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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to [SECTION]240.14a-11(c) or
[SECTION]240.14a-12
PENNICHUCK CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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:
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(4) Date Filed:
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PENNICHUCK CORPORATION
4 Water Street
Nashua, New Hampshire 03061
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Friday, April 16, 1999
To the Shareholders of Pennichuck Corporation:
Notice is hereby given that the Annual Meeting of Shareholders of
Pennichuck Corporation ("Company") will be held at 3:00 p.m. on Friday,
April 16, 1999, at the Nashua Marriott Hotel, 2200 Southwood Drive, Nashua,
New Hampshire for the following purposes:
(1) To elect three directors;
(2) To ratify the appointment by the Board of Directors of the firm
of Arthur Andersen LLP as independent accountants of the
Company for the fiscal year ending December 31, 1999;
(3) To act upon a proposal to amend the Company's Articles of
Incorporation to increase the number of authorized common
shares of the Company from 2,400,000 to 5,000,000; and
(4) To transact such other business as may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on March 11,
1999 as the record date for the determination of shareholders entitled to
notice of, and to vote at, the Annual Meeting. Only holders of common stock
of record at the close of business on that date will be entitled to notice
of, and to vote at, the Annual Meeting or any adjournment thereof. Your
attention is directed to the attached Proxy Statement.
By Order of the Board of Directors,
JAMES L. SULLIVAN, JR.
Secretary
Nashua, New Hampshire
March 17, 1999
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR
NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN,
DATE AND COMPLETE THE ACCOMPANYING PROXY AND RETURN IT IN THE ENCLOSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. THE
GIVING OF THE PROXY WILL NOT AFFECT YOUR RIGHTS TO VOTE AT THE MEETING IF
THE PROXY IS REVOKED AS SET FORTH IN THE ACCOMPANYING PROXY STATEMENT.
---------------------------
PENNICHUCK CORPORATION
4 Water Street
Nashua, New Hampshire 03061
---------------------------
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
to be held on
April 16, 1999
GENERAL INFORMATION
This Proxy Statement and the accompanying proxy are being mailed to
shareholders beginning on or about March 17, 1999. They are furnished in
connection with the solicitation of proxies by the Board of Directors of
Pennichuck Corporation ("Company") for use at the Annual Meeting of
Shareholders to be held on Friday, April 16, 1999, and at any adjournment or
adjournments thereof. Holders of the Company's common stock are entitled to
one vote for each share held of record at the close of business on March
11,1999. Shareholders are not entitled to cumulate their votes. On March
11, 1999, [1,720,807] shares of common stock of the Company were issued and
outstanding, all of which were entitled to vote, and [3,696] shares were
held as treasury stock.
A copy of the Annual Report to Shareholders for the year ended
December 31, 1998 accompanies this Proxy Statement.
VOTING PROCEDURES
If the accompanying proxy is properly executed and returned to the
Company in time to be voted at the Annual Meeting, the shares represented
thereby will be voted in accordance with any choice specified. Where no
choice is specified, executed proxies will be voted: (1) FOR the election of
the three nominees as directors of the Company; (2) FOR the ratification of
the appointment of Arthur Andersen LLP as independent accountants of the
Company for the fiscal year ending December 31, 1999; and (3) FOR approval
of the proposal to amend the Company's Articles of Incorporation to increase
the number of authorized common shares from 2,400,000 to 5,000,000. If any
matters not specified in this Proxy Statement are properly brought before
the Annual Meeting, the shares represented by executed proxies will be voted
at the discretion of the proxy holders. As of the date hereof, management
is not aware of any other matters to be voted upon.
Any shareholder executing a proxy has the power to revoke it at any
time prior to the voting thereof on any matter (without, however, affecting
any vote taken prior to such revocation) by delivering a duly executed
written notice of revocation to the Secretary of the Company at the above
address, by executing and delivering to the Secretary another duly executed
proxy dated as of a later date, or by voting in person at the Annual
Meeting.
In addition to the solicitation of proxies by mail, the directors,
officers and regular employees of the Company may also solicit proxies
personally or by telephone or other means. None of such directors, officers
and employees will receive any compensation for such solicitation activities
beyond their usual compensation. All costs of soliciting proxies, including
reimbursement of certain brokers, fiduciaries and nominees for their
expenses in obtaining voting instructions from beneficial owners, will be
borne by the Company.
