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Document: PROXY
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Creation Date: 03/03/1994
Modification Date: 03/04/1994
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NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD ON APRIL 21, 1994
March 11, 1994
SHAREHOLDERS OF IWC RESOURCES CORPORATION:
The annual meeting of shareholders of IWC Resources Corporation
("Resources") will be held at the principal office of Resources, 1220 Waterway
Boulevard, Indianapolis, Indiana 46202 on April 21, 1994, at 11:00 a.m., EST,
for the following purposes:
(1) To elect four Directors to serve a three-year term until the annual
meeting of shareholders in 1997 and until their successors are elected
and have qualified, as set forth in the accompanying Proxy Statement;
(2) To approve or disapprove the proposed appointment of KPMG Peat Marwick as
auditors for Resources for 1994; and
(3) To transact such other business as may properly come before the meeting.
All shareholders of record at the close of business on March 7, 1994, will be
eligible to vote.
It is important that your shares be represented at this meeting so that a
quorum will be assured. Whether or not you expect to be present, please fill
in, date, sign and return the enclosed proxy form in the accompanying
addressed, postage-paid envelope. If you attend the meeting, your proxy will
be canceled at your request.
JOHN M. DAVIS, Secretary
IWC RESOURCES CORPORATION
(ANNUAL REPORT MAILED CONCURRENTLY)
PROXY STATEMENT
Annual Meeting of Shareholders of
IWC Resources Corporation
To be Held on April 21, 1994
This statement is being furnished on or about March 11, 1994, to
shareholders of record on March 7, 1994, in connection with a solicitation by
the Board of Directors of IWC Resources Corporation ("Resources") of proxies to
be voted at the annual meeting of shareholders of Resources to be held at 11:00
a.m., EST, Thursday, April 21, 1994, at the principal office of Resources, 1220
Waterway Boulevard, Indianapolis, Indiana 46202 for the purposes set forth in
the accompanying Notice. Resources is the parent corporation of Indianapolis
Water Company ("IWC").
On March 7, 1994, there were outstanding and entitled to vote 6,865,978
common shares of Resources. The shareholders entitled to vote at the meeting
will be determined from the record at the close of business on that date and
will have one vote for each share held. In addition, on such date there were
outstanding and entitled to vote 51,612 shares of Resources Series B
Convertible Redeemable Preferred Stock ("Preferred Stock"). The holders of the
Preferred Stock are entitled to one vote for each share held and vote together
with the holders of the common shares.
If the enclosed form of proxy is executed and returned, it may nevertheless
be revoked at any time insofar as it has not been exercised. Unless revoked, a
properly executed proxy will be voted at the meeting in accordance with the
instructions of the shareholder in the proxy as to Proposals 1 and 2 or, if no
instructions are given, for the election as Directors of all nominees listed
under Proposal 1 and for approval of the proposal shown as Proposal 2. Assuming
a quorum is present at the meeting, directors will be elected by a plurality of
the votes cast by the shares entitled to vote in the election at the meeting.
The appointment of auditors will require that the votes cast in favor of such
proposal exceed the votes cast against. Pursuant to the Indiana Business
Corporation Law and the Bylaws of the Company, shares held by persons who
abstain from voting on a proposal will be counted in determining whether a
quorum is present but will not be counted as voting either for or against such
proposal. If a broker indicates on a proxy that it does not have discretionary
authority as to certain shares on a particular proposal, those shares will not
be counted in determining whether a quorum is present or as voting with respect
to that proposal.
The Board of Directors knows of no matters, other than those reported
herein, which are to be brought before the meeting. However, if other matters
properly come before the meeting, it is the intention of the persons named in
the enclosed form of proxy to vote such proxy in accordance with their judgment
on such matters.
...The cost of this solicitation of proxies will be borne by Resources.
Proposal 1. ELECTION OF DIRECTORS
Directors are elected for staggered terms of three years with approximately
one-third of the Board of Directors standing for election each year. At the
meeting, four Directors are to be elected, each to hold office for a term of
three years and until his successor is elected and has qualified. It is the
intention of the persons named in the accompanying form of proxy to vote such
proxy for the election to the Board of Directors of the persons identified on
the following page. Each such person has indicated that he will accept
nomination and election as a Director. However, if any such person is unable
or unwilling to accept nomination or election, it is the intention of
management to nominate such other person as Director as it may in its
discretion determine, in which event proxies will be voted for such other
person.
