SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
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Indianapolis Power & Light Company
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Indianapolis Power & Light Company
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<PAGE>
IPL
INDIANAPOLIS POWER & LIGHT COMPANY
25 Monument Circle
P.O. Box 1595
Indianapolis, Indiana 46206-1595
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 19, 1995
TO THE SHAREHOLDERS OF
INDIANAPOLIS POWER & LIGHT COMPANY
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Indianapolis Power & Light Company will be held at the office of the
Company, 25 Monument Circle, Indianapolis, Indiana on Wednesday, April 19,
1995, at 10 o'clock A.M. (Eastern Standard Time), for the following
purposes:
1. To elect seventeen (17) directors to hold office for terms of one
year each and until their successors are duly elected and
qualified; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on Monday,
February 27, 1995, as the record date for determining the shareholders
entitled to notice of, and to vote at, the meeting and at any adjournment
thereof.
Proxies will not be solicited for this meeting and you are requested
not to send us a proxy. Shareholders are welcome to attend the meeting in
person and cast their votes by ballot on the issues presented at the meeting.
By order of the Board of Directors.
INDIANAPOLIS POWER & LIGHT COMPANY
By: BRYAN G. TABLER, Secretary
Indianapolis, Indiana
March 6, 1995
<PAGE>
INDIANAPOLIS POWER & LIGHT COMPANY
INFORMATION STATEMENT
TABLE OF CONTENTS
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 1
OTHER BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RELATIONSHIP WITH AUDITOR . . . . . . . . . . . . . . . . . . . . . . 1
VOTING SECURITIES AND BENEFICIAL OWNERS . . . . . . . . . . . . . . . 2
DIRECTORS AND NOMINEES. . . . . . . . . . . . . . . . . . . . . . . . 2
Election of Seventeen Directors . . . . . . . . . . . . . . . . . . 2
Vote Required For Election of Directors . . . . . . . . . . . . . . 5
Procedure To Propose Nominees For Director. . . . . . . . . . . . . 5
Number Of Board Meetings and Attendance . . . . . . . . . . . . . . 5
Committees of the Board . . . . . . . . . . . . . . . . . . . . . . 5
Certain Business Relationships. . . . . . . . . . . . . . . . . . . 6
COMPENSATION OF EXECUTIVE OFFICERS. . . . . . . . . . . . . . . . . . 6
Nature and Types of Compensation. . . . . . . . . . . . . . . . . . 6
Summary Compensation - Table I. . . . . . . . . . . . . . . . . . 7
Option Exercises - Table II . . . . . . . . . . . . . . . . . . . 8
Long-Term Incentive Plans - Table III . . . . . . . . . . . . . . 9
COMPENSATION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . 10
Standard Arrangements . . . . . . . . . . . . . . . . . . . . . . . 10
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Compensation Policies Relating Generally to Executive Officers. . . 10
Base Salary . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Annual Incentive Plan . . . . . . . . . . . . . . . . . . . . . . 11
Long-Term Incentive Plan. . . . . . . . . . . . . . . . . . . . . 11
Stock Option Plan . . . . . . . . . . . . . . . . . . . . . . . . 12
Basis for Chief Executive Officer's Compensation. . . . . . . . . . 12
Compensation Committee Interlocks and Insider Participation . . . . 12
Performance Graph - Table IV. . . . . . . . . . . . . . . . . . . . 13
Performance Graph . . . . . . . . . . . . . . . . . . . . . . . . . 14
Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Pension Plan Table - Table V. . . . . . . . . . . . . . . . . . . 14
Employment Contracts and Termination of Employment and Change-in-
Control Arrangements. . . . . . . . . . . . . . . . . . . . . . . 15
(i)
<PAGE>
INDIANAPOLIS POWER & LIGHT COMPANY
INFORMATION STATEMENT
Relating to the
Annual Meeting of Shareholders
April 19, 1995
(Mailed on or about March 6, 1995)
GENERAL INFORMATION
The following information is furnished in connection with the Annual
Meeting of Shareholders of Indianapolis Power & Light Company (``IPL'') to
be held pursuant to the accompanying Notice of Annual Meeting and at any
adjournment of such meeting.
At the close of business on December 31, 1983, IPL became a subsidiary
of IPALCO Enterprises, Inc. (``IPALCO'') and, at that time, all outstanding
shares of IPL Common Stock were exchanged for Common Stock of IPALCO and all
Common shareholders of IPL became Common shareholders of IPALCO. As a result,
IPALCO owns all 17,206,630 outstanding shares of IPL's Common Stock. However,
there remain outstanding 518,985 shares of IPL's Cumulative Preferred Stock.
Since IPALCO's ownership represents more than 94% of the total votes
that could be cast for the election of directors, and shareholders do not
have cumulative voting rights, the Board of Directors considered it
inappropriate to solicit proxies for IPL's Annual Meeting of Shareholders to
be held April 19, 1995. Please be advised, therefore, that this is only an
Information Statement. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY. However, if you wish to vote your shares
of Cumulative Preferred Stock, you may do so by attending the meeting in
person and casting your vote by a ballot which will be provided for that
purpose.
OTHER BUSINESS
Management is not presently aware of any business to be presented at
the Annual Meeting other than the election of directors. The minutes of the
Annual Meeting of Shareholders held April 20, 1994 will be presented for
approval at the 1995 Annual Meeting; however, such action is not intended to
constitute approval or disapproval of any matter referred to in such minutes.
