SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MIDDLESEX WATER COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/_/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(1)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
/X/ No Fee Required.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ 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 No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
[MIDDLESEX LETTERHEAD]
April 19, 1999
Dear Stockholder:
I cordially invite you to the 1999 annual meeting of Middlesex Water
Company shareholders. The meeting will be held at the office of the Company,
1500 Ronson Road, Iselin, New Jersey, on Wednesday, May 26, 1999, at 11:00 a.m.
The primary business of the meeting will be election of directors and
approval of the selection of Deloitte & Touche LLP as independent auditors for
1999, and transaction of such other business as may properly come before the
meeting.
During the meeting, we will report to you on the Company's financial
status, operations and other achievements during 1998, together with our goals
for 1999. We welcome this opportunity to meet with our stockholders and look
forward to your comments and questions.
Your vote is important to us. Whether or not you plan to attend the annual
meeting, I urge you to vote. Please specify your choice by marking the
appropriate boxes on the enclosed proxy card and sign, date and return your
proxy in the enclosed postpaid return envelope as promptly as possible. If you
date, sign and return your proxy card without indicating your choices, the
persons designated as proxies will vote your shares in accordance with the
recommendations of the Directors and management.
I look forward to seeing you on May 26th.
Sincerely,
/s/ J. Richard Tompkins
-----------------------------------
J. Richard Tompkins
Chairman of the Board and President
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SOLICITATION AND REVOCATION OF PROXIES...................... 1
SHARES ENTITLED TO VOTE..................................... 1
VOTE REQUIRED AND METHOD OF COUNTING VOTES.................. 1
GENERAL INFORMATION......................................... 2
PROPOSAL 1--ELECTION OF DIRECTORS........................... 2
NOMINEES FOR ELECTION AS DIRECTOR WITH TERM EXPIRING
IN 2002--CLASS III........................................ 3
DIRECTORS WHOSE TERMS CONTINUE BEYOND THE 1999 ANNUAL
MEETING................................................... 3
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS......................................... 5
EXECUTIVE COMPENSATION...................................... 6
Summary Compensation Table................................ 6
Compensation of Directors................................. 6
Compensation Pursuant to Pension Plans.................... 7
Compensation Committee Interlocks and Insider
Participation.......................................... 8
REPORT OF THE EXECUTIVE DEVELOPMENT
AND COMPENSATION COMMITTEE................................ 8
STOCK PERFORMANCE GRAPH..................................... 10
PROPOSAL 2--APPOINTMENT OF INDEPENDENT AUDITORS............. 11
STOCKHOLDER PROPOSALS....................................... 11
OTHER MATTERS............................................... 11
MINUTES OF 1998 MEETING OF STOCKHOLDERS..................... 11
</TABLE>
<PAGE>
[MIDDLESEX LETTERHEAD]
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 26, 1999
AND
PROXY STATEMENT
------------------------
To the Stockholders of MIDDLESEX WATER COMPANY
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MIDDLESEX
WATER COMPANY will be held at the office of the Company, 1500 Ronson Road,
Iselin, New Jersey, on Wednesday, May 26, 1999, at 11:00 a.m., for the following
purposes:
1. To elect two members of Class III of the Board of Directors to hold
office until the Annual Meeting of Stockholders in the year 2002, and
in each case until their respective successors are elected and qualify.
2. To consider and act upon the approval of the appointment of Deloitte &
Touche LLP as independent auditors for the year 1999.
3. To transact such other business as may properly come before the meeting
and any adjournment thereof.
Only holders of record of Common Stock at the close of business on April 1,
1999, will be entitled to notice of and to vote at the meeting or any
adjournment thereof.
The Company's Annual Report for the year ended December 31, 1998, has
already been mailed to stockholders.
If you are unable to be present at the meeting but desire to have your
shares voted, please execute the enclosed proxy and return it in the
accompanying envelope, to which no postage need be affixed if mailed in the
United States.
By Order of the Board of Directors,
/s/ Marion F. Reynolds
--------------------------------
MARION F. REYNOLDS
Secretary
April 19, 1999
IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE
MAIL THE ENCLOSED PROXY PROMPTLY.
<PAGE>
[MIDDLESEX LETTERHEAD]
------------------------
PROXY STATEMENT
------------------------
Notice of the Annual Meeting of Stockholders of Middlesex Water Company to
be held on May 26, 1999, is attached. You are cordially invited to attend the
meeting. If you are unable to attend, you are requested to sign and complete the
enclosed proxy and return it in the accompanying envelope.
