CIPSCO INCORPORATED
607 East Adams Street
Springfield, Illinois 62739
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of CIPSCO Incorporated ("CIPSCO" or
the "Company") will be held at the Springfield Hilton, 700 East Adams Street,
Springfield, Illinois, on April 24, 1996, at 10:00 AM, for the purpose of
considering and voting with respect to the following matters:
(1) the election of a Board of nine directors;
(2) the approval of the appointment by the Board of Directors of Arthur
Andersen LLP as independent public accountants for 1996; and
(3) the transaction of such other business as may properly come before
the meeting.
Reference is made to the attached Proxy Statement for further information
with respect to the foregoing.
Only shareholders of record on CIPSCO's books at the close of business on
February 26, 1996, are entitled to vote at the meeting. All such shareholders
are urged to be present in person, or represented by proxy, at the meeting.
A copy of CIPSCO's Annual Report to Shareholders for the year 1995 has
been mailed to each shareholder of the Company of record on its books.
By order of the Board of Directors,
W. A. Koertner,
Vice President and Secretary
March 8, 1996
All shareholders, even if they plan to attend the meeting in person, are
urged to vote, date and sign their proxies and return them to the Company in
the enclosed envelope as promptly as possible. The Board of Directors
encourages all shareholders to be represented at the meeting, whether their
shareholdings are small or large.<PAGE>
CIPSCO INCORPORATED
607 East Adams Street
Springfield, Illinois 62739
217/523-3600
March 8, 1996
Proxy Statement Relating to
1996 Annual Meeting of Shareholders
INTRODUCTION
General. The purposes of the meeting are set forth in the attached
Notice. The enclosed proxy relating to the meeting is solicited on behalf of
the Board of Directors of CIPSCO and the cost of such solicitation will be
borne by the Company. Following the initial solicitation of proxies by mail
beginning on or about March 8, 1996, certain officers, directors and employees
of CIPSCO may solicit proxies by correspondence, telephone, telegraph,
telecopy, other electronic means or in person, but without extra compensation.
The Company will pay to banks, brokers, nominees and other fiduciaries their
reasonable charges and expenses incurred in forwarding the proxy soliciting
material to their principals. In addition, Morrow & Co., Inc., New York, New
York, has been retained to assist CIPSCO and its affiliate in the solicitation
of proxies. Such solicitation may be made by mail, telecommunication or in
person. The estimated aggregate cost of such services of Morrow & Co., Inc.
is $5,500.
CIPSCO will provide without charge to each shareholder entitled to vote
at the meeting who makes a written request therefor, a copy of CIPSCO's 1995
Annual Report on Form 10-K as filed with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934. Written requests
for a copy of the report should be directed to Corporate Secretary, CIPSCO
Incorporated, 607 East Adams Street, Springfield, Illinois 62739.
Holding Company. CIPSCO is the parent holding company of Central
Illinois Public Service Company ("CIPS").
Voting. The voting securities of CIPSCO outstanding on the record date
stated below consisted of 34,069,542 shares of Common Stock, without par
value.
Only shareholders of record on CIPSCO's books at the close of business on
February 26, 1996, are entitled to notice of and to vote at the meeting. At
such meeting, each such shareholder is entitled to one vote, for each share of
common stock of the Company held, on each matter submitted to a vote at the
meeting, except that in the election of directors, each such shareholder is
entitled to vote cumulatively and therefore may give one nominee for election
as many votes as shall equal the number of directors to be elected multiplied
by the number of shares held by such shareholder, or may distribute such votes
among any two or more nominees. The proxies solicited herewith seek
discretionary authority to cast cumulative votes in the election of directors.
1<PAGE>
Any shareholder may vote his or her shares either in person or by duly
authorized proxy. The giving of a proxy by a shareholder will not affect such
shareholder's right to vote such shares if the shareholder attends the meeting
and desires to vote in person. Prior to the voting of a proxy, such proxy may
be revoked by the shareholder by delivering written notice of revocation to
the Secretary of CIPSCO, by executing a subsequently dated proxy or by voting
in person at the meeting. All shares represented by effective proxies on the
enclosed form of proxy, received by the Company, will be voted at the meeting
(or any adjourned session thereof) in accordance with the terms of such
proxies.
A majority of the outstanding shares entitled to vote on a matter,
represented in person or by proxy, constitutes a quorum for consideration of
such matter at the meeting. If a quorum is present, the nine persons
receiving the greatest number of votes will be elected as directors. The
affirmative vote of the majority of the shares represented at the meeting and
entitled to vote on a matter will be sufficient to take action on a matter
properly before the meeting (unless a higher vote is required by law).
Broker non-votes will not be considered represented at the meeting on
those matters for which no instructions from the shareholder have been given
to the broker. Accordingly, for a matter which requires the vote of a
percentage of shares represented at the meeting, broker non-votes will have no
effect on the outcome. Abstentions will be counted in determining the quorum
in attendance for all matters and will be included in the total number of
shares represented and voting on a matter.
Each participant in CIPSCO's Automatic Dividend Reinvestment and Stock
Purchase Plan (the "Reinvestment Plan") or the CIPS Employee Stock Ownership
Plan (the "ESOP"), Employee Long-Term Savings Plan, Employee Long-Term Savings
Plan-IUOE No. 148 or Employee Long-Term Savings Plan-IBEW No. 702 (the
"Savings Plans") will receive a form of proxy by which such participant may
direct the respective agent or trustee under such Plan as to the manner of
voting shares credited to the participant's account under such Plan.
