SCHEDULE 14A
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 Section 240.14a-11(c) or
Section 240.14a-12
BIRMINGHAM UTILITIES, INC.
(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] 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:
[ ] 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 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.:
PAGE 2
3) Filing Party:
Birmingham Utilities, Inc.
4) Date Filed:
April 5, 1999
BIRMINGHAM UTILITIES, INC.
230 Beaver Street
Ansonia, Connecticut 06401
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held May 12, 1999
To the Holders of Common Stock of Birmingham Utilities, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of
Birmingham Utilities, Inc. (hereinafter called the "Company") has been
called and will be held at the principal office of the Company, 230
Beaver Street, Ansonia, Connecticut 06401, on Wednesday, May 12, 1999 at
2:00 P.M., local time, for the purpose of considering and acting upon the
following matters:
1. To elect directors of the Company.
2. To approve the Birmingham Utilities, Inc. 1998 Stock Incentive
Plan for employees of the Company.
3. To approve independent auditors for the Company.
4. To transact any and all other business which may lawfully come
before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 1,
1999, as the record date for determining the stockholders of the
Company entitled to notice of and to vote at such meeting and any
adjournment thereof.
If you cannot be present in person at the meeting, please date and
sign the enclosed form of proxy and return it promptly in the post-paid
envelope furnished herewith.
By Order of the Board of Directors,
ANNE A. HOBSON
Secretary
April 6, 1999
PAGE 3
BIRMINGHAM UTILITIES, INC.
230 Beaver Street
Ansonia, Connecticut 06401
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
To be Held May 12, 1999
April 6, 1999
This Proxy Statement accompanies the Notice of Annual Meeting of
Stockholders of Birmingham Utilities, Inc. (hereinafter called "the
Company") to be held at the principal office of the Company, 230 Beaver
Street, Ansonia, Connecticut 06401, on Wednesday, May 12, 1999, at 2:00
P.M., local time (the "Meeting").
GENERAL
The accompanying proxy is solicited by and on behalf of the Board
of Directors of the Company. The solicitation will be made by mail and
the cost will be borne by the Company. Forms of proxies and proxy
material may also be distributed through brokers, custodians and other
like parties to the beneficial owners of stock.
Proxies in the accompanying form received by the Company will be
voted, in accordance with the terms and specifications made thereon,
at the Meeting or any adjournment there of; any such proxy may,
however, be revoked at any time before it is voted by notice in
writing to the Secretary of the Company.
As of March 26, 1999, the Company had outstanding 1,554,716 shares
of Common Stock (no par value), and only holders of Common Stock of
record at the close of business on that date will be entitled to vote
at the Meeting or any adjournment thereof. Each share is entitled to
one vote.
A plurality of votes cast by the shares of Common Stock entitled
to vote at the Meeting in person or by proxy is required for approval
of Proposal 1 (Election of Directors). Proposal 2 (Approval of the 1998
Stock Incentive Plan) will be adopted if the votes cast by such shares
in favor of the proposal exceeds the votes cast by such shares opposing
the proposal. Abstentions and other non-votes, such as the failure
of a nominee or other record holder to vote or forward proxies to
beneficial owners in sufficient time to be voted at the Meeting, have
a neutral effect upon the matters presented for vote, except that in
order to have a quorum, a majority of the shares of Common Stock
entitled to vote must be present at the Meeting in person or by proxy.
In certain circumstances, a shareholder will be considered to be present
for quorum purposes but will not be deemed to have voted in the election
of directors or in connection with other matters presented for approval
at the Meeting. Such circumstances will exist where a shareholder is
present but specifically abstains from voting, or where shares of
PAGE 4
Common Stock are represented at the Meeting by a proxy conferring
authority to vote on certain matters but not on other matters.
The Board of Directors knows of no business other than those items
listed in the Notice of Annual Meeting which may be presented to the
Meeting.
