<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to 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:
-------------------------------------------------------------------------
<PAGE>
United Water Resources
200 Old Hook Road
Harrington Park, NJ 07640-1799
telephone 201 784 9434
United Water [LOGO]\(R)\ facsimile 201 767 6579
- -------------------------------------------------------------------------------
Notice of Annual Meeting of Shareholders, May 10, 1999
- -------------------------------------------------------------------------------
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 10, 1999, 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 18, 1999 appointing PricewaterhouseCoopers LLP, New York, New York as
the auditor for United Water and its subsidiaries for the year 1999.
3. To transact such other business as may properly be brought before such
meeting or any adjournments thereof.
The close of business on March 15, 1999, 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, or you may be able to vote by
telephone. 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, 1999
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]\(R)\
- -------------------------------------------------------------------------------
Proxy Statement
for Annual Meeting of Shareholders, May 10, 1999
- -------------------------------------------------------------------------------
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 10, 1999. 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, 1999.
Shareholders of record may vote their proxies by telephone by calling the
toll-free number on their proxy card or they may mark, date, sign and return
the enclosed proxy card in the envelope provided. If your shares are held in
the name of a bank or broker, you may be able to vote by telephone. Check you
proxy card or the information forwarded by your bank, broker, or other holder
of record to see if the telephone voting option is available to you. The
telephone voting facilities for shareholders of record will be available 24
hours a day until 5:00 p.m., May 9, 1999.
The close of business on March 15, 1999, 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 29, 1999, there were 37,907,318 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, 1998, 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, 1998, 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 officer individually and by all directors and executive
officers of United Water and its subsidiaries as a group as of January 29,
1999.
<TABLE>
<CAPTION>
Number of
Name of Beneficial Owner Shares(a)(d)
------------------------ ------------
<S> <C>
Edward E. Barr............................................ 9,451(e)
Frank J. Borelli.......................................... 8,943
Thierry Bourbie........................................... 3,923
Charles Chaumin........................................... 123
Lawrence R. Codey......................................... 5,121
Donald L. Correll......................................... 255,620(c)
Peter Del Col............................................. 11,989
Frank J. DeMicco.......................................... 44,806(c)
Robert L. Duncan, Jr...................................... 4,709
Michael C. J. Fallon...................................... 28,596(c)
Jon F. Hanson............................................. 35,701(b)(e)
Douglas W. Hawes.......................................... 15,045
George F. Keane........................................... 4,800
Richard B. McGlynn........................................ 47,656(c)
Dennis M. Newnham......................................... 5,887
Joseph Simunovich......................................... 81,406(c)
Marcia L. Worthing........................................ 8,373(e)
Directors and Executive Officers as a Group (24 persons).. 796,135(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 29, 1999, each director or executive officer
beneficially owned less than .7% of the outstanding Common Stock of United
Water and all of the directors and executive officers as a group
beneficially owned less than 2.1% 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 (17,086). 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. Correll (192,330); F. DeMicco (43,270); M. Fallon (24,710); R.
McGlynn (45,590); J. Simunovich (70,960); and all directors and executive
officers as a group (582,550).
(d) Includes shares of restricted Common Stock granted pursuant to the
Directors' Restricted Stock Plans totalling 53,970 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 (3,730); J. Hanson (13,480); and M. Worthing (2,099).
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 29, 1999.
<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. 11,148,323 shares 29.4%
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 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. At the 2001 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 eight 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.
Mr. Chaumin 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. Withheld votes will have no negative
effect.
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
Lawrence R. Codey, 54(e)......... Director of United Water since 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, 48(e)......... Chairman of United Water since 1994.
Director, Chief Executive Officer and
President of United Water since 1992.
Director, Interchange Financial Service
Corporation.
Robert L. Duncan, Jr., 56(a)..... Director of United Water since 1988.
General Counsel of American Management
Association International since July 1998.
Member of the law firm of De Forest & Duer
through June 1998.
George F. Keane, 69(a),(c)....... Director of United Water since 1997.
Chairman of Trigen Energy Corp. since 1994.
President Emeritus and Senior Investment
Advisor for The Common Fund 1993 to 1996.
Director, Security Capital U.S. Real Estate
Shares, Global Pharmaceutical Co., and
Universal Stainless & Alloy Products.
Class II
Thierry Bourbie, 46(c),(e),(p)... Director of United Water since 1996.
