UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
TO
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission Name of Registrant, State of Incorporation, IRS Employer
File Number Address of Principal Executive Offices and Identification
Telephone Number Number
1-9894 INTERSTATE ENERGY CORPORATION (formerly WPL 39-1380265
Holdings, Inc.)
(a Wisconsin corporation)
222 West Washington Avenue
Madison, Wisconsin 53703
Telephone (608)252-3311
Securities registered pursuant to Section 12 (b) of the Act:
Name of Each
Title of Class Exchange on Which Registered
Common Stock, $.01 Par Value New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past (90) days. Yes X
No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of the Form
10-K or any amendment to this Form 10-K. [ X]
The aggregate market value of the voting stock held by nonaffiliates as of
February 28, 1998: $976.1 million
Number of shares outstanding of each class of common stock as of February
28, 1998:
Common Stock, $.01 par value, 30,788,593 shares outstanding
DOCUMENTS INCORPORATED BY REFERENCE:
None
On April 21, 1998, the merger involving IES Industries Inc., Interstate
Power Company and WPL Holdings, Inc. was completed (the Merger), after
which WPL Holdings, Inc.'s name was changed to Interstate Energy
Corporation (the Company). Following the Merger, Heartland Development
Corporation, the holding company for non-regulated operations of the
Company, changed its name to Alliant Industries Inc. (Alliant Industries).
The Company is now the parent holding company of Wisconsin Power and Light
Company (WP&L), IES Utilities Inc. (IES), Interstate Power Company (IPC)
and Alliant Industries.
The undersigned Registrant hereby amends Items 10, 11, 12 and 13 of its
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 to
provide in their entirety as follows:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the directors of the Company as of the date of this
filing is set forth below.
Election of Directors of Interstate Energy Corporation
Eleven directors are to be elected at the Company's 1998 Annual Meeting of
Shareowners scheduled to be held on June 24, 1998. Joyce L. Hanes, Arnold
M. Nemirow, Jack R. Newman, Judith D. Pyle, and David Q. Reed are nominees
to hold office for a term expiring in 2001; Lee Liu, Robert W. Schlutz and
Wayne H. Stoppelmoor are nominees to hold office for a term expiring in
2000; and Alan B. Arends, Robert D. Ray and Anthony R. Weiler are nominees
to hold office for a term expiring in 1999. All nominees are currently
directors of the Company, WP&L, IES and IPC. All persons elected as
directors will serve until the Annual Meeting of Shareowners of the
Company in the year their respective term expires, or until their
successors have been duly elected and qualified. A proxy statement for
the 1998 Annual Meeting will be mailed to shareowners in advance of such
meeting.
Brief biographies of the director nominees and continuing directors
follow. These biographies include their age (as of December 31, 1997), an
account of their business experience, and the names of publicly-held and
certain other corporations of which they are also directors. Except as
otherwise indicated, each nominee and continuing director has been engaged
in his or her present occupation for at least the past five years.
Nominees
For Terms Expiring in 2001
Joyce L. Hanes Principal Occupation: Director and Chair of Midwest
Wholesale Inc.
Age: 65
Served as a director of the Company since the
consummation of the Merger.
Annual meeting at which nominated term of office
will expire: 2001
Other Information: Ms. Hanes has been a director of Midwest Wholesale
Inc., Mason City, Iowa since 1970. She was re-elected Chair of the Board
of that company in December, 1997, having previously served as Chair from
1986 to 1988. Ms. Hanes has served as a director of IPC since 1982, and
of WP&L and IES since the consummation of the Merger.
Arnold M. Nemirow Principal Occupation: Chairman, President and
Chief Executive Officer, Bowater, Inc. (a pulp and
paper manufacturer), Greenville, South Carolina.
Age: 54
Served as a director of the Company since 1991.
Annual Meeting at which nominated term of office
will expire: 2001
Other Information: Mr. Nemirow served as President, Chief Executive
Officer and Director of Wausau Paper Mills Company, a pulp and paper
manufacturer, from 1990 until joining Bowater, Inc., in September 1994.
Mr. Nemirow has served as a director of WP&L since 1994, and of IES and
IPC since the consummation of the Merger. He is a member of the New York
Bar.
Jack R. Newman Principal Occupation: Partner of Morgan, Lewis &
Bockius, an international law firm based in
Washington, D.C.
Age: 64
Served as a director of the Company since the
consummation of the Merger.
Annual Meeting at which nominated term of office
will expire: 2001
Other Information: Mr. Newman has been engaged in private practice since
1967 and has been a partner of Morgan, Lewis & Bockius since December 1,
1994. Prior to joining Morgan, Lewis & Bockius, he was a partner in the
law firms Newman & Holtzinger and Newman, Bouknight & Edgar. He has
served as nuclear legal counsel to IES since 1968. He advises a number of
utility companies on nuclear power matters, including many European and
Asian companies. Mr. Newman is a member of the Bar of the State of New
York, the Bar Association of the District of Columbia, the Association of
the Bar of the City of New York, the Federal Bar Association and the
Lawyers Committee of the Edison Electric Institute. Mr. Newman has served
as a director of IES since 1994, and of WP&L and IPC since the
consummation of the Merger.
Judith D. Pyle Principal Occupation: Vice Chair of The Pyle
Group, a financial services company, Madison,
Wisconsin.
Age: 54
Served as a director of the Company since 1992.
Annual Meeting at which nominated term of office
will expire: 2001
Other Information: Prior to assuming her current position, Ms. Pyle
served as Vice Chair and Senior Vice President of Corporate Marketing of
Rayovac Corporation (a battery and lighting products manufacturer),
Madison, Wisconsin. Ms. Pyle is a director of Firstar Corporation. She
is also a member of the Board of Visitors at the University of Wisconsin
School of Human Ecology. Further, Ms. Pyle is a member of Boards of
Directors of the United Way Foundation, Greater Madison Chamber of
Commerce, Madison Art Center, Wisconsin Taxpayers Alliance, Children's
Theatre of Madison, and is a trustee of the White House Endowment Fund.
Ms. Pyle has served as a director of WP&L since 1994, and of IES and IPC
since the consummation of the Merger.
David Q. Reed Principal Occupation: Independent practitioner of
law in Kansas City, Missouri.
Age: 66
Served as a director of the Company since the
consummation of the Merger.
Annual Meeting at which nominated term of office
will expire: 2001
Other Information: Mr. Reed has been engaged in the private practice of
law since 1960. He is a member of the American Bar Association, the
Association of Trial Lawyers of America, the Missouri Association of Trial
Lawyers, the Missouri Bar and the Kansas City Metropolitan Bar
Association. Mr. Reed has served as a director of IES (or predecessor
companies) since 1967, and of WP&L and IPC since the consummation of the
Merger.
For Terms Expiring in 2000
Lee Liu Principal Occupation: Chairman of the Board of the
Company.
Age: 64
Served as a director of the Company since the
consummation of the Merger.
Annual Meeting at which current term of office will
expire: 2000
Other Information: Mr. Liu has served as Chairman of the Board of the
Company since the consummation of the Merger. Mr. Liu was Chairman of the
Board and Chief Executive Officer of IES Industries Inc. and Chairman of
the Board and Chief Executive Officer of IES prior to the Merger. Mr. Liu
has held a number of professional, management and executive positions after
joining Iowa Electric Light and Power Company (later known as IES Utilities
Inc.) in 1957. He is a director of HON Industries Inc., an office
equipment manufacturer in Muscatine, Iowa; McLeodUSA Inc., a telecommunica-
tions company in Cedar Rapids, Iowa; Principal Financial Group, an insurance
company in Des Moines, Iowa; and Eastman Chemical Company, a diversified
chemical company in Kingsport, Tennessee. He also serves as a trustee for
Mercy Medical Center, a hospital in Cedar Rapids, Iowa and is a member of
the University of Iowa College of Business Board of Visitors. Mr. Liu has
served as a director of IES (or predecessor companies) since 1981, and of
WP&L and IPC since the consummation of the Merger.
