psagreement2010mpm.htm


    Exhibit 10.14


     

    
 

    PERFORMANCE SHARE AGREEMENT

    


    pursuant
to the

    


    CHESAPEAKE
UTILITIES CORPORATION

    PERFORMANCE
INCENTIVE PLAN

    


    


    On
January 23, 2008, (the “Grant Date”), Chesapeake Utilities Corporation, a
Delaware corporation (the “Company”), has granted to Michael P. McMasters (the
“Grantee”), who resides at 312 Quail Run, Wyoming, DE 19934, a Performance Share
Award on the terms and subject to the conditions of this Performance Share
Agreement.


    


    Recitals

    


    WHEREAS,
the Chesapeake Utilities Corporation Performance Incentive Plan (the “Plan”) has
been duly adopted by action of the Company's Board of Directors (the “Board”) on
February 24, 2005, and approved by the Shareholders of the Company at a meeting
held on May 5, 2005; and

    


    WHEREAS,
the Plan is effective January 1, 2006; and

    


    WHEREAS,
the Committee of the Board of Directors of the Company referred to in the Plan
(the “Committee”) has determined that it is in the best interests of the Company
to grant the Performance Share Award described herein pursuant to the Plan;
and

    


    WHEREAS,
the shares of the Common Stock of the Company (“Shares”) that are subject to
this Agreement, when added to the other shares of Common Stock that are subject
to awards granted under the Plan, do not exceed the total number of shares of
Common Stock with respect to which awards are authorized to be granted under the
Plan.


    


    Agreement

    


    It is
hereby covenanted and agreed by and between the Company and the Grantee as
follows:

    


    Section
1.                                Performance Share Award and
Performance Period

    


    The
Company hereby grants to the Grantee a Performance Share Award as of the Grant
Date.  As more fully described herein, the Grantee may earn up to
6,400 Shares upon the Company's achievement of the performance criteria set
forth in Section 2 (the “Performance Shares”) over the performance period from
January 1, 2008 to December 31, 2010 (the “Performance Period”).  This
Award has been granted pursuant to the Plan; capitalized terms used in this
agreement which are not specifically defined herein shall have the meanings
ascribed to such terms in the Plan.

    


    Section
2.                      Performance Criteria and
Terms of Share Award

    


    (a) The
Committee selected and established in writing performance criteria for the
Performance Period, which, if met, may entitle the Grantee to some or all of the
Performance Shares under this Award.  If this Award is intended by the
Committee to comply with the exception from Code Section 162(m) for qualified
performance-based compensation for Grantees who are “Covered Employees” as
defined in Code Section 162(m), the performance criteria established shall be
based on one or more Performance Goals selected by the Committee in writing
within 90 days following the first day of the Performance Period (or, if
earlier, before 25% of that period has elapsed), and at a time when the outcome
relative to the attainment of the performance criteria is not substantially
certain.  As soon as practicable after the Company’s independent
auditors have certified the Company’s financial statements for each fiscal year
of the Company in the Performance Period, the Committee shall determine for
purposes of this Agreement the Company’s (1) total shareholder return, defined
as the cumulative total return to shareholders (“Shareholder Value”), (2) growth
in long-term earnings, defined as the growth in total capital expenditures as a
percentage of total capitalization (“Growth”) and (3) earnings performance,
defined as average return on equity (“RoE”), in accordance with procedures
established by the Committee.  The Shareholder Value, Growth and RoE
(each a “Performance Metric” and collectively, the “Performance Metrics”) shall
be determined by the Committee in accordance with the terms of the Plan and this
Agreement based on financial results reported to shareholders in the Company’s
annual reports and shall be subject to adjustment by the Committee for
extraordinary events during the Performance Period, as
applicable.  Both the Shareholder Value and the Growth Performance
Metrics will be compared to those of the peer group consisting of gas utility
companies listed in the Edward Jones Natural Gas Distribution Group (the “Peer
Group”) for the Performance Period and Awards will be determined according to
the schedule in subsection (b) below.  For the average RoE Performance
Metric, the Company’s performance will be compared to pre-determined RoE
thresholds established by the Committee.  At the end of the
Performance Period, the Committee shall certify in writing the extent to which
the Performance Goals were met during the Performance Period for Awards for
Covered Employees.  If the Performance Goals for the Performance
Period are met, Covered Employees shall be entitled to the Award, subject to the
Committee’s exercise of discretion to reduce any Award to a Covered Employee
based on business objectives established for that Covered Employee or other
factors as determined by the Committee in its sole discretion.  The
Committee shall promptly notify the Grantee of its determination.

    


    (b) The
Grantee may earn 50 percent or more of the target award of 5,120 Performance
Shares (the “Target Award”) up to a maximum number of Performance Shares set
forth in Section 1 above (the “Maximum Award”) based upon achievement of
threshold and target levels of performance against the Performance Metrics
established for the Performance Period .  The Committee shall confirm
the level of Award attained for the Performance Period after the Company’s
independent auditors have certified the Company’s financial statements for each
fiscal year of the Company in the Performance Period.

