least equal to his or her years of credited
service as a non-employee director. Except for death, disability or a change in
control of the Company, retirement benefits under the plan do not become payable
until age 65 or the later cessation of Board service. Such benefits are
unfunded.
Directors are covered under the Company's group health insurance plans
as a supplement to such insurance as may be applicable to the directors from
other sources. In 1995, group health insurance benefits provided to Messrs.
Goodspeed, Pflieger and Urquhart amounted to $419, $161 and $927, respectively.
In connection with his retirement as the Company's Chief Executive
Officer on January 1, 1990, Mr. Warner entered into an agreement with the
Company whereby Mr. Warner renders consulting services to the Company. The
agreement, which will expire in 1996, provides for payments of up to $50,000
annually.
In connection with his retirement as the Company's Chief Executive
Officer on October 1, 1995, Mr. McGregor entered into an agreement with the
Company whereby Mr. McGregor renders consulting services to the Company. For
information concerning this agreement with the Company, see "Employment
Contracts and Termination and Change-in-Control Arrangements."
7
<PAGE>
EXECUTIVE COMPENSATION
The following table presents the compensation provided by the Company
to its Chief Executive Officer and the Company's four most highly compensated
executive officers for services rendered to the Company in 1993, 1994 and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -------------------------------------
AWARDS
- ---------------------------------------------------------------------------------------------
RESTRICTED ALL
OTHER STOCK SECURITIES OTHER
ANNUAL AWARDS UNDERLYING COMP.
SALARY BONUS COMP. (1) OPTIONS/SARS (2)
YEAR ($) ($) ($) ($) (#) ($)
=============================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
J. E. McGregor (3) 1995 249,000 65,650 12,547
Chairman of the 1994 257,502 65,650 61,000 12,587
Board 1993 247,881 46,876 14,616 20,000 16,584
=============================================================================================
R. K. Schmidt (4) 1995 196,516 19,200 121,058 50,000 7,039
President and Chief 1994 165,537 77,390 22,000 4,620
Executive Officer 1993 155,771 14,559 4,516 5,000 2,248
=============================================================================================
J. S. McInerney (5) 1995 163,000 52,000 20,000 9,161
President and CEO,
Bridgeport 1994 153,252 31,233 22,000 8,062
Hydraulic Company 1993 145,506 25,906 10,378 5,000 8,100
=============================================================================================
J. M. Hansen (6) 1995 137,500 40,100 20,000 7,802
Executive Vice
President, 1994 128,502 30,000 13,000 6,655
CFO and Treasurer 1993 121,194 19,379 6,521 5,000 6,722
=============================================================================================
L. L. Bingaman 1995 113,000 20,300 5,000 6,323
Vice President,
Corporate Relations 1994 112,432 23,165 11,000 5,755
and Secretary 1993 109,750 17,971 4,821 5,000 6,216
- ---------------------------------------------------------------------------------------------
</TABLE>
- -------------------
8
<PAGE>
(1) The number and dollar value of shares of previously granted restricted
stock held on December 31, 1995, based on a closing price of the Company's
Common Stock on December 31, 1995 was: J. S. McInerney---334 shares
($8,517). Restricted stock is Common Stock of the Company and dividends are
paid thereon at the same rate as on unrestricted shares.
(2) The amounts shown for named officers represent the Company's contribution
to The Employee Savings and Investment Plan accounts for such officers.
(3) Mr. McGregor served as President and Chief Executive Officer of the Company
until October 1, 1995.
(4) Mr. Schmidt became President and Chief Executive Officer of the Company on
October 1, 1995, having served previously as President and Chief Executive
Officer of Industrial and Environmental Analysts, Inc. ("IEA"). Mr.
Schmidt continues to be Chief Executive Officer of IEA. The amount shown
under Other Annual Compensation for 1995 represents Mr. Schmidt's
relocation allowances, including reimbursement for taxes.
(5) Mr. McInerney became Chief Executive Officer of Bridgeport Hydraulic
Company on April 25, 1995 and President of Bridgeport Hydraulic Company on
April 23, 1991, having served previously as Chief Operating Officer and
Executive Vice President.
(6) Mrs. Hansen became Executive Vice President on October 1, 1995 and Chief
Financial Officer of the Company on April 28, 1992, having served
previously as Senior Vice President, Chief Financial Officer and Treasurer
of the Company.
