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):
[x] $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:
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
<PAGE>
ILLINOIS CENTRAL CORPORATION
455 NORTH CITYFRONT PLAZA DRIVE
CHICAGO, ILLINOIS 60611
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1997
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 Regent Room of the Fairmont Hotel , 200 N. Columbus Drive,
Chicago, Illinois 60601, on May 7, 1997, at 9:00 AM local time, for the
following purpose :
To elect three directors to a three-year term expiring at the 2000 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 14, 1997, 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 -- MAY 7, 1997
PROXY
This Proxy Statement and the accompanying proxy card are first being
sent on or about March 27, 1997, 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 Regent Room of the Fairmont Hotel, 200 N. Columbus Drive,
Chicago, Illinois 60601, on May 7, 1997, 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 14, 1997, will be entitled to vote
at the Annual Meeting.
The shares represented by the proxies will be voted in accordance with
the stockholders' specification with respect to the Proposal. If no
specification is made, the shares will be voted "FOR" the nominees described
below for election as directors.
VOTING SECURITIES OF THE CORPORATION
As of March 14, 1997, there were outstanding 61,406,831 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. Directions to withhold authority,
abstentions and non-votes by brokers and other nominees will be treated as
present for purposes of determining the presence of 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 III directors will expire. The current Class III
directors are George D. Gould, Alexander P. Lynch and F. Jay Taylor. The Board
of Directors has nominated each of them for re-election as Class III directors
to terms expiring in 2000, 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 III DIRECTORS TO HOLD OFFICE UNTIL 2000
George D. Gould, 69, 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 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, TIG Holdings, and the Needham Growth Fund.
Committees: Audit, Compensation (Chairman) and Finance.
Alexander P. Lynch, 44, 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 and Patina Oil and Gas Corporation. Mr. Lynch is the
brother-in-law of another director, Mr. Lamphere. Committees: Audit and Finance.
F. Jay Taylor, 73, 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.
CLASS I DIRECTORS CONTINUING IN OFFICE UNTIL 1998
E. Hunter Harrison, 52, 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
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<PAGE>
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, 41, has been a director of the Corporation since 1989.
Mr. Pryor has been Managing Director of The Noel Group, Inc. ("Noel"), a
diversified company since 1991. He also is President of The Prospect Group, Inc.
("Prospect"), for which he has served in various capacities since 1986. Mr.
Pryor is a director of Prospect, Belding Heminway, Inc. and Health Plan
Services, Inc. Committees: Audit, Compensation and Finance (Chairman).
Alan H. Washkowitz, 56, 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., a
manufacturer of aircraft wheels and brakes, 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 1999
William B. Johnson, 78, 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.
Gilbert H. Lamphere, 44, 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 and Chairman of Prospect. He serves as a director of Belding
Heminway, Inc., the Fremont Group and Sequois. Mr. Lamphere is the
brother-in-law of another director, Mr. Lynch. Committee: Executive (Chairman).
John V. Tunney, 62, 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, Swiss Army
Brands, Enterprise Plan, Inc., an automobile finance company, and Prospect.
Committees: Audit and Compensation.
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<PAGE>
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 1996
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 1996 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 1996, 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
six meetings in 1996, 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
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Committee held 13 meetings in 1996, reported the results of those
meetings to the Board and made recommendations to the Board.
Meetings of the Board of Directors
In 1996, 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. Pryor who, because of
schedule conflicts, attended one of the two Audit Committee meetings and four of
the six Compensation Committee meetings.
VOTE REQUIRED
The three nominees receiving the greatest number of votes (i.e., a
plurality) will be elected as Directors. Directions to withhold authority 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.
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Compensation Committee Report
Executive Compensation Philosophy
The Compensation Committee of the Board of Directors (the "Committee")
has adopted a philosophy that compensation for the management of the Corporation
and its subsidiaries ("the Company") 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 are the
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 four
components: (1) Base Salary, (2) Performance Awards, (3) Stock Options and (4)
Incentive 2000 Plan Awards. The program is designed to emphasize risk-based
compensation which rewards Company and individual performance. 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
Salary levels 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. To
emphasize risk-based compensation, the overall target for base salary has been
set at 90% of the size-adjusted median for the railroad industry. The Committee
reviews the salary of the CEO and all other officers annually.
