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 ("CIPS" or the "Company") will be held at the Springfield Hilton, 700
East Adams Streets, Springfield, Illinois, on April 24, 1996 at 10:00 AM, 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 record on CIPS' books at the
close of business on February 26, 1996, 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 CIPS' Annual Report to Shareholders for the year 1995, which is
combined with its 1995 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,
W. A. Koertner,
Vice President and Secretary
March 8, 1996
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 8, 1996
Proxy Statement Relating to
1996 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 CIPS 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 8, 1996, certain officers, directors and employees
of CIPS 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 CIPS 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. CIPS is the principal subsidiary of CIPSCO Incorporated
("CIPSCO").
Voting. The voting securities of CIPS 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 record on CIPS' on books
at the close of business on February 26, 1996, 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 such
1<PAGE>
shareholder's right to vote such shares if the shareholder attends the meeting
and desires to vote in person. Prior to the voting of a proxy, such proxy may
by revoked by the shareholder by delivering written notice of revocation to
the Secretary of CIPS, 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 CIPS ("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
1997 annual meeting of shareholders of CIPS must be received at the principal
executive office of the Company no later than November 11, 1996, 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 26,
1996, 25,452,373 shares of Common Stock of CIPS representing 100% of the
outstanding Common stock of the Company. The directors, nominees and
executive officers of CIPS and CIPSCO owned beneficially at February 1, 1996,
an aggregate of 49,536 shares of Common Stock of CIPSCO representing .15% of
the outstanding Common Stock of CIPSCO and 24 shares of Preferred Stock of
CIPS representing less than .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 CIPS, 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. Each of the nominees is a director of CIPS
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.
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, Mr. Wogsland who was elected in 1992, and Mr. Lumpkin who
was elected in 1995.
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. (consumer products and services),
Stamford, Connecticut.
Age: 66
Served as a director of
CIPS since: 1974
Shares beneficially owned at
February 1, 1996: 1,626 shares of CIPSCO Common Stock. In
addition, Mr. Alley's account in the
directors' deferred compensation plan
described below holds the equivalent of
6,465 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 CIPS.
Age: 63
Served as a director of
CIPS since: 1986
Shares beneficially owned at
February 1, 1996: 11,489 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. Mr. Greenwalt is also
President and Chief Executive Officer,
as well as a director of CIPSCO.
John L. Heath
Principal occupation: Retired Chairman and President of L.S.
Heath and Sons, Inc. (confectionery
manufacturer). Robinson, Illinois.
Age: 60
Served as a director of
CIPS since: 1977
Shares beneficially owned at
February 1, 1996: 4,000 shares of CIPSCO Common Stock.
4<PAGE>
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 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 the
Sun Street Food Corporation and of the
Phoenix Memorial Hospital Health
Services Network of Phoenix, Arizona.
Robert W. Jackson
Principal occupation: Retired Senior Vice President--Finance
and Secretary of CIPS.
Age: 65
Served as a director of
CIPS since: 1986
Shares beneficially owned at
February 1, 1996: 7,083 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.
Gordon R. Lohman
Principal occupation: President and Chief Executive Officer
of AMSTED Industries Incorporated
(diversified manufacturer of industrial
products), Chicago, Illinois.
Age: 61
Served as a director of
CIPS since: 1989
5<PAGE>
Shares beneficially owned at
February 1, 1996: 200 shares of CIPSCO Common Stock. In
addition, Mr. Lohman's account in the
directors' deferred compensation plan
described below holds the equivalent of
5,753 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
Chief Executive Officer of AMSTED
Industries Incorporated in 1990. 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: 60
Served as a director of
CIPS since: 1995
Shares beneficially owned at
February 1, 1995: 1,028 shares of CIPSCO Common Stock.
Other information: Mr. Lumpkin is a member of the Audit
and Nominating Committees of the Board.
He has been Chairman of the Board and
Chief Executive Officer of CCI since
1989. He is also Chairman of the Board
and Chief Executive Officer 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: 54
Served as a director of
CIPS since: 1990
Shares beneficially owned at
February 1, 1996: 1,602 shares of CIPSCO Common Stock.
In addition, Mrs. Merriman's account in
the directors' deferred compensation
plan described below holds the
equivalent of 4,034 shares of CIPSCO
Common Stock.
