-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, iStreycMyLpErpO7WT9zRB6gdi9DjuFT7jrM5/P5vqjtV100M8dpjq7gQSiPvwDj ViSm9ufQ5E1g18YU0U3sig== 0000073986-94-000003.txt : 19940310 0000073986-94-000003.hdr.sgml : 19940310 ACCESSION NUMBER: 0000073986-94-000003 CONFORMED SUBMISSION TYPE: PRE 14C PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OHIO POWER CO CENTRAL INDEX KEY: 0000073986 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 314271000 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: PRE 14C SEC ACT: 34 SEC FILE NUMBER: 001-06543 FILM NUMBER: 94515084 BUSINESS ADDRESS: STREET 1: 301 CLEVELAND AVE S W CITY: COLUMBUS STATE: OH ZIP: 44702 BUSINESS PHONE: 6142231000 PRE 14C 1 OPCO PRELIMINARY INFORMATION STATEMENT SCHEDULE 14C INFORMATION Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 Check the appropriate box: [X] Preliminary Information Statement [ ] Definitive Information Statement OHIO POWER COMPANY (Name of Registrant As Specified in Charter) John M. Adams, Jr. (Name of Person(s) Filing the Information Statement) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g). [ ] Fee computed on table below per Exchange Act Rules 14c-5(g) 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 0-11:1 ______________________________________________________ 4) Proposed maximum aggregate value of transaction: ______________________________________________________ 1 Set forth the amount on which the filing fee is calculated and state how it was determined. [ ] 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:___________________________________________ OHIO POWER COMPANY 301 Cleveland Avenue, S.W. Canton, Ohio 44702 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO THE SHAREHOLDERS OF OHIO POWER COMPANY: The annual meeting of the shareholders of Ohio Power Company will be held on Tuesday, May 3, 1994, at 2:30 p.m. at the principal office of the Company, 301 Cleveland Avenue, S.W., Canton, Ohio, for the following purposes: 1. To elect eight directors of the Company to hold office for one year or until their successors are elected and qualified; 2. To consider and act upon an amendment to the Company's Amended Articles of Incorporation which would reclassi- fy 1,050,000 authorized but unissued shares of the Company's Cumulative Preferred Stock, par value $100 per share, to 1,050,000 authorized but unissued shares of the Company's Cumulative Preferred Stock, Non-Voting par value $100 per share; and 3. To transact such other business (none known as of the date of this notice) as may legally come before the meeting or any adjournment thereof. Only holders of record of Common Stock and Cumulative Preferred Stock, par value $100 per share, at the close of business on March 4, 1994 are entitled to notice of and to vote at the annual meeting. THERE WILL BE NO SOLICITATION OF PROXIES BY THE BOARD OF DIRECTORS OF THE COMPANY. JOHN F. DI LORENZO, JR., Secretary March 24, 1994 INFORMATION STATEMENT This information statement is being furnished in connection with the annual meeting of shareholders of Ohio Power Company (the "Company"), to be held on Tuesday, May 3, 1994 at 2:30 p.m. at the principal office of the Company, 301 Cleveland Avenue, S.W., Canton, Ohio. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. Voting at Meeting On March 4, 1994, the date for determining shareholders entitled to notice of and to vote at the meeting, there were 1,712,403 shares of Cumulative Preferred Stock, par value $100 per share, and 27,952,473 shares of Common Stock outstanding. Each holder of Cumulative Preferred Stock, par value $100 per share, and each holder of Common Stock has the right to one vote for each share standing in such holder's name on the books of the Company at the close of business on March 4, 1994 for the election of directors and on any other business which may come before the meeting. Holders of Cumulative Preferred Stock, $25 non-voting of the par value $25 per share, and Cumulative Preferred Stock, $100 non-voting of the par value of $100 per share, are not entitled to notice of, or to vote at, the meeting. If notice in writing is given by any shareholder to the President, any Vice President, or the Secretary of the Company, not less than 48 hours before the time fixed for the meeting, that such shareholder desires that the voting at the meeting for directors shall be cumulative, and if an announcement of the giving of such notice is made upon the convening of the meeting by the Chairman or Secretary or by or on behalf of the sharehold- er giving such notice, each shareholder will have the right to cumulate such voting power as he possesses and to give one candidate as many votes as the number of directors to be elected, multiplied by the number of his votes, or to distribute his votes on the same principle among two or more