President of the International Water
Division of Lyonnaise since September 1996
and Director of French Water Operations
1994 to 1996. Chief Executive Officer and
Chairman of Lyd Informatique (Lyonnaise
Subsidiary) 1994 to 1996. Chief Executive
Officer and Chairman of Apic Syst
(Lyonnaise Subsidiary) 1991 to 1995.
Director, AGBAR.
Peter Del Col, 64(p)............. Director of United Water since 1983.
Chairman of Colson Services Corporation
since January 1998 and President 1986 to
1998. Chairman of FundQuest since 1994 and
Partner, Colson Investments since 1985.
Jon F. Hanson, 62(c),(e)......... Director of United Water since 1986.
Chairman of Hampshire Management Company
since 1976. Director, Orange and Rockland
Utilities, Inc., Prudential Insurance
Company of America, Consolidated Delivery
and Logistics, Fleet Trust Company and
Neuman Distributors, Inc.
Marcia L. Worthing, 56(c),(p).... Director of United Water since 1987.
Executive Vice President of Mullin &
Associates since November 1998. Senior Vice
President--Human Resources and Corporate
Affairs of Avon Products Inc. 1995 to
November 1998, and Senior Vice President--
Human Resources 1990 to 1995.
4
<PAGE>
Period Served as Director and Business
Experience During Past Five Years
Name and Age
Class III
Edward E. Barr, 62(a),(e)........ Director of United Water since 1994.
Chairman of Sun Chemical Corporation since
January 1998, and President and Chief
Executive Officer since 1987. President and
Chief Executive Officer of DIC American,
Inc. 1988 to 1997. Director, Dainippon Ink
and Chemicals, Tokyo and First Union Corp.;
Trustee, Northwestern Mutual Insurance
Company.
Charles Chaumin, 46(a)........... Director of United Water since July 1998.
Vice President of the Americas of Lyonnaise
since September 1998. Vice President of
Aquas Argentina 1993 to September 1998.
Frank J. Borelli, 63(c),(p)...... Director of United Water since 1983.
Director of Marsh & McLennan Companies Inc.
since 1988 and Senior Vice President and
Chief Financial Officer since 1984.
Director, Interpublic Group of Companies
Inc.
Douglas W. Hawes, 66(e).......... Director of United Water since 1983.
Secretary of United Water since 1983. Of
Counsel to law firm of LeBoeuf, Lamb,
Greene & MacRae, L.L.P. since January 1999
and Partner through 1998.
Dennis M. Newnham, 58(a),(p)..... Director of United Water since 1986.
President and Chief Executive Officer of
The B. Manischewitz Company, LLC since
January 1999. President and Chief Executive
Officer of Tsumura International 1996 to
1999 and Adirondack Beverages Inc. 1995 to
1996. Venture capitalist consultant in
1994. Director, Nutramax Products Inc.
Mr. Chaumin, Mr. Correll, Mr. Del Col, Mr. Hanson and Mr. Keane also serve
as directors of United Properties Group. Mr. Correll serves as a director and
officer of certain other subsidiaries of United Water.
- --------
(a) Audit Committee member.
(c) Compensation Committee member.
(e) Executive Committee member.
(p) Pension Committee member.
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 1998, United Water's Board of Directors had seven 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 1998 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, 5,436
shares of restricted stock. Each director, except Messrs. Barr and Chaumin,
attended at least 75% of the aggregate of the number of meetings of the board
and committees on which they served.
During 1998, LeBoeuf, Lamb, Greene & MacRae L.L.P., of which Mr. Hawes was 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 $461,200.
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
William D. Colford, 54......... Vice-President--Support Services of United
Water M&S since November 1996. Vice
President--Administration 1994 to 1996.
Frank J. DeMicco, 54........... President of United Water New Jersey since
August 1996. Vice President--Operations from
1992 to 1996. Senior Vice President of United
Water M&S since 1994.
Michael C.J. Fallon, 52........ President of United Properties Group since
January 1993. Vice President of United Water
M&S since March 1998.
Walton F. Hill, 50............. Vice President--Regulatory Business of United
Water M&S since August 1998. Vice President--
Regulatory Law 1994 to 1998.
Robert J. Iacullo, 45.......... Vice President of United Waterworks since
August 1998. Vice President--Regulatory
Business of United Water M&S 1996 to 1998 and
Vice President--Rates 1994 to 1996.
