SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X][ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ][X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
IPALCO ENTERPRISES, INC.
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(Name of Registrant AAs Specified In Its Charter)
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(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)(4)(1)
and 0-11.
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:0-11 (Set forth the amount on
which the filing fee is calculated and state how it was determined):
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PRELIMINARY COPIES
IPALCO ENTERPRISES, INC.
One Monument Circle
P. O. Box 1595
Indianapolis, Indiana 46206-1595
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1997APRIL 15, 1998
TO THE SHAREHOLDERS OF
IPALCO ENTERPRISES, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
IPALCO Enterprises, Inc. will be held at the office of the corporation, One
Monument Circle, Indianapolis, Indiana on Wednesday, May 21, 1997,April 15, 1998, at
11
o'clock11:00 A.M. (Eastern Standard Time), for the following purposes:
1. To elect fivefour directors in Class IIIII to hold office for
terms of three years each and until their successors are
duly elected and qualified;
2. To approve an amendment to Section 5.01 of Article 5 of the
Amended Articles of Incorporation to increase the authorized
number of shares of IPALCO's common stock from 145 million to 290
million;
3. To approve the adoption ofadopt the IPALCO Enterprises, Inc. 1997Long-Term Performance
and Restricted Stock Option Plan;Incentive Plan (As Amended and 4.Restated
Effective January 1, 1998); and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors fixed the close of business on Thursday, April
10, 1997Wednesday,
February 25, 1998 as the record date for determining the shareholders
entitled to notice of, and to vote at, the Annual Meeting and at any
adjournment thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING.
Whether or not you expect to be present at the meeting, you are urged to
fill in, date and sign the enclosed proxy and return it immediately in the
accompanying postage guaranteed envelope.
By order of the Board of Directors.
IPALCO ENTERPRISES, INC.
By: BRYAN G. TABLER, Secretary
Indianapolis, Indiana
April 15, 1997March 9, 1998
TABLE OF CONTENTS
ANNUAL MEETING INFORMATION. . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of Annual Meeting . . . . . . . . . . . 1
Solicitation of Proxies. . . . . . . . . . . . . . . . . . . 1
Other Business . . . . . . . . . . . . . . . . . . . . . . . 2
Shareholder Proposals for 19981999 Annual Meeting. . . . . . . . 2
RELATIONSHIP WITH AUDITOR . . . . . . . . . . . . . . . . . . . 2
VOTING SECURITIES AND BENEFICIAL OWNERS . . . . . . . . . . . . 2
Beneficial Owners of 5% or More of Common Stock. . . . . . . 3
Beneficial Ownership of Common Stock By Directors,
Nominees and Executive Officers . . . . .Officers. . . . . . . . . . . . . . . 3
PROPOSAL 1 - ELECTION OF FIVEFOUR DIRECTORS . . . . . . . . . . . . 5
Nominees For Directors To Be Elected At the 19971998 Annual
Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CLASS II.III . . . . . . . . . . . . . . . . . . . . . . 5
Current Directors Whose Terms Expire in 19981999 (Class III)I)
and in 19992000 (Class I).II) . . . . . . . . . . . . . . . . . . . 6
CLASS IIII . . . . . . . . . . . . . . . . . . . . . . . 6
CLASS I .II. . . . . . . . . . . . . . . . . . . . . . . 7
INFORMATION REGARDING THE BOARD OF DIRECTORS. . . . . . . . . . 8
Procedure To Propose Nominees For Director . . . . . . . . . 8
Number Of Board Meetings and Attendance. . . . . . . . . . . 98
Committees of the Board. . . . . . . . . . . . . . . . . . . 98
Section 16(a) Beneficial Ownership Reporting Compliance. . . 109
Compensation Committee Interlocks and Insider Participation. 10
Compensation of Directors. . . . . . . . . . . . . . . . . . 10
Certain Business Relationships . . . . . . . . . . . . . . . 10
PROPOSAL 2 - APPROVALAPPROVING ADOPTION OF AMENDMENT TO AMENDED ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES
OF IPALCO'S COMMONIPALCO ENTERPRISES, INC.
LONG-TERM PERFORMANCE AND RESTRICTED STOCK INCENTIVE PLAN
(As Amended and Restated Effective January 1, 1998) . . . . . . . . . . . . . . . . . . 12
The Proposed Amendment . . . . . . . . . . . . . . . . . . . 12
Purpose and Effect of Proposed Amendment . . . . . . . . . . 12
PROPOSAL 3 - APPROVAL OF THE IPALCO ENTERPRISES, INC. 1997 STOCK
OPTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . 1411
Introduction . . . . . . . . . . . . . . . . . . . . . . . . 1411
Summary of the Plan. . . . . . . . . . . . . . . . . . . . . 14
Administration12
Federal Income Tax Consequences of Grants Under the Plan . . . . . . . . . . . . . . . . . . . . . . 14
Eligibility. . . . . . . . . . . . . . . . . . . . . . . . 14
Stock Subject15
Vote Required to Approve the Plan. . . . . . . . . . . . . . . . . . . 14
Terms of Options . . . . . . . . . . . . . . . . . . . . . 15
Adjustment of Shares . . . . . . . . . . . . . . . . . . . 16
Tax Withholding. . . . . . . . . . . . . . . . . . . . . . 16
Amendment. . . . . . . . . . . . . . . . . . . . . . . . . 16
Termination. . . . . . . . . . . . . . . . . . . . . . . . 17
Agreements Evidencing Incentive and Non-Qualified Stock
Options. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Federal Income Tax Consequences of Stock Options . . . . . . 17
New Plan Benefits Chart. . . . . . . . . . . . . . . . . . . 18
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . 1915
Compensation Policies Relating Generally to Executive
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 1915
Base SalarySalary. . . . . . . . . . . . . . . . . . . . . . 19
Annual Incentive Plan . . . . . . . . . . . . . . . . 20
Long-Term Performance and Restricted Stock16
Annual Incentive Plan. . . . . . . . . . . . . . . . . . . . 2017
Long-Term Performance and Restricted Stock Incentive Plan. . 17
Stock Options. . . . . . . . . . . . . . . . . . . . . . . . 18
Basis for Chief Executive Officer's Compensation . . . . . . 2118
Deductibility of Executive Compensation. . . . . . . . . . . 2119
COMPENSATION OF EXECUTIVE OFFICERS. . . . . . . . . . . . . . . 2219
Nature and Types of Compensation . . . . . . . . . . . . . . 2219
Subsidiary Incentive Plan. . . . . . . . . . . . . . . . . . 2219
Summary Compensation - Table I . . . . . . . . . . . . . . . 23
Option Exercises20
Option/SAR Grants in Last Fiscal Year - Table II.II . . . . . . 21
Option/SAR Exercises in Last Fiscal Year - Table III . . . . 22
Performance Graph - Table IV . . . . . . . . . . . . . . . . 24
Performance Graph - Table III. . . . . . . . . . . . . . . . 2523
Performance Graph. . . . . . . . . . . . . . . . . . . . . . 2624
Pension Plans. . . . . . . . . . . . . . . . . . . . . . . . 2624
Pension Plan Table - Table IVV. . . . . . . . . . . . . 2624
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements . . . . . . . . . . . . . . . 27
APPENDIX A - Text of IPALCO Enterprises, Inc.
1997 Stock Option Plan25
Appendix A. . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
IPALCO ENTERPRISES, INC.
One Monument Circle * P. O. Box 1595
Indianapolis, Indiana 46206-1595
PROXY STATEMENT
For the Annual Meeting of Shareholders
To Be Held May 21, 1997April 15, 1998
(Mailed on or about April 15, 1997)March 9, 1998)
ANNUAL MEETING INFORMATION
Date, Time and Place of Annual Meeting
The information set forth in this Proxy Statement is furnished in
connection with the solicitation of the enclosed proxy by and on behalf of
the Board of Directors of IPALCO Enterprises, Inc. ("IPALCO") for use at its
Annual Meeting of Shareholders to be held May 21, 1997,April 15, 1998, at 11:00 o'clock A.M. (EST)
at the principal office of IPALCO, One Monument Circle, Indianapolis, Indiana
46204, pursuant to the foregoing Notice of Annual Meeting, and at any
adjournment of such meeting.
Solicitation of Proxies
The presence in person or by proxy of the holders of a majority of
the outstanding shares entitled to vote at the Annual Meeting is necessary to
constitute a quorum. Shares represented for any purpose are deemed present
for quorum purposes. If the enclosed form of proxy is properly executed and
returned in time for the meeting, the named proxies will vote the shares
represented by the proxy in accordance with the instructions marked. Proxies
returned unmarked will be voted in favor of the proposed nominees for
director, in favor of the proposed
amendment to IPALCO's Amended Articles of Incorporation and in favor of the adoption of the 1997IPALCO Enterprises, Inc. Long-Term Performance
and Restricted Stock Option Plan.Incentive Plan (the "1998 Restricted Stock Plan"). If
other matters are properly brought before the meeting, or any adjournment
thereof, the enclosed proxy gives discretionary authority to the persons
named therein to vote in accordance with their best judgment on such matters.
A shareholder executing and delivering the enclosed proxy has the
unconditional right to revoke it at any time before the authority granted
therein is exercised.
Under Indiana law, the election of directors will be determined by
plurality vote at a meeting where a quorum is present. As a result, the fivefour
nominees who receive the greatest number of votes cast for election as
directors will be elected as directors of IPALCO. Broker non-votes and
withheld votes will not affect the outcome of the election of directors.
Action on any matter, other thanAdoption of Proposal 2 requires the electionaffirmative vote of directors,
will be approved if the votes cast in favora majority of
the proposal
exceedshares present in person or by proxy and entitled to vote at the votes castAnnual
Meeting. Abstentions will have the same effect as a vote against the proposal.
Abstentions from
voting or brokerBroker non-votes will have no effect since such actions
do not represent votes castbe voted for or against the proposal.proposal and will not
be counted as entitled to vote.
This solicitation of proxies is being made by IPALCO and the expenses
thereof will be borne by IPALCO. The principal solicitation is being made by
mail. However, additional solicitation may be made by telephone, telegraph or
personal contact by officers and other employees of IPALCO and its
subsidiaries, who will not be additionally compensated therefor. IPALCO
expects to reimburse broker-dealers and others for reasonable expenses of
forwarding proxy material to beneficial owners.
Other Business
Management is not aware of any business to be presented at the 19971998
Annual Meeting other than the election of fivefour directors, the proposed amendment to the Amended Articles of
Incorporation, and the proposed
approval of the 19971998 Restricted Stock Option Plan. The minutes of the Annual Meeting
of Shareholders held April 17, 1996,May 21, 1997, will be presented for approval at the 19971998
Annual Meeting; however, such action is not intended to constitute approval
or disapproval of any matter referred to in such minutes.
Shareholder Proposals for 19981999 Annual Meeting
If a shareholder intends to present a proposal at the Annual Meeting
of Shareholders to be held April 15, 1998,21, 1999, the proposal must be received by
the Corporate Secretary for inclusion in IPALCO's proxy statement and form of
proxy not later than December 16, 1997.November 9, 1998.
RELATIONSHIP WITH AUDITOR
Deloitte & Touche LLP, with offices at Market Tower, Suite 3000, 10
West Market Street, Indianapolis, Indiana, has been the auditor of IPALCO
since its inception. Upon the recommendation of the Audit Committee, that
firm was again appointed by IPALCO's Board of Directors to serve as auditor
for IPALCO and its subsidiaries for the current year. A representative of
Deloitte & Touche LLP will be present at the Annual Meeting of Shareholders
to be held May 21, 1997,April 15, 1998, and will be given the opportunity to make a
statement and to respond to appropriate questions from shareholders.
VOTING SECURITIES AND BENEFICIAL OWNERS
On April 10,December 31, 1997, IPALCO had outstanding 44,499,61244,649,844 shares of
common stock. Each share of common stock entitles its owner to one (1) vote
upon each matter to come before the meeting. Only shareholders of record at
the close of business on Thursday, April 10, 1997,Wednesday, February 25, 1998, will be entitled
to vote at the meeting or at any adjournment thereof.
Beneficial Owners of 5% or More of Common Stock
On April 10,December 31, 1997, the following beneficial owners held
more than 5% of IPALCO's voting securities:
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Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner of Beneficial Ownership of Class
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Common Stock Employees' Thrift Plan 4,711,8694,687,611 shares 10.59%10.15%
of Indianapolis Power
& Light Company
c/o Merrill Lynch
Trust Company of America,
Trustee
265 Davidson Avenue, 4th Floor
Somerset, NJ 08873
_________________________________
Trustee, under a continuing agreement, has discretion to vote shares
as to which no voting instructions are received.
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Beneficial Ownership of Common Stock By Directors, Nominees and Executive
Officers
On March 15,December 31, 1997, the following named directors, nominees and
executive officers of IPALCO and its subsidiaries, individually and as a
group, beneficially owned equity securities of IPALCO as follows:
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Name of Amount and Nature Percent
Title of Class Beneficial Owner of Beneficial Ownership of Class
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Common Stock Joseph D. Barnette, Jr. 16,00019,000 shares
Robert A. Borns 44,64448,968 shares
John R. Brehm 72,802148,317 shares
Mitchell E. Daniels, Jr. 18,30021,300 shares
Rexford C. Early 11,64214,686 shares
Otto N. Frenzel III 31,20034,200 shares
Max L. Gibson 11,10014,100 shares
Edwin J. Goss 14,407 shares
Earl B. Herr, Jr. 13,86016,903 shares
John R. Hodowal 247,639498,759 shares 1.08%
Ramon L. Humke 174,662301,235 shares
Sam H. Jones 18,36021,360 shares
Andre B. Lacy 37,80640,884 shares
L. Ben Lytle 12,74815,765 shares
Michael S. Maurer 11,07214,119 shares
Andrew J. Paine, Jr. 0340 shares
Sallie W. Rowland 19,24422,273 shares
Thomas H. Sams 23,00126,082 shares ,
Bryan G. Tabler 15,36360,731 shares ,
Gerald D. Waltz 105,245118,557 shares
Other Executive Officers 275,873507,905 shares , 1.09%
All 27 directors, nominees,
and executive officers, as
a group 1,174,9681,945,484 shares (3), 2.64%(4) 4.21%
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Except as otherwise noted below, each person named in the table has
sole voting and investment power with respect to all shares of common
stock listed as owned by such person. Shares beneficially owned
include shares that may be acquired pursuant to exercise of
outstanding options that are exercisable within 60 days as follows:
Mr. Barnette-9,000;Barnette-12,000; Mr. Borns-12,000;Borns-15,000; Mr. Brehm-52,500;Brehm-127,500;
Mr. Daniels-18,000;Daniels-21,000; Mr. Early-6,000;Early-9,000; Mr. Frenzel-18,000;Frenzel-21,000;
Mr. Gibson-6,000;Gibson-9,000; Dr. Herr-15,000; Mr. Goss-12,000; Dr. Herr-12,000;Hodowal-430,000;
Mr. Hodowal-180,000;Humke-230,000; Mr. Humke-105,000;Jones-21,000; Mr. Jones-18,000;Lacy-21,000;
Mr. Lacy-18,000;Lytle-15,000; Mr. Lytle-12,000;Maurer-12,000; Mrs. Rowland-21,000;
Mr. Maurer-9,000; Mrs.
Rowland-18,000;Sams-21,000; Mr. Sams-18,000;Tabler-45,000; Mr. Waltz-55,320;Waltz-56,839; other
executive officers-201,750;officers-429,552; directors and executive officers
as a group-780,570.group-1,531,891.
Percentages less than 1% of total common stock outstanding are not
indicated.
Includes 43,54747,870 shares owned by or with family members sharing their
home and shares held in trust or other arrangements with family
members.
Includes vested and contingent interests in shares of common stock
held by the Trustee in the Thrift Plan (stated in whole shares) of:
Mr. Brehm-13,650;Brehm-14,165; Mr. Hodowal-29,774;Hodowal-30,894; Mr. Humke-7,747;Humke-8,361;
Mr. Tabler-1,066;Tabler-1,368; Mr. Waltz-36,349;Waltz-37,822; other executive officers-57,198;officers-60,474;
and all executive officers as a group-145,784.group-153,084.
Includes 12,000 shares owned by LDI, Ltd. and 2,700 shares owned by
LDI, Ltd. and 2,700 shares
owned by the Lacy Foundation of which Mr. Lacy is a partner and a director,
respectively, and 600 shares representing his vested interest in a
self-employment retirement plan, totaling 15,300 shares, 11,700 of
which he disclaims beneficial ownership.
Mr. Lacy is a partner
and a director, respectively, and 600 shares representing
his vested interest in a self-employment retirement plan,
totaling 15,300 shares, 11,700 of which heSams disclaims beneficial ownership.
Mr. Sams disclaims beneficial ownership of 1,500 shares of 1,500the total
shares of
the total shares shown opposite his name.
PROPOSAL 1 - ELECTION OF FIVEFOUR DIRECTORS
At a meeting held January 28, 1997,27, 1998, the Executive Committee of
IPALCO's Board of Directors nominated fivefour directors to stand for election
as Class IIIII directors of IPALCO at its Annual Meeting of Shareholders to be
held May 21, 1997,April 15, 1998, for terms of three years each and until their successors
are duly elected and qualified.
