<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
CENTRAL ILLINOIS LIGHT COMPANY
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRELL CORPORATION
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[CILCO]
300 LIBERTY ST., PEORIA, IL 61602-1404
NOTICE OF ANNUAL MEETING
Dear Shareholders:
The Annual Meeting of Shareholders of Central Illinois Light Company will be
held on Tuesday, April 23, 1996 at 1:30 PM, Central Time, at the principal
office of the Company, 300 Liberty Street, Peoria, Illinois, in order to elect a
Board of Directors and transact such other business as may properly come before
the meeting.
Shareholders of record at the close of business on March 8, 1996 are entitled to
vote at the meeting.
By Order of the Board of Directors,
John G. Sahn
Secretary
March 26, 1996
IMPORTANT
It is important that your shares be represented at the meeting.
Please mark, sign, date and return the enclosed proxy promptly in
order that your shares will be voted.
<PAGE>
PROXY STATEMENT
GENERAL
This statement is furnished in connection with a solicitation of proxies
by the Board of Directors of Central Illinois Light Company (the "Company" or
"CILCO"), for use at the Annual Meeting of Shareholders to be held on Tuesday,
April 23, 1996 at 1:30 PM, Central Time, at the Company's executive offices, 300
Liberty Street, Peoria, Illinois 61602, and any adjournment thereof. The shares
represented by your proxy will be voted if the proxy is duly executed and
returned prior to the meeting. You may revoke your proxy by a duly executed
later proxy, or at any time before it is exercised by written notice to the
Secretary of the Company, received prior to the time of the meeting, or orally
at the meeting.
The expense of the solicitation of proxies is being borne by the Company.
In addition to solicitation by mail, officers and regular employees of the
Company may solicit proxies either personally, or by telephone or fax. The
Company will reimburse banks, brokers or other similar agents or fiduciaries for
forwarding proxy material to their principals, the beneficial owners of the
stock.
The annual report of the Company for the year ended December 31, 1995 is
being sent, along with the Notice of Annual Meeting, this Proxy Statement and
the accompanying Proxy, to all shareholders of record at the close of business
on March 8, 1996, which is the record date for the determination of shareholders
entitled to vote at the meeting. These items are to be first mailed to
shareholders on March 26, 1996.
VOTING SECURITIES AND PRINCIPAL HOLDERS
On March 8, 1996, the record date for the meeting, the Company had
outstanding 191,204 shares of preferred stock, $100 par value, 470,000 shares of
Class A preferred stock, no par value, and 13,563,871 shares of common stock, no
par value. Each share entitles the holder thereof to one vote upon any matter
coming before the meeting, except that in the election of directors, each
shareholder is entitled to cumulate votes and, therefore, may give one nominee
as many votes as shall equal the number of directors to be elected multiplied by
the number of shares held by such shareholder, or such shareholder may
distribute such votes among any two or more nominees by so indicating on the
proxy. Votes cast by proxy or in person at the annual meeting will be tabulated
by the election inspectors appointed for the meeting who will determine whether
or not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a
1
<PAGE>
quorum but as unvoted for purposes of determining the approval of any matter
submitted to the shareholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
At March 8, 1996, T. S. Romanowski, a vice president of the Company, was
the beneficial owner of 5 shares of the Company's preferred stock, $100 par
value, representing less than .003% of the shares of that class outstanding. No
other officer or director nominee was the beneficial owner of any shares of the
Company's preferred or common stock.
The following information, regarding beneficial ownership on January 1,
1996 of the Company's equity securities, is furnished with respect to each
person or group of persons acting together who, as of such date, is shown on the
Company's stock records to be the registered owner of more than 5% of any class
of the Company's voting securities and no independent inquiry has been made to
determine whether any shareholder is the beneficial owner of shares not
registered in the name of such shareholder or whether any shareholder is a
member of a shareholder group.
