CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
607 East Adams Street
Springfield, Illinois 62739
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of Central Illinois Public Service
Company (the "Company") will be held at the Springfield Hilton, 700 East Adams
Streets, Springfield, Illinois, on April 26, 1995, at 10:00 a.m., for the
purpose of considering and voting with respect to the following matters:
(1) the election of a Board of nine directors; and
(2) the transaction of such other business as may properly come before
the meeting.
Reference is made to the attached Proxy Statement for further information
with respect to the foregoing.
Only common and preferred shareholders of the Company of record on its
books at the close of business on February 27, 1995, are entitled to vote at
the meeting. All such shareholders are urged to be present in person, or
represented by proxy, at the meeting.
A copy of the Company's Annual Report to Shareholders for the year 1994,
which is combined with its 1994 Annual Report on Form 10-K filed with the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934, has been mailed to each shareholder of the Company of record on its
books.
By order of the Board of Directors,
R. W. Jackson,
Senior Vice President and Secretary
March 6, 1995
All shareholders, even if they plan to attend the meeting in person, are
urged to vote, date and sign their proxies and return them to the Company in
the enclosed envelope as promptly as possible. The Board of Directors
encourages all shareholders to be represented at the meeting, whether their
shareholdings are small or large.<PAGE>
CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
607 East Adams Street
Springfield, Illinois 62739
217/523-3600
March 6, 1995
Proxy Statement Relating to
1995 Annual Meeting of Shareholders
INTRODUCTION
General. The purposes of the meeting are set forth in the attached
Notice. The enclosed proxy relating to the meeting is solicited on behalf of
the Board of Directors of the Company and the cost of such solicitation will
be borne by the Company. Following the initial solicitation of proxies by
mail beginning on or about March 1, 1995, certain officers, directors and
employees of the Company may solicit proxies by correspondence, telephone,
telegraph, telecopy, other electronic means or in person, but without extra
compensation. The Company will pay to banks, brokers, nominees and other
fiduciaries their reasonable charges and expenses incurred in forwarding the
proxy soliciting material to their principals. In addition, Morrow & Co.,
Inc., New York, New York, has been retained to assist the Company and its
affiliate in the solicitation of proxies. Such solicitation may be made by
mail, telecommunication or in person. The estimated aggregate cost of such
services of Morrow & Co., Inc. is $5,500.
Holding Company. The Company is the principal subsidiary of CIPSCO
Incorporated ("CIPSCO").
Voting. The voting securities of the Company outstanding on the record
date stated below consisted of 800,000 shares of Cumulative Preferred Stock,
par value $100 per share, of various series and 25,452,373 shares of Common
Stock, without par value.
Only shareholders (both preferred and common) of the Company of record on
its books at the close of business on February 27, 1995, are entitled to
notice of and to vote at the meeting. At such meeting, each such shareholder
is entitled to one vote, for each share of stock of the Company (whether
preferred or common) held, on each matter submitted to a vote at the meeting,
except that in the election of directors, each such shareholder is entitled to
vote cumulatively and therefore may give one nominee for election as many
votes as shall equal the number of directors to be elected multiplied by the
number of shares held by such shareholder, or may distribute such votes among
any two or more nominees. The proxies solicited herewith seek discretionary
authority to cast cumulative votes in the election of directors.
Any shareholder may vote his or her shares either in person or by duly
authorized proxy. The giving of a proxy by a shareholder will not affect the
right to vote shares if the shareholder attends the meeting and desires to
vote in person. Prior to the voting of a proxy, it may be revoked by the
1<PAGE>
shareholder by delivering written notice of revocation to the Secretary of the
Company, by executing a subsequently dated proxy or by voting in person at the
meeting. All shares represented by effective proxies on the enclosed form of
proxy, received by the Company, will be voted at the meeting (or any adjourned
session thereof) in accordance with the terms of such proxies.
A majority of the outstanding shares entitled to vote on a matter,
represented in person or by proxy, constitutes a quorum for consideration of
such matter at the meeting. If a quorum is present, the nine persons
receiving the greatest number of votes will be elected as directors. The
affirmative vote of the majority of the shares represented at the meeting and
entitled to vote on a matter will be sufficient to take action on a matter
properly before the meeting (unless a higher vote is required by law).
Broker non-votes will not be considered as represented at the meeting on
those matters for which no instructions from the shareholder have been given
to the broker. Accordingly, for a matter which requires the vote of a
percentage of shares represented at the meeting, broker non-votes will have no
effect on the outcome. Abstentions will be counted in determining the quorum
in attendance for all matters and will be included in the total number of
shares represented and voting on a matter.
Each holder of depositary shares ("Depositary Shares") representing one-
quarter of one share of 6.625% Cumulative Preferred Stock of the Company
("6.625% Preferred Stock") will receive a form of proxy by which such holder
may instruct Illinois Stock Transfer Company, as depositary agent, as to the
manner of voting Depositary Shares held by such holder. The depositary agent
will vote whole shares of 6.625% Preferred Stock based on instructions from
holders of Depositary Shares but may not vote shares of 6.625% Preferred Stock
represented by Depositary Shares in the absence of voting instructions from
holders of such Depositary Shares.
