<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
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 Section 240.14a-11(c) or Section
240.14a-12
DOMINGUEZ SERVICES 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>
May 3, 1999
TO THE SHAREHOLDERS OF DOMINGUEZ SERVICES CORPORATION:
The following proxy statement relates to the normal business of the Company; it
is distinct from the previous proxy statement you received, which concerned the
merger with California Water Service Group.
We are pleased to invite you to attend the Annual Meeting of Shareholders of
Dominguez Services Corporation, to be held on June 8, 1999, at 1:00 p.m.
California time. The meeting will take place at the Torrance Marriott, located
at 3635 Fashion Way in Torrance, California. You are also cordially invited to
lunch, which will be served prior to the Annual Meeting at 12:15 p.m.
Please leave a message at (800) 382-2040 to let us know if you plan to attend.
Or, if you need to reach us directly, please call our Corporate Communications
Manager, Shannon Dean, at (310) 834-2625, extension 313.
Whether or not you plan to attend the meeting, please promptly complete, sign,
date, and return the enclosed proxy card in the envelope provided.
Thank you. I hope to see you on June 8.
Sincerely,
/s/ BRIAN J. BRADY
<PAGE>
DOMINGUEZ SERVICES CORPORATION
21718 SOUTH ALAMEDA STREET
LONG BEACH, CALIFORNIA 90810
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 8, 1999
--------------------
To the Shareholders of Dominguez Services Corporation:
The 1999 Annual Meeting of Shareholders of Dominguez Services Corporation
(Company) will be held at the Torrance Marriott, 3635 Fashion Way, Torrance,
California 90503, on June 8, 1999, at 1:00 p.m. California time to conduct the
following business:
1. Elect eight directors to hold office until the Company's next Annual
Meeting and thereafter until their successors are duly elected and
qualified.
2. Ratify, confirm, and approve the appointment by the Board of Directors
of Arthur Andersen LLP as the independent auditors for the Company and
its subsidiaries for the 1999 fiscal year.
3. Transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The Board of Directors has fixed April 26, 1999, as the record date for
determining the shareholders entitled to notice of and to vote at the Annual
Meeting and at any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JOHN S. TOOTLE
JOHN S. TOOTLE
CORPORATE SECRETARY
MAY 3, 1999
IMPORTANT: TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE
INDICATE YOUR VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD AND DATE, SIGN, AND
MAIL IT PROMPTLY IN THE RETURN ENVELOPE PROVIDED.
<PAGE>
DOMINGUEZ SERVICES CORPORATION
21718 SOUTH ALAMEDA STREET
LONG BEACH, CA 90810
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card (Proxy) are furnished
in connection with the solicitation by the Board of Directors of Dominguez
Services Corporation (the Company) of proxies in the accompanying form, to be
voted at the Annual Meeting of Shareholders of the Company and at any
adjournments thereof (the Annual Meeting) to be held at 1:00 p.m. California
time on June 8, 1999, at the Torrance Marriott, 3635 Fashion Way, Torrance,
California 90503. At the Annual Meeting, the shareholders of the Company's
common stock will be asked to vote upon the matters set forth in the
accompanying Notice of Annual Meeting of Shareholders. This Proxy Statement,
the accompanying Proxy, and the Notice of Annual Meeting of Shareholders are
being mailed to shareholders of the Company on or about May 3, 1999.
SOLICITATION OF PROXIES
The enclosed Proxy is solicited on behalf of the Board of Directors of the
Company for use at the Annual Meeting and at any adjournments thereof.
The Company will bear the entire cost of preparing, assembling, printing,
and mailing the Proxy Statement, the accompanying Proxy, the Notice of Annual
Meeting of Shareholders, and any additional materials, which may be furnished to
shareholders in connection therewith. The solicitation of proxies will be made
by mail and may also be made by telephone, facsimile, telegraph, or personally
by directors, officers, and regular employees of the Company who will receive no
extra compensation for such services.
Any person who executes and returns the Proxy accompanying this Proxy
Statement may revoke it at any time before its exercise by delivering to the
Secretary of the Company a written instrument of revocation or by presenting a
duly executed Proxy for the Annual Meeting bearing a later date. A Proxy may
also be revoked by attending the Annual Meeting and voting in person. Each
properly executed Proxy received prior to the Annual Meeting will be voted as
directed. If not otherwise specified, proxies will be voted for the election of
the nominees for directors described in this Proxy Statement, for the
appointment of Arthur Andersen LLP as independent auditors of the Company and
its subsidiaries, and at the discretion of management with respect to any other
matters properly presented at the Annual Meeting or any adjournments thereof.
