YORK WATER CO
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _______)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ]
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to § 240.14a-12
The York 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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed: March 17, 2017
THE YORK WATER COMPANY
130 EAST MARKET STREET
YORK, PENNSYLVANIA 17401
March 21, 2017
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF THE YORK WATER COMPANY
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of The York Water Company will be held at The Strand-Capitol Performing Arts Center, 50 North George Street, York, Pennsylvania 17401, on Monday, May 1, 2017, at 1:00 p.m. local time for the purpose of taking action upon the following proposals:
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To elect three (3) Directors to three-year terms of office;
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To ratify the appointment of Baker Tilly Virchow Krause, LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2017;
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To approve, by non-binding vote, the compensation of the named executive officers;
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To recommend, by non-binding vote, the frequency of future advisory votes on executive compensation; and
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To transact such other business as may properly come before the meeting.
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The Board of Directors has fixed the close of business on February 28, 2017, as the record date for the determination of shareholders entitled to notice of and to vote at the meeting, and at any adjournment or adjournments thereof.
It is important that your shares be represented and voted at the Annual Meeting regardless of the size of your holdings. Whether or not you plan to attend the Annual Meeting, we encourage you to vote your shares in advance of the Annual Meeting by using one of the methods described below:
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By mail – If you received a printed proxy card, mark, sign, date and mail the proxy card (see instructions on the Proxy Materials Notice on how to request a printed proxy card);
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By phone – Call the toll-free telephone number listed on your Proxy Materials Notice or on your proxy card;
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By internet – Visit the website shown on your Proxy Materials Notice or on the proxy card to vote via the Internet; or
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In Person – Shareholders of record may deliver their completed proxy card in person at the Annual Meeting of Shareholders or by completing a ballot available upon request at the meeting. Beneficial shareholders whose shares are held in the name of a bank, broker or other nominee must obtain a legal proxy from the holder of record (that is, your bank, broker or nominee) to be able to vote in person at the Annual Meeting.
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If you plan on attending the meeting, a boxed lunch will be provided beginning at 12:00 p.m. Please RSVP to Molly Norton at (717)718-2942 or e-mail mollyn@yorkwater.com if you will be joining us for lunch.
Thank you for your continued interest and support of The York Water Company!
By order of the Board of Directors,
BRUCE C. McINTOSH
Secretary
THE YORK WATER COMPANY
130 EAST MARKET STREET
YORK, PENNSYLVANIA 17401
March 21, 2017
This Proxy Statement and the accompanying form of proxy are being furnished to the shareholders of The York Water Company (hereinafter referred to as the "Company") in connection with the solicitation of proxies by the Board of Directors of the Company, whereby shareholders would appoint Jeffrey R. Hines, P.E., George W. Hodges, and George Hay Kain III as Proxies on behalf of the shareholders, to be used at the Annual Meeting of the Shareholders of the Company to be held at 1:00 p.m. at The Strand Capitol Performing Arts Center, 50 North George Street, York, Pennsylvania 17401, Monday, May 1, 2017 (the "Annual Meeting"), and at any adjournment thereof.
Solicitation of proxies will be made by mail, telephone and internet. Those shareholders who previously opted out of printed copies of the proxy materials will receive a Notice Regarding the Availability of Proxy Materials (the "Notice") by mail. The Notice will instruct you as to how you may access and review the proxy materials. The Notice also instructs you as to how you may submit your proxy via internet or by telephone. If you previously opted out of printed copies of the proxy materials but would like to receive a printed copy of such materials, or vote by telephone, you should follow the instructions included in the Notice. Those shareholders who have requested printed copies and some of those who have not specifically opted out of printed copies of the proxy materials will be provided printed copies. It is anticipated that proxy materials will first be mailed and made available via internet on March 21, 2017.
The expense of this solicitation will be paid by the Company. If necessary, some of the officers of the Company and regular employees of the Company may solicit proxies personally or by telephone for no additional pay. Banks, brokerage houses and other institutions and fiduciaries will be requested to forward the proxy materials to beneficial owners and to obtain authorization for the execution of proxies.
A shareholder who submits a proxy electronically, by telephone, or completes and forwards the enclosed proxy is not precluded from attending the Annual Meeting and voting his or her shares in person, and may revoke the proxy by delivering a later dated proxy or by written notification at any time before the proxy is exercised.
At the Annual Meeting, shareholders of the Company will consider and vote upon four proposals: (i) to elect three (3) Directors to serve for a term of three (3) years; (ii) to ratify the appointment of Baker Tilly Virchow Krause, LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2017; (iii) to approve, by non-binding vote, the compensation of the named executive officers; and (iv) to recommend, by non-binding vote, the frequency of future advisory votes on executive compensation. Shareholders may also consider and vote upon such other matters as may properly come before the Annual Meeting or any adjournment thereof.
Page 1
The outstanding securities of the Company entitled to vote at the meeting consist of 12,857,199 shares of our common stock. The presence at the Annual Meeting in person or by proxy of shareholders entitled to cast a majority of the votes that all shareholders are entitled to cast will constitute a quorum for the Annual Meeting. Abstentions and broker non-votes (when accompanied by broker votes) are considered present and entitled to vote for purposes of establishing a quorum.
The record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting or at any adjournment or adjournments thereof was the close of business on February 28, 2017. Shareholders are entitled to one vote for each share on all matters coming before the meeting.
In accordance with Pennsylvania law, a shareholder can withhold authority to vote for all nominees for Directors or can withhold authority to vote for certain nominees for Directors. Directors will be elected by a plurality of the votes cast, meaning that the three nominees who receive the most affirmative votes will be elected. Votes that are withheld will be excluded from the vote and will have no effect.
The proposals to ratify the appointment of the independent registered public accounting firm, to approve executive compensation and to recommend the frequency of the executive compensation vote each require the affirmative vote of a majority of the votes cast, and any votes that are withheld on such proposals will not be counted for or against the proposal. If a signed proxy is returned with no markings on any of the proposals, the votes represented by that proxy will be voted as recommended by the Board of Directors on each of the proposals.
Brokers who have received no voting instructions from their customers will not have discretion to vote with respect to election of directors, executive compensation or the frequency of the executive compensation vote, but will have the discretion to vote with respect to the proposal to ratify the appointment of the Company's auditors.
The following table sets forth certain information regarding the beneficial ownership of the Company's common stock as of February 28, 2017, by (1) each person known to the Company to be the beneficial owner of more than 5% of the common stock of the Company; (2) each director, director nominee and executive officer named in the summary compensation table included elsewhere herein; and (3) all executive officers, directors and director nominees as a group.
The information appearing in the following table with respect to beneficial ownership of common stock of the Company has been furnished to the Company by the three nominees, the seven directors continuing in office, and the six executive officers, and from statements filed with the SEC pursuant to Section 13(d) or 13(g) of the Exchange Act, all as of February 28, 2017.
Page 2
The table includes shares owned or beneficially owned by the respective individuals as of February 28, 2017. No individual has a specific right to acquire beneficial ownership of any additional shares within 60 days from such date.
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Number of Shares
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Percent of Total
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Beneficially Owned (1)
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Shares Outstanding(2)
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1) Certain beneficial owners:
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BlackRock, Inc.
55 East 52
nd
Street
New York, NY 10022
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669,306
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(3)
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5.21
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2)
Directors, director nominees and named executive officers:
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Erin C. Casey
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16
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0.00
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James H. Cawley, Esq.
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200
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0.00
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Michael W. Gang, Esq.
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10,972
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(4)
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0.09
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Joseph T. Hand
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11,635
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(5)
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0.09
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Jeffrey R. Hines, P.E.
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59,743
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(6)
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0.46
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George W. Hodges
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4,565
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(7)
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0.04
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George Hay Kain, III
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23,661
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(8)
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0.18
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Jody L. Keller, SPHR
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1,956
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(9)
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0.02
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Bruce C. McIntosh
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7,198
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(10)
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0.06
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Kathleen M. Miller
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8,481
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0.07
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Robert P. Newcomer
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5,157
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(11)
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0.04
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Steven R. Rasmussen, CPA
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1,128
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0.01
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John H. Strine
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4,418
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(12)
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0.03
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Ernest J. Waters
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635
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0.00
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3) All directors, director nominees and executive officers as a group
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All Directors and Executive Officers as a group (16 persons)
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141,214
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(13)
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1.10
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(1)
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Except as indicated in the footnotes below, directors and officers possessed sole voting power and sole investment power with respect to all shares set forth in this column. All Directors and Officers can be reached through the executive offices of the Company.
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(2)
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The percentage for each individual or group is based on 12,857,199
shares outstanding as of February 28, 2017.
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(3)
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The information for BlackRock Inc. was obtained from the Schedule 13(g) filed by BlackRock Inc. with the Securities and Exchange Commission on January 30, 2017.
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(4)
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Mr. Gang shares voting and investment power on all held shares with his wife.
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(5)
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Includes 10,917 shares owned jointly by Mr. Hand's wife for which he shares voting and investment power. Includes 718 shares held by Mr. Hand's children for which Mr. Hand disclaims beneficial ownership.
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(6)
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Includes 10,891 shares held by Mr. Hines' wife, for which Mr. Hines disclaims beneficial ownership.
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(7)
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Includes 3,560 shares held by the Hodges Family Foundation, for which Mr. Hodges claims indirect beneficial ownership.
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(8)
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Includes 15,059 shares held by the estate of Mr. Kain's grandfather, for which he is one of three co-trustees and shares voting power and investment power.
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(9)
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Ms. Keller shares voting and investment power on all held shares with her husband.
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(10)
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Mr. McIntosh shares voting and investment power on all held shares with his wife.
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(11)
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Mr. Newcomer shares voting and investment power on all held shares with his wife.
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(12)
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Mr. Strine shares voting and investment power on all held shares with his wife.
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(13)
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Includes shares owned by family members, unnamed executive officers and certain other shares, as to which some directors and officers disclaim any beneficial ownership and which are further disclosed in the notes above.
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Page 3
Director Hines reported a September 7, 2016 transfer of stock to the estate of his mother for which he is the executor on December 22, 2016.
Other than the aforementioned transaction,
t
he Company believes that during the year ended December 31, 2016, all directors and executive officers timely complied with all applicable filing requirements of Section 16(a) of the Securities Exchange Act of 1934. The foregoing statement is based solely upon a review of copies of reports on Forms 3, 4 and 5 furnished to the Company and written representations of its Directors and executive officers that no other reports were required.
ELECTION OF DIRECTORS
The bylaws of the Company provide that the Board of Directors will consist of no less than eight Directors and no more than twelve directors, segregated into three classes, and elected to staggered three-year terms of office. During the majority of 2016, the Board consisted of eight directors. Consistent with the bylaws, the Board of Directors increased the seats to ten directors in October of 2016 and filled the resulting vacancies with Erin C. Casey and James H. Cawley. Each director class consists of three or four directors.
The Nomination and Corporate Governance Committee recommends that the three nominees, who are currently serving as Director, be elected at the Annual Meeting, to serve for the ensuing three (3) years and until their respective successors have been elected and qualified. There were no nominee recommendations from shareholders or from any group of shareholders submitted in accordance with bylaw provisions. Each share represented by the enclosed proxy will be voted for each of the nominees listed, unless authority to do so is withheld. If any nominee becomes unavailable for any reason or if a vacancy should occur before the election (which events are not anticipated), the shares represented by the enclosed proxy may be voted as determined by the Proxies.
The three Directors are to be elected by a plurality of the votes cast at the Annual Meeting, meaning that the three directors receiving the most votes are elected, whether or not they receive a majority of the vote.
Page 4
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NOMINEES FOR ELECTION TO THREE YEAR TERMS EXPIRING IN 2020
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Erin C. Casey
Age 43
Director since 2016
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Ms. Casey is founder and partner at Design Quake, Inc., a design thinking consultancy in York, PA, and an adjunct professor of design thinking at York College of Pennsylvania. Prior to her current positions, Ms. Casey was on the senior management team at Mitchco, Inc. d/b/a Rudy Art Glass, a family-owned decorative architectural glass fabricator in York, PA from 2005 – 2016, an Assistant Marketing Manager for General Mills in Minneapolis, MN from 2004 – 2005, Manager of Investment Funds at The Carlyle Group, a private equity firm in Washington, DC, from 1998 – 2002, and a Senior Auditor with Arthur Anderson LLP in Washington, DC from 1995 – 1998. Ms. Casey is active in the York community, serving as a board member, officer or committee member of a number of non-profit organizations. In addition, Ms. Casey was named a Central Penn Business Journal Woman of Influence in 2015. The Board considered Ms. Casey's experience in all aspects of running a business including strategic planning, marketing, production, finance, accounting, human resources, sales, and public relations and her involvement in the community and determined that she would add a considerable benefit and diversity to the Company's Board of Directors.
