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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:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] 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)
- -------------------------------------------------------------------------------
(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:
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2) Aggregate number of securities to which transaction applies:
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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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4) Proposed maximum aggregate value of transaction:
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5) Total Fee paid:
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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
PRELIMINARY PROXY MATERIAL
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[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 21, 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.
[Signature]
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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PROXY STATEMENT
March 21, 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 21, 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 9
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
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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, Marriott International, Inc. and Student Loan Marketing
Association ("Sallie Mae"). 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 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, Riverdell School and a director 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).
Francis 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
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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.
Dr. 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.
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 business woman, consultant and attorney to various
businesses. Prior to serving as United States Secretary of Energy, she served
as president of[Insert Name of the company and time period] the natural gas
subsidiary of Northern States Power.
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
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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
Beneficially
Name Age Positions Held with the Company Owned(1)(2) % of Class(1)(2)
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<S> <C> <C> <C>
Roger W. Sant 65 Chairman of the Board and Director 10,638,296 (3) 13.66%
Dennis W. Bakke # 51 President, Chief Executive Officer 8,993,433 (4) 11.58%
and Director
Vicki-Ann Assevero + ## 44 Director 2,761 *
Alice F. Emerson + ### 65 Director 11,597 *
Robert F. Hemphill, Jr. + ## 53 Director 856,683 (5) 1.11%
Frank Jungers + ### 70 Director 551,770 (6) *
Henry R. Linden + ## 75 Director 28,373 *
John H. McArthur + 63 Director 0 *
Hazel O'Leary 60 Director nominee 0 *
Thomas I. Unterberg + ## 66 Director 675,557 (7) *
Robert H. Waterman, Jr. + # ### 60 Director 341,657 (8) *
Mark F. Fitzpatrick 46 Vice President 163,791 *
Barry J. Sharp 37 Vice President and Chief Financial 115,170 *
Officer
Thomas A. Tribone 44 Senior Vice President 201,641 *
All directors and executive 26,383,879 (9) 33.95%
officers as a group (22 persons)
</TABLE>
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## Member of the Financial Audit Committee.
+ Member of the Environmental, Safety and Social Responsibility
Committee.
### Member of the Compensation Committee.
# 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)
upon conversion of subordinated debentures, (f) under the Profit
Sharing and Stock Ownership Plan, and (g) 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.
Fitzpatrick - 40,542 shares; Mr. Sharp - 98,991 shares; Mr. Tribone --
141,799 shares; Ms. Assevero -- 2,761 shares; Dr. Emerson
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-- 7,695 shares; Mr. Hemphill-- 0 shares; Mr. Jungers -- 5,687 shares;
Dr. Linden 495 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 shares 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. Unterberg -- 57,838; Mr. Waterman -- 57,556; all directors as a
group 258,857; (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. Fitzpatrick - 43,110 -
shares; Mr. Sharp - 22,359 shares; Mr. Tribone -- 27,883 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. Fitzpatrick - 238;
-; Mr. Sharp - 284; Mr. Tribone - 404; 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 1,128,751 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.
(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
(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 4,826 shares held by Mr. Unterberg's wife, of which Mr.
Unterberg disclaims beneficial ownership.
(8) 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.
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(9) 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 33,536 shares held
jointly by one executive officer and his wife. Includes 76,657 shares
held jointly by another executive officer and his wife, and 1,988 and
1,256 shares held in IRAs for the benefit of the executive officer and
his wife, respectively. 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 2,000 shares of
Class A Common Stock and 100,000 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.
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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 1997, 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 1997. 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 4,000 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 800
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 one time 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
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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 as a director. The Company's By-Laws also contains 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
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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
performance 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
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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 300 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 officers) but is not so
contributed because of the limitations contained in the Internal Revenue Code.
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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 29% from 1995 to
1996.
- 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.
12
<PAGE> 15
- Successful public issuance of $250 million aggregate
principal amount of senior subordinated notes, and increase
in the Company's short-term credit facility to $425 million.