candidates, as he sees fit. Principal Shareholders American Electric Power Company, Inc. ("AEP"), 1 Riverside Plaza, Columbus, Ohio 43215, a registered public utility holding company under the Public Utility Holding Company Act of 1935, owns all of the Company's outstanding Common Stock. The Common Stock represents approximately 94% of the combined voting power of the capital stock of the Company entitled to vote at the meeting. Aetna Life and Casualty Company, 151 Farmington Avenue, Hartford Connecticut 06156, has reported that it is the beneficial owner of 40,800 shares of the Company's Cumulative Preferred Stock, par value $100 per share, 7.60% Series, which constitutes 11.6% of such Series and 2.4% of the voting power of all Cumulative Preferred Stock and The Colonial Group, Inc., Colonial Management Associates, Inc. and John A. McNeice, Jr., One Financial Center, Boston, Massachusetts 02111, have reported that they jointly beneficially own 30,000 shares of the Company's Cumulative Preferred Stock, par value $100 per share, 7-6/10% Series, which constitutes 8.6% of such Series and 1.9% of the voting power of all Cumulative Preferred Stock. Other than such ownership, the management of the Company does not know of any person (including any "group" as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) who beneficially owns more than 5% of the outstanding shares of Cumulative Preferred Stock, par value $100 per share. AEP also owns, directly or indirectly, all of the common stock of the other companies which constitute the American Electric Power System (the "AEP System"). The AEP System is an integrated electric utility system and, as a result, the member companies of the AEP System, including the Company, have contractual, financial and other business relationships with the other member companies, such as participation in the AEP System savings and retirement plans and tax returns; sales of electrici- ty; sales, transportation and handling of fuel; sales or rentals of property; and interest or dividend payments on the securities held by the companies' respective parents. American Electric Power Service Corporation (the "Service Corporation"), a wholly- owned subsidiary of AEP, renders management, advisory, engineer- ing and other similar services at cost to the principal operating companies of the AEP System, including the Company. ELECTION OF DIRECTORS Eight directors are to be elected to hold office for one year or until their successors are elected and qualify. The Company has been informed that AEP will nominate, and cast the votes of all of the outstanding shares of Common Stock for, the persons named below. In the event that any of such persons should unexpectedly be unable to stand for election, AEP has informed the Company that it will cast its votes for a substitute chosen by the Board of Directors of the Company and approved by AEP. The following brief biographies of the nominees include their ages as of March 15, 1994, an account of their business experience and the names of certain publicly-held corporations of which they are also directors.
Name Age Business Experience PETER J. DEMARIA 59 Vice president and treasurer of the Company, treasurer of AEP and executive vice pres- ident-administration and chief accounting officer of the Service Corporation. Joined the Service Corpora- tion in 1959, became an assistant treasurer in 1969, assistant vice president in 1971, vice president in 1974, treasurer and senior vice president in 1978 and assumed his present posi- tions with AEP in 1978 and the Service Corporation in 1984. Has been a director and treasurer of the Company since 1978 and a vice presi- dent since 1991. A director of AEP and certain other AEP System companies. A. JOSEPH DOWD 64 Vice President of the Compa- ny, secretary of AEP and senior vice president and general counsel of the Ser- vice Corporation. Joined the Service Corporation in 1962, became a vice presi- dent and its general counsel in 1973, and secretary of AEP in 1974. Assumed his present positions with the Service Corporation in 1975. Has been a director and vice president of the Company since 1977. A director of AEP and certain other AEP System companies. E. LINN DRAPER, JR. 52 Chairman of the board and chief executive officer of the Company, chairman of the board, president and chief executive officer of AEP and the Service Corporation. Joined the Service Corpora- tion in 1992 as president and chief operating officer and assumed his present position in 1993. President of AEP from 1992 until as- suming his present position in 1993. From 1987 until 1992 was chairman of the board, president and chief executive officer of Gulf States Utilities Company, an unaffiliated electric utili- ty. A director of the Com- pany, AEP, certain other AEP System companies and Pacific Nuclear