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by and on behalf of the Board of Directors
of the Company. The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, the Company may make arrangements with
brokerage houses and other custodians, nominees, and fiduciaries to send proxies
and proxy material to their principals and will reimburse them for their
expenses in so doing. The solicitations will be initially by mail, and it may
later be decided to make further solicitations by mail, telephone, telegraph, or
personal calls by Directors, Officers, and employees of the Company. This proxy
statement and the accompanying proxy are first being sent to stockholders on or
about April 19, 1999.
The giving of a proxy does not preclude the right to vote in person should
the Stockholder giving the proxy so desire, and a proxy may be revoked by giving
notice to the Secretary of the Company in writing at any time prior to the
commencement of the meeting or in open meeting prior to the taking of the vote
to which such revocation relates.
SHARES ENTITLED TO VOTE
As of April 1, 1999, there were outstanding 4,910,018 shares of Common
Stock which is the only class of capital stock entitled to vote at the Annual
Meeting. Each holder of Common Stock is entitled to one vote for each share
held. As stated in the Notice of Meeting, holders of record of Common Stock at
the close of business on April 1, 1999, will be entitled to vote at the meeting
or any adjournment thereof.
VOTE REQUIRED AND METHOD OF COUNTING VOTES
The affirmative vote of a plurality of the votes cast at the meeting is
required for the election of Directors. For the ratification of the appointment
of Deloitte & Touche LLP, the affirmative vote of the holders of a majority of
the shares represented, in person or by proxy, and entitled to vote on the item
will be required. Abstentions and broker non-votes will not be included in
determining the number of votes cast concerning any matter.
1
<PAGE>
GENERAL INFORMATION
Management of the Company is under the general direction of a Board of
Directors elected by the stockholders. The Board of Directors holds regular
monthly meetings and meets on other occasions when required in special
circumstances. The Board of Directors held fifteen meetings and the Board
Committees held fourteen meetings during the year 1998. Each incumbent Director
attended more than 75% of the total number of meetings of the Board and
Committees on which each served. Attendance at Board and Committee meetings by
Directors as a group averaged 96% in 1998.
The Board of Directors has an Audit Committee, consisting of John C.
Cutting, John P. Mulkerin and Philip H. Reardon, which reviews the scope of the
audit and receives and reviews the auditors' annual report. The Committee held
two meetings during the year 1998.
The Board of Directors has an Executive Development and Compensation
Committee, consisting of Ernest C. Gere, Stephen H. Mundy and Jeffries Shein,
which reviews and makes recommendations to the Board of Directors as to the
salaries and benefits of the Executive Officers of the Company and administers
the 1989 Restricted Stock Plan. The Committee held four meetings during the year
1998.
The Board of Directors has a Pension Committee, consisting of John C.
Cutting, Ernest C. Gere and Philip H. Reardon, which reviews investment policies
and determines recommended investment objectives for the Company's Pension Plan
and serves as trustee for the Company's Voluntary Employees' Beneficiary
Association Trust. The Committee meets periodically with the Company's
Investment Managers. The Committee held four meetings during the year 1998.
The Board of Directors appoints an ad hoc Pricing Committee from time to
time as needed. In September 1997 such a Committee, consisting of Ernest C.
Gere, John P. Mulkerin and Jeffries Shein, was appointed to approve the terms of
the sale of First Mortgage Bonds in March 1998 and the sale of Common Stock in
December 1998. The Committee held two meetings during the year 1998.
The Board of Directors appoints an ad hoc Nominating Committee from time to
time as needed. Such a Committee, consisting of John P. Mulkerin, Stephen H.
Mundy and Jeffries Shein, was appointed in September 1998. The Committee held
three meetings during the year 1998. Qualified nominations for Directors
recommended by stockholders will be considered by a Nominating Committee when
appointed. Recommendations should be sent to Middlesex Water Company, Office of
the Secretary, 1500 Ronson Road, P.O. Box 1500, Iselin, New Jersey 08830-0452.
Any nominations for Director should be received by the Secretary on or before
December 22, 1999.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders two members of Class III of the Board
of Directors are to be elected each to hold office until the Annual Meeting of
Stockholders in the year 2002, and until their respective successors are elected
and qualify. The present terms of the two Directors included in Class III of the
Board of Directors expire at the 1999 Annual Meeting. Effective January 1, 1999,
William E. Scott (a Director since 1978), whose three-year term was to expire at
the 1999 annual meeting, elected to go to Emeritus status.