<PAGE>
VOTING SECURITIES
Only holders of record of the Company's common stock at the close of
business on April 26, 1999, are entitled to notice of and to vote at the Annual
Meeting. At that date, 1,560,979 shares of common stock were outstanding; held
by approximately 313 common shareholders of record as well as 659 common
shareholders in street name. Subject to cumulative voting rights in the
election of directors, holders of common stock are entitled to one vote on each
matter submitted for each share held of record. Each shareholder or his proxy
(including the persons named in the accompanying Proxy) entitled to vote for the
election of directors may cumulate his votes and give one candidate a number of
votes equal to the number of directors to be elected multiplied by the number of
votes to which his shares are entitled, or distribute his votes on the same
principle among any or all of the nominees. No shareholder or proxy, however,
shall be entitled to cumulate votes for a candidate unless, prior to the voting,
such candidate or candidates have been placed in nomination and the shareholder
has given notice at the meeting that he intends to cumulate his votes. If any
shareholder gives such notice, all shareholders may cumulate their votes for
nominated candidates.
The presence, either in person or by proxy, of persons holding a majority
of the shares entitled to vote constitutes a quorum for the transaction of
business at the Annual Meeting. The affirmative vote of a majority of the votes
represented at the meeting will be required for the election of directors
(unless cumulative voting is in effect) and for the approval of all other
matters voted upon at the Annual Meeting.
The Company's general administrative and executive offices are located at
21718 South Alameda Street in Carson, California.
<PAGE>
PRINCIPAL SECURITIES HOLDERS
The following table sets forth information as of April 1, 1999, with
respect to the beneficial ownership of the Company's common stock by (i) each
person known by the Company to own beneficially five percent or more of any
class of the Company's outstanding common stock, (ii) each director nominee and
named executive officer, and (iii) all directors and executive officers as a
group. Each shareholder has sole voting and investment power with respect to
such shares unless otherwise indicated.
<TABLE>
<CAPTION>
NUMBER OF SHARES AND PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER NATURE OF BENEFICIAL OWNERSHIP COMMON STOCK
- ------------------------------------ ------------------------------ ------------
<S> <C> <C>
Carson Estate Company 148,293 9.5%
18710 South Wilmington, Suite 200
Rancho Dominguez, CA 90220
Carson Dominguez Real Estate Corporation 159,364 10.2%
18710 South Wilmington, Suite 200
Rancho Dominguez, CA 90220
Watson Land Company 132,894 8.6%
515 South Figueroa Street, Suite 1910
Los Angeles, CA 90071
Dwight C. Baum 33,750(1) 2.2%
200 South Los Robles Avenue, Suite 645
Pasadena, CA 91101-2431
Richard M. Cannon 132,894(2) 8.5%
22010 South Wilmington Avenue, Suite 400
Carson, CA 90745
Terrill M. Gloege 160,864(3) *
18710 South Wilmington Avenue, Suite 200
Rancho Dominguez, CA 90220
Thomas W. Huston 750 *
22010 South Wilmington Avenue, Suite 400
Carson, CA 90745
C. Bradley Olson 308,157(4) 19.7%
18710 South Wilmington Avenue, Suite 200
Rancho Dominguez, CA 90220
Langdon W. Owen 9,950 *
1300 Bristol North, Suite 175
Newport Beach, CA 92660
Charles W. Porter 8,491 *
400 Paseo Dorado
Long Beach, CA 90803
Debra L. Reed 239 *
555 West 5th Street
Los Angeles, CA 90013
Brian J. Brady 4,380(5) *
21718 South Alameda Street
Long Beach, CA 90810
John S. Tootle 5,141(6) *
21718 South Alameda Street
Long Beach, CA 90810
All Directors and Executive Officers as a group, 505,252(7) 32.4%
(10 persons)
</TABLE>
*Less than one percent
<PAGE>
1) All of such shares are owned by Mr. Baum as trustees of the Dwight C. Baum
and Hildagarde E. Baum Trust. Mr. Baum has voting and investment powers
with respect to such shares
2) All of such shares are owned by Watson Land Company, of which Mr. Cannon is
president, chief executive officer, and a director. Mr. Cannon shares
voting and investing powers with respect to such shares with the other
directors of Watson Land Company.
3) 159,364 of such shares are owned by the Carson Dominguez Real Estate
Corporation, of which Mr. Gloege is a director. Mr. Gloege shares voting
and investing powers with respect to such shares with the other directors
of Carson Dominguez Real Estate Corporation. The remaining 1,500 shares
are owned by Mr. Gloege individually.
