<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
(Amendment No. )
Filed by 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
The AES Corporation
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14-a6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock, par value .01 per share
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2) Aggregate number of securities to which transaction applies:
N/A
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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):
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N/A
4) Proposed maximum aggregate value of transaction:
N/A
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5) Total Fee paid:
N/A
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[ ] 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.
<PAGE> 2
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[AES LOGO]
The AES Corporation
1001 North 19th Street
Arlington, Virginia 22209
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, APRIL 15, 1997
March 24, 1997
The Annual Meeting of Stockholders of The AES Corporation (the "Company") will
be held on Tuesday, April 15, 1997, at 9:30 a.m. in the Company's corporate
offices at 1001 North 19th Street, Arlington, Virginia. Doors to the meeting
will open at 8:30 a.m.
The meeting will be conducted:
- To elect a board of eleven directors;
- To consider and vote on a proposal to ratify the appointment of Deloitte
& Touche LLP as independent auditors of the Company for the year 1997
(approved by the Board of Directors, and set forth in the following Proxy
Statement);
- To consider and vote on a proposal to amend The AES Corporation's Amended
and Restated Certificate of Incorporation to increase the number of
shares of Common Stock that the Company is authorized to issue from
100,000,000 to 500,000,000, and to increase the number of shares of
Preferred Stock that the Company is authorized to issue from 1,000,000 to
50,000,000; and
- To transact such other business as may properly come before the meeting.
Stockholders of record at the close of business on March 3, 1997 will be
entitled to notice of and to vote at this meeting.
/s/ WILLIAM R. LURASCHI
-----------------------------
William R. Luraschi
General Counsel and Secretary
EACH STOCKHOLDER IS REQUESTED TO EXECUTE AND PROMPTLY
RETURN THE ENCLOSED PROXY. A PREPAID ENVELOPE IS ENCLOSED.
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<PAGE> 3
PROXY STATEMENT
March 24, 1997
The accompanying proxy is solicited by the Board of Directors of The AES
Corporation (the "Company" or "AES") for use at the Annual Meeting of
Stockholders of the Company to be held on Tuesday, April 15, 1997 at 9:30 a.m.
at the Company's corporate offices at 1001 North 19th Street, Arlington,
Virginia 22209, or at any adjournment of such meeting. This Proxy Statement and
accompanying proxy are first being sent or given to stockholders on or about
March 24, 1997. If the proxy is properly executed and returned by mail, the
shares it represents will be voted at the meeting in accordance with the
instructions noted thereon. If no instructions are specified, the shares will be
voted for the election of the directors and in accordance with the Board of
Directors' recommendations as set forth herein. Any stockholder executing a
proxy has the power to revoke it at any time before it is voted by filing with
the Company a written notice of revocation, by delivering a duly executed proxy
bearing a later date, or by attending the Annual Meeting of Stockholders and
voting in person. Proxies marked as abstentions, or to withhold a vote from a
nominee as a director in the case of the election of directors, will have the
effect of a negative vote. Broker non-votes (where a nominee holding shares for
a beneficial owner has not received voting instructions from the beneficial
owner with respect to a particular matter and such nominee does not possess or
choose to exercise his discretionary authority with respect thereto) will be
considered as present at the meeting but not entitled to vote with respect to
the particular matter and will therefore have no effect.
The only securities of the Company entitled to be voted are shares of Common
Stock, and only holders of record of Common Stock at the close of business on
March 3, 1997 are entitled to notice of and to vote at the meeting. Holders of
Common Stock are entitled to one vote per share. There were 77,492,990 shares of
Common Stock outstanding at the close of business on March 3, 1997. The
Company's Annual Report for the fiscal year ended December 31, 1996 is being
delivered concurrently with this Proxy Statement.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors is composed of eleven members, nine of whom are not
officers of or otherwise employed by the Company. The Board of Directors met
nine times, including five telephone conferences, for 1996. Directors are to be
elected to hold office until the next Annual Meeting of Stockholders and until
their respective successors shall have been elected and qualified. Directors
shall be elected by a majority of the votes of the shares of Common Stock
present in person or represented by proxy at the Annual Meeting of Stockholders,
at which a quorum is present.
Roger W. Sant co-founded AES with Dennis Bakke in 1981. He has been Chairman of
the Board and a director of AES since its inception and he held the office of
Chief Executive Officer through December 31, 1993. He currently is Chairman of
AES China Generating Co. Ltd. ("AES Chigen"), which is an affiliate of the
Company, The Summit Foundation and The World Wildlife Fund U.S., and serves on
the Board of Directors of The World Resources Institute, the World Wide Fund for
Nature, and Marriott International, Inc. He was Assistant Administrator for
Energy Conservation and the Environment of the Federal Energy Agency ("FEA")
from 1974 to 1976 and the Director of the Energy Productivity Center, an energy
research organization affiliated with The Mellon Institute at Carnegie-Mellon
University, from 1977 to 1981.
Dennis W. Bakke co-founded AES with Roger Sant in 1981 and has been a director
of AES since 1986. He has been President of AES since 1987 and Chief Executive
Officer since January 1, 1994. He currently is a director of AES
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Chigen, which is an affiliate of the Company. From 1987 to 1993, he served as
Chief Operating Officer of AES; from 1982 to 1986, he served as Executive Vice
President of AES; and from 1985 to 1986, he also served as Treasurer of AES. He
served with Mr. Sant as Deputy Assistant Administrator of the FEA from 1974 to
1976 and as Deputy Director of the Energy Productivity Center from 1978 to 1981.
He is a trustee of Geneva College, Rivendell School and a member of the Board of
Directors of MacroSonics Corporation (Richmond, VA).
Vicki-Ann Assevero has been a director of AES since 1994. She currently is a
partner with the law firm of Holland & Knight specializing in international
governmental relations, business transactions and international investment law.
Prior to that, she was a partner in the law firm of Dalley, Neill, Assevero,
Carroll & Nealer and served as counsel to the African Business Round Table and
the governments of Cameroon, Cote d'Ivoire, Guinea and Trinidad and Tobago.
Alice F. Emerson has been a director of AES since 1993. Currently the Senior
Fellow at The Andrew W. Mellon Foundation, she was President of Wheaton College
in Massachusetts from 1975 to 1991, and prior to that served as Dean of Students
at the University of Pennsylvania. She is a member of the Boards of Directors of
the World Resources Institute, the Bank of Boston Corporation, Champion
International Corporation, Eastman Kodak Company, Public/Private Ventures and
Salzburg Seminar.
