-----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, QVlS898ghasiCzY0TQ2+wzELfqAeroYxIjEu1h3bor+uJ9zYv5PojtV6GkUGL9pd 7e/e2AkUNLFsi4pdfI27gg== 0000860520-97-000005.txt : 19970310 0000860520-97-000005.hdr.sgml : 19970310 ACCESSION NUMBER: 0000860520-97-000005 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970307 FILED AS OF DATE: 19970307 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIPSCO INC CENTRAL INDEX KEY: 0000860520 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 371260920 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10628 FILM NUMBER: 97552190 BUSINESS ADDRESS: STREET 1: 607 E ADAMS ST CITY: SPRINGFIELD STATE: IL ZIP: 62739 BUSINESS PHONE: 2175233600 MAIL ADDRESS: STREET 1: 607 E ADAMS STREET CITY: SPRINGFIELD STATE: IL ZIP: 62739 DEF 14A 1 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 line: ___ Preliminary Proxy Statement ___ Confidential. For use of Commission Only (as permitted by Rule 14a- 6(e)(2)) X Definitive Proxy Statement ___ Definitive Additional Materials ___ Soliciting Material Pursuant to 240.14a-11 (c) or 240.14a-12 CIPSCO INCORPORATED (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 line): 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 transactions 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 line 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: CIPSCO INCORPORATED 607 East Adams Street Springfield, Illinois 62739 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS The annual meeting of shareholders of CIPSCO Incorporated ("CIPSCO" or the "Company") will be held at the Springfield Hilton, 700 East Adams Street, Springfield, Illinois, on April 23, 1997, at 10:00 AM, for the purpose of considering and voting on the following matters: (1) the election of a Board of eight directors; (2) the approval of the appointment by the Board of Directors of Arthur Andersen LLP as independent public accountants for 1997; and (3) the transaction of such other business as may properly come before the meeting. See the attached Proxy Statement for further information with respect to the foregoing. Only shareholders of record on CIPSCO's books at the close of business on February 25, 1997, are entitled to vote at the meeting. All such shareholders are urged to be present in person, or represented by proxy, at the meeting. A copy of CIPSCO's Annual Report to Shareholders for the year 1996 has been mailed to each shareholder of record of the Company on its books. By order of the Board of Directors, W. A. Koertner, Vice President and Secretary March 10, 1997 All shareholders, even if they plan to attend the meeting in person, are urged to vote, date and sign their proxies and return them to the Company in the enclosed envelope as promptly as possible. The Board of Directors encourages all shareholders to be represented at the meeting, whether their shareholdings are small or large. CIPSCO INCORPORATED 607 East Adams Street Springfield, Illinois 62739 217/523-3600 March 10, 1997 Proxy Statement For the 1997 Annual Meeting of Shareholders INTRODUCTION General. The purposes of the meeting are set forth in the attached Notice. The enclosed proxy is solicited by mail on behalf of the Board of Directors of CIPSCO and the cost of such solicitation will be paid by the Company. The Company will pay to banks, brokers, nominees and other fiduciaries their reasonable charges and expenses incurred in forwarding the proxy soliciting material to their principals. In addition, Morrow & Co., Inc., New York, New York, has been retained to assist CIPSCO and its affiliate in the solicitation of proxies. Such solicitation may be made by mail, telecommunication or in person. The estimated aggregate cost of such services of Morrow & Co., Inc. is $6,500. Officers, directors and employees of CIPSCO may also solicit proxies by other means. CIPSCO will provide without charge to each shareholder entitled to vote at the meeting who makes a written request therefor, a copy of CIPSCO's 1996 Annual Report to the Securities and Exchange Commission on Form 10-K. Requests for a copy of the report should be sent to the Corporate Secretary, CIPSCO Incorporated, 607 East Adams Street, Springfield, Illinois 62739. Holding Company. CIPSCO is the parent holding company of Central Illinois Public Service Company ("CIPS"). Voting. The outstanding voting securities of CIPSCO on the record date of February 25, 1997, consisted of 34,069,542 shares of Common Stock, without par value. Only shareholders of record on CIPSCO's books at the close of business on February 25, 1997, are entitled to notice of and to vote at the meeting. At such meeting, each shareholder is entitled to one vote, for each share of Common Stock of the Company held, on each matter submitted to a vote at the meeting, except that in the election of directors, each such shareholder is entitled to vote cumulatively and therefore may give one nominee votes equal to the number of directors to be elected, multiplied by the number of shares held by such shareholder, or such votes may be distributed among any two or more nominees. The proxies seek discretionary authority to cast cumulative votes in the election of directors. Shareholders may vote in person or by duly authorized proxy. The giving of a proxy by a shareholder will not affect the shareholder's right to vote if the shareholder attends the meeting and votes in person. Prior to the voting of a proxy, such proxy may be revoked by the shareholder by either (a) delivering written notice of revocation to the Secretary of CIPSCO, (b) executing a subsequently dated proxy or (c) voting in person at the meeting. All shares represented by effective proxies on the enclosed form of proxy, received by the Company, will be