-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Inl3hAQ5AwG4aV16fZ0ACrxWxhhzC6Z8LhrdcvIbqRICNFV3MjhU4H7zn4nEQqKz Hc5Da8fQ3wypbDZjr4Q2AA== 0000910647-98-000263.txt : 19981005 0000910647-98-000263.hdr.sgml : 19981005 ACCESSION NUMBER: 0000910647-98-000263 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981106 FILED AS OF DATE: 19981002 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERKSHIRE GAS CO /MA/ CENTRAL INDEX KEY: 0000317406 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS DISTRIBUTION [4924] IRS NUMBER: 041731220 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-01857 FILM NUMBER: 98719966 BUSINESS ADDRESS: STREET 1: 115 CHESHIRE RD CITY: PITTSFIELD STATE: MA ZIP: 01201-1388 BUSINESS PHONE: 4134421511 DEF 14A 1 BODY OF PROXY STATEMENT AND CARD The Berkshire Gas Company 115 Cheshire Road Pittsfield, MA 01201-1879 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To Be Held November 6, 1998 Pittsfield, Massachusetts October 2, 1998 Notice is hereby given that the Annual Meeting of Shareholders of The Berkshire Gas Company, a Massachusetts corporation, will be held at the Crowne Plaza Pittsfield Hotel (formerly the Berkshire Hilton Inn), Pittsfield, Massachusetts on Friday, November 6, 1998 at 10:00 A.M. local time, for the following purposes, as more fully set forth in the Proxy Statement which accompanies this Notice: Proposal No. 1. To elect two (2) directors. Proposal No. 2. To consider and act upon a proposal to ratify the selection by the Board of Directors of Deloitte & Touche LLP as auditors for the Company for the fiscal year ending June 30, 1999. To transact such other business as may properly come before the meeting. The stock transfer books will not be closed, but only Common shareholders of record at the close of business on September 25, 1998 (the "Record Date") will be entitled to notice of and to vote at the meeting. By Order of the Board of Directors, CHERYL M. CLARK Clerk of the Corporation YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE DATE, SIGN AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED SELF-ADDRESSED ENVELOPE. A SHAREHOLDER WHO EXECUTES AND RETURNS A PROXY IN THE ACCOMPANYING FORM HAS THE POWER TO REVOKE SUCH PROXY AT ANY TIME PRIOR TO THE EXERCISE THEREOF. The Berkshire Gas Company 115 Cheshire Road Pittsfield, MA 01201-1879 October 2, 1998 PROXY STATEMENT This Proxy Statement sets forth certain information with respect to the accompanying proxy proposed to be used at the Annual Meeting of Shareholders of The Berkshire Gas Company (hereinafter called the "Company") to be held at the Crowne Plaza Pittsfield Hotel (formerly the Berkshire Hilton Inn), Pittsfield, Massachusetts on November 6, 1998 at 10:00 A.M. local time, or any adjournments or postponements thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. THE BOARD OF DIRECTORS OF THE COMPANY SOLICITS THIS PROXY AND URGES YOU TO INDICATE YOUR CHOICE ON THE PROXY, TO SIGN AND DATE THE PROXY AND RETURN IT IMMEDIATELY. Your prompt cooperation is requested in order to ensure a quorum (a majority of issued and outstanding Common Stock) and to avoid additional expense and delay. Solicitation of proxies will be primarily by mail and the cost of solicitation will be borne by the Company. Proxies may also be solicited personally or by telephone by regular employees of the Company at nominal cost. The approximate date on which this Proxy Statement and the accompanying proxy will first be mailed to shareholders is October 2, 1998. The Company mails herewith to all shareholders entitled to vote a copy of its Annual Report for the year ended June 30, 1998, which contains detailed financial information concerning the Company. Upon the written request of any shareholder, the Company will mail, without charge, a copy of the Company's Annual Report on Form 10-K, as discussed further on page 14. REVOCABILITY OF PROXY The proxy is revocable on written instructions, signed in the same manner as the proxy, received by the Clerk of the Corporation, at any time at or before the balloting on the matter with respect to which such proxy is to be used. If you attend the meeting you may, if you wish, revoke your proxy and vote in person. PROPOSALS OF SHAREHOLDERS If a shareholder intends to present a proposal at the Company's 1999 Annual Meeting of Shareholders and wants that proposal to be included in the Company's Proxy Statement and form of proxy for that meeting, the proposal must be received by the Office of the Clerk, The Berkshire Gas Company, 115 Cheshire Road, Pittsfield, Massachusetts 01201-1879 