Robert F. Hemphill, Jr. has been a director of AES since June 1996. He served as
Executive Vice President of AES from 1982 to June 1996. He is also Vice Chairman
of the Board of AES Chigen, which is an affiliate of the Company. He currently
is the Managing Director of White Wolf Capital (a venture capital firm).
Frank Jungers was an advisor to the Board of AES from 1982 to 1983 and has been
a director of AES since 1983. He has been a private business consultant to
various companies since prior to 1992. Mr. Jungers is the retired Chairman of
the Board and Chief Executive Officer of the Arabian American Oil Company
("ARAMCO"). He currently serves on the Boards of Directors of Georgia-Pacific
Corporation, Thermo Electron Corporation, Thermo Ecotek Corporation, ThermoQuest
Corporation, Esco Corporation, and Donaldson, Lufkin & Jenrette, Inc. He is also
Chairman of the Advisory Board of Common Sense Partners, L.P. He is Chairman of
the College of Engineering Development Committee and member of the Visiting
Committee, The University of Washington. He is also Advisory Trustee of the
Board of Trustees, The American University in Cairo and serves as a Trustee to
the High Desert Museum.
Henry R. Linden has been a director of AES since 1987 and has been the Max
McGraw Professor of Energy and Power Engineering and Management at the Illinois
Institute of Technology since 1990, where he also was the Interim President and
Chief Executive Officer from 1989 to 1990. In addition, he served as Interim
Chairman and Chief Executive Officer of the Illinois Institute of Technology
Research Institute from 1989 to 1990. He has been an Executive Advisor to the
Gas Research Institute since 1987, where he was the President and Chief
Executive Officer from 1977 to 1987. Dr. Linden was also the F.W. Gunsaulus
Distinguished Professor of Chemical Engineering at the Illinois Institute of
Technology from 1987 to 1989. He currently serves on the Boards of Directors of
Centennial Holdings, Inc. (formerly Larimer & Co.), and Proton Energy Systems,
Inc.
John H. McArthur has been a director of AES since January 1997. He is the
retired Dean of the Harvard Business School, and has been a private business
consultant and investor in various companies since prior to 1992. He serves as
Senior Advisor to the President of the World Bank Group. He is a member of the
Boards of Directors of BCE Inc., Cabot Corporation, Glaxo Wellcome plc, Rohm &
Haas Corporation, Springs Industries, Inc., and the Vincam Group, Inc. He also
serves in various capacities with non-profit health and education organizations
in America, Canada, Europe, and Asia.
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Hazel R. O'Leary is being nominated for election to the Board of Directors for
the first time since 1989. Mrs. O'Leary previously served on AES's Board of
Directors from September 1988 to June 1989. Mrs. O'Leary was the seventh
Secretary of Energy of the Department of Energy from 1993 to 1997. She currently
is a private businesswoman, consultant and attorney to a diverse group of
domestic and international businesses. Prior to serving as U.S. Secretary of
Energy, she served as president of the natural gas subsidiary of Northern States
Power Company, and before that as Executive Vice President of the holding
company.
Russell E. Train is a former Chairman and President of The World Wildlife Fund
and is now Chairman Emeritus. Mr. Train is a former Administrator of the U.S.
Environmental Protection Agency. Mr. Train will retire from the Board of
Directors in April, 1997.
Thomas I. Unterberg has been a director of AES since 1984 and from 1982 to 1983.
He has been a Managing Director of Unterberg Harris, L.P. (an investment banking
firm) since 1989, having been a Managing Director of Shearson Lehman Brothers
Inc., from 1987 through 1988. He currently serves on the Boards of Directors of
AES Chigen, which is an affiliate of the Company, Electronics for Imaging, Inc.,
Systems and Computer Technology Corporation, Fractal Design Corporation, and
ECCS, Inc.
Robert H. Waterman, Jr. was an advisor to the Board of AES from 1983 to 1985 and
has been a director of AES since 1985. He is the founder and has been the Chief
Executive of The Waterman Group, Inc. (a business consulting firm) since 1985.
His business includes research and writing, consulting and venture management.
He is a co-author of In Search of Excellence, and the author of The Renewal
Factor, Adhocracy -- The Power to Change and What America Does Right, each of
which is a book on business management. He currently serves on the Board of
Directors of McKesson Corporation.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS, AND EXECUTIVE
OFFICERS
The following table sets forth, as of February 1, 1997, the beneficial ownership
of the Company's Common Stock by each director and named executive officer, all
directors and executive officers as a group, as well as all persons who own more
than five percent (5%) of the Company's Common Stock. Unless otherwise
indicated, each of the persons and group listed below has sole voting and
dispositive power with respect to the shares shown.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
POSITIONS HELD WITH BENEFICIALLY
NAME AGE THE COMPANY OWNED(1)(2) % OF CLASS(1)(2)
<S> <C> <C> <C> <C>
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Roger W. Sant....................... 65 Chairman of the Board and Director 10,659,070(3) 13.69
Dennis W. Bakke N................... 51 President, Chief Executive Officer and 8,993,433(4) 11.58
Director
Vicki-Ann Assevero +T............... 44 Director 2,761 *
Alice F. Emerson +P................. 65 Director 11,597 *
Robert F. Hemphill, Jr. +T.......... 53 Director 856,683(5) 1.11
Frank Jungers +P.................... 70 Director 551,770(6) *
Henry R. Linden +T.................. 75 Director 28,373 *
John H. McArthur +.................. 63 Director 0 *
Hazel R. O'Leary.................... 60 Director nominee 0 *
Russell E. Train + N................ 76 Director 591,110(7) *
Thomas I. Unterberg +T.............. 66 Director 675,557(8) *
Robert H. Waterman, Jr. +
NP............................... 60 Director 341,657(9) *
Thomas A. Tribone................... 44 Senior Vice President 201,641 *
Mark F. Fitzpatrick................. 46 Vice President 163,791(10) *
Barry J. Sharp...................... 37 Vice President and Chief Financial 155,170(11) *
Officer
All directors and executive officers
as a group (22 persons)........... 26,404,653(12) 33.98
</TABLE>
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<TABLE>
<C> <S>
T Member of the Financial Audit Committee.
+ Member of the Environmental, Safety and Social Responsibility Committee.
P Member of the Compensation Committee.
N Member of the Nominating Committee.
* Shares held represent less than 1% of the total number of outstanding shares of Common Stock of the Company.
