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Indianapolis Power & Light Company
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IPL
INDIANAPOLIS POWER & LIGHT COMPANY
One Monument Circle
P.O. Box 1595
Indianapolis, Indiana 46206-1595
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 17, 1996
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
Corporation, One Monument Circle, Indianapolis, Indiana, 46204 on
Wednesday, April 17, 1996, 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
Wednesday, February 28, 1996, 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 8, 1996
<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
COMPENSATION OF DIRECTORS -------------------------------------------- 9
Standard Arrangements ------------------------------------------------ 9
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION --------------------------------------------------------- 9
Compensation Policies Relating Generally to Executive Officers ------- 9
Base Salary ------------------------------------------------ 9
Annual Incentive Plan -------------------------------------- 10
Long-Term Performance and Restricted Stock Incentive Plan ------------ 10
Basis for Chief Executive Officer's Compensation --------------------- 11
Deductibility of Executive Compensation ------------------------------ 11
Compensation Committee Interlocks and Insider Participation ---------- 12
Performance Graph - Table III ---------------------------------------- 13
Performance Graph ---------------------------------------------------- 14
Pension Plans -------------------------------------------------------- 14
Pension Plan Table - Table IV ------------------------------ 14
Employment Contracts and Termination of Employment and Change-in-
Control Arrangements ---------------------------------------- 15
<PAGE>
INDIANAPOLIS POWER & LIGHT COMPANY
INFORMATION STATEMENT
Relating to the
Annual Meeting of Shareholders
April 17, 1996
(Mailed on or about March 8, 1996)
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 17, 1996. 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 19, 1995 will be
presented for approval at the 1996 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 LLP (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 17, 1996, and will be
given an opportunity to make a statement and to respond to appropriate
questions from shareholders.
VOTING SECURITIES AND BENEFICIAL OWNERS
On January 15, 1996, 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
Wednesday, February 28, 1996, will be entitled to vote at the meeting or
at any adjournment thereof.
<TABLE>
On January 15, 1996, 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%
One 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>
On January 15, 1996, 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 30, 1996, the Executive Committee of
IPL's Board of Directors nominated 17 nominees for election as directors
at its Annual Meeting of Shareholders to be held April 17, 1996 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 17, 1996), job experience and
directorships of such nominees are as follows:
Joseph D. Barnette, Jr., 56, 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.
Robert A. Borns, 60, Chairman of Borns Management Corporation (real
estate management), Indianapolis, Indiana. Mr. Borns has held his
present position since 1961 and serves on numerous boards,
including the Board of Trustees of Indianapolis Museum of Art,
Indianapolis Symphony Orchestra and St. Vincent Hospital. He is
also a director of IPALCO, Indianapolis Water Company, IWC
Resources Corporation 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., 47, 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, Acordia,
Inc. and NBD Bank, N.A. and has been a director of IPL since
November, 1989.
Rexford C. Early, 61, 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, 65, Chairman, Executive Committee National City
Bank, Indiana, Indianapolis, Indiana. Mr. Frenzel has held his
present position since January, 1996. For more than 3 years prior
to that time, Mr. Frenzel was Chairman of the Board of National
City Bank, Indiana. Prior to May, 1992, Mr. Frenzel was Chairman of
the Board of Merchants National Bank & Trust Company of
Indianapolis and Chairman of the Board of Merchants National
Corporation. 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 Corporation. He has been a director
of IPL since April, 1977.
Max L. Gibson, 55, 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, 69, 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., 68, 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, 51, 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.
Ramon L. Humke, 63, 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, 68, 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, 56, 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., Herff Jones and The
National Bank of Indianapolis. He has been a director of IPL since
April, 1987.
L. Ben Lytle, 49, 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, 53, 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, United Way of Central Indiana. He has been a
director of IPALCO and IPL since January, 1993.