<TABLE>
<CAPTION>
CLASS OF NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
STOCK BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- - ----------- --------------------------------- ---------------------- ------------
<S> <C> <C> <C>
Common CILCORP Inc. 13,563,871(1) 100%
300 Hamilton Boulevard
Suite 300
Peoria, IL 61602
Class A Chancellor Capital 15,000(2) 6.8%
Preferred Management, Inc. and
Chancellor Trust Company
1166 Avenue of the Americas
New York, New York 10036
</TABLE>
- - --------
(1) CILCORP Inc. has sole voting and dispositive power with respect to the
common shares.
(2) According to Schedule 13G dated February 1, 1996, filed by Chancellor
Capital Management, Inc. and Chancellor Trust Company, as Investment
Advisors for various fiduciary accounts, they have sole voting and
dispositive power with respect to the Class A Preferred shares.
ELECTION OF DIRECTORS
The Board of Directors has determined that, effective as of the annual
meeting on April 23, 1996, the Board will be reduced from eleven to between
three and seven
2
<PAGE>
directors. Three directors are to be elected at the annual meeting to hold
office for the ensuing year or until their successors are elected and qualified.
All nominees, except Mr. Romanowski, are now serving as directors of the Company
and have consented to serve, if elected. To be elected a director, a nominee
must be among the three nominees receiving the highest number of votes. The
nominees, along with their biographical summaries, are listed below.
The Board of Directors has no reason to believe that the persons named
will not be available, but in the event that a vacancy among the original
nominees is occasioned by death or any other reason prior to the meeting, the
proxy will be voted for a substitute nominee or nominees designated by the Board
of Directors.
THOMAS S. ROMANOWSKI
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER OF CILCO
Director of CILCORP Investment Management Inc. since 1987
Mr. Romanowski was born at Peoria, Illinois in 1950. He graduated from
Bradley University in 1971 with a degree in Business Administration. He joined
CILCO that same year and after advancing through several positions in the
accounting, treasury and information systems areas was elected vice president in
1986. Mr. Romanowski is president of CILCORP Investment Management Inc.,
president and chief executive officer of Agricultural Research and Development
Corporation, and president and chief executive officer of CILCORP Ventures Inc.
He serves as director and treasurer of the Employers' Association of Illinois,
director of the Illinois Central College Education Foundation, and director of
Heartland Community Development Corporation. He is a director and president of
the Tri-County (Peoria) Urban League, Inc., member and past president of the
Central Illinois Chapter of the Planning Forum, and a member of the Institute of
Management Accountants.
JAMES F. VERGON
PRESIDENT AND CHIEF OPERATING OFFICER OF CILCO
Director of CILCO since 1991
Mr. Vergon was born at Peoria, Illinois in 1948. He joined CILCO in 1971
and advanced through various positions in engineering. He was appointed gas
engineering manager in 1981, director-rates and regulatory affairs in 1982, and
elected vice president in 1986. He was vice president and chief financial
officer of CILCORP from January 1, 1993 through February 28, 1993. He again was
elected a vice president of the Company effective March 1, 1993 and was elected
group president of CILCO effective April 1, 1995. He was elected to his current
position effective January 29, 1996. Mr. Vergon graduated from Bradley
University in 1971 with a degree in mechanical engineering and is a
3
<PAGE>
registered professional engineer. He received a master's degree in business
administration from Bradley University in 1981. He is chairman of the board of
CILCORP Investment Management Inc. and a member of the board of directors of
Bank One, Peoria; The Economic Development Council for the Peoria Area; and the
Heart of Illinois United Way. In addition, he is a member of the board of
trustees of Proctor Hospital and the Bradley University Associate Board and the
advisory boards of Forest Park Foundation, The Institute of Public Utilities and
the Bradley University College of Engineering and Technology.