STOCK OPTIONS
The following table sets forth information with respect to all options
granted to the named executive officers during 1995, including the potential
realizable value of each grant assuming that the market value of the Company's
Common Stock appreciates in value from the date of the grant to the expiration
of the option at annualized rates of (a) five percent and (b) ten percent, in
each case compounded annually over the term of the option. These assumed rates
of appreciation have been specified by the Securities and Exchange Commission
for illustrative purposes only and are not intended to predict future prices of
the Company's Common Stock, which will depend upon market conditions and the
Company's future performance and prospects.
Based on the number and market price of the shares outstanding at
year-end 1995, the Company's market capitalization was $174,809,717, and
assuming a five percent and ten percent annualized increase, produce a
corresponding market capitalization of $284,746,608 and $453,411,384,
respectively.
9
<PAGE>
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
------------------------------------------------------------------
NUMBER % OF
OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
NAME GRANTED IN FY PRICE EXPIRATION
(#) 1995 ($/SH) DATE 5% ($) 10%($)
===========================================================================================
<S> <C> <C> <C> <C> <C> <C>
J. E. McGregor (1) 18,000 8% 27.125 2/2/04 307,058 778,145
- -------------------------------------------------------------------------------------------
J. E. McGregor (1) 34,000 15% 21.75 12/5/04 465,068 1,178,573
- -------------------------------------------------------------------------------------------
R. K. Schmidt (2) 50,000 22% 23.25 10/13/05 731,090 1,852,726
- -------------------------------------------------------------------------------------------
J. S. McInerney (2) 20,000 9% 23.50 12/5/05 295,580 749,059
- -------------------------------------------------------------------------------------------
J. M. Hansen (2) 20,000 9% 23.50 12/5/05 295,580 749,059
- -------------------------------------------------------------------------------------------
L. L. Bingaman (2) 5,000 2% 23.50 12/5/05 73,895 187,265
- -------------------------------------------------------------------------------------------
</TABLE>
(1) This represents an amendment to previously granted options which may be
deemed a regrant under Securities and Exchange Commission regulations.
(2) One-third of the stock options granted to the named executive become
exercisable on each of the first three anniversaries of the grant date, but
may be exercised earlier if there is a change in control of the Company as
defined under "Employment Contracts and Termination and Change-in-Control
Arrangements" below. The Company has not granted Stock Appreciation Rights.
10
<PAGE>
The following table sets forth the aggregated 1995 year-end options
values. During 1995, no options were exercised by the named officers.
AGGREGATED 1995 FISCAL YEAR-END OPTIONS VALUES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
SHARES
ACQUIRED NUMBER OF SECURITIES VALUE OF UNEXERCISED
ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
EXERCISE REALIZED OPTIONS AT FY-END (#) FY-YEAR END ($) (1)
- -------------------------------------------------------------------------------------------
EXERCISABLE/
NAME UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J. E. McGregor --- --- 152,500/0 $184,439/0
R. K. Schmidt --- --- 19,833/64,667 $54,063/142,500
J. S. McInerney --- --- 38,583/34,667 $ 36,720/70,000
J. M. Hansen --- --- 15,583/28,667 $ 29,718/57,502
L. L. Bingaman --- --- 30,916/12,334 $ 63,718/22,503
- -------------------------------------------------------------------------------------------
</TABLE>
(1) Market value of underlying securities at year-end, minus the exercise or
base price.
RETIREMENT PROGRAM
Under the Company's qualified retirement plan (the "Pension Plan") and
the Supplemental Benefit Plan (the "Supplemental Plan") for certain key
executives, an eligible employee will receive a benefit at retirement that is
based upon the employee's number of years of credited service and average
pensionable compensation (salary in case of the Pension Plan and salary plus
annual bonus in case of the Supplemental Plan, in each case as set forth in the
Summary Compensation Table) during, in the case of the Pension Plan, the highest
five consecutive years of the employee's final ten years of service. The
benefits under the Supplemental Plan are not subject to the Internal Revenue
Code provisions that limit benefits under the Pension Plan. For a single
employee, the benefits are straight life annuity amounts and for a married
employee the benefits are 50 percent joint and survivor annuity amounts. As of
December 31, 1995, the years of credited service are 4 years for Mr. Schmidt;
for Mr. McInerney 25 years; Mrs. Hansen, 20 years; and Mr. Bingaman, 6 years.
