<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
IPALCO ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(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 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] 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:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
IPALCO ENTERPRISES, INC.
One Monument Circle
P. O. Box 1595
Indianapolis, Indiana 46206-1595
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 21, 1999
TO THE SHAREHOLDERS OF
IPALCO ENTERPRISES, INC.
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 21, 1999, at 11:00 A.M. (Indianapolis Time), for
the following purposes:
1. To elect six directors in Class I to hold office for terms of three
years each and until their successors are duly elected and qualified;
and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on Wednesday, March 3,
1999 are entitled to notice of and to vote at the Annual Meeting.
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 15, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ANNUAL MEETING INFORMATION................................................. 1
Date, Time and Place of Annual Meeting................................. 1
Solicitation of Proxies................................................ 1
Other Business......................................................... 1
Shareholder Proposals for 2000 Annual Meeting.......................... 2
RELATIONSHIP WITH AUDITOR.................................................. 2
VOTING SECURITIES AND BENEFICIAL OWNERS.................................... 2
Beneficial Owners of 5% or More of Common Stock........................ 2
Common Stock Ownership of Directors, Nominees and Executive Officers... 3
Section 16(a) Beneficial Ownership Reporting Compliance................ 3
PROPOSAL 1--ELECTION OF SIX DIRECTORS...................................... 4
Nominees For Directors To Be Elected At The 1999 Annual Meeting........ 4
CLASS I............................................................ 4
Current Directors Whose Terms Expire in 2000 (Class II) and 2001 (Class
III).................................................................. 5
CLASS II........................................................... 5
CLASS III.......................................................... 6
INFORMATION REGARDING THE BOARD OF DIRECTORS............................... 6
Procedure To Propose Nominees For Director............................. 6
Number Of Board Meetings and Attendance................................ 6
Standing Committees of the Board....................................... 7
Compensation Committee Interlocks and Insider Participation............ 8
Compensation of Directors.............................................. 8
Certain Business Relationships......................................... 8
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.............. 9
Compensation Policies Relating Generally to Executive Officers......... 9
Base Salary............................................................ 9
Annual Incentive Plan.................................................. 10
Long-Term Performance and Restricted Stock Incentive Plan.............. 10
Stock Options.......................................................... 11
Basis for Chief Executive Officer's Compensation....................... 11
Deductibility of Executive Compensation................................ 11
COMPENSATION OF EXECUTIVE OFFICERS......................................... 12
Nature and Types of Compensation....................................... 12
Summary Compensation--Table I.......................................... 12
Option/SAR Exercises in Last Fiscal Year--Table II..................... 14
Performance Graph--Table III........................................... 15
Performance Graph...................................................... 16
Pension Plans.......................................................... 16
Pension Plan Table--Table IV........................................... 16
Employment Contracts and Termination of Employment and Change-in-
Control Arrangements.................................................. 17
</TABLE>
-i-
<PAGE>
IPALCO ENTERPRISES, INC.
One Monument Circle P. O. Box 1595
Indianapolis, Indiana 46206-1595
PROXY STATEMENT
For the Annual Meeting of Shareholders
To Be Held April 21, 1999
(Mailed on or about March 15, 1999)
ANNUAL MEETING INFORMATION
Date, Time and Place of Annual Meeting
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") to be voted at its Annual Meeting of Shareholders
to be held April 21, 1999, at 11:00 A.M. (Indianapolis Time) at the principal
office of IPALCO, One Monument Circle, Indianapolis, Indiana 46204, 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. The enclosed proxy gives discretionary authority to the persons
named therein to vote in accordance with their best judgment on any other
matters brought before the meeting. A shareholder executing and delivering the
enclosed proxy has the unconditional right to revoke it at any time before it
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 six
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.
IPALCO will pay all expenses in connection with the solicitation of
proxies. The principal solicitation is being made by mail. However, additional
solicitation may be made by telephone, telefax or personal contact by officers
and other employees of IPALCO and its subsidiaries, without additional
compensation. IPALCO expects to reimburse broker-dealers and others for
reasonable expenses of forwarding proxy materials to, and obtaining
instructions from, beneficial owners.
Other Business
Management is not aware of any business to be presented at the 1999
Annual Meeting other than the election of six directors. The minutes of the
Annual Meeting of Shareholders held April 15, 1998, will be presented for
approval at the 1999 Annual Meeting; however, such action is not intended to
constitute approval or disapproval of any matter referred to in such minutes.
