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))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Indianapolis Power & Light Company
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(Name of Registrant As 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)
and 0-11.
1) Title of each class of securities to which transaction applies:
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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: (Set forth the amount on
which the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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March 10, 1997
Dear Preferred Shareholder:
You have been sent a Proxy Statement this year instead of an
information statement because the Company is proposing an important
initiative that requires your approval. This initiative, which is
reflected in the annexed Proxy Statement as Proposal 2, seeks to amend
the Articles of Incorporation to remove the limitation on the issuance of
unsecured indebtedness. This will provide the Company with more
financial flexibility and will enhance its ability to raise capital at a
reasonable cost during the next several years.
Enclosed with this letter are the Notice of Annual Meeting and the
Proxy Statement which provides more information on Proposal 2. A copy of
IPALCO Enterprises, Inc. 1996 Annual Report, your proxy card and a return
envelope are also enclosed.
It is important that your shares be represented at this meeting and
that your vote be registered in favor of Proposal 2. Therefore, I urge
you to fill in, date and sign the enclosed proxy and return it as soon as
possible.
Thank you for your interest in our Company's future.
Sincerely,
John R. Hodowal
Chairman of the Board and
Chief Executive Officer
PRELIMINARY COPIES
IPL
INDIANAPOLIS POWER & LIGHT COMPANY
One Monument Circle
P.O. Box 1595
Indianapolis, Indiana 46206-1595
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 16, 1997
TO THE SHAREHOLDERS OF
INDIANAPOLIS POWER & LIGHT COMPANY
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Indianapolis Power & Light Company will be held at its principal office,
One Monument Circle, Indianapolis, Indiana on Wednesday, April 16, 1997,
at 10 o'clock A.M. (Eastern Standard Time), for the following purposes:
1. To elect sixteen (16) directors to hold office
for terms of one year each and until their
successors are duly elected and qualified;
2. To approve an amendment to IPL's Amended Articles of
Incorporation to remove the limitation on the issuance of
unsecured indebtedness; and
3. To transact such other business as may properly
come before the meeting or any adjournment
thereof.
The Board of Directors has fixed the close of business on
Wednesday, February 26, 1997, as the record date for determining the
shareholders entitled to notice of, and to vote at, the 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.
INDIANAPOLIS POWER & LIGHT COMPANY
By: BRYAN G. TABLER, Secretary
Indianapolis, Indiana
March 10, 1997
INDIANAPOLIS POWER & LIGHT COMPANY
PROXY STATEMENT
TABLE OF CONTENTS
ANNUAL MEETING INFORMATION. . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of Annual Meeting . . . . . . . . . . . 1
Solicitation of Proxies. . . . . . . . . . . . . . . . . . . 1
Other Business . . . . . . . . . . . . . . . . . . . . . . . 1
Shareholder Proposals for 1998 Annual Meeting. . . . . . . . 2
RELATIONSHIP WITH AUDITOR . . . . . . . . . . . . . . . . . . . 2
VOTING SECURITIES AND BENEFICIAL OWNERS . . . . . . . . . . . . 2
Beneficial Ownership of the Common Stock of IPALCO By Directors,
Nominees
and Executive Officers . . . . . . . . . . . . . . . . . . . 3
PROPOSAL 1 - ELECTION OF SIXTEEN DIRECTORS. . . . . . . . . . . 5
INFORMATION REGARDING THE BOARD OF DIRECTORS. . . . . . . . . . 8
Procedure To Propose Nominees For Director . . . . . . . . . 8
Number Of Board Meetings and Attendance. . . . . . . . . . . 8
Committees of the Board. . . . . . . . . . . . . . . . . . . 9
Compensation Committee Interlocks and Insider Participation. 9
Compensation of Directors. . . . . . . . . . . . . . . . . . 10
Certain Business Relationships . . . . . . . . . . . . . . . 10
PROPOSAL 2 - APPROVE AMENDMENT TO AMENDED ARTICLES OF
INCORPORATION TO REMOVE THE LIMITATION ON THE ISSUANCE
OF UNSECURED INDEBTEDNESS. . . . . . . . . . . . . . . . . . 11
Purpose and Effect of Proposed Amendment . . . . . . . . . . 11
Vote Required to Approve Proposed Amendment. . . . . . . . . 12
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . 17
Compensation Policies Relating Generally to Executive Officers. . 17
Base Salary . . . . . . . . . . . . . . . . . . . . . 17
Annual Incentive Plan . . . . . . . . . . . . . . . . 18
Long-Term Performance and Restricted Stock Incentive Plan 18
Basis for Chief Executive Officer's Compensation . . . . . . 19
Deductibility of Executive Compensation. . . . . . . . . . . 19