4) 148,293 of such shares are owned by the Carson Estate Company, of which Mr.
Olson is president and a director. Mr. Olson shares voting and investing
powers with respect to such shares with the other directors of Carson
Estate Company. 159,364 of such shares are owned by the Carson Dominguez
Real Estate Corporation, of which Mr. Olson is president and a director.
Mr. Olson shares voting and investing powers with respect to such shares
with the other directors of Carson Dominguez Real Estate Corporation. The
remaining 500 shares are owned by Mr. Olson individually.
5) This includes 2,130 shares are owned by Mr. Brady individually and 2,250
currently exercisable options held by Mr. Brady.
6) This includes 3,791 shares are owned by Mr. Tootle individually and 1,350
currently exercisable options held by Mr. Tootle.
7) Includes shares described in footnotes (2), (3) and (4) above, and includes
2,250 currently exercisable options held by Mr. Brady and 1,350 currently
exercisable options held by Mr. Tootle.
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, based solely on its review of the copies of
reports furnished to the Company and representations from reporting persons that
no reports were required to be filed, all officers, directors, and ten percent
beneficial owners of the Company's voting securities complied with the filing
requirements of Section 16(a) of the Securities Exchange Act of 1934 during
1998.
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
Action is to be taken at the Annual Meeting with respect to the election of
eight directors to serve until the 2000 Annual Meeting of Shareholders and until
their successors are duly elected and qualified. The Company's bylaws provide
that there shall be no fewer than seven and no more than nine directors. The
Board has fixed the number of directors at nine. C. Bradley Olson, president of
Carson Estate Company, and a member of the Board since 1993, has advised the
Board that he will retiring from the Carson Estate Company, effective June 30,
1999, and will be assuming a new position at Cornell University in Ithaca, New
York. Accordingly, he is not standing for reelection to the Company's Board of
Directors. The Board of Directors anticipates appointing Mr. Olson's successor
at Carson Estate Company to fill the resulting Board vacancy. The Carson Estate
Company has not designated the successor as of the date of this Proxy. The
Company expects, however, that the remaining Board members will appoint Mr.
Olson's successor to fill the Board vacancy shortly after he assumes the
presidency of Carson Estate Company.
Set forth below is certain information concerning each nominee for
director:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR
NAME AGE AND ALL OTHER POSITIONS WITH THE COMPANY SINCE
- ---- --- ---------------------------------------- --------
<S> <C> <C> <C>
Dwight C. Baum 86 Senior Vice President of PaineWebber Incorporated (and 1962
Predecessors), a brokerage house
Brian J. Brady 50 President, Chief Executive Officer, and Chairman of the 1995
Board of the Company since May 1996; President and Chief
Executive Officer of the Company since November 1995;
Director, Irvine Ranch Water District, since 1998; prior,
Assistant General Manager Public Utilities, City of
Anaheim, since 1992; prior, Vice President and General
Manager, Energy Services, Inc., a Subsidiary of Southern
California Edison, since 1988.
Richard M. Cannon 57 Chief Executive Officer and President of Watson Land 1991
Company, a privately held developer and owner of
industrial centers and buildings, since 1994; prior,
President of Watson Land Company since 1989.
Terrill M. Gloege 63 Senior Vice President, Chief Financial Officer of Carson 1991
Estate Company and affiliated entities, a privately held
investment company since 1989.
Thomas W. Huston 37 Director of Leasing and Asset Management for Watson Land 1995
Company since 1995; prior, Assistant Director of Leasing
and Asset Management, and prior Leasing Agent for Watson
Land Company.
Langdon W. Owen 68 President of Don Owen & Associates since 1973; Consulting 1994
Engineer and Financial Advisor.
Charles W. Porter 68 Business Consultant since January 1996; prior, President, 1977
Chief Executive Officer of the Company since 1980.
Debra L. Reed 42 President, Energy Distribution Services and Chief 1995
Financial Officer, Southern California Gas Company, since
1998, prior, Senior Vice President of Southern California
Gas Company, since 1995; and prior, Vice President,
Southern California Gas Company since 1988.
</TABLE>
<PAGE>
The Proxies received will be voted to elect as directors the eight nominees
listed above unless otherwise specified, and each nominee has agreed to serve as
a director if elected at the Annual Meeting. Although management of the Company
does not anticipate that any of the persons named in the accompanying Proxy will
be unable to serve, if any nominee is unable or declines to serve as a director
at the time of the Annual Meeting, the proxy holders will vote for a substitute
nominee at their discretion.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE "FOR" THE ELECTION OF THE DIRECTORS NOMINATED
During 1998, the Board of Directors held thirteen meetings. All nominated
directors attended more than seventy-five percent of the meetings.
