SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
(Amendment No. )
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[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
E'TOWN CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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<PAGE>
E'TOWN CORPORATION
600 SOUTH AVENUE, WESTFIELD, N.J. 07090
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 15, 1997
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To the Stockholders of E'town Corporation,
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of E'town
Corporation will be held at the Canal Road Water Treatment Plant, 701 Randolph
Road, Somerset, New Jersey 08876, on Thursday, May 15, 1997, at 10:00 A.M. for
the following purposes:
1. To elect three members to the Board of Directors for terms to
expire at the 2000 Annual Meeting of Stockholders.
2. To ratify, confirm and approve the act of the Board of
Directors, on February 20, 1997, appointing Deloitte & Touche LLP,
Parsippany, New Jersey, as the auditors for the Corporation and its
subsidiaries for the year 1997.
3. To transact such other business as may properly be brought
before such meeting or any adjournment or adjournments thereof.
Action will be taken at the meeting for the election of James W. Hughes,
Hugo M. Pfaltz, Jr., and Joan Verplanck as Directors for terms of three years.
The close of business on March 17, 1997, has been fixed as the time for
the determination of the stockholders entitled to vote at said meeting, or any
adjournments thereof, and only stockholders 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. You may revoke your proxy at
any time prior to the meeting and vote in person at the meeting.
By Order of the Board of Directors,
Walter M. Braswell
Secretary
Westfield, New Jersey
March 27, 1997
<PAGE>
E'TOWN CORPORATION
600 SOUTH AVENUE, WESTFIELD, N.J. 07090
March 27, 1997
PROXY STATEMENT
The following statement is furnished in connection with the
solicitation by the Board of Directors of E'town Corporation ("E'town" or the
"Corporation") of proxies to be used at the Annual Meeting of the holders of the
Common Stock of the Corporation, to be held May 15, 1997, at the hour and place
set forth in the Notice of Annual Meeting accompanying this Proxy Statement.
This Proxy Statement and the accompanying proxy were first sent to stockholders
on March 27, 1997.
PERSONS MAKING THE SOLICITATION
This solicitation is made on behalf of the Board of Directors of
the Corporation. The cost of soliciting these proxies will be borne by the
Corporation. In addition to solicitation by mail, the Corporation may make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to their principals and may
reimburse them for their expenses in so doing. The solicitation will be
initially by mail, and it may later be decided to make further solicitations by
mail, telephone, telefax, or personal call by directors, officers and regular
employees of the Corporation. The Corporation has retained Georgeson & Company
("Georgeson") to assist in the solicitation pursuant to which Georgeson will be
paid a fee of $5,500.00 plus expenses.
VOTING SECURITIES AND OWNERSHIP THEREOF
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 17, 1997, there were outstanding 7,814,349 shares of
the Corporation's Common Stock, the only capital stock entitled to vote at the
Annual Meeting. Each share of Common Stock is entitled to one vote. As stated in
the Notice of Annual Meeting, only holders of record of the Common Stock at the
close of business on such date will be entitled to vote at the meeting or any
adjournment thereof.
Under current rules of the Securities and Exchange Commission
(the "SEC"), a person who directly or indirectly has or shares voting power
and/or investment power with respect to a security is considered a beneficial
owner of the security. Voting power is the power to vote or direct the vote of
shares, and investment power is the power to dispose of or direct the
disposition of shares.
To the knowledge of the Corporation, no persons owned
beneficially more than 5% of the outstanding Common Stock as of March 17, 1997.
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<PAGE>
The following information pertains to the Common Stock of the
Corporation that, to the knowledge of the Corporation, is beneficially owned,
directly or indirectly, individually and as a group, by all Directors (including
nominees) and Executive Officers of the Corporation and its subsidiaries,
Elizabethtown Water Company ("Elizabethtown") and E'town Properties, Inc.
("Properties"), as of March 17, 1997.
<TABLE>
<CAPTION>
No. of Percent
Title of Class Name of Beneficial Owner Shares(1) of Class
- -------------- ------------------------ --------- --------
<S> <C> <C> <C>
Common Stock Brendan T. Byrne ................................. 1,574 .02
Edward F. Cash.................................... 14,988 .19
Thomas J. Cawley.................................. 9,810 .13
Anthony S. Cicatiello ............................ 50 .00
Andrew M. Chapman ................................ 29,407 .38
Anne Evans Estabrook.............................. 57,009 .73
James W. Hughes .................................. - -
John Kean ........................................ 290,004(2) 3.71
Robert W. Kean, Jr. .............................. 215,648(3) 2.76
Robert W. Kean, III .............................. 4,902 .06
Barry T. Parker .................................. 2,801(4) .04
Henry S. Patterson, II ........................... 10,570 .14
Hugo M. Pfaltz, Jr. .............................. 9,400(5) .12
Chester A. Ring, 3rd ............................. 17,085 .22
Joan Verplanck ................................... - -
Norbert Wagner.................................... 20,381 .26
Directors and Executive Officers as a group ...... 683,629 8.75
</TABLE>
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(1) Includes shares held for Executive Officers under the Elizabethtown
Savings and Investment Plan (the "401(k) Plan") and shares subject to
options presently exercisable under the 1982 Incentive Stock Option Plan
and 1987 Stock Option Plan.