The Company's Bylaws require that the holders of a majority of all
shares of common stock outstanding and entitled to vote at a meeting be
present in person or by proxy at a meeting of shareholders in order to
constitute a quorum for the transaction of business. When a quorum is
present, the Bylaws of the Company also require the affirmative vote of a
majority of the shares of the Company's common stock present in person or by
proxy, and voting, at the meeting in order to elect directors and to ratify
the appointment of Arthur Andersen LLP. When a quorum is present, the
Company's Articles of Incorporation require the affirmative vote of a
majority of the shares of the Company's common stock entitled to vote at the
Annual Meeting in order to adopt the proposed amendment to the Company's
Articles of Incorporation. An abstention from voting on a particular
matter, or, where a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
will have the same effect as a vote withheld on the election of directors or
as a vote against another matter submitted to the shareholders for vote, as
the case may be.
GENERAL DISCLOSURES
Security Ownership of Certain Beneficial Owners
To the best knowledge of the Company, there were no person(s) or group
of persons, as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, who beneficially owned more than 5% of the Company's
outstanding common stock as of February 27, 1999.
Security Ownership of Management
To the best knowledge of the Company, the following table sets forth
information as of February 27, 1999 with respect to the shares of the
Company's common stock beneficially owned by each nominee and director, and
by all nominees, directors and officers as a group:
<TABLE>
<CAPTION>
Amount and % of Common
Nature of Stock Out-
Beneficial standing (if
Name of Beneficial Owner Ownership(1)(3) more than 1%)(2)
------------------------ --------------- ----------------
<S> <C> <C>
Maurice L. Arel (3)(5) 30,159 [1.7]%
Joseph A. Bellavance (3)(4) 9,912 -
Charles E. Clough 16,332 -
Stephen J. Densberger (3)(5) 12,180 -
Robert P. Keller 1,168 -
John R. Kreick 155 -
Hannah M. McCarthy 150 -
Martha E. O'Neill(6) 17,026 [1.0]%
Charles J. Staab(3)(5) 10,830 -
All directors and
officers as a group
(12 persons) (3)(5) 111,662 [6.4]%
- --------------------
<FN>
<F1> Shares beneficially owned means shares over which a person exercises
sole or shared voting or investment power or shares of which a person
has the right to acquire beneficial ownership within 60 days of
February 27, 1999. Unless otherwise noted, the individuals and group
above have sole voting and investment power with respect to shares
beneficially owned.
<F2> Calculation of percentages is based upon a total of [1,754,575]
shares, which total includes shares outstanding and entitled to vote
of [1,720,807], plus 33,768 shares which have not been issued but
which may be issued within 60 days of February 27, 1999 if persons
having rights to exercise stock options within such period exercise
such rights.
<F3> The individuals and group noted above have sole voting and investment
power with respect to shares beneficially owned, except as stated in
notes (4) through (6) below and except that voting and investment
power is shared as follows: Mr. Arel - 3,761 shares, Mr. Bellavance -
4,179 shares, Mr. Densberger - 1,905 shares, Mr. Kreick - 155 shares,
Mr. Staab - 3,030 shares, and non-director officers as a group - 1,513
shares.
<F4> Mr. Bellavance disclaims beneficial ownership of 1,483 of these
shares.
<F5> Includes shares subject to unexercised stock options previously
granted which officers have a right to acquire within 60 days of
February 27, 1999. Mr. Arel holds options to acquire 11,000 shares,
Mr. Densberger holds options to acquire 6,750 shares, Mr. Staab holds
options to acquire 6,300 shares and the officers of the Company as a
group hold options to acquire a total of 9,718 shares within 60 days
of February 27, 1999.
<F6> Includes 8,217 shares owned by the Charles H. Nutt Surgical Hospital
Trust, of which Ms. O'Neill is a trustee. Ms. O'Neill shares voting
and investment power with the other Trustees over these shares. Ms.
O'Neill disclaims beneficial ownership of these shares.
</FN>
</TABLE>
ELECTION OF DIRECTORS
General
The Company's Board of Directors consists of nine members. The
Articles of Incorporation classify the directors into three classes, each
serving for three years, with one class being elected each year. The Board
has nominated Stephen J. Densberger, Hannah M. McCarthy and Charles J.
Staab, all incumbent directors, for re-election to three-year terms expiring
at the Annual Meeting of Shareholders in 2002.
The Board of Directors recommends a vote FOR the election of the three
nominees as directors of the Company.
Information as to Nominees and Continuing Directors
Unless otherwise directed in the proxy, each proxy executed and
returned by a shareholder will be voted FOR the election of the three
nominees. If any person named as nominee should be unable or unwilling to
stand for election at the time of the Annual Meeting, the proxies will
nominate and vote for a replacement nominee or nominees recommended by the
Board of Directors. All nominees have indicated to the Company their
willingness to be nominated as directors and to serve as directors if
elected. At this time, the Board of Directors knows of no reason why any of
the nominees listed below would not be able to serve as a director if
elected.
