EXHIBIT 99.1
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[x] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S)
240.14a-12
Vectren Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] 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
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(2) Aggregate number of securities to which transaction
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(3) Per unit price or other underlying value of transaction
computed
pursuant to Exchange Act Rule 0-11 (set forth the amount
on which
the filing fee is calculated and state how it was
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by
Exchange
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Notes:
[VECTREN CORPORATION LOGO]
VECTREN CORPORATION
20 N. W. Fourth Street
Evansville, Indiana 47708
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2001
TO THE SHAREHOLDERS OF VECTREN CORPORATION
The annual meeting of shareholders of Vectren Corporation (the
"Company")
will be held at the Company's Norman P. Wagner Operations Center,
One North
Main Street, Evansville, Indiana on Wednesday, April 25, 2001, at
9:30 a.m.
(Central Daylight Time), for the following purposes:
1. To elect four directors of the Company to serve for a term of
three
years or until their successors are duly qualified and
elected;
2. To approve the Company's At-Risk Compensation Plan; and
3. To transact such other business as may properly come before
the meeting,
or any adjournment of the meeting.
As allowed by the Company's Code of By-Laws, the board of
directors has
fixed the close of business on March 2, 2001 as the record date
for
determining the shareholders entitled to notice of and to vote at
the meeting
and at any adjournment of the meeting.
It is important that your stock be represented at this meeting
to assure a
quorum. Whether or not you now expect to be present at the
meeting, please
fill in, date and sign the enclosed proxy and return it promptly
to the
Company in the accompanying addressed envelope. No stamp is
required if mailed
in the United States. You may also authorize the individuals named
on your
proxy card to vote your shares by calling toll-free 1-877-779-8683
or using
the Internet (www.eproxyvote.com/vvc) by following the
instructions included
with your proxy card. Please note that if your shares are not
registered in
your own name, your bank, broker or other institution holding your
shares may
not offer telephone or Internet voting. You have the unconditional
right to
revoke your proxy at any time before the authority granted by it
is exercised.
By order of the board of
directors.
Vectren Corporation
[Ronald E. Christian]
RONALD E. CHRISTIAN
Senior Vice President,
General
Counsel, and Corporate
Secretary
Evansville, Indiana
March 16, 2001
LOCATION OF APRIL 25, 2001
ANNUAL SHAREHOLDERS' MEETING
[MAP]
NORMAN P. WAGNER OPERATIONS CENTER
Vectren Corporation
One North Main Street
Evansville, Indiana
Parking for shareholders will be provided in the Employee and
Visitor
parking lot on the corner of North Main and Division Streets.
Please use the
Main Street entrance.
YOUR VOTE IS IMPORTANT
PLEASE READ THE PROXY STATEMENT AND SIGN, DATE AND MAIL THE
PROXY IN THE
PREPAID ENVELOPE WITHOUT DELAY, WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING.
YOU MAY REVOKE YOUR PROXY PRIOR TO OR AT THE MEETING AND VOTE IN
PERSON IF YOU
WISH. IF YOUR SHARES ARE HELD BY A BROKER, BANK OR NOMINEE, IT IS
IMPORTANT
THAT THEY RECEIVE YOUR VOTING INSTRUCTIONS.
TABLE OF CONTENTS
Page
- ----
Proxy
Statement.........................................................
.. 1
Solicitations of
Proxies................................................ 1
Purposes of
Meeting..................................................... 1
Voting
Securities.......................................................
1
Item 1. Election of
Directors............................................. 2
Class I
Directors.......................................................
2
Class II
Directors......................................................
3
Class III
Directors..................................................... 3
Other Executive
Officers.................................................. 4
Common Stock Ownership by Directors and Executive
Officers................ 5
Certain Relationships and Related
Transactions............................ 6
Meetings and Committees of the Board of
Directors......................... 6
Director
Compensation.....................................................
7
Section 16(a) Beneficial Ownership Reporting
Compliance................... 7
Report of the Audit
Committee............................................. 7
Executive Compensation and Other
Information.............................. 8
Report of the Compensation
Committee...................................... 8
A. Executive Compensation
Policy........................................ 8
B. Components of Executive
Compensation................................. 9
Base
Salary...........................................................
9
Annual Incentive
Compensation......................................... 9
Long-Term Incentive
Compensation...................................... 10
C. Chief Executive Officer
Compensation................................. 11
D. Share
Ownership......................................................
11
E. Compensation Consultant, Termination Benefits Agreements and
Deductibility of Executive
Compensation............................... 11
Compensation Committee Interlocks and Insider
Participation............... 13
Compensation......................................................
........ 13
Table I:Summary
Compensation............................................ 13
Table I(A):Earnings for Former Indiana Energy
Executives................ 14
Table II:Option Grants in Last Fiscal
Year.............................. 16
Table III: Aggregated Option Exercises in Last Fiscal Year and
Fiscal
Year-End Option Values from 1/1/2000 -
12/31/2000........... 16
Table IV: Long-Term Incentive Plan Awards in Last Fiscal
Year........... 16
Retirement Savings
Plan................................................... 17
Retirement
Plans..........................................................
17
Table: Pension
Plan..................................................... 18
Stock Option
Plan......................................................... 19
Employment
Agreements.....................................................
19
Corporate
Performance.....................................................
20
Comparison of 9 Month Cumulative Total
Return........................... 20
i
Page
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Item 2. Approval of Company's At-Risk Compensation
Plan................... 21
Stock
Options...........................................................
21
Restricted
Stock........................................................ 21
Other Stock Based
Awards................................................ 22
Annual Incentive
Awards................................................. 22
Awards Under the At-Risk Compensation
Plan.............................. 22
United States Federal Income Tax Aspects of the At-Risk
Compensation
Plan..............................................................
..... 22
Incentive Stock
Options............................................... 22
Restricted
Stock...................................................... 23
Stock Units
Awards.................................................... 23
Section 162(m) of the Internal Revenue
Code........................... 23
Required Vote and
Recommendation........................................ 24
Independent Public Accountants of the
Company............................. 24
Audit
Fees..............................................................
24
Financial Systems Design and Implementation
Fees........................ 24
All Other
Fees.......................................................... 24
Cost and Method of
Solicitation........................................... 25
Annual
Report............................................................
. 25
Revocation
Rights.........................................................
25
Nomination of Directors by
Shareholders................................... 25
Shareholders' Proposals for 2002 Annual
Meeting........................... 26
APPENDIX A--Audit Committee
Charter....................................... A-1
APPENDIX B--At-Risk Compensation
Plan..................................... B-1
ii
VECTREN CORPORATION
20 N. W. Fourth Street
Evansville, Indiana 47708
(812) 491-4000
PROXY STATEMENT
The following information is furnished in connection with the
solicitation
of the enclosed proxy by and on behalf of the board of directors
of the
Company. The proxy will be used at the annual meeting of
shareholders to be
held at the Company's Norman P. Wagner Operations Center, One
North Main
Street, Evansville, Indiana, on Wednesday, April 25, 2001, at 9:30
a.m.
(Central Daylight Time), and at any adjournment of the meeting for
the matters
to be acted upon under its authority. The proxy and this proxy
statement were
first mailed to the shareholders on or about March 16, 2001.
SOLICITATIONS OF PROXIES
The management solicits your proxy for use at the annual
meeting of the
Company. Shares held in your name and represented by your proxy
will be voted
as you instruct if your proxy is duly executed and returned prior
to the
meeting. Shares represented by proxies that are returned signed
but without
instructions for voting will be voted as recommended by
management. Shares
represented by proxies that are returned unsigned or improperly
marked will be
treated as abstentions for voting purposes. You may revoke your
proxy at any
time before it is exercised by written notice to the Secretary of
the Company
received prior to the time of the meeting, or orally at the
meeting.
If you are a participant in the Company's Automatic Dividend
Reinvestment
and Stock Purchase Plan, your proxy card will represent the number
of shares
registered in your name and the number of shares credited to your
plan
account. For those shares held in the plan, your proxy card will
serve as
direction to the Plan Administrator as to how your account is to
be voted.
PURPOSES OF MEETING
As of this date, the only known business to be presented at the
2001 annual
meeting of shareholders is (1) the reelection of four directors of
the Company
to serve for a term of three years or until their successors are
duly
qualified and elected, and (2) the approval of the Company's At-
Risk
Compensation Plan. However, the enclosed proxy authorizes the
proxy holders to
vote on all other matters that may properly come before the
meeting, and it is
the intention of the proxy holders to take any such action
utilizing their
best judgment. Only shares held by those present at the meeting or
for which
proxies are returned will be considered to be represented at the
meeting. For
the purposes of determining a quorum, shares represented at the
meeting are
counted without regard to abstentions or broker non-votes as to
any particular
item.
VOTING SECURITIES
On March 31, 2000, Indiana Energy, Inc. ("Indiana Energy") and
SIGCORP,
Inc. ("SIGCORP") merged with and into the Company. As a result of
the merger,
each Indiana Energy shareholder received 1 share of the Company's
common stock
for each share of Indiana Energy common stock owned by the
shareholder, and
each SIGCORP shareholder received 1.333 shares of the Company's
common stock
for each share of SIGCORP common stock owned by the shareholder.
Immediately
following the merger, the former Indiana Energy shareholders owned
48.6% of
the Company, and the former SIGCORP shareholders owned 51.4% of
the Company.
As of March 2, 2001, the Company had one class of capital stock
outstanding, consisting of 67,712,468 shares of common stock
without par
value. The holders of the outstanding shares of common stock are
entitled
1
to one vote for each share held of record on each matter presented
to a vote
of the shareholders at the meeting. However, unless the holder
personally
appears at the meeting, shares for which no proxy is returned
(whether
registered in the name of the actual holder thereof or in nominee
or street
name) will not be voted. Only shareholders of record at the close
of business
on March 2, 2001 will be entitled to vote at the meeting or at any
adjournment
of the meeting.
ITEM 1. ELECTION OF DIRECTORS
The Company's board of directors currently consists of sixteen
directors
divided into three classes having staggered terms of three years
each. Four of
the five Class I directors, John D. Engelbrecht, William G. Mays,
J. Timothy
McGinley, and Richard P. Rechter, are nominees for election with
terms
expiring in 2004. The fifth member of Class I, James S. Vinson, is
not
standing for reelection due to his impending retirement and
relocation to
South Carolina. The Class II directors, Lawrence A. Ferger, Donald
A. Rausch,
Ronald G. Reherman, Richard W. Shymanski, and Jean L. Wojtowicz,
have terms
expiring in 2002. The Class III directors, John M. Dunn, Niel C.
Ellerbrook,
Anton H. George, Andrew E. Goebel, Robert L. Koch II, and James C.
Shook, have
terms expiring in 2003. Messrs. Ellerbrook and Goebel also serve
as directors
of Vectren Utility Holdings, Inc., a holding company for the
Company's
regulated gas and electric distribution company subsidiaries,
Indiana Gas
Company, Inc. ("Indiana Gas"), Southern Indiana Gas and Electric
Company
("SIGECO"), and Vectren Energy Delivery of Ohio, Inc. Messrs.
Ellerbrook and
Goebel also serve as directors of Vectren Capital, Corp. ("Vectren
Capital"),
the Company's subsidiary that serves as the vehicle for financing
non-
regulated business activities, and Vectren Enterprises, Inc.
("Vectren
Enterprises"), the Company's subsidiary that serves as the
corporate parent
for non-regulated business activities. The placement of a portion
of the
Company's directors on the board of directors of Vectren Capital
and Vectren
Enterprises will ensure the participation of those individuals in
decision
making with respect to financing and non-regulated business
activities.
At each annual meeting of shareholders, directors are elected
to succeed
those whose terms then expire for a term of three years or until
their
successors are duly qualified and elected. Accordingly, four
directors are to
be elected by a plurality of votes cast at the annual meeting of
shareholders
to be held on April 25, 2001.
The board of directors intends that the enclosed proxy will be
voted by the
proxy holders in favor of the election of the nominees named below
for the
office of director of the Company to hold office for a term of
three years or
until their respective successors are duly qualified and elected.
Each of such
nominees is now serving as a director of the Company and has
signified the
willingness to serve if elected. Directors are elected by a
plurality of the
votes cast. Plurality means that the individuals who receive the
largest
number of votes cast are elected up to the maximum number of
directors to be
chosen at the meeting. Abstentions, broker non-votes, and
instructions on the
accompanying proxy card to withhold authority to vote for one or
more of the
nominees might result in some nominees receiving fewer votes.
However, the
number of votes otherwise received by the nominee will not be
reduced by such
action. If, however, any situation should arise under which any
nominee should
be unable to serve, the authority granted in the enclosed proxy
may be
exercised by the proxy holders for the purpose of voting for a
substitute
nominee.
Certain information concerning the nominees and the other
directors of the
Company is set forth below and under the caption "Meetings and
Committees of
the Board of Directors." If not otherwise indicated, the principal
occupation
listed for any individual has been the same for at least five
years.
Class I Directors--Term expiring 2004
John D. Engelbrecht, age 49, has been a director of SIGCORP or
the Company
since 1996. Mr. Engelbrecht is President and Chief Executive
Officer of South
Central Communications, owner and operator of radio and television
stations in
Indiana, Kentucky and Tennessee, and MUZAK franchises in 14 U.S.
cities.
William G. Mays, age 54, has been a director of Indiana Energy
or the
Company since 1998. Mr. Mays is President of Mays Chemical
Company, Inc., an
Indianapolis, Indiana based chemical company, and is also a
director of
Anthem, Inc.
2
J. Timothy McGinley, age 60, has been a director of Indiana
Energy or the
Company since January 1999. Mr. McGinley is Managing Partner and
principal
owner of House Investments, a real estate investment company. Mr.
McGinley is
also a director of Bindley Western Industries, Inc.
Richard P. Rechter, age 61, has been a director of Indiana Gas,
Indiana
Energy, or the Company since 1984. Mr. Rechter is Chairman of
Rogers Group,
Inc., a company providing crushed stone, sand and gravel, asphalt,
highway
construction, concrete masonry and construction materials
recycling;
President, Chief Executive Officer and director of Rogers
Management, Inc.;
and President, Chief Executive Officer and director of Mid-South
Stone, Inc.
Mr. Rechter is also a director of Monroe County Bank and Monroe
Bancorp.
The board of directors recommends a vote "FOR" all nominees for
Class I
director.
Class II Directors--Term expiring 2002
Lawrence A. Ferger, age 66, has been a director of Indiana Gas,
Indiana
Energy, or the Company since 1984. From October 1997 through June
1, 1999, Mr.
Ferger served as Chairman and Chief Executive Officer of Indiana
Energy and
Indiana Gas. Prior to that time and since January 1996, Mr. Ferger
served as
Chairman, President and Chief Executive Officer of Indiana Energy
and Indiana
Gas; and prior to that time and since 1987, Mr. Ferger was
President and Chief
Executive Officer of Indiana Energy and Indiana Gas.
Donald A. Rausch, age 70, has been a director of SIGECO,
SIGCORP, or the
Company since 1982. From 1990 through 1995, Mr. Rausch served as
Chairman,
President and Chief Executive Officer of UF Bancorp, Inc. in
Evansville,
Indiana. From 1985 through 1995, Mr. Rausch served as Chairman and
President
of Union Federal Savings Bank in Evansville, Indiana.
Ronald G. Reherman, age 65, has been a director of SIGECO,
SIGCORP, or the
Company since 1985. From January 1996 through March 2000, Mr.
Reherman served
as Chairman, President, and Chief Executive Officer of SIGCORP.
