<PAGE>
Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment N0. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission only
(as permitted by Rule 14a-6(e) (2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to 240.14a-11 (c) or 240.14a-12
--------------
NIPSCO Industries, Inc.
(Name of Registrant as Specified In Its Charter)
-----------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies: N/A
(2) Aggregate number of securities to which transactions applies: N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee Paid: N/A
[_] Fee Paid Previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE>
LOGO
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING
March 7, 1997
To the Holders of Common Shares of
NIPSCO Industries, Inc.:
The annual meeting of the shareholders of NIPSCO Industries, Inc. (the
"Company"), will be held at the Grand Wayne Center, 120 West Jefferson
Boulevard, Fort Wayne, Indiana, on Wednesday, April 9, 1997, at 10:00 a.m.,
Eastern Standard Time, for the following purposes:
(1) to elect three members of the Board of Directors, each for a term of
three years;
(2) to consider and vote upon an amendment to the Company's Articles of
Incorporation to increase the number of directors from nine to ten; and
(3) to transact any other business that may properly come before the meeting
or any adjournment or adjournments thereof.
Shareholders of record on February 18, 1997, will be entitled to vote at the
meeting. The stock transfer books will not close.
The Company has approximately 35,300 common shareholders of record. In order
that there may be proper representation at the meeting, each shareholder is
requested to vote, sign and mail the enclosed proxy at once. If sufficient
proxies are not obtained, an adjournment will be necessary. Please help avoid
the expense and delay of adjourning the meeting by mailing your proxy promptly.
Shareholders attending the meeting may vote in person, and in such cases
proxies they have signed will not be voted.
In order to facilitate arrangements for the meeting, we would like to know in
advance how many shareholders expect to attend in person. If you plan to
attend, please so indicate in the space provided on the proxy card.
Please Vote, Date, Sign and Return the Enclosed Proxy Promptly.
LOGO
Nina M. Rausch
Secretary
<PAGE>
PROXY STATEMENT
THE ACCOMPANYING PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY AND IS REVOCABLE BY THE SHAREHOLDER. The common shares, no par
value, of the Company ("Common Shares") represented by the proxies will be
voted as directed, but in the absence of direction, proxies will be voted for
all of the nominees for director and for approval of the proposed amendment to
the Company's Articles of Incorporation. The proxy statement and form of proxy
are first being sent to shareholders on March 7, 1997. The expense of this
solicitation will be borne by the Company. It is intended that the original
solicitation of proxies by mail and a reminder letter may be supplemented by
telephone, telegraph and personal solicitation by officers and regular
employees of the Company or its subsidiaries. In addition, the Company has
retained Morrow & Co., Inc., for a fee of $8,000 plus reimbursement of
expenses, to aid in the solicitation of proxies. Requests will also be made of
brokerage houses and other nominees and fiduciaries to forward proxy material
at the expense of the Company to the beneficial owners of stock held of record
by such persons.
All of a shareholder's shares registered in the same name, including those
held for the shareholder as a participant in the Company's Automatic Dividend
Reinvestment and Share Purchase Plan and the Tax Deferred Savings Plan, will
be represented on one proxy.
Proxies may be revoked at any time before a vote is taken or the authority
granted is otherwise exercised. Revocation of proxies may be accomplished by
delivering an instrument of revocation or a duly executed proxy bearing a
later date to the Secretary of the Company or by attending the meeting and
voting in person. Attendance at the meeting will not in and of itself revoke a
proxy.
If you are planning to attend the meeting in person, please indicate in the
space provided on the proxy card, so that the Company may facilitate
arrangements.
VOTING SECURITIES--
The close of business on February 18, 1997, is the date for the
determination of the number of shares outstanding and of shareholders entitled
to notice of and to vote at the meeting. As of February 18, 1997, the Company
had issued and outstanding 59,805,661 Common Shares owned by approximately
35,300 shareholders of record. Each Common Share is entitled to one vote on
each matter voted upon.
A quorum of shareholders is necessary to take action at the Annual Meeting.
A majority of the outstanding Common Shares, represented in person or by
proxy, will constitute a quorum of
1
<PAGE>
shareholders at the Annual Meeting. The judges of election will determine
whether or not a quorum is present. A plurality vote of the shares represented
at the meeting is required to elect a director. A vote of not less than 75% of
the outstanding shares entitled to vote thereon is required to approve the
proposed amendment to the Company's Articles of Incorporation. Votes cast by
proxy or in person at the meeting will be tabulated by the judges of election
appointed for the meeting.
PROPOSAL 1--ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS--
The Company's Board of Directors is composed of nine directors, who are
divided into three classes. One class is elected each year for a term of three
years. Upon recommendation of the Nominating and Compensation Committee, the
Board of Directors has nominated for reelection as directors Arthur J. Decio,
Gary L. Neale and Robert J. Welsh, each for a term of three years. The Board
of Directors does not anticipate that any of the nominees will be unable to
serve, but if such a situation should arise the proxies will be voted in
accordance with the best judgment of the person or persons acting thereunder.
The following chart gives information about nominees (who have consented to
being named in the proxy statement and to serve if elected) and incumbent
directors. The dates shown for service as a director include service as a
director of Northern Indiana Public Service Company ("Northern Indiana") prior
to the March 3, 1988 share exchange with the Company. The Company's current
directors are also the directors of Northern Indiana, now a wholly-owned
subsidiary of the Company.
<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPAL OCCUPATIONS HAS BEEN
FOR PAST FIVE YEARS AND PRESENT DIRECTOR
DIRECTORSHIPS HELD SINCE
----------------------------------- --------
NOMINEES FOR TERMS TO EXPIRE IN 2000
<S> <C>
Arthur J. Decio, 66-Chairman of the Board and Chief Executive Officer
and Director of Skyline Corporation, Elkhart, Indiana, a
manufacturer of manufactured housing and recreational vehicles. Mr.