Robert W. Schlutz Principal Occupation: President of Schlutz
Enterprises, a diversified farming and retailing
business in Columbus Junction, Iowa.
Age: 62
Served as a director of the Company since the
consummation of the Merger.
Annual Meeting at which current term of office will
expire: 2000
Other Information: Mr. Schlutz is a director of PM Agri-Nutritional Group
Inc., an animal health business in St. Louis, Missouri, and the Iowa
Foundation for Agricultural Advancement. Mr. Schlutz is President of the
Iowa State Fair Board and a member of various community organizations. He
also served on the National Advisory Council for the Kentucky Fried
Chicken Corporation. He is a past Chairman of the Environmental
Protection Commission for the State of Iowa. Mr. Schlutz has served as a
director of IES (or predecessor companies) since 1989, and of WP&L and IPC
since the consummation of the Merger.
Wayne H. Stoppelmoor Principal Occupation: Vice Chairman of the Board
of the Company.
Age: 63
Served as a director of the Company since the
consummation of the Merger.
Annual Meeting at which current term of office will
expire: 2000
Other Information: Mr. Stoppelmoor has served as Vice Chairman of the
Board of Directors of the Company since the consummation of the Merger.
Prior thereto, Mr. Stoppelmoor had served as Chairman, President and Chief
Executive Officer of IPC. He retired as President of IPC on October 1,
1996 and as Chief Executive Officer on January 1, 1997. Mr. Stoppelmoor
has served as a director of IPC since 1986, and of WP&L and IES since the
consummation of the Merger.
For Terms Expiring in 1999
Alan B. Arends Principal Occupation: Chairman of the Board of
Directors of Alliance Benefit Group Financial
Services Corp. (formerly Arends Associates, Inc.,)
of Albert Lea, Minnesota, an employee benefits
company.
Age: 64
Served as a director of the Company since the
consummation of the Merger.
Annual Meeting at which current term of office will
expire: 1999
Other Information: Mr. Arends founded Alliance Benefit Group Financial
Services Corp. in 1983. Mr. Arends has served as a director of IPC since
1993, and of WP&L and IES since the consummation of the Merger.
Robert D. Ray Principal Occupation: Retired President and Chief
Executive Officer of IASD Health Services Inc.
(formerly Blue Cross and Blue Shield of Iowa,
Western Iowa and South Dakota), an insurance firm
in Des Moines, Iowa.
Age: 69
Served as a director of the Company since the
consummation of the Merger.
Annual Meeting at which current term of office will
expire: 1999
Other Information: Mr. Ray served as Governor of the State of Iowa for
fourteen years, and was the United States Delegate to the United Nations
in 1984. He is a director of the Maytag Company, an appliance
manufacturer in Newton, Iowa. He also serves as Chairman of the National
Leadership Commission on Health Care Reform and the National Advisory
Committee on Rural Health Care. Mr. Ray is Chairman of the Board of
Governors, Drake University, Des Moines, Iowa, and a member of the Iowa
Business Council. Mr. Ray has served as a director of IES (or predecessor
companies) since 1987, and of WP&L and IPC since the consummation of the
Merger.
Anthony R. Weiler Principal Occupation: Senior Vice President,
Merchandising, for Heilig-Meyers Company, a
national furniture retailer in Richmond, Virginia.
Age: 61
Served as a director of the Company since the
consummation of the Merger.
Annual Meeting at which current term of office will
expire: 1999
Other Information: Mr. Weiler was previously Chairman and Chief Executive
Officer of Chittenden & Eastman Company, a national manufacturer of
mattresses in Burlington, Iowa. He was employed by Chittenden & Eastman
in various management positions from 1960 to 1995. Mr. Weiler joined
Heilig-Meyers Company as Senior Vice President of Merchandising in 1995.
Mr. Weiler is Chairman of the National Home Furnishings Association and a
director of the Retail Home Furnishings Foundation. He is a trustee of
NHFA Insurance and a past director of the Burlington Area Development
Corporation, the Burlington Area Chamber of Commerce and various community
organizations. Mr. Weiler has served as a director of IES (or predecessor
companies) since 1991, and of WP&L and IPC since the consummation of the
Merger.
Continuing Directors
Erroll B. Davis, Jr. Principal Occupation: President and Chief
Executive Officer of the Company.
Age: 53
Served as a director of the Company since 1982.
Annual Meeting at which current term of office will
expire: 2000
Other Information: Mr. Davis was elected President of the Company in
January, 1990, and was elected President and Chief Executive Officer of
the Company effective July 1, 1990. Mr. Davis joined WP&L in August, 1978
and was elected President in July, 1987. He was elected President and
Chief Executive Officer of WP&L in August, 1988. Mr. Davis has also
served as Chief Executive Officer of IES and IPC since the consummation of
the Merger. He is a director of the Edison Electric Institute, Amoco Oil
Company, Competitive Wisconsin, Inc., PPG Industries, Inc., and the
Wisconsin Utilities Association. Mr. Davis is also a director and past
chair of the Wisconsin Association of Manufacturers and Commerce, former
director and vice chair of Forward Wisconsin, and director and acting
chair of the Electric Power Research Institute, past director of the
Association of Edison Illuminating Companies, and the American Gas
Association. Mr. Davis is also a member of the Iowa Business Council. Mr.
Davis has served as a director of WP&L since 1984, and of IES and IPC
since the consummation of the Merger.
Rockne G. Flowers Principal Occupation: Chief Executive Officer of
Nelson Industries, Inc. (a muffler, filter,
industrial silencer, and active sound and vibration
control technology and manufacturing firm),
Stoughton, Wisconsin (a subsidiary of Cummins
Engine Company).
Age: 66
Served as a director of the Company since 1981.
Annual Meeting at which current term of office will
expire: 1999
Other Information: Mr. Flowers is a director of Digisonix, Inc.; American
Family Mutual Insurance Company; Janesville Sand and Gravel Company; M&I
Bank of Southern Wisconsin; Meriter Health Services, Inc.; Meriter
Hospital; the Wisconsin History Foundation, and University Research Park.
Mr. Flowers has served as a director of WP&L from 1979 to 1990 and since
1994, and of IES and IPC since the consummation of the Merger.
Katharine C. Lyall Principal Occupation: President, University of
Wisconsin System, Madison, Wisconsin.
Age: 56
Served as a director of the Company since 1994.
Annual Meeting at which current term of office will
expire: 1999
Other Information: Ms. Lyall has served as President of the University of
Wisconsin System since April 1992. Prior thereto, she served as Executive
Vice President of the University of Wisconsin System. She also serves on
the Board of Directors of the Kemper National Insurance Companies and the
Carnegie Foundation for the Advancement of Teaching. She is a member of a
variety of professional and community organizations, including the
American Economic Association; Carnegie Foundation for Advancement of
Teaching (President, Board of Trustees); the Wisconsin Academy of
Sciences, Arts and Letters; the American Red Cross (Dane County);
Competitive Wisconsin, Inc.; and Forward Wisconsin. In addition to her
administrative position, she is a professor of economics at the University
of Wisconsin-Madison. Ms. Lyall has served as a director of WP&L since
1986, and of IES and IPC since the consummation of the Merger.