From September
1997 through March 2000, Mr. Reherman also served as Chairman of
SIGECO. Prior
to that time and since 1991, Mr. Reherman served as Chairman,
President and
Chief Executive Officer of SIGECO. Mr. Reherman is also a director
of Integra
Bank of Evansville, Indiana.
Richard W. Shymanski, age 64, has been a director of SIGECO,
SIGCORP, or
the Company since 1989. Mr. Shymanski is the retired Chairman and
Chief
Executive Officer of Harding, Shymanski & Company, Professional
Corporation,
Certified Public Accountants, in Evansville, Indiana.
Jean L. Wojtowicz, age 43, has been a director of Indiana
Energy or the
Company since 1996. Ms. Wojtowicz is President and founder of
Cambridge
Capital Management Corp., a consulting and venture capital firm.
Class III Directors--Term expiring 2003
John M. Dunn, age 63, has been a director of SIGCORP or the
Company since
1996. Mr. Dunn is President and Chief Executive Officer of Dunn
Hospitality
Group, a hotel development and management company. He is also
director of Old
National Bank of Evansville.
Niel C. Ellerbrook, age 52, has been a director of Indiana
Energy or the
Company since 1991. Mr. Ellerbrook is Chairman of the Board and
Chief
Executive Officer of the Company, having served in that capacity
since March
2000. Prior to that time and since June 1999, Mr. Ellerbrook
served as
President and Chief Executive Officer of Indiana Energy. Prior to
that time
and since October 1997, Mr. Ellerbrook served as President and
Chief Operating
Officer of Indiana Energy. From January through October 1997, Mr.
Ellerbrook
served as Executive Vice President, Treasurer and Chief Financial
Officer of
Indiana Energy; and prior to that time and since 1986, Vice
President,
Treasurer and Chief Financial Officer. Mr. Ellerbrook is a
director of Vectren
Utility
3
Holdings, Vectren Capital, and Vectren Enterprises. He is also a
director of
Fifth Third Bank, Indiana, and Deaconess Hospital of Evansville,
Indiana.
Anton H. George, age 41, has been a director of Indiana Energy
or the
Company since 1990. Mr. George is President and a director of
Indianapolis
Motor Speedway Corporation, an auto racing company. Mr. George is
also
President and a director of Hulman & Company, a manufacturer and
distributor
of baking powder, and a director of First Financial Corporation.
Andrew E. Goebel, age 53, has been a director of SIGCORP or the
Company
since 1997. Mr. Goebel is President and Chief Operating Officer of
the
Company, having served in that capacity since March 2000. Prior to
that time
and since April 1999, Mr. Goebel was President and Chief Operating
Officer of
SIGCORP. From September 1997 through April 1999, Mr. Goebel served
as
Executive Vice President of SIGCORP; and prior to that time and
since 1996, he
served as Secretary and Treasurer of SIGCORP. Mr. Goebel is a
director of
Vectren Utility Holdings, Vectren Capital, and Vectren
Enterprises. Mr. Goebel
is also a director of Old National Bancorp and Old National Bank.
Robert L. Koch II, age 62, has been a director of SIGECO,
SIGCORP, or the
Company since 1986. Mr. Koch is President and Chief Executive
Officer of Koch
Enterprises, Inc., a holding company comprised of manufacturers of
industrial
painting systems and wholesale distributors of heating and air
conditioning
equipment. Mr. Koch is also a director of Fifth Third Bancorp, and
Bindley
Western Industries, Inc.
James C. Shook, age 69, has been a director of Indiana Gas,
Indiana Energy,
or the Company since 1983. Mr. Shook is President of Coldwell
Banker / The
Shook Agency, Inc., a residential, commercial, and industrial real
estate
brokerage firm in Lafayette, Indiana. Mr. Shook is also a director
of
Crossmann Communities, Inc.
OTHER EXECUTIVE OFFICERS
Other executive officers of the Company are Jerome A. Benkert,
Jr., age 42,
Carl L. Chapman, age 45, and J. Gordon Hurst, age 57.
On March 31, 2000, Mr. Benkert was elected as Executive Vice
President and
Chief Financial Officer of the Company. Prior to March 31, 2000
and since
October 1, 1997, he was Executive Vice President and Chief
Operating Officer
of Indiana Energy's administrative services company. Mr. Benkert
has served as
Controller and Vice President of Indiana Gas. Mr. Benkert served
as Chief
Accountant, Secretary/Treasurer and was a member of the board of
directors of
Richmond Gas Corporation from February 1, 1986 to January 1, 1991.
Mr. Benkert
served as Assistant Treasurer for Indiana Gas from January 1, 1991
to October
1, 1993.
On March 31, 2000, Mr. Chapman was elected Executive Vice
President of the
Company. Prior to March 31, 2000 and since 1986, Mr. Chapman
served as
Assistant Treasurer of Indiana Energy. Since October 1, 1997, Mr.
Chapman has
served as President of IGC Energy, Inc., which has been renamed
Vectren Energy
Solutions, Inc. As of May 1, 1998, when he assumed this position
full-time, he
was again considered to be a named executive officer of Indiana
Energy. Mr.
Chapman served as President of ProLiance Energy, LLC
("ProLiance"), a gas
supply and energy marketing joint venture partially owned by
Vectren Energy
Solutions, Inc., an indirect, wholly owned subsidiary of the
Company, from
March 15, 1996, until April 30, 1998. Currently, Mr. Chapman is
the chairman
of ProLiance. From 1995 until March 15, 1996, he was Senior Vice
President of
Corporate Development for Indiana Gas. Prior to 1995 and since
1987, he was
Vice President of Planning for Indiana Gas.
On March 31, 2000, Mr. Hurst was elected Executive Vice
President of the
Company. Prior to March 31, 2000 and since 1966, Mr. Hurst has
served in
various positions with SIGECO. From 1997 to 2000, he was Executive
Vice
President and Chief Operating Officer; from 1992 to 1997, he was
Senior Vice
President and General Manager of Operations. Mr. Hurst has served
as Vice
President of Power and Gas Operations, Vice President of Gas and
Warrick
Operations, and Vice President of SIGECO. He has also served as
Director of
Gas Operations, Director of Power Production, and Director of
Electrical
Engineering.
4
COMMON STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE
OFFICERS
The following table sets forth the number of shares of common
stock of the
Company beneficially owned by the directors, the chief executive
officer, the
four additional named executive officers, and all directors and
executive
officers as a group, as of December 31, 2000. Except as otherwise
indicated,
each individual has sole voting and investment power with respect
to the
shares listed below.
Name of Individuals or Identity of Group Shares Owned
Beneficially (1)
---------------------------------------- ----------------
- -------------
John M. Dunn............................... 3,751
(2)(4)
Niel C. Ellerbrook......................... 71,837
(2)(6)
John D. Engelbrecht........................ 5,178
(3)(4)
Lawrence. A. Ferger........................ 144,487
(4)(7)
Anton H. George............................ 2,586,907
(1)(4)(5)
Andrew E. Goebel........................... 147,350
(2)(3)(6)(9)
Robert L. Koch II.......................... 5,267
(2)(3)(4)
William G. Mays............................ 1,829
(4)
J. Timothy McGinley........................ 4,434
(2)(4)
Donald A. Rausch........................... 20,446
(4)
Richard P. Rechter......................... 11,714
(2)(4)
Ronald G. Reherman......................... 224,845
(3)(4)(10)
James C. Shook............................. 62,921
(4)(8)
Richard W. Shymanski....................... 15,014
(3)(4)
James S. Vinson............................ 1,813
(3)(4)
Jean L. Wojtowicz.......................... 1,798
(2)(4)
Jerome A. Benkert, Jr...................... 15,656
(2)(6)
Carl L. Chapman............................ 27,012
(2)(6)
J. Gordon Hurst............................ 108,576
(2)(3)(6)(9)
All Directors and Executive Officers as a
Group (19 Persons)........................ 3,460,835
(1)
- --------
(1) Except for Anton H. George, no director or executive officer
owned
beneficially as of December 31, 2000, more than .33 percent
of common
stock of the Company. Excluding Anton H. George, all
directors and
executive officers owned beneficially an aggregate of 873,928
shares or
1.29 percent of Common Stock of the Company. The beneficial
ownership by
Anton H. George of 2,586,907 shares or 3.82% of Common Stock
of the
Company is discussed below in footnote (5).
(2) This amount does not include derivative securities held under
the
Company's Non-Qualified Deferred Compensation Plan. These
derivative
securities are in the form of phantom stock units which are
valued as if
they were Company Common Stock. The amounts shown for the
following
individuals include the following amounts of phantom units:
Name of Individuals or Identity of Group
Phantom Stock Units
---------------------------------------- ------
- -------------
John M. Dunn.........................................
1,348
Niel C. Ellerbrook...................................
48,515
Andrew E. Goebel.....................................
4,530
Robert L. Koch II....................................
395
J. Timothy McGinley..................................
851
Richard P. Rechter...................................
11,896
Jean L. Wojtowicz....................................
5,464
Jerome A. Benkert, Jr................................
14,811
Carl L. Chapman......................................
25,596
J. Gordon Hurst......................................
726
All Directors and Executive Officers as a Group
(10 Persons)........................................
114,132
(3) Includes shares held by spouse or jointly with spouse.
5
(4) Includes shares granted to non-employee directors under the
Company's
Directors Restricted Stock Plan, which are subject to certain
transferability restrictions and forfeiture provisions.
(5) Of the 2,586,907 shares, Mr. George has both voting and
investment power
with respect to 13,858 shares. Regarding the balance he may
be deemed to
share voting or investment power in his capacity as a member
of the
shareowner's board of directors or charitable donations
committee. Mr.
George disclaims beneficial interest in these shares.
(6) Includes shares granted to executives under the Company's
Executive
Restricted Stock Plan, which are subject to certain
transferability
restrictions and forfeiture provisions.
(7) Includes 144,053 shares held in a family limited partnership,
in which
Mr. Ferger is a general partner and owns limited partnership
interests.
Mr. Ferger shares voting and investment power over these
shares with his
wife.
(8) Includes 2,000 shares held by Mr. Shook's wife, and he
disclaims
beneficial interest therein.
(9) Includes shares which the named individual has the right to
acquire under
the SIGCORP, Inc. Stock Option Plan. See Table III for the
number of
shares that can currently be acquired.
(10) As of December 31, 2000, Mr. Reherman had the right to
acquire 242,908
shares under the SIGCORP, Inc. Stock Option Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Andrew E. Goebel is President and Chief Operating Officer of
the Company.
During 2000, Hasgoe Cleaning Systems, a cleaning company owned by
Mr. Goebel's
brother, performed certain cleaning services for the Company and
certain of
its subsidiaries and is expected to perform such services in 2001.
During
2000, the cost of such services was $174,372.88, which the Company
believes to
be a fair and reasonable price for the services rendered.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors of the Company had eight (8) meetings
during the
last fiscal year. No member attended fewer than 75 percent of the
aggregate of
board meetings and meetings of the respective committees of the
board of which
they are members.
The members of the Company's board of directors are elected to
various
committees. The standing committees of the board are: the
Executive Committee,
the Audit Committee, the Compensation Committee, and the Public
and
Environmental Affairs Committee.
The members of the Executive Committee are Niel C. Ellerbrook,
chairman,
Andrew E. Goebel, Anton H. George, Robert L. Koch II, John M.
Dunn, and
Richard P. Rechter. The Executive Committee acts on behalf of the
board of
directors of the Company when the board is not in session, except
on those
matters which require action of the full board of directors. The
Executive
Committee meets as required. There were two (2) meetings of the
committee
during the past fiscal year.
The members of the Audit Committee are Anton H. George,
chairman, John M.
Dunn, John D. Engelbrecht, J. Timothy McGinley, Dr. James S.
Vinson, and Jean
L. Wojtowicz. The functions of the Audit Committee are described
under "Report
of the Audit Committee" below. There were three (3) meetings of
the committee
during the past fiscal year.
The members of the Compensation Committee are Robert L. Koch
II, chairman,
J. Timothy McGinley, Donald A. Rausch, Richard P. Rechter, Richard
W.
Shymanski, and Jean L. Wojtowicz. None of the members is an
officer or
employee of the Company. The committee has the responsibility of
formulating
recommendations to the board as to the compensation to be paid to
the officers
of the Company and certain of its subsidiaries. If
6
the Company's At-Risk Compensation Plan is approved by the
shareholders at the
annual meeting (see "Approval of Company's At-Risk Compensation
Plan" below),
the committee will also administer that plan. There were five (5)
meetings of
the committee during the past fiscal year. See the "Report of the
Compensation
Committee" below.
The members of the Public and Environmental Affairs Committee
are Dr. James
S. Vinson, chairman, Lawrence A. Ferger, William G. Mays, Ronald
G. Reherman,
James C. Shook, and Richard W. Shymanski. The duties and powers of
the
committee are to review current policies, programs, procedures,
and processes
of the Company and its subsidiaries affected by public policy and
affecting
the environment. It also reviews reports from Company management
on public
policy and environmental matters and monitors compliance with, and
trends and
emerging policy developments in, business and environmental
regulation. In
addition, the committee reports to the board of directors on
public policy and
environmental issues affecting the Company and its subsidiaries.
There were
two (2) meetings of the committee during the past fiscal year.
DIRECTOR COMPENSATION
Non-employee directors of the Company receive combined fees
totaling
$20,000 per year for service on the board. The fees are paid in
the form of a
monthly retainer of $1,666.66. Committee chairs receive a cash
retainer of
$2,000 per year, which is paid in the form of a monthly retainer
of $166.66.
Non-employee directors also receive a fee of $1,000 for each
Company board
meeting attended. Each non-employee member of a committee of the
board is paid
a fee of $1,000 for each meeting of the committee attended, and
each non-
employee chair of a committee is paid an additional fee of $500
for each
meeting attended.
On October 1, 2000, each non-employee member of the board
received a grant
of 434 shares of restricted stock under the Vectren Corporation
Directors
Restricted Stock Plan (formerly the Indiana Energy, Inc. Directors
Restricted
Stock Plan). The terms of that grant provide that, subject to
certain limited
exceptions, the restrictions will lift on October 1, 2003. At that
time, if
the director continues serving on the board he or she will receive
the shares
without restrictions.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires
the Company's officers, directors, and persons who own more than
10% of the
Company's common stock to file reports of ownership and changes in
ownership
concerning the common stock with the Securities and Exchange
Commission, and
to furnish the Company with copies of all Section 16(a) forms they
file. Based
solely on the Company's review of the Section 16(a) filings that
the Company
has received, the Company believes that all filings required to be
made under
Section 16(a) during 2000 were timely made.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee oversees the Company's financial reporting
process on
behalf of the board of directors. The committee consists of six
members, all
of whom are independent from the Company and the Company's
management in
accordance with the New York Stock Exchange's listing
requirements. The
committee met three (3) times during the past fiscal year, and
operates under
a written Audit Committee Charter adopted by the board of
directors of the
Company on March 31, 2000, a copy of which is included as Appendix
A to this
proxy statement. Under the Audit Committee Charter, the committee
has the
authority and the responsibility to select, evaluate, and replace
the
independent accountants, to review the scope, conduct, and results
of audits
performed, and to make inquiries as to the differences of views,
if any,
between such independent accountants and officers and employees of
the Company
and subsidiaries with respect to the
7
financial statements and records and accounting policies,
principles, methods
and systems. It further considers whether the provision by the
independent
auditors of services for the Company in addition to the annual
audit
examination is compatible with maintaining the independent
auditors'
independence. Finally, the committee reviews the policies and
guidelines of
the Company and subsidiaries designed to ensure the proper use and
accounting
for corporate assets, and the activities of the Company's Internal
Audit
department.