Shareholders of record who are participants in the Reinvestment Plan will
receive one form of proxy which will be deemed to include shares held of
record and shares held under the Reinvestment Plan. If a participant in any
of the Savings Plans does not return a proxy by April 19, 1996, the trustee
under such Plans will vote such participant's shares under such Plan, in
accordance with the instructions provided by the Central Illinois Public
Service Company Employee Long-Term Savings Plan Committees, unless the
participant votes in person at the meeting. A participant in the Reinvestment
Plan, the ESOP or any Savings Plan wishing to vote in person at the meeting
may obtain a proxy for shares credited to his or her account under such Plan
by making a written request therefor by April 12, 1996 as follows: for the
Reinvestment Plan, to Illinois Stock Transfer Company, 223 West Jackson
Boulevard, Chicago, Illinois 60606; for the ESOP, to Boston Safe Deposit and
Trust Company, Attention: Chris D. Kuhn, One Cabot Road, Medford,
Massachusetts 02155, and for the Savings Plans, to Merrill Lynch, Attention:
Ramon W. Ortel, Jr., 265 Davidson Ave., Somerset, New Jersey 08873.
2<PAGE>
Proposals of Shareholders. Under the rules of the Securities and
Exchange Commission, any shareholder proposal intended to be presented at the
1997 annual meeting of shareholders of CIPSCO must be received at the
principal executive office of the Company no later than November 11, 1996, in
order to be eligible to be considered for inclusion in the proxy materials
relating to that meeting.
Voting Securities Beneficially Owned by Principal Holders, Directors,
Nominees and Executive Officers. The directors, nominees and executive
officers of CIPSCO and CIPS owned beneficially at February 1, 1996, an
aggregate of 49,536 shares of Common Stock of CIPSCO representing .15% of the
outstanding Common Stock and 24 shares of Preferred Stock of CIPS representing
less than .01% of the outstanding Preferred Stock. To the Company's
knowledge, the only beneficial owner of more than 5% of CIPSCO's Common Stock
as of February 1, 1996 was Franklin Resources, Inc., which owned beneficially
2,139,400 shares. This information is based solely upon information set forth
in the Company's shareholder records and in statements filed with the
Securities and Exchange Commission pursuant to Section 13 of the Securities
Exchange Act of 1934. The Company believes such shares may be held by
Franklin Resources, Inc. for its mutual fund affiliates.
ELECTION OF DIRECTORS
Director Information. Nine directors are to be elected at the meeting.
Barring unforeseen contingencies, and in the absence of contrary directions,
the proxies solicited herewith will be voted for the election of William J.
Alley, Clifford L. Greenwalt, John L. Heath, Robert W. Jackson, Gordon R.
Lohman, Richard A. Lumpkin, Hanne M. Merriman, Thomas L. Shade and James W.
Wogsland as directors of CIPSCO, to hold office until the next annual meeting
of shareholders of the Company or until their respective successors are
elected and qualified. Each of the nominees is a director of CIPSCO, has
served continuously as such and has served as a director of CIPS, in each
case, since his or her election in the respective years indicated below. The
proxies may also be voted for a substitute nominee or nominees in the event
any one or more of the above nominees shall be unable to serve for any reason
or be withdrawn from nomination, a contingency not now anticipated.
Except as otherwise indicated below, each nominee has been engaged in his
or her present principal occupation for at least the past five years.
The following information is given with respect to the nominees for
election as directors:
William J. Alley
Principal occupation: Retired Chairman of the Board and Chief
Executive Officer of American Brands,
Inc. (consumer products and services),
Stamford, Connecticut.
3<PAGE>
Age: 66
Served as a director of
CIPSCO since: 1990
Served as a director of CIPS
since: 1974
Shares beneficially owned at
February 1, 1996: 1,626 shares of Common Stock. In
addition, Mr Alley's account in the
directors' deferred compensation plan
described below holds the equivalent of
6,465 shares of Common Stock.
Other information: Mr. Alley served as Chairman of the
Board and Chief Executive Officer of
American Brands, Inc. from 1987 to his
retirement in 1994. He is Chairman of
the Audit Committee, Chairman of the
Executive Committee and a member of the
Compensation Committee of the Board.
Mr. Alley is also a director of
American Brands, Inc., Rayonier, Inc.,
Rayonier Forest Resources, Inc., Olin
Corporation and Bunn-O-Matic
Corporation.
Clifford L. Greenwalt
Principal occupation: President and Chief Executive Officer
of CIPSCO, President and Chief
Executive Officer of CIPS and Chairman
of the Board of CIPSCO Investment
Company.
Age: 63
Served as a director of
CIPSCO since: 1990
Served as a director of CIPS
since: 1986
Shares beneficially owned at
February 1, 1996: 11,489 shares of Common Stock.
4<PAGE>
Other information: Mr. Greenwalt is a member of the
Executive Committee of the Board. He
is a director of First of America Bank
Corporation, Kalamazoo, Michigan and
was appointed a director of its wholly-
owned subsidiary, First of America
Bank-Illinois, N.A. He has been
President and Chief Executive Officer
of the Company since it became the
parent company of CIPS in 1990.
John L. Heath
Principal occupation: Retired Chairman and President of L.S.
Heath & Sons, Inc. (confectionery
manufacturer), Robinson, Illinois.
Age: 60
Served as a director of
CIPSCO since: 1990
Served as a director of CIPS
since: 1977
Shares beneficially owned at
February 1, 1996: 4,000 shares of Common Stock.
Other information: Mr. Heath is a member of the Nominating
and Audit Committees of the Board. He
served as Chairman of L.S. Heath &
Sons, Inc. from 1971 until 1988 and as
President and Chief Executive Officer
from 1971 until 1982. Mr. Heath is a
director of the Biltmore Bank Corp. and
of its wholly-owned subsidiary, the
Biltmore Investors Bank of Phoenix,
Arizona. He is also a director of the
Sun Street Food Corporation and of the
Phoenix Memorial Hospital Health
Services Network of Phoenix, Arizona.
Robert W. Jackson
Principal occupation: Retired Senior Vice President, Chief
Financial Officer and Secretary of
CIPSCO, Senior Vice President --
Finance and Secretary of CIPS, and
President and Chief Executive Officer
of CIPSCO Investment Company.
5<PAGE>
Age: 65
Served as a director of
CIPSCO since: 1990
Served as a director of CIPS
since: 1986
Shares beneficially owned at
February 1, 1996: 7,083 shares of Common Stock.
Other information: Mr. Jackson is a director of Firstbank
of Illinois Co. and each of its wholly-
owned subsidiary banks, including the
First National Bank of Springfield.
Gordon R. Lohman
Principal occupation: President and Chief Executive Officer
of AMSTED Industries Incorporated
(diversified manufacturer of industrial
products), Chicago, Illinois.
Age: 61
Served as a director of
CIPSCO since: 1990
Served as a director of CIPS
since: 1989
Shares beneficially owned at
February 1, 1996: 200 shares of Common Stock. In
addition, Mr. Lohman's account in the
directors' deferred compensation plan
described below holds the equivalent of
5,753 shares of Common Stock.
Other information: Mr. Lohman is Chairman of the
Compensation Committee and a member of
the Audit Committee and Executive
Committee of the Board. He became
President of AMSTED Industries
Incorporated in 1988 and Chief
Executive Officer in 1990. He was
Executive Vice President of that firm
in 1988. He is a director of
American Brands, Inc.
6<PAGE>
Richard A. Lumpkin
Principal occupation: Chairman of the Board and Chief
Executive Officer of Consolidated
Communications Inc. (CCI) (diversified
telecommunications holding company)
Mattoon, Illinois.
Age: 60
Served as a director of
CIPSCO since: 1995
Served as a director of CIPS
since: 1995
Shares beneficially owned at
February 1, 1996: 1,028 shares of CIPSCO Common Stock.
Other information: Mr. Lumpkin is a member of the Audit
and Nominating Committees of the Board.
He has been Chairman of the Board and
Chief Executive Officer of CCI since
1989. He is also Chairman of the Board
and Chief Executive Officer of Illinois
Consolidated Telephone Company, a
telephone utility subsidiary of CCI.
Mr. Lumpkin serves as a director of
Mid-America National Bancorp, Inc. and
its wholly-owned subsidiary Mid-America
National Bank of Chicago; First Mid-
Illinois Bancshares, Inc. and its
wholly-owned subsidiary First Mid-
Illinois Bank and Trust, N.A. of
Mattoon, Illinois; and Sarah Bush
Lincoln Health Systems, also of
Mattoon, Illinois.
7<PAGE>
Hanne M. Merriman
Principal occupation: Principal in Hanne Merriman Associates
(retail business consultants),
Washington, D.C.
Age: 54
Served as a director of
CIPSCO since: 1990
Served as a director of CIPS
since: 1990
Shares beneficially owned at
February 1, 1996: 1,602 shares of Common Stock. In
addition, Mrs. Merriman's account in
the directors' deferred compensation
plan described below holds the
equivalent of 4,034 shares of Common
Stock.
Other information: Mrs. Merriman is Chairman of the
Nominating Committee and a member of
the Audit and Executive Committees of
the Board. She was President of Nan
Duskin, Inc. from 1991 to 1992.
Previously she had been a retail
business consultant from January 1990.
Mrs. Merriman is a director of USAir
Group, Inc., State Farm Mutual
Automobile Insurance Co., The Rouse
Company, AnnTaylor Stores Corporation
and T. Rowe Price Mutual Funds.
Thomas L. Shade
Principal occupation: Retired Chairman of the Board and Chief
Executive Officer of Moorman
Manufacturing Company (livestock feed
products), Quincy, Illinois.
Age: 65
Served as a director of
CIPSCO since: 1991
Served as a director of CIPS
since: 1991
8<PAGE>
Shares beneficially owned at
February 1, 1996: 2,668 shares of Common Stock. In
addition, Mr. Shade's account in the
directors' deferred compensation plan
described below holds the equivalent of
3,318 shares of Common Stock.
Other information: Mr. Shade is a member of the Audit and
Compensation Committees of the Board.
Mr. Shade served as Chairman of the
Board and Chief Executive Officer of
Moorman Manufacturing Company during
1992 and 1993. He was President and
Chief Executive Officer of that firm
from 1984 to 1992. He also is a
director of Moorman Manufacturing
Company and Quincy Soybean Company,
both of Quincy, Illinois.
James W. Wogsland
Principal occupation: Retired Vice Chairman of Caterpillar,
Inc. (heavy equipment and engine
manufacturer), Peoria, Illinois.
Age: 64
Served as a director
CIPSCO since: 1992
Served as a director of CIPS
since: 1992
Shares beneficially owned at
February 1, 1996: 1,000 shares of Common Stock. In
addition, Mr. Wogsland's account in
the directors' deferred compensation
plan described below holds the
equivalent of 2,424 shares of Common
Stock.
