<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
LG&E Energy Corp.
- --------------------------------------------------------------------------------
(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 box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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 box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
March 16, 1995
Dear LG&E Energy Corp. shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
LG&E Energy Corp. to be held Tuesday, April 25, 1995, at 10:00 a.m., E.D.T. at
the Hyatt Regency Louisville, 320 W. Jefferson Street, Louisville, Kentucky.
Business matters to be acted upon at the meeting are the election of three
directors to three-year terms expiring in 1998, approval of the independent
auditors for 1995, and the transaction of any other business properly brought
before the meeting. We will also report on the progress of LG&E Energy, and
shareholders will have the opportunity to present questions of general interest.
We encourage you to read the proxy statement carefully and complete, sign
and return your proxy in the envelope provided, even if you plan to attend the
meeting. Returning your proxy to us will not prevent you from voting in person
at the meeting, or from revoking your proxy and changing your vote at the
meeting, if you are present and choose to do so.
If you plan to attend the Annual Meeting, please fill out the ticket request
attached to the form of proxy and return it with your proxy. An admission card
will be mailed to you prior to the meeting. If you wish to attend the meeting
but do not have a ticket, you will be admitted to the meeting after presenting
personal identification and evidence of ownership.
The directors and officers of LG&E Energy appreciate your continuing
interest in the business of LG&E Energy. We hope you can join us at the meeting.
Sincerely,
[SIGNATURE]
Roger W. Hale
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of LG&E Energy Corp. ("LG&E Energy"), a
Kentucky corporation, will be held at the Hyatt Regency Louisville, 320 West
Jefferson Street, Louisville, Kentucky, on Tuesday, April 25, 1995, at 10:00
a.m., E.D.T. for the following purposes:
1. To elect three directors, each for a three-year term expiring in 1998;
2. To approve and ratify the appointment of Arthur Andersen LLP as
independent auditors of LG&E Energy for 1995; and
3. To transact such other business as may properly come before the meeting.
The close of business on February 15, 1995, has been fixed by the Board of
Directors as the record date for determination of shareholders entitled to
notice of and to vote at the Annual Meeting or any adjournment thereof.
You are cordially invited to attend the meeting. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY IN THE
REPLY ENVELOPE AS SOON AS POSSIBLE. Your cooperation in signing and returning
your proxy promptly is greatly appreciated.
By Order of the Board of Directors,
John R. McCall, Secretary
LG&E Energy Corp.
220 West Main Street
Louisville, Kentucky 40202
March 16, 1995
<PAGE>
PROXY STATEMENT
--------------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 25, 1995
----------------------
The Board of Directors of LG&E Energy hereby solicits your proxy, and asks
that you vote, sign, date and promptly mail the enclosed proxy card for use at
the Annual Meeting of Shareholders to be held April 25, 1995, and at any
adjournment of such meeting. The meeting will be held at the Hyatt Regency
Louisville, 320 West Jefferson Street, Louisville, Kentucky. This proxy
statement and the accompanying proxy were first mailed to shareholders on or
about March 16, 1995.
If you plan to attend the meeting, please complete the ticket request form
attached to your proxy and return it promptly. An admission card, which will
expedite your admission to the meeting, will be mailed to you prior to the
meeting. Shareholders who do not have an admission card, including beneficial
owners whose accounts are held by brokers or other institutions, will be
admitted to the meeting upon presentation of personal identification and, in the
case of beneficial owners, proof of ownership.
At the close of business on February 15, 1995, the record date for the
Annual Meeting, there were 33,028,551 shares of Common Stock of LG&E Energy
outstanding and entitled to vote. LG&E Energy has no other voting securities.
Owners of record of LG&E Energy Common Stock at the close of business on
February 15, 1995, are entitled to one vote per share for each matter presented
at the Annual Meeting or any adjournment thereof. In addition, each shareholder
has cumulative voting rights with respect to the election of directors.
Accordingly, in electing directors, each shareholder is entitled to as many
votes as the number of shares of stock owned multiplied by the number of
directors to be elected. All such votes may be cast for a single nominee or may
be distributed among two or more nominees. The persons named as proxies reserve
the right to cumulate votes represented by proxies which they receive and to
distribute such votes among one or more of the nominees at their discretion.
You may revoke your proxy at any time before it is voted by giving written
notice of its revocation to the Secretary of LG&E Energy, by delivery of a later
dated proxy, or by attending the Annual Meeting and voting in person. Signing a
proxy does not preclude you from attending the meeting in person.
Directors are elected by a plurality of the votes cast by the holders of
LG&E Energy Common Stock at a meeting at which a quorum is present. "Plurality"
means that the individuals who receive the largest number of votes are elected
as directors up to the maximum number of directors to be chosen at the meeting.
Consequently, any shares not voted (whether by withholding authority, broker
nonvote or otherwise) have no impact on the election of directors except to the
extent the failure to vote for an individual results in another individual
receiving a larger number of votes.
The affirmative vote of a majority of shares of LG&E Energy Common Stock
represented at the Annual Meeting is required for the approval of the
independent auditors and any other matters that may properly come before the
meeting. Abstentions from voting on any such matter are treated as votes
against, while broker nonvotes are treated as shares not voted.
The Annual Report to Shareholders of LG&E Energy (the "Annual Report"),
including financial statements, is enclosed with this proxy statement.
1
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of LG&E Energy presently consists of ten members. The
directors are classified into three classes, as nearly equal in number as
possible, with respect to the time for which they are to hold office. One class
of directors is elected at each year's Annual Meeting to serve for three-year
terms and to continue in office until their successors are elected and
qualified.
At this Annual Meeting, the following three persons are proposed for
election to the Board of Directors for three-year terms expiring at the 1998
Annual Meeting: Owsley Brown II, Gene P. Gardner and J. David Grissom. All of
the nominees are presently directors of LG&E Energy and Louisville Gas and
Electric Company ("LG&E"), the principal subsidiary of LG&E Energy.
The Board of Directors does not know of any nominee who will be unable to
stand for election or otherwise serve as a director. If for any reason any
nominee becomes unavailable for election, the Board of Directors may designate a
substitute nominee, in which event the shares represented on the proxy cards
returned to LG&E Energy will be voted for such substitute nominee, unless an
instruction to the contrary is indicated on the proxy card.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION
OF THE THREE NOMINEES FOR DIRECTOR.
INFORMATION ABOUT DIRECTORS AND NOMINEES
The following contains certain information as of February 15, 1995,
concerning the nominees for director, as well as the directors whose terms of
office continue after the 1995 Annual Meeting.
NOMINEES FOR DIRECTOR WITH TERMS EXPIRING AT 1998 ANNUAL MEETING OF SHAREHOLDERS
OWSLEY BROWN II (AGE 52)
Mr. Brown was named the Chief Executive Officer of Brown-Forman Corporation,
a consumer products company, in July 1993, and has been President of
Brown-Forman Corporation since 1987. Mr. Brown is a graduate of Yale University,
and received his master's degree in business administration from Stanford
University. He has been a director of LG&E Energy since August 1990 and of LG&E
since May 1989. Mr. Brown is also a member of the Board of Directors of
Brown-Forman Corporation, Hilliard Lyons Trust Company and NACCO Industries,
Inc.
GENE P. GARDNER (AGE 65)
Mr. Gardner has been Chairman of Beaver Dam Coal Company, which is engaged
in the ownership and development of coal properties, since April 1983. Mr.
Gardner is a graduate of the University of Louisville and of the Advanced
Management Program of the University of Virginia, Colgate-Darden Graduate School
of Business. Mr. Gardner has been a director of LG&E Energy since August 1990
and of LG&E since July 1979. He is also a member of the Board of Directors of
Commonwealth Bank and Trust Company, Commonwealth Financial Corporation and
Thomas Industries, Inc.
