<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
MADISON GAS AND ELECTRIC COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MADISON GAS AND ELECTRIC COMPANY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
MADISON GAS AND ELECTRIC COMPANY
[LOGO]
-------------------------------------
PROXY STATEMENT
-----------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 9, 1994
<PAGE>
MADISON GAS AND ELECTRIC COMPANY
POST OFFICE BOX 1231
MADISON, WISCONSIN 53701-1231
March 24, 1994
Dear Shareholder:
The directors and officers of the Company join me in extending a cordial
invitation to you to attend our 1994 Annual Meeting of Shareholders which will
be held on Monday, May 9, 1994, at 11:00 a.m., local time, at the Holiday
Inn--Madison West, 1313 John Q. Hammons Drive, Greenway Center, Middleton,
Wisconsin (see the map on the next page).
The accompanying Proxy Statement requests approval of the election of a
slate of nominees for directors of Class II to hold office until 1997.
At the Meeting we will discuss last year's operations, comment on items of
interest to you and the Company, and give you an opportunity to ask questions.
Following the Meeting, our Company's officers, directors, and other employees
will be available to answer any questions you may have.
YOUR VOTE IS IMPORTANT TO US. I ENCOURAGE YOU TO SIGN YOUR PROXY PROMPTLY
AND MAIL IT BACK TO US even if you plan to attend the Meeting. You may revoke
your proxy at the Meeting and vote your shares in person if you wish.
I hope you will be able to attend.
Very truly yours,
DAVID C. MEBANE
President, Chief Executive Officer,
and Chief Operating Officer
<PAGE>
IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE FILL OUT THE
ENCLOSED ATTENDANCE CARD AND RETURN IT WITH YOUR PROXY SO THAT WE MAY HAVE AN
INDICATION OF THE NUMBER OF SHAREHOLDERS PLANNING TO ATTEND THE MEETING.
IF YOU HAVE ANY QUESTIONS, PLEASE FEEL FREE TO CALL OUR SHAREHOLDER
SERVICES TOLL-FREE NUMBER. CALL 1-800-356-6423 IF YOU ARE CALLING FROM OUTSIDE
WISCONSIN (CONTINENTAL UNITED STATES). IN WISCONSIN, PLEASE CALL
1-800-362-6423, AND IN THE MADISON AREA, CALL 252-4744.
[PASTE UP MAP]
From the West Beltline Highway, take Exit 252 -- Greenway Blvd.
<PAGE>
MADISON GAS AND ELECTRIC COMPANY
POST OFFICE BOX 1231
MADISON, WISCONSIN 53701-1231
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MONDAY, MAY 9, 1994, 11:00 A.M.
The 1994 Annual Meeting of Shareholders of Madison Gas and Electric Company
will be held in Middleton, Wisconsin, at the Holiday Inn--Madison West, 1313
John Q. Hammons Drive, Greenway Center, Middleton, Wisconsin, on Monday, May 9,
1994, at 11:00 a.m., local time, for the purposes of:
(1) Electing four directors of Class II to hold office until the Annual
Meeting of Shareholders in 1997 and until their successors have been elected
and qualified.
(2) Transacting such other business as may properly come before the
Meeting.
Only those shareholders of Common Stock of record at the close of business
on March 1, 1994, are entitled to vote at the Meeting. All shareholders are
requested to be present at the Meeting in person or by proxy. Enclosed is a
proxy.
Your attention is directed to the Proxy Statement of Madison Gas and
Electric Company on the following pages.
By order of the Board of Directors
GARY J. WOLTER, Secretary
March 24, 1994
--------------
IT IS IMPORTANT TO YOU AND THE COMPANY THAT YOUR SHARES BE REPRESENTED AT
THE ANNUAL MEETING OF SHAREHOLDERS. EVEN IF YOU PLAN TO ATTEND THE MEETING IN
PERSON, YOU ARE REQUESTED TO SIGN, DATE, AND MAIL THE ENCLOSED PROXY
PROMPTLY--REGARDLESS OF THE SIZE OF YOUR STOCK HOLDING.
THE SIGNATURE ON THE PROXY SHOULD CORRESPOND EXACTLY WITH THE NAME OF THE
SHAREHOLDER AS IT APPEARS ON THE PROXY. WHERE STOCK IS REGISTERED IN THE NAMES
OF TWO OR MORE PERSONS, ALL SUCH PERSONS SHOULD SIGN THE PROXY.
