<PAGE> 1
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only
/X/ Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
Southern California Water 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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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> 2
SOUTHERN CALIFORNIA WATER COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS -- APRIL 30, 1996
Dear Shareholder:
The Annual Meeting of the Shareholders of Southern California Water Company
(the "Company") will be held at the Industry Hills Sheraton, One Industry Hills
Parkway, City of Industry, California, on Tuesday, April 30, 1996, at 10:00
A.M., Pacific time, for the following purposes:
1. To elect seven directors to the Board of Directors to serve until the
next Annual Meeting of Shareholders and until their successors are
elected and qualified.
2. To transact any other business which may properly come before the
meeting or any adjournment thereof.
The Board of Directors has nominated the following individuals for election
as directors: Jean E. Auer, William V. Caveney, R. Bradbury Clark, N.P. Dodge,
Jr., Robert F. Kathol, Lloyd E. Ross and Floyd E. Wicks.
The Board of Directors has fixed the close of business on March 4, 1996, as
the record date for the determination of shareholders entitled to notice of and
to vote at this meeting or any adjournment thereof.
It is important that every shareholder, whether owning one or more shares
and whether or not expecting to attend the meeting in person, sign, date and
promptly return the enclosed proxy. A return envelope, requiring no postage if
mailed in the United States, is enclosed for convenience. By returning your
signed proxy, you can help assure a quorum to transact the business of the
meeting.
By order of the Board of Directors
(SIG)
James B. Gallagher
Secretary
San Dimas, California
March 15, 1996
<PAGE> 3
PROXY STATEMENT
SOUTHERN CALIFORNIA WATER COMPANY
630 EAST FOOTHILL BOULEVARD
SAN DIMAS, CALIFORNIA 91773
------------------------
SOLICITATION OF PROXY AND RIGHT OF REVOCATION
The accompanying proxy is solicited by and on behalf of the Board of
Directors (the "Board" or the "Board of Directors") of Southern California Water
Company (the "Company") for use at the Annual Meeting of Shareholders to be held
on April 30, 1996 (the "Annual Meeting"), or any adjournment thereof. Any
shareholder giving a proxy has the power to revoke it at any time before it is
exercised by attending the meeting and voting in person or by a writing
delivered to the Company stating that the proxy is revoked or by a subsequent
proxy executed by the shareholder and presented to the meeting. All shares
represented by each properly executed, unrevoked proxy received in time for the
meeting will be voted as marked on the proxy. If the proxy is signed and
returned, but is not marked, it will be voted for all nominees listed or, if
cumulative voting applies, at the discretion of the proxies named on the
accompanying proxy card, as described herein. You are encouraged to mark your
proxy carefully in accordance with its instructions. Proxy solicitation expense
will be paid by the Company. This proxy statement and the accompanying proxy
were mailed on or about March 15, 1996.
VOTING RIGHTS
The Company's voting securities outstanding on March 4, 1996 were 86,400
Preferred Shares and 7,845,092 Common Shares. Each Preferred Share is entitled
to one vote and each Common Share is entitled to one-tenth of one vote. Except
as otherwise provided in the Company's Articles of Incorporation, as amended,
and under applicable law, Common and Preferred shareholders vote as a single
class.
Votes cast by proxy or in person at the meeting will be counted by an
inspector of election appointed by the Board of Directors to act as an election
inspector for the meeting. Shares represented by proxies that reflect
abstentions will be treated as present and entitled to vote for purposes of
determining the presence of a quorum. Abstentions, however, will not constitute
a vote "for" or "against" any matter and thus will be disregarded in the
calculation of a plurality or of votes cast on any matter submitted to the
shareholders for a vote.
1
<PAGE> 4
The inspector of election will treat shares referred to as "broker
non-votes" (i.e., shares held by brokers or nominees as to which instructions
have not been received from the beneficial owners or persons entitled to vote
that the broker or nominee does not have discretionary power to vote on a
particular matter) as shares that are present and entitled to vote for purposes
of determining the presence of a quorum. However, for purposes of determining
the outcome of any matter as to which the broker has physically indicated on the
proxy that it does not have discretionary authority to vote, those shares will
be treated as not present and not entitled to vote with respect to that matter
(even though those shares are considered present for quorum purposes and may be
entitled to vote on other matters). Any unmarked proxies, including those
submitted by brokers or nominees, will be voted as indicated in the accompanying
proxy card.