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Robert P. Newcomer
Age 68
Director since 2013
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Mr. Newcomer has been President of Newcomer Consulting LLC, providing financial consulting services for public, private and not for profit organizations since 2003. Prior to starting his own business, Mr. Newcomer was with Glatfelter, York, PA, a public company and global manufacturer of specialty paper and engineered products from 1972 – 2003. He was an Executive Vice President for Glatfelter from 1993 – 2001, and President and Chief Operating Officer from 2001 – 2003. Mr. Newcomer also served as Dean of Business Affairs and CFO for York College of Pennsylvania from 2004 – 2006 and Interim President for York County Community Foundation from 2008 – 2009. He currently serves as a director and a member of the strategic review, compensation and employee benefits committees at Burnham Corporation, Lancaster, PA, a public company; and a director and compensation committee member of Glatfelter Insurance Group, York, PA, which is a private company. Mr. Newcomer also participates as an officer, Board or committee member with various community and non-profit organizations. The Board determined that Mr. Newcomer's experience leading a large public company, his financial background, board and committee experience with other organizations, as well as his familiarity with the community in which York Water serves, would continue to benefit the Company's Board of Directors.
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Ernest J. Waters
Age 67
Director since 2007
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Mr. Waters, now retired, served as Area Vice President and York Area Manager, Met-Ed, a FirstEnergy Company (an investor owned utility) from 1998 to 2009. In addition to management, Mr. Waters' experience includes public accounting, internal auditing and serving as an expert accounting witness in rate proceedings before the Pennsylvania Public Utility Commission, The Federal Energy Regulatory Commission, and the New York Public Service Commission. Mr. Waters was formerly a Certified Public Accountant and holds an MBA degree. He serves as a director, chairman of the special joint compliance committee, and a member of the risk and audit committees of Fulton Financial Corporation (a public company), and a director and chairman of the trust committee of Fulton Bank of Lancaster, PA (a subsidiary of Fulton Financial Corporation). Mr. Waters serves on the board of Wellspan Health (a non-profit organization.), chairs the audit committee, and is a member of the executive committee. Mr. Waters is a director and audit committee chairman of Pace Resources, York, PA, which is a private company. Mr. Waters is an NACD Governance Fellow. The Board considered Mr. Waters' prior experience in the utility industry and with regulatory matters and his current public company director and committee experience to be valuable and determined that his continued service on the Board will be beneficial to the Company's Board of Directors.
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The Board of Directors unanimously recommends a vote "FOR" each of the nominees.
Page 5
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DIRECTORS WITH TERMS EXPIRING IN 2018
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Michael W. Gang, Esq.
Age 66
Director since 1996
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Mr. Gang is a principal with Post & Schell PC (P & S), Harrisburg, PA, a Pennsylvania-based law firm, concentrating in regulatory matters. Mr. Gang currently serves as Chairperson of the P & S Board of Directors. Mr. Gang was a partner in Morgan, Lewis & Bockius, Harrisburg, PA, an international law firm, from 1984 to 2005. Mr. Gang is counsel to numerous water, gas, and electric utilities which are regulated by the Pennsylvania Public Utility Commission and has represented public utilities over a broad range of complex financial and tax issues in conjunction with economic regulation, financial statements, taxes and financing for 39 years. P & S is currently regulatory counsel for the Company. The Board believes Mr. Gang's legal and regulatory knowledge, as well as his experience with the Pennsylvania Public Utility Commission will continue to be a great benefit to the Company's Board of Directors.
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Jeffrey R. Hines, P.E.
Age 55
Director since 2008
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Mr. Hines has served as the President and Chief Executive Officer of the Company since 2008. He was Chief Operating Officer and Secretary from 2007 to 2008, and Vice President of Engineering from 1995 to 2006. Mr. Hines is a director and a member of the compensation, audit and corporate governance and nominating committees of Codorus Valley Bancorp in York, PA (a public company), and its wholly-owned subsidiary, Peoples Bank, York, PA. Mr. Hines is a trustee and vice chair of York College of Pennsylvania, a director of the National Association of Water Companies and serves as director or committee member of various community and non-profit organizations. Mr. Hines is a licensed Professional Engineer in PA and MD, and holds MBA and law degrees. The Board considered Mr. Hines' experience within the Company, his industry experience, and his educational background and determined that his continued service on the Board will be beneficial to the Company's Board of Directors.
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George W. Hodges
Age 66
Director since 2000
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Mr. Hodges, now retired, served as non-executive Chairman of the Board of The Wolf Organization, regional distributor and manufacturer of kitchen and bath products and specialty building products, from 2008 to 2009. Prior to being Chairman, Mr. Hodges was a member of the Office of the President of The Wolf Organization from 1986 to 2006. Mr. Hodges is lead director, and a member of the audit, compensation and executive committees of Fulton Financial Corporation (a public company), in Lancaster, PA, and director, trust committee member of Fulton Bank, a subsidiary of Fulton Financial Corporation. Mr. Hodges is a director, as well as serving on the audit and nominating committees of Burnham Holdings, Lancaster, PA (a public company). Mr. Hodges is a director of the Powder Mill Foundation, a private charitable foundation in York, PA. Mr. Hodges is an NACD (National Association of Corporate Directors) Board Leadership Fellow. He also serves and has served on the boards or committees of various non-profit and community organizations. The Board determined that Mr. Hodges' business experience and leadership in the community as well as his extensive board and committee service with various organizations will continue to benefit the Company's Board of Directors.
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George Hay Kain, III
Age 68
Director since 1986
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Mr. Kain has been an academic since 2007, and was a consultant from 2004 to 2007. Mr. Kain ran his own law office from 1982 to 2004, handling all aspects of the business, specializing in pipeline condemnation cases for a local utility, and cases involving real estate, and estates and trusts. Mr. Kain was a solicitor for York County Children and Youth Services. He also practiced in the local juvenile court, the Pennsylvania Superior Court, and the Pennsylvania Supreme Court. Mr. Kain was admitted to the bar of the Supreme Court of the United States. Mr. Kain is also actively involved in various non-profit organizations. The Board considered Mr. Kain's legal experience as well as his commitment and contributions to the Company over the past 29 years and determined that his continued service will be beneficial to the Company's Board of Directors.
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Page 6
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DIRECTORS WITH TERMS EXPIRING IN 2019
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James H. Cawley
Age 71
Director since 2016
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Mr. Cawley has been an energy consultant with the Harrisburg, PA law firm, Skarlatos-Zonarich LLC, since November, 2016, Vice President, Strategy for HomeADE LLC d/b/a Zentility, a state–licensed software application for retail electricity consumers since May 2016, and an adjunct professor of Administrative Law at the Widener School of Law, Philadelphia, PA since 2005. Mr. Cawley served two terms as a member of the Pennsylvania Public Utility Commission (PPUC), one from 1979 to 1985 and the second from 2005 to 2015. He was Chairman of the PPUC from 2008 to 2011. Prior to serving on the PPUC, Mr. Cawley was a partner in several law firms including Rhoads & Sinon LLP, Harrisburg, PA from 1996 to 2005; and LeBoeuf, Lamb, Green & MacRae LLP, Harrisburg, PA from 1988 to 1996. In addition, Mr. Cawley served as majority counsel to the state Senate Consumer Affairs Committee and chief counsel to the Democratic floor leader in the Senate, and was a major drafter of the Pennsylvania Public Utility Code. Mr. Cawley served on the board of Pennsylvania-American Water Company from 1998 to 2003 and the Pennsylvania Energy Development Authority from 1991 to 1999. The Board views Mr. Cawley's experience in legal and regulatory matters, particularly in the state of Pennsylvania, as an invaluable asset to the Company's Board of Directors in the areas of customer rates, regulations and legislation, in addition to many others.
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Jody L. Keller, SPHR
Age 63
Director since 2015
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Ms. Keller is the owner of Jody Keller LLC, a human resources management consulting firm she founded in 2013. Concurrently, Ms. Keller is the Executive in Residence at The Graham Center for Entrepreneurial Leadership Studies at Penn State York. Previously, Ms. Keller served as the Interim Executive Director of the Strand Capitol Performing Arts Center in York, PA from 2014 – 2015. Prior to her consulting business, Ms. Keller was a Partner and Chief Administrative Officer of ParenteBeard LLC, a national accounting firm providing CPA and business advisory services to small and middle market businesses, non-profits and SEC registrants from 1999 to 2013. Ms. Keller was the owner and President of her own business, Keller Resources, Inc. specializing in human resources, management consulting and training from 1984 to 1999. Additionally, Ms. Keller served as an instructor of human resources management, employment law, and training and development courses at Villanova University and York College from 1992 to 2011. Ms. Keller has held numerous Chairman, President, board member and various committee positions with community and non-profit organizations. The Board believes Ms. Keller's expertise in human resources, organizational development and design, compensation strategy, and leadership development will aid in succession planning efforts, identification of future officers and Board members, add some diversity to the Board, and that her knowledge and leadership in the community will add overall strength to the Board of Directors.
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Steven R. Rasmussen, CPA
Age 44
Director since 2011
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Mr. Rasmussen has been Chief Executive Officer and General Manager for Adams Electric Cooperative, Inc., an electric distribution cooperative in south-central Pennsylvania, since 2006. Mr. Rasmussen served as Accounting and Member Services Manager with the same organization from 1999 to 2006. Prior to joining Adams Electric, Mr. Rasmussen served in various other capacities including college faculty and auditor for various accounting firms. Mr. Rasmussen serves on the boards and executive committees of the Adams Utility Services Company, a wholly-owned subsidiary of Adams Electric, and Mid-Atlantic Cooperative Solutions, Inc. which does business as Aero Energy in New Oxford, PA (both private companies). He also serves and has served on the boards and committees of numerous community, non-profit and professional organizations as a way of giving back to the communities where he works and lives. In addition to his utility experience and board experience, Mr. Rasmussen is a certified public accountant, and a leader in the communities of some of the Company's recently added water systems. The Board views Mr. Rasmussen's utility experience, his financial and educational background, and his knowledge and visibility in the Adams County area as beneficial to the Company's Board of Directors.
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Page 7
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Name
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Positions and Offices Held
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Joseph T. Hand
Age 54
Officer since 2008
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Mr. Hand has been Chief Operating Officer for the Company since March 2008. Prior to his current position, Mr. Hand was Chief of the Navigation Branch, Baltimore District, for the U.S. Army Corps of Engineers from September 2006 to February 2008, and Deputy Commander and Deputy District Engineer for the Corps of Engineers from June 2003 to September 2006. Prior to the Army Corps, Mr. Hand held various positions in the U.S. Army.
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Kathleen M. Miller
Age 54
Officer since 2003
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Ms. Miller has been Chief Financial Officer and Treasurer of the Company since January 2003. Prior to her current position, Ms. Miller was Controller and Assistant Treasurer of the Company from October 2001 to December 2002, and Accounting Manager from March 1996 to September 2001. Prior to joining the Company, Ms. Miller held a variety of accounting and financial positions with two large companies in the York County area.
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Vernon L. Bracey
Age 55
Officer since 2003
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Mr. Bracey has been Vice President of Customer Service of the Company since March 2003. Prior to his current position, Mr. Bracey was Customer Service Manager from January 2000 to February 2003 and Meter Reading Manager from September 1998 to December 1999. Prior to joining the Company, Mr. Bracey held various positions in economic development, energy services and public and community relations at GPU Energy, A First Energy Company, from March 1983 through August 1998.
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Bruce C. McIntosh
Age 64
Officer since 1998
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Mr. McIntosh has been Vice President-Human Resources, Secretary and Assistant Treasurer of the Company since March 2008. Prior to his current position, Mr. McIntosh was Vice President-Human Resources and Assistant Treasurer from January 2003 to February 2008, Vice President-Human Resources from May 1998 to December 2002 and Director of Human Resources from November 1996 to April 1998. Prior to joining the Company, Mr. McIntosh held various human resources positions in the healthcare industry.
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Mark S. Snyder, P.E.
