SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
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 Section 240.14a-11(c)or Section
240.14a-12
ILLINOIS CENTRAL CORPORATION
(Name of Registrant as Specified In Its Charter)
ILLINOIS CENTRAL CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1), or 14a-6(i)(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 0-11:1
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
[ x ] Fee paid previously with preliminary materials
<PAGE>
ILLINOIS CENTRAL CORPORATION
455 NORTH CITYFRONT PLAZA DRIVE
CHICAGO, ILLINOIS 60611
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 19, 1995
TO THE STOCKHOLDERS OF ILLINOIS CENTRAL CORPORATION:
Notice is hereby given that the Annual Meeting of
Stockholders of Illinois Central Corporation, a Delaware
corporation (the "Corporation"), will be held in the
Stockholder's Room of the Bank of America NT&SA, 231 South
LaSalle Street, Chicago, Illinois 60604, on April 19, 1995, at
9:00 AM local time, for the following purpose:
To elect three directors to a three-year term expiring at
the 1998 Annual Meeting of Stockholders or until their
successors are elected and qualified
and to transact such other business as may properly come before
the meeting or any adjournment or adjournments.
Stockholders of record of the Common Stock of the
Corporation at the close of business on March 2, 1995, are
entitled to notice of and to vote at this meeting. A list of
such stockholders will be available for examination during the
ten-day period preceding the meeting at the offices of the
Corporation at 455 North Cityfront Plaza Drive, Chicago, Illinois
60611.
By order of the Board of Directors,
Ronald A. Lane
Secretary
PLEASE SIGN AND RETURN PROMPTLY THE ACCOMPANYING PROXY CARD in
the enclosed envelope which does not require postage if mailed in
the United States or Canada.
<PAGE>
Illinois Central Corporation
455 North Cityfront Plaza Drive
Chicago, Illinois 60611
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS -- APRIL 19, 1995
PROXY
This Proxy Statement and the accompanying proxy card are
first being sent on or about March 16, 1995, to holders of Common
Stock of Illinois Central Corporation ("IC" or the "Corporation")
in connection with the solicitation of proxies by IC's Board of
Directors (the "Board of Directors" or the "Board") for the
Annual Meeting of Stockholders ("Annual Meeting"). The Annual
Meeting will be held in the Stockholder's Room of the Bank of
America NT&SA, 231 South LaSalle Street, Chicago, Illinois 60604,
on April 19, 1995, at 9:00 AM local time. To assure the presence
of a quorum at the Annual Meeting, the Board requests that all
stockholders sign and return promptly the enclosed proxy card.
Only stockholders of record at the close of business on March 2,
1995, will be entitled to vote at the Annual Meeting.
The shares represented by the proxies will be voted by the
persons named as proxies, and, if the stockholder specifies a
choice with respect to a Proposal, the shares will be voted in
accordance with that specification. If no specification is made,
the shares will be voted "FOR" the nominees described below for
election as directors. Any stockholder returning a proxy card
has the power to revoke it by written revocation or a later dated
proxy card delivered to the corporate Secretary at any time
before it is voted or by attending the meeting and voting in
person.
VOTING SECURITIES OF THE CORPORATION
As of March 2, 1995, there were outstanding 42,330,191
shares of Illinois Central Corporation Common Stock, $.001 par
value per share ("Common Stock"), which is the Corporation's only
class of voting securities. Holders of Common Stock are entitled
to one vote per share, exercisable in person or by proxy, with
respect to all matters to come before the Annual Meeting.
Under the Corporation's By-Laws, stockholders of record of a
majority of the outstanding shares of Common Stock entitled to
vote must be present in person or by proxy at the Annual Meeting
to constitute a quorum.
<PAGE>
ELECTION OF DIRECTORS
The Corporation has three classes of directors with
staggered terms, the members of each class serving a three-year
term on the Board. At this Annual Meeting, the terms of the
Class I directors will expire. The current Class I directors are
E. Hunter Harrison, Samuel F. Pryor, IV and Alan H. Washkowitz.
The Board of Directors intends to nominate these three
individuals for re-election to terms expiring in 1998, or until
their successors are elected and qualified.
Each nominee has consented to his nomination and, if
elected, has indicated his intent to serve as a director. In the
event that any nominee should be unable or unwilling to accept
the office of director, which is not anticipated, the persons
named as proxies intend to vote for the election of such other
person(s) as the Board of Directors may recommend, unless the
Board has taken prior action to reduce its membership.
NOMINEES FOR ELECTION AS CLASS I DIRECTORS WHO WOULD HOLD OFFICE
UNTIL 1998
E. Hunter Harrison, 50, has been a director of the
Corporation and the Illinois Central Railroad Company (the
"Railroad") since 1993 and has served as President and Chief
Executive Officer of the Corporation and the Railroad since
February 1993. Mr. Harrison joined the Corporation and the
Railroad as Vice President and Chief Transportation Officer in
1989, was elected Senior Vice President-Transportation in 1991
and was elected Senior Vice President-Operations in July 1992.
Mr. Harrison also is a director of Wabash National Corporation,
a manufacturer of truck trailers. Committee: Executive.
Samuel F. Pryor, IV, 39, has been a director of the
Corporation since 1989. Mr. Pryor has been Managing Director of
The Noel Group, Inc. ("Noel"), a diversified operating company
since 1991. He also is President of The Prospect Group, Inc.
("Prospect"), a diversified operating company, for which he has
served in various capacities since 1986. Mr. Pryor is a director
of Prospect, Belding Heminway, Inc. and Sylvan Foods, Inc.
Committees: Audit, Compensation and Finance (Chairman).
Alan H. Washkowitz, 54, has been a director of the
Corporation since 1991. He has been a Managing Director of
Lehman Brothers or its predecessors since 1978. Mr. Washkowitz
also serves as a director of K&F Industries, Inc., Lear Seating,
a manufacturer of automobile seats, and McBrides, Ltd., a
manufacturer of private label household and personal care
products. Committees: Compensation and Finance.
CLASS II DIRECTORS CONTINUING IN OFFICE UNTIL 1996
Thomas A. Barron, 42, has been a director of the
Corporation since 1990. He is an author and has been Chairman of
Evergreen Management Corporation, a private investment firm,
since 1990. Mr. Barron was President and Chief Operating Officer
and a director of Prospect from 1983 to 1989 and Vice Chairman
and a director from 1989 to 1990. Mr. Barron is a director of
The Forschner Group, Inc. and Sweetwater, Inc., and has served
as a Trustee of Princeton University. Committee: Audit.
William B. Johnson, 76, has been a director of the
Corporation since 1989. He previously served as a director,
Chairman and Chief Executive Officer of IC Industries, Inc. (now
known as Whitman Corporation). Until 1989, Whitman owned the
Railroad. Mr. Johnson was employed by the Corporation as Advisor
to the Chairman in 1990 and 1991. Mr. Johnson serves as a
director of Webster Broadcasting, is a Trustee of the University
of Chicago and the University of Pennsylvania Law School and is
a member of the Board of Governors of Washington College,
Chestertown, Maryland. Committees: Audit (Chairman) and
Executive.
John V. Tunney, 60, has been a director of the Corporation
since 1990. He has been Chairman of the Board of Cloverleaf
Group, Inc., a real estate development firm, since 1980. Mr.
Tunney served as United States Senator from the State of
California from 1971 to 1977 and as a member of the United States
House of Representatives from 1965 to 1971. Mr. Tunney is a
director of Foamex International, a manufacturer and fabricator
of polyurethane foam, The Forschner Group, Inc., Garnet Resources
Corporation, Logan Manufacturing Company, a manufacturer of wide-
track vehicles, and Prospect. Committees: Audit and
Compensation.