The following table sets forth information concerning the three
persons nominated to serve on the Board of Directors and concerning the
other directors continuing in office beyond the Annual Meeting.
<TABLE>
<CAPTION>
Other
Director Year Present Position
of Company Term Will With
Nominees (1) Age Since Expire Company
- ------------ --- ---------- ------------ --------
<S> <C> <C> <C> <C>
Stephen J. Densberger 48 1986 1999 Executive
Vice President
Hannah M. McCarthy 52 1994 1999 ---
Charles J. Staab 49 1986 1999 Vice President,
Treasurer and
Chief Financial
Officer
Continuing Directors (1)
- ------------------------
Maurice L. Arel 61 1984 2000 President and
Chief Executive
Officer
Joseph A. Bellavance 59 1983 2000 ---
Robert P. Keller 61 1983 2000 ---
Charles E. Clough 68 1968 2001
John R. Kreick 54 1998 2001 ---
Martha E. O'Neill 41 1998 2001 ---
- --------------------
<FN>
<F1> Except for Messrs. Densberger and Staab, all directors are also
directors of the Company's wholly-owned subsidiaries, Pennichuck Water
Works, Inc. and The Southwood Corporation. Mr. Densberger is a
director of Pennichuck Water Works, Inc. Messrs. Arel, Densberger
and Staab are also directors and officers of the Company's other
wholly-owned subsidiaries, Pennichuck Water Service Corporation,
Pennichuck East Utility, Inc. and Pittsfield Aqueduct Company, Inc.
</FN>
</TABLE>
The business experience of each of the above nominees, continuing
directors and of the executive officers of the Company during the last five
years, and certain other pertinent information, is as follows:
Maurice L. Arel - Mr. Arel has served as President, Chief Executive
Officer and a director of the Company since October 1984. Mr. Arel also
serves as President, Chief Executive Officer and a director of the Company's
subsidiaries, Pennichuck Water Works, Inc., The Southwood Corporation and
Pennichuck Water Service Corporation. He is Chairman and a director of
Pittsfield Aqueduct Company, Inc and Pennichuck East Utility, Inc.. He is
the former Mayor of the City of Nashua, having served from 1977 to 1984. He
received his Bachelor of Arts degree in Chemistry from St. Anselm College
and his Master of Science degree in Physical Chemistry from St. John's
University. He is a Commissioner of the Nashua Police Department, a
director of Fleet Bank - NH and Blue Cross/Blue Shield of New Hampshire, a
Trustee of St. Anselm College of Manchester, New Hampshire and a member of
the Board of Trustees of the Public Library of Nashua. He serves as a
member of the National Drinking Water Advisory Council to the Administrator
of the federal Environmental Protection Agency. He is a member of the
National Association of Water Companies, the American Chemical Society, the
American Water Works Association and the New England Water Works
Association.
Joseph A. Bellavance - Mr. Bellavance is President and General Manager
of Bellavance Beverage Company, Inc. and President of Bellavance Realty
Corporation, both of Nashua. He received his Bachelor of Science degree in
Business Administration from the University of New Hampshire. He is a
director of the New Hampshire Wholesale Beverage Association, "New Hampshire
The Beautiful," and a member of the American Legion and the Nashua Rotary
Club.
Charles E. Clough - Mr. Clough is currently President of Freedom
Partners, LLC. He holds a Master of Business Administration degree from the
Amos Tuck School of Business and was affiliated with Nashua Corporation from
1957 until 1995. Mr. Clough also serves as a director of Hitchiner
Manufacturing Company, Inc. of Milford, New Hampshire.
Stephen J. Densberger - Mr. Densberger is Executive Vice President of
the Company and has been affiliated with the Company since 1974. Mr.
Densberger was the Treasurer of the Company from 1978 to 1983. He holds a
Master of Business Administration degree from the Whittemore School of
Business and Economics of the University of New Hampshire. He is past
President of the New Hampshire Water Works Association, past President of
the New England Water Works Association, and is a member of the City of
Nashua Board of Aldermen. Mr. Densberger also serves as Executive Vice
President of Pennichuck Water Works, Inc. and as Vice President of The
Southwood Corporation and Pennichuck Water Service Corporation. He is a
director and President of Pittsfield Aqueduct Company, Inc. and of
Pennichuck East Utility, Inc. and a director of Pennichuck Water Service
Corporation.