In fulfilling its oversight responsibilities, the committee
reviewed the
audited financial statements in the Annual Report on Form 10-K
with
management, including a discussion of the quality and
acceptability of the
Company's financial reporting and controls. The committee reviewed
with the
independent auditors, who are responsible for expressing an
opinion on the
conformity of those audited financial statements with generally
accepted
accounting principles, their judgments as to the quality and the
acceptability
of the Company's financial reporting and such other matters as are
required to
be discussed with the committee under generally accepted auditing
standards.
In addition, the committee has discussed with the independent
auditors the
auditors' independence from management and the Company, including
the matters
in the auditors' written disclosures required by the Independence
Standards
Board.
The committee also discussed with the Company's internal and
independent
auditors the overall scope and plans for their respective audits.
The
committee meets periodically with the internal and independent
auditors, with
and without management present, to discuss the results of their
examinations,
their evaluations of the Company's internal controls, and the
overall quality
of the Company's financial reporting.
In reliance on the reviews and discussions referred to above,
the committee
recommended to the board of directors that the audited financial
statements be
included in the Annual Report on Form 10-K for the fiscal year
ended December
31, 2000 for filing with the Securities and Exchange Commission.
The committee
also evaluated and recommended to the board of directors the
reappointment of
the Company's independent auditors for fiscal year 2001.
Audit Committee
Anton H. George,
Chairman
John M. Dunn
John D. Engelbrecht
J. Timothy McGinley
James S. Vinson
Jean L. Wojtowicz
EXECUTIVE COMPENSATION AND OTHER INFORMATION
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee is responsible for reviewing and
approving all
elements of the total compensation program for officers of the
Company and
certain of its subsidiaries and serves as the administrator of the
annual and
long-term incentive plan. In the future the committee will also
administer the
Company's "At-Risk Compensation Plan" which will provide for
annual and long-
term incentives. The "At-Risk Compensation Plan" is attached as
Appendix B to
this document for review and approval by shareholders. The
committee is also
responsible for monitoring the Company's executive compensation
programs to
ensure that they are aligned with the Company's business
strategies and
financial goals. The committee is composed entirely of
independent, non-
employee directors.
A. Executive Compensation Policy.
The Company's total compensation program for officers includes
base
salaries, an annual incentive program, and long-term incentives.
The
committee's primary objective is to achieve above-average
performance by
providing the opportunity to earn above-average total compensation
(base
salary, at-risk annual and long-term
8
incentives) for above-average performance. Each element of total
compensation
is designed to work in concert. The total program is designed to
attract,
motivate, reward and retain the broad-based management talent
required to
serve customer, employee, and shareholder interests. The Company
believes that
the program also motivates the Company's officers to acquire and
retain
appropriate levels of stock ownership and is competitive with
programs offered
by comparable organizations of similar revenue size. It is the
opinion of the
committee that the total compensation earned by Company officers
in 2000
achieves these objectives and is fair and reasonable. Each aspect
of the total
compensation program is discussed in greater detail below.
B. Components of Executive Compensation.
Base Salary
Individual salaries are set based on market comparisons to
actual pay for
comparable positions within the utility industry, and industry in
general. In
determining actual salaries, the committee takes into
consideration individual
performance, experience, potential, and changes in executive
responsibilities.
Establishing industry-based salaries provides an objective
standard by which
to judge the reasonableness of the Company's salaries, maintains
the Company's
ability to compete for and retain qualified executives, and
ensures that
internal responsibilities are properly rewarded.
Annual Incentive Compensation
All of the Company's officers have a significant portion of
their total
compensation at risk. Participation in the annual incentive plan,
which
includes the chief executive officer, is extended to those
positions that play
key roles in achieving annual financial and operating objectives.
Annual
incentive opportunities are also based on periodic reviews of
prevailing
practices for comparable positions among similar companies of
comparable size.
The potential incentive award is determined annually by non-
employee directors
and is based upon a percentage of each participant's base salary.
During the
past year, target annual incentive opportunities for executive
officers,
excluding the chief executive officer, ranged from 25 to 50
percent of salary.
Amounts actually paid under the annual incentive plans during
2000 relate
to:
. The performance for the first half of the 2000 fiscal year for
Indiana
Energy up to the effective date of the merger on March 31,
2000.
. The performance for SIGCORP for 1999 and the 1st quarter of
2000.
For Indiana Energy, prior to the start of the fiscal year, its
compensation
committee would recommend to the board of directors, and the non-
employee
directors would determine, minimum, target, and maximum corporate
goals to be
used in the incentive plan. The specific metric used was the
consolidated
return on equity as compared to the average return on equity of
peer group
companies, which consisted of a group of comparable energy
companies. Target
performance levels were set in excess of peer group performance in
order to
ensure linkage between financial performance and executive
rewards. Depending
upon Indiana Energy's financial performance, the size of this
component could
range from zero to the maximum established for each participant in
the plan.
The second and smaller performance component was based upon
each
executive's achievement of individual goals, which were consistent
with
Indiana Energy's overall objectives and which were established
prior to the
beginning of the fiscal year. Individual performance was monitored
and
evaluated subjectively throughout the fiscal year. Overall
performance was
measured after the end of the fiscal year by the chief executive
officer.
Among the executive officers, for the amounts actually paid during
the past
fiscal year, no person had more than 30 percent of their total
potential
incentive under the Incentive Plan dependent upon the attainment
of individual
objectives.
For executives of the former SIGCORP, the annual incentives
paid in 2000
consisted of awards for the calendar year 1999 and for the first
quarter of
2000 prior to the merger of Indiana Energy and SIGCORP into the
9
Company. For 1999, all senior corporate SIGCORP executives were
measured in
part on corporate financial performance as measured by earnings
per share
("EPS"). In addition, officers were measured on one of two bases:
. How well they achieved specific and measurable progress toward
identified
strategic objectives; or
. Performance against specific operational goals which were:
. overall customer satisfaction index;
. total electric O&M per kWh sold;
. overall equivalent availability; and
. safety record.
For the 2000 partial performance year, all SIGCORP officers
were measured
either on the basis of EPS only or a combination of EPS and the
four
operational measures listed above.
The amounts payable under the Company's incentive plan
commencing on April
1, 2000, will not be determined and paid until early in 2001 and
accordingly
will be reflected in next year's proxy statement as part of
calendar year 2001
compensation.
Long-Term Incentive Compensation
The purpose of the long-term incentive plan is to retain and
motivate the
Company's principal officers to increase their incentive to work
toward the
attainment of the Company's long-term growth and profit
objectives. Under the
plan, the committee recommends to the board of directors, and the
non-employee
directors determine, the executive officers, as well as other
principal
officers, to whom grants will be made and the percentage of each
officer's
base salary to be used for determining the number of shares or
options to be
granted. Like the potential cash payment that may be received
under the annual
incentive plan, this component of total compensation is also
performance
driven and totally at-risk.
In 2000 the committee authorized and the board of directors
approved grants
of restricted stock to each of the Company's executives pursuant
to the former
Indiana Energy restricted stock plan, which remained in effect
following the
merger creating the Company. To be eligible for a grant, the
executive must
consent in writing to observe the restrictions imposed on the
shares. The
shares may not be sold, transferred, pledged, or assigned until
such
restrictions are lifted.
Pursuant to this plan these contingent grants of restricted
stock are
subject to adjustment at the end of the performance period based
on the
Company's performance relative to a peer group. For each measuring
period
under the plan, depending upon the total return provided to the
Company's
shareholders relative to the total return provided by each of the
companies in
the peer group, there are three possible outcomes. If the
Company's total
return places it in the bottom quartile, all of the shares are
forfeited. If
the Company's total return places it in the second or third
quartiles, the
original grant is vested, subject to continuing employment by the
executives
during the remaining period of restriction. If the Company's total
return
places it in the top quartile, the original grant is doubled and
vested,
subject to continuing employment by the executives during the
remaining period
of restriction.
For the grant authorized on October 1, 2000, the measurement
period for
each third of the grant will commence on October 1, 2000, and
conclude on
December 31, 2002, 2003, and 2004. Upon conclusion of each
measurement period
and subsequent adjustment to the number of shares contingently
granted, an
additional 1 year employment restriction is imposed.
It is the opinion of the committee that the long-term plan
meets its
objective of providing executive officers, as well as other
principal
officers, with the appropriate long-term interest in maximizing
shareholder
value. A participant's increased level of equity in the Company is
contingent
upon the additional enhancement of
10
shareholder value relative to the performance of companies in the
peer group.
In addition, the vesting restrictions provide an incentive for all
plan
participants to remain with the Company.
C. Chief Executive Officer Compensation.
The compensation of Niel C. Ellerbrook, Chairman and Chief
Executive
Officer, consists of the same components as for other executive
officers,
namely base salary, an at-risk payment under the annual incentive
plan, and an
at-risk long-term incentive.
In establishing Mr. Ellerbrook's total compensation for 2000,
the committee
considered the total compensation of other chief executive
officers in
comparable companies, the financial and business performance of
the Company,
and a subjective evaluation of the leadership role provided by Mr.
Ellerbrook.
Mr. Ellerbrook's base salary was established on the same basis
as the other
Company officers. This basis was described previously in this
document.
Mr. Ellerbrook's payment received under the annual incentive
plan during
2000 was based entirely upon the financial performance of Indiana
Energy as
measured by its consolidated return on equity relative to the
average return
on equity of companies in a peer group in accordance with Indiana
Energy's
former plan. This method of measurement ensured the linkage of
this aspect of
Mr. Ellerbrook's compensation to Indiana Energy's performance. For
the first
half of Indiana Energy's fiscal year 2000, which began on October
1, 1999, Mr.
Ellerbrook was eligible to receive a maximum annual incentive of
60% of base
pay.
Mr. Ellerbrook's receipt of restricted shares under the long-
term incentive
plan stock plan is likewise directly linked to the Company's
performance.
Whether stock is received and, if so, in what amount, will depend
upon the
measurement of the total return provided to the Company's
shareholders in
comparison to the total return provided to the shareholders of
companies in
the peer group as previously described.
For the same reasons expressed above with respect to the
conclusion
regarding the appropriateness of the total compensation provided
other
executive officers, it is the opinion of the committee that Mr.
Ellerbrook's
total compensation is reasonable and appropriate.
D. Share Ownership.
The Company's share ownership policy requires officers to meet
share
ownership targets. The program includes these key features:
. Participants have a share ownership target based on a multiple
of their
base salary, ranging from two times base salary for certain
participants
to five times for Mr. Ellerbrook.
. As an incentive to maximize shareholder value, a participant
may count
toward his or her target the value of owned shares, including
phantom
units of Company stock in the Company's Non-Qualified Deferred
Compensation Plan, the value of vested "in the money" stock
options and
the market value of restricted shares, with market value based
on the
market price of the Company's common shares.
. The committee expects participants to meet their targets
within five
years and to make ratable progress each year.
E. Compensation Consultant, Termination Benefits Agreements And
Deductibility
Of Executive Compensation.
To assist the committee, the services of an independent
compensation
consultant are utilized. The consultant assists by evaluating the
total
compensation system relative to the compensation systems employed
by
comparable companies. The consultant also provides an additional
measure of
assurance that the system is a reasonable and appropriate means to
achieve the
Company's objectives.
11
As described elsewhere under the heading "Employment
Agreements," the
Company has entered into employment agreements with each of the
executive
officers. These agreements do not affect in any manner the
recommendations of
the committee and the determinations by the non-employee members
of the board
with respect to the total compensation provided the executive
officers.
In 1993, Congress enacted Section 162(m) of the Internal
Revenue Code
("Code"), applicable to the individual executives named in the
Summary
Compensation Table, that disallows corporate deductibility for
"compensation"
paid in excess of $1 million unless the compensation is payable
solely on
achievement of an objective performance goal. The "At-Risk
Compensation Plan"
attached to this document has been structured to satisfy the
requirements of
162(m). Consequently, the committee does not anticipate that in
the future the
compensation paid to executive officers in the form of base
salaries and
incentive compensation will be non-deductible under Section 162(m)
of the
Code.
Compensation Committee
Robert L. Koch II, Chair
J. Timothy McGinley
Donald A. Rausch
Richard P. Rechter
Richard W. Shymanski
Jean L. Wojtowicz
12
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
The functions and members of the Compensation Committee are set
forth above
under "Meetings And Committees of the Board of Directors." None of
the members
of the Compensation Committee has served as an officer or employee
of the
Company or a subsidiary of the Company.
COMPENSATION
The following tabulation shows for years 1998, 1999, and 2000,
the
compensation paid by the Company and its subsidiaries to each of
the five most
highly compensated executive officers of the Company and its
subsidiaries in
all capacities in which they serve.
TABLE I
SUMMARY COMPENSATION TABLE
(a) (b) (c) (d) (e) (g)
(h) (i)
Long-
term Compensation
Annual Compensation
Payouts
---------------------------- -------
- ---------------------
All Other
Other Annual
Options LTIP Compen-
Name and Principal Salary Bonus Compensation (#
Shares) Payouts sation
Position Year ($) ($) (1) ($) (2) (3)
($) (4) ($) (5)
- ------------------ ---- ------- ------- ------------ -------
- --- ------- ---------
Niel C. Ellerbrook...... 2000 470,873 94,357 19,063 --
496,433 399,126
Chairman and Chief 1999 363,946 203,829 19,933 --
214,863 51,286
Executive
Officer 1998 284,054 107,508 19,658 --
- -- 21,053
Andrew E. Goebel........ 2000 326,143 137,000 6,720 --
- -- 17,638
President and Chief 1999 275,014 80,156 --
49,973 -- 13,023
Operating
Officer 1998 220,436 65,625 --
9,340 -- --
J. Gordon Hurst......... 2000 259,118 99,089 3,148 --
- -- 12,333
Executive Vice- 1999 217,048 62,500 --
33,390 -- 8,762
President, President
Utility Group, 1998 196,637 59,375 --
2,631 -- --
President SIGECO
Carl L. Chapman......... 2000 244,437 48,326 7,098 --
218,066 220,132
Executive Vice 1999 214,615 119,879 9,589 --
153,335 31,249
President
President Vectren 1998 87,115 -- 9,768 --
- -- 7,406
Enterprises
Jerome A. Benkert Jr.... 2000 208,943 31,422 5,347 --
163,389 159,550
Executive Vice 1999 164,692 75,405 5,807 --
37,207 18,492
President and
Chief Financial Officer 1998 137,289 42,970 4,721 --
- -- 11,166
For years 1999 and 2000, earnings are shown on a calendar year
basis. For
1998, Mr. Goebel's and Mr. Hurst's earnings are shown on a
calendar year
basis. For Mr. Ellerbrook, Mr. Chapman, and Mr. Benkert, 1998
earnings are
shown for the fiscal year ending September 30, 1998, as reported
in the
Indiana Energy, Inc. 1999 proxy statement. For the 3-month period
beginning
October 1, 1998 and ending December 31, 1998, the earnings for Mr.
Ellerbrook,
Mr. Chapman, and Mr. Benkert are reported in the following table:
13
TABLE I(A)
EARNINGS FOR FORMER INDIANA ENERGY EXECUTIVES,
OCTOBER 1, 1998 TO DECEMBER 31, 1998
(a) (c) (d) (e) (h)
(i)
Other Annual Long-term
All Other
Salary Bonus Compensation Compensation
Compensation
Name ($) ($) (1) ($) (2) Payouts ($)
(3) ($) (2)
- ---- ------ ------- ------------ --------------
- - ------------
Niel C. Ellerbrook.... 80,769 174,132 5,701 --
3,387
Carl L. Chapman....... 51,154 28,500 3,105 --
3,473
Jerome A. Benkert Jr.. 39,039 65,661 1,443 --
1,979
- --------
(1) The amounts shown in this column are payments under Indiana
Energy's
Annual Management Incentive Plan (for Mr. Ellerbrook, Mr.