The following tables set forth information regarding the nominees for
Director and those Directors of Resources whose terms of office continue past
the meeting. Unless otherwise indicated in a footnote to the following table,
the principal occupation of each person has been the same for the last five
years.
Nominees for Directors
Present Principal Director Term to
Name and Age Occupation Since Expire
Murvin S. Enders, 51 Plant Manager, Toledo Machine 1992 1997
Plant, Chrysler Corporation (1)
J.B. King, 64 Vice President and General 1981 1997
Counsel, Eli Lilly and Company
(pharmaceuticals)
James T. Morris*, 50 Chairman of the Board and Chief 1989 1997
Executive Officer of Resources
and IWC (2)
Robert A. Borns, 58 Chairman of the Board -- 1997
Borns Management Corporation
Directors Continuing in Office
Present Principal Director Term to
Name and Age Occupation Since Expire
Joseph D.Barnette,Jr., 54 Chairman, President and Chief 1983 1995
Executive Officer, Banc One
Indiana Corporation (3)
Thomas W. Binford, 69 Chairman, Binford Associates 1975 1995
(management consultants) (4)
Joseph R. Broyles*, 51 President and Chief Operating 1992 1996
Officer of IWC (5)
Otto N. Frenzel,III*, 63 Chairman of the Board 1963 1995
National City Bank, Indiana (6)
Elizabeth Grube, 77 Personal Investments 1982 1995
Robert B. McConnell*, 72 Chairman of the Executive 1971 1996
Committee of Resources and IWC (7)
J. George Mikelsons, 56 Chairman of the Board and 1989 1996
Chief Executive Officer,
Amtran, Inc. (airlines)
Thomas M. Miller*, 64 Chairman of the Board and 1985 1996
Chief Executive Officer, NBD
Indiana, Inc., and INB
National Bank (8)
Jack E. Reich*, 83 Chairman of the Board 1962 1996
Emeritus, American United
Life Insurance Company (9)
Fred E. Schlegel, 52 Partner, Baker & Daniels 1988 1995
(attorneys for Resources and IWC)
Directors Not Continuing In Office
John G. Johnson*, 69 Retired President 1982 1994
Butler University (10)
* Member of Executive Committee
( 1) Prior to November 1993, Mr. Enders was Plant Manager of the
Indianapolis Foundry, Chrysler Corporation. In November 1993 he was
transferred to Chrysler's Toledo Machine Plant as Plant Manager.
( 2) Mr. Morris became Chairman of the Board and Chief Executive Officer of
Resources and IWC in April 1991. He was President and Chief Operating
Officer of Resources and IWC from January 1989 until April 1991. Prior
to that time, Mr. Morris was President of Lilly Endowment, Inc. Mr.
Morris is also a Director of American United Life Insurance Company,
Broadcast Communications, Inc., and MSA Realty Corporation.
( 3) Mr. Barnette is also President and Chief Executive Officer of BANK ONE,
INDIANAPOLIS, NA. Prior to January 1990, Mr. Barnette was the
President and Chief Operating Officer of Banc One Indiana Corporation
and BANK
ONE, INDIANAPOLIS, NA. Mr. Barnette is also a Director of Meridian
Insurance Group, Inc., and IPALCO Enterprises, Inc.
( 4) Mr. Binford is also a Director of Somerset Group, Inc.
( 5) Mr. Broyles joined IWC in 1965 as Plant Engineer and has served as an
executive officer of IWC in several capacities since 1983, most
recently as Executive Vice President from February 1990 until his
election as President in January 1992.
( 6) Prior to January 1993, Mr. Frenzel was Chairman of the Board and Chief
Executive Officer of Merchants National Corporation. Mr. Frenzel is
also a Director of American United Life Insurance Company, Baldwin &
Lyons, Inc., Indiana Energy, Inc., IPALCO Enterprises, Inc., and
National City Corporation.
( 7) Mr. McConnell was Chairman of the Board and Chief Executive Officer of
Resources and IWC from October 1986 to April 1991. He also served as
President of Resources and IWC from October 1988 to January 1989.