Proxies representing shares held on the record date which are
returned duly executed, will be voted, unless otherwise specified, in favor
of the fivefour nominees for the Board of Directors named below in Class II.III.
All such nominees except
Andrew J. Paine, Jr., are members of IPALCO's present Board of Directors and all
nominees have consented to serve if elected. However, if any nominee becomes
unavailable to serve, the persons named as proxies may exercise their
discretion to vote for a substitute nominee.
The nominees for directors in Class II,III, the current directors in
Class IIII and Class I,II, as assigned by the Board of Directors, and the names,
ages (as of May 21, 1997)April 15, 1998), business experience and directorships of such
nominees and directors are as follows:
Nominees For Directors To Be Elected At The 19971998 Annual Meeting:
CLASS II
Joseph D. Barnette, Jr.III
Robert A. Borns, 62, Chairman of Borns Management Corporation (real estate
owners and managers), 57, Chairman and Chief Executive Officer
of Bank One,Indianapolis, Indiana NA (a bank holding company) since January, 1993. Prior to that, Mr. Barnette was President
and Chief Executive Officer of Banc One Indiana Corporation
(July, 1990 - January, 1993), President and Chief Executive
Officer of Bank One, Indianapolis, NA (January, 1990 -
October, 1994)1961, and Chairman
of Correctional Management Company L.L.C. since 1996. Mr. Borns
serves on numerous boards, including the Board of Trustees of
Indianapolis Museum of Art, Indianapolis Symphony Orchestra,
Indiana University Foundation and Chief Executive Officer of
Bank One, Indianapolis, NA (October, 1994 - March, 1997).St. Vincent Hospital Advisory
Board. He is also a director of IPL, Standard Management
Corporation, and Meridian Insurance Group, Inc.of Artistic Media Partners. He has been a
director of IPALCO since January, 1993.
Max L. Gibson, 56, President of Majax Corporation (waste consulting firm),
Terre Haute, Indiana forApril, 1987 (excluding the past five years. For more than five
years priorperiod
March 15 to his consulting work, Mr. Gibson was President of
Victory Services Corporation (waste disposal), Terre Haute,
Indiana. He is a director of IPL, First Financial
Corporation, Terre Haute First National Bank and First State
Bank, Brazil, Indiana. He has been a director of IPALCO
since August 1993.
Ramon L. Humke, 64, Vice Chairman of IPALCO and President and
Chief Operating Officer of IPL. Prior to February, 1990 when he
assumed his present position with IPL, Mr. Humke was President and
Chief Executive Officer of Ameritech Services and Senior Vice
President of Ameritech Bell Group (September, 1989 - February,
1990) and President and Chief Executive Officer of Indiana Bell
Telephone Company (October, 1983 - September, 1989)23, 1993). He is a
director of IPL, NBD Bank, N.A., LDI Management, Inc. and is
Chairman of the Boards of Meridian Mutual Insurance Company and
Meridian Insurance Group, Inc. He has been a director of IPALCO
since February, 1990.
Andrew J. Paine Jr., 59, President and Chief Executive Officer of
NBD Indiana, Inc. and Executive Vice President of First Chicago
NBD Corporation. In his position with NBD Indiana, Inc. he directs
the operation of all NBD banks in Indiana. In 1981, Mr. Paine
was named Vice Chairman of Indiana National Bank, and was
elected Executive Vice President of NBD Bancorp after it
acquired INB in 1992. Mr. Paine was named Chief Executive
Officer of NBD Indiana, Inc. in June, 1994, and Executive
Vice President of First Chicago NBD Corporation in 1995. He
is a director of Indianapolis Life Insurance Company and
Bankers Life Insurance Company of New York.
Sallie W. Rowland, 64, Chairman and Chief Executive Officer of
Rowland Design, Inc. (an architectural, interiors and graphic
design firm), Indianapolis, Indiana, positions she has held for
more than 5 years. Mrs. Rowland serves on various community boards
including The Indianapolis Chamber of Commerce. She is a
director of IPL, NBD Bank, N.A., Meridian Insurance Group,
Inc. and Meridian Mutual Insurance Company. She has been a
director of IPALCO since April, 1988.
Current Directors Whose Terms Expire in 1998 (Class III) and in
1999 (Class I):
CLASS III
Otto N. Frenzel III, 66,67, Chairman, Executive Committee, National City Bank
of Indiana, Indianapolis, Indiana. Mr. Frenzel has held his present
position since January, 1996. For more than 3 years prior to that
time, Mr. Frenzel was Chairman of the Board of National City Bank,
Indiana. Prior to May, 1992, Mr. Frenzel was Chairman of the Board
of Merchants National Bank & Trust Company of Indianapolis and
Chairman of the Board of Merchants National Corporation. He
is a director of IPL, National City Corporation, American
United Life Insurance Company, Indiana Energy, Inc., Indiana
Gas Company, Inc., and Baldwin & Lyons, Inc. He has been a
director of IPALCO since September, 1983.
Dr. Earl B. Herr, Jr., 69, Retired. For more than five years prior to his
retirement in December, 1992, Dr. Herr was Executive Vice
President of Eli Lilly and Company (pharmaceuticals manufacturer),
Indianapolis, Indiana. He is a director of IPL and Lilly Endowment
and has been a director of IPALCO since April, 1986 (excluding
the period March 15 to August 23, 1993).
Sam H. Jones, 69, President, Indianapolis Urban League, Inc.,
Indianapolis, Indiana. Mr. Jones has held his present position
for more than 5 years and serves on numerous educational, social
and cultural boards, including the Advisory Board of Indiana
University-Purdue University at Indianapolis, Methodist Health
Foundation, Board of One Hundred Black Men of Indianapolis and the
Administrative Board of Northwest United Methodist Church. He is a
director of IPL and has been a director of IPALCO since September,
1983.
Andre B. Lacy, 57,58, General Partner and Chief Executive of LDI, Ltd. (an
industrial and investment limited partnership), Chairman of the
Board, Chief Executive Officer and President of LDI Management, Inc.,
the managing general partner of LDI, Ltd., and Chairman and Chief
Executive Officer of all subsidiaries and divisions thereof. He has
held his present positions for more than 5 years. He is a
director of IPL, Tredegar Industries, Inc., Albemarle
Corporation, FinishMaster, Inc., Herff Jones, Patterson
Dental Co., Herff Jones and The National Bank of Indianapolis. He has
been a director of IPALCO since April, 1985.
L. Ben Lytle, 50,51, President and Chief Executive Officer, Anthem Insurance
Companies, Inc. (insurance and financial services), Indianapolis,
Indiana. He served as Chairman from March, 1994 to March, 1996, and
has held the remaining positions for more than five years. He is a
director of IPL, Bank One, Indiana, NA, and Anthem Insurance
Companies, Inc. and its subsidiaries. He has been a director of
IPALCO since April, 1992.
Current Directors Whose Terms Expire in 1999 (Class I) and in 2000
(Class II):
CLASS I
Robert A. Borns, 61, Chairman of Borns Management Corporation
(real estate owners and managers), Indianapolis, Indiana since 1961,
and Chairman of Correctional Management Company L.L.C. since 1996.
Mr. Borns serves on numerous boards, including the Board of Trustees
of Indianapolis Museum of Art, Indianapolis Symphony
Orchestra, Indiana University Foundation and St. Vincent
Hospital Advisory Board. He is also a director of IPL,
Standard Management Corporation, and of Heritage Partners
Management, Inc. He has been a director of IPALCO since
April, 1987 (excluding the period March 15 to August 23,
1993).
Mitchell E. Daniels, Jr., 48,49, Vice President, Corporate Strategy and Policy,
Eli Lilly and Company, (pharmaceuticals manufacturer). During the
period April 1, 1993 to January 6, 1996, Mr. Daniels was President,
North American Pharmaceutical Operations of Eli Lilly and Company.
Prior to that time, he was Vice President, Corporate Affairs of Eli
Lilly and Company and President and Chief Executive Officer
of Hudson Institute, Inc. (March, 1987 to August, 1990). He
is a director of IPL Acordia,
Inc. and NBD Bank, N.A.NA and has been a
director of IPALCO since November, 1989.
Rexford C. Early, 62,63, President of Carlisle Insurance Agency, Inc.,
Indianapolis, Indiana, a position he has held for more than five
years. Mr. Early was Chairman of the Indiana Republican Party from
March, 1991 to March, 1993. He is a trustee of the Indianapolis
Foundation and currently serves as its Chairman. He is a director
of IPL and has been a director of IPALCO since August, 1993.
John R. Hodowal, 52,53, Chairman of the Board and President of IPALCO and
Chairman of the Board and Chief Executive Officer of IPL. Except for
the Chairmanship of IPL which he assumed in February, 1990, Mr.
Hodowal has held his current positions since May, 1989. For some
years prior to that time, he was Vice President and Treasurer of
IPALCO and Executive Vice President of IPL. He is a director of IPL,
Bank One, Indiana, NA and Anthem Insurance Companies, Inc.
He has been a director of IPALCO since April, 1984.
Michael S. Maurer, 54,55, Chairman of the Board of The National Bank of
Indianapolis since December, 1993. Mr. Maurer is Chairman of the
Board of MyStar Communications Corporation (radio station
operations), a position he has held for more than five years; and
Chairman of the Board of IBJ Corporation (newspaper publisher), since
December, 1990; Chairman of the
Board of The National Bank of Indianapolis since December,
1993.1990. Mr. Maurer is Chair, United Way of Central Indiana.
He has been a director of IPL and IPALCO since January, 1993.
Thomas H. Sams, 55,56, President and Chief Executive Officer, Waldemar
Industries, Inc. (an investment holding company), Indianapolis,
Indiana and an officer of various subsidiary and affiliated
corporations thereof. Mr. Sams has held these positions since 1966.
He is a director of IPL, NBD Bank, N.A.,NA, and Meridian Insurance Group,
Inc. He has been a director of IPALCO since April, 1987.
CLASS II
Joseph D. Barnette, Jr., 58, Chairman and Chief Executive Officer of Bank
One, Indiana, NA since March, 1997 and Chairman and Chief Executive
Officer of Banc One Indiana Corporation (a bank holding company)
since January, 1993. Prior to that, Mr. Barnette was Chairman and
Chief Executive Officer of Bank One, Indianapolis, NA (October,
1994 - March, 1997), President and Chief Executive Officer of Banc
One Indiana Corporation (July, 1990 - January, 1993), and President
and Chief Executive Officer of Bank One, Indianapolis, NA (January,
1990 - October, 1994). He is a director of IPL and Meridian
Insurance Group, Inc. He has been a director of IPALCO since January,
1993.
Max L. Gibson, 57, President of Majax Corporation (waste consulting firm),
Terre Haute, Indiana for the past five years. For more than five
years prior to his consulting work, Mr. Gibson was President of
Victory Services Corporation (waste disposal), Terre Haute, Indiana.
He is a director of IPL, First Financial Corporation, Terre Haute
First National Bank and First State Bank, Brazil, Indiana. He has
been a director of IPALCO since August, 1993.
Ramon L. Humke, 65, Vice Chairman of IPALCO and President and Chief Operating
Officer of IPL. Prior to February, 1990 when he assumed his present
position with IPL, Mr. Humke was President and Chief Executive
Officer of Ameritech Services and Senior Vice President of Ameritech
Bell Group (September, 1989 - February, 1990) and President and
Chief Executive Officer of Indiana Bell Telephone Company (October,
1983 - September, 1989). He is a director of IPL, NBD Bank, NA,
LDI Management, Inc. and is Chairman of the Boards of Meridian Mutual
Insurance Company and Meridian Insurance Group, Inc. He has been a
director of IPALCO since February, 1990.
Andrew J. Paine, Jr., 60, President and Chief Executive Officer of NBD Bank,
NA and Executive Vice President of First Chicago NBD Corporation.
In his position with NBD Bank, NA he directs the operation of all
NBD banks in Indiana. In 1981, Mr. Paine was named Vice Chairman of
Indiana National Bank, and was elected Executive Vice President of
NBD Bancorp after it acquired INB in 1992. Mr. Paine was named Chief
Executive Officer of NBD Indiana, Inc. in June, 1994, and Executive
Vice President of First Chicago NBD Corporation in 1995. He is a
director of IPL, Indianapolis Life Insurance Company and Bankers
Life Insurance Company of New York. He has been a director of
IPALCO since May, 1997.
Sallie W. Rowland, 65, Chairman and Chief Executive Officer of Rowland
Design, Inc. (an architectural, interiors and graphic design firm),
Indianapolis, Indiana, positions she has held for more than 5 years.
Mrs. Rowland serves on various community boards including The
Indianapolis Chamber of Commerce and Indianapolis Project. She is a
director of IPL, NBD Bank, NA, Meridian Insurance Group, Inc. and
Meridian Mutual Insurance Company. She has been a director
of IPALCO since April, 1988.
INFORMATION REGARDING THE BOARD OF DIRECTORS
Procedure To Propose Nominees For Director
IPALCO will accept timely notice by shareholders of proposed
nominees for directors. Any such notice must be received by the Corporate
Secretary of IPALCO not less than 60 days nor more than 90 days prior to the
date of each annual meeting. Such shareholder's notice shall set forth
(a) as to each proposed nominee for director (i) the name, age, business
address and residence address of such nominee, (ii) the principal occupation
or employment of such nominee, (iii) the class and/or series and number of
shares that are beneficially owned by such nominee on the date of such
shareholder notice and (iv) any other information relating to such nominee
that is required to be disclosed pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, and (b) as to the shareholder
giving the notice (i) the name and address, as they appear on IPALCO's books,
of such shareholder and any shareholders known to be supporting such nominee
and (ii) the class and/or series and number of shares beneficially owned by
such shareholder and by any shareholders known to be supporting such nominee
on the date of such shareholder notice. The Board of Directors may reject any
nomination for director not made in accordance with the foregoing provisions.
Number of Board Meetings and Attendance
During 1996,1997, the Board of Directors of IPALCO held 11 meetings and
committees of the Board held a total of 1620 meetings. Each director attended
more than 75%85% of the aggregate of Board meetings and assigned committee
meetings.meetings except for Mr. Robert A. Borns who attended more than 70%, and
Mr. L. Ben Lytle who attended more than 71%. All directors, on average,
attended over 92%91% of the Board meetings and assigned committee meetings held
in 1996.1997.
Committees of the Board
The Board of Directors of IPALCO has four standing committees, the
Executive Committee, the Audit Committee, the Compensation Committee, and the
Committee on Strategies. The Board does not have a nominating committee as
such, but the Executive Committee performs the functions of such committee.
It reviews, among other things, the qualifications and suitability of
candidates to stand for election to IPALCO's Board of Directors and makes
specific recommendations with respect thereto. In addition, the Executive
Committee considers and recommends the declaration of dividends and acts on
matters when the full Board is not in session. The Executive Committee held
six meetings in 1996.1997. Currently, Mr. John R. Hodowal is Chairman and Messrs.
Robert A. Borns, Otto N. Frenzel III, Earl B. Herr, Jr., Ramon L. Humke, and
Sam H. Jones are members. The Audit Committee recommends the appointment of
the auditor for the ensuing year for IPALCO and its subsidiaries, reviews
the scope of the audit, examines the auditor's reports, makes appropriate
recommendations to the Board of Directors as a result of such review and
examination, and inquires into the effectiveness of the financial and
accounting functions and controls. The Audit Committee first approves all
non-audit services and gives appropriate consideration to the effect, if any,
such services may have on the independence of the auditor, except that
management advisory and tax services which do not exceed $50,000 per project
or $150,000 in the aggregate per calendar year may be approved by the
Chairman of the Board without such Committee's consent. The Audit Committee
held threefour meetings in 1996.1997. Currently, Mrs. Sallie W. Rowland is Chairman and
its members are Messrs. Rexford C. Early, Edwin J. Goss, Sam H. Jones, and Andre B. Lacy.Lacy, and Andrew J. Paine, Jr.
The Compensation Committee reviews current and proposed compensation
levels of all officers of IPALCO and its subsidiaries, obtains advice of
independent consultants, and makes specific recommendations as to the
compensation each officer should receive on an annual basis. It also reviews
and makes recommendations with respect to other forms of compensation for
such officers, including supplemental pension benefits, bonuses, stock
options and restricted stock. (See ``Board"Board Compensation Committee Report on
Executive Compensation''Compensation" below.) The Compensation Committee held fourseven
meetings in 1996.1997. Currently, Mr. Otto N. Frenzel III is Chairman and Messrs.
Robert A. Borns, Rexford C. Early, Earl B. Herr, Jr., and Thomas H. Sams are
members.
The Committee on Strategies considers and makes recommendations with
respect to issues and processes involving dynamic planning, matters affecting
the allocation of corporate resources among regulated and non-regulated
subsidiaries, and other components of overall corporate strategy. The
Committee on Strategies held three meetings in 1996.1997. Currently, Mr. Joseph D.
Barnette, Jr. is Chairman and Messrs. Mitchell E. Daniels, Jr., Max L.