- An exceptional year in plant reliability and availability
across the Company.
- Continued excellent environmental performance below permitted
levels (on average).
- Successful transition to the New York Stock Exchange for
trading in the Company's Common Stock.
The following primarily negative factors considered were:
- While the Company's overall safety record improved in 1996,
several very serious injuries occurred, including two amongst
the Company's contractors, that resulted in loss of life.
Based on a subjective evaluation considering all of these factors, the
Committee determined that an increase in total cash compensation of
approximately 40% from 1995 to 1996 was appropriate as compared to an increase
from 1994 to 1995 of 16%. Of the total 1995 to 1996 increase, Mr. Bakke's base
salary increased approximately 12% and his bonus increased approximately 64%.
Stock option grants were for 70,883 shares. Stock options were granted at the
fair market value of the underlying shares on the date of grant and vest at the
rate of 50% per year through December 1998.
Frank Jungers, Chairman
Alice F. Emerson
Robert H. Waterman, Jr.
===============================================================================
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the five most highly
compensated executive officers for the three years ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
----------------------------------------------------------------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary($) 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 64,100
Chief Executive 1995 367,000 450,000 19,377 70,000 49,015
Officer and President 1994 353,000 353,000 15,591 59,459 30,000
ROGER W. SANT 1996 246,000 378,000 19,298 6,250 46,060
Chairman of the Board 1995 367,000 350,000 21,550 120,000 48,693
1994 353,000 353,000 25,966 59,459 30,000
</TABLE>
13
<PAGE> 16
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
THOMAS A. TRIBONE 1996 175,000 500,000 10,393 12,500 38,250
Senior Vice President 1995 160,000 150,000 8,924 23,000 25,200
1994 153,000 110,000 9,066 17,297 30,000
MARK F. FITZPATRICK 1996 170,000 500,000 263,032* 12,500 36,700
Vice President 1995 143,000 110,000 263,716* 21,000 31,763
1994 133,000 110,000 98,858* 16,973 30,000
BARRY J. SHARP 1996 170,000 325,000 1,976 11,250 37,700
Vice President 1995 146,000 180,000 8,947 25,000 32,235
1994 138,000 138,000 8,978 18,162 30,000
</TABLE>
*Includes Ex-patriot equalization.
- ---------------
(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, (a)
amounts allocated to the Deferred Compensation Plan for Executive
Officers: Mr. Sant - $30,000; (b) amounts contributed to The AES
Profit Sharing and Stock Ownership Plan: Mr. Bakke - $30,000; Mr.
Tribone - $30,000; Mr. Fitzpatrick - $30,000; Mr. Sharp - $30,000; (c)
amounts allocated to the Supplemental Retirement Plan: Mr. Sant -
$16,060; Mr. Bakke - $34,100; Mr. Tribone - $8,250; Mr. Fitzpatrick -
$6,700; Mr. Sharp - $7,700.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on options granted for 1996 to the
named executive officers.
<TABLE>
<CAPTION>
Number % of Total
of Options
Securities Granted
Underlying to all Exercise
Options AES People or Base Grant Date
Granted in Fiscal Price Expiration Present Value
Name (#)(1) Year ($/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
</TABLE>
14
<PAGE> 17
<TABLE>
<S> <C> <C> <C> <C> <C>
ROGER W. SANT
Chairman of the Board 6,250 1.5% 44.125 12/27/06 $150,000
THOMAS A. TRIBONE
Senior Vice President 12,500 2.9% 44.125 12/27/06 300,000
MARK F. FITZPATRICK
Vice President 12,500 2.9% 44.125 12/27/06 300,000
BARRY J. SHARP
Vice President 11,250 2.6% 44.125 12/27/06 270,000
</TABLE>
- -------------
(1) All options are for shares of Common Stock of the Company. Options
granted for services performed in 1996 were granted at the fair market
value on the date of grant, and vest at the rate of 50% per year
through December 1998.