The nominees listed were selected by the Board of Directors of the Company.
Proxies in the accompanying form will be voted for these nominees, unless
authority to vote for one or more of them shall have been withheld by so marking
the enclosed proxy. Directors shall be elected by a plurality of the votes cast
at the election.
If at the time of the meeting any of the nominees listed should be unable
to serve, which is not anticipated, it is the intention of the persons
designated as proxies to vote, in their discretion, for other nominees, unless
the number of Directors constituting a full Board is reduced.
There is shown as to each nominee, and as to each Director whose term of
office will continue after the 1999 Annual Meeting, age as of the date of the
Annual Meeting, the period of service as a Director of the Company, and business
experience during the last five years.
2
<PAGE>
NOMINEES FOR ELECTION AS
DIRECTOR WITH TERM EXPIRING IN 2002--CLASS III
<TABLE>
<CAPTION>
EXPIRATION BUSINESS EXPERIENCE
NAME, PERIOD SERVED AS DATE OF DURING PAST FIVE YEARS
DIRECTOR OF COMPANY AGE NEW TERM AND OTHER AFFILIATIONS
---------------------- --- ---------- ----------------------
<S> <C> <C> <C>
Jeffries Shein (1)................... 58 2002 Partner, Jacobson, Goldfarb & Tanzman,
Director since 1990 Industrial and Commercial Brokerage
Firm, Woodbridge, New Jersey.
Director of First Sentinel Bancorp,
Inc., holding company for First
Savings Bank/SLA, Perth Amboy, New
Jersey, and Chairman of the Board of
Raritan Bay Medical Center.
Chairman of Nominating Committee and
Member of Executive Development and
Compensation Committee and Pricing
Committee.
J. Richard Tompkins.................. 60 2002 Chairman of the Board and President of
Director since 1981 the Company. Past President of National
Association of Water Companies,
Director of New Jersey Utilities
Association and Raritan Bay
Healthcare Foundation. Director and
Chairman of Tidewater Utilities, Inc.
(TUI), Pinelands Water Company and
Pinelands Wastewater Company;
Director and President of Utility
Service Affiliates, Inc., and Utility
Service Affiliates (Perth Amboy)
Inc., subsidiaries of the Company;
and Director of Public Water Supply
Company, Inc.; and Director and
Chairman of White Marsh Envi-
ronmental Systems, Inc., subsidiaries
of TUI.
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 1.
DIRECTORS WHOSE TERMS CONTINUE BEYOND
THE 1999 ANNUAL MEETING AND ARE NOT
SUBJECT TO REELECTION THIS YEAR
<TABLE>
<CAPTION>
EXPIRATION BUSINESS EXPERIENCE
NAME, PERIOD SERVED AS DATE OF TERM DURING PAST FIVE YEARS
DIRECTOR OF COMPANY AGE AND CLASS AND OTHER AFFILIATIONS
---------------------- --- ------------ ----------------------
<S> <C> <C> <C>
John C. Cutting...................... 62 2000 Consulting Engineer, Science
Director since 1997 Class I Applications International
Corporation, specialists in in-
formation, energy and military
systems, Pittsburgh, Pennsylvania,
since 1998 and prior to that date
was Senior Engineer since 1987.
Member of Audit and Pension
Committees.
Ernest C. Gere....................... 66 2001 Retired. Formerly Senior Vice
Director since 1988 Class II President and Chief Financial Officer
of the Company.
Chairman of Pricing Committee and
Member of Executive Development and
Compensation Committee and Pension
Committee.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
EXPIRATION BUSINESS EXPERIENCE
NAME, PERIOD SERVED AS DATE OF TERM DURING PAST FIVE YEARS
DIRECTOR OF COMPANY AGE AND CLASS AND OTHER AFFILIATIONS
---------------------- --- ------------ ----------------------
<S> <C> <C> <C>
John P. Mulkerin (1)................. 61 2000 President, Chief Executive Officer
Director since 1997 Class I and Director of First Sentinel
Bancorp, Inc., holding company for
First Savings Bank/SLA of Perth
Amboy, New Jersey, since 1997 and
prior to that date was Executive
Vice President, Chief Operating
Officer and Corporate Secretary
since 1987 and General Counsel
since 1993. Director of FSB Fi-
nancial Corp., Raritan Bay Medical
Center and Daytop Village
Foundation.