Other information: Mr. Wogsland is a member of the Audit
and Nominating Committees of the Board.
Mr. Wogsland was Vice Chairman of
Caterpillar, Inc. from 1990 until his
retirement in 1995. He was Executive
Vice President of that firm from 1987
until 1990. He is a director of First
of America Bank Corporation, Kalamazoo,
Michigan; and Protection Mutual
Insurance Company.
9<PAGE>
Executive Compensation. CIPSCO's principal operating subsidiary is CIPS.
Each of the officers of CIPSCO is also an officer of CIPS and did not receive
separate compensation from CIPSCO for services as a CIPSCO officer. The
following table contains information with respect to the compensation paid for
all services rendered during 1993 through 1995 to the President, the four
other most highly compensated executive officers of CIPSCO and CIPS, and a
recently retired Senior Vice President.
10<PAGE>
Summary Compensation Table
Annual
Compensation
_________________ All Other
Compensation
Name of Individual Principal Positions(s) Year Salary Bonus (1)
__________________ _____________________ ____ ________ _______ ____________
C.L. Greenwalt President and Chief 1995 $388,750 $86,970 $ 8,426
Executive Officer of 1994 359,168 70,800 8,466
CIPSCO and CIPS; 1993 339,093 99,902 5,852
Chairman of CIPSCO
Investment Company
L.A. Dodd (2) Group Vice 1995 228,964 39,928 3,662
President of CIPS 1994 204,591 32,048 3,249
1993 194,272 36,009 3,524
W.R. Morgan Vice President of 1995 157,189 23,232 2,374
CIPS 1994 149,710 19,788 2,250
1993 142,713 21,235 2,700
W. A. Koertner Vice President, Chief 1995 155,757 23,232 922
Financial Officer and 1994 132,676 19,376 755
Secretary of CIPSCO 1993 122,815 19,196 375
and CIPS; President
and Chief Executive
Officer of CIPSCO
Investment Company
G.W. Moorman Vice President of 1995 148,806 22,944 1,428
CIPS 1994 141,717 17,955 1,354
1993 134,585 20,047 2,564
R.W. Jackson (3) Senior Vice President 1995 189,603 22,568 18,909
and Secretary of 1994 234,592 38,351 3,552
CIPSCO; Senior Vice 1993 224,545 44,699 2,864
President-Finance and
Secretary of CIPS;
President and Chief
Executive Officer of
CIPSCO Investment
Company
_______________
(1) Premiums paid on behalf of the officers for group term life insurance.
Mr. Jackson also received $11,750 for CIPSCO and CIPS board retainers and
meeting fees subsequent to his retirement as an officer of the Company.
(2) Retired January 1, 1996
(3) Retired June 30, 1995
11<PAGE>
Substantially all employees of CIPSCO and CIPS (including officers)
participate in CIPS' Retirement Income Plan (the "Retirement Plan"), including
persons whose remuneration is reported in the Summary Compensation Table.
Employer contributions to the Retirement Plan are determined actuarially. For
purposes of the Retirement Plan, compensation of a participant is base pay,
exclusive of bonuses, overtime pay, and other special payments. Compensation
for the persons named in the Summary Compensation Table is substantially
equivalent to the compensation reported in the table under "Salary."
Retirement Plan benefits depend upon years of service, age at retirement and
final average pay. In certain cases, pension benefits under the Retirement
Plan (or compensation used to measure such benefits) will be reduced to comply
with maximum limitations imposed by the Internal Revenue Code ("IRC"). CIPS
maintains an unfunded Excess Benefit Plan to provide for the payment of the
difference between the monthly benefit that would have been paid to
participants under the Retirement Plan if such IRC limitations were not in
effect and the reduced amount payable as a result of such IRC limitations.
The credited years of service under the Retirement Plan and the Excess Benefit
Plan for the above listed persons as of December 31, 1995 are as follows:
Greenwalt, 32 years; Dodd, 32 years; Morgan, 32 years; Koertner, 17 years;
Moorman, 27 years and Jackson, 16 years. Assuming retirement at age 65, it is
estimated a participant would be eligible for a maximum annual benefit under
the Retirement Plan, as supplemented by the Excess Benefit Plan, as follows:
Annual Benefit After Specified
Years of Service (1)
Average Annual _____________________________________________________
Earnings (2) 20 25 30 35 40
____________________ ________ ________ ________ ________ ________
$125,000............ $ 33,600 $ 42,000 $ 50,400 $ 58,800 $ 67,200
150,000............ 41,100 51,375 61,650 71,925 82,200
175,000............ 48,600 60,750 72,900 85,050 97,200
200,000............ 56,100 70,125 84,150 98,175 112,200
225,000............ 63,600 79,500 95,400 111,300 127,200
250,000............ 71,100 88,875 106,650 124,425 142,200
275,000............ 78,600 98,250 117,900 137,550 157,200
300,000............ 86,100 107,625 129,150 150,675 172,200
325,000............ 93,600 117,000 140,400 163,800 187,200
350,000............ 101,100 126,375 151,650 176,925 202,200
375,000............ 108,600 135,750 162,900 190,050 217,200
400,000............ 116,100 145,125 174,150 203,175 232,200
425,000............ 123,600 154,500 185,400 216,300 247,200
450,000............ 131,100 163,875 196,650 229,425 262,200
475,000............ 138,600 173,250 207,900 242,550 277,500
________
(1) Annual benefits are on a straight-line basis. Amounts shown have been
reduced by an amount equal to 50% of estimated Social Security benefits
and are not subject to any other offset amounts.