Milton E. Neshek Principal Occupation: Special Consultant to the
Kikkoman Corporation, Tokyo, Japan, and General
Counsel and Secretary of Kikkoman Foods, Inc. and
Manager, New Market Development, Kikkoman Foods,
Inc. (a food products manufacturer), Walworth,
Wisconsin.
Age: 67
Served as a director of the Company since 1986.
Annual Meeting at which current term of office will
expire: 2000
Other Information: Mr. Neshek is a director of Kikkoman Foods, Inc.;
Midwest U.S.-Japan Association; Regional Transportation Authority (for
southeast Wisconsin); and Wisconsin-Chiba, Inc. He is a fellow in the
American College of Probate Counsel. Mr. Neshek is a member of the
Walworth County Bar Association, the State Bar of Wisconsin, and the
American Judicature Society. Mr. Neshek is also a member of the Wisconsin
Sesquicentennial Commission and a member of its Executive and Finance
Committee. Mr. Neshek is a member of the Wisconsin International Trade
Council (WITCO) and is Chairman of the WITCO International Education Task
Force. Mr. Neshek has served as a director of WP&L since 1984, and of IES
and IPC since the consummation of the Merger.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company's directors, its executive officers, and certain other
officers are required to report their ownership of the Company's common
stock and subsidiary preferred stock and any changes in that ownership to
the Securities and Exchange Commission and the New York Stock Exchange.
To the best of the Company's knowledge, all required filings in 1997 were
properly made in a timely fashion. In making the above statements, the
Company has relied on the representations of the persons involved and on
copies of their reports filed with the Securities and Exchange Commission.
Executive Officers of Interstate Energy Corporation
Figures following the names represent the officer's age as of December 31,
1997:
Erroll B. Davis, Jr., 53, has served as President and Chief Executive
Officer of the Company since 1990 and has been a board member since 1988.
Michael R. Chase, 59, was elected Executive Vice President-Corporate
Services effective April 1998. He previously served as President and
Chief Executive Officer since 1997, President and Chief Operating Officer
from 1996 to 1997, Executive Vice President from 1995 to 1996 and Vice
President-Power Production from 1991 to 1995 at IPC.
William D. Harvey, 48, was elected Executive Vice President-Generation
effective April 1998. He previously served as Senior Vice President since
1993 and Vice President-Natural Gas and General Counsel from 1992 to 1993
at WP&L.
James E. Hoffman, 44, was elected Executive Vice President-Business
Development effective April 1998. He previously served as Executive Vice
President since 1996 at IES Industries Inc. and Executive Vice President-
Customer Service & Energy Delivery from 1995 to 1997 at IES Utilities Inc.
Prior to joining the company, he was Chief Information Officer from 1990
to 1995 at MCI Communications.
Eliot G. Protsch, 44, was elected Executive Vice President-Energy Delivery
effective April 1998. He previously served as Senior Vice President since
1993 and Vice President-Customer Services and Sales from 1992 to 1993 at
WP&L.
Thomas M. Walker, 50, was elected Executive Vice President and Chief
Financial Officer effective April 1998. He previously served as Executive
Vice President and Chief Financial Officer since 1996 at IES Industries
Inc. and IES Utilities Inc. Prior to joining the company, he was
Executive Vice President-Chief Financial and Administrative Officer and
Member of the Board of Directors from 1990 to 1995 at Information
Resources, Inc.
John E. Ebright, 54, was elected Vice President-Controller effective April
1998. He previously served as Controller and Chief Accounting Officer
since 1996 at IES Industries Inc. and IES Utilities Inc. Prior to joining
the company he was Vice President and Controller from 1987 to 1996 at
MidCon Corp., a subsidiary of Occidental Petroleum Corporation.
Edward M. Gleason, 57, was elected Vice President-Treasurer and Corporate
Secretary effective April 1998. He previously served as Vice President-
Treasurer and Corporate Secretary of WPL Holdings, Inc. since 1993. He
has also served as Controller, Treasurer and Corporate Secretary of WP&L
since 1996, Corporate Secretary of WP&L from 1993 to 1996 and Vice
President-Finance and Treasurer of WP&L from 1986 to 1993.
Donald D. Jannette, 55, was elected Assistant Corporate Secretary
effective April 1998. He previously served as Assistant Secretary and
Assistant Treasurer since 1989 at IPC.
Susan J. Kosmo, 51, was elected Assistant Controller effective April 1998.
She previously served as Assistant Controller since 1995 and Trust
Investments and Investor Relations Supervisor from 1992 to 1995 at WP&L.
John E. Kratchmer, 35, was elected Assistant Controller effective April
1998. He previously served as Manager of Financial Reporting and Property
since 1996, Manager of Financial Reporting from 1994 to 1996 and Financial
Reporting Specialist from 1993 to 1994 at IES Industries Inc.
NOTE: None of the executive officers listed above is related to any
member of the Board of Directors or nominee for director.
Executive officers have no definite terms of office and serve at the
pleasure of the Board of Directors.
ITEM 11. EXECUTIVE COMPENSATION
Compensation of Directors
No fees are paid to directors who are officers of the Company and/or any
of its subsidiaries (presently Mr. Davis, Mr. Liu and Mr. Stoppelmoor).
Non-management directors, each of whom serve on the Boards of the Company,
WP&L, IES, IPC and Alliant Industries Inc. (the holding company for IEC's
nonregulated businesses), receive an annual retainer of $32,800 for
service on all five boards. Travel expenses are paid for each meeting-day
attended. All non-management directors also receive a 25% Company
matching contribution in common stock for limited optional cash purchases,
up to $10,000, of the Company's common stock through the Company's
Shareowner Direct Plan. Matching contributions of $2,500 each for
calendar year 1997 were made for the following directors: L. D. Carley, R.
G. Flowers, D. R. Haldeman, K. C. Lyall, A. M. Nemirow, M. E. Neshek, H.
C. Prange, J. D. Pyle, and C. T. Toussaint. Messrs. Carley, Haldeman and
Prange and Ms. Toussaint retired as directors at the effective time of the
Merger.
Director's Charitable Award Program - The Company maintains a Director's
Charitable Award Program for the members of its Board of Directors
beginning after three years of service. The purpose of the Program is to
recognize the interest of the Company and its directors in supporting
worthy institutions, and to enhance the Company's director benefit program
so that the Company is able to continue to attract and retain directors of
the highest caliber. Under the Program, when a director dies, the Company
will donate a total of $500,000 to one qualified charitable organization,
or divide that amount among a maximum of four qualified charitable
organizations, selected by the individual director. The individual
director derives no financial benefit from the Program. All deductions
for charitable contributions are taken by the Company, and the donations
are funded by the Company through life insurance policies on the
directors. Over the life of the Program, all costs of donations and
premiums on the life insurance policies, including a return of the
Company's cost of funds, will be recovered through life insurance proceeds
on the directors. The Program, over its life, will not result in any
material cost to the Company.
Director's Life Insurance Program - The Company maintains a split-dollar
Director's Life Insurance Program for non-employee directors, beginning
after three years of service, which provides a maximum death benefit of
$500,000 to each eligible director. Under the split-dollar arrangement,
directors are provided a death benefit only and do not have any interest
in the cash value of the policies. The Life Insurance Program is
structured to pay a portion of the total death benefit to the Company to
reimburse the Company for all costs of the program, including a return on
its funds. The Life Insurance Program, over its life, will not result in
any material cost to the Company.
Director Emeritus Program - In connection with the Merger, the Company put
in place a Director Emeritus Program under which directors that retired
from the Board as a result of the Merger are paid the same annual retainer
fee as continuing directors for up to two years after they retire or until
they reach age 71, whichever occurs first. This program is intended to
apply only to directors who retired in connection with the Merger.