voted at the meeting (or any adjourned session thereof) in accordance with the terms of such proxies. A majority of the outstanding shares entitled to vote constitutes a quorum for the meeting. If a quorum is present in person or by proxy, the eight director nominees receiving the greatest number of votes will be elected as directors. The affirmative vote of the majority of the shares represented at the meeting and entitled to vote on a matter will be sufficient to take action on a matter properly before the meeting (unless a higher vote is required by law). Broker non-votes will not be considered represented at the meeting on those matters for which no instructions from the shareholder have been given to the broker. Accordingly, for a matter which requires the vote of a percentage of shares represented at the meeting, broker non-votes will have no effect on the outcome. Abstentions will be counted in determining the quorum in attendance for all matters and will be included in the total number of shares represented and voting on a matter. Participants in CIPSCO's Automatic Dividend Reinvestment and Stock Purchase Plan (the "Reinvestment Plan") or the CIPS Employee Stock Ownership Plan (the "ESOP"), Employee Long-Term Savings Plan, Employee Long- Term Savings Plan-IUOE No. 148 or Employee Long-Term Savings Plan-IBEW No. 702 (the "Savings Plans") will receive a form of proxy to vote shares credited to the participant's Plan account. Shareholders of record who are participants in the Reinvestment Plan will receive one form of proxy which includes shares held of record and shares held under the Reinvestment Plan. If a participant in any of the Savings Plans does not return a proxy by April 18, 1997, the trustee will vote the participant's shares in accordance with the instructions provided by the Central Illinois Public Service Company Employee Long-Term Savings Plan Committees, unless the participant votes in person at the meeting. Participants in the Reinvestment Plan, the ESOP or any Savings Plan wishing to vote in person at the meeting may obtain a proxy for his or her account shares by making a written request by April 11, 1997 as follows: for the Reinvestment Plan, to Illinois Stock Transfer Company, 223 West Jackson Boulevard, Chicago, Illinois 60606; for the ESOP, to Boston Safe Deposit and Trust Company, Attention: James Antonellis, One Cabot Road, Medford, Massachusetts 02155, and for the Savings Plans, to Merrill Lynch, Attention: Ramon W. Ortel, Jr., 265 Davidson Ave., Somerset, New Jersey 08873. Proposals of Shareholders. Under the rules of the Securities and Exchange Commission, any shareholder proposal intended to be presented at the 1998 annual meeting of shareholders of CIPSCO must be received by the Company no later than November 10, 1997, in order to be eligible for inclusion in the proxy materials relating to that meeting. Voting Securities Beneficially Owned by Principal Holders, Directors, Nominees and Executive Officers. The directors, nominees and executive officers of CIPSCO and CIPS owned beneficially at February 1, 1997, an aggregate of 38,114 shares of Common Stock of CIPSCO representing .11% of the outstanding Common Stock and 38 shares of Preferred Stock of CIPS representing less than .01% of the outstanding Preferred Stock. ELECTION OF DIRECTORS Director Information. Eight directors are to be elected at the meeting. Barring unforeseen contingencies, and in the absence of contrary directions, the proxies solicited will be voted for the election of Clifford L. Greenwalt, John L. Heath, Robert W. Jackson, Gordon R. Lohman, Richard A. Lumpkin, Hanne M. Merriman, Thomas L. Shade and James W. Wogsland as directors of CIPSCO, to hold office until the next annual meeting of shareholders or until their respective successors are elected and qualified. Each of the nominees is a director of CIPSCO, has served as such and has served as a director of CIPS since his or her election as indicated below. Proxies may also be voted for a substitute nominee or nominees in the event any one or more of the above nominees is unable to serve for any reason or is withdrawn from nomination, a contingency not now anticipated. Each nominee has been engaged in his or her present principal occupation for at least the past five years, except as otherwise indicated below. Information about each nominee for election as director is provided below: Clifford L. Greenwalt Principal occupation: President and Chief Executive Officer of CIPSCO, President and Chief Executive Officer of CIPS and Chairman of the Board of CIPSCO Investment Company. Age: 64 Served as a director of CIPSCO since: 1990 Served as a director of CIPS since: 1986 Shares beneficially owned at February 1, 1997: 12,102 shares of Common Stock. Other information: Mr. Greenwalt is a member of the Executive Committee of the Board. He is a director of First of America Bank Corporation, Kalamazoo, Michigan and its wholly- owned subsidiary, First of America Bank-Illinois, N.A. He has been President and Chief Executive Officer of the Company since it became the parent company of CIPS in 1990. John L. Heath Principal occupation: Executive Vice President of Channel Earth Communications, Inc. (Satellite television broadcaster), Scottsdale, Arizona and Chicago, Illinois. Age: 61 Served as a director of CIPSCO since: 1990 Served as a director of CIPS since: 1977 Shares beneficially owned at February 1, 1997: 4,000 shares of Common Stock. Other information: Mr. Heath is a member of the Nominating and Audit Committees of the Board. He served as Chairman of L.S. Heath & Sons, Inc. Robinson, Illinois, (candy manufacturer) from 1971 until 1988 and as President and Chief Executive Officer from 1971 until 1982. In October 