SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
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[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
IPALCO ENTERPRISES, INC.
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(Name of Registrant A Specified In Its Charter)
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IPALCO ENTERPRISES, INC.
One Monument Circle
P.O. Box 1595
Indianapolis, Indiana 46206-1595
April 15, 1997
Dear Fellow Shareholders:
In the first quarter of 1997, IPALCO announced a significant
wealth-creation initiative. On March 27, we ended a month-long "Dutch
Auction" whereby we bought back approximately 22 percent of our
outstanding common stock at $32 per share. This $400 million repurchase
is the first of its kind in the electric utility industry.
Along with repurchasing our stock, we reduced the dividend nearly
33 percent. The reduction in dividend combined with the reduction in shares
outstanding resulted in $24 million after-tax improvement in cash flow. Both
S&P and Moody's liked the story. I'm pleased to report that IPL maintained
its strong Double-A credit ratings with both agencies.
Overall, the transaction has been an unqualified success. Since the
beginning of the year, IPALCO's stock price has increased 15.7 percent, while
the S&P Electric Utility Index declined 6.9 percent through April 8. Our
transaction gave investors the option to exit the stock at nearly a $4 per
share premium over the closing price on the day we announced our plans.
Alternatively, those of you who remained owners have witnessed significant
price appreciation and now own 28 percent more of a faster-growing company.
We will use our strong cash flow to pay off the debt in three and a
half to five years which will accelerate earnings per share growth. Our
objective of a 45-50 percent payout ratio should mean strong dividend growth
as well in the years ahead.
Please enjoy reading the rest of the IPALCO story in the enclosed
Annual Report. As always, we appreciate your investment and will do our best
to grow it for your benefit.
Sincerely,
/s/ John R. Hodowal
John R. Hodowal
Chairman of the Board
and President
IPALCO ENTERPRISES, INC.
One Monument Circle
P. O. Box 1595
Indianapolis, Indiana 46206-1595
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1997
TO THE SHAREHOLDERS OF
IPALCO ENTERPRISES, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
IPALCO Enterprises, Inc. will be held at the office of the corporation, One
Monument Circle, Indianapolis, Indiana on Wednesday, May 21, 1997, at 11
o'clock A.M. (Eastern Standard Time), for the following purposes:
1. To elect five directors in Class II to hold office for terms of
three years each and until their successors are duly elected and
qualified;
2. To approve an amendment to Section 5.01 of Article 5 of the
Amended Articles of Incorporation to increase the authorized
number of shares of IPALCO's common stock from 145 million to 290
million;
3. To approve the adoption of the IPALCO Enterprises, Inc. 1997 Stock
Option Plan; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors fixed the close of business on Thursday, April
10, 1997 as the record date for determining the shareholders entitled to
notice of, and to vote at, the Annual Meeting and at any adjournment thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. Whether
or not you expect to be present at the meeting, you are urged to fill in, date
and sign the enclosed proxy and return it immediately in the accompanying
postage guaranteed envelope.
By order of the Board of Directors.
IPALCO ENTERPRISES, INC.
By: BRYAN G. TABLER, Secretary
Indianapolis, Indiana
April 15, 1997
TABLE OF CONTENTS
ANNUAL MEETING INFORMATION. . . . . . . . . . . . . . . . . . . 1
Date, Time and Place of Annual Meeting . . . . . . . . . . . 1
Solicitation of Proxies. . . . . . . . . . . . . . . . . . . 1
Other Business . . . . . . . . . . . . . . . . . . . . . . . 1
Shareholder Proposals for 1998 Annual Meeting. . . . . . . . 2
RELATIONSHIP WITH AUDITOR . . . . . . . . . . . . . . . . . . . 2
VOTING SECURITIES AND BENEFICIAL OWNERS . . . . . . . . . . . . 2
Beneficial Owners of 5% or More of Common Stock. . . . . . . 2
Beneficial Ownership of Common Stock By Directors, Nominees
and Executive Officers . . . . . . . . . . . . . . . . . . . 3
PROPOSAL 1 - ELECTION OF FIVE DIRECTORS . . . . . . . . . . . . 4
Nominees For Directors To Be Elected At the 1997 Annual
Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CLASS II. . . . . . . . . . . . . . . . . . . . . . . 4
Current Directors Whose Terms Expire in 1998 (Class III)
and in 1999 (Class I). . . . . . . . . . . . . . . . . . . . 5
CLASS III . . . . . . . . . . . . . . . . . . . . . . 5
CLASS I . . . . . . . . . . . . . . . . . . . . . . . 5
INFORMATION REGARDING THE BOARD OF DIRECTORS. . . . . . . . . . 6
Procedure To Propose Nominees For Director . . . . . . . . . 6
Number Of Board Meetings and Attendance. . . . . . . . . . . 6
Committees of the Board. . . . . . . . . . . . . . . . . . . 7
Section 16(a) Beneficial Ownership Reporting Compliance. . . 7
Compensation Committee Interlocks and Insider Participation. 7
Compensation of Directors. . . . . . . . . . . . . . . . . . 8
Certain Business Relationships . . . . . . . . . . . . . . . 8
PROPOSAL 2 - APPROVAL OF AMENDMENT TO AMENDED ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES
OF IPALCO'S COMMON STOCK . . . . . . . . . . . . . . . . . . 9
The Proposed Amendment . . . . . . . . . . . . . . . . . . . 9
Purpose and Effect of Proposed Amendment . . . . . . . . . . 9
PROPOSAL 3 - APPROVAL OF THE IPALCO ENTERPRISES, INC. 1997 STOCK
OPTION PLAN. . . . . . . . . . . . . . . . . . . . . . . . . 10
Introduction . . . . . . . . . . . . . . . . . . . . . . . . 10
Summary of the Plan. . . . . . . . . . . . . . . . . . . . . 10
Administration . . . . . . . . . . . . . . . . . . . . . . 10
Eligibility. . . . . . . . . . . . . . . . . . . . . . . . 10
Stock Subject to Plan. . . . . . . . . . . . . . . . . . . 11
Terms of Options . . . . . . . . . . . . . . . . . . . . . 11
Adjustment of Shares . . . . . . . . . . . . . . . . . . . 12
Tax Withholding. . . . . . . . . . . . . . . . . . . . . . 12
Amendment. . . . . . . . . . . . . . . . . . . . . . . . . 12
Termination. . . . . . . . . . . . . . . . . . . . . . . . 12
Agreements Evidencing Incentive and Non-Qualified Stock
Options. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Federal Income Tax Consequences of Stock Options . . . . . . 12
New Plan Benefits Chart. . . . . . . . . . . . . . . . . . . 13
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . 13
Compensation Policies Relating Generally to Executive
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Base Salary . . . . . . . . . . . . . . . . . . . . . 14
Annual Incentive Plan . . . . . . . . . . . . . . . . 14
Long-Term Performance and Restricted Stock
Incentive Plan. . . . . . . . . . . . . . . . . . . . 14
Basis for Chief Executive Officer's Compensation . . . . . . 15
Deductibility of Executive Compensation. . . . . . . . . . . 15
COMPENSATION OF EXECUTIVE OFFICERS. . . . . . . . . . . . . . . 16
Nature and Types of Compensation . . . . . . . . . . . . . . 16
Subsidiary Incentive Plan. . . . . . . . . . . . . . . . . . 16
Summary Compensation - Table I . . . . . . . . . . . . . . . 16
Option Exercises - Table II. . . . . . . . . . . . . . . . . 17
Performance Graph - Table III. . . . . . . . . . . . . . . . 18
Performance Graph. . . . . . . . . . . . . . . . . . . . . . 18
Pension Plans. . . . . . . . . . . . . . . . . . . . . . . . 19
Pension Plan Table - Table IV . . . . . . . . . . . . 19
Employment Contracts and Termination of Employment and
Change-in-Control Arrangements . . . . . . . . . . . . . . . 20
APPENDIX A - Text of IPALCO Enterprises, Inc.
1997 Stock Option Plan . . . . . . . . . . . . . . . . . . . A-1
IPALCO ENTERPRISES, INC.
One Monument Circle P. O. Box 1595
Indianapolis, Indiana 46206-1595
PROXY STATEMENT
For the Annual Meeting of Shareholders
To Be Held May 21, 1997
(Mailed on or about April 15, 1997)
ANNUAL MEETING INFORMATION
Date, Time and Place of Annual Meeting
The information set forth in this Proxy Statement is
furnished in connection with the solicitation of the enclosed
proxy by and on behalf of the Board of Directors of IPALCO
Enterprises, Inc. ("IPALCO") for use at its Annual Meeting of
Shareholders to be held May 21, 1997, at 11:00 o'clock A.M. (EST)
at the principal office of IPALCO, One Monument Circle,
Indianapolis, Indiana 46204, pursuant to the foregoing Notice of
Annual Meeting, and at any adjournment of such meeting.
Solicitation of Proxies
The presence in person or by proxy of the holders of a
majority of the outstanding shares entitled to vote at the Annual
Meeting is necessary to constitute a quorum. Shares represented
for any purpose are deemed present for quorum purposes. If the
enclosed form of proxy is properly executed and returned in time
for the meeting, the named proxies will vote the shares
represented by the proxy in accordance with the instructions
marked. Proxies returned unmarked will be voted in favor of the
proposed nominees for director, in favor of the proposed
amendment to IPALCO's Amended Articles of Incorporation and in
favor of the adoption of the 1997 Stock Option Plan. If other
matters are properly brought before the meeting, or any
adjournment thereof, the enclosed proxy gives discretionary
authority to the persons named therein to vote in accordance with
their best judgment on such matters. A shareholder executing and
delivering the enclosed proxy has the unconditional right to
revoke it at any time before the authority granted therein is
exercised.
Under Indiana law, the election of directors will be
determined by plurality vote at a meeting where a quorum is
present. As a result, the five nominees who receive the greatest
number of votes cast for election as directors will be elected as
directors of IPALCO. Broker non-votes and withheld votes will
not affect the outcome of the election of directors.
Action on any matter, other than the election of directors,
will be approved if the votes cast in favor of the proposal
exceed the votes cast against the proposal. Abstentions from
voting or broker non-votes will have no effect since such actions
do not represent votes cast for or against the proposal.
This solicitation of proxies is being made by IPALCO and the
expenses thereof will be borne by IPALCO. The principal
solicitation is being made by mail. However, additional
solicitation may be made by telephone, telegraph or personal
contact by officers and other employees of IPALCO and its
subsidiaries, who will not be additionally compensated therefor.
IPALCO expects to reimburse broker-dealers and others for
reasonable expenses of forwarding proxy material to beneficial
owners.
Other Business
Management is not aware of any business to be presented at
the 1997 Annual Meeting other than the election of five
directors, the proposed amendment to the Amended Articles of
Incorporation, and the proposed approval of the 1997 Stock Option
Plan. The minutes of the Annual Meeting of Shareholders held
April 17, 1996, will be presented for approval at the 1997 Annual
Meeting; however, such action is not intended to constitute
approval or disapproval of any matter referred to in such
minutes.
Shareholder Proposals for 1998 Annual Meeting
If a shareholder intends to present a proposal at the Annual
Meeting of Shareholders to be held April 15, 1998, the proposal
must be received by the Corporate Secretary for inclusion in
IPALCO's proxy statement and form of proxy not later than
December 16, 1997.