Compensation of Executive Officers
The following Summary Compensation Table sets forth the total compensation
paid by the Company and its subsidiaries for all services rendered during
1997, 1996, and 1995 to the Chief Executive Officer and the five other
most highly compensated executive officers of the Company or its
subsidiaries who performed policy making functions for the Company.
SUMMARY COMPENSATION TABLE
(Dollars)
Long-Term
Annual Compensation Compensation Awards
Other Options/ Restricted
Name and Principal Annual SARs 4 Stock All Other
Position Year Salary 1 Bonus 2 Compensation 3 (Shares) Awards Compensation 5
Erroll B. Davis, Jr. 1997 450,000 200,800 19,982 13,800 - 60,261
President and CEO 1996 450,000 297,862 23,438 12,600 - 66,711
1995 426,038 125,496 18,963 13,100 - 61,513
William D. Harvey 1997 220,000 43,986 14,944 5,100 - 33,043
Senior Vice President - 1996 220,000 92,104 10,765 4,650 - 29,343
WP&L 1995 203,846 47,340 5,746 4,700 - 23,534
Eliot G. Protsch 1997 220,000 51,400 11,444 5,100 - 30,057
Senior Vice President - 1996 220,000 101,224 7,657 4,650 - 25,890
WP&L 1995 200,000 47,520 4,169 4,700 - 20,178
A.J. (Nino) Amato 6 1997 168,846 25,262 13,775 3,900 - 27,809
Senior Vice President - 1996 168,846 65,920 9,346 3,550 - 22,723
WP&L 1995 156,804 40,046 5,144 3,650 - 18,059
Daniel A. Doyle 1997 165,400 20,139 7,087 3,250 - 17,811
Vice President - Power 1996 149,150 46,865 3,053 2,800 - 12,180
Production - WP&L 1995 140,399 32,465 3,090 2,900 - 11,155
Lance W. Ahearn 7 1997 186,011 70,458 106,340 - - 791,727
1996 205,000 59,860 6,180 - - 35,147
1995 195,000 34,125 3,814 - - 29,663
___________________
1 Includes vacation days sold back to the Company, if any.
2 Bonuses include special bonuses for merger related work of: Mr.
Davis - $100,000, Mr. Harvey - $25,000, Mr. Protsch - $25,000, Mr.
Amato - $5,000 and Mr. Doyle - $10,000. The bonus for Mr. Ahearn for
1997 includes a tax reimbursement bonus related to tax on proceeds
from Alliant Industries restricted stock redeemed during 1997.
3 Other Annual Compensation for 1997 consists of: Income tax gross-ups
for reverse split-dollar life insurance: Mr. Davis - $13,526, Mr.
Harvey - $5,567, Mr. Protsch - $2,866, Mr. Ahearn - $3,476, Mr. Amato
- $4,732 and Mr. Doyle - $3,164; Income tax gross-ups on financial
counseling benefit: Mr. Davis - $6,456, Mr. Harvey - $9,377, Mr.
Protsch - $8,578, Mr. Ahearn - $4,096, Mr. Amato - $9,043 and Mr.
Doyle - $3,923; and Income tax gross-ups for redemption of Alliant
Industries stock: Mr. Ahearn - $98,768.
4 Awards made in 1997 were in combination with contingent dividend
awards as described in the table entitled "Long-Term Incentive Awards
in 1997".
5 All Other Compensation for 1997 consists of: matching contributions
to 401(k) plan: Mr. Davis - $13,500, Mr. Harvey - $6,600, Mr.
Protsch - $6,600, Mr. Ahearn - $4,750, Mr. Amato -$4,100 and Mr.
Doyle - $4,962; Financial counseling benefit: Mr. Davis - $7,000,
Mr. Harvey - $10,167, Mr. Protsch - $10,750, Mr. Ahearn - $11,333,
Mr. Amato - $11,333 and Mr. Doyle - $4,917; Split dollar life
insurance premiums: Mr. Davis -$25,096, Mr. Harvey - $10,241, Mr.
Protsch - $9,116, Mr. Amato - $6,446 and Mr. Doyle - $3,967; Reverse
split dollar life insurance: Mr. Davis - $14,665, Mr. Harvey -
$6,035, Mr. Protsch - $3,591, Mr. Ahearn - $6,744, Mr. Amato -$5,930
and Mr. Doyle - $3,965; Severance payments pursuant to severance
agreements: Mr. Ahearn - $768,900. The split dollar insurance
premiums are calculated using the "foregone interest" method.
6 Mr. Amato left the Company following the effective date of the
Merger.
7 Mr. Ahearn resigned as President and Chief Executive Officer of
Alliant Industries in November 1997.
Pro Forma Executive Compensation Information
The following sets forth pro forma compensation information as though the
Merger had been consummated on January 1, 1997. The compensation
reflected in the table was paid by the Company and IES Industries Inc., as
the case may be.
Pro Forma
SUMMARY COMPENSATION TABLE
(Dollars)
Long-Term
Annual Compensation Compensation Awards
Other Options/ Restricted
Annual SARs 4 Stock All Other
Name and Principal Position Year Salary 1 Bonus 2 Compensation 3 (Shares) Awards 5 Compensation 6
Erroll B. Davis, Jr. 1997 450,000 200,800 19,982 13,800 - 60,261
President and CEO of the 1996 450,000 297,862 23,438 12,600 - 66,711
Company 1995 426,038 125,496 18,963 13,100 - 61,513
Lee Liu 1997 400,000 189,000 5,956 - 176,391 13,277
Chairman of the Board and 1996 380,000 175,000 2,578 - 253,475 13,956
CEO - IES Industries Inc. 1995 340,000 142,800 1,588 - 176,745 13,507
Larry D. Root 1997 336,000 - 1,164 - - -
President and Chief 1996 50,909 - 813 - - 252,000
Operating Officer - IES 1995 220,822 62,606 566 - - 208,038
Industries Inc.
James E. Hoffman 1997 232,200 62,694 - - 35,462 847
Executive Vice President - 1996 226,467 58,050 - - 101,879 823
IES Industries Inc. 1995 89,583 206,500 51,523 - 143,125 324
Thomas M. Walker 1997 230,000 62,100 38,138 - - 2,367
Executive Vice President 1996 9,583 - - - 30,000 119
and CFO - IES Industries 1995 - - - - - -
Inc.
___________________
1 Includes vacation days sold back to the Company, if any.
2 The 1997 bonus for Mr. Davis includes a special bonus for merger
related work of $100,000. The bonuses for Mr. Liu, Mr. Hoffman and
Mr. Walker represent plan year awards from the IES Industries Inc.
Management Incentive Compensation Plan. The amount reported as
bonus for Mr. Hoffman in 1995 also includes a one-time payment of
$185,000 when he commenced employment with IES Industries Inc.
3 Other Annual Compensation for 1997 consists of: Income tax gross-ups
for reverse split-dollar life insurance: Mr. Davis - $13,526; Income
tax gross-ups on financial counseling benefit: Mr. Davis - $6,456;
Earnings from the IES Industries Inc. Key Employee Deferred
Compensation Plan in excess of 120% of the applicable federal long-
term rate provided under Section 1274(d) of the Internal Revenue
Code: Mr. Liu - $5,956 and Mr. Root - $1,164; Relocation expense
reimbursement: Mr. Walker - $38,138. Also included in 1995 are
relocation expense reimbursements for Mr. Hoffman of $51,523.
4 Awards for Mr. Davis made in 1997 were in combination with contingent
dividend awards as described in the table entitled "Long-Term
Incentive Awards in 1997".
