-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RNEb9jNu2npnyCtPVWmoOeXCTHSvoDXkpdFHgkKziVvwNURSTsKPxP7gfhskRsmK x+m5N+c5FR1aYJv6yc7+ow== 0000912057-01-507835.txt : 20010411 0000912057-01-507835.hdr.sgml : 20010411 ACCESSION NUMBER: 0000912057-01-507835 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010522 FILED AS OF DATE: 20010410 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTRAL ILLINOIS LIGHT CO CENTRAL INDEX KEY: 0000018651 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 370211050 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-02732 FILM NUMBER: 1599476 BUSINESS ADDRESS: STREET 1: 300 LIBERTY ST CITY: PEORIA STATE: IL ZIP: 61602 BUSINESS PHONE: 3096758810 MAIL ADDRESS: STREET 1: 300 LIBERTY ST CITY: PEORIA STATE: IL ZIP: 61602 DEF 14A 1 a2042884zdef14a.txt DEF14A SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section240.14a-11(c) or Section240.14a-12
CENTRAL ILLINOIS LIGHT COMPANY ------------------------------------------------------------- (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 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: ---------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ---------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ---------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ---------------------------------------------------------- (5) Total fee paid: ---------------------------------------------------------- / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ---------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ---------------------------------------------------------- (3) Filing Party: ---------------------------------------------------------- (4) Date Filed: ----------------------------------------------------------
[LOGO] NOTICE OF ANNUAL MEETING Dear Shareholders: The Annual Meeting of Shareholders of Central Illinois Light Company will be held on Tuesday, May 22, 2001, at 1:30 PM, Central Time, at the principal office of the Company, 300 Liberty Street, Peoria, Illinois, in order to: 1. Elect a Board of Directors; and 2. Transact such other business as may properly come before the meeting. Shareholders of record at the close of business on March 30, 2001, are entitled to vote at the meeting. By Order of the Board of Directors, [SIGNATURE] Craig W. Stensland Secretary April 16, 2001 IMPORTANT It is important that your shares be represented at the meeting. Please mark, sign, date and return the enclosed proxy promptly in order that your shares will be voted. PROXY STATEMENT GENERAL This statement is furnished in connection with a solicitation of proxies by the Board of Directors of Central Illinois Light Company (the "Company" or "CILCO"), for use at the Annual Meeting of Shareholders to be held on Tuesday, May 22, 2001, at 1:30 PM, Central Time, at the Company's executive offices, 300 Liberty Street, Peoria, Illinois 61602, and any adjournment thereof. The shares represented by your proxy will be voted if the proxy is duly executed and returned prior to the meeting. If no choice has been specified, the persons named in the proxy intend to vote for the election of the nominees listed herein. You may revoke your proxy by a duly executed later proxy, or at any time before it is exercised, by written notice to the Secretary of the Company, received prior to the time of the meeting, or orally at the meeting. The expense of the solicitation of proxies is being borne by the Company. In addition to solicitation by mail, officers and regular employees of the Company may solicit proxies either personally, or by telephone, e-mail or fax. The Company will reimburse banks, brokers or other similar agents or fiduciaries for forwarding proxy material to their principals, the beneficial owners of the stock. The annual report on Form 10-K of the Company for the year ended December 31, 2000, is being sent, along with the Notice of Annual Meeting, this Proxy Statement and the accompanying Proxy, to all shareholders of record at the close of business on March 30, 2001, which is the record date for the determination of shareholders entitled to vote at the meeting. These items are to be first mailed to shareholders on April 16, 2001. VOTING SECURITIES AND PRINCIPAL HOLDERS On March 30, 2001, the record date for the meeting, the Company had outstanding 191,204 shares of preferred stock, $100 par value; 220,000 shares of Class A preferred stock, no par value; and 13,563,871 shares of common stock, no par value. Each share entitles the holder thereof to one vote upon any matter coming before the meeting, except that, in the election of directors, each shareholder is entitled to cumulate votes and, therefore, may give one nominee as many votes as shall equal the number of directors to be elected multiplied by the number of shares held by such shareholder, or such shareholder may distribute such votes among any two or more nominees by so indicating on the proxy. Votes cast by proxy or in person at the Annual Meeting will be tabulated by the election inspectors appointed for the meeting who will determine whether or not a quorum is present. The election inspectors will treat abstentions as shares that are present and entitled to vote for purposes of determining the presence of a quorum but as unvoted for purposes of determining the approval of any matter submitted to the shareholders for a vote. If a broker indicates on the proxy that it does not have 1 discretionary authority as to certain shares to vote on a particular matter, those shares will not be considered as present and entitled to vote with respect to that matter. At March 30, 2001, the following officer of the Company was a beneficial owner of shares of the Company's preferred stock, $100 par value, representing less than .003% of the shares of that class outstanding.