Chapman, and Mr.
Benkert) and the SIGCORP Corporate Performance Plan (for Mr.
Goebel and
Mr. Hurst) which were discussed above in Part B, relating to
"Annual
Incentive Compensation," and Part C of the Compensation
Committee Report.
The amounts paid to Mr. Goebel and Mr. Hurst in 1998 and 1999
are
attributable to SIGCORP's performance in the previous year.
For Mr.
Ellerbrook, Mr. Chapman, and Mr. Benkert, bonus payments shown
in 1998 are
attributable to Indiana Energy's performance for the 1997
fiscal year and
the bonus shown in 1999 is attributable to Indiana Energy's
performance
for the 1999 fiscal year. The bonus earned for the 1998 fiscal
year is
shown in the supplementary table.
At the close of the merger of Indiana Energy and SIGCORP into
the Company,
the existing annual incentive programs of the two companies were
terminated
and a "stub year" payout was made based on the portion of the
performance
cycle that had passed. For Indiana Energy, a prorated payout for
six
months, October 1, 1999 to March 31, 2000 was made. For Mr.
Ellerbrook, Mr.
Chapman, and Mr. Benkert, these bonus payments are listed in
year 2000 in
the table. For the SIGCORP Performance Plan, a prorated payout
for three
months, January 1, 2000 to March 31, 2000 was made. For Mr.
Goebel, this
stub year bonus was $29,500. For Mr. Hurst, the stub year bonus
was
$19,688. The balance of the amount shown for 2000 (for Mr.
Goebel,
$107,500; for Mr. Hurst, $79,401) is attributable to SIGCORP's
performance
for the period January 1 to December 31, 1999.
The amounts earned in the period beginning April 1, 2000 and
ending
December 31, 2000 under the Vectren Corporation At-Risk
Incentive Plan have
not been determined and approved for distribution by the
Company's
Compensation Committee.
(2) The amounts shown in this column are dividends paid on
restricted shares
issued under the Indiana Energy Executive Restricted Stock
Plan, which was
discussed above in Part B, relating to "Long-Term Incentive
Compensation,"
and C of the Compensation Committee Report. Note that the
Stock Plan was
adopted by Vectren on March 31, 2000. Mr. Goebel and Mr. Hurst
did not
participate in the Stock Plan prior to March 31, 2000.
(3) The shares shown in this column have been restated to reflect
the
conversion ratio of 1.333 described above in Section titled
"Voting
Securities."
(4) The amounts shown in this column represent the value of shares
issued
under the Stock Plan and for which restrictions were lifted in
each year.
At the time of the merger, Indiana Energy executives had
restricted stock
performance grants relating to open performance measurement
periods.
(Under normal circumstances, at the close of each performance
cycle,
Indiana Energy's Total Shareholder Return would have been
compared to a
peer group and the number of restricted shares granted would
have been
adjusted in accordance with the plan.) The Board concluded
that it would
be difficult, if not inappropriate, to use Vectren's
performance to make
adjustments to the prior grants. Based upon the frequency of
past
performance grants, the Board awarded 75% of the present value
of the
potential performance grants. The value of these grants is
included in the
2000 row. Grants related to this closing cycle are: Mr.
Ellerbrook--10,758
shares, $213,493; Mr. Chapman--4,926 shares, $97,756; Mr.
Benkert--3,828
shares, $75,967. The balance of the value in the 2000 row
reflects stock
from other grant cycles for which restrictions were lifted in
2000
coincident with the consummation of the merger.
14
For further information on the Restricted Stock Plan, see the
discussion
above in Part B relating to "Long-Term Incentive Compensation,"
and C of
the Compensation Committee Report.
(5) The amount shown in this column represents several
compensation elements.
a) Relocation--As a result of the Vectren merger, many employees
of Indiana
Energy were asked to move to Evansville, Indiana, the new
headquarters
of Vectren Corporation. As part of a relocation program,
relocating
employees were offered a "relocation bonus" equal to 25% of
their annual
base salary and other allowances related to the move. Of the
five
officers discussed in this section, three relocated and,
therefore,
received income related to relocation: Mr. Ellerbrook--
$204,797, Mr.
Chapman--$114,919, Mr. Benkert--$86,817.
b) Change-in-Control Walk-Away Provisions--Several Indiana
Energy officers
had change-in-control agreements at the time of the merger.
These
agreements contained "walk-away" provisions that would have
allowed
officers to exercise their agreements anytime within a
thirteen-month
period following the close of the Vectren merger. The Board
felt it was
important to maintain the continuity of the officer group
through the
merger process and asked that all change-in-control
agreements be
terminated at the close of the merger and new agreements be
put in
place. Recognizing the value of the walk-away provision, the
Board felt
that officers should be compensated for losing the right to
exercise the
provision. A settlement equal to 25% of the officers' annual
base salary
was made. Of the five officers discussed in this section,
three received
these settlements: Mr. Ellerbrook--$122,500, Mr. Chapman--
$62,500, Mr.
Benkert--$55,000. These amounts were paid in 2000.
c) For Mr. Ellerbrook, Mr. Chapman, and Mr. Benkert, the balance
of this
column reflects Company contributions to the retirement
savings plan
(Ellerbrook: 2000--$10,200, 1999--$9,600, 1998--$6,522, last
quarter of
1998--$1,794; Chapman: 2000--$10,200, 1999--$9,600, 1998--
$2,689, last
quarter of 1998--$1,883, Benkert: 2000--$10,200, 1999--
$9,600, 1998--
$7,022, last quarter of 1998--$1,849), the dollar value of
insurance
premiums paid by, or on behalf of, the Company and its
subsidiaries with
respect to split-dollar life insurance for the benefit of
executive
officers (Ellerbrook: 2000--$24,496, 1999--$18,746, 1998--
$14,530;
Chapman: 2000--$8,880, 1999--$8,589, 1998--$4,717; Benkert:
2000--
$4,705, 1999--$4,423, 1998--$4,144), credits for flexible
spending
accounts, wellness, and perfect attendance (Ellerbrook: 2000-
- -$75, 1999
--$579, last quarter of 1998--$2.89; Chapman: 2000--$150,
1999--$438;
Benkert: 2000--$196, 1999--$196, last quarter of 1998--$53),
deferred
compensation contributions to restore employer contributions
to the
Company Retirement Savings Plan (Ellerbrook: 2000--$18,174,
1999--
$12,237, 1998 Chapman: 2000--$4,507, 1999--$3,277; Benkert:
2000--
$2,632, 1999--$282), reimbursement for taxable expenses
(Ellerbrook:
2000--$12,884, 1999--$10,124, last quarter of 1998--$1,590;
Chapman:
2000--$18,977, 1999--$9,345, last quarter of 1998--$1,590;
Benkert:
1999--$3,991, last quarter of 1998--$77.71), and non-cash
earnings
(Ellerbrook: 2000--$6,000).
d) For Mr. Goebel and Mr. Hurst, this column contains income
related to
reimbursement for club dues (Goebel: 2000--$954, 1999--
$1,540; Hurst:
2000--$1,074, 1999--$1,190), imputed earnings from automobile
usage
(Goebel: 2000--$961, 1999--$6,683; Hurst: 2000--$621, 1999--
$2,772), and
Company contributions to the retirement savings plan (Goebel:
2000--
$10,184, 1999--$4,800; Hurst: 2000--$5,100, 1999--$4,800). In
addition,
at the close of the merger, officers coming from SIGCORP were
no longer
furnished with company automobiles (Indiana Energy executives
were not
furnished with company automobiles). As a result of the
termination of
this perquisite, officers with company cars were given a one-
time
automobile buyout of $5,538.
15
TABLE II
OPTION GRANTS IN LAST FISCAL YEAR
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
Number of % of Total Exercise
or for Option Term
Shares Options Granted Base
Price ($)
Underlying to Employees (Per
Share) Expiration ------------------
Name Options Granted in Fiscal Year ($)
Date 5% 10%
---- --------------- --------------- ---------
- -- ---------- ------------------
Niel C. Ellerbrook...... 0 0 $ 0
N/A $ 0 $ 0
Andrew E. Goebel........ 0 0 $ 0
N/A $ 0 $ 0
J. Gordon Hurst......... 0 0 $ 0
N/A $ 0 $ 0
Carl L. Chapman......... 0 0 $ 0
N/A $ 0 $ 0
Jerome A. Benkert, Jr... 0 0 $ 0
N/A $ 0 $ 0
TABLE III
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES FROM 1/1/2000 TO
12/31/2000
Number of
Unexercised Value of In-The-Money
Shares Value Options As of
12/31/00 Options
Acquired Realized ------------------
- ------- -------------------------
Name on Exercise ($) Exercisable
Unexercisable Exercisable Unexercisable
- ---- ----------- ---------- ----------- ------
- ------- ----------- -------------
Niel C. Ellerbrook...... 0 $ 0 0
0 $ 0 $ 0
Andrew E. Goebel........ 3,895 $88,320.00 99,094
24,987 $745,818.35 $134,305.13
J. Gordon Hurst......... 0 $ 0 93,354
16,695 $809,175.50 $ 89,735.63
Carl L. Chapman......... 0 $ 0 0
0 $ 0 $ 0
Jerome A. Benkert, Jr... 0 $ 0 0
0 $ 0 $ 0
TABLE IV
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
Estimated Future Payouts Under
Non-
Stock Price-Based Plans
------
- -------------------------
(a) (b) (c)
(d) (e) (f)
Performance or
Maximum
Number of Other Periods
Threshold Target Number of
Shares; Units or Until Maturation Number
of Number of Shares
Other Rights (1) or Payout (2) Shares
(3) Shares (4) (5)
---------------- ---------------- ------
- ---- ---------- ---------
Niel C. Ellerbrook...... 50,391 0
50,391 100,782
Andrew E. Goebel........ 26,354 0
26,354 52,708
J. Gordon Hurst......... 12,346 0
12,346 24,692
Carl L. Chapman......... 17,133 0
17,133 34,266
Jerome A. Benkert, Jr. . 12,950 0
12,950 25,900
- --------
(1) This column shows the restricted shares awarded during fiscal
year 2000
under the Stock Plan. The manner for determining the awards,
and other
terms and conditions of the Stock Plan, are discussed in Part
B of the
Compensation Committee Report relating to "Long-Term Incentive
Compensation." The market value of the shares on the dates of
the grants
is determined according to a formula in the Stock Plan based
on an average
price over a period of time preceding the grant. Dividends are
paid
directly to the holders of the stock.
(2) As discussed above in Part B of the Compensation Committee
Report relating
to "Long-Term Incentive Compensation," for the grant
authorized on October
1, 2000, the measurement period for each third of the
16
grant will commence on October 1, 2000, and conclude on
December 31, 2002,
2003, and 2004. Upon conclusion of each measurement period and
subsequent
adjustment to the number of shares contingently granted, an
additional 1
year employment restriction is imposed. The granting of
additional shares,
if any, and the application of forfeiture provisions depends
upon certain
measurements of the Company's total return to shareholders in
comparison to
the total return to shareholders of a predetermined group of
comparable
companies.
(3) The initial grant shares, which are the same as the total
number of shares
in column (b), are also set forth in column (e), are subject
to
forfeiture. If the Company's performance compared to the peer
group during
this measurement period places it in the bottom quartile, the
executive
officers will forfeit all of the shares granted for this
period.
(4) The initial grant shares, which are the same as the total
number of shares
in column (b), are presented in this column. If the Company's
performance
compared to the peer group during this measurement period
places it in the
middle two quartiles, these shares will vest.
(5) Under the Stock Plan, if the Company's performance compared to
the peer
group during the initial measuring period places it in the top
quartile,
an additional performance grant equal to the original grant
will be made.
In that event, the shares shown in column (e) will be doubled.
RETIREMENT SAVINGS PLAN
During the past fiscal year, the Company sponsored the
Retirement Savings
Plan which covers both bargaining and non-bargaining employees.
Effective as
of July 1, 2000, retirement savings plans maintained by SIGCORP
and its
subsidiaries were merged with and into the Company's Retirement
Savings Plan.
In general, the Company's Retirement Savings Plan permits
participants to
elect to have not more than 19 percent of their qualified
compensation
(subject to certain maximums imposed on highly compensated
employees by the
Internal Revenue Code) invested on a tax-deferred basis in shares
of the
Company's common stock or various investment funds. Non-bargaining
participants in the Savings Plan who were employees of Indiana
Energy or its
subsidiaries before the merger with the Company have matching
Company
contributions made to the plan on their behalf equal to 100
percent of their
contributions not in excess of 6 percent of their individual
redirected
compensation; non-bargaining participants in the Savings Plan who
were not
employees of Indiana Energy or its subsidiaries before the merger
with the
Company have matching Company contributions made to the plan on
their behalf
equal to 50 percent of their contributions not in excess of 6
percent of their
individual redirected compensation. Also, a 3.0 percent lump sum
Company
contribution is made to the Savings Plan for all eligible non-
bargaining
employees at the end of each year who were not employees of
Indiana Energy or
its subsidiaries before the merger and who did not elect to stay
in the SIGECO
defined benefit formula as it existed before the merger.
The Summary Compensation Table shows the value of contributions
made to the
plan for executive officers in the column marked "All Other
Compensation."
RETIREMENT PLANS
During the past fiscal year, the Company sponsored a defined
benefit
pension plan covering full-time employees of the Company and
certain of its
subsidiaries who meet certain age and service requirements. The
Company's plan
covers salaried employees, including executive officers, and
provides fixed
benefits at normal retirement age based upon compensation and
length of
service, the costs of which are fully paid by the employer and are
computed on
an actuarial basis. The pension plan also provides for benefits
upon death,
disability and early retirement under conditions specified
therein. The
remuneration covered by this plan includes all compensation for
regular work
periods (including overtime and bonuses). As of July 1, 2000, the
retirement
plans maintained by SIGECO were merged into, and became part of,
the Company's
defined benefit pension plan.
17
During the past fiscal year, the Company had a supplemental
pension plan
covering certain of the principal officers of the Company and its
subsidiaries. The supplemental pension plan provides fixed
benefits at normal
retirement age based upon compensation and is computed on an
actuarial basis.
The supplemental pension plan also provides for benefits upon
death,
disability and early retirement under conditions specified
therein, including
service requirements. This supplemental pension plan also provides
a reduced
benefit to a participant who voluntarily terminates his employment
with a
participating employer (which may consist of the Company or one or
more of its
subsidiaries) before normal retirement age (65), but following a
change in
control of the Company. The remuneration covered by the
supplemental pension
plan includes all compensation for regular work periods (including
incentive
payments and other forms of additional compensation).
Upon retirement at or after age 65, any participant in the
supplemental
pension plan will, in general, be entitled to an annual pension
for life
which, when added to primary Social Security benefits, defined
benefit pension
plan benefits, described above, and benefits under the Retirement
Savings Plan
attributable to contributions by participants' employers, will
equal
approximately 65 percent of the participant's average annual
compensation
during the 60 consecutive calendar months immediately preceding
the
participant's retirement date. The amounts paid under the
supplemental pension
plan are unfunded and are paid from the general assets of the
Company.