The Company has a standing Audit Committee. The current members of the
Audit Committee are Dwight C. Baum Terrill M. Gloege, and Charles W. Porter.
The Audit Committee reviews the results of the Company's annual audit, the
financial statements, internal accounting and control procedures, and recommends
the selection of auditors to the Board of Directors. The Audit Committee met
two times during 1998.
The Company has a standing Executive Compensation Committee. The current
members of the Executive Compensation Committee are Terrill M. Gloege, Thomas W.
Huston, and Debra L. Reed. The Executive Compensation Committee annually
recommends to the Board of Directors the compensation for each officer,
including the President and executive managers, for the ensuing year. During
1998, the Compensation Committee met six times.
The Company has a standing Growth Committee. The current members of the
Growth Committee are Richard M. Cannon, C. Bradley Olson and Langdon W. Owen.
The Growth Committee reviews and assesses acquisition proposals and makes
recommendations on acquisitions to the Board of Directors. The Growth Committee
met five times during 1998.
The Company does not have a standing Nominating Committee nor any other
committee performing similar functions.
Except for Mr. Brady (who was a director and an employee during 1998), the
Company paid each of its directors an annual fee of $4,200, plus $500 for each
meeting of the Board of Directors. In addition, Committee Chairpersons received
$750 for each committee meeting attended, and Committee members were paid $500
for each committee meeting attended.
<PAGE>
COMPENSATION POLICY
The Company's primary objective is to maximize shareholder value over time.
To accomplish this objective, the Company has adopted a comprehensive strategic
business plan. The overall goal of the Executive Compensation Committee of the
Company's Board of Directors (the Committee) is to develop executive
compensation policies which are consistent with and linked to the Company's
strategic plan and business objectives. Members of the Committee evaluate the
performance of the senior management team, including the Chief Executive
Officer, review and approve the base salary levels for the Company's senior
management team, review overall base salary levels for all managers in the
Company, and approve the annual salary increase budget of the Company. The
Committee also administers the Company's Annual Incentive Plan (AIP) and Stock
Incentive Plan (SIP). The Committee regularly reports to the full Board of
Directors on its activities.
COMPENSATION PHILOSOPHY AND PROGRAM ELEMENTS
The Committee bases its decisions on the Company's executive compensation
philosophy, which relates the level of the compensation given to the Company's
success in meeting its performance goals, rewards individual achievement, and
seeks to attract and retain qualified executives. The Company's executive
compensation program currently consists of three principal components: base
salary, potential for an annual incentive award under the Company's AIP based on
Company performance as well as individual performance, and stock option awards
under the Company's Stock Incentive Plan (SIP). The AIP and stock option
components constitute the "at risk" portion of the compensation program. The
Board of Directors uses long-term incentives to align executive interests with
the long-term interests of shareholders and put more compensation at risk. This
long-term incentive component was first used in 1997, after shareholder
approval, with the grant of stock options in lieu of base salary increases for
executives.
The Company's fundamental policy is to offer the Company's executives
competitive compensation opportunities based upon overall Company performance,
their individual contribution to the financial success of the Company, and their
personal performance. It is the Committee's objective to have a reasonable and,
over time, an increasing portion of each officer's compensation contingent upon
the Company's performance, as well as upon his or her own level of performance.
In 1998, the Board emphasized performance-based elements of compensation as a
method of increasing compensation levels to remain competitive with market
compensation levels.
The Committee believes that this structure will result in a total
compensation program for executives that is competitive with similar companies
and is a fair and reasonable cost to shareholders and ratepayers.
For fiscal 1998, the process utilized by the Committee in determining
executive management compensation levels took into account both qualitative and
quantitative factors. Among the factors considered by the Committee was data
provided by an independent management consulting firm specializing in executive
compensation. This firm was retained to assess the Company's compensation
policies and performance relative to similar indices for comparable companies
and assist with the design of the management compensation program. The
Committee reviewed this information and considered the provided data in the
context of the Company's business objectives, financial requirements, and
overall compensation policy.
<PAGE>
BASE SALARY
The Company positions its overall executive compensation levels at or near
the median of the range of base salary and total compensation levels for other
companies comparable to the Company in this industry and who are viewed as
competitors for executive talent in the overall labor market.
