December 6, 1996
Office of Applications and Report Services
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
We are transmitting herewith Indiana Energy, Inc.'s
1996 Proxy Statement.
The $125.00 filing fee was transmitted via FEDWIRE on
December 5, 1996.
Sincerely,
/s/Ronald E. Christian
Ronald E. Christian
REC:rs
IEI
INDIANA ENERGY, INC.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 22, 1997
TO THE SHAREHOLDERS OF INDIANA ENERGY, INC.
The annual meeting of shareholders of Indiana Energy, Inc.
("Company") will be held at the principal office of the Company,
1630 North Meridian Street, Indianapolis, Indiana 46202 on
Wednesday, January 22, 1997, at 10:30 a.m. (Eastern Standard
Time), for the following purposes:
1. To elect four directors of the Company to serve for a
term of three years or until their successors are duly elected
and qualified; and
2. To transact such other business as may properly come
before the meeting, or any adjournment of the meeting.
As allowed by the code of by-laws, the board of directors
has fixed the close of business on November 18, 1996, as the
record date for determining the shareholders entitled to notice
of and to vote at the meeting and at any adjournment of the
meeting.
It is important that your stock be represented at this
meeting to assure a quorum. Whether or not you now expect to be
present at the meeting, please fill in, date and sign the
enclosed proxy and return it promptly to the Company in the
accompanying addressed envelope. No stamp is required if mailed
in the United States. You have the unconditional right to revoke
your proxy at any time before the authority granted by it is
exercised.
By order of the board of directors.
INDIANA ENERGY, INC.
By RONALD E. CHRISTIAN
Indianapolis, Indiana Secretary
December 6, 1996
CONTENTS
PURPOSES OF MEETING
VOTING SECURITIES
ELECTION OF DIRECTORS
COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
1. THE AUDIT COMMITTEE.
2. THE COMPENSATION COMMITTEE.
3. THE NOMINATING COMMITTEE.
4. THE PUBLIC AND ENVIRONMENTAL AFFAIRS COMMITTEE.
DIRECTORS' COMPENSATION
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION COMMITTEE REPORT
A. EXECUTIVE COMPENSATION POLICY.
B. COMPONENTS OF EXECUTIVE COMPENSATION.
C. CHIEF EXECUTIVE OFFICER COMPENSATION.
D. COMPENSATION CONSULTANT, TERMINATION BENEFIT AGREEMENTS AND
DEDUCTIBILITY OF EXECUTIVE COMPENSATION.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
COMPENSATION
SUMMARY COMPENSATION TABLE
CORPORATE PERFORMANCE
TOTAL RETURN TO SHAREHOLDERS
RETURN ON EQUITY
RETIREMENT SAVINGS PLAN
RETIREMENT PLANS
EMPLOYMENT AND TERMINATION BENEFIT AGREEMENTS
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY
COST AND METHOD OF SOLICITATION
ANNUAL REPORT
REVOCATION RIGHTS
SHAREHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
INDIANA ENERGY, INC.
1630 North Meridian Street
Indianapolis, Indiana 46202-1496
(317) 926-3351
PROXY STATEMENT
The following information is furnished in connection with
the solicitation of the enclosed proxy by and on behalf of the
board of directors of the Company. The proxy will be used at
the annual meeting of shareholders to be held at the principal
office of the Company, 1630 North Meridian Street,
Indianapolis, Indiana, on Wednesday, January 22, 1997, at 10:30
A.M. (Eastern Standard Time), and at any adjournment of the
meeting for the matters to be acted upon under its authority.
The proxy and this proxy statement were first mailed to the
shareholders on or about December 6, 1996.
PURPOSES OF MEETING
As of this date, the only known business to be presented
at the 1997 annual meeting of shareholders is the election of
four directors of the Company to serve for a term of three
years or until their successors are duly elected and qualified.
However, the enclosed proxy authorizes the proxy holders to
vote on all other matters that may properly come before the
meeting, and it is the intention of the proxy holders to take
any such action utilizing their best judgment.
VOTING SECURITIES
The Company has one class of capital stock outstanding,
consisting as of September 30, 1996, of 22,474,402 shares of
common stock without par value. The holders of the
outstanding shares of common stock are entitled to one vote
for each share held of record on each matter presented to a
vote of the shareholders at the meeting. Only shareholders of
record at the close of business on November 18, 1996, will be
entitled to vote at the meeting or at any adjournment of the
meeting.
In connection with the Company's acquisition of Richmond
Gas Corporation ("Richmond") and Terre Haute Gas Corporation
("Terre Haute"), shares of common stock of the Company were
issued to certain members of the Anton Hulman, Jr. family,
certain corporations controlled by them, certain trusts
established for their benefit and certain other persons with
personal or business relationships with the family
(collectively, the "Hulman Interests"). At September 30, 1996,
the Hulman Interests beneficially owned an aggregate of
2,749,968 shares of the Company which comprised 12.24 percent
of the outstanding common stock of the Company. At September
30, 1996, the following beneficial owners held more than 5
percent of the outstanding common stock of the Company, the
only class of voting securities outstanding:
<TABLE>
Name and Number of
Address of Shares Nature of Percent
Title of Beneficial Beneficially Beneficial of
Class Owner Owned Ownership Class
<S> <C> <C> <C> <C>
Common Hulman & 1,622,435 Voting & 7.22%
Company Investment
900 Wabash
Avenue
Terre Haute,
Indiana 47807
</TABLE>
As a result of the attribution to certain persons of shares
held by Hulman & Company, the following persons are deemed to
be beneficial owners of more than 5 percent of the outstanding
common stock of the Company:
<TABLE>
Number of
Shares
Title of Name of Beneficially Percent of
Class Beneficial Owner Owned Class
<S> <C> <C> <C>
Common Mary F. Hulman 1,966,920 8.75%
Common Mari H. George 2,055,631 9.15%
Common Anton H. George 1,849,202 8.23%
Common Katherine M. 1,629,084 7.25%
George
Common Laura L. George 1,849,202 8.23%
Common Nancy L. George 1,629,888 7.25%
Common M. Josephine 1,627,383 7.24%
George
</TABLE>
The number of shares held beneficially by Mary F. Hulman, Mari
H. George, Anton H. George, Katherine M. George, Nancy L.
George and M. Josephine George each includes 1,622,435 shares
held by Hulman & Company as to which each, as a director of
Hulman & Company, may be deemed to share voting power and
investment power. The number of shares held beneficially by
Mary F. Hulman, Mari H. George and Anton H. George each
includes 217,398 shares held by Rose-Hulman Institute of
Technology ("Rose-Hulman") as to which Mary F. Hulman and Anton
H. George, as members of the Investment Management Committee of
the Board of Managers of Rose-Hulman, and as to which Mari H.
George, as a member of the Board of Managers, may be deemed to
share voting power and investment power, and as to which each
disclaims beneficial ownership. Laura L. George is the wife of
Anton H. George, and the shares listed for her are those
beneficially owned by Mr. George. Laura L. George disclaims
beneficial ownership of all such shares. The information
furnished here regarding beneficial ownership is derived from
the Schedule 13D, as amended most recently on June 29, 1994,
filed by the Hulman Interests with the Securities and Exchange
Commission, and Forms 3, 4 and 5 filed through September 30,
1996. The filing of the Schedule 13D by the Hulman Interests
did not affirm the existence of a "group" within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934 or the
regulations promulgated under it.
ELECTION OF DIRECTORS
In connection with the Company's acquisition of Richmond
and Terre Haute, the Company entered into a standstill
agreement with the Hulman Interests. Under this agreement, the
Company agreed to cause one designee of the Hulman Interests to
be elected to the board of directors of the Company and, until
the termination of the standstill agreement (which is dependent
upon the occurrence of certain events specified in the
agreement), to include a designee of the Hulman Interests in
the slate of nominees recommended by the board at the annual
meeting of shareholders at which the term of the original
designee expires. At a regular meeting held on August 31,
1990, the board of directors of the Company elected Anton H.
