EXHIBIT 99
IES Utilities Inc. (Utilities) is a wholly-owned subsidiary of IES Industries
Inc. (Industries). Substantially all of the information required for
Utilities with respect to Form 10-K Items 11, 12 and 13 is included in
Industries' definitive proxy statement prepared for the 1994 annual meeting
of the shareholders, which will be filed with the Commission on or about
April 4, 1994. Attached hereto are the applicable pages from Industries'
definitive proxy statement.
IES INDUSTRIES DEFINITIVE PROXY STATEMENT TO BE FILED ON OR ABOUT
APRIL 4, 1994.
NOMINATION AND ELECTION OF DIRECTORS
Eleven directors will be elected by the Shareholders at the Annual Meeting to
serve until the next annual meeting or until their respective successors have
been duly elected and qualified. All of the nominees have previously been
elected as directors by the Shareholders. Under the provisions of the Merger
Agreement (approved by Shareholders), effective July 1, 1991, between IE
Industries Inc. ("IE Industries") and Iowa Southern Inc. ("Iowa Southern")
forming IES Industries Inc., the Board was increased to sixteen members,
integrating directors from both companies. At this time, pursuant to agreement
with the former Iowa Southern directors, the Board of Directors will be reduced
to eleven members. The current members of the Board of Directors who are not
running for reelection are: Robert F. Brewer, Dr. Salomon Levy, Rene H. Males
and Larry D. Root. IES Industries' principal subsidiary is IES Utilities Inc.
("IES Utilities"), the surviving corporation following the merger of Iowa
Southern Utilities Company into Iowa Electric Light and Power Company ("Iowa
Electric") on December 31, 1993.
2
In the event that any nominee should become unavailable for election, which
is not now contemplated, the Board of Directors reserves discretionary
authority to designate a substitute nominee. Proxies will be voted for the
election of such other nominee or nominees as may be so designated by the
Board of Directors.
NOMINEES FOR ELECTION AS DIRECTORS
NAME OF NOMINEE AND PRINCIPAL OCCUPATION OR EMPLOYMENT DIRECTOR
(1) AGE SINCE
------------------------------------------------------ --- --------
C.R.S. Anderson, Retired Chairman of the Board of the 66 1978(2)
Company
J. Wayne Bevis, Vice Chairman & Chief Executive Officer, 59 1987
Pella Corporation (Window and Door Manufacturing),
Pella, Iowa
Dr. George Daly, Dean, Leonard Stern School of Business, 53 1988
New York University, New York, New York (3)
Blake O. Fisher, Jr., Executive Vice President & Chief 49 1991
Financial Officer of the Company (4)
G. Sharp Lannom, IV, President & Chief Executive Officer, 55 1987(2)
DeLong Sportswear, Inc. (Sportswear Manufacturing),
Grinnell, Iowa
Lee Liu, Chairman of the Board, President & Chief 60 1981
Executive Officer of the Company
Robert D. Ray, President & Chief Executive Officer, Blue 65 1987
Cross and Blue Shield of Iowa (Insurance), Des Moines,
Iowa
David Q. Reed, Attorney and Counselor at Law, Kansas 62 1967
City, Missouri
Henry Royer, Chairman of the Board & President, Firstar 62 1984
Bank of Cedar Rapids, N.A., Cedar Rapids, Iowa
Robert W. Schlutz, President, Schlutz Enterprises 58 1989(2)
(Diversified Farming and Retailing), Columbus Junction,
Iowa
Anthony R. Weiler, Chairman & Chief Executive Officer, 57 1979(2)
Chittenden & Eastman Company (Furniture Manufacturer &
Distributor), Burlington, Iowa
- --------
(1) Except as otherwise noted, all nominees have served in their current
position for five years or more as of the date of this proxy. All other
information is as of January 1, 1994. All nominees are also the current
directors of IES Utilities.