IF THE PROXY IS SIGNED AS ATTORNEY, PERSONAL REPRESENTATIVE, ADMINISTRATOR,
TRUSTEE, OR GUARDIAN, PLEASE INDICATE FULL TITLE AS SUCH.
1
<PAGE>
MADISON GAS AND ELECTRIC COMPANY
POST OFFICE BOX 1231
MADISON, WISCONSIN 53701-1231
PROXY STATEMENT
To the Shareholders of the Common Stock of
MADISON GAS AND ELECTRIC COMPANY:
This Proxy Statement and accompanying proxy, to be mailed on or about March
24, 1994, are furnished as a part of the solicitation of proxies by the Board of
Directors of Madison Gas and Electric Company (hereinafter referred to as the
"Company"), to be voted at the 1994 Annual Meeting of Shareholders of the
Company to be held in Middleton, Wisconsin, at the Holiday Inn--Madison West,
1313 John Q. Hammons Drive, Greenway Center, Middleton, Wisconsin, on Monday,
May 9, 1994, at 11:00 a.m., local time, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders. A shareholder who
executes a proxy may revoke it at any time before it is voted. A proxy may be
revoked by written notice to the Company, execution of a subsequent proxy, or
attendance at the Meeting and voting in person. Attendance at the Meeting will
not automatically revoke a proxy.
As of March 1, 1994, the Company had outstanding 10,719,812 shares of
28,000,000 authorized shares of Common Stock and 220,000 shares of 1,199,000
authorized shares of Cumulative Preferred Stock. The Common Stock constitutes
the only class of securities entitled to vote at the 1994 Annual Meeting of
Shareholders. Only those shareholders of Common Stock of record at the close of
business on March 1, 1994, are entitled to vote at the Meeting. At the 1985
Annual Meeting of Shareholders, the shareholders of the Company approved an
amendment to the Company's Restated Articles of Incorporation (the "Restated
Articles") limiting the voting power of any shareholder who acquires more than
10 percent of the Company's outstanding voting stock. To the knowledge of the
Company, this limitation does not currently apply to any shareholder.
Accordingly, at the present time one share of Common Stock will be entitled to
one vote. For those shareholders who are participants in the Company's Automatic
Dividend Reinvestment and Stock Purchase Plan, the shares you have accumulated
in the Plan are held by the Administrator of the Plan under the nominee name of
Whimm & Co., and those shares, including your reinvestment shares, will be voted
in accordance with the direction given on the proxy.
2
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors consists of eleven directors and is divided into
three classes (two classes of four directors and one class of three directors),
with one class being elected each year for a term of three years. Accordingly,
it is proposed that the four nominees listed below be elected to serve as Class
II directors for three-year terms, to expire at the 1997 Annual Meeting of
Shareholders and upon the election and qualification of their successors.
Messrs. Bolz, Stark, Swanson, and Vondrasek are currently Class II directors
whose terms expire at the 1994 Annual Meeting and who have been nominated for
reelection.
Each of the nominees has indicated a willingness to serve if elected, and
the Board of Directors has no reason to believe that any nominee will be
unavailable. If any of the nominees should become unable to serve, it is
presently intended that the proxies solicited hereby will be voted for a
substitute nominee designated by the Board of Directors.
A shareholder may (i) vote for the election of all named director nominees,
(ii) withhold authority to vote for all named director nominees, or (iii) vote
for the election of all such nominees other than any nominee with respect to
whom the shareholder withholds authority to vote by so indicating on the proxy.
Proxies properly executed and received by the Company prior to the 1994 Annual
Meeting of Shareholders and not revoked will be voted as directed therein. In
the absence of a specific direction from a shareholder, proxies will be voted
for the election of the nominees named above. If a proxy indicates that all or a
portion of the votes represented by such proxy are not being voted, such
non-votes will not be considered as votes cast in the election of directors and
will not affect the outcome of the election of directors. If a quorum is present
at the 1994 Annual Meeting, the four persons receiving the greatest number of
votes will be elected to serve as Class II directors.