Systems, Inc. CARL A. ERIKSON 43 President and chief operat- ing officer of the Company. Joined the Service Corpora- tion in 1979, was assistant to the executive vice presi- dent-operations from 1989 until 1990 and vice presi- dent of the Company from 1990 until 1992 when he became vice president of the Service Corporation and executive assistant to the President. Became president and chief operating officer and a director of the Compa- ny and Columbus Southern Power Company ("CSPCo"), another subsidiary of AEP, in 1993. HENRY W. FAYNE 47 Senior vice president and controller of the Service Corporation. Joined the Service Corporation in 1974, became assistant controller in 1978, controller in 1984, vice president and control- ler in 1988 and assumed his present position in January 1993. A director of certain other AEP System companies. WILLIAM J. LHOTA 54 Vice president of the Compa- ny and executive vice presi- dent of the Service Corpora- tion. Joined the Company in 1965, was president of CSPCo from 1987 until 1989 when he became executive vice presi- dent-operations of the Ser- vice Corporation. He as- sumed his present position with the Service Corporation in 1993. Has been a vice president and director of the Company since 1989. A director of certain other AEP System companies and Huntington Bancshares Incor- porated. G. P. MALONEY 61 Vice president of the Compa- ny and of AEP and executive vice president-chief finan- cial officer of the Service Corporation. Joined the Service Corporation in 1955, became its controller in 1965, vice president-finance in 1970, senior vice presi- dent-finance in 1974 and assumed his present position with the Service Corporation in 1991. Became vice presi- dent of the Company in 1970 and vice president of AEP in 1974. Has been a director of the Company since 1973. A director of AEP and cer- tain other AEP System compa- nies. JAMES J. MARKOWSKY 49 Executive vice president- engineering and construction of the Service Corporation. Joined the Service Corpora- tion in 1971 as a senior engineer, became assistant vice president-mechanical engineering in 1984, senior vice president and chief engineer in 1988 and assumed his present position in 1993. Has been a director of the Company since 1989. A director of certain other AEP System companies.
Messrs. DeMaria, Dowd, Draper, Lhota and Maloney are directors of Appalachian Power Company ("Appalachian"), CSPCo, Indiana Michigan Power Company ("I&M") and Kentucky Power Company ("Kentucky"), all of which are subsidiaries of AEP and have one or more classes of publicly held preferred stock or debt securities. Mr. Fayne is a director of CSPCo and Mr. Markowsky is a director of Appalachian and CSPCo. Messrs. DeMaria, Dowd, Draper, Fayne, Lhota, Maloney and Markowsky are also directors of AEP Generating Company, another subsidiary of AEP. PROPOSED AMENDMENT TO AMENDED ARTICLES OF INCORPORATION Article Fourth of the Company's Amended Articles of Incorporation, as amended, provides that the Company is authorized to issue and have outstanding a total of 47,762,403 shares of capital stock divided in four classes as follows: 40,000,000 shares of Common Stock without par value; 2,762,403 shares of Cumulative Preferred Stock of the par value of $100 each (the "$100 Voting Preferred"); 1,000,000 shares of Cumulative Preferred Stock, $100 Non- Voting, of the par value of $100 each (the "$100 Non-Voting Preferred"); and 4,000,000 shares of Cumulative Preferred Stock, $25 Non- Voting, of the par value of $25 each (the $25 Non-Voting Preferred"). The Company currently has issued and outstanding 1,712,403 shares of the $100 Voting Preferred, 700,000 shares of the $100 Non- Voting Preferred and no shares of the $25 Non-Voting Preferred. Subject to approval by the shareowners, the Company proposes to amend Article Fourth to reclassify 1,050,000 authorized but unissued shares of $100 Voting Preferred to 1,050,000 authorized but unissued shares of $100 Non-Voting Preferred. As a result, the total authorized shares of $100 Voting Preferred would be 1,712,403 and the total authorized shares of $100 Non-Voting Preferred would be 2,050,000. The reclassification of the unissued shares of $100 Voting Preferred will not affect in any way the dividend, voting and other rights of the shares of $100 Voting Preferred or $100 Non- Voting Preferred that are now issued and outstanding. The classes of $100 Voting Preferred shares and $100 Non- Voting Preferred shares now authorized are of equal rank and confer equal rights upon the holders thereof, except as to the voting rights of the respective classes and permissible variations among the series of each class. Unlike the holders of shares of $100 Voting Preferred, who are entitled to vote for the election of directors of the Company and upon all other matters submitted