SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. __)
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commmission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
EnergyNorth, Inc.
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(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)(4) 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 the amount on which the filing fee is
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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 Sechedule and the date of its filing.
1) Amount previously Paid:
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<PAGE>
[LOGO]
ENERGY
NORTH
- --------------------------------------------------------------------------------
EnergyNorth, Inc. [bullet] 1260 Elm Street [bullet] P.O. Box 329 [bullet]
Manchester, New Hampshire 03105-0329 [bullet] Telephone (603) 625-4000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held February 4, 1998
To the Stockholders of
ENERGYNORTH, INC.:
The annual meeting of stockholders of EnergyNorth, Inc. will be held at
the Wayfarer Inn, 121 South River Road, Bedford, New Hampshire, at 11:00 a.m.
on Wednesday, February 4, 1998, for the following purposes:
1. To elect three directors to the Board of Directors.
2. To ratify the appointment of independent public accountants for 1998.
3. 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 16, 1997
will be eligible to vote at this meeting and any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
RICHARD A. SAMUELS, Secretary
December 22, 1997
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>
[INTENTIONALLY BLANK]
<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 Wayfarer Inn, 121 South River Road, Bedford, New Hampshire,
at 11:00 a.m. on Wednesday, February 4, 1998. This proxy statement and
accompanying form of proxy are being mailed to stockholders on or about
December 22, 1997.
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" 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 16, 1997. On that date, the Company had
outstanding and entitled to vote 3,246,258 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 John E. Tulley II. 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 Richard B. Couser, Chairman,
Roger C. Avery and Joan P. Cudhea. It held two 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 person listed below was the only person known by the Company to be the
beneficial owner of more than five percent of the Company's $1.00 par value
Common Stock, its only class of securities, at the close of business on
September 30, 1997.
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Shares Owned Beneficially Percent of Class
- -------------------------------------- --------------------------- -----------------
<S> <C> <C>
Dimensional Fund Advisors, Inc. 162,417(1) 5.01
1299 Ocean Avenue
Santa Monica, California 90401
</TABLE>
The following table sets forth information regarding beneficial ownership
of the Company's $1.00 par value Common Stock by each director and nominee for
director, certain executive officers (Ms. Chicoine and Messrs. Childs, Demers
and Hanlon), and all directors and executive officers as a group, as of October
21, 1997.
<TABLE>
<CAPTION>
Name Shares Beneficially Owned*
- ----------------------------------------------- -----------------------------
<S> <C>
Roger C. Avery (2) 34,277
Edward T. Borer (3) 15,089
Richard J. Censits 2,000
Michelle L. Chicoine 2,014
Frank L. Childs 872
Richard B. Couser 146
Joan P. Cudhea (4) 13,952
Richard P. Demers 1,668
Sylvio L. Dupuis 615
Robert R. Giordano (5) 15,498
Constance B. Girard-diCarlo 125
Albert J. Hanlon 2,043
Andrew E. Lietz (6) 1,000
N. George Mattaini (7) 11,612
John E. Tulley II 100
All Directors, Nominees and Executive Officers
as a Group (17 in number at 12/1/97) 102,386
</TABLE>
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*The beneficial ownership of shares of directors, nominees, and executive
officers of the Company in no individual case, except Mr. Avery, whose
beneficial ownership represented 1.06 percent, exceeded one percent of the
outstanding common stock of the Company. Such ownership represented in the
aggregate 3.16 percent of the outstanding common stock.
2
<PAGE>
(1) According to a Statement on Schedule 13G filed with the Securities and
Exchange Commission on February 5, 1997 and a subsequent statement from
the beneficial owner. The beneficial owner, a registered investment
advisor, reported that it has dispositive power only with respect to
34,926 of such shares.
(2) Includes 12,879 shares held by Mr. Avery solely in a fiduciary capacity and
in which he disclaims beneficial ownership.
(3) Includes 963 shares held by Mr. Borer's spouse, in which he disclaims
beneficial ownership.
(4) Includes 1,690 shares held by Ms. Cudhea's daughter-in-law, in which she
disclaims beneficial ownership and over which she shares investment power
only.
(5) Includes 430 shares held by Mr. Giordano's spouse, in which he disclaims
beneficial ownership.
(6) Mr. Lietz's shareholdings are as of November 20, 1997.
(7) Includes 7,404 shares held by Mr. Mattaini's spouse, in which he disclaims
beneficial ownership.
ELECTION OF DIRECTORS
(Item 1 on Proxy)
The following information concerning the name, age at December 31, 1997,
and business experience of the three persons to be nominated for election as
directors and the seven directors whose terms do not expire in 1998 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. Where
proxies are marked "withhold authority," such shares are included in
determining the number of shares present and voting. "Broker non-votes" on
proxies returned by brokers holding shares for beneficial owners who have not
provided instructions as to voting for directors will be counted as a vote for
each nominee.