not later than June 5, 1999. As to any proposal that a shareholder intends to present to shareholders without including it in the Company's proxy statement for the Company's 1999 Annual Meeting of Shareholders, the proxies named in management's proxy for that meeting will be entitled to exercise their discretionary authority on that proposal unless the Company receives notice of the matter to be proposed not later than August 20, 1999. Even if proper notice is received on or prior to August 20, 1999, the proxies named in management's proxy for that meeting may nevertheless exercise their discretionary authority with respect to such matter by advising shareholders of such proposal and how they intend to exercise their discretion to vote on such matter, unless the shareholder making the proposal solicits proxies with respect to the proposal as set forth in Rule 14a-4(c)(2) of the Securities Exchange Act of 1934. VOTING SECURITIES Holders of record of outstanding Common Stock, par value $2.50 per share, of the Company at the close of business on September 25, 1998 (the "Record Date") are the only persons entitled to notice of and to vote at the meeting. As of the Record Date, there were 2,352,334 shares outstanding and entitled to vote. Each outstanding share entitles the holder thereof to one vote. Abstentions and broker non-votes are each included in calculating the number of shares present and voting for purposes of determining quorum requirements. However, each is tabulated separately. Abstentions are counted in tabulating the votes cast on proposals presented to shareholders, whereas broker non-votes are not counted for purposes of determining whether a proposal has been approved. ELECTION OF DIRECTORS (PROPOSAL NO. 1) The By-laws of the Company provide that the Board of Directors shall consist of not less than five nor more than nine members and that the number of directors to be elected each year shall be fixed by the Board of Directors prior to the Annual Meeting. The Board of Directors has set the number of directors for the ensuing year at seven. The Articles of Organization and the By-laws of the Company provide that the Board of Directors be divided into three classes, with staggered three-year terms, so that the term of office of one class expires each year. Currently, the Board of Directors is divided into three separate classes, consisting of three Class A directors, two Class B directors and two Class C directors, whose terms expire as set forth in the table below. Directors now serving in each class have been elected in prior years by the shareholders to serve for a period of three years and until election and qualification of their respective successors in office. At each Annual Meeting of Shareholders, the shareholders of the Company have the right to elect an appropriate number of persons to serve as directors of the class whose three-year terms then expire. Any directorship which may become vacant by reason of death, resignation or otherwise than by expiration of term, may be filled solely by the Board of Directors, as provided in the By-laws. The terms for the Class B directors are scheduled to expire at the 1998 Annual Meeting and the Board has set at two the number of Class B directors to be elected at this meeting. The Board has nominated for election the incumbent Class B directors, George R. Baldwin and John W. Bond. It is the intention of the persons named as proxies, in the absence of contrary specification, to vote FOR the election of each of such persons to serve as director for a term of three years and until the election and qualification of his successor. In the event of a vacancy in the list of such nominees prior to the 1998 Annual Meeting (which the Board of Directors does not anticipate), the persons named as the proxies will vote for a person acceptable to the Board, unless the Board should reduce the number of directors to be elected in order to eliminate the vacancy. The following information is furnished with respect to each nominee for election as a director, each director whose term of office will continue after the meeting, the Chief Executive Officer of the Company, each of the executive officers identified in the summary compensation table on page 7 below, and all directors and officers of the Company as a group. No person or group of persons owns of record or is known by the Company to own more than 5% of the Company's outstanding Common Stock. Each of the individuals in the following table has furnished the information appearing in the first column opposite his name.