In the election of directors, the candidates for election receiving the
highest number of affirmative votes of the shares entitled to be voted for them,
up to the number of directors to be elected, will be elected. Votes cast against
a candidate or votes withheld will have no legal effect. No shareholder will be
entitled to cumulate votes (i.e., cast for any candidate a number of votes
greater than the number of such shareholder's shares in the case of Preferred
Shares or one-tenth that number in the case of Common Shares) unless such
candidate's name has been placed in nomination prior to the voting and the
shareholder has given notice at the meeting, prior to the voting, of the
shareholder's intention to cumulate the shareholder's votes. If any one
shareholder has given such notice, all shareholders may cumulate their votes for
candidates who have been nominated. If voting for directors is conducted by
cumulative voting, each share will be entitled to the number of votes equal to
the number of directors authorized times the number of votes to which such share
is otherwise entitled, which votes may be cast for a single candidate or may be
distributed among two or more candidates in whatever proportion the shareholder
may desire. The accompanying proxy card will grant the named proxies
discretionary authority to vote cumulatively, if cumulative voting applies. If
voting is not conducted by cumulative voting, each Preferred Share will be
entitled to one vote and each Common Share will be entitled to one-tenth of one
vote, and shareholders having a majority of the voting power exercised at the
meeting will be able to elect all of the directors if they choose to do so. In
that event, the other shareholders will be unable to elect any director or
directors.
Except as otherwise provided in the Company's Articles of Incorporation, on
all matters other than the election of directors, the affirmative vote of the
majority of the voting power of shares represented and voting at the meeting (if
the shares voting affirmatively also represent at least a majority of the voting
power required for a quorum) is required for the shareholders to take action.
Assuming the presence of a quorum, the shareholders present at the meeting may
continue to do business until adjournment, notwithstanding the withdrawal of
shareholders holding sufficient voting power to leave less than a quorum, if any
action taken (other than adjournment) is approved by at least a majority of the
voting power required to constitute a quorum.
2
<PAGE> 5
ITEM 1.
ELECTION OF DIRECTORS
Action will be taken at the Annual Meeting to elect seven directors to the
Board of Directors to serve until the next Annual Meeting of Shareholders and
until their successors are elected and qualified. It is intended that the
proxies solicited and received by and on behalf of the Board of Directors will
be voted for the re-election of the current directors, who are standing for
re-election (the "Nominees"), unless authority is withheld. If voting for
directors is conducted by cumulative voting, the proxies named on the enclosed
form of proxy will have discretionary authority to cumulate votes among the
Nominees named herein.
The proxies may also be voted for a substitute Nominee or Nominees in the
event any one or more of the persons named below shall be unable to serve for
any reason or be withdrawn from nomination, a contingency not now anticipated.
A brief biography of each Nominee is set forth below, including the
Nominee's business experience during the last five years.
JEAN E. AUER, Consultant to the CalFed Bay Delta Program and member of the
town council of Hillsborough, California. Mrs. Auer served as Consultant to the
San Francisco Estuary Project (1990-1995). Mrs. Auer has previously served as a
member of the National Drinking Water Advisory Board to the United States
Environmental Protection Agency, a member of the California State Water
Resources Control Board and a member of both the Central Coast and the San
Francisco Regional Water Quality Control Boards. Mrs. Auer, age 59, is a member
of the Company's Compensation and Business Opportunities Committees and has
served as a director of the Company since 1995.
WILLIAM V. CAVENEY, Chairman of the Board of Directors of the Company since
April, 1992. Mr. Caveney was Chairman of the Board and Chief Executive Officer
of the Company from April, 1990 to March, 1992 and President and Chief Executive
Officer of the Company from April, 1982 to March, 1990. Mr. Caveney, age 69, is
Chairman of the Company's Compensation Committee and a member of the Business
Opportunities Committee and has served as a director of the Company since 1980.
R. BRADBURY CLARK, Of Counsel to the law firm of O'Melveny & Myers in Los
Angeles, California. Until February 1, 1993, Mr. Clark was a partner in that
firm. Mr. Clark, age 71, is a member of the Company's Compensation, Business
Opportunities and Audit Committees and has served as a director of the company
since 1970.
N.P. DODGE, JR., President of the N.P. Dodge Company, a full service real
estate concern in Omaha, Nebraska. Mr. Dodge, age 59, is a director of the Omaha
Public Power District. Mr. Dodge
3
<PAGE> 6
is a member of the Company's Compensation Committee and Chairman of the Audit
Committee and has served as a director of the Company since 1990.
ROBERT F. KATHOL, Executive Vice President of Kirkpatrick, Pettis, Smith,
Polian, Inc., an investment banking firm in Omaha, Nebraska. Mr. Kathol, age 55,
is a member of the Company's Compensation and Audit Committees and has served as
a director of the Company since 1995.
