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): November 30, 2005
Chesapeake
Utilities Corporation
(Exact
name of registrant as specified in its charter)
|
Delaware
|
001-11590
|
51-0064146
|
(State
or other jurisdiction of
|
(Commission
|
|
incorporation
or organization)
|
File
Number)
|
|
909
Silver Lake Boulevard, Dover, Delaware 19904
(Address
of principal executive offices, including Zip Code)
(302)
734-6799
(Registrant's
Telephone Number, including Area Code)
_______________________________________________________________
(Former
name, former address and former fiscal year, 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 (see General Instruction A.2. below):
[
]
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))
Item
1.01. Entry into a Material Definitive Agreement.
On
November 30, 2005, the Compensation Committee (the “Committee”) of the
Chesapeake Utilities Corporation (the “Company”) Board of Directors approved the
following compensation arrangements relating to the executive officers
of the
Company.
2006
Performance Incentive Awards
Corporate
Executive Officers
The
Committee approved awards under the Company’s Performance Incentive Plan to John
R. Schimkaitis, President and Chief Executive Officer; Paul M. Barbas,
Executive
Vice President; and Michael P. McMasters, Senior Vice President and Chief
Financial Officer. According to the terms of the awards, each executive
officer
is entitled to earn up to a specified number of shares of the Company’s common
stock (“Contingent Performance Shares”) depending on the extent to which
pre-established performance goals (the “Performance Goals”) are achieved during
the year ended December 31, 2006 (the “2006 Award Year”). In addition, any
Contingent Performance Shares that are not earned by the applicable executive
officer during the 2006 Award Year may be earned in 2007 or 2008, if in
either
of those two succeeding years cumulative pre-established Performance Goals
are
achieved over, respectively, the three-year period ending in that year.
The
Contingent Performance Shares, to the extent earned, will be issued to
the
applicable executive officer following the end of the award year in which
it is
earned, but will be subject to restrictions on transfer by the applicable
executive officer for an additional three-year period from the date of
issuance.
On
or
before September 30, 2006, the applicable executive officer, in lieu of
the
Contingent Performance Shares, can elect to receive at the end of the 2006
Award
Year, whether or not the Performance Goals are achieved, a number of restricted
shares of Company common stock equal to one-fourth of the maximum number
of
Contingent Performance Shares the applicable executive officer otherwise
would
have been entitled to earn. These shares will be subject to restrictions
on
transfer by the applicable executive officer for, and (subject to certain
exceptions) will be subject to forfeiture if the employment of the applicable
executive officer terminates during, the three-year period following the
date of
issuance.
The
Performance Goals consist of: (i) earnings growth, (ii) achievement of
established milestones and objectives under the Company’s long-term strategic
plan, and (iii) shareholder value as measured by the performance of the
Company’s stock price (including the reinvestment of dividends), in relationship
to an index of industry peers.
Business
Unit Executive Officers
The
Compensation Committee also approved awards under the Company’s Performance
Incentive Plan to (i) Stephen C. Thompson, Senior Vice President, and (ii)
S.
Robert Zola, President of Sharp Energy, Inc., a Company subsidiary, for
the
three-year period ending December 31, 2008. For a performance period beginning
January 1, 2006 and ending December 31, 2006, each executive officer is
entitled
to earn, in the form of shares of restricted stock, up to 30 percent of
the
annual award of Contingent Performance Shares if the Company achieves
Performance Goals relative to the index of industry peers relating to
shareholder value performance. The second component consists of performance
awards pursuant to which the remaining 70 percent of the annual award of
Contingent Performance Shares will be earned, if (1) for Mr. Thompson,
the
Company’s natural gas segment achieves at least 90 percent of the target pre-tax
return on investment over the three-year period January 1, 2006 to December
31,
2008 and (ii) for Mr. Zola, the Company’s propane distribution operation
generates income at least equal to the income target for the three-year
period
January 1, 2006 to December 31, 2008. The 2006 Contingent Performance Shares,
to
the extent earned, will be issued to the applicable executive officer following
the end of the award year, but will be subject to restrictions on transfer
by
the applicable executive officer for an additional three-year period from
the
date of issuance.
Alternatively,
under the terms of the awards, each executive officer is entitled to elect,
on
or before September 30, 2006, to receive at the end of the 2006 Award Year,
whether or not the Performance Goals are achieved, a number of restricted
shares
of Company common stock equal to one-fourth of the maximum number of annual
Contingent Performance Shares the applicable executive officer otherwise
would
have been entitled to earn. These shares will be subject to restrictions
on
transfer by the applicable executive officer for, and (subject to certain
exceptions) will be subject to forfeiture if the employment of the applicable
executive officer terminates during, the three-year period following the
date of
issuance.
2006
Short-Term Bonus Awards
Under
the
Company’s Cash Bonus Incentive Plan, the Committee approved target cash bonus
awards, measured as a percentage of base salary, and the performance targets,
for each of Mssrs. Schimkaitis, Barbas, McMasters, Thompson and Zola. The
approved performance targets, which vary according to the applicable executive
officer, are based on the following performance criteria: (i) earnings
per
share, (ii) pretax return on average investment of the Company’s regulated
natural gas operations and (iii) earnings before interest and taxes of
the
Company’s Delmarva propane distribution operations. The amount of each executive
officer’s cash bonus for 2006 will vary depending on the extent to which the
applicable performance targets are achieved.
SIGNATURE
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.
Chesapeake
Utilities Corporation
/s/
Michael
P. McMasters
—————————————
Michael
P. McMasters
Senior
Vice President and Chief Financial Officer
Date: December
5, 2005