Retirement Policy

RETIREMENT POLICY

The Board has a retirement age policy that provides no Director may be nominated as a candidate, or for reelection, as part of the slate of Directors proposed for election by the Company, nor may any person be nominated as a candidate for Director, after he or she has reached age 75. Directors are not, however, subject to specific term limits. Due to the complexity of the utility industry, the Company values the insight that a Director is able to develop over a period of time. Tenure on theThe Board generallybelieves that tenure provides an enhanced contribution to the Board, whichincluding the Board believesbenefits of valuable experience and familiarity, which is in the best interest of shareholders.

STOCK OWNERSHIP POLICY

The Board has a mandatory stock ownership policy that is applicable to all members of the Board. The Board is of the continuing belief that its members should own a significant number of shares of the Company’s common stock to properly align their interests with those of the shareholders of the Company. Effective as of January 1, 2013, all Directors must own shares of the Company’s common stock in the equivalent value of three times the current annual cash retainer for Board service. Shares of restricted stock and restricted stock units (“RSUs”) are counted towards this total. The ownership requirement is calculated annually on January 1, and as of January 1, 2016,2017, the ownership requirement was $171,000$195,000 in value. Currently, all Board members meet the stock ownership requirement, with the exception of Ms. Crutchfield and Mr. Whiteley. Ms. Crutchfield and Mr. Whiteley were initially elected by the Company’s shareholders on April 18, 2013 and will have until April 18, 2017 to meet the ownership requirement. Any new directorDirector who may join the Board in the future will have four years from the date of first election to the Board by shareholders to accumulate the required number of shares of common stock.

RESIGNATION POLICY

In October 2016, the Board adopted a policy that requires a Director to tender his or her resignation if he or she should receive a “withhold” vote greater than 50% of the shares voted at the annual meeting of shareholders in an uncontested election. If an incumbent Director fails to receive the required vote forre-election, the Nominating and Governance Committee will act on an expedited basis to determine whether to recommend the acceptance of the Director’s resignation and will submit such recommendation for prompt consideration by the Board. The Director whose resignation is under consideration shall abstain from participating in any decision regarding that resignation. The Nominating and Governance Committee and the Board may consider any factors they deem relevant in deciding whether to accept a Director’s resignation.

Further, the Board shall nominate for election orre-election as Director only candidates who agree to tender, promptly following the annual meeting at which they are elected orre-elected as Director, irrevocable resignations that will be effective upon (i) the failure to receive the required vote at the annual meeting at which they facere-election and (ii) Board acceptance of such resignation. In addition, the Board will fill board seat vacancies and new directorships only with candidates who agree to tender, promptly following their appointment to the Board, the same form of resignation tendered by other Directors in accordance with this policy.

ANNUAL EVALUATION

The Board conducts an annual evaluation on key Board- and committee-related issues, an exercise that has been practiced since 2002. The annual evaluation has proven to be a beneficial tool in the process of continuous improvement in Board and committee functioning and communication. This practice has also provenThe evaluation is specifically designed to be an effectiveprovide a platform for qualitative expression of thoughts and opinions, as well as a catalyst for candid discussion and open dialog on current and emerging issues facing the utility industry, the Company, and the Board as a whole. whole, any committee(s) served upon, matters of strategic importance to the Company, as well as self-evaluation with regard to skills and expertise. In 2016, all Directors participated in the annual evaluation, which was conducted in the fourth quarter. Responses were discussed in executive session in January 2017.

MEETING ATTENDANCE

The Board has conducted an annual evaluation since 2002.

The Company expects members of the Boardis expected to make a determined effort to attend all meetings of the Board and applicable committees upon which they serve. TheIn 2016, the Board met a totalheld four meetings, and the committees held 19 meetings. Overall, Directors attended 99% of four timesthe meetings held in 2015. During 2015, no2016. No Director attended less than 75% of the aggregate of the total number of meetings of the Board and applicable committees. In 2015, Directors achieved 100% attendance at all meetings held.

Directors are encouraged to attend the Annual Meeting, although there is no formal requirement to attend. In 2015,2016, all eleven Directors attended the annual meeting of shareholders.

EXECUTIVE SESSIONS

Non-employee members of the Board have the opportunity to meet in executive session, without members of management present, either prior to the start or following the adjournment of each Board and committee meeting. During 2015,2016, the Board met in executive session on threefour occasions and the lead Director, Mr. Elfner, presided at these meetings.

COMMUNICATION WITH THE BOARD

Shareholders and other interested parties who desire to communicate with the Board, a committee of the Board, thenon-management or independent directorsDirectors as a group, or an individual member of the Board may do so in writing by sending a letter c/o Corporate Secretary, Unitil Corporation, 6 Liberty Lane West, Hampton, New Hampshire 03842-1720 or via email towhitney@unitil.com. The Company will screen such correspondence for security purposes. The Corporate Secretary will determine whether the communication relates to business matters that are relevant to the Company and, if so, promptly forward the communication to the appropriate Director(s).

NOMINATIONS

The Nominating and Governance Committee is responsible for recommending to the Board the slate of Director nominees for election by shareholders. The Board reviews and, as appropriate, approves all Director nominees prior to annual proxy material preparation. As provided in Article III of the Company’s Bylaws, any vacancy occurring in the Board, whether due to the death, resignation or other inability to serve of any Director previously elected may be filled by the affirmative vote of a majority of the remaining Directors. A Director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office.

The Nominating and Governance Committee determines the required selection criteria and qualifications of Director nominees based upon the needs of the Company at the time nominees are considered. See also the section entitledCorporate Governance and Policies of the Board—Board — Board Diversity below. Director candidates will be selected based on input from Directors, Executive Officers, and if the Committee deems appropriate, a third-party search firm. Minimum criteria for Director nominees are set forth below, as well as in the Corporate Governance Guidelines. A candidate must possess the ability to apply good business judgment and must be in a position to properly exercise his or her duties of loyalty and care. Candidates with potential conflicts of interest or who do not meet independence criteria will be identified and disqualified, as appropriate. In addition to independence criteria, the Committee will consider criteria including integrity, judgment, proven leadership capabilities, business experience, areas of expertise, availability for service, factors relating to the composition of the Board, such as size and structure, and also the Company’s policies and principles concerning diversity. The Board seeks to include diversity of backgrounds, perspectives, experience and skills among its members. The Committee will consider these criteria for nominees identified by the Committee, by other Directors, by shareholders, or through another source. When current Board members are considered for nomination for reelection, the Committee also takes into consideration their prior Board contributions, performance and meeting attendance records.

The Nominating and Governance Committee conducts a process of making a preliminary assessment of each proposed nominee based upon the resume and biographical information, an indication of the individual’s willingness to serve and other background information. This information is evaluated against the criteria set forth above as well as the specific needs of the Company at that time. Based upon a preliminary assessment of the candidate(s), those who appear best suited to meet the needs of the Company may be invited to participate in a series of interviews, which are used for further evaluation. On the basis of information collected during this process, the Committee determines which nominee(s) to recommend to the Board to submit for election at the next annual meeting of shareholders, or to fill vacancies on the Board that occur between shareholder meetings. The Committee uses the same process for evaluating all nominees, regardless of the source of the nomination. The Board may elect, at its discretion, to participate in an additional round(s) of interviews with one or all candidate(s) recommended by the Committee.

Shareholders who wish to recommend a nominee for consideration by the Nominating and Governance Committee may do so by sending the following information to the Committee c/o the Corporate Secretary at the address listed in the section entitledCorporate Governance and Policies of the Board—Communication with the Board: (1) the name of the candidate with brief biographical information and his or her resume; (2) contact information for the candidate and a document evidencing the candidate’s willingness to serve as a Director if elected; and (3) a signed statement as to the submitting shareholder’s current status as a shareholder and proof of ownership of the number of shares currently held.

No candidates for Director nominees were submitted to the Nominating and Governance Committee by any shareholder in connection with the Annual Meeting.

Additionally, nominations of persons for election to the Board may be made by any shareholder of the Company by submitting a nomination in compliance with all procedures set forth in Article IV –Nomination of Directors of the Company’s Bylaws.

No candidates for Director nominees were submitted to the Committee by any shareholder in connection with the Annual Meeting.

AlthoughQUALIFICATIONS & SKILLS OF DIRECTORS

The Board believes there are general qualifications that all Directors must exhibit, and other qualifications, attributes, skills and experience that should be represented on the Board doesas a whole, but not havenecessarily by each Director.

Qualifications Required of All Directors

The Board requires that each Director be a formal diversity policy, it does seekperson of high integrity and superior ethical character with a proven record of leadership and accomplishment in his or her chosen field. Each Director must demonstrate innovative and independent thinking, understand complex principles of business, finance, and utility regulation, and demonstrate familiarity with and respect for corporate governance requirements and practices. Directors must also comply unequivocally with the Code of Ethics, be free of conflicts or potential conflicts of interest, and, other than Mr. Schoenberger, meet the requirements of independence as set forth by the NYSE, as appropriate. Directors must be willing and able to maintain optimum Board heterogeneity through a diversitydedicate the proper amount of backgrounds, perspectives, experiencetime and skills among its members. Since 1999,effort to service on the Board as necessary to fulfill his or her responsibilities to the Company, and must not serve on more recently,than two public company boards if currently holding a position of chief executive officer or an equivalent position, or on more than three public company boards if retired.

Qualifications, Attributes, Skills and Experience to be Represented on the Board

The Board has identified particular qualifications, attributes, skills and experience that are important to be represented on the Board as a whole. The Nominating and Governance Committee, has trackedis charged with the responsibility of tracking the Directors’ professional experience and skill sets with a board inventory matrix (the “matrix”“Skills Matrix”). The matrixSkills Matrix lists each Director and his or her professional experience and skill sets in 15 categories considered by the Board and the Committee to be advantageous to the regulated utility business, as well as for a company of Unitil’s size and complexity. The Committee uses this information to assess overall Board composition and to identify existing and potential gaps in the skill sets of Directors. This information is also used for recruiting purposes when there is a vacancy, or an expected vacancy, on the Board. The matrix has been in use, and updated regularly, for more than 15 years because itSkills Matrix has proven to be a valuable tool in this assessment exercise. The Board strives to represent a meaningful cross-section of business and industry experience, education, and specialized skill sets with a group of diverse individuals who add the element of quality to the Company’s corporate governance framework, and who fairly and without compromise execute their fiduciary duty to serve the best interests of Unitil’s shareholders and all of the Company’s stakeholders.