LLOYD E. ROSS, Chairman, President and Chief Executive Officer of SMI
Construction Co., a commercial and industrial general contracting firm in
Irvine, California. Mr. Ross also is a director of PacifiCare Health Systems.
Mr. Ross, age 55, is a member of the Company's Compensation Committee and
Chairman of the Business Opportunities Committee and has served as a director of
the Company since 1995.
FLOYD E. WICKS, President and Chief Executive Officer of the Company since
April, 1992. Mr. Wicks served as President of the Company from April, 1990 to
March, 1992 and as Vice President of Operations from January, 1988 to March,
1990. Mr. Wicks, age 52, is a member of the Company's Business Opportunities
Committee and has served as a director of the Company since 1990.
No Nominee is or has been employed in his or her principal occupation or
employment during the past five years by the Company or other organization that
is a parent, subsidiary or affiliate of the Company, other than Mr. Caveney and
Mr. Wicks whose relationships are as described above.
The following table sets forth, as of March 4, 1996, the beneficial
ownership of Common Shares of the Company by each Nominee. No Nominee owns any
of the Company's Preferred Shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF CLASS
NAME BENEFICIAL OWNERSHIP BENEFICIALLY HELD
---- -------------------- -----------------
<S> <C> <C>
Jean E. Auer................................ 400 *
William V. Caveney.......................... 7,441 *
R. Bradbury Clark........................... 2,898 *
N.P. Dodge, Jr. ............................ 3,100 *
Robert F. Kathol............................ 600 *
Lloyd E. Ross............................... 400 *
Floyd E. Wicks.............................. 1,603 *
</TABLE>
- ---------------
* Less than one percent
During 1995, reports required by Section 16(a) of the Securities Exchange
Act of 1934 covering two transactions in the Common Shares of the Company for
Lloyd E. Ross were not timely filed.
O'Melveny and Myers, for which R. Bradbury Clark is of counsel, and of
which he is a retired partner, provides legal services to the Company on a
variety of matters.
4
<PAGE> 7
Kirkpatrick, Pettis, Smith, Polian Inc., of which Robert F. Kathol is an
Executive Vice President, has served, at various times in the past five years,
as co-manager of the Company's offerings of Common Shares and as co-agent on the
Company's debt issuances. A subsidiary, KPM Investment Management, Inc., had
also been, until December, 1995, the Company's 401(k) Plan investment manager.
Neither Kirkpatrick, Pettis, Smith, Polian Inc. nor its subsidiaries currently
provide any services to the Company.
The Board of Directors has an Audit Committee, a Compensation Committee and
a Business Opportunities Committee. The Audit Committee provides advice and
assistance to the Board of Directors on accounting and financial reporting
practices of the Company. It reviews the scope of audit work and findings of the
firm of independent public accountants who serve as auditors of the Company, and
also monitors the work of the Company's internal auditors. It also reviews the
qualifications of and recommends to the Board of Directors a firm of independent
auditors and reviews and approves fees charged by the independent auditors. The
Compensation Committee reviews and makes recommendations to the Board of
Directors as to appropriate compensation for the President and other executive
officers of the Company and determines the awards to be made under the Company's
Key Executive Long-Term Incentive Plan (see table and accompanying footnotes on
pages 8 and 9). The Business Opportunities Committee reviews potential changes
to the regulated and non-regulated operations of the Company including
acquisitions, divestitures, joint ventures and partnerships and makes
recommendations to the Board of Directors as to the financial and operational
integrity of such changes. There is no Executive Committee or Nominating
Committee.
Outside directors (presently all directors except Messrs. Caveney and
Wicks) are currently paid an annual retainer, payable monthly, of $15,000. In
addition, each such director receives a $1,000 fee for each meeting attended,
although the regular and organizational meetings of the board in April are
deemed one meeting for purposes of the per-meeting fee. In addition, after
November, 1995, each outside director who is a member of the Compensation
Committee, Audit Committee or Business Opportunities Committee will receive a
$500 fee for each meeting attended and the chairperson of each committee, if an
outside director, will receive an additional fee of $250 for each committee
meeting attended.
Chairman of the Board Caveney earned $94,500 as chairman during 1995, which
is the current annual rate for such service. President Wicks was compensated as
an officer of the Company. Neither Mr. Caveney nor Mr. Wicks received separate
compensation as a director.
During 1995, directors met as a board six times. The Audit Committee met
four times in 1995, the Compensation Committee met five times in 1995 and the
Business Opportunities Committee met once in 1995. No director attended less
than 75% of the board meetings and other committee meetings on which such
director serves.