<PAGE>
Shareholder Proposals for 2000 Annual Meeting
If a shareholder intends to present a proposal at the Annual Meeting of
Shareholders to be held April 19, 2000, the proposal must be received by the
Secretary of IPALCO in writing by November 17, 1999 to be considered for
inclusion in next year's proxy statement. The proposal must comply in all
respects with the rules and regulations of the Securities and Exchange
Commission and the Bylaws of IPALCO. Under IPALCO's Bylaws, other proposals
which are not included in the proxy statement will be considered untimely and
will not be presented at that meeting unless they are received by the
Secretary of IPALCO in writing, no earlier than January 10, 2000 and no later
than February 4, 2000.
RELATIONSHIP WITH AUDITOR
Deloitte & Touche LLP, with offices at Bank One Center/Tower, 111
Monument Circle, Suite 2000, 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 and will be
given the opportunity to make a statement and to respond to appropriate
questions from shareholders.
VOTING SECURITIES AND BENEFICIAL OWNERS
On December 31, 1998, IPALCO had outstanding 44,431,513 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, March 3, 1999, will be entitled to vote at the meeting
or at any adjournment thereof.
Beneficial Owners of 5% or More of Common Stock
On December 31, 1998, the following beneficial owners held more than 5%
of IPALCO's voting securities:
<TABLE>
<CAPTION>
Title of Name and Address of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership of Class
- ------------------------------------------------------------------------------
<C> <S> <C> <C>
Common Stock Employees' Thrift Plan of 4,558,402 shares (1) 10.26%
Indianapolis Power & Light
Company
c/o Merrill Lynch Trust Company
of America, Trustee
265 Davidson Avenue, 4th Floor
Somerset, NJ 08873
</TABLE>
(1) Trustee under a continuing agreement, has discretion to vote shares as to
which no voting instructions are received.
2
<PAGE>
COMMON STOCK
OWNERSHIP OF DIRECTORS, NOMINEES AND
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Directors, Shares Held
Nominees Options By or With
And Shares Shares held Exercisable Spouse, In % of Shares
Executive Beneficially in Thrift Within 60 Trust or By Outstanding
Officers Owned Plan Days Corporation Total (1)
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Joseph D.
Barnette,
Jr. 2,250 15,000 4,750 22,000
- -------------------------------------------------------------------------------------
Robert A.
Borns 10,598 12,000 24,176 46,774
- -------------------------------------------------------------------------------------
John R.
Brehm 21,875 14,808 60,000 96,683
- -------------------------------------------------------------------------------------
Daniel R.
Coats 0
- -------------------------------------------------------------------------------------
Mitchell
E.
Daniels,
Jr. 24,000 500 24,500
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Rexford C.
Early 5,233 12,000 1,000 18,233
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Otto N.
Frenzel
III 900 24,000 12,300 37,200
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Max L.
Gibson 5,100 12,000 17,100
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N. Stuart
Grauel 13,616 21,148 105,000 139,764
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John R.
Hodowal 96,309 32,103 0 128,412
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Ramon L.
Humke 118,300 9,030 191,127 318,457
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Andre B.
Lacy (2) 19,965 24,000 43,965
- -------------------------------------------------------------------------------------
L. Ben
Lytle 1,016 18,000 19,016
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Michael S.
Maurer 500 15,000 15,500
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Andrew J.
Paine,
Jr. 170 3,000 170 3,340
- -------------------------------------------------------------------------------------
Sallie W.
Rowland 1,150 24,000 153 25,303
- -------------------------------------------------------------------------------------
Thomas H.
Sams (3) 596 21,000 4,500 26,096
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Bryan G.
Tabler 27,000 1,763 35,000 300 64,063
- -------------------------------------------------------------------------------------
Other
Executive
Officers 26,740 38,512 189,000 897 255,149
- -------------------------------------------------------------------------------------
All 25
Directors
and
Officers 351,318 117,364 784,127 48,746 1,301,555 2.93%
</TABLE>
(1) Percentages less than 1% of total common stock outstanding are not
indicated.
(2) 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 shares of
which he disclaims beneficial ownership.
(3) Mr. Sams disclaims beneficial ownership of 1,500 shares of the total
shares shown opposite his name.
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. A Form 3 filed for Stephen M. Powell, an executive officer of IPL,
inadvertently omitted shares held by his spouse. This oversight was corrected
immediately upon discovery.
3
<PAGE>
PROPOSAL 1-ELECTION OF SIX DIRECTORS
The Executive Committee of IPALCO's Board of Directors nominated six
directors to stand for election as Class I directors of IPALCO at its Annual
Meeting. Under IPALCO's Articles of Incorporation, the Board is divided into
three classes with approximately one-third of the directors standing for
election each year for a three-year term.