(2) Includes 270,741 shares held under two trusts for which beneficial owner
is a co-trustee and beneficial owner shares voting and investment power
with respect to these shares.
(3) Includes 197,567 shares held under a trust for which beneficial owner is
a co-trustee and beneficial owner shares voting and investment power
with respect to these shares.
(4) Includes 600 shares held under a trust for which beneficial owner is a
co-trustee and beneficial owner shares voting and investment power with
respect to these shares.
(5) Includes 1,250 shares of Common Stock issuable upon conversion of
debentures held by a partnership of which Mr. Pfaltz is a general
partner.
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<PAGE>
I. ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS
The Board of Directors is divided into three classes of
directorships, with directors in each class serving staggered three-year terms.
At each Annual Meeting of Stockholders, the terms of directors in one of the
three classes expire. At that Annual Meeting of Stockholders, directors are
elected in a class to succeed the directors whose terms expire. The terms of the
directors so elected will expire at the third Annual Meeting of Stockholders
thereafter. Accordingly, of the current Directors, four are in the class whose
term expires at the 1997 Annual Meeting of Stockholders, four are in the class
whose term expires at the 1998 Annual Meeting of Stockholders and four are in
the class whose term expires at the 1999 Annual Meeting of Stockholders.
Brendan T. Byrne, Robert W. Kean, Jr., and Henry S. Patterson,
II, having reached the Board's mandatory retirement age of 72 during their most
recent terms, are not standing for re-election at the Annual Meeting. Pursuant
to a resolution passed by the Board of Directors, Messrs. Byrne, Kean and
Patterson have been appointed Directors Emeritus of the Corporation, in order
for the Board to continue to have access to their expertise and experience.
Robert W. Kean, Jr. has been appointed Chairman Emeritus of the Board. Directors
Emeritus will be invited to attend Board meetings, but shall have no right or
duty to vote on any matter before the Board.
On February 20, 1997, the Board of Directors elected Anne Evans
Estabrook to the position of Chairman of the Board of Directors of the
Corporation and Andrew M. Chapman to the position of President of the
Corporation, effective May 15, 1997. Both individuals are currently Directors of
the Corporation. Anne Evans Estabrook has served as Vice President of the
Corporation since September 1987; Andrew M. Chapman has served as President of
Elizabethtown since January 1996 and as Treasurer of the Corporation since
August 1990.
Every stockholder entitled to vote shall have the right to vote
the number of shares owned by him or her for as many candidates for election as
there are directors to be elected. Directors shall be elected by a plurality of
the votes cast at the election. With respect to election of directors, the
approval of auditors and any other matter submitted to a vote of stockholders,
votes shall be counted by designated agents and tabulated by inspectors, with
abstentions and non-votes, including broker non-votes, treated as votes not
cast.
It is intended that the shares of Common Stock represented by the
accompanying proxy will be voted at the 1997 Annual Meeting of Stockholders for
the election of nominees HUGO M. PFALTZ, JR., JOAN VERPLANCK AND JAMES W.
HUGHES, who have been designated by the Board of Directors as the three nominees
who, if elected, shall serve as Directors in the class of directorships whose
members' terms will expire in 2000. Of the foregoing nominees, Hugo M. Pfaltz is
currently a Director of the Corporation, and James W. Hughes and Joan Verplanck
are nominated for the first time. While it is not anticipated that any of the
nominees will be unable to serve, if any such nominee is not a candidate for
election as a Director at the 1997 Annual Meeting of Stockholders, the proxy
will be voted in favor of such other person or persons in lieu thereof as the
present Board of Directors shall determine unless the proxy withholds authority
to vote for all nominees.
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<PAGE>
The following information relates to the nominees named herein
and the other persons whose terms as Directors will continue after the 1997
Annual Meeting of Stockholders. Effective with the 1997 Annual Meeting, the
number of directors on the Corporation's Board of Directors shall be reduced by
one, to eleven.
<TABLE>
NOMINEES:
<CAPTION>
NAME, AGE AND OTHER POSITIONS Period Served as Director,
IF ANY, WITH REGISTRANT Business Experience During Past 5 Years Term Expires
- ----------------------- --------------------------------------- ------------
<S> <C> <C>
JAMES W. HUGHES, 53 .............. Since 1995 he has been Dean of the Edward J. 2000
Bloustein School of Planning and Public
Policy at Rutgers University. He has been
the Director of the Rutgers Regional Report
since 1988, and has been a member of the
Rutgers University Faculty since 1971.
HUGH M. PFALTZ, JR., 65 .......... Served as Director of Elizabethtown since October 2000
Member of Corporate Planning, 1980, the Corporation since June 1987 and
Executive Compensation and Properties from July 1987 until May 1996. He has
Stock Options Committees, and been a principal of the law firm of Pfaltz &
Elizabethtown's Executive Woller, P.A. since 1976.
Compensation and Pension
Investment Committees.
JOAN VERPLANCK, 50 ............... Since December 1994 she has been President of the 2000
New Jersey Chamber of Commerce. For eight
years prior to that she served as President of the
Morris County Chamber of Commerce.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF ALL THESE NOMINEES.