The following table illustrates the estimated normal annual
retirement
benefits payable to a covered participant retiring at age 65 under
the
supplemental pension plan, under the defined benefit plan based on
the
specified remuneration, under the Retirement Savings Plan
attributable to
contributions made by the Company and, as pertinent, one or more
of its
subsidiaries, and including an estimated primary Social Security
Benefit. The
compensation included in the Summary Compensation Table under
salary and
payments under the annual Incentive Plan qualifies as remuneration
for
purposes of these plans. The amounts shown do not reflect
reductions, which
would result from joint and survivor elections.
PENSION PLAN TABLE
Years of
Service(1)
----------------------
- -------------
Covered
30
Remuneration 15 20
25 or more
------------ -------- -------- ----
- ---- --------
$125,000............................ $ 40,625 $ 54,167 $
67,708 $ 81,250
150,000............................ 48,750 65,000
81,250 97,500
175,000............................ 56,875 75,833
94,792 113,750
200,000............................ 65,000 86,667
108,333 130,000
225,000............................ 73,125 97,500
121,875 146,250
250,000............................ 81,250 108,333
135,417 162,500
300,000............................ 97,500 130,000
162,500 195,000
350,000............................ 113,750 151,667
189,583 227,500
400,000............................ 130,000 173,333
216,667 260,000
450,000............................ 146,250 195,000
243,750 292,500
500,000............................ 162,500 216,667
270,833 325,000
- --------
(1) The compensation covered by the plans includes the salary and
incentive
payments shown on the Summary Compensation Table. Years of
service are not
used in calculating the benefit amount under the Unfunded
Supplemental
Retirement Plan. The Supplemental plan above would be offset
by Social
Security and benefits under the defined benefit plan benefits
and
Retirement Savings Plan attributable to contributions made by
the Company
and, as pertinent, one or more of its subsidiaries.
(2) Although the benefit attributable to the Savings Plan may be
paid in a
single lump sum payment, it has been converted to an annual
benefit for
purposes of this table. The estimated aggregate annual pension
plan
benefit may be greater than the amounts in the table to the
extent that
the Savings Plan benefit, after conversion to an annual
benefit and when
added to the annual benefit under the applicable defined
benefit
18
plan, exceeds the amount specified in the table. Since the
Savings Plan has
only been in effect for a few years, it is unlikely in the near
future that
the aggregated Savings Plan benefit and defined benefit plan
benefits will
exceed the amount specified in the table.
STOCK OPTION PLAN
Prior to the merger with the Company, SIGCORP maintained its
1994 Stock
Option Plan. Effective as of the merger, each unexpired and
unexercised option
to purchase SIGCORP common shares was automatically converted into
an option
to purchase the number of the Company's common shares that could
have been
purchased under the original option multiplied by 1.333. The
exercise price
per share of Company common stock under the new options is equal
to the
original per share option exercise price divided by 1.333. To
date, a total of
999,752 options have been granted. Since the merger, no additional
options
have been granted under the 1994 Stock Option Plan, nor does the
Company
intend to issue any additional options under this plan.
EMPLOYMENT AGREEMENTS
The Company, with the approval of the board of directors, has
entered into
employment agreements with Messrs. Niel C. Ellerbrook, Andrew E.
Goebel,
Jerome A. Benkert, Jr., Carl L. Chapman, Ronald E. Christian,
Timothy M.
Hewitt, J. Gordon Hurst, and Richard G. Lynch, each dated as of
March 31,
2000. Each agreement continues for a period of three years, and is
automatically renewable on a month-to-month basis thereafter
unless notice is
given by either party of its intention to terminate the agreement
at the end
of the then current period. Each individual is entitled to
compensation
consisting of an annual aggregate base salary, an annual bonus
opportunity
based on performance targets set forth in each applicable
agreement, and such
additional compensation as the board of directors determines
throughout the
employment period. Under the agreements, each individual is
eligible to
participate in all long-term incentive plans, all stock incentive
plans, and
all savings and retirement plans to the extent applicable
generally to other
peer executives of the Company. Each agreement is also subject to
termination
in the event of disability, death, or voluntary retirement by the
individual,
attainment by the individual of the age of 65, or his termination
for cause.
Each employment agreement also requires the Company to pay
amounts to the
individual when the applicable employment agreement has been
terminated under
the following circumstances:
. If the Company terminates the employment of the executive for
any reason
(other than cause, death, the executive's attainment of age
65, or the
executive's total and permanent disability); or
. If the executive voluntarily terminates his employment for
good reason
(i.e., certain material changes in the terms of the
executive's
employment); or
. The executive voluntarily terminates his employment without
reason during
the 30-day period immediately following the first anniversary
of a change
of control of the Company.
If an employment agreement is terminated coincident with or
after an
acquisition of control of the Company, the Company is required to
pay to the
individual a cash amount equal to: (a) the executive's annual base
salary plus
the highest bonus paid to the executive during the previous three
years
multiplied by (b) the lesser of three, or the number of years
(rounded to the
nearest twelfth ( 1/12th) of a year) between the date the
employment agreement
is terminated and the executive's attainment of age 65. If an
employment
agreement is terminated under any of the other circumstances
described above,
the Company is required to pay to the individual a cash amount
equal to: (a)
the executive's annual base salary plus the highest bonus paid to
the
executive during the previous three years multiplied by (b) the
number of
years remaining in the employment agreement's term (rounded to the
nearest
twelfth ( 1/12th) of a year). In addition to the cash payment, if
an
employment agreement terminates under any of the circumstances
described
above, any restricted stock, stock options, and any other stock
awards under
any Company sponsored plan or arrangement that were outstanding
(immediately
prior to March 31, 2000) become immediately vested and/or
exercisable.
19
CORPORATE PERFORMANCE
The following Total Return to Shareholders graph compares the
performance
of the Company with that of the S&P 500 Composite and the S&P
Utilities Index.
COMPARISON OF 9 MONTH CUMULATIVE TOTAL RETURN*
AMONG VECTREN CORPORATION, THE S & P 500 INDEX
AND THE S & P UTILITIES INDEX
[Performance Graph]
Vectren Corporation S & P 500 S & P
Utilities
------------------- --------- -----
- ----------
4/3/00 100.00 100.00
100.00
6/00 86.42 97.34
106.70
9/00 103.05 96.40
141.33
12/00 131.40 88.86
147.73
$100 INVESTED IN COMPANY COMMON STOCK ON 4/3/00, WHICH WAS THE
FIRST
DAY OF TRADING, OR IN THE S&P 500 OR S&P UTILITY INDEX ON
3/31/00--
INCLUDING REINVESTMENT OF DIVIDENDS FOR FISCAL YEAR ENDING
DECEMBER 31,
2000.
20
ITEM 2. APPROVAL OF COMPANY'S AT-RISK COMPENSATION
PLAN
The Company's shareholders are being requested to approve the
Company's At-
Risk Compensation Plan (the "Plan") adopted by the board of
directors of the
Company on January 24, 2001, subject to shareholder approval. The
following
summary description of the Plan is qualified in its entirety by
reference to
the full text of the Plan which is attached to this proxy
statement as
Appendix B.
The Plan, which includes at-risk compensation payable in cash,
stock
options, and restricted stock, was approved and recommended by the
Compensation Committee (the "Committee") of the board of
directors. The Plan
is administered by the Committee, which has complete discretion in
determining
the Company's key employees and officers (the "Eligible
Employees") and
outside directors who shall be eligible to participate in the
Plan. The at-
risk compensation for the Eligible Employees is based on the
performance of
the Company and its success in attaining specific strategic goals.
The Plan
includes both short-term and long-term incentives. The short-term
incentives
are accomplished through potential payment of annual incentive
awards. Equity
ownership, representing long-term incentive compensation, is
achieved through
restricted shares and stock options. The purpose of the Plan is to
promote the
interests of the Company and its shareholders through (a) the
attraction and
retention of participants essential to the success of the Company;
(b) the
motivation of participants using performance-related incentives
linked to
performance goals and the interest of the Company shareholders,
and (c)
enabling such individuals to share in the growth and success of
the Company
and its subsidiaries.
An outside director who is selected by the Committee to
participate in the
Plan will only be eligible for awards relating to stock and will
not be
eligible for the annual incentive awards described in more detail
below.
The number of shares of the Company's common stock which may be
issued
pursuant to the Plan may not exceed in the aggregate 4,000,000
shares. Shares
of common stock may be available from the authorized but unissued
shares,
shares issued and reacquired by the Company or shares purchased in
the open
market for purposes of the Plan. As of March 2, 2001, the closing
price for
the Company's common stock was $23.36 per share.
Stock Options. Under the Plan, the Committee may grant stock
options to
participants as it shall determine. The Committee has complete
discretion in
determining the type of option granted, the option price (which
shall not be
less than 100% of the fair market value of the stock on the grant
date), the
duration of the option, the number of shares of common stock to
which an
option pertains, any condition imposed upon the exercisability or
the
transferability of the options (including vesting conditions), the
conditions
under which the option may be terminated, and any such other
provisions as may
be warranted to comply with the law or rules of any securities
trading system
or stock exchange. Each option grant shall have such specified
terms and
conditions detailed in an option agreement made with the Eligible
Employee.
The option agreement shall specify whether the option is intended
to be an
incentive stock option or a non-qualified stock option. However,
no incentive
stock option may be awarded (a) after the tenth anniversary of the
date the
Plan was adopted by the board of directors, or (b) to a
participant who is not
an employee. Options granted under the Plan shall be exercisable
at such times
and be subject to such restrictions and conditions as the
Committee shall
determine, which will be specified in the option agreement and
need not be the
same for each participant.
Restricted Stock. The Committee may also grant shares of
restricted stock
under the Plan to such participants, and in such amounts and for
such duration
and/or consideration as it shall determine. Each restricted stock
grant under
the Plan shall be evidenced by an award agreement that shall
specify the
restriction period, the conditions which must be satisfied prior
to removal of
the restriction, the forfeiture of such shares in the event such
conditions
are not satisfied, the number of shares of restricted stock
granted, and such
other provisions as the Committee shall determine. The Committee
may specify
in the award agreement conditions or restrictions which the
Committee may deem
advisable, including without limitation, conditions for
acceleration or
achievement of the end of the restriction period based on any
performance
criteria. Notwithstanding the foregoing, the Committee has the
authority to
grant additional unrestricted stock to a participant under the
Plan, provided
performance criteria are satisfied for a performance period. The
shares of
restricted stock granted under
21
the Plan may not be sold, or otherwise transferred, until
termination of the
applicable restriction period or upon earlier satisfaction of
other conditions
as specified by the Committee in its sole discretion and set forth
in the
applicable award agreement.
Other Stock Based Awards. In addition to stock options and
restricted
stock, the Committee may issue to participants, either alone or in
addition to
other awards made under the Plan, stock appreciation rights,
performance
awards or other stock unit awards. Any such awards shall be
governed by the
terms of an agreement, and the Committee may impose such terms and
conditions,
similar to those described above, and not inconsistent with the
terms of the
Plan. Stock appreciation rights shall have an exercise price
determined at the
time of grant by the Committee, subject to the limitation that the
grant price
shall not be less than 100% of fair market value of the common
stock on the
grant date. Performance awards granted hereunder may be issued in
the form of
either performance units or performance shares. The Committee
shall set
performance criteria in its discretion for each participant who is
granted a
performance award, and the extent to which such performance
criteria are met
will determine the value of the performance unit or performance
share to the
participant. Stock unit awards granted hereunder may but are not
required to
be in the form of the Company's common stock or other securities.
The value of
each such award shall be based, in whole or in part, on the value
of the
underlying common stock on the grant date. The Committee, in its
sole and
complete discretion, shall determine the terms, restrictions,
conditions,
vesting requirements, and payment rules of the award.
Annual Incentive Awards. Under the Plan, annual cash incentive
awards may
also be paid to Eligible Employees on the basis of the Company
achieving
certain performance goals. Following the completion of a
performance period,
the Committee will undertake or direct an evaluation of
performance criteria,
and no annual incentive award may be paid without a certification
by the
Committee that the performance goals have been met. Performance
criteria of
the Company will be established in writing by the Committee before
the
beginning of each performance period or at such later time as may
be permitted
under the Plan. The maximum individual annual incentive award for
a
performance period of twelve calendar months will be $1,500,000,
provided the
Eligible Employee has been a participant under the Plan for such
twelve month
period.
Awards Under The At-Risk Compensation Plan
Benefits payable or amounts that will be granted upon the
approval of the
Plan by the shareholders are not determinable at this time. The
Plan defines
the class of employees, officers, and directors eligible to
participate under
the Plan. The Company currently expects that awards under the Plan
will be
made to the Company's Section 16 officers, its corporate officers
and other
key employees, and members of the Company's board of directors,
which consists
of approximately 31 individuals in the aggregate.
United States Federal Income Tax Aspects of the At-Risk
Compensation Plan
With respect to non-statutory stock options (an option other
than an
incentive stock option, which is described below), as a general
rule, no
federal income tax is imposed on the optionee upon the grant of a
non-
statutory stock option. In addition, the Company is not entitled
to a tax
deduction by reason of such a grant. Generally, upon the exercise
of a non-
statutory stock option, the optionee will be treated as receiving
compensation
taxable as ordinary income in the year of exercise in an amount
equal to the
excess of the fair market value of the shares on the date of
exercise over the
option price paid for such shares.
Upon the exercise of a non-statutory stock option, the Company
may claim a
deduction for compensation paid at the same time and in the same
amount as
compensation income is recognized to the award recipient assuming
any federal
income tax withholding requirements are satisfied. Upon a
subsequent
disposition of the shares received upon the exercise of a non-
statutory stock
option, any appreciation after the date of exercise should qualify
as a
capital gain.
Incentive Stock Options. The incentive stock options under the
Plan are
intended to constitute "incentive stock options" within the
meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the
22
"Code"). Incentive stock options are subject to special federal
income tax
treatment. No federal income tax is imposed on the optionee upon
the grant or
exercise of incentive stock options if the optionee does not
dispose of shares
acquired pursuant to the exercise within the two-year period
beginning on the
date the option was granted or within the one-year period
beginning on the
date the option was exercised (collectively, the "holding
period"). If these
conditions are met and no tax is imposed on the optionee, then the
Company
would not be entitled to any deduction for federal income tax
purposes in
connection with the grant or exercise of the option or the
disposition of the
underlying shares. With respect to an incentive stock option, the
difference
between the fair market value of the stock on the date of exercise
and the
exercise price generally must be included in the optionee's
alternative
minimum taxable income.
Upon disposition of the shares received upon exercise of an
incentive stock
option after the holding period, the difference between the amount
realized
and the exercise price should constitute a long-term capital gain
or loss. If
an optionee disposes of shares acquired pursuant to his or her
exercise of an
incentive stock option prior to the end of the holding period, the
optionee
will be treated as having received, at the time of disposition,
compensation
taxable as ordinary income. In such event, the Company may claim a
deduction
for compensation paid at the same time and in the same amount as
compensation
is treated as received by the optionee. The amount treated as
compensation is
the excess of the fair market value of the shares at the time of
exercise (or
in the case of a sale in which a loss would be recognized, the
amount realized
on the sale if less) over the exercise price, and any amount
realized in
excess of the fair market value of the shares at the time of
exercise would be
treated as short-term or long-term capital gain, depending on the
holding
period of the shares.
Restricted Stock. An individual who has been granted stock
under the Plan
will not realize taxable income at the time of grant, and the
Company will not
be entitled to a deduction at that time, assuming that the
restrictions
constitute a substantial risk of forfeiture for federal income tax
purposes.
Upon expiration of the forfeiture restrictions (i.e., as shares
become
vested), the holder will realize ordinary income in an amount
equal to the
excess of the fair market value of the shares at such time over
the amount, if
any, paid for such shares, and, subject to the application of
Section 162(m)
of the Code, the Company will be entitled to a corresponding
deduction.