(2) "Average Annual Earnings" means the average annual base compensation
during the four consecutive years of highest pay during the 10-year
period immediately preceding retirement.
12<PAGE>
CIPS also maintains an unfunded Special Executive Retirement Plan (the
"Executive Plan") for each employee of CIPSCO or CIPS who was hired from
outside CIPSCO, CIPS or their affiliates as a senior officer and who is a
participant in and qualifies for benefits under the Retirement Plan. For
purposes of the Executive Plan, a senior officer includes the president, vice
president and such other officers of CIPSCO or CIPS as shall be designated
from time to time by the Board of Directors of CIPSCO or CIPS. A participant
in the Executive Plan who becomes disabled or retires in accordance with the
provisions of the Executive Plan is eligible to receive benefits under the
Executive Plan in an amount equal to the difference between (i) the amounts
which would have been payable under the Retirement Plan, as supplemented by
the Excess Benefit Plan, if the participant had 35 years of credited service
under the Retirement Plan (reduced in accordance with the Executive Plan if
the participant terminates employment for any reason prior to age 65) and (ii)
the aggregate of the amounts which are paid or payable (a) under the
Retirement Plan as supplemented by the Excess Benefit Plan, based upon the
number of actual years of credited service under the Retirement Plan, (b)
under certain other pension plans as a result of the participant's prior
employment and (c) under any employment contract (excluding the Management
Continuity Agreement described below) with CIPSCO or CIPS. A qualifying
surviving spouse of any participant who dies is eligible to receive a
percentage of the benefit provided under the Executive Plan for the
participant. Mr. Jackson is a participant under the Executive Plan and, as a
result of his retirement in 1995, received $31,693 in benefits (which also
includes amounts paid under the Excess Benefit Plan, described below).
In 1995 CIPS established an irrevocable trust to provide a source of
funds to assist in meeting its liabilities under the Excess Benefit Plan and
the Executive Plan. CIPS made contributions to the trust from time to time in
amounts determined in accordance with the provisions of the trust sufficient
to pay when due benefits to its participants or their beneficiaries under such
plans. Notwithstanding the trust, these plans are not qualified or "funded"
and amounts on deposit in the trust are subject to the claims of CIPS' general
creditors under the applicable law.
The Excess Benefit Plan and the Executive Plan each provides that in the
event of a change in control(which has substantially the same meaning as "change
in control" under the Management Continuity Agreements described in the follow-
ing paragraph) the present value of benefits owed any participant pursuant to
each such Plan will be paid in a lump sum (i) for a terminated participant
already receiving or entitled to receive benefits, within 30 days after such
change in control and (ii) for any other participant, within 30 days after term-
ination provided such participant's termination occurs within two years after
such change in control. Any such lump sum will be increased by an amount
necessary to compensate the participant for any excise tax payable under
federal, state or local tax law as a result of the lump sum payment being
made contingent on a change in control. Both the Excess Benefit Plan and the
Executive Plan were modified (with the required consent of participants) in
1995 to provide, in effect, that the announced business combination among
CIPSCO, Ameren Corporation and Union Electric Company (the "Merger") will not
constitute a "change in control" under such Plans.
13<PAGE>
The individuals named in the Summary Compensation Table and four other
executive officers of CIPSCO or CIPS have each entered into a Management
Continuity Agreement with CIPSCO, which provides that in the event of a
"change in control" of CIPSCO or CIPS, CIPSCO and/or CIPS or another
subsidiary of CIPSCO will continue to employ the executive for a period of
three years from the date of the change in control or to the executive's
earlier death or attainment of age 65 (the "Period of Employment"). In the
event of the executive's (i) involuntary termination of employment during the
Period of Employment except by reason of death, disability, attainment of age
65 or cause (as defined in the Management Continuity Agreement) or (ii)
resignation during the Period of Employment for good reason (as defined in the
Management Continuity Agreement), the executive will be entitled to payment of
severance compensation in an amount equal to the present value of the
executive's base pay and incentive pay (determined as provided in the
Management Continuity Agreement) that would have accrued if the executive
remained employed until the end of the Period of Employment. The executive
will also receive continued welfare benefits and service credits until the end
of the Period of Employment, subject to offset for comparable welfare
benefits. The severance compensation will be increased by an amount necessary
to compensate the executive for any excise tax payable under federal, state or
local tax law as a result of the payment and any other compensation paid by
CIPSCO or any of its affiliates being contingent on a change in control. A
"change in control" occurs, in general, if (i) as a result of a merger,
consolidation or sale of assets, less than a majority of the voting power of
CIPSCO is held after such event by the persons who were holders of the voting
power of CIPSCO prior to such event or less than a majority of the voting
power of CIPS is held after such event by CIPSCO or by the holders of the
voting power of CIPSCO prior to such event, (ii) any person (or group)
acquires beneficial ownership of 20 percent or more of the voting power of the
Company or CIPS or (iii) within any two-year period a majority of the members
of the Board of Directors of CIPSCO or CIPS ceases to be members (other than
changes in members approved by at least two-thirds of the continuing
directors). A "change in control" within the meaning of the Management
Continuity Agreements has occurred as a result of the agreement to enter into
the Merger. Because, as of the date hereof, other required conditions have
not occurred, no benefits have been paid under the terms of the Management
Continuity Agreements.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview. The Compensation Committee of the Board of Directors of CIPSCO
(the "Committee") is charged with overall oversight and review of the
performance and compensation of the executive officers of CIPSCO and CIPS.