Age 46
Officer since 2009
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Mr. Snyder has been Vice President-Engineering since May 2009. Prior to his current position, Mr. Snyder was Engineering Manager from October 2007 to April 2009 and Engineer from December 2006 to October 2007. Prior to joining the Company, Mr. Snyder was a project engineer with Buchart Horn, Inc., York, PA, an international engineering firm from April 2001 to December 2006, and a project engineer for Rettew Associates, York, PA, a national engineering firm, from December 1996 to April 2001. Mr. Snyder is a licensed Professional Engineer in Pennsylvania.
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John H. Strine
Age 60
Officer since 2009
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Mr. Strine has been Vice President-Operations since May 2009. Prior to his current position, Mr. Strine was Operations Manager from February 2008 to May 2009, Maintenance and Grounds Superintendent from August 1991 to February 2008, Assistant Superintendent from June 1985 to July 1991, and held various other positions with the Company prior to 1985.
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Page 8
The Board of Directors operates under specific corporate governance principles and guidelines based on the Company's Bylaws, Standing Resolutions, and Policies. The Nomination and Corporate Governance Committee ("the Committee") monitors, develops and makes recommendations to the Board of Directors based on these principles and guidelines. Some of the principles and guidelines are listed below.
The Bylaws of the Company provide that the Board of Directors will consist of no less than eight Directors and no more than twelve directors, who are elected to staggered three-year terms of office. There is a mandatory retirement age of 73 for all directors.
The Committee considers candidates for Board membership suggested by its members and other Board members, as well as management and shareholders. The Committee recommends to the Board the appropriate size, function and needs of the Board, so that the Board as a whole collectively possesses a broad range of skills, industry and other knowledge, and business and other experience useful to the effective oversight of the Company. Some of these skills include crisis management, accounting and finance, corporate governance, merger and acquisition, business development and risk management. The Committee also seeks Board members that will add diversity to the Board in areas such as professional experience, perspectives, education, skills, backgrounds, demographics (including gender, race, age, national origin, etc.), culture and work-style. In addition, Directors should have experience in positions with a high degree of responsibility, be leaders in the companies or institutions with which they are affiliated, have a high degree of integrity, and be selected based upon contributions they can make to the Company. The Committee considers all of these qualities when selecting, subject to Board ratification, candidates for Director. No distinctions are made between internally-recommended candidates and those recommended by shareholders.
The Company's Common Stock is listed on the NASDAQ Global Select Market ("NASDAQ"). NASDAQ listing rules require that a majority of the Company's directors be "independent directors" as defined by NASDAQ corporate governance standards. In compliance with this rule, the Board of Directors examines the independence of its members annually. In order for a director to be considered independent, the Director must not be an executive officer or employee of the Company and the Board must determine that the Director has no relationship, which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Generally but not exclusively, a director does not qualify as an independent director if the Director:
|
1.
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Has been employed by the Company or its affiliates in the current year or past three years;
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|
2.
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Has accepted, or has an immediate family member who has accepted, any compensation from the Company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the determination of independence (except for payment for Board service, retirement plan benefits or non-discretionary compensation, or in the case of an immediate family member compensation as an employee);
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3.
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Has an immediate family member who is, or has been in the past three years, employed by the Company as an executive officer;
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4.
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Has been or has an immediate family member who has been, a partner in, a controlling shareholder or an executive officer of any organization to which the Company made or from which it received, payments (other than those which arise solely from investments in the Company's securities or under non-discretionary charitable contribution matching programs) that exceed five percent of the recipient's consolidated gross revenues for that year, or $200,000, whichever is more, in any of the past three fiscal years;
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Page 9
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5.
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Has been or has an immediate family member who has been employed as an executive of another entity where any of the Company's executives serve or have served during the past three years on that entity's compensation committee; and
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6.
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Is or has an immediate family member who is a current partner of the Company's outside auditor, or was a partner or employee of the Company's outside auditor who worked on the Company's audit at any time during any of the past three years.
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The Board has determined that directors Casey, Cawley, Gang, Hodges, Kain, Keller, Newcomer, Rasmussen and Waters are independent directors under the NASDAQ listing standards. Mr. Hines, who is an employee of the Company, is not considered an independent director.
The Board based these determinations primarily on a review of the responses of the Directors and executive officers to an annual questionnaire regarding employment history, affiliations, family and other relationships, together with an examination of those companies with whom the Company transacts business. In addition, Directors are required to notify the Board when considering new directorships.
In making the determination that Mr. Gang is independent under the NASDAQ rules, the Board considered 2016 payments of $39,359 made to Post & Schell PC, a law firm in which Mr. Gang is Chairman of the Board and Principal. Post & Schell PC is the Company's regulatory counsel. The amounts paid represent less than 0.10% of Post & Schell PC revenue in 2016. The Company pays the same rates for services as the firm's other comparable clients. Mr. Gang is not a controlling shareholder of the firm.
In making the determination that Mr. Rasmussen is independent under the NASDAQ rules, the Board considered 2016 payments of $167,251 made to affiliated entities of Adams Electric where Mr. Rasmussen serves as an executive officer. The payments were for electric service, based on rates applicable to all Adams Electric consumers, and for gasoline which was purchased through a bidding process. The payments made were not material to the affiliated entities.
The Company has a banking relationship with Fulton Bank, where Mr. Hodges and Mr. Waters are members of the Board of Directors. The amounts paid to the entity were not material.
The Company makes payments to The Glatfelter Agency for insurance brokerage services where Mr. Newcomer is a member of the Board of Directors. The amounts paid to the entity were not material.
The Company makes payments to Buchart-Horn for engineering services and Print-O-Stat, Inc. for operating supplies and services which are affiliated entities of Pace Resources where Mr. Waters is a member of the Board of Directors. The amounts paid to the entities were not material.
In addition to these relationships, the Company purchases from and sells services to certain directors or the organizations with which they are affiliated at rates that are either regulated or the same as those charged to the same class of customers.
The Board determined that the noted relationships do not create a conflict of interest or impair any Director's judgment with respect to Board member responsibilities. Directors who are involved with entities being discussed or voted upon at a meeting abstain from voting on that matter.
The preference of the Board, per its Standing Resolutions, is for the Chairman of the Board to be an independent director as defined by NASDAQ. Generally, independent directors provide oversight and protect shareholder interests, and they offer more objective input and leadership to the Board. The Board believes this structure is in the shareholders' best interest. The Chairman leads regular executive sessions of the Board's independent directors. In addition, the Chairman of the Board and the Chairman of the Nomination and Corporate Governance Committee annually evaluate the performance of the individual directors.
Page 10
The Board and its Committees are responsible for oversight of the Company's risk management process. The Audit Committee
is responsible for oversight of risks relating to the Company's financial statements, financial reporting processes, the evaluation of the effectiveness of internal control over financial reporting and compliance with certain of the Company's ethics policies.
The Compensation Committee is responsible for monitoring risks associated with the design and administration of the Company's compensation programs and performs the annual performance review of the CEO. Other risks such as regulatory risk, environmental risk, and strategic risk are monitored by the Executive Committee, the Nomination and Corporate Governance Committee, or the full Board.
Senior management of the Company is responsible for identifying risks, managing risks, and reporting and communicating risks and mitigation efforts back to the Board of Directors or the designated committee. While certain elements of risk are addressed at each Board meeting, management and the Board of Directors conduct a comprehensive analysis of risk on an annual basis. The Board believes a Chairman that is independent of management adds another layer of insight to the risk assessment process.
The Company has an Executive Committee, an Audit Committee, a Compensation Committee, and a Nomination and Corporate Governance Committee, all of which are composed of members of the Board of Directors. The Audit, Compensation, and Nomination and Corporate Governance committees must be composed of at least three directors all of which are considered independent directors under the NASDAQ rules. Each of these three key committees has a charter which is reviewed at least annually, and which is posted on the Company's website at www.yorkwater.com under "Investor Relations" then "Corporate Governance".
The Executive Committee is empowered to function as delegated by the Board of Directors. Their main focus is on budgeting, ratemaking, and debt and equity financing. The Executive Committee is composed of the following Directors appointed by the Board: George W. Hodges, Chairman; Michael W. Gang, Esq.; Jeffrey R. Hines, P.E.; Robert P. Newcomer; and Ernest J. Waters. James H. Cawley was appointed by the Board to the Executive Committee effective January 30, 2017. The Executive Committee held one (1) meeting during the fiscal year ended December 31, 2016.
The Audit Committee monitors the audit functions of the independent public accountants, and reviews the Company's financial reporting process and internal controls. The Audit Committee is composed of the following independent Directors appointed by the Board: Steven R. Rasmussen, CPA, Chairperson; Robert P. Newcomer; and Ernest J. Waters. Erin C. Casey was appointed by the Board to the Audit Committee effective January 30, 2017. Based on a review of the background and experience of the members of the Audit Committee, the Board of Directors has determined that all members of the Audit Committee meet the additional requirements for independence applicable to Audit Committee members, are financially literate and are "audit committee financial experts" within the meaning of applicable SEC rules. The Audit Committee held six (6) meetings during the fiscal year ended December 31, 2016.
The Compensation Committee considers and makes recommendations to the Board of Directors concerning the appropriate compensation package for the corporate officers, Directors and members of the Committees of the Board of Directors of the Company, including incentives. Compensation for corporate officers is further explained in the Compensation Discussion and Analysis section of this proxy statement. Director and committee member compensation is based on a review of fees paid by peers and other public companies.
The Compensation Committee is composed of the following independent Directors appointed by the Board: Ernest J. Waters, Chairperson; George Hay Kain III; and Robert P. Newcomer. Erin C. Casey was appointed by the Board to the Compensation Committee effective January 30, 2017. The Compensation Committee held four (4) meetings during the fiscal year ended December 31, 2016.
The Nomination and Corporate Governance Committee recommends the appropriate Board structure, reviews the Company's succession planning, oversees the Board's annual evaluation of its performance and the performance of other Board Committees, evaluates corporate governance best practices, and makes recommendations to the Board of Directors for nominations for Directors and Officers of the Company. The Committee will consider nominees recommended by shareholders of the Company in accordance with the Company's Bylaws.
Page 11
The Nomination and Corporate Governance Committee is composed of the following
independent
Directors appointed by the Board: Michael W. Gang, Esq., Chairperson; Jody L. Keller, SPHR; and Steven R. Rasmussen, CPA. James H. Cawley was appointed by the Board to the Nomination and Corporate Governance Committee effective January 30, 2017. The Nomination and Corporate Governance Committee held three (3) meetings during the fiscal year ended December 31, 2016.
The Board has adopted a written policy setting forth procedures for the review, approval and monitoring of transactions involving the Company and any related persons (directors, nominees for directors, 5% security holders, and executive officers or their immediate family members). Under the policy (and the Audit Committee Charter), the Audit Committee is responsible for reviewing and approving all transactions involving the Company in which any related person has a direct or indirect interest, regardless of amount. The Audit Committee intends to approve only those related party transactions that are on terms no less favorable to the Company than could be obtained from independent third parties and are otherwise in, or are not inconsistent with, the best interests of the Company and its shareholders.
In furtherance of this policy, the Company's Board of Directors has adopted a Code of Conduct applicable to all Directors, officers and employees, which generally requires that any transaction or opportunity that may constitute a conflict of interest, be reported to management so that it may be reviewed and avoided, if possible. The Code of Conduct is available on the Company's web site at www.yorkwater.com under "Investor Relations", then "Corporate Governance".
Shareholders who wish to communicate with the Board of Directors or specific individual Directors may do so by directing a written request addressed to such Directors or Director in care of the Secretary of The York Water Company, at the address appearing on the first page of this proxy statement. Communication(s) directed to members of the Board of Directors who are also executive officers will be relayed to the intended Board member(s) except to the extent that it is deemed unnecessary or inappropriate to do so pursuant to the procedures established by a majority of the independent Directors. Communications directed to non-management Directors will be relayed to the intended Board member(s) except to the extent that doing so would be contrary to the instructions of the non-management Directors. Any communication so withheld will nevertheless be made available to any non-management Director who wishes to review it.
The independent directors of the Board schedule regular executive sessions of independent directors in which they meet without management participation. The Chairman of the Board leads these sessions.
The Board approved a stock ownership policy in 2016. Each non-employee director shall within five (5) years of appointment, or five (5) years from the original date of the policy, whichever is later; attain shares valued at three (3) times the annual cash retainer at that time. No adjustments for subsequent fluctuations in stock price or cash retainers will be made. A director may use both purchased and granted shares to meet the requirement. A director must continue to hold a minimum of three (3) times the annual retainer for as long as they are a director. As part of the Company's Securities Trades Policy, directors, officers and selected employees are prohibited from trading in Company securities on a short-term basis, engaging in short sales, purchasing Company stock on margin, buying or selling puts or calls, pledging securities, or otherwise engaging in any type of hedging transactions involving Company securities.