(1) Shares beneficially owned and deemed to be outstanding include Common Stock of the Company issued or issuable, on or before
April 1, 1997, (a) upon exercise of outstanding options, (b) upon exercise of warrants, (c) under the Deferred Compensation
Plan for Executive Officers, (d) under the Deferred Compensation Plan for Directors, (e) under the Profit Sharing and Stock
Ownership Plan, and (f) under the Supplemental Retirement Plan.
(2) Includes (a) the following shares issuable upon exercise of options: Mr. Sant -- 428,449 shares; Mr. Bakke -- 226,870
shares; Mr. Tribone -- 141,799 shares; Mr. Fitzpatrick -- 40,542 shares; Mr. Sharp -- 98,991 shares; Ms. Assevero -- 2,761
shares; Dr. Emerson -- 7,695 shares; Mr. Jungers -- 5,687 shares; Dr. Linden 495 shares; Mr. Train -- 5,687 shares; Mr.
Unterberg -- 5,687 shares; Mr. Waterman -- 5,687 shares; all directors and executive officers as a group -- 1,363,808
shares; (b) the following units issuable under the Deferred Compensation Plan for Executive Officers: Mr. Sant -- 14,021
shares; all executive officers as a group -- 14,021 shares; (c) the following units issuable under the Deferred Compensation
Plan for Directors: Dr. Emerson -- 3,593; Mr. Jungers -- 40,360; Dr. Linden -- 27,878; Mr. Train -- 57,611; Mr.
Unterberg -- 57,838; Mr. Waterman -- 57,556; all directors as a group 244,836; (d) the following shares held by the Profit
Sharing and Stock Ownership Plan: Mr. Sant -- 146,212 shares; Mr. Bakke -- 139,479 shares; Mr. Hemphill -- 99,356 shares;
Mr. Tribone -- 27,883 shares; Mr. Fitzpatrick -- 43,110 shares; Mr. Sharp -- 22,359 shares; all executive officers as a
group -- 702,133 shares; and (e) the following units issuable under the Supplemental Retirement Plan: Mr. Sant -- 1,727; Mr.
Bakke -- 2,151; Mr. Hemphill -- 649; Mr. Tribone -- 404; Mr. Fitzpatrick -- 238; Mr. Sharp -- 284; all executive officers as
a group -- 7,056.
(3) Includes 7,550,146 shares held jointly by Mr. Sant and his wife. Also includes 403,241 shares held by his wife, 146,195 held
in an IRA for the benefit of Mr. Sant, and 64,871 shares held in an IRA for the benefit of his wife. In addition, includes
1,149,525 shares held by The Summit Foundation, of which Mr. Sant disclaims beneficial ownership. Mr. and Mrs. Sant can be
reached c/o The AES Corporation, 1001 N. 19th Street, Arlington, Virginia 22209.
(4) Includes 6,834,658 shares held jointly by Mr. Bakke and his wife, 31,530 shares held by his children, and 449,043 shares
held by his wife, and 181,383 shares held by the Mustard Seed Foundation, of which Mr. Bakke disclaims beneficial ownership.
Mr. and Mrs. Bakke can be reached c/o The AES Corporation, 1001 N. 19th Street, Arlington, Virginia 22209.
(5) Includes 8,148 shares held in an IRA for the benefit of Mr. Hemphill.
(6) Includes 26,390 shares held by Mr. Jungers's wife and 282,742 shares held by FJF, Inc.
(7) Includes 188,147 shares held by Mr. Train's wife.
(8) Includes 4,826 shares held by Mr. Unterberg's wife, of which Mr. Unterberg disclaims beneficial ownership.
(9) Includes 2,370 and 46 shares, held in IRAs for Mr. Waterman and his wife, respectively, 622 shares held in a trust of which
Mr. Waterman is trustee, and 275,373 shares held in a family trust.
(10) Includes 76,657 shares held jointly by Mr. Fitzpatrick and his wife, and 1,988 and 1,256 shares held in IRAs for the benefit
of Mr. Fitzpatrick and his wife, respectively.
(11) Includes 33,536 shares held jointly by Mr. Sharp and his wife.
(12) Includes 1,468,921 shares held jointly by one executive officer and his wife, and 119,200 shares held in trust for his
children, and 288,600 shares held in a family trust. Includes 598,337 shares held jointly by another executive officer and
his wife, and 40,558 shares held in trust for his children. Includes 27 shares held by another executive officer's wife.
Such executive officer also holds, jointly with his wife or individually, 2,000 shares of Class A Common Stock and 185,275
beneficial shares of Class B Common Stock of AES Chigen, an affiliate of the Company. Includes 3,090 shares held in IRAs for
the benefit of an executive officer and his wife and 600 shares held in trust with his wife as trustee. Includes 2,481
shares held by another executive officer for his children.
</TABLE>
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COMPENSATION OF DIRECTORS
Directors who are employed by AES are not paid any fees or additional
compensation for service as members of AES's Board of Directors or any committee
thereof. Each director who is not employed by AES received $26,000 as annual
compensation for service on the Board of Directors for 1996, and $1,000 for each
board meeting attended in person and $500 for each meeting in which he or she
participated by telephone conference, held in 1996. The directors may elect to
receive their fees in cash, or defer the compensation pursuant to the Deferred
Compensation Plan for Directors. All directors are reimbursed for travel and
other related expenses incurred in attending Board and committee meetings.
Directors who are not employed by AES are not eligible to participate in AES's
employee benefit plans but are eligible to participate in The AES Corporation
Stock Option Plan for Outside Directors which was adopted in 1992. Under the
terms of the plan, the Company issues options to purchase shares of the
Company's Common Stock at a price equal to 100% of the fair market value on the
date the option is granted. Directors eligible to participate in the plan are
granted an initial option to purchase 6,180 shares of Common Stock upon their
initial election or appointment to the Board of Directors. These options become
eligible for exercise in installments of 20% at the end of each of the first
five years. Subsequent to the initial grant, options to purchase 1,236 shares of
Common Stock are granted annually and vest on the fifth anniversary of such
grant.
COMMITTEES OF THE BOARD
The Board has four standing committees: the Financial Audit Committee, the
Environmental, Safety and Social Responsibility Committee, the Nominating
Committee, and the Compensation Committee.
The Financial Audit Committee recommends which firm will be appointed by the
Board of Directors as independent auditor to examine AES's financial statements
and to perform services related to the audit. The Financial Audit Committee
reviews the scope and results of the audit with the independent auditors,
reviews with the Company and the independent auditors AES's interim and year-end
operating results, considers the adequacy of the internal accounting and control
procedures of AES, reviews any non-audit services to be performed by the
independent auditors and considers the effect of such performance on the
auditors' independence. The Financial Audit Committee met twice in 1996.