Gibson, L. Ben Lytle, and Michael S. Maurer are members.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the federal securities laws, IPALCO's directors, certain
officers, and 10% shareholders are required to report to the Securities and
Exchange Commission, by specific due dates, transactions and holdings in
IPALCO's stock. During 1996, Mr.
Robert W. Rawlings and Mr. Joseph D. Barnette, Jr. each had one
late report with regard to one transaction.All reports were made on a timely basis in 1997.
Compensation Committee Interlocks and Insider Participation
Mr. Frenzel is Chairman, and Messrs. Borns, Early, Herr and Sams are
the members of the Compensation Committee. IPALCO's Vice Chairman, Mr. Ramon
L. Humke, is a member of the Compensation Committee of the Board of Directors
of LDI Management, Inc. Mr. Andre B. Lacy is Chairman of the Board, Chief
Executive Officer and President of LDI Management, Inc. and is also a
director of IPALCO.
Compensation of Directors
Non-employee directors serving on the Board of IPALCO are paid an
annual fee of $8,500 plus $450$500 for each meeting attended; however, directors
of IPALCO and its subsidiaries are limited to two annual fees. Non-employee
members of the Executive Committee of the Board are paid annual fees of
$10,000, but no meeting fees. Members of the Audit Committee, Compensation
Committee and the Committee on Strategies of the Board, all of whom are
non-employee directors, are paid annual fees of $4,000 plus $450$500 for each
meeting attended. The Chairman of each of the latter three committees
receives an additional fee of $1,500 annually. Members of the Executive and
Audit Committees of both IPALCO and IPL are limited to one annual fee.
Directors who are also officers of IPALCO or one of its subsidiaries receive
no director fees.
Certain Business Relationships
During 1996,1997, companies associated with Anthem Insurance Companies,
Inc. ("Anthem") administered health care programs for IPALCO and its
subsidiaries under contracts that involve payments to Anthem aggregating
approximately $15$17 million. Mr. L. Ben Lytle is President and Chief Executive
Officer of Anthem.
IPALCO subsidiaries Indianapolis Power & Light Company ("IPL") and
Mid-America Capital Resources, Inc. ("Mid-America") each maintained a line
of credit during 19961997 with National City Bank, Indiana ("NCB") of which
Mr. Otto N. Frenzel III is Chairman of the Executive Committee. During
1996,1997, the maximum principal amount outstanding at any time on IPL's $30
million line of credit with NCB was approximately $11$16.5 million, and IPL
had noan outstanding balance with NCB as of December 31, 1996.1997 of $13.7 million.
Mid-America's $7.5 million line of credit with NCB had a maximum principal
amount of $3.0$2.5 million outstanding at any time, and a principal balance of
$3.0$2.5 million outstanding as of December 31, 1996.1997.
IPL maintained a long-term revolving credit facility during 19961997 with
Bank One, Indianapolis, NA, ("Bank One") of which Mr. Joseph D. Barnette,
Jr., is Chairman and Chief Executive Officer. IPL did not utilize the credit
facility during 1996.1997. Mid-America maintained a $7.5 million line of credit
with Bank One during 19961997 and had a maximum principal amount of $3.0$2.5 million
outstanding at any time, and an outstanding principal balance of $3.0$2.5 million
as of December 31, 1996.1997.
An unutilized credit line and an unutilized long-term revolving
credit facility were also maintained by IPL with First Chicago NBD ("NBD"),
of which Mr. Ramon L. Humke is a director
and Mr. Andrew J. Paine, Jr., is an executive officer. Mr. Ramon L.
Humke is a director of NBD Bank, NA. IPALCO subsidiary Mid-America
maintained a $7.5$30 million line of credit during 1996 with NBD,participating banks including
NCB and Bank One, had a maximum principal amount outstanding of $3.0$10 million,
and a principal balance of $3.0$10 million outstanding as of December 31, 1996.1997.
IPALCO entered into a Credit Agreement with Bank One, Indiana, NA,
NCB, and The First National Bank of Chicago on April 4, 1997 for the purpose
of borrowing $401 million. The proceeds of the loan will bewere used for the
repurchase of 12,539,428 of the outstanding shares of IPALCO Enterprises,
Inc. common stock pursuant to the terms of the tender offer announced by
IPALCO on February 25, 1997. The outstanding balance on December 31, 1997
was $323 million.
IPL engaged Rowland Design, Inc. for architectural and design
services for certain improvements to the corporate offices located at One
Monument Circle. During 1996,1997, IPL paid fees of approximately $93,000$97,000 under
such agreements. Mrs. Sallie W. Rowland is Chairman and CEO of Rowland
Design, Inc.
IPL engaged Schenkel & Associates, LLC, for consulting
services in the areas of community affairs, public relations,PROPOSAL 2 -- APPROVING ADOPTION OF IPALCO ENTERPRISES, INC.
LONG-TERM PERFORMANCE AND RESTRICTED STOCK INCENTIVE PLAN
(As Amended and communication, and paid fees of approximately $25,000 during
1996. Mr. Thomas M. Miller, a member ofRestated Effective January 1, 1998)
Introduction
At its meeting held January 27, 1998, the Board of Directors ofapproved
the IPALCO prior to his death on July 5, 1996, was a majority
owner of Schenkel & Associates, LLC.
PROPOSAL 2 - APPROVAL OF AMENDMENT TO AMENDED ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF
SHARES OF IPALCO'S COMMON STOCK
The Proposed Amendment
At a regular meeting of the Board of Directors of IPALCO
held January 28, 1997, a resolution was adopted by unanimous vote
of the 16 directors present directing that an amendment be
submitted to a vote of the shareholders at the 1997 Annual
Meeting to amend Section 5.01 of Article 5 of the Amended
Articles of Incorporation to read as follows:
"Section 5.01. Amount and Par Value. The total number of
shares which the Corporation shall have the authority to
issue is two hundred ninety million (290,000,000) shares,
without par value."
Section 5.01 of IPALCO's Amended Articles of Incorporation
currently authorizes the issuance of 145,000,000 shares of common
stock, without par value. No other class of capital stock is
authorized. As of April 10, 1997, there were 44,499,612
shares of IPALCO's common stock issued and outstanding after
giving effect to the repurchase of 12,539,428 shares of IPALCO
common stock pursuant to the terms of the tender offer announced
by IPALCO on February 25, 1997. Of the 100,500,388 authorized
shares that remain available for issuance, 61,758,065 shares
are reserved for issuance in accordance with the provisions of
IPALCO's Shareholder Rights Plan, 1991 Directors Stock Option
Plan, 1990 (Officers) Stock Option Plan andEnterprises, Inc. Long-Term Performance and Restricted Stock
Incentive Plan. An additional 2,000,000
shares will be reserved for issuance pursuant to the 1997 Stock
Option Plan if such plan is approved at the Annual Meeting. The
12,539,428 shares repurchased pursuant to the tender offer will be
held as treasury shares. The balance of shares available after
taking into consideration the shares reserved for issuance, including
those to be reserved in connection with the 1997 Stock Option Plan,(As Amended and treasury shares, is 24,202,895. In addition, each time IPALCO
issues shares of its common stock, an additional share is reserved
for issuance under the terms of the Shareholder Rights Plan.
As a result, IPALCO only has one-half of the 24,202,895 shares
available for issuance, or 12,101,448.
Purpose and Effect of Proposed Amendment
The proposed amendment would increase from 145,000,000
shares to 290,000,000 shares the amount of IPALCO common stock
authorized for issuance, but it would have no effect upon the
terms of such stock or the rights of the holders thereof. IPALCO
does not have any present plans, understandings or agreements to
issue additional shares of common stock.
The Board of Directors believes that the proposed increase
in authorized common stock is desirable to enhance IPALCO's
flexibility in connection with possible future actions, such as
stock splits, stock dividends, financings, corporate mergers,
acquisitions of property, use in employee benefit plans or other
corporate purposes. Having such authorized shares available for
issuance in the future would allow shares of common stock to be
issued without the expense and delay of a special shareholders'
meeting. Once authorized, such common stock would be available
for issuance from time to time to such persons and for such
consideration and on such terms as the Board of Directors
determines. No further action or authorization by IPALCO's
shareholders would be necessary prior to the issuance of the
additional shares of common stock unless required by applicable
law or by the rules of any stock exchange on which IPALCO's
securities may then be listed. The holders of any of the
additional shares of common stock issued in the future would have
the same rights and privileges as the holders of the shares of
common stock currently authorized and outstanding. Those rights
do not include preemptive rights with respect to the future
issuance of any additional shares.
As stated above, IPALCO has no immediate plans,
understandings or agreements with respect to the issuance of any
additional shares of common stock which would be authorized by
the proposed amendment. However, shareholders should be aware
that the authority of the Board to issue common stock might be
considered as having the effect of discouraging an attempt by
another person or entity to effect a takeover or otherwise gain
control of IPALCO, because the issuance of additional common
stock would dilute the voting power of the common stock then
outstanding. As of this date, the Board is not aware of any
pending or threatened effort to accumulate IPALCO's shares or to
obtain control of IPALCO by means of a merger, tender offer,
solicitation in opposition to management or otherwise.
Other provisions of IPALCO's Amended Articles could also be
viewed as potential impediments to efforts to acquire control of
IPALCO. Specifically, those provisions of the Articles requiring
the election of only one-third of the directors of IPALCO every
year, and the super-majority vote requirement applicable to
certain business transactions (such as mergers or sales of
assets) could be used in a manner calculated to prevent the
removal of management and make more difficult or discourage a
change in control of IPALCO. The Articles also provide that the
Board, when evaluating such transactions, shall, in connection
with the exercise of its judgment in determining what is in the
best interests of IPALCO and its shareholders, give due
consideration to all relevant factors including the social and
economic effects on employees, customers, suppliers, and other
constituents of IPALCO and on the communities in which IPALCO
operates or is located. In addition, directors may be removed
only for cause and only upon the affirmative vote of the holders
of 80% of the outstanding voting power of IPALCO. IPALCO's
Shareholder Rights Plan could be used with the intent to make
more difficult or discourage a change in control. IPALCO has no
present intention of soliciting the vote of shareholders on any
other proposal, or series of proposals, to deter changes in
control of IPALCO.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2
PROPOSAL 3 - APPROVAL OF ADOPTION OF
IPALCO ENTERPRISES, INC. 1997 STOCK OPTION PLAN
Introduction
At its meeting held March 25, 1997, the Board of Directors adopted the
1997 Stock Option PlanRestated Effective January 1, 1998) (the
"Plan"). The Plan is a performance based incentive compensation and
restricted stock plan for officers (two of whom are also
directors) and other key executive employees of
IPALCO and its subsidiaries,
subjectsubsidiaries. The Plan was originally adopted in 1995 and
approved by the shareholders at the Annual Meeting held April 19, 1995, and
was amended in 1998 to shareholder approval. Failure to obtain shareholder approval
terminatesmake changes in the peer group and in the performance
measures applicable in determining the amount of incentive compensation.
If the Plan and all options granted thereunder. The Plan is designed
to provideperformance goals are met, participants with a favorable opportunity to acquire IPALCO'swill earn IPALCO common
stock (the "Stock"). The Board of Directors believes that optionsrestricted Stock
grants have been and will continue to
purchase the Stock will be a significant benefit to IPALCO and
its subsidiaries in attracting and retaining key executive employees and in
providing a long range incentive to work for the continued success of these
companies. The 1997 Stock Option Plan is set forth in Appendix A to this Proxy Statement, to
which reference is made for a full and complete statement of its terms and
conditions. A summary of the principal features of the Plan follows. (See
also "Compensation of Executive Officers" and "Board Compensation Committee
Report on Executive Compensation" below.)
Summary of the Plan
Administration. The Plan is administered by the Compensation
Committee of IPALCO's Board of Directors, which is made up of 4five
disinterested outside directors (the "Committee"). The Committee has sole
authority to (a) select planPlan participants, (b) decide on the timing of option grants, (c) determine the number of
shares of the Stock covered by each option, (d) set the option
price, (e)grant, (c) establish the period for exercising options, (f) determine which
options are to be incentive optionsappropriate
performance goals, and which are to be non-qualified
options, (g) determine the terms and conditions of option agreements, and
(h) make(d) makes rules, regulations and other necessary
determinations in the course of administering the Plan.
Eligibility. Officers and other key employees who in the opinion of the
Committee are materially
responsible for, the management and operationcontribute to, strategic and long-term growth of IPALCO
orand its subsidiaries are eligible to participate in the Plan.
Ten
percent (10%) owners of the Stock are excluded unless the exercise price of
the stock option is at least 110% of the fair market value of the Stock on
the date the option is granted and the exercise period does not exceed 5
years. Eligible employees may be granted more than one stock option. As
indicated, the Committee has sole authority to select Plan participants.
Stock Subject to Plan. TwoOne Million Five Hundred Thousand shares of
the Stock (representing 4.49%3.35% of currently outstanding shares) are reserved for
option grants.
Unpurchased shares from expired optionsrestricted Stock grants during the expected duration of the Plan. Forfeited
Stock may again become available for additional optionStock grants.
Terms(a) The first grants were made as of Options. OptionJanuary 1, 1995. Additional
grants arewere made as of January 1, 1996 and 1997 to new Plan participants.
The next grants were made as of January 27, 1998, subject to shareholder
approval at the following termsApril 15, 1998 Annual Meeting and conditions:
(a)on each January 1
thereafter.
(b) The exercise price isCommittee will establish targets for the participants
expressed as a number of shares for each $1,000 of annual compensation paid
to be determined bya participant. The targeted number of shares for the Committee when options
are granted. In1998 grants range
from 50 shares per $1,000 of compensation to 20 shares per $1,000 of
compensation. The initial grant made at the case of incentive stock options, the price may
not be less than the fair market valuebeginning of the Stock.
(b) Themeasuring
period allowed for exercising an option may not exceed 10 years
and 1is based on the average annual salary in effect on the first calendar
day after the date granted; provided that incentive stock
options shall have terms not exceeding 10 years. Options are not
exercisable before shareholders approve the Plan.
(c) Upon exercise of an option, the price shall be paid in full either
(i) in cash, (ii) subject to the terms of the Plan, with an exercise
note with irrevocable instructions to a broker to deliver the option
price in cash, or (iii) subject to approval by the Committee, with
other shares of the Stock having a fair market value, as determined
by the Committee, equal to the cash exercise price. The Committee
may determine whether options are exercisable in full or in quotas.
Options may be exercised at any time during their term.
(d) An option terminates if a participant's employment ceasesmeasuring period for reasons other than death, disability or retirement. If employment
ceases due to disability, any option granted must be exercised within
1 year after employment ceases whether or not the option was
otherwise exercisable at the date of such termination of employment.
A participant who retires may exercise his or her option any time
during its term provided that the option was otherwise exercisable
at the date of such termination of employment.each participant. However, an
incentive stock option must be exercised within 3 months after
retirement or it will be treated for tax purposes as a non-qualified
option. Personal representatives of participants who die while
employed or who die within 1 year after being disabled or retiring,
may exercise an option in whole or in part at any time after the
date of such death until the expiration of the option term as fixed
by the Committee whether or not the option was otherwise
exercisable at the date of death.
(e) An option is not transferable except upon a participant's death.
(f) Participants are deemed to have agreed that the Stock purchased
through the exercise of an option was, in good faith, acquired for
investment and not for sale or other distribution.
(g) The aggregate fair market value (as determined by the Committee at
date of grant) of the Stock subject to an incentive stock option
that is exercisable for the first time by a participant shall not
exceed $100,000 for any calendar year. If, due to immediate
exercisability of an incentive stock option, the aggregate fair
market value exceeds the $100,000 limitation, the Committee shall
convert so much of the option that is in excess of such limitation
to a non-qualified stock option. Except as noted in paragraph (m)
below and except for the number of
shares reserved for option grants,
the is no limit on non-qualified options.
(h) An agreement between IPALCO and the participant shall evidence each
stock option and shall contain a requirement to notify IPALCO of any
sale or transfer of option Stock that occurs 2 years from date of
grant or 1 year from date of exercise.
(i) The Committee may provide an additional cash payment to a non-
qualified stock option participant equal to all or a part of the
tax benefit realized by IPALCO from the exercise of such option.
(j) Certificates for the Stock shallawarded will be issuedadjusted as soon as practicable after an optionthe end of the
program based on the actual base salary paid to the participant. The Plan
does contain a maximum number of shares which may be allocated to any
participant during a measuring period which is exercised, withoutthe lesser of:
(1) the number determined by dividing the participant's
annualized base salary in effect on the first day
of the performance measuring period by 4, or
(2) the number determined by dividing the participant's
actual annual base salary paid to the participant
during the entire measuring period by 5.
(c) The 1998 grants are conditioned upon the approval of the
Amended and Restated Plan by the shareholders of IPALCO.
