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 Rule 14a-11(c) or Rule 14a-12
PROVIDENCE AND WORCESTER RAILROAD COMPANY
(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) (4) 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>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
75 Hammond Street
Worcester, Massachusetts 01610
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 26, 2000
PLEASE TAKE NOTICE that the 2000 annual meeting of the shareholders of
Providence and Worcester Railroad Company (the "Company") will be held at the
Crowne Plaza, 10 Lincoln Square, Worcester, Massachusetts, on Wednesday, April
26, 2000 at 10:00 o'clock A.M., local time, for the following purposes:
(1) To elect three directors (by the holders of Common Stock only) and six
directors (by the holders of Preferred Stock only) to serve for terms of one
year and until their successors are elected and qualified;
(2) To ratify the appointment of Deloitte & Touche LLP as independent
auditors of the accounts of the Company for 2000 (by the holders of Common
Stock and Preferred Stock, voting as separate classes); and
(3) To transact such other business, if any, as may properly come before the
meeting or any adjournment or adjournments thereof (by the holders of Common
Stock and Preferred Stock, voting as separate classes).
Holders of record of the Common Stock or Preferred Stock on the books of
the Company as of the close of business on March 3, 2000 will be entitled to
vote.
By Order of the Board of Directors
DEBORAH E. SEDARES
Secretary and General Counsel
PROVIDENCE AND WORCESTER RAILROAD COMPANY
Worcester, Massachusetts
March 24, 2000
If you are the holder of record of only one class of the Company's
capital stock, only one proxy card is enclosed. If you are the holder of record
of both Common Stock and Preferred Stock, two proxy cards are enclosed. Kindly
fill in, date and sign the enclosed proxy card(s) and promptly return the same
in the enclosed addressed envelope, which requires no postage if mailed in the
United States. If you are personally present at the meeting, the proxy or
proxies will not be used without your consent.
<PAGE>
PROVIDENCE AND WORCESTER RAILROAD COMPANY
PROXY STATEMENT
Annual Meeting of Shareholders
April 26, 2000
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy or proxies are solicited by the Board of Directors
of Providence and Worcester Railroad Company (herein called the "Company") in
connection with the annual meeting of the shareholders to be held April 26,
2000; the Company will bear the cost of such solicitation. It is expected that
the solicitation of proxies will be primarily by mail. Proxies may also be
solicited personally by regular employees of the Company at nominal cost. The
Company may reimburse brokerage houses and other custodians, nominees and
fiduciaries holding stock for others in their names, or in those of their
nominees, for their reasonable out-of-pocket expenses in sending proxy materials
to their principals or beneficial owners and obtaining their proxies. Any
shareholder giving a proxy has the power to revoke it at any time prior to its
exercise, but the revocation of a proxy will not be effective until notice
thereof has been given to the Secretary of the Company. Notice of revocation may
be delivered in writing to the Secretary prior to the meeting or may be
transmitted orally to the Secretary at the meeting. Every properly signed proxy
will be voted in accordance with the specifications made thereon.
The Company's Annual Report for 1999, including financial statements, this
proxy statement and the accompanying proxy or proxies are expected to be first
sent to shareholders on or about March 24, 2000. Neither the Annual Report nor
the financial statements therein are incorporated in this Proxy Statement and do
not form any part of the material for the solicitation of proxies.
VOTING AT MEETING
Only shareholders of record at the close of business on March 3, 2000 will
be entitled to vote at the meeting. Under the Company's charter, the holders of
the Company's Common Stock, voting separately as a class, are entitled to one
vote for each share held in the election of one-third (1/3) of the Board of
Directors of the Company proposed to be elected at the meeting. The holders of
the Company's Preferred Stock, voting separately as a class, are entitled to one
vote for each share held in the election of the balance of the Board of
Directors proposed to be elected at the meeting. The holders of the Company's
Common Stock and the holders of the Company's Preferred Stock are entitled to
one vote per share, voting as separate classes and not together, upon all other
matters presented to the shareholders for their approval.
Common Stock directors will be elected in each case by vote of the holders
of a majority of the Common Stock present or represented at the meeting, and the
Preferred Stock directors will be similarly elected by vote of the holders of a
majority of the Preferred Stock.