The Environmental, Safety and Social Responsibility Committee was created by the
Board in January 1997. It replaces the Environmental and Safety Committees which
monitored the environmental and safety compliance, respectively, of the Company
and its subsidiaries and reviewed and approved the scope of the Company's
internal environmental and safety compliance audit programs to consider the
adequacy and appropriateness of the programs being planned and performed. The
Environmental, Safety and Social Responsibility Committee will assume the duties
previously performed by the Environmental and Safety Committees, as well as
periodically review the Company's commitment to, and implementation of, its
principle to act in a socially responsible way. The Environmental and Safety
Committees each met one time in 1996.
The Nominating Committee provides recommendations for potential nomination for
election of new members of the Board of Directors. The Nominating Committee
considers potential nominations provided by stockholders and submits suggested
nominations, when appropriate, to the Board of Directors for approval. The
Nominating Committee met once in 1996. Stockholders wishing to recommend persons
for consideration by the Nominating Committee as nominees for election to the
Company's Board of Directors can do so by writing to the Secretary of the
Company at 1001 North 19th Street, Arlington, Virginia 22209, giving each such
person's name, biographical data and qualifications. Any such recommendation
should be accompanied by a written statement from the person recommended of his
or her consent to be named as a nominee and, if nominated and elected, to serve
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as a director. The Company's By-Laws also contain a procedure for stockholder
nomination of directors. (See "Submission of Stockholder Proposals and
Nominations" below.)
The Compensation Committee establishes rates of salary, bonuses, profit sharing
contributions, grants of stock options, retirement and other compensation for
all directors and officers of AES and for such other people as the Board may
designate. All of the members of this committee are "disinterested persons"
under the provisions of Rule 16b-3 adopted under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). The Compensation Committee's primary
responsibility is to formulate and maintain the compensation program of the
Company in order to develop, retain (and attract, when necessary) people
important to the Company's performance. This committee specifically acts to
evaluate the performance and set the total compensation for the executive
officers of the Company, including the CEO, in accordance with the guidelines
discussed below. This committee has delegated to the CEO the power to set
compensation for the non-executive officers. The Compensation Committee met once
in 1996.
COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee's (the "Committee") guidelines for compensation of
executive officers are designed to provide fair and competitive levels of total
compensation while integrating pay with performance. Executive officers,
including the CEO, are evaluated annually on the basis of both individual
responsibilities and contributions, as well as Company-wide results in two
related areas: (i) corporate culture (or principles) and (ii) business or
functional area performance.
There are three elements in the Company's executive officer compensation
program. These elements are:
- Base salary
- Annual incentive compensation
- Stock option program
Base salary is adjusted annually by the Committee to account for general
economic and cost of living changes. Adjustments are also made periodically to
recognize significant new or additional responsibilities of individual executive
officers. The Committee's guidelines are to provide base salary compensation
generally consistent with its interpretation of industry averages for
individuals with similar responsibility levels.
Annual incentive compensation is based upon both objective and subjective
measures in the areas of corporate culture and business or functional area
performance, and generally takes the form of bonuses payable after year-end.
With respect to corporate culture, the Company's shared values of fairness,
integrity, fun and social responsibility are integral to its operations and
serve as its founding principles or values. These values apply equally to the
internal activities of the Company as well as its external relationships. Each
executive officer's individual contribution to demonstrating and nurturing these
shared values is reviewed by the Committee and considered as a factor in
determining annual incentive compensation. Evaluations by the Committee in this
area are inherently subjective.
The second area considered in the determination of annual incentive compensation
is the individual executive officer's performance with respect to his or her
related business responsibilities and/ or functional area. Although all aspects
of an individual's responsibilities are considered in determining annual
incentive compensation, several quantitative measures of annual performance are
considered significant, including operating margin improvements, operating
reliability, earnings per share, environmental performance, and plant and
Company-wide safety. The qualitative factors considered significant include
business and project development progress, effective planning, Company-wide
support, community relations and people development.
Important strategic successes or failures can take several years to translate
into objectively measurable results. The Committee does not compute annual
incentive compensation using a mathematical formula of pre-determined per-
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formance goals and objective criteria. As a result, the Committee's ultimate
determination of the amount, if any, of annual incentive compensation is made at
the end of each year based on a subjective evaluation of several quantitative
and qualitative factors, with primary emphasis given this year to those factors
listed in the preceding paragraph. There are no targeted, minimum or maximum
levels of annual incentive compensation, and such compensation does not
necessarily bear any consistent relationship to salary amounts or total
compensation.
The Company's stock option program provides longer-term incentives using stock
ownership to encourage people within the Company to think and act like owners.
All executive officers and approximately 50% of the total people in the Company
located in the United States participate in this program. The Company is also
reviewing ways to incorporate those people who reside in non-U.S. countries into
this program. Stock options are granted annually at the fair market value on the
date of grant and provide vesting periods to reward people for continued service
to the Company. The Committee's determination of the number of options to be
granted to executive officers is based upon the same factors as such officer's
annual incentive compensation discussed above with additional consideration
given to the number of options previously granted.
Since 1994, the Company has participated in an annual survey conducted by an
outside consulting firm which encompasses over 400 public companies. Based in
part on the survey results, the Committee established guidelines for suggested
ranges of option grants to executive officers as well as the rest of the people
in the Company. Based on the survey, the Committee established guideline ranges
for eligible participants between the 50th and 90th percentile of similar
companies. As with annual incentive compensation, the determination of an
individual's grant is subjective and although the Committee has established
suggested guidelines, the grants are not formula based.
Total compensation is reviewed to determine whether amounts are competitive with
other companies whose operations are similar in type, size and complexity with
those of the Company, as well as a broad range of similarly sized companies.
Comparisons are made with published amounts, where available, and, from time to
time, the Company also participates in various industry-sponsored compensation
surveys in addition to the public-company survey described above. The
industry-related companies include companies in the Peer Group Index as well as
other similar non-public companies who participate in industry surveys. The
Committee also has, in the past, engaged an independent compensation consultant
to specifically review the level and appropriateness of executive officer
compensation. Other than as described above, the Company uses the results of
surveys, when available, for informational purposes only and does not target
individual elements of or total compensation to any specific range of survey
results (i.e., high, low or median) other than the Committee's suggested
guidelines for stock option grants as discussed in the previous paragraph.
Because each individual's compensation is determined, in part, by experience and
performance, actual compensation generally varies from industry averages.