OFFICER NUMBER OF SHARES - ---------------------------- ---------------------------- T. S. Romanowski 5
No other officer or director was the beneficial owner of any shares of the Company's preferred or common stock. The following information, regarding beneficial ownership of the Company's equity securities on January 1, 2001, is furnished with respect to each person or group of persons acting together who, as of such date, is shown on the Company's stock records to be the registered owner of more than 5% of any class of the Company's voting securities and no independent inquiry has been made to determine whether any shareholder is the beneficial owner of shares not registered in the name of such shareholder or whether any shareholder is a member of a shareholder group.
AMOUNT AND NATURE OF CLASS OF NAME AND ADDRESS OF BENEFICIAL PERCENT STOCK BENEFICIAL OWNER OWNERSHIP OF CLASS ----- ---------------- --------- -------- Common CILCORP Inc. 13,563,871(1) 100% 300 Liberty Street Peoria, IL 61602
- -------- (1) CILCORP Inc. has sole voting and dispositive power with respect to the common shares. CILCORP Inc. is a wholly-owned subsidiary of The AES Corporation. 2 PROPOSAL 1: ELECTION OF DIRECTORS Six directors are to be elected at the Annual Meeting to hold office for the ensuing year or until their successors are elected and qualified. All nominees are now serving as directors of the Company and have consented to serve, if elected. To be elected a director, a nominee must be among the six nominees receiving the highest number of votes. The nominees, along with their biographical summaries, are listed below. The Board of Directors has no reason to believe that the persons named will not be available, but in the event that a vacancy among the original nominees is occasioned by death or any other reason prior to the meeting, the proxy will be voted for a substitute nominee or nominees designated by the Board of Directors. JERRY D. CAGLE VICE PRESIDENT OF CILCO Director of CILCO since 1999 Mr. Cagle was born at Kewanee, Missouri, in 1950. He came to CILCO in September of 1999 to assume responsibility as plant manager for CILCO's Indian Trails cogeneration facility. In January of 2000, Mr. Cagle began his current position as plant manager of CILCO's Edwards power generation facility. He was elected vice president of the Company in October of 1999. Prior to Mr. Cagle coming to CILCO, he had been with CILCO's parent company, The AES Corporation, since 1989 and worked at AES Warrior Run and AES Shady Point power generation plants. Mr. Cagle has had extensive experience with gas and steam turbines, and geothermal, nuclear, and coal-fired power plants in the United States and abroad. SCOTT A. CISEL VICE PRESIDENT OF CILCO Director of CILCO since 1999 Mr. Cisel was born at Peoria, Illinois, in 1953. He is a graduate of Culver-Stockton College where he received a bachelor of science degree in business administration and economics. He received a master's degree in liberal studies from Bradley University in 1985. Mr. Cisel joined CILCO in 1975. He was initially employed as a summer meter reader and advanced through various management positions in sales and customer service. He was appointed manager-commercial office in 1981; manager-consumer and energy services in 1984; manager-Agricultural Research and Development Corporation ("ARDC") in 1987; manager-rates, sales and customer service in 1988 and director-corporate sales in 1993. Effective April 1, 1995, Mr. Cisel was elected vice president-sales and marketing and, on November 9, 1995, he became responsible for federal and state governmental and regulatory activities. He was promoted to his present position as 3 leader of CILCO's sales and marketing business unit in April 1999 and remains a vice president. Mr. Cisel serves as a trustee of Eureka College, and is a member