DEF 14A of Consolidated Water Co. Ltd.
Filed Apr 18, 2024 · FY20230001104659-24-048920
Election of Directors
Election of Directors The shareholders of the Company will vote on the election of eight directors at the Annual General Meeting. Each nominee listed below has consented to being named a nominee in this Proxy Statement and has agreed to serve as a director if elected at the Annual General Meeting. If, prior to the Annual General Meeting, a nominee should become unavailable to serve, the proxies in such nominee’s favor will be void. The Board of Directors knows of no reason to anticipate that this will occur. All eight directors will stand for reelection at the 2024 Annual General Meeting. The affirmative vote of the holders of a majority of the Shares cast is required to elect each director. Abstentions and “broker non-votes” are not treated as votes cast and, therefore, will not affect the outcome of the vote. Unless a shareholder specifies otherwise on the accompanying proxy, its shares will be voted “FOR ALL” nominees listed below. THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE “FOR ALL” IN THE ELECTION OF THE NOMINEES LISTED BELOW. Linda Beidler-D’Aguilar, age 61, has been a director of our Company since November 2018. Ms. Beidler-D’Aguilar recently retired from the active practice of law; she has lived and worked in The Bahamas since 1991. From July 2015 to April 2023, she was a partner and head of the financial services practice at Glinton Sweeting O’Brien, a full-service boutique law firm located in Nassau, Bahamas, which specializes in financial services, corporate advisory services, securitization, real estate and resort development, and commercial litigation. From January 2005 to July 2015, Ms. Beidler-D’Aguilar was a partner at Graham Thompson, a law firm located in The Bahamas and Turks & Caicos specializing in trust and estate planning, commercial matters, civil litigation, family law, securitization, employment and immigration matters. Prior to joining Graham Thompson, Ms. Beidler-D’Aguilar worked briefly at another local law firm, before which she served as Vice President — Legal & Trademark, overseeing global intellectual property and domestic legal matters at Bacardi & Company Limited for almost nine years. Previously she was employed by two major trust companies in The Bahamas. Before moving to The Bahamas, Ms. Beidler-D’Aguilar practiced law in the United States. Upon her retirement, Ms. Beidler-D’Aguilar was given a Lifetime Achievement Award by the Bahamas Financial Services Board in recognition of her many years of dedicated support of the financial services industry in The Bahamas, including legislative drafting, public speaking and authorship of numerous articles for publication around the world. Ms. Beidler-D’Aguilar was selected to serve as a member of our Board of Directors because of her nearly 30 years of experience as an attorney, her legal, business and financial knowledge acquired during that period and her knowledge of, and business contacts in, the Caribbean. Brian E. Butler, age 74, has been a director of our Company since 1983. Mr. Butler, a full-time resident of the Cayman Islands, has since 1977 directed a consortium of property development companies presented under the Butler name specializing in luxury resort projects in the Cayman Islands, the Turks and Caicos Islands, and British Columbia, Canada. Mr. Butler was selected to serve as a member of our Board of Directors because of his over 50 years of experience as a property developer (over 45 of those years in the Caribbean), his business and financial knowledge acquired during that period and his knowledge of, and business contacts in, the Cayman Islands. Carson K. Ebanks, age 68, became the Cayman Islands government-nominated director of our Company in May 2001. Mr. Ebanks was the Director of Planning for the Cayman Islands from 1991 to 1997. He served the Cayman Islands Government as a Chief Officer beginning in 1997, and, when he retired in November 2011, he was Chief Officer for the Ministry of Finance, Tourism and Development. Mr. Ebanks is a Justice of the Peace, a Fellow of the Royal Geographic Society and a member of the Most Excellent Order of the British Empire. He holds a Bachelor of Environmental Studies (Hons. Urban and Regional Planning — Peace and Conflict Studies Minor) from the University of Waterloo and a Master of Arts — Planning in Community