<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (Section) 240.14a-11(c) or
(Section) 240.14a-12
CILCORP Inc.
-----------------------------------------------
(Name of Registrant as Specified In Its Charter)
CILCORP Inc.
-----------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
_____
* Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO] LOGO OF CILCORP INC.
300 HAMILTON BLVD. SUITE 300, PEORIA, IL 61602
CENTRAL ILLINOIS LIGHT COMPANY
CILCORP INVESTMENT MANAGEMENT INC.
CILCORP VENTURES INC.
ENVIRONMENTAL SCIENCE & ENGINEERING, INC.
March 13, 1995
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
CILCORP Inc. which will be held at 300 Liberty Street, Peoria, Illinois, on
April 25, 1995 at 10 AM, Central Time. Detailed information as to the business
to be transacted at the meeting is contained in the accompanying Notice of
Annual Meeting and Proxy Statement.
It is important that your shares be represented at the meeting. Please complete,
sign and date the enclosed Proxy and return it in the envelope provided as soon
as possible.
Your continued interest and cooperation are greatly appreciated.
Sincerely,
/s/ Robert O. Viets
Robert O. Viets
President and Chief
Executive Officer
<PAGE>
CILCORP Inc.
300 Hamilton Boulevard, Suite 300
Peoria, Illinois 61602
Notice of Annual Meeting
March 13, 1995
Dear Shareholders:
The Annual Meeting of Shareholders of CILCORP Inc. will be held on Tuesday,
April 25, 1995 at 10 AM, Central Time, at 300 Liberty Street, Peoria, Illinois
61602 for the following purposes:
1. To elect three members of the Board of Directors;
2. To ratify the appointment by the Board of Directors of Arthur Andersen
LLP as the independent public accountants for the year 1995;
3. To consider and vote upon a shareholder proposal which is set forth and
described in the attached proxy statement, if such proposal is brought
before the meeting; and
4. To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on February 24, 1995 are
entitled to vote at the meeting.
By Order of the Board of Directors,
John G. Sahn
Vice President, General Counsel and Secretary
IMPORTANT
It is important that your shares be represented at the meeting. Please mark,
sign, date and return the enclosed proxy promptly in order that your shares
will be voted.
<PAGE>
Proxy Statement
General
This statement is furnished in connection with a solicitation of proxies
by the Board of Directors of CILCORP Inc. (the "Company" or "CILCORP"), for use
at the Annual Meeting of Shareholders to be held on Tuesday, April 25, 1995 at
10 AM, Central Time, at 300 Liberty Street, Peoria, Illinois, and any
adjournment thereof. The executive offices of the Company are located at 300
Hamilton Boulevard, Suite 300, Peoria, Illinois 61602. The shares represented by
your proxy will be voted as directed therein if the proxy is duly executed and
returned prior to the meeting. If no choice has been specified, the persons
named in the proxy intend to vote for the election of the nominees listed below,
in favor of ratification of the designated independent public accountants
(Proposal 2), and against the shareholder proposal (Proposal 3). You may revoke
your proxy by a duly executed later proxy, or at any time before it is exercised
by written notice to the Secretary of the Company, received prior to the time of
the meeting, or orally at the meeting.
Shareholders of record participating in the Company's Automatic Dividend
Reinvestment and Stock Purchase Plan will receive one proxy for both shares held
of record and shares held under such Plan. Shares in the account of an employee
participating in the savings plans of the Company's subsidiaries, Central
Illinois Light Company ("CILCO") and Environmental Science & Engineering, Inc.
("ESE"), will be voted in accordance with the employee's instructions; or, if no
instructions are given, pursuant to the trust agreements pertaining to the
plans.
The expense of the solicitation of proxies is being borne by the Company.
In addition to solicitation by mail, officers and regular employees of the
Company may solicit proxies either personally, or by telephone or FAX. The
Company will reimburse banks, brokers or other similar agents or fiduciaries for
forwarding proxy material to their principals, the beneficial owners of the
stock. The Company has arranged for D. F. King & Co., Inc., for a fee of
approximately $8,000, to assist in the solicitation of proxies. Such
solicitation may be made by mail, telephone, FAX or in person.
The annual report of the Company for the year ended December 31, 1994 is
being sent, along with the Notice of Annual Meeting, this Proxy Statement and
the accompanying Proxy, to all shareholders of record at the close of business
on February 24, 1995, which is the record date for the determination of
shareholders entitled to vote at the meeting. These items are to be first mailed
to shareholders on March 13, 1995.
Voting Securities and Principal Holders
On February 24, 1995, the record date for the meeting, the outstanding
voting stock of the Company consisted of 13,035,756 shares of common stock, no
par value (the "common stock"). Each share of common stock entitles the holder
thereof to one
1
<PAGE>
vote upon each matter coming before the meeting. Votes cast by proxy or in
person at the annual meeting will be tabulated by the election inspectors
appointed for the meeting and will determine whether or not a quorum is present.
The election inspectors will treat abstentions as shares that are present and
entitled to vote for purposes of determining the presence of a quorum but as
unvoted for purposes of determining the approval of any matter submitted to the
shareholders for a vote. If a broker indicates on the proxy that it does not
have discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter.
To the Company's knowledge, no single entity or person has beneficial
ownership of 5% or more of the Company's outstanding common stock. No
independent inquiry has been made to determine whether any shareholder is the
beneficial owner of shares not registered in the name of such shareholder or
whether any shareholder is a member of a shareholder group.
