<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
E'TOWN CORPORATION
(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:
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> 2
[COMPANY LOGO]
E'TOWN CORPORATION
600 SOUTH AVENUE, WESTFIELD, N.J. 07090
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
---------------
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 20, 1999, at 10:00 A.M. for
the following purposes:
1. To elect four members to the Board of Directors for terms to expire at
the 2002 Annual Meeting of Stockholders.
2. To ratify, confirm and approve the act of the Board of Directors, on
February 18, 1999, appointing Deloitte & Touche LLP, Parsippany, New
Jersey, as the auditors for E'town and its subsidiaries for the year
1999.
3. To transact such other business as may properly be brought before the
meeting or any adjournment or adjournments thereof.
Action will be taken at the meeting for the election of Thomas J. Cawley,
Anthony S. Cicatiello, John Kean and Chester A. Ring, 3rd as Directors for terms
of three years.
The close of business on March 22, 1999, has been fixed as the time for the
determination of the stockholders entitled to vote at the meeting, or any
adjournments thereof, and only stockholders of record at such time will be
entitled to vote at the 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 31, 1999
<PAGE> 3
E'TOWN CORPORATION
600 SOUTH AVENUE, WESTFIELD, N.J. 07090
March 31, 1999
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 20, 1999, 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 31, 1999.
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 initial solicitation will be
by mail. Later solicitations may be 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 22, 1999, there were outstanding 8,506,886 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 that 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.
<PAGE> 4
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 22, 1999.
<TABLE>
<CAPTION>
TITLE OF CLASS NAME OF BENEFICIAL OWNER NO. OF SHARES (1) PERCENT OF CLASS
- -------------- ------------------------ ----------------- ----------------
<S> <C> <C> <C>
Common Stock Gail P. Brady ........................................... 5,843 0.07
Walter M. Braswell ...................................... 9,796 0.12
Thomas J. Cawley ........................................ 10,948 0.13
Andrew M. Chapman ....................................... 28,532 (2) 0.34
Anthony S. Cicatiello ................................... 1,283 0.02
Edward A. Clerico ....................................... 130,420 1.53
Anne Evans Estabrook .................................... 86,463 (3) 1.02
James W. Hughes ......................................... 1,433 0.02
John Kean ............................................... 189,631 (4) 2.23
Robert W. Kean, Jr. ..................................... 216,790 (5) 2.55
Robert W. Kean, III ..................................... 1,238 0.02
Barry T. Parker ......................................... 3,216 0.04
Hugo M. Pfaltz .......................................... 10,101 (6) 0.12
Chester A. Ring, 3rd .................................... 17,802 0.21
Joan Verplanck .......................................... 1,046 0.01
Norbert Wagner .......................................... 21,892 (7) 0.26
Directors and Officers as a group ....................... 784,543 9.22
</TABLE>
- ---------
(1) Includes shares held under the Elizabethtown Savings and Investment
Plan-401 (k) (the "401 (k) Plan") for the Executive Officers and those
directors who retired as Executive Officers.
(2) Includes 21,300 shares subject to options which were granted to A.M.
Chapman and are presently exercisable under the Corporation's 1987 Stock
Option Plan.
(3) Includes 32,500 shares subject to options which were granted to A.E.
Estabrook and are presently exercisable under the Corporation's 1987 Stock
Option Plan.
(4) Includes 119,532 shares held under two trusts for which J. Kean is a
co-trustee and J. Kean shares voting and investment power with respect to
these shares.
(5) Includes 197,567 shares held under a trust for which R.W. Kean, Jr. is a
co-trustee and R.W. Kean, Jr. shares voting and investment power with
respect to these shares.
(6) Includes 1,250 shares of Common Stock issuable upon conversion of
debentures held by a partnership of which H.M. Pfaltz is a general partner.
(7) Includes 8,000 shares subject to options which were granted to N. Wagner
and are presently exercisable under the Corporation's 1987 Stock Option
Plan.
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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 and their successors are elected to serve terms expiring at the third
Annual Meeting of Stockholders thereafter. Accordingly, of the current
Directors, four are in the class whose term expires at the 1999 Annual Meeting
of Stockholders, three are in the class whose term expires at the 2000 Annual
Meeting of Stockholders and four are in the class whose term expires at the 2001
Annual Meeting of Stockholders.
