UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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 Rule 14a-11(c) or Rule 14a-12.
MIDDLESEX WATER COMPANY
-----------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person[s] Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-(6)(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(set forth theamount on which the
filing fee is calculated and state how it was determined):
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<PAGE>
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[GRAPHIC - MIDDLESEX WATER CO. LOGO]
500 Ronson Road
P.O. Box 1500
Iselin, New Jersey 08830-0452
Tel. (732) 634-1500
Fax (732) 750-5981
NASDAQ Stock Market Symbol: MSEX
April 17, 2000
Dear Stockholder:
I am pleased to invite you to attend Middlesex Water Company's Annual
Meeting of Shareholders that will take place on Wednesday, May 24, 2000, at
11:00 a.m., at the office of the Company, 1500 Ronson Road, Iselin, New Jersey.
The primary business of the meeting will be election of directors and
approval of the selection of Deloitte & Touche LLP as independent auditors for
2000, 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 1999, together with our goals
for 2000. 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 24th.
Sincerely,
/S/ J. Richard Tompkins
-------------------------
J. Richard Tompkins
Chairman of the Board and President
<PAGE>
TABLE OF CONTENTS
Page
SOLICITATION AND REVOCATION OF PROXIES.................................. 1
SHARES ENTITLED TO VOTE................................................. 1
VOTE REQUIRED AND METHOD OF COUNTING VOTES.............................. 1
GENERAL INFORMATION..................................................... 1
PROPOSAL 1--ELECTION OF DIRECTORS....................................... 2
NOMINEES FOR ELECTION AS DIRECTOR WITH TERM EXPIRING
IN 2003--CLASS I....................................................... 3
NOMINEE FOR ELECTION AS DIRECTOR WITH TERM EXPIRING
IN 2002--CLASS III..................................................... 4
DIRECTORS WHOSE TERMS CONTINUE BEYOND 2000 ANNUAL MEETING............... 4
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT AND CERTAIN
BENEFICIAL OWNERS...................................................... 5
EXECUTIVE COMPENSATION.................................................. 6
Summary Compensation Table............................................. 6
Compensation of Directors.............................................. 7
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 AUDITOR.......................... 11
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS............................ 11
OTHER MATTERS........................................................... 11
MINUTES OF 1999 MEETING OF STOCKHOLDERS................................. 11
<PAGE>
[GRAPHIC - MIDDLESEX WATER CO. LOGO]
1500 Ronson Road
P.O. Box 1500
Iselin, New Jersey 08830-0452
Tel. (732) 634-1500
Fax (732) 750-5981
NASDAQ Stock Market Symbol: MSEX
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 24, 2000
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 24, 2000, at 11:00 a.m., for the following
purposes:
1. To elect three members of Class I of the Board of Directors to hold
office until the Annual Meeting of Stockholders in the year 2003, and
one member 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 2000.
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 March 31, 2000, 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, 1999, 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
----------------------
/S/ MARION F. REYNOLDS
Secretary
April 17, 2000
<PAGE>
[GRAPHIC - MIDDLESEX WATER CO. LOGO]
1500 Ronson Road
P.O. Box 1500
Iselin, New Jersey 08830-0452
Tel. (732) 634-1500
Fax (732) 750-5981
NASDAQ Stock Market Symbol: MSEX
PROXY STATEMENT
Notice of the Annual Meeting of Stockholders of Middlesex Water Company to
be held onMay 24, 2000, 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 17, 2000.
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 March 31, 2000, there were outstanding 5,011,469 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 March 31, 2000, 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.
GENERAL INFORMATION
Management of the Company is under the general direction of the Board of
Directors who are 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 twelve meetings and the Board
Committees held twelve meetings during the year 1999. Each incumbent Director
attended more than 95% 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 99% in 1999.
1
<PAGE>
The Board of Directors has an Audit Committee, consisting of John C.
Cutting, John R. Middleton and John P. Mulkerin, which reviews the scope of the
audit, receives and reviews the auditors' annual report and makes a
recommendation to the Board for the appointment of an independent accounting
firm for the following calendar year. The Committee held two meetings during the
year 1999.
The Board of Directors has an Executive Development and Compensation
Committee, consisting of John C. Cutting, 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
1999.
The Board of Directors has a Pension Committee, consisting of John C.
