<PAGE>
SCHEDULE 14A INFORMATION
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
/ / 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
CILCORP INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL CORPORATION
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $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 (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.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
<TABLE>
<C> <S>
300 HAMILTON BLVD., SUITE 300, PEORIA, CENTRAL ILLINOIS LIGHT COMPANY
IL 61602 CILCORP INVESTMENT MANAGEMENT INC.
CILCORP VENTURES INC.
ENVIRONMENTAL SCIENCE & ENGINEERING, INC.
QST ENTERPRISES INC.
</TABLE>
March 11, 1996
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 23, 1996 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,
Robert O. Viets
President and Chief
Executive Officer
<PAGE>
CILCORP INC.
300 HAMILTON BOULEVARD, SUITE 300
PEORIA, ILLINOIS 61602
NOTICE OF ANNUAL MEETING
March 11, 1996
Dear Shareholders:
The Annual Meeting of Shareholders of CILCORP Inc. will be held on Tuesday,
April 23, 1996 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 transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on February 23, 1996 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 23, 1996 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.
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 shares held of
record as well as 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, 1995 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 23, 1996, 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 11, 1996.
VOTING SECURITIES AND PRINCIPAL HOLDERS
On February 23, 1996, the record date for the meeting, the outstanding
voting stock of the Company consisted of 13,355,731 shares of common stock, no
par value (the "common stock"). Each share of common stock entitles the holder
thereof to one 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
1
<PAGE>
who 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 February 23, 1996 the beneficial
ownership of the Company's common stock (including ownership of stock in the
Employees' Savings Plan as of December 31, 1995) 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, 1996 the common stock
equivalents held by directors participating in the Company's and CILCO's
Deferred Compensation Stock Plans.
<TABLE>
<CAPTION>
SHARES OF COMMON COMMON
STOCK AND NATURE STOCK
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) EQUIVALENTS(2)
- ------------------------------------------------------ --------------------------- ---------------
<S> <C> <C>
Marcus Alexis 1,100 2,540
John R. Brazil 400
Willard Bunn III 1,200 83
Jerry D. Caulder 100
David E. Connor 4,604
Homer J. Holland 500
H. Safford Peacock 1,000 5,038
Katherine E. Smith 940 3,266
Richard N. Ullman 1,000 3,566
Robert O. Viets 8,779 5,054
Murray M. Yeomans 1,250 4,762
R. Wayne Slone 10,203
William M. Shay 5,843
James F. Vergon 4,193
Joseph F. Silvey 100
Thomas S. Romanowski 3,963
All directors and officers as a group 49,383 24,309
</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. The directors and
officers individually and as a group own less than one percent of the
Company's common stock.
(2) Compensation deferred under the Deferred Compensation Stock 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 1996
Annual Meeting, the shareholders will elect three persons as directors with
terms continuing until the Annual Meeting of Shareholders in 1999 or until their
respective successors are elected and qualified. The remaining seven directors
will continue to serve as set forth below, with four directors having terms
expiring April 1997 and three directors having terms expiring April 1998. 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 except Dr. Caulder are now directors of the Company
and all have agreed to serve if elected. The vacancy on the Board resulted from
the retirement of Mr. David E. Connor. His many years of service to the Company
and its shareholders are deeply appreciated. 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 1999
<TABLE>
<S> <C>
JOHN R. BRAZIL
PRESIDENT OF BRADLEY UNIVERSITY, PEORIA, ILLINOIS
Director of CILCORP and CILCO since 1993 [PHOTO1]
Member of Audit and Finance 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, National
Association of Independent Colleges and Universities and
chairs the Walter Byers Post-Graduate Scholarship Committee
of the National Collegiate Athletic Association.
