<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Philadelphia Suburban 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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION
762 W. LANCASTER AVENUE
BRYN MAWR, PENNSYLVANIA 19010
--------------------
Notice of Annual Meeting of Shareholders
To Be Held May 15, 1997
--------------------
TO THE SHAREHOLDERS OF
PHILADELPHIA SUBURBAN CORPORATION:
Notice is hereby given that the Annual Meeting of Shareholders of
PHILADELPHIA SUBURBAN CORPORATION will be held at the Company's principal
offices, 762 W. Lancaster Avenue, Bryn Mawr, Pennsylvania 19010, at 10:00
A.M., local time, on Thursday, May 15, 1997, for the following purposes:
1. To elect four directors; and
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 24, 1997
will be entitled to notice of, and to vote at, the Annual Meeting and at any
adjournments thereof.
By order of the Board of Directors,
PATRICIA M. MYCEK
Secretary
April 4, 1997
===============================================================================
REGARDLESS OF WHETHER OR NOT THEY PLAN TO ATTEND THE MEETING, SHAREHOLDERS
ARE URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
===============================================================================
<PAGE>
PHILADELPHIA SUBURBAN CORPORATION
762 W. LANCASTER AVENUE
BRYN MAWR, PENNSYLVANIA 19010
---------------
PROXY STATEMENT
---------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Philadelphia Suburban Corporation (the
"Company") to be used at the Annual Meeting of Shareholders to be held May
15, 1997 and at any adjournments thereof. This proxy statement and the
enclosed proxy are being mailed to shareholders on or about April 4, 1997.
The cost of soliciting proxies will be paid by the Company, which has
arranged for reimbursement, at the rate suggested by the New York Stock
Exchange, of brokerage houses, nominees, custodians and fiduciaries for the
forwarding of proxy materials to the beneficial owners of shares held of
record. In addition, the Company has retained the firm of Corporate Investor
Communications, Inc., to assist in the solicitation of proxies from (i)
brokers, bank nominees and other institutional holders, and (ii) individual
holders of record. The fee to Corporate Investor Communications, Inc. for
normal proxy solicitation is $4,000 plus expenses, which will be paid by the
Company. Directors, officers and regular employees of the Company may also
solicit proxies, although no additional compensation will be paid by the
Company for such efforts.
The Annual Report to Shareholders for the year ended December 31, 1996,
including financial statements and other information with respect to the
Company and its subsidiaries, was mailed with this proxy statement by
combined first class bulk mailing to shareholders of record as of March 24,
1997. Additional copies of the Annual Report may be obtained by writing to
the Company. KPMG Peat Marwick, the Company's independent certified public
accountants, has been selected by the Board of Directors to continue in such
capacity for the current year. Representatives of that firm are expected to
be present at the meeting and will be available to respond to appropriate
questions.
PURPOSE OF THE MEETING
As the meeting is the Annual Meeting of Shareholders, the shareholders of
the Company will be requested to elect four directors to hold office as
provided by law and the Company's Bylaws.
VOTING AT THE MEETING
Holders of shares of the Company's Common Stock of record at the close of
business on March 24, 1997 are entitled to vote at the meeting. As of that
date, there were 19,346,615 shares of Common Stock outstanding
1
<PAGE>
and entitled to be voted at the meeting. Each shareholder entitled to vote
shall have the right to one vote on each matter presented at the meeting for
each share of Common Stock outstanding in such shareholder's name. The
presence in person or by proxy of shareholders entitled to cast a majority of
all votes entitled to be cast will constitute a quorum at the meeting.
The holders of a majority of the shares entitled to vote, present in
person or represented by proxy, constitute a quorum. Directors are to be
elected by a plurality of the votes cast at the meeting. The affirmative vote
of the holders of a majority of the shares present in person or represented
by proxy entitled to vote at the meeting is required to take action with
respect to any other matter that may properly be brought before the meeting.
Shares cannot be voted at the meeting unless the holder of record is present
in person or by proxy. The enclosed proxy card is a means by which a
shareholder may authorize the voting of his or her shares at the meeting. The
shares of Common Stock represented by each properly executed proxy card will
be voted at the meeting in accordance with each shareholder's direction.
Shareholders are urged to specify their choices by marking the appropriate
boxes on the enclosed proxy card; if no choice has been specified, the shares
will be voted as recommended by the Board of Directors. If any other matters
are properly presented to the meeting for action, the proxy holders will vote
the proxies (which confer discretionary authority to vote on such matters) in
accordance with their best judgment.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect, other than for purposes of determining the presence of a
quorum. Brokers that are member firms of the New York Stock Exchange ("NYSE")
and who hold shares in street name for customers, but have not received
instructions from a beneficial owner, have the authority under the rules of
the NYSE to vote those shares with respect to the election of directors. Such
shares which are not voted by brokers will be considered present and entitled
to vote at the meeting.
Execution of the accompanying proxy will not affect a shareholder's right
to attend the meeting and vote in person. Any shareholder giving a proxy has
the right to revoke it by giving written notice of revocation to the
Secretary of the Company at any time before the proxy is voted by executing a
proxy bearing a later date, which is voted at the meeting, or by attending
the meeting and voting in person.
Your proxy vote is important. Accordingly, you are asked to complete, sign
and return the accompanying proxy card regardless of whether or not you plan
to attend the meeting.
Employees will not receive a separate proxy for shares owned (subject to
vesting) under the Company's Thrift Plan or the Philadelphia Suburban Water
Company Personal Savings Plan, as the trustee for these Plans will vote the
shares of Common Stock held thereunder.
2
<PAGE>
(PROPOSAL NO. 1)
ELECTION OF DIRECTORS
VOTING ON PROPOSAL NO. 1
The Board of Directors is divided into three classes. One class is elected
each year to hold office for a three-year term and until successors of such
class are duly elected and qualified, except in the event of death,
resignation or removal. Upon the recommendation of the Nominating Committee
of the Board of Directors (the "Nominating Committee"), the Board of
Directors, at its February 4, 1997 meeting: increased the size of the Board
from nine to ten members effective as of the 1997 Annual Meeting; increased
the size of the class of directors to be elected at the 1997 Annual Meeting
from three to four effective as of the 1997 Annual Meeting; and nominated
John H. Austin, Jr., Alan R. Hirsig, John F. McCaughan and Harvey J. Wilson
for election to this class of directors at the 1997 Annual Meeting (Messrs.