COMPENSATION OF EXECUTIVE OFFICERS. . . . . . . . . . . . . . . 13
Nature and Types of Compensation . . . . . . . . . . . . . . 13
Summary Compensation - Table I . . . . . . . . . . . . . . . 14
Option Exercises - Table II. . . . . . . . . . . . . . . . . 16
Performance Graph - Table III. . . . . . . . . . . . . . . . 21
Performance Graph. . . . . . . . . . . . . . . . . . . . . . 20
Pension Plans. . . . . . . . . . . . . . . . . . . . . . . . 22
Pension Plan Table - Table IV . . . . . . . . . . . . 22
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements . . . . . . . . . . . . . . . 23
FORM 10-K ANNUAL REPORT . . . . . . . . . . . . . . . . . . . . 23
PRELIMINARY COPIES
INDIANAPOLIS POWER & LIGHT COMPANY
PROXY STATEMENT
Relating to the
Annual Meeting of Shareholders
April 16, 1997
(Mailed on or about March 10, 1997)
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
Indianapolis Power & Light Company ("IPL") for use at its
Annual Meeting of Shareholders to be held April 16, 1997, at
10:00 o'clock A.M. (EST) at the principal office of IPL, One
Monument Circle, Indianapolis, Indiana 46204, pursuant to the
accompanying Notice of Annual Meeting and at any adjournment
of such meeting.
At the close of business on December 31, 1983, IPL
became a subsidiary of IPALCO Enterprises, Inc. (``IPALCO'')
and, at that time, all outstanding shares of IPL Common Stock
were exchanged for Common Stock of IPALCO and all Common
shareholders of IPL became Common shareholders of IPALCO. As
a result, IPALCO owns all 17,206,630 outstanding shares of
IPL's Common Stock. However, there are currently outstanding
518,985 shares of IPL's Cumulative Preferred Stock.
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 and in
favor of the proposed amendment to IPL's Amended Articles of
Incorporation. 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 matter.
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 five nominees who receive the
greatest number of votes cast for election as directors will
be elected as directors of IPL. Broker non-votes and
withheld votes will not affect the outcome of the election of
directors.
This solicitation of proxies is being made by IPL and
the expenses thereof will be borne by IPL. 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 IPL and its
subsidiaries, who will not be additionally compensated
therefor. IPL expects to reimburse broker-dealers and others
for reasonable expenses of forwarding proxy material to
beneficial owners.
Other Business
Management is not presently aware of any business to be
presented at the 1997 Annual Meeting other than the election
of directors and the proposed amendment to the Amended
Articles of Incorporation. The minutes of the Annual Meeting
of Shareholders held April 17, 1996 will be presented for
approval at the 1997 Annual Meeting; however, such action is
not intended to constitute approval or disapproval of any
matter referred to in such minutes.
Shareholder Proposals for 1998 Annual Meeting
If a shareholder intends to present a proposal at the
Annual Meeting of Shareholders to be held April 15, 1998, the
proposal must be received by the Corporate Secretary not
later than November 11, 1997 for inclusion in IPL's proxy or
information statement and form of proxy, if applicable.
RELATIONSHIP WITH AUDITOR
Deloitte & Touche LLP (the ``Auditor'') with offices at
Market Tower, Suite 3000, 10 West Market Street,
Indianapolis, Indiana, has been the auditor for IPL since the
year 1952, and was appointed by the Board of IPALCO upon
recommendation of the Audit Committee to serve as such during
the current year. A representative of the Auditor will be
present at the Annual Meeting of Shareholders on April 16,
1997, and will be given an opportunity to make a statement
and to respond to appropriate questions from shareholders.
VOTING SECURITIES AND BENEFICIAL OWNERS
On January 15, 1997, IPL had outstanding 17,206,630
shares of Common Stock and 518,985 shares of Cumulative
Preferred Stock issued in six (6) separate series. Each share
of Cumulative Preferred Stock entitles its owner to two (2)
votes, and 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
Wednesday, February 26, 1997, will be entitled to vote at the
meeting or at any adjournment thereof.
On January 15, 1997, the following beneficial owners
held more than 5% of a class of IPL's voting securities:
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Name and Address of Amount and Nature Percent
Title of Class Beneficial Owner of Beneficial Ownership of Class
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Common Stock IPALCO Enterprises, Inc. 17,206,630 shares<F1> 100%
One Monument Circle
Indianapolis, IN 46204
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<FN>
<F1> IPALCO Enterprises, Inc. has sole power to vote and
dispose of all shares shown as beneficially owned by
it.
