<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] 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
UNITED WATER RESOURCES INC.
- - - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
UNITED WATER RESOURCES INC.
- - - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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:
-------------------------------------------------------------------------
(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 filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
United Water [LOGO]
UNITED WATER RESOURCES
200 Old Hook Road
Harrington Park, NJ 07640
telephone 201 784 9434
facsimile 201 767 6579
- - - --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, MAY 13, 1996
- - - --------------------------------------------------------------------------------
To the Shareholders of
UNITED WATER RESOURCES INC.:
The Annual Meeting of the Shareholders of United Water Resources Inc.
("United Water") will be held at the Montvale Inn, 100 Chestnut Ridge Road,
Montvale, New Jersey 07645, on Monday, May 13, 1996, at 9:30 a.m. for the
following purposes:
1. To elect five directors to Class III of the Board of Directors.
2. To ratify, confirm and approve the act of the Board of Directors on
March 7, 1996, appointing Price Waterhouse llp, New York, New York, as the
auditors for United Water and its subsidiaries for the year 1996.
3. To transact such other business as may properly be brought before such
meeting or any adjournment or adjournments thereof.
The close of business on March 14, 1996, has been fixed as the time for the
determination of the shareholders entitled to vote at said meeting, or any
adjournments thereof, and only shareholders of record at such time will be
entitled to vote at such meeting, or at any adjournments thereof.
You are urged to sign, date and return the enclosed proxy promptly, using the
envelope enclosed for your convenience. This will not limit your right to vote
in person at the meeting if you plan to attend.
By Order of the Board of Directors
DOUGLAS W. HAWES, Secretary
Harrington Park, New Jersey
March 28, 1996
THE ANNUAL MEETING IS BEING HELD AT THE MONTVALE INN, 100 CHESTNUT RIDGE
ROAD, MONTVALE, NEW JERSEY 07645. DIRECTIONS TO THE MEETING ARE INCLUDED AT THE
END OF THIS PROXY STATEMENT AND MAY ALSO BE OBTAINED BY TELEPHONING UNITED
WATER AT (201) 784-9434.
<PAGE>
United Water [LOGO]
UNITED WATER RESOURCES
200 Old Hook Road
Harrington Park, NJ 07640
telephone 201 784 9434
facsimile 201 767 6579
- - - --------------------------------------------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 13, 1996
- - - --------------------------------------------------------------------------------
The proxy which is requested in the foregoing Notice of Annual Meeting of
Shareholders is being solicited by the Board of Directors of United Water
Resources Inc. ("United Water") with respect to the shareholders' meeting to be
held on May 13, 1996. The mailing address and principal executive office of
United Water is 200 Old Hook Road, Harrington Park, New Jersey 07640. Any proxy
given may be revoked by the shareholder executing such proxy by notifying the
secretary of the meeting in writing at any time prior to the voting thereof.
Unless revoked, the shares represented by all such proxies will be voted. It is
expected that the Notice, Proxy Statement and form of Proxy will be mailed to
shareholders on or about March 28, 1996.
The close of business on March 14, 1996, has been fixed as the time for the
determination of the shareholders entitled to vote at the Annual Meeting. Each
share of United Water Common Stock, no par value, is entitled to one vote. On
January 31, 1996, there were 32,930,967 shares of United Water's Common Stock
outstanding and entitled to vote.
United Water's Annual Report to Shareholders, including financial statements
for the year ended December 31, 1995, is being mailed to all shareholders of
record at their respective last known addresses.
A COPY OF UNITED WATER'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1995, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, WILL
BE FURNISHED BY UNITED WATER WITHOUT CHARGE TO EACH PERSON TO WHOM THIS PROXY
STATEMENT IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON TO UNITED
WATER RESOURCES INC., 200 OLD HOOK ROAD, HARRINGTON PARK, NEW JERSEY 07640,
ATTENTION: ALLAN D. SHAKLEY, ASSISTANT SECRETARY (TELEPHONE NUMBER: (201) 784-
9434).
<PAGE>
ELECTION OF DIRECTORS
OWNERSHIP OF SECURITIES BY DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL
OWNERS
The following information pertains to the Common Stock of United Water
beneficially owned, directly or indirectly, by each director and nominee and
certain executive officers individually and by all directors and executive
officers of United Water and its subsidiaries as a group.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF BENEFICIAL OWNER(A) SHARES(B)(D)
--------------------------- ------------
<S> <C>
Edward E. Barr............................................ 266
Frank J. Borelli.......................................... 3,343
Philippe Brongniart....................................... 106
Lawrence R. Codey......................................... 699
Donald L. Correll......................................... 209,695(e)
Peter Del Col............................................. 5,259
Frank J. DeMicco.......................................... 36,157(e)
Allan R. Dragone.......................................... 100
Robert L. Duncan, Jr...................................... 197
Ronald S. Dungan.......................................... 40,137(e)
Jon F. Hanson............................................. 22,934(c)
George M. Haskew, Jr...................................... 98,164(c)(e)
Douglas W. Hawes.......................................... 8,882
Richard B. McGlynn........................................ 13,101(e)
Dennis M. Newnham......................................... 1,063
Jacques F. Petry.......................................... 106
Joseph Simunovich......................................... 31,655(e)
Marcia L. Worthing........................................ 1,629
Directors and Executive Officers As a Group (22 persons).. 579,039(c)(e)
</TABLE>
- - - --------
(a) All individuals listed are currently serving as directors or directors and
executive officers of United Water and its subsidiaries, except for Mr.
DeMicco, Mr. Dungan, Mr. McGlynn, and Mr. Simunovich, who are serving as
executive officers only.
