SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [_]
Check the appropriate box:
[_] Preliminary proxy statement
[X] Definitive proxy statement
[_] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
IOWA-ILLINOIS GAS AND ELECTRIC COMPANY
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(Name of Registrant as Specified in Its Charter)
Keith M. Giger, Secretary and Treasurer of the Registrant
By Order of the Board of Directors of the Registrant
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[_] $125 per Exchange Act Rule 14a-6(i)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee Computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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IOWA-ILLINOIS
GAS AND ELECTRIC COMPANY
------------------------
ENERGY IN ACTION
---------------
Notice of
Annual Meeting
and
Proxy Statement
---------------
Annual Meeting of Shareholders
The Mark of the Quad Cities
1201 River Drive
Moline, Illinois
April 28, 1994
10:00 a.m.
IOWA-ILLINOIS GAS AND ELECTRIC COMPANY
206 EAST SECOND STREET
DAVENPORT, IOWA 52801
March 16, 1994
Dear Shareholder:
You are cordially invited to attend the 1994 Annual Meeting of Shareholders
of Iowa-Illinois Gas and Electric Company to be held on Thursday, April 28,
1994, at 10:00 a.m. at The Mark of the Quad Cities, 1201 River Drive, Moline,
Illinois.
Your vote is extremely important. Please make sure your shares are
represented at the Annual Meeting even if you are unable to attend. We were
pleased with the response of our shareholders for the 1993 Annual Meeting, at
which 80 percent of the Company's eligible shares were represented in person or
by proxy.
Even if you plan to attend the meeting, I urge you to mark, sign and date
the enclosed proxy and return it promptly. You may revoke your proxy by writing
the Secretary and Treasurer of the Company, by filing another proxy with him
prior to or at the meeting or by attending the meeting and voting in person.
We appreciate your investment in the Company and look forward to seeing you
on April 28.
Sincerely,
Stanley J. Bright
Chairman and
Chief Executive Officer
IOWA-ILLINOIS GAS AND ELECTRIC COMPANY
206 EAST SECOND STREET
DAVENPORT, IOWA 52801
NOTICE OF ANNUAL MEETING
TO SHAREHOLDERS OF
IOWA-ILLINOIS GAS AND ELECTRIC COMPANY:
In accordance with Article II of the By-laws, notice is hereby given that
the annual meeting of shareholders of Iowa-Illinois Gas and Electric Company
will be held at The Mark of the Quad Cities, 1201 River Drive, Moline, Illinois,
on April 28, 1994, at 10:00 a.m.
Shareholders of record at the close of business on February 28, 1994, will
be entitled to vote at the meeting.
The matters to be considered and voted upon are:
1. Election of a board of directors;
2. Amendment of the Company's First Restated Articles of Incorporation to
limit each director's monetary liability to the Company and its
shareholders arising from a breach of such director's fiduciary duty, as
recently permitted by Illinois corporate law;
3. Adoption of the Company's 1994 Key Employee Sustained Performance Plan
under which the Company may issue from time to time up to 100,000 of its
Common Shares;
4. Consideration of a shareholder proposal concerning executive compensation,
if such proposal is brought before the meeting; and
5. Any other matters which may properly be brought before the meeting.
Please specify your choices by marking the appropriate boxes on the
enclosed proxy. However, if you wish to vote in accordance with the
recommendations of the board of directors, you need not mark any box. You need
only SIGN, DATE and RETURN the proxy.
Please sign, date and return the proxy in the enclosed postage-paid
envelope. You may revoke your proxy by providing written notice to or by filing
another proxy with the Company, to the attention of the undersigned, prior to or
at the meeting or by attending the meeting and voting in person.
We hope you will participate in the annual meeting, either through your
attendance or by providing your proxy. Your continued interest in the Company
and your cooperation are greatly appreciated.
By Order of the Board of Directors
Keith M. Giger
Secretary and Treasurer
March 16, 1994
PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXY
This proxy statement is furnished in connection with a solicitation of
proxies by the Board of Directors of Iowa-Illinois Gas and Electric Company
("Company") for use at the annual meeting of shareholders to be held on April
28, 1994, and will be mailed to shareholders on or about March 16, 1994.
Proxies may be revoked at any time prior to the voting thereof by giving written
notice of revocation to or by filing a subsequently dated proxy with the
Secretary and Treasurer of the Company prior to or at the meeting or by
attending the meeting and voting in person. Duly executed proxies received by
the management prior to the meeting will be voted at the meeting in accordance
with the directions noted thereon.
OUTSTANDING VOTING SECURITIES
The shareholders of record at the close of business on February 28, 1994,
are entitled to vote at the meeting. Each Preferred Share, each Preference
Share and each Common Share entitle the holder thereof to one vote upon each
matter coming before the meeting, with the right to cumulate votes in the
election of directors. As of February 28, 1994, there were outstanding 198,288
Preferred Shares, 500,000 Preference Shares and 29,348,749 Common Shares. A
majority of the outstanding shares entitled to vote, represented at the meeting
in person or by proxy, will constitute a quorum for consideration of all matters
at the meeting.
PROXY VOTING
At the meeting, the shareholders will elect ten directors by cumulative
voting and will vote on a proposed amendment to the Company's First Restated
Articles of Incorporation and the proposed 1994 Key Employee Sustained
Performance Plan. In addition, the shareholders may vote upon a shareholder
proposal, if such proposal is brought before the meeting.
With respect to the election of directors, a shareholder may (i) vote "FOR"
the election of all ten of the nominees for director named herein, (ii)
"WITHHOLD AUTHORITY" to vote for all such nominees or (iii) withhold authority
to vote for one or more of such nominees and vote for all of the remaining
nominees. Withholding authority to vote for a particular nominee, however, will
not prevent such nominee from being elected. In addition, every shareholder has
the right to cast votes equal to the number of shares owned multiplied by the
number of directors to be elected. The shareholder may distribute such votes
among as many candidates as desired in whatever proportion is desired. Except
as otherwise instructed by a shareholder, each signed and returned proxy that
grants authority to vote for one or more of such nominees will authorize the
proxies to cumulate all votes which the shareholder is entitled to cast and to
allocate such votes among such nominees as such proxies determine, in their sole
and absolute discretion.
With respect to each other matter specified in the notice of the meeting, a
shareholder may (i) vote "FOR" the matter, (ii) vote "AGAINST" the matter or
(iii) "ABSTAIN" from voting on the matter. A vote to abstain from voting on a
matter has the effect of a vote against such matter.
Shares will be voted as instructed in the accompanying proxy, if signed and
returned to the Company, on each matter submitted to the shareholders. If no
instructions are given, the shares will be voted for the election of all ten
nominees for director named herein, for approval of the proposed amendment of
the First Restated Articles of Incorporation, for approval of the proposed 1994
Key Employee Sustained Performance Plan and against the shareholder proposal if
it is brought before the meeting.
Proxies submitted by brokers for shares beneficially owned by other persons
may indicate that all or a portion of the shares represented by such proxies are
not being voted with respect to the shareholder proposal. The rules of the New
York Stock Exchange do not permit a broker to vote shares held in street name
with respect to the shareholder proposal in the absence of instructions from the
beneficial owner of such shares. The shares represented by broker proxies which
are not voted with respect to the shareholder proposal will not be considered
entitled to vote with respect to such proposal; accordingly, such shares will
not affect the determination of whether such proposal is approved, although such
shares will be considered in determining the presence of a quorum at the
meeting.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following are the only persons known to the Company to beneficially own
more than five percent of any class of the Company's voting securities as of
January 31, 1994:
Percent
Number of Shares of
Class Name and Address Beneficially Owned Class
- --------------------------------------------------------------------------------
Preference Shares Humana Inc. 42,250 8.5%
500 West Main Street
Louisville, Kentucky 40202
FINANCIAL STATEMENTS
The Company's annual report for 1993, including financial statements, has
been mailed to all shareholders entitled to vote at the meeting.
1. ELECTION OF DIRECTORS
Ten directors, constituting the entire Board of Directors of the Company,
are to be elected to hold office until the next annual meeting of shareholders
and until their successors shall have been duly elected and qualified. If a
quorum is present at the meeting, the ten candidates for director receiving the
greatest number of votes will be elected. If individuals other than the
nominees named below are nominated for director of the Company, the proxies
intend to distribute the number of votes as to which they have discretionary
authority with respect to cumulative voting in such manner as will assure the
election of all nominees named below or, if they shall have insufficient votes
for such purpose, the election of as many of such nominees as is possible.
NOMINEES FOR DIRECTOR
Information as to each of the nominees is set forth below.
STANLEY J. BRIGHT, 53
Chairman, President and Chief Executive Officer of Iowa-Illinois
Gas and Electric Company
[Photo] Committee Chairman: Executive and Finance.
Mr. Bright, a director since 1987, has been Chairman, President
and Chief Executive Officer of the Company since 1991. He joined
the Company in 1986 as Vice President-Finance and Chief Financial
Officer, and was elected President and Chief Operating Officer in
1990. He is also Chairman and Chief Executive Officer of
InterCoast Energy Company.
JOHN W. COLLOTON, 62
Vice President for Statewide Health Services, University of Iowa,
Iowa City, Iowa
[Photo] Committee Membership: Audit; Compensation; Executive; Finance;
Nominating.
Mr. Colloton was elected to the Board in 1992. He served as
Director and CEO of the University of Iowa Hospitals and Clinics
from 1971 to 1993, when he assumed his present position. He
serves as a director of Baxter International Inc., Premier
Anesthesia, Iowa State Bank and Trust Company and Blue Cross &
Blue Shield of Iowa and South Dakota.
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LANCE E. COOPER, 50
Vice President-Finance and Chief Financial Officer, Iowa-Illinois
Gas and Electric Company
[Photo] Committee Membership: Finance.
Mr. Cooper joined the Company in his present capacity in 1991 and
became a director in 1992. He is also a member of the board of
directors of InterCoast Energy Company. He served as Vice
President-Control of Atlantic City Electric Company from 1984
through 1991.
FRANK S. COTTRELL, 51
Vice President, General Counsel and Secretary, Deere & Company,
Moline, Illinois
[Photo] Committee Membership: Audit; Compensation; Executive; Finance;
Nominating.
Mr. Cottrell, who became a director in 1992, has been an employee
of Deere & Company since 1967. He was elected to his present
position in 1993. Prior to that time, he served as General
Counsel and Secretary from 1991 through 1993 and as Secretary and
Associate General Counsel from 1987 through 1991.
WILLIAM C. FLETCHER, 67
Retired President of Rapids Chevrolet Company, Cedar Rapids, Iowa
[Photo] Committee Chairman: Audit.
Committee Membership: Compensation; Executive; Finance;
Nominating.
Mr. Fletcher, a director since 1977, is Chairman of the Board of
Perpetual Savings Bank, FSB.
MEL FOSTER, JR., 66
Chairman, Mel Foster Co., Inc., Real Estate and Insurance,
Davenport, Iowa
[Photo] Committee Vice Chairman: Executive.
Committee Membership: Audit; Compensation; Finance; Nominating.
Mr. Foster has been a director since 1972.
NANCY L. SEIFERT, 64
Executive Vice President, James F. Seifert & Sons L.C., Cedar
Rapids, Iowa
[Photo] Committee Chairman: Compensation.
Committee Membership: Audit; Executive; Finance; Nominating.
Mrs. Seifert has been a director since 1985.
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STEPHEN E. SHELTON, 46
Vice President-Electric Operations, Iowa-Illinois Gas and
Electric Company
[Photo] Committee Membership: Finance.
Mr. Shelton has been a director since 1990. He has been an
employee of the Company since 1970 and a Vice President since
1985.
W. SCOTT TINSMAN, 61
Co-Owner and Vice President, Twin-State Engineering and Chemical
Company, Bettendorf, Iowa
[Photo] Committee Membership: Audit; Compensation; Executive; Finance;
Nominating.
Mr. Tinsman has been a director since 1988.
LEONARD L. WOODRUFF, 65
President, Woodruff Construction, Fort Dodge, Iowa
[Photo] Committee Chairman: Nominating.