Page 12
The Company's Board of Directors has adopted a Code of Conduct applicable to all Directors, officers and employees. The Code of Conduct constitutes a "code of ethics" as required by Item 406 of Regulation S-K. There were no waivers of the Code made for any Director, officer or employee during 2016. A copy of the Code of Conduct was filed with the Securities and Exchange Commission as Exhibit 14 to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2014. The Code of Conduct is also available, free of charge, on the Company's website, www.yorkwater.com, under "Investor Relations", then "Corporate Governance". The Company intends to disclose material amendments to, or Director, officer and employee waivers from, the Code of Conduct, if any, on its website, or by Form 8-K to the extent required.
The Audit Committee reviews the Company's financial reporting process on behalf of the Board, including reports to the Securities and Exchange Commission on Forms 10-Q and 10-K, the Company's internal control over financial reporting and releases of earnings. In addition, the Committee selects, subject to shareholder ratification, the Company's independent registered public accounting firm and evaluates the performance of the firm.
Management is responsible for the Company's internal controls and the financial reporting process. The independent registered public accounting firm is responsible for performing an integrated audit of the Company's financial statements in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) (United States) and to issue reports thereon. The Committee's responsibility is to monitor and oversee these processes.
In this context, the Committee has reviewed and discussed the audited financial statements with management; has discussed with the independent registered public accounting firm, Baker Tilly Virchow Krause, LLP ("Baker Tilly"), the matters required to be discussed by Auditing Standards No. 1301, as adopted by the Public Company Accounting Oversight Board; has received the written disclosures and the letter required by the PCAOB regarding independence communications; and has discussed Baker Tilly's independence with the firm and management.
Based upon the Committee's discussions with management and Baker Tilly and the Committee's review of the representations of management, and Baker Tilly's report to the Committee, the Committee recommended that the Board include the audited financial statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2016 for filing with the SEC.
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Steven R. Rasmussen, CPA
Chairperson
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||
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Erin C. Casey
Member
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Robert P. Newcomer
Member
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Ernest J. Waters
Member
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Page 13
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has approved the appointment of Baker Tilly as the independent registered public accounting firm to audit the financial statements of the Company for the fiscal year ending December 31, 2017. Although we are not required to seek shareholder approval of this appointment, the Board of Directors believes it is in the best interests of shareholders to be given the opportunity to ratify the appointment. If shareholders do not ratify the appointment of Baker Tilly, the Audit Committee will consider the appointment of another independent registered public accounting firm for the Company in future years. It is understood that even if the selection of Baker Tilly is ratified by the shareholders, the Audit Committee, in its discretion, may direct the appointment of a new independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its shareholders.
Representatives of Baker Tilly are expected to be present at the 2017 Annual Meeting of Shareholders, will have the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions.
Principal Public Accountant's Fees and Services
Audit fees and all professional services rendered by the Company's independent registered public accountants, Baker Tilly were approved by the Company's Audit Committee. The Board considers the possible effect on auditors' independence of providing non-audit services prior to the service being rendered.
The following table presents fees for services provided by Baker Tilly for 2016 and 2015:
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2016
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2015
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|||||||
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Audit Fees (1)
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149,843
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143,865
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||||||
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Audit Related Fees
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-
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-
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||||||
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Tax Fees (2)
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13,000
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18,850
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||||||
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All Other Fees
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-
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-
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||||||
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162,843
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162,715
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|||||||
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(1)
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Professional services rendered for 2016 and 2015 include (a) the audit of the Company's annual financial statements, (b) the review of the financial statements included in the Company's Quarterly Reports on Form 10-Q, and (c) the audit of the effectiveness of internal control over financial reporting. In addition, 2016 fees include consent procedures in connection with registration statements relating to the Company's stock plans and 2015 fees include consent procedures in connection with debt offering statements.
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| (2) |
Tax fees include preparation of the federal income tax return and other tax matters.
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The Audit Committee approves in advance any audit or non-audit services provided by outside auditors. During 2016 and 2015, there were no exceptions to the Audit Committee's pre-approval requirements.
Adoption of this proposal requires the affirmative vote of a majority of the votes cast by all shareholders entitled to vote at the Annual Meeting.
The Board of Directors unanimously recommends a vote "FOR" the ratification of Baker Tilly Virchow Krause, LLP as the Company's independent registered public accounting firm for the 2017 fiscal year.
Page 14
Our Named Executive Officers.
This section discusses the compensation we paid to our named executive officers (as defined by SEC rules) in 2016. Our named executive officers are:
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Name
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Title
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Jeffrey R. Hines, P.E.
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President, Chief Executive Officer
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Kathleen M. Miller
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Chief Financial Officer
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Joseph T. Hand
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Chief Operating Officer
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Bruce C. McIntosh
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Vice President-Human Resources
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John H. Strine
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Vice President-Operations
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Highlights of Our Financial Performance in 2016.
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·
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Net income and earnings per share (EPS) were $11.8 million, and $0.92, respectively, compared to $12.5 million and $0.97 in 2015;
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|
·
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Total revenue grew to $47.6 million from $47.1 million, an increase of $0.5 million, or 1.1%;
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·
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The Company's long-term performance is strong with three-year average annual total shareholder return at 26.5% and three-year average annual return on equity of 11.0%.
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General Philosophy.
The goal of our compensation program is to attract, motivate and retain our executive officers who are key to the success of our Company. We compensate our named executive officers through a combination of base salary, short-term cash incentives and long-term incentives through stock-based awards designed to be competitive with comparable employers and to align management's incentives with the long-term interests of our customers and shareholders. Our compensation setting process consists of establishing a base salary for each named executive officer, designing an annual cash incentive (currently up to 5% of salary) for such executive to reward the achievement of specific operational goals, and awarding a long-term incentive award based on performance metrics over three years. We only incentivize operational goals that add value for both our customers and our shareholders, such as increasing efficiency, ensuring a safe, adequate supply of water, reducing costs, improving customer service and expanding our service territory in order to gain economies of scale and spread fixed costs over a larger number of customers. Payouts for incentives that are not in the long-term interest of customers may not be considered prudent, and therefore, may not be recoverable through water and wastewater rates granted by the Pennsylvania Public Utility Commission. In 2016, shareholders approved a long-term incentive plan to advance the long-term success of the Company, and to increase shareholder value by providing the incentive of long-term stock-based awards to officers, directors and key employees. The plan is designed to: (1) encourage Company stock ownership by participants to further align their interest with the interests of shareholders of the Company, (2) ensure that compensation practices of the Company are competitive in the industry and (3) assist in the attraction and retention of directors and key employees vital to the Company's success.
Role of Compensation Committee Consultant.
The Compensation Committee engaged Mosteller & Associates, Reading, PA ("the Consultant"), to evaluate the Company's director and executive compensation relative to the market, and to make recommendations as necessary. The Consultant compared the compensation package of our executives to water utilities in the mid-Atlantic with similar size and scope, general utility companies in the mid-Atlantic with similar size, engineering and utility organizations in PA of similar size, publicly held smaller companies in PA and MD, and other smaller publicly held water utility companies. The Consultant found that base pay for the executive officers was generally between the 25
th
and 50
th
percentile, bonus pay was substantially less than the market, the Company had no long-term incentive plans to compare to the market, and the supplemental pension plans were very strong relative to the market. The Consultant recommended a long term equity incentive plan, which was approved by shareholders in 2016. The Compensation Committee concluded that Mosteller & Associates is an independent consultant after considering the factors relevant to Mosteller & Associates' independence from management, including the factors set forth in the NASDAQ and SEC rules regarding compensation consultant independence. If necessary in the future, the Compensation Committee plans to engage a different consultant to maintain independence from management.
Page 15
Base Salary.
To assist us in establishing base salary in 2016, the Compensation Committee directed management to provide a comparison between York Water compensation for senior management with our four most similar water utility peer companies. These companies included: Middlesex Water Company (MSEX), Connecticut Water Company (CTWS), Artesian Water Company (ARTNA), and San Jose Water Company (SJW). Compensation information for the comparable companies was obtained for the named executive officers as reported in the 2016 proxy statements. In order to adjust for size differences, a regression analysis was performed based on the following attributes of the comparable companies: total revenue, number of customers, net utility plant, and number of employees. Comparable company attributes were obtained from proxy statements, annual reports, and SEC 10K filings. After correlating for these size differences through a regression analysis, it was deemed appropriate that York Water's compensation goal should be between 75% and 125% of the projected base compensation. The width of this band reflects such items as: complexity of operations, variations in duties of the incumbents, time in service, geographic differences in cost of living, and statistical uncertainty due to a relatively small sample size.
Due to the small sample size of peer water utilities and significant geographic differences, the company also compared several similarly sized (by net income), publicly traded companies located in our service area to insure that our senior executive compensation is competitive with similar organizations in our area. The company selected two locally based, publicly traded financial institutions for this comparison: Codorus Valley Bancorp (CVLY), and Adams County National Bank (ACNB). These companies were selected because they served the same geographic area as York Water, are similar sized, and operate in a highly regulated environment which is comparable to a water company. It was deemed appropriate that York Water's compensation goal should be between 75% and 125% of the base compensation of these local comparable companies. The width of this band reflects such items as: complexity of operations, variations in duties of the incumbents, and time in service.
The base salary level of named executive officers will be reviewed annually to determine if the peer groups described above, and the 75%-125% band widths continue to be appropriate based on changes relative to comparable companies, our product line, the current regulatory environment, changes in water quality standards, competition for competent management, and growth in our service territory, as well as other relevant factors.
The Compensation Committee also considers subjective factors such as the value of the position to the Company, competition for executives, the performance of the executive, and the length of service in the current position and with the Company when determining base salary levels.
Bonuses.
We do not provide bonuses to senior management.
Stock Awards.
In 2016, shareholders approved a Long-Term Incentive Plan to advance the long-term success of the Company, and to increase shareholder value by providing the incentive of long-term stock-based awards to officers, directors and key employees. The plan is designed to: (1) encourage Company stock ownership by participants to further align their interest with the interests of shareholders of the Company, (2) ensure that compensation practices of the Company are competitive in the industry and (3) assist in the attraction and retention of directors and key employees vital to the Company's success.
The plan is administered by the Compensation Committee, which has complete and final authority to, among other things, select participants, to determine the goals and circumstances under which incentive awards are granted, to grant awards and to construe and interpret the Plan. Decisions of the Compensation Committee with respect to the administration and interpretation of the Plan are final, conclusive and binding upon all participants.
The Compensation Committee has based the awards for officers on a combination of metrics that link closely to shareholder value. Twenty-five (25) percent of the award is based on achieving a three-year average total shareholder return of 9.5%, twenty-five (25) percent of the award is based on achieving a three-year average return on equity of 9.5%, twenty-five (25) percent of the award is based on achieving a three-year average Pennsylvania Public Utility Commission justified complaint rate per 1,000 customers of less than the Pennsylvania water utility peer group average in the most recently published report, and twenty-five (25) percent of the award is based on maintaining customer rates that are less than the Pennsylvania water utility peer group average. The grants will typically be made in the first or second quarter of the year based on a three-year look back method of these metrics ending with the most recently completed fiscal year. The awards vest ratably over three years for the participants.
Page 16
On November 21, 2016, the Compensation Committee determined that the Company met or exceeded all four metrics for the three-year period ended December 31, 2015. The Committee awarded restricted stock to all officers and other key employees effective November 28, 2016 at a rate of 2% of base salary to vest ratably over three years beginning November 28, 2016. The Committee awarded the named executive officers the amounts set forth in the 2016 Grants of Plan Based Awards Table below, which was the target incentive amount for each named executive officer.
Cash Incentives.
Our practice is to use cash awards to incentivize our senior managers in the short-term to create value for our customers and shareholders. To that end, we adopted a Cash Incentive Plan in 2005, pursuant to which our Compensation Committee sets annual performance objectives and target incentive payment amounts. All of our supervisors and managers participate in the plan, including our named executive officers.
The plan is administered by the Compensation Committee, which has complete and final authority to, among other things, select participants, to determine the goals and circumstances under which incentive awards are granted, to grant awards and to construe and interpret the Plan. Decisions of the Compensation Committee with respect to the administration and interpretation of the Plan are final, conclusive and binding upon all participants.