The following table illustrates for representative average annual pensionable
compensation and years of credited service the annual retirement benefit payable
to employees under the Plans upon retirement in 1996 at age 65 based on the
straight life annuity form of benefit.
11
<PAGE>
PENSION PLAN TABLE
- -------------------------------------------------------------------------
FIVE-YEAR AVERAGE YEARS OF CREDITED SERVICE
COMPENSATION RECOGNIZED -----------------------------------------------
UNDER THE PLAN
- -------------------------------------------------------------------------
10 15 20 25 30
- -------------------------------------------------------------------------
$120,000 $19,600 $29,400 $ 39,200 $ 49,000 $ 58,800
$180,000 $30,600 $45,900 $ 61,200 $ 76,500 $ 91,800
$240,000 $41,600 $62,400 $ 83,200 $104,000 $124,800
$300,000 $52,600 $78,900 $105,200 $131,500 $157,800
$360,000 $63,600 $95,400 $127,200 $159,000 $190,800
- -------------------------------------------------------------------------
EMPLOYMENT CONTRACTS AND TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS
Messrs. Schmidt, McInerney, Bingaman and Mrs. Hansen each have an
employment agreement with the Company. Mr. Schmidt's agreement, which became
effective when he succeeded Mr. McGregor as the Company's Chief Executive
Officer on October 1, 1995, has a term of three years. The agreements with
Messrs. McInerney, Bingaman and Mrs. Hansen each have a term of two years and
are extended monthly for an additional month unless either the Company or the
employee elects otherwise, in which event the agreement would expire at the end
of the then remaining two-year term. Each agreement provides for the payment of
a minimum base salary which is subject to increase by the Board in accordance
with the Company's customary compensation practice and for participation by the
employee in the Company's benefits plans and programs. The annual base
salaries, effective April 1, 1996, for Messrs. Schmidt, McInerney, Bingaman and
Mrs. Hansen are $215,000, $175,000, $118,000 and $150,000, respectively.
In the event of either a material lessening of the employee's
responsibilities during the term of the agreement, or assignment or reassignment
to another geographic area, or liquidation, dissolution, consolidation,
acquisition or merger of the Company (except by a successor corporation of at
least equal net worth which assumes the agreement) or a reduction in
compensation and benefits, the agreement may be terminated and certain benefits
would be provided to the employee. Such benefits would essentially compensate
the employee for the salary (subject, in Mr. Schmidt's case, to a limit of 2
times his annual salary, and as to Messrs. McInerney, Bingaman and Mrs. Hansen,
to a limit of 1.5 times each person's annual salary), benefits, including the
Company's share of contributions which would have been made on behalf of the
employee to the Company's Employee Savings and Investment Plan (and the related
Supplemental Benefit Plan) and pension rights he or she would have had for the
remainder of the primary term of the agreement. Therefore, if any of the events
listed above occur and result in a termination toward the end of a non-renewed
employment term, the value of such benefits would be minimal, while such a
termination earlier in the term of an agreement would, subject to the
application of the maximum limits specified above, result in proportionately
greater benefits. At present salary levels, the maximum termination benefits
relating to the salaries of Messrs. Schmidt, McInerney, Bingaman and Mrs. Hansen
would be $430,000, $262,500, $177,000, and $225,000, respectively. Coverage
under the Company's health and welfare benefits plans would be extended to these
individuals for a period of 24 months after termination under the circumstances
described above.
Effective October 1, 1995, Mr. McGregor retired as Chief Executive
Officer of Aquarion and was appointed Chairman of the Board, succeeding Mr.
Warner. Mr. McGregor has a consulting agreement with the Company that has a
term of five years, or such later date as determined by the Board of Directors.
The agreement may be terminated earlier on any anniversary of the commencement
of the second consulting period.
12
<PAGE>
The consulting period shall consist of the "First Consulting Period,"
commencing the day following October 1, 1995 and ending on the first anniversary
of such day, and the "Second Consulting Period," comprising the remainder of the
consulting period. The Board of Directors, in its sole discretion, can terminate
the agreement as of the last day of the First Consulting Period. During the
First Consulting Period, Mr. McGregor will receive a consulting fee of $175,000
per year, and during the Second Consulting Period, he will receive a fee of
$75,000 per year. Mr. McGregor will receive as an additional retirement benefit
an annual amount equal to $25,900 paid in equal monthly installments that will
cease upon his death as well as a retirement benefit in the annual amount of
$33,200 commencing at the age of 61. Mr. McGregor received a 1995 annual
incentive award of $65,650, 61 percent of Mr. McGregor's target bonus level as
Chief Executive Officer.