Committee Membership: Audit; Compensation; Executive; Finance.
Mr. Woodruff has been a director since 1972.
Mr. Fletcher retired from his principal position of employment in 1991.
Mr. Fletcher had been associated with his employer for at least five years prior
to his retirement. Mrs. Seifert was elected to her current position in 1993.
Mrs. Seifert had retired from her prior position as a merchandise executive with
Seifert's Inc., Cedar Rapids, Iowa in 1990, a position which she held for at
least five years prior to her retirement. All other nominees for director,
except for Mr. Cooper, have been associated with their respective employers for
at least five years.
The management believes each of the persons named herein will be available
to serve as a director, but if any nominee shall be unable to serve as a
director, the proxies may be voted for another individual to be selected by the
persons named in the proxy.
BOARD AND COMMITTEE INFORMATION
The business of the Company is managed by its officers under the general
policy guidelines of the Board of Directors. Six meetings of the Board of
Directors were held during 1993. Each director attended at least 75% of the
aggregate of the meetings of the Board and the Committees on which he or she
served.
The AUDIT COMMITTEE reviews major accounting and financial reporting
policies, issues pertaining to the Company's system of internal controls and
related organizational matters (including possible employee conflicts of
interest), audit and non-audit services provided by the Company's independent
accountants and the costs of each and the effect of non-audit services on the
independence of such accountants and recommends to the Board of Directors the
annual appointment of independent accountants. The Committee held three
meetings during 1993.
The COMPENSATION COMMITTEE reviews overall compensation practices of the
Company and recommends officers' salaries and board and committee fee structures
to the Board of Directors. The Committee held four meetings during 1993.
The FINANCE COMMITTEE reviews investment guidelines and plans and programs
of the Company's wholly-owned non-regulated subsidiary, InterCoast Energy
Company ("InterCoast"); recommends to the Board of Directors appropriate changes
to such investment guidelines; and reviews performance of InterCoast. The
Committee also reviews the performance of the Company's pension plan asset
managers and, as directed by the Board of Directors, reviews
-4-
proposals for issuing and redeeming the Company's securities. The Committee
held four meetings during 1993.
The NOMINATING COMMITTEE advises the Board of Directors on the composition
of the Board of Directors and the composition and duties of Committees thereof.
The Committee recommends to the Board of Directors the slate of nominees for
election at the annual shareholders' meeting. Nominees are selected on the
basis of recognized achievements and their ability to bring skills and
experience to the deliberations of the Board of Directors. Shareholders who
wish to suggest nominees should write to the Secretary and Treasurer of the
Company stating in detail the qualifications of such persons and evidencing
such persons' willingness to serve. Suggestions for the following year's annual
meeting should be received by October 1. The Committee held two meetings during
1993.
Directors who are not officers of the Company receive an annual retainer of
$14,400 and a fee of $400 per Board and Committee meeting attended. Directors
who are officers of the Company do not receive an annual retainer or attendance
fees. Directors are reimbursed for travel expenses.
SECURITY OWNERSHIP OF MANAGEMENT
At January 31, 1994, each director and each executive officer named in the
Summary Compensation Table and all directors and executive officers of the
Company as a group beneficially owned equity securities of the Company as
follows:
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Number of
Name of shares
Title of beneficial beneficially Percent
class owner owned (1) of class (2)
- --------------------------------------------------------------------------------
Common Shares Stanley J. Bright 3,727 --
John W. Colloton 500 --
Lance E. Cooper 2,658 --
Frank S. Cottrell 1,000 --
William C. Fletcher 1,009 --
Mel Foster, Jr. 17,000(3) --
William T. Green 842 --
Donald C. Heppermann 1,113 --
Nancy L. Seifert 1,182 --
Stephen E. Shelton 3,988 --
W. Scott Tinsman 1,700 --
Leonard L. Woodruff 15,029 --
All directors and
executive officers as a
group (19 persons) 58,353 --
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(1) Shares owned beneficially by spouses and minor children of the directors
and executive officers and shares held by the Trustee under the Company's
Savings Plan are included.
(2) The percentage of shares beneficially owned by each director and each
executive officer and by all directors and executive officers as a group
does not exceed one percent of the class so owned and, therefore, the
precise percentage has not been furnished in accordance with Item 403 of
Regulation S-K under the Securities Exchange Act of 1934.
(3) Includes 10,000 shares held by corporations in which Mr. Foster has a
substantial beneficial interest.
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Directors and officers of the Company are required by Section 16 of the
Securities Exchange Act of 1934 to report to the Securities and Exchange
Commission their transactions in, and beneficial ownership of, the Company's
equity securities. Based upon a review of records furnished to the Company for
1993, all required reports were filed in a timely manner.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate compensation for services in
all capacities for the fiscal years ended December 31, 1993, 1992 and 1991, paid
to or set aside by the Company and its subsidiaries for the persons who were, at
December 31, 1993, the Chief Executive Officer and the other four most highly
compensated executive officers of the Company and its subsidiaries (the "Named
Executive Officers"):
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
Annual
Compensation
------------------
All Other
Salary Bonus Compensation
Name and Principal Position Year (1) (2) (3)(4)
- --------------------------------------------------------------------------------
Stanley J. Bright (5) 1993 $285,000 $17,100 $11,273
Chairman, President and Chief 1992 276,352 -- 9,443
Executive Officer 1991 247,252 -- --
Stephen E. Shelton 1993 206,000 12,360 8,913
Vice President 1992 202,333 -- 7,567
1991 188,333 -- --
Donald C. Heppermann 1993 186,583 33,660 6,467
President and Chief Operating 1992 173,667 -- 5,302
Officer, InterCoast Energy 1991 163,000 -- --
Company
William T. Green 1993 189,000 11,340 45,724
Senior Vice President 1992 185,334 -- 11,515
1991 173,041 -- --
Lance E. Cooper (6) 1993 163,000 9,780 6,656
Vice President and Chief Financial 1992 160,700 -- 1,443
Officer 1991 66,178 -- --
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(1) Represents salaries (including amounts deferred by the Named Executive
Officers under the Company's Savings Plan and Compensation Deferral Plan
for Designated Officers).
(2) No bonuses were paid in 1992 or 1991. See the Compensation Committee
Report on Executive Compensation for a discussion of bonuses earned in
1993.
(3) In accordance with the transitional provisions applicable to the revised
rules on executive officer and director compensation disclosure adopted by
the Securities and Exchange Commission, amounts in the All Other
Compensation column will be phased-in to the Summary Compensation Table
over a three-year period. Amounts in this column for 1993 consist of (i)
contributions by the Company to its Savings Plan of $5,554, $5,505, $5,132,
$5,529 and $4,618 for Messrs. Bright, Shelton, Heppermann, Green and
Cooper, respectively; (ii) above-market earnings under the Compensation
Deferral Plan for Designated Officers of $5,719, $3,408, $1,335, $8,387 and
$2,038 for Messrs. Bright,
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Shelton, Heppermann, Green and Cooper, respectively; and (iii) a payment to
Mr. Green of $31,808 representing accrued vacation pay on account of his
retirement.
(4) Company Pension Plan contributions are not included in this table since the
Plan is group funded and contributions in respect of individual employees
are not and cannot be separately or individually calculated by the
actuaries for the Plan. The Company was not required to make contributions
to the Plan during the three-year period ended December 31, 1993 because it
satisfied Internal Revenue Service funding requirements for those years.
(5) Mr. Bright was elected President and Chief Operating Officer, effective
April 1, 1990. He was elected to the additional positions of Chairman and
Chief Executive Officer, effective May 1, 1991.
(6) Mr. Cooper was elected Vice President-Finance and Chief Financial Officer,
effective October 9, 1991. He was previously Vice President-Control of
Atlantic City Electric Company.
LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS TABLE
The following table sets forth awards earned by the Named Executive
Officers for 1993 under the Company's 1993 Key Employee Sustained Performance
Plan. If a Named Executive Officer's employment were terminated for any reason
other than death, total disability, retirement or a "qualifying termination"
following a change in control, awards previously earned but not paid out would
be subject to forfeiture.
LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
- ---------------------------------------------------------------------------------------
Performance or
Number of other period
shares, units until Estimated future payouts under
or other rights maturation non-stock price-based plans (3)
-------------------------------
Name (1) or payout (2) Threshold Target Maximum
- ----------------------------------------------------------------------------------------
Stanley J. Bright $84,075 1994-1997 $77,186 $109,116 $162,889
- 97,712
Stephen E. Shelton 40,170 1994-1997 36,878 52,134 77,826
- 46,686
Lance E. Cooper 31,785 1994-1997 29,181 41,252 61,581
- 36,941
(1) Represents the dollar amount of the contingent award granted to the Named
Executive Officer under the Company's 1993 Key Employee Sustained
Performance Plan based on the number of points earned for 1993.
Award opportunities for each fiscal year under the Plan are based on a "100
point system" and the accumulation of points under specific goal and
discretionary award components of the Plan. Points earned in respect to
the achievement of specific goals may range from 0 to 100. The
discretionary award, under which points earned may range from 0 to 30, is
determined by the Compensation Committee in recognition of other
outstanding performance results, if any. The threshold level of
performance is achieved if 35 or more points are earned, the target level
of performance is achieved if 70 or more points are
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earned and the maximum level of performance is achieved if the full 100
points are earned. If total points earned for a particular year are less
than 35, then no award is granted for that year. Further, award
opportunities for a particular year will be reduced or eliminated if the
threshold, representing the minimum corporate performance level established
for that year, is not achieved.
For 1993, achievement of the threshold level of performance would have
entitled Mr. Bright to an award of 15% of salary and the other Named
Executive Officers to an award of 10% of salary. Achievement of the
targeted and maximum levels of performance would have entitled such persons
to an award of 30% and 20%, respectively, for targeted levels of
performance and 45% and 30%, respectively, for maximum levels of
performance. The actual points awarded based upon 1993 performance
resulted in awards to Mr. Bright and the other Named Executive Officers who
are participants in the Plan of 29.5% and 19.5%, respectively.
(2) It is anticipated that 2/3 of the payout will occur in 1996 and 1/3 will
occur in 1997. In addition to being subject to the -20% to +30% range of
annual adjustments discussed below, the 1997 portion of the payout will be
further adjusted based on the ratio of the market price of the Company's
Common Shares on March 15, 1997 to the market price of the Company's Common
Shares on December 31, 1992.
(3) The amount of the award that the Named Executive Officer will ultimately
receive may fluctuate each year subsequent to the year for which the award
is made and prior to the year of payout from a decrease of up to 10% per
year to an increase of up to 20% per year based on points awarded for such
subsequent years under the specific goal and discretionary award provisions
of the Plan. The amount of the award may also fluctuate an additional
amount each year subsequent to the year for which the award is made and
prior to the year of payout from a decrease of up to 10% per year to an
increase of up to 10% per year based on the percentage points by which the
total return to the Company's shareholders for such subsequent year is
below or above, respectively, the median total return for all utility
companies included in the Salomon Brothers utility group.
The entire award is at risk pursuant to specific provisions of the Plan.
Scheduled payouts could be subject to indefinite deferrals in the event
that the minimum corporate performance level is not reached for the year
prior to each such scheduled payout. Since all awards made, but not paid
out, are subject to a maximum 20% reduction each year, the entire amount of
each award is, therefore, subject to ongoing reductions. The Plan also
provides that all awards made but not paid out would be subject to
forfeiture in the event of an employment termination for any reason other
than death, total disability, retirement or a "qualifying termination" due
to a change in control.
Amounts shown under the heading "Threshold" reflect a range of possible
payout amounts between (a) a maximum (which assumes (i) that each Named
Executive Officer earns 35 points each year until payout of the Plan award
and (ii) that the total return to shareholders for each such year is equal
to the median total return of all utility companies included in the Salomon
Brothers utility group) and (b) a minimum (which adjusts the maximum
amounts to reflect the assumption that the total return to shareholders for
each such year is sufficiently below the median total return of all utility
companies in the Salomon Brothers utility group to result in annual
reductions of 10% on account of the total return to shareholders achieved).