RELATIONSHIP WITH AUDITOR
Deloitte & Touche LLP, with offices at Market Tower, Suite
3000, 10 West Market Street, Indianapolis, Indiana, has been the
auditor of IPALCO since its inception. Upon the recommendation of
the Audit Committee, that firm was again appointed by IPALCO's
Board of Directors to serve as auditor for IPALCO and its
subsidiaries for the current year. A representative of Deloitte &
Touche LLP will be present at the Annual Meeting of Shareholders
to be held May 21, 1997, and will be given the opportunity to
make a statement and to respond to appropriate questions from
shareholders.
VOTING SECURITIES AND BENEFICIAL OWNERS
On April 10, 1997, IPALCO had outstanding 44,499,612
shares of common stock. Each share of common stock entitles its
owner to one (1) vote upon each matter to come before the
meeting. Only shareholders of record at the close of business on
Thursday, April 10, 1997, will be entitled to vote at the meeting
or at any adjournment thereof.
Beneficial Owners of 5% or More of Common Stock
On April 10, 1997, the following beneficial owners held more
than 5% of IPALCO's voting securities:
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Name and Address of Amount and Nature of Percent
Title of Class Beneficial Owner Beneficial Ownership of Class
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Common Stock Employees' Thrift Plan 4,711,869 shares<F1> 10.59%
of Indianapolis Power
& Light Company
c/o Merrill Lynch
Trust Company of America,
Trustee
265 Davidson Avenue, 4th Floor
Somerset, NJ 08873
_________________________________
<FN>
<F1> Trustee, under a continuing agreement, has discretion
to vote shares as to which no voting instructions are
received.
</FN>
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Beneficial Ownership of Common Stock By Directors, Nominees and
Executive Officers
On March 15, 1997, the following named directors, nominees
and executive officers of IPALCO and its subsidiaries,
individually and as a group, beneficially owned equity securities
of IPALCO as follows:
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Name of Amount and Nature Percent
Title of Class Beneficial Owner of Beneficial Ownership<F1> of Class<F2>
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Common Stock Joseph D. Barnette, Jr. 16,000 shares <F3>
Robert A. Borns 44,644 shares <F3>
John R. Brehm 72,802 shares <F4>
Mitchell E. Daniels, Jr. 18,300 shares <F3>
Rexford C. Early 11,642 shares <F3>
Otto N. Frenzel III 31,200 shares <F3>
Max L. Gibson 11,100 shares
Edwin J. Goss 14,407 shares <F3>
Earl B. Herr, Jr. 13,860 shares
John R. Hodowal 247,639 shares <F4>
Ramon L. Humke 174,662 shares <F4>
Sam H. Jones 18,360 shares <F3>
Andre B. Lacy 37,806 shares <F5>
L. Ben Lytle 12,748 shares
Michael S. Maurer 11,072 shares
Andrew J. Paine, Jr. 0 shares
Sallie W. Rowland 19,244 shares <F3>
Thomas H. Sams 23,001 shares <F3>, <F6>
Bryan G. Tabler 15,363 shares <F3>, <F4>
Gerald D. Waltz 105,245 shares <F4>
Other Executive Officers 275,873 shares <F1>, <F4>
All 27 directors, nominees,
and executive officers, as
a group 1,174,968 shares <F3>, <F4> 2.64%
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<FN>
<F1> Except as otherwise noted below, each person named in the
table has sole voting and investment power with respect to
all shares of common stock listed as owned by such person.
Shares beneficially owned include shares that may be
acquired pursuant to exercise of outstanding options that
are exercisable within 60 days as follows: Mr.
Barnette-9,000; Mr. Borns-12,000; Mr. Brehm-52,500; Mr.
Daniels-18,000; Mr. Early-6,000; Mr. Frenzel-18,000; Mr.
Gibson-6,000; Mr. Goss-12,000; Dr. Herr-12,000; Mr.
Hodowal-180,000; Mr. Humke-105,000; Mr. Jones-18,000; Mr.
Lacy-18,000; Mr. Lytle-12,000; Mr. Maurer-9,000; Mrs.
Rowland-18,000; Mr. Sams-18,000; Mr. Waltz-55,320; other
executive officers-201,750; directors and executive officers
as a group-780,570.
<F2> Percentages less than 1% of total common stock outstanding
are not indicated.
<F3> Includes 43,547 shares owned by or with family members
sharing their home and shares held in trust or other
arrangements with family members.
<F4> Includes vested and contingent interests in shares of common
stock held by the Trustee in the Thrift Plan (stated in
whole shares) of: Mr. Brehm-13,650; Mr. Hodowal-29,774; Mr.
Humke-7,747; Mr. Tabler-1,066; Mr. Waltz-36,349; other
executive officers-57,198; and all executive officers as a
group-145,784.
<F5> Includes 12,000 shares owned by LDI, Ltd. and 2,700 shares
owned by the Lacy Foundation of which Mr. Lacy is a partner
and a director, respectively, and 600 shares representing
his vested interest in a self-employment retirement plan,
totaling 15,300 shares, 11,700 of which he disclaims
beneficial ownership.
<F6> Mr. Sams disclaims beneficial ownership of 1,500 shares of
the total shares shown opposite his name.
PROPOSAL 1 - ELECTION OF FIVE DIRECTORS
At a meeting held January 28, 1997, the Executive Committee
of IPALCO's Board of Directors nominated five directors to stand
for election as Class II directors of IPALCO at its Annual
Meeting of Shareholders to be held May 21, 1997, for terms of
three years each and until their successors are duly elected and
qualified.
Proxies representing shares held on the record date which
are returned duly executed, will be voted, unless otherwise
specified, in favor of the five nominees for the Board of
Directors named below in Class II. All such nominees, except
Andrew J. Paine, Jr., are members of IPALCO's present Board of
Directors and all nominees have consented to serve if elected.
However, if any nominee becomes unavailable to serve, the persons
named as proxies may exercise their discretion to vote for a
substitute nominee.
The nominees for directors in Class II, the current
directors in Class III and Class I, as assigned by the Board of
Directors, and the names, ages (as of May 21, 1997), business
experience and directorships of such nominees and directors are
as follows:
Nominees For Directors To Be Elected At The 1997 Annual Meeting:
CLASS II
Joseph D. Barnette, Jr., 57, Chairman and Chief Executive Officer
of Bank One, Indiana, NA since March, 1997. Prior to that,
Mr. Barnette was Chairman and Chief Executive Officer of Bank
One, Indianapolis, NA (October, 1994 - March, 1997) Chairman
and Chief Executive Officer of Bank One Indiana Corporation
(January, 1993 - March, 1997), President and Chief Executive
Officer of Banc One Indiana Corporation (July, 1990 - January,
1993), and President and Chief Executive Officer of Bank One,
Indianapolis, NA (January, 1990 - October, 1994). He is a
director of IPL and Meridian Insurance Group, Inc.
He has been a director of IPALCO since January, 1993.
Max L. Gibson, 56, President of Majax Corporation (waste consulting firm),
Terre Haute, Indiana for the past five years. For more than five
years prior to his consulting work, Mr. Gibson was President of
Victory Services Corporation (waste disposal), Terre Haute,
Indiana. He is a director of IPL, First Financial
Corporation, Terre Haute First National Bank and First State
Bank, Brazil, Indiana. He has been a director of IPALCO
since August, 1993.
Ramon L. Humke, 64, Vice Chairman of IPALCO and President and
Chief Operating Officer of IPL. Prior to February, 1990 when he
assumed his present position with IPL, Mr. Humke was President and
Chief Executive Officer of Ameritech Services and Senior Vice
President of Ameritech Bell Group (September, 1989 - February,
1990) and President and Chief Executive Officer of Indiana Bell
Telephone Company (October, 1983 - September, 1989). He is a
director of IPL, NBD Bank, N.A., LDI Management, Inc. and is
Chairman of the Boards of Meridian Mutual Insurance Company and
Meridian Insurance Group, Inc. He has been a director of IPALCO
since February, 1990.
Andrew J. Paine Jr., 59, President and Chief Executive Officer of
NBD Indiana, Inc. and Executive Vice President of First Chicago
NBD Corporation. In his position with NBD Indiana, Inc. he directs
the operation of all NBD banks in Indiana. In 1981, Mr. Paine
was named Vice Chairman of Indiana National Bank, and was
elected Executive Vice President of NBD Bancorp after it
acquired INB in 1992. Mr. Paine was named Chief Executive
Officer of NBD Indiana, Inc. in June, 1994, and Executive
Vice President of First Chicago NBD Corporation in 1995. He
is a director of Indianapolis Life Insurance Company and
Bankers Life Insurance Company of New York.
Sallie W. Rowland, 64, Chairman and Chief Executive Officer of
Rowland Design, Inc. (an architectural, interiors and graphic
design firm), Indianapolis, Indiana, positions she has held for
more than 5 years. Mrs. Rowland serves on various community boards
including The Indianapolis Chamber of Commerce. She is a
director of IPL, NBD Bank, N.A., Meridian Insurance Group,
Inc. and Meridian Mutual Insurance Company. She has been a
director of IPALCO since April, 1988.
Current Directors Whose Terms Expire in 1998 (Class III) and in
1999 (Class I):
CLASS III
Otto N. Frenzel III, 66, Chairman, Executive Committee, National
City Bank of Indiana, Indianapolis, Indiana. Mr. Frenzel
has held his present position since January, 1996. For more
than 3 years prior to that time, Mr. Frenzel was Chairman of
the Board of National City Bank, Indiana. Prior to May, 1992, Mr.
Frenzel was Chairman of the Board of Merchants National Bank
& Trust Company of Indianapolis and Chairman of the Board of
Merchants National Corporation. He is a director of IPL,
National City Corporation, American United Life Insurance
Company, Indiana Energy, Inc., Indiana Gas Company, Inc.,
and Baldwin & Lyons, Inc. He has been a director of IPALCO
since September, 1983.
Dr. Earl B. Herr, Jr., 69, Retired. For more than five years prior to his
retirement in December, 1992, Dr. Herr was Executive Vice
President of Eli Lilly and Company (pharmaceuticals manufacturer),
Indianapolis, Indiana. He is a director of IPL and Lilly Endowment
and has been a director of IPALCO since April, 1986 (excluding
the period March 15 to August 23, 1993).
Sam H. Jones, 69, President, Indianapolis Urban League, Inc.,
Indianapolis, Indiana. Mr. Jones has held his present position
for more than 5 years and serves on numerous educational, social
and cultural boards, including the Advisory Board of Indiana
University-Purdue University at Indianapolis, Methodist Health
Foundation, Board of One Hundred Black Men of Indianapolis and the
Administrative Board of Northwest United Methodist Church. He is a
director of IPL and has been a director of IPALCO since September,
1983.
Andre B. Lacy, 57, General Partner and Chief Executive of LDI,
Ltd. (an industrial and investment limited partnership),
Chairman of the Board, Chief Executive Officer and President of
LDI Management, Inc., the managing general partner of
LDI, Ltd., and Chairman and Chief Executive Officer of all
subsidiaries and divisions thereof. He has held his
present positions for more than 5 years. He is a director of IPL,
Tredegar Industries, Inc., Albemarle Corporation, Patterson Dental
Co., Herff Jones and The National Bank of Indianapolis. He has
been a director of IPALCO since April, 1985.