(2) Performance Awards and Bonuses
Approximately 425 management employees 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.
Actual award levels vary depending upon the Corporation's performance relative
to predetermined objectives for annual revenue growth and return on total
capital ("ROTC"), and range from 0% to 150% of target awards. Award levels are
weighted two-thirds on ROTC and one-third on revenue
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<PAGE>
growth. Performance awards under the program for management employees other than
the CEO and four other most highly compensated officers contain a second
component for individual performance for the year as well as Company
performance. The individual component of performance awards vary from 0% to 50%
of the target award.
The Company performance objectives are the same for all management
employees and relate directly to those measures which drive stockholder value --
annual return on average total capital, 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 after it has been
reviewed and approved by the Board. 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, determines the Performance Award.
The CEO's target award is 75% of base salary and the targets for the
other four most highly compensated officers range from 60% to 65%. 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. The Committee
also cannot adjust upward the Company performance award for these individuals.
However, the Committee has retained the discretion to award cash bonuses (which
are subject to the deductibility cap) to those individuals.
(3) Stock Options
The Company maintains a long-term stock option program for
approximately 85 senior managers to provide an equity-like interest in the
Company. This program is intended to motivate senior management to improve the
long-term performance of the Company's stock price and total return to
stockholders.
The number of stock options available for grant in any given year to
all eligible employees will vary between .3% and .9% of common shares
outstanding, depending on Company performance. Company performance is determined
based upon three measures: the Company's 3- year total stockholder return
relative to the S&P Midcap 400 index, its 3-year ROTC relative to Class I
railroads and its annual compound revenue growth over a 3-year period relative
to Class I railroads. The measures are weighted 50% on comparative stockholder
return, 25% on ROTC and 25% on revenue growth. Stock options are granted at fair
market value on the date of grant and vest 25% each year over four years. Actual
awards to individual participants are based upon Company performance, individual
performance and individual responsibility (salary grade) within the Company. The
maximum award which can be made in one year to a participant under this program
is options on 150,000 shares.
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(4) Incentive 2000 Plan Awards
In May 1996, the stockholders approved the Illinois Central Railroad
Incentive 2000 Plan ("Incentive 2000 Plan") for key management employees. The
Incentive 2000 Plan is intended to focus senior managers on the goals of the
Company's Plan 2000, the five-year growth plan adopted by the Board for the
years through 1999. Plan 2000 calls for increasing operating revenue to $800
million in the year 1999 while achieving an operating ratio (operating expense
divided by operating revenue) under 60%. The Committee determined that providing
significant cash incentives to management conditioned on achieving financial
measures linked to Plan 2000 will promote the long-term interests of the Company
and its stockholders. In addition to the goals of Plan 2000, the Incentive 2000
Plan calls for a return on total capital of 14% and earnings per share of $4.00
for the year 2000. The Board believes these goals are challenging but
achievable, and if attained will result in substantial appreciation of
stockholder value. Management will not benefit from Incentive 2000 Plan unless
the Company's Common Stock reaches a price of at least $43 for twenty
consecutive business days within the sixteen month period ending April 30, 2001.
Employees in the Railroad's top ten salary grades are eligible to
receive awards under the Incentive 2000 Plan. As of March 12, 1997,
approximately 85 employees were eligible to participate in the Incentive 2000
Plan.
The Incentive 2000 Plan will be administered by the Committee, which
will certify the extent to which the performance objectives are attained. The
Corporation believes that the Incentive 2000 Plan meets the requirements of The
Omnibus Budget Reconciliation Act of 1993 to qualify as fully-deductible
performance-based compensation.
Directors Incentive 2000 Option Plan
In May 1996 the Stockholders also approved the Illinois Central
Corporation Directors Incentive 2000 Option Plan (the "Directors Option Plan").
The Directors Option Plan is intended to complement the senior management's
Incentive 2000 Plan and to link compensation of directors who are not employees
of the Corporation or its subsidiaries ("Outside Directors") to the same goals
of Plan 2000 and the stockholders' interests in the creation of stock value.
