DPL INC, DEF 14A, 2000-03-06

DPL INC
DEF 14A, 2000-03-06
ELECTRIC & OTHER SERVICES COMBINED

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

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Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
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DPL INC.
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(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment of Filing Fee (Check the appropriate box):

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/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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applies:
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/ / Check box if any part of the fee is offset as provided by
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DPL INC.

COURTHOUSE PLAZA S.W.
DAYTON, OHIO 45402

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON APRIL 11, 2000
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TO SHAREHOLDERS OF
DPL INC.:

The Annual Meeting of Shareholders for DPL Inc. will be held at Preble
Shawnee High School, 5495 Somers Gratis Road, Camden, Ohio on Tuesday,
April 11, 2000, at 10:00 a.m. Centrally located between Dayton, Cincinnati and
Oxford, the selection of Camden as this year's Annual Meeting site keeps with
the unique DPL tradition of meeting with shareholders throughout the communities
we serve. Located in West Central Ohio's Preble County, the area has a strong
agricultural tradition and is located near Hueston Woods State Park and Bush Run
Wildlife area.

The business of the meeting will be:

1. To elect four directors of DPL Inc., each of whom shall serve for a term
of three years.

2. To approve the DPL Inc. Stock Option Plan.

3. To transact such other business as may properly come before the meeting
or any adjournments thereof.

Holders of common shares of record at the close of business on February 15,
2000 are entitled to vote at the meeting.

If you are a holder of common shares and will not be present personally,
please mark, sign, date and return the enclosed proxy in the enclosed
self-addressed envelope as promptly as possible so that the presence of a quorum
may be assured and unnecessary expense avoided. Giving the proxy will not affect
your right to vote in person if you attend the meeting.

Your vote is important to us and we thank you for your prompt response and
continued interest in DPL Inc.

Sincerely,

/s/ STEPHEN F. KOZIAR, JR.

STEPHEN F. KOZIAR, JR.

GROUP VICE PRESIDENT AND SECRETARY

Dayton, Ohio
March 6, 2000
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DPL INC.

COURTHOUSE PLAZA S.W., DAYTON, OHIO 45402

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PROXY STATEMENT
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This Proxy Statement is furnished to you and other shareholders of DPL Inc.
in connection with the solicitation of proxies by its Board of Directors to be
used at the Annual Meeting of Shareholders to be held at Preble Shawnee High
School, 5495 Somers Gratis Road, Camden, Ohio on April 11, 2000 at 10:00 a.m.
and any adjournments thereof. At the close of business on February 15, 2000, the
record date for the Annual Meeting, DPL Inc. had outstanding 157,801,404 common
shares. Only holders of common shares on such record date are entitled to vote
at the Annual Meeting, and each such shareholder is entitled to one vote per
share.

All common shares represented by properly executed proxies received by the
Board of Directors pursuant to this solicitation will be voted in accordance
with the shareholder's directions specified on the proxy. If no directions have
been specified by marking the appropriate squares on the accompanying proxy
card, the shares will be voted "FOR" the proposals as listed. A shareholder
signing and returning the accompanying proxy has the power to revoke it at any
time prior to its exercise.

All expenses in connection with this solicitation of proxies will be paid by
DPL Inc. Proxies will be solicited principally by mail but directors, officers,
and certain other individuals specified by DPL Inc. may personally solicit
proxies. In addition, DPL Inc. has retained Georgeson Shareholder
Communications Inc., a proxy solicitation firm, to assist in the solicitation of
proxies. DPL Inc. will reimburse custodians, nominees or other persons for their
out-of-pocket expenses in sending proxy material to beneficial owners and will
pay Georgeson Shareholder Communications Inc. a fee of approximately $12,000,
plus out-of-pocket expenses.

This Proxy Statement together with the accompanying proxy card were first
mailed to common shareholders on or about March 6, 2000.

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BUSINESS OF THE MEETING

INTRODUCTION

Diversified utility companies, including DPL Inc., have experienced and will
continue to experience a significant increase in the level of competition in the
utility and energy services markets. During the past decade, various state and
federal regulatory changes have occurred and a significant number of states have
begun to implement legislative initiatives to permit retail customers to choose
their energy provider.

Ohio enacted deregulation legislation in July 1999. As a result, customers
of DPL Inc.'s utility subsidiary, The Dayton Power and Light Company ("DP&L"),
will be able to purchase power from other sources commencing January 1, 2001. As
required by the new legislation, DPL Inc. and DP&L are reorganizing their
corporate and business structure to separate regulated and competitive
businesses. DP&L will maintain its focus on its core electric transmission and
distribution business and DPL Inc. will operate its generation business through
a separate business unit.

As a complement to its business strategy, DPL Inc. has employed various
financial initiatives intended to increase DPL Inc.'s financial and operating
flexibility and to further position DPL Inc. for the increasingly competitive
utility and energy market.

On February 1, 2000, DPL Inc. signed a definitive agreement with affiliates
of Kohlberg Kravis Roberts & Co. ("KKR"), an investment company, under which KKR
will make a strategic investment of $550 million in the Company. DPL Inc. plans
to use the proceeds of this investment, combined with up to $425 million of new
debt capital, to continue its planned generation strategy, retire short-term
debt and to repurchase up to 31.6 million common shares. See "Certain
Transactions."

Upon the closing of the KKR transaction which is anticipated to occur in
March 2000, the size of DPL Inc.'s Board will be increased from nine to eleven
directors. George R. Roberts and Scott M. Stuart, partners of KKR, will be
appointed by the Board to fill the newly-created vacancies. Mr. Roberts will
serve in the Class of 2000 to be elected this year and Mr. Stuart will serve in
the Class of 2001 to be elected next year. KKR will have the right to nominate
one person for election to the Board of Directors so long as it maintains a
specified investment in DPL Inc.'s securities. See "Election of Directors."

At its February 1, 2000 meeting, the Board of Directors also made extensive
changes to DPL Inc.'s executive and director compensation programs. DPL Inc. was
among the first utilities to adopt performance-based stock and annual incentive
compensation programs. With the changes to a more competitive marketplace the
Board has ended the Management Stock Incentive Plan, the Supplemental Deferred
Program for Key Employees and, for most participants, the Supplemental Executive
Retirement Plan. With the elimination of these plans and to further motivate its
executives, align their interests with those of DPL Inc.'s shareholders and
encourage them to continue over the

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longer term with DPL Inc., the Board adopted, subject to shareholder approval, a
new Stock Option Plan. Three-year block grants of options were made to the
executive group with five-year vesting. A three-year block grant was also made
to outside directors. Restricted share units earned under the prior stock
incentive program were fixed and payment deferred until 2005. See "Approval of
Stock Option Plan."

1. ELECTION OF DIRECTORS

The Regulations of DPL Inc. provide for the classification of Directors into
three classes, with each class being of approximately equal size and in no event
shall any class contain fewer than three directors nor more than four directors.
The term of each directorship is three years and the terms of the three classes
are staggered in a manner so that only one class is elected by the shareholders
annually. The Board is presently authorized to consist of nine directors and
will be increased to eleven directors upon the closing of the KKR transaction.
These nine directors are also directors of DP&L. Four directors are to be
elected this year to serve until the Annual Meeting of Shareholders in 2003 or
until their successors are duly elected and qualified.

Unless specifically instructed to the contrary, the Proxy Committee named in
the enclosed form of proxy will vote all duly executed proxies "FOR" the
election of the nominees named below. Should any nominee become unable to accept
nomination or election, the Proxy Committee will vote for the election of such
other person as a director as the present directors may recommend in the place
of such nominee. The following information regarding the nominees and the other
directors continuing in office is based on information furnished by them:

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NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2003

ERNIE GREEN, Age 61, Director since 1991. 43,414
[PHOTO] President and Chief Executive Officer, Ernie Green
Industries, Dayton, Ohio, automotive components
manufacturer.
Director: Pitney Bowes Inc., Eaton Corp.

DAVID R. HOLMES, Age 59, Director since 1994. 17,815
[PHOTO] Chairman and Chief Executive Officer, The Reynolds
and Reynolds Company, Dayton, Ohio, information
management systems.
Director: NCR Corporation, Dayton, Ohio.
Advisor: J. L. Kellogg Graduate School of
Management, Northwestern University.
Member: Dayton Business Committee, Area Progress
Council, Downtown Dayton Partnership.

BURNELL R. ROBERTS, Age 72, Director since 1987. 44,916
[PHOTO] Retired Chairman of the Board and Chief Executive
Officer, The Mead Corporation, Dayton, Ohio,
forest products producer.
Principal: Pembroke Associates.
Director: Rayonier, Inc., Vutek, Inc.
Trustee: Granum Value Fund.
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COMMON SHARES
BENEFICIALLY OWNED
AT FEBRUARY 15,
PRINCIPAL OCCUPATION AND OTHER INFORMATION 2000(1)
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NOMINEES FOR DIRECTOR FOR THREE-YEAR TERM EXPIRING IN 2003 (CONT)
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GEORGE R. ROBERTS, Age 56, Director since 2000. --(4)
[PHOTO] Founding Partner of KKR and a managing member of
KKR & Co. LLC, New York City, investment company.
Director: Accuride Corporation, Amphenol
Corporation, Borden, Inc., The Boyds Collection,
Ltd., Evenflo Company Inc., IDEX Corporation,
KinderCare Learning Center, Inc., KSL Recreation
Group, Inc., Owens-Illinois, Inc., PRIMEDIA, Inc.,
Regal Cinemas, Inc., RELTEC Corporation, Safeway
Inc., Spalding Holdings Corporation.
Trustee: Claremont McKenna College, Culver
Military Academy.
Board Member: San Francisco Symphony, San
Francisco Ballet, Fine Arts Museum.