J. DAVID GRISSOM (AGE 56)
Mr. Grissom has been Chairman of Mayfair Capital, Inc., a private investment
firm, since April 1989. He served as Chairman and Chief Executive Officer of
Citizens Fidelity Corporation from April 1977 until March 31, 1989. Upon the
acquisition of Citizens Fidelity Corporation by PNC Financial Corp. in February
1987, Mr. Grissom served as Vice Chairman and a Director of PNC Financial Corp.
until March 1989. Mr. Grissom is a graduate of Centre College and the University
of Louisville School of Law. Mr. Grissom has been a director of LG&E Energy
since August 1990 and of
2
<PAGE>
LG&E since January 1982. He is also a member of the Board of Directors of
Providian Corporation, Churchill Downs, Inc., Columbia/HCA Healthcare
Corporation, Transco Energy Co., Regal Cinemas, Inc. and Sphere Drake Holdings
LTD.
DIRECTORS WHOSE TERMS EXPIRE AT 1996 ANNUAL MEETING OF SHAREHOLDERS
ROGER W. HALE (AGE 51)
Mr. Hale has been a Director and Chairman of the Board, President and Chief
Executive Officer of LG&E Energy since August 1990. Mr. Hale has also been Chief
Executive Officer and a Director of LG&E since June 1989, Chairman of the Board
of LG&E since February 1, 1990, and served as President of LG&E from June 1989
until January 1, 1992. Prior to his coming to LG&E, Mr. Hale served as Executive
Vice President of Bell South Enterprises, Inc. Mr. Hale is a graduate of the
University of Maryland, and received a master's degree in management from the
Massachusetts Institute of Technology, Sloan School of Management. Mr. Hale is
also a member of the Board of Directors of PNC Bank, Kentucky, Inc. and H&R
Block, Inc.
DAVID B. LEWIS (AGE 50)
Mr. Lewis is a founding partner of the law firm of Lewis, White & Clay, a
Professional Corporation, in Detroit, Michigan. Since 1972, Mr. Lewis has served
as Chairman of the Board and a Director of the firm. Mr. Lewis is a graduate of
Oakland University and received his law degree from the University of Michigan
Law School. He also received a master's degree in business administration from
the University of Chicago Graduate School of Business. Mr. Lewis has been a
director of LG&E Energy and LG&E since November 1992. Mr. Lewis is also a member
of the Board of Directors of Consolidated Rail Corporation (Conrail), and serves
or has served as a board member for numerous educational, cultural and civic
organizations in the Detroit and Washington, D.C. areas.
ANNE H. MCNAMARA (AGE 47)
Mrs. McNamara has been Senior Vice President -- Administration and General
Counsel of AMR Corporation and its subsidiary, American Airlines, Inc. since
June 1988. Mrs. McNamara is a graduate of Vassar College, and received her law
degree from Cornell University. She has been a director of LG&E Energy and LG&E
since November 1991.
DONALD C. SWAIN (AGE 63)
Dr. Swain has been President of the University of Louisville since April
1981. Dr. Swain is a graduate of the University of Dubuque. He received his
master's and doctoral degrees in history from the University of California at
Berkeley. He has been a director of LG&E Energy since August 1990 and of LG&E
since May 1985. Dr. Swain is also a member of the Board of Directors of PNC
Bank, Kentucky, Inc.
DIRECTORS WHOSE TERMS EXPIRE AT 1997 ANNUAL MEETING OF SHAREHOLDERS
WILLIAM C. BALLARD, JR. (AGE 54)
Mr. Ballard has been of counsel to the law firm of Greenebaum Doll &
McDonald since May 1992. He served as Executive Vice President and Chief
Financial Officer from 1978 until May 1992, of Humana, Inc., a healthcare
services company. Mr. Ballard is a graduate of the University of Notre Dame, and
received his law degree, with honors, from the University of Louisville School
of Law. He also received a Master of Law degree in taxation from Georgetown
University. Mr. Ballard has been a director of LG&E Energy since August 1990 and
of LG&E since May 1989. Mr. Ballard is also a member of the Board of Directors
of United Healthcare Corp., MidAmerica Bancorp, Vencor, Inc., American Safety
Razor, Inc. and Arjo, A.B.
S. GORDON DABNEY (AGE 66)
Mr. Dabney has been President since 1955 of Standard Foods, Inc., which is
engaged in the food processing business. Mr. Dabney attended the University of
Florida. He has been a director of LG&E Energy since August 1990 and of LG&E
since January 1987.
3
<PAGE>
T. BALLARD MORTON, JR. (AGE 62)
Mr. Morton has been Executive in Residence at the College of Business and
Public Administration of the University of Louisville since 1983. Mr. Morton is
a graduate of Yale University. Mr. Morton has been a director of LG&E Energy
since August 1990 and of LG&E since May 1967. Mr. Morton is also a member of the
Board of Directors of PNC Bank, Kentucky, Inc. and the Kroger Company.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Each member of the Board of Directors of LG&E Energy is also a director of
LG&E. The committees of the Board of Directors of LG&E Energy include an Audit
Committee, a Compensation Committee and a Nominating and Development Committee.
The directors who are members of the various committees of LG&E Energy serve in
the same capacity for purposes of the LG&E Board of Directors.
During 1994, there were seven regular meetings and one special meeting of
the LG&E Energy Board. All directors attended 75% or more of the total number of
meetings of the Board of Directors and Committees of the Board on which they
served.
COMPENSATION OF DIRECTORS
Directors who are also officers of LG&E Energy or its subsidiaries receive
no compensation in their capacities as directors. During 1994, directors
received a retainer of $1,417 per month, or $17,000 annually ($18,000 annually
for committee chairmen), a fee for Board meetings of $900 per meeting and a fee
for each committee meeting of $750. Non-employee directors residing out of the
Louisville area received reimbursement for expenses incurred in traveling to
meetings, and received an additional $750 compensation for each Board meeting
they attended. The foregoing amounts represent the aggregate fees paid to
directors in their capacities as directors of LG&E Energy and LG&E during 1994.
Non-employee directors of LG&E Energy and its subsidiaries may elect to
defer all or a part of their fees (including retainers, fees for attendance at
regular and special meetings, committee meetings and travel compensation)
pursuant to the LG&E Energy Corp. Deferred Stock Compensation Plan (the
"Deferred Stock Plan"). Each deferred amount is credited by LG&E Energy to a
bookkeeping account and then is converted into a stock equivalent on the date
the amount is credited. The number of stock equivalents credited to the director
is based upon the average of the high and the low sale price of LG&E Energy
Common Stock on the New York Stock Exchange for the five trading days prior to
the conversion. Additional stock equivalents will be added to stock accounts at
the time that dividends are declared on LG&E Energy Common Stock, in an amount
equal to the amount of LG&E Energy Common Stock that could be purchased with
dividends that would be paid on the stock equivalents if converted to LG&E
Energy Common Stock. In the event that LG&E Energy is a party to any
consolidation, recapitalization, merger, share exchange or other business
combination in which all or a part of the outstanding LG&E Energy Common Stock
is changed into or exchanged for stock or other securities of the other entity
or LG&E Energy, or for cash or other property, the stock account of a
participating director shall be converted to such new securities or
consideration equal to the amount each share of LG&E Energy Common Stock
receives, multiplied by the number of share equivalents in the stock account.
A director will be eligible to receive a distribution from his or her
account only upon termination of service, death, retirement or otherwise.
Following departure from the Board, the distribution will occur, at the
director's election, either in one lump sum or in no more than five annual
installments. The distribution will be made, at the director's election, either
in LG&E Energy Common Stock or in cash equal to the then-market price of the
LG&E Energy Common Stock allocated to the director's stock account. At February
15, 1995, six directors were participating in the Deferred Stock Plan.
4
<PAGE>
Non-employee directors also receive stock options pursuant to the LG&E
Energy Corp. Stock Option Plan for Non-Employee Directors (the "Directors'
Option Plan"), which was approved by the shareholders at the 1994 annual
meeting. Under the terms of the Directors' Option Plan, upon initial election or
appointment to the Board, each new director, who has not been an employee or
officer of the company within the preceding three years, receives an option
grant for 2,000 shares of LG&E Energy Common Stock. Following these initial
grants, eligible directors will receive an annual grant of an option for 2,000
shares on the first Wednesday of each February. The option exercise price per
share for each share of LG&E Energy Common Stock is the fair market value on the
grant date. Options granted are not exercisable during the first twelve months
from the date of grant and will terminate 10 years from the date of grant. In
the event of a tender offer or an exchange offer for shares of LG&E Energy
Common Stock, all then exercisable, but unexercised options granted under the
Directors' Option Plan will continue to be exercisable for thirty days following
the first purchase of shares pursuant to such tender or exchange offer.