5
<PAGE> 8
EXECUTIVE OFFICERS
EXPERIENCE, SECURITY OWNERSHIP AND COMPENSATION
In addition to Chairman Caveney (information about whose business
experience and beneficial share ownership is set forth on pages 3 and 4), the
Company had seven executive officers as of December 31, 1995. Information
regarding the identities, business experience and beneficial ownership of shares
of those seven individuals is shown in the following table and footnotes
thereto:
<TABLE>
<CAPTION>
HELD SUCH COMMON SHARES PERCENT
PRINCIPAL OCCUPATION AND EXPERIENCE POSITION BENEFICIALLY OF
NAME DURING THE PAST FIVE YEARS AGE SINCE OWNED CLASS
---- ----------------------------------- --- --------- ------------- -------
<S> <C> <C> <C> <C> <C>
Floyd E. Wicks President and Chief Executive 52 4/92 1,603 *
Officer(1)
Thomas J. Bunosky Vice President -- Customer Service of 41 4/94 435 *
Region II(2)
Joel A. Dickson Vice President -- Customer Service of 43 4/94 2,063 *
Region III(3)
James B. Gallagher Vice President -- Finance, Chief 41 4/94 867 *
Financial Officer and Secretary(4)
Donald K. Saddoris Vice President -- Customer Service of 52 4/94 2,726 *
Region I(5)
Randell J. Vogel Vice President -- Customer and 60 4/94 610 *
Operations Support(6)
Joseph F. Young Vice President -- Regulatory Affairs(7) 51 4/94 8,645 *
</TABLE>
- ---------------
* Less than one percent
(1) President from 4/90 to 3/92.
(2) Vice President of Operations from 3/93 to 3/94, Manager of Operations from
5/91 to 2/93 and Director of Engineering, Production and Water Resources
from 12/90 to 4/91.
(3) Vice President -- Regulatory Affairs and Utility Business Development 9/90
to 3/94.
(4) Secretary, Treasurer and Chief Financial Officer from 10/90 to 3/94.
(5) Director of Operations -- Northern/Coastal Division from 5/90 to 3/94.
(6) Vice President of Administration from 2/93 to 3/94, Director of
Administration from 1/93 to 2/93, Director of Information Systems from 6/92
to 12/92; Executive Vice President and Chief Operating Officer of Suburban
Water Systems from 10/85 to 4/92.
(7) Assistant Vice President for Conservation Management and Governmental
Affairs from 4/92 to 3/94, Assistant Vice President of Operations from 5/91
to 3/92 and Director of Operations from 4/89 to 4/91.
Directors and executive officers of the Company as a group beneficially own
31,788 Common Shares of the Company, which is less than one percent of the total
shares outstanding. No director or executive officer of the Company owns any of
the Company's outstanding Preferred Shares.
6
<PAGE> 9
The following table sets forth information on compensation of the Company's
Chief Executive Officer and its four most highly compensated executive officers
for the three most recent calendar years:
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL PAYOUTS
COMPENSATION ------------
NAME AND PRINCIPAL ------------ LTIP ALL OTHER
POSITION YEAR SALARY(1) PAYOUTS(2) COMPENSATION(3)
------------------ ---- ------------ ------------ ---------------
<S> <C> <C> <C> <C>
Floyd E. Wicks - 1995 $263,584 $ 4,767
President and Chief 1994 251,796 3,700
Executive Officer 1993 237,918 3,332
Joel A. Dickson - Vice 1995 147,039 4,548
President - Customer 1994 139,625 2,313
Service of Region III 1993 132,687 2,288
Thomas J. Bunosky - 1995 142,739 4,452
Vice President - 1994 138,307 2,282
Customer Service 1993 130,807(4) 2,231
of Region II
Randell J. Vogel - Vice 1995 143,699 4,322
President - Customer 1994 124,023 2,061
and Operations 1993 114,818(4) 267
Support
James B. Gallagher - Vice 1995 128,167 3,990
President - Finance, 1994 121,488 2,016
Chief Financial Officer 1993 111,678 1,944
and Secretary
</TABLE>
- ---------------
(1) The executive officers of the Company receive certain perquisites, including
the personal use of a Company vehicle and personal computer. However, the
aggregate amount of such perquisites received by each named officer does
not, in the case of any such named officer, exceed 10% of the total annual
salary of any such named officer.
(2) The Company has a Key Executive Long-Term Incentive Plan, the provisions of
which became effective on January 1, 1995. Any payouts, which are made in
cash and/or Common Shares of the Company, would not occur prior to 1998,
except as otherwise provided in the Plan.
(3) Includes Company payment of premium on business travel and accident policy
of $39 per person per year and Company payment of the premium on group life
insurance of $228 per person per year. The balance represents the Company's
matching contribution to the 401(k) Plan for the benefit of the named
officer.