The Company uses a formal performance review system for all employees,
including the Chief Executive Officer and the other executive management. This
process generates information that the Committee uses in making decisions on
base compensation and management incentive awards. The Chief Executive Officer
is responsible for preparing the reviews on all executive management other than
himself. The Committee is responsible for reviewing the Chief Executive Officer
against established performance objectives. All reviews are discussed and
approved by the Committee. Executive performance is measured both in terms of
the performance of the Company as a whole and various individual performance
factors, including the overall professional performance and managerial
accomplishments of the individual.
The base salary for each executive manager is set within the formal
established salary range for the position which is based on market rates for
comparable positions as determined by the annual survey process. Individual
salaries are set within the range on the basis of personal performance. The
total salary increase budget for the Company is based on marketplace norms.
Individual salary increases for officers are based on position relative to
market and individual performance as assessed through the performance review
system and achievement of annually determined performance goals and objectives.
For fiscal 1998, in lieu of base salary increases, increases in annual incentive
opportunity levels and stock option grants were used to bring total compensation
levels to market rates. No base salary increases were awarded to executive
management other than to the Chief Executive Officer, as described below.
ANNUAL INCENTIVE PLAN, AIP
The current AIP, approved by the Board of Directors in 1993 and
subsequently revised, is structured to ensure that executive management of the
Company have an opportunity to earn additional compensation only when the
Company and the individual officers have performed at a level that produces
acceptable results for shareholders. Each executive management has an
established incentive award target for the fiscal year. The available funding
for incentive award payments is subject to specified levels of Company financial
performance established at the start of the fiscal year. Actual incentive
awards paid reflect both achievement of corporate objectives and an individual's
accomplishment of functional objectives, with greater weight being given to
achievement of corporate rather than independent objectives.
Under the AIP, cash awards to a maximum amount of 25% of base salary for
the Chief Executive Officer (CEO) and 20% of salary for other participants are
available based upon the Company's attainment of certain financial targets, the
individual's contribution to the attainment of these Company objectives,
performance against personal objectives, and a subjective assessment by the
Company's CEO and the Board of each executive's professional performance (with
assessment by the Board for the CEO). These maximum incentive opportunity
levels represent a 5 percentage point increase over 1997 levels, granted in lieu
of base salary increases for all executives other than the CEO. Awards are paid
to participants annually during the year following the year for which
performance was assessed.
For 1998, the availability of an annual incentive pool was contingent on
the Company achieving a threshold level of return on equity relative to the
industry peer group, and individual AIP awards were based on the Company meeting
performance objectives established by the Board of Directors. Individual
officers are also assessed on individual performance objectives and their
overall professional performance in the position. No 1998 AIP awards will be
granted to the Chief Executive Officer or executive management based on the
Company's financial results.
<PAGE>
LONG-TERM INCENTIVE COMPENSATION
This SIP provides for awards of stock options, payment of AIP awards in
shares of the Company's common stock, restricted stock awards, and dividend
equivalent payments.
Generally, the Committee intends the size of each option grant to be set at
a level that is reflective of the competitive market for long-term compensation
among peer water utilities and that the Committee deems necessary to create a
meaningful opportunity for stock ownership based upon the individual's position
with the Company, the individual's potential for future responsibility and
promotion, and the individual's performance in the recent period. The relative
weight given to each of these factors will vary from individual to individual at
the Committee's discretion, based on the recommendation made by the CEO to the
Committee.
Each stock option grant allows the employee to acquire shares of the
Company's common stock at a fixed price per share (no less than the market price
on the date of grant) over a specified period of time. Options vest in periodic
installments over a multi-year period, contingent upon the executive
management's continued employment with the Company. Accordingly, the option
will provide compensation to the executive management only if he/she remains in
the Company's employ, and then only if the market price of the Company's common
stock appreciates over the option term. The number of options granted will only
provide a competitive level of compensation if the Company's stock price exceeds
historical growth rates over time.
In July 1998, the Company granted options under the SIP to six executive
managers. The options were issued at fair market value with the exercise price
equal to the Company's stock price at the date of grant which was $18.00 for all
options granted during 1998. Options vest in even increments over the next four
years; are exercisable in whole or in installments; and expire ten years from
date of grant. The Committee does not anticipate, and has no plans to make, any
awards of restricted stock. All of the options were outstanding at December 31,
1998. The Company did not provide for any dividend equivalent to the executive
managers.
In view of the contemplated merger (the Merger) with a subsidiary of
California Water Service Group (Group), as described in the Company's proxy
statement dated April 7, 1999, for its special meeting of shareholders to be
held on May 12, 1999, to consider and to approve the Merger, the Company does
not anticipate issuing any additional options under the SIP for 1999 year. In
accordance with the Merger, the Company is restricted from granting additional
options or stock under the SIP. Stock options granted during 1998 and 1997
years will be accelerated if the Merger is approved.