RELATIONSHIP WITH AUDITOR
Deloitte & Touche (the ``Auditor'') with offices at Market Tower,
Suite 3000, 10 West Market Street, Indianapolis, Indiana, has been the
auditor for IPL since the year 1952, and was appointed by the Board of
IPALCO upon recommendation of the Audit Committee to serve as such during
the current year. A representative of the Auditor will be present at the
Annual Meeting of Shareholders on April 19, 1995, and will be given an
opportunity to make a statement and to respond to appropriate questions
from shareholders.
<PAGE>
VOTING SECURITIES AND BENEFICIAL OWNERS
On January 31, 1995, IPL had outstanding 17,206,630 shares of Common
Stock and 518,985 shares of Cumulative Preferred Stock issued in six (6)
separate series. Each share of Cumulative Preferred Stock entitles its owner
to two (2) votes, and each share of Common Stock entitles its owner to one
(1) vote upon each matter to come before the meeting. Only shareholders of
record at the close of business on Monday, February 27, 1995, will be
entitled to vote at the meeting or at any adjournment thereof.
<TABLE>
At January 31, 1995, the following beneficial owners held more than
5% of a class of IPL's voting securities:
<CAPTION>
- -----------------------------------------------------------------------------
Name and Address of Amount and Nature Percent
Title of Class Beneficial Owner, of Beneficial Ownership of Class
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock IPALCO Enterprises, Inc. 17,206,630 shares<F1> 100
25 Monument Circle
Indianapolis, IN 46204
- -----------------------------------------------------------------------------
<FN>
<F1> IPALCO Enterprises, Inc. has sole power to vote and dispose of all
shares shown as beneficially owned by it.
</TABLE>
At January 31, 1995, none of the directors, executive officers or
nominees for director of IPL beneficially owned equity securities of IPL.
DIRECTORS AND NOMINEES
Election of Seventeen Directors
At a meeting held January 31, 1995, the Executive Committee of the
Board nominated 17 nominees for election as directors of IPL at its Annual
Meeting of Shareholders to be held April 19, 1995 for terms of one year each
and until their successors are duly elected and qualified. All nominees
currently are members of the Board and all nominees have consented to serve
if elected. The nominees for director and the names, ages, (as of April 19,
1995), job experience and directorships of such nominees are as follows:
Joseph D. Barnette, Jr., 55, Chairman and Chief Executive Officer of Banc
One Indiana Corporation (a bank holding company) since January, 1993
and Chairman and Chief Executive Officer of Bank One, Indianapolis, NA
since October, 1994. Prior to that, Mr. Barnette was President and
Chief Executive Officer of Banc One Indiana Corporation (July, 1990 -
January, 1993) and President and Chief Executive Officer of Bank One,
Indianapolis, NA (January, 1990 - October, 1994). He is a director of
IPALCO, IWC Resources Corporation, Indianapolis Water Company and
Meridian Insurance Group, Inc. He has been a director of IPL since
January, 1993.
<PAGE>
Robert A. Borns, 59, Chairman of Borns Management Corporation (real estate
management), Indianapolis, Indiana. Mr. Borns has held his present
position since 1961 and serves on numerous social and cultural boards,
including the Board of Trustees of Indianapolis Museum of Art. He is
also a director of IPALCO, Indianapolis Water Company, IWC Resources,
Inc. and of Heritage Partners Management, Inc. He has been a director
of IPL since April, 1986 (excluding the period March 15 to August 23,
1993).
Mitchell E. Daniels, Jr., 46, President, North American Pharmaceutical
Operations, Eli Lilly and Company (pharmaceuticals manufacturer),
Indianapolis, Indiana since April 1, 1993. Prior to that time, he was
Vice President, Corporate Affairs of Eli Lilly and Company and
President and Chief Executive Officer of Hudson Institute, Inc.
(March, 1987 to August, 1990). He is a director of IPALCO and NBD
Bank, N.A. and has been a director of IPL since November, 1989.
Rexford C. Early, 60, President of Carlisle Insurance Agency, Inc.,
Indianapolis, Indiana, a position he has held for more than five years.
Mr. Early was Chairman of the Indiana Republican Party from March, 1991
to March, 1993. He is a director of IPALCO and has been a director of
IPL since August, 1993.
Otto N. Frenzel III, 64, Chairman of the Board of National City Bank, Indiana,
Indianapolis, Indiana. Mr. Frenzel has held his present position since
1992. For more than 5 years prior to that time, Mr. Frenzel was
Chairman of the Board of Merchants National Corporation and Vice
Chairman of Merchants National Bank & Trust Company of Indianapolis,
Indiana. He is a director of IPALCO, National City Corporation,
American United Life Insurance Company, Indiana Energy, Inc., Indiana
Gas Company, Inc., Indianapolis Water Company, Baldwin & Lyons, Inc.
and IWC Resources, Inc. He has been a director of IPL since April, 1977.
Max L. Gibson, 54, Retired July, 1989. For more than five years prior to
retirement, Mr. Gibson was President of Victory Services Corporation
(waste disposal), Terre Haute, Indiana. He is a director of IPALCO,
First Financial Corporation, Terre Haute First National Bank and First
State Bank of Clay County. He has been a director of IPL since August,
1993.
Edwin J. Goss, 68, Retired, March 1990. For more than five years prior to his
retirement, Mr. Goss was the Chairman and Chief Executive Officer of
American States Insurance Company and its subsidiaries, Indianapolis,
Indiana. Mr. Goss continues as a director of these companies. He also
is a director of IPALCO, National City Bank, Indiana and has been a
director of IPL since April, 1985 (excluding the period March 15 to
August 23, 1993).
