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EXHIBIT 99
WICOR
626 East Wisconsin Avenue
P.O. Box 334
Milwaukee, WI 53201
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 23, 1998
To the Shareholders of
WICOR, Inc.:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of WICOR,
Inc. will be held Thursday, April 23, 1998, at 2:00 P.M. (local time), at the
Italian Community Center, 631 East Chicago Street, Milwaukee, Wisconsin, for
the following purposes:
1. To elect four directors to hold office until the 2001 Annual
Meeting of Shareholders and until their successors are duly elected
and qualified.
2. To approve the 1994 Long-Term Performance Plan, as amended.
3. To consider and act upon any other business which may be properly
brought before the Annual Meeting or any adjournment or
postponement thereof.
The close of business Monday, February 23, 1998, has been fixed as the
record date for the determination of shareholders entitled to receive notice
of, and to vote at, the Annual Meeting and any adjournment or postponement
thereof.
A proxy and Proxy Statement are enclosed herewith.
By Order of the Board of Directors
Robert A. Nuernberg
Secretary
March 13, 1998
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE
DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, SIGN
EXACTLY AS YOUR NAME APPEARS, AND RETURN IMMEDIATELY.
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WICOR
626 East Wisconsin Avenue
P.O. Box 334
Milwaukee, Wisconsin 53201
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 23, 1998
This Proxy Statement is being furnished to shareholders by the Board of
Directors of WICOR, Inc. (the "Company") beginning on or about March 13, 1998,
in connection with a solicitation of proxies by the Board of Directors of the
Company (the "Board") for use at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on Thursday, April 23, 1998, at 2:00 P.M.(local
time), at the Italian Community Center, 631 East Chicago Street, Milwaukee,
Wisconsin, and at all adjournments or postponements thereof, for the purposes
set forth in the attached Notice of Annual Meeting of Shareholders.
Execution of a proxy given in response to this solicitation will not
affect a shareholder's right to attend the Annual Meeting and to vote in
person. Presence at the Annual Meeting of a shareholder who has signed a
proxy does not in itself revoke the proxy. Any shareholder giving a proxy may
revoke it at any time before it is exercised by giving notice thereof to the
Company in writing or in open meeting. Unless so revoked, the shares
represented by proxies received by the Board will be voted at the Annual
Meeting and at any adjournment or postponement thereof. A properly executed
proxy will be voted as directed therein by the shareholder.
Only holders of record of the Company's Common Stock, $1 par value
("Common Stock"), at the close of business on February 23, 1998, are entitled
to vote at the Annual Meeting and at any adjournment or postponement thereof.
On that date, the Company had outstanding and entitled to vote 18,627,281
shares of Common Stock. The record holder of each outstanding share of Common
Stock is entitled to one vote per share.
The Company is a holding company. Its principal subsidiaries include
Wisconsin Gas Company ("Wisconsin Gas"), WICOR Industries, Inc. ("WICOR
Industries"), Sta-Rite Industries, Inc. ("Sta-Rite"), SHURflo Pump
Manufacturing Co.("SHURflo"), Hypro Corporation ("Hypro"), WICOR Energy
Services Company ("WICOR Energy") and FieldTech, Inc. ("FieldTech").
ITEM NO. 1: ELECTION OF DIRECTORS
The Board consists of 10 directors. The Company's By-laws provide that
the directors shall be divided into three classes, with staggered terms of
three years each. At the Annual Meeting, shareholders will elect four
directors to hold office until the 2001 Annual Meeting of Shareholders and
until their successors are duly elected and qualified. Directors are elected
by a plurality of the votes cast (assuming a quorum is present at the Annual
Meeting). Consequently any shares not voted, whether due to abstentions, or
otherwise, have no impact on the election of directors. However, abstentions
are counted in determining whether a quorum is present at the meeting.
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Unless shareholders otherwise specify, the shares represented by the
proxies received will be voted "FOR" the indicated nominees for election as
directors. The Board has no reason to believe that any of the listed nominees
will be unable or unwilling to continue to serve as a director if elected.
However, in the event that any nominee should be unable or for good cause
unwilling to serve, the shares represented by proxies received will be voted
for another nominee selected by the Board.
The following sets forth information regarding the four nominees for
election as directors and the six continuing directors. Except as otherwise
noted, each such person has engaged in the principal occupation or employment
and held the offices shown for more than the past five years.
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NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
For Three-Year Terms Expiring April, 2001
A photograph of each nominee and director continuing in office appears
adjacent to the nominee's/director's name and personal information
WENDELL F. BUECHE Mr. Bueche, 67, is the Chairman and a
Audit and Compensation director of IMC Global, Inc., a producer
Committees and marketer of crop nutrients. He was
Director since 1984 named to that position in 1997. He served
as Chairman and Chief Executive Officer of
IMC from 1994 to 1997 and as President and
Chief Executive Officer from 1993 to 1994.
Mr. Bueche previously was Chairman,
President and Chief Executive Officer of
Allis-Chalmers Corporation. Mr. Bueche is a
director of Marshall & Ilsley Corporation
and M&I Marshall & Ilsley Bank.
DANIEL F. McKEITHAN, JR. Mr. McKeithan, 62, is President, Chief
Compensation and Retirement Executive Officer and a director of
Plans Investment (Chairman) Tamarack Petroleum Company, Inc., an
Committees operator of producing oil and gas wells.
Director since 1989 Since 1995 he has also been President and
Chief Executive Officer of both Active
Investor Management, Inc., a manager of oil
and gas wells, and SeisTech Development,
Inc., an oil and gas exploration and
development company. He is a director of
Firstar Corporation and The Marcus
Corporation, and is a Trustee of The
Northwestern Mutual Life Insurance Company.
GEORGE E. WARDEBERG Mr. Wardeberg, 62, is Chairman and Chief
Nominating Committee Executive Officer of the Company and
Director since 1992 Chairman of its subsidiaries. He was
elected Chairman and Chief Executive
Officer of the Company in 1997. Previously,
he was President and Chief Executive
Officer of the Company from 1994 to 1997.
He has held his positions with Wisconsin
Gas, Sta-Rite and SHURflo since 1994; with
Hypro and WICOR Energy since 1995; and with
FieldTech since 1996. He served in other
executive capacities with the Company and
its subsidiaries beginning in 1989. He is a
director of M&I Marshall & Ilsley Bank and
Twin Disc, Inc.
ESSIE M. WHITELAW Ms. Whitelaw, 49, is Vice President -
Nominating and Retirement National Business Development and Govern-
Plans Investment Committees ment Employee Services of Blue Cross & Blue
Director since 1992 Shield United of Wisconsin, a comprehensive
health care insurer. She has held her
current position since 1997. Previously,
she served as President and Chief Operating
Officer of Blue Cross & Blue Shield United
from 1992 to 1997. She is a director of
Universal Foods Corporation.
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MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING APRIL, 1999
JERE D. McGAFFEY Mr. McGaffey, 62, is a partner in the law firm
Nominating (Chairman) and of Foley & Lardner.(1) He has been in practice
Retirement Plans Investment with that firm since 1961 and has been a
Committees partner since 1968. Mr. McGaffey is a director
Director since 1980 of Smith Investment Company.
THOMAS F. SCHRADER Mr. Schrader, 48, is President and Chief
Director since 1988 Operating Officer of the Company and Vice
Chairman of Wisconsin Gas, WICOR Energy and
FieldTech. He was elected to those positions
in 1997. Previously, he served as President
and Chief Executive Officer of Wisconsin Gas,
WICOR Energy and FieldTech, and Vice President
of the Company. Mr. Schrader is a director of
Firstar Bank Milwaukee, N.A.
STUART W. TISDALE Mr. Tisdale, 69, retired as Chairman and Chief
Audit and Nominating Executive Officer of the Company in 1994. He
Committees is a director of Marshall & Ilsley Corporation
Director since 1980 Corporation, M&I Marshall & Ilsley Bank,
Modine Manufacturing Co. and Twin Disc Inc.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRING APRIL, 2000
WILLIE D. DAVIS Mr. Davis, 63, is President, Chief
Audit (Chairman) and Executive Officer and a director of All Pro
Compensation Committees Broadcasting, Inc., which owns and operates
Director since 1990 radio stations in Los Angeles and Milwaukee.
Mr. Davis is a director of Alliance Bank, The
Dow Chemical Co., Johnson Controls, Inc.,
Kmart Corp., L.A. Gear Inc., MGM Grand Inc.,
Rally's Hamburgers, Inc., Sara Lee Corporation
and Strong Capital Management, Inc.
GUY A. OSBORN Mr. Osborn, 62, retired as Chairman of
Compensation (Chairman) and Universal Foods Corporation, an international
Retirement Plans Investment manufacturer and marketer of value-added food
Committees products, in 1997. He is a director of
Director since 1987 Universal Foods Corporation and Fleming
Companies, Inc., and is a Trustee of The
Northwestern Mutual Life Insurance Company.
WILLIAM B. WINTER Mr. Winter, 69, retired as Chairman, Chief
Audit and Nominating Executive Officer and a director of Bucyrus-
Committees Erie Company, a manufacturer of mining
Director since 1980 machinery, and its parent corporation B-E
Holdings Inc., in 1994.
(1) Foley & Lardner was retained in 1997 by the Company and its subsidiaries
to provide legal services and has been similarly retained in 1998.
THE BOARD RECOMMENDS A VOTE "FOR" ALL NOMINEES FOR ELECTION AS DIRECTORS, ITEM
NO. 1. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY A DIFFERENT CHOICE.
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THE BOARD OF DIRECTORS
GENERAL
The Board held seven meetings in 1997. Each director attended at least
75% of the total of such meetings and meetings of any committees on which such
director served. The Board maintains standing Audit, Nominating,
Compensation, and Retirement Plans Investment Committees.
The Audit Committee held two meetings in 1997. The committee's functions
include recommending the selection of the independent auditors each year;
consulting with the independent auditors regarding the scope and plan of
audit, internal controls, fees, non-audit services (including the possible
effect of such services on the independence of the auditors), the audit report
and related matters; reviewing other accounting, internal audit and financial
matters; investigating accounting, auditing or financial exceptions which may
occur; and overseeing the corporate compliance programs of the Company and its
subsidiaries.
The Nominating Committee held two meetings in 1997. The committee's
functions include recommending those persons to be nominated by the Board for
election as directors of the Company at the next Annual Meeting of Share-
holders and recommending the person to fill any unexpired term on the Board
which may occur. The committee will consider nominees recommended by share-
holders, but has no established procedures which must be followed to make
recommendations.
The Compensation Committee held three meetings in 1997. The committee's
functions include reviewing and recommending adjustments to the salaries of
the officers of the Company and the presidents of its subsidiaries;
administering the 1987 Stock Option Plan, the 1992 Director Stock Option Plan,
the Director Deferred Stock Plan, the 1994 Long-Term Performance Plan and the
other incentive compensation plans of the Company and its subsidiaries; and
reviewing and recommending director compensation.