ROBERT O. VIETS
PRESIDENT AND CHIEF EXECUTIVE OFFICER OF CILCORP INC. AND
CHAIRMAN AND CHIEF EXECUTIVE OFFICER OF CILCO
Director of CILCO from 1988 to 1991 and since 1995
Mr. Viets was born at Girard, Kansas in 1943. He graduated from Washburn
University in 1965 with a degree in economics and received his law degree from
Washington University School of Law in 1969. He is a certified public accountant
and has had experience with a national accounting firm. Mr. Viets joined CILCO
in 1973 as manager of special studies and was appointed manager of rates and
regulatory affairs in 1976. He was elected assistant vice president, regulatory
and legislative affairs, in 1980, vice president, financial services in 1981,
vice president (finance group) in 1983 and senior vice president of the Company
and CILCORP in 1986. He was elected president and chief executive officer of
CILCORP in 1988 and chairman and chief executive officer of the Company in 1995.
He is also chairman of the board and chief executive officer of Environmental
Science & Engineering, Inc., and QST Enterprises Inc. (effective January 29,
1996), chairman of CILCORP Ventures Inc. and a director of CILCORP and CILCORP
Investment Management Inc. Mr. Viets is a director of First of America Bank-
Illinois, N.A.; First of America Bank-Illinois, N.A. Peoria Regional Advisory
Board; RLI Corp.; Lincoln Office Supply Co., Incorporated; the Peoria Medical
Research Corporation and Methodist Health Services Corporation. He serves as
chairman of the board of trustees of Bradley University.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
Effective April 23, 1996, the Board of Directors will function as a
Committee of the Whole. Prior to April 23, 1996, the Board of Directors has had
Executive and Finance Committees. During 1995, the Executive Committee held one
meeting and the Finance Committee held six meetings. During 1995, the Board of
Directors held a total of five meetings.
4
<PAGE>
DIRECTORS' COMPENSATION
No fees are paid to directors who are officers of the Company.
Non-employee members of the Board receive a single annual retainer fee of
$16,000 for serving on the Company's Board and on CILCORP's Board. Non-employee
members of the Board who are not members of the Board of the Company's parent
receive an annual retainer fee of $12,000 for serving on the Company's Board.
These fees are prorated for less than a year's service. Non-employee directors
also receive an attendance fee of $750 for attending meetings of the Board of
Directors of the Company or CILCORP and an attendance fee of $750 for each
meeting attended of committees of those Boards. No reduction is made in
attendance fees in the event the Boards or committees meet on the same day.
Directors are also reimbursed for their travel expenses for each Board or
committee meeting attended.
INDEPENDENT AUDITORS
Upon the recommendation of its Audit Committee, the Board of Directors of
the Company's parent, CILCORP Inc., has appointed Arthur Andersen LLP,
independent public accountants, to audit the accounts of the Company for 1996.
Arthur Andersen LLP is not expected to be represented at the annual meeting.
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation
earned for the years 1995, 1994 and 1993 for the Chief Executive Officer(s) and
the four most highly compensated executive officers of the Company:
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
--------------------- --------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY LTIP PAYOUTS(1) COMPENSTION(2)
- - ----------------------------------------- --------- ---------- --------------- ----------------
<S> <C> <C> <C> <C>
R. O. Viets (3) 1995 $ 327,756 $ 17,819 $ 34,925
Chairman and Chief 1994 261,000 88,015 27,364
Executive Officer 1993 257,850 41,962 25,305
W. M. Shay (4) 1995 $ 185,838 $ 54,641 $ 24,812
Former Group President 1994 156,818 49,852 19,418
1993 150,437 34,864 17,953
J. F. Vergon (5) 1995 $ 181,661 $ 61,437 $ 15,610
President and Chief 1994 140,270 63,012 12,513
Operating Officer 1993 134,564 57,114 11,635
T. S. Romanowski 1995 $ 133,584 $ 56,662 $ 14,442
Vice President 1994 127,795 58,775 11,751
1993 121,705 55,162 10,894
T. S. Kurtz (6) 1995 $ 110,144 $ 124,413 $ 8,820
Former Vice President 1994 124,309 56,820 8,622
1993 118,120 53,012 8,022
R. W. Slone (7) 1995 $ 91,840 $ 78,988 $ 38,013
Former Chairman, President 1994 226,720 96,321 30,977
and Chief Executive Officer 1993 205,500 88,635 28,611
</TABLE>
- - --------
(1) Amounts paid pursuant to the Company's EVA-Based Incentive Compensation
Plan.