Cutting, John P. Mulkerin and Jeffries Shein, 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 quarterly with the Company's Investment
Managers. The Committee held four meetings during the year 1999.
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 and reappointed in
September 1999. The Committee held two meetings during the year 1999. A
Nominating Committee when appointed will consider qualified nominations for
Directors recommended by stockholders. Recommendations should be sent to
Middlesex Water Company, Office of the Secretary, 1500 Ronson Road, P.O. Box
1500, Iselin, New Jersey 08830-0452. The Secretary on or before December 19,
2000, should receive any nominations for Director.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders three members of Class I of the Board
of Directors are to be elected each to hold office until the Annual Meeting of
Stockholders in the year 2003, and one member of Class III of the Board of
Directors is to be elected to hold office until the Annual Meeting of
Stockholders in the year 2002, and in each case until their respective
successors are elected and qualified. The present terms of the three Directors
included in Class I and the one Director included in Class III of the Board of
Directors expire at the year 2000 Annual Meeting.
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 year 2000 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
DIRECTORS WITH TERMS EXPIRING IN 2003--CLASS I
<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>
John C. Cutting 63 2003 Retired. Formerly Senior Engineer, Science
Director since 1997 Applications International Corporation, spe-
cialists in information, energy and military
systems, Pittsburgh, Pennsylvania.
Chairman of Pension Committee and Member
of Audit Committee and Executive Develop-
ment and Compensation Committee.
John P. Mulkerin (1) 62 2003 President, Chief Executive Officer and Director
Director since 1997 of First Sentinel Bancorp, Inc., holding com-
pany for First Savings Bank, Perth Amboy,
New Jersey, since 1997 and prior to that date
was Executive Vice President, Chief Operat
- - ing Officer and Corporate Secretary since
1987. Director of FSB Financial Corp., Rari-
tan Bay Medical Center and Daytop Village
Foundation.
Chairman of Audit Committee and Member of
Nominating and Pension Committees.
Dennis G. Sullivan 58 2003 Vice President and General Counsel, Assistant
Director since November 1999 Secretary and Assistant Treasurer of the
Company. Director and Assistant Secretary
and Assistant Treasurer of Tidewater Utili
ties, Inc. (TUI). Director and Assistant Secre-
tary of Pinelands Water Company and Pine-
lands Wastewater Company; Utility Service
Affiliates, Inc., and Utility Service Affiliates
(Perth Amboy) Inc., subsidiaries of the Com-
pany. Director, Vice President and Assistant
Secretary of White Marsh Environmental
Systems, Inc., a subsidiary of TUI.
</TABLE>
3
NOMINEE 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>
John R. Middleton, M.D. 55 2002 Chair of the Department of Medicine and
Director since November 1999 Medical Director of Raritan Bay Medical
Center. Fellow of American College of
Physicians and Member of Editorial Board
(Infectious Diseases) of New Jersey Medi-
cine.
Member of Audit Committee.
</TABLE>
The Board of Directors unanimously recommends a vote FOR Proposal 1.
DIRECTORS WHOSE TERMS CONTINUE BEYOND
THE 2000 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>
Stephen H. Mundy 66 2001 Retired. Formerly Vice President, A. Stanley
Director since 1977 Class II Mundy, Inc., Public Utility Contractor,
Virginia Beach, Virginia.
Chairman of Executive Development and
Compensation Committee and Member of
Nominating Committee.
Richard A. Russo 54 2001 Executive Vice President of the Company since
Director since 1994 Class II 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 Pine-
lands Wastewater Company; Director and
Executive Vice President of Utility Service
Affiliates, Inc., and Utility Service Affiliates
(Perth Amboy) Inc., subsidiaries of the
Company; and White Marsh Environmental
Systems, Inc., a subsidiary of TUI. Director
and Vice President of Sussex Shores Water
Company.
Jeffries Shein (1) 60 2002 Partner, Jacobson, Goldfarb & Tanzman,
Director since 1990 Class III Industrial and Commercial Brokerage Firm,
Woodbridge, New Jersey. Director of First
Sentinel Bancorp, Inc., holding company for
First Savings Bank, 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 Pension
Committee.