The Retirement Plans Investment Committee held three meetings in 1997.
The committee's functions include generally overseeing the management of
Company and subsidiary retirement and other employee benefit and welfare
plans. The committee determines investment policy, selects the trustees and
investment managers, and monitors and evaluates the performance of the
trustees and investment managers. The committee also recommends to the Board
changes in plan design.
COMPENSATION OF DIRECTORS
The Company revised its director compensation program effective January
1, 1997, to eliminate the retirement plan for directors, to tie more of the
directors' compensation to the performance of the Common Stock, and to adjust
the overall compensation level. Only non-employee directors receive
compensation for service as directors.
Cash Compensation. The Company pays its directors the following cash
compensation: an annual retainer fee of $6,000, $600 for each Board meeting
they attend, and $900 for each Board committee meeting they attend. Committee
chairmen are paid an additional annual retainer fee of $1,000 and receive
meeting fees for meetings with the Chief Executive Officer of the Company
relating to committee business. Wisconsin Gas pays its directors an annual
cash retainer fee of $4,000, and $600 for each Board meeting they attend.
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Presently, all directors of Wisconsin Gas are also directors of the Company.
Any fees payable to directors in cash may, at the option of each individual
director, be deferred for future payment as discussed below.
Deferred Compensation. The Company and Wisconsin Gas have identical
deferred stock plans for directors. Under the deferred stock plans, each
director receives on January 1 of each year, 557 deferred stock units (334
from the Company and 223 from Wisconsin Gas). Each stock unit has an economic
value equivalent to a share of Common Stock. As of December 31, 1997, these
deferred stock units had a value of $25,866 based on the price of a share of
Common Stock on that date ($46.4375). Each deferred stock unit is credited
with an amount equal to the dividend paid on a share of Common Stock if and
when such dividends are declared and paid. Such dividend-equivalent amounts
will be converted into deferred stock units based on the per-share price on
the dividend payment date. When a director retires, leaves the Board or dies,
the director's account balance will be paid out in shares of Common Stock.
The Company (for itself and on behalf of Wisconsin Gas) intends to purchase
Common Stock on the open market from time to time in its discretion to
accumulate shares of Common Stock to be used for settlement of deferred stock
balances. However, neither the Company nor Wisconsin Gas intends to fund its
future payment obligations under its deferred stock plan. On January 1, 1997,
directors also received a one-time grant of deferred stock units corresponding
to the then present value of their accrued benefit under the director
retirement plan which was terminated on December 31, 1996.
The Company and Wisconsin Gas each maintain a deferred compensation plan
for directors which entitles a director to defer directors' fees otherwise
payable in cash for payment when the director ceases to be a director. Fees
may be deferred for settlement in cash or shares of Common Stock, at the
election of the director. Amounts deferred for settlement in cash accrue
interest at the prevailing announced prime interest rate of a major commercial
bank. Amounts deferred for settlement in Common Stock are converted into
deferred stock units based on the per-share price on the date of deferral.
Each deferred stock unit will be credited with an amount equal to the dividend
paid on a share of Common Stock if and when such dividends are declared and
paid. Each director may elect to receive payment of the director's deferred
account balance in a lump sum or in equal installments over ten years.
All amounts deferred are unsecured. The Company has entered into an
executive trust agreement with Marshall & Ilsley Trust Company to provide a
means of segregating assets for the payment of director deferred compensation,
subject to the claims of the Company's creditors. Such trust is only
nominally funded until the occurrence of a potential change of control.
Stock Options. Directors participate in the 1992 Director Stock Option
Plan, pursuant to which options to purchase 2,000 shares of Common Stock are
automatically granted annually on the fourth Tuesday in February to each non-
employee director. The exercise price per share for options granted under the
1992 Director Stock Option Plan is equal to the fair market value of a share
of Common Stock on the date of grant. On February 25, 1997, Messrs. Bueche,
Davis, McGaffey, McKeithan, Osborn, Tisdale and Winter and Ms. Whitelaw each
received an option to purchase 2,000 shares of Common Stock at a per-share
exercise price of $36.125. Options granted under the 1992 Director Stock
Option Plan are immediately exercisable and have a ten-year term; provided,
however, that no option may be exercised after 24 months have elapsed from the
date the optionee ceased being a director. On February 24, 1998, options to
purchase an additional 2,000 shares of Common Stock were granted to each non-
employee director at a per-share exercise price of $46.875.
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SECURITY OWNERSHIP OF MANAGEMENT
The following tabulation sets forth the number of shares of Common Stock
beneficially owned, as of February 28, 1998, by each director and nominee,
each executive officer named in the Summary Compensation Table, and all
directors and executive officers as a group. The tabulation also reflects the
number of deferred stock units held by each such person.
Amount and Nature
Name of of Beneficial Percent of Deferred Stock
Beneficial Owner Ownership (1) (2) (3) Class (4) Units (5)
- ---------------------- --------------------- --------- ---------------
Wendell F. Bueche 14,168 - 6,520
Willie D. Davis 12,533 - 4,474
James C. Donnelly 85,616 -
Jere D. McGaffey 15,229 - 4,934
Daniel F. McKeithan, Jr. 13,000 - 4,446
Robert A. Nuernberg 44,284 -
Guy A. Osborn 14,000 - 4,948
Thomas F. Schrader 141,811 -
Stuart W. Tisdale 90,081 (6) - 4,747
George E. Wardeberg 99,999 (7) -
Joseph P. Wenzler 142,419 (8) -
Essie M. Whitelaw 12,000 - 1,949
William B. Winter 14,588 (9) - 6,415
All directors and
executive officers as
a group (14 persons) 699,728 3.8% 38,433
(1) Except as otherwise noted in the footnotes to the table, each beneficial
owner exercises sole voting and investment power with respect to the
shares shown as owned beneficially.
(2) Includes the following numbers of shares covered under options
exercisable as of or within 60 days of February 28, 1998: Mr. Donnelly,
75,649; Mr. Nuernberg, 31,248; Mr. Schrader, 98,824; Mr. Wardeberg,
54,499; Mr. Wenzler, 90,650; Messrs Bueche, Davis, McGaffey, McKeithan,
Osborn and Winter and Ms. Whitelaw, 12,000 each; Mr. Tisdale, 10,000; and
all directors and executive officers as a group, 448,870.
(3) Includes the following numbers of shares of restricted stock over which
the holders have sole voting but no investment power: Mr. Donnelly,
5,500; Mr. Nuernberg, 1,200; Mr. Schrader, 6,000; Mr. Wardeberg, 11,600;
and Mr. Wenzler, 4,500; and all directors and executive officers as a
group, 28,800. The number of shares include restricted stock grants to
become effective April 23, 1998, following approval by the shareholders
of the 1994 Long-Term Performance Plan, as amended. See "Item No. 2,
Approval of the 1994 Long-Term Performance Plan, as amended - Outstanding
Future Awards." The restricted stock vests three years after grant if the
Company's total return to shareholders for the three-year period exceeds
a pre-established goal.
(4) Where no percentage figure is set out in this column, the person owns
less than 1% of the outstanding shares
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(5) Deferred stock units are issued under the deferred stock plans and the
deferred compensation plan discussed under "Compensation of Directors -
Deferred Compensation."
(6) Includes 4,852 shares owned by Mr. Tisdale's spouse.
(7) Includes 4,200 shares owned jointly by Mr. Wardeberg and his spouse.
(8) Includes 526 shares owned by Mr. Wenzler's spouse.
(9) Includes 2,588 shares owned by Mr. Winter's spouse.
EXECUTIVE COMPENSATION
The following tabulation is a three-year summary of the compensation awarded
or paid to, or earned by, the persons who served as Company's chief executive
officer during 1997 and each of the Company's four other most highly
compensated executive officers whose total cash compensation exceeded $100,000
in 1997.
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SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation Awards
---------------------------- --------------------------
Securities
Restricted Underlying All Other
Name and Principal Stock Options/
Compensation
Position Year Salary ($) Bonus ($) Awards ($)(2) SARs (#) ($) (3)
- ------------------------------ ---- ---------- --------- ------------- ---------- ----------
George E. Wardeberg, Chairman 1997 $ 440,833 $185,200 20,000 $ 19,233
and Chief Executive Officer 1996 $ 393,750 $217,638 $ 264,000 20,000 $ 17,250
of the Company and its sub- 1995 $ 368,750 $192,455 15,000 $ 16,250
sidiaries (4)(7)
Thomas F. Schrader, President 1997 $ 321,616 $144,700 10,000 $ 14,465
and Chief Operating Officer 1996 $ 290,650 $177,903 $ 132,000 10,000 $ 13,126
of the Company and Vice 1995 $ 278,500 $176,857 10,000 $ 12,640
Chairman of certain of its
subsidiaries(5)
James C. Donnelly, Vice-Pres- 1997 $ 287,250 $ 78,000 10,000 $ 14,775
ident of the Company and 1996 $ 277,525 $ 59,218 $ 132,000 10,000 $ 12,735
President and Chief Execu- 1995 $ 267,800 $ 28,253 10,000 $ 13,185
tive Officer of Sta-Rite
Joseph P. Wenzler, Senior 1997 $ 286,825 $ 96,400 7,500 $ 13,073
Vice President, Treasurer 1996 $ 272,050 $120,296 $ 99,000 7,500 $ 12,382
and Chief Financial Officer 1995 $ 261,850 $106,700 7,500 $ 11,974
of the Company; Vice Presi-
dent and Chief Financial
Officer of Wisconsin Gas;
Secretary and Treasurer of
SHURflo and Hypro; and Vice-
President and Treasurer of
WICOR Energy and FieldTech (6)(7)
Robert A. Nuernberg, Secretary 1997 $ 148,875 $ 39,000 2,000 $ 7,444
of the Company, WICOR Energy 1996 $ 142,750 $ 49,125 $ 26,400 2,000 $ 7,138
and FieldTech; Vice Presi- 1995 $ 138,000 $ 48,307 2,000 $ 6,900
dent-Corporate Relations and
Secretary of Wisconsin Gas (7)
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(1) The aggregate amount of personal benefits provided by the Company and its
subsidiaries to the executive officers named in this table in any year
did not exceed the lesser of $50,000 or 10% of each officer's annual
salary and bonus reported in the table for any of the years indicated.
(2) The amounts in the table reflect the market value on the date of grant of
restricted stock awarded under the 1994 Long-Term Performance Plan. The
number of shares of restricted stock held by the executive officers named
in the table and the market value of such shares as of December 31, 1997,
were as follows: Mr. Wardeberg, 8,000 shares, $371,500; Messrs. Schrader
and Donnelly, 4,000 shares, $185,750; Mr. Wenzler, 3,000 shares,
$139,313; and Mr. Nuernberg, 800 shares, $37,150. The restricted stock
vests three years after issuance provided the Company's three-year total
return to shareholders exceeds a pre-established goal. Holders of shares
of restricted stock are entitled to receive dividends on such shares. The
numbers of shares of restricted stock held by the named officers on
February 28, 1998, are set out in footnote 3 to the Security Ownership of
Management table.