The total number of shares of the Corporation's Common Stock authorized
for issuance pursuant to the Directors Option Plan is 300,000, which number of
shares of Common Stock is subject to adjustment upon the occurrence of a stock
dividend, stock split, recapitalization or certain other capital adjustments.
The Directors Option Plan will be administered by the Board of Directors of the
Corporation, subject to certain restrictions set forth in the Directors Option
Plan. Each of the eight eligible Outside Directors, as of May 1996, received a
one-time grant of options to purchase 37,500 shares of Common Stock. The
exercise price for each option is $37.875, which is equal to 150% of the closing
sales price of the Common Stock on the New York Stock Exchange on March 8, 1996,
the date of grant (adjusted to reflect the 3-for-2 stock split of the Common
Stock effective March 14, 1996). Options expire in 2006. If an Outside
Director's service as a director terminates before April 30, 2001, the director
will be entitled to exercise the number of options under the
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Directors Option Plan that would have vested but for his termination of
employment, prorated for the number of completed months in the Plan at the time
such director's service terminates.
Results for 1996
Actual results for 1996 were below threshold for the ROTC and revenue
growth objectives of 12.1% and 3.0%, respectively. Actual 1996 ROTC was 12.0%
and revenue declined 4.2%. However, there were significant capital expenditures
during 1996 for which associated returns were not yet realized. Considering the
impact of these investments, the committee determined that 1996 ROTC would have
been approximately 12.1% and accordingly approved incentive payouts for ROTC at
the threshold level (i.e., 50% of target) and nothing for revenue growth. In
aggregate, approximately $4.0 million in bonuses were paid to all management
employees for 1996.
The Company's stockholder return for the three years ending December
31, 1996 was 13.0% compared to 12.0% for the S&P Midcap 400 index. ROTC for the
three years ending 1996 was 11.5% compared to 6.7% for all Class I railroads.
The annual compound revenue growth for those years was 5.2% compared to 4.1% for
Class I railroads. Accordingly, the Committee determined that options for a
maximum of 500,500 shares, or .82% of shares outstanding on grant date, should
be awarded pursuant to the senior management stock option plan with respect to
1996 performance. These options will be awarded in 1997.
Based on the 1997 Budget and the Company's strategic plans, including
Plan 2000, the Committee established the Company's 1997 ROTC target at 11.2% and
the annual revenue growth target at 7.5%.
CEO Compensation
Mr. Harrison was the highest compensated officer of the Company in
1996. Mr. Harrison's salary for 1996 was $500,000. Pursuant to the Performance
Compensation Plan, based on Company performance in 1996 and considerations cited
above, Mr. Harrison received a Performance Award of $187,500.
The Committee awarded Mr. Harrison a cash bonus of $200,000 with
respect to his individual performance in 1996 in achieving a reduction to the
Operating Ratio in the face of an extremely soft grain supply. In determining
the amount of this bonus, the Committee considered Mr. Harrison's individual
contribution toward the achievement of significant corporate objectives
including, among others, the acquisition of the Chicago Central and Pacific,
negotiation of labor contracts, settlement of matters related to the Union
Pacific/Southern Pacific merger and development of important growth
opportunities. Additionally, consideration was given to the magnitude of Mr.
Harrison's personal award in relation to other employees. Finally, the Committee
noted that Mr. Harrison did not receive a salary increase for 1995 or 1996 and
that his total direct compensation (salary plus cash bonus) was comparable to
compensation for CEOs of Class I railroads on a size-adjusted basis.
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Employment Security Agreements
In January 1997, the Board of Directors approved extending Employment
Security Agreements to senior management employees in recognition of the
extensive restructuring underway in the railroad industry. To retain the
Company's management and promote alignment of management's interests with the
stockholders' interests, the Company entered into Employment Security Agreements
with approximately 26 senior officers which provide stated benefits in the event
they are terminated without cause or terminate their employment for good reason
within two years after a change of control. Following a covered termination, the
officer will be entitled to two or three years base salary (depending on salary
grade) and incentive payment target for one year plus a proration of the current
year. Two or three years credit, respectively, will be granted toward the
Supplemental Executive Retirement Plan and fringe benefits will be extended.