Dr. Earl B. Herr, Jr., 67, Retired. For more than five years prior to his
retirement in December, 1992, Dr. Herr was Executive Vice President of
Eli Lilly and Company (pharmaceuticals manufacturer), Indianapolis,
Indiana. He is a director of IPALCO and Lilly Endowment and has been a
director of IPL since April, 1986 (excluding the period March 15 to
August 23, 1993).
John R. Hodowal, 50, Chairman of the Board and President of IPALCO and
Chairman of the Board and Chief Executive Officer of IPL. Except for
the Chairmanship of IPL which he assumed in February, 1990, Mr. Hodowal
has held his current positions since May, 1989. For some years prior to
that time, he was Vice President and Treasurer of IPALCO and Executive
Vice President of IPL. He is a director of IPALCO, Bank One,
Indianapolis, NA and Associated Insurance Companies, Inc. He has been a
director of IPL since April, 1984.
<PAGE>
Ramon L. Humke, 62, Vice Chairman of IPALCO and President and Chief Operating
Officer of IPL. Prior to February, 1990 when he assumed his present
position with IPL, Mr. Humke was President and Chief Executive Officer
of Ameritech Services and Senior Vice President of Ameritech Bell Group
(September, 1989 - February, 1990) and President and Chief Executive
Officer of Indiana Bell Telephone Company (October, 1983 - September,
1989). He is a director of IPALCO, NBD Bank, N.A., LDI Management, Inc.
and is Chairman of the Boards of Meridian Mutual Insurance Company and
Meridian Insurance Group, Inc. He has been a director of IPL since
February, 1990.
Sam H. Jones, 67, President, Indianapolis Urban League, Inc., Indianapolis,
Indiana. Mr. Jones has held his present position for more than 5 years
and serves on numerous educational, social and cultural boards,
including the Advisory Board of Indiana University-Purdue University
at Indianapolis, Methodist Health Foundation, Board of One Hundred
Black Men of Indianapolis and the Administrative Board of Riverside
Park United Methodist Church. He is a director of IPALCO and has been
a director of IPL since June, 1983.
Andre B. Lacy, 55, General Partner and Chief Executive of LDI, Ltd. (an
industrial and investment limited partnership), Chairman of the Board,
Chief Executive Officer and President of LDI Management, Inc., the
managing general partner of LDI, Ltd., and Chairman and Chief Executive
Officer of all subsidiaries and divisions thereof. He has held his
present positions for more than 5 years. He is a director of IPALCO,
Ethyl Corporation, Tredegar Industries, Inc., Albemarle Corporation,
Patterson Dental Co. and The National Bank of Indianapolis. He has been
a director of IPL since April, 1987.
L. Ben Lytle, 48, Chairman, President and Chief Executive Officer, Associated
Insurance Companies, Inc. (insurance and financial services),
Indianapolis, Indiana. He assumed the title of Chairman in March, 1994,
and has held the remaining positions for more than five years. He is a
director of IPALCO, Bank One, Indianapolis, NA and Associated Insurance
Companies, Inc. and its subsidiaries. He has been a director of IPL
since April, 1992.
Michael S. Maurer, 52, Chairman of the Board of MyStar Communications
Corporation (radio station operations), a position he has held for
more than five years; Chairman of the Board of IBJ Corporation
(newspaper publisher) since December, 1990; Chairman of the Board of
The National Bank of Indianapolis since December, 1993. Mr. Maurer is
Chair, Board of Trustees of the Indianapolis Zoo and Jewish Community
Relations Council and is on the boards of various organizations
including University of Indianapolis and United Way of Central Indiana.
He has been a director of IPALCO and IPL since January, 1993.
Thomas M. Miller, 65, Retired. For more than 5 years prior to his retirement
on May 31, 1994, Mr. Miller was Chairman of the Board and Chief
Executive Officer of NBD Indiana, Inc. (a bank holding company) and
NBD, N.A., Indianapolis, Indiana, and predecessor companies. Mr.
Miller is a director of IPALCO, NBD Indiana, Inc., NBD Bank, N.A.,
State Life Insurance Company, Indianapolis Water Company and IWC
Resources, Inc. He has been a director of IPL since April, 1992.
<PAGE>
Sallie W. Rowland, 62, Chairman and Chief Executive Officer of Rowland
Design, Inc. (a design and space planning firm), Indianapolis, Indiana,
positions she has held for more than 5 years. Mrs. Rowland serves on
various community boards including The Indianapolis Chamber of Commerce
of which she is Vice Chairman. She is a director of IPALCO, NBD Bank,
N.A. and Meridian Mutual Insurance Company and is a member of the
Advisory Board of The Walker Group. She has been a director of IPL since
April, 1988.
Thomas H. Sams, 53, President and Chief Executive Officer, Waldemar
Industries, Inc. (an investment holding company), Indianapolis,
Indiana and an officer of various subsidiary and affiliated
corporations thereof. Mr. Sams has held these positions since 1966. He
is a director of IPALCO, NBD Bank, N.A., Meridian Insurance Group,
Inc. and State Life Insurance Company. He has been a director of IPL
since April, 1986.
Vote Required For Election of Directors
Under Indiana law, directors are elected by plurality vote at a
meeting where a quorum (a majority of shares issued and outstanding) is
present. Shares represented for any purpose are deemed present for quorum
purposes; thus, withheld votes are counted for quorum purposes but
abstentions and broker non-votes are not counted for any purpose.