(3) The amounts shown in this column for 1997 are comprised of the following
items: Company contributions to 401(k) and supplemental savings plans:
Mr. Wardeberg, $19,233; Mr. Schrader, $14,465; Mr. Donnelly, $13,090; Mr.
Wenzler, $13,073; and Mr. Nuernberg, $7,444; and above-market earnings on
deferred compensation: Mr. Donnelly, $1,685.
(4) On July 22, 1997, Mr. Wardeberg was elected Chairman and Chief Executive
Officer of the Company. He previously served as President and Chief
Executive Officer. He continues as Chairman of the Company's
subsidiaries.
(5) On July 22, 1997, Mr. Schrader was elected President and Chief Operating
Officer of the Company. He previously served as Vice President. On
December 16, 1997, Mr. Schrader was elected Vice Chairman of Wisconsin
Gas, WICOR Energy and FieldTech. He previously served as President and
Chief Executive Officer of those subsidiaries.
(6) On July 22, 1997, Mr. Wenzler was elected Senior Vice President,
Treasurer and Chief Financial Officer of the Company. He previously
served as Vice President, Treasurer and Chief Financial Officer. He
continues in his positions with the Company's subsidiaries.
(7) These executive officers were elected to their positions with SHURflo in
1993, Hypro and WICOR Energy in 1995, and FieldTech in 1996.
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Stock Option Information
The Company has in effect benefit plans pursuant to which options to
purchase Common Stock may be granted to key employees (including executive
officers) of the Company and its subsidiaries. The following tabulation sets
forth information regarding grants of options made by the Company in 1997 to
the executive officers named in the Summary Compensation Table. No SARs were
awarded in 1997.
OPTION/SAR GRANTS IN 1997 FISCAL YEAR
Individual Grants
- ---------------------------------------------------------------------------------
Number of Sec. Percent of Total Grant
Underlying Options Granted Exercise or Date
Options/SARs to Employees Base Expiration Present
Name Granted (#) (1) in Fiscal Year Price ($/sh.) Date Value (2)
- ------------------- --------------- ---------------- ------------- ---------- ---------
George E. Wardeberg 20,000 7.9 $ 35.1875 2/18/07 $ 84,400
Thomas F. Schrader 10,000 3.9 $ 35.1875 2/18/07 $ 42,200
James C. Donnelly 10,000 3.9 $ 35.1875 2/18/07 $ 42,200
Joseph P. Wenzler 7,500 3.0 $ 35.1875 2/18/07 $ 31,650
Robert A. Nuernberg 2,000 0.8 $ 35.1875 2/18/07 $ 8,440
(1) The options reflected in the table (which are nonstatutory stock options
for purposes of the Internal Revenue Code) were granted on February 18,
1997 and vest ratably over the three-year period from the date of grant.
(2) Amounts in this column were calculated using the Black-Scholes option
pricing model. The model assumes: (a) an option term of 10 years and an
average life of 5.64 years; (b) a risk-free interest rate of 5.09%; (c)
volatility (variance of rate of return) of 15.94%; and (d) a dividend yield of
4.8%. The actual value, if any, that an optionee may realize upon exercise
will depend upon the excess of the price of the Common Stock over the option
exercise price on the date that the option is exercised. There is no
assurance that the value received by the optionee will be at or near the value
estimated by the Black-Scholes model.
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The following tabulation sets forth information regarding the exercise of
stock options during 1997 and the unexercised options held at December 31,
1997, by each of the executive officers named in the Summary Compensation
Table.
AGGREGATED OPTION/SAR EXERCISES IN 1997 FISCAL YEAR,
AND FY-END OPTION/SAR VALUES
Numbers of
Securities Underlying Value of Unexercised
Unexercised Options/ In-the-Money Options/
Shares SARs at FY-End (#) SARs at FY-End ($)
Acquired on Value ------------------------- -------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ----------- ----------- ----------- ------------- ----------- -------------
George E. Wardeberg 0 $ 0 36,166 38,334 $ 594,699 $ 495,113
Thomas F. Schrader 0 $ 0 93,424 20,001 $2,121,815 $ 262,725
James C. Donnelly 0 $ 0 65,649 20,001 $1,424,103 $ 262,725
Joseph P. Wenzler 0 $ 0 87,750 15,000 $2,027,881 $ 197,031
Robert A. Nuernberg 0 $ 0 29,249 4,001 $ 687,907 $ 52,651
PENSION AND RETIREMENT PLANS
The Company and its subsidiaries maintain pension and retirement plans
in which the executive officers and other employees participate. The Company
and its subsidiaries also maintain supplemental retirement plans for officers
and certain other employees to reflect certain compensation that is excluded
under the retirement plans and to provide benefits that otherwise would have
been accrued or payable except for the limitations imposed by the Internal
Revenue Code.
Effective January 1, 1998, the basic pension plan was amended to restate
the benefit accrual as a "cash balance" formula. Under a cash balance pension
plan, a participant's benefit is based on an annual accrual of a percentage of
current year's compensation, with such annual accruals being combined and
adjusted by an earnings factor. The actual pension benefit is then determined
by converting such lump sum balance into an equivalent annuity value.
The Company's cash balance formula provides an annual accrual of 6% of
salary and bonus, with a guaranteed earnings rate of 4%. In its discretion,
the Company may amend the plan from year to year to grant a higher earnings
rate for the applicable year. In order to recognize the pre-1998 service and
compensation of current participants, the plan grants each participant a
special transition credit. In addition, in order to protect such existing
participants, the revised pension plan guarantees that for employment through
December 31, 2007, the benefit accrual will not be less under the new cash
balance formula than under the pre-1998 final average earnings formula.
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The plan's actuaries project that for long-service employees the revised
cash balance formula will provide substantially equivalent benefits commencing
at age 65 as under the pre-1998 "final average earnings" formula. Such
projection is subject to the applicable earnings rate that is applied from
time to time to the cash balance account and to future interest rates. The
plan's actuaries have projected the ultimate benefits for the named executive
officers. Because of the ten-year guarantee until the end of 2007 and the
fact that Messrs. Wardeberg, Wenzler and Nuernberg will have attained age 65
prior to that time, the actuaries project that the pre-1998 final average
earnings formula will provide the better benefit.
The following tabulation sets forth estimated annual retirement benefits
payable under the pension plans, as supplemented, for Messrs. Wardeberg,
Wenzler and Nuernberg. It is based on the final average earnings formula for
the indicated levels of final average earnings with various periods of
credited service. Benefits reflected in the table are based on a straight
life annuity and an assumed age of 65. The election of other available
payment options would change the retirement benefits shown in the table. The
plan does not provide for reduction of retirement benefits to offset Social
Security or any other retirement benefits.
PENSION PLAN TABLE
Remuneration 10 15 20 25 30
- ------------ ---------- ---------- ---------- ---------- ----------
$ 300,000 $ 58,726 $ 88,089 $ 117,452 $ 134,384 $ 138,884
$ 400,000 $ 78,526 $ 117,789 $ 157,052 $ 179,684 $ 185,684
$ 500,000 $ 98,326 $ 147,489 $ 196,652 $ 224,984 $ 232,484
$ 600,000 $ 118,126 $ 177,189 $ 236,252 $ 270,284 $ 279,284
$ 700,000 $ 137,926 $ 206,889 $ 275,852 $ 315,584 $ 326,084
$ 800,000 $ 157,726 $ 236,589 $ 315,452 $ 360,884 $ 372,884
For Messrs. Schrader and Donnelly, who have more than 10 years until
their attainment of the normal retirement age of 65, using a 6.5% earnings
assumption and assuming continuation of compensation at the level paid in 1997
as defined in the plan, the plan actuaries projected estimated annual benefits
under the pension plan, as supplemented, payable upon retirement at normal
retirement age of 65 of $280,995 and $139,660, respectively.
The compensation covered by the pension plan, as supplemented, for the
named executive officers includes all compensation reported for each
individual as salary and bonus in the Summary Compensation Table. Messrs.
Wardeberg, Schrader, Donnelly, Wenzler and Nuernberg have 8, 19, 10, 23 and 28
years, respectively, of credited service under the pension plan. Pursuant to
a supplemental retirement plan, Messrs. Schrader and Nuernberg will receive a
supplemental retirement benefit of $25,000 per year for 15 years beginning at
age 65, payable in monthly installments.
15
A retired executive officer who is married at the time of retirement and
selects one of the available joint and surviving spouse annuity payment
options will also receive the difference between the monthly benefits payable
under the single life annuity payment option and the 50% joint and surviving
spouse annuity payment option for the lives of the retired officer and spouse.
Upon the death of the retired officer, the surviving spouse will receive 50%
of the supplemental benefit for life.
The Company has entered into an executive trust agreement with Marshall
& Ilsley Trust Company to provide a means of segregating assets for the
payment of these benefits (as well as benefits under the Company's
supplemental retirement plan), subject to the claims of the Company's
creditors. Such trust is only nominally funded until the occurrence of a
potential change of control.
AGREEMENTS WITH CERTAIN EXECUTIVE OFFICERS
The Company has agreements with Messrs, Wardeberg, Schrader, Donnelly
and Wenzler that provide that each such executive officer is entitled to
benefits if, following a change of control (as such term is defined in the
agreements), the officer's employment is ended through (i) termination by the
Company, other than by reason of death or disability or for cause (as defined
in the agreements), or (ii) termination by the officer following the first
anniversary of the change in control or due to a breach of the agreement by
the Company or a significant change in the officer's responsibilities. In
general, the benefits provided are: (i) a cash termination payment of up to
three times the sum of the executive officer's annual salary and his highest
annual bonus during the three years before the termination, (ii) supplemental
pension benefits,(iii) continuation of equivalent hospital, medical, dental,
accident, disability and life insurance coverage as in effect at the time of
termination, and (iv) outplacement services. The agreements also provide the
foregoing benefits in connection with certain terminations that are effected
in anticipation of a change of control. Each agreement provides that if any
portion of the benefits under the agreement or under any other agreement for
the officer would constitute an "excess parachute payment" for purposes of the
Internal Revenue Code, benefits will be reduced so that the officer will be
entitled to receive $1 less than the maximum amount which he could receive
without becoming subject to the 20% excise tax imposed by the Code, or which
the Company may pay without loss of deduction under the Code.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee of the Board. The Compensation Committee is comprised
of four independent, non-employee directors. Following Compensation Committee
review and approval, matters relating to executive compensation (other than
the grant of stock options and restricted stock) are submitted to the full
Board for approval. The Compensation Committee utilizes an independent
compensation consultant. The consultant provides advice to the Committee on
compensation-related issues, including incentive plan design and competitive
compensation data for officer positions.
16
Compensation Policies
Policies are used to set a general direction and as a backdrop against
which specific compensation decisions are made.
- - Design of executive pay programs is intended to attract and retain top
talent, motivate and reward performance.
- - Differences in pay practices and performance measures between the
Company's primary lines of business are recognized.