Shares represented by proxies which are marked "withhold authority" with
respect to the election of any particular nominee for director, "abstain" with
respect to any other matter, or to deny discretionary authority on any other
matters will be counted as shares present and entitled to vote, and,
accordingly, any such marking of a proxy will have the same effect as a vote
against the proposal to which it relates.
<PAGE>
2
Brokers who hold shares in street name may lack authority to vote such
shares on certain items, absent specific instructions from their customers.
Shares subject to such "broker non-votes" will not be treated as shares entitled
to vote on the matters to which they relate and therefore will be treated as not
present at the meeting for those purposes, but otherwise will have no effect on
the outcome of the voting on such matters. It is not presently anticipated that
any matter which might be the subject of a "broker non-vote" will come before
the annual meeting.
On the record date, there were 4,281,280 shares of the Company's Common
Stock and 647 shares of the Company's Preferred Stock outstanding and entitled
to vote at the meeting.
ELECTION OF DIRECTORS
At the annual meeting, three Common Stock directors and six Preferred Stock
directors are to be elected, and each will hold office until the next annual
meeting and until his successor is elected and qualified. The proxies named in
the accompanying proxy or proxies, who have been designated by the Board of
Directors, intend to vote, unless otherwise instructed, for the election to the
Board of Directors of the persons named below, all of whom are now directors of
the Company. Certain information concerning such nominees is set forth below:
<TABLE>
<S> <C> <C>
Principal Occupation Director
Name and Age During Past Five Years Since
- ------------ ---------------------- -----
Common Stock Director Nominees:
-------------------------------
Richard W. Anderson (52) Senior Vice President of Massachusetts 1998
Capital Resource Company
Robert H. Eder (67) Chairman of the Company 1965
Merrill W. Sherman (51) President and Chief Executive Officer of 1999
Bank Rhode Island (prior to August 1995,
partner, Brown, Rudnick, Freed & Gesmer)
Preferred Stock Director Nominees:
----------------------------------
Frank W. Barrett (60) Executive Vice President and Chief Lending 1995
Officer of Family Bank (prior to January 1999,
Executive Vice President, Springfield
Institution for Savings)
John H. Cronin (66) Retired; until September 1995, President of 1986
Ideal Products, Inc. (restaurant supplies)
J. Joseph Garrahy (69) President of J. Joseph Garrahy & Associates, 1992
Inc. (business consultants)
Orville R. Harrold (67) President of the Company 1978
John J. Healy (64) President of Worcester Affiliated Mfg. L.L.C. 1991
(Mfg. Consultant) and President of
Manufacturing Assistance Center
(prior to January 1997, President and
Chief Executive Officer, HMA
Behavioral Health, Inc.)
Charles M. McCollam, Jr. President of Bertha M. McCollam, Inc. 1996
(67) (insurance) and President, McCollam
Associates (consultant)
</TABLE>
Dates of directorships include directorships of the Company's predecessors.
<PAGE>
3
Brief Biographies
- -----------------
Richard W. Anderson, Director. Mr. Anderson has been a Director of the
Company since 1998. He is Senior Vice President of Massachusetts Capital
Resource Company ("MCRC"), a private investment firm funded by major
Massachusetts based life insurance companies providing high risk growth capital
to Massachusetts businesses. He began working at MCRC in 1981.
Frank W. Barrett, Director. Mr. Barrett has been a Director of the Company
since 1995. From 1993 to 1998 he was Executive Vice President at Springfield
Institution for Savings ("SIS"). Effective January 1, 1999 he became Executive
Vice President and Chief Lending Officer of Family Bank. Family Bank is a
Massachusetts subsidiary of Peoples Heritage Financial Group and the acquirer of
SIS. He is also a director of Dairy Mart Convenience Store, Inc.
John H. Cronin, Director. Mr. Cronin has been a Director of the Company
since 1986. From 1971 until his retirement in 1995, Mr. Cronin was owner and
President of Ideal Products, Inc., a wholesale restaurant supply company.
Robert H. Eder, Chairman of the Board and Chief Executive Officer. Mr. Eder
became President of the Company in 1966 and led the Company through its efforts
to become an independent operating company. He has been Chairman of the Board
since 1980. He is a graduate of Harvard College and Harvard Law School. He (with
his wife) is also majority owner and Chairman of Capital Properties, Inc., a
real estate holding company of which he is also a Director. Mr. Eder is admitted
to practice law in Rhode Island and New York.
