DEF 14A of York Water Co
Filed Mar 22, 2024 · FY20230000108985-24-000028
ELECTION OF DIRECTORS
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 first half of 2023, the Board consisted of twelve Directors and during the second half of 2023, the Board consisted of eleven directors. Laura T. Wand was elected by the shareholders in May 2023 and replaced Robert P. Newcomer who reached the mandatory retirement age for Board service shortly after the election and thus did not stand for re-election. Cynthia A. Dotzel resigned from the Board in July 2023 and George Hay Kain III reached the mandatory retirement age for Board service in August 2023. Consistent with the bylaws, the Board of Directors filled a vacancy with Douglas S. Brossman in September 2023. Each Director class consists of three or four Directors. The Nomination and Corporate Governance Committee recommends that the four nominees 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 four Directors are to be elected by a plurality of the votes cast at the Annual Meeting, meaning that the four Directors receiving the most votes are elected, whether or not they receive a majority of the vote. The Board of Directors has adopted a majority voting policy whereby in an uncontested director election where the only nominees are those recommended by the Board, any incumbent Director nominated for re-election who receives a greater number of votes “withheld” for his or her election than votes “for” such election will promptly tender his or her resignation after such election. The independent Directors of the Board will evaluate the relevant facts and circumstances in connection with such Director’s resignation, giving due consideration to the best interests of the Company and its shareholders. Within 60 days after the election, the independent Directors will make a decision on whether to accept or reject the tendered resignation, or whether other action should be taken. The Board will promptly disclose publicly its decision and the reasons for its decision. The Board believes this process enhances accountability to shareholders and responsiveness to shareholder votes, while allowing the Board appropriate discretion in considering whether a particular Director’s resignation would be in the best interests of the Company and its shareholders.
ELECTION OF DIRECTORS
| NOMINEES FOR ELECTION TO THREE YEAR TERMS EXPIRING IN 2027 | | | Douglas S. Brossman Age 65 Director since 2023 | Mr. Brossman has been a director of Burnham Holdings, Inc., a public company and leader in the design, manufacture, distribution and sale of boilers, furnaces, radiators, air conditioning systems and related accessories for residential, commercial, and industrial uses, since 2012. Mr. Brossman is also a director of High Industries, Inc. and High Real Estate Group, LLC, a leader in the heavy construction and materials industry, since 2013. Mr. Brossman, now retired, served as CEO of Burnham Holdings, Inc. from 2012 to 2023, after holding the position of Vice President, General Counsel, and Secretary from 2008 to 2012. From 1993 to 2008, Mr. Brossman held various positions in legal, finance, and marketing at Armstrong World Industries, Inc., a public company and global leader in the design, innovation, manufacture, sales, and distribution of floor coverings, ceilings, and cabinets. Mr. Brossman holds the National Association of Corporate Directors (NACD) Directorship Certification. Mr. Brossman holds an MBA from The Wharton School of The University of Pennsylvania, a Juris Doctorate from The Dickinson School of Law, and a bachelor’s degree in Civil Engineering from The Pennsylvania State University. The Board considered Mr. Brossman’s experience in management, strategic leadership and planning, environmental law, and engineering, as well as his public company experience and community involvement, and determined that his service will be beneficial to the Company’s Board of Directors. | | Michael W. Gang, Esq. Age 73 Director since 1996 | Mr. Gang has been a principal of Post & Schell PC (P & S), Harrisburg, PA, a Pennsylvania-based law firm since 2005, 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 47 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. |
ELECTION OF DIRECTORS
| NOMINEES FOR ELECTION TO THREE YEAR TERMS EXPIRING IN 2027 | | | Jeffrey R. Hines, P.E. Age 62 Director since 2008 | Mr. Hines, now retired, served as the President and Chief Executive Officer of the Company from 2008 to 2020. He was Chief Operating Officer and Secretary from 2007 to 2008, and Vice President of Engineering from 1995 to 2006. Mr. Hines was a director and a member of various committees of Codorus Valley Bancorp in York, PA (a public company), and its wholly-owned subsidiary, Peoples Bank, York, PA from 2011 to 2022. Mr. Hines was a trustee of York College of Pennsylvania and serves as director or committee member of various community and non-profit organizations. Mr. Hines was a director with the National Association of Water Companies at both the state and national levels. Mr. Hines is a licensed Professional Engineer in PA and holds MBA and law degrees. The Board considered Mr. Hines’ prior 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. | | George W. Hodges Age 73 Director since 2000 | 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 was a director and a member of various committees of Fulton Financial Corporation (a public company), in Lancaster, PA, and director of Fulton Bank, a subsidiary of Fulton Financial Corporation. Mr. Hodges was a director of Burnham Holdings, Inc., in Lancaster, PA (a public company) from 2008 to 2021. Mr. Hodges is a director and chairman of the Hodges Family Foundation, director and chairman of the Huber Foundation, and director emeritus of the Powder Mill Foundation, private charitable foundations in York, PA. Mr. Hodges is an NACD 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. |
ELECTION OF DIRECTORS
The Board of Directors unanimously recommends a vote “FOR” each of the nominees.