Chairman of Audit Committee and
Member of Nominating and Pricing
Committees.
Stephen H. Mundy..................... 65 2001 Retired. Formerly Vice President, A.
Director since 1977 Class II Stanley Mundy, Inc., Public Utility
Contractor, Virginia Beach,
Virginia.
Chairman of Executive Development and
Compensation Committee and Member
of Nominating Committee.
Philip H. Reardon.................... 62 2000 Retired. Formerly President and
Director since 1991 Class I Chief Executive Officer, Essex County
Gas Company, Amesbury,
Massachusetts. Director of New
England Gas Association, American
Gas Association and First & Ocean
National Bank.
Chairman of Pension Committee and
Member of Audit Committee.
Richard A. Russo..................... 53 2001 Executive Vice President of the
Director since 1994 Class II Company since May 1996 and prior to
that date was Vice
President-Operations since 1989.
Director and President of Tidewater
Utilities, Inc. (TUI), Pinelands
Water Company and Pinelands
Wastewater Company; Director and
Executive Vice President of Utility
Service Affiliates, Inc., and
Utility Service Affiliates (Perth
Amboy) Inc., subsidiaries of the
Company; and Director and President
of Public Water Supply Company,
Inc., and White Marsh Environmental
Systems, Inc., subsidiaries of TUI.
Director and Vice President of
Sussex Shores Water Company.
</TABLE>
- ------------------
(1) In addition to maintaining lines of credit totaling $18,000,000 with two
other financial institutions, the Company has established a $10,000,000 line
of credit with First Savings Bank/SLA of Perth Amboy, New Jersey. All such
lines of credit may be drawn on for short terms at market rates.
4
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of April 1, 1999, beneficial ownership
of Middlesex Water Company Common Stock by the elected Directors, Executive
Officers named in the table appearing under Executive Compensation and all
elected Directors and Executive Officers as a group. Jeffries Shein owned 1.35%
of the shares outstanding on April 1, 1999. All other individual elected
Directors and Executive Officers owned less than 1% of the shares outstanding on
April 1, 1999.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME OWNERSHIP
- ---- -----------------
<S> <C>
Directors
John C. Cutting 16,214
Ernest C. Gere 4,920
John P. Mulkerin 3,500
Stephen H. Mundy 33,648
Philip H. Reardon 10,533
Richard A. Russo 8,802
Jeffries Shein* 73,700
J. Richard Tompkins** 22,367
Named Executive Officers
Walter J. Brady 8,517
Dennis G. Sullivan 5,167
Ronald F. Williams 2,131
All elected Directors and Executive Officers as a
group including those named above (13) 204,280***
</TABLE>
- ------------------
* Includes 7,429 shares over which Mr. Shein has shared voting powers. Mr.
Shein also disclaims beneficial ownership of 1,973 additional shares.
** Disclaims beneficial ownership of 214 additional shares.
*** 4.16% of the shares outstanding on April 1, 1999.
The following table sets forth information made known to the Company as of
December 31, 1997, of any person or group to be the beneficial owner of more
than five percent of the Company's Common Stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED
AND NATURE OF BENEFICIAL PERCENT OF
NAME AND ADDRESS OWNERSHIP (1) CLASS
- ---------------- ------------------------ ----------
<S> <C> <C>
Verona Construction Company 329,800 6.72%
1201 Market Street
Wilmington, Delaware 19801
</TABLE>
- ------------------
(1) Beneficial owner has sole power to vote and dispose of such shares.