Decio is also a director of Quality Dining, Inc. and St. Joseph
Capital Corporation................................................. 1991
Gary L. Neale, 57-Chairman, President and Chief Executive Officer of
the Company and of Northern Indiana since March 1, 1993; prior
thereto, Executive Vice President of the Company, and President and
Chief Operating Officer of Northern Indiana. Mr. Neale is also a
director of Modine Manufacturing Company............................ 1991
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE AND PRINCIPAL OCCUPATIONS HAS BEEN
FOR PAST FIVE YEARS AND PRESENT DIRECTOR
DIRECTORSHIPS HELD SINCE
----------------------------------- --------
<S> <C>
Robert J. Welsh, 61-President and Chief Executive Officer of Welsh,
Inc., Merrillville, Indiana, a marketer of petroleum products
through convenience stores and travel centers. Mr. Welsh is also a
director of NBD Indiana, Inc........................................ 1988
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Steven C. Beering, 64-President of Purdue University, West Lafayette,
Indiana. Dr. Beering is also a director of Arvin Industries, Inc.,
American United Life Insurance Company and Eli Lilly and Company.... 1986
Ernestine M. Raclin, 69-Chairman of the Board, 1st Source
Corporation, a bank holding company, and 1st Source Bank, South
Bend, Indiana....................................................... 1983
Denis E. Ribordy, 67-Chairman and Chief Executive Officer of the
Chicago Motor Club, Chicago, Illinois; retired President of Ribordy
Drugs, Inc., Merrillville, Indiana, a retail drugstore chain. Mr.
Ribordy is also a director of Mercantile National Bank of Indiana.... 1981
DIRECTORS WHOSE TERMS EXPIRE IN 1999
Ian M. Rolland, 63-Chairman and Chief Executive Officer of Lincoln
National Corporation, Fort Wayne, Indiana, an insurance and
financial services firm. Mr. Rolland is also a director of Lincoln
National Corporation, Tokheim Corporation, Norwest Corporation and
Norwest Bank Indiana, N.A........................................... 1978
Edmund A. Schroer, 69-Retired March 1, 1993 as Chairman, President
and Chief Executive Officer of the Company and Chairman and Chief
Executive Officer of Northern Indiana............................... 1977
John W. Thompson, 47-General Manager-IBM North America of IBM
Corporation, White Plains, New York. IBM is a worldwide corporation,
whose offerings include services, software systems, products and
technologies. Mr. Thompson is also a director of American Brands
Inc................................................................. 1993
</TABLE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS--
The Board of Directors of the Company met ten times during 1996. The Board
has the following six standing committees: the Executive Committee, the Audit
Committee, the Nominating and Compensation Committee, the Environmental
Affairs Committee, the Public Affairs and Employment Committee and the
Corporate Governance Committee.
3
<PAGE>
During 1996, each director attended at least 88% of the combined total
number of the Company's Board meetings and the meetings of the respective
committees on which he or she was a member.
The Executive Committee has the authority to act on behalf of the Board at
such times as is reasonably necessary when the Board is not in session. The
Committee did not meet in 1996. Mr. Neale is Chairman and Messrs. Decio,
Ribordy, Rolland and Welsh were members of the Committee in 1996.
The Audit Committee met five times in 1996. The Committee has reviewed and
made recommendations to the Board with respect to the engagement of the
independent public accountants, both for 1996 and 1997, and the fees relating
to audit services and other services performed by them. The Committee meets
with the independent public accountants and officers responsible for Company
financial matters. Members of the Committee in 1996 were
Mr. Rolland, Chairman, and Messrs. Decio, Schroer and Thompson.
The Nominating and Compensation Committee met three times in 1996. The
Committee advises the Board with respect to nominations of directors and the
salary, compensation and benefits of directors and officers of the Company.
Mr. Ribordy was Chairman of the Committee, and Dr. Beering, Mrs. Raclin and
Mr. Welsh were members during 1996. The Committee considers nominees for
directors recommended by shareholders. The Company's By-laws require that
shareholders who desire to nominate a person for election as a director at the
1998 annual meeting must deliver a written notice to the Secretary of the
Company by November 10, 1997. The notice of nomination must set forth (i) the
name, age and address of each nominee proposed, (ii) the principal occupation
or employment of the nominee, (iii) the number of Common Shares beneficially
owned by the nominee and (iv) such other information concerning the nominee as
would be required, under the rules of the Securities and Exchange Commission,
in a proxy statement soliciting proxies for the election of the nominee. The
nomination notice must also include the nominating shareholder's name and
address and the number of Common Shares beneficially owned by the shareholder.
The shareholder must also furnish the signed consent of the nominee to serve
as a director, if elected.
The Environmental Affairs Committee met twice during 1996. The Committee
reviews the status of environmental compliance of the Company, and considers
Company public policy issues. Members of the Committee in 1996 were Mr. Welsh,
Chairman, Dr. Beering and Messrs. Decio and Schroer.
4
<PAGE>
The Public Affairs and Employment Committee met twice in 1996. The Committee
advises the Board regarding charitable and political contributions, employment
policies, shareholder proposals concerning matters of general public interest
and consumer and utility industry related issues. Members of the Committee in
1996 were Mrs. Raclin, Chairman, and Messrs. Ribordy, Rolland and Thompson.
The Corporate Governance Committee met once in 1996. The Committee consists
of all members of the Board who are not also officers. The Committee meets
once a year to evaluate/advise the Board regarding the performance of the
Board of Directors and each of its members and the nature and amount of
information flowing between the Board, management and shareholders. Mr.
Rolland was Chairman of the Committee in 1996.
COMPENSATION OF DIRECTORS--
Each director who is not receiving a salary from the Company is paid $15,000
per year, $3,000 annually per standing committee on which the director sits,
$1,000 annually for each committee chairmanship, $750 for each Board meeting
attended and $750 per committee meeting attended. Directors of the Company do
not receive any additional compensation for services as a director of any
Company subsidiary, including Northern Indiana. Under a deferred compensation
arrangement, directors may have their fees deferred in the current year and
credited to an interest-bearing account or to a phantom stock account for
payment in the future.
The Company's Nonemployee Director Retirement Plan provides a retirement
benefit for each nonemployee director of the Company who has completed at
least five years of service on the Board. The benefit will be an amount equal
to the annual retainer for Board service in effect at the time of the
director's retirement from the Board, to be paid for the lesser of ten years
or the number of years of service as a nonemployee director of the Company.
The Company's Nonemployee Director Stock Incentive Plan provides for grants
of restricted Common Shares to nonemployee directors of the Company. Initial
grants were made in 1992, following shareholder approval of the plan, at the
level of 250 shares for each year of service as a director, and 1,000
restricted Common Shares have been granted to each nonemployee director
elected or reelected since that date. A grant of 1,000 shares will be made in
the future to each person, other than an employee of the Company, who is
elected or reelected as a director of the Company. The grants of restricted
shares vest in 20% annual increments, with full vesting five years after the
date of award.
5
<PAGE>
The Company has adopted a Directors' Charitable Gift Program for nonemployee
directors. Under the program, the Company makes a donation to one or more
eligible tax-exempt organizations as designated by each eligible director. The
Company contributes up to an aggregate of $125,000 as designated by nonemployee
directors having served as a director of the Company for at least five years
and up to $250,000 as designated by those having served ten years or more.
Organizations eligible to receive a gift under the program include charitable
organizations and educational institutions located in Indiana and educational
institutions that the director attended or for which he or she serves on its
governing board. Individual directors derive no financial benefit from the
program, as all deductions relating to the charitable donations accrue solely
to the Company. All current nonemployee directors are eligible to participate
in the program.
An agreement between the Company and Mr. Schroer, retired Chairman, President
and Chief Executive Officer of the Company, provided that, for a period of
three years ended March 1, 1996, he was engaged by the Company as an
independent consultant for an annual fee of $200,000.
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The Company is not aware of any beneficial owner of more than 5% of its
Common Shares, as of January 31, 1997.
The following table sets forth information as to the beneficial ownership of
Common Shares, as of January 31, 1997, for each of the named directors and
executive officers, and for all directors and executive officers as a group.
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(/1/)
---------------- -------------------------
<S> <C>
Steven C. Beering.............................. 3,043
Arthur J. Decio................................ 3,250
Gary L. Neale.................................. 203,598(/2/)
Ernestine M. Raclin............................ 11,232
Denis E. Ribordy............................... 27,500(/3/)
Ian M. Rolland................................. 7,749
Edmund A. Schroer.............................. 20,900
John W. Thompson............................... 2,337
Robert J. Welsh................................ 5,000
Stephen P. Adik................................ 107,319(/2/)
Patrick J. Mulchay............................. 75,779(/2/)
Jeffrey W. Yundt............................... 87,228(/2/)
Joseph L. Turner............................... 58,719(/2/)
All directors and executive officers as a
group......................................... 955,268(/2/)
</TABLE>
- --------
(/1/)The number of shares owned includes shares held in the Company's Automatic
Dividend Reinvestment and Share Purchase Plan, shares held in the
Company's Tax Deferred Savings Plan (the "401(k) Plan") and restricted
shares awarded under the Company's 1988 Long-Term Incentive Plan (the
"Incentive Plan") and Nonemployee Director Stock Incentive Plan, where
applicable. The percentage of Common Shares owned by all directors and
officers as a group is approximately 0.765 percent of the Common Shares
outstanding.
(/2/)The totals include shares for which the following executive officers have
a right to acquire beneficial ownership, within 60 days after January 31,
1997, by exercising stock options granted under the Incentive Plan: Gary
L. Neale--120,000 shares; Stephen P. Adik--61,600 shares; Patrick J.
Mulchay--47,200 shares; Jeffrey W. Yundt--56,000 shares; Joseph L.
Turner--34,500 shares; and all executive officers as a group--489,700
shares.
(/3/)Mr. Ribordy disclaims beneficial ownership of 100 shares owned by his
wife.
7
<PAGE>
EXECUTIVE COMPENSATION
NOMINATING AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION--
The Nominating and Compensation Committee's (the "Compensation Committee")
compensation policy for all executive officers, including the person who
served as Chief Executive Officer of the Company during 1996 and the four
other most highly compensated officers of the Company (the "Named Officers"),
is designed to relate total compensation (defined as base salary, incentive
bonus and long-term, stock-based compensation) to corporate performance. The
Compensation Committee has implemented a "pay-for-performance" program which
is designed to position the Company's executive compensation competitively and
to reward performance that creates additional shareholder value. The
Compensation Committee discusses and considers executive compensation matters,
then makes recommendations to the full Board of Directors, which takes the
final action on such matters. The Board accepted all of the Compensation
Committee's recommendations in 1996.
The Compensation Committee has engaged an independent, nationally known,
compensation consulting firm, Hewitt Associates ("Hewitt"), to advise it and
provide surveys of comparative compensation practices for a group of similarly
sized energy companies, typically electric, gas or combination utility
companies, approximately half of which are located in the Midwest. The 1996
executive compensation comparative group consisted of 22 companies from which
data was available to Hewitt and which were believed to be competitors of the
Company for executive talent. The comparative compensation group is subject to
change in future years if information about any company included in the group
is not available, if it is determined that any companies included in the group
are no longer competitors for executive talent, or if different energy or
other types of companies are determined to be competitors. The Company's
comparative compensation group is not the same as the corporations which make
up the Dow Jones Utilities Index in the Stock Price Performance Graph included
in this proxy statement.
The Compensation Committee considers the surveys provided by Hewitt in
determining base salary, incentive bonus and long-term stock-based
compensation. The Compensation Committee's philosophy is to set conservative
base salaries while providing performance-based variable compensation through
the Bonus and Incentive Plans described below to allow total compensation to
fluctuate according to the Company's financial performance. Long-term
incentive awards are stock-based (e.g., stock options or goal-based restricted
stock awards) to emphasize long-term stock price appreciation and the
concomitant increased shareholder value. In 1996, total compensation of the
executive officers, including the Chief Executive Officer, was targeted
between the 50th and the 75th percentile of the comparative compensation
group. Total compensation would reach this level only if the Company met its
8
<PAGE>
earnings per share and pre-tax operating income targets for the year and its
long-term stock price targets. Base salaries of the executive officers, as a
group, varied between 40% to 55% of total target compensation.
In establishing Mr. Neale's base salary for 1996, the Compensation Committee
reviewed information provided by Hewitt regarding the chief executive officer
compensation practices of comparative energy companies. The Compensation
Committee determined to set base salary near the median salary of the
comparative group, giving regard to Mr. Neale's proven abilities and strong
performance with the Company since joining it as Executive Vice President and
Chief Operating Officer in 1989. As with the other executive officers, Mr.
Neale's total compensation was targeted to be between the 50th and the 75th
percentile of the comparative compensation group, if the Company met its
targeted financial goals. The result of the Compensation Committee's
determination as to Mr. Neale's total compensation package was that more than
50% of Mr. Neale's total compensation was performance based and at risk,
dependent upon the Company's earnings per share, Northern Indiana's pre-tax
operating income and the Company's stock price performance. The Compensation
Committee noted that this compensation would be realized only if specific
financial benchmarks were reached by the Company.
Annual incentive awards for all executive officers are determined in
accordance with the Senior Management Incentive Plan (the "Bonus Plan"). The
Bonus Plan sets forth a formula established at the beginning of each fiscal
year by the Compensation Committee for awarding incentive bonuses, based upon
the Company's financial performance. Bonuses awarded to each of the Named
Officers (including the Chief Executive Officer) are based on overall
corporate financial performance, rather than individual performance of the
executive. In 1996, the bonus formula (and the relative weight of the factors
on which it was based) was based upon attaining targets for both the Company's
earnings per share and the pre-tax operating income of Northern Indiana. The
range of awards and levels of awards (as a percent of base salary), if
financial performance targets are achieved, are as follows:
<TABLE>
<CAPTION>
AWARD IF
RANGE TARGETS MET
-------- -----------
<S> <C> <C>
Chief Executive Officer................................. 0 to 70% 60%
Executive Vice Presidents............................... 0 to 60% 50%
Vice Presidents......................................... 0 to 60% 40%
</TABLE>
The required financial performance levels of the Company necessary to attain
the maximum and target bonus levels have been increased annually since the
inception of the Bonus Plan in 1990. In 1996, the Company's actual earnings
per share and Northern Indiana's pre-tax operating income were less than
targeted.
9
<PAGE>
Executive officers are also eligible to receive awards under the Company's
Long-Term Incentive Plan. Under the Long-Term Incentive Plan, stock options,
stock appreciation rights, performance units, restricted stock awards and
supplemental cash payments may be awarded. Stock options and restricted stock
awards were awarded in 1996. Base salaries of the executive officers, prior
awards under the Long-Term Incentive Plan, and the Company's total
compensation target are considered in establishing long-term incentive awards.
Options and restricted stock awards granted to executive officers are valued
using the Black-Scholes option pricing model at the time of grant for purposes
of determining the number of options to be granted to reach total target
compensation. In 1996, the number of options and restricted shares granted to
the Chief Executive Officer and other executive officers (including all Named
Officers) was based on these considerations. The compensation value of stock
options and/or restricted stock awards depends on actual stock price
appreciation. In addition, restricted stock awards are subject to performance
vesting criteria. The criteria for 1996 awards involve meeting specific
performance objectives.
Section 162(m) of the Internal Revenue Code provides that compensation in
excess of $1,000,000 per year paid to the chief executive officer or any of
the four other most highly compensated executive officers employed at year-
end, other than compensation meeting the definition of "performance based
compensation," will not be deductible by a corporation for federal income tax
purposes. The Compensation Committee believes that the Company's incentive
bonus and long-term stock-based compensation constitutes performance based
compensation for purposes of the Internal Revenue Code. In light of its
emphasis on such performance based compensation, the Compensation Committee
does not anticipate that the limits of Section 162(m) will affect the
deductibility of any compensation paid by the Company. However, the
Compensation Committee will continue to review the deductibility of
compensation under Section 162(m) and related regulations.
The Compensation Committee believes that its overall executive compensation
program has been successful in providing competitive compensation sufficient
to attract and retain highly qualified executives, while at the same time
encouraging increased performance from the executive officers which creates
additional shareholder value.
Nominating and Compensation
Committee
Denis E. Ribordy, Chairman
Steven C. Beering
Ernestine M. Raclin
Robert J. Welsh
January 31, 1997
10
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the yearly change in the Company's cumulative
total shareholder return on Common Shares, during the years 1991 through 1996,
with the cumulative total return on the Standard & Poor's 500 Stock Index and
the Dow Jones Utilities Average, assuming the investment of $100 on December
31, 1991 and the reinvestment of dividends.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG NIPSCO INDUSTRIES, S&P 500 INDEX AND DJ UTILITIES
Measurement Period NIPSCO S&P
(Fiscal Year Covered) Industries 500 INDEX DJ Utilities
- -------------------- ---------- --------- ------------
Measurement Pt-
12/31/91 $100.00 $100.00 $100.00
FYE 12/31/92 $108.14 $107.61 $104.03
FYE 12/31/93 $139.98 $118.44 $114.07
FYE 12/31/94 $132.84 $119.99 $ 96.67
FYE 12/31/95 $179.05 $165.02 $127.92
FYE 12/31/96 $193.98 $202.89 $139.67
11
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS--
Summary. The following table summarizes all annual and long-term
compensation for services to the Company and its subsidiaries, including
Northern Indiana, for the years 1996, 1995 and 1994 awarded to, earned by or
paid to each of the Named Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(/1/) LONG-TERM COMPENSATION
------------------------------- ----------------------------
AWARDS PAYOUTS
------------------ -------
SECU-
OTHER RITIES LONG-TERM ALL
ANNUAL RESTRICT- UNDER- INCENTIVE OTHER
NAME AND COMPEN- ED STOCK LYING PLAN COMPEN-
PRINCIPAL SALARY BONUS SATION AWARDS OPTIONS/ PAYOUTS SATION
POSITION YEAR ($) ($)(/2/) ($)(/3/) ($) SARS(#) ($)(/4/) ($)(/5/)
--------- ---- -------- -------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary L.
Neale, 1996 $460,000 $236,624 $5,161 0 25,000 $567,188 $10,775
Chairman,
President
and Chief 1995 460,000 286,120 2,746 0 20,000 527,812 10,168
Executive
Officer 1994 460,000 230,000 1,903 0 25,000 0 11,190
Stephen P.
Adik, 1996 205,000 84,952 9,103 0 10,000 283,594 2,268
Executive
Vice
President,1995 205,000 107,010 2,400 0 10,000 263,906 1,992
Chief Fi-
nancial
Officer
and 1994 205,000 82,000 1,118 0 8,000 0 1,927
Treasurer
Patrick J.
Mulchay, 1996 175,000 72,520 1,614 0 10,000 283,594 3,199
Executive
Vice
President
and 1995 175,000 91,350 756 0 10,000 87,968 3,344
Chief Op-
erating
Officer 1994 175,000 70,000 852 0 8,000 0 3,078
Jeffrey W.
Yundt, 1996 175,000 72,520 1,671 0 10,000 283,594 809
Executive
Vice
President
and 1995 175,000 91,350 1,217 0 10,000 263,906 800
Chief Op-
erating
Officer-- 1994 175,000 70,000 1,174 0 8,000 0 739
Energy
Services
Joseph L.
Turner, 1996 160,000 182,958(/6/) 5,144 0 5,000 283,594 2,055
Senior
Vice
President 1995 160,000 66,816 1,302 0 5,000 263,906 2,211
1994 160,000 64,000 1,090 0 6,500 0 2,109
</TABLE>
- --------
(/1/)Compensation deferred at the election of the Named Officer is reported in
the category and year in which such compensation was earned.
(/2/)All bonuses are paid pursuant to the Bonus Plan, except for a portion of
the bonus paid to Joseph L. Turner, which is described in Note 6. The
Bonus Plan is designed to supplement a conservative base salary with
incentive bonus payments if targeted financial performance is attained.
The 1996 target aggregate payout for the Bonus Plan for the Named Officers
12
<PAGE>
was $549,340, which was greater than the actual aggregate payout for the
Named Officers. See "Nominating and Compensation Committee Report on
Executive Compensation."
(/3/)In accordance with applicable Securities and Exchange Commission rules,
the amounts shown for each of the Named Officers do not include
perquisites and other personal benefits, as the aggregate amount of such
benefits is less than the lesser of $50,000 and 10% of the total salary
and bonus of such Named Officer.
(/4/)The payouts shown are based on the value, at date of vesting, of
restricted shares awarded under the Long-Term Incentive Plan which vested
during the years shown. Vesting was based on meeting certain performance
requirements. Total restricted shares held (assuming 100% vesting) and
aggregate market value at December 31, 1996 (based on the average of the
high and low sale prices of the Common Shares on that date as reported in
The Wall Street Journal) for the Named Officers were as follows: Mr.
Neale, 53,000 shares valued at $2,103,438; Mr. Adik, 24,000 shares valued
at $952,500; Messrs. Mulchay and Yundt, 20,000 shares each valued at
$793,750; and Mr. Turner, 12,000 shares valued at $476,250. Dividends on
the restricted shares are paid to the Named Officers.
(/5/)The Chairman, President and Chief Executive Officer, the Executive Vice
Presidents and certain Vice Presidents of the Company and Northern Indiana
have available to them a supplemental life insurance plan which provides
split-dollar coverage of up to 3.5 times base compensation as of
commencement of the plan in 1991 and could provide life insurance coverage
after retirement if there is adequate cash value in the respective policy;
none is projected at this time. "All other compensation" represents
Company contributions to the 401(k) Plan and the dollar value of the
benefit to the Named Officers of the remainder of the premiums paid by the
Company during 1996 on behalf of the Named Officers under the supplemental
life insurance plan, as follows: Mr. Neale--$1,055 401(k) Plan, $8,748
premium value and $973 term insurance cost; Mr. Adik--$1,055 401(k) Plan,
$809 premium value and $405 term insurance cost; Mr. Mulchay, $136 401(k)
Plan, $2,702 premium value and $361 term insurance cost; Mr. Yundt, $809
premium value and $326 term insurance cost and Mr. Turner--$1,306 premium
value and $749 term insurance cost.
(/6/)Joseph L. Turner is also President of Primary Energy, Inc., and
participates in the Primary Energy Incentive Plan ("PE Plan"). The PE Plan
provides for a bonus based on meeting certain financial performance
criteria of Primary Energy. Under the PE Plan, $80,871 of Mr. Turner's
bonus for 1996 was used to purchase Common Shares of the Company on or
about February 28, 1997, the date of payment of the bonus. The PE Plan
requires that the Common Shares are restricted for a period of five years,
subject to continued employment, except that they vest earlier in the
event of the employee's retirement, death or disability.
13
<PAGE>
Option Grants in 1996. The following table sets forth grants of options to
purchase Common Shares made during 1996 to the Named Officers. No stock
appreciation rights were awarded during 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------------
NUMBER OF
SECURITIES PERCENT OF TOTAL GRANT
UNDERLYING OPTIONS/SARS DATE
OPTIONS/SARS GRANTED TO PRESENT
GRANTED EMPLOYEES IN EXERCISE OR BASE EXPIRATION VALUE
NAME (#)(/1/) FISCAL YEAR(/2/) PRICE ($/SH)(/3/) DATE ($)(/4/)
- ---- ------------ ---------------- ----------------- ---------- --------
<S> <C> <C> <C> <C> <C>
Gary L. Neale........... 25,000 9.0% 37.81 08/27/06 $122,500
Stephen P. Adik......... 10,000 3.6% 37.81 08/27/06 49,000
Patrick J. Mulchay...... 10,000 3.6% 37.81 08/27/06 49,000
Jeffrey W. Yundt........ 10,000 3.6% 37.81 08/27/06 49,000
Joseph L. Turner........ 5,000 1.8% 37.81 08/27/06 24,500
</TABLE>
- --------
(/1/)All options granted in 1996 are fully exercisable commencing one year from
the date of grant. Vesting may be accelerated as a result of certain
events relating to a change in control of the Company. The exercise price
and tax withholding obligation related to exercise may be paid by delivery
of already owned Common Shares or by reducing the number of Common Shares
received on exercise, subject to certain conditions.
(/2/)Based on an aggregate of 278,300 options granted to all employees in 1996.
(/3/)All options were granted at the average of high and low sale prices of the
Common Shares as reported in The Wall Street Journal on the date of grant.
(/4/)Grant date present value is determined using the Black-Scholes option
pricing model. The assumptions used in the Black-Scholes option pricing
model were as follows: volatility--12.796% (calculated using daily Common
Share prices for the twelve-month period preceding the date of grant);
risk-free rate of return--6.64% (the rate for a ten-year U.S. treasury);
dividend yield--$1.68; option term--ten years; vesting--100% one year
after date of grant; and turnover--9.00% (to reflect the probability of
forfeiture due to termination of employment prior to vesting) and 14.84%
(to reflect the probability of a shortened option term due to termination
of employment prior to the option expiration date). No assumptions
relating to non-transferability or risk of forfeiture were made. Actual
gains, if any, on option exercises and Common Shares are dependent on the
future performance of the Common Shares and overall market condition.
There can be no assurance that the amounts reflected in this table will be
achieved.
14
<PAGE>
Option Exercises in 1996. The following table sets forth certain information
concerning the exercise of options or stock appreciation rights ("SARs")
during 1996 by each of the Named Officers and the number and value of
unexercised options and SARs at December 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
ACQUIRED OPTIONS/SARS AT FISCAL AT FISCAL YEAR-END
ON VALUE YEAR-END (#)(/1/) ($)(/2/)
EXERCISE REALIZED ------------------------- -------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gary L. Neale........... 0 $ 0 120,000 25,000 $1,531,562 $46,875
Stephen P. Adik......... 0 0 61,600 10,000 943,375 18,750
Patrick J. Mulchay...... 0 0 47,200 10,000 582,850 18,750
Jeffrey W. Yundt........ 0 0 56,000 10,000 782,375 18,750
Joseph L. Turner........ 0 0 34,500 5,000 391,843 9,375
</TABLE>
- --------
(/1/)Includes some SARs granted in tandem with options.
(/2/)Represents the difference between the option exercise price and $39.69,
the average of high and low sale prices of the Common Shares on December
31, 1996, as reported in The Wall Street Journal.
15
<PAGE>
Long-Term Incentive Plan Awards in 1996. The following table sets forth
restricted shares awarded pursuant to the Long-Term Incentive Plan during 1996
to each of the Named Officers.
LONG-TERM STOCK INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE
OR OTHER
PERIOD ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF SHARES, UNTIL NON-STOCK PRICE-BASED PLANS
UNITS OR OTHER MATURATION ------------------------------------
NAME RIGHTS (#) OR PAYOUT THRESHOLD (#) TARGET (#) MAXIMUM (#)
- ---- ----------------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Gary L. Neale........... 8,000 2 years 0 8,000 8,000
Stephen P. Adik......... 4,000 2 years 0 4,000 4,000
Patrick J. Mulchay...... 0 0 0 0
Jeffrey W. Yundt........ 0 0 0 0
Joseph L. Turner........ 0 0 0 0
</TABLE>
The restrictions on shares awarded during 1996 lapse two years from the date
of grant. The vesting of the restricted shares is variable from 0% to 100% of
the number awarded, based upon meeting certain specific non-financial
performance objectives. There is a two-year holding period for the shares
after the restrictions lapse.
16
<PAGE>
PENSION PLAN AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN--
The following table shows estimated annual benefits, giving effect to the
Company's Supplemental Executive Retirement Plan (as described below), payable
upon retirement to persons in the specified remuneration and years-of-service
classifications.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------
REMUNERATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$200,000........................... $ 79,500 $106,000 $111,000 $116,000 $116,000
250,000........................... 102,000 136,000 142,250 148,500 148,500
300,000........................... 124,500 166,000 173,500 181,000 181,000
350,000........................... 147,000 196,000 204,750 213,500 213,500
400,000........................... 169,500 226,000 236,000 246,000 246,000
450,000........................... 192,000 256,000 267,250 278,500 278,500
500,000........................... 214,500 286,000 298,500 311,000 311,000
550,000........................... 237,000 316,000 329,750 343,500 343,500
600,000........................... 259,500 346,000 361,000 376,000 376,000
650,000........................... 282,000 376,000 392,250 408,500 408,500
700,000........................... 304,500 406,000 423,500 441,000 441,000
750,000........................... 327,000 436,000 454,750 473,500 473,500
800,000........................... 349,500 466,000 486,000 506,000 506,000
850,000........................... 372,000 496,000 517,250 538,500 538,500
900,000........................... 394,500 526,000 548,500 571,000 571,000
</TABLE>
The credited years of service for each of the Named Officers, pursuant to
the Supplemental Plan, are as follows: Gary L. Neale--22 years; Stephen P.
Adik--18 years; Patrick J. Mulchay--34 years; Jeffrey W. Yundt--17 years; and
Joseph L. Turner--25 years.
Upon their retirement, regular employees and officers of the Company and its
subsidiaries which adopt the plan (including directors who are also full-time
officers) will be entitled to a monthly pension in accordance with the
provisions of the Company's pension plan, effective as of January 1, 1945. The
directors who are not and have not been officers of the Company are not
included in the pension plan. The pensions are payable out of a trust fund
established under the pension plan with The Northern Trust Company, trustee.