George to the board and he currently serves as a member of the
board.
The board of directors of the Company consists of twelve
directors divided into three classes as follows: Niel C.
Ellerbrook, Loren K. Evans, Fred A. Poole and Jean L.
Wojtowicz, who are nominees for election with terms expiring in
2000; Gerald L. Bepko, Lawrence A. Ferger, Anton H. George, and
James C. Shook, whose terms expire in 1999; and Paul T. Baker,
Otto N. Frenzel III, Don E. Marsh and Richard P. Rechter, whose
terms expire in 1998. Indiana Energy, Inc. is a holding
company, and each of its directors also serves as a director of
Indiana Gas Company, Inc. ("Indiana Gas"), its principal
subsidiary.
At each annual meeting of shareholders, directors are
elected to succeed those whose terms then expire for a term of
three years or until their successors are duly elected and
qualified. Accordingly, four directors are to be elected by a
plurality of votes cast at the annual meeting of shareholders
to be held on January 22, 1997.
The board of directors intends that the enclosed proxy
will be voted by the proxy holders in favor of the election of
the nominees named below for the office of director of the
Company to hold office for a term of three years or until their
respective successors are duly elected and qualified. Each of
such nominees is now serving as a director of the Company and
has signified the willingness to serve if elected. Directors
are elected by a plurality of the votes cast. Plurality means
that the individuals who receive the largest number of votes
cast are elected up to the maximum number of directors to be
chosen at the meeting. Abstentions, broker non-votes, and
instructions on the accompanying proxy card to withhold
authority to vote for one or more of the nominees might result
in some nominees receiving fewer votes. However, the number of
votes otherwise received by the nominee will not be reduced by
such action. If, however, any situation should arise under
which any nominee should be unable to serve, the authority
granted in the enclosed proxy may be exercised by the proxy
holders for the purpose of voting for a substitute nominee.
Certain information concerning the nominees and the other
directors of the Company is set forth below and under the
caption "Meetings and Committees of the Board of Directors."
Unless otherwise indicated, each nominee and director has sole
investment and voting power with respect to the shares of
common stock of the Company shown as beneficially owned by that
person.
<TABLE>
Has Been a
Director of
Name and Principal Occupation During Indiana Gas or
Business the Past 5 Years and Other the
Location Age Information (1) Company Since
<S> <C> <C> <C>
Nominees For Election Whose Terms Will Expire in 2000
NIEL C. 47 Vice President and Treasurer 1991
ELLERBROOK and Chief Financial Officer
Indianapolis, of the Company since 1986;
Indiana Senior Vice President and
Chief Financial Officer of
Indiana Gas since 1987. He
is also a Director of Fifth
Third Bank of Central
Indiana.
LOREN K. EVANS 68 Retired. Before 1993, Vice 1988
Columbus, Chairman since 1991 and
Indiana Director of Arvin
Industries, Inc. (an Indiana
company serving global
markets in more than 100
countries); President and
Chief Operating Officer from
1987. He was also a Director
of Irwin Financial
Corporation, Columbus,
Indiana until April, 1994.
FRED A. POOLE 54 General Manager of the 1996
Indianapolis, Indianapolis Maintenance
Indiana Operations of United
Airlines since October 1994,
and prior to that held
numerous positions with
United Airlines over the
past 22 years. He is also a
director of National City
Bank, Indiana.
JEAN L. 39 President since 1983 and 1996
WOJTOWICZ founder of Cambridge Capital
Indianapolis, Management Corporation (a
Indiana consulting and venture
capital firm). She is also
a Director of Circle
Ventures, Inc. and Seaboard
North American Holdings,
Inc.
Directors Continuing in Office Whose Terms Will Expire in 1999
GERALD L. BEPKO 56 Vice President for Long- 1990
Indianapolis, Range Planning, Indiana
Indiana University and Chancellor of
Indiana University-Purdue
University at Indianapolis
since 1986. He is also a
Director of First Indiana,
Inc. and USA Group, Inc.
LAWRENCE A. 62 Chairman, President and 1984
FERGER Chief Executive Officer of
Indianapolis, the Company and Indiana Gas
Indiana since January 1996 and
President and Chief
Executive Officer since
1987. He is also a Director
of National City Bank,
Indiana.
ANTON H. GEORGE 37 President since December 1990
Indianapolis, 1989 and a Director of
Indiana Indianapolis Motor Speedway
Corporation (auto racing);
President since January,
1994, and prior to that time
Executive Vice President
since June 1989, and a
Director of Hulman & Company
(manufacturer and
distributor of baking
powder). He is also a
Director of First Financial
Corporation.
JAMES C. SHOOK 65 President, The Shook Agency, 1983
Lafayette, Inc. (residential,
Indiana commercial and industrial
real estate brokerage). He
is also a Director of NBD
Bank, N.A., Lafayette Life
Insurance Company (a mutual
company) and Crossman
Communities, Inc.
Directors Continuing In Office Whose Terms Will Expire In 1998
PAUL T. BAKER 56 Senior Vice President and 1991
Indianapolis, Chief Operating Officer of
Indiana Indiana Gas; prior to 1991,
Senior Vice President of Gas
Supply & Customer Services.
OTTO N. FRENZEL 66 Chairman, Executive 1967
III Committee, National City
Indianapolis, Bank, Indiana, since 1996.
Indiana Prior to that time, Chairman
of the Board of National
City Bank, Indiana. He is
also a Director of National
City Corporation, American
United Life Insurance
Company, Baldwin & Lyons,
Inc. (insurance brokerage
firm), Indianapolis Power
and Light Company and IPALCO
Enterprises, Inc., IWC
Resources Corporation and
Indianapolis Water Company.
DON E. MARSH 58 Chairman, President and 1986
Indianapolis, Chief Executive Officer and
Indiana Director of Marsh
Supermarkets, Inc. He is
also a Director of National
City Bank, Indiana and Nash-
Finch Company.
RICHARD P. 57 Chairman of the Board of 1984
RECHTER Rogers Group, Inc.,
Bloomington, President and Chief
Indiana Executive Officer and
Director of Rogers
Management, Inc., and
President and Chief
Executive Officer and
Director, Mid-South Stone,
Inc. He is also a Director
of Monroe County Bank and
Monroe Bancorp.
</TABLE>
Other executive officers of the Company are Anthony E. Ard, age
55, and Timothy M. Hewitt, age 46. In 1995, Mr. Ard was made
Senior Vice President of Corporate Affairs for Indiana Gas.
Prior to 1995 and since 1993, he was Vice President of
Corporate Affairs for Indiana Gas. Prior to 1993, and since
1988, Mr. Ard was Vice President and Secretary for Indiana Gas
and Secretary for the Company. In 1995, Mr. Hewitt was made
Vice President of Operations and Engineering for Indiana Gas.
Prior to 1995 and since 1989, Mr. Hewitt was Vice President of
Sales and Field Operations for Indiana Gas. Prior to 1989 and
since 1987, Mr. Hewitt was Vice President of Sales for Indiana
Gas. Mr. Carl L. Chapman was regarded as an executive officer
of the Company until August 31, 1996. He served from 1995
until March 15, 1996 as Indiana Gas' Senior Vice President of
Corporate Development. Prior to 1995, and since 1987, he was
Vice President of Planning for Indiana Gas. Presently, he is
the President of ProLiance Energy, LLC, a gas supply and energy
marketing company that is partially owned by IGC Energy, Inc.,
an indirect, wholly owned subsidiary of the Company. He
remains as the Assistant Treasurer for the Company, a position
he has held since 1986.