(b) None of the directors or executive officers of United Water owns equity
securities of United Water or any of its subsidiaries other than Common
Stock. As of January 31, 1996, each director or executive officer
beneficially owned less than 0.7% of the outstanding Common Stock of United
Water and all of the directors and executive officers as a group
beneficially own 1.7% of such stock. Fractional shares have been rounded to
the nearest whole share.
(c) The number of shares listed above includes, in compliance with applicable
regulations and interpretations, shares of Common Stock held by the spouse
or other relatives who share the home, in custody for children or
grandchildren of the persons indicated or indirectly through a trust or
similar arrangement in the following amounts: J. Hanson (22,934); G.
Haskew, Jr. (686); and all directors and executive officers as a group
(23,823). Such persons disclaim any beneficial ownership of such shares.
(d) Based solely upon a review of Forms 3, 4 and 5 and written representations
furnished to United Water, United Water believes that during the fiscal
year ended December 31, 1995, the directors and officers of United Water
complied with all filing requirements of Section 16(a) of the Securities
Exchange Act of 1934.
(e) These numbers include shares of Common Stock which may be acquired pursuant
to options awarded under United Water's Management Incentive Plan in the
following amounts: D. Correll (178,651); F. DeMicco (35,630); R. Dungan
(37,620); G. Haskew, Jr. (60,443); R. McGlynn (12,470); J. Simunovich
(28,750); and all directors and executive officers as a group (447,704).
2
<PAGE>
The following corporation is known to United Water to be the beneficial owner
of more than 5% of a class of United Water's voting securities. To the
knowledge of United Water, no other person is the holder of more than 5% of any
class of United Water's voting securities.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
TITLE OF NAME AND ADDRESS OF BENEFICIAL OF BENEFICIAL OF
CLASS OWNER OWNERSHIP CLASS
-------- ------------------------------ ----------------- -------
<C> <S> <C> <C>
Common Stock Lyonnaise American Holding, Inc. 8,648,039 shares 26.3%
2000 First State Boulevard
Wilmington, Delaware 19804-0507
</TABLE>
Lyonnaise American Holding, Inc. ("Lyonnaise American"), its parent company
Lyonnaise des Eaux ("Lyonnaise"), and certain of their respective affiliates
are subject to the terms of a Governance Agreement, dated April 22, 1994,
which, among other things, prohibits, subject to certain exceptions, such
parties from acquiring additional United Water securities, commencing
unsolicited tender or exchange offers to acquire United Water's securities,
making offers to acquire United Water's assets or soliciting proxies against
United Water's management and which requires their United Water Common Stock to
be voted in accordance with the votes of the holders of 75% of the Common Stock
if any proposal obtains that vote.
DIRECTORS OF UNITED WATER
Effective as of the Annual Meeting, the Board of Directors of United Water is
comprised of fourteen directors, divided into three classes. At the Annual
Meeting five directors will be elected to Class III for a three year term. At
the 1997 Annual Meeting of Shareholders five directors will be elected to Class
I for a three year term and at the 1998 Annual Meeting of Shareholders four
directors will be elected to Class II for a three year term. Information with
respect to the five nominees proposed for election and information with respect
to the nine other continuing directors is set forth below. It is intended that
the persons named in the proxy will vote in favor of the five nominees for
election to Class III as set forth below.
Mr. Petry has been designated as nominee for director by Lyonnaise American.
Pursuant to the Governance Agreement, Lyonnaise American may designate up to
four persons to be appointed to the Board of Directors for United Water. Mr.
Petry is included in Class III of directors being recommended to the
shareholders of United Water.
3
<PAGE>
The affirmative vote of a plurality of the votes cast by shareholders of
United Water entitled to notice of and to vote at the Annual Meeting is
required for the election of directors.
All directors of United Water also serve as directors of United Water New
Jersey and United Waterworks.
<TABLE>
<CAPTION>
PERIOD SERVED AS DIRECTOR
AND BUSINESS EXPERIENCE
NAME AND AGE DURING PAST FIVE YEARS
------------ -------------------------
<S> <C>
CLASS I
George M. Haskew, Jr.,
68(a),(c).................. Served as director of United Water since 1983.
Vice Chairman of the Board of United Water from
1991 to May 1993. Vice President of United Water
from 1988 to 1991. President of United Water New
Jersey from 1988 to 1992.
Robert L. Duncan, Jr.,
53(c)...................... Served as director of United Water since 1988.
Member of the law firm of De Forest & Duer.
Lawrence R. Codey, 51(d).... Served as director of United Water since 1991.
President and Chief Operating Officer of Public
Service Electric & Gas Co. ("PSE&G") since 1991.
Senior Vice President--Electric of PSE&G from 1989
to 1991. Senior Vice President--Gas of PSE&G from
1987 to 1989. Director, Trust Company of New Jer-
sey, Public Service Enterprise Group, Inc., and
Sealed Air Corporation.
Donald L. Correll, 45(b).... Served as director of United Water since 1992.
Chairman of the Board of United Water since May
1994, Chief Executive Officer since 1992,
President since 1991, and Vice President and Chief
Financial Officer from 1986 to 1991. President of
United Water New Jersey since 1992 and Senior Vice
President--Finance, Treasurer and Chief Financial
Officer from 1988 to 1991. Director, Interchange
Financial Service Corporation since 1993.
Allan R. Dragone, 70(c),(d). Served as director of United Water since April
1994. Director, GWC Corporation from 1987 to 1994.
Self-employed. Chairman of Arcadian Corporation
during 1990, President and Chief Executive Officer
of Akzo America, Inc. from 1986 to 1989. Director,
Purina Mills, Inc., Wellman, Inc., and Arcadian
Corporation. Formerly director, American Cyanamid
Company.
CLASS II
Peter Del Col, 61(a)........ Served as director of United Water since 1983.