The exercise period for the 34,000 stock options awarded on December
5, 1994 will be extended to such options' 10-year terminus, and such options
together with the 18,000 stock options awarded on February 2, 1994 became
immediately exercisable on September 1, 1995.
Unvested options will become exercisable in the event of a change in
control of the Company. For this purpose, a change in control shall be deemed to
have occurred in the following circumstances unless the event in question has
been approved in advance by the continuing directors: (i) the acquisition by any
person or group of 15 percent of the Company's outstanding shares; (ii) the
purchase of the Company's outstanding shares under a tender offer or exchange
offer; (iii) less than two-thirds of the Company's Board of Directors are
continuing directors; (iv) approval of the shareholders of a merger,
consolidation, liquidation or dissolution of the Company or the sale of its
assets. Continuing directors shall mean members of the Board on the date the
plan in question was adopted or who were recommended or elected to the Board by
a majority of continuing directors.
BOARD OF DIRECTORS COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
The objectives of Aquarion's executive compensation program are to
link executive compensation with creation of customer and shareholder value, to
attract and to retain qualified executives, and to produce strong financial
performance for the benefit of our shareholders while providing a high level of
customer service and value for our customers. In order to meet these
objectives, the compensation program is designed to be competitive with
compensation programs provided by comparable businesses. For the water utility
business, the comparison group consists of water and other utilities (the
"utility comparison group") with comparable revenues as maintained in various
databases, including the companies in the Edward Jones water utility group
displayed on the performance graph. For the non-utility businesses, the
comparison group consists of companies with comparable revenues and lines of
business as maintained in various other databases (the "non-utility comparison
group").
EXECUTIVE COMPENSATION PROGRAM
Each year, the Compensation Committee, which is comprised entirely of
outside directors, recommends to the Board of Directors compensation
arrangements for officers, including the salary structure and salary grade
assignments, individual salaries, annual and long-term incentive plan awards,
performance standards for new awards, payouts from past awards, and the overall
design of the executive compensation program.
13
<PAGE>
The Compensation Committee determined that based on Mr. McGregor's
experience and knowledge of the industry, it was appropriate to retain his
services under a consulting agreement, the terms of which are fully described on
Pages 12 and 13.
Aquarion's executive compensation program in 1995 consisted of three
components: salary, annual incentive compensation, and stock options.
The primary comparison for CEO compensation is a select group of 13
investor-owned water utilities with whom Aquarion compares its business
performance. Since Aquarion is one of the largest companies in this group, the
total compensation target is set in the third quartile.
Salary ranges are set by periodic comparison to rates of pay for
comparable positions within the utility industry for corporate and utility
positions and the non-utility industries for non-utility positions. Individual
salaries are generally considered for adjustment based on external salary
levels, individual performance and potential, and/or changes in duties and
responsibilities. Based on salary data compiled by outside consultants, officer
salaries approximate the 50th percentile salary reported for comparable
positions.
Annual incentive compensation opportunities are targeted such that at
targeted performance levels, salary plus annual incentive awards for corporate
and water utility positions will be at or near the 50th percentile of companies
within the utility industry, and for non-utility positions, at or near the 50th
percentile within non-utility industries. Annual objectives are established,
subject to Compensation Committee approval, for corporate, operating company,
and individual performance. Customer service performance is a criterion for
every executive with earnings per share being the criterion for corporate
performance and pre-tax profit being the criterion for operating company
performance. The Chief Executive Officer's targeted award is based on corporate
performance and customer service, while other officers' targets are allocated
among corporate, operating company and individual objectives and customer
service as appropriate. Targeted award levels also vary according to magnitude
of responsibility, with incentive compensation constituting a potentially
greater portion of the Chief Executive Officer's total annual compensation than
it does for other officers.