L. Ben Lytle, 50, President and Chief Executive Officer, Anthem
Insurance Companies, Inc. (insurance and financial services),
Indianapolis, Indiana. He served as Chairman from March, 1994
to March, 1996, and has held the remaining positions for more
than five years. He is a director of IPL, Bank One, Indiana,
NA, and Anthem Insurance Companies, Inc. and its subsidiaries. He
has been a director of IPALCO since April, 1992.
CLASS I
Robert A. Borns, 61, Chairman of Borns Management Corporation
(real estate owners and managers), Indianapolis, Indiana since 1961,
and Chairman of Correctional Management Company L.L.C. since 1996.
Mr. Borns serves on numerous boards, including the Board of Trustees
of Indianapolis Museum of Art, Indianapolis Symphony
Orchestra, Indiana University Foundation and St. Vincent
Hospital Advisory Board. He is also a director of IPL,
Standard Management Corporation, and of Heritage Partners
Management, Inc. He has been a director of IPALCO since
April, 1987 (excluding the period March 15 to August 23,
1993).
Mitchell E. Daniels, Jr., 48, Vice President, Corporate Strategy
and Policy, Eli Lilly and Company, (pharmaceuticals manufacturer).
During the period April 1, 1993 to January 6, 1996, Mr. Daniels was
President, North American Pharmaceutical Operations of Eli Lilly and
Company. Prior to that time, he was Vice President,
Corporate Affairs of Eli Lilly and Company and President and
Chief Executive Officer of Hudson Institute, Inc. (March,
1987 to August, 1990). He is a director of IPL, Acordia,
Inc. and NBD Bank, N.A. and has been a director of IPALCO
since November, 1989.
Rexford C. Early, 62, President of Carlisle Insurance Agency,
Inc., Indianapolis, Indiana, a position he has held for more
than five years. Mr. Early was Chairman of the Indiana
Republican Party from March, 1991 to March, 1993. He is a
director of IPL and has been a director of IPALCO since
August, 1993.
John R. Hodowal, 52, Chairman of the Board and President of
IPALCO and Chairman of the Board and Chief Executive Officer of
IPL. Except for the Chairmanship of IPL which he assumed in
February, 1990, Mr. Hodowal has held his current positions
since May, 1989. For some years prior to that time, he was Vice
President and Treasurer of IPALCO and Executive Vice
President of IPL. He is a director of IPL, Bank One, Indiana,
NA and Anthem Insurance Companies, Inc. He has been a director of
IPALCO since April, 1984.
Michael S. Maurer, 54, Chairman of the Board of MyStar Communications
Corporation (radio station operations), a position he has held for
more than five years; Chairman of the Board of IBJ Corporation
(newspaper publisher), since December, 1990; Chairman of the
Board of The National Bank of Indianapolis since December,
1993. Mr. Maurer is Chair, United Way of Central Indiana. He
has been a director of IPL and IPALCO since January, 1993.
Thomas H. Sams, 55, President and Chief Executive Officer,
Waldemar Industries, Inc. (an investment holding company),
Indianapolis, Indiana and an officer of various subsidiary
and affiliated corporations thereof. Mr. Sams has held
these positions since 1966. He is a director of IPL, NBD
Bank, N.A., and Meridian Insurance Group, Inc. He has
been a director of IPALCO since April, 1987.
INFORMATION REGARDING THE BOARD OF DIRECTORS
Procedure To Propose Nominees For Director
IPALCO will accept timely notice by shareholders of proposed
nominees for directors. Any such notice must be received by the
Corporate Secretary of IPALCO not less than 60 days nor more than
90 days prior to the date of each annual meeting. Such
shareholder's notice shall set forth (a) as to each proposed
nominee for director (i) the name, age, business address and
residence address of such nominee, (ii) the principal occupation
or employment of such nominee, (iii) the class and/or series and
number of shares that are beneficially owned by such nominee on
the date of such shareholder notice and (iv) any other
information relating to such nominee that is required to be
disclosed pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended, and (b) as to the shareholder
giving the notice (i) the name and address, as they appear on
IPALCO's books, of such shareholder and any shareholders known to
be supporting such nominee and (ii) the class and/or series and
number of shares beneficially owned by such shareholder and by
any shareholders known to be supporting such nominee on the date
of such shareholder notice. The Board of Directors may reject any
nomination for director not made in accordance with the foregoing
provisions.
Number of Board Meetings and Attendance
During 1996, the Board of Directors of IPALCO held 11
meetings and committees of the Board held a total of 16 meetings.
Each director attended more than 75% of the aggregate of Board
meetings and assigned committee meetings. All directors, on
average, attended over 92% of the Board meetings and assigned
committee meetings held in 1996.
Committees of the Board
The Board of Directors of IPALCO has four standing
committees, the Executive Committee, the Audit Committee, the
Compensation Committee, and the Committee on Strategies. The
Board does not have a nominating committee as such, but the
Executive Committee performs the functions of such committee. It
reviews, among other things, the qualifications and suitability
of candidates to stand for election to IPALCO's Board of
Directors and makes specific recommendations with respect
thereto. In addition, the Executive Committee considers and
recommends the declaration of dividends and acts on matters when
the full Board is not in session. The Executive Committee held
six meetings in 1996. Currently, Mr. John R. Hodowal is Chairman
and Messrs. Robert A. Borns, Otto N. Frenzel III, Earl B. Herr,
Jr., Ramon L. Humke, and Sam H. Jones are members.
The Audit Committee recommends the appointment of the
auditor for the ensuing year for IPALCO and its subsidiaries,
reviews the scope of the audit, examines the auditor's reports,
makes appropriate recommendations to the Board of Directors as a
result of such review and examination, and inquires into the
effectiveness of the financial and accounting functions and
controls. The Audit Committee first approves all non-audit
services and gives appropriate consideration to the effect, if
any, such services may have on the independence of the auditor,
except that management advisory and tax services which do not
exceed $50,000 per project or $150,000 in the aggregate per
calendar year may be approved by the Chairman of the Board
without such Committee's consent. The Audit Committee held three
meetings in 1996. Currently, Mrs. Sallie W. Rowland is Chairman
and its members are Messrs. Rexford C. Early, Edwin J. Goss, Sam
H. Jones, and Andre B. Lacy.
The Compensation Committee reviews current and proposed
compensation levels of all officers of IPALCO and its
subsidiaries, obtains advice of independent consultants,
and makes specific recommendations as to the compensation each
officer should receive on an annual basis. It also reviews and
makes recommendations with respect to other forms of compensation
for such officers, including supplemental pension benefits,
bonuses and restricted stock. (See ``Board Compensation Committee
Report on Executive Compensation'' below.) The Compensation
Committee held four meetings in 1996. Currently, Mr. Otto N.
Frenzel III is Chairman and Messrs. Robert A. Borns, Earl B.
Herr, Jr., and Thomas H. Sams are members.
The Committee on Strategies considers and makes
recommendations with respect to issues and processes involving
dynamic planning, matters affecting the allocation of corporate
resources among regulated and non-regulated subsidiaries, and
other components of overall corporate strategy. The Committee on
Strategies held three meetings in 1996. Currently, Mr. Joseph D.
Barnette, Jr. is Chairman and Messrs. Mitchell E. Daniels, Jr.,
Max L. Gibson, L. Ben Lytle, and Michael S. Maurer are members.
Section 16(a) Beneficial Ownership Reporting Compliance
Under the federal securities laws, IPALCO's directors,
certain officers, and 10% shareholders are required to report to
the Securities and Exchange Commission, by specific due dates,
transactions and holdings in IPALCO's stock. During 1996, Mr.
Robert W. Rawlings and Mr. Joseph D. Barnette, Jr. each had one
late report with regard to one transaction.
Compensation Committee Interlocks and Insider Participation
Mr. Frenzel is Chairman, and Messrs. Borns, Herr and Sams
are the members of the Compensation Committee. IPALCO's Vice
Chairman, Mr. Ramon L. Humke, is a member of the Compensation
Committee of the Board of Directors of LDI Management, Inc. Mr.
Andre B. Lacy is Chairman of the Board, Chief Executive Officer
and President of LDI Management, Inc. and is also a director of
IPALCO.
Compensation of Directors
Non-employee directors serving on the Board of IPALCO are
paid an annual fee of $8,500 plus $450 for each meeting attended;
however, directors of IPALCO and its subsidiaries are limited to
two annual fees. Non-employee members of the Executive Committee
of the Board are paid annual fees of $10,000, but no meeting
fees. Members of the Audit Committee, Compensation Committee and
the Committee on Strategies of the Board, all of whom are
non-employee directors, are paid annual fees of $4,000 plus $450
for each meeting attended. The Chairman of each of the latter
three committees receives an additional fee of $1,500 annually.
Members of the Executive and Audit Committees of both IPALCO and
IPL are limited to one annual fee. Directors who are also
officers of IPALCO or one of its subsidiaries receive no director
fees.
Certain Business Relationships
During 1996, companies associated with Anthem Insurance
Companies, Inc. ("Anthem") administered health care programs for
IPALCO and its subsidiaries under contracts that involve payments
to Anthem aggregating approximately $15 million. Mr. L. Ben
Lytle is President and Chief Executive Officer of Anthem.
IPALCO subsidiaries Indianapolis Power & Light Company
("IPL") and Mid-America Capital Resources, Inc. ("Mid-America")
each maintained a line of credit during 1996 with National City
Bank, Indiana ("NCB") of which Mr. Otto N. Frenzel III is
Chairman of the Executive Committee. During 1996, the maximum
principal amount outstanding at any time on IPL's $30 million
line of credit with NCB was approximately $11 million, and IPL
had no outstanding balance with NCB as of December 31, 1996.
Mid-America's $7.5 million line of credit with NCB had a maximum
principal amount of $3.0 million outstanding at any time, and a
principal balance of $3.0 million outstanding as of December 31,
1996.
IPL maintained a long-term revolving credit facility during
1996 with Bank One, Indianapolis, NA, ("Bank One") of which Mr.
Joseph D. Barnette, Jr., is Chairman and Chief Executive Officer.
IPL did not utilize the credit facility during 1996. Mid-America
maintained a $7.5 million line of credit with Bank One during
1996 and had a maximum principal amount of $3.0 million
outstanding at any time, and an outstanding principal balance of
$3.0 million as of December 31, 1996.
An unutilized credit line and an unutilized long-term
revolving credit facility were also maintained by IPL with First
Chicago NBD ("NBD"), of which Mr. Andrew J. Paine, Jr., is an
executive officer. Mr. Ramon L. Humke is a director of NBD Bank,
N.A. IPALCO subsidiary Mid-America maintained a $7.5 million line
of credit during 1996 with NBD, had a maximum principal amount
outstanding of $3.0 million, and a principal balance of $3.0 million
outstanding as of December 31, 1996.
IPALCO entered into a Credit Agreement with Bank One Indiana, NA,
NCB, and The First National Bank of Chicago on April 4, 1997 for the
purpose of borrowing $401 million. The proceeds of the loan will be
used for the repurchase of 12,539,428 of the outstanding shares
of IPALCO Enterprises, Inc. common stock pursuant to the terms of
the tender offer announced by IPALCO on February 25, 1997.
IPL engaged Rowland Design, Inc. for architectural and
design services for certain improvements to the corporate offices
located at One Monument Circle. During 1996, IPL paid fees of
approximately $93,000 under such agreements. Mrs. Sallie W.
