SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
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OHIO POWER COMPANY
(Name of Registrant As Specified in Charter)
John M. Adams, Jr.
(Name of Person(s) Filing the Information Statement)
Payment of Filing Fee (Check the appropriate box):
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[ ] Fee computed on table below per Exchange Act Rules 14c-5(g)
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OHIO POWER COMPANY
301 Cleveland Avenue, S.W.
Canton, Ohio 44702
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF
OHIO POWER COMPANY:
The annual meeting of the shareholders of Ohio Power Company
will be held on Tuesday, May 2, 1995, at 2:30 p.m. at the
principal office of the Company, 301 Cleveland Avenue, S.W.,
Canton, Ohio, for the following purposes:
1. To elect seven directors of the Company to hold office
for one year or until their successors are elected and
qualified; and
2. To transact such other business (none known as of the
date of this notice) as may legally come before the
meeting or any adjournment thereof.
Only holders of record of Common Stock and Cumulative
Preferred Stock, par value $100 per share, at the close of
business on March 3, 1995 are entitled to notice of and to vote
at the annual meeting.
THERE WILL BE NO SOLICITATION OF PROXIES BY THE BOARD OF
DIRECTORS OF THE COMPANY.
JOHN F. DI LORENZO, JR.,
Secretary
March 24, 1995
INFORMATION STATEMENT
This information statement is being furnished in connection
with the annual meeting of shareholders of Ohio Power Company
(the "Company"), to be held on Tuesday, May 2, 1995 at 2:30 p.m.
at the principal office of the Company, 301 Cleveland Avenue,
S.W., Canton, Ohio.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT
TO SEND US A PROXY.
Voting at Meeting
On March 3, 1995, the date for determining shareholders
entitled to notice of and to vote at the meeting, there were
1,712,403 shares of Cumulative Preferred Stock, par value $100
per share, and 27,952,473 shares of Common Stock outstanding.
Each holder of Cumulative Preferred Stock, par value $100
per share, and each holder of Common Stock has the right to one
vote for each share standing in such holder's name on the books
of the Company at the close of business on March 3, 1995 for the
election of directors and on any other business which may come
before the meeting. Holders of Cumulative Preferred Stock, $25
non-voting of the par value $25 per share, and Cumulative
Preferred Stock, $100 non-voting of the par value of $100 per
share, are not entitled to notice of, or to vote at, the meeting.
If notice in writing is given by any shareholder to the
President, any Vice President, or the Secretary of the Company,
not less than 48 hours before the time fixed for the meeting,
that such shareholder desires that the voting at the meeting for
directors shall be cumulative, and if an announcement of the
giving of such notice is made upon the convening of the meeting
by the Chairman or Secretary or by or on behalf of the
shareholder giving such notice, each shareholder will have the
right to cumulate such voting power as he possesses and to give
one candidate as many votes as the number of directors to be
elected, multiplied by the number of his votes, or to distribute
his votes on the same principle among two or more candidates, as
he sees fit.
Principal Shareholders
American Electric Power Company, Inc. ("AEP"), 1 Riverside
Plaza, Columbus, Ohio 43215, a registered public utility holding
company under the Public Utility Holding Company Act of 1935,
owns all of the Company's outstanding Common Stock. The Common
Stock represents approximately 94% of the combined voting power
of the capital stock of the Company entitled to vote at the
meeting. Aetna Life and Casualty Company, 151 Farmington Avenue,
Hartford Connecticut 06156, has reported that it is the
beneficial owner of 40,800 shares of the Company's Cumulative
Preferred Stock, par value $100 per share, 7.60% Series, which
constitutes 11.6% of such Series and 2.4% of the voting power of
all Cumulative Preferred Stock and The Colonial Group, Inc.,
Colonial Management Associates, Inc. and John A. McNeice, Jr.,
One Financial Center, Boston, Massachusetts 02111, have reported
that they jointly beneficially own 30,000 shares of the Company's
Cumulative Preferred Stock, par value $100 per share, 7-6/10%
Series, which constitutes 8.6% of such Series and 1.9% of the
voting power of all Cumulative Preferred Stock. Other than such
ownership, the management of the Company does not know of any
person (including any "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) who beneficially
owns more than 5% of the outstanding shares of Cumulative
Preferred Stock, par value $100 per share.
