[EnergyNorth logo]
EnergyNorth, Inc. (bullet) 1260 Elm Street (bullet) P.O. Box 329 (bullet)
Manchester, New Hampshire 03105-0329 (bullet) Telephone (603) 625-4000
December 27, 1995
To Our Stockholders:
You are cordially invited to attend the annual meeting of stockholders
of EnergyNorth, Inc. The meeting will be held at 11:00 a.m., local time, on
Wednesday, February 7, 1996, at the Merrimack Hotel and Conference Center, 4
Executive Park Drive, Merrimack, New Hampshire.
At this meeting, you will be asked to (1) elect three persons to the
Board of Directors, (2) amend the Articles of Incorporation to change a
reference from NASDAQ to the New York Stock Exchange, (3) ratify the
appointment of independent public accountants and (4) transact such other
business that may lawfully come before the meeting.
We hope that you will be able to attend the meeting. To make certain
that your vote is counted, please sign and date the enclosed proxy and return
it in the envelope provided. No postage is required. Sending in your proxy at
this time will not affect your right to vote in person, should you attend the
meeting.
We look forward to seeing you on February 7, 1996.
Sincerely,
[signature] Robert R. Giordano
Robert R. Giordano, President
and Chief Executive Officer
<PAGE>
ENERGYNORTH, INC.
1260 Elm Street
P.O. Box 329
Manchester, New Hampshire 03105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held February 7, 1996
To the Stockholders of
EnergyNorth, Inc.:
The annual meeting of stockholders of EnergyNorth, Inc. will be held at
the Merrimack Hotel and Conference Center, 4 Executive Park Drive, Merrimack,
New Hampshire, at 11:00 a.m. on Wednesday, February 7, 1996, for the
following purposes:
1. To elect three directors to the Board of Directors.
2. To amend Article Seventh, Section B of the Articles of Incorporation.
3. To ratify the appointment of independent public accountants for 1996.
4. To transact such other business as may lawfully come before the meeting
or any adjournments thereof.
Only stockholders of record at the close of business on December 19, 1995
will be eligible to vote at this meeting and any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
Richard A. Samuels, Secretary
December 27, 1995
IMPORTANT
The interest and cooperation of all shareholders in the affairs of the
Company are considered to be of the greatest importance by your Company's
Board of Directors. If you do not expect to attend the annual meeting, it is
urgently requested that, even though your holdings of stock may not be large,
you promptly mark, sign, date and return the accompanying proxy in the
envelope enclosed for your use. If you do so now, the Company will be saved
the expense of follow-up solicitations.
<PAGE>
ENERGYNORTH, INC.
1260 Elm Street
P.O. Box 329
Manchester, New Hampshire 03105
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by
the Board of Directors of EnergyNorth, Inc. (hereinafter the "Company") of
proxies in the accompanying form, for use at the annual meeting of
stockholders to be held at the Merrimack Hotel and Conference Center, 4
Executive Park Drive, Merrimack, New Hampshire, at 11:00 a.m. on Wednesday,
February 7, 1996. This proxy statement and accompanying form of proxy are
being mailed to stockholders on or about December 27, 1995.
The cost of this solicitation is being borne by the Company. In addition
to the use of the mails, proxies may be solicited by advertisement,
telephone, facsimile, electronic message and personal interview.
SUBSIDIARIES
Some of the information contained in this proxy statement refers to the
Company's subsidiaries, EnergyNorth Natural Gas, Inc. ("ENGI"); EnergyNorth
Propane, Inc. ("ENPI"); and EnergyNorth Realty, Inc. ("ENRI").
VOTING OF PROXIES
Proxies will be voted in accordance with stockholders' directions. If no
directions are given, proxies will be voted in favor of the election as
directors of the three persons named as nominees under the caption "Election
of Directors," in favor of the amendment of the Articles of Incorporation
described under the caption entitled "Amendment to Articles of
Incorporation," and in favor of the proposal to ratify the appointment of
independent public accountants. There is no reason to believe that any
nominee for director will not be a candidate or will be unwilling to serve,
but if either event occurs it is intended that the shares represented by the
proxies will be voted for any substitute nominee designated by the Board of
Directors.
At the meeting, each stockholder will be entitled to one vote for each
share of stock standing in the stockholder's name on the books of the Company
at the close of business on December 19, 1995. On that date, the Company had
outstanding and entitled to vote 3,208,501 shares of $1.00 par value Common
Stock.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise. Filing of a duly executed proxy bearing a later date with the
Company's secretary or appearing at the meeting and voting in person will
constitute such revocation.
The Bylaws of the Company provide for the election of three directors to
the Board of ten Directors. The proxies cannot be voted for a greater number
than for the three vacancies to be filled.