5
<PAGE>
EXECUTIVE COMPENSATION
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the years 1998,
1997 and 1996 of those officers whose total annual salary amounted to $100,000
or more.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
RESTRICTED ALL OTHER
NAME AND STOCK ANNUAL
PRINCIPAL POSITION YEAR SALARY BONUS AWARD COMPENSATION
------------------ ---- -------- ------- ---------- ------------
(1) (2)
<S> <C> <C> <C> <C> <C>
J. Richard Tompkins 1998 $256,350 $24,615 $43,500 $10,470
Chairman of the Board 1997 $239,350 $25,462 $ 8,372
and President 1996 $229,350 $40,844 $ 8,285
Richard A. Russo 1998 $166,773 $12,846 $21,750 $ 6,794
Executive Vice President 1997 $153,350 $13,580 $ 6,497
1996 $143,350 $21,239 $ 5,989
Walter J. Brady 1998 $127,369 $ 9,808 $21,750 $ 5,760
Senior Vice President- 1997 $119,950 $ 6,790 $ 5,373
Administration 1996 $115,350 $11,436 $ 5,170
Dennis G. Sullivan 1998 $123,369 $ 9,500 $21,750 $ 5,397
Vice President & General 1997 $115,750 $ 6,790 $ 5,168
Counsel and Assistant 1996 $111,350 $13,070 $ 4,974
Secretary & Assistant
Treasurer
Ronald F. Williams 1998 $115,469 $ 8,892 $21,750 $ 4,473
Vice President-Operations 1997 $108,550 $ 6,790 $ 4,047
1996 $104,350 $ 8,169 $ 4,023
</TABLE>
- ------------------
(1) The number and value of Restricted Stock held in escrow as of December 31,
1998, were as follows: Mr. Tompkins-9,900/$240,075; Mr.
Russo-4,900/$118,825; Mr. Brady-3,300/$80,025; Mr. Sullivan-3,700/$89,725;
and Mr. Williams-1,900/$46,075. Generally, the restrictions lapse on these
awards five years from the date of grant. The restrictions also lapse in the
event of a change in control of the Company. All dividends on these shares
are paid to the awardees.
(2) Includes employer contributions to the Company's defined contribution plan
and life insurance premiums for 1998: Mr. Tompkins ($5,600 and $4,870), Mr.
Russo ($5,600 and $1,194), Mr. Brady ($4,446 and $1,314), Mr. Sullivan
($4,139 and $1,258) and Mr. Williams ($4,029 and $444); for 1997: Mr.
Tompkins ($5,542 and $2,830), Mr. Russo ($5,425 and $1,072), Mr. Brady
($4,186 and $1,187), Mr. Sullivan ($4,039 and $1,129) and Mr. Williams
($3,648 and $399); and for 1996: Mr. Tompkins ($5,542 and $2,743), Mr. Russo
($5,005 and $984), Mr. Brady ($4,025 and $1,145), Mr. Sullivan ($3,885 and
$1,089) and Mr. Williams ($3,640 and $484).
COMPENSATION OF DIRECTORS
A Director who is not an officer of the Company or its subsidiaries is paid
an annual retainer of $6,000 and a fee of $500 for attendance at Board of
Directors (Board) meetings; a fee of $250 for attendance at special meetings of
the Board and a fee of $150 for attendance at special Board Committee meetings
by means of communications facilities and a fee of $350 for each committee
meeting attended. Committee chairmen receive an additional $200 for each
committee meeting chaired. Directors who are officers of the Company are paid a
fee of $250 for each meeting of the Board attended.
6
<PAGE>
COMPENSATION PURSUANT TO PENSION PLANS
ANNUAL BENEFIT BASED ON COMPENSATION AND YEARS OF SERVICE
<TABLE>
<CAPTION>
FINAL YEARS OF SERVICE
YEAR'S ---------------------------------------------------------------
COMPENSATION 15 20 25 30 35 45
------------ -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$100,000.................... $ 58,376 $ 58,376 $ 58,376 $ 58,376 $ 59,418 $ 71,918
$125,000.................... $ 77,126 $ 77,126 $ 77,126 $ 77,126 $ 77,126 $ 91,668
$150,000.................... $ 95,876 $ 95,876 $ 95,876 $ 95,876 $ 95,876 $111,418
$175,000.................... $114,626 $114,626 $114,626 $114,626 $114,626 $119,318
$200,000.................... $133,376 $133,376 $133,376 $133,376 $133,376 $133,376
$225,000.................... $152,126 $152,126 $152,126 $152,126 $152,126 $152,126
$250,000.................... $170,876 $170,876 $170,876 $170,876 $170,876 $170,876
$300,000.................... $208,376 $208,376 $208,376 $208,376 $208,376 $208,376
</TABLE>
All employees who receive pay for 1,000 hours during the year are included
in the Qualified Pension Plan. Under the noncontributory trusteed defined
benefit plan, current service costs are funded annually. The Company's annual
contribution is determined on an actuarial basis. Benefits are measured from the
member's entry date and accrue to normal retirement date or date of early
retirement. Benefits are calculated, at normal retirement, at 1.25% of pay up to
the Executive's benefit integration level, plus 1.9% of such excess pay,
multiplied by service to normal retirement date, capped at 35 years of such
excess pay, multiplied by service to normal retirement date of age 65. Average
pay is the highest annual average of total pay during any 5 consecutive years
within the 10 calendar-year period prior to normal retirement date. The benefit
integration level is based on the 1998 Summary Compensation Table. The benefit
amounts are not subject to any deduction for Social Security benefits or other
offset amounts.