John T. Marino, 47............. Treasurer of United Water M&S since June
1994. Treasurer of United Water in 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 1994 to 1998.
Richard B. McGlynn, 60......... 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. in
1994.
Joseph Simunovich, 59.......... President and Chief of Staff of United Water
M&S since November 1998. President since 1996
and Senior Vice President--External Affairs
and Marketing 1994 to 1996.
John J. Turner, 49............. Treasurer of United Water since June 1994.
Vice President-Chief Financial Officer of
United Water M&S since November 1998 and Vice
President-Finance and Controller 1994 to
1998.
W. Marie Zanavich, 55.......... Vice President-Chief Information Officer of
United Water M&S since December 1998.
Assistant Vice President and Chief
Information Officer 1994 to 1998.
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, 1996, 1997 and 1998.
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....... 1998 365,000 153,100 -- 40,280 4,800
Chairman, President and 1997 315,000 132,900 -- 42,260 4,750
Chief Executive Officer 1996 315,000 100,000 19,922 43,290 4,500
Joseph Simunovich....... 1998 215,000 95,000 -- 17,570 4,800
President-Chief of 1997 187,500 95,000 -- 18,500 4,750
Staff--United 1996 177,500 94,500 -- 9,630 4,500
Water M&S
Frank J. DeMicco........ 1998 200,000 85,000 -- 17,570 4,800
President--United Water 1997 177,885 77,500 -- 18,500 4,750
New Jersey 1996 168,100 57,000 -- 12,490 4,500
Richard B. McGlynn...... 1998 187,500 52,000 -- 10,890 4,800
General Counsel 1997 180,000 50,300 -- 11,610 4,750
1996 180,000 38,500 -- 6,980 4,500
Michael C.J. Fallon..... 1998 163,000 100,800 -- 6,500 5,900
President--United 1997 150,000 97,500 -- 7,010 9,000
Properties Group 1996 150,000 70,000 -- 5,130 9,000
</TABLE>
- --------
(a) The number and value of the aggregate restricted Common Stock holdings at
December 31, 1998, for D. Correll, 7,500 shares, $179,531. Dividends are
paid on such stock.
(b) Contributions by United Water to its Thrift Plan.
Executive Employment Agreements
United Water has employment agreements with Messrs. Correll, Simunovich, and
DeMicco. 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. United Water has a similar contract with Mr.
Fallon excluding the SERP benefits; payout upon termination incident to a
change in control is equal to one and one half times.
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, 1999 is: Mr. Correll, $4,887,300; Mr.
Simunovich, $1,895,700; Mr. DeMicco, $1,679,900; Mr. McGlynn, $194,000; and
Mr. Fallon, $354,300.
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
forms of benefit 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, 1998, for certain
executive officers included in the Summary Compensation Table are as
follows: D. Correll, 22 years; J. Simunovich, 6 years; F. DeMicco, 7
years; and M. Fallon, 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 one and one half percent 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 1998 to
the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
Option Grants in 1998
- ---------------------------------------------------------------------------------------------------------
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 (#) 1998 ($/sh) Date Value($)(b)
- ---- -------------------- ------------------- ----------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
Donald L. Correll....... 40,280 9.9 18.625 1/8/08 317,400
Joseph Simunovich....... 17,570 4.3 18.625 1/8/08 138,450
Frank J. DeMicco........ 17,570 4.3 18.625 1/8/08 138,450
Richard B. McGlynn...... 10,890 2.7 18.625 1/8/08 85,810
Michael C.J. Fallon..... 6,500 1.6 18.625 1/8/08 51,225
</TABLE>
- --------
(a) All options were granted and vested on January 8, 1998. 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 units is included in the option value, as the optionee is
entitled to receive dividend units for five years. Note that similar to
options, factors could change over the term of the option that may
increase or decrease the dividend unit amount. The dividend unit 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 5.5%
. Dividend yield of 5.1%
. 10 years to exercise the options
. Stock price volatility of 26.1%
. 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, 1998, 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 1998 and December 31, 1998 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($) 1998(#)(a) 1998($)
- ---- --------------- ----------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Donald L. Correll....... -- -- 150,830 1,348,978
Joseph Simunovich....... 11,530 65,990 53,290 445,415
Frank J. DeMicco........ 18,500 148,000 30,100 239,745
Richard B. McGlynn...... -- -- 34,970 297,516
Michael C.J. Fallon..... 4,910 28,540 23,700 208,590
</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 the 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 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 individuals for their work,
attracting and retaining superior talent, and encouraging sustained long-term
performance of the Company for both its customers and its shareholders. The
Committee continues to be committed to strengthening the relationship between
pay and performance, both at the executive level and throughout the Company.