of the board of directors of the Tri-County Urban League. He is active in various professional and civic organizations. LENNY M. LEE PRESIDENT OF CILCO Director of CILCO since 2001 Mr. Lee was born at Kankakee, Illinois, in 1958. He received a bachelor of science degree in chemical engineering from Cornell University in 1980. He joined The AES Corporation in 1988. In 1993, Mr. Lee became general manager of the 650 megawatt Central Termica San Nicolas power generation station in Argentina. In 1995, he moved to Singapore and in 1998 he became group manager of the AES Transpower Group where he was responsible for business development and operations in Australia, Southeast Asia, Korea and Hawaii. In January 2001, Mr. Lee became manager of the AES Great Plains Group in the Central United States. Also in 2001, Mr. Lee assumed the responsibilities of president and director of both CILCORP and CILCO. JAMES L. LUCKEY, III VICE PRESIDENT OF CILCO Director of CILCO since 1999 Mr. Luckey was born at Ocala, Florida, in 1960. He graduated from City University in Bellevue, Washington, in 1993, with a bachelor of science degree in technology/ engineering management. He was elected vice president of the Company in December of 1999. In January 2000, Mr. Luckey became plant manager of CILCO's Duck Creek power generation facility. Prior to coming to CILCO, Mr. Luckey had worked with CILCO's parent company, The AES Corporation, at AES Thames. His responsibilities at AES Thames included plant safety, water treatment, budgeting, material handling, and control room operation. Before joining AES in 1988, Mr. Luckey had seven years of experience with the United States Navy in high pressure steam, electric generation and nuclear systems. Mr. Luckey has served on the boards of local community service organizations. GREG T. RUSSELL VICE PRESIDENT OF CILCO Director of CILCO since 1999 Mr. Russell was born at New London, Connecticut, in 1964. He came to CILCO in June of 1999 to become a team leader at CILCO's Edwards power generation facility. In 4 December of 1999, he was elected vice president of the Company. In January 2000, Mr. Russell became plant manager for CILCO's Indian Trails cogeneration facility. Prior to coming to CILCO, Mr. Russell had been with CILCO's parent company, The AES Corporation, since 1989. While at AES, he worked at AES Southington, AES Barry Operations and AES Thames. Prior to AES, he worked for General Dynamics Corporation in Groton, Connecticut. ROBERT J. SPROWLS VICE PRESIDENT OF CILCO Director of CILCO since 1999 Mr. Sprowls was born at Kewanee, Illinois, in 1957. He graduated from Knox College in 1979 with a bachelor of arts degree in economics and business administration. He received a master of business administration degree from Bradley University in 1980 with concentration in the areas of finance and accounting. Mr. Sprowls is a certified public accountant and a certified management accountant. He began his career at CILCO in February of 1982 and has served in many financial positions including being elected CILCO treasurer in 1998 and CILCORP treasurer in 1990. On April 1, 1995, he was elected vice president-strategic services for CILCO and in December 1995 became assistant to the CEO of CILCORP. In August 1996, Mr. Sprowls became vice president and chief financial officer of QST Enterprises Inc. and in April 1997 he became senior vice president and chief financial officer of QST Enterprises Inc. In August 1998, he became vice president and chief financial officer of CILCO. He was promoted to his present position as leader of CILCO's energy delivery business unit in March 1999. Mr. Sprowls is a director of both CILCORP and CILCO and a vice president at both CILCORP and CILCO. He is a member of the board of directors of Goodwill Industries of Central Illinois and the Illinois Energy Association. COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS The Board of Directors functions as a Committee of the Whole and has no committees. During 2000, the Board of Directors took action, as needed, by unanimous written consent. DIRECTORS' COMPENSATION No fees are paid to directors who are officers of the Company. 5 EXECUTIVE COMPENSATION The following table sets forth the five most highly compensated executive officers for the years 2000, 1999 and 1998: SUMMARY COMPENSATION TABLE
