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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
IPALCO Enterprises, Inc.
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(Name of Registrant As Specified In Its Charter)
- - ---------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on
which the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] 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:
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4) Date Filed:
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<PAGE>
PRELIMINARY COPIES
IPALCO ENTERPRISES, INC.
One Monument Circle
P. O. Box 1595
Indianapolis, Indiana 46206-1595
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 1997
TO THE SHAREHOLDERS OF
IPALCO ENTERPRISES, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of IPALCO
Enterprises, Inc. will be held at the office of the corporation, One Monument
Circle, Indianapolis, Indiana on Wednesday, April 16, 1997, at 11 o'clock
A.M. (Eastern Standard Time), for the following purposes:
1. To elect five directors in Class II to hold office for terms of
three years each and until their successors are duly elected and
qualified;
2. To approve an amendment to Section 5.01 of Article 5 of the
Amended Articles of Incorporation to increase the authorized
number of shares of IPALCO's common stock from 145 million to
290 million; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors fixed the close of business on Wednesday,
February 26, 1997 as the record date for determining the shareholders
entitled to notice of, and to vote at, the Annual Meeting and at any
adjournment thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING.
Whether or not you expect to be present at the meeting, you are urged to
fill in, date and sign the enclosed proxy and return it immediately in the
accompanying postage guaranteed envelope.
By order of the Board of Directors.
IPALCO ENTERPRISES, INC.
By: BRYAN G. TABLER, Secretary
Indianapolis, Indiana
March 10, 1997
<PAGE>
TABLE OF CONTENTS
ANNUAL MEETING INFORMATION. . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of Annual Meeting . . . . . . . . . . . 1
Solicitation of Proxies. . . . . . . . . . . . . . . . . . . 1
Other Business . . . . . . . . . . . . . . . . . . . . . . . 2
Shareholder Proposals for 1998 Annual Meeting. . . . . . . . 2
RELATIONSHIP WITH AUDITOR . . . . . . . . . . . . . . . . . . . 2
VOTING SECURITIES AND BENEFICIAL OWNERS . . . . . . . . . . . . 2
Beneficial Owners of 5% or More of Common Stock. . . . . . . 3
Beneficial Ownership of Common Stock By Directors, Nominees
and Executive Officers . . . . . . . . . . . . . . . . . . 3
PROPOSAL 1 - ELECTION OF FIVE DIRECTORS . . . . . . . . . . . . 5
Nominees For Directors To Be Elected At the 1997 Annual
Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . 5
CLASS II . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Current Directors Whose Terms Expire in 1998 (Class III) and
in 1999 (Class I). . . . . . . . . . . . . . . . . . . . . . 6
CLASS III . . . . . . . . . . . . . . . . . . . . . . 6
CLASS I . . . . . . . . . . . . . . . . . . . . . . . 7
INFORMATION REGARDING THE BOARD OF DIRECTORS. . . . . . . . . . 8
Procedure To Propose Nominees For Director . . . . . . . . . 8
Number Of Board Meetings and Attendance. . . . . . . . . . . 9
Committees of the Board. . . . . . . . . . . . . . . . . . . 9
Section 16(a) Beneficial Ownership Reporting Compliance. . . 10
Compensation Committee Interlocks and Insider Participation. 10
Compensation of Directors. . . . . . . . . . . . . . . . . . 10
Certain Business Relationships . . . . . . . . . . . . . . . 11
PROPOSAL 2 - APPROVAL OF AMENDMENT TO AMENDED ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF
SHARES OF IPALCO'S COMMON STOCK. . . . . . . . . . . . . . . 12
The Proposed Amendment . . . . . . . . . . . . . . . . . . . 12
Purpose and Effect of Proposed Amendment . . . . . . . . . . 12
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . 13
Compensation Policies Relating Generally to Executive
Officers . . . . . . . . . . . . . . . . . . . . . . . . . 13
Base Salary . . . . . . . . . . . . . . . . . . . . . 14
Annual Incentive Plan . . . . . . . . . . . . . . . . 14
Long-Term Performance and Restricted Stock Incentive
Plan. . . . . . . . . . . . . . . . . . . . . . . . 15
Basis for Chief Executive Officer's Compensation . . . . . . 16
Deductibility of Executive Compensation. . . . . . . . . . . 16
COMPENSATION OF EXECUTIVE OFFICERS. . . . . . . . . . . . . . . 17
Nature and Types of Compensation . . . . . . . . . . . . . . 17
Subsidiary Incentive Plan. . . . . . . . . . . . . . . . . . 17
Summary Compensation - Table I . . . . . . . . . . . . . . . 18
Option Exercises - Table II. . . . . . . . . . . . . . . . . 19
Performance Graph - Table III. . . . . . . . . . . . . . . . 20
Performance Graph. . . . . . . . . . . . . . . . . . . . . . 21
Pension Plans. . . . . . . . . . . . . . . . . . . . . . . . 21
Pension Plan Table - Table IV . . . . . . . . . . . . 21
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements . . . . . . . . . . . . . . 22
<PAGE>
PRELIMINARY COPIES
IPALCO ENTERPRISES, INC.
One Monument Circle P. O. Box 1595
Indianapolis, Indiana 46206-1595
PROXY STATEMENT
For Annual Meeting of Shareholders
To Be Held April 16, 1997
(Mailed on or about March 10, 1997)
ANNUAL MEETING INFORMATION
Date, Time and Place of Annual Meeting
The information set forth in this Proxy Statement is furnished
in connection with the solicitation of the enclosed proxy by and on
behalf of the Board of Directors of IPALCO Enterprises, Inc. (``IPALCO'')
for use at its Annual Meeting of Shareholders to be held April 16, 1997,
at 11:00 o'clock A.M. (EST) at the principal office of IPALCO, One Monument
Circle, Indianapolis, Indiana 46204, pursuant to the foregoing Notice of
Annual Meeting, and at any adjournment of such meeting.