AEP also owns, directly or indirectly, all of the common
stock of the other companies which constitute the American
Electric Power System (the "AEP System"). The AEP System is an
integrated electric utility system and, as a result, the member
companies of the AEP System, including the Company, have
contractual, financial and other business relationships with the
other member companies, such as participation in the AEP System
savings and retirement plans and tax returns; sales of
electricity; sales, transportation and handling of fuel; sales or
rentals of property; and interest or dividend payments on the
securities held by the companies' respective parents. American
Electric Power Service Corporation (the "Service Corporation"), a
wholly-owned subsidiary of AEP, renders management, advisory,
engineering and other similar services at cost to the principal
operating companies of the AEP System, including the Company.
ELECTION OF DIRECTORS
Seven directors are to be elected to hold office for one
year or until their successors are elected and qualify. The
Company has been informed that AEP will nominate, and cast the
votes of all of the outstanding shares of Common Stock for, the
persons named below. In the event that any of such persons
should unexpectedly be unable to stand for election, AEP has
informed the Company that it will cast its votes for a substitute
chosen by the Board of Directors of the Company and approved by
AEP.
The following brief biographies of the nominees include
their ages as of March 15, 1995, an account of their business
experience and the names of certain publicly-held corporations of
which they are also directors.
Name Age Business Experience
PETER J. DEMARIA 60 Vice president and treasurer
of the Company, treasurer of
AEP and executive vice
president-administration and
chief accounting officer of
the Service Corporation.
Joined the Service
Corporation in 1959, became
an assistant treasurer in
1969, assistant vice
president in 1971, vice
president in 1974, treasurer
and senior vice president in
1978 and assumed his present
positions with AEP in 1978
and the Service Corporation
in 1984. Has been a
director and treasurer of
the Company since 1978 and a
vice president since 1991.
A director of AEP and
certain other AEP System
companies.
E. LINN DRAPER, JR. 53 Chairman of the board and
chief executive officer of
the Company, chairman of the
board, president and chief
executive officer of AEP and
the Service Corporation.
Joined the Service
Corporation in 1992 as
president and chief
operating officer and
assumed his present position
in 1993. President of AEP
and vice president and
director of the Company from
1992 until assuming his
present positions in 1993.
From 1987 until 1992 was
chairman of the board,
president and chief
executive officer of Gulf
States Utilities Company, an
unaffiliated electric
utility. A director of the
Company, AEP, certain other
AEP System companies and
VECTRA Technologies, Inc.
CARL A. ERIKSON 44 President and chief
operating officer of the
Company. Joined the Service
Corporation in 1979, was
assistant to the executive
vice president-operations
from 1989 until 1990 and
vice president of the
Company from 1990 until 1992
was vice president of the
Service Corporation and
executive assistant to the
President from 1992 to 1994.
Became president and chief
operating officer and a
director of the Company and
Columbus Southern Power
Company ("CSPCo"), another
subsidiary of AEP, in 1993.
HENRY W. FAYNE 48 Senior vice president and
controller of the Service
Corporation. Joined the
Service Corporation in 1974,
became assistant controller
in 1978, controller in 1984,
vice president and
controller in 1988 and
assumed his present position
in 1993. A director of
certain other AEP System
companies.
WILLIAM J. LHOTA 55 Vice president of the
Company and executive vice
president of the Service
Corporation. Joined the
Company in 1965, was
president of CSPCo from 1987
until 1989 when he became
executive vice president-
operations of the Service
Corporation. He assumed his
present position with the
Service Corporation in 1993.
Has been a vice president
and director of the Company
since 1989. A director of
certain other AEP System
companies and Huntington
Bancshares Incorporated.