Chairman of FundQuest and Theraphysics since 1994.
President, Colson Services Corp. since 1986 and
Partner, Colson Investments since 1985.
Jon F. Hanson, 59(b),(d).... Served as director of United Water since 1986.
Chairman, Hampshire Management Company since 1976.
Director, Orange and Rockland Utilities, Inc.,
Prudential Insurance Company of America and Newman
Distributors, Inc..
Marcia L. Worthing,
53(a),(d).................. Served as director of United Water since 1987. Se-
nior Vice President--Human Resources and Corporate
Affairs since January 1995, Senior Vice Presi-
dent--Human Resources from 1990 to 1995, Vice
President--Human Resources from 1984 to 1990, Avon
Products Inc.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PERIOD SERVED AS DIRECTOR
AND BUSINESS EXPERIENCE
NAME AND AGE DURING PAST FIVE YEARS
------------ -------------------------
<S> <C>
Philippe Brongniart, 57(a).. Served as director of United Water since April
1994. Director, GWC Corporation from 1993 to 1994.
Executive Vice President of Lyonnaise since 1993.
President of Sita, a subsidiary of Lyonnaise, from
1988 to June 1993.
CLASS III
Frank J. Borelli, 60(b)..... Served as director of United Water since 1983. Di-
rector, Senior Vice President and Chief Financial
Officer, Marsh & McLennan Companies, Inc. and Di-
rector, Interpublic Group of Companies Inc., Mid-
Ocean Reinsurance Company Ltd. and Frizzell Bank-
ing Services.
Douglas W. Hawes, 63(b)..... Served as director of United Water since 1983.
Secretary of United Water since 1983, of United
Water New Jersey since 1981 and United Waterworks
since 1994. Member of the law firm of LeBoeuf,
Lamb, Greene & MacRae, L.L.P. Director, Bay State
Gas Company.
Dennis M. Newnham,
55(a),(c).................. Served as director of United Water since 1986.
Chairman, President and Chief Executive Officer of
Adirondack Beverages Inc. since March 1995. Ven-
ture capitalist consultant since March 1994. For-
merly Chairman of the Board, President and Chief
Executive Officer of Lea & Perrins, Inc. Director,
Nutramax Products Inc.
Edward E. Barr, 59(b),(c)... Served as director of United Water since April
1994. Director, GWC Corporation from 1987 to 1994.
President and Chief Executive Officer of Sun Chem-
ical Corporation since 1987 and President and
Chief Executive Officer of DIC American, Inc.
since 1988. Director, Dainippon Ink and Chemicals,
Tokyo and First Union Corp. Trustee, Northwestern
Mutual Insurance Company.
Jacques F. Petry, 41(b),(d). Served as director of United Water since April
1994. Director, GWC Corporation from 1991 to 1994.
President of the International Water Division of
Lyonnaise des Eaux since June 1993. Director of
International Water Operations of Lyonnaise from
1989 to May 1993.
</TABLE>
Mr. Brongniart, Mr. Correll, Mr. Del Col, Mr. Dragone and Mr. Hanson also
serve as directors of United Properties Group. Mr. Correll serves as a director
and officer of certain subsidiaries of United Water.
- - - --------
(a) Member of Pension Committees.
(b) Member of Executive Committees.
(c) Member of Audit Committees.
(d) Member of Compensation Committees.
United Water and two of its subsidiaries, United Water New Jersey and United
Waterworks, have directors who are not salaried employees; each pays a portion
of the retainers and fees set forth below. No fees are paid to directors who
are salaried officers of United Water.
Directors receive an annual retainer of $12,000 and a daily attendance fee of
$800. During 1995, United Water's Board of Directors had seven meetings.
5
<PAGE>
United Water's Board of Directors has an Executive Committee which, during
the interim between board meetings, exercises board authority to the extent
permitted by law; an Audit Committee, which reviews financial statements,
management and internal audits; a Compensation Committee, which reviews the
compensation paid to employees; and a Pension Committee, which reviews
retirement plans. United Water does not have Nominating Committees charged with
reviewing the credentials of nominees for the board. Daily attendance fees for
the Executive Committee meeting are $800, and all other committees are $525.
Chairmen of committees receive a double committee fee in light of their
responsibilities. During 1995 the Executive Committee met four times and all
other committees met two times. The total amount paid directors was $258,375.
This amount also includes fees paid by United Properties Group to directors who
are not salaried employees. They receive a meeting fee of $750. This amount
does not include $37,650 of deferred compensation due directors pursuant to
contract and amounts paid to a director of United Properties Group who is not a
director of United Water. Each director, except Messrs. Barr, Brongniart and
Dragone, attended at least 75% of the aggregate of the number of meetings of
the board and committees on which he or she served.
Effective January 1, 1996, the Board of Directors changed the existing
directors' deferred compensation plan by adopting the United Water Resources
and Subsidiaries Non-Employee Directors Deferred Compensation Unit Plan. It
provided directors with an opportunity to defer all or a portion of their
director fees and to link the ultimate value of such deferred compensation to
the performances of the common stock of the Company.
During 1995, DeForest & Duer, of which Mr. Duncan is a member, and LeBoeuf,
Lamb, Greene & MacRae, L.L.P., of which Mr. Hawes is a member, performed legal
services for United Water and its subsidiaries.
Mr. Barr is a director of First Union Corp. which has credit lines with
United Water totalling $15 million. At December 31, 1995 there were no available
balances on these credit lines.
During 1995, S.T. Construction, of which Mr. Simunovich's son-in-law Stephen
Martinez is the owner, performed renovation work at various buildings for
certain United Water subsidiaries. The construction work, which was performed
as a result of competitive bids and comparable price quotes, totalled $588,773.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee of the Board of Directors
of United Water (the "Compensation Committee") are Mr. Codey (Chairman), Mr.