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 1999 Annual Meeting of Stockholders for
the election of nominees THOMAS J. CAWLEY, ANTHONY S. CICATIELLO, JOHN KEAN and
CHESTER A. RING, 3RD., who have been designated by the Board of Directors as the
four nominees who, if elected, shall serve as Directors in the class whose terms
expires at the 2002 Annual Meeting of Stockholders. All nominees are currently
Directors of the Corporation. 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 1999 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.
The following information relates to the nominees named herein and the other
Directors whose terms will continue after the 1999 Annual Meeting of
Stockholders. There are currently twelve Directors on the Corporation's Board of
Directors. Mr. Edward Clerico, a Director who was appointed by the Board in July
1998, is not a nominee for reelection. After the Annual Meeting of Stockholders,
there will be eleven Directors on the Corporation's Board of Directors.
<TABLE>
<CAPTION>
NOMINEES:
- ---------
NAME, AGE AND OTHER POSITIONS PERIOD SERVED AS DIRECTOR,
IF ANY, WITH REGISTRANT BUSINESS EXPERIENCE DURING PAST 5 YEARS TERM TO EXPIRE
- ----------------------- --------------------------------------- --------------
<S> <C> <C>
THOMAS J. CAWLEY, 68 Served as Director of the Corporation and Elizabethtown since August 2002
Member of Corporate Planning and 1992, and Properties since July 1987. He was Vice President,
Elizabethtown's Pension Elizabethtown until his retirement in December 1996. From August
Investment Committees 1992 to January 1996 he served as President of Elizabethtown. He
joined Elizabethtown in 1969 and served in a variety ofoperating
positions until elected President in 1992.
ANTHONY S. CICATIELLO, 51 Served as a Director of the Corporation, Elizabethtown and 2002
Member of Corporate Planning and Executive Properties since May 1996. He is the Chairman of CN Communications
Compensation and Stock Options Committees International, Inc., a public relations and advertising firm.
</TABLE>
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<TABLE>
<CAPTION>
NOMINEES:
- ---------
NAME, AGE AND OTHER POSITIONS PERIOD SERVED AS DIRECTOR,
IF ANY, WITH REGISTRANT BUSINESS EXPERIENCE DURING PAST 5 YEARS TERM TO EXPIRE
- ----------------------- --------------------------------------- --------------
<S> <C> <C>
JOHN KEAN, 69 Served as Director of the Corporation since March 1985 and 2002
Member of Corporate Planning Elizabethtown since 1957. He is Chairman of the Board and a Director
and Executive Compensation and of NUI Corporation. He was President and Chief Executive Officer of
Stock Options Committees 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.
CHESTER A. RING, 3rd, 71 Served as Director of Elizabethtown since December 1982 and the 2002
Member of Audit and Elizabethtown's Corporation since June 1987. Effective August 1, 1992, he retired as
Pension Investment Committees President of Elizabethtown.
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF ALL THESE NOMINEES.
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>
ANDREW M. CHAPMAN, 43 Served as Director of the Corporation and Elizabethtown since May 2001
President, E'town Corporation, 1995 and as Director of Properties since May 1997. Served as
President, Elizabethtown Water , President of the Corporation since May 1997. Served as Chief
Company, President Financial Officer of the Corporation from August 1989 until May 1997
E'town Properties, Inc. and Treasurer of the Corporation from November
1990 until May 1997. He was elected President of
Elizabethtown in January1996. He served as Executive
Vice President of Elizabethtown from May 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.
He is a member of the Regional Advisory Board of
PNC Bank, N.A., New Jersey and is a member of the Board
of Directors of the Damon G. Douglas Company, a general
construction company.
</TABLE>
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<TABLE>
<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>
ANNE EVANS ESTABROOK, 54 Served as Director of the Corporation since March 1985, 2001
Chairman of the Board, Elizabethtown since December 1982 and Properties since July 1987.
E'town Corporation and She served as Chairman of the Board of the Corporation since May
Elizabethtown Water Company 1997, as Vice President of the Corporation from September 1987 to
May 1997 and as Chairman of the Board of Elizabethtown since May 1997.
She has been the owner of Elberon Development Co. (a real estate
holding company) since 1984 and is President of David O. Evans, Inc. (a
construction management company). She is a Director of Summit Bancorp and
its subsidiary, Summit Bank. She is a Public Member of theGoverning
Board, New Jersey Economic Development Authority. She is a trustee
of Cornell University.