    


    (c)           Once
established, the performance criteria identified above normally shall not be
changed during the Performance Period.  However, if the Committee
determines that external changes or other unanticipated business conditions have
materially affected the fairness of the goals, or that a change in the business,
operations, corporate structure or capital structure of the Company, or the
manner in which it conducts its business, or acquisitions or divestitures of
subsidiaries or business units, or other events or circumstances materially
affect the performance criteria or render the performance criteria unsuitable,
then the Committee may approve appropriate adjustments to the performance
criteria (either up or down) during the Performance
Period.  Notwithstanding the foregoing, no changes shall be made to an
Award intended to satisfy the requirements of Code Section 162(m) if such
changes would affect the qualification of the Award as performance-based
compensation within the meaning of Code Section 162(m).

    


    (d)           Performance
Shares that are earned by the Grantee pursuant to this Section 2 shall be issued
promptly, without payment of consideration by the Grantee, within 2 1⁄2 months of
the end of the Performance Period.  The Grantee shall have the right
to vote the Performance Shares and to receive the dividends distributable with
respect to such Shares on and after, but not before, the date on which the
Grantee is recorded on the Company's ledger as holder of record of the
Performance Shares (the “Issue Date”).  If, however, the Grantee
receives Shares as part of any dividend or other distribution with respect to
the Performance Shares, such Shares shall be treated as if they are Performance
Shares, and such Shares shall be subject to all of the terms and conditions
imposed by this Section 2.  Notwithstanding the foregoing, the Grantee
shall be entitled to receive an amount in cash, equivalent to the dividends that
would have been paid on the awarded Performance Shares from the Grant Date to
the Issue Date for those Performance Shares actually earned by the Grantee
during the applicable Performance Period.  Such dividend equivalents
shall be payable at the time such Performance Shares are issued.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)           The
Performance Shares will not be registered for resale under the Securities Act of
1933 or the laws of any state except when and to the extent determined by the
Board pursuant to a resolution.  Until a registration statement is
filed and becomes effective, however, transfer of the Performance Shares shall
require the availability of an exemption from such registration, and prior to
the issuance of new certificates, the Company shall be entitled to take such
measures as it deems appropriate (including but not limited to obtaining from
the Grantee an investment representation letter and/or further legending the new
certificates) to ensure that the Performance Shares are not transferred in the
absence of such exemption.

    


    (f)             In
the event of a Change in Control, as defined in the Plan, during the Performance
Period, the Grantee shall earn the Maximum Award of Performance Shares set forth
in this Section 2, as if all performance criteria were satisfied, without any
pro ration based on the proportion of the Performance Period that has expired as
of the date of such Change in Control.

    


    (g)           If,
during the Performance Period, the Grantee is separated from employment,
Performance Shares shall be deemed earned or forfeited as follows:

    


    (1)           Upon
voluntary termination by the Grantee or termination by the Company for failure
of job performance or other just cause as determined by the Committee, all
unearned Performance Shares shall be forfeited immediately;

    


    (2)           If
the Grantee separates from employment by reason of death or total and permanent
disability (as determined by the Committee), the number of Performance Shares
that would otherwise have been earned at the end of the Performance Period shall
be reduced by pro rating such Performance Shares based on the proportion of the
Performance Period during which the Grantee was employed by the Company, unless
the Committee determines that the Performance Shares shall not be so
reduced;

    


    (3)           Upon
retirement by the Grantee at age 55 or thereafter, all unearned Performance
Shares shall be forfeited immediately.

     

    (h) The
Grantee shall be solely responsible for any federal, state and local taxes of
any kind imposed in connection with the vesting or delivery of the Performance
Shares.  Prior to the transfer of any Performance Shares to the
Grantee, the Grantee shall remit to the Company an amount sufficient to satisfy
any federal, state, local and other withholding tax requirements.  The
Grantee may elect to have all or part of any withholding tax obligation
satisfied by having the Company withhold Shares otherwise deliverable to the
Grantee as Performance Shares, unless the Committee determines otherwise by
resolution.  If the Grantee fails to make such payments or election,
the Company and its subsidiaries shall, to the extent permitted by law, have the
right to deduct from any payments of any kind otherwise due to the Grantee any
taxes required by law to be withheld with respect to the Performance
Shares.  In the case of any amounts withheld for taxes pursuant to
this provision in the form of Shares, the amount withheld shall not exceed the
minimum required by applicable law and regulations.

    


    (i)           Notwithstanding
any other provision of this Agreement, if any payment or distribution (a
"Payment") by the Company or any other person or entity to or for the benefit of
the Grantee is determined to be an  "excess parachute payment" (within
the meaning of Code Section 280G(b)(1) or any successor provision of similar
effect), whether paid or payable or distributed or distributable pursuant to
this Agreement or otherwise, then the Grantee’s benefits under this Agreement
may, unless the Grantee elects otherwise pursuant to his employment agreement,
be reduced by the amount necessary so that the Grantee’s total "parachute
payment" as defined in Code Section 280G(b)(2)(A) under this and all other
agreements will be $1.00 less than the amount that would be a "parachute
payment".  The payment of any “excess parachute payment” pursuant to
this paragraph shall also comply with the terms of the Grantee’s employment
agreement.