Dragone, Mr. Hanson, Mr. Petry, and Ms. Worthing. No executive officer of
United Water serves on Compensation Committees of other bodies determining
executive compensation for other publicly traded corporations. In 1992,
Laboratory Resources, Inc. ("LRI"), a subsidiary of United Water, entered into
a five-year lease (with a renewal option) for approximately 14,200 square feet
of office space located in Teterboro, New Jersey. LRI increased its office
space to approximately 24,400 square feet and paid rent of $204,800 in 1995 and
expects to negotiate rent in future years at comparable amounts. Mr. Hanson
owns approximately a 1.6% interest in the lessor, his three adult children own
an aggregate 15.7% interest in the lessor, and his brother, Peter Hanson, owns
approximately a 16.3% interest in the lessor. Mr. Hanson abstained from all
discussion and from the authorizing vote on this transaction.
6
<PAGE>
EXECUTIVE OFFICERS OF UNITED WATER
The following table sets forth the age and principal occupation during the
past five years of each executive officer of United Water and United Water
Management and Services Inc. ("United Water M&S"), a subsidiary of United
Water, who is not a director of United Water.
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE DURING
NAME AND AGE PAST FIVE YEARS
------------ --------------------------
<S> <C>
William D. Colford, 51....... Vice President--Administration of United Water M&S
since June 1994 and United Water New Jersey since
1992. Assistant to Senior Vice President--Adminis-
tration of United Water New Jersey from 1987 to
1992.
Frank J. DeMicco, 51......... Senior Vice President--Operations of United Water
M&S since September 1994. Vice President--Opera-
tions of United Water New Jersey since 1991. Pres-
ident of Buck, Seifert & Jost Inc., environmental
consulting engineers, from 1986 to 1991.
Ronald S. Dungan, 57......... Senior Vice President of United Water M&S since
September 1994. President and Chief Executive Of-
ficer of United Waterworks since 1989 and Execu-
tive Vice President of GWC Corporation from 1989
to 1994.
Robert J. Iacullo, 42........ Vice President--Rates of United Water M&S since
September 1994 and United Water New Jersey since
June 1994. Director--Rates of United Water New
Jersey from 1988 to 1994.
John T. Marino, 44........... Treasurer of United Water M&S since June 1994, and
United Water from 1988 to 1994.
Richard B. McGlynn, 57....... Vice President and General Counsel of United Water
M&S since January 1995. Partner of LeBoeuf, Lamb,
Greene and MacRae, L.L.P. from 1992 to 1994 and
Partner of Stryker, Tams & Dill from 1980 to 1992.
Joseph Simunovich, 56........ Senior Vice President--External Affairs and Mar-
keting of United Water M&S. Vice President--Exter-
nal Affairs and Marketing of United Water M&S from
June to November 1994 and United Water New Jersey
from 1992 to 1994. Director of Sales of New Jersey
Bell Telephone Co. from 1978 to 1992.
John J. Turner, 46........... Treasurer of United Water and Vice President--Fi-
nance and Controller of United Water M&S since
June 1994. Vice President--Controller of United
Water from 1992 to 1994 and Controller from 1989
to 1992.
</TABLE>
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation of the
chief executive officer and the four other most highly compensated executive
officers of United Water, and its subsidiaries for services in all capacities
for the years ended December 31, 1993, 1994 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------
ANNUAL
COMPENSATION RESTRICTED SECURITIES
NAME AND PRINCIPAL POSITION ---------------- STOCK UNDERLYING ALL OTHER
AT DECEMBER 31, 1995 YEAR SALARY BONUS AWARDS(A) OPTIONS COMPENSATION(B)
- - - --------------------------- ---- -------- ------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Donald L. Correll........ 1995 $315,000 $60,175 $ 16,656 34,130 $4,500
Chairman, President and
Chief 1994 280,000 94,500 51,790 36,380 8,400
Executive Officer(c) 1993 246,500 91,350 114,375 29,520 7,395
Ronald S. Dungan......... 1995 208,000 20,600 -- 12,400 4,500
Senior Vice President(d) 1994 138,333 60,000 -- 11,990 4,620
1993 -- -- -- -- --
Joseph Simunovich........ 1995 165,000 43,000 -- 7,590 4,500
Senior Vice President--
External 1994 146,666 33,150 -- 5,470 4,400
Affairs and Marketing(d) 1993 133,000 32,100 -- 4,430 3,990
Frank J. DeMicco......... 1995 156,000 23,400 -- 9,840 4,500
Senior Vice President-- 1994 139,780 28,063 -- 5,220 2,130
Operations(d) 1993 123,100 21,720 -- 3,760 --
Richard B. McGlynn....... 1995 180,000 21,000 -- 5,490 4,500
Vice President and 1994 -- -- -- -- --
General Counsel(d) 1993 -- -- -- -- --
</TABLE>
- - - --------
(a) Valued at closing price reported on the New York Stock Exchange-Composite
Transactions service for United Water Common Stock (the "NYSE Closing
Price") on the date of grant. The number and value of the aggregate
restricted stock holdings at December 31, 1995, for D. Correll, 25,693
shares, $308,316. Dividends are paid on such stock.
(b) "All Other Compensation" includes contributions by United Water to its
Thrift Plan.
(c) Mr. Correll became Chairman of United Water in May 1994.
(d) Executive officers of United Water M&S. The table sets forth Mr. Dungan's
compensation since April 22, 1994.