Award opportunities under the stock option plan are targeted between
50th and 75th percentile utility industry levels for the corporate and utility
positions and at the 50th percentile of general industry levels for non-utility
positions (which levels are reflected in databases maintained by the Company's
compensation consultants). The use of stock options is intended to encourage
stock ownership by management and to further assure alignment of management's
compensation with shareholder return. Option awards are determined each year
based on the expected present value of long-term incentives, and are made
independent of an executive's balance of unexercised options.
In December 1993, the Internal Revenue Service (IRS) adopted a
regulation, applicable to publicly held corporations, which denies federal
income tax deductions for compensation in excess of $1 million paid in a taxable
year to any of its named executive officers. The Company does not anticipate
that any of its executives will exceed this limit on deductible compensation.
CEO COMPENSATION - 1995
Based on the advice of professional consultants independently employed
by the Committee and coupled with its members' individual business judgments,
the Compensation Committee reviewed and approved the level and form of
compensation for the Chief Executive Officer in 1995.
Aquarion's net income for 1995 is slightly below target. Net income of
$12.9 million increased 5.4 percent from 1994.
14
<PAGE>
Mr. Schmidt received a salary of $215,000, effective October 1, 1995,
as the new Chief Executive Officer of Aquarion, which approximated a 44th
percentile salary among chief executives within the utility comparison group.
The Committee recommended a 1995 annual incentive award of $19,200, based on his
contribution in the fourth quarter as Chief Executive Officer. No incentive
award was recommended for his contribution as President of Industrial and
Environmental Analysts, Inc., for the first three quarters of the year because
only two laboratories achieved objectives. Mr. Schmidt also received a stock
option grant in 1995 of 50,000 options upon his appointment as Chief Executive
Officer of Aquarion. The grant is exercisable at a price equal to the market
price of the stock on the date of grant.
Compensation Committee
G. Jackson Ratcliffe, Chairman
George W. Edwards, Jr.
Eugene D. Jones
Donald M. Halsted, Jr.
John A. Urquhart
SHAREHOLDER RETURN PRESENTATION
The following performance graph compares the yearly percentage change
in the Company's cumulative total shareholder return on its Common Stock with
the cumulative total return on the S&P 500 Index and the Edward Jones Water
Utility Industry Return Comparison, which includes the Company, for the five
years commencing 1991 and ended 1995. The Edward Jones Utility Industry peer
group provides a broad array of companies that are similar to Aquarion's market
capitalization. A majority of the Company's peer group uses the Edward Jones
Water Utility Industry Return Comparison.
FIVE YEAR CUMULATIVE TOTAL RETURN -- S&P 500, EDWARD JONES
WATER UTILITY INDUSTRY, AND AQUARION
[CHART APPEARS HERE]
Edward Jones Aquarion S&P 500
-----------------------------------------------------
12/90 100 100 100
12/91 142.8 124 130.3
12/92 158.1 135.1 140.3
12/93 180.2 163.8 154.3
12/94 167.9 147.4 156.5
12/95 211.2 167.8 215.1
The Peer Group consists of American Water Works Company, Inc.,
Aquarion Company, California Water Service Company, Connecticut Water Service,
Inc., Consumers Water Company, Dominguez Services Corp., E'Town Corp., IWC
Resources Corporation, Middlesex Water Company, Philadelphia Suburban
Corporation, SJW Corp., Southern California Water Company, Southwest Water
Company, and United Water Resources.
15
<PAGE>
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Price Waterhouse,
300 Atlantic Street, Stamford, Connecticut 06904 as its independent public
accountants for 1996. In accordance with a resolution of the Board of
Directors, this selection is being presented to shareholders for ratification at
the Annual Meeting.
If the foregoing proposal is not approved by the shareholders or if,
prior to the 1996 Annual Meeting, Price Waterhouse shall decline to act or
otherwise become incapable of acting, or if its employment shall be otherwise
discontinued by the Board of Directors, then the Board of Directors will appoint
other independent public accountants whose employment for any period subsequent
to the 1996 Annual Meeting will be subject to ratification by the shareholders
at that meeting.
The firm of Price Waterhouse has audited the financial statements of
the Company annually since 1931. The Company has been advised that
representatives of Price Waterhouse will be present at the meeting with the
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions.
Adoption of proposal 2 will require the affirmative vote of a majority
of the Common Stock present or represented at the meeting, and abstentions will
have the effect of votes in opposition, and broker non-votes will not have any
effect on the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
SELECTION OF PRICE WATERHOUSE AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS.