BOARD OF DIRECTORS
The Board of Directors of the Company met six times during the most recent
fiscal year. Each director attended 75% or more of the aggregate of the total
number of Board meetings and total number of meetings of Committees on which
the director served.
The Compensation Committee of the Board consists of Sylvio L. Dupuis,
Chairman, Roger C. Avery and Richard B. Couser. This Committee reviews the
salary ranges of the officers and the benefit plans of the Company and makes
recommendations to the Board of Directors with respect to those matters. It
held three meetings during the fiscal year.
<PAGE>
The Audit Committee of the Board consists of Davis P. Thurber, Chairman,
Roger C. Avery and Joan P. Cudhea. It held three meetings during the fiscal
year. This Committee reviews the scope and results of the audit by the
independent public accountants, makes recommendations to the Board of
Directors as to the selection of independent public accountants for each
fiscal year, and approves services provided by the independent public
accountants and the fees for those services. It also reviews systems of
internal control and accounting policies and procedures, financial reporting,
and other matters relating to fiscal management of the Company.
The Board does not have a nominating committee.
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding beneficial ownership
of the Company's $1.00 par value Common Stock, its only class of securities,
by each director and nominee for director, certain executive officers
(Messrs. Hanlon and Mancini), and all directors and executive officers as a
group, as of October 1, 1995. No person is known to the Company to own more
than 5% of the Company's stock.
<TABLE>
<CAPTION>
Shares Owned Beneficially
------------------------------
Sole Voting Shared Voting
And Investment And Investment % of
Name Power Power Total Class
- -------------------------------------------- -------------- -------------- -------- -------
<S> <C> <C> <C> <C>
Roger C. Avery 2,479 10,879 (1) 13,358 *
Edward T. Borer 14,126 6,588 (2) 20,714 *
Richard J. Censits 2,000 -- 2,000 *
Richard B. Couser 129 -- 129 *
Joan P. Cudhea 13,187 1,690 (3) 14,877 *
Sylvio L. Dupuis -- 400 400 *
Robert R. Giordano 4,327 8,709 (4) 13,036 *
Constance B. Girard-diCarlo 111 -- 111 *
Albert J. Hanlon 857 -- 857 *
Howard W. Keegan 4,035 1,000 (5) 5,035 *
Michael J. Mancini, Jr. 2,707 -- 2,707 *
N. George Mattaini 11,508 535 (6) 12,043 *
Davis P. Thurber 6,007 78,219 (7) 84,226 2.6
All Directors, Nominees and Executive
Officers as a Group (17 in number at
12/1/95) 63,733 108,320 172,053 5.4
</TABLE>
- -------------
*Less than 1% of class.
(1) These shares are held by Mr. Avery solely in a fiduciary capacity and in
which he disclaims beneficial ownership.
(2) Includes shares held by Mr. Borer solely in a fiduciary capacity and 213
shares held by his spouse in which he disclaims beneficial ownership.
(3) These shares are held by Ms. Cudhea's daughter-in-law, in which she
disclaims beneficial ownership.
(4) Includes 430 shares held by Mr. Giordano's spouse, in which he disclaims
beneficial ownership.
(5) These shares are held by Mr. Keegan's spouse, in which he disclaims
beneficial ownership.
(6) These shares are held by Mr. Mattaini's spouse, in which he disclaims
beneficial ownership.
(7) These shares are held as Trustee by Bank of New Hampshire, of which Mr.
Thurber is Chairman of the Board, and in which he disclaims beneficial
ownership.
2
<PAGE>
ELECTION OF DIRECTORS
(Item 1 on Proxy)
The following information concerning the name, age at December 31, 1995,
and business experience of the three persons to be nominated for election as
directors and the seven directors whose terms do not expire in 1996 has been
furnished to the Company by the nominees and directors((1)). The election of
each nominee will require the affirmative votes of the holders of a majority
of the shares of common stock present at the meeting and entitled to vote.
Each person nominated, if elected, will hold office until the annual
meeting to be held in the year in which his or her term expires and until his
or her successor is duly elected.
NOMINEES FOR ELECTION FOR TERM OF THREE YEARS EXPIRING IN 1999
<TABLE>
<CAPTION>
Name, Age and Other Served as
Positions Held With Director Principal Occupation or Employment
the Company Since During Last Five Years
- ---------------------------------- --------- -----------------------------------------------------
<S> <C> <C>
Edward T. Borer, 57(2) 1982 Chairman and Chief Executive Officer (and, until
Chairman of the Board 1995, President) of Philadelphia Corporation for
Investment Services, a registered securities
broker/dealer and investment advisor
Richard B. Couser, 54 1985 Attorney with Orr & Reno, Professional Association
Constance B. 1994 President, Healthcare Support Services, a division
Girard-diCarlo, 48 of ARAMARK Corporation, which manages support
service departments in the healthcare industry
</TABLE>
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 1998
<TABLE>
<CAPTION>
Name, Age and Other Served as
Positions Held With Director Principal Occupation or Employment
the Company Since During Last Five Years
- ---------------------------------- --------- -----------------------------------------------------
<S> <C> <C>
Richard J. Censits, 58(3) 1993 Chairman and (since 1995) Chief Financial Officer
of Montech International, Inc.; formerly (until
1995) Chairman and Chief Executive Officer,
MedQuist Inc.