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
To determine the compensation arrangements for the Chief Executive Officer
(CEO) in 1998, the Committee applied the compensation philosophy and objectives
outlined above. Considerations included the average salary and annual incentive
compensation levels for comparable positions in the market, the extent to which
the Company's annual performance goals were achieved, and the extent to which
the Company's overall strategy was successfully implemented.
The annual base salary for Mr. Brady, the Company's President and CEO, was
established by the Board at his date of hire in 1995. During 1998, Mr. Brady's
base salary was adjusted to $165,000. Under the SIP, Mr. Brady was awarded and
granted 4,500 options in 1998. Stock options vest in even increments over four
years.
The CEO's incentive compensation award of $26,402 paid in 1998 was entirely
dependent upon the Company's financial performance and his individual
performance during 1997 as assessed by the Board of Directors and did not
include any provisions for guaranteed payments. Each year, the AIP is
reevaluated with a new achievement threshold and new targets for financial
performance.
DEBRA L. REED, CHAIRPERSON
TERRILL M. GLOEGE
THOMAS W. HUSTON
<PAGE>
EXECUTIVE COMPENSATION
Set forth below is certain information with respect to two of the Company's
executive officers. All officers have served at the discretion of the Board of
Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY YEARS AS OFFICER
- ---- --- ------------------------- ----------------
<S> <C> <C> <C>
Brian J. Brady 50 President, Chief Executive Officer, and 3
Chairman of the Board
John S. Tootle 45 Chief Financial Officer, Vice President of 12
Finance, Treasurer and Secretary
</TABLE>
The following table sets forth the compensation paid by the Company in 1998
and its two prior fiscal years to the Company's Chief Executive Officer and
three other executive managers of the Company whose total annual salary and
bonus exceeded $100,000 in 1998:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
AUTO & OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
- ------------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Brian J. Brady 1998 $158,226.29 $26,402.00 $3,600.00
President & Chief Executive Officer 1997 150,009.60 16,200.00 3,920.54
1996 149,023.60 2,000.00 3,766.80
John S. Tootle 1998 113,834.92 15,295.00 4,275.00
Chief Financial Officer, Treasurer, 1997 113,297.61 8,800.00 4,140.23
Vice President of Finance, Secretary 1996 110,557.60 6,200.00 5,116.60
Susan L. Leone 1998 88,237.36 11,815.00 6,503.50
Director of Integrated Services 1997 87,721.66 - 6,672.71
1996 6,731.20 - -
Terry H. Witthoft 1998 90,771.15 12,015.00 660.00
Director of Resource Development 1997 90,232.02 6,900.00 660.00
1996 87,592.00 4,200.00 720.00
</TABLE>
<PAGE>
OPTIONS AND LONG-TERM INCENTIVE PLANS
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING PERFORMANCES OR OTHER PERIOD
YEAR NAME OPTIONS UNTIL MATURATION OR PAYOUT EXPIRATION DATE
--- ---- ---------- ----------------------------- ---------------
<S> <C> <C> <C> <C>
1998 Brian J. Brady 4,500 1,125 options every year for the July 14, 2008
next four years.
John S. Tootle 2,700 675 options every year for the July 14, 2008
next four years.
Susan L. Leone 2,100 525 options every year for the July 14, 2008
next four years.
Terry H. Witthoft 2,100 525 options every year for the July 14, 2008
next four years.
1997 Brian J. Brady 9,000 2,250 options exercisable and June 23, 2007
2,250 options every year for the
next three years.
John S. Tootle 5,400 1,350 options exercisable and June 23, 2007
1,350 options every year for the
next three years.
Susan L. Leone 3,000 750 options exercisable and June 23, 2007
750 options every year for the
next three years.
Terry H. Witthoft 4,200 1,050 options every year for the June 23, 2007
next three years.
</TABLE>
In accordance with the Plan and the granted option agreements vesting of options
granted will be accelerated so such options will be exercisable prior to a
change in control of the Company.
<PAGE>
PENSION PLAN
The Company has a non-contributory defined benefit pension plan (the
Defined Benefit Plan). Benefits are determined under a formula applied
uniformly to all employees, regardless of position. The annual benefits is
dependent on length of service and cash compensation received by the employee.