Proxies representing shares held on the record date which are returned
duly executed, will be voted, unless otherwise specified, in favor of the six
nominees for the Board of Directors named below in Class I. All such nominees,
except for Daniel R. Coats, 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 I, the current directors in Class II
and Class III, as assigned by the Board of Directors, and the names, ages (as
of April 21, 1999), business experience and directorships of such nominees and
directors are as follows:
Nominees For Directors To Be Elected At The 1999 Annual Meeting:
CLASS I
Daniel R. Coats, 55, Partner, Verner, Liipfert, Bernhard, McPherson and Hand
since February 1, 1999. Senator Coats represented the State of Indiana in
the U.S. Senate from 1988 to 1998, and represented Indiana's Fourth
District in the U.S. House of Representatives from 1981 to 1988. Senator
Coats currently serves as National Board President of Big Brothers Big
Sisters of America, an organization he has been associated with since
1972. He is also a board member of the International Republican Institute
and the Wheaton College Board of Visitors.
Mitchell E. Daniels, Jr., 50, Senior 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 and has been
a director of IPALCO since November, 1989.
Rexford C. Early, 64, 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 trustee of the Indianapolis Foundation and served
as its Chairman in 1998, and he is a trustee of the English Foundation.
He is a director of IPL and has been a director of IPALCO since August,
1993.
John R. Hodowal, 54, 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 and Anthem Insurance Companies,
Inc. He has been a director of IPALCO since April, 1984.
Michael S. Maurer, 56, Chairman of the Board of The National Bank of
Indianapolis since December, 1993. Mr. Maurer is Chairman of the Board of
MyStar Communications Corporation (radio station operations), a position
he has held for more than five years; and Chairman of the Board of IBJ
Corporation (newspaper publisher) since December, 1990. He is a director
of IPL and has been a director of IPALCO since January, 1993.
4
<PAGE>
Thomas H. Sams, 57, 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 and
Meridian Insurance Group, Inc. He has been a director of IPALCO since
April, 1987.
Current Directors Whose Terms Expire in 2000 (Class II) and in 2001 (Class
III):
CLASS II
Joseph D. Barnette, Jr., 59, Chairman and Chief Executive Officer of Bank One,
Indiana, NA, since March, 1997. Prior to that, Mr. Barnette was Chairman
and Chief Executive Officer of Bank One, Indianapolis, NA (October, 1994-
March, 1997), Chairman and Chief Executive Officer (January, 1993
December, 1998), and President and Chief Executive Officer (July, 1990
January, 1993) of Banc One Indiana Corporation, and President and Chief
Executive Officer of Bank One, Indianapolis, NA (January, 1990-October,
1994). He is a director of IPL and Meridian Insurance Group, Inc. He has
been a director of IPALCO since January, 1993.
Max L. Gibson, 58, 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, 66, 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; LDI Management, Inc.; Monument Advisors,
LLC; 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., 61, Retired. Prior to his retirement in October, 1998,
Mr. Paine was President and Chief Executive Officer of NBD Bank, NA, and
Executive Vice President of First Chicago NBD Corporation. In his
position with NBD Bank, NA, he directed 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 of NBD
Indiana, Inc. in June, 1994, and Executive Vice President of First
Chicago NBD Corporation in 1995. He is a director of IPL; Indianapolis
Life Insurance Company; and Bankers Life Insurance Company of New York.
He has been a director of IPALCO since May, 1997.
Sallie W. Rowland, 66, 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 and Indianapolis Project. She is a director of IPL; Meridian
Insurance Group, Inc.; and Meridian Mutual Insurance Company. She has
been a director of IPALCO since April, 1988.
5
<PAGE>
CLASS III
Robert A. Borns, 63, 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;
Standard Management Corporation; and Artistic Media Partners. He has been
a director of IPALCO since April, 1987 (excluding the period March 15 to
August 23, 1993).
Otto N. Frenzel III, 68, 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; American United
Life Insurance Company; Indiana Energy, Inc.; Indiana Gas Company, Inc.;
and Baldwin & Lyons, Inc. He has been a director of IPALCO since
September, 1983.
Andre B. Lacy, 59, 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; FinishMaster, Inc.;
Herff Jones; Patterson Dental Co.; and The National Bank of Indianapolis.
He has been a director of IPALCO since April, 1985.
L. Ben Lytle, 52, Chairman, 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, was re-elected Chairman in November, 1997, and has held the
remaining positions since 1989. He is a director of IPL; Duke Realty
Investments, Inc.; Central Newspapers, Inc.; and Anthem Insurance
Companies, Inc. and its subsidiaries. He has been a director of IPALCO
since April, 1992.
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 1998, 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 85% of the aggregate of Board meetings and assigned committee
meetings except for Andrew J. Paine, Jr. who attended more than 70%. All
directors, on average, attended over 92% of the Board meetings and assigned
committee meetings held in 1998.