ELECTION OF DIRECTORS
| DIRECTORS WITH TERMS EXPIRING IN 2025 | | | Paul R. Bonney, Esq. Age 65 Director since 2022 | Mr. Bonney is an energy-industry consultant since January 2019 and adjunct professor of business law and energy and sustainability at Clemson University since January 2020. Mr. Bonney previously held various positions at Exelon Corporation, a multi-state electric and gas investor owned utility, in Philadelphia, Washington DC, Baltimore, and Chicago. He was Senior Vice President of Legal and Regulatory Strategy at Pepco Holdings (2016-2018), Senior Vice President and General Counsel of Exelon’s Constellation commercial business (2012-2016), and General Counsel of PECO and Vice President of Regulatory Affairs (2007-2012). Mr. Bonney holds a law degree from Georgetown University Law School, and a B.A. in Economics from Duke University. In addition, Mr. Bonney is an advisory board member of the Kleinman Center for Energy Policy at the University of Pennsylvania. The Board believes Mr. Bonney’s experience in legal and regulatory affairs and management of rate and regulatory strategy and performance will be of great benefit to the Company’s Board and its Committees. | | Jody L. Keller, SPHR Age 70 Director since 2015 | Ms. Keller was the owner of Jody Keller LLC, a human resources management consulting firm she founded from 2013 to 2022. 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. Ms. Keller also served as the Co-Interim Executive Director of the York County SPCA in 2019, the Executive in Residence at The Graham Center for Entrepreneurial Leadership Studies at Penn State York from 2016 to 2018, and as the Interim Executive Director of the Strand Capitol Performing Arts Center in York, PA from 2014 to 2015. 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 Chairperson, President, board member and various committee positions with private company, 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 and identification of future officers and Board members, and will add diversity to the Board, and that her knowledge and leadership in the community will add overall strength to the Board of Directors. | | Steven R. Rasmussen, CPA Age 51 Director since 2011 | 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 and wastewater 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. |
ELECTION OF DIRECTORS
| DIRECTORS WITH TERMS EXPIRING IN 2026 | | | Joseph T. Hand Age 61 Director since 2020 | Mr. Hand has served as the President and Chief Executive Officer of the Company since 2020. He was Chief Operating Officer and Secretary for the Company from 2017 to 2020 and Chief Operating Officer from 2008 to 2017. Prior to joining the Company, Mr. Hand was Chief of the Navigation Branch, Baltimore District, for the U.S. Army Corps of Engineers from 2006 to 2008, and Deputy Commander and Deputy District Engineer for the Corps of Engineers from 2003 to 2006. Prior to the Army Corps, Mr. Hand held various positions in the U.S. Army. Mr. Hand is a director of the National Association of Water Companies at the national level, the twice former chairman of the Pennsylvania Chapter of the National Association of Water Companies, a director of the Pennsylvania Chapter of the American Water Works Association Water Utility Council, a director of the Pennsylvania Public Water System Technical Assistance Center and serves as director or committee member of various community and non-profit organizations. Mr. Hand holds an MBA degree. The Board considered Mr. Hand’s 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. | | Erin C. McGlaughlin Age 50 Director since 2016 | Ms. McGlaughlin is Chief Operating Officer of myHR Partner, Inc., an outsourced human resources services firm. Prior to her current role, Ms. McGlaughlin was a partner at Design Quake, Inc., a business consultancy in York, PA focused on strategic change management and organizational development from 2016 to 2022, 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 to 2016, an Assistant Marketing Manager for General Mills in Minneapolis, MN from 2004 to 2005, Manager of Investment Funds at The Carlyle Group, a private equity firm in Washington, DC, from 1998 to 2002, and a Senior Auditor with Arthur Anderson LLP in Washington, DC from 1995 to 1998 during which time she became a certified public accountant. Ms. McGlaughlin was an adjunct professor of design thinking at York College of Pennsylvania from 2015 to 2017. Ms. McGlaughlin earned an MBA from Stanford University where she was named an Arjay Miller Scholar. Ms. McGlaughlin serves and has served as a board member, officer, or committee member of a number of private companies and non-profit organizations. In addition, Ms. McGlaughlin was named a Central Penn Business Journal Woman of Influence in 2015. The Board considered Ms. McGlaughlin’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. |