Robert P. Keller - Mr. Keller is a Certified Public Accountant. From
April 27, 1990 until October 10, 1991 he served as President and Chief
Executive Officer of Dartmouth Bank of Manchester, New Hampshire and from
October 10, 1991 until June 6, 1994, as President and Chief Executive
Officer of New Dartmouth Bank, also of Manchester, New Hampshire. From
August 22, 1994 until March 15, 1995, he served as President and Chief
Executive Officer of Independent Bancorp of Arizona, Inc. of Phoenix,
Arizona and Chairman and Chief Executive Officer of Caliber Bank, also of
Phoenix, Arizona. Since June 1995, he has served as President and Chief
Executive Officer of Dartmouth Capital Group, Inc., and since September 30,
1995, as President and Chief Executive Officer of Eldorado Bancshares, Inc.
and Chairman, President and Chief Executive Officer of Eldorado Bank of
Laguna Hills, California. He is also a director of White Mountains
Holdings, Inc. and Haverford Industries, Inc.
John R. Kreick - Dr. Kreick served as President of Sanders Associates
and as a vice president of the Lockheed Martin Corporation from January 1988
until March 1998. Dr. Kreick received his Bachelor of Science degree in
physics from the University of Michigan in 1965. As a Rackman graduate
fellow, he worked at University's Space Physics Research Laboratory and
received his Masters of Science degree in physics in 1966. He received his
Ph.D. in theoretical physics from the University of Michigan in 1969 and he
holds eight patents in infrared and electro-optical technology. Dr. Kreick
is a member of the National Research Council's Commission of Physical
Sciences, Mathematics and Applications; a trustee of Rivier College; a
member of the board of directors of the New England Council; and has served
on numerous Department of Defense panels and committees. In 1993, Dr. Kreick
received the Electronic Warfare Association's highest award - the Gold Medal
of Electronic Warfare and is a recipient of Aviation Week magazine's
Aerospace Laurels Award for his long-term contributions to electronic
warfare.
Hannah M. McCarthy - Ms. McCarthy is President of Daniel Webster
College in Nashua, New Hampshire, a position which she has held since June,
1980. She earned her BA at Simmons College, and has done graduate work at
Rivier College and New Hampshire College. Ms. McCarthy serves as a director
of the New Hampshire College and University Council and the Boys & Girls
Club of Nashua.
Martha E. O'Neill - Ms. O'Neill has been practicing as an attorney
with the law firm of Clancy & O'Neill, P. A. in Nashua since 1982. She is a
graduate of Wellesley College and Georgetown University Law Center. Ms.
O'Neill serves on the Rivier College Board of Trustees, Rivier College
Paralegal Department Advisory Board, Mary A. Sweeney Home Board of Trustees,
Charles H. Nutt Surgical Hospital Board and the Boys & Girls Club of Greater
Nashua, Inc. Charitable Foundation Board of Trustees.
Charles J. Staab - Mr. Staab is Vice President, Treasurer and Chief
Financial Officer of the Company and has been Treasurer since 1983. He
holds a Master of Business Administration degree from Rivier College, and is
a Certified Public Accountant. He is a member of the Finance Committee of
the National Association of Water Companies, a member of the Board of
Directors of the Nashua YMCA and the Nashua Center for Economic Development.
He is a past director of the Nashua Children's Association and the United
Way of Greater Nashua, and former President of the Northern New England
chapter of the Financial Executives Institute. Mr. Staab also serves as Vice
President and Treasurer of Pennichuck Water Works, Inc. and The Southwood
Corporation. He is Treasurer and a director of Pennichuck Water Service
Corporation, Pennichuck East Utility, Inc. and Pittsfield Aqueduct Company,
Inc.
Bonalyn J. Hartley - Ms. Hartley has been with the Company since 1979
and was elected Vice President-Controller of the Company, Pennichuck Water
Works, Inc. and The Southwood Corporation in 1991. She is also Controller
and a director of Pennichuck Water Service Corporation, Pennichuck East
Utility, Inc. and Pittsfield Aqueduct Company, Inc. She is a graduate of
Rivier College with a Bachelor of Science Degree in Business Management.
Ms. Hartley serves as a Trustee of the Southern New Hampshire Regional
Medical Center and as a director of the Rivier College Alumni Association.
She is also a director of the New England Chapter of the National
Association of Water Companies and a member of the New England Water Works
Association. Ms. Hartley is 54 years old.