(2) Amounts shown in this column for 1995 represent (a) Company contributions
under the Employees' Savings Plan: Mr. Viets $4,500, Mr. Shay $4,500, Mr.
Vergon $4,500, Mr. Romanowski $3,852, Mr. Kurtz $3,304, and Mr. Slone $2,755
and (b) earnings on deferred compensation: Mr. Viets $30,425, Mr. Shay
$20,312, Mr. Vergon $11,110, Mr. Romanowski $10,590, Mr. Kurtz $5,516, and
Mr. Slone $35,258.
(3) Elected chairman, president and chief executive officer effective April 1,
1995. Mr. Viets' compensation relates also to his compensation as president
and chief executive officer of CILCORP Inc.
(4) Elected vice president of the Company in 1993 and group president effective
April 1, 1995. Effective January 29, 1996, Mr. Shay is president and chief
operating officer of QST Enterprises Inc., also a subsidiary of CILCORP Inc.
6
<PAGE>
(5) Re-elected vice president of the Company in 1993, group president effective
April 1, 1995 and president and chief operating officer effective January
29, 1996. Mr. Vergon served as vice president and chief financial officer of
CILCORP Inc. from January 1, 1993 through February 28, 1993.
(6) Resigned from the Company effective November 8, 1995. Mr. Kurtz received the
accumulated balance of his EVA-Based Incentive Compensation Plan upon
termination.
(7) Retired from the Company effective April 1, 1995.
EVA-BASED INCENTIVE COMPENSATION PLAN
Incentive compensation is awarded in accordance with the Company's EVA-
Based Incentive Compensation Plan (the "EVA Plan") and the CILCORP Shareholder
Return Incentive Compensation Plan (the "Shareholder Return Plan") described
below. The purpose of the EVA Plan is to provide an incentive to eligible
officers and senior managers and to increase and maintain shareholder value by
rewarding the achievement of these objectives. EVA is a measure of profitability
that is based on the difference between the return earned on the capital
invested in an enterprise and the cost of that capital. This difference can be
either positive or negative and results in an addition to or a deduction from
award balances accumulated from prior years. Each year, one third of the net
balance accumulated is paid to the participant. That portion of the incentive
compensation which has been deferred is "at risk" since a negative EVA in a
subsequent year may eliminate previously accumulated balances. The calculation
of the award pool is based, in part, on a fixed percentage of the improvement in
EVA from the prior year and, in part, on a fixed percentage of the average of
EVA contributed over a three-year period. These percentages, which do not change
from year to year, were determined when the EVA Plan was originally established.
They were designed to create an award pool of sufficient size to achieve the
Plan objectives and are used only for that purpose. Annually, at the outset of
each plan year, the Finance Committee determines the portion of the award pool
to be allocated to each participant, including the executive officers, based on
the individual's job responsibilities and the Committee's evaluation of the
effect which that individual's performance is expected to have on the size of
the award pool. A portion of the award pool is distributed, at the Committee's
discretion, at the conclusion of each plan year. Discretionary awards are
determined on the basis of the CEO's recommendation and the compensation
policies established by the Committee. Both the non-discretionary and
discretionary portions of an award are added to each participant's account
balance, one third of which is paid and the remainder of which remains at risk
in the account balance.
7
<PAGE>
SHAREHOLDER RETURN INCENTIVE COMPENSATION PLAN
Participants in the Shareholder Return Plan are eligible key employees of
CILCORP and its subsidiaries, including CILCO, who, due to the nature and scope
of their positions, regularly and directly make or influence policy decisions
which impact the overall long-term results or success of the Company and
CILCORP. The purposes of the Shareholder Return Plan are to promote long-term
growth in the value of CILCORP common stock, to attract and retain executives of
outstanding ability, to encourage teamwork among the executives of CILCORP and
its subsidiaries, and to reward performance based on the successful achievement
of pre-established corporate financial goals. Under the Plan, grants entitle
participants to receive shares of CILCORP common stock at the end of a
pre-established performance measurement period to the extent that the Company
achieves pre-established financial objectives during such period. All grants are
made by a committee of the Board (comprised of disinterested directors), which
has discretion to establish the performance measurement periods and Company
financial objectives applicable to each grant. Grants under this Plan made in
1995 are set forth in the table below.