Austin, McCaughan and Wilson are current directors whose terms expire at the
1997 Annual Meeting).
In view of the tragic death of Claudio Elia (a member of the class of
directors with terms expiring at the 1998 Annual Meeting), and to avoid
having two vacancies in the class of directors with terms ending at the 1998
Annual Meeting, upon recommendation of the Nominating Committee, the Board of
Directors approved the retention of Joseph C. Ladd as a director until the
1997 Annual Meeting even though Mr. Ladd reached the mandatory retirement age
of 70 in January 1997. Upon the recommendation of the Nominating Committee,
the Board of Directors at its March 4, 1997 meeting elected Richard L. Smoot
to fill the vacancy that will be created in the class of directors with terms
expiring at the 1998 Annual Meeting by the retirement of Mr. Ladd, such
election to be effective as of the August 5, 1997 regularly scheduled meeting
of the Board.
Therefore, four directors, Messrs. Austin, Hirsig, McCaughan and Wilson,
are to be elected by a plurality of the votes cast at the Annual Meeting,
five directors will continue to serve in accordance with their prior election
and one nominee for director will begin serving effective with the August 5,
1997 Board meeting. At the meeting, proxies in the accompanying form,
properly executed, will be voted for the election of the four nominees listed
below, unless authority to do so has been withheld in the manner specified in
the instruction on the proxy card. Discretionary authority is reserved to
cast votes for the election of a substitute should any nominee be unable or
unwilling to serve as a director. Each nominee has stated his willingness to
serve and the Company believes that all of the nominees will be available to
serve.
The Board of Directors recommends that the shareholders vote FOR the
election of Messrs. Austin, Hirsig, McCaughan and Wilson as directors.
GENERAL INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held six meetings in 1996. The Company's Bylaws
provide that the Board of Directors, by resolution adopted by a majority of
the whole Board, may designate an Executive Committee and one or more other
committees, with each such committee to consist of two or more directors. The
Board of Direc-
3
<PAGE>
tors annually elects from its members the Executive, Audit, Executive
Compensation and Employee Benefits, Nominating, and Pension Committees. Each
incumbent director, for the period served in 1996, attended at least 75% of
the aggregate of all meetings of the Board and the Committees on which he or
she served.
Executive Committee. The Company's Bylaws provide that the Executive
Committee shall have and exercise all of the authority of the Board in the
management of the business and affairs of the Company, with certain
exceptions. The Executive Committee is intended to serve in the event that
action by the Board of Directors is necessary or desirable between regular
meetings of the Board, or at a time when convening a meeting of the entire
Board is not practical, and to make recommendations to the entire Board with
respect to various matters. The Executive Committee did not meet in 1996. The
Executive Committee currently has seven members, and the Chairman of the
Company serves as Chairman of the Executive Committee.
Audit Committee. The Audit Committee is composed of four directors who are
not officers of the Company or any of its subsidiaries. It meets periodically
with the Company's financial officers and independent certified public
accountants to review the scope of auditing procedures and the policies
relating to the Company's accounting procedures and controls. The Committee
also provides general oversight with respect to the accounting principles
employed in the Company's financial reporting. The Audit Committee held two
meetings in 1996.
Executive Compensation and Employee Benefits Committee. The Executive
Compensation and Employee Benefits Committee is composed of three members of
the Board who are not officers of the Company or any of its subsidiaries. The
Executive Compensation and Employee Benefits Committee has the power to
administer the Company's 1982 and 1988 Stock Option Plans and to administer
and make awards of stock options, dividend equivalents and restricted stock
under the Company's 1994 Equity Compensation Plan. In addition, the Executive
Compensation and Employee Benefits Committee reviews the recommendations of
the Company's Chief Executive Officer as to appropriate compensation of the
Company's officers (other than the Chief Executive Officer) and key personnel
and recommends to the Board the compensation of such officers and the
Company's Chief Executive Officer for the ensuing year. The Executive
Compensation and Employee Benefits Committee held three meetings in 1996.
Nominating Committee. The Nominating Committee reviews and makes
recommendations to the Board of Directors with respect to candidates for
director of the Company. The Nominating Committee has three members and held
two meetings during 1996. It is the present policy of the Nominating
Committee to consider nominees who are recommended by shareholders as
additional members of the Board or to fill vacancies on the Board.
Shareholders desiring to submit the names of, and any pertinent data with
respect to, such nominees should send this information in writing to the
Chairman of the Nominating Committee in care of the Company. See
"Requirements for Advance Notifications of Nominations."
Pension Committee. The Pension Committee serves as the Plan Administrator
for the Company's qualified benefit plans. The Committee reviews and
recommends to the Board any actions to be taken by the Board in the discharge
of the Board's fiduciary responsibilities under the Company's qualified
benefit plans and meets periodically with the Company's financial, legal,
actuarial, and investment advisors. The Committee consists of five members
and met four times in 1996.
4
<PAGE>
The current members of the Committees of the Board of Directors are as
follows:
<TABLE>
<CAPTION>
Executive Compensation and Audit
Executive Committee Employee Benefits Committee Committee
- ---------------------------- ------------------------------- ----------------------------
<S> <C> <C>
Nicholas DeBenedictis* John F. McCaughan* John H. Austin, Jr.*
John H. Austin, Jr. G. Fred DiBona, Jr. John W. Boyer, Jr.
John W. Boyer, Jr. Joseph C. Ladd Richard H. Glanton, Esq.
G. Fred DiBona, Jr. Harvey J. Wilson
Richard H. Glanton, Esq.
Joseph C. Ladd
John F. McCaughan
</TABLE>
<TABLE>
<CAPTION>
Pension Committee Nominating Committee
- ------------------------- -------------------------
<S> <C>
Joseph C. Ladd* G. Fred DiBona, Jr.*
John H. Austin, Jr. Mary C. Carroll
John W. Boyer, Jr. Nicholas DeBenedictis
Mary C. Carroll
Nicholas DeBenedictis
</TABLE>
- ------
*Chairman
REQUIREMENTS FOR ADVANCE NOTIFICATION OF NOMINATIONS
Nominations for election of directors may be made at the Annual Meeting by
any shareholder entitled to vote for the election of directors, provided that
written notice (the "Notice") of the shareholder's intent to nominate a
director at the meeting is filed with the Secretary of the Company prior to
the Annual Meeting in accordance with provisions of the Company's Amended and
Restated Articles of Incorporation and Bylaws.
Section 4.13 of the Company's Bylaws requires the Notice to be received by
the Secretary of the Company not less than 14 days nor more than 50 days
prior to any meeting of the shareholders called for the election of
directors, with certain exceptions. These notice requirements do not apply to
nominations for which proxies are solicited under applicable regulations of
the Securities and Exchange Commission ("SEC"). The Notice must contain or be
accompanied by the following information:
(1) the name and residence of the shareholder who intends to make the
nomination;
(2) a representation that the shareholder is a holder of record of
voting stock and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the Notice;
(3) such information regarding each nominee as would have been required
to be included in a proxy statement filed pursuant to the SEC's proxy
rules had each nominee been nominated, or intended to be nominated, by the
management or the Board of Directors of the Company;
5
<PAGE>
(4) a description of all arrangements or understandings among the
shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to
be made by the shareholder; and
(5) the consent of each nominee to serve as a director of the Company
if so elected.