Executive officers also participate in the Company's profit sharing plan (or
deferred compensation plan for executive officers) on the same terms as all
other people in the Company, subject to any legal limitations on amounts that
may be contributed or benefits that may be payable under the plan. Matching
contributions and annual profit sharing contributions are made with the common
stock of the Company to further encourage long-term performance. In addition,
certain individuals of the Company participate in the Company's supplemental
retirement plan, which provides supplemental retirement benefits to "highly
compensated employees" (as defined in the Internal Revenue Code) of any amount
which would be contributed on such individual's behalf under the profit sharing
plan (or the deferred compensation plan for executive of-
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<PAGE> 10
ficers) but is not so contributed because of the limitations contained in the
Internal Revenue Code.
In the past, the Committee has taken steps to qualify all income paid to any
officer as a deductible business expense pursuant to regulations issued by the
Internal Revenue Service pursuant to Section 162(m) of the Internal Revenue Code
with respect to qualifying compensation paid to executive officers in excess of
$1 million. Compensation earned pursuant to the exercise of options granted
under the Company's former stock option plan (which was discontinued in 1991) is
not considered for purposes of the $1 million aggregate limit, and exercises
under the 1991 Plan are similarly excluded. The Committee will continue to
consider the implications to the Company of qualifying all compensation as a
deductible expense under Section 162 (m), but retains the discretion to pay
bonuses commensurate with an executive officer's contributions to the success of
the Company, irrespective of whether such amounts are entirely deductible. For
1996, portions of Mr. Bakke's cash compensation may not be deductible under
Section 162(m) of the Internal Revenue Code.
MR. BAKKE'S 1996 COMPENSATION
Mr. Bakke's compensation for 1996 was reviewed and approved by the Committee
utilizing the guidelines discussed above. Specifically, the following primarily
positive factors considered were:
- Strong adherence by the people in the Company to its shared principles of
integrity, fairness, social responsibility and fun, as indicated by the
Company's internal values survey.
- Improvement toward integrating shared principles, including improved
awareness and commitment by AES people to the Company's principles along
with improvements in relationships with major suppliers, financial
institutions and shareholders.
- Increase in the price of the Company's Common Stock from year end 1995 to
year end 1996 of approximately 95%.
- Net income and earnings per share increased 17% and 15% from 1995 to
1996, respectively.
- Significant development of new project and business opportunities,
including the financial closings of the AES Pak Gen project in Pakistan
and several projects in China (through the Company's affiliate, AES China
Generating Co. Ltd.), the acquisition of a controlling interest (with
partners) in the 3,800 MW Light Servicos de Eletricidade S.A., the
acquisition of the 1,281 MW Tiszai Eromu Rt. company in Hungary, the
acquisition of the 4,000 MW Ekibastuz GRES-1 plant in Kazakstan, the
acquisition of 78 MW AES San Juan company in Argentina, the agreement to
acquire the remaining publicly-held shares of the Company's affiliate,
AES China Generating Co. Ltd., the initiation of construction of the 230
MW power plant in South Wales, U.K., the successful bid to build a 288 MW
power plant in Queensland, Australia, and other significant business and
project development, including progress on the AES Puerto Rico project.
- Successful public issuance of $250 million aggregate principal amount of
senior subordinated notes, and increase in the Company's short-term
credit facility to $425 million.
- An exceptional year in plant reliability and availability across the
Company.
- Continued excellent environmental performance below permitted levels (on
average).
- Successful transition to the New York Stock Exchange for trading in the
Company's Common Stock.
8
<PAGE> 11
The following primarily negative factors considered were:
- While the Company's overall safety record improved in 1996, several very
serious injuries occurred, including two amongst the Company's
contractors, that resulted in loss of life.
Based on a subjective evaluation considering all of these factors, the Committee
determined that an increase in total cash compensation of approximately 40% from
1995 to 1996 was appropriate as compared to an increase from 1994 to 1995 of
16%. Of the total 1995 to 1996 increase, Mr. Bakke's base salary increased
approximately 12% and his bonus increased approximately 64%. Stock option grants
were for 70,883 shares. Stock options were granted at the fair market value of
the underlying shares on the date of grant and vest at the rate of 50% per year
through December 1998.
Frank Jungers, Chairman
Alice F. Emerson
Robert H. Waterman, Jr.
9
<PAGE> 12
- --------------------------------------------------------------------------------
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the five most highly
compensated executive officers for the three years ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------------- -------------
SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#)(1) COMPENSATION($)(2)
- -------------------------- ---- --------- -------- --------------- ------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
DENNIS W. BAKKE 1996 410,000 738,000 12,508 70,833 54,600
Chief Executive 1995 367,000 450,000 19,377 70,000 39,775
Officer and President 1994 353,000 353,000 15,591 59,459 20,760
ROGER W. SANT 1996 246,000 378,000 19,298 6,250 36,560
Chairman of the Board 1995 367,000 350,000 21,550 120,000 39,453
1994 353,000 353,000 25,966 59,459 20,760
THOMAS A. TRIBONE 1996 175,000 500,000 10,393 12,500 28,750
Senior Vice President 1995 160,000 150,000 8,924 23,000 15,960
1994 153,000 110,000 9,066 17,297 20,760
MARK F. FITZPATRICK 1996 170,000 500,000 263,032* 12,500 27,200
Vice President 1995 143,000 110,000 263,716* 21,000 22,523
1994 133,000 110,000 45,936* 16,973 20,760
BARRY J. SHARP 1996 170,000 325,000 8,951 11,250 28,200
Vice President and 1995 146,000 180,000 8,947 25,000 22,995
Chief Financial Officer 1994 138,000 138,000 8,978 18,162 20,760
</TABLE>
- ---------------
* Includes ex-patriot compensation.
(1) The number of options shown as compensation as of December 31, 1996 were for
services rendered for 1996. Those stock options were awarded by the
Compensation Committee of the Board in December 1996.
(2) This column constitutes Company contributions to the Profit Sharing and
Stock Ownership Plan of the Company or, in the case of Mr. Sant, Company
allocations to the Deferred Compensation Plan for Executive Officers, and
allocations to the Company's Supplemental Retirement Plan. Company
allocations to the Deferred Compensation Plan for Executive Officers equal
amounts which would have been contributed to such person's account under the
Profit Sharing and Stock Ownership Plan, if such person had been a
participant therein. Specifically for 1996, (a) amounts allocated to the
Deferred Compensation Plan for Executive Officers: Mr. Sant -- $20,500; (b)
amounts contributed to The AES Profit Sharing and Stock Ownership Plan: Mr.