Joan P. Cudhea, 63 1984 Certified Financial Planner and Registered
Investment Adviser
Sylvio L. Dupuis, 61 1982 Optometrist; Commissioner of Insurance - State of
New Hampshire (since 1994); formerly (until 1994)
President and Chief Executive Officer, Catholic
Medical Center, a hospital
</TABLE>
3
<PAGE>
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 1997
<TABLE>
<CAPTION>
Name, Age and Other Served as
Positions Held With Director Principal Occupation or Employment
the Company Since During Last Five Years
- ---------------------------------- --------- -----------------------------------------------------
<S> <C> <C>
Roger C. Avery, 56 1984 President and Chief Executive Officer, Illinois Gas
Company; Adjunct Associate Professor (since 1991)
and Research Associate, Brown University
Robert R. Giordano, 57 1988 President and Chief Executive Officer of ENGI;
President and Chief Executive formerly (until 1991) Executive Vice President of
Officer the Company
N. George Mattaini, 70 1982 Chairman of ENGI; formerly (until 1991) President
Vice Chairman of the Board and Chief Executive Officer of the Company
Davis P. Thurber, 70 1982 Chairman and President of Bank of New Hampshire
Corporation, a bank holding company; Chairman of
Bank of New Hampshire, a commercial bank
</TABLE>
- ----------------
(1) Howard W. Keegan, 72, has been a Director of the Company since 1984. He
is Chairman of the Board of Hesser College (since 1992) and formerly (until
1994) President, SEA Systems, Inc., a manufacturer of naval products. Mr.
Keegan's term of office as a Director of the Company expires at the 1996 Annual
Meeting. Pursuant to the Company's retirement policy for Directors, Mr. Keegan
is not eligible for reelection at the 1996 Annual Meeting.
(2) Mr. Borer is a director of Philadelphia Corporation for Investment
Services.
(3) Mr. Censits is a director of Checkpoint Systems, Inc. and of DiMark,
Inc.
Compensation of Directors
The Chairman of the Board of Directors receives an annual retainer of
$38,000 and the Vice Chairman receives an annual retainer of $21,000. All
other Directors receive annual retainers of $8,500. Committee Chairmen
receive additional annual retainers of $2,000, and Executive Committee
members, except the Chairman and Vice Chairman, receive additional annual
retainers of $2,000. Directors, other than the Chairman and Vice Chairman,
receive fees of $600 for each Board meeting attended and $500 for each
committee meeting attended, with the exception of multiple meetings of the
Board of Directors held on the day of the annual meeting of the Board of
Directors. Directors who are employees receive no annual retainers or meeting
fees.
Directors may elect to have portions of their retainers and fees credited
each year to a deferred compensation account pursuant to a plan that provides
for accrual of interest and distribution of the deferral accounts in lump sum
amounts or in equal installments over ten years, at the option of each
Director, beginning on a date designated by the Director.
OTHER TRANSACTIONS
Davis P. Thurber is a director and Chairman of the Board of Bank of New
Hampshire, and is a director, Chairman of the Board, President and a major
stockholder of its parent holding company, Bank of New Hampshire Corporation.
ENGI and ENPI maintain unsecured lines of credit, presently in the amounts of
$3,200,000 and $1,000,000, respectively, with Bank of New Hampshire, and ENRI
has a $1,275,000 mortgage
4
<PAGE>
note to Bank of New Hampshire. ENPI also has a $2,100,000 mortgage note with
Bank of New Hampshire. Bank of New Hampshire serves as Trustee under ENGI's
bond indenture. The total amount of interest and fees paid to Bank of New
Hampshire during the period October 1, 1994 to September 30, 1995 was
approximately $372,700.
It is management's opinion that these services were obtained on terms as
favorable to the Company as those that could have been obtained from
unaffiliated persons. It is anticipated that the Company and its subsidiary
will make payments for services similar in nature during the current fiscal
year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Richard B. Couser, a director and a member of the Compensation Committee,
is a director of Orr & Reno, Professional Association, a law firm that
provides legal services to the Company and its subsidiaries. It is
management's opinion that such services were obtained on terms as favorable
to the Company and its subsidiaries as those that could have been obtained
from unaffiliated persons.
