NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT OF
UNION ELECTRIC COMPANY
Time: 9:00 A.M.
Thursday
April 22, 1999
Place: One Ameren Plaza
1901 Chouteau Avenue
St. Louis, Missouri
IMPORTANT
Admission to the meeting will be by ticket only. If you plan to attend,
please check the appropriate box on the proxy. Persons without tickets will be
admitted to the meeting upon verification of their stockholdings in the Company.
Please vote, date, sign, and return the enclosed proxy in the accompanying
reply envelope even if you own only a few shares. If you attend the meeting and
want to change your proxy vote, you can do so by voting in person at the
meeting.
<PAGE>
UNION ELECTRIC COMPANY
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
UNION ELECTRIC COMPANY
We will hold the Annual Meeting of Stockholders of Union Electric Company
at the principal executive offices of Ameren Corporation, One Ameren Plaza, 1901
Chouteau Avenue, St. Louis, Missouri, on Thursday, April 22, 1999, at 9:00 A.M.,
for the purposes of
(1) electing directors of the Company for terms ending in April 2000; and
(2) acting on other proper business presented to the meeting.
If you owned shares of the Company's capital stock at the close of business
on March 5, 1999, you are entitled to vote at the meeting and at any adjournment
thereof.
To assure that your shares are represented at this meeting, please vote,
date, sign, and return the enclosed proxy in the enclosed envelope. The prompt
return of your proxy will reduce expenses.
By order of the President and the Board of Directors.
STEVEN R. SULLIVAN
Secretary
St. Louis, Missouri
March 30, 1999
<PAGE>
PROXY STATEMENT OF UNION ELECTRIC COMPANY
(First sent or given to stockholders March 30, 1999)
Principal Executive Offices:
One Ameren Plaza
1901 Chouteau Avenue, St. Louis, MO 63103
The enclosed proxy is solicited by the Board of Directors of Union Electric
Company, d/b/a AmerenUE (the "Company"), for use at the Annual Meeting of
Stockholders of the Company to be held on Thursday, April 22, 1999, and at any
adjournment thereof.
As a result of a merger effective December 31, 1997 (the "Merger"), the
Company, Central Illinois Public Service Company, d/b/a AmerenCIPS ("CIPS"), and
Ameren Services Company are the principal subsidiaries of Ameren Corporation
("Ameren").
VOTING
Only stockholders of record at the close of business on the Record Date,
March 5, 1999, are entitled to vote at the meeting. The voting securities of the
Company on such date consisted of 102,123,834 shares of Common Stock, all of
which were owned by Ameren, and 2,795,095 shares of Preferred Stock of various
series. In order to conduct the meeting, a majority of the outstanding shares
entitled to vote must be represented. Each share is entitled to one vote on
matters to come before the meeting, except that in the election of directors the
stockholders have cumulative voting rights, which are not subject to any
condition. Under cumulative voting each stockholder has the right to cast votes
in the election of directors equal to the number of shares held by such
stockholder, multiplied by the number of directors to be elected; that is, five
votes for each share. All such votes may be cast for one nominee or may be
distributed among two or more nominees, but not among more than five nominees.
A proxy can be revoked by delivering either a written revocation or a
signed proxy bearing a later date to the Secretary of the Company or by voting
in person at the meeting.
Returned proxies which are properly marked and signed will be voted as
directed. If you sign the proxy but do not make specific choices, your shares
will be voted as recommended by the Board -- FOR the Board's nominees for
Director. On any other matters, the named proxies will use their discretion.
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<PAGE>
In determining whether a quorum is present at the meeting, shares
registered in the name of a broker or other nominee, which are voted on any
matter, will be included. In tabulating the number of votes cast, withheld
votes, abstentions, and non-votes by banks and brokers are not included.
The Board of Directors has adopted a confidential voting policy for
proxies.
ITEMS TO BE CONSIDERED
Item (1): Election of Directors
Five directors are to be elected to serve until the next annual meeting of
stockholders and until their successors are elected and qualified. The nominees
designated by the Board of Directors, all of whom are executive officers of the
Company or its affiliates, are listed below with information about their
principal occupations and backgrounds.
PAUL A. AGATHEN
Senior Vice President - Energy Supply Services of Ameren Services Company. Mr.
Agathen was employed by the Company in 1975 as an attorney. He was named General
Attorney of the Company in 1982, Vice President, Environmental and Safety in
1994 and Senior Vice President in 1996. He was elected to his present position
at Ameren Services Company upon the Merger. Director of the Company since 1998.
Other directorships: CIPS (since 1997). Age: 51.