- - Compensation opportunities, by component and in the aggregate, are
targeted at the median (50th percentile) of competitive practice.
Actual compensation earned by an executive may exceed the market
median for above average performance and be less than median for
performance that is below expectation.
- - Achievement of incentive compensation levels is dependent on
attainment of performance goals as agreed to by the Board annually.
These goals relate to the achievement of the Company's operating and
financial plan, individual objectives and milestones in the Company's
longer-term strategic plan.
- - In business units where an all-employee bonus or profit-sharing
program exists, a portion of each executive's incentive compensation
is determined on the same criteria.
- - The focus on enhancement of shareholder value is accomplished by tying
a significant portion of total pay to performance of the Company's
stock.
In assessing executive performance and pay, the members of the
Compensation Committee consider and weigh in their judgment factors outside
the formal incentive plans. These factors include operational and financial
measures not specifically incorporated in the incentive plans, and actual
performance in dealing with unanticipated business conditions during the year.
The Compensation Committee believes such factors should be considered in
addition to the more formalized factors to assess and reward executive
performance properly.
Base salary midpoints, annual incentive targets and long-term incentive
grants are set based on a competitive analysis conducted by the independent
compensation consultant. As indicated above, compensation opportunities, by
component and in the aggregate, are set at or near the 50th percentile of
competitive practice for comparably sized organizations. Rates for the gas
utility positions are set using survey sources from the utility industry.
There is substantial overlap between the companies in these surveys and the
companies used in the peer company index in the Performance Graph. Rates for
the nonutility positions are set using survey sources from general industry;
there is no overlap with the Performance Graph peer companies here.
17
Components of Compensation
Base salary. The Compensation Committee targets salary range midpoints
as indicated above. Individual salaries range above and below the midpoint
based upon an individual's past and current performance, and expectations for
future performance. The factors considered in this review are job specific
and vary depending on the individual's position. There is no specific
weighting given to these factors.
Annual incentive plan. The Company's annual incentive compensation plan
tailors each officer's incentive potential to that officer's Company and
subsidiary responsibilities. The plan sets incentive targets ranging from 20%
to 50% of base salary. The plan is designed to compensate the officers
primarily on a formula basis. For the Chief Executive Officer, Chief
Operating Officer and the Chief Financial Officer, the formula bases 75% of
the targeted award on the Company's return on capital and 25% on individual
performance objectives. The return on capital calculation is further modified
by performance against earnings per share growth. For Company Vice
Presidents, who are also the subsidiary presidents, the formula bases 75% of
the targeted award on the subsidiary's return on capital and 25% on individual
performance objectives. The return on capital calculation is further modified
by performance against sales growth for Sta-Rite and by performance against
rate comparison, customer service, safety and cost effectiveness criteria for
Wisconsin Gas. Individual performance objectives vary among the officers, but
may include such things as cost management, product development, sales growth,
personnel management and development, and management of specific projects.
The Compensation Committee exercises its judgment on a case-by-case basis in
determining the weight to be accorded any individual performance objective.
Long-term incentive plan. The Company's long-term incentive
compensation plan provides for annual awards of stock options and biennial
awards of performance-based restricted stock. The plan splits an officer's
long-term incentive opportunity equally (based on value) between stock options
and performance-based restricted stock. The independent compensation
consultant provides the Compensation Committee with a long-term incentive
grant schedule that approximates a market median grant opportunity. The
Compensation Committee reserves the right to adjust this schedule upward or
downward based on Company performance; however, it is the Compensation
Committee's intention that in most cases grants will be provided at targeted
levels.
Stock options may be incentive stock options or nonstatutory options
which have a term of not more than ten years and have an exercise price equal
to the fair market value on the date of grant. The Compensation Committee
determines the manner and conditions under which the options become
exercisable. The number of options granted is based on the participant's
office or position, with an equal number of shares generally being granted to
individuals holding the same or similar positions, such as vice president of
an operating subsidiary. Performance-based restricted stock will vest three
years from the year of grant provided the Company's three-year total return to
shareholders equals or exceeds pre-established goals relative to the
Performance Graph peer group (the PaineWebber Gas Distribution Utility Index).
For other subsidiary officers who participate in the plan, the restricted
stock will vest in three-years provided the appropriate subsidiary's three-
year financial performance (three-year cumulative earnings for Wisconsin Gas
and return on assets for Sta-Rite) equals or exceeds the pre-established goal.
18
Compensation of Officers
The Compensation Committee sets base salaries of officers within the
established ranges. The Compensation Committee considers specified financial
measures tailored to the Company and each subsidiary, each officer's
contribution to achieving corporate goals, and such officer's achievement of
personal performance objectives. Examples of financial measures are net
income earned relative to budget, return on capital, return on total assets,
return on sales, and rate of return earned versus allowed. The Compensation
Committee weighs the financial measures differently for each officer, in
recognition that the Company's principal subsidiaries operate in different
industries with different compensation practices and that the officers'
responsibilities differ. For example, the rate of return earned versus that
nominally allowed by state regulatory authorities having jurisdiction over the
gas utility subsidiary is applicable only to officers of the utility company,
whereas return on total assets and return on sales are applicable primarily to
officers of the manufacturing subsidiaries. Examples of personal performance
objectives considered by the Compensation Committee are set out above in the
discussion of the Annual Incentive Plan. The Compensation Committee exercises
its judgment in determining the relative weight to be accorded each personal
objective.
As stated above, each officer's annual incentive award, if any, is based
on a formula, although the Compensation Committee exercises its judgment in
determining the weights to be accorded the achievement of personal objectives.
Long-term incentive awards (stock options and restricted stock) are also
formula-based, with individual awards being set relative to the officer's
position. The specific number of stock options awarded is based on the number
of options to be awarded to all key employees of the Company and its
subsidiaries and the number of options previously granted and outstanding, as
determined by the Compensation Committee. Options granted in 1997 were
nonstatutory, have a term of ten years, and first become exercisable one-third
each year on the first, second and third anniversary of the grant. No
restricted stock grants were made in 1997.
Compensation of the Chief Executive Officer
The Compensation Committee increased the base salary of George E.
Wardeberg, the Company's Chief Executive Officer, by $35,000 or 8.8% effective
April 1, 1997. The increase reflects his overall performance, as demonstrated
by record earnings for the Company in 1996, an increase in earnings per share
of 10% and a total return of 17%, along with his position in the salary range.
The increase set Mr. Wardeberg's salary in the second quartile of the range
targeted by the Compensation Committee.
During July, 1997, Mr. Wardeberg was named the Company's Chairman in
addition to being Chief Executive Officer. In light of the increased
responsibilities, the Compensation Committee increased his base salary by
$35,000 or 8%, effective August 1, 1997.
The Compensation Committee awarded Mr. Wardeberg 20,000 nonstatutory
stock options in 1997. The number of options awarded was at the targeted
number established in the long-term incentive compensation plan.
19
The annual incentive award to Mr. Wardeberg for 1997 was $185,200 or 42%
of his salary as compared to a target of 50% of salary. This award reflects
Mr. Wardeberg's contributions to the Company during 1997. The less than
targeted incentive award was caused by certain financial objectives which were
not met. These included the Company's return on capital at 8.2%, less than
targeted at 8.5% and earnings per share growth at 5%, less than targeted at
10%. This was caused by the Company's manufacturing operations falling short
of a very aggressive target. Despite this shortfall, manufacturing had an
exceptionally strong year with net earnings up 38% over the prior year. As a
result, WICOR's net earnings and earnings per share increased 6% and 5%,
respectively. WICOR outperformed its industry peers over the last five years
as shown in the accompanying Total Return Comparison performance graph. In
addition, Mr. Wardeberg accomplished many of his personal objectives in the
areas of growth, preserving the Company's financial strength, and human
resources which included a successfully executed succession plan. The
Compensation Committee exercised its judgment in determining the weights
accorded to his accomplishment of these personal objectives.
Compliance with Tax Regulations
Under Section 162(m) of the Internal Revenue Code, the tax deduction by
corporate taxpayers, such as the Company, is limited with respect to the
compensation of certain executive officers unless such compensation is based
upon performance objectives meeting certain regulatory criteria or is
otherwise excluded from the limitation. The Compensation Committee currently
intends to qualify compensation paid to the Company's executive officers for
deductibility by the Company under Section 162(m) of the Code.
Guy A. Osborn, Chairman
Wendell F. Bueche
Willie D. Davis
Daniel F. McKeithan, Jr.
Members of the Compensation Committee
PERFORMANCE PRESENTATION
The following graph compares the yearly percentage change in the
Company's cumulative total shareholder return (dividends declared plus share
appreciation) to the S&P 500 Stock Index and the PaineWebber Gas Distribution
Utility Index, comprised of 34 U.S. natural gas distribution utilities. The
information presented assumes that all dividends were reinvested.
[Performance graph will appear here.]
Total Return Comparison *
Among WICOR, Inc. S&P 500 Index
and PaineWebber Gas Distribution Utility Index
Measurement Period - FYE Measurement Point - December 31, 1992
1992 1993 1994 1995 1996 1997
-------- -------- -------- -------- -------- --------
WICOR $ 100 $ 121 $ 116 $ 139 $ 162 $ 218
S&P $ 100 $ 111 $ 112 $ 153 $ 188 $ 251
Industry $ 100 $ 114 $ 100 $ 130 $ 154 $ 198
* Includes Reinvested Dividends
** PaineWebber Gas Distribution Utility Index
20
ITEM NO. 2: APPROVAL OF THE 1994 LONG-TERM
PERFORMANCE PLAN, AS AMENDED
General
The Board has unanimously adopted three amendments to the Company's 1994
Long-Term Performance Plan contingent upon shareholder approval of such plan,
as so amended, at the Annual Meeting. The Long-Term Performance Plan, as
amended, is referred to herein as the "1994 Plan". The 1994 Plan provides for
the grant of options to purchase Common Stock, stock appreciation rights
("SARs") and shares of restricted Common Stock to key employees of the Company
and its subsidiaries. The first amendment to the 1994 Plan increases the
authorized number of shares for which awards may be made thereunder from
820,000 to 1,745,000. On February 17, 1998, without giving effect to the
amendment, only 155,990 shares of Common Stock remained available for future
awards under the 1994 Plan. The Board approved the amendment increasing the
number of shares for which awards may be made under the 1994 Plan to provide
the opportunity for additional awards to be granted thereunder in the future.
The second amendment to the 1994 Plan modifies the limitations on awards
made to individual participants under the 1994 Plan. Without giving effect to
the amendment, the 1994 Plan provides that during the term of the Plan no
participant may receive grants that could result in the participant exercising
options for, or SARs with respect to, more than 125,000 shares of Common
Stock, or receiving restricted stock awards for more than 25,000 shares of
Common Stock. As amended, the 1994 Plan provides that no participant may
receive awards in any calendar year of options for, or SARs with respect to,
more than 150,000 shares of Common Stock, or receive restricted stock awards
in any calendar year of more than 10,000 shares of Common Stock. The
modification of the individual limitations on awards is being proposed both to
reflect the increase in the number of authorized shares under the 1994 Plan
and to minimize the burden of administering the 1994 Plan by changing the
limitations to calendar year restrictions as opposed to limitations for the
term of the 1994 Plan.
