SIGCORP, INC.
AND
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
20 N.W. FOURTH STREET
EVANSVILLE, INDIANA 47741-0001
NOTICE OF JOINT ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 22, 1997
TO THE STOCKHOLDERS OF SIGCORP, INC. and
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY:
NOTICE IS HEREBY GIVEN THAT THE JOINT ANNUAL MEETING OF STOCKHOLDERS OF
SIGCORP, INC. ("SIGCORP") AND SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
("SIGECO") IS CALLED AND WILL BE HELD ON TUESDAY, THE 22ND DAY OF APRIL, 1997,
AT 3:00 P.M., AT THE NORMAN P. WAGNER CENTER ADMINISTRATION BUILDING, ONE NORTH
MAIN STREET, EVANSVILLE, INDIANA, FOR THE FOLLOWING PURPOSES:
1. To elect three directors of SIGCORP and three directors of SIGECO
to serve a term of three years and until their successors are duly elected
and qualified;
2. To ratify the appointment of Arthur Andersen LLP as auditors for
1997; and
3. To transact any and all business in connection with the foregoing
and any other business that may properly come before the meeting and any
adjournment or adjournments thereof.
By Order of the Boards of Directors,
A.E. Goebel
Secretary
Evansville, Indiana
March 21, 1997
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING IN ORDER THAT
A QUORUM WILL BE ASSURED. STOCKHOLDERS, WHETHER OR NOT THEY EXPECT TO BE PRESENT
AT THE MEETING, ARE REQUESTED TO FILL IN, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT PROMPTLY IN THE ACCOMPANYING ADDRESSED ENVELOPE, WHICH REQUIRES NO
POSTAGE. IF YOU ATTEND THE MEETING AND SO REQUEST, THE PROXY WILL NOT BE VOTED.
<PAGE>
LOCATION OF APRIL 22, 1997
ANNUAL SHAREHOLDERS' MEETING
[LOGO]
NORMAN P. WAGNER OPERATIONS CENTER
Southern Indiana Gas and Electric Company
One N. Main Street 465-4153
Parking for shareholders will be provided in the Employee and Visitors'
parking lot on the corner of North Main and Division Streets. Please use the
entrance marked "Main Street Entrance" on the above map. Entry to the building
will be through the doors indicated by the arrow.
YOUR VOTE IS IMPORTANT
PLEASE READ THE PROXY STATEMENT AND SIGN, DATE AND MAIL THE PROXY IN THE
PREPAID ENVELOPE WITHOUT DELAY, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
YOU MAY REVOKE YOUR PROXY PRIOR TO OR AT THE MEETING AND VOTE IN PERSON IF YOU
WISH. IF YOUR SHARES ARE HELD BY A BROKER, BANK OR NOMINEE, IT IS IMPORTANT THAT
THEY RECEIVE YOUR VOTING INSTRUCTIONS.
<PAGE>
SIGCORP, INC.
AND
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
20 N.W. FOURTH STREET
EVANSVILLE, INDIANA 47741-0001
JOINT PROXY STATEMENT
FOR
JOINT ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1997
INTRODUCTION
This Joint Proxy Statement is provided to the shareholders of SIGCORP, Inc.
("SIGCORP") and Southern Indiana Gas and Electric Company ("SIGECO") in
connection with their annual meetings of shareholders and any adjournments or
postponements thereof. The annual meetings are scheduled to be held at 3:00
p.m., Central Daylight Time, at the Norman P. Wagner Center Administration
Building, One North Main Street, Evansville, Indiana. The SIGCORP and SIGECO
annual meetings will be held in conjunction with each other at the same time and
location.
GENERAL INFORMATION
SOLICITATION OF PROXIES
The management solicits your proxy for use at the joint annual meeting.
Shares held in your name and represented by your proxy will be voted as you
instruct if your proxy is duly executed and returned prior to the meeting.
Shares represented by proxies that are returned signed but without instructions
for voting will be voted as recommended by the management. Shares represented by
proxies that are returned unsigned or improperly marked will be treated as
abstentions for voting purposes. Abstentions and broker non-votes are not
counted in the tally of shares voted at the meeting. You may revoke your proxy
at any time before it is exercised by written notice to SIGCORP or SIGECO, as
the case may be, received prior to the time of the meeting, or orally at the
meeting. Dissenting stockholders in connection with any item presented do not
have rights of appraisal. The proxy and this statement were first mailed to
stockholders on or about March 21, 1997.
