UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 24, 2023
UNITIL CORPORATION
(Exact name of registrant as specified in its charter)
New Hampshire | 1-8858 | 02-0381573 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
6 Liberty Lane West, Hampton, New Hampshire | 03842-1720 | |||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (603) 772-0775
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading | Name of each exchange of which registered | ||
Common Stock, no par value | UTL | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 | Entry into a Material Definitive Agreement |
The disclosure required by this item is included in Item 5.02 and is incorporated herein by reference.
Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers |
New Equity Compensation Practices
On January 24, 2023, the Compensation Committee (the “Compensation Committee”) of the Board of Directors of Unitil Corporation (the “Company”) approved and adopted amendments to the Company’s practices relating to the grant to the Company’s executive officers and other senior management participants (collectively, “Participants”) of restricted stock awards (the “New Equity Compensation Practices”). The New Equity Compensation Practices include:
(i) a revised form of restrictive stock agreement relating to awards of restricted shares of the Company’s common stock that vest over time (“Time Restricted Shares”); and
(iii) a form of restricted stock agreement relating to awards of restricted shares of the Company’s common stock that vest based on the satisfaction of certain performance metrics (“Performance Restricted Shares”).
As disclosed in the Company’s proxy statement dated March 29, 2022 relating to the Company’s 2022 annual meeting of shareholders, in general, the Company previously granted to Participants, on an annual basis, Time Restricted Shares that vest over a four-year period subject to continued employment. Participants were selected by the Compensation Committee. The number of such awards was based upon the Company’s achievement of key performance metrics under the Management Incentive Plan for the prior calendar year, which were approved by the Compensation Committee. Each Participant’s target restricted stock award was based on market data for the median of the broad-based published compensation survey group grant at peer group and other comparable companies minus anticipated Federal and Medicare taxes on the Participant’s award. In addition, the Company’s Chief Executive Officer’s and Chief Financial Officer’s target restricted stock award was based in part on information from the proxy statements of the Company’s peer group, at the 25th percentile target.
Under the New Equity Compensation Practices, in general, the Company will grant to its Participants, on an annual basis, (i) Time Restricted Shares and (ii) Performance Restricted Shares. Participants will continue to be selected by the Compensation Committee. The number of such awards is no longer based upon the Company’s achievement of key performance metrics under the Management Incentive Plan for the prior calendar year. Instead, the number of each Participant’s Time Restricted Shares and Performance Restricted Shares, in the aggregate (the “Total Number”), is based upon (A) (i) the midpoint of the Participant’s salary range multiplied by (ii) the Participant’s multiplier minus (B) anticipated Federal and Medicare taxes on the Participant’s award. The number of each of the Time Restricted Shares and the Performance Restricted Shares is 50% of the Total Number.
The following table summarizes the current multiplier for each Participant that is the Chief Executive Officer, the Chief Financial Officer or a named executive officer of the Company.
Name | Principal Position | Multiplier | ||||
Thomas P. Meissner, Jr. | Chairman of the Board of Directors, Chief Executive Officer and President | 135 | % | |||
Robert B. Hevert | Senior Vice President, Chief Financial Officer and Treasurer | 70 | % | |||
Todd R. Black | Senior Vice President, External Affairs and Customer Relations | 45 | % | |||
Justin Eisfeller | Vice President & Chief Technology Officer | 45 | % | |||
Christopher J. Leblanc | Vice President, Gas Operations | 45 | % |
Time Restricted Shares
Time Restricted Shares generally vest over a period of four years at a rate of 25% each year. Prior to the end of the vesting period, Time Restricted Shares are subject to forfeiture if the Participant ceases to be employed by the Company other than due to the Participant’s death, disability or retirement. During the vesting period, dividends on Time Restricted Shares generally are credited to a Participant’s account.
Performance Restricted Shares
Performance Restricted Shares generally vest after a performance period of three years based on the attainment of certain performance thresholds of certain performance goals, each as set by the Compensation Committee towards the beginning of the performance period. The Compensation Committee has chosen two performance goals for the three-year performance period ending December 31, 2025:
1. | three-year average return on common equity (the “ROE Goal”); and |
2. | three-year average growth in book value per share (the “Book Value Goal”). |
In general:
• | 25% of Performance Restricted Shares will vest if the Company attains the minimum ROE Goal; |
• | 50% of Performance Restricted Shares will vest if the Company attains the target ROE Goal; and |
• | 75% of Performance Restricted Shares will vest if the Company attains the maximum ROE Goal. |
Also, in general, an additional:
• | 25% of Performance Restricted Shares will vest if the Company attains the minimum Book Value Goal; |
• | 50% of Performance Restricted Shares will vest if the Company attains the target Book Value Goal; and |
• | 75% of Performance Restricted Shares will vest if the Company attains the maximum Book Value Goal. |
If the Company’s level of attainment of the ROE Goal or the Book Value Goal exceeds the minimum but is less than the target, then the amount of vesting or forfeiture will be determined on a straight-line basis between the minimum and the target. If the level of achievement of the ROE Goal or the Book Value Goal exceeds the target but is less than the maximum, then the amount of vesting or forfeiture will be determined on a straight-line basis between the target and the maximum.