ELECTION OF DIRECTORS
| | DIRECTORS WITH TERMS EXPIRING IN 2026 | | Laura T. Wand Age 63 Director since 2023 | Ms. Wand, now retired, was the Chief Executive Officer from 2020 to 2021 and Strategic Advisor from 2021 to 2022 of Shield T3, LLC, an organization delivering large scale, rapid response COVD-19 testing services in the education and high tech manufacturing space nationally. Previously, Ms. Wand had an extensive career with Johnson Controls International, a manufacturer of HVAC equipment, industrial refrigeration systems, controls, security systems, fire-detection systems and fire-suppression solutions, encompassing both domestic and global roles. She was Vice President and General Manager of Applied HVAC Equipment from 2018 to 2020 and Vice President and General Manager of Global Chiller Products from 2014 to 2018. Ms. Wand is currently an independent director for Burnham Holdings, Inc., in Lancaster, PA (a public company) and for IMPREG Group, a Danish private company as well as a senior advisor for TowerBrook Capital Partners, LP. Ms. Wand also serves on the Commonwealth of Pennsylvania Workforce Development Board of Directors. In addition, Ms. Wand also has served on the York College Board of Trustees since 2009 and was elected as Chair beginning in July of 2022. Ms. Wand holds the NACD Directorship Certification. She holds a bachelor’s degree in Mechanical Engineering from the Georgia Institute of Technology. The Board considered Ms. Wand’s experience in management and strategic leadership and planning, as well as her involvement in the community, and determined she would add considerable knowledge, diversity, and unique perspective to the Company’s Board of Directors. | | Ernest J. Waters Age 74 Director since 2007 | 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. Mr. Waters recently left the board of Fulton Financial Corporation (a public company) where he served as a director, chairman of the special joint compliance committee, and a member of the risk and audit committees, and Fulton Bank of Lancaster, PA (a subsidiary of Fulton Financial Corporation) where he served as a director and chairman of the trust committee. Mr. Waters served on the board of Wellspan Health (a non-profit organization.), chaired the audit committee, and was a member of the executive committee before ending his service in 2017 by reaching the maximum years allowed. Mr. Waters is an NACD Governance Fellow. The Board considered Mr. Waters’ prior experience in the utility industry and with regulatory matters, his recent public company director and committee experience, and his diversity to be valuable and determined that his continued service on the Board will be beneficial to the Company’s Board of Directors. |
ELECTION OF DIRECTORS
| EXECUTIVE OFFICERS OF THE COMPANY | | | Joseph T. Hand Age 61 Officer since 2008 | Mr. Hand became President and CEO in 2020 and has been an executive officer since 2008. Since he is also a Director, his biography appears on page 8 under the heading “Directors with Terms Expiring in 2026.” | | Matthew E. Poff, CPA Age 52 Officer since 2018 | Mr. Poff has been Chief Financial Officer and Treasurer of the Company since January 2018. Prior to his current position, Mr. Poff was Controller and Assistant Treasurer from May 2017 to December 2017, and Controller from June 2009 to April 2017. Prior to joining the Company, Mr. Poff was the Chief Financial Officer for I.B. Abel, Inc., an electrical contractor in York, PA, from October 2006 to May 2009, and held various positions of increasing responsibility at Beard Miller Company LLP, a regional accounting firm in York, PA for more than ten years. Mr. Poff is a licensed Certified Public Accountant in Pennsylvania and holds an MBA degree. | | Alexandra C. Chiaruttini, Esq. Age 53 Officer since 2020 | Ms. Chiaruttini has been Chief Administrative Officer and General Counsel of the Company since October 2020. Prior to joining the Company, Ms. Chiaruttini was the Chief Counsel for the Pennsylvania Department of Environmental Protection, Harrisburg, PA from October 2015 to September 2020, Partner and Chair of Environmental Practice for Stock and Leader, LP, York, PA from February 2008 to September 2015, Associate in the Environmental Law and Toxic Tort Practice Group for McNees Wallace & Nurick, LLC, Harrisburg, PA from March 2001 to January 2008, and the Assistant Regional Counsel of the Southcentral Office of the Pennsylvania Department of Environmental Protection, Harrisburg, PA from September 1997 to February 2001. | | Vernon L. Bracey Age 62 Officer since 2003 | 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 