G. P. MALONEY 62 Vice president of the
Company, vice president and
secretary of AEP and
executive vice president-
chief financial officer of
the Service Corporation.
Joined the Service
Corporation in 1955, became
its controller in 1965, vice
president-finance in 1970,
senior vice president-
finance in 1974 and assumed
his present position with
the Service Corporation in
1991. Became vice president
of the Company in 1970, vice
president of AEP in 1974 and
secretary of AEP in 1994.
Has been a director of the
Company since 1973. A
director of AEP and certain
other AEP System companies.
JAMES J. MARKOWSKY 50 Executive vice president-
engineering and construction
of the Service Corporation.
Joined the Service
Corporation in 1971 as a
senior engineer, became
assistant vice president-
mechanical engineering in
1984, senior vice president
and chief engineer in 1988
and assumed his present
position in 1993. Has been
a director of the Company
since 1989. A director of
certain other AEP System
companies.
Messrs. DeMaria, Draper, Lhota, Maloney and Markowsky are
directors of Appalachian Power Company ("Appalachian"), CSPCo,
Indiana Michigan Power Company ("I&M") and Kentucky Power Company
("Kentucky"), all of which are subsidiaries of AEP and have one
or more classes of publicly held preferred stock or debt
securities. Mr. Fayne is a director of Appalachian and CSPCo.
Messrs. DeMaria, Draper, Fayne, Lhota, Maloney and Markowsky are
also directors of AEP Generating Company, another subsidiary of
AEP.
OTHER BUSINESS
Management does not intend to bring any matters before the
meeting other than the election of directors and does not know of
any matters that will be brought before the meeting by others.
EXECUTIVE COMPENSATION
Certain executive officers of the Company are employees of
the Service Corporation. The salaries of these executive
officers are paid by the Service Corporation and a portion of
their salaries has been allocated and charged to the Company.
The following table shows for 1994, 1993 and 1992 the
compensation earned from all AEP System companies by the chief
executive officer and the four other most highly compensated
executive officers (as defined by regulations of the Securities
and Exchange Commission) of the Company at December 31, 1994.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Payouts All Other
Salary Bonus Compensation
Name and Principal Position Year ($) ($)(1) LTIP Payouts($)(2) ($)(3)
E. Linn Draper, Jr. - 1994 620,000 209,436 137,362 29,385
Chairman of the board and 1993 538,333 148,742 18,180
chief executive officer of 1992 395,833 8,730 63,700
the Company; chairman of the
board, president and chief
executive officer of AEP and
the Service Corporation;
chairman of the board and
chief executive officer of
other AEP System companies
Peter J. DeMaria - Vice 1994 305,000 103,029 59,032 18,750
president, treasurer and 1993 280,000 77,364 17,811
director of the Company; 1992 273,000 6,021 15,576
treasurer and director of
AEP; executive vice
president-administration and
chief accounting officer and
director of the Service
Corporation; vice president,
treasurer and director of
other AEP System companies
G. P. Maloney - Vice 1994 300,000 101,340 58,094 19,745
president and director of the 1993 269,000 74,325 18,000
Company; vice president, 1992 261,000 5,757 17,036
secretary and director of
AEP; executive vice
president-chief financial
officer and director of the
Service Corporation; vice
president and director of
other AEP System companies
William J. Lhota - Vice 1994 280,000 94,584 54,409 19,185
president and director of the 1993 249,000 68,799 17,160
Company; executive vice 1992 230,000 5,073 15,116
president and director of the
Service Corporation; vice
president and director of
other AEP System companies
James J. Markowsky - Director 1994 267,000 90,193 51,930 14,755
of the Company; executive 1993 247,000 65,259 11,165
vice president-engineering 1992 219,000 4,497 7,020
and construction and director
of the Service Corporation;
vice president and director
of other AEP System companies
___________
(1) Reflects payments under the Management Incentive
Compensation Plan ("MICP"). Amounts for 1994 are estimates
but should not change significantly. For 1994 and 1993,
these amounts include both cash paid and a portion deferred
in the form of restricted stock units. These units are paid
out in cash after three years based on the price of AEP
Common Stock at that time. Dividend equivalents are paid
during the three-year period. At December 31, 1994, the
deferred amounts (included in the above table) and accrued
dividends for Dr. Draper, Messrs. DeMaria, Maloney and Lhota
and Dr. Markowsky were equivalent to 2,204, 1,109, 1,080,
1,004 and 956 units having values of $72,456, $36,458,
$35,505, $33,006 and $31,428, respectively, based upon a
$327/8 per share closing price of AEP's Common Stock as
reported on the New York Stock Exchange. For 1992, MICP
payments were made entirely in cash.