The "Target" amount assumes that each Named Executive Officer earns 70
points each year until payout of the Plan award and that the total return
to the Company's shareholders equals the median total return of all utility
companies in the above comparison group in each year prior to the year of
payout. The "Maximum" amount assumes that each Named Executive Officer
earns 100 points each year until payout of the
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Plan award and that the total return to the Company's shareholders for each
such year is sufficiently above the total return of all utility companies
in the above comparison group in each year prior to the year of payout to
result in annual increases of 10% on account of the total return to
shareholders achieved. Each such amount assumes that the market price of
the Company's Common Shares on March 15, 1997 is equal to such price on
December 31, 1993.
PENSION PLAN
The Company's tax-qualified Pension Plan covers substantially all employees
who have reached age 21. Benefits upon retirement are determined under a
formula based on the eligibility date of the employee, age at retirement, final
average compensation and years of credited service. Final average compensation
is determined by the highest sixty consecutive months of compensation during the
ten years prior to retirement. For the Named Executive Officers, such covered
compensation is reflected in the Salary column of the Summary Compensation Table
minus, in each case, the amount of deferred compensation included in the amounts
shown. The maximum years of credited service allowed under the Plan at December
31, 1993 was 40. The maximum annual pension benefit for plans qualified under
the Internal Revenue Code is $118,800 for 1994. Pension plan benefits are not
subject to Social Security or other offsets. As of December 31, 1993, Messrs.
Bright, Shelton, Heppermann, Green and Cooper had 6, 22, 2, 13 and 1 years of
credited service, respectively.
PENSION PLAN TABLE
I. For Employees Eligible as of 12/31/75:
Annual Benefits for Years of Credited Service Indicated
---------------------------------------------------------
Years of Service
----------------
Remuneration 15 Yrs. 20 Yrs. 25 Yrs. 30 Yrs. 35 Yrs. 40 Yrs.
- -------------- ------- ------- ------- ------- ------- -------
$125,000 39,790 44,303 48,817 53,330 57,743 64,093
150,000 (1) 48,040 53,553 59,067 64,580 70,093 77,593
175,000 (1) 56,290 62,803 69,317 75,830 82,343 91,903
200,000 (1) 64,540 72,053 79,567 87,080 94,593 104,593
235,840 (1) 76,367 85,314 94,261 103,208 112,155 118,800 (2)
II. For Employees Eligible after 12/31/75:
Annual Benefits for Years of Credited Service Indicated
---------------------------------------------------------
Years of Service
----------------
Remuneration 15 Yrs. 20 Yrs. 25 Yrs. 30 Yrs. 35 Yrs. 40 Yrs.
- -------------- ------- ------- ------- ------- ------- -------
$125,000 24,790 33,053 41,317 49,580 57,843 64,093
150,000 (1) 30,040 40,053 50,067 60,080 70,093 77,593
175,000 (1) 35,290 47,053 58,817 70,580 82,343 91,093
200,000 (1) 40,540 54,053 67,567 81,080 94,593 104,593
235,840 (1) 48,066 64,089 80,111 96,133 112,155 118,800 (2)
(1) During 1994, compensation in excess of $150,000 may not be used to compute
benefits under the tax-qualified Pension Plan. However, a benefit accrued
after 1993 will not be
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less than the benefit accrued as of December 31, 1993 based on total
compensation without regard to this limitation. The pension qualified
compensation for 1993 was $235,840.
(2) Internal Revenue Service limitation on annual benefits for 1994.
SUPPLEMENTAL RETIREMENT PLAN FOR DESIGNATED OFFICERS
The Supplemental Retirement Plan for Designated Officers provides executive
officers who retire after attaining sixty-five years of age or due to disability
with an aggregate retirement benefit which (together with all benefits under the
Company's Pension Plan and similar plans of previous employers) will equal 65%
of the highest annual salary in the three years immediately prior to retirement
or disability. Under some circumstances reduced retirement benefits are payable
on early retirement. The surviving spouse of a deceased retired officer will
receive an amount equal to two-thirds of the officer's retirement benefit, as
determined under the Plan, for life. If the officer dies before retirement, a
survivor's benefit will be paid to the designated beneficiary or estate for 15
years. The Plan provides for the vesting and payment of benefits to executive
officers who are participants in the Plan if, within twenty-four full calendar
months immediately following a "Change in Control" (as such term is defined
under "Severance Plan" below), the executive's employment with the Company
terminates either (i) involuntarily for any reason or (ii) voluntarily after
furnishing six full months' prior notice of such termination to the President of
the Company. The Plan would provide an estimated maximum annual aggregate
retirement benefit upon retirement at age 65 for Messrs. Bright, Shelton,
Heppermann, Green and Cooper of $185,250, $133,900, $121,550, $122,850 and
$105,950, respectively (such amounts are then reduced by benefits received under
the Company's Pension Plan and similar plans of previous employers), assuming
the named officers continue their employment at their December 31, 1993 salary
rate until their normal retirement date.
SEVERANCE PLAN
To ensure that designated executive officers of the Company are treated in
the manner which the Board of Directors believes appropriate following a Change
in Control, the Board of Directors in 1991 adopted a Severance Plan for such
officers. The Plan provides that, in the event of a Change in Control, a
designated executive officer of the Company will receive severance benefits if,
within 24 months after the Change in Control, that officer's employment with the
Company terminates either (i) involuntarily for any reason or (ii) voluntarily
after furnishing six full months' prior written notice to the President of the
Company. Severance benefits include two times the officer's highest annual
salary, accrued vacation pay, continuation of health, disability and group life
insurance benefits for 24 months and out-placement services. In addition,
amounts deferred under the Company's Compensation Deferral Plan for Designated
Officers would also be accelerated.
For purposes of the Plan, a "Change in Control" of the Company means (a)
approval by the shareholders of the Company of a plan of merger, consolidation
or reorganization of the Company unless at least 60% of the members of the Board
of Directors of the company resulting from such merger, consolidation or
reorganization were members of the Incumbent Board or (b) the occurrence of any
other event that is designated as being a Change in Control by a majority vote
of the directors of the Incumbent Board who are not also employees of the
Company. The "Incumbent Board" means the members of the Board of Directors of
the Company at the time of the Change in Control who were directors on April 26,
1991, and any individual who becomes a member of the board subsequent to April
26, 1991, and has been nominated for election by the Company's shareholders by a
resolution adopted by a vote of at least two-thirds of the directors then
comprising the Incumbent Board at a duly convened meeting thereof.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, which consists of all
of the Company's outside directors, has furnished the following report on
executive compensation. This
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report shall not be deemed incorporated by reference by any general statement
incorporating by reference this proxy statement into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of 1934, except to
the extent that the Company specifically incorporates this report by reference,
and shall not otherwise be deemed filed under such Acts.
HISTORY
Prior to 1993, the decisions made by the Compensation Committee with
respect to executive compensation were preceded by a review of the Company's
salary structure as compared to various peer groups of utility companies or non-
regulated affiliates of utility companies, and by a review of the performance of
the Company, the Chief Executive Officer and other senior executive officers.
Based upon such reviews, the base salary compensation levels of the Chief
Executive Officer and the other senior executive officers were set within the
Company's executive salary structure, taking into account individual and Company
performance. The midpoint of the base salary range for each position was
targeted to the 50th percentile of peer comparison groups. This process was
typically completed each year in April and new base salaries, when appropriate,
became effective May 1. No incentive plans or other types of variable pay plans
were in effect prior to 1993. In light of the performance of the Company in
1992, the base salaries of the Chief Executive Officer and most of the other
senior executive officers were not adjusted on May 1, 1993, and the annual
consideration date for adjustment in the compensation levels of senior executive
officers was changed to January 1.
The Compensation Committee changed the compensation philosophy in 1993 to
incorporate a variable long-term incentive component in the overall compensation
program for the senior executive officers of the Company.
COMPENSATION PHILOSOPHY
A nationally recognized compensation consultant was retained by the
Compensation Committee to assist it in a review of the Company's executive
compensation practices. Based upon the consultant's recommendations and the
Compensation Committee's belief that a variable compensation component, based on
individual performance and Company performance, should be introduced, the
Committee adopted the philosophy that (1) senior officers' base salaries should
be targeted to the 25th percentile of a peer comparison group and (2) incentive
awards should be designed to provide an opportunity to achieve total
compensation at the 75th percentile of such peer comparison group when maximum
performance-based incentive compensation awards are made.
While the Committee will continue to refer to compensation data in
available utility industry studies, such as the study of executive compensation
conducted annually by the Edison Electric Institute, the Committee will place
primary reliance on a peer comparison group of twenty-eight utilities selected
by the Committee for this purpose. While the Committee believes that the
Standard & Poors' Utilities index and the S&P 500 index are appropriate
benchmarks for shareholder total return comparisons, the Committee does not
believe that all of the companies included in those indices are sufficiently
comparable to the Company for use in making compensation comparisons. For
example, the S&P Utilities index includes gas pipeline companies, communications
companies and very large electric utility companies which, in the Committee's
opinion, are inappropriate for the purpose of comparing the Company's
compensation levels. Therefore, the Committee has selected a specific peer
comparison group using four characteristics which it believes are appropriate
indicators of comparability to the Company. These characteristics are total
revenues between $250,000,000 and $750,000,000, total gas and electric customers
between 250,000 and 750,000, net utility plant between $500,000,000 and
$1,500,000,000 and common equity capital between $250,000,000 and $850,000,000.
None of the twenty-eight companies selected by the Committee for the peer group
are included in either of the two S&P indices referenced above.
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BASE SALARY
The 25th percentile of total compensation of this peer comparison group, as
reported in annual proxy statements, is determined for each of the top five
positions to serve as the target for the Company's base salary levels. Since
the midpoint of the Company's executive base salary structure was previously
targeted to the 50th percentile, the Company's executive salary structure has
been frozen and will remain so until the 25th percentile of the peer comparison
group and the midpoint of the Company's base salary structure coincide. Until
that time, base salaries will be targeted, on average, to the fraction of the
midpoint that is equivalent to the 25th percentile. For 1993, the 25th
percentile of the peer comparison group was approximately equivalent to 80% of
the midpoint of the Company's executive salary structure.
The base salaries for the Chief Executive Officer and the three utility
officers in the Summary Compensation Table, which were established effective May
1, 1992, remained in effect through December 31, 1993.
A separate process is employed in respect to the senior officers of
InterCoast, including Mr. Heppermann. Mr. Heppermann's salary was adjusted in
1993 as discussed in this report under InterCoast Energy Company.
ANNUAL BONUSES
The Company does not have a formal annual (short term) bonus plan.
However, as a result of the aforementioned change in compensation philosophy
which will limit adjustments to base salaries for a period of time, the
implementation of a long-term incentive plan under which no payouts will be made
before 1996 and the significant corporate performance improvements in 1993,
particularly in earnings per share, the Committee authorized one time bonuses
for 1993 as detailed in the Summary Compensation Table. The bonuses, which
approximated 6% of base salary, were intended to be in the range that the
Committee would have considered for base salary increases assuming the change in
compensation philosophy had not been made. Based on data made available to the
Company by outside compensation consultants, the Committee believes that the 6%
bonus factor reflects the annual rate of increase applicable to the base salary
compensation levels of other utility industry senior executives in recent
periods.
1993 KEY EMPLOYEE SUSTAINED PERFORMANCE PLAN
The 1993 Key Employee Sustained Performance Plan (SPP), a long-term
incentive plan, was adopted during 1993 by the Board of Directors for the
purpose of motivating utility senior officers to develop and successfully
execute specific sustained performance objectives to ensure the continuous
delivery of reliable energy to customers at a competitive price and to maximize
the Company's prospects for achieving a sustainable competitive return for its
shareholders over the long term. In addition, the SPP is intended to motivate
participants to focus on key annual goals representing measurable progress
toward long-term strategic objectives and to provide rewards for superior
performance on both an individual and a team basis. The SPP is also designed to
help retain and attract superior talent at the senior officer level and to do so
with pay-for-performance, variable cost incentive awards where the level of the
award is linked to sustained successful senior officer performance, Company
performance and the returns to the Company's shareholders.