( 8) Mr. Miller is also Vice Chairman of NBD Bancorp, Inc. Prior to October
1992, Mr. Miller was Chairman of the Board and Chief Executive Officer
of INB Financial Corporation. Mr. Miller is also a Director of IPALCO
Enterprises, Inc.
( 9) Before retiring in September 1991, Mr. Reich served as Chairman of the
Board of American United Life Insurance Company.
(10) Before retiring in January 1990, Mr. Johnson served as Chancellor of
Butler University. Prior to 1989, Mr. Johnson was the President of
Butler. Mr. Johnson is also a Director of Meridian Insurance Group,
Inc. Mr. Johnson resigned from his directorship effective December 31,
1993.
During 1993, the Board of Directors of Resources held five meetings. No
Director, except Messrs. Enders and Miller, attended fewer than 75% of the
total number of meetings of the Board of Directors and of the committees on
which he or she sat. The Board of Directors has created various committees,
including audit and executive compensation committees. The Audit Committee
consisted of Messrs. Barnette, Johnson and King. That Committee reviews
Resources' internal auditing and reporting procedures and recommends
appointment of Resources' auditors. During 1993, the Audit Committee held four
meetings. The Executive Compensation and Benefits Committee (the "Compensation
Committee") consists of Messrs. Frenzel, Mikelsons, Miller and Reich. The
Compensation Committee determines executive compensation and administers
certain of Resources' employee benefit plans. During 1993, the Compensation
Committee held five meetings. The Board of Directors of Resources does not
have a nominating committee.
Section 16(a) Reporting
Section 16(a) of the Securities Exchange Act of 1934 requires Resources'
officers and Directors, and persons who own more than ten percent of the
outstanding common shares, to file reports of ownership with the Securities and
Exchange Commission. Officers, Directors and greater than ten-percent
shareholders are required to furnish Resources with copies of all Section 16(a)
forms they file. Based solely on its review of copies of such forms received
by it, or written representations from certain reporting persons that no
reports were required for those persons, Resources believes that during 1993,
all filing requirements applicable to its officers, Directors, and greater than
ten-percent shareholders were met, except for J.A. Rosenfeld, who filed one
report after the due date thereof covering one purchase of 500 shares by his
self-directed, individual retirement account.
Principal Shareholders and Management Ownership
The following table sets forth information as of December 31, 1993,
regarding the beneficial ownership of common shares of Resources by each
Director of Resources, the Chief Executive Officer and the five other most
highly compensated executive officers of Resources whose salary and bonus
exceeded $100,000 for fiscal 1993, and the Directors and Executive Officers of
Resources as a group. Resources is not aware of any person that owns
beneficially 5% or more of its outstanding common shares. The persons named in
the table will have sole voting and investment power with respect to all common
shares owned by them unless otherwise noted.
Amount and Nature
Name of Beneficial of Beneficial Percent of
Owner Ownership (1) Class
Joseph R. Broyles 34,442 (2) *
Robert B. McConnell 14,167 *
J. George Mikelsons 250 *
Thomas M. Miller 366 *
Jack E. Reich 45,204 *
Joseph D. Barnette, Jr. 200 *
Thomas W. Binford 2,804 (3) *
Murvin S. Enders 100 *
John G. Johnson 100 *
Otto N. Frenzel, III 12,927 (4) *
Elizabeth Grube 33,438 (5) *
J.B. King 1,783 *
James T. Morris 9,933 (6) *
Fred E. Schlegel 996 *
Paul J. Doane 11,848 (7)
James D. Kiefner 1,773 (8)
Kenneth N. Giffin 7,761 (9)
J.A. Rosenfeld 4,071 (10)
Directors and Executive Officers
as a group (21 persons) 188,533 (11) 2.7%
* Less than 1%
( 1) None of the persons named owned beneficially any shares of IWC
preferred stock on December 31, 1993, except Mrs. Grube, who had voting
and investment power with respect to 360 shares of such stock held in a
trust and Mr. Broyles, who may have been deemed to own beneficially 500
shares of preferred stock for which he is custodian for his minor
children.