(4) Elected executive officer in April, 1993.
7
<PAGE> 10
The Company currently has no other bonus, profit sharing, stock option,
stock appreciation right or other remunerative program (other than pension and
welfare benefits) in effect. The Company implemented a Key Executive Long-Term
Incentive Plan effective as of January 1, 1995 (see footnote 2 above). The
following table sets forth information about this Plan.
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
OR OTHER PRICE-BASED PLANS(B)
PERIOD UNTIL -------------------------------------------
NAME AND PRINCIPAL MATURATION THRESHOLD TARGET MAXIMUM
POSITION OR PAYOUT(A) (# OR $)(C) (# OR $)(D) (# OR $)(C)
------------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
Floyd E. Wicks - 3 years $15,120 N/A $108,800
President and Chief
Executive Officer
Joel A. Dickson - Vice 3 years $ 6,345 N/A $ 42,300
President - Customer
Service of Region III
Thomas J. Bunosky - 3 years $ 6,255 N/A $ 41,700
Vice President -
Customer Service
of Region II
Randell J. Vogel - 3 years $ 5,490 N/A $ 36,600
Vice President -
Customer and
Operations Support
James B. Gallagher - 3 years $ 5,310 N/A $ 35,400
Vice President -
Finance, Chief
Financial Officer
and Secretary
</TABLE>
- ---------------
(A) It is intended, but not required, under the Company's Key Executive
Long-Term Incentive Plan that a three-year performance cycle (as such cycle
is defined in the Plan, the "Performance Cycle") until payout of the awards
under the Plan will begin to run at the start of each calendar year. Payment
of awards is to be made as soon as practicable after the end of the
Performance Cycle to which they relate. If Termination of Service (as
defined in the Plan) of a participant occurs during a Performance Cycle for
any reason other than death, disability, normal retirement or early
retirement, the participant will forfeit the opportunity to receive an award
for that Performance Cycle. If a participant dies, becomes disabled or
retires during a Performance Cycle, the participant will be eligible to
receive a pro rata award (based on the number of days the participant was
employed substantially full-time during that Performance Cycle) for that
Performance Cycle. The Plan also contains provisions for the payment of
awards if there is a change of control of the Company (as defined in the
Plan) before the end of a Performance Cycle.
(B) Awards under the Plan are established as a percentage of each Plan
participant's annual base salary and are payable in cash and/or Company
Common Shares. Awards for the Performance Cycle that began in 1995 will be
based on the Company's ranking, expressed as a percentile, for
8
<PAGE> 11
growth in earnings per share and total shareholder return relative to the
corresponding measures for the companies that comprise the Peer Group
referred to on page 14. A ranking below the 40th percentile among the
companies in the Peer Group with respect to either performance measure will
result in no award with respect to that measure, while the maximum award for
either performance measure will be paid for a ranking at or above the 75th
percentile with respect to that measure. Awards will be reduced if the
Company's return on equity falls more than 50 basis points below the
Company's Authorized Rate of Return (as defined in the Plan), and awards
will not be paid at all if the Company's share price at the end of a
Performance Cycle is less than 80% of its price at the beginning of that
cycle.
(C) Figures listed represent the amount of awards that would be payable to the
executives if the Company were to achieve a ranking among the Peer Group at
the 40th percentile (Threshold) and for any percentile at or above the 75th
percentile (Maximum) for each of the performance measures. The Plan also
specifies awards for performance at the 50th and 60th percentiles with
respect to each of the performance measures. Awards for performance at
percentiles between such stated percentiles will be calculated by linear
interpolation.
(D) Participants in the Plan are not assigned a "target" award. Rather, awards
are variable depending upon the Company's performance with respect to each
of the performance measures for the Performance Cycle (see footnote (C)
above).
9
<PAGE> 12
PENSION PLAN
The Company maintains a noncontributory, defined benefit pension plan.
Benefits are determined under a formula applied uniformly to all employees,
regardless of position, and amounts depend on length of service and the average
of the five highest consecutive years of compensation earned. For purposes of
pension calculations, compensation includes salary and all other compensation
but excludes the value of personal use of Company vehicles and other
perquisites. An employee who terminates employment after having at least five
years of service with the Company has a vested interest in the plan.
Annual benefits payable at retirement (at age 65 or beyond) are reduced by
a percentage of primary social security benefits based upon years of credited
service and are payable monthly. The following table illustrates the estimated
annual benefits payable upon retirement for persons in the earnings
classifications with years of service as shown, but excluding the Social
Security deduction.