WARNER L. BAXTER
Vice President and Controller of the Company, Ameren and Ameren Services Company
and Controller of CIPS. From 1983 to 1995, Mr. Baxter was employed by Price
Waterhouse (now PricewaterhouseCoopers LLP). Mr. Baxter joined the Company in
1995 as Assistant Controller. He was promoted to Controller of the Company in
1996 and was elected Vice President and Controller of the Company, Ameren and
Ameren Services Company in 1998. He was elected Controller of CIPS in 1998.
Age: 37.
DONALD E. BRANDT
Senior Vice President - Finance and Corporate Services of the Company and Ameren
Services Company and Senior Vice President - Finance of Ameren. Mr. Brandt
worked for Price Waterhouse (now
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<PAGE>
PricewaterhouseCoopers LLP) from 1975 until his appointment as Controller of the
Company in 1983. He was elected Vice President of the Company in 1985 and Senior
Vice President in 1988. He was elected to his present positions at Ameren and
Ameren Services Company upon the Merger. Director of the Company since 1998.
Other directorships: CIPS (since 1997); Huntco, Inc.; The ARCH Fund, Inc. Age:
44.
CHARLES W. MUELLER
President and Chief Executive Officer of the Company, Ameren and Ameren Services
Company and Chairman of Ameren. Mr. Mueller began his career with the Company
in 1961 as an engineer. He was named Treasurer in 1978, Vice President-Finance
in 1983, Senior Vice President-Administrative Services in 1988, President in
1993 and Chief Executive Officer in 1994. Mr. Mueller was elected Chairman of
Ameren and President and Chief Executive Officer of Ameren and Ameren Services
Company upon the Merger. Director of the Company since 1993. Mr. Mueller is
Deputy Chairman of the Federal Reserve Bank of St. Louis. Other directorships:
Ameren (since 1997); CIPS (since 1997); Angelica Corporation. Age: 60.
GARY L. RAINWATER
President and Chief Executive Officer of CIPS. Mr. Rainwater was elected
Executive Vice President of CIPS in January 1997 and was named to his present
position in December 1997. Before joining CIPS he worked for the Company for
17 years and was elected a vice president in 1993. Director of the Company since
1998. Other directorships: CIPS (since 1997). Age: 52.
The five nominees for director who receive the most votes will be elected.
The Board of Directors knows of no reason why any nominee will not be able
to serve as a director. If, at the time of the Annual Meeting, any nominee is
unable or declines to serve, the proxies may be voted for a substitute nominee
approved by the Board.
During 1998, the Board of Directors met six times. All nominees attended
all of the meetings of the Board for which they were eligible.
Age Policy - Directors who attain age 72 prior to the date of an annual
meeting cannot be designated as a nominee for election at such meeting.
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<PAGE>
Board Committees - The Board does not have standing committees. The Board
committees of the Company's parent, Ameren, perform committee functions for the
Company's Board.
Directors' Compensation - All nominees for director are executive officers
of Ameren or its subsidiaries, and they do not receive compensation for their
services as a director.
Item (2): Other Matters
The Board of Directors does not know of any matters, other than the
election of directors, which may be presented to the meeting.
SECURITY OWNERSHIP
Securities of the Company
All of the outstanding shares of the Company's Common Stock are owned by
Ameren. Of the 2,795,095 shares of the Company's outstanding Preferred Stock, no
shares were owned by directors and executive officers of the Company as of
February 1, 1999.
Securities of Ameren
<TABLE>
<CAPTION>
Shares of Common Stock
of Ameren
Beneficially Owned<F1><F2>
Name as of February 1, 1999
<S> <C>
Paul A. Agathen 10,820
Warner L. Baxter 2,583
Donald E. Brandt 9,370
Charles W. Mueller 30,383
Gary L. Rainwater 3,060
Garry L. Randolph 5,131
Charles J. Schukai 10,196
Robert J. Schukai 5,899
All Directors and executive officers as a group 92,047
<FN>
<F1>Includes shares held jointly. Also includes shares issuable within
60 days upon the exercise of stock options as follows: Mr.
Agathen, 6,400; Mr. Baxter, 2,500; Mr. Brandt, 8,150; Mr. Mueller,
22,175; Mr. Randolph, 3,150; Mr. Charles J. Schukai, 5,350; and
Mr. Robert J. Schukai, 2,100. Reported shares include those for
which a director, nominee for director or executive officer has
voting or investment power because of joint or fiduciary ownership
of the shares or a relationship with the record owner, most
commonly a spouse, even if such nominee or executive officer does
not claim beneficial ownership.