Other information: Mrs. Merriman is Chairman of the
Nominating Committee and a member of
the Audit and Executive Committees 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 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: 65
Served as a director of
CIPS since: 1991
7<PAGE>
Shares beneficially owned at
February 1, 1996: 2,668 shares of CIPSCO Common Stock.
In addition, Mr. Shade's account in the
directors' deferred compensation plan
described below holds the equivalent of
3,318 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: Retired Vice Chairman of Caterpillar,
Inc. (heavy equipment and engine
manufacturer), Peoria, Illinois.
Age: 64
Served as a director of
CIPS since: 1992
Shares beneficially owned at
February 1, 1996: 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 2,424 shares of CIPSCO
Common Stock.
Other information: Mr. Wogsland is a member of the Audit
and Nominating Committees of the Board.
Mr. Wogsland was Vice Chairman of
Caterpillar, Inc. from 1990 until his
retirement in 1995. He was Executive
Vice President of that firm from 1987
until 1990. He is a director of 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 CIPS for all services rendered during 1993
through 1995 to the President, the four other most highly compensated
executive officers, and a recently retired Senior Vice President:
Summary Compensation Table
Annual
Compensation All Other
________________ Compensation
Name of Individual Principal Position(s) Year Salary Bonus (1)
__________________ _____________________ ____ ________ _______ ____________
C.L. Greenwalt President and Chief 1995 $388,750 $86,970 $ 8,426
Executive Officer 1994 359,168 70,800 8,466
1993 339,093 99,902 5,852
L.A. Dodd(2) Group Vice President 1995 228,964 39,928 3,662
1994 204,591 32,048 3,249
1993 194,271 36,009 3,524
W.R. Morgan Vice President- 1995 157,189 23,232 2,374
Division Operations 1994 149,710 19,788 2,250
1993 142,713 21,235 2,700
W.A. Koertner Vice President, Chief 1995 155,757 23,232 922
Financial Officer and 1994 132,676 19,376 755
Secretary 1993 122,815 19,196 375
G.W. Moorman Vice President-Power 1995 148,806 22,944 1,428
Supply 1994 141,717 17,955 1,354
1993 134,585 20,047 2,564
R.W. Jackson(3) Senior Vice President 1995 189,603 22,568 18,909
-Finance and 1994 234,592 38,351 3,552
Secretary 1993 224,545 44,699 2,864
_______________
(1) Premiums paid on behalf of the officers for group term life insurance.
Mr. Jackson also received $11,750 for CIPSCO and CIPS board retainers and
meeting fees subsequent to his retirement as an officer of the Company.
(2) Retired January 1, 1996.
(3) Retired June 30, 1995.
Substantially all employees of CIPS 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
9<PAGE>
a participant is base pay, exclusive of bonuses, overtime pay, and other
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, 1995 are as follows: Greenwalt, 32 years; Dodd, 32 years;
Morgan, 32 years; Koertner, 17 years; Moorman, 27 years; and Jackson, 16
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............ $ 33,600 $ 42,000 $ 50,400 $ 58,800 $ 67,200
150,000............ 41,100 51,375 61,650 71,925 82,200
175,000............ 48,600 60,750 72,900 85,050 97,200
200,000............ 56,100 70,125 84,150 98,175 112,200
225,000............ 63,600 79,500 95,400 111,300 127,200
250,000............ 71,100 88,875 106,650 124,425 142,200
275,000............ 78,600 98,250 117,900 137,550 157,200
300,000............ 86,100 107,625 129,150 150,675 172,200
325,000............ 93,600 117,000 140,400 163,800 187,200
350,000............ 101,100 126,375 151,650 176,925 202,200
375,000............ 108,600 135,750 162,900 190,050 217,200
400,000............ 116,100 145,125 174,150 203,175 232,200
425,000............ 123,600 154,500 185,400 216,300 247,200
450,000............ 131,100 163,875 196,650 229,425 262,200
475,000............ 138,600 173,250 207,900 242,550 277,500
________
(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>
CIPS also maintains an unfunded Special Executive Retirement Plan (the
"Executive Plan") for each employee of CIPS or CIPSCO who was hired from
outside CIPS, 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 CIPS or CIPSCO as shall be designated
from time to time by the Board of Directors of CIPS 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 CIPS 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. Mr. Jackson is a participant under the Executive Plan and, as a
result of his retirement in 1995, received $31,693 in benefits (which also
includes amounts paid under the Excess Benefit Plan, described below).
