<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
United Water Resources Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials:
-------------------------------------------------------------------------
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the 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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<PAGE>
UNITED WATER RESOURCES
200 Old Hook Road
UNITED WATER [LOGO] Harrington Park, NJ 07640-1799
telephone 201 784 9434
facsimile 201 767 6579
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS, MAY 11, 1998
- -------------------------------------------------------------------------------
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 Park Ridge Marriott, 300 Brae Boulevard,
Park Ridge, New Jersey 07656, on Monday, May 11, 1998, at 9:30 a.m. for the
following purposes:
1. To elect four Directors to Class II of the Board of Directors.
2. To ratify, confirm and approve the act of the Board of Directors on
March 12, 1998 appointing Price Waterhouse LLP, New York, New York as the
auditor for United Water and its subsidiaries for the year 1998.
3. To transact such other business as may properly be brought before such
meeting or any adjournments thereof.
The close of business on March 13, 1998, 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 24, 1998
THE ANNUAL MEETING IS BEING HELD AT THE PARK RIDGE MARRIOTT, 300 BRAE
BOULEVARD, PARK RIDGE, NEW JERSEY 07656. 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 RESOURCES 200 Old Hook Road Harrington Park, NJ 07640-1799
telephone 201 784 9434 facsimile 201 767 6579
UNITED WATER [LOGO]
- -------------------------------------------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS, MAY 11, 1998
- -------------------------------------------------------------------------------
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" or the "Company") with respect to the
shareholders' meeting to be held on May 11, 1998. 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
24, 1998.
The close of business on March 13, 1998, 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, 1998, there were 36,322,890 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, 1997, 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, 1997, 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>
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
named executive officers individually and by all directors and executive
officers of United Water and its subsidiaries as a group as of January 31,
1998.
<TABLE>
<CAPTION>
NUMBER OF
NAME OF BENEFICIAL OWNER SHARES(A)(D)
------------------------ ------------
<S> <C>
Edward E. Barr............................................ 7,537(e)
Frank J. Borelli.......................................... 8,172
Thierry Bourbie........................................... 3,236
David E. Chardavoyne...................................... 37,368(c)
Lawrence R. Codey......................................... 4,374
Donald L. Correll......................................... 213,554(c)
Peter Del Col............................................. 10,903
Frank J. DeMicco.......................................... 49,807(c)
Robert L. Duncan, Jr...................................... 3,983
Jon F. Hanson............................................. 32,980(b)(e)
Douglas W. Hawes.......................................... 14,246
George F. Keane........................................... 4,118
Richard B. McGlynn........................................ 36,635(c)
Dennis M. Newnham......................................... 5,148
Jacques F. Petry.......................................... 2,784
Joseph Simunovich......................................... 69,223(c)
Marcia L. Worthing........................................ 6,441(e)
Directors and Executive Officers as a Group (22 persons).. 640,053(b)(c)
</TABLE>
- --------
(a) 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, 1998, each director or executive officer
beneficially owned less than .6% of the outstanding Common Stock of United
Water and all of the directors and executive officers as a group
beneficially owned less than 1.8% of such stock. Fractional shares have
been rounded to the nearest whole share.
(b) 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 (16,845); and all directors and executive officers as a
group (17,074). Such persons disclaim any beneficial ownership of such
shares.
(c) Includes shares of Common Stock which may be acquired pursuant to options
awarded under United Water's Management Incentive Plan in the following
amounts: D. Chardavoyne (36,070); D. Correll (150,830); F. DeMicco
(48,600); R. McGlynn (34,970); J. Simunovich (64,820); and all directors
and executive officers as a group (448,940).
(d) Includes shares of restricted Common Stock granted pursuant to the
Directors' Restricted Stock Plans totalling 48,534 shares.
(e) Includes non-voting Common Stock equivalent units acquired in accordance
with the Directors' Deferred Compensation Unit Plan in the following
amounts: E. Barr (2,593); J. Hanson (11,518); and M. Worthing (928).
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 as of January 31, 1998.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
NAME AND ADDRESS OF OF BENEFICIAL OF
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP CLASS
-------------- ------------------- ----------------- -------
<C> <S> <C> <C>
Lyonnaise American
Common Stock Holding, Inc. 10,327,156 shares 28.4%
2000 First State
Boulevard
Wilmington, Delaware
19804-0507
</TABLE>
Lyonnaise American Holding, Inc. ("Lyonnaise American"), its parent company
Suez 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.