During the year 1998, the Company was not required to make a statutory
contribution to the Pension Plan. Remuneration covered under the Pension Plan
includes base wages only and not Directors' fees.
The estimated credited years of service based on normal retirement at age
65 includes 22 years, 20 years, 44 years, 22 years and 19 years for Messrs.
Tompkins, Russo, Brady, Sullivan, and Williams, respectively.
Supplemental Executive Retirement Plan--All executive officers are eligible
to participate in the deferred compensation plan known as the Supplemental
Executive Retirement Plan at the discretion of the Board of Directors.
A participant who retires on his normal retirement date is entitled to an
annual retirement benefit equal to 75% of his compensation reduced by his
primary Social Security benefit and further reduced by any benefit payable from
the Qualified Pension Plan. In certain cases further reductions are made for
benefits from other employment. Generally, a participant is vested at 10 years
of service. Annual retirement benefits are payable for 15 years either to the
participant or his beneficiary. Retirement benefits may be in the form of single
life annuity, joint and 50% survivors annuity, joint and 100% survivors annuity,
single life annuity with a 10-year certain period and single life annuity with a
15-year certain period paid on an actuarial equivalent basis.
The Company is not obligated to set aside or earmark any monies or other
assets specifically for the purpose of funding the Plan, except that upon a
change of control the Company would be obligated to make contributions to a
trust anticipated to be sufficient to meet its obligations under the Plan. In
any event, the benefits are in the form of an unfunded obligation of the
Company. The Company has elected to purchase Corporate-owned life insurance as a
means of satisfying its obligation under this Plan. The Company reserves the
right to terminate any plan or life insurance at any time; however, a
participant is entitled to any benefits he would have been entitled to under the
Plan provisions. For the year 1998 the Company paid life insurance premiums
totaling $0.1 million for Messrs. Tompkins, Russo, Brady, Sullivan and Williams,
which provides a preretirement net death benefit of 1 1/2 times base salary at
date of death.
7
<PAGE>
Defined Contribution Plan--The Company matches 100% of that portion of the
contribution which does not exceed 1% of basic pay plus an additional 50% of
that portion from 2% to 6% of basic pay. Distributions under the Plan are made
upon normal retirement, total and permanent disability or death and are subject
to certain vesting provisions as to Company contributions. In 1996, this Plan
was converted from an after tax plan to a 401(k) pre tax plan.
Change of Control Agreements--The Company has change of control termination
agreements with the named executive officers, and the other executive officers.
These agreements provide that if the executive is terminated by the Company,
other than for death, disability, cause (as defined in the agreement) or good
reason (as defined in the agreement) within three years after a change of
control, the executive is entitled to receive (a) a lump sum severance payment
equal to the sum of three times the executive's average total compensation for
the five years prior to the termination; (b) continued coverage for three years
under any health or welfare plan in which the executive and the executive's
dependents were participating; and (c) an additional amount sufficient to pay
any additional tax liability resulting from the severance payments and benefits
under this, and any other plans or agreements. In addition, the executive will
be entitled to receive benefits under the Supplemental Executive Retirement
Plan, at the executive's otherwise normal retirement date, with such benefits
calculated as if the executive had continued employment to age 65, unless the
executive elects to receive such benefits at a lesser amount at termination.
Further, all restricted stock held by the executive will become unrestricted
(with respect to the plan's five year holding period) upon a change of control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the 1998 Executive Development and Compensation Committee
were Ernest C. Gere, Stephen H. Mundy and Jeffries Shein. During 1998, no member
of the Executive Development and Compensation was an officer or employee of the
Company or a subsidiary. Stephen H. Mundy has a financial interest in a
construction company that was awarded a contract by the Company in the amount of
$1.0 million in 1998. Mr. Gere was formerly Senior Vice President of the
Company.