Rowland is Chairman and CEO of Rowland Design, Inc.
IPL engaged Schenkel & Associates, LLC, for consulting
services in the areas of community affairs, public relations, and
communication, and paid fees of approximately $25,000 during
1996. Mr. Thomas M. Miller, a member of the Board of Directors
of IPALCO prior to his death on July 5, 1996, was a majority
owner of Schenkel & Associates, LLC.
PROPOSAL 2 - APPROVAL OF AMENDMENT TO AMENDED ARTICLES OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF
SHARES OF IPALCO'S COMMON STOCK
The Proposed Amendment
At a regular meeting of the Board of Directors of IPALCO
held January 28, 1997, a resolution was adopted by unanimous vote
of the 16 directors present directing that an amendment be
submitted to a vote of the shareholders at the 1997 Annual
Meeting to amend Section 5.01 of Article 5 of the Amended
Articles of Incorporation to read as follows:
"Section 5.01. Amount and Par Value. The total number of
shares which the Corporation shall have the authority to
issue is two hundred ninety million (290,000,000) shares,
without par value."
Section 5.01 of IPALCO's Amended Articles of Incorporation
currently authorizes the issuance of 145,000,000 shares of common
stock, without par value. No other class of capital stock is
authorized. As of April 10, 1997, there were 44,499,612
shares of IPALCO's common stock issued and outstanding after
giving effect to the repurchase of 12,539,428 shares of IPALCO
common stock pursuant to the terms of the tender offer announced
by IPALCO on February 25, 1997. Of the 100,500,388 authorized
shares that remain available for issuance, 61,758,065 shares
are reserved for issuance in accordance with the provisions of
IPALCO's Shareholder Rights Plan, 1991 Directors Stock Option
Plan, 1990 (Officers) Stock Option Plan and Long-Term Performance
and Restricted Stock Incentive Plan. An additional 2,000,000
shares will be reserved for issuance pursuant to the 1997 Stock
Option Plan if such plan is approved at the Annual Meeting. The
12,539,428 shares repurchased pursuant to the tender offer will be
held as treasury shares. The balance of shares available after
taking into consideration the shares reserved for issuance, including
those to be reserved in connection with the 1997 Stock Option Plan,
and treasury shares, is 24,202,895. In addition, each time IPALCO
issues shares of its common stock, an additional share is reserved
for issuance under the terms of the Shareholder Rights Plan.
As a result, IPALCO only has one-half of the 24,202,895 shares
available for issuance, or 12,101,448.
Purpose and Effect of Proposed Amendment
The proposed amendment would increase from 145,000,000
shares to 290,000,000 shares the amount of IPALCO common stock
authorized for issuance, but it would have no effect upon the
terms of such stock or the rights of the holders thereof. IPALCO
does not have any present plans, understandings or agreements to
issue additional shares of common stock.
The Board of Directors believes that the proposed increase
in authorized common stock is desirable to enhance IPALCO's
flexibility in connection with possible future actions, such as
stock splits, stock dividends, financings, corporate mergers,
acquisitions of property, use in employee benefit plans or other
corporate purposes. Having such authorized shares available for
issuance in the future would allow shares of common stock to be
issued without the expense and delay of a special shareholders'
meeting. Once authorized, such common stock would be available
for issuance from time to time to such persons and for such
consideration and on such terms as the Board of Directors
determines. No further action or authorization by IPALCO's
shareholders would be necessary prior to the issuance of the
additional shares of common stock unless required by applicable
law or by the rules of any stock exchange on which IPALCO's
securities may then be listed. The holders of any of the
additional shares of common stock issued in the future would have
the same rights and privileges as the holders of the shares of
common stock currently authorized and outstanding. Those rights
do not include preemptive rights with respect to the future
issuance of any additional shares.
As stated above, IPALCO has no immediate plans,
understandings or agreements with respect to the issuance of any
additional shares of common stock which would be authorized by
the proposed amendment. However, shareholders should be aware
that the authority of the Board to issue common stock might be
considered as having the effect of discouraging an attempt by
another person or entity to effect a takeover or otherwise gain
control of IPALCO, because the issuance of additional common
stock would dilute the voting power of the common stock then
outstanding. As of this date, the Board is not aware of any
pending or threatened effort to accumulate IPALCO's shares or to
obtain control of IPALCO by means of a merger, tender offer,
solicitation in opposition to management or otherwise.
Other provisions of IPALCO's Amended Articles could also be
viewed as potential impediments to efforts to acquire control of
IPALCO. Specifically, those provisions of the Articles requiring
the election of only one-third of the directors of IPALCO every
year, and the super-majority vote requirement applicable to
certain business transactions (such as mergers or sales of
assets) could be used in a manner calculated to prevent the
removal of management and make more difficult or discourage a
change in control of IPALCO. The Articles also provide that the
Board, when evaluating such transactions, shall, in connection
with the exercise of its judgment in determining what is in the
best interests of IPALCO and its shareholders, give due
consideration to all relevant factors including the social and
economic effects on employees, customers, suppliers, and other
constituents of IPALCO and on the communities in which IPALCO
operates or is located. In addition, directors may be removed
only for cause and only upon the affirmative vote of the holders
of 80% of the outstanding voting power of IPALCO. IPALCO's
Shareholder Rights Plan could be used with the intent to make
more difficult or discourage a change in control. IPALCO has no
present intention of soliciting the vote of shareholders on any
other proposal, or series of proposals, to deter changes in
control of IPALCO.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 2
PROPOSAL 3 - APPROVAL OF ADOPTION OF
IPALCO ENTERPRISES, INC. 1997 STOCK OPTION PLAN
Introduction
At its meeting held March 25, 1997, the Board of Directors adopted the
1997 Stock Option Plan (the "Plan") for officers (two of whom are also
directors) and other key executive employees of IPALCO and its subsidiaries,
subject to shareholder approval. Failure to obtain shareholder approval
terminates the Plan and all options granted thereunder. The Plan is designed
to provide participants with a favorable opportunity to acquire IPALCO's
common stock (the "Stock"). The Board of Directors believes that options to
purchase the Stock will be a significant incentive to work for the continued
success of these companies. The 1997 Stock Option Plan is set forth in
Appendix A to this Proxy Statement, to which reference is made for a full and
complete statement of its terms and conditions. A summary of the principal
features of the Plan follows.
Summary of the Plan
Administration. The Plan is administered by the Compensation Committee
of IPALCO's Board of Directors, which is made up of 4 disinterested outside
directors (the "Committee"). The Committee has sole authority to (a) select
plan participants, (b) decide on the timing of option grants, (c) determine
the number of shares of the Stock covered by each option, (d) set the option
price, (e) establish the period for exercising options, (f) determine which
options are to be incentive options and which are to be non-qualified
options, (g) determine the terms and conditions of option agreements, and
(h) make rules, regulations and other necessary determinations in the course
of administering the Plan.
Eligibility. Officers and other key employees who in the opinion of the
Committee are materially responsible for the management and operation of
IPALCO or its subsidiaries are eligible to participate in the Plan. Ten
percent (10%) owners of the Stock are excluded unless the exercise price of
the stock option is at least 110% of the fair market value of the Stock on
the date the option is granted and the exercise period does not exceed 5
years. Eligible employees may be granted more than one stock option. As
indicated, the Committee has sole authority to select Plan participants.
Stock Subject to Plan. Two Million shares of the Stock (representing
4.49% of currently outstanding shares) are reserved for option grants.
Unpurchased shares from expired options may again become available for
additional option grants.
Terms of Options. Option grants are subject to the following terms and
conditions:
(a) The exercise price is to be determined by the Committee when options
are granted. In the case of incentive stock options, the price may
not be less than the fair market value of the Stock. The market
value of the Stock as of the close of business on April 8, 1997
was $31.25.
(b) The period allowed for exercising an option may not exceed 10 years
and 1 day after the date granted; provided that incentive stock
options shall have terms not exceeding 10 years. Options are not
exercisable before shareholders approve the Plan.
(c) Upon exercise of an option, the price shall be paid in full either
(i) in cash, (ii) subject to the terms of the Plan, with an exercise
note with irrevocable instructions to a broker to deliver the option
price in cash, or (iii) subject to approval by the Committee, with
other shares of the Stock having a fair market value, as determined
by the Committee, equal to the cash exercise price. The Committee
may determine whether options are exercisable in full or in quotas.
Options may be exercised at any time during their term.
(d) An option terminates if a participant's employment ceases for
reasons other than death, disability or retirement. If employment
ceases due to disability, any option granted must be exercised within
1 year after employment ceases whether or not the option was
otherwise exercisable at the date of such termination of employment.
A participant who retires may exercise his or her option any time
during its term provided that the option was otherwise exercisable
at the date of such termination of employment. However, an
incentive stock option must be exercised within 3 months after
retirement or it will be treated for tax purposes as a non-qualified
option. Personal representatives of participants who die while
employed or who die within 1 year after being disabled or retiring,
may exercise an option in whole or in part at any time after the
date of such death until the expiration of the option term as fixed
by the Committee whether or not the option was otherwise
exercisable at the date of death.
(e) An option is not transferable except upon a participant's death.
(f) Participants are deemed to have agreed that the Stock purchased
through the exercise of an option was, in good faith, acquired for
investment and not for sale or other distribution.
(g) The aggregate fair market value (as determined by the Committee at
date of grant) of the Stock subject to an incentive stock option
that is exercisable for the first time by a participant shall not
exceed $100,000 for any calendar year. If, due to immediate
exercisability of an incentive stock option, the aggregate fair
market value exceeds the $100,000 limitation, the Committee shall
convert so much of the option that is in excess of such limitation
to a non-qualified stock option. Except as noted in paragraph (m)
below and except for the number of shares reserved for option grants,
the is no limit on non-qualified options.
(h) An agreement between IPALCO and the participant shall evidence each
stock option and shall contain a requirement to notify IPALCO of any
sale or transfer of option Stock that occurs 2 years from date of
grant or 1 year from date of exercise.
(i) The Committee may provide an additional cash payment to a non-
qualified stock option participant equal to all or a part of the
tax benefit realized by IPALCO from the exercise of such option.
(j) Certificates for the Stock shall be issued as soon as practicable
after an option is exercised, without which a participant has no
rights as a shareholder. Cash shall be paid in lieu of fractional
shares.
(k) No right to continue in the employ of IPALCO or its subsidiaries
is conferred by the Plan or any agreement thereunder.
(l) Options shall be clearly identified as either incentive stock
options or non-qualified stock options, both of which may be granted
to the same participant. The exercise of an incentive stock option
shall not affect the exercise of a non-qualified stock option and
vice versa.
(m) The maximum number of option shares which may be granted to a
participant in any calendar year may not exceed 250,000.
Adjustment of Shares. A reorganization, recapitalization, stock split,
stock dividend, combination of shares, exchange of shares, merger or
consolidation, liquidation or other changes after the Plan becomes effective
authorizes the Committee to conclusively determine what changes may be
appropriate in the number and kind of shares and in the option price of
outstanding options.
Tax Withholding. Whenever the Stock is issued or transferred under the
Plan, IPALCO has the right to withhold federal, state or local tax as
dictated by applicable requirements or to require payments sufficient to
satisfy such requirements.