Donald L. Ware - Mr. Ware is Vice President of Engineering for the
Company. He joined the Company in April 1995 and also serves as the Vice
President of Engineering for Pennichuck Water Works, Inc. and The Southwood
Corporation. He is also a Vice President and director of Pennichuck Water
Service Corporation, Pennichuck East Utility, Inc. and Pittsfield Aqueduct
Company, Inc. Prior to joining the Company, Mr. Ware was the general manager
of the Augusta Water District in Augusta, Maine. He holds a Bachelor of
Science degree in Civil Engineering from Bucknell University and is a
licensed professional engineer in New Hampshire, Massachusetts and Maine.
Mr. Ware is 41 years old.
During the year ended December 31, 1998, the Board of Directors of the
Company held 7 meetings. The Board of Directors has established an Audit
Committee, a Compensation and Benefits Committee and a Nominating Committee.
These committees served the specific functions, and held the number of
meetings, as described below. Each director nominee and continuing director
attended 75% or more of the total of the number of meetings of the Board of
Directors and the number of meetings of all committees of the Board on which
he or she served.
Audit Committee
The Audit Committee, presently comprised of Messrs. Keller and
Bellavance and Ms. McCarthy, met twice in 1998. The Audit Committee is
required to recommend an independent firm to serve as the Company's auditors
and to review with such firm the scope of its audit and its findings with
respect thereto.
Compensation and Benefits Committee
The Compensation and Benefits Committee, comprised of Messrs. Clough,
Keller and Kreick met twice during 1998. The Compensation and Benefits
Committee is charged generally (i) to establish compensation for employees
of the Company, (ii) to monitor the operation of the Company's qualified
noncontributory, defined benefit pension plan and the Company's Savings Plan
for Employees and the performance of the trustee and administrator of these
Plans, and to recommend changes to the Board, as and when appropriate, and
(iii) to administer the Company's 1985 and 1995 Stock Option Plans.
Nominating Committee
The Nominating Committee, comprised of Mr. Bellavance, Ms. McCarthy
and Ms. O'Neill met once during 1998. The Nominating Committee is charged
generally with recommending for nomination to the Board of Directors, and as
officers of the Company, those available individuals who are best qualified
to serve in such capacities. The Nominating Committee will consider
recommending names submitted by shareholders for nomination as Directors
provided that such names are delivered to the Secretary of the Company by
December 15 preceding the annual meeting at which such nominations will be
acted upon.
Compensation of Directors
The Directors of the Company currently receive a fee of $6,000
annually and $600 for each Board and committee meeting they attend. Each
Committee Chairman also receives an additional $1,500 annually. Directors
who are also salaried employees of the Company do not receive any separate
compensation for services as a Director of the Company or of its
subsidiaries.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and beneficial owners of more than ten
percent of the Company's common stock, to file reports of ownership and
changes in ownership of such common stock with the Securities and Exchange
Commission ("SEC"). Generally, these persons must file such reports at the
time they first become subject to Section 16(a) reporting, and thereafter on
a monthly basis following a change in ownership, if any. Officers,
directors and such greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports
they file. The Company is required by SEC regulation to identify in its
proxy statement those individuals for whom one of the referenced reports was
not filed on a timely basis during the most recent fiscal year or prior
fiscal years.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company, and written representations from each
of such persons that no other reports were required, the Company believes
that during the fiscal year ended December 31, 1998, all Section 16(a)
filing requirements applicable to its officers, directors and greater than
ten percent beneficial owners were complied with on a timely basis, except
Ms. Hartley and Mr. Ware, each of whom did not file a Form 4 with respect to
the exercise of certain stock options during 1998. However, each such person
reported this transaction on a Form 5 report filed on February 5, 1999.
PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED COMMON SHARES
The authorized capital stock of the Company as of February 27, 1999
consisted of 2,400,000 shares of common stock, par value $1.00 per share, of
which [1,720,807] shares were outstanding; and (i) 15,000 shares of
preferred stock, par value $100.00 per share, none of which is outstanding,
and (ii) 100,000 shares of preferred stock, no par value, none of which has
been issued. Accordingly, the Company has available for issuance only
[679,193] authorized but unissued shares of common stock, of which [40,238]
shares have been reserved for issuance under the Company's 1995 Stock Option
Plan and [119,336] shares have been reserved for issuance under the
Company's Dividend Reinvestment and Common Stock Purchase Plan. This leaves
only [519,619] shares of common stock available for other purposes.
The Board of Directors of the Company has adopted a resolution setting
forth a proposed amendment to Article IV of the Company's Articles of
Incorporation to increase the number of authorized shares of common stock
from 2,400,000 shares to 5,000,000 shares, at the same par value of $1.00
per share, and further providing that the amendment be submitted to a vote
of the Company's shareholders. The additional shares of common stock for
which such authorization is sought would be part of the existing class of
common stock and, if and when issued, would have the same rights and
privileges as the shares of common stock presently outstanding.