J. Joseph Garrahy, Director. Mr. Garrahy has been a Director of the Company
since 1992. He is a former four term Governor of Rhode Island and, since 1990,
has been an independent business consultant in the State of Rhode Island. Mr.
Garrahy is also a director of Grove Real Estate Investment Trust.
Orville R. Harrold, President, Chief Operating Officer and Director. Mr.
Harrold has been with the Company since the commencement of independent
operations in February 1973. Over the past 27 years, he has held the positions
of Chief Engineer and General Manager, becoming President in 1980. Mr. Harrold
has a bachelors degree in mechanical engineering from the Pratt Institute,
Brooklyn, New York and has been employed in the railroad industry in various
capacities since 1960.
John J. Healy, Director. Mr. Healy has been a Director of the Company since
1991. He has been President of Worcester Affiliated Mfg. L.L.C., an independent
business consulting firm involved in efforts to revitalize manufacturing in
Massachusetts, since January 1997. Prior thereto, Mr. Healy was President and
Chief Executive Officer of HMA Behavioral Health, Inc., a behavioral health care
management service provider.
Charles M. McCollam, Jr., Director. Mr. McCollam has been a Director of the
Company since 1996. He owns and operates a number of insurance businesses in the
State of Connecticut, as well as McCollam Associates, a consulting firm. He was
the Chief of Staff to a former governor of Connecticut.
Merrill W. Sherman, Director. Ms. Sherman has been a Director of the
Company since 1999. She has been President, Director and Chief Executive Officer
of Bank Rhode Island, a community bank in the greater Providence metropolitan
area since its formation in March 1996. Prior thereto, from September 1993 to
August 1995, Ms. Sherman was a partner in the corporate and real estate
departments of the law firm Brown, Rudnick, Freed & Gesmer where she headed the
firm's banking consulting group affiliate. She retired from her position in
August 1995 to devote full-time efforts to the creation of Bank Rhode Island.
<PAGE>
4
The Board of Directors has an Executive Committee, Stock Option &
Compensation Committee and Audit Committee. In accordance with the By-laws of
the Company, the Executive Committee, currently comprised of Robert H. Eder,
Chairman, Robert J. Easton and Orville R. Harrold, exercises the authority of
the Board of Directors when formal Board action is required between meetings,
subject to the limitations imposed by law, the By-laws or the Board of
Directors. The Executive Committee acts on routine matters such as authorizing
the execution of government contracts for reimbursement for Company work on
highway projects adjacent to the railroad and grade crossing rehabilitation.
The Stock Option & Compensation Committee, currently comprised of John J.
Healy, Chairman, Richard W. Anderson and Charles M. McCollam, Jr. , is
responsible for establishing the amount of option shares to be granted to the
Company's employees under the Stock Option Plan and for making recommendations
to the full Board concerning executive officer compensation.
The Audit Committee is currently comprised of John H. Cronin, Chairman,
Frank W. Barrett, J. Joseph Garrahy and Merrill W. Sherman. All members of the
Audit Committee are independent non-employee directors. The Audit Committee
reviews the Company's procedures with respect to maintaining books and records,
and the adequacy and implementation of internal auditing, accounting and
financial controls. The Audit Committee reviews and makes recommendations to the
Board regarding services provided by the independent auditors of the accounts of
the Company, reviews with the independent auditors the scope and results of
their annual examination of the Company's financial statements and any
recommendations they may have, and makes recommendations to the Board with
respect to the engagement of the independent auditors.
The Board of Directors does not have a nominating committee.
The Board of Directors held five meetings, the Audit Committee held 3
meetings, the Stock Option & Compensation Committee held 4 meetings and the
Executive Committee held 9 meetings during the fiscal year ended December 31,
1999.
During the fiscal year ended December 31, 1999, each director who was not
an employee of the Company received a base fee of $500 for each attended meeting
of the Board of Directors plus $50 per attended meeting for each year of service
as a director, and each member of the Audit Committee and the Stock Option &
Compensation Committee received $300 for each attended meeting of the committee
(other than the Chairman of the Committee, who received $350).
During the month of January of each year, directors of the Company who
were serving as such on the preceding December 31 and are not full time
employees of the Company are granted options for the purchase of 100 shares of
the Common Stock of the Company, plus options for an additional ten shares for
each full year of service to the Company. The exercise price is the last sale
price of the Common Stock on the last business day of the preceding year, and
the term of each option is ten years (subject to earlier termination if the
grantee ceases to serve as a director), provided, however, that no option is
exercisable within six months following the date of grant.