If you are a participant in the SIGCORP Automatic Dividend Reinvestment and
Stock Purchase Plan (the "Plan"), whole shares credited to your account in the
Plan will be voted by the Plan Agent in accordance with a voting instruction
form that will be furnished to you by the Plan Agent, provided the form is
completed by you and returned to the Plan Agent. If the separate voting
instruction form is returned signed but without instructions, your Plan shares
will be voted in accordance with the recommendations of management. If the
separate voting instruction form for the Plan shares is not returned to the Plan
Agent or if it is returned unsigned or improperly marked, none of your Plan
shares will be voted unless you vote in person. If you wish to vote the Plan
shares in person, a proxy may be obtained upon written request received by the
Plan Agent (Harris Trust & Savings Bank, Reinvestment Services, P.O. Box A3309,
Chicago, Illinois 60690) at least 15 days prior to the meeting.
COST AND METHOD OF SOLICITATION
The cost of preparing, assembling, printing, and mailing this proxy
statement, the enclosed proxy and any other material which may be furnished to
the stockholders in connection with the solicitation of proxies for the meeting
will be borne by SIGCORP and SIGECO. In order to be assured that a quorum of
outstanding stock will be represented at the meeting, proxies may be solicited
by officers and regular employees of SIGCORP or SIGECO, personally, by
telephone, telegraph, fax, or mail. In addition, Continental Stock Transfer &
Trust Co., 2 Broadway, New York, New York 10004 and/or D.F. King & Co., Inc., 77
Water Street, New York, New York 10005 may assist SIGCORP and SIGECO in the
solicitation of proxies. It is anticipated that the cost of such solicitations
will not exceed $10,000 plus reasonable out-of-pocket expenses. Brokers, banks,
nominees and other fiduciaries will be reimbursed for postage and other
reasonable out-of-pocket expenses incurred in sending this Joint Proxy Statement
and other materials to, and obtaining instructions relating to such materials
from, beneficial owners of SIGCORP and SIGECO stock.
1
<PAGE>
MATTERS TO BE VOTED UPON
As of this date, the only known business to be presented at the 1997 joint
annual meeting of stockholders is (1) the election of three directors of SIGCORP
and three directors of SIGECO to serve for a term of three years and until their
successors are duly elected and qualified, and (2) the ratification of the
appointment of Arthur Andersen LLP as auditors for 1997. However, the enclosed
proxy authorizes the proxy holders named therein to vote on all matters that may
properly come before the Annual Meetings and it is the intention of the proxy
holders to take such action in connection therewith as shall be in accordance
with their best judgment. Only shares held by those present at the meeting or
for which proxies are returned will be considered to be represented at the
meeting. For the purpose of determining a quorum, shares represented at the
meeting are counted without regard to abstentions or broker non-votes as to any
particular item.
RECORD DATE
The Board of Directors has fixed March 7, 1997, as the date for the
determination of stockholders entitled to notice of and to vote at the meeting.
Only stockholders of record at the close of business on March 7, 1997 will be
entitled to vote at the meeting or at any adjournments thereof, unless the Board
of Directors fixes a new record date for the adjourned meeting which it must do
if the adjourned meeting date is after August 20, 1997.
VOTING SECURITIES
As of the record date, there were 15,754,826 shares of Common Stock of
SIGCORP outstanding and entitled to vote. SIGECO's voting securities outstanding
on the record date consisted of 85,895 shares of 4.8% Preferred Stock, 25,000
shares of 4.75% Preferred Stock and, 75,000 shares of 6.50% Preferred Stock, and
15,754,826 shares of Common Stock owned by SIGCORP. Each share of the respective
companies is entitled to one vote on each question presented to a vote of the
stockholders of that company at their annual meeting. However, unless the holder
personally appears at the meeting, shares for which no proxy is returned
(whether registered in the name of the actual holder thereof or in nominee or
street name) will not be voted.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of December 31, 1996, each of the following stockholders was known to
the management to be the beneficial owner of more than five percent of the
outstanding shares of any class of voting securities as set forth below.
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
TITLE OF CLASS BENEFICIAL OWNER OWNER OF CLASS
- ------------------- ------------------ ---------- -------
$100 Par Preferred SALKELD & CO. 18,000 Shares 9.7%
Stock of SIGECO P.O. Box 704 Registered Owner
Church Street Station
New York, NY 10008
IDS Certificate Company 75,000 Shares 40.3%
c/o IDS Financial Registered Owner
Services, Inc.
3000 IDS Tower 10
Minneapolis, MN 55440
Common Stock of SIGECO SIGCORP, Inc. 15,754,826 Shares 100%
20 N.W. Fourth Street Registered Owner
P.O. Box 3606
Evansville, IN 47735-3606
2
<PAGE>
ELECTION OF DIRECTORS
SIGCORP's and SIGECO's Boards of Directors each consist of the same 10
individuals of whom approximately onethird are elected each year to serve terms
of three years or until the director's earlier retirement pursuant to the
respective Boards of Directors' Retirement Policy. It is intended that the
enclosed form of proxy will be voted for the election of Messrs. Ronald G.