However, payments under these agreements will be limited to 2.99 times average
last five year W-2 wages to preclude triggering "Excess Parachute Payment"
excise taxes.
Nondeductible Compensation
The Committee does not currently anticipate that any executive
officer's nonperformance-based compensation will exceed $1 million. For 1996, no
executive officer received nonperformance-based compensation which exceeded $1
million. It is anticipated that all executive compensation to be paid in 1997
will be fully deductible as well. However, the Committee and the Board of
Directors retain the discretion to grant nondeductible compensation if that
would be in the best interests of the Company and stockholders under the
circumstances.
Respectfully submitted,
Mr. George D. Gould, Chairman
Mr. Samuel F. Pryor, IV
Mr. John V. Tunney
Mr. Alan H. Washkowitz
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Executive Compensation
All of the cash compensation received by IC's executive officers during
fiscal years 1996, 1995 and 1994 was paid or accrued by the Railroad; none was
paid by IC. The following table sets forth information concerning the Chief
Executive Officer and the four other most highly compensated executive officers
for the year ended December 31, 1996. The table has been restated to give affect
to a 3-for-2 stock split declared in January 1996.
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation Long-Term Compensation
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Salary Bonus Compensation2 Award(s)3 Options Compensation
Positions(s) Year ($)1 ($)1 ($) ($) # ($)
<S> <C> <C> <C> <C> <C> <C> <C>
E. Hunter Harrison 1996 500,000 387,500 18,615 -- 85,500 175,734 4
President and 1995 500,000 650,000 14,857 -- 90,000 156,739 4
Chief Executive 1994 496,154 630,000 15,424 -- -- 108,522 4
Officer
John D. McPherson . 1996 217,420 130,920 71,522 6 -- 30,000 48,520 5
Senior Vice ...... 1995 201,925 195,000 9,568 -- 30,112 42,705 5
President- .. 1994 174,660 190,000 7,909 -- -- 31,936 5
Operations
Donald H. Skelton . 1996 188,674 113,620 11,657 -- 30,000 35,874 8
Senior Vice 1995 166,984 158,000 108,835 7 -- 19,800 16,285 8
Marketing and 1994 19,039 10,000 958 642,500 -- 1,552 8
Sales
Ronald A. Lane .... 1996 173,982 96,710 12,676 -- 19,500 42,172 9
Vice President 1995 164,562 158,000 11,320 -- 19,800 38,055 9
and General 1994 154,328 157,000 11,504 -- -- 30,648 9
Counsel and
Secretary
Dale W. Phillips .. 1996 188,674 104,880 10,808 -- 19,500 44,503 10
Vice President 1995 164,562 158,000 8,863 -- 19,800 37,957 10
and Chief 1994 154,328 157,000 8,399 -- -- 30,856 10
Financial Officer
</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. Salary and Bonus amounts, where applicable,
have not been reduced by the officers election to defer compensation
pursuant to the Executive Deferred Compensation Plan.
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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. Excludes the value
of the Company paid portion of the price for shares purchased under
the Management Employee Discounted Stock Purchase Plan as same
discount is available to all management employees.
3 Restricted stock awards were granted in 1994 to Mr. Skelton. 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, 1996,
Mr. McPherson owned 7,500 unvested shares of the shares granted in
1993 which had a current value of $240,000 and Mr. Skelton's unvested
11,250 shares had a current value of $360,000. Current value is
computed by multiplying the closing NYSE market price of unrestricted
stock on December 31, 1996, 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, for each fiscal year 1996, 1995 and 1994; (ii) Railroad
contributions to 401(k) plan of $4,125, $4,620, and $4,620 for each
fiscal year 1996, 1995 and 1994, respectively; (iii) amounts accrued
under an executive account balance plan of $136,680, $124,559 and
$84,652 for fiscal years 1996, 1995 and 1994, respectively; and (iv)
amounts accrued under an excess benefit plan of $31,929, $24,560, and
$16,250 for fiscal years 1996, 1995 and 1994, respectively.