Proposals of Shareholders. Under the rules of the Securities and
Exchange Commission, any shareholder proposal intended to be presented at the
1996 annual meeting of shareholders of the Company must be received at the
principal executive office of the Company no later than November 6, 1995, in
order to be eligible to be considered for inclusion in the proxy materials
relating to that meeting.
Voting Securities Beneficially Owned by Principal Holders, Directors,
Nominees and Executive Officers. CIPSCO owned beneficially at February 27,
1995, 25,452,373 shares of Common Stock of the Company representing 100% of
the outstanding Common stock of the Company. The directors, nominees and
executive officers of the Company and CIPSCO owned beneficially at February 1,
1995, an aggregate of 53,132 shares of Common Stock of CIPSCO representing
.16% of the outstanding Common Stock of CIPSCO and one share of Preferred
Stock of CIPS representing less than 0.01% of the outstanding Preferred Stock.
2<PAGE>
ELECTION OF DIRECTORS
Director Information. Nine directors are to be elected at the meeting.
Barring unforeseen contingencies, and in the absence of contrary directions,
the proxies solicited herewith will be voted for the election of William J.
Alley, Clifford L. Greenwalt, John L. Heath, Robert W. Jackson, Gordon R.
Lohman, Hanne M. Merriman, Richard A. Lumpkin, Thomas L. Shade and James W.
Wogsland as directors of the Company, to hold office until the next annual
meeting of shareholders of the Company or until their respective successors
shall have been duly elected and qualified. Except for Mr. Lumpkin, each of
the nominees is a director of the Company and has served continuously as such
since his or her election in the respective years indicated below. The
proxies may also be voted for a substitute nominee or nominees in the event
any one or more of the above nominees shall be unable to serve for any reason
or be withdrawn from nomination, a contingency not now anticipated.
Except for Mr. Lumpkin, each of the nominees is also a director of
CIPSCO, and has served continuously as such since CIPSCO's formation in 1990,
except Mr. Shade who was elected in 1991 and Mr. Wogsland who was elected in
1992. Under the policy adopted by the Board of Directors with respect to the
age of directors, Mr. Donald G. Raymer, retired President and Chief Executive
Officer of the Company, who has been a director of the Company since 1972,
will not stand for reelection as director at the meeting.
Except as otherwise indicated below, each nominee has been engaged in his
or her present principal occupation for at least the past five years.
The following information is given with respect to the nominees for
election as directors:
William J. Alley
Principal occupation: Retired Chairman of the Board and Chief
Executive Officer of American Brands,
Inc. (diversified consumer products and
services), Stamford, Connecticut.
Age: 65
Served as a director of the
Company since: 1974
Shares beneficially owned at
February 1, 1995: 1,527 shares of CIPSCO Common Stock. In
addition, Mr. Alley's account in the
directors' deferred compensation plan
described below holds the equivalent of
5,057 shares of CIPSCO Common Stock.
3<PAGE>
Other information: Mr. Alley served as Chairman of the
Board and Chief Executive Officer of
American Brands, Inc. from 1987 to his
retirement in 1994. He is Chairman of
the Audit Committee, Chairman of the
Executive Committee and a member of the
Compensation Committee of the Board.
Mr. Alley is also a director of
American Brands, Inc., Rayonier Inc.,
Rayonier Forest Resources, Inc., Olin
Corporation and Bunn-O-Matic
Corporation.
Clifford L. Greenwalt
Principal occupation: President and Chief Executive Officer
of the Company.
Age: 62
Served as a director of the
Company since: 1986
Shares beneficially owned at
February 1, 1995: 10,722 shares of CIPSCO Common Stock.
Other information: Mr. Greenwalt is a member of the
Executive Committee of the Board. He
is a director of First of America Bank
Corporation, Kalamazoo, Michigan and a
director of its wholly-owned
subsidiary, First of America Bank-
Illinois, N.A. He was Senior Vice
President-Operations of the Company
from 1980 to August 1989 when he became
President. Mr. Greenwalt is also
President and Chief Executive Officer
of CIPSCO.
John L. Heath
Principal occupation: Retired Chairman and President of L.S.
Heath and Sons, Inc. (also known as
Heath Candy Company -- confectionery
manufacturer). Robinson, Illinois.
Age: 59
Served as a director of the
Company since: 1977
4<PAGE>
Shares beneficially owned at
February 1, 1995: 4,000 shares of CIPSCO Common Stock.
Other information: Mr. Heath is a member of the Nominating
and Audit Committees of the Board. He
served as Chairman of L.S. Heath &
Sons, Inc. from 1971 until 1988 and
also as President and Chief Executive
Officer from 1971 until 1982. Mr.
Heath is a director of the Biltmore
Bank Corp. and of its wholly-owned
subsidiary, The Biltmore Investors Bank
of Phoenix, Arizona. He is also a
director of Sun Street Food Corporation
of Phoenix, Arizona.
Robert W. Jackson
Principal occupation: Senior Vice President--Finance and
Secretary of the Company.
Age: 64
Served as a director of the
Company since: 1986
Shares beneficially owned at
February 1, 1995: 6,634 shares of CIPSCO Common Stock.