Security Ownership of Management
The following table sets forth as of January 1, 1995 the beneficial
ownership of the Company's common stock by all directors (including nominees for
director), the executive officers included in the Summary Compensation Table
herein, and all directors and officers as a group. The following table also sets
forth as of January 1, 1995 the common stock equivalents held by directors
participating in the Company's and CILCO's Deferred Compensation Stock Plans
(the "Plans").
<TABLE>
<CAPTION>
Shares of Common
Stock and Nature Common Stock
Name of Beneficial Owner of Beneficial Ownership(1) Equivalents(2)
- ------------------------ -------------------------- --------------
<S> <C> <C>
Marcus Alexis 100 1,619
John R. Brazil 400 --
Willard Bunn III 500 --
David E. Connor 4,604 --
Homer J. Holland 100 --
H. Safford Peacock 1,000 3,711
R. Wayne Slone 9,365 --
Katherine E. Smith 131 2,283
Richard N. Ullman 1,000 2,549
Robert O. Viets 8,265 4,543
Murray M. Yeomans 1,250 3,585
Ronald L. Rainson 1,024 --
William M. Shay 5,291 --
James F. Vergon 1,416 --
All directors and officers as a group 37,201 18,290
</TABLE>
2
<PAGE>
- ---------
(1) In each case, with respect to the shares of common stock shown, the named
individual or his spouse has sole voting and investment power. No director
or officer owns directly or indirectly more than one-tenth of one percent
of the Company's common stock. All directors and officers as a group own
less than one percent of the Company's common stock.
(2) Compensation deferred under the Plans is converted into units of common
stock based upon the market price of such stock on the trading date next
following the date payment would have been made to the director. Additional
amounts are credited to the director's account equal to common stock
dividends paid, and are treated as automatically reinvested in the
Company's common stock.
1. Election of Directors
The Board of Directors consists of ten members, divided into three
classes, with members of each class serving a three-year term. At the 1995
Annual Meeting, the shareholders will elect three persons as directors with
terms continuing until the Annual Meeting of Shareholders in 1998 or until their
respective successors are elected and qualified. The remaining seven directors
will continue to serve as set forth below, with three directors having terms
expiring April 1996 and four directors having terms expiring April 1997. To be
elected a director, a nominee must receive the affirmative vote of a majority of
the Company's outstanding shares represented at the meeting and entitled to
vote. All of the nominees are now directors of the Company and have agreed to
serve if elected. The nominees and directors are listed below, together with
biographical information.
The Board of Directors has no reason to believe that the nominees will not
be available, but in the event that a vacancy among the original nominees is
occasioned by death or any other reason prior to the meeting, the proxy will be
voted for a substitute nominee or nominees designated by the Board of Directors.
3
<PAGE>
Nominees for Election to the Board of Directors
For Three-Year Terms Expiring April 1998
Willard Bunn III
Senior Vice President and Managing Director [PHOTO]
in the Financial Services Unit
The Chicago Corporation,
Chicago, Illinois
Director of CILCORP since 1994 and CILCO since 1991
Member of Compensation and Finance Committees
Mr. Bunn was born at Springfield, Illinois in 1943. He joined Marine
Bank of Springfield in 1978 as an executive vice president. He was elected
president in 1980 and chairman and chief executive officer in 1989. In
1992, Mr. Bunn became chairman and chief executive officer of Banc One
Illinois Corporation which merged with Marine Bank. He was formerly
associated with Chemical Bank from 1968 to 1978 serving in various
capacities including vice president and group head of domestic depository
institutions. Mr. Bunn graduated from Princeton University in 1966 with a
degree in history. He received his master's degree in business
administration from The Darden School at the University of Virginia in
1968. Mr. Bunn serves on the boards of various local and state business and
civic organizations. He retired on December 31, 1994 as chairman and chief
executive officer of Banc One Illinois Corporation and chairman of Bank
One, Springfield, Illinois. He remains on the boards of Bank One,
Springfield and Bank One, Chicago.
4
<PAGE>
Homer J. Holland
President of Holland Partners, Inc., Chicago, Illinois [PHOTO]
(financial and executive management services for
financial service institutions)
Director of CILCORP since 1994
Member of Audit and Finance Committees
Mr. Holland was born at Madison, Wisconsin in 1941. He is a 1963
graduate of the U.S. Military Academy and served in the U.S. Army from 1963
to 1971. He received a Masters of Science degree in physics and electrical
engineering from Massachusetts Institute of Technology in 1967 and a Doctor
of Business Administration degree from George Washington University in
1972. Following military service, he was associated with the First National
Bank of Chicago from 1971 to 1979, last serving as senior vice president.
He was president of Exchange National Bank of Chicago from 1979 to 1983.
Mr. Holland founded Holland Partners, Inc. in 1983 and through Holland
Partners, Inc., acquired control of six Illinois savings banks from 1985
through 1988 (later merged as River Valley Savings Bank, F.S.B., Peoria,
Illinois) and one Texas savings bank in 1992. He served as chairman of
River Valley Holdings, Inc., parent of the Peoria bank, until its sale in
January 1995. He continues to serve as chairman of Western Capital
Holdings, Inc., parent of River Valley Bank, F.S.B., McAllen, Texas. He is
a director of Environmental Science & Engineering, Inc., CILCORP Investment
Management Inc., United Services Automobile Association, Lifeline Shelter
Systems, Inc., Wisconsin Industrial Products Inc. and the Institute of
European Studies.
5
<PAGE>
Katherine E. Smith
Vice President, The Quaker Oats Company, Chicago, Illinois [PHOTO]
Director of CILCORP and CILCO since 1985
Member of Compensation and Nominating Committees
Ms. Smith was born at Chicago, Illinois in 1940. She is a 1961
graduate of Oregon State University with a degree in home economics. From
1982 to December 1994, Ms. Smith was vice president, consumer affairs, U.