Solicitation of Proxies
The presence in person or by proxy of the holders of a majority of the
outstanding shares entitled to vote at the Annual Meeting is necessary to
constitute a quorum. Shares represented for any purpose are deemed present
for quorum purposes. If the enclosed form of proxy is properly executed and
returned in time for the meeting, the named proxies will vote the shares
represented by the proxy in accordance with the instructions marked.
Proxies returned unmarked will be voted in favor of the proposed
nominees for director and in favor of the proposed amendment to IPALCO's
Amended Articles of Incorporation. If other matters are properly brought
before the meeting, or any adjournment thereof, the enclosed proxy gives
discretionary authority to the persons named therein to vote in accordance
with their best judgment on such matter. A shareholder executing and
delivering the enclosed proxy has the unconditional right to revoke it at
any time before the authority granted therein is exercised.
Under Indiana law, the election of directors will be determined by
plurality vote at a meeting where a quorum is present. As a result, the
five nominees who receive the greatest number of votes cast for election as
directors will be elected as directors of IPALCO. Broker non-votes and
withheld votes will not affect the outcome of the election of directors.
Action on any matter, other than the election of directors, will be
approved if the votes cast in favor of the proposal exceed the votes cast
against the proposal. Abstentions from voting or broker non-votes will have
no effect since such actions do not represent votes cast for or against the
proposal.
This solicitation of proxies is being made by IPALCO and the expenses
thereof will be borne by IPALCO. The principal solicitation is being made
by mail. However, additional solicitation may be made by telephone,
telegraph or personal contact by officers and other employees of IPALCO and
its subsidiaries, who will not be additionally compensated therefor. IPALCO
expects to reimburse broker-dealers and others for reasonable expenses of
forwarding proxy material to beneficial owners.
Other Business
Management is not aware of any business to be presented at the 1997 Annual
Meeting other than the election of five directors and the proposed amendment
to the Amended Articles of Incorporation. The minutes of the Annual
Meeting of Shareholders held April 17, 1996, will be presented for approval
at the 1997 Annual Meeting; however, such action is not intended to
constitute approval or disapproval of any matter referred to in such minutes.
Shareholder Proposals for 1998 Annual Meeting
If a shareholder intends to present a proposal at the Annual Meeting of
Shareholders to be held April 15, 1998, the proposal must be received by the
Corporate Secretary for inclusion in IPALCO's proxy statement and form of
proxy not later than November 11, 1997.
RELATIONSHIP WITH AUDITOR
Deloitte & Touche LLP, with offices at Market Tower, Suite 3000, 10 West
Market Street, Indianapolis, Indiana, has been the auditor of IPALCO since
its inception. Upon the recommendation of the Audit Committee, that firm was
again appointed by IPALCO's Board of Directors to serve as auditor for
IPALCO and its subsidiaries for the current year. A representative of
Deloitte & Touche LLP will be present at the Annual Meeting of Shareholders
to be held April 16, 1997, and will be given the opportunity to make a
statement and to respond to appropriate questions from shareholders.
VOTING SECURITIES AND BENEFICIAL OWNERS
On January 15, 1997, IPALCO had outstanding 57,036,540 shares of common
stock. 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 26, 1997, will be entitled to vote
at the meeting or at any adjournment thereof.
<TABLE>
Beneficial Owners of 5% or More of Common Stock
On January 15, 1997, the following beneficial owners held more than 5% of
IPALCO's voting securities:
<CAPTION>
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Name and Address of Amount and Nature Percent
Title of Class Beneficial Owner of Beneficial Ownership of
Class
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<S> <C> <C> <C>
Common Stock Employees' Thrift Plan 5,539,800 shares<F1> 9.71%
of Indianapolis Power
& Light Company
c/o Merrill Lynch
Trust Company of America,
Trustee
265 Davidson Avenue, 4th Floor
Somerset, NJ 08873
_________________________________
<FN>
<F1> Trustee, under a continuing agreement, has discretion to vote
shares as to which no voting instructions are received.