to August 1998. | | Matthew J. Scarpato Age 41 Officer since 2023 | Mr. Scarpato has been Vice President of Operations since July 2023. Prior to joining the Company, Mr. Scarpato was the Chief Financial Officer and Vice President of Operations for Homestead Village Enhanced Senior Living, Lancaster, PA from February 2021 to March 2023, Chief Financial Officer for Homestead Village Enhanced Senior Living, Lancaster, PA from May 2020 to February 2021, and Executive Vice President of Operations and Finance for York Jewish Community Center, York, PA from December 2010 to May 2020. Mr. Scarpato holds an MBA degree. | | Mark S. Snyder, P.E. Age 53 Officer since 2009 | Mr. Snyder has been Vice President of 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, Lancaster, PA, a national engineering firm, from December 1996 to April 2001. Mr. Snyder is a licensed Professional Engineer in Pennsylvania. |
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE 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 2023 and 2022. The “Nonqualified Deferred Compensation Earnings” column presented in prior proxy statements has been deleted as it is not required by the rules of the SEC.
SUMMARY COMPENSATION TABLE
| | | | | Non-Equity | | | | | | | | | | Incentive Plan | | All Other | | | | Name and | | | Stock | Compensation | | Compensation | | | | Principal Position | Year | Salary (1) | Awards (2) | (3) | | (4) | | Total | | Joseph T. Hand | 2023 | $334,201 | $80,429 | $36,335 | $13,561 | | $464,526 | | | President, Chief | 2022 | 314,024 | 78,937 | 32,500 | 12,310 | | 437,771 | | | Executive Officer | | | | | | | | | | Matthew E. Poff, CPA | 2023 | 233,080 | 34,020 | 25,250 | 14,088 | | 306,438 | | | Chief Financial | 2022 | 219,056 | 43,200 | 22,680 | 12,984 | | 297,920 | | | Officer | | | | | | | | | | Alexandra C. | 2023 | 210,199 | 30,615 | 22,900 | 18,331 | | 282,045 | | | Chiaruttini, Esq. | | | | | | | | | | Chief Administrative | | | | | | | | | | Officer and General Counsel | | | | | | | | |
SUMMARY COMPENSATION TABLE
| (1) In 2023, the Compensation Committee directed management to engage Herbein + Company, Inc., Reading, PA (“the Consultant”), to assist the Company in establishing base salary by evaluating compensation for senior management relative to the market. The Compensation Committee has concluded that the Consultant is an independent consultant after considering the factors relevant to the Consultant’s independence from management, including the factors set forth in the NASDAQ and SEC rules regarding compensation consultant independence. The Consultant provides no other services to the Company other than serving as the Compensation Committee’s compensation consultant. |
SUMMARY COMPENSATION TABLE
The Consultant compared the compensation package of the Company to a peer group of 11 companies consisting of organizations in the utilities industry as well as publicly traded financial services organizations in similarly situated geographies, with sufficient similarity in terms of size and performance measures. These companies included similar water utility peer companies, Middlesex Water Company (MSEX) and Artesian Water Company (ARTNA). The Consultant selected five publicly traded utilities for this comparison, Consolidated Water Co. Ltd. (CWCO), Global Water Resources (GWRS), Pure Cycle Corporation (PCYO), RGC Resources (RGCO), and Until Corporation (UTL). The Company also selected two locally based, publicly traded financial institutions, Codorus Valley Bancorp (CVLY) and Traditions Bancorp, Inc. (TRBK), and two additional publicly traded financial institutions, Franklin Financial Services Corporation (FRAF) and Juniata Valley Financial Corporation (JUVF). These companies were selected because they serve the same or a nearby geographic area, are similar sized, and operate in a highly regulated environment which is comparable to a water company. In addition to the peer analysis, the Consultant also performed a compensation market survey. The analysis and comparisons were normalized based on scope factors. Based upon the work of the Consultant, it was deemed appropriate that the Company’s base salary compensation goal should be approximately the 50th percentile of the market. The base salary level of named executive officers is reviewed annually to determine if the peer group described above, and the 50th percentile continue to be appropriate based on changes relative to comparable companies, product line, the current regulatory environment, changes in water and wastewater quality standards, competition for competent management, and growth in the 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. The Company does not provide discretionary cash bonuses to senior management.