The Directors' Option Plan authorizes the issuance of up to 250,000 shares
of LG&E Energy Common Stock, of which 36,000 are subject to existing options at
a weighted average per share price of $39.00. Information on the number of
exercisable options held by each non-employee director is shown in footnote 3
under "Ownership of LG&E Energy Common Stock" on page 6 of this proxy statement.
The number of shares subject to the Directors' Option Plan and subject to awards
outstanding under the plan will adjust with any stock dividend or split,
recapitalization, reclassification, merger, consolidation, combination or
exchange of shares, or any similar corporate change.
AUDIT COMMITTEE
The Audit Committee of the Board is composed of Messrs. Dabney, Brown,
Gardner and Lewis, Dr. Swain and Mrs. McNamara. During 1994, the Audit Committee
maintained direct contact with the independent auditors and LG&E Energy's
Internal Auditor to review the following matters: the adequacy of LG&E Energy's
and its subsidiaries' accounting and financial reporting procedures; the
adequacy and effectiveness of LG&E Energy's and its subsidiaries' system of
internal accounting controls; the scope and results of the annual audit and any
other matters relative to the audit of LG&E Energy's and its subsidiaries'
accounts and its financial affairs that the Committee, the Internal Auditor, or
the independent auditors deemed necessary. The Audit Committee met three times
during 1994.
COMPENSATION COMMITTEE
The Compensation Committee, composed of non-employee directors, approves the
compensation of the Chief Executive Officer and the executive officers of LG&E
Energy and its subsidiaries. The Committee makes recommendations to the full
Board regarding benefits provided to executive officers and the establishment of
various employee benefit plans. The members of the Compensation Committee are
Messrs. Ballard, Dabney, Gardner, Grissom and Morton and Mrs. McNamara. The
Compensation Committee met three times during 1994.
NOMINATING AND DEVELOPMENT COMMITTEE
The Nominating and Development Committee is composed of the Chairman of the
Board and certain other directors. The Committee reviews and recommends to the
Board of Directors nominees to serve on the Board and their compensation. The
Committee considers nominees suggested by other members of the Board, by members
of management and by shareholders. To be considered for inclusion in the slate
of nominees proposed by the Board of Directors at an annual meeting, shareholder
recommendations must be submitted in writing to the Secretary of LG&E Energy not
later than 120 days prior to the meeting. In addition, the Articles of
Incorporation and Bylaws of LG&E Energy contain procedures governing shareholder
nominations for election of directors at a shareholders' meeting. The Chairman
of the Annual Meeting may refuse to acknowledge the nomination of any person not
made in compliance with these procedures. The Nominating and Development
Committee also provides advice and counsel as necessary to executive management
concerning business development activities of LG&E Energy.
5
<PAGE>
The members of the Nominating and Development Committee are Messrs. Ballard,
Brown, Grissom, Hale, Lewis and Morton, and Dr. Swain. The Nominating and
Development Committee met twice during 1994.
OWNERSHIP OF LG&E ENERGY COMMON STOCK
LG&E Energy does not know of any shareholder who, as of February 15, 1995,
beneficially owned more than five percent of LG&E Energy's outstanding Common
Stock.
The table below shows information as of February 15, 1995, concerning
beneficial ownership by each director, each nominee for director, each executive
officer named in the Summary Compensation Table beginning on page 14 of this
proxy statement (the "Summary Compensation Table"), and all directors and
executive officers as a group. Unless otherwise indicated, each person has sole
investment and voting power (or shares such powers with a member of his or her
family) with respect to the shares set forth on the following table.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED
NAME OF BENEFICIAL OWNER (1)(2)(3)
- ------------------------------------------------------------------ ------------
<S> <C>
William C. Ballard, Jr. 8,402
Owsley Brown II 3,000
David R. Carey 12,811
Edward J. Casey, Jr. 16,104
S. Gordon Dabney 4,800
Gene P. Gardner 6,850
J. David Grissom 4,718
Roger W. Hale 39,607
David B. Lewis 2,400
Anne H. McNamara 2,300
T. Ballard Morton, Jr. 5,000
Victor A. Staffieri 7,534
Donald C. Swain 2,300
Stephen R. Wood 13,193
All Directors and Executive Officers as a group (4) 139,266
<FN>
- ------------------------
(1) Does not include the following shares of Energy Common Stock credited to
participating director's accounts under the Deferred Stock Plan as of
February 15, 1995: Mr. Brown, 539.82 shares; Mr. Dabney, 2,553.47 shares;
Mr. Gardner, 2,539.11 shares; Mrs. McNamara, 787.83 shares; Mr. Morton,
2,504.85 shares; and Dr. Swain, 674.98 shares.
(2) Includes shares subject to stock options granted under LG&E Energy's
Omnibus Long-Term Incentive Plan, exercisable within 60 days following
February 15, 1995, as follows: Mr. Hale, 14,961 shares; Mr. Carey, 10,562
shares; Mr. Casey, 12,971 shares; Mr. Staffieri, 6,974 shares; and Mr.
Wood, 10,760 shares.
(3) Includes 2,000 shares subject to stock options granted under the Directors'
Option Plan, exercisable within 60 days following February 15, 1995, for
each of Messrs. Ballard, Brown, Dabney, Gardner, Grissom, Lewis and Morton,
and Mrs. McNamara and Dr. Swain.
(4) For each director and nominee, the number of shares of LG&E Energy Common
Stock beneficially owned as of February 15, 1995, is less than two tenths
of one percent of the total LG&E Energy Common Stock outstanding on that
date, and the total number of shares beneficially owned by all directors
and executive officers as a group is less than one-half of one percent of
the then-outstanding LG&E Energy Common Stock. In the case of employees,
the share total shown includes 4,284 shares of LG&E Energy Common Stock
representing an interest in shares held in
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
trust under LG&E's Employee Stock Ownership Plan, with respect to which
employees have voting power but not investment power, and 87,520 stock
options granted under LG&E Energy's Omnibus Long-Term Incentive Plan,
exercisable within 60 days of February 15, 1995.
</TABLE>
The Securities Exchange Act of 1934, as amended, requires LG&E Energy's
officers and directors to file reports of ownership and changes in ownership of
LG&E Energy Common Stock with the Securities and Exchange Commission. Based
solely on a review of the copies of such forms and amendments thereto received
by LG&E Energy, or written representations from the LG&E Energy officers and
directors that no Forms 5 were required to be filed, LG&E Energy believes that
during 1994 all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were met on a timely
basis, with two exceptions. Mr. Charles A. Markel III, Corporate Vice President
- -- Finance, timely filed a Form 5 for 1993, but inadvertently failed to disclose
beneficial ownership of shares held by his spouse in three separate accounts.
Amended Form 5s were filed promptly after learning of the omissions. Mr. M. Lee
Fowler, Vice President and Controller of LG&E, inadvertently failed to timely
file one report relating to four purchases of Common Stock made by his spouse
pursuant to voluntary cash contributions under the Dividend Reinvestment and
Stock Purchase Plan. The shares are held by his spouse as custodian for Mr. and
Mrs. Fowler's grandchildren. The purchases were promptly reported on Mr.
Fowler's Form 5 for 1994 upon learning of the omission.
PROPOSAL NO. 2
APPROVAL OF INDEPENDENT AUDITORS FOR 1995
Based upon the recommendation of the Audit Committee, the Board of
Directors, subject to ratification by shareholders, has selected Arthur Andersen
LLP as independent auditors to audit the accounts of LG&E Energy and LG&E for
the fiscal year ending December 31, 1995. Arthur Andersen has audited the
accounts of LG&E Energy since its organization in 1990, and has audited the
accounts of LG&E for many years. The shareholders previously approved the
employment of the firm at the Annual Meeting on May 24, 1994.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting. Such representatives will be given the opportunity to make a statement
if they so desire, and will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL
OF THE APPOINTMENT OF THE INDEPENDENT AUDITORS.