(2) Under the Merger Agreement forming IES Industries, six members of the Iowa
Southern Board were designated by the Iowa Southern Board for appointment
and reelection to the IES Industries Board. These directors were elected on
the date specified to the Iowa Southern Board and have been serving on the
IES Industries Board since July 1, 1991.
(3) Dr. Daly became Dean of Leonard Stern School of Business, New York
University, New York, New York on August 1, 1993. Prior thereto he had
served as Dean, College of Business Administration, The University of Iowa,
Iowa City, Iowa since July 1, 1983.
(4) Mr. Fisher was elected Executive Vice President & Chief Financial Officer
effective January 1, 1991. Before that time, he was employed by Consumers
Power Company since 1967, serving as Vice President/Finance since 1986 and
Treasurer since 1990.
Certain directors of IES Industries are directors of other publicly held
corporations: Mr. Liu is a director of HON Industries Inc., an office equipment
manufacturer, in Muscatine, Iowa; a director of Principal Financial Group, an
insurance company, in Des Moines, Iowa; and a director of Eastman Chemical
Company, a diversified chemical company, in Kingsport, Tennessee. Mr. Ray is a
director of the Maytag Company, an appliance manufacturer, in Newton, Iowa; a
director of AEGON USA, Inc., an insurance company, in Cedar Rapids, Iowa and a
director of Norwest Bank of Iowa, in Des Moines, Iowa.
3
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES.
SECURITY OWNERSHIP OF BENEFICIAL OWNERS
The IES Industries Board does not know of any person who beneficially owns
5% or more of the outstanding Common Stock of the Company.
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is certain information with respect to beneficial ownership
of the Common Stock of the Company as of February 28, 1994 by each current
director and nominee for director, certain executive officers and by all
directors and listed executive officers of the Company as a group:
AMOUNT AND
NATURE OF PERCENT
BENEFICIAL OF
NAME OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------------ ------------ -------
C.R.S. Anderson..................................... 19,000 .07%
J. Wayne Bevis...................................... 250 (2)
Robert F. Brewer.................................... 28,274 .10%
Dr. George Daly..................................... 1,500 (2)
Blake O. Fisher, Jr................................. 7,863 .03%
G. Sharp Lannom, IV................................. 800 (2)
Dr. Salomon Levy.................................... 1,320 (2)
Lee Liu............................................. 24,192 .09%
Rene H. Males....................................... 5,401 .02%
Robert D. Ray....................................... 1,000 (2)
David Q. Reed....................................... 14,252 .05%
Larry D. Root....................................... 10,490 .04%
Henry Royer......................................... 1,454 (2)
Robert W. Schlutz................................... 584 (2)
Anthony R. Weiler................................... 1,802 (2)
Robert J. Kucharski................................. 1,605 (2)
All listed executive officers and directors of the
Company as a group (16 persons).................... 119,787 .42%
- --------
(1) Includes ownership of shares by family members even though beneficial
ownership of such shares may be disclaimed.
(2) Less than .01% of the Class (Common Stock).
OTHER TRANSACTIONS
S. Levy, Incorporated, an engineering and management consulting firm of which
Dr. Salomon Levy, a current director not running for reelection as a director
of IES Industries, is Chairman and Chief Executive Officer, performed
consulting services for Iowa Electric in 1993 for which it was paid $445,931.
IES Utilities has a service contract with S. Levy, Incorporated pursuant to
which it supplied these services and under which it will provide services in
1994.
The Company has a contract with Blue Cross and Blue Shield of Iowa for
administration of its employee health insurance plan, as it has had for many
prior years. In 1993, the Company paid $391,751 to Blue Cross and Blue Shield
of Iowa. As previously stated, Mr. Ray is President & Chief Executive Officer
of the insurance company.
4
FUNCTIONING OF THE BOARD OF DIRECTORS AND COMMITTEES
IES Industries' Board has an Executive Committee, an Audit Committee, a
Nominating Committee and a Compensation Committee.