CLASS III DIRECTORS CONTINUING IN OFFICE UNTIL 1997
George D. Gould, 67, has been a director of the Corporation
since 1990. He has been Vice Chairman of Klingenstein, Fields &
Co., L.P., a money management firm, since 1989. Mr. Gould is a
Trustee of the Drexel Burnham Lambert Liquidating Trust,
appointed by the United States Bankruptcy Court for the Southern
District of New York. Mr. Gould is Chairman of the Hungarian
American Enterprise Fund. He previously served as Undersecretary
of the United States Treasury for Finance from 1985 to 1988. Mr.
Gould also serves as a director of the Federal Home Loan Mortgage
Corporation. Committees: Audit, Compensation (Chairman) and
Finance.
Gilbert H. Lamphere, 42, has been a director of the
Corporation and the Railroad since 1989. He has been Chairman of
the Board since 1993, and Chairman of the Executive Committee of
the Board since 1990. Mr. Lamphere is Managing Director of the
Fremont Group, a diversified investment company. He was Co-
Chairman and Chief Executive Officer of Noel from 1991 until
1994 and was the Chairman and Chief Executive Officer of
Prospect until 1994, for which he had served in various
capacities since becoming a director in 1983. Mr. Lamphere also
is a director of and Chairman of both Recognition International
Inc. and Belding Heminway, Inc. He also serves as a director of
Fremont and Prospect. Mr. Lamphere is the brother-in-law of another
director, Mr. Lynch. Committee: Executive (Chairman).
Alexander P. Lynch, 42, has been a director of the
Corporation since 1991. He is Co-Chief Executive Officer and Co-
President of The Bridgeford Group, a financial advisory firm.
From 1991 until 1995 he was a Senior Managing Director of
Bridgeford. From 1985 until 1991, Mr. Lynch was a Managing
Director of Lehman Brothers or its predecessors. Mr. Lynch also
serves as a director of Lincoln Snacks Company. Mr. Lynch is the
brother-in-law of another director, Mr. Lamphere. Committee:
Finance.
F. Jay Taylor, 71, has been a director since 1994. Dr.
Taylor is a Labor-Management Arbitrator in both the public and
private sectors. He served as President of Louisiana Tech
University from 1962 to 1987, and currently serves as President
Emeritus of the University. Dr. Taylor is a member of the Board
of Directors of Michael's Stores, Inc. and Pizza Inn, Inc. and a
member of the National Academy of Arbitrators and Society of
Professionals in Dispute Resolution. Committee: Audit.
See "OWNERSHIP OF COMMON STOCK AND CERTAIN TRANSACTIONS"
for the beneficial ownership of Common Stock by each director and
by all directors, nominees and executive officers as a group.
Committees Of The Board of Directors
There are four standing committees of the Board of
Directors. Committee membership is noted in the biographical
section above. The functions of the various committees are
described below.
EXECUTIVE COMMITTEE - With the exception of certain powers
that are reserved exclusively to a board of directors by
the Delaware General Corporation Law (such as approving
amendments to the Restated Certificate of Incorporation,
adopting an agreement of merger or consolidation, and the
amendment of the corporation's by-laws), the Executive
Committee, which has three members, may exercise all the
powers and authority of the Board in the management of the
business and affairs of the Corporation. The Committee
held five meetings in 1994 and reported the results of
those meetings to the Board.
AUDIT COMMITTEE - The Audit Committee is composed of six
outside directors. The Committee oversees the
Corporation's financial reporting on behalf of the Board.
The Committee reviewed the 1994 audit plans of Arthur
Andersen LLP, considered the adequacy of audit scope and
reviewed and discussed with the auditors and management the
auditors' reports. The Committee recommended to the Board
the selection of the Corporation's independent public
accountants. The Committee reviews compliance with the
Corporation's Standards of Business Conduct policy,
environmental conditions and compliance activities for the
Corporation's facilities and the independent public
accountants' review of the expense accounts of principal
executive officers. The independent public accountants and
the Committee have unrestricted access to each other,
without management present, to discuss the results of
audit work, including the adequacy of internal accounting
controls, the quality of financial reporting and any other
matter deemed appropriate. The Committee held two meetings
in 1994, reported the results of those meetings to the
Board and made recommendations to the Board.
COMPENSATION COMMITTEE - The Compensation Committee
establishes and administers compensation policies for the
Board, sets the compensation for the Chief Executive
Officer and has the responsibility for establishing and
administering compensation policies, plans and programs for
the Corporation and its subsidiaries. The Committee held
three meetings in 1994, reported the results of those
meetings to the Board and made recommendations to the
Board.
FINANCE COMMITTEE - The Finance Committee monitors
developments in the financial markets, reviews the
financial structure of the Corporation, including its
annual budget and five year plan, and recommends
appropriate financial strategies and transactions. The
Committee held five meetings in 1994, reported the results
of those meetings to the Board and made recommendations to
the Board.
Meetings of the Board of Directors
In 1994, the Board of Directors held eight meetings. The
number of meetings held by the committees of the Board of
Directors is noted above. Each director of the Corporation
attended at least 75% of the meetings held by the Board and by
the Committees on which he served, except Mr. Barron, who,
because of schedule conflicts, attended one of the two Audit
Committee meetings.
VOTE REQUIRED
The three nominees receiving the greatest number of votes
(i.e., a plurality) will be elected as Directors. Abstentions
and non-votes by brokers and other nominees will not have any
effect upon the vote.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the election
of the nominees listed above as directors of the Corporation.
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Compensation Committee Report
Executive Compensation Philosophy
The Compensation Committee of the Board of Directors (the
"Committee") has the responsibility for establishing and
administering compensation policies, plans and programs for the
Corporation and its subsidiaries (herein, "the Company"). The
Committee has adopted a compensation philosophy for the Company's
management to serve as guiding principles for program design and
administration. The overriding philosophy is that compensation
should be tied directly to the Company's stated business
objectives and to the sustained creation of stockholder value.
The Committee believes that stockholder interests and the
Company's compensation programs should be closely aligned and
integrated. Therefore, the Company's compensation program
reflects both a performance and long-term orientation. Further,
the performance measures used to determine compensation levels
have been demonstrated to be primary, sustainable drivers of
stockholder value among transportation companies specifically,
and other publicly-held companies generally. As a result, the
Company's total compensation program is designed to be highly
sensitive to the Company's performance, defined in terms of
stockholder value creation.
Performance Compensation Program
The Company's Performance Compensation Program consists
of three components: (1) Base Salary, (2) Performance Awards and
(3) Stock Options and purchases under the Discounted Stock
Purchase Plan. Each of these components and its respective role
in total direct compensation, as well as the basis for
determining the compensation of the President and Chief Executive
Officer ("CEO"), Mr. Harrison, are described below:
(1) Base Salary
Pursuant to the compensation philosophy of emphasizing
risk-oriented pay to encourage superior performance and
consistent with the Company's business strategy of controlling
fixed costs, annual salary adjustments are determined by several
factors, including: the Company's performance, the individual's
contribution to that performance, the individual's position
within his/her salary grade and competitive pay levels. The
overall target for an individual's base salary has been set at
90% of the size-adjusted median for Class I railroads most of
whom are part of the S&P Railroad Index. On an annual basis,
the Committee reviews the salary of the CEO and all other officers.