On January 15, 1997, none of the directors, executive
officers or nominees for director of IPL beneficially owned
equity securities of IPL.
Beneficial Ownership of the Common Stock of IPALCO By
Directors, Nominees and Executive Officers
On January 15, 1997, the following named directors and
nominees of IPL, and executive officers of IPALCO and its
subsidiaries, including IPL, 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<F1> of Class<F2>
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Common Stock Joseph D. Barnette, Jr. 16,000 shares <F3>
Robert A. Borns 44,409 shares <F3>
John R. Brehm 72,674 shares <F4>
Mitchell E. Daniels, Jr. 18,300 shares <F3>
Rexford C. Early 11,642 shares <F3>
Otto N. Frenzel III 31,200 shares <F3>
Max L. Gibson 11,100 shares
Edwin J. Goss 14,407 shares <F3>
Earl B. Herr, Jr. 13,860 shares
John R. Hodowal 247,510 shares <F4>
Ramon L. Humke 174,533 shares <F4>
Sam H. Jones 18,360 shares <F3>
Andre B. Lacy 37,806 shares <F5>
L. Ben Lytle 12,748 shares
Michael S. Maurer 11,072 shares
Andrew J. Paine, Jr. 0 shares
Sallie W. Rowland 19,244 shares <F3>
Thomas H. Sams 23,001 shares <F3>, <F6>
Bryan G. Tabler 15,199 shares <F3>, <F4>
Gerald D. Waltz 105,056 shares <F4>
Other Executive Officers 274,744 shares <F1>, <F4>
All 26 directors, nominees,
and executive officers, as
a group 1,172,865 shares <F3>, <F4> 2.06%
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<FN>
<F1> 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; Mr. Borns-12,000; Mr. Brehm-52,500;
Mr. Daniels-18,000; Mr. Early-6,000; Mr. Frenzel-18,000;
Mr. Gibson-6,000; Mr. Goss-12,000; Dr. Herr-12,000; Mr.
Hodowal-180,000; Mr. Humke-105,000; Mr. Jones-18,000;
Mr. Lacy-18,000; Mr. Lytle-12,000; Mr. Maurer-9,000;
Mrs. Rowland-18,000; Mr. Sams-18,000; Mr. Waltz-55,320;
other executive officers-201,750; directors and
executive officers as a group-780,570.
<F2> Percentages less than 1% of total common stock
outstanding are not indicated.
<F3> Includes 43,547 shares owned by or with family members
sharing their home and shares held in trust or other
arrangements with family members.
<F4> 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-13,522; Mr.
Hodowal-29,645; Mr. Humke-7,618; Mr. Tabler-901; Mr.
Waltz-36,160; other executive officers-57,485; and all
executive officers as a group-145,331.
<F5> Includes 12,000 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.
<F6> Mr. Sams disclaims beneficial ownership of 1,500 shares
of the total shares shown opposite his name.
PROPOSAL 1 - ELECTION OF SIXTEEN DIRECTORS
At a meeting held January 28, 1997, the Executive
Committee of IPL's Board of Directors nominated 16 nominees
for election as directors at its Annual Meeting of
Shareholders to be held April 16, 1997 for terms of one year
each and until their successors are duly elected and
qualified. All nominees, except Andrew J. Paine, Jr.,
currently are members of the Board and all nominees have
consented to serve if elected. The nominees for director and
the names, ages, (as of April 16, 1997), job experience and
directorships of such nominees are as follows:
Joseph D. Barnette, Jr., 57, Chairman and Chief Executive
Officer of Banc One Indiana Corporation (a bank holding
company) since January, 1993 and Chairman and Chief
Executive Officer of Bank One, Indianapolis, NA since
October, 1994. Prior to that, Mr. Barnette was 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
IPALCO, IWC Resources Corporation, Indianapolis Water
Company and Meridian Insurance Group, Inc. He has been a
director of IPL since January, 1993.
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 IPALCO, Indianapolis
Water Company, IWC Resources Corporation, Standard
Management Corporation, and of Heritage Partners
Management, Inc. He has been a director of IPL since
April, 1986 (excluding the period March 15 to August 23,
1993).
Mitchell E. Daniels, Jr., 48, Vice President, Corporate
Strategy and Policy, Eli Lilly and Company
(pharmaceuticals manufacturer), Indianapolis, Indiana.