7
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
Decisions on the compensation of LG&E Energy's officers are made by the
Compensation Committee of the Board of Directors. Each member of the
Compensation Committee is a non-employee director, and all decisions of the
Compensation Committee relating to the compensation of LG&E Energy's executive
officers are reviewed by the full Board of Directors, with the exception of
long-term incentive plan administration, which is performed solely by the
Compensation Committee.
The executive compensation program was developed and implemented after
consultation with a worldwide, highly respected independent executive
compensation consultant. That consultant has concluded that the structure of the
executive compensation program and the target awards and opportunities provided
to executives are consistent with the compensation and pay programs of
comparable companies, including utilities and utility holding companies
nationwide. The Compensation Committee and the Board of Directors have continued
access to this compensation consultant as desired, and are provided with
independent compensation data for their review. Set forth below is a report
submitted by the members of the Compensation Committee addressing LG&E Energy's
compensation policies for 1994 which affect the executive officers of LG&E
Energy, including the executive officers named in the following tables.
COMPENSATION PHILOSOPHY
This report reflects LG&E Energy's compensation philosophy as set by the
Compensation Committee and the Board of Directors, and as reflected in the
salaries and awards paid to the executive officers of LG&E Energy and its
subsidiaries. There are three major components of LG&E Energy's executive
compensation program: (1) base salary; (2) short-term or annual incentives; and
(3) long-term incentives. LG&E Energy developed its executive compensation
program to focus on both short-term and long-term business objectives which are
designed to enhance overall shareholder value. The short-term and long-term
incentives are premised on the belief that the interests of executives should be
closely aligned with those of LG&E Energy's shareholders. Based on this
philosophy, these two portions of each executive's total compensation package
are placed at risk and are linked to the accomplishment of specific results that
are designed to benefit LG&E Energy's shareholders in both the short-term and
long-term. Under this pay-for-performance approach, a highly competitive level
of compensation can be earned in years of strong performance; conversely, in
years of below-average performance, compensation may decline below competitive
benchmarks.
The executive compensation program also recognizes that LG&E Energy's
compensation practices must be competitive with utilities, utility holding
companies, and other industries to ensure that a stable and successful
management team can be recruited and retained. The Compensation Committee
believes that the Company's most direct competitors for executive talent are not
limited to the companies that would be included in the utility industry index
against which shareholder returns may be compared. For this reason, the
compensation peer group is not the same as the utility industry index in the
Comparison of Five-Year Total Return graph included on page 13 of this Proxy
Statement. In order to establish competitive compensation levels for all
executive positions, the Compensation Committee establishes salaries and
short-term incentive levels based upon compensation data from three utility and
three all-industry surveys (the "Survey Group"), the latter of which primarily
consists of non-utility businesses with annual revenues of $0.5 billion to $2.5
billion. Long-term incentive levels, however, are established by the
Compensation Committee based upon compensation data from a survey of utilities
and utility holding companies (the "Long-Term Survey Group") compiled by a
national compensation consulting firm. In 1994, there were 61 utilities and
utility holding companies in the Long-Term Survey Group. The Compensation
Committee utilizes the Long-Term Survey Group for purposes of establishing
long-term incentive levels because the long-term financial performance goals of
the Company can be measured more effectively against the utilities in the
Long-Term Survey Group, rather than the Survey Group.
8
<PAGE>
The Compensation Committee establishes a target salary (the "Position Rate")
for each executive at approximately the 65th percentile of the range for
executives in similar positions with companies in the Survey Group. Salaries,
short-term and long-term incentives are based on this Position Rate as described
below.
In 1993, a new Federal tax law was passed which limits the deductibility of
executive compensation in excess of $1,000,000 unless certain exceptions are
met. Because the Company's executive compensation programs qualify for these
exceptions under transition rules adopted by the Internal Revenue Service, this
new law is not expected to impact the Company's executive compensation practices
in 1995. The Compensation Committee is reviewing the tax law and associated
regulations, as well as the structure of its salary, short-term and long-term
incentive programs.
The compensation information set forth in other sections of this proxy
statement, particularly with respect to the tabular information presented,
reflects the considerations set forth in this report. The Base Salary,
Short-Term Incentives, and Long-Term Incentives sections that follow address the
compensation philosophy for all executive officers except for Mr. Roger W. Hale.
Mr. Hale's compensation is determined in accordance with the terms of his
Employment Agreement (see Chief Executive Officer Compensation on page 11 of
this proxy statement).
BASE SALARY
The base salaries for LG&E Energy executive officers are designed to be
competitive with the Survey Group. The Position Rate represents the maximum base
salary that an executive officer may receive and, as stated above, approximates
the salary at the 65th percentile of the range for executives in similar
positions with companies in the Survey Group. Actual base salaries are
determined based on individual performance and experience.
SHORT-TERM INCENTIVES
The short-term or annual incentives provide direct financial compensation to
executives and reward them for meeting performance measures which are
established at the beginning of each performance year. The performance goals are
set with consideration for economic and business factors known to Company
management, the Compensation Committee and the Board at the time the goals are
established. The factors include external competition, inflation, financial and
market data and trends, as well as certain standards of excellence consistent
with core company values. In 1994, short-term incentive payments for executive
officers were based from 50% to 75% on Net Income Available for Common Stock
(NIAC), 25% on Management Effectiveness, and from 10% to 25% on Customer
Satisfaction. The percentages varied within the executive officer group based
upon the nature of each individual's functional responsibilities, with more
senior officers having a greater percentage of their short-term incentives based
on NIAC. This component of the executive compensation program focuses executives
on the tasks most immediately at hand and is based upon priorities which are
tailored for each performance year.
In 1994, the short-term incentive targets (the "targeted amounts") ranged
from 26% to 41% of Position Rate for each executive officer and approached the
65th percentile of the level of such awards granted to comparable executives
employed by companies in the Survey Group. The individual officers are entitled
to receive from 0% to 150% of their targeted amounts, dependent upon Company and
individual performance during 1994 as measured by NIAC, Management Effectiveness
and Customer Satisfaction. Based on such performances, payouts of the short-term
awards for 1994 ranged from 29% to 51% of each executive officer's targeted
amount.
LONG-TERM INCENTIVES
On June 11, 1990, the shareholders of LG&E Energy approved the Omnibus
Long-Term Incentive Plan (the "Long-Term Plan"). The Long-Term Plan is
administered by a committee of not less than three directors of LG&E Energy who
are appointed by the Board of Directors. At this time, the Compensation
Committee administers the Long-Term Plan. The Long-Term Plan provides for the
9
<PAGE>
grant of any or all of the following types of awards: stock options, stock
appreciation rights, restricted stock, performance units and performance shares.
To date, the Compensation Committee has chosen to award stock options, stock
appreciation rights and performance units to executive officers.
The Compensation Committee establishes an aggregate amount of long-term
incentives by grouping the executives into four categories, based on job
description and content. The Compensation Committee sets within each group the
percentage of an individual's Position Rate to be paid in options and the amount
to be paid in performance units. The aggregate value of the stock options and
performance units (expressed as a percentage of Position Rate) is intended to
approach the amount of long-term incentives (expressed as a percentage of
salary) payable to executives in similar positions with utilities and utility
holding companies in the 65th percentile of the Long-Term Survey Group,
depending upon achievement of targeted Company performance.
Stock options are awarded annually at fair market value at the time of grant
and vest after one year has elapsed. Options are granted with an exercise price
equal to the market value of the Common Stock at the time of grant, so they
provide no value unless the Company's stock price increases after the grants are
awarded. Vested options are exercisable over a nine-year term. Compensation
awards are thus tied to stock price appreciation in excess of the stock's value
at time of grant, rewarding executives as if they shared in the ownership of
LG&E Energy. The number of shares subject to options is determined by taking the
percentage of the executive's Position Rate to be paid in options, as determined
above, and dividing that amount by the fair market value of LG&E Energy Common
Stock on the date of the grant. Prior awards are not considered when making new
grants.