CLASS OF 2001
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THOMAS J. DANIS, Age 50, Director since 1989. 48,161
[PHOTO] Chairman and Chief Executive Officer, The Danis
Companies, Dayton, Ohio, construction, real estate
and environmental services.
Trustee: Miami Valley Research Park Foundation.

ALLEN M. HILL, Age 54, Director since 1989. 484,464(2)
[PHOTO] President and Chief Executive Officer, DPL Inc.
and The Dayton Power and Light Company.
Director: Fifth Third Bank, Premier Health
Partners. Trustee: Dayton Business Committee, The
University of Dayton, Air Force Museum Foundation,
Alliance Community Schools.
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CLASS OF 2001 (CONT)
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W AUGUST HILLENBRAND, Age 59, Director since 1992. 28,179
[PHOTO] Chief Executive Officer, Hillenbrand Industries,
Batesville, Indiana, a diversified public holding
company with three wholly-owned and autonomously
operated subsidiaries manufacturing caskets,
hospital furniture, hospital supplies and
providing funeral planning services.
Director: Forecorp, Inc., Forethought Life
Insurance Company, Hon Industries.
Trustee: National Committee for Quality Health
Care, Batesville Girl Scouts.
Trustee Emeritus: Denison University.

SCOTT M. STUART, Age 40, Director since 2000. --(4)
[PHOTO] Partner of KKR and member of KKR & Co. LLC, New
York City, investment company.
Director: AEP Industries Inc., Borden, Inc., The
Boyds Collection, Ltd., KSL Recreation Corp.
Board Member: The Boys Club of New York, Greenwich
Country Day School, WNET/Channel 13.

CLASS OF 2002
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JAMES F. DICKE, II, Age 54, Director since 1990. 100,528
[PHOTO] President, Crown Equipment Corporation, New
Bremen, Ohio, international manufacturer and
distributor of electric lift trucks and material
handling products.
Director: Regional Boys and Girls Clubs of
America, Anderson-Cooke, Inc., Dayton Art
Institute.
Chairman: Trinity University Board of Trustees.
Secretary: Culver Educational Foundation.
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PETER H. FORSTER, Age 57, Director since 1979. 843,792(3)
[PHOTO] Chairman, DPL Inc. and The Dayton Power and Light
Company.
Chairman: Miami Valley Research Foundation.
Director: Amcast Industrial Corp.
Trustee: F.M. Tait Foundation.

JANE G. HALEY, Age 69, Director since 1978. 60,914
[PHOTO] President and Chief Executive Officer, Gosiger,
Inc., Dayton, Ohio, national importer and
distributor of machine tools.
Director: The Ultra-Met Company, Urbana, Ohio, ONA
America, Dayton, Ohio.
Trustee: University of Dayton, Chaminade-Julienne
High School, Dayton, Ohio.
Member: Area Progress Council, Miami Valley
Economic Development Coalition.
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(1) The number of shares shown represents in each instance less than 1% of the
outstanding Common Shares. There were 1,709,954 shares or 1.1% of the total
number of Common Shares beneficially owned by all directors and executive
officers of DPL Inc. and DP&L as a group at February 15, 2000, excluding
shares beneficially owned by an affiliate of KKR. See note (4) below. The
number of shares shown includes Common Shares transferred to the Master
Trust for non-employee directors pursuant to the Directors' Deferred Stock
Compensation Plan.

(2) The number of shares shown for Mr. Hill includes 34,464 Common Shares and
450,000 Restricted Share Units with no voting rights.

(3) The number of shares shown for Mr. Forster includes 43,792 Common Shares and
800,000 Restricted Share Units with no voting rights.

(4) Excludes 31,560,000 Common Shares subject to warrants and 6,800,000
Series B voting preferred shares to be beneficially owned by Dayton Ventures
LLC, an affiliate of KKR. George R. Roberts and Scott M. Stuart disclaim
beneficial ownership of all such shares. See "Security Ownership of Certain
Beneficial Owners."

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George R. Roberts and Scott M. Stuart are the designees of KKR pursuant to
the Securityholders and Registration Rights Agreement among DPL Inc., DPL
Capital Trust I, Dayton Ventures LLC and Dayton Ventures, Inc. This agreement
gives KKR the right to designate one person for election to, and one person to
attend as a non-voting observer at all meetings of, the DPL Inc. and DP&L Boards
of Directors for as long as KKR and its affiliates continue to beneficially own
at least 12,640,000 common shares of DPL Inc., including shares issuable upon
exercise of the warrants. The Board believes it is appropriate to have KKR Board
representation upon the closing of the transaction and therefore will appoint
Messrs. Roberts and Stuart to the DPL Inc. and DP&L Boards of Directors.
Mr. Roberts will stand for election this year.

The four candidates receiving the greatest number of votes will be elected
as directors. Abstentions and broker non-votes will be treated as non-votes.

Under Ohio law, if a shareholder gives written notice to the President, a
Vice President or the Secretary, not less than 48 hours before the Annual
Meeting, that such shareholder desires the voting at the election of directors
to be cumulative, and if an announcement of the giving of such notice is made
upon the convening of the meeting by or on behalf of the shareholder giving such
notice, then shareholders will be entitled to give one candidate as many votes
as the number of directors to be elected multiplied by the number of their
shares, or to distribute their votes on the same principle among two or more
candidates. In the event that directors are elected by cumulative voting and
cumulated votes represented by proxies solicited hereby are insufficient to
elect all the nominees, then the Proxy Committee will vote such proxies
cumulatively for the election of as many of such nominees as possible and in
such order as the Proxy Committee may determine.

INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES FOR 1999

The Board of Directors of DPL Inc. met on seven occasions and the Board of
Directors of DP&L met on six occasions during 1999. The three standing
committees of DPL Inc. -- Executive, Finance and Audit Review and Compensation
and Management Review -- held thirteen meetings in total and the standing
committee of DP&L -- Community and External Relations -- met two times in total.

COMMITTEES OF DPL INC.

FINANCE AND AUDIT REVIEW COMMITTEE

This Committee consists of the following non-employee members of the Board:
Thomas J. Danis, Chairman, Ernie Green, Jane G. Haley and David R. Holmes.

The Finance and Audit Review Committee oversees the financial plans,
approves the terms and conditions of financial arrangements and recommends to
the Board of Directors such actions and policies that will best accommodate
DPL Inc.'s objectives and operating strategies while maintaining

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its sound fiscal health. It also provides direct communication between
DPL Inc.'s internal auditors, the independent auditors, PricewaterhouseCoopers
LLP, and the Board of Directors. It is intended to assure the independent
auditors the freedom, cooperation and opportunity necessary to accomplish their
functions. It is also intended to assure that appropriate action is taken on the
recommendations of the auditors. This Committee met four times during 1999.

COMPENSATION AND MANAGEMENT REVIEW COMMITTEE

This Committee consists of the following non-employee members of the Board:
Burnell R. Roberts, Chairman, James F. Dicke, II and W August Hillenbrand.

The Compensation and Management Review Committee has the broad
responsibility to see that the officers and key management personnel of
DPL Inc. and its subsidiaries perform in accordance with corporate objectives,
and are effectively compensated in terms of salaries, supplemental compensation
and benefits which are internally equitable and externally competitive. The
Committee administers the deferred, incentive and long-term compensation plans
for directors and officers. This Committee met three times during 1999.

EXECUTIVE COMMITTEE

This Committee consists of the following non-employee members of the Board:
Peter H. Forster, Chairman, James F. Dicke, II, W August Hillenbrand and Burnell
R. Roberts. Allen M. Hill is a non-voting member.

The principal duties of this Committee include evaluating executive
management development, succession and organizational structure in addition to
director selection, tenure and succession. This Committee also serves on a
standby basis for use in an emergency which requires immediate action. This
Committee met six times during 1999.

The non-employee members of the Executive Committee act as a nominating
committee for the Board of Directors and endeavor to identify, seek out, and if
necessary actively recruit, the best available candidates who, in the judgment
of the Committee, have the character, education, training, experience and proven
accomplishments which give promise of significant contribution to the
responsible and profitable conduct of DPL Inc.'s business in the interest of all
shareholders, customers and employees. This Committee considers qualified
nominees submitted to DPL Inc. by shareholders.

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COMMITTEE OF DP&L

COMMUNITY AND EXTERNAL RELATIONS COMMITTEE

This Committee consists of the following non-employee members of the Board:
Jane G. Haley, Chairman, Thomas J. Danis, Peter H. Forster, Ernie Green and
David R. Holmes. Allen M. Hill is a non-voting member.

The Community and External Relations Committee provides for a periodic
review of DP&L's relations with all sectors of the community with which it is
vitally concerned -- shareholders, customers, governmental bodies and agencies,
political groups, regulatory agencies, elected officials and the media. This
Committee met two times during 1999.

OTHER MATTERS

DPL Inc. directors, all of whom are also directors of DP&L, receive no
annual fee for their services as directors of DP&L. Directors of DPL Inc. who
are not employees receive $12,000 annually for services as a director, $1,000
for attendance at a Board meeting, and $500 for attendance at a committee
meeting or operating session of DPL Inc. and DP&L. Members of the Executive
Committee receive $2,000 annually for services on that committee. Each committee
chairman receives an additional $1,600 annually. Directors who are not employees
of DP&L also have participated in a Directors' Deferred Stock Compensation Plan
(the "Stock Plan") under which a number of shares were awarded to directors each
year. All shares awarded under the Stock Plan were transferred to a grantor
trust (the "Master Trust") maintained by DPL Inc. to secure its obligations
under various directors' and officers' deferred and incentive compensation
plans. In April 1999, each non-employee director was awarded 2,700 shares.
Commencing in 2000, no additional share awards will be made under the Stock
Plan. Non-employee directors instead will be eligible to receive grants of stock
options under the DPL Inc. Stock Option Plan.