<TABLE>
<CAPTION>
AVERAGE ANNUAL BENEFITS BASED ON LENGTH OF SERVICE
SALARY FOR HIGHEST --------------------------------------------------------------------------
CONSECUTIVE FIVE YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
---------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 75,000 $22,500 $30,000 $37,500 $45,000 $ 52,500 $ 60,000
100,000 30,000 40,000 50,000 60,000 70,000 80,000
125,000 37,500 50,000 62,500 75,000 87,500 100,000
150,000 45,000 60,000 75,000 90,000 105,000 120,000
</TABLE>
The executive officers of the Company not presently receiving pension
benefits have the following credited years of service under the pension plan:
Floyd E. Wicks -- 8; Joel A. Dickson -- 5; Thomas J. Bunosky -- 5; Randell J.
Vogel -- 3, James B. Gallagher -- 8, Joseph F. Young -- 18 and Donald K.
Saddoris -- 28.
The plan provides an early retirement option for those employees the sum of
whose age and number of years of service equals at least 90.
The Company has a Retirement Plan for Non-Employee Directors (the
"Non-Employee Directors Plan") of the Company. This Plan provides annual
benefits to an eligible director in an amount equal to the annual retainer in
effect at the director's date of retirement. Benefits are payable in monthly
installments for a period equal to the shortest of (a) the period he or she was
a director or (b) ten years. In the case of a director's death, benefits will
continue to be received by that director's surviving spouse for the remaining
period for which the director would have been entitled to receive benefits
except for death. Benefits are payable to directors after the age of 62 and
after retirement from the Board, except that a director who ceases to be a
director before attaining age 62 because of ill health or death may receive
benefits immediately after retirement from the Board, or at such later date as
he or she may request. Directors who are "removed for cause" are not eligible
for benefits under the Non-Employee Directors Plan. As a condition of
participation in the Non-Employee Directors Plan, an eligible director must
agree to retire from the Board at the annual
10
<PAGE> 13
shareholders' meeting occurring on or next following such director's 72nd
birthday, and to accept nomination as a director if requested by the Board (and
to serve if so nominated) for at least ten years after his or her first election
to the Board.
DEFERRED COMPENSATION PLAN FOR DIRECTORS AND EXECUTIVES
Under the Company's Deferred Compensation Plan for Directors and
Executives, directors and eligible officers and employees are entitled to defer
all, in the case of directors, or a portion, in the case of officers and
employees, of their compensation until specified times after the deferral.
Interest accrues on amounts deferred under this Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee's report on executive compensation is set forth
below. Mr. William V. Caveney, a member of this Committee and Chairman of the
Board of Directors, is, in his capacity as Chairman, an officer of the Company.
Mr. Caveney does not actively participate in the daily operation of the Company,
duties as to which are the responsibility of Mr. Wicks, President and Chief
Executive Officer of the Company. The Compensation Committee does not recommend
or determine Mr. Caveney's compensation. No other member of this Committee is a
current or former officer or employee of the Company or any of its subsidiaries
or affiliates.
All of the Company's directors except Mr. Wicks are members of the
Compensation Committee. Mr. Clark is of counsel to and is a retired partner of
O'Melveny & Myers, which provides legal services to the Company. Mr. Kathol is
Executive Vice President of Kirkpatrick, Pettis, Smith, Polian Inc., which has
served as co-manager of the Company's Common Share offerings and as co-agent on
the Company's debt sales in the past. The firm of Kirkpatrick, Pettis, Smith,
Polian Inc. and its subsidiaries do not currently provide any services to the
Company.
The following Report and the Performance Graph included in this proxy
statement shall not be deemed to be incorporated by reference by any general
statement incorporating by reference this proxy statement into any filing under
the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934,
as amended, except to the extent the Company specifically incorporates this
Report or the Performance Graph by reference therein, and shall not be deemed
soliciting material or otherwise deemed filed under either of such Acts.
11
<PAGE> 14
REPORT ON EXECUTIVE COMPENSATION
To: The Board of Directors
The principal responsibility of your Compensation Committee is to review
and make recommendations as to the compensation of the executive officers of the
Company (other than the Chairman of the Board). In addition to recommending cash
and other kinds of compensation, our responsibility includes the consideration
of related matters such as evaluating management performance and planning for
management planning and succession. The Compensation Committee reviews these
matters in detail with you and reports to you the Committee's recommendations as
to compensation of these executive officers.
The Compensation Committee particularly reviews, in detail, the performance
and other aspects of compensation for the President and Chief Executive Officer,
Floyd E. Wicks.