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</TABLE>
<TABLE>
Beneficial Ownership of Common Stock By Directors, Nominees and Executive Officers
On January 15, 1997, the following named directors, nominees and executive officers of
IPALCO and its subsidiaries, individually and as a group, beneficially owned equity securities
of IPALCO as follows:
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Name of Amount and Nature Percent
Title of Class Beneficial Owner of Beneficial Ownership<F1> of Class<F2>
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<S> <C> <C> <C>
Common Stock Joseph D. Barnette, Jr. 16,000 shares <F3>
Robert A. Borns 44,409 shares <F3>
John R. Brehm 72,674 shares <F4>
Mitchell E. Daniels, Jr. 18,300 shares <F3>
Rexford C. Early 11,642 shares <F3>
Otto N. Frenzel III 31,200 shares <F3>
Max L. Gibson 11,100 shares
Edwin J. Goss 14,407 shares <F3>
Earl B. Herr, Jr. 13,860 shares
John R. Hodowal 247,510 shares <F4>
Ramon L. Humke 174,533 shares <F4>
Sam H. Jones 18,360 shares <F3>
Andre B. Lacy 37,806 shares <F5>
L. Ben Lytle 12,748 shares
Michael S. Maurer 11,072 shares
Andrew J. Paine, Jr. 0 shares
Sallie W. Rowland 19,244 shares <F3>
Thomas H. Sams 23,001 shares <F3>, <F6>
Bryan G. Tabler 15,199 shares <F3>, <F4>
Gerald D. Waltz 105,056 shares <F4>
Other Executive Officers 274,744 shares <F1>, <F4>
All 26 directors, nominees,
and executive officers, as
a group 1,172,865 shares <F3>, <F4> 2.06%
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<FN>
<F1> Except as otherwise noted below, each person named in the table has sole voting and investment power
with respect to all shares of common stock listed as owned by such person. Shares beneficially owned
include shares that may be acquired pursuant to exercise of outstanding options that are exercisable
within 60 days as follows: Mr. Barnette-9,000; Mr. Borns-12,000; Mr. Brehm-52,500; Mr. Daniels-18,000;
Mr. Early-6,000; Mr. Frenzel-18,000; Mr. Gibson-6,000; Mr. Goss-12,000; Dr. Herr-12,000; Mr. Hodowal-
180,000; Mr. Humke-105,000; Mr. Jones-18,000; Mr. Lacy-18,000; Mr. Lytle-12,000; Mr. Maurer-9,000;
Mrs. Rowland-18,000; Mr. Sams-18,000; Mr. Waltz-55,320; other executive officers-201,750; directors
and executive officers as a group-780,570.
<F2> Percentages less than 1% of total common stock outstanding are not indicated.
<F3> Includes 43,547 shares owned by or with family members sharing their home and shares held in trust or
other arrangements with family members.
<F4> Includes vested and contingent interests in shares of common stock held by the Trustee in the Thrift
Plan (stated in whole shares) of: Mr. Brehm-13,522; Mr. Hodowal-29,645; Mr. Humke-7,618; Mr. Tabler-
901; Mr. Waltz-36,160; other executive officers-57,485; and all executive officers as a group-145,331.
<F5> Includes 12,000 shares owned by LDI, Ltd. and 2,700 shares owned by the Lacy Foundation of which Mr.
Lacy is a partner and a director, respectively, and 600 shares representing his vested interest in a
self-employment retirement plan, totaling 15,300 shares, 11,700 of which he disclaims beneficial
ownership.
<F6> Mr. Sams disclaims beneficial ownership of 1,500 shares of the total shares shown opposite his name.
</TABLE>
<PAGE>
PROPOSAL 1 - ELECTION OF FIVE DIRECTORS
At a meeting held January 28, 1997, the Executive Committee of IPALCO's
Board of Directors nominated five directors to stand for election as Class II
directors of IPALCO at its Annual Meeting of Shareholders to be held April
16, 1997, for terms of three years each and until their successors are duly
elected and qualified.
Proxies representing shares held on the record date which are returned
duly executed, will be voted, unless otherwise specified, in favor of the
five nominees for the Board of Directors named below in Class II. All such
nominees, except Andrew J. Paine, Jr., are members of IPALCO's present Board
of Directors and all nominees have consented to serve if elected. However,
if any nominee becomes unavailable to serve, the persons named as proxies
may exercise their discretion to vote for a substitute nominee.
The nominees for directors in Class II, the current directors in Class III
and Class I, as assigned by the Board of Directors, and the names, ages (as
of April 16, 1997), business experience and directorships of such nominees
and directors are as follows:
Nominees For Directors To Be Elected At The 1997 Annual Meeting:
CLASS II
Joseph D. Barnette, Jr., 57, 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 IPL, IWC Resources Corporation,
Indianapolis Water Company and Meridian Insurance Group, Inc. He has
been a director of IPALCO since January, 1993.
Max L. Gibson, 56, President of Majax Corporation (waste consulting firm),
Terre Haute, Indiana for the past five years. For more than five
years prior to his consulting work, Mr. Gibson was President of
Victory Services Corporation (waste disposal), Terre Haute, Indiana.
He is a director of IPL, First Financial Corporation, Terre Haute
First National Bank and First State Bank, Brazil, Indiana. He has
been a director of IPALCO since August, 1993.
Ramon L. Humke, 64, 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 IPL, 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 IPALCO since February, 1990.
Andrew J. Paine Jr., 59, President and Chief Executive Officer of NBD
Indiana, Inc. and Executive Vice President of First Chicago NBD
Corporation. In his position with NBD Indiana, Inc. he directs the
operation of all NBD banks in Indiana. In 1981, Mr. Paine was named
Vice Chairman of Indiana National Bank, and was elected Executive
Vice President of NBD Bancorp after it acquired INB in 1992. Mr.
Paine was named Chief Executive Officer in June, 1994, and
Executive Vice President of First Chicago NBD Corporation in
1995. He is a director of Indianapolis Life Insurance Company and
Bankers Life Insurance Company of New York.
Sallie W. Rowland, 64, 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. She is a director of IPL, NBD Bank,
N.A., Meridian Insurance Group, Inc. and Meridian Mutual Insurance
Company. She has been a director of IPALCO since April, 1988.
Current Directors Whose Terms Expire in 1998 (Class III) and in 1999 (Class
I):
CLASS III
Otto N. Frenzel III, 66, Chairman, Executive Committee National City Bank of
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 IPL, 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 IPALCO since September, 1983.
Dr. Earl B. Herr, Jr., 69, 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 IPL and Lilly Endowment and has been a
director of IPALCO since April, 1986 (excluding the period March 15
to August 23, 1993).
Sam H. Jones, 69, 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 Northwest
United Methodist Church. He is a director of IPL and has been a
director of IPALCO since September, 1983.