6
<PAGE>
STANDING COMMITTEES OF THE BOARD
<TABLE>
<CAPTION>
Board Member Board Audit Compensation Executive Strategies
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Joseph D. Barnette, Jr. 3 3*
-------------------------------------------------------------------------
Robert A. Borns 3 3 3
-------------------------------------------------------------------------
Mitchell E. Daniels, Jr. 3 3
-------------------------------------------------------------------------
Rexford C. Early 3 3
-------------------------------------------------------------------------
Otto N. Frenzel III 3 3* 3
-------------------------------------------------------------------------
Max L. Gibson 3 3 3
-------------------------------------------------------------------------
John R. Hodowal 3* 3*
-------------------------------------------------------------------------
Ramon L. Humke 3 3
-------------------------------------------------------------------------
Andre B. Lacy 3 3 3
-------------------------------------------------------------------------
L. Ben Lytle 3 3
-------------------------------------------------------------------------
Michael S. Maurer 3 3 3
-------------------------------------------------------------------------
Andrew J. Paine, Jr. 3 3
-------------------------------------------------------------------------
Sallie W. Rowland 3 3*
-------------------------------------------------------------------------
Thomas H. Sams 3 3 3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Meetings held in 1998 11 3 5 5 3
</TABLE>
*Chairperson
<TABLE>
<C> <S>
Audit: Examines and inquires into the effectiveness of auditing,
accounting, financial reporting and internal control functions.
Recommends the appointment of the auditor, reviews the scope of
the audit, reviews the auditor's report and makes appropriate
recommendations to the Board after such review. All members are
non-employee directors.
Compensation: Monitors management compensation and benefit programs, obtains
advice of independent consultants, and makes specific
recommendations on compensation of Executive Officers of IPALCO
and its subsidiaries. Administers IPALCO's bonus, stock option,
restricted stock and pension plans and makes specific
recommendations regarding awards under those plans. All members
are non-employee directors.
Executive: May act on behalf of the Board when the full Board is not is
session. Performs the functions of a nominating committee. It
reviews the qualifications of candidates to stand for election
to the Board of Directors and makes specific recommendations
with respect thereto. In addition, the Executive Committee
considers and recommends the declaration of dividends.
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.
</TABLE>
7
<PAGE>
Compensation Committee Interlocks and Insider Participation
Mr. Frenzel is Chairman, and Messrs. Borns, Early, Gibson 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
Employee directors receive no compensation other than their normal salary
for serving on the Board or its committees. Non-employee directors receive the
following fees for their service on the Board:
<TABLE>
<S> <C>
Annual Retainer Fees:
Board of Directors $10,000
Executive Committee 15,000
Audit--Compensation--Strategies Committees 4,000
Meeting Fees:
Board of Directors $ 500
Executive Committee 0
Audit--Compensation--Strategies Committees 500
</TABLE>
The Chairperson of the Audit Committee, Compensation Committee and
Committee on Strategies each receives an additional fee of $1,500 annually.
Directors of IPALCO and its subsidiaries are limited to two annual fees.
Members of the Executive and Audit Committees of both IPALCO and IPL are
limited to one annual fee.
Outside directors receive an annual grant of options to purchase 3,000
shares of IPALCO common stock on May 1 of each year, if they have served as a
director for the prior 12 months. The options become exercisable six months
after the date of grant. The exercise price of these options is equal to the
fair market value of IPALCO's common stock on the date of grant. The options
expire after ten years.
Directors may elect to defer part or all of their annual retainer,
attendance or committee fees under a non-qualified, unfunded deferred
compensation plan. Deferred amounts earn interest equal to IPL's cost of
capital as determined by the Indiana Utility Regulatory Commission in IPL's
last general retail electric rate order, unless otherwise determined by the
Compensation Committee.
Certain Business Relationships
During 1998, 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 $16
million. Mr. L. Ben Lytle is Chairman, President and Chief Executive Officer
of Anthem.
IPL engaged Rowland Design, Inc. for architectural and design services
for certain improvements to the corporate offices located at One Monument
Circle. During 1998, IPL paid fees of approximately $65,000 under such
agreements. Mrs. Sallie W. Rowland is Chairman and CEO of Rowland Design, Inc.
8
<PAGE>
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 five non-employee directors whose philosophy
is to attract, retain, and motivate a high quality management team by providing
a strong and direct link between IPALCO performance and officer compensation,
with a significant portion of total compensation being dependent upon
measurable performance objectives. The compensation program for named executive
officers and other selected officers had four basic components in 1998: base
salary, a performance-based annual incentive plan, a long-term performance and
restricted stock incentive plan, and a stock option plan. It is the policy of
the Committee that the compensation program should directly link executive and
shareholder interests.