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
JERRY D. CAULDER
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF MYCOGEN
CORPORATION, SAN DIEGO, CALIFORNIA [PHOTO2]
Director of Environmental Science & Engineering, Inc. since
1993
Dr. Caulder was born in Gideon, Missouri in 1942. He
received a Bachelor of Science degree in botany and zoology
from Southeast Missouri State University in 1964 and a
Master's degree and a Doctorate in agronomy and plant
physiology from the University of Missouri in 1969. In
1984, Dr. Caulder joined Mycogen Corporation as president
and chief executive officer and was elected chairman of the
board in 1989. Prior to joining Mycogen, he managed various
aspects of both the international and domestic business of
Monsanto Company for over 15 years. He serves as a
consultant and speaker to various organizations, including
the Brookings Institute (Washington, D.C.), The Keystone
Group (Keystone, Colorado) and the World Economic Forum
(Geneva, Switzerland). Dr. Caulder is also a director of
Applied Genetics.
MURRAY M. YEOMANS
CHAIRMAN OF YEOMANS DISTRIBUTING
COMPANY, PEORIA, ILLINOIS [PHOTO3]
(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, chairman and chief executive officer in 1991 and to
his present position in 1995. 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.
</TABLE>
5
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING APRIL 1997
<TABLE>
<S> <C>
MARCUS ALEXIS
BOARD OF TRUSTEES PROFESSOR OF ECONOMICS AND
PROFESSOR OF MANAGEMENT AND STRATEGY [PHOTO4]
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.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
H. SAFFORD PEACOCK
INVESTMENT MANAGEMENT AND FARMING
Director of CILCORP since 1985 [PHOTO5]
Member of Audit, Executive and Director Affairs 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 and past chairman of the
board of trustees of Lincoln College and a trustee and past
chairman of the board of trustees of Monmouth College. He
also serves as a director of the National Defense
University Foundation in Washington, D.C. He was a director
of CILCO from 1978 to 1994.
RICHARD N. ULLMAN
PRESIDENT OF FEDERAL COMPANIES, PEORIA, ILLINOIS
(COMMERCIAL WAREHOUSING, LOCAL AND LONG DISTANCE MOVING) [PHOTO6]
Director of CILCORP and CILCO since 1988
Member of Finance and Director Affairs 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 Corpo-
ration. 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.
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
ROBERT O. VIETS
PRESIDENT AND CHIEF EXECUTIVE OFFICER OF CILCORP
Director of CILCORP since 1988 [PHOTO7]
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 with
the Company in 1988. He is also chairman and chief
executive officer of CILCO, Environmental Science &
Engineering, Inc. and QST Enterprises Inc. (effective
January 29, 1996), chairman of CILCORP Ventures Inc. and a
director of CILCORP Investment Management Inc. 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.
</TABLE>
8
<PAGE>
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERM EXPIRING APRIL 1998
<TABLE>
<S> <C>
WILLARD BUNN III
SENIOR VICE PRESIDENT AND MANAGING DIRECTOR IN
THE FINANCIAL SERVICES UNIT [PHOTO8]
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 graduated from Princeton University in 1966 with a
degree in history and received his master's degree in
business administration from The Darden School at the
University of Virginia in 1968. He was associated with
Chemical Bank from 1968 to 1978 serving in various
capacities, including vice president and group head of
domestic depository institutions. He joined Marine Bank of
Springfield in 1978 as an executive vice president and was
subsequently 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 retired
from these positions on December 31, 1994. Mr. Bunn serves
on the boards of various local and state business and civic
organizations.
</TABLE>
9
<PAGE>
HOMER J. HOLLAND
PRESIDENT OF HOLLAND PARTNERS, INC.
CHICAGO, ILLINOIS (DIVERSIFIED INVESTMENTS) [PHOTO9]
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 this company 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., La Cantera
Development Company, Lifeline Shelter Systems, Inc.,
Wisconsin Industrial Products Inc., First Financial
Training Services and the Institute of European Studies.
10
<PAGE>
<TABLE>
<S> <C>
KATHERINE E. SMITH
GROUP EXECUTIVE
DAIRY MANAGEMENT INC., CHICAGO, ILLINOIS [PHOTO10]
Director of CILCORP and CILCO since 1985
Member of Compensation and Director Affairs Committees
Ms. Smith was born at Chicago, Illinois in 1940. She
is a 1961 graduate of Oregon State University with a degree
in family and consumer science. She was named to her
current position in 1995. From 1982 to 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 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.