Amendment. IPALCO's Board of Directors may amend the Plan and, with
consent of the participant, may amend an option; however, shareholder
approval is required (a) to increase the number of shares reserved for
issuance; (b) to extend beyond 10 years and 1 day the exercise period for
an option; (c) to modify materially the class of eligible participants;
and (d) to materially increase the benefits accruing to participants.
Termination. IPALCO's Board of Directors may terminate the Plan at any
time, but options theretofore granted will not be affected. No incentive
stock options may be granted after 10 years.
Agreements Evidencing Incentive and Non-Qualified Stock Options
The Plan requires that each option be evidenced by an agreement between
IPALCO and the participant. On March 25, 1997, 27 such agreements, covering
an aggregate of 1,067,500 shares of the Stock and representing 2.4% of
total shares currently outstanding, were entered into with officers and key
employees of IPALCO and its subsidiaries as selected by the Committee,
subject to shareholder approval of the Plan. These agreements, in principal
part, (a) establish the total number of shares of the Stock for which each
participant has been granted incentive and/or non-qualified stock options;
(b) set the option price at the higher of the average of the high and low
price of the Stock on March 25, 1997 or April 8, 1997; (c) limit the term of
an incentive option to 10 years and of a non-qualified option to 10 years
and 1 day; and (d) authorize the Committee to approve the manner in which
the option can be exercised.
Federal Income Tax Consequences of Stock Options
The grant of an incentive or a non-qualified stock option has no federal
tax consequences to IPALCO or a subsidiary. Moreover, the exercise of an
incentive stock option will ordinarily have no federal income tax
consequences to IPALCO or a subsidiary, if the option is exercised (a) while
a participant is employed, (b) within 3 months after a participant retires,
(c) after participant's death, or (d) within 1 year after participant ceases
to be an employee due to a disability within the meaning of Section 105(d)(4)
of the Internal Revenue Code (the "Code"). However, the amount by which the
fair market value at the time of exercise exceeds the option price of the
Stock constitutes an alternative taxable income and may subject a participant
to alternative minimum tax.
At the time a non-qualified stock option is exercised, the amount by which
the fair market value of the Stock at the time of exercise exceeds the option
price is ordinary income to a participant, but is generally deductible by
IPALCO or a subsidiary for federal income tax purposes.
Any capital gain realized from a sale of the Stock acquired upon exercise
of an incentive stock option will be taxed at long-term rates if the sale was
made more than 2 years after grant and 1 year after receipt of the Stock. A
sale of option-acquired Stock made before either of such periods will be
taxed as ordinary income. The amount of such ordinary income will be
deductible by IPALCO or a subsidiary, if income taxes were appropriately
withheld.
NEW PLAN BENEFITS
IPALCO ENTERPRISES, INC. 1997 STOCK OPTION PLAN
Name and Position Dollar Value($) Number of Units
John R. Hodowal 250,000
Chairman of the Board and
Chief Executive Officer
Ramon L. Humke 125,000
Vice Chairman
John R. Brehm 75,000
Vice President and Treasurer
Bryan G. Tabler 45,000
Vice President, Secretary
and General Counsel
Gerald D. Waltz 45,000
Senior Vice President,
Electric Delivery of IPL
Executive Group 240,000
Non-Executive Director Group -0-
Non-Executive Officer/ 287,500
Employee Group
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 3.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Compensation Policies Relating Generally to Executive Officers
The Compensation Committee (``Committee'') of the Board of Directors
("Board"), in consultation with its outside advisor, establishes the
compensation policies of IPALCO Enterprises, Inc. and its subsidiaries
(``IPALCO'') with regard to all officers. The Committee recommends to the
Board the adoption or amendment of compensation plans for officers,
including the named executive officers. On authority of the full Board, the
Committee administers all such plans, including establishing officers' base
salary levels, reviewing and approving performance measures and goals for
both annual and long-term incentive plans, and approving incentive awards.
The Committee is made up of four non-employee directors whose philosophy
is to attract, retain, and motivate a high quality management team by
providing a strong and direct link between IPALCO performance and officer
compensation, with a significant portion of total compensation being
dependent upon measurable performance objectives. The compensation program
for executive and other selected officers had three basic components in 1996:
base salary, a performance-based annual incentive plan, and a long-term
performance and restricted stock incentive plan. It is the policy of the
Committee that the compensation program should directly link executive and
shareholder interests.
Base Salary
The Committee targeted 1996 base salaries for officers, including the
named executive officers, at the median level for similar positions within
comparably performing utilities, and where such positions are also found in
general industry, at a level approximately one-half the difference between
the utility industry and general industry medians. The Committee considered
the analysis which was provided by the outside advisor that IPALCO salaries
are within the median range of comparable utilities and below those of
general industry. The Committee also considered both company and individual
performance in approving the range of salary increases and the salary for
each officer, including the named executive officers. 1996 base salary
increases for all officers averaged 4.5%, slightly ahead of the utility
industry average, but aligned with IPALCO performance.
The comparative compensation data for electric utilities used by the
Committee were derived from companies with comparable revenues as reported in
the annual Edison Electric Institute Executive Compensation Survey. Data for
general industry were drawn from five national executive compensation surveys
provided by the outside consultant.
Annual Incentive Plan
The IPALCO Annual Incentive Plan is a performance-based plan which
measures company performance in four equally weighted criteria: Net Income,
Customer Satisfaction, Productivity, and Budget Compliance. For 1996 only,
the Committee amended the Annual Incentive Plan to remove Customer
Satisfaction and weigh the remaining performance measures one-third each.
The customer survey being used was incapable of measuring management's
efforts to improve customer service. For 1997 and beyond, Customer
Satisfaction will be measured by an independent broad-based customer survey
focusing on service characteristics which customers have stated are
important. Target awards are set approximately halfway between general
industry and utility medians. Participants in the Plan are approved in
advance of the plan year by the Committee. All participants, including the
named executive officers, are measured against performance goals which are
established by the Committee and announced at the beginning of the year.
Goals are set at Threshold, Target, and Maximum levels, with Threshold
performance required for any award in each criteria; however, if the
Threshold goal for Net Income is not met, no payout is made regardless of
the performance in any other criteria. Each performance level is assigned an
award value, with interpolation for performance between levels. For named
executive officers, performance at Threshold, Target, and Maximum levels
respectively warrants a payout of 10%, 22.5%, and 35% of base salary.
Factors ranging from .75 to 1.5 are applied to the award percentage based
upon the participant's position.
The Plan permits the reduction or elimination of an award should an
individual participant's performance be below expectations. No awards were
reduced in 1996.
For 1996, the Company met the Maximum performance goals in all three
performance measures: Net Income, Productivity and Budget Compliance.
Long-Term Performance and Restricted Stock Incentive Plan
The performance-based restricted stock plan is designed to focus the
attention of prospective participants on long-term company objectives and
performance. Participation is subject to Committee approval and is limited
to key employees (including non-officers) who contribute on a continuing
basis to the strategic and long-term growth of the company.
The Plan continues to measure company performance in Total Return to
Shareholders and in Cost Effective Service (net income as a percentage of
utility revenues) compared with the performance of a Peer Group of 15
comparable utilities. Criteria for selection of peer companies included
revenue size and sources, market-to-book ratio, fuel source, and dividend
yield among other criteria. Target awards are set approximately halfway
between general industry and utility medians. Conditional restricted stock
grants, at Target levels, ranging from 10% to 35% of base salary, are awarded
at the beginning of each three-year performance period. Final awards are
based upon IPALCO's ranking within the Peer Group over the performance
period, with one-third of the shares to be vested during each of the
fourth, fifth, and sixth years after the beginning of the performance period.
The performance period for Program 1 covers 1995-1997, with final restricted
stock awards made July 1, 1998.
Performance in Total Return to Shareholders and Cost Effective Service
continues also to be measured over the four-year performance periods
specified in the original Long-Term Incentive Plan for those programs begun
prior to 1995. For Program 5, for the years 1992-1995, IPALCO ranked first
among peers in Cost Effective Service and sixth among peers in Total Return
to Shareholders. Using the schedule specified in the Plan for that level
of performance, the named executive officers received incentive payments
totaling $282,249 in 1996.
Basis For Chief Executive Officer's Compensation
The Chief Executive Officer's (``CEO'') compensation continues to be
directly and explicitly linked to IPALCO performance with consideration given
to the Committee's assessment of his individual performance. The Committee
thoroughly reviews the CEO's performance, including strategic direction,
leadership and management team development, as well as overall company
performance. The Committee's review is both subjective and objective. IPALCO
performance data used in the incentive plans plus other financial,
operational, service, and administrative data are considered.
Total 1996 compensation for the CEO (including base salary, Annual
Incentive Plan payment, and Long-Term Incentive payment and stock associated
with the Long-Term Performance and Restricted Stock Incentive Plan), is
shown in Table I. His total compensation was slightly above the median of
Peer Group CEOs, but was slightly below the median of CEO compensation in
comparably high-performing peer companies.
At Target performance, under the current compensation program,
approximately 37% of the CEO's total direct compensation is variable and at
risk. During 1996, approximately 43% of the CEO's actual total direct
compensation was at risk.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code will not permit a public
corporation to deduct, for federal income tax purposes, annual compensation
in excess of $1 million paid to certain top executives, unless that
compensation qualifies as "performance based" compensation. This limitation
will not impact IPALCO with respect to executive compensation paid in 1996,
nor does the Committee believe that this will have an impact in 1997. The
Committee continues to review this issue with the present intent to take
appropriate steps to ensure the continued deductibility of its executive
compensation.
The Compensation Committee of the
Board of Directors of IPALCO
Enterprises, Inc.
Otto N. Frenzel III, Chairman
Robert A. Borns
Earl B. Herr, Jr.
Thomas H. Sams
COMPENSATION OF EXECUTIVE OFFICERS
Nature and Types of Compensation
The two tables that follow on succeeding pages disclose all plan and non-
plan compensation awarded to, earned by, or paid to the Chairman of the Board
and President of IPALCO, who is its chief executive officer (``CEO'') and to
the four named executive officers other than the CEO who are the most highly
compensated key policy-making executive officers of IPALCO and its
subsidiaries. The tables include a Summary Compensation Table (Table I) and
an Aggregated Option/SAR Exercises In Last Fiscal Year and Fiscal Year-End
Option/SAR Values Table (Table II). No table is presented for Option/SAR
Grants in last fiscal year since no stock options were granted during 1996.
No table is presented for Long-Term Incentive Plans since the issuance of
restricted stock under the Long-Term Performance and Restricted Stock
Incentive Plan is included in the Summary Compensation Table (Table I).