1. ELECTION OF DIRECTORS
The By-laws provide for not less than seven nor more than fifteen
Directors to be elected at the Annual Meeting of Stockholders, each to
serve for the ensuing year and until his or her successor is elected
and has qualified. The Board of Directors recommends that the number of
Directors be fixed at ten and the enclosed proxy confers authority to
vote for no more than ten nominees. The names of the ten nominees for
election as Directors are set forth below, and the following information
is furnished with respect to them. All nominees except Mr. Tomac served
as Directors in 1998 and were elected by the shareholders. All nominees
listed below have consented to serve, and the Board of Directors knows
of no reason why any of them would not be available.
NOMINEES FOR DIRECTORS
<TABLE>
<S> <C> <C> <C>
Name Age Business Experience During Director
The Last Five Years Since
and Other Directorships
Stephen P. Ahern 69 Vice President, Unicco Security 1994
Services; Principal, Ahern Builders
Edward G. Brickett 69 Retired; Director of Finance, 1979
Town of Southington, Connecticut,
until June 1995
James E. Cohen 52 Lawyer in Practice in Derby; 1982
Director, Great Country
Bank (1987-1993)
Betsy Henley-Cohn 46 Chairwoman of the Board of Directors 1981
of the Company; Chairman and Treasurer,
Joseph Cohn & Sons, Inc. (construction
subcontractors); Director, United
Illuminating Corp.;Director, Aristotle
Corp.; Director, Citizens Bank of
Connecticut; Director, Society for
Savings Bancorp, Inc. (1985-1993)
PAGE 5
Alvaro da Silva 53 President, D.A. Corp (a management 1997
company); President B.I.D., Inc. (land
development and home building company);
Managing Partner, Connecticut
Commercial Investors, LC (a commercial
real estate and investment partnership);
Chairman of Sheldon Inland Wetlands
Commission; Board of Governors Unquowa
School; Director of Great Country Bank
(1991-1995); Director Griffin Hospital
(1987-1990)
Aldore J. Rivers 65 Retired; President of the Company 1986
until September 30, 1998
B. Lance Sauerteig 53 Lawyer in Practice in Westport; 1996
Principal in BLS Strategic Capital,
Inc. (financial and investment
advisory company); previously,
President, First Spring Corporation,
1986-1994 (private family investment
management company); Director,
Offitbank (a New York based private
investment management company)
Kenneth E. Schaible 57 Bank Consultant and Real Estate 1994
Developer; previously, Senior Vice
President, Webster Bank, 1995-1996;
President, Sheldon Savings Bank
and Sheldon Bancorp., Inc., 1967
to 1995
David Silverstone 52 Group Vice President, The Southern 1994
Connecticut Gas Company; Lawyer in
Practice in Hartford until March 31,
1998
John S. Tomac 45 President and Treasurer of the Company: ____
previously, Vice President and
Treasurer of the Company (1997-September
30, 1998), Assistant Controller, BHC
Company, 1991-1997
</TABLE>
The Board of Directors' Audit Committee consisted of Messrs.
Brickett, da Silva and Schaible, during 1998. It performs the function
of recommending the engagement and reviewing the performance of the
Company's independent public accountants. The Audit Committee met 3
times in 1998. The Board of Directors' Personnel and Pension Committee
consisted of Ms. Henley-Cohn (ex-officio) and Messrs. Ahern, Brickett,
Sauerteig and Silverstone and performs the function of reviewing
Executive Officer compensation and proposing the same to the full
PAGE 6
Board of Directors for action. It also proposes to the full Board
overall payroll pool levels and pension plan arrangements for all
employees. The Personnel and Pension Committee met 6 times in 1998.
In 1998, five meetings of the Board of Directors were held, and all
Directors attended at least 75% of the meetings of the full Board
and Committees on which they served.
Mr. Cohen is a partner in the law firm of Cohen & Thomas, which
has represented the Company on occasions in past years; the Company
may continue to employ that firm on occasion in the future.