The third amendment modifies the criterion that must be satisfied for
restricted stock to vest. Without giving effect to the amendment, the 1994
Plan provides that restricted stock grants to Company executive officers and
subsidiary chairmen and presidents will vest if the Company attains, over a
period of at least three years, a specified compounded annual total return to
shareholders (stock price appreciation plus Company cash dividends paid and
assumed to be reinvested in Common Stock) compared to a specified group of gas
distribution utilities. Restricted stock granted to other participants under
the 1994 Plan prior to amendment would vest based on such conditions as the
Compensation Committee determined. As amended, the 1994 Plan provides that
restricted stock grants to all participants will vest if the Company attains
over a specified period a compounded annual total return to shareholders fixed
by the Compensation Committee at the time of the grant. The Company remains
committed to permitting restricted stock to vest based on the performance of
the Company. However, as the Company's manufacturing and non-utility energy-
related businesses become larger in size and of greater importance to the
Company's overall performance, the Board believes it is inappropriate to
require Company performance to be measured solely by comparison to gas utility
distribution companies
21
The 1994 Plan was initially adopted by the Board effective March 1,
1994, and was approved by shareholders on April 28, 1994. The 1994 Plan, as
amended, was approved by the Board on February 26, 1998. The 1994 Plan, as
amended, is included as Appendix A to this Proxy Statement. The description of
the 1994 Plan set forth below is qualified in its entirety by reference to
Appendix A.
Purpose
The purpose of the 1994 Plan is to enhance the ability of the Company
and its affiliates to attract, retain and motivate key salaried employees upon
whom, in large measure, the sustained growth and profitability of the Company
depend, and to provide incentive to those salaried employees that are more
directly linked to the profitability of the Company's businesses and increases
in shareholder value.
Administration
The 1994 Plan is administered by the Compensation Committee (the
"Committee") of the Board which consists of four non-employee directors.
Subject to the terms of the 1994 Plan, the Committee has authority to
interpret the 1994 Plan, prescribe, amend and rescind rules and regulations
relating to the 1994 Plan, and make all other determinations necessary or
advisable for the administration of the 1994 Plan.
Participation
The Committee selects participants in the 1994 Plan from among key
salaried employees of the Company and its affiliates. The Committee solicits
and considers recommendations of the Chief Executive Officer in determining
those key salaried employees who will be eligible to participate in the 1994
Plan. Approximately 110 employees are currently eligible to participate in
the 1994 Plan.
Stock Subject to the 1994 Plan
Assuming the 1994 Plan, as amended, is approved by the shareholders, the
maximum number of shares issuable thereunder will be 1,745,000, subject to
adjustment as described below. Awards may be granted as options (either
incentive stock options or nonstatutory stock options), SARs or restricted
stock. If any shares covered by an award granted under the 1994 Plan, or to
which any award relates, are forfeited or if an award otherwise terminates,
expires or is canceled prior to the delivery of all of the shares or of other
consideration issuable or payable pursuant to such award, and if such
forfeiture, termination, expiration or cancellation occurs prior to the
payment of dividends or the exercise by the holder of other indicia of
ownership of the shares to which the award relates, then the number of shares
counted against the number of shares available under the 1994 Plan in
connection with the grant of such award, to the extent of any such forfeiture,
termination, expiration or cancellation, will again be available for granting
of additional awards under the 1994 Plan. Notwithstanding the foregoing, if a
new award for additional shares is granted to a participant in connection with
such an expiration, forfeiture, cancellation or termination, then the shares
subject to the expiration, forfeiture, cancellation or termination will reduce
the number of shares that can otherwise be issued under the 1994 Plan. Shares
to be issued under the 1994 Plan may be either authorized but unissued or
treasury shares.
22
In the event of any change in the outstanding shares of Common Stock by
reason of a stock dividend or split, recapitalization, merger, consolidation,
combination, spin-off, exchange of shares or other similar corporate change,
the number of shares subject to outstanding options and their stated option
prices, and the number of shares subject to the 1994 Plan, will be adjusted
equitably by the Committee. In such event, the Committee will also adjust
equitably the number of shares subject to restricted stock grants and the
number of outstanding SARs and related grant values.
Options
Options may be granted to participants at such times as determined by
the Committee. The Committee will also determine the number of options
granted and whether an option is to be an incentive stock option or
nonstatutory stock option. Pursuant to the Internal Revenue Code, the
aggregate fair market value of Common Stock with respect to which incentive
stock options are exercisable for the first time by a participant during any
calendar year shall not exceed $100,000. The option price per share of Common
Stock will be fixed by the Committee, but will not be less than the fair
market value of the Common Stock on the date of grant and cannot be
subsequently changed except as noted above. No option shall be granted,
directly or indirectly, in connection with the expiration, forfeiture,
cancellation or termination of an option previously granted under the 1994
Plan prior to its normal expiration date if such expired, forfeited, canceled
or terminated option had an exercise price higher than the exercise price of
the option proposed to be granted. The Committee will determine the
expiration date of each option, but the expiration date will not be later than
the tenth anniversary of the grant date. Options will be exercisable at such
times and be subject to such restrictions and conditions as the Committee
deems necessary or advisable. No options will be assignable or transferable
by a participant, except by will or the laws of descent and distribution and
may be exercised during the life of the participant only by the participant.
At the time of exercise, the option price must be paid in full. The
Committee will determine the form of payment, which may include either (i)
cash; (ii) tendering shares of Common Stock having a fair market value at the
time of exercise equal to the option price; (iii) electing to have the Company
withhold from shares of Common Stock otherwise issuable upon exercise that
number of shares of stock having a fair market value at the time of exercise
equal to the option price; (iv) a combination of (i), (ii) and (iii); or (v)
such other form of payment as the Committee determines. The Committee may
permit the practice known as "pyramiding" whereby shares of Common Stock
acquired upon exercise of an option are simultaneously surrendered in exchange
for all or part of the remaining shares subject to the option.
Stock Appreciation Rights
The Committee may also grant SARs under the 1994 Plan, independently or
in tandem with a related option, giving the participant the right to receive a
payment (in cash, shares of Common Stock, or a combination thereof as the
Committee shall determine) equal to the excess of the fair market value of a
share of Common Stock at the date of exercise over the exercise price.
SARs granted in tandem with options will be exercisable at such times,
on such conditions and to the extent that the related option may be exercised.
23
Restricted Stock
The Committee may grant shares of restricted stock to participants in
such amounts and at such times as it determines. Under the 1994 Plan, as
amended, restricted stock awards will vest based on attaining a specified
compounded annual total shareholder return (stock price appreciation plus
Company cash dividends paid and assumed to be reinvested in Common Stock).
Shares of restricted stock may not be transferred in any way, other than by
will or by the laws of descent and distribution, for the period of
restriction. After the period of restriction, the shares of restricted stock
become freely transferable.
The Committee may impose such other restrictions on restricted stock as
it may deem appropriate. If any dividends or distributions are paid in shares
of capital stock, the shares will be subject to the same restrictions on
transferability as the shares on which the dividends or distributions are
paid.
Tax Withholding
Whenever shares of Common Stock are to be issued under the 1994 Plan,
the Company may withhold from any cash otherwise payable to the participant or
require the participant to remit to the Company an amount sufficient to
satisfy federal, state and local withholding taxes. Unless the Committee
determines otherwise, a participant may satisfy such withholding requirements
by tendering already owned shares of Common Stock or requesting that the
Company withhold shares of Common Stock issuable in connection with the award.
Certain Federal Income Tax Consequences
Stock Options. The grant of an option under the 1994 Plan creates no
income tax consequences to the employee or the Company. An employee who is
granted a nonstatutory stock option will generally recognize ordinary income
at the time of exercise in an amount equal to the excess of the fair market
value of the Common Stock at such time over the exercise price. The Company
will be entitled to a deduction in the same amount and at the same time as
ordinary income is recognized by the employee. A subsequent disposition of
the Common Stock will give rise to capital gain or loss to the extent the
amount realized from the sale differs from the tax basis, i.e., the fair
market value of the Common Stock on the date of exercise. This capital gain
or loss will be short-term, mid-term or long-term capital gain or loss
depending on the holding period.
In general, an employee will recognize no income or gain at the time of
exercise of an incentive stock option (except that the alternative minimum tax
may apply). If the employee holds the shares of Common Stock acquired
pursuant to the exercise of an incentive stock option for at least two years
from the date of grant and one year from the date of exercise, any gain or
loss realized by the employee on the disposition of the Common Stock will be
treated as a long-term or mid-term capital gain or loss depending on the
holding period. No deduction will be allowed to the Company. If these
holding period requirements are not satisfied, the employee will recognize
ordinary income at the time of the disposition equal to the lesser of (i) the
gain realized on the disposition; or (ii) the difference between the exercise
price and the fair market value of the shares of Common Stock on the date of
exercise. Any gain realized by the employee over the fair market value at the
time of exercise will be treated as a capital gain which will be a short-term,
mid-term or long-term capital gain depending on the holding period. The
Company will be entitled to a deduction in the same amount and at the same
time as ordinary income is recognized by the employee. The Committee may
provide for a sharing between the Company and the participant of any tax
benefits to the Company arising from such disqualifying disposition.
24
Stock Appreciation Rights. The grant of an SAR will create no income
tax consequences for the employee or the Company. Upon exercise of an SAR,
the employee will recognize ordinary income equal to the amount of any cash
and the fair market value of any shares of Common Stock or other property
received, except that if the employee receives restricted stock upon exercise
of an SAR, recognition of income may be deferred in accordance with the rules
applicable to such an award. The Company will be entitled to a deduction in
the same amount and at the same time as income is recognized by the employee.
Restricted Stock. An employee will not recognize income upon the award
of restricted stock under the 1994 Plan unless the election described below is
made. However, an individual who has not made such an election will recognize
ordinary income at the time the restrictions lapse in an amount equal to the
fair market value of the restricted stock at such time. The Company will be
entitled to a corresponding deduction in the same amount and at the same time
as the participant recognizes income. Any otherwise taxable disposition of
the restricted stock after the restrictions lapse will result in capital gain
or loss (short-term, mid-term or long-term depending on the length of time the
restricted stock is held after the restrictions lapse). Dividends paid in
cash and received by a participant prior to time the restrictions lapse will
constitute ordinary income to the participant, and the Company will be
entitled to a corresponding deduction for such dividends. Any dividends paid
in stock will be treated as an award of additional restricted stock subject to
the tax treatment described above.
An employee may, within 30 days after the date of the award of
restricted stock, elect to recognize ordinary income as of the date of the
award in an amount equal to the fair market value of such restricted stock on
the date of the award. The Company will be entitled to a corresponding
deduction in the same amount and at the same time as the participant
recognizes income. If the election is made, any cash dividends received with
respect to the restricted stock will be treated as dividend income to the
participant in the year of payment and will not be deductible by the Company.