In its deliberations concerning compensation for Mr. Wicks and the
Company's other executive officers in April, 1995, the Committee relied on both
objective and subjective criteria. We reviewed comparative salary and total
compensation data for Mr. Wicks and other executive officers, the results of
which were included as part of a report entitled "An Assessment of Executive
Compensation," dated January 25, 1995, prepared by Strategic Compensation
Associates ("SCA"). In addition, we relied on other compensation data developed
by the Company's Human Resources department, which included comparable cash
salary data of other water utilities, as well as comments and evaluative
recommendations of Mr. Wicks based on his formal appraisal of each executive's
performance. In conducting the formal appraisals, Mr. Wicks reviewed the
contribution of each executive in the areas of regulatory matters,
implementation of the Company's organizational goals and general progress made
toward the achievement of individually determined, job-related goals.
As part of our review, we recognize that our responsibilities also extend
to offering compensation opportunities designed to retain and attract managerial
talent. We believe that the Key Executive Long-Term Incentive Plan, approved by
shareholders in April, 1995, will result in closer alignment of management's
goals with those of the shareholders by providing compensation to management
based upon the Company's achievement, over rolling three-year performance
cycles, of specified targets for total shareholder return and growth in earnings
per share. Awards earned under the Plan supplement base compensation and should
enhance the Company's ability to attract and retain qualified personnel.
As in the past, we have not adopted a direct formula relationship between
the Company's financial performance and the level of compensation paid to Mr.
Wicks and other executive officers in part because of the pervasive effects that
varying regulatory practices and weather conditions have on financial
performance. We believe that these effects are largely outside the immediate
control of the executive officers. Accordingly, in determining executives'
compensation, the committee also relied
12
<PAGE> 15
upon its subjective evaluation of the Company's earnings performance, in light
of those considerations, and of the performance of the executives in maintaining
and enhancing the Company's ability to meet its challenges. These challenges
include (i) water quality and water supply, (ii) appropriately enhancing
earnings and (iii) successfully resolving issues before the California Public
Utilities Commission and other regulatory agencies (including the Company's
continuing response to the CPUC-ordered management audit). Upon review of all of
the objective and subjective factors described above, in April 1995, we
recommended and the Board authorized that Mr. Wicks' annual base compensation be
set at $262,000.
We recognize that changes to the Internal Revenue Code in 1993 affect,
subject to limited exceptions, the deductibility of compensation in excess of
$1,000,000 for certain executive officers unless such compensation qualifies as
"performance-based." However, since the Company's current compensation program
does not provide for annual compensation to any executive in excess of
$1,000,000, the deduction limitations are presently inapplicable to the Company.
We will address this limitation if and when it becomes meaningful.
Compensation Committee
D. E. Brown
W. V. Caveney
R. B. Clark
N. P. Dodge, Jr.
13
<PAGE> 16
PERFORMANCE GRAPH
The graph below compares the performance of the Company to (1) the Standard
& Poor's 500 Stock Index, (2) a peer group index developed by the Company for
the Key Executive Long-Term Incentive Plan and (3) the Dow Jones Water Utility
Index (a published industry index). The water and electric utilities selected by
the Compensation Committee for the peer group were intended to provide an
appropriate basis for comparison with the Company in determining awards payable
under the Key Executive Long Term Incentive Plan and, as such, that peer group
is included herein for comparative purposes. The peer group consists of 17
companies: American Water Works Inc., Aquarion Company, Consumers Water Company,
Connecticut Water Service Inc., California Water Service Company, Citizens
Utilities Company (Class A and Class B), Empire District Electric Company,
E'Town Corporation, Green Mountain Power Corporation, IWC Resources Corporation,
Middlesex Water Company, Northwestern Public Service Company, Philadelphia
Suburban Corporation, St. Joseph Light & Power Company, SJW Corp., Southwest
Water Company and United Water Resources, Inc. The graph shows the total return
to shareholders for the last five years of an investment of $100 made on
December 31, 1990 and assuming reinvestment of all dividends. As with any
investment, the historical performance reflected in this performance graph is
not necessarily indicative of future performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG SOUTHERN CALIFORNIA WATER COMPANY, THE S & P 500 STOCK INDEX,
THE DOW JONES WATER UTILITIES INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD SOUTHERN CALIFORNIA
(FISCAL YEAR COVERED) WATER COMPANY PEER GROUP S & P 500 D J WATER UTILITIES
<S> <C> <C> <C> <C>
12/90 100 100 100 100
12/91 128 147 130 152
12/92 163 164 140 163
12/93 188 190 155 184
12/94 161 158 157 173
12/95 199 185 215 223
</TABLE>
- ---------------
* $100 invested on 12/31/90 in stock or index -- including reinvestment of
dividends. Fiscal year ending December 31.