( 2) Shares shown include 4,532 shares owned by Mr. Broyles as custodian for
his minor daughter and 1,152 shares owned by Mr. Broyles' wife, as to
which Mr. Broyles disclaims beneficial ownership. Shares shown include
7,069 shares credited to Mr. Broyles' account under Resources' Employee
Stock Ownership Plan, 4,344 restricted shares granted pursuant to
Resources' Restricted Stock Plan, and 5,235 shares allocated within
Resources' Thrift Plan.
( 3) Shares shown include 1,000 shares owned by Mr. Binford's wife, as to
which Mr. Binford disclaims beneficial ownership.
( 4) Shares shown include 100 shares held in a family partnership as to
which Mr. Frenzel has voting and investment power, and 10,000 shares of
stock held in charitable remainder trusts in which Mr. Frenzel is
Co-Trustee.
( 5) Shares shown include 33,238 shares held in a trust as to which Mrs.
Grube has voting and investment power and 200 shares held as custodian
for her grandchildren.
( 6) Shares shown include 361 shares credited to Mr. Morris' account under
Resources' Employee Stock Ownership Plan, and 7,085 restricted shares
granted pursuant to Resources' Restricted Stock Plan, and 1,313 shares
allocated within Resources' Thrift Plan.
( 7) Shares shown include 3,118 shares credited to Mr. Doane under
Resources' Employee Stock Ownership Plan, and 2,683 restricted shares
granted pursuant to Resources' Restricted Stock Plan, and 4,095 shares
allocated within Resources' Thrift Plan.
( 8) Shares shown include 433 shares credited to Mr. Kiefner under
Resources' Employee Stock Ownership Plan, and 300 shares owned by
Mr. Kiefner's adult daughters for which he is custodian, but disclaims
beneficial ownership.
( 9) Shares shown include 3,304 shares credited to Mr. Giffin under
Resources' Employee Stock Ownership Plan, and 2,708 restricted shares
granted pursuant to Resources' Restricted Stock Plan, and 1,749 shares
allocated within Resources' Thrift Plan.
(10) Shares shown include 3,407 restricted shares granted to Mr. Rosenfeld
pursuant to Resources' Restricted Stock Plan.
(11) Includes 14,701 shares credited to officers under Resources' Employee
Stock Ownership Plan (with respect to which the officers have voting
but not investment power), 6,032 shares with respect to which voting
and investment power is shared with spouses or relatives of the
Directors and officers, 2,452 shares as to which beneficial ownership
is disclaimed, and 20,227 restricted shares granted pursuant to
Resources' Restricted Stock Plan, and 12,802 shares allocated within
Resources' Thrift Plan with respect to officers. As to beneficial
ownership of shares of IWC Preferred Stock, see footnote 1.
COMPENSATION COMMITTEE REPORT TO SHAREHOLDERS
During 1993, the Compensation Committee consisted of Messrs. Frenzel,
Mikelsons, Miller and Reich. The Compensation Committee determines executive
compensation and administers certain of Resources' employee benefit plans.
General
In 1991 Resources, with the assistance of an outside compensation
consultant, undertook a comprehensive review and revision of its compensation
policies. That process resulted in a modification of Resources' historical
compensation practices in order to link more closely executive compensation to
long-term strategic goals and the enhancement of shareholder value.
Resources' executive compensation policy seeks to serve three goals: (1) to
encourage the creation of value for shareholders by linking compensation to
shareholder value performance; (2) to encourage superior individual
performance; and (3) to provide a total compensation package that is
competitive within the industry, in order to attract and retain qualified
executives.
Compensation Strategy
An executive's compensation consists of three principal components: base
salary, annual cash bonus and grants of restricted shares under Resources'
Restricted Stock Plan. Base salary levels are set in part with reference to
compensation paid by other companies in the water utility industry. For
purposes of this comparison, Resources utilizes a comparison group of
investor- owned water utilities. Resources generally seeks to be within the
50th to 75th percentile of comparison group compensation. In determining
base salary, Resources also takes into account individual experience and
performance, specific issues particular to Resources, including its past
compensation practices, and general salary levels in the Indianapolis area.
The amount of cash bonuses is determined annually by the Compensation
Committee. The Compensation Committee considers a number of factors in
determining the level of bonuses, including the extent to which Resources
has met its financial and operating goals for the year, the performance of
Resources stock in terms of share price and dividends, and the individual
performance of the executive during the year. Annual bonuses may range from
0% to 25% of base salary.