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<PAGE>
<CAPTION>
OTHER DIRECTORS:
NAME, AGE AND OTHER POSITIONS, Period Served as Director
IF ANY, WITH REGISTRANT Business Experience During Past 5 Years Term Expires
- ----------------------- --------------------------------------- ------------
<S> <C> <C>
THOMAS J. CAWLEY, 66 ............. In December 1996, he retired as Vice Chairman, 1999
Elizabethtown Water Company. He served as
Director of Elizabethtown and the Corporation
since August 1992, and Properties since July
1987. He was Vice Chairman of Elizabethtown
Water Company since January 1996. From August
1992 to January 1996 he served as President of
Elizabethtown Water Company. He remains
President of The Mount Holly Water Company. He
served as Executive Vice President of
Elizabethtown from 1987 to 1992. He joined
Elizabethtown in 1969 and served in a variety of
operating positions until elected Executive Vice
President in 1987.
ANDREW M. CHAPMAN, 41 ............ Served as Director of the Corporation and 1998
Chief Financial Officer and Elizabethtown since May 1995. Served as Chief
Treasurer, E'town Corporation Financial Officer Of the Corporation since August
(President-elect of E'town 1989 and Treasurer of the Corporation since
Corporation effective May 15, November 1990. He was elected President of
1997), President, Elizabethtown Elizabethtown in January 1996. He served as
Water Company, Treasurer, Executive Vice President of Elizabethtown from May
E'town Properties, Inc. 1994 to December 1995, Senior Vice President of
Elizabethtown from April 1993 to May 1994,
Chief Financial Officer of Elizabethtown
from November 1990 to December 1995, and
Treasurer of Elizabethtown from August 1989
to May 1994. Prior to 1989, he was Director
of the Office of Financial Management of
the State of New Jersey, Department of
Treasury.
ANTHONY S. CICATIELLO, 49 ........ Served as a Director of the Corporation, 1999
Member of Audit Committee Elizabethtown and Properties since May 1996.
He is the Chairman of CN Communications
International, Inc., a public relations and
advertising firm. He currently serves on
the Rutgers University Board of Governors.
ANNE EVANS ESTABROOK, 52 ......... Served as Director of Elizabethtown since December 1998
Vice President, E'town 1982, the Corporation since March 1985 and
Corporation (Chairman-elect of Properties since July 1987 and as a Vice
E'town Corporation and President of the Corporation since September
Elizabethtown effective May 15, 1987. She has been the owner of Elberon
1997), Member of Corporate Development Co. (a real estate holding company)
Planning Committee and since 1984 and is President of David O. Evans,
Elizabethtown's Executive Inc. (a construction management company). She is
Compensation Committee a Director of Summit Bancorp and its subsidiary,
Summit Bank. She is a Public Member of the
Governing Board, New Jersey Economic Development
Authority. She is a trustee of Cornell
University.
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<PAGE>
<CAPTION>
NAME, AGE AND OTHER POSITIONS, Period Served as Director
IF ANY, WITH REGISTRANT Business Experience During Past 5 Years Term Expires
- ----------------------- --------------------------------------- ------------
<S> <C> <C>
JOHN KEAN, 67 .................... Served as Director of Elizabethtown since 1957 and 1999
Member of Elizabethtown's the Corporation since March 1985. He is Chairman
Pension Investment Committee of the Board and a Director of NUI Corporation.
He was President and Chief Executive Officer of
NUI Corporation until his retirement in April
1995, and until October 1994, Chairman of the
Board and Director of Elizabethtown Gas Company,
which was previously a subsidiary of NUI
Corporation. He is also an Honorary President of
the International Gas Union.
ROBERT W. KEAN, III, 49 .......... Served as Director of the Corporation since May 1998
Executive Vice President,E'town 1989 and Director and Executive Vice President of
Properties, Inc. Properties since July 1987.
BARRY T. PARKER, 64 .............. Served as Director of Elizabethtown since January 1998
Member of Audit, Executive 1983 and the Corporation since 1991. He has been a
Compensation and Stock Options partner in the law firm of Parker, McCay &
Committees and Elizabethtown's Criscuolo, P.C. since 1967.
Executive Compensation
Committee
CHESTER A. RING, 3RD, 69 ......... Served as Director of Elizabethtown since December 1999
Member of Elizabethtown's 1982 and the Corporation since June 1987.
Pension Investment Committee Effective August 1, 1992, he retired as
President of Elizabethtown Water Company.
</TABLE>
Family Relationships. Robert W. Kean, Jr. is a first cousin of John Kean
and the father of Robert W. Kean, III.
Transactions. Utility Billing Services, Inc., a subsidiary of NUI
Corporation, of which John Kean is Chairman of the Board and a Director,
provides data processing services to Elizabethtown and its subsidiary pursuant
to a contract expiring December 31, 1997. The charges for such services totalled
$651,062 for the year ended December 31, 1996.
In July 1994, Elizabethtown entered into a $60,000,000 revolving credit
agreement with six banks. Summit Bank, of which Anne Evans Estabrook is a
director, is committed to lend a minimum of $5,000,000 under the agreement, but
may lend additional amounts under a bidding procedure. At March 17, 1997, there
was $12,500,000 outstanding in loans from Summit Bank under the agreement.
Interest charges paid to Summit Bank totaled $138,433 during 1996. Summit Bank
also served as trustee for a benefit plan and bond trustee for which it was paid
fees of $15,225.