(2) Reflects payments under the Performance Share Incentive Plan
(which became effective January 1, 1994) for the one-year
transition performance period ending December 31, 1994.
Dr. Draper, Messrs. DeMaria, Maloney and Lhota and
Dr. Markowsky received 2,050, 881, 867, 812 and 775 shares
of AEP Common Stock, respectively, representing one-half of
their payments. See the discussion below for additional
information.
(3) For 1994, includes (i) employer matching contributions under
the AEP System Employees Savings Plan: $4,500 for each of
the named executive officers; (ii) employer matching
contributions under the AEP System Supplemental Savings Plan
(which became effective January 1, 1994), a non-qualified
plan designed to supplement the AEP Savings Plan:
Dr. Draper, $14,100; Mr. DeMaria, $4,650; Mr. Maloney,
$4,500; Mr. Lhota, $3,900; and Dr. Markowsky, $3,510; and
(iii) subsidiary companies director fees: Dr. Draper,
$10,785; Mr. DeMaria, $9,600; Mr. Maloney, $10,745;
Mr. Lhota, $10,785; and Dr. Markowsky, $6,745.
Long-Term Incentive Plans - Awards In 1994
Each of the awards set forth below constitutes a grant of
performance share units, which represent units equivalent to
shares of AEP Common Stock, pursuant to AEP's Performance Share
Incentive Plan. Since it is not possible to predict future
dividends and the price of AEP Common Stock, credits of
performance share units in amounts equal to the dividends that
would have been paid if the performance share units were granted
in the form of shares of AEP Common Stock are not included in the
table.
The ability to earn performance share units is tied to
achieving specified levels of total shareowner return ("TSR")
relative to the S&P Electric Utility Index. Notwithstanding
AEP's TSR ranking, no performance share units are earned unless
AEP shareowners realize a positive TSR over the relevant three-
year performance period. The Human Resources Committee may, at
its discretion, reduce the number of performance share units
otherwise earned. In accordance with the performance goals
established for the periods set forth below, the threshold,
target and maximum awards are equal to 25%, 100% and 200%,
respectively, of the performance share units held. No payment
will be made for performance below the threshold.
Payment of awards earned for the one-year transition
performance period ending December 31, 1994 were made 50% in cash
and 50% in AEP Common Stock. For subsequent performance periods,
payments of earned awards are deferred in the form of restricted
stock units (equivalent to shares of AEP Common Stock) until the
officer has met the equivalent stock ownership target discussed
in the Human Resources Committee Report. Once officers meet and
maintain their respective targets, they may elect either to
continue to defer or to receive further earned awards in cash
and/or AEP Common Stock.