Effective January 1, 1992, Resources instituted a Restricted Stock Plan
pursuant to which Resources may make grants of common shares to officers of
Resources and its affiliates. The purpose of the Restricted Stock Plan is
to enable Resources to attract, retain and motivate its officers by
providing them with a means of acquiring or increasing a proprietary
interest in the Company, so that they will have an increased incentive to
work toward the attainment of the long-term growth and profit objectives of
Resources. Common shares granted pursuant to the Restricted Stock Plan are
subject to restrictions upon transfer and risk of forfeiture for a period of
three years.
The Restricted Stock Plan is administered by the Compensation Committee.
Awards are made to officers of Resources and its affiliates selected by the
Compensation Committee. Grants under the Restricted Stock Plan are made by
the Compensation Committee at the beginning of each measuring period
consisting of three consecutive years ("Measuring Period"). The first
Measuring Period was deemed to have begun on January 1, 1992, and will end
on December 31, 1994. All grants of restricted shares are subject to
adjustments ("Shareholder Value Performance Adjustments") pursuant to which
at the end of the Measuring Period grantees may be entitled to grants of
additional shares or required to forfeit restricted shares previously
granted. The Shareholder Value Performance Adjustments provide for an
increase or decrease in the number of shares granted to a grantee based upon
various levels of performance ("Shareholder Value Performance") of Resources
compared to the Shareholder Value Performance of a group of companies
designated by the Compensation Committee as a comparison group (the
"Comparison Group"). The schedule of Shareholder Value Performance
Adjustments adopted by the Compensation Committee for the first Measuring
Period provides for adjustments that, depending upon the level of Shareholder
Value Performance attained, will range from the forfeiture by the grantee of
one-half of the restricted shares granted to him in the event the lowest
quartile of Shareholder Value Performance is attained, to the receipt of
additional shares equal to the number initially granted in the event the
highest quartile of Shareholder Value Performance is obtained. Holders of
restricted shares will receive immediate vesting of restricted shares, as
adjusted assuming the maximum Shareholder Value Performance Adjustment, in the
event of a change in control of Resources.
Resources has granted 7,085, 4,344, 3,407, 2,708, and 2,683 restricted
shares to Messrs. Morris, Broyles, Rosenfeld, Giffin, and Doane respectively.
Resources also provides medical and pension benefits to its executive
officers. With the exception of the Executive Supplemental Benefits Plan, the
benefits paid to executive officers are similar to those available to other
employees of Resources.
Compensation of Chief Executive Officer
For 1993, Mr. Morris received a salary of $287,219, the annual base salary
rate established in December, 1992, plus a cash bonus of $72,100. The bonus
for 1993 represented an increase over the bonus paid in 1992. The
Compensation Committee believes the higher bonus paid for 1993 was appropriate
because of Resources' excellent performance in 1993 in achieving a total
return exceeding that of its water industry comparison group, and because of
Mr. Morris' central role in Resources' strategic planning, its progress in the
area of staff development and its strengthening financial operations.
Otto N. Frenzel, III
J. George Mikelsons
Thomas M. Miller
Jack E. Reich
COMPENSATION OF EXECUTIVES
Summary Compensation Table
The following table sets forth information concerning total compensation for
each of the last three fiscal years awarded to or earned by the Chief Executive
Officer of Resources and the four most highly compensated officers of the
company.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Restricted
Other Annual Stock All Other
Name & Principal Position Fiscal Year Salary Bonus (1) Compensation Awards (2) Compensation (3)
<S> <C> <C> <C> <C> <C> <C>
James T. Morris 1993 $287,219 $72,100 -- -- $14,318
Chairman of the Board 1992 276,540 55,460 -- $69,955 14,940
of Resources and IWC 1991 256,515 27,730 -- -- 12,028
Joseph R. Broyles 1993 176,079 44,200 -- -- 9,913
President of IWC 1992 165,047 34,000 -- 42,897 8,957
1991 122,988 12,500 -- -- 5,321
J.A. Rosenfeld 1993 156,799 40,000 -- -- 8,855
Senior Vice President, 1992 75,181 20,000 -- 33,634 4,282
Treasurer and Chief 1991 -- -- -- -- --
Financial Officer of
Resources and IWC
Kenneth N. Giffin 1993 113,937 13,780 -- -- 5,747
Senior Vice President 1992 108,399 13,250 -- 26,742 5,474
of Resources and IWC 1991 97,187 9,300 -- -- 4,259
Paul J. Doane 1993 108,755 13,650 -- -- 5,508
Executive Vice President, 1992 102,996 13,125 -- 26,485 5,225
IWC 1991 87,137 8,780 -- -- 3,837
</TABLE>
(1) Includes all amounts received with respect to a fiscal year, even
though actual payment of some or all of the bonus may have
been made in the following fiscal year.