Andre B. Lacy, 57, 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 IPL, Tredegar Industries, Inc., Albemarle Corporation, Patterson
Dental Co., Herff Jones and The National Bank of Indianapolis. He
has been a director of IPALCO since April, 1985.
L. Ben Lytle, 50, President and Chief Executive Officer, Anthem Insurance
Companies, Inc. (insurance and financial services), Indianapolis,
Indiana. He served as Chairman from March, 1994 to March, 1996, and
has held the remaining positions for more than five years. He is a
director of IPL, Bank One, Indianapolis, NA, and Anthem Insurance
Companies, Inc. and its subsidiaries. He has been a director of
IPALCO since April, 1992.
CLASS I
Robert A. Borns, 61, Chairman of Borns Management Corporation (real estate
owners and managers), Indianapolis, Indiana since 1961, and Chairman
of Correctional Management Company L.L.C. since 1996. Mr. Borns
serves on numerous boards, including the Board of Trustees of
Indianapolis Museum of Art, Indianapolis Symphony Orchestra, Indiana
University Foundation and St. Vincent Hospital Advisory Board. He is
also a director of IPL, Indianapolis Water Company, IWC Resources
Corporation, Standard Management Corporation, and of Heritage
Partners Management, Inc. He has been a director of IPALCO since
April, 1987 (excluding the period March 15 to August 23, 1993).
Mitchell E. Daniels, Jr., 48, Vice President, Corporate Strategy and Policy,
Eli Lilly and Company, (pharmaceuticals manufacturer). During the
period April 1, 1993 to January 6, 1996, Mr. Daniels was President,
North American Pharmaceutical Operations of Eli Lilly and Company.
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
IPL, Acordia, Inc. and NBD Bank, N.A. and has been a director of
IPALCO since November, 1989.
Rexford C. Early, 62, 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 IPL and has been a
director of IPALCO since August, 1993.
John R. Hodowal, 52, 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 IPL,
Bank One, Indianapolis, NA and Anthem Insurance Companies, Inc. He
has been a director of IPALCO since April, 1984.
Michael S. Maurer, 54, 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
IPL and IPALCO since January, 1993.
Thomas H. Sams, 55, 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 IPL, Mid-America Capital Resources, Inc., NBD
Bank, N.A., and Meridian Insurance Group, Inc. He has been a director
of IPALCO since April, 1987.
INFORMATION REGARDING THE BOARD OF DIRECTORS
Procedure To Propose Nominees For Director
IPALCO will accept timely notice by shareholders of proposed nominees for
directors. Any such notice must be received by the Corporate Secretary of
IPALCO not less than 60 days nor more than 90 days prior to the date of each
annual meeting. Such shareholder's notice shall set forth (a) as to each
proposed nominee for director (i) the name, age, business address and
residence address of such nominee, (ii) the principal occupation or
employment of such nominee, (iii) the class and/or series and number of
shares that are beneficially owned by such nominee on the date of such
shareholder notice and (iv) any other information relating to such nominee
that is required to be disclosed pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, and (b) as to the shareholder
giving the notice (i) the name and address, as they appear on IPALCO's books,
of such shareholder and any shareholders known to be supporting such nominee
and (ii) the class and/or series and number of shares beneficially owned by
such shareholder and by any shareholders known to be supporting such nominee
on the date of such shareholder notice. The Board of Directors may reject
any nomination for director not made in accordance with the foregoing
provisions.
Number of Board Meetings and Attendance
During 1996, the Board of Directors of IPALCO held 11 meetings and
committees of the Board held a total of 16 meetings. Each director attended
more than 75% of the aggregate of Board meetings and assigned committee
meetings. All directors, on average, attended over 92% of the Board meetings
and assigned committee meetings held in 1996.
Committees of the Board
The Board of Directors of IPALCO has four standing committees, the
Executive Committee, the Audit Committee, the Compensation Committee, and
the Committee on Strategies. The Board does not have a nominating committee
as such, but the Executive Committee performs the functions of such
committee. It reviews, among other things, the qualifications and suitability
of candidates to stand for election to IPALCO's Board of Directors and makes
specific recommendations with respect thereto. 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 1996. Currently, Mr. John R. Hodowal is Chairman and
Messrs. Robert A. Borns, Otto N. Frenzel III, Earl B. Herr, Jr., Ramon L.
Humke, and Sam H. Jones are members.
The Audit Committee recommends the appointment of the auditor for the
ensuing year for IPALCO and its subsidiaries, 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, such services 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 1996. Currently, Mrs. Sallie W. Rowland is Chairman and its members are
Messrs. Rexford C. Early, Edwin J. Goss, Sam H. Jones, and Andre B. Lacy.
The Compensation Committee reviews current and proposed compensation
levels of all officers of IPALCO and its subsidiaries, obtains advice of
independent consultants, and makes specific recommendations as to the
compensation each officer should receive on an annual basis. It also reviews
and makes recommendations with respect to other forms of compensation for
such officers, including supplemental pension benefits, bonuses and
restricted stock. (See ``Board Compensation Committee Report on
Executive Compensation'' below.) The Compensation Committee held four
meetings in 1996. Currently, Mr. Otto N. Frenzel III is Chairman and Messrs.
Robert A. Borns, Earl B. Herr, Jr., and Thomas H. Sams are members.
The Committee on Strategies considers and makes recommendations with
respect to issues and processes involving dynamic planning, matters
affecting the allocation of corporate resources among regulated and non-
regulated subsidiaries, and other components of overall corporate strategy.
The Committee on Strategies held three meetings in 1996. Currently, Mr.