DPL Inc. maintains a Deferred Compensation Plan (the "Compensation Plan")
for non-employee directors in which payment of directors' fees may be deferred.
The Compensation Plan also includes a supplementary deferred income program
which provides that DPL Inc. will match $5,000 annually of deferred directors'
fees for a maximum of ten years. Under the supplementary program, a $150,000
death benefit is provided until such director ceases to participate in the
Compensation Plan. Under the standard deferred income program directors are
entitled to receive a lump sum payment or payments in installments over a period
up to 20 years. A director may elect payment in either cash or common shares.
Participants in the supplementary program are entitled to receive deferred
payments over a ten-year period in equal installments. The Compensation Plan
provides that in the event of a change in control of DPL Inc., as defined in the
Compensation Plan, all benefits provided under the supplementary deferred income
program become immediately vested without the need for further contributions by
the participants and the discretion which, under the Compensation Plan, is
exercisable by the Chief Executive Officer of DPL Inc. will be exercised by the
trustees of the Master Trust. Effective January 31, 2000, the supplementary
program was terminated

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for current directors and the value of each director's supplementary account
transferred to his or her standard deferral account.

Mr. Forster, who retired as Chief Executive Officer of DPL Inc. effective
December 31, 1996, entered into a three year agreement with DPL Inc. and DP&L
pursuant to which he serves as Chairman of the Board of DPL Inc. and DP&L and
provides advisory and strategic planning services. The term of the agreement is
automatically extended each December 31 for an additional year unless either
party gives advance notice of nonrenewal. For these services, Mr. Forster
receives an annual fee of $550,000 (as well as such bonuses, if any, as may be
determined by the Compensation and Management Review Committee in its
discretion) and an award opportunity of 60,000 restricted shares under the Stock
Plan. Commencing in 2000, Mr. Forster will participate in DPL Inc.'s Stock
Option Plan and will no longer receive restricted share awards under the Stock
Plan. As Chairman, Mr. Forster is responsible for the long-term strategic
planning of the Company, the oversight of financial assets, and the evaluation
and recommendations relating to the merger, acquisition and disposition of
utility assets. Mr. Forster participates in an incentive program for individuals
managing financial assets. Under this program, incentives will be paid in 2000
based on net cumulative investment performance of such assets over the four-year
period 1996 through 1999 and for each year thereafter based on annual
performance.

CERTAIN TRANSACTIONS

On February 1, 2000, DPL Inc. entered into a definitive agreement with
affiliates of KKR under which KKR will make a strategic investment of
$550 million in the Company. Under the terms of the agreement, affiliates of KKR
will purchase a combination of trust preferred securities issued by a trust
established by DPL Inc., voting preferred shares and warrants to purchase common
shares. The trust preferred securities will have an aggregate face amount of
$550 million, will be issued at an initial discounted price of approximately
$500 million, will have a maturity of 30 years (subject to acceleration to six
months after the exercise of the warrants), and will pay distributions at a rate
of 8.5% of the aggregate face amount per year. The voting preferred shares will
have voting power not exceeding 4.9% of the total outstanding voting power of
DPL Inc.'s voting securities and will be sold for an aggregate purchase price of
$68,000. The warrants will be for 31.6 million common shares (representing
approximately 19.9% of the common shares outstanding as of February 1, 2000),
will have a term of 12 years, will have an exercise price of $21 per share, and
will be sold for an aggregate purchase price of $50 million. In connection with
the transaction, DPL Inc. will pay KKR $16.5 million in fees and expenses
including expenses of KKR's consultants, investment bankers, accountants and
counsel. Following the closing, DPL Inc. will pay KKR an annual management,
consulting and financial services fee of $1 million. During 1999, DPL Inc.
subscribed to invest up to $100 million over time in a KKR-sponsored investment
fund on customary terms.

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EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

DPL Inc. has always designed its executive compensation programs to create a
strong and direct link between the compensation paid to senior executives and
current and long-term level of company performance. The program also recognizes
each executive's individual contribution to that performance. Toward that end,
the Compensation and Management Review Committee (the "Committee") annually
evaluates and reviews, with its outside consultant, the executive compensation
program. With the change in the utility industry from a regulated business to a
customer choice business, the Committee felt an overall review was needed and
undertook such review during 1999.

The results of this review were extensive changes to DPL Inc.'s executive
compensation program. The Committee eliminated the annual Management Stock
Incentive Plan ("MSIP"), the Supplemental Deferred Program for Key Employees
and, in part, the Supplemental Executive Retirement Plan.

2000 COMPENSATION PROGRAM

The elimination of three substantial compensation programs allowed the
Committee to focus even more strongly on those performance parameters directly
tied to shareholder value -- primarily, stock price and market valuation. The
Committee also felt it important to have more than half of total compensation be
performance-based and at risk.

The three components will be Base Salary, Annual Cash Incentives and Stock
Options.

Base Salary will recognize competitive industry median compensation, be
experience and performance adjusted, and subject to annual review.

Annual Cash Incentives will be subject to the following program. A
performance pool of funds based on how the various business units exceed
predetermined levels of Earnings Before Interest and Taxes ("EBIT") will be
created. These funds will be allocated to individual executives based on their
performance contribution.

Long-term compensation will consist of Stock Options. Each executive was
granted options equal to three times the DPL Inc. shares they individually own.
The initial grant covers a three-year period and will vest over five years. This
program is described in the next section, "Approval of Stock Option Plan." The
major features of DPL Inc.'s Stock Option program compared to others in our
industry is the high level of stock ownership by each executive and the
willingness of each executive to lock up, meaning they cannot sell, for five
years the shares they individually own.

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1999 COMPENSATION PROGRAM

In 1999, DPL Inc.'s executive compensation program consisted of three
elements, each designed to reward different aspects of executive performance.

1. Base salary recognized competitive pay levels, sustained long-term
value creation and contributions by individual executives.

2. Annual incentives, awarded through the Management Incentive
Compensation Program, rewarded the achievement of operational and strategic
milestones. Each executive had three or four different individual
objectives. The individual objectives for 1999 were related to maintaining
competitive energy prices and providing superior customer service. They
included reductions in operating expenses, outside service costs, fuel
inventory expenses and capital expenditures, as well as improvements in
plant productivity, customer satisfaction and earnings per share. Over half
of each executive's annual incentive payout was determined based on their
performance as compared to their individual objectives. The remaining
portion of the executive's annual incentive payout was based on the
executive group's aggregate performance on their individual objectives. For
1999, executives met their individual objectives. Target incentive awards
ranged from thirty to sixty percent of base salary, depending upon the
executive's position. Executives could earn from zero to one and a half
times the target amount.

3. Outstanding Restricted Share Unit awards under DPL Inc.'s long-term
MSIP, which rewards longer-term financial results and total return to
shareholders, were concluded by crediting a pro-rata portion of outstanding
awards as earned at one and a half times the target amount. The MSIP was
eliminated in 2000 and will be replaced with the Stock Option Plan.

Compensation opportunities were positioned at the general industry median
for the CEO and between the utility industry 75(th) percentile and general
industry median for other executives. Over half of the target total compensation
for each executive varies with performance.

DPL Inc. maintains an incentive program for individuals managing all
financial assets of DPL Inc. Under the program, incentives were earned based on
net cumulative investment performance of such assets over the four-year period
1996 through 1999. This program is described in note (3) to the Summary
Compensation Table.

CEO COMPENSATION

The Chief Executive Officer's total compensation potential is based on
consideration of median general industry practices. The Chief Executive
Officer's annual and long-term incentive programs are variable enough to provide
actual total compensation at median general industry levels only if DPL Inc.'s
performance is in the top quartile of electric and natural gas utilities.

Overall, Mr. Hill exceeded his annual performance objectives for 1999.
Mr. Hill's salary was increased in 1999 based on his individual contributions
and consistent with the performance criteria

13
<PAGE>
used for all executives. Under the Management Incentive Compensation Program,
Mr. Hill received a bonus based seventy-five percent on DPL Inc.'s performance
and twenty-five percent on the Committee's assessment of his individual
performance. Company performance objectives were based on equal consideration of
earnings per share performance, which objective was satisfied, and the aggregate
performance of the executive group versus their individual objectives. The
Committee based its overall assessment of Mr. Hill's individual performance on
consideration of several factors, including DPL Inc.'s performance versus other
electric and natural gas utilities, investment community evaluations and
progress on management development and succession planning. Mr. Hill also
participated in the financial asset incentive program.

CONCLUSION

Based on current compensation levels and the present structure of
DPL Inc.'s executive compensation programs, the Committee believes that the
compensation payable to executives will not be subject to the limitation on
deductibility imposed by the Omnibus Budget Reconciliation Act of 1993.

The Committee believes that DPL Inc.'s annual and long-term incentive plan
goals have contributed to the strong stock market performance shown in the
performance chart in the next section. DPL Inc.'s total return on common equity
between 1994 and 1999 was significantly higher than the utility industry as a
whole.

The Committee recommends approval of the new DPL Inc. Stock Option Plan.