    


    Section
3.                                Additional Conditions to
Issuance of Shares

    


    Each
transfer of Performance Shares shall be subject to the condition that if at any
time the Committee shall determine, in its sole discretion, that it is necessary
or desirable as a condition of, or in connection with, transfer of Performance
Shares (i) to satisfy withholding tax or other withholding liabilities, (ii) to
effect the listing, registration or qualification on any securities exchange or
under any state or federal law of any Shares deliverable in connection with such
exercise, or (iii) to obtain the consent or approval of any regulatory body,
then in any such event such transfer shall not be effective unless such
withholding, listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Company.

    


    Section
4.                                Adjustment of
Shares

    


    (a)           If
the Company shall become involved in a merger, consolidation or other
reorganization, whether or not the Company is the surviving corporation, any
right to earn Performance Shares shall be deemed a right to earn or to elect to
receive the consideration into which the Shares represented by the Performance
Shares would have been converted under the terms of the merger, consolidation or
other reorganization.  If the Company is not the surviving
corporation, the surviving corporation (the “Successor”) shall succeed to the
rights and obligations of the Company under this Agreement.

    


    (b)           If
any subdivision or combination of Shares or any stock dividend, capital
reorganization or recapitalization occurs after the adoption of the Plan, the
Committee shall make such proportionate adjustments as are appropriate to the
number of Performance Shares to be earned in order to prevent the dilution or
enlargement of the rights of the Grantee.

    


    Section
5.                                No Right to
Employment

    


    Nothing
contained in this Agreement shall be deemed by implication or otherwise to
confer upon the Grantee any right to continued employment by the Company or any
affiliate of the Company.

    


    Section
6.                                Notice

    


    Any
notice to be given hereunder by the Grantee shall be sent by mail addressed to
Chesapeake Utilities Corporation, 909 Silver Lake Boulevard, Dover, Delaware
19904, for the attention of the Committee, c/o the Corporate Secretary, and any
notice by the Company to the Grantee shall be sent by mail addressed to the
Grantee at the address of the Grantee shown on the first page
hereof.  Either party may, by notice given to the other in accordance
with the provisions of this Section, change the address to which subsequent
notices shall be sent.

    


    Section
7.                                Beneficiary
Designation

    


    Grantee
may designate a beneficiary to receive any Performance Shares to which Grantee
is entitled which vest as a result of Grantee’s death.  Grantee
acknowledges that the Company may exercise all rights under this Agreement and
the Plan against Grantee and Grantee’s estate, heirs, lineal descendants and
personal representatives and shall not be limited to exercising its rights
against Grantee’s beneficiary.

    


    Section
8.                                Assumption of
Risk

    


    It is
expressly understood and agreed that the Grantee assumes all risks incident to
any change hereafter in the applicable laws or regulations or incident to any
change in the market value of the Performance Shares.

    


    Section
9.                                Terms of
Plan

    


    This
Agreement is entered into pursuant to the Plan (a copy of which has been
delivered to the Grantee).  This Agreement is subject to all of the
terms and provisions of the Plan, which are incorporated into this Agreement by
reference, and the actions taken by the Committee pursuant to the
Plan.  In the event of a conflict between this Agreement and the Plan,
the provisions of the Plan shall govern.  All determinations by the
Committee shall be in its sole discretion and shall be binding on the Company
and the Grantee.

    


    Section
10.                                Governing Law;
Amendment

    


    This
Agreement shall be governed by, and shall be construed and administered in
accordance with, the laws of the State of Delaware (without regard to its choice
of law rules) and the requirements of any applicable federal
law.  This Agreement may be modified or amended only by a writing
signed by the parties hereto.

     

     

    Section
11.                                Action by the
Committee

    


    The
parties agree that the interpretation of this Agreement shall rest exclusively
and completely within the sole discretion of the Committee.  The
parties agree to be bound by the decisions of the Committee with regard to the
interpretation of this Agreement and with regard to any and all matters set
forth in this Agreement.  The Committee may delegate its functions
under this Agreement to an officer of the Company designated by the Committee
(hereinafter the “Designee”).  In fulfilling its responsibilities
hereunder, the Committee or its Designee may rely upon documents, written
statements of the parties or such other material as the Committee or its
Designee deems appropriate.  The parties agree that there is no right
to be heard or to appear before the Committee or its Designee and that any
decision of the Committee or its Designee relating to this Agreement shall be
final and binding unless such decision is arbitrary and capricious.

     

     

    Section
12.                                Terms of
Agreement

    


    This
Agreement shall remain in full force and effect and shall be binding on the
parties hereto for so long as any Performance Shares issued to the Grantee under
this Agreement continue to be held by the Grantee.

     

    IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed in its
corporate name, and the Grantee has executed the same in evidence of the
Grantee's acceptance hereof, upon
the terms and conditions herein set forth, as of the day and year first above
written.

    


    CHESAPEAKE UTILITIES
CORPORATION

    


    


    By:                                                                

    


    


    Its:                                                                


    


                                               Grantee: