<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
KU ENERGY CORPORATION
(Name of Registrant as Specified In Its Charter)
KU ENERGY CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
(4) Proposed maximum aggregate value of transaction:
- --------
*Set forth the amount on which the filing fee is calculated and state how it
was determined.
[_] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
KU ENERGY CORPORATION
One Quality Street
Lexington, Kentucky 40507
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of KU Energy Corporation (the "Company")
will be held in the Second Floor Assembly Room at the offices of the Company,
One Quality Street, Lexington, Kentucky, on April 26, at 1:30 p.m., Lexington
(Kentucky) Time, for the following purposes:
(1) To elect to the Board three directors to hold office until the 1997
Annual Meeting of Shareholders of the Company or until their respective
successors shall have been duly elected and qualified.
(2) To transact such other business as may properly come before the
meeting.
For further information with respect to the foregoing, reference is made to
the attached Proxy Statement.
Only holders of Common Stock of the Company of record on its books at the
close of business on March 8, 1994, are entitled to vote at the meeting. All
such shareholders of record are requested to be represented at the meeting,
either in person or by proxy.
A copy of the Company's Annual Report to Shareholders for the year 1993 has
been mailed to each common shareholder of record on the Company's books.
By order of the Board of Directors,
LOGO
George S. Brooks II
General Counsel and Secretary
March 18, 1994
----------------
SHAREHOLDERS WHO CANNOT ATTEND THE MEETING IN PERSON ARE REQUESTED TO DATE
AND SIGN THEIR PROXIES AND RETURN THEM TO THE COMPANY IN THE ENCLOSED ENVELOPE,
AS PROMPTLY AS POSSIBLE. THE BOARD OF DIRECTORS DESIRES THE REPRESENTATION OF
ALL SHAREHOLDERS AT THE MEETING, WHETHER THEIR HOLDINGS ARE SMALL OR LARGE.
1
<PAGE>
KU ENERGY CORPORATION
One Quality Street
Lexington, Kentucky 40507
MARCH 18, 1994
Proxy Statement Relating to 1994 Annual Meeting of Shareholders
The purposes of the meeting are set forth in the accompanying Notice. The
enclosed proxy is solicited on behalf of the Board of Directors of the Company
and the cost of such solicitation will be borne by the Company. Following the
initial solicitation of proxies by mail beginning on or about March 18, 1994,
certain of the officers, employees and directors of the Company may solicit
proxies by correspondence, telephone, telecopy, telegraph or in person, but
without extra compensation. In addition, the Company has retained Georgeson &
Company, Inc., New York, New York, to assist in the solicitation of proxies.
Such solicitation may be made by mail, telephone, telecopy, telegraph or in
person. The estimated cost of the services of Georgeson & Company, Inc. is
$8,500. The Company will pay to banks, brokers, nominees and other fiduciaries
their reasonable charges and expenses incurred in forwarding the proxy material
to their principals.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH SHAREHOLDER ENTITLED TO VOTE
AT THE MEETING WHO MAKES A WRITTEN REQUEST THEREFOR A COPY OF THE COMPANY'S
1993 ANNUAL REPORT ON FORM 10-K (OTHER THAN CERTAIN EXHIBITS) AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES EXCHANGE ACT OF
1934. WRITTEN REQUESTS FOR A COPY OF THE REPORT SHOULD BE MAILED TO GEORGE S.
BROOKS II, SECRETARY OF THE COMPANY, AT THE ADDRESS STATED ABOVE.
The Company has been the parent holding company of Kentucky Utilities Company
("Kentucky Utilities") since December 1991.
On the record date for the meeting, March 8, 1994, there were 37,817,878
shares of Common Stock outstanding. Only holders of Common Stock of record on
the books of the Company at the close of business on the record date are
entitled to vote at the meeting. Each such holder is entitled to vote at the
meeting, one vote per share, in respect to each of the matters to be voted on
at the meeting, except that in the election of directors each such holder is
entitled to cumulative voting and therefore may give one nominee for election
as many votes as shall equal the number of directors to be elected multiplied
by the number of shares of Common Stock held by such shareholder or may
distribute such votes among any two or more of the nominees. The proxies
solicited herewith seek discretionary authority to cast cumulative votes in the
election of directors.
A majority of the shares entitled to be cast on a matter constitutes a quorum
for action on that matter. Once a share is represented for any purpose at the
meeting, it will be deemed present for quorum purposes for the remainder of the
meeting and any adjournment of the meeting (unless a new record date is set).
If a quorum exists, action on a matter (other than the election of directors)
will be approved if the votes cast favoring the action exceed the votes cast
opposing the action unless a higher vote is required by law. The three nominees
for director receiving the highest number of votes will be elected. Shares
represented by a limited proxy, such as where a broker may not vote on a
particular matter without instructions from the beneficial owner and no
instructions have been received (i.e., a "broker non-vote"), will be counted to
determine the presence of a quorum but will not be present for other purposes
and will not be the equivalent of a "no" vote on a proposition. Shares
represented by a proxy with instructions to abstain on a matter will
2
<PAGE>
be counted in determining whether a quorum is in attendance. An abstention is
not the equivalent of a "no" vote on a proposition.
Shareholders may vote either in person or by duly authorized proxy. The
giving of a proxy will not prevent a shareholder from voting in person at the
meeting. A proxy may be revoked by a shareholder at any time prior to the
voting thereof by giving written notice to the Secretary of the Company prior
to such voting. All shares entitled to vote and represented by effective
proxies on the enclosed form, received by the Company, will be voted at the
meeting (or any adjourned session thereof) in accordance with the terms of such
proxies.
Each Participant in the Company's Automatic Dividend Reinvestment and Stock
Purchase Plan (the "Reinvestment Plan"), Kentucky Utilities' Employee Stock
Ownership Plan (the "ESOP") or the Kentucky Utilities Employee Savings Plan
(the "Savings Plan") will receive a form of proxy by which such Participant may
direct the agent or trustee under such Plans as to the manner of voting shares
credited to the Participant's accounts under such Plans. Shareholders of record
who are participants in the Reinvestment Plan will receive only one form of
proxy which will be deemed to include shares held of record and shares, if any,
held under such Plan. A Participant of any of such Plans wishing to vote in
person at the meeting may obtain a proxy for shares credited to his account
under such Plans by making a written request therefor by April 11, 1994, as
follows: for the Reinvestment Plan, to George S. Brooks II, Secretary of the
Company, at the address stated on page 2; for the ESOP, to Liberty National
Bank and Trust, PO Box 32500, Louisville, Kentucky 40232, Attention: Kennedy H.
Clark, Jr., Trust Investment Division; and for the Savings Plan, to National
City Bank, Kentucky, PO Box 36010, Louisville, Kentucky 40233, Attention:
Judith E. Meany.
Election of Directors
General. Three directors are to be elected at the meeting. Barring unforeseen
circumstances and in the absence of contrary directions, the proxies solicited
herewith will be voted for the election of Milton W. Hudson, John T. Newton and
William L. Rouse, Jr. as directors of the Company, to hold office until the
1997 Annual Meeting of Shareholders of the Company or until their respective
successors shall have been duly elected and qualified. The proxies may also be
voted for a substitute nominee or nominees in the event any one or more of said
persons shall be unable to serve for any reason or be withdrawn from
nomination, an occurrence not now anticipated. Except as otherwise indicated,
each nominee has been engaged in his present principal occupation for at least
the past five years. All information regarding share ownership is as of January
31, 1994.
The following information is given with respect to the nominees for election
as directors:
MILTON W. HUDSON, 66, has been an economic consultant
- ------------ (Washington, D.C.) since 1991. He was Managing Director and
- ------------ Senior Economic Advisor of Morgan Guaranty Trust Company of New
York from January 1990 until his retirement in June 1991. He was
Senior Vice President and Senior Economic Adviser for Morgan
Guaranty from 1988 to 1990. He has been a director of the
Company since 1991 and a director of Kentucky Utilities since
1990. Mr. Hudson beneficially owns 1,013 shares of Common Stock
of the Company.
3
<PAGE>
- ------------ JOHN T. NEWTON, 63, is Chairman of the Board, President and
- ------------ Chief Executive Officer of the Company and Kentucky Utilities.
He has been a director of the Company since 1988 and a director
of Kentucky Utilities since 1974. Mr. Newton beneficially owns
25,538 shares of Common Stock of the Company which include 9,817
shares held jointly with his wife.
WILLIAM L. ROUSE, JR., 61, was Chairman of the Board and Chief
- ------------ Executive Officer and a director of First Security Corporation
- ------------ of Kentucky, a multi-bank holding company, prior to his
retirement in 1992. Mr. Rouse is a director of Ashland Oil,
Incorporated. He has been a director of the Company since 1991
and a director of Kentucky Utilities since 1989. Mr. Rouse
beneficially owns 1,000 shares of Common Stock of the Company.
Information with respect to those directors whose terms are not expiring is
as follows:
MIRA S. BALL, 59, is Secretary-Treasurer and Chief Financial
- ------------ Officer of Ball Homes, Inc., a single-family residential
- ------------ developer and property management company. She has been a
director of the Company and Kentucky Utilities since 1992. Ms.
Ball beneficially owns 5,053 shares of Common Stock of the
Company. Her term expires in 1996.
W. B. BECHANAN, 68, retired in 1987 as Chairman of the Board and
- ------------ Chief Executive Officer of Kentucky Utilities. He has been a
- ------------ director of the Company since 1991 and a director of Kentucky
Utilities since 1978. Mr. Bechanan beneficially owns 25,974
shares of Common Stock of the Company which include 22,389
shares held pursuant to family trusts under which Mr. Bechanan
has shared investment power. His term expires in 1995.
HARRY M. HOE, 68, is President and a director of J. R. Hoe &
- ------------ Sons, Inc., Middlesboro, Kentucky, a foundry and casting
- ------------ company. He has been a director of the Company since 1991 and a
director of Kentucky Utilities since 1979. Mr. Hoe beneficially
owns 14,018 shares of Common Stock of the Company which include
4,516 shares held solely by his wife. His term expires in 1995.
4
<PAGE>
- ------------ FRANK V. RAMSEY, JR., 62, is President and Director of Dixon
- ------------ Bank, Dixon, Kentucky, and a farm owner and operator. He has
been a director of the Company since 1991 and a director of
Kentucky Utilities since 1986. Mr. Ramsey beneficially owns
1,400 shares of Common Stock of the Company. His term expires in
1996.
WARREN W. ROSENTHAL, 70, is a private investor and the owner of
- ------------ Patchen Wilkes Farm, Lexington, Kentucky (a thoroughbred horse
- ------------ breeding operation). Prior to September, 1989, he was Chairman
of the Board and a director of Jerrico, Inc., Lexington,
Kentucky, an operator of a national restaurant chain. Mr.
Rosenthal is a director of Immununomedics, Inc. He has been a
director of the Company since 1991 and a director of Kentucky
Utilities since 1976. Mr. Rosenthal beneficially owns 17,400
shares of Common Stock of the Company. His term expires in 1996.
CHARLES L. SHEARER, PH.D., 51, is President of Transylvania
- ------------ University, Lexington, Kentucky. He has been a director of the
- ------------ Company since 1991 and a director of Kentucky Utilities since
1987. Dr. Shearer beneficially owns 1,255 shares of Common Stock
of the Company which include 200 shares held solely by his wife
and 12 shares held by his children. His term expires in 1996.
MICHAEL R. WHITLEY, 51, has been Senior Vice President of the
- ------------ Company since 1988 and of Kentucky Utilities since 1987. Mr.
- ------------ Whitley was Secretary of Kentucky Utilities from 1978 until 1992
and of the Company from 1988 until 1992. Mr. Whitley has been a
director of the Company and Kentucky Utilities since 1992. Mr.
Whitley beneficially owns 13,562 shares of the Common Stock of
the Company which include 337 shares held solely by his wife.
His term expires in 1995.
Voting Securities Beneficially Owned by Directors, Nominees and Executive
Officers; Other Information. The directors, nominees and executive officers of
the Company and Kentucky Utilities owned beneficially at February 1, 1994 an
aggregate of 157,619 shares of Common Stock of the Company, representing in the
aggregate .4% of such stock.
On January 12, 1993, a report on Form 4 (due January 10, 1993) was filed on
behalf of John T. Newton, Chairman, President and CEO of the Company, with the
Securities and Exchange Commission reporting a purchase of Company Common
Stock.
Meetings and Committees of the Board of Directors. All members of the
Company's Board of Directors are currently members of Kentucky Utilities' Board
of Directors. The Board of Directors of the Company and the Board of Directors
of Kentucky Utilities have each established five committees: the Executive
5
<PAGE>
Committee, the Audit Committee, the Compensation Committee, the Finance
Committee and the Nominating Committee. Committee members are the same for
committees of the Company and committees of Kentucky Utilities.
During 1993, the Board of Directors of the Company held 7 meetings, and the
Board of Directors of Kentucky Utilities held 8 meetings.
During 1993, each director attended 100% of the meetings of the Company's and
Kentucky Utilities' Board of Directors and applicable committee meetings.
The members of the Executive Committee are Messrs. Newton, Rosenthal, Rouse,
Shearer and Whitley. Neither the Company's nor Kentucky Utilities' Executive
Committee met during 1993. The Executive Committee has the full power of the
Board between meetings of the Board, except as provided by law.
The members of the Audit Committee are Ms. Ball and Messrs. Hoe, Hudson and
Rouse. The Company's Audit Committee met two times in 1993 as did the Kentucky
Utilities' Audit Committee. The Audit Committee selects and engages (and may
discharge) the Company's independent auditors; approves or disapproves each
professional service or type of service to be provided by the auditors; meets
with the auditors regarding the scope and results of the annual audit and of
internal accounting procedures and practices; reviews any recommendations which
may be made by the independent auditors; and generally exercises supervision
over all matters relating to audit functions, making periodic reports to the
Board.
The members of the Compensation Committee are Messrs. Ramsey, Rosenthal and
Rouse. The Company's Compensation Committee met five times in 1993 and Kentucky
Utilities' Compensation Committee met three times in 1993. The Compensation
Committee reviews compensation for all officers, directors' fees and fees paid
to directors for membership on the various committees of the Board; and makes
recommendations to the Board at least annually with respect to appropriate
levels of compensation and fees.
The members of the Finance Committee are Messrs. Hudson, Ramsey, Rosenthal
and Shearer. The Company's Finance Committee met two times in 1993 and the
Kentucky Utilities' Finance Committee met three times in 1993. The Finance
Committee monitors and reviews financing programs and capital structure of the
Company, reviews the Company's cash position in order to establish programs for
the proper investment of amounts determined to be available for such purpose
from time to time, and reports to the Board at least annually concerning its
activities, or, when appropriate, makes recommendations which the committee
deems appropriate for action to be taken by the Board.
The members of the Nominating Committee are Messrs. Hoe, Rouse and Shearer.
The Company's Nominating Committee met one time in 1993 as did the Kentucky
Utilities' Nominating Committee. The Nominating Committee makes recommendations
to the Board with respect to qualified candidates for election to the Board;
and reviews the performance of Board members and, based upon such review, makes
recommendations to the Board as to which members shall stand for reelection. In
making recommendations for election to the Board, the Nominating Committee will
consider persons recommended by shareholders. Any shareholder wishing to make
such a recommendation must comply with certain requirements of the Company's
By-laws described herein under the caption "General--Proposals of
Shareholders."
Report of Compensation Committee on Executive Compensation. The Company's
principal business activities are carried out through Kentucky Utilities. Each
of the officers of the Company whose compensation is reported in the Summary
Compensation Table is also an officer of Kentucky Utilities and
6
<PAGE>
received compensation in 1993 only from Kentucky Utilities. Such officers of
the Company and Kentucky Utilities do not receive separate compensation from
the Company for services as an officer. The Kentucky Utilities' Board of
Directors establishes compensation for Kentucky Utilities' executive officers
on the basis of recommendations made by that Board's Compensation Committee. In
addition, the Board of Directors of the Company establishes compensation for
Company executive officers who are not also Kentucky Utilities executive
officers on the basis of recommendations made by that Board's Compensation
Committee. In addition to recommending base salary for all executive officers,
the Compensation Committees make recommendations concerning incentive
compensation and other compensation programs established by the respective
Boards of Directors. The incentive compensation plans described below are
administered by the respective Compensation Committees.
The Company's executive compensation is both market- and performance-based.
The Committees believe that both market- and performance-based compensation is
necessary to meet the challenges of intensifying competitive, economic and
regulatory pressures. Executive compensation consists of four basic components,
as described below:
. Base salary:
The base salaries of all executive officers are reviewed annually by
the Committees, which make recommendations to the Boards of Directors.
In considering base salary levels for all officers other than the
Chairman, President and CEO, the Committees initially review
recommendations made by the Chairman, President and CEO. As part of the
review, consideration is given to the operating performance and
financial condition of the Company and/or Kentucky Utilities as well as
the performance and responsibilities of the individual executives.
Consideration is also given to market data for electric utility
executives as set forth in the annual Edison Electric Institute
Executive Compensation Survey (the "EEI Survey"). More specifically,
comparisons are made to those survey companies similarly sized to the
Company (those with annual revenues of between $300 million and $1
billion). In 1993 there were 27 such comparable companies; 93% of these
survey companies are included among those in the EEI 100 Index to which
the Company's performance is compared on page 11 of this proxy
statement. The intent of the Committees and Boards is, in general, to
set base salary levels above the average but below the highest reported
level for comparable positions as shown by the EEI Survey. The specific
level of an individual's base salary level is influenced by the
specific responsibilities of the position and the performance level of
that individual as determined to be appropriate by the Committees and
the Boards after considering the recommendations made by the Chairman,
President and CEO for all positions, except his own.
. Annual Performance Incentive:
The Kentucky Utilities Annual Performance Incentive Plan (the
"Kentucky Utilities Incentive Plan") and the Company's Annual
Performance Incentive Plan (the "KUE Incentive Plan" and together, the
"Incentive Plans") are designed to provide cash incentive compensation
opportunities to attract, retain and motivate a select group of
employees of Kentucky Utilities and the Company, respectively,
including executive officers. No employee who has received an award
under one of the plans (i.e. either the Kentucky Utilities Incentive
Plan or the KUE Incentive Plan) for a plan year is eligible to receive
an award under the other plan for such plan year. Annual cash incentive
compensation is based on the financial and competitive strength of the
Company and Kentucky Utilities in terms of earnings and cost per
kilowatt hour or cost control. The Incentive Plans provide for
establishment of individual incentive awards based on performance
against specific
7
<PAGE>
predetermined performance targets. For Kentucky Utilities the
performance targets are based on cost per kilowatt hour and net income
available to common shareholders. For the Company, the performance
targets are based on cost control criterion and net income available to
common shareholders. In addition, personal performance goals are set
for participants.
The Compensation Committees determine eligible participants. An
individual's potential incentive compensation is determined by a
varying percentage of base salary depending on the individual's
position and other factors as determined each year by the Committees.
For 1993, there were three tiers of participation for executive
officers. If the performance targets are not met, no awards are paid.
If the targets are achieved, the awards for executive officers for the
three tiers of participation are 20%, 25% and 30%, respectively, of
base compensation. Participants may earn up to 1 1/2 times the target
award opportunity to the extent performance targets are exceeded. In
1993, the weightings for the various performance measures set forth
above varied for each participation tier. For individuals participating
in the Kentucky Utilities Incentive Plan having target award levels of
25% and 30% of base compensation (the latter applying only to the
Chairman, President and CEO), cost per kilowatt hour performance was
weighted at 35%, net income performance was weighted at 35% and
individual goals were weighted at 30% of the total award. For other
executive officers having target award levels of 20% of base salary,
these performance measures were weighted 30%, 30% and 40%,
respectively. In the case of a participant in the KUE Incentive Plan
for 1993, the performance measures and their weightings were cost
control (20%), net income (40%) and individual goals (40%).
If the goals are met, awards are subject to being paid in cash after
each year. Kentucky Utilities Incentive Plan awards earned in 1991,
1992 and 1993, as a result of attaining the performance goals for each
of those years, are set forth in the Summary Compensation Table under
the column "Bonus" for the individuals named therein.
Participants may elect to have all or any portion of their cash
awards deferred under the applicable Executive Optional Deferred
Compensation Plan (collectively, the "Executive Deferred Compensation
Plans") established by the Company and Kentucky Utilities,
respectively. Amounts deferred will be maintained in an unfunded
account for each participant and will be credited with earnings each
quarter at a rate of interest equal to the greater of (1) the return on
capital of the Company or Kentucky Utilities (as the case may be) for
the 12 months ended each quarter or (2) the 13-week Treasury Bill rate
in effect on the first business day following each quarter. Amounts
credited under the Executive Deferred Compensation Plans will be paid
to each participant upon termination of employment or as otherwise
permitted by the Executive Deferred Compensation Plans.
In establishing and periodically reviewing the Incentive Plans, the
Committees have utilized the services of outside consultants
specializing in executive compensation and benefits. During 1993, an
extensive review of both the Incentive Plans and the Performance Share
Plans (see below) was conducted by an outside consultant. In conducting
such review, the consultant utilized data from the EEI Survey (total
sample of 100 companies, 93% of which are included in the EEI 100
Index) as well as a group of 58 utility companies for which the
consultant had more detailed information (67% of which are included in
the EEI 100 Index). The consultant confirmed the appropriateness of the
Incentive Plans and reported that approximately 78% of utility
companies have similar plans.
. Long Term Performance Incentive:
The Kentucky Utilities Performance Share Plan (the "Kentucky
Utilities Performance Share Plan") and the Company's Performance Share
Plan (the "KUE Performance Share Plan" and
8
<PAGE>
together the "Performance Share Plans") are designed to provide long-
term incentives in the form of additional compensation to officers and
other select employees of Kentucky Utilities and the Company,
respectively, dependent upon achievement of the performance measurement
compared to a selected group of 18 other companies (total of 19
including Kentucky Utilities or the Company, respectively). For 1993,
100% of the companies or subsidiaries of these companies included in
both comparative groups also were in the EEI 100 Index to which the
Company's performance is compared on page 11 of this proxy statement.
Prior to 1993, the performance measure of the Kentucky Utilities
Performance Share Plan was growth in earnings per share compared to
other companies, but such measure was amended with shareholder approval
in 1993 to return on equity compared to the group of comparable
companies, which is also the measure used in the KUE Performance Share
Plan.
Under the Performance Share Plans, each year the Compensation
Committees determine a Performance Cycle and the number of Performance
Shares to be contingently granted to each eligible participant for that
Performance Cycle. The Committees have determined that the number of
Performance Shares contingently granted will be based on a varying
percentage of base salary divided by the year-end market price of the
Company's Common Stock. For 1993 for executive officers, the percentage
for a base salary of $100,000 to $125,000 was 20%, for $125,000 to
$150,000 was 25%, for $150,000 to $200,000 was 30%, for $200,000 to
$300,000 was 40% and for a base salary of $300,000 or above was 50%
(the maximum percentage, which applied only to the Chairman, President
and CEO in 1993). No employee who receives an award under one of the
plans (i.e. either the Kentucky Utilities Performance Share Plan or the
KUE Performance Share Plan) for a Performance Cycle is eligible to
receive an award from the other plan for such Performance Cycle. Each
Performance Cycle is a number of years determined by the Compensation
Committee over which the contingent grants of Performance Shares may be
earned. Existing Performance Cycles for Kentucky Utilities and the
Company have been set at three years. Under both plans a Performance
Share is a share unit which is contingently granted to a participant at
the beginning of a Performance Cycle.
The number of Performance Shares that may be earned by each
participant for a Performance Cycle is based on the relative
performance of the Company or Kentucky Utilities, as the case may be,
compared to the specified group of similar companies. For each
Performance Cycle, management submits to the Compensation Committees
recommendations for proposed participants, target award opportunities
(stated in Performance Shares), Performance Cycle length, performance
goals, a scale which specifies the number of Performance Shares to be
earned by each participant depending upon the degree to which the
target goal is met and a group of companies to which performance
comparison will be made. See the information below the table "Long Term
Incentive Plan--Awards In Last Fiscal Year" for a description of the
scale. At the end of each Performance Cycle, the Compensation
Committees determine the number of Performance Shares earned by each
participant, based on the degree to which actual performance compared
to the targets set. Upon such determination, Performance Shares earned
for that Performance Cycle, if any, will be converted into an equal
number of restricted shares of the Company's Common Stock.
The first Performance Cycle for Kentucky Utilities commenced in 1990
and was completed in 1992. Since the stringent target goals set by the
Committee were not met, there were no distributions of restricted
shares to participants. All contingent awards for the 1990-1992
Performance Cycle have lapsed.
9
<PAGE>
The Performance Cycle that commenced in 1991 was completed in 1993.
Shares of Common Stock earned in respect of that Performance Cycle, if
any, will be distributed to participants in the second quarter of 1994
after necessary comparisons are made.
The Performance Share Plans have been included with the Incentive
Plans in reviews by outside consultants as described under "Annual
Performance Incentive" above. The consultant confirmed the
appropriateness of the Performance Share Plans, reporting that
approximately 85% of utilities have long term incentive plans.
. Benefits:
Executive officers of the Company and Kentucky Utilities, including
those listed in the Summary Compensation Table on page 13 of this proxy
statement, are eligible for participation in the standard benefit
package available to all Company and Kentucky Utilities' employees. In
addition, executive officers of the Company and Kentucky Utilities are
eligible to be members in Kentucky Utilities' Supplemental Security
Plan, which is described below under "Executive Compensation".
The above described components combine to provide total compensation packages
that enable the companies to effectively recruit, motivate and retain executive
personnel. In keeping with prevailing industry practices for such executive-
level personnel, the Committees have acted to place a significant portion (up
to approximately 50%, as described below) of total compensation for executive
employees "at risk," that is tied directly to company performance. The "at
risk" nature of such compensation is demonstrated by the varying annual
Incentive Plan payouts and the zero payout under the Performance Share Plan
shown as "Bonus" and "LTIP Payouts," respectively, in the Summary Compensation
Table on page 13. Base salary levels, although set at competitive levels, are
set to constitute an increasingly smaller portion of total compensation at the
higher executive levels. For the Chairman, President and CEO, base salary,
assuming achievement of target levels for the incentive plans, would constitute
approximately 60% to 65% of total compensation, with the remainder tied
directly to performance. At maximum achievement levels under those plans, his
base salary would constitute approximately 50% of total compensation, with the
remainder tied directly to performance. The Committees believe that placing
significant portions of executive compensation "at risk" furthers the interests
of both shareholders and ratepayers.
The Kentucky Utilities Compensation Committee makes its recommendations for
the base salary of John T. Newton, Chairman, President and CEO, by utilizing
the same criteria and philosophies described above. The Committee analyzes Mr.
Newton's individual performance on the additional basis of its evaluation of
the performance and coordination of the Company's and Kentucky Utilities' other
management personnel. The incentive portion of Mr. Newton's compensation for
1993 was provided under the Kentucky Utilities Incentive Plan and the Kentucky
Utilities Performance Share Plan. As described above, compensation under these
plans is tied to Company performance. Awards made under those plans to Mr.
Newton were established at the levels and utilizing formulas set forth above.
Specific information regarding the level of compensation, and Incentive Plan
and Performance Share Plan participation for Mr. Newton are set forth in the
tables shown under "Executive Compensation" below and as detailed in the
discussion above.
None of the present members of the Compensation Committees is (or has been)
an employee of the Company or Kentucky Utilities. The members of the Company's
Compensation Committee and Kentucky Utilities' Compensation Committee
responsible for this report are:
Frank V. Ramsey, Jr.
Warren W. Rosenthal
William R. Rouse, Jr.
10
<PAGE>
Performance Graph. The following performance graph compares the performance
for the last five years of the Company's Common Stock (or for periods prior to
December 1, 1991, Kentucky Utilities' Common Stock) to the S&P 500 Index and
the index of 100 investor owned electric and combination electric and natural
gas utilities reported by Edison Electric Institute (the "EEI 100 Index"). The
graph gives total shareholder return in each case assuming $100 invested at
December 31, 1988 and the reinvestment of all dividends. Following the graph is
a chart giving the same information.
[GRAPH APPEARS HERE]
Shareholder Returns
(Dividends Reinvested)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------
1988 1989 1990 1991 1992 1993
---- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
KU Energy Corporation.............. $100 $122.14 $130.83 $185.77 $200.68 $218.31
EEI 100 Index...................... 100 129.92 131.52 169.39 182.09 202.82
S&P 500 Index...................... 100 131.69 127.60 166.47 179.16 197.21
</TABLE>
11
<PAGE>
Directors' Compensation. Each director of the Company is also a director of
its principal subsidiary, Kentucky Utilities. Each director who is not an
employee of the Company is paid an annual retainer of $15,000. This retainer is
reduced by any retainer paid from a Company subsidiary. Kentucky Utilities pays
non-employee directors an annual retainer of $12,600. Thus, the net annual
Company retainer paid to such directors is $2,400 but the aggregate paid for
serving on both Boards is $15,000.
In addition to an annual retainer, the Company and Kentucky Utilities pay
each non-employee director a $750 fee for each meeting of a Board or a
particular committee attended; provided that if the Boards of the Company and
Kentucky Utilities meet on the same day, only one $750 fee is paid for both
meetings and if the same committee of the Boards of the Company and Kentucky
Utilities meet on the same day, only one $750 fee is paid for both meetings.
Out-of-pocket travel expenses are paid to directors for all meetings attended.
All eligible directors of the Company and Kentucky Utilities are entitled to
participate in the Director Retirement Retainer Programs (the "Director
Retirement Plans") of the Company and Kentucky Utilities. Directors who are
not, and have not previously been, an officer of Kentucky Utilities, the
Company, or their affiliated companies ("outside directors") are eligible to
participate. An outside director who is 65 years of age and has completed at
least five consecutive years of service on the Company's and/or Kentucky
Utilities' Board will receive, upon termination of service from a Board for any
reason other than death, an annual retirement benefit equal to the annual
retainer paid to such Board's directors in effect as of such termination,
payable monthly over a period of years equal to the number of full years such
director served on the Board, but not in excess of 10 years. Such payments
cease, however, if the director dies before all such payments are made. In the
event of a change in control of the Company or Kentucky Utilities, any person
then receiving a retirement benefit would be paid, within 30 days of the change
in control, a lump sum payment equal to the discounted present value of all
then unpaid installments of the director's retirement benefit. In the event of
a change in control, each outside director in office immediately prior to such
change in control will be eligible to receive an accelerated retirement benefit
if the director terminates service from a Board for any reason other than death
within three years of the date of the change in control. Such accelerated
retirement benefit would be paid in a lump sum within 30 days of such
termination and would be equal to the discounted present value of the
retirement benefit which such director would have received if the director had
retired from the Board at age 70 (or for certain directors, 72) and lived to
collect the full benefit otherwise payable under the applicable Director
Retirement Plan. Such benefit would be based on the higher of the annual
retainer in effect immediately prior to the change in control or immediately
prior to such director's termination of service. Change in control is broadly
defined under the Director Retirement Plans and includes any merger,
consolidation, reorganization or sale of substantially all of the assets of the
Company or Kentucky Utilities which results in less than a majority of the
voting power of the resulting entity being owned by the holders of the Common
Stock of the Company prior to the transaction; a change in the majority of the
Board of Directors of the Company or Kentucky Utilities over a two-year period
which is not approved by two-thirds of the incumbent directors; and the
acquisition by any person or group of persons of beneficial ownership of 10% or
more of the Common Stock of the Company or Kentucky Utilities. The annual
retainer in effect upon the director's termination from a Board will be
calculated as described in the first paragraph under this caption.
Directors may elect to have all or a specified portion of their director's
fees deferred under the Director Deferred Compensation Plans (the "Director
Deferred Compensation Plans") of the Company and Kentucky Utilities. Amounts
deferred will be maintained in unfunded accounts for each participant, which
bear interest at a floating rate based upon the average prime rate charged by
banks as reported in the Federal Reserve
12
<PAGE>
Bulletin. Amounts credited under the Director Deferred Compensation Plans will
be paid to the participant upon termination as a director for any reason other
than death in a single payment or, with interest, quarterly over a period of
not to exceed 40 calendar quarters, or, with interest, annually over a period
of not to exceed 10 years. In the event of a participant's death, payment of
any remaining balance of credited amounts will be made in a single payment to a
designated beneficiary. In certain cases, directors may receive a distribution
of deferred amounts in the event of substantial financial hardship. In the
event of a change in control of the Company or Kentucky Utilities, any director
who terminated prior to the change in control whose deferred amounts have not
been distributed would receive, within 15 days of the change in control, a lump
sum payment of the undistributed amounts. In the event of a change in control,
each director who terminates thereafter would be paid, within 15 days after
termination, a lump sum payment of the director's deferred amounts. Change in
control has essentially the same meaning as under the Director Retirement Plans
described above. Because officers of the Company and Kentucky Utilities receive
no compensation for services as directors, any director who is an officer is
not eligible to participate in the plans.
Executive Compensation. The following table contains information with respect
to the compensation paid by (or earned from) the Company and Kentucky
Utilities, for all services rendered during 1991 through 1993 in all
capacities, to the Chief Executive Officer and the four most highly compensated
executive officers of the Company and Kentucky Utilities:
Summary Compensation Table
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION PAYOUTS
----------------------------------- ------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION LTIP PAYOUTS COMPENSATION
POSITION YEAR ($) ($)(1) ($)(2) ($) ($)(3)
--------- ---- ------ ------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
JOHN T. NEWTON; 1993 $424,237 $144,362 $11,886 $ 0 $8,444
Chairman of the
Board, 1992 414,909 99,075 11,161 -- 4,870
President, Chief 1991 361,212 121,295 9,998 -- 3,299
Executive
Officer &
Director of the
Company
& Kentucky
Utilities
MICHAEL R.
WHITLEY; 1993 219,529 62,164 1,258 0 6,045
Senior Vice
President 1992 210,682 41,834 21 -- 3,574
& Director of
the 1991 187,913 53,605 0 -- 2,748
Company &
Kentucky
Utilities
JAMES W. TIPTON; 1993 204,042 60,331 1,201 0 5,712
Senior Vice
President 1992 205,199 41,834 18 -- 3,346
of Kentucky
Utilities 1991 187,913 53,605 0 -- 2,643
O. M. GOODLETT; 1993 188,724 54,257 0 0 4,497
Senior Vice
President of 1992 160,215 24,736 0 -- 2,182
Kentucky
Utilities 1991 136,610 29,640 0 -- 1,968
ROBERT M.
HEWETT; 1993 144,850 32,514 0 0 4,180
Vice President
of 1992 139,730 24,011 0 -- 2,065
Kentucky
Utilities 1991 124,235 28,468 0 -- 1,856
</TABLE>
13
<PAGE>
- --------
(1) Bonuses are paid under the Annual Performance Incentive Plan. Any bonus
earned but deferred under the Executive Deferred Compensation Plan is
included in the Table.
(2) Other annual compensation consists of amounts for group term life insurance
and related taxes.
(3) All other compensation includes above market rate interest earned on
deferred compensation and the employer matching contribution made to the
officer's account in the 401(k) Employee Savings Plan. Such amounts for
1993 are shown in the following table.
<TABLE>
<CAPTION>
INTEREST ON 401(K)
EXECUTIVE DEFERRED MATCHING
OFFICER COMPENSATION CONTRIBUTION
--------- ------------ ------------
<S> <C> <C>
John T. Newton................................ $3,947 $4,497
Michael R. Whitley............................ 1,548 4,497
James W. Tipton............................... 1,215 4,497
O. M. Goodlett................................ 0 4,497
Robert M. Hewett.............................. 0 4,180
</TABLE>
Performance Shares contingently awarded under the Company's and Kentucky
Utilities' Performance Share Plans in 1993 are reported in the Long Term
Incentive Plan awards table below. Normally only Long-Term Incentive Awards for
the most recently completed fiscal year are disclosed. Because in 1993 the
Company submitted for approval by its shareholders the adoption of the KUE
Performance Share Plan and amendment of the Kentucky Utilities Performance
Share Plan, applicable rules required disclosure in the Company's 1993 proxy
materials of awards made in 1992 and 1993. Accordingly, the awards shown below
under the Kentucky Utilities Performance Share Plan under "Number of Units or
Other Rights" are the same awards as shown in last year's proxy statement under
"Number of Performance Shares" and "Year of Contingent Grant--1993." However,
amounts shown below under "Estimated Future Payouts Under Non-Stock Price-Based
Plans" have been recalculated based on the price of the Company's Common Stock
on December 31, 1993. A description of how awards are determined is presented
under "Report of Compensation Committee on Executive Compensation." A
description of the scale by which performance targets are set follows the
table.
Long Term Incentive Plan--Awards In Last Fiscal Year
<TABLE>
<CAPTION>
NUMBER PERFORMANCE
OF OR OTHER
UNITS PERIOD
OR UNTIL ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
OTHER MATURATION PRICE-BASED PLANS(3)
RIGHTS OR ----------------------------------------------
NAME (#)(1) PAYOUT(2) THRESHOLD ($) TARGET ($) MAXIMUM ($)
---- ------ ----------- ------------- -------------------- -----------
<S> <C> <C> <C> <C> <C>
John T. Newton.......... 7,110 3 $ 0 $103,095 or $154,642 $206,190
Michael R. Whitley...... 2,915 3 0 42,267 or 63,401 84,535
James W. Tipton......... 2,845 3 0 41,252 or 61,878 82,505
O. M. Goodlett.......... 1,920 3 0 27,840 or 41,760 55,680
Robert M. Hewett........ 1,210 3 0 17,545 or 26,317 35,090
</TABLE>
- --------
(1) Constitutes Performance Shares contingently granted under the Kentucky
Utilities Performance Share Plan in 1993.
(2) Number of years in Performance Cycle.
(3) See description below for the scale that determines which amount would be
applicable.
14
<PAGE>
Under the Kentucky Utilities Performance Share Plan, which commenced in 1990
and is described under "Report of Compensation Committee on Executive
Compensation," above, Performance Shares have been contingently granted each
year since 1990 in each case for a three-year Performance Cycle. For the
Performance Cycle commencing in 1990, it has been determined that there is a
zero payout. Shares of Common Stock are awarded under the plan only after the
end of the Performance Cycle and if the performance goals have been met.
Participants will not be able to sell such Common Stock for a designated
period, expected to be seven years, or until earlier retirement, death or as
otherwise provided in the Performance Share Plan.
For the Performance Cycles commencing in 1992 and prior years, payouts of
awards will be based on the extent to which Kentucky Utilities' growth in
earnings per share compares to 19 selected utilities (including Kentucky
Utilities). The scale that determines if awards are earned is as follows: if
Kentucky Utilities ranks in the top three, the payout will be 100% of the
contingent grant (the Maximum shown in the table), if its rank is fourth
through sixth, 75%, if its rank is seventh or eighth, 50% (the two figures
shown as Target in the table) and if Kentucky Utilities ranks ninth or below,
no shares will be awarded for that Performance Cycle (shown as the Threshold in
the table). The dollar amounts of the Threshold, Target and Maximum awards are
calculated assuming shares are awarded and based on the price of the Common
Stock on December 31, 1993 ($29). The actual value of the shares awarded, if
any, may be higher or lower.
Payouts for the 1993-1995 Cycle will be determined by calculating the average
return on equity for the Performance Cycle of Kentucky Utilities compared to
the average return on equity for the Performance Cycle of the comparable
utilities. The returns will then be ranked in descending order, and the payout
will be determined in accordance with the scale of Kentucky Utilities' rank
described above (i.e. top 3=100%; 4-6=75%; 7-8=50%; 9 or below=0).
The KU Energy Performance Share Plan, which commenced in 1993, operates
similarly to the Kentucky Utilities Performance Share Plan described above. The
group of 19 comparative companies is selected from among utility holding
companies. Payouts will be determined based on average return on equity of KU
Energy compared to the average return on equity for the Performance Cycle of
the comparable utility holding companies.
Each of the officers of the Company and Kentucky Utilities is entitled to
participate in the Kentucky Utilities employee retirement plans described
below.
Executive officers, like other employees, are eligible to participate in
Kentucky Utilities' Retirement Plan, and all eligible persons whose
compensation is reported in the Summary Compensation Table participated in the
Retirement Plan. Contributions to the Retirement Plan are determined
actuarially and cannot be readily calculated as applied to any individual
participant or small group of participants. Generally, compensation for
Retirement Plan purposes means base compensation while a participant, excluding
overtime pay, commissions, performance incentive compensation or other
extraordinary compensation. The compensation for Retirement Plan purposes of
the individuals named in the foregoing table is substantially equivalent to the
base salary reported in the Summary Compensation Table. As of December 31,
1993, the credited years of service under the Retirement Plan for such persons
were as follows: Mr. Newton, 35 years; Mr. Whitley, 29 years; Mr. Tipton, 26
years; Mr. Goodlett, 23 years; and Mr. Hewett, 24 years. Retirement Plan
benefits depend upon length of service, age at retirement and amount of
compensation (determined in accordance with the Retirement Plan).
Although higher amounts are determined under the Retirement Plan and shown in
the table below, in most cases, pension benefits under the Retirement Plan or
compensation used to measure such benefits will
15
<PAGE>
be reduced to comply with maximum limitations imposed by the Internal Revenue
Code. Under such limitations effective in 1994, no base compensation above
$150,000 may be used to calculate a benefit, except in the case of certain
executive officers to preserve benefits accrued under previously applicable
rules. In addition, no annual benefit derived from employer contributions may
exceed $118,800. Assuming retirement at age 65, a Retirement Plan participant
would be eligible at retirement for a maximum annual pension benefit (without
taking into account the Internal Revenue Code limitations referred to above)
set forth in the following table. However, assuming retirement at age 65,
assuming 1993 base compensation and taking into account the Internal Revenue
Code limitations, the annual pension benefit under the Retirement Plan for the
executive officers named in the Summary Compensation Table would be as follows:
Mr. Newton, $120,818, Mr. Whitley, $102,545, Mr. Tipton, $93,978, Mr. Goodlett,
$84,578, and Mr. Hewett, $87,098.
<TABLE>
<CAPTION>
ANNUAL BENEFIT AFTER SPECIFIED YEARS OF SERVICE(2)
FINAL AVERAGE -------------------------------------------------------------
BASE PAY(1) 15 20 25 30 35 40 45
- ------------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$125,000 $24,999 $ 33,333 $ 41,666 $ 49,999 $ 58,332 $ 66,665 $ 74,998
150,000......... $29,999 $ 39,999 $ 49,999 $ 59,999 $ 69,998 $ 79,998 $ 89,998
200,000......... $39,999 $ 53,332 $ 66,665 $ 79,998 $ 93,331 $106,664 $119,997
250,000......... $49,999 $ 66,665 $ 83,331 $ 99,998 $116,664 $133,330 $149,996
300,000......... $59,999 $ 79,998 $ 99,998 $119,997 $139,997 $159,996 $179,996
350,000......... $69,998 $ 93,331 $116,664 $139,997 $163,329 $186,662 $209,995
400,000......... $79,998 $106,664 $133,330 $159,996 $186,662 $213,328 $239,994
450,000......... $89,998 $119,997 $149,996 $179,996 $209,995 $239,994 $269,993
500,000......... $99,998 $133,330 $166,663 $199,995 $233,328 $266,660 $299,993
</TABLE>
- --------
(1) "Final average base pay" generally means the average annual compensation
during the 60 consecutive months of highest pay during the period of
employment.
(2) Annual benefits shown are on a straight life annuity basis. Amounts shown
are not subject to any deduction for Social Security benefits or other
offset amounts. Benefits may be reduced by Internal Revenue Code
limitations described above.
Executive officers and certain other employees of the Company and Kentucky
Utilities are eligible to be members in Kentucky Utilities' Supplemental
Security Plan which provides retirement, disability and death benefits as well
as a change in control retirement benefit and a change in control severance
benefit. As to executive officers, upon retirement at age 65, an eligible
member will receive 15 annual payments of an amount equal to 75% of basic
compensation, offset by benefits payable from any defined benefit plan of the
Company or an affiliate (such as Kentucky Utilities' Retirement Plan) and
social security benefits. Basic compensation is the annualized base monthly
salary of the member, exclusive of performance incentive compensation or other
extraordinary compensation, in effect at termination of employment by
retirement, disability or death. Upon termination of employment by death prior
to age 65, the member's beneficiary will receive an annual benefit equal to 50%
of basic compensation until the later of the date such member would have
attained age 65 or completion of 15 annual payments. Upon termination of
employment by disability, the member will receive the "retirement benefit" if
the member lives to retirement age and is then disabled or the "death benefit"
if the member dies prior to retirement age and is disabled at death. Benefits
will be paid from the general funds of the employer. The estimated annual
benefits from Kentucky Utilities' Supplemental Security Plan that would be
payable upon retirement at normal retirement age for the individuals named in
the Summary Compensation Table (assuming 1993 basic salary) are as follows: Mr.
Newton, $180,550; Mr. Whitley, $48,121; Mr. Tipton, $49,182; Mr. Goodlett,
$42,376; and Mr. Hewett, $5,737. Under the terms of the Supplemental Security
Plan, the foregoing amounts increased from those reported in 1993 because of
16
<PAGE>
reductions in amounts that will be payable under the Retirement Plan resulting
from the Internal Revenue Code limitations described above. To assist in
providing funds to pay such benefits when they become payable, insurance is
purchased on the lives of the members of the Supplemental Security Plan.
Under the Supplemental Security Plan, members are entitled to change in
control severance benefits in the following circumstances: (i) involuntary
termination of the individual's employment within two years following the
change in control for reasons other than cause, death, permanent disability or
attainment of age 65, (ii) resignation within two years of the change in
control for good reason (as defined in the plan) and (iii) in respect of the
Chairman of the Board, the President, the Chief Financial Officer or, if such
positions are filled by less than three persons, the Executive Vice President,
in each case of Kentucky Utilities, termination of employment for any reason
during the 30-day period commencing on the first anniversary of the change in
control. In such circumstances, the employee will be entitled to a change in
control severance payment equal to a certain percentage (300% in the case of
executive officers of the Company or Kentucky Utilities) of the sum of (i) the
employee's basic compensation and (ii) the employee's target annual performance
incentive compensation. In addition, the employee will be entitled to
continuation of certain employee welfare benefits for up to three years
following termination of employment, subject to an offset for comparable
benefits. Under the Supplemental Security Plan, the employee is entitled to
receive additional payments, if necessary, to reimburse the employee for
certain federal excise tax liabilities.The Supplemental Security Plan's change
in control retirement benefit provides that, upon termination of employment,
other than for cause (as defined in the Supplemental Security Plan) following a
change in control, an eligible member will receive a lump sum amount equal to
the present value of the retirement benefit (described in the preceding
paragraph and assuming the member is then 65 but prorated if the member then
has less than 15 years of service, including an assumed three additional years
of service for executive officers); provided that, if the termination is more
than two years from the change in control, the calculation of years of service
will not include the assumed additional three years and the compensation upon
which the benefit is calculated will be the actual compensation in effect at
termination (rather than the compensation in effect at the change in control
which, if higher, would be used if termination occurred within two years of the
change in control). The change in control severance benefits and change in
control retirement benefits are effective for a minimum of five years, which is
automatically extended from year to year unless Kentucky Utilities gives notice
that it does not wish to extend the period of effectiveness. Change in control
has essentially the same meaning as under the Director Retirement Plans
described under "Directors' Compensation."
The Performance Share Plans and Executive Deferred Compensation Plans contain
provisions relating to a change in control. Under each of these plans a change
in control has essentially the same meaning as under the Director Retirement
Plans described under "Directors' Compensation." Under the Performance Share
Plans, if a participant's employment is terminated voluntarily or involuntarily
after a change in control, such participant will have the right to an immediate
cash payment for all Performance Cycles in which the participant is currently
participating. The amount payable to a participant in the event of termination
in connection with a change in control will be determined in accordance with
the formula specified in the Performance Share Plan. In addition, after a
change in control, whether or not the participant is terminated, under the
Executive Deferred Compensation Plans, all amounts held under such plans will
be paid to the participant. The Incentive Plans do not contain any change in
control provisions.
General
Independent Public Accountants. The Audit Committee of the Board has selected
the firm of Arthur Andersen & Co. as independent public accountants to examine
the financial statements of the Company and
17
<PAGE>
Kentucky Utilities for 1994. The firm served as the Company's independent
public accountants since 1991 and as Kentucky Utilities' independent public
accountants for many years. Representatives of the firm are not expected to be
present at the annual meeting.
Proposals of Shareholders. Under the rules of the Securities and Exchange
Commission, any shareholder proposal intended to be presented at the 1995
Annual Meeting of Shareholders must be received by the Company at its principal
executive offices no later than November 18, 1994, in order to be eligible to
be considered for inclusion in the Company's proxy materials relating to that
meeting. A shareholder submitting a proposal or nominating a person to serve as
director must comply with procedures set forth in the Company's By-laws. In
general, the By-laws provide that for business to be considered at an annual
meeting of shareholders, a shareholder must give timely and proper notice of
the matter to the Secretary of the Company. The notice must specify in
reasonable detail the business desired to be brought before the meeting and
contain other information required by the By-laws. Nominations for director may
be made by shareholders only if the shareholder has given timely and proper
notice thereof to the Secretary of the Company. The notice must contain the
name of the person or persons nominated, certain information about the nominee
and other information required by the By-laws. Shareholder proposals or
nominations must be received no fewer than 60 days prior to the meeting (or, if
the date of the meeting has not been made public, within 10 days after the
publication of the date of the meeting).
Other Business. The meeting is being held for the purposes set forth in the
Notice which accompanies this Proxy Statement. The Board of Directors of the
Company knows of no business to be transacted at the meeting other than the
election of directors. However, if any other business should properly be
presented to the meeting, the proxies will be voted in respect thereof in
accordance with the judgment of the person or persons voting the proxies.
KU Energy Corporation
By order of the Board of Directors
John T. Newton,
Chairman and President
George S. Brooks II
General Counsel and Secretary
18
<PAGE>
LOGO
<PAGE>
Graphic Material Appendix
The performance graph required by Item 402(1) of Regulation S-K is on page 11 of
this filing. The paper copy has a line graph with three differentiated lines
showing the returns given in the data presented on page 11. A paper copy of the
graph has been submitted supplementally to the Branch Chief pursuant to
Regulation S-T, Item 304(d)(2).
<PAGE>
KU ENERGY CORPORATION THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
PROXY. The undersigned appoints, and if a participant in the Company's
dividend reinvestment plan, and/or Kentucky Utilities Company's employee stock
ownership plan and/or employee savings plan, authorizes and directs the
appropriate agent or trustee, in each case as agent for the undersigned, to
appoint, W.B. BECHANAN, WARREN W. ROSENTHAL and JOHN T. NEWTON, and each of
them, attorneys and proxies, with power of substitution, to vote all shares of
COMMON STOCK of KU Energy Corporation of record in the name of the undersigned,
and all shares, if any, of such stock credited to the account of the
undersigned under each of such plans, in each case, at the close of business on
March 8, 1994, at the 1994 annual meeting of shareholders (or any adjourned
session) as follows:
FOR all nominees WITHHOLD AUTHORITY to vote for all
listed below nominees listed below [_]
(except as marked
to the contrary
below) [_]
1. Election of Directors:
INSTRUCTION: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below.
Milton W. Hudson, John T. Newton, William L. Rouse, Jr.,
In their discretion with respect to such other business as may properly come
before the meeting,
all as set forth in the Notice and Proxy Statement relating to the meeting.
(to be signed on reverse side)
(continued from other side)
SHARES REPRESENTED BY THIS PROXY SHALL BE
VOTED AS SPECIFIED ON THE REVERSE SIDE. IN
ABSENCE OF SPECIFIC DIRECTIONS, SAID SHARES
SHALL BE VOTED FOR THE ELECTION OF DIRECTORS.
PLEASE DO
NOT FOLD
Dated ______
PLEASE SIGN BELOW
-----------------------
-----------------------
NOTE: PLEASE DATE AND SIGN EXACTLY AS NAME(S) APPEAR ABOVE AND RETURN SIGNED
PROXY IN ENCLOSED ENVELOPE. IF THE STOCK IS ISSUED IN THE NAMES OF TWO OR MORE
PERSONS, ALL SHOULD SIGN THE PROXY. STATE FULL TITLE WHEN SIGNING AS EXECUTOR,
ADMINISTRATOR, TRUSTEE, GUARDIAN, ETC.