Under the terms of the Company's Bylaws, nominations for the Board of
Directors made by shareholders must be made in writing and delivered or mailed
to the Chief Executive Officer and/or President of the Company at the Company's
principal executive offices not less than 14 days nor more than 60 days prior to
the Annual Meeting of Shareholders. If less than 14 days' notice of the Annual
Meeting is given to shareholders, such nominations must be delivered or mailed
as specified above not later than the close of business on the fourth day
following the day on which the notice was mailed. Such notification shall
contain the following information to the extent known to the nominating
3
<PAGE>
shareholder: a) name and address of each proposed nominee, b) the principal
occupation of each proposed nominee, c) the name and residence address of the
nominating shareholder, and d) the number of shares of capital stock of the
corporation owned by the nominating shareholder. Shareholder nominations for the
1994 Annual Meeting of Shareholders must be delivered or mailed to the Company
no later than April 25, 1994.
The following table sets forth the names of the current directors and
nominees, their ages, information as to their business experience for the last
five years (unless otherwise noted), and the year they first became directors of
the Company.
<TABLE>
<CAPTION>
Director
Names (Ages) and Business Experience Since
- -------------------------------------------------------------------------------------------------- -----------
<S> <C>
NOMINEES (CLASS II)--TERM EXPIRING IN 1997
ROBERT M. BOLZ (71), Madison, Wisconsin........................................................... 1972
Retired Vice Chairman of the Board of Directors of Oscar Mayer Foods Corporation, a meat packing
company, of which he had been an officer since 1966.
PHILLIP C. STARK (68), Madison, Wisconsin......................................................... 1985
Chairman of the Board of The Stark Company, a real estate company, with which he has been
associated for 45 years.
H. LEE SWANSON (56), Cross Plains, Wisconsin...................................................... 1988
Chief Executive Officer, President, and Director of the State Bank of Cross Plains, with which
he has been associated for more than 28 years; also Director of Mid-Plains Telephone Company,
an independent telephone company.
FRANK C. VONDRASEK (65), Madison, Wisconsin....................................................... 1982
Chairman of the Board of the Company, of which he has been an officer since 1974; also director
of Firstar Bank Madison, N.A.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Director
Names (Ages) and Business Experience Since
- -------------------------------------------------------------------------------------------------- -----------
<S> <C>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS I--TERM EXPIRING IN 1996
JEAN MANCHESTER BIDDICK (67), Madison, Wisconsin.................................................. 1982
Retired Chief Executive Officer of Neesvig's Inc., a wholesale meat company, with which she was
associated for more than 27 years.
DAVID C. MEBANE (60), Madison, Wisconsin.......................................................... 1984
President, Chief Executive Officer, and Chief Operating Officer of the Company, of which he has
been an officer since 1980; also director of First Federal Capital Corp., a bank holding
company.
ROBERT B. RENNEBOHM (71), Madison, Wisconsin...................................................... 1983
President Emeritus of the University of Wisconsin Foundation, with which he had been associated
for more than 39 years; also director of First Federal Capital Corp., a bank holding company.
CLASS III--TERM EXPIRING IN 1995
RICHARD E. BLANEY (57), Madison, Wisconsin........................................................ 1974
President of Richard Blaney Seeds Inc., sellers of hybrid seed corn, with which he has been
associated for more than 8 years.
DONALD J. HELFRECHT (72), Madison, Wisconsin...................................................... 1972
Former Chairman of the Board and Former Chief Executive Officer of the Company, of which he was
an officer from 1968 to 1991.
FREDERIC E. MOHS (57), Madison, Wisconsin......................................................... 1975
Partner in the law firm of Mohs, MacDonald, Widder & Paradise, of which he has been a member
since 1968.
</TABLE>
5
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY DIRECTORS AND EXECUTIVE OFFICERS
(AS OF MARCH 1, 1994)
The following table lists the beneficial ownership of Common Stock of each
director and nominee, the executive officers named in the Summary Compensation
Table, and the directors and executive officers as a group. In each case the
indicated owner has sole voting power and sole investment power with respect to
the shares shown except as noted.