Base Salary
During 1998 the Committee thoroughly reviewed base salary of officers,
including the named executive officers, in light of IPALCO's transformation
from a more traditional utility to a more general industry company. The
Committee approved a new base salary structure prepared by the outside
consultant based on general industry S & P 500 and S & P 400 Mid-Cap companies
with comparable market value to IPALCO. The new base salary structure is
designed for the three-year period 1998 through 2000, uses six broadbanded pay
ranges with band assignment made based on the external market and internal role
within IPALCO, and provides the ability to pay base salaries within a 40th to
75th percentile range. Another component of the new base salary structure is
the departure from annual salary increases to perhaps, and in most cases,
increases once every three years. Exception to base salary increases once every
three years would be new officers paid below median or officers performing at a
truly exceptional level.
The Committee established 1998 base salaries for officers, including the
named executive officers, between the 40th to 75th percentile for similar
positions within comparable market value S & P 500 and S & P Mid-Cap 400
general industry companies. The Committee considered both company and
individual performance in approving the range of 1998 base salary increases and
if the increase was for a one-year, two-year, or three-year period.
In 1998 twenty-two officers, including all named executive officers,
received a base salary increase which for most officers, including all named
officers, was the first base salary increase since 1996. The total 1998 officer
base salaries were 1% less than the total 1997 officer base salaries due to a
reduction in the number of officers.
The comparative compensation data for electric utility industry
competitors used by the Committee was derived from an executive compensation
database maintained by the outside consultant and the annual Edison Electric
Institute Executive Compensation Survey. Data for general industry was drawn
from three national executive compensation surveys provided by the outside
consultant and from an analysis prepared by the outside consultant on
comparable executive position compensation within the S & P 500 and S & P 400
Mid-Cap general industry companies with market values of between $1.5 billion
and $3.0 billion (202 companies met this criteria.)
9
<PAGE>
Annual Incentive Plan
The IPALCO Annual Incentive Plan is a performance-based plan which
measures company performance in four equally weighted criteria: Net Income,
Customer Satisfaction, Productivity, and Budget Compliance. Target awards are
set at comparable market value general industry 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 criterion; 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 3.0 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 1998.
For 1998, the Company met the Maximum performance goals in all four
performance measures: Net Income, Customer Satisfaction, 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.
Program II (1998-2000) of the Plan measures Company performance in Total
Return to Shareholders compared to companies included in the S & P 500 Index
during the three-year measuring period. Target awards are set approximately at
comparable market value general industry medians. Conditional restricted stock
grants, at target levels ranging from 20 shares per $1,000 of base compensation
to 50 shares per $1,000 of base compensation, are awarded at the beginning of
each three-year performance period. Final awards are based upon IPALCO's
ranking in Total Return to Shareholders among the S & P 500 companies over the
performance period, with one-third of the shares to be paid during each of the
fourth (2001), fifth (2002), and sixth (2003) years after the beginning of the
performance period. The performance period for Program II will end December 31,
2000. On December 31, 1998, the end of the first year in the three-year
performance period, IPALCO ranked in the top quartile, 123rd among the S & P
500 companies.
Program I (1995-1997) of the Plan measured 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 were set approximately halfway
between general industry and utility medians. Conditional restricted stock
grants, at Target levels ranging from 10% to 35% of base salary, were awarded
at the beginning of the three-year performance period. Final awards were based
upon IPALCO's ranking within the Peer Group over the performance period, with
one-third of the shares to be paid during each of the fourth (1998), fifth
(1999), and sixth (2000) years after the beginning of the performance period.
The performance period for Program I ended December 31, 1997 with IPALCO ranked
1st in Total Return to Shareholders and 1st in Cost Effective Service.
Using the schedule specified in the Plan for the level of performance
achieved under Program I, and an IPALCO Common Stock market value on January
14, 1998 of $41.91, the named executive officers received incentive payments
for the first Program I payout totalling $1,937,122.00 in 1998.
10
<PAGE>
Stock Options
The Compensation Committee strongly believes management is in a position
to exert the greatest influence on those strategic decisions which affect
IPALCO's long-term financial success and the creation of shareholder value.
Thus, the Compensation Committee has maintained a posture that particularly
senior officers, including the named executive officers, should have a portion
of their long-term incentive compensation tied directly to the stock price
performance. As reported in IPALCO's 1997 and 1998 proxy statements, on March
25, 1997, all named executive officers were granted stock options in varying
amounts at an exercise price of $31.375 per share, vesting immediately. No
additional stock options were granted to named executive officers during 1998,
however, during the year the Committee granted a total of 90,000 stock options
in varying amounts to two officers and four non-officers.