Mr. Silverstone was, until March 31,1998, a partner in the law
firm of Silverstone & Koontz, which represented the Company on rate
matters in 1997.
Mr. Sauerteig is a principal in the law firm of Levett, Rockwood
and Sanders, which provided legal services to the Company in past years
and may do so in the future.
Nominations by Shareholders
The Board's Nominating Committee consists of the Board as a whole
and will consider director nominees presented by the Shareholders for
election at the 2000 Annual Meeting of Shareholders. Shareholders may
make recommendations for director-nominees by submitting names, in
writing, to the Secretary of the Company not later than February 1,
2000.
Security Ownership of Management and Certain Beneficial Owners
(a) The following table sets forth certain information with respect
to the only persons, to the knowledge of the Company, who own as much as
5% of the Company's stock, as of February 28, 1999. The numbers of
shares reported in this section reflect the effect of a two-for-one
split of the Company's common stock on March 18, 1999.
<TABLE>
<S> <C> <C>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership Of Class
Group consisting of Cohn 393,886 Shares (1) 25.01%
Realty & Investment, Betsy
Henley-Cohn, Juri Henley-Cohn,
John J. Crawford, as custodian for
Jesse Henley-Cohn, Joel Cohn
Revocable Trusts 1A, 2A and 2B,
Betsy Cohn Spray Trust, Harry
Barques Revocable Trust, Betsy
Cohn Income Trust, 80 Hamilton
Street, New Haven, CT 06511, and
Ruth Weisman, 26 Kohary Drive,
New Haven, CT 06515.
</TABLE>
PAGE 7
(1) Of the 393,886 shares owned by this Group, Betsy Henley-Cohn owns
options to purchase 20,000 shares of the Company's Common Stock under the
Company's 1994 Stock Incentive Plan, which options are exercisable
within 60 days of April 1, 1999, the record date for the Company's 1999
Annual Meeting of Stockholders (the "Record Date"). Cohn Realty &
Investment (a Connecticut general partnership consisting of three
investment trusts whose managing agent is Betsy Henley-Cohn, whose
beneficiaries are certain members of the Cohn Family and whose Trustees
are Rhoda Cohn and Stanley Bergman) has beneficial ownership of 72,000
shares; Juri Henley-Cohn has beneficial ownership of 44,626 shares;
John J. Crawford, as custodian for Jesse Henley-Cohn, has beneficial
ownership of 45,028 shares; Joel Cohn Revocable Trust 1A has beneficial
ownership of 53,720 shares; Joel Cohn Revocable Trust 2A has beneficial
ownership of 6,000 shares; Joel Cohn Revocable Trust 2B has beneficial
ownership of 2,000 shares; Betsy Cohn Spray Trust has beneficial
ownership of 65,376 shares; Betsy Cohn Income Trust has beneficial
ownership of 22,120 shares; Harry Barques Revocable Trust has beneficial
ownership of 42,560 shares; and Ruth Weisman has beneficial ownership of
20,456 shares. Betsy Henley-Cohn has either a controlling or a
beneficial interest in Cohn Realty & Investment, Betsy Cohn Spray Trust
and Betsy Cohn Income Trust. Except for the options owned by Betsy
Henley-Cohn described above, no member of the Group owns or has the
right to acquire, directly or indirectly, any other shares. Unless
otherwise indicated, the named beneficial owner of the shares has
sole voting and dispositive power with respect thereto. The information
set forth in this footnote is derived from filings with the Securities
and Exchange Commission made by the Group and from other information
available to the Company.
(b) The following table sets forth certain information concerning
ownership of the Company's Shares by management. The numbers of shares
reported in this section reflect the effect of a two-for-one split of
the Company's common stock on March 18, 1999.