Procedure To Propose Nominees For Director
IPL will accept timely recommendations by shareholders of proposed
nominees for director who reside in IPL's service area. All such proposals
must be received by IPL's Corporate Secretary not later than January 2 of
any year for consideration at that year's Annual Meeting of Shareholders.
The Executive Committee will review nominees proposed by shareholders in
the same manner as other proposed nominees.
Number of Board Meetings and Attendance
Each director of IPL is elected for a term of one year and until his
or her successor is duly elected and qualified. During the year 1994, the
Board of Directors of IPL held 11 meetings. Its Executive Committee and
Audit Committee held a total of 7 meetings. All directors attended, in the
aggregate, more than 75% of Board meetings and assigned Committee meetings
except Mr. Lytle, who attended 72.7% of such meetings. On average, directors
attended more than 92% of Board and Committee meetings held in 1994.
Committees of the Board
The Board of Directors of IPL has two standing committees, the
Executive Committee and the Audit Committee. There is no nominating
committee, as such; however, the Executive Committee substantially performs
the functions of such committee. It reviews the qualifications and
suitability of candidates to stand for election to IPL's Board of Directors
and recommends nominees to the Board. In addition, the Executive Committee
considers and recommends the declaration of dividends and acts on matters
when the full Board is not in session. The Executive Committee held six
meetings in 1994 and is currently composed of Mr. John R. Hodowal, Chairman,
and Messrs. Robert A. Borns, Otto N. Frenzel III, Earl B. Herr, Jr., Ramon L.
Humke and Sam H. Jones, members.
<PAGE>
The Audit Committee reviews the scope of the audit, examines the
auditor's reports, makes appropriate recommendations to the Board of
Directors as a result of such review and examination, and inquires into the
effectiveness of the financial and accounting functions and controls. The
Audit Committee first approves all non-audit services and gives appropriate
consideration to the effect, if any, they may have on the independence of
the auditor; except that management advisory and tax services, which do not
exceed $50,000 per project or $150,000 in the aggregate per calendar year,
may be approved by the Chairman of the Board without such Committee's
consent. The Audit Committee held three meetings in 1994 and is currently
made up of Mrs. Sallie W. Rowland, Chairman, and Messrs. Rexford C. Early,
Edwin J. Goss, Sam H. Jones and Andre B. Lacy, members.
Certain Business Relationships
During 1994, Acordia, Inc. (``Acordia'') and Anthem Companies, Inc.
(``Anthem'') administered health care programs for IPALCO and its
subsidiaries, including IPL, under contracts that involve payments to
Acordia and Anthem aggregating approximately $14 Million. Mr. L. Ben Lytle is
Chairman and Chief Executive Officer of Acordia and Anthem, which are
subsidiaries of Associated Insurance Companies, Inc. of which Mr. Lytle also
is Chairman, President and Chief Executive Officer.
IPL maintained a line of credit during 1994 with National City Bank,
Indiana (``NCB'') of which Mr. Otto N. Frenzel III is Chairman of the Board.
During the year 1994, IPL utilized $5 Million of its $30 Million line of
credit with NCB. An unutilized credit line also was maintained by IPL with
NBD Bank, N.A., of which Mr. Thomas M. Miller was Chairman of the Board and
Chief Executive Officer until May 31, 1994, and of which Mr. Ramon L. Humke
is a director.
IPL has agreements with Rowland Design, Inc. for architectural and
design services for certain improvements to the Electric Building. During
1994, IPL paid fees of approximately $128,000 under such agreements. Mrs.
Sallie W. Rowland is Chairman and CEO of Rowland Design, Inc.
In late 1994, IPL contracted with Schenkel, McVey & Associates, LLC,
for consulting services in the areas of community affairs, public relations,
and communication for an annual fee of $25,000. No payments under the
contract were made in 1994. Mr. Thomas M. Miller is majority owner of
Schenkel, McVey & Associates, LLC.
COMPENSATION OF EXECUTIVE OFFICERS
Nature and Types of Compensation
The three tables that follow on succeeding pages disclose all plan and
non-plan compensation awarded to, earned by, or paid to the Chairman of the
Board and Chief Executive Officer (``CEO'') and to the four named executive
officers other than the CEO who are the most highly compensated key policy-
making executive officers of IPL, each of whose total annual salary and bonus
exceeded $100,000 for the year 1994. The tables include a Summary
Compensation Table (Table I), an Aggregate Option/SAR Exercises and Fiscal
Year-End Option/SAR Value Tables (Table II) and a table concerning Long-Term
Incentive Plans--Awards in Last Fiscal Year (Table III). No table is
presented for Option/SAR Grants in last fiscal year since no stock options
were granted during 1994.