Pursuant to the above requirements, appropriate Notices in respect of
nominations for directors must be received by the Secretary of the Company no
later than May 1, 1997.
INFORMATION REGARDING NOMINEES AND DIRECTORS
For the four nominees for election as directors at the 1997 Annual Meeting
and the six directors whose terms of office expire either at the 1998 Annual
Meeting or the 1999 Annual Meeting, there follows information as to the
positions and offices with the Company held by each, the principal occupation
of each during the past five years, and certain directorships of public
companies and other organizations held by each.
- -----------------------------------------------------------------------------
NOMINEES FOR ELECTION AT ANNUAL MEETING
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
John H. Austin, Jr. ... Mr. Austin retired as President of Philadelphia Electric Company (now known as PECO
Berwyn, PA Energy Company), a public utility, in 1988. Mr. Austin served as President of PECO
Director since 1981 Energy Company from 1982 to 1988. He is also a director of Selas Corporation of America.
Age: 68.
John F. McCaughan ..... Since 1995, Mr. McCaughan has served as President of BetzDearborn, Inc. Foundation.
Doylestown, PA From 1995 to 1996, Mr. McCaughan was Chairman of Betz Laboratories, Inc., which provides
Director since 1984 engineered chemical treatment of water, wastewater and process systems. Mr. McCaughan
was Chairman and Chief Executive Officer of Betz Laboratories from 1982 to 1994. He
is also a director of BetzDearborn, Inc. and Penn Mutual Life Insurance Company. Age:
61.
Harvey J. Wilson ...... Mr. Wilson is President and CEO of Eclipsys Corporation, a healthcare information
Delray Beach, FL systems company. Mr. Wilson was a co-founder of Shared Medical Systems Corporation.
Director since 1983 He is also a director of Eclipsys Corporation, FPA Medical Management, RMSC of West
Palm Beach, and Enterprise Application Systems, Inc. Age: 58.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Alan R. Hirsig ........ Mr. Hirsig has been President and Chief Executive Officer of ARCO Chemical Company
Haverford, PA since 1991. From 1984 to 1990, Mr. Hirsig was President of ARCO Chemical European
Operations. Mr. Hirsig is a director of ARCO Chemical Company, and BetzDearborn Inc.,
as well as Chairman of the Executive Committee of the Chemical Manufacturers Association,
a director of Greater Philadelphia First and a trustee of Bryn Mawr College, the YMCA
of Philadelphia and Vicinity and the Eisenhower Exchange Fellowships. He also is Chairman
of the Advisory Board of PRIME, Inc. Age: 57.
</TABLE>
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DIRECTORS CONTINUING IN OFFICE WITH TERMS EXPIRING IN 1998
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Mary C. Carroll ............ Ms. Carroll is a consultant, a community volunteer and an advisor to nonprofit corporations,
Bryn Mawr, PA businesses and government agencies. Presently, she serves as Chair of the National Parks
Director since 1981 Mid-Atlantic Council. She is Vice Chair of Ft. Mifflin on the Delaware and is a founder,
director or trustee of various civic and charitable organizations, including the Metropolitan
YMCA, the Urban Affairs Coalition, Philadelphia Hospitality, Inc., International House,
and Preservation Action. Age: 56.
Richard H. Glanton, Esq. ... Mr. Glanton has been a partner in the law firm of Reed, Smith, Shaw & McClay in Philadelphia
Philadelphia, PA since 1986. Mr. Glanton is a director of General Accident Insurance Company of North America,
Director since 1995 PECO Energy Company, the Greater Philadelphia Chamber of Commerce and the Philadelphia
Industrial Development Corporation. Age: 50.
</TABLE>
- -----------------------------------------------------------------------------
INDIVIDUAL NAMED TO BECOME A DIRECTOR WITH A TERM EXPIRING IN 1998
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Richard L. Smoot ... Mr. Smoot has served as president and chief executive officer of PNC Bank in Philadelphia
Radnor, PA and Southern New Jersey, and its predecessor, Provident National Bank, since 1991. Prior
to becoming president, he served as executive vice president responsible for Operations
and Data Processing for PNC Bank Corp. Before joining PNC Bank in 1987, Mr. Smoot spent
10 years as first vice president and chief operating officer of the Federal Reserve Bank
of Philadelphia. Mr. Smoot is a director of P.H. Glatfelter Company and Southco Inc.
He also serves as Chairman of the Board of Directors of Greater Philadelphia First and
Chairman of the Board of Trustees of the Agnes Irwin School and the Philadelphia Award
and is a director of the Philadelphia Orchestra, the Settlement Music School, the Greater
Philadelphia Urban Affairs Coalition and Widener University. Age: 56.
</TABLE>
7
<PAGE>
- -----------------------------------------------------------------------------
DIRECTORS CONTINUING IN OFFICE WITH TERMS EXPIRING IN 1999
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
John W. Boyer, Jr. ...... Mr. Boyer retired as Chairman of the Company on May 20, 1993, having served in that capacity
St. Davids, PA since the restructuring of the Company on July 1, 1981. Mr. Boyer also served as the
Director since 1981 Company's Chief Executive Officer from July 1, 1981 to July 1, 1992. Mr. Boyer is a director
of Betz Laboratories, Inc., Gilbert Associates, Inc. and Rittenhouse Trust Company. Age:
68.
Nicholas DeBenedictis ... Mr. DeBenedictis has served as Chairman of the Company since May 20, 1993. Mr. DeBenedictis
Ardmore, PA also continues to serve as the Company's Chief Executive Officer and President, the positions
Director since 1992 he has held since joining the Company in July 1992. He also serves as Chairman, Chief
Executive Officer and President of the Company's principal subsidiary, Philadelphia Suburban
Water Company. Between April 1989 and June 1992, he served as Senior Vice President for
Corporate Affairs of PECO Energy Company. From December 1986 to April 1989, he served
as President of the Greater Philadelphia Chamber of Commerce and from 1983 to 1986 he
served as the Secretary of the Pennsylvania Department of Environmental Resources. Mr.
DeBenedictis is a director of Provident Mutual Life Insurance Company of Philadelphia,
Air & Water Technologies Corporation and P.H. Glatfelter Company. Age: 51.
G. Fred DiBona, Jr. ..... Mr. DiBona has served since 1990 as President and Chief Executive Officer of Independence
Bryn Mawr, PA Blue Cross, the Delaware Valley region's largest health insurer. He also serves as Chairman
Director since 1993 of Independence Blue Cross' subsidiaries and affiliates. Between 1987 and 1990, Mr. DiBona
served as President and Chief Executive Officer for Pennsylvania Blue Shield's holding
company, Keystone Ventures, Inc. Mr. DiBona is also a director of Independence Blue Cross
and its subsidiaries, Pennsylvania Savings Bank, Magellan Health Services, Inc., PECO
Energy Company and various civic and charitable organizations. Age: 46.