1996, Mr. Heath became Executive Vice President of Channel Earth Communications, Inc. Mr. Heath is a director of Biltmore Investors Bank of Phoenix, Arizona, Channel Earth Communications, Inc., Sunstreet Food Corporation and Phoenix Memorial Hospital Health Services Network of Phoenix, Arizona. Robert W. Jackson Principal occupation: Retired Senior Vice President, Chief Financial Officer and Secretary of CIPSCO, Senior Vice President -- Finance and Secretary of CIPS, and President and Chief Executive Officer of CIPSCO Investment Company. Age: 66 Served as a director of CIPSCO since: 1990 Served as a director of CIPS since: 1986 Shares beneficially owned at February 1, 1997: 3,675 shares of Common Stock. In addition, Mr. Jackson's account in the directors' deferred compensation plan described below holds the equivalent of 583 shares of Common Stock. Other information: Mr. Jackson, who retired in 1995, is a director of Firstbank of Illinois Co. and each of its wholly- owned subsidiary banks, including the First National Bank of Springfield. Gordon R. Lohman Principal occupation: President and Chief Executive Officer of AMSTED Industries Incorporated (diversified manufacturer of industrial products), Chicago, Illinois. Age: 62 Served as a director of CIPSCO since: 1990 Served as a director of CIPS since: 1989 Shares beneficially owned at February 1, 1997: 200 shares of Common Stock. In addition, Mr. Lohman's account in the directors' deferred compensation plan described below holds the equivalent of 6,810 shares of Common Stock. Other information: Mr. Lohman is Chairman of the Compensation Committee and Executive Committee and a member of the Audit Committee of the Board. He became President of AMSTED Industries Incorporated in 1988 and Chief Executive Officer in 1990. He was Executive Vice President of that firm in 1988. Mr. Lohman is a director of American Brands, Inc. Richard A. Lumpkin Principal occupation: Chairman of the Board and Chief Executive Officer of Consolidated Communications Inc. (CCI) (diversified telecommunications holding company), Mattoon, Illinois. Age: 61 Served as a director of CIPSCO since: 1995 Served as a director of CIPS since: 1995 Shares beneficially owned at February 1, 1997: 1,087 shares of Common Stock. Other information: Mr. Lumpkin is a member of the Audit and Nominating Committees of the Board. He has been Chairman of the Board and Chief Executive Officer of CCI since 1989. He is also Chairman of the Board and Chief Executive Officer of Illinois Consolidated Telephone Company, a telephone utility subsidiary of CCI. Mr. Lumpkin serves as a director of First Mid-Illinois Bancshares, Inc. and its wholly- owned subsidiary, First Mid- Illinois Bank and Trust, N.A. of Mattoon, Illinois, and Sarah Bush Lincoln Health Systems, also of Mattoon, Illinois. Hanne M. Merriman Principal occupation: Principal in Hanne Merriman Associates (retail business consultants), Washington, D.C. Age: 55 Served as a director of CIPSCO since: 1990 Served as a director of CIPS since: 1990 Shares beneficially owned at February 1, 1997: 1,694 shares of Common Stock. In addition, Mrs. Merriman's account in the directors' deferred compensation plan described below holds the equivalent of 4,944 shares of Common Stock. Other information: Mrs. Merriman is Chairman of the Nominating Committee and a member of the Audit and Executive Committees of the Board. She was President of Nan Duskin, Inc. from 1991 to 1992. Previously she had been a retail business consultant from January 1990. Mrs. Merriman is a director of USAir Group, Inc., State Farm Mutual Automobile Insurance Co., The Rouse Company, AnnTaylor Stores Corporation and T. Rowe Price Mutual Funds. Thomas L. Shade Principal occupation: Retired Chairman of the Board and Chief Executive Officer of Moorman Manufacturing Company (livestock feed products), Quincy, Illinois. Age: 66 Served as a director of CIPSCO since: 1991 Served as a director of CIPS since: 1991 Shares beneficially owned at February 1, 1997: 2,821 shares of Common Stock. In addition, Mr. Shade's account in the directors' deferred compensation plan described below holds the equivalent of 4,210 shares of Common Stock. Other information: Mr. Shade is a member of the Audit and Compensation Committees of the Board. Mr. Shade served as Chairman of the Board and Chief Executive Officer of Moorman Manufacturing Company during 1992 and 1993. He was President and Chief Executive Officer of that firm from 1984 to 1992. He also is a director of Moorman Manufacturing Company and Quincy Soybean Company, both of Quincy, Illinois. James W. Wogsland Principal occupation: Retired Vice Chairman of Caterpillar, Inc. (heavy equipment and engine manufacturer), Peoria, Illinois. Age: 65 Served as a director CIPSCO since: 1992 Served as a director of CIPS since: 1992 Shares beneficially owned at February 1, 1997: 1,000 shares of Common Stock. In addition, Mr. Wogsland's account in the directors' deferred compensation plan described below holds the equivalent of 3,279 shares of Common Stock. Other information: Mr. Wogsland is Chairman of the Audit Committee and a member of the Executive and Compensation Committees of the Board. Mr. Wogsland was Vice Chairman of Caterpillar, Inc. from 1990 until his retirement in 1995. He was Executive Vice President of that firm from 1987 until 1990. Executive Compensation. CIPSCO's principal operating subsidiary is CIPS. Each of the officers of CIPSCO is also an officer of CIPS and did not receive separate compensation from CIPSCO for services as a CIPSCO officer. The following table contains compensation information for the President, four other top executive officers of CIPSCO and CIPS and two recently retired Vice Presidents. The