5 Includes: (i) Railroad contributions to defined contribution plan of
$3,000 for each fiscal year 1996, 1995 and 1994; (ii) Railroad
contributions to 401(k) plan of $4,488, $4,620 and $4,001 for fiscal
years 1996, 1995 and 1994, respectively; (iii) amounts accrued under
an executive account balance plan of $36,408, $31,942 and $23,778 for
fiscal years 1996, 1995 and 1994, respectively; and (iv) amount
accrued under an excess benefit plan of $4,624 and $3,143 and $1,157
in 1996, 1995 and 1994, respectively.
6 Includes perquisites, including club dues and initiation fees of
$28,774.
7 Includes perquisites, including club dues and initiation fees of
$50,905.
8 Includes (i) Railroad contributions to defined contribution plan of
$3,000, $3,000 and $275 for fiscal 1996, 1995 and 1994, respectively;
(ii) Railroad contributions to 401(k) plan of $4,541, $4,620 and $207
for fiscal 1996, 1995 and 1994, respectively; (iii) amounts accrued
under an executive account balance plan of $26,117, $7,925 and $1,070
for fiscal years 1996, 1995 and 1994, respectively; and (iv) amounts
accrued under the excess benefit plan of $2,216, $740 in 1996 and
1995, respectively.
9 Includes: (i) Railroad contributions to defined contribution plan of
$3,000 for each fiscal year 1996, 1995, 1994 and 1993; (ii) Railroad
contributions to 401(k) plan of $4,551, $4,620 and $4,620 for fiscal
years 1996, 1995 and 1994, respectively; (iii) amounts accrued under
an executive account balance plan of $32,837, $29,656 and $22,924 for
fiscal years 1996, 1995 and 1994, respectively; and (iv) amounts
accrued under the excess benefit plan of $1,784, $779 and $104 in
1996, 1995 and 1994, respectively.
10 Includes: (i) Railroad contributions to defined contribution plan of
$3,000 for each fiscal year 1996, 1995 and 1994; (ii) Railroad
contributions to 401(k) plan of $4,462, $4,222 and $4,620 for fiscal
years 1996, 1995 and 1994, respectively; (iii) amounts accrued under
an executive account balance plan of $34,763, $29,953 and $23,132 for
fiscal years 1996, 1995 and 1994, respectively; and (iv) amounts
accrued under the excess benefit plan of $2,278, $782 and $104 in
1996, 1995 and 1994, respectively.
12
<PAGE>
Options/Grants
During 1996 following stock options awards under the Executive
Performance Compensation Program were awarded.
<TABLE>
OPTIONS/ GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Grants for Option Terms(2)
Percent
Number of of Total
Securities Options
Underlying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#) Year ($/SH) Date(1) 5% ($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
E. Hunter Harrison 85,500 16.12% 25.25 3/08/2006 1,357,705 3,440,691
John D. McPherson 30,000 5.66 25.25 3/08/2006 476,388 1,207,260
Donald H. Skelton 30,000 5.66 25.25 3/08/2006 476,388 1,207,260
Ronald A. Lane ... 19,500 3.68 25.25 3/08/2006 309,652 784,719
Dale W. Phillips . 19,500 3.68 25.25 3/08/2006 309,652 784,719
</TABLE>
(1) Options vest at 25% per year on March 8, 1997, March 8, 1998, March 8,
1999 and March 8, 2000. (2) Potential realizable value is reported net
of the option exercise price but before taxes associated with
exercise. These amounts assume annual compounding results in total
appreciation of 63% (5% per year) and 159% (10% per year). Actual
gains, if any, on stock option exercises and common stock are
dependent on the future performance of the common stock and overall
market conditions. There can be no assurance that the amounts
reflected in this table will be achieved.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Underlying Unexercised In-the-Money
On Value Options at Options at
Exercise Realized FY-End (#) FY-End($)2
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
E. Hunter Harrison 0 0 311,875 256,125 4,878,750 2,723,375
John D. McPherson 0 0 21,028 57,084 217,247 452,242
Donald H. Skelton 0 0 4,950 44,850 43,725 333,675
Ronald A. Lane 0 0 17,325 34,475 181,913 308,863
Dale W. Phillips 0 0 17,325 34,875 181,913 308,863
</TABLE>
13
<PAGE>
1 Includes shares exercisable on February 17, 1997, (93,750) and March 16,
1997 (44,878) and March 8, 1997 (48,262).