<F2>Shares beneficially owned by all directors, nominees for director
and executive officers in the aggregate do not exceed one percent
of any class of equity securities outstanding.
</FN>
</TABLE>
4
<PAGE>
EXECUTIVE COMPENSATION
Ameren Corporation Human Resources Committee Report on Executive Compensation:
Ameren Corporation and its subsidiaries' (collectively referred to as
"Ameren") goal for executive salaries is to approximate the median of the range
of salaries paid by similarly-situated companies. Accordingly, the Human
Resources Committee of the Board of Directors of Ameren Corporation, which is
comprised entirely of non-employee directors, makes annual reviews of the
compensation paid to the executive officers of Ameren. The Committee's salary
decisions with respect to the five highest paid officers of Ameren Corporation
and each principal subsidiary are subject to approval by such company's Board of
Directors. Following the annual reviews, the Committee authorizes appropriate
changes as determined by the three basic components of the executive
compensation program, which are:
o Base salary,
o A performance-based incentive plan, and
o Long-term stock-based awards.
First, in evaluating and setting base salaries for executive officers,
including the Chief Executive Officers of Ameren Corporation and its
subsidiaries, the Committee considers: individual responsibilities, including
changes which may have occurred since the prior review; individual performance
in fulfilling responsibilities, including the degree of competence and
initiative exhibited; relative contribution to the results of operations; the
impact of operating conditions; the effect of economic changes on salary
structure; and comparisons with compensation paid by similarly-situated
companies. Such considerations are subjective, and specific measures are not
used in the review process.
The second component of the executive compensation program is a
performance-based Executive Incentive Compensation Plan established by the
Ameren Corporation Board, which provides specific, direct relationships between
corporate results and Plan compensation. For 1998, Ameren consolidated year-end
earnings per share (EPS) target levels were set by the Human Resources
Committee. If EPS reaches at least the minimum target level, the Committee
authorizes incentive payments within prescribed ranges based on individual
performance and degree of responsibility. If EPS fails to reach the minimum
target level, no payments are made. Under the Plan, it is expected that payments
to the Chief Executive Officers of Ameren Corporation and its subsidiaries
5
<PAGE>
will range from 0-37% of base salary. For 1998, actual payments ranged from 29%
to 36% of base salary.
The third component of the 1998 executive compensation program is the
Long-Term Incentive Plan of 1998, which also ties compensation to performance.
The Plan was approved by Ameren Corporation shareholders at its 1998 Annual
Meeting and provides for the grant of options, performance awards, stock
appreciation rights and other awards. The Human Resources Committee determines
who participates in the Plan and the number and types of awards to be made. It
also sets the terms, conditions, performance requirements and limitations
applicable to each award under the Plan. Awards under the 1998 Plan have been at
levels that approximate the median of the range of awards granted by
similarly-situated companies.
In determining the reported 1998 compensation of the Chief Executive
Officers, as well as compensation for the other executive officers, the Human
Resources Committee considered and applied the factors discussed above. Further,
the reported compensation reflects an above-average level of achievement in
attaining 1998 EPS. Authorized salaries for the Company's executive officers
fell within the ranges of those paid by similarly-situated companies.
/s/ John Peters MacCarthy, Chairman
Thomas A. Hays
Robert H. Quenon
Gordon R. Lohman
Compensation Tables
The following tables contain compensation information, for the periods
indicated, for (a) the President and Chief Executive Officer of the Company and
(b) the four other most highly compensated executive officers of the Company who
were serving as executive officers at the end of 1998.
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<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Annual Securities All Other
Name and Compensation Underlying Compen-
Principal Position Year Salary ($) Bonus ($) Options(#) sation($)
------------------ ---- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
C. W. Mueller 1998 550,000 198,000 63,800 53,751<F1>
President and 1997 500,000 155,000 23,000 45,723
Chief Executive 1996 441,000 165,000 17,700 39,306
Officer, Ameren,
Union Electric and
Ameren Services
Company; Chairman
of Ameren<F2>
C. J. Schukai 1998 280,000 80,000 25,800 41,921<F1>
Senior Vice 1997 269,000 68,000 7,800 36,839
President, Union 1996 258,000 76,000 6,800 33,506
Electric and Ameren
Services Company<F2>
D. E. Brandt 1998 274,000 79,000 25,800 31,947<F1>
Senior Vice 1997 254,000 64,000 7,800 27,580
President, Ameren, 1996 242,000 69,000 6,800 24,278
Union Electric and
Ameren Services
Company<F2>
G.L. Randolph 1998 220,000 47,000 9,700 6,294<F1>
Vice President and 1997 192,000 38,000 3,400 5,953
Chief Nuclear 1996 165,000 35,000 2,500 5,668
Officer
R.J. Schukai 1998 194,000 39,000 9,700 16,343<F1>
Vice President - 1997 185,000 29,000 3,400 14,209
Power Operations 1996 177,000 34,000 2,500 12,767
<FN>
<F1>Amounts include (a) matching contributions to the 401(k) plan and (b)
above-market earnings on deferred compensation, as follows:
(a) (b)
C. W. Mueller $4,800 $48,951
C. J. Schukai 4,306 37,615
D. E. Brandt 4,800 27,147
G. L. Randolph 4,800 1,494
R. J. Schukai 4,183 12,160
<F2>Includes compensation received as an officer of Ameren and its
subsidiaries including the Company.