<PAGE>
5
Summary Compensation Table
The following table summarizes the compensation paid or accrued by the
Company during the three year period ended December 31, 1999, to its Chief
Executive Officer and each of its four most highly compensated executive
officers who earned more than $100,000 in salary and bonus in 1999, for services
rendered in all capacities to the Company during 1999.
<TABLE>
Long-Term
Annual Compensation Compensation
------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Securities
Underlying All
Other Options to Other
Annual Purchase Compen-
Salary Compen- Common sation
Name and Principal Position Year ($)(a) Bonus($) sation($) Stock ($)(b)
- ---------------------------- ---- ------ ------ -------- ------------ ------
Robert H. Eder.............. 1999 307,403 17,500 23,653(c) 0 48,024
Chairman of the Board and 1998 286,210 0 31,216(c) 0 48,696
Chief Executive Officer 1997 288,530 0 0 0 47,453
Orville R. Harrold.......... 1999 262,181 0 0 1,087 42,726
President and Chief 1998 240,382 20,000 1,011 43,940
Operating Officer 1997 234,588 0 913 42,526
P. Scott Conti.............. 1999 99,072 0 0 147 8,068
Vice President Engineering 1998 80,425 0 0 132 6,468
1997 70,155 0 0 118 5,295
Robert J. Easton............ 1999 130,858 0 0 346 10,469
Treasurer 1998 126,038 16,000 310 11,412
1997 123,232 0 210 9,353
Deborah E. Sedares.......... 1999 104,004 0 0 0 8,320
Secretary and General 1998 19,038(d) 0 0 0 0
Counsel 1997 0 0 0 0 0
</TABLE>
(a) Includes amounts taxable to employees for personal use of Company-owned
vehicles, other than Mr. Eder who does not have personal use of a Company
owned vehicle.
(b) Includes amounts paid directly to the retirement accounts of management
staff under the Company's simplified employee pension plan, and, in the
case of Robert H. Eder and Orville R. Harrold, includes for 1999 premiums
paid for life insurance coverage in the amounts of $35,224 and $29,926,
respectively.
(c) Includes the cost of a vehicle for Mr. Eder.
(d) Date of hire, October 5, 1998. Appointed to the position of Secretary and
General Counsel effective March 12, 1999.
<PAGE>
6
EXECUTIVE COMPENSATION
Report on Executive Compensation
The Stock Option & Compensation Committee of the Board (the "Committee") is
composed entirely of independent, non-employee directors. From time to time Mr.
Harrold meets with the Committee to review the compensation program and make
recommendations for executive officers reporting to him. The Committee is
charged with the broad responsibility of seeing that executive officers are
effectively compensated in a manner which is internally equitable and externally
competitive.
Executive Compensation Philosophy. The Company's executive compensation
philosophy seeks to link executive officer compensation with the values,
objectives, business strategy, management initiatives and financial performance
of the Company. The overall objectives of the program are to attract and retain
highly qualified individuals in key executive positions, to motivate executives
to achieve goals inherent in the Company's business strategy, and to link
executives' and Shareholders' interests. The Company also seeks to achieve a
balance of the compensation paid to a particular individual and the compensation
paid to other executives both inside the Company and at comparable railroad
companies.
Base Salary. Base salaries for executive officers are substantially
dependent upon the base salaries paid for comparable positions at similar
companies, the responsibilities of the position held, and the experience level
of the particular executive officer. The Committee sets the base salary for
executive officers by reviewing compensation for competitive positions in the
market and the historical compensation levels of the executives.
Bonus. All bonuses for executive officers are determined at the discretion
of the Committee taking into consideration the Company's objectives and
profitability.
Stock Options. Total compensation at the executive level also includes
long-term incentives afforded by stock options granted under the 1993
Non-Qualified Stock Option Plan ("Plan"). The objectives of the program are to
align executive and shareholder long-term interests by creating a strong and
direct link between executive pay and total shareholder return, and to enable
executives to develop and maintain a long-term stock ownership position in the
Company's Common Stock. Annual grants of stock options are made in accordance
with the terms of the Plan. Options are granted at fair market value and have
ten year vesting schedules to encourage executives to continue in the employ of
the Company.