</TABLE>
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors, has, among others, Audit, Compensation and
Director Affairs Committees.
The Audit Committee is responsible for reviewing audits made by the
Company's independent accountants, including the scope of the auditors' reports
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 1995, 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
officers. Directors serving as members of the Committee are Messrs. Alexis,
Bunn, Yeomans and Ms. Smith. During 1995, the Committee held eight meetings.
The Director Affairs Committee, in addition to monitoring governance
policies of the Board, reviews and recommends to the Board of Directors nominees
to serve on the
11
<PAGE>
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 common 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. Connor,
Peacock, Ullman and Yeomans and Ms. Smith. During 1995, the Committee held five
meetings.
During 1995, the Board of Directors held a total of five 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 $16,000 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. No reduction is
made in attendance fees 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 annual and long-term compensation
earned for the years 1995, 1994 and 1993 for the Chief Executive Officer and the
four most highly compensated executive officers of the Company and its
subsidiaries who perform policy-making functions for the Company.
12
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
COMPENSATION
--------------------- --------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY LTIP PAYOUTS(1) COMPENSATION(2)
- ----------------------------------------- --------- ---------- --------------- ----------------
<S> <C> <C> <C> <C>
Robert O. Viets 1995 $ 327,756 $ 17,819 $ 34,925
President and Chief Executive 1994 261,000 88,015 27,364
Officer of the Company 1993 257,850 41,962 25,305
William M. Shay(3) 1995 $ 185,838 54,641 24,812
President and Chief 1994 156,818 49,852 19,418
Operating Officer of QST Enterprises Inc. 1993 150,437 34,864 17,953
James F. Vergon(4) 1995 $ 181,661 61,437 15,610
President and Chief 1994 140,270 63,012 12,513
Operating Officer of CILCO 1993 134,564 57,114 11,635
Thomas S. Romanowski 1995 $ 133,584 56,662 14,442
Vice President of CILCO 1994 127,795 58,775 11,751
1993 121,705 55,162 10,894
Joseph F. Silvey(5) 1995 $ 162,018 -0- 3,375
President and Chief 1994 152,267 -0- 3,347
Operating Officer of Environmental 1993 119,464 -0- 2,780
Science & Engineering, Inc.
</TABLE>
(1) Amounts paid pursuant to the EVA-Based Incentive Compensation Plans of the
Company, CILCO and ESE.
(2) Amounts shown in this column for 1995 represent (a) employer contributions
under the CILCO and ESE Savings Plans: Mr. Viets $4,500, Mr. Vergon $4,500,
Mr. Shay $4,500, Mr. Romanowski $3,852 and Mr. Silvey $3,375 and (b)
earnings on deferred compensation: Mr. Viets $30,425, Mr. Shay $20,312, Mr.
Vergon $11,110, Mr. Romanowski $10,590 and Mr. Silvey $-0-.
(3) Effective January 29, 1996. QST Enterprises Inc. is a subsidiary of CILCORP.
Previously Mr. Shay was a group president of CILCO effective April 1, 1995,
and vice president of CILCO effective January 1, 1993.
(4) Effective January 29, 1996. Mr. Vergon was a group president of CILCO
effective April 1, 1995, vice president of CILCO effective March 1, 1993 and
served as vice president and chief financial officer of CILCORP from January
1, 1993 through February 28, 1993.
(5) Effective April 1, 1994. Mr. Silvey was senior vice president of ESE
effective February 15, 1993.
13
<PAGE>
EVA-BASED INCENTIVE COMPENSATION PLAN
Incentive compensation is awarded in accordance with the Company's EVA-
Based Incentive Compensation Plan (the "EVA Plan") and the Shareholder Return
Incentive Compensation Plan described below (the "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 EVA Plan was originally established
and were designed, using historical financial data, to create an award pool of
sufficient size to achieve the Plan objectives 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 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 of which 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.