2 Based on the year-end price of $32.00.
Pension and Retirement Plans
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 1996, the wage offset
factor was $104,500. 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 Plans. 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
14
<PAGE>
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.
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 Corporation. 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.
Average Pension Plan Table
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 1996, 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, 1996, is three
(3) years for each of Messrs. Harrison, McPherson, Lane, and Phillips. Mr.
Skelton has two (2) years of credited service at December 31, 1996.
15
<PAGE>
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. A supplemental annual retainer of $3,000 is paid each
committee chairman. Each director receives $2,000 for each board or committee
meeting attended and is reimbursed for expenses incurred in attending those
meetings. 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 receive an annual grant of stock options to
purchase 2,250 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.
In March 1996, each Outside Director received an option to purchase
37,500 shares which may vest on April 1, 2001 if specified Company performance
objectives are achieved in the year 2000.
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 (see above) 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
The Corporation has entered into Employment Security Agreements with
approximately 26 senior officers which provide stated benefits in the event they
are terminated without cause or terminate their employment for good reason
within two years after a change in control. Following a covered termination, the
officer will be entitled to two or three years' base salary (depending on salary
grade) and target incentive payment for one year plus a proration of the current
year. Two or three years' credit will be granted toward the Supplementary
Executive Retirement Plan and fringe benefits will be extended. However, payment
under these agreements will be limited to 2.99 times average last five years W-2
earnings. In addition any unvested stock options and restricted stock granted to
participants will vest upon a Change in Control.
16
<PAGE>
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.
17
<PAGE>
Performance Graph
The following performance graph compares the Corporation's change in
total stockholder return on its Common Stock since December 31, 1991 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
Period IC Stock Midcap 400 Railroads
12-91 100 100 100
12-92 111 112 112
12-93 166 128 139
12-94 146 123 120
12-95 188 161 176
12-96 242 192 219
18
<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 14, 1997, 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 Ownership1 Outstanding1
INVESCO PLC, et al.
11 Devonshire Square
London, EC2M 4YR England......... 4,509,450 2 7.34%
MacKay Shields Financial
Corporation
9 West 57th Street
New York, New York 10019............ 4,060,875 3 6.61%
George D. Gould...................... 58,500 *
William B. Johnson................... 44,918 4 *
Gilbert H. Lamphere ................. 858,097 5 1.40%
Alexander P. Lynch .................. 388,545 6 *
Samuel F. Pryor, IV ................. 398,940 7 *
F. Jay Taylor ....................... 35,248 8 *
John V. Tunney ...................... 15,993 9 *
Alan H. Washkowitz .................. 56,250 10 *
E. Hunter Harrison .................. 665,316 1.08%
Ronald A. Lane ...................... 175,096 *
John D. McPherson ................... 77,728 *
Dale W. Phillips .................... 194,054 *
Donald H. Skelton.................... 33,274 *
All directors and executive officers
of IC as a group (16 persons)......... 3,283,020 11 5.26%
* under 1%
19
<PAGE>
1 Based on 61,406,831 shares of Common Stock outstanding on March 14, 1997.
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).
2 According to a Schedule 13G dated February 12, 1997, INVESCO PLC and or its
United Kingdom or U.S. subsidiaries have shared voting and dispositive
power for 4,509,450 shares in its capacity as an investment advisor to
several investment funds.
3 According to a Schedule 13G dated February 17, 1997, MacKay Shields
Financial Corporation, in its capacity as an investment manager for various
clients, has shared voting and shared disposition power for 4,060,875
shares.
4 Includes 225 shares held by Mr. Johnson's spouse. Mr. Johnson disclaims
beneficial ownership of these shares.
5 Excludes 209,112 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 69,831 shares held by a trust for benefit of Mr. Pryor's
children, of which Mr. Lamphere is a co-trustee.
6 Includes 209,112 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.
7 Excludes 69,831 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.
8 Includes 1,500 shares held by Dr. Taylor's spouse. Dr. Taylor disclaims
beneficial ownership of these shares.