Dividend equivalents accrued and paid to the holder during the
period that the
forfeiture restrictions apply will also be treated as compensation
income to
the holder and deductible as such by the Company.
However, the recipient of restricted stock may elect to be
taxed at the
time of grant of the restricted stock based upon the fair market
value of the
shares on the date of the award. If the recipient makes this
election, (a) the
Company will be entitled to a deduction at the same time and in
the same
amount (subject to the limitations contained in Section 162(m)),
(b) dividends
paid to the recipient during the period the forfeiture
restrictions apply will
be taxable as dividends and will not be deductible by the Company,
and (c)
there will be no further federal income tax consequences when the
forfeiture
restrictions lapse.
Stock Units Awards. A recipient of stock units awards under the
Plan will
generally not realize taxable income at the time of grant, and the
Company
will not be entitled to a deduction at that time. At the time
stock units are
settled in shares of the Company's common stock, the recipient
will have
taxable compensation income and, subject to Section 162(m) as
discussed below,
the Company will receive a corresponding deduction. The measure of
this income
and deduction will be the fair market value of the shares at the
time the
stock units are settled, plus any accrued dividend equivalents;
provided,
however, that, with respect to a recipient subject to Section 16
of the
Securities and Exchange Act of 1934, as amended, unless such
recipient elects
otherwise, such fair market value will be measured at the time any
restrictions imposed with respect to such shares under Section 16
of the
Exchange Act of 1934 subsequently lapse.
Section 162(m) of the Internal Revenue Code. Section 162(m)
precludes a
public corporation from taking a deduction for compensation in
excess of $1
million paid to its chief executive officer or any of its four
other highest-
paid officers. However, compensation that qualifies under Section
162(m) as
"performance-based" is specifically exempt from the deduction
limit. Based on
Section 162(m) and the regulations issued thereunder, the Company
believes
that the income generated in connection with the exercise of stock
options
granted under the Plan should qualify as performance-based
compensation and,
accordingly, the Company's deductions for such
23
compensation should not be limited by Section 162(m). The Plan has
been
designed to provide flexibility with respect to whether restricted
stock
awards will qualify as performance-based compensation under
Section 162(m).
The Company believes that certain awards of restricted stock under
the Plan
will so qualify and the Company's deductions with respect to such
awards
should not be limited by Section 162(m). The Plan does provide
that all awards
under the Plan to employees covered by Section 162(m) are subject
to other
conditions, restrictions, and requirements as the Committee may
determine to
be necessary to avoid the loss of deduction by the Company under
Section
162(m). However, certain awards of restricted stock may not
qualify as
performance-based compensation and, therefore, the Company's
compensation
expense deductions relating to such awards will be subject to the
Section
162(m) deduction limitation.
Required Vote and Recommendation
Approval of the Company's At-Risk Compensation Plan requires an
affirmative
vote of a majority of the shares present or by proxy and entitled
to vote at
the meeting. For this proposal, an abstention will have the same
effect as a
vote against the proposal. Broker non-votes will not be voted for
or against
the proposal and will not be counted as entitled to vote.
The Board of Directors recommends voting "FOR" this proposal.
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY
Arthur Andersen, L.L.P. ("Arthur Andersen") has been selected
by the board
of directors as the independent public accountants of the Company
and its
subsidiaries for fiscal year 2001. The selection was made by the
board of
directors upon the recommendation of the Audit Committee. See
"Report of the
Audit Committee." Arthur Andersen has served as auditors for the
Company since
the time of the merger of Indiana Energy and SIGCORP into the
Company in March
2000, and prior to that time as auditors for SIGECO since 1918,
for SIGCORP
since its organization in 1996, for Indiana Energy since 1986, and
for Indiana
Gas since its organization in 1945. A representative of Arthur
Andersen will
be present at the annual meeting, will have the opportunity to
make a
statement and will be available to respond to questions.
Audit Fees
The aggregate fees billed for professional services rendered
for the audit
of the Company's 2000 fiscal year annual financial statements, and
reviews of
the Company's financial statements included in the Company's Forms
10-Q filed
during the Company's 2000 fiscal year were $290,000. Arthur
Andersen also
performed audit services for certain of the Company's subsidiaries
and
performed audits of the Company's various benefit plan financial
statements.
The aggregate fees billed for these services totaled $81,000.
Financial Systems Design and Implementation Fees
No professional services were rendered by Arthur Andersen
during the
Company's 2000 fiscal year in connection with: (a) operating or
supervising
the operation of the Company's information system; or (b)
designing or
implementing a hardware or software system that aggregates source
data
underlying the Company's financial statements or generates
information that is
significant to the Company's financial statements.
All Other Fees
The aggregate fees billed for services rendered by Arthur
Andersen for
services other than audit fees during the Company's 2000 fiscal
year were
$464,000. These fees were for such services as (i) tax planning
and review of
tax returns of the Company, (ii) due diligence reviews, and (iii)
evaluation
of the impact of various accounting issues and changes in
accounting
standards.
24
The Audit Committee of the board of directors has considered
and determined
that the provision by Arthur Andersen of the services described
above is
compatible with maintaining Arthur Andersen's independence.
COST AND METHOD OF SOLICITATION
The cost of preparing, assembling, printing and mailing this
proxy
statement, the enclosed proxy and any other material which may be
furnished to
shareholders in connection with the solicitation of proxies for
the meeting
will be borne by the Company. The Company has retained D. F. King
& Company to
assist in soliciting proxies from shareholders, including brokers'
accounts,
at an estimated fee of $7,500 plus reasonable out-of-pocket
expenses. In
addition, some of the officers and regular employees of the
Company, who will
receive no compensation therefor in addition to their regular
salaries, may
solicit proxies by telephone, telegraph or personal visits, and it
is
estimated that the cost of such additional solicitation, if any,
will not
exceed $500, and will be borne by the Company. The Company expects
to
reimburse banks, brokerage houses and other custodians of stock
for their
reasonable charges and expenses in forwarding proxy material to
beneficial
owners.
ANNUAL REPORT
A copy of the Company's annual report, including consolidated
financial
statements for the fiscal year ended December 31, 2000, was mailed
to
shareholders on or about March 16, 2001.
REVOCATION RIGHTS
A shareholder executing and delivering the enclosed proxy may
revoke it by
written notice delivered to the secretary of the Company, or in
person at the
annual meeting, at any time before the authority granted by it is
exercised.
NOMINATION OF DIRECTORS BY SHAREHOLDERS
If a shareholder entitled to vote for the election of directors
at a
shareholders' meeting desires to nominate a person for election to
the board
of directors of the Company, pursuant to the Company's By-Laws,
any such
nominations must be made pursuant to notice delivered to, or
mailed and
received at, the principal office of the Company, not less than 90
days nor
more than 120 days prior to the first anniversary date of the
annual meeting
of the shareholders for the preceding year; provided, however,
that if the
annual meeting is not scheduled to be held within a period that
commences 30
days before such anniversary date and ends 30 days after such
anniversary
date, such shareholder notice shall be given by the later of: (a)
the date 90
days prior to the actual date of shareholder meeting, or (b) the
tenth day
following the day on which the annual meeting date is first
publicly announced
or disclosed. In any case, such shareholder's notice must set
forth, in
addition to the name and address of the shareholder submitting the
nomination,
as to each person whom the shareholder proposes to nominate for
election or
re-election as a director: (i) the name, age, business address and
residence
address of such person, (ii) the principal occupation or
employment of such
person, (iii) the class and number of shares of the Company which
are
beneficially owned by such person, (iv) any other information
relating to such
person that is required to be disclosed in the solicitation of
proxies for
election of directors, or is otherwise required, in each case
pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as
amended
(including, without limitation, such person's written consent to
be named in
the proxy statement as a nominee and to serve as a director, if
elected), and
(v) the qualifications of the nominee to serve as a director of
the Company.
25
SHAREHOLDERS' PROPOSALS FOR 2002 ANNUAL MEETING
Under Rule 14a-8 of the Securities Exchange Act of 1934,
shareholders of
the Company may present proper proposals for inclusion in the
Company's proxy
statement and for consideration at the 2002 annual meeting of its
shareholders
by submitting their proposals to the Company in a timely manner.
In order to
be so included for the 2002 annual meeting, shareholder proposals
must be
received at the Company's principal office, 20 N. W. Fourth
Street,
Evansville, Indiana 47708, Attention: Corporate Secretary, no
later than
November 16, 2001, and must otherwise comply with the requirements
of Rule
14a-8.
If a shareholder desires to bring business before the meeting
which is not
the subject of a proposal timely submitted for inclusion in the
proxy
statement, the shareholder must follow procedures outlined in the
Company's
Code of By-Laws. A copy of these procedures is available upon
request from the
Corporate Secretary at the address referenced above. One of the
procedural
requirements in the Company's Code of By-Laws is timely notice in
writing of
the business the shareholder proposes to bring before the meeting.
To be
timely a shareholder's notice must be delivered to, or mailed and
received at,
the principal office of the Company not less than 90 days nor more
than 120
days prior to the first anniversary date of the annual meeting of
the
shareholders for the preceding year; provided, however, that if
the annual
meeting is not scheduled to be held within a period that commences
30 days
before such anniversary date and ends 30 days after such
anniversary date,
such shareholder notice shall be given by the later of: (a) the
date 90 days
prior to the actual date of shareholder meeting, or (b) the tenth
day
following the day on which the notice of the annual meeting is
first publicly
announced or disclosed. The shareholder's notice must set forth
(i) a brief
description of the matter to be brought before the meeting, (ii)
the name and
address as they appear on the corporate records of the shareholder
proposing
the business, (iii) the number of shares of capital stock of the
Company
beneficially owned by the shareholder and (iv) any interest of the
shareholder
in the business.
In addition, if the Company does not receive the shareholder's
notice
within the time period described above, the proxies designated by
the board of
directors for that meeting may vote in their discretion on any
such proposal
any shares for which they have been appointed proxies without
mention of such
matter in the Company's proxy statement or on the proxy card for
such meeting.
By order of the board of
directors.
Vectren Corporation
RONALD E. CHRISTIAN
Senior Vice President,
General
Counsel and
Corporate Secretary
Evansville, Indiana
March 16, 2001
Please fill in, date and sign the enclosed proxy and return it
in the
accompanying addressed envelope. No further postage is required if
mailed in
the United States. You may also authorize the individuals named on
your proxy
card to vote your shares by calling toll-free 1-877-779-8683 or
using the
Internet (www.eproxyvote.com/vvc) by following the instructions
included with
your proxy card. If you attend the annual meeting and wish to vote
your shares
in person, you may do so. Your cooperation in giving this matter
your prompt
attention will be appreciated.
26
APPENDIX A
VECTREN CORPORATION
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit committee is to assist the
Board of
Directors (Board) in fulfilling its oversight responsibilities by
reviewing:
the financial reports and other financial information provided by
the Company
to a governmental body or the public; the Company's system of
internal
controls regarding finance, accounting, legal compliance and
ethics that
management and the Board have established; and the Company's
auditing,
accounting and financial reporting processes generally. Consistent
with this
function, the Audit committee should encourage continuous
improvement of, and
adherence to the Company's policies, procedures and practices. The
Audit
committee's primary responsibilities are to:
. Ensure that management of the Company maintains reliable
accounting
policies, financial reporting and disclosure practices.
. Ensure that management maintains an adequate system of
internal control.
. Ensure that management maintains processes to assure
compliance with all
applicable laws, regulations and Company policy.
. Provide for open communication among the independent
accountants,
financial and senior management, the Internal Audit
department, and the
Board.
The Audit committee will primarily fulfill these
responsibilities by
carrying out the activities enumerated in Section IV of this
Charter.
II. COMPOSITION
The Audit committee shall be comprised of three or more
directors as
determined by the Board, each of whom shall be independent
directors, and free
from any relationship that, in the opinion of the Board, would
interfere with
the exercise of his or her independent judgment as a member of the
committee.
All members of the committee shall have a working familiarity
with basic
finance and accounting practices, and at least one member of the
committee
shall have accounting or related financial management expertise.
III. MEETINGS
The Audit committee shall meet (either physically or by means
of conference
call) consistent with the quarterly release of financial data or
as other
circumstances dictate. As part of its job to foster open
communication, the
committee should meet at least biannually with the director of
internal
auditing and the independent accountants in executive sessions to
discuss any
matters that the committee or either of these parties believe
should be
discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit committee
shall:
Documents/Reports Review
1. Review and update this Charter periodically, at least annually,
as
conditions dictate, and ensure that this charter is disclosed
in the
Company's Proxy at least every three years.
A-1
2. Review the Company's annual financial statements and quarterly
financial
statements submitted to the Securities and Exchange Commission.
The Audit
committee may also be convened to review and discuss any
significant (e.g.,
Form 8K) or unusual transactions. (In this context, review
shall mean
listening to a presentation related to the financial
statements, looking at
drafts of the statements and discussing unusual or significant
transactions.)
3. Review internal reports to management prepared by the Internal
Audit
department and management's response.
4. Review and discuss earnings information prior to the quarterly
release of
earnings information to the public. The Chair of the committee
may
represent the entire committee for purposes of this review.
This discussion
should focus on significant events, transactions and changes in
accounting
estimates, which were considered by the independent accountants
to have
affected the quality of the Company's financial reporting. This
discussion
should also include appropriate members of financial
management, the
internal auditor, and legal counsel. (Quality, in this context,
refers to
relevance, reliability, comparability and understandability.
Relevance
means that users find the information useful in making
decisions;
reliability means that information is verifiable and faithfully
represents
what it purports to represent; comparability means that the
user can
compare from one company to another, and from one time period
to another to
identify trends; and understandability means that the
information is
presented in an organized, concise and clear fashion so that it
can be
understood by competent users.)
Independent Accountants/Auditors
5. The independent accountants are ultimately accountable to the
Board and the
Audit committee.
6. The Audit committee has the authority and responsibility to
select,
evaluate, and replace the independent accountants of the
Company and its
subsidiaries. This responsibility also includes approval of the
fees and
other compensation to be paid to the independent accountants.
7. The Audit committee is responsible for ensuring that the
independent
accountants submit a formal written statement regarding
relationships and
services which may affect objectivity and independence, for
discussing any
relevant matters with the independent accountants, and for
recommending
that the full board take appropriate action to ensure the
independence of
the auditors.
8. Review with management, the independent accountants and
internal auditors
any significant risks and exposures, audit activities and
significant audit
findings.
9. Review activities, organizational structure, and qualifications
of the
Internal Audit department.
Financial Reporting Process
10. Consider the independent accountant's judgements about the
quality and
appropriateness of the Company's accounting principles and
practices as
applied to its financial reporting.
11. Review any significant disagreement among management and the
independent
accountants or the Internal Audit department in conjunction
with the
preparation of the financial statements.
12. Consider, approve, and monitor implementation of changes to
the Company's
auditing and accounting principles and practices as suggested
by the
independent accountants, management, or the Internal Audit
department.
13. Discuss with the independent accountants and internal auditors
any
significant difficulties encountered during the course of an
audit,
including any restrictions on the scope of work or access to
required
information.
Ethical and Legal Compliance
14. Review management's monitoring of the Corporate Code of
Conduct (Code) and
ensure that management has the proper review controls in
place. Suggest
changes to the Code as deemed necessary and appropriate.
A-2
15. Review, with the Company's counsel, any legal matter that
could have a
significant impact on the Company's financial statements.
16. Review, with the Company's counsel, legal compliance matters
including
corporate securities trading policies.
17. Conduct or authorize investigations into any matters within
the scope of
the Audit committee's responsibilities. The Audit committee
shall be
empowered to retain any resources necessary including
independent counsel,
accountants or others to assist in such investigations.