ELECTION OF DIRECTORS
DIRECTORS OF UNITED WATER
Effective as of the Annual Meeting, the Board of Directors of United Water
is comprised of thirteen directors, divided into three classes. At the Annual
Meeting four directors will be elected to Class II for a three year term. At
the 1999 Annual Meeting of Shareholders five directors will be elected to
Class III for a three year term. At the 2000 Annual Meeting of Shareholders
four directors will be elected to Class I for a three year term. Information
with respect to the four 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 four
nominees for election.
Mr. Bourbie has been designated as a 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 of
United Water.
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.
3
<PAGE>
PERIOD SERVED AS DIRECTOR AND BUSINESS
EXPERIENCE DURING PAST FIVE YEARS
NAME AND AGE
CLASS I
Served as director of United Water since
Lawrence R. Codey, 53(b)......... 1991. President and Chief Operating Officer
of Public Service Electric & Gas Co. since
1991. Director, Trust Company of New
Jersey, Public Service Enterprise Group,
Inc., and Sealed Air Corporation.
Donald L. Correll, 47(b)......... Served as director of United Water since
1992. Chairman of United Water since 1994,
Chief Executive Officer since 1992.
Director, Interchange Financial Service
Corporation since 1993.
Robert L. Duncan, Jr., 55(c)..... Served as director of United Water since
1988. Member of the law firm of De Forest &
Duer.
George F. Keane, 68(c),(d)....... Served as director of United Water since
January 1997. Director, Security Capital
U.S. Real Estate Shares since 1997.
Chairman of Trigen Energy Corp. since 1994.
President Emeritus and Senior Investment
Advisor for The Common Fund from 1993 to
1996. President and Chief Executive Officer
of The Common Fund from 1971 to 1993.
CLASS II
Thierry Bourbie, 45(a),(b),(d)... Served as director of United Water since
1996. President of the International Water
Division of Lyonnaise since September 1996.
Director of French Water Operations of
Lyonnaise from 1994 to 1996. Chief
Executive Officer and Chairman of Lyd
Informatique (Lyonnaise Subsidiary) from
1994 to 1996. Chief Executive Officer and
Chairman of Apic Syst (Lyonnaise
Subsidiary) from 1991 to 1995.
Peter Del Col, 63(a)............. Served as director of United Water since
1983. Chairman since January 1998 and
President from 1986 to 1997 of Colson
Services Corporation. Chairman of FundQuest
since 1994 and Partner, Colson Investments
since 1985.
Jon F. Hanson, 61(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 American and Neuman
Distributors, Inc.
Marcia L. Worthing, 55(a),(d).... Served as director of United Water since
1987. Senior Vice President--Human
Resources and Corporate Affairs since 1995,
Senior Vice President--Human Resources from
1990 to 1995 Avon Products Inc.
4
<PAGE>
PERIOD SERVED AS DIRECTOR AND BUSINESS
EXPERIENCE DURING PAST FIVE YEARS
NAME AND AGE
CLASS III
Edward E. Barr, 61(b),(c)........ Served as director of United Water since
1994. Director, GWC Corporation from 1987
to 1994. Chairman, since January 1998,
President and Chief Executive Officer of
Sun Chemical Corporation since 1987 and
President and Chief Executive Officer of
DIC American, Inc. from 1988 to 1997.
Director, Dainippon Ink and Chemicals,
Tokyo and First Union Corp.; Trustee,
Northwestern Mutual Insurance Company.
Frank J. Borelli, 62(a),(d)...... Served as director of United Water since
1983. Director, Senior Vice President and
Chief Financial Officer, Marsh & McLennan
Companies, Inc. and Director, Interpublic
Group of Companies Inc. since 1995 and Mid-
Ocean Limited since 1992.
Douglas W. Hawes, 65(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, 57(a),(c).....
Served as director of United Water since
1986. President and Chief Executive Officer
of Tsumura International since March 1996
and Adirondack Beverages Inc. from 1995 to
1996. Venture capitalist consultant since
1994. Formerly Chairman, President and
Chief Executive Officer of Lea & Perrins,
Inc. Director, Nutramax Products Inc.
Jacques F. Petry, 43(c).......... Served as director of United Water since
1994. Director, GWC Corporation from 1991
to 1994. Chairman and Chief Executive
Officer of SITA since 1996. President of
the International Water Division of
Lyonnaise since 1993. Director of
International Water Operations of Lyonnaise
from 1989 to 1993.