Qualifications The Skills Matrix Summary outlines certain essential key qualifications, attributes, skills and Skillsexperience that the Board believes should be represented on the Board as a whole for optimal oversight of the Company’s business and the effective exercise of its fiduciary duty to shareholders. Directors standing for reelection are also evaluated by the Committee for

Directors must possessrecommendation to the abilityBoard using a set procedure based on the expectations of Board members, which is provided to apply good business judgment and must be in a position to properly exercise their duties of loyalty and care. Directors should also exhibit proven leadership capabilities, integrity, superior business judgment and experience with a high level of responsibility and accomplishment within their chosen fields, and must have the ability to understand complex principles of business, finance, and utility regulation. Directors must comply with the Code of Ethics, be free of conflicts or potential conflicts of interest, and meet the requirements of independence as set forth by the NYSE, as appropriate. Mr. Schoenberger, as the chairmanall members of the Board CEO and president of the Company, is not independent and is exempted from this qualification requirement. Directors must be willing and ableannually. The evaluation includes contribution to dedicate the proper amount of time to service on the Board and must not serve on more than two public company boards if currently holding a position of chief executive officer or an equivalent position, or on more than three public company boards if retired. Directors standing for reelection are also evaluated by the Nominatingcommittees served upon; unique skills, expertise and Governance Committee with regardattributes; attendance and preparedness; and willingness to their meeting participation and contribution, preparedness and attendance.continue serving. Overall continuity and chemistry of the Board are also considerations, as well as factors relating to the composition of the Board, such as size and structure, and also the diversity of backgrounds, perspectives, experience and skills among its members. Lengthy tenure on the Board is considered to be a uniquely valuable qualification in the highly regulated utility industry.

BOARD DIVERSITY

Although the Board does not have a formal diversity policy, it does seek to maintain optimum Board heterogeneity through an appropriate balance of diversity of backgrounds, perspectives, tenure, professional experience and skills among its members. The Board believes that a variety of points of view and experiences contributes to a more effective decision-making process, and considers diversity of gender, age, competencies, and professional experience in the evaluation of all candidates for Board membership. The Board also considers how the experience and skill set of each Director nominee complements those of existing Directors and fellow Director nominees to create a balanced Board with diverse viewpoints and deep expertise.

Skills Matrix Summary Utility Operations CEO/Senior Leadership Experience High Level Financial Aptitude Utility Regulation Regional Knowledge/Expertise Public Policy

TRANSACTIONS WITH RELATED PERSONS

The Audit Committee is responsible for reviewing and approving, as appropriate, all Related Person Transactions (as defined below), in accordance with its charter (the “Audit Committee Charter”). As a result, the Audit Committee has adopted procedures for such review and approval and included such procedures in the Company’s Corporate Governance Guidelines. The Company had no Related Person Transactions in 2015,2016, and there are no Related Person Transactions currently proposed for 2016.

2017. A “Related Person Transaction” means any transaction for which disclosure is required under the terms of Item 404(a) of SEC RegulationS-K involving the Company and any Related Person. A “Related Person” is defined in Item 404(a) of SEC RegulationS-K.

Transactions between the Company or one or more of its subsidiaries and one or more Related Persons (as defined below) may present risks or conflicts of interest or the appearance of conflicts of interest. The Company’s Code of Ethics requires all employees, officers and Directors, without exception, to avoid engagement in activities or relationships that conflict, or would be perceived to conflict, with the Company’s interests or adversely affect its reputation. It is understood, however, that certain relationships or transactions may arise that would be deemed acceptable and appropriate upon full disclosure of the transaction, following review and approval to ensure there is a legitimate business reason for the transaction and that the terms of the transaction are no less favorable to the Company than could be obtained from an unrelated person.

The Audit Committee will evaluate Related Person Transactions based on:

In connection with the review and approval or ratification, if appropriate, of any Related Person Transaction, the Audit Committee will consider whether the transaction will compromise the Company’s professional standards included in its Code of Ethics. In the case of any Related Person Transaction involving an outside Director or nominee for Director, the Audit Committee will also consider whether the transaction

RELATED PERSON TRANSACTIONS Review & Approval Procedure Requirements all Related Person Transactions and all material terms of the transactions shall be communicated to the Audit Committee for evaluation, including, but not limited to, the approximate dollar value of the amount involved in the transaction, and all material facts as to the Related Person’s direct or indirect interest in, or relationship to, the Related Person Transaction each Related Person Transaction, and any material amendment or modification to any Related Person Transaction, be reviewed and approved or ratified by the Audit Committee RELATED PERSON TRANSACTIONS Basis for Audit Committee Evaluation of on Transactions information provided by members of the Board during the required annual affirmation of independence, at which the members of the Audit Committee will be present applicable responses on Directors’ and Officers’ Questionnaires submitted by Directors and officers and provided to the Audit Committee by the Corporate Secretary or Internal Auditor background information on nominees for Director provided by the Nominating and Governance Committee any other applicable information provided by any Director or officer of the Company

will compromise the Director’s status as an independent Director as prescribed in the NYSE Listed Company Manual, Section 303A, Independent Directors.

Exemption Clause:

Instruction (7)(a)to Item 404(a) of SEC Regulation S-K states that: Disclosure need not be provided if the transaction is one where the rates or charges involved in the transaction are determined by competitive bid, or the transaction involves rendering of services as a common or contract carrier, or public utility, at rates or charges fixed in conformity with law or governmental authority.

Applicable Definitions:

The procedures followed by the Audit Committee to evaluate transactions with Related Persons are also available in the Corporate Governance portion of the Investor Relations section of the Company’s website atwww.unitil.com/investors.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The subsection entitledSection 16(a) Beneficial Ownership Reporting Compliance within theShare Ownership section of this proxy statement is incorporated herein by reference.

COMMITTEES OF THE BOARD

The Board has the following standing committees: Audit Committee; Compensation Committee; Executive Committee; and Nominating and Governance Committee. The tables below provide a summary of each committee with respect to membership and primary responsibilities.

Audit Committee

Committee Members		Robert V. Antonucci		Edward F. Godfrey		Michael B. Green◆		David A. Whiteley
Independent		∎		∎		∎		∎
Financial Expert		∎		∎		∎
Meetings in 2016		4		4		4		4
Latest Charter Review		October 18, 2016
Primary Charter Directives		To provide independent and objective oversight of the Company’s accounting functions, internal controls and financial reporting
		Appointment, compensation and oversight of the work of the Company’s independent registered public accounting firm

Committee Chair◆

The Audit Committee is a separately-designated standing audit committee established in accordance with section 3(a)(58)(A) of the Exchange Act. Each member of the Audit Committee is financially literate, knowledgeable and qualified to review financial statements. The Audit Committee operates under a written charter, which it reviews annually, and adopts amendments, if necessary, to reflect changes governing financial reporting and accounting requirements or its responsibilities. The Audit Committee Report, which appears in the section entitledAudit Matters, more fully describes the activities and responsibilities of the Committee.

Compensation Committee

Committee Members		David P. Brownell		Lisa Crutchfield		Eben S. Moulton◆		Sarah P. Voll
Independent		∎		∎		∎		∎
Meetings in 2016		7		7		7		7
Latest Charter Review		October 19, 2016
Primary Charter Directives		To establish objectives and interpret the terms of the Company’s compensation policies for base salary, incentive compensation, equity compensation, and benefits programs
		Annual Review of CEO performance (jointly with the Executive Committee)
		Approval of executive-level base salaries and approval and recommendation to the Board of base salaries for Named Executive Officers
		Administration of merit, incentive, and commission compensation plans for all appropriate personnel
		Review and approval of annual performance measures and approval of annual incentive compensation plan awards

Committee Chair◆

The Compensation Committee operates under a written charter, which it reviews annually and, as appropriate, amends to reflect changes in its responsibilities. The specific activities and responsibilities of the Compensation Committee are described in greater detail in the section entitled Compensation Committee Operations.

Executive Committee

Committee Members		Albert H. Elfner, III ◆		Edward F. Godfrey		Eben S. Moulton		M. Brian O’Shaughnessy		Robert G. Schoenberger
Independent		∎		∎		∎		∎
Meetings in 2016		4		4		4		4		4
Latest Charter Review		October 19, 2016
Primary Charter Directives		To act on behalf of the Board when necessary between scheduled Board meetings
		To assess key business risks and implement appropriate risk management policies, practices and plans to mitigate such risks to the Company
		Annual Review of CEO performance (jointly with the Compensation Committee)

Committee Chair◆

The Executive Committee operates under a written charter, which it reviews annually and, as appropriate, amends to reflect changes in its responsibilities.

Nominating & Governance Committee

Committee Members		David P. Brownell◆		Albert H. Elfner, III		M. Brian O’Shaughnessy		David A. Whiteley
Independent		∎		∎		∎		∎
Meetings in 2016		4		4		4		4
Latest Charter Review		October 19, 2016
Primary Charter Directives		The review and oversight of corporate governance standards
		To coordinate suggestions or searches for potential nominees for Board members and to review and evaluate qualifications of potential Board members
		To recommend to the Board nominees for vacancies occurring from time to time on the Board
		To review Board member performance prior to recommendation for nomination to stand for election to an additional term
		The annual review and evaluation of Directors’ compensation and recommendation of any changes to the Board

Committee Chair◆

The Nominating and Governance Committee operates under a written charter, which it reviews annually and, as appropriate, amends to reflect changes in its responsibilities.

All Committees

The existence and activities of all committees of the Board do not alter the traditional roles and responsibilities of the Company’s management. All committees may delegate authority to individuals or subcommittees when it deems appropriate. However, in delegating authority, a committee shall not be absolved from the responsibilities designated under the terms of its respective charter. All committees shall undertake any other action or exercise such other powers, authority, duties and responsibilities as necessary or appropriate to the discharge of the duties and responsibilities set forth in its charter or the Company’s Bylaws, or otherwise required by the listing standards of the NYSE or other applicable laws, rules or regulations, or as shall otherwise be determined by or assigned by the Board.