SECTION 16(a) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that each
director and certain officers of the Company file reports of initial
beneficial ownership and changes in beneficial ownership of the Company's
common stock with the Securities and Exchange Commission. To the Company's
knowledge, during 1995 all directors and officers filed all such required
notices, except for the acquisition of approximately 595 shares of Company
common stock by Mr. Giordano in December 1994 that was reported in a filing
in February 1995 rather than in January and the charitable donation of 100
shares by Ms. Cudhea that was reported in a filing with respect to the 1995
fiscal year filed a day late. The Company also became aware of a purchase of
100 shares by Michelle L. Chicoine, Vice President and Treasurer, that should
have been reported in a filing with respect to the 1992 fiscal year and was
not reported until her filing with respect to the 1995 fiscal year.
5
<PAGE>
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation paid by the
Company for services rendered in all capacities during the fiscal years ended
September 30, 1995, 1994 and 1993 to the Chief Executive Officer and the two
other executive officers of the Company whose salary and cash incentive
compensation award for the 1995 fiscal year exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------------------------------------
Long-Term
Annual Compensation (1) Compensation
------------------------------------------ --------------
Restricted All Other
Cash Incentive Other Annual Stock Compensation
Name and Principal Position Year Salary (2) Compensation Compensation Awards (3) (4)
- --------------------------- ----- ----------- -------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert R. Giordano 1995 $191,021 $19,002 $3,124 $18,989 $7,197
President and Chief 1994 181,369 13,808 2,459 13,805 7,131
Executive Officer of 1993 158,985 16,026 1,696 16,015 5,906
the Company and ENGI;
Chairman and Chief
Executive Officer of ENPI
- --------------------------- ---- ---------- ------------- ------------ ------------- -------------
Michael J. Mancini, Jr. 1995 $115,936 $ 9,279 $1,782 $ 9,248 $4,694
Senior Vice President 1994 109,590 6,684 2,026 6,658 4,357
and Chief Financial 1993 103,385 8,338 1,800 8,335 3,812
Officer of the Company,
ENGI and ENPI
- --------------------------- ---- ---------- ------------- ------------ ------------- -------------
Albert J. Hanlon 1995 $111,866 $ 9,279 $1,448 $ 9,248 $4,560
Senior Vice President 1994 106,635 6,962 813 6,937 4,136
of the Company 1993 95,535 8,338 897 8,335 3,511
and ENGI
</TABLE>
- ----------------
(1) Annual Compensation reflects cash compensation that was earned under the
Company's Key Employee Performance and Equity Incentive Plan for
performance during fiscal year 1995 but does not include a portion of
incentive cash compensation that is not yet calculable (less than $100
each).
(2) Includes amounts earned and deferred pursuant to Deferred Compensation
Agreements and the Company's 401(k) plan.
(3) Long Term Compensation reflects awards of restricted stock that were
earned under the Company's Key Employee Performance and Equity Incentive
Plan for performance during fiscal year 1995 but does not include
portions of the restricted stock awards that are not yet calculable (less
than $100 each).
(4) All other compensation paid in 1995 includes: Employer contributions to
the Company's 401(k) plan for Mr. Giordano ($4,816), Mr. Mancini
($3,202), and Mr. Hanlon ($3,092); value of term life insurance premiums
paid for Mr. Giordano ($1,935), Mr. Mancini ($1,492) and Mr. Hanlon
($1,468); portion of interest earned in a deferred compensation account
by Mr. Giordano in excess of 120% of federal long-term rate ($446).
6
<PAGE>
The following Pension Plan Table sets forth estimated annual benefits
payable under the Company's Retirement Plan and Supplemental Executive
Retirement Plan ("SERP") at age 65 to persons in specified compensation and
years of service classifications, and combined annual benefits payable under
the Retirement Plan and SERP upon such retirement to persons in those
compensation classifications. Combined annual benefits shown in the table do
not reflect offsets for benefits of Social Security and for retirement
benefits received from other employers.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
-----------------------------------------------------------------------------------
Estimated Annual Benefits Under Retirement Plan
Upon Retirement with Years of Service Indicated
-----------------------------------------------------------------------------------
Combined Annual Benefits
Average Annual Earnings Under Retirement Plan
During Highest Five Years 20 Years 30 Years 40 Years and SERP Upon Retirement
- ------------------------- --------- --------- --------- ------------------------
<S> <C> <C> <C> <C>
$100,000 $36,000 $ 47,500 $ 52,500 $ 75,000
125,000 45,000 59,375 65,625 93,750
150,000 54,000 71,250 78,750 112,500
175,000 63,000 83,125 91,875 131,250
200,000 72,000 95,000 105,000 150,000
225,000 81,000 106,875 118,125 168,750
</TABLE>
Non-Contributory Retirement Plan
All full-time salaried employees, including officers and certain part-time
employees, are eligible to participate in the Company's Retirement Plan,
provided an employee has reached the age of 21 and has completed one year of
service. The SERP is a non-contributory plan intended to supplement benefits
of the Retirement Plan for certain named executive officers, effective
January 1, 1985. Under both plans normal retirement is at age 65 with a
provision for early retirement. Benefits under the Retirement Plan vest after
five years of service and under the SERP vest after ten years of service.