SUMMARY COMPENSATION TABLE
| (2) 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 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. |
SUMMARY COMPENSATION TABLE
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 (“PPUC”) 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 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. On May 1, 2023, the Compensation Committee determined that the Company met or exceeded three of the four metrics for the three-year period ended December 31, 2022. The Compensation Committee awarded restricted stock to the named executive officers effective May 1, 2023 at a rate of 75% of 20% of base salary for Mr. Hand, Mr. Poff, and Ms. Chiaruttini, all to vest ratably over three years beginning May 1, 2023. Awards are subject to the Company’s clawback policy. The value presented on the table was determined using the closing stock price on May 1, 2023. As part of its review of the President and Chief Executive Officer compensation, the Compensation Committee issued a stock award of 845 shares to Mr. Hand on November 20, 2023. The shares vested immediately. The value presented on the table was determined using the closing stock price on September 29, 2023.
SUMMARY COMPENSATION TABLE
| (3) The Company’s practice is to use cash awards to incentivize its senior managers in the short-term to create value for its customers and shareholders. To that end, the Company adopted a Cash Incentive Plan in 2005, pursuant to which the Compensation Committee sets annual performance objectives and target incentive payment amounts. All supervisors and managers participate in the plan, including the named executive officers. |
SUMMARY COMPENSATION TABLE
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 Compensation 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 and wastewater 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 (5) 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 2023 on February 6, 2023. For 2023, the Compensation Committee determined that the amount of the target cash incentive award would be 10% of the base salary as of December 31, 2023 for each C suite employee, including named executive officers, 7.5% of the base salary as of December 31, 2023 for each Vice President level employee, and 5% of the base salary as of December 31, 2023 for each other management employee. The Committee selected these target cash incentive awards for 2023 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 these factors together contributed to the Committee’s decision to keep the target incentive relatively low as compared to other companies. The 2023 performance objectives as determined by the Compensation Committee were, among other things: replace and reline 50,000 feet of pipe; initiate and complete a new Company website; develop an active source water protection program for the Codorus watershed; take preparatory steps to meet the 2024 revised Lead and Copper Rule; complete an information technology department evaluation and provide recommendations for the evolution of information technology services; update the investment policy statements of the pension plans; complete a job description and job analysis; substantial completion of the Lake Williams dam rehabilitation project; complete a market compensation study; complete an assessment and emergency action plan update for the Roxbury Dam; complete the Conodoguinet Creek source of supply study; review the taxation of real property; integrate organic growth and acquired customers seamlessly; implement a labor-management plan to provide uninterrupted service; complete all customer service base rate requirements for 2023; and establish an internal ESG committee to assess, develop, and communicate ESG programs and priorities. On January 29, 2024, the Compensation Committee determined that management had achieved eighty-eight (88) percent of the performance objectives listed above for 2023, as well as the set business criterion for 2023, which was, earnings per common share of $1.56. The Committee awarded the named executive officers the amounts set forth in the table. Non-equity plan incentive plan compensation is shown in the year earned and is normally paid in the following calendar year. Awards are subject to the Company’s clawback policy.
SUMMARY COMPENSATION TABLE
| (4) Amounts presented represent the Company contributions to the named executive officer’s 401(k) account described in the “Retirement Benefits” section below, credited earnings, tax savings and Company contributions for non-qualified deferred compensation described in the “Retirement Benefits” section below, and personal use of company vehicles. 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 participate in the Company'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. |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| 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 | | Joseph T. Hand President, Chief Executive Officer | 2,885 | $111,419 | | Matthew E. Poff, CPA Chief Financial Officer | 1,816 | $70,134 | | Alexandria C. Chiaruttini, Esq. Chief Administrative Officer and General Counsel | 1,459 | $56,347 |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The closing price of the Company’s Common Stock was $38.62 on December 29, 2023, the final trading day of the year. The shares that have not vested consist of (i) one-third of the 2021 award that will vest on May 3, 2024, (ii) the 2022 award that will vest one-third each on May 2, 2024 and May 2, 2025, and (iii) the 2023 award that will vest one-third each on May 1, 2024, May 1, 2025, and May 1, 2026.