<TABLE>
<CAPTION>
Percent of
Number of Shares Outstanding
Name Beneficially Owned Common Stock
- ---------------------------------------------------------- -------------------- ---------------
<S> <C> <C>
Jean Manchester Biddick................................... 1,780 *
Richard E. Blaney......................................... 708 *
Robert M. Bolz............................................ 1,999 *
Donald J. Helfrecht....................................... 3,537(1) *
David C. Mebane........................................... 4,358(1)(2) *
Frederic E. Mohs.......................................... 946(3) *
D. Louis Peoples.......................................... 39 *
Robert B. Rennebohm....................................... 674 *
Phillip C. Stark.......................................... 1,476 *
H. Lee Swanson............................................ 2,100(4) *
Frank C. Vondrasek........................................ 11,316(1)(2) *
All directors and executive officers
as a group (20 persons).................................. 45,154 *
<FN>
- ---------
* Less than one percent.
(1) Messrs. Helfrecht, Mebane, and Vondrasek are directors of Madison Gas
and Electric Foundation, Inc., and as such have shared voting and investment
power in an additional 6,565 shares of Common Stock held thereby.
(2) Includes Common Stock held under two Employee Stock Ownership Plans of
the Company with respect to which such persons have sole voting but no
investment power: Mr. Mebane, 2,728 shares; Mr. Vondrasek, 6,335 shares; and
directors and executive officers as a group, 19,632 shares.
</TABLE>
6
<PAGE>
<TABLE>
<S><C>
<FN>
(3) Includes 324 shares of Common Stock with respect to which Mr. Mohs is
trustee of a trust for the benefit of his children.
(4) Mr. Swanson is a member of the Qualified Plan Committee of the Profit
Sharing Plan and the Money Purchase Pension Plan of the State Bank of Cross
Plains and as such has shared voting and investment power in an additional 1,050
shares of Common Stock held thereby.
</TABLE>
BOARD COMMITTEES
The Company has an Audit Committee, a Compensation Committee, an Executive
Committee, and a Personnel Committee.
During the year ended December 31, 1993, a total of 16 meetings of the Board
of Directors were held. All of the directors attended in excess of 75 percent of
the aggregate of these meetings and (if they were members of the Audit,
Compensation, or Personnel Committees) the meetings of the Audit, Compensation,
and Personnel Committees. The Executive Committee did not meet during 1993.
Directors who are not employees of the Company receive $6,000 annually, plus
$500 for each Board meeting attended and $350 for each Audit, Compensation,
Executive, or Personnel Committee meeting attended. The Chairman of the Board
receives an additional $12,000 annual retainer. Mr. Mebane does not receive
additional compensation for serving as a director.
The members of the Audit Committee are Mrs. Biddick and Messrs. Blaney,
Bolz, Helfrecht, Mohs, Rennebohm, Stark, Swanson, and Vondrasek. The Audit
Committee held three meetings during 1993. The Audit Committee's function is to
meet with the Company's internal auditors and independent public accountants and
discuss with them the scope and results of their audits, the Company's
accounting practices, and the adequacy of the Company's internal controls. The
Audit Committee also approves services performed by the Company's independent
public accountants.
The members of the Compensation Committee are Messrs. Blaney, Bolz, and
Mohs. The Compensation Committee held five meetings during 1993. The function of
the Compensation Committee is to review the salaries, fees, and other benefits
of officers and directors and recommend compensation adjustments to the Board of
Directors.
7
<PAGE>
The members of the Executive Committee are Mrs. Biddick and Messrs. Blaney,
Helfrecht, Mebane, Mohs, and Vondrasek. The Executive Committee provides a means
of taking prompt action when a quorum of the Board of Directors cannot be
readily assembled. When the Board of Directors is not in session, the Executive
Committee has the powers of the Board in the management of the business and
affairs of the Company, except action with respect to dividends to shareholders,
election of principal officers, or the filling of vacancies on the Board of
Directors or committees created by the Board of Directors. The members of the
Executive Committee are elected by the Board of Directors each year at the first
meeting of the Board following the Annual Meeting of Shareholders to serve until
the first Board meeting following the next Annual Meeting of Shareholders.
The members of the Personnel Committee are Mrs. Biddick and Messrs. Mebane,
Mohs, Swanson, and Vondrasek. The Personnel Committee held seven meetings during
1993. The Personnel Committee makes recommendations with respect to the election
of directors and officers of the Company. Nominations for the Board of Directors
by shareholders, which are submitted to the Chief Executive Officer and/or
President of the Company, in the manner described above, will be considered by
the Personnel Committee, the Board, or the Chief Executive Officer.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee as of the beginning of fiscal year
1993 were Messrs. Blaney, Bolz, Mebane, Mohs, and Vondrasek. Mr. Mebane is the
President, Chief Executive Officer, and Chief Operating Officer of the Company,
and Mr. Vondrasek is the Chairman of the Board of Directors of the Company. Mr.