Estimated Future Payouts of
Performance Share Units Under
Non-Stock Price-Based Plan
Performance
Number of Period Until
Performance Maturation Threshold Target Maximum
Name Share Units or Payout (#) (#) (#)
E. L. Draper, Jr. 2,235 1994 (1) (1) (1)
4,470 1994-1995 1,118 4,470 8,940
6,705 1994-1996 1,676 6,705 13,410
P. J. DeMaria 960 1994 (1) (1) (1)
1,920 1994-1995 480 1,920 3,840
2,885 1994-1996 721 2,885 5,770
G. P. Maloney 945 1994 (1) (1) (1)
1,890 1994-1995 473 1,890 3,780
2,840 1994-1996 710 2,840 5,680
W. J. Lhota 885 1994 (1) (1) (1)
1,770 1994-1995 443 1,770 3,540
2,650 1994-1996 663 2,650 5,300
J. J. Markowsky 845 1994 (1) (1) (1)
1,690 1994-1995 423 1,690 3,380
2,525 1994-1996 631 2,525 5,050
___________
(1) For the 1994 transition performance period, the actual
number of performance share units earned was: Dr. Draper
4,100; Mr. DeMaria 1,761; Mr. Maloney 1,734; Mr. Lhota
1,624; and Dr. Markowsky 1,550 (see the Summary Compensation
Table for the cash value of these payouts).
Retirement Benefits
The American Electric Power System Retirement Plan provides
pensions for all employees of AEP System companies (except for
employees covered by certain collective bargaining agreements),
including the executive officers of the Company. The Retirement
Plan is a noncontributory defined benefit plan.
The following table shows the approximate annual annuities
under the Retirement Plan that would be payable to employees in
certain higher salary classifications, assuming retirement at age
65 after various periods of service. The amounts shown in the
table are the straight life annuities payable under the
Retirement Plan without reduction for the joint and survivor
annuity. Retirement benefits listed in the table are not subject
to any deduction for Social Security or other offset amounts.
The retirement annuity is reduced 3% per year in the case of
retirement between ages 60 and 62 and further reduced 6% per year
in the case of retirement between ages 55 and 60. If an employee
retires after age 62, there is no reduction in the retirement
annuity.
PENSION PLAN TABLE
Years of Accredited Service
Highest Average
Annual Earnings 15 20 25 30 35 40
$250,000 $ 58,065 $ 77,420 $ 96,775 $116,130 $135,485 $152,110
350,000 82,065 109,420 136,775 164,130 191,485 214,760
450,000 106,065 141,720 176,775 212,130 247,485 277,410
600,000 142,065 189,420 236,775 284,130 331,485 371,385
750,000 178,065 237,420 296,775 356,130 415,485 465,360
Compensation upon which retirement benefits are based
consists of the average of the 36 consecutive months of the
employee's highest salary, as listed in the Summary Compensation
Table, out of the employee's most recent 10 years of service. As
of December 31, 1994, the number of full years of service
credited under the Retirement Plan to each of the executive
officers of the Company named in the Summary Compensation Table
were as follows: Dr. Draper, two years; Mr. DeMaria, 35 years;
Mr. Maloney, 39 years; Mr. Lhota, 30 years; and Dr. Markowsky, 23
years.
Dr. Draper's employment agreement described below provides
him with a supplemental retirement annuity that credits him with
24 years of service in addition to his years of service credited
under the Retirement Plan less his actual pension entitlement
under the Retirement Plan and any pension entitlements from prior
employers.
AEP has determined to pay supplemental retirement benefits
to 23 AEP System employees (including Messrs. DeMaria, Maloney
and Lhota and Dr. Markowsky) whose pensions may be adversely
affected by amendments to the Retirement Plan made as a result of
the Tax Reform Act of 1986. Such payments, if any, will be equal
to any reduction occurring because of such amendments. Assuming
retirement in 1995 of the executive officers named in the Summary
Compensation Table, none would be eligible to receive
supplemental benefits.
AEP made available a voluntary deferred-compensation program
in 1982 and 1986, which permitted certain executive employees of
AEP System companies to defer receipt of a portion of their
salaries. Under this program, an executive was able to defer up
to 10% or 15% annually (depending on the terms of the program
offered), over a four-year period, of his or her salary, and
receive supplemental retirement or survivor benefit payments over
a 15-year period. The amount of supplemental retirement payments
received is dependent upon the amount deferred, age at the time
the deferral election was made, and number of years until the
executive retires. The following table sets forth, for the
executive officers named in the Summary Compensation Table, the
amounts of annual deferrals and, assuming retirement at age 65,
annual supplemental retirement payments under the 1982 and 1986
programs.