9 Includes 4,500 shares held in trust for Mr. Tunney's mother, for which Mr.
Tunney is Trustee.
10 Under an arrangement with Lehman Brothers, Mr. Washkowitz must remit to
Lehman Brothers any gain upon exercise of the options for 24,750 shares of
the total.
11 See Notes (4) - (10) above.
20
<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 (i) the public debt offerings of the Railroad in 1996
and 1995, (ii) the debt tender offer and public debt offering of the Railroad in
1993 and (iii) is one of the designated dealer's 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 in the future. The Bridgeford Group assisted
in the evaluation of and negotiations with Kansas City Southern Industries in
1994 and the evaluation of and negotiations with CCP Holdings, Inc. in 1995 and
1996. During 1996, approximately $1.8 million was paid to the Bridgeford Group
for services rendered.
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 the
November 1996 report of Mr. Donald H. Skelton which was filed 30 days late.
ANNUAL REPORTS
A copy of the Corporation's 1996 Annual Report, which includes the
Corporation's Consolidated Financial Statements for the three years ended
December 31, 1996, was mailed to all stockholders of record as of March 14,
1997. The 1996 Annual Report is not to be regarded as part of the proxy
soliciting materials.
21
<PAGE>
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.
<PAGE>
In addition, the Corporation has retained Corporate Investor
Communications, Inc. at a fee of $5,000, 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 December 5, 1997.
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 27, 1997
22
<PAGE>
SIDE 1
ILLINOIS CENTRAL CORPORATION
ILLINOIS CENTRAL CORPORATION
P SAVINGS PLANS
R
O Instructions Solicited on Behalf of the Trustee of the Savings Plans for
X Voting at Illinois Central Corporation's
Y Annual Meeting of Stockholders - May 7, 1997
The undersigned hereby instructs the Continental Trust Company,
the Trustee under the Savings Plans to vote all shares subject to the
participant's direction under such Plans, at the Annual Meeting of
Stockholders of Illinois Central Corporation to be held in the Regent
Room, Fairmont Hotel, 200 N. Columbus Drive, Chicago, Illinois 60601
on Wednesday, May 7, 1997, 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.
Election of Directors, Nominees:
George D. Gould, Alexander P. Lynch, F. Jay Taylor
CONTINUED AND TO BE SIGNED ON REVERSE SIDE. SEE REVERSE
SIDE
<PAGE>
SIDE II
--------------------
IC
LOGO
HERE
--------------------
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 the election of directors
1. Election of Directors (see reverse).
For Withheld
------ ------
MARK HERE
FOR ADDRESS -----
CHANGE AND
NOTE AT LEFT
- -------------------------------------------------
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 Signature: Date:
heretofore given by the signer to vote
at said meeting or any adjournments
thereof. Signature: Date:
-----------------------
<PAGE>
SIDE 1
ILLINOIS CENTRAL CORPORATION
P PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
R OF STOCKHOLDERS - MAY 7, 1997
O
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 Regent Room of the Fairmont Hotel, 200 N. Columbus Drive, Chicago,
Illinois, 60601 on Wednesday, May 7, 1997, 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.
Election of Directors, Nominees:
George D. Gould, Alexander P. Lynch, F. Jay Taylor
CONTINUED AND TO BE SIGNED ON REVERSE SIDE. SEE REVERSE
SIDE
<PAGE>
SIDE II
--------------------
IC
LOGO
HERE
-------------------
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 the election of Directors
1. Election of Directors (see reverse).
For Withheld
------ ------
- ------------------------------------------------
For all nominees except as noted above.
MARK HERE
FOR ADDRESS -----
CHANGE AND
NOTE AT LEFT
- -------------------------------------------------
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 Signature: Date:
heretofore given by the signer to vote
at said meeting or any adjournments
thereof. Signature: Date:
-----------------------
MARK HERE
FOR ADDRESS -----
CHANGE AND
NOTE AT LEFT
- -------------------------------------------------
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 Signature: Date:
heretofore given by the signer to vote
at said meeting or any adjournments
thereof. Signature: Date:
-----------------------
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.
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
Signature: Date:
--------------------
Signature: Date:
-------------------
<PAGE>
