NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD ON APRIL 20, 1995
March 10, 1995
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 Thursday, April 20, 1995, at 11:00
a.m., EST, for the following purposes:
(1) To elect five Directors to serve three-year terms until the annual
meeting of shareholders in 1998 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 LLP as auditors for Resources for 1995; 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 6, 1995, 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.
By Order of the Board of Directors,
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 20, 1995
This statement is being furnished on or about March 10, 1995, to
shareholders of record on March 6, 1995, 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 20, 1995, 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 6, 1995, there were outstanding and entitled to vote 6,932,350
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, five 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 or
she 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
Joseph D. Barnette, Jr., 55 Chairman and Chief Executive 1983 1998
Officer, Bank One, Indianapolis,
NA (commercial bank)(1)
Otto N. Frenzel, III*, 64 Chairman of the Board, 1963 1998
National City Bank, Indiana
(commercial bank)(2)
Fred E. Schlegel, 53 Partner, Baker & Daniels 1988 1998
(attorneys for Resources and IWC)
Susan O. Conner, 42 Vice President of Public Affairs, -- 1998
USA Group, Inc.
(student loans)(3)
J. A. Rosenfeld, 63 Executive Vice President, -- 1998
Resources and IWC (4)
Directors Continuing in Office
Present Principal Director Term to
Name and Age Occupation Since Expire
Robert A. Borns, 59 Chairman of the Board 1994 1997
Borns Management Corporation
(real estate management)
Joseph R. Broyles*, 52 President and Chief Operating 1992 1996
Officer, IWC (5)
Murvin S. Enders, 52 President, T. E. I. 1992 1997
(management consultants)(6)
J.B. King, 65 Vice President and General 1981 1997
Counsel, Guidant Corporation
(medical devices)(7)
Robert B. McConnell*, 73 Chairman of the Executive 1971 1996
Committee of Resources and IWC (8)
J. George Mikelsons, 57 Chairman of the Board and 1989 1996
Chief Executive Officer,
Amtran, Inc. (airlines)
Thomas M. Miller*, 65 Associate, Schenkel, McVey 1985 1996
and Associates
(public relations)(9)
James T. Morris*, 51 Chairman of the Board and Chief 1989 1997
Executive Officer of Resources
and IWC (10)
Jack E. Reich*, 84 Chairman of the Board 1962 1996
Emeritus, American United
Life Insurance Company
(mutual life insurance company)(11)
Directors Not Continuing In Office
Thomas W. Binford, 70 Chairman, Binford, Miles, Rodgers 1975 1995
and Associates
(management consultants)(12)
Elizabeth Grube, 78 Personal Investments 1982 1995
* Member of Executive Committee
( 1) Mr. Barnette is also Chairman and Chief Executive Officer of Banc One
Indiana Corporation. Prior to January 1990, Mr. Barnette was the President and
Chief Operating Officer of Bank One, Indianapolis, NA and President of Banc One
Indiana Corporation. Mr. Barnette is also a Director of Meridian Insurance
Group, Inc. and IPALCO Enterprises, Inc.
( 2) 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.
( 3) Ms. Conner joined USA Group, Inc. in 1992 as Vice President of Public
Affairs. Prior to then, she was Communications Director at Lilly Endowment,
Inc., a philanthropic foundation.
( 4) Mr. Rosenfeld joined Resources in October 1991 and has served as its Chief
Financial Officer since 1992. Prior to joining Resources, he was President and
a member of the Board of Directors of MSA Realty Corporation, a publicly traded
real estate investment trust.
( 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 November 1993, Mr. Enders was Plant Manager of the Indianapolis
Foundry, Chrysler Corporation. In November 1993, he was transferred to
Chrysler's Toledo Machining Plant as Plant Manager. He retired from Chrysler
in December, 1994.
( 7) From October 1, 1987 to February 28, 1995, Mr. King served as Vice
President and General Counsel of Eli Lilly and Company, a pharmaceutical
manufacturer. Mr. King assumed his current position on September 13, 1994.
( 8) 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.
( 9) Mr. Miller was formerly Chairman of the Board and Chief Executive Officer,
NBD Indiana, Inc. and NBD Bank, N.A. Mr. Miller is also a Director of NBD
Indiana, Inc., NBD Bank, N.A., and IPALCO Enterprises, Inc.
(10) 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 and National City Bank,
Indiana.
(11) Before retiring in September 1991, Mr. Reich served as Chairman of the
Board of American United Life Insurance Company. Mr. Reich is a former
Chairman of the Board and Chief Executive Officer of IWC.
(12) Mr. Binford is also a Director INB Financial Corporation and NBD Indiana,
Inc.
During 1994, the Board of Directors of Resources held five meetings. No
Director, except Mr. 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
served. The Board of Directors has created various committees, including Audit
and Compensation committees. The Audit Committee consists of Messrs. Barnette,
McConnell and King. That committee reviews Resources' internal auditing and
reporting procedures and recommends appointment of Resources' auditors. During
1994, the Audit Committee held four meetings. 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 1994, the Compensation Committee
held three 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 1994,
all filing requirements applicable to its officers, Directors, and greater than
ten-percent shareholders were met, except for Mr. Mikelsons, who filed one
report after the due date thereof covering one purchase of 250 shares.