and Regional Planning from the University of British Columbia. He is a trustee of the National Gallery of the Cayman Islands and is the Secretary General of the Cayman Islands Olympic Committee. Mr. Ebanks is also the President of the Cayman Islands National Karate-Do Association. Mr. Ebanks has served on the Boards of the Trustee of Cayman Islands National Museum, the Cayman Islands Airports Authority, the Cayman Islands Port Authority, Cayman Islands Turtle Farm, Cayman Islands Airways, the Cayman Islands Civil Service Co-operative Credit Union, the Housing Development Corporation, the Water Authority — Cayman and the National Roads Authority. Mr. Ebanks, who was nominated to serve on our Board of Directors by the Cayman Islands government, was selected to serve as a member of our Board of Directors because of his knowledge of government affairs, his contacts within the Cayman Islands government and his experience in the water industry. Clarence B. Flowers, Jr., age 68, has been a director of our Company since 1991. Mr. Flowers is, and has been since 1985, the principal of Orchid Development Company, a real estate developer in the Cayman Islands. Mr. Flowers also serves as a director of C.L. Flowers & Sons, which is the largest manufacturer of wall systems in the Cayman Islands, and Cayman National Bank, a retail bank. Mr. Flowers was selected to serve as a member of our Board of Directors because of his more than 40 years of experience in the construction industry as a real estate developer in the Cayman Islands. Frederick W. McTaggart, age 61, has been a director of our Company since 1998, the Company’s President since October 2000 and its Chief Executive Officer since January 1, 2004. Mr. McTaggart served as Chief Financial Officer of the Company from February 2001 to January 1, 2004. From April 1994 to October 2000, Mr. McTaggart was the Managing Director of the Water Authority — Cayman, the government-owned water utility serving certain areas of the Cayman Islands. From March 1987 to April 1994, he held the positions of Deputy Director and Operations Engineer with the Water Authority — Cayman. He received his B.S. degree in Building Construction from the Georgia Institute of Technology in 1985. Mr. McTaggart was selected to serve as a member of our Board of Directors because of his extensive technical and managerial experience in the water industry, and his knowledge and managerial experience within both public and private sector water utilities.
Election of Directors
Wilmer F. Pergande, age 84, has been a director of our Company since 1978 and Chairman since 2009. He has more than 55 years of management, sales, manufacturing and engineering experience in the desalination and chemical processing industries. Mr. Pergande is the principal of WF Pergande Consulting LLC and currently provides consulting engineering services with respect to marine industry, metallurgy, fluid dynamics and aqueous chemical solutions separation technologies. He retired in 2006 as the Global Leader for Desalination and Process Equipment for GE Infrastructure, Water and Process Technologies, which position he held since 2002. Mr. Pergande previously held the position of Vice President of Special Projects of Osmonics Inc. and Chief Executive Officer of the desalination subsidiary of Osmonics Inc., a publicly traded water treatment and purification company, until its acquisition by General Electric Co. Before joining Osmonics, Mr. Pergande was the Chief Executive Officer of Licon International Inc., a publicly traded manufacturer of liquid chemical separation, purification and processing equipment. Previously, Mr. Pergande was the President of Mechanical Equipment Company Inc. (MECO) for 14 years and held engineering, sales and executive managerial positions with AquaChem Inc., a subsidiary of Coca Cola Co. at the time, both companies being manufacturers of seawater desalination equipment. He has a bachelor’s degree in Mechanical Engineering from Marquette University and Post Graduate Studies in Chemical Engineering, Metallurgy, Heat Transfer and Business Management from Marquette University and the University of Wisconsin. Mr. Pergande served three terms as a Director of the International Desalination Association, in which he held the positions of Treasurer and Secretary. He is a Member of Five Technical Societies related to the Business and has presented numerous Technical Papers at