Other information: Mr. Jackson is a director of Firstbank
of Illinois Co. and each of its wholly-
owned subsidiary banks, including the
First National Bank of Springfield.
Mr. Jackson is Senior Vice President,
Chief Financial Officer and Secretary
of CIPSCO, and President and Chief
Executive Officer of CIPSCO Investment
Company.
Gordon R. Lohman
Principal occupation: President and Chief Executive Officer
of AMSTED Industries Incorporated
(diversified manufacturer of industrial
products), Chicago, Illinois.
Age: 60
Served as a director of the
Company since: 1989
5<PAGE>
Shares beneficially owned at
February 1, 1995: 200 shares of CIPSCO Common Stock. In
addition, Mr. Lohman's account in the
directors' deferred compensation plan
described below holds the equivalent of
4,462 shares of CIPSCO Common Stock.
Other information: Mr. Lohman is Chairman of the
Compensation Committee and a member of
the Audit Committee and Executive
Committee of the Board. He became
President of AMSTED Industries
Incorporated in 1988 and Chief
Executive Officer in 1990. He was
Executive Vice President of that firm
in 1988 and served as Vice President
from 1978 through 1987. He is a
director of American Brands, Inc.
Richard A. Lumpkin
Principal occupation: Chairman of the Board and Chief
Executive Officer of Consolidated
Communication Inc. ("CCI") (diversified
telecommunications holding company)
Mattoon, Illinois.
Age: 59
Shares beneficially owned at
February 1, 1995: 1,000 shares of CIPSCO Common Stock.
Other information: Mr. Lumpkin has been Chairman of the
Board and Chief Executive Officer of
CCI since 1989 and President and
Treasurer prior to 1989. He is also
Chairman of the Board of Illinois
Consolidated Telephone Company, a
telephone utility subsidiary of CCI.
Mr. Lumpkin serves as a director of
Mid-America National Bancorp, Inc. and
its wholly-owned subsidiary Mid-America
National Bank of Chicago; First Mid-
Illinois Bancshares, Inc. and its
wholly-owned subsidiary First Mid-
Illinois Bank and Trust, N.A. of
Mattoon, Illinois; and Sarah Bush
Lincoln Health Systems, also of
Mattoon, Illinois.
6<PAGE>
Hanne M. Merriman
Principal occupation: Principal in Hanne Merriman Associates
(retail business consultants),
Washington, D.C.
Age: 53
Served as a director of the
Company since: 1990
Shares beneficially owned at
February 1, 1995: 1,505 shares of CIPSCO Common Stock.
In addition, Mrs. Merriman's account in
the directors' deferred compensation
plan described below holds the
equivalent of 3,006 shares of CIPSCO
Common Stock.
Other information: Mrs. Merriman is Chairman of the
Nominating Committee and a member of
the Audit Committee of the Board. She
was President of Nan Duskin, Inc. from
1991 to 1992. Previously she had been
a retail business consultant from
January 1990. Mrs. Merriman also
served as President and Chief Executive
Officer of Honeybee, Inc., a division
of Spiegel, Inc., and President of
Garfinckels, a division of Allied
Stores Corporation. Mrs. Merriman is a
director of USAir Group, Inc., State
Farm Mutual Automobile Insurance Co.,
The Rouse Company, AnnTaylor Stores
Corporation and T. Rowe Price Mutual
Funds.
Thomas L. Shade
Principal occupation: Retired Chairman of the Board and Chief
Executive Officer of Moorman
Manufacturing Company (livestock feed
products), Quincy, Illinois.
Age: 64
Served as a director of the
Company since: 1991
7<PAGE>
Shares beneficially owned at
February 1, 1995: 2,506 shares of CIPSCO Common Stock.
In addition, Mr. Shade's account in the
directors' deferred compensation plan
described below holds the equivalent of
2,318 shares of CIPSCO Common Stock.
Other information: Mr. Shade is a member of the Audit and
Compensation Committees of the Board.
Mr. Shade served as Chairman of the
Board and Chief Executive Officer of
Moorman Manufacturing Company during
1992 and 1993. He was President and
Chief Executive Officer of that firm
from 1984 to 1992. He also is a
director of Moorman Manufacturing
Company and Quincy Soybean Company,
both of Quincy, Illinois.
James W. Wogsland
Principal occupation: Vice Chairman of Caterpillar, Inc.
(heavy equipment and engine
manufacturer), Peoria, Illinois.
Age: 63
Served as a director of the
Company since: 1992
Shares beneficially owned at
February 1, 1995: 1,000 shares of CIPSCO Common Stock.
In addition, Mr. Wogsland's account in
the directors' deferred compensation
plan described below holds the
equivalent of 1,541 shares of CIPSCO
Common Stock.
Other information: Mr. Wogsland is a member of the Audit
and Nominating Committees of the Board.
Mr. Wogsland has been Vice Chairman of
Caterpillar, Inc. since 1990. He was
Executive Vice President of that firm
from 1987 until 1990. He is a director
of Caterpillar, Inc; First of America
Bank Corporation, Kalamazoo, Michigan;
and Protection Mutual Insurance
Company.