The Amendment would delete the first sentence of Article IV of the
Articles of Incorporation and substitute in place thereof the following:
Except as provided in Article VII, the aggregate number of shares of
capital stock which the corporation shall have authority to issue is:
Five Million (5,000,000) shares of common stock, having par value of
One Dollar ($1.00) per share, and Fifteen Thousand (15,000) shares of
preferred stock, have par value of One Hundred Dollars ($100.00) per
share. [no change to the remainder of the Article]
The Company has no present plans or understandings with respect to
issuing the uncommitted authorized shares of common stock. Such shares will
be available for issuance from time to time to such persons and for such
consideration as the Board of Directors of the Company may determine. Such
issuance may be made without shareholder approval except as otherwise
required by applicable law. The additional shares of common stock proposed
to be authorized, together with shares presently authorized but unissued,
will be available for issuance to the Company's shareholders in connection
with stock dividends and stock splits, for issuance in transactions to
support further asset growth, and to finance acquisitions as and when
opportunities for such acquisitions may arise.
The proposed amendment to the Articles of Incorporation is not being
submitted to the shareholders with any object in mind of creating voting
impediments for, or otherwise hindering, persons seeking to gain control of
the Company. This Amendment is not being presented in response to any
effort to accumulate the Company's shares or to obtain control of the
Company. Nevertheless, the amendment, if adopted, could be used to thwart a
hostile takeover attempt of the Company. Having a substantial number of
shares of common stock available for issuance could be used by the Company's
established Board of Directors to facilitate placement of a block of stock
in the hands of parties sympathetic to management and opposed to any attempt
to gain control of the Company. No such private placement in friendly hands
is contemplated or foreseen by the Company. The additional shares could
also be used to dilute the stock ownership of persons seeking to gain
control of the Company, as by issuing shares in a defensive acquisition.
However, the Company does not anticipate making acquisitions with a view to
fending off takeover attempts, or for any purpose other than strengthening
the enterprise and benefiting all its shareholders. The Articles of
Incorporation and/or Bylaws of the Company already contain provisions that
may be viewed as having the effect of impeding efforts to acquire control of
the Company. The following is an itemization of these measures.
* The Board of Directors has the existing authority to issue up to
100,000 shares of preferred stock upon terms, including terms relating
to voting rights, as may be determined by the Board of Directors.
* The so-called "fair price" provisions of the Company's Articles of
Incorporation which, in general: (a) require approval by the holders
of two-thirds of the shares entitled to vote in order for the Company
to enter into certain business combinations with a holder of more than
10% of the shares entitled to vote (an "Interested Shareholder")
unless (i) certain minimum price and procedural requirements are met;
or (ii) the transaction is approved by at least a majority of the
Board of Directors who are unaffiliated with the Interested
Shareholder and were Directors before the Interested Shareholder
became an Interested Shareholder; and (b) require that the shareholder
vote required to amend or repeal the fair price provisions, or to
adopt any provision inconsistent therewith, shall be two-thirds of the
shares entitled to vote.
* Classification of the Board of Directors into three classes serving
staggered three-year terms, with approximately one-third of the Board
being elected each year. The classification of directors has the
effect of making it more difficult for shareholders to change the
composition of the Board in a relatively short period of time, thus
providing the Board with additional time to evaluate proposed takeover
efforts and to consider alternatives to such proposals in the best
interests of the shareholders.
* Removal of a Director or Directors only if the removal is approved by
a vote of two-thirds of the shares entitled to vote.
* Fixing the size of the Board of Directors at not less than three and
no more than thirteen, with the exact number of Directors to be
determined from time to time by the Board.
* Providing that vacancies on the Board of Directors, including
vacancies created by an increase in the number of directorships, shall
be filled only by majority vote of the remaining Directors then in
office with Directors elected to fill a vacancy to serve for the
remainder of the full term of his predecessor in office and Directors
elected by reason of an increase in the number of directors to serve
until the next annual meeting of shareholders.
* Requiring vote of two-thirds of the shares entitled to vote in order
to amend or repeal the above provisions, or to amend or repeal Bylaw
changes made by the Board of Directors.
The Board of Directors does not consider the proposal to increase the
number of authorized common shares of the Company to be an anti-takeover
measure. However, while the object of the proposed amendment to the
Articles of Incorporation is not to avert a takeover, the new shares of
common stock could be used for such purpose as discussed above.