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 IPALCO, Acordia, Inc. and NBD Bank,
N.A. and has been a director of IPL since November,
1989.
Rexford C. Early, 62, 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 director of IPALCO and has been a director
of IPL since August, 1993.
Otto N. Frenzel III, 66, Chairman, Executive Committee
National City Bank, 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 IPALCO,
National City Corporation, American United Life
Insurance Company, Indiana Energy, Inc., Indiana Gas
Company, Inc., Indianapolis Water Company, Baldwin &
Lyons, Inc. and IWC Resources Corporation. He has been a
director of IPL since April, 1977.
Max L. Gibson, 56, 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 IPALCO, First Financial Corporation,
Terre Haute First National Bank and First State Bank,
Brazil, Indiana. He has been a director of IPL since
August, 1993.
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 IPALCO and Lilly Endowment and has
been a director of IPL since April, 1986 (excluding the
period March 15 to August 23, 1993).
John R. Hodowal, 52, 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 IPALCO, Bank One, Indianapolis, NA and
Anthem Insurance Companies, Inc. He has been a director
of IPL since April, 1984.
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). He is a
director of IPALCO, 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 IPL since February, 1990.
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 IPALCO and has been a
director of IPL since June, 1983.
Andre B. Lacy, 57, 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 IPALCO, Tredegar
Industries, Inc., Albemarle Corporation, Patterson
Dental Co., Herff Jones and The National Bank of
Indianapolis. He has been a director of IPL since April,
1987.
L. Ben Lytle, 50, 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 IPALCO, Bank One, Indianapolis, NA and
Anthem Insurance Companies, Inc. and its subsidiaries.
He has been a director of IPL since April, 1992.
Michael S. Maurer, 54, Chairman of the Board of MyStar
Communications Corporation (radio station operations), a
position he has held for more than five years; 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. Mr.
Maurer is Chair, United Way of Central Indiana. He has
been a director of IPALCO and IPL since January, 1993.
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 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 IPALCO, NBD
Bank, N.A., Meridian Insurance Group, Inc. and Meridian
Mutual Insurance Company. She has been a director of IPL
since April, 1988.
Thomas H. Sams, 55, 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 IPALCO, Mid-America Capital Resources, Inc.,
NBD Bank, N.A., and Meridian Insurance Group, Inc. He
has been a director of IPL since April, 1986.
INFORMATION REGARDING THE BOARD OF DIRECTORS
Procedure To Propose Nominees For Director
IPL will accept timely recommendations by shareholders
of proposed nominees for director. All such proposals must be
received by IPL's Corporate Secretary not later than January
2 of any year for consideration at that year's Annual Meeting
of Shareholders. The Executive Committee will review nominees
proposed by shareholders in the same manner as other proposed
nominees.
Number of Board Meetings and Attendance
Each director of IPL is elected for a term of one year
and until his or her successor is duly elected and qualified.
During the year 1996, the Board of Directors of IPL held 11
meetings. Its Executive Committee and Audit Committee held a
total of 9 meetings. All directors attended, in the
aggregate, more than 75% of the aggregate of Board meetings
and assigned committee meetings. On average, directors
attended more than 92% of Board and committee meetings held
in 1996.
Committees of the Board
The Board of Directors of IPL has two standing
committees, the Executive Committee and the Audit Committee.
There is no nominating committee, as such; however, the
Executive Committee substantially performs the functions of
such committee. It reviews, among other things, the
qualifications and suitability of candidates to stand for
election to IPL's Board of Directors and recommends nominees
to the Board. 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 and is currently composed
of Mr. John R. Hodowal, Chairman, and Messrs. Robert A.
Borns, Otto N. Frenzel III, Earl B. Herr, Jr., Ramon L. Humke
and Sam H. Jones, members.
The Audit Committee 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, they
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 three
meetings in 1996 and is currently made up of Mrs. Sallie W.
Rowland, Chairman, and Messrs. Rexford C. Early, Edwin J.
Goss, Sam H. Jones and Andre B. Lacy, members.
Compensation Committee Interlocks and Insider Participation
There is no standing Compensation Committee of the Board
of Directors of IPL. Mr. John R. Hodowal and Mr. Ramon L.
Humke consult with the Compensation Committee of the Board of
Directors of IPALCO concerning the base salary component of
executive officer compensation. Mr. Frenzel is Chairman, and
Messrs. Borns, Herr and Sams are the members of IPALCO's
Compensation Committee. However, Mr. Hodowal and Mr. Humke
do not participate in discussions with the Compensation
Committee with regard to their own compensation. IPL's
President and Chief Operating Officer, 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 IPL.