Earnings under the plans for the executive officers named in the Summary
Compensation Table consist of regular annual compensation, excluding bonuses
or severance pay, and is the same as the Annual Compensation and Long-Term
Compensation shown in the Summary Compensation Table. Mr. Giordano has 30
credited years of service under the plans, Mr. Mancini 24 years, Mr. Hanlon
23 years.
Funding of the Retirement Plan is based on actuarial computations and
results in a pool of assets held in trust that is unallocated with respect to
any particular individual. Benefits payable under the Retirement Plan are
calculated on the basis of straight life annuity amounts, accrued over a
25-year period and are not subject to any deduction for Social Security
Benefits or other offset.
Benefits under the SERP are unfunded, accrue over a 15-year period and
once they are fully vested do not vary with years of service. For an
individual retiring at age 65, benefits are calculated on the basis of 75% of
the average of the five highest consecutive years' earnings, less any amounts
receivable for benefits of Social Security, the Retirement Plan, and other
qualified plans of the Company and other employers.
Employment Agreements
The Company has employment agreements with Messrs. Giordano, Mancini, and
Hanlon under which the Company has agreed to employ them for five, two, and
two-year periods, respectively, and which may be extended annually for an
additional year. If the Company terminates the employment of any of these
7
<PAGE>
individuals other than for his breach of the agreement or misconduct, it is
required to continue salary payments including average incentive
compensation, deferred compensation and amounts the employee has elected to
defer, through the term of the agreement. Such termination payments will not
be made following any termination of employment that gives rise to payments
under the management continuity agreements described below.
Management Continuity Agreements
The Company has management continuity agreements (the "Continuity
Agreements") with Messrs. Giordano, Mancini, and Hanlon. The Continuity
Agreements provide that in the event of termination of employment or a
reduction in compensation, position or other conditions of employment within
a specified period following a Change in Control of the Company, as defined
in the Continuity Agreements, or termination by the employee for Good Reason,
as defined in the Continuity Agreements, following a Change in Control, the
Company shall pay to the employee a lump sum severance benefit and certain
other benefits. The severance benefit payable to Mr. Giordano is five times
his annual salary and incentive and deferred compensation, and to Messrs.
Mancini and Hanlon 2.95 times their annual salaries and incentive and
deferred compensation. In each Continuity Agreement, except for Mr.
Giordano's, no severance benefits are paid to the extent that such benefits,
aggregated with other benefits paid to the employee, constitute "excess
parachute payments" within the meaning of Section 280G of the Internal
Revenue Code of 1986.
PERFORMANCE GRAPH
The following graph compares the performance of the Company's common stock
to the S&P 500 Index and a natural gas industry peer group, consisting of 61
companies published by Media General Financial Services, Inc., for the last
five years. The graph assumes an investment of $100 at September 30, 1990
with all dividends reinvested.
Comparison of Five Year Cumulative Total Return
[line chart]
9/90 9/91 9/92 9/93 9/94 9/95
S&P 500 Index $100 $131 $146 $165 $171 $221
EnergyNorth, Inc. 100 116 132 174 146 155
Industry Peer Group 100 107 110 139 125 132
8
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The compensation program for executive officers of the Company is
administered by the Compensation Committee of the Board of Directors. The
Committee's philosophy is to link executive compensation to improvements in
corporate performance and enhanced profitability and shareholder value. The
compensation program objectives are to (1) provide a competitive,
market-based total compensation package that enables the Company to attract
and retain key executives; (2) integrate all compensation programs with the
Company's annual and long-term business objectives and focus executive
efforts on the fulfillment of those objectives; and, (3) provide variable
compensation opportunities that are directly linked with the performance of
the Company and that align executive remuneration with the interests of
shareholders and utility subsidiary ratepayers.
Base Salary
The base salary component of executive compensation reflects the first
objective stated above of attracting and retaining qualified executives.