18. Perform any other activities consistent with this Charter, the
Company's
By-laws and governing law, as the committee or the Board deems
necessary
or appropriate.
A-3
APPENDIX B
VECTREN CORPORATION
AT RISK COMPENSATION PLAN
Effective May 1, 2001
B-1
TABLE OF CONTENTS
Page
- ----
ARTICLE I--PURPOSE
1.1
Purpose...........................................................
. B-5
ARTICLE II--DEFINITIONS
2.1
"Agreement".......................................................
. B-5
2.2 "Annual Incentive
Award"........................................... B-5
2.3
"Award"...........................................................
. B-5
2.4 "Award Date" or "Grant
Date"....................................... B-5
2.5 "Board" or "Board of
Directors".................................... B-5
2.6 "Cashless
Exercise"................................................ B-5
2.7
"Cause"...........................................................
. B-5
2.8 "Change in
Control"................................................ B-5
2.9
"Code"............................................................
. B-5
2.10
"Committee".......................................................
. B-5
2.11 "Common Stock" or
"Stock".......................................... B-5
2.12
"Company".........................................................
. B-5
2.13 "Covered
Participant".............................................. B-5
2.14 "Designated
Beneficiary"........................................... B-6
2.15
"Disability"......................................................
. B-6
2.16 "Effective
Date"................................................... B-6
2.17 "Eligible
Employee"................................................ B-6
2.18
"Employee"........................................................
. B-6
2.19 "Exchange
Act"..................................................... B-6
2.20 "Fair Market
Value"................................................ B-6
2.21 "Good
Reason"...................................................... B-6
2.22 "Incentive Stock
Option"........................................... B-6
2.23 "Non-qualified Stock
Option"....................................... B-6
2.24 "Option
Price"..................................................... B-6
2.25 "Outside
Director"................................................. B-6
2.26
"Participant".....................................................
. B-6
2.27 "Participating
Company"............................................ B-6
2.28 "Performance
Award"................................................ B-7
2.29 "Performance
Criteria"............................................. B-7
2.30 "Performance
Period"............................................... B-7
2.31 "Performance
Share"................................................ B-7
2.32 "Performance
Unit"................................................. B-7
2.33
"Person"..........................................................
. B-7
2.34
"Plan"............................................................
. B-7
2.35 "Restricted
Stock"................................................. B-7
2.36 "Restriction
Period"............................................... B-7
2.37
"Retirement"......................................................
. B-7
2.38 "Rule of 16b-
3".................................................... B-7
2.39 "Section
162(m)"................................................... B-7
2.40 "Securities
Act"................................................... B-7
2.41 "Stock" or
"Shares"................................................ B-8
2.42 "Stock Appreciation
Right"......................................... B-8
2.43 "Stock Option" or
"Option"......................................... B-8
2.44 "Stock Unit
Award"................................................. B-8
2.45
"Subsidiary"......................................................
. B-8
B-2
Page
- ----
ARTICLE III--ELIGIBILITY
3.1
Eligibility.......................................................
. B-8
ARTICLE IV--SHARES SUBJECT TO THE PLAN
4.1 Number of
Shares................................................... B-8
4.2 Lapsed Awards or Forfeited
Shares.................................. B-8
4.3 Delivery of Shares as
Payment...................................... B-8
4.4 Capital
Adjustments................................................ B-9
ARTICLE V--STOCK OPTIONS
5.1 Grant of Stock
Options............................................. B-9
5.2 Option
Price....................................................... B-9
5.3
Exercisability....................................................
. B-9
5.4 Method of
Exercise................................................. B-9
5.5 Death, Disability, Retirement or Other Termination of
Employment... B-10
ARTICLE VI--RESTRICTED STOCK
6.1 Grant of Restricted
Stock.......................................... B-10
6.2 Restricted Stock Award
Agreement................................... B-10
6.3 Restriction
Period................................................. B-10
6.4 Removal of Restrictions and Deferral of
Payment.................... B-10
6.5 Voting
Rights...................................................... B-11
6.6 Dividends and Other
Distributions.................................. B-11
6.7 Death, Disability or
Retirement.................................... B-11
ARTICLE VII--OTHER STOCK BASED AWARDS
7.1 Grant of Other Stock Based
Awards.................................. B-11
7.2 Stock Appreciation
Rights.......................................... B-11
7.3 Performance
Awards................................................. B-12
7.4 Stock Unit
Awards.................................................. B-12
7.5 Death, Disability, Retirement or Other Termination of
Employment... B-13
7.6 Deferral of
Payment................................................ B-13
ARTICLE VIII--ANNUAL INCENTIVE AWARDS
8.1 Timing and Determination of Annual Incentive
Awards................ B-13
8.2 Performance Criteria for Annual Incentive Awards
.................. B-13
8.3 Maximum Annual Incentive
Award..................................... B-13
8.4 Short Performance
Year............................................. B-14
8.5 Limitation on Right to Payment of
Award............................ B-14
ARTICLE IX--SPECIAL PROVISIONS APPLICABLE TO COVERED PARTICIPANTS
9.1 Special Provisions Applicable to Covered
Participants.............. B-14
ARTICLE X--CHANGE IN CONTROL
10.1 Change in Control
Agreements....................................... B-15
10.2 Change in Control
Defined.......................................... B-15
10.3 Good Reason
Defined................................................ B-17
10.4 Cause
Defined...................................................... B-18
ARTICLE XI--ADMINISTRATION
11.1 The
Committee...................................................... B-
18
11.2 Committee
Decisions................................................ B-18
11.3 Rule 16b-3 and Section 162(m)
Requirements......................... B-18
B-3
Page
- ----
ARTICLE XII--GENERAL PROVISIONS
12.1
Withholding.......................................................
. B-19
12.2 Terms of
Awards.................................................... B-19
12.3 Non-
transferability................................................ B-
19
12.4 No Right to
Employment............................................. B-19
12.5 Rights as
Shareholder.............................................. B-19
12.6 Construction of the
Plan........................................... B-19
12.7 Amendment of
Plan.................................................. B-19
12.8 Amendment of
Award................................................. B-19
12.9 Exemption from Computation of Compensation for Other
Purposes...... B-19
12.10
Legend............................................................
. B-20
12.11 Special Provisions for Certain
Participants........................ B-20
12.12 Unfunded
Plan...................................................... B-20
12.13 Conflict with Employment
Agreement................................. B-20
12.14 Gender and
Number.................................................. B-20
12.15
Severability......................................................
. B-20
12.16 Effect of
Headings................................................. B-20
12.17 No
Liability....................................................... B-
20
B-4
ARTICLE I
PURPOSE
1.1 Purpose. Vectren Corporation, an Indiana corporation,
hereby
establishes the Vectren Corporation At Risk Compensation Plan to
promote the
interests of the Company and its shareholders through (a) the
attraction and
retention of Participants essential to the success of the Company;
(b) the
motivation of Participants using performance-related incentives
linked to
performance goals and the interests of Company shareholders; and
(c) enabling
such individuals to share in the growth and success of the Company
and its
Subsidiaries. The Plan permits cash awards, the grant of Stock
Options,
Restricted Stock, and, with prior Board approval, any other stock-
based forms
of awards as the Committee, in its sole and complete discretion,
may determine
to be appropriate in carrying out the intent and purposes of this
Plan. The
Plan also provides for the grant of annual incentive awards.
ARTICLE II
DEFINITIONS
2.1 "Agreement" shall mean a written agreement between the
Company and a
Participant implementing the grant, and setting forth the
particular terms,
conditions and restrictions of each Award. With respect to the
grant of a
Stock Option, the Agreement may be referred to herein as an
"Option
Agreement," and with respect to any other Award hereunder, the
Agreement may
be referred to herein as an "Award Agreement."
2.2 "Annual Incentive Award" shall mean a cash bonus payable to
a
Participant under Article VIII.
2.3 "Award" shall mean an award or grant made to a Participant
under
Article V, VI, or VII, or an Annual Incentive Award under Article
VIII.
2.4 "Award Date" or "Grant Date" shall mean the date on which
an Award is
made by the Committee under the Plan.
2.5 "Board" or "Board of Directors" shall mean the Board of
Directors of
the Company.
2.6 "Cashless Exercise" shall mean the exercise of an Option by
the
Participant through the use of a brokerage firm to make payment to
the Company
of the exercise price either from the proceeds of a loan to the
Participant
from the brokerage firm or from the proceeds of the sale of Stock
issued
pursuant to the exercise of the Option, and upon receipt of such
payment, the
Company delivers the exercised Shares to the brokerage firm.
2.7 "Cause" shall be defined in Section 10.4.
2.8 "Change in Control" shall be defined in Section 10.2.
2.9 "Code" shall mean the Internal Revenue Code of 1986 and the
rules and
regulations promulgated thereunder, or any successor law, as
amended from time
to time.
2.10 "Committee" shall mean the Compensation Committee of the
Board or such
other committee appointed by the Board to administer the Plan in
accordance
with Article XI.
2.11 "Common Stock" or "Stock" shall mean the Common Stock of
the Company
without par value, or such other security or right or instrument
into which
such Common Stock may be changed or converted in the future.
2.12 "Company" shall mean Vectren Corporation, an Indiana
corporation, or
any successor thereto.
2.13 "Covered Participant" shall mean a Participant who is a
"covered
employee" as defined in Code Section 162(m)(3) and the regulations
promulgated
thereunder.
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2.14 "Designated Beneficiary" shall mean the beneficiary
designated by the
Participant, pursuant to procedures established by the Committee,
to receive
amounts due to the Participant in the event of the Participant's
death. If the
Participant does not make an effective designation, then the
Designated
Beneficiary will be deemed to be the Participant's estate.
2.15 "Disability" shall mean (a) the mental or physical
disability of the
Participant defined as "Disability" under the terms of the long-
term
disability plan sponsored by the Company and in which the
Participant is
covered, as amended from time to time in accordance with the
provisions of
such plan; or (b) a determination by the Committee, in its sole
discretion, of
total disability (based on medical evidence) that precludes the
Participant
from engaging in any occupation or employment for wage or profit
for at least
twelve months and appears to be permanent. All decisions by the
Committee
relating to a Participant's Disability (including a decision that
a
Participant is not disabled), shall be final and binding on all
parties.
2.16 "Effective Date" shall mean:
(a) January 1, 2001 with respect to Annual Incentive Awards
granted
pursuant to Article VIII; and
(b) May 1, 2001 with respect to long-term incentive Awards
granted
pursuant to Articles V, VI or VII.
2.17 "Eligible Employee" shall mean an Employee who is an
officer or other
key employee of a Participating Company as designated by the
Committee to be
eligible to participate in the Plan.
2.18 "Employee" shall mean an individual who is employed by a
Participating
Company in a customary employer-employee relationship and
designated as such
in accordance with the Company's standard employment practices.
2.19 "Exchange Act" shall mean the Securities Exchange Act of
1934 and the
rules and regulations promulgated thereunder, or any successor law
as amended
from time to time.
2.20 "Fair Market Value" shall mean, on any given date, the
closing price
of Common Stock as reported on the composite tape of the primary
stock
exchange in which the Common Stock is listed on such day or, if no
Shares were
traded on such stock exchange on such day, then on the next
preceding day that
Stock was traded on such exchange, all as reported by The Wall
Street Journal
or such other source as the Committee may select.
2.21 "Good Reason" shall be defined in Section 10.3.
2.22 "Incentive Stock Option" shall mean an option to purchase
Stock,
granted under Article VI herein, which is designated as an
incentive stock
option and is intended to meet the requirements of Code Section
422.
2.23 "Non-qualified Stock Option" shall mean an option to
purchase Stock,
granted under Article V herein, which is not intended to qualify
as an
Incentive Stock Option.
2.24 "Option Price" shall mean the exercise price per share of
Stock
covered by an Option in accordance with Section 5.2.
2.25 "Outside Director" shall mean a member of the Board who is
not an
Employee.
2.26 "Participant" shall mean an Eligible Employee or Outside
Director who
has been selected from time to time under Article III to receive
an Award
under the Plan.
2.27 "Participating Company" shall mean the Company, and such
other
Subsidiaries as the Board authorizes to participate herein.
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2.28 "Performance Award" shall mean a performance-based Award
made under
Section 7.3, which may be in the form of either Performance Shares
or
Performance Units.
2.29 "Performance Criteria" shall mean objectives established
by the
Committee for a Performance Period for the purpose of determining
when an
Award subject to such objectives has been earned, and may include
alternative
and multiple Performance Criteria, including, but not limited to,
operating
and maintenance expense targets, customer satisfaction, safety,
and financial
goals (which may be adjusted for abnormal weather based on
National Oceanic
and Atmospheric Administration measures or such other objective
measures as
approved by the Committee before the beginning of a Performance
Period)
including, but not limited to, absolute or relative (i.e., in
relation to a
peer group of companies) total shareholder return, revenues,
sales, net
income, EBITDA, return on assets, earnings per share and/or growth
thereof, or
net worth of the Company, any of its Subsidiaries, divisions,
business units
or other areas of the Company.
2.30 "Performance Period" shall mean the time period designated
by the
Committee during which Performance Criteria must be met in order
for a
Participant to obtain a performance-based award.
2.31 "Performance Share" shall mean an Award, designated as a
Performance
Share, granted to a Participant pursuant to Section 7.3, the value
of which is
linked to Company Stock and which is determined, in whole or in
part, by the
attainment of pre-established Performance Criteria as deemed
appropriate by
the Committee and described in the Agreement.
2.32 "Performance Unit" shall mean an Award, designated as a
Performance
Unit, granted to a Participant pursuant to Section 7.3, the value
of which is
determined, in whole or in part, by the attainment of pre-
established
Performance Criteria which is linked to the performance of Company
Stock as
deemed appropriate by the Committee and described in the
Agreement.
2.33 "Person" shall have the meaning ascribed to such term in
Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof,
including a "group" as defined in Section 13(d) thereof.
2.34 "Plan" shall mean the Vectren Corporation At Risk
Compensation Plan,
as herein established and as hereafter amended from time to time.
2.35 "Restricted Stock" shall mean an Award of Stock granted to
a
Participant pursuant to Article VI herein.
2.36 "Restriction Period" shall mean the period during which
the transfer
of Shares of Restricted Stock is restricted and is subject to a
risk of
forfeiture, pursuant to Article VI.
2.37 "Retirement" shall mean the termination of employment for
a
Participant who is eligible for early or normal retirement under
the Vectren
Corporation Combined Non-Bargaining Retirement Plan.
Notwithstanding the
foregoing, "Retirement" before the Participant has attained normal
retirement
under such plan shall require prior approval by the Committee.
With respect to
a Participant who is an Outside Director, "Retirement" shall mean
the end of
the director's term of office upon attaining the mandatory
retirement age for
directors.
2.38 "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of
the Exchange
Act as adopted in Exchange Act Release No. 34-37260 (May 30,
1996), or any
successor rule as amended from time to time.
2.39 "Section 162(m)" shall mean Section 162(m) of the Code, or
any
successor section under the Code, as amended from time to time and
as
interpreted by final or proposed regulations promulgated
thereunder from time
to time.
2.40 "Securities Act" shall mean the Securities Act of 1933 and
the rules
and regulations promulgated thereunder, or any successor law, as
amended from
time to time.
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2.41 "Stock" or "Shares" shall mean the shares of Common Stock
of the
Company.
2.42 "Stock Appreciation Right" shall mean the right to receive
an amount
equal to the excess of the Fair Market Value of a share of Stock
(as
determined on the date of exercise) over the Option Price of a
related Option
or the Fair Market Value of the Stock on the Grant Date of the
Stock
Appreciation Right.