EXECUTIVE EMPLOYMENT AGREEMENTS
Except as discussed herein, the named executive officers serve at the
pleasure of the Board of Directors. United Water has an employment agreement
with Mr. Correll that provides for compensation and benefits for services
performed under the agreement. The agreement provides for a two-year term of
employment commencing January 1, 1988, with renewal of the two-year term at the
end of each year unless prior notice of termination has been given. This
agreement has been renewed and is currently in effect. Mr. Correll's agreement
provides that in the event he is involuntarily terminated without cause (except
upon two years' notice), or terminates employment voluntarily following
constructive discharge, he shall receive certain employee benefits for the
remainder of the term and shall be paid in accordance with the formula under
his agreement (i) his salary, (ii) incentive compensation and bonuses, if any,
based upon full attainment of objectives; (iii) projected Thrift Plan matching
contributions and (iv) the actuarial present value of retirement benefits, all
determined for and payable during the remainder of the two-year term of
employment. He may also elect to surrender stock options that have been
outstanding for at least six months in exchange for a cash payment per optioned
share equal to the difference between the highest share price (as determined
under the agreement) as of the date of termination and the option exercise
price. These payments and benefits will be offset by any corresponding benefits
received from post-termination employment.
8
<PAGE>
If a "Change in Control" (as defined in the agreement) occurs and involuntary
termination or constructive discharge occurs within the next 24 months, he will
receive a lump sum cash payment equal to the sum of (a) the actuarially
determined present value as provided for in the agreement of the compensation
and other benefits listed in clauses (i) through (iv) of the preceding
paragraph; (b) unpaid deferred compensation and incentive cash awards under
certain plans and (c) the value of surrendered stock options. The estimated
value of the payments and benefits that he would have been entitled to if a
Change of Control and termination had occurred on December 31, 1995, is
$2,348,940. If a Change of Control occurs without a termination of employment,
he will receive a lump sum cash payment equal to the amounts determined under
clauses (b) and (c) of this paragraph plus the actuarially determined present
value as of the Change of Control of benefits under his supplemental retirement
benefit plan. United Water and certain of its subsidiaries have an employment
agreement with Mr. Dungan that provides for compensation and benefits for
services performed under the agreement. The agreement was effective April 22,
1994 and ends December 31, 1996. The agreement provides that in the event he is
involuntarily terminated without cause or terminates employment voluntarily
following constructive discharge, reduction in salary or reduction in position,
he shall receive certain employee benefits for the remainder of the term and
shall be paid in accordance with the formula under his agreement (i) his
salary, (ii) incentive compensation and bonuses, if any, based upon full
attainment of objectives and (iii) a consulting fee until the close of the year
in which he attains age 65, subject to reduction for post-termination
employment. The estimated value of the payments and benefits that he would have
been entitled to if a termination had occurred on December 31, 1995, is
$300,220. United Water has an employment agreement with Mr. McGlynn that
provides for compensation and benefits for services performed under the
agreement. The agreement was effective January 1, 1995 and ends December 31,
1999. The agreement provides that in the event he is involuntarily terminated
without cause or terminates employment with good reason, he shall receive his
base annual salary at the time of his termination times the number of years
(and fractions thereof) then remaining to the end of the agreement. The
estimated value of the payments and benefits that he would have been entitled
to if a termination had occurred on December 31, 1995 is $720,000.
RETIREMENT PLANS
The table below contains information concerning estimated annual retirement
benefits in accordance with the Employee Retirement Income Security Act payable
under United Water's pension plans upon retirement at age 65 for certain key
executives with final average pay and years of credited service as set forth
below.
PENSION PLAN TABLE(a)
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE(c)
-----------------------------------------------------
FINAL AVERAGE PAY(b) 10 15 20 25 30 35
- - - -------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$200,000.................. $ 60,000 $ 80,000 $100,000 $120,000 $140,000 $140,000
250,000.................. 75,000 100,000 125,000 150,000 175,000 175,000
300,000.................. 90,000 120,000 150,000 180,000 210,000 210,000
350,000.................. 105,000 140,000 175,000 210,000 245,000 245,000
400,000.................. 120,000 160,000 200,000 240,000 280,000 280,000
450,000.................. 135,000 180,000 225,000 270,000 315,000 315,000
</TABLE>
- - - --------
(a) Pension benefits are calculated on a straight life annuity basis (other
benefit forms are available). Benefits are not subject to any deduction or
offset for Social Security or other amounts.
(b) Average of compensation in the three calendar years in which it was highest
during the ten calendar years immediately preceding retirement.
Compensation includes all amounts listed in the Summary Compensation Table
under "Salary" and "Bonus" plus certain other items of compensation for
federal income tax purposes.
(c) The years of credited service as of December 31, 1995, for certain
executive officers included in the Summary Compensation Table are as
follows: D. Correll, 19 years; F. DeMicco, 4 years; and J. Simunovich, 3
years.
9
<PAGE>
The retirement benefits summarized in the preceding table are provided by
United Water's qualified defined benefit pension plan, which covers executive,
supervisory and other employees of United Water and certain subsidiaries who
are not included in collective bargaining units and by a supplemental
retirement benefit plan. The qualified plan provides a normal retirement
benefit of 1 1/2% of a participant's average base wage or salary rate (up to
the maximum permitted for tax-qualified retirement plans under federal income
tax laws and regulations, which is currently $150,000 as adjusted for
inflation) multiplied by years of credited service. Average base wage or salary
rate is as defined in the plan and is substantially equivalent to the "Salary"
reported in the Summary Compensation Table; the average is computed over the
five years having the highest base wage or salary of the last ten years of
service. The normal form of retirement benefit is a straight life annuity for
unmarried participants or an actuarially reduced 50% joint and surviving spouse
retirement benefit for married participants. Other optional forms of benefit
payment are available on an actuarially equivalent basis. Federal income tax
laws and regulations also limit the maximum annual retirement benefit payable
from the qualified defined benefit pension plan.
