SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant X
Filed by a party other than the Registrant ___
Check the appropriate line:
___ Preliminary Proxy Statement
___ Confidential. For use of Commission Only (as permitted by Rule 14a-
6(e)(2))
X Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to 240.14a-11 (c) or 240.14a-12
CIPSCO INCORPORATED
(Name of Registrant as Specified in Its Charter)
Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate line):
X No fee required.
___ Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (set forth the amount on which the
filing fee is calculated and state how it was determined)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
___ Fee paid previously with preliminary materials
___ Check line if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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 23, 1997, at 10:00 AM, for the
purpose of considering and voting on the following matters:
(1) the election of a Board of eight directors;
(2) the approval of the appointment by the Board of Directors of
Arthur Andersen LLP as independent public accountants for 1997; and
(3) the transaction of such other business as may properly come
before the meeting.
See 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 25, 1997, 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 1996 has
been mailed to each shareholder of record of the Company on its books.
By order of the Board of Directors,
W. A. Koertner,
Vice President and Secretary
March 10, 1997
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.
CIPSCO INCORPORATED
607 East Adams Street
Springfield, Illinois 62739
217/523-3600
March 10, 1997
Proxy Statement For the
1997 Annual Meeting of Shareholders
INTRODUCTION
General. The purposes of the meeting are set forth in the attached
Notice. The enclosed proxy is solicited by mail on behalf of the Board of
Directors of CIPSCO and the cost of such solicitation will be paid by the
Company. 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 $6,500. Officers, directors and
employees of CIPSCO may also solicit proxies by other means.
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 1996 Annual Report to the Securities and Exchange Commission on
Form 10-K. Requests for a copy of the report should be sent to the
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 outstanding voting securities of CIPSCO on the record
date of February 25, 1997, 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 25, 1997, are entitled to notice of and to vote at the meeting.
At such meeting, each 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 votes equal to the number of directors to be elected, multiplied by
the number of shares held by such shareholder, or such votes may be
distributed among any two or more nominees. The proxies seek discretionary
authority to cast cumulative votes in the election of directors.
Shareholders may vote in person or by duly authorized proxy. The
giving of a proxy by a shareholder will not affect the shareholder's right
to vote if the shareholder attends the meeting and votes in person. Prior
to the voting of a proxy, such proxy may be revoked by the shareholder by
either (a) delivering written notice of revocation to the Secretary of
CIPSCO, (b) executing a subsequently dated proxy or (c) 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 constitutes a
quorum for the meeting. If a quorum is present in person or by proxy, the
eight director nominees 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.
Participants 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 to vote shares
credited to the participant's Plan account. Shareholders of record who are
participants in the Reinvestment Plan will receive one form of proxy which
includes 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 18, 1997, the trustee will vote the participant's shares 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. Participants in the
Reinvestment Plan, the ESOP or any Savings Plan wishing to vote in person
at the meeting may obtain a proxy for his or her account shares by making a
written request by April 11, 1997 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: James Antonellis, 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.
Proposals of Shareholders. Under the rules of the Securities and
Exchange Commission, any shareholder proposal intended to be presented at
the 1998 annual meeting of shareholders of CIPSCO must be received by the
Company no later than November 10, 1997, in order to be eligible 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, 1997, an
aggregate of 38,114 shares of Common Stock of CIPSCO representing .11% of
the outstanding Common Stock and 38 shares of Preferred Stock of CIPS
representing less than .01% of the outstanding Preferred Stock.
ELECTION OF DIRECTORS
Director Information.
Eight directors are to be elected at the meeting.
Barring unforeseen contingencies, and in the absence of contrary
directions, the proxies solicited will be voted for the election of
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 or until their respective successors are elected
and qualified. Each of the nominees is a director of CIPSCO, has served as
such and has served as a director of CIPS since his or her election as
indicated below. Proxies may also be voted for a substitute nominee or
nominees in the event any one or more of the above nominees is unable to
serve for any reason or is withdrawn from nomination, a contingency not now
anticipated.
Each nominee has been engaged in his or her present principal
occupation for at least the past five years, except as otherwise indicated
below.
Information about each nominee for election as director is provided
below:
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: 64
Served as a director of
CIPSCO since: 1990
Served as a director of CIPS
since: 1986
Shares beneficially owned at
February 1, 1997: 12,102 shares of Common Stock.
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 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: Executive Vice President of Channel
Earth Communications, Inc.
(Satellite television broadcaster),
Scottsdale, Arizona and Chicago,
Illinois.