Reherman, Donald E. Smith and James S. Vinson, all of whom are now members of
the Boards, as directors of SIGCORP and SIGECO, respectively, for three year
terms or until the director's earlier retirement. In any election of directors,
the persons receiving a plurality of the votes cast are elected to the vacancies
to be filled.
Each of the nominees has signified his willingness to serve if elected. If,
however, any situation should arise under which any such person should be unable
to serve, the authority granted in the enclosed proxy card may be exercised by
the proxy holders for the purpose of voting for a substitute nominee. Set forth
below is information with respect to the nominees and the other members of the
Boards of Directors. If not otherwise indicated, the principal occupation listed
for any individual has been the same for at least five years. THE BOARDS OF
DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES LISTED BELOW.
NOMINEES FOR ELECTION FOR TERMS TO EXPIRE IN 2000
[PHOTO]
Ronald G. Reherman
Ronald G. Reherman, 61, Chairman, President and Chief Executive Officer of
SIGCORP since January 1996; Chairman, President and Chief Executive Officer of
SIGECO since April 1991; President and Chief Executive Officer of SIGECO
1990-1991; President and Chief Operating Officer of SIGECO 1988-1990; Executive
Vice President and General Manager of SIGECO 1985-1988. He is also a director of
Ohio Valley Electric Corp., Indiana-Kentucky Electric Corp., National City
Bancshares and the National City Bank of Evansville. He has been a director of
SIGECO since 1985 and a director of SIGCORP since 1996.
[PHOTO]
Donald E. Smith
Donald E. Smith, 70, President and Chief Executive Officer of First Financial
Corporation, Terre Haute, Indiana; Chairman, and director of Terre Haute First
National Bank, Terre Haute, Indiana; President and director of Terre Haute Oil
Corp., Chairman and director of Princeton Mining Co. Inc., Chairman and director
of Deep Vein Coal Company, and Chairman and director of R.J. Oil Co., all of
Terre Haute, Indiana; and a director of Blackhawk Coal Corporation. He has been
a director of SIGECO since 1964 and a director of SIGCORP since 1996.
[PHOTO]
James S. Vinson
James S. Vinson, 55, President and Professor of Physics at the University of
Evansville in Evansville, Indiana since 1987. Vice President of Academic Affairs
and Professor of Physics at Trinity University at San Antonio, Texas 1983-1987.
He has been a director of SIGECO since 1989 and a director of SIGCORP since
1996.
3
<PAGE>
CURRENT DIRECTORS WHOSE TERMS EXPIRE IN 1998
[PHOTO]
John D. Engelbrecht
John D. Engelbrecht, 45, President of South Central Communications Evansville,
Indiana, owner and operator of radio and television stations in Indiana,
Kentucky and Tennessee and MUZAK franchises in 14 U.S. cities. He is also a
director of CNB Bancshares, Evansville, Indiana. He has been a director of
SIGECO and SIGCORP since 1996.
[PHOTO]
Donald A. Rausch
Donald A. Rausch, 66, Chairman of the Board, President and Chief Executive
Officer 1990-1995, of UF Bancorp, Inc., Evansville, Indiana; Chairman of the
Board and President, 1985-1995, of Union Federal Savings Bank, Evansville,
Indiana. He is also a director of The Citizens National Bank of Evansville. He
has been a director of SIGECO since 1982 and a director of SIGCORP since 1996.
[PHOTO]
Richard W. Shymanski
Richard W. Shymanski, 60, Chairman of the Board since 1995, and President
1983-1995, of Harding Shymanski & Company, Professional Corporation, Certified
Public Accountants, Evansville, Indiana. He has been a director of SIGECO since
1989 and a director of SIGCORP since 1996.
[PHOTO]
Norman P. Wagner
Norman P. Wagner, 72, Chairman of the Board of SIGECO 1990-1991; Chairman and
Chief Executive Officer of SIGECO 1988-1990; Chairman, President and Chief
Executive Officer 1986-1988. He currently serves as an officer of Southern
Indiana Properties, Inc. and Southern Indiana Minerals, Inc., both of which are
wholly-owned subsidiaries of SIGCORP. He has been a director of SIGECO since
1978 and a director of SIGCORP since 1996.