To ensure its overall competitiveness in the relevant employment markets for
executives, the Company compares both its compensation structure and its pay
levels with those of industrial companies nationally, New York metropolitan
area companies and a national group of utilities, virtually all of which are
included in the Wilshire 5000 index included in the Shareholder Return
Presentation following this report. These comparisons are provided by the
Company's independent compensation consultants, who review these findings with
the Committee.
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 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 individual's performance and the salary trends within the
relevant labor market. In 1998, the named executive officers, excluding the
Chief Executive Officer, received an average salary increase of 10.1%, their
first base increase in three years.
2. The Management Incentive Plan (MIP) is designed to motivate and reward
executives for achieving both individual goals and overall Company goals
linked to improving performance for both shareholders and customers. The MIP
has three components: annual cash incentives, stock option grants and dividend
units.
11
<PAGE>
(a) Cash incentives are payable annually after the close of the year based
on the achievement of specific financial, operational and/or strategic goals
established for each participant. Goals for 1998 addressed financial
performance, customer satisfaction, business growth, operating efficiencies,
human resource effectiveness and regulatory relations. Goals for executives
are weighted between individual, business unit and Company performance. Actual
awards paid may range from 0 to 1.5 times the target level established for
each participant. In 1998, the named executive officers, excluding the Chief
Executive Officer, were granted an average of 1.25 times their target levels.
(b) Stock options are granted annually to provide an incentive to increase
shareholder value. The executive realizes benefits from these options only if
the value of United Water's shares appreciates during their term. The number
of stock options granted is based on the executive's specific responsibility
and is designed to set their total compensation at a level competitive in the
employment markets. In 1998, the named executive officers, excluding the Chief
Executive Officer, were granted an average of 13,130 stock options.
(c) Free-standing dividend units are granted annually. These reflect the
dividends paid on a share of United Water Common Stock and tie the executive's
rewards to the total return to shareholders. In 1998, the named executive
officers, excluding the Chief Executive Officer, were granted an average of
13,130 dividend units.
In 1998, the Committee approved employment contracts for certain executives,
including the named executives, covering terms of service, pay and termination
benefits. The contracts provided for a base salary at not less than that which
was in effect when signed.
Over the past three years, Mr. Correll's compensation has become
increasingly performance-based. In 1998, the Committee reviewed Mr. Correll's
salary and incentives relative to competitive practices and his performance.
His salary was increased by 15.9%, the first base salary increase he has
received since 1994. For 1998, Mr. Correll's incentive goals included targets
with respect to earnings per share, market share, Company development
initiatives and productivity. After reviewing his performance, without giving
specific weighting to any one factor, the Committee recommended, and the Board
approved, an award of 1.2 times his target incentive, as reported in the
compensation table above, as well as 40,280 stock options and 40,280 dividend
units.
The Compensation Committee intends to continue and expand the practice of
tying performance to pay in the future, both for executives and for other
employees as well. The Committee believes that shifting an increasing portion
of pay to performance-based incentives will benefit shareholders, customers
and employees as all share in the continued improvement of the Company.
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 1998 or 1999.
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, 1998. 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.
Five-Year Cumulative Total Returns
[LINE GRAPH APPEARS HERE]
1993 1994 1995 1996 1997 1998
-----------------------------------------------------------------------
UWR 100.00 96.71 98.99 136.48 181.36 233.46
-----------------------------------------------------------------------
E.D.JONES 100.00 92.66 117.58 141.15 192.77 243.85
-----------------------------------------------------------------------
WILSHIRE 5000 100.00 99.94 136.41 165.33 217.04 267.94
-----------------------------------------------------------------------
One-Year Cumulative Total Returns
[LINE GRAPH APPEARS HERE]
1997 1998
-----------------------------------
UWR 100.00 128.73
-----------------------------------
E.D.Jones 100.00 126.50
-----------------------------------
Wilshire 5000 100.00 123.45
-----------------------------------
13
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
At the regular meeting held March 18, 1999, the Board of Directors of United
Water acted to appoint PricewaterhouseCoopers LLP, New York, New York, as
auditors for United Water and its subsidiaries for the year 1999. 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. PricewaterhouseCoopers LLP performed
the function of auditors of United Water and its subsidiaries in 1998. A
representative of PricewaterhouseCoopers LLP will attend the meeting and, if
so desires, make a statement. The representative will also respond to
appropriate questions.