5 Awards of IES Industries restricted stock had been made by IES
Industries Inc. since June 1, 1988, with one-third of each year's
award being restricted for one year, one-third being restricted for
two years, and one-third being restricted for three years. The
shares of restricted stock reflected in this table subject to such
three-year vesting schedule are as follows: Mr. Liu - 5,004 shares
awarded for 1997, 8,703 shares awarded for 1996, and 6,171 shares
awarded for 1995; Mr. Hoffman - 1,006 shares awarded for 1997, 3,498
shares awarded for 1996 and 5,000 shares awarded for 1995; Mr. Walker
- 1,000 shares awarded for 1996. Restricted stock is considered
outstanding upon award date and dividends are paid to the eligible
officers on these shares while restricted. The amounts shown in the
table above represent the value of the awards based upon closing
price of IES Industries common stock on the award date. The award
date is usually in the calendar year following the plan year. At
December 31, 1997, the following listed officers of IES Industries
Inc. had restricted stock for which restrictions had not lapsed as
follows (values based on December 31, 1997 closing price for IES
Industries Common Stock): Mr. Liu - 20,592 shares valued at $758,043;
Mr. Hoffman - 7,838 valued at $288,536; Mr. Walker - 667 shares
valued at $24,554. All of the restricted shares award by IES
Industries vested upon consummation of the Merger.
6 All Other Compensation for 1997 consists of: Matching contributions
to 401(k) plan: Mr. Davis - $13,500 and Mr. Liu - $3,800; Financial
counseling benefit: Mr. Davis - $7,000; Split dollar life insurance
premiums: Mr. Davis -$25,096; Reverse split dollar life insurance:
Mr. Davis - $14,665; Life insurance coverage in excess of $50,000:
Mr. Liu - $9,477, Mr. Hoffman - $847 and Mr. Walker - $2,367. The
split dollar insurance premiums are calculated using the "foregone
interest" method. The 1996 amount for Mr. Root includes consulting
fees of $249,989. The 1995 amount for Mr. Root includes severance
costs of $200,660.
Stock Options
The following table sets forth certain information concerning options
granted during 1997 to the executives named below:
OPTION/SAR GRANTS IN 1997
Potential Realizable Value at
Assumed Annual Rates of
Stock Appreciation for Option
Individual Grants Term 2
Number of
Securities % of Total
Underlying Options/SARs
Options/ Granted to Exercise or
SARs Employees in Base Price Expiration
Name Granted 1 Fiscal Year ($/Share) Date 5% 10%
Erroll B. Davis, Jr. 13,800 17% $28.00 1/2/07 $243,018 $615,814
William D. Harvey 5,100 6% 28.00 1/2/07 89,811 227,613
Eliot G. Protsch 5,100 6% 28.00 1/2/07 89,811 227,613
A. J. (Nino) Amato 3,900 5% 28.00 1/2/07 68,679 174,057
Daniel A. Doyle 3,250 4% 28.00 1/2/07 57,233 145,048
Lance W. Ahearn NA NA NA NA NA NA
1 Consists of non-qualified stock options to purchase shares of Company
common stock granted pursuant to the Company's Long Term Equity
Incentive Plan. Options were granted on January 2, 1997, and will
fully vest on January 2, 2000. These options were granted with an
equal number of contingent dividend awards as described in the table
entitled "Long-Term Incentive Awards in 1997" and have exercise
prices equal to the fair market value of Company shares on the date
of grant. Upon a "change in control" of the Company as defined in
the Plan or upon retirement, disability or death of the option
holder, these options shall become immediately exercisable. Upon
exercise of an option, the executive purchases all or a portion of
the shares covered by the option by paying the exercise price
multiplied by the number of shares as to which the option is
exercised, either in cash or by surrendering common shares already
owned by the executive.
2 The hypothetical potential appreciation shown for the named
executives is required by the Securities and Exchange Commission
(SEC) rules. The amounts shown do not represent either the
historical or expected future performance of the Company's common
stock level of appreciation. For example, in order for the named
executives to realize the potential values set forth in the 5% and
10% columns in the table above, the price per share of the Company's
common stock would be $45.61 and $72.65 respectively as of the
expiration date of the options.
The following table provides information for the executives named below
regarding the number and value of unexercised options. No options were
exercisable during 1997.
OPTION/SAR VALUES AT DECEMBER 31, 1997
Number of Securities Value of Unexercised In-the-Money
Underlying Unexercised Options/SARs at Year End 1
Options/SARs at Fiscal
Year End
Name Exercisable Unexercisable Exercisable Unexercisable
Erroll B. Davis, Jr. 0 39,500 0 $174,338
William D. Harvey 0 14,450 0 63,620
Eliot G. Protsch 0 14,450 0 63,620
A. J. (Nino) Amato 0 11,000 0 48,950
Daniel A. Doyle 0 8,950 0 39,619
Lance W. Ahearn NA NA NA NA
1 Based on the closing per share price on December 31, 1997 of Company
common stock of $33.125.
Long-Term Incentive Awards
The following table provides information concerning long-term incentive
awards made to the executives named below in 1997.
LONG-TERM INCENTIVE AWARDS IN 1997
ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
PRICE-BASED PLANS 2
PERFORMANCE OR
NUMBER OF OTHER PERIOD
SHARES, UNITS OR UNTIL MATURATION
NAME OTHER RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
(#)1 ($) ($) ($)
Erroll B. Davis, Jr. 13,800 1/2/00 66,240 82,800 144,900
William D. Harvey 5,100 1/2/00 24,480 30,600 53,550
Eliot G. Protsch 5,100 1/2/00 24,480 30,600 53,550
A. J. (Nino) Amato 3,900 1/2/00 18,720 23,400 40,950
Daniel A. Doyle 3,250 1/2/00 15,600 19,500 34,125
Lance W. Ahearn NA NA NA NA NA
1 Consists of Performance Units awarded under the Company's Long
Term Equity Incentive Plan in combination with stock options (as
described in the table entitled "Option/SAR Grants in 1997").
These Performance Units are entirely in the form of contingent
dividends and will be paid if total shareholder return over a
three-year period ending January 2, 2000 equals or exceeds the
median return earned by the companies in a peer group of utility
holding companies, except that there will be no payment if the
Company's total return is negative over the course of such period.
If payable, each participant shall receive an amount equal to the
accumulated dividends paid on one share of Company common stock
during the period of January 2, 1997 through December 31, 2000
multiplied by the number of performance units awarded to the
participant, and modified by a performance multiplier which ranges
from 0 to 1.75 based on the Company's total return relative to the
peer group.
2 Assumes, for purposes of illustration only, a $2.00 per share
annual dividend on shares of common stock for 1998 and 1999.
Agreements and Transactions with Executives
In connection with the Merger, Messrs. Liu and Davis entered into new
employment agreements with the Company. Pursuant to Mr. Liu's agreement,
Mr. Liu will serve as Chairman of the Company until the second anniversary
of the effective time of the Merger. Mr. Liu will thereafter retire as an
officer of the Company, although he may continue to serve as a director.
Under Mr. Davis's agreement, Mr. Davis will serve as the Chief Executive
Officer of the Company until at least the fifth anniversary of the
effective time of the Merger and, following Mr. Liu's retirement, Mr.
Davis will also serve as Chairman of the Company. Following the
expiration of the initial term of Mr. Davis's employment agreement, his
agreement will automatically renew for successive one-year terms, unless
either Mr. Davis or the Company gives prior written notice of his or its
intent to terminate the agreement. Mr. Davis will also serve as Chief
Executive Officer of each subsidiary of the Company until at least the
third anniversary of the effective time of the Merger and as a director of
such companies during the term of his employment agreement.