The Compensation Committee has discretion to determine all performance objectives. In addition, the Committee may specify that any incentive award be conditioned upon achievement or satisfaction of business criteria or other measures of performance. One or more of the following business criteria or other measures of performance may be used by the Committee: (1) growth in revenues or assets; (2) earnings from operations; (3) net income or earnings per common share; (4) return on investment or return on equity; (5) stock price or shareholder return; and (6) strategic business criteria, consisting of meeting specified water quality standards, environmental or safety standards, affordability of rates and customer satisfaction standards. The Compensation Committee may exercise its discretion to eliminate, reduce or increase the amounts payable as incentive, subject to such business criteria or other measures of performance.
Under the plan, annual performance objectives are established no later than ninety (90) days after the beginning of any annual incentive period, which is usually a calendar year. Each performance objective carries with it a minimum score of five (5) points. Objectives of more significant value or that require more effort, may carry more than five points. No points are awarded for partial achievement of performance objectives. Incentive awards are granted only if an overall score of seventy-five (75) percent of the available performance objective points are achieved. The Compensation Committee believes that achieving performance objectives should be the shared responsibility of management. Accordingly, if an overall score of seventy-five (75) percent of the available performance objective points is achieved, all participants receive their target incentive awards. If an overall score of less than seventy-five (75) percent of the available performance objectives is achieved, no participant receives an award.
The Compensation Committee set the performance objectives and target incentive awards for 2016 on February 18, 2016. For 2016, the Compensation Committee determined that the amount of the target cash incentive award would be 5% of the base salary as of December 31, 2016 for each management employee, including named executive officers. The Committee selected 5% as the target cash incentive award for 2016, and for all of the previous years since the plan's inception in 2005, after considering various factors. One such factor was the range of other benefits already provided by the Company. Another factor was the comparison of the Company's total salary and benefit package to the compensation packages paid by other comparable companies. A third factor was the level of motivation needed to achieve the established goals of the Company. Finally, the Compensation Committee considered how the plan would be perceived by the regulators, customers and shareholders. All of these factors together contributed to the Committee's decision to keep the target incentive relatively low as compared to other companies.
The 2016 performance objectives as determined by the Compensation Committee were, among other things: replace and reline over 42,200 feet of pipe; materially complete the construction of a new raw water pumping station and pipeline; complete assessment and evaluation for the third phase of a treatment plant optimization project; complete final filter rebuilds; conduct needs surveys for additional portions of the current service territory without public water supply; successfully integrate acquisitions into the Company's operations to realize economies of scale; update emergency response plans in an on-line repository; and increase paperless billing customers to further reduce billing costs.
Page 17
On January 30, 2017, the Compensation Committee determined that our management had achieved seventy-five (75) percent of the performance objectives listed above for 2016, as well as the set business criterion for 2016, which was, earnings per common share of $0.89. The Committee awarded the named executive officers the amounts set forth in the 2016 Grants of Plan Based Awards Table below, which was the target incentive amount for each named executive officer.
On January 30, 2017, the Compensation Committee determined performance objectives and target incentive amounts to be awarded under the plan for 2017. The performance objectives are, among other things: replace and reline over 42,200 feet of pipe; replace 400 company-owned lead service lines and the attached customer-owned lead service line; develop an inventory of customer-owned service lines which are made of lead; provide a water test to all customers with a company-owned or customer-owned lead service line that requests such a test; review our corrosion control and optimize if needed; obtain operating permits for the new raw water pumping station and pipeline; successfully integrate approved wastewater acquisitions into the Company's operations to realize economies of scale; conduct needs surveys for additional portions of the current service territory without public water supply; submit a rate case to the Pennsylvania Public Utility Commission if one is deemed appropriate; implement a labor-management plan to provide uninterrupted service; and complete the Environmental Protection Agency's climate ready utility pilot program. The target incentive amounts for 2017, as determined by the Compensation Committee, are 5% of named executive officers' base salary as of December 31, 2017 and the business criteria for 2017 is a target level of earnings per common share.
Clawback Policy.
In the event of a material misstatement of financial results requiring restatement, the Board, or appropriate committee thereof, will review all short-term and long-term incentive compensation paid to senior executives on the basis of having met specific performance targets during the restatement period. If the material misstatement resulted from fraud, negligence or intentional misconduct, the Board or committee will take, in its discretion, such action as it deems necessary to recover the compensation paid, remedy the misconduct, and prevent its recurrence. The Board will, to the extent permitted by applicable law, to the extent it is reasonable to do so (e.g. the expense of recovering the compensation does not exceed the amount recovered), and to the extent that the amount earned under restated financial results is lower than the amount originally awarded, require reimbursement from the senior executive engaged in the misconduct that caused the need for the restatement. The required reimbursement will be the amount paid in excess of the amount earned under restated financial results. In addition, the Board may dismiss the senior executive, authorize legal action, or take such other action to enforce the officer's obligations to the Company as it deems appropriate.
Severance Benefits.
Other than Change in Control payments described below, we do not provide severance benefits to employees as part of our compensation program.
Retirement Plans.
We provide a traditional defined benefit pension plan covering employees hired before May 1, 2010. All named executive officers are entitled to benefits under the defined benefit pension plan upon retirement after the age of 55 on the same terms as other pension-eligible employees. The pension benefit is based on the years of service multiplied by the sum of $19.25 and 1.50% of that portion of the final average monthly earnings which are in excess of $400. The final average monthly earnings are the average of the employee's earnings for the highest consecutive sixty (60) complete months during the last one hundred and twenty (120) complete months immediately prior to the date the pension benefit calculation is made. Normal (full) retirement benefits are payable at age 65, or at age 62 with twenty-five years of service. Employees who terminate their employment prior to the age of 55 may elect to collect reduced benefits upon attaining age 55, or full benefits at age 65. Early retirement benefits are reduced by 5/9
of a percent for each of the first 60 months by which the early retirement date precedes the normal retirement date, and 5/18 of a percent for each month in excess of 60 months by which the early retirement date precedes the normal retirement date.
We also provide a supplemental retirement program, which provides senior management with a retirement benefit at or after the age of 55 in addition to the defined benefit pension. The supplemental retirement program is designed to encourage senior management to stay with the Company until retirement. Generally, supplemental retirement benefits are made available to senior management and are payable to the executive or his or her beneficiary, after retirement, over 15 years beginning no earlier than age 60. The annual benefit payable under the supplemental retirement program is calculated by multiplying the number of years of eligible service subsequent to the plan commencement date, by a predetermined annual retirement benefit unit, some of which are shown below. The number of years of eligible service for each named executive as of December 31, 2016 is shown in the 2016 Pension Benefits Table.
Page 18
|
Annual Retirement Benefit Unit at Age:
|
|||
|
55
|
60
|
65
|
|
|
Mr. Hines
|
$2,526
|
$2,033
|
$1,482
|
|
Ms. Miller
|
2,330
|
1,866
|
1,394
|
|
Mr. Hand
|
1,961
|
1,961
|
1,961
|
|
Mr. McIntosh
|
-
|
-
|
1,667
|
|
Mr. Strine
|
-
|
2,778
|
2,778
|
The estimated annual benefit payable to Mr. Hines at normal retirement age (65) under the supplemental retirement program is $53,333. The estimated annual benefit payable to Ms. Miller, Mr. Hand, Mr. McIntosh and Mr. Strine at normal retirement age under the supplemental retirement program is $33,333. Benefits are paid monthly. Named executive officers who terminate their employment prior to the age of 55 forfeit their supplemental retirement benefits. Named executive officers who terminate their employment between the ages of 55 and normal retirement age are subject to alternate annual retirement benefit units as provided in the plan agreements. If a named executive officer were to die before retirement, his or her beneficiary would receive a death benefit of $500,000, with the exception of Mr. Hines' beneficiary, who would receive $800,000. If a named executive officer were to die after retirement but prior to age 60, his or her beneficiary would receive the benefit earned at retirement.
Deferred Compensation.
We also provide a deferred compensation program to management. The deferred compensation program permits managers and executives to defer up to 5% of salary over an eight (8) to eleven (11) year period, with the Company matching the deferment up to 2.50% of salary. During 2015, the Compensation Committee approved an Amended and Restated Deferred Compensation Plan ("the Plan") which accelerated the vesting of various portions of the Plan from age 60 to other times based on years of plan participation. The Plan was filed as Exhibit 10-18 to our 2015 Annual Report on Form 10-K. Under the amended and restated plan, participants immediately vest in their deferral and the earnings thereon; after 10 years in the plan, participants vest in the Company match and the earnings thereon; and after 15 years in the plan, participants vest in the tax savings associated with their deferral, the Company match and the earnings. The tax savings do not represent a gross up of the deferred compensation payout, but rather a pass-through of the tax benefit the Company will realize, when benefits are paid to participants.
Mr. Hines, Ms. Miller and Mr. Hand are currently deferring salary under the Plan. Mr. McIntosh deferred salary under the Plan in 2016, but he reached the end of his deferral period and is no longer deferring salary in 2017. Matching benefits for 2016 were $1,013 for Mr. Hines, $1,519 for Ms. Miller, $2,775 for Mr. Hand and $2,467 for Mr. McIntosh. Annually, the Company credits participants' deferred compensation balances with tax savings accruing to the Company that will be realized in the form of a death benefit at a later time. Tax savings credited to each participant's account in 2016 amounted to $4,093 for Mr. Hines, $3,190 for Ms. Miller, $7,767 for Mr. Hand, $4,567 for Mr. McIntosh and $1,732 for Mr. Strine. Also annually, the Company credits participants' accounts with interest on the existing balance at a rate selected by the Company, currently equal to the December 15 rate of Moody's AAA Corporate Bond Yield. The interest rate amounted to 4.07% for 2016. 2016 credited earnings and future tax savings are shown in the "2016 Nonqualified Deferred Compensation" table. Payouts from this plan on retirement, termination, disability or death are described in detail below in the narrative discussion accompanying the 2016 Nonqualified Deferred Compensation Table. Our deferred compensation program does not provide above-market or preferential earnings. Certain members of management hired after May 1, 2010 who are not eligible for the defined benefit pension plan, are eligible for an enhanced deferred compensation plan. None of our named executive officers are benefiting under the enhanced plan.
401(k).
Our named executive officers may participate in our 401(k) savings plan on the same terms as other employees. We provide an annual maximum matching contribution of $2,800 per employee, for participating employees hired before May 1, 2010. All named executives received the maximum matching contribution during 2016. Employees hired after May 1, 2010 who are not eligible for the defined benefit pension plan, are eligible for an enhanced 401(k) plan. None of our named executive officers are benefiting under the enhanced plan.
Page 19
Change in Control.
Our senior management has built York Water into the successful business that it is today. We believe that it is important to protect them in the event of a change of control and to protect the Company from the distractions senior managers often suffer as a result of the uncertainties that frequently surround changes in control. Accordingly, we entered into amended and restated agreements with each of our senior managers that provide for certain payments upon changes of control in consideration of such senior managers agreeing not to compete with us for a period of time following the termination of their employment. Most change in control payments are only paid if the senior manager in question is terminated in connection with a change in control. In certain circumstances, however, payments may be made to senior managers who do not terminate their employment for one year following a change in control. These payments incentivize our senior managers to continue their employment amid the uncertainty that often follows changes in control and thereby promote stability for the Company during such times. Change in control benefits are paid in lump sum and are based on a multiple of base salary and cash incentive compensation. In the event of a change of control, we also continue health and other insurance benefits for up to one year depending on circumstances. The agreements are valid for an initial term of five years, and renew automatically for one-year periods after the first five years. The agreements terminate upon the employee reaching age 65 or terminating employment with the Company. The Company must provide 90 days' notice to terminate the agreements. These agreements are described in more detail below under the heading "Potential Payments upon Termination or Change in Control."
Perquisites and Other Benefits.
The primary perquisite for named executive officers is the use of company vehicles for personal benefit. The most common personal use of company vehicles by senior management is commuting to and from work. No named executive officer receives perquisites valued in the aggregate at $10,000 or more. Named executive officers also participate in York Water's other benefit plans on the same terms as other employees. These plans include medical and health insurance, life insurance and employee stock purchase plan (ESPP). Under the ESPP, full-time employees with at least 90 days of service are eligible to purchase company stock through payroll deduction, up to 10% of their regular salary, at a 5% discount from fair market value. The Compensation Committee considers the ESPP as a contributing factor to hiring and retaining employees, and as a way of aligning employee interests with those of shareholders.
Board Process.