Thomas M. Miller, 66, Retired. For more than 5 years prior to his
retirement, Mr. Miller was Chairman of the Board and Chief
Executive Officer of NBD Indiana, Inc. (a bank holding company) and
NBD Bank, N.A., Indianapolis, Indiana, and predecessor companies.
Mr. Miller is a director of IPALCO, NBD Indiana, Inc., NBD Bank,
N.A., Indianapolis Water Company and IWC Resources Corporation. He
has been a director of IPL since April, 1992.
Sallie W. Rowland, 63, Chairman and Chief Executive Officer of Rowland
Design, Inc. (an architectural, interiors and graphic design 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. She has been a director of IPL since April,
1988.
Thomas H. Sams, 54, 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.
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. 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 1995,
the Board of Directors of IPL held 11 meetings. Its Executive Committee
and Audit Committee held a total of 10 meetings. All directors attended
more than 75% of the aggregate of Board meetings and assigned committee
meetings. On average, directors attended more than 93% of Board and
committee meetings held in 1995.
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 seven meetings in 1995 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.
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 1995 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 1995, 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 $16 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 1995 with National City
Bank, Indiana (``NCB'') of which Mr. Otto N. Frenzel III is Chairman of
the Executive Committee. During 1995, the maximum principal amount
outstanding at any time on IPL's $30 million line of credit with NCB was
approximately $11 million, and IPL had no outstanding balance with NCB as
of December 31, 1995. An unutilized long-term revolving credit facility
was also maintained by IPL with NCB.
IPL maintained a long-term revolving credit facility during 1995
with Bank One, Indianapolis, NA, (``Bank One'') of which Mr. Joseph D.
Barnette, Jr., is Chairman and Chief Executive Officer. IPL did not
utilize the credit facility during 1995.
An unutilized credit line and an unutilized long-term revolving
credit facility were also maintained by IPL with NBD Bank, N.A.
(``NBD''), of which Mr. Thomas M. Miller is a Director, and of which Mr.
Ramon L. Humke is a director.
IPL engaged Rowland Design, Inc. for architectural and design
services for certain improvements to IPL's corporate offices located at
One Monument Circle. During 1995, IPL paid fees of approximately $238,000
under such agreement. Mrs. Sallie W. Rowland is Chairman and CEO of
Rowland Design, Inc.
IPL engaged Schenkel & Associates, LLC, for consulting services in
the areas of community affairs, public relations, and communication, and
paid fees of approximately $27,000 during 1995. Mr. Thomas M. Miller is
majority owner of Schenkel & Associates, LLC.
COMPENSATION OF EXECUTIVE OFFICERS
Nature and Types of Compensation
The two 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 $100,000 for the year 1995. The tables include
a Summary Compensation Table (Table I) and an Aggregated Option/SAR
Exercises In Last Fiscal Year and Fiscal Year-End Option/SAR Value Table
(Table II). No table is presented for Option/SAR Grants in last fiscal
year since no stock options were granted during 1995. No table is
presented for Long-Term Incentive Plans since the issuance of restricted
stock under the Long-Term Performance and Restricted Stock Incentive Plan
is included in the Summary Compensation Table (Table I).