Simplified Employee Pension Plan ("SEPP"). Total compensation at the
executive level also includes a contribution by the Company on behalf of each
"eligible employee", as defined under the 1979 SEPP, as amended, of an amount
not to exceed 12% of said employee's "eligible compensation" for the preceding
year ending December 31. "Eligible compensation" as defined under the SEPP means
all taxable compensation of an Eligible Employee paid by the Company in any
calendar year, excluding any contribution made by the Company under the SEPP,
provided however, that Eligible Compensation shall be limited to no more than
$150,000, or such amount as permitted under Section 401(a)(17) of the Internal
Revenue Code. Such contribution is made directly to an individual retirement
account or individual retirement annuity as determined by the "eligible
employee".
Compensation of Chief Executive Officer. Mr. Eder is eligible to
participate in the same executive compensation plans available to other senior
executives other than the Company's Non-Qualified Stock Option Plan. Effective
in July 1999 his base salary was increased from $289,605 to $314,605
representing an 8.6% increase deemed consistent with salary levels among
executives in comparable positions within the railroad industry. Other than
periodic cost of living adjustments provided to all Company employees, Mr. Eder
had not received an increase in his base salary since 1995. Mr. Eder received a
bonus in October 1999 in the amount of $17,500 in recognition of Mr. Eder's
efforts in successfully undertaking the Company's two stock offerings in 1999.
Conclusion. The Committee believes that the compensation program for
executive officers is competitive and that the program effectively ties
executive compensation to the Company's performance and resultant stock price
performance.
<PAGE>
7
Option/SAR Grants in Last Fiscal Year
The following table contains information concerning the grant of stock
options under the Company's Non-Qualified Stock Option Plan to the Named
Executive Officers during the Company's last fiscal year. The Company does not
issue stock appreciation rights.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
% of Total
Number of Options
Securities Granted To
Underlying Employees Grant Date
Options In Fiscal Exercise Expiration Present
Name Granted(a) 1999 Price($) Date Value($)(b)
------ ---------- --------- ------ -------- -----------
Robert H. Eder(c)...... 0 0 0 0 0
Orville R. Harrold..... 1,087 15.5 12.375 01/04/09 $9.53
P. Scott Conti......... 147 2.1 12.375 01/04/09 $9.53
Robert J. Easton....... 346 4.9 12.375 01/04/09 $9.53
Deborah E. Sedares(d).. 0 0 0 0 0
</TABLE>
(a) The options were all granted on January 4, 1999 and became exercisable on
July 4, 1999.
(b) Amounts represent fair value of each option and were estimated as of the
date of grant using Black-Scholes options - pricing model with the
following weighted average assumptions: expected volatility of 30%;
expected life 7 years; and risk free interest rate of 6.3%. Dividends at
the rate of 1.21% per share were assumed for purposes of this estimate.
(c) Under the terms of the Company's Non-Qualified Stock Option Plan, Mr. Eder
is not eligible to receive a grant of stock options.
(d) Ms. Sedares was not eligible to receive options under the Company's
Non-Qualified Stock Option Plan in 1999.
Aggregated Option/SAR Exercises In Last Fiscal Year
And Fiscal Year End Option Values
The following table sets forth individual exercises of stock options during
1999 and the year-end values of options to purchase Common Stock held by the
Named Executive Officers as of December 31, 1999.
<TABLE>
<S> <C> <C> <C> <C> <C>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money at
December 31, 1999 December 31, 1999(b)
----------------- --------------------
Shares
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized($)(a) Unexercisable Unexercisable($)
---- ----------- -------------- ------------- ----------------
Robert H. Eder....... 0 0 0/0 0/0
Orville R. Harrold... 608 1,510 1,882/0 0/0
P. Scott Conti....... 441 1,773 279/0 0/0
Robert J. Easton..... 0 0 1,313/0 351/0
Deborah E. Sedares... 0 0 0/0 0/0
</TABLE>
(a) Based on the last sale price of the Common Stock on the date of exercise
minus the exercise price.
(b) Based on the difference between the exercise price of each grant and the
closing price of the Company's Common Stock on the AMEX on December 31,
1999, which was $8.00.