The salary range for each executive officer ("Officer") position,
including the Chief Executive Officer ("CEO"), and the actual base salary of
each Officer is reviewed annually. The salary ranges are based upon
independent regional and industry salary surveys, including peer groups, for
comparable positions. These surveys are reviewed and analyzed by the
Company's Human Resources Department with the assistance of outside
consultants from time to time. Specific salary levels are established through
an evaluation of each Officer's performance relating to duties and individual
achievements. For fiscal year 1995, the salary range and specific Officer
salary recommendations were reviewed and approved by the Compensation
Committee.
In establishing the CEO's 1995 base salary, the Compensation Committee
reviewed the competitive market data and also reviewed performance relating
to the Company's earnings level and return on equity, cost containment
efforts, the development and implementation of a long-term strategic plan,
involvement in community and industry leadership activities and development
of relations with customers. The Committee's evaluation of the CEO's success
in meeting these goals resulted in the determination of his base salary. The
Compensation Committee recommended a base salary, which was approved by the
Board of Directors.
Key Employee Incentive Plan
Each Officer participates in the Company's Key Employee Performance and
Equity Incentive Plan. The Plan is intended to compensate key employees based
upon performance standards and objectives and to reward performance with
share ownership in the Company. The Company seeks to align the interests of
key employees with the interests of shareholders and utility ratepayers. In
1995 the annual performance criteria which determined eligibility for awards
under the plan were (1) earnings levels compared to forecast, (2) total
shareholder return compared to a peer group of comparable natural gas
distribution companies, (3) operations and maintenance expenses per customer
benchmarks compared to inflation, (4) percentage change in annual cost of gas
sold benchmarks compared to the peer group, and (5) evaluation of individual
performance. Success in meeting these goals determines the amount of annual
incentive compensation an Officer will receive. Targeted awards for Officers
under the program range up to 20% of the salary range control point and up to
25% of the salary range control point for the CEO. One-half of the Incentive
Plan award is paid in cash and one-half is paid in the form of awards of
Company Common Stock that are subject to forfeiture and restrictions on
transferability for a period of three years. The Key Employee Performance and
Equity Incentive Plan was adopted and approved by the shareholders in
February 1993.
9
<PAGE>
The Compensation Committee believes that the total compensation program
for executives of the Company is competitive with the compensation programs
provided by similarly sized utilities. The Compensation Committee believes
that any amounts paid under the annual incentive plan are appropriately
related to corporate and individual performance, yielding awards that are
directly linked to annual financial and operational results of the Company.
Compensation Committee
of the Board of Directors
Sylvio L. Dupuis, Chairman
Roger C. Avery
Richard B. Couser
10
<PAGE>
AMENDMENT TO ARTICLES OF INCORPORATION
(Item 2 on Proxy)
The Company proposes an amendment to its Articles of Incorporation (the
"Amendment") to change a reference from the "asked price quoted by NASDAQ" to
the "sales price on the New York Stock Exchange." The Company's common stock
had been traded on NASDAQ until April 1995, at which time its common stock
began trading on the New York Stock Exchange. The Amendment is attached to
this Proxy Statement as Exhibit A. The Board of Directors unanimously
recommends that the shareholders approve the Amendment.
At the 1986 Annual Meeting of Shareholders, the Company's shareholders
approved an addition to the Articles of Incorporation of Article Seventh,
Section B which imposes special voting requirements for certain business
combinations that do not provide shareholders with a defined minimum price
for their shares. The purpose of Article Seventh, Section B is to require,
generally, that certain business combinations with other companies or persons
that will result in the involuntary termination of ownership of Company
common stock by Company shareholders be approved by a majority of the shares
held by shareholders other than the person who would be acquiring the Company
or its assets in the business combination (an "Acquiror"), unless the
shareholders receive a defined minimum price per share and a proxy statement
soliciting approval of the business combination has been distributed to
shareholders. Article Seventh, Section B was intended to protect shareholders
from receiving less consideration than the price paid by the Acquiror in
obtaining its controlling block of shares in "two-tier" acquisitions in which
the initial tender offer for, or market purchase of, a controlling block of
shares by the Acquiror is followed by a business combination that eliminates
all minority interests.
As noted above, the special voting requirement imposed by Article Seventh,
Section B is not triggered if a proxy statement soliciting shareholder
approval of the business combination has been distributed and shareholders
receive payment for their shares at least equal to a defined minimum price
per share ("Minimum Price Per Share"). The definition of Minimum Price Per
Share in Article Seventh, Section B is, generally, the higher of (i) the
highest price paid by the Acquiror during the five years preceding the record
date for shareholder consent to the combination, increased to take into
account the passage of time from the date of purchase, or (ii) the highest
asked price quoted by NASDAQ during the same five year period, similarly
increased to take into account the passage of time from the date of purchase.