The law firm of Parker, McCay & Criscuolo, P.C., of which Barry T.
Parker is a partner, provided legal services to the Corporation and
Elizabethtown which resulted in $58,560 in legal fees being paid to the firm in
1996.
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<PAGE>
The law firm of Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart &
Olstein, of which Brendan T. Byrne is a partner, provided legal services to
Elizabethtown which resulted in $48,759 in legal fees being paid to the firm in
1996.
The law firm of Lindabury, McCormick & Estabrook, of which the husband
of Anne Evans Estabrook is of counsel, provided legal services to the
Corporation which resulted in $12,447 in legal fees being paid to the firm in
1996.
It is the opinion of management that the amounts charged for these
services were as favorable as those that would be charged for such services by
comparable unaffiliated sources. Management periodically reviews the terms of
these arrangements to ensure that the costs for these services are comparable to
those that would be charged in the general market.
Meetings and Committees. The Board of Directors of the Corporation held
eleven meetings in 1996, with an attendance record by Directors of 95%. There
are six committees of the Board of Directors. Unless otherwise indicated, these
committees perform the indicated functions for both the Corporation and
Elizabethtown.
The Audit Committee, which met twice in 1996, reviews the scope of the
annual audit by the Corporation's independent auditors, receives and reviews the
auditors' annual report, annually recommends to the Board of Directors the
appointment of independent auditors, subject to approval by the stockholders,
and oversees the activities of Elizabethtown's internal auditor. The Audit
Committee was composed in 1996 of Barry T. Parker, Chairman, Brendan T. Byrne
and Anthony S. Cicatiello.
The Corporate Planning Committee, which did not meet during 1996,
reviews and makes recommendations to the Board of Directors regarding the
Corporation's current and long-range strategic plans and objectives, and any
other matters that may be assigned by the Board of Directors to the Committee.
The Committee was composed in 1996 of Brendan T. Byrne, Chairman, Hugo M.
Pfaltz, Jr. and Anne Evans Estabrook.
The Executive Compensation Committee of Elizabethtown (the
"Elizabethtown Committee"), which met twice during 1996, reviews and recommends
to the Elizabethtown Board of Directors salaries and bonuses as well as awards
under incentive programs for officers of Elizabethtown. During 1996, it was
composed of Anne Evans Estabrook, Chairperson, Brendan T. Byrne, Barry T. Parker
and Hugo M. Pfaltz, Jr. The Executive Compensation Committee of E'town (the
"E'town Committee"), which has similar duties with respect to E'town and was
composed of Brendan T. Byrne, Barry T. Parker and Hugo M. Pfaltz, Jr., did not
meet during 1996.
The Pension Investment Committee of Elizabethtown meets with the
Investment Managers for Elizabethtown's Employees' Retirement Plan Fund to
review investment policies and determine recommended investment objectives for
the Fund. The Committee also reviews the investment performance of participants'
investment options for Elizabethtown's Savings and Investment Plan-401(k) and
the investment performance for the Trust Funds for Postretirement Benefits. The
Committee met three times in 1996 and was composed of Chester A. Ring, 3rd.,
Chairman, John Kean and Hugo M. Pfaltz, Jr.
The Stock Options Committee of E'town, which met once in 1996,
administers the 1982 Incentive Stock Option Plan and the 1987 Stock Option Plan.
In 1996, this Committee was composed of Hugo M. Pfaltz, Jr., Chairman and
Brendan T. Byrne.
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<PAGE>
Executive Management Committee. The Boards of Directors of the
Corporation and Elizabethtown have established a joint Executive Management
Committee to review general policy and planning matters and make recommendations
to the Boards of Directors as to policy decisions. This Committee also serves as
the nominations committee for the Board of Directors of the Corporation. This
Committee, which usually meets semi-monthly, was composed in 1996 of Robert W.
Kean, Jr., Chairman, Anne Evans Estabrook, Thomas J. Cawley, Andrew M. Chapman
and Henry S. Patterson, II. Robert W. Kean, Jr. will continue to act as Chairman
of the Executive Management Committee in an advisory, non-voting capacity for a
twelve-month period beginning May 15, 1997, subject to renewal by the Board of
Directors.
Directors' Fees. Directors of the Corporation who are not officers of
Elizabethtown or employees of Properties are paid by Elizabethtown an annual
retainer of $15,000 and a fee of $550 for each meeting of the Board of Directors
of Elizabethtown which they attend. Such Directors also receive the per-meeting
attendance fee for each meeting of the Board of the Corporation held on a day
when there is not also a meeting of the Board of Elizabethtown. Directors
Emeritus will receive the per-meeting fee for each Board meeting which they
attend during their first year. E'town Properties Directors receive a $1,000
annual retainer and a fee of $550 for a Board Meeting held on days not
coincident with Board meetings of Elizabethtown. Directors who are officers of
Elizabethtown or employees of Properties are paid a fee of $300 for each Board
meeting of Elizabethtown they attend.
Members of committees who are not officers of Elizabethtown or employees
of Properties are paid a fee of $350 for participation at Committee meetings on
the same day as regular Board meetings and a fee of $550 for meetings held on
days other than Board meetings. No fees are paid to members of the Executive
Management Committee for attendance at meetings.