Participants designated were those senior officers of the Company expected
to continue in such capacity during the period to the initial scheduled payout
date. Officers of InterCoast were not designated as they participate in other
incentive arrangements. This resulted in the inclusion of only three of the
five Named Executive Officers as participants in the Plan.
The primary features of the SPP are (1) the establishment of both annual
and long-term objectives for the Company at the beginning of each fiscal year,
(2) annual reviews of individual participant performance, (3) the measurement of
progress toward the annual and long-term objectives, (4) accruals to individual
participant accounts based on such progress, (5) adjustments to participant
account balances, up or down, based on sustained performance in relation to
annual goals and returns to the Company's shareholders and (6) payouts to
participants on specified payout dates.
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Annual and long-term objectives are comprised of a "trigger" element and a
set of long-range goal areas. The trigger element is established annually and
is a minimum corporate performance level, expressed in terms of earnings per
share, which must be achieved after all SPP award accruals have been recognized.
The four goal areas for 1993 are described below and represent areas of
strategic importance for which long-term objectives were established and for
which short-term threshold, target and maximum objectives were adopted for 1993.
Such short-term objectives may be changed from year to year.
Reviews of the performance of individual participants are conducted
annually. Awards may be reduced or eliminated for any participant whose
personal performance is below the level expected for a key employee of the
Company. The measurement of progress in the goal areas is reviewed and points
are assigned for each of the goal areas based on such progress. For performance
during 1993, a total of 8.75 points was awarded for achievement of the threshold
level, 17.5 points for achievement of the target level and 25 points for
achievement of the maximum target level for each of the four goals. The SPP
also provides that up to 30 discretionary points may be awarded to recognize
other outstanding performance results not adequately recognized by the goal
areas. However, the maximum points, in aggregate, cannot exceed 100.
The points awarded in a given year are used for both the adjustment of
existing participant accounts and additional accruals to such accounts.
Existing accounts are reduced if the aggregate points awarded in a given year
are less than 35 and increased if the aggregate points awarded are equal to or
greater than 35. In addition, existing accounts are reduced or increased based
on the total return to the holders of the Company's Common Shares compared to an
industry group. Based on both the points awarded and the total return
comparison, existing participant account balances may be reduced by as much as
20% or increased by as much as 30% in any given year.
New accruals to participant accounts are based solely on the aggregate
points awarded in the specific goal areas. No accruals are made if the
aggregate awarded points are less than 35. If the points awarded range from 35
to 100, accruals are made based on a percentage of each participant's base
salary rate, such percentage to be established at the beginning of each fiscal
year by the Compensation Committee.
Payouts will be made on specific dates, the first such payout being
scheduled for April 1, 1996. That payout, which will be in cash, will be equal
to two-thirds of the balance in each participant's account on that date. Every
three years thereafter two-thirds of the balance in each participant's account
as of the payout date will be distributed in cash. A further payout is
scheduled for April 1, 1997, and every three years thereafter, based on one-half
of each participant's account balance and the appreciation or depreciation of
the Common Share market price. Such payouts, which will be made in Common
Shares of the Company assuming shareholder approval of the modified SPP, as
presented in Item 3 in this proxy statement, will be increased or decreased by a
ratio of the Common Share market price on March 15 of the payout year as
compared to the Common Share market price on December 31, 1992. No payouts are
scheduled to be made on April 1, 1998 and in every third year thereafter.
The first strategic goal area was based upon balancing electric generating
capacity with Company needs, measured in terms of megawatts of electric
generating capacity owned at year-end. The second goal area was based upon
improving productivity, measured by total weather-adjusted utility earnings per
full time equivalent utility employee. The third goal area was designed to
encourage successful economic development efforts as measured by the number of
non-retail new jobs created in the Company's service territory as a result of
successful economic development projects in which the Company played an active
role. The fourth goal area was based upon the total return to the holders of
the Common Shares of the Company as compared to the median total return for a
group of sixty-five utilities.
The Committee reviewed the results of Company performance during 1993 and
authorized accruals to participant accounts based on those results as compared
to the goal areas. Earnings per share in 1993 exceeded the trigger level.
Performance relating to the first goal did not achieve the threshold level.
Performance related to the second and fourth goals achieved the maximum level.
Performance related to the third goal was slightly above the target level. No
discretionary points were awarded with respect to 1993 performance.
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Accruals under the SPP are detailed in the Long-Term Incentive Plan Table.
Payouts, when they occur, will be reported under the Long-Term Compensation
heading in the Summary Compensation Table.
CHIEF EXECUTIVE OFFICER COMPENSATION
The compensation of the Chief Executive Officer was determined according to
the policies and procedures outlined in the previous sections of this report.
Specifically, the base salary of the Chief Executive Officer remained at the
level established effective May 1, 1992 through December 31, 1993, as a result
of the 1992 performance of the Company and the need for transition to the new
compensation philosophy discussed above. The Committee believes that the Chief
Executive Officer's salary was below the 25th percentile of the peer comparison
group during 1993. For the reasons previously discussed, the Chief Executive
Officer also received a one-time bonus in 1993 in the same proportion to his
base salary as that paid to the other senior officers. Such bonus payment is
shown in the Annual Bonus column in the Summary Compensation Table. The trigger
element and goals under the SPP are the same for the Chief Executive Officer as
for the other senior officers, but the potential award amounts are set at higher
percentages than those for the other officers. Earnings per share in 1993
exceeded the trigger level. Performance relating to the first goal area did not
achieve the threshold level (0 points). Performance related to the second and
fourth goal areas achieved the maximum levels (25 points each). Performance
related to the third goal area was slightly above the target level (18.75
points). No discretionary points were awarded with respect to 1993 performance.
The 1993 accrual for the Chief Executive Officer under the SPP and associated
explanations are shown in the Long-Term Incentive Plan Table. The Chief
Executive Officer is not eligible for payouts under the SPP until April 1, 1996.
INTERCOAST ENERGY COMPANY
The Committee takes separate action regarding the compensation of the
President and Chief Operating Officer of InterCoast because neither the utility
company peer group nor the utility incentive plan goals directly relate to the
non-regulated businesses of InterCoast.
The Company commissioned an independent survey by a compensation consultant
in 1992 for the purpose of determining appropriate officer compensation for non-
regulated subsidiaries of utilities or utility holding companies. It was
determined from that study that the President's total compensation was
significantly below the peer group. The base salary structure of InterCoast was
increased, effective January 1, 1993, to adjust the midpoint of the structure
to the 25th percentile of the peer group. In addition, the Committee approved a
short-term incentive plan for the President to allow compensation for that
position to approach the peer group median level with appropriate performance.
The short-term incentive plan for 1993 consisted of two parts, an earnings
target and four specific goals. The maximum potential award under the earnings
target was 12% of base salary, and such award was based entirely on the earnings
of InterCoast. At the target level, the award was 6% of base salary.
The four goals for the 1993 short-term incentive plan were related to (1)
investment in new activities with significant income potential, (2) the
restructuring of an investment, (3) securing a power development project and (4)
the restructuring of a joint venture arrangement to which InterCoast is a party.
The maximum award for achieving the targets in all four areas was 8% of base
salary. Thus, the maximum incentive award under the 1993 plan was 20% of base
salary.
The maximum award was earned in 1993 under the earnings target.
Performance in the first, third, and fourth goal areas also reached the maximum
level. The second goal area was not achieved.
The short-term incentive award approved by the Committee, shown in the
Summary Compensation Table under the Bonus heading, represents an award of
approximately 18% of base salary.
This report has been provided by:
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Mrs. Nancy L. Seifert (Chairman of the Compensation Committee)
Mr. John W. Colloton
Mr. Frank S. Cottrell
Mr. William C. Fletcher
Mr. Mel Foster, Jr.
Mr. W. Scott Tinsman
Mr. Leonard L. Woodruff
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
The following line graph compares the annual cumulative total return on the
Company's Common Shares with the cumulative total return of the Standard &
Poor's Composite-500 Stock Index and the Standard & Poor's Composite-40 Utility
Index for the five years ended December 31, 1993.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG IOWA-ILLINOIS GAS AND ELECTRIC COMPANY,
THE S & P 500 INDEX AND THE S & P UTILITIES INDEX
[GRAPH]
1988 1989 1990 1991 1992 1993
---- ------ ------ ------ ------ ------
Iowa-Illinois Gas and Electric Co. 100 130.46 130.95 173.37 156.91 188.04
S&P Utilities Index 100 147.22 143.45 164.42 177.73 203.39
S&P 500 Index 100 131.69 127.60 166.47 179.15 197.21
- ----------------
* Assumes $100 invested on December 31, 1988 in Company Common Shares and each
Index and the reinvestment of dividends.
-15-
2. AMENDMENT TO ARTICLES OF INCORPORATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ITEM 2; a proposal
to add a new provision to Article Eleven of the Company's First Restated
Articles of Incorporation to recognize changes in Illinois law pertaining to the
liability of directors of the Company. Approval of the proposed provision
requires the affirmative vote of the holders of at least two-thirds of all
outstanding Preferred, Preference and Common Shares, voting together as a single
class. Any subsequent change or repeal of the provision would currently require
the same vote.
Effective January 1, 1994, the Illinois Business Corporation Act was
amended to permit Illinois corporations to limit to certain specified conditions
a director's personal liability to the corporation and its shareholders for
monetary damages for breach of fiduciary duty as a director. As a consequence
of the change in Illinois law, an Illinois corporation's articles of
incorporation may now provide its directors with a limitation on liability
similar to that available for companies incorporated in other states such as
Delaware.
The proposed provision would not reduce the fiduciary duty of a director.
Instead, it would limit a director's personal liability for monetary damages for
certain breaches of that duty. The provision would limit a director's liability
only in actions brought by the Company or its shareholders and would not limit
recovery of damages by third parties. The proposed provision does not eliminate
equitable remedies for breach of the duty of care, but in some circumstances
equitable remedies may not be available as a practical matter.
Under Illinois law, the liability of a director may not be eliminated for
acts or omissions involving bad faith, intentional misconduct, a knowing
violation of law, a breach of the duty of loyalty or resulting in an improper
personal benefit to such director. The adoption of the proposed provision will
not modify those liabilities of a director. Similarly, adoption of the proposed
provision would not limit a director's duty to comply with federal securities
laws or affect his or her liability for a violation thereof. However, the
proposed provision could, under certain circumstances, eliminate a shareholder's
cause of action against a director for monetary damages for breach of his or her
fiduciary duty, including grossly negligent business decisions relating to
attempts to change control of the Company.
The proposed provision would not apply to a director's liability for acts
taken or omitted prior to the time the provision becomes effective.
While the directors of the Company may have a conflict of interest, at the
potential expense of shareholders, in recommending adoption of this proposal,
the management of the Company has no knowledge of any pending or threatened
proceedings against any director to which the proposed provision would
apply.
A copy of the proposed provision follows as Exhibit A. A copy of Article
Eleven, as currently in effect, follows as Exhibit B.
If the proposed provision is not adopted by the shareholders, the existing
Article Eleven would remain in effect.
Directors of Illinois corporations are required to perform their duties in
good faith and with the same degree of care that a prudent person in like
position would use under similar circumstances. However, directors are exposed
to the threat of personal liability for monetary damages and for the expense of
defending associated litigation, even in situations where they have acted in
good faith. As now permitted by Illinois law, the proposed amendment would
limit a director's exposure to such monetary damages. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE FOR ITEM 2.
3. ADOPTION OF A LONG-TERM INCENTIVE COMPENSATION PLAN
In order to strengthen the commonality of interest between management and
shareholders, and to provide incentives and rewards for key employees to achieve
the Company's long-term goals and objectives, the Board of Directors has by
unanimous action (with the directors who are also officers of the Company
abstaining) adopted and approved for submission to the shareholders for approval
the 1994 Key Employee Sustained Performance Plan (the "Proposed Plan"). The
major provisions of the Proposed Plan are described below, and such description
is qualified in its entirety by reference to the attached Exhibit C, which sets
forth the text of the Proposed Plan.