The charters for each of the standing committees are available in the Corporate Governance portion of the Investor Relations section of the Company’s website atwww.unitil.com/investors, or in print to any shareholder or other interested party, free of charge upon request to the Office of the Secretary, Unitil Corporation, 6 Liberty Lane West, Hampton, NH 03842-1720; or toInvestorRelations@unitil.com; or by calling toll free800-999-6501.

Compensation Committee OperationsAUDIT MATTERS

AUDIT COMMITTEE REPORT

The following report is submitted by the Audit Committee of Unitil Corporation with respect to the Company’s audited financial statements for the fiscal year ended December 31, 2016.

In discharging its oversight responsibility regarding the audit process, the Audit Committee has discussed with Deloitte & Touche LLP (“Deloitte”), the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2016, the matters required to be discussed by Auditing Standard No. 1301. In addition, the Committee has received the written disclosures and the letter from Deloitte required by applicable requirements of the PCAOB regarding Deloitte’s communications with the Committee concerning independence and has discussed with Deloitte the firm’s independence with respect to the Company.

During 2016, the Audit Committee members received the Company’s quarterly financial information for review and comment prior to the filing of each of the Company’s Forms10-Q with the SEC. In fulfilling its responsibilities relating to the financial statements, the Committee also reviewed and discussed the Company’s significant accounting policies and the audited financial statements of the Company for the fiscal year ended December 31, 2016 with management and Deloitte. Based on the review and discussions with management and Deloitte, the Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 2016, for filing with the SEC.

Audit Committee Members

Dr. Robert V. Antonucci, Edward F. Godfrey, Michael B. Green (chairman), and David A. Whiteley

PRINCIPAL ACCOUNTANT FEES & SERVICES

The following table presents fees for professional services rendered by Deloitte, the Company’s independent registered public accounting firm, for the fiscal years ended December 31, 2016 and 2015.

Audit Fees

In 2016 and 2015, this category includes fees incurred for professional services rendered by Deloitte for reviewing the quarterly financial statements included in the Company’s Quarterly Reports on Form10-Q, auditing the Company’s annual financial statements included in the Company’s Annual Report on Form10-K, and auditing the Company’s internal control over financial reporting.

Audit-Related Fees

In 2016 and 2015, Deloitte did not perform any audit-related services.

Tax Fees

In 2016 and 2015, Deloitte did not perform any tax services.

All Other Fees

In 2016 and 2015, Deloitte did not perform any services that are not included in the above categories.

AUDIT COMMITTEEPRE-APPROVAL POLICY

The Audit Committee has adopted a formal policy concerning approval of audit andnon-audit services to be provided by the independent registered public accounting firm engaged to audit the Company’s consolidated financial statements. The policy requires that all services to be provided by the independent registered public accounting firm, including audit services and permitted audit-related andnon-audit services, must bepre-approved by the Committee. The Committeepre-approved all audit, audit-related, tax and all other services provided by Deloitte during fiscal 2016 and 2015.

Fiscal 2016 Fiscal 2015 Audit Fees $692,000 $668,500 Audit-Related Fees $0 $0 Tax Fees $0 $0 All Other Fees $0 $0 Total Fees $692,000 $668,500

COMPENSATION

COMPENSATION COMMITTEE OPERATIONS

The Compensation Committee is appointed annually by the Board and is responsible for oversight of the executive compensation program. The Committee has overall authority to establish goals and objectives and to interpret the terms of the Company’s compensation policies, including base salary, incentive compensation, equity compensation, sales commissions, and benefits programs. The Committee discharges its oversight responsibilities by carrying out the specific functions outlined in its charter (the “Compensation Committee Charter”). See the section entitledCompensation of Named Executive Officers—Officers - Compensation of Directorsfor information on the Nominating and Governance Committee’s work regarding directors’Directors’ compensation.

The Compensation Committee has the authority to delegate some of its responsibilities to individuals or subcommittees of the Committee’s choice. However, such delegation does not, and will not, absolve the Committee from the responsibilities that it bears under the terms of the Compensation Committee Charter.

The Compensation Committee has the authority to invite Executive Officers, members of management or other guests to attend its meetings, to perform research, or to provide relevant information or recommendations. At the Committee’s request, Mr. Schoenberger and Mr. Long serve the Committee in a consultative capacity, providing data and analytical support, as well as management perspective and recommendations relative to employee compensation and benefits, including executive compensation. Mr. Long is excluded from deliberations and decisions regarding Executive Officer compensation. Mr. Schoenberger participates in the discussions and decisions regarding salaries and incentive compensation for the Executive Officers of the Company reporting directly to him. Mr. Schoenberger is excluded from deliberations and decisions regarding his own salary and incentive compensation.

The Compensation Committee also has the authority to retain or obtain the advice of outside counsel, compensation consultants or other advisors to advise the Committee as it deems appropriate or necessary in its sole discretion. The Committee is directly responsible for the appointment, retention terms (including compensation), and oversight of the work of any adviser it retains. Prior to retaining or obtaining advice from an adviser, the Committee will consider factors relevant to the adviser’s independence from management to the extent required by the NYSE listing standards.

Since 2009, the Compensation Committee has regularly engaged a compensation consultant, Willis Towers Watson (formerly known as Towers Watson)(“Willis Towers”), to provide the Committee with compensation study data, including data from selected peer companies and compensation marketplace survey analysis.analysis, as well as to provide various recommendations based on study findings and industry trends for the Committee’s consideration. Willis Towers is engaged by and reports directly to the Compensation Committee. Willis Towers receives compensation only for services related to executive compensation, employee benefits and general compensation issues, and neither it nor any affiliated company provides any other services to the Company.

In 2014, the Compensation Committee engaged Willis Towers Watson to prepare a comprehensive compensation analysis (the “2014 Compensation Analysis”), which included an in depth study of chief executive officer compensation, salary survey data for comparable industry executives and middle management, and benefits. The Compensation Committee used the information in the 2014 Compensation Analysis for decisions concerning executive compensation for the 2015 compensation year. The Committee also considered and discussed various recommendations from Willis Towers Watson based on study findings and industry trends. The 2014 Compensation Analysis and the Committee’s use of the 2014 Compensation Analysis are described in greater detail in the section entitledCompensation Discussion and Analysis.

In 2015, the Compensation Committee again engaged Willis Towers Watson to assess the competitiveness of the compensation of the Named Executive Officers (the “2015 Assessment”) using the 2014 Compensation Analysis as a foundation with updated information from published compensation surveys, including base salary, total cash compensation (base plus annual incentives), and total direct compensation (base plus annual incentives plus long-term incentives). The Committee assessed the competitiveness of each Named Executive Officer’s compensation in the context of market practices and Unitil’s compensation philosophy, which is to target the national market median, or 50^th percentile, of the compensation marketplace in the published compensation surveys. The Committee also used information from 2015 proxy statements of the Company’s utility company peer group, at the 25^th percentile target, as a secondary source to assess CEO compensation competitiveness.

Willis Towers Watson used market data from two sources for the 2015 Assessment, including:

1)

Compensation Data from Published Compensation Surveys. Willis Towers Watson obtained compensation data from published compensation surveys focused on comparably sized organizations in the utility sector and general industry sector (for “cross industry” positions). The data were size-adjusted based on revenue, employee regression and/or scope parameters. Because the compensation surveys are confidential, the data did not indicate survey participants by company name.

2)

Compensation Data from Proxy Filings. Willis Towers Watson obtained chief executive officer compensation data from publicly available proxy filings for a selected group of 15 publicly traded utility companies1 (the “2015 Peer Group”) with annual revenues between $86 million and $1.6 billion.

The Compensation Committee used the information from the 2015 Assessment as a reference point, or benchmark, upon which to base its compensation decisions for Named Executive Officers, including the CEO, for the 2016 compensation year.

In 2015, the Company incurred total expenses of $42,353 for services rendered by Willis Towers Watson. The services were approved by the2014 Compensation Committee as part of Willis Towers Watson’s 2015 engagement.

In addition, the Company requested and received information from Willis Towers Watson to assist the committee in determining whether its work raised any conflict of interest. Based on the responses provided by Willis Towers Watson in its completed Conflict of Interest Questionnaire, there were no conflicts of interest in 2015.

1

The 2015 selected group consists of ALLETE, Inc., Black Hills Corp., Chesapeake Utilities Corp., Delta Natural Gas Company, Inc., El Paso Electric Company, Empire District Electric Company, Idacorp, Inc., ITC Holdings Corp., MGE Energy, Inc., Northwest Natural Gas Company, Northwestern Corp., Otter Tail Corp., PNM Resources, Inc., South Jersey Industries, Inc., and UIL Holdings Corp.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s Executive Officers, Directors, and persons who own more than ten percent of a registered class of the Company’s equity securities to file certain reports of ownership and changes in share ownership with the SECAnalysis and the NYSE. Based upon its review of such forms that were filed in 2015 and written representations from certain reporting persons that such forms were not required to be filed by those persons for the reporting year 2015, the Company believes that all filing requirements applicable to its officers and Directors during 2015 and through February 2016, were met, with the exception that Mr. Green failed to timely file one report relating to one transaction with respect to the acquisition of 355 shares of Company common stock on May 22, 2015. Mr. Green filed the Form 4 reporting this transaction on June 4, 2015.

Committees of the Board

The Board has the following standing committees: Audit Committee; Compensation Committee; Executive Committee; and Nominating and Governance Committee. Each of these committees has a formal written charter. The Corporate Governance Guidelines,Assessment as well as the charters for eachCommittee’s use of the standing committees,2014 Compensation Analysis and 2015 Assessment are available for review on the Corporate Governance page of the Investor Relations section of the Company’s website atwww.unitil.com/investors, and are availabledescribed in print to any shareholder or other interested party, free of charge upon request to the Corporate Secretary at 1-800-999-6501 or at the address listedgreater detail in the section entitledInformation aboutCompensation Discussion and Analysis.