JAMES W. HUGHES, 55 Served as Director of the Corporation and Elizabethtown since May 2000
Member of Audit and Corporate 1997. Since 1995 he has been Dean of the Edward J. Bloustein School
Planning Committees 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.
ROBERT W. KEAN, III, 51 Served as Director of the Corporation since May 1989 and Director 2001
Executive Vice President, E'town and Executive Vice President of Properties since July 1987. Served
Properties, Inc., Vice President, Corporation as Vice President of the Corporation since May 1997.
E'town Member of Elizabethtown's
Pension Investment Committee
BARRY T. PARKER, 66 Served as Director of Elizabethtown since January 1983 and the 2001
Parker, Member of Audit, Corporation since 1991. He is of counsel to the law firm of
Executive Compensation and McCay & Criscuolo, P.C. since December 1997, where he had been a
and Stock Options partner since 1967.
and Corporate Planning
Committees
HUGH M. PFALTZ, 67 Served as Director of Elizabethtown since October 1980, the 2000
Member of Executive Compensation and Stock Corporation since June 1987 and Properties from July 1987 until May
Options and Elizabethtown's Pension 1996. He has been a principal of the law firm of Pfaltz & Woller,
Investment Committees P.A. since 1976.
JOAN VERPLANCK, 52 Served as Director of the Corporation since May 1997. Since December 2000
Member of Audit and Elizabethtown's 1994 she has been President of the New Jersey Chamber of Commerce.
Pension Investment Committees For eight years prior to that she served as President of the Morris
County Chamber of Commerce.
</TABLE>
5
<PAGE> 8
Family Relationships. Robert W. Kean, Jr., (Director Emeritus) is a cousin
of John Kean, Director and father of Robert W. Kean, III, Director.
Certain 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 and related services to Elizabethtown and other
subsidiaries of the Corporation. Certain of these services rendered to
Elizabethtown are pursuant to a contract which expires December 31, 2000. The
charges for all services totaled $928,061 for the year ended December 31, 1998.
Elizabethtown had a line of credit with Summit Bank, of which Anne Evans
Estabrook is a Director, in the amount of $10 million, which expired on June 30,
1998. Effective November 1998, E'town has a line of credit with Summit Bank in
the amount of $10 million. At December 31, 1998, E'town had $2.5 million in
outstanding loans from Summit Bank. Interest charges paid to Summit Bank under
both lines of credit totaled $71,871 during 1998. Summit Bank also serves as
bond trustee for Elizabethtown for which it was paid fees of $22,000 in 1998.
Elizabethtown has a line of credit with PNC Bank, N.A., New Jersey in the
amount of $30 million. Andrew M. Chapman serves on the Regional Advisory Board
of this bank. At December 31, 1998, there were $21 million in outstanding loans
from PNC Bank. Interest charges paid to PNC Bank totaled $607,084 during 1998.
PNC Bank also serves as trustee and recordkeeper for Elizabethtown's benefit
plans for which it was paid fees of $56,117 in 1998.
The law firm of Parker, McCay & Criscuolo, P.C., of which Barry T. Parker
was a partner and is now of counsel, provided legal services to the Corporation
and its subsidiaries which resulted in $74,278 in legal fees being paid to the
firm in 1998.
The law firm of Lindabury, McCormick & Estabrook, of which the husband of
Anne Evans Estabrook is of counsel, provided legal services to the Corporation
and its subsidiaries that resulted in $135,705 in legal fees being paid to the
firm in 1998.
Edward Clerico, a current Director, owns land and buildings leased by a
subsidiary of E'town. From the period of June 12, 1998 (when this subsidiary was
acquired by E'town) through December 31, 1998, Mr. Clerico received total
payments of $86,406 under this lease.
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 13
meetings in 1998, with an attendance record by Directors of 96%. There are four
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 three times in 1998, 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 1998 of Chester A. Ring, 3rd, Chairman, James W.
Hughes, Barry T. Parker and Joan Verplanck.
The Corporate Planning Committee, which met five times in 1998, 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
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Committee was composed in 1998 of Anthony S. Cicatiello, Chairman, Thomas J.
Cawley, James W. Hughes, John Kean and Barry T. Parker.
The Executive Compensation and Stock Options Committee, which met four
times in 1998, reviews and recommends to the Board of Directors salaries and
bonuses as well as awards under incentive programs for officers of the
Corporation and its subsidiaries. During 1998, it was composed of Barry T.