Mr. Liu's employment agreement provides that he receive an annual base
salary of not less than $400,000, and supplemental retirement benefits and
the opportunity to earn short-term and long-term incentive compensation
(including stock options, restricted stock and other long-term incentive
compensation) in amounts no less than he was eligible to receive from IES
Industries before the effective time of the Merger. Pursuant to Mr.
Davis's employment agreement, he is paid an annual base salary of not less
than $450,000. Mr. Davis also has the opportunity to earn short-term and
long-term incentive compensation (including stock options, restricted
stock and other long-term incentive compensation) in amounts no less than
he was eligible to receive before the effective time of the Merger, as
well as supplemental retirement benefits (including continued
participation in the WP&L Executive Tenure Compensation Plan) in an amount
no less than he was eligible to receive before the effective time of the
Merger, and life insurance providing a death benefit of three times his
annual salary.
If the employment of either Mr. Liu or Mr. Davis is terminated without
cause (as defined in their respective employment agreements) or if either
of them terminates his employment for good reason (as defined in their
respective employment agreements), the Company or its affiliates will
continue to provide the compensation and benefits called for by the
respective employment agreement through the end of the term of such
employment agreement (with incentive compensation based on the maximum
potential awards and with any stock compensation paid in cash), and all
unvested stock compensation will vest immediately. If either Mr. Liu or
Mr. Davis dies or becomes disabled, or terminates his employment without
good reason, during the term of his respective employment agreement, the
Company or its affiliates will pay to the officer or his beneficiaries or
estate all compensation earned through the date of death, disability or
such termination (including previously deferred compensation and pro rata
incentive compensation based upon the maximum potential awards). If the
officer is terminated for cause, the Company or its affiliates will pay
his base salary through the date of termination plus any previously
deferred compensation. Notwithstanding the foregoing, in the event that
any payments to an officer under his employment agreement or otherwise are
subject to the excise tax on excess parachute payments under the Internal
Revenue Code (the Code), then the total payments to be made under the
employment agreement will be reduced so that the value of these payments
the officer is entitled to receive is $1 less than the amount that would
subject the officer to the 20% excise tax imposed by the Code on certain
excess payments, or which the Company may pay without loss of deduction
under the Code.
The Company also has key executive employment and severance agreements
(KEESAs) with Mr. Davis and with certain other executive officers of the
Company and its subsidiaries, including Messrs. Harvey, Protsch, Amato and
Doyle. The KEESAs provide that each executive officer that is a party
thereto is entitled to benefits if, within five years after a change in
control of the Company (as defined in the KEESAs), the officer's
employment is ended through (i) termination by the Company, other than by
reason of death or disability or for cause (as defined in the KEESAs), or
(ii) termination by the officer due to a breach of the agreement by the
Company or a significant change in the officer's responsibilities, or
(iii) in the case of Mr. Davis's agreement, termination by Mr. Davis
following the first anniversary of the change of control. The
consummation of the Merger was deemed to constitute a change in control of
the Company for purposes of the KEESAs. The benefits provided are, (i) a
cash termination payment of one, two or three times (depending on which
executive is involved) the sum of the officer's annual salary and his
average annual bonus during the three years before the termination and
(ii) continuation for up to five years of equivalent hospital, medical,
dental, accident, disability and life insurance coverage as in effect at
the time of termination. Each KEESA provides that if any portion of the
benefits under the KEESA or under any other agreement for the officer
would constitute an excess payment for purposes of the Code, benefits
will be reduced so that the officer will be entitled to receive $1 less
than the maximum amount which he could receive without becoming subject to
the 20% excise tax imposed by the Code on certain excess payments, or
which the Company may pay without loss of deduction under the Code. Mr.
Davis's employment agreement as described above limits benefits paid
thereunder to the extent that duplicate payments would be provided to him
under his KEESA. In connection with the termination of his employment and
pursuant to a letter agreement with the Company, Mr. Amato received
benefits totaling $614,771 under his KEESA.
IES Industries also had an executive change of control severance agreement
with Mr. Hoffman that was assumed by the Company in connection with the
Merger. Mr. Hoffman's agreement provides for salary continuation and
certain other benefits in the event he is terminated within a three-year
period following a change in control of IES Industries. The consummation
of the Merger constituted a change in control of IES Industries for
purposes of Mr. Hoffman's agreement. Mr. Hoffman's severance agreement
provides that, in the event of his termination during the three-year
period following the effective time of the Merger other than for just
cause, death, retirement, disability or voluntary resignation (excluding
resignation for good reason), his salary (at its then current level) will
be continued for a period of 18 months. Additionally, Mr., Hoffman will
be entitled to certain benefits during the severance period, including
life and health insurance, and he would receive annual incentive award
payments equal to the average annual incentive awards paid to executives
of the same or comparable designation during the three years prior to the
change in control. In the event Mr. Hoffman should die during the
severance period, the salary and benefits payments described above would
be payable during the remainder of the term to his surviving spouse or his
estate. Mr. Hoffman would also become immediately vested in any stock
option or comparable award granted to him.
In connection with the termination of his employment on November 21, 1997,
the Company entered into a severance agreement with Mr. Ahearn. Pursuant
to this agreement, Mr. Ahearn received a severance payment of $768,900 and
a pro rated bonus of $70,458. In addition, Mr. Ahearn will receive in
three annual installments commencing January 1998 payments aggregating
$204,190. In consideration for these payments, Mr. Ahearn provided the
Company with a general release of claims, agreed to maintain the
confidentiality of certain information and entered into a one-year
covenant not-to-compete.
During 1997, in connection with a Restricted Stock Agreement entered into
in 1991 with the Company and Alliant Industries, Mr. Ahearn converted 0.51
shares of Alliant Industries stock into 7,104 shares of Company common
stock and redeemed his remaining 1.02 shares of Alliant Industries stock
for $421,553 per share. The conversion and redemption amounts were based
on third-party appraisals of Alliant Industries stock. Similarly, during
1997, Mr. Davis converted 0.5567 shares of Alliant Industries stock into
7,754 shares of Company common stock and redeemed his remaining 1.1133
shares of Alliant Industries stock for $421,553 per share. The proceeds
of the redemption to Mr. Davis were used, in part, to repay $315,257 of
principal and interest on loans made by the Company to Mr. Davis for taxes
withheld in connection with the vesting of his Alliant Industries stock.
Mr. Davis was charged interest on these loans at the prime rate.
Alliant Industries also has a consulting agreement with Mr. Root that
became effective upon consummation of the Merger and Mr. Root's
retirement. The consulting agreement provides that Mr. Root be paid
$1,500 and $2,000 per day for consulting services performed in the United
States and outside the United States, respectively. In addition, in
connection with an early retirement agreement entered into with IES in
1995, Mr. Root, in addition to other retirement benefits he is entitled to
as a retired officer, receives, as an unfunded supplemental pension
benefit, $11,306.11 per month for a period of fifteen years. If Mr. Root
dies before receiving payments for ten years, then his surviving spouse
and children will receive such payments up to the end of such ten-year
period. In such a case, payments beyond ten years will be forfeited. The
Company is also obligated to pay, within three months of Mr. Root's death,
a death benefit of $200,660 to his beneficiaries.
Retirement and Employee Benefit Plans
Salaried employees (including officers) of the Company and WP&L are
eligible to participate in a Retirement Plan maintained by WP&L. During
his employment, Mr. Ahearn was not eligible to participate in the plan.
All eligible persons whose compensation is reported in the foregoing
Summary Compensation Table participated in the plan during 1997.