Joseph D. Barnette, Jr. is Chairman and Messrs. Mitchell E. Daniels,
Jr., Max L. Gibson, L. Ben Lytle, and Michael S. Maurer are members.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the federal securities laws, IPALCO's directors, certain officers,
and 10% shareholders are required to report to the Securities and Exchange
Commission, by specific due dates, transactions and holdings in IPALCO's
stock. During 1996, Mr. Robert W. Rawlings and Mr. Joseph D. Barnette, Jr.
each had one late report with regard to one transaction.
Compensation Committee Interlocks and Insider Participation
Mr. Frenzel is Chairman, and Messrs. Borns, Herr and Sams are the members
of the Compensation Committee. IPALCO's Vice Chairman, 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
IPALCO.
Compensation of Directors
Non-employee directors serving on the Board of IPALCO are paid an annual
fee of $8,500 plus $450 for each meeting attended; however, 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, Compensation
Committee and the Committee on Strategies of the Board, all of whom are
non-employee directors, are paid annual fees of $4,000 plus $450 for each
meeting attended. The Chairman of each of the latter three committees
receives an additional fee of $1,500 annually. Members of the Executive and
Audit Committees of both IPALCO and IPL are limited to one annual fee.
Directors who are also officers of IPALCO or one of its subsidiaries receive
no director fees.
<PAGE>
Certain Business Relationships
During 1996, companies associated with Anthem Insurance Companies, Inc.
("Anthem") administered health care programs for IPALCO and its subsidiaries
under contracts that involve payments to Anthem aggregating
approximately $15 million. Mr. L. Ben Lytle is President and Chief Executive
Officer of Anthem.
IPALCO subsidiaries IPL and Mid-America Capital Resources, Inc. ("Mid-
America") each maintained a line of credit during 1996 with National City
Bank, Indiana ("NCB") of which Mr. Otto N. Frenzel III is Chairman of
the Executive Committee. During 1996, 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, 1996. Mid-America's $7.5 million line of credit with NCB had a
maximum principal amount of $3.0 million outstanding at any time, and a
principal balance of $3.0 million outstanding as of December 31, 1996.
IPALCO subsidiary IPL maintained a long-term revolving credit facility
during 1996 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 1996. Mid-America maintained a $7.5
million line of credit with Bank One during 1996 and had a maximum principal
amount of $3.0 million outstanding at any time, and an outstanding principal
balance of $3.0 million as of December 31, 1996.
An unutilized credit line and an unutilized long-term revolving credit
facility were also maintained by IPL with First Chicago NBD ("NBD"), of
which Mr. Ramon L. Humke is a director and Mr. Andrew J. Paine, Jr., is an
executive officer. IPALCO subsidiary Mid-America maintained a $7.5 million
line of credit during 1996 with NBD, had a maximum principal amount
outstanding of $3.0 million, and a principal balance of $3.0 million
outstanding as of December 31, 1996.
IPALCO subsidiary IPL engaged Rowland Design, Inc. for architectural and
design services for certain improvements to IPALCO's corporate office located
at One Monument Circle. During 1996, IPL paid fees of approximately $93,000
under such agreements. Mrs. Sallie W. Rowland is Chairman and CEO of
Rowland Design, Inc.
IPALCO subsidiary IPL engaged Schenkel & Associates, LLC, for consulting
services in the areas of community affairs, public relations, and
communication, and paid fees of approximately $25,000 during 1996. Mr.
Thomas M. Miller, a member of the Board of Directors of IPALCO prior to his
death on July 5, 1996, was a majority owner of Schenkel & Associates, LLC.
PROPOSAL 2 - APPROVAL OF AMENDMENT TO AMENDED ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER
OF SHARES OF IPALCO'S COMMON STOCK
The Proposed Amendment
At a regular meeting of the Board of Directors of IPALCO held January 28,
1997, a resolution was adopted by unanimous vote of the 16 directors present
directing that an amendment be submitted to a vote of the shareholders at
the 1997 Annual Meeting to amend Section 5.01 of Article 5 of the Amended
Articles of Incorporation to read as follows:
"Section 5.01. Amount and Par Value. The total number of shares which
the Corporation shall have the authority to issue is two hundred
ninety million (290,000,000) shares, without par value."
Section 5.01 of IPALCO's Amended Articles of Incorporation currently
authorizes the issuance of 145,000,000 shares of common stock, without par
value. No other class of capital stock is authorized. On January 15, 1997,
there were 57,036,540 shares of IPALCO's common stock issued and outstanding.
Of the 87,963,460 authorized shares that remain available for issuance,
61,592,107 shares are reserved for issuance in accordance with the provisions
of the Shareholder Rights Plan, the 1991 Directors Stock Option Plan, the
1990 (Officers) Stock Option Plan and the Long-Term Performance and
Restricted Stock Incentive Plan, all of which are IPALCO plans. The balance
of shares available after taking into consideration the shares reserved
for issuance is 26,371,353.
Purpose and Effect of Proposed Amendment
The proposed amendment would increase from 145,000,000 shares to
290,000,000 shares the amount of IPALCO common stock authorized for issuance,
but it would have no effect upon the terms of such stock or the rights of the
holders thereof. IPALCO does not have any present plans, understandings
or agreements to issue additional shares of common stock.