Mebane and Mr. Vondrasek resigned their positions on the Compensation Committee
in January of 1993 and did not participate in decisions of the Committee during
the year.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table summarizes the compensation for the fiscal years 1991,
1992, and 1993 of the Chief Executive Officer and other executive officers whose
compensation exceeded $100,000 for fiscal year 1993.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------
Awards
Annual Compensation ---------------------
-------------------------------------- Securities
Other Annual Underlying LTIP
Compensation Restricted Options Payouts
Name and Principal Position Year Salary ($) Bonus ($) ($) Stock ($) (#) ($)
- -------------------------------------- --------- ----------- --------- -------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Frank C. Vondrasek (1) 1993 $ 256,707(3) 0 $ 0 0 0 0
Chairman 1992 189,022 0 0 0 0 0
1991 154,827 0 0 0 0
David C. Mebane (2) 1993 $ 178,055 0 $ 0 0 0 0
President, Chief Executive Officer 1992 149,320 0 0 0 0 0
and Chief Operating Officer 1991 119,666 0 0 0 0
D. Louis Peoples 1993 $ 144,322 0 $ 0 0 0 0
Executive Vice President 1992 79,003 0 32,181 0 0 0
<CAPTION>
All Other
Compensation ($)
Name and Principal Position (4)
- -------------------------------------- -----------------
<S> <C>
Frank C. Vondrasek (1) $ 2,249
Chairman 2,182
David C. Mebane (2) $ 2,249
President, Chief Executive Officer 2,182
and Chief Operating Officer
D. Louis Peoples $ 783
Executive Vice President 94,877
<FN>
- -------------
(1) President and Chief Operating Officer until October 1, 1991, at which time
Mr. Vondrasek was promoted to Chairman and Chief Executive Officer. Mr.
Vondrasek retired from his duties as Chief Executive Officer on December
31, 1993.
(2) Senior Vice President and General Counsel until October 1, 1991, at which
time Mr. Mebane was promoted to President and Chief Operating Officer. Mr.
Mebane assumed the duties of Chief Executive Officer on January 1, 1994.
(3) Includes pay for accrued vacation at retirement.
(4) All other compensation for 1993 amounts are Company contributions to a
401(k) defined contribution plan.
</TABLE>
9
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
CORPORATE MISSION
The mission of Madison Gas and Electric Company is to provide quality gas
and electric utility service to its customers at competitive rates; to meet all
customers' gas, electric, and related energy needs; and to earn a reasonable
return for investors. MGE is committed to maintaining the highest standards of
corporate citizenship and fair treatment for all employees.
COMPENSATION PHILOSOPHY
The principal goal of the Madison Gas and Electric Company compensation
program is to pay employees, including executive officers, at levels which are:
- reflective of how well the Company is achieving its corporate mission
- consistent with the Company's current financial condition, earnings,
rates, total shareholder return, and projected Consumer Price Index
- reflective of individual performance and experience
- competitive in the marketplace
- administered in a fair and consistent manner.
The compensation program for executives is comprised of base salary only.
Executive salaries are established within a salary range that reflects
competitive salary levels for similar positions in similar-sized gas and
electric utilities. The utilities used for salary comparison are not the same
companies included in the performance graph peer group in this Proxy Statement.
The performance graph peer group was selected to reflect utilities facing
similar weather and economic conditions. Many of these companies are larger than
MGE with much higher compensation structures. When examining compensation peer
groups, it was determined more appropriate to consider similar-sized utilities.
10
<PAGE>
The midpoint (or middle) of an executive's salary range is approximately
equal to the industry median salary level. An executive's position in the range
reflects his or her performance over a period of years in that position, the
executive's experience in that position, and Company performance.
Specific individual or Company performance targets are not set. Instead, an
executive's salary is determined by subjectively evaluating the individual's
performance and experience and the Company's performance.
While MGE's current compensation program has functional adequacy to retain
and fairly compensate the Company's executives, the Compensation Committee and
the full Board review the objectives of the executive compensation program on a
continuing basis.