</TABLE>
8
<PAGE>
OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of January 31, 1997,
with respect to shares of Common Stock of the Company beneficially owned by
each director, nominee for director and executive officer and by all
directors, nominees and executive officers of the Company as a group. This
information has been provided by each of the directors and officers at the
request of the Company. Beneficial ownership of securities as shown below has
been determined in accordance with applicable guidelines issued by the
Securities and Exchange Commission ("SEC") and includes the possession,
directly or indirectly, through any formal or informal arrangement, either
individually or in a group, of voting power (which includes the power to
vote, or to direct the voting of, such security) and/or investment power
(which includes the power to dispose of, or to direct the disposition of,
such security).
<TABLE>
<CAPTION>
Sole voting Shared voting Total and
and/or sole and/or shared percent of class
Beneficial Owner investment power investment power(1)(2) outstanding(3)
----------------------------------------------- ---------------- ---------------------- ----------------
<S> <C> <C> <C>
John H. Austin, Jr. ........................... 2,100 24 2,124
John W. Boyer, Jr. ............................ 70,668 -- 70,668
Mary C. Carroll ............................... 1,350 706 2,056
Morrison Coulter .............................. 38,862 10,165(4) 49,027
Nicholas DeBenedictis ......................... 107,368 31,249(5) 138,617
G. Fred DiBona, Jr. ........................... 1,800 -- 1,800
Richard H. Glanton, Esq. ...................... 728 43 771
Michael P. Graham ............................. 23,748 15,155 38,903
Alan R. Hirsig ................................ -- -- --
Joseph C. Ladd ................................ 4,276 -- 4,276
John F. McCaughan ............................. 5,100 -- 5,100
Richard R. Riegler ............................ 28,028 1,890 29,918
Richard L. Smoot(6) ........................... -- -- --
Roy H. Stahl .................................. 30,498 19,896 50,394
Harvey J. Wilson .............................. 10,350 -- 10,350
All directors and executive officers as a group
(15 persons) ................................. 324,876(7) 79,128(8) 404,004(2.1%)
</TABLE>
9
<PAGE>
- ------
(1) The shareholdings indicated include 1,127 shares held in the Company's
Dividend Reinvestment Program.
(2) Under the Company's Thrift Plan, participants do not have any present
voting power with respect to shares allocated to their accounts. Such
shares have been included in this column.
(3) Percentages for each person or group are based on the aggregate of the
shares of Common Stock outstanding as of January 31, 1997 (19,210,537
shares) and all shares issuable to such person or group upon the exercise
of outstanding stock options exercisable within 60 days of that date.
Percentage ownership of less than 1% of the class then outstanding as of
January 31, 1997 has not been shown.
(4) The shareholdings indicated include 2,052 shares owned of record by Mr.
Coulter's wife. Mr. Coulter disclaims beneficial ownership as to such
shares.
(5) The shareholdings indicated include 606 shares owned of record by Mr.
DeBenedictis' wife and 5,944 shares owned of record by Mr. DeBenedictis'
son. Mr. DeBenedictis disclaims beneficial ownership as to such shares.
(6) The shareholdings indicated do not include approximately 340,000 shares
as to which PNC Bank, National Association, or its affiliates have sole
voting power as trustee of the Philadelphia Suburban Corporation Thrift
Plan and Philadelphia Suburban Water Company Personal Savings Plan for
Local 473 Employees. Mr. Smoot is the President and Chief Executive
Officer of PNC Bank in Philadelphia and Southern New Jersey. Mr. Smoot
disclaims beneficial ownership of such shares.
(7) The shareholdings indicated include 204,117 shares exercisable under the
1982 and 1988 Stock Option Plans and the 1994 Equity Compensation Plan on
or before April 1, 1997.
(8) The shareholdings indicated include 58,594 shares (i) held in joint
ownership with spouses, (ii) held as custodian for minor children or
(iii) owned by family members.
The following table sets forth certain information as of March 31, 1997,
except as otherwise indicated, with respect to the ownership of shares of
Common Stock of the Company by certain beneficial owners of 5% or more of the
Company's total outstanding shares.
<TABLE>
<CAPTION>
Percent of
Amount and Nature Outstanding
Beneficial Owner of Beneficial Ownership Shares
--------------------------- ------------------------------ -------------
<S> <C> <C>
Compagnie Generale des Eaux Sole voting and dispositive power 14.1%
52 Rue D'Anjou 75384 over 2,710,900 shares (1)
Paris, France
</TABLE>
- ------
(1) Based on the Form 4 of Compagnie General des Eaux dated March 7, 1997.
10
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE EXECUTIVE COMPENSATION AND EMPLOYEE BENEFITS COMMITTEE
OVERALL OBJECTIVES
Philadelphia Suburban Corporation's executive compensation program is
designed to motivate its senior executives to achieve the Company's goals of
providing its customers with cost-effective, reliable water services and
providing the Company's shareholders with a market-based return on their
investment.
Toward that end, the program:
o Provides compensation levels that are competitive with those provided by
companies with which the Company may compete for executive talent.
o Motivates key senior executives to achieve strategic business
initiatives and rewards them for their achievement.
o Creates a strong link between stockholder and financial performance and
the compensation of the Company's senior executives.
In administering the executive compensation program, the Executive
Compensation and Employee Benefits Committee (the "Committee") attempts to
strike an appropriate balance among the above-mentioned objectives, each of
which is discussed in greater detail below.
At present, the executive compensation program is comprised of three
components: base salary, annual cash incentive opportunities and equity
incentive opportunities. In determining the relative weighting of
compensation components and the target level of compensation for the
Company's executives, the Committee considers compensation programs of a peer
group of companies. Because of the limited number of investor-owned water
utilities from which comparable compensation data is available, the Committee
utilizes survey data from a composite market ("Composite Market") compiled by
a nationally recognized compensation consulting firm in assessing the
competitiveness of the components of the Company's compensation program. The
Composite Market for the base salary and annual cash incentive elements of
the program consists of 50% water utilities, 25% other utilities and 25%
general industrial businesses. There are fourteen water utilities in the
Composite Market, twelve of which are included in the Edward Jones Water
Utility Industry Index used for the stock performance chart contained herein.
Competitive compensation levels are targeted at the median of the third
quartile range of compensation levels in the Composite Market, except for
equity incentives, which are targeted at the 50th percentile of the
compensation consulting firm's data base of general industrial organizations,
including utilities, that have long-term incentive programs.