<TABLE>
<S> <C> <C>
Common Shares
Beneficially Owned Percent
Name As of February 28, 1999 (1) of Class (2)
Stephen P. Ahern 39,760(3) 2.54%
Edward G. Brickett 18,934 1.21
James E. Cohen 78,196(4) 4.98
Betsy Henley-Cohn 393,886(5) 25.01
Alvaro da Silva 5,400 .35
Aldore J. Rivers 24,312 1.55
B. Lance Sauerteig 7,900 .51
Kenneth E. Schaible 11,960 .76
David Silverstone 10,240 .65
John S. Tomac 400 .03
Executive Officers, Directors
and Nominees as a group,
10 in number 590,988 35.90%
</TABLE>
PAGE 8
(1) Includes options to purchase shares of Common Stock exercisable
within 60 days of the Record Date, as follows: Mr. Ahern, 10,000;
Mr. Brickett, 9,000; Mr. Cohen, 10,000; Mr. da Silva, 5,000, Ms.
Henley-Cohn, 20,000; Mr. Rivers, 10,000; Mr. Sauerteig, 7,500; Mr.
Schaible, 10,000; and Mr. Silverstone, 10,000.
(2) For the purpose of calculating the percentage of Common Stock
beneficially owned (a) by the individual persons listed in the table,
the number of options held by such person is included in both the
number of shares beneficially owned by the person and in the total
number of shares outstanding in the class with respect to the
individual person's percentage calculation, and (b) by the directors
and officers as a group, the total number of shares beneficially owned
by the group and the total number of shares outstanding includes the
91,500 shares issuable upon the exercise of options exercisable by
all persons in the group within 60 days of the Record Date.
(3) Includes 4,200 shares owned by Ahern Family Limited Partnership.
(4) Includes 65,196 shares held by Mr. Cohen as Trustee for the David
B. Cohen Family Trust, and 3,000 shares held in a brokerage custodial
account for Mr. Cohen's benefit.
(5) Ms. Henley-Cohn is a member of the shareholder group described in
the preceding table. The 393,886 shares set forth in this table is the
aggregate number of shares held by all of the members of the group.
See note (1) to the preceding table for information concerning shares
beneficially held by Ms. Henley-Cohn.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than
ten-percent of a registered class of the Company's equity securities,
to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the Company.
Based solely on review of copies of such forms furnished to the
Company, or written representations that no reconciliation forms were
required, the Company believes that during fiscal year ending December
31, 1998, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent shareholders were
complied with.
Compensation of Directors and Executive Officers
Directors: The Company's Directors, except for Ms. Henley-Cohn and
Mr. Rivers, received an annual fee of $3,000 plus $500 for each full
Board meeting and $300 for each Committee meeting actually attended in
1997.
PAGE 9
Executive Officers: The following table sets forth the annual cash
compensation for (i) Mr. Rivers, the Company's Chief Executive Officer
(until September 30, 1998) and only Executive Officer whose total annual
salary exceeded $100,000, and (ii) for Ms. Henley-Cohn, the Company's
Chief Executive Officer upon Mr. Rivers' retirement, for each of 1996,
1997 and 1998. The Company has no bonus or long-term incentive plans.
<TABLE>
Annual Compensation
<S> <C> <C>
Name and
Principal Position Year Salary*
Aldore J. Rivers,
President, CEO and Director 1996 $105,404
1997 $111,404
1998 $ 90,894
Betsy Henley-Cohn,
Chairwoman of the Board and 1996 $ 49,139
Chief Executive Officer 1997 $ 52,000
1998 $ 52,719
</TABLE>
* Includes the economic benefit of premiums on a split-dollar life
insurance policy pursuant to which Mr. Rivers is the insured and the
Company is the owner and paid the premiums in 1996, 1997 and 1998.
Employment Agreement and Split-Dollar Insurance Plan
The Company entered into an Employment Agreement with Mr. Rivers
in 1990 (the "Employment Agreement"), pursuant to which the Company
agreed to employ Mr. Rivers as President of the Company. The Employment
Agreement was amended in 1992 and 1993 and terminated upon Mr. Rivers'
retirement on September 30, 1998.