-16-
If approved by the shareholders, the Proposed Plan would supersede the 1993
Key Employee Sustained Performance Plan (the "Existing Plan"). The primary
difference between the Proposed Plan and the Existing Plan is that a portion of
the payouts under the Proposed Plan would be in Common Shares of the Company
rather than in cash. Under the Existing Plan all payouts are made in cash. If
the Proposed Plan is not approved by the shareholders, the Existing Plan will
continue in full force and effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
ITEM 3. The affirmative vote of the holders of a majority of the shares
represented at the meeting in person or by proxy and entitled to vote on Item 3
is necessary to approve such proposal.
SUMMARY
Participants in the Proposed Plan would be key employees of the Company as
designated by the Compensation Committee of the Board of Directors, as is the
case with the Existing Plan. Current participants in the Existing Plan are the
senior officers of the Company. The senior officers of InterCoast currently
participate in separate incentive compensation arrangements. The number of
eligible employees is subject to designation by the Compensation Committee.
The primary features of the Proposed Plan are (1) the establishment of both
annual and long-term objectives for the Company at the beginning of each fiscal
year, (2) annual reviews of individual participant performance, (3) the
measurement of progress toward the annual and long-term objectives after the end
of each fiscal year, (4) accruals to individual participant accounts based on
progress toward the annual and long-term objectives, (5) adjustments to
participant account balances, up or down, based on sustained performance in
relation to annual goals and returns to the Company's shareholders and (6)
payouts to participants on specified payout dates with a portion of such payouts
in cash and a portion in Common Shares of the Company.
Payouts to each participant from his or her account are scheduled to begin
on April 1, 1996 with a second payout on April 1, 1997. No payout would be made
in 1998. This three-year payout cycle would be repeated in 1999-2001 and every
three years thereafter until termination or amendment of the Plan. The Proposed
Plan reserves 100,000 Common Shares of the Company to be available for such
payouts, which management estimates will be sufficient for at least three payout
cycles (approximately nine years).
ESTABLISHMENT OF OBJECTIVES
Annual and long-term objectives are comprised of an annual "trigger"
element and a set of long-range goal areas. The trigger element will be
established annually and will be a minimum corporate performance level,
expressed in terms of earnings per share, which must be achieved after all Plan
award accruals have been recognized. The goal areas will represent areas of
strategic importance to the Company for which long-term objectives will be
established and for which annual threshold, target and maximum objectives will
be adopted at the beginning of each fiscal year. The annual goal areas may be
changed from year to year. A description of the 1994 goal areas adopted by the
Compensation Committee is set forth below.
INDIVIDUAL AND CORPORATE PROGRESS MEASUREMENT
Reviews of the performance of individual participants will be conducted
annually. Awards may be reduced or eliminated for any participant whose
personal performance is below the level expected for a key employee of the
Company. The measurement of progress in the goal areas will be reviewed
annually by the Compensation Committee and points will be assigned for each of
the goal areas based on such progress. The Proposed Plan provides that
discretionary points may also be awarded to recognize other outstanding
performance results not adequately recognized by the goal areas, subject to a
maximum total of 100 points. The points associated with threshold, target and
maximum performance will be 35, 70 and 100, respectively.
ACCRUALS AND ADJUSTMENTS TO PARTICIPANT ACCOUNTS
The points awarded in a given year will be used for both the adjustment of
existing participant accounts and additional accruals to such accounts.
Existing accounts are reduced if the
-17-
aggregate points awarded in a given year are less than 35 and increased if the
aggregate points awarded are equal to or greater than 35. In addition, existing
accounts are reduced or increased based on the total return (dividends plus
share appreciation) to the holders of the Company's Common Shares as compared to
an industry group. Based on both the points awarded and the total return
comparison, existing participant account balances may be reduced by as much as
20% or increased by as much as 30% in any given year.
New accruals to participant accounts will be based solely on the aggregate
points awarded in the goal areas. No accruals will be made if the aggregate
awarded points are less than 35. If the points awarded range from 35 to 100,
accruals will be made based on a percentage of each participant's base salary,
such percentage to be established at the beginning of each fiscal year by the
Compensation Committee.
PAYOUTS
Payouts will be made in cash or in Common Shares of the Company on specific
dates, the first such payout being scheduled to be made on April 1, 1996. The
initial payout, to be made in cash, will be equal to two-thirds of the balance
in each participant's account on that date. Every three years thereafter, two-
thirds of the account balance in each participant's account as of the payout
date will be distributed in cash. A further payout, to be made in Common Shares
of the Company, is scheduled to be made on April 1, 1997. Such payout will be
equal to the number of Common Shares determined by dividing one half of each
participant's account balance by $22.13 (the market price per share of the
Company's Common Shares as at December 31, 1992, the beginning of the
performance period of the Existing Plan). Payouts in Common Shares of the
Company, determined in this fashion, will be made in every third year following
1997. No payouts are scheduled to be made in 1998 or in every third year
thereafter.
1994 FISCAL YEAR GOALS
The Compensation Committee has established four goal areas for 1994. These
goal areas will apply to the Proposed Plan, if approved by the shareholders, or
to the Existing Plan, if the Proposed Plan is not approved by the shareholders.
The first strategic goal area is based upon balancing electric generating
capacity with Company needs, measured in terms of revenue obtained from off-
system bulk capacity sales. The second goal area is based upon improving
productivity as measured by total weather-adjusted utility earnings per full-
time equivalent utility employee. The third goal area is designed to encourage
successful economic development efforts as measured by the number of non-retail
new jobs created in the Company's service territory as a result of successful
economic development projects in which the Company plays an active role. The
fourth goal area is based upon the total return to the holders of the Company's
Common Shares as compared to the median total return to shareholders of a group
of sixty-five utilities.
In order to emphasize the enhancement of shareholder value, the
Compensation Committee weighted the productivity and total return to shareholder
goal areas more heavily than the bulk capacity sales and economic development
goal areas for the purpose of awarding points in 1994 under the Proposed Plan.
AMENDMENT OR TERMINATION OF THE PROPOSED PLAN
The Board of Directors of the Company may amend, modify or terminate the
Proposed Plan at any time in its sole discretion, subject to shareholder
approval to the extent required by applicable law; provided, however, that,
except as described in the next paragraph, no amendment or modification shall be
made without shareholder approval if such amendment or modification would
increase the maximum number of Common Shares which can be issued in the
operation of the Proposed Plan. No amendment, modification or termination of
the Proposed Plan shall impair the rights of any participant with respect to any
outstanding award to such participant or his or her participant account without
the consent of such participant.
In the event of any stock split or combination, stock dividend,
recapitalization, reorganization, merger, consolidation, partial liquidation,
spin-off or other similar change materially
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affecting the fair market value of the Common Shares or the capitalization of
the Company, the number and class of securities distributable under the Proposed
Plan and the payout terms affecting each outstanding award shall be adjusted
appropriately by the Compensation Committee.
If the Proposed Plan is approved by the shareholders, the participant
account for each participant in the Existing Plan as of May 1, 1994 shall become
the participant account of such participant in the Proposed Plan as of May 1,
1994. If the Proposed Plan is not approved by the shareholders, all participant
accounts shall remain in effect under the Existing Plan.
PLAN BENEFITS
Future benefit amounts are not determinable due to such factors, among
others, as variations in individual and Company performance, the inability to
forecast the specific goal areas to be adopted after 1994 and the weight to be
assigned with respect to such goal areas, variations in comparison groups and
fluctuations in the market price of the Common Shares of the Company. If the
Proposed Plan had been in effect in 1993, the accruals which would have been
made to the five individuals named in the Summary Compensation Table, the
Executive Group and the Non-Executive Director Group would have been, as shown
in the table below, identical to the accruals made under the Existing Plan as
shown in the Long-Term Incentive Plan Table.
Benefit Award Accruals Which Would Have Been Made Under
-------------------------------------------------------
Proposed Plan If Plan Had Been In Effect In 1993
------------------------------------------------
Name and Position Participant Account Award Accrual (1)
- ----------------- -------------------------------------
Stanley J. Bright $84,075
Chairman, President and Chief
Executive Officer
Stephen E. Shelton $40,170
Vice President
Donald C. Heppermann (2) -
President and Chief Operating
Officer, InterCoast Energy Company
William T. Green (3) -
Senior Vice President
Lance E. Cooper $31,785
Vice President and Chief Financial
Officer
Executive Group (7 participants, including $265,230
Messrs. Bright, Shelton & Cooper)
Non-Executive Director Group -
Non-Executive Officer -
Employee Group
(1) The accruals shown are actual accruals under the Existing Plan as
authorized by the Compensation Committee. With the exception of amendments
to provide for a portion of payouts to be made in the Common Shares of the
Company rather than in cash, the Proposed Plan is identical to the Existing
Plan.
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(2) Mr. Heppermann participates in a separate incentive compensation plan which
is based upon his performance and the performance of InterCoast.
(3) Mr. Green retired on February 1, 1994.
The Board of Directors believes that incentive compensation arrangements
for the Company's senior officers, and the establishment of payout provisions
under such arrangements which make use of the Common Shares of the Company, are
consistent with the objective of motivating such officers to develop and attain
the long-term strategic objectives which are essential to the Company's ability
to achieve a sustainable competitive return to its shareholders. Moreover, in
the judgment of the Board of Directors, the use of long-term incentives is
essential to attract, retain, motivate and reward key senior officers and to
properly align the interests of such officers with those of shareholders.
ACCORDINGLY, THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 3.
4. SHAREHOLDER PROPOSAL REGARDING EXECUTIVE COMPENSATION
The Company has been notified that the two trustees of a family trust
intend to present for consideration and action at the annual meeting the
following proposal ("Item 4"). FOR THE REASONS SET FORTH BELOW, THE BOARD OF
DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST ITEM 4. The
affirmative vote of the holders of a majority of the shares represented at the
meeting in person or by proxy and entitled to vote on Item 4 is necessary to
approve such proposal. The Company will, on request made to the Secretary of
the Company at the address shown for the Company on the Notice of Annual
Meeting, furnish the names and address of and number of Common Shares of the
Company held by the proponents of the proposal.
SHAREHOLDER PROPOSAL
"RESOLVED: That the shareholders of Iowa-Illinois Gas & Electric Company
recommend that the Board of Directors take the necessary steps to institute a
salary ceiling such that no senior executive officer or director or consultant
acting in the capacity of an executive officer or director of the Company
receive a combined salary and other compensation which is more than one hundred
and fifty percent (150%) of the salary provided to the President of the United
States."
SUPPORTING STATEMENT OF PROPONENT
"Reasons: There is no corporation which exceeds the size or has the
complexity of the government of the United States run by the President of the
United States. Even most government agencies far exceed the size, as measured
by personnel and budget of any private corporation. The President of the United
States receives a salary of $200,000, while the heads of agencies and even
members of Congress are paid somewhat in excess of $100,000.
"In order to overcome even the appearance that officers of public
corporations run the corporations for their benefit rather than for the benefit
of the shareholders, the salary and compensation should not exceed that set
forth above. Usually, there is no direct correlation between the profitability
of a corporation and the compensation to officers. In fact, in many
corporations, the compensation increases even as profits fall. Thus, it is
clear that compensation does not usually serve as an incentive for a better run
or more profitable corporation. Any officer who believes he can better his
corporation should be sufficiently motivated by stock options or by his purchase
of stock on the open market.
"There is a general consensus in the United States that corporate officials
are grossly overpaid and that this state of affairs is promulgated by the "hands
off" policy of Boards of Directors. Many qualified people would gladly step in
and do as good a job as the incumbent officers of the Corporation and they would
have no hesitation to serve under the aforementioned ceiling on compensation.
"If you agree, please mark your proxy FOR this resolution."
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OPPOSING STATEMENT OF THE BOARD OF DIRECTORS
The Board of Directors believes that the proposal is not in the best
interests of the Company and its shareholders. The establishment of an absolute
and arbitrary ceiling on compensation payable to the Company's senior executive
officers, directors and consultants acting in the capacity of an executive
officer would place the Company at a severe competitive disadvantage in
attracting and retaining the senior executive management talent which the
Company requires. Moreover, implementation of such a proposal would eliminate
the Board of Directors' ability to adopt the type of compensation policies which
are needed to provide the proper incentives for the achievement of corporate
goals. In addition, the Board's ability to ensure that the interests of
management and the shareholders are sufficiently aligned through performance-
based compensation systems would be significantly curtailed. The Board of
Directors believes that implementation of such a proposal would adversely affect
the quality of management, the operation of the Company and, ultimately,
shareholder value.