RETIREMENT BENEFITS
RETIREMENT BENEFITS Defined Benefit Pension Plan. The Company provides a traditional defined benefit pension plan covering employees hired before May 1, 2010. Messrs. Hand and Poff 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. There were no payments to named executives made under this plan during the last fiscal year. Employees begin accruing benefits under the pension plan when they commence work at the Company. Supplemental Executive Retirement Plan. The Company provides 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. The estimated annual benefits payable at normal retirement age under the supplemental retirement program are as follows: Mr. Hand, $66,667; Mr. Poff, $33,333; and Ms. Chiaruttini, $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 the following executive officers were to die before retirement, their respective beneficiaries would receive the following death benefits: Mr. Hand, $1,000,000; Mr. Poff, $500,000; and Ms. Chiaruttini, $500,000. 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. There were no payments to named executives made under this plan during the last fiscal year. Employees do not become eligible for the supplemental retirement program until they become executives of the Company. Deferred Compensation Plan. The Company provides a deferred compensation program to management. For executives and managers hired before May 1, 2010, including Messrs. Hand and Poff, the deferred compensation program permits a deferral of up to 5% of salary at the time the participant is eligible to enter the plan, over an eight (8) to eleven (11) year period, with the Company matching the deferral up to 2.5% of salary. For executives and managers hired on or after May 1, 2010 who are not eligible for the defined benefit pension plan, including Ms. Chiaruttini, the deferred compensation program permits deferral of up to 5% of salary through age 65, with the Company matching the deferral up to 5% of salary. For all participants, the Company annually 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 4.61% for 2023. The Company also annually credits all participants’ deferred compensation balances with tax savings accruing to the Company. 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. The deferred compensation program does not provide above-market or preferential earnings. 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 in one hundred and twenty (120) monthly installments. If a named executive officer’s employment with the Company is terminated other than by death or disability before he is eligible for retirement (age 60) and attaining less than 10 years in the plan, the amount of his or her contributions and the earnings thereon 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 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 one hundred and twenty (120) monthly installments. If a named executive officer’s employment with the Company is terminated before he 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 one hundred and twenty (120) monthly installments. If a named executive officer’s employment with the Company is terminated after he is eligible for retirement (age 60), 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 in one hundred and twenty (120) monthly installments. 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. 401(k) Plan. The named executive officers may participate in the 401(k) savings plan on the same terms as other employees. The Company provides an annual maximum matching contribution of $2,800 per employee, for participating employees hired before May 1, 2010. Messrs. Hand and Poff received the maximum matching contribution during 2023.
RETIREMENT BENEFITS
Employees hired on or after May 1, 2010 who are not eligible for the defined benefit pension plan, are eligible for an enhanced 401(k) plan. The Company provides an annual matching contribution of 100% of the employee’s contribution up to a maximum 4% of the employee’s eligible compensation. In addition, the Company makes an annual contribution of $1,200 to each employee’s account whether or not they defer their own compensation. Ms. Chiaruttini received a matching contribution of $9,594 during 2023.