(1) Includes, but is not limited to, directorships in
corporations with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934 or which are
subject to the requirements of Section 15(d) of that Act or in
a company registered as an investment company under the
Investment Company Act of 1940.
COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the number of shares of
common stock of the Company beneficially owned by the
directors, the chief executive officer, the five named
executive officers during the past fiscal year, and all
directors and executive officers as a group, as of
September 30, 1996:
<TABLE>
Name of Individuals or Identity Shares Owned
of Group Beneficially (1)
<S> <C>
ANTHONY E. ARD
Indianapolis, Indiana 15,454 (2)
PAUL T. BAKER
Indianapolis, Indiana 22,009 (2)
GERALD L. BEPKO
Indianapolis, Indiana 2,557 (3)(7)
CARL L. CHAPMAN
Indianapolis, Indiana 11,659 (2)(4)
NIEL C. ELLERBROOK
Indianapolis, Indiana 20,766 (2)
LOREN K. EVANS
Columbus, Indiana 4,001 (3)(7)
LAWRENCE A. FERGER
Indianapolis, Indiana 56,475 (2)(5)
OTTO N. FRENZEL III
Indianapolis, Indiana 18,139 (7)(8)
ANTON H. GEORGE
Indianapolis, Indiana 1,849,202 (1)(7)
TIMOTHY M. HEWITT
Indianapolis, Indiana 8,419 (2)(3)(4)
DON E. MARSH
Indianapolis, Indiana 5,176 (7)
FRED A. POOLE
Indianapolis, Indiana 288 (7)
RICHARD P. RECHTER
Bloomington, Indiana 7,257 (3)(7)
JAMES C. SHOOK
Lafayette, Indiana 42,416 (6)(7)
JEAN L. WOJTOWICZ
Indianapolis, Indiana 288 (7)
All directors and executive
officers as a group (15 persons) 2,064,106 (1)
</TABLE>
(1) Except for Anton H. George, no director or executive
officer owned beneficially as of September 30, 1996, more than
.30 percent of common stock of the Company. Excluding Anton H.
George, all directors and executive officers owned beneficially
an aggregate of 214,904 shares or .96 percent of common stock
of the Company outstanding as of that date. The beneficial
ownership by Anton H. George of 1,849,202 shares or 8.23
percent of common stock of the Company is discussed above in
"Voting Securities."
(2) Includes shares awarded to Messrs. Ard, Baker, Chapman,
Ellerbrook, Ferger and Hewitt under the Company's executive
restricted stock plan which are subject to certain
transferability restrictions and forfeiture provisions.
(3) Some or all of the shares owned by Messrs. Bepko, Evans,
Hewitt and Rechter are owned jointly with their wives.
(4) Carl L. Chapman ceased being considered a named executive
officer after August 31, 1996. Effective September 1, 1996,
Timothy M. Hewitt was considered a named executive officer.
(5) Includes 3,981 shares held by Mr. Ferger's wife, and he
disclaims beneficial interest therein.
(6) Includes 1,500 shares held by Mr. Shook's wife, and he
disclaims beneficial interest therein.
(7) Includes shares granted under the Company's directors
restricted stock plan, some of which shares are subject to
certain transferability restrictions and forfeiture provisions.
(8) Includes 3,774 shares held in a trust, of which Mr.
Frenzel is a co-trustee, and he disclaims beneficial interest
therein.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 29, 1995, IGC Energy, Inc. ("Energy"), an
indirect, wholly owned subsidiary of the Company, entered into
a subscription agreement to purchase an interest in a limited
partnership known as the Cambridge Ventures, L.P. (Partnership)
("CVLP"). CVLP is licensed by the United States Small Business
Administration as a small business investment company. As
such, CVLP operates as a venture fund and invests in equities,
debt securities with equity participation and secured short and
long-term loans; CVLP also participates in other funds. Energy
has invested a total of $275,000 in CVLP, which represents, in
the opinion of the board of directors, a fair and reasonable
investment for Energy. Energy holds ten (10) partnership units
out of the one hundred and ninety five and one half units
(195.5) that have been sold to date in CVLP. On January 26,
1996, Jean L. Wojtowicz was elected to the board of directors
of the Company and Indiana Gas. Ms. Wojtowicz is the President
and a Director of Cambridge Capital Management Corp., which
owns fifty percent (50%) of Cambridge Ventures, Inc., the
general partner in CVLP.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company has the following standing committees of the
board of directors:
1. The Audit Committee.
The members of this committee are Loren K. Evans, chair,
Gerald L. Bepko, Anton H. George, Fred A. Poole and Jean L.
Wojtowicz. The committee makes recommendations to the board as
to the selection and retention of the independent accountants,
reviews the scope, conduct and results of audits performed, and
makes inquiry as to the differences of views, if any, between
such independent accountants and officers and employees of the
Company and subsidiaries with respect to the financial
statements and records and accounting policies, principles,
methods and systems. It further determines that services
performed by the independent accountants in addition to the
annual audit examination do not impair such accountants'
independence in performing the audit examination. Finally, the
committee reviews the policies and guidelines of the Company
and subsidiaries designed to ensure the proper use and
accounting for corporate assets, and the activities of the
Internal Audit department of Indiana Gas. There were two
meetings of the committee during the past fiscal year.
2. The Compensation Committee.
The members of this committee are Otto N. Frenzel III,
chair, Don E. Marsh and Richard P. Rechter. None of the
members is an officer or employee of the Company. The
committee has the responsibility of formulating recommendations
to the board as to the compensation to be paid the officers of
the Company and its subsidiaries. It also administers the
Company's annual management incentive plan, the executive
restricted stock plan, and the directors restricted stock plan.
There were two meetings of the committee during the past fiscal
year.
3. The Nominating Committee.
The members of this committee are Lawrence A. Ferger,
chair, Don E. Marsh and James C. Shook. The duties and powers
of the committee are to search for, evaluate and make
recommendations to the board of directors as to nominees to be
submitted annually to the shareholders for election to the
board as well as to fill vacancies occurring from time to time
on the board. In that connection, the committee is authorized
to act on behalf of the Company and the board in receiving,
giving consideration to and making recommendations to the board
respecting communications submitted to the Company from
shareholders relating to nominees for directors. Such
communications must be in writing and with respect to the next
annual election must be received by the Company, addressed to
the secretary, no later than August 7, 1997. There was one
meeting of the committee during the past fiscal year.
If a shareholder entitled to vote for the election of
directors at a shareholders' meeting desires to nominate a
person for election to the board of directors of the Company,
pursuant to the Company's Code of By-Laws, any such nominations
must be made pursuant to notice delivered to, or mailed and
received at, the principal office of the Company, not less than
50 days nor more than 90 days prior to the meeting. However,
in the event that less than 60 days notice of the meeting is
given, the shareholder's notice must be received not later than
the tenth day following the date of notice of the meeting.
Such shareholder's notice must set forth, in addition to the
name and address of the shareholder submitting the nomination,
as to each person whom the shareholder proposes to nominate for
election or re-election as a director, (i) the name, age,
business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the
class and number of shares of the Company which are
beneficially owned by such person, (iv) any other information
relating to such person that is required to be disclosed in
solicitation of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended
(including, without limitation, such person's written consent
to be named in the proxy statement as a nominee and to serving
as a director, if elected), and (v) the qualifications of the
nominee to serve as a director of the Company.