As a result of Mr. Rivers' Employment Agreement, the Company has
agreed to make one hundred eighty (180) monthly supplemental pension
payments of (a) $2,400 each to Mr. Rivers commencing when he reaches
the age of 65 and continuing until the earlier of his death or the end
of the 180-month period and (b) if he should die after reaching the age
of 65 but before the end of the 180-month period and his spouse survives
him; $1,200 each to her until the earlier of her death or the expiration
of the balance of the 180-month period.
The following table contains information with respect to options
exercised during 1998 and the unexercised options held by Mr. Rivers on
December 31, 1998.
PAGE 10
<TABLE>
Aggregated Option Exercises in 1998
and December 31, 1998 Option Values
<S> <C> <C> <C> <C>
Name Shares Value Number of Shares Value of
Acquired Realized underlying Unexercised in
on Exercise* Unexercised Options the Options
at 12/31/98* at 12/31/98
Aldore J. Rivers 10,000 $ 48,150 10,000$ 73,750
</TABLE>
* The number of shares set forth in the table have been restated to
reflect the 2 for 1 split of the Company's Common Stock, effective March
18, 1999.
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" PROPOSAL 1.
2. APPROVAL OF THE BIRMINGHAM UTILITIES INC. 1998 STOCK INCENTIVE
PLAN
The Board of Directors believes it to be in the best interest of the
Company and its shareholders to attract and retain certain employees
responsible for the success of the Company and to provide incentives for
employees to work toward the Company's financial success. With that
belief in mind, in 1994 the Board of Directors adopted and in 1995 the
Company's shareholders approved the Company's 1994 Stock Incentive Plan
(the "1994 Plan"). During the four years since the adoption of the 1994
Plan, all of the 70,0001 options authorized under that plan have been
granted to employees.
During the summer of 1998, while the Board of Directors was
considering the appropriate compensation package to provide for Mr.
Tomac as the Company's new President, the Board of Directors determined
that it would be in the Company's best interest to have available to its
Personnel and Pension Committee, additional options for common stock to
award to Mr. Tomac. The Board of Directors also determined that it would
be in the Company's best interest to have further options available to
the Personnel and Pension Committee for future use. Accordingly, on
December 9, 1998, the Board of Directors approved and adopted the
Birmingham Utilities, Inc. 1998 Stock Incentive Plan (the "1998 Plan"),
subject to approval of the shareholders of the Company at the Annual
Meeting in May 1999 and subject to approval of the Connecticut
Department of Public Utility Control ("DPUC"). Accordingly, the Board
recommends approval of the 1998 Plan by shareholders. A copy of the 1998
Plan is attached as Exhibit A to this Proxy Statement. Proxies solicited
hereby will be voted for the adoption of the 1998 Plan unless the
shareholder specifies otherwise.
PAGE 11
On December 9, 1998, subsequent to the adoption of the 1998 Plan by
the Board of Directors, the Personnel and Pension Committee (the
"Committee") of the Board of Directors, which is the body designated in
the 1998 Plan to administer it, granted to Mr. Tomac awards of options,
subject to approval of the 1998 Plan by the Company's shareholders at
its May 1999 Annual Meeting and by the DPUC, to purchase shares of the
Company's Common Stock for a purchase price equal to the fair market
value of the shares on that date, as set forth below under the heading
"New Plan Benefits Table".
The Company recently requested the DPUC's approval of the 1998 Plan.
Although no assurances can be given, the Company is aware of no reason
why the DPUC should not approve the 1998 Plan.
1. The 1994 Plan authorized options for 35,000 shares of common stock,
subject to adjustment for such events as stock dividends, stock splits,
mergers, recapitalizations and similar transactions. Accordingly, the
numbers of shares contemplated under the 1994 Plan and the 1998 Plan
described in this Proxy Statement have been adjusted to reflect the
effect of a two-for-me stock split approved by the Board of Directors on
December 9, 1998 and the Connecticut Department of Public Utility
Control on February 26, 1999, and effective on March 18, 1999.