Current members of the Executive Committee are Lee Liu, Chairman, C.R.S.
Anderson, David Q. Reed and Henry Royer. The Committee met six times during
1993. It is empowered with all of the authority vested in the IES Industries
Board, subject to certain limitations, and may act when the IES Industries
Board is not in session.
Current members of the Audit Committee are C.R.S. Anderson, Chairman, J.
Wayne Bevis, Robert D. Ray and Robert W. Schlutz. The Committee met twice
during 1993. The principal functions of the Committee are to review IES
Industries' internal audit activities, including reviews of the internal
control procedures; to oversee the compliance process; to recommend to the IES
Industries Board an independent public accounting firm to be IES Industries'
auditors; and to approve the audit arrangements and audit results. Both the
internal and independent auditors have direct and independent access to the
Audit Committee.
Current members of the Nominating Committee are David Q. Reed, Chairman, Lee
Liu, Robert D. Ray and Anthony R. Weiler. The Committee met once during 1993.
Its principal function is to review and recommend to the IES Industries Board
nominees to serve on the Board and its committees. While there are no formal
procedures, the Committee considers nominees brought to its attention by other
members of the IES Industries Board, members of management and Shareholders.
Current members of the Compensation Committee are Henry Royer, Chairman, Dr.
George Daly, G. Sharp Lannom, IV and Dr. Salomon Levy. The Committee met five
times during 1993. The principal functions of the committee are to review and
make recommendations to the IES Industries Board on the salaries and other
compensation and benefits of the elected officers of IES Industries and its
subsidiaries, and to review and administer incentive compensation or similar
plans for officers and other key employees of IES Industries and its
subsidiaries. The report of the Compensation Committee is included later in
this Proxy Statement.
IES Industries Board met six times in 1993. The various committees of the
Board met an aggregate of fourteen times. All of the directors attended 80% or
more of these meetings.
COMPENSATION OF DIRECTORS
Non-employee directors of IES Industries receive fees of $10,000 per year
plus $600 per meeting attended. Non-employee directors serving on the Executive
or Compensation Committees receive $750 per committee meeting attended, and
those serving on the Audit or Nominating Committee receive $600 for each
committee meeting attended. In addition, non-employee directors serving as
chairman of a committee receive an annual fee of $1,500 for serving in such
capacity. Directors who are officers received a one-time fee of $10,000 and
meeting fees for two board meetings for 1993 and will not receive any fees in
future years. Directors who are officers do not receive any fees for attendance
at meetings of committees of which they are members.
Under the Director Retirement Plan, the Company provides a retirement or
death benefit to directors in an amount equal to 80% of the annual directors
fee. Such amount is payable annually, based upon length of service, to
directors who have served at least four years, for a maximum period of eight
years.
The Company makes available to members of the Board of Directors a business
travel accident insurance policy at an annual cost to the Company of $10 per
director. No director received any payments under such policy in 1993.