4. The Public and Environmental Affairs Committee.
The members of this committee are Richard P. Rechter,
chair, Gerald L. Bepko and James C. Shook. The duties and
powers of the committee are to review current policies,
programs, procedures and processes of the Company and its
subsidiaries affected by public policy and affecting the
environment. It also reviews reports from Company management
on public policy and environmental matters and monitors
compliance with, and trends and emerging policy developments
in, business and environmental regulation. In addition, the
committee reports to the Board on public policy and
environmental issues affecting the Company and its
subsidiaries. There were two meetings of the committee during
the past fiscal year.
The board of directors of the Company had five meetings
during the last fiscal year. Gerald L. Bepko and Fred A. Poole
attended fewer than 75 percent of the aggregate of board
meetings and meetings of committees of the board of which they
are members. No other incumbent director attended fewer than
75 percent of the aggregate of board meetings and meetings of
committees of the board of which they are members.
DIRECTORS' COMPENSATION
Non-employee directors of the Company and of Indiana Gas
receive combined fees totaling $21,000 per year for service on
the boards of both companies. The fees are paid under the
directors' restricted stock plan approved by the shareholders
at their January 13, 1992, meeting. Under the plan, $7,000 of
the combined directors' fees paid by the Company and Indiana
Gas to non-employee directors is paid in restricted shares of
the Company. The restricted shares are issued to each non-
employee director at the beginning of their three-year term,
and the number of restricted shares is determined by dividing
$21,000 ($7,000 for each year) by the per share market price of
the Company's stock during the period specified in the plan.
Directors may elect to receive the remaining $14,000 in
unrestricted shares or in cash. To receive the restricted
shares, a director must consent to the restrictions in writing.
To elect to receive unrestricted shares instead of cash, a
director must provide an irrevocable written election to the
secretary of the Company before the July 1 immediately
preceding the calendar year for which the election relates.
Restricted shares may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution until the first
to occur of: (1) the expiration of the director's term of
office for which the grant relates; (2) the grantee's death or
disability; (3) the termination of the grantee's status as a
director pursuant to the mandatory retirement policy for
directors; (4) the involuntary termination of the grantee's
status as a director; (5) approval by a majority of the other
directors of the grantee's voluntary termination of his/her
status as a director because of the relocation of his/her
principal place of residence outside of Indiana; or (6) a
change in control of the Company. In no event, however, are the
restricted shares transferable and free of restrictions before
the expiration of a six-month period beginning the first day of
the director's term of office or, if later, the date of
issuance of the shares.
All restricted shares bear a legend citing the
restrictions contained in the plan. When the restrictions
lapse, the grantee is entitled to have the legend removed from
any shares or certificates. Restrictions are lifted
automatically upon the expiration of the period to which the
restrictions apply. If a director voluntarily terminates
his/her status as such before the expiration of the period of
restriction, any shares still subject to restriction are
immediately forfeited.
The Company has reserved 71,172 shares for grant under the
plan. As of September 30, 1996, 50,149 shares remain in
reserve. Those shares may consist of authorized but unissued
shares or shares reacquired by the Company including shares
purchased in the open market. If any shares subject to the
grants are forfeited, the forfeited shares become available for
reissuance under the plan.
The board may amend, modify, alter or terminate the plan
at any time. The plan may not, however, be amended more
frequently than once every six months. Amendments,
modifications or alterations which would (1) increase the
number of shares reserved for issuance under the plan, (2)
materially modify the class of individuals to whom grants of
shares may be made, (3) change the manner in which shares are
granted, or (4) materially increase the benefits accruing to
grantees under the plan, must be approved by the Company's
shareholders.
Non-employee directors also receive a fee of $500 for each
meeting of the board of directors of the Company attended and
$500 for each meeting of the board of directors of Indiana Gas
attended. Each non-employee member of a committee of the board
is paid a fee of $1,000 for each meeting of the committee
attended, and each non-employee chair of a committee is paid an
additional fee of $1,000 for each meeting attended.
There are two unfunded plans under which non-employee
directors may defer all or any part of fees received in cash
until the occurrence of certain conditions specified in each of
the plans. Under the first plan, which has been in place since
fiscal year 1995, amounts deferred are considered for
accounting purposes to be invested in Company common stock.
These amounts are tracked as phantom units of Company common
stock and the value of amounts deferred change with the receipt
of dividends, as well as with fluctuations in the price of
Company stock. Under the second plan, which became effective
during fiscal year 1996, amounts deferred earn a return equal
to the mean between the high and low of the Corporate Bond
Yield averages, Average Public Utility (aa rated), for the past
twelve (12) months reported in Moody's Bond Survey in its
published issue in the November preceding the January 1, on
which the rate is to come into effect. The rate changes each
January 1.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION COMMITTEE REPORT
The Compensation committee is responsible for reviewing
and approving all elements of the total compensation program
for officers of the Company and its affiliates and serves as
the administrator of the Company's Annual Management Incentive
Compensation Plan ("Incentive Plan") and the Executive
Restricted Stock Plan ("Stock Plan"). The committee is also
responsible for monitoring the Company's executive compensation
programs to ensure that they are aligned with the Company's
business strategies and financial goals.
A. Executive Compensation Policy.
The Company's total compensation program for officers
includes base salaries, annual incentive payments, and
restricted stock grants. The committee's primary objective is
to achieve above-average performance by providing the
opportunity to earn above-average total compensation (base
salary, at-risk annual and long-term incentives) for above-
average performance. Each element of total compensation is
designed to work in concert. The total program is designed to
attract, motivate, reward and retain the broad-based management
talent required to serve customer, employee, and shareholder
interests. The Company believes that the program also motivates
the Company's officers to acquire and retain appropriate levels
of stock ownership and is competitive with programs offered by
the companies that comprise the peer group ("Peer Group")
included in the performance graph on page 19. It is the
opinion of the committee that the total compensation earned by
Company officers in fiscal year 1996 achieves these objectives
and is fair and reasonable. Each aspect of the total
compensation program is discussed in greater detail below.
B. Components of Executive Compensation.
Annual Compensation. The annual compensation program
consists of two components, base salary and an at-risk
incentive payment. Individual salaries are set within ranges
based on comparisons to actual pay for comparable positions
within the Peer Group, and industry in general. In determining
actual salaries within these ranges, the committee takes into
consideration individual performance, experience, potential,
and changes in executive responsibilities. Establishing
industry based salary ranges provides an objective standard by
which to judge the reasonableness of the Company's salaries,
maintains the Company's ability to compete for and retain
qualified executives, and ensures that internal
responsibilities are properly rewarded.
All of the Company's officers, but particularly the five
highest paid officers, have a significant portion of their
total compensation at risk. Participation in the Incentive
Plan, which includes the chief executive officer, is extended
to those positions that play key roles in achieving annual
financial and operating objectives. Annual incentive
opportunities are also based on periodic reviews of prevailing
Peer Group practices for comparable positions. The potential
incentive award is determined annually by non-employee
directors and is based upon a percentage of each participant's
base salary. Incentive opportunities for executive officers,
excluding the chief executive officer, ranged from 40 to 50
percent of salary.
Prior to the start of the fiscal year the committee
recommends to the board, and the board (excluding Company and
Indiana Gas employees) determines, minimum, target, and maximum
corporate performance levels. The performance that is measured
is the Company's financial performance, as determined by the
Company's consolidated return on equity, relative to the
average return on equity of companies in the Peer Group.
Target performance levels are set in excess of Peer Group
performance in order to ensure the linkage between financial
performance and executive rewards. Depending upon the
Company's financial performance, the size of this component can
range from zero to the maximum level established for each
participant in the Incentive Plan. In determining the cash
payment that was received by executive officers for the past
fiscal year, the Company's consolidated return on equity
exceeded the target performance level and was at the maximum
performance level as determined by the board. Incentive
payouts correspondingly were at the maximum amounts.