The number of performance units granted is determined by taking the amount
of the executive's Position Rate to be paid in performance units, as determined
above, and dividing that amount by the fair market value of LG&E Energy Common
Stock on the date of the grant. The value of the performance units is
substantially dependent upon the changing value of LG&E Energy's Common Stock in
the marketplace. Each executive officer is entitled to receive from 0% to 150%
of the performance units contingently awarded to the executive based on the
Company's:
(1) total shareholder return, defined as share price increase plus dividends
paid, divided by share price at beginning of the period ("Total
Shareholder Return"); and
(2) return on invested capital ("ROIC") over a three-year period measured
against a pre-established, internally set goal.
Total Shareholder Return is determined through comparing LG&E Energy's total
shareholder return over a three-year period to that of the utility holding
companies and gas and electric utilities in the Salomon Brothers Electric
Utility Index at the time the Long-Term Plan was established in 1990.*
Payouts of long-term incentive awards in February 1995 were based on Company
performance during the 1992-1994 period. During such period, LG&E Energy
exceeded the target level for Total Shareholder Return, but was somewhat below
target in its ROIC performance. Performance was at the 95th percentile of its
comparison group with respect to Total Shareholder Return, and at 80% of
targeted ROIC performance, resulting in payouts of 115% of the contingent
awards. Because of
- ------------------------
* While similar, the utilities and utility holding companies that were in the
Salomon Brothers Electric Utility Index in 1990 are not necessarily the same
as those in the Standard & Poor's Utility Index used in the Company
Performance Graph on page 13 of this proxy statement. The Salomon Brothers
Index was selected by the Compensation Committee at the time awards were
originally made under the Long-Term Plan. The companies included in the index
at that time continue to be used to determine Total Shareholder Return,
subject to eliminations due to merger or takeover activity. In the judgment of
the Compensation Committee, these companies continue to represent an
appropriate peer group for compensation purposes.
10
<PAGE>
changes to effective tax rates produced through the adoption of the Revenue
Reconciliation Act of 1993, the Compensation Committee determined in 1993 that
50% of the 1993 performance unit awards be paid in LG&E Energy Common Stock and
50% in cash, rather than 65% in stock and 35% in cash, as in 1992. For the same
reason, the performance units awarded in 1991 and 1992 also were changed to a
50%/50% payout from a 65%/35% payout, and the 1994 performance unit awards were
paid 50% in LG&E Energy Common Stock and 50% in cash.
In December 1994, special one-time stock option awards through the Long-Term
Plan were granted to two key business unit executives to provide them with
additional incentive to grow their business units consistent with increasing
shareholder value. Mr. Casey, Group President -- Energy Services, and Mr.
Staffieri, President -- LG&E, were granted 25,000 and 20,000 stock options,
respectively, in addition to their annual grants under the Long-Term Plan. These
additional options vest 50% in 1996 and 50% in 1998. All other terms of these
one-time stock option grants match the terms of the annual stock options granted
to all LG&E Energy and LG&E executives under the Long-Term Plan.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of the Chief Executive Officer of LG&E Energy, Mr. Roger W.
Hale, is governed by the terms of an employment agreement. Mr. Hale originally
entered into an employment agreement with LG&E in April 1989. That agreement was
developed to induce him to move to LG&E from another company, and was updated by
Board action in 1990. The term of Mr. Hale's original employment agreement was
to expire by its terms on December 31, 1994.
In recognition of Mr. Hale's continued importance to the performance of LG&E
Energy and his significant contributions to LG&E Energy, including particularly
his leadership role in transforming LG&E, a local utility company, into LG&E
Energy, a national (and, increasingly, international) diversified energy
services company, the Compensation Committee in late 1993 negotiated with Mr.
Hale to retain his services beyond the term of his original agreement.
Consequently, Mr. Hale entered into a new employment agreement with LG&E Energy,
effective in November 1993. The term of this new agreement (the "Agreement")
extends through December 31, 1998. The Agreement provides for an increase in Mr.
Hale's minimum base salary, and provides that Mr. Hale may elect to retire and
commence payment of his retirement benefits on or after age 50 (see page 18 of
this proxy statement).
The Agreement dictates the level of Mr. Hale's minimum compensation, but the
Compensation Committee retains discretion to increase such compensation. The
Compensation Committee compares Mr. Hale's compensation to that for chief
executive officers of companies contained in the Survey Group, as well as
approximately 20 electric and gas utilities and utility holding companies, with
comparable revenues, market capitalization and asset size. In setting long-term
awards, the Company also considers survey data from various compensation
consulting firms. Details of Mr. Hale's 1994 compensation are set forth below.
BASE SALARY. Mr. Hale was paid a base salary of $410,000 during 1994. The
Agreement provides that his salary shall not be less than his 1993 salary of
$385,000 and is to be reviewed as of each January 1 by the Compensation
Committee. The Compensation Committee, in determining the annual salary
increase for 1994, focused on Mr. Hale's individual performance (including
his management effectiveness, as described below) and the level of increases
provided to other LG&E Energy and LG&E employees. The 1994 increase was
6.6%.
SHORT-TERM INCENTIVE. Mr. Hale's target short-term incentive award is 50%
of base salary, as dictated by the Agreement. Like all other executive
officers receiving short-term incentive awards, Mr. Hale may receive from 0
to 150% of the targeted amount, based on Company performance and individual
performance. His 1994 short-term incentive payout was based 75% on corporate
NIAC performance, and 25% on Management Effectiveness.
11
<PAGE>
The resulting payout for 1994 performance was 65% of base salary. The
Compensation Committee considered Mr. Hale's management effectiveness in
several areas in determining the final 1994 award. These included the
increased profitability of LG&E Energy and LG&E, profitability of LG&E
Energy subsidiaries, customer satisfaction rating, and other measures.
LONG-TERM INCENTIVE PAYOUT. In 1994, Mr. Hale received 4,787 options and
10,637 performance units. These amounts were determined in accordance with
the terms of his Agreement, which provides that his long-term incentive
awards shall include target awards of performance units with a value not
less than 100% of base salary, and stock options with a market value at
grant of not less than 45% of base salary. The terms of the options and
performance units (including the manner in which performance units are
earned) for Mr. Hale are the same as for other executive officers, as
described under the heading "Long-Term Incentives."
In the 1992-1994 period, LG&E Energy exceeded the target for Total
Shareholder Return, but was somewhat below target in its ROIC performance.
Performance was at the 95th percentile of its comparison group in Total
Shareholder Return, and at 80% of targeted ROIC performance. That resulted
in a payout equal to 115% of the approved target. In addition, the market
value of LG&E Energy Common Stock increased from $30.56 at grant to $36.88
during the performance period. This further increased the value of the
payout of the performance units awarded to Mr. Hale in 1992.
OTHER BENEFITS. Mr. Hale receives LG&E Energy contributions to thrift and
savings plans, similar to those of other employees.
CONCLUSION
The Compensation Committee believes that the Company's current executive
compensation system serves the interests of the Company and its shareholders
effectively. The Compensation Committee takes very seriously its
responsibilities with respect to the Company's executive compensation system. To
this end, the Compensation Committee will continue to monitor and revise the
compensation policies as necessary to ensure that the Company's compensation
system continues to meet the needs of the Company and its shareholders.
MEMBERS OF THE COMPENSATION COMMITTEE
William C. Ballard, Jr., Chairman
S. Gordon Dabney
Gene P. Gardner
J. David Grissom
Anne H. McNamara
T. Ballard Morton, Jr.
12
<PAGE>
COMPANY PERFORMANCE
The following graph reflects a comparison of the cumulative total return
(change in stock price plus reinvested dividends) to shareholders of LG&E Energy
Common Stock from December 29, 1989, through December 30, 1994, with the
Standard & Poor's 500 Composite Index and the Standard & Poor's Utility Index.
The comparisons in this table are required by the Securities and Exchange
Commission and, therefore, are not intended to forecast or be indicative of
possible future performance of LG&E Energy Common Stock.
COMPARISON OF FIVE YEAR YEAR CUMULATIVE
TOTAL SHAREHOLDER RETURN (1)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LG&E ENERGY S&P 500 S&P UTILITIES
<S> <C> <C> <C>
12/29/89 100 100 100
1990 104 97 97
1991 132 126 112
1992 156 136 121
1993 189 150 138
1994 183 152 127
<FN>
- ------------------------
(1) Total Shareholder Return assumes $100 invested on December 29, 1989, with
quarterly reinvestment of dividends.
</TABLE>
13
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table shows the cash compensation paid or to be paid by LG&E
Energy or any of its subsidiaries, as well as certain other compensation paid or
accrued for those years, to the Chief Executive Officer and the four most highly
compensated officers of LG&E Energy (including certain officers of subsidiaries
of LG&E Energy) in all capacities in which they served during 1992, 1993 and
1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
--------------------
ANNUAL COMPENSATION AWARDS
----------------------------------- ----------
OTHER SECURITIES PAYOUTS
ANNUAL UNDERLYING -------- ALL OTHER
COMPEN- OPTIONS/ LTIP COMPEN-
NAME AND SALARY BONUS SATION SARS PAYOUTS SATION
PRINCIPAL POSITION YEAR ($) ($) ($) (#) ($) ($)
- -------------------------------------------------- ---- ------------ -------- --------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Roger W. Hale 1994 $ 410,500 $266,825 $10,822 4,787 $506,584 12,819(1)
Chairman of the Board, 1993 385,000 261,800 9,387 4,807 604,341 11,417
President and CEO 1992 365,000 205,300 8,127 5,367 412,405 10,765
Edward J. Casey, Jr. 1994 235,000 142,945 6,058 28,200 55,504 7,661(1)
Group President -- 1993 193,000 120,566 441 2,553 48,195 6,874
LG&E Energy Services 1992 168,000 118,800 288 2,618 33,530 5,305
Victor A. Staffieri 1994 213,000 120,750 4,771 23,000 35,515 2,947(1)
President -- Louisville Gas and 1993 175,000 75,097 3,883 2,087 0 1,462
Electric Company 1992 130,625(2) 72,352 2,738 1,887 0 162,920(3)
Stephen R. Wood 1994 197,000 101,007 5,974 2,229 44,957 6,604(1)
Executive Vice President and Chief 1993 174,000 71,572 5,727 2,087 54,878 4,588
Administrative Officer 1992 163,000 57,445 3,171 2,357 38,640 3,653
David R. Carey 1994 177,000 62,100 3,705 2,073 39,388 5,144(1)
Senior Vice President -- Operations 1993 154,000 56,022 1,259 1,820 48,195 3,579
Louisville Gas and Electric 1992 145,000 46,446 317 2,069 34,825 3,401
Company
<FN>
- ------------------------
(1) Includes employer contributions to 401(k) plan, nonqualified thrift plan
and employer paid life insurance premiums in 1994 as follows: Mr. Hale
$2,970, $5,079 and $4,770, respectively; Mr. Casey $2,970, $3,991 and $700,
respectively; Mr. Staffieri $1,485, $0 and $1,462, respectively; Mr. Wood
$1,888, $3,430 and $1,286, respectively; and Mr. Carey $1,401, $3,213 and
$530, respectively.
(2) Reported compensation is only for a portion of the year. Mr. Staffieri
joined LG&E on March 15, 1992.
(3) Consists of moving and relocation expenses in excess of benefits available
to all salaried employees, and $610 in employer paid life insurance
premiums.
</TABLE>
14
<PAGE>
OPTION/SAR GRANTS TABLE
OPTION/SAR GRANTS IN 1994 FISCAL YEAR
The following table contains information at December 31, 1994, with respect
to grants of stock options and stock appreciation rights (SARs) to the named
executive officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
--------------------------- REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL
SECURITIES TOTAL EXERCISE RATES OF STOCK
UNDERLYING OPTIONS/SARS OR BASE PRICE APPRECIATION
OPTIONS/SARS GRANTED TO PRICE FOR OPTION TERM
GRANTED EMPLOYEES IN ($/ EXPIRATION ------------------------------
NAME (#) (1) FISCAL YEAR SHARE) DATE 0%($) 5%($) 10%($)
- ---------------------------------------- ------------ ------------ -------- ---------- ------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Roger W. Hale 4,787 4.7% $ 38.59 2/2/2004 0 $ 116,176 $ 294,413
Edward J. Casey, Jr. 3,200 3.1 38.59 2/2/2004 0 77,661 196,808
Edward J. Casey, Jr. 25,000(2) 24.4 37.38 12/8/2004 0 587,702 1,489,352
Victor A. Staffieri 3,000 2.9 38.59 2/2/2004 0 72,807 184,508
Victor A. Staffieri 20,000(2) 19.5 37.38 12/8/2004 0 470,162 1,191,482
Stephen R. Wood 2,229 2.2 38.59 2/2/2004 0 54,096 137,089
David R. Carey 2,073 2.0 38.59 2/2/2004 0 50,310 127,495
<FN>
- ------------------------
(1) Options are awarded at fair market value at time of grant; unless otherwise
indicated, options vest in one year and are exercisable over a ten-year
term.
(2) Options vest 50% in 1996 and 50% in 1998.
</TABLE>
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION/SAR EXERCISES IN 1994 FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table sets forth information with respect to the named
executive officers concerning the exercise of options and/or SARs during 1994
and the value of unexercised options and SARs held by them as of December 31,
1994:
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS OPTIONS/SARS AT
ON VALUE AT FY-END (#) FY-END ($)(1)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------------------------------- -------- -------- ------------- ----------------
<S> <C> <C> <C> <C>
Roger W. Hale 10,063 $114,270 10,174/4,787 $37,907/$0
Edward J. Casey, Jr. 0 N/A 9,771/28,200 66,455/0
Victor A. Staffieri 0 N/A 3,974/23,000 14,433/0
Stephen R. Wood 0 N/A 8,531/2,229 58,371/0
David R. Carey 0 N/A 8,489/2,073 62,376/0
<FN>
- ------------------------
(1) Dollar amounts reflect market value of LG&E Energy Common Stock at
year-end, minus the exercise price.
</TABLE>
15
<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS TABLE
LONG-TERM INCENTIVE PLAN AWARDS IN 1994 FISCAL YEAR
The following table provides information concerning awards made in 1994 to
the named executive officers under the Long-Term Plan.
<TABLE>
<CAPTION>
NUMBER PERFORMANCE
OF OR ESTIMATED FUTURE PAYOUTS UNDER
SHARES, OTHER PERIOD NON-STOCK PRICE BASED PLANS
UNITS OR UNTIL (NUMBER OF SHARES) (1)
OTHER MATURATION -------------------------------------
NAME RIGHTS OR PAYOUT THRESHOLD(#) TARGET(#) MAXIMUM(#)
- ------------------------------------------------------------ --------- ------------ ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Roger W. Hale 10,637 12/31/96 4,787 10,637 15,956
Edward J. Casey, Jr. 2,203 12/31/96 991 2,203 3,305
Victor A. Staffieri 2,073 12/31/96 933 2,073 3,110
Stephen R. Wood 1,114 12/31/96 501 1,114 1,671
David R. Carey 933 12/31/96 420 933 1,400
<FN>
- ------------------------------
(1) The table indicates the number of performance units which are paid 50% in
stock and 50% in cash at maturation.