8<PAGE>
Executive Compensation. The following table contains information with
respect to the compensation paid by the Company for all services rendered
during 1992 through 1994 to the President and the four other most highly
compensated executive officers:
Summary Compensation Table
Annual
Compensation All Other
________________ Compensation
Name of Individual Principal Position(s) Year Salary Bonus (1)
__________________ _____________________ ____ ________ _______ ____________
C.L. Greenwalt President and Chief 1994 $359,168 $70,800 $ 8,466
Executive Officer of 1993 339,093 99,902 5,852
the Company 1992 317,375 0 2,073
R.W. Jackson Senior Vice President 1994 234,592 38,351 3,552
-Finance and 1993 224,545 44,699 2,864
Secretary of the 1992 213,426 10,278 1,713
Company
L.A. Dodd Senior Vice President 1994 204,591 32,048 3,249
-Operations 1993 194,271 36,009 3,524
1992 176,880 8,504 2,073
W.R. Morgan Vice President- 1994 149,710 19,788 2,250
Division Operations 1993 142,713 21,235 2,700
1992 135,758 8,653 2,073
G.W. Moorman Vice President-Power 1994 141,717 17,955 1,354
Supply 1993 134,585 20,047 2,564
1992 124,713 8,421 2,073
(1) Premiums paid by the Company on behalf of the officers for group term
life insurance.
Substantially all employees of the Company and CIPSCO (including
officers) participate in the Company's Retirement Income Plan (the "Retirement
Plan"), including persons whose remuneration is reported in the Summary
Compensation Table. Employer contributions to the Retirement Plan are
determined actuarially. For purposes of the Retirement Plan, compensation of
a participant is base pay, exclusive of bonuses, overtime pay, and other
9<PAGE>
special payments. Compensation for the persons named in the Summary
Compensation Table is substantially equivalent to the compensation reported in
the table under "Salary." Retirement Plan benefits depend upon years of
service, age at retirement and final average pay. In certain cases, pension
benefits under the Retirement Plan (or compensation used to measure such
benefits) will be reduced to comply with maximum limitations imposed by the
Internal Revenue Code ("IRC"). The Company maintains an unfunded Excess
Benefit Plan to provide for the payment of the difference between the monthly
benefit that would have been paid to participants under the Retirement Plan if
such IRC limitations were not in effect and the reduced amount payable as a
result of such IRC limitations. The credited years of service under the
Retirement Plan and the Excess Benefit Plan for the above listed persons as of
December 31, 1994 are as follows: Greenwalt, 31 years; Jackson, 15 years;
Dodd, 30 years; Morgan, 31 years; and Moorman, 25 years. Assuming retirement
at age 65, it is estimated a participant would be eligible for a maximum
annual benefit under the Retirement Plan, as supplemented by the Excess
Benefit Plan, as follows:
Annual Benefit After Specified
Years of Service (1)
Average Annual _____________________________________________________
Earnings (2) 20 25 30 35 40
____________________ ________ ________ ________ ________ ________
$125,000............ $ 33,903 $ 42,379 $ 50,855 $ 59,330 $ 67,806
150,000............ 41,403 51,754 62,105 72,455 82,806
175,000............ 48,903 61,129 73,355 85,580 97,806
200,000............ 56,403 70,504 84,605 98,705 112,806
225,000............ 63,903 79,879 95,855 111,830 127,806
250,000............ 71,403 89,254 107,105 124,955 142,806
275,000............ 78,903 98,629 118,355 138,080 157,806
300,000............ 86,403 108,004 129,605 151,205 172,806
325,000............ 93,903 117,379 140,855 164,330 187,806
350,000............ 101,403 126,754 152,105 177,455 202,806
375,000............ 108,903 136,129 163,355 190,580 217,806
400,000............ 116,403 145,504 174,605 203,705 232,806
425,000............ 123,903 154,879 185,855 216,830 247,806
450,000............ 131,403 164,254 197,105 229,955 262,806
________
(1) Annual benefits are on a straight-line basis. Amounts shown have been
reduced by an amount equal to 50% of estimated Social Security benefits
and are not subject to any other offset amounts.
(2) "Average Annual Earnings" means the average annual base compensation
during the four consecutive years of highest pay during the 10-year
period immediately preceding retirement.
10<PAGE>
The Company also maintains an unfunded Special Executive Retirement Plan
(the "Executive Plan") for each employee of the Company or CIPSCO who was
hired from outside the Company, CIPSCO or their affiliates as a senior officer
and who is a participant in and qualifies for benefits under the Retirement
Plan. For purposes of the Executive Plan, a senior officer includes the
president, vice president and such other officers of the Company or CIPSCO as
shall be designated from time to time by the Board of Directors of the Company
or CIPSCO. A participant in the Executive Plan who becomes disabled or
retires in accordance with the provisions of the Executive Plan is eligible to
receive benefits under the Executive Plan in an amount equal to the difference
between (i) the amounts which would have been payable under the Retirement
Plan, as supplemented by the Excess Benefit Plan, if the participant had 35
years of credited service under the Retirement Plan (reduced in accordance
with the Executive Plan if the participant terminates employment for any
reason prior to age 65) and (ii) the aggregate of the amounts which are paid
or payable (a) under the Retirement Plan as supplemented by the Excess Benefit
Plan, based upon the number of actual years of credited service under the
Retirement Plan, (b) under certain other pension plans as a result of the
participant's prior employment and (c) under any employment contract
(excluding the Management Continuity Agreement described below) with the
Company or CIPSCO. A qualifying surviving spouse of any participant who dies
is eligible to receive a percentage of the benefit provided under the
Executive Plan for the participant. At present, Mr. Jackson is a participant
under the Executive Plan. His estimated annual benefits under the Retirement
Plan, the Excess Benefit Plan and the Executive Plan are as set forth in the
table above.