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
_________________________________________ __________________________
Other Securities
Annual Underlying All Other
Compen- Options/ LTIP Compen-
Name and sation<F1> SARs<F2> Payouts<F3> sation<F4>
Principal Position Year Salary ($) Bonus ($) ($) (#) ($) ($)
- --------------------- ---- ---------- --------- --------- -------- -------- __________
<S> <C> <C> <C> <C> <C> <C> <C>
John R. Hodowal 1992 $ 420,907<F5> $ 165,994 $ 24,134 15,000 $48,800 $ 9,389
Chairman & CEO 1993 424,459 209,672 45,851 105,000 82,350 8,624
1994 461,051 214,566 41,471 -0- 76,250 8,955
Ramon L. Humke 1992 $ 348,925<F5> $ 137,607 $ 53,617 10,000 $39,867 $ 8,771
President & COO 1993 351,889 173,827 112,425 60,000 68,250 8,624
1994 382,221 177,881 130,141 -0- 63,646 8,955
John R. Brehm 1992 $ 196,983<F5> $ 51,748 $ 2,364 5,000 $16,500 $ 7,879
Senior Vice President 1993 199,822 65,839 6,717 30,000 27,844 7,993
1994 218,304 67,728 3,678 -0- 25,781 8,199
Robert W. Rawlings 1992 $ 142,052<F5> $ 37,298 $ 2,633 5,000 -0- $ 5,682
Senior Vice President 1993 143,161 47,159 20,483 30,000 $10,725 5,727
1994 159,040 49,375 7,135 -0- 11,917 6,362
Gerald D. Waltz 1992 $ 194,628<F5> $ 51,069 $ 965 -0- $16,667 $ 7,785
Senior Vice President 1993 193,415 63,684 23,757 30,000 28,125 7,735
1994 202,955 62,887 4,465 -0- 26,042 7,731
- ----------------------------
<FN>
<F1> Represents taxes paid by IPALCO and/or IPL on accrued interest and contributions of principal under the Funded
Supplemental Plan. (See ``Pension Plans'')
<F2> No options have stock appreciation rights.
<F3> Payouts shown were made in 1994 for the 3-year LTIP Program ended December 31, 1993.
<F4> Represents 1994 contributions made by company to Trustee of Employees' Thrift Plan.
<F5> Pay periods were changed December 1, 1992 from monthly to bi-weekly resulting in 1992 payouts being greater than
annual salary rates.
TABLE I
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION/SAR GRANTS IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Option/SARs at
FY-End FY-End ($) *
Shares Acquired Exercisable/ Exercisable/
Name On Exercise (#) Value Realized ($) Unexercisable Unexercisable
________________ __________________ __________________ ___________________ ________________
<S> <C> <C> <C> <C>
John R. Hodowal -0- -0- 85,000 (e) --
70,000 (u) --
Ramon L. Humke 5,000 35,000 85,000 (e) $ 58,750 (e)
40,000 (u) --
John R. Brehm 30,000 195,000 15,000 (e) --
20,000 (u) --
Robert W. Rawlings -0- -0- 27,000 (e) --
20,000 (u) --
Gerald D. Waltz -0- -0- 40,000 (e) $ 62,500 (e)
20,000 (u) --
_______________________
(e) Exercisable.
(u) Unexercisable.
* Based upon year-end closing market price of $30.00 per share of common stock.
TABLE II
</TABLE>
<PAGE>
<TABLE>
LONG-TERM INCENTIVE PLANS<F1> - AWARDS IN LAST FISCAL YEAR
<CAPTION>
Estimated Future Payouts
Under Non-Stock Price-Based Plans
___________________________________________________
Performance
Period Until
Maturation or Threshold Target<F3><F4) Maximum<F3)
Name Payout<F2) ($) ($) ($)
__________________ ___________________ _______________ _________________ ___________
<S> <C> <C> <C> <C>
John R. Hodowal 1994 - 1997 $ -0- $75,038 $150,076
Ramon L. Humke 1994 - 1997 $ -0- 62,208 124,416
John R. Brehm 1994 - 1997 $ -0- 23,684 47,368
Robert W. Rawlings 1994 - 1997 $ -0- 17,420 34,840
Gerald D. Waltz 1994 - 1997 $ -0- 21,632 43,265
___________________________________
<FN>
<F1> IPALCO's Long-Term Incentive Plan became effective January 1, 1990. Under the Plan, Performance
Incentive Awards (``PI Awards'') amounting to 15% of average base salary over a Performance Period
may be earned by the Chairman and the Vice Chairman (10% for other participants) payable after the
end of each Program. (Performance Periods are typically 4-year periods called ``Programs,'' although
Programs 1 and 2 have 2-year and 3-year Performance Periods, respectively.) The amount of a PI Award,
however, may be increased or decreased by a multiple ranging from 0% to 200% depending upon the
quartile ranking for cost effective service and total return to shareholders that IPALCO has achieved
at the end of each Program in relation to other companies within a pre-determined peer group. A program
begins each year. The third Program spanned the 4-year period ended December 31, 1993 for which PI
Awards were paid out in 1994 (See Table I). None of the 17 members of the Peer Group is a company
included in the Dow Jones Utility Index. (See Table IV.) For the four-year period 1990-93 the Company
ranked first among 16 peers in cost-effective service and eighth in total return to shareholders.
Payouts have not yet been determined for Program 4 that ended December 31, 1994. Program 7 reported
in this Table began in 1994; however, see note (2) below.
<F2> If the Long-Term Performance and Restricted Stock Incentive Plan is approved by IPALCO shareholders
at the 1995 Annual Meeting of IPALCO Enterprises, Inc. Shareholders, Program 7 reported in this Table
is cancelled in full and no payouts will be made.
<F3> Based upon 108% of 1994 salary reported in Table I.
<F4> There is no targeted payout under the LTIP. The multiple of 100% was used to calculate the values shown
in this column.