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, operations,
service, and administrative data are considered. The Committee closely followed
IPALCO's performance during 1997 and 1998 compared to the S & P 500 Index and
the S & P Electric Companies Index. IPALCO substantially outperformed both of
these market measurements in 1997 and again in 1998.
Total 1998 compensation for the CEO (including base salary, Annual
Incentive Plan payment, and stock associated with the Long-Term Performance and
Restricted Stock Incentive Plan and stock options) is shown in Tables I and II.
His total compensation was above the median of comparable electric utility
industry CEO's but was below the median of CEO compensation in comparable
market value and high-performing general industry companies.
At Target performance, under the current compensation program,
approximately 56% of the CEO's total direct compensation is variable and at
risk. During 1998, approximately 69% 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 $1 million paid to certain top executives, unless that compensation
qualifies as "performance based" compensation. This limitation will have
insignificant impact on IPALCO with respect to executive compensation paid in
1998. The Committee continues to review this issue with the present intent to
limit the effect of Section 162(m) where appropriate to ensure the continued
deductibility of its executive compensation.
The Compensation Committee of the
Board of Directors of IPALCO Enterprises, Inc.
Otto N. Frenzel III, Chairman
Robert A. Borns
Rexford C. Early
Max L. Gibson
Thomas H. Sams
11
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Nature and Types of Compensation
The two tables that follow disclose all plan and non-plan
compensation awarded to, earned by, or paid to the Chairman of the Board
and President of IPALCO, who is its chief executive officer ("CEO") and to
the four named executive officers other than the CEO who are the most
highly compensated key policy-making executive officers of IPALCO and its
subsidiaries. The tables include a Summary Compensation Table (Table I),
and an Aggregated Option/SAR Exercises In Last Fiscal Year and Fiscal
Year-End Option/SAR Values Table (Table II). No table is presented for
Option/SAR Grants in Last Fiscal Year since no options were granted to the
named executive officers in 1998. No table is presented for Long-Term
Incentive Plans since the issuance of restricted stock under the Long-Term
Performance and Restricted Stock Incentive Plan is included in the Summary
Compensation Table (Table I).
SUMMARY COMPENSATION TABLE
TABLE I
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------------
Annual Compensation Awards Awards Payouts
-------------------------------- ---------- ---------- --------
Other Securities
Annual Restricted Underlying All Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation(2) Awards(3) SARs(4) Payouts sation(6)
Position Year ($) (1) ($) ($) ($) (#) (5) ($) ($)
- --------- ---- ------- ----- --------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John R.
Hodowal 1996 $515,125 $272,370 $ 229,775 - 0 - - 0 - $111,333 $6,000
Chairman &
President; 1997 532,958 468,125 70,087 - 0 - 250,000 127,550 5,831
Chairman &
CEO of IPL 1998 637,897 677,250 1,693,360 $1,586,497 - 0 - 757,607 6,400
Ramon L.
Humke 1996 $432,812 $228,935 $ 200,277 - 0 - - 0 - $ 92,296 $6,000
Vice
Chairman; 1997 450,778 395,937 236,242 - 0 - 125,000 106,147 5,831
President &
COO of IPL 1998 480,990 508,375 841,754 $1,348,452 - 0 - 635,481 6,400
John R.
Brehm 1996 $236,394 $ 83,253 $ 7,788 - 0 - - 0 - $ 34,996 $6,698
Vice
President
&
Treasurer; 1997 240,781 84,595 7,512 - 0 - 75,000 39,858 5,630
SVP,
Finance of
IPL 1998 277,859 147,297 36,288 $ 518,399 - 0 - 199,492 6,757
Bryan G.
Tabler 1996 $218,184 $ 76,907 $ 17,077 - 0 - - 0 - $ 10,652 $6,119
Vice
President,
Secretary
& 1997 225,742 79,310 20,053 - 0 - 45,000 21,197 5,081
General
Counsel; 1998 234,268 82,437 58,294 $ 346,525 - 0 - 183,733 5,714
SVP,
Secretary
and General
Counsel of
IPL
N. Stuart
Grauel 1996 $190,158 $ 66,967 $ 8,364 - 0 - - 0 - $ 28,741 $5,845
Vice
President, 1997 193,669 68,040 8,750 - 0 - 45,000 32,441 5,702
Public
Affairs 1998 200,415 70,513 31,745 $ 293,169 - 0 - 160,809 6,465
</TABLE>
- --------------------------------------------------------------------------------
12
<PAGE>
FOOTNOTES TO SUMMARY COMPENSATION TABLE
(1) The named executive officers did not receive a salary increase from 1996
to 1997. Salary increases, if applicable take effect in May. 1996 figures
reflect 4 month's pay at 1995 base salary rates and 8 months at 1996 base
salary rates, while 1997 figures reflect 12 month's pay at the 1996 base
salary rates.