The trust fund consists of contributions made by the Company and the earnings
of the fund. Over a period of years the contributions are intended to result
in over-all actuarial solvency of the trust fund. The pension
17
<PAGE>
plan of the Company has been qualified as non-discriminatory under Sections
401 and 404 of the Internal Revenue Code of 1986 (the "Code").
Pension benefits are determined separately for each participant. The formula
for a monthly payment for retirement at age 65 is 1.7% of average monthly
compensation multiplied by years of service (to a maximum of 30 years) plus
0.6% of average monthly compensation multiplied by years of service over 30.
Average monthly compensation is the average for the 60 consecutive highest-
paid months in the employee's last 120 months of service. Covered compensation
is defined as wages reported as W-2 earnings plus any salary reduction
contributions made under the 401(k) Plan and an amount equivalent to base pay
for certain non-compensated periods of authorized leave of absence, minus any
amounts paid for unused vacations accrued.
The Company also has a Supplemental Executive Retirement Plan for officers.
Participants in the Plan are selected by the Board of Directors. Benefits from
the Plan are to be paid from the general assets of the Company.
The Supplemental Plan provides the larger of (i) 60% of five-year average
pay less Primary Social Security Benefits (prorated for less than 20 years of
service) and an additional 0.5% of 5-year average pay less Primary Social
Security Benefits per year for participants with between 20 and 30 years of
service, or (ii) the benefit formula under the Company's Pension Plan. In
either case, the benefit is reduced by the actual pension payable from the
Company's Pension Plan. In addition, the Supplemental Plan provides certain
disability and pre-retirement death benefits for the spouse of a participant.
CHANGE IN CONTROL AND TERMINATION AGREEMENTS--
The Board of Directors of the Company has authorized Change in Control and
Termination Agreements (the "Agreements") with Mr. Neale and the Vice
Presidents of the Company (including each of the Named Officers) (each such
person being an "executive"). The Company believes that these Agreements and
related shareholder rights protections are in the best interests of the
shareholders, to insure that in the event of extraordinary events, totally
independent judgment is enhanced to maximize shareholder value. The
Agreements, which are terminable upon three years' notice, provide for the
payment of three times then current annual base salary and the continuation of
certain employee benefits for a period of 36 months (the "Severance Period"),
if the executive's employment is terminated within 24 months of certain
changes in control of the Company. Based on their 1996 base salaries, the
amounts that would be payable to the Named Officers would be as follows: Gary
L. Neale--$1,380,000; Stephen P.
18
<PAGE>
Adik--$615,000; Patrick J. Mulchay--$525,000; Jeffrey W. Yundt--$525,000; and
Joseph L. Turner--$480,000.
The executive would receive full benefits under any supplemental retirement
plan of the Company, offset by amounts paid to the executive from any
qualified retirement plans of the Company. All stock options held by the
executive would become immediately exercisable upon the date of termination of
employment, and the restrictions would lapse on all restricted shares awarded
to the executive. If any penalty tax under the Code is imposed on the payment
of three times base salary, the Company would increase the payment to the
extent necessary to compensate the executive for the imposition of such tax.
During the Severance Period, the executive and spouse would continue to be
covered by applicable health or welfare plans of the Company. If the executive
died during the Severance Period, all amounts payable to the executive would
be paid to a named beneficiary. No amounts would be payable under the
Agreements if the executive's employment were terminated by the Company for
Good Cause (as defined in the Agreements).
The Agreement with Mr. Neale also provides for the same severance payments
as above described in the event his employment is terminated at any time by
the Company (other than for Good Cause) or due to death or disability, or if
he voluntarily terminates employment with Good Reason (as defined in the
Agreements).
PROPOSAL 2--AMENDMENT TO ARTICLES OF INCORPORATION TO INCREASE
THE NUMBER OF DIRECTORS
The Board of Directors of the Company has unanimously adopted, and
recommends that the shareholders approve, an amendment to Article VI of the
Articles of Incorporation of the Company to increase the number of directors
from nine to ten. If the proposed amendment is approved, the first two
sentences of Paragraph 1 of Article VI would be amended to read as follows:
1. The Board of Directors of the Corporation shall consist of ten (10)
directors. The directors shall be divided into three classes, and each
class shall consist of one-third, or as near as may be, of the total number
of directors constituting the Board of Directors.
The Company's Articles of Incorporation currently provide that the Board of
Directors is composed of nine directors, who are divided into three classes
with each class consisting of three directors. In connection with the
Company's pending acquisition of IWC Resources
19
<PAGE>
Corporation ("IWC"), which is expected to be completed on or about March 31,
1997, the Company determined that it would be in the best interests of the
Company and its shareholders to add one of IWC's directors to the Company's
Board of Directors. The agreement providing for the IWC acquisition requires
the Company to use its best efforts to cause its Articles of Incorporation to
be amended at the 1997 annual meeting of its shareholders to increase the
authorized number of directors so as to permit the appointment immediately
after the annual meeting of one director of the Company to be mutually
determined by the Company and IWC. In order to satisfy that requirement, the
Board of Directors has adopted the resolution amending the Articles of
Incorporation to increase the number of directors of the Company from nine to
ten. The Board of Directors believes that this amendment is in the best
interests of the Company and its shareholders and unanimously recommends that
the shareholders approve the amendment.
If the proposed amendment to increase the size of the Board of Directors of
the Company is approved, the tenth director would be included in the class of
directors whose terms expire in 1998. The Company and IWC have agreed that
James T. Morris, the Chairman of the Board and Chief Executive Officer of IWC,
will be appointed by the Board of Directors to fill the vacancy created in
that class if the amendment is approved.
Mr. Morris became Chairman of the Board and Chief Executive Officer of IWC
and its largest subsidiary, Indianapolis Water Company, in April 1991. He was
President and Chief Operating Officer of IWC and Indianapolis Water Company
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.