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL The senior management of the Company has built it into the successful business that it is today. The Company believes 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, the Company entered into amended and restated agreements with each of the senior managers. These agreements incentivize the 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. Description of Change in Control Agreements. The Company has 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. Under all agreements, generally a “change in control” will occur if:
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | Any person or affiliated group (with limited exceptions) becomes the beneficial owner in the aggregate of 50 percent or more of all of the voting securities; |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | A majority of the Board of Directors is involuntarily removed or defeated for re-election to the Board of Directors (for example, as a result of a proxy contest); |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | The Company is party to a merger or reorganization pursuant to which the holders of the 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 |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | The Company is liquidated or dissolved, or all its assets are sold to a third party. |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
In each circumstance described above, the 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. All payments under the agreements are triggered by the occurrence of a change in control and a termination of the senior manager’s employment by the Company without cause, or by the senior manager for “good reason.” A “good reason” termination is one which occurs when the senior manager terminates his or her own employment following a change in control and after one or more of the following has occurred:
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | the Company has breached the change in control agreement; |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | the Company has significantly reduced the authority, duties or responsibilities of the senior manager or reduced his or her base compensation or annual bonus compensation opportunity; |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | the Company has reduced the senior manager from the employment grade or officer positions which he or she holds; or |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | the Company has transferred the senior manager, without his or her express written consent, to a location that is more than 70 miles from his or her principal place of business immediately preceding the change of control. |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
Payouts under Change in Control Agreements. Under the agreements, the senior managers are entitled to payment in the case of a termination without cause or a good reason termination within some time period surrounding a change in control (generally six months prior to or two years following a change in control) as follows:
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | Severance pay of an amount equal to a multiple of compensation payable in equal periodic payments over a set period of time; |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | Pro-rated annual bonus payable in a lump sum amount if the executive has completed at least six (6) months of employment during the fiscal year; |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | All unvested equity-based incentive compensation awards held by the executive will immediately vest; |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | Monthly reimbursements of the COBRA premium paid by the executive for up to eighteen (18) months; and |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
| • | A monthly stipend of $3,000 for a set period of time following the eighteen (18) month COBRA continuation coverage period. |
POTENTIAL PAYMENTS UPON TERMINATION OR A CHANGE IN CONTROL
If the senior manager is terminated on account of disability or death, the Company is required to pay the pro-rated annual bonus and COBRA reimbursement, and all unvested equity-based incentive compensation awards held by the senior manager will immediately vest. No payments are required if the senior manager terminates his or her employment without good reason, or is terminated for cause. Payment of the lump sum payments under the change in control agreements is contingent upon the senior manager executing a standard release. The change in control agreements also contain restrictive covenants around confidential information and mutual non-disparagement provisions. The Company would not be obligated to make these payments if these provisions are violated. Other Payouts. Senior managers will in all events 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.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
| Director | Fees Paid in Cash | Stock Awards | Total | | Paul R. Bonney, Esq. | $32,203 | $2,618 | $34,821 | | Douglas S. Brossman | 9,453 | - | 9,453 | | Cynthia A. Dotzel, CPA | 17,542 | 4,518 | 22,060 | | Michael W. Gang, Esq. | 28,893 | 4,518 | 33,411 | | Jeffrey R. Hines, P.E. | 28,893 | 4,518 | 33,411 | | George W. Hodges | 39,333 | 4,518 | 43,851 | | George Hay Kain III | 19,420 | 4,518 | 23,938 | | Jody L. Keller, SPHR | 30,183 | 4,518 | 34,701 | | Erin C. McGlaughlin | 35,743 | 4,518 | 40,261 | | Robert P. Newcomer | 11,867 | 4,518 | 16,385 | | Steven R. Rasmussen, CPA | 37,773 | 4,518 | 42,291 | | Laura T. Wand | 21,617 | - | 21,617 | | Ernest J. Waters | 35,693 | 4,518 | 40,211 |
DIRECTOR COMPENSATION
Director Fees Paid in Cash. In consideration of the services provided to us, Directors who are not regular full-time employees are entitled to receive a retainer of $23,500 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.
DIRECTOR COMPENSATION
| | Board | Executive Committee | Audit Committee | Nomination & Corporate Governance Committee | Compensation Committee | | Chairperson | $2,500 | $1,200 | $1,800 | $1,090 | $1,090 | | Directors/Members | $810 | $890 | $950 | $840 | $840 |
DIRECTOR COMPENSATION
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. Similar to the stock awards issued to the named executive officers discussed with the Summary Compensation Table, the non-employee Directors were issued stock awards on May 1, 2023 in the amount of 75% of 30% of the annual retainer, or $4,518, which amounted to 107 shares based on the closing price of the common stock of the Company of $42.22. The shares vested immediately. Director Bonney was granted a prorated award based on his service as a Director beginning in June 2022. Directors Brossman and Wand were not granted an award based upon their not accruing any service time in 2022. No perquisites are provided to Directors. There were seven (7) Board of Directors' Meetings during the calendar year 2023. All Directors attended more than 75% of the scheduled Board of Directors and committee meetings. In addition, all Directors attended the 2023 Annual Meeting of Shareholders. All Directors are expected to attend the 2024 Annual Meeting of Shareholders, but attendance is not mandatory.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE In August 2022, pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission adopted a rule requiring companies to disclose the relationship between executive compensation actually paid and the Company’s financial performance. The following table sets forth specified executive compensation and financial performance measures over a two-year lookback period.