Compensation of Directors
Non-employee directors serving on the Board of IPL are
paid an annual fee of $8,500 plus $450 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
of the Board, all of whom are non-employee directors, are
paid annual fees of $4,000 plus $450 for each meeting
attended. The Chairman of this committee 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 IPL
receive no director fees.
Certain Business Relationships
During 1996, 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 million.
Mr. L. Ben Lytle is President and Chief Executive Officer of
Anthem.
IPL maintained a line of credit during 1996 with
National City Bank, Indiana ("NCB") of which Mr. Otto N.
Frenzel III is Chairman of the Executive Committee. During
1996, the maximum principal amount outstanding at any time on
IPL's $30 million line of credit with NCB was approximately
$11 million, and IPL had no outstanding balance with NCB as
of December 31, 1996. Mid-America's $7.5 million line of
credit with NCB had a maximum principal amount of $3.0
million outstanding at any time, and a principal balance of
$3.0 million outstanding as of December 31, 1996.
IPL maintained a long-term revolving credit facility
during 1996 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. Mid-America maintained a $7.5 million line of
credit with Bank One during 1996 and had a maximum principal
amount of $3.0 million outstanding at any time, and an
outstanding principal balance of $3.0 million as of December
31, 1996.
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. IPALCO subsidiary Mid-America maintained a $7.5
million line of credit during 1996 with NBD, had a maximum
principal amount outstanding of $3.0 million, and a principal
balance of $3.0 million outstanding as of December 31, 1996.
IPL engaged Rowland Design, Inc. for architectural and
design services for certain improvements to IPL's corporate
office located at One Monument Circle. During 1996, IPL paid
fees of approximately $93,000 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,
and communication, and paid fees of approximately $25,000
during 1996. Mr. Thomas M. Miller, a member of the Board of
Directors of IPALCO prior to his death on July 5, 1996, was a
majority owner of Schenkel & Associates, LLC.
PROPOSAL 2 - APPROVE AMENDMENT TO AMENDED ARTICLES OF
INCORPORATION TO REMOVE THE LIMITATION ON THE ISSUANCE OF
UNSECURED INDEBTEDNESS
Purpose and Effect of Proposed Amendment
Under Article 6 of IPL's Articles of Incorporation, as
amended, (the "Articles"), the holders of IPL's Cumulative
Preferred Stock (the "Preferred Stock") have special voting
rights with respect to certain matters, including among
others the amendment of the Articles to authorize any prior
ranking stock, the issuance of Preferred Stock unless certain
coverage tests are met, and the issuance of unsecured
indebtedness unless certain coverage tests are met.
Specifically, Article 6(A)(4)(g) provides that the
approval of a majority of the Preferred Stock, voting
separately as a class, is required for IPL to:
issue any unsecured notes, debentures or other
securities representing unsecured indebtedness, or
assume any such unsecured securities, for purposes
other than the refunding of outstanding unsecured
securities theretofore issued or assumed by the
Company or the redemption or other retirement of
all outstanding shares of Preferred Stock, if
immediately after such issue or assumption, the
total principal amount of all unsecured notes,
debentures or other securities representing
unsecured indebtedness issued or assumed by the
Company and then outstanding (including unsecured
securities then to be issued or assumed) would
exceed twenty percent (20%) of the aggregate of (i)
the total principal amount of all bonds or other
securities representing secured indebtedness issued
or assumed by the Company, and then to be
outstanding and (ii) the capital and surplus of the
Company as then to be stated on the books of
account of the Company.
The proposed amendment would remove clause (A)(4)(g) of
Article 6 from the Articles of Incorporation and thereby
eliminate the special voting rights contained in that clause
and enable IPL to incur unsecured indebtedness without a
shareholder vote. The amendment is intended to increase the
flexibility of the Board of Directors in obtaining financing
on the best possible terms for IPL. Historically, IPL's
long-term debt financing generally has been accomplished
through the issuance of first mortgage bonds (secured debt
financing) pursuant to IPL's Mortgage and Deed of Trust (the
"Mortgage"). All of the first mortgage bonds issued by IPL
pursuant to the Mortgage are secured by a first priority lien
on substantially all of IPL's properties. In light of the
increasingly competitive pressures in the utility industry
and the financial markets, the Board of Directors believes it
is in IPL's best interests to have maximum flexibility with
respect to obtaining future financing to meet IPL's needs.