LONG TERM ANNUAL COMPENSATION COMPENSATION ----------------------------------- ------------- OTHER ANNUAL SECURITIES ALL OTHER COMPENSATION UNDERLYING COMPENSATION NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) OPTIONS(#)(1) ($)(2) - --------------------------- -------- --------- -------- ------------ ------------- ------------ Paul D. Stinson (3) 2000 190,000 140,000 926 0 28,450 President 1999 185,000 175,000 71,892 7,369 15,966 1998 -- -- -- -- -- Robert J. Sprowls (4) 2000 157,200 75,000 -- 2,000 4,353 Vice President 1999 150,997 57,661 -- 1,867 57,625 1998 150,177 100,000 -- -- 8,985 Scott A. Cisel (5) 2000 139,885 32,000 -- 1,800 4,197 Vice President 1999 135,954 53,394 -- 1,318 55,736 1998 133,000 65,208 -- -- 5,749 James L. Luckey, III (6) 2000 98,000 50,000 240 1,057 11,270 Vice President 1999 69,000 16,500 3,317 1,453 633 1998 -- -- -- -- -- Jerry D. Cagle (7) 2000 105,000 32,000 598 1,071 16,575 Vice President 1999 87,083 7,000 3,030 842 7,441 1998 -- -- -- -- --
- -------- (1) The number of options shown as compensation as of December 31, 2000, were for services rendered for 2000. Those stock options were awarded by the Compensation Committee of the AES Board of Directors in January 2001. (2) For Messrs. Stinson, Cagle and Luckey, this column reports contributions by AES to The AES Corporation's Profit-Sharing and Stock Ownership Plan and the Employee Stock Ownership Plan of AES. For Mr. Stinson it also includes allocations to AES's Supplemental Retirement Plan. Specifically, for Mr. Stinson in 2000, the amount contributed to The AES Profit-Sharing and Stock Ownership Plan and Employee Stock Ownership Plan was $20,000, and the amount allocated to the Supplemental 6 Retirement Plan was $8,450. For Messrs. Cagle and Luckey, the amount contributed to The AES Profit-Sharing and Stock Ownership Plan and Employee Stock Ownership Plan was as follows: Mr. Cagle $16,575; and Mr. Luckey $11,270. For Messrs. Cisel and Sprowls, amounts shown in this column represent employer contributions to the CILCO Employees' Savings Plan. For the CILCO Employees' Savings Plan, the amounts contributed in 2000 were as follows: Mr. Sprowls $4,353; and Mr. Cisel $4,197. (3) Mr. Stinson is a vice president of The AES Corporation, which owns all the outstanding common stock of CILCORP Inc. CILCORP owns all the common stock of Central Illinois Light Company. Mr. Stinson was president of both CILCO and CILCORP until January 26, 2001. In that Mr. Stinson also provided services to The AES Corporation, his salary was allocated among CILCO, CILCORP and AES. Mr. Stinson's salary was determined by The AES Corporation. (4) Mr. Sprowls is a vice president of CILCORP and is also a vice president of CILCO. The amount noted for his Securities Underlying the Options is determined by The AES Corporation. (5) Mr. Cisel is a vice president of CILCO. The amount noted for his Securities Underlying the Options is determined by The AES Corporation. (6) Mr. Luckey is a vice president of CILCO. The amount noted for his Securities Underlying the Options is determined by The AES Corporation. (7) Mr. Cagle is a vice president of CILCO. The amount noted for his Securities Underlying the Options is determined by The AES Corporation. 7 OPTION GRANTS IN LAST FISCAL YEAR The following table provides information on options granted for 2000 to the named executive officers.