Compensation and Management Review
Committee

Burnell R. Roberts, Chairman
James F. Dicke, II
W August Hillenbrand

14
<PAGE>
Performance Comparison

INVESTMENT RETURNS
VALUE OF $1000 INVESTED

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
DPL INC. DOW JONES INDUSTRIAL S&P'S ELECTRIC CO.'S
<S> <C> <C> <C>
1994 $1,000 $1,000 $1,000
1995 $1,275 $1,368 $1,309
1996 $1,318 $1,763 $1,305
1997 $1,684 $2,202 $1,645
1998 $1,950 $2,601 $1,896
1999 $1,647 $3,307 $1,532
</TABLE>

Dividends Reinvested

15
<PAGE>
2. APPROVAL OF STOCK OPTION PLAN

In 2000, the Company eliminated its officer and director stock plans. The
DPL Inc. Stock Option Plan (the "Plan") will replace the Management Stock
Incentive Plan ("MSIP") and the Directors' Deferred Stock Compensation Plan as
the primary long-term incentive program for executives and directors. The Stock
Option Plan is intended to align the interests of management and the directors
with those of shareholders by directly linking long-term incentive compensation
opportunities to increases in share price. Executives and directors will forego
a number of benefits under current plans and programs as a result of the
changes, including benefits the level of which are not tied to increases in
share price, and in their place will receive three-year option grants under the
Plan. In addition, to encourage long-term employment with the Company,
management options vest in equal increments over a five-year period. Further,
earned Restricted Share Units under the MSIP will be locked up (i.e., not
payable) for five years.

One of the purposes of the Annual Meeting is to consider and vote upon
approval of the Plan. The Plan was adopted by the Board of Directors on
February 1, 2000, subject to approval by shareholders. The purpose of the Plan
is to promote the interests of the Company and its shareholders by
(i) attracting and retaining individuals eligible to participate in the Plan;
(ii) motivating such individuals by providing incentive to contribute to the
Company's future success; and (iii) aligning the interests of such individuals
with the interests of the Company's shareholders. The principal provisions of
the Plan are summarized below.

The Plan will be administered by the Compensation and Management Review
Committee of the Board of Directors or such other committee as may be designated
by the Board (the "Committee"). Any officer or other key employee, director or
consultant of the Company or any of its subsidiaries will be eligible to be
designated a participant under the Plan. As of February 1, 2000, approximately
30 individuals participated in the Company's executive compensation programs for
key employees, officers and directors. The Committee has the sole and complete
authority to determine the participants to whom options will be granted under
the Plan.

The Plan authorizes the grant of options to purchase a maximum of 8,000,000
Common Shares of the Company in the aggregate, subject to adjustment to avoid
dilution or enlargement of intended benefits in the event of certain significant
corporate events. Options granted are not intended to qualify as incentive stock
options under Section 422 of the Internal Revenue Code of 1986 (the "Code"). The
maximum number of shares with respect to which options may be granted to any
individual participant under the Plan may not exceed 2,500,000. If, after the
effective date of the Plan, any shares covered by an option granted under the
Plan are forfeited, or if an option has expired, terminated or been cancelled
for any reason whatsoever (other than by reason of exercise), then the shares
covered by such option will again be available for the grant of options under
the Plan. The shares delivered upon exercise of options granted under the Plan
may be either authorized but unissued shares or treasury shares. On February 1,
2000, the date option grants were made under the Plan, the last reported sale
price of the Common Shares on the New York Stock Exchange was $19 1/16

16
<PAGE>
per share and the option exercise price was set at $21. The closing price on
February 24, 2000 was $20 1/4 per share.

Options granted under the Plan will be subject to such terms, including
vesting and exercise price, as may be determined by the Committee and specified
in the applicable option agreement, except that the exercise price of an option
cannot be less than the fair market value of the underlying shares on the date
of grant and the term of an option may not exceed ten years. Options granted
under the Plan are intended to qualify as "performance-based compensation" under
Section 162(m) of the Code.

Payment of the exercise price of an option granted under the Plan may be
made (i) in cash or check (or, if so determined by the Committee, with the
proceeds of a loan advanced by the Company for purposes of paying the exercise
price), (ii) by exchanging Common Shares owned by the optionee or (iii) subject
to such rules as may be established by the Committee, through delivery of
irrevocable instructions to a broker to sell the shares being acquired upon
exercise of the option and to deliver promptly to the Company an amount equal to
the aggregate exercise price, or by a combination of the foregoing, provided
that the combined value of all cash and cash equivalents and the fair market
value of shares so tendered to the Company is at least equal to the aggregate
exercise price of the option.

Each option, and each right under any option, will be exercisable only by
the participant during the participant's lifetime or, if permissible under
applicable law, by the participant's guardian or legal representative. No option
may be assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a participant otherwise than by will or by the laws of descent and
distribution. The Committee has the discretion to provide that options granted
under the Plan may be transferred without consideration to certain family
members or trusts, partnerships or limited liability companies whose only
beneficiaries, partners or members are the original grantee and/or such family
members.

The Committee has the discretion to provide that in the event of a "change
of control" (as defined in the Plan), any outstanding options held by
participants which are unexercisable or otherwise unvested will automatically be
deemed exercisable or vested.

The Board of Directors may amend, suspend or terminate the Plan or any
portion of the Plan at any time, provided that no such amendment, suspension or
termination (i) may impair the rights of any participant with respect to options
previously granted under the Plan without the participant's consent or
(ii) operate to increase the number of shares available for options, decrease
the exercise price of any option or change the definition of eligible employee
without shareholder approval, except for share or price adjustments in the event
of certain significant corporate events.

The Plan will remain in effect until all options granted under the Plan have
been exercised or terminated.

17
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES

The following is a general description of federal income tax consequences to
optionees and the Company relating to options that may be granted under the
Plan. Options granted are not intended to qualify as incentive stock options
under Section 422 of the Code. This discussion does not purport to cover all tax
consequences relating to stock options.

An optionee will not recognize income upon the grant of a stock option. Upon
exercise of the option, the optionee will recognize ordinary income equal to the
excess of the fair market value of the shares on the date of exercise over the
option price. The tax basis of the option shares in the hands of the optionee
will equal the option price plus the amount of ordinary income recognized upon
exercise, and the holding period for the shares will commence on the day the
option is exercised. An optionee who sells option shares will recognize capital
gain or loss measured by the difference between the tax basis of the shares and
the amount realized on sale. Such gain or loss will be long-term if the shares
are held for more than one year after exercise. The Company will be entitled to
a deduction equal to the amount of ordinary income recognized by the optionee.
The deduction will be allowed at the same time the optionee recognizes the
income.

Approval of the Plan requires the affirmative vote of a majority of the
Common Shares present in person or by proxy. Abstentions will be considered
present and will have the effect of a vote against approval of the Plan. Broker
non-votes will not be counted in determining the number of shares necessary for
approval.

NEW PLAN BENEFITS

The following table sets forth information concerning options that have been
granted under the Plan, subject to shareholder approval of the Plan. These
option grants represent a three-year block grant. Each executive was granted a
number of option shares equal to three times the executive's

18
<PAGE>
earned Restricted Share Units held in the Master Trust under the MSIP. These
Restricted Share Units, which are payable in shares, will remain locked up for a
five-year period.

<TABLE>
<CAPTION>
RESTRICTED SHARE
UNITS LOCKED UP 3 YEAR OPTION GRANTS
NAME AND POSITION FOR 5 YEARS WITH 5 YEAR VESTING
- ----------------- -------------------- --------------------
<S> <C> <C>
Allen M. Hill............................................... 450,000 1,350,000(1)
President and Chief Executive Officer -- DPL Inc. and DP&L
Peter H. Forster............................................ 800,000 2,400,000(1)
Chairman -- DPL Inc. and DP&L
Judy W. Lansaw.............................................. 175,000 525,000(1)
Group Vice President -- DPL Inc. and DP&L
Stephen F. Koziar, Jr....................................... 165,000 495,000(1)
Group Vice President and Secretary -- DPL Inc. and DP&L
H. Ted Santo................................................ 125,000 375,000(1)
Group Vice President -- DP&L
All executive officers as a group........................... 1,715,000 6,150,000(1)
All directors who are not executive officers as a group..... -- 350,000(2)
All employees who are not executive officers as a group..... 335,000 1,050,000(1)
</TABLE>

- ------------------------------

(1) Options granted on February 1, 2000 at an exercise price of $21 per share.
The closing price on February 1, 2000 was $19 1/16 per share. These options
vest in five cumulative installments of 20% on December 31, 2000, 2001,
2002, 2003, and 2004, become exercisable on January 1, 2005, and expire on
February 1, 2010.

(2) Each non-employee director was granted an option to purchase 50,000 shares
on February 1, 2000 at an exercise price of $21 per share. The closing price
on February 1, 2000 was $19 1/16 per share. These options become exercisable
upon shareholder approval of the Plan and expire on February 1, 2010.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE
PLAN.

19
<PAGE>
SUMMARY COMPENSATION TABLE

Set forth below is certain information concerning the compensation of the
Chief Executive Officer and each of the other four most highly compensated
executive officers of DPL Inc. and its major subsidiary DP&L, for the last three
fiscal years, for services rendered in all capacities.