2.43 "Stock Option" or "Option" shall mean an Incentive Stock
Option or a
Non-qualified Stock Option.
2.44 "Stock Unit Award" shall mean an award of Common Stock or
units
granted under Section 7.4.
2.45 "Subsidiary" shall mean any entity (other than Vectren
Corporation)
with respect to which Vectren Corporation owns, either directly or
indirectly,
at least 50% of the total combined voting power of all classes of
stock or
other ownership interest.
ARTICLE III
ELIGIBILITY
3.1 Eligibility. The Committee shall have sole and complete
discretion in
determining the Eligible Employees and Outside Directors who shall
be eligible
to participate in the Plan. An Outside Director who is selected by
the
Committee to participate in the Plan shall only be eligible for
Awards under
Articles V, VI or VII and shall not be eligible for Annual
Incentive Awards
under Article VIII. An Eligible Employee or Outside Director of
the Company
designated by the Committee as eligible hereunder shall be
considered a
Participant upon receiving an Award under the Plan.
ARTICLE IV
SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided for in
Section 4.4
below, the maximum aggregate number of Shares that may be issued
pursuant to
Awards made under the Plan shall not exceed 4,000,000 Shares,
which shall be
in a combination of Stock Options, Restricted Stock, and, at the
discretion of
the Committee, other Awards as described in Article VII.
Notwithstanding the
foregoing, the maximum aggregate number of shares which may be
issued as
Awards in a form other than Stock Options shall not exceed 800,000
Shares.
Shares of Common Stock may be available from the authorized but
unissued
Shares, Shares issued and reacquired by the Company or Shares
purchased in the
open market for purposes of the Plan. Except as provided in
Sections 4.2 and
4.3 herein, the issuance of Shares in connection with the exercise
of, or as
other payment for, Awards under the Plan shall reduce the number
of Shares
available for future Awards under the Plan.
4.2 Lapsed Awards or Forfeited Shares. In the event that:
(a) any Option or other Award granted under the Plan
terminates,
expires, or lapses for any reason without having been
exercised in
accordance with its terms,
(b) Shares issued pursuant to the Awards are canceled or
forfeited
for any reason, or
(c) Awards are paid in cash,
the Shares subject to such Award shall thereafter be again
available for grant
of an Award under the Plan.
4.3 Delivery of Shares as Payment. In the event a Participant
pays for any
Option or other Award granted under the Plan through the delivery
of
previously acquired shares of Common Stock, the number of shares
of Common
Stock available for Awards under the Plan shall be increased by
the number of
shares surrendered by the Participant.
B-8
4.4 Capital Adjustments. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of
shares, merger,
consolidation, rights offering, or any other change in the
corporate
structure, capitalization or Shares of the Company, the Committee
shall make
such adjustments as are appropriate in the maximum number and kind
of Shares
that may be issued under the Plan and to any Participant, in the
number and
kind of Shares covered by any Awards granted before such change
and in the
Option Price of any Option granted before such change or in the
Fair Market
Value of the Shares on the Grant Date of any Stock Appreciation
Right granted
before such change. Such adjustments shall be intended to put the
Participant
in the same position as he or she was in immediately before such
event.
ARTICLE V
STOCK OPTIONS
5.1 Grant of Stock Options. Subject to the limitation set forth
in Section
4.1 and the other terms and provisions of the Plan and applicable
law, the
Committee, at any time and from time to time, may grant Stock
Options to
Participants as it shall determine. The Committee shall have sole
and complete
discretion in determining the type of Option granted, the Option
Price, the
duration of the Option, the number of Shares to which an Option
pertains, any
conditions imposed upon the exercisability or the transferability
of the
Options, including vesting conditions, the conditions under which
the Option
may be terminated, and any such other provisions as may be
warranted to comply
with the law or rules of any securities trading system or stock
exchange. Each
Option grant shall have such specified terms and conditions
detailed in an
Option Agreement. The Option Agreement shall specify whether the
Option is
intended to be an Incentive Stock Option or a Non-qualified Stock
Option.
However, no Incentive Stock Option may be awarded (a) after the
tenth
anniversary of the date this Plan is adopted by the Board or
approved by the
shareholders of the Company, whichever is earlier, or (b) to a
Participant who
is not an Employee.
5.2 Option Price. The exercise price per share of Stock covered
by an
Option shall be determined on the Grant Date by the Committee;
provided that
the Option Price shall not be less than 100% of the Fair Market
Value of the
Common Stock on the Grant Date. Further provided, in the case of
an Incentive
Stock Option granted to any Employee who owns more than 10% of the
total
combined voting power of all classes of stock of the Company or a
Subsidiary,
the Option Price shall not be less than 110% of the Fair Market
Value of the
Common Stock on the Grant Date.
(a) Restriction Against Re-Pricing or Replacement. No option
shall
provide by its terms for the re-setting of its exercise price or
for its
cancellation and reissuance, in whole or in part; provided that
the
foregoing shall not limit the authority of the Committee to
grant
additional Options hereunder.
5.3 Exercisability. Except as otherwise provided herein,
Options granted
under the Plan shall be exercisable at such times and be subject
to such
restrictions and conditions as the Committee shall determine,
which will be
specified in the Option Agreement and need not be the same for
each
Participant. However, under no circumstances, may an Incentive
Stock Option be
exercisable after the expiration of 10 years from the Grant Date
(5 years from
the Grant Date for any Employee who owns more than 10% of the
total combined
voting power of all classes of stock of the Company or a
Subsidiary).
5.4 Method of Exercise. Options shall be exercised by the
delivery of a
written notice from the Participant to the Company in a form
prescribed by the
Committee setting forth the number of Shares with respect to which
the Option
is to be exercised, accompanied by full payment of fee for the
Shares. The
Option Price shall be payable to the Company in full in cash, or
its
equivalent, or by delivery of Shares of Stock (not subject to any
security
interest or pledge or acquired from the Company within the
preceding six
months) having a Fair Market Value at the time of exercise equal
to the
exercise price of the Shares, or by a combination of the
foregoing. In
addition, at the request of the Participant, and subject to
applicable laws
and regulations, the Company may (but shall not be required to)
cooperate in a
Cashless Exercise of the Option. After receipt of written notice
and full
payment of the Option Price, the Company shall deliver to the
Participant as
soon as practicable, or, at a later
B-9
date mutually agreed to with a Participant, a stock certificate or
other
documentation, issued in the Participant's name, evidencing the
number of
Shares with respect to which the Option was exercised.
5.5 Death, Disability, Retirement or Other Termination of
Employment.
Except as otherwise provided in a Participant's Option Agreement:
(a) in the event of a Participant's death, Disability or
Retirement,
Options granted to the Participant shall be considered
immediately vested
and shall be exercisable at such time as specified in the Option
Agreement,
and
(b) subject to Article X, in the event the Participant
resigns, is
terminated from the Company or, in the case of an Outside
Director, is not
reelected to the Board or otherwise resigns as a member of the
Board,
Options which have not vested by such date shall be forfeited,
and the
Participant shall have three months from such date to exercise
vested
Options (but not beyond the expiration of the term of the
Option, if
earlier). Notwithstanding the foregoing, if the Participant is
terminated
from the Company for Cause (as defined in Section 10.4), the
Participant
shall be required to exercise any vested Options immediately,
and any
vested Options not immediately exercised shall lapse.
ARTICLE VI
RESTRICTED STOCK
6.1 Grant of Restricted Stock. Subject to the limitations set
forth in
Section 4.1 and the other terms and provisions of the Plan and
applicable law,
the Committee, at any time, and, from time to time, may grant
shares of
Restricted Stock under the Plan to such Participants, and in such
amounts and
for such duration and/or consideration as it shall determine.
6.2 Restricted Stock Award Agreement. Each Restricted Stock
granted
hereunder shall be evidenced by an Award Agreement that shall
specify the
Restriction Period, the conditions which must be satisfied prior
to removal of
the restriction, the forfeiture of such Shares in the event such
conditions
are not satisfied, the number of Shares of Restricted Stock
granted, and such
other provisions as the Committee shall determine. The Committee
may specify,
but is not limited to, the following types of conditions in the
Award
Agreement: (a) conditions for acceleration or achievement of the
end of the
Restriction Period based on any Performance Criteria and (b) any
other
conditions or restrictions which the Committee may deem advisable,
including
requirements established pursuant to the Securities Act, the
Exchange Act, the
Code and any securities trading system or stock exchange upon
which such
Shares under the Plan are listed.
Notwithstanding the foregoing, the Committee shall have the
authority to
grant additional unrestricted Stock to a Participant hereunder,
provided
Performance Criteria are satisfied for the Performance Period.
6.3 Restriction Period. Except as otherwise provided in this
Article, the
Shares of Restricted Stock granted under the Plan may not be sold,
transferred, pledged, assigned, or otherwise alienated or
hypothecated until
the termination of the applicable Restriction Period or upon
earlier
satisfaction of other conditions as specified by the Committee in
its sole
discretion and set forth in the applicable Award Agreement.
Subject to Section 6.7 and Article X, if a Participant resigns,
is
otherwise terminated from the Company or, in the case of an
Outside Director
is not reelected to the Board or otherwise resigns as a member of
the Board,
prior to the end of the Restriction Period, he or she will forfeit
all
interests in the Award. All rights with respect to the Restricted
Stock
granted to a Participant under the Plan shall be exercisable
during his or her
lifetime only by such Participant or his or her guardian or legal
representative.
6.4 Removal of Restrictions and Deferral of Payment. Except as
otherwise
provided in this Article, Restricted Stock covered by each Award
made under
the Plan shall become freely transferable by the Participant after
the last
day of the Restriction Period and/or upon the satisfaction of
other conditions
as determined by the Committee.
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Furthermore, upon the expiration of the Restriction Period, a
Participant
may defer the value of the Awards under the non-qualified deferred
compensation plan, including any successor plan, sponsored by the
Company if
the Participant is eligible under such plan and if such plan
provides for
deferral of Awards hereunder.
6.5 Voting Rights. During the Restriction Period, Participants
in whose
name Restricted Stock is granted under the Plan may exercise full
voting
rights with respect to those shares.
6.6 Dividends and Other Distributions. During the Restriction
Period,
Participants in whose name Restricted Stock is granted under the
Plan shall be
entitled to receive all dividends and other distributions paid
with respect to
those Shares. If any such dividends or distributions are paid in
Shares, the
Shares shall be subject to the same restrictions on
transferability and
forfeitability as the Restricted Stock with respect to which they
were
distributed.
6.7 Death, Disability or Retirement. Except as otherwise
provided in a
Participant's Award Agreement, in the event of the Participant's
death,
Disability, or Retirement the following shall apply:
(a) If such event occurs after the end of the Performance
Period but
before the end of the Restriction Period, restrictions on all
Shares shall
be immediately removed;
(b) In the event of the Participant's Disability or
Retirement before
the Performance Period has ended, the restrictions on the shares
awarded to
the Participant shall be removed upon expiration of the
Performance Period,
and the number of Shares the Participant shall be entitled to,
if any,
shall equal (i) the number of Shares, if any, the Participant
would
otherwise be entitled to had the individual been an active
Participant at
the end of the Performance Period (i.e., as adjusted or
forfeited based on
the Performance Criteria) multiplied by (ii) the portion of the
Performance
Period the Participant was an active Participant hereunder; and
(c) In the event of the Participant's death before the
Performance
Period has ended, the restrictions on the shares awarded to the
Participant
shall be removed upon the Participant's date of death, and the
number of
Shares the Participant shall be entitled to, if any, shall equal
the number
of Shares contingently granted to the Participant, without any
further
adjustment.
ARTICLE VII
OTHER STOCK BASED AWARDS
7.1 Grant of Other Stock Based Awards. Subject to the
limitations set forth
in Section 4.1 and the other terms and provisions of the Plan and
applicable
law, with prior Board approval, the Committee may, at any time and
from time
to time, issue to Participants, either alone or in addition to
other Awards
made under the Plan, Stock Appreciation Rights as described in
Section 7.2,
Performance Awards as described in Section 7.3, or other Stock
Unit Awards as
described in Section 7.4. Any such Awards shall be governed by the
terms of an
Agreement, and the Committee may impose such terms and conditions,
similar to
those described in Section 5.1 and/or Section 6.2 and not
inconsistent with
the terms of this Plan, as it deems appropriate on such Award.
7.2 Stock Appreciation Rights.
(a) Grant of Stock Appreciation Rights. Stock Appreciation
Rights
granted in tandem with an Option or in addition to an Option may
be granted
at the time of the Option or at a later time. No Stock
Appreciation Rights
granted under the Plan may be exercisable until the expiration
of at least
six months after the Grant Date (except that such limitations
shall not
apply in the case of death or Disability of the Participant).
(b) Price. The exercise price of each Stock Appreciation
Right shall be
determined at the time of grant by the Committee, subject to the
limitation
that the grant price shall not be less than 100% of Fair Market
Value of
the Common Stock on the Grant Date.
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(c) Exercise. Stock Appreciation Rights shall be exercised by
the
delivery of a written notice from the Participant to the Company
in a form
prescribed by the Committee. Upon such exercise, the Participant
shall be
entitled to receive an amount equal to the excess of the Fair
Market Value
of a Share over the grant price thereof on the date of exercise
of the
Stock Appreciation Right multiplied by the number of Shares for
which the
Stock Appreciation Right was granted.
(d) Payment. Payment upon exercise of the Stock Appreciation
Right shall
be made in the form of cash, cash installments, Shares of Common
Stock, or
a combination thereof, as determined in the sole and complete
discretion of
the Committee. However, if any payment in the form of Shares
results in a
fractional share, such payment for the fractional share shall be
made in
cash.
7.3 Performance Awards.
(a) Grant of Performance Awards. Performance Awards granted
hereunder
may be issued in the form of either Performance Units or
Performance Shares
to Participants subject to the Performance Criteria, Performance
Period and
other considerations or restrictions as the Committee shall
determine. The
Committee shall have complete discretion in determining the
number and
value of Performance Units or Performance Shares granted to each
Participant.
(b) Value of Performance Awards. The Committee shall
determine the
number and value of Performance Units or Performance Shares
granted to each
Participant as a Performance Award. The Committee shall set
Performance
Criteria in its discretion for each Participant who is granted a
Performance Award. The extent to which such Performance Criteria
are met
will determine the value of the Performance Unit or Performance
Share to
the Participant.
(c) Settlement of Performance Awards. After a Performance
Period has
ended, the holder of a Performance Unit or Performance Share
shall be
entitled to receive the value thereof based on the degree to
which the
Performance Criteria established by the Committee and set forth
in the
Award Agreement have been satisfied.
(d) Form of Payment. Payment of the amount to which a
Participant shall
be entitled upon the settlement of the Performance Award shall
be made in
cash, Stock, or a combination thereof and may be made in a lump
sum or
installments all as determined by the Committee and set forth in
the
related Award Agreement.
7.4 Stock Unit Awards.
(a) Grant of Other Stock Unit Awards. Stock Unit Awards
granted
hereunder may be in the form of Common Stock or other
securities. The value
of each such Award shall be based, in whole or in part, on the
value of the
underlying Common Stock on the Grant Date. The Committee, in its
sole and
complete discretion, may determine that an Award, either in the
form of a
Stock Unit Award under this Section or as an Award granted
pursuant to the
other provisions of the Plan, may provide to the Participant (i)
dividends
or dividend equivalents (payable on a current or deferred basis)
and (ii)
cash payments in lieu of or in addition to an Award. Subject to
the
provisions of the Plan, the Committee, in its sole and complete