1993 COMPENSATION REVIEW
Each year, the Compensation Committee reviews and recommends to the Board
annual salaries, salary grades and ranges, and the overall salary program design
for the Company's executives. A recent study was performed for the Company by a
compensation consultant. The study compared the pay levels of MGE executives to
pay levels of other utilities with revenues of approximately $250 million. This
study showed that pay levels for MGE executives were generally below the median
of salary and incentive compensation for similar-sized utilities. Salary
adjustments were made to move Company executives closer to the market median for
their positions and to reflect the Company's performance as discussed below.
COMPANY PERFORMANCE AND EXECUTIVE COMPENSATION
Company performance factors such as earnings, rates, shareholder return, and
other financial criteria are used in determining the CEO's and other executive
officers' positions in his or her salary range as described above.
Recent Company performance has been exceptional. Rates have decreased or
been frozen every year since 1990. Earnings for 1993 were $2.26 per share, the
second highest in Company history and only 2 cents per share below the Company's
record earnings. The Company performance graph in this Proxy Statement shows
total shareholder return exceeding both the Standard & Poor's 500 Stock Index
(S&P 500) and the peer group of utilities during the five-year period ended
December 31, 1993. As a result of these recent
11
<PAGE>
accomplishments and the findings of the compensation study, the CEO's salary was
increased to $216,804. The CEO's salary, however, remains slightly below the
midpoint of his salary range.
COMPENSATION COMMITTEE MEMBERS
The members of the Compensation Committee as of the end of fiscal 1993 were:
Richard E. Blaney, Robert M. Bolz, and Frederic E. Mohs. Mr. Mebane and Mr.
Vondrasek resigned their positions on the Compensation Committee in January of
1993 and did not participate in decisions of the Committee during the year.
Richard E. Blaney
Robert M. Bolz
Frederic E. Mohs
12
<PAGE>
COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative total returns
for the Company, S&P 500, and a Peer Group Index weighted according to each
company's market capitalization as of the beginning of each annual period.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
[GRAPHIC]
Assumes $100 invested on December 31, 1988, in each of the Company's Common
Stock, S&P 500, and the Peer Group.
* Total return assumes reinvestment of dividends.
13
<PAGE>
The Peer Group selected by the Company is composed of 19 Upper Midwest
combination utilities. The companies included in the Peer Group are as follows:
Cilcorp Inc.
Cincinnati Gas & Electric
Cipsco Inc.
CMS Energy Corp.
DPL Inc.
IES Industries Inc.
Illinois Power Co.
Interstate Power Co.
Iowa-Illinois Gas & Elec.
Midwest Resources
Minnesota Power & Light
Nipsco Industries Inc.
Northern States Power-MN
Southern Indiana Gas & Elec.
St. Joseph Light & Power
Utilicorp United Inc.
Wisconsin Energy Corp.
Wisconsin Public Service
WPL Holdings Inc.
PENSION PLAN AND SUPPLEMENTAL RETIREMENT PLAN
The Company has a noncontributory defined benefit pension plan covering its
salaried employees. The amount of pension is based upon years of service and
final 60-month average earnings prior to retirement.
The following table indicates the estimated maximum retirement benefits
payable (unreduced for survivor protection) at the normal retirement age of 65
for specified compensation and years of service classifications. Substantially
all compensation shown in the salary column of the summary compensation table is
included in compensation under the Pension Plan, subject to any statutory
regulations imposed by the Internal Revenue Code. Information in this table is
based on the Pension Plan formula for years of service credit earned in 1986 and
subsequent years:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Annual Pension at Normal Retirement Age of 65
After Years of Service Indicated Below
Final ----------------------------------------------
Five-Year 25 Years
Average Annual Salary 10 Years 15 Years 20 Years or More
- -------------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$100,000.................. $ 12,500 $ 18,750 $ 25,000 $ 31,250
$125,000.................. $ 15,625 $ 23,438 $ 31,250 $ 39,063
$150,000.................. $ 18,750 $ 28,125 $ 37,500 $ 46,875
$175,000.................. $ 21,875 $ 32,813 $ 43,750 $ 54,688
$200,000.................. $ 25,000 $ 37,500 $ 50,000 $ 62,500
$225,000.................. $ 28,125 $ 42,188 $ 56,250 $ 70,313
$250,000.................. $ 31,250 $ 46,875 $ 62,500 $ 78,125
</TABLE>
14
<PAGE>
The retirement benefits listed above are not subject to any reduction for
Social Security benefits received by the employees or for any other offset
amounts. Also, the retirement benefits listed above do not reflect any limit
imposed by the Internal Revenue Code on benefit amounts or covered compensation.