The second and smaller performance component is based upon
each executive's achievement of individual goals, which are
consistent with the Company's overall objectives and which are
established prior to the beginning of the fiscal year.
Individual performance is monitored and evaluated subjectively
throughout the fiscal year. Overall performance is measured
after the end of the fiscal year by the chief executive
officer. Among the executive officers, no person has more than
one-fourth of their total potential incentive under the
Incentive Plan dependent upon the attainment of individual
objectives.
Long-Term Incentive. The purpose of the Stock Plan is to
retain and motivate the Company's principal officers and to
increase their incentive to work toward the attainment of the
Company's long-term growth and profit objectives by providing
them with a means of acquiring or increasing a proprietary
interest. Under the Stock Plan, the committee recommends to
the board, and the board (excluding Company and Indiana Gas
employees) determines, the executive officers, as well as other
principal officers, to whom grants will be made and the
percentage of each officer's base salary to be used for
determining the number of shares to be granted. Among the
executive officers, excluding the chief executive officer, the
percentages of each officer's base salary range from fifteen
percent to thirty percent. Like the potential cash payment
that may be received under the Incentive Plan, this component
of total compensation is also performance driven and totally at-
risk.
The Stock Plan provides for a grant to eligible officers
at the outset of each measuring period and also provides for
grants of shares to be made to newly eligible principal
officers during a measuring period. The measuring periods are
consecutively running three-year periods. Shares were
allocated under the stock plan effective October 1, 1987, for
the "First Measuring Period," October 1, 1990, for the "Second
Measuring Period," and October 1, 1993, for the "Third
Measuring Period."
To be eligible for a grant, a principal must consent in
writing to observe the restrictions imposed on the shares. The
shares may not be sold, transferred, pledged, or assigned until
such restrictions are lifted. The restrictions are lifted in
33 1/3 percent increments on the fourth, fifth, and sixth
anniversaries of the calendar day immediately preceding the
first calendar day of the measuring period.
The granting of additional shares, if any, and the
application of forfeiture provisions, depends upon two primary
criteria: (i) certain measurements of the total return to the
Company's shareholders in comparison to the total return of
shareholders of the companies in the Peer Group; and (ii) the
continued employment of the officer during the period of
restriction.
For each three-year measuring period under the Stock Plan,
depending upon the total return provided to the Company's
shareholders relative to the total return provided by each of
the companies in the Peer Group, there are three possible
outcomes. If the Company's total return places it in the
bottom quartile, all of the shares are forfeited. If the
Company's total return places it in the second or third
quartiles, the original grant is vested, subject to continuing
employment by the officers during the remaining period of
restriction. If the Company's total return places it in the
top quartile, the original grant is doubled and vested, subject
to continuing employment by the officers during the remaining
period of restriction.
For the First Measuring Period ended September 30, 1990,
the Second Measuring Period ended September 30, 1993, and the
Third Measuring Period ended September 30, 1996, the number of
shares originally granted were doubled under the Stock Plan
because the Company's total return to shareholders placed it in
the top quartile compared to the total return performance of
the Peer Group companies. Among all of the companies in the
Peer Group, the Company was the sole Peer Group member to
perform in the top quartile for all three measuring periods.
It is the opinion of the committee that the Stock Plan
meets its objective of providing executive officers, as well as
other principal officers, with the appropriate long-term
interest in maximizing shareholder value. A participant's
increased level of equity in the Company is contingent upon the
additional enhancement of shareholder value relative to the
performance of companies in the Peer Group. In addition, the
vesting restrictions provide an incentive for all plan
participants to remain with the Company.
C. Chief Executive Officer Compensation.
The compensation of Lawrence A. Ferger, Chairman,
President and Chief Executive Officer, consists of the same
components as for other executive officers, namely base salary,
an at-risk payment under the Incentive Plan, and an at-risk
grant of restricted stock under the Stock Plan.
In establishing Mr. Ferger's total compensation for fiscal
year 1996, the committee considered the total compensation of
other chief executive officers in the Peer Group, the financial
and business performance of the Company, and a subjective
evaluation of the leadership role provided by Mr. Ferger.
Mr. Ferger's payment received under the Incentive Plan
during fiscal year 1996 was based entirely upon the financial
performance of the Company as measured by its consolidated
return on equity relative to the average return on equity of
companies in the Peer Group. This method of measurement
ensures the linkage of this aspect of Mr. Ferger's compensation
to Company performance. Under the Incentive Plan, the maximum
award Mr. Ferger was eligible to receive was an amount equal to
sixty percent of his base salary. As discussed above with
respect to other executive officers, during the past fiscal
year the Company's consolidated return on equity exceeded the
target performance level and was at the maximum performance
level as determined by the board. The incentive payout
correspondingly was at the maximum level.
Mr. Ferger's receipt of restricted shares under the Stock
Plan is likewise directly linked to the Company's performance.
Whether stock is received and, if so, in what amount, will
depend upon the measurement of the total return provided to the
Company's shareholders in comparison to the total return
provided to the shareholders of companies in the Peer Group.
As discussed above with respect to the other executive
officers, fiscal year 1996 was the third year of the third
three year measuring period under the Stock Plan. Based upon
the Company's total return performance as measured at the
conclusion of the Third Measuring Period ended September 30,
1996, that stock was doubled in amount and vested, subject to
Mr. Ferger's continued employment during the remaining period
of restriction.
For the same reasons expressed above with respect to the
conclusion regarding the appropriateness of the total
compensation provided other executive officers, it is the
opinion of the committee that Mr. Ferger's total compensation
is reasonable and appropriate.
D. Compensation Consultant, Termination Benefit
Agreements And Deductibility Of Executive Compensation.
To assist the committee, the services of an independent
compensation consultant are utilized. The consultant assists
by evaluating the total compensation system relative to the
compensation systems employed by companies in the Peer Group.
The consultant also provides an additional measure of assurance
that the system is a reasonable and appropriate means to
achieve the Company's objectives.
As described on page 22 under the heading "EMPLOYMENT AND
TERMINATION BENEFIT AGREEMENTS," the Company and Indiana Gas
have entered into such agreements with each of the executive
officers. Neither form of agreement affects in any manner the
recommendations of the Committee and the determinations by the
board (excluding Company and Indiana Gas employees) with
respect to the total compensation provided the executive
officers.
In 1993, Congress enacted Section 162(m) of the Internal
Revenue Code that disallows corporate deductibility for
"compensation" paid in excess of $1 million to the individual
executives named in the Summary Compensation Table, unless the
compensation is payable solely on account of achievement of an
objective performance goal. The committee does not anticipate
that the compensation paid to executive officers in the form of
base salaries and incentive compensation will exceed $1 million
in the near future. However, as part of its ongoing
responsibilities with respect to executive compensation, the
committee will monitor this issue to determine what actions, if
any, should be taken as a result of the limitation on
deductibility.
Otto N. Frenzel III, Chair
Don E. Marsh
Richard P. Rechter
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Lawrence A. Ferger is a director of National City Bank,
Indiana. Otto N. Frenzel III, chair of the Company's
compensation committee, is chairman of the Executive Committee
of National City Bank, Indiana. During the past fiscal year,
Indiana Gas had a bank line of credit agreement with National
City Bank, Indiana for borrowing by Indiana Gas not to exceed
$25,000,000 at any one time. At September 30, 1996, there was
$5,000,000 outstanding under such line. The interest on
borrowing under such line of credit has been at a rate not to
exceed the prime lending rate at such bank which in the opinion
of the board of directors is fair. Similar bank lines of
credit agreements have been in effect between Indiana Gas and
the bank in the normal course of business for many years.