Restrictions and Lifting of Restrictions. The Stock awarded is
subject to financial performance restrictions and employment restrictions,
which restrictions are described below:
(a) The financial performance restrictions relate to the performance
of IPALCO versus companies included as part of the S&P 500 Index during the
three-year measuring period. The performance measure utilized by the Plan is
Total Return to Shareholders (as defined in the Plan). At the end of the
three-year measuring period, IPALCO's performance is compared with the
performance of the companies included as part of the S&P 500 Index as to
this measure. Depending on IPALCO's performance, the Stock award for the
measuring period for the 1998 grant is adjusted upward to a maximum of
400% of the initial grant or downward to no shares being issued. If shares
of Stock are forfeited, the shares will become eligible for subsequent
grants under the Plan.
(b) After the performance restrictions are lifted, the shares are
still subject to continuing employment restrictions which lapse in 1/3
increments beginning on the July 1 following the end of the measuring period
or such earlier day after the measuring period as established by the
Committee, with the other 1/3 increments lapsing on the first business day
of each of the two calendar years following the calendar year during which
the restrictions on the first 1/3 increment are lifted. If the participant's
employment is terminated before the lifting of the employment restrictions,
the shares that are still restricted are forfeited. At such time that the
continuing employment restrictions are lifted as to each 1/3 increment,
the participant will be permitted to elect to receive cash of up to 50% of
the value of the non-restricted shares, based on their fair market value.
(c) If during the period in which the shares of Stock are subject to
financial performance and employment restrictions, a participant dies or
becomes disabled, employment restrictions will no longer be applicable. If a
participant becomes disabled or dies during a performance period, the number
of shares awarded will be proportionately reduced to reflect the portion of
the measuring period during which the participant was not an active
participant in the Plan, and the reduced number of shares will not be
subject to the financial adjustments at the end of the measuring period.
If a participant's employment terminates on or after reaching early or
normal retirement requirements, the Committee has no
rightsthe discretion to lift
all or a portion of the employment restrictions at its sole discretion.
(d) If there is a change in control of IPALCO, the employment
restrictions will immediately lapse. Upon the change in control, the
measuring period will be deemed terminated as a shareholder. Cashof the date of the change in
control and financial performance of IPALCO shall be paid in lieumeasured against
the performance of fractional
shares.
(k)the companies included as part of the S&P 500 Index based
on the abbreviated measuring period, and the Committee shall effect the
financial adjustments as soon as practicable thereafter.
No Employment Rights. No right to continue in the employ of IPALCO
or its subsidiaries is conferred by the Plan or any agreement thereunder.
(l) Options shall be clearly identified as either incentive stock
options or non-qualified stock options, both of which may be granted
to the same participant. The exercise of an incentive stock option
shall not affect the exercise of a non-qualified stock option and
vice versa.
(m) The maximum number of option shares which may be granted to a
participant in any calendar year may not exceed 250,000.Plan.
Adjustment of Shares. AUpon a reorganization, recapitalization,
stock split, stock dividend, combination of shares, exchange of shares,
merger or consolidation, liquidation or other changessimilar corporate change after
the Plan becomes effective, authorizes the Committee shall make appropriate adjustments
in share grants, as to conclusively determine what changes may be
appropriatewhich adjustments in the number and kind of shares,
and in the option price of
outstanding options.Committee's determination is conclusive.
Tax Withholding. Whenever the Stock is issued or transferred under
the Plan, IPALCO has the right to withhold federal, state or local tax as
dictated by applicable requirements or to require payments sufficient to
satisfy such requirements.
Amendment. IPALCO's Board of Directors may amend the Plan and, with
consent of the participant, may amend an option; however,Plan. However,
shareholder approval is required (a) to increase the number of shares
reserved for issuance; or (b) to extend beyond 10 years and 1 day the exercise period for
an option; (c) to modify materially the class of eligible participants;
and (d) to materially increase the benefits accruing to
participants.
Termination. IPALCO's Board of Directors may terminate the Plan at
any time, but optionsawards theretofore granted will not be affected.
No incentive
stock options may be granted after 10 years.
Agreements Evidencing Incentive and Non-Qualified Stock Options
The Plan requires that each option be evidenced by an agreement between
IPALCO and the participant. On March 25, 1997, 27 such agreements, covering
an aggregate of 1,067,500 shares of the Stock and representing 2.4% of
total shares currently outstanding, were entered into with officers and key
employees of IPALCO and its subsidiaries as selected by the Committee,
subject to shareholder approval of the Plan. These agreements, in principal
part, (a) establish the total number of shares of the Stock for which each
participant has been granted incentive and/or non-qualified stock options;
(b) set the option price at the higher of the average of the high and low
price of the Stock on March 25, 1997 or April 8, 1997; (c) limit the term of
an incentive option to 10 years and of a non-qualified option to 10 years
and 1 day; and (d) authorize the Committee to approve the manner in which
the option can be exercised.
Federal Income Tax Consequences of Stock Options
The grant of an incentive or a non-qualified stock option has no federal
tax consequences to IPALCO or a subsidiary. Moreover, the exercise of an
incentive stock option will ordinarily have no federal income tax
consequences to IPALCO or a subsidiary, if the option is exercised (a) while
a participant is employed, (b) within 3 months after a participant retires,
(c) after participant's death, or (d) within 1 year after participant ceases
to be an employee due to a disability within the meaning of Section 105(d)(4)
of the Internal Revenue Code (the "Code"). However, the amount by which the
fair market value at the time of exercise exceeds the option price of the
Stock constitutes an alternative taxable income and may subject a participant
to alternative minimum tax.
At the time a non-qualified stock option is exercised, the amount by which
the fair market value of the Stock at the time of exercise exceeds the option
price is ordinary income to a participant, but is generally deductible by
IPALCO or a subsidiary for federal income tax purposes.
Any capital gain realized from a sale of the Stock acquired upon exercise
of an incentive stock option will be taxed at long-term rates if the sale was
made more than 2 years after grant and 1 year after receipt of the Stock. A
sale of option-acquired Stock made before either of such periods will be
taxed as ordinary income. The amount of such ordinary income will be
deductible by IPALCO or a subsidiary, if income taxes were appropriately
withheld.
NEW PLAN BENEFITS
- --------------------------------------------------------------------------------------------
IPALCO ENTERPRISES, INC.
1997LONG-TERM PERFORMANCE AND
RESTRICTED STOCK OPTIONINCENTIVE PLAN
(As Amended and Restated Effective January 1, 1998)
- --------------------------------------------------------------------------------------------
Number of Shares
Name and Position Dollar Value($) NumberValue of UnitsRestricted Stock
- --------------------------------------------------------------------------------------------
John R. Hodowal 250,000$1,114,305 26,750
Chairman of the Board
and Chief Executive OfficerPresident
Ramon L. Humke 125,000$ 942,473 22,625
Vice Chairman
John R. Brehm 75,000$ 402,733 9,668
Vice President and Treasurer
Bryan G. Tabler 45,000$ 235,983 5,665
Vice President, Secretary and
General Counsel
Gerald D. Waltz 45,000$ 223,402 5,363
Senior Vice President, Electric
Delivery of IPL
Other Executive Officers as a Group 240,000$1,070,982 25,710
Non-Executive DirectorOfficer Employee Group -0-
Non-Executive Officer/ 287,500
Employee Group$ 704,407 16,910
-------
Total $4,694,285 112,691
These shares of restricted stock were issued on January 27, 1998,
subject to shareholder approval at the Annual Meeting held April 15,
1998. The dollar value is based on the average of the high and low
price for IPALCO's Common Stock on the date of issuance, without
regard to the restrictions.
Federal Income Tax Consequences of Grants Under the Plan
At the time on which the restrictions lapse (both the financial
performance and employment restrictions), the fair market value of the
non-restricted shares will be ordinary income to a participant and
deductible by IPALCO and its subsidiaries for federal income taxes as long
as withholding requirements are met. However, a participant may accelerate
the tax recognition of a restricted share grant by making an election under
Section 83(b) of the Internal Revenue Code of 1986 (the "Code") within
thirty days from the date of grant. In such case, the deduction available to
IPALCO or a subsidiary is also accelerated as long as withholding
requirements are met. Since the Plan is intended to be a performance-based
plan, the value of benefits should therefore be exempt from the
deductibility limitations of Section 162(m) of the Code.
Vote Required to Approve the Plan
Adoption of Proposal 2 requires the affirmative vote of a majority of
the shares present in person or by proxy and entitled to vote at the Annual
Meeting. Abstentions will have the same effect as a vote against the
proposal. Broker non-votes will not be voted for or against the proposal and
will not be counted as entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 3.
2.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Policies Relating Generally to Executive Officers
The Compensation Committee (``Committee''("Committee") of the Board of Directors
("Board"), in consultation with its outside advisor, establishes the
compensation policies of IPALCO Enterprises, Inc. and its subsidiaries
(``IPALCO''("IPALCO") with regard to all officers. The Committee recommends to the
Board the adoption or amendment of compensation plans for officers,
including the named executive officers. On authority of the full Board,
the Committee administers all such plans, including establishing officers'
base salary levels, reviewing and approving performance measures and
goals for both annual and long-term incentive plans, and approving incentive
awards.
The Committee is made up of fourfive non-employee directors whose
philosophy is to attract, retain, and motivate a high quality management
team by providing a strong and direct link between IPALCO performance and
officer compensation, with a significant portion of total compensation being
dependent upon measurable performance objectives. The compensation program
for named executive officers and other selected officers had threefour basic
components in 1996:1997: base salary, a performance-based annual incentive plan,
and a long-term performance and restricted stock incentive plan and a stock
option plan. It is the policy of the Committee that the compensation
program should directly link executive and shareholder interests.
Base Salary
During 1997 the Committee thoroughly reviewed base salary of
officers, including the named executive officers, in light of IPALCO's
transformation from a more traditional utility to a more general industry
company following the leveraged recapitalization, dividend reduction and
stock buy back in April, 1997. The Committee agreed to continue its
practice of tying a greater percentage of total compensation to IPALCO's
performance. As such, no named executive officer received a 1997 base salary
increase.
The Committee targeted 19961997 base salaries for officers, including
the named executive officers, at the median level75th percentile for similar positions
within comparably performing utilities, and where such positions are also
found in general industry, at a level approximately one-half the difference
between the utility industry and general industry medians. The Committee
considered the analysis which was provided by the outside advisor that IPALCO
salaries are withinat the median75th percentile range of comparable utilities and below
those of general industry. The Committee also considered both company and
individual performance in approving the range of salary increases, if any,
and the salary for each officer, including the named executive officers.
In 1997 nineteen officers, including all named executive officers,
received the same base salary as in 1996 while eleven officers received base
salary increases. Total base salary increases for all officers averaged 4.5%, slightly ahead of the utility
industry average, but aligned with IPALCO performance.2.1%.
The comparative compensation data for electric utilities used by the
Committee were derived from companies with comparable revenues as reported in
the annual Edison Electric Institute Executive Compensation Survey. Data
for general industry were drawn from five national executive compensation
surveys provided by the outside consultant.
consultant and from an analysis prepared by
the outside consultant on comparable executive position compensation within
the S&P 400 MidCap general industry companies.
Annual Incentive Plan
The IPALCO Annual Incentive Plan is a performance-based plan which
measures company performance in four equally weighted criteria: Net Income,
Customer Satisfaction, Productivity, and Budget Compliance. For 1996 only,
the Committee amended the Annual Incentive Plan to remove Customer
Satisfaction and weigh the remaining performance measures one-third each.
The customer survey being used was incapable of measuring management's
efforts to improve customer service. For 1997 and beyond, Customer
Satisfaction will be measured by an independent broad-based customer survey
focusing on service characteristics which customers have stated are
important. Target awards
are set approximately halfway between general industry and utility medians.
Participants in the Plan are approved in advance of the plan year by the
Committee. All participants, including the named executive officers, are
measured against performance goals which are established by the Committee and
announced at the beginning of the year. Goals are set at Threshold, Target,
and Maximum levels, with Threshold performance required for any award in each
criteria; however, if the Threshold goal for Net Income is not met, no payout
is made regardless of the performance in any other criteria. Each
performance level is assigned an award value, with interpolation for
performance between levels. For named executive officers, performance at
Threshold, Target, and Maximum levels respectively warrants a payout of 10%,
22.5%, and 35% of base salary. Factors ranging from .75 to 1.52.5 are applied
to the award percentage based upon the participant's position.
The Plan permits the reduction or elimination of an award should an
individual participant's performance be below expectations. No awards were
reduced in 1996.1997.
For 1996,1997, the Company met the Maximum performance goals in all threefour
performance measures: Net Income, Customer Satisfaction, Productivity and
Budget Compliance.
Long-Term Performance and Restricted Stock Incentive Plan
The performance-based restricted stock plan is designed to focus the
attention of prospective participants on long-term company objectives and
performance. Participation is subject to Committee approval and is limited
to key employees (including non-officers) who contribute on a continuing
basis to the strategic and long-term growth of the company.
TheCompany.
Program 1 (1995-1997) of the Plan continues to measure companymeasured Company performance in
Total Return to Shareholders and in Cost Effective Service (net income as a
percentage of utility revenues) compared with the performance of a Peer Group
of 15 comparable utilities. Criteria for selection of peer companies
included revenue size and sources, market-to-book ratio, fuel source, and
dividend yield among other criteria. Target awards are set approximately
halfway between general industry and utility medians. Conditional restricted
stock grants, at Target levels, ranging from 10% to 35% of base salary, are
awarded at the beginning of each three-year performance period. Final awards
are based upon IPALCO's ranking within the Peer Group over the performance
period, with one-third of the shares to be vested during each of the fourth,
fifth, and sixth years after the beginning of the performance period. The
performance period for Program 1 covers 1995-1997,ended December 31, 1997 and in January, 1998
the Committee reviewed Program 1 performance with final restricted
stock awards made July 1, 1998.IPALCO ranked 1st in Total
Return to Shareholders and 1st in Cost Effective Service.
Performance in Total Return to Shareholders and Cost Effective
Service continues also to be measured over the four-year performance periods
specified in the original Long-Term Incentive Plan for those programs begun
prior to 1995. ForIn the final Program 5,6 (replaced by the performance based
restricted stock plan discussed above), for the years 1992-1995,1993-1996, IPALCO
ranked first among peers in Cost Effective Service and sixthfourth among peers in
Total Return to Shareholders. Using the schedule specified in the Plan for
thatthe level of performance, the named executive officers received incentive
payments totaling $282,249$331,336.34 in 1996.1997.
Stock Options
The Compensation Committee strongly believes management is in a
position to exert the greatest influence on those strategic decisions which
affect IPALCO's long-term financial success and the creation of shareholder
value. Thus, the Compensation Committee has maintained a posture that
particularly senior officers, including the named executive officers, should
have a portion of their long-term incentive compensation tied directly to
the stock price performance.
As reported in IPALCO's 1997 proxy statement in March, 1997, the
Compensation Committee assessed the competitiveness of IPALCO's total
compensation (base salary + annual incentive + long-term incentives) relative
to the electric utility industry and general industry, focusing expressly on
the relative value of IPALCO's long-term incentive levels (performance based
restricted stock plan described above + stock options). Based upon the
Compensation Committee's desire to maintain long-term incentive compensation
opportunities at competitive levels, officers, including the named executive
officers, were granted stock options on March 25, 1997, in varying amounts
at the exercise price of $31.375 per share, vesting immediately.
Basis Forfor Chief Executive Officer's Compensation
The Chief Executive Officer's (``CEO''("CEO") compensation continues to be
directly and explicitly linked to IPALCO performance with consideration
given to the Committee's assessment of his individual performance. The
Committee thoroughly reviews the CEO's performance, including strategic
direction, leadership and management team development, as well as overall
company performance. The Committee's review is both subjective and
objective. IPALCO performance data used in the incentive plans plus other
financial, operational,operations, service, and administrative data are considered.
The Committee closely followed IPALCO's performance during the three-year
period 1995-1997 and calendar year 1997 compared to the S&P 500 Index and
the S&P Electric Companies Index. IPALCO substantially outperformed both
of these market measurements in 1997 and during the three-year period
1995-1997.
Total 19961997 compensation for the CEO (including base salary, Annual
Incentive Plan payment, and Long-Term Incentive payment and stock associated
with the Long-Term Performance and Restricted Stock Incentive Plan)Plan and stock
options), is shown in Table I.Tables I and II. His total compensation was slightly
above the median of Peer Groupcomparable electric utility industry CEOs, but was slightly below
the median of CEO compensation in comparablycomparable high-performing peergeneral industry
companies.
At Target performance, under the current compensation program,
approximately 37%56% of the CEO's total direct compensation is variable and at
risk. During 1996,1997, approximately 43%53% of the CEO's actual total direct
compensation was at risk.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code will not permit a public
corporation to deduct, for federal income tax purposes, annual compensation
in excess of $1 million paid to certain top executives, unless that
compensation qualifies as "performance based" compensation. This limitation
will nothave insignificant impact on IPALCO with respect to executive
compensation paid in 1996,
nor does the Committee believe that this will have an impact in 1997. The Committee continues to review this issue
with the present intent to takelimit Section 162(m) where appropriate steps to ensure
the continued deductibility of its executive compensation.
The Compensation Committee of the
Board of Directors of IPALCO Enterprises, Inc.