(2) The Black-Scholes stock option pricing model was used to value the
stock options on the grant date December 27, 1996. The Company's
assumptions under this model include an expected volatility of 27.6%,
a 6.5% risk free rate of return and no dividends. The options have 10
year terms and vest at 50% per year. There were adjustments made to
account for vesting provisions, and no adjustments were made for
non-transferability or risk of forfeiture.
The use of such amounts and assumptions are not intended to forecast
any possible future appreciation of the Company's stock price or
dividend policy.
15
<PAGE> 18
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION
VALUE
The following table provides information on option exercises in 1996 by the
named executive officers and the value of such officers' unexercised options at
December 31, 1996.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares Acquired FY-End (#) FY-End ($)
on Value ---------- ----------
Exercise Realized Exercisable/ Exercisable/
Name (#) ($)(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 -- -- 428,449/ 16,027,844/
Chairman of the Board 141,957 3,746,132
THOMAS A. TRIBONE 5,794 276,431 141,799/ 5,507,777/
Senior Vice President 51,145 1,111,557
MARK F. FITZPATRICK 23,175 406,258 40,542/ 1,257,131/
Vice President 46,041 963,198
BARRY J. SHARP -- -- 98,991/ 3,684,641/
Vice President 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
$46.50 per share for each security underlying such stock option and
the per share exercise price to the extent such price exceeded the
fair market value
16
<PAGE> 19
THE AES CORPORATION STOCK PRICE PERFORMANCE
PEER GROUP INDEX*
<TABLE>
<CAPTION>
STARTING
BASIS
DESCRIPTION 1991 1992 1993 1994 1995 1996
- ---------------------------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
AES CORP (%) -16.93 29.89 -13.92 22.44 94.76
AES CORP ($) $100.00 $83.07 $107.91 $92.88 $113.72 $221.49
S & P 500 (%) 7.62 10.08 1.32 37.58 22.96
S & P 500 ($) $100.00 $107.62 $118.46 $120.03 $165.13 $203.05
1996 Peer Group Only (%) 0.98 2.75 -17.96 16.65 42.09
1996 Peer Group Only ($) $100.00 $100.98 $103.75 $85.12 $99.30 $141.10
1995 Peer Group (%) -10.22 -2.96 -21.59 27.37 46.13
1995 Peer Group ($) $100.00 $ 89.78 $87.12 68.32 $87.01 $127.15
</TABLE>
The 1995 Peer Group was composed of the following publicly traded companies:
California Energy, 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
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.
17
<PAGE> 20
PROPOSAL 2
APPOINTMENT OF AUDITORS
The Board of Directors has appointed Deloitte & Touche L.L.P., 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 1,
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
18
<PAGE> 21
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
Preferred 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
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
19
<PAGE> 22
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 opportunities, 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 share 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
20
<PAGE> 23
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 20, 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 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 $8,000. 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
21
<PAGE> 24
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
[Signature]
William R. Luraschi
General Counsel and Secretary
22
<PAGE> 25
[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 of 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 /\
[AES LOGO]
THIS IS YOUR PROXY.
THE GLOBAL POWER COMPANY YOUR VOTE IS IMPORTANT
DO YOU NEED ASSISTANCE IN ANY OF THE FOLLOWING AREAS?
- ADDRESS CHANGES - LEGAL TRANSFERS
- CONSOLIDATION OF ACCOUNTS - ELIMINATE MULTIPLE ACCOUNTS FOR ONE HOLDER
AND CERTAIN DUPLICATE SHAREHOLDER MAILINGS GOING TO ONE ADDRESS. (Annual
reports and proxy materials would continue to be mailed to each
shareholder.)
JUST CALL OUR TRANSFER AGENT'S TELEPHONE RESPONSE CENTER:
(800) 519-3711 OR (201) 324-1225
OR WRITE TO:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
P.O. BOX 2500
JERSEY CITY, NJ 07303-2500
<PAGE> 26
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. -----------