The Boards of Directors of the Corporation and Elizabethtown have
authorized such companies to negotiate consulting agreements with Robert W.
Kean, Jr. whereby he will serve as Chairman Emeritus of the Boards of both
companies and Chairman of the Executive Management Committee as described above,
and will render such other consulting services as the Chairman may reasonably
request. Pursuant to a consulting arrangement with Elizabethtown, effective
January 1, 1997 and continuing for a five-month period, Thomas J. Cawley is paid
a consulting fee and expenses of $5,472 per month.
A Director cannot stand for re-election after his or her 72nd birthday.
A retired Director with 10 or more years' service on the Board of Directors (of
the Corporation or Elizabethtown) becomes eligible at age 72 to receive a
pension for life equal to the annual retainer in effect at the date the Director
becomes eligible for the pension. A retiring Director with 5 to 9 years of
service will receive a pension equal to the annual retainer in effect at the
date of retirement, payable for the same number of years that the Director
served on the Board.
Effective May 15, 1997, Anne Evans Estabrook will serve as the Chairman
of the Boards of Directors of the Corporation and Elizabethtown for a salary to
be set annually by the Boards.
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<PAGE>
BOARD OF DIRECTOR'S COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
E'town's Executive Compensation Committee (the "E'town Committee") was
composed in 1996 of three E'town directors: Brendan T. Byrne, Barry T. Parker
and Hugo M. Pfaltz, Jr. The Executive Compensation Committee of Elizabethtown
(the "Elizabethtown Committee"), the principal subsidiary of E'town, was
composed in 1996 of four Elizabethtown directors: Anne Evans Estabrook,
Chairperson, Brendan T. Byrne, Barry T. Parker and Hugo M. Pfaltz, Jr.
Each executive officer named in the Summary Compensation Table is an
executive officer of, and is compensated by, Elizabethtown. The Elizabethtown
Committee reviews and recommends to Elizabethtown's Board of Directors the
salaries, benefits, bonuses and awards under an incentive program for the
executive officers of Elizabethtown. The Elizabethtown Committee designs its
executive compensation program to enable Elizabethtown to attract, motivate and
retain the caliber of executives required to effectively attain Elizabethtown's
objectives.
The Elizabethtown Committee administers executive compensation to ensure
that the compensation remains competitive with levels paid to comparable
positions in comparably-sized companies in three groups: water utilities, other
utilities and general industry. The select group of water utilities used for
comparative purposes includes those set forth in Note 2 to the performance graph
entitled "Comparison of Five-year Cumulative Total Return v. S&P 500 and Peer
Group of Water Utilities."
The Elizabethtown Committee and the E'town Committee believe that
competitive salaries provide the foundation of the executive officer
compensation program of E'town and Elizabethtown and are essential for E'town
and Elizabethtown to attract and retain qualified executive officers. The
Elizabethtown Committee positions executive pay levels at the median of the
comparative group, and annually evaluates the continued competitiveness of these
levels. The pay program consists first of annual merit increases and is
sufficiently variable that above average performance is adequately rewarded and
below average performance, if it occurs, is not rewarded. Additionally, in 1996
the Elizabethtown Committee decided to strengthen the link between performance
and compensation. To do this it approved a plan to reward covered employees with
a range of cash bonuses for reaching or exceeding goals set by the employee's
supervisor and agreed to by the employee. Compensation under this plan will
first be paid in 1997 and did not affect the 1996 compensation of any executive
officer.
The E'town Committee can also make restricted stock grants and recommend
the granting of stock options. Stock options and restricted stock grants are
used primarily to retain and motivate Executive Officers to improve the
long-term stock market performance of E'town. No restricted stock awards have
been made since 1992. Stock options for 4,000 shares were granted in 1996 to an
employee who was not an executive officer.
Current SEC regulations also require a discussion of the relationship
between the compensation of the Chief Executive Officer (Robert W. Kean, Jr.)
and company performance for the last completed fiscal year. In 1996 Mr. Kean
received a salary of $250,000. He has disqualified himself from participation in
the Company's incentive plans. The E'town Committee and the Elizabethtown
Committee are of the opinion that the value of Mr. Kean's services exceeds his
compensation received and that he is presently undercompensated when compared to
his peers at the select group of water companies used for comparative purposes.
The Executive Compensation The Executive Compensation Committee of
Committee of E'town Corporation: Elizabethtown Water Company:
Brendan T. Byrne Anne Evans Estabrook, Chairperson
Barry T. Parker Brendan T. Byrne
Hugo M. Pfaltz, Jr. Barry T. Parker
Hugo M. Pfaltz, Jr.
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<PAGE>
The following performance graph illustrates the cumulative total return to
stockholders from the beginning of 1992 to the end of 1996 in comparison to the
Standard & Poor's ("S&P") 500 and a selected peer group of water utilities
("Water Utilities") (Note 2). This peer group is included in the statistical
survey used by the E'town Committee and the Elizabethtown Committee for
comparative purposes.
-- GRAPHICAL REPRESENTATION OF DATA TABLE BELOW --
1991 1992 1993 1994 1995 1996
---- ------ ------ ------ ------ ------
E'town 10.0 10.471 12.554 11.316 13.913 15.666
Water Utilities 10.0 11.075 12.619 11.756 14.790 18.082
S&P 500 10.0 10.761 11.840 12.001 16.495 20.272
(1) Assumes $10,000 invested December 31, 1991 in E'town Corporation Common
Stock, S&P 500 and Water Utilities. All dividends are assumed to be
reinvested over the five-year period. Total returns for each Water
Utility were determined in accordance with SEC regulations; i.e.
weighted according to each such issuer's stock market capitalization.