1982 Program 1986 Program
Annual Amount of Annual Amount of
Annual Supplemental Annual Supplemental
Amount Retirement Amount Retirement
Deferred Payment Deferred Payment
Name (4-Year Period) (15-Year Period) (4-Year Period) (15-Year Period)
P. J. 10,000 52,000 $13,000 $53,300
DeMaria . .
G. P. 15,000 67,500 16,000 56,400
Maloney . .
EMPLOYMENT AGREEMENT
Dr. Draper has a contract with AEP and the Service
Corporation which provides for his employment for an initial term
from no later than March 15, 1992 until March 15, 1997. Dr.
Draper commenced his employment with AEP and the Service
Corporation on March 1, 1992. AEP or the Service Corporation may
terminate the contract at any time and, if this is done for
reasons other than cause and other than as a result of Dr.
Draper's death or permanent disability, the Service Corporation
must pay Dr. Draper's then base salary through March 15, 1997,
less any amounts received by Dr. Draper from other employment.
AEP BOARD HUMAN RESOURCES COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Human Resources Committee of the AEP Board of Directors
regularly reviews executive compensation policies and practices
and evaluates the performance of management in the context of
AEP's performance. The Committee is composed entirely of
independent outside directors.
The Human Resources Committee recognizes that the executive
officers are charged with managing a $15 billion, multi-state
electric utility during challenging times and with addressing
many difficult and complex issues. The Committee believes that
compensation must be competitive in order to attract, retain,
reward and motivate the highly qualified individuals needed to
manage AEP to meet corporate objectives and that it should be
closely tied to performance in order to provide incentives that
will maximize shareowner value.
Stock Ownership Guidelines. The AEP Board of Directors, upon
the Committee's recommendation, underscored the importance of
linking executive and shareowner interests by adopting in
December 1994 stock ownership guidelines for senior management
participants in the Performance Share Incentive Plan described
below. Under the guidelines, the target ownership of AEP Common
Stock is directly related to the officer's corporate position
with the greatest ownership target for the chief executive
officer. The target for the CEO is 45,000 shares and ranges down
to 6,000 shares for vice presidents. Since these levels are
equivalent to approximately one or more times the officer's
annual salary, each officer is expected to achieve the ownership
target within a period of five years commencing on January 1,
1995. Common Stock equivalents earned through the Management
Incentive Compensation Plan, also described below, and the
Performance Share Incentive Plan are included in determining
compliance with the ownership targets.
Pay Mix and Measurement
Base Salary. When reviewing salaries, the Committee considers
external pay practices used by other electric utilities and by
industry in general. In addition, the Committee considers the
respective positions held by the executive officers, their levels
of responsibility, performance and experience, and the
relationship of their salaries to the salaries of other AEP
managers and employees.
For compensation comparison purposes, the Human Resources
Committee uses the electric utility companies in the S&P Electric
Utility Index. In recognition of AEP's relatively large size and
operational complexity, executive officer salary levels are
targeted to the third quartile (between the 50th and 75th
percentiles) of the range of compensation paid by the other
electric utilities in this compensation peer group. Base salary
levels in 1994 for the five most highly compensated executive
officers of AEP named in the Summary Compensation Table were at
about the median of the range of the compensation peer group. In
establishing salary levels against that range, the Human
Resources Committee considers the competitiveness of AEP's entire
compensation package.
Salaries are reviewed and adjusted annually to reflect
individual and corporate performance and consistency with
compensation changes within AEP and the compensation peer group
of other electric utilities.
The Committee meets without the presence of Dr. Draper,
chairman, president and chief executive officer of AEP, to
evaluate his performance and compensation and reports on that
evaluation to the outside directors of the AEP Board. These
directors then act on the Committee's recommendation.