The Committee is responsible for assuring that executive compensation and
benefit plans are implemented and are consistent with the Company's
shareholder interests, corporate goals and compensation philosophy.
CIPSCO's executive officer compensation program supports these goals and
objectives. It is designed to attract, retain, motivate and reward quality
and experienced officers to achieve the Company's business objectives. It
links executive compensation with corporate performance by providing the
opportunity to earn increased compensation during periods of superior results,
but also limiting compensation during periods with lesser results.
14<PAGE>
The executive officer compensation program consists of a base salary and
an annual incentive. The base salary is determined by a combination of the
individual's performance relative to specific job responsibilities and market
comparisons of salaries for similar jobs in the utility industry. Particular
emphasis is placed on salary data provided by the Edison Electric Institute
(EEI) survey of electric and combination electric and natural gas utilities.
This group of utilities is essentially the same group as the EEI 100 utility
peer group shown on the Performance Graph below. The philosophy is to pay
base salaries and provide for incentive compensation that are comparable to
the medians of such amounts for a subgroup of utilities included in the EEI
survey that are of comparable size to CIPSCO (based on revenues). Salaries
for the officers listed in the Summary Compensation Table were increased in
1995 to track competitive base salaries in the utility industry and to reflect
performance, which is determined subjectively by the Committee based on
individual evaluations. Incentive compensation was earned based on
achievement of the objectives of the annual Management Incentive Plan
(described below).
The Management Incentive Plan. The Management Incentive Plan (MIP), an
annual incentive program instituted in 1992, strongly supports CIPSCO's
primary goal of achieving superior returns on shareholders' investments. The
MIP is intended to provide additional compensation to the executive officers,
named in the Summary Compensation Table above, along with 7 other officers and
29 other employees of the Company and its subsidiaries. It is the Committee's
responsibility to administer the MIP and in so doing (1) set the overall
corporate financial performance goal and unit or individual objectives, (2)
determine the participants to be included in the MIP, and (3) determine the
amount of each participant's incentive pay to be based on attainment of the
overall corporate goal and the amount to be based on achievement of his or her
unit or individual objectives. Specific award levels are set by the Committee
prior to the beginning of the fiscal year for which they apply. Incentive
awards are payable in cash as soon as feasible following the close of the year
after determination by the Committee of the level of attainment of the goals.
The overall corporate goal is based on attainment of targeted return on
average Common Stock equity of CIPSCO. The Committee has determined that
return on equity is the measure of corporate performance that most directly
measures management's performance. Individual unit objectives relate to such
areas as service reliability, public and employee safety, proper maintenance
of corporate assets and quantifiable improvement in efficiency and
productivity. The MIP provides for threshold, target and maximum levels of
awards based on performance against the predetermined targets, set annually by
the Committee. A participant may receive the portion of his or her incentive
pay tied to unit or individual objectives even though CIPSCO has not attained
the overall corporate goal, with the exception of the President and Chief
Executive Officer, whose incentive pay is tied solely to the overall corporate
goal for return on equity. For other executive officers, individual unit
awards are weighted, according to the participant's position, to produce
awards from about one-fifth to one-third of the total award and corporate
15<PAGE>
performance goals are weighted to make up the remaining portion. However, for
any incentive pay to be earned by any participant, overall earnings of CIPSCO,
on a per share basis, must equal or exceed the annualized Common Stock
dividend rate then in effect. Accordingly, shareholders will realize an
appropriate return on their investment prior to the payment of any incentive
compensation.
For 1995, award levels were designed so that achievement of threshold
performance would have earned approximately one-half of the target award while
maximum performance would have earned approximately 1.7 times the target
award. Total incentive pay ranges varied, depending on the participant's
position within the organization, from a minimum of 7 percent of base salary
for some participants, assuming threshold corporate and unit goals were
achieved, to a maximum of 46 percent of base salary for the President and
Chief Executive Officer assuming maximum performance was achieved. In
accordance with Plan provisions, the Committee adjusted the performance goals
to reflect the impact of unusual circumstances affecting performance results
which were not anticipated at the time such goals were established. As a
result, in 1995, MIP participants, including the officers named in the Summary
Compensation Table, earned various amounts reflecting achievement of a
corporate goal of return on common equity in excess of the threshold level.
Participants also earned various amounts reflecting the achievement of at
least the target level of individual and unit goals, in accordance with the
MIP provisions and the adjustments previously described. Benefits earned in
1995 are reflected in the "Bonus" column of the Summary Compensation Table
above.
Compensation of the Chief Executive Officer. The Committee is
responsible for reviewing the Chief Executive Officer's performance and
adjusting his base salary accordingly. In addition, the Committee adjusts
base salary to reflect changes in the prevailing competitive market levels for
chief executive officers in other comparably-sized utilities, as described
above. Mr. Greenwalt's base salary increased in 1995 approximately 8.2
percent in consideration of strong performance of his duties which are
reflected in CIPSCO's excellent operating and financial performance. Under
his leadership CIPSCO achieved exceptional total returns to shareholders, as
shown on the graph below. He has directed CIPSCO's effort to evaluate,
negotiate and enter into the Agreement and Plan of Merger among CIPSCO, Ameren
Corporation and Union Electric Company. The capital structure, cash flows and
financial condition remain strong as indicated by continued excellent credit
ratings for the utility subsidiary. Mr. Greenwalt's 1995 base compensation
increase also reflects changes in levels of executive compensation at similar-
sized utilities.