In 1995 CIPS established an irrevocable trust to provide a source of
funds to assist in meeting its liabilities under the Excess Benefit Plan and
the Executive Plan. CIPS made 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 CIPS' 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. Both the Excess
Benefit Plan and the Executive Plan were modified (with the required consent
of participants) in 1995 to provide, in effect, that the announced business
11<PAGE>
combination among CIPSCO, Ameren Corporation and Union Electric Company (the
"Merger") will not constitute a "change in control" under such Plans.
The individuals named in the Summary Compensation Table and four other
executive officers of CIPS or CIPSCO have each entered into a Management
Continuity Agreement with CIPSCO, which provides that in the event of a
"change in control" of CIPS or CIPSCO, CIPS 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 or to the executive's
earlier death or attainment of age 65 (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 welfare benefits and service credits
until the end of the Period of Employment, subject to offset for comparable
welfare 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 CIPS 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 CIPS 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). A "change in control" within the meaning of the
Management Continuity Agreements has occurred as a result of the agreement to
enter into the Merger. Because, as of the date hereof, other required
conditions have not occurred, no benefits have been paid under the terms
of the Management Continuity Agreements.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview. The Compensation Committee of the Board of Directors of CIPS
(the "Committee") is charged with overall oversight and review of the
performance and compensation of the executive officers of CIPS. 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.
12<PAGE>
CIPS' executive officer compensation program supports these goals and
objectives. It is designed to attract, retain, motivate and reward 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.
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 as the EEI 100 utility
peer group 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 in 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 7 other officers and
29 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 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 CIPSCO. 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
13<PAGE>
the Committee. A participant may receive the portion of his or her incentive
pay tied to unit or individual objectives even though CIPSCO 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 for return on equity. For other executive officers, individual unit
awards are weighted, according to the participant's position, to produce
awards from about one-fifth to one-third of the total award and corporate
performance goals are 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 1995, 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 1.7 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 46 percent of base salary for the President and
Chief Executive Officer assuming maximum performance was achieved. In
accordance with Plan provisions, the Committee adjusted the performance goals
to reflect the impact of unusual circumstances affecting performance results
which were not anticipated at the time such goals were established. As a
result, in 1995, MIP participants, including the officers named in the Summary
Compensation Table, earned various amounts reflecting achievement of a
corporate goal of return on common equity in excess of the threshold level.
Participants also earned various amounts reflecting the achievement of at
least the target level of individual and unit goals, in accordance with the
MIP provisions and the adjustments previously described. Benefits earned in
1995 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 8.2
percent in consideration of strong performance of his duties which are
reflected in CIPSCO's excellent operating and financial performance. Under
his leadership CIPSCO achieved exceptional total returns to shareholders, as
shown on the graph below. He has directed CIPSCO's effort to evaluate,
negotiate and enter into the Agreement and Plan of Merger among CIPSCO, Ameren
Corporation and Union Electric Company. The capital structure, cash flows and
financial condition remain strong as indicated by continued excellent credit
ratings. Mr. Greenwalt's 1995 base compensation increase also reflects
changes in levels of executive compensation at similar-sized utilities.
14<PAGE>
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 $86,970
under the MIP in 1995 because CIPSCO's return on common equity exceeded the
predetermined threshold goal as established in the MIP.
The members of the Compensation Committee are indicated below. No member
of the Committee is a current or former officer of CIPS 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, 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, 1990, and all dividends
paid during the period reinvested. 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 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, 1990
Data Points: 1991 1992 1993 1994 1995
____ ____ ____ ____ ____
CIPSCO 138 160 173 164 252
S&P 500 130 140 155 157 215
EEI 100 129 139 154 136 179
DJ Util 115 120 131 111 147
Directors' Compensation. No annual retainer or fees are paid to any
director who is an officer of CIPSCO, CIPS or any other subsidiary of CIPSCO.