(2) Water Utilities: American Water Works, Aquarion, California Water
Service, Connecticut Water Service, Consumers Water, Dominguez Services,
E'town, IWC Resources, Middlesex Water, Philadelphia Suburban, San Jose
Water, Southern California Water, Southwest Water, United Water
Resources.
-11-
<PAGE>
E'TOWN CORPORATION
Summary Compensation Table
<TABLE>
<CAPTION>
-------------------------------------------------
Long-Term
Annual Compensation Compensation
-------------------------------- ------------
Salary Restricted
Fiscal ($) Bonus Other Annual Stock Awards All Other
Name & Principal Position Year (1) & (2) ($) Compensation (3) Compensation
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert W. Kean, Jr
Chairman and Chief Executive 1996 $246,420 $0 $0 $0 $ 6,574(4)(5)
Officer, E'town Corporation and 1995 $220,820 $0 $0 $0 $ 5,494
Elizabethtown Water Company 1994 $201,250 $0 $0 $0 $ 5,903
- --------------------------------------------------------------------------------------------------------------------------------
Thomas J. Cawley 1996 $218,062 $0 $0 $0 $40,967(4)(5)(7)
Vice Chairman, Elizabethtown Water 1995 $202,166 $0 $0 $18,441 $ 5,964
Company (Retired December 31,1996 1994 $192,000 $0 $0 $0 $ 6,594
- --------------------------------------------------------------------------------------------------------------------------------
Andrew M. Chapman
Chief Financial Officer and Treasurer 1996 $185,508 $0 $0 $0 $42,898(4)(5)(6)
of E'town Corporation and President 1995 $166,864 $0 $0 $17,739 $ 5,964(8)
of Elizabethtown Water Company 1994 $150,869 $0 $0 $0 $ 6,223
- --------------------------------------------------------------------------------------------------------------------------------
Norbert Wagner 1996 $128,427 $0 $0 $0 $ 5,604(4)(5)
Senior Vice President, 1995 $124,170 $0 $0 $ 8,964 $ 4,743(8)
Elizabethtown Water Company 1994 $118,558 $0 $0 $0 $ 4,890
- --------------------------------------------------------------------------------------------------------------------------------
Edward F. Cash 1996 $125,204 $0 $0 $0 $ 4,764(4)(5)
Vice President -- Customer Services, 1995 $120,231 $0 $0 $ 9,477 $ 4,095(8)
Elizabethtown Water Company 1994 $115,323 $0 $0 $0 $ 4,756
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All salaries are paid by Elizabethtown, the Corporation's principal
subsidiary. Salaries are reallocated to the Corporation, as appropriate.
(2) Includes pretax contributions to the 401(k) Plan and Director's fees for
R.W. Kean, Jr., T.J. Cawley and A.M. Chapman.
(3) Restricted stock awards granted in 1992 under the E'town Corporation 1990
Performance Stock Program vested in 1995. The number of shares of
restricted stock vested in 1995 for executive officers was: T.J. Cawley,
683 shares; A.M. Chapman, 657 shares; N. Wagner, 332 shares; and E.F. Cash,
351 shares. The market value of these shares is shown in the table. R.W.
Kean, Jr. has disqualified himself from E'town's 1990 Performance Stock
Program.
(4) Includes 401(k) Plan matching contributions by Elizabethtown for: R.W.
Kean, Jr. $5,700, T.J. Cawley $5,700, A.M. Chapman $5,700, N. Wagner $4,618
and E.F. Cash $3,802.
(5) Includes life insurance by Elizabethtown for: R.W. Kean, Jr. $874, T.J.
Cawley $1,344, A.M. Chapman $1,344, N. Wagner $986 and E.F. Cash $962.
(6) Includes 1995 Supplemental Executive Retirement Plan life insurance by
Elizabethtown for: A.M. Chapman $27,378 and a cash vehicle allowance of
$8,475.
(7) Includes accrued and unused vacation pay of $27,378 for T.J. Cawley at his
retirement at December 31, 1996.
(8) The securities ownership, reported on page 3, by A. Chapman, N. Wagner and
E. Cash includes 27,000, 8,000 and 4,000 shares respectively in exercisable
options, of which 12,000, 8,000 and 4,000 shares, respectively, were
granted in 1995.
-12-
<PAGE>
Pensions. Elizabethtown's non-contributory defined benefit retirement
plan provides that a participant will receive an annual retirement benefit equal
in amount to 1.6% (increased from 1.525% as of February 1, 1996) of the
participant's final average compensation for the highest four (decreased from
five as of February 1, 1996) consecutive calendar years multiplied by the number
of years of credited service (up to a maximum of 40). Remuneration covered under
the retirement plan includes base wages only. Directors who are not also
officers or employees do not participate.
The following table shows annual pension benefits payable to employees,
including officers, upon retirement at age 65, in various remuneration and
years-of-service classifications. The compensation taken into account under a
tax-qualified plan is subject to a maximum annual limit under the Internal
Revenue Code of 1986, as amended, adjusted annually for cost of living increases
($235,840 in 1993, $150,000 in 1994, 1995 and 1996, and $160,000 in 1997).