Subsidiary Incentive Plan
In early 1995, the Board of Directors of Mid-America Capital Resources,
Inc. (``Mid-America''), a wholly owned subsidiary of IPALCO, approved the
implementation of an incentive compensation plan that will provide for
payment of incentive compensation in the year 2000 or later to key employees
of Mid-America, its subsidiaries, and certain executive employees of IPALCO
if certain objective performance measures are met.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
----------------------------------------
Annual Compensation Awards Awards Payouts
--------------------------------------- ----------------------------------------
Other Securities
Annual Restricted Underlying All Other
Compen- Stock Options/ LTIP Compen-
Name and sation<F1> Awards<F2> SARs Payouts<F3> sation<F4>
Principal Position Year Salary ($) Bonus ($) ($) ($) (#) ($) ($)
- ---------------------- ---- ---------- --------- ---------- ----------- ------ --------- ------
John R. Hodowal 1994 $461,051 $214,566 $ 41,471 -0- -0- $ 76,250 $8,955
Chairman & President; 1995 476,012 206,425 43,721 $491,790 -0- 75,488 8,310
Chairman & CEO of IPL 1996 515,125 272,370 229,775 -0- -0- 111,333 6,000
Ramon L. Humke 1994 $382,221 $177,881 $130,141 -0- -0- $ 63,646 $8,955
Vice Chairman; 1995 394,591 171,120 157,606 $407,700 -0- 62,975 8,310
President & COO 1996 432,812 228,935 200,277 -0- -0- 92,296 6,000
of IPL
John R. Brehm 1994 $218,304 $ 67,728 $ 3,678 -0- -0- $ 25,781 $8,199
Vice President & 1995 225,315 89,513 6,301 $133,050 -0- 24,228 8,310
Treasurer; 1996 236,394 83,253 7,788 -0- -0- 34,996 6,698
SVP, Finance &
Information Services
of IPL
Bryan G. Tabler<F5> 1994 $ 46,157 $ 15,785 $ 1,360 -0- -0- -0- -0-
Vice President, 1995 202,931 58,650 14,471 $121,350 -0- -0- $5,589
Secretary & General 1996 218,184 76,907 17,077 -0- -0- $ 10,652 6,119
Counsel;
SVP, Secretary and
General Counsel of IPL
Gerald D. Waltz 1994 $202,955 $ 62,887 $ 4,465 -0- -0- $ 26,042 $7,731
SVP, Electric 1995 201,930 58,353 11,178 $121,530 -0- 24,228 8,310
Delivery of IPL 1996 209,792 73,885 12,355 -0- -0- 32,972 6,000
- -------------------------------
<FN>
<F1> Represents taxes paid by IPALCO and/or IPL on accrued interest and
contributions of principal under the Funded Supplemental Retirement
Plan (See ``Pension Plans''). Includes $10,227 earned in above
market interest on deferred compensation for Mr. Humke in 1996.
<F2> Restricted common stock awards are valued at the closing market price
as of the date of grant. Restricted common stock holdings and the
value thereof based on the closing price of the common stock at
year end are as follows: Mr. Hodowal - 24,589 shares ($670,050);
Mr. Humke - 20,385 shares ($555,491); Mr. Brehm - 6,652 shares
($181,267); Mr. Tabler - 6,067 shares ($165,326); and Mr. Waltz
- 6,076 shares ($165,571). Dividends on the restricted common stock
are payable to the named officers. Shares awarded in 1995 represent
a cumulative 3-year award for years 1995, 1996, and 1997. Under the
terms of the Plan, no additional shares will be awarded to the named
officers before 1998.
<F3> Payouts shown were made in 1996 for the 4-year LTIP Program ended
December 31, 1995.
<F4> Represents 1996 contributions made by IPL to the Trustee of the
Employees' Thrift Plan.
<F5> Mr. Tabler started his employment on October 1, 1994, and became an
officer of both IPALCO and IPL on January 1, 1995.
TABLE I
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End(#) FY-End ($)*
Shares Acquired Exercisable/ Exercisable/
Name On Exercise (#) Value Realized ($) Unexercisable Unexercisable
- ------------------- --------------- ------------------ ------------------ ----------------
John R. Hodowal 35,000 $542,485 180,000(e) $401,701(e)
-0- (u) -0- (u)
Ramon L. Humke 82,500 $921,385 105,000(e) $239,013(e)
-0- (u) -0- (u)
John R. Brehm -0- -0- 52,500(e) $119,506(e)
-0- (u) -0- (u)
Bryan G. Tabler -0- -0- ---- ----
---- ----
Gerald D. Waltz 18,120 $267,208 55,320(e) $193,880(e)
-0- (u) -0- (u)
- ------------------------------
(e) Exercisable.
(u) Unexercisable.
* Based upon year-end closing market price of $27.25 per share of common stock.
TABLE II
Performance Graph
The Performance Graph on this page, Table III, plots the total cumulative
return that shareholders of IPALCO received (solid line) during the period
December 31, 1991 through March 31, 1997, compared with the total cumulative
return to shareholders of companies comprising the Standards and Poor's
500 Index (solid line with dash) and the Standard & Poor's Electric
Companies Index (wavy line). The Graph shows the cumulative total return
assuming dividend reinvestment and based upon an initial investment of
$100. The vertical portion of the Graph indicates the dollar value
ranging from $90.00 to $210.00, and the horizontal portion of the Graph
is the year, beginning in 1991 and contuing through March 31, 1997.
The points on the Performance Graph are as follows:
CUMULATIVE TOTAL RETURN ASSUMING DIVIDEND REINVESTMENT
1991 1992 1993 1994 1995 1996 3/31/97
IPALCO 100 114 119 108 146 165 186
S & P 500 100 108 118 120 165 203 208
S & P ELEC COMPANIES 100 106 119 104 136 136 131
Source: Standard and Poor's Compustat Services, Inc.
TABLE III
Performance Graph
The Performance Graph (Table III) on the preceding page plots the total
cumulative return that shareholders of IPALCO received (solid line) during
the period from December 31, 1991 through March 31, 1997, compared with the
total cumulative return to shareholders of companies comprising the Standard
and Poor's 500 Index (solid line with dash) and the Standard & Poor's
Electric Companies Index (wavy). The Graph reflects IPALCO's superior
return as compared to the electric utility industry and is one of the
bases for the Chief Executive Officer's compensation disclosed in the
Compensation Committee Report set forth in this Proxy Statement.
Pension Plans
Table IV below illustrates the combined annual retirement benefits
computed on a straight-life annuity basis that are payable under the Base
Retirement Plan and the Funded Supplemental Retirement Plan (assuming
continuous employment to age 65) to named executive officers having the
remuneration and years of service shown.
- -------------------------------------------------------------------------------------------
PENSION PLAN TABLE <F1>
Remuneration Years of Service
- ---------------- -------------------------------------------------------------------------
15 20 25 30 35
-------- -------- -------- -------- --------
$125,000 $ 81,250 $ 81,250 $ 81,250 $ 81,250 $ 81,250
150,000 97,500 97,500 97,500 97,500 97,500
175,000 113,750 113,750 113,750 113,750 113,750
200,000 130,000 130,000 130,000 130,000 130,000
225,000 146,250 146,250 146,250 146,250 146,250
250,000 162,500 162,500 162,500 162,500 162,500
300,000 195,000 195,000 195,000 195,000 195,000
400,000 260,000 260,000 260,000 260,000 260,000
450,000 292,500 292,500 292,500 292,500 292,500
500,000 325,000 325,000 325,000 325,000 325,000
___________________________________
<FN>
<F1> This table takes into account the latest Internal Revenue Code
Section 415 benefit limitations and Internal Revenue Code Section
401(a)(17) compensation limitation applicable to the Base Retirement
Plan. Benefits for both the Base Retirement Plan portion and Funded
Supplemental Retirement Plan portion of the combined amounts
have been shown without adjustment for income taxes.
TABLE IV
- -------------------------------------------------------------------------------------------
IPL's Employees' Retirement Plan (the ``Base Retirement Plan'') covers all
permanent employees with one (1) year of service but excludes directors
unless they are also officers. It provides fixed benefits at normal
retirement age based upon compensation and length of service, the costs of
which are computed actuarially. The remuneration covered by the Plan includes
``Salary'' but excludes ``Bonus'' and ``Other Compensation,'' annual or
otherwise, as those terms are used in the Summary Compensation Table (Table
I). Benefits are calculated on the basis of the highest average annual salary
in any 60 consecutive months of employment. Years of service for Pension Plan
purposes of named executive officers are as follows: Mr. Hodowal - 28, Mr.
Humke - 7, Mr. Brehm - 21, Mr. Tabler - 2, and Mr. Waltz - 36.
The Funded Supplemental Retirement Plan referred to above is applicable to
the named executive officers and, at reduced benefits, to all other officers
of IPALCO and IPL. In addition to the Base Retirement Plan and Funded
Supplemental Retirement Plan benefits described above, the Funded
Supplemental Retirement Plan also provides Mr. Hodowal with a straight-life
annuity of $130,000 per year commencing at age 65, which benefit is reduced
for early retirement. Contributions and accrued interest credited during
1996 to the accounts of Messrs. Hodowal, Humke, Brehm, Tabler and Waltz
amounted to $271,745, $196,824, $7,256, $20,466 and $9,987, respectively (in
addition to the federal, state and local income tax payments reflected in
Table I above). Contributions are based on actuarial assessments of benefits
projected to accrue to such officers under the Funded Supplemental Retirement
Plan upon termination of employment at normal retirement age and at current
salary levels.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
IPALCO has an employment contract with Mr. Hodowal which provides for an
indefinite term that is convertible into a fixed 3-year term upon notice. IPL
has an employment contract with Mr. Humke which provides for a 3-year term
expiring on December 31, 1999. Such contracts terminate upon death, total
disability or retirement. Should they be terminated without ``cause'' or
resign for ``good reason'' (as those terms are defined in the contract--see
below), they would continue to receive their Salary, as that term is used in
Table I above, for up to 3 years thereafter, less any severance payments
received from other agreements.
All officers of IPALCO and its subsidiaries have Termination Benefits
Agreements, dated on or after January 1, 1993. These Agreements provide for
payment of severance benefits equal to 299.99% of the last 5 years' average
annual compensation (as defined in Section 280G of the Internal Revenue
Code), payable by IPALCO and its subsidiaries which was includable in the
gross income of the officer, if IPALCO undergoes an ``acquisition of
control'' while the agreement is in effect and if, within 3 years after an
acquisition of control, any such officer is terminated without ``cause'' or
resigns for ``good reason,'' as those terms are therein defined (see below).
The term ``without `cause''' is defined in the employment contracts and
Termination Benefits Agreements discussed above to mean in the absence of
fraud, dishonesty, theft of corporate assets or other gross misconduct, as
set out in a good faith determination of the Board of Directors. The term
``resign for `good reason''' is defined in the same agreements to mean
generally, and subject to lengthy qualifications and amplification, demotion;
assignment of duties inconsistent with the officer's status, position or
responsibilities; reduction in base salary or failure to grant annual
increases commensurate with increases of other officers; relocation of the
headquarters of IPALCO or IPL to a location outside Greater Indianapolis; or
termination of the executive's participation in, or the existence of,
an incentive compensation, insurance or pension program. The term
``acquisition of control'' in such contracts means, generally and subject to
lengthy amplification and qualifications therein, acquisition by any person,
entity, or group of 20% or more of the combined voting power of the
outstanding securities of IPALCO entitled to vote in the election of
directors, excluding acquisitions by or from IPALCO or any acquisition by any
employee benefit plan of IPALCO or IPL; change in majority membership of the
Board of Directors other than by normal succession; certain reorganizations,
mergers or consolidations resulting in control of the reorganized, merged,
or consolidated entity by persons not previously in control of IPALCO;
approval by the shareholders of complete liquidation or dissolution of
IPALCO, or of a sale of all or substantially all of its assets to an entity
not controlled by directors and holders of voting securities who were
directors and holders of voting securities of IPALCO prior to the
transaction.
A Benefit Protection Fund and Trust Agreement (``Fund'') is also in effect
to pay litigation expenses in the event it becomes necessary for any officer
to enforce the employment contracts and Termination Benefits Agreements above
described. The Fund is held in trust by National City Bank, Indianapolis,
and at December 31, 1996, the sum of $887,580 was reserved in trust for such
expenses.