The appointment of PricewaterhouseCoopers 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, 1999, meeting the Audit Committee (1) recommended the
appointment of PricewaterhouseCoopers LLP as auditors for 1999 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
PricewaterhouseCoopers LLP with respect to their examination of the December
31, 1999, 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 2000 ANNUAL MEETING
Rule 14a-4 of the Securities and Exchange Commission's proxy rules allows
the Company to use discretionary voting authority to vote on matters coming
before an annual meeting of shareholders, if the Company does not have notice
of the matter at least 45 days before the date corresponding to the date on
which the Company first mailed its proxy materials for the prior year's annual
meeting of shareholders or the date specified by an overriding advance notice
provision in the Company's By-Laws. The Company's By-Laws do not contain such
an advance notice provision. For the Company's Annual Meeting of Shareholders
to be held on May 8, 2000, shareholders must submit such written notice to the
executive offices of United Water at 200 Old Hook Road, Harrington Park, New
Jersey 07640; Attention: Corporate Secretary on or before February 8, 2000.
Shareholder proposals for the 2000 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; Attention: Corporate Secretary no later
than November 26, 1999, for inclusion in the 2000 proxy statement and form of
proxy.
On Behalf of the Board of Directors
Lawrence R. Codey
Peter Del Col
Marcia L. Worthing
Proxy Committee
Harrington Park, New Jersey
March 24, 1999
15
<PAGE>
Annual Meeting Notes
<PAGE>
Annual Meeting Notes
<PAGE>
United Water [LOGO]\(R)\
- -------------------------------------------------------------------------------
1999 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
[MAP OF PARK RIDGE MARRIOTT APPEARS HERE]
<PAGE>
This Proxy Is Solicited On Behalf Of The Board of Directors Please mark
your votes
as [X]
indicated in
this example
1. Election of Directors
The Nominees to Class III are: FOR WITHHELD
01 Edward E. Barr, 02 Charles Chaumin, 03 Frank J. Borelli, [_] [_]
04 Douglas W. Hawes, 05 Dennis M. Newnham
Withheld For: (Write that nominee's name in the space provided below).
- ---------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To Approve Auditors [_] [_] [_]
3. 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
adjournments thereof.
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___________, 1999
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 .
VOTE BY TELEPHONE
[GRAPHIC] [GRAPHIC]
QUICK ... EASY ... IMMEDIATE
YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone 24
hours a day-7 days a week
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is
located in the box in the lower right hand corner of this form
- --------------------------------------------------------------------------------
OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1
- --------------------------------------------------------------------------------
When asked, please confirm by Pressing 1.
- --------------------------------------------------------------------------------
OPTION 2: If you choose to vote on each Proposal separately, press 0. You will
hear these instructions:
- --------------------------------------------------------------------------------
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD
FOR ALL nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the
instructions
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
When asked, please confirm by Pressing 1.
The instructions are the same for all remaining proposals.
or
--
2. VOTE BY PROXY: Mark, sign and date your proxy card and return promptly in
the enclosed envelope.
NOTE: If you vote by telephone, THERE IS NO NEED TO MAIL BACK your Proxy Card.
<PAGE>
PROXY
UNITED WATER RESOURCES INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS-MAY 10, 1999
The undersigned shareholder of United Water Resources Inc. ("United
Water") hereby constitutes and appoints LAWRENCE R. CODEY, PETER DEL COL 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 Park Ridge Marriott, 300 Brae Boulevard, Park
Ridge, New Jersey 07656, on Monday, May 10, 1999, 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 .
Dear Shareholder(s) of United Water Resources Inc.:
Enclosed you will find materials regarding the United Water Resources Inc., 1999
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. You may vote your proxy by
telephone. If you vote by telephone, there is no need to mail back your proxy
card. As a shareholder, please remember that your vote is important to us. We
look forward to hearing from you.