Parker, Chairman, Anthony S. Cicatiello, John Kean and Hugo M. Pfaltz.
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 the 401(k) Plan and the investment performance for the
trust funds for postretirement benefits. The Committee met three times in 1998
and was composed of Hugo M. Pfaltz, Chairman, Thomas J. Cawley, Robert W. Kean,
III, Chester A. Ring, 3rd, and Joan Verplanck.
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 1998 of Robert W.
Kean, Jr. (Director Emeritus), Chairman, Andrew M. Chapman, Anne Evans Estabrook
and Norbert Wagner. Robert W. Kean, Jr. has served as Chairman of the Executive
Management Committee in an advisory, non-voting capacity, subject to annual
renewal by the Board of Directors.
Directors' Fees. Directors of the Corporation who are not officers are paid
by Elizabethtown an annual retainer of $15,000 which is paid in E'town
Corporation common stock, and a fee of $600 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.
Properties Directors receive a $1,000 annual retainer and a fee of $600 for a
Board Meeting held on days not coincident with Board meetings of Elizabethtown.
Directors who are officers of the Corporation are paid a fee of $300 for each
Board meeting of Elizabethtown they attend.
Effective May 1997, Robert W. Kean, Jr. was appointed Chairman of the Board
- - Emeritus and Director Emeritus and Brendan T. Byrne and Henry S. Patterson, II
were appointed Directors Emeriti. For the two year period after their
appointment, Directors Emeriti receive the per-meeting Directors' fee for each
Board meeting which they attend.
Members of committees who are not officers of the Corporation are paid a
fee of $400 for participation at committee meetings on the same day as board
meetings and a fee of $600 for committee meetings held on days other than board
meetings. No fees are paid to members of the Executive Management Committee for
attendance at meetings of that committee.
The Corporation and Elizabethtown have consulting agreements with Robert W.
Kean, Jr. whereby he serves as Chairman Emeritus of the Boards of both companies
and Chairman of the Executive Management Committee as described above, and
renders such other consulting services as the Chairman may reasonably request.
Robert W. Kean, Jr. was paid $75,000 in consulting fees in 1998 in addition to
his pension.
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 retired Director with 5 to 9 years of
service will receive a pension equal to the annual retainer in
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<PAGE> 10
effect at the date the Director becomes eligible to receive the pension, payable
for the same number of years that the Director served on the Board.
BOARD OF DIRECTORS' COMPENSATION AND STOCK OPTIONS COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
E'town's Executive Compensation and Stock Options Committee (the
"Compensation Committee") consists of four Directors: Barry T. Parker, Chairman,
Anthony S. Cicatiello, John Kean and Hugo M. Pfaltz.
The Compensation Committee reviews and recommends to Elizabethtown's Board
of Directors the salaries and benefits for each of the officers of
Elizabethtown, including each executive officer named in the Summary
Compensation Table.
The Compensation Committee designs its executive compensation program to
enable E'town and Elizabethtown to attract, motivate and retain the caliber of
executives required to effectively attain E'town's and Elizabethtown's
objectives.
The Compensation 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 vs. S&P 500 and Peer
Group of Water Utilities."
E'town's compensation program consists of (a) salaries which form the
foundation of each officer's compensation and (b) incentive awards which are
linked to earnings goals of the Corporation and specific objectives for each
officer. The Compensation 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 officers to improve the
long-term stock market performance of E'town.
The Compensation Committee positions salary levels at the median of the
comparative group, and annually evaluates the continued competitiveness of these
levels. The Compensation Committee adjusts salaries through annual merit
increases. Such changes are sufficiently variable that above-average performance
is adequately rewarded and below average performance, if it occurs, is not
rewarded.
To strengthen the link between employee performance and compensation, the
Compensation Committee instituted an incentive awards program. All officers of
Elizabethtown (except the Chairman) participate in this program and the
President administers a similar program for all Elizabethtown employees who do
not receive overtime. Under this program, the Compensation Committee sets a
target incentive award for each participant, which is expressed as a percent of
base salary. Approximately one third of a participant's award is tied to
financial performance and the balance is based on goals specific to each
participant. See Summary Compensation Table for the awards made in 1997 and 1998
under this program to the individuals listed in the table.