</TABLE>
4
<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>
J. Richard Tompkins 61 2002 Chairman of the Board and President of the
Director since 1981 Class III Company. President of National Association
of Water Companies and Director of New
Jersey Utilities Association. Director and
Chairman of Tidewater Utilities, Inc. (TUI);
Pinelands Water Company and Pinelands
Wastewater Company; Director and Presi-
dent of Utility Service Affiliates, Inc., and
Utility Service Affiliates (Perth Amboy) Inc.,
subsidiaries of the Company; and Director
and Chairman of White Marsh Environmen-
tal Systems, Inc., a subsidiary of TUI.
</TABLE>
- -------------------------
(1) The Company has established a $10,000,000 line of credit with First
Savings Bank, Perth Amboy, New Jersey. At December 31, 1999, there was an
outstanding loan of $2,000,000 at an interest rate of 6.10% with First
Savings Bank.
SECURITY OWNERSHIP OF DIRECTORS, MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 31, 2000, 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 1.38%
of the shares outstanding on March 31, 2000. All other individual elected
Directors and Executive Officers owned less than 1% of the shares outstanding on
March 31, 2000.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Name Ownership
Directors
<S> <C>
John C. Cutting............................................ 16,269
John R. Middleton.......................................... 700
John P. Mulkerin........................................... 3,500
Stephen H. Mundy........................................... 32,225
Richard A. Russo........................................... 11,994
Jeffries Shein*............................................ 78,936
Dennis G. Sullivan......................................... 5,738
J. Richard Tompkins**...................................... 22,480
Named Executive Officers
Walter J. Brady............................................ 9,303
A. Bruce O'Connor.......................................... 4,953
All elected Directors and Executive Officers as a group
including those named above (12)........................... 201,530***
</TABLE>
<PAGE>
- -------------------------
* Includes 9,929 shares over which Mr. Shein has shared voting powers. Mr.
Shein also disclaims beneficial ownership of 2,152 additional shares.
** Disclaims beneficial ownership of 431 additional shares.
*** 4.02% of the shares outstanding on March 31, 2000.
5
<PAGE>
The following table sets forth information made known to the Company as of
March 17, 2000, of any person or group to be the beneficial owner of more than
five percent of the Company's Common Stock:
Number of Shares
Beneficially Owned
and Nature
of Beneficial Percent
Name and Address Ownership (1) of Class
---------------- ------------- --------
Verona Construction Company.......... 329,800 6.58%
1201 Market Street
Wilmington, Delaware 19801
- -------------------------
(1) Beneficial owner has sole power to vote and dispose of such shares.
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 1999,
1998 and 1997 of those officers whose total annual salary amounted to $100,000
or more.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Restricted All
Name and Stock Other Annual
Principal Position Year Salary Bonus Award Compensation
(1) (2)
<S> <C> <C> <C> <C> <C>
J. Richard Tompkins 1999 $265,000 $10,192 $51,700 $ 9,416
Chairman of the Board 1998 $256,350 $24,615 $43,500 $10,470
and President 1997 $239,350 -- $25,462 $ 8,372
Richard A. Russo 1999 $176,000 $ 6,769 $25,850 $ 6,512
Executive Vice President 1998 $166,773 $12,846 $21,750 $ 6,794
1997 $153,350 -- $13,580 $ 6,497
Walter J. Brady 1999 $133,000 $ 5,115 $25,850 $ 5,400
Senior Vice President- 1998 $127,369 $ 9,808 $21,750 $ 5,760
Administration 1997 $119,950 -- $ 6,790 $ 5,373
Dennis G. Sullivan 1999 $130,000 $ 5,000 $25,850 $ 5,577
Vice President & General 1998 $123,369 $ 9,500 $21,750 $ 5,397
Counsel and Assistant 1997 $115,750 -- $ 6,790 $ 5,168
Secretary & Assistant
Treasurer
A. Bruce O'Connor 1999 $128,000 $ 4,923 $25,850 $ 4,710
Vice President and 1998 $114,273 $ 9,000 $21,750 $ 4,244
Controller 1997 $103,350 -- $ 6,790 $ 3,745
</TABLE>
- -------------------------
(1) The number and value of Restricted Stock held in escrow as of December
31, 1999, were as follows: Mr. Tompkins -- 10,500/$336,000; Mr.
Russo--5,100/$163,200; Mr. Brady -- 3,700/$118,400; Mr. Sullivan --
4000/$128,000; and Mr. O'Connor--3,350/$107,200. 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.