Principal Shareholders and Management Ownership
The following table sets forth information as of January 9, 1995,
regarding the beneficial ownership of common shares of Resources by each
Director of Resources, the Chief Executive Officer and the four other most
highly compensated executive officers of Resources whose salary and bonus
exceeded $100,000 for fiscal 1994, 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 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 39,495 (2) *
Robert B. McConnell 14,167 *
J. George Mikelsons 250 *
Thomas M. Miller 393 *
Jack E. Reich 45,204 *
Joseph D. Barnette, Jr. 200 *
Thomas W. Binford 2,804 (3) *
Murvin S. Enders 100 *
Robert A. Borns 3,000 *
Otto N. Frenzel, III 20,927 (4) *
Elizabeth Grube 33,438 (5) *
J.B. King 1,911 *
James T. Morris 13,616 (6) *
Fred E. Schlegel 1,027 *
John M. Davis 2,954 (7) *
Kenneth N. Giffin 12,223 (8) *
J.A. Rosenfeld 5,103 (9) *
Directors and Executive Officers
as a group (23 persons) 218,034 (10) 3.2%
* Less than 1%
( 1) None of the persons named owned beneficially any shares of IWC preferred
stock 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.
<PAGE>
( 2) Shares shown include 6,857 shares owned by Mr. Broyles as custodian for
his minor daughters and 1,234 shares owned by Mr. Broyles' wife, as to which
Mr. Broyles disclaims beneficial ownership. Shares shown include 7,763 shares
credited to Mr. Broyles' account under Resources' Employee Stock Ownership
Plan, 5,200 restricted shares granted pursuant to Resources' Restricted Stock
Plan, and 5,460 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 18,000 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 555 shares credited to Mr. Morris' account under
Resources' Employee Stock Ownership Plan, and 8,604 restricted shares granted
pursuant to Resources' Restricted Stock Plan, and 3,198 shares allocated within
Resources' Thrift Plan.
( 7) Shares shown include 1,954 restricted shares granted pursuant to
Resources' Restricted Stock Plan.
( 8) Shares shown include 3,644 shares credited to Mr. Giffin under Resources'
Employee Stock Ownership Plan, and 3,166 restricted shares granted pursuant to
Resources' Restricted Stock Plan, and 5,412 shares allocated within Resources'
Thrift Plan.
( 9) Shares shown include 144 shares credited to Mr. Rosenfeld's account under
Resources' Employee Stock Ownership Plan, and 4,039 restricted shares granted
to Mr. Rosenfeld pursuant to Resources' Restricted Stock Plan.
(10) Includes 17,854 shares credited to officers under Resources' Employee
Stock Ownership Plan (with respect to which the officers have voting but not
investment power), 28,973 shares with respect to which voting and investment
power is shared with spouses or relatives of the Directors and officers, 2,235
shares as to which beneficial ownership is disclaimed, and 28,283 restricted
shares granted pursuant to Resources' Restricted Stock Plan, and 18,912 shares
allocated within Resources' Thrift Plan with respect to officers. As to
beneficial ownership of shares of IWC Preferred Stock, see footnote 1.
<PAGE>
COMPENSATION COMMITTEE REPORT TO SHAREHOLDERS
During 1994, 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 generally range
from 0% to 40% 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 ( Measurement Period ). The Initial Measurement
Period began on January 1, 1992, and ended 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 Measurement 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 Initial Measurement
Period provided for adjustments that, depending upon the level of Shareholder
Value Performance attained, ranged 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.
The composition of the Comparison Group during the Initial Measurement
Period was affected by merger and consolidation in the industry. As a result,
in September 1994 the Compensation Committee, based upon the recommendation of
Resources compensation consultant, adjusted the award formula for the Initial
Measurement Period. For the Initial Measurement Period the Compensation
Committee awarded additional shares equal to 75.312 percent of the initial
award of restricted shares.
After giving effect to the supplemental awards earned for the Initial
Measurement Period, Resources granted 12,421; 7,616; 5,973; 4,747; and 3,024
restricted shares to Messrs. Morris, Broyles, Rosenfeld, Giffin, and Davis,
respectively, in connection with the Initial Measurement Period, before
reduction for mandatory in-kind tax withholding.