compensation reported is for all services rendered during 1994 through 1996. Summary Compensation Table Annual Compensation _________________ All Other Compensation Name of Individual Principal Positions(s) Year Salary Bonus (1) __________________ _____________________ ____ ________ _______ ____________ C. L. Greenwalt President and Chief 1996 $418,751 $146,580 $8,326 Executive Officer of 1995 388,750 86,970 8,426 CIPSCO and CIPS; 1994 359,168 70,800 8,513 Chairman of CIPSCO Investment Company W. A. Koertner Vice President, Chief 1996 188,897 45,006 1,148 Financial Officer and 1995 155,757 23,232 922 Secretary of CIPSCO 1994 132,676 19,376 755 and CIPS; President and Chief Executive Officer of CIPSCO Investment Company G. W. Moorman Vice President of 1996 161,464 35,477 1,578 CIPS 1995 148,806 22,944 1,428 1994 141,717 17,955 1,354 J. T. Birkett Vice President of 1996 148,897 34,947 2,241 CIPS 1995 114,889 15,613 1,665 1994 94,639 10,032 1,260 D. R. Patterson Vice President of 1996 142,002 33,203 3,299 CIPS 1995 115,664 15,732 1,656 1994 98,209 11,726 1,253 W. R. Morgan Vice President of 1996 166,225 0 395,152 CIPS 1995 157,189 23,232 2,374 1994 149,710 19,788 2,250 W. R. Voisin Vice President of 1996 126,675 0 301,174 CIPS 1995 119,463 21,247 2,654 1994 113,751 15,565 1,602 _______________ (1) All amounts are for premiums paid on behalf of the officers for group term life insurance except for Mr. Morgan ($4,237 for life insurance premium and $390,915 paid upon termination of employment in October 1996 pursuant to Management Continuity Agreement described below) and Mr. Voisin ($2,896 for life insurance premium and $298,278 paid upon termination of employment in October 1996 pursuant to Management Continuity Agreement). Substantially all employees of CIPSCO and CIPS (including officers) participate in CIPS' Retirement Income Plan (the "Retirement Plan"), including persons named in the Summary Compensation Table. Employer contri- butions to the Retirement Plan are determined actuarially. For Retirement Plan purposes, compensation is base pay, exclusive of special payments. Compensation for the persons named in the Summary Compensation Table is substantially equivalent to the compensation reported in the table under "Salary." Retirement Plan benefits depend upon years of service, age at retirement and final average pay. In certain cases, pension benefits under the Retirement Plan are reduced to comply with maximum limitations imposed by the Internal Revenue Code (the "Code"). CIPS maintains an unfunded Excess Benefit Plan to provide for the payment of the difference between the monthly benefit that would have been paid if such Code limitations were not in effect and the reduced amount payable as a result of such Code limitations. Amounts attributable to service credits arising under the Management Continuity Agreements discussed below are also paid through the Excess Benefit Plan. The credited years of service under the Retirement Plan and the Excess Benefit Plan for the above listed persons as of December 31, 1996 are as follows: Greenwalt, 33 years; Koertner, 18 years; Moorman, 28 years; Patterson, 35 years; Birkett, 25 years; Morgan, 33 years; and Voisin, 35 years. Assuming retirement at age 65, it is estimated a participant would be eligible for a maximum annual benefit under the Retirement Plan, as supplemented by the Excess Benefit Plan, as follows: Annual Benefit After Specified Years of Service (1) Average Annual _____________________________________________________ Earnings (2) 20 25 30 35 40 ____________________ ________ ________ ________ ________ ________ $100,000............ $ 26,256 $ 32,820 $ 39,384 $ 45,948 $ 52,512 125,000............ 33,756 42,195 50,634 59,073 67,512 150,000............ 41,256 51,570 61,884 72,198 82,512 175,000............ 48,756 60,945 73,134 85,323 97,512 200,000............ 56,256 70,320 84,384 98,448 112,512 225,000............ 63,756 79,695 95,634 111,573 127,512 250,000............ 71,256 89,070 106,884 124,698 142,512 275,000............ 78,756 98,445 118,134 137,823 157,512 300,000............ 86,256 107,820 129,384 150,948 172,512 325,000............ 93,756 117,195 140,634 164,073 187,512 350,000............ 101,256 126,570 151,884 177,198 202,512 375,000............ 108,756 135,945 163,134 190,323 217,512 400,000............ 116,256 145,320 174,384 203,448 232,512 425,000............ 123,756 154,695 185,634 216,573 247,512 450,000............ 131,256 164,070 196,884 229,698 262,512 475,000............ 138,756 173,445 208,134 242,823 277,512 500,000............ 146,256 182,820 219,384 255,948 292,512 525,000............ 153,756 192,195 230,634 269,073 307,512 ________ (1) Annual benefits are on a straight-line basis. Amounts shown have been reduced by an amount up to 50% (at 40 years of service) of estimated Social Security benefits and are not subject to any other offset amounts. (2) "Average Annual Earnings" means the average annual base compensation during the four consecutive years of highest pay during the 10-year period immediately preceding retirement. The Excess Benefit Plan provides that in the event of a change in control (which has substantially the same meaning as "change in control" under the Management Continuity Agreements described below) the present value of benefits owed any participant pursuant to each such Plan will be paid in a lump sum (i) for a terminated participant already receiving or entitled to receive benefits, within 30 days after such change in control and (ii) for any other participant, within 30 days after termination provided such participant's termination occurs within two years after such change in control. Any such lump sum will be increased by an amount necessary to compensate the