TABLE III
</TABLE>
<PAGE>
COMPENSATION OF DIRECTORS
Standard Arrangements
Non-employee directors serving on the Board of IPL are paid an annual
fee of $8,500 plus $450 for each meeting attended; however, those who are
directors of IPALCO and two or more of its subsidiaries, are limited to two
annual fees. Non-employee members of the Executive Committee of the Board are
paid annual fees of $10,000, but no meeting fees. Members of the Audit
Committee of the Board, all of whom are non-employee directors, each are paid
an annual fee of $4,000 plus $450 for each meeting attended. The Chairman of
this committee receives an additional fee of $1,500 annually. Members of the
Executive and Audit Committees of IPL are limited to one annual fee and only
one meeting fee is paid to Audit Committee members of two or more companies
when meetings are held jointly or follow one another. Directors who are also
officers of IPL receive no director fees.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Policies Relating Generally to Executive Officers
The Compensation Committee of the Board of Directors of IPALCO
(``Committee''), in consultation with its outside advisor, establishes the
compensation policies of IPALCO Enterprises, Inc. and its subsidiaries,
including IPL, (``IPALCO'') with regard to all officers. The Committee
recommends to the Board the adoption or amendment of compensation plans for
officers, including the named executive officers. On authority of the full
Board, the Committee administers all such plans, including establishing
officers' base salary levels, reviewing and approving performance measures
and goals for both annual and long-term incentive plans, and approving
incentive awards.
The Committee is made up of five non-employee directors whose
philosophy is to attract, retain, and motivate a high quality management team
by providing a strong and direct link between IPALCO performance and officer
compensation, with a significant portion of total compensation being
dependent upon measurable performance objectives. The compensation program
for executive and other selected officers had four basic components in 1994:
base salary, annual incentive plan, long-term incentive plan, and stock
option plan. Subject to approval by IPALCO shareholders, a performance-based
restricted stock plan will succeed both the current long-term incentive plan
and the stock option plan in 1995 as a way of more directly linking executive
and shareholder interests.
Base Salary
The Committee targeted the 1994 base salaries for officers, including
the named executive officers, at the median level for similar positions
within the electric utility industry, and where such positions are also found
in general industry, at a level approximating one-half the difference between
the utility industry and general industry. The Committee considered the
analysis provided by the outside advisor that IPALCO salaries are within the
median range of comparable utilities and below those of general industry. The
Committee also considered both company and individual performance in
approving the range of salary increases and the salary for each officer,
including the named executive officers. 1994 base salary increases for all
officers averaged 4.7%; however, as a result of a reduction in the number of
officer positions, total officer salaries for 1994 were less than total
officer salaries for 1993.
<PAGE>
The comparative compensation data for electric utilities used by the
Committee were derived from 25 companies with comparable revenues as reported
in the annual ``Edison Electric Institute Executive Compensation Survey''
(``EEI ECS''). Data for general industry were drawn from four national
executive compensation surveys by the outside consultant.
Annual Incentive Plan
The IPALCO Annual Incentive Plan is a performance-based plan that
measures company performance under four equally weighted criteria: Net
Income, Customer Satisfaction, Productivity, and Budget Compliance.
Participants in the plan are approved in advance of the plan year by the
Committee; and all, including the named executive officers, are measured
against performance goals that are established by the Committee and
announced at the beginning of the year. Goals are set at Threshold, Target,
and Maximum levels, with Threshold performance required for any award under
each criterion; however, if the Threshold goal for Net Income is not met, no
payout is made regardless of the performance under the other criteria. Each
performance level is assigned an award value, with interpolation for
performance between levels. For named executive officers, other than the CEO,
performance at Threshold, Target, and Maximum levels, respectively, warrants
a payout of 10%, 22.5%, and 35% of base salary. Factors ranging from .75 to
1.5 are applied to the award percentage based upon the participant's position.
For the CEO, this performance award range is adjusted by a factor of 1.5.
For 1994, the Company achieved the Maximum performance goal in
Productivity; achieved slightly below Maximum performance in Net Income; and
performed above Target goals in both Budget Compliance and Customer
Satisfaction.
The plan has been amended for 1995 to permit the reduction or
elimination of an award should an individual particpant's performance be
below expectations.
Long-Term Incentive Plan
Subject to approval by IPALCO shareholders, the Long-Term Incentive
Plan and the Stock Option Plan, both adopted in 1990, will be followed by a
performance-based restricted stock plan designed to focus the attention of
prospective participants on long-term company objectives and performance.
Participation will be subject to Committee approval and will be limited to
key employees (including non-officers) who contribute to the strategic and
long-term growth of the company.
IPALCO has continued to perform within the top two quartiles of the
Committee-approved Peer Group in both Total Return to Shareholders and Cost
Effective Service, the criteria used to measure performance for the long-term
incentive plan in effect through 1994. For the four-year performance period
1990-1993, IPALCO ranked first among peers in Cost Effective Service (net
income as a percent of operating revenues plus other income) and eighth in
Total Return to Shareholders. Using the schedule specified in the plan for
that level of performance, the named executive officers received incentive
payments totaling $205,000 in 1994. Awards paid in 1994 were below the median
of awards to comparably positioned executives of peer companies. The long-
term award to the CEO was also below the median award for CEOs in the Peer
Group. Performance results and incentive payments to be made in 1995, if any,
for the performance period 1991-1994 have not been determined.
The new restricted stock plan continues to measure company performance
in Total Return to Shareholders and in Cost Effective Service compared with
the performance of a Peer Group of 15 comparable utilities. Criteria for
selection of peer companies included revenue size and sources, market-to-book
ratio, fuel source,
<PAGE>
and dividend yield, among others. The current Peer Group
does not include any of the 15 companies that make up the current Dow Jones
Electric Utility Index. Final restricted stock awards are based upon IPALCO's
ranking within the Peer Group over a three-year performance period, with
one-third of the shares to be vested during each of the fourth, fifth, and
sixth years after the beginning of the performance period. Subject to its
approval by IPALCO shareholders, this plan generally will not be subject to
the special rules set forth under Section 162(m) of the Internal Revenue
Code, since it qualifies as a performance-based compensation plan.