The Board of Directors believes that the proposed increase in authorized
common stock is desirable to enhance IPALCO's flexibility in connection with
possible future actions, such as stock splits, stock dividends, financings,
corporate mergers, acquisitions of property, use in employee benefit plans or
other corporate purposes. Having such authorized shares available for
issuance in the future would allow shares of common stock to be issued
without the expense and delay of a special shareholders' meeting. Once
authorized, such common stock would be available for issuance from time to
time to such persons and for such consideration and on such terms as the
Board of Directors determines. No further action or authorization by
IPALCO's shareholders would be necessary prior to the issuance of the
additional shares of common stock unless required by applicable law or by
the rules of any stock exchange on which IPALCO's securities may then be
listed. The holders of any of the additional shares of common stock issued
in the future would have the same rights and privileges as the holders of the
shares of common stock currently authorized and outstanding. Those rights
do not include preemptive rights with respect to the future issuance of any
additional shares.
As stated above, IPALCO has no immediate plans, understandings or
agreements with respect to the issuance of any additional shares of common
stock which would be authorized by the proposed amendment. However,
shareholders should be aware that the authority of the Board to issue common
stock might be considered as having the effect of discouraging an attempt by
another person or entity to effect a takeover or otherwise gain control of
IPALCO, because the issuance of additional common stock would dilute the
voting power of the common stock then outstanding. As of this date, the
Board is not aware of any pending or threatened effort to accumulate IPALCO's
shares or to obtain control of IPALCO by means of a merger, tender offer,
solicitation in opposition to management or otherwise.
Other provisions of IPALCO's Amended Articles could also be viewed as
potential impediments to efforts to acquire control of IPALCO. Specifically,
those provisions of the Articles requiring the election of only one-third of
the directors of IPALCO every year, and the super-majority vote requirement
applicable to certain business transactions (such as mergers or sales of
assets) could be used in a manner calculated to prevent the removal of
management and make more difficult or discourage a change in control of
IPALCO. The Articles also provide that the Board, when evaluating
such transactions, shall, in connection with the exercise of its judgment
in determining what is in the best interests of IPALCO and its shareholders,
give due consideration to all relevant factors including the social and
economic effects on employees, customers, suppliers, and other constituents
of IPALCO and on the communities in which IPALCO operates or is located. In
addition, directors may be removed only for cause and only upon the
affirmative vote of the holders of 80% of the outstanding voting power of
IPALCO. IPALCO's Shareholder Rights Plan could be used with the intent to
make more difficult or discourage a change in control. IPALCO has no present
intention of soliciting the vote of shareholders on any other proposal, or
series of proposals, to deter changes in control of IPALCO.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Policies Relating Generally to Executive Officers
The Compensation Committee (``Committee'') of the Board of Directors
("Board"), in consultation with its outside advisor, establishes the
compensation policies of IPALCO Enterprises, Inc. and its subsidiaries
(``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 four 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 1996:
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 1996 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 approximately 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. 1996 base salary
increases for all officers averaged 4.5%, slightly ahead of the utility
industry average, but aligned with IPALCO performance.
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 five 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. For 1996
only, the Committee amended the Annual Incentive Plan to remove Customer
Satisfaction and weigh the remaining performance measures one-third each.
The customer survey being used was incapable of measuring management's
efforts to improve customer service. For 1997 and beyond, Customer
Satisfaction will be measured by an independent broad-based customer survey
focusing on service characteristics which customers have stated are important.
Target awards are set approximately halfway 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 1996.
For 1996, the Company met the Maximum performance goals in all three
performance measures: Net Income, Productivity and Budget Compliance.
Long-Term Performance and Restricted Stock Incentive Plan
The performance-based restricted stock plan 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 percentage of
utility revenues) 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 halfway
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 5, for the years 1992-1995, IPALCO ranked first
among peers in Cost Effective Service and sixth 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 $282,249 in 1996.
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 1996 compensation for the CEO (including base salary, Annual
Incentive Plan payment, and Long-Term Incentive payment and stock associated
with the 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 37% of the CEO's total direct compensation is variable and at
risk. During 1996, approximately 43% 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
will not impact IPALCO with respect to executive compensation paid in 1996,
nor does the Committee believe that this will have an impact in 1997. 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 H. Sams
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 President of IPALCO, who is its 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 IPALCO and its
subsidiaries. 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 Values Table (Table II). No table is presented for Option/SAR
Grants in last fiscal year since no stock options were granted during 1996.
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).
Subsidiary Incentive Plan
In early 1995, the Board of Directors of Mid-America Capital Resources,
Inc. (``Mid-America''), a wholly owned subsidiary of IPALCO, approved the
implementation of an incentive compensation plan that will provide for
payment of incentive compensation in the year 2000 or later to key employees
of Mid-America, its subsidiaries, and certain executive employees of IPALCO
if certain objective performance measures are met.
<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 ompen-
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 1994 $461,051 $214,566 $ 41,471 -0- -0- $ 76,250 $8,955
Chairman & President; 1995 476,012 206,425 43,721 $491,790 -0- 75,488 8,310
Chairman & CEO of IPL 1996 515,125 272,370 229,775 -0- -0- 111,333 6,000
Ramon L. Humke 1994 $382,221 $177,881 $130,141 -0- -0- $ 63,646 $8,955
Vice Chairman; 1995 394,591 171,120 157,606 $407,700 -0- 62,975 8,310
President & COO of IPL 1996 432,812 228,935 200,277 -0- -0- 92,296 6,000
John R. Brehm 1994 $218,304 $ 67,728 $ 3,678 -0- -0- $ 25,781 $8,199
Vice President & Treasurer; 1995 225,315 89,513 6,301 $133,050 -0- 24,228 8,310
SVP, Finance & Information 1996 236,394 83,253 7,788 -0- -0- 34,996 6,698
Services of IPL
Bryan G. Tabler<F5> 1994 $ 46,157 $ 15,785 $ 1,360 -0- -0- -0- -0-
Vice President, Secretary & 1995 202,931 58,650 14,471 $121,350 -0- -0- $5,589
General Counsel; 1996 218,184 76,907 17,077 -0- -0- $ 10,652 6,119
SVP, Secretary and General
Counsel of IPL
Gerald D. Waltz 1994 $202,955 $ 62,887 $ 4,465 -0- -0- $ 26,042 $7,731
SVP, Electric Delivery of IPL 1995 201,930 58,353 11,178 $121,530 -0- 24,228 8,310
1996 209,792 73,885 12,355 -0- -0- 32,972 6,000
- - -------------------------------
<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 $10,227 earned in above market interest on deferred
compensation for Mr. Humke in 1996.