S. Grocery Products Division of The Quaker Oats Company. She was formerly
with The Great Atlantic & Pacific Tea Company, Inc. from 1976 to 1982 as
vice president, consumer affairs and marketing services and prior to that,
she was associated with The Pillsbury Company. She began her business
career with Southern California Gas Company, a division of Pacific Lighting
Corporation, where she advanced through various positions related to
customer services. Ms. Smith is active in a number of professional and
civic associations including the Society of Consumer Affairs Professionals
in Business and the American Association of Family & Consumer Science. In
addition, she is a trustee of the Oregon State University Foundation.
6
<PAGE>
Members of the Board of Directors Continuing in Office
Term Expiring April 1996
John R. Brazil
President of Bradley University, Peoria, Illinois [PHOTO]
Director of CILCORP and CILCO since 1993
Member of Audit and Nominating Committees
Dr. Brazil was born at Los Angeles, California in 1946. He received a
bachelor's degree in history from Stanford University in 1968 and a
master's degree and Ph.D. in American studies from Yale University in 1972
and 1975, respectively. In 1980, he was a Fulbright senior scholar in
English and American studies at the University of Sydney, Australia. Prior
to joining Bradley University as president in January 1992, he served as
chancellor and professor of English at the University of Massachusetts
Dartmouth (formerly known as Southeastern Massachusetts University) from
1984 through 1991. Dr. Brazil was previously associated with San Jose'
State University in California for eleven years, last serving as professor
of humanities and American studies and vice president for academic affairs.
He is a director of First of America Bank-Illinois, N.A., First of America
Bank-Illinois, N.A. Peoria Regional Advisory Board, Methodist Medical
Center, and chairs the Walter Byers Post-Graduate Scholarship Committee of
the National Collegiate Athletic Association.
7
<PAGE>
David E. Connor
President of David E. Connor and Associates, Peoria, Illinois [PHOTO]
(financial advisor to businesses and banks)
Director of CILCORP since 1985 and CILCO since 1968
Member of Executive and Finance Committees
Mr. Connor was born at Omaha, Nebraska in 1925. He graduated from Yale
University in 1947. Prior to his retirement in 1985, he had served as
president and as a director of Midwest Financial Group, Inc. (a multi-bank
holding company) since its inception in 1981, and chairman of its largest
subsidiary, Commercial National Bank of Peoria. Mr. Connor had been
associated with the bank since 1952, and advanced through various areas of
responsibility to vice president in 1956. He was elected a director in
1959, senior vice president in 1964, president in 1967 and chairman in
1985. Mr. Connor formed David E. Connor and Associates in 1985. Other
directorships include CILCORP Investment Management Inc., Keystone
Consolidated Industries, Inc., Peoria Development Corporation and First
Bankers Trust Shares, Quincy, Illinois. He is a member of the board of
trustees of Bradley University and was formerly chairman of that board. He
also serves on the boards of various local and state business and civic
organizations.
Murray M. Yeomans
Chairman and Chief Executive Officer of Yeomans [PHOTO]
Distributing Company, Peoria, Illinois
(wholesale appliances and central heating and cooling equipment)
Director of CILCORP and CILCO since 1987
Member of Audit and Compensation Committees
Mr. Yeomans was born at Philadelphia, Pennsylvania in 1935. He is a
1958 graduate of Miami University (Ohio) with a degree in business
administration. He joined Yeomans Distributing Company in 1960 and was
named president in 1972 and to his present position in 1991. He is a
director of Peoria Area Community Foundation and serves as a trustee of
Bradley University. In addition, he is a member of the Saint Francis
Medical Center Advisory Board, the First of America Bank-Illinois N.A.
Peoria Regional Advisory Board and president of the Illinois Neurological
Institute. Mr. Yeomans is active in civic and charitable activities.
8
<PAGE>
Members of the Board of Directors Continuing in Office
Term Expiring April 1997
Marcus Alexis
Board of Trustees Professor of Economics and [PHOTO]
Professor of Management and Strategy
Northwestern University, Evanston, Illinois
Director of CILCORP and CILCO since 1988
Member of Compensation and Finance Committees
Dr. Alexis was born at New York, New York in 1932. He graduated from
Brooklyn College in 1953 with a degree in economics. Dr. Alexis received a
Master of Arts degree in economics from Michigan State University in 1954,
and a Ph.D degree in economics from the University of Minnesota in 1959. He
initially joined Northwestern University in 1970 and served as chairman of
the Department of Economics from 1976-1979 and 1982-1985. During the period
1979 to 1981, he was a member, vice chairman and acting chairman of the
Interstate Commerce Commission. He joined the University of Illinois at
Chicago in 1985 as dean of the College of Business Administration and
professor of economics. He returned to Northwestern University in 1990. He
is former Chairman of the Federal Reserve Bank of Chicago and serves on the
boards of the Teachers Insurance and Annuity Association, the Metropolitan
Planning Council in Chicago, and is also a director of the Lincoln Park
Zoological Society.
9
<PAGE>
H. Safford Peacock
Investment Management and Farming [PHOTO]
Director of CILCORP since 1985
Member of Audit and Executive Committees
Mr. Peacock was born at Monmouth, Illinois in 1928. He graduated from
the Massachusetts Institute of Technology in 1950. He joined Myers
Industries, Inc. (manufacturers of store fixtures and storage shelving) in
Lincoln, Illinois in 1953 in an engineering capacity, and was elected vice
president of manufacturing and director in 1960. He served as vice
president and general manager from 1974 until his retirement in 1977. He is
active in investment management, including farming operations and
industrial real estate. He is a director of Environmental Science &
Engineering, Inc. and CILCORP Ventures Inc., trustee of Lincoln College and
a trustee and past chairman of the board of trustees of Monmouth College.