(2) Performance Awards and Bonuses
Fiscal 1994 was the first year in which all of the
Company's management employees (approximately 390) were eligible
to participate in the Company's annual incentive program. Each
participant is assigned a target Performance Award according to
the individual's level of responsibility (salary grade). Target
award levels range from 10% to 75% of annual base salary. The
CEO's target award is 75% and the target awards for the four
other most highly compensated officers range from 60% to 65% of
base salary. Actual award levels vary depending upon the degree
of achievement relative to specified Company and individual
performance objectives and can range in total from 0% to 220% of
target award levels. For the CEO and four other most highly
compensated officers, there is no individual performance
objective and the range for an actual award, based solely on
Company performance is from 0% to 150% of target awards.
Performance awards under the program are contingent upon
both Company and individual performance for the year. Only those
individuals who receive a satisfactory or better performance
rating in their annual performance reviews are eligible to
receive a Performance Award. The Company's performance relates
directly to those measures which drive stockholder value --
annual return on average total capital ("ROTC"), calculated on an
after-award after-tax basis, and annual revenue growth. Specific
performance objectives are set by the Committee annually in
relation to the Company's fiscal budget which has been reviewed
and approved by the Board. The payout related to Company
performance against these predetermined objectives ranges from 0%
to 150% of target award. Except as to the CEO and the four other
most highly compensated individuals, the Committee has the
ability to adjust the Company payout through a discretionary
factor of plus or minus 20% of target award by evaluating other
business measures (e.g., safety, operating ratio, earnings per
share, or other measures). For the CEO and the four other most
highly compensated officers only, Company performance, subject to
potential reduction by the Committee, governs their Performance
Award amount under the program. For other participants their
individual performance rating determines the individual portion
of his/her award, which varies from 0% to 50% of the target
award.
To comply with IRS regulations limiting the deductibility
of executive compensation, the CEO and the four other most highly
compensated officers are not eligible to receive any performance
award based on individual performance. However, the Committee
has retained the option of awarding cash bonuses outside the Plan
(which are subject to the deductibility cap) to those individuals.
(3) Stock Options
The Company maintains two types of long-term equity
incentive programs: a senior management Stock Option Program and
a Discounted Stock Purchase Plan. These programs encourage
senior managers and other employees to acquire and retain a
significant ownership stake in the Company and to motivate them
to improve the long-term performance of the Company's stock price
and total return to stockholders. Both programs are designed to
align stockholders' and management's interests. These programs
are discussed under Compensation Plans and Arrangements.
Awards are made annually under the Stock Option Program
and are determined by (i) the return to stockholders from the
Company's Common Stock relative to the S&P Mid-Cap 400 Industrial
Average and (ii) the Company's performance compared with other
Class I railroads. As such, the first awards under the program
will be made later in 1995 after that data is available. As to
the Discounted Stock Purchase Plan approximately 50 employees
participated in 1994 and acquired 3,593 shares.
Results for 1994
Actual results for 1994 exceeded the ROTC and revenue
growth objectives. Actual 1994 ROTC was 11.5% and revenue growth
was 5.2%. Based on this performance level the Company
performance portion of the Performance Award was 117.8% of target
award levels. Participants other than the CEO and the four other
highly compensated individuals earned individual Performance
Award based upon the criteria described above. In January 1995,
the Committee reviewed the recommendations of Strategic
Compensation Associates ("SCA"), a consulting firm specializing
in Executive Compensation retained by the Committee as
independent advisors. Upon consideration of SCA's
recommendations, the CEO's recommendations and their
observations, the Committee awarded additional cash bonuses to
the executive officers reflecting the contributions these
individuals made to the overall performance of the Company for
the year and competitive compensation currently paid by other
railroads. In aggregate, approximately $6.2 million in
Performance Awards and bonuses were paid to all management
employees for 1994.
The Committee also recommended and the Board approved
setting the Company's 1995 ROTC objective at 12% and the annual
revenue growth objective at 5%.
CEO Compensation
Mr. Harrison was the highest compensated officer of the
Company in 1994.
In November 1994, Mr. Harrison's salary was increased from
$400,000 to $500,000 retroactively to January 1, 1994. The
Compensation Committee had determined in February 1994 that an
increase in Mr. Harrison's base salary was warranted in light of
Mr. Harrison's performance as President and Chief Executive
Officer since his appointment in February 1993 and the Company's
numerous financial and strategic accomplishments, including: the
lowest operating ratio among Class I railroads; the Company's
quick response to the massive floods in the Midwest during the
summer of 1993; the Company's response to and management of the
1993 coal strike; the Company's numerous marketing, sales and
organizational initiatives; and the Company's strong stock price
appreciation. However, the Board of Directors determined that
the increase should be held in abeyance because of the pending
acquisition discussions with Kansas City Southern Industries
("KCSI"). Following the termination of those discussions in
October 1994, the Board at its November 1994 meeting implemented
the Compensation Committee's recommendation retroactively to
January 1st.
In January 1995, the Compensation Committee determined that
Mr. Harrison's base salary should continue to be $500,000. The
Committee also determined that Mr. Harrison should be paid a cash
bonus of $188,250 in addition to the Performance Award of
$441,750 generated by the Company's financial performance (ROTC
and revenue growth) under the Executive Performance Compensation
Program. This bonus was determined based on the Committee's
assessment of Mr. Harrison's individual contribution toward the
Company's numerous accomplishments including: the surpassing of the
its 1994 ROTC and revenue growth goals, the continuation of
the Company's focus on safety and the receipt of The Harriman Gold
Medal for safety performance, the negotiation of several
breakthrough local bargaining agreements and the implementation of the
Company's plans to expand management depth and development as
well as other personal accomplishments during 1994.
Nondeductible Compensation
The Company believes that compensation paid under the
Executive Performance Program will be fully deductible for
federal income tax purposes. The Committee does not currently
anticipate that any executive officer's nonperformance-based
compensation will exceed $1 million. For 1994, no executive
officer received nonperformance-based compensation which exceeded
$1 million. It is anticipated that all executive compensation to
be paid in 1995 will be fully deductible as well. However, the
Committee and the Board of Directors retain the discretion to
grant nondeductible compensation if that would be in the best
interests of the Company and stockholders under the
circumstances.
Respectfully submitted,
Mr. George D. Gould, Chairman
Mr. Samuel F. Pryor, IV
Mr. John V. Tunney
Mr. Alan H. Washkowitz
<PAGE>
<TABLE>
Executive Compensation
All of the cash compensation received by IC's executive officers during fiscal years 1994, 1993 and 1992 was paid
or accrued by the Railroad; none was paid by IC. The following table sets forth information concerning the Chief
Executive Officer and the four other most highly compensated executive officers for the year ended December 31, 1994.