to the shareholders, the holders of shares of $100 Non- Voting Preferred are not entitled to vote, except in proceedings as to which their vote is required by Ohio law and in the case of certain other events specified in the Amended Articles of Incorporation. The Company has proposed the amendment because since the classes of $100 Non-Voting Preferred and $25 Non-Voting Preferred were authorized in 1977, management has believed that to the extent possible it would be appropriate to issue only non-voting shares of Cumulative Preferred Stock. As a result of the issuance of 700,000 shares of $100 Non-Voting Preferred in 1993, the Company has only 300,000 authorized but unissued shares of $100 Non-Voting Preferred. The proposed amendment would provide the Company with an additional 1,050,000 authorized but unissued shares of $100 Non-Voting Preferred and so permit the Company to issue additional shares of $100 Non-Voting Preferred. The proposed amendment must be approved by the affirmative vote of holders of more than two-thirds of the outstanding shares of Common Stock and outstanding shares of $100 Voting Preferred, voting together as a single class. AEP, the owner of all of the Company's outstanding Common Stock, has indicated that it intends to vote all of such shares in favor of the amendment. If approved by the necessary vote of shareholders, the proposed amendment will become effective when it is certified by the appropriate officers of the Company and filed with the Secretary of State of Ohio. OTHER BUSINESS Management does not intend to bring any matters before the meeting other than the election of directors and does not know of any matters that will be brought before the meeting by others. EXECUTIVE COMPENSATION Certain executive officers of the Company are employees of the Service Corporation. The salaries of these executive officers are paid by the Service Corporation and a portion of their salaries has been allocated and charged to the Company. The following table shows for 1993, 1992 and 1991 the compensa- tion earned from all AEP System companies by (i) the chief executive officer and four other most highly compensated executive officers (as defined by regulations of the Securities and Exchange Commission) of the Company at December 31, 1993 and (ii) a chief executive officer and executive officer, both of whom retired in 1993. SUMMARY COMPENSATION TABLE
Annual Compensation All Other Name and Principal Position Salary Bonus Compensation Year ($) ($)(1) ($)(2) E. Linn Draper, Jr. - Chairman of the 1993 538,333 148,742 18,180 board and chief executive officer of 1992 395,833 8,730 63,700 the Company; chairman of the board, president and chief executive officer of AEP and the Service Corporation; chairman of the board and chief execu- tive officer of other AEP System companies (3) Richard E. Disbrow - Chairman of the 1993 200,000 55,260 102,753 board and chief executive officer of 1992 600,000 13,234 17,676 the Company, AEP, the Service Corpora- 1991 540,000 86,994 17,272 tion and other AEP System companies (3) Peter J. DeMaria - Vice president, 1993 280,000 77,364 17,811 treasurer and director of the Company; 1992 273,000 6,021 15,576 treasurer of AEP; executive vice 1991 258,000 41,564 14,987 president-administration and chief accounting officer and director of the Service Corporation; vice president, treasurer and director of other AEP System companies John E. Katlic - Senior vice presi- 1993 279,167 74,677 45,452 dent-fuel supply and director of the 1992 325,000 6,400 9,396 Service Corporation; president, chief 1991 300,000 38,419 9,402 operating officer and director of coal mining subsidiaries (retired October 31, 1993) G. P. Maloney - Vice president and 1993 269,000 74,325 18,000 director of the Company; vice presi- 1992 261,000 5,757 17,036 dent of AEP and executive vice presi- 1991 246,000 39,631 16,662 dent-chief financial officer and director of the Service Corporation; vice president and director of other AEP System companies A. Joseph Dowd - Vice president and 1993 268,000 61,707 15,760 director of the Company; secretary and 1992 260,000 4,779 13,876 director of AEP and senior vice presi- 1991 245,000 32,891 14,002 dent, general counsel, assistant secretary and director of the Service Corporation; vice president and direc- tor of other AEP System companies William J. Lhota - Vice president and 1993 249,000 68,799 17,160 director of the Company; executive 1992 230,000 5,073 15,116 vice president and director of the 1991 210,000 33,831 14,385 Service Corporation; vice president and director of other AEP System companies