In 2016, in order to prudently manage outside consulting expenses, the Annual Meeting.Committee decided to forego a year of special consulting work related to executive compensation, and to instead simply utilize the existing compensation programs which were previously found to be reasonable and competitive in design and operation. The following table shows the chair and the otherCommittee decided to next engage Willis Towers in a review of executive compensation during 2017.

COMPENSATION COMMITTEE INTERLOCKS & INSIDER PARTICIPATION

The current members of each standing committee.

Committee Membership:
Name		Audit Committee		the Compensation Committee		Executive Committee		Nominating & Governance Committee
Robert V. Antonucci		p
David P. Brownell				p				p¨
Lisa Crutchfield				p
Albert H. Elfner, III						p¨		p
Edward F. Godfrey		p				p
Michael B. Green		p¨
Eben S. Moulton				p¨		p
M. Brian O’Shaughnessy						p		p
Robert G. Schoenberger						p
Sarah P. Voll				p
David A. Whiteley		p						p
Committee Memberp
Committee Chair¨

Audit Committee

The Audit Committee is a separately-designated standing audit committee established in accordance with section 3(a)(58)(A)are not current or former officers or employees of the Exchange Act. EachCompany. No member of the Committee is nothas any relationship requiring disclosure under Item 404 of RegulationS-K, Transactions with Related Persons. In addition, no Executive Officer of the Company serves on the board of directors or compensation committee of another company where an executive officer of the Companyother company also serves on the Board or Compensation Committee.

RISK AND BROAD-BASED COMPENSATION PROGRAMS

After review and is independent as defined by SEC regulations and in the NYSE Listed Company Manual. The Board has confirmed that Dr. Antonucci, Mr. Godfrey and Mr. Green are “Audit Committee Financial Experts,” as defined by the rules promulgated by the SEC. The Committee held four meetings in 2015 for the purpose of discharging its responsibilities in accordance with the Audit Committee Charter. In accordance with the Audit Committee Charter, the Committee is responsible for providing independent and objective oversight of the Company’s accounting functions, internal controls and financial reporting. The Committee is also directly responsible for the appointment, compensation and oversight of the work of the Company’s independent registered public accounting firm. Annually, the Committee reviews the Audit Committee Charter and adopts amendments, if necessary, to reflect changes governing financial reporting and accounting requirements or its responsibilities. The Audit Committee Charter was last reviewed and ratified on October 20, 2015. The Audit Committee Charter is available in the Corporate Governance portion of the Investor Relations section of the Company’s website atwww.unitil.com/investors. The Audit Committee Report, which appears in the section entitledAudit Committee Report, more fully describes the activities and responsibilities of the Committee.

Compensation Committee

Each member of the Compensation Committee is independent as defined in the NYSE Listed Company Manual. The Committee held six meetings in 2015. The Committee is responsible for establishing objectives and interpreting the termsevaluation of the Company’s compensation policies and practices, including the annual incentive award performance metrics, variable andnon-variable pay mix, and limitednon-performance payouts, the Compensation Committee determined, and management agreed, that the risks arising from the Company’s compensation policies and practices are not likely to have a material adverse effect on the Company because (a) the Company’s compensation program is designed to be balanced and not motivate imprudent or excessive risk-taking by Executive Officers or other employees, (b) the Company does not use incentives that encourage short-term, high-risk strategies at the expense of long-term performance and value, (c) the Compensation Committee has significant discretion in its determination of incentive

compensation awards, (d) the Compensation Committee considers distinct quantitative factors with regard to base salary, incentive compensation, equity compensation, and benefits programs, as well as approval of executive-level base salaries and approval and recommendation to the Board of base salaries for Unitil’s Named Executive Officers. The Committee’s duties also include administration of merit, incentive, and commission compensation plans for all appropriate personnel, the review and approval of annual performance measures and approval of annual incentive compensation plan awards. The Committee is also responsible for the annual review and approval of the Compensation Discussion and Analysis contained in the Company’s proxy statement. The Committee operates under(e) the Compensation Committee Charter, which it reviews annuallyconsiders qualitative factors, such as the difficulty of achieving goals and as appropriate, amendschallenges faced during the year, to reflect changes in its responsibilities. The Compensation Committee Charter was last reviewedencourage employees and ratified on October 21, 2015. The Compensation Committee Charter is available in the Corporate Governance portion of the Investor Relations sectionExecutive Officers to consider and balance all aspects of the Company’s website atwww.unitil.com/investors.Strategic Plan, both short- and long-term, and (f) the variable andnon-variable

Executive Committee

The pay mix is proportionally weighted for Executive Committee held four meetings in 2015. With the exception of Mr. Schoenberger,Officers and all Committee members are independent as defined in the NYSE Listed Company Manual. The Committee’s responsibilities are to act on behalf of the Board when necessary between scheduled Board meetings; to assess key business risks and implement appropriate risk management policies, practices and plans to mitigate such risks to the Company; and to review the CEO’s performance. The Committee operates under a written charter (the “Executive Committee Charter”), which it reviews annually and, as appropriate, amends to reflect changes in its responsibilities. The Executive Committee Charter was last reviewed and amended on October 21, 2015. The Executive Committee Charter is available in the Corporate Governance portion of the Investor Relations section of the Company’s website atwww.unitil.com/investors.

Nominating and Governance Committee

The Nominating and Governance Committee held three meetings in 2015. Each member of the Committee is independent as defined in the NYSE Listed Company Manual. The responsibilities of the Committee are to coordinate suggestions or searches for potential nominees for Board members, to review and evaluate qualifications of potential Board members, to recommend to the Board nominees for vacancies occurring from time to time on the Board, and to review Board member performance prior to recommendation for nomination to stand for election to an additional term. The Committee’s duties also include the annual review and evaluation of Directors’ compensation and the review and oversight of corporate governance standards. The Committee operates under the Nominating and Governance Committee Charter, which it reviews annually and, as appropriate, amends to reflect changes in its responsibilities. The Nominating and Governance Committee Charter was last reviewed and amended on October 21, 2015. The Nominating and Governance Committee Charter is available in the Corporate Governance portion of the Investor Relations section of the Company’s website atwww.unitil.com/investors.employees.

Audit Committee Report

COMPENSATION DISCUSSION AND ANALYSIS

The following report is submitted by the Audit Committee of Unitil Corporation with respect to the Company’s audited financial statements for the fiscal year ended December 31, 2015.Introduction

 

In discharging its oversight responsibility regarding the audit process, the Audit Committee has discussed with Deloitte & Touche LLP (“Deloitte”), the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2015, the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended, as adopted by the Public Company Accounting Oversight Board (“PCAOB”) in Rule 3200T. In addition, the Committee has received the written disclosures and the letter from Deloitte required by applicable requirements of the PCAOB regarding Deloitte’s communications with the Committee concerning independence and has discussed with Deloitte the firm’s independence with respect to the Company.

During 2015, the Audit Committee members received the Company’s quarterly financial information for review and comment prior to the filing of each of the Company’s Forms 10-Q with the SEC. In fulfilling its responsibilities relating to the financial statements, the Committee also reviewed and discussed the Company’s significant accounting policies and the audited financial statements of2016, the Company continued to show strong operating and financial results, which have translated into greater returns for the fiscal year ended December 31, 2015 with management and Deloitte. Based on the review and discussions with management and Deloitte, the Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015, for filing with the SEC.

Audit Committee Members

Dr. Robert V. Antonucci, Edward F. Godfrey, Michael B. Green (chairman), and David A. Whiteley

Principal Accountant Fees and Services

The following table presents fees for professional services rendered by Deloitte, the Company’s independent registered public accounting firm, for the fiscal years ended December 31, 2015 and 2014.

		Fiscal 2015				Fiscal 2014
Audit Fees		$	668,500			$	630,000
Audit-Related Fees		$	0			$	0
Tax Fees		$	0			$	0
All Other Fees		$	0			$	0
Total Fees		$	668,500			$	630,000

Audit Fees:

In 2015 and 2014, this category includes fees incurred for professional services rendered by Deloitte for reviewing the quarterly financial statements included in the Company’s Quarterly Reports on Form 10-Q, auditing the Company’s annual financial statements included in the Company’s Annual Report on Form 10-K, and auditing the Company’s internal control over financial reporting.

Audit-Related Fees:

In 2015 and 2014, Deloitte did not perform any audit-related services.

Tax Fees:

In 2015 and 2014, Deloitte did not perform any tax services.

All Other Fees:

In 2015 and 2014, Deloitte did not perform any services thatshareholders. Selected highlights of 2016 are not included in the above categories.outlined below.

Audit Committee Pre-Approval Policy

The Audit Committee has adopted a formal policy concerning approval of audit and non-audit services to be provided by the independent registered public accounting firm engaged to audit the Company’s consolidated financial statements. The policy requires that all services to be provided by the independent registered public accounting firm, including audit services and permitted audit-related and non-audit services, must be pre-approved by the Committee. The Committee pre-approved all audit, audit-related, tax and all other services provided by Deloitte during fiscal 2015 and 2014.

Compensation Discussion and Analysis

Introduction

 

In 2015, the Company continued to show strong operating and financial results, which have translated into greater returns for shareholders. Selected highlights of 2015 are outlined below. •   Net income grew to $26.3$27.1 million in 2015,2016, an increase of $1.6 million3.0% compared to 2014.2015. Earnings per share grew to $1.89$1.94 per share, an increase of $0.10 per share2.6% compared to 2014.2015. Unitil’s financial results have continued to improve notably over the past several years, with net income growing at an annual rate of 7.9% since 2013, and EPS growing at an annual rate of 7.3% over the same period. The positive financial results are largely driven by continued natural gas customer and sales growth, higher investment in gas and electric utility rate base, a successful regulatory agenda, and cost management. Again in 2016, Unitil achieved outstanding gas safety, as well as the best electric reliability in		Comparative Five-Year Cumulative Total Returns(1) (1)     Unitil data provided by
the Edison Electric Institute. S&P 500Company’s history. Distribution cost per customer was among the lowest for both gas and S&P 500 Utility Index data provided by Standard & Poors. All data reflects reinvestment of dividends, and assumes $100 invested on December 31, 2010. electric customers as compared to peer utility companies in the northeast.