participant for any excise tax payable under federal, state or local tax law as a result of the lump sum payment being made contingent on a change in control. The Excess Benefit Plan was modified (with the required consent of participants) in 1995 to provide, in effect, that the announced business combination among CIPSCO, Ameren Corporation and Union Electric Company (the "Merger") will not constitute a "change in control" under the Plan. In 1995 CIPS established an irrevocable trust to provide a source of fund to assist in meeting its liabilities under the Excess Benefit Plan. CIPS makes contributions to the trust from time to time in amounts determined in accordance with the provisions of the trust sufficient to pay when due benefits to participants or their beneficiaries under the Excess Benefit Plan. Notwithstanding the trust, the Excess Benefit Plan is not qualified or "funded" and amounts on deposit in the trust are subject to the claims of CIPS' general creditors under the applicable law. The individuals named in the Summary Compensation Table and two other executive officers of CIPSCO or CIPS have each entered into a Management Continuity Agreement with CIPSCO, which provides that in the event of a "change in control" of CIPSCO or CIPS, CIPSCO and/or CIPS or another subsidiary of CIPSCO will continue to employ the executive for a period of three years from the date of the change in control or to the executive's earlier death or attainment of age 65 (the "Period of Employment"). In the event of the executive's (i) involuntary termination of employment during the Period of Employment except by reason of death, disability, attainment of age 65 or cause (as defined in the Management Continuity Agreement) or (ii) resignation during the Period of Employment for good reason (as defined in the Management Continuity Agreement), the executive will be entitled to payment of severance compensation equal to the present value of the executive's base pay and incentive pay (determined as provided in the Management Continuity Agreement) that would have accrued if the executive remained employed until the end of the Period of Employment. The executive will also receive continued welfare benefits and service credits until the end of the Period of Employment, subject to offset for comparable welfare benefits. The severance compensation will be increased by an amount necessary to compensate the executive for any excise tax payable under federal, state or local tax law as a result of the payment and any other compensation paid by CIPSCO or any of its affiliates being contingent on a change in control. A "change in control" occurs, in general, if (i) as a result of a merger, consolidation or sale of assets, less than a majority of the voting power of CIPSCO is held after such event by the persons who were holders of the voting power of CIPSCO prior to such event or less than a majority of the voting power of CIPS is held after such event by CIPSCO or by the holders of the voting power of CIPSCO prior to such event, (ii) any person (or group) acquires beneficial ownership of 20 percent or more of the voting power of the Company or CIPS or (iii) within any two-year period a majority of the members of the Board of Directors of CIPSCO or CIPS ceases to be members (other than changes in members approved by at least two-thirds of the continuing directors). A "change in control" within the meaning of the Management Continuity Agreements has occurred as a result of the agreement to enter into the Merger. Mr. Morgan and Mr. Voisin, have received benefits under their Management Continuity Agreements as described in Note 1 to the Summary Compensation Table. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION Overview. The Compensation Committee of the Board of Directors of CIPSCO is charged with overall oversight of executive compensation programs, as well as reviewing the performance and establishing the compensation of executive officers of CIPSCO and CIPS. The Committee is responsible for assuring that executive compensation and benefit plans are implemented and are consistent with the Company's shareholder interests, corporate goals and compensation philosophy. CIPSCO's executive officer compensation program is designed to attract, retain, motivate and reward quality and experienced officers to achieve the Company's objectives. It links executive compensation with corporate performance by providing the opportunity to earn increased compensation during periods of superior results, and limits compensation during periods with lesser results. The executive officer compensation program consists of a base salary and an annual incentive. The base salary is determined by a combination of the individual's performance relative to specific job responsibilities and market comparisons of salaries for similar jobs in the utility industry. Particular emphasis is placed on salary data provided by the Edison Electric Institute (EEI) survey of electric and combination electric and natural gas utilities. This group of utilities is essentially the same group as the EEI 100 utility peer group shown on the Performance Graph below. The philosophy is to pay base salaries and provide for incentive compensation that are comparable to the medians of such amounts for a subgroup of utilities included in the EEI survey that are of comparable size to CIPSCO (based on revenues). Salaries for the officers listed in the Summary Compensation Table were increased in 1996 to track competitive base salaries in the utility industry and to reflect performance, which is determined subjectively by the Committee based on individual evaluations. Incentive compensation was earned based on achievement of the objectives