Because the Company's common stock is now listed on the NYSE and is no
longer traded on NASDAQ, a literal reading of the definition of Minimum Price
will always result in the use of the first of the two alternatives described
in the preceding paragraph. Thus, the reason for the Amendment is to allow
the definition of Minimum Price to once again operate as it was intended, by
referencing the exchange on which Company common stock is now traded.
If the Amendment is not approved by the shareholders, all of the
provisions of Article Seventh, Section B will continue to be operative, with
the exception of the market price alternative definition of Minimum Price Per
Share. The Company believes that in the event that the Amendment is not
approved, Article Seventh, Section B will continue to serve the purpose for
which it was adopted, without a material difference in the degree to which
the Article may have the effect of discouraging a third party from making a
tender offer or otherwise attempting to obtain control of the Company. The
Board of Directors and management are not aware of any takeover attempt
directed at the Company or any interest on the part of a third party in
making such an attempt.
The affirmative vote of the holders of a majority of the outstanding
shares of the Company's common stock is required to approve the Amendment.
Consequently, a shareholder's failure to vote will have the same effect as a
vote against the Amendment. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
FOR THE PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION.
11
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RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(Item 3 on Proxy)
Subject to shareholder ratification, the Board of Directors, upon
recommendation of the Audit Committee, has reappointed Arthur Andersen LLP to
serve as independent public accountants for the Company for the year 1996.
Arthur Andersen LLP were the Company's principal accountants in 1995.
Ratification of the appointment of independent public accountants will
require the affirmative vote of the holders of a majority of the shares of
Common Stock present at the meeting and entitled to vote. The Board of
Directors recommends that the shareholders vote for such ratification.
Representatives of Arthur Andersen LLP are expected to be present at the
meeting and will have an opportunity to make a statement and be available to
respond to appropriate questions.
STOCKHOLDERS' PROPOSALS
Stockholders may submit proposals to be considered for stockholder action
at the 1997 annual meeting if they do so in accordance with appropriate
regulations of the Securities and Exchange Commission. Any such proposals
must be received by the Company no later than August 29, 1996 in order to be
considered for inclusion in the 1997 materials.
OTHER MATTERS
Management knows of no matters to be presented at the meeting other than
those set forth in the accompanying proxy. However, if any other matters are
properly presented for action, it is the intention of the persons named in
the proxy to vote upon such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Richard A. Samuels, Secretary
December 27, 1995
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO
EXECUTE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING
ENVELOPE.
AVAILABILITY OF FORM 10-K
A copy of the Company's annual report for the last fiscal year filed on
Form 10-K with the Securities and Exchange Commission will be furnished to
stockholders without charge upon written request to Michael J. Netkovick,
Manager, Public and Investor Relations, EnergyNorth, Inc., P.O. Box 329,
Manchester, NH 03105.
12
<PAGE>
EXHIBIT A
[proposed deletions shown as stricken; additions underlined]
Article Seventh
B. 1. Any Business Combination, except as set forth in Section 2 of this
Article, that will result in an involuntary sale, redemption, cancellation or
other termination of ownership of any shares of Common Stock of the
Corporation owned by shareholders who do not vote in favor of, or consent in
writing to, the Business Combination shall require the affirmative vote of
the holders of at least a majority of all shares of the Common Stock of the
Corporation that are not beneficially owned, directly or indirectly, by the
Controlling Person involved in the Business Combination. Such affirmative
vote as is provided for in this Article shall be in addition to any vote of
the holders of the stock of the Corporation otherwise provided by law or any
agreement.
2. The provisions of this Article shall not apply to any Business
Combination if:
(a) The cash or fair value of other readily marketable consideration to be
received by such shareholders for such shares shall at least be equal
to the Minimum Price Per Share, and
(b) A proxy statement responsive to the requirements of the Securities
Exchange Act of 1934 shall be mailed to the shareholders of the
Corporation for the purpose of soliciting shareholder approval of the
proposed Business Combination.
3. For purposes of this Article, the following definitions shall apply:
(a) Affiliate shall mean a Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under
common control with another Person.
(b) Associate shall mean (1) any corporation or organization of which a
Person is an officer or partner or is, directly or indirectly, the
Beneficial Owner of five percent (5%) or more of any class of equity
securities, (2) any trust or other estate in which a Person has a five
percent (5%) or larger beneficial interest of any nature or as to
which a Person serves as trustee or in a similar fiduciary capacity,
(3) any spouse of a Person, and (4) any relative of a Person, or any
relative of a spouse of a Person, who has the same residence as such
Person or spouse.
(c) Beneficial Owner shall be deemed to have the same meaning as set forth
in Section 240-13D-3 of the Regulations under the Securities Exchange
Act of 1934.