5
The following table shows, for the fiscal years ending December 31, 1991-
1993, the cash compensation paid by the Company and its subsidiaries as well
as certain other compensation paid or accrued for those years, to the Chief
Executive Officer and to each of the four most highly compensated executive
officers of the Company and its subsidiaries:
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ ------------
RESTRICTED
NAME AND PRINCIPAL OTHER ANNUAL STOCK ALL OTHER
POSITION(1) YEAR SALARY BONUS(3) COMPENSATION(4) AWARDS(5) COMPENSATION(6)
------------------ ---- -------- -------- --------------- ------------ ---------------
Lee Liu--Chairman of the 1993 $307,450(2) $157,500 $1,625 * $10,571
Board, President & 1992 298,600(2) 71,250 798 $186,750 9,518
Chief Executive Officer 1991 295,450(2) 85,000 N/A(7) 259,375 N/A(7)
- ------------------------------------------------------------------------------------------------
Blake O. Fisher, Jr.-- 1993 212,475(2) 81,974 720 * 4,392
Executive Vice
President 1992 204,959(2) 50,000 386 32,868 3,070
& Chief Financial
Officer 1991 199,200(2) 116,439 N/A(7) 25,538 N/A(7)
- ------------------------------------------------------------------------------------------------
Larry D. Root--President
and 1993 200,694(2) 77,176 2,168 * 5,948
Group Executive, Energy 1992 194,069(2) 37,724 1,051 28,355 6,748
Delivery and Nuclear
Group 1991 182,075(2) 38,808 N/A(7) 42,563 N/A(7)
- ------------------------------------------------------------------------------------------------
Rene H. Males--President 1993 179,024(2) 65,100 404 -- 25,817
and Group Executive, 1992 179,218(2) 22,800 94 -- 901
Generation and
Engineering Group 1991 161,863(2) -- N/A(7) -- N/A(7)
- ------------------------------------------------------------------------------------------------
Robert J. Kucharski--
Vice 1993 121,872 35,000 2,781 * 4,650
President,
Administration 1992 118,684 16,195 1,372 7,968 5,262
& Secretary 1991 113,176 18,085 N/A(7) 14,188 N/A(7)
- --------
*The grants of restricted stock pursuant to the long-term incentive plan for
the 1993 plan year have not been determined as of the date of this Proxy
Statement. See footnote (5) below for a discussion of restricted stock
grants.
(1) Messrs. Root and Males were officers of the registrant until February 1,
1994. They are no longer officers of the registrant, but are officers of
IES Utilities Inc., a wholly-owned subsidiary of the registrant.
(2) The amounts reported as salary include, for each director, fees and
payments in lieu of directors fees for Messrs. Liu, Fisher and Root of
$11,200 in 1993, $13,600 in 1992, and $14,200 in 1991. Director's fees and
payments in lieu of director's fees for Mr. Males were $11,200 in 1993,
$13,600 in 1992, and $11,800 in 1991.
8
(3) The Company does not pay bonuses. The amounts listed represents awards
under the Management Incentive Compensation Plan, the Company's annual
incentive plan, for the plan year, with cash payment made in the subsequent
calendar year.
(4) The 1993 amounts shown as Other Annual Compensation represent the earnings
for the Key Employee Deferred Compensation Plan in excess of 120% of the
applicable federal long-term rate provided under Section 1274 (d) of the
Internal Revenue Code in the following amounts: Mr. Liu--$1,625, Mr.
Fisher--$720, Mr. Root--$2,168, Mr. Males--$404, and Mr. Kucharski--$2,781.
(5) The grants of restricted stock have been made on June 1st since 1988, with
one-third of the grant being restricted for one year, one-third being
restricted for two years and one-third being restricted for three years. In
addition, in both December 1992 and June 1993, Mr. Liu received grants of
4,000 shares, which will vest at retirement. Restricted stock is considered
outstanding upon grant date and dividends are paid to the eligible officers
on these shares while restricted. The amounts shown in the table above
represent the value of the grants based upon closing price of IES
Industries Common Stock on the grant date. The grant date is in the
calendar year following the plan year. At December 31, 1993, the listed
officers had restricted stock for which restrictions had not lapsed (based
upon the December 31, 1993 closing price of IES Industries Common Stock) as
follows:
SHARES VALUE
------ --------
Lee Liu................................................... 17,333 $541,656
Blake O. Fisher, Jr....................................... 2,767 86,469
Larry D. Root............................................. 2,411 75,344
Rene H. Males............................................. -- --
Robert J. Kucharski....................................... 1,023 31,969
No stock options nor stock appreciation rights have been awarded to any
executive officers.
(6) Amounts shown for 1993 represent: (a) contributions by the Company to the
applicable employee savings plans in the following amounts: Mr. Liu--
$3,504, Mr. Fisher--$3,161, Mr. Root--$2,978, Mr. Males--$1,691, and Mr.