4
<PAGE>
CURRENT DIRECTORS WHOSE TERMS EXPIRE IN 1999
[PHOTO]
John M. Dunn
John M. Dunn, 58, President and Chief Executive Officer of Dunn Hospitality
Group, Evansville, Indiana, hotel development and management company. He is also
a director of Old National Bank of Evansville. He has been a director of SIGECO
and SIGCORP since 1996.
[PHOTO]
Robert L. Koch II
Robert L. Koch II, 58, President and Chief Executive Officer of George Koch
Sons, Inc. Evansville, Indiana, manufacturers of industrial painting systems and
distributors of heating and air conditioning equipment. He is a director of CNB
Bancshares, Inc. of Evansville and Bindley Western Industries, Inc. of
Indianapolis, Indiana. He has been a director of SIGECO since 1986 and a
director of SIGCORP since 1996.
[PHOTO]
Jerry A. Lamb
Jerry A. Lamb, 62, Chairman of the Board and Chief Executive Officer of American
Sheet Extrusion Corporation, Evansville, Indiana, manufacturers of plastic
formed products. He is also a director of CNB Bancshares, Inc., of Evansville.
He has been a director of SIGECO since 1993 and a director of SIGCORP since
1996.
COMMITTEES AND COMPENSATION OF THE BOARDS OF DIRECTORS
The committees of each of the SIGCORP and SIGECO Boards are the Executive
Committee, the Audit Committee, the Compensation Committee and the Strategic
Planning Committee. The members of the committees are the same individuals for
both SIGCORP and SIGECO.
The Executive Committees act on behalf of the Board of Directors of SIGCORP
or SIGECO, as applicable, when the respective Boards are not in session, except
on those matters which require action of the full Boards. The Executive
Committees of SIGCORP and SIGECO met 13 times in 1996. The Executive Committees
meet as required. The members of the SIGCORP and SIGECO Executive Committees are
Ronald G. Reherman (Chairman), Donald A. Rausch, Richard W. Shymanski, James S.
Vinson and Norman P. Wagner.
The Audit Committees of SIGCORP and SIGECO meet at least twice each year
with the independent auditors and internal auditing staff to review audit
procedures and recommendations for improvements in internal controls. The
members of the SIGCORP and SIGECO audit committees are Donald E. Smith
(Chairman), John M. Dunn, John D. Engelbrecht, Robert L. Koch II and Norman P.
Wagner. The SIGCORP and SIGECO Audit Committee met twice in 1996.
The Compensation Committees of SIGCORP and SIGECO advise and recommend to
the Board of Directors the salaries to be paid to the Chairman of the Board
(when also serving as an employee), the Chief Executive Officer, the President,
the Chief Operating Officer and the Chief Financial Officer of the respective
companies. The Compensation Committee of SIGECO also administers that company's
Corporate Performance Plan and 1994 Stock Option Plan. The members of the
Compensation Committees are Donald A. Rausch (Chairman), Jerry A. Lamb, Richard
W. Shymanski and James S. Vinson. The Compensation Committees of SIGCORP and
SIGECO met three times in 1996.
The Strategic Planning Committees of SIGCORP and SIGECO were formed on
November 19, 1996 to assist the Chairman of the Board in strategic planning for
the Corporations. The members of the Strategic Planning Committees are Ronald G.
Reherman (Chairman), Robert L. Koch II, Donald A. Rausch and Norman P. Wagner.
The SIGCORP and SIGECO Strategic Planning Committees met twice in 1996.
The Boards of Directors of SIGCORP and SIGECO had 17 meetings in 1996. No
director attended fewer than 75% of the Boards of Directors meetings, or the
aggregate of such meetings, and meetings of the committees of the Boards of
which he is a member during the time he was a director.
During 1996, each director who was a director for the entire year and not
an employee of SIGCORP or SIGECO received an annual retainer of $15,000 (which
included $3,000 in SIGCORP, Inc. common stock). Each director who was not an
employee of SIGCORP or SIGECO was paid $700 for each Board or committee meeting
attended. Directors are reimbursed for ordinary expenses incurred in performance
of their duties.
5
<PAGE>
Since each director serves on both the SIGCORP and SIGECO Boards and on the
same committees of each Board, the yearly retainer applies to service on both
Boards and separate meeting fees are paid only if the meeting of the SIGCORP or
SIGECO Board, as the case may be, or one of the Committees thereof, is not held
in conjunction with a meeting of the corresponding Board or committee. The usual
practice of SIGCORP and SIGECO is to hold meetings of the SIGCORP and SIGECO
Boards, and the corresponding committees, in conjunction with each other in
order to limit each director to a single meeting fee for each set of meetings.