He was a Director of CILCO from 1978 to 1994.
Richard N. Ullman
President of Federal Companies, Peoria, Illinois [PHOTO]
(commercial warehousing, local and long distance moving)
Director of CILCORP and CILCO since 1988
Member of Finance and Nominating Committees
Mr. Ullman was born at Peoria, Illinois in 1934. He graduated from
DePauw University in 1956 with a liberal arts degree. He joined Federal
Warehouse Company in 1957. In 1973 he was named president of that company
and of Federal Companies. He is a director of First of America
Bank-Illinois, N.A., First of America Bank-Illinois, N.A. Peoria Regional
Advisory Board, Keystone Consolidated Industries, Inc. and the Peoria
Medical Research Corporation. Mr. Ullman is a member of the Saint Francis
Medical Center Advisory Board, a member of the advisory board of Children's
Hospital of Illinois at Saint Francis Medical Center, and serves as a
member of the board of trustees of Bradley University. He is active in a
number of professional and civic organizations.
10
<PAGE>
Robert O. Viets
President and Chief Executive Officer of this Company [PHOTO]
Director of CILCORP since 1988
Member of Executive Committee
Mr. Viets was born at Girard, Kansas in 1943. He graduated from
Washburn University in 1965 with a degree in economics and received his law
degree from Washington University School of Law in 1969. He is a certified
public accountant and has had experience with a national accounting firm.
Mr. Viets joined CILCO in 1973 as manager of special studies and was
appointed manager of rates and regulatory affairs in 1976. He was elected
assistant vice president, regulatory and legislative affairs in 1980, vice
president, financial services in 1981, vice president (finance group) in
1983, senior vice president of the Company and CILCO in 1986 and to his
present position in 1988. Mr. Viets is a director of First of America
Bank-Illinois, N.A., First of America Bank-Illinois, N.A. Peoria Regional
Advisory Board, RLI Corp., Lincoln Office Supply Co., Incorporated, the
Peoria Medical Research Corporation and Methodist Health Services
Corporation. He serves as chairman of the board of trustees of Bradley
University. He is also chairman of the board of Environmental Science &
Engineering, Inc. and a director of CILCORP Investment Management Inc. and
CILCORP Ventures Inc. and effective April 1, 1995, he will become chairman,
president and chief executive officer of CILCO.
Committees and Meetings of the Board of Directors
The Board of Directors, has, among others, Audit, Compensation and
Nominating Committees.
The Audit Committee is responsible for reviewing audits made by the
Company's independent accountants, including the scope of the auditors' reports
thereon and reviewing such other matters, such as the effectiveness of internal
controls, as the Committee may deem appropriate. The Audit Committee recommends
to the Board of Directors the independent accounting firm which will be engaged
to audit the Company's financial statements. The Committee also reviews the
activities of the Company's internal auditors. Directors serving as members of
the Committee are Messrs. Brazil, Holland, Peacock and Yeomans. During 1994, the
Committee held four meetings.
The Compensation Committee considers and makes recommendations to the
Board of Directors with respect to the compensation of the Company's executive
11
<PAGE>
officers. Directors serving as members of the Committee are Messrs. Alexis,
Bunn, Yeomans and Ms. Smith. During 1994, the Committee held two meetings.
The Nominating Committee's principal function is to review and recommend
to the Board of Directors nominees to serve on the Board. The Committee
considers nominees brought to its attention by other members of the Board, by
members of management and by shareholders. Shareholders may submit
recommendations to the Committee with respect to nominees by writing to the
Secretary of the Company. Under the Company's By-laws, written notice of any
shareholder nomination of an individual for election as a director at the Annual
Meeting must be received by the Secretary of the Company at 300 Hamilton
Boulevard, Suite 300, Peoria, Illinois 61602, not later than sixty days prior to
the first anniversary of the date of the last Annual Meeting of Shareholders and
set forth the name, age, business and residential address, principal occupation,
number of shares of stock owned and such other information concerning the
nominee as may be required by the federal securities laws in respect of an
individual nominated as a director for whom proxies are solicited. (A copy of
the Company's By-laws specifying the requirements for shareholder nominations
will be furnished to any shareholder without charge upon written request to the
Secretary.) Directors serving as members of the Committee are Messrs. Brazil,
Ullman and Ms. Smith. The Committee did not meet during 1994.
During 1994, the Board of Directors held a total of nine meetings.
Directors' Compensation
No fees are paid to directors who are employees of the Company or its
subsidiaries. Non-employee members of the Board receive a total annual retainer
fee of $13,000 for serving on the Company's Board and on the Board of any of the
Company's subsidiaries, prorated for less than a year's service. Non-employee
directors also receive an attendance fee of $750 for attending meetings of the
Board of Directors of the Company or its subsidiaries and an attendance fee of
$750 for each meeting attended of committees of those Boards. A single Board or
committee attendance fee is payable to each director in the event the Boards of
the Company and CILCO or committees of the Boards of the Company and CILCO meet
on the same day. Directors are also reimbursed for their travel expenses for
each Board or committee meeting attended.