Incentive compensation for the Chief Executive Officer was determined in
accordance with the provisions and formulas of the MIP. Accordingly, Mr.
Greenwalt's incentive compensation is based solely on corporate performance as
measured by the overall corporate goal of return on equity. He earned $86,970
under the MIP in 1995 because the Company's return on common equity exceeded
the threshold goal as established in the MIP.
16<PAGE>
The members of the Compensation Committee are indicated below. No member
of the Committee is a current or former officer of CIPSCO or any of its
subsidiaries.
G. R. Lohman, Chairman
W. J. Alley
T. L. Shade
Performance Graph. The following graph is a comparison of total returns
on CIPSCO Common Stock, the Standard & Poor's 500 index, the Dow Jones Utility
Index and an industry peer group as reported by the Edison Electric Institute
("EEI 100"). It assumes $100 invested at December 31, 1990, and all dividends
paid during the period reinvested. The peer group consists of about 100
investor-owned electric and combination electric and natural gas utilities.
The returns have been weighted to reflect the market capitalization of each
utility in the group. A portion of incentive compensation to executive
officers is based on return on CIPSCO Common Stock equity rather than total
return (shown on the graph) for reasons set forth in the Compensation
Committee Report.
(Graph to be inserted here)
Title: Total Return Summary
Based on Initial Investment of $100
on December 31, 1990
Data Points: 1991 1992 1993 1994 1995
____ ____ ____ ____ ____
CIPSCO 138 160 173 164 252
S&P 500 130 140 155 157 215
EEI 100 129 139 154 136 179
DJ Util 115 120 131 111 147
Directors' Compensation. No annual retainer or fees are paid to any
director who is an officer of CIPSCO, CIPS or any other subsidiary of the
Company. During 1995 other members of the Board of CIPSCO received an annual
retainer of $16,000 for serving on the Board of CIPSCO. CIPSCO pays no
additional fees for attendance at Board meetings or for service on committees.
17<PAGE>
The annual retainer paid to each director by CIPSCO is reduced by an
amount equal to the aggregate amount paid to such director by each subsidiary
of CIPSCO as an annual retainer for services as a director of such subsidiary.
Non-employee directors of CIPS received an annual retainer of $12,000 and a
fee of $750 for each CIPS Board meeting or committee meeting attended.
Consequently, the aggregate annual retainer for service on the Boards for 1995
was $16,000. Effective January 1, 1996, the attendance fee was increased to
$850 for each CIPS Board or Committee meeting attended. All current directors
are on the Board of CIPSCO and CIPS. Directors were also reimbursed for their
reasonable travel and out-of-pocket expenses for each Board or Committee
meeting attended.
CIPSCO and CIPS each maintain an unfunded deferred compensation plan
under which directors may elect to defer directors' retainers and fees paid by
that company. For each director who elects to participate in a plan, the
amount of his or her director's retainer and fees is accrued in an unfunded
account in the name of the director. Such amount is adjusted in value by an
amount equivalent to the amount which would be available if the director's
compensation were invested in CIPSCO's Common Stock and dividends on such
stock were reinvested. The aggregate value of each participant's accounts in
the plans at February 1, 1996 (based on deferred director's fees paid by
CIPSCO and CIPS) was equivalent to investments in CIPSCO Common Stock as
follows: Mr. Alley, 6,465 shares; Mr. Lohman, 5,753 shares; Mrs. Merriman,
4,034 shares; Mr. Shade, 3,318 shares; and Mr. Wogsland, 2,424 shares.
Amounts accrued in a director's account will be paid in cash upon his or her
retirement as a director either in a single payment or over a period not to
exceed 20 calendar quarters, with interest. Because officers of CIPSCO and
CIPS receive no compensation for services as directors, any director who is an
officer is not eligible to participate in these plans.
CIPSCO has established a Director Retirement Plan for directors of the
Company and its subsidiaries, including CIPS, who are not or have never been
officers of CIPSCO or any subsidiary, including CIPS. Each director who has
completed five years of service on the Board of CIPSCO or any of its
subsidiaries is eligible for monthly retirement payments for a period of the
lesser of 10 years or the number of full years the director served on any of
the Boards. The annual retirement benefit for a director of CIPSCO is equal
to the annual retainer in effect for CIPSCO's directors (without reduction for
director's fees paid by subsidiaries of the Company) at the time the director
ceases to serve as a director. The annual retirement benefit for a director
who is not a member of the Board of CIPSCO is equal to the annual retainer in
effect at the time the director ceases to serve as a director for each of the
Boards of which the director was a member but not to exceed the amount of
retainer for CIPSCO's directors. Such annual retirement payment is reduced a
proportional amount for directors retiring before reaching age 72.
18<PAGE>
Meetings and Committees of the Board. During 1995, the Board of
Directors held eight meetings. The Board of Directors of CIPSCO and CIPS have
each established an Executive Committee, an Audit Committee, a Nominating
Committee and a Compensation Committee. Committee members are appointed by a
majority of directors at the Board of Directors meeting following the annual
meeting of shareholders. Committee members are the same for CIPSCO's and
CIPS' committees.
Mr. Alley, Mr. Greenwalt, Mr. Lohman and Mrs. Merriman are the members of
the Executive Committee. The CIPSCO Executive Committee held two meeting and
the CIPS Executive Committee held four meetings in 1995. The Executive
Committee has and may exercise all the authority of the Board of Directors in
the management of the Company, except as limited by Illinois law.