Any otherwise taxable disposition of the restricted stock (other than by
forfeiture) will result in capital gain or loss (long-term or short-term
depending on the holding period). If the participant who has made an election
subsequently forfeits the restricted stock, the participant will not be
entitled to deduct the amount previously included in income as a loss. The
Company would then be required to include as ordinary income the amount of the
deduction it originally claimed with respect to such shares
25
Outstanding Future Awards
On February 17, 1998, the Committee granted Options and restricted stock
to participants effective as of the date of the Annual Meeting, assuming
shareholder approval of the 1994 Plan, as amended. The Options will have a
per-share exercise price equal to the fair market value of a share of Common
Stock on the effective date of the grant. On February 27, 1998, the closing
per-share price of Common Stock on the New York Stock Exchange was $47.8175.
The following tabulation sets out the grants of stock options and restricted
stock to participants.
NEW PLAN BENEFITS
1994 Long-Term Performance Plan
Number of Shares Number of Shares of
Name and Position Subject to Options Restricted Stock
- --------------------- ------------------ -------------------
George E. Wardeberg 100,000 3,600
Chairman and Chief
Executive Officer
Thomas F. Schrader 30,000 2,000
President and Chief
Operating Officer
James C. Donnelly 20,000 1,500
Vice President
Joseph P. Wenzler 20,000 1,500
Senior Vice President,
Treasurer and Chief
Financial Officer
Robert A. Nuernberg 2,000 400
Secretary
Executive Group 192,000 9,000
Non-Executive 155,100 9,700
Officer Group
Except as set forth in the table, the Company cannot currently determine
awards that may be made to eligible participants under the 1994 Plan, as
amended. Such determination will be made from time to time by the Committee.
Duration of Plan
The 1994 Plan will remain in effect until all Common Stock subject to it
has been purchased or acquired, unless terminated earlier by the Board.
However, no option, SAR or restricted stock may be granted after March 1,
2004.
26
Amendment, Modification and Termination
The Board may amend, modify or terminate the 1994 Plan at any time,
provided that no such action of the Board, without approval of the
shareholders, may (i) increase the maximum number of shares issuable under the
1994 Plan or the maximum number of shares which can be awarded to any
participant; (ii) modify the performance criteria pursuant to which restricted
stock vests; (iii) materially modify the eligibility requirements for
participation in the 1994 Plan; or (iv) materially increase the benefits to
participants under the 1994 Plan. Termination, amendment or modification of
the 1994 Plan will not adversely affect the right of participants under
options, SARs or restricted stock previously granted, without the consent of
the participant.
Vote Required for Approval
The affirmative vote of a majority of the votes cast on the proposal by
shareholders is required for approval of the 1994 Plan, as amended, provided
that a majority of the outstanding shares of Common Stock are voted on the
proposal. Assuming such proviso is met, any shares not voted (whether by
broker non-vote or otherwise, except abstentions) will have no impact on the
vote. Shares as to which shareholders abstain from voting will be treated as
votes against the 1994 Plan, as amended. The shares represented by the
proxies received will be voted FOR approval of the 1994 Plan, as amended,
unless a vote against such approval or to abstain from voting is specifically
indicated on the proxy. In the event that the 1994 Plan, as amended, is not
approved by the shareholders at the Annual Meeting, the 1994 Plan (without
giving effect to the amendments described above) will remain in full force and
effect.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" APPROVAL OF THE 1994
PLAN, AS AMENDED, ITEM NO.2. PROXIES SOLICITED BY THE BOARD WILL BE SO VOTED
UNLESS SHAREHOLDERS SPECIFY A DIFFERENT CHOICE.
SHAREHOLDER PROPOSALS
Proposals which shareholders of the Company intend to present at and
have included in the Company's proxy statement for the 1999 Annual Meeting of
Shareholders must be received by the Company by the close of business on
November 13, 1998.
OTHER MATTERS
Arthur Andersen LLP was retained as the Company's independent auditors
for the year ended December 31, 1997 and, upon the recommendation of the Audit
Committee, the Board has reappointed Arthur Andersen as independent public
accountants for the Company for the year ending December 31, 1998. A
representative of Arthur Andersen is expected to be present at the Annual
Meeting with the opportunity to make a statement if such representative
desires to do so, and it is expected that such representative will be
available to respond to appropriate questions.
27
The Company will file with the Securities and Exchange Commission on or
before March 31, 1998, an annual report on Form 10-K for the fiscal year ended
December 31, 1997. The Company will provide without charge a copy of this
Form 10-K (including financial statements and financial statement schedules,
but not including exhibits thereto) to each person who is a record or
beneficial holder of shares of Common Stock as of the record date for the
Annual Meeting and who submits a written request for it. A request for a Form
10-K should be addressed to Robert A. Nuernberg, Secretary, WICOR, Inc., P.O.
Box 334, Milwaukee, Wisconsin 53201.
Management does not intend to present to the Annual Meeting any matters
other than the matters described in this Proxy Statement. Management knows of
no other matters to be brought before the Annual Meeting. However, if any
other matters are properly brought before the Annual Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote thereon
in accordance with their best judgment.
The cost of soliciting proxies will be borne by the Company. The
Company expects to solicit proxies primarily by mail. Proxies may also be
solicited personally and by telephone by certain officers and regular
employees of the Company and its subsidiaries. The Company has also retained
ChaseMellon Shareholder Services to assist in the solicitation of proxies, and
expects to pay such firm a fee of approximately $4,750, plus out-of-pocket
expenses. The Company may reimburse brokers and other nominees for their
expenses in communicating with the persons for whom they hold Common Stock.
By Order of the Board of Directors
Robert A. Nuernberg
Secretary
March 13, 1998
28
APPENDIX A
WICOR, INC.
1994 LONG-TERM PERFORMANCE PLAN
(as proposed to be amended)
Proposed additions to Section 4(a)(i), Section 4(a)(ii) and Section
6(c)(iii) of the Company's 1994 Long-Term Performance Plan that would be
effected if the shareholders approve the 1994 Plan, as amended, have been
underlined and proposed deletions have been indicted by overstriking.
Section 1. Purpose
The purpose of the WICOR, Inc. 1994 Long-Term Performance Plan (the
"Plan") is to enhance the ability of WICOR, Inc. (together with any successor
thereto, the "Company") and its Affiliates (as defined below) to attract,
retain and motivate key salaried employees upon whom, in large measure, the
sustained growth and profitability of the Company depend and to provide
incentives to such key salaried employees which are more directly linked to
the profitability of the Company's businesses and increases in shareholder
value.
Section 2. Definitions
As used in the Plan, the following terms shall have the respective
meanings set forth below:
- "Affiliate" shall mean any entity that, directly or through one or more
intermediaries, is controlled by, controls, or is under common control with,
the Company.
- "Award" shall mean any Option, Stock Appreciation Right or Restricted
Stock granted under the Plan.
- "Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award granted under the Plan.
- "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
- "Commission" shall mean the United States Securities and Exchange
Commission or any successor agency.
- "Committee" shall mean a committee of the Board of Directors of the
Company designated by such Board to administer the Plan and composed of not
less than two directors, each of whom is a "non-employee director" within the
meaning of Rule 16b-3.
- "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
- "Fair Market Value" shall mean, with respect to any property (including,
without limitation, any Shares or other securities), the fair market value of
such property determined by such methods or procedures as shall be established
from time to time by the Committee.
- "Incentive Stock Option" shall mean an Option granted under Section 6(a)
of the Plan that is intended to meet the requirements of Section 422 of the
Code, or any successor provision thereto.
- "Key Salaried Employee" shall mean any officer or other key salaried
employee of the Company or of an Affiliate who is responsible for or
contributes to the management, growth or profitability of the business of the
Company or any Affiliate as determined by the Committee.
- "Non-Qualified Stock Option" shall mean an Option granted under Section
6(a) of the Plan that is not intended to be an Incentive Stock Option.
- "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
29
- "Participant" shall mean a Key Salaried Employee designated to be granted
an Award under the Plan.
- "Person" shall mean any individual, corporation, partnership,
association, limited liability company, joint-stock company, trust,
unincorporated organization, or government or political subdivision thereof.
- "Released Securities" shall mean Shares of Restricted Stock with respect
to which all applicable restrictions have expired, lapsed, or been waived.
- "Restricted Securities" shall mean Awards of Restricted Stock or other
Awards under which issued and outstanding Shares are held subject to certain
restrictions.
- "Restricted Stock" shall mean any Shares granted under Section 6(c)of the
Plan.
- "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the Commission under
the Exchange Act, or any successor rule or regulation thereto.
- "Shares" shall mean shares of common stock of the Company and such other
securities or property as may become subject to Awards pursuant to an
adjustment made under Section 4(b) of the Plan.
- "Stock Appreciation Right" shall mean any right granted under Section
6(b) of the Plan.
- "Total Shareholder Return" shall mean the appreciation of the price of a
share of common stock of the Company, plus the value of dividends paid thereon
assuming reinvestment in common stock of the Company.
Section 3. Administration
The Plan shall be administered by the Committee; provided, however, that
if at any time the Committee shall not be in existence, the functions of the
Committee as specified in the Plan shall be exercised by those members of the
Board of Directors of the Company who qualify as "non-employee directors"
under Rule 16b-3. Subject to the terms of the Plan and applicable law, the
Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to each Participant
under the Plan; (iii) determine the number of Shares to be covered by (or with
respect to which payments, rights, or other matters are to be calculated in
connection with) Awards granted to Participants; (iv) determine the terms and
conditions of any Award granted to a Participant; (v) determine whether, to
what extent, and under what circumstances Awards granted to Participants may
be settled or exercised in cash, Shares, other securities, other Awards, or
other property, or canceled, forfeited, or suspended to the extent permitted
in Section 7 of the Plan, and the method or methods by which Awards may be
settled, exercised, canceled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable with respect to an
Award granted to Participants under the Plan shall be deferred either
automatically or at the election of the holder thereof or of the Committee;
(vii) interpret and administer the Plan and any instrument or agreement
relating to, or Award made under, the Plan (including, without limitation, any
Award Agreement); (viii) establish, amend, suspend, or waive such rules and
regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (ix) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan,
all designations, determinations, interpretations, and other decisions under
or with respect to the Plan or any Award shall be within the sole discretion
of the Committee, may be made at any time, and shall be final, conclusive, and
binding upon all Persons, including the Company, any Affiliate, any
Participant, any holder or beneficiary of any Award, any shareholder, and any
employee of the Company or of any Affiliate.
30
The Committee shall solicit and consider the recommendations of the Chief
Executive Officer of the Company with regard to, among other things, the
designation of Participants, the type of Awards to be granted under the Plan
to such Participants and the number of Shares to be subject thereto, and the
other terms and conditions of Awards granted to Participants, subject to the
limitations of Rule 16b-3.