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term Compensation
___________________________________________
Annual Compensation Awards Awards Payouts
________________________________________ ________________________________________
Other Securities
Annual Restricted Underlying All Other
Compen- Stock Options/ LTIP Compen-
Name and sation<F1> Awards<F2> SARs<F3> Payouts<F4> sation<F5>
Principal Position Year Salary ($) Bonus ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John R. Hodowal 1993 $424,459 $209,672 $45,851 -0- 105,000 $82,350 $8,624
Chairman & CEO 1994 461,051 214,566 41,471 -0- -0- 76,250 8,955
1995 476,012 206,425 43,721 $491,790 -0- 75,488 8,310
Ramon L. Humke 1993 $351,889 $173,827 $112,425 -0- 60,000 $68,250 $8,624
President & COO 1994 382,221 177,881 130,141 -0- -0- 63,646 8,955
1995 394,591 171,120 157,606 $407,700 -0- 62,975 8,310
John R. Brehm 1993 $199,822 $ 65,839 $ 6,717 -0- 30,000 $27,844 $7,993
Senior Vice President 1994 218,304 67,728 3,678 -0- -0- 25,781 8,199
1995 225,315 89,513 6,301 $133,050 -0- 24,228 8,310
Bryan G. Tabler<F6> 1993 -0- -0- -0- -0- -0- -0- -0-
Senior Vice President 1994 $ 46,157 $ 15,785 $ 1,360 -0- -0- -0- -0-
Secretary & General 1995 202,931 58,650 14,471 $121,350 -0- -0- $5,589
Counsel
Gerald D. Waltz 1993 $193,415 $ 63,684 $ 23,757 -0- 30,000 $28,125 $7,735
Senior Vice President 1994 202,955 62,887 4,465 -0- -0- 26,042 7,731
1995 201,930 58,353 11,178 $121,530 -0- 24,228 8,310
________________________
<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''). Includes $5,463 for taxes and gross-up paid on
deferred compensation and $3,864 earned in above market interest on
deferred compensation for Mr. Humke.
<F2> Restricted common stock awards are valued at the closing market
price as of the date of grant. Restricted common stock holdings and
the value thereof based on the closing price of the common stock at
year end are as follows: Mr. Hodowal - 16,393 shares ($624,983);
Mr. Humke - 13,590 shares ($518,119); Mr. Brehm - 4,435 shares
($169,084); Mr. Tabler - 4,045 shares ($154,216); and Mr. Waltz -
4,051 shares ($154,444). Dividends on the restricted common stock
are payable to the named officers. Shares awarded in 1995 represent
a cumulative 3-year award for years 1995, 1996, and 1997. Under the
terms of the Plan, no additional shares will be awarded to the
named officers before 1998.
<F3> No options have stock appreciation rights.
<F4> Payouts shown were made in 1995 for the 4-year LTIP Program ended
December 31, 1994.
<F5> Represents 1995 contributions made by IPL to the Trustee of the
Employees' Thrift Plan.
<F6> Mr. Tabler started his employment on October 1, 1994, and became an
officer of both IPALCO and IPL on January 1, 1995.
TABLE I
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End(#) FY-End ($)*
Shares
Acquired On Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- --------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
John R. Hodowal -0- -0- 120,000(e) $517,500(e)
35,000(u) 4,375(u)
Ramon L. Humke -0- -0- 105,000(e) $751,875(e)
20,000(u) 2,500(u)
John R. Brehm -0- -0- 25,000(e) $21,875(e)
10,000(u) 1,250(u)
Bryan G. Tabler -0- -0- ---- ----
---- ----
Gerald D. Waltz 5,000 $48,750 45,000(e) $324,375(e)
10,000(u) 1,250(u)
- ----------------------
(e) Exercisable.
(u) Unexercisable.
* Based upon year-end closing market price of $38.125 per share
of common stock.
TABLE II
</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 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 (``Committee''), of the Board of
Directors of IPALCO Enterprises, Inc. (``IPALCO''), in consultation with
its outside advisor, establishes the compensation policies of IPALCO and
its subsidiaries, including IPL, 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 three basic
components in 1995: base salary, a performance-based annual incentive
plan, and a long-term performance and restricted stock incentive plan. It
is the policy of the Committee that the compensation program should
directly link executive and shareholder interests.
Base Salary
The Committee targeted 1995 base salaries for officers, including
the named executive officers, at the median level for similar positions
within comparably performing utilities, 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 medians. The
Committee considered the analysis which was 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. 1995 base salary increases for all officers averaged
3.7%, somewhat below the utility industry average, even though company
performance was comparable with other high-performing utilities. The
Committee determined that constraining base salary increases was an
appropriate step to place a higher percentage of total compensation at
risk through the use of incentive compensation.