(2) Represents taxes paid by IPALCO and/or IPL on accrued interest and
contributions of principal under the Funded Supplemental Retirement Plan
(See "Pension Plans"). Includes $10,227, $17,783, and $38,751 earned in
above market interest on deferred compensation for Mr. Humke in 1996,
1997, and 1998, respectively.
(3) Restricted common stock awards pursuant to the IPALCO Enterprises, Inc.
Long-Term Performance and Restricted Stock Incentive Plan (the
"Restricted Stock Plan") are valued at the closing market price as of the
date of the award. Dividends on the restricted common stock are payable
to the named officers. Amounts shown for 1998 represent shares awarded in
January, 1998 under the 1995-1997 performance period (Cycle 1) as a
result of IPALCO's performance during that period and to reflect actual
salary during that period, and shares awarded in January, 1998 for the
1998-2000 performance period (Cycle 2) as follows:
<TABLE>
<CAPTION>
Cycle 1 Cycle 2
------- -------
<S> <C> <C> <C> <C>
John R. Hodowal 11,566 shares $ 484,731 26,750 shares $1,101,766
Ramon L. Humke 9,940 shares $ 416,585 22,625 shares $ 931,867
John R. Brehm 2,868 shares $ 120,198 9,668 shares $ 398,201
Bryan G. Tabler 2,701 shares $ 113,198 5,665 shares $ 233,327
N. Stuart Grauel 2,219 shares $ 92,998 4,860 shares $ 200,171
The total shares awarded under Cycle 1 vest in one-third increments in
the years 1998, 1999 and 2000 and are paid out in cash or stock, at the
election of the named officer. Under the terms of the Restricted Stock
Plan, no additional shares will be awarded to the named officers before
2001. Upon completion of the performance period for Cycle 2, the total
shares to be awarded will be 0-400% of the award listed. This total will
vest in one-third increments in the years 2001, 2002, and 2003 and is
paid out in cash or stock, at the election of the named officer.
Restricted common stock holdings and the values thereof based on the
closing price of the common stock at year end are as follows:
John R. Hodowal 62,905 shares $3,487,296
Ramon L. Humke 52,950 shares $2,935,416
John R. Brehm 19,188 shares $1,063,735
Bryan G. Tabler 14,433 shares $ 800,129
N. Stuart Grauel 12,533 shares $ 694,798
</TABLE>
(4) No options have stock appreciation rights.
(5) Payouts shown for 1996 and 1997 were made pursuant to the 1990 Long-Term
Incentive Plan (the "LTIP Plan"). The LTIP Plan was replaced by the
Restricted Stock Plan and no additional payments will be made under the
LTIP Plan. Payouts shown for 1998 were made pursuant to the Restricted
Stock Plan.
(6) Represents contributions made by IPL to the Trustee of the Employees'
Thrift Plan.
- --------------------------------------------------------------------------------
13
<PAGE>
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of
Unexercised Unexercised
Options/SARs In-the-Money
at Option/SARs
Shares FY-End(#) FY-End($)*
Acquired On Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John R. Hodowal 430,000 $9,024,002 -0-(e) -0-
-0-(u) -0-
- --------------------------------------------------------------------------------
Ramon L. Humke 38,873 $1,132,262 191,127(e) $5,017,941
-0-(u) -0-
- --------------------------------------------------------------------------------
John R. Brehm 67,500 $1,534,194 60,000(e) $1,443,750
-0-(u) -0-
- --------------------------------------------------------------------------------
Bryan G. Tabler 10,000 $ 181,250 35,000(e) $ 842,188
-0-(u) -0-
- --------------------------------------------------------------------------------
N. Stuart Grauel -0- $-0- 105,000(e) $2,957,333
-0-(u) -0-
</TABLE>
(e)Exercisable.
(u)Unexercisable.
*Based upon year-end closing market price of $55.4375 per share of common
stock.
TABLE II
14
<PAGE>
PERFORMANCE GRAPH
TABLE III
CUMULATIVE TOTAL RETURN ASSUMING DIVIDEND REINVESTMENT
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
IPALCO 100 90.65 122.63 138.94 220.20 297.87
- ----------------------------------------------------------------------------
S&P 500 100 101.32 139.40 171.40 228.59 293.91
- ----------------------------------------------------------------------------
S&P 500 ELEC COMPANIES 100 86.93 113.96 113.77 143.63 165.86
</TABLE>
Source: Standard and Poor's Compustat Custom Data Services.