of the annual Management Incentive Plan (described below). The Management Incentive Plan. The Management Incentive Plan (MIP), an annual incentive program instituted in 1992, strongly supports CIPSCO's primary goal of achieving superior returns on shareholders' investments. The MIP is intended to provide additional compensation to the executive officers named in the Summary Compensation Table, along with two other officers and 29 other employees of the Company and its subsidiaries. It is the Committee's responsibility to administer the MIP and in so doing (1) set the overall corporate financial performance goal and unit or individual objectives, (2) determine the participants to be included in the MIP, and (3) determine the amount of each participant's incentive pay to be based on attainment of the overall corporate goal and the amount to be based on achievement of his or her unit or individual objectives. Specific award levels are set by the Committee prior to the beginning of the fiscal year for which they apply. Incentive awards are payable in cash as soon as feasible following the close of the year after determination by the Committee of the level of attainment of the goals. The overall corporate goal is based on attainment of targeted return on average Common Stock equity of CIPSCO. The Committee has determined that return on Common Stock equity is the measure of corporate performance that most directly measures management's performance. Individual unit objectives relate to such areas as service reliability, public and employee safety, proper maintenance of corporate assets and quantifiable improvement in efficiency and productivity. The MIP provides for threshold, target and maximum levels of awards based on performance against the predetermined targets, set annually by the Committee. With the exception of the President and Chief Executive Officer, whose incentive pay is tied solely to the overall corporate goal for return on Common Stock equity, a participant may receive the portion of his or her incentive pay tied to unit or individual objectives even though CIPSCO has not attained the overall corporate goal. Individual unit awards are weighted, according to the participant's position, to produce awards from about one-fourth to two-fifths of the total award and corporate performance goals are weighted to make up the remaining portion. However, for any incentive pay to be earned by any participant, overall earnings of CIPSCO, on a per share basis, must equal or exceed the annualized Common Stock dividend rate then in effect. Accordingly, shareholders will realize an appropriate return on their investment prior to the payment of any incentive compensation. For 1996, award levels were designed so that achievement of threshold performance would have earned approximately one-half of the target award while maximum performance would have earned approximately 1.7 times the target award. Total incentive pay ranges varied, depending on the participant's position within the organization, from a minimum of 7 percent of base salary for some participants, assuming threshold corporate and unit goals were achieved, to a maximum of 46 percent of base salary for the President and Chief Executive Officer, assuming maximum performance was achieved. As a result, in 1996, MIP participants earned various amounts reflecting achievement of a corporate goal of return on Common Stock equity in excess of the target level. Participants also earned various amounts reflecting the achievement of at least the threshold level of individual and unit goals, in accordance with the MIP provisions. Benefits earned in 1996 for the identified executive officers are reflected in the "Bonus" column of the Summary Compensation Table above. Compensation of the Chief Executive Officer. The Committee is responsible for reviewing the Chief Executive Officer's performance and adjusting his base salary accordingly. In addition, the Committee adjusts base salary to reflect changes in the prevailing competitive market levels for chief executive officers in other comparably-sized utilities, as described above. Mr. Greenwalt's base salary increased in 1996 approximately 7.7 percent in consideration of the Company's continued strong operating and financial performance as well as advances toward a more competitive cost structure. Specifically, increased merger related savings were identified as a result of the continuing focus on efficiencies which can be achieved through the strategic alliance with Union Electric. In addition, cost-saving revisions in a long- term coal contract were obtained which will serve to benefit all stakeholders. With respect to competition and deregulation, the Company has successfully positioned itself and focused efforts toward promoting principles of reliability, safety and benefits for all parties. The Committee believes these advances made under the leadership of Mr. Greenwalt warrant the adjustments in his base salary. Mr. Greenwalt's 1996 base compensation increase also reflects changes in levels of executive compensation at similar-sized utilities. Incentive compensation for the Chief Executive Officer was determined in accordance with the provisions and formulas of the MIP. Accordingly, Mr. Greenwalt's incentive compensation is based solely on corporate performance as measured by the overall corporate goal of return on Common Stock equity. He earned $146,580 under the MIP in 1996 because the Company's return on Common Stock equity exceeded the target goal as established in the MIP. The members of the Compensation Committee are indicated below. No member of the Committee is a current or former officer of CIPSCO or any of its subsidiaries or has any relationship with