Society Meetings. Mr. Pergande was selected to serve as a member of our Board of Directors because of his management and engineering experience in the desalination industry, and for his management, engineering, sales and marketing skills. Leonard J. Sokolow, age 67, has been a director of our Company since June 1, 2006. Since September 2023, Mr. Sokolow has served as Co-Chief Executive Officer of SKYX Platforms Corp. (Nasdaq: SKYX). He has served as an independent director and Chairman of the Audit Committee of SKYX Platforms from 2015 to February 2022 and continues to serve as a board member of that company and a member of its Corporate Development Committee. From 2015 to August 2023, Mr. Sokolow served as Chief Executive Officer and President of Newbridge Financial, Inc., a financial services holding company. From 2015 to July 2022 Mr. Sokolow served as Chairman of Newbridge Securities Corporation, Newbridge Financial, Inc.’s full-service broker-dealer. From August 2022 to August 2023 Mr. Sokolow served as CEO of Newbridge Securities Corporation and Newbridge Financial Services Group, Inc., Newbridge Financial, Inc.’s, full-service registered investment adviser. From November 1999 until July 2008, Mr. Sokolow was the Chief Executive Officer and a member of the Board of Directors, of vFinance Inc., a publicly traded financial services company he co-founded. He also served as its Chairman from January 2007 until July 2008, when it merged into National Holdings Corporation, a publicly traded financial services company. From July 2008 until July 2013, Mr. Sokolow was President of National Holdings Corporation, and from July 2008 until July 2014 he was Vice-Chairman of the Board of Directors of National Holdings Corporation. From July 2013 until December 2014, Mr. Sokolow was a consultant and partner at Caribou LLC, a strategic advisory services firm. Mr. Sokolow was a Founder, Chairman, and Chief Executive Officer of the Americas Growth Fund, Inc., a closed-end 1940 Act management investment company, from 1994 to 1998. From 1988 until 1993, Mr. Sokolow was an Executive Vice President and the General Counsel of Applica Inc., a publicly traded appliance marketing and distribution company. From 1982 until 1988, Mr. Sokolow practiced corporate, securities, and tax law and was one of the founding attorneys and a partner of an international boutique law firm. From 1980 until 1982, he worked as a Certified Public Accountant for Ernst & Young and KPMG Peat Marwick. Since June 2020, he has served as a member of the Board of Directors of Vivos Therapeutics, Inc. (Nasdaq: VVOS), Chairman of its Audit Committee, and a member of its Nominations and Corporate Governance Committee, and since December 2021, Mr. Sokolow has served as a member of the Board of Directors of Agrify Corporation (Nasdaq: AGFY), where he currently serves as a member of the Audit Committee and the Compensation Committee. Mr. Sokolow was selected to serve as a member of our Board of Directors because of his experience as a director and principal executive officer, his legal, accounting, auditing and consulting background, and his qualifications to serve as our “audit committee financial expert.” Raymond Whittaker, age 70, has served as a director of our Company since 1988. Mr. Whittaker was the Managing Director of TransOcean Bank & Trust Ltd., a bank and trust company located in the Cayman Islands and a subsidiary of Johnson International Inc., a bank holding company located in Racine, Wisconsin from 1984 to December 2000. He is now the principal of his own company and management firm, FCM Ltd. On August 25, 2014, Mr. Whittaker was recognized as a Governance Fellow by the National Association of Corporate Directors (“NACD”) upon completion of NACD’s Governance Program and in recognition of an ongoing commitment to exemplary board leadership. Mr. Whittaker continues to participate in various NACD programs. Mr. Whittaker was selected to serve as a member of our Board of Directors because of his management, financial and banking experience.
Equity Compensation Plan Information
Equity Compensation Plan Information The following table sets forth certain information as of December 31, 2023, with respect to compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance under: all compensation plans previously approved by our security holders; and • all compensation plans not previously approved by our security holders.