</FN>
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN 1998
Number of % of Total Grant
Shares Options Date
Underlying Granted to Exercise Present
Options Employees Price Expiration Value<F2>
Name Granted<F1> in 1998 ($/Sh) Date ($)
---- ---------- ------- ------ ---- --------
<S> <C> <C> <C> <C> <C>
C. W. Mueller 63,800 9.11 39.25 4/28/08 316,448
C. J. Schukai 25,800 3.68 39.25 4/28/08 127,968
D. E. Brandt 25,800 3.68 39.25 4/28/08 127,968
G. L. Randolph 9,700 1.38 39.25 4/28/08 48,112
R. J. Schukai 9,700 1.38 39.25 4/28/08 48,112
<FN>
<F1>Options vest 25% annually beginning April 28, 2000.
<F2>The Grant Date Present Values were determined using the binomial option
pricing model, a derivative of the Black-Scholes option pricing model.
Assumptions used for the model are as follows: an option term of ten years,
stock volatility of 17.63%, dividend yield of 6.55%, risk-free interest rate
of 6.01%, and a vesting restrictions discount rate of 3% per year over the
five-year vesting period. The Grant Date Present Value calculation is
presented in accordance with SEC proxy requirements, and the Company has no
way to determine whether the pricing model can properly determine the value
of an option. There is no assurance that the value, if any, that may be
realized will be at or near the value estimated by the model. No value will
be realized by the optionee unless the stock price increases from the
exercise price, in which case shareholders would benefit commensurately.
</FN>
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1998
AND YEAR-END VALUES
Shares Number of
Acquired Value Shares Underlying Value of In-the-Money
on Realized Options At Year End(#) Options At Year End($)
Name Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
C. W. Mueller - - 11,925 107,875 48,985 341,373
C. J. Schukai 2,800 21,613 1,700 41,500 - 130,189
D. E. Brandt - - 4,500 41,500 18,288 130,189
G. L. Randolph - - 1,675 16,025 6,858 50,775
R. J. Schukai 1,050 7,383 625 16,025 - 50,775
</TABLE>
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<PAGE>
Ameren Retirement Plan
Most salaried employees of Ameren and its subsidiaries earn benefits under
the Ameren Retirement Plan immediately upon employment. Benefits generally
become vested after five years of service. On an annual basis a bookkeeping
account in a participant's name is credited with an amount equal to a percentage
of the participant's pensionable earnings for the year. Pensionable earnings
equals base pay, overtime and annual bonuses, which are equivalent to amounts
shown as "Annual Compensation" in the Summary Compensation Table. The applicable
percentage is based on the participant's age as of December 31 of that year. If
the participant was an employee prior to July 1, 1998, an additional transition
credit percentage is credited to the participant's account through 2007 (or an
earlier date if the participant had less than 10 years of service on December
31, 1998).
<TABLE>
<CAPTION>
Participant's Age Regular Credit for Transition Credit For
on December 31 Pensionable Earnings<F1> for Pensionable Earnings Total Credits
-------------- -------------------- ------------------------ -------------
<S> <C> <C> <C>
Less than 30 3% 1% 4%
30 to 34 4% 1% 5%
35 to 39 4% 2% 6%
40 to 44 5% 3% 8%
45 to 49 6% 4.5% 10.5%
50 to 54 7% 4% 11%
55 and over 8% 3% 11%
<FN>
<F1>An additional regular credit of 3% is received for pensionable earnings
above the Social Security wage base.
</FN>
</TABLE>
These accounts also receive interest credits based on the average yield for
one-year U.S. Treasury Bonds for the previous October, plus 1%. In addition,
certain annuity benefits earned by participants under prior plans as of December
31, 1997 were converted to additional credit balances under the Ameren
Retirement Plan as of January 1, 1998. When a participant terminates employment,
the amount credited to the participant's account is converted to an annuity or
paid to the participant in a lump sum. The participant can also choose to defer
distribution, in which case the account balance is credited with interest at the
applicable rate until the future date of distribution. Benefits are not subject
to any deduction for Social Security or other offset amounts.