Mr. Correll, Mr. Del Col, Mr. Hanson, Mr. Keane and Mr. Petry 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 Committee.
(b) Member of Executive Committee.
(c) Member of Audit Committee.
(d) Member of Compensation Committee.
5
<PAGE>
United Water and two of its major 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 1997, United Water's Board of Directors had six meetings.
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 a Nominating Committee 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. Chairpersons of committees receive a double committee fee in light
of their responsibilities. During 1997 the Executive Committee met four times,
the Audit Committee met two times and each other committee met three times.
United Properties Group, a subsidiary of United Water, also has directors who
are not salaried employees. They receive a daily attendance fee of $750.
Directors may defer all or a portion of their compensation. Directors also
received, pursuant to United Water's Directors' Restricted Stock Plans, 12,839
shares of restricted stock. Each director, except Mr. Borelli, attended at
least 75% of the aggregate of the number of meetings of the board and
committees on which he or she served.
In November 1997, Mr. Correll received 2,000 stock options from Lyonnaise to
purchase Lyonnaise stock at 573 French francs per share. The options vest in
two years and expire in eight years. As of December 31, 1997, Mr. Correll has
been granted a total of 4,500 options from Lyonnaise at an approximate value
of $126,800. During 1997, LeBoeuf, Lamb, Greene & MacRae L.L.P., of which Mr.
Hawes is a member, performed legal services for United Water and its
subsidiaries and S.T. Construction, of which Mr. Simunovich's son-in-law
Stephen Martinez is the owner, performed renovation work at various buildings
totalling $564,600. Mr. Simunovich does not participate in the bidding or the
selection process of contractors for this type of work.
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 its subsidiaries
who is not a director of United Water.
BUSINESS EXPERIENCE DURING
PAST FIVE YEARS
NAME AND AGE
David E. Chardavoyne, 50....... President of United Waterworks and Senior
Vice President of United Water M&S since
August 1996. President and Chief Operating
Officer of Jamaica Water Supply Company from
1992 to 1996. President and Chief Operating
Officer of Sea Cliff Water Company from 1992
to 1996.
William D. Colford, 53......... Vice President--Support Services since
November 1996 and Vice President--
Administration of United Water M&S since June
1994 and United Water New Jersey since 1992.
Frank J. DeMicco, 53........... President of United Water New Jersey since
August 1996. Senior Vice President of United
Water M&S since 1994. Vice President--
Operations of United Water New Jersey from
1992 to 1996.
Robert J. Iacullo, 44.......... Vice President--Regulatory Business since
February 1996 and Vice President---Rates of
United Water M&S and United Water New Jersey
since 1994. Director--Rates of United Water
New Jersey from 1988 to 1994.
John T. Marino, 46............. Treasurer of United Water M&S since June 1994
and United Water from 1988 to 1994.
John Martinowich, 52........... Vice President--External Affairs and Business
Development of United Water M&S since January
1998. Assistant Vice President--External
Affairs and Marketing from 1994 to 1998.
Senior Manager of Bell Atlantic from 1992 to
1994.
Richard B. McGlynn, 59......... General Counsel of United Water since August
1996. Vice President and General Counsel of
United Water M&S since 1995. Partner of
LeBoeuf, Lamb, Greene & MacRae, L.L.P. from
1992 to 1994.
Joseph Simunovich, 58.......... President of United Water M&S since August
1996. Senior Vice President--External Affairs
and Marketing of United Water M&S from 1994
to 1996. Vice President--External Affairs and
Marketing of United Water M&S 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, 48............. Treasurer of United Water and Vice
President--Finance and Controller of United
Water M&S since June 1994. Vice President--
Controller of United Water from 1992 to 1994.
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, 1995, 1996 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
----------------------- ---------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL AWARDS(A) OPTIONS COMPENSATION(B)
POSITION YEAR SALARY($) BONUS($) ($) (#) ($)
- ------------------ ---- --------- -------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Donald L. Correll....... 1997 315,000 132,900 -- 42,260 4,750
Chairman, President and 1996 315,000 100,000 19,922 43,290 4,500
Chief 1995 315,000 60,175 31,875 34,130 4,500
Executive Officer
Joseph Simunovich....... 1997 187,500 95,000 -- 18,500 4,750
President--United Water 1996 177,500 94,500 -- 9,630 4,500
M&S(c) 1995 165,000 43,000 -- 7,590 4,500
Frank J. DeMicco........ 1997 177,885 77,500 -- 18,500 4,750
President--United Water 1996 168,100 57,000 -- 12,490 4,500
New 1995 156,000 23,400 -- 9,840 4,500
Jersey(c)
David E. Chardavoyne.... 1997 177,885 77,500 -- 18,500 4,750
President--United 1996 77,100 49,500 -- -- 408
Waterworks(c) 1995 -- -- -- -- --
Richard B. McGlynn...... 1997 180,000 50,300 -- 11,610 4,750
General Counsel 1996 180,000 38,500 -- 6,980 4,500
1995 180,000 21,000 -- 5,490 4,500
</TABLE>
- --------
(a) The number and value of the aggregate restricted Common Stock holdings at
December 31, 1997, for D. Correll, 15,000 shares, $293,435. Dividends are
paid on such stock.
(b) Contributions by United Water to its Thrift Plan.
(c) Elected August 1, 1996.
EXECUTIVE EMPLOYMENT AGREEMENTS
United Water entered into new employment agreements with Messrs. Correll,
Simunovich, DeMicco and Chardavoyne. The agreements have three-year terms
commencing January 1, 1998, with automatic one year extensions at the end of
the term unless prior notice is given. The employment agreements provide for
base salary at not less than the amounts specified therein, participation in
the Supplemental Executive Retirement Plan ("SERP"), Management Incentive Plan
("MIP") and standard employee benefits. If employment is terminated by United
Water without cause or by the employee for good reason, as defined, the
employee will be entitled to receive base pay and target amounts under the MIP
and continued employee benefits for a two-year period (a three-year period for
Mr. Correll). Should such termination of employment occur within two years
following a change in control, as defined, the employee will be entitled to an
amount equal to two times base salary (three times for Mr. Correll), two times
the current target amount under the MIP (three times for Mr. Correll) and the
present value of a fully vested SERP benefit, in addition to a payment to make
the employee whole after any excise tax payments.
8
<PAGE>
United Water has an employment agreement with Mr. McGlynn effective January
1995 and ending December 31, 1999. The agreement provides for base salary at
not less than the amount specified therein. In the event employment is
terminated by United Water without cause or by Mr. McGlynn for good reason, he
will receive base annual salary at the time of termination multiplied by the
number of years (and fractions thereof) remaining to the end of the agreement.
The estimated value of the accelerated payments under the agreements to
which the employees would have been entitled if a change in control and
termination had occurred on January 1, 1998 is: Mr. Correll, $4,665,000; Mr.
Simunovich, $1,637,000; Mr. DeMicco, $1,482,000; Mr. Chardavoyne, $1,588,000;
and Mr. McGlynn, $375,000.
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(B)
-----------------------------------------------------
FINAL AVERAGE PAY 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
500,000.................. 150,000 200,000 250,000 300,000 350,000 350,000
</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) The years of credited service as of December 31, 1997, for certain
executive officers included in the Summary Compensation Table are as
follows: D. Correll, 21 years; J. Simunovich, 5 years; F. DeMicco, 6 years;
and D. Chardavoyne, 1 year.
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
executive retirement 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 $160,000 as adjusted for
inflation) multiplied by years of credited service. Average base wage or
salary rate is defined in the qualified 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.
9
<PAGE>
The supplemental executive retirement plan for the benefit of certain key
executive employees, including some of those named in the Summary Compensation
Table, authorizes the payment of benefits out of general funds in addition to
those provided under the qualified defined benefit pension plan according to a
formula that takes into account years of service, age, final average
compensation (salary and bonus) of the three years having the highest
compensation of the last ten years of service and qualified 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.
OPTION GRANTS
Shown below is additional information on grants of options to purchase
United Water Common Stock under the Management Incentive Plan during 1997 to
the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1997
- ---------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS GRANT DATE VALUE
---------------------------------------- ----------------
NUMBER OF SECURITIES PERCENTAGE OF TOTAL
UNDERLYING OPTIONS OPTIONS GRANTED TO EXERCISE OR GRANT DATE
GRANTED(A) EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME (#) 1997 ($/SH) DATE VALUE($)(B)
- ---- -------------------- ------------------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Donald L. Correll....... 42,260 11.4 15.375 1/2/07 287,991
Joseph Simunovich....... 18,500 5.0 15.375 1/2/07 126,073
Frank J. DeMicco........ 18,500 5.0 15.375 1/2/07 126,073
David E. Chardavoyne.... 18,500 5.0 15.375 1/2/07 126,073
Richard B. McGlynn...... 11,610 3.1 15.375 1/2/07 79,119
</TABLE>
- --------
(a) All options were granted and vested on January 2, 1997. The exercise price
per share equalled the fair market value on the date of grant.