(2) As of January 1, 1992, Resources granted an aggregate of 26,491
restricted common shares under its Restricted Stock Plan.
Messrs. Morris, Broyles, Rosenfeld, Giffin and Doane received 7,085,
4,344, 3,407, 2,708 and 2,683 restricted shares, respectively. The
Restricted Stock Plan requires certain adjustments in the number of
restricted shares granted, that, depending upon the Shareholder Value
Performance of Resources compared to the Comparison Group, will range
from the forfeiture by the grantee of one-half of the restricted shares
received in the event the lowest quartile of performance is obtained,
to the receipt of additional restricted shares equal to the number
initially granted in the event the highest quartile of
performance is obtained. These adjustments generally will be made at
the end of three years following the date of the grant.
Amounts shown reflect one-half of the number of restricted shares
initially granted, representing the number of shares to which the named
executive will be entitled at the lowest level of performance. The
value of additional restricted shares that may vest if particular
performance levels are met is shown in the "Long Term Incentive Plans
-- Awards In Last Fiscal Year" table. The value shown for restricted
shares is based upon the closing price of Resources common shares of
$19.75 on January 2, 1992, the business day nearest the effective date
of grant. Based upon the closing price of Resources common shares of
$21.50 per
share on December 31, 1993, the aggregate value of the Restricted Stock
listed in the above table would have been $217,408. Holders of
restricted shares are entitled to receive any dividends paid on the
common shares.
(3) Includes amounts contributed by Resources for the benefit of the named
executive pursuant to Resources' Employee Stock Ownership Plan,
Employee Thrift Plan and Non-Qualified Deferred Compensation Plan.
Long-Term Incentive Plans -- Awards in Last Fiscal Year
The following table sets forth certain information regarding
restricted shares granted to the named executives pursuant to the
Resources Restricted Stock Plan.
<TABLE>
<CAPTION>
Number of Date
Restricted of Estimated Future Payouts (2)
Name Shares (1) Vesting Threshold Mean Maximum
<S> <C> <C> <C> <C> <C>
James T. Morris 0-10,628 12/31/94 0 $69,974 $209,903
Joseph R. Broyles 0-6,516 12/31/94 0 42,897 128,691
J.A. Rosenfeld 0-5,110 12/31/94 0 33,654 100,943
Kenneth N. Giffin 0-4,062 12/31/94 0 26,741 80,224
Paul J. Doane 0-4,025 12/31/94 0 26,504 79,494
</TABLE>
(1) Does not include restricted shares as to which there is no performance
based vesting requirement and which are reported in the Summary
Compensation Table. The actual number of shares that could be awarded
will be determined by application of the Shareholder Value Performance
Adjustments at the end of the Measuring Period. See footnote 2 below.
(2) Restricted shares vest three years after the date of grant, provided
the grantee remains in the employ of Resources, and as pro-rated for
new admittees during the three year period. Mr. Rosenfeld, who became
an executive officer of Resources after the date of initial grants to
other executives, received a grant of 3,407 shares on December 18,
1992, which will vest on December 31, 1994. The number of shares
granted to Mr. Rosenfled was proportionately reduced to reflect the
fact that he joined the Company after the initial date of grant. The
number of shares granted is subject to adjustment based upon the
Shareholder Value Performance of Resources compared to the Shareholder
Value Performance of a Comparison Group. See "Compensation Committee
Report to Shareholders." Under the schedule of Shareholder Value
Performance Adjustments adopted by the Committee, if the Shareholder
Value Performance of Resources for the measuring period would place
Resources in the top quartile of the Comparison Group, the number of
shares granted will be increased by 100%. If the Shareholder Value
Performance of Resources would place it in the bottom quartile, the
number of restricted shares will be reduced by 50%, and if Shareholder
Value Performance is in the second or third quartile, no adjustment
will be made. Amounts shown reflect value received assuming
Shareholder Value Performance is the lowest ("Threshold"), middle two
("Mean") and top ("Maximum") quartile, respectively, based upon the
closing price of Resources common shares of $19.75 on January 2, 1992,
the business day nearest the effective date of grant.