Section 4. Shares Available for Award
(a) Shares Available. Subject to adjustment as provided in Section 4(b):
(i) Number of Shares Available. The total number of Shares with
respect to which Awards may be granted under the Plan shall be 820,000
1,745,000. If, after the effective date of the Plan, any Shares covered by an
Award granted under the Plan, or to which any Award relates, are forfeited or
if an Award otherwise terminates, expires or is canceled prior to the delivery
of all of the Shares or of other consideration issuable or payable pursuant to
such Award and if such forfeiture, termination, expiration or cancellation
occurs prior to the payment of dividends or the exercise by the holder of
other indicia of ownership of the Shares to which the Award relates, then the
number of Shares counted against the number of Shares available under the Plan
in connection with the grant of such Award, to the extent of any such
forfeiture, termination, expiration or cancellation, shall again be available
for granting of additional Awards under the Plan; provided, however, that if
an Award covering additional Shares is granted to a Participant in connection
with such forfeiture, termination, expiration or cancellation, then the Shares
subject to the forfeiture, termination, expiration or cancellation shall be
counted against the total number of Shares with respect to which Awards may be
granted under the Plan and the maximum number of Shares that may be the
subject of Awards granted to individual Participants under the Plan in an
amount equal to the number of Shares to which such additional grant relates.
(ii) Limitation on Awards to Individual Participants. No During any
one calendar year, no Participant shall be granted Awards that could result in
such Participant exercising of Options for, or Stock Appreciation Rights with
respect to, more than 125,000 150,000 Shares or receiving receive more than
25,000 10,000 Shares of Restricted Stock under the Plan.
(iii) Accounting for Awards. The number of Shares covered by an
Award under the Plan, or to which such Award relates, shall be counted on the
date of grant of such Award against the number of Shares available for
granting Awards under the Plan; provided, however, that if Options and Stock
Appreciation Rights are granted in tandem and the exercise of either an Option
or Stock Appreciation Right results in an offsetting reduction in the number
of Options or Stock Appreciation Rights subject to the Award, then the number
of Shares to which such Award relates shall only be counted against the number
of Shares available for granting Awards under the Plan to the extent of the
aggregate number of Shares as to which such Award may be exercised.
(iv) Sources of Shares Deliverable Under Awards. Any Shares
delivered pursuant to an Award may consist, in whole or in part, of authorized
and unissued Shares or of treasury Shares.
31
(b) Adjustments. In the event that the Company shall pay a dividend on
its common stock in Shares, effect a stock split, or effect a similar
corporate transaction or event that affects the Shares such that an adjustment
is determined by the Committee to be appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the number of Shares subject to the Plan and
which thereafter may be made the subject of Awards and the number of Shares
subject to outstanding Awards under the Plan, and the exercise and grant
prices thereof, shall be equitably adjusted by the Committee such that the
number of Shares, as adjusted, shall bear the same relation to the total
number of outstanding shares of common stock of the Company following the
transaction or event as immediately prior to such transaction or event;
provided, however, that the number of Shares subject to any Award payable or
denominated in Shares shall always be a whole number.
Section 5. Eligibility
Any Key Salaried Employee, including any executive officer or employee
who is also a director of the Company or of any Affiliate, who is not a member
of the Committee shall be eligible to be designated a Participant.
Section 6. Awards
(a) Options. The Committee is hereby authorized to grant Options to
Participants with the terms and conditions as set forth below and with such
additional terms and conditions, in either case not inconsistent with the
provisions of the Plan, as the Committee shall determine; provided, however,
that no Option shall be granted, directly or indirectly, in connection with
the forfeiture, termination, cancellation or expiration of an Option
previously granted under the Plan prior to its normal expiration date if such
forfeited, terminated, canceled or expired Option has an exercise price higher
than the Option proposed to be granted.
(i) Exercise Price. The exercise price per share under an Option
shall be determined by the Committee; provided, however, that such exercise
price shall not be less than 100% of the Fair Market Value of a Share on the
date of grant of such Option; and provided further, that such exercise price
shall not be adjusted following the date of grant of such Option except as
provided in Section 4(b) hereof.
(ii) Option Term. The term of each Option shall be fixed by the
Committee; provided, however, that in no event shall the term of any Option
exceed a period of ten years from the date of its grant.
(iii) Exercisability and Method of Exercise. An Option shall become
exercisable in such manner and within such period or periods and in such
installments or otherwise as shall be determined by the Committee. The
Committee also shall determine the method or methods by which, and the form or
forms, including, without limitation, cash, Shares, other securities, other
Awards, or other property, or any combination thereof, having a Fair Market
Value on the exercise date equal to the relevant exercise price, in which
payment of the exercise price with respect to any Option may be made or deemed
to have been made.
(iv) Incentive Stock Options. The terms of any Incentive Stock
Option granted under the Plan shall comply in all respects with the provisions
of Section 422 of the Code, or any successor provision thereto, and any
regulations promulgated thereunder.
32
(b) Stock Appreciation Rights. The Committee is hereby authorized to
grant Stock Appreciation Rights to Participants. Subject to the terms of the
Plan and any applicable Award Agreement, a Stock Appreciation Right granted
under the Plan shall confer on the holder thereof a right to receive, upon
exercise thereof, the excess of (i) the Fair Market Value of one Share on the
date of exercise over (ii) the grant price of the right as specified by the
Committee, which shall not be less than the Fair Market Value of one Share on
the date of grant of the Stock Appreciation right. Subject to the terms of the
Plan, the grant price, term, methods of exercise, methods of settlement
(including whether the Participant will be paid in cash or Shares, or a
combination thereof), and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee; provided, however,
that the grant price of a Stock Appreciation Right may not be adjusted
following the date of grant of such Stock Appreciation Right except as
provided in Section 4(b) hereof. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as it may deem
appropriate, including, without limitation, restricting the time of exercise
of the Stock Appreciation Right to specified periods as may be necessary to
satisfy the requirements of Rule 16b-3.
(c) Restricted Stock Awards
(i) Issuance. The Committee is hereby authorized to grant Awards
of Restricted Stock to Participants.
(ii) Restrictions. Shares of Restricted Stock granted to
Participants shall be subject to such restrictions as the Committee may
impose, which restrictions may lapse separately or in combination at such time
or times, in such installments or otherwise, as the Committee may deem
appropriate.
(iii) Performance Criteria. The restrictions applicable to Company
executives and the Chairman and President of each subsidiary of the Company
Participants shall be based on the criteria of attaining over a period of at
least three years a compounded annual percentage rate of Total Shareholder
Return compared to a specified group of gas distribution utilities. The
restrictions applicable to other executives of the subsidiaries shall be as
determined by the Committee.
(iv) Registration. Any Restricted Stock granted under the Plan to a
Participant may be evidenced in such manner as the Committee may deem
appropriate. In the event any stock certificate is issued in respect of
Shares of Restricted Stock granted under the Plan to a Participant, such
certificate shall be registered in the name of the Participant and shall bear
an appropriate legend (as determined by the Committee) referring to the terms,
conditions, and restrictions applicable to such Restricted Stock.
(v) Payment of Restricted Stock. At the end of the applicable
restriction period relating to Restricted Stock granted to a Participant, one
or more stock certificates for the appropriate number of Shares, free of
restrictions, shall be delivered to the Participant, or, if the Participant
received stock certificates representing the Restricted Stock at the time of
grant, the legends placed on such certificates shall be remove.
(vi) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment of a Participant (as determined under criteria
established by the Committee) for any reason during the applicable restriction
period, all Shares of Restricted Stock still subject to restriction shall be
forfeited by the Participant and reacquired by the Company.
33
(d) General.
(i) No Consideration for Awards. Awards shall be granted to
Participants for no cash consideration unless otherwise determined by the
Committee.
(ii) Award Agreements. Each Award granted under the Plan shall be
evidenced by an Award Agreement in such form (consistent with the terms of the
Plan) as shall have been approved by the Committee.
(iii) Awards May Be Granted Separately or Together. Awards to
Participants under the Plan may be granted either alone or in addition to, in
tandem with, or in substitution for any other Award or any award granted under
any other plan of the Company or any Affiliate. Awards granted in addition to
or in tandem with other Awards, or in addition to or in tandem with awards
granted under any other plan of the Company or any Affiliate, may be granted
either at the same time as or at a different time from the grant of such other
Awards or awards.
(iv) Limits on Transfer of Awards. No Award (other than Released
Securities), and no right under any such Award, shall be assignable,
alienable, salable, or transferable by a Participant otherwise than by will or
by the laws of descent and distribution (or, in the case of an Award of
Restricted Securities, to the Company); provided, however, that a Participant
at the discretion of the Committee may be entitled, in the manner established
by the Committee, to designate a beneficiary or beneficiaries to exercise his
or her rights, and to receive any property distributable, with respect to any
Award upon the death of the Participant. Each Award, and each right under any
Award, shall be exercisable, during the lifetime of the Participant, only by
such individual or, if permissible under applicable law, by such individual's
guardian or legal representative. No Award (other than Released Securities),
and no right under any such Award, may be pledged, alienated, attached, or
otherwise encumbered, and any purported pledge, alienation, attachment, or
encumbrance thereof shall be void and unenforceable against the Company or any
Affiliate.
(v) Term of Awards. Except as otherwise provided in the Plan, the
term of each Award shall be for such period as may be determined by the
Committee.
(vi) Rule 16b-3 Six-Month Limitations. To be extent required in
order to comply with Rule 16b-3 only, any equity security offered pursuant to
the Plan may not be sold for at least six months after acquisition, except in
the case of death or disability, and any derivative security issued pursuant
to the Plan shall not be exercisable for at least six months, except in case
of death or disability of the holder thereof. Terms used in the preceding
sentence shall, for the purposes of such sentence only, have the meanings, if
any, assigned or attributed to them under Rule 16b-3.
(vii) Share Certificates; Representation by Participants. In
addition to the restrictions imposed pursuant to Section 6(c) hereof, all
certificates for Shares delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the Commission, any stock exchange or
other market upon which such Shares are then listed or traded, and any
applicable federal or state securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions. The Committee may require each Participant or
other Person who acquires Shares under the Plan by means of an Award
originally made to a Participant to represent to the Company in writing that
such Participant or other Person is acquiring the Shares without a view to the
distribution thereof.
34
Section 7. Amendment and Termination; Waiver of Conditions
(a) Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue, or terminate the Plan at any time;
provided, however, that no amendment, alteration, suspension, discontinuation
or termination of the Plan shall in any manner (except as otherwise provided
in this Section 7) adversely affect any Award granted and then outstanding
under the Plan without the consent of the Participant; provided further that,
notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the shareholders of the Company, no amendment,
alterations, suspension, discontinuation, or termination of the Plan shall be
made that would:
(i) increase the total number of Shares available for Awards under
the Plan or the maximum number of Shares with respect to which Awards may be
made to individual Participants, except as provided in Section 4(b) hereof;
(ii) modify the performance criteria pursuant to which Restricted
Stock vests;
(iii) materially increase the benefits accruing to Participants under
the Plan; or
(iv) Materially modify the requirements as to eligibility for
participation in the Plan.