(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 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.
In addition to the Black-Scholes value calculated above, the value of the
dividend equivalents is included in the option value, as the optionee is
entitled to receive dividend equivalents for five years. Note that similar
to options, factors could change over the term of the option that may
increase or decrease the dividend equivalent amount at the time of
exercise. The dividend equivalent was calculated by discounting the sum of
quarterly dividends for twenty quarters by the risk-free rate, stated
below, for the same period. The use of the Black-Scholes model is set
forth as an acceptable method of option valuation by the Securities and
Exchange Commission.
The present value of the options was based on the following assumptions:
. Risk-free rate of 6.5%
. Dividend yield of 5.1%
. 10 years to exercise the options
. Stock price volatility of 21.1%
. No adjustment has been made for non-transferability or risk of
forfeiture associated with the options
10
<PAGE>
OPTION EXERCISES AND VALUES OF UNEXERCISED OPTIONS
The table below summarizes information as of December 31, 1997, as to
exercised and 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.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1997 AND DECEMBER 31, 1997 OPTION VALUES
- ----------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE OPTIONS AT DECEMBER 31, OPTIONS AT DECEMBER 31,
NAME ON EXERCISE(#) REALIZED($) 1997(#)(A) 1997($)
- ---- --------------- ----------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Donald L. Correll....... 76,560 296,800 110,550 651,335
Joseph Simunovich....... -- -- 47,250 254,533
Frank J. DeMicco........ 23,100 97,230 31,030 169,055
David E. Chardavoyne.... -- -- 18,500 77,469
Richard B. McGlynn...... -- -- 24,080 134,314
</TABLE>
- --------
(a) All such options are presently exercisable.
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 compensation plans for 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 performance, both in terms of profitability
and service to our customers, with the ultimate 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.
United Water's executive compensation program has two major elements: base
salary and the Management Incentive Plan. Additionally, the Committee may
grant restricted stock on a selected basis. With regard to these pay elements:
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. However, as part of our commitment to increase the pay for
performance link, none of the named officers received salary increases in
1997. Mr. Correll and certain other named executive officers have employment
contracts which provide for a base salary at not less than that which was in
effect when signed.
11
<PAGE>
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. In 1997, the Company revised the Plan to
better reflect competitive incentive practices. The plan continues to have
three components: an annual cash bonus, annual stock option grants and annual
dividend units.
(a) Annual cash bonuses are awarded after the end of the 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
1997 addressed financial performance, customer satisfaction standards, core
business growth, operating efficiencies, human resources 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 1.5 times the target level based on
the executive's attainment of the goals set at the beginning of the year. In
1997, the named executive officers were granted an average of 1.2 times their
target levels.
(b) 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.
(c) Free-standing dividend units are granted annually. In conjunction with
the separate stock option grants, dividend units reflect the total return
received by United Water shareholders.
Over the past three years, Mr. Correll's compensation increases have been
totally linked to performance incentives and he has received no increase in
base salary. Mr. Correll's 1997 goals included achieving United Water's
earnings per share target, expanding market share, several corporate
development initiatives and productivity gains. 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
1997 to be 1.2 times his target level as reported in the table above. Finally
in 1997, Mr. Correll was not granted restricted stock.
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 1997 or 1998.
Compensation Committee
Marcia L. Worthing, Chairperson
Frank J. Borelli
Thierry Bourbie
Jon F. Hanson
George F. Keane
12
<PAGE>
SHAREHOLDER RETURN PRESENTATION
The following graphs compare 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 and one year period
ending December 31, 1997. 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 during a portion of the five year period provided for a discount
from market prices on the purchase of Common Stock. The measurement points are
the last business day of each year.