% OF TOTAL OPTIONS NUMBER OF GRANTED SECURITIES TO ALL UNDERLYING AES OPTIONS PEOPLE EXERCISE GRANT DATE GRANTED FOR FISCAL OR BASE EXPIRATION PRESENT VALUE NAME (#)(1) YEAR PRICE($/SH) DATE ($)(2) - ---- ---------- ---------- ----------- ---------- ------------- Paul D. Stinson 0 -- -- -- 0 Robert J. Sprowls 2,000 0.05% $55.61 01/31/11 70,000 Scott A. Cisel 1,800 0.04% $55.61 01/31/11 63,000 James L. Luckey, III 1,057 0.03% $55.61 01/31/11 36,995 Jerry D. Cagle 1,071 0.03% $55.61 01/31/11 37,485
- -------- (1) All options are for shares of Common Stock of The AES Corporation. Options granted for services performed in 2000 were granted at the fair market value on the date of grant, and vest at the rate of 50% per year through January 2003. (2) The Black-Scholes stock option pricing model was used to value the stock options on the grant date (January 31, 2001). AES's assumptions under this model include an expected volatility of 47.05%, a 5.26% risk free rate of return, no dividends, and a vesting adjustment of 4.5%. The options have 10 year terms and vest at 50% per year. 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 AES's stock price or dividend policy. 8 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION VALUE The following table provides information on option exercises in 2000 by the named executive officers and the value of such officers' unexercised options at December 31, 2000.
NUMBER OF DOLLAR SECURITIES VALUE OF UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY NUMBER OF OPTIONS AT OPTIONS AT SHARES DOLLAR FY-END FY-END ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/ NAME EXERCISE REALIZED(1) UNEXERCISABLE UNEXERCISABLE(2) - ----------------------------- ----------- ----------- ------------- ---------------- Paul D. Stinson 102,308 4,296,875 96,193/ 3,901,062/ 25,849 705,902 Robert J. Sprowls 0 0 642/ 16,953/ 3,092 63,656 Scott A. Cisel 0 0 560/ 14,788/ 2,076 43,868 James L. Luckey, III 800 18,300 0/ 0/ 3,706 85,996 Jerry D. Cagle 1,600 53,350 14,064/ 630,604/ 2,784 74,176
- -------- (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, 2000, of $55.3750 per share for each security underlying such stock option and the per share exercise price. 9 MANAGEMENT CONTINUITY AGREEMENTS The Company has entered into a management continuity agreement with Mr. Cisel. The agreement provides that, in the event of a change in control of CILCORP Inc. (as defined in the agreement) and a subsequent termination of employment within two years of the change in control, CILCORP Inc., or its successor, is obligated to pay termination benefits for a period of up to two years. As a result of the change in control of CILCORP Inc. pertaining to its merger with The AES Corporation on October 18, 1999, the two-year period following said change in control will expire on October 17, 2001. Termination benefits include the continuation of salary, incentive compensation and certain employee benefits. Under the agreement, compensation and benefits are payable for a period not to exceed two years and termination must be involuntary or due to material changes in the terms of employment. The Company has entered into a retention agreement with Mr. Sprowls. The agreement provides that in the event of a termination of employment prior to the second anniversary of the date of the change in control (as defined in the agreement), but in no event later than April 1, 2006, CILCORP Inc., Central Illinois Light Company, or its successor, is obligated to pay termination benefits. Under the agreement, termination benefits include a base salary continuation payment equal to three times base salary if the termination date is within 12 months following the date of change in control and two times base salary if the termination date falls after the first anniversary of the change in control, but before the second anniversary. Additional benefits are paid for continuation of hospital and medical insurance plans. In order to qualify for the base salary continuation payment, the termination must be involuntary or due to material changes in the terms of employment. CERTAIN PLANS BENEFIT REPLACEMENT PLAN. The Board of Directors has established a Benefit Replacement Plan (the "Benefit Replacement Plan"). The Benefit Replacement Plan provides for payments to participants from the Company's general funds to restore the retirement benefit under the Company's non-contributory Pension Plan for Management, Office and Technical Employees (the "Pension Plan") when such benefit is restricted by (1) the maximum defined benefit limitation of Section 415(b) of the Internal Revenue Code of 1986, as amended (the "Code"), (2) the indexed compensation limitation of Code Section 401(a)(17), and (3) participation in certain of the Company's deferred compensation plans. The Benefit Replacement Plan generally covers all Pension Plan participants affected by these restrictions and provides for payments consistent with the timing and forms