<PAGE>
8
Performance Graph
Set forth below is a line graph prepared for the Company by Advest, Inc. to
compare the cumulative total return on the Company's common stock against the
cumulative total return of a Standard & Poor's industrial stock index and a peer
index for a period of five fiscal years ended December 31, 1999. The S&P
Industrial Index is calculated using the 378 industrial companies in the S&P
500. The index is weighted by the then current outstanding shares and assumes
dividends reinvested. The peer group designated below as the S&P Railroad Index
is comprised of the 5 railroad operating companies in the S&P 500. The total
returns assume $100 invested on January 1, 1994 with reinvestment of dividends.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG PROVIDENCE AND WORCESTER RAILROAD COMPANY,
S&P INDUSTRIAL INDEX AND S&P RAILROAD INDEX
[GRAPHIC OMITTED]
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Fiscal Years Ended December 31
-------------------------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
Providence & Worcester.. 100 98.21 112.50 262.50 178.57 114.29
S&P RailRoads........... 100 143.05 166.32 183.31 165.81 136.45
S&P Industrials......... 100 131.72 158.90 204.81 270.16 336.42
</TABLE>
The Board of Directors recognize that the market price of stock is
influenced by many factors, only one of which is issuer performance. The
Company's stock price may also be influenced by market perception, economic
conditions and government regulation. The stock price performance shown in the
graph is not necessarily an indicator of future price performance.
<PAGE>
9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table set forth below reflects the only persons (including any "group"
as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934)
who, to the best of the Company's knowledge, were on March 3, 2000, the
beneficial owners of more than five percent of the Company's outstanding Common
Stock, $.50 par value, or Preferred Stock, $50 par value. Each share of the
Company's outstanding Preferred Stock is convertible at any time, at the option
of the holder, into one hundred shares of Common Stock of the Company. The
footnote to the table below sets forth the percentages of the outstanding Common
Stock which would be held by the indicated owners if such owners' Preferred
Stock were converted in whole into Common Stock.
<TABLE>
<S> <C> <C> <C>
Percent
Name and Address Number of Shares Owned of Class
- ---------------- ---------------------- --------
Robert H. and Linda Eder 842,742 (Common) 19.7%(1)
2441 S.E. Bahia Way 500 (Preferred) 77.3%
Stuart, Florida 34996
Cadence Capital Management 235,100 (Common) 5.5%
One Exchange Place, 29th Floor
Boston, MA 02109
Franklin Resources, Inc. 232,200 (Common) 5.4%
777 Mariners Island Boulevard
San Mateo, CA 94404
</TABLE>
(1) Assuming no conversion of Preferred Stock. If their Preferred Stock
were converted in whole to Common Stock, Mr. and Mrs. Eder would own 20.6% of
the outstanding Common Stock.
Of the shares owned by Mr. and Mrs. Eder, 768,162 shares of Common Stock
and 500 shares of Preferred Stock were held directly by Mr. Eder, and 74,580
shares of Common Stock were held directly by Mrs. Eder. By reason of their
ownership, Mr. and Mrs. Eder may be deemed to be "control persons" with respect
to the Company.
The following table reflects as of March 3, 2000, the beneficial ownership
of the Common Stock of the Company by directors, nominees for directors and
officers of the Company.
<TABLE>
<S> <C> <C>
Name Number Percentage
- ---- ------ ----------
Richard W. Anderson(a) ......................... 200,400 4.6%
Frank W. Barrett(b).............................. 860 *
P. Scott Conti(c)................................ 1,338 *
John H. Cronin(d)................................ 1,760 *
Robert J. Easton(e) ............................. 2,992 *
Robert H. Eder(f)................................ 892,742 20.6%
J. Joseph Garrahy(g)............................. 580 *
Orville R. Harrold(h)............................ 28,202 *
John J. Healy(i)................................. 1,170 *
Charles M. McCollam, Jr.(j)...................... 1,250 *
Deborah E. Sedares............................... 290 *
Merrill W. Sherman............................... 500 *
All executive officers and directors as a group
(12 people)(k)................................ 1,132,084 26.1%
</TABLE>
* Less than one percent
<PAGE>
10
(a) Includes 200,000 shares of common stock held by Massachusetts Capital
Resource Company of which Mr. Anderson disclaims beneficial ownership. Mr.
Anderson is Senior Vice President of Massachusetts Capital Resource
Company. Includes 100 shares of Common Stock issuable under stock options
exercisable within 60 days.
(b) Includes 360 shares of Common Stock issuable under stock options
exercisable within 60 days.
(c) Includes 279 shares of Common Stock issuable under stock options
exercisable within 60 days.