The estimated annual retirement payable at normal retirement age of 65 under
the Pension Plan formula (assuming continuation of 1993 compensation levels
through retirement and taking into account employee contributions and service
credits for 1985 and prior years) to Mr. Mebane is $64,970. The annual
retirement benefit payable to Mr. Vondrasek is $63,581 (unreduced for survivor
protection). Retirement information for Mr. Peoples is not shown, since he is no
longer employed by the Company and is not eligible to receive retirement
benefits.
The full credited years of service of Messrs. Vondrasek and Mebane under the
Pension Plan are 23 and 17, respectively.
Officers of the Company are covered under a nonqualified supplemental
retirement plan which provides that officers with five or more years of service
may receive a supplemental retirement benefit. The supplemental retirement
benefit is a designated percentage ranging from 55 to 70 percent of the final
60-month average earnings less the benefit payable from the Pension Plan
described above. The designated percentage is based on the officer's age and
service at retirement. The estimated supplemental annual retirement benefit
payable at normal retirement age of 65 under the supplemental retirement plan
(assuming continuation of 1993 compensation levels through retirement) to Mr.
Mebane is $66,725. The annual benefit payable to Mr. Vondrasek is $59,056.
The Company has purchased life insurance policies for select officers under
which the Company is beneficiary. At the officer's death, the proceeds of such
life insurance are intended to reimburse the Company for the expense of the
benefits provided under the supplemental retirement plan.
DEFERRED COMPENSATION PLAN
Officers of the Company are permitted to defer a portion of their current
salary under a nonqualified deferred compensation plan initiated in 1984. Two
officers contributed to the plan during 1993. Participants in the plan are
entitled to receive deferred compensation upon termination of active employment.
Deferred compensation under this plan does not constitute compensation as
defined under the Pension Plan described above.
15
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The Company has entered into a trust agreement for the purpose of assuring
the payment of the Company's obligations under the supplemental retirement plan
and deferred compensation plan. Under the trust agreement, in the event of a
change in control or potential change in control of the Company, the Company
will be obligated to deliver to the trustee cash or marketable securities having
a value equal to the present value of the amounts which the Company is obligated
to pay under such plans and the costs of maintaining the trust.
SEVERANCE PLANS
The Company has entered into severance agreements with certain key
employees, including Messrs. Vondrasek and Mebane. Under these agreements, each
such employee is entitled to a severance payment following a change in control
of the Company if, within 24 months after such change in control, employment
with the Company is terminated by (i) the Company or (ii) the employee for good
reason. Each agreement terminates on June 15, 1995, but is automatically
extended for an additional year on June 16 of each year, unless either the
Company or the employee gives notice not to extend the agreement or a change in
control of the Company has occurred. Severance payments will be equal to an
amount up to three times the employee's annualized aggregate base salary prior
to the change of control. In circumstances not involving a change in control of
the Company, Messrs. Vondrasek and Mebane, like other salaried employees, are
entitled under the Company's general severance plan to a payment equal to two
weeks of compensation plus the employee's weekly compensation multiplied by the
number of years of employment not exceeding 24.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, directors, officers, and employees of the Company may
solicit proxies from the shareholders of the Company personally or by telephone.
The Company has retained Morrow & Co., Inc., to aid in the solicitation of
proxies at a fee of $6,000 plus expenses.
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RECEIPT OF SHAREHOLDERS' PROPOSALS AND
DIRECTOR NOMINATIONS FOR NEXT ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy materials for
the 1995 Annual Meeting of Shareholders, any shareholders' proposals must be
received at the Company's principal executive offices at 133 South Blair Street,
Post Office Box 1231, Madison, Wisconsin 53701-1231, no later than November 24,
1994.
Shareholder nominations for Class III directors to be elected at the 1995
Annual Meeting of Shareholders must be submitted in the manner described in
Election of Directors above not less than 14 days nor more than 60 days prior to
the 1995 Annual Meeting.