<PAGE>
(2) Includes employer contributions to the Company's defined contribution
plan and life insurance premiums for 1999: Mr. Tompkins ($5,600 and
$3,816), Mr. Russo ($5,600 and $912), Mr. Brady ($4,341 and $1,059), Mr.
Sullivan ($4,550 and $1,027) and Mr. O'Connor ($4,480 and $230); 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.
O'Connor ($3,987 and $256); 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. O'Connor ($3,605 and $140).
6
<PAGE>
COMPENSATION OF DIRECTORS
A Director who is not an officer of the Company or its subsidiaries is paid
an annual retainerof $8,100, increased from $6,000, and a fee of $600, increased
from $500, for attendance at Board of Directors (Board) meetings; a fee of $300,
increased from $250, for attendance at special meetingsof the Board and a fee of
$150 for attendance at special Board Committee meetings by means of
communications facilities and a fee of $400, increased from $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 $300, increased from $250, for each meeting of the Board attended.
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..................... $ 58,308 $ 58,308 $ 58,308 $ 58,308 $ 59,308 $ 71,479
$125,000..................... $ 77,058 $ 77,058 $ 77,058 $ 77,058 $ 77,058 $ 91,229
$150,000..................... $ 95,808 $ 95,808 $ 95,808 $ 95,808 $ 95,808 $110,979
$175,000..................... $114,558 $114,558 $114,558 $114,558 $114,558 $118,879
$200,000..................... $133,308 $133,308 $133,308 $133,308 $133,308 $133,308
$225,000..................... $152,058 $152,058 $152,058 $152,058 $152,058 $152,058
$250,000..................... $170,808 $170,808 $170,808 $170,808 $170,808 $170,808
$300,000..................... $208,308 $208,308 $208,308 $208,308 $208,308 $208,308
</TABLE>
All employees, including the named executives, who receive pay for 1,000
hours during the year are included in the Company's Qualified Defined Benefit
Pension Plan (Qualified Plan). Under the noncontributory trusteed Qualified
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 employee'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 1999 Summary Compensation Table. The benefit
amounts are not subject to any deduction for Social Security benefits or other
offset amounts.
During the year 1999, the Company was not required to make a statutory
contribution to the Qualified Plan. Remuneration covered under the Qualified
Plan includes base wages only.
The estimated credited years of service based on normal retirement at age
65 includes 22 years, 20 years, 44 years, 22 years and 33 years for Messrs.
Tompkins, Russo, Brady, Sullivan, and O'Connor, respectively.
Supplemental Executive Retirement Plan--The named executive officers are
eligible to participate in the deferred compensation plan known as the
<PAGE>
Supplemental Executive Retirement Plan (Executive 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 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.
7
<PAGE>
The Company is not obligated to set aside or earmark any monies or other
assets specifically for the purpose of funding the Executive 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 Executive
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 the Executive 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 Executive Plan provisions. For the year 1999 the Company paid life insurance
premiums totaling $0.1 million for Messrs. Tompkins, Russo, Brady, Sullivan and
O'Connor, which provides a pre-retirement net death benefit of 1-1/2 times base
salary at date of death.
Defined Contribution Plan--Under its 401(k) Plan, the Company matches 100%
of that portion of the employee contribution which does not exceed 1% of base
pay, plus an additional 50% of that portion from 2% to 6% of base pay.
Distributions under the 401(k) Plan are made upon normal retirement, total and
permanent disability or death and are subject to certain vesting provisions as
to Company contributions.
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 Executive 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. The Board of Directors
is currently considering adding certain provisions to these plans and modifying
the calculations of benefits under certain circumstances, while generally
maintaining the provisions set forth in this paragraph. 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 1999 Executive Development and Compensation Committee
were Ernest C. Gere, Stephen H. Mundy and Jeffries Shein. During 1999, no member
of the Executive Development and Compensation Committee was an officer or
employee of the Company or a subsidiary. Mr. Gere was formerly Senior Vice
President of the Company.
REPORT OF THE EXECUTIVE DEVELOPMENT AND COMPENSATION COMMITTEE
Overview
The Executive Development and Compensation Committee of the Board of
Directors administers the compensation program for executive officers of the
Company. The Committee for the year 2000 is composed of three independent
Directors: John C. Cutting, Stephen H. Mundy and Jeffries Shein. The Committee
is responsible for setting and administering the policies which govern annual
<PAGE>
compensation and Restricted Stock awards. The full Board of Directors approves
policies and plans developed by the Committee.