(d) Includes 430 shares of Common Stock issuable under stock options
exercisable within 60 days.
(e) Includes 118 shares of Common Stock held by Mr. Easton's wife in her name
and 1,313 shares of Common Stock issuable under stock options exercisable
within 60 days.
(f) Mr. Eder's business address is 75 Hammond Street, Worcester, Massachusetts
01610. Includes 74,580 shares of Common Stock owned by Mr. Eder's wife and
assumes the conversion of the 500 shares of Preferred Stock owned by Mr.
Eder.
(g) Includes 310 shares of Common Stock issuable under stock options
exercisable within 60 days.
(h) Includes (i) 1,700 shares of Common Stock held by Mr. Harrold's wife, (ii)
2,600 shares of Common Stock held by a custodian in an individual
retirement account for the benefit of Mr. Harrold and (iii) 1,882 shares of
Common Stock issuable under stock options exercisable within 60 days.
(i) Includes 870 shares of Common Stock issuable under stock options
exercisable within 60 days.
(j) Includes 230 shares of Common Stock issuable under stock options
exercisable within 60 days.
(k) Includes 50,000 shares of Common Stock issuable upon conversion of
Preferred Stock and 5,774 shares of Common Stock issuable under stock
options exercisable within 60 days.
EXECUTIVE AGREEMENTS
The Company has entered into agreements with its executive officers and key
management personnel, including the named executive officers other than Mr.
Eder, to provide lump sum payments in the event of a "change in control" as
defined in the subject agreements. The agreements are automatically extended
from year to year unless terminated in accordance with the terms of the
agreements. The agreements also provide that if there is a "change in control"
as defined in the agreement, the terms will continue for 24 months thereafter. A
named executive officer will be entitled to a lump sum payment equal to a
multiple of his or her base salary if his or her employment is constructively
terminated without cause in anticipation of or within two years following the
"change in control" or if within two years of the "change in control event" he
or she voluntarily terminates employment due to a "material change" in the terms
and conditions of the named executive officer's employment as is defined under
the agreements. The multiplier is determined based upon years of service with
the Company. Mr. Harrold is entitled to a lump sum payment equal to two (2)
times his annual base salary. Mr. Conti and Mr. Easton are each entitled to a
lump sum payment equal to one and one-half (1-1/2) times their annual base
salary. Ms. Sedares is entitled to a lump sum payment equal to one (1) times her
annual base salary. A lump sum payment may be reduced to the extent necessary to
avoid any liability for federal excise tax levied under section 4999 of the
Internal Revenue Code.
<PAGE>
11
COMPLIANCE WITH SECTION 16 (a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities to file reports of securities ownership and changes in such
ownership with the Securities and Exchange Commission. Officers, directors and
greater than ten-percent beneficial owners also are required by rules
promulgated by the Securities and Exchange Commission to furnish the Company
with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Company or written representations that no Form 5 filings were required, the
Company believes that during 1999 its officers, directors and greater than
ten-percent beneficial owners complied with all applicable Section 16(a) filing
requirements except for the inadvertent late filing of Richard W. Anderson for
purchase of shares, which notification is shown on Mr. Anderson's Form 5 filed
on or about January 17, 2000; and the inadvertent late filing of Form 4 by John
P. Burnham. Mr. Burnham's term as a Director with the Company expired on April
28, 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee
composed of independent non-employee directors, has appointed Deloitte & Touche
LLP, who acted as independent auditors of the accounts of the Company for 1999,
and as independent auditors of the accounts of the Company for the year 2000,
subject to ratification by the holders of Common Stock and Preferred Stock of
the Company, voting as separate classes. The shareholders will be asked to
ratify the appointment. The Company has recently been advised by Deloitte &
Touche LLP that they have no direct financial interest or any material indirect
financial interest in the Company, nor have they had any connection during the
past four years with the Company in the capacity of promoter, underwriter,
voting trustee, director, officer or employee.
It is expected that a representative of Deloitte & Touche LLP will be
present at the annual meeting with the opportunity to make a statement if he so
desires, and that such representative will be available to respond to
appropriate questions.
PROPOSALS FOR 2001 ANNUAL MEETING
The 2001 annual meeting of the shareholders of the Company is scheduled to
be held April 25, 2001. If a shareholder intending to present a proposal at that
meeting wishes to have a proper proposal included in the Company's proxy
statement and form of proxy relating to the meeting, the shareholder must submit
the proposal to the Company not later than November 24, 2000.