Summary Compensation Table
<CAPTION>
Long-Term
Annual Compensation Compensation
Name and Other Restricted Securities
Principal Annual Restricted Underlying
Position(s) Compen- Stock Options/SARS All Other Compensation
Year Salary Bonus(1) sation(2) Awards(3) SARS Compensation ($)
($) ($) ($) ($) # ($)
<S> <C> <C> <C> <C> <C> <C> <C>
E. Hunter Harrison 1994 496,154 630,000 15,424 - - 108,522(4)
President and Chief 1993 357,342 350,000 19,965 - 275,000 70,252(4)
Executive Officer 1992 158,807 175,000 5,784 412,500 - 28,150(4)
John D. McPherson 1994 174,660 190,000 7,909 - - 31,936(5)
Senior Vice 1993 56,896 65,000 1,380 650,000 - 4,968(5)
President-Operations
Gerald F. Mohan 1994 180,049 190,000 9,425 - - 42,097(6)
Senior Vice President -1993 173,721 165,000 8,762 - 12,000 39,892(6)
Marketing 1992 158,807 175,000 5,675 412,500 - 29,194(6)
Ronald A. Lane 1994 154,328 157,000 11,504 - - 30,648(7)
Vice President and 1993 149,013 135,000 9,105 - 11,000 29,203(7)
General Counsel, and 1992 138,956 140,000 4,932 371,250 - 20,962(7)
Secretary
Dale W. Phillips 1994 154,328 157,000 8,399 - - 30,856(9)
Vice President & Chief 1993 148,822 135,000 8,319 - 11,000 29,368(9)
Financial Officer 1992 132,846 140,000 57,481(8) 371,250 - 20,361(9)
</TABLE>
Notes to Summary Compensation Table
(1) Bonus amounts include, but are not limited to,
Performance Awards (see "Compensation Committee Report").
Amounts shown in a given year reflect amounts awarded with
respect to that year but may have been paid the following year.
(2) Generally includes federal and state tax "gross ups"
for various perquisites such as company cars and club dues and
initiation fees, and, when they exceeded the lesser of $50,000 or
10% of the total of annual salary and bonus, the value of
perquisites.
(3) Restricted stock awards were granted in 1992 (1993 for
Mr. McPherson). Shares awarded are restricted for a period of
four years from the date of purchase or award. On each of the
first four year anniversary dates of purchase or award, if
employment has not previously been terminated, 25% of the shares
originally awarded become unrestricted. Dividends paid on
unvested restricted shares are not included in this table because
they do not exceed regular dividends. As of December 31, 1994,
Messrs. Harrison and Mohan each owned 10,000 unvested shares of
the shares granted in 1992 which had a current value of $307,500,
and Messrs. Lane and Phillips each owned 9,000 unvested shares of
the shares granted in 1992 which had a current value of $276,750.
Current value is computed by multiplying the closing NYSE market
price of unrestricted stock on December 31, 1994, by the number
of shares still subject to restrictions and netting out any
consideration paid by award recipient. See "Employment Contracts
and Termination of Employment and Change in Control
Arrangements."
(4) Includes: (i) Railroad contributions to defined
contribution plan of $3,000, $4,717 and $3,204 for fiscal years
1994, 1993 and 1992, respectively; (ii) Railroad contributions
to 401(k) plan of $4,620, $4,497 and $4,364 for fiscal years
1994, 1993 and 1992, respectively; (iii) amounts accrued under an
executive account balance plan of $84,652, $50,735 and $19,713
for fiscal years 1994, 1993 and 1992, respectively; and (iv)
amounts accrued under an excess benefit plan of $16,250, $10,303,
$869 for fiscal years 1994, 1993 and 1992, respectively.
(5) Includes: (i) Railroad contributions to defined
contribution plan of $3,000 and $825 for fiscal years 1994 and
1993, respectively; (ii) Railroad contributions to 401(k) plan of
$4,001 and $1,239 for fiscal years 1994 and 1993, respectively;
(iii) amounts accrued under an executive account balance plan of
$23,778 and $2,904 for fiscal years 1994 and 1993, respectively;
and (iv) amount accrued under an excess benefit plan of $1,157
in 1994.
(6) Includes: (i) Railroad contributions to defined
contribution plan of $3,000, $3,504 and $3,204 for fiscal years
1994, 1993 and 1992, respectively; (ii) Railroad contributions to
401(k) plan of $4,620, $4,358 and $3,743 for fiscal years 1994,
1993 and 1992, respectively; (iii) amounts accrued under an
executive account balance plan of $32,910, $31,135 and $21,289
for fiscal years 1994, 1993 and 1992, respectively; and (iv)
amounts accrued under an excess benefit plan of $1,567, $895 and
$958 for fiscal years 1994, 1993 and 1992, respectively.
(7) Includes: (i) Railroad contributions to defined
contribution plan of $3,000, $3,000 and $2,808 for fiscal years
1994, 1993 and 1992, respectively; (ii) Railroad contributions to
401(k) plan of $4,620, $4,475 and $4,025 for fiscal years 1994,
1993 and 1992, respectively; (iii) amounts accrued under an
executive account balance plan of $ 22,924, $21,728 and $14,129
for fiscal years 1994, 1993 and 1992, respectively; and (iv)
amounts accrued under the excess benefit plan of $104 in 1994.
(8) Includes perquisites, including club dues and
initiation fees of $31,250.
(9) Includes: (i) Railroad contributions to defined
contribution plan of $3,000, $3,000 and $2,684 for fiscal years
1994, 1993 and 1992, respectively; (ii) Railroad contributions to
401(k) plan of $4,620, $4,463 and $3,850 for fiscal years 1994,
1993 and 1992, respectively; (iii) amounts accrued under an
executive account balance plan of $23,132, $21,905 and $13,827
for fiscal years 1994, 1993 and 1992, respectively; and (iv)
amounts accrued under the excess benefit plan of $104 in 1994.
<PAGE>
1990 Incentive Plan
Set forth below is a summary of the awards made during 1994
pursuant to the IC's 1990 Long-Term Incentive Plan (the "1990
Incentive Plan").
Number
Exercise of Units
Price Per (Shares
Name and Position(s) Share(1) Dollar Value(1) or Options)
Restricted Stock:
Executive Group $32.125 $481,875 15,000
Option Grants:
Executive Group -
All Non-Executive -
Total Options to Employees(2) -
Non-Executive/Director Group N/A(3) 13,500
Total Options Granted 13,500
Notes:
1 Value based upon the closing price of the Common Stock on
the NYSE on the award date of October 31, 1994. The
individual is in the Executive Group but is not named in
1994 Summary Compensation Table in accordance with the
applicable proxy statement disclosure rules.
2 None granted to employees in 1994.
3 The value of the option awards is not determinable. The
value of the common stock underlying the options on the
award date of April 21, 1994, based upon the closing price
of the Common Stock on the NYSE, was $460,688.
<PAGE>
The following is a schedule of shares and options awarded
and still outstanding or available for award under the Incentive
Plan. The exercise prices have been adjusted to give effect to
the 3-for-2 stock split in February 1992.
Outstanding Total
Reserved shares(1) 2,402,500
Options:
Granted in 1990:
At $12.000/share 45,000
At $ 8.000/share 45,000
Granted in 1991:
At $12.750/share 34,500
Granted in 1992:
At $22.750/share 10,500
At $22.375/share 15,000
Granted in 1993:
At $24.875/share 250,000
At $27.750/share 10,500
At $31.250/share 270,000
Granted in 1994:
At $37.750/share 15,000
At $34.250/share 13,500 (709,000)
Restricted stock:
Awarded in 1992 350,000
Awarded in 1993 25,000
Awarded in 1994 15,000 (390,000)
Shares of restricted stock forfeited 80,600
Available for award 1,384,100
1 Reserved shares are reduced by the number of shares issued
upon exercise of options.
Until 1993, all option awards had been granted to directors
who are not full time employees of IC ("Outside Directors") only.
<PAGE>
Options/SAR Grants in Last Fiscal Year.
During 1994, neither options nor SAR's were granted to the named
executives. The first awards under the Executive Performance Compensation
Program approved by the stockholders at the 1994 Annual Meeting will be
made in 1995.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired on Value FY-End (#) FY-End($)2
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
E. Hunter Harrison 0 0 68,750 206,250(1) 367,188 1,101,563
John D. McPherson 0 0 3,000 9,000 N/A N/A
Gerald F. Mohan 0 0 3,000 9,000 N/A N/A
Ronald A. Lane 0 0 2,750 8,250 N/A N/A
Dale W. Phillips 0 0 2,750 8,250 N/A N/A
</TABLE>
1 Exercisable on February 17, 1995, - 62,500.
2 Based on the year-end price of $30.75. Only options granted
in February 1993 are in-the-money.
<PAGE>
Federal Income Tax Consequences of Options
The following is a summary of the federal income tax
consequences of options granted under the 1990 Incentive Plan
based upon federal tax laws currently in effect. The 1990
Incentive Plan is not qualified under Section 401(a) of the
Internal Revenue Code.
With respect to nonstatutory options: Except as provided
below, when an optionee exercises an option, the difference
between the option price and any higher fair market value of the
shares on the date of exercise will be ordinary income to the
optionee and will be allowed as a deduction for federal income
tax purposes to the Corporation or its affiliates provided that
applicable tax withholding requirements are satisfied. When an
optionee disposes of shares acquired by the exercise of the
option, any amount received in excess of the market value of the
shares on the date of exercise will be treated as long- or short-
term capital gain, depending upon the holding period of the
shares. If the amount received is less than the fair market
value of the shares on the date of exercise, the loss will be
treated as long- or short- term capital loss, depending upon the
holding period of the shares.
With respect to incentive stock options: When an optionee
exercises an incentive stock option while employed by the
Corporation or its affiliates or within the three month period
(one year for disability) after termination of employment, no
ordinary income will be recognized by the optionee at that time,
but the excess (if any) of the fair market value of the shares
acquired upon such exercise over the option price will be an
adjustment to taxable income for purposes of the federal
alternative minimum tax applicable to individuals. If the shares
acquired upon exercise are not disposed of prior to the
expiration of one year after the date of transfer and two years
after the date of grant of the option, the excess (if any) of the
sale proceeds over the aggregate option price of such shares will
be long-term capital gain, but the Corporation will not be
entitled to any tax deduction with respect to such gain. Except
as provided below, if the shares are disposed of prior to the
expiration of such periods (a "disqualifying disposition"), the
excess of the fair market value of such shares at the time of
exercise over the aggregate option price (but not more than the
gain on the disposition if the disposition is a transaction on
which a loss, if realized, would be recognized) will be ordinary
income at the time of such disqualifying disposition and the
Corporation or its affiliates will be entitled to a federal tax
deduction in a like amount. If an incentive stock option is
exercised by the optionee more than three months (one year for
disability) after termination of employment, the tax consequences
are the same as described above for nonstatutory stock options.
If a participant who is subject to Section 16(b) of the
Securities and Exchange Act of 1934 ("1934 Act") receives shares
of Common Stock by reason of the exercise of a nonstatutory
option there is no ordinary income recognized at that time unless
(i) the election described below is made or (ii) the sale of such
shares at a profit is no longer subject to Section 16(b) of the
1934 Act. Such participants will instead recognize ordinary
income equal to the fair market value of the number of shares
received (less the amount of cash paid for the shares, if any) on
the first day such sale is no longer subject to Section 16(b) of
the 1934 Act and the Corporation or its affiliates will be
entitled to deduction of a like amount for federal income tax
purposes at that time provided that applicable tax withholding
requirements are satisfied. However, such a participant may
elect under Section 83(b) of the Code within 30 days of the
transfer of such shares to have the normal rules described above
apply.
Certain additional rules apply if the exercise price of an
option is paid for in shares previously owned by the optionee
rather than in cash.
Compensation Plans and Arrangements
Various stock plans of IC and benefit plans of the Railroad
are discussed below:
Stock Purchase Plan. In 1990 under IC's 1990 Stock
Purchase Plan (the "Stock Purchase Plan") established when
Prospect owned IC, 448,740 shares of Common Stock were sold by
Prospect to key employees and officers of IC at a price of $.10
per share (which was Prospect's approximate original per share
cost for such stock after adjusting for the stock split). No new
awards are permitted under this plan. Shares awarded pursuant
to the Stock Purchase Plan were restricted for a period of four
years and the last of these restrictions ended June 4, 1994.
Long-Term Incentive Plan. Under the 1990 Incentive Plan,
subject to certain adjustments, shares of Common Stock are
available (i) for discretionary stock-based awards by the
Compensation Committee to employee directors, selected salaried
employees of IC and its subsidiaries and certain other
individuals who possess the potential to contribute to the future
success of IC and its subsidiaries ("Employee Participants") and
(ii) for stock option grants, pursuant to the fixed provisions in
the Incentive Plan, to Outside Directors.
Under the 1990 Incentive Plan, as amended in 1993, on the
date of each Annual Meeting of Stockholders, each Outside
Director of IC who serves immediately prior to such date and who
will continue to serve after such date (whether as a result of
such director's re-election or by reason of the continuation of
such director's term), is granted an option to purchase 1,500
shares of Common Stock at a price equal to the closing market
price of such Common Stock on the grant date. Options held by
Outside Directors expire 10 years from the date of grant, or, if
earlier, one year following termination of service as a director
for any reason other than death or disability. Such options
become exercisable in full six months after their date of grant.
Options granted to Employee Participants are granted at
fair market value at grant date. Twenty-five percent of each
option grant becomes exercisable on each of the first four
anniversary dates of the grant, and the option expires 10 years
from the date of the original grant.
Executive Account Balance Plan. The Railroad's Executive
Account Balance Plan provides for a sum equivalent to 10% of an
executive's combined salary and performance awards in excess of
a wage offset factor to be accrued annually (but not funded), and
is payable upon the retirement from the Railroad or termination
of employment. The wage offset factor is adjusted annually by
the percentage increase in the social security wage base. For
1994, the wage offset factor was $101,000. Amounts accrued earn
interest in accordance with the plan.
Defined Contribution Plan. All management employees of the
Railroad are eligible to participate in a defined contribution
plan to which the Railroad contributes 2% of each participant's
earnings (as defined in the plan). All contributions are fully
vested upon contribution and are invested in various investment
funds as selected by the employees. Contributions are designated
as Employer Contributions in the Savings Plan.
Supplemental Retirement and Savings Plan. All management
employees of the Railroad are eligible to participate in the
Supplemental Retirement and Savings Plan (the "Savings Plan"),
which is a qualified salary reduction 401(k) plan. Eligible
employees may make "pre-tax" contributions to the Savings Plan of
up to 15% of their salary subject to limitations imposed by the
Internal Revenue Code. Those contributions are partially matched
by the Railroad. The matching contribution is limited to 50% of
the first 6% of an employee's pre-tax salary (i.e., the matching
contribution is limited to 3% of his or her salary). All
contributions are fully vested upon contribution and are invested
in various investment funds as selected by the employees.
Excess Benefit Plan. Under the Railroad's Excess Benefit
Plan, amounts are accrued for each executive officer on an
unfunded basis to offset the limitations imposed by the Internal
Revenue Code with respect to certain benefit plans as a result of
the level of the recipient's compensation. Currently, the Excess
Benefit Plan provides for the accrual of a sum equivalent to the
employer matching contribution under the Supplemental Retirement
and Savings Plan which is restricted by the limits of Section
402(g) of the Internal Revenue Code. The amounts accrued will be
distributed at the same time and on the same terms as the amounts
paid under the Savings Plan.
Executive Deferred Compensation Plan. The Corporation
established the Illinois Central Corporation Executive Deferred
Compensation Plan effective as of January 1, 1994. The plan is
available to all officers of the Railroad and such management
employees as specified from time to time by the Railroad.
Eligible employees may elect to defer up to 50% of base salary
and 100% of annual bonus. Participants' account balances are
fully vested and earn interest at a specified, variable rate.
Distributions under the plan will be made in a lump sum or
installments after the participant's retirement or other
termination of employment. Subject to a penalty, a participant
may elect to withdraw all or a portion of his or her account
under the plan in the event of an unforeseen financial emergency.
Management Life Insurance Plan. The Corporation
established the Illinois Central Corporation Management Life
Insurance Plan effective as of January 1, 1994. The plan covers
management employees of the Railroad. The plan provides a
benefit approximately equal to three times a participant's base
salary. The plan is a form of split-dollar life insurance plan
under which participants must contribute to the cost of their
coverage each year. Because of this contribution, participants
generally will not be taxed on the value of the life insurance
coverage. The death benefit under the plan will be paid to the
participant's designated beneficiary and the Railroad's
contribution amount will be returned to it. At retirement, a
participant will have the option of purchasing the policy from
the Corporation.
Performance Compensation Program. Adopted in 1993 and
effective for 1994, this program covers approximately 390 of the
Corporation's management employees, but it excludes Covered
Employees (defined below). The program has a salary and
Performance Award segment and is designed to emphasize risk-
oriented pay and linking individual performance and Corporation
performance. In addition to performance, base salary is affected
by the individual's position within the salary grade and
competitive pay levels.
The Performance Award portion of the program is contingent
upon both Corporation and individual performance for the year.
Only those individuals who receive a satisfactory or better
performance rating in their annual performance reviews are
eligible to receive an annual Performance Award. Each
participant is assigned a target Performance Award according to
the individual's level of responsibility (salary grade). Target
award levels range from 10% to 75% of annual base salary. The
Corporation's performance related directly to those measures are
those which drive stockholder value -- ROTC and annual revenue
growth. Specific performance objectives are set annually by the
Board. The payout related to Corporation performance against
these predetermined objectives ranges from 0% to 150% of target
award. The Compensation Committee has the ability to adjust the
Corporation payout through a discretionary factor of plus or
minus 20% of target award by evaluating other business measures
(e.g., safety, operating ratio, EPS, or other measures). A
participant's individual performance rating determines the
individual portion of his/her award, which varies from 0% to 50%
of the target award.
Executive Performance Compensation Program. Approved by
the stockholders in 1994, this program is similar to the
Performance Compensation Program except the Executive Program
covers the CEO and the four other most highly compensated
officers (collectively the "Covered Employees"). The CEO's
target level is 75% and the targets for the other Covered
Employees range from 60% to 65%. Under the Executive Program,
the Compensation Committee can lower, but not raise the
Corporation performance for discretionary factors and the Covered
Employees do not receive an individual performance portion. In
all other respects the programs are identical.
Senior Management Stock Option Program. Effective for
1994, this program covers approximately 60 management employees
who are eligible to participate. The number of stock options
that will be available for grant in any given year to all
eligible employees will vary between .3% and .9% of common shares
outstanding, depending on Corporation performance. Corporation
performance will be determined based upon three measures: 3-year
ROTC relative to Class I railroads, annual compound revenue
growth over a 3-year period relative to Class I railroads, and
the Corporation's 3-year total stockholder return relative to the
S&P Midcap 400 index. The stock options will be granted at the
fair market value on the date of grant and will vest 25% each
year over four years. Actual awards to individual participants
will be based upon Corporation performance, individual
performance and individual responsibility (salary grade) within
the Corporation. The maximum award which can be made in one year
to a participant under this program is options on 100,000 shares.
Stock options will be issued pursuant to the 1990 Long-Term
Incentive Plan previously approved by the stockholders. Similar
to the other performance programs, only those individuals who
receive a satisfactory or better rating on their annual
individual performance appraisals will be eligible to receive
stock option awards.
Stock Purchase Programs. The Corporation has two stock
purchase programs. The regular program is open to all employees
and permits employees to acquire Corporation Common Stock via
payroll deductions. The other plan is the Discounted Stock
Purchase Plan ("Discounted Plan"). Management employees
(approximately 390) are eligible to participate in the Discounted
Plan which provides for the investment of up to 15% of an
eligible employee's salary in the Common Stock of the
Corporation at a 15% discount. A participant must continue
employment with the Corporation or its subsidiaries for two
years to retain the 15% discount, and, during that period, the
shares will be held by the plan's administrator. If the employee
withdraws shares or directs the sale of shares within two years,
the discount must be repaid in cash or relinquished shares. No
such repayment is required in the event of death, retirement,
disability or change of control of the Corporation.
<PAGE>
Pension Plans
Supplemental Executive Retirement Plan. The Corporation
has no tax-qualified defined benefit retirement plan for
employees. However, the Corporation established the Illinois
Central Corporation Supplemental Executive Retirement Plan
effective as of January 1, 1994 (the "SERP"). The SERP covers
all officers of the Railroad and such other management employees
as specified from time to time by the Railroad. The monthly
benefit payable pursuant to the SERP is equal to a maximum of 35%
of the participant's final average compensation (defined as the
average annual compensation paid for the highest 36 consecutive
months out of the last 60 months prior to retirement) offset by
the amount of annual annuity that could be purchased with the sum
of: (i) the portion of the participant's account in the Savings
Plan which is attributable solely to Employer contributions and
the earnings thereon; (ii) the participant's account in the
Excess Benefit Plan; and (iii) the participant's account balance
in the Executive Account Balance Plan. Participants vest after
five years of participation in the SERP. The following table
shows benefits payable to those executives who are eligible for
early retirement at age 55 or above with 10 years of credited
service, or upon normal retirement at age 65.
Pension Plan Table
Average
Final Estimated Annual Benefit for Years of Credited Service
Earnings 5 10 15 20 25
$100,000 $17,500 $35,000 $35,000 $35,000 $35,000
200,000 35,000 70,000 70,000 70,000 70,000
300,000 52,500 105,000 105,000 105,000 105,000
400,000 70,000 140,000 140,000 140,000 140,000
500,000 87,500 175,000 175,000 175,000 175,000
600,000 105,000 210,000 210,000 210,000 210,000
700,000 122,500 245,000 245,000 245,000 245,000
800,000 140,000 280,000 280,000 280,000 280,000
900,000 157,500 315,000 315,000 315,000 315,000
The above table sets forth the estimated annual benefits
payable on a single-life annuity basis if participant does not
have a spouse at the time payment is to commence and a joint and
50% survivor annuity basis in the event the participant has a
spouse at the time of commencement. For 1994, covered
compensation for the executive officers named in the Summary
Compensation Table consists of salary, bonus and any deferred
compensation has been added back in the table.
The number of years of credited service as of December 31, 1994,
is one (1) year for each of Mr. Harrison, Mr. Mohan, Mr.
McPherson, Mr. Lane, and Mr. Phillips.
Directors' Compensation
Under the compensation program for Outside Directors the
annual retainer for the Chairman is $170,000 and the annual
retainer for other Board members is $20,000. For 1994 the
Chairman received a retainer of $120,000 and a bonus of $75,000
in recognition of his extensive service in connection with the
proposed transaction with KCSI. Because of the extra demands
placed on each committee's chairman a supplemental annual
retainer of $3,000 is paid. Each director receives $2,000 for
each board or committee meeting attended and is reimbursed for
expenses incurred in attending those meetings. In addition, in
recognition of the efforts involved in developing and
implementing the Company's compensation system, Mr. Alexander P.
Lynch received a special $50,000 bonus for 1994. No director
fees are paid to Mr. Harrison since he is an employee. A
Directors Deferral Plan permits directors to defer up to 100% of
their cash compensation until they terminate their services as
directors.
The outside directors also participate in the 1990
Incentive Plan which provides for an annual grant of stock
options to purchase 1,500 shares at the fair market value on the
date of grant. Stock options are granted to each continuing
director (whether as a result of such director's re-election or
by reason of the continuation of such director's term) on the
date of each Annual Meeting. Such options are exercisable in
full six months following their grant date and expire 10 years
following grant date or if earlier, one year after termination of
service as a director for any reason other than death or
disability.
The Outside Directors participate in a non-qualified
retirement plan which provides for annual payment of an amount
equal to the annual retainer at the time of a director's
retirement (currently $20,000) to be paid for as many years as
the director served in that capacity up to a maximum of 10 years.
IC has an Indemnification Agreement with each of the
directors.
Employment Contracts and Termination of Employment and Change in
Control Arrangements
No officer has an employment contract or a termination of
employment or change in control arrangement related to continued
employment. However, in the event of a change in control, any
unvested restricted stock and options granted to Employee
Participants will be subject to accelerated vesting.
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
The following independent directors are members of IC's
Compensation Committee: George D. Gould (Chairman), Samuel F.
Pryor, IV, John V. Tunney and Alan H. Washkowitz. No executive
officer serves as a director of any entity whose executive
officers serve on IC's Compensation Committee.
PERFORMANCE GRAPH/TABLE
The following performance graph/table compares the Corporation's
change in total stockholder return on its Common Stock since
August 1990 when public trading in the Common Stock began with
the S&P Midcap Index in which the Corporation is included and the
S&P Railroad Index which includes other Class I railroads but not
the Railroad. Dividend reinvestment has been assumed.
Stock Performance Table
S & P S & P
Period IC Stock Midcap 400 Railroads
7-90 100 100 100
12-90 80 95 92
12-91 226 142 150
12-92 251 159 168
12-93 376 181 208
12-94 331 175 180
<PAGE>
OWNERSHIP OF COMMON STOCK AND CERTAIN TRANSACTIONS
OWNERSHIP
The following table sets forth certain information with
respect to persons known by the Corporation to beneficially own
(as defined by the Securities Exchange Act of 1934) as of
March 2, 1995, five percent or more of Common Stock, and with
respect to each director and named executive officer of the
Corporation and all directors and executive officers of the
Corporation as a group.
Name and Address Amount and Percentage of
(if applicable) of Nature of Common Stock
Beneficial Owner Beneficial Ownership(1) Outstanding(1)
The Equitable Companies Incorporated
787 Seventh Avenue
New York, New York 10019 4,508,178(2) 10.65%
FMR Corporation
82 Devonshire Street
Boston, Massachusetts 02109 5,538,576(3) 13.08%
Mellon Bank Corporation
One Mellon Bank Center
Pittsburgh, PA 15258 2,539,000(4) 6.00%
Marsh & McLennan Companies, Inc.
1166 Avenue of the Americas
New York, NY 10036 2,266,700(5) 5.35%
Thomas A. Barron 364,399(6) *
George D. Gould 36,000 *
William B. Johnson 30,972 *
Gilbert H. Lamphere 579,065(7) 1.37%
Alexander P. Lynch 256,030(8) *
Samuel F. Pryor, IV 278,435(9) *
F. Jay Taylor 20,499(10) *
John V. Tunney 7,662(11) *
Alan H. Washkowitz 34,500(12) *
E. Hunter Harrison 263,318 *
John D. McPherson 32,361 *
Gerald F. Mohan 131,800 *
Ronald A. Lane 104,540 *
Dale W. Phillips 115,781 *
All directors and executive
officers of IC as a group
(18 persons) 2,425,431(13) 5.68%
__________
* under 1%
(1) Based on 42,330,191 shares of Common Stock
outstanding on March 2, 1995. Shares
issuable currently or within sixty days upon
exercise of options are treated as
outstanding for the purposes of stating the
amount of beneficial ownership and computing
the percentage of beneficial ownership of
shares by such person (or of the group).
See 1990 Incentive Plan for a summary of
shares purchasable upon exercise of options
granted.
(2) According to a Schedule 13G Amendment No. 5
dated February 9, 1994, on behalf of five
French mutual insurance companies, AXA
Assurances I.A.R.D. Mutuelle, AXA Assurances
Vie Mutuelle, Alpha Assurances I.A.R.D.
Mutuelle, Alpha Assurances Vie Mutuelle and
Uni Europe Assurance Mutuelle (collectively,
the Mutuelles AXA), AXA and The Equitable
Companies Incorporated and certain of their
subsidiaries. AXA reported sole voting and
dispositive power for 11,500 shares. The
remaining shares are held directly or
indirectly by Equitable or its subsidiaries.
Those Equitable subsidiaries reported the
following: Equitable Life reported having
sole voting power for 381,100 shares, shared
voting power for 103,400 shares and sole
dispositive power for 484,500 shares;
Alliance Capital Management L.P. reported
having sole voting power for 3,413,650
shares and sole dispositive power for
4,008,650 shares; and DLJ Securities
reported shared voting power for 800 shares
and Wood, Struthers & Winthrop Management
Corporation reported shared voting and sole
disposition power for 2,728 shares.
(3) According to a Schedule 13G dated February
14, 1995, Fidelity Management & Research
Company, a wholly-owned subsidiary of FMR
Corporation, has dispositive power for
5,458,176 shares in its capacity as an
investment advisor to several investment
companies (i.e., Funds) controlled by FMR
Corporation. Voting rights are vested with
the Fund's Board of Trustees. Fidelity
Management Trust Company, a wholly owned
subsidiary of FMR Corporation, has sole
dispositive voting power for 80,400 shares
in its capacity as trustee or managing agent
on several private investment accounts.
(4) According to a Schedule 13G dated February
14, 1995, Mellon Bank Corporation ("Mellon")
on behalf of various of its direct and
indirect subsidiaries in their various
fiduciary capacities reported beneficial
ownership of 2,539,000 shares. Of the
shares owned Mellon reported it had sole
voting power for 2,143,000 shares and shared
voting power for 13,000 shares. Mellon
further reported sole dispositive power for
1,305,000 shares and shared dispositive
power for 1,234,000 shares.
(5) According to a Schedule 13G dated January
30, 1995, Putnam Investments, Inc. ("PI") a
wholly-owned subsidiary of Marsh & McLennan
Companies, Inc. ("M&MC") reported that one
of PI's subsidiaries, Putnam Investment
Management, Inc., beneficially owned
2,221,800 shares with shared dispositive
power but neither have a sole voting power
and (ii) that one of PI's subsidiaries,
Putnam Advisory Company, Inc., beneficially
owned 19,950 shares with shared dispositive
and voting power and owned 24,950 shares
with only shared dispositive power. PI and
M&MC deny that either or both of them are,
for the purposes of Section 13(d) or 13(g)
the beneficial owner of any of the shares so
reported.
(6) Includes 56,554 shares held in trust for the
benefit of Mr. Barron's descendants, of
which Mr. Barron is a co-trustee. Mr.
Barron disclaims beneficial ownership of
these shares.
(7) Excludes 139,408 shares held by a trust for
the benefit of Mr. Lamphere's descendants,
of which Messrs. Alexander P. Lynch and
Richard G. Woolworth, Jr. are co-trustees.