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.
8
<PAGE>
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.
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.
Year 2000 Executive Development and Compensation Committee
Stephen H. Mundy, Chairman
John C. Cutting
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, a peer group of investor-owned water
utilities, the Wilshire 5000 Stock Index and the NASDAQ for the period of five
years commencing December 31, 1994. The Committee reviewed the validity of
comparing the Company to NASDAQ, a broad market indicator with a very large
population of high technology companies. It determined that shareholders and
investors would be better able to interpret the Company's performance utilizing
a broad market index that was more evenly distributed across all industries. The
Wilshire 5000 Stock Index is being used for this comparison in place of the
NASDAQ as the Committee believes the Wilshire 5000 Index more closely resembles
that type of indicator than the NASDAQ. Nevertheless the Company is required to
show the comparison with both the newly-selected Wilshire 5000 Index and the
previously used NASDAQ. The current peer group includes American States Water
Company, American Water Works Company, Inc., California Water Service Company,
Connecticut Water Service, Inc., Philadelphia Suburban Corporation, Southwest
Water Company, and the Company. Due to announced or completed acquisitions, the
following companies have been removed from the peer group: Aquarion Company
(Completed), Consumers Water Company (Completed), E'town Corporation
(Announced), SJW Corporation (Announced), and United Water Resources
(Announced). Because of this peer group reduction, the Committee deemed it
appropriate to add American Water Works Company, Inc.
[GRAPHIC- DATA POINTS LISTED BELOW]
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
Middlesex $100 $120 $119 $168 $191 $263
Peer Group 100 136 161 224 282 220
Wilshire 5000 100 136 165 217 268 331
NASDAQ 100 141 174 213 300 542
11
<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 perform the annual audit of the books of account and supporting
records of the Company for the year 2000, 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, the Secretary of the Company at 1500 Ronson Road, P.O. Box 1500,
Iselin, New Jersey 08830-0452, must receive it not later than December 19, 2000,
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 1999 MEETING OF STOCKHOLDERS
The minutes of the 1999 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 17, 2000
<PAGE>
[GRAPHIC - MIDDLESEX WATER CO. LOGO]
1500 Ronson Road, Iselin,
New Jersey 08830-0452
732-634-1500
[MAP - DEPICTING COMPANYS' LOCATION]
DIRECTIONS TO MIDDLESEX WATER COMPANY
FROM GARDEN STATE PARKWAY (NORTH OR SOUTH): Take Exit 131A to third traffic
light. Turn right onto Middlesex-Essex Turnpike and proceed (about 1 @ 2 mile)
to first 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
Middlesex Water Company.
FROM NEW JERSEY TURNPIKE (NORTH OR SOUTH): Take Exit 11 onto 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>
REVOCABLE PROXY
MIDDLESEX WATER COMPANY
PLEASE MARK VOTES
AS IN THIS EXAMPLE
ANNUAL MEETING OF SHAREHOLDERS
MAY 24, 2000
The undersigned stockholder(s) hereby appoint(s) Stephen H. Mundy and J. Richard
Tompkins, 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 March 31, 2000, at the annual meeting of shareholders to be held
on May 24, 2000, at 11:00 a.m., local time or any adjournment thereof.
Please be sure to sign and date this Proxy in the box below.
-------------------------
Date
-------------------------
Shareholder sign above
-------------------------
Co-holder (if any) sign above
1. Election of Directors, Nominees for Class I term expiring in 2003 are: J.
C. Cutting, J.P. Mulkerin and D. G. Sullivan; Nominee for Class III term
expiring 2002 is: J. R. Middleton.
With- For All
[ ] FOR [ ] hold [ ] Except
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
================================================================================
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Approve the appointment of Deloitte & Touche LLP as auditors for the
Company for the year 2000. 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. [ ]
If this Proxy is properly executed and returned, the shares represented hereby
will be voted. If not otherwise specified, this Proxy will be voted FOR the
persons nominated as directors, and FOR proposal number 2.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. Detach above card,
sign, date and mail in postage paid envelope provided.
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 NAMES APPEAR ON THIS PROXY. THANK YOU
Annual Meeting of Shareholders - May 24, 2000, at 11:00 a.m.
Middlesex Water Company - 1500 Ronson Rd., Iselin, NJ