PROPOSAL NO. 3
SHAREHOLDER PROPOSAL
RELATING TO DIRECTORS' RETIREMENT BENEFITS
Mr. William Steiner, 4 Radcliff Drive, Great Neck, New York 11024, who was a
holder of 450 shares of Aquarion Company Common Stock as of September 21, 1995,
has submitted the following shareholder proposal:
"RESOLVED, that the shareholders assembled in person and by proxy,
recommend (i) that all future non-employee directors not be granted pension
benefits and (ii) current non-employee directors voluntarily relinquish their
pension benefits."
SUPPORTING STATEMENT
"Aside from the usual reasons, presented in the past, regarding
"double dipping", that is outside (non-employee) directors who are in almost all
cases amply rewarded with their pension at their primary place of employment,
and in many instances serving as outside pensioned directors with other
companies, there are other more cogent reasons that render this policy as
unacceptable.
Traditionally, pensions have been granted in both the private and
public sectors for long term service. The service component usually represents a
significant number of hours per week. The practice of offering pensions for
consultants is a rarity. Outside directors' service could logically fit the
definition of consultants and pensions for this type of service is an abuse of
the term.
16
<PAGE>
But more importantly, outside directors, although retained by
corporate management, namely the C.E.O., are in reality representatives of
shareholders. Their purpose is to serve as an impartial group to which
management is accountable. Although outside directors are certainly entitled to
compensation for their time and expertise, pensions have the pernicious effect
of compromising their impartiality. In essence, pensions are management's
grants to outside directors to insure their unquestioning loyalty and
acquiescence to whatever policy management initiates, and at times, serving
their own self interest. Thus, pensions become another device to enhance and
entrench management's controls over corporate policies while being accountable
only to themselves. I am a founding member of the Investors Rights Association
of America and I feel this practice perpetuates a culture of corporate
management "cronyism" that can easily be at odds with shareholder and company
interest.
A final note in rebuttal to management's contention that many
companies offer their outside directors pensions, so they can attract and retain
persons of the highest quality. Since there are also companies that do not
offer their outside directors pensions, can management demonstrate that those
companies that offer pensions have a better performance record than their non-
pensioned peers? In addition, do we have any evidence of a significant
improvement in corporate profitability with the advent of pensions for
outside directors?
I URGE YOUR SUPPORT, VOTE FOR THIS RESOLUTION." BOARD OF DIRECTORS
STATEMENT IN OPPOSITION TO THE SHAREHOLDER PROPOSAL
The Board of Directors believes that this proposal is not in the best
interest of Aquarion Company and its shareholders and urges a vote AGAINST the
resolution.
To continue to attract and retain directors of the highest caliber,
with recognized leadership qualities, experience and ability, it is important
that the Company provide compensation that is competitive with that offered by
other comparable companies. The Board has been advised by its outside
compensation consultants that the compensation package it offers to non-employee
directors, including retirement benefits, is consistent with general industry
practice.
The proposal suggests that retirement benefits constitute "double-
dipping" by non-employee directors, who may receive retirement benefits from
others while remaining eligible to receive such benefits from the Company. The
benefits the Company provides to non-employee directors relate solely to the
services they provide to the Company, and their receipt of benefits from others
is irrelevant.
The Board strongly disagrees with the comparison of non-employee
directors to consultants. Consultants are generally responsible for specific
assignments of a short-term nature, while directors have ongoing relationships
with their companies and are responsible for the long-term viability and success
of those companies. Additionally, directors have a fiduciary responsibility to
fairly represent the best interests of shareholders, whereas consultants'
responsibilities are generally defined by the terms of the contractual
arrangements with their clients.
The argument in the proposal that the directors' retirement benefits
contribute to "entrench management's controls over corporate policies" is
without merit. The proponent offers no evidence that the retirement benefits
for directors compromises in any way the impartiality of the Company's
directors.
The compensation that the Company provides to non-employee directors,
including retirement benefits, is fair and appropriate in view of the
substantial time, effort and potential liability involved in serving as a member
of the Board.
Adoption of proposal 3 will require the affirmative vote of a majority
of the Common Stock present or represented at the meeting, and abstentions will
have the effect of votes in opposition, and broker non-votes will not have any
effect on the vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ADOPTION OF THIS
PROPOSAL.