Executive Compensation
The following table sets forth the compensation earned for the years 1994,
1993 and 1992 for the Chief Executive Officer and the five most highly
compensated persons who were executive officers of the Company and its
subsidiaries during 1994 and whose total annual compensation exceeded $100,000.
All of these individuals were executive officers at December 31, 1994 except Mr.
Rainson.
12
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
------------------- ------------ All Other
Name and Principal Position Year Salary LTIP Payouts(1) Compensation(2)
- --------------------------- ---- ------ --------------- ---------------
<S> <C> <C> <C> <C>
Robert O. Viets 1994 $ 261,000 $ 88,015 $ 27,364
President and Chief Executive 1993 257,850 41,962 25,305
Officer of the Company 1992 243,800 48,121 19,903
R. Wayne Slone 1994 226,720 96,321 30,977
Chairman, President and Chief 1993 205,500 88,635 28,611
Executive Officer of CILCO 1992 195,250 60,976 22,371
William M. Shay 1994 156,818 49,852 19,418
Vice President of CILCO(3) 1993 150,437 34,864 17,953
1992 143,250 30,851 25,821
James F. Vergon 1994 140,270 63,012 12,513
Vice President of CILCO(4) 1993 134,564 57,114 11,635
1992 121,205 40,796 9,310
Ronald L. Rainson 1994 189,119 -- 15,394
Chairman, President and Chief 1993 214,000 -- 10,043
Executive Officer of ESE(5) 1992 189,500 24,800 9,651
Thomas S. Romanowski 1994 127,795 58,775 11,751
Vice President of CILCO 1993 121,705 55,162 10,894
1992 115,914 39,922 8,886
</TABLE>
(1) Amounts paid, if any, pursuant to the EVA-Based Incentive Compensation
Plans of the Company, CILCO and ESE.
(2) The amounts shown in this column for 1994 represent (a) employer
contributions under the CILCO and ESE Savings Plans: Mr. Viets $4,620, Mr.
Slone $4,620, Mr. Shay $4,234, Mr. Vergon $4,208, Mr. Rainson $4,802 and
Mr. Romanowski $3,834; (b) earnings on deferred compensation: Mr. Viets
$22,744, Mr. Slone $26,357, Mr. Shay $15,184, Mr. Vergon $8,305, Mr.
Rainson $8,775, and Mr. Romanowski $7,917; and (c) employer contributions
under an ESE deferred compensation plan: Mr. Rainson $1,817.
(3) Effective January 1, 1993. Previously Mr. Shay was a vice president of the
Company.
(4) Mr. Vergon served as vice president and chief financial officer of the
Company from January 1, 1993 through February 28, 1993.
(5) Effective April 1, 1994, Mr. Rainson concluded service as president and
chief executive officer of ESE and concluded service as chairman of the
board of ESE effective December 31, 1994.
13
<PAGE>
EVA-Based Incentive Compensation Plan
Incentive compensation is awarded in accordance with the Company's EVA-
Based Incentive Compensation Plan ("EVA Plan") and the Shareholder Return
Incentive Compensation Plan approved by shareholders on April 27, 1993
("Shareholder Return Plan"). The purpose of the EVA Plan is to provide an
incentive to eligible officers and senior managers to increase and maintain
shareholder value by rewarding the achievement of these objectives. EVA is a
measure of profitability that is based on the difference between the return
earned on the capital invested in an enterprise and the cost of that capital.
This difference can be either positive or negative and results in an addition to
or a deduction from award balances accumulated from prior years. Each year, one
third of the net balance accumulated is paid to the participant. That portion of
the incentive compensation which has been deferred is "at risk" since a negative
EVA in a subsequent year may eliminate previously accumulated balances. The
calculation of the award pool is based, in part, on a fixed percentage of the
improvement in EVA from the prior year and, in part, on a fixed percentage of
the average of EVA contributed over a three year period. These percentages,
which do not change from year to year, were determined when the Plan was
originally established and were designed, using historical financial data, to
create an award pool of sufficient size to achieve the objectives of the Plan
and are used only for that purpose. Annually, at the outset of each plan year,
the Compensation Committee determines the portion of the award pool to be
allocated to each participant, including the executive officers, based on that
individual's job responsibilities and the Committee's evaluation of the effect
which that individual's performance is expected to have on the size of the award
pool. A portion of the award pool is allocated, at the Committee's discretion,
at the conclusion of each plan year. Discretionary awards are determined on the
basis of the CEO's recommendation and the compensation policies established by
the Committee. Both the non-discretionary and discretionary portions of an award
are added to each participant's account balance, one third of which is paid and
the remainder remains at risk in the account balance.
Shareholder Return Incentive Compensation Plan
The purposes of the Shareholder Return Plan are to promote long term
growth in the value of the Company's common stock, to attract and retain
executives of outstanding ability, to encourage teamwork among the executives of
the Company and its subsidiaries, and to reward performance based on the
successful achievement of pre-established corporate financial goals. Under the
Plan, shares are granted, from time to time, to eligible key employees of the
Company or its subsidiaries who, due to the nature and scope of their positions,
regularly and directly make or influence policy decisions which impact the
overall long-term results or success of the Company. No awards were made in
1994.
14
<PAGE>
LONG TERM INCENTIVE PLANS--AWARDS IN 1994(1)
<TABLE>
<CAPTION>
Performance
Number of or Other
Shares, Units Period Until ESTIMATED FUTURE PAYOUTS
or Other Maturation -------------------------------------
Name Rights(2) Payout(3) Threshold(4) Target(5) Maximum(6)
---- ------------- ------------ ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Robert O. Viets $ 195,850 -- $ 52,734 $ 118,017 $ 158,201
R. Wayne Slone 122,645 -- 58,467 99,349 175,401
William M. Shay 88,774 -- 29,435 59,026 88,304
James F. Vergon 81,301 -- 38,445 65,545 115,334
Ronald L. Rainson(7) -0- -- -0- -0- -0-
Thomas S. Romanowski 72,630 -- 35,654 59,864 106,961
</TABLE>
(1) Amounts listed are paid under the Company's EVA-Based Incentive
Compensation Plan which is described above.