Employees' Pension Plan and Other Related Plans
All employees of Resources (and subsidiaries) become eligible to
participate in a pension plan (the "Pension Plan") as of the first January 1 or
July 1 after completing one year of service (as defined in the Pension Plan).
Resources and IWC also maintain a nonqualified executive supplemental benefits
plan (the "ESB") to supplement the benefits of key executives under the Pension
Plan. Participation is limited to key executives designated by Resources' Board
of Directors, and the ESB currently covers eighteen persons,
including Messrs. Morris, Broyles, Rosenfeld, Giffin and Doane.
The following table sets forth a range of combined annual retirement
benefits under the Pension Plan and the ESB for graduated levels of average
annual earnings and years of service (as calculated under the ESB) for
employees of Resources and its subsidiaries. The benefit amounts listed in the
table are computed as a straight life annuity beginning at age 65.
<TABLE>
<CAPTION>
Average Annual Years of Service Credited under ESB at Retirement
Earnings 52 Years
(3 Highest Years) 10 Years 20 Years 30 Years 40 Years 50 Years or More
<C> <C> <C> <C> <C> <C> <C>
$100,000 12,500 25,000 37,500 50,000 62,500 65,000
150,000 18,750 37,500 56,250 75,000 93,750 97,500
200,000 25,000 50,000 75,000 100,000 125,000 130,000
250,000 31,250 62,500 93,750 125,000 156,250 162,500
300,000 37,500 75,000 112,500 150,000 187,500 195,000
350,000 43,750 87,500 131,250 175,000 218,750 227,500
400,000 50,000 100,000 150,000 200,000 250,000 260,000
</TABLE>
Generally, the Pension Plan provides a pension beginning at age 65 of
$20 per month multiplied by the participant's years of service or, if greater,
a pension equal to (a) 1.25% of the participant's average stated salary (for
the three consecutive years that produce the highest average) in excess of $833
per month multiplied by the participant's years of service (up to 50 years),
plus (b) varying lesser percentages (ranging from .85% to 1.13%) of salary
under $833 per month, multiplied by the number of the participant's years of
service to which each percentage applies under the Pension Plan. The Pension
Plan also includes provisions for early retirement benefits, late retirement
benefits, disability retirement benefits, optional methods of benefit payments
to an employee who leaves the employ of Resources and its subsidiaries after a
certain number of years of service, and payments to the surviving spouse.
Pension Plan benefits are funded through a tax-exempt trust to which Resources
and its subsidiaries make annual contributions.
In calculating a participant's benefit under the ESB, the
participant's total years of service are added to his or her years of service
as an executive. Thus, for example, if a participant has 25 years of service
with Resources and its subsidiaries and has served as an executive for 20
years, he or she will be credited with 45 years of service. Messrs. Morris,
Broyles, Giffin and Doane have been credited with 10, 39, 35 and 64 years of
service, respectively, under the ESB.
The monthly amount of the life annuity payable to a participant under
the ESB upon his or her retirement on or after age 65 is calculated as follows:
Step 1. The participant's years of service (determined in the
aforementioned manner) are multiplied by 1.25% of the participant's average
stated salary for the 36 consecutive months that produce the highest average.
The amount determined under this Step 1 is limited to 65% of the participant's
average stated salary for the 36 consecutive months that produce the highest
average.
Step 2. The result of Step 1 is reduced by the amount payable to the
participant under the Pension Plan.
If a participant retires before age 65, his or her benefit under the
ESB is reduced, unless he or she retires after attaining age 60 and has
completed 30
years of service. If a participant dies after retirement, one half of the
retirement annuity payable to him or her during his or her life will be
continued to his or her spouse. In addition, the spouse of a participant who
dies before retirement is entitled to a death benefit, as if the decedent
retired on his or her date of death with such full benefit paid to surviving
spouse until decendent's age 65, at which time it is reduced to 50%.