The elimination of the provision providing for special voting
rights with respect to the issuance or assumption of
unsecured indebtedness would provide IPL with the ability to
obtain the best terms available in the debt markets. This
should result in long-term benefits for all of IPL's
shareholders, including the holders of IPL's Preferred Stock.
Even though the removal of the provision providing for
special voting rights would permit IPL to issue a greater
amount of unsecured debt, IPL does not have any present
intention to issue an aggregate amount of debt greater than
it otherwise would be permitted to issue. In other words,
the total amount of secured and unsecured debt intended to be
issued and outstanding would not exceed the total amount of
secured and unsecured debt currently permitted by the
Articles and the Mortgage; instead, unsecured debt would
become a more significant component of the overall debt of
IPL.
In addition, the adoption of the proposed amendment
would not remove all restrictions on IPL's issuance of debt
securities. As a regulated utility, the issuance of any
securities by IPL would continue to be subject to the prior
approval of the Indiana Utility Regulatory Commission (with
respect to securities maturing in more than one year) or the
Federal Energy Regulatory Commission (with respect to
securities maturing in one year or less). Consequently,
although the removal of the provision providing for special
voting rights will increase the financial flexibility of IPL
by removing a limitation on the amount of unsecured debt that
IPL is permitted to issue, it is not intended that the
overall debt capacity levels would be increased, and, in any
event, the issuance of any debt securities will continue to
be reviewed by regulatory agencies.
Vote Required to Approve Proposed Amendment
Adoption of Proposal 2 requires the affirmative vote of
the holders of two-thirds of the outstanding shares of IPL
Cumulative Preferred Stock, voting separately as a class.
Proxies representing shares held on the record date which are
returned duly executed, will be voted, unless otherwise
specified, in favor of the proposed amendment to IPL's
Amended Articles of Incorporation. Abstentions and broker
non-votes will have the effect of a vote against the proposal
since the affirmative vote of two-thirds of the outstanding
shares is required for approval of the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Policies Relating Generally to Executive
Officers
The Compensation Committee (``Committee'') of the Board
of Directors ("Board") of IPALCO Enterprises, Inc. ("IPALCO"),
in consultation with its outside advisor, establishes the
compensation policies of IPALCO and its subsidiaries,
including IPL, 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 four 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 executive and other selected officers had three
basic components in 1996: base salary, a performance-based
annual incentive plan, and a long-term performance and
restricted stock incentive plan. It is the policy of the
Committee that the compensation program should directly link
executive and shareholder interests.
Base Salary
The Committee targeted 1996 base salaries for officers,
including the named executive officers, at the median level
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 within the median 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 and
the salary for each officer, including the named executive
officers. 1996 base salary increases for all officers
averaged 4.5%, slightly ahead of the utility industry
average, but aligned with IPALCO performance.
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.
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 1.5 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.
For 1996, the Company met the Maximum performance goals
in all three performance measures: Net Income, 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.
The Plan continues to measure 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, with
final restricted stock awards made July 1, 1998.
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.
For Program 5, for the years 1992-1995, IPALCO ranked first
among peers in Cost Effective Service and sixth among peers
in Total Return to Shareholders. Using the schedule
specified in the plan for that level of performance, the
named executive officers received incentive payments totaling
$282,249 in 1996.
Basis For Chief Executive Officer's Compensation
The Chief Executive Officer's (``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, service, and administrative data are considered.
Total 1996 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), is shown in
Table I. His total compensation was slightly above the
median of Peer Group CEOs, but was slightly below the median
of CEO compensation in comparably high-performing peer
companies.
At Target performance, under the current compensation
program, approximately 37% of the CEO's total direct
compensation is variable and at risk. During 1996,
approximately 43% 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 not
impact 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 take 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
Earl B. Herr, Jr.
Thomas H. Sams
COMPENSATION OF EXECUTIVE OFFICERS
Nature and Types of Compensation
The two tables that follow on succeeding pages disclose
all plan and non-plan compensation awarded to, earned by, or
paid to the Chairman of the Board and Chief Executive Officer
(``CEO'') and to the four named executive officers other than
the CEO who are the most highly compensated key policy-making
executive officers of IPL, each of whose total annual salary
and bonus exceeded $100,000 for the year 1996. The tables
include a Summary Compensation Table (Table I) and an
Aggregated Option/SAR Exercises In Last Fiscal Year and
Fiscal Year-End Option/SAR Value Table (Table II). No table
is presented for Option/SAR Grants in last fiscal year since
no stock options were granted during 1996. No table is
presented for Long-Term Incentive Plans since the issuance of
restricted stock under the Long-Term Performance and
Restricted Stock Incentive Plan is included in the Summary
Compensation Table (Table I).