During 1996, there were no board or committee meetings that deviated from that
practice.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows the beneficial ownership, as of December 31,
1996, of SIGCORP Common Stock, by each director, the Chief Executive Officer,
and each of the other executive officers named in the Compensation Table found
under "Executive Compensation" below. Also shown is the total ownership for such
persons and other executive officers as a group. No member of the group is the
beneficial owner of any of SIGECO's Preferred Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP(2)
--------------------------------------------------------
NAME OF BENEFICIAL OWNER(1) DIRECT INDIRECT TOTAL PERCENT OF CLASS
- ------------------------ ------- --------- ------ ----------------
<S> <C> <C> <C> <C>
John M. Dunn........................................... 1,400 -- 1,400 .01
John D. Engelbrecht.................................... 200 -- 200 --
Robert L. Koch II...................................... 1,863 -- 1,863 .01
Jerry A. Lamb.......................................... 586 -- 586 --
Donald A. Rausch....................................... 7,886 -- 7,886 .05
Ronald G. Reherman..................................... 6,964 373 7,337 .05
Richard W. Shymanski................................... 1,184 3,924 5,108 .03
Donald E. Smith (3) ................................... 12,944 1,030 13,974 .09
James S. Vinson........................................ 250 -- 250 --
Norman P. Wagner....................................... 3,834 15,407 19,241 .12
Andrew E. Goebel....................................... 4,176 -- 4,176 .03
J. Gordon Hurst........................................ 1,296 -- 1,296 .01
Ronald G. Jochum....................................... 600 -- 600 --
All of the above and other executive
officers as a group (15)............................. 64,836 .41
- ----------
(1) Beneficial ownership includes those shares over which an individual has
sole or shared voting, or investment powers, such as shares in which the
spouse, minor children or other relatives living in the home of the named
person have a beneficial interest, and shares held in SIGCORP's Dividend
Reinvestment Plan and other trust accounts.
(2) Includes shares held jointly or in other capacities, as to which in some
cases beneficial ownership is disclaimed. Does not include shares which the
named individual has the right to acquire under the 1994 Stock Option Plan.
See Table 3 for the number of shares that can currently be acquired.
(3) Donald E. Smith is a director and Chairman of Princeton Mining Company,
which owns 240,124 shares of Common Stock; director and Chairman of R.J.
Oil and Refining Co., Inc., which owns 86,221 shares of Common Stock,
director of Blackhawk Coal Corporation, which owns 125,733 shares of Common
Stock; Chairman and director of Terre Haute First National Bank, which
holds 27,243 shares of Common Stock as trustee; and President and director
of Terre Haute Oil Corporation, which owns 2,133 shares of Common Stock.
The aggregate number of such shares represents 3.06 percent of Common Stock
outstanding.
</TABLE>
6
<PAGE>
EXECUTIVE COMPENSATION
GENERAL. The following three tables set forth compensation paid by SIGECO
to each of the executive officers of SIGECO during the past three years whose
total cash compensation for the calendar year 1996 exceeded $100,000. The tables
include a Summary Compensation Table (Table 1); a table showing Option Grants in
Last Fiscal Year (Table 2), and a table showing Aggregate Option Exercises in
Last Fiscal Year and Fiscal Year-End Option Values (Table 3).
<TABLE>
<CAPTION>
TABLE 1
SUMMARY COMPENSATION TABLE
(a) (b) (c) (d) (e) (f)
LONG TERM
COMPENSATION
AWARDS:
SHARES
ANNUAL COMPENSATION UNDERLYING
-------------------------------------- OPTIONS(2) ALL OTHER
NAME AND PRINCIPAL POSITION AT SIGECO YEAR SALARY BONUS(1) (#) COMPENSATION
- ------------------------------------- ----- --------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Ronald G. Reherman 1996 331,875 64,000 None None
Chairman of the Board, 1995 315,833 60,000 None None
President and Chief Executive Officer 1994 295,833 42,000 65,157 None
Andrew E. Goebel 1996 173,542 33,600 None None
Senior Vice President, 1995 166,333 32,000 None None
Chief Financial Officer and Secretary 1994 158,333 30,400 26,064 None
J. Gordon Hurst 1996 162,333 31,200 None None
Senior Vice President and 1995 153,917 29,200 None None
General Manager of Operations 1994 143,917 27,200 23,784 None
Ronald G. Jochum 1996 118,958 11,500 3,441 None
Vice President and Director 1995 113,958 11,000 3,755 None
of Power Production 1994 104,583 4,376 3,982 None
- --------
(1) These amounts are cash awards under the Corporate Performance Plan based on
performance for the prior plan year as described in the report of the
Compensation Committee below.
(2) See "Compensation Committee Report on Executive Compensation" beginning on
page 9, and the information provided in Tables 2 and 3, for a discussion of
the 1994 Stock Option Plan applicable to certain officers, staff and
managers of SIGECO.