Shares of Percentage of Common Stock Shares of Principal Occupation for Beneficially Common Stock Preceding Five Years Owned as of Outstanding as Name and Directorships June 30, 1998* of June 30, 1998+ - ----------------------------- ------------------------------------------- -------------- ----------------- Nominees for election as Class B directors whose terms expire at the 2001 Annual Meeting: George R. Baldwin Area Chairman, Arthur J. Gallagher & 2,223 .10% Age: 55 Co., a national insurance brokerage Director since: 1982 firm. Formerly, President and Chief Board Committees: Executive Officer, Kaler Carney Audit and Finance Liffler & Co., Inc., a general insurance agency. Director, Century Bank & Trust. John W. Bond President, Kimbell Financial, Inc., a 4,136(3) .18 Age: 68 financial services company. Director since: 1965 Board Committees: Executive and Audit Class A directors whose terms expire at the 2000 Annual Meeting: Paul L. Gioia Of Counsel, LeBoeuf, Lamb, Greene 3,611(1) .16% Age: 56 & MacRae, a law firm; formerly, Director since: 1991 Senior Vice President, First Albany Board Committees: Corporation, a securities brokerage Audit and Compensation and investment banking firm; Director, New York State Electric & Gas Corporation; Director, Energy East Corp. Franklin M. Hundley Chairman of the Board of Directors 2,661 .11 Age: 63 of the Company. Of Counsel, Rich, Director since: 1987 May, Bilodeau & Flaherty, P.C., Board Committees: a law firm. Trustee, Commonwealth Executive and Finance Energy System. Scott S. Robinson President and Chief Executive Officer 6,720(2) .29 Age: 58 of the Company. Director since: 1983 Board Committees: Executive and Finance Class C directors whose terms expire at the 1999 Annual Meeting: James R. Keys President, J.R. Keys & Assoc., a 1,199 .05 Age: 57 marketing & government relations Director since: 1996 consulting firm. Formerly Executive Board Committees: Director of State Government Compensation Relations, Tenneco, Inc. Robert B. Trask President, The Fitzpatrick Companies, 9,376(4) .40 Age: 52 Inc., formerly Country Curtains, Inc., a Director since: 1994 mail order/retail firm dealing in household Board Committees: window treatments and accessories. Audit and Compensation Other individuals identified in the summary compensation table on Page 7: Michael J. Marrone Vice President, Treasurer and 1,234 .05% Chief Financial Officer of the Company Les H. Hotman Vice President of the Company 0 0 Robert M. Allessio Vice President of the Company 206 .008 All directors and officers 31,366(5) 1.35 of the Company, 10 persons as a group - ------------------- As used in this Proxy Statement, "beneficial ownership" means direct or indirect, sole or shared power to vote, or to direct the voting of, and/or investment power to dispose of, or to direct the disposition of, shares of the Common Stock of the Company. Except as indicated in the footnotes below, the listed beneficial owners held direct and sole voting and investment power with respect to the stated shares. As of June 30, 1998, there were 2,315,913 shares of the Company's Common Stock outstanding. All of Mr. Gioia's shares are held jointly with his spouse, with shared voting and investment power over such shares. Comprised of 6,720 shares held in trust, for which Mr. Robinson and his spouse are joint Trustees, with shared voting and investment power. Includes 273 shares held by his spouse, who has sole voting and investment power over such shares. 6,476 of Mr. Trask's shares are held jointly with his spouse, with shared voting and investment power over such shares. 2,900 of Mr. Trask's shares are owned by a private, non-profit foundation of which Mr. Trask is a trustee. Aggregate record or imputed beneficial ownership, with sole or shared voting and investment power.