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 2001
<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>
Joan P. Cudhea, 65 1984 Certified Financial Planner and Registered Investment
Adviser
Sylvio L. Dupuis, 63 1982 Optometrist; Executive Director of McLane, Graf, Raul-
erson & Middleton, Professional Association law firm;
formerly (until 1996) Commissioner of Insurance -
State of New Hampshire; formerly (until 1994) Presi-
dent and Chief Executive Officer, Catholic Medical
Center, a hospital
Andrew E. Lietz, 59 -- President, Chief Executive Officer and Director (until
1995, Vice President and Chief Operating Officer) of
Hadco Corporation, a manufacturer of printed circuit
boards
</TABLE>
3
<PAGE>
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS EXPIRING IN 2000
<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, 58 1984 President and Chief Executive Officer, Illinois Gas Com-
pany; Adjunct Associate Professor and Research
Associate, Brown University
Robert R. Giordano, 59 1988 President and Chief Executive Officer of ENGI; Chair-
President and Chief man and Chief Executive Officer of ENPI
Executive Officer
N. George Mattaini, 72 1982 Retired President and Chief Executive Officer of the
Vice Chairman Company
of the Board
John E. Tulley II, 43 1997 President and Chief Executive Officer, Tulley Buick
Pontiac Co., Inc.
</TABLE>
DIRECTORS TO CONTINUE IN OFFICE WITH TERMS 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, 59(2) 1982 Chairman (and, until 1996, Chief Executive Officer; and,
Chairman of the Board until 1995, President) of Philadelphia Corporation for
Investment Services, a registered securities broker/
dealer and investment advisor
Richard B. Couser, 56 1985 Attorney with Orr & Reno, Professional Association
Constance B. 1994 President, Healthcare Support Services, a division of
Girard-diCarlo, 50 ARAMARK Corporation, which manages support
service departments in the healthcare industry
</TABLE>
- ------------
(1) Richard J. Censits, 60, has been a director of the Company since 1993. He
is a Consultant to Business and, formerly, until 1996, Chairman and Chief
Financial Officer of Montech International, Inc. Mr. Censits has chosen
not to stand for reelection and his term of office as director expires at
the 1998 Annual Meeting. Mr. Censits is a director of Checkpoint Systems,
Inc. and Medquist Inc.
(2) Mr. Borer is a director of Philadelphia Corporation for Investment
Services.
4
<PAGE>
Compensation of Directors
The Chairman of the Board of Directors receives an annual retainer of
$42,000 and the Vice Chairman receives an annual retainer of $24,000. All other
directors receive annual retainers of $10,500. Committee Chairmen receive
additional annual retainers of $2,500. Incentive compensation in the amount of
100 shares of the Company's $1.00 par value Common Stock is awarded to each
director annually provided that the Company has achieved certain fiscal year
earnings and shareholder return objectives. 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,
director incentive compensation, 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Richard B. Couser, a director and a former 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) BENEFICIAL OWNERSHIP REPORTING 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
1997 all directors and officers filed all such required notices, except that
Dr. Dupuis failed to report an acquisition of 200 shares on his Form 5 filed
for the Company's 1995 fiscal year and Mr. Borer filed a Form 5 for the
Company's 1997 fiscal year, reporting his spouse's inheritance of 750 shares,
approximately one week late.
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, 1997, 1996 and 1995 to the Chief Executive Officer and the four
other executive officers of the Company whose salary and cash incentive
compensation award for the 1997 fiscal year exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
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Long-Term
Annual Compensation Compensation
------------------------------------------- ------------------
Cash Incentive Other Annual Restricted Stock All Other
Name and Principal Position Year Salary(1) Compensation Compensation Awards(2) Compensation(3)
- ----------------------------- ------ ----------- ---------------- -------------- ------------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Robert R. Giordano 1997 $210,797 $61,217 $2,234 $20,403 $12,132
President and CEO 1996 200,334 59,103 2,492 19,677 7,961
1995 191,021 19,002 3,124 18,989 7,197
Michelle L. Chicoine 1997 $111,595 $26,832 $1,350 $ 8,932 $ 6,013
Senior Vice President, 1996 85,584 21,550 1,053 7,164 4,095
Treasurer and CFO 1995 81,041 6,222 927 6,222 3,729
Frank L. Childs 1997 $107,417 $25,695 $ 0 $ 8,563 $ 3,571
Senior Vice President 1996 93,750 22,062 0 7,338 1,946
1995 68,981 5,613 0 5,610 645
Albert J. Hanlon(4) 1997 $120,083 $26,392 $1,373 $ 8,770 $ 4,759
Senior Vice President 1996 114,917 25,835 1,346 8,593 4,555
1995 111,866 9,279 1,448 9,248 4,560
Richard P. Demers 1997 $ 99,750 $21,054 $ 0 $ 7,016 $ 4,565
Vice President 1996 95,333 20,959 0 6,971 4,397
1995 91,927 7,721 827 7,718 4,250
</TABLE>
(1) Includes amounts earned and deferred without election by the officer and
amounts deferred pursuant to Deferred Compensation Agreements and the
Company's 401(k) plan.