Kucharski--$1,931; (b) amount included in W-2 earnings for life insurance
coverage in excess of $50,000 in the following amounts: Mr. Liu--$7,067,
Mr. Fisher--$1,231, Mr. Root--$2,970, Mr. Males--$2,387, and Mr.
Kucharski--$2,719; and (c) amounts paid to Mr. Males of $11,409 as a
relocation allowance and $10,330 for reimbursement of moving expenses.
(7) Pursuant to the transition rules promulgated by the Securities and Exchange
Commission, only information for 1993 and 1992 has been provided.
9
IES INDUSTRIES PLANS
IES Industries Pension Plans: IES Industries, IES Utilities and the Cedar
Rapids and Iowa City Railway Company have non-contributory retirement plans
covering employees who have at least one year of accredited service. Directors
who are not officers do not participate in the plans. Maximum annual benefits
payable at age 65 to participants who retire at age 65, calculated on the basis
of straight life annuity, are illustrated in the following table:
PENSION PLAN TABLE
AVERAGE OF HIGHEST ANNUAL ESTIMATED MAXIMUM ANNUAL RETIREMENT BENEFITS
SALARY (RENUMERATION) BASED ON SERVICE YEARS
FOR 3 CONSECUTIVE -----------------------------------------------------
YEARS OF THE LAST 10 15 20 25 30 35
- ------------------------- -------- -------- -------- -------- --------
$125,000 $ 26,400 $ 35,200 $ 44,000 $ 52,800 $ 61,600
150,000 32,000 42,700 53,300 64,000 74,700
175,000 37,650 50,200 62,750 75,300 87,850
200,000 43,300 57,700 72,125 86,550 100,975
225,000 48,900 65,200 81,500 97,800 114,100
250,000 54,525 72,700 90,875 109,050 115,641
300,000 65,775 87,700 109,625 115,641 115,641
400,000 88,350 115,641 115,641 115,641 115,641
450,000 99,600 115,641 115,641 115,641 115,641
500,000 110,850 115,641 115,641 115,641 115,641
- --------
For 1993, $115,641 is the maximum benefits allowable under the retirement
plans prescribed by Section 415 of the Internal Revenue Code. The 1994
maximum is $118,800.
With respect to the officers named in the Summary Compensation Table, the
remuneration for retirement plan purposes would be substantially the same as
that shown as "Salary" excluding amount paid as director fees. As of December
31, 1993, the officers had accredited years of service for the retirement plan
as follows: Lee Liu, 36 years; Blake O. Fisher, Jr., 3 years; Larry D. Root, 23
years; and Robert J. Kucharski, 19 years.
IES Industries has a non-qualified Supplemental Retirement Plan for eligible
officers of IES Industries and IES Utilities. The plan provides for payment of
supplemental retirement benefits equal to 69 percent of the officer's base
salary in effect at the date of retirement, reduced by benefits receivable
under the qualified retirement plan, for a period not to exceed 18 years
following the date of retirement. In the event of the death of the officer
following retirement, similar payments reduced by the joint and survivor
annuity of the qualified retirement plan will be made to his designated
beneficiary (surviving spouse or dependent children), if any, for a period not
to exceed 12 years from the date of the officer's retirement. Thus, if an
officer died 12 years after retirement, no payment to the beneficiary would be
made. Death benefits are provided on the same basis to a designated beneficiary
for a period not to exceed 12 years from the date of death should the officer
die prior to retirement. The Supplemental Retirement Plan further provides that
if, at the time of the death of an officer, the officer is entitled to receive,
is receiving, or has received supplemental retirement benefits by virtue of
having taken retirement, a death benefit shall be paid to the officer's
designated beneficiary or to the officer's estate in an amount equal to 100% of
the officer's annual salary in effect at the date of retirement. Under certain
circumstances, an officer who takes early retirement will be entitled to
reduced benefits under the Supplemental Retirement Plan. The Supplemental
Retirement Plan also provides for benefits in the event an officer becomes
disabled under the terms of the qualified retirement plan. IES Industries has
purchased life insurance on the participants sufficient in amount to finance
actuarially all of its future liabilities under the Supplemental Retirement
Plan and IES Industries is the owner and beneficiary of all such life
insurance. The Supplemental Retirement Plan has been designed so that if the
assumptions made as to mortality, experience, policy dividends, tax credits and
other factors are realized, IES Industries will fully recover all of its
premium payments over the life of the Supplemental Retirement Plan.