The Board of Directors of the Company has a standing Audit Committee, of which Messrs. Baldwin, Bond, Gioia and Trask are members, which recommends the selection of independent auditors, reviews the plan and results of the independent audit, consults with the auditors on any matter which the Audit Committee may deem relevant to the audit or which the auditors may desire to bring to the attention of the Audit Committee, and approves each professional service provided by the independent auditors. The Audit Committee held two meetings during the past year. The Board of Directors also has a standing Compensation Committee, of which Messrs. Gioia, Keys and Trask are members. The Compensation Committee periodically reviews the compensation, pensions and benefits of the directors and executives of the Company, as well as industry trends in this area, reports its findings to the Board of Directors and makes recommendations as to appropriate compensation for the directors and executives of the Company. The Compensation Committee held four meetings during the past year. The Board of Directors does not have a standing nominating committee. During the 1998 fiscal year, there were six meetings of the Board of Directors. No member of the Board of Directors attended fewer than 75% of the aggregate number of meetings of the Board and the committees on which he served in fiscal year 1998. During the year ended June 30, 1998, fees of $473,398 were incurred for legal services rendered by the law firm of Rich, May, Bilodeau & Flaherty, P.C., which the Company has retained as counsel in the past and intends to retain in the current fiscal year. Mr. Hundley is Of Counsel to such firm. In addition, the Mansfield Consortium, a purchasing group of which the Company is a member, during the last fiscal year was represented by and made payments (and in the current fiscal year intends to continue to be represented by and to make payments) to LeBoeuf, Lamb, Greene & MacRae, a law firm of which Mr. Gioia is Of Counsel. EXECUTIVE COMPENSATION Compensation of Executive Officers. The following table contains the compensation paid or accrued by the Company during the years ended June 30, 1998, 1997 and 1996 to the Company's Chief Executive Officer and to each executive officer whose total annual salary and bonus exceeded $100,000. Although only principal positions are listed, the compensation figures include all compensation received in any capacity, including directorships, for services rendered during the fiscal years indicated. SUMMARY COMPENSATION TABLE Annual Compensation(1)
Name and Other Annual Principal Position Year Salary Bonus Compensation - ------------------------------ ---- -------- ------- ------------ Scott S. Robinson, 1998 $178,500 $34,362 $17,350(2) President and Chief 1997 173,900 0 13,850 Executive Officer 1996 165,000 28,050 12,858 Michael J. Marrone 1998 114,800 18,942 0 Vice President, Treasurer 1997 110,989 0 0 and Chief Financial Officer 1996 106,100 12,732 0 Les H. Hotman(3) 1998 109,400 0 0 Vice President 1997 105,575 0 0 1996 99,200 11,904 0 Robert M. Allessio(4) 1998 98,000 16,170 0 Vice President - ------------------- The Company did not pay any long-term compensation to its Chief Executive Officer or to its executive officers during the fiscal years ended June 30, 1998, 1997 and 1996. The Other Annual Compensation listed for Mr. Robinson represents director fees. Mr. Hotman resigned from the Company effective July 13, 1998. Prior to fiscal year 1998, Mr. Allessio's total annual salary and bonus from the Company was less than $100,000.