Age: 61
Served as a director of
CIPSCO since: 1990
Served as a director of CIPS
since: 1977
Shares beneficially owned at
February 1, 1997: 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.
Robinson, Illinois, (candy
manufacturer) from 1971 until 1988
and as President and Chief
Executive Officer from 1971 until
1982. In October 1996, Mr. Heath
became Executive Vice President of
Channel Earth Communications, Inc.
Mr. Heath is a director of Biltmore
Investors Bank of Phoenix, Arizona,
Channel Earth Communications, Inc.,
Sunstreet Food Corporation and
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.
Age: 66
Served as a director of
CIPSCO since: 1990
Served as a director of CIPS
since: 1986
Shares beneficially owned at
February 1, 1997: 3,675 shares of Common Stock. In
addition, Mr. Jackson's account in
the directors' deferred
compensation plan described below
holds the equivalent of 583 shares
of Common Stock.
Other information: Mr. Jackson, who retired in 1995,
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: 62
Served as a director of
CIPSCO since: 1990
Served as a director of CIPS
since: 1989
Shares beneficially owned at
February 1, 1997: 200 shares of Common Stock. In
addition, Mr. Lohman's account in
the directors' deferred
compensation plan described below
holds the equivalent of 6,810
shares of Common Stock.
Other information: Mr. Lohman is Chairman of the
Compensation Committee and
Executive Committee and a member of
the Audit 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. Mr.
Lohman is a director of
American Brands, Inc.
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: 61
Served as a director of
CIPSCO since: 1995
Served as a director of CIPS
since: 1995
Shares beneficially owned at
February 1, 1997: 1,087 shares of 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 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.
Hanne M. Merriman
Principal occupation: Principal in Hanne Merriman
Associates (retail business
consultants), Washington, D.C.
Age: 55
Served as a director of
CIPSCO since: 1990
Served as a director of CIPS
since: 1990
Shares beneficially owned at
February 1, 1997: 1,694 shares of Common Stock. In
addition, Mrs. Merriman's account
in the directors' deferred
compensation plan described below
holds the equivalent of 4,944
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: 66
Served as a director of
CIPSCO since: 1991
Served as a director of CIPS
since: 1991
Shares beneficially owned at
February 1, 1997: 2,821 shares of Common Stock. In
addition, Mr. Shade's account in
the directors' deferred
compensation plan described below
holds the equivalent of 4,210
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: 65
Served as a director
CIPSCO since: 1992
Served as a director of CIPS
since: 1992
Shares beneficially owned at
February 1, 1997: 1,000 shares of Common Stock. In
addition, Mr. Wogsland's account in
the directors' deferred
compensation plan described below
holds the equivalent of 3,279
shares of Common Stock.
Other information: Mr. Wogsland is Chairman of the
Audit Committee and a member of the
Executive and Compensation
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.
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 compensation information for the President,
four other top executive officers of CIPSCO and CIPS and two recently
retired Vice Presidents. The compensation reported is for all services
rendered during 1994 through 1996.
Summary Compensation Table
Annual
Compensation
_________________ All Other
Compensation
Name of Individual Principal Positions(s) Year Salary Bonus (1)
__________________ _____________________ ____ ________ _______ ____________
C. L. Greenwalt President and Chief 1996 $418,751 $146,580 $8,326
Executive Officer of 1995 388,750 86,970 8,426
CIPSCO and CIPS; 1994 359,168 70,800 8,513
Chairman of CIPSCO
Investment Company
W. A. Koertner Vice President, Chief 1996 188,897 45,006 1,148
Financial Officer and 1995 155,757 23,232 922
Secretary of CIPSCO 1994 132,676 19,376 755
and CIPS; President
and Chief Executive
Officer of CIPSCO
Investment Company
G. W. Moorman Vice President of 1996 161,464 35,477 1,578
CIPS 1995 148,806 22,944 1,428
1994 141,717 17,955 1,354
J. T. Birkett Vice President of 1996 148,897 34,947 2,241
CIPS 1995 114,889 15,613 1,665
1994 94,639 10,032 1,260
D. R. Patterson Vice President of 1996 142,002 33,203 3,299
CIPS 1995 115,664 15,732 1,656
1994 98,209 11,726 1,253
W. R. Morgan Vice President of 1996 166,225 0 395,152
CIPS 1995 157,189 23,232 2,374
1994 149,710 19,788 2,250
W. R. Voisin Vice President of 1996 126,675 0 301,174
CIPS 1995 119,463 21,247 2,654
1994 113,751 15,565 1,602
_______________
(1) All amounts are for premiums paid on behalf of the officers for group
term life insurance except for Mr. Morgan ($4,237 for life insurance premium
and $390,915 paid upon termination of employment in October 1996 pursuant
to Management Continuity Agreement described below) and Mr. Voisin ($2,896
for life insurance premium and $298,278 paid upon termination of
employment in October 1996 pursuant to Management Continuity Agreement).