The Board of Directors of the Company recommends a vote FOR the
proposal to amend Article IV of its Articles of Incorporation to increase
the number of authorized shares of common stock from 2,400,00 shares to
5,000,000 shares of common stock, par value $1.00 per share. The
affirmative vote of a majority of shares entitled to vote is necessary to
adopt this proposal to amend the Articles of Incorporation.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
Executive Officers
The following table sets forth information for the fiscal years ended
December 31, 1998, 1997 and 1996 concerning the compensation paid to the
Chief Executive Officer and the other highest paid executive officers
("Named Executive Officers") for services performed in all capacities; no
other executive officer of the Company received total cash compensation in
excess of $100,000 during the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
Securities
Name and Principal Fiscal Year Underlying All Other
Position End Dec 31 Salary Bonus (1) Other (2) Options Compensation (3)
- -------- ---------- ------ --------- --------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Maurice L. Arel,
President and Chief
Executive Officer 1998 $159,327 $50,000 -0- 2,000 $42,293
1997 $143,125 $37,512 -0- 1,500 $38,862
1996 $133,005 $33,551 -0- 1,500 $36,902
Stephen J.
Densberger,
Executive Vice
President 1998 $100,983 $19,285 -0- 1,500 $5,746
1997 $ 90,742 $15,503 -0- 750 $3,966
1996 $ 87,050 $14,360 -0- 750 $3,314
Charles J. Staab,
Vice President,
Treasurer and Chief
Financial Officer 1998 $ 89,031 $14,384 -0- 1,500 $3,943
1996 $ 75,537 $10,626 -0- 750 $2,900
1997 $ 78,743 $11,473 -0- 750 $2,855
- --------------------
<FN>
<F1> Bonus awards for services rendered during such year and paid in the
following year.
<F2> No information is given with respect to other compensation paid to or
distributed in kind where such compensation did not exceed the lesser
of $50,000 or 10% of the total reported salary and bonus.
<F3> For the fiscal years ended December 31, 1998, 1997 and 1996,
respectively, for Mr. Arel includes (i) the cost to the Company for
the purchase of a term life insurance policy ($6,308, $3,041and
$2,102), (ii) Company contributions to the elective Savings Plan for
Employees of Pennichuck Corporation ($5,264, $5,300, $4,530) and (iii)
Company contributions to insurance premium paid with respect to
Insurance Funded Deferred Compensation Agreement ($30,721, $30,521 and
$30,270). For fiscal years ended December 31, 1998, 1997 and 1996,
respectively, for Mr. Densberger includes (i) the cost to the Company
for the purchase of a term life insurance policy ($1,786, $813 and
$477) and (ii) Company contributions to the elective Savings Plan for
Employees of Pennichuck Corporation ($3,960, $3,153 and $2,837). For
fiscal years ended December 31, 1998, 1997 and 1996, respectively, for
Mr. Staab includes (i) the cost to the Company for the purchase of a
term life insurance policy ($928, $538 and $425) and (ii) Company
contributions to the Elective Savings Plan for Employees of Pennichuck
Corporation ($3,015, $2,362 and $2,430).
</FN>
</TABLE>
Stock Option Grants During the Fiscal Year Ended December 31, 1998
The following table sets forth information concerning the grant of
stock options to acquire shares of the Company's common stock under the 1995
Stock Option Plan to the Chief Executive Officer and the Named Executive
Officers during the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
Individual Grants (1)
Number of
Securities Percent of Total
Underlying Options Granted to Exercise Expiration
Name Options Granted Employees in Fiscal Year Price($/Share) Date
- ---- --------------- ------------------------ -------------- ----------
<S> <C> <C> <C> <C>
Maurice L. Arel 3,000 27% $12.67 Jan 9, 2008
Stephen J. Densberger 1,500 14% $12.67 Jan 9, 2008
Charles J. Staab 1,500 14% $12.67 Jan 9, 2008
- --------------------
<FN>
<F1> The exercise price of the options granted is equal to the fair market
value of the Company's common stock on the date of grant. The options
are exercisable on the date of the grant and expire ten years
thereafter.
</FN>
</TABLE>
Stock Option Exercises and Fiscal Year End Values
The following table sets forth information concerning the exercise of
stock options by the Chief Executive Officer and the Named Executive
Officers during the fiscal year ended December 31, 1998, and the number and
value of unexercised options held by those officers at fiscal year end. The
value realized on the shares acquired on exercise is the difference between
the exercise price and the fair market value on the date of exercise. The
value of unexercised, in-the-money options at December 31, 1998, is the
difference between its exercise price and the fair market value of the
underlying stock on such date. These values have not been, and may never
be, realized. The underlying options have not been, and may never be,
exercised; and actual gains, if any, on exercise will depend on the value of
Company common stock on the date of exercise.