(2) Amounts listed are the net increases in the 1994 plan year to previously
accumulated balances.
(3) Each year, one third of the net balance accumulated in the EVA Plan is paid
to the participant. (See Summary Compensation Table for amounts paid in
1994.)
(4) Amounts listed are payable if net change in EVA in 1995 is zero.
(5) Amounts listed are payable if net change in EVA in 1995 is the same as in
1994.
(6) Amounts listed are accumulated balances at the beginning of the 1995 plan
year.
(7) Mr. Rainson did not participate in an EVA-Based Incentive Compensation Plan
in 1994 and has no accumulated award balance.
Certain Plans
CILCO Benefit Replacement Plan. The CILCO Board of Directors has
established a Benefit Replacement Plan (the "Plan"). The Plan provides for
payments to Plan participants from CILCO's general funds to restore the
retirement benefit under the CILCO Pension Plan when such benefit is restricted
by (1) the maximum defined benefit limitation of Section 415(b) of the Internal
Revenue Code of 1986, as amended (the "Code"), (2) the indexed compensation
limitation of Section 401(a)(17) of the Code, and (3) participation in certain
deferred compensation plans. The Plan generally covers all CILCO Pension Plan
participants affected by these restrictions and provides for payment at the
times and in the forms of the Pension Plan.
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<PAGE>
CILCO Pension Plan. Pension benefits are provided to Company employees
through CILCO's non-contributory Pension Plan for Management, Office and
Technical Employees (the "Pension Plan"). Directors who are not employees do not
participate in this Plan. Pension benefits are determined using a formula based
on years of service and highest average rate of monthly earnings for any sixty
consecutive month period. The normal retirement date specified in the Pension
Plan is age 65. Retirement prior to age 62 results in an appropriate reduction
in pension benefits.
The following table shows the aggregate annual benefits payable on a
straight life annuity basis upon retirement at normal retirement age under the
CILCO Pension Plan and under the CILCO Benefit Replacement Plan discussed above.
The amounts shown are not subject to any deduction for Social Security benefits
or other offset amounts other than that for an optional survivorship provision.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
-------------------------------------------------------
Remuneration 15 years 20 years 25 years 30 years 35 years
------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$175,000 $37,410 $49,878 $ 62,346 $ 74,814 $ 87,282
200,000 42,750 57,000 71,250 85,500 99,750
225,000 48,096 64,128 80,160 96,192 112,224
250,000 53,442 71,250 89,064 106,878 124,692
300,000 64,128 85,500 106,878 128,250 149,628
350,000 74,814 99,750 124,692 149,628 174,564
</TABLE>
The annual and long-term compensation shown for the individuals listed in
the above Summary Compensation Table is substantially compensation as covered by
the Pension Plan and the Benefit Replacement Plan. At January 1, 1995, the
credited years of service under the Pension Plan for the officers named in the
above table are as follows: R. O. Viets--21 years, R. W. Slone--36 years, W. M.
Shay--12 years, J. F. Vergon--23 years, R. L. Rainson--12 years, and T. S.
Romanowski--23 years.
Compensation Protection Plans. The Boards of Directors of the Company and
its subsidiaries, CILCO and ESE, have established Compensation Protection Plans
providing benefits to eligible employees. Of those named in the Summary
Compensation Table, the following are eligible employees: Viets, Slone, Shay,
Vergon and Romanowski. The Plans provide severance benefits in the event of (i)
a termination of employment resulting directly or indirectly from a sale of
substantially all or certain assets of the Company, CILCO or ESE or (ii) a
termination of employment within two years after a change in control occurring
involuntarily for a reason other than unacceptable performance or occurring
voluntarily with good reason as defined in the plan. A change in control
includes the sale of all or part of the business of the Company, CILCO or ESE to
a person not controlled by CILCORP, a merger or consolidation of CILCORP in
which CILCORP does not survive or in which its common stock is
16
<PAGE>
converted, the acquisition of 30% of the beneficial ownership of CILCORP by a
person together with the failure of continuing directors to constitute a
majority of its board of directors, or a sale of all or substantially all of the
assets of CILCORP. Upon a covered termination, a participant is entitled to a
continuation of base salary and benefit plan coverage for two years (or a
shorter period for participants below the position of vice president with less
than 30 years of service) after such termination.
Compensation Committee Report on Executive Compensation
Background and Policies. The Compensation Committee of the Board of
Directors (the "Committee") is comprised of four non-employee members of the
Board. The Committee considers and makes recommendations to the Board with
respect to the compensation of the executive officers (the president and vice
president) of the Company. The Committee's compensation policies with respect to
the executive officers are as follows:
1. Compensation levels should be established which are internally fair
and equitable, bearing in mind (a) past practices, patterns and
relationships, and (b) the relationship between officer level
compensation and the compensation provided for top level managers
throughout the Company.
2. Compensation should be comparable and reasonable in relation to
similar positions in other companies of like size, structure and
purpose. A group of utility and utility holding companies of
comparable size and nature was used for comparative purposes. This
group includes consideration of smaller companies (comparable to
CILCORP) that differs from the group of companies identified for
comparative stock performance purposes.