LONG TERM INCENTIVE PLANS -- AWARDS IN 1995(1)
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE OR ESTIMATED FUTURE PAYOUTS
SHARES, UNITS OTHER PERIOD UNTIL ----------------------------------------------------
OR OTHER MATURATION OR
RIGHTS PAYOUT THRESHOLD TARGET MAXIMUM
----------------- ------------------ --------------- ---------------- ----------------
NAME EVA(2) SRP(3) EVA(4) SRP EVA(5) SRP(6) EVA(7) SRP EVA(8) SRP
- - ------------------------- --------- ------ ------ --------- ------- ------ -------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
R. O. Viets ($117,466) 10,000 -- 1995-1999 $ 5,936 5,000 ($33,216) 10,000 $ 17,809 30,000
W. M. Shay 68,648 3,333 -- 1995-1999 32,595 1,666 55,454 3,333 97,882 10,000
J. F. Vergon 61,430 3,333 -- 1995-1999 37,357 1,666 57,813 3,333 112,184 10,000
T. S. Romanowski (9) 56,210 -- -- -- 34,210 -- 52,928 -- 102,734 --
T. S. Kurtz (9)(10) 44,360 -- -- -- -- -- -- -- -- --
R. W. Slone (9)(11) 50,352 -- -- -- -- -- -- -- -- --
</TABLE>
- - --------
(1) Amounts listed under columns headed "EVA" are dollar amounts under the
Company's EVA-Based Incentive Compensation Plan. Amounts listed under
columns headed "SRP" are the number of shares of common stock under the
CILCORP Shareholder Return Plan.
(2) Amounts listed are the net increases or decreases accrued during the 1995
plan year to previously accumulated balances.
(3) Amounts listed are the number of shares allocated in 1995.
(4) Each year, one-third of the net balance accumulated in the EVA Plan is paid
to the participant. (See Summary Compensation Table for amounts paid in
1995.)
8
<PAGE>
(5) Amounts listed are payable if net change in EVA in 1996 is zero.
(6) Represents minimum amount received if certain Company financial objectives
are met. No shares are received if such objectives are not met.
(7) Amounts listed are payable if net change in EVA in 1996 is the same as in
1995.
(8) Amounts listed are accumulated balances at the beginning of the 1996 plan
year.
(9) Mr. Romanowski, Mr. Kurtz and Mr. Slone did not participate in the
Shareholder Return Plan in 1995.
(10) Upon resignation from the Company November 8, 1995, Mr. Kurtz terminated
his participation in the EVA-Based Incentive Compensation Plan and received
his entire accumulated balance.
(11) Upon retirement from the Company effective April 1, 1995, Mr. Slone
concluded participation in the EVA-Based Incentive Compensation Plan. He
will receive equal annual payments of his accumulated balance in 1996 and
1997 adjusted for interest and loan repayments. His accumulated balance as
of September 30, 1995 was $140,735.
CERTAIN PLANS
BENEFIT REPLACEMENT PLAN. The Board of Directors has established a
Benefit Replacement Plan (the "Benefit Replacement Plan"). The Benefit
Replacement Plan provides for payments to participants from the Company's
general funds to restore the retirement benefit under the Company's
non-contributory Pension Plan for Management, Office and Technical Employees
(the "Pension Plan") when such benefit is restricted by (1) the maximum defined
benefit limitation of Section 415(b) of the Internal Revenue Code of 1986, as
amended (the "Code"), (2) the index compensation limitation of Code Section
401(a)(17), and (3) participation in certain of the Company's deferred
compensation plans. The Benefit Replacement Plan generally covers all Pension
Plan participants affected by these restrictions and provides for payment at the
times and in the forms of the Pension Plan.