<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 - 24,589 shares ($670,050); Mr. Humke - 20,385 shares ($555,491); Mr. Brehm - 6,652
shares ($181,267); Mr. Tabler - 6,067 shares ($165,326); and Mr. Waltz - 6,076 shares ($165,571). Dividends
on the restricted common stock are payable to the named officers. Shares awarded in 1995 represent a
cumulative 3-year award for years 1995, 1996, and 1997. Under the terms of the Plan, no additional shares
will be awarded to the named officers before 1998.
<F3> Payouts shown were made in 1996 for the 4-year LTIP Program ended December 31, 1995.
<F4> Represents 1996 contributions made by IPL to the Trustee of the Employees' Thrift Plan.
<F5> Mr. Tabler started his employment on October 1, 1994, and became an officer of both IPALCO and IPL on
January 1, 1995.
TABLE I
</TABLE>
<PAGE>
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End(#) FY-End ($)*
Shares Acquired Exercisable/ Exercisable/
Name On Exercise (#) Value Realized ($) Unexercisable Unexercisable
- - ------------------- --------------- ------------------ ----------------- ----------------
<S> <C> <C> <C> <C>
John R. Hodowal 35,000 $542,485 180,000(e) $401,701(e)
-0-(u) -0-(u)
Ramon L. Humke 82,500 $921,385 105,000(e) $239,013(e)
-0-(u) -0-(u)
John R. Brehm -0- -0- 52,500(e) $119,506(e)
-0-(u) -0-(u)
Bryan G. Tabler -0- -0- ---- ----
---- ----
Gerald D. Waltz 18,120 $267,208 55,320(e) $193,880(e)
-0-(u) -0-(u)
- - ------------------------------
(e) Exercisable.
(u) Unexercisable.
* Based upon year-end closing market price of $27.25 per share of common stock.
TABLE II
</TABLE>\
<PAGE>
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, 1996, compared with the total cumulative
return to shareholders of companies comprising 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 $210.00, and the horizontal portion of the Graph
is the year, beginning in 1991 and continuing through 1996.
The points on the Performance Graph are as follows:
<TABLE>
CUMULATIVE TOTAL RETURN ASSUMING DIVIDEND REINVESTMENT
1991 1992 1993 1994 1995 1996
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
IPALCO 100 114 119 108 146 165
S & P 500 100 108 118 120 165 203
S & P ELEC COMPANIES 100 106 119 104 136 136
Source: Standard and Poor's 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, 1996, compared with the total
cumulative return to shareholders of companies comprising 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 as compared to the electric utility industry and is one of the bases
for the Chief Executive Officer's compensation disclosed in the
Compensation Committee Report set forth in this Proxy Statement.
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 Retirement Plan (assuming
continuous employment to age 65) to named executive officers having the
remuneration and years of service shown.
<TABLE>
- - -----------------------------------------------------------------
- - -------------------------------------------------
PENSION PLAN TABLE (1)
<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 Retirement Plan portion of the combined amounts have
been shown without adjustment for income taxes.
TABLE IV
- - -------------------------------------------------------------------------------------------------
</TABLE>
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 - 28,
Mr. Humke - 7, Mr. Brehm - 21, Mr. Tabler - 2, and Mr. Waltz - 36.
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. In addition to the Base Retirement Plan and Funded Supplemental
Retirement Plan benefits described above, the Funded Supplemental Retirement
Plan also provides Mr. Hodowal with a straight-life annuity of $130,000 per
year commencing at age 65, which benefit is reduced for early retirement.
Contributions and accrued interest credited during 1996 to the accounts of
Messrs. Hodowal, Humke, Brehm, Tabler and Waltz amounted to $271,745,
$196,824, $7,256, $20,466 and $9,987, 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 Retirement 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
IPALCO and IPL have 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 IPALCO and its subsidiaries 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 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 above
described. The Fund is held in trust by National City Bank, Indianapolis, and
at December 31, 1996, the sum of $887,580 was reserved in trust for such
expenses.
By order of the Board of Directors.
IPALCO ENTERPRISES, INC.
By: BRYAN G. TABLER, Secretary
Indianapolis, Indiana
March 10, 1997
- - -----------------------------------------------------------------------------
[form of proxy/instruction card]
IPALCO ENTERPRISES, INC.
This Proxy/Instruction Card is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints John R. Hodowal and Bryan G. Tabler as
Proxies, each with the power of substitution, and authorizes them to
represent and vote and/or, in the case of shares held in IPALCO PowerInvest,
the dividend reinvestment and direct stock purchase plan, instructs the agent
for such Plan to execute a proxy empowering the above-named persons to vote,
as designated below, all the shares of IPALCO Enterprises, Inc. common stock
held of record by the undersigned and/or credited to the undersigned's
account in such Plan on February 26, 1997, at the annual meeting of the
shareholders to be held April 16, 1997, or at any adjournment thereof, with
respect to the matter(s) set forth below.