Mr. Alley, Mr. Heath, Mr. Lohman, Mr. Lumpkin, Mrs. Merriman, Mr. Shade
and Mr. Wogsland are the members of the Audit Committee. The CIPSCO Audit
Committee and the CIPS Audit Committee each held three meetings in 1995. The
Audit Committee engages an independent public accountant for CIPSCO, subject
to the approval of the Board and shareholders; discusses with the independent
public accountant the scope and results of its audit and the adequacy of the
Company's accounting, financial and operating controls; approves the
performance of non-audit professional services by the independent public
accountant; and discusses with management and the independent public
accountant the Company's accounting principles, policies and practices and its
reporting policies and practices.
Mrs. Merriman, Mr. Heath, Mr. Lumpkin and Mr. Wogsland are the members of
the Nominating Committee. The CIPSCO Nominating Committee and the CIPS
Nominating Committee each held one meeting in 1995. The Nominating Committee
seeks out and recommends to the Board qualified candidates for election to the
Board; reviews the performance of Board members and, based upon such review,
makes recommendations to the Board as to which Board members should stand for
re-election. In making recommendations of nominees for election to the Board,
the Nominating Committee will consider persons recommended by shareholders.
Any shareholder wishing to make such a recommendation should write to the
President of CIPSCO who will forward all such recommendations to the
Nominating Committee.
Mr. Lohman, Mr. Alley, and Mr. Shade are the members of the Compensation
Committee. The CIPSCO Compensation Committee held two meetings and the CIPS
Compensation Committee held four meetings in 1995. The Compensation Committee
reviews the compensation to be paid officers of CIPSCO (other than assistant
officers); reviews directors' fees and fees paid to directors for membership
on the various committees of the Board; and makes recommendations to the Board
as to appropriate levels of such officers' compensation, directors' fees and
fees for membership on such committees. No member of the Compensation
Committee is a current or former officer of CIPSCO or CIPS.
19<PAGE>
During 1995, each director attended at least 86 percent of the total of
the meetings of CIPSCO's and CIPS' Board and of committees of each company's
Board of which he or she was a member.
APPROVAL OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Subject to the approval of the shareholders of CIPSCO, the Board of
Directors has appointed the firm of Arthur Andersen LLP as independent public
accountants to examine the annual financial statements of CIPSCO for 1996.
The firm has served as independent public accountants for CIPSCO and CIPS for
many years. A representative of Arthur Andersen LLP will be present at the
annual meeting to make a statement if he or she so desires, and to respond to
questions.
The following resolution concerning the appointment of independent public
accountants will be offered at the meeting:
"RESOLVED, that the appointment by CIPSCO's Board of Directors of Arthur
Andersen LLP to examine the annual financial statements of the Company and its
subsidiaries for 1996 is hereby approved."
The Board of Directors recommends a vote "FOR" the foregoing proposal.
OTHER MATTERS
At the date hereof, the Board of Directors of CIPSCO knows of no business
to come before the meeting other than those matters described above. However,
should any such business properly come before the meeting, the proxies will be
voted in respect thereof in accordance with the judgment of the person or
persons voting the proxies.
CIPSCO INCORPORATED
By Order of the Board of Directors,
W. A. Koertner
Vice President and Secretary
20<PAGE>
SOLICITED BY THE BOARD OF DIRECTORS OF CIPSCO INCORPORATED
The undersigned appoints and/or directs the agents of the Plans identified on
the reverse hereof to appoint C. L. Greenwalt and W. A. Koertner, and each of
them as attorneys and proxies with power of substitution to vote, as indicated
hereon, all shares of common stock of CIPSCO Incorporated held of record in
the name of, or held for the account of the undersigned in the Plans, at the
close of business on the record date and, in their discretion, to vote on all
other matters which may properly come before the 1996 Annual Meeting of
Shareholders of CIPSCO Incorporated and at all adjourned sessions thereof, all
as set forth in the Notice and Proxy Statement relating to the meeting.
If joint account, each joint
owner should sign. State title
when signing as executor,
administrator, trustee, guardian,
etc.
DO NOT FOLD
DATE _________________________
SIGNED _________________________________
_________________________________
<PAGE>
The votes represented by this proxy, if properly executed, will be voted as
indicated by you. If you sign and return the proxy unmarked, such votes will
be voted "FOR" the election of directors and "FOR" approval of the appointment
of auditors. No proposal is related to or conditioned on any other proposal.
DIRECTORS RECOMMENDED a Vote "FOR" Items 1 and 2.
For ___ Withhold Authority ___
1. Election of Directors all nominees listed to vote for all
below (except as nominees
marked to the
contrary)
W. J. Alley C. L. Greenwalt J. L. Heath
R. W. Jackson G. R. Lohman R. A. Lumpkin
H. M. Merriman T. L. Shade J. W. Wogsland
To withhold authority to vote for any individual nominee, strike a line
through the nominee's name in the list above.
2. Approval of the appointment
of Arthur Andersen LLP as For ___ Against ___ Abstain ___
independent public
accountants for 1996.
Please mark your votes with an "X." Then DATE PROXY AND SIGN ON REVERSE side
exactly as name(s) are shown and return signed proxy in enclosed envelope.
Participants in (i) the Company's Automatic Dividend Reinvestment and Stock
Purchase Plan and (ii) Central Illinois Public Service Company's Employee
Stock Ownership Plan or any of its Employee Savings Plans, direct Illinois
Stock Transfer Company and the respective plan Trustee, respectively, as
agent, to vote as indicated herein.
(To be signed on reverse side)