Contributions to the plan are determined actuarially, computed on a
straight-life annuity basis, and cannot be readily calculated as applied
to any individual participant or small group of participants. For
purposes of the plan, compensation means payment for services rendered,
including vacation and sick pay, and is substantially equivalent to the
salary amounts reported in the foregoing Summary Compensation Table.
Retirement Plan benefits depend upon length of plan service (up to a
maximum of 30 years), age at retirement, and amount of compensation
(determined in accordance with the plan) and are reduced by up to 50% of
Social Security benefits. Credited years of service under the plan for
covered persons named in the foregoing Summary Compensation Table are as
follows: Erroll B. Davis, Jr., 18 years; Eliot G. Protsch, 18 years; A.
J. (Nino) Amato, 11 years; Daniel A. Doyle, 5 years; and William D.
Harvey, 10 years. Assuming retirement at age 65, a Retirement Plan
participant (in conjunction with the Unfunded Supplemental Retirement Plan
described below) would be eligible at retirement for a maximum annual
retirement benefit as follows:
Retirement Plan Table
Average
Annual Annual Benefit After Specified Years in Plan*
Compensation 5 10 15 20 25 30
$125,000 $10,132 $20,265 $ 30,397 $ 40,529 $ 50,662 $60,794
150,000 12,424 24,848 37,272 49,696 62,120 74,544
200,000 17,007 34,015 51,022 68,029 85,037 102,044
250,000 21,591 43,181 64,772 86,363 107,953 129,544
300,000 26,174 52,348 78,522 104,696 130,870 157,044
350,000 30,757 61,515 92,272 123,029 153,787 184,544
400,000 35,341 70,681 106,022 141,363 176,703 212,044
450,000 39,924 79,848 119,772 159,696 199,620 239,544
475,000 42,216 84,431 126,647 168,863 211,078 253,294
500,000 44,507 89,015 133,722 178,029 222,537 267,044
525,000 46,799 93,598 140,397 187,196 233,995 280,794
550,000 49,091 98,181 147,272 196,363 245,453 294,544
* Average annual compensation is based upon the average of the highest 36 consecutive months of compensation. The
Retirement Plan benefits shown above are net of estimated Social Security benefits and do not reflect any deductions for
other amounts. The annual retirement benefits payable are subject to certain maximum limitations (in general, $150,000
for 1996 and $160,000 for 1997) under the Code. Under the Retirement Plan and a supplemental survivors income plan, if a
Retirement Plan participant dies prior to retirement, the designated survivor of the participant is entitled to a monthly
income benefit equal to approximately 50% (100% in the case of certain executive officers and key management employees)
of the monthly retirement benefit which would have been payable to the participant under the Retirement Plan if the
participant had remained employed by the Company until eligible for normal retirement.
Unfunded Supplemental Retirement Plan - WP&L maintains an Unfunded
Supplemental Retirement Plan which provides funds for payment of
retirement benefits above the limitations on payments from qualified
pension plans in those cases where an employee's retirement benefits
exceed the qualified plan limits. Additionally, the plan provides for
payments of supplemental retirement benefits to employees holding the
position of Vice President or higher, who have been granted additional
months of service by the Board of Directors for purposes of computing
retirement benefits.
Unfunded Executive Tenure Compensation Plan - WP&L maintains an Unfunded
Executive Tenure Compensation Plan to provide incentive for key executives
to remain in the service of WP&L by providing additional compensation
which is payable only if the executive remains with WP&L until retirement
(or other termination if approved by the Board of Directors). In the case
of the Chief Executive Officer only, in the event that the Chief Executive
Officer (1) is terminated under his employment agreement with the Company
as described above (the Employment Agreement) other than for cause, death
or disability (as those terms are defined in the Employment Agreement),
(2) terminates his employment under the Employment Agreement for good
reason (as such term is defined in the Employment Agreement), or (3) is
terminated as a result of a failure of the Employment Agreement to be
renewed automatically pursuant to its terms (regardless of the reason for
such non-renewal), then for purposes of the plan, the Chief Executive
Officer shall be deemed to have retired at age 65 and shall be entitled to
benefits under the plan. Participants in the plan must be designated by
the Chief Executive Officer of WP&L and approved by its Board of
Directors. Mr. Davis was the only active participant in the plan as of
December 31, 1997. The plan provides for monthly payments to a
participant after retirement (at or after age 65, or with Board approval,
prior to age 65) for 120 months. The payments will be equal to 25% of the
participant's highest average salary for any consecutive 36-month period.
If a participant dies prior to retirement or before 120 payments have been
made, the participant's beneficiary will receive monthly payments equal to
50% of such amount for 120 months in the case of death before retirement,
or if the participant dies after retirement, 50% of such amount for the
balance of the 120 months. Annual benefits of $112,500 would be payable
to Mr. Davis upon retirement, assuming he continues in WP&L's service
until retirement at the same salary as was in effect on December 31, 1997.
Supplemental Executive Retirement Plan - The Company maintains an unfunded
Supplemental Executive Retirement Plan to provide incentive for key
executives to remain in the service of WP&L by providing additional
compensation which is payable only if the executive remains with WP&L
until retirement, disability or death. Participants in the plan must be
approved by the Compensation and Personnel Committee of the Board. The
plan provides for payments of 60% of the participant's average annual
earnings (base salary and bonus) for the highest paid three years out of
the last ten years of the participant's employment. The normal retirement
date under the plan is age 65 or the date the participant has completed 10
years of employment, whichever is later. If a participant retires prior
to age 62, the 60% payment under the plan is reduced by 3% per year for
each year the participant's retirement date precedes his/her normal
retirement date. Benefit payments under the plan will be made for a
maximum of 18 years, with a minimum of 12 years of payments if the
participant dies after retirement. Messrs. Davis, Harvey, Protsch, and
Doyle are participants in this plan. The following table shows payments
under the plan, assuming a minimum of 10 years of service at retirement
age.
Supplemental Executive Retirement Plan Table
Average
Compensation < 10 Years >10 Years
$125,000 $0 $75,000
150,000 0 90,000
200,000 0 120,000
250,000 0 150,000
300,000 0 180,000
350,000 0 210,000
400,000 0 240,000
450,000 0 270,000
500,000 0 300,000
550,000 0 330,000
Key Employee Deferred Compensation Plan - The Company maintains an
unfunded Key Employee Deferred Compensation Plan under which participants
may defer up to 100% of base salary or incentive compensation. The
Company matches up to 50% of the employee deferral (plus 401(k)
contributions up to 6% of pay, less 401(k) matching contributions). The
deferrals and matching contributions receive an annual return equal to the
A-utility bond rate with a minimum return no less than the prime interest
rate published in the Wall Street Journal. Payments from the plan may be
made in lump sums or installments at the election of the participant.
Participants are selected by the CEO of Alliant Services Company. Messrs.
Davis, Harvey, Protsch and Doyle participate in this plan.
Alliant Services Retirement Plans
IES Utilities Pension Plan: Prior to the completion of the Merger, IES
Industries, IES Utilities and the Cedar Rapids and Iowa City Railway
Company (CRANDIC) (a current subsidiary of Alliant Industries, Inc.)
maintained certain retirement and employee benefit plans for eligible
employees. Upon completion of the Merger, IES Industries' interest in
these plans was transferred to Alliant Services Company (Alliant Services)
(a wholly-owned subsidiary of the Company). Alliant Services, IES
Utilities and CRANDIC now maintain non-contributory retirement plans
covering employees who have at least one year of accredited service and
who have elected to remain under these plans following the Merger. Mr.