Moreover, as of September 30, 1996, Energy Realty, Inc., an
indirect subsidiary of the Company, had two loans outstanding
in an aggregate amount of approximately $5.6 million from
National City Bank, Indiana at variable rates of interest tied
to commercially-recognized benchmarks, which in the opinion of
the board of directors are fair. Finally, on July 31, 1995,
Energy Realty, Inc. and National City Bank, Indiana each
invested $806,250 in the Lebanon Housing Partnership, L.P. As
a result of these investments, each company owns 37.125% of the
partnership.
None of the Company's executive officers is a member of
the Compensation Committee.
COMPENSATION
The following tabulation shows for the fiscal years ended
September 30, 1994, 1995 and 1996, the compensation paid by the
Company and its subsidiaries to each of the six most highly
compensated executive officers of the Company (considering for
this purpose Mr. Ard, Mr. Baker and Mr. Hewitt, executive
officers of Indiana Gas, to be executive officers of the
Company) in all capacities in which they served. During most of
fiscal year 1996 (through August 31, 1996), Mr. Chapman was one
of the five most highly compensated executive officers of the
Company. Effective March 15, 1996, Mr. Chapman resigned as
Senior Vice President of Corporate Development of Indiana Gas
to become President of ProLiance Energy LLC, a company
partially owned by IGC Energy, Inc., an indirect, wholly-owned
subsidiary of the Company. Mr. Chapman became a full-time
employee of ProLiance effective September 1, 1996. Mr. Chapman
remains the Assistant Treasurer of the Company. As a result of
Mr. Chapman's change in status, effective September 1, 1996,
Mr. Hewitt is now considered as one of the five most highly
compensated executive officers of the Company.
<TABLE>
Summary Compensation Table
(a) (b) (c) (d) (e) (h) (i)
<S> <C> <C> <C> <C> <C> <C>
Long-Term
Compensa- All Other
Annual Compensation tion Payouts Compensation
Other Annual
Name and Compensation LTIP Payouts
Principal Year Salary Bonus (1) (2) (3) (4)
Position in
Group
Lawrence A. 1994 $ 321,769 $ 147,129 $ 43,780 $ 182,313 $17,028
Ferger, 1995 347,615 139,439 35,665 198,336 15,790
Chairman, 1996 370,922 173,808 26,817 223,592 15,980
President and
Chief
Executive
Officer
Paul T. Baker, 1994 222,308 74,552 12,647 48,257 13,939
Sr. V.P. and 1995 236,077 75,093 10,541 52,506 13,050
Chief 1996 249,308 89,709 8,240 59,183 13,137
Operating
Officer,
Indiana Gas
Niel C. 1994 165,769 58,605 17,635 75,207 11,708
Ellerbrook, 1995 175,885 56,179 14,271 81,829 11,700
V.P. and 1996 186,846 67,617 10,604 92,235 11,985
Treasurer and
Chief
Financial
Officer
Anthony E. 1994 125,977 33,962 9,906 44,301 9,419
Ard, 1995 133,962 32,755 7,905 48,202 10,926
Sr. V.P. of 1996 142,019 38,104 5,727 54,332 12,067
Corp. Affairs,
Indiana Gas
Timothy M. 1994 120,785 30,351 7,683 35,477 12,067
Hewitt, V.P. 1995 124,577 31,875 6,071 38,601 13,251
of Operations 1996 131,385 36,680 4,317 43,509 10,721
and
Engineering,
Indiana Gas
Carl. L. 1994 117,489 31,197 9,837 35,994 9,470
Chapman, 1995 125,096 29,765 8,281 39,163 9,614
Assistant 1996 125,596 36,139 6,580 44,143 9,857
Treasurer, and
formerly Sr.
V.P. of Corp.
Development,
Indiana Gas
</TABLE>
(1) The amounts shown in this column are payments under the
annual Incentive Plan, which was discussed above in Parts B and
C of the Compensation Committee Report relating to "Annual
Compensation". Amounts paid in any fiscal year are
attributable to the Company's performance in the prior fiscal
year. Payments earned in fiscal year 1996 have not been
determined and approved for distribution by the Company's
Compensation committee. The Company's performance over the
last five years is depicted on page 20.
(2) The amounts shown in this column are dividends paid on
restricted shares issued under the Stock Plan, which was
discussed above in Parts B and C of the Compensation Committee
Report relating to "Long-Term Incentive Compensation".
(3) The amounts shown in this column represent the value of
shares issued under the Stock Plan and for which restrictions
were lifted in each of those fiscal years. For instance, the
amounts shown for fiscal year 1996 represent the value of one-
third of the Second Measuring Period shares issued under the
Stock Plan and for which restrictions were lifted as of
September 30, 1996. After the lifting of those restrictions,
the executive officers, as a group, held 34,901 restricted
shares, with an aggregate market value of those shares as of
that date of $850,712. Those shares continue to be subject to
restrictions imposed by the Stock Plan, and they represent all
of the initial grant of the Third Measuring Period shares. The
number and value of restricted shares held by each executive
officer on September 30, 1996 was as follows: Lawrence A.
Ferger-14,986 shares, $365,284; Paul T. Baker-4,995 shares,
$121,753; Niel C. Ellerbrook-5,769 shares, $140,619; Anthony E.
Ard-2,930 shares, $71,419; Timothy M. Hewitt-2,104 shares,
$51,285; and Carl L. Chapman-4,117 shares, $100,352.
(4) The amounts shown in this column are Company contributions
to the Retirement Savings Plan and the dollar value of
insurance premiums paid by, or on behalf of, Indiana Gas with
respect to term life insurance for the benefit of executive
officers.
During fiscal year 1996, there were no awards under the
Stock Plan, which is considered to be a long-term incentive
plan. Accordingly, in this Proxy Statement there is no table
reflecting the Long-Term Annual Incentive Plan Award in Last
Fiscal Year.
CORPORATE PERFORMANCE
The following Total Return to Shareholders graph compares
the performance of the Company with that of the S&P 500
Composite, the S&P Utilities Index and a group of peer gas
distribution companies, with the return weighted based on
market capitalization. The Return on Equity graph compares the
performance of the Company with the same Peer Group. For
fiscal year 1996, companies in the Peer Group are as follows:
AGL Resources; Atmos Energy Corp.; Bay State Gas Co.; Brooklyn
Union Gas; Cascade Natural Gas Corp.; Connecticut Natural Gas
Corp.; Energen Corp.; Laclede Gas Co.; MCN Corp.; National Fuel
Gas Co.; New Jersey Resources Corp.; NICOR, Inc.; Northwest
Natural Gas Co.; NUI Corp.; Pacific Enterprises; Pennsylvania
Enterprises, Inc.; Peoples Energy Corp.; Piedmont Natural Gas
Co., Inc.; Public Service Co. of North Carolina, Inc.; South
Jersey Industries, Inc.; Southeastern Michigan Gas Enterprises,
Inc.; Southern Union Co.; Southwest Gas Corp.; Southwestern
Energy Co.; UGI Corp.; United Cities Gas Co.; Washington Energy
Co.; Washington Gas Light Co.; and WICOR, Inc. The companies
to be included in the Peer Group were determined by one of the
Company's investment bankers and approved by the Compensation
committee of the Company.
From year to year, the Company's investment bankers review
the composition of the Peer Group to ensure comparability among
the member companies. If in their judgment a company is
determined not to be comparable, it will be removed from the
Peer Group, and, if possible, replaced with a comparable
company. Companies can also be removed if they are acquired or
merged out of existence. For instance, in 1996, based upon an
assessment of the comparability of the existing peer group, the
Company's investment bankers changed the Peer Group used for
fiscal year 1995 (the "1995 Peer Group") by adding United
Cities Gas Co. In addition, the investment bankers replaced
CMS Energy Corp.'s common stock with CMS Energy Corp.'s "G"
stock issued in July of 1995 related to its gas division.