3. Compensation of the executive officers should be directly related to
the economic value created for the Company's shareholders.
4. A compensation program should be designed to attract and retain
superior management.
Executive Officer Compensation Program. The Company's current executive
officer compensation program is comprised of two major components: base salary
and incentive compensation. Base salary levels for the Company's executive
officers are set by the Committee relative to other utility and utility holding
companies of similar size. In addition, the Committee also considers the
individual officer's experience and performance. Salaries of the executive
officers are reviewed each year by the Committee and may be adjusted based on
the individual's contribution to the Company's performance, as well as
competitive pay levels. The average compensation of the executive officers
combined is moderately below the competitive median of the group of utility and
utility holding companies and the chief executive officer's compensation is well
below the competitive median.
17
<PAGE>
The Company has not yet developed a policy with respect to qualifying
certain performance based compensation paid to its named executive officers
under the Plan for corporate deductibility under Section 162(m) of the Internal
Revenue Code. The total compensation paid to each of these officers in 1994 was
significantly below the $1,000,000 deductibility cap specified in Section
162(m). If and when it is anticipated that the total compensation paid to any of
these named executive officers will reach this limit, the Company will establish
such a policy.
President's Compensation. The Committee recognizes Mr. Viets' positive
contribution toward management of the ongoing operations of the holding company
and its subsidiaries and his capacity for leadership in the future. Based in
part upon Mr. Viets' suggestion, an increase in his current base salary of
$261,000 was postponed until there is an improvement in operating results.
The payment to Mr. Viets of an award of $88,015 in 1994 pursuant to the
Company's EVA-Based Incentive Compensation Plan resulted from the creation of
economic value as measured by the Plan formula, the Committee's consideration of
Mr. Viets' performance and partial distribution of a positive award balance
which had accumulated for prior years.
Compensation Committee
Katherine E. Smith, Chairperson
Marcus Alexis
Willard Bunn III
Murray M. Yeomans
18
<PAGE>
Comparative Stock Performance
The graph below compares the yearly percentage change in the cumulative
total shareholder return on the common stock of the Company during the five
years ended December 31, 1994 with the cumulative total return on the S&P 500
Index and the S&P Utility Index over the same period. The comparison assumes
$100 was invested on December 31, 1989 in the Company's common stock and in each
of the foregoing indices, and assumes reinvestment of dividends.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
(CILCORP, S&P 500, S&P UTILITIES)
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG CILCORP, S&P500 INDEX AND S&P UTILITY INDEX
<CAPTION>
Measurement period S&P 500 S&P UTILITY
(Fiscal year Covered) CILCORP INDEX INDEX
- --------------------- ------- ------- -----------
<S> <C> <C> <C>
Measurement PT-
12/31/89 $100.00 $100.00 $100.00
FYE 12/31/90 $ 98.42 $ 96.89 $ 97.44
FYE 12/31/91 $114.43 $126.42 $111.69
FYE 12/31/92 $127.79 $136.05 $120.72
FYE 12/31/93 $128.44 $149.76 $138.16
FYE 12/31/94 $118.94 $151.74 $127.18
</TABLE>
19
<PAGE>
2. Appointment of Independent Public Accountants
(The Board Recommends a Vote FOR Ratification.)
The Board of Directors has appointed Arthur Andersen LLP, independent
public accountants, to audit the accounts of the Company for 1995. Although the
appointment of independent public accountants is not required to be approved by
the shareholders, the Board believes the shareholders should participate in this
appointment through ratification. If a majority of the shares represented and
voting at the meeting does not ratify the appointment, the Board will reconsider
its action.
A representative of Arthur Andersen LLP is expected to be present at the
annual meeting and will be given an opportunity to make a statement if he so
desires and to respond to appropriate questions.
3. Shareholder Proposal
(The Board Recommends That CILCORP Shareholders Vote
AGAINST Proposal 3.)
Three shareholders of the Company have advised the Company that they will
submit the proposal set forth below at the annual meeting. The names and
addresses of the proponents and the number of shares held by the proponents will
be furnished by the Secretary of the Company to any person, orally or in
writing, as requested, promptly upon the receipt of an oral or written request.
"The shareholders of CILCORP Inc. request the following amendment to the
By-laws and (or) Articles of Incorporation be adopted:
Beginning at the 1995 CILCORP Inc. Annual Shareholders meeting, each
director shall at all times hold, directly in their name, an amount of
shares of CILCORP Inc. common or voting class preferred of such quantity
not to be less than the average shareholder's holding of the particular
class of stock. The number of shares shall be based upon the annual report
to shareholders of the preceding year.
It shall be the duty of the Secretary of CILCORP Inc. to certify this
compliance prior to an individual being seated on our Board of Directors.
Should any director fail to comply with this ownership requirement, such
director shall have thirty (30) days from the date of non-compliance to
comply. Failure to comply shall result in disqualification and such
director's position shall be declared vacant."
Shareholders' Statement in Support of Proposal
"In the proponents' opinion, a director with an investment at least equal
to that of the average shareholder (holding 816 shares based upon the
current annual
20
<PAGE>
report) should help to instill strong, undivided and lasting interest in
our corporation. This should promote directors to think like the average
owner and expose them directly to risks of the business as well as its
opportunities. Assets represented in the form of--PHANTOM or other forms of
ILLUSIONARY shares, must not be construed as bonafide stock holdings in
CILCORP Inc. An investment in CILCORP Inc. is a monetary commitment;
however, if the amount is of a superficial nature, the question of
dedication becomes one of conjecture. This would ensure that our Directors
examine management's initiatives as being in the best interests of the
shareholder. For a number of years we have witnessed board members placing
their retainer and meeting fees in tax deferred accounts drawing interest
on this money from our company while avoiding buying additional common
shares of our company; therefore, the basic question we ask is "WHY ARE
DIRECTORS UN-WILLING TO PLACE THEIR DOLLAR AT RISK FOR THE DECISIONS THEY
MAY AUTHORIZE?"