Compensation Pursuant to Plans. The Company maintains two defined benefit pension plans, one for union employees and one for non-union employees, including executive officers. The following table shows the annual benefits payable under the pension plan for non-union employees (the "Pension Plan") upon retirement at age 65 to eligible employees in various base salary groups and with various periods of service. The annual retirement benefits formula is based on the number of years of service and the employee's average base salary for the five years yielding the highest such average. PENSION PLAN TABLE
Years of Credited Service ---------------------------------------- 25 Years Remuneration 15 Years 20 Years and Thereafter ------------ -------- -------- -------------- $ 65,000 $16,038 $21,384 $26,730 80,000 20,245 26,994 33,742 95,000 24,453 32,604 40,755 110,000 28,660 38,214 47,767 125,000 32,868 43,824 54,780 140,000 37,075 49,434 61,792 155,000 41,283 55,044 68,805 170,000 45,490 60,654 75,817 185,000 49,698 66,264 82,830 200,000 53,905 71,874 89,842
Messrs. Robinson, Marrone, Hotman and Allessio, the individuals named in the preceding Summary Compensation Table, have 28, 15, 11 and 13 years, respectively, of credited service under the Pension Plan. The compensation covered by the Pension Plan is that shown in the Summary Compensation Table, excepting any bonus amounts. The Company also maintains a supplemental pension plan (the "Supplemental Plan") for Messrs. Robinson, Marrone, and Allessio. Under the Supplemental Plan, upon retirement at age 62, covered executives are assured that they will receive annually 75% of their final year's base salary in the form of retirement income. The 75% of final base salary benefit will be comprised of amounts received pursuant to the Pension Plan, Social Security, vested benefits from any previous employers, and payments under the Supplemental Plan as may be necessary to bring the covered officer's benefit to 75% of such officer's final year's base salary. The Supplemental Plan allows for earlier retirement at age 60, with a corresponding reduction in benefits. The Supplemental Plan also will pay disability benefits to covered officers in addition to those benefits paid by the Company's Long Term Disability Insurance Plan. In addition, the Supplemental Plan will provide a survivorship benefit to the selected beneficiary of the covered officer in the event of such officer's death. Moneys received under Supplemental Plans are in addition to amounts shown in the Summary Compensation Table and the Pension Plan Table. As of June 30, 1998, it is not possible to compute the estimated annual benefits payable under Messrs. Robinson's, Marrone's or Allessio's Supplemental Plan upon their retirement at the normal retirement age. The Company also maintains a Non-Qualified Retirement Savings Plan (the "Savings Plan") for Messrs. Robinson, Marrone, and Allessio. Under the Savings Plan, the Executive is permitted to defer a portion per year of salary up to an equivalent of 15-1/2% of gross wages, less the maximum contribution allowable under the Company's Qualified 401(k) Plan. The Executive may select the assets in which the funds are to be invested. The Savings Plan allows for the benefits to be paid at retirement and if the Executive is at least 62 years of age. In addition, the Savings Plan provides a survivorship benefit to the selected beneficiary of the Executive, equal to the balance in the account, in the event of the Executive's death. The amounts deferred by Messrs. Robinson, Marrone and Allessio are included in the salary column in the Summary Compensation Table above. Employment Contracts, Termination of Employment and Change-in-Control Arrangements. The Company has entered into an employment agreement with its President and Chief Executive Officer, Scott S. Robinson. Under the terms of this employment agreement, Mr. Robinson is compensated for his duties as an officer and director with a salary in an amount determined from time to time by the Board of Directors. The term of Mr. Robinson's employment contract is five years, unless earlier terminated by either the Company or Mr. Robinson and, unless so terminated, is renewed automatically at the expiration of each year to provide for a continuous five-year term. In no event, however, may Mr. Robinson's employment under his employment agreement be extended beyond the year 2005. Mr. Robinson's employment contract also provides that in the event Mr. Robinson is unable to perform his duties as the result of any disability, the Company may terminate Mr. Robinson's employment, and shall pay him (or his beneficiary) for a period of 60 months at a rate equal to 60% of Mr. Robinson's "basic monthly earnings" as set forth in the Company's Long Term Disability Insurance Plan. The Company maintains severance agreements with certain of its executive officers and key personnel (each, a "Severance Agreement"). Pursuant to the Severance Agreements, the Company has agreed to pay such covered executive officers and key personnel certain benefits in the