(d) Business Combination shall mean:
(i) any merger or consolidation of the Corporation with or into a
Controlling Person, or
(ii) any sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the Corporation to
or with a Controlling Person, or
(iii) any sale, lease, exchange or other disposition to the Corporation
of any assets, cash, securities or other property of a Controlling
Person, in exchange for securities of the Corporation, or
(iv) any acquisition of shares of stock of the Corporation by a
Controlling Person by means of a statutory share exchange, or
(v) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any other
transaction (whether or not with or into or otherwise involv-
A-1
<PAGE>
ing a Controlling Person) which has the effect, directly or
indirectly, of increasing the proportionate shares of any class of
equity or convertible securities of the Corporation which is
directly or indirectly owned by any Controlling Person.
(e) Control shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies
of a Person, whether through the ownership of voting securities, by
contract or otherwise.
(f) Controlling Person shall mean any Person who is the Beneficial Owner
of a number of shares of Common Stock of the Corporation, whether or
not such number includes shares not then outstanding or entitled to
vote, that exceeds ten percent (10%) of the outstanding shares of
Common Stock of the Corporation entitled to vote. The Board of
Directors of the Corporation shall have the power and duty to
determine for the purposes of this Article, on the basis of
information known to the Corporation, whether any corporation, person
or other entity is a Beneficial Owner of ten percent (10%) or more of
the shares of Common Stock of the Corporation. Any such determination
made in good faith shall be conclusive and binding for all purposes of
this Article.
(g) Minimum Price Per Share shall mean the sum of (a) the higher of (i) the
highest gross per share price paid or agreed to be paid to acquire any
shares of Common Stock of the Corporation Beneficially Owned by a
Controlling Person, provided such payment or agreement to make payment
was made within five (5) years immediately prior to the record date set
to determine the shareholders entitled to vote or consent to the Business
Combination in question, or (ii) the highest per share closing (striked
out text "asked price quoted by NASDAQ")(redlined text "sales price on
the New York Stock Exchange") for such Common Stock during such five (5)
year period, plus (b) the aggregate amount, if any, by which five percent
(5%) for each year, beginning on the date on which such Controlling
Person became a Controlling Person, of such higher per share price
exceeds the aggregate amount of all Common Stock dividends per share paid
in cash since the date on which such Person became a Controlling Person.
The calculation of the Minimum Price Per Share shall require appropriate
adjustments for capital changes, including without limitation stock
splits, stock dividends and reverse stock splits. The Board of Directors
of the Corporation shall have the power and duty to determine, on the
basis of information known to the Corporation, the value of any non-cash
consideration offered in connection with a Business Combination. Any such
determination made in good faith shall be conclusive and binding for all
purposes of this Article.
(h) Person shall mean an individual, a corporation, a partnership, an
association, a joint-stock company, a trust, any unincorporated
organization, a government or political subdivision thereof and any
other entity, and shall include an Affiliate or Associate of any
Person.
A-2
<PAGE>
[ENERGYNORTH PROXY CARD FOLLOWS.]
Proxy for the Annual Meeting of Stockholders of EnergyNorth, Inc.
P To Be Held February 7, 1996
R THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS
O
X
Y
The undersigned hereby appoints Edward T. Borer, Robert R. Giordano, and
N. George Mattaini, and each of them, proxies for the undersigned, with power of
substitution, to vote on behalf of the undersigned at the annual meeting of
stockholders to be held February 7, 1996, and any adjournments thereof, upon the
matters set forth in the notice of said meeting and as stated below. The proxies
are further authorized to vote, in their discretion, upon such other business as
may properly come before the meeting and any adjournments thereof.
UNLESS OTHERWISE INDICATED, THIS PROXY WILL BE VOTED IN FAVOR OF THE
PROPOSALS SET FORTH ON THE REVERSE SIDE.
PLEASE DATE AND SIGN ON THE REVERSE SIDE SEE REVERSE
AND MAIL IN THE ENCLOSED POSTAGE PAID ENVELOPE. SIDE
<PAGE>
X Please mark
- ------ votes as in
this example.
1. To elect the following nominees as directors:
Nominees: Edward T. Borer, Richard B. Couser,
Constance B. Girard-diCarlo
FOR WITHHELD
---------- -------
- --------------------------------------------------------
For all nominees except as noted above
FOR AGAINST ABSTAIN
2. To amend Article Seventh,
Section B of the Articles
of Incorporation. ---- ---- ----
3. To ratify the appointment
of independent public
accountants for 1996. ---- ---- ----
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT ----
The undersigned also hereby acknowledges receipt of
notice of said meeting and the related proxy statement.
NOTE: Attorneys, executors, administrators, trustees and
others signing in a representative capacity should indicate
that capacity. If shares are held jointly, EACH holder must
sign.
Signature: ---------------------------------- Date ----------------
Signature: ---------------------------------- Date ----------------