____________ (1) Reflects payments under the AEP Management Incentive Compensation Plan ("MICP") in which individuals in key management positions with AEP System companies participate. Amounts for 1993 are estimates but should not change significantly. For 1991 and 1993, these amounts included both cash paid and a portion deferred in the form of restricted stock units. These units are paid out in cash after three years based on the price of AEP Common Stock at that time. Dividend equivalents are paid during the three- year period. At December 31, 1993, the deferred amounts (included in the above table) for Dr. Draper and Messrs. DeMaria, Maloney, Dowd and Lhota were equivalent to 813, 746, 715, 593 and 639 units having a value of $30,177, $27,701, $26,526, $22,020 and $23,730, respectively, based upon a $37-1/8 per share closing price of AEP's Common Stock as reported on the New York Stock Exchange. For 1992, MICP payments were made entirely in cash. (2) Includes amounts contributed by AEP System companies under the American Electric Power System Employees Savings Plan on behalf of their employee participants. For 1993 this amount was $7,075 for Dr. Draper and Messrs. Katlic, Maloney, Dowd and Lhota and $6,000 for Mr. Disbrow and $7,006 for Mr. DeMaria. The AEP System Savings Plan is available to all employees of AEP System companies (except for employees covered by certain collective bargaining agreements) who have met minimum service requirements. Includes director's fees for AEP System companies. For 1993 these fees were: Dr. Draper, $11,105; Mr. Disbrow, $3,580; Mr. DeMaria, $10,805; Mr. Katlic, $2,300; Mr. Maloney, $10,925; Mr. Dowd, $8,685; and Mr. Lhota, $10,085. Includes payments of $93,173 and $36,077 for unused accrued vacation which Messrs. Disbrow and Katlic, respectively, received upon their retirement. (3) Dr. Draper was elected chairman of the board and chief executive officer of the Company and other AEP System companies and chairman of the board, president and chief executive officer of AEP and the Service Corporation, succeeding Mr. Disbrow, who retired, effective April 28, 1993. RETIREMENT BENEFITS The American Electric Power System Retirement Plan provides pensions for all employees of AEP System companies (except for employees covered by certain collective bargaining agreements), including the executive officers of the Company. The Retirement Plan is a noncontributory defined benefit plan. The following table shows the approximate annual annuities under the Retirement Plan that would be payable to employees in certain higher salary classifications, assuming retirement at age 65 after various periods of service. The amounts shown in the table are the straight life annuities payable under the Plan without reduction for the joint and survivor annuity. Retirement benefits listed in the table are not subject to any deduction for Social Security or other offset amounts. The retirement annuity is reduced 3% per year in the case of retirement between ages 60 and 62 and further reduced 6% per year in the case of retirement between ages 55 and 60. If an employee retires after age 62, there is no reduction in the retirement annuity. PENSION PLAN TABLE
Years of Accredited Service Highest Average Annual Earnings 15 20 25 30 35 40 $250,000 $ 58,155 $ 77,540 $ 96,925 $116,310 $135,695 $152,230 350,000 82,155 109,540 136,925 164,310 191,695 214,970 450,000 106,155 141,540 176,925 212,310 247,695 277,620 550,000 130,155 173,540 216,925 260,310 303,695 340,270 700,000 166,155 221,540 276,925 332,310 387,695 434,245
Compensation upon which retirement benefits are based consists of the average of the 36 consecutive months of the employee's highest salary, as listed in the Summary Compensation Table, out of the employee's most recent 10 years of service. With respect to Messrs. Disbrow and Katlic, since they retired in 1993, the amounts of $600,000 and $316,944, respectively, are the actual salaries upon which their retirement benefits are based. Mr. Disbrow's retirement benefit was enhanced by computing his benefit based on his 1992 base salary as described in the Human Resources Committee Report in this proxy statement. As of December 31, 1993, the number of full years of service credited under the Retirement Plan to each of the executive officers of the Company named in the Summary Compensation Table were as follows: Dr. Draper, 1 year; Mr. Disbrow, 39 years; Mr. DeMaria, 34 years; Mr. Katlic, 10 years; Mr. Maloney, 38 years; Mr. Dowd, 31 years; and Mr. Lhota, 29 years. Dr. Draper's employment agreement described below provides him with a supplemental retirement annuity that credits him with 24 years of service in addition to his years of service credited under the Retirement Plan less his actual pension entitlement under the Retirement Plan and any pension entitlements from prior employers. Mr. Katlic has a contract with the Service Corporation under which the Service Corporation agrees to provide him with a supplemental retirement annuity equal to the annual pension