event of a change in control of the Company leading to the termination of the covered employee's employment with the Company. For the purposes of the Severance Agreements, a "change in control" of the Company is defined as: (i) the acquisition by any person, group, corporation or other entity of 25% or more of the outstanding Common Stock of the Company, whether or not pursuant to a tender or exchange offer; (ii) the approval by the shareholders of the Company of (a) any consolidation or merger of the Company in which the Company will not be the continuing or surviving corporation or pursuant to which shares of the Company's Common Stock would be converted into cash, securities or other property, (b) any acquisition, combination or merger of the Company by or with another corporation in which less than a majority of the outstanding voting shares of the surviving corporation will be owned by the owners of the Common Stock of the Company outstanding immediately prior to such acquisition, combination or merger; (iii) a complete liquidation or dissolution of the Company; or (iv) any sale, lease, exchange or other transfer of all or substantially all the assets of the Company. Under the Severance Agreements, during the 24 months following a change in control of the Company, should a covered employee be discharged without cause or resign in the face of any diminution of salary, substantial change in responsibilities, geographical relocation or the like, the covered employee is entitled to receive a severance benefit in the amount of his or her salary for a period of up to 30 months, subject to partial set-off from any compensation received from any new employment obtained by the covered employee during the period during which any severance benefits are received. At present, three executive officers or key employees of the Company, including two of the above named executive officers (Mr. Marrone and Mr. Allessio) are covered by Severance Agreements. Compensation of Directors. The annual retainer for a director is $8,500, of which $3,000 is applied to the purchase of Company stock. In addition, directors are paid $600 for attendance at each regular meeting of the Board of Directors and $600 for attendance at committee meetings, except for attendance at Executive Committee meetings for which no fee is paid. Compensation for serving on the Executive Committee is $3,800 annually. Further, the chairmen of the Finance, Audit, and Compensation Committees each receive an annual fee of $1,000 for such services. Mr. Hundley receives $24,000 annually as Chairman of the Board of Directors. The Company maintains a Non-Qualified Retirement Savings Plan (the "Plan") for the Board of Directors. Under the Plan, the Directors are permitted to defer up to 100% of their fees. The Director may select the assets in which the funds are to be invested. The Plan allows for the benefits to be paid at age 70-1/2. In addition, the Plan provides a survivorship benefit, equal to the balance in the account, to the selected beneficiary of the Director in the event of the Director's death. The Company also maintains a Retirement Plan for Directors, pursuant to which directors of the Company are entitled to certain limited benefits upon their retirement as directors of the Company. Eligibility for participation in the Retirement Plan is limited to directors having served as such for a period of at least five years. Under the plan, directors are entitled to receive an annual retirement benefit equal to one-half of the annual retainer fee for directors plus an additional amount based on 10% of the annual retainer fee for every year in excess of five, but not exceeding ten, years of service as director. Benefits under the Retirement Plan are payable for a ten-year period, and may, in certain circumstances, be paid to a participant's beneficiary. Compensation Committee Interlocks and Insider Participation. Directors Gioia, Keys and Trask served on the Company's Compensation Committee during the Company's last fiscal year. Mr. Gioia served as chairman of the Committee. The law firm of which Mr. Hundley is Of Counsel received fees of $473,398 from the Company during the Company's most recent fiscal year; the Company intends to retain such firm in the current fiscal year. Report of the Compensation Committee. The Company's Compensation Committee has submitted the following report concerning executive compensation. The compensation of executive officers of the Company, including that of the executive officers named in the Summary Compensation Table, is formally reviewed and established annually by the Compensation Committee of the Board of Directors, subject to approval by the Board. During the fiscal year ended June 30, 1998, the compensation of the executive officers of the Company, including that of the President and Chief Executive Officer, the Vice President, Treasurer and Chief Financial Officer and Vice President, Utility Operations, consisted of base salary, and director's fees as to Mr. Robinson. In its annual review and in setting compensation for the President