Participants under this Plan are 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. Grants entitle participants to receive shares
of common stock at the end of a pre-established performance measurement
14
<PAGE>
period to the extent that the Company achieves pre-established financial
objectives during such period. All grants are made by a committee of the Board
(comprised of disinterested directors), which has discretion to establish the
performance measurement periods and Company financial objectives applicable to
each grant. Grants under this Plan made in 1995 are set forth in the table
below.
LONG TERM INCENTIVE PLANS--AWARDS IN 1995(1)
<TABLE>
<CAPTION>
PERFORMANCE
NUMBER OF OR OTHER ESTIMATED FUTURE PAYOUTS
SHARES, UNITS PERIOD UNTIL -------------------------------------------------------
OR OTHER MATURATION
RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
---------------------- -------------------- ---------------------- -------------------- ---------
NAME EVA(2) SRP(3) EVA(4) SRP EVA(5) SRP(6) EVA(7) SRP EVA(8)
- --------------------- --------- ----------- --------- --------- --------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
R. O. Viets $(117,466) 10,000 -- 1995-1999 $ 5,936 5,000 $ (33,216) 10,000 $ 17,809
W. M. Shay 68,648 3,333 -- 1995-1999 32,595 1,666 55,454 3,333 97,882
J. F. Vergon 61,430 3,333 -- 1995-1999 37,357 1,666 57,813 3,333 112,184
T. S. Romanowski(9) 56,210 -- -- -- 34,210 -- 52,928 -- 102,734
J. F. Silvey(10) -- 3,333 -- 1995-1999 -- 1,666 -- 3,333 --
<CAPTION>
NAME SRP
- --------------------- ---------
<S> <C>
R. O. Viets 30,000
W. M. Shay 10,000
J. F. Vergon 10,000
T. S. Romanowski(9) --
J. F. Silvey(10) 10,000
</TABLE>
(1) Amounts listed under columns headed "EVA" are dollar amounts under the
Company's EVA-Based Incentive Compensation Plan. Amounts listed under
columns headed "SRP" are the number of shares of common stock under the
Company's Shareholder Return Plan.
(2) Amounts listed are the net increases or decreases accrued during the 1995
plan year to previously accumulated balances.
(3) Amounts listed are the number of shares allocated in 1995.
(4) 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
1995.)
(5) Amounts listed are payable if net change in EVA in 1996 is zero.
(6) Represents minimum amount received if certain Company financial objectives
are met. No shares are received if such objectives are not met.
(7) Amounts listed are payable if net change in EVA in 1996 is the same as in
1995.
(8) Amounts listed are accumulated balances at the beginning of the 1996 plan
year.
(9) Mr. Romanowski did not participate in the Shareholder Return Plan in 1995.
(10) Mr. Silvey did not participate in an EVA-Based Incentive Compensation Plan
in 1995 and has no accumulated award balance.
15
<PAGE>
CERTAIN PLANS
CILCO BENEFIT REPLACEMENT PLAN. The CILCO Board of Directors has
established a Benefit Replacement Plan (the "Benefit Replacement Plan"). The
Benefit Replacement Plan provides for payments to participants from CILCO's
general funds to restore the retirement benefit under the CILCO non-contributory
Pension Plan for Management, Office and Technical Employees (the "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
Benefit Replacement Plan generally covers all Pension Plan participants affected
by these restrictions and provides for payment at the times and in the forms of
the Pension Plan.
CILCO PENSION PLAN. Pension benefits are provided to Company employees
through CILCO's 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
Pension Plan and under the 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 sum of annual and long-term compensation shown for the executive
officers listed in the above Summary Compensation Table is substantially
compensation as covered by the Pension Plan and the Benefit Replacement Plan. At
January 1, 1996, the
16
<PAGE>
credited years of service under the Pension Plan for such officers are as
follows: R. O. Viets--22 years, W. M. Shay--13 years, J. F. Vergon--24 years,
and T. S. Romanowski--24 years. Mr. Silvey does not participate in the Pension
Plan.
