Company: MSEX
Filing Date: 2025-04-10
Form Type: DEF 14A
Source: 0001174947-25-000561
Chunk: 46

Company: MIDDLESEX WATER CO
Filing Date: 2025-04-10
Form: DEF 14A
Chunk 46
---
, management has a greater ability to drive financial performance affecting those income statement line items, which are separate
and apart from income taxes, than income taxes themselves. Listed below are the financial performance measures, which in our assessment,
represent additional important financial performance measures we use to link compensation actually paid to our NEOs, for 2024, to company
performance.

| • | Return on Average Common Equity |

| • | Net Income |

| • | Total Shareholder Return (TSR) |

As largely a regulated water and wastewater utility company, achieving returns on average common equity at levels authorized by our economic regulators is an important financial measure. When combined with the financial performance of our non-regulated contract operations business, we achieved a consolidated return on average common equity in 2024 of 10.2%. The net income we derive from our regulated water utility business is somewhat weather-dependent as related to revenue from outdoor irrigation in the spring and summer months. In addition, income we derive from the sale of water to municipal contract customers is dependent on whatever weather and/or other operational anomalies such contract customers may experience from year-to-year. Our ability to manage our water supplies, provide treatment to such supplies in sufficient quantity and quality, combined with our ability to manage and control operation and maintenance expenses, are key drivers of net income and therefore, of our ability to generate net income as an important element of shareholder return. TSR, on an absolute basis and in comparison to that of our peer group, is an important measure of our ability to deliver shareholder value. We view our focus on bottom line financial results combined with common stock dividends as important drivers of total shareholder return. We conclude that the 2024 results related to the three aforementioned important financial measures are relevant to the compensation paid to our CEO and the other NEOs for 2024. Other non-financial measures also used in determining Executive compensation for 2024, can be found in the CD&A. Relationship between Pay and Performance Below are graphs showing the relationship of Compensation Actually Paid (CAP) to our CEO and other NEOs in 2021, 2022, 2023 and 2024. (1) TSR of both Middlesex and the Peer Group, (2) Middlesex’s net income and (3) Middlesex’s Income Before Income Taxes. CAP, as required under SEC rules, reflects adjusted values to unvested and vested equity awards during the years shown in the table based on year-end stock prices, various accounting valuation assumptions, and projected performance modifiers but does not