Since no beginning stock price was available for that stock, it
has not been included in the Peer Group. The 1995 Peer Group,
as revised for these changes, was used during fiscal year 1996
(the "1996 Peer Group"). The following graphs reflect
comparisons of total return for the 1996 Peer Group, the 1995
Peer Group, the S&P 500 and the S&P Utilities.
Total Return to Shareholders (1) (2)
<TABLE>
1991 1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C> <C>
IEI 0.00% 15.92% 44.66% 29.09% 48.46% 75.07%
1996 PEERS 0.00% 9.02% 45.23% 30.45% 47.49% 85.57%
1995 PEERS 0.00% 6.66% 45.42% 29.70% 48.35% 85.14%
S&P 500 0.00% 11.05% 25.49% 30.11% 68.82% 103.14%
S&P UTILITIES 0.00% 14.37% 42.31% 23.67% 57.78% 68.55%
</TABLE>
(1) The total return on investment (change in the year end
stock price plus reinvested dividends) for each of the periods
for the Company, the respective peer groups, the S&P 500
Composite and the S&P Utilities Index is based on the stock
price or composite index at the end of fiscal 1991.
(2) As discussed in the Compensation Committee Report above,
the Stock Plan also measures the Company's total return to
shareholders. However, the Stock Plan methodology requires a
determination of the total return to shareholders of the
Company and the Peer Group companies by comparing a 12 month
average trading price at the end of the measuring period with a
twelve month average price preceding the measuring period.
Unlike the Stock Plan methodology, the methodology used in
preparing the above performance graph requires a measurement of
the total return to shareholders of the Company and of the Peer
Group companies at specific points in time--activity as of
September 30, 1991 compared with activity as of September 30,
1992, 1993, 1994, 1995 and 1996. Moreover, the Stock Plan also
uses a three-year measurement period versus the five-year
measurement period used in the above performance graph.
Finally, the Stock Plan's measurement of Peer Group companies'
performance is not weighted by the companies' relative market
capitalization, while the above performance graph does use such
weighting. Because of the differences in these two
methodologies, the measurements produced by the Stock Plan and
the above performance graph will vary.
Return on Equity (1) (2) (3)
<TABLE>
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
IEI 11.32% 11.46% 14.68% 13.00% 11.94%
PEER GROUP 9.79% 9.45% 10.34% 11.40% 9.15%
</TABLE>
(1) Under the annual Incentive Plan, payments are awarded on
the basis of the Company's average return on equity compared to
that of the peer group in any fiscal year and are paid in the
first quarter of the succeeding fiscal year. Accordingly,
payments paid to executive officers in the first quarter of
fiscal year 1996 were based on the Company's comparative return
on equity during the fiscal year 1995, and so on, back to 1988,
the first year in which payments were made.
(2) For purposes of the annual Incentive Plan, average return
on equity for both the Company and the peer group has been
computed using the simple average of beginning and ending
common equity as of September 30.
(3) The peer group return on equity by fiscal year reflects
the peer group for each of those years as determined by the
Company's investment bankers and approved by the Compensation
committee. See the discussion above under "Corporate
Performance".
RETIREMENT SAVINGS PLAN
As of October 1, 1994, Indiana Gas merged its Retirement
Savings Plan for bargaining employees ("Bargaining Savings
Plan") into its Retirement Savings Plan for non-bargaining
employees ("Savings Plan"). The primary objective for this
action was to reduce the level of resources required to
administer two plans. In general, the Savings Plan permits
participants to elect to have not more than 15 percent of their
qualified compensation (subject to certain maximums imposed on
highly compensated employees by the Internal Revenue Code)
invested on a tax-deferred basis in shares of the Company's
common stock or various investment funds. Non-bargaining
participants in the Savings Plan have matching company
contributions made to the plan on their behalf equal to 100
percent of their contributions not in excess of 3 percent of
their individual redirected compensation, and 50 percent of
their contributions in excess of 3 percent but not in excess of
8 percent of their individual redirected compensation. Also, a
2.5-percent lump sum company contribution is made to the
Savings Plan for all eligible non-bargaining employees at the
end of each year.
The Summary Compensation Table shows the value of Indiana
Gas contributions made to the plan for executive officers in
the column marked "All Other Compensation."
RETIREMENT PLANS
Indiana Gas has two defined benefit pension plans covering
full-time employees of the Company and certain of its
subsidiaries who meet certain age and service requirements. One
such plan covers salaried employees, including executive
officers, and provides fixed benefits at normal retirement age
based upon compensation and length of service, the costs of
which are fully paid by the employer and are computed on an
actuarial basis. The pension plan also provides for benefits
upon death, disability and early retirement under conditions
specified therein. The remuneration covered by this plan
includes all compensation for regular work periods (excluding
overtime, bonuses and other forms of additional compensation).
Effective July 1, 1991, the retirement plans maintained by
Terre Haute and Richmond were merged into, and became part of,
the Indiana Gas defined benefit pension plans.
Indiana Gas has a supplemental pension plan covering the
principal officers of Indiana Gas and Carl L. Chapman,
president of ProLiance. The supplemental pension plan provides
fixed benefits at normal retirement age based upon compensation
and is computed on an actuarial basis. The supplemental
pension plan also provides for benefits upon death, disability
and early retirement under conditions specified therein,
including service requirements. This supplemental pension plan
also provides a reduced benefit to a participant who
voluntarily terminates his employment with Indiana Gas before
normal retirement age (65) but following a change in control of
the Company. The remuneration covered by the supplemental
pension plan includes all compensation for regular work periods
(including incentive payments and other forms of additional
compensation).
Upon retirement at or after age 65, any participant in the
supplemental pension plan will, in general, be entitled to an
annual pension for life which, when added to primary Social
Security benefits, benefits paid under the Indiana Gas defined
benefit pension plan described above and benefits under the
Retirement Savings Plan attributable to Indiana Gas
contributions, will equal approximately 65 percent of the
participant's average annual compensation during the 60
consecutive calendar months immediately preceding the
participant's retirement date. The amounts paid under the
supplemental pension plan are unfunded and are paid from the
general assets of Indiana Gas.
The following table illustrates the estimated normal
annual retirement benefits payable to a covered participant
retiring at age 65 under the supplemental pension plan and
under the Indiana Gas defined benefit plan based on the
specified remuneration and under the Retirement Savings Plan
attributable to Indiana Gas contributions. The compensation
included in the Summary Compensation Table under salary and
payments under the annual Incentive Plan qualifies as
remuneration for purposes of these plans. The amounts shown do
not reflect reductions, which would result from joint and
survivor elections.
Pension Table
15 or More Years of Service (1)
Remuneration Amount of Benefits
Level (2)
$125,000 $ 81,250
150,000 97,500
175,000 113,750
200,000 130,000
225,000 146,250
250,000 162,500
300,000 195,000
350,000 227,500
400,000 260,000
450,000 292,500
500,000 325,000
(1) The compensation covered by the plans includes the salary
and incentive payments shown on the Summary Compensation Table.
Years of service are not used in calculating the benefit amount
under the Supplemental Executive Retirement Plan. The amounts
shown above are offset by Social Security and benefits under
the Retirement Savings Plan attributable to Indiana Gas
contributions.
(2) Although the benefit attributable to the Savings Plan will
be paid in a single lump sum payment, it has been converted to
an annual benefit for purposes of this table. The estimated
aggregate annual pension plan benefit may be greater than the
amounts in the table to the extent that the Savings Plan
benefit, after conversion to an annual benefit and when added
to the annual benefit under the applicable Indiana Gas defined
benefit plan, exceeds the amount specified in the table. Since
the Savings Plan has only been in effect for a few years, it is
unlikely in the near future that the aggregated Savings Plan
benefit and defined benefit plan benefits will exceed the
amount specified in the table.