The Board of Directors does not believe that the salary or the total
compensation payable to the President of the United States has any relevance to
the proper level of compensation paid to any officer, director or consultant of
the Company. However, it should be noted that the total compensation (salary
and all other elements of compensation) paid to the President of the United
States, which includes among other things: a non-accountable expense allowance;
family travel expense; an official entertainment allowance; rent, care,
maintenance and operation of the Executive Residence and a secondary residence;
and many personal services, exceeds the total compensation paid to any officer
of the Company.
As discussed further in the Compensation Committee Report on Executive
Compensation included elsewhere in this proxy statement, the Compensation
Committee, which consists only of non-employee (outside) directors, determines
annually the base salaries and incentive compensation of the Company's executive
officers. The Board of Directors believes that the Compensation Committee's
present policy of compensating the Company's executive officers through base
salary and long-term incentives properly aligns the interests of such executive
officers with those of the Company's shareholders.
ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST
ITEM 4.
5. OTHER MATTERS
The management does not know of any other matters to be presented at the
meeting. However, if any other matters should properly come before the meeting,
the holders of proxies will vote on them at their discretion.
INDEPENDENT PUBLIC ACCOUNTANTS
On February 18, 1993, the Company's Board of Directors, upon recommendation
of the Board's Audit Committee, approved the appointment of Deloitte & Touche as
the independent public accountants to audit and certify the Company's financial
statements for 1993. The services of Arthur Andersen & Co., who previously
served as the Company's independent public accountants, were discontinued,
effective February 18, 1993, for audit work relating to fiscal periods
commencing after December 31, 1992. The Company solicited proposals from
independent public accounting firms qualified to provide auditing services to
the Company. After reviewing and evaluating the proposed services and
associated costs, the Audit Committee recommended a change of auditors.
During the Company's two fiscal years ended December 31, 1992 and the
subsequent interim period from January 1, 1993 through February 17, 1993, there
were no disagreements with Arthur Andersen & Co. on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved to their satisfaction, would have caused
Arthur Andersen & Co. to make reference thereto in connection with its report.
Neither of Arthur Andersen & Co.'s reports on the financial statements for the
two years prior to the change of independent accountants contained an adverse
opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles.
-21-
Representatives of Deloitte & Touche are expected to be present at the
Company's 1994 Annual Meeting. They will have the opportunity to make a
statement if they so desire and are expected to be available to respond to
appropriate questions.
1995 SHAREHOLDER PROPOSALS
Any proposal by a shareholder which is intended to be presented at the 1995
Annual Meeting of Shareholders must be received by the Company not later than
November 16, 1994 in order to be considered by the Board of Directors for
inclusion in the Company's proxy statement for such meeting.
The Company's By-laws provide that, except as otherwise provided by law or
by the Company's First Restated Articles of Incorporation, the only business
which may be conducted at any annual or special meeting of the Company's
shareholders is such business as has been (i) specified in the written notice of
such meeting delivered to shareholders of the Company in accordance with the
Company's By-laws, (ii) brought before such meeting at the direction of the
Company's Board of Directors or the chairman of the meeting or (iii) specified
in a written notice (a "Shareholder Meeting Notice") which shall have been
timely delivered to the Company by a shareholder of record entitled to vote at
such meeting. To be timely delivered, a Shareholder Meeting Notice must be
received by the Secretary of the Company (i) in the case of an annual meeting,
not less than 10 days prior to the first anniversary date of the initial mailing
of notice of the previous year's annual meeting (except that such Notice need
not be given more than 75 days prior to the forthcoming annual meeting), and
(ii) in the case of a special meeting, not more than 10 days after the date of
the initial mailing by the Company of notice of such special meeting. Each
Shareholder Meeting Notice must contain specified information, including a
description of the proposed business, the name and address of the person
proposing such business, the ownership and voting rights of such person with
respect to the Company's shares and, in the case of director nominations,
certain background information relating to any nominee for director to be
proposed by such person and the written consent of such nominee to serve if
elected.
SOLICITATION
In addition to the mail, proxies may be solicited by personal interview,
telephone or facsimile. Banks, brokers, nominees and other custodians and
fiduciaries may be reimbursed for their reasonable out-of-pocket expenses in
forwarding soliciting material to their principals, the beneficial owners of
shares of the Company. Proxies may be solicited by officers, directors and key
employees of the Company on a voluntary basis without compensation therefor. In
addition, Georgeson & Company Inc. has been retained by the Company to aid in
the solicitation of proxies at a cost to the Company of $8,000 plus out-of-
pocket expenses. The cost of soliciting proxies will be borne by the Company.
OTHER DOCUMENTS
A COPY OF THE COMPANY'S FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE PROVIDED WITHOUT CHARGE ON WRITTEN REQUEST TO THE SECRETARY
AND TREASURER AT THE ADDRESS SHOWN FOR THE COMPANY APPEARING ON THE NOTICE OF
ANNUAL MEETING AT THE BEGINNING OF THIS PROXY STATEMENT.
By Order of the Board of Directors
Keith M. Giger
Secretary and Treasurer
Davenport, Iowa
March 16, 1994
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EXHIBIT A
Article Eleven of the First Restated Articles of Incorporation of the Company,
as proposed to be amended:
RESOLVED: That Article Eleven of the First Restated Articles of
Incorporation of the Company be amended by inserting the following new Section 1
and renumbering the subsequent Sections accordingly:
1. No director shall be personally liable to the Corporation or its
shareholders for monetary damages for breach of fiduciary duty as a director;
provided, however, that this Section 1 shall not eliminate or limit the
liability of any director (i) for any breach of such director's duty of loyalty
to the Corporation or its shareholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) under Section 8.65 of the Illinois Business Corporation Act, as amended
from time to time, or (iv) for any transaction from which such director derived
an improper personal benefit; and provided, further, that this Section 1 shall
not eliminate or limit the liability of any director for any act or omission
occurring before the effective date hereof. The objective of this Section 1 is
to eliminate or limit the liability of directors of the Corporation to the
fullest extent permitted by applicable Illinois law, including Section
2.10(b)(3) of the Illinois Business Corporation Act, as in effect on the date
this Section shall become effective, and by any subsequent amendment thereto to
the extent that such amendment shall authorize or permit such liability to be
further eliminated or limited.
A-1
EXHIBIT B
Article Eleven of the First Restated Articles of Incorporation of the Company,
as currently in effect:
ARTICLE ELEVEN
1. Any person made a party to or involved in any litigation (which term shall
include any actual or threatened civil, criminal, administrative or arbitration
action, proceeding, claim, suit or appeal therefrom) by reason of the fact that
such person at any time was or is a director, officer or employee of the
Corporation, or by reason of the fact that, at the request of the Corporation,
such person served or is serving as a director, officer or employee of any
business corporation, not-for-profit corporation, joint venture, trade
association or other entity, shall be indemnified by the Corporation against all
liabilities, judgments, fines and amounts paid in settlement and all expenses
(including attorneys' fees) actually and reasonably incurred by such person
arising out of or in connection with any such litigation, if such person acted
in good faith and in a manner which such person reasonably believed to be in, or
not opposed to, the best interests of the Corporation or any such business
corporation, not-for-profit corporation, joint venture, trade association or
other entity and, in the case of criminal litigation, such person had no
reasonable cause to believe that his or her conduct was unlawful; provided,
however, that such person shall not be indemnified hereunder if, in the case of
litigation by or in the right of the Corporation, it shall be finally
determined in such litigation that such person breached his or her duty to the
Corporation or any such business corporation, not-for-profit corporation, joint
venture, trade association or other entity unless, and then only to the extent
that, a court shall finally determine that, despite such breach of duty, such
person, in view of all the circumstances relating to such litigation, is fairly
and reasonably entitled to indemnification under this paragraph 1.
2. Any action taken or omitted to be taken by any such director, officer or
employee in good faith and in compliance with or pursuant to any order,
determination, approval or permission made or given by a commission, board,
official or other agency of the United States or of any state or other
governmental authority with respect to the property or affairs of the
Corporation or any such business corporation, not-for-profit corporation, joint
venture, trade association or other entity over which such commission, board,
official or agency has jurisdiction or authority or purports to have
jurisdiction or authority shall be deemed prima facie to be in compliance with
the applicable standard of conduct set forth in paragraph 1, whether or not it
may thereafter be determined that such order, determination, approval or
permission was unauthorized, erroneous, unlawful or otherwise improper.
3. Unless finally determined as provided in paragraph 1, the termination of
any litigation, whether by judgment, settlement, conviction or upon a plea of
nolo contendere, or its equivalent, shall not create a presumption that the
person seeking indemnification did not meet the applicable indemnification
standard set forth in paragraph 1.
4. Except where a person has been successful on the merits with respect to any
such litigation, any indemnification hereunder shall be made only after (a) the
Board of Directors (acting by a quorum consisting only of directors who were not
involved in such litigation) determines that such person met the applicable
indemnification standard set forth in paragraph 1 or (b) in the absence of such
a quorum, a panel (selected in the following manner) determines that such person
met the applicable indemnification standard set forth in paragraph 1: one member
of such panel shall be selected by the members of the Board of Directors who
were not involved in such litigation, or, if there should be no such directors,
then by the senior-ranking officer of the Corporation who was not involved in
such litigation; one member of such panel shall be selected by the person
seeking indemnification; and the third member of such panel shall be selected by
the first two members or, in the event such two panel members cannot agree
within 30 days, by the
B-1
President of the Illinois State Bar Association. Such panel shall make its
determination by arbitration in accordance with the laws of the State of
Illinois. Judgment upon the award rendered by such panel may be entered in any
court having jurisdiction thereof.
5. Advances may be made by the Corporation against costs, expenses and fees
arising out of, or in connection with, any such litigation at the discretion of,
and upon such terms (but always subject to the final determination of a person's
right to indemnification) as may be determined by, the Board of Directors.
6. The Corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer or employee of the
Corporation, or is or was serving, at the request of the Corporation, as a
director, officer or employee of any business corporation, not-for-profit
corporation, joint venture, trade association or other entity, against any
liability asserted against such person which was incurred in any such capacity,
or arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against any such liability under
the provisions of this Article.
7. The right of indemnification provided hereunder shall not be deemed
exclusive of any other right to indemnification to which any person may be
entitled, or of any other indemnification which may lawfully be granted to any
person in addition to the indemnification provided hereunder. Indemnification
provided hereunder shall, in the case of the death of the person entitled to
indemnification, inure to the benefit of such person's heirs, executors or other
lawful representatives.
8. The invalidity or unenforceability of any provision of this Article shall
not affect the validity or enforceability of any other provision of this
Article.
B-2
EXHIBIT C
KEY EMPLOYEE SUSTAINED PERFORMANCE PLAN
A. EFFECTIVE DATE, PLAN CONTINUANCE, AND MAXIMUM NUMBER OF SHARES.
1. The Key Employee Sustained Performance Plan (the SPP or the Plan) is
effective January 1, 1993, with initial Award opportunities covering
performance during fiscal year 1993 (1/1/93 - 12/31/93).
2. It is the intent of Iowa-Illinois Gas and Electric Company (the Company) to
continue the Plan indefinitely with new performance goals and Award
opportunities established for each fiscal year subsequent to fiscal year
1993. However, the Committee reserves the right to amend or discontinue the
Plan at any time should such action be deemed appropriate by the Committee
for the best interests of the Company and its shareholders.
3. Subject to adjustment as provided in Section L.10 of the Plan, an aggregate
of 100,000 shares of Stock shall be available for issuance under the Plan,
reduced by the aggregate number of shares of Stock that are then subject to
outstanding Awards payable in Stock. To the extent that an outstanding
Award payable in Stock expires or terminates or is cancelled or forfeited,
the shares of Stock subject to such expired, terminated, cancelled or
forfeited Award shall again be available for issuance under the Plan.