The comparative compensation data for electric utilities used by
the Committee were derived from companies with comparable revenues as
reported in the annual Edison Electric Institute Executive Compensation
Survey. Data for general industry were drawn from four national executive
compensation surveys provided by the outside consultant.
Annual Incentive Plan
The IPALCO Annual Incentive Plan is a performance-based plan which
measures company performance in four equally weighted criteria: Net
Income, Customer Satisfaction, Productivity, and Budget Compliance.
Target awards are set approximately half-way between general industry and
utility medians. Participants in the plan are approved in advance of the
plan year by the Committee. All participants, including the named
executive officers, are measured against performance goals which 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 in each criteria; however, if the
Threshold goal for Net Income is not met, no payout is made regardless of
the performance in any other criteria. Each performance level is assigned
an award value, with interpolation for performance between levels. For
named executive officers, 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.
The plan permits the reduction or elimination of an award should an
individual participant's performance be below expectations. No awards
were reduced in 1995.
For 1995, the Company met the Maximum performance goals in three of
the four performance measures: Net Income, Productivity, and Budget
Compliance. Customer Satisfaction performance was at the Threshold level.
Long-Term Performance and Restricted Stock Incentive Plan
The performance-based restricted stock plan, approved at the last
Annual Meeting of Shareholders, is designed to focus the attention of
prospective participants on long-term company objectives and performance.
Participation is subject to Committee approval and is limited to key
employees (including non-officers) who contribute on a continuing basis
to the strategic and long-term growth of the company.
The plan continues to measure company performance in Total Return
to Shareholders and in Cost Effective Service (net income as a percent of
operating revenues plus other income) 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, and dividend yield among other criteria. Target awards are set
approximately half-way between general industry and utility medians.
Conditional restricted stock grants, at Target levels, ranging from 10%
to 35% of base salary, are awarded at the beginning of each three-year
performance period. Final awards are based upon IPALCO's ranking within
the Peer Group over the 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. The performance period for Program 1
covers 1995-1997, with final restricted stock awards made July 1, 1998.
Performance in Total Return to Shareholders and Cost Effective
Service continues also to be measured over the four-year performance
periods specified in the original Long-Term Incentive Plan for those
programs begun prior to 1995. For Program 4, for the years 1991-1994,
IPALCO ranked first among peers in Cost Effective Service and eleventh
among peers 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 $186,919 in 1995.
Basis For Chief Executive Officer's Compensation
The Chief Executive Officer's (``CEO'') compensation continues to
be directly and explicitly linked to IPALCO performance with
consideration given to the Committee's assessment of his individual
performance. The Committee thoroughly reviews the CEO's performance,
including strategic direction, leadership and management team
development, as well as overall company performance. The Committee's
review is both subjective and objective. IPALCO performance data used in
the incentive plans plus other financial, operational, service, and
administrative data are considered.
Total 1995 compensation for the CEO (including base salary, Annual
Incentive Plan payment, and Long-Term Incentive payment and the first
grant of stock associated with the 1995 Long-Term Performance and
Restricted Stock Incentive Plan), is shown in Table I. 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.
At Target performance, under the current compensation program,
approximately 41% of the CEO's total direct compensation is variable and
at risk. During 1995, approximately 48% of the CEO's actual total direct
compensation was at risk.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code will not permit a
public corporation to deduct, for federal income tax purposes, annual
compensation in excess of $1 million paid to certain top executives,
unless that compensation qualifies as ``performance based'' compensation.
This limitation does not impact IPALCO with respect to executive
compensation paid in 1995, nor does the Committee believe that this will
have an impact in 1996. The Committee continues to review this issue with
the present intent to take appropriate steps to ensure the continued
deductibility of its executive compensation.
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. Mr. Frenzel
is Chairman, and Messrs. Borns, Herr, Miller and Sams are the members of
IPALCO's Compensation Committee. 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 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. 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.