This proposal does not eliminate highly qualified individuals from serving
on our Board of Directors, but demands a highest level of motivation and
commitment to the employees, customers and shareholders."
Board of Directors' Statement in Opposition to Shareholder Proposal
The Board believes that the establishment of a mandatory, arbitrary level
of stock ownership by CILCORP directors is unwarranted. A director of CILCORP
owes, by law, a fiduciary obligation to the shareholders of the Company. He or
she is obligated to exercise the utmost duty of care and loyalty to shareholders
and to conduct the business and affairs of the Company in such a way as to
maximize the benefits of stock ownership. The selection of CILCORP's directors
should be based primarily on the business experience, management skill and sound
judgment which they contribute to the Board rather than on the number of shares
owned and wealth accumulation.
Any implication by this proposal that CILCORP's current directors are not
dedicated to the interests of the Company and its shareholders is false and
misleading. All of the Company's current directors hold significant investment
interests in the Company, consisting of outright stock ownership and deferred
compensation arrangements through which the participants assume the position of
unsecured general creditors. At January 1, 1995, directors had a combined
investment in the Company exceeding $4.0 million, an average in excess of
$367,000 per director. The average investment by directors in the Company's
common stock or common stock equivalents exceeds 4,000 shares, an increase of
approximately 2,000 shares during the last four years.
Six incumbent directors are participating in a deferred compensation plan
which provides that the value of amounts deferred fluctuates proportionately
with the
21
<PAGE>
performance of the Company's common stock. The economic interest is not
"illusionary." The plan provides directors their only opportunity to participate
in the benefits (and risks) of owning CILCORP stock without being subject to
regulations of the Securities and Exchange Commission which impose severe stock
market trading limitations on "insiders." A participant in the plan cannot,
however, dispose of his or her plan investment so long as he or she is a
director. Because plan participants cannot liquidate their stock holdings to
take advantage of market developments, the Company believes the plan requires a
higher level of commitment to CILCORP than outright share ownership.
To amend the Company's By-laws to include the foregoing proposal, the
affirmative vote of 75% of the shares outstanding and entitled to vote thereon
at the annual meeting is required.
To amend the Company's Articles of Incorporation to include the foregoing
proposal, the affirmative vote of a majority of the shares outstanding and
entitled to vote thereon at the annual meeting is required, as well as approval
by the Board.
4. Other Matters
The Board has no knowledge of any business to be presented for
consideration at the annual meeting other than that discussed above. Should any
other business properly come before the meeting or any adjournment thereof, it
is intended that the shares represented by proxies will be voted with respect
thereto in accordance with the best judgment of the persons named in such
proxies.
Proposals of Shareholders
Proposals of shareholders to be presented at the April 23, 1996 annual
meeting must be received not later than November 13, 1995 for inclusion in the
proxy statement and form of proxy relating to that meeting. Proposals should be
sent to the Secretary, CILCORP Inc., 300 Hamilton Boulevard, Suite 300, Peoria,
Illinois 61602.
By Order of the Board of Directors,
John G. Sahn
Vice President, General Counsel and
Secretary
March 13, 1995
22
<PAGE>
[LOGO OF CILCORP INC.]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints D.E. Connor, R.O. Viets, and J.G. Sahn, and
each of them, attorneys and proxies with power of substitution to each,
with authority to vote all shares which the undersigned would be entitled
to vote if personally present at the 1995 annual meeting of shareholders
of CILCORP Inc., or at any adjournment thereof, upon the items set forth
in the notice of meeting and proxy statement relating thereto and, in their
discretion, upon any other matter which may properly come before the meeting.
The shares represented hereby will be voted as directed on the reverse of
this card.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NOT OTHERWISE DIRECTED, THIS PROXY WILL BE
VOTED FOR ITEMS 1 AND 2 AND AGAINST ITEM 3
--- -------
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE>
PROXY. PLEASE DATE AND SIGN EXACTLY AS NAME APPEARS BELOW. EACH JOINT
OWNER SHOULD SIGN. ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE,
CORPORATE OFFICER OR OTHERS SIGNING IN A REPRESENTATIVE CAPACITY
SHOULD GIVE THEIR FULL TITLES.
1. ELECTION OF DIRECTORS
DATE: ---------------, 1995
[_] FOR all nominees [_] WITHHOLD AUTHORITY
- --------------------------- listed below to vote for all
SIGNATURE/S (except as marked nominees listed below
to the contrary
- --------------------------- below)
Nominees: W. Bunn III, H.J. Holland, and
K.E. Smith
Instructions: To withhold authority to vote for
any individual nominee, write that
nominee's name in the space
provided below.
________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
---
APPOINTMENT OF INDEPENDENT ACCOUNTANTS.
2. Appointment of FOR AGAINST ABSTAIN
Arthur Andersen [_] [_] [_]
LLP as independent
accountants
------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
-------
THE FOLLOWING.
FOR AGAINST ABSTAIN
3. Shareholder [_] [_] [_]
proposal (director
share ownership)
NO POSTAGE REQUIRED IF RETURNED IN THE ENCLOSED
ENVELOPE AND MAILED IN THE UNITED STATES.