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<PAGE>
In certain cases pension benefits under the Retirement Plan are reduced to
comply with maximum limitations imposed by the Internal Revenue Code.
Supplemental plans are maintained by Ameren, Union Electric and CIPS to provide
for a supplemental benefit equal to the difference between the benefit that
would have been paid if such Code limitations were not in effect and the reduced
benefit payable as a result of such Code limitations. Such plans are unfunded
and are not qualified plans under the Internal Revenue Code. CIPS makes
contributions to an irrevocable trust to provide funds to assist in meeting its
liabilities under its supplemental plan.
The following table shows the estimated annual retirement benefits,
including supplemental benefits, which would be payable to each executive
officer listed if he were to retire at age 65 at his 1998 base salary and annual
bonus, and payments were made in the form of a single life annuity.
<TABLE>
<CAPTION>
Name Year of 65th Birthday Estimated Annual Benefit
---- --------------------- ------------------------
<S> <C> <C>
C.W. Mueller 2003 $380,000
C.J. Schukai 1999 191,000
D.E. Brandt 2019 237,000
G.L. Randolph 2013 160,000
R.J. Schukai<F1> 2003 105,000
<FN>
<F1>Retired February 1, 1999 and received distribution of his Plan benefit.
</FN>
</TABLE>
Change of Control Severance Plan
Under the Ameren Corporation Change of Control Severance Plan, designated
officers of Ameren and its subsidiaries, including current officers of the
Company named in the Summary Compensation Table, are entitled to receive
severance benefits if their employment is terminated under certain circumstances
within three years after a "change of control." A "change of control" occurs, in
general, if (i) any individual, entity or group acquires 20% or more of the
outstanding Common Stock of Ameren or of the combined voting power of the
outstanding voting securities of Ameren; (ii) individuals who, as of the
effective date of the Plan, constitute the Board of Directors of Ameren, or who
have been approved by a majority of the Board, cease for any reason to
constitute a majority of the Board; or (iii) Ameren enters into certain business
combinations, unless certain requirements are met regarding continuing ownership
of the outstanding Common Stock and
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<PAGE>
voting securities of Ameren and the membership of its Board of Directors.
Severance benefits are based upon a severance period of two or three years,
depending on the officer's position. An officer entitled to severance will
receive the following: (a) salary and unpaid vacation pay through the date of
termination; (b) a pro rata bonus for the year of termination, and base salary
and bonus for the severance period; (c) continued employee welfare benefits for
the severance period; (d) a cash payment equal to the actuarial value of the
additional benefits the officer would have received under Ameren's qualified and
supplemental retirement plans if employed for the severance period; (e) up to
$30,000 for the cost of outplacement services; and (f) reimbursement for any
excise tax imposed on such benefits as excess payments under the Internal
Revenue Code.
INDEPENDENT ACCOUNTANTS
The Company has not selected its independent accountants for 1999. This
selection is expected to be made by the Board of Directors of Ameren Corporation
after the Auditing Committee of that Board has reviewed the prior year's audit
report with representatives of the independent accountants for such year. After
such review, the Auditing Committee will recommend to that Board for its
approval the selection of independent accountants for 1999 and the fees to be
paid for the regular annual audit.
PricewaterhouseCoopers LLP served as the Company's independent accountants
in 1998. Representatives of that firm are expected to be present at the annual
meeting with the opportunity to make a statement if they so desire and are
expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended for inclusion in the proxy material for
the Company's 2000 Annual Meeting of Stockholders must be received by December
1, 1999.
In addition, under the Company's By-Laws, stockholders who intend to submit
a proposal in person at an Annual Meeting, or who intend to nominate a director
at a Meeting, must provide advance written notice along with other prescribed
information. In general, such notice must be received by the Secretary of the
Company at the principal executive
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<PAGE>
offices of the Company not later than 60 or earlier than 90 days prior to the
Meeting. A copy of the By-Laws can be obtained by written request to the
Secretary of the Company.
MISCELLANEOUS
In addition to the use of the mails, proxies may be solicited by personal
interview, or by telephone or other means, and banks, brokers, nominees and
other custodians and fiduciaries will be reimbursed for their reasonable
out-of-pocket expenses in forwarding soliciting material to their principals,
the beneficial owners of stock of the Company. Proxies may be solicited by
officers, directors and key employees of the Company on a voluntary basis
without compensation. The Company will bear the cost of soliciting proxies on
its behalf.
____________
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