<TABLE>
<CAPTION>
ANNUAL LONG TERM COMPENSATION
COMPENSATION -----------------------------
------------------- RESTRICTED LTIP ALL OTHER
SALARY BONUS(1) SHARE UNITS(2) PAYOUTS(3) COMPENSATION(4)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) ($)
--------------------------- -------- -------- -------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Allen M. Hill 1999 550,000 462,000 -- 525,000 1,000
President and Chief Executive Officer -- 1998 500,000 300,000 505,000 ('99-01) 275,000 1,000
DPL Inc. and DP&L 1997 430,000 258,000 834,000 ('98-00) -- 1,000

Peter H. Forster(5) 1999 500,000 250,000 -- 1,130,000 84,000
Chairman -- DPL Inc. and DP&L 1998 500,000 200,000 420,000 ('99-01) 1,130,000 87,000
1997 500,000 150,000 840,000 ('98-00) 1,130,000 70,400

Judy W. Lansaw 1999 280,000 180,000 -- -- 1,000
Group Vice President -- DPL Inc. and DP&L 1998 264,000 119,000 197,000 ('99-01) -- 1,000
1997 240,000 108,000 411,000 ('98-00) -- 1,000

Stephen F. Koziar, Jr. 1999 259,000 166,000 -- 350,000 1,000
Group Vice President and Secretary -- 1998 244,000 110,000 186,000 ('99-01) 200,000 1,000
DPL Inc. and DP&L 1997 231,000 104,000 234,000 ('98-00) 504,000 1,000

H. Ted Santo 1999 258,000 139,000 -- -- 1,000
Group Vice President -- DP&L 1998 243,000 109,000 176,000 ('99-01) -- 1,000
1997 226,000 102,000 297,000 ('98-00) -- 1,000
</TABLE>

- ------------------------------

(1) Amounts in this column represent awards made under the Management Incentive
Compensation Program. Awards are based on achievement of specific
predetermined operating and management goals in the year indicated and paid
in the year earned or in the following year.

(2) Amounts shown in this column represent the dollar value of Restricted Share
Units ("RSUs") awarded to the named executive officer under the Management
Stock Incentive Plan ("MSIP") based on the closing price of a DPL Inc.
common share on the New York Stock Exchange -- Consolidated Transactions
Tape on the date of award. Commencing in 2000, the Stock Option Plan will
replace the MSIP and no additional awards will be made under the MSIP.

Awards covered a three-year performance period. For plan years '98-00,
earning of RSUs was dependent on the extent that the DPL Inc. average return
on equity ("ROE") exceeded the Regulatory Research Associates industry
median. For the '99-01 plan, earning of RSUs was dependent on the extent the
DPL Inc. average ROE and total return to shareholders exceeded the RRA
industry median. Depending on the performance of DPL Inc., these RSUs could
be earned in amounts ranging from 0% to 200% of the target award. As a
result of replacing the MSIP with the Stock Option Plan, outstanding awards
under the MSIP were concluded by crediting two-thirds and one-third of the
RSUs awarded for plan years '98-00 and '99-01, respectively, as earned at
150% of the target award. Amounts shown for 1997 and 1998 reflect this
action. These RSUs vest in one-third annual increments ending in 2002. RSUs
earned under the MSIP are not payable until 2005.

20
<PAGE>
For each RSU which is earned and vests, a participant receives the
equivalent of one DPL Inc. common share plus dividend equivalents from the
date of award. All payouts of vested RSUs under the MSIP are deferred until
retirement and are made in DPL Inc. common shares.

(3) Amounts in this column represent annualized incentives earned by the named
executive officer under a long-term incentive program for individuals
managing all financial assets of DPL Inc. Incentives were earned based on
net cumulative investment performance of such assets over the four year
period 1996 through 1999. The financial asset portfolio value was
$1.1 billion at December 31, 1999, contributed $105 million to income during
the 1997-1999 period and had $167 million in unrealized gains at
December 31, 1999. Beginning in 2000, incentives will be earned based on
annual performance.

(4) Amounts in this column represent employer matching contributions on behalf
of each named executive under the DP&L Employee Savings Plan made to the
DPL Inc. Employee Stock Ownership Plan.

(5) Annual compensation shown for Mr. Forster for 1997, 1998 and 1999 was paid
pursuant to an agreement with DPL Inc. and DP&L. Long term compensation
award opportunities shown for 1997, 1998 and 1999 represent the dollar value
of restricted shares awarded to Mr. Forster under the Directors' Stock Plan
which are subject to the same earning and vesting criteria generally
applicable to RSUs. All other compensation shown for 1999 represents
directors fees of $37,000 and the dollar value of the annual award of 2,700
shares to each non-employee director under the Directors' Stock Plan, for
1998 represents directors fees of $37,000 and an annual award of 2,700
shares under the Directors' Stock Plan and for 1997 represents directors
fees of $32,600 and an award of 2,400 shares under the Directors' Stock
Plan. Participation in the Director compensation program by Mr. Forster was
terminated in 2000. See "Information Concerning the Board of Directors and
its Committees -- Other Matters."

CONTINGENT LONG-TERM INCENTIVE PLAN AWARDS IN 1999

A one-time contingent award of Restricted Share Units to the named executive
officers under the MSIP was approved by the Compensation Committee in 1999.
These awards will be earned only if the closing price of DPL Inc. common shares
on the NYSE -- Consolidated Transactions Tape achieves $26 per share between
June 1999 and July 1, 2001.

<TABLE>
<CAPTION>
PERFORMANCE OR OTHER
NUMBER OF PERIOD UNTIL
RESTRICTED SHARE MATURATION OR
NAME UNITS PAYOUT
---- ---------------- --------------------
<S> <C> <C>
Allen M. Hill.......................... 80,000 2 years
Peter H. Forster....................... 80,000 2 years
Judy W. Lansaw......................... 80,000 2 years
Stephen F. Koziar, Jr.................. 80,000 2 years
H. Ted Santo........................... 40,000 2 years
</TABLE>

CERTAIN SEVERANCE PAY AGREEMENTS

DPL Inc. has in place severance pay agreements with each of Messrs. Hill,
Koziar, and Santo and Ms. Lansaw providing for the payment of severance benefits
in the event that the individual's employment with DPL Inc. or its subsidiaries
is terminated under specified circumstances within

21
<PAGE>
three years after a change in control of DPL Inc. or DP&L (generally, defined as
the acquisition of 50% or more of the voting securities (15% or more without
board approval) or certain mergers or other business combinations). The
agreements entered into between 1987 and 1991 require the individuals to remain
with DPL Inc. throughout the period during which any change of control is
pending in order to help put in place the best plan for the shareholders. The
principal severance benefits under each agreement include payment of the
following: (i) the individual's full base salary and accrued benefits through
the date of termination and any awards for any completed or partial period under
the MICP and the individual's award for the current period under the MICP (or
for a completed period if no award for that period has yet been determined)
fixed at an amount equal to his average annual award for the preceding three
years; (ii) 300% of the sum of the individual's annual base salary at the rate
in effect on the date of termination (or, if higher, at the rate in effect as of
the time of the change in control) plus the average amount awarded to the
individual under the MICP for the three preceding years; (iii) all awarded or
earned but unpaid RSUs; and (iv) continuing medical, life, and disability
insurance. In the event any payments under these agreements are subject to an
excise tax under the Internal Revenue Code of 1986, the payments will be
adjusted so that the total payments received on an after-tax basis will equal
the amount the individual would have received without imposition of the excise
tax. The severance pay agreements are effective for one year but are
automatically renewed each year unless DPL Inc. or the participant notifies the
other one year in advance of its or his or her intent not to renew. DPL Inc. has
agreed to secure its obligations under the severance pay agreements by
transferring required payments to the Master Trust. Mr. Forster's agreement with
DPL Inc. and DP&L contains similar severance benefits provisions.

PENSION PLANS

The following table sets forth the estimated total annual benefits payable
under the DP&L retirement income plan and the supplemental executive retirement
plan to executive officers at normal retirement date (age 65) based upon years
of accredited service and final average annual compensation (including base and
incentive compensation) for the three highest years during the last ten:

<TABLE>
<CAPTION>
TOTAL ANNUAL RETIREMENT BENEFITS FOR
YEARS OF ACCREDITED SERVICE AT AGE 65
FINAL AVERAGE ----------------------------------------
ANNUAL EARNINGS 10 YEARS 15 YEARS 20-30 YEARS
--------------- ----------- ----------- ------------
<S> <C> <C> <C>
$ 200,000................................ $ 51,500 $ 77,500 $103,000
400,000................................ 108,500 163,000 217,000
600,000................................ 165,500 248,500 331,000
800,000................................ 222,500 334,000 445,000
1,000,000............................... 279,500 419,500 559,000
1,200,000............................... 336,500 505,000 673,000
1,400,000............................... 393,500 590,500 787,000
</TABLE>

22
<PAGE>
The years of accredited service for the named executive officers are
Mr. Hill -- 30 yrs.; Mr. Koziar -- 30 yrs.; Ms. Lansaw -- 20 yrs. and Mr. Santo
- -- 24 yrs. Years of service under the retirement income plan are capped at
30 years, however, the retirement and supplemental plans, taken together, can
provide full benefits after 20 years of accredited service. Benefits are
computed on a straight-life annuity basis, are subject to deduction for Social
Security benefits and may be reduced by benefits payable under retirement plans
of other employers. For each year an individual retires prior to age 62,
benefits under the supplemental plan are reduced by 3% or 21% for early
retirement at age 55. Mr. Forster ceased to accrue benefits under the retirement
and supplemental plans effective as of December 31, 1996 upon his retirement as
an employee of DPL Inc. and DP&L. Participation in the supplemental plan was
terminated for some executive officers effective December 31, 1999 and the
present value of each individual's accrued benefit under the supplemental plan,
determined by DPL Inc.'s actuary, transferred to a deferred payment account.