The affirmative vote of the holders of not less than 75% of the outstanding
shares entitled to vote thereon is required to approve the amendment to the
Articles of Incorporation of the Company to increase the number of directors
from nine to ten.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AMENDMENT TO THE ARTICLES OF INCORPORATION OF THE COMPANY TO INCREASE THE
NUMBER OF DIRECTORS FROM NINE TO TEN.
20
<PAGE>
INCLUSION OF SHAREHOLDER PROPOSALS IN PROXY MATERIALS
Any holder of Common Shares who wishes to submit a proposal to be voted upon
by shareholders at the 1998 annual meeting of the Company, and who wishes the
proposal to be included in the Company's proxy materials, must submit the
proposal to the Secretary of the Company by November 10, 1997. The notice must
include a brief description of the business desired to be brought before the
meeting, the reasons for conducting such business at the meeting and any
material interest in such business of such shareholder and the beneficial
owner, if any, on whose behalf the proposal is made. The notice must also
include the nominating shareholder's name and address and the number of Common
Shares beneficially owned by the shareholder. Any proposal submitted will also
be subject to the rules of the Securities and Exchange Commission regarding
shareholder proposals.
COMPLIANCE WITH FORMS 3, 4 AND 5 REPORTING REQUIREMENTS
Based solely upon its review of the Forms 3, 4 and 5 furnished to the
Company pursuant to Section 16(a) of the Securities Exchange Act of 1934, the
Company believes that all of its directors, officers and beneficial owners of
more than 10% of its Common Shares filed all such reports on a timely basis
during 1996.
ANNUAL REPORT AND FINANCIAL STATEMENTS
Attention is directed to the financial statements contained in the Company's
Annual Report for the year ended December 31, 1996. A copy of the Annual
Report has been sent, or is concurrently being sent, to all shareholders of
record as of February 18, 1997.
AVAILABILITY OF FORM 10-K
A copy of the Company's annual report for 1996 to the Securities and
Exchange Commission on Form 10-K, without exhibits, will be provided without
charge to any shareholder or beneficial owner of the Company's shares upon
written request to Nina M. Rausch, Secretary, NIPSCO Industries, Inc., 5265
Hohman Avenue, Hammond, Indiana 46320.
21
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP has been selected by the Board of Directors to serve as
the Company's independent public accountants for the year 1997, as they have
served for many years past. A representative of that firm will be present at
the annual meeting and will be given an opportunity to make a statement if he
so desires. The Company has been informed by the representative that he does
not presently intend to make such a statement. The representative will also be
available to respond to questions from shareholders.
OTHER BUSINESS
The Board of Directors does not intend to bring any other matters before the
meeting and does not know of any matters which will be brought before the
meeting by others. If any matters properly come before the meeting it is the
intention of the persons named in the enclosed form of proxy to vote the proxy
in accordance with their judgment on such matters.
It is important that proxies be returned promptly. Therefore, shareholders
are urged to vote, date, sign and return the enclosed proxy. No postage need
be affixed if mailed in the United States,
By Order of the Board of Directors
LOGO
Nina M. Rausch
Secretary
Dated: March 7, 1997
22
<PAGE>
NIPSCO INDUSTRIES, INC.
----------------------------------------------------------------------------
NOTICE OF ANNUAL
OFFICERS MEETING AND
Gary L. Neale PROXY STATEMENT
Chairman,
President and
1997
Chief Executive
Officer
Stephen P. Adik
NIPSCO INDUSTRIES, INC.
Executive Vice
President and
Chief Financial
Officer, and
Treasurer
5265 Hohman Avenue
Hammond, Indiana 46320-1775 LOGO
- ----------------------------------------------------------------------------
Patrick J. Mulchay
Executive Vice
President and
Chief Operating
Officer, Northern
Indiana Public
Service Company
Jeffrey W. Yundt
Executive Vice
President and
Chief Operating
Officer, Energy
Services
Joseph L. Turner
Senior Vice
President, Major
Accounts
Jerry M. Springer
Controller and
Assistant
Secretary
Dennis E. Senchak
Assistant
Treasurer
Nina M. Rausch
Secretary
<PAGE>
- -
- -
PROXY PROXY
NIPSCO INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS, APRIL 9, 1997
The undersigned hereby appoints Gary L. Neale, Stephen P. Adik and Jerry M.
Springer, or any of them, the attorneys and proxies of the undersigned, with
full power of substitution, for and in the name of the undersigned to represent
and vote the shares of the undersigned at the Annual Meeting of Shareholders of
the Company, to be held at the Grand Wayne Center, 120 West Jefferson
Boulevard, Fort Wayne, Indiana, on Wednesday, April 9, 1997, at 10 a.m., EST,
and at any adjournment or adjournments thereof, in accordance with the Notice
and Proxy Statement received upon the following matters:
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED "FOR" THE
ELECTION OF DIRECTORS AND THE AMENDMENT TO THE COMPANY'S ARTICLES OF
INCORPORATION.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND
THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(Continued and to be signed on reverse side.)
<PAGE>
- - -
NIPSCO INDUSTRIES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. (X)
1. Election of Directors
Nominees: Arthur J. Decio, Gary L. Neale and Robert J. Welsh
For
For Withheld All (Except Nominee(s) written below)
( ) ( ) ( )
- --------------------------------------------------------------------------------
2. Amendment to the Company's Articles of Incorporation increasing the number
of directors from nine to ten.
For Against Abstain
( ) ( ) ( )
3. Transacting such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE INDICATE THE NUMBER
OF SHAREHOLDER(S) ATTENDING IN THE FOLLOWING BOX: [_]
Dated: _____________________________________________________________ , 1997
Signature(s) ___________________________________________________________________
- --------------------------------------------------------------------------------
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN.
WHERE APPLICABLE, INDICATE YOUR OFFICIAL POSITION OR REPRESENTATIVE CAPACITY.
- - -