Bakke -- $20,500; Mr. Tribone -- $20,500; Mr. Fitzpatrick -- $20,500; Mr.
Sharp -- $20,500; (c) amounts allocated to the Supplemental Retirement Plan:
Mr. Bakke -- $34,100; Mr. Sant -- $16,060; Mr. Tribone -- $8,250; Mr.
Fitzpatrick -- $6,700; Mr. Sharp -- $7,700.
10
<PAGE> 13
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on options granted for 1996 to the
named executive officers.
<TABLE>
<CAPTION>
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED
UNDERLYING TO ALL EXERCISE
OPTIONS AES PEOPLE OR BASE GRANT DATE
GRANTED IN FISCAL PRICE EXPIRATION PRESENT VALUE
NAME (#)(1) YEAR ($/SH) DATE ($)(2)
- ---------------------------- --------- ----------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
DENNIS W. BAKKE
Chief Executive
Officer and President 70,833 16.4 44.125 12/27/06 1,700,000
ROGER W. SANT
Chairman of the Board 6,250 1.5 44.125 12/27/06 150,000
THOMAS A. TRIBONE
Senior Vice President 12,500 2.9 44.125 12/27/06 300,000
MARK F. FITZPATRICK
Vice President 12,500 2.9 44.125 12/27/06 300,000
BARRY J. SHARP
Vice President and
Chief Financial Officer 11,250 2.6 44.125 12/27/06 270,000
</TABLE>
- ---------------
(1) All options are for shares of Common Stock of the Company. Options granted
for services performed in 1996 were granted at the fair market value on the
date of grant, and vest at the rate of 50% per year through December 1998.
(2) The Black-Scholes stock option pricing model was used to value the stock
options on the grant date December 27, 1996. The Company's assumptions under
this model include an expected volatility of 27.6%, a 6.3% risk free rate of
return and no dividends. The options have 10 year terms and vest at 50% per
year. There were adjustments made to account for vesting provisions, and no
adjustments were made for non-transferability or risk of forfeiture.
The use of such amounts and assumptions are not intended to forecast any
possible future appreciation of the Company's stock price or dividend
policy.
11
<PAGE> 14
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION
VALUE
The following table provides information on option exercises in 1996 by the
named executive officers and the value of such officers' unexercised options at
December 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FY-END (#) FY-END ($)
------------- ----------------
SHARES ACQUIRED VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) ($)(1) UNEXERCISABLE UNEXERCISABLE(2)
- --------------------------------- --------------- --------------- ------------- ----------------
<S> <C> <C> <C> <C>
DENNIS W. BAKKE
Chief Executive Officer and
President -- -- 226,870/ 8,041,927/
173,588 3,012,148
ROGER W. SANT
Chairman of the Board -- -- 428,449/ 16,027,844/
141,957 3,746,132
THOMAS A. TRIBONE
Senior Vice President 5,794 276,431 141,799/ 5,507,777/
51,145 1,111,557
MARK F. FITZPATRICK
Vice President 23,175 406,258 40,542/ 1,257,131/
46,041 963,198
BARRY J. SHARP
Vice President and
Chief Financial Officer -- -- 98,991/ 3,684,641/
49,841 1,102,721
</TABLE>
- ---------------
(1) The amounts in this column have been calculated based upon the difference
between the fair market value of the securities underlying each stock option
on the date of exercise and its exercise price.
(2) The amounts in this column have been calculated based on the difference
between the fair market value on December 31, 1996 of $46.50 per share for
each security underlying such stock option and the per share exercise price
to the extent such price exceeded the fair market value.
- --------------------------------------------------------------------------------
12
<PAGE> 15
THE AES CORPORATION STOCK PRICE PERFORMANCE
<TABLE>
<CAPTION>
MEASUREMENT PERIOD THE AES 1995 PEER 1996 PEER
(FISCAL YEAR COVERED) CORPORATION S&P 500 GROUP GROUP
<S> <C> <C> <C> <C>
1991 100.00 100.00 100.00 100.00
1992 83.07 107.62 89.78 100.98
1993 107.91 118.46 87.12 103.75
1994 92.88 120.03 68.32 85.12
1995 113.72 165.13 87.01 99.30
1996 221.49 203.05 127.15 141.10
</TABLE>
PEER GROUP INDEX*
The 1995 Peer Group was composed of the following publicly traded companies:
CalEnergy Co., Destec Energy, Inc. and Kenetech Corporation. Sithe Energy has
been excluded from the 1995 Peer Group Index because it is no longer
publicly-traded.
The 1996 Peer Group consists of the following publicly-traded companies in the
independent power generation industry: Edison International, National Power, CMS
Energy, and CalEnergy Co. Destec Energy, Inc. has been excluded from the 1996
Peer Group because it has entered into an agreement to be acquired and Kenetech
Corporation has been excluded from the 1996 Peer Group because it's subsidiary,
Kenetech Windpower, Inc. declared bankruptcy during 1996. Edison International,
National Power, and CMS Energy have been added because they are engaged in the
same line of business as the Company and were selected on the basis of
comparability of market capitalization.
Each of the 1995 Peer Group Index and the 1996 Peer Group Index reflects the
weighted average total return for the entire Peer Group calculated for the
period in which the Company's equity securities were registered with the
Securities and Exchange Commission pursuant to the Exchange Act, from a base of
100. In compliance with Securities and Exchange Commission regulations, the
returns of each company in the 1995 Peer Group index and in the 1996 Peer Group
Index have been weighted according to their market capitalization as of the
beginning of the period.
The Report of the Compensation Committee on Executive Compensation and The AES
Corporation Stock Price Performance Graph shall not be deemed to be "soliciting
material" or to be "filed" with the Securities and Exchange Commission or
subject to Regulation 14A or 14C under the Exchange Act.
- ---------------
* Excludes The AES Corporation
13
<PAGE> 16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on the Company's review of reports filed under Section 16(a) of the
Exchange and certain written representations, the Company believes that there
were no reports which were not reported on a timely basis and no known failure
to file a required form, except that Mr. Sant and Mr. Bakke failed to timely
file their purchase of 100 shares each of AES Common Stock in connection with
the Company's initial day of trading on the New York Stock Exchange, Mr.
Woodcock failed to timely report the sale of 6,915 shares of AES Common Stock,
and Mr. Rothaupt failed to timely report the exercise and sale of 2,278 shares
of AES Common Stock.