Summary of the Plan.
The following summary and discussion of the 1998 Plan is qualified
in its entirety by reference to Exhibit A hereto.
Shares Subject to the 1998 Plan. The 1998 Plan provides for the
issuance of a maximum of 60,0002 shares (3.9% of the 1,554,716 total
shares currently outstanding3) of the Company's Common Stock. Awards
under the 1998 Plan may be granted in the form of Incentive Stock
Options ("ISO") or Non-Qualified Stock Options ("NSO"). Shares delivered
pursuant to the 1998 Plan upon the exercise of awards may be either
authorized but unissued shares of the Company's Common Stock or
previously issued shares of the Company's Common Stock reacquired by
the Company. Shares reserved for awards which terminate without having
been exercised or vested become available for new grants.
Duration. The term during which awards may be granted under the
1998 Plan will, unless terminated earlier by the Company's Board of
Directors, expire on December 8, 2008.
Administration and Eligibility. The 1998 Plan is to be administered
by the Committee, which shall consist of not less than three directors
who are not employees of the Company. The individuals eligible to
participate in the Plan will be certain key employees of the Company or
its subsidiaries (whether or not they are directors of the Company),
who are in positions to contribute to the growth and prosperity of the
Company and who shall be selected in the discretion of the Committee.
The Committee also has the discretion, within the guidelines and
limitations expressed in the 1998 Plan, to determine the amount of each
PAGE 12
award, whether options granted under the 1998 Plan will be ISO's
(qualifying under the provisions of Section 422 of the Internal Revenue
Code of 1986 (the "Code") or NSO's, the time of the awards, the date(s)
on which awards will be exercisable, and the form and terms of
agreements evidencing awards granted under the 1998 Plan. The aggregate
fair market value as of the date of grant of the shares of the
Company's Common Stock with respect to which ISO's are granted (under
the 1998 Plan and any other plan maintained by the Company) exercisable
for the first time by a participant in the 1998 Plan during any
calendar year, shall not exceed $100,000. No one participant in the
1998 Plan shall be granted an award which would, if made, cause such
participant to be (or be deemed to be, under Section 424 of the Code)
the owner of more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any of its subsidiaries
unless certain criteria are met. The Committee has full power and
authority to administer and interpret the 1998 Plan and to adopt rules,
regulations, agreements and guidelines for the conduct of its business.
Term of Awards. Awards granted under the 1998 Plan are exercisable
during the term of the award period as determined by the Committee and
specified in the agreement governing each respective award. The time
within which an award must be exercised, as specified by the Committee,
may not extend beyond the tenth anniversary of the date of the grant of
the award. Awards under the 1998 Plan are non-transferable other than
by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order and may be exercised only by the
grantee or his or her legal representative during the grantee's
lifetime. All unexercised options terminate three months after the date
a grantee's employment terminates, provided that such awards may be
exercised during certain longer periods, to be specified by the
Committee subject to certain stated limitations, following termination
of employment by reason of death, disability or retirement.
2. When adopted by the Board of Directors, the 1998 Plan authorized the
issuance of options for 30,000 shares, also subject to adjustment as set
forth in note 1 above. Accordingly, the number of shares has been
adjusted accordingly.
3. After giving effect to the stock split effective March 18, 1999.
Exercise Price and Payment. The exercise price of each option granted
under the 1998 Plan will be established by the Committee and set forth
in the agreement governing the option. In general, grants of NSO's or
ISO's will require payment of an amount, specified by the Committee in
the option agreement, which may not be less than the fair market value
of the Company's Common Stock on the date of grant of the option. To
qualify under present provisions, the exercise price of ISOs must be
equal to at least the fair market value of the Company's Common Stock on
the date of grant of the ISO. On December 9, 1998, the bid price on the
NASDAQ Small Cap Market for the Company's Common Stock was $21.50. On
March 18, 1999, such price was $29.50. The per share prices set forth
here have not been adjusted to reflect the effect of the two-for-one
stock split effective March 18, 1999.