EMPLOYMENT AND TERMINATION BENEFIT AGREEMENTS
The Company and Indiana Gas, with approval of their boards
of directors, have entered into employment agreements with five
out of the six executive officers listed in the Summary
Compensation Table. Carl L. Chapman formerly had such an
agreement; however, it was terminated March 15, 1996 when Mr.
Chapman became the President of ProLiance. Each agreement
continues unless notice of termination is given by either
party, in which event the agreement will terminate three years
from the date of the notice. The period between notice and
termination is defined as an "employment period" under each
agreement. Each officer is entitled to compensation consisting
of the annual aggregate base salary or salaries, and such
additional compensation as the board determines throughout the
employment period. Each agreement is also subject to
termination in the event of disability, death, or voluntary
retirement by the individual or his termination for cause.
The Company and Indiana Gas, with approval of their boards
of directors, have entered into termination benefit agreements
with each of the executive officers listed in the Summary
Compensation Table. With the exception of Mr. Hewitt, the
agreements provide that if there is an acquisition of control
of the Company (as defined in the agreements), the Company and
Indiana Gas are obligated to pay the termination benefits under
the following conditions:
bullet Within three years the Company terminates the employment
of the executive for any reason (other than cause, death,
the executive's attainment of age 65, or the executive's
total and permanent disability); or
bullet Within three years the executive voluntarily terminates
his employment for good reason (i.e., certain material
changes in the terms of the executive's employment); or
bullet The executive voluntarily terminates his employment
without reason during the 30-day period immediately
following the first anniversary of the acquisition of
control.
The termination benefits payment is the executive's average
annual compensation for the most recent five calendar years
multiplied by 299.99%. The initial term of the agreements
expires on October 1, 1999 and shall be automatically extended
for one year periods unless the Company notifies the executive
prior to October 1 of each succeeding year that the Agreement
will terminate at the end of the five year period that begins
with October 1 following the date of such written notice. The
agreement with Mr. Hewitt is comparable to the agreements just
described, except that the provisions of Mr. Hewitt's
agreement, including the termination benefits payment, are
predicated upon the use of one year rather than three years.
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY
Arthur Andersen, L.L.P., Indianapolis, has been selected
by the board of directors as the independent public accountants
of the Company and its subsidiaries for fiscal year 1997. The
selection was made upon the recommendation of the Audit
committee of the board of directors. See "Meetings and
Committees of the Board of Directors." Arthur Andersen, L.L.P.
has served as auditors for the Company since 1986 and for
Indiana Gas since its organization in 1945. A representative
of that firm will be present at the annual meeting, will have
the opportunity to make a statement and will be available to
respond to questions.
COST AND METHOD OF SOLICITATION
The cost of preparing, assembling, printing and mailing
this proxy statement, the enclosed proxy and any other material
which may be furnished to shareholders in connection with the
solicitation of proxies for the meeting will be borne by the
Company. The Company has retained Corporate Investor
Communications, Inc. to assist in soliciting proxies from
shareholders, including brokers' accounts, at an estimated fee
of $5,000 plus reasonable out-of-pocket expenses. In addition,
some of the officers and regular employees of the Company, who
will receive no compensation therefor in addition to their
regular salaries, may solicit proxies by telephone, telegraph
or personal visits, and it is estimated that the cost of such
additional solicitation, if any, will not exceed $500, and will
be borne by the Company. The Company expects to reimburse
banks, brokerage houses and other custodians of stock for their
reasonable charges and expenses in forwarding proxy material to
beneficial owners.
ANNUAL REPORT
A copy of the Company's annual report, including
consolidated financial statements for the fiscal year ended
September 30, 1996, was mailed to shareholders on or about
December 6, 1996.
REVOCATION RIGHTS
A shareholder executing and delivering the enclosed proxy
may revoke it by written notice delivered to the secretary of
the Company, or in person at the annual meeting, at any time
before the authority granted by it is exercised.
SHAREHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
Under Rule 14a-8 under the Securities Exchange Act of
1934, shareholders of the Company may present proper proposals
for inclusion in the Company's proxy statement and for
consideration at the 1998 annual meeting of its shareholders by
submitting their proposals to the Company in a timely manner.
In order to be so included for the 1998 annual meeting,
shareholder proposals must be received at the Company's
principal office, 1630 North Meridian Street, Indianapolis,
Indiana 46202-1496, Attention: Corporate Secretary, no later
than August 7, 1997, and must otherwise comply with the
requirements of Rule 14a-8.
If a shareholder desires to bring business before the
meeting which is not the subject of a proposal timely submitted
for inclusion in the proxy statement, the shareholder must
follow procedures outlined in the Company's Code Of By-Laws. A
copy of these procedures is available upon request from the
Corporate Secretary at the address referenced above. One of
the procedural requirements in the Company's Code of By-Laws is
timely notice in writing of the business the shareholder
proposes to bring before the meeting. To be timely a
shareholder's notice must be delivered to, or mailed and
received at, the principal office of the Company not less than
50 days nor more than 90 days prior to the meeting, provided,
however, that if less than 60 days' notice of the meeting date
is given, notice by the shareholder must be so received by the
Company not later than the tenth day following the day on which
the notice is given.
By order of the board of directors.
Indianapolis, Indiana
December 6, 1996
INDIANA ENERGY, INC.
By RONALD E. CHRISTIAN
Secretary
Please fill in, date and sign the enclosed proxy and
return it in the accompanying addressed envelope. No further
postage is required if mailed in the United States. If you
attend the annual meeting and wish to vote your shares in
person, you may do so. Your cooperation in giving this matter
your prompt attention will be appreciated.
[SIDE 1]
INDIANA ENERGY, INC. PROXY/VOTING INSTRUCTION CARD
COMMON STOCK
This proxy is solicited on behalf of the Board of Directors for the
Annual Meeting on January 22, 1997. ANTHONY E. ARD, RONALD E. CHRISTIAN
and TIMOTHY M. HEWITT and each of them, are hereby appointed proxies of
the undersigned, with power of substitution, to vote all of the shares
of Common Stock of INDIANA ENERGY, INC., owned by the undersigned, at
the Annual Meeting of Shareholders to be held on January 22, 1997, and
at any adjournments thereof, on the matters and in the manner specified
on the reverse side of this proxy.
Receipt of Notice of Annual Meeting of Shareholders, dated December 6,
1996, and Proxy Statement attached thereto is hereby acknowledged.
This proxy will be voted as directed. If no direction is given, this
proxy will be voted FOR the proposal.
Election of Directors (three-year term):
Nominees: Niel C. Ellerbrook, Loren K. Evans, Fred A. Poole and Jean
L. Wojtowicz.
You are encouraged to specify your choices by marking the appropriate
box on the reverse side.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND MAIL PROMPTLY IN THE
ENCLOSED ENVELOPE.
[SIDE 2]
x
Please mark your votes as in this example.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder(s). If no direction
is made, this proxy will be voted FOR the proposal.
The Board of Directors recommends a vote FOR the Election of
Directors.
FOR WITHHELD authority for all Nominees
1. Election of To withhold authority to vote
Directors. ____ ______ for any specific nominee(s), mark
the "WITHHELD" box and write the
name of each nominee for whom
you are withholding authority to vote
on the line provided below.
_________________________________
2. In their discretion, the proxies are authorized to vote upon such
business as may properly come before the meeting.
Please sign exactly as your name(s)
appears hereon. All joint tenants
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, give full title as such. If
a corporation, sign the full corporate
name by an authorized officer.
If a partnership, sign in partnership
name by authorized person.
_______________________________________
_______________________________________
Signature(s) Date