23
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information with respect to the
beneficial ownership of common shares and Series B voting preferred shares of
DPL Inc. as of February 15, 2000 (assuming the KKR transaction had closed as of
that date) by each person or group known by the Company to own more than 5% of
the common shares or Series B voting preferred shares.

<TABLE>
<CAPTION>
COMMON SHARES SERIES B VOTING PREFERRED SHARES
BENEFICIALLY OWNED BENEFICIALLY OWNED
------------------------------- ---------------------------------
NAME NUMBER PERCENT OF CLASS NUMBER PERCENT OF CLASS
---- ------------ ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Dayton Ventures LLC(1) .......... 31,560,000(2) 19.9% 6,800,000(3) 100%
c/o Kohlberg Kravis
Roberts & Co. LP
9 W. 57(th) Street
New York, NY 10019
</TABLE>

- ------------------------

(1) The managing member of Dayton Ventures LLC is KKR 1996 Fund L.P. The general
partner of KKR 1996 Fund L.P. is KKR Associates 1996 L.P., and its general
partner is KKR 1996 GP LLC. George R. Roberts and Scott M. Stuart are
members of KKR 1996 GP LLC. Messrs. Roberts and Stuart may be deemed to
share beneficial ownership of the shares beneficially owned by Dayton
Ventures LLC, however, Messrs. Roberts and Stuart disclaim beneficial
ownership of such shares.

(2) Includes 31,560,000 common shares issuable upon the exercise of warrants.

(3) The 6,800,000 Series B voting preferred shares, which represent up to 4.9%
of the outstanding voting power of DPL Inc.'s voting securities, are subject
to mandatory redemption on a share for share basis to the extent common
shares are issued upon exercise of the warrants held by Dayton Ventures LLC.

24
<PAGE>
SECURITY OWNERSHIP OF CERTAIN EXECUTIVE OFFICERS

Set forth below is information concerning the beneficial ownership of common
shares of DPL Inc. by each executive officer of DPL Inc. or DP&L named in the
Summary Compensation Table (other than executive officers who are directors of
DPL Inc. whose security ownership is found under "Election of Directors") as of
February 15, 2000. Please refer to Note (1) on Page 7 for the security ownership
of all directors and executive officers of DPL Inc. and DP&L.

<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF PERCENT OF
EXECUTIVE OFFICER BENEFICIAL OWNERSHIP(1) CLASS
----------------- ----------------------- ----------
<S> <C> <C>
Stephen F. Koziar, Jr. 15,021 shares *
H. Ted Santo 4,141 shares *
Judy W. Lansaw 3,912 shares *
</TABLE>

- ------------------------

* Less than one percent

(1) Excludes Restricted Share Units

INDEPENDENT PUBLIC ACCOUNTANTS

PricewaterhouseCoopers LLP served as independent public accountants of
DPL Inc. for the year 1999 and has been appointed as independent public
accountants for 2000. A representative of PricewaterhouseCoopers LLP will be
present at the Annual Meeting with the opportunity to make a statement if he
desires to do so and to respond to appropriate questions from shareholders.

SHAREHOLDER PROPOSALS

A proposal by a shareholder intended for inclusion in the proxy materials of
DPL Inc. for the 2001 Annual Meeting of Shareholders pursuant to Rule 14a-8 must
be received by DPL Inc. at P.O. Box 1247, Dayton, Ohio 45401, Attn.: Secretary,
on or before November 6, 2000 in order to be considered for such inclusion.
Shareholder proposals intended to be submitted at the 2001 Annual Meeting of
Shareholders outside the framework of Rule 14a-8 will be considered untimely
under Rule 14a-4(c)(1) if not received by DPL Inc. at the above address on or
before (i) 50 days before the date of the 2001 meeting (or 10 days after notice
of the meeting if less than sixty days notice is given) for proposals relating
to nomination of persons for election as directors or (ii) January 23, 2001 for
any other proposals. If DPL Inc. does not receive notice of the matter by the
applicable date, the Proxy Committee will vote on the matter, if presented at
the meeting, in its discretion.

25
<PAGE>
OTHER BUSINESS

The Board of Directors does not intend to present, and has no knowledge that
others will present, any other business at the meeting. However, if any other
matters are properly brought before the meeting, it is intended that the holders
of proxies will vote thereon in their discretion.

By order of the Board of Directors,
[SIGNATURE]

STEPHEN F. KOZIAR, JR.
GROUP VICE PRESIDENT AND SECRETARY

26
<PAGE>
NOTICE OF

ANNUAL
MEETING

OF SHAREHOLDERS

APRIL 11, 2000

AND

PROXY
STATEMENT
[DPL LOGO]

DPL INC.
DAYTON, OHIO
<PAGE>

DPL INC.
STOCK OPTION PLAN

SECTION 1. PURPOSE

The purpose of the Plan is to promote the interests of the Company and
its shareholders by (i) attracting and retaining individuals eligible to
participate in the Plan; (ii) motivating such individuals by providing incentive
to contribute to the Company's future success; and (iii) aligning the interests
of such individuals with the interests of the Company's shareholders.

SECTION 2. DEFINITIONS

The following terms, as used in the Plan, shall have the meaning
specified below. Other capitalized terms shall have the meaning specified in the
Plan.

a. "BOARD OF DIRECTORS" means the Board of Directors of the
Company, as it may be comprised from time to time.

b. "CHANGE OF CONTROL" means Change of Control as defined in
Section 10.

c. "CODE" means the Internal Revenue Code of 1986, and any
successor statute, as it or they may be amended from time to
time.

d. "COMMITTEE" means the Compensation and Management Review
Committee of the Board of Directors or such other committee as
may be designated by the Board of Directors.

e. "COMPANY" means DPL Inc., and any successor thereto.

f. "COVERED EMPLOYEE" means a covered employee within the meaning
of Code Section 162(m)(3).

g. "CONSULTANT" means a consultant of the Company or a
Subsidiary.

h. "DIRECTOR" means a member of the Board of Directors of the
Company or of a Subsidiary, whether or not an Employee.

i. "EMPLOYEE" means an officer or other key employee of the
Company or of a Subsidiary. The term also includes any person
who, in connection with the hiring of such person, has been
granted an Option prior to the date such person first performs
services for the Company or a Subsidiary, provided that no
Option granted to such a person shall become vested prior to
the date that such person first performs such services.
<PAGE>

j. "EXCHANGE ACT" means the Securities Exchange Act of 1934, and
any successor statute, as it may be amended from time to time.

k. "FAIR MARKET VALUE" means (i) the average of the highest and
lowest sale prices of the Shares as reported on the New York
Stock Exchange Composite Transaction Tape on the relevant date
(or if the Shares are not then so traded, the average of the
highest and lowest sale prices of the Shares on the stock
exchange or over-the-counter market on which the Shares are
principally trading on such date), or if no sale of the Shares
is reported for such date, the next preceding day for which
there is a reported sale or (ii) if there is no public market
for the Shares on such date, fair market value as determined
by the Committee.

l. "INSIDER" means any person who is subject to Section 16 of the
Exchange Act, and any successor statutory provision, as it may
be amended from time to time.

m. "OPTION" means an option granted pursuant to Section 4.

n. "OPTION AGREEMENT" means a document described in Section 6
setting forth the terms and conditions applicable to an Option
granted to a Participant.

o. "PARTICIPANT" means any Employee, Director or Consultant who
has been granted an Option.

p. "SHARES" means common shares of the Company or any security of
the Company issued in substitution, exchange or lieu thereof.

q. "SUBSIDIARY" means (i) any corporation or other entity in
which the Company, directly or indirectly, controls 50% or
more of the total combined voting power of such corporation or
other entity and (ii) any other corporation or other entity in
which the Company has a significant equity interest, in either
case as determined by the Committee.

SECTION 3. ELIGIBILITY

The Committee may grant one or more Options to any Employee, Director
or Consultant designated by it to receive an Option.

SECTION 4. OPTIONS

The Committee may grant options to purchase a specific number of Shares
exercisable at such time or times and subject to such terms and conditions as
the Committee may determine subject to the Plan, provided that the term of an
Option shall not exceed ten years.

a. The exercise price of an Option shall not be less than 100% of
the Fair Market Value of the Shares on the date the Option is
granted.

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<PAGE>

b. The exercise price of an Option shall be paid in cash or check
(subject to collection); provided that, at the discretion of
the Committee, the exercise price may also be paid by the
tender, by either actual delivery or attestation, of Shares
acceptable to the Committee and valued at their Fair Market
Value on the date of exercise; through a combination of Shares
and cash; or through such other means as the Committee may
determine. Without limiting the foregoing, to the extent
permitted by applicable law:

(i) The Committee may, on such terms and conditions as it
may determine, agree to accept as full or partial
payment of the exercise price the proceeds of a loan
from the Company to the Participant. The loan shall
be evidenced by the Participant's promissory note,
which promissory note shall (A) be payable as
determined by the Committee, (B) be secured by a
pledge of the Shares acquired upon exercise of the
Option, (C) be full recourse with respect to the
Participant and (D) bear interest at a rate,
established by the Committee, not less than needed to
avoid the imputation of income under the Code; and

(ii) The Committee may, on such terms and conditions as it
may determine, permit a Participant to elect to pay
the exercise price by authorizing a third party,
pursuant to a brokerage or similar arrangement
approved in advance by the Committee, to
simultaneously sell all (or a sufficient portion) of
the Shares acquired upon exercise of the Option and
to remit to the Company a sufficient portion of the
proceeds from the sale to pay the entire exercise
price of the Option and any required tax withholding
resulting therefrom.

c. No fractional Shares will be issued or accepted. The Committee
may impose such other conditions, restrictions and
contingencies with respect to Shares delivered pursuant to the
exercise of an Option as it deems desirable.

d. Options granted under the Plan are not intended to be
incentive stock options under Section 422 of the Code.

e. The Committee may require or permit Participants to defer the
issuance or vesting of Shares under such rules and procedures
as it may establish under the Plan. The Committee may also
provide that deferred settlements include the payment of, or
crediting of interest on, the deferral amounts or the payment
or crediting of dividend equivalents on deferred settlements
denominated in Shares.