Unitil’s financial results have improved considerably over the past several years, with net income growing at an annual rate of 13% since 2012, and EPS growing at an annual rate of approximately 10% over the same period. The improved financial results are largely driven by continued natural gas customer and sales growth, gas and electric utility rate base investments, and a successful regulatory agenda.

Unitil made a record $104 million in capital investments. To match this investment growth, the Company has benefitted from a constructive regulatory environment with nearly $60 million of rate relief awarded since 2010.

Unitil achieved outstanding gas safety and electric reliability, and its distribution cost per customer was among the lowest for both gas and electric customers as compared to peer utility companies in the northeast.

For the five-year period ended December 31, 2015,2016, Unitil’s total shareholder return (“TSR”) was 99%98%, a return that outperformed the S&P 500 IndexCompany’s peer group at 81% and the S&P Utility Index at 69%64% over the same period. Of the 4644 investor-owned utilities that appear in the Edison Electric Institute’s Utility Index, Unitil’s TSR is in the top 1510 for the one-, three- and five-year periodsone-year period ended December 31, 2015.2016.

Unitil’s annual common stock dividend of $1.40$1.42 per share in 2016 provided a dividend yield of approximately 4%3.1%, based on the closing stock price of $35.88$45.34 per share on December 31, 2015.30, 2016. Unitil has paid an annual common stock dividend every year since trading on the open market began in 1984. In addition, on January 26, 2016,25, 2017, the Board of Directors voted to increase the annual dividend to $1.42$1.44 per share.

Compensation Philosophy and Administration

Comparative Five-Year Cumulative Total Returns (1) (1) Unitil data provided by the Edison Electric Institute. S&P 500 S&P 500 Utility Index data provided by standard & Poor’s. The chart above shows how a $100 investment in the Company’s Common Stock on December 31, 2011 would have grown to $198 on December 31, 2016, with dividends reinvested quarterly. The chart also compares the total shareholder return on the Company’s common stock to the same investment in the S&P 500 Index and the Company’s peer group, defined as the S&P Utility Index, over the same period, with dividends reinvested quarterly.

Compensation Philosophy and Administration

 

The Compensation Committee is responsible for oversight of the executive compensation program. The Company,Committee, the Board and the CommitteeCompany recognize the value and importance of sound principles for the development and administration of competitive compensation and benefit programs. The Company believes that its executive compensation program (i) is instrumental in the achievement of its short-term and long-term strategic and business objectives, (ii) provides appropriate rewards for the fulfillment of strong operational and financial performance and (iii) provides appropriate rewards for practicing the Company’s core values and principles, which creates lasting value for shareholders and other stakeholders.

The Compensation Committee maintainsutilizes a set of guiding principles for setting executive compensation, which are discussed below. Additional information concerning the processes and operational procedures followed by the Committee can be found in the section entitledCorporate Governance and Policies of the Board— Compensation—Compensation Committee Operations.

Compensation Policy & Process

 

Compensation Policy and Process

The principal objective of Unitil’s executive compensation program is to attract, motivate, retain and reward highly qualified personsemployees who are committed to the achievement of solid financial performance, outstanding service to customers, and excellence in the management of the Company’s assets. It is the Company’s belief that a strong sense of teamwork and shared responsibility are vital components in the achievement of strong performance. The Company’s incentive compensation reflects and supports this philosophy with an appropriate balance of both financial and operational goals that apply to the entire management team. See the section entitledCompensation Discussion and Analysis –Elements of Compensation for a discussion of the specific goals set, and results achieved, for 2015.2016. The Company also believes that retention of talented and dedicated key executives will help ensure continued focus on the achievement of long-term growth in shareholder value and provide significant benefit to all of the Company’s stakeholders, including shareholders, customers and employees.

The guiding principles utilized by the Compensation Committee follows the following guiding principles in the design and implementation of the Company’s executive compensation program:program are outlined below.

 

•

Annual compensation (currently defined as base salary, cash incentive and equity compensation for the Company’s employees, including the Executive Officers) should generally target the national market median, which is defined as the middle, or the 50th percentile, of the compensation marketplace;

 

EXECUTIVE COMPENSATION - GUIDING PRINCIPLES Annual compensation (currently defined as base salary, cash incentive and equity compensation for the Company’s employees, including the Executive Officers) should generally target the national market median, which is defined as the middle, or the 50th percentile, of the compensation marketplace. The compensation methodology for determining base pay increases should be the same for all executive positions including the CEO and other Named Executive Officers; and

Officers. The compensation methodology should include a consistent formula for determining each component of annual compensation based on both objective and verifiable market data and on attainment of selected performance measures from the Company’s approved strategic plan (the “Strategic Plan”).

To aid in its decision-making process, concerningin both 2014 and 2015, compensation, the Compensation Committee engaged compensation consulting firm Willis Towers Watson into prepare an analysis of executive compensation.

2014: 2015 Compensation Decisions

In 2014, to prepareWillis Towers provided the Committee a comprehensive compensation analysis (the “2014 Compensation Analysis”) which included chief executive officer compensation, salary survey data for comparable industry executives and middle management, and benefits. The nature and scope of the 2014 Compensation Analysis included:

 

1)

Detailed review of compensation for executives (including Named Executive Officers) – including defining the competitive marketplace and selected peer group, and assessing the competitiveness and mix of total compensation, appropriateness of cash and equity incentive programs, and competitiveness of key benefit programs.

2)

Competitive assessment of non-union cash compensation for 92 positions covering 145 incumbents in the general employee population – including cash compensation, appropriateness of salary structure, and analysis of incentive targets.

3)

Review of broad-based benefit program design to ensure competitiveness of total compensation.

Within the scope of work identified above, the

The 2014 Compensation Analysis scope included an overall analysis of the Company’s compensation as it relates to and supports the Company’s business strategy, and detailed information on executive compensation, as well as a review of the research methodology and process, key findings with regard to base salary and incentive compensation, program assessment, and several recommendations for changes.

 

The Compensation Committee used the information in the 2014 Compensation Analysis (a) to gain a

general understanding of compensation practices, (b) as a reference point, or benchmark, upon which to base its compensation decisions and (c) to analyze each Executive Officer’s, including the CEO’s, compensation for 2015.

Willis Towers used two sources of data in the 2014 Compensation Analysis which was provided to the Committee in October 2014, (a) to gain a general understanding of compensation practices, (b) as a reference point, or benchmark, upon which to base its compensation decisions and (c) to analyze each Executive Officer’s, including the CEO’s, compensation.

In completing the 2014 Compensation Analysis, Willis Towers Watson used two sources of data for its analysisassessment of the Company’s position in the compensation marketplace:

Compensation Data from Published Compensation Surveys.

1)

Compensation Data from Published Compensation Surveys. Willis Towers Watson obtained compensation data from published compensation surveys focused on comparably sized organizations in the utility sector and general industry sector (for “cross industry” positions)2. Published survey data were size-adjusted based on revenue, employee regression and/or scope parameters. Because the surveys are confidential, the specific data selected by Willis Towers Watson did not indicate survey participants by company name.

Compensation data from published compensation surveys focused on comparably sized organizations in the utility sector and general industry sector (for “cross industry” positions)¹. Published survey data weresize-adjusted based on revenue, employee regression and/or scope parameters. Because the surveys are confidential, the specific data selected by Willis Towers did not indicate survey participants by company name.

 

2)

Compensation Data from Proxy Filings. Willis Towers Watson obtained chief executive officer compensation data from publicly available proxy filings for a selected group of 16 publicly traded utility companies with annual revenues between $81 million

21

The primary sources of data were the Willis Towers Watson CDB Executive Energy Services and General Industry Compensation Databases that provide market compensation data on over 1,000 U.S. organizations, as well as other published survey sources including Mercer’s Executive/IT/Finance, and Accounting and Legal Benchmark databases.

and $1.6 billion (the “2014 Peer Group”)3. The Compensation Committee used this data to analyze the CEO’s compensation, with the objective of ensuring that the CEO’s total compensation was reasonable, competitive and consistent with pay practices at peer companies.

 

2014 COMPENSATION ANALYSIS Nature & Scope Detailed review of compensation for executives (including Named Executive Officers) – including defining the competitive marketplace and selected peer group, and assessing the competitiveness and mix of total compensation, appropriateness of cash and equity incentive programs, and competitiveness of key benefit programs. Competitive assessment ofnon-union cash compensation for 92 positions covering 145 incumbents in the general employee population – including cash compensation, appropriateness of salary structure, and analysis of incentive targets. Review of broad-based benefit program design to ensure competitiveness of total compensation.

Compensation Data from Proxy Filings.

Compensation data was extracted from publicly available proxy filings for a selected group of 16 publicly traded utility companies with annual revenues between $81 million and $1.6 billion (the “2014 Peer Group”)². The Compensation Committee used this data to analyze only the CEO’s compensation, with the objective of ensuring that the CEO’s total compensation was reasonable, competitive and consistent with pay practices at peer companies.

For the proxy-based market analysis, Willis Towers Watson prepared a benchmarking assessment using position-specific market data to compare Unitil’s current compensation levels for the CEO with compensation levels for comparable positions in the 2014 Peer Group. Market data for each of the following total direct compensation elements were extracted for the 25^th percentile, the median (50^th percentile), and the 75^th percentile: percentile.

 

Base salary

Target annual incentive compensation

Actual total cash compensation (base salary plus most recent actual annual incentive payment)

Long-term incentive expected value granted during the most recent year

Actual total direct compensation (actual total cash plus the expected value of long-term incentives)

Due to the fact that Unitil’s size (based on fiscalyear-end 2013 revenues and number of employees) was approximately equal to the 25^th percentile of the 2014 Peer Group companies, the Compensation Committee targeted the 25^th percentile within this data set.