The Committee has also taken into account management's
ability to address the potential impact of increased competition
in the electric utility industry. It is the Committee's opinion
that in this ever-changing environment, Dr. Draper and his senior
management team are developing and implementing strategies to
position AEP for the future. The benefits of these efforts to
the Company cannot, of course, be quantifiably measured but the
Committee believes these efforts are vital to the Company's
continuing success in the 1990s.
Annual Incentive. A variable, performance-based portion of the
executive officers' total compensation is paid through the
Management Incentive Compensation Plan ("MICP"), which is
included in the "Bonus" column in the Summary Compensation Table.
The MICP was established (effective January 1, 1990) to motivate
and reward superior management performance in serving customer
needs and creating shareholder value. Each participant is
assigned an annual target award expressed as a percentage of
annual salary. The target award is 30% for the executive
officers named in the compensation table. Actual awards can vary
from 0-150% of the target award based on performance.
The MICP awards for the executive officers named in the
compensation table are based entirely on preestablished AEP
corporate performance criteria specified in the MICP, which
include return on stockholder equity (weighted at 25%) and total
investor return reflecting stock price and payment of dividends
(weighted at 25%), both measured relative to the performance of
the utilities in the S&P Electric Utility Index, and the extent
to which the average price of power sold to retail customers
(weighted at 50%) is lower as compared with other utilities in
the states which AEP serves. For 1994, the AEP corporate
performance target was achieved to the extent of 112.6%. This
percentage is an estimate but should not change significantly.
To more closely align the financial interests of the
executive officers with AEP's shareowners, 20% of the MICP awards
have been generally deferred for three years and treated as if
they are invested in AEP Common Stock, although no stock is
actually purchased. Dividend equivalents are credited during the
three-year period.
Long-Term Incentive. As a result of the Committee's review of
the competitiveness of AEP's total compensation program for
executive and other senior officers, the Committee recommended to
the Board of Directors that AEP adopt the Performance Share
Incentive Plan (the "Plan") to provide longer-term,
performance-driven, equity incentive award opportunities directly
related to shareowner value. The AEP Board of Directors approved
the Plan in December 1993 and, at the 1994 annual meeting, the
AEP shareowners also approved it.
The Plan grants performance share units annually which are
paid based on AEP's subsequent three-year total shareholder
returns measured relative to the S&P peer utilities. In 1994,
for each of the three performance periods, the Committee granted
Dr. Draper and the other executive officers named in the Summary
Compensation Table performance share units equivalent to
approximately 40% and 35%, respectively, of their base salaries
(the two shorter transition period awards were prorated to grant
one-third and two-thirds of a full-cycle award). The number of
performance share units granted has been determined based on an
evaluation of long-term incentive opportunities provided by the
S&P peer companies, again targeting the third quartile of
competitive practice. However, the awards which will ultimately
be paid to participants under the Plan for a performance period
are not determinable in advance and, in fact, could be zero.
The Plan ended a one-year transition performance period at
year end 1994. AEP's total shareholder return for 1992-1994
ranked fifth relative to the S&P 24 peer utilities and, as a
result, 170% of the performance share units granted (and dividend
credits) were earned. The associated award payments, listed in
the Summary Compensation Table, were made 50% in cash and 50% in
shares of AEP Common Stock. Officers are not permitted to sell
these shares of AEP Common Stock if such shares are required to
be held to meet the equivalent stock ownership targets discussed
above.
Like that portion of the MICP awards deferred for three
years, for subsequent Plan performance periods, payments of
earned awards under the Plan are also deferred in the form of
restricted stock units (equivalent to shares of AEP Common
Stock). Such Plan deferrals continue until officers meet and
maintain their respective equivalent stock ownership targets, and
then the officers may elect either to continue to defer or to
receive further earned Plan awards in cash and/or AEP Common
Stock. Dividend equivalents are credited as though reinvested in
additional restricted stock units, again until officers meet and
maintain their respective equivalent stock ownership targets,
with such dividends then paid in cash. The Plan was amended to
provide for the deferral in order to reflect the intention of the
Committee to place, on an expedited basis, more of the earned
Plan awards at risk similar to the risk experienced by all other
shareowners.