B. DEFINITIONS
1. AWARD(S) shall mean annually determined dollar amounts credited to
Participant Accounts under the Plan.
2. AWARD DATE shall mean April first of each calendar year.
3. CEO shall mean the Chief Executive Officer of the Company.
4. CHANGE OF CONTROL shall mean either (a) approval by the shareholders of
Iowa-Illinois of a reorganization, merger or consolidation, unless at least
sixty percent (60%) of the members of the Board of Directors of the
corporation resulting from the reorganization, merger or consolidation were
members of the Incumbent Board; or (b) such other event as designated by a
majority vote of the directors of the Incumbent Board who are not also
employees of Iowa-Illinois.
5. COMMITTEE shall mean the Compensation Committee of the Company's Board of
Directors as constituted from time to time, which shall consist of three or
more members of the Board each of whom shall be a "disinterested person"
within the meaning of rule 16b-3 under the Exchange Act.
6. COMPANY shall mean Iowa-Illinois Gas and Electric Company or its successor
organization.
7. EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as amended.
8. INCUMBENT BOARD shall mean the members of the Board of Directors of Iowa-
Illinois Gas and Electric Company on October 28, 1993. For this purpose,
an individual who becomes a member of the Board subsequent to October 28,
1993 and who has been nominated for election by the Company's shareholders
and by resolution adopted by a vote of at least
C-1
two-thirds of the directors then comprising the Incumbent Board at a duly
convened meeting thereof shall be deemed to be a member of the Incumbent
Board.
9. PARTICIPANT shall mean a key employee of the Company designated to
participate in the Plan by the Committee.
10. PARTICIPANT ACCOUNT shall mean the deferred incentive account established
to receive annually determined Awards for each Participant.
11. PAYOUT shall mean the distribution of cash and/or Stock from Participant
Accounts.
12. PERSONAL PERFORMANCE shall mean the individual contributions to Company
success demonstrated by each Participant.
13. PLAN or SPP shall mean this Key Employee Sustained Performance Plan.
14. QUALIFYING TERMINATION shall occur when, within twenty-four (24) full
calendar months after a Change of Control, a Participant's employment with
the corporation which results from such Change in Control is terminated
either (a) involuntarily for any reason; or (b) voluntarily, provided that
the Participant shall have furnished six (6) full months prior written
notice of the intent to voluntarily terminate employment to the President
of such corporation.
15. RETIREMENT shall mean the cessation of employment with the Company on or
after attaining age 55. For purposes of the Plan a Participant's
Retirement shall be deemed to be effective as of the first of the month
next following the Participant's last day of active employment including,
if applicable, vacation or holiday days.
16. STOCK shall mean the Common Shares, $1 par value, or any similar shares of
the Company then traded on national securities exchanges.
17. TOTAL RETURN shall mean the sum of the change in the fair market value
(trading price) of the Stock plus the total amount of dividend paid thereon
over a specific period of time, expressed as a rate of return on the
initial trading price for such period.
18. TOTAL DISABILITY shall mean a physical or mental impairment qualifying a
Participant for the commencement of payments under the Company's Long Term
Disability (LTD) Plan. For purposes of the SPP, Total Disability shall be
deemed to commence coincident with the date such LTD payments would become
effective if the Participant elected LTD coverage.
19. VALUE CHANGE PERCENTAGE shall mean the adjustment applied to Participant
Accounts each Award Date which shall change the dollar value of such
Accounts in a manner reflective of Company and Personal Performance in the
preceding fiscal year.
C. PLAN PURPOSE AND GENERAL DESCRIPTION
1. The main purposes of the Plan are:
a. To motivate Participants to develop and successfully execute those
sustained performance objectives which will assure the continuous
delivery of reliable energy to customers at a competitive price, and
maximize the Company's prospects for achieving a sustainable
competitive return for its shareholders over the long term.
C-2
b. To focus Participants on key annual goals representing progress toward
longer term strategic objectives.
c. To recognize and reward superior performance on both an individual and
a team basis.
d. To help retain and attract superior talent at the senior executive
level and to do so with pay-for-performance, variable cost incentive
award dollars where the level of award is linked to sustained
successful Participant performance, Company performance and the
returns to the Company's shareholders.
2. The Plan shall be administered by the Committee. The Committee shall,
subject to the terms of the Plan, select eligible officers and other key
employees for participation in the Plan and determine the form, amount and
timing of each Award and all other terms and conditions of such Award,
including, without limitation, the form of any agreement evidencing such
Award. The Committee shall, subject to the terms of the Plan, interpret
the Plan and the application thereof, establish rules and regulations for
the administration of the Plan and impose any conditions with respect to
any or all Awards. All such interpretations, rules and regulations shall
be conclusive and binding on all interested persons, including
Participants. The Committee may delegate some or all of its power and
authority hereunder to the CEO or any other executive officer of the
Company as the Committee deems appropriate; provided that the Committee may
not delegate its power and authority with regard to the selection for
participation in the Plan of an officer or other person subject to Section
16 of the Exchange Act or with regard to any decisions concerning the
timing, pricing or amount of any Award to such an officer or to such other
person.
3. Personal Performance shall be evaluated each fiscal year. Awards and other
opportunities otherwise applicable under the Plan shall be reduced or
eliminated for any Participant if his or her Personal Performance is less
than the level expected for a key employee of the Company.
4. Performance goals shall be established by the Committee for the Plan each
fiscal year and shall focus on a few very key results. These goals shall
be set forth in Committee minutes each year. Performance in areas not set
forth in such minutes can also be recognized by the Committee on a
subjective basis each year.
5. A Trigger, as detailed in Section F. below, shall be established each
fiscal year. Awards and other opportunities otherwise applicable shall be
reduced or eliminated unless the related corporate performance
threshold(s), as set forth in the Trigger, are satisfied.
6. Awards earned for each fiscal year, if any, shall be credited to
individually maintained Participant Accounts. Beginning April 1, 1995 the
dollar value of such Accounts shall fluctuate up or down each year (as
reflected by the Value Change Percentage) - based on Company and Personal
Performance and shareholder returns.
7. Each Participant shall receive a Payout of a portion of the dollar value of
his or her Participant Account on the first two of every three Award Dates
beginning on April 1, 1996. Payouts shall be first in cash, then Stock on
consecutive Award Dates.
8. In the event of a Participant's death, Total Disability, Retirement, or
Qualifying Termination, the then dollar value of such Participant's Account
shall become immediately vested and shall then be paid out in cash to the
Participant or his or her beneficiary as designated by the Plan. For the
fiscal year in which such an event occurs, the Participant's Annual Award
C-3
shall be paid in cash and prorated for the period of participation up to
the date of death, Total Disability, Retirement, or Qualifying
Termination.
9. In the event a Participant's employment with the Company terminates
for any reason other than death, Total Disability, Retirement, or
Qualifying Termination, such Participant shall forfeit the entire
amount of his or her Participant Account as in effect at such
termination. In addition, such a termination occurring before Annual
Awards are actually credited for any fiscal year's performance shall
result in the total and complete forfeiture of such Participant's
right in any such Annual Awards credited for such fiscal year.
C-4
D. PARTICIPATION IN THE SPP
1. Participation in the SPP shall be limited to key employees so designated by
the Committee each fiscal year.
2. Participation in one fiscal year does not guarantee participation in any
subsequent year. Should a former Participant be judged by the Committee to
be ineligible for continued participation and is so informed in writing by
the Company, such Participant shall immediately cease to be eligible for
any subsequent Annual Award, and shall also immediately surrender all
rights to his or her Participant Account in exchange for three annual
payments equal to one-third of the dollar value of such Account as of the
date of the notice of non-participation sent by the Company plus interest
at a rate determined by the Company for the second and third installments.
At the Company's sole option, such payments may be made in a single lump
sum.
3. Prorata participation during a fiscal year may be authorized by the
Committee.
E. INCENTIVE OPPORTUNITY
1. Incentive opportunity consists of three distinct items:
a. Annual Awards;
b. Dollar value enhancement for Participant Accounts; and
c. Dollar gains realized by the periodic Stock Payout.
2. Annual Award opportunity shall be expressed as a percentage of each
Participant's annual salary rate as in effect at the end of the fiscal year
for which performance was measured. The Annual Award opportunity shall be
set forth in Committee minutes each year.
F. TRIGGER ELEMENT
1. Each fiscal year the Committee shall establish a Trigger element for the
Plan. The Trigger shall be set forth in Committee minutes each year.
2. This Trigger shall consist of a specified base level of financial or other
performance which must be satisfied if the full, otherwise generated,
Annual Award opportunity under the Plan is to be realized by the
Participants.
G. DETERMINING ANNUAL AWARDS
1. Annual Awards shall be determined by the Committee as of each Award Date.
2. This determination shall be a two-step process using a "100 point system"
as described below:
a. Formal Award: The Committee shall award from 0 - 100 points on the
basis of actual, demonstrated Company performance against the specific
performance goals established for the fiscal year to which such awards
relate.
b. Discretionary Award: The Committee may also award from 0 - 30 points
on a discretionary basis to recognize and reward other outstanding
performance results
C-5
not, in the Committee's sole judgement, adequately recognized or
rewarded by the Formal Award above.
c. The two point awards shall then be added together and the sum, not to
exceed 100, used in conjunction with this Annual Award table:
- ---------------------------------------------------------
IF TOTAL POINTS ANNUAL AWARD ANNUAL AWARDS AS
AWARDED ARE: LEVEL IS: % SALARY ARE:
- ---------------------------------------------------------
Less than 35 None 0
- ---------------------------------------------------------
35 Threshold Level As Set By
- --------------------------------------- Committee For
70 Target Level Fiscal Year
- ---------------------------------------------------------
100 Maximum Level
- ---------------------------------------------------------
Annual Awards prorated for results between Threshold and
Target or Target and Maximum
- ---------------------------------------------------------
d. Once determined, Annual Awards, if any, shall be credited to
Participant Accounts each year as of the Award Date.
H. VALUE CHANGES FOR PARTICIPANT ACCOUNTS
1. The dollar value of all Participant Accounts shall be adjusted in an
identical manner as of each Award Date beginning April 1, 1995.
2. This adjustment shall be from a 20% loss to a 30% gain with such adjustment
being applicable to:
a. the full dollar value of each Participant Account prior to any Payout
due on such Award Date; but
b. excluding the Annual Award, if any, being credited to each Participant
Account on such Award Date.
3. The adjustment in dollar value shall be based upon the Value Change
Percentage determined as set forth in (4) below.
4. The Value Change Percentage shall be set by the Committee for each Award
Date based on this two-step process:
a. First, the total points already established for the Annual Awards for
such Award Date shall be applied to this table to determine a Value
Change Percentage:
C-6
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POINTS USED FOR ANNUAL AWARDS VALUE CHANGE
- ---------------------------------------------------------------------------
Less than 35 Minus 10%
35 Plus 5%
70 Plus 10%
100 Plus 20%
- ---------------------------------------------------------------------------
Prorate Percentage for points between 35 and 70 or 70 and 100
- ---------------------------------------------------------------------------
b. Second, the Percentage from the above table shall be increased or
reduced by up to ten percentage points by comparing the Total Return
to the Company's Shareholders for the prior fiscal year to the Median
Total Return for all Utility Companies included in the Salomon
Brothers Utility Group for the period to which the value change
relates. A percentage increase shall be used if the Total Return to
Company Shareholders is higher than such Median, and a decrease if
lower.
c. The following is an example of this two-step process in operation:
- --------------------------------------------------------------------
POINTS FIRST STEP COMPANY STOCK MEDIAN FINAL
EARNED PERCENTAGE TOTAL RETURN TOTAL RETURN PERCENTAGE
- --------------------------------------------------------------------
30 <10%> 6.0% 8.0% <12%>
35 5% 8.0% 8.0% 5%
70 10% 10.0% 8.0% 12%
85 15% 12.0% 8.0% 19%
100 20% 19.0% 8.0% 30% (max)
- --------------------------------------------------------------------
5. Should the Annual Awards to which Participants would otherwise be entitled
on a given award date be reduced or eliminated as a result of the operation
of the Trigger Element, the Committee may, at its discretion, modify the
Value Change Percentage.