Otto N. Frenzel III, Chairman
Robert A. Borns
Rexford C. Early
Earl B. Herr, Jr.
Thomas H. Sams
COMPENSATION OF EXECUTIVE OFFICERS
Nature and Types of Compensation
The twothree tables that follow on succeeding pages disclose all plan
and non-
plannon-plan compensation awarded to, earned by, or paid to the Chairman of
the Board and President of IPALCO, who is its chief executive officer (``CEO''("CEO")
and to the four named executive officers other than the CEO who are the most
highly compensated key policy-making executive officers of IPALCO and its
subsidiaries. The tables include a Summary Compensation Table (Table I) and, a
table showing Option/SAR Grants in Last Fiscal Year (Table II), an Aggregated
Option/SAR Exercises In Last Fiscal Year and Fiscal Year-End Option/SAR
Values Table (Table II)III). No table is presented for Option/SAR
Grants in last fiscal year since no stock options were granted during 1996. No table is presented for Long-Term Incentive Plans
since the issuance of restricted stock under the Long-Term Performance and
Restricted Stock Incentive Plan is included in the Summary Compensation
Table (Table I).
Subsidiary Incentive Plan
In early 1995, the Board of Directors of Mid-America Capital
Resources, Inc. (``Mid-America''("Mid-America"), a wholly owned subsidiary of IPALCO,
approved the implementation of an incentive compensation plan that will
provide for payment of incentive compensation in the year 2000 or later
to key employees of Mid-America, its subsidiaries, and certain executive
employees of IPALCO if certain objective performance measures are met.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-----------------------------------------------------------------------------------
Annual Compensation Awards Awards Payouts
--------------------------------------- ------------------------------------------------------------------------------------------------------------------------
Other Securities
Annual Restricted Underlying All Other
Compen- Stock Options/ LTIP Compen-
Name and Salary sation Awards SARs PayoutsAwards SARs Payoutssation
Principal Position Year Salary ($) Bonus ($) ($) ($) (#) ($) ($)
- ------------------------------------------- ---- ------------------ --------- ---------- ---------- ----------- ------ --------- ----------------- ----------
John R. Hodowal 1994 $461,051 $214,5661995 $476,012 $206,425 $ 41,471 -0- -0- $ 76,250 $8,955
Chairman & President; 1995 476,012 206,425 43,721 $491,790 -0- $ 75,488 $ 8,310
Chairman & CEO of IPLPresident; 1996 515,125 272,370 229,775 -0- -0- 111,333 6,000
Chairman & CEO of IPL 1997 532,958 468,125 70,087 -0- 250,000 127,550 5,831
Ramon L. Humke 1994 $382,221 $177,881 $130,141 -0- -0-1995 $394,591 $171,120 $ 63,646 $8,955
Vice Chairman; 1995 394,591 171,120 157,606 $407,700 -0- $ 62,975 $ 8,310
President & COOVice Chairman; 1996 432,812 228,935 200,277 -0- -0- 92,296 6,000
President & COO of IPL 1997 450,778 395,937 236,242 -0- 125,000 106,147 5,831
John R. Brehm 1994 $218,3041995 $225,315 $ 67,72889,513 $ 3,678 -0- -0- $ 25,781 $8,199
Vice President & 1995 225,315 89,513 6,301 $133,050 -0- $ 24,228 $ 8,310
Treasurer;Vice President 1996 236,394 83,253 7,788 -0- -0- 34,996 6,698
& Treasurer; SVP, 1997 240,781 84,595 7,512 -0- 75,000 39,858 5,630
Finance & Information
Services of IPL
Bryan G. Tabler 1994 1995 $202,931 $ 46,15758,650 $ 15,785 $ 1,360 -0- -0- -0- -0-
Vice President, 1995 202,931 58,650 14,471 $121,350 -0- -0- $5,589
Secretary & General$ 5,589
Vice President, 1996 218,184 76,907 17,077 -0- -0- $ 10,652 6,119
Counsel;Secretary & General 1997 225,742 79,310 20,053 -0- 45,000 21,197 5,081
Counse; SVP, Secretary
and General Counsel
of IPL
Gerald D. Waltz 1994 $202,9551995 $201,930 $ 62,88758,353 $ 4,465 -0- -0- $ 26,042 $7,731
SVP, Electric 1995 201,930 58,353 11,178 $121,530 -0- $ 24,228 $ 8,310
Delivery of IPLSVP, Electric 1996 209,792 73,885 12,355 -0- -0- 32,972 6,000
Delivery of IPL 1997 213,678 75,075 12,000 -0- 45,000 36,584 5,831
- -------------------------------------------------------------
The named executive officers did not receive a base salary increase
from 1996 to 1997. Salary increases, if applicable take effect in
May. 1996 figures reflect 4 months pay at 1995 base salary rates and
8 months at 1996 base salary rates , while 1997 figures reflect 12
months pay at the 1996 base salary rates.
Represents taxes paid by IPALCO and/or IPL on accrued interest and
contributions of principal under the Funded Supplemental Retirement
Plan (See ``Pension Plans''"Pension Plans"). Includes $10,227 and $17,783 earned in
above market interest on deferred compensation for Mr. Humke in 1996.
1996
and 1997, respectively.
Restricted common stock awards are valued at the closing market price
as of the date of grant. Restricted common stock holdings and the
value thereof based on the closing price of the common stock at year
end are as follows: Mr. Hodowal - 24,589 shares ($670,050)1,031,201);
Mr. Humke - 20,385 shares ($555,491)854,896); Mr. Brehm - 6,652 shares
($181,267)278,968); Mr. Tabler - 6,067 shares ($165,326)254,435); and Mr. Waltz -
6,076 shares ($165,571)254,812). Dividends on the restricted common stock
are payable to the named officers. Shares awarded in 1995 represent
a cumulative 3-year award for years 1995, 1996, and 1997. Under the
terms of the Plan, no additional shares will be awarded to the named
officers before 1998.
No options have stock appreciation rights.
Payouts shown were made in 1996 forpursuant to the 4-year1990 Long-Term Incentive Plan
(the "LTIP Plan"). The LTIP Program ended
December 31, 1995.
Plan was replaced by the IPALCO
Enterprises, Inc. Long-Term Performance and Restricted Stock
Incentive Plan and no additional payments will be made under the LTIP
Plan.
Represents 1996 contributions made by IPL to the Trustee of the Employees'
Thrift Plan.
Mr. Tabler started his employment on October 1, 1994, and became an
officer of both IPALCO and IPL on January 1, 1995. TABLE I
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term
------------------------------------------------------------- -----------------------
% of
Total
Number of Options/
Securities SARs
Underlying Granted to Exercise
Options/ Employees or Base Expira-
SARs in Fiscal Price tion
Name Granted (#) Year ($/Sh) Date 5% ($) 10%($)
- ---------------------------------------------------------------------------------------------------------------------
John R. Hodowal 250,000 23.4 $31.375 03/25/07 $4,932,892 $12,500,918
Ramon L. Humke 125,000 11.7 $31.375 03/25/07 $2,466,446 $ 6,250,459
John R. Brehm 75,000 7.0 $31.375 03/25/07 $1,479,868 $ 3,750,275
Bryan G. Tabler 45,000 4.2 $31.375 03/25/07 $ 887,921 $ 2,250,165
Gerald D. Waltz 45,000 4.2 $31.375 03/25/07 $ 887,921 $ 2,250,165
_________________________
3,187 underlying securities out of the amount shown for each officer
relate to incentive stock options, the balance relate to
non-qualified stock options. All options are exercisable
immediately; however, incentive stock options expire one day before
the expiration date shown. None of the stock options contain stock
appreciation rights.
Equal to market price on grant date.
These values are not a prediction of what IPALCO believes the market
value of its common stock will be in the next 10 years. IPALCO does
not know and cannot determine whether its common stock will increase
(or decrease) in value over that period. The values shown in these
columns are merely assumed values required by, and calculated in
accordance with, Securities and Exchange Commission Rules.
TABLE II
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End(#) FY-End ($)*
Shares Acquired Exercisable/ Exercisable/
Name On Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ------------------------------------ --------------- ------------------ ------------------ ----------------------------- -------------
John R. Hodowal 35,000 $542,485 180,000(e) $401,701(e)-0- -0- 430,000 (e) $5,686,076
-0- (u) -0-
(u)
Ramon L. Humke 82,500 $921,385 105,000(e) $239,013(e)-0- -0- 230,000 (e) $3,101,513
-0- (u) -0- (u)
John R. Brehm -0- -0- 52,500(e) $119,506(e)127,500 (e) $1,682,788
-0- (u) -0- (u)
Bryan G. Tabler -0- -0- ---- ----
---- ----45,000 (e) $ 475,312
-0- (u) -0-
Gerald D. Waltz 18,120 $267,208 55,320(e) $193,880(e)43,481 $462,401 56,839 (e) $ 671,919
-0- (u) -0-
(u)
- ----------------------------------------------------
(e) Exercisable.
(u) Unexercisable.
* Based upon year-end closing market price of $27.25$41.9375 per share of common stock.
TABLE IIIII
Performance Graph
The Performance Graph on this page, Table III,IV, plots the total
cumulative return that shareholders of IPALCO received (solid line) during
the period December 31, 19911992 through MarchDecember 31, 1997, compared with the
total cumulative return to shareholders of companies comprising the
Standards and Poor's 500 Index (solid line with dash)(dotted line) and the Standard &
Poor's Electric Companies Index (wavy(dash/dotted line). The Graph shows the
cumulative total return assuming dividend reinvestment and based upon an
initial investment of $100. The vertical portion of the Graph indicates the
dollar value ranging from $90.00 to $210.00,$260.00, and the horizontal portion of
the Graph is the year, beginning in 19911992 and contuingcontinuing through MarchDecember 31,
1997.
The points on the Performance Graph are as follows:
[solid line] IPALCO [dotted line] S & P 500 [dash/dotted line] S & P
Electric
Companies
CUMULATIVE TOTAL RETURN ASSUMING DIVIDEND REINVESTMENT
1991 1992 1993 1994 1995 1996 3/31/971997
IPALCO 100 114 119 108 146 165 186104.16 94.42 127.74 144.72 229.37
S & P 500 100 108 118 120 165 203 208110.08 111.53 153.45 188.68 251.63
S & P ELEC COMPANIES 100 106 119 104 136 136 131112.60 97.89 128.32 128.11 161.74
Source: Standard and Poor's Compustat Services, Inc.
TABLE IIIIV
Performance Graph
The Performance Graph (Table III)IV) on the preceding page plots the
total cumulative return that shareholders of IPALCO received (solid line)
during the period from December 31, 19911992 through MarchDecember 31, 1997, compared
with the total cumulative return to shareholders of companies comprising the
Standard and Poor's 500 Index (solid line with dash)(dotted line) and the Standard & Poor's
Electric Companies Index (wavy)(dash/dotted line). The Graph reflects IPALCO's
superior return as compared to the electric utility industry and is one of
the bases for the Chief Executive Officer's compensation disclosed in the
Compensation Committee Report set forth in this Proxy Statement.
Pension Plans
Table IVV below illustrates the combined annual retirement benefits
computed on a straight-life annuity basis that are payable under the Base
Retirement Plan and the Funded Supplemental Retirement Plan (assuming
continuous employment to age 65) to named executive officers having the
remuneration and years of service shown.
- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
PENSION PLAN TABLE
Remuneration Years of Service
- ---------------- -----------------------------------------------------------------------------------------------
15 20 25 30 35
-------- -------- -------- -------- --------- --------------------------------------------------------------------
$125,000 $ 81,250 $ 81,250 $ 81,250 $ 81,250 $ 81,250
150,000 97,500 97,500 97,500 97,500 97,500
175,000 113,750 113,750 113,750 113,750 113,750
200,000 130,000 130,000 130,000 130,000 130,000
225,000 146,250 146,250 146,250 146,250 146,250
250,000 162,500 162,500 162,500 162,500 162,500
300,000 195,000 195,000 195,000 195,000 195,000
400,000 260,000 260,000 260,000 260,000 260,000
450,000 292,500 292,500 292,500 292,500 292,500
500,000 325,000 325,000 325,000 325,000 325,000
___________________________________
This table takes into account the latest Internal Revenue Code
Section 415 benefit limitations and Internal Revenue Code Section
401(a)(17) compensation limitation applicable to the Base Retirement
Plan. Benefits for both the Base Retirement Plan portion and Funded
Supplemental Retirement Plan portion of the combined amounts have
been shown without adjustment for income taxes.
TABLE IVV
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
IPL's Employees' Retirement Plan (the ``Base"Base Retirement Plan''Plan") covers
all permanent employees with one (1) year of service but excludes directors
unless they are also officers. It provides fixed benefits at normal
retirement age based upon compensation and length of service, the costs
of which are computed actuarially. The remuneration covered by the Plan
includes ``Salary''"Salary" but excludes ``Bonus''"Bonus" and ``Other"Other Compensation,''" annual or
otherwise, as those terms are used in the Summary Compensation Table (Table
I). Benefits are calculated on the basis of the highest average annual salary
in any 60 consecutive months of employment. Years of service for Pension Plan
purposes of named executive officers are as follows: Mr. Hodowal - 28,29,
Mr. Humke - 7,8, Mr. Brehm - 21,22, Mr. Tabler - 2,3, and Mr. Waltz - 36.37.
The Funded Supplemental Retirement Plan referred to above is
applicable to the named executive officers and, at reduced benefits, to all
other officers of IPALCO and IPL. In addition to the Base Retirement Plan and
Funded Supplemental Retirement Plan benefits described above, the Funded
Supplemental Retirement Plan also provides Mr. Hodowal with a straight-life
annuity of $130,000 per year commencing at age 65, which benefit is reduced
for early retirement. Contributions and accrued interest credited during 19961997
to the accounts of Messrs. Hodowal, Humke, Brehm, Tabler and Waltz amounted
to $271,745, $196,824, $7,256, $20,466$46,676, $208,285, $5,895, $22,176 and $9,987,$7,842, respectively (in addition
to the federal, state and local income tax payments reflected in Table I
above). Contributions are based on actuarial assessments of benefits
projected to accrue to such officers under the Funded Supplemental Retirement
Plan upon termination of employment at normal retirement age and at current
salary levels.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
IPALCO has an employment contract with Mr. Hodowal which provides for
an indefinite term that is convertible into a fixed 3-year term upon notice.
IPL has an employment contract with Mr. Humke which provides for a 3-year
term expiring on December 31, 1999. Such contracts terminate upon death,
total disability or retirement. Should they be terminated without ``cause''"cause" or
resign for ``good reason''"good reason" (as those terms are defined in the contract--see
below), they would continue to receive their Salary, as that term is used
in Table I above, for up to 3 years thereafter, less any severance payments
received from other agreements.
All Officersofficers of IPALCO and its subsidiaries have Termination Benefits
Agreements, dated on or after January 1, 1993. These Agreements provide for
payment of severance benefits equal to 299.99% of the last 5 years' average
annual Salary (but not exceedingcompensation (as defined in Section 280G of the limits of Internal Revenue Code 280G),Code)
payable by IPALCO and its subsidiaries which was includable in the gross
income of the officer, if IPALCO undergoes an ``acquisition"acquisition of control''control" while
the agreement is in effect and if, within 3 years after an acquisition of
control, any such officer is terminated without ``cause''"cause" or resigns for
``good"good reason,''" as those terms are therein defined (see below).
The term ``without `cause'''"without 'cause'" is defined in the employment contracts and
Termination Benefits Agreements discussed above to mean in the absence of
fraud, dishonesty, theft of corporate assets or other gross misconduct, as
set out in a good faith determination of the Board of Directors. The term
``resign"resign for `good'good reason'''" is defined in the same agreements to mean
generally, and subject to lengthy qualifications and amplification, demotion;
assignment of duties inconsistent with the officer's status, position or
responsibilities; reduction in base salary or failure to grant annual
increases commensurate with increases of other officers; relocation of the
headquarters of IPALCO or IPL to a location outside Greater Indianapolis;
or termination of the executive's participation in, or the existence of, an
incentive compensation, insurance or pension program. The term ``acquisition"acquisition
of control''control" in such contracts means, generally and subject to lengthy
amplification and qualifications therein, acquisition by any person, entity,
or group of 20% or more of the combined voting power of the outstanding
securities of IPALCO entitled to vote in the election of directors,
excluding acquisitions by or from IPALCO or any acquisition by any employee
benefit plan of IPALCO or IPL; change in majority membership of the Board of
Directors other than by normal succession; certain reorganizations, mergers
or consolidations resulting in control of the reorganized, merged, or
consolidated entity by persons not previously in control of IPALCO; approval
by the shareholders of complete liquidation or dissolution of IPALCO, or of
a sale of all or substantially all of its assets to an entity not controlled
by directors and holders of voting securities who were directors and holders
of voting securities of IPALCO prior to the transaction.
A Benefit Protection Fund and Trust Agreement (``Fund''("Fund") is also in
effect to pay litigation expenses in the event it becomes necessary for any
officer to enforce the employment contracts and Termination Benefits
Agreements above described. The Fund is held in trust by National City Bank,
Indianapolis, and at December 31, 1996,1997, the sum of $887,580$945,439 was reserved in
trust for such expenses.