<PAGE>
12
OTHER MATTERS
No business other than that set forth in the attached Notice of Meeting is
expected to come before the annual meeting, but should any other matters
requiring a vote of shareholders arise, including a question of adjourning the
meeting, the persons named in the accompanying proxy will vote thereon according
to their best judgment in the interests of the Company. In the event any of the
nominees for the office of director should withdraw or otherwise become
unavailable for reasons not presently known, the persons named as proxies will
vote for other persons in their place in what they consider the best interests
of the Company.
By Order of the Board of Directors
DEBORAH E. SEDARES
Secretary and General Counsel
PROVIDENCE AND WORCESTER RAILROAD COMPANY
Dated: March 24, 2000
<PAGE>
PROXY
PROVIDENCE AND WORCESTER RAILROAD COMPANY
Annual Meeting of Shareholders - April 26, 2000
The undersigned, whose signature appears on the reverse side of this
proxy, hereby appoints Robert H. Eder, Orville R. Harrold, Robert J. Easton,
attorneys with power of substitution and with all the powers the undersigned
would possess if personally present, to vote the Preferred Stock of the
undersigned in Providence and Worcester Railroad Company at the annual meeting
of shareholders to be held on April 26, 2000 in Worcester, Massachusetts, and at
any adjournments thereof, as follows:
- ------------- -------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ------------- -------------
<PAGE>
X Please mark votes as in this example.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
for Proposals 1 and 2.
FOR AGAINST ABSTAIN
----- ----- ------
1. ELECTION OF DIRECTORS: 2. PROPOSAL TO RATIFY THE
Nominees: O. Harrold, F. Barrett, J. Cronin APPOINTMENT OF DELOITTE &
J. Garrahy, J. Healy, C.McCollam, Jr. TOUCHE LLP as independent
auditors of the Company
for 2000.
FOR WITHHELD
-------- -------
3. In their discretion, upon
______________________________________ such other matters as may
To withhold authority to vote for any properly come before the
individual nominee, write that nominee's meeting.
name in the space provided above.
MARK HERE FOR ADDRESS CHANGE
AND NOTE AT LEFT
PLEASE DATE, SIGN AND RETURN
THIS PROXY.
(Sign exactly as your
name appears hereon.
When signing as
attorney, executor,
administrator,
trustee, guardian, or
in a corporate
capacity, please give
full title as such. In
case of joint tenants
or multiple owners,
each party must sign.)
Signature: Date: Signature: Date:
------------ ------ --------------- ----------
<PAGE>
PROXY
PROVIDENCE AND WORCESTER RAILROAD COMPANY
Annual Meeting of Shareholders - April 26, 2000
The undersigned, whose signature appears on the reverse side of this
proxy, hereby appoints Robert H. Eder, Orville R. Harrold, and Robert J. Easton
attorneys with power of substitution and with all the powers the undersigned
would possess if personally present, to vote the Common Stock of the undersigned
in Providence and Worcester Railroad Company at the annual meeting of
shareholders to be held on April 26, 2000 in Worcester, Massachusetts, and at
any adjournments thereof, as follows:
- ------------- -------------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ------------- -------------
<PAGE>
X Please mark votes as in this example.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
for Proposals 1 and 2.
FOR AGAINST ABSTAIN
----- ----- ------
1. ELECTION OF DIRECTORS: 2. PROPOSAL TO RATIFY THE
Nominees: R. Anderson, R. Eder, M. Sherman APPOINTMENT OF DELOITTE &
TOUCHE LLP as independent
auditors of the Company
for 2000.
FOR WITHHELD
-------- -------
3. In their discretion, upon
______________________________________ such other matters as may
To withhold authority to vote for any properly come before the
individual nominee, write that nominee's meeting.
name in the space provided above.
MARK HERE FOR ADDRESS CHANGE
AND NOTE AT LEFT
PLEASE DATE, SIGN AND RETURN
THIS PROXY.
(Sign exactly as your
name appears hereon.
When signing as
attorney, executor,
administrator,
trustee, guardian, or
in a corporate
capacity, please give
full title as such. In
case of joint tenants
or multiple owners,
each party must sign.)
Signature: Date: Signature: Date:
------------ ------ --------------- ----------