11
Messrs. Liu, Root and Kucharski have elected to continue under supplemental
retirement agreements previously provided to them by the Company with
provisions for payment of benefits equal to 75 percent of the officer's base
salary, for a period not to exceed 15 years following the date of retirement,
and payment to the surviving spouse or dependent children for a period not to
exceed 10 years following the date of retirement. Mr. Males has elected to
continue under a supplemental retirement agreement previously provided to him
by IS Utilities with provisions for payment of benefits equal to 65 percent of
base salary for life, subject to consumer price index adjustment, and payments
to survivors after death of the officer for a period not to exceed 15 years
following the date of retirement.
Executive Guaranty Plan: IES Industries Board has approved an Executive
Guaranty Plan (the "Guaranty Plan") for eligible officers of IES Industries and
its principal subsidiary, IES Utilities. The purpose of the Guaranty Plan is to
promote flexibility in financial planning of participating officers and to
provide an inducement to new officers in order to retain and attract the best
possible executive management team. Under the Guaranty Plan, IES Industries
guarantees loans within defined limits, based on salary level and years of
service made to participating officers for various specified purposes,
including real estate acquisitions and purchases of IES Industries Common
Stock. As of December 31, 1993, guarantees of $89,996, $57,967, $50,000, and
$58,000 were outstanding for Messrs. Liu, Root, Fisher and Kucharski,
respectively.
Executive Change of Control Agreements: In 1991, IE Industries entered into
certain agreements with eleven of its executive officers, including Messrs.
Liu, Root, Fisher, who were also directors of IE Industries, and Mr. Kucharski.
IE Industries' merger with Iowa Southern constituted a change of control of IE
Industries for purposes of these agreements. Accordingly, if an executive
officer is terminated within a three-year period following the consummation of
the merger, July 1, 1991, the surviving corporation (IES Industries) will be
required to continue the executive officer's salary and provide certain other
benefits as described below. These agreements provide for salary continuation
and certain other benefits in the event the executive is terminated within a
three-year period following a "change of control" of IES Industries. Change of
Control for these agreements is as described in IES Industries Restated
Articles of Incorporation and, in addition, will be deemed to have occurred, if
following a merger, consolidation or reorganization, the owners of the capital
stock entitled to vote in the election of directors of IES Industries prior to
the transactions own less than 75% of the resulting entity's voting stock or
during any period of two consecutive years, individuals who, at the beginning
of such period constitute the Board of Directors of the parent company, cease
for any reason to constitute at least a majority of the Board of Directors of
any successor organization. IES Industries, following termination of any
officer except for just cause, death, retirement, disability or voluntary
resignation (other than resignation under certain circumstances), agrees to
continue the executive's salary at a level equal to his salary just prior to
termination for a period up to but not to exceed thirty-six months.
Additionally, certain benefits, including life insurance and health and medical
insurance, as well as incentive awards, equal to that awarded executives of the
same or comparable designation will be payable for a like period. In the event
the executive dies during the period of these payments, salary and benefits as
described above shall be payable during the remainder of the term to the
executive's surviving spouse or his estate. The executive will also become
immediately vested and entitled to receive awards of Restricted Stock or other
rights granted to the executive under the IES Industries Long Term Incentive
Plan. With respect to those executives who were 56 or older at the time of the
change of control and with respect to Mr. Root, the Supplemental Retirement
Plan of IES Industries is specifically amended to provide that the executive is
immediately vested and entitled to receive, at normal retirement age, benefits
provided under the Supplemental Retirement Plan, including benefits payable to
the spouse or dependent child in the event of his death during the period to
which he was otherwise entitled to such benefits.