PENSION PLAN. Pension benefits are provided through the Pension Plan.
Directors who are not employees do not participate in this Plan. Pension
benefits are determined using a formula based on years of service and highest
average rate of monthly earnings for any sixty consecutive month period. The
normal retirement date specified in the Pension Plan is age 65. Retirement prior
to age 62 results in an appropriate reduction in pension benefits.
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<PAGE>
The following table shows the aggregate annual benefits payable on a
straight life annuity basis upon retirement at normal retirement age under the
Pension Plan and under the Benefit Replacement Plan discussed above. The amounts
shown are not subject to any deduction for Social Security benefits or other
offset amounts other than that for an optional survivorship provision.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------
REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- - ------------- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$175,000 $ 37,410 $ 49,878 $ 62,346 $ 74,814 $ 87,282
200,000 42,750 57,000 71,250 85,500 99,750
225,000 48,096 64,128 80,160 96,192 112,224
250,000 53,442 71,250 89,064 106,878 124,692
275,000 58,781 78,375 97,969 117,563 137,156
300,000 64,128 85,500 106,878 128,250 149,628
</TABLE>
The sum of annual and long-term compensation shown for the individuals
listed in the above Summary Compensation Table is substantially compensation as
covered by the Pension Plan and the Benefit Replacement Plan. At January 1,
1996, the credited years of service under the Pension Plan for such individuals
are as follows: R. O. Viets -- 22 years, W. M. Shay -- 13 years, J. F. Vergon --
24 years, T. S. Romanowski -- 24 years, T. S. Kurtz -- 20 years, and R. W. Slone
- - -- 37 years.
COMPENSATION PROTECTION PLAN. The Company's Board of Directors has
established a Compensation Protection Plan providing severance benefits to
eligible employees, including all individuals named in the Summary Compensation
Table above (except Messrs. Kurtz and Slone), in the event of (i) a termination
of employment resulting directly or indirectly from a sale of substantially all
or certain assets of the Company or (ii) a termination of employment within two
years after a change in control occurring involuntarily for a reason other than
unacceptable performance or occurring voluntarily with good reason as defined in
the plan. A change in control includes the sale of all or part of the business
of the Company to a person not controlled by CILCORP, a merger or consolidation
of CILCORP in which CILCORP does not survive or in which its common stock is
converted, the acquisition of 30% of the beneficial ownership of CILCORP by a
person together with the failure of continuing directors to constitute a
majority of its Board of Directors, or a sale of all or substantially all of the
assets of CILCORP. Upon a covered termination, a participant is entitled to a
continuation of base salary and benefit plan coverage for two years (or a
shorter period for participants below the position of vice president with less
than 30 years of service) after such termination.
10
<PAGE>
FINANCE COMMITTEE REPORT ON EXECUTIVE COMPENSATION
BACKGROUND AND POLICIES. The Finance Committee of the Board of Directors
(the "Committee") is comprised of four non-employee members of the Board. The
Committee considers and makes recommendations to the Board with respect to the
compensation of the executive officers (the president and vice presidents) of
the Company. The Committee's compensation policies with respect to the executive
officers are as follows:
1. Compensation levels should be established which are internally fair and
equitable, bearing in mind (a) past practices, patterns and
relationships, and (b) the relationship between officer level
compensation and the compensation provided for top level managers
throughout the Company.
2. Compensation should be comparable and reasonable in relation to similar
positions in other utility companies of like size, structure and
characteristics.
3. Compensation of the executive officers should be directly related to the
economic value created for shareholders.
4. A compensation program should be designed to attract and retain superior
management.
EXECUTIVE OFFICER COMPENSATION PROGRAM. The Company's current executive
officer compensation program is comprised of two major components: base salary
and incentive compensation. Base salary levels for the Company's executive
officers are set by the Committee relative to other utility companies of similar
size and characteristics. In addition, the Committee also considers the
individual officer's experience and performance. Salaries of the executive
officers are reviewed each year by the Committee and may be adjusted based on
the individual's contribution to the Company's performance and competitive pay
levels.