Benefits payable under the Pension Plan and ESB are not reduced by
any Social Security payments made. The amount of covered compensation for
each of the executive officers of Resources named in the Summary Compensation
Table is approximated by the amount shown as salary in the table.
Compensation of Directors
Each Director who is not a salaried officer or employee of
Resources, receives a retainer of $2,000 per quarter and an additional $750
for each Board of Directors meeting attended. Each such Director who is a
member of the Executive Committee receives an additional $750 per month.
Each such Director who is a member of the Audit Committee or Compensation
Committee receives $750 for each committee meeting attended. Mr. McConnell
receives an additional $1,500 per month for his services as Chairman of the
Executive Committee. Messrs. Barnette and Frenzel each receive an additional
$250 per quarter for their services as Chairman of the Audit and Compensation
Committees, respectively.
Compensation Committee Interlocks
Messrs. Frenzel, Mikelsons, Miller and Reich served as members of
the Compensation Committee during 1993. Each of these persons is an outside
director and, with the exception of Mr. Reich, not a present or former
officer or employee of Resources. Mr. Reich served as Chairman of the Board
of IWC from 1962 to 1967. No executive officer of Resources served as a
member of the compensation committee of another entity, one of whose
executive officers served on the Compensation Committee. Mr. Morris serves
as director of National City Bank, Indiana. Mr. Frenzel is Chairman of the
Board of National City Bank, Indiana. Mr. Morris does not serve on the
compensation committee of National City Bank, Indiana.
Employment Contracts
There are no contracts for current employment between Resources and
any of its executive officers. Under the Resources Restricted Stock Plan,
holders of restricted shares will receive immediate vesting of restricted
shares, as adjusted assuming the maximum Shareholder Value Performance
Adjustment, in the event of a change in control of Resources. However, in
the event of a change in control of Resources, Messrs. Morris, Broyles,
Rosenfeld and Giffin each vest in a three year employment contract at the
same title, duties, location and compensation as before such change in
control. These employment contracts were approved by the Executive
Compensation Committee and Executive Committee in December 1993, and by the
full Board in January 1994.
Compliance with Internal Revenue Code Section 162(M)
Section 162(M) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the corporation's Chief Executive Officer and four other most highly
compensated executive officers. Qualifying performance-based compensation will
not be subject to the deduction limit if certain conditions are met.
The Company does not foresee that the limitation will apply because
the compensation for the Chief Executive Officer and four other highest
compensated executives is significantly below the limitation threshold. If the
limitation was to be exceeded it would be attributed to performance-based
portions of the respective compensation packages, which the company believes is
structured in a manner that complies with the new statute.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on
the common shares of Resources for the last five years with a cumulative total
return on the S&P 500 index and a comparison group of companies (the
"Comparison Group") over the same period (assuming the investment of $100 in
Resources common shares, the S&P 500 index and the Comparison Group on January
1, 1988, and reinvestment of all dividends).
(Comparative stock performance graph goes here.)
(Copy of graph filed with form SE)
(1) The Comparison Group was selected by the Compensation Committee and
consists of the following investor-owned water utilities: American
Water Works Company, Inc., Aquarion Company, Connecticut Water
Service, Inc., Consumers Water Company, E'town Corporation, GWC
Corporation, Middlesex Water Company, Philadelphia Suburban
Corporation and United Water Resources.
Proposal 2. APPOINTMENT OF AUDITORS
The appointment of KPMG Peat Marwick as auditors for Resources for
1994 is recommended by the Board of Directors and will be submitted to the
meeting in order to permit the shareholders to express their approval or
disapproval. KPMG Peat Marwick has served as auditors for Resources and IWC
since 1954. In the event of a negative vote, a selection of other auditors
will be made by the Board. A representative of KPMG Peat Marwick is expected
to be present at the meeting, and will be given an opportunity to make a
statement if he or she desires and respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
The date by which shareholder proposals must be received by Resources
for inclusion in proxy materials relating to the 1995 annual meeting of
shareholders of Resources is November 4, 1994.