CIPSCO or CIPS required to be disclosed pursuant to the rules of the Securities and Exchange Commission. G. R. Lohman, Chairman T. L. Shade J. W. Wogsland (Graph to be inserted here) Total Return Summary Based on Initial Investment of $100 On December 31, 1991 1991 1992 1993 1994 1995 1996 CIPSCO $100 $116 $125 $118 $182 $177 S&P 500 100 108 118 120 165 203 EEI 100 100 108 120 106 139 140 DJ Util 100 109 126 114 160 165 The above graph assumes all dividends paid during the periods are reinvested. The EEI peer group consists of about 100 investor-owned electric and combination electric and natural gas utilities. All returns have been weighted to reflect the market capitalization of each utility in the group. A portion of incentive compensation to executive officers is based on return on CIPSCO Common Stock equity rather than total return (shown on the graph) for reasons set forth in the Compensation Committee Report. Directors' Compensation. No retainer or fees are paid to any director who is an officer of CIPSCO, CIPS or any other subsidiary of the Company. During 1996 non-employee members of the Board of CIPSCO received an annual retainer of $16,000. CIPSCO pays no additional fees for attendance at Board or committee meetings. During 1996, non-employee directors of CIPS received an annual retainer of $12,000 and a fee of $850 for each CIPS Board meeting or committee meeting attended. The annual retainer paid to each director by CIPSCO is reduced by an amount equal to the aggregate amount paid to such director by each subsidiary of CIPSCO as an annual retainer for services as a director of such subsidiary. All current directors are on the Board of CIPSCO and CIPS. Consequently, the aggregate annual retainer for service on the Boards for 1996 was $16,000. All current directors are on the Board of CIPSCO and CIPS. Directors were also reimbursed for their reasonable travel and out-of-pocket expenses for each Board or Committee meeting attended. CIPSCO and CIPS each maintain an unfunded deferred compensation plan under which directors may elect to defer directors' retainers and fees paid by that company. For each director who elects to participate in a plan, the amount of his or her director's retainer and fees is accrued in an unfunded account in the name of the director. Such amount is adjusted in value by an amount equivalent to the amount which would be available if the director's compensation were invested in CIPSCO's Common Stock and dividends on such stock were reinvested. The aggregate value of each participant's accounts in the plans at February 1, 1997 (based on deferred director's fees paid by CIPSCO and CIPS) was equivalent to investments in CIPSCO Common Stock as follows: Mr. Lohman, 6,810 shares; Mrs. Merriman, 4,944 shares; Mr. Shade, 4,210 shares; Mr. Wogsland, 3,279 shares; and Mr. Jackson, 583 shares. Amounts accrued in a director's account will be paid in cash upon his or her retirement as a director either in a single payment or over a period not to exceed 20 calendar quarters, with interest. Directors who are also officers do not participate in these plans. CIPSCO has established a Director Retirement Plan for directors of the Company and its subsidiaries, including CIPS, who are not or have never been officers of CIPSCO or any subsidiary, including CIPS. Each director who has completed five years of service on the Board of CIPSCO or any of its subsidiaries is eligible for monthly retirement payments for a period of the lesser of 10 years or the number of full years the director served on any of the Boards. The annual retirement benefit for a director of CIPSCO is equal to the annual retainer in effect for CIPSCO's directors (without reduction for director's fees paid by subsidiaries of the Company) at the time the director ceases to serve as a director. The annual retirement benefit for a director who is not a member of the Board of CIPSCO is equal to the annual retainer in effect at the time the director ceases to serve as a director for each of the Boards of which the director was a member but not to exceed the amount of retainer for CIPSCO's directors. Such annual retirement payment is reduced a proportional amount for directors retiring before reaching age 72. Meetings and Committees of the Board. During 1996, the Board of Directors held six meetings. The Board of Directors of CIPSCO and the Board of Directors of CIPS have each established an Executive Committee, an Audit Committee, a Nominating Committee and a Compensation Committee. Committee members are appointed by a majority of directors at the Board of Directors meeting following the annual meeting of shareholders. Committee members are the same for CIPSCO's and CIPS' committees. Mr. Lohman, Mr. Greenwalt, Mrs. Merriman and Mr. Wogsland are the current members of the Executive Committee. The CIPSCO Executive Committee and the CIPS Executive Committee held no meetings in 1996. The Executive Committee has and may exercise all the authority of the Board of Directors in the management of the Company, except as limited by Illinois law. Mr. Wogsland, Mr. Heath, Mr. Lohman, Mr. Lumpkin, Mrs. Merriman, and Mr. Shade are the members of the Audit Committee. The CIPSCO Audit Committee and the CIPS Audit Committee each held three meetings in 1996. The Audit Committee engages an independent public accountant for CIPSCO, subject to the approval of the Board and shareholders; discusses with the independent public accountant the scope and results of its audit and the adequacy of the Company's accounting, financial and operating controls; approves the performance of non-audit professional services by the independent public accountant; and discusses with management and the independent public accountant