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
TABLE 2
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------------------------------------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE
SHARES UNDERLYING OPTIONS EXERCISE VALUE AT ASSUMED
OPTIONS GRANTED TO OR BASE ANNUAL RATES OF STOCK
GRANTED(1) EMPLOYEES IN PRICE(2) EXPIRATION PRICE APPRECIATION
NAME (#) FISCAL YEAR (PER SHARE) DATE FOR OPTION TERM
----- -------------- ------------ --------- ----------- --------------------------
5%(3) 10%(3)
----------- -----------
<S> <C> <C> <C> <C> <C> <C>
R.G. Reherman -- -- -- -- -- --
A.E. Goebel -- -- -- -- -- --
J.G. Hurst -- -- -- -- -- --
R.G. Jochum 3,441 11.18 $34.8750 7/10/2006 $62,880 $159,352
- --------
(1) For Mr. Jochum, options vest one year after the date of grant (July 10, 1996).
(2) Equal to market price on grant date.
(3) These values are not a prediction of what SIGCORP believes the market value
of its common stock will be in the next 10 years. They are merely assumed
values required to be calculated in accordance with SEC Rules.
</TABLE>
<TABLE>
<CAPTION>
TABLE 3
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF
SECURITIES
SHARES UNDERLYING UNDERLYING VALUE OF
ACQUIRED UNEXERCISED UNEXERCISED UNEXERCISED
ON VALUE OPTIONS AT IN-THE-MONEY
EXERCISE REALIZED(1) YEAR-END OPTIONS AT YEAR-END(2)
YEAR NAME (#) ($) (#) ($)
----- ----- ------------ ------------ ----------- --------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
<C> <C> <C> <C> <C> <C>
1996 R.G. Reherman 0 0 43,438/21,719 304,066/152,033
1996 A.E. Goebel 0 0 17,376/8,688 121,632/60,816
1996 J.G. Hurst 0 0 15,856/7,928 110,992/55,496
1996 R.G. Jochum 500 2,875.00 7,237/3,441 39,394/0
- -------
(1) Market value of underlying securities at time of exercise minus the exercise
price.
(2) Market value of underlying securities at fiscal year-end (December 31, 1996)
of $34.625 per share minus the exercise price.
</TABLE>
CHANGE OF CONTROL AGREEMENTS. In order to insure SIGCORP and SIGECO
continuity of management and operations in the event of a change of control of
SIGCORP or SIGECO, agreements have been entered into between SIGCORP, SIGECO and
Messrs. Reherman, Goebel, Hurst and Jochum. The agreements provide that in the
event of a change of control of SIGCORP or SIGECO, the salary of the named
officers will continue for the lesser of a period of three years, or until
retirement age, at their existing compensation levels (unless a lesser amount is
the maximum amount deductible by SIGCORP for United States Federal income tax
purposes, in which case the continued salary would be at such lesser amount).
RETIREMENT PLANS. All officers participate in SIGECO's trusteed,
noncontributory tax qualified Pension Plan for Salaried Employees (the "Pension
Plan"). Retirement income, as defined in the Pension Plan, is based on an
employee's average monthly earnings during the highest paid five consecutive
years in the Pension Plan of the employee's final 10 years of continuous service
prior to retirement or other termination of employment and is calculated in two
increments: 1.42 percent of such average monthly earnings for each year of
accredited service or part thereof up to a maximum of 30 years; plus .69 percent
of such average monthly earnings for each year of accredited service or part
thereof in excess of 30 years to a maximum of 10 years. Amounts payable under
the Pension Plan are not subject to social security or other offset.
8
<PAGE>
The years of service in the Pension Plan credited to officers named in the
compensation table above are R.G. Reherman-33 years, 6 months; A.E. Goebel-24
years, 1 month; J.G. Hurst-26 years; R.G. Jochum-2 years, 3 months.
The following table illustrates the estimated retirement income payable
under the Pension Plan, based on the specific remuneration levels and years of
service classification shown.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF SERVICE
---------------------------------------------------------------------
COVERED
REMUNERATION 15 20 25 30 35
------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$100,000.................... $21,300 $28,400 $35,500 $42,600 $46,050
125,000.................... 26,630 35,500 44,380 53,250 57,560
160,000* and above......... 34,080 45,440 56,800 68,160 73,680
- ------------------------------------------------------------------------------------------------------------------------------------
* As of January 1, 1997, the OMNIBUS Budget Reconciliation Act of 1993 (OBRA '93) limited annual compensation to $160,000
for purposes of pension calculations under tax qualified pension plans.