The supplemental retirement benefit plan for the benefit of certain key
executive employees, including some of those named in the Summary Compensation
Table, authorizes the payment out of general funds of benefits in addition to
those provided under the defined benefit pension plan according to a formula
that takes into account years of service, age, final average pay and defined
benefit pension plan benefits. The normal form of payment is a single life
annuity with a ten-year certain guaranty. Other optional forms of benefit
payment are available on an actuarially equivalent basis. Mr. Dungan's annual
retirement benefits are provided by the qualified defined benefit pension plan
and a separate supplemental retirement benefit plan which restores benefits
that are limited under certain provisions of the Internal Revenue Code.
United Water and its subsidiaries provide retirement benefits for their
directors, excluding directors who were officers, but including directors who
were officers but who were not full-time employees. Any retiring director who
served as a director for ten years or who attained the age specified for
retirement as a director will receive annually an amount equal to the total
amount of annual retainers the director would have received (or would be
entitled to receive but for the fact of being an officer as well as a director)
for the year of retirement. However, such benefits may be increased at the
discretion of the Board to an amount equal to the total amount of annual
retainers such director would have been entitled to receive for the year of the
distribution if he were not retired.
OPTION GRANTS
Shown below is additional information on grants of options for shares of
United Water under the Management Incentive Plan during 1995 to the executive
officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
PERCENTAGE OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED TO EXERCISE GRANT DATE
UNDERLYING OPTIONS ALL EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED(A) DURING 1995 PER SHARE DATE VALUE(B)
- - - ---- -------------------- ------------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Donald Correll.......... 34,130 16.3 $13.25 1/4/05 $159,387
Ronald Dungan........... 12,400 5.9 13.25 1/4/05 57,908
Joseph Simunovich....... 7,590 3.6 13.25 1/4/05 35,445
Frank DeMicco........... 9,840 4.7 13.25 1/4/05 45,953
Richard McGlynn ........ 5,490 2.6 13.25 1/4/05 25,583
</TABLE>
- - - --------
(a) All options reported here were granted on January 5, 1995. The exercise
price per share equalled the fair market value on the date of grant. See
"Executive Employment Agreements," above as to rights to surrender options
for a cash payment on termination or a Change in Control of United Water.
(b) The grant date present value shown is estimated in part using the Black-
Scholes option pricing model, a method of approximating the present value
of options exercisable at a fixed price at the end of a fixed period. It
relies on certain assumptions as of the date of grant of the options, such
as interest rates, dividend yield, time to exercise, and stock price
sensitivity (volatility). Each of these factors could change over the life
of the options and affect the estimated value. The actual value of the
options when exercised
10
<PAGE>
may be a lesser or greater amount, depending on the price of the stock at
the date of exercise; it is also possible that the options will expire
unexercised and produce no cash value to the optionee. The estimated grant
date present value also includes the discounted present value of dividend
equivalent rights accompanying the options, which accrue until the earlier
of the time of exercise or the fifth anniversary of grant, based upon the
current dividend policy and the interest rate assumption below. The use of
the Black-Scholes model is set forth in the rules of the Securities and
Exchange Commission as an acceptable method of option valuation.
The values of the options estimated under the Black-Scholes model were based
on the following assumptions:
. Risk-free rate of 6.0%
. Dividend yield of 7.1%
. 10 years to exercise the options
. Stock price volatility of 12.2%
. No adjustment has been made for non-transferability or risk of
forfeiture of the options
OPTION EXERCISES AND VALUES OF UNEXERCISED OPTIONS
The table below summarizes information as of December 31, 1995, as to
unexercised options to purchase United Water Common Stock held by the executive
officers named in the Summary Compensation Table and granted under the
Management Incentive Plan. None of the executive officers named in the Summary
Compensation Table exercised options in 1995.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED,
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
DECEMBER 31, DECEMBER 31,
NAME 1995(A) 1995(B)
---- ------------ ------------
<S> <C> <C>
Donald Correll................................... 135,358 $ --
Ronald Dungan.................................... 24,390 --
Joseph Simunovich................................ 19,120 --
Frank DeMicco.................................... 23,140 75
Richard McGlynn.................................. 5,490 --
</TABLE>
- - - --------
(a) All such options are presently exercisable.
(b) Difference between exercise price and NYSE Closing Price (if higher than
exercise price) for December 31, 1995.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors is charged with
reviewing United Water's plans for compensating executive officers as well as
recommending to the Board of Directors for adoption the individual compensation
to be paid to the Chief Executive Officer. The Compensation Committee also
exercises general review over compensation plans for all employees, such as the
Thrift Plan and pension plans. The Committee has furnished the following report
on executive compensation.
United Water and all its subsidiaries have adopted executive compensation
programs with the purpose of fairly compensating executives for their work,
attracting and retaining superior individuals, and encouraging them to increase
United Water's long-term profitability, all with the goal of enhancing total
returns to shareholders. The Compensation Committee continues to be committed
to strengthening the relationship between executive pay and performance.
To ensure its overall competitiveness in the relevant employment markets for
executives, United Water compares its compensation structure with those of
industrial companies nationwide, New York metropolitan area industrial
companies, and a group of utilities located nationwide, virtually all of which
are part of the Wilshire 5000 index shown in the Shareholder Return
Presentation following this report. All of these are considered to be relevant
recruitment markets for United Water's executives. These comparisons are
provided by outside independent compensation consultants. In addition to
reviewing outside competitive compensation levels, United Water also uses job
evaluation to set salary levels that are internally equitable relative to the
scope and accountability of the position.