that Mr. Katlic would have received with service of 30 years under the AEP System Retirement Plan as then in effect, less his actual annual pension entitlement under the Retirement Plan. Mr. Katlic commenced receiving his supplemental annuity upon his retirement effective October 31, 1993. AEP has determined to pay supplemental retirement benefits to 23 AEP System employees (including Messrs. Disbrow, DeMaria, Maloney and Lhota) whose pensions may be adversely affected by amendments to the Retirement Plan made as a result of the Tax Reform Act of 1986. Such payments, if any, will be equal to any reduction occurring because of such amendments. Upon his retirement on April 28, 1993, Mr. Disbrow began receiving an annual supplemental benefit of $2,642. Assuming retirement of the remaining eligible employees in 1994, none would be eligible to receive supplemental benefits. AEP made available a voluntary deferred-compensation program in 1982 and 1986, which permitted certain executive employees of AEP System companies to defer receipt of a portion of their salaries. Under this program, an executive was able to defer up to 10% or 15% annually (depending on the terms of the program offered), over a four-year period, of his or her salary, and receive supplemental retirement or survivor benefit payments over a 15-year period. The amount of supplemental retirement payments received is dependent upon the amount deferred, age at the time the deferral election was made, and number of years until the executive retires. The following table sets forth, for the executive officers named in the Summary Compensation Table, the amounts of annual deferrals, assuming retirement at age 65, and annual supplemental retirement payments under the 1982 and 1986 programs for the individuals listed in the summary compensation table.
1982 Program 1986 Program Annual Amount of Annual Amount of Annual Supplemental Annual Supplemental Amount Retirement Amount Retirement Deferred Payment Deferred Payment Name (4-Year Period) (15-Year Period) (4-Year Period) (15-Year Period) Mr. Disbrow $15,000 $54,375 -- -- Mr. DeMaria 10,000 52,000 $13,000 $53,300 Mr. Katlic 15,000 24,500 -- -- Mr. Maloney 15,000 67,500 16,000 56,400 Mr. Dowd 10,000 34,000 10,000 25,500
EMPLOYMENT AGREEMENT Dr. Draper has a contract with AEP and the Service Corporation which provides for his employment for an initial term from no later than March 15, 1992 until March 15, 1997. Dr. Draper commenced his employment with AEP and the Service Corporation on March 1, 1992. AEP or the Service Corporation may terminate the contract at any time and, if this is done for reasons other than cause and other than as a result of Dr. Draper's death or permanent disability, the Service Corporation must pay Dr. Draper's then base salary through March 15, 1997, less any amounts received by Dr. Draper from other employment. AEP BOARD HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Human Resources Committee of the AEP Board of Directors regularly reviews executive compensation policies and practices and evaluates the performance of management in the context of the Company's performance. The Committee is composed entirely of independent outside directors. The Human Resources Committee recognizes that the executive officers are charged with managing a $15 billion, multi-state electric utility during challenging times and with addressing many difficult and complex issues. The Committee believes that compensation must be competitive in order to attract, retain, reward and motivate the highly qualified individuals needed to manage AEP to meet corporate objectives and that it should be closely tied to performance in order to provide incentives that will maximize shareowner value. Pay Mix and Measurement Base Salary. The major component of compensation for the executive officers is their annual salaries. When reviewing salaries, the Committee considers external pay practices used by other competitive electric utilities and by industry in general. In addition, the Committee considers the respective positions held by the executive officers, their levels of responsibility, performance and experience, and the relation- ship of their salaries to the salaries of other AEP managers and employees. For compensation comparison purposes, the Human Resources Committee uses the electric utility companies in the S&P Electric Utility Index. In recognition of AEP's relatively large size and operational complexity, executive officer salary levels are targeted to the third quartile (between the 50th and 75th percentiles) of the range of compensation paid by the other electric utilities in this compensation peer group. Base salary levels in 1993 for the five most highly compensated executive officers of AEP named in the Summary Compensation Table (who were employed as