PRESIDENT'S COMPENSATION. Robert O. Viets serves as president and chief
executive officer of CILCORP Inc. in addition to serving as chairman and chief
executive officer of CILCO. His compensation in his capacities as an officer of
both companies is determined by the Board of Directors of CILCORP upon
recommendation of its Compensation Committee. The Finance Committee concurs in
and adopts the recommendation and determination for 1995 of the CILCORP Board of
Directors and its Compensation Committee whereby Mr. Viets was awarded a salary
of $350,000 commencing April 1, 1995, representing an increase of approximately
34% over his prior salary level.
The CILCORP Compensation Committee based its decision on the following
factors: (1) studies conducted by an external executive compensation consultant
which indicated that Mr. Viets' base salary compensation was approximately 73%
of the base
11
<PAGE>
salary compensation of the chief executive officers of a group of comparable
companies, (2) recognition that Mr. Viets, in addition to assuming additional
duties, had met substantially all the business and financial goals that were
established for the preceding year, and (3) the fact that Mr. Viets had not
received a base salary increase since April 1993.
In 1995, the Compensation Committee allocated 10,000 shares of CILCORP
common stock on behalf of Mr. Viets under the Shareholder Return Plan for the
performance period ending December 31, 1999. The number of shares awarded and
actual distribution of the shares will be dependent upon meeting pre-established
Company financial objectives based on total shareholder return during the
performance period. In addition, Mr. Viets received an award of $17,819 in 1995
pursuant to the Company's EVA-Based Incentive Compensation Plan."
Finance Committee
Richard N. Ullman, CHAIRMAN
Marcus Alexis
John R. Brazil
Willard Bunn III
OTHER MATTERS
The Board has no knowledge of any business to be presented for
consideration at the annual meeting other than that discussed above. Should any
other business properly come before the meeting or any adjournment thereof, it
is intended that the shares represented by proxies will be voted with respect
thereto in accordance with the best judgment of the persons named in such
proxies.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders to be presented at the April 22, 1997 annual
meeting must be received not later than November 27, 1996 for inclusion in the
proxy statement and form of proxy relating to that meeting. Proposals should be
sent to the Secretary, Central Illinois Light Company, 300 Liberty Street,
Peoria, Illinois 61602.
By Order of the Board of Directors,
John G. Sahn
SECRETARY
March 26, 1996
12
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[Cilco logo]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D.E. Connor, R.O. Viets, and J.G. Sahn,
and each of them, attorneys and proxies with power of substitution to each,
with authority to vote all shares which the undersigned would be entitled to
vote if personally present at the 1996 annual meeting of shareholders of
Central Illinois Light Company, or at any adjournment thereof, upon the
election of directors as set forth in the notice of meeting and proxy
statement dated March 26, 1996, and, in their discretion, upon any other
matter which may properly come before the meeting. The shares represented
hereby will be voted as directed on the reverse of this card.
IF NOT OTHERWISE DIRECTED, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF DIRECTORS
(C0NTINUED AND TO BE SIGNED ON THE OTHER SIDE)
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<S> <C> <C>
ACCOUNT NUMBER PROXY. PLEASE DATE AND SIGN EXACTLY AS NAME APPEARS BELOW. EACH JOINT OWNER SHOULD SIGN. ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, OR OTHERS SIGNING IN A REPRESENTATIVE CAPACITY SHOULD GIVE
THEIR FULL TITLES.
ELECTION OF DIRECTORS
DATE: ,1996
------------------------ / / FOR all nominees listed / / WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
- - ---------------------------------- to the contrary below) listed below
SIGNATURE/S
T.S. Romanowski, J.F. Vergon, and R.O. Viets
- - ----------------------------------
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
-----------------------------------------------------------------------------
NO POSTAGE REQUIRED IF RETURNED IN THE ENCLOSED
ENVELOPE AND MAILED IN THE UNITED STATES.
TEAR OFF THIS PORTION
REMOVE PROXY AT PERFORATION AND RETURN IN ENCLOSED BUSINESS REPLY ENVELOPE.
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