1. Election of Five Nominees for Director, namely: Joseph D. Barnette, Jr.,
Max L. Gibson, Ramon L. Humke, Andrew J. Paine, Jr., Sallie W. Rowland
[ ] Vote for All Nominees
[ ] Withhold Vote from All Nominees
[ ] Vote for All Nominees, Except Nominees written below:
- - -----------------------------------------------------------------------------
Please write name(s) of Nominee(s) from whom vote is withheld)
2. Approval of an amendment to the Amended Articles of Incorporation
increasing to 290 million shares the amount of common stock authorized for
issuance.
[ ] For [ ] Against [ ] Abstain
(FOLD HERE - DO NOT TEAR)
This Proxy/Instruction Card when properly executed will be voted in the
manner directed by the undersigned shareholder. If not otherwise indicated,
this Proxy/Instruction Card will be voted FOR the five nominees for Director
listed above and FOR the amendment to the Amended Articles of Incorporation
and confers discretionary authority to vote on currently unknown matters
properly presented to the meeting. This Proxy/Instruction Card shall be voted
on those matters properly presented in accordance with the best judgment of
the named Proxies.
Receipt of the Notice of Annual Meeting and Proxy Statement dated March 10,
1997, and the 1996 Annual Report is hereby acknowledged.
Dated ___________________, 1997.
Your signature must be exactly ___________________________________
as your name appears below. (SIGNATURE)
When signing as attorney-in-fact,
executor, administrator, trustee,
guardian or corporate officer, ___________________________________
please give full title as such. (SIGNATURE IF HELD JOINTLY)
Please complete
1997 Proxy at right.
Then date, sign,
detach it from this
form at perforations,
fold it and return
immediately in
accompanying
postage guaranteed
envelope.
Account ID:
ADDRESS CHANGE
_________________________
STREET
_________________________
APT. NO./P.O. BOX
_________________________
CITY
_________________________
STATE
_________________________
ZIP CODE
_________________________
SIGNATURE
[at perforation]
(DETACH HERE)
[letter soliciting voting instructions
from participants in Employees' Thrift Plan]
IPL
INDIANAPOLIS POWER & LIGHT COMPANY
March 10, 1997
TO PARTICIPANTS IN THE EMPLOYEES' THRIFT PLAN:
As a participant in the Employees' Thrift Plan, you are entitled to direct
the manner in which shares of stock of IPALCO Enterprises, Inc., ("IPALCO")
in which you have an interest, shall be voted by the Trustee at the
forthcoming Annual Meeting of Shareholders of IPALCO to be held April 16,
1997. This right is given to you by Section 305.90 of the Thrift Plan.
Enclosed is a copy of the Notice of the Annual Meeting and Proxy Statement
dated March 10, 1997 and an Instruction Card indicating the number of shares
with respect to which you may give voting instructions to the Trustee. You
may instruct the Trustee how you wish such shares to be voted by placing a
mark in the box which expresses your choice.
The only business to be acted upon at the meeting of which Management is
presently aware, is (1) the election of five directors to hold office for
terms of three years each and until their successors are duly elected and
qualified and (2) an amendment to the Amended Articles of Incorporation to
increase the authorized number of shares of IPALCO's common stock from 145
million to 290 million.
It is important that you instruct the Trustee as to the voting of the
shares in which you have an interest. After designating how you wish such
shares to be voted, sign the instruction form and return it via intra company
mail to the Secretary of IPALCO, Room 729, IPALCO Corporate Center, on or
before April 10, 1997.
Shares with respect to which no voting instructions are given will be
voted by the Trustee in its discretion.
/s/ John D. Wilson
John D. Wilson, Secretary
Employees' Pension Committee
[form to be executed by Thrift Plan participants]
IPALCO ENTERPRISES, INC.
Instructions To Thrift Plan Trustee For
Annual Meeting Of Shareholders - April 16, 1997
TO THE EMPLOYEE PENSION COMMITTEE:
I understand that in accordance with Section 305.90 of the Thrift Plan, I
may instruct the voting of the number of shares shown on this form. Will you
please direct the Trustee to execute a proxy empowering the persons appointed
therein to vote as follows:
1. Election of Five Nominees for Director, namely: Joseph D. Barnette, Jr.,
Max L. Gibson, Ramon L. Humke, Andrew J. Paine, Jr., Sallie W. Rowland
[ ] Vote for All Nominees
[ ] Withhold Vote from All Nominees
[ ] Vote for All Nominees, Except Nominees written below:
- - -----------------------------------------------------------------------------
Please write name(s) of Nominee(s) from whom vote is withheld)
2. Approval of an amendment to the Amended Articles of Incorporation
increasing to 290 million shares the amount of common stock authorized for
issuance.
[ ] For [ ] Against [ ] Abstain
(FOLD HERE - DO NOT TEAR)
The Trustee will execute the proxy as above directed, or, if no choice is
indicated, the proxy will be voted by the Trustee in its discretion. This
instruction card confers discretionary authority to vote on currently unknown
matters properly presented to the meeting.
Receipt of the Notice of Annual Meeting and Proxy Statement dated March 10,
1997, and the 1996 Annual Report is hereby acknowledged.
Dated ___________________, 1997.
Your signature must be exactly ___________________________________
as your name appears below. (SIGNATURE)
Please complete
1997 Instruction Card
at right. Then date,
sign, detach it from this
form at perforations,
fold it and return
immediately in
accompanying
interoffice envelope.
[at perforation]
(DETACH HERE)