For the published survey-based analysis, Willis Towers Watson used benchmark matches for all positions (including the CEO) in its assessment. For all published survey-based data, market values reflected the size/scope of Unitil’s revenues and employee count through use of regression analysis (or tabular groupings where regression data were not available). Because the published survey databases cover a vast number of benchmark positions in the utility industry sector and general industry sector, Willis Towers Watson advised the Compensation Committee that the median (50^thpercentile) of the published survey-based data set approximated the 25^th percentile of the smaller proxy-based data set. The Committee determined that the median (50^th percentile) of the marketplace when using information from the published survey-based data set was an appropriate target.

The Compensation Committee used the information in the 2014 Compensation Analysis as a reference point, or benchmark, upon which to base its compensation decisions for the 2015 compensation year. The Committee also considered and discussed various recommendations from Willis Towers Watson based on study findings and industry trends.

 

In 2015, at the request of the Compensation Committee, Willis Towers Watson prepared an assessment of the competitiveness of the compensation of the Named Executive Officers (the “2015 Assessment”) using the 2014 Compensation Analysis with updated information from published compensation marketplace surveys. The Committee used the information from the 2015

32

The 2014 selected group consists of ALLETE, Inc., Black Hills Corp., Chesapeake Utilities Corp., CLECO Corp., Delta Natural Gas Company, Inc., El Paso Electric Company, Empire District Electric Company, Idacorp, Inc., ITC Holdings Corp., MGE Energy, Inc., Northwest Natural Gas Company, Northwestern Corp., Otter Tail Corp., PNM Resources, Inc., South Jersey Industries, Inc., and UIL Holdings Corp.

DIRECT COMPENSATION ELEMENTS Market Data Base salary Target annual incentive compensation Actual total cash compensation (base salary plus most recent actual annual incentive payment) Long-term incentive expected value granted during the most recent year Actual total direct compensation (actual total cash plus the expected value of long-term incentives)

2015: 2016 Compensation Decisions

In 2015, at the request of the Compensation Committee, Willis Towers prepared an assessment of the competitiveness of the compensation of the Named Executive Officers (the “2015 Assessment”) using the 2014 Compensation Analysis as a foundation with updated information from published compensation surveys, including base salary, total cash compensation (base plus annual incentives), and total direct compensation (base plus annual incentives plus long-term incentives). The Committee assessed the competitiveness of each Named Executive Officer’s compensation in the context of market practices and Unitil’s compensation philosophy, which is to target the national market median, or 50^th percentile, of the compensation marketplace in the published compensation surveys. The Committee also used information from 2015 proxy statements of the Company’s utility company peer group, at the 25^th percentile target, as a secondary source to assess CEO compensation competitiveness.

Compensation Data from Published Compensation Surveys

Compensation data from published compensation surveys focused on comparably sized organizations in the utility sector and general industry sector (for “cross industry” positions). Published survey data weresize-adjusted based on revenue, employee regression and/or scope parameters. Because the surveys are confidential, the specific data selected by Willis Towers did not indicate survey participants by company name.

Compensation Data from Proxy Filings

Chief executive officer compensation data was obtained from publicly available proxy filings for a selected group of 15 publicly traded utility companies³ (the “2015 Peer Group”) with annual revenues between $86 million and $1.6 billion.

The Committee used the information from the 2015 Assessment as a reference point, or benchmark, upon which to base its compensation decisions for Named Executive Officers, including the CEO, for the 2016 and 2017 compensation year.years. The Committee also used information from the 2015 proxy statements of the Company’s utility company peer group, at the 25^th percentile target, as a secondary source to assess CEO compensation competitiveness. The 2015 Assessment methodology andIn 2016, in order to prudently manage outside consulting expenses, the Compensation Committee’s useCommittee decided to forego a year of the 2015 Assessment are described in additional detail in the section entitledCorporate Governance and Policies of the Board—Compensation Committee Operations.

Willis Towers Watson is engaged by and reports directly to the Compensation Committee. Willis Towers Watson receives compensation only for servicesspecial consulting work related to executive compensation, employee benefitspay, and general compensation issues,to instead simply utilize the existing programs which were previously found to be reasonable and neither it nor any affiliated company provides any other servicescompetitive in design and operation. The Committee decided to the Company. The fees paid tonext engage Willis Towers Watson in 2015 are described in the section entitledCorporate Governance and Policies of the Board—Compensation Committee Operations.

Mr. Schoenberger and Mr. Long participate in meetings of the Compensation Committee at the Committee’s request. Mr. Schoenberger and Mr. Long serve the Committee in a consultative capacity, providing data and analytical support to the Committee, management perspective relative to employeereview of executive compensation and benefits, and recommendations for changes in employee benefits and compensation plans and programs for the Committee’s review, consideration and approval. From time to time, other Executive Officers are also invited to meet with the Committee to provide information, viewpoints or status reports. Mr. Long is excluded from deliberations and decisions regarding Executive Officer compensation. Mr. Schoenberger is excluded from deliberations and decisions regarding his own compensation.

during 2017.

In addition to individual performance, the Company’s performance is a critical component in the determination of how each individual executive is paid relative to the market median of the broad-based published compensation survey group, as described below. Accordingly, approximately 65.6%40.3% (for Mr. Schoenberger) and 49.5%31.5% (average for the other Named Executive Officers) of the 20152016 annual compensation was incentive compensation directly related to the Company’s performance.

Base Salary

The Company utilizes the Hay methodMethod of job evaluation, which is a job grading process developed by the Hay Group. This method results in a numeric job grade for each position that is equivalent to positions with comparable responsibilities at other companies that use this job evaluation system. The Company then sets base salary ranges for every job grade and position based upon base salary survey data provided by Willis Towers Watson.Towers. The midpoint (or middle) of the base salary range is set at the median level of the broad-based published compensation survey group when compared to similar positions at comparable companies. The minimum in the salary range is determined by multiplying the midpoint by 80%, and the maximum is determined by multiplying the midpoint by 120%. In relation to each Named Executive Officer, base salary is set within the salary range based upon individual performance relative to individual annual goals. This process is used for both executive andnon-executive positions.

Incentive Compensation – Cash Incentive

Incentive Compensation – Cash Incentive

The Company sets annual target cash incentive awards equal to the median of the broad-based published compensation survey group for the Executive Officers’ target cash incentive awards at other comparable companies based on data provided by Willis Towers Watson.Towers. The Committee also used information from the proxy statements of the Company’s peer group, at the 25^th percentile target, as a secondary source to set the CEO’s annual target cash incentive award. The Company has also developed a “balanced score card” approach to setting goals for the annual incentive awards, which includes certain goals from the Strategic Plan that represent success in financial results, electric reliability, gas safety, customer service and distribution cost per customer. The Compensation Committee approves the quantitative goals, also referred to as performance metrics, for these awards annually. See the section entitledCompensation Discussion and Analysis— Elements of Compensation for a discussion of this score card.

Incentive Compensation – Equity Compensation

The Company grants shares of restricted stock to executive participants in the Stock Plan annually. The size of the annual restricted stock award is based upon the Company’s performance, and the target award is based on market data for the median of the broad-based published compensation survey group size grant at peer group and other comparable companies, as calculated using data provided by Willis Towers Watson.Towers. The Committee also used information from the proxy statements of the Company’s peer group, at the 25^th percentile target, as a secondary source to set the CEO’s annual restricted stock award. The shares of restricted stock vest over a period of four years, and the executive must request and receive approval from either the CEO or the Company’s Chief Financial Officer (“CFO”) to sell fully vested shares.

Shareholder Advisory Vote on Executive Compensation and Frequency of Advisory Vote

Pursuant toAs required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the Company held (i) its second advisory(non-binding) shareholder vote on the compensation of the

Company’s Named Executive Officers (commonly known as a “say-on-pay”“say-on-pay” proposal), at its 2014 annual meeting of shareholders and (ii) its first shareholder vote on the frequency of suchsay-on-pay proposal, at its 2011 annual meeting of shareholders. As reported in the Company’s Form8-K, filed with the SEC on April 24, 2014, 88% of shareholders approved by advisory vote the compensation of the Company’s Named Executive Officers. The Compensation Committee considered the results of the advisory vote by shareholders on thesay-on-pay proposal presented to shareholders at the 2014 annual meeting of shareholders in its decision to make no direct changes to the Company’s executive compensation program in 2015 or 2016 as a result of the vote. Additionally, atThe Company’s thirdsay-on-pay proposal is included in this proxy statement asProposal 3: Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers.

At the 2011 annual meeting of shareholders, shareholders elected to hold asay-on-pay advisory vote every three years. The next required advisory shareholderDodd-Frank Act requires that every six years the Company provide the opportunity for shareholders to vote, on the compensation of the Company’s Named Executive Officers, as well as the next required shareholder votean advisory basis, on the frequency of(commonly known as a“say-on-frequency” proposal) that thesay-on-pay advisory vote will occur atbe presented to shareholders. The Company’s secondsay-on-frequency proposal is included in this proxy statement asProposal 4: Advisory Vote on the 2017 annual meetingFrequency of shareholders.Future Advisory Votes on Executive Compensation.

Elements of Compensation

ELEMENTS OF COMPENSATION

Base Salary

Every employee is paid a base salary. The purpose of base salary is to reward employees for the expertise and value they bring to their jobs. Base salary is determined according to the Company’s salary policy, which assigns each position a grade and a salary range. The Company sets salary ranges for every position based upon comparative salary data provided by Willis Towers Watson.Towers. The midpoint (or middle) of the salary range is set at the median level of the broad-based published compensation survey group when compared to similar positions at other comparable companies. The minimum parameter in the salary range is determined by multiplying the midpoint by 80%, and the maximum parameter is determined by multiplying the midpoint by 120%. The salary range is then used to manage each employee’s salary, and an employee’s salary within the range is based on merit. For each employee (including Named Executive Officers), base salary is set within the salary range based upon individual performance relative to individual annual goals. The elements of individual performance differ depending on the individual position, but include: quantity and quality of work; successful completion of established goals; ability to initiate creative solutions; adaptability to change; and impact on performance of the Company. The salaries of all employees (including the Named Executive Officers) are reviewed annually, as well as at the time of a promotion or change in responsibilities.