</TABLE>
SIGECO has a non-qualified Supplemental Retirement Plan (the "Supplemental
Plan") covering certain senior officers of SIGECO who qualify under the
applicable length of service and other eligibility provisions. It is presently
anticipated that Mr. Goebel, Mr. Hurst and Mr. Jochum will qualify for benefits
under the Supplemental Plan. The Supplemental Plan provides for supplemental
retirement income to be paid such that, when combined with benefits receivable
under SIGECO's Pension Plan, total retirement benefits paid will be equal to 50
percent of the average of the senior officer's final three years base salary
excluding bonuses. In the case of death, survivor benefits are payable to
surviving spouses, if any, at an actuarially adjusted level. SIGECO has entered
into an agreement with Mr. Reherman that is similar to the Supplemental Plan
except that the retirement income paid is equal to 70 percent of his highest
annualized salary as Chief Executive Officer of SIGECO. SIGECO has purchased
life insurance on the participants sufficient in amount to fund actuarially all
of SIGECO's future liabilities under the Supplemental Plan and the Agreement.
DEATH BENEFITS PLAN. SIGECO has a Supplemental Post-Retirement Death
Benefits Plan for officers and other senior executives to provide retired
participants with the equivalent of 25-35 percent of the pre-retirement group
life insurance benefit under SIGECO's group insurance plan for salaried
employees. SIGECO has purchased insurance on the lives of the participants,
which is projected to allow SIGECO to recover the entire cost of this plan.
STOCK OPTION PLAN. The 1994 Stock Option Plan was adopted by the Board of
Directors at its meeting held December 21, 1993, and by SIGECO's shareholders at
their meeting held March 22, 1994. Pursuant to the exchange whereby SIGECO
common stockholders became stockholders of SIGCORP, SIGECO's common
stockholders, by agreeing to the exchange, also agreed to the amendment of the
1994 Stock Option Plan to provide for the issuance of SIGCORP shares. The 1994
Stock Option Plan authorizes the granting of options to officers and key
employees of SIGECO to purchase up to 500,000 shares of SIGCORP Common Stock.
Options granted under the 1994 Stock Option Plan may constitute incentive stock
options (within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended, or nonqualified stock options (collectively, "options"). To date, a
total of 220,665 options have been granted.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
SIGECO's Executive Compensation Program is administered and monitored by
the Compensation Committee of the Board of Directors. The Compensation Committee
is composed entirely of independent, nonemployee directors. The main objectives
of the program are to:
o attract and retain an outstanding management team,
o motivate and reward outstanding performance results, and
o focus attention on plans, goals and initiatives which enhance value to
shareholders and to the customers of SIGECO.
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<PAGE>
In order to achieve these objectives, the executive compensation program
consists of three elements: a base salary plan, an annual corporate performance
incentive plan and a long-term stock option plan. The key elements of the
compensation package for executive officers are addressed in greater detail
below.
BASE SALARY PLAN. The Compensation Committee determines the annual base
salaries for SIGECO's mandatory officers and the salary ranges for all officer
positions. The determination of officer salaries and salary ranges is based upon
competitive norms (averages) for similar positions in reasonably comparable
electric and combination utility companies. SIGECO retains an independent
consultant to provide such information to the Compensation Committee.
Adjustments to actual base salaries take into consideration two key
variables: 1) the performance of the officer, and 2) the level of actual salary
compared with the midpoint of the applicable salary range, where midpoint is
defined as the competitive salary norm for the position. In general, individuals
whose performance is deemed fully competent over several years would be expected
to achieve a base salary at the midpoint level.
CORPORATE PERFORMANCE INCENTIVE PLAN. The annual Corporate Performance
Incentive Plan (the "Performance Plan") provides for the payment of additional
compensation contingent upon the achievement of certain specific shareholder and
customer related goals. Approximately 25 officers and senior management
personnel participate in the Performance Plan. Goal achievement is primarily
judged on a comparison with the results of ten similar companies in five
critical results areas as set forth in the table on page 11. In addition, plan
participants are also judged on their achievement of specific individual goals
which are developed in support of corporate objectives. These individual goals
are often, but not exclusively, related to the implementation of initiatives
contained in SIGECO's long-term strategic plan.
The Performance Plan design is reviewed annually by the Compensation
Committee. Based on corporate and individual performance results, the Plan
provides the following award opportunities: 20-30% of base salary for the Chief
Executive Officer; 10-30% of base salary for the senior vice presidents; and
5-25% of base salary for all other participants.