SECTION 5. SHARES AVAILABLE UNDER PLAN

a. Subject to the adjustment provisions of Section 9, the number
of Shares with respect to which Options may be granted under
the Plan shall not exceed 8,000,000 Shares; provided that with
respect to the unexercised portion of any terminated or
forfeited Option and Shares tendered or withheld to pay the
exercise price of an Option and/or any required tax
withholding with respect to an Option

3
<PAGE>

shall be available for further Option grants. Additional rules
for determining the number of Shares granted under the Plan
may be adopted by the Committee, as it deems necessary and
appropriate.

b. Subject to the adjustment provisions of Section 9, no single
Participant shall receive Options with respect to more than
2,500,000 Shares.

c. The Shares that may be issued pursuant to an Option under the
Plan may be treasury or authorized but unissued Shares, or
Shares may be acquired, subsequently or in anticipation of the
transaction, in the open market to satisfy the requirements of
the Plan.

SECTION 6. OPTION AGREEMENTS

Each Option under the Plan shall be evidenced by an Option Agreement.
Each Option Agreement shall set forth the terms and conditions applicable to the
Option, as determined by the Committee subject to the Plan, including but not
limited to provisions describing the treatment of an Option in the event of the
termination of a Participant's status as an Employee, Director or Consultant.

SECTION 7. AMENDMENT AND TERMINATION

The Board of Directors may at any time amend, suspend or terminate the
Plan, in whole or in part, and the Committee may, subject to the Plan, at any
time alter or amend any or all Option Agreements to the extent permitted by
applicable law; provided that no such action shall impair the rights of any
holder of an Option without the holder's consent. Notwithstanding the foregoing,
neither the Board of Directors nor the Committee shall (except pursuant to
Section 9) amend the Plan or any Option Agreement without the approval of the
shareholders of the Company to (i) increase the number of Shares available for
Options in total and to each Participant as set forth in Section 5, (ii)
decrease the exercise price of any Option or (iii) change the definition of
Employee.

SECTION 8. ADMINISTRATION

a. The Plan and all Options shall be administered by the
Committee. In the absence of the Committee, or to the extent
determined by the Board of Directors, any action that could be
taken by the Committee may be taken by the Board of Directors,
provided that any such action may be taken with respect to
Covered Employees only by those members of the Board of
Directors who are considered "outside directors" within the
meaning of Treasury Reg. Section 1.162-27(e)(3). A majority of
the members of the Committee shall constitute a quorum. The
vote of a majority of a quorum shall constitute action by the
Committee.

b. The Committee shall have full and complete authority, in its
sole and absolute discretion, (i) to exercise all of the
powers granted to it under the Plan, (ii) to construe,
interpret and implement the Plan and any related document,
(iii) to

4
<PAGE>

prescribe, amend and rescind rules relating to the Plan, (iv)
to make all determinations necessary or advisable in
administering the Plan and (v) to correct any defect, supply
any omission and reconcile any inconsistency in the Plan. The
actions and determinations of the Committee on all matters
relating to the Plan and any Options will be final and
conclusive. The Committee's determinations under the Plan need
not be uniform and may be made by it selectively among
Participants who receive, or who are eligible to receive,
Options under the Plan, whether or not such persons are
similarly situated.

c. The Committee and others to whom the Committee has allocated
or delegated authority or duties shall keep a record of all
their proceedings and actions and shall maintain all such
books of account, records and other data as shall be necessary
for the proper administration of the Plan.

d. The Company shall pay all reasonable expenses of administering
the Plan, including, but not limited to, the payment of
professional fees.

e. It is the intent of the Company that this Plan and Options
hereunder satisfy, and be interpreted in a manner that
satisfy, (i) in the case of Participants who are or may be
Insiders, the applicable requirements of Rule 16b-3 of the
Exchange Act so that such persons will be entitled to the
benefits of Rule 16b-3, or other exemptive rules under Section
16, and will not be subjected to avoidable liability
thereunder and (ii) the applicable requirements of Code
Section 162(m). If any provision of this Plan or of any Option
Agreement would otherwise frustrate or conflict with the
intent expressed in this Section 8(e), that provision, to the
extent possible, shall be interpreted and deemed amended so as
to avoid such conflict. To the extent of any remaining
irreconcilable conflict with such intent, such provision shall
be deemed void as applicable to Insiders and/or Covered
Employees, as applicable.

f. The Committee may appoint such accountants, counsel and other
experts as it deems necessary or desirable in connection with
the administration of the Plan.

g. Except to the extent prohibited by applicable law or
otherwise, the Committee may from time to time allocate to one
or more of its members and delegate to one or more Employees
or Directors all or any portion of its authority and duties,
provided that the Committee may not allocate or delegate any
discretionary authority with respect to substantive decisions
or functions regarding the Plan or Options to the extent
inconsistent with the intent expressed in Section 8(e).

SECTION 9. ADJUSTMENT PROVISIONS

a. In the event of any change in the outstanding Shares by reason
of a stock dividend or stock split, the number of Shares then
remaining subject to this Plan, and the maximum number of
Shares that may be issued to any single Participant pursuant
to this Plan, including those that are then covered by
outstanding Options, shall (i)

5
<PAGE>

in the event of an increase in the number of outstanding
Shares, be proportionately increased and the price for each
Share then covered by an outstanding Option shall be
proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding Shares, be proportionately
reduced and the price for each Share then covered by an
outstanding Option shall be proportionately increased.

b. In the event of any change in the outstanding Shares by reason
of a recapitalization, merger or consolidation (whether or not
the Company is the surviving corporation), reorganization,
combination or exchange of shares or other similar corporate
changes or an extraordinary dividend in cash or property, but
not including the repurchase or issuance of Shares by the
Company unrelated to any such corporate change or
extraordinary dividend, the number and kind of shares subject
to this Plan, the maximum number of shares that may be issued
to any single Participant, the number and kind of shares
subject to outstanding Options and the exercise price thereof
shall be adjusted by the Committee as it deems appropriate to
prevent dilution or enlargement of the rights and benefits
intended to be conveyed by an Option.

c. The Committee shall make any further adjustments as it deems
necessary to help ensure equitable treatment of any holder of
an Option as the result of any transaction affecting the
securities subject to the Plan not described in Section 9(a)
or (b), or as is required or authorized under the terms of any
applicable Option Agreement, provided the Committee shall not
be permitted under this Section 9(c) to increase the number of
Shares available for Options in total or to each Participant
as set forth in Section 5.

d. The existence of the Plan and the Options granted hereunder
shall not affect or restrict in any way the right or power of
the Board of Directors or the shareholders of the Company to
make or authorize any adjustment, recapitalization,
reorganization or other capital structure of its business, any
merger or consolidation of the Company, any issue of bonds,
debentures, preferred or prior preference shares ahead of or
affecting the Shares or the rights thereof, the dissolution or
liquidation of the Company or any sale or transfer of all or
any part of its assets or business, or any other corporate act
or proceeding.

SECTION 10. CHANGE OF CONTROL

a. In the event of a Change of Control, in addition to any action
required or authorized by the terms of an Option Agreement,
the Committee may, in its sole discretion, take any of the
following actions as a result, or in anticipation, of any such
event to assure fair and equitable treatment of Participants:

(i) accelerate time periods for purposes of vesting in,
or realizing gain from, any outstanding Option
granted pursuant to this Plan;

6
<PAGE>

(ii) offer to purchase any outstanding Option granted
pursuant to this Plan from the holder for its
equivalent cash value, as determined by the
Committee, as of the date of the Change of Control;
or

(iii) make adjustments or modifications to outstanding
Options as the Committee deems appropriate to
maintain and protect the rights and interests of
Participants following such Change of Control.