IES Industries believes that these agreements enable IES Industries to employ
key executives who can approach major business decisions objectively and
without concern for their personal situations. Each agreement is effective for
three years following execution and shall be deemed thereafter to be extended
automatically for one-year periods unless the IES Industries Board terminates
such agreement.
12
IS UTILITIES PLANS
IS Utilities Pension Plan: IS Utilities provided a contributory pension plan
which covered substantially all non-collective bargaining employees who have
completed the minimum eligibility requirements of 1,000 hours in a year. The
plan was amended effective January 1, 1991 to be non-contributory. As of
December 31, 1993, Mr. Males has two years of accredited service under the
Pension Plan. Participants contributed one percent of annual compensation to
the Pension Plan through 1990.
The following table shows the estimated aggregate annual benefits payable
under the IS Utilities Pension Plan. Maximum annual benefits payable at age 65
to participants who retire at age 65, calculated on the basis of straight life
annuity, are illustrated in the following table:
PENSION PLAN TABLE
AVERAGE OF HIGHEST ANNUAL ESTIMATED MAXIMUM ANNUAL RETIREMENT BENEFITS
SALARY (RENUMERATION) BASED ON SERVICE YEARS
FOR 3 CONSECUTIVE --------------------------------------------
YEARS OF THE LAST 10 15 20 25 30 35
- ------------------------- -------- -------- -------- -------- --------
$125,000 $ 23,440 $ 31,250 $ 39,060 $ 46,880 $ 54,690
150,000 28,125 37,500 46,875 56,250 65,625
175,000 32,810 43,750 54,680 65,625 76,560
200,000 37,500 50,000 62,500 75,000 87,500
225,000 42,190 56,250 70,310 84,375 98,440
250,000 46,875 62,500 78,125 93,750 109,375
300,000 56,250 75,000 93,750 112,500 115,641
400,000 75,000 100,000 115,641 115,641 115,641
450,000 84,375 112,500 115,641 115,641 115,641
500,000 93,750 115,641 115,641 115,641 115,641
- --------
For 1993, $115,641 is the maximum benefits allowable under the retirement
plans prescribed by Section 415 of the Internal Revenue Code. The 1994
maximum is $118,800.
IS Utilities Senior Executive Severance Agreements: Individual agreements
providing for severance pay were entered into by IS Utilities and four senior
executives, including Mr. Males. The benefits to be provided are generally as
follows: a lump sum payment equal to the executive's salary for a payment
period equal to the greater of 24 months, or one month multiplied by years of
service with a limit of 30 months. Mr. Males's agreement provides for the
greater of 24 months or the period between the date his employment terminates
and January 28, 1996. In addition, each covered senior executive will be
entitled to continuation of life and health insurance coverage during the
payment period and reimbursement of certain other expenses.
For the other three senior executives, the severance payments will be made
only to those senior executives employed by IS Utilities on July 1, 1991 and
whose employment is involuntarily terminated (except for cause) by IS Utilities
within the 36-consecutive month period following such change in control
(including as a result of the merger). With respect to each senior executive,
benefits are based upon the annual rate of the senior executive's base
compensation immediately prior to his date of termination. Each of the
individual agreements provides that in no event shall the benefits determined
thereunder be based on a period that extends beyond the senior executive's
normal retirement date (as such term is defined under the IS Utilities Pension
Plan).
