exv10w26



 







EXHIBIT 10.26




January 6, 2006




Mr. Eric Thornburg

473 Pine Bend Drive

Chesterfield, MO 63005




Dear Eric:



The Connecticut Water Service Board of Directors is very pleased to offer you the position of
President and CEO, and a Director of Connecticut Water Service, Inc., reporting to the Chairman of
the Board.



The attached offer term sheet outlines the key dimensions of the compensation package. Also
included is an outline of our standard benefits package. Necessary supporting documentation on
these terms will be provided once you are aboard.



We are excited about the prospect of you joining us. There is much to do. We would hope to ratify
your election at a board meeting scheduled for January 11, 2006. We need to discuss the timing and
content of the public announcement.



If the attached documentation is acceptable, please initial each page of the term sheet and return
it with a signed copy of this letter by fax to me at 860.669.5579.



The Board and I very much look forward to working with you and to making Connecticut Water Service
a larger and even more successful regional water company.



Sincerely,




	 	 	 
	 

	 	 
	/s/ Marshall T. Chiaraluce
	 	 
	 	 	 
	 
	 	 
	Marshall T. Chiaraluce
	 	 
	Chairman, President & CEO
	 	 






 









 






EXHIBIT 10.26




CONNECTICUT WATER SERVICE, INC./THE CONNECTICUT WATER COMPANY




EXECUTIVE COMPENSATION TERM SHEET




	 	 	 
	Title:

	 	President and CEO, and Director
	 
	 	 
	Reports to:

	 	Chairman of the Board
	 
	 	 
	Base Salary:

	 	$294,100 (midpoint of salary range) per year, paid bi-monthly. To be reviewed and adjusted on a calendar year basis
	 
	 	 
	Annual Incentive Award:

	 	15% of midpoint salary at threshold; 30% of midpoint at target; 45% of mid-point at maximum.
	 
	 	 
	 

	 	Determined by Compensation Committee of the Board, based on Company’s financial performance, corporate indicators and strategic initiatives.
	 
	 	 
	 Long Term Incentives:

	 	4,507 shares of restricted CWS Common Stock on hire; 6-year vesting starting in 2006 Annual awards of restricted stock and/or stock options consistent with 2004
Performance Stock Plan, with value equal to annual incentive award.
	 
	 	 
	 

	 	Deferred Compensation Agreement; defer up to 12% of salary with interest earned at Moody’s AAA corporate bond yield average rate plus an additional 1
l/2 to 3%.
	 
	 	 
	 

	 	Pension and Supplemental Executive Retirement Plan; 60% of last 5-year average salary base, including bonus; reduced by pension payments from
previous employer. Retirement can begin at age 55 with reduction factor. Five-year vesting.
	 
	 	 
	Vacation:

	 	4 weeks
	 
	 	 
	Holidays:

	 	13 paid holidays and 2 personal days per year
	 
	 	 
	401(k):

	 	Yes; 50% matching to statutory maximum






 









 





EXHIBIT 10.26




Executive Compensation Term Sheet – Page 2




	 	 	 
	Insurance:

	 	See standard Company documentation.
	 

	 	Medical – managed care and point-of-service options; employee pays 25% of premium
	 

	 	Dental – yes; with employee contribution
	 

	 	Eye Care- discounts on routine exams and prescription eye wear
	 

	 	Life – 2 times salary up to $350,000; premium fully paid by company
	 

	 	Short Term Disability – 100% of salary for first 30 days; 60% to 180 days
	 

	 	Long Term Disability – 60% of salary; $10,000/month max.
	 

	 	Employee Counseling Assistance
	 

	 	Flexible Medical Spending Account
	 
	 	 
	Severance:

	 	For Cause – none
	 
	 

	 	Not for Cause:
	 

	 	1-year salary continuation; 1 year health and welfare benefit premium continuation; 1 year non-compete






	 	 	 	 	 	 	 
	 	 	Change in Control
	 

	 	 	§	 	 	3-year salary and target bonus lump sum with tax gross up.
	 

	 	 	§	 	 	3-year health and welfare benefit premium continuation
	 

	 	 	§	 	 	accelerated vesting of options and/or restricted stock;
	 

	 	 	§	 	 	2-year non-compete






	 	 	 
	Car:

	 	Yes; American-made, non-luxury vehicle
	Cell phone:

	 	Yes
	Club:

	 	The Hartford Club
	 
	 	 
	 Industry Associations:

	 	 Membership in national organizations and attendance at annual NAWC and Water Utility Executive conferences
	 
	 	 
	Relocation Assistance:

	 	Relocation expenses and other appropriate expenses grossed up for taxes; temporary living benefits until August 2006; trip home every other week during school year; 3 house-hunting trips for spouse
	 
	 	 
	Start Date:

	 	February 1, 2006 up to March 1, 2006 (your choice)