By order of the Board of Directors.
IPALCO ENTERPRISES, INC.
By: BRYAN G. TABLER, Secretary
Indianapolis, Indiana
April 15, 1997
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APPENDIXMarch 9, 1998
Appendix A
IPALCO ENTERPRISES, INC.
1997LONG-TERM PERFORMANCE AND
RESTRICTED STOCK OPTIONINCENTIVE PLAN
1. Purpose. The purposeAs Amended and Restated Effective January 1, 1998)
Pursuant to Section 22 of the IPALCO Enterprises, Inc. 1997Long-
Term Performance and Restricted Stock OptionIncentive Plan (the "Plan"), IPALCO
Enterprises, Inc. ("IPALCO") amends the Plan, effective as of January 1, 1998,
to provide, in its entirety, as follows:
SECTION 1
PURPOSE
The purpose of the amended Plan (as such term is described below) is
to provide an incentive to certain officers (including
officers who are membersselected key executives of the BoardCompany (as such
term is described below), by providing an opportunity to earn long-term
incentive compensation, based upon the attainment of Directors) and other key executive
employees of IPALCO Enterprises, Inc. (the "Corporation") and of anyCompany performance
goals. In addition, the restricted stock component of the eighty percent (80%)Plan is intended
to provide the key executives with a means of acquiring or greater owned, direct or indirect, subsidiaries of
the Corporation (individuallyincreasing a
"Subsidiary and collectively the
"Subsidiaries") who are materially responsible for the management or
operation of the business of the Corporation or a Subsidiary, a favorable
opportunity to acquire Common Stock, without par value, of the Corporation
("Common Stock"), thereby providing them withproprietary interest in IPALCO so that they shall have an increased incentive
to work fortoward the successattainment of the Corporationlong term growth and profit objectives
of IPALCO and its affiliated companies. Specifically, the SubsidiariesPlan is designed
to:
A. Link, directly and better enabling
the Corporationindirectly, executive and
the Subsidiaries to attractshareholder interests.
B. Attract and retain capable
executive personnel.
2. Administrationindividuals of outstanding ability.
C. Encourage key Company officers to render superior
performance.
SECTION 2
DEFINITIONS
The terms defined in this Section 2 shall, for purposes of this Plan,
have the Plan.meanings herein specified, unless the context expressly or by
necessary implication otherwise requires:
A. Acquisition of Control: An "Acquisition of Control"
means:
(1) The Plan shall be administered,
construed and interpretedacquisition by the Compensation Committee (the "Committee") of
the Board of Directors of the Corporation. The Committee must be composed of
twoany individual, entity or
more persons who qualify as "Non-Employee Directors" withingroup (within the meaning of Rule 16b-3(b)Section 13(d)(3) promulgated underor 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the
"1934"Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act)
of twenty percent (20%) or more of either (A) the then
outstanding shares of common stock of IPALCO (the
"Outstanding IPALCO Common Stock") or (B) the combined
voting power of the then outstanding voting securities of
IPALCO entitled to vote generally in the election of
directors (the "Outstanding IPALCO Voting Securities");
provided, however, that the following acquisitions shall not
constitute an Acquisition of Control: (i) any acquisition
directly from IPALCO (excluding an acquisition by virtue of
the exercise of a conversion privilege), (ii) any
acquisition by IPALCO, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by
IPALCO, IPL or any corporation controlled by IPALCO or (iv)
any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, following such
reorganization, merger or consolidation, the conditions
described in clauses (A), (B) and (C) of subsection (3) of
this Section 2.A. are satisfied;
(2) Individuals who, as "outside directors"of the date hereof,
constitute the Board of Directors of IPALCO (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board of Directors of IPALCO; provided,
however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election
by IPALCO's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board of Directors;
or
(3) Approval by the shareholders of IPALCO of a
reorganization, merger or consolidation, in each case,
unless, following such reorganization, merger or
consolidation, (A) more than sixty percent (60%) of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger
or consolidation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
IPALCO Common Stock and Outstanding IPALCO Voting Securities
immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their
ownership, immediately prior to such reorganization, merger
or consolidation, of the Outstanding IPALCO Stock and
Outstanding IPALCO Voting Securities, as the case may be,
(B) no Person (excluding IPALCO, any employee benefit plan
or related trust of IPALCO, IPL or such corporation
resulting from such reorganization, merger or consolidation
and any Person beneficially owning, immediately prior to
such reorganization, merger or consolidation, directly or
indirectly, twenty percent (20%) or more of the Outstanding
IPALCO Common Stock or Outstanding IPALCO Voting Securities,
as the case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of, respectively,
the then outstanding shares of common stock of the
corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (C) at
least a majority of the members of the board of directors of
the corporation resulting from such reorganization, merger
or consolidation were members of the Incumbent Board at the
time of the execution of the initial agreement providing for
such reorganization, merger or consolidation;
(4) Approval by the shareholders of IPALCO of (A) a
complete liquidation or dissolution of IPALCO or (B) the
sale or other disposition of all or substantially all of the
assets of IPALCO, other than to a corporation, with respect
to which following such sale or other disposition (i) more
than sixty percent (60%) of, respectively, the then
outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding IPALCO Common Stock and
Outstanding IPALCO Voting Securities immediately prior to
such sale or other disposition in substantially the same
proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding IPALCO Common
Stock and Outstanding IPALCO Voting Securities, as the case
may be, (ii) no Person (excluding IPALCO and any employee
benefit plan or related trust of IPALCO, IPL or such
corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or
indirectly, twenty percent (20%) or more of the Outstanding
IPALCO Common Stock or Outstanding IPALCO Voting Securities,
as the case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of, respectively,
the then outstanding shares of common stock of such
corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled
to vote generally in the election of directors and (iii) at
least a majority of the members of the board of directors of
such corporation were members of the Incumbent Board at the
time of the execution of the initial agreement or action of
the Board of Directors providing for such sale or other
disposition of assets of IPALCO; or
(5) The closing, as defined in Treasury Reg.the documents
relating to, or as evidenced by a certificate of any state or
federal governmental authority in connection with, a
transaction approval of which by the shareholders of IPALCO
would constitute an "acquisition of control" under subsection
(3) or (4) of this Section 1.162-27(e)2.A. of this Plan.
Notwithstanding anything contained in this Plan to the contrary, if a
Participant's employment is terminated before an "Acquisition of Control" as
defined in this subsection (A) and the Participant reasonably demonstrates
that such termination (i) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to effect an
Acquisition of Control and who effectuates an "Acquisition of Control" or
(ii) otherwise occurred in connection with, or in anticipation of, an
Acquisition of Control which actually occurs, then for all purposes of this
Plan, the date of an Acquisition of Control with respect to such Participant
shall mean the date immediately prior to the date of such termination of the
Participant's employment.
B. Administrative Guidelines: The guidelines established for each
Program used to administer this Plan as now in effect or as modified from
time to time by the Committee.
C. Base Salary: The aggregate base salary paid to a Participant in
a Fiscal Year.
D. Board of Directors: The Board of Directors of IPALCO.
E. Committee: The Compensation Committee of the Board of Directors.
F. Company: IPALCO and its subsidiaries, or successors.
G. Cost Effective Service: The three (3) year average, as
applicable, of net income of the Company as a percentage of the sum of the
Company's total operating revenues and other income. The Company's net
income, total operating revenues and other income shall be as reported in the
Company's Uniform Statistical Report; provided, however, that the total
operating revenues and other income shall include gross IPL revenues but,
with respect to the non-utility businesses, shall only include their net
income. Cost Effective Service shall cease to be a Performance Measure
effective January 1, 1998.
H. Fiscal Year: The calendar year.
I. IPALCO: IPALCO Enterprises, Inc. or its successor.
J. IPL: Indianapolis Power & Light Company or its successor.
K. Market Price: For a Fiscal Year, the prices of a company's
common stock on the New York Stock Exchange, or other appropriate exchange,
if the company's common stock is not traded on the New York Stock Exchange,
as published in The Wall Street Journal, at the close of trading on the last
trading date in such Fiscal Year.
L. Participant: The employees of the Company designated by the
Committee to receive an award under the Plan. The employees eligible for
designation include officers of the Company and other employees who the
Committee expect to contribute to the strategic growth of the Company.
M. Peer Group: The entities included as part of the S&P 500 Index.
N. Performance Incentive Award: The incentive award amount for a
Performance Period established by the Committee and expressed as a number of
Shares determined in relation to a Participant's average annual Base Salary
for the entire three (3) year period or, if lesser, the portion of such
three (3) year period that he was employed; provided, however, that for
purposes of making the Share grants at the beginning of each Performance
Period, the Share grants shall be based on the Participant's rate of base
compensation in effect on the first (1st) calendar day of the Performance
Period; provided, further, that the number of Shares awarded shall be
increased or decreased as soon as practicable after the end of the
Performance Period to reflect the actual annual Base Salary paid to the
Participant in such Performance Period. The maximum number of Shares
(including any additional Shares awarded in accordance with Section 16
based on Performance Period Performance Measure results) shall not exceed
the lesser of:
(1) the annualized Base Salary of a Participant in effect
on the first (1st) calendar day of the Performance Period divided by
four (4), or
(2) the average annual Base Salary of the Participant
during the Performance Period divided by five (5);
provided, however, that in applying these share limits, dividends paid on
restricted Shares shall be disregarded. Notwithstanding anything contained in
this Paragraph to the contrary, the Committee may establish the Performance
Incentive Awards for various groups of Participants by job title or officer
class. To the extent the Committee establishes Performance Incentive Awards
by job title or officer groups and a Participant's job title or officer
group provides for a lower or higher number of Shares as the Participant's
Performance Incentive Award, the Participant's Performance Incentive Award
shall be automatically adjusted at the end of the Performance Period to
reflect the different number of Shares applicable for such new job title
or officer class based on the number of full calendar months remaining in the
Performance Period at the effective date on which such Participant's job
title or officer class is modified. For example, if a Participant's job
title is changed to a title which results in an increase of the number of
Shares to be included as the Participant's Performance Incentive Award from
twenty (20) to twenty-five (25) Shares with eighteen (18) full calendar
months remaining in the Performance Period at the time of the change, the
Participant shall have the number of Shares included as his Performance
Incentive Award adjusted at the end of the Performance Period to twenty-two
and one-half (22 1/2).
O. Performance Incentive Award Schedule: The schedule, attached
hereto as Appendix A, containing the ranking of Total Return to Shareholders
versus the Peer Group, and a percent of the Performance Incentive Award for
each of the levels of achievement listed.
P. Performance Measures: The measures used in determining the
amount of any Program Incentive Payment. Effective January 1, 1998, Total
Return to Shareholders shall be the only Performance Measure.
Q. Performance Period: A period of three (3) consecutive Fiscal
Years, commencing on the first (1st) day of the first (1st) Fiscal Year of a
Program, over which the Performance Measures are to be taken. A new
Performance Period shall begin on January 1, 2001 and January 1, 2004.
Performance Periods shall not overlap.
R. Period of Restriction: The period during which the transfer of
shares are restricted pursuant to the Plan.
S. Plan: This Long-Term Performance and Restricted Stock Incentive
Plan, as now in effect and as amended from time to time.
T. President: The President of IPALCO.
U. Program: One (1) Performance Period with its respective
Performance Incentive Awards, Performance Incentive Award Schedule, and
Participants.
V. Shares: Shares of common stock of IPALCO.
W. Total Return to Shareholders: The average return on investment
to shareholders from stock price appreciation and dividends paid during each
Fiscal Year of the Performance Period.
SECTION 3
ADMINISTRATION
The Plan shall be administered by the Committee. No member of the
Committee shall be eligible, at any time when he or she is such a member or
within one (1) year prior to his or her appointment to the Committee, to be
granted Shares under the Plan; provided, however, that notwithstanding the
preceding clause of this sentence, a member of the Committee shall not be
precluded from participating in, the IPALCO Enterprises, Inc. 1991 Directors'
Stock Option Plan. The decision of a majority of the members of the Committee
shall constitute the decision of the Committee, and the Committee may act
(a)either at a meeting at which a majority of theits members of
the Committee isare present (b) unless prohibited by the Corporation's Articles
of Incorporation or Bylaws, by simultaneous telephonic communication as
authorized by IND. CODE Section 23-1-34-1, or (c) by a
written consent signed by all membersof its members. The Committee may appoint
individuals to act on its behalf in the administration of the Committee. ThePlan; provided,
however, that except as otherwise provided by the Plan, the Committee shall
have the sole, final and conclusive authority to determine, consistent withadminister, construe and
subject tointerpret the provisionsPlan.
SECTION 4
NUMBER OF SHARES SUBJECT TO THE PLAN
The total number of the Plan:
(a) the individuals (the "Optionees") to whom options or successive
options shallShares that may be granted under the Plan;
(b)Plan may not
exceed One Million and Five Hundred Thousand (1,500,000) Shares subject to
adjustment as provided in Section 6 hereof. Those Shares may consist, in
whole or in part, of authorized but unissued Shares or Shares reacquired
by IPALCO, including Shares purchased in the time when optionsopen market, not reserved for
any other purpose; provided, however, that the Shares granted hereunder shall
be granted hereunder;
(c)authorized and unissued unless the Committee, in its sole discretion,
takes action to utilize open market Shares.
SECTION 5
UNUSED SHARES
In the event any Shares subject to grants made under the Plan are
forfeited pursuant to Section 16 hereof, such forfeited Shares shall again
become available for issuance under the Plan.
SECTION 6
ADJUSTMENTS IN CAPITALIZATION
In the event of any change in the outstanding Shares by reason of a
stock dividend, stock split, recapitalization, merger, consolidation,
combination, stock rights plan or exchange of shares or other similar
corporate change, the aggregate number of shares of Common Stock ofShares issuable under the Corporation to be covered
under each option;
(d) the option price to be paid upon the exercise of each option;
(e) the period within which each option may be exercised;
(f) the extent to which an option is an incentive stock option or a
non-qualified stock option; and
(g) the terms and conditions of the respective agreements by which
options grantedPlan
shall be evidenced.
Theappropriately adjusted by the Committee, whose determination
shall be conclusive. In such event, the Committee shall also have authoritydiscretion
to prescribe, amendmake appropriate adjustments in the number and rescind rules
and regulations relatingtype of shares subject to
restricted Share grants then outstanding under the Plan pursuant to the Plan,terms
of such grants or otherwise.
SECTION 7
PARTICIPATION
A. Prior to the commencement of each Fiscal Year, Participants
shall be recommended by the President and approved by the Committee.
Participants are to make all other determinations
necessary or advisable in the administration of the Plan.
3. Eligibility. The Committee may, consistent with the purposes of the
Plan, grant options to officers and otherbe those key employees of the Corporation or
of a Subsidiary who, in the opinion of the
Committee, are from timein a position to time
materially responsiblemake a significant contribution to the
long-term success of the Company. Participants for each Program shall
be notified of their participation prior to the beginning of the first (1st)
Fiscal Year of a Program. Participation in one (1) Program does not
guarantee participation in subsequent Programs.
B. The Committee, in its sole discretion, may select additional
Participants to participate in the final one (1) or two (2) Fiscal Years of
a Program. The Committee approval shall include the establishment of the
Performance Incentive Award for any new Participant. If a Participant
is added during a Program, the first (1st) Fiscal Year of his participation
shall be substituted for the managementfirst (1st) Fiscal Year of the Performance
Period for purposes of determining the number of Shares awarded under
Section 9.
C. The Committee, in its sole discretion, may discontinue the
participation of a Participant for the final one (1) or operationtwo (2) Fiscal Years
of a Program. If a Participant's participation is discontinued during a
Program, he shall forfeit, as soon as practicable after the effective date of
his participation termination, two-thirds (2/3) of the Shares granted to him
for such Program if his participation is discontinued for the final two (2)
Fiscal Years of the Program or one-third (1/3) of the Shares granted to him
for such Program if his participation is discontinued for the final Fiscal
Year of the Program. At the end of a Program, the reduced share grant shall
be adjusted in accordance with Section 16.
SECTION 8
PERFORMANCE INCENTIVE AWARD GRANTS
A. Each Program shall be subject to the limitations and terms
provided in the Plan. A new Program shall commence on the third (3rd)
annual anniversary date of the preceding Program. These Programs shall be
of three (3) year duration.
B. The Committee shall determine for each Participant his
Performance Incentive Award for each Program. Only one (1) grant shall be
made to each Participant during each Program. Participants shall generally
be notified of their individual Performance Incentive Award before the
beginning of each Program.
SECTION 9
GRANT OF SHARES
Concurrently with the beginning of each Performance Period and
subject to the limits established by Section 2.N., the Committee shall cause
the Secretary of IPALCO to issue to each Participant a number of restricted
Shares based on the Participant's Performance Incentive Award for such
Performance Period. Notwithstanding anything contained herein to the
contrary, the Share grants for the Performance Period beginning on January 1,
1998 are conditioned upon the amended and restated Plan being approved by
IPALCO's shareholders in accordance with Section 28 hereof. At the end of
each Performance Period, the Share grants shall be adjusted, upward or
downward, based on the Participant's actual Base Salary and, if applicable,
change in job title or officer class.