<TABLE>
<CAPTION>
Value of Unexercised In-the-
Number of Unexercised Money Options at Fiscal Year
Shares Options at Fiscal Year End End (1)
Acquired Value --------------------------- ----------------------------
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Maurice L. Arel 750 $3,253 12,000 -0- $129,495 -0-
Stephen J. Densberger 900 $3,906 7,500 -0- $ 82,374 -0-
Charles J. Staab 900 $3,906 6,300 -0- $ 68,273 -0-
- --------------------
<FN>
<F1> The closing price of the Company's common stock as reported on the
Nasdaq National Market System on December 31, 1998 was $21.75 per
share and is used in calculating the value of unexercised options.
</FN>
</TABLE>
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors, as recommended by its Audit Committee, has
appointed Arthur Andersen LLP as the independent accountants for the Company
for the fiscal year ending December 31, 1999, subject to ratification of the
shareholders. The Board of Directors recommends a vote FOR the ratification
of the appointment of Arthur Andersen LLP as independent accountants for the
Company to audit the books and accounts of the Company for the fiscal year
ending December 31, 1999. No determination has been made as to what action
the Board of Directors would take if the shareholders do not ratify the
appointment. Representatives of Arthur Andersen LLP will be in attendance
at the Annual Meeting and will have the opportunity to make a statement,
should they desire to do so, and are expected to be available to respond to
questions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Maurice L. Arel, the Company's President and Chief Executive Officer,
is a director of Fleet Bank-NH. The Company has available a $4.5 million
unsecured line of credit facility with Fleet Bank-NH at interest rates tied
to the Bank's cost of funds; at the end of 1998, no amounts were outstanding
under that credit facility. The Company also has two term notes totaling $6
million with Fleet Bank - NH at December 31, 1998. The Company maintains
its primary depository and disbursing accounts with Fleet Bank-NH.
SHAREHOLDERS' PROPOSALS
Shareholders who desire to present proposals for consideration by the
Company's shareholders at the next Annual Meeting of Shareholders, which
will be held on or about April 14, 2000, will be required to advise the
Company in writing of the proposal on or prior to December 1, 1999.
OTHER MATTERS
The Board of Directors knows of no business which will be presented
for consideration at the Annual Meeting other than those items set forth in
the Proxy Statement. The enclosed proxy confers upon each person entitled
to vote the shares represented thereby discretionary authority to vote such
shares in accordance with his or her best judgment with respect to any other
matters which may properly be presented for action at the meeting.
PROXY
PENNICHUCK CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Pennichuck Corporation ("Company")
hereby appoints Robert P. Keller and Charles E. Clough, and each of them,
with full power of substitution in each, as proxies for the undersigned to
vote, as designated below, all shares of common stock of the Company which
the undersigned is entitled to vote at the Annual Meeting of Shareholders
to be held at 3:00 p.m. on Friday, April 16, 1999 at the Nashua Marriot
Hotel, 2200 Southwood Drive, Nashua, New Hampshire, or any adjournments
thereof.
This proxy when properly executed will be voted as directed by the
undersigned shareholder. UNLESS CONTRARY DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR ALL PROPOSALS. The undersigned shareholder may revoke
this proxy at any time before it is voted by delivering to the Secretary of
the Company at 4 Water Street, Nashua, New Hampshire, either a written
revocation of the proxy or a duly executed substitute bearing a later date,
or by appearing at the Annual Meeting and voting in person. The
undersigned shareholder hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and the accompanying Proxy Statement.
If you receive more than one proxy card, please sign and return all
cards in the accompanying envelope.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED SIDE
ON THE REVERSE SIDE
The Board of Directors Recommends a vote "FOR" Proposals 1, 2 and 3.
1. Election of Directors.
Nominees: Stephen J. Densberger, Hannah M. McCarthy and Charles J.
Staab
[ ] FOR [ ]WITHHELD
[ ]
For all nominees except as noted above
2. Proposal to ratify the appointment by the Board of Directors of
Arthur Andersen LLP as independent accountants of the Company for
the fiscal year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve an amendment to the Company's Articles of
Incorporation to increase the number of authorized common shares from
2,400,000 to 5,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournments thereof.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
IMPORTANT: THIS IS YOUR PROXY. Please date, sign and return this proxy
promptly in the enclosed envelope.
Please sign exactly as your name appears on the envelope in which this card
was mailed. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held jointly, each
holder should sign.
Signature:_____________________ Date:________________
Signature:_____________________ Date:________________