By order of the Board of Directors.
IPALCO ENTERPRISES, INC.
By: BRYAN G. TABLER, Secretary
Indianapolis, Indiana
April 15, 1997
- --------------------------------------------------------------------------
APPENDIX A
IPALCO ENTERPRISES, INC.
1997 STOCK OPTION PLAN
1. Purpose. The purpose of the IPALCO Enterprises, Inc. 1997 Stock
Option Plan (the "Plan") is to provide to certain officers (including
officers who are members of the Board of Directors) and other key executive
employees of IPALCO Enterprises, Inc. (the "Corporation") and of any of the
eighty percent (80%) or greater owned, direct or indirect, subsidiaries of
the Corporation (individually a "Subsidiary and collectively the
"Subsidiaries") who are materially responsible for the management or
operation of the business of the Corporation or a Subsidiary, a favorable
opportunity to acquire Common Stock, without par value, of the Corporation
("Common Stock"), thereby providing them with an increased incentive to work
for the success of the Corporation and the Subsidiaries and better enabling
the Corporation and the Subsidiaries to attract and retain capable
executive personnel.
2. Administration of the Plan. The Plan shall be administered,
construed and interpreted by the Compensation Committee (the "Committee") of
the Board of Directors of the Corporation. The Committee must be composed of
two or more persons who qualify as "Non-Employee Directors" within the
meaning of Rule 16b-3(b)(3) promulgated under the Securities Exchange Act of
1934, as amended (the "1934 Act") and as "outside directors" as defined in
Treasury Reg. Section 1.162-27(e)(3). The decision of a majority of the
members of the Committee shall constitute the decision of the Committee, and
the Committee may act (a) at a meeting at which a majority of the members of
the Committee is present, (b) unless prohibited by the Corporation's Articles
of Incorporation or Bylaws, by simultaneous telephonic communication as
authorized by IND. CODE Section 23-1-34-1, or (c) by a written consent signed
by all members of the Committee. The Committee shall have the sole, final
and conclusive authority to determine, consistent with and subject to the
provisions of the Plan:
(a) the individuals (the "Optionees") to whom options or successive
options shall be granted under the Plan;
(b) the time when options shall be granted hereunder;
(c) the number of shares of Common Stock of the Corporation to be covered
under each option;
(d) the option price to be paid upon the exercise of each option;
(e) the period within which each option may be exercised;
(f) the extent to which an option is an incentive stock option or a
non-qualified stock option; and
(g) the terms and conditions of the respective agreements by which
options granted shall be evidenced.
The Committee shall also have authority to prescribe, amend and rescind rules
and regulations relating to the Plan, and to make all other determinations
necessary or advisable in the administration of the Plan.
3. Eligibility. The Committee may, consistent with the purposes of the
Plan, grant options to officers and other key employees of the Corporation or
of a Subsidiary who in the opinion of the Committee are from time to time
materially responsible for the management or operation of the business of the
Corporation or of a Subsidiary; provided, however, that in no event may any
employee who owns (after application of the ownership rules in Section 424(d)
of the Internal Revenue Code of 1986, as amended (the "Code")) shares of
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Corporation be granted an incentive stock option
hereunder unless at the time such option is granted the option price is at
least 110% of the fair market value of the Common Stock subject to the
option and such incentive stock option by its terms is not exercisable after
the expiration of five (5) years from the date such option is granted.
Subject to the provisions of Section 4 hereof, an individual who has been
granted an option under the Plan, if he is otherwise eligible, may be granted
an additional option or options if the Committee shall so determine. The
maximum number of shares of the Corporation's Common Stock with respect to
which options may be granted in any calendar year to any individual shall not
exceed two hundred and fifty thousand (250,000).
4. Stock Subject to the Plan. There shall be reserved for issuance upon
the exercise of options granted under the Plan, two million (2,000,000)
shares of the Corporation's Common Stock which may be authorized but unissued
shares of the Corporation. Subject to Section 6 hereof, the shares for which
options may be granted under the Plan shall not exceed that number. If any
option shall expire or terminate for any reason without having been exercised
in full, the unpurchased shares subject thereto shall (unless the Plan shall
have terminated) become available for other options under the Plan.
5. Terms of Option. Each option granted under the Plan shall be subject
to the following terms and conditions and to such other terms and conditions
not inconsistent therewith as the Committee may deem appropriate in each
case:
(a) Option Price. The price to be paid for shares of Common Stock upon
the exercise of each option shall be determined by the Committee at the time
such option is granted, but such price in the case of an incentive stock
option in no event shall be less than the fair market value, as determined
by the Committee consistent with the requirements of Section 422 of the Code,
of such Common Stock on the date on which such option is granted.
(b) Period for Exercise of Option. An option shall not be exercisable
after the expiration of such period as shall be fixed by the Committee at
the time such option is granted, but such period in no event shall exceed
ten (10) years and one day from the date on which such option is granted;
provided, however, that incentive stock options shall have terms not in
excess of ten (10) years; provided, further, that no option shall be
exercisable prior to the date on which the Plan is approved by the
shareholders of the Corporation as required by Section 422 of the Code.
(c) Exercise of Options. The option price of each share of Common Stock
purchased upon exercise of an option shall be paid in full (1) in cash at the
time of such exercise, (2) if the Optionee may do so in conformity with
Regulation T (12 C.F.R. Section 220.3(e)(4)) and without violating Section
16(b) or (c) of the 1934 Act (to the extent applicable) and subject to
approval by the Committee, by delivering a properly executed exercise note
together with irrevocable instructions to a broker to deliver promptly
to the Corporation the total option price in cash and, if desired, the
amount of any taxes to be withheld from the Optionee's compensation as a
result of any withholding tax obligation of the Corporation or any of its
Subsidiaries, as specified in such notice, or (3) subject to the approval of
the Committee, by tendering to the Corporation whole shares of Common
Stock owned by him or any combination of whole shares of Common Stock owned
by him and cash, having a fair market value equal to the cash exercise price
of the shares with respect to which the option is being exercised. For this
purpose, the fair market value of the shares tendered by the Optionee shall
be computed as of the exercise date in such manner as determined by the
Committee, consistent with the requirements of Section 422 of the Code. The
Committee shall have the authority to grant options exercisable in full at
any time during their term, or exercisable in such quotas as the Committee
shall determine. An option may be exercised at any time or from time to time
during the term of the option as to any or all whole shares which have become
subject to purchase pursuant to the terms of the option (including, without
limitation, any quotas with respect to option exercise) or the Plan.
(d) Termination of Option. If an Optionee ceases to be an employee of
the Corporation or one of the Subsidiaries for any reason other than
retirement, permanent and total disability (within the meaning of Section
105(d)(4) of the Code), or death, any option granted to him shall forthwith
terminate. Leave of absence approved by the Committee shall not constitute
cessation of employment. If an Optionee ceases to be an employee of
the Corporation or one of the Subsidiaries by reason of permanent and total
disability (within the meaning of Section 105(d)(4) of the Code), any option
granted to him may be exercised by him in whole or in part within one (1)
year after the date of his termination of employment by reason of such
disability whether or not the option was otherwise exercisable at the date of
such termination of employment. If an Optionee ceases to be an employee of
the Corporation or one of the Subsidiaries by reason of retirement, any
option granted to him may be exercised by him in whole or in part during the
period fixed by the Committee under subsection (b) of this Section 5,
provided that the option was otherwise exercisable at the date of such
termination of employment. The term "retirement" as used herein means an
Optionee's termination of employment on or after meeting the requirements
for early or normal retirement benefits under any then existing Indianapolis
Power & Light Company pension plan. In the event of the death of an
Optionee while in the employ of the Corporation or the Subsidiaries or
within one (1) year after the termination of his employment by reason of
retirement or permanent and total disability (within the meaning of Section
105(d)(4) of the Code), any option granted to him may be exercised in whole
or in part at any time after the date of such death by the executor or
administrator of his estate or by the person or persons entitled to the
option by will or by applicable laws of descent and distribution until the
expiration of the option term as fixed by the Committee, whether or not the
option was otherwise exercisable at the date of his death. Notwithstanding
the foregoing provisions of this subsection (d), no option shall in any event
be exercisable after the expiration of the period fixed by the Committee in
accordance with subsection (b) above. An option shall also terminate if this
Plan is not approved by the shareholders of the Corporation within the
requisite time period set forth in Section 422 of the Code.
(e) Nontransferability of Option. An Option may not be transferred by
the Optionee otherwise than by will or the laws of descent and distribution,
and during the lifetime of the Optionee shall be exercisable only by him.
(f) Investment Representations. Unless the shares of Common Stock
subject to an option are registered under applicable federal and state
securities laws, each Optionee by accepting an option shall be deemed to
agree for himself and his legal representatives that any option granted to
him and any and all shares of Common Stock purchased upon the exercise of
the option shall be acquired for investment and not with a view to, or for
the sale in connection with, any distribution thereof, and each notice of
the exercise of any portion of an option shall be accompanied by a
representation in writing, signed by the Optionee or his legal
representatives, as the case may be, that the shares of Common Stock
are being acquired in good faith for investment and not with a view to, or
for sale in connection with, any distribution thereof (except in case of
the Optionee's legal representatives for distribution, but not for sale, to
his legal heirs, legatees and other testamentary beneficiaries). Any shares
issued pursuant to an exercise of an option may, but need not, bear a legend
evidencing such representations and restrictions. In addition, if the
options and shares of Common Stock issued pursuant to this Plan are issued
in reliance upon Rule 147, promulgated under the Securities Act of 1933, as
amended, the written representations required by such rule shall be obtained
from the Optionees prior to or at the time they are granted options, any and
all legends required by Rule 147 shall be set forth on the certificates
representing shares of Common Stock issued pursuant to the exercise of
such options, and stop transfer instructions shall be issued to the
Corporation's recordkeeping transfer agent with respect to such shares.
(g) Maximum Incentive Stock Options. The aggregate fair market value
(determined as of the time the option is granted) of Common Stock subject to
incentive stock options that are exercisable for the first time by an
employee during any calendar year under the Plan or any other plan of the
Corporation or any Subsidiary shall not exceed $100,000. For this purpose,
the fair market value of such shares shall be determined as of the date the
option is granted and shall be computed in such manner as shall be determined
by the Committee, consistent with the requirements of Section 422 of the Code.
If the immediate exercisability of incentive stock options arising from the
death or permanent and total disability of an Optionee pursuant to Section
5(d) above or arising from any change of control of the Corporation would
cause this $100,000 limitation to be exceeded for an Optionee, the Committee
shall convert as of the date on which such incentive stock options become
exercisable all or a portion of the outstanding incentive stock options held
by such Optionee to non-qualified stock options to the extent necessary to
comply with the $100,000 limitation.
(h) Agreement. Each option shall be evidenced by an agreement between
the optionee and the Corporation which shall provide, among other things,
that, with respect to incentive stock options, the optionee shall advise the
Corporation immediately upon any sale or transfer of the shares of Common
Stock received upon exercise of the option to the extent such sale or
transfer takes place prior to the later of (a) two (2) years from the date
of grant or (b) one (1) year from the date of exercise.