SECTION 10
ESTABLISHMENT OF PERFORMANCE MEASURES
A. The Performance Measure to be used is IPALCO's ranking
versus the Peer Group on Total Return to Shareholders.
B. A Performance Incentive Award Schedule shall contain
various levels of performance and corresponding Performance
Incentive Award values.
C. If the Company disposes of a significant part of the
business of IPL, or acquires through purchase, merger, or
otherwise the Corporation orcapital assets of any other company, the Committee may,
in its sole and absolute discretion, adjust the Total Return to
Shareholder targets of a Subsidiary;Performance Incentive Award Schedule for a
Performance Period so as to reflect the financial impact of the
acquisition or disposition.
SECTION 11
DETERMINATION OF PERFORMANCE RESULTS
A. Upon the completion of a Performance Period, the Shares
awarded for each Participant shall be adjusted based upon the
Performance Incentive Award Schedule.
B. For each Performance Period, the Total Return to
Shareholders of IPALCO shall be compared with the Total Return to
Shareholders of the members of the Peer Group. Total Return to
Shareholders for IPALCO and each member of the Peer Group shall be
measured by the following formula (with appropriate adjustments for
changes in capital structure due to stock dividends, stock splits,
recapitalization, mergers, or other events having significant
distorting effect on IPALCO or on any member of the Peer Group):
1. For each Fiscal Year of the Performance Period:
(a) Subtract the Market Price of each
company's common stock for the prior Fiscal Year
from the Market Price of the company's common stock
for the current Fiscal Year.
(b) Add to the result obtained in Step
(a) the amount of all cash dividends paid by the
company with respect to its common stock during the
current Fiscal Year.
(c) Divide the result obtained in Step
(b) by the Market Price of the company's common
stock for the prior Fiscal Year.
2. The calculated values from Step 1 for the Fiscal
Years in the Performance Period shall then be converted to
an annual average for the Performance Period.
IPALCO's ranking shall be determined by its performance ranking
versus the Peer Group.
SECTION 12
RESTRICTIONS ON TRANSFERABILITY
Until the lifting of the restrictions on the Shares granted
hereunder, no Shares granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, otherwise than by
will or by the laws of descent and distribution until the termination of the
applicable Period of Restriction.
SECTION 13
CERTIFICATE LEGEND
Each certificate representing restricted Shares granted pursuant to
this Plan shall bear the following legend:
"The sale or other transfer of the shares represented by
this certificate, whether voluntary, involuntary, or by
operation of law, is subject to certain restrictions on
transfer set forth in the IPALCO Enterprises, Inc. Long-Term
Performance and Restricted Stock Plan and rules of
administration adopted pursuant to such Plan. A copy of the
Restricted Stock Plan and the rules of such Plan may be
obtained from the Secretary of IPALCO Enterprises, Inc."
Once the restricted Shares are released from the restrictions, the
Participant shall be entitled to have the legend required by this Section 13
removed from such Share certificate(s).
SECTION 14
VOTING RIGHTS
During the Period of Restriction, Participants holding restricted
Shares granted hereunder may exercise full voting rights with respect to
those Shares.
SECTION 15
DIVIDENDS AND OTHER DISTRIBUTIONS
During the Period of Restriction, Participants holding restricted
Shares granted hereunder shall be entitled to receive all dividends and other
distributions paid with respect to those Shares while they are so held. If
any such dividends or distributions are paid in Shares, such Shares shall be
subject to the same restrictions on transferability as the restricted Shares
with respect to which they were paid.
SECTION 16
LIFTING OF RESTRICTIONS
The restricted Share grants under the Plan shall be subject to
restrictions as to transferability and shall also be subject to forfeiture
provisions. The lifting of the transferability restrictions and the
forfeitability provisions shall be dependent on the Performance Measures
during each Performance Period and on the continued employment of the
Participant during the Period of Restriction.
As soon as practicable after the end of a Performance Period, the
Committee shall determine the adjustments, if any, that are required to be
made to the Share grants for the Performance Period based on actual results
of IPALCO under the Performance Measures for such Performance Period. This
evaluation shall be completed no later than the July 1 immediately following
the end of the Performance Period or such earlier date established by the
Committee after it completes the required grant adjustments for the
Performance Period (the July 1 or earlier date established by the Committee
shall for each Performance Period be referred to as the "Initial Vesting
Date"). After the adjustments are made in the Share grants consistent with
the Performance Incentive Award Schedule for the Performance Period and
after effectuating the adjustments described above rounding up or down any
fractional share to the nearest whole share, the restrictions on the Shares
held by a Participant at the end of the Performance Period (after adjusted
as described above) shall be lifted on one-third (1/3) of the Shares as
of the Initial Vesting Date for the Performance Period and shall be lifted in
additional one-third (1/3) increments on the first business day of each of
the next two calendar years immediately following the Initial Vesting Date
for the Performance Period; provided, however, that except as provided in
no event may any
employee who owns (after applicationSection 17, 18 or 19 hereof:
(1) the restriction shall be lifted on an Initial Vesting
Date or, if applicable for the other one-third (1/3) increments, the
first business day in January only if the Participant is still
employed by the Company on such date, and
(2) if a Participant ceases to be employed by the Company
before the restrictions lapse on the Shares held by him, the Shares
still subject to restrictions shall be immediately forfeited.
Notwithstanding anything contained in this Plan to the contrary, the
Committee shall have the complete discretion to delay the lifting of the
ownership rules inrestrictions on Shares under this Plan (including restrictions that lapse
under Sections 17 and 18) for a Participant to the extent it determines such
delay is necessary to avoid the non-deductibility of the awards under Section
424(d)162(m) of the Internal Revenue Code of 1986, as amended (the "Code")) shares of
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Corporation be granted an incentive stock option
hereunder unless at the time such option is granted the option price is at
least 110% of the fair market value of the Common Stock subject to the
option and such incentive stock option by its terms is not exercisable after
the expiration of five (5) years from the date such option is granted.
Subject to the provisions of Section 4 hereof, an individual who has been
granted an option under the Plan, if he is otherwise eligible, may be granted
an additional option or options if the Committee shall so determine. The
maximum number of shares of the Corporation's Common Stock with respect to
which options may be granted in any calendar year to any individual shall not
exceed two hundred and fifty thousand (250,000).
4. Stock Subject to the Plan. There shall be reserved for issuance upon
the exercise of options granted under the Plan, two million (2,000,000)
shares of the Corporation's Common Stock which may be authorized but unissued
shares of the Corporation. Subject to Section 6 hereof, the shares for which
options may be granted under the Plan shall not exceed that number. If any
option shall expire or terminate for any reason without having been exercised
in full, the unpurchased shares subject thereto shall (unless the Plan shall
have terminated) become available for other options under the Plan.
5. Terms of Option. Each option granted under the Plan shall be subject
to the following terms and conditions and to such other terms and conditions
not inconsistent therewith as the Committee may deem appropriate in each
case:
(a) Option Price. The price to be paid for shares of Common Stock upon
the exercise of each option shall be determined by the Committee at the time
such option is granted, but such price in the case of an incentive stock
option in no event shall be less than the fair market value, as determined
by the Committee consistent with the requirements of Section 422 of the Code,
of such Common Stock on the date on which such option is granted.
(b) Period for Exercise of Option. An option shall not be exercisable
after the expiration of such period as shall be fixed by the Committee at
the time such option is granted, but such period in no event shall exceed
ten (10) years and one day from the date on which such option is granted;amended; provided, however,
that incentive stock options shall have terms not in
excessany decision to delay the lifting of ten (10) years; provided, further, that no optionthe restrictions shall be exercisable priorrequired
to be made and communicated to the date onaffected Participant in writing before the
beginning of the calendar year during which the Planrestrictions would have been
lifted but for the delay.
SECTION 17
EFFECT OF PARTICIPANT'S RETIREMENT
Except as provided in the next paragraph, for Performance Periods
beginning before January 1, 1998 and notwithstanding anything contained in
Section 16 hereof to the contrary, if a Participant attains age 65 before his
employment with the Company is approvedterminated and before the end of a Performance
Period but after completing at least one (1) full Fiscal Year of employment
during such Performance Period, the remaining restrictions on any Shares
attributable to such Performance Period held by the shareholdersParticipant (after the
number of the Corporation as required by Section 422 of the Code.
(c) Exercise of Options. The option price of each share of Common Stock
purchased upon exercise of an option shall be paid in full (1) in cash at the
time of such exercise, (2) if the Optionee may do so in conformity with
Regulation T (12 C.F.R. Section 220.3(e)(4)) and without violating Section
16(b) or (c) of the 1934 Act (to the extent applicable) and subject to
approval by the Committee, by delivering a properly executed exercise note
together with irrevocable instructions to a broker to deliver promptly
to the Corporation the total option price in cash and, if desired, the
amount of any taxes to be withheld from the Optionee's compensation as a
result of any withholding tax obligation of the Corporation or any of its
Subsidiaries, as specified in such notice, or (3) subject to the approval of
the Committee, by tendering to the Corporation whole shares of Common
Stock owned by him or any combination of whole shares of Common Stock owned
by him and cash, having a fair market value equal to the cash exercise price
of the shares with respect to which the option is being exercised. For this
purpose, the fair market value of the shares tendered by the Optionee shall
be computed as of the exercise date in such manner as determined by the
Committee, consistent with the requirements of Section 422 of the Code. The
Committee shall have the authority to grant options exercisable in full at
any time during their term, or exercisable in such quotas as the Committee
shall determine. An option may be exercised at any time or from time to time
during the term of the option as to any or all whole shares which have become
subject to purchaseShares are adjusted pursuant to the termsPerformance Measure adjustments
described in Section 16 and Base Salary adjustment described in Section 2.N.
and Section 9 hereof are completed for such Performance Period) shall lapse
on the last calendar day of such Performance Period; provided, however, that
if a Participant's employment with the Company is terminated, voluntarily or
involuntarily, before his completion of at least two (2) Fiscal Years of
employment, the Participant shall only be entitled to two-thirds (2/3) of the
option (including, without
limitation, any quotas with respect to option exercise) or the Plan.
(d) Termination of Option. If an Optionee ceases to be an employee of
the Corporation or one of the Subsidiaries for any reason other than
retirement, permanent and total disability (within the meaning of Section
105(d)(4) of the Code), or death, any optionrestricted Shares granted to him for such Performance Period (after the
Performance Measure adjustments described in Section 16 and Base Salary
adjustment described in Section 2.N. and Section 9 hereof are completed for
such Performance Period), rounding up or down any fractional Share to the
nearest whole Share, and the remaining one-third (1/3) of the Shares shall forthwith
terminate. Leavebe
forfeited as soon as practicable after the end of absencethe Performance Period.
Notwithstanding anything contained in Section 16 hereof to the
contrary but only to the extent expressly approved by the Committee, the
provisions contained in the preceding paragraph of this Section 17 shall not constitute
cessation of employment. If an Optionee ceases to be an employee of
the Corporation or one of the Subsidiaries by reason of permanent and total
disability (within the meaning of Section 105(d)(4) of the Code), any option
granted to him may be exercised by himalso
apply, in whole or in part, within one (1)
year after the date of his termination ofwith respect to a Participant whose employment by reason of such
disability whether or not the option was otherwise exercisable at the date of
such termination of employment. If an Optionee ceases to be an employee of
the Corporation or one of the Subsidiaries by reason of retirement, any
option granted to him may be exercised by him in whole or in part during the
period fixed by the Committee under subsection (b) of this Section 5,
provided that the option was otherwise exercisable at the date of such
termination of employment. The term "retirement" as used herein means an
Optionee's termination of employment on oris
terminated after meeting the requirements for early or normal retirement
benefits under any then existingthe Employees' Retirement Plan of Indianapolis Power & Light Company
pension plan.(or any successor plan) to the extent the Committee waives the continued
employment requirements; provided, however, that under no circumstances
shall the waiver affect the Performance Measures adjustments provided in
Section 11; provided, further, that until such time, if ever, that the
Committee waives the restrictions, the retired Participant shall cease to
have voting or dividend rights with respect to the restricted Shares.
SECTION 18
EFFECT OF TERMINATION OF EMPLOYMENT DUE TO
DEATH OR DISABILITY
Notwithstanding anything contained in Section 16 hereof to the
contrary, if a Participant's employment with the Company is terminated by
reason of his death or total and permanent disability (as such term is
defined in the Employees' Retirement Plan of Indianapolis Power & Light
Company or in any successor retirement plan thereto) that occurs after the
end of the Performance Period but before the restrictions lapse on the Shares
granted for such Performance Period, the remaining restrictions on any Shares
attributable to such Performance Period held by the Participant (after the
Performance Measure adjustments described in Section 16 hereof are completed
for such Performance Period) shall immediately lapse on the date of his death
or total and permanent disability, whichever is applicable.
Notwithstanding anything contained in Section 16 hereof to the
contrary, if a Participant's employment with the Company is terminated by
reason of his death or total and permanent disability that occurs before the
end of the Performance Period, the Participant shall be entitled to a pro
rata number of Shares (as determined below) granted to him at the beginning
of the Performance Period (as adjusted for Performance Periods to reflect the
actual Base Salary paid to such Participant during the Performance Period
that he was employed), no further adjustments shall be effected with respect
to such Shares, and such Shares shall be fully vested and transferable by
such Participant or, if deceased, his legal representative. The number of
Shares that the disabled or deceased Participant is entitled shall be
determined by multiplying the number of Shares granted to the Participant at
the beginning of the Performance Period or, if later, at the date as of which
his participation in the Performance Period commenced (as adjusted to reflect
the actual Base Salary paid to such Participant during the Performance
Period) by a fraction, the numerator of which is the number of full calendar
months of the Performance Period during which he was a Participant and
employed by the Company and the denominator of which is thirty-six (36) or,
if the Participant became a Participant after the beginning of a Performance
Period, the number of months remaining in the Performance Period beginning
with the month during which his participation commenced.
SECTION 19
ACQUISITION OF CONTROL
In the event that there is an Acquisition of Control and
notwithstanding anything contained in Section 16 to the contrary, the
lifting of the death of an
Optionee while inrestrictions based on continued employment on the employ ofrestricted
Shares held by a Participant who was employed by the Corporation or the Subsidiaries or
within one (1) year after the termination of his employment by reason of
retirement or permanent and total disability (within the meaning of Section
105(d)(4) of the Code), any option granted to him may be exercised in whole
or in part at any time afterCompany immediately
preceding the date of such death by the executor or
administratorAcquisition of his estate or byControl shall immediately occur.
In addition, the person or persons entitled toPerformance Period during which the option by will or by applicable lawsAcquisition of descent and distribution until the
expiration of the option term as fixed by the Committee, whether or not the
option was otherwise exercisableControl
occurs shall be deemed terminated at the date of his death. Notwithstanding
the foregoing provisionsAcquisition of this subsection (d), no option shall in any event
be exercisable after the expiration of the period fixed by the Committee in
accordance with subsection (b) above. An option shall also terminate if this
Plan is not approved by the shareholders of the Corporation within the
requisite time period set forth in Section 422 of the Code.
(e) Nontransferability of Option. An Option may not be transferred by
the Optionee otherwise than by will or the laws of descent and distribution,
and during the lifetime of the OptioneeControl,
IPALCO performance for such Performance Period shall be exercisable only by him.
(f) Investment Representations. Unless the shares of Common Stock
subject to an option are registered under applicable federal and state
securities laws, each Optionee by accepting an option shall be deemed to
agree for himself and his legal representatives that any option granted to
him and any and all shares of Common Stock purchased upon the exercise of
the option shall be acquired for investment and not with a view to, or for
the sale in connection with, any distribution thereof, and each notice of
the exercise of any portion of an option shall be accompanied by a
representation in writing, signed by the Optionee or his legal
representatives, as the case may be, that the shares of Common Stock
are being acquired in good faith for investment and not with a view to, or
for sale in connection with, any distribution thereof (except in case of
the Optionee's legal representatives for distribution, but not for sale, to
his legal heirs, legatees and other testamentary beneficiaries). Any shares
issued pursuant to an exercise of an option may, but need not, bear a legend
evidencing such representations and restrictions. In addition, if the
options and shares of Common Stock issued pursuant to this Plan are issued
in reliance upon Rule 147, promulgated under the Securities Act of 1933, as
amended, the written representations required by such rule shall be obtained
from the Optionees prior to or at the time they are granted options, any and
all legends required by Rule 147 shall be set forth on the certificates
representing shares of Common Stock issued pursuant to the exercise of
such options, and stop transfer instructions shall be issued to the
Corporation's recordkeeping transfer agent with respect to such shares.
(g) Maximum Incentive Stock Options. The aggregate fair market value
(determined as of the time the option is granted) of Common Stock subject to
incentive stock options that are exercisable for the first time by an
employee during any calendar year under the Plan or any other plan of the
Corporation or any Subsidiary shall not exceed $100,000. For this purpose,
the fair market value of such shares shall be determinedmeasured as of the
date the
option is granted and shall be computed in such manner as shall be determined
by the Committee, consistent with the requirements of Section 422 of the Code.