An employee's interest in the Defined Benefit Plan becomes fully vested
after completing full five plan years of service with the Company. Benefits are
payable monthly upon retirement. The benefits listed in the following table are
not subject to any deduction for Social Security or other offset amounts. The
following table illustrates the estimated annual benefits payable upon
retirement for persons in the earnings classifications with years of service as
shown.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
SALARY FOR 5
HIGHEST
CONSECUTIVE ANNUAL BENEFITS BASED ON LENGTH OF SERVICE
------------------------------------------
10 YEARS 15 YEARS 20 YEARS 25 YEAR 30 YEARS 35 YEARS
-------- -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 30,000 $ 8,100 $12,200 $16,200 $ 20,300 $ 24,300 $ 28,400
40,000 10,800 16,200 21,600 27,000 32,400 37,800
50,000 13,500 20,300 27,000 33,800 40,500 47,300
60,000 16,200 24,300 32,400 40,500 48,600 56,700
70,000 18,900 28,400 37,800 47,300 56,700 66,200
80,000 21,600 32,400 43,200 54,000 64,800 75,600
90,000 24,300 36,500 48,600 60,800 72,900 85,100
100,000 27,000 40,500 54,000 67,500 81,000 94,500
110,000 29,700 44,600 59,400 74,300 89,100 104,000
120,000 32,400 48,600 64,800 81,000 97,200 113,400
130,000 35,100 52,700 70,200 87,800 105,300 122,900
140,000 37,800 56,700 75,600 94,500 113,400 132,300
150,000 40,500 60,800 81,000 101,300 121,500 141,800
160,000 43,200 64,800 86,400 108,000 129,600 151,200
170,000 45,900 68,900 91,800 114,800 137,700 160,700
</TABLE>
Payments which are made by the Company to the Defined Benefit Plan are
computed on an actuarial basis. The benefits described in the table above are
not subject to any deduction for Social Security or other offset amounts. No
contributions were made to the Defined Benefit Plan for the plan year ended
February 28, 1999. The vested plan years of service for Brian J. Brady and John
S. Tootle are two and eleven years respectively.
<PAGE>
CERTAIN TRANSACTIONS
Watson Land Company leases to the Company two well sites for which the
Company paid rent of $40,732 in 1998. This lease continues until 2010 with
annual adjustments to the rental agreement based upon the Consumer Price Index.
Watson Land Company holds 8.6% of the Company's outstanding common stock.
Richard M. Cannon is President and Chief Executive Officer of Watson Land
Company and Thomas W. Huston is employed by Watson Land Company. The Company
believes that the terms of these transactions are at least as favorable to the
Company as they would have been if they had been negotiated with an unaffiliated
third party.
Carson Estate Company leases to the Company one well site for which the
Company paid rent of $19,674 in 1998. Dominguez Energy LP, an affiliate of
Carson Estate Company and Watson Land Company, leases to the Company one well
site for which the Company paid rent of $3,846 in 1998. The leases continue
until 2021 and 2002 respectively, with annual adjustments to the rental amount
based upon the Consumer Price Index. Carson Estate Company holds 9.5% of the
Company's outstanding common stock. C. Bradley Olson is President of Carson
Estate Company and Terrill M. Gloege is Senior Vice President and Chief
Financial Officer of Carson Estate Company. The Company believes that the terms
of these transactions are at least as favorable to the Company as they would
have been if they had been negotiated with an unaffiliated third party.
The Company has a 20% percent ownership interest in Chemical Services
Company (CSC) with an option to acquire an additional forty percent through the
year 2001. The Company purchases chlorine generation equipment and supplies
from CSC. In 1998, purchases from CSC totaled approximately $393,000. The
Company believes that the terms of these purchases are at least as favorable to
the Company as they would have been if they had been negotiated with an
unaffiliated third party.
<PAGE>
PERFORMANCE GRAPH
The following graph compares the growth in the cumulative total shareholder
return on the Company common stock for each of the years 1993 to 1998 with the
performance over the same period of the Standard & Poor's 500 Composite Stock
Price Index and the Standard & Poor's Utilities Index. These returns were
calculated assuming and initial investment of $100 in the Company common stock
and reinvestment of all dividends.
SHAREHOLDER RETURN
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Dominguez Services Corporation 100.00 84.65 100.04 128.89 194.06 261.70
Standard & Poor's 500 100.00 101.32 139.37 171.36 228.51 293.82
E. D. Jones 100.00 92.66 117.58 141.16 192.79 243.88
</TABLE>
<PAGE>
PROPOSAL II
INDEPENDENT AUDITORS
(Item 2 on Proxy Card)
The appointment of Arthur Andersen LLP by the Board of Directors is based
on the recommendation of the Audit Committee, which historically has reviewed
both the audit scope and the estimated audit fees and related services for the
coming year.