The Company will establish in 1995 an irrevocable trust to provide itself
a source of funds to assist it in meeting its liabilities under the Excess
Benefit Plan and the Executive Plan. The Company will make contributions to
the trust from time to time in amounts determined in accordance with the
provisions of the trust to be sufficient to pay when due benefits to its
participants or their beneficiaries under such plans. Notwithstanding the
trust, these plans are not qualified or "funded" and amounts on deposit in the
trust are subject to the claims of the Company's general creditors under the
applicable law. The Excess Benefit Plan and the Executive Plan each provides
that in the event of a change in control (which has substantially the same
meaning as "change in control" under the Management Continuity Agreements
described in the following paragraph) the present value of benefits owed any
participant pursuant to each such Plan will be paid in a lump sum (i) for a
terminated participant already receiving or entitled to receive benefits,
within 30 days after such change in control and (ii) for any other
participant, within 30 days after termination provided such participant's
termination occurs within two years after such change in control. Any such
lump sum will be increased by an amount necessary to compensate the
participant for any excise tax payable under federal, state or local income
tax law as a result of the lump sum payment being made contingent on a change
in control.
11<PAGE>
The individuals named in the Summary Compensation Table and three other
executive officers of the Company or CIPSCO have each entered into a
Management Continuity Agreement with CIPSCO, which provides that in the event
of a "change in control" of the Company or CIPSCO, the Company and/or CIPSCO
or another subsidiary of CIPSCO will continue to employ the executive for a
period of three years from the date of the change in control (the "Period of
Employment"). In the event of the executive's (i) involuntary termination of
employment during the Period of Employment except by reason of death,
disability, attainment of age 65 or cause (as defined in the Management
Continuity Agreement) or (ii) resignation during the Period of Employment for
good reason (as defined in the Management Continuity Agreement), the executive
will be entitled to payment of severance compensation in an amount equal to
the present value of the executive's base pay and incentive pay (determined as
provided in the Management Continuity Agreement) that would have accrued if
the executive remained employed until the end of the Period of Employment.
The executive will also receive continued employee benefits until the end of
the Period of Employment, subject to offset for comparable benefits. The
severance compensation will be increased by an amount necessary to compensate
the executive for any excise tax payable under federal, state or local income
tax law as a result of the payment and any other compensation paid by the
Company or any of its affiliates being contingent on a change in control. A
"change in control" occurs, in general, if (i) as a result of a merger,
consolidation or sale of assets, less than a majority of the voting power of
CIPSCO is held after such event by the persons who were holders of the voting
power of CIPSCO prior to such event or less than a majority of the voting
power of the Company is held after such event by CIPSCO or by the holders of
the voting power of CIPSCO prior to such event, (ii) any person (or group)
acquires beneficial ownership of 20 percent or more of the voting power of the
Company or CIPSCO or (iii) within any two-year period a majority of the
members of the Board of Directors of the Company or CIPSCO ceases to be
members (other than changes in members approved by at least two-thirds of the
continuing directors).
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview. The Compensation Committee of the Board of Directors of the
Company (the "Committee") is charged with overall oversight and review of the
performance and compensation of the executive officers of the Company. The
Committee is responsible for assuring that executive compensation and benefit
plans are implemented and are consistent with the Company's shareholder
interests, corporate goals and compensation philosophy.
The Company's executive officer compensation program supports these goals
and objectives. It is designed to attract, retain, motivate and reward top
quality and experienced officers to achieve the Company's business objectives.
It links executive compensation with corporate performance by providing the
opportunity to earn increased compensation during periods of superior results,
but also limits compensation during periods with lesser results.
12<PAGE>
The executive officer compensation program consists of a base salary and
an annual incentive. The base salary is determined by a combination of the
individual's performance relative to specific job responsibilities and market
comparisons of salaries for similar jobs in the utility industry. Particular
emphasis is placed on salary data provided by the Edison Electric Institute
(EEI) survey of electric and combination electric and natural gas utilities.
This group of utilities is essentially the same group that makes up the EEI
100 utility peer group whose performance is shown on the Performance Graph
below. The philosophy is to pay base salaries and provide for incentive
compensation that are comparable to the medians of such amounts for a subgroup
of utilities included in the EEI survey that are of comparable size to CIPSCO
(based on revenues). Salaries for the officers listed in the Summary
Compensation Table were increased in 1994 to reflect performance and to track
competitive base salaries being paid by the utility industry and to reflect
performance, which is determined subjectively by the Committee based on
individual evaluations. Incentive compensation was earned based on
achievement of the objectives of the annual management incentive plan
(described below).