15
<PAGE>
Performance Graph
The Performance Graph (Table III) on the preceding page plots the total
cumulative return that shareholders of IPALCO received (solid line) during the
period from December 31, 1993 through December 31, 1998, compared with the
total cumulative return to shareholders of companies comprising the S & P 500
Index (dash line) and the S & P Electric Companies Index (bold dash line). 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 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.
PENSION PLAN TABLE (1)
<TABLE>
<CAPTION>
Remuneration Years of Service
--------------------------------------------------------------
15 20 25 30 35
-------------------------------------
<S> <C> <C> <C> <C> <C>
$125,000 $ 75,000 $ 75,000 $ 75,000 $ 75,000 $ 75,000
150,000 90,000 90,000 90,000 90,000 90,000
175,000 105,000 105,000 105,000 105,000 105,000
200,000 120,000 120,000 120,000 120,000 120,000
225,000 135,000 135,000 135,000 135,000 135,000
250,000 150,000 150,000 150,000 150,000 150,000
300,000 180,000 180,000 180,000 180,000 180,000
400,000 240,000 240,000 240,000 240,000 240,000
450,000 270,000 270,000 270,000 270,000 270,000
500,000 300,000 300,000 300,000 300,000 300,000
</TABLE>
(1) 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
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" and
"Bonus" but excludes "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--30, Mr. Humke--9, Mr. Brehm--23, Mr.
Grauel--19, and Mr. Tabler--4.
The Funded Supplemental Retirement 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
16
<PAGE>
retirement. Contributions and accrued interest credit during 1998 to the
accounts of Messrs. Hodowal, Humke, Brehm, Grauel and Tabler amounted to
$2,062,000, $916,000, $41,000, $33,000 and $68,000, 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 has an employment contract with Mr. Hodowal which provides for an
indefinite term that is convertible into a fixed 3-year term upon notice. IPL
has an employment contract with Mr. Humke which provides for a 3-year term
expiring on December 31, 1999. 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), the
executives 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
compensation (as defined in section 280G of the Internal Revenue Code) payable
by IPALCO and its subsidiaries which was includable in the gross income of the
officers, 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 the officers; relocation of 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 acquisition 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 of Indiana, and at
December 31, 1998, the sum of $1,012,924 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 15, 1999
- -------------------------------------------------------------------------------
17
<PAGE>
Please complete the 1999 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
(DETACH HERE)
- --------------------------------------------------------------------------------
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 or 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
March 3, 1999, at the annual meeting of the shareholders to be held April 21,
1999, or at any adjournment thereof, with respect to the matter(s) set forth
below.
1. Election of Six Nominees For Director, namely:
Daniel R. Coats, Mitchell E. Daniels, Jr., Rexford C. Early,
John R. Hodowal, Michael S. Maurer, Thomas H. Sams
[_] Vote For All Nominees
------------
[_] Withhold Vote from All Nominees
---------------------
[_] Vote for All Nominees, Except Nominees written below:
------
______________________________________________________________________
(Please write names(s) of Nominee(s)from whom vote is withheld)
___________________________ (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 all nominees for Director 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 15,
1999, and the 1998 Annual Report is hereby acknowledged.
Your signature must be exactly as your name appears below. When signing as
attorney-in-fact, executor, administrator, trustee, guardian or corporate
officer, please give full title as such,
Dated ____________________________________________ , 1999.
_________________________________________________________
(SIGNATURE)
_________________________________________________________
(SIGNATURE IF HELD JOINTLY)
<PAGE>
Please complete 1999 Instruction Card at right. Then, date, sign, detach it from
this form at perforations, fold it, and return immediately in accompanying
interoffice envelope.
- -------------------------------------------------------------------------------
(DETACH HERE)
IPALCO ENTERPRISES, INC.
Instructions To Thrift Plan Trustee For
Annual Meeting of Shareholders - April 21, 1999
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 to
vote as follows:
1. Election of Six Nominees For Director, namely:
Daniel R. Coats, Mitchell E. Daniels, Jr., Rexford C. Early,
John R. Hodowal, Michael S. Maurer, Thomas H. Sams
[_] Vote For All Nominees
------------
[_] Withhold Vote from All Nominees
----------------------
[_] Vote For All Nominees. Except Nominees written below:
------
_______________________________________________________________________________
(Please write names(s) of Nominee(s) from whom vote is withheld)
___________________________(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 15,
1999, and the 1998 Annual Report is hereby acknowledged.
Dated__________, 1999.
Your signature must be exactly as your name appears below._____________________
(SIGNATURE)