The Audit Committee has based its recommendation on Arthur Andersen LLP's
special expertise with respect to complex tax and accounting issues applicable
to regulated utilities. Arthur Andersen LLP has audited the Company's financial
statements since 1989.
A representative of Arthur Andersen LLP will attend the meeting and, if he
so desires, make a statement and respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
RATIFY, CONFIRM, AND APPROVE THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS AUDITORS
FOR THE COMPANY AND ITS SUBSIDIARIES.
SHAREHOLDER PROPOSALS
Eligible shareholders who wish proposals to be considered for inclusion in
the proxy solicitation materials relating to the 2000 Annual Meeting must submit
such proposals to the Company no later than December 2, 1999. An eligible
shareholder is one who owns at least one percent, or $1,000, in market value of
the voting securities entitled to vote at the 2000 Annual Meeting of
Shareholders and who has held such securities for at least one year and
continues to hold such securities through the date of that Annual Meeting. If
the Merger occurs, however, the Company will be merged into a subsidiary of
Group and Company shareholder will become shareholder of Group. The Company
anticipates that the Merger would occur prior to its 2000 Annual Meeting of
Shareholders.
OTHER MATTERS
The Board of Directors knows of no business to be transacted at the Annual
Meeting other than that described above. Should other matters properly come
before the Annual Meeting, including any adjournments thereof, action may be
taken thereon pursuant to the proxies in the form enclosed, which confer
discretionary authority on the persons named therein with respect to such
matters.
<PAGE>
ANNUAL REPORT
The 1998 Annual Report to Shareholders is being mailed to shareholders together
with this Proxy Statement. The Company will provide to any shareholder,
without charge, a copy of its Annual Report on form 10-K for the year ended
December 31, 1998, including financial statements and financial statement
schedules appended thereto, upon the written request of any such shareholder.
Requests should be directed to Dominguez Services Corporation, 21718 South
Alameda Street, Long Beach, California 90810, Attention: John S. Tootle,
Secretary. This report is also available on the EDGAR web site address
http:/www.sec.gov.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ JOHN S. TOOTLE
JOHN S. TOOTLE
CORPORATE SECRETARY
MAY 3, 1999
<PAGE>
DIRECTIONS TO TORRANCE MARRIOTT HOTEL
From 405 Freeway North:
Take Crenshaw Boulevard exit. Make a left turn at the exit and another left
on Crenshaw Boulevard. Proceed to Torrance Boulevard (about 2 miles) and
make a right. Turn left at Delores Way (about 1 1/2 mile). Marriott
Hotel and a parking lot are on the right.
TORRANCE MARRIOTT
3635 FASHION WAY
TORRANCE, CA 90503
(310) 316-3636
<PAGE>
DOMINGUEZ SERVICES CORPORATION
21718 South Alameda Street
Long Beach, CA 90810-0351
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS - JUNE 8, 1999
The undersigned hereby appoints Brian J. Brady and John S. Tootle, or
either of them, each with full power of substitution, proxies of the
undersigned to vote all shares of common stock which the undersigned is
entitled to vote at the Company's Annual Meeting of Shareholders, scheduled to
be held on June 8, 1999, and at all adjournments thereof. The proxies have
authority to vote such shares, as specified on the reverse side hereof, (1) to
elect directors and (2) to appoint independent auditors. The proxies are
further authorized to vote such shares upon any other business that may
properly come before the Annual Meeting or any adjournments thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
Please Detach and Mail in the Envelope Provided
Please mark your
A /X/ vote as in this
example.
THE DIRECTORS RECOMMEND A VOTE FOR THE ELECTION OF EACH NOMINEE
AND FOR ITEM 2. THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THIS
RECOMMENDATION UNLESS OTHERWISE SPECIFIED
WITHHELD
FOR FOR ALL
1. ELECTION OF / / / / Nominees: Dwight C. Baum
DIRECTORS Brian J. Brady
Richard M. Cannon
INSTRUCTION: To withhold authority to vote for Terrill M. Gloege
any individual nominee, strike a line through Thomas W. Huston
the nominee's name in the list at right. Langdon W. Owen
Charles W. Porter
Debra L. Reed
FOR AGAINST ABSTAIN
Item 2. Appointment of Arthur Andersen / / / / / /
LLP as independent Auditors
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD
IN THE ENCLOSED ENVELOPE.
Note: Change of Address Change of Address / /
to the left
- ------------------------------------
- ------------------------------------
- ------------------------------------
Signature(s)___________________________________________ Date _____________, 1999
Note: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