OTHER MATTERS
The Company's Annual Report for the year 1993 has been mailed to
shareholders.
The management has no knowledge of any other matters to be brought before
the Annual Meeting. If, however, any other matters properly come before the
Annual Meeting, it is the intention of the persons named in the proxy to vote
the proxies in accordance with their judgment on such matters.
Coopers & Lybrand was engaged as independent public accountants by the Board
of Directors at its meeting on November 20, 1992. At the same meeting, the Board
of Directors informed Arthur Andersen & Co., independent public accountants, of
their dismissal by the Company effective after the completion of the audit work
relating to the fiscal year ending December 31, 1992. The decision to change
independent accountants was made upon the recommendation of the Audit Committee
of the Board of Directors.
The reports of Arthur Andersen & Co. on the financial statements of the
Company for 1992 did not contain an adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope, or accounting
principles. During 1992, there were no disagreements with Arthur Andersen & Co.
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.
The Board of Directors has selected Coopers & Lybrand to audit the
consolidated financial statements of the Company and its subsidiaries for 1994.
Coopers & Lybrand,
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the Company's independent public accountant in 1993, is expected to have a
representative present at the meeting who may make a statement and will be
available to respond to appropriate questions.
Madison Gas and Electric Company
DAVID C. MEBANE
President, Chief Executive Officer,
and Chief Operating Officer
Dated March 24, 1994
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PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF MADISON GAS AND ELECTRIC
COMPANY
The undersigned Common Stock shareholder of MADISON GAS AND ELECTRIC COMPANY
hereby appoints RICHARD E. BLANEY, ROBERT M. BOLZ, DONALD J. HELFRECHT, and
FRANK C. VONDRASEK, and each of them, as proxies with power of substitution (to
act by a majority of such of them as shall be present) to represent and to vote
all shares of stock the undersigned would be entitled to vote, at the Annual
Meeting of Shareholders to be held at the Holiday Inn--Madison West, 1313 John
Q. Hammons Drive, Greenway Center, Middleton, Wisconsin on Monday, May 9, 1994,
at 11:00 a.m., local time, and at all adjournments thereof:
(1)The election of members of Class II of the Board of Directors as provided
in the Company's Proxy Statement:
<TABLE>
<S> <C>
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for all nominees
(except as marked to the contrary below) listed below
</TABLE>
Class II (3 years)--R. Bolz, P. Stark, H. Swanson, and F. Vondrasek (to
withhold authority to vote for any individual nominee, write the nominee's name
in the space provided below):
________________________________________
(2) In their discretion upon such other business as may properly come before
the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED WITH RESPECT TO
THE MATTERS DESIGNATED IN PROPOSAL NUMBERED (1). IF NO SPECIFICATION IS MADE,
THE SHARES WILL BE VOTED "FOR" ALL NOMINEES.
<TABLE>
<S> <C>
This proxy revokes any proxy heretofore given. __________________________________________________(L.S.)
________________________________________, 1994 __________________________________________________(L.S.)
MONTH DAY Please sign exactly as name appears hereon. For joint
accounts, all tenants should sign. Executors,
Administrators, Trustees, etc., should so indicate when
signing.
</TABLE>
<PAGE>
MR. GARY J. WOLTER ANNUAL SHAREHOLDERS' MEETING
MADISON GAS AND ELECTRIC COMPANY MONDAY, MAY 9, 1994, 11:00 AM
POST OFFICE BOX 1231 HOLIDAY INN MADISON WEST
MADISON, WISCONSIN 53701-1231 1313 JOHN Q. HAMMONS DRIVE
MIDDLETON, WISCONSIN
I (We) plan to attend the Annual Meeting of Shareholders.
Name of Shareholder(s) Attending ______________________________________________
(please print)
Address _______________________________________________________________________
City ________________________________ State ____________ ZIP Code ___________
Name of Guest Attending _______________________________________________________
(please print)
PLEASE RETURN THIS RESERVATION ONLY IF YOU PLAN TO ATTEND THE ANNUAL MEETING. IT
MAY BE ENCLOSED WITH YOUR PROXY. THANK YOU.
<PAGE>
APPENDIX
The map that appears on the inside front page is for reference to
show location of meeting site.