An individual will be deemed to be involuntarily terminated for reasons other
than cause if he resigns after (A) a significant change in the nature or scope
of the individual's authorities or duties from those commensurate with his
position and authority immediately prior to the change in control; (B) a
material adverse change in the individual's compensation or any of his
benefits, in the aggregate, compared to his compensation and benefits, in the
aggregate, immediately prior to the change in control; (C) the relocation of
13
his office to a location more than 50 miles from the location of his office
immediately prior to the change in control; or (D) the failure by IS Utilities
to obtain a satisfactory agreement from any successor to assume and agree to
perform the severance benefit agreement. In addition, an individual will be
deemed to be involuntarily terminated for reasons other than cause if he
resigns after a reasonable determination by him that, as a result of a change
in control and in circumstances thereafter, he is unable to exercise the
authorities, powers, functions or duties associated with his position and
contemplated by the agreement.
EMPLOYMENT AGREEMENTS
IES Industries and IES Utilities Inc. entered into an employment agreement
(the "Liu Agreement") with Lee Liu, which became effective July 1, 1991. The
Liu Agreement provides that Mr. Liu shall be employed as President, Chief
Executive Officer and Chairman of the Executive Committee of IES Industries and
as Chief Executive Officer and Chairman of IES Utilities from July 1, 1991
until April 1995, which period shall be automatically extended unless at least
six months prior to any expiration thereof either IES Industries or IES
Utilities or Mr. Liu shall give notice that they do not wish to extend such
time (the "Period of Employment"). The Liu Agreement also provides that he
shall become Chairman of the Board at such time as C.R.S. Anderson ceases to
serve in such position. This occurred on July 1, 1993. The Liu Agreement
provides that Mr. Liu shall provide consulting services to the Company for
three years ( the "Period of Consulting") after the conclusion of the Period of
Employment.
During the Period of Employment, Mr. Liu will be paid a base annual salary of
at least $275,000, and will be entitled to participate in all incentive
compensation plans applicable to the positions he holds and all retirement and
employee welfare benefit plans. During the Period of Employment, Mr. Liu's
incentive compensation shall be at least equal to that paid to the Chairman of
the Board of IES Industries.
If Mr. Liu's employment is terminated without his consent by IES Industries
or IES Utilities during the Period of Employment for other than an unremedied
material breach or just cause or by his resignation if such resignation occurs
after IES Industries fails to cause him to be employed in or elected to the
positions specified in the Liu Agreement or after a material diminution in his
duties, responsibilities or status, then Mr. Liu shall be entitled to an amount
equal to the sum of his base annual salary as of the date of termination plus
his average incentive compensation during the three years immediately preceding
the date of termination multiplied by the number of years (and fractions
thereof) then remaining in the Period of Employment. Mr. Liu also would be
entitled to continued insurance coverages and an amount equal to the then
present value of the actuarially determined difference between the aggregate
retirement benefits actually to be received by him as of the date of
termination and those that would have been received by him had he continued to
be employed at the base salary in effect at termination through the expiration
of the Period of Employment. All his shares of IES Restricted Stock would also
vest at that time.
During the Period of Consulting, Mr. Liu will make himself available for up
to 30 days per year, report to the Chief Executive Officer of IES Industries
and will earn an annual consulting fee equal to 13.33% of his highest annual
base salary during his Period of Employment. If Mr. Liu's consulting services
are terminated for reasons other than material breach or just cause, he will be
entitled to a lump sum payment equal to the amount of the consulting fee he
would otherwise have earned during the Period of Consulting.
CERTAIN SEC FILINGS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than 10% of the registered
class of the Company's equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission ("SEC"). Such
officers, directors and Shareholders are required by SEC regulations to furnish
the Company with copies of all such reports that they file.
Based solely on a review of copies of reports filed with the SEC with respect
to 1993 and of written representations by certain officers and directors, all
persons subject to the reporting requirements of Section 16(a) filed the
required reports on a timely basis, except for inadvertent late filings by Rene
H. Males (one report covering one transaction) and David Q. Reed (one report
covering one transaction).
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