Each position in the Company (including all Executive Officer positions) has a job description that outlines the accountabilities and competencies required. Merit increases are considered at the end of the year based on the evaluation of each person’s performance as related to each accountability listed in the individual job description, as well as the achievement of individual goals established at the beginning of the year. Merit increases generally are effective as of January 1 of each year. Merit increases also are one of the methods used to reach one of the Company’s competitive compensation guiding principles, which is to ensure that employees are paid at or near the market median of the broad-based published compensation survey group. Merit increases may also be adjusted by the Compensation Committee to reflect the market value of a job when compared to similar positions at other companies within the Company’s peer group, as recommended by Willis Towers Watson.

Each year, Mr. Schoenberger provides an evaluation of the performance of the Company to the Compensation Committee and the Executive Committee, and discusses this evaluation with both committees in a joint meeting. The Compensation Committee and the Executive Committee then meet in executive session to discuss Mr. Schoenberger’s performance in relation to the Company’s performance for the year, taking into account both the quantitative and qualitative aspects of the performance of both Mr. Schoenberger and the Company as a whole. The Compensation Committee uses this information along with market competitive salary information previously described to determine an appropriate base salary increase for Mr. Schoenberger based on both merit and market conditions. Mr. Schoenberger provides a recommendation to the Compensation Committee for base salary increases for Mr. Collin, Mr. Meissner, Mr. Black and Mr. Long. The Compensation Committee then reviews and recommends the base salaries of all of the Named Executive Officers to the full Board for discussion and approval. The recommendations are based on the performance evaluations and market information for each of the Named Executive Officers. For 2015, each Named Executive Officer received the increase set forth opposite his name in the following table.Towers.

Incentive Compensation

Named Executive Officer 2016 Base Salary Increase Mr. Schoenberger 4.6% Mr. Collin 4.6% Mr. Meissner 4.6% Mr. Black 4.8% Mr. Long 5.2%

Compensation Committee then reviews and recommends the base salaries of all of the Named Executive Officers to the full Board for discussion and approval. The recommendations are based on the performance evaluations and market information for each of the Named Executive Officers. For 2016, each Named Executive Officer received the increase set forth opposite his name in the table above.

Incentive Compensation

Management Incentive Plan—

The Unitil Corporation Management Incentive Plan (the “Management Incentive Plan”) provides annual cash incentive payments based upon the attainment of specified goals selected from the Strategic Plan. The Compensation Committee selects participants in the plan and establishes their individual target awards. All executives (including the Named Executive Officers) are participants in the Management Incentive Plan. The purpose of the Management Incentive Plan, which is consistent with the Company’s principal compensation objective, is to provide executives with significant incentives related to performance, thereby providing motivation to maximize efforts on behalf of all the Company’s stakeholders. The Management Incentive Plan is further intended to provide executives with competitive target levels of total compensation when considered with base salaries.

For the annual incentive awards, annual quantitative performance goals are established by the Compensation Committee. These goals, which relate to key performance metrics selected from the Strategic Plan, are the same for all employees (including Executive Officers), with the exception of Usource employees, to ensure that employees are focused on common bottom-line business, customer service, and operational results. (Usource employees are rewarded using performance metrics that are directly related to the growth and success of Usource, also as established by the Committee.) These goals are discussed below in the section entitledCompensation Discussion and Analysis—Elements ofIncentive Compensation—Performance Metrics and Goals For Incentive Compensation. Under the Management Incentive Plan, Executive Officers receive a cash award if the quantitative goals that are set by the Committee are met. Each Executive Officer’s Management Incentive Plan target award is established as a percentage of base

salary based on the market median of the broad-based published compensation survey group for his or her position when compared to other comparable companies, calculated using data provided by Willis Towers Watson.Towers. The Committee also used information from the proxy statements of the Company’s peer group, at the 25^th percentile target, as a secondary source to set the CEO’s Management Incentive Plan target award. The table on the following page shows the Management Incentive Plan target awards for 2015 were the following2016 as a percentage of base salary percentages for the Named Executive Officers:Officers.

Actual awards may be less than or greater than the target awards depending upon actual results achieved. In addition, the Compensation Committee has the authority to increase or decrease the annual incentive award under the Company’s incentive plans, including the Management Incentive Plan, and restricted stock awards under the Stock Plan. The Committee also has the freedom to decide to pay no award when one would otherwise be paid. The Committee has in the past exercised its discretion to both increase and decrease award payments when such calculation did not properly balance the interests of the employees and the shareholders. For awards for 2015 results, the Compensation Committee did not exercise any discretion to adjust the awards.

Second Amended and Restated 2003 Stock Plan—

The Unitil Corporation Second Amended and Restated 2003 Stock Plan (as amended, the “Stock Plan”) was initially approved by shareholders at the 2003 annual meeting of shareholders, amended and restated on March 24, 2011, and again amended and restated, effective April 19, 2012. Participation in the Stock Plan is currently limited to Directors, Executive Officers and other employees and consultants selected by the Compensation Committee. Restricted Stock and Restricted Stock Units (“RSUs”) may be issued to participants in the Stock Plan.

Restricted Stock:

Stock

Generally, in January or February of each year, the Company grants annual awards, in the form of restricted stock, to current Executive Officers and employee participants in the Stock Plan based upon the attainment of the same set of specified goals as those selected for the annual cash incentive awards discussed above. As with the annual cash incentive awards, target awards are established for each participant that generally vary based upon the job grade level of such participant’s position in the Company in accordance with survey data provided by Willis Towers Watson.Towers. The objectives of the Stock Plan, which tie back to the principal compensation objective, are to optimize profitability and growth through incentives that link the personal interests of participants to those of shareholders, to provide participants with an incentive for excellence in individual performance, to promote teamwork among participants, and to encourage stock ownership in the Company. Further, equity-based compensation ensures that Executive Officers have a continuing stake in the Company’slong-term success.

AwardsNamed Executive Officer Target Award (% of restricted stock generally vest fully over a period of four years at a rate of 25% each year subject to continued employment with the Company. Participants holding restricted stock have the same rights as all shareholders, including the right to vote the restricted stock and to collect any cash dividends paid on the restricted stock prior to vesting. Each Executive Officer’s target restricted stock award is set by the Compensation Committee based upon recommendations from Willis Towers Watson, with the goal of granting a target award with a value equal to the market median of the broad-based published compensation survey group at the time of grant. The Committee also used information from the proxy statements of the Company’s peer group, at the 25^th percentile target, as a secondary source to set the CEO’s target award. The values of the target restricted stock awards based on 2015 performance were the following:Base Salary) Mr. Schoenberger 65% Mr. Collin 45% Mr. Meissner 45% Mr. Black 35% Mr. Long 35%

The value of each possible award extends from a minimum of 50% of the target restricted stock award amount to a maximum of 150% of the target award amount. This award is then reduced for anticipated income taxes and Medicare taxes, with Stock Plan participants receiving the shares net of such taxes, subject to the vesting schedule. As the shares vest, they become taxable income to the participant, and the taxes, previously accounted for, are credited back to participants. This procedure reduces both the dilutive effect of the Stock Plan by granting fewer shares than would otherwise be granted, and the volatility of the Company’s stock in the market by eliminating stock sales that would otherwise be completed to pay personal income taxes. Specifically, the Compensation Committee’s actions in connection with the annual grant of restricted stock include:

	1)	set the amount of the stock award, with the value of the target
		The net restricted stock award equalprovides a market competitive award while minimizing both dilution and volatility. In addition, the Committee may exercise discretion to vary the valuesize of the market medianrestricted stock award, ofbut chose not to do so for the broad-based published compensation survey group;restricted stock awards for 2016 performance.

The net restricted stock award provides a market competitive award while minimizing both dilution and volatility. In addition, the Committee may exercise discretion to vary the size of the restricted stock award, but chose not to do so for the restricted stock awards for 2015 performance.

Incentive Compensation Performance Metrics and Goals For Incentive Compensation

The Company has two compensation plans in which the Named Executive Officers participate where performance metrics and goals are integrally and directly linked to the compensation awarded—the Management Incentive Plan and the Stock Plan.

Named Executive Officer Stock Plan Target Award Mr. Schoenberger $598,230 Mr. Collin $136,917 Mr. Meissner $136,917 Mr. Black $76,282 Mr. Long $76,282 COMPENSATION COMMITTEE PROCEDURE: Annual Grant of Restricted Stock Tax Adjustment Calculation 1: Set the dollar amount of the stock award - the value of the target restricted stock award shall be equal to the value of the market median award of the broad-based published compensation survey group 2: Subtract the federal and Medicare tax impacts of the award to get the net award value 3: Divide the net award value by the current stock price to calculate a net award in shares

Performance metrics and goals are recommended by the Company annually in the Strategic Plan. The Strategic Plan includes targets for each performance metric, and is reviewed and approved by the Board each year. In connection with the responsibilities outlined in the Compensation Committee Charter, key performance metrics and goals are then selected by the Compensation Committee each year, and the Committee may also consider recommendations from Willis Towers Watson.Towers. The Committee selects the target performance goals from the Strategic Plan and determines a minimum and maximum performance level for each performance metric. Additional credit, or “weight,” is not provided for performance that achieves values greater than the maximum determined by the Committee, and no credit is given for performance that fails to achieve the minimum determined by the Committee.

The table belowon the following page shows the performance metrics and goals selected by the Compensation Committee for 2015 for the 2016 annual incentive awards under the Company’s incentive plans, including the Management Incentive Plan and the Stock Plan, as well as the performance results calculated for 2015.2016.

2016 PERFORMANCE METRICS, GOALS AND RESULTS

For the “peer utility companies” referenced in the table above, actual performance is compared to a select group of utility companies that have service territory characteristics comparable to Unitil. This peer group is comprised of: Algonquin Power & Utilities Corp., Avangrid, Blackstone Gas Co., Emera, Inc., Eversource, Fortis, Inc., Gas Natural, Gaz Métro, Iberdrola USA, National Grid, Northeast Utilities, and UIL Holdings Corp.NiSource, Inc.

The Compensation Committee generally meets in late January or early February each year, following certification of the fiscal year financial results by the Company’s independent registered public accounting firm, to approve the payout of the annual cash incentive awards and to approve the annual grant of restricted stock awards under the Stock Plan.