COMPENSATION COMPONENTS
BASE SALARY
To ensure that its pay levels are competitive, the Company regularly
compares its executive compensation levels with those of other companies and
sets its salary structure in line with competitive data from the Composite
Market. Individual salaries are considered for adjustment annually and any
adjustments are based on gen-
11
<PAGE>
eral movement in external salary levels, individual performance, and changes
in individual duties and responsibilities.
CASH INCENTIVE AWARDS
The annual cash incentive plan is based on target incentive awards for
each executive, which are stated as a percentage of their base salaries.
Annual incentive awards for executive officers are calculated by a formula
that multiplies the executive's target incentive percentage times a Company
rating factor based on the Company's overall financial performance and an
individual rating factor based on the executive's performance against
established objectives. These factors can range from 0% to 125% for the
Company rating factor and 0% to 150% for the individual rating factor. Each
of these percentages are correlated with defined objectives and approved by
the Committee each year. Regardless of the Company's financial performance,
the Committee retains the authority to determine the final Company rating
factor, and the actual payment and amount of any bonus is always subject to
the discretion of the Committee.
EQUITY INCENTIVES
As part of its review of the total compensation package for the Company's
officers, the Committee, with the assistance of a nationally-recognized
compensation consulting firm, reviewed the Company's equity incentive
compensation program. Given the importance of dividends to a utility
investor, the consultant recommended using a combination of stock options
with dividend equivalents to best link executive long-term incentives to
corporate performance and shareholder interests.
Under the terms of the Company's Equity Compensation Plan, which was
approved by the shareholders at the 1994 Annual Meeting, the Committee and
the Board of Directors may grant stock options, dividend equivalents and
restricted stock to officers and key employees, and stock options to key
consultants of the Company and its subsidiaries who are in a position to
contribute materially to the successful operation of the business of the
Company. The purpose of the Plan is to help align executive compensation with
shareholder interests by providing the participants with a long-term equity
interest in the Company. The Plan also provides a means through which the
Company can attract and retain employees of significant abilities.
SUMMARY OF ACTIONS TAKEN BY THE COMMITTEE
SALARY INCREASE
Under the Company's salary program, the base salary budget is based on
salary levels for comparable positions in the Composite Market. The projected
overall annual increase is based on annual salary budget increase data
reported by published surveys. Under these guidelines, actual salary
increases are determined based on a combination of an assessment of the
individual's performance and the individual's salary compared to the market.
In the case of executive officers named in this Proxy Statement, the
determination of salary levels is made by the Committee, subject to approval
by the Board of Directors.
Mr. DeBenedictis' salary for 1996 was consistent with the target level for
the CEO position within the Composite Market. Mr. DeBenedictis' salary for
1997, which was approved by the Board of Directors on February 4, 1997 and
effective on April 1, 1997, is consistent with published salary survey
information on salary levels and projected annual salary increases for 1997
and is based on the Committee's favorable assessment of his and the Company's
performance.
12
<PAGE>
ANNUAL INCENTIVE AWARD
At its January 31, 1997 meeting, the Committee determined the annual cash
incentive awards to be made to the participants in the annual incentive plan.
The awards were based on the Company's performance compared to its financial
goal for 1996 as well as the participants' achievement of their individual
objectives. The incentive awards to the Company's officers were approved by
the Board of Directors on February 4, 1997. Mr. DeBenedictis' annual
incentive compensation for 1996, was based on the Company's earnings and the
Committee's assessment of Mr. DeBenedictis' individual performance. Mr.
DeBenedictis' achievements in 1996 included increasing revenues and net
income to record levels, reducing controllable operating expenses and
interest costs, increasing customer growth through acquisitions, improving
return on equity and implementing other management initiatives intended to
control costs, enhance customer satisfaction and increase shareholder value.
It was the Committee's assessment that Mr. DeBenedictis exceeded all of his
1996 objectives.
EQUITY INCENTIVES
At its March 3, 1997 meeting, the Committee approved the grant of
incentive stock options and dividend equivalents under the Company's 1994
Equity Compensation Plan to its executive officers at the fair market value
on the date of grant for such stock options of $20.1875. The options are
exercisable in installments of one-third each year starting on the first
anniversary of the date of grant and expire at the end of 10 years from the
date of grant. The dividend equivalents will accumulate dividends over a
period of four years. Mr. DeBenedictis received a grant of 30,000 options and
dividend equivalents on March 3, 1997 at the grant price stated above. In
addition, at its March 3, 1997 meeting, the Committee approved management's
recommendation to reduce the performance period for the dividend equivalents
granted in 1995 and 1996 by one year based on the Company's performance
against the measurement criteria established by the Committee for this
purpose at its March 4, 1996 meeting. The measurement criteria involve
targets for earnings per share, dividends, total return to shareholders and
customer growth.
Section 162(m) of the Internal Revenue Code generally precludes the
deduction for federal income tax purposes of more than $1 million in
compensation paid to the Chief Executive Officer and the other officers named
in the Summary Compensation Table in any one year, subject to certain
specified exceptions. Given the nature of the stock option grants and the
level of other compensation paid to the Chief Executive Officer and the other
executive officers named in the Summary Compensation Table, the deduction
limitation is presently inapplicable to the Company. The Committee will
address this limitation if and when it becomes applicable to the Company's
compensation program.
Respectfully submitted,
John F. McCaughan
G. Fred DiBona, Jr.
Joseph C. Ladd
13
<PAGE>
The foregoing report of the Executive Compensation and Employee Benefits
Committee shall not be deemed incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing
under the Securities Act of 1933 or Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table shows compensation paid by the
Company for services rendered during the years 1996, 1995 and 1994, or for
the year in which the individual was an executive officer, if shorter, for
the Company's Chief Executive Officer and the other four most highly
compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
----------------------------------------- -------------------------- ---------
Securities
Other Restricted Under- All Other
Annual Stock lying LTIP Compen-
Name and Compen- Award(s) Options/ Payouts sation
Principal Position Year Salary ($)(1) Bonus($)(2) sation($)(3) ($)(4) SAR's (#) ($) ($)(5)
- -------------------- ----- --------------- ----------- ------------ ----------- ------------ --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
N. DeBenedictis .... 1996 263,485 206,325 4,911 -- 30,000 -- 80,694
CEO 1995 252,372 229,281 4,666 -- 30,000 -- 55,505
1994 241,027 157,697 4,620 174,375 22,500 -- 30,240
R. Stahl ........... 1996 158,852 49,808 4,911 -- 6,000 -- 13,042
Sr. V.P. & Gen. Cnsl. 1995 155,766 62,330 4,620 -- 6,000 -- 7,958
1994 151,775 57,682 4,453 -- 5,250 -- 1,960
M. Graham .......... 1996 134,934 45,763 4,048 -- 6,000 -- 13,261
Sr. V.P.-Finance 1995 129,501 52,078 3,885 -- 6,000 -- 8,157
1994 122,554 43,812 3,677 -- 5,250 -- 1,960
R. Riegler (6) ..... 1996 144,944 42,158 4,348 -- 6,000 -- 13,878
Sr. V.P.-Operations 1995 140,548 47,389 4,216 -- 6,000 -- 8,234
1994 135,624 36,973 2,910 -- 5,250 -- 1,960
M. Coulter (7) ..... 1996 132,756 37,455 3,589 -- 6,000 -- 15,494
Sr. V.P.-Production 1995 125,818 34,925 3,468 -- 6,000 -- 9,245
</TABLE>
14
<PAGE>
- ------
(1) Salary deferred at the discretion of the executive and contributed to the
Company's Thrift Plan or Executive Deferral Plan is included in this
column.