11
<PAGE>
United Water's executive compensation program has three major elements: base
salary, the Management Incentive Plan, and restricted stock on a selected
basis.
1. Base salary levels are set to attract and retain key executive talent.
Salary increases for all executives, including the Chief Executive Officer, are
based upon the executive's individual contribution to the Company and on salary
trends within the relevant employment markets described above for executives.
Consistent with this policy, Mr. Correll's base salary range reflects
compensation for Chief Executive Officers with similar responsibilities,
challenges, and tenure.
2. The Management Incentive Plan is designed to motivate executives to
achieve both individual goals and Company objectives in order to provide
competitive returns to shareholders. The plan as utilized for 1995 has two
components: an annual cash bonus and annual stock option grants.
Annual cash bonuses are awarded after the end of each year based on
achievement of specific financial, operational and/or strategic goals set at
the beginning of that year for each participating executive. Typical goals for
1995 addressed financial performance, customer satisfaction standards, core
business growth, operating efficiencies, human resource effectiveness, and
regulatory relations. Goals for executives are weighted between achievement of
individual or workgroup objectives and achievement of Company-wide financial
and operating targets based on the executive's primary responsibilities. The
bonus actually granted may range from 0 to 150 percent of the target level
based on the executive's attainment of the goals set at the beginning of the
year.
Mr. Correll's 1995 goals included achieving United Water's earnings per share
target, expanding market share, several corporate development initiatives and
continued productivity gains including those associated with the merger
completed during 1994. After consideration of his achievement of the above
goals and the circumstances relative to the current earnings per share, the
committee determined his incentive compensation for 1995 as reported in the
table above.
Stock options are granted annually to provide incentives for executives to
improve shareholder value. The executives realize benefits from these options
only if United Water's shareholder value appreciates during the terms of the
options.
3. Restricted stock is granted to executives on a selective basis to retain
key individuals and to give them an immediate propriety stake in United Water.
On this basis Mr. Correll was granted additional shares of restricted stock in
1995 which will vest after five years.
United Water currently ties a greater portion of its executives' total
incentive package to improvement in its shareholder value than many of its peer
companies have done. For example, 70% of Mr. Correll's annual incentive
compensation opportunity for 1995 was comprised of stock option grants.
The Compensation Committee intends to continue this practice of tieing
incentives more closely to a total return to shareholders in order to further
motivate executives to achieve long-term corporate objectives and to improve
shareholders' total returns. By shifting a higher proportion of executive total
pay to incentives, the emphasis on producing strong returns for shareholders
has become an even more prominent feature of United Water's program.
The Compensation Committee believes that Section 162(m) of the Internal
Revenue Code will not impact United Water's tax deduction for compensation paid
to executives for 1995 or 1996.
Compensation Committee
Lawrence R. Codey, Chairman
Allan R. Dragone
Jon F. Hanson
Jacques F. Petry
Marcia L. Worthing
12
<PAGE>
SHAREHOLDER RETURN PRESENTATION
The following line graph compares the yearly percentage change in cumulative
total return to shareholders investing $100 in United Water Common Stock to the
cumulative total returns of the Wilshire 5000 Equity Index and the Edward D.
Jones Water Utility Index for the five year period ending December 31, 1995.
Total return includes both capital appreciation and dividend payments and the
graph assumes that all dividends were reinvested in United Water Common Stock
through the Dividend Reinvestment and Stock Purchase Plan, which provides for a
discount from market prices on the purchase of Common Stock. The measurement
points are the last business day of each year.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG UNITED WATER RESOURCES, EDWARD D. JONES WATER UTILITY INDEX
AND WILSHIRE 5000 EQUITY INDEX
Measurement period EDWARD D. JONES
(Fiscal year Covered) UNITED WATER INDEX WILSHIRE 5000 Index
- - - --------------------- ------------ ----------------- -------------------
<S> <C> <C> <C>
Measurement PT -
12/31/90 $ 100 $ 100 $ 100
FYE 12/31/91 $ 154 $ 143 $ 134
FYE 12/31/92 $ 148 $ 158 $ 146
FYE 12/31/93 $ 150 $ 180 $ 163
FYE 12/31/94 $ 145 $ 168 $ 162
FYE 12/31/95 $ 149 $ 211 $ 222
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANTS
At the regular meeting held March 7, 1996, the Board of Directors of United
Water acted to appoint Price Waterhouse LLP, New York, New York, as auditors
for United Water and its Subsidiaries for the year 1996. At the Annual Meeting
it is the intention of the persons named in the proxy enclosed herewith to vote
in favor of the ratification, confirmation and approval of such action by the
Board of Directors. Price Waterhouse LLP performed the function of auditors of
United Water and its subsidiaries in 1995. A representative of Price Waterhouse
LLP will attend the meeting and, if so desires, make a statement. The
representative will also respond to appropriate questions.
The appointment of Price Waterhouse LLP by the Board of Directors is based on
the recommendations of the Audit Committee, which historically has reviewed
both the audit scope and the estimated audit fees and related services for the
coming year. The affirmative vote of a majority of the votes cast by the
shareholders entitled to notice and to vote at the Annual Meeting is required
for approval of such appointment.
At its February 22, 1996, meeting the Audit Committee (1) recommended the
appointment of Price Waterhouse LLP as auditors for 1996 and the continuance by
that firm of certain nonaudit services, and (2) concluded that rendering such
nonaudit services does not impair the independence of Price Waterhouse LLP with
respect to their examination of the December 31, 1996, financial statements of
United Water and its subsidiaries.
13
<PAGE>
COST OF PROXY SOLICITATION
The cost of preparing, assembling and mailing this Proxy Statement, the
Notice of Annual Meeting and form of Proxy will be borne by United Water.