<TABLE>
<CAPTION>
Highest
Consecutive
Four Year Annual Benefits for Years of Service Indicated
Average ----------------------------------------------
Compensation 10 years 15 years 20 years 25 years 30 years 35 years 40 years
- -------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 75,000 $12,000 $18,000 $24,000 $ 30,000 $ 36,000 $ 42,000 $ 48,000
100,000 16,000 24,000 32,000 40,000 48,000 56,000 64,000
125,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000
150,000 24,000 36,000 48,000 60,000 72,000 84,000 96,000
175,000 28,000 42,000 56,000 70,000 84,000 98,000 112,000
200,000 32,000 48,000 64,000 80,000 96,000 112,000 128,000
225,000 36,000 54,000 72,000 90,000 108,000 126,000 144,000
250,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000
</TABLE>
The annual benefit amounts shown above are not subject to any deduction
for Social Security benefits or other offset amounts. The number of years of
service now credited under the retirement plan (and the supplemental plans
described below) is as indicated for the following officers: Andrew M. Chapman,
7 years; Norbert Wagner, 33 years and Edward F. Cash, 38 years.
Executive officers of Elizabethtown are entitled to either a Supplemental
Executive Retirement Plan benefit or a 1995 Supplemental Executive Retirement
Plan benefit upon the attainment of the normal retirement age of 65 with a
minimum of 20 years service. The benefit payable under each of these plans is an
amount equal to the difference between 60% of the average annual base salary for
the thirty-six months prior to retirement and the regular pension benefit shown
in the table above. The 1995 Plan also provides life insurance equal to two
times compensation if death occurs before age 55. The following table shows the
annual benefit under each plan payable to executive officers upon retirement at
age 65.
Average Annual
Base Salary for 36 Annual Supplemental
Months Prior to Executive Retirement
Retirement Benefit(1)
------------------- --------------------
$ 75,000 $ 45,000
100,000 60,000
125,000 75,000
150,000 90,000
175,000 105,000
200,000 120,000
225,000 135,000
250,000 150,000
- ----------
(1) To be reduced by regular pension benefit shown in prior table.
-13-
<PAGE>
Change in Control Agreement. E'town has entered into an agreement with
Andrew M. Chapman that provides him certain extended benefits in the event that
his employment is terminated by the Corporation (other than for cause) within
three years following a change in control of the Corporation. In the event of
such a termination, Mr. Chapman would be entitled under the agreement to receive
salary and incentive compensation, as well as medical and other benefits, at the
rates in effect prior to such termination for a period of thirty months
thereafter. In addition, any incentive compensation awards due to Mr. Chapman
prior to the change in control but not yet paid would be paid on the date of
termination and any restricted stock not vested at the time of the change in
control would thereupon become vested. The amounts payable pursuant to the
agreement will be reduced, if necessary, to avoid excise tax under the Federal
tax laws. The agreement expires on December 31, 1997, subject to automatic
annual renewal unless prior notice is given by the Corporation.
ELIZABETHTOWN WATER COMPANY
Elizabethtown is a wholly-owned subsidiary of the Corporation. The Board
of Directors of Elizabethtown currently numbers twelve individuals, consisting
of the Directors of the Corporation. Effective with the 1997 Annual Meeting, the
number of directors on Elizabethtown's Board of Directors will be reduced by
one, to eleven. Nine of the directors of Elizabethtown will stand for election,
including Hugo M. Pfaltz, Jr., and it is the intention of the Board of Directors
of the Corporation to cause the Corporation to elect all of such persons as
directors of Elizabethtown. If James W. Hughes and Joan Verplanck are elected
Directors of the Corporation at the Annual Meeting, the Board of Directors of
the Corporation intends to cause the Corporation to elect them as Directors of
Elizabethtown. In addition, Robert W. Kean, Jr. will be appointed Chairman
Emeritus and Brendan T. Byrne and Henry S. Patterson, II will be appointed
Directors Emeritus of the Board of Directors of Elizabethtown upon their
retirements from the Board following the Annual Meeting.
II. APPROVAL OF APPOINTMENT OF AUDITORS
Deloitte & Touche LLP, Two Hilton Court, Parsippany, New Jersey 07054,
independent certified public accountants, have been selected by the Board of
Directors, upon recommendation of the Audit Committee, to serve as independent
auditors of the Corporation for the year ending December 31, 1997.
The appointment of Deloitte & Touche LLP continues a relationship that
began in 1950. Stockholder approval of this appointment is requested. In the
event a majority of the votes cast is against approval, the Board of Directors
will reconsider the appointment.
It is expected that representatives of Deloitte & Touche LLP will be
present at the Annual Meeting, will have the opportunity to make a statement if
they so desire, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THIS PROPOSAL.
-14-
<PAGE>
III. OTHER BUSINESS
Management does not intend to present and does not have any reason to
believe that others will present at the 1997 Annual Meeting of Stockholders any
item of business other than the proposals set forth herein. However, if other
matters are properly presented for a vote, the proxies will be voted upon such
matters in accordance with the judgment of the person acting under the proxies.