Furthermore, if the number of a Participant’s Performance Restricted Shares that would vest exceeds 100% of such Participant’s Performance Restricted Shares, then the Company will issue additional shares (“Additional Shares”) to the Participant in an amount equal to the vesting percentage in excess of 100% multiplied by the number of the Participant’s Performance Restricted Shares.
Prior to the end of the performance period, the Performance Restricted Shares are subject to forfeiture if the Participant ceases to be employed by the Company other than due to the Participant’s death, disability or retirement. If a Participant dies, becomes disabled, or retires during the performance period, then vesting will be pro-rated based on the number of months of service before the Participant’s death, disability, or retirement during the performance period.
During the performance period, dividends on Performance Restricted Shares generally are credited to a Participant’s account. No dividends on Additional Shares will be credited to a Participant’s account until the Company issues the Additional Shares to the Participant.
Summary of Time Restricted Shares and Performance Restricted Shares
The following table summarizes certain terms of the Time Restricted Shares and the Performance Restricted Shares.
Award | Number of | Vesting Description | Performance Threshold (1) | Amount of Award Vested (2) | ||||
Time Restricted Shares | 50% of Total Number | Award vests over a four-year period at a rate of 25% per year, generally subject to continued employment. | n/a | Award vests over a four-year period at a rate of 25% per year, generally subject to continued employment. | ||||
Performance Restricted Shares | 50% of Total Number | 50% of Performance Restricted Shares will vest if Company achieves its target ROE Goal | minimum | 25% vesting of Performance Restricted Shares | ||||
target | 50% vesting of Performance Restricted Shares | |||||||
maximum | 75% vesting of Performance Restricted Shares | |||||||
50% of Performance Restricted Shares will vest if Company achieves its target Book Value Goal | minimum | 25% vesting of Performance Restricted Shares | ||||||
target | 50% vesting of Performance Restricted Shares | |||||||
maximum | 75% vesting of Performance Restricted Shares |
(1) | If the Company’s level of attainment of the ROE Goal or the Book Value Goal exceeds the minimum but is less than the target, then the amount of vesting or forfeiture will be determined on a straight-line basis between the minimum and the target. If the level of achievement of the ROE Goal or the Book Value Goal exceeds the target but is less than the maximum, then the amount of vesting or forfeiture will be determined on a straight-line basis between the target and the maximum. |
(2) | If the number of a Participant’s Performance Restricted Shares that would vest exceeds 100% of such Participant’s Performance Restricted Shares, then the Company will issue Additional Shares to the Participant in an amount equal to the vesting percentage in excess of 100% multiplied by the number of the Participant’s Performance Restricted Shares |
The foregoing description of Time Restricted Shares is qualified in its entirety by reference to the full text of the form of Restricted Stock Agreement (Time Vesting), which is filed herewith as Exhibit 10.1 to this Current Report on Form 8-K and (ii) the Company’s Second Amended and Restated 2003 Stock Plan, which is incorporated by reference herewith as Exhibit 10.3 to this Current Report on Form 8-K. The foregoing description of Performance Restricted Shares is qualified in its entirety by reference to the full text of the form of Restricted Stock Agreement (Performance Vesting), which is filed herewith as Exhibit 10.2 to this Current Report on Form 8-K and (ii) the Company’s Second Amended and Restated 2003 Stock Plan, which is incorporated by reference herewith as Exhibit 10.3 to this Current Report on Form 8-K.
Grants of Time Restricted Shares and Performance Restricted Shares
On January 24, 2023, the Company granted Time Restricted Shares and Performance Restricted Shares to the Chief Executive Officer, the Chief Financial Officer and the named executive officers of the Company as follows:
Name | Principal Position | Amount of Time Restricted Shares | Amount of Performance Restricted Shares | |||||||
Thomas P. Meissner, Jr. | Chairman of the Board of Directors, Chief Executive Officer and President | 6,820 | 6,820 | |||||||
Robert B. Hevert | Senior Vice President, Chief Financial Officer and Treasurer | 2,020 | 2,020 | |||||||
Todd R. Black | Senior Vice President, External Affairs and Customer Relations | 970 | 970 | |||||||
Justin Eisfeller | Vice President & Chief Technology Officer | 970 | 970 | |||||||
Christopher J. Leblanc | Vice President, Gas Operations | 970 | 970 |
The Company has entered into, or will enter into, agreements with each recipient named in the table above in the forms filed herewith as Exhibit 10.1 (form of Restricted Stock Agreement (Time Vesting)) and Exhibit 10.2 (form of Restricted Stock Agreement (Performance Vesting)) to this Current Report on Form 8-K.
Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
Number | Exhibit | Reference* | ||
10.1** | Form of Restricted Stock Agreement (Time Vesting) | Filed herewith | ||
10.2** | Form of Restricted Stock Agreement (Performance Vesting) | Filed herewith | ||
10.3** | Unitil Corporation Second Amended and Restated 2003 Stock Plan | Appendix 1 to the Proxy Statement filed on Schedule 14A dated March 13, 2012 (SEC File No. 1-8858) | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* | The exhibits referred to in this column by specific designations and dates have heretofore been filed with or furnished to the Securities and Exchange Commission under such designations and are hereby incorporated by reference. |
** | These exhibits represent a management contract or compensatory plan. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
UNITIL CORPORATION | ||
By: | ||
/s/ Robert B. Hevert | ||
Robert B. Hevert | ||
Senior Vice President, Chief Financial Officer and Treasurer |
Date: January 30, 2023