(2) Includes cash bonuses for services rendered during the specified year,
regardless of when paid.
(3) Company matching contributions pursuant to the Company's Thrift Plan and
Executive Deferral Plan are included in this column.
(4) Mr. DeBenedictis was awarded a grant of 15,000 shares (adjusted for the
1996 3-for-2 stock split) of restricted stock under the Company's 1994
Equity Compensation Plan on May 19, 1994 at a fair market value on the
date of grant of $11.96 per share (adjusted for the 1996 3-for-2 stock
split), less the $.50 par value per share paid by Mr. DeBenedictis.
One-third of the restricted stock under this grant is released to Mr.
DeBenedictis each year starting on May 19, 1995 and he is entitled to
receive the dividends on the restricted shares pending their release. At
year-end 1996, the value of the 5,000 shares still subject to
restrictions was $99,375 based on a closing price for the stock of
$19.875.
(5) Includes: (a) the dollar value, on a term loan approach, of the benefit
of the whole-life portion of the premiums for a split dollar life
insurance policy on Mr. DeBenedictis maintained by the Company, projected
on an actuarial basis ($9,041); (b) Company payments on behalf of Mr.
DeBenedictis to cover the premium attributable to the term life insurance
portion of the split dollar life insurance policy ($9,436); (c) the
amounts accrued for the named executive's accounts in 1996 in connection
with the dividend equivalent awards made in 1994, 1995 and 1996 (Messrs.
DeBenedictis $59,513; Stahl $12,496; Graham $12,496; Riegler $12,496; and
Coulter $12,496); and (d) the value of group term life insurance
maintained by the Company on the named executives (Messrs. DeBenedictis
$2,704; Stahl $546; Graham $765; Riegler $1,382; and Coulter $2,998). The
Company will be reimbursed for the amount of the premiums paid under the
split dollar program for Mr. DeBenedictis upon his death or repaid such
premiums by Mr. DeBenedictis if he leaves the Company.
(6) Mr. Riegler is Senior Vice President of the registrant's principal
subsidiary and was designated as an executive officer of the registrant
in 1994 by the Board of Directors.
(7) Mr. Coulter is Senior Vice President of the registrant's principal
subsidiary and was designated as an executive officer of the registrant
in 1995 by the Board of Directors.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Common Stock of the Company for the last five years with the weighted average
cumulative total return of a peer group of companies represented by the
Edward Jones ("EJ") Water Utility Industry Index (adjusted for total market
capitalization) and the cumulative total return on the S&P 500 over the same
period, assuming a $100 investment on January 1, 1991 and the reinvestment of
all dividends. The EJ Water Utility Industry Index consists of the following
companies: American Water Works Company, Inc.; Aquarion Company; California
Water Service Company; Connecticut Water Service Company; Consumers Water
Company; Dominguez Services Corporation; E'town Corporation; IWC Resources
Corporation; Middlesex Water Company; Philadelphia Suburban Corporation; SJW
Corporation; Southern California Water Company; Southwest Water Company; and
United Water Resources, Inc.
15
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMOUNG PSC, S&P AND EJ WATER UTILITY AVERAGE
260 |-------------------------------------------------------------------------|
| |
| * |
| |
240 |-------------------------------------------------------------------------|
| |
| |
| |
220 |-------------------------------------------------------------------------|
| |
| |
| |
200 |-----------------------------------------------------------------------@-|
| |
| |
| |
180 |-----------------------------------------------------------------------#-|
| |
| * |
| @ |
160 |-------------------------------------------------------------------------|
| |
| # |
| |
140 |-------------------------------------------------------------------------|
| * |
| * |
| # |
120 |-------------------------------------------@-----------------------------|
| @ # |
| # |
| *@ |
100 |*#@----------------------------------------------------------------------|
1991 1992 1993 1994 1995 1996
For 1997 Proxy 1991 1992 1993 1994 1995 1996
- -------------------------------------------------------------------------------
PSC * 100 $108.75 $132.41 $138.57 $168.72 $254.27
EJ WEIGHTED AVG # 100 $110.75 $126.19 $117.56 $147.90 $180.82
S&P 500 @ 100 $107.61 $118.40 $120.01 $164.95 $202.72
The foregoing comparative stock performance graph shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
16
<PAGE>
STOCK OPTION GRANTS IN 1996
The following table sets forth information concerning individual grants of
stock options under the Company's 1994 Equity Compensation Plan during 1996
to each executive officer identified in the Summary Compensation Table who
received options during the period.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Grant Date
Individual Grants Value
------------------------------------------------------------- ------------
% of
Number of Total
Securities Options/SAR's Exercise
Underlying Granted to or Base Grant Date
Options/SAR's Employees Price Expiration Present
Name Granted(#)(1) in Fiscal Year ($/Sh)(2) Date Value($)(3)
- -------------------- --------------- -------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
DeBenedictis ....... 30,000 15.7% 14.9167 3/4/06 60,600
Stahl .............. 6,000 3.1% 14.9167 3/4/06 12,120
Graham ............. 6,000 3.1% 14.9167 3/4/06 12,120
Riegler ............ 6,000 3.1% 14.9167 3/4/06 12,120
Coulter ............ 6,000 3.1% 14.9167 3/4/06 12,120
</TABLE>
- ------
(1) The options listed in the column are qualified stock options granted at
an exercise price equal to the fair market value of the Company's common
stock on the date of grant under the Company's 1994 Equity Compensation
Plan. Grants become exercisable in installments of one-third per year
commencing on the first anniversary of the grant date. An equal number of
dividend equivalents, with a four year accumulation period, were awarded
to the named individuals under the 1994 Equity Compensation Plan. The
accrued value of the dividend equivalent awards for 1994, 1995 and 1996
is shown on the Summary Compensation Table.
(2) The exercise price for options granted is equal to the mean of the high
and low sale prices of the Company's common stock on the New York Stock
Exchange composite tape on the date the option is granted.