as provided by the Pension Plan. 10 PENSION PLAN. Pension benefits are provided through the Pension Plan. Pension benefits are determined using a formula based on years of service and highest average rate of monthly earnings for any sixty consecutive month period. The normal retirement age specified in the Pension Plan is age 65. Retirement between the ages of 55 and 62 results in an appropriate reduction in pension benefits. The following table shows the aggregate annual benefits payable on a straight life annuity basis upon retirement at normal retirement age under the Pension Plan and under the Benefit Replacement Plan discussed above. The amounts shown are not subject to any deduction for Social Security benefits or other offset amounts other than for an optional survivorship provision. PENSION PLAN TABLE
YEARS OF SERVICE ---------------------------------------------------- REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS - ------------ -------- -------- -------- -------- -------- $200,000 42,750 57,000 71,250 85,500 99,750 225,000 48,096 64,128 80,160 96,192 112,224 250,000 53,442 71,250 89,064 106,878 124,692 275,000 58,781 78,375 97,969 117,563 137,156 300,000 64,128 85,500 106,878 128,250 149,628 400,000 85,500 114,000 142,500 171,000 199,500 500,000 106,878 142,500 178,128 213,715 249,378
The sum of annual and long-term compensation shown for the individuals listed in the above Summary Compensation Table is substantially compensation as covered by the Pension Plan and the Benefit Replacement Plan. At January 2001, the credited years of service under the Pension Plan for such individuals are as follows: R. J. Sprowls-- 19 years, S.A. Cisel--26 years. Messrs. Stinson, Cagle and Luckey do not participate in the Pension Plan. REPORT ON EXECUTIVE COMPENSATION The Company's executive officer compensation program is modeled after The AES Corporation compensation program. The guidelines for compensation of executive officers are designed by The AES Corporation (AES) to provide fair and competitive levels of total compensation while integrating pay with performance. Executive officers are evaluated annually on the basis of both individual responsibilities and contributions, as well as AES company-wide results in two related areas: (i) corporate culture (or principles) and (ii) business or functional area performance. 11 There are three elements in AES's executive officer compensation program, which is consistent with how most people who work for AES are compensated. These elements are base salary, annual incentive compensation and stock option program. Base salary is adjusted annually 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 guidelines provide base salary compensation generally consistent with AES's 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, AES's shared principles of fairness, integrity, fun and social responsibility are integral to its operations and serve as its founding principles. These principles apply equally to the internal activities of AES as well as its external relationships. Each executive officer's individual contribution to demonstrating and nurturing these shared values is reviewed and considered as a factor in determining annual incentive compensation. Evaluations 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 contributions, environmental performance, and plant and company-wide safety. The qualitative factors considered significant include business and project development progress, effective strategic planning and implementation, AES company-wide support, understanding of and adherence to AES's values, and community relations and people development. Important strategic successes or failures can take several years to translate into objectively measurable results. Annual incentive compensation is not computed using a mathematical formula of pre-determined performance goals and objective criteria. As a result, the 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 AES stock option program is used to reward people for the corporate responsibilities they undertake, their performance of those duties and to help them to think and 12 act like owners. All executive officers and approximately 75% of the total people in the AES company located in the United States (approximately 4% of AES people worldwide) participate in this program. Historically, because of differing legal environments in many countries, options had been primarily granted to U.S. people. However, AES has taken steps to incorporate those people who reside outside of the United States into this program by qualifying its stock option plan in each country where AES people currently reside or work, and AES expects the total participation to increase in the future. Stock options are usually granted annually at the fair market value on the date of grant and provide vesting periods to reward people for continued service to AES. The 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, AES