Substantially all employees of CIPSCO and CIPS (including officers)
participate in CIPS' Retirement Income Plan (the "Retirement Plan"),
including persons named in the Summary Compensation Table. Employer contri-
butions to the Retirement Plan are determined actuarially. For Retirement
Plan purposes, compensation is base pay, exclusive of 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 are reduced to comply with maximum limitations imposed
by the Internal Revenue Code (the "Code"). CIPS maintains an unfunded
Excess Benefit Plan to provide for the payment of the difference between
the monthly benefit that would have been paid if such Code limitations were
not in effect and the reduced amount payable as a result of such Code
limitations. Amounts attributable to service credits arising under the
Management Continuity Agreements discussed below are also paid through the
Excess Benefit Plan. The credited years of service under the Retirement
Plan and the Excess Benefit Plan for the above listed persons as of
December 31, 1996 are as follows: Greenwalt, 33 years; Koertner, 18 years;
Moorman, 28 years; Patterson, 35 years; Birkett, 25 years; Morgan, 33
years; and Voisin, 35 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
____________________ ________ ________ ________ ________ ________
$100,000............ $ 26,256 $ 32,820 $ 39,384 $ 45,948 $ 52,512
125,000............ 33,756 42,195 50,634 59,073 67,512
150,000............ 41,256 51,570 61,884 72,198 82,512
175,000............ 48,756 60,945 73,134 85,323 97,512
200,000............ 56,256 70,320 84,384 98,448 112,512
225,000............ 63,756 79,695 95,634 111,573 127,512
250,000............ 71,256 89,070 106,884 124,698 142,512
275,000............ 78,756 98,445 118,134 137,823 157,512
300,000............ 86,256 107,820 129,384 150,948 172,512
325,000............ 93,756 117,195 140,634 164,073 187,512
350,000............ 101,256 126,570 151,884 177,198 202,512
375,000............ 108,756 135,945 163,134 190,323 217,512
400,000............ 116,256 145,320 174,384 203,448 232,512
425,000............ 123,756 154,695 185,634 216,573 247,512
450,000............ 131,256 164,070 196,884 229,698 262,512
475,000............ 138,756 173,445 208,134 242,823 277,512
500,000............ 146,256 182,820 219,384 255,948 292,512
525,000............ 153,756 192,195 230,634 269,073 307,512
________
(1) Annual benefits are on a straight-line basis. Amounts shown have been
reduced by an amount up to 50% (at 40 years of service) 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.
The Excess Benefit Plan 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 below) 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 termination 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. The Excess Benefit Plan was 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 the Plan.
In 1995 CIPS established an irrevocable trust to provide a source of
fund to assist in meeting its liabilities under the Excess Benefit Plan.
CIPS makes 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 participants or their beneficiaries under the Excess
Benefit Plan. Notwithstanding the trust, the Excess Benefit Plan is 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 individuals named in the Summary Compensation Table and two 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 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. Mr. Morgan and Mr.
Voisin, have received benefits under their Management Continuity Agreements
as described in Note 1 to the Summary Compensation Table.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview. The Compensation Committee of the Board of Directors of
CIPSCO is charged with overall oversight of executive compensation
programs, as well as reviewing the performance and establishing the
compensation of 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 is designed to
attract, retain, motivate and reward quality and experienced officers to
achieve the Company's objectives. It links executive compensation with
corporate performance by providing the opportunity to earn increased
compensation during periods of superior results, and limits compensation
during periods with lesser results.
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 1996 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, along with two 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 Common Stock 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. With the exception of the President
and Chief Executive Officer, whose incentive pay is tied solely to the
overall corporate goal for return on Common Stock equity, 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.
Individual unit awards are weighted, according to the participant's
position, to produce awards from about one-fourth to two-fifths of the
total award and corporate 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 1996, 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. As a result, in 1996, MIP participants earned various amounts
reflecting achievement of a corporate goal of return on Common Stock equity
in excess of the target level. Participants also earned various amounts
reflecting the achievement of at least the threshold level of individual
and unit goals, in accordance with the MIP provisions. Benefits earned in
1996 for the identified executive officers 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 1996
approximately 7.7 percent in consideration of the Company's continued
strong operating and financial performance as well as advances toward a
more competitive cost structure. Specifically, increased merger related
savings were identified as a result of the continuing focus on efficiencies
which can be achieved through the strategic alliance with Union Electric.