REPORT OF THE EXECUTIVE DEVELOPMENT AND COMPENSATION COMMITTEE
OVERVIEW
The compensation program for executive officers of the Company is
administered by the Executive Development and Compensation Committee of the
Board of Directors. The 1999 Committee is composed of three independent
Directors: Ernest C. Gere, Stephen H. Mundy and Jeffries Shein. The Committee is
responsible for setting and administering the policies which govern annual
compensation and Restricted Stock awards. Policies and plans developed by the
Committee are approved by the full Board of Directors.
The Committee's compensation policies and plans applicable to the executive
officers seek to enhance the profitability of the Company and shareholder value,
as well as control costs and maintain reasonable rates for the customers. The
Committee's practices reflect policies that compensation should (1) attract and
retain well-qualified executives, (2) support short- and long-term goals and
objectives of the Company, (3) reward individuals for outstanding contributions
to the Company's success, (4) be meaningfully related to the value created for
shareholders, and (5) relate to maintenance of good customer relations and
reasonable rates.
The Committee meets with Mr. Tompkins to evaluate the performance of the
other executive officers and meets in the absence of Mr. Tompkins to evaluate
his performance. The Committee reports on all executive evaluations to the full
Board of Directors.
8
<PAGE>
SALARY COMPENSATION
Base salary levels are reviewed annually using compensation data produced
by an independent compensation consultant for similar positions and comparable
companies. Base salaries for satisfactory performance are targeted at the median
of the competitive market. Individual performance of the executive is determined
and taken into account when setting salaries against the competitive market
data. The Committee reviews, as well, the individual's efforts on cost control
and his or her contributions to the results of the year. The Committee also
reviews the Company's financial results compared with prior years and compared
with other companies. It compares salaries with both water and general industry
salaries.
The factors and criteria upon which Mr. Tompkins' compensation was based
generally include those discussed with respect to all the executive officers.
Specifically, however, his salary is based on his overall performance and that
of the Company. His salary was set at a rate which was approximately the median
of the utility market and below that of the general industry. In addition, in
evaluating the performance of the CEO, the Committee has taken particular note
of management's success with respect to the growth of the Company.
RESTRICTED STOCK
The Company maintains a restricted stock plan for the purpose of attracting
and retaining key executives and other employees having managerial or
supervisory responsibility who have contributed, or are likely to contribute,
significantly to the long-term performance and growth of the Company and its
subsidiaries. This plan is designed to enhance financial performance, customer
service and corporate efficiency through a performance-based stock award. Annual
stock awards are based upon several factors including the participant's ability
to contribute to the overall success of the Company.
The level of awards and the value of the performance are reviewed annually
by the Committee. The Committee submits reports on all executive evaluations and
restricted stock awards to the full Board of Directors for approval.
1999 Executive Development and Compensation Committee
Stephen H. Mundy, Chairman
Ernest C. Gere
Jeffries Shein
9
<PAGE>
STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly change in the
cumulative total return (which includes reinvestment of dividends) of a $100
investment for the Company's Common Stock, the NASDAQ and a peer group of
investor-owned water utilities for the period of five years commencing December
31, 1993. The peer group includes American States Water Company, Aquarion
Company, California Water Service Company, Connecticut Water Service, Inc.,
Consumers Water Company, E'town Corporation, Philadelphia Suburban Corporation,
SJW Corporation, Southwest Water Company, United Water Resources and the
Company.
In the printed version there appears a line graph
depicted by the following plot points:
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Middlesex $100 $ 81 $ 97 $ 96 $136 $154
NASDAQ 100 98 138 170 208 294
Peer Group 100 92 106 135 183 231
</TABLE>
10
<PAGE>
PROPOSAL 2
APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed Deloitte & Touche LLP of Parsippany, New Jersey, as independent
auditors to make the annual audit of the books of account and supporting records
of the Company for 1999, subject to the approval of the stockholders entitled to
vote for the election of Directors, by a majority of the votes cast on the
question of such approval, provided a quorum is present, at the Annual Meeting
of Stockholders.
Representatives of Deloitte & Touche LLP will be present at the meeting,
and will be afforded an opportunity to make a statement if they so desire and to
respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2.
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the Securities and Exchange
Commission. Should a stockholder intend to present a proposal at next year's
annual meeting, it must be received by the Secretary of the Company at 1500
Ronson Road, P.O. Box 1500, Iselin, New Jersey 08830-0452, not later than
December 22, 1999, in order to be included in the Company's proxy statement and
form of proxy relating to that meeting.