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 1994, Mr. Morris received a salary of $304,202, the annual base salary
rate established in December, 1993, plus a cash bonus of $114,639. The bonus
for 1994 represented an increase over the bonus paid in 1993. The Compensation
Committee believes the higher bonus paid for 1994 was appropriate because of
Resources' excellent performance in 1994 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
<PAGE>
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 other four most highly compensated
officers of Resources.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
Restricted
Fiscal Stock LTIP All Other
Name & Principal Position Year Salary Bonus(1) Awards(2) Payouts(3) Compensation(4)
<S> <C> <C> <C> <C> <C> <C>
James T. Morris 1994 $304,202 $114,639 $170,921 $18,848
Chairman of the Board 1993 287,219 72,100 -- -- 14,318
of Resources and IWC 1992 276,540 55,460 $69,995 -- 14,940
Joseph R. Broyles 1994 193,269 69,269 104,797 11,814
President of IWC 1993 176,079 44,200 -- -- 9,913
1992 165,047 34,000 42,897 -- 8,957
J.A. Rosenfeld 1994 174,903 61,600 82,198 10,643
Executive Vice President,1993 156,799 40,000 -- -- 8,855
& Chief Financial Officer1992 75,181 20,000 33,634 -- 4,282
of Resources and IWC
Kenneth N. Giffin 1994 119,026 17,608 65,315 6,149
Senior Vice President 1993 113,937 13,780 -- -- 5,747
of Resources and IWC 1992 108,399 13,250 26,742 -- 5,474
John M. Davis 1994 141,342 21,300 41,619 7,319
Vice President, General 1993 63,690 6,750 18,700 -- --
Counsel and Secretary of 1992 -- -- -- -- --
Resources and IWC
</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) For the three-year measurement period beginning January 1, 1992, Resources
granted an aggregate of 26,491 restricted common shares under its Restricted
Stock Plan. Messrs. Morris, Broyles, Rosenfeld, Giffin and Davis received
7,085, 4,344, 3,407, 2,708 and 1,725 restricted shares, respectively. The
amounts shown as awards in 1992 reflect one-half of the number of restricted
shares initially granted, representing the number of shares to which the named
executive was entitled at the lowest level of performance. The value of
additional restricted shares that were vested January 11, 1995, based upon
particular performance levels met, is shown in the Long Term Incentive Plans
(LTIP) Payouts column. The value shown for restricted shares awarded in 1992
is based upon the closing price of Resources common shares of $19.75 on January
2, 1992, or the closing price for the business day nearest the effective date
of pro-rata grant in the case for Messrs. Rosenfeld and Davis. Based upon the
closing price of Resources common shares of $20.50 per share on December 31,
1994, the aggregate value of the Restricted Stock shown in the awards column
would have been $197,500. Holders of restricted shares are entitled to receive
any dividends paid on the common shares.
(3) Restricted shares granted relate to a three-year measurement period and
generally vest upon completion of such three-year period. The number of shares
granted to Messrs. Rosenfeld and Davis reflect the fact that they 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 Compensation
Committee, if the Shareholder Value Performance of Resources for the
measurement period would place Resources in the top quartile of the Comparison
Group, the number of shares granted would be increased by 100%. If the
Shareholder Value Performance of Resources would place it in the bottom
quartile, the number of restricted shares would be reduced by 50%, and if
Shareholder Value Performance is in the second or third quartile, a ratable
adjustment would be made. Amounts shown reflect the value of additional shares
awarded January 11, 1995, pursuant to the Shareholder Value Performance
Adjustments, based upon the closing price of Resources common shares of $19.25
on January 11, 1995.
(4) 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.
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 Davis.
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.
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
$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
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,
Rosenfeld, Giffin and Davis have been credited with 17, 41, 4, 37 and 2 years
of service, respectively, under the ESB. In the case of Mr. Morris, his years
of credited service includes those as Director of Compucom, a formerly
affiliated company.
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 decedent'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 and bonus in the table.
Compensation of Directors
Each Director who is not a salaried officer or employee of Resources,
receives a retainer of $2,500 per quarter and an additional $1,000 for each
Board of Directors meeting attended. Each such Director who is a member of the
Executive Committee receives an additional $500 per month, and $1,000 for each
Executive Committee meeting attended. Each such Director who is a member of
the Audit Committee or Compensation Committee receives $1,000 for each
committee meeting attended. Mr. McConnell receives an additional $1,667 per
month for his services as Chairman of the Executive Committee. Messrs.
Barnette and Frenzel each receive an additional $313 per quarter for their
services as Chairman of the Audit and Compensation Committees, respectively.
<PAGE>
Directors' Retirement
On October 21, 1994, the Board of Directors established the IWC Resources
Directors' Retirement Plan. The purpose of the Plan is to provide a quarterly
retirement benefit for retiring directors, and to establish certain age
criteria for director election or re-election. Normal retirement, for purposes
of this Plan, is at age 65 or when the director's term is complete, whichever
is later. A director may not stand for re-election if he or she has attained
the age of 70 years, except for directors who formerly served as the Chairman
of the Board.
A director may choose to retire at any age; however, quarterly benefits
will not commence until reaching age 65. Upon attaining age 65 with at least
10 years of service, a director will be entitled to receive the directors
quarterly retainer ($2,500) upon his or her retirement. If a director retires
on or after age 65 with less than 10 years of service, the quarterly benefit
will be reduced by 1/10 for each year less than ten. The quarterly benefits
are payable for the life of the director.
Compensation Committee Interlocks
Messrs. Frenzel, Mikelsons, Miller and Reich served as members of the
Compensation Committee during 1994. 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.
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.
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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, 1990, 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 LLP as auditors for Resources for
1995 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 LLP 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 LLP 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 1996 ANNUAL MEETING
The date by which shareholder proposals must be received by Resources for
inclusion in proxy materials relating to the 1996 annual meeting of
shareholders of Resources is November 10, 1995.
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