has participated in an annual survey conducted by an outside consulting firm which encompasses over 400 public companies. Based in part on the survey results, guidelines were established for suggested ranges of option grants to executive officers as well as the rest of the people at AES. Based on the survey, guideline ranges were established 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 AES 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 AES, as well as a broad range of similarly sized companies. Comparisons are made with published amounts, where available, and, from time to time, AES also participates in various industry-sponsored compensation surveys in addition to the public-company survey described above. AES 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, AES 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 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. Some executive officers also participate in AES's profit sharing plan (or deferred compensation plan for executive officers) on the same terms as all other people at AES, subject to any legal limitations on amounts that may be contributed or benefits that may 13 be payable under the plan. Matching contributions and annual profit sharing contributions are made with the common stock of AES to further encourage long-term performance. In addition, certain individuals at AES participate in AES'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. In most cases, AES has taken steps to qualify 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 AES'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. AES will continue to consider the implications 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 to AES, irrespective of whether such amounts are entirely deductible. CILCO Board of Directors J. D. Cagle S. A. Cisel L. M. Lee J. L. Luckey, III G. T. Russell R. J. Sprowls
OTHER MATTERS The Board has no knowledge of any business to be presented for consideration at the Annual Meeting other than that discussed above. Should any other business properly come before the meeting or any adjournment thereof, it is intended that the shares represented by proxies will be voted with respect thereto in accordance with the best judgment of the persons named in such proxies. PROPOSALS OF SHAREHOLDERS Proposals of shareholders to be presented at the May 21, 2002, Annual Meeting must be received not later than January 18, 2002, if they are to be included in the Company's proxy statement and form of proxy relating to that meeting. Shareholder proposals received after that date but before April 2, 2002 will not be included in the 14 Company's proxy statement and form of proxy relating to the meeting and shareholder proposals received after April 2, 2002 will be considered untimely under the rules of the Securities and Exchange Commission governing discretionary voting on matters not covered in a proxy statement. Proposals should be sent to the Secretary, Central Illinois Light Company, 300 Liberty Street, Peoria, Illinois 61602. By Order of the Board of Directors, [SIGNATURE] Craig W. Stensland Secretary
April 16, 2001 15 [CILCO LOGO] THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints R. J. Sprowls, S. A. Cisel and C. W. Stensland attorneys and proxies with power of substitution to each, with authority to vote all shares which the undersigned would be entitled to vote if personally present at the 2001 annual meeting of shareholders of Central Illinois Light Company, or at any adjournment thereof, upon the election of directors as set forth in the notice of meeting and proxy statement dated April 16, 2001, and, in their discretion, upon any other matter which may properly come before the meeting. The shares represented hereby will be voted as directed on the reverse of this card. IF NOT OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS (CONTINUED AND TO BE SIGNED ON THE OTHER SIDE) ACCOUNT NUMBER PROXY. PLEASE DATE AND SIGN EXACTLY AS NAME APPEARS BELOW. EACH JOINT OWNER SHOULD SIGN. ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE, OR OTHERS SIGNING IN A REPRESENTATIVE CAPACITY SHOULD GIVE THEIR FULL TITLES. TEAR OFF THIS PORTION DATE: ________________________________________________, 2001 ____________________________________________________________ SIGNATURE/S ____________________________________________________________ NO POSTAGE REQUIRED IF RETURNED IN THE ENCLOSED ENVELOPE AND MAILED IN THE UNITED STATES. 1. Election of Directors / / FOR all nominees listed / / WITHHOLD AUTHORITY below (except as marked to vote for all nominees to the contrary below) listed below J.D. Cagle, S.A. Cisel, L.M. Lee, J.L. Luckey III, G.T. Russell, R.J. Sprowls INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW. _______________________________________________________________________________ REMOVE PROXY AT PERFORATION AND RETURN IN ENCLOSED BUSINESS REPLY ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----