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. All of those named in the Summary
Compensation Table are eligible employees. 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 Plans. 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
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
equit-able, 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.
17
<PAGE>
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
below the competitive median.
The Company has not yet developed a policy with respect to qualifying
certain performance-based compensation paid to its named executive officers
under the EVA Plan and the Shareholder Return Plan for corporate deductibility
under Section 162(m) of the Internal Revenue Code. The total compensation paid
to each of these officers in 1995 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. All outside directors of the Company are
engaged annually in a review of the president and chief executive officer's
performance prior to approving his compensation. The Compensation Committee of
the Board reviews such evaluations and makes a recommendation to the full Board
regarding compensation for the ensuing year.
Upon the Committee's recommendation, Mr. Viets was awarded a salary of
$350,000 commencing April 1, 1995, representing an increase of approximately 34%
over his prior salary level. The Committee based its decision on the following
factors: (1) studies conducted by an external executive compensation consultant
which indicated that Mr. Viets' base salary compensation was approximately 73%
of the base salary compensation of the chief executive officers of a group of
comparable companies, (2) recognition that Mr. Viets, in addition to assuming
additional duties, had met substantially all the business and financial goals
that were established for the preceding year, and (3) the fact that Mr. Viets
had not received a base salary increase since April 1993.
In 1995, the Compensation Committee allocated 10,000 shares of common
stock on behalf of Mr. Viets under the Shareholder Return Plan for the
performance period
18
<PAGE>
ending December 31, 1999. The number of shares awarded and actual distribution
of the shares will be dependent upon meeting pre-established Company financial
objectives based on total shareholder return during the performance period. In
addition, Mr. Viets received an award of $17,819 in 1995 pursuant to the
Company's EVA-Based Incentive Compensation Plan.
Compensation Committee
Katherine E. Smith, CHAIRPERSON
Marcus Alexis
Willard Bunn III
Murray M. Yeomans
19
<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, 1995 with the cumulative total return on the S&P 500
Index and the S&P Utility Index over the same period. The S & P Utility Index
includes gas pipeline and telecommunications companies in addition to electric
and combination companies. The comparison assumes $100 was invested on December
31, 1990 in the Company's common stock and in each of the foregoing indices, and
assumes reinvestment of dividends.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Cilcorp 100 116.27 129.85 130.51 120.86 170.22
S&P 500 100 130.47 140.61 154.56 156.6 214.86
S&P Utilities 100 114.62 123.89 141.79 130.52 185.37
</TABLE>
20
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP, independent
public accountants, to audit the accounts of the Company for 1996. 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.
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 22, 1997 annual
meeting must be received not later than November 12, 1996 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 11, 1996
21
<PAGE>
CENTRAL ILLINOIS LIGHT COMPANY
CILCORP INVESTMENT MANAGEMENT INC.
CILCORP VENTURES INC.
ENVIRONMENTAL SCIENCE & ENGINEERING, INC.
QST ENTERPRISES INC.
<PAGE>
[Cilcorp logo]
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 1996 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.
IF NOT OTHERWISE DIRECTED, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF DIRECTORS
(C0NTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE>
<TABLE>
<S> <C> <C>
ACCOUNT NUMBER 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.
ELECTION OF DIRECTORS
DATE: ,1996
------------------------ / / FOR all nominees listed / / WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
- ---------------------------------- to the contrary below) listed below
SIGNATURE/S
Nominees: J.R. Brazil, J.D. Caulder, and M.M. Yeomans
- ----------------------------------
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
-----------------------------------------------------------------------------
NO POSTAGE REQUIRED IF RETURNED IN THE ENCLOSED
ENVELOPE AND MAILED IN THE UNITED STATES.
TEAR OFF THIS PORTION
REMOVE PROXY AT PERFORATION AND RETURN IN ENCLOSED BUSINESS REPLY ENVELOPE.
</TABLE>