OTHER MATTERS
The Management of the Company does not intend to bring any other matters
before the meeting and has no reason to believe any will be presented to the
meeting. If, however, other matters properly do come before the meeting, it is
the intention of the persons named in the accompanying proxy to vote in
accordance with their judgment in such matters.
MINUTES OF 1998 MEETING OF STOCKHOLDERS
The minutes of the 1998 meeting of Stockholders will be submitted at the
meeting for the correction of any errors or omissions but not for the approval
of the matters referred to therein.
By Order of the Board of Directors,
/s/ Marion F. Reynolds
--------------------------------
MARION F. REYNOLDS
Secretary
Iselin, New Jersey
April 19, 1999
11
<PAGE>
[MIDDLESEX LOGO] 1500 Ronson Road
Iselin, New Jersey 08830-0452
732-634-1500
In the printed version there is a
graphic image of a map showing the
location of the Company.
DIRECTIONS TO MIDDLESEX WATER COMPANY
FROM GARDEN STATE PARKWAY (NORTH OR SOUTH): Take Exit 131A to second
traffic light. Turn right onto Middlesex-Essex Turnpike and proceed (about 1/2
mile) to third traffic light (Gill Lane). Turn right and go (about 1 mile) under
railroad underpass and make right onto Ronson Road. Proceed past three large
mirror-sided office buildings on the right. At the sign, make a right into
Middlesx Water Company.
FROM NEW JERSEY TURNPIKE (NORTH OR SOUTH): Take Exit 11 onto the Garden
State Parkway North and follow above directions.
FROM US ROUTE NO. 1 (NORTH OR SOUTH): Proceed to the Woodbridge Center area
and follow signs to Gill Lane. When on Gill Lane, make left turn onto Ronson
Road and follow above directions.
<PAGE>
<PAGE>
| | PLEASE MARK VOTES REVOCABLE PROXY
| X | AS IN THIS EXAMPLE MIDDLESEX WATER COMPANY
ANNUAL MEETING OF SHAREHOLDERS
MAY 26, 1999
The undersigned stockholder(s) hereby appoint(s) John P. Mulkerin and
Richard A. Russo, and each of them, proxies, with the power to appoint his
substitute, and hereby authorizes them to represent and to vote as designated,
all the shares of common stock of Middlesex Water Company held on record by the
undersigned on April 1, 1999, at the annual meeting of shareholders to be held
on May 26, 1999, at 11:00 a.m., local time or any adjournment thereof.
1. Election of Directors, Nominees for Class III
term expiring in 2002:
With- For All
For |_ | hold |_| Except |_|
Jeffries Shein and J. Richard Tompkins
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominees name in the space provided below.
- --------------------------------------------------------------------------------
2. Approve the appointment of Deloitte & Touche LLP
as auditors for the Company for the year 1999.
For |_ | Against |_| Abstain |_|
In their discretion, the Proxies are authorized to vote upon such other
business that may properly come before the meeting.
PLEASE CHECK BOX IF YOU PLAN
TO ATTEND THE MEETING. |_|
- --------------------------------------------------------------------------------
|
Please be sure to sign and date this Proxy in the box below. | Date
|
- --------------------------------------------------------------------------------
| |
| |
| Sharehholder sign above Co-holder (If any) sign above |
- --------------------------------------------------------------------------------
If this Proxy is properly executed and returned, the shares represented
hereby will be voted. In not otherwise specified, this Proxy will be vote FOR
the persons nominated as directors, and FOR proposal number 2.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS.
<PAGE>
|_|Detach above card, sign, date and mail in postage paid envelope provided.|_|
[LOGO] MIDDLESEX WATER COMPANY
c/o Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016-3572
- --------------------------------------------------------------------------------
PLEASE DATE AND SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR ON THIS PROXY.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If signer is a corporation, please sign full
corporate name by authorized officer and attach a corporate seal. For joint
account, each joint owner should sign.
PLEASE ACT PROMPTLY
BE SURE TO COMPLETE, SIGN AND RETURN THIS PROXY,
WHETHER OR NOT YOU ELECT TO BE PRESENT IN PERSON.
ALL SIGNATURES MUST APPEAR EXACTLY AS YOUR NAME APPEARS ON THIS PROXY.
THANK YOU
Annual Meeting of Shareholders -- May 26, 1999, at 11:00 a.m.
Middlesex Water Company -- 1500 Ronson Rd., Iselin, NJ