</TABLE>
Each performance unit awarded represents the right to receive an amount
payable 50% in LG&E Energy Common Stock and 50% in cash on the date of payout,
the latter portion being payable in cash in order to facilitate the payment of
taxes by the recipient. The amount of the payout is determined by the then-fair
market value of LG&E Energy Common Stock. The Long-Term Plan rewards executives
on a three-year rolling basis dependent upon: (1) the total shareholder return
for shareholders and (2) return on capital. The target for award eligibility
requires that LG&E Energy shareholders earn a total return at a preset level in
comparison to that of the utility holding companies and gas and electric
utilities in the Salomon Brothers Electric Utilities Index. The return on
capital component of the Long-Term Plan is triggered by the actual return on
capital exceeding preset levels of achievement established by the Compensation
Committee prior to commencement of the period. The Committee sets a contingent
award for each management level selected to participate in the Plan and such
amount is the basis upon which incentive compensation is determined. Depending
on the level of achievement, the participant can receive from zero to 150% of
the contingent award amount. Payments made under the Long-Term Plan in 1994 are
reported in the summary compensation table for the year of payout.
16
<PAGE>
PENSION PLANS
The following table shows the estimated pension benefits payable to a
covered participant at normal retirement age under LG&E Energy's qualified
defined benefit pension plans, as well as non-qualified supplemental pension
plans that provide benefits that would otherwise be denied participants by
reason of certain Internal Revenue Code limitations for qualified plan benefits,
based on the remuneration that is covered under the plan and years of service
with the Company and its subsidiaries:
1994 PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------
REMUNERATION 15 20 25 30 OR MORE
- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
$100,000 $ 50,236 $ 50,236 $ 50,236 $ 56,483
$150,000 $ 82,236 $ 82,236 $ 82,236 $ 86,183
$200,000 $ 114,236 $ 114,236 $ 114,236 $ 114,236
$250,000 $ 146,236 $ 146,236 $ 146,236 $ 146,236
$300,000 $ 178,236 $ 178,236 $ 178,236 $ 178,236
$350,000 $ 210,236 $ 210,236 $ 210,236 $ 210,236
$400,000 $ 242,236 $ 242,236 $ 242,236 $ 242,236
$450,000 $ 274,236 $ 274,236 $ 274,236 $ 274,236
$500,000 $ 306,236 $ 306,236 $ 306,236 $ 306,236
$550,000 $ 338,236 $ 338,236 $ 338,236 $ 338,236
$600,000 $ 370,236 $ 370,236 $ 370,236 $ 370,236
$650,000 $ 402,236 $ 402,236 $ 402,236 $ 402,236
$700,000 $ 434,236 $ 434,236 $ 434,236 $ 434,236
$750,000 $ 466,236 $ 466,236 $ 466,236 $ 466,236
$800,000 $ 498,236 $ 498,236 $ 498,236 $ 498,236
</TABLE>
A participant's remuneration covered by the Retirement Income Plan (the
"Retirement Income Plan") is his or her average base salary and short-term
incentive payment (as reported in the Summary Compensation Table) for the five
calendar plan years during the last ten years of the participant's career for
which such average is the highest. The estimated years of service for each named
executive is as follows: 4 years for Mr. Carey; 4 years for Mr. Casey; 28 years
for Mr. Hale; 2 years for Mr. Staffieri; and 5 years for Mr. Wood. Benefits
shown are computed as a straight life single annuity beginning at age 65.
Current Federal law prohibits paying benefits under the Retirement Income
Plan in excess of $118,800 per year. Officers of LG&E Energy and LG&E with at
least one year of service with either company are eligible to participate in
LG&E's Supplemental Executive Retirement Plan (the "Supplemental Executive
Retirement Plan"), which is an unfunded supplemental plan that is not subject to
the $118,800 limit. Presently, participants in the Supplemental Executive
Retirement Plan consist of all of the eligible officers of LG&E Energy and LG&E.
This plan provides generally for retirement benefits equal to 64% of average
current earnings during the final 36 months prior to retirement, reduced by
Social Security benefits, by amounts received under the Retirement Income Plan
and by benefits from other employers. As part of its employment agreement with
Mr. Hale, LG&E established a separate Supplemental Executive Retirement Plan.
The special plan generally provides for a retirement benefit for Mr. Hale of 2%
for each of his first 20 years of service with LG&E Energy, LG&E or with certain
prior employers, 1.5% for each of the next 10 years of service and 1% for each
remaining year of service completed prior to age 65, all multiplied by Mr.
Hale's final 60 months average compensation, less benefits payable from the
Retirement Income Plan, benefits payable from any other qualified or
nonqualified plan sponsored by LG&E Energy, LG&E or certain prior employers,
17
<PAGE>
and primary Social Security benefits. Under Mr. Hale's employment agreement (see
page 11 of this proxy statement), he may elect to commence payment of his
retirement benefits at age 50. If he retires prior to age 65, Mr. Hale's
benefits will be reduced by factors set forth in the employment agreement.
The estimated annual benefits to be received under the Retirement Income
Plan and the Supplemental Executive Retirement Plans upon normal retirement at
age 65 and after deduction of Social Security benefits will be $141,696 for Mr.
Carey; $236,292 for Mr. Casey; $382,116 for Mr. Hale; $208,800 for Mr.
Staffieri; and $185,268 for Mr. Wood.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Ballard, Dabney, Gardner, Grissom and Morton, and Mrs. McNamara
served as members of the Compensation Committee during 1994. None of the members
of the Compensation Committee are or were officers or employees of LG&E Energy
or its subsidiaries. Mr. Ballard is of counsel to the law firm of Greenebaum
Doll & McDonald, which provides legal services to LG&E Energy from time to time.
EMPLOYMENT CONTRACT AND TERMINATION OF EMPLOYMENT
ARRANGEMENTS AND CHANGE IN CONTROL PROVISIONS
In November 1993, Mr. Hale entered into a new employment agreement with LG&E
Energy superseding the prior agreement. The new agreement was effective upon its
execution, and extends through December 31, 1998. Under the new agreement, Mr.
Hale is entitled to an annual base salary of not less than $385,000, subject to
annual review by the Compensation Committee, and to participate in the
Short-Term Plan and the Long-Term Plan. Mr. Hale's arrangement with LG&E Energy
provides for a stock option target award of not less than 45% of base salary and
a long-term incentive target award of not less than 100% of base salary. LG&E
Energy's Board of Directors may terminate the agreement at any time and, if it
does so for reasons other than cause, LG&E Energy must pay Mr. Hale's base
salary for two years.
In the event of a change in control, all officers of LG&E Energy shall be
entitled to the following payments if, within twenty-four months after such
change in control, they are terminated for reasons other than cause or
disability, or their employment responsibilities are altered: (i) all accrued
compensation; (ii) a severance amount equal to 2.99 times the sum of (a) his or
her annual base salary and (b) his or her "target" award pursuant to the
Short-Term Plan. However, in no event is the payment to the executive to equal
or exceed an amount which would constitute a nondeductible payment pursuant to
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), or
be subject to an excise tax imposed by Section 4999 of the Code. The executive
is entitled to receive such amounts in a lump-sum payment within thirty days of
termination. A change in control encompasses certain mergers and acquisitions,
changes in Board membership and acquisitions of voting securities of LG&E
Energy.
Also upon a change in control of LG&E Energy, all stock-based awards shall
vest 100%, and all performance-based awards, such as performance units and
performance shares, shall immediately be paid out in cash, based upon the extent
to which the performance goals have been met through the effective date of the
change in control or based upon the assumed achievement of such goals, whichever
amount is higher.
18
<PAGE>
SHAREHOLDER PROPOSALS
FOR 1996 ANNUAL MEETING
Any shareholder may submit a proposal for consideration at the 1996 Annual
Meeting. Any shareholder desiring to submit a proposal for inclusion in the
proxy statement for consideration at the 1996 Annual Meeting should forward the
proposal so that it will be received at LG&E Energy's principal executive
offices no later than November 7, 1995. Proposals received by that date that are
proper for consideration at the Annual Meeting and otherwise conforming to the
rules of the Securities and Exchange Commission will be included in the 1996
proxy statement.
OTHER MATTERS
At the Annual Meeting, it is intended that the first two items set forth in
the accompanying notice and described in this proxy statement will be presented.