14
<PAGE> 17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to the beneficial
owners of more than five percent of any class of the Company's voting securities
on March 4, 1996 based upon public information known to the Company.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP OF CLASS
------------------- -------------- ---------- --------
<S> <C> <C> <C>
First Colony Life Insurance Company Preferred Shares 44,959--Direct 52.1*
700 Main Street
Lynchburg, Virginia
Massachusetts Mutual Life Insurance Co. Preferred Shares 12,000--Direct 13.9
Box 5101 GPO
New York, New York
Equitable American Insurance Company Preferred Shares 2,315--Direct 2.7
604 Locust Street
Des Moines, Iowa
</TABLE>
- ---------------
* Represents 5.2% of total voting power.
ANNUAL REPORT (FORM 10-K)
The Company undertakes, on written request, to provide, without charge,
each person from whom the accompanying proxy is solicited, with a copy of the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 as
filed with the Securities and Exchange Commission, including the financial
statements and schedules. Requests should be addressed to Southern California
Water Company, 630 East Foothill Boulevard, San Dimas, California 91773,
Attention: Office of the Treasurer.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the Company's independent public accountants
for the year ended December 31, 1995. No accounting firm has been selected for
the current year. The Board of Directors normally selects the public accountants
for each year in July of that year. Representatives of Arthur Andersen LLP will
be at the Annual Meeting of Shareholders and will have an opportunity to make a
statement, if they so desire, and will be available to respond to appropriate
questions.
15
<PAGE> 18
OTHER MATTERS
Management of the Company knows of no business, other than that mentioned
above, to be transacted at the Annual Meeting, but if other matters do properly
come before the meeting, it is the intention of the persons named in the
enclosed proxy to vote in regard thereto in accordance with their judgment, and
discretionary authority to do so is included in the proxy. Whether or not you
intend to be present at the meeting, you are urged to complete, sign and return
your proxy promptly.
PROPOSALS FOR NEXT ANNUAL MEETING
Any proposal which a shareholder intends to present at the next Annual
Meeting of Shareholders to be held in April 1997 must be received at the
principal executive office of the Company by November 15, 1996 if such proposal
is to be considered for inclusion in the Company's proxy statement and form of
proxy relating to that meeting. In addition, the Company's bylaws contain
separate notice requirements applicable to the bringing of business before the
Annual Meeting of Shareholders by a shareholder of the Company. The Company
maintains at its principal executive offices in San Dimas, California, a copy of
its bylaws, as amended, which bylaws will be open to inspection by shareholders
at all reasonable times during office hours.
16
<PAGE> 19
PROXY
SOUTHERN CALIFORNIA WATER COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints R. Bradbury Clark and W.V. Caveney proxies,
with power to act without the other and with power of substitution, and hereby
authorizes them to represent and vote, as designated on the other side, all the
shares of stock of Southern California Water Company standing in the name of the
undersigned with all powers which the undersigned would possess if present at
the Annual Meeting of Stockholders of the Company to be held April 30, 1996 or
any adjournment of that meeting.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
Dear Shareholder:
The Annual Meeting of Shareholders of Southern California Water Company will
be held on April 30, 1996 at the Industry Hills Sheraton, One Industry Hills
Parkway, City of Industry, California. A map of the location is located on the
reverse side. The meeting is scheduled for 10:00 a.m. and refreshments will be
provided beforehand. The meeting should conclude by 11:00 a.m.
This mailing also includes the notice of the meeting and the proxy statement.
Whether or not you plan to attend the meeting, please assure representation of
your shares by marking, signing, dating and sending in the detachable proxy
card.
Sincerely,
/s/ Floyd E. Wicks
- ------------------
Floyd E. Wicks
President, Chief Executive Officer
<PAGE> 20
Please mark
your votes as /X/
indicated in
this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
Item 1. ELECTION OF DIRECTORS WITHHELD
FOR FOR ALL
Nominees: Jean E. Auer Robert F. Kathol / / / /
William V. Caveney Lloyd E. Ross
R. Bradbury Clark Floyd E. Wicks
N.P. Dodge, Jr.
WITHHELD FOR: (write that Nominee's name in the space provided below.)
- ----------------------------------------------------------------------
Item 2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Signature(s) Date
----------------------------------------- ---------------------
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.
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
INDUSTRY HILLS SHERATON
ONE INDUSTRY HILLS PARKWAY
CITY OF INDUSTRY, CA 91744-0290
(818) 810-4455
[MAP OF INDUSTRY, CALIFORNIA]
INDUSTRY HILLS
SHERATON RESORT HOTEL
Refreshments will be provided only before the meeting.