The Compensation Committee of the Board of Directors approves all compensation and awards to executive officers, which include the Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and four vice presidents. The Compensation Committee reviews the performance and compensation of the Chief Executive and, following discussions with that individual, and a review of the data provided by Executive Reward Advisors and other available data, establishes his compensation level. For the remaining executive officers, the Chief Executive Officer makes recommendations to the Compensation Committee, based on Executive Reward Advisors data and other available data, which are subject to final approval by the committee. With respect to the cash and stock based incentive awards, the Compensation Committee grants incentive awards when warranted.
Shareholder Say-on-Pay and Say-on-Frequency Votes.
The Company provides its shareholders with the opportunity to cast an advisory vote on executive compensation (a "say-on-pay proposal") every three years. At the Company's annual meeting of shareholders held in May 2014, a substantial majority of the votes cast on the three-year say-on-pay proposal at that meeting were voted in favor of the proposal. The Compensation Committee believes this affirms shareholders' support of the Company's executive compensation program. Since the last say-on-pay vote, the compensation program was changed in 2015 to accelerate the vesting under the deferred compensation program as previously discussed. In 2016, a long term equity-based incentive plan was added to the compensation program to better align executives' goals with those of shareholders. Shareholders approved the long-term incentive plan in 2016. The entire executive compensation package will be voted upon by shareholders during this proxy season. The Compensation Committee will consider the outcome of the Company's say-on-pay vote when making future compensation decisions for the named executive officers.
Shareholders have an opportunity at least every 6 years to cast an advisory vote on the frequency of say-on-pay proposals. The frequency of say-on-pay proposals will be voted upon by shareholders during this proxy season, and again at the 2023 annual meeting.
Page 20
The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management, and based on that review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
|
Ernest J. Waters
Chairperson
|
||
|
Erin C. Casey
Member
|
George Hay Kain III
Member
|
Robert P. Newcomer
Member
|
The Compensation Committee reviewed the Company's compensation policies and practices for all employees (including non-executive officers) covering base salaries and wages, deferred compensation, incentive plans and change in control agreements in order to assess the inherent risks involved.
Considering all of the elements of the various compensation plans and the fact that the Company has no competing segments or divisions, the Compensation Committee concluded that the Company's compensation policies and practices did not incentivize excessive risk-taking that would have a material adverse effect on the Company.
The members of our Compensation Committee are named above, and in the "Board Committees and Functions" section of this proxy statement. None of the members of the Compensation Committee is or has ever been an officer or employee of the Company, and during the last fiscal year, none of our executive officers served as a member of the board of directors or the compensation committee of any other entity that has one or more executive officers serving on our Board of Directors or Compensation Committee.
Page 21
The following table sets forth information concerning compensation paid by the Company to named executive officers or accrued by the Company for the named executive officers in 2016, 2015 and 2014.
|
Non-Equity
Incentive Plan
Compensation(2)
|
Change in
Pension Value
& Nonqualified
Deferred
Compensation
Earnings(3)
|
||||||||||
|
|
|||||||||||
|
|
|
All Other
Compensation(4)
|
|||||||||
|
Name and Principal Position
|
Year
|
Salary
|
Stock Awards (1)
|
Total
|
|||||||
|
Jeffrey R. Hines, P.E.
|
2016
|
$294,515
|
$5,770
|
$14,862
|
$185,893
|
$12,150
|
$513,190
|
||||
|
President, Chief
|
2015
|
$285,885
|
-
|
$14,425
|
$26,004
|
$12,954
|
$339,268
|
||||
|
Executive Officer
|
2014
|
282,708
|
-
|
14,000
|
470,239
|
10,335
|
777,282
|
||||
|
Kathleen M. Miller
|
2016
|
181,012
|
3,500
|
9,188
|
181,198
|
9,138
|
384,036
|
||||
|
Chief Financial
|
2015
|
171,871
|
-
|
8,750
|
36,194
|
7,085
|
223,900
|
||||
|
Officer
|
2014
|
164,456
|
-
|
8,250
|
246,554
|
4,922
|
424,182
|
||||
|
Joseph T. Hand
|
2016
|
181,012
|
3,500
|
9,188
|
71,870
|
17,848
|
283,418
|
||||
|
Chief Operating
|
2015
|
171,867
|
-
|
8,750
|
37,074
|
16,745
|
234,436
|
||||
|
Officer
|
2014
|
163,025
|
-
|
8,250
|
92,735
|
15,515
|
279,525
|
||||
|
Bruce C. McIntosh
|
2016
|
127,301
|
2,488
|
6,420
|
74,416
|
12,584
|
223,209
|
||||
|
Vice President-
|
2015
|
123,454
|
-
|
6,220
|
19,909
|
9,362
|
158,945
|
||||
|
Human Resources
|
2014
|
122,155
|
-
|
6,040
|
199,271
|
5,910
|
333,376
|
||||
|
John H. Strine
|
2016
|
125,957
|
2,461
|
6,353
|
144,924
|
8,087
|
287,782
|
||||
|
Vice President-
|
2015
|
122,109
|
-
|
6,153
|
64,251
|
7,985
|
200,498
|
||||
|
Operations
|
2014
|
120,787
|
-
|
5,973
|
329,249
|
7,500
|
463,509
|
||||
|
(1)
|
Stock awards valued at approximately 2% of the named executive officer's base pay were made using the closing stock price on November 28, 2016.
|
|
(2)
|
Non-Equity Plan Incentive Plan compensation is shown in the year earned and is normally paid in the following calendar year.
|
|
(3)
|
Amounts presented represent the sum of the change in the actuarial present value of the named executive officer's accumulated benefit under the Company's defined benefit pension plan and the change in the present value of the named executive officer's benefit under the Company's supplemental executive retirement plan. The change in pension value and non-qualified deferred compensation can vary from year to year due to changes in the discount rate used to calculate the present value and changes in the mortality table. When the discount rate increases, the present value of the pension and non-qualified deferred compensation liability decreases. The change was higher in 2016 than in 2015 due to a decrease in the discount rate to 4.0% in 2016 from 4.2% in 2015. The change was substantially lower in 2015 than in 2014 due to an increase in the discount rate to 4.2% in 2015 from 3.8% in 2014. In addition, an adjusted mortality table and improvement scale were adopted in 2015 to reflect two additional years of data from the Social Security Administration, and included rates generally lower than assumed in the prior year mortality table and improvement scale.
|
|
(4)
|
Includes Company contributions to the named executive officer's 401(k) account, credited earnings, tax savings and Company contributions for non-qualified deferred compensation, and personal use of company vehicles.
|
Page 22
|
Name and Principal
Position
|
Grant
Date
|
Compensation Committee
Action Date
|
Estimated Future Payouts Under
Non-Equity Incentive
Plan Awards Target (1)
|
Estimated Future Payouts Under
Equity Incentive
Plan Awards
Target
(in shares) (2)
|
Grant Date Fair Value of Stock
Awards (2)
|
|
|
Jeffrey R. Hines, P.E.
President, Chief Executive Officer
|
11/28/16
02/18/16
|
11/21/16
|
$14,862
|
155
|
$5,770
|
|
|
Kathleen M. Miller
Chief Financial Officer
|
11/28/16
02/18/16
|
11/21/16
|
9,188
|
94
|
3,500
|
|
|
Joseph T. Hand
Chief Operating Officer
|
11/28/16
02/18/16
|
11/21/16
|
9,188
|
94
|
3,500
|
|
|
Bruce C. McIntosh
Vice President-Human Resources
|
11/28/16
02/18/16
|
11/21/16
|
6,420
|
67
|
2,488
|
|
|
John H. Strine
Vice President-Operations
|
11/28/16
02/18/16
|
11/21/16
|
6,353
|
66
|
2,461
|
| (1) |
Non-Equity Incentive Plan Awards.
As described in the Compensation Discussion and Analysis under the heading "Cash Incentives," our practice is to award cash incentives based upon the achievement of diverse performance objectives. The performance objectives are established annually by the Compensation Committee, and are designed to recognize and reward the achievement of our goals and the creation of value for our customers and shareholders. Non-Equity Incentive Plan Awards are shown in the year earned and are normally paid in the following calendar year.
|
| (2) |
Equity Incentive Plan Awards.
As described in the Compensation Discussion and Analysis under the heading "Stock Awards," our practice is to increase shareholder value by providing the incentive of long-term stock-based awards upon meeting or exceeding a combination of metrics that link closely to shareholder value established by the Compensation Committee. Stock awards valued at approximately 2% of the named executive officer's base pay were made using the closing stock price on November 28, 2016.
|
The awards appearing in this table also appear in the Summary Compensation Table.
Awards are subject to the Company's clawback policy.
Page 23
|
Name and Principal Position
|
Equity Incentive
Plan Awards: Number of Shares That Have Not
Vested
|
Equity Incentive
Plan Awards:
Market Value of Shares
That Have Not Vested
|
||
|
Jeffrey R. Hines, P.E.
President, Chief Executive Officer
|
155
|
$5,921
|
||
|
Kathleen M. Miller
Chief Financial Officer
|
94
|
3,591
|
||
|
Joseph T. Hand
Chief Operating Officer
|
94
|
3,591
|
||
|
Bruce C. McIntosh
Vice President-Human Resources
|
67
|
2,559
|
||
|
John H. Strine
Vice President-Operations
|
66
|
2,521
|
||
The December 31, 2016 closing price of the Company's Common Stock was $38.20.
One-third of the award to each named executive officer will vest on November 28, 2017, one-third will vest on November 28, 2018, and one-third will vest on November 28, 2019.
Page 24
The table below sets forth the present value of accumulated benefits payable to each named executive officer, including the number of years of credited service, under the Company's General and Administrative Pension Plan (a defined benefit pension plan) and its Supplemental Executive Retirement Plan. Detailed information on these plans can be found in the Compensation Discussion and Analysis above, under the heading "Retirement Plans."
|
Years of
|
Present Value
|
||||
|
Name and
|
Credited
|
of Accumulated
|
|||
|
Principal Position
|
Plan Name
|
Service
|
Benefit
|
||
|
Jeffrey R. Hines, P.E.
|
General and Administrative
|
27
|
$1,300,997
|
||
|
President, Chief Executive Officer
|
Pension Plan
|
||||
|
Jeffrey R. Hines, P.E.
|
Supplemental Executive
|
27
|
500,797
|
||
|
President, Chief Executive Officer
|
Retirement Plan
|
||||
|
Kathleen M. Miller
|
General and Administrative
|
21
|
655,086
|
||
|
Chief Financial Officer
|
Pension Plan
|
||||
|
Kathleen M. Miller
|
Supplemental Executive
|
13
|
270,369
|
||
|
Chief Financial Officer
|
Retirement Plan
|
||||
|
Joseph T. Hand
|
General and Administrative
|
9
|
214,953
|
||
|
Chief Operating Officer
|
Pension Plan
|
||||
|
Joseph T. Hand
|
Supplemental Executive
|
7
|
123,318
|
||
|
Chief Operating Officer
|
Retirement Plan
|
||||
|
Bruce C. McIntosh
|
General and Administrative
|
20
|
562,127
|
||
|
Vice President-Human Resources
|
Pension Plan
|
||||
|
Bruce C. McIntosh
|
Supplemental Executive
|
18
|
403,080
|
||
|
Vice President-Human Resources
|
Retirement Plan
|
||||
|
John H. Strine
|
General and Administrative
|
40
|
1,124,565
|
||
|
Vice President-Operations
|
Pension Plan
|
||||
|
John H. Strine
|
Supplemental Executive
|
7
|
218,333
|
||
|
Vice President-Operations
|
Retirement Plan
|
||||
All assumptions made in quantifying the present value of the accumulated benefits under the defined benefit pension plan to the named executive officers are described in Note 7 to the Company's Financial Statements included in our 2016 Annual Report on Form 10-K. The present value of the accumulated supplemental executive retirement benefit is based on retirement at age 60. The present values are based upon a 4.00% discount rate. There were no payments to named executives made under these plans during the last fiscal year. Future payouts under these plans are described in more detail in the Compensation Discussion and Analysis under the heading "Retirement Plans". Employees begin accruing benefits under the Pension Plan when they commence work at the Company, but do not become eligible for the Supplemental Executive Retirement Plan until they become executives of the Company.