Further, the Compensation Committee evaluates the relationship between the
compensation of the principal executive officers of the company and company
performance for the last completed fiscal year. In 1998 the company exceeded its
earnings target and other corporate financial goals.
Anne Evans Estabrook is Chairman of the Board of E'town and Elizabethtown.
Mrs. Estabrook serves on a part-time basis and manages all Board activities and
provides overall input regarding strategic development and implementation. Mrs.
Estabrook is compensated for services rendered as Chairman through a salary set
annually by the Boards. Mrs. Estabrook's annual compensation effective as of
April 1998 was $150,000,
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<PAGE> 11
payable in cash and restricted stock. The Compensation Committee believes that
this level of compensation is appropriate given Mrs. Estabrook's ongoing
substantial contributions to the Corporation.
Andrew M. Chapman is the President of E'town and Elizabethtown and is the
senior full-time executive at the two companies. Mr. Chapman's salary effective
as of April 1998 was $230,000, paid in a combination of cash and restricted
stock. The Compensation Committee believes that this level of compensation is
appropriate given the performance of the companies.
The Executive Compensation and
Stock Options Committee
Barry T. Parker, Chairman
Anthony S. Cicatiello
John Kean
Hugo M. Pfaltz
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<PAGE> 12
The following performance graph illustrates the cumulative total return to
stockholders from the beginning of 1993 to the end of 1998 in comparison to the
Standard & Poor's ("S&P") 500 and a selected peer group of water utilities
("Water Utilities") identified in Note 2 below. This peer group is included in
the statistical survey used by the Compensation Committee for comparative
purposes.
Water
E'town Utilities S&P 500
------ --------- -------
1993 10,000 10,000 10,000
1994 9,014 10,734 10,132
1995 11,082 13,620 13,936
1996 12,479 16,351 17,135
1997 16,864 22,330 22,849
1998 20,918 28,248 29,379
(1) Assume $10,000 invested December 31, 1993 in E'town Corporation Common
Stock, S&P 500 and Water Utilities. All dividends are assumed to be
reinvested over the five year period. Total returns for each Water Utility
were determined in accordance with SEC regulations (i.e., weighted
according to each such issuer's stock market capitalization).
(2) Water Utilities: American States, American Water Works, Aquarion,
California Water Service, Connecticut Water Service, Consumers Water,
Dominguez Services, E'town Corp., Middlesex Water, Philadelphia Suburban,
SJW Corp., Southwest Water, United Water Resources.
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E'TOWN CORPORATION
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning the
compensation for the past three years of the Chairman of the Board and each of
the other four most highly compensated executive officers of the Corporation
(the "named executive officers").
<TABLE>
<CAPTION>
-----------------------------------------
Annual Compensation
- ------------------------------------------------------------------------------------------------------
Salary Other
Fiscal ($) Annual
Name & Principal Position Year (1) & (2) Bonus ($) Compensation
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Anne Evans Estabrook
Chairman of the Board, 1998 $ 118,512 $0 $0
E'town Corporation and 1997 84,262 $0 $0
Elizabethtown Water Company 1996 63,800 $0 $0
- ------------------------------------------------------------------------------------------------------
Andrew M. Chapman 1998 $ 214,596 $0 $0
President, E'town Corporation and 1997 199,354 $0 $0
Elizabethtown Water Company 1996 185,508 $0 $0
- ------------------------------------------------------------------------------------------------------
Norbert Wagner 1998 $ 145,024 $0 $0
Senior Vice President, 1997 135,774 $0 $0
Elizabethtown Water Company 1996 128,427 $0 $0
- ------------------------------------------------------------------------------------------------------
Gail P. Brady
Treasurer, E'town Corporation
Senior Vice President, Chief Financial 1998 $ 129,443 $0 $0
Officer and Treasurer, 1997 120,239 $0 $0
Elizabethtown Water Company 1996 114,497 $0 $0
- ------------------------------------------------------------------------------------------------------
Walter M. Braswell
Secretary, E'town Corporation 1998 $ 127,123 $0 $0
Vice President - General Counsel and 1997 121,230 $0 $0
Secretary, Elizabethtown Water Company 1996 117,308 $0 $0
- ------------------------------------------------------------------------------------------------------
<CAPTION>