(b) Adjustments of Awards Upon Certain Acquisitions. In the event the
Company or any Affiliate shall assume outstanding employee awards or the right
or obligation to make future such awards in connection with the acquisition of
another business or another corporation or business entity, the Committee may
make such adjustments, not inconsistent with the terms of the Plan, in the
terms of Awards granted to Participants as it shall deem appropriate in order
to achieve reasonable comparability or other equitable relationship between
the assumed awards and the Awards granted under the Plan to Participants as so
adjusted.
(C) Correction of Defects, Omissions, and Inconsistencies. The Committee
may correct any defect, supply any omission, or reconcile any inconsistency in
any Award or Award Agreement in the manner and to the extent it shall deem
necessary or desirable to carry the Plan into effect.
Section 8. General Provisions
(a) No Rights to Awards. No Key Salaried Employee, Participant or other
Person shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Key Salaried Employees,
Participants, or holders or beneficiaries of Awards under the Plan. The terms
and conditions of Awards need not be the same with respect to each
Participant.
(b) Withholding. No later than the date as of which an amount first
becomes includible in the gross income of a Participant for federal income tax
purposes with respect to any Award under the Plan, the Participant shall pay
to the Company, or make arrangements satisfactory to the Company regarding the
payment of, any federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined
by the Committee, withholding obligations arising with respect to Awards to
Participants under the Plan may be settled with Shares (other than Restricted
Securities), including Shares that are part of, or are received upon exercise
of, the Award that gives rise to the withholding requirement. The obligations
of the Company under the Plan shall be conditional on such payment or
arrangements, and the Company and any Affiliate shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment otherwise due
to the Participant. The Committee may establish such procedures as it deems
appropriate for the settling of withholding obligations with Shares,
including, without limitation, the establishment of such procedures as may be
necessary to satisfy the requirements of Rule 16b-3.
35
(c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.
(d) Rights and Status of Recipients of Awards. The grant of an Award
shall not be construed as giving a Participant the right to be retained in the
employ of the Company or any Affiliate. Further, the Company or any Affiliate
may at any time dismiss a Participant from employment, free from any
liability, or any claim under the Plan. Except for rights accorded under the
Plan and under any applicable Award Agreement, Participants shall have no
rights as holders of Shares as a result of the granting of Awards hereunder.
(e) Unfunded Status of the Plan. Unless otherwise determined by the
Committee, the Plan shall be unfunded and shall not create (or be construed to
create) a trust or a separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any Participant or other
Person. To the extent any Person holds any right by virtue of a grant under
the Plan, such right (unless otherwise determined by the Committee) shall be
no greater than the right of an unsecured general creditor of the Company.
(f) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the internal laws of the State of Wisconsin and applicable
federal law.
(g) Severability. If any provision of the Plan or any Award Agreement or
any Award is or becomes or is deemed to be invalid, illegal, or unenforceable
in any jurisdiction, or as to any Person or Award, or would disqualify the
Plan, any Award Agreement or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the intent of the
Plan, any Award Agreement or the Award, such provision shall be stricken as to
such jurisdiction, Person, or Award, and the remainder of the Plan, any such
Award Agreement and any such Award shall remain in full force and effect.
(h) No Fractional Shares. No fraction Shares or other securities shall
be issued or delivered pursuant to the Plan, any Award Agreement or any Award,
and the Committee shall determine (except as otherwise provided in the Plan)
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares or other securities or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
Section 9. Effective Date of the Plan
The Plan shall be effective as of March 1, 1994, subject, however, to the
approval of the plan by the shareholders of the Company at the next annual
meeting of shareholders, or any adjournment thereof, within twelve months
following the date of adoption of the Plan by the Board of Directors of the
Company.
36
Section 10. Term of the Plan
No Award shall be granted under the Plan after March 1, 2004. However,
unless otherwise expressly provided in the Plan or in an applicable Award
Agreement, any Award theretofore granted may extend beyond such date, and, to
the extent set forth in the Plan, the authority of the Committee to amend,
alter, adjust, suspend, discontinue, or terminate any such award, or to waive
any conditions or restrictions with respect to any such Award, and the
authority of the Board of Directors of the Company to amend the Plan, shall
extend beyond such date.
37
APPENDIX B
WICOR
VOTING AUTHORIZATION
[X] Please mark your
votes as this
- ----------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees
in Item 1 AND for ITEM 2..
- ----------------------------------------------------------------------------
1. Election of the following nominees as directors for three-year terms:
Wendell F. Bueche, Daniel F. McKeithan, Jr., George E. Wardeberg
and Essie M. Whitelaw
FOR all nominees WITHHOLD
(except as marked AUTHORITY
to the contrary) to vote for all nominees
/ / / /
(Instruction: To withhold authority to vote
for any nominee write the name below)
2. To approve and adopt the 1994 Long-Term Performance Plan, as amended.
For Against Abstain
/ / / / / /
-------------------------------------------
. . . . . . . . . . . . . . . . . . . . . .
. .
. .
. .
. . This Voting Authoriza-
. . tion is Solicited by the
. . Board of Directors
. . . . . . . . . . . . . . . . . . . . . .
Signature(s) _________________________________ Date ________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
38
FOLD AND DETACH HERE
March 13, 1998
Dear WICOR Employee Shareholder:
Enclosed is a notice of WICOR's annual shareholders meeting, coming up
April 23, 1998, in Milwaukee. Also enclosed is a proxy statement, voting
authorization card and WICOR 1997 annual report.
It's important that you fill out and return the authorization card as soon
as possible. It entitles you, as an owner of WICOR common stock through our
company's savings plans, to vote your interest at the annual meeting.
Filing out the card directs the Trustee of your shares held in the savings
plan as of February 23, 1998, to vote them on your behalf. You must return
your marked and signed card in order to have the Trustee vote your shares.
The WICOR Board of Directors urges you to exercise this right to vote. To
make sure your vote counts, and to prevent the expense of WICOR sending
further reminder notices, please mark and sign your voting authorization
card now and return it to the Trustee in the enclosed envelope.
Thank you,
Sincerely,
George E. Wardeberg
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION AT THE WICOR
SHAREHOLDERS ANNUAL MEETING, MARK YOUR VOTES ON THE ENCLOSED VOTING
AUTHORIZATION CARD, DATE IT, SIGN IT EXACTLY AS YOUR NAME APPEARS AND RETURN
IT TODAY IN THE ENCLOSED ENVELOPE.
39
--- (BACKSIDE OF VOTER AUTHORIZATION FORM) ---
WICOR
VOTING AUTHORIZATION
The undersigned acknowledges receipt of the WICOR, Inc. Annual Report for
1997 and the proxy solicitation material relative to the Annual Meeting of
Shareholders of WICOR, Inc. to be held April 23, 1998. As to my interest in
the Common Stock of WICOR, Inc. held by Marshall and Ilsley Trust Company,
the Trustee under the WICOR, Inc. Master Savings Trust, I hereby instruct
the Trustee to vote as indicated on the reverse side.
The shares represented by this authorization will be voted as directed by
the undersigned. If no direction is given when the duly executed
authorization is returned, the Trustee cannot vote such shares.
THIS VOTING AUTHORIZATION IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT
THE ANNUAL MEETING OF SHAREHOLDERS OF WICOR, INC., APRIL 23, 1998.
(continued on the reverse side)
40
APPENDIX II
/X/ Please mark your
votes as indicated
WICOR in this example
PROXY
- ------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees in Item 1
and FOR item 2..
- ------------------------------------------------------------------------
1. Election of the following nominees as directors for three-year terms:
Wendell F. Bueche, Daniel F. McKeithan, Jr., George E. Wardeberg
and Essie M. Whitelaw
FOR all nominees WITHHOLD
(except as marked AUTHORITY
to the contrary) to vote for all nominees
/ / / /
(Instruction: To withhold authority to vote for
any nominee write the name below)
------------------------------------------
2. To approve the 1994 Long-Term Performance Plan, as amended.
FOR AGAINST ABSTAIN
/ / / / / /
Please check this box
if you plan to attend
the annual meeting
[ ]
This Proxy is Solicited
by the Board of Directors
Signature(s) __________________________ Date __________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
41
FOLD AND DETACH HERE
March 13, 1998
Dear WICOR Shareholder:
We're pleased to send you the enclosed 1997 annual report and proxy
materials. I hope you'll find the annual report interesting and
informative, and that you'll exercise your right to vote at the annual
meeting by returning your proxy card promptly.
I'd also like to invite you to attend WICOR's Annual Meeting of Shareholders
on Thursday, April 23, 1998. This year's meeting will be held at the
Italian Community Center, 631 East Chicago Street, Milwaukee, Wisconsin,
beginning at 2:00 p.m. (Central Time). A map with directions to the center
is on the reverse side of this letter. Free parking is available in a lot
on the south side of the building.
At the meeting, we will elect directors, VOTE ON THE 1994 Long-Term
Performance Plan, as amended, discuss 1997 performance and talk
about the future. As an investor in WICOR, you have a right and a
responsibility to vote on issues affecting your company. Regardless of
whether you plan to attend the annual meeting, please mark the appropriate
boxes on the proxy form, and then date, sign and promptly return the form in
the enclosed, postage-paid envelope. If you sign and return the proxy form
without specifying your choices, your shares will be voted according to the
recommendations of your board of directors.
If you plan to attend the annual meeting, please check the appropriate box
on the proxy card. We welcome your comments and suggestions, and we will
provide time during the meeting for questions from shareholders. I hope to
see you on April 23.
Sincerely,
George E. Wardeberg
President and Chief Executive Office
42
WICOR
COMMON SHAREHOLDER PROXY
The undersigned hereby appoints George E. Wardeberg and Joseph P. Wenzler,
and each of them, as proxy with the power of substitution (to act by a
majority present or if only one acts then by that one) to vote for the
undersigned as indicated on the reverse side and in their discretion on such
other matters as may properly be considered at the Annual Meeting of
Shareholders of WICOR, Inc. to be held Thursday, April 23, 1998, at 2:00
P.M., at the Italian Community Center, 631 E. Chicago Street, Milwaukee,
Wisconsin, and at any adjournments thereof.
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is
returned, such shares will be voted "FOR" all nominees in Item 1, "FOR"
Item 2, and in the discretion of the proxies on any other items of business
as may properly arise at the meeting.
Please mark, date and sign on the reverse side exactly as name appears and
return in the enclosed postage-paid envelope. If shares are held jointly,
each shareholder named should sign. If signing as attorney, administrator,
executor, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by duly authorized officer.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL
MEETING OF SHAREHOLDERS OF WICOR, INC., APRIL 23, 1998.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
FOLD AND DETACH HERE
Map of downtown Milwaukee, Wisconsin, showing
location of annual meeting and the routes to take within
Milwaukee and from Chicago, Green Bay and Madison.
1