The Management Incentive Plan. The Management Incentive Plan (MIP), an
annual incentive program instituted in 1992, strongly supports CIPSCO's
primary goal of achieving superior returns on shareholders' investments. The
MIP is intended to provide additional compensation to the executive officers,
named in the Summary Compensation Table above, along with about five other
officers and 20 other employees of the Company and its subsidiaries. It is
the Committee's responsibility to administer the MIP and in so doing (1) set
the overall corporate financial performance goal and unit or individual
objectives, (2) determine the participants to be included in the MIP, and (3)
determine the amount of each participant's incentive pay to be based on
attainment of the overall corporate goal and the amount to be based on
achievement of his or her unit or individual objectives. Specific award
levels are set by the Compensation Committee prior to the beginning of the
fiscal year for which they apply. Incentive awards are payable in cash as
soon as feasible following the close of the year after determination by the
Committee of the level of attainment of the goals.
The overall corporate goal is based on attainment of targeted return on
average Common Stock equity of the Company. The Committee has determined that
return on equity is the measure of corporate performance that most directly
measures management's performance. Individual unit objectives relate to such
areas as service reliability, public and employee safety, proper maintenance
of corporate assets and quantifiable improvement in efficiency and
productivity. The MIP provides for threshold, target and maximum levels of
awards based on performance against the predetermined targets, set annually by
the Compensation Committee. A participant may receive the portion of his or
her incentive pay tied to unit or individual objectives even though the
Company has not attained the overall corporate goal, with the exception of the
President and Chief Executive Officer, whose incentive pay is tied solely to
the overall corporate goal of return on equity. For other executive officers,
individual unit awards are weighted, according to the participant's position,
13<PAGE>
to produce awards from about one-fifth to one-third of the total award and
corporate performance goals weighted to make up the remaining portion.
However, for any incentive pay to be earned by any participant, overall
earnings of CIPSCO, on a per share basis, must equal or exceed the CIPSCO
annualized Common Stock dividend rate then in effect. Accordingly,
shareholders will realize an appropriate return on their investment prior to
the payment of any incentive compensation.
For 1994, award levels were designed so that achievement of threshold
performance would have earned approximately one-half of the target award while
maximum performance would have earned approximately 1.5 times the target
award. Total incentive pay ranges varied, depending on the participant's
position within the organization, from a minimum of 7 percent of base salary
for some participants, assuming threshold corporate and unit goals were
achieved, to a maximum of 40 percent of base salary for the President and
Chief Executive Officer assuming maximum performance was achieved. The
threshold corporate goal of return on common equity was exceeded in 1994
resulting in MIP participants, including the officers named in the Summary
Compensation Table, earning various amounts of incentive compensation, based
on the formulas previously described. The Committee determined that incentive
compensation was earned by participants in 1994 for achievement of individual
and unit goals, in accordance with the MIP provisions. Benefits earned in
1994 are reflected in the "Bonus" column of the Summary Compensation Table
above.
Compensation of the Chief Executive Officer. The Committee is
responsible for reviewing the Chief Executive Officer's performance and
adjusting his base salary accordingly. In addition, the Committee adjusts
base salary to reflect changes in the prevailing competitive market levels for
chief executive officers in other comparably-sized utilities, as described
above. Mr. Greenwalt's base salary increased in 1994 approximately 5.9
percent in consideration of strong performance of his duties which are
reflected in the Company's excellent operating and financial performance.
Under his leadership CIPSCO achieved exceptional levels of earnings and return
on shareholders' equity which placed the Company among the top 15 percent of
major electric and natural gas utilities in the nation during 1993. He has
directed the Company's effort to establish strategic objectives and initiated
plans for achieving them. The capital structure, cash flows and financial
condition remain strong as indicated by continued excellent credit ratings.
Mr. Greenwalt's 1994 base compensation increase also reflects changes in
levels of executive compensation at similar-sized utilities.
Incentive compensation for the Chief Executive Officer was determined in
accordance with the provisions and formulas of the MIP. Accordingly, Mr.
Greenwalt's incentive compensation is based solely on corporate performance as
measured by the overall corporate goal of return on equity. He earned $70,800
under the MIP in 1994 because the Company's return on common equity exceeded
the predetermined threshold goal as established in the MIP.
14<PAGE>
The members of the Committee are indicated below. No member of the
Compensation Committee is a current or former officer of the Company or
CIPSCO.
G. R. Lohman, Chairman
W. J. Alley
T. L. Shade
Performance Graph. The following graph is a comparison of total returns
on CIPSCO Common Stock as compared with the Standard & Poor's 500 index, the
Dow Jones Utility Index and an industry peer group as reported by the Edison
Electric Institute ("EEI 100"). It assumes $100 invested at December 31,
1989, and all dividends paid during the period reinvested in additional common
stock. The peer group consists of about 100 investor-owned electric and
combination electric and natural gas utilities. The returns have been
weighted to reflect the different market capitalization of each utility in the
group. A portion of incentive compensation to executive officers is based on
return on CIPSCO Common Stock equity rather than total return (shown on the
graph) for reasons set forth in the Compensation Committee Report.