such at the end of the year) were at about the median of the range of the compensation peer group. In establishing salary levels against that range, the Human Resources Committee considers the competitiveness of AEP's entire compensation package. Salaries are reviewed and adjusted annually to reflect indi- vidual and corporate performance and consistency with compensa- tion changes within the entire Company and the compensation peer group of other electric utilities. The Committee meets without the presence of Dr. Draper, chairman, president and chief executive officer of AEP, to evaluate his performance and compensation and reports on that evaluation to the outside directors of the Board. These directors then act on the Committee's recommendation. Dr. Draper's increased salary, effective May 1, 1993, reflects the salary increase he received upon becoming chairman, president and chief executive officer of AEP. Mr. Disbrow, the former chairman and chief executive officer, retired several years in advance of his normal retirement date to facilitate the management transition. In recognition of this, and his many years of distinguished service with the AEP System, the Committee determined to pay his supple- mental retirement annuity by computing such benefit on the basis of his 1992 base salary rather than the 36 consecutive months of his highest base salary that would have been used, as specified in the Retirement Plan, had he retired at age 65. Annual Incentive. A variable, performance-based portion of the executive officers' total compensation is paid through the Management Incentive Compensation Plan ("MICP"), which is included in the "Bonus" column in the Summary Compensation Table. The MICP was established (effective January 1, 1990) to motivate and reward superior management performance in serving customer needs and creating shareholder value. Each participant is assigned an annual target award expressed as a percentage of annual salary. The target award ranges from 25-30% for the executive officers. Actual awards can vary from 0-150% of the target award based on performance. The MICP awards for the executive officers (except for Mr. Katlic) are based entirely on pre-established AEP corporate performance criteria specified in the MICP, which include return on stockholder equity (weighted at 25%) and total investor return reflecting stock price and payment of dividends (weighted at 25%), both measured relative to the performance of the utilities in the S&P Electric Utility Index, and the extent to which the average price of power sold to retail customers (weighted at 50%) is lower as compared with other utilities in AEP's service area. Fifty percent (50%) of Mr. Katlic's award is based on certain fuel supply performance criteria. For 1993, the AEP corporate performance and fuel supply performance targets were achieved to the extent of 92.1% and 121.9%, respectively. These percentages are estimates but should not change significantly. To more closely align the long-term financial interests of the executive officers with AEP's shareowners, 20% of the MICP awards have been generally deferred for three years (although the full amounts of the awards are shown in the Summary Compensation Table) and treated as if they are invested in AEP Common Stock, although no stock is actually purchased. However, for 1992, the full amount of the MICP awards was paid in cash in view of the small value of the deferrals that would otherwise have been involved. Long-Term Incentive. As a result of the Committee's review of the competitiveness of the Company's total compensation program for executive and other senior officers, the Committee recommended to the Board of Directors that the Company adopt the Performance Share Incentive Plan ("PSI Plan") to provide longer- term, performance-driven, equity incentive award opportunities directly related to shareowner value. An independent consulting firm advised the Committee that 19 of the 24 S&P utilities provide their senior officers with longer-term incentive opportunities, in addition to annual incentives, and that the absence of such a plan created a significant competitive deficiency, and resulted in AEP's executive officer total compensation being substantially below the median for the companies in the S&P Utility Index. The AEP Board of Directors approved the PSI Plan, subject to AEP shareowner approval at the annual meeting and approval by the Securities and Exchange Com- mission under the Public Utility Holding Company Act of 1935. Performance share units earned by a participant are based on a pre-established factor. This factor reflects, for a period of at least three years, the relative ranking of AEP's total shareholder return ("TSR") compared to the TSR's of the peer group of companies comprising the S&P Electric Utility