PROPOSAL 2
APPOINTMENT OF AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP, a firm of
independent public accountants, as auditors to examine and report to
stockholders on the consolidated financial statements of the Company and its
subsidiaries for the year 1997. Deloitte & Touche LLP has acted as the Company's
independent auditors since 1981. The appointment was made upon the
recommendation of the Financial Audit Committee of the Board of Directors.
Representatives of Deloitte & Touche LLP will be present at the Annual Meeting
and will be given an opportunity to make a statement. They also will be
available to respond to appropriate questions.
The Board of Directors recommends that the stockholders ratify the appointment
of Deloitte & Touche LLP, and intends to introduce at the forthcoming Annual
Meeting the following resolution (designated herein as Proposal 2):
"RESOLVED, that the appointment by the Board of Directors of Deloitte
& Touche LLP as independent auditors for this Company for the year
1997 is hereby approved, ratified and confirmed."
The affirmative vote of the holders of a majority of shares of Common Stock
entitled to notice of and to vote at the Annual Meeting of Stockholders, at
which a quorum is present, is necessary for the ratification of the appointment
of Deloitte & Touche LLP as independent auditors for the Company for the year
1997.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT
OF DELOITTE AND TOUCHE LLP AS
INDEPENDENT AUDITORS OF
THE COMPANY.
PROPOSAL 3
PROPOSED AMENDMENT TO
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED
NUMBER OF SHARES
The Company's Amended and Restated Certificate of Incorporation currently
authorizes 101,000,000 shares of Capital Stock, of which 100,000,000 shares are
Common Stock and 1,000,000 shares are Preferred Stock. Of the 100,000,000 shares
of Common Stock authorized, as of March 3, 1996, 77,492,990 shares were
outstanding, 2,548,693 shares were reserved for possible issuance in connection
with an amalgamation between a subsidiary of AES and AES Chigen, and 12,045,897
shares were reserved for issuance under the Company's benefit plans. Of the
1,000,000 shares of Preferred Stock authorized, as of March 3, 1997, there were
no outstanding shares.
The Board of Directors has determined that it is in the best interests of the
Company's stockholders to increase the number of shares of Common Stock which
the Company is authorized to issue from 100,000,000 to 500,000,000 shares, and
to increase the number of shares of authorized Pre-
14
<PAGE> 17
ferred Stock which the Company is authorized to issue from 1,000,000 to
50,000,000.
The Board of Directors believes that the proposed increase in the number of
authorized shares of Common Stock and Preferred Stock will benefit the Company
by improving its flexibility in responding to future business needs and
opportunities. The additional authorized shares could be used for possible stock
splits, future acquisitions, financings, stock dividends and other proper
corporate purposes.
Within the limits imposed by applicable law and the rules of the New York Stock
Exchange, described below, shares of Common Stock could be issued in one or more
transactions. Depending upon the nature and terms thereof, such a transaction or
transactions could make a takeover of the Company more difficult and, therefore,
less likely. An issuance of additional shares of Common Stock could have the
effect of diluting the earnings per share and book value per share of existing
shares of Common Stock and diluting the stock ownership of persons seeking to
obtain control of the Company. The Board of Directors, however, has no present
plans, understandings or agreements to issue the additional shares to be
authorized except pursuant to the Company's benefit plans.
The Board of Directors does not currently intend to propose any amendments to
the Company's Amended and Restated Certificate of Incorporation which might be
deemed to have the effect of discouraging takeover attempts, although such
amendments or other programs may be considered by the Board in the future if it
believes the interests of the stockholders would be protected thereby.
The New York Stock Exchange, on which the Common Stock is listed, currently
requires stockholder approval as a prerequisite to listing shares in several
instances, including acquisition transactions where the number of shares of
Common Stock to be issued is or will be equal to or in excess of 20% of the
number of shares outstanding before such issuance.
Except for the increase of the number of authorized shares, the proposed
amendment would not change any of the provisions of the Company's Amended and
Restated Certificate of Incorporation. All shares of Common Stock or Preferred
Stock, including the additional shares of Common Stock and Preferred Stock that
would be authorized if the proposed amendment is adopted, which are not issued
and outstanding would be issuable at any time or from time to time by action of
the Board of Directors without further authorization from stockholders, except
to the extent that such further authorization is required by the rules of the
New York Stock Exchange, the terms of any series of the Company's Preferred
Stock, the terms of any agreements or securities the Company may hereafter enter
into or issue or applicable law.
The additional shares of Common Stock which would be authorized by the proposed
amendment would have the same rights and privileges as and otherwise be
identical to the shares of Common Stock currently authorized and outstanding.
The Amended and Restated Certificate of Incorporation empowers the Board of
Directors to determine the relative rights and limitations of series of
Preferred Stock, including, among other things, dividend rights, conversion
prices, voting rights, redemption prices and the preferences, if any, of such
series over shares of Common Stock as to dividends or distributions of assets of
the Company, including the additional shares of Preferred Stock which would be
authorized by the proposed amendment. It is possible that the future issuance of
Preferred Stock having dividend and liquidation preferences could affect amounts
that might otherwise be available to holders of Common Stock as dividends or
upon liquidation. Holders of the Company's shares have no preemptive rights and,
as a result, existing stockholders would not have any preferential right to
purchase any of the additional shares of Common Stock when issued.
In order to improve the Company's flexibility in responding to future business
needs and oppor-
15
<PAGE> 18
tunities, the Company's stockholders are accordingly being asked to adopt an
amendment to the Company's Amended and Restated Certificate of Incorporation to
increase the aggregate number of shares which the Company is authorized to issue
from 101,000,000 shares, of which 100,000,000 shares are Common Stock and
1,000,000 shares are Preferred Stock, to 550,000,000 shares, of which
500,000,000 shares shall be Common Stock and 50,000,000 shares shall be
Preferred Stock.
The Board of Director's recommends that the stockholders approve the amendment
to the Company's Amended and Restated Certificate of Incorporation, and intends
to introduce at the forthcoming Annual Meeting the following resolution
(designated herein as Proposal 3):
"RESOLVED, that Article IV of the Amended and Restated Certificate of
Incorporation of the Company be amended to read in its entirety as
follows:
"The total number of shares of all classes of stock that the Company
shall have authority to issue is five hundred fifty million
(550,000,000) shares, of which five hundred million (500,000,000)
shares shall be Common Stock, par value $.01 per share, and fifty
million (50,000,000) shares shall be Preferred Stock, without par
value."
The affirmative vote of holders representing a majority of the outstanding
shares of Common Stock is necessary for the adoption of Proposal 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL
TO AMEND THE COMPANY'S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED
NUMBER OF SHARES.