Notwithstanding the foregoing provisions of this section or any
provision in an Option Agreement to the contrary, in no event
shall the Committee be deemed to have discretion to accelerate or
not accelerate or make other changes in or to any or all Options,
in respect of a transaction, if such action or inaction would be
inconsistent with or would otherwise frustrate the intended
accounting for a proposed transaction as a pooling of interest
under generally accepted accounting principles.

b. A "Change of Control" means any change in control of the
Company, or its principal subsidiary, The Dayton Power and
Light Company ("DP&L"), of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Exchange Act as
determined by the Board of Directors in its sole discretion;
provided that, without limitation, such a Change of Control
shall be deemed to have occurred if: (i) any "person" (as such
term is defined in Sections 13(d) and 14(d)(2) of the Exchange
Act; hereafter, a "Person") other than the Company or DP&L or
an entity then directly or indirectly controlling, controlled
by or under common control with the Company or DP&L is on the
effective date hereof, or becomes the beneficial owner,
directly or indirectly, of securities of the Company or DP&L
representing (A) 15% or more of the combined voting power of
the then outstanding securities of the Company or DP&L if the
acquisition of such beneficial ownership is not approved by
the Board of Directors prior to the acquisition or (B) 50% or
more of such combined voting power in all other cases; (ii)
the Company or DP&L enters into an agreement to merge or
consolidate itself, or an agreement to consummate a
"combination" or "majority share acquisition" in which it is
the "acquiring corporation" (as such terms are defined in Ohio
Rev. Code Section 1701.01 as in effect on December 31, 1990)
and in which shareholders of the Company or DP&L, as the case
may be, immediately prior to entering into such agreement,
will beneficially own, immediately after the effective time of
the merger, consolidation, combination or majority share
acquisition, securities of the Company or DP&L or any
surviving or new corporation, as the case may be, having less
than 50% of the "voting power" of the Company or DP&L or any
surviving or new corporation, as the case may be, including
"voting power" exercisable on a contingent or deferred basis
as well as immediately exercisable "voting power", excluding
any merger of the Company into DP&L or of DP&L into the
Company; (iii) the Company or DP&L enters into an agreement to
sell, lease, exchange or otherwise transfer or dispose of all
or substantially all of its assets to any Person other than to
a wholly-owned subsidiary or, in the case of DP&L, to the
Company; but not including (A) a mortgage or pledge of assets

7
<PAGE>

granted in connection with a financing or (B) a spin-off or
sale of assets if the Company continues in existence and its
common shares are listed on a national securities exchange,
quoted on the automated quotation system of a national
securities association or traded in the over-the-counter
market; (iv) any transaction referred to in (ii) or (iii)
above is consummated; or (v) those persons serving as
directors of the Company or DP&L on the date this Plan is
effective (the "Original Directors") and/or their Successors
do not constitute a majority of the whole Board of Directors
of the Company or DP&L, as the case may be (the term
"Successors" shall mean those directors whose election or
nomination for election by shareholders has been approved by
the vote of at least two-thirds of the Original Directors and
previously qualified Successors serving as directors of the
Company or DP&L, as the case may be, at the time of such
election or nomination for election).

SECTION 11. MISCELLANEOUS

a. NONASSIGNABILITY. Except as otherwise provided in this Plan or
by the Committee, no Option or benefit or right related
thereto shall be assignable or transferable except by will or
by the laws of descent and distribution.

b. OTHER PAYMENTS OR AWARDS. Nothing contained in the Plan shall
be deemed in any way to limit or restrict the Company or a
Subsidiary from making any award or payment to any person
under any other plan, arrangement or understanding, whether
now existing or hereafter in effect.

c. PAYMENTS TO OTHER PERSONS. To the extent permitted by law,
none of the benefits payable under or relating to the Plan
shall be subject to the claims or legal process of the
creditors of a Participant or of his or her beneficiary,
spouse, prior spouse, or other persons or entity. Any payment
legally required to be made to any person other than the
person to whom any amount is made available under the Plan
shall be a complete discharge of the liability with respect
thereto.

d. UNFUNDED PLAN. The Plan shall be unfunded. No provision of the
Plan or any Option Agreement shall require the Company or a
Subsidiary, for the purpose of satisfying any obligations
under the Plan, to purchase assets or place any assets in a
trust or other entity to which contributions are made or
otherwise to segregate any assets, nor shall the Company or a
Subsidiary maintain separate bank accounts, books, records or
other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes.
Participants shall have no rights under the Plan other than as
unsecured general creditors of the Company or a Subsidiary,
except that insofar as they may have become entitled to
payment of additional compensation by performance of services,
they shall have the same rights as other employees under
generally applicable law.

e. LIMITS OF LIABILITY. Any liability of the Company or a
Subsidiary to any Participant with respect to an Option shall
be based solely upon contractual

8
<PAGE>

obligations created by the Plan and the Option Agreement.
Neither the Company or its Subsidiaries, nor any member of the
Board of Directors or of the Committee, nor any other person
participating in any determination of any question under the
Plan, or in the interpretation, administration or application
of the Plan, shall have any liability to any party for any
action taken, or not taken, in good faith under the Plan.

f. RIGHTS OF PARTICIPANTS. Status as an eligible Employee,
Director or Consultant shall not be construed as a commitment
that any Option shall be granted under this Plan to such
eligible Employee, Director or Consultant or to eligible
Employees, Directors and Consultants generally. Nothing
contained in this Plan or in any Option Agreement shall confer
upon any Participant any right to continue in the employ or
other service of the Company or a Subsidiary or constitute any
contract or limit in any way the right of the Company or a
Subsidiary to change such person's compensation or other
benefits or to terminate the employment or other service of
such person with or without cause. Except as provided
otherwise in an Option Agreement, a Participant's (i) transfer
from the Company to a Subsidiary or affiliate of the Company,
whether or not incorporated, or vice versa, or from one
Subsidiary to another; (ii) change in status to or from
Employee, Director or Consultant; or (iii) leave of absence,
duly authorized in writing by the Company or a Subsidiary,
shall not be deemed a termination of such Participant's
employment or other service.

g. RIGHTS AS A SHAREHOLDER. A Participant shall have no rights as
a shareholder with respect to any Shares covered by an Option
until the date the Participant becomes the holder of record of
such Shares. Except as provided in Section 9, no adjustment
shall be made for dividends or other rights, unless the Option
Agreement specifically requires such adjustment.

h. WITHHOLDING. Applicable taxes, to the extent required by law,
shall be withheld in respect of all Options. A Participant may
satisfy the withholding obligation by paying the amount of any
taxes in cash, check (subject to collection) or Shares, or
with the approval of the Committee, Shares may be deducted
from the payment to satisfy the obligation in full or in part.
The amount of the withholding and the number of Shares to be
paid or deducted in satisfaction of the withholding
requirement shall be determined by the Committee with
reference to the Fair Market Value of the Shares when the
withholding is required to be made.

i. SECTION HEADINGS. The section headings contained herein are
for the purpose of convenience only, and in the event of any
conflict, the text of the Plan, rather than the section
headings, shall control.

j. CONSTRUCTION. In interpreting the Plan, the masculine gender
shall include the feminine, the neuter gender shall include
the masculine or feminine, and the singular shall include the
plural unless the context clearly indicates otherwise.

9
<PAGE>

k. INVALIDITY. If any term or provision contained herein or in
any Option Agreement shall to any extent be invalid or
unenforceable, such term or provision will be reformed so that
it is valid, and such invalidity or unenforceability shall not
affect any other provision or part hereof or thereof.

l. APPLICABLE LAW. The Plan, the Option Agreements and all
actions taken hereunder or thereunder shall be governed by,
and construed in accordance with, the laws of the State of
Ohio without regard to the conflict of law principles thereof.

m. COMPLIANCE WITH LAWS. Notwithstanding anything contained
herein or in any Option Agreement to the contrary, the Company
shall not be required to sell or issue Shares hereunder or
thereunder if the issuance would constitute a violation by the
Participant or the Company of any provisions of any law or
regulation of any governmental authority or any national
securities exchange; and as a condition of any sale or
issuance, the Company may require such agreements or
undertakings, if any, as the Company may deem necessary or
advisable to assure compliance with any such law or
regulation.

n. EFFECTIVE DATE AND TERM. The Plan was adopted by the Board of
Directors effective as of February 1, 2000, subject to
approval by the Company's shareholders. The Committee may
grant Options prior to shareholder approval, provided,
however, that Options granted prior to such shareholder
approval are automatically cancelled if shareholder approval
is not obtained at or prior to the period ending 12 months
after the date the Plan is effective and provided further that
no Option may be exercisable prior to the date shareholder
approval is obtained. The Plan shall remain in effect until
all Options granted under the Plan have been exercised or
terminated under the terms of the Plan and applicable Option
Agreements.

10
<PAGE>

DETACH HERE

PROXY

DPL INC.

PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR 2000 ANNUAL MEETING OF SHAREHOLDERS

Peter H. Forster, James F. Dicke, II and W August Hillenbrand or any of
them with full power of substitution, are hereby appointed proxies to vote as
specified at the Annual Meeting of Shareholders of DPL Inc. on Tuesday,
April 11, 2000, at 10:00 A.M., and at any adjournments thereof, all Common
Shares which the undersigned is entitled to vote and in their discretion upon
any other matters which may properly come before the meeting.

UNLESS OTHERWISE MARKED, YOUR PROXY WILL BE VOTED FOR THE PROPOSALS BY
SIMPLY SIGNING YOUR NAME ON THE REVERSE SIDE AND RETURNING THIS CARD.

- ------------- -------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
- ------------- -------------

<PAGE>

DETACH HERE

/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE

This proxy is solicited on behalf of the Board of Directors. If no boxes
are marked, your vote will be cast as recommended by the Board of
Directors by simply signing your name below and returning this card.

FOR AGAINST ABSTAIN
1. Election of Four Directors. 2. Approval of DPL / / / / / /
Nominees: Ernie Green, Inc. Stock
David R. Holmes, Option Plan
Burnell R. Roberts,
George R. Roberts
FOR / / / / WITHHELD
ALL FROM ALL
NOMINEES NOMINEES The Annual Meeting of Shareholders
For, except vote withheld from the will be held at Preble Shawnee High
following nominee(s): School, Camden, Ohio. To request an
attendance card for the meeting, please
- --------------------------------- mark below;

MARK HERE FOR ATTENDANCE CARD / /

MARK HERE FOR ADDRESS CHANGE AND / /
NOTE AT LEFT

Please sign exactly as your name
appears. If acting as attorney,
executor, trustee, or in a fiduciary
capacity, sign name and title.

Signature: Date: Signature: Date:
-------------- --------- ------------- ---------