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February 28. 2013 11:20PM
NASHUA - Aldermen on Thursday debated who will represent the city as the sole shareholder at Pennichuck Corporation's first yearly meeting since the city acquired the water company last year.
"We need to work this whole process out," said Thomas Leonard, chairman of the Pennichuck board of directors. "This is a structure that is new. It is new to everybody in this room."
While Pennichuck Corp. follows a corporate structure, Leonard explained that the rights of the city of Nashua - as the sole shareholder - are limited. Pennichuck must follow those corporate rules, or otherwise the company risks losing its business structure, Leonard warned the aldermanic Pennichuck Water Special Committee on Thursday.
"We can't run that risk," he said. "We are not a municipal body."
Last week, the Pennichuck board of directors issued its proxy statement to aldermen in preparation of the first annual meeting scheduled for March 23 at 9 a.m. at the Radisson Hotel in Nashua. In order to vote at the annual meeting, city officials have the option of voting its shares by proxy, or either designating an individual to attend the meeting and vote at the event.
"The other option is that the 15 Board of Aldermen attend, which I expect we will," Alderman Daniel Moriarty told his colleagues, saying it is important to have face-to-face interaction with Pennichuck management.
John Patenaude, CEO of Pennichuck, agreed that although a proxy card was provided to city officials, it does not have to be utilized. He said aldermen could attend in person to represent the city as the company's owner. However, Leonard cautioned that traditional corporate law principles provide the option of a proxy vote for institutional voting of shares.
"This is our first year, and the goal is to act like a corporation," said Leonard. "... We can't have the shareholders running Pennichuck."
"It is a little more complicated, at least in my mind," argued Alderman Jim Donchess, who said the process must be made public and transparent since a municipality owns the company.
Aside from several housekeeping items, the proxy statement provided by Pennichuck officials requests that two items be voted on at the annual meeting.
Pennichuck is requesting changes to the company's by-laws, specifically seeking to increase the number of directors from 10 to 11. It is also nominating four directors for three-year terms, including the renominations of Jay Lustig, John McGrath and Preston Stanley Jr., and the new nomination of Martha O'Neill, a former Pennichuck director.
Some aldermen voiced concerns about O'Neill's nomination, in part because she was not formally interviewed and vetted by city officials.
Brian McCarthy, president of the Board of Aldermen, said he would prefer using a proxy card to vote, explaining the desire of the aldermen will be fully discussed and agreed upon prior to the annual meeting later this month. McCarthy claimed that the meeting is more of a formality, stressing only one entity can actually vote - not each individual alderman.
"It is all very new and kind of unexplored and confusing," said Donchess, questioning how much discussion will take place at the annual meeting and whether there will be a question and answer session.
According to Leonard, a shareholders report is being prepared, a presentation and summary of the company's status will take place, and a period for comments will be granted.
However, Leonard said he does not view the annual meeting as a workshop, anticipating there will not be much discussion.
As of press time, the committee recommended approval of all four nominees listed on the proxy, but had not yet voted on the by-law amendments, or designated an individual to represent the city at the annual meeting. The city acquired Pennichuck Corp. in January 2012 for about $150 million, paying $29 a share for Pennichuck's stock.
khoughton@newstote.com
Pennichuck ownership is uncharted territory for Nashua aldermen
"We need to work this whole process out," said Thomas Leonard, chairman of the Pennichuck board of directors. "This is a structure that is new. It is new to everybody in this room."
While Pennichuck Corp. follows a corporate structure, Leonard explained that the rights of the city of Nashua - as the sole shareholder - are limited. Pennichuck must follow those corporate rules, or otherwise the company risks losing its business structure, Leonard warned the aldermanic Pennichuck Water Special Committee on Thursday.
"We can't run that risk," he said. "We are not a municipal body."
Last week, the Pennichuck board of directors issued its proxy statement to aldermen in preparation of the first annual meeting scheduled for March 23 at 9 a.m. at the Radisson Hotel in Nashua. In order to vote at the annual meeting, city officials have the option of voting its shares by proxy, or either designating an individual to attend the meeting and vote at the event.
"The other option is that the 15 Board of Aldermen attend, which I expect we will," Alderman Daniel Moriarty told his colleagues, saying it is important to have face-to-face interaction with Pennichuck management.
John Patenaude, CEO of Pennichuck, agreed that although a proxy card was provided to city officials, it does not have to be utilized. He said aldermen could attend in person to represent the city as the company's owner. However, Leonard cautioned that traditional corporate law principles provide the option of a proxy vote for institutional voting of shares.
"This is our first year, and the goal is to act like a corporation," said Leonard. "... We can't have the shareholders running Pennichuck."
"It is a little more complicated, at least in my mind," argued Alderman Jim Donchess, who said the process must be made public and transparent since a municipality owns the company.
Aside from several housekeeping items, the proxy statement provided by Pennichuck officials requests that two items be voted on at the annual meeting.
Pennichuck is requesting changes to the company's by-laws, specifically seeking to increase the number of directors from 10 to 11. It is also nominating four directors for three-year terms, including the renominations of Jay Lustig, John McGrath and Preston Stanley Jr., and the new nomination of Martha O'Neill, a former Pennichuck director.
Some aldermen voiced concerns about O'Neill's nomination, in part because she was not formally interviewed and vetted by city officials.
Brian McCarthy, president of the Board of Aldermen, said he would prefer using a proxy card to vote, explaining the desire of the aldermen will be fully discussed and agreed upon prior to the annual meeting later this month. McCarthy claimed that the meeting is more of a formality, stressing only one entity can actually vote - not each individual alderman.
"It is all very new and kind of unexplored and confusing," said Donchess, questioning how much discussion will take place at the annual meeting and whether there will be a question and answer session.
According to Leonard, a shareholders report is being prepared, a presentation and summary of the company's status will take place, and a period for comments will be granted.
However, Leonard said he does not view the annual meeting as a workshop, anticipating there will not be much discussion.
As of press time, the committee recommended approval of all four nominees listed on the proxy, but had not yet voted on the by-law amendments, or designated an individual to represent the city at the annual meeting. The city acquired Pennichuck Corp. in January 2012 for about $150 million, paying $29 a share for Pennichuck's stock.
khoughton@newstote.com
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