SIGECO retains an independent consultant to assist in the process of goal
formulation and to provide an independent assessment of goal achievement to the
Compensation Committee at the end of each Performance Plan year. The annual
awards paid under the Performance Plan for years 1994, 1995 and 1996 are shown
in column (d) of the Summary Compensation Table (Table 1) for the individuals
named therein.
LONG-TERM STOCK OPTION PLAN. As indicated above, the 1994 Stock Option Plan
was approved by the stockholders during 1994. Approximately 25 officers and
senior management personnel are eligible to participate in the plan. On July 10,
1996, the Compensation Committee granted stock options to certain plan
participants. None of the options granted in 1996 are exercisable prior to July
10, 1997.
The stock option awards for executive officers along with additional
details are included in Tables 2 and 3.
DISCUSSION OF CEO PAY. Consistent with overall executive compensation
program philosophy, the Compensation Committee structured the CEO's total
compensation during 1996 based on the overall performance of SIGECO, competitive
pay levels for CEO's in the utility industry, and a multi-year plan for the CEO
to achieve a base salary level at or about the established midpoint for the
position.
During 1996, the Compensation Committee took the following actions
regarding the CEO:
1. Increased base salary to $335,000 per year. This represented an
increase of 4.7%, which brought the CEO's base salary to its 1996
competitive norm.
2. Provided a cash incentive of $64,000 based on results achieved
under the Corporate Performance Incentive Plan for the
plan year 1995.
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<PAGE>
During the Performance Plan year 1995, SIGECO's performance as measured
against its ten company comparison group resulted in the following:
- --------------------------------------------------------------------------------
KEY PERFORMANCE INDEX OBJECTIVE SIGECO RATING
- --------------------------------------------------------------------------------
Total 5 Year Shareholder Return Highest 9th best (highest)
- --------------------------------------------------------------------------------
3 Year Average Annual Net Income Growth Highest 4th best (highest)
- --------------------------------------------------------------------------------
Electric Revenue per Kwh Lowest 3rd best (lowest)
- --------------------------------------------------------------------------------
Gas Revenue per Mcf Lowest 2nd best (lowest)
- --------------------------------------------------------------------------------
3 Year Average Annual Growth of Net 4th
Operating Expense per Customer Lowest best (lowest)
- --------------------------------------------------------------------------------
Under the Performance Plan formula, these performance ratings earned an
incentive award of 20% of base salary for the CEO.
Compensation Committee
Donald A. Rausch, Chairman R.W. Shymanski
J.A. Lamb J.S. Vinson
PERFORMANCE COMPARISONS
As required by the SEC, set forth below is a line graph comparing the
yearly change in the cumulative total shareholder return on SIGCORP Common
Stock, assuming reinvestment of all dividends, against the cumulative total
return of the S&P Composite 500 Stock Index and the EEI Combination Gas and
Electric Investor-Owned Utilities' Index, over the past five years.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
[chart]
11
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Under applicable SEC Rules, there were no interlocks or insider
participation on the Compensation Committee during 1996.
RATIFICATION OF APPOINTMENT OF AUDITORS
It is intended that, unless otherwise specified by the SIGCORP and SIGECO
stockholders entitled to vote, votes will be cast pursuant to the proxies hereby
solicited in favor of the ratification of the appointment by the Boards of
Directors of Arthur Andersen LLP as independent auditors of SIGCORP and SIGECO
for the year 1997. The Arthur Andersen firm has acted for SIGECO in this
capacity since 1918 and for SIGCORP since its inception. The Companies are
advised that neither the firm nor any of its partners has any financial interest
in or any connection with SIGCORP or SIGECO except in the capacity of auditors.
A representative of Arthur Andersen LLP will attend the Joint Annual Meeting and
will be available to answer any questions and may make a statement if he so
desires. THE BOARDS OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF AUDITORS.
SHAREHOLDER PROPOSALS
Proposals by shareholders to be presented at the next annual meeting of
shareholders of SIGCORP and SIGECO currently scheduled to be held on April 22,
1997 must be received by SIGCORP or SIGECO, as the case may be, on or before
Nov. 21, 1997 for inclusion in the Proxy Statement relating to that meeting.
OTHER BUSINESS. The Joint Annual Meeting is being held for the purposes set
forth in the Notice which accompanies this Proxy Statement. The Boards of
Directors of SIGCORP and SIGECO know of no business to be transacted at the
meeting other than the election of directors and the ratification of the
appointment of auditors. However, if any other business should properly be
presented to the Joint Annual Meeting, the proxies will be voted in respect
thereof in accordance with the judgment of the person or persons voting the
proxies.
SIGCORP, INC.
and
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
By Order of the Boards of Directors,
A.E. Goebel,
Secretary
Evansville, Indiana
Date: March 21, 1997
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