the Company's accounting principles, policies and practices and its reporting policies and practices. Mrs. Merriman, Mr. Heath, and Mr. Lumpkin are the members of the Nominating Committee. The CIPSCO Nominating Committee and the CIPS Nominating Committee each held one meeting in 1996. The Nominating Committee seeks out and recommends to the Board qualified candidates for election to the Board; reviews the performance of Board members and, based upon such review, makes recommendations to the Board as to which Board members should stand for re-election. In making recommendations of nominees for election to the Board, the Nominating Committee will consider persons recommended by shareholders. Any shareholder wishing to make such a recommendation should write to the President of CIPSCO who will forward all such recommendations to the Nominating Committee. Mr. Lohman, Mr. Shade and Mr. Wogsland are the members of the Compensation Committee. The CIPSCO Compensation Committee and the CIPS Compensation Committee each held three meetings in 1996. The Compensation Committee evaluates performance of and sets the compensation of officers of CIPSCO (other than assistant officers); reviews directors' fees and fees paid to directors for membership on the various committees of the Board; and makes recommendations to the Board as to appropriate levels of such fees. No member of the Compensation Committee is a current or former officer of CIPSCO or CIPS. During 1996, each director attended at least 83 percent of the total of the meetings of CIPSCO's and CIPS' Board and of committees of each company's Board of which he or she was a member. APPROVAL OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS Subject to the approval of the shareholders of CIPSCO, the Board of Directors has appointed the firm of Arthur Andersen LLP as independent public accountants to examine the annual financial statements of CIPSCO for 1997. The firm has served as independent public accountants for CIPSCO and CIPS for many years. A representative of Arthur Andersen LLP will be present at the annual meeting to make a statement if he or she so desires, and to respond to questions. The following resolution concerning the appointment of independent public accountants will be offered at the meeting: "RESOLVED, that the appointment by CIPSCO's Board of Directors of Arthur Andersen LLP to examine the annual financial statements of the Company and its subsidiaries for 1997 is hereby approved." The Board of Directors recommends a vote "FOR" the foregoing proposal. If the proposed Merger with Union Electric Company is consummated prior to the end of 1997, it may be deemed desirable at that time for the current auditors of Union Electric or another auditing firm to audit the annual financial statements for all affiliated corporations for 1997 in which case Arthur Andersen LLP would no longer serve. Shareholders will be informed if another auditing firm is subsequently selected. OTHER MATTERS At the date hereof, the Board of Directors of CIPSCO knows of no business to come before the meeting other than those matters described above. However, should any such business properly come before the meeting, the proxies will be voted in accordance with the judgment of the person or persons voting the proxies. CIPSCO INCORPORATED By Order of the Board of Directors, W. A. Koertner Vice President and Secretary EX-1 2 SOLICITED BY THE BOARD OF DIRECTORS OF CIPSCO INCORPORATED The undersigned appoints and/or directs the agents of the Plans identified on the reverse hereof to appoint C. L. Greenwalt and W. A. Koertner, and each of them as attorneys and proxies with power of substitution to vote, as indicated hereon, all shares of common stock of CIPSCO Incorporated held of record in the name of, or held for the account of the undersigned in the Plans, at the close of business on the record date and, in their discretion, to vote on all other matters which may properly come before the 1997 Annual Meeting of Shareholders of CIPSCO Incorporated and at all adjourned sessions thereof, all as set forth in the Notice and Proxy Statement relating to the meeting. If joint account, each joint owner should sign. State title when signing as executor, administrator, trustee, guardian, etc. DO NOT FOLD Dated _____________ Signed _____________________________ _____________________________ (on reverse side) The votes represented by this proxy, if properly executed, will be voted as indicated by you. If you sign and return the proxy unmarked, such votes will be voted "FOR" the election of directors and "FOR" approval of the appoint- ment of auditors. No proposal is related to or conditioned on any other proposal. DIRECTORS RECOMMEND a Vote "FOR" Items 1 and 2. 1. Election of Directors FOR __ Withhold Authority __ all nominees listed to vote for all nominess below (except as marked to the contrary) C. L. Greenwalt J. L. Heath R. W. Jackson G. R. Lohman R. A. Lumpkin H. M. Merriman T. L. Shade J. W. Wogsland To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list above. 2. Approval of the appointment of Arthur Andersen LLP as independent public accountants for 1997. FOR __ AGAINST __ ABSTAIN __ Please mark you votes with an X. Then DATE PROXY AND SIGN ON REVERSE side exactly as name(s) are shown and return signed proxy in enclosed envelope. Participants in (i) the Company's Automatic Dividend Reinvestment and Stock Purchase Plan and (ii) Central Illinois Public Service Comapany's Employee Stock Ownership Plan or any of its Employee Savings Plans, direct Illinois Stock Transfer Company and the respective plan Trustee, respectively, as agent, to vote as indicated herein. (To be signed on reverse side) -----END PRIVACY-ENHANCED MESSAGE-----