PAGE 13
The exercise of an option must be accompanied by payment in full
of the purchase price in cash, by check or by delivery of shares of the
Company's Common Stock previously acquired by the optionee equal in
value to the option price, or by a combination of cash and stock.
Participants under the 1998 Plan may pay withholding taxes by means of
contributing cash or shares of the Company's Common Stock previously
acquired or by deducting shares of Common Stock from the amount to be
received upon the exercise or vesting of an award. The aggregate number
and kind of shares which are reserved for issuance under the 1998 Plan
and which are subject to awards under the 1998 Plan and the purchase
price per share of shares subject to awards will be appropriately
adjusted by the Committee in the event of future stock dividends, stock
splits, mergers, recapitalizations or similar transactions that affect
the Company's Common Stock.
Amendment and Termination. The Board of Directors may amend,
suspend or terminate the 1998 Plan at any time prior to its specified
date of termination.
Federal Income Tax Consequences
NSO's. Under current law, there will generally be no Federal income
tax consequences to either the employee or the Company on the grant of
NSO's. Upon exercise of NSO's, the difference between the fair market
value of the Company's Common Stock at the date of exercise and the
exercise price is taxed to the grantee at ordinary income rates, and is
subject to withholding tax by the Company. The exercise of NSO's will
result in a tax deduction to the Company, measured by such difference.
However, grantees who are subject to the six-month restrictions on
resale of Common Stock under Federal securities laws will, unless they
elect otherwise, generally not recognize ordinary income until such
restrictions lapse. The fair market value of the Company's Common Stock
at the date of exercise becomes the tax basis in the hands of the
grantee of shares acquired upon such exercise.
ISO's. Under the Code, there are generally no Federal income tax
consequences to the employee or the Company upon the grant or exercise
of an ISO, except that the difference between the option price and the
fair market value of the Common Stock at the exercise of the option
will be an item of tax preference for purposes of the alternative
minimum tax. If the employee does not dispose of the stock within two
years from the grant date of the ISO, and holds the stock after
exercise for at least one year, the employee will be taxed at long-term
capital gain rates upon the sale of the stock, and the Company will not
be entitled to a tax deduction in connection with the exercise of the
ISO. If the employee does not meet these holding period requirements,
the employee's gain upon disposing of the stock will usually be taxed
as ordinary income to the extent of the excess of the fair market value
of the shares on the date of exercise over the option price. The balance
of the amount received, if any, will be short-term or long-term capital
gain depending on how long the shares were held by the employee. The
PAGE 14
Company will be allowed a tax deduction in the amount of the grantee's
ordinary income as a result of the disposition.
Accounting Treatment Under Present Accounting Rules
Neither the grant nor the exercise of a stock option results in a
charge against earnings of the Company so long as the option price at
the date of grant is not less than the fair market value of the
Company's Common Stock on that date.
Adoption of the 1998 Plan requires the approval of the holders of
at least a majority of the Common Stock of the Company represented at
the May 12, 1999 Annual Meeting.
New Plan Benefits Table
The following table sets forth the number of options to be
received by the named individuals and group of executive officers and
employees that will accrue, assuming that all of the grantees
continue in their current employment through the minimum vesting and
award periods.
New Plan Benefits
<TABLE>
<S> <C>
1998 Stock Incentive Plan
Options for No.
of Share of
Name and Position Common Stock
John S. Tomac, President and Treasurer 7,000
All Current Executive Officers As a Group 7,000
All Employees, Other Than
Executive Officers, As a Group 0
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" PROPOSAL 2.
3. INDEPENDENT AUDITORS FOR THE COMPANY
There will be brought up for consideration at the Annual Meeting a
proposal to approve the appointment of Dworken, Hillman, LaMorte &
Sterczala, P.C. as auditors for the Company to make the annual audit for
the 1999 fiscal year.