(Graph to be inserted here)
Title: Total Return Summary
Based on Initial Investment of $100
on December 31, 1989
Data Points: 1990 1991 1992 1993 1994
____ ____ ____ ____ ____
CIPSCO 104 143 165 178 169
S&P 500 97 126 136 150 152
EEI 100 101 131 141 156 138
DJ Util 95 110 114 125 106
Directors' Compensation. No annual retainer or fees are paid to any
director who is an officer of CIPSCO, the Company or any other subsidiary of
CIPSCO. During 1994 other members of the Board of the Company received an
annual retainer of $10,000 for serving on the Board of the Company and a fee
of $750 for each Company Board meeting or Committee meeting attended.
Effective January 1, 1995, the annual retainer for serving on the Board of the
15<PAGE>
Company was established at $12,000. The Chairman of the Company Executive
Committee received an additional annual fee of $2,500 and the Chairman of the
Company Audit Committee received an additional annual fee of $2,000.
Directors were also reimbursed for their reasonable travel and out-of-pocket
expenses for each Company Board or Committee meeting attended. CIPSCO pays no
additional fees for attendance at Board meetings or for service on committees.
During 1994, non-employee directors of CIPSCO received an annual retainer
for serving on the Board of CIPSCO of $13,000. Effective January 1, 1995, the
annual retainer for serving on the Board of CIPSCO was increased at $16,000.
The annual retainer paid to each director by CIPSCO, however, is reduced by an
amount equal to the aggregate amount paid to such director by each subsidiary
of CIPSCO as an annual retainer for services as a director of such subsidiary.
All current directors are on the Board of the Company and CIPSCO.
Consequently, the aggregate annual retainer for service on both Boards for
1994 was $13,000 and for 1995 will be $16,000.
The Company and CIPSCO each maintain an unfunded deferred compensation
plan under which directors may elect to defer directors' retainers and fees
paid by that company. For each director who elects to participate in a plan,
the amount of his or her directors' retainers and fees is accrued in an
unfunded account in the name of the director. Such amount is adjusted in
value by an amount equivalent to the amount which would be available if the
director's compensation were invested in CIPSCO's Common Stock and dividends
on such stock were reinvested. The aggregate value of each participant's
accounts in the plans at February 1, 1995 (based on deferred director's fees
paid by the Company and CIPSCO) was equivalent to investments in CIPSCO Common
Stock as follows: Mr. Alley, 5,057 shares; Mr. Lohman, 4,462 shares; Mrs.
Merriman, 3,006 shares; Mr. Shade, 2,318 shares; and Mr. Wogsland, 1,541
shares. Amounts accrued in a director's account will be paid in cash upon his
or her retirement as a director either in a single payment or over a period
not to exceed 20 calendar quarters, with interest. Because officers of the
Company or CIPSCO receive no compensation for services as directors, any
director who is an officer is not eligible to participate in these plans.
CIPSCO has established a Director Retirement Plan for directors of CIPSCO
and its affiliates, including the Company, who are not or have never been
officers of CIPSCO or any affiliate, including the Company. Each director who
has completed five years of service on the Board of CIPSCO or any of its
affiliates is eligible for monthly retirement payments for a period of the
lesser of 10 years or the number of full years the director served on any of
the Boards. The annual retirement benefit for a director of CIPSCO is equal
to the annual retainer in effect for CIPSCO's directors (without reduction for
director's fees paid by affiliates of CIPSCO) at the time the director ceases
to serve as a director. The annual retirement benefit for a director who is
not a member of the Board of CIPSCO is equal to the annual retainer in effect
at the time the director ceases to serve as a director for each of the Boards
of which the director was a member but not to exceed the amount of retainer
for the CIPSCO directors. Such annual retirement payment is reduced a
proportional amount for directors retiring before reaching age 72.
16<PAGE>
Meetings and Committees of the Board. During 1994 the Board of Directors
held six meetings. The Board of Directors of the Company and CIPSCO have each
established an Executive Committee, an Audit Committee, a Nominating Committee
and a Compensation Committee. Committee members are appointed by a majority
of directors at the Board of Directors meeting following the annual meeting of
shareholders. Committee members are the same for the Company's committees and
CIPSCO's committees.
Mr. Alley, Mr. Greenwalt, Mr. Lohman and Mr. Raymer are the members of
the Executive Committee. The Company's Executive Committee held one meeting
and the CIPSCO Executive Committee held no meetings in 1994. The Executive
Committee has and may exercise all the authority of the Board of Directors in
the management of the Company, except as limited by Illinois law.
Mr. Alley, Mr. Heath, Mr. Lohman, Mrs. Merriman, Mr. Shade and Mr.
Wogsland are the members of the Audit Committee. The Company's Audit
Committee and the CIPSCO Audit Committee each held three meetings in 1994.
The Audit Committee engages an independent public accountant for the Company,
subject to the approval of the Board; discusses with the independent public
accountant the scope and results of its audit and the adequacy of the
Company's accounting, financial and operating controls; approves the
performance of non-audit professional services by the independent public
accountant; and discusses with management and the independent public
accountant the Company's accounting principles, policies and practices and its
reporting policies and practices.