(3) The values in this column were determined using Black-Scholes Option
Pricing Model. The actual value of stock options, if any, that may be
realized will depend on the difference between the exercise price and the
market price on the date of exercise. The estimated values under the
Black-Scholes model are based on assumptions as to such variables as
interest rates, stock price volatility and dividend yield. The key
assumptions used in the Black-Scholes model valuation of the stock
options are (i) an assumed dividend yield of 6.3%, (ii) a risk free rate
of return of 7.4%, (iii) volatility of 12.5%, (iv) an exercise date of 10
years from the date of grant, and (v) no reduction in values to reflect
non-transferability or other restrictions on the options. These
assumptions are not a forecast of future dividend yield, stock
performance or volatility.
17
<PAGE>
STOCK OPTION EXERCISES IN 1996 AND VALUE OF OPTIONS AT YEAR-END 1996
The following table sets forth information concerning the number of stock
options exercised under the Company's 1982 and 1988 Stock Option Plans and
the 1994 Equity Compensation Plan during 1996 by each executive officer
listed below and the number and value of unexercised options as of December
31, 1996, indi- cating in each case the number and value of those options
that were exercisable and unexercisable as of that date.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SAR's at Options/SAR's at
Shares Fiscal Year-End (#) Fiscal Year-End ($)(1)
Acquired Value -------------------------------- --------------------------------
Name on Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- -------------- ----------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
DeBenedictis ......... 19,668 160,093 73,432 77,900 724,672 568,172
Stahl ................ -- -- 23,499 16,251 210,948 115,547
Graham ............... -- -- 16,749 16,251 149,354 115,547
Riegler .............. 8,461 57,198 15,211 15,651 133,905 109,722
Coulter .............. -- -- 31,900 16,100 308,256 114,083
</TABLE>
- ------
(1) Based on the closing price on the New York Stock Exchange-Composite
Transactions of the Company's Common Stock on December 29, 1996
($19.875).
CERTAIN COMPENSATION PLANS
RETIREMENT PLAN
The Retirement Plan for Employees of the Company (the "Retirement Plan")
is a defined benefit pension plan. In general, participants are eligible for
normal pension benefits upon retirement at age 65 and are eligible for early
retirement benefits upon retirement at age 55 with ten years of credited
service. Under the terms of the Retirement Plan, a participant becomes fully
vested in his or her accrued pension benefit after five years of credited
service. Benefits payable to employees under the Retirement Plan are based
upon "final average compensation", which is defined as the average cash
compensation through the five highest consecutive years of the last ten full
years preceding retirement.
The Employee Retirement Income Security Act of 1974, as amended, ("ERISA")
imposes maximum limitations on the annual amount of pension benefits that may
be paid under, and the amount of compensation that may be taken into account
in calculating benefits under, a qualified, funded defined benefit pension
plan such as the Retirement Plan. The Retirement Plan complies with these
ERISA limitations. Effective December 1, 1989, the Board of Directors adopted
an Excess Benefits Plan for Salaried Employees (the "Excess Plan"). The
Excess Plan is a nonqualified, unfunded pension benefit plan that is intended
to provide an additional pension benefit to participants in the Retirement
Plan and their beneficiaries whose benefits under the Retirement Plan are
adversely affected by these ERISA limitations. The benefit under the Excess
Plan is equal to the difference between (i) the amount of the benefit the
participant would have been entitled to under the Retirement Plan absent such
ERISA limitations, and (ii) the amount of the benefit actually payable under
the Retirement Plan.
18
<PAGE>
The following tabulation shows the estimated annual pension payable
pursuant to the Retirement Plan and the Excess Plan to employees, including
employees who are directors or officers of the Company, upon retirement after
selected periods of service. This table is provided for illustrative purposes
only and does not reflect pension benefits presently due under the Retirement
Plan or Excess Plan.
PENSION TABLE
<TABLE>
<CAPTION>
Average Salary
During Five Years Estimated Annual Pension Based on Service of
---------------------------------------------------------------
Preceding Retirement 15 Years 20 Years 25 Years 30 Years 35 Years
- -------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$100,000 $ 25,100 $ 33,500 $ 41,900 $ 44,400 $ 46,900
125,000 31,900 42,500 53,100 56,300 59,400
150,000 38,600 51,500 64,400 68,100 71,900
175,000 45,400 60,500 75,600 80,000 84,400
200,000 52,100 69,500 86,900 91,900 96,900
225,000 58,900 78,500 98,100 103,800 109,400
250,000 65,600 87,500 109,400 115,600 121,900
300,000 79,100 105,500 131,900 139,400 146,900
350,000 92,600 123,500 154,400 163,100 171,900
400,000 106,100 141,500 176,900 186,900 196,900
450,000 119,600 159,500 199,400 210,600 221,900
500,000 133,100 177,500 221,900 234,400 246,900
</TABLE>
The Company's contributions to the Retirement Plan are computed on the
basis of straight life annuities. The following executive officers listed in
Summary Compensation Table have the indicated number of completed years of
service under the Retirement Plan, and would, upon retirement at age 65 on
March 31, 1997, be entitled to a pension based on the remuneration level
listed in the following table:
Completed
Covered Years of
Name Remuneration Credited Service
- -------------------------------- ------------ ----------------
Nicholas DeBenedictis ......... $336,401 5
Roy H. Stahl .................. $195,781 15
Richard R. Riegler ............ $168,809 27
Michael P. Graham ............. $159,439 20
Morrison Coulter .............. $147,569 36
A Supplemental Executive Retirement Plan or SERP has been established for
Mr. DeBenedictis. This Plan, which is nonqualified and unfunded, was approved
by the Board of Directors and is intended to provide Mr. DeBenedictis with a
total retirement benefit, in combination with the Retirement Plan and Excess
Plan, that is commensurate with the retirement benefits for the chief
executive officers of other companies. Under the terms of the SERP, Mr.
DeBenedictis will be eligible to receive a benefit at normal retirement equal
to the difference between (i) the benefit to which he would otherwise be
entitled under the Retirement Plan assuming he had 25 years of service and
absent the ERISA limitations referred to above, and (ii) the benefit payable
to him under the Retirement Plan and the Excess Plan. Under the terms of Mr.
DeBenedictis' SERP, if his employment is terminated for any reason prior to
age 65, he is entitled to receive a supplemental retirement benefit equal to
the
19
<PAGE>
difference between (i) the benefit to which he would otherwise be entitled
under the Retirement Plan assuming he was credited with two years of service
for each of his first seven years of credited service and (ii) the benefit
payable to him under the Retirement Plan and the Excess Plan. If Mr.