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-------------------------------------------
Annual Compensation Awards Awards Payouts
--------------------------------------------------------------------------------
Other Securities
Annual Restricted Underlying All Other
Compen- Stock Options/ LTIP Compen-
Name and sation<F1> Awards<F2> SARs<F3> Payouts<F4> sation<F5>
Principal Position Year Salary ($) Bonus ($) ($) ($) (#) ($) ($)
- - ------------------- ---- ---------- --------- ---------- ----------- ----- ----------- ----------
John R. Hodowal 1994 $461,051 $214,566 $ 41,471 -0- -0- $ 76,250 $8,955
Chairman & CEO 1995 476,012 206,425 43,721 $491,790 -0- 75,488 8,310
1996 515,125 272,370 229,775 -0- -0- 111,333 6,000
Ramon L. Humke 1994 $382,221 $177,801 $130,141 -0- -0- $ 63,646 $8,955
President & COO 1995 394,591 171,120 157,606 $407,700 -0- 62,975 8,310
1996 432,812 228,935 200,277 -0- -0- 92,296 6,000
John R. Brehm 1994 $218,304 $ 67,728 $ 3,678 -0- -0- $ 25,781 $8,199
Senior Vice 1995 225,315 89,513 6,301 $133,050 -0- 24,228 8,310
President, Finance 1996 236,394 83,253 7,788 -0- -0- 34,996 6,698
& Information
Services
Bryan G. Tabler<F6> 1994 $ 46,157 $ 15,785 $ 1,360 -0- -0- -0- -0-
Senior Vice President, 1995 202,931 58,650 14,471 $121,305 -0- -0- $5,589
Secretary & General 1996 218,184 76,907 17,077 -0- -0- $ 10,651 6,698
Counsel
Gerald D. Waltz 1994 $202,955 $ 62,887 $ 4,465 -0- -0- $ 26,042 $7,731
Senior Vice President, 1995 201,930 58,353 11,178 $121,530 -0- 24,228 8,310
Electric Delivery 1996 209,792 73,885 12,355 -0- -0- 32,972 6,000
- - -------------------------------
<FN>
<F1> Represents taxes paid by IPALCO and/or IPL on accrued interest and
contributions of principal under the Funded Supplemental Plan (See
``Pension Plans''). Includes $10,227 earned in above market
interest on deferred compensation for Mr. Humke for 1996.
<F2> 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); Mr. Humke - 20,385 shares ($555,491); Mr. Brehm - 6,652
shares ($181,267); Mr. Tabler - 6,067 shares ($165,326); and Mr.
Waltz - 6,076 shares ($165,571). Dividends on the restricted
common stock are payable to the named officers. Shares awarded in
1995 represent a cumulative 3-year award for years 1995, 1996, and
1997. Under the terms of the Plan, no additional shares will be
awarded to the named officers before 1998.
<F3> No options have stock appreciation rights.
<F4> Payouts shown were made in 1996 for the 4-year LTIP Program ended
December 31, 1995.
<F5> Represents 1996 contributions made by IPL to the Trustee of the
Employees' Thrift Plan.
<F6> Mr. Tabler started his employment on October 1, 1994, and became an
officer of both IPALCO and IPL on January 1, 1995.
TABLE I
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End(#) FY-End ($)*
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-(u) -0-(u)
Ramon L. Humke 82,500 $921,385 105,000(e) $239,013(e)
-0-(u) -0-(u)
John R. Brehm -0- -0- 52,500(e) $119,506(e)
-0-(u) -0-(u)
Bryan G. Tabler -0- -0- ---- ----
---- ----
Gerald D. Waltz 18,120 $267,208 55,320(e) $193,880(e)
-0-(u) -0-(u)
- - ------------------------------
(e) Exercisable.
(u) Unexercisable.
* Based upon year-end closing market price of $27.25 per share of
common stock.
TABLE II
Performance Graph
The Performance Graph on this page, Table III, plots the total
cumulative return that shareholders of IPALCO received (solid line with dot)
during the 5-year period ended December 31, 1996, compared with the total
cumulative return to shareholders of companies comprising the Standard and
Poors 500 Index (solid line with square) and the Standard & Poors Electric
Companies Index (solid line with star). The Graph shows the cumulative
total return assuming dividend reinvestment and based upon an initial
investment of $100.00. The vertical portion of the Graph indicates the
dollar value ranging from $90.00 to $210.00, and the horizontal portion of
the Graph is the year, beginning in 1991 and continuing through 1996.