Index. Notwithstanding AEP's TSR ranking, no performance share units are earned unless AEP shareowners realize a positive TSR. The Committee granted performance share units for the period beginning January 1, 1994 and ending December 31, 1996 and certain transition periods. Performance share units granted for the 1994-96 performance periods were determined based on an evaluation of long-term incentive opportunities provided by the S&P peer companies, again targeting the third quartile of competitive practice. January 26, 1994 Human Resources Committee Members Toy F. Reid, Chairman Arthur G. Hansen Morris Tanenbaum SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the beneficial ownership of AEP Common Stock as of December 31, 1993 for all directors as of the date of this Information Statement, all nominees to the Board of Directors, each of the persons named in the Summary Compensa- tion Table and all directors and executive officers as a group. Unless otherwise noted, each person had sole voting and investment power over the number of shares of AEP Common Stock set forth across from his or her name. Fractions of shares have been rounded to the nearest whole share. No executive officer, director or nominee owns any shares of any series of the Cumulative Preferred Stock of the Company. NAME SHARES(a) P. J. DeMaria 5,789(b)(c) R. E. Disbrow 9,822(b) A. J. Dowd 4,707 E. L. Draper, Jr. 951(b) C. A. Erikson 1,854 H. W. Fayne 2,567 J. E. Katlic 2,290 W. J. Lhota 6,673(b)(c) G. P. Maloney 4,227(b) J. J. Markowsky 4,362(b) All directors and executive officers as a group (9 persons) 119,157(b)(c) (a) The holdings of AEP Common Stock of the following individuals include shares held by the trustee of the AEP System Employees Savings Plan, over which they have voting power but the investment/disposition power is subject to the terms of such Plan: Mr. DeMaria, 2,081 shares; Mr. Disbrow, 4,027 shares; Mr. Dowd, 4,203 shares; Dr. Draper, 836 shares; Mr. Erikson, 1,807 shares; Mr. Fayne, 2,478 shares; Mr. Katlic, 2,230 shares; Mr. Lhota, 5,245 shares; Mr. Maloney, 2,142 shares; Dr. Markowsky, 4,281 shares; and all directors and executive officers as a group, 25,087 shares. Messrs. Disbrow's, Dowd's and Maloney's holdings include 85 shares each, and Messrs. DeMaria's, Erikson's, Fayne's, Katlic's, Lhota's and Markowsky's holdings include 83, 46, 63, 60, 60 and 66 shares, respectively, and the holdings of all directors and executive officers as a group include 536 shares, each held by the trustee of the AEP Employee Stock Ownership Plan over which shares such persons have sole voting power, but the investment/disposition power is subject to the terms of such Plan. The shares beneficially owned by the directors and executive officers of the Company as a group and by the individuals listed above in each case represent less than 1% of the total number of shares of AEP Common Stock outstanding as of December 31, 1993. (b) Includes shares with respect to such directors, nominees and executive officers share voting and/or investment power as follows: Mr. DeMaria, 3,624 shares; Mr. Disbrow, 283 shares; Dr. Draper, 115 shares; Mr. Lhota, 1,368 shares; Mr. Maloney, 2,000 shares; and Dr. Markowsky, 181 shares. Mr. DeMaria disclaims beneficial ownership of 807 shares. (c) Does not include 85,231 shares in the American Electric Power System Education Trust Fund over which Messrs. DeMaria, Lhota and Maloney share voting and investment power as trustees (they disclaim beneficial ownership). The amount of shares shown for all directors and executive officers as a group includes these shares. MEETINGS OF THE BOARD OF DIRECTORS Regular meetings of the Board of Directors were held once each month during the year. In addition, the Board of Directors holds special meetings from time to time as required. During 1993, the Board held twelve regular meetings and four special meetings. During 1993, the only director who attended fewer than 75% of the total number of meetings of the Board of Directors was Dr. Markowsky. Directors of the Company receive a fee of $100 for each meeting of the Board of Directors attended in addition to their salaries. The Board of Directors of the Company has no committees. INDEPENDENT AUDITORS The public accounting firm of Deloitte & Touche has been selected as the independent auditors of the Company for the year 1994. A representative of Deloitte & Touche will not be present at the meeting unless prior to the day of the meeting the Secretary of the Company has received written notice from a stockholder addressed to the Secretary at 1 Riverside Plaza, Columbus, Ohio 43215, that such stockholder will attend the meeting and wishes to ask questions of a representative of the firm. JOHN F. DI LORENZO, JR., Secretary March 24, 1994 -----END PRIVACY-ENHANCED MESSAGE-----