(i) Tax Benefit. The Committee may, in its sole discretion, include a
provision in any non-qualified stock option agreement that provides for an
additional cash payment from the Corporation to the grantee of such non-
qualified option as soon as practicable after the exercise date of such
non-qualified stock option equal to all or a portion of the tax benefit to
be received by the Corporation attributable to its federal income tax
deduction resulting from the exercise of such non-qualified stock option.
(j) Certificates. The certificate or certificates for the shares
issuable upon an exercise of an option shall be issued as promptly as
practicable after such exercise. An Optionee shall not have any rights of a
shareholder in respect to the shares of Common Stock subject to an option
until the date of issuance of a stock certificate to him for such shares.
In no case may a fraction of a share be purchased or issued under the Plan,
but if, upon the exercise of an option, a fractional share would otherwise
be issuable, the Corporation shall pay cash in lieu thereof.
(k) No Right to Continued Service. Nothing in this Plan or in any
agreement entered into pursuant hereto shall confer on any person any right
to continue in the employ of the Corporation or its Subsidiaries or affect
any rights of the Corporation, a Subsidiary, or the shareholders of the
Corporation may have to terminate his service at any time.
(l) Incentive Stock Options and Non-Qualified Stock Options. Options
granted under the Plan may be incentive stock options under Section 422 of
the Code or non-qualified stock options. All options granted hereunder shall
be clearly identified as either incentive stock options or non-qualified
stock options. In no event shall the exercise of an incentive stock option
affect the right to exercise any non-qualified stock option, nor shall the
exercise of any non-qualified stock option affect the right to exercise any
incentive stock option. Nothing in this Plan shall be construed to prohibit
the grant of incentive stock options and non-qualified stock options to the
same person; provided, however, that incentive stock options and non-
qualified stock options shall not be granted in a manner whereby the
exercise of one non-qualified stock option or incentive stock option affects
the exercisability of the other.
6. Adjustment of Shares. In the event of any change after the effective
date of the Plan in the outstanding stock of the Corporation by reason of any
reorganization, recapitalization, stock split, stock dividend, combination of
shares, exchange of shares, merger or consolidation, liquidation, or any
other change after the effective date of the Plan in the nature of the shares
of stock of the Corporation, the Committee shall determine what changes, if
any, are appropriate in the number and kind of shares reserved under the
Plan, and in the option price under and the number and kind of shares
covered by outstanding options granted under the Plan. Any determination of
the Committee hereunder shall be conclusive.
7. Tax Withholding. Whenever the Corporation proposes or is required
to issue or transfer shares of Common Stock under the Plan, the Corporation
shall have the right to require the Optionee or his or her legal
representative to remit to the Corporation an amount sufficient to satisfy
any federal, state and/or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares, and whenever
under the Plan payments are to be made in cash, such payments shall be net
of an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements.
8. Amendment. The Board of Directors of the Corporation may amend the
Plan from time to time and, with the consent of the Optionee, the terms and
provisions of his option, except that without the approval of the
Corporation's shareholders:
(a) the number of shares of Common Stock which may be reserved for
issuance under the Plan may not be increased except as provided in Section 6
hereof;
(b) the period during which an option may be exercised may not be
extended beyond ten (10) years and one (1) day from the date on which such
option was granted;
(c) the class of employees to whom options may be granted under the Plan
shall not be modified materially; and
(d) no other amendment to the Plan may be made which requires the
approval of the Corporation's shareholders under applicable law or under the
rules and regulations of the New York Stock Exchange.
No amendment of the Plan, however, may, without the consent of the
Optionees, make any changes in any outstanding options theretofore granted
under the Plan which would adversely affect the rights of such Optionees.
9. Termination. The Board of Directors of the Corporation may terminate
the Plan at any time and no option shall be granted thereafter. Such
termination, however, shall not affect the validity of any option theretofore
granted under the Plan. In any event, no incentive stock option may be
granted after the conclusion of a ten (10) year period commencing on the
date the Plan is adopted or, if earlier, the date the Plan is approved by
the Corporation's shareholders.
10. Successors. The Plan shall be binding upon the successors and
assigns of the Corporation.
11. Governing Law. The terms of any options granted hereunder and the
rights and obligations hereunder of the Corporation, the Optionees and their
successors in interest shall, except to the extent governed by federal law,
be governed by Indiana law.
12. Government and Other Regulations. The obligations of the Corporation
to issue or transfer and deliver shares under options granted under the Plan
shall be subject to compliance with all applicable laws, governmental rules
and regulations, and administrative action.
13. Effective Date. The Plan shall become effective when it shall have
been approved by the Corporation's Board of Directors; provided, however,
that the granting of any options under the Plan is conditional upon the
approval of the Plan by the Corporation's shareholders within twelve (12)
months after the adoption of the Plan by the Corporation's Board of
Directors and the options granted pursuant to the Plan may not be exercised
until the Board of Directors of the Corporation has been advised by counsel
that such approval has been obtained and all other applicable legal
requirements have been met; provided, further, that if shareholder approval
does not occur within the required twelve (12) month period, the Plan and
all outstanding options shall be deemed terminated.
[form of proxy/instruction card]
IPALCO ENTERPRISES, INC.
This Proxy/Instruction Card is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints John R. Hodowal and Bryan G. Tabler as
Proxies, each with the power of substitution, and authorizes them to
represent and vote and/or, in the case of shares held in IPALCO PowerInvest,
the dividend reinvestment and direct stock purchase plan, instructs the
agent for such Plan to execute a proxy empowering the above-named persons
to vote, as designated below, all the shares of IPALCO Enterprises, Inc.
common stock held of record by the undersigned and/or credited to the
undersigned's account in such Plan on April 10, 1997, at the annual
meeting of the shareholders to be held May 21, 1997, or at any adjournment
thereof, with respect to the matter(s) set forth below.
1. Election of Five Nominees For Directors, namely: Joseph D.
Barnette, Jr., Max L. Gibson, Ramon L. Humke, Andrew J. Paine, Jr.,
Sallie W. Rowland
[ ] Vote For All Nominees
[ ] Withhold Vote from All Nominees
[ ] Vote For All Nominees, Except Nominees written below:
--------------------------------------------------------------------
(Please write name(s) of Nominee(s) from whom vote is withheld)
2. Approval of an amendment to the Amended Articles of Incorporation
increasing to 290 million shares the amount of common stock
authorized for issuance.
[ ] For [ ] Against [ ] Abstain
3. Approval of the adoption of the IPALCO Enterprises, Inc. 1997
Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
(FOLD HERE - DO NOT TEAR)
This Proxy/Instruction Card when properly executed will be voted in the
manner directed by the undersigned shareholder. If not otherwise indicated,
this Proxy/Instruction Card will be voted FOR the five nominees for Director
listed above, FOR the amendment to the Amended Articles of Incorporation, and
FOR the adoption of the Stock Option Plan and confers discretionary authority
to vote on currently unknown matters properly presented to the meeting. This
Proxy/Instruction Card shall be voted on those matters properly presented in
accordance with the best judgment of the named Proxies.
Receipt of the Notice of Annual Meeting and Proxy Statement dated April 15,
1997, and the 1996 Annual Report is hereby acknowledged.
Dated ______________________, 1997.
Your signature must be exactly ____________________________________
as your name appears below. (SIGNATURE)
When signing as attorney-in-fact,
executor, administrator, trustee,
guardian or corporate officer, ____________________________________
please give full title as such. (SIGNATURE IF HELD JOINTLY)
Please complete
1997 Proxy at right.
Then date, sign,
detach it from this
form at perforations,
fold it and return
immediately in
accompanying
postage guaranteed
envelope.
Account ID:
ADDRESS CHANGE
_________________________
STREET
_________________________
APT. NO./P.O. BOX
_________________________
CITY
_________________________
STATE
_________________________
ZIP CODE
_________________________
SIGNATURE
[at perforation]
(DETACH HERE)
[letter soliciting voting instructions
from participants in Employees' Thrift Plan]
IPL
INDIANAPOLIS POWER & LIGHT COMPANY
April 15, 1997
TO PARTICIPANTS IN THE EMPLOYEES' THRIFT PLAN:
As a participant in the Employees' Thrift Plan, you are entitled to
direct the manner in which shares of stock of IPALCO Enterprises, Inc.,
("IPALCO") in which you have an interest, shall be voted by the Trustee
at the forthcoming Annual Meeting of Shareholders of IPALCO to be held
May 21, 1997. This right is given to you by Section 305.90 of the
Thrift Plan.
Enclosed is a copy of the Notice of the Annual Meeting and Proxy
Statement dated April 15, 1997 and an Instruction Card indicating the
number of shares with respect to which you may give voting instructions
to the Trustee. You may instruct the Trustee how you wish such shares
to be voted by placing a mark in the box which expresses your choice.
The only business to be acted upon at the meeting of which Management
is presently aware, is (1) the election of five directors to hold office
for terms of three years each and until their successors are duly elected
and qualified; (2) an amendment to the Amended Articles of Incorporation to
increase the authorized number of shares of IPALCO's common stock from 145
million to 290 million; and (3) the approval of the adoption of the IPALCO
Enterprises, Inc. 1997 Stock Option Plan.
It is important that you instruct the Trustee as to the voting of the
shares in which you have an interest. After designating how you wish such
shares to be voted, sign the instruction form and return it via intra company
mail to the Secretary of IPALCO, Room 729, IPALCO Corporate Center, on or
before May 15, 1997.
Shares with respect to which no voting instructions are given will be
voted by the Trustee in its discretion.
/s/ John D. Wilson
John D. Wilson, Secretary
Employees' Pension Committee
[form to be executed by Thrift Plan participants]
IPALCO ENTERPRISES, INC.
Instructions to Thrift Plan Trustee For
Annual Meeting of Shareholders - May 21, 1997
TO THE EMPLOYEE PENSION COMMITTEE:
I understand that in accordance with Section 305.90 of the Thrift Plan,
I may instruct the voting of the number of shares shown on this form. Will
you please direct the Trustee to execute a proxy empowering the persons
appointed therein to vote as follows:
1. Election of Five Nominees For Director, namely: Joseph D.
Barnette, Jr., Max L. Gibson, Ramon L. Humke, Andrew J. Paine, Jr.,
Sallie W. Rowland
[ ] Vote For All Nominees
[ ] Withhold Vote from All Nominees
[ ] Vote For All Nominees, Except Nominees written below:
--------------------------------------------------------------------
(Please write name(s) of Nominee(s) from whom vote is withheld)
2. Approval of an amendment to the Amended Articles of Incorporation
increasing to 290 million shares the amount of common stock
authorized for issuance.
[ ] For [ ] Against [ ] Abstain
3. Approval of the adoption of the IPALCO Enterprises, Inc. 1997
Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
(FOLD HERE - DO NOT TEAR)
The Trustee will execute the proxy as above directed, or, if no choice is
indicated, the proxy will be voted by the Trustee in its discretion. This
instruction card confers discretionary authority to vote on currently
unknown matters properly presented to the meeting.
Receipt of the Notice of Annual Meeting and Proxy Statement dated April 15,
1997, and the 1996 Annual Report is hereby acknowledged.
Dated ______________________, 1997.
Your signature must be exactly ____________________________________
as your name appears below. (SIGNATURE)
Please complete
1997 Instruction Card
at right. Then date,
sign, detach it from this
form at perforations,
fold it and return
immediately in
accompanying
interoffice envelope.