DeBenedictis retires from the Company at age 65, the SERP is projected to
provide an annual benefit of $88,300.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
Under the terms of Mr. DeBenedictis' employment arrangement, if his
employment is terminated by the Company for any reason other than his
disability, death or for cause, he will be entitled to receive a severance
payment equal to twelve months of his base compensation paid in twelve equal
monthly installments without offset. In the event that the employment of any
of the executive officers named in the Summary Compensation Table set forth
above is terminated, actually or constructively, within two years following a
change of control of the Company, the executive officers will be entitled to
certain payments under agreements with the Company and its primary
subsidiary, Philadelphia Suburban Water Company. Under the terms of these
agreements, the Chief Executive Officer will be entitled to two and one-half
times his average annual base cash compensation and the other executive
officers will be entitled to two times their average annual base cash
compensation, plus continuation of their normal fringe benefits for a period
of three years for the Chief Executive Officer and two years for the other
executive officers. The agreement with the Chief Executive Officer also
provides that, in exchange for a non-competition agreement, he will be
entitled to receive one-half of his average annual base cash compensation and
the transfer to him of a split dollar life insurance policy maintained by the
Company on his life. Under the terms of the 1994 Equity Compensation Plan
approved by the shareholders, outstanding stock options will become
immediately exercisable, dividend equivalents will become immediately payable
and the restrictions on restricted stock grants shall immediately lapse upon
certain change of control events.
COMPENSATION OF DIRECTORS
Directors who are full-time employees of the Company do not receive a
retainer or fees for service on the Board of Directors or Committees of the
Board. Members of the Board of Directors who were not full-time employees of
the Company or any of its subsidiaries ("Non-employee Directors") receive an
annual retainer fee of $12,000, plus an annual grant of 300 shares of the
Company's common stock (on a post-split basis). Directors also receive a fee
of $1,000 for attendance at each meeting of the Board of Directors of the
Company, including Committee meetings. In addition, each Committee Chairman
who is a Non-employee Director receives an annual retainer fee of $2,500. All
directors are reimbursed for reasonable expenses incurred in connection with
attendance at Board or Committee meetings.
CERTAIN TRANSACTIONS
Richard H. Glanton, Esq., a director, is a partner in the law firm of Reed
Smith Shaw & McClay, which firm has provided legal services to the Company in
1996.
SHAREHOLDER SUGGESTIONS AND PROPOSALS FOR 1998 ANNUAL MEETING
Consideration of certain matters is required at the Annual Meeting of
Shareholders, such as the election of directors. In addition, pursuant to
applicable regulations of the Securities and Exchange Commission, sharehold-
20
<PAGE>
ers may present resolutions, which are proper subjects for inclusion in the
proxy statement and for consideration at the Annual Meeting, by submitting
their proposals to the Company on a timely basis. In order to be included for
the 1998 Annual Meeting, resolutions must be received by December 5, 1997.
The Company receives many shareholder suggestions which are not in the
form of resolutions. All are given careful consideration. We welcome and
encourage your comments and suggestions. Your correspondence should be
addressed as follows:
Patricia M. Mycek
Secretary
Philadelphia Suburban Corporation
762 W. Lancaster Avenue
Bryn Mawr, PA 19010
ADDITIONAL INFORMATION
The Company will provide without charge, upon written request, a copy of
the Company's Annual Report on Form 10-K for 1996. Please direct your
requests to Patricia M. Mycek, Secretary, Philadelphia Suburban Corporation,
762 W. Lancaster Avenue, Bryn Mawr, PA 19010.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Act") requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities (a 10% Shareholder), to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission ("SEC"). Officers, directors and 10% Shareholders are
required by the SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
a written representation from certain reporting persons that no Form 5's were
required for those persons, the Company believes that, during the period
January 1, 1996 through December 31, 1996, all filing requirements applicable
to its officers, directors and 10% Shareholders have been complied with.
OTHER MATTERS
The Board of Directors is not aware of any other matters which may come
before the meeting. However, if any further business should properly come
before the meeting, the persons named in the enclosed proxy will vote upon
such business in accordance with their judgment.
By Order of the Board of Directors,
PATRICIA M. MYCEK
Secretary
April 4, 1997
21
<PAGE>
PROXY
PHILADELPHIA SUBURBAN CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
PHILADELPHIA SUBURBAN CORPORATION
Proxy for Annual Meeting of Shareholders, May 15, 1997
The undersigned hereby appoints Nicholas DeBenedictis, Roy H. Stahl and
Patricia M. Mycek, or a majority of them or any one of them acting singly in the
absence of the others, with full power of substitution, the proxy or proxies of
the undersigned, to attend the Annual Meeting of Shareholders of Philadelphia
Suburban Corporation, to be held at 762 W. Lancaster Avenue, Bryn Mawr,
Pennsylvania, 19010, at 10:00 a.m., on Thursday, May 15, 1997 and any
adjournments thereof, and, with all powers the undersigned would possess, if
present, to vote all shares of Common Stock of the undersigned in Philadelphia
Suburban Corporation, including any shares held in the Dividend Reinvestment
Plan of Philadelphia Suburban Corporation, as designated on the reverse side.
The proxy when properly executed will be voted in the manner directed
herein by the undersigned. If the proxy is signed, but no vote is specified,
this proxy will be voted FOR the nominees listed in item 1 on the reverse side,
and in accordance with the proxies' best judgment upon other matters properly
coming before the meeting and any adjournments thereof.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THE PROXY CARD USING THE
ENCLOSED ENVELOPE.
(continued on reverse side)
- -------------------------------------------------------------------------------
o FOLD AND DETACH HERE o
<PAGE>
/X/ Please mark
your vote as
indicated in
this example
1. Election of Directors. The Board of Directors recommends that you vote FOR
all nominees: John H. Austin, Jr., Alan R. Hirsig, John F. McCaughan,
Harvey J. Wilson.
VOTE FOR WITHHOLD To withhold authority to vote for any
all nominees AUTHORITY individual nominee while voting for the
listed (except to vote for remainder, write that nominee's name in
as marked to all nominees the space provided below:
the contrary)
----------------------------------------
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Dated: , 1997
-------------------------
-------------------------------------
Signature
-------------------------------------
Signature (if held jointly)
THIS PROXY MUST BE SIGNED EXACTLY AS
NAME APPEARS HEREIN.
Executors, Administrators, Trustees,
etc. should give full title as such.
If the signer is a corporation, please
sign full corporate name by duly
authorized officer.
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o FOLD AND DETACH HERE o
<PAGE>
Dear Shareholder:
Enclosed are materials relating to Philadelphia Suburban Corporation's
1997 Annual Meeting of Shareholders. The Notice of the Meeting and Proxy
Statement describe the formal business to be transacted at the meeting.
Your vote is important to us. Please complete, sign and return the
attached proxy card in the accompanying postage-paid envelope whether or not you
expect to attend the meeting.
Nicholas DeBenedictis
Chairman & President