During 1995 other members of the Board of CIPS received an annual retainer of
$12,000 for serving on the Board of CIPS and a fee of $750 for each CIPS Board
meeting or Committee meeting attended. Effective January 1, 1996 the
attendance fee was increased to $850 for each CIPS Board or Committee meeting
attended. The Chairman of the CIPS Executive Committee received an additional
annual fee of $2,500 and the Chairman of the CIPS Audit Committee received an
15<PAGE>
an additional annual fee of $2,000. Directors were also reimbursed for their
reasonable travel and out-of-pocket expenses for each Board or Committee
meeting attended. CIPSCO pays no additional fees for attendance at Board
meetings or for service on committees.
During 1995, non-employee directors of CIPSCO received an annual retainer
for serving on the Board of CIPSCO of $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 1995 was $16,000.
CIPSCO and CIPS 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 director's retainer 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, 1996 (based on deferred director's fees paid by CIPS
and CIPSCO) was equivalent to investments in CIPSCO Common Stock as follows:
Mr. Alley, 6,465 shares; Mr. Lohman, 5,753 shares; Mrs. Merriman, 4,034
shares; Mr. Shade, 3,318 shares; and Mr. Wogsland, 2,424 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 CIPS and
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 subsidiaries, including CIPS, who are not or have never been officers
of CIPSCO or any subsidiary, including CIPS. Each director who has completed
five years of service on the Board of CIPSCO or any of its subsidiaries 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 subsidiaries 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 1995 the Board of Directors
held eight meetings. The Board of Directors of CIPS 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 CIPS' and CIPSCO's
committees.
Mr. Alley, Mr. Greenwalt, Mr. Lohman and Mrs. Merriman are the members of
the Executive Committee. The CIPS Executive Committee held four meetings and
the CIPSCO Executive Committee held two meetings in 1995. The Executive
Committee has and may exercise all the authority of the Board of Directors in
the management of CIPS, except as limited by Illinois law.
Mr. Alley, Mr. Heath, Mr. Lohman, Mr. Lumpkin, Mrs. Merriman, Mr. Shade
and Mr. Wogsland are the members of the Audit Committee. The CIPS Audit
Committee and the CIPSCO Audit Committee each held three meetings in 1995.
The Audit Committee engages an independent public accountant for CIPS, 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, Mr. Lumpkin and Mr. Wogsland are the members of
the Nominating Committee. The CIPS Nominating Committee and the CIPSCO
Nominating Committee each held one meeting in 1995. 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 CIPS Compensation Committee held three meetings and the CIPSCO
Compensation Committee held two meetings in 1995. The Compensation Committee
reviews the compensation to be paid officers of CIPS (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 CIPS or CIPSCO.
17<PAGE>
During 1995, each director attended at least 86 percent of the total of
the meetings of CIPS' 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
CIPS for 1996. The firm has served as CIPS' independent public accountants to
examine the annual financial statements of the Company for many years,
including 1995. 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 CIPS 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,
W. A. Koertner
Vice President and Secretary
18<PAGE>
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 W. A. Koertner, 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 the close of business on the record date and, in their
discretion, to vote on all other matters which may properly come before the
1996 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
DATE _________________________
SIGNED _________________________________
_________________________________
<PAGE>
The votes represented by this proxy, if properly executed, will be voted as
indicated by you. If you sign and return the proxy unmarked, such votes will
be voted "FOR" the election of directors.
DIRECTORS RECOMMENDED a Vote "FOR" Item 1.
For ___ Withhold Authority ___
1. Election of Directors all nominees listed to vote for all
below (except as nominees
marked to the
contrary)
W. J. Alley C. L. Greenwalt J. L. Heath
R. W. Jackson G. R. Lohman R. A. Lumpkin
H. M. Merriman T. L. Shade J. W. Wogsland
To withhold authority to vote for any individual nominee, strike a line
through the nominee's name in the list above.
Please mark your vote with an "X." Then DATE PROXY AND SIGN ON REVERSE side
exactly as name(s) are shown and return signed proxy in enclosed envelope.
Holders of depositary shares representing 1/4 of the share of 6.625%
Cumulative Preferred Stock direct Illinois Stock Transfer Company, as
depository agent for holders of depositary shares, to appoint proxies to vote
as indicated herein.
(To be signed on reverse side)