Mrs. Merriman, Mr. Heath and Mr. Wogsland are the members of the
Nominating Committee. The Company's Nominating Committee and the CIPSCO
Nominating Committee each held three meetings in 1994. The Nominating
Committee seeks out and recommends to the Board qualified candidates for
election to the Board; reviews the performance of Board members and, based
upon such review, makes recommendations to the Board as to which Board members
should stand for re-election. In making recommendations of nominees for
election to the Board, the Nominating Committee will consider persons
recommended by shareholders. Any shareholder wishing to make such a
recommendation should write to the President of the Company who will forward
all such recommendations to the Nominating Committee.
Mr. Lohman, Mr. Alley, and Mr. Shade are the members of the Compensation
Committee. The Company's Compensation Committee and the CIPSCO Compensation
Committee each held three meetings in 1994. The Compensation Committee
reviews the compensation to be paid officers of the Company (other than
assistant officers); reviews directors' fees and fees paid to directors for
membership on the various committees of the Board; and makes recommendations
to the Board as to appropriate levels of such officers' compensation,
directors' fees and fees for membership on such committees. No member of the
Compensation Committee is a current or former officer of the Company or
CIPSCO.
17<PAGE>
During 1994, each director attended at least 82 percent of the total of
the meetings of the Company's and CIPSCO's Board and of committees of each
company's Board of which he or she was a member.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Arthur Andersen LLP as
independent public accountants to examine the annual financial statements of
the Company for 1995. The firm has served as the Company's independent public
accountants to examine the annual financial statements of the Company for many
years, including 1994. A representative of Arthur Andersen LLP will be
present at the annual meeting to make a statement if he or she so desires, and
to respond to questions.
OTHER MATTERS
At the date hereof, the Board of Directors of the Company knows of no
business to come before the meeting other than the matter described above.
However, should any such business properly come before the meeting, the
proxies will be voted in respect thereof in accordance with the judgment of
the person or persons voting the proxies.
CENTRAL ILLINOIS PUBLIC SERVICE
COMPANY
By Order of the Board of Directors,
[SIG]
R. W. Jackson
Senior Vice President and Secretary
18<PAGE>
Graphic Material Appendix
The performance graph required by Item 402(1) of Regulation S-K is on page
15 of this filing. The paper copy has a line graph with four differentiated
lines showing the returns given in the data presented on page 15. A paper
copy of the graph has been submitted supplementally to the Branch Chief
pursuant to Regulation S-T. Item 304 (d) (2).
<TABLE>
<CAPTION>
SOLICITED BY THE BOARD OF DIRECTORS OF CENTRAL ILLINOIS PUBLIC SERVICE COMPANY
The undersigned appoints, or directs the depositary agent identified on the reverse hereof to appoint, C. L. Greenwalt and
R. W. Jackson, and each of them as attorneys and proxies with power of substitution to vote, as indicated hereon, all shares
of Preferred Stock of Central Illinois Public Service Company held of record in the name of, or held for the account of, the
undersigned at close of business on the record date and, in their discretion, to vote on all other matters which may
properly come before the 1995 Annual Meeting of Shareholders of Central Illinois Public Service Company and at all adjourned
sessions thereof, all as set forth in the Notice and Proxy Statement relating to the meeting.
If joint account, each
joint owner should
sign. State title when
signing as executor,
administrator, trustee
guardian, etc.
DO NOT FOLD
DATED _______________
MARK "X" HERE TO VOTE WITH DIRECTORS' RECOMMENDATIONS: [ ] SIGNED ____________________________________________
All shares will be voted in accordance with the Board of Directors'
recommendations, if you mark the box above (any contrary marking on ______________________________________________
the reverse side will be disregarded) or leave all boxes unmarked.
If you wish to vote other than with the Directors'recommendations,
specify your choices by marking the appropriate boxes on the
reverse side.
(Reverse Side)
If you have marked the box on the reverse side of this card, you should NOT complete the section below. The votes
represented by this proxy, if properly executed, will be voted as indicated by you. If you sign and return the proxy
unmarked or mark the box on the reverse, such votes will be voted "FOR" the election of directors. No proposal is related
to or conditioned on any other proposal.
DIRECTORS RECOMMEND a Vote "FOR" Item 1.
<S> <C> <C> <C>
If you choose not to mark the box on the
reverse side, mark your votes on this side
with an [X]. Then DATE PROXY AND SIGN ON
REVERSE side exactly as name(s) are shown
and return signed proxy in enclosed envelope.
1. Election of Directors For [ ] Withhold Authority [ ]
all nominees listed to vote for all nominees
below (except as
marked to the
contrary)
Holders of depositary shares representing 1/4
of a share of 6.625% Cumulative Preferred Stock
W. J. Alley C. L. Greenwalt J. L. Heath direct Illinois Stock Transfer Company, as
R. W. Jackson G. R. Lohman R. A. Lumpkin depositary agent for holders of depositary shares,
H. M. Merriman T. L. Shade J. W. Wogsland to appoint proxies to vote as indicated herein.
To withhold authority to vote for any individual nominee,
strike a line through the nominee's name in the list above.
(To be signed on reverse side)
</TABLE>