Liu participates in this plan. Maximum annual benefits payable at age 65
to participants who retire at age 65, calculated on the basis of straight
life annuity, are illustrated in the following table:
Alliant Services Pension Plan Table
Average of Highest Annual Estimated Maximum Annual Retirement Benefits Based on Service
Salary (Remuneration) Years of Service
for 3 Consecutive
Years of the last 10 15 20 25 30 35
$125,000 $26,869 $35,828 $44,784 $53,741 $62,697
150,000 32,683 43,576 54,471 65,366 76,259
175,000 35,913 48,282 60,650 73,019 85,388
200,000 40,038 54,282 68,525 82,769 97,013
225,000 44,163 60,282 76,400 92,519 108,638
250,000 44,818 61,235 77,652 94,068 110,485
300,000 44,818 61,235 77,652 94,068 110,485
400,000 44,818 61,235 77,652 94,068 110,485
450,000 44,818 61,235 77,652 94,068 110,485
500,000 44,818 61,235 77,652 94,068 110,485
For 1997, $125,000 was the maximum benefits allowable under the retirement
plans prescribed by Section 415 of the Code.
With respect to Mr. Liu, the remuneration for retirement plan purposes
would be substantially the same as that shown as "Salary" in the Pro Forma
Summary Compensation Table. As of December 31, 1997, Mr. Liu had 40
accredited years of service under the retirement plan.
Alliant Services Supplemental Retirement Plans: Alliant Services maintains
a non-qualified Supplemental Retirement Plan (SRP) for eligible former
officers of IES Industries who have elected to remain under this plan
following the Merger. Mr. Liu is the only executive named in the Pro
Forma Summary Compensation Table participating in the SRP. The SRP
currently provides for payment of supplemental retirement benefits equal
to 75% of the officer's base salary in effect at the date of retirement,
reduced by benefits receivable under the qualified retirement plan, for a
period not to exceed 15 years following the date of retirement. In the
event of the death of the officer following retirement, similar payments
reduced by the joint and survivor annuity of the qualified retirement plan
will be made to his or her designated beneficiary (surviving spouse or
dependent children), if any, for a period not to exceed 10 years from the
date of the officer's retirement. Thus, if an officer died 10 years after
retirement, no payment to the beneficiary would be made. Death benefits
are provided on the same basis to a designated beneficiary for a period
not to exceed 10 years from the date of death should the officer die prior
to retirement. The SRP further provides that if, at the time of the death
of an officer, the officer is entitled to receive, is receiving, or has
received supplemental retirement benefits by virtue of having taken
retirement, a death benefit shall be paid to the officer's designated
beneficiary or to the officer's estate in an amount equal to 100% of the
officer's annual salary in effect at the date of retirement. Under
certain circumstances, an officer who takes early retirement will be
entitled to reduced benefits under the SRP. The SRP also provides for
benefits in the event an officer becomes disabled under the terms of the
qualified retirement plan. Life insurance policies on the participants
have been purchased sufficient in amount to finance actuarially all future
liabilities under the SRP. The SRP has been designed so that if the
assumptions made as to mortality, experience, policy dividends, tax
credits and other factors are realized, all life insurance premium
payments will be recovered over the life of the SRP.
The following table shows the estimated annual benefits payable under the
SRP equal to 75% of the officer's base salary in effect at the date of
retirement:
Alliant Services Company Supplemental Retirement Plan Payments
75% SRP Benefit
Years of Service
Annual Salary 15 20 25 30 35
$125,000 $66,881 $57,922 $48,966 $40,009 $31,053
150,000 79,817 68,924 58,029 47,134 36,241
175,000 95,337 82,968 70,600 58,231 45,862
200,000 109,962 95,718 81,475 67,231 52,987
225,000 124,587 108,468 92,350 76,231 60,112
250,000 142,682 126,265 109,848 93,432 77,015
300,000 180,182 163,765 147,348 130,932 114,515
400,000 255,182 238,765 222,348 205,932 189,515
450,000 292,682 276,265 259,848 243,432 227,015
500,000 330,182 313,765 297,348 280,932 264,515
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
OWNERSHIP OF VOTING SECURITIES
Listed in the following table are the shares of the Company's common stock
owned by the executive officers listed in the Summary Compensation Table
and all directors of the Company, as well as the number of shares owned by
directors and officers as a group as of April 21, 1998. The directors and
executive officers of the Company as a group owned less than 1% of the
outstanding shares of common stock on that date. To the Company's
knowledge, no shareowner beneficially owned 5% or more of the Company's
outstanding common stock as of April 21, 1998.
Shares
Beneficially
Name of Beneficial Owner Owned(1)
Executives(2)
Lance W. Ahearn . . . . . . . . . . . . . 29,358(3)
A. J. (Nino) Amato . . . . . . . . . . . 5,810(4)(5)
Daniel A. Doyle . . . . . . . . . . . . . 3,603(4)
William D. Harvey . . . . . . . . . . . . 14,767(4)
Eliot G. Protsch . . . . . . . . . . . . 14,941(4)
Director Nominees
Alan B. Arends . . . . . . . . . . . . 1,100
Joyce L. Hanes. . . . . . . . . . . . . . 1,868(4)
Lee Liu . . . . . . . . . . . . . . . . . 56,617(4)
Arnold M. Nemirow . . . . . . . . . . . . 9,567
Jack R. Newman . . . . . . . . . . . . . 1,482
Judith D. Pyle . . . . . . . . . . . . . 6,100
Robert D. Ray . . . . . . . . . . . . . . 3,193
David Q. Reed . . . . . . . . . . . . . . 6,044(4)
Robert W. Schlutz . . . . . . . . . . . . 3,633
Wayne H. Stoppelmoor . . . . . . . . . . 6,075
Anthony R. Weiler . . . . . . . . . . . . 4,603(4)
Continuing Directors
Erroll B. Davis, Jr. . . . . . . . . . . 33,703(4)
Rockne G. Flowers . . . . . . . . . . . . 9,819
Katharine C. Lyall . . . . . . . . . . . 7,194
Milton E. Neshek . . . . . . . . . . . . 12,195
All Executives and Directors as a
Group 33 people, including
those listed above . . . . . . . . . . . 312,257
_________________
(1) Total shares of Company common stock outstanding as of April 21, 1998
were 76,757,268.
(2) Stock ownership of Mr. Davis is shown with continuing directors.
(3) Mr. Ahearn resigned in November 1997.
(4) Included in the beneficially owned shares shown are: Indirect
ownership interests with shared voting and investment powers: Mr.
Amato - 1,032, Mr. Harvey - 1,828, Mr. Protsch - 552, Mr. Davis -
5,603, Ms. Hanes - 425, Mr. Liu - 9,755, Mr. Reed - 353 and Mr.
Weiler - 1,037; and Excercisable stock options : Mr. Davis - 13,100,
Mr. Harvey - 4,700, Mr. Protsch - 4,700, Mr. Amato - 3,650 and Mr.
Doyle - 2,900 (all directors and officers as a group - 39,200).
(5) Mr. Amato left the Company following the effective date of the
Merger.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Director nominee Jack R. Newman serves as legal counsel to the Company on
nuclear issues. Mr. Newman's firm, Morgan, Lewis & Bockius has also
provided legal services to the Company related to the Merger.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment to be
signed on its behalf by the undersigned thereunto duly authorized on the
30th day of April 1998.
Interstate Energy Corporation
By: /s/ Thomas M. Walker Executive Vice President and Chief Financial
Thomas M. Walker Officer (Principal Financial Officer)
By: /s/ John E. Ebright Vice President-Controller (Principal
John E. Ebright Accounting Officer)