SUBMISSION OF STOCKHOLDER
PROPOSALS AND NOMINATIONS
Any stockholder entitled to vote in the election of directors and who meets the
requirements of the proxy rules under the Exchange Act may submit to the Board
of Directors proposals to be considered for submission to the stockholders at
the 1998 Annual Meeting. Any such proposal should be submitted in writing by
notice delivered or mailed by first-class United States mail, postage prepaid,
to the Secretary, The AES Corporation, 1001 North 19th Street, Arlington,
Virginia 22209 and must be received no later than November 17, 1997. Any such
notice shall set forth: (a) the name and address of the stockholder and the text
of the proposal to be introduced; (b) the number of shares of stock held of
record, owned beneficially and represented by proxy by such stockholder as of
the date of such notice; and (c) a representation that the stockholder intends
to appear in person or by proxy at the meeting to introduce the proposal
specified in the notice. The chairperson of the meeting may refuse to
acknowledge the introduction of any stockholder proposal not made in compliance
with the foregoing procedure.
AES's By-Laws contain a procedure for stockholder nomination of directors. The
By-Laws provide that any record owner of stock entitled to be voted generally in
the election of directors may nominate one or more persons for election as a
director at a stockholders meeting only if written notice is given to the
Secretary of AES of the intent to make such nomination. The notice must be
given, with respect to an annual meeting, not later than 90 days in advance of
such annual meeting and with respect to a special meeting, not later than the
close of business on the seventh day following the earlier of (a) the date on
which notice of such special meeting is first given to stockholders and (b) the
date on which a public announcement of such meeting is first made. Each notice
must include (i) the name and address of each stockholder who intends to appear
in person or by proxy to make
16
<PAGE> 19
the nomination and of the person or persons to be nominated; (ii) a description
of all arrangements or understandings between the stockholder and each nominee
and any other person or persons (naming them) pursuant to which the nomination
is to be made by the stockholder; (iii) such other information regarding each
nominee proposed by such stockholder as would have been included in a proxy
statement filed pursuant to Rule 14a-8 under the Exchange Act; and (iv) the
consent of each nominee to serve if elected. The presiding officer of the
meeting may refuse to acknowledge the nomination of any person not made in
compliance with this procedure.
The procedure for stockholder nomination of directors described above may have
the effect of precluding a nomination for election of directors at a particular
meeting if the required procedure is not followed.
SOLICITATION OF PROXIES
Proxies will be solicited by mail, telephone, or other means of communication.
The Company has retained the services of First Chicago Trust Company of New York
to assist in the solicitation of proxies from stockholders for a fee, including
its expenses, estimated at $9,000. In addition, solicitation may be made by
directors, officers, and regular employees of the Company. The Company will
reimburse brokerage firms, custodians, nominees, and fiduciaries in accordance
with the rules of the National Association of Securities Dealers, Inc., for
reasonable expenses incurred by them in forwarding materials to the beneficial
owners of shares. The entire cost of solicitation will be borne by the Company.
FORM 10-K ANNUAL REPORT
ANY STOCKHOLDER WHO DESIRES A COPY OF THE COMPANY'S 1996 ANNUAL REPORT ON FORM
10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION MAY OBTAIN A COPY
(EXCLUDING EXHIBITS) WITHOUT CHARGE BY ADDRESSING A REQUEST TO THE SECRETARY,
THE AES CORPORATION, 1001 NORTH 19TH STREET, ARLINGTON, VIRGINIA 22209. EXHIBITS
ALSO MAY BE REQUESTED, BUT A CHARGE EQUAL TO THE REPRODUCTION COST THEREOF WILL
BE MADE. STOCKHOLDERS MAY ALSO VISIT THE COMPANY'S WEB SITE AT
HTTP://WWW.AESC.COM
By Order of the Board Of Directors,
/s/ WILLIAM R. LURASCHI
William R. Luraschi
General Counsel and Secretary
17
<PAGE> 20
THE AES CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
P THE AES CORPORATION FOR ANNUAL MEETING ON APRIL 15, 1997.
R
O
X THE UNDERSIGNED hereby appoints Roger W. Sant or Dennis W. Bakke, or
Y either of them, and any substitute or substitutes, to be the attorneys
and proxies of the undersigned at the Annual Meeting of Stockholders of
The AES Corporation ("AES") to be held at 9:30 a.m. EST on Tuesday, April
15, 1997 at 1001 N. 19th St., Arlington, VA 22209, or at any adjournment
thereof, and to vote at such meeting the shares of common stock of AES
the undersigned held of record on the books of AES on the record date for
the meeting for the election for the nominees listed below, on Proposals
2 and 3, referred to on the reverse side and described in the Proxy
Statement, and on any other business before the meeting, with all powers
the undersigned would possess if personally present.
(change of address/comments)
ELECTION OF DIRECTORS, NOMINEES:
----------------------------
Roger W. Sant Dennis W. Bakke
Vicki-Ann Assevero John H. McArthur ----------------------------
Alice F. Emerson Hazel R. O'Leary
Robert F. Hemphill, Jr. Thomas I. Unterberg ----------------------------
Francis Jungers Robert H. Waterman, Jr.
Henry R. Linden ----------------------------
(If you have written in the
INDEPENDENT AUDITORS above spaces, please mark
Deloitte & Touche LLP the corresponding box on the
reverse side of this card)
You are encouraged to specify your choices by marking the
appropriate boxes, SEE REVERSE SIDE, but you need not mark -----------
any boxes if you wish to vote in accordance with the Board SEE REVERSE
of Directors' recommendations. The proxies cannot vote your SIDE
shares unless you sign and return this card. -----------
<PAGE> 21
[X] Please mark your
votes as in this
example.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR Proposals 1,
2 and 3.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Company Proposals 1, 2 and 3.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of 2. Ratification of 3. Approval to amend the
Directors. (see appointment of Restated Certificate
reverse) [ ] [ ] independent of Incorporation [ ] [ ] [ ]
auditors [ ] [ ] [ ]
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
Change of Address/
Comments on Reverse Side [ ]
</TABLE>
All as more particularly described in the
Proxy Statement relating to such meeting,
receipt of which is hereby acknowledged.
Please sign exactly as name appears hereon.
Joint owners should each sign. When signing
as attorney, executor, administrator, parent
or guardian, please give full title as such.
--------------------------------------------
--------------------------------------------
SIGNATURE(S) DATE
/\ FOLD AND DETACH HERE /\