Page 25
The table set forth below presents contributions, earnings and the balance at year-end, for the accounts of our named executive officers, under our deferred compensation program that is described in more detail in the Compensation Discussion and Analysis under the heading "Deferred Compensation." Company contributions and earnings are reported in the "All Other Compensation" column of the Summary Compensation Table.
|
Name and
Principal Position
|
Executive
Contributions
in Last Fiscal
Year
|
Company
Contributions
in Last Fiscal
Year *
|
Aggregate
Earnings
in Last
Fiscal Year
|
Aggregate Balance at Last Fiscal
Year-End
|
||
|
Jeffrey R. Hines, P.E.,
President, Chief Executive Officer
|
$2,026
|
$5,106
|
$2,952
|
$127,048
|
||
|
Kathleen M. Miller,
Chief Financial Officer
|
1,519
|
4,709
|
1,629
|
70,132
|
||
|
Joseph T. Hand,
Chief Operating Officer
|
5,550
|
10,543
|
3,044
|
130,998
|
||
|
Bruce C. McIntosh,
Vice President-Human Resources
|
2,467
|
7,035
|
1,750
|
75,322
|
||
|
John H. Strine,
Vice President-Operations
|
-
|
1,732
|
2,536
|
109,134
|
||
* Company Contributions include a match and the future tax savings to be earned by the Company when death benefits are received.
Payouts upon Retirement or Disability.
Following a named executive officer's retirement, or if a named executive officer becomes disabled before his or her deferred income account has been distributed, a monthly retirement benefit will be paid to him or her for 120 months. This benefit will be equal to a percentage of his or her deferred income account immediately prior to retirement. Assuming all named executive officers were eligible for retirement as of December 31, 2016, the named executive officers would receive the monthly benefits in the table that follows.
|
Name and
Principal Position
|
Deferred
Income Account Percentage
|
Monthly Retirement Amount
|
|||
|
Jeffrey R. Hines, P.E., President, Chief Executive Officer
|
1.110%
|
$1,410
|
|||
|
Kathleen M. Miller,
Chief Financial Officer
|
0.833%
|
584
|
|||
|
Joseph T. Hand,
Chief Operating Officer
|
0.833%
|
1,092
|
|||
|
Bruce C. McIntosh, Vice
President-Human Resources
|
0.833%
|
628
|
|||
|
John H. Strine,
Vice President-Operations
|
2.036%
|
2,222
|
|||
Page 26
Payouts upon Termination of Employment.
If a named executive officer's employment with the Company is terminated other than by death or disability before he or she is eligible for retirement (age 60), the amount of his or her contributions and the earnings thereon (if a participant for less than 10 years) shall be distributed to such named executive officer immediately upon his or her termination in a lump sum. If a named executive officer's employment with the Company is terminated before he or she is eligible for retirement (age 60), but after attaining 10 years but less than 15 years in the plan, the amount of his or her vested account including his or her contributions and the earnings thereon, and the Company's matching contributions and earnings thereon shall be distributed to such named executive officer upon his or her attainment of age 60, in 120 monthly installments. If a named executive officer's employment with the Company is terminated before he or she is eligible for retirement (age 60), but after attaining 15 years of service under the plan, the amount of his or her contributions and the earnings thereon, the Company's matching contributions and earnings thereon, and the future tax savings to be received by the Company shall be distributed to such named executive officer upon his or her attainment of age 60, in 120 monthly installments. Assuming each named executive officer were terminated as of December 31, 2016, such named executive officer would be entitled to receive the following payment, either in lump sum or in installments upon reaching age 60:
|
Name and
Principal Position
|
Payment Upon Termination
|
||
|
Jeffrey R. Hines, P.E., President, Chief Executive Officer
|
$127,048
|
||
|
Kathleen M. Miller,
Chief Financial Officer
|
70,132
|
||
|
Joseph T. Hand,
Chief Operating Officer
|
51,882
|
||
|
Bruce C. McIntosh, Vice
President-Human Resources
|
75,322
|
||
|
John H. Strine,
Vice President-Operations
|
19,156 (1)
|
||
(1)
Mr. Strine remains under a previous deferred compensation agreement whereby participants are vested in their deferral immediately; however, they receive no company match, earnings or tax savings until age 60. Mr. Strine will vest in his entire account balance in 2017.
The named executive officer deferrals have previously been reported in the salary column of the Summary Compensation Table in the year in which they were earned.
Page 27
Payouts upon Death.
If a named executive officer were to die before distribution of his or her deferred income account has commenced, his or her beneficiary would receive a death benefit in an amount equal to the higher of $150,000, or the named executive officer's deferred income account (including tax savings) immediately prior to his or her death. The death benefit will be paid to beneficiaries in a lump sum. Assuming death benefits for each named executive officer became payable as of December 31, 2016, such named executive officer's respective beneficiaries would be entitled to receive the following lump sum payments:
|
Name and
Principal Position
|
Beneficiary Death Benefit ($)
|
|
|
Jeffrey R. Hines, P.E., President, Chief Executive Officer
|
150,000
|
|
|
Kathleen M. Miller,
Chief Financial Officer
|
150,000
|
|
|
Joseph T. Hand,
Chief Operating Officer
|
150,000
|
|
|
Bruce C. McIntosh, Vice
President-Human Resources
|
150,000
|
|
|
John H. Strine,
Vice President-Operations
|
150,000
|
Description of Change in Control Agreements.
We have entered into Amended and Restated Change in Control Agreements with each named executive officer that provides for payments to them under certain circumstances in connection with a change in control in consideration of such named executive officers agreeing not to compete with us for a period of time following the termination of their employment.
Under all agreements, generally a "change in control" will occur if:
|
·
|
Any person or affiliated group (with limited exceptions) becomes the beneficial owner in the aggregate of 50 percent or more of all of our voting securities;
|
|
·
|
A majority of our Board of Directors is involuntarily removed or defeated for re-election to our Board of Directors (for example, as a result of a proxy contest);
|
|
·
|
We are party to a merger or reorganization pursuant to which the holders of our voting securities prior to such transaction become the holders of 50 percent or less of the voting securities of the new merged or reorganized company; or
|
|
·
|
The Company is liquidated or dissolved, or all of its assets are sold to a third party.
|
In each circumstance described above, our Board of Directors may make a determination that the circumstances do not warrant the implementation of the provisions of the agreement, and in such case, the change in control will not trigger any payments under the agreements.
Page 28
All payments under the agreements are triggered by the occurrence of a change in control, and most payments also require that the relevant senior manager's employment also be terminated. The amounts of payments to our named executive officers under these agreements vary depending on the timing of the change in control and the timing and manner of the termination of employment. Generally, the manner of termination is divided into four categories.
A "for cause" termination results from:
|
·
|
misappropriation of funds or any act of common law fraud;
|
|
·
|
habitual insobriety or substance abuse;
|
|
·
|
conviction of a felony or any crime involving moral turpitude;
|
|
·
|
willful misconduct or gross negligence by the senior manager in the performance of his duties;
|
|
·
|
the willful failure of the senior manager to perform a material function of his duties; or
|
|
·
|
the senior manager engaging in a conflict of interest or other breach of fiduciary duty.
|
A "good reason" termination occurs when the senior manager terminates his own employment following a change in control and after one or more of the following has occurred:
|
·
|
the Company has breached the change in control agreement;
|
|
·
|
the Company has significantly reduced the authority, duties or responsibilities of the senior manager or reduced his base compensation or annual bonus compensation opportunity;
|
|
·
|
the Company has reduced the senior manager from the employment grade or officer positions which he or she holds; or
|
|
·
|
the Company has transferred the senior manager, without his or her express written consent, to a location that is more than 50 miles from his or her principal place of business immediately preceding the change of control.
|
A voluntary termination is the termination by the senior manager of his or her own employment under circumstances that would not be a "good reason" termination. Examples are ordinary retirement or leaving the Company to seek other job opportunities.
An involuntary termination is a termination in connection with a change in control that is not a "for cause" termination, a good reason termination or a voluntary termination.
Payouts under Change in Control Agreements.
Under the agreements, all named executive officers are entitled to payment in the case of an involuntary termination or a good reason termination within some time period surrounding a change in control (generally six months prior to or one year following a change in control). Payments are paid in lump sum and are based on a multiple of base salary and cash incentive compensation earned by the named executive officer in the preceding 12 months. We call this amount "base pay." Additionally, Messrs. Hines, Hand, McIntosh, and Strine, and Ms. Miller are entitled to payment of "stay bonuses" if they remain employed by us for one year following a change in control, and smaller stay bonuses if they remain employed for at least three months following a change in control and then voluntarily terminate their employment more than three months but less than one year following a change in control. Finally, our named executive officers are entitled to have their health and welfare benefits continue for periods of up to one year following the termination of their employment (subject to such benefits terminating or such named executive officer becoming covered by the benefit plans of another employer).
The table below sets forth the relevant base pay multiples, lump sum payout amounts and the value of continued benefits our named executive officers would receive under various circumstances under their change in control agreements. For the purposes of this table, we have assumed that a change in control occurred on December 31, 2016.
Page 29
|
Health
|
||||||||
|
and Other
|
||||||||
|
Lump Sum
|
Insurance
|
|||||||
|
Multiple of
|
Payment
|
Benefits
|
||||||
|
Name
|
Base Pay
|
Amount
|
(1)
|
Total
|
||||
|
Jeffrey R. Hines, P.E.
|
||||||||
|
Involuntary termination or
|
2.99 times
|
$933,215
|
$13,123
|
$946,338
|
||||
|
good reason termination.
|
||||||||
|
Voluntary termination more
|
.25 times
|
78,028
|
13,123
|
91,151
|
||||
|
than 3 months but less than
|
||||||||
|
one year after a change in
|
||||||||
|
control.
|
||||||||
|
Continuing employment for
|
.5 times
|
156,056
|
13,123
|
169,179
|
||||
|
one year after a change in
|
||||||||
|
control.
|
||||||||
|
Kathleen M. Miller
|
||||||||
|
Involuntary termination or
|
.5 times
|
96,469
|
10,054
|
106,523
|
||||
|
good reason termination.
|
||||||||
|
Voluntary termination more
|
.25 times
|
48,235
|
10,054
|
58,289
|
||||
|
than 3 months but less than
|
||||||||
|
one year after a change in
|
||||||||
|
control.
|
||||||||
|
Continuing employment for
|
.5 times
|
96,469
|
10,054
|
106,523
|
||||
|
one year after a change in
|
||||||||
|
control.
|
||||||||
|
Joseph T. Hand
|
||||||||
|
Involuntary termination or
|
.5 times
|
96,469
|
565
|
97,034
|
||||
|
good reason termination.
|
||||||||
|
Voluntary termination more
|
.25 times
|
48,235
|
565
|
48,800
|
||||
|
than 3 months but less than
|
||||||||
|
one year after a change in
|
||||||||
|
control.
|
||||||||
|
Continuing employment for
|
.5 times
|
96,469
|
565
|
97,034
|
||||
|
one year after a change in
|
||||||||
|
control.
|
||||||||
Page 30
|
Health
|
|||||||||||
|
and Other
|
|||||||||||
|
Lump Sum
|
Insurance
|
||||||||||
|
Multiple of
|
Payment
|
Benefits
|
|||||||||
|
Name
|
Base Pay
|
Amount
|
(1)
|
Total
|
|||||||
|
Bruce C. McIntosh
|
|||||||||||
|
Involuntary termination or
|
.5 times
|
$67,408
|
$13,123
|
$80,531
|
|||||||
|
good reason termination.
|
|||||||||||
|
Voluntary termination more
|
.25 times
|
33,704
|
13,123
|
46,827
|
|||||||
|
than 3 months but less than
|
|||||||||||
|
one year after a change in
|
|||||||||||
|
control.
|
|||||||||||
|
Continuing employment for
|
.5 times
|
67,408
|
13,123
|
80,531
|
|||||||
|
one year after a change in
|
|||||||||||
|
control.
|
|||||||||||
|
John H. Strine
|
|||||||||||
|
Involuntary termination or
|
.5 times
|
66,702
|
6,146
|
72,848
|
|||||||
|
good reason termination.
|
|||||||||||
|
Voluntary termination more
|
.25 times
|
33,351
|
6,146
|
39,497
|
|||||||
|
than 3 months but less than
|
|||||||||||
|
one year after a change in
|
|||||||||||
|
control.
|
|||||||||||
|
Continuing employment for
|
.5 times
|
66,702
|
6,146
|
72,848
|
|||||||
|
one year after a change in
|
|||||||||||
|
control.
|
|||||||||||
|
(1) The value of health benefits was determined using the estimated rates applicable under the Comprehensive
|
|||||||||||
|
Omnibus Budget Reconciliation Act (COBRA) for terminated employees.
|
|||||||||||
Payment of the lump sum payments under the change in control agreements is contingent upon the named executive officer executing a standard release. The change in control agreements also
contain non-competition provisions that generally require that, a named executive officer will not, while he or she is employed by us and for one year following the termination of his or her employment by us:
|
·
|
participate in the ownership, management, operation, control or financing of, or be connected as an officer, director, employee, partner, principal, agent, representative, consultant or otherwise with or use or permit his or her name to be used in connection with, any business or enterprise engaged in by us within our franchised territory;
|
|
·
|
solicit or attempt to convert any account or customer of the Company to another supplier; or
|
|
·
|
solicit or attempt to hire any employee of the Company.
|
Any breach of this non-competition agreement can result in damages being awarded to the Company, including the amount of one-half of any lump sum payments described above.