Equity Compensation Plan Information
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | Equity compensation plans approved by security holders | 151,569(1) | $0.00 | 836,012 | | Equity compensation plans not approved by security holders | — | — | * | | Total | 151,569 | $0.00 | 836,012 |
Equity Compensation Plan Information
* This equity compensation plan does not have any limits on the number of shares reserved for issuance under the plans. (1) Includes shares related to our long-term incentive compensation plan, specifically: (i) 29,392 shares that were vested as of December 31, 2023 and issued on January 2, 2024; (ii) 10,751 share grants that vest on December 31, 2024; (iii) 19,672 share grants that vest in 1∕2 increments on December 31, 2024 and 2025; (iv) 26,742 shares that were vested as of December 31, 2023 and issued on March 27, 2024 based upon the Company’s cumulative financial performance for the three-year period ended December 31, 2023 relative to the cumulative financial performance target measures for the three-year period ended December 31, 2023 set by the Board of Directors in 2021; and (v) 51,587 shares that may be issued based upon the three-year cumulative financial performance target measures set by the Board of Directors in 2022 and 2023 for the three-year periods ending December 31, 2024 and 2025, respectively. Of the 51,587 shares, the actual number of shares earned may be adjusted upward or downward based upon the executive’s continued employment and the financial performance of the Company relative to the long-term financial performance measures. Also includes 1,250 shares issued on January 2, 2024 as compensation to a long-time employee of the Company. In addition, 12,175 options to purchase Ordinary Shares issued to four long-serving non-executive employees are outstanding with a weighted average exercise price of $16.08 and a weighted average remaining contractual life of 2.29 years.
Summary Compensation Table
Summary Compensation Table The following table summarizes the compensation of (1) our Chief Executive Officer and (2) our two other most highly compensated executive officers based upon total compensation (collectively, our “Named Executive Officers”) for the fiscal years ended December 31, 2023 and 2022.
Summary Compensation Table
| Name and Title | Year | Salary ($) | Non-Equity Incentive Plan Compensation ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | | Frederick W. McTaggart Chief Executive Officer | 2023 | 551,250 | 600,000 | 275,625 | 19,200 | 1,446,075 | | | 2022 | 525,000 | 525,000 | 262,500 | 18,600 | 1,331,100 | | David W. Sasnett Executive VP & Chief Financial Officer | 2023 | 419,150 | 185,690 | 125,745 | 19,200 | 749,785 | | | 2022 | 399,195 | 166,755 | 119,759 | 18,600 | 704,309 | | Ramjeet Jerrybandan Executive VP & Chief Operating Officer | 2023 | 409,115 | 199,000 | 122,735 | 19,200 | 750,050 | | | 2022 | 389,630 | 165,785 | 116,889 | 18,600 | 690,904 |
Summary Compensation Table
(1) Non-Equity Incentive Plan Compensation amounts have been determined pursuant to the terms outlined in our Named Executive Officers’ respective employment agreements and our short-term incentive compensation plan. Amounts for 2023 and 2022 represent the value (based upon the share price of our stock on the grant date) of the shares that may be earned by and granted to the executive in future years under stock grant rights provided under our long-term incentive compensation plan. With respect to these stock grant rights, 50% of the underlying shares vest in equal 1∕3 increments on December 31 of each year in the three-year period following the January 1 date on which the stock grant right is awarded if the executive is employed by the Company as of the vesting date. The remaining 50% of the underlying shares associated with these stock grant rights will be earned by and granted to the executive if our Company achieves the three-year cumulative financial performance target measures established by the Board for the three-year periods ending December 31, 2025 (for the stock grants awarded in 2023) and 2024 (for the stock grants awarded in 2022) and the executive is in our employ as of the measurement date. The actual number of shares earned and granted under these performance measures may be greater or lesser than these amounts (or even zero) based upon the financial performance of the Company relative to the long-term financial performance target measures. Represents car allowances.
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table provides information for each of the Named Executive Officers on stock option exercises and shares vested during the year ended December 31, 2023, including the number of shares acquired and the value realized upon exercise and the number of shares acquired and the value realized upon vesting, before payment of any applicable withholding tax and broker commissions.
Option Exercises and Stock Vested
| Named Executive Officer | Option Awards | | Stock Awards | | | | Number of shares acquired on exercise | Value realized on exercise | Number of shares acquired on vesting | Value realized on vesting ($) | | Frederick W. McTaggart | — | — | 23,358 | 831,545 | | David W. Sasnett | — | — | 10,574 | 376,434 | | Ramjeet Jerrybandan | — | — | 10,322 | 367,463 |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table summarizes the outstanding awards under our long-term incentive compensation plan as of December 31, 2023, for each Named Executive Officer.