<PAGE>
PERFORMANCE GRAPH
The Performance Graph on this page, Table III, plots the total
cumulative return that shareholders of IPALCO received (solid line with
dot) during the 5-year period ended December 31, 1995, compared with the
total cumulative return to shareholders of companies comprising the Dow
Jones Electric Utilities Index (solid line with triangle) and the Standard
and Poors 500 Index (solid line with square) and the Standard & Poors
Electric Companies Index (solid line with star). 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 $220.00, and the
horizontal portion of the Graph is the year, beginning in 1990 and
continuing through 1995.
The points on the Performance Graph are as follows:
<TABLE>
CUMULATIVE TOTAL RETURN ASSUMING DIVIDEND REINVESTMENT
- ---------------------------------------------------------------------------
<CAPTION>
1990 1991 1992 1993 1994 1995
--------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
IPALCO<F1> 100 133 152 158 143 194
DJ ELEC UTIL<F1> 100 130 138 155 136 178
S & P 500<F2> 100 130 140 155 157 215
S & P ELEC COMPANIES<F2> 100 130 138 155 135 177
<FN>
Source:
<F1> *Dow Jones Total Return Indexes
<F2> **Standard and Poors Compustat Services, Inc.
TABLE III
</TABLE>
<PAGE>
Performance Graph
The Performance Graph (Table III) on the preceding page plots the
total cumulative return that shareholders of IPALCO received (solid line
with dot) during the 5-year period ended December 31, 1995, compared with
the total cumulative return to shareholders of companies comprising the
Dow Jones Electric Utilities Index (solid line with triangle) and the
Standard and Poors 500 Index (solid line with square) and the Standard &
Poors Electric Companies Index (solid line with star). The Graph reflects
IPALCO's superior return in years 1991 through 1995 as compared to the
electric utility industry and is one of the bases for the Chief Executive
Officer's compensation as disclosed in the Compensation Committee Report
set forth in this Information Statement.
IPALCO has elected to use the Standard & Poors Electric Companies
Index (``S&P Electric Index'') for its industry comparison this year and
will discontinue the use of the Dow Jones Electric Utilities Index next
year. The S&P Electric Index is a capitalization weighted index of all
stocks in the index, while the Dow Jones Electric Utilities Index is a
price weighted average of the 15 utility companies in the index. As a
result, changes in the S&P Electric Index reflect both the relative size
of the company as well as the change in price. In addition, the S&P
Electric Index contains a broader range of companies and IPALCO believes
it is a better indicator of the electric utility market.
Pension Plans
Table IV below illustrates the combined annual retirement benefits
computed on a straight-life annuity basis that are payable under the Base
Retirement Plan 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
---------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
$125,000 $ 81,250 $ 81,250 $ 81,250 $ 81,250 $ 81,250
150,000 97,500 97,500 97,500 97,500 97,500
175,000 113,750 113,750 113,750 113,750 113,750
200,000 130,000 130,000 130,000 130,000 130,000
225,000 146,250 146,250 146,250 146,250 146,250
250,000 162,500 162,500 162,500 162,500 162,500
300,000 195,000 195,000 195,000 195,000 195,000
400,000 260,000 260,000 260,000 260,000 260,000
450,000 292,500 292,500 292,500 292,500 292,500
500,000 325,000 325,000 325,000 325,000 325,000
- -------------------------
<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.
TABLE IV
</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 - 27, Mr. Humke - 6, Mr.
Brehm - 20, Mr. Tabler - 1, and Mr. Waltz - 35.
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
1995 to the accounts of Messrs. Hodowal, Humke, Brehm, Tabler and Waltz
amounted to $31,563, $140,186, $4,752, $17,781 and $6,779, 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 above, for up to 3 years thereafter, less any severance payments
received from other agreements.
All Officers of IPL have Termination Benefits Agreements, dated on
or after 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 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 described above. The Fund is held in trust by National City
Bank, Indianapolis, and at December 31, 1995, the sum of $856,566 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 8, 1996