Page 31
Other Payouts.
The named executive officers will also be entitled to the payouts of their pension and supplemental retirement accounts upon retirement and payout of their deferred compensation accounts upon termination of their employment with us.
Using the assumptions described in Note 7 to the Company's Financial Statements included in the 2016 Annual Report on Form 10-K, and assuming that all of our named executive officers remain with the Company until reaching age 55 (or, for those who are currently older than age 55, assuming they retired as of December 31, 2016) our named executive officers have earned monthly benefits under the pension plan and supplemental retirement plan as follows:
|
Name
|
Plan Name
|
Monthly
Benefit
|
|
|
Jeffrey R. Hines, P.E.
|
General and Administrative Pension Plan
|
$9,070
|
|
|
Jeffrey R. Hines, P.E.
|
Supplemental Executive Retirement Plan
|
4,404
|
|
|
Kathleen M. Miller
|
General and Administrative Pension Plan
|
4,737
|
|
|
Kathleen M. Miller
|
Supplemental Executive Retirement Plan
|
2,524
|
|
|
Joseph T. Hand
|
General and Administrative Pension Plan
|
1,969
|
|
|
Joseph T. Hand
|
Supplemental Executive Retirement Plan
|
1,144
|
|
|
Bruce C. McIntosh
|
General and Administrative Pension Plan
|
3,454
|
|
|
Bruce C. McIntosh
|
Supplemental Executive Retirement Plan
|
2,972
|
|
|
John H. Strine
|
General and Administrative Pension Plan
|
6,749
|
|
|
John H. Strine
|
Supplemental Executive Retirement Plan
|
1,620
|
|
Our named executive officers will also be entitled to be paid the amounts described in the narrative discussion accompanying the 2016 Nonqualified Deferred Compensation Table above in the manner described in that section.
All restrictions applicable to any outstanding restricted stock awards will lapse upon a change in control and all shares of common stock will immediately vest.
Page 32
|
Director
|
Fees Paid in Cash
|
Stock Awards
|
Total |
|
Erin C. Casey
|
$6,555
|
$0
|
$6,555
|
|
James H. Cawley
|
6,555
|
0
|
6,555
|
|
Michael W. Gang, Esq.
|
27,950
|
3,311
|
31,261
|
|
George W. Hodges
|
36,200
|
3,311
|
39,511
|
|
George Hay Kain III
|
27,960
|
3,311
|
31,271
|
|
Jody L. Keller, SPHR
|
26,280
|
1,376
|
27,656
|
|
Robert P. Newcomer
|
34,550
|
3,311
|
37,861
|
|
Steven R. Rasmussen, CPA
|
37,920
|
3,311
|
41,231
|
|
Ernest J. Waters
|
35,550
|
3,311
|
38,861
|
Director Fees Paid in Cash.
In consideration of the services they provide to us, directors who are not regular full-time employees are entitled to receive a retainer of $16,500 per year, payable quarterly. In addition to the annual retainer, Board and Committee members are entitled to the fees in the table below for each meeting they attend. Directors who are also current employees of the Company receive no additional compensation for Board service.
|
Board
|
Executive
Committee
|
Audit
Committee
|
Nomination & Corporate Governance
Committee
|
Compensation
Committee
|
|
|
Chairperson
|
$1,850
|
$1,200
|
$1,800
|
$1,090
|
$1,090
|
|
Directors/Members
|
$810
|
$890
|
$950
|
$840
|
$840
|
Stock Awards.
The Board is authorized to grant equity-based compensation to non-employee directors which vests immediately under a long-term incentive plan approved by shareholders in 2016. The Board believes that director fees paid in equity will help to better align Board member objectives with those of shareholders. The equity compensation is determined as a percentage of the annual retainer, with the number of shares based on the closing price of the stock on the grant date. The grant amount is prorated in the event a non-employee director has not served on the Board for the entire year. The service year is May through April. On November 28, 2016, the non-employee directors were issued stock awards in the amount of 20% of the annual retainer, or $3,311, which amounted to 89 shares based on the closing price of the common stock of the Company of $37.20. The award was for the service year ended April 2016, and the shares vested immediately. Ms. Keller was given a prorated award to recognize her five (5) months of service during the service year. Directors Casey and Cawley were not awarded any stock due to their service beginning in October 2016.
No perquisites are provided to Directors.
As previously disclosed, Ms. Casey and Mr. Cawley were elected by the Board on October 3, 2016 to fill vacancies from retirements in previous years.
There were 9 Board of Directors' Meetings during calendar year 2016. All Directors attended more than 75% of the scheduled Board of Directors and committee meetings. In addition, all Directors other than Mr. Gang attended the 2016 Annual Meeting of Shareholders. All Directors are expected to attend the 2017 Annual Meeting of Shareholders, but attendance is not mandatory.
Page 33
TO APPROVE, BY NON-BINDING VOTE,
THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS
In accordance with Section 14A of the Securities Exchange Act of 1934, we are asking shareholders to approve the following advisory resolution at the 2017 Annual Meeting of Shareholders:
"RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED."
As described in the "Compensation Discussion and Analysis" section above, the goal of our executive compensation programs is to attract, motivate and retain our senior management. We believe that our combination of base salary, cash and stock based incentives and deferred compensation programs as detailed above, properly support this goal while also providing increased value to our customers and shareholders. In addition, our executive compensation compares favorably with that of our peers as discussed in detail in the "Compensation Discussion and Analysis" section contained in this proxy statement.
We encourage shareholders to read the Compensation Discussion and Analysis beginning on page 15 of the proxy statement and related compensation tables and narrative beginning on page 22, which provide detailed information on the Company's compensation policies and practices and the compensation of our named executives.
As an advisory vote, this proposal, commonly referred to as a "say-on-pay" vote, is not binding upon the Company. However, the Compensation Committee, which is responsible for designing and administering the Company's executive compensation program, values the opinions expressed by shareholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions.
The Board of Directors unanimously recommends a vote "FOR" the approval, in an advisory capacity, of the compensation of our named executive officers, as disclosed in this proxy statement.
Page 34
TO RECOMMEND, BY NON-BINDING VOTE,
THE FREQUENCY OF FUTURE ADVISORY VOTES
ON EXECUTIVE COMPENSATION
In accordance with Section 14A of the Securities Exchange Act of 1934, we are also providing our shareholders with a vote to indicate how frequently we should seek an advisory vote on the compensation of our named executive officers, the "say-on-pay" vote included as Proposal 3 in this proxy statement. Specifically, we are asking shareholders to recommend whether the advisory vote should occur every three years, every two years or every year. Currently, and consistent with the shareholder vote in 2011, we are seeking the advisory vote every three years.
We believe it is important for our shareholders to be able to express their views regarding significant Company policies and practices such as executive compensation. We are recommending a triennial (every three years) vote on our named executive's compensation because we believe it is the most consistent with the long-term focus of both the Company and its investors. We also believe that a triennial vote better reflects a water utility's operations which can fluctuate year over year due to rate case impacts and short-term weather patterns. A triennial period will tend to be more representative of the long-term investment that our shareholders expect. In addition, a vote every three years will allow both shareholders and the Company sufficient time to acquire more information and to address concerns regarding the Company's compensation policies. A triennial vote will help to discourage short-term thinking and encourage a more long-term focus.
Because this vote is advisory and not binding on the board of directors or the Company, we will consider the frequency recommended by shareholders, but we may not adopt that frequency.
The Board of Directors unanimously recommends that the vote on the compensation of our named executive officers occur EVERY THREE YEARS.
Page 35
The notice of Annual Meeting of Shareholders calls for the transaction of such other business as may properly come before the meeting. The Board of Directors has no knowledge of any matters to be presented for action by the shareholders at the meeting other than is hereinbefore set forth. In the event additional matters should be presented, however, the proxies will exercise their discretion in voting on such matters.
Shareholder proposals to be considered for inclusion in the proxy statement and form of proxy relating to the 2018 Annual Meeting of Shareholders must be received by the Company in writing no later than November 21, 2017. In addition, all proposals will need to comply with Rule 14a-8(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which lists the requirements for the inclusion of shareholder proposals in company-sponsored proxy materials.
For a proposal to be timely for consideration at the annual meeting, but not included in the proxy statement and form of proxy relating to the 2018 Annual Meeting of Shareholders, the Company's Bylaws provide that we must have received the shareholder proposal or director nomination not less than ninety days nor more than one hundred and twenty days prior to the anniversary of our annual meeting, meaning between January 1, 2018 and January 31, 2018 for the 2018 annual meeting. In the event that the 2018 annual meeting of shareholders is advanced by more than thirty days or delayed by more than sixty days from the anniversary date of the 2017 Annual Meeting, proposals or nominations for the 2018 annual meeting must be received by us no earlier than the ninetieth day prior to the date of the 2018 annual meeting of shareholders or, if later, the date which is ten days after the day on which public announcement of the date of such meeting is first made. All shareholder proposals and director nominations must also comply with the other requirements set forth in the Company's Bylaws. Copies of the Company's Bylaws can be obtained by submitting a written request to: Corporate Secretary, The York Water Company, 130 E. Market Street, York, PA 17401.
We offer a service approved by the SEC called householding. This service allows shareholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials to receive only one copy of our Proxy Statement and Annual Report. We believe this service provides greater convenience to our shareholders and saves money by reducing our printing and mailing costs and fees. If you and other shareholders of record with whom you share an address and last name currently receive multiple copies of our Proxy Statement and Annual Report and would like to participate in our householding program, please contact Broadridge Financial Solutions, or Broadridge, by calling toll-free at 800-542-1061, or by writing to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717. Alternatively, if you participate in householding and wish to revoke your consent and receive separate copies of our Proxy Statement and Annual Report, please contact Broadridge as described above.
A number of brokerage firms have instituted householding. If you hold your shares in street name, please contact your bank, broker or other holder of record to request information about householding.
Further information regarding the Company is set forth in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which has been filed with the Securities and Exchange Commission. The Form 10-K (including financial statements and schedules) may be obtained free of charge upon written or oral request by writing to: Molly Norton, The York Water Company, 130 East Market Street, York, Pennsylvania 17401; or by telephone to Ms. Norton at (717) 718-2942. Copies of exhibits to the Form 10-K will be furnished upon request and the payment of a reasonable fee. The Form 10-K is also available, free of charge, on the Investor Relations page of the Company's website at www.yorkwater.com.
A copy of the Company's Annual Report to Shareholders, does not form part of the proxy solicitation materials. The Annual Report to Shareholders is also available, free of charge, on the Investor Relations page of the Company's website at
www.yorkwater.com
.
Page 36
TABLE OF CONTENTS
Proxy StatementPurpose of the MeetingVoting at the MeetingSecurity Ownership of Certain Beneficial Owners and ManagementSection 16(a) Beneficial Ownership Reporting ComplianceProposal 1: Election of DirectorsExecutive Officers of the CompanyCorporate GovernanceBoard SelectionDirector IndependenceBoard Leadership StructureBoard Role in Risk OversightBoard Committees and FunctionsRelated Party TransactionsCommunication With the Board of DirectorsExecutive Sessions of the BoardStock OwnershipCode of EthicsReport of the Audit CommitteeProposal 2: Ratification of Appointment of Independent RegisteredPublic Accounting FirmCompensation of Directors and Executive OfficersCompensation Discussion and AnalysisCompensation Committee ReportCompensation Risk AssessmentCompensation Committee Interlocks and Insider ParticipationSummary Compensation TableGrants of Plan Based AwardsOutstanding Equity Awards at Fiscal Year EndPension BenefitsNonqualified Deferred CompensationPayout of Deferred Compensation AccountsPotential Payments Upon Termination or Change in ControlDirector CompensationProposal 3: Approve, by Non-Binding Vote, the Compensation of the NamedExecutive OfficersProposal 4: Recommend, by Non-Binding Vote, the Frequency of FutureAdvisory Votes on Executive CompensationDiscretionary AuthorityShareholder Proposals and Nominations for DirectorsOther Matters