Stock Option Plan
Subject to approval by IPALCO shareholders, the Stock Option Plan will
be succeeded by the Long Term Performance and Restricted Stock Incentive Plan.
No stock options were granted during 1994.
Basis For Chief Executive Officer's Compensation
The Chief Executive Officer's (``CEO'') compensation continues to be
directly and explicitly linked to IPALCO performance. The CEO's total
compensation is set in relation to the median compensation for CEOs in the
Peer Group and in consideration of the Committee's assessment of his
individual performance. The Committee thoroughly reviews the CEO's
performance, including strategic direction, management team development, and
leadership, as well as overall company performance. The Committee's review is
both subjective and objective. Company performance data used in the incentive
plans plus other financial, operational, service, and administrative data are
considered.
Total 1994 compensation for the CEO (including base salary, Annual
Incentive Plan payment, and Long-Term Incentive payment), as shown in Table
I, increased 5.2% over 1993. His total compensation was slightly above the
median of Peer Group CEOs, but was slightly below the median of CEO
compensation in comparably high-performing peer companies. As cited above,
IPALCO has continued to rank among the high-performing peer companies in
Total Return to Shareholder and in Cost Effective Service.
At Target performance, under the current compensation program,
approximately 33% of the CEO's total direct compensation is variable and at
risk. During 1994, approximately 39% of the CEO's actual total direct
compensation was at risk. With approval by IPALCO shareholders of the revised
Long-Term Performance and Restricted Stock Incentive Plan, it is expected
that the portion of his compensation that is at risk will increase.
The Compensation Committee of the
Board of Directors of IPALCO
Enterprises, Inc.
Otto N. Frenzel III, Chairman
Robert A. Borns
Earl B. Herr, Jr.
Thomas M. Miller
Thomas H. Sams
Compensation Committee Interlocks and Insider Participation
There is no standing Compensation Committee of the Board of Directors
of IPL. Mr. John R. Hodowal and Mr. Ramon L. Humke consult with the
Compensation Committee of the Board of Directors of IPALCO concerning the
base salary component of executive officer compensation. However, Mr. Hodowal
and Mr. Humke do not participate in discussions with the Compensation
Committee with regard to their own compensation. IPL's President and Chief
Operating Officer, Mr. Ramon L. Humke, is a member of the
<PAGE>
[GRAPHICS DELETED]
Performance Graph
The Performance Graph on this page, Table IV, plots the total
cumulative return that shareholders of IPALCO received (solid line) during
the 5-year period ended December 31, 1994, compared with the total cumulative
return to shareholders of companies comprising the Dow Jones Electric
Utilities Index (broken line) and the Standard and Poors 500 Index (dotted
line). The Graph shows the cumulative total return assuming dividend
reinvestment and based upon an initial investment of $100.00. The vertical
portion of the Graph indicates the dollar value ranging from $90.00 to
$180.00, and the horizontal portion of the graph is the year, beginning in
1989 and continuing through 1994.
The points on the Performance Graph are as follows:
<TABLE>
CUMULATIVE TOTAL RETURN ASSUMING DIVIDEND REINVESTMENT
______________________________________________________________________
<CAPTION>
1989 1990 1991 1992 1993 1994
____________________________________________
<S> <C> <C> <C> <C> <C> <C>
IPALCO<F1> 100 109 145 165 172 156
Dow Jones
Electric
Utilities<F1> 100 102 132 141 158 138
S&P 500 <F2> 100 97 126 136 150 152
<FN>
Source:
<F1> Dow Jones Total Return Indexes
<F2> Standard and Poors Compustat Services, Inc.
</TABLE>
<PAGE>
Compensation Committee of the Board of Directors of LDI Management, Inc. Mr.
Andre B. Lacy is Chairman of the Board, Chief Executive Officer and President
of LDI Management, Inc. and is also a director of IPL. Mr. Humke is also a
member of the Board of Directors of NBD Bank, N.A., and Mr. Thomas M. Miller,
a director of IPL was Chairman of the Board and Chief Executive Officer of
NBD Bank, N.A., until May 31, 1994. Mr. John R. Hodowal, Chairman of IPL, is
a member of the Board of Directors of Bank One, Indianapolis, N.A. Mr. Joseph
D. Barnette, Jr. is Chairman and Chief Executive Officer of Bank One,
Indianapolis, N.A. and is a director of IPL.
Performance Graph
The Performance Graph (Table IV) on the preceding page plots the total
cumulative return that shareholders of IPALCO received (solid line) during
the 5-year period ended December 31, 1994, compared with the total cumulative
return to shareholders of companies comprising the Dow Jones Electric
Utilities Index (broken line) and the Standard and Poors 500 Index (dotted
line). The Graph reflects IPALCO's superior return in years 1991 through 1994
referenced in the foregoing Compensation Committee Report as one of the
bases for the Chief Executive Officer's compensation disclosed in preceeding
sections of this statement.
Pension Plans
Table V below illustrates the combined annual retirement benefits
computed on a straight-life annuity basis (less Social Security) that is
payable under the Base Retirement Plan, as defined below, and the Funded
Supplemental Plan (assuming continuous employment to age 65) to named
executive officers having the remuneration and years of service shown.