------------------------------------------------------
Long-Term Compensation
Awards
- -------------------------------------------------------------------------------------------------------
Restricted Securities
Stock Awards Underlying
Name & Principal Position (3) Options All Other Compensation
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Anne Evans Estabrook
Chairman of the Board, $ 30,000 $ 5,082 (4)(5)
E'town Corporation and 24,999 25,000 3,780 (4)(5)
Elizabethtown Water Company 0 1,836 (4)(5)
- -------------------------------------------------------------------------------------------------------
Andrew M. Chapman $ 69,989 $ 7,344 (4)(5)
President, E'town Corporation and 20,953 6,876 (4)(5)
Elizabethtown Water Company 0 34,422 (4)(5)(6)
- -------------------------------------------------------------------------------------------------------
Norbert Wagner $ 10,334 $ 6,329 (4)(5)
Senior Vice President, 8,997 5,794 (4)(5)
Elizabethtown Water Company 0 5,604 (4)(5)
- -------------------------------------------------------------------------------------------------------
Gail P. Brady
Treasurer, E'town Corporation
Senior Vice President, Chief Financial $ 8,779 $ 5,854 (4)(5)
Officer and Treasurer, 5,978 5,452 (4)(5)
Elizabethtown Water Company 0 11,935 (4)(5)(6)
- -------------------------------------------------------------------------------------------------------
Walter M. Braswell
Secretary, E'town Corporation $ 7,085 $ 5,880 (4)(5)
Vice President - General Counsel and 6,984 5,479 (4)(5)
Secretary, Elizabethtown Water Company 0 16,606 (4)(5)(6)
- -------------------------------------------------------------------------------------------------------
</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. Also includes Director's
fees for 1998, 1997 and 1996, respectively, as follows: A.E. Estabrook
$3,900, $8,650, $21,650 and A.M. Chapman $3,600, $3,300, $3,300.
(3) Represents the value as of grant date of restricted stock awards granted in
1998 under the E'town Corporation 1990 Performance Stock Program. The
number of shares of restricted stock awarded to executive officers during
1998 and the value of such restricted stock based on the closing price of
Common Stock, of $47.375, as reported on the New York Stock Exchange on
December 31, 1998 is as follows: A.E. Estabrook 868 shares, $41,122; A.M.
Chapman 2,025 shares, $95,934; N. Wagner 299 shares, $14,165; G.P. Brady
254 shares, $12,033 and W.M. Braswell 205 shares, $9,712.
(4) Includes 401(k) Plan matching contributions by Elizabethtown for 1998, 1997
and 1996, respectively, as follows: A.E. Estabrook $3,738, $2,952, $1,512;
A.M. Chapman $6,000, $5,700, $5,700; N. Wagner $5,215, $4,882, $4,618; G.P.
Brady $4,510, $4,276, $4,280 and W.M. Braswell $4,536, $4,303, $4,218.
(5) Includes premiums for life insurance by Elizabethtown for 1998, 1997 and
1996, respectively, as follows: A.E. Estabrook $1,344, $828, $324; A.M.
Chapman $1,344, $1,176, $1,344; N. Wagner $1,114, $912, $986; G.P. Brady
$1,344, $1,176, $1,344 and W.M. Braswell $1,344, $1,176, $1,344.
(6) Includes premiums for 1995 Supplemental Executive Retirement Plan life
insurance by Elizabethtown for: A.M. Chapman $27,378; G.P. Brady $6,311 and
W.M. Braswell $11,044.
11
<PAGE> 14
E'TOWN CORPORATION
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
The following table provides information regarding the pre-tax value
realized from the exercise of options and stock appreciation rights during 1998
and the value of unexercised in-the-money options and stock appreciation rights
held at December 31, 1998 by the persons named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Value of all Outstanding
Number of all Outstanding In-the-Money Options/SARs
Options/SARs at 12/31/98 at 12/31/98 Exercisable/
Shares Acquired on Exercise Aggregate Value Realized Exercisable/ Unexercisable Unexercisable
Name (#) ($) (1) (1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Anne Evans Estabrook -- -- 32,500/0 $592,500/0
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew M. Chapman 5,300 $130,751 21,700/0 $448,239/0
- ------------------------------------------------------------------------------------------------------------------------------------
Norbert Wagner -- -- 8,000/0 $162,000/0
- ------------------------------------------------------------------------------------------------------------------------------------
Gail P. Brady 2,000 $54,250 1,000/0 $20,250/0
- ------------------------------------------------------------------------------------------------------------------------------------
Walter M. Braswell -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) No Stock Appreciation Rights were granted under the 1987 Stock Option Plan,
which expired in 1997.