[THE TABLE BELOW WAS PRESENTED IN THE PRINTED MATERIAL AS A LINE GRAPH]
FIVE-YEAR CUMULATIVE TOTAL RETURNS
1992 1993 1994 1995 1996 1997
UWR 100.00 101.16 97.83 100.14 138.06 183.46
E.D. Jones 100.00 114.30 105.91 134.39 161.33 220.33
Wilshire 5000 100.00 111.30 111.23 151.82 184.01 241.57
[THE TABLE BELOW WAS PRESENTED IN THE PRINTED MATERIAL AS A LINE GRAPH]
ONE-YEAR CUMULATIVE TOTAL RETURNS
1996 1997
UWR 100.0 132.9
E.D. Jones 100.0 136.6
Wilshire 5000 100.0 131.3
13
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
At the regular meeting held March 12, 1998, 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 1998. 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 1997. 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 recommendation 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
shareholders entitled to notice and to vote at the Annual Meeting is required
for approval of such appointment.
At its February 25, 1998, meeting the Audit Committee (1) recommended the
appointment of Price Waterhouse LLP as auditors for 1998 and the continuance
by that firm of certain non-audit services, and (2) concluded that rendering
such non-audit services does not impair the independence of Price Waterhouse
LLP with respect to their examination of the December 31, 1998, financial
statements of United Water and its subsidiaries.
COST OF PROXY SOLICITATION
The cost of preparing, assembling and mailing the 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 will have
no effect.
14
<PAGE>
PROPOSALS FOR 1999 ANNUAL MEETING
Shareholder proposals for the 1999 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 24, 1998, for
inclusion in the 1999 proxy statement and form of proxy.
On Behalf of the Board of Directors
Lawrence R. Codey
Douglas W. Hawes
Dennis M. Newnham
Proxy Committee
Harrington Park, New Jersey
March 24, 1998
15
<PAGE>
UNITED WATER [LOGO]
- -------------------------------------------------------------------------------
1998 ANNUAL MEETING
LOCATION: PARK RIDGE MARRIOTT
- -------------------------------------------------------------------------------
The Park Ridge Marriott is accessible via the Garden State Parkway, Exit 172
North. From Exit ramp turn right onto Grand Avenue, at first traffic light
make right onto Mercedes Drive, follow to end and make right, follow to
traffic light make left onto Brae Blvd. The hotel is on your left at 300 Brae
Blvd.
FROM NEW JERSEY & SOUTH: Take Garden State Parkway North to Exit 172 , then
follow above directions.
FROM NEW YORK CITY: Take the George Washington Bridge West to New Jersey.
Follow to Route 80 West. Take Route 80 West to the Saddle Brook Exit for the
Garden State Parkway. Follow the Garden State Parkway North to Exit 172, and
follow directions from above.
FROM UPSTATE NEW YORK. New York State Thruway to Exit 14A onto the Garden
Parkway Extension. Take first exit "Chestnut Ridge." From ramp make left onto
Schoolhouse Road. Follow through first light (Summit Avenue), road becomes
Spring Valley Road, follow through second light (Grand Avenue) to fourth (4th)
right, Brae Blvd., make right onto Brae Blvd., hotel is approximately 1/4 mile
on right hand side.
LOCAL STREETS NEAR THE PARK RIDGE MARRIOTT
LOGO
<PAGE>
PROXY
UNITED WATER RESOURCES INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS-MAY 11, 1998
The undersigned shareholder of United Water Resources Inc. ("United Water")
hereby constitutes and appoints LAWRENCE R. CODEY, DOUGLAS W. HAWES and DENNIS
M. NEWNHAM, 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 Park Ridge Marriott, 300 Brae Boulevard, Park Ridge, New
Jersey 07656, on Monday, May 11, 1998, 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)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Please mark
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS your votes
as [ X ]
indicates in
this example
FOR WITHHELD FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS [ ] [ ] 2. To Approve Auditors [ ] [ ] [ ]
The Nominees to Class II are:
Thierry Bourbie, Peter Del Col, Jon F. Hanson, Marcia L. Worthing 3. To vote 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 adjournments thereof.
Withheld For: (Write that nominee's name in the space provided
below).
- -------------------------------------------------------------- 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----------------------,1998
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
</TABLE>
Dear Shareholder(s) of United Water Resources Inc.:
Enclosed you will find materials regarding the United Water Resources Inc. 1998
Annual Meeting of Shareholders. The notice of the Annual Meeting and proxy
statement describe the formal business to be transacted at the meeting, as
summarized on the attached proxy card.
Whether or not you expect to attend the Annual Meeting, please complete and
return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. As a shareholder, please
remember that your vote is important to us. We look forward to hearing from
you.