<TABLE>
PENSION PLAN TABLE <F1>
<CAPTION>
Remuneration Years of Service
____________ ______________________________________________________________________
15 20 25 30 35 40
_________ ________ _________ ________ ________ ________
<S> <C> <C> <C> <C> <C> <C>
$150,000 $ 97,500 $ 97,500 $ 97,500 $ 97,500 $ 97,500 $ 97,500
200,000 130,000 130,000 130,000 130,000 130,000 130,000
250,000 162,500 162,500 162,500 162,500 162,500 162,500
300,000 195,000 195,000 195,000 195,000 195,000 195,000
350,000 227,500 227,500 227,500 227,500 227,500 227,500
400,000 260,000 260,000 260,000 260,000 260,000 260,000
450,000 292,500 292,500 292,500 292,500 292,500 292,500
500,000 325,000 325,000 325,000 325,000 325,000 325,000
__________________________________________
<FN>
<F1> This table takes into account the latest Internal Revenue Code Section 415
benefit limitations and Internal Revenue Code Section 401(a)(17) compensation
limitation applicable to the Base Retirement Plan. Benefits for both the Base
Retirement Plan portion and Funded Supplemental Plan portion of the combined
amounts have been shown without adjustment for income taxes. The Funded
Supplemental Plan portion reflects the change in that Plan in 1994 to
eliminate the offset for Social Security.
TABLE V
</TABLE>
<PAGE>
IPL's Employees' Retirement Plan (the ``Base Retirement Plan'') covers
all permanent employees with one (1) year of service but excludes directors
unless they are also officers. It provides fixed benefits at normal
retirement age based upon compensation and length of service, the costs of
which are computed actuarially. The remuneration covered by the Plan includes
``Salary'' but excludes ``Bonus'' and ``Other Compensation'', annual or
otherwise, as those terms are used in the Summary Compensation Table (Table
I). Benefits are calculated on the basis of the highest average annual salary
in any 60 consecutive months of employment. Years of service for Pension Plan
purposes of named executive officers are as follows: Mr. Hodowal - 26, Mr.
Humke - 5, Mr. Brehm - 19, Mr. Rawlings - 30, and Mr. Waltz - 34.
The Funded Supplemental Plan referred to above is applicable to the
named executive officers and, at reduced benefits, to all other officers of
IPALCO and IPL. Contributions and accrued interest credited during 1994 to
the accounts of Messrs. Hodowal, Humke, Brehm, Rawlings and Waltz amounted to
$44,097, $148,628, $3,524, $7,748 and $3,029, respectively (in addition to
the federal, state and local income tax payments reflected in Table I above).
Contributions are based on actuarial assessments of benefits projected to
accrue to such officers under the Funded Supplemental Plan upon termination
of employment at normal retirement age and at current salary levels.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
IPL has employment contracts with Messrs. Hodowal and Humke which
provide for an indefinite term that is convertible into a fixed 3-year term
upon notice. Such contracts terminate upon death, total disability or
retirement. Should they be terminated without ``cause'' or resign for
``good reason'' (as those terms are defined in the contract--see below),
they would continue to receive their Salary, as that term is used in
Table I, for up to 3 years thereafter, less any severance payments received
from other agreements.
All Officers of IPL have Termination Benefits Agreements, dated as of
January 1, 1993. These Agreements provide for payment of severance benefits
equal to 299.99% of the last 5 years' average annual Salary (but not
exceeding the limits of Internal Revenue Code 280G), if IPL or IPALCO
undergoes an ``acquisition of control'' while the agreement is in effect and
if, within 3 years after an acquisition of control, any such officer is
terminated without ``cause'' or resigns for ``good reason'', as those terms
are therein defined (see below).
The term ``without `cause''' is defined in the employment contracts
and Termination Benefits Agreements discussed above to mean in the absence
of fraud, dishonesty, theft of corporate assets or other gross misconduct,
as set out in a good faith determination of the Board of Directors. The term
``resign for `good reason''' is defined in the same agreements to mean
generally, and subject to lengthy qualifications and amplification, demotion;
assignment of duties inconsistent with the officer's status, position or
responsibilities; reduction in base salary or failure to grant annual
increases commensurate with increases of other officers; relocation of the
headquarters of IPALCO or IPL to a location outside Greater Indianapolis; or
termination of the executive's participation in, or the existence of, an
incentive compensation, insurance or pension program. The term ``acquisition
of control'' in such contracts means, generally and subject to lengthy
amplification and qualifications therein, acquisition by any person, entity,
or group of 20% or more of the combined voting power of the outstanding
securities of IPALCO entitled to vote in the election of directors, excluding
acquisitions by or from IPALCO or any acquisition by any employee benefit
plan of IPALCO or IPL; change in majority membership of the Board of
Directors other than by normal succession; certain reorganizations, mergers or
<PAGE>
consolidations resulting in control of the reorganized, merged, or
consolidated entity by persons not previously in control of IPALCO; approval
by the shareholders of complete liquidation or dissolution of IPALCO, or of
a sale of all or substantially all of its assets to an entity not controlled
by directors and holders of voting securities who were directors and holders
of voting securities of IPALCO prior to the transaction.
A Benefit Protection Fund and Trust Agreement (``Fund'') is also in
effect to pay litigation expenses in the event it becomes necessary for any
officer to enforce the employment contracts and Termination Benefits
Agreements above described. The Fund is held in trust by National City Bank,
Indianapolis, and at December 31, 1994, the sum of $787,000 was reserved in
trust for such expenses.
By order of the Board of Directors.
INDIANAPOLIS POWER & LIGHT COMPANY
By: BRYAN G. TABLER, Secretary
Indianapolis, Indiana
March 6, 1995