In addition, cost-saving revisions in a long- term coal contract were
obtained which will serve to benefit all stakeholders. With respect to
competition and deregulation, the Company has successfully positioned
itself and focused efforts toward promoting principles of reliability,
safety and benefits for all parties. The Committee believes these advances
made under the leadership of Mr. Greenwalt warrant the adjustments in his
base salary. Mr. Greenwalt's 1996 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 Common
Stock equity. He earned $146,580 under the MIP in 1996 because the
Company's return on Common Stock equity exceeded the target goal as
established in the MIP.
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 or has any relationship with CIPSCO or CIPS required to be
disclosed pursuant to the rules of the Securities and Exchange Commission.
G. R. Lohman, Chairman
T. L. Shade
J. W. Wogsland
(Graph to be inserted here)
Total Return Summary
Based on Initial Investment of $100
On December 31, 1991
1991 1992 1993 1994 1995 1996
CIPSCO $100 $116 $125 $118 $182 $177
S&P 500 100 108 118 120 165 203
EEI 100 100 108 120 106 139 140
DJ Util 100 109 126 114 160 165
The above graph assumes all dividends paid during the periods are
reinvested. The EEI peer group consists of about 100 investor-owned
electric and combination electric and natural gas utilities. All 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.
Directors' Compensation.
No retainer or fees are paid to any director who is an
officer of CIPSCO, CIPS or any other subsidiary of the Company.
During 1996 non-employee members of the Board of CIPSCO received an annual
retainer of $16,000. CIPSCO pays no additional fees for attendance at
Board or committee meetings.
During 1996, non-employee directors of CIPS received an annual
retainer of $12,000 and a fee of $850 for each CIPS Board meeting or
committee meeting attended. 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. All current directors are on the Board of
CIPSCO and CIPS. Consequently, the aggregate annual retainer for service
on the Boards for 1996 was $16,000. 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, 1997 (based on deferred
director's fees paid by CIPSCO and CIPS) was equivalent to investments in
CIPSCO Common Stock as follows: Mr. Lohman, 6,810 shares; Mrs. Merriman,
4,944 shares; Mr. Shade, 4,210 shares; Mr. Wogsland, 3,279 shares; and Mr.
Jackson, 583 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.
Directors who are also officers do not 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.
Meetings and Committees of the Board. During 1996, the Board of
Directors held six meetings. The Board of Directors of CIPSCO and the
Board of Directors of 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. Lohman, Mr. Greenwalt, Mrs. Merriman and Mr. Wogsland are the
current members of the Executive Committee. The CIPSCO Executive Committee
and the CIPS Executive Committee held no meetings in 1996. 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. Wogsland, Mr. Heath, Mr. Lohman, Mr. Lumpkin, Mrs. Merriman, and
Mr. Shade are the members of the Audit Committee. The CIPSCO Audit
Committee and the CIPS Audit Committee each held three meetings in 1996.
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, and Mr. Lumpkin are the members of the
Nominating Committee. The CIPSCO Nominating Committee and the CIPS
Nominating Committee each held one meeting in 1996. 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. Shade and Mr. Wogsland are the members of the
Compensation Committee. The CIPSCO Compensation Committee and the CIPS
Compensation Committee each held three meetings in 1996. The Compensation
Committee evaluates performance of and sets the compensation of 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
fees. No member of the Compensation Committee is a current or former
officer of CIPSCO or CIPS.
During 1996, each director attended at least 83 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
1997. 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 1997 is hereby approved."
The Board of Directors recommends a vote "FOR" the foregoing proposal.
If the proposed Merger with Union Electric Company is consummated
prior to the end of 1997, it may be deemed desirable at that time for the
current auditors of Union Electric or another auditing firm to audit the
annual financial statements for all affiliated corporations for 1997 in
which case Arthur Andersen LLP would no longer serve. Shareholders will be
informed if another auditing firm is subsequently selected.
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 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
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 1997 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
Dated _____________
Signed _____________________________
_____________________________
(on reverse side)
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 appoint-
ment of auditors. No proposal is related to or conditioned on any other
proposal.
DIRECTORS RECOMMEND a Vote "FOR" Items 1 and 2.
1. Election of Directors FOR __ Withhold Authority __
all nominees listed to vote for all nominess
below (except as
marked to the contrary)
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 independent
public accountants for 1997.
FOR __ AGAINST __ ABSTAIN __
Please mark you 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 Comapany'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)