17
<PAGE>
OTHER TRANSACTIONS
In connection with Mr. Schmidt's relocation to Connecticut, the
Company made a loan to Mr. Schmidt on December 12, 1995 in the amount of
$151,000 for the purpose of purchasing a residence in the Connecticut area.
The loan is to be repaid promptly after the closing on the sale of his prior
residence and in any event within fifteen days of closing. The loan, originally
due on March 12, 1996, was interest free until that date and since it remains
outstanding is now being charged interest at the annual rate of 6.7%.
ANNUAL REPORT
Beginning on March 21, 1996 the Company is mailing to its shareholders
of record copies of its Annual Report for the year ended December 31, 1995.
Such Report is not a part of the proxy materials.
THE COMPANY WILL FURNISH TO ANY BENEFICIAL OWNER OF ITS COMMON STOCK
UPON WRITTEN REQUEST, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR 1995 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS
SHOULD BE ADDRESSED TO CORPORATE COMMUNICATIONS, AQUARION COMPANY, 835 MAIN
STREET, BRIDGEPORT, CONNECTICUT 06601.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Any proposal that a shareholder intends to present at the 1997 Annual
Meeting must be received at the Company's principal executive offices by
November 20, 1996 to be included in the proxy statement and form of proxy
relating to the meeting.
OTHER MATTERS
OTHER BUSINESS
Management knows of no other matters to be presented to the 1996
Annual Meeting of Shareholders. If any additional matters should be properly
presented, it is the intention of the persons named in the proxy to vote with
respect to such matters in accordance with their best judgment.
By Order of the Board of Directors
Larry L. Bingaman
Secretary
18
<PAGE>
AQUARION COMPANY COMMON STOCK PROXY
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 23, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Donald M. Halsted, Jr., Jack E. McGregor and Richard K. Schmidt, or any
of them with power of substitution, are hereby appointed proxies of the
undersigned to vote all common stock of Aquarion Company owned by the
undersigned at the Annual Meeting of Shareholders to be held in Center
Barnstead, New Hampshire on April 23, 1996 or any adjournment thereof, upon such
business as may properly come before the meeting, including the following items,
as set forth in the Notice of Meeting and Proxy Statement:
1. Election of Class II 2. Ratification of selection 3. To consider a share-
Directors of independent accountants holder proposal
relating to the
retirement plan for
non-employee
directors
The shares represented hereby will be voted in accordance with the
directions given by the shareholder. If not otherwise directed, the shares
represented by this proxy will be voted for Proposals 1 and 2 and against
Proposal 3.
(Continued and to be signed, on reverse side)
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[UP ARROW] FOLD AND DETACH HERE [UP ARROW]
<PAGE>
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The Board of Directors recommends a vote FOR Proposals 1 and 2 and AGAINST
Proposal 3: [X]
1. Election of Class II Directors
I plan to attend
FOR WITHHOLD the meeting. [_]
[_] [_]
NOMINEES: Janet D. Greenwood, Donald M. Halsted, Jr. and John A. Urquhart
(To withhold authority to vote for any individual nominee, write that
nominee's name on space provided below.)
2. Ratification of selection of Price Waterhouse as independent accountants
FOR AGAINST ABSTAIN
[_] [_] [_]
3. To consider a shareholder proposal relating to the retirement plan for
non-employee directors
FOR AGAINST ABSTAIN
[_] [_] [_]
Dated: , 1996
----------
------------------------
Signature of Shareholder
-------------------------------
Signature (if held jointly)
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting. Please mark, date, sign and return
promptly in the enclosed envelope, which requires no postage if mailed in the
U.S.A. When signing as attorney, executor, trustee or guardian or in other
representative capacities, please give full title as such.
- --------------------------------------------------------------------------------
[UP ARROW] FOLD AND DETACH HERE [UP ARROW]
AQUARION COMPANY
Annual Meeting of Shareholders
Tuesday, April 23, 1996
10:00 a.m.
Timco, Inc.
William S. Warner Custom Building
Depot Street
Center Barnstead, New Hampshire 03225
IF YOU PLAN TO ATTEND THE ANNUAL MEETING OF
SHAREHOLDERS, PLEASE CHECK THE ABOVE BOX AND
AN ADMISSION CARD WITH DIRECTIONS WILL BE
SENT TO YOU.