PAGE 15
The Audit Committee of the Board of Directors has recommended that
the Company retain Dworken, Hillman, LaMorte & Sterczala, P.C. as its
independent accountants for the 1998 fiscal year.
Representatives of Dworken, Hillman, LaMorte & Sterczala, P.C.
will be present at the Annual Meeting to respond to questions of
shareholders, but, although they have been offered the opportunity to do
so, they do not otherwise propose to make any statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" PROPOSAL 3.
Management knows of no other business which may come before the
Meeting or any adjournment thereof.
Shareholder Proposals
If a shareholder intends to present a proposal for action at the
2000 Annual Meeting of Stockholders, such proposal must be received by
the Company on or before February 1, 2000 for inclusion in the
Company's Proxy Statement and Form of Proxy except where omission of
such proposal is permitted by the rules of the Securities & Exchange
Commission.
Annual Report
The Company's Annual Report, including the financial statements of
the Company for the fiscal year ending December 31, 1998, is mailed to
the shareholders of record herewith. The Annual Report is not part of
this Proxy Statement.
The Board of Directors,
Anne A. Hobson, Secretary
PAGE 16
EXHIBIT A
BIRMINGHAM UTILITIES, INC.
1998 STOCK INCENTIVE PLAN
ARTICLE I
Purpose and Scope of the Plan
1.01 Purpose
The purpose of the Birmingham Utilities, Inc. 1998 Stock Incentive
Plan (the "Plan") is to promote the long-term success of Birmingham
Utilities, Inc. by providing financial incentives to key employees who
are in a position to make significant contributions toward such success.
The Plan is designed to attract and retain key employees and to
encourage them to acquire a proprietary interest in the Company and
thereby to increase their personal interest in the long-term success of
the Company.
1.02 Definitions
Unless the context clearly indicates otherwise, the following
terms have the meanings set forth below:
"Board of Directors" or "Board" means the Board of Directors of
the Company.
"Business Day" shall mean any day except Saturday, Sunday or a
legal holiday in the State of Connecticut.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Personnel and Pension Committee of three or
more members appointed by the Board of Directors and selected from those
directors who are not employees of the Company,
BIRMINGHAM UTILITIES, INC.
230 Beaver Street
Ansonia, Connecticut 06401
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Edward G. Brickett and James E. Cohen
as proxies, each with the power to appoint his substitute, and hereby
authorize them to represent and to vote as designated on the reverse side
all shares of common stock of Birmingham Utilities, Inc., held of record
by the undersigned on April 1, 1999 at the annual meeting of shareholders
to be held on May 12, 1999, or any adjournment thereof.
(Continued and to be signed on other side)
PAGE 17
X Please mark your
votes as in this
example
FOR all nominees WITHHOLD
listed at right AUTHORITY
(except as marked to vote for
to the contrary all nominees
below) listed at right
1. To elect Nominees: S.P. Ahern
directors of E.G. Brickett
the Company J.E. Cohen
A.J. da Silva
B. Henley-Cohn
A.J. Rivers
B.L. Sauerteig
K.E. Schaible
D. Silverstone
J.S. Tomac
2. To approve the Birmingham Utilities, Inc. FOR AGAINST ABSTAIN
1998 Stock Incentive Plan for Employees
of the Company
3. To approve the appointment of Dworken,
Hillman, LaMorte & Sterczala, P.C., as the
independent Auditors of the Corporation
4. In their discretion the proxies are authorized
to vote upon other business as may properly come
before the meeting.
This Proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. If no direction is
made, this proxy will be voted FOR proposals 1 and 2.
PLEASE MARK, SIGN, DATE AND RETURN IMMEDIATELY.
SIGNATURES(S) _________________________ DATE _________
SIGNATURES(S) _________________________ DATE _________
Signature if jointly held
NOTE: Please sign exactly as name appears above. When shares held by
joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full
title as such. If a corporation or partnership, please sign in
full name by authorized officer of partners.