Outstanding Equity Awards at Fiscal Year-End
| Named Executive Officer | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market value of unearned shares, units or other rights that have not vested ($) | | Frederick W. McTaggart | 4,112(1) | 146,387(1) | | | 12,336(2) | 439,162(2) | | | 6,208(3) | 221,005(3) | | | 9,312(4) | 331,507(4) | | David W. Sasnett | 1,876(1) | 66,786(1) | | | 5,628(2) | 200,357(2) | | | 2,832(3) | 100,819(3) | | | 4,248(4) | 151,229(4) | | Ramjeet Jerrybandan | 1,831(1) | 65,184(1) | | | 5,493(2) | 195,551(2) | | | 2,764(3) | 98,398(3) | | | 4,146(4) | 147,598(4) |
Outstanding Equity Awards at Fiscal Year-End
Amounts represent the number and value of shares that vest on December 31, 2024, assuming continued employment. Amounts represent the number and value of shares that may be earned by the executive assuming achievement of the three-year cumulative financial performance target measures established by the Board for the three-year period ending December 31, 2024. The actual number and value of shares earned may be adjusted upward or downward based upon the executive’s continued employment and the financial performance of the Company relative to the long-term financial performance measures. Amounts represent the number and value of shares that vest in equal 1∕2 increments on December 31, 2024 and 2025, assuming continued employment. (4) Amounts represent the number and value of shares that may be earned by the executive assuming achievement of the three-year cumulative financial performance target measures established by the Board for the three-year period ending December 31, 2025. The actual number and value of shares earned may be adjusted upward or downward based upon the executive’s continued employment and the financial performance of the Company relative to the long-term financial performance measures.
Pension Benefits
Pension Benefits We do not have any defined benefit plans and only offer defined contribution plans.
Non-Qualified Deferred Compensation
Non-Qualified Deferred Compensation We do not have any non-qualified deferred contribution plans or other deferred compensation plans.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control The section below describes the payments that may be made to the Named Executive Officers upon termination or Change in Control, as defined below, pursuant to individual agreements.
Pay versus Performance
Pay versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information that demonstrates the relationship between executive “Compensation Actually Paid” and the Company’s performance against several specific financial metrics. Pay versus Performance Table: The table below reflects Compensation Actually Paid to the Company’s Principal Executive Officer (“PEO”) and Average Summary Compensation Actually Paid to Non-PEO Named Executive Officers (“NEOs”) during 2023, 2022 and 2021.
Pay versus Performance
| Year | Summary Compensation Table Total for PEO $ | Compensation Actually Paid to PEO(1) $ | Average Summary Compensation Table Total for Non-PEO NEOs $ | Average Compensation Actually Paid to Non-PEO NEOs(1) $ | Value of Initial Fixed $100 Investment Based on Total Shareholder Return(2) $ | Net Income $ | | 2023 | 1,446,075 | 2,546,547 | 749,917 | 1,244,543 | 317.66 | 29,585,391 | | 2022 | 1,331,100 | 1,547,295 | 697,606 | 794,129 | 129.66 | 5,856,294 | | 2021 | 907,150 | 841,379 | 587,190 | 558,031 | 91.12 | 875,579 |
Pay versus Performance
(1) Compensation Actually Paid represents total compensation as reported in the Summary Compensation Table for that year (i) less the grant-date fair value of any stock and option awards granted during that year, (ii) plus the change in fair value of outstanding and unvested stock and option awards during that year, as well as the fair value of new stock and option awards granted during that year as of the end of the year. (2) The Value of Initial Fixed $100 Investment Based on Total Shareholder Return depicts a hypothetical $100 investment in Ordinary Shares on December 31, 2020, and shows the value of that investment over time (assuming the reinvestment of dividends) for each calendar year. Historical stock performance is not necessarily indicative of future stock performance.
Relationship between Compensation Actually Paid Disclosed in the Pay versus Performance Table and Other Table Elements
Relationship between Compensation Actually Paid Disclosed in the Pay versus Performance Table and Other Table Elements Compensation Actually Paid to Mr. McTaggart and Average Compensation Actually Paid to Non-PEO NEOs for 2023, 2022 and 2021 were directionally aligned with the cumulative total shareholder return and net income for those years.