I. PAYOUTS - ACTIVE PARTICIPANTS
1. No Payouts shall occur prior to April 1, 1996.
2. Subject to the Trigger, periodic Payouts shall be made on the first two out
of every three Award Dates commencing on April 1, 1996.
3. Effective April 1, 1996 and every third year thereafter (April 1, 1999,
April 1, 2002, etc.), each Participant shall receive a cash payment equal
to two-thirds of the dollar value of his or her Participant Account with
such dollar value being equal to:
a. The dollar value of the Account from the prior Award Date increased or
reduced by the Value Change Percentage applied for the current Award
Date; plus
b. The Annual Award credited to the Participant Account as of the current
Award Date.
4. Effective April 1, 1997 and every three years thereafter (April 1, 2000,
April 1, 2003, etc.), each Participant shall receive a payment in shares of
Stock equal to:
C-7
a. One-half of the dollar value of his or her Participant Account with
such "dollar value" determined as set forth in (3)(a) and (b) above;
divided by
b. $22.13 (Stock price on 12/31/92); and
c. Rounded to the next highest whole number which will represent the
number of shares of Stock to be paid out.
5. The following is an example of this Stock Payout calculation:
---------------------------------------------------
DOLLAR VALUE ONE-HALF DIVIDED BY SHARE
OF ACCOUNT OF THIS $22.13 PAYOUT
---------------------------------------------------
$20,000 $10,000 451.88 452 shares
$46,000 $23,000 1,039.31 1,040 shares
---------------------------------------------------
6. The actual dollar value of the Stock Payout will be more than one-half of
the dollar value of the Participant Account if the actual market value of
Company Stock is over $22.13, and less than such amount if the Stock price
is under $22.13.
7. At Payout the Stock will be transferred to the Participant with full rights
of ownership and the then dollar value of such Stock is expected to
constitute taxable income to the Participant.
J. PERSONAL PERFORMANCE
1. The CEO shall evaluate the Personal Performance of every Participant, other
than a Participant who is an officer or other person subject to Section 16
of the Exchange Act, each fiscal year, and the Committee shall do the same
for each Participant who is an officer or other person subject to Section
16 of the Exchange Act. The evaluations of performance made by the CEO
shall be reviewed with the Committee.
2. Should the Personal Performance of any Participant be less than that
expected from a key employee, the Committee (acting on a recommendation
from the CEO in respect to any Participant other than a Participant who is
an officer or other person subject to Section 16 of the Exchange Act) may,
not withstanding any other provision of the Plan, eliminate or reduce any
Annual Award otherwise payable.
K. PERFORMANCE GOALS AND UNUSUAL EVENTS
1. Specific performance goals established for any fiscal year shall not
normally be altered or otherwise adjusted. However, in the event of highly
unusual circumstances or significant events which render established goals
totally inconsistent with the purposes and intents of the Plan, the
Committee may adjust such goals during a fiscal year.
L. MISCELLANEOUS AND ADMINISTRATIVE PROVISIONS
1. All calculated amounts under the Plan shall be rounded to the next higher
whole dollar (or full Stock share) amount.
2. All Payouts, whether in dollars or Stock, shall be subject to all
applicable Federal, State, and local taxation and shall be subject to all
applicable withholding for such taxation.
C-8
3. Payouts, whether in cash or Stock, shall not count as "compensation" for
the purpose of any benefit plan of the Company. Awards credited to
Participant Accounts, may, however be used for the purpose of calculations
for the Supplemental Retirement Plan For Designated Officers as adopted by
the Board of Directors in October 1993, or its successor plan(s).
4. Voluntary, irrevocable deferral of any or all Payouts, whether in cash or
Stock, may be elected by Participants on terms approved by the Committee.
Should a Stock Payout be deferred on such an elective basis, the dollar
value of such a Payout will be fixed as of the original Payout date and not
thereafter changed by increases or decreases in the market value of the
Stock.
5. Participation in the SPP does not guarantee employment rights to any
employee, and participation in the SPP in one fiscal year does not
automatically result in participation in any subsequent year.
6. Each Participant shall be required to provide the Company with a written
beneficiary designation for Plan purposes, and maintaining such designation
shall be the sole responsibility of the Participant. In the event the
beneficiary of record does not survive the Participant, any payments
otherwise due shall be made to the Participant's estate.
7. The Company shall establish appropriate accounting reserves to recognize
the liability of Annual Awards and periodic Payouts under the Plan.
8. No Award shall be transferable other than by will or the laws of descent
and distribution. No Award may be sold, transferred, assigned, pledged,
hypothecated, encumbered, or otherwise disposed of (whether by operation of
law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of any Award, such Award and all rights
thereunder shall immediately become null and void.
9. Each Award under the Plan which is payable in Stock shall be subject to the
requirement that if at any time the Company shall determine that the
registration, qualification or listing of such Stock is required by any
applicable Federal or State law or the rules or regulations of any
applicable national securities exchange, or the consent or approval of any
Federal or State governmental body (or the taking of any other action) is
necessary or desirable, as a condition of, or in connection with, the
delivery of such Stock, such Stock shall not be delivered until such
registration, qualification, listing, consent, approval or other action
shall have been effected or obtained, free of any conditions not acceptable
to the Company. The Company may require that certificates evidencing
shares of Stock delivered pursuant to the Plan bear a legend to the effect
that the sale, transfer, or other disposition of the shares evidenced
thereby may be made only in compliance with the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
10. In the event of any stock split or combination, stock dividend,
recapitalization, reorganization, merger, consolidation, partial
liquidation, spin-off or other similar change materially affecting the fair
market value of the Stock or the capitalization of the Company, the number
and class of securities distributable under the Plan and the Payout terms
affecting each outstanding Award shall be appropriately adjusted by the
Committee.
11. No Participant shall have any rights as a shareholder of the Company with
respect to any shares of Stock which may be distributed under the Plan
unless and until a certificate with respect to such shares shall have been
registered in the name of such Participant.
C-9
12. The Plan shall be submitted to the shareholders of the Company for approval
and, if approved, shall become effective as of May 1, 1994 and shall
supersede the Company's Key Employee Sustained Performance Plan (the "Prior
Plan") in effect prior to such date. Awards hereunder may be made at any
time on or after the effective date of the Plan. In the event that the
Plan shall not be approved by the shareholders of the Company, the Plan and
any Awards hereunder shall be void and of no force or effect, and the Prior
Plan shall continue in full force and effect in all respects.
13. The Board of Directors of the Company may amend, modify or terminate the
Plan at any time in its sole discretion, subject to shareholder approval to
the extent required by applicable law; provided, however, that, except to
the extent permitted by Section L.10 of the Plan, no amendment or
modification shall be made without shareholder approval if such amendment
or modification would increase the maximum number of shares of Stock
available for issuance under the Plan. No amendment, modification or
termination of the Plan shall impair the rights of any Participant with
respect to any outstanding Award to such Participant or his or her
Participant Account without the consent of such Participant.
C-10
IOWA-ILLINOIS
GAS AND ELECTRIC COMPANY
------------------------
ENERGY IN ACTION
THE ANNUAL MEETING OF SHAREHOLDERS WILL BE HELD AT THE MARK OF THE QUAD CITIES,
1201 RIVER DRIVE, MOLINE, ILLINOIS, ON APRIL 28, 1994 AT 10 A.M.
THE ENCLOSED PROXY STATEMENT CONTAINS ADDITIONAL INFORMATION ABOUT THE MEETING.
Your proxy is printed at the bottom of this page. Please mark your vote on the
four issues, and sign and date the proxy. (If you wish to vote with the
directors' recommendations, you may simply sign and date the proxy. No
designation is needed.) After you have voted, please detach the proxy from this
notice, and return it in the enclosed envelope to the Company. This will help
save the expense of follow-up letters to shareholders who have not responded.
If you do not return your proxy, your shares will not be represented or voted at
the meeting.
TEAR HERE TEAR HERE TEAR HERE
- --------------------------------------------------------------------------------
IOWA-ILLINOIS GAS AND ELECTRIC COMPANY
PROXY FOR ANNUAL SHAREHOLDERS' MEETING, APRIL 28, 1994
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
RECORD DATE: HOLDINGS: ACCOUNT: PROXY:
Please sign your name(s) exactly as shown, date the proxy, and mail it promptly
in the enclosed envelope. Please give your full title when signing as attorney,
executor, administrator, trustee, or guardian. For JOINT HOLDERS, all should
sign.
_________________________ Dated _______________
_________________________ Dated _______________
Signature(s)
Stanley J. Bright, Lance E. Cooper, and Stephen E. Shelton, and any of them, are
hereby appointed proxies with power of substitution to vote as specified in this
Proxy all Preferred Shares, all Preference Shares and all Common Shares which
the shareholder is entitled to vote at the annual meeting of shareholders of
Iowa-Illinois Gas and Electric Company to be held on April 28, 1994, and at any
adjournment thereof, including authority to vote on the election of directors in
the manner specified below and, in their discretion, upon all other matters as
may be properly brought before such meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
1. ELECTION OF BOARD OF DIRECTORS /_/ FOR ALL nominees
/_/ WITHHOLD AUTHORITY to vote for ALL nominees
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE CHECK THE FOR BOX
AND STRIKE A LINE THROUGH THE NOMINEE'S NAME BELOW.
Nominees: S. Bright, J. Colloton, L. Cooper, F. Cottrell, W. Fletcher,
M. Foster, N. Seifert, S. Shelton, S. Tinsman, L. Woodruff
NOTE: If you grant authority to vote for one or more nominees, unless you
otherwise specify below you will authorize the proxies to cumulate all votes
which you are entitled to cast and to allocate such votes among such nominees as
such proxies shall determine, in their sole and absolute discretion, in order to
maximize the number of such nominees elected. To specify a different manner of
cumulative voting, write "Cumulate For," the number of votes and the name(s) of
the nominee(s) below. See "Election of Directors -- Cumulative Voting" in the
accompanying proxy statement for further information.
2. Amendment of the First Restated Articles of Incorporation with respect to
director's personal monetary liability as permitted by recent changes to
Illinois corporation law:
/_/ FOR /_/ AGAINST /_/ ABSTAIN (Having the same affect as a vote AGAINST)
3. Adoption of the Company's Key Employee Sustained Performance Plan under
which the Company may issue from time to time up to 100,000 of its
Common Shares:
/_/ FOR /_/ AGAINST /_/ ABSTAIN (Having the same affect as a vote AGAINST)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST PROPOSAL 4.
4. Consideration of a shareholder proposal concerning executive compensation:
/_/ FOR /_/ AGAINST /_/ ABSTAIN (Having the same affect as a vote AGAINST)
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2, AND 3 AND
AGAINST ITEM 4.
SHAREHOLDER SERVICES, 206 EAST SECOND STREET, P.O. BOX 435P, DAVENPORT, IOWA,
52806-4350, TELEPHONE: LOCAL 319-326-7266 TOLL FREE 1-800-374-4443
PAGE WHERE
GRAPHIC APPEARS DESCRIPTION OF GRAPHIC OR CROSS-REFERENCE
- ----------------------------------------------------------------------------
2 Photograph of Stanley J. Bright, nominee for director
2 Photograph of John W. Colloton, nominee for director
3 Photograph of Lance E. Cooper, nominee for director
3 Photograph of Frank S. Cottrell, nominee for director
3 Photograph of William C. Fletcher, nominee for director
3 Photograph of Mel Foster, Jr., nominee for director
3 Photograph of Nancy L. Seifert, nominee for director
4 Photograph of Stephen E. Shelton, nominee for director
4 Photograph of W. Scott Tinsman, nominee for director
4 Photograph of Leonard L. Woodruff, nominee for director
15 Performance graph of Comparison of Five Year Cumulative
Return Among Iowa-Illinois Gas and Electric Company,
the S&P 500 Index and the S&P Utilities Index
- ----------------------------------------------------------------------------