(2) The aggregate number of shares of restricted stock holdings of the
above-named officers, as of September 30, 1997, is 7,167 shares, having a
value of $165,293.
(3) All other compensation paid in 1997 includes: Employer contributions to the
Company's 401(k) plan for Mr. Giordano ($5,374), Ms. Chicoine ($4,360),
Mr. Childs ($1,946), Mr. Hanlon ($2,909), and Mr. Demers ($3,030); value
of term life insurance premiums paid for Mr. Giordano ($2,040), Ms.
Chicoine ($1,653), Mr. Childs ($1,625), Mr. Hanlon ($1,850) and Mr. Demers
($1,535); portion of interest earned in a deferred compensation account by
Mr. Giordano in excess of 120% of federal long-term rate ($4,718).
(4) Mr. Hanlon has announced his retirement effective December 31, 1997.
6
<PAGE>
The following Pension Plan Table sets forth estimated combined 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. The 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
- --------------------------------------------------------------------------
Average Annual Earnings 15 Years of 25 Years of 35 Years of
During Highest Five Years Service Service Service
- --------------------------- ------------- ------------- ------------
<S> <C> <C> <C>
$125,000 $ 93,750 $ 93,750 $ 93,750
150,000 112,500 112,500 112,500
175,000 131,250 131,250 131,250
200,000 150,000 150,000 150,000
225,000 168,750 168,750 168,750
250,000 187,500 187,500 187,500
300,000 225,000 225,000 225,000
</TABLE>
Noncontributory 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 noncontributory 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
are the same as the Annual Compensation and Long-Term Compensation shown in the
Summary Compensation Table. Mr. Giordano has 32 credited years of service under
the plans, Ms. Chicoine 7 years, Mr. Childs 2 years, Mr. Hanlon 25 years and
Mr. Demers 9 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, except that SERP
participants who are included in the plan after September 30, 1995 will have
benefits reduced if they retire prior to normal retirement date under the
Retirement Plan. 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.
7
<PAGE>
Employment Agreements
The Company has employment agreements with Messrs. Giordano and Hanlon
(until the date of his retirement on December 31, 1997) under which the Company
has agreed to employ them for five and two-year periods, respectively, and
which may be extended annually for an additional year. If the Company
terminates the employment of either of these 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. The Company has a consulting agreement with Mr.
Hanlon under which it will retain him as a consultant from the date of his
retirement until January 1, 2000. If the Company terminates the consulting
agreement other than for its breach or misconduct by Mr. Hanlon, it is required
to continue payments under it through the term of the agreement.
Management Continuity Agreements
The Company has management continuity agreements (the "Continuity
Agreements") with Mr. Giordano, Ms. Chicoine, Messrs. Childs, Hanlon, and
Demers. 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. Hanlon and Childs and Ms. Chicoine 2.95 times each
of their annual salaries and incentive and deferred compensation. The severance
benefit payable to Mr. Demers is the greater of two times his annual salary or
2.75 times his five-year average taxable 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.
8
<PAGE>
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 59
companies published by Media General Financial Services, Inc., for the last
five years. The graph assumes an investment of $100 at September 30, 1992 with
all dividends reinvested.
Comparison of Five Year Cumulative Total Return
[line graph and legend]
9/92 9/93 9/94 9/95 9/96 9/97
S&P 500 Index $100 $113 $117 $152 $183 $257
EnergyNorth, Inc. 100 132 117 117 141 180
Industry Peer Group 100 130 118 126 142 194
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.
9
<PAGE>
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 1997, the salary range and specific officer salary recommendations
were reviewed and approved by the Compensation Committee.
In establishing the CEO's 1997 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,
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 customers. In 1997 the
annual performance criteria which determined eligibility for awards under the
plan were (1) earnings levels compared to forecast, (2) total average
shareholder return over a rolling three-year period compared to a peer group of
comparable natural gas distribution companies, (3) operations and maintenance
expenses per customer benchmarks compared to inflation, and (4) evaluation of
individual performance. Success in meeting these goals determines the amount of
annual incentive compensation an officer will receive. Targeted awards for the
CEO under the program range up to 40% of the midpoint of the market interval
and up to 30% for other participating officers. Three-quarters of the Incentive
Plan award is paid in cash and one-quarter 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 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
John E. Tulley II
10
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(Item 2 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 1998.
Arthur Andersen LLP were the Company's principal accountants in 1997.
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 1999 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 24, 1998 in order to be
considered for inclusion in the 1999 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 22, 1997
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.
11
<PAGE>
2670-PS-97