and Chief Executive Officer and other executives, the Compensation Committee considered and gave weight to financial and operating results, earnings levels and return on common equity, development and implementation of short term and long term planning objectives, achievement of cost containment in the Company's operations, the state of relations between the Company and its customers, regulatory authorities and the public generally and the degree of achievement of individual and management goals established from time to time. In this regard, as in previous years, the Compensation Committee gave greater weight to the degree of achievement of earnings and common equity return objectives than to other goals, with appropriate consideration of the impact of variable weather conditions and the condition of the local economy upon the Company's earnings and common equity return during the last fiscal year. The Compensation Committee, using information provided by independent sources, publicly available information concerning other public utilities similar in size to the Company and information from industry organizations, reviewed earnings levels and return on common equity realized by the Company on a comparative basis with other similar companies. The Compensation Committee also reviewed information concerning executive compensation paid by other gas distribution companies in Massachusetts and the New England area. The Company adopted some years ago, and the Compensation Committee reviews periodically, with the assistance of Company personnel and outside consultants as necessary, salary ranges for each executive officer, including the President and Chief Executive Officer, of the Company. In determining salary ranges, reference is made in part to information concerning salaries paid by other regional utility companies. The Compensation Committee established what it believed to be an appropriate compensation level for each executive within the salary range by reference to an assessment of each executive's responsibilities and job performance and the factors set forth above. The Company adopted, in 1994, a corporate Incentive Compensation Plan ("ICP") as part of an ongoing review of executive compensation, in order to provide a discretionary and variable component of overall compensation that will acknowledge exceptional service and achievement, and at the same time will encourage continuing improvement in the Company's performance, promote the interests of the Company's shareholders and ratepayers by incorporating criteria of financial performance and comparative measures of operating performance, and reinforce a sense of commitment to the achievement of longer term objectives by the achievement of short-term goals. It is intended that awards through the ICP will encourage executives to increase their equity ownership in the Company with 50% of the award purchasing Common Stock through the Company's Dividend Reinvestment and Stock Purchase Plan. The ICP is administered by the Committee, subject to Board approval, and provides that awards shall be made only for a year in which the Company's earnings exceed dividend payout (except for any awards made at the Board's discretion, which awards are limited to 25% of the maximum ICP award). Annual awards under the ICP, if any, are to be made as a percentage of base salary and can range from a low of 2.5% to a maximum of 35%, depending upon the degree to which performance measures established by the Committee are met or exceeded. During the fiscal year ended June 30, 1998, the Company's earnings exceeded dividend payout and the Board approved awards under the ICP based upon its discretionary authority and upon the Company's performance with respect to shareholder return and market-to-book value during such fiscal year. The awards made for the fiscal year ended June 30, 1998 were included in the Company's operating expenses for such fiscal year and are reflected in the Summary Compensation Table at page 7 above in the "Bonus" column. THE COMPENSATION COMMITTEE Paul L. Gioia, Chairman James R. Keys Robert B. Trask Performance Graph. The following graph illustrates the return that would have been realized (assuming reinvestment of dividends) by an investor who invested on June 30, 1993 in each of (i) the Company's Common Stock, (ii) the Nasdaq Stock Market - U.S. Index, and (iii) a peer group consisting of 13 companies within the Company's Standard Industrial Classification Code (SIC), the "Peer Group". COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN* THE BERKSHIRE GAS COMPANY, THE NASDAQ STOCK MARKET-US INDEX AND A PEER GROUP
Cumulative Total Return -------------------------------------------------------- 6/93 6/94 6/95 6/96 6/97 6/98 ------ ------ ------ ------ ------ ------ Berkshire Gas Co. 100.00 103.37 99.25 109.02 121.68 186.58 Peer Group 100.00 93.83 101.18 113.86 125.92 144.25 Nasdaq Stock Market-US 100.00 100.96 134.77 173.03 210.38 277.69 - -------------------- $100 INVESTED ON 06/30/93 IN STOCK OR INDEX- INCLUDING REINVESTMENT OF DIVIDENDS. FISCAL YEAR ENDING JUNE 30.