Tabular List of the Company’s Most Important Metrics that Link Compensation Actually Paid to the PEO and other NEOs
Tabular List of the Company’s Most Important Metrics that Link Compensation Actually Paid to the PEO and other NEOs We consider the list below to be the Company’s most important metrics that link compensation paid to our NEOs, as they are the key metrics that determine the payout under our short-term incentive compensation plan and long-term incentive compensation plan. Revenue (excluding pass-through energy charges) Net income from continuing operations • Gross margin • Earnings per share • Operating cash flows
Director Compensation
Director Compensation The following table sets forth a summary of the compensation earned by our non-employee directors and/or paid to certain of our non-employee directors in 2023.
Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Linda Beidler-D’Aguilar*(2) | 52,350 | 47,738 | 100,088 | | Brian E. Butler* | 44,400 | 51,755 | 96,155 | | Carson K. Ebanks* | 38,500 | 42,875 | 81,375 | | Richard Finlay*(3) | 16,838 | 28,098 | 44,936 | | Clarence B. Flowers, Jr.* | 39,050 | 41,903 | 80,953 | | Wilmer F. Pergande*(4) | 157,100 | 44,170 | 201,270 | | Leonard J. Sokolow* | 62,600 | 47,020 | 109,620 | | Raymond Whittaker* | 50,388 | 47,590 | 97,978 |
Director Compensation
* The Board of Directors has determined that each of such persons is an “independent director” under the corporate governance rules of NASDAQ. (1) Represents fair value on the date of grant. (2) Of the $100,088 fees earned or paid in cash, $10,000 consists of director fees paid by Consolidated Water (Bahamas) Limited for service on the board of directors of this Company subsidiary. (3) Of the $44,936 fees earned or paid in cash, $5,000 consists of director fees paid by Consolidated Water (Bahamas) Limited for service on the board of directors of this Company subsidiary. Mr. Finlay passed away on March 14, 2023. (4) Of the $201,270 fees earned or paid in cash, $27,500 consists of director fees paid by Consolidated Water (Bahamas) Limited for service on the board of directors of this Company subsidiary.
Director Compensation Policy
Director Compensation Policy Our Chairman of the Board of Directors receives an annual cash retainer of $103,000 and each director who is not an executive officer is entitled to an annual cash retainer of $33,000. In addition, under the non-executive directors share plan, the Chairman of the Board of Directors and each director who is not an executive officer receives an annual equity retainer in Ordinary Shares worth $32,500 and $33,150, respectively. A Director who is also an executive officer of our Company (i.e. Mr. McTaggart) is not entitled to an annual retainer of cash or equity. Each director who is a member of the Compensation Committee and the Chairman of the committee is entitled to an annual cash retainer of $3,300 and $5,550, respectively. In addition, under the non-executive directors share plan, each committee member and the Chairman of the committee receive an annual equity retainer in Ordinary Shares worth $5,835 and $7,485, respectively. Each director who is a member of the Audit Committee and the Chairman of the committee is entitled to an annual cash retainer of $4,400 and $7,400, respectively. In addition, under the non-executive directors share plan, each committee member and the Chairman of the committee receive an annual equity retainer in Ordinary Shares worth $7,780 and $9,980, respectively. Each director who is a member of the Nominations and Corporate Governance Committee and the Chairman of the committee is entitled to an annual cash retainer of $2,200 and $3,700, respectively. In addition, under the non-executive directors share plan, each committee member and the Chairman of the committee receive an annual equity retainer in Ordinary Shares worth $3,890 and $4,990, respectively. Each director who is a member of the Environmental and Social Governance Committee and the Chairman of the committee is entitled to an annual cash retainer of $4,400 and $7,400, respectively. In addition, under the non-executive directors share plan, each committee member and the Chairman of the committee receive an annual equity retainer in Ordinary Shares worth $7,780 and $9,980, respectively. Mr. McTaggart is the Chairman of this committee and is not entitled to an annual retainer of cash or equity. The number of Ordinary Shares granted to the directors is calculated by dividing the equity retainers by the prevailing market price on October 1 of the preceding year.