(2) Based on the price of $47.375 per share, the closing price of the Common
Stock on the New York Stock Exchange, Inc. on December 31, 1998.
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% of the participant's final average compensation for the highest
four consecutive calendar years multiplied by the number of years of credited
service (up to a maximum of 45). 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
($150,000 in 1995 and 1996, and $160,000 in 1997, 1998 and 1999).
<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 45 years
- ------------- ---------- ---------- ---------- ---------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 75,000 $12,000 $18,000 $24,000 $30,000 $36,000 $42,000 $48,000 $54,000
100,000 16,000 24,000 32,000 40,000 48,000 56,000 64,000 72,000
125,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
150,000 24,000 36,000 48,000 60,000 72,000 84,000 96,000 108,000
175,000 28,000 42,000 56,000 70,000 84,000 98,000 112,000 126,000
200,000 32,000 48,000 64,000 80,000 96,000 112,000 128,000 144,000
225,000 36,000 54,000 72,000 90,000 108,000 126,000 144,000 162,000
250,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000
</TABLE>
12
<PAGE> 15
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) are as indicated for the following officers: Anne Evans Estabrook, 11
years; Andrew M. Chapman, 9 years; Norbert Wagner, 35 years, Gail P. Brady, 27
years; and Walter M. Braswell, 18 years.
Executive Officers of Elizabethtown and Properties, with the exception of
the Chairman of the Board, are entitled to either a Supplemental Executive
Retirement Plan ("SERP") benefit upon the attainment of the normal retirement
age of 65, or a 1995 ("1995 SERP") benefit upon the attainment of the age of 62
with a minimum of 20 years service. The benefit payable under each of these
plans is an amount equal to the difference between 65% for retirement at age 62
or 55% for retirement at age 62 of the average of annual base salary and
incentive compensation payments as shown in the Salary, Bonus and Restricted
Stock Awards Columns in the Summary Compensation Table for the thirty-six months
prior to retirement and the regular pension benefit shown in the table above.
Effective August 1998 the SERP and the 1995 SERP were amended to include
incentive compensation payments as additions to base salary. The plans were also
amended to provide that in the event of termination due to a change in control,
a participant is credited with an additional 10 years of service for purposes of
qualifying for the 1995 SERP. The 1995 SERP 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 Annual
Base Salary for Supplemental
36 Months Prior Executive Retirement
to 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
275,000 165,000
- ---------
(1) To be reduced by regular pension benefit shown in prior table.
Change in Control Agreements. E'town has entered into agreements with
Andrew M. Chapman and Anne Evans Estabrook that provide them with certain
extended benefits in the event of a change in control (as defined in the
agreements) of the Corporation. In the event of such change in control, Mr.
Chapman and Mrs. Estabrook would be entitled, under the agreements, to receive
salary, medical and other benefits, at the rates in effect prior to such
termination for a period of 30 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 due
to Mr. Chapman or Mrs. Estabrook, but not vested at the time of the change in
control would thereupon become vested. The agreements also provide that, if any
payments are subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code as a result of excess parachute payments, the Corporation shall
gross-up the payments to be made so that the net amount shall be equal to the
payments prior to the payment of any excise tax and any income taxes on the
gross-up payment. The agreements expire on December 31, 1999, but are subject to
automatic annual renewal unless the Corporation gives prior notice.
13
<PAGE> 16
In August 1998, E'town entered into Change in Control Agreements with other
officers of Elizabethtown and Properties including the Executive Officers. These
Change in Control Agreements contain similar terms and benefits as those for
Andrew M. Chapman and Anne Evans Estabrook, except that (i) the participants are
only entitled to receive certain extended benefits in the event that their
respective employments are terminated by the Corporation (other than for cause)
within three years following a change in control of the Corporation, (ii) the
participants have the choice of either having the amounts payable pursuant to
the agreements reduced, if necessary, to avoid excise tax applicable to
"parachute payments" under the Federal tax laws or paying such excise tax, and
(iii) the payment and benefit period upon termination is 18 months.
Employment Agreements. E'town and Elizabethtown have each entered into an
employment agreement with Anne Evans Estabrook effective May 15, 1997. The
agreements continue until the earliest of (i) mutual agreement of termination,
(ii) resignation, and (iii) any date on which Mrs. Estabrook no longer stands
for re-election as a Director. In addition, the respective companies may
terminate Mrs. Estabrook's employment for reasons of disability or cause (each
as defined in the agreements).