If the immediate exercisabilityAcquisition of incentive stock options arising from the
death or permanentControl, and total disability of an Optionee pursuant to Section
5(d) above or arising from any change of control of the Corporation would
cause this $100,000 limitation to be exceeded for an Optionee, the Committee shall convert as ofeffect the
date on which such incentive stock options become
exercisable all or a portion of the outstanding incentive stock options heldadjustments required by such Optionee to non-qualified stock options to the extent necessary to
comply with the $100,000 limitation.
(h) Agreement. Each option shall be evidenced by an agreement between
the optionee and the Corporation which shall provide, among other things,
that, with respect to incentive stock options, the optionee shall advise the
Corporation immediately upon any sale or transfer of the shares of Common
Stock received upon exercise of the option to the extent such sale or
transfer takes place prior to the later of (a) two (2) years from the date
of grant or (b) one (1) year from the date of exercise.
(i) Tax Benefit. The Committee may, in its sole discretion, include a
provision in any non-qualified stock option agreement that provides for an
additional cash payment from the Corporation to the grantee of such non-
qualified optionSection 16 as soon as practicable after the
exercise dateAcquisition of such
non-qualified stock option equalControl. The restrictions on all Shares provided to all or a portionthe
Participants after completing the adjustments described above shall be
lifted immediately.
SECTION 20
ELECTIVE SALE OF SHARES
Participants shall also be permitted to cash-in up to fifty percent
(50%) of the tax benefitShares (after the adjustments required by Section 16 are
completed) that cease to be receivedsubject to the continued employment requirements
under Section 16 (the "Eligible Shares") by following the procedures
established by the Corporation attributableCommittee.
SECTION 21
NO EMPLOYMENT CONTRACT
The Plan is not and is not intended to its federal income tax
deduction resulting from the exercise of such non-qualified stock option.
(j) Certificates. The certificate or certificates for the shares
issuable uponbe an exercise of an option shall be issued as promptly as
practicable after such exercise. An Optionee shall not have any rights of a
shareholder inemployment contract with
respect to any of the shares of Common Stock subject to an option
until the date of issuance of a stock certificate to him for such shares.
In no case may a fraction of a share be purchased or issued under the Plan,
but if, upon the exercise of an option, a fractional share would otherwise
be issuable, the Corporation shall pay cash in lieu thereof.
(k) No Right to Continued Service. Nothing in this Plan or in any
agreement entered into pursuant hereto shall confer on any person any rightParticipants, and IPALCO's and IPL's rights to continue
in the employ of the Corporation or its Subsidiaries or affect
any rights of the Corporation, a Subsidiary, or the shareholders of the
Corporation may have to terminate his service at any time.
(l) Incentive Stock Options and Non-Qualified Stock Options. Options
granted under the Plan may be incentive stock options under Section 422 of
the Code or non-qualified stock options. All options granted hereunder shall
be clearly identified as either incentive stock options or non-qualified
stock options. In no event shall the exercise of an incentive stock option
affect the right to exercise any non-qualified stock option, nor shall the
exerciseemployment relationship of any non-qualified stock option affect the right to exercise any
incentive stock option. Nothing in this Plan shall be construed to prohibit
the grant of incentive stock options and non-qualified stock options to the
same person; provided, however, that incentive stock options and non-
qualified stock optionsParticipant shall not be
granted in a manner whereby the
exercise of one non-qualified stock option or incentive stock option affects
the exercisability of the other.
6. Adjustment of Shares. In the event of any change after the effective
date of the Plan in the outstanding stock of the Corporationaffected by reason of any
reorganization, recapitalization, stock split, stock dividend, combination of
shares, exchange of shares, merger or consolidation, liquidation, or any
other change after the effective date of the Plan in the nature of the shares
of stock of the Corporation, the Committee shall determine what changes, if
any, are appropriate in the number and kind of shares reserved under the
Plan, and in the option price under and the number and kind of shares
covered by outstanding options granted under the Plan.
Any determination of
the Committee hereunder shall be conclusive.
7. Tax Withholding. Whenever the Corporation proposes or is required
to issue or transfer shares of Common Stock under the Plan, the Corporation
shall have the right to require the Optionee or his or her legal
representative to remit to the Corporation an amount sufficient to satisfy
any federal, state and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares, and whenever
under the Plan payments are to be made in cash, such payments shall be net
of an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements.
8. Amendment.SECTION 22
AMENDMENT AND TERMINATION
The Board of Directors ofmay at any time amend, modify, alter, or terminate the
Corporation may amend the
Plan from time to time and, with the consent of the Optionee, the terms and
provisions of his option, exceptPlan; provided, however, that without the approval of the Corporation'sIPALCO
shareholders:
(a) the number of shares of Common StockShares which may be reserved for issuance
under the Plan may not be increased except as provided in
Section 6 hereof; (b) the period during which an option may be exercised may not be
extended beyond ten (10) years and
one (1) day from the date on which such
option was granted;
(c)(b) the class of employees to whom optionsgrants may be granted
under the Plan shall not be modified materially;
and
(d) no otherprovided, further, that except for the modifications expressly permitted by
the last paragraph of Section 16 hereof, any amendment, modification,
alteration or termination to the Plan may be made which requiresincreases the approvalrestrictions as
to transferability or forfeitability of any restricted Shares granted
hereunder to a Participant, including any Performance Measure adjustments
which occur at the Corporation's shareholders under applicable law or under the
rules and regulationsend of the New York Stock Exchange.
No amendment of the Plan, however, may, without the consent of the
Optionees, make any changes in any outstanding options theretofore granted
under the Plan which would adversely affect the rights of such Optionees.
9. Termination. The Board of Directors of the Corporation may terminate
the Plan at any time and no option shall be granted thereafter. Such
termination, however,a Performance Period, shall not affectbecome effective
until the validity of any option theretofore
granted underfirst (1st) Performance Period following the Plan. In any event, no incentive stock option may be
granted after the conclusion of a ten (10) year period commencing on the
datePerformance Period
during which such amendment, modification, alteration or termination to the
Plan is adopted without the written consent of the majority of the
Participants adversely affected by the change.
SECTION 23
INDEMNIFICATION
Each person who is or if earlier,shall have been a member of the dateBoard of
Directors or the Committee shall be indemnified and held harmless by IPALCO
against and from any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred by him in connection with or resulting from any
claim, action, suit, or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the
Plan is approvedand against and from any and all amounts paid by him in settlement
thereof with IPALCO's approval, or paid by him in satisfaction of a
judgment in any such action, suit or proceeding against him, provided he
shall give IPALCO an opportunity, at its own expense, to handle and defend
the same before he undertakes to handle and defend it on his behalf. The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the IPALCO
Articles of Incorporation or Code of By-Laws, as a matter of law, or
otherwise, or any power that IPALCO may have to indemnify them or hold them
harmless.
SECTION 24
GOVERNING LAW
The Plan, and all grants and other documents delivered hereunder,
shall be construed in accordance with and governed by the Corporation's shareholders.
10. Successors.laws of Indiana.
SECTION 25
EXPENSES OF PLAN
The expenses of administering the Plan shall be borne by IPALCO.
SECTION 26
SUCCESSORS
The Plan shall be binding upon the successors and assigns of the
Corporation.
11. Governing Law. The termsparticipating Employers.
SECTION 27
TAX WITHHOLDING
IPALCO or IPL, as appropriate, shall have the right to require the
Participant or other person receiving Shares to pay to IPALCO or IPL the
amount of any options granted hereunderfederal, state or local taxes which IPALCO or IPL are required
to withhold with respect to such Shares. If permitted by the Committee and
pursuant to rules established by the rights and obligations hereunderCommittee, a Participant may make a
written election to have Shares having an aggregate fair market value, as
determined by the Committee, sufficient to satisfy the applicable withholding
taxes, withheld from the Shares otherwise to be received at the end of the
Corporation, the OptioneesPeriod of Restriction.
SECTION 28
EFFECTIVE DATE AND DURATION OF PLAN
This amended and their
successors in interest shall, except to the extent governed by federal law,
be governed by Indiana law.
12. Government and Other Regulations. The obligations of the Corporation
to issue or transfer and deliver shares under options granted under therestated Plan shall be subject to compliance with all applicable laws, governmental rules
and regulations, and administrative action.
13. Effective Date. The Plan shall become effective when it shall have
been approved by the Corporation's Board of Directors;January 1, 1998;
provided, however, that the granting of any options under the Plan is conditionalShares are conditioned upon the
approval of the Plan by the Corporation's shareholders within twelve (12)
months afterholders of a majority of the adoptionShares present, or
represented, and entitled to vote at IPALCO's 1998 annual shareholder
meeting. Except for the provisions set forth in Section 16 which are also
applicable for the January 1, 1995 grants, the Performance Periods beginning
before January 1, 1998 shall be governed by the provisions of the Plan by the Corporation's Board of
Directors and the options granted pursuantin
effect before January 1, 1998.
APPENDIX A
PERFORMANCE INCENTIVE AWARD SCHEDULE
AWARD AS A PERCENT OF TARGET
S&P 500 Index Ranking: 3 year cumulative Total Return to the Plan may not be exercised
until the Board of Directors of the Corporation has been advised by counsel
that such approval has been obtained and all other applicable legal
requirements have been met; provided, further, that if shareholder approval
does not occur within the required twelve (12) month period, the Plan and
all outstanding options shall be deemed terminated.Shareholder (TRS)
IPALCO Award
Ranking: TRS Percentage
------------ ----------
1-31 400%
32-62 375%
63-93 350%
94-125 325%
126-156 300%
157-187 275%
188-218 250%
219-250 225%
251-281 200%
282-312 175%
313-343 150%
344-375 125%
376-406 100%
407-437 75%
438-468 50%
469-500 0%
[form of proxy/instruction card]
IPALCO ENTERPRISES, INC.
This Proxy/Instruction Card is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints John R. Hodowal and Bryan G. Tabler as
Proxies, each with the power of substitution, and authorizes them to
represent and vote and/or, in the case of shares held in IPALCO PowerInvest,
the dividend reinvestment and direct stock purchase plan, instructs the
agent for such Plan to execute a proxy empowering the above-named persons
to vote, as designated below, all the shares of IPALCO Enterprises, Inc.
common stock held of record by the undersigned and/or credited to the
undersigned's account in such Plan on April 10, 1997,February 25, 1998, at the annual
meeting of the shareholders to be held May 21, 1997,April 15, 1998, or at any adjournment
thereof, with respect to the matter(s) set forth below.
1. Election of FiveFour Nominees For Directors, namely: Joseph D.
Barnette, Jr., MaxRobert A. Borns,
Otto N. Frenzel III, Andre B. Lacy, L. Gibson, Ramon L. Humke, Andrew J. Paine, Jr.,
Sallie W. RowlandBen Lytle
[ ] Vote For All Nominees
[ ] Withhold Vote from All Nominees
[ ] Vote For All Nominees, Except Nominees written below:
--------------------------------------------------------------------
(Please write name(s) of Nominee(s) from whom vote is withheld)
2. Approval of an amendment to the Amended Articles of Incorporation
increasing to 290 million shares the amount of common stock
authorized for issuance.
[ ] For [ ] Against [ ] Abstain
3. Approval of the adoption of the IPALCO Enterprises, Inc. 1997Long-Term Performance and
Restricted Stock Option Plan.Incentive Plan (as Amended and Restated January 1,
1998).
[ ] For [ ] Against [ ] Abstain
(FOLD HERE - DO NOT TEAR)
This Proxy/Instruction Card when properly executed will be voted in the
manner directed by the undersigned shareholder. If not otherwise indicated,
this Proxy/Instruction Card will be voted FOR the five nominees for Director
listed above, FOR the amendment to the Amended Articles of Incorporation,Proposals 1 and FOR the adoption of the Stock Option Plan2 and confers
discretionary authority to vote on currently unknown matters properly
presented to the meeting. This Proxy/Instruction Card shall be voted on
those matters properly presented in accordance with the best judgment of
the named Proxies.
Receipt of the Notice of Annual Meeting and Proxy Statement dated April 15,
1997,March 9,
1998, and the 19961997 Annual Report is hereby acknowledged.
Dated ______________________, 1997.__________________, 1998.
Your signature must be exactly _______________________________________________________________________
as your name appears below. (SIGNATURE)
When signing as attorney-in-fact,
executor, administrator, trustee,
guardian or corporate officer, _______________________________________________________________________
please give full title as such. (SIGNATURE IF HELD JOINTLY)
Please complete
19971998 Proxy at right.
Then date, sign,
detach it from this
form at perforations,
fold it and return
immediately in
accompanying
postage guaranteed
envelope.
Account ID:
ADDRESS CHANGE
________________________________________________
STREET
________________________________________________
APT. NO./P.O. BOX
________________________________________________
CITY
________________________________________________
STATE
________________________________________________
ZIP CODE
________________________________________________
SIGNATURE
[at perforation]
(DETACH HERE)
[letter soliciting voting instructions
from participants in Employees' Thrift Plan]Plan.
IPL
INDIANAPOLIS POWER & LIGHT COMPANY
April 15, 1997March 9, 1998
TO PARTICIPANTS IN THE EMPLOYEES' THRIFT PLAN:
As a participant in the Employees' Thrift Plan, you are entitled
to direct the manner in which shares of stock of IPALCO Enterprises, Inc.,
("IPALCO") in which you have an interest, shall be voted by the Trustee at
the forthcoming Annual Meeting of Shareholders of IPALCO to be held
May 21, 1997.April 15, 1998. This right is given to you by Section 305.90 of the Thrift
Plan.
Enclosed is a copy of the Notice of the Annual Meeting and Proxy
Statement dated April 15, 1997March 9, 1998 and an Instruction Card indicating the number
of shares with respect to which you may give voting instructions to the
Trustee. You may instruct the Trustee how you wish such shares to be voted
by placing a mark in the box which expresses your choice.
The only business to be acted upon at the meeting of which Management
is presently aware, is (1) the election of fivefour directors to hold office for
terms of three years each and until their successors are duly elected and
qualified; (2) an amendment to the Amended Articles of Incorporation to
increase the authorized number of shares of IPALCO's common stock from 145
million to 290 million;qualified, and (3) the approval of the adoption of the IPALCO Enterprises, Inc. 1997Long-Term Performance and
Restricted Stock Option Plan.Incentive Plan (as Amended and Restated effective January
1, 1998).
It is important that you instruct the Trustee as to the voting of the
shares in which you have an interest. After designating how you wish such
shares to be voted, sign the instruction form and return it via intra company
mailin the
accompanying interoffice envelope to the Secretary of IPALCO, Room 729,
IPALCO Corporate Center, on or before May 15, 1997.April 8, 1998.
Shares with respect to which no voting instructions are given will be
voted by the Trustee in its discretion.
/s/ John D. Wilson
John D. Wilson, Secretary
Employees' Pension Committee
[form to be executed by Thrift Plan participants]
IPALCO ENTERPRISES, INC.
Instructions toTo Thrift Plan Trustee For
Annual Meeting ofOf Shareholders - May 21, 1997April 15, 1998
TO THE EMPLOYEE PENSION COMMITTEE:
I understand that in accordance with Section 305.90 of the Thrift
Plan, I may instruct the voting of the number of shares shown on this form.
Will you please direct the Trustee to execute a proxy empowering the persons
appointed therein to vote as follows:
1. Election of FiveFour Nominees For Director, namely: Joseph D.
Barnette, Jr., MaxRobert A. Borns,
Otto N. Frenzel III, Andre B. Lacy, L. Gibson, Ramon L. Humke, Andrew J. Paine, Jr.,
Sallie W. RowlandBen Lytle
[ ] Vote For All Nominees
[ ] Withhold Vote from All Nominees
[ ] Vote For All Nominees, Except Nominees written below:
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(Please-----------------------------------------------------------------
Please write name(s) of Nominee(s) from whom vote is withheld)
2. Approval of an amendment to the Amended Articles of Incorporation
increasing to 290 million shares the amount of common stock
authorized for issuance.
[ ] For [ ] Against [ ] Abstain
3. Approval of the adoption of the IPALCO Enterprises, Inc. 1997Long-Term Performance and
Restricted Stock Option Plan.Incentive Plan (as Amended and Restated effective
January 1, 1998).
[ ] For [ ] Against [ ] Abstain
(FOLD HERE - DO NOT TEAR)
The Trustee will execute the proxy as above directed, or, if no choice is
indicated, the proxy will be voted by the Trustee in its discretion. This
instruction cardInstruction Card confers discretionary authority to vote on currently unknown
matters properly presented to the meeting.
Receipt of the Notice of Annual Meeting and Proxy Statement dated April 15,
1997,March 9,
1998, and the 19961997 Annual Report is hereby acknowledged.
Dated ______________________, 1997._______________________, 1998.
Your signature must be exactly ____________________________________
as your name appears below. (SIGNATURE)
Please complete
19971998 Instruction Card
at right. Then date,
sign, detach it from this
form at perforations,performations,
fold it and return
immediately in
accompanying
interoffice envelope.
[at perforation]
(DETACH HERE)