Mr. Lamphere disclaims beneficial ownership
of these shares. Includes 56,554 shares
held by a trust for benefit of Mr. Pryor's
children, of which Mr. Lamphere is a co-
trustee.
(8) Includes 139,408 shares held by a trust for
the benefit of Mr. Lamphere's descendants,
of which Messrs. Alexander P. Lynch and
Richard G. Woolworth, Jr. are co-trustees.
(9) Excludes 56,554 shares held by a trust for
the benefit of Mr. Pryor's children, of
which Mr. Lamphere and Mr. Samuel F. Pryor,
III, Mr. Pryor's father, are trustees. Mr.
Pryor disclaims beneficial ownership of
these shares.
(10) Includes 1,000 shares held by Dr. Taylor's
spouse. Dr. Taylor disclaims beneficial
ownership of these shares.
(11) Includes 3,000 shares held in trust for Mary
L. Tunney, for which Mr. Tunney is Trustee.
(12) Under an arrangement with Lehman Brothers,
Mr. Washkowitz must remit to Lehman Brothers
any gain upon exercise of the options for
16,500 shares of the total.
(13) See Notes (6) - (12) above.
<PAGE>
CERTAIN TRANSACTIONS
Lehman Brothers Inc.
Mr. Washkowitz has been a Managing Director of
Lehman Brothers or its predecessors since 1978. Lehman
Brothers has provided services to the Corporation and
the Railroad in the past and is expected to do so in the
future. Lehman Brothers managed the debt tender offer
and public debt offering of the Railroad in 1993 and is
the designated dealer for the Railroad's commercial
paper program which started in November 1993.
The Bridgeford Group
Mr. Lynch is Co-Chief Executive Officer and Co-
President of The Bridgeford Group and served as a Senior
Managing Director there from 1991 until 1995. The
Bridgeford Group has provided services to the
Corporation and the Railroad in the past and is expected
to do so as well in the future. The Bridgeford Group
assisted in the evaluation of and negotiations with
Kansas City Southern Industries in 1994.
GENERAL
COMPLIANCE WITH THE SECURITIES EXCHANGE ACT
The Corporation's executive officers and directors
are required under the Securities Exchange Act of 1934,
as amended, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission
and the New York Stock Exchange. Copies of those
reports must be furnished to the Corporation as well.
Based solely on a review of the copies of reports
furnished to the Corporation and written representations
that no other reports were required, the Corporation
believes that during the preceding year all executive
officers and directors have complied with applicable
filing requirements, except for Mr. Harrison who was
fifteen days late in filing his Form 4 for January 1994
and Mr. Tunney who was sixty days late in filing his
Form 4 for November 1994.
ANNUAL REPORTS
A copy of the Corporation's 1994 Annual Report,
which includes the Corporation's Consolidated Financial
Statements for the three years ended December 31, 1994,
was mailed to all stockholders of record as of March 2,
1995. The 1994 Annual Report is not to be regarded as
part of the proxy soliciting materials.
PROXY SOLICITATION
The cost of the solicitation of proxies will be
paid by the Corporation. In addition to the use of the
mails, proxies may be solicited personally, or by
telephone or by telegraph, by directors, officers and
employees of the Corporation or its subsidiaries,
without extra remuneration. The Corporation will
reimburse brokers, banks, nominees and other fiduciaries
for their reasonable expenses for forwarding proxy
materials to principals.
In addition, the Corporation has retained
Corporate Investor Communications, Inc. at a fee of
$4,500, to assist in the distribution of proxy material
and the solicitation of proxies.
PROPOSALS OF STOCKHOLDERS
Proposals of stockholders intended to be included
in next year's proxy statement must be received by the
Corporate Secretary at the Corporation's principal
executive offices in Chicago, Illinois, no later than
the close of business on November 16, 1995.
FURTHER BUSINESS
To the best of the Board of Directors' knowledge,
there are no matters to come before the Annual Meeting
other than those set forth in this Proxy Statement. If
any further business is presented to the Annual Meeting,
the persons named in the proxies will act on behalf of
the stockholders they represent according to their
judgment.
By order of the Board of
Directors
Ronald A. Lane
Secretary
March 16, 1995
<PAGE>
SIDE I ILLINOIS CENTRAL CORPORATION
ILLINOIS CENTRAL CORPORATION SUPPLEMENTAL RETIREMENT
P AND SAVINGS PLAN (SRS PLAN)
R
O Instructions Solicited on Behalf of the
X Trustee of the SRS Plan for Voting at
Y Illinois Central Corporation's
Annual Meeting of Stockholders - April 19, 1995
The undersigned hereby instructs the
Continental Trust Company, the Trustee under
the SRS Plan to vote all shares subject to the
participant's direction under such Plan, at the
Annual Meeting of Stockholders of Illinois
Central Corporation to be held in The
Stockholder's Room of the Bank of America,
NT&SA, 231 South LaSalle Street, Chicago,
Illinois 60604 on Wednesday, April 19, 1995,
and at any adjournments thereof, as indicated on
the reverse side of this card, and on all other
matters coming before said Meeting in the
Trustee's discretion.
(1) Election of Directors, Nominees: E. Hunter
Harrison, Samuel F. Pryor, IV and Alan H.
Washkowitz
Please specify your choice by marking the
appropriate box on the reverse side of this
card.
<PAGE>
SIDE II
X
- ------ Please mark votes as in this example.
These instructions when properly executed
will enable the Trustee to vote your
shares in the manner directed herein. If
no direction to the contrary is made, your
shares may be voted by the Trustee in
accordance with the terms of the Plan
documents.
The Board of Directors recommends a vote FOR proposal 1
1. Election of Directors (see reverse).
For Withheld
----- ------
- -------------------------------------------------
For all nominees except as noted above.
Please sign exactly as name appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
Mark here for address change and note at left
The signer hereby revokes all proxies heretofore given
by the signer to vote at said meeting or any
adjournments thereof:
Signature: Date:
Signature: Date:
- -----------------------------------------
-----------------
<PAGE>
SIDE I ILLINOIS CENTRAL CORPORATION
P PROXY SOLICITED ON BEHALF OF THE BOARD OF
R DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
O - APRIL 19, 1995
X
y
The undersigned hereby appoints E. Hunter
Harrison and Ronald A. Lane, and each of them,
as proxies with the powers the undersigned would
possess if personally present and with full
power of substitution, to vote all shares the
undersigned is entitled to vote, at the Annual
Meeting of Stockholders of Illinois Central
Corporation to be held in The Stockholder's Room
of the Bank of America, NT&SA, 231 South LaSalle
Street, Chicago, Illinois, on Wednesday, April
19, 1995, and at any adjournments thereof, as
indicated on the reverse side of this card, and
on all other matters coming before said Meeting
in their discretion.
(1) Election of Directors, Nominees: E. Hunter
Harrison, Samuel F. Pryor, IV and Alan H.
Washkowitz
Please specify your choice by marking the
appropriate box on the reverse side of this
card.
<PAGE>
SIDE II
X
- ------ Please mark votes as in this example.
These instructions when properly executed
will be voted in the manner directed
herein. If no direction to the contrary is
made this proxy will be voted FOR proposal 1
The Board of Directors recommends a vote FOR
proposal 1
1. Election of Directors (see reverse).
For Withheld
----- ------
- -------------------------------------------------
For all nominees except as noted above.
Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, please
give full title as such.
Mark here for address change and note at left
The signer hereby revokes all proxies heretofore given
by the signer to vote at said meeting or any
adjournments thereof:
Signature: Date:
Signature: Date:
- -----------------------------------------
-----------------