Should any other matter be properly presented at the Annual Meeting, the persons
named in the accompanying proxy will vote upon them in accordance with their
best judgment. The Board of Directors knows of no other matters which may be
presented at the meeting.
LG&E Energy will bear the costs of this proxy solicitation. LG&E Energy will
provide copies of this proxy statement, the accompanying proxy and the Annual
Report to brokers, dealers, banks and voting trustees, and their nominees, for
mailing to beneficial owners, and upon request therefor, will reimburse such
record holders for their reasonable expenses in forwarding solicitation
materials. In addition to using the mails, proxies may be solicited by
directors, officers and regular employees of LG&E Energy or its subsidiaries, in
person or by telephone. LG&E Energy and LG&E have retained D.F. King & Co.,
Inc., a firm of professional proxy solicitors, to assist in the solicitations at
an estimated fee of $5,000 plus reimbursement of reasonable expenses.
ANY SHAREHOLDER MAY OBTAIN WITHOUT CHARGE A COPY OF LG&E ENERGY'S ANNUAL
REPORT ON FORM 10-K, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR
THE YEAR 1994, BY SUBMITTING A REQUEST IN WRITING TO: JOHN R. MCCALL, SECRETARY,
LG&E ENERGY CORP., P.O. BOX 32030, 220 WEST MAIN STREET, LOUISVILLE, KENTUCKY
40232.
19
<PAGE>
[ LOGO ]
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 25, 1995
The Annual Meeting of Shareholders of LG&E Energy Corp. will be held on
Tuesday, April 25, 1995, at 10:00 a.m., E.D.T. at the Hyatt Regency Louisville,
320 West Jefferson Street, Louisville, Kentucky. The left side of this form is a
ticket request form. If you plan to attend the Annual Meeting, please complete
the ticket request form and return it with your proxy. An admission ticket will
be mailed to you prior to the meeting. If you wish to attend the meeting but do
not have a ticket, you will be admitted to the meeting after presenting
personal identification and proof of ownership.
THE BOTTOM RIGHT PORTION OF THIS FORM IS THE PROXY CARD. Each proposal is fully
explained in the enclosed Notice of Annual Meeting of Shareholders and Proxy
Statement. To vote your proxy, please MARK by placing an "X" in the appropriate
box, SIGN and DATE the proxy. Then please DETACH and RETURN the completed proxy
promptly in the enclosed envelope.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
DETACH HERE DETACH HERE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PROXY
COMMON
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below (except as marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME)
OWSLEY BROWN II
GENE P. GARDNER
J. DAVID GRISSOM
2. APPROVAL OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS
/ / FOR / / AGAINST / / ABSTAIN
[ LOGO ]
LG&E ENERGY CORP.
220 WEST MAIN STREET
P.O. BOX 32030
LOUISVILLE, KENTUCKY 40232
- -------------------------------------- --------------------------------------
SIGNATURE SIGNATURE
- --------------------------- SIGNATURE(S) SHOULD CORRESPOND TO THE NAME(S)
DATE APPEARING IN THIS PROXY. IF EXECUTOR, TRUSTEE,
GUARDIAN, ETC. PLEASE INDICATE.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH HERE DETACH HERE
[ LOGO ]
LG&E ENERGY CORP.
220 WEST MAIN STREET
P.O. BOX 32030
LOUISVILLE, KENTUCKY 40232
TICKET REQUEST
(PLEASE RETURN THIS CARD BY APRIL 10, 1995)
------------------------------------
PLEASE SEND AN ADMITTANCE TICKET TO:
------------------------------------
NAME:
------------------------------------
ADDRESS:
------------------------------------
CITY: STATE: ZIP CODE:
------------------------------------
TELEPHONE NUMBER:
------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<PAGE>
LG&E ENERGY CORP.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- APRIL 25, 1995
Roger W. Hale, Victor A. Staffieri and Edward J. Casey, Jr. are hereby
appointed as proxies, with full power of substitution, to vote the shares of the
shareholder(s) named on the reverse side hereof, at the Annual Meeting of
Shareholders of LG&E Energy Corp. to be held on April 25, 1995, and at any
adjournment thereof, as directed on the reverse side hereof, and in their
discretion to act upon any other matters that may properly come before the
meeting or any adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED AS YOU SPECIFY. IF NOT SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS
1 AND 2. A VOTE FOR PROPOSAL 1 INCLUDES DISCRETIONARY AUTHORITY TO CUMULATE
VOTES SELECTIVELY AMONG THE NOMINEES AS TO WHOM AUTHORITY TO VOTE HAS NOT BEEN
WITHHELD.
Please mark, sign and date this proxy on the reverse side and return the
completed proxy promptly in the enclosed envelope.
<PAGE>
[ LOGO ]
ANNUAL MEETING OF SHAREHOLDERS -- APRIL 25, 1995
The Annual Meeting of Shareholders of LG&E Energy Corp. will be held on
Tuesday, April 25, 1995, at 10:00 a.m., E.D.T. at the Hyatt Regency
Louisville, 320 West Jefferson Street, Louisville, Kentucky. The left side
of this form is a ticket request form. If you plan to attend the Annual
Meeting, please complete the ticket request form and return it with your
proxy. An admission ticket will be mailed to you prior to the meeting.
If you wish to attend the meeting but do not have a ticket, you will be
admitted to the meeting after presenting personal identification and proof
of stock ownership.
THE BOTTOM RIGHT PORTION OF THIS FORM IS THE PROXY CARD. Each proposal is
fully explained in the enclosed Notice of Annual Meeting of Shareholders
and Proxy Statement. To vote your proxy, please MARK by placing an "X" in
the appropriate box, SIGN and DATE the proxy. Then please DETACH and RETURN
the completed proxy promptly in the enclosed envelope.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH PROPOSAL.
DETACH HERE DETACH HERE
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PROXY
ESOP
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below (except as marked to the contrary below)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME)
OWSLEY BROWN II
GENE P. GARDNER
J. DAVID GRISSOM
2. APPROVAL OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS
/ / FOR / / AGAINST / / ABSTAIN
[ LOGO ]
LG&E ENERGY CORP.
220 WEST MAIN STREET
P.O. BOX 32030
LOUISVILLE, KENTUCKY 40232
- ------------------------------------- -------------------------------------
SIGNATURE SIGNATURE
- --------------------------- SIGNATURE(S) SHOULD CORRESPOND TO THE NAME(S)
DATE APPEARING IN THIS PROXY. IF EXECUTOR, TRUSTEE,
GUARDIAN, ETC. PLEASE INDICATE.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
DETACH HERE DETACH HERE
[ LOGO ]
LG&E ENERGY CORP.
220 WEST MAIN STREET
P.O. BOX 32030
LOUISVILLE, KENTUCKY 40232
TICKET REQUEST
(PLEASE RETURN THIS CARD BY APRIL 10, 1995)
--------------------------------------
PLEASE SEND AN ADMITTANCE TICKET TO:
--------------------------------------
NAME:
--------------------------------------
ADDRESS:
--------------------------------------
CITY: STATE: ZIP CODE:
--------------------------------------
TELEPHONE NUMBER
--------------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<PAGE>
LG&E ENERGY CORP.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- APRIL 25, 1995
Roger W. Hale, Victor A. Staffieri and Edward J. Casey, Jr. are
hereby appointed as proxies, with full power of substitution, to vote the
shares of the shareholder(s) named on the reverse side hereof, at the
Annual Meeting of Shareholders of LG&E Energy Corp. to be held on
April 25, 1995, and at any adjournment thereof, as directed on the
reverse side hereof, and in their discretion to act upon any other
matters that may properly come before the meeting or any adjournment
thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL
BE VOTED AS YOU SPECIFY. IF NOT SPECIFIED, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2. A VOTE FOR PROPOSAL 1 INCLUDES DISCRETIONARY AUTHORITY
TO CUMULATE VOTES SELECTIVELY AMONG THE NOMINEES AS TO WHOM AUTHORITY TO VOTE
HAS NOT BEEN WITHHELD.
Please mark, sign and date this proxy on the reverse side and return the
completed proxy promptly in the enclosed envelope.