United Water has retained Georgeson & Co., Inc., a proxy solicitation firm, to
assist in the solicitation of proxies at an estimated cost of $6,000, plus
expenses. In addition, United Water will request brokerage houses, custodians,
nominees and fiduciaries to forward the proxy material to the beneficial
owners of the stock held of record by such persons, and United Water will
reimburse them, upon request, for reasonable expenses incurred in connection
therewith.
OTHER MATTERS FOR THE MEETING
No other business is to be presented to the meeting so far as is now known
or foreseen, but in the event that any other matter is properly presented by
persons other than the Board of Directors, it is intended that the enclosed
proxy will be voted upon it according to the judgment of the person or persons
voting the proxy to the extent permitted by regulations of the Securities and
Exchange Commission.
VOTING PROCEDURES
Votes made by proxies returned prior to the date of the Annual Meeting will
be counted by United Water's transfer agent. Votes made by proxies returned on
the date of the Annual Meeting to the secretary of the meeting and votes cast
by shareholders attending or represented by proxyholders (other than those
named by management) will be counted by inspectors of election appointed by
the chairman of the meeting and who are expected to be employees of United
Water or its subsidiaries. Those votes will be added to those counted by the
transfer agent and the last vote or proxy will control. Abstentions and
failures by record holders to vote shares owned by beneficial owners
(including "broker non-votes") will have no effect.
PROPOSALS FOR 1997 ANNUAL MEETING
Shareholder proposals for the 1997 Annual Meeting of United Water must be
received at the executive offices of United Water at 200 Old Hook Road,
Harrington Park, New Jersey 07640, no later than November 29, 1996, for
inclusion in the 1997 proxy statement and form of proxy.
On Behalf of the Board of Directors
Peter Del Col
George M. Haskew, Jr
Marcia L. Worthing
Proxy Committee
Harrington Park, New Jersey
March 28, 1996
14
<PAGE>
ANNUAL MEETING NOTES
<PAGE>
ANNUAL MEETING NOTES
<PAGE>
ANNUAL MEETING NOTES
<PAGE>
United Water [LOGO]
- - - --------------------------------------------------------------------------------
1996 ANNUAL MEETING
LOCATION: MONTVALE INN
- - - --------------------------------------------------------------------------------
Directions to the Annual Meeting
Garden State Parkway north to exit 172, turn left at traffic light off exit
ramp onto Grand Avenue. At first traffic light turn left onto Chestnut Ridge
Road. Hotel is approximately 100 yards on the right.
New York/George Washington Bridge to Route 80 West and exit at Saddle Brook
for the Garden State Parkway, north. Follow Garden State Parkway instructions
above.
New York/Lincoln Tunnel to NJ Turnpike, north. Then take 80 West and exit at
Saddle Brook for the Garden State Parkway, north. Follow Garden State Parkway
instructions above.
Upstate New York take the New York Thruway (Interstate 87) south to Exit 14A
Garden State Parkway Extension. Take first exit, "Chestnut Ridge." Turn left
off exit ramp. Turn right at first traffic light (Summit Avenue). Turn left
onto Chestnut Ridge Road. Hotel is 100 yards on right past Grand Avenue.
LOCAL STREETS NEAR THE MONTVALE INN
[ART]
<PAGE>
PROXY
UNITED WATER RESOURCES INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS--MAY 13, 1996
The undersigned shareholder of United Water Resources Inc. ("United Water")
hereby constitutes and appoints PETER DEL COL, GEORGE M. HASKEW, JR., and
MARCIA L. WORTHING, or any of them, the attorneys or attorney and proxies or
proxy of the undersigned, with full power of substitution and revocation, for
and in the name of the undersigned, to attend the Annual Meeting of
Shareholders of United Water to be held at the Montvale Inn, 100 Chestnut
Ridge Road, Montvale, New Jersey 07645, on Monday, May 13, 1996, at 9:30 a.m.,
and any adjournment or adjournments thereof, receipt of the notice of which
meeting stating the purposes thereof being hereby acknowledged, to vote all of
the shares of United Water which the undersigned would be entitled to vote if
then personally present as follows:
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
- - - --------------------------------------------------------------------------------
+ FOLD AND DETACH HERE +
<PAGE>
Please mark [X]
your votes
as
indicated in
this example
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
WITHHELD
FOR FOR ALL
1. ELECTION OF DIRECTORS-- [_] [_]
The Nominees to Class III are:
Frank J. Borelli, Douglas W. Hawes,
Dennis M. Newnham, Edward E. Barr,
Jacques F. Petry
WITHHELD FOR: (Write that nominee's name in
the space provided below).
- - - ----------------------------------------
FOR AGAINST ABSTAIN
2. APPROVAL OF AUDITORS-- [_] [_] [_]
3. and to vote all of such shares
as they or he or she may deem
proper upon all other matters
that may properly come before
said meeting and any adjournment
or adjournments thereof.
4. Mark box if you plan to attend [_]
the Annual Meeting.
THIS PROXY IS GIVEN AND IS TO BE CONSTRUED UNDER THE LAWS OF THE STATE OF NEW
JERSEY AND WILL BE VOTED "FOR" THE NOMINEES NAMED HEREIN AND "FOR" THE ABOVE
PROPOSALS, IF IN EITHER CASE THE UNDERSIGNED HAS NOT SPECIFIED A CHOICE IN THE
SPACES PROVIDED THEREFOR. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED.
Signature(s) of Shareholder(s) _________Date ___________________________ , 1996
NOTE: Please date and sign exactly as name appears hereon. When shares are
held by joint tenants both should sign. (Executors, Administrators, Trustees,
etc. should so indicate).
- - - --------------------------------------------------------------------------------
+ FOLD AND DETACH HERE +