Section 16(a) Beneficial Ownership Reporting Compliance. During 1998, Joan
Verplanck failed to file on a timely basis one Report on Form 4 required by
Section 16(a) of the Securities Exchange Act of 1934, as amended. That late
report related to one transaction.
ELIZABETHTOWN WATER COMPANY
Elizabethtown is a wholly-owned subsidiary of the Corporation. The Board of
Directors of Elizabethtown consists of the Directors of the Corporation. Four of
the Directors of Elizabethtown will stand for re-election: Thomas J. Cawley,
Anthony S. Cicatiello, John Kean and Chester A. Ring, 3rd, 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. In addition, Robert
W. Kean, Jr. was appointed Chairman Emeritus and Director Emeritus in 1997 and
Brendan T. Byrne and Henry S. Patterson, II were appointed Directors Emeriti of
Elizabethtown.
IV. APPROVAL OF APPOINTMENT OF AUDITORS
Deloitte & Touche LLP, Two Hilton Court, Parsippany, New Jersey 07054,
independent certified public accountants, have been appointed 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, 1999.
The appointment of Deloitte & Touche LLP continues a relationship that
began in 1950. Stockholder approval of this appointment is requested. If a
majority of votes are cast 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> 17
V. OTHER BUSINESS
Management does not intend to present and does not have any reason to
believe that others will present at the 1999 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 no later than December 2, 1999 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 continuously for at least one year by the date the proposal is
submitted, and he or she must continue to own such securities through the date
of the meeting.
On Behalf of the Board of Directors,
Walter M. Braswell
Secretary
Westfield, New Jersey
March 31, 1999
<PAGE> 18
E'TOWN CORPORATION
Directions to the Annual Meeting at The Canal Road Water Treatment Plant
[MAP]
FROM ROUTE 287:
Take Exit #12 (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 #12 (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 #12 (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 #12
(Weston Canal Road). Follow directions as in "From Route 287" at left.
<PAGE> 19
E'TOWN CORPORATION
This Proxy is Solicited by the Board of Directors
PROXY For Annual Meeting of Stockholders, May 20, 1999
The undersigned hereby appoints ANDREW M. CHAPMAN and ANNE EVANS ESTABROOK,
or any one of 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 20,
1999, 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 11273
NEW YORK, N.Y. 10203-0273
<PAGE> 20
E'TOWN CORPORATION
600 SOUTH AVENUE
WESTFIELD, NEW JERSEY 07090
Dear Stockholder:
The Annual Meeting of Stockholders of E'town Corporation wil be held at 10:00
a.m. on Thursday, May 20, 1999 at the Canal Road Water Treatment Plant, 701
Randolph Road, Somerset, New Jersey, for the following purposes.
1. To elect four directors to the Board of Directors.
2. To approve the 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. BRASWEL
Secretary
March 31, 1999
<PAGE> 21
1. ELECTION OF DIRECTORS: FOR all nominees WITHHOLD AUTHORITY to vote
listed below. [x] for all nominees listed below.[x]
*EXCEPTIONS [x]
Nominees: Thomas J. Cawley, Anthony S. Cicatiello, John Kean and Chester A.
Ring, 3rd.
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, mark
the "Exceptions" box while that nominee's name in the
space provided below.)
*Exceptions
---------------------------------------------------------------------
2. Approval of appointment of Delottle & Touche LLP as independent auditors.
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.
FOR [x] AGAINST [x] ABSTAIN [x]
I plan to attend the meeting [x]
Change of Address and or Comments Mark Here [x]
The signature on this Proxy should correspond
exactly with stockholder's name as printed to the
left. In the case of joint tenancles, co-executors
or co-trustees, both should sign. Persons signing
as Attorney, Executor, Administrator, Trustee or
Guardian should give their full title.
Dated:
------------------------------------, 1999
- ------------------------------------------------
Signature
- ------------------------------------------------
Signature
Votes must be indicated
(x) in Black or Blue Ink. [ ]
Sign, Date and Return the Proxy Card Promptly Using the Enclosed Envelope.
Please Detach Here
You Must Detach This Portion of the Proxy Card
Before Returning it in the Enclosed Envelope