RATIFICATION OF THE SELECTION OF AUDITORS (PROPOSAL NO. 2) There will be submitted to the Annual Meeting a proposal to ratify the action of the Board of Directors in selecting the firm of Deloitte & Touche LLP, Independent Certified Public Accountants, as auditors for the Company for the fiscal year ending June 30, 1999. In the event of non-ratification, the Board of Directors would reconsider its selection. Representatives of Deloitte & Touche LLP, which has served as principal accountant for the Company during the past fiscal year, are expected to be present at the Annual Meeting to respond to appropriate questions and to make a statement if they so desire. OTHER MATTERS As of the date hereof, the Board of Directors has not been informed of any matters to be presented for action at the Annual Meeting other than those listed in the Notice of Annual Meeting and referred to herein. If any other matters properly come before the Annual Meeting or any adjournment thereof, it is intended that the proxies will be voted in respect thereof in accordance with the judgment of the persons named therein. PLEASE DATE, SIGN AND RETURN THE ENCLOSED PROXY. A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30, 1998, WHICH HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED WITHOUT CHARGE BY ANY SHAREHOLDER OF THE COMPANY UPON WRITTEN REQUEST ADDRESSED TO: OFFICE OF THE CLERK, THE BERKSHIRE GAS COMPANY, 115 CHESHIRE ROAD, PITTSFIELD, MASSACHUSETTS 01201-1879. By Order of the Board of Directors, CHERYL M. CLARK Clerk of the Corporation THE BERKSHIRE GAS COMPANY Common Stock Proxy The undersigned, revoking any previous instructions, hereby acknowledges receipt of the Notice and Proxy Statement dated October 2, 1998, in connection with the Annual meeting mentioned hereon and appoints Franklin M. Hundley, Scott S. Robinson and John W. Bond as Proxies, each with the power to act alone and to appoint his substitute and authorizes them to represent and to vote, as indicated on the reverse side hereof, all of the shares of Common Stock of The Berkshire Gas Company held of record by the undersigned on September 25, 1998, at the Annual Meeting of Shareholders to be held on November 6, 1998, and any adjournments or postponements thereof. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. When this Proxy is properly executed, the shares represented hereby will be voted as specified by the Shareholder on the reverse side hereof. If no specification is made, such shares will be voted "FOR" the nominees named herein and "FOR" each of the Proposals. PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. Please sign this Proxy exactly as your name(s) appear(s) hereon. Joint owners should each sign personally. Trustees and other fiduciaries should indicate the capacity in which they sign, and where more than one name appears, a majority must sign. If a corporation, this signature should be that of an authorized officer, who should state his or her title. HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS? - ---------------------------------- ---------------------------------- - ---------------------------------- ---------------------------------- - ---------------------------------- ---------------------------------- THE BERKSHIRE GAS COMPANY [X] PLEASE MARK VOTES AS IN THIS EXAMPLE RECORD DATE SHARES: Proposal No. 1 To elect two (2) directors For all For all Nominees Withhold Except John W. Bond [ ] [ ] [ ] George R. Baldwin If you do not wish your shares voted "For" any particular nominee, mark the "For All Except" box and strike a line through that nominee's name. Your shares will be voted for the remaining nominee(s). FOR AGAINST ABSTAIN Proposal No. 2 To ratify the selection by the Board of [ ] [ ] [ ] Directors of Deloitte & Touche LLP as auditors for the Company for the fiscal year ending June 30, 1999. To act upon such other matters as may properly come before the meeting. ----------------------- Please be sure to sign and date this Proxy. | Date | ------------------------------------------------------------------------ | | | | | | ----------Shareholder sign here---------------Co-owner sign here-------- Mark box at right if an address change or comment has [ ] been noted on the reverse side of this card. DETACH CARD DETACH CARD THE BERKSHIRE GAS COMPANY Common Stock Proxy Dear Shareholder, Please take note of the important information enclosed with this Proxy Card. The Proposals require your immediate attention and approval and are discussed in detail in the enclosed proxy materials. Your vote counts, and you are strongly encouraged to exercise your right to vote your shares. Please mark the boxes on this proxy card to indicate how your shares will be voted. Then sign the card, detach it and return your proxy vote in the enclosed postage paid envelope. Your vote must be received prior to the Annual Meeting of Shareholders, November 6, 1998. Thank you in advance for your prompt consideration of these matters. Sincerely, The Berkshire Gas Company -----END PRIVACY-ENHANCED MESSAGE-----