Incentive Compensation Formulas

For each employee, including The Committee approved the Named Executive Officers, the following formula was used to calculate the individual2017 annual cash incentive award payments:awards and the annual grant of restricted stock awards under the Stock Plan on January 30, 2017.

Incentive Compensation Formulas

Plan Year Base Pay x Target Percent x Weighted Performance Factor = Incentive Payout

For each Executive Officer and employee participant in the Stock Plan, including the Named Executive Officers, the following formula was used to calculate the individual grant of the restricted stock award in any plan year:

For purposes of the restricted stock awards under the Stock Plan, the Performance Factor was determined based upon the Weighted Performance Factor as follows:shown below.

The Weighted Performance Factor, as shown in the formulas above, is the total actual quantitative performance calculation derived by multiplying each “weight” by the corresponding “factor” and adding the results. The “factor” is based upon where the actual performance results fall on the continuum of minimum—target—maximum, with “target” assigned a “factor” of 100%, “minimum” assigned a “factor” of 50%, and “maximum” assigned a “factor” of 150%. As provided in the Compensation Committee Charter, the Committee has discretion to establish policies,		Performance Factor
50% to 69%			50	%
70% to 89%			75	%
90% to 109%			100	%
110% to 129%			125	%
130% to 150%			150	%

The Weighted Performance Factor, as shown in the formulas above, is the total actual quantitative performance calculation derived by multiplying each “weight” by the corresponding “factor” and adding the results. The “factor” is based upon where the actual performance results fall on the continuum of minimum—target—maximum, with “target” assigned a “factor” of 100%, “minimum” assigned a “factor” of 50%, and “maximum” assigned a “factor” of 150%.

As provided in the Compensation Committee Charter, the Compensation Committee has discretion to establish policies, objectives, rules, and other procedures necessary for the effective operation of the Company’s compensation plans and programs. This discretion includes the authority to increase or decrease the annual cash incentive award payments under the Company’s incentive plans, including the Management Incentive

ANNUAL CASH INCENTIVE AWARD CALCULATION Plan Year Base Pay X Target Percent X Weighted Performance Factor = Incentive Cash Award Payment ANNUAL GRANT OF RETRICTED STOCK AWARD CALCULATION Target Restricted Stock Grant X Performance Factor = Actual Restricted Stock Grant WEIGHTED PERFORMANCE FACTOR PERFORMANCE FACTOR 50% to 69% 70% to 89% 90% to 109% 110% to 129% 130% to 150% 50% 75% 100% 125% 150%

Plan and the restricted stock awards under the Stock Plan. The Committee also has the freedom to decide to pay no award when one would otherwise be paid. The Committee has in the past exercised its discretion to both increase and decrease certain awards when such calculation did not properly balance the interests of the employees and the shareholders. For awards for 20152016 results, the Committee did not exercise any discretion to adjust the awards.

Other Benefits

Unitil Corporation Retirement Plan (the “Retirement Plan”)—

The Retirement Plan is a traditional Defined Benefit Pension Plan covering certain employees of Unitil and its subsidiaries. It provides retirement income benefits based upon years of service, age at retirement and final five-year average salary. The Retirement Plan is closed to new participants, effective January 1, 2010. New employees participate in an enhanced 401(k) plan instead of the Retirement Plan. In addition, at the time of closure of the Retirement Plan, existing employee participants were offered aone-time opportunity to elect to remain an active participant in the Retirement Plan, or to accept a frozen Retirement Plan benefit and move to the enhanced 401(k) Plan.

Supplemental Executive Retirement Plan (“SERP”)—

The purpose of the SERP is to provide enhanced retirement benefits to certain key executives selected by the Board in order to encourage continued service by these executives until retirement. Currently, Mr. Schoenberger, Mr. Collin, Mr. Meissner, Mr. Black and Mr. Long have been named by the Board to participate in the SERP. The SERP enhances the retirement benefits provided by the Retirement Plan by:

	1)	counting all cash compensation towards
See also the benefits formula, thereby providing a bypass toPension Benefits Table in the compensation limits imposed bysection entitledCompensation of Named Executive Officers for the Internal Revenue Service (the “IRS”);present value of the accumulated benefit for each Named Executive Officer. Change of Control Agreements The Company provides certain executives with protection from job

See also the Pension Benefits Table in the section entitledCompensation of Named Executive Officers for the present value of the accumulated benefit for each Named Executive Officer.

Change of Control Agreements— The Company provides certain executives with protection from job loss due to a change of control in the Company in the form of Change of Control Agreements (“Change of Control Agreements”). This protection is primarily provided so that the executives will make decisions and take actions that are in the best interest of shareholders and not unduly influenced by the fear of job loss. The Company maintains bothtwo-year (executed in 2001 and later) and three-year (executed before 2001) Change of Control Agreements. Mr. Schoenberger, Mr. Collin and Mr. Black have three-year Change of Control Agreements, and Mr. Meissner and Mr. Long havetwo-year Change of Control Agreements in place.

SERP ENHANCEMENT OF RETIREMENT PLAN BENEFITS •all cash compensation towards the benefits formula is counted, thereby providing a bypass to the compensation limits imposed by the Internal Revenue Service (the “IRS”); •compensation received from the annual cash incentive awards in the benefits calculation is included; and•a final three-year average of salary and annual cash incentive compensation is used to determine the benefits from the SERP.

All existing Change of Control Agreements are “double trigger” agreements, meaning that two events must occur in order for payments to be made: (i) a change of control must occur; and (ii) an adverse employment action must occur, meaning that the Company must terminate the executive’s employment other than for cause or disability or the executive must terminate his employment for good reason. Double trigger agreements were chosen to protect the shareholders from executives choosing to leave the Company as result of a change of control where there is no adverse employment action. All Change of Control Agreements were amended effective June 30, 2008, with the objective of complying with the provisions of IRS Code Section 409A (“409A Amendment”). See also the section entitledCompensation of Named Executive Officers – Potential Payments Upon Termination or Change of Control for a full description of “change of control” as defined in the Change of Control Agreements.

Employment Agreement—Agreement - Robert G. Schoenberger—

The Company entered into an employment agreement (the “Employment Agreement”) with Mr. Schoenberger, which was effective November 1, 2015 for a term of three years, with an end date of October 31, 2018. For a description of the Employment Agreement, see the sections entitledCompensation of Named Executive Officers –Employment Agreement of the Chief Executive OfficerandCompensation of Named Executive Officers –Potential Payments Upon Termination or Change of Control.

Executive Perquisites—

The Company limits the use of perquisites as a method of compensation. Mr. Schoenberger receives annual reimbursement for a club membership and is also provided with a Company automobile for both business and personal use. Please see the All Other Compensation column of the Summary Compensation Table in the section entitledCompensation of Named Executive Officers. Both of these perquisites were provided to Mr. Schoenberger pursuant to his Employment Agreement. No other perquisites are provided to Mr. Schoenberger or any Named Executive Officer.

INTERNAL REVENUE CODE SECTION 162(M)

In general, under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), the Company cannot deduct, for federal income tax purposes, compensation in excess of $1,000,000 paid to the CEO and certain Executive Officers. However, this deduction limitation does not apply to compensation that constitutes “qualified performance-based compensation” within the meaning of Section 162(m) of the Code and applicable regulations. The Compensation Committee considers the limitations on deductions imposed by Section 162(m) of the Code and the exception for “qualified performance-based compensation.” The Committee reserves its right to authorize executive compensation that may or may not be subject to the deduction limitations of Section 162(m) of the Code when it believes that such compensation is appropriate and in the best interests of the Company and its shareholders.

STOCK OWNERSHIP REQUIREMENT FOR EXECUTIVE OFFICERS

The Company does not have a formal policy requiring stock ownership by Executive Officers. One of the key objectives of the Stock Plan is to promote ownership of the Company’s stock by members of management, including Executive Officers. The Stock Plan has been successful in this objective, with approximately 99% of the restricted stock granted to date that has vested being held by Executive Officers as unrestricted common stock.

OTHER EMPLOYEE BENEFITS

Active Employee Benefits—

The Company provides a comprehensive package of employee benefits to substantially all employees. These benefits include several medical insurance plans, a dental insurance plan, a vision insurance plan, two group life insurance plans, a long-term disability insurance plan, a defined benefit pension plan, a 401(k) retirement savings plan (which includes company matching contributions), and other ancillary benefits plans and policies.

Retired Employee Benefits—

The Company provides company-paid life insurance, as well as company-subsidized medical insurance, to qualifying retirees. Fornon-union employees hired

before December 31, 2009 and retiring on or after January 1, 2010, the Company will subsidize post-retirement medical premiums at the same percentage as active employees. For employees hired after December 31, 2009, this subsidy ends when the retiree attains age 65. Post-retirement benefits for employees represented by unions are administered in accordance with the applicable collective bargaining agreement.

The current members of the Compensation Committee are Mr. Brownell, Ms. Crutchfield, Mr. Moulton, who serves as chairman, and Dr. Voll. The current members of the Compensation Committee are neither current nor former officers or employees of the Company. No member of the Committee has any relationship requiring disclosure under Item 404 of Regulation S-K, Transactions with Related Persons. In addition, no Executive Officer of the Company serves on the board of directors or compensation committee of another company where an executive officer of the other company also serves on the Board or Compensation Committee.

This report is submitted by the Compensation Committee of Unitil with respect to the review and approval of the Compensation Discussion and Analysis, which appears above.

In discharging its oversight responsibility, the Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of RegulationS-K with management, and has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement for the Annual Meeting.

Compensation Committee Members

David P. Brownell, Lisa Crutchfield, Eben S. Moulton (chairman) and Dr. Sarah P. Voll

Compensation of Named Executive Officers

COMPENSATION OF NAMED EXECUTIVE OFFICERS

Summary Compensation Table

The Summary Compensation Tabletable below shows the information specified in paragraph (c)(2) of Item 402 of RegulationS-K concerning the compensation of the CEO, the CFO and the Company’s three other most highly compensated officers for each of fiscal years 2013, 2014, 2015 and 2015.2016.