Dissenting stockholders have no rights of appraisal with respect to the
proposals set forth herein.
STOCKHOLDER PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate for
stockholder action consistent with regulations of the SEC. Should a stockholder
intend to present a proposal at next year's annual meeting, it must be received
by the Secretary of the corporation (at 600 South Avenue, Westfield, New Jersey
07090) by not later than November 27, 1997 in order to be included in the
Corporation's proxy statement and form of proxy relating to that meeting. Under
the rules of the SEC, a stockholder submitting a proposal is required to be a
record or beneficial owner of at least one percent or $1,000 in market value of
Common Stock for at least one year prior to the date of submission of the
proposal, and he or she must continue to own such securities through the date on
which the meeting is held.
On Behalf of the Board of Directors,
Walter M. Braswell
Secretary
Westfield, New Jersey
March 27, 1997
-15-
<PAGE>
E'TOWN CORPORATION
Directions to the Annual Meeting at The Canal Road Water Treatment Plant
[MAP]
FROM ROUTE 287:
Take Exit #7 (Weston Canal Road). At end of off ramp, make a left onto Weston
Canal Road. Make third left onto Randolph Road. The entrance to the Plant is up
ahead on the right. Follow driveway to parking lot.
FROM THE SOUTH:
Take Garden State Parkway North to Exit #127 onto Route 287 North. Take Route
287 to Exit #7 (Weston Canal Road). Follow directions as in "From Route 287" at
left.
FROM THE NORTH:
Take Garden State Parkway South to Exit #129 onto Route 287 North. Take Route
287 to Exit #7 (Weston Canal Road). Follow directions as in "From Route 287" at
left.
FROM NEW JERSEY TURNPIKE:
(ROUTE 95) Take Exit #10 onto Route 287 North. Take Route 287 to Exit #7 (Weston
Canal Road). Follow directions as in "From Route 287" at left.
<PAGE>
APPENDIX
(Pursuant to Rule 304 of Regulation S-T)
1. Page 11 contains a description in tabular form of a graph entitled
"Perfrmance Graph" which represents the comparison of the cumulative total
stockholder return on the Company's Common Stock against the cumulative total
return of the Standard and Poor's 500 Stock Index and the Water Utilities Peer
Group for the period of each of the years commencing December 31, 1991 and
ending December 31, 1996, which graph is contained in the paper format of this
Proxy Statement being sent to Stockholders.
<PAGE>
E'TOWN CORPORATION
600 SOUTH AVENUE
WESTFIELD, NEW JERSEY 07090
Dear Stockholder:
The Annual Meeting of Stockholders of E'town Corporation will be held at 10:00
A.M. on Thursday, May 15, 1997 at the Canal Road Water Treatment Plant, 701
Randolph Road, Somerset, New Jersey, for the following purposes:
1. To elect three directors to the Board of Directors.
2. Approval of appointment of Deloitte & Touche LLP as independent auditors.
3. To transact such other business as may properly be brought before the
meeting or any adjournment or adjournments thereof.
To be sure that your vote is counted, we urge you to complete and sign the
proxy/voting instruction card below, detach it from this letter and return it in
the postage paid envelope enclosed in this package. The giving of such proxy
does not affect your right to vote in person if you attend the meeting. The
prompt return of your signed proxy will aid the Company in reducing the expense
of additional proxy solicitation.
Sincerely,
WALTER M. BRASWELL
Secretary
March 27, 1997
Detach Proxy Card Here
- --------------------------------------------------------------------------------
-----
| |
-----
1. ELECTION OF ALL
DIRECTORS: FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ]
listed below for all nominees listed below
*EXCEPTIONS [ ]
Nominees: James W. Hughes, Hugo M. Pfaltz, Jr. and Joan Verplanck
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below.)
*Exceptions _________________________________________________________________
2. To ratify and approve the selection by the Board of Directors of Deloitte
& Touche LLP as independent public auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting or any adjournment or
adjournments thereof.
I plan to attend the meeting [ ]
Change of address and
or Comments Mark Here [ ]
The signature on this Proxy should correspond
exactly with stockholder's name as printed to
the left. In the case of joint tenancies,
co-executors or co-trustees, both should sign.
Persons signing as Attorney, Executor,
Administrator, Trustee or Guardian should give
their full title.
Dated: ___________________________________, 1997
________________________________________________
Signature
________________________________________________
Signature
Votes MUST be indicated
(x) in Black or Blue ink. [X]
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
<PAGE>
E'TOWN CORPORATION
This Proxy is Solicited by the Board of Directors
PROXY For Annual Meeting of Stockholders, May 15, 1997
The undersigned hereby appoints ANDREW M. CHAPMAN and ANNE EVANS ESTABROOK,
or any one fo them with full power of substitution, attorneys, agents and
proxies to vote on behalf of the undersigned all shares of Common Stock of
E'TOWN CORPORATION which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders to be held at the Canal Road Water
Treatment Plant, 701 Randolph Road, Somerset, New Jersey, on Thursday, May 15,
at 10:00 A.M., or any adjournments thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholders. If no direction is made, this proxy will
be voted FOR Proposals (1) and (2).
Continued, and to be signed and dated, on reverse side.
E'TOWN CORPORATION
P.O. BOX 11016
NEW YORK, N.Y. 10203-0016