The points on the Performance Graph are as follows:
CUMULATIVE TOTAL RETURN ASSUMING DIVIDEND REINVESTMENT
1991 1992 1993 1994 1995 1996
IPALCO 100 114 119 108 146 165
S & P 500 100 108 118 120 165 203
S & P ELEC COMPANIES 100 106 119 104 136 136
Source: Standard and Poor's Compustat Services, Inc.
TABLE III
Performance Graph
The Performance Graph (Table III) on the preceding page
plots the total cumulative return that shareholders of IPALCO
received (solid line with dot) during the 5-year period ended
December 31, 1996, compared with the total cumulative return
to shareholders of companies comprising the Standard and
Poors 500 Index (solid line with square) and the Standard &
Poors Electric Companies Index (solid line with star). 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 IV 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<F1>
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
___________________________________
<FN>
<F1> 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 IV
- - ------------------------------------------------------------------------------------------------
IPL's Employees' Retirement Plan (the ``Base Retirement
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'' but excludes ``Bonus'' and ``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, Mr. Humke - 7, Mr. Brehm - 21, Mr.
Tabler - 2, and Mr. Waltz - 36.
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 1996 to
the accounts of Messrs. Hodowal, Humke, Brehm, Tabler and
Waltz amounted to $271,745, $196,824, $7,256, $20,466 and
$9,987, 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
IPL has employment contracts with Messrs. Hodowal and
Humke which provide for an indefinite term that is
convertible into a fixed 3-year term upon notice. Such
contracts terminate upon death, total disability or
retirement. Should they be terminated without ``cause'' or
resign for ``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 Officers of IPL 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
exceeding the limits of Internal Revenue Code 280G), if IPL
or IPALCO undergoes an ``acquisition of control'' while the
agreement is in effect and if, within 3 years after an
acquisition of control, any such officer is terminated
without ``cause'' or resigns for ``good reason,'' as those
terms are therein defined (see below).
The term ``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 for `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 of 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'')
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, the sum of $887,580
was reserved in trust for such expenses.
FORM 10-K ANNUAL REPORT
The following portions of IPL's Annual Report on Form
10-K for the year ended December 31, 1996, as filed with the
Securities and Exchange Commission, are hereby incorporated
by reference: (1) the financial statements and Report of
Independent Public Accountants relating thereto; and (2) the
information under the caption Item 6, Selected Financial
Data. IPL will provide without charge, upon the written or
oral request of any person (including any beneficial owner)
to whom this Proxy Statement is delivered, a copy of the
Annual Report on Form 10-K (excluding exhibits) by first
class mail within one business day of receipt of such
request. Such requests for information should be directed to
IPL's principal office at One Monument Circle, P.O. Box 1595,
Indianapolis, IN 46206-1595, Attention: Corporate Secretary,
telephone (317) 261-5134.
By order of the Board of Directors.
IPALCO ENTERPRISES, INC.
By: BRYAN G. TABLER, Secretary
Indianapolis, Indiana
March 10, 1997
- - -------------------------------------------------------------
[form of proxy/instruction card]
INDIANAPOLIS POWER & LIGHT COMPANY
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 as designated below, all the
shares of Indianapolis Power & Light Company cumulative preferred stock
held of record by the undersigned on February 26, 1997, at
the annual meeting of the shareholders to be held April 16,
1997, or at any adjournment thereof, with respect to the
matter(s) set forth below.
1. Election of Sixteen Nominees for Director, namely:
Joseph D. Barnette, Jr., Robert A. Borns, Mitchell E.
Daniels, Jr., Rexford C. Early, Otto N. Frenzel III, Max
L. Gibson, Earl B. Herr, Jr., John R. Hodowal, Ramon L.
Humke, Sam H. Jones, Andre B. Lacy, L. Ben Lytle,
Michael S. Maurer, Andrew J. Paine, Jr., Sallie W.
Rowland, Thomas H. Sams
[ ] 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 to remove the limitation on the issuance
of unsecured indebtedness.
[ ] 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 will be voted FOR the
sixteen nominees for Director listed above and FOR the amendment
to the Amended Articles of Incorporation and confers discretionary
authority to vote on currently unknown matters properly presented
to the meeting. This Proxy 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 March 10, 1997, and the 1996 Annual Report is hereby
acknowledged.
Dated ___________________, 1997.
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
1997 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)