PAY VERSUS PERFORMANCE
| Year | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs | Value of Initial Fixed $100 Investment Based on Total Shareholder Return | Net Income (in thousands of dollars) | | 2023 | $464,526 | $444,001 | $294,242 | $283,582 | $87.69 | $23,757 | | 2022 | 437,771 | 425,592 | 301,975 | 299,217 | 100.11 | 19,580 | | 2021 | 429,985 | 430,753 | 275,510 | 276,139 | 108.70 | 16,984 |
PAY VERSUS PERFORMANCE
Note: The following tables reconcile the summary compensation table totals to compensation actually paid by adjusting for equity awards, for PEO Joseph T. Hand for each of 2021,2022, and 2023, and for Non-PEO NEOs Mark A. Wheeler and Matthew E. Poff for 2021 and 2022 and Non-PEO NEOs Matthew E. Poff and Alexandra C. Chirauttini for 2023.
PAY VERSUS PERFORMANCE
| 2023 | PEO | Non-PEO NEOs | | Summary Compensation Table Total | $464,526 | $294,242 | | Less: Grant-Date Fair Value of Equity Awards | (80,429) | (32,318) | | Fair Value of Equity Awards Granted During the Year Outstanding and Unvested at Year End | 44,606 | 29,564 | | Fair Value of Equity Awards Granted During the Year that Vested During the Year | 31,679 | - | | Change in Fair Value of Equity Awards Granted in Prior Years Outstanding and Unvested at Year End | (10,988) | (5,553) | | Change in Fair Value of Equity Awards Granted in Prior Years that Vested During the Year | (5,393) | (2,353) | | Compensation Actually Paid | $444,001 | $283,582 |
PAY VERSUS PERFORMANCE
| 2022 | PEO | Non-PEO NEOs | | Summary Compensation Table Total | $437,771 | $301,975 | | Less: Grant-Date Fair Value of Equity Awards | (78,937) | (42,200) | | Fair Value of Equity Awards Granted During the Year Outstanding and Unvested at Year End | 71,743 | 48,826 | | Fair Value of Equity Awards Granted During the Year that Vested During the Year | 16,937 | - | | Change in Fair Value of Equity Awards Granted in Prior Years Outstanding and Unvested at Year End | (8,069) | (3,453) | | Change in Fair Value of Equity Awards Granted in Prior Years that Vested During the Year | (13,853) | (5,931) | | Compensation Actually Paid | $425,592 | $299,217 |
PAY VERSUS PERFORMANCE
| 2021 | PEO | Non-PEO NEOs | | Summary Compensation Table Total | $429,985 | $275,510 | | Less: Grant-Date Fair Value of Equity Awards | (102,800) | (40,300) | | Fair Value of Equity Awards Granted During the Year Outstanding and Unvested at Year End | 99,560 | 39,028 | | Change in Fair Value of Equity Awards Granted in Prior Years Outstanding and Unvested at Year End | 3,569 | 1,834 | | Change in Fair Value of Equity Awards Granted in Prior Years that Vested During the Year | 439 | 66 | | Compensation Actually Paid | $430,753 | $276,139 |
PAY VERSUS PERFORMANCE
In 2023, the compensation actually paid to the PEO increased 4.3% from $425,592 to $444,001 and the average compensation actually paid to the non-PEO NEOs dropped 5.2% from $299,217 to $283,582. In comparison, net income increased 21.3% from $19,580,000 to $23,757 and total shareholder return fell 12.4% from $100.11 to $87.69. In 2022, the compensation actually paid to the PEO dropped 1.2% from $430,753 to $425,592 and the average compensation actually paid to the non-PEO NEOs increased 8.4% from $276,139 to $299,217. In comparison, net income increased 15.3% from $16,984,000 to $19,580,000 and total shareholder return fell 7.9% from $108.70 to $100.11. In 2021, net income increased 2.3% from $16,598,000 to $16,984,000 and total shareholder return increased 8.7% from $100.00 to $108.70.