The Plan is further described above.
Human Resources Committee Members
Toy F. Reid, Chairman
Arthur G. Hansen
Morris Tanenbaum
SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the beneficial ownership of
AEP Common Stock as of December 31, 1994 for all directors as of
the date of this Information Statement, each of the persons named
in the Summary Compensation Table and all directors and executive
officers as a group. Unless otherwise noted, each person had
sole voting and investment power over the number of shares of AEP
Common Stock set forth across from his or her name. Fractions of
shares have been rounded to the nearest whole share. No
executive officer, director or nominee owns any shares of any
series of the Cumulative Preferred Stock of the Company.
NAME SHARES(a)
P. J. DeMaria 6,105(b)(c)
E. L. Draper, Jr. 1,492(b)
C. A. Erikson 2,151
H. W. Fayne 2,921
W. J. Lhota 7,414(b)(c)
G. P. Maloney 4,249(b)(c)
J. J. Markowsky 4,861(b)
All directors and
executive officers as a group (8 persons) 117,578(b)(c)
(a) The holdings of AEP Common Stock of the following
individuals include shares held by the trustee of the AEP System
Employees Savings Plan, over which they have voting power but the
investment/disposition power is subject to the terms of such
Plan: Mr. DeMaria, 2,398 shares; Dr. Draper, 1,368 shares; Mr.
Erikson, 2,105 shares; Mr. Fayne, 2,830 shares; Mr. Lhota, 5,986
shares; Mr. Maloney, 2,464 shares; Dr. Markowsky, 4,779 shares;
and all directors and executive officers as a group, 24,258
shares. Messrs. DeMaria's, Erikson's, Fayne's, Lhota's,
Maloney's and Markowsky's holdings include 83, 46, 63, 60, 85 and
66 shares, respectively, and the holdings of all directors and
executive officers as a group include 450 shares, each held by
the trustee of the AEP Employee Stock Ownership Plan over which
shares such persons have sole voting power, but the
investment/disposition power is subject to the terms of such
Plan. The shares beneficially owned by the directors and
executive officers of the Company as a group and by the
individuals listed above in each case represent less than 1% of
the total number of shares of AEP Common Stock outstanding as of
December 31, 1994.
(b) Includes shares with respect to such directors,
nominees and executive officers share voting and/or investment
power as follows: Mr. DeMaria, 3,624 shares; Dr. Draper, 124
shares; Mr. Lhota, 1,368 shares; Mr. Maloney, 1,700 shares; and
Dr. Markowsky, 16 shares. Mr. DeMaria disclaims beneficial
ownership of 2,392 shares.
(c) Does not include 85,231 shares in the American Electric
Power System Education Trust Fund over which Messrs. DeMaria,
Lhota and Maloney share voting and investment power as trustees
(they disclaim beneficial ownership). The amount of shares shown
for all directors and executive officers as a group includes
these shares.
MEETINGS OF THE BOARD OF DIRECTORS
Regular meetings of the Board of Directors were held once
each month during the year. In addition, the Board of Directors
holds special meetings from time to time as required. During
1994, the Board held twelve regular meetings and no special
meetings.
Directors of the Company receive a fee of $100 for each
meeting of the Board of Directors attended in addition to their
salaries.
The Board of Directors of the Company has no committees.
INDEPENDENT AUDITORS
The public accounting firm of Deloitte & Touche LLP has been
selected as the independent auditors of the Company for the year
1995.
A representative of Deloitte & Touche LLP will not be
present at the meeting unless prior to the day of the meeting the
Secretary of the Company has received written notice from a
stockholder addressed to the Secretary at 1 Riverside Plaza,
Columbus, Ohio 43215, that such stockholder will attend the
meeting and wishes to ask questions of a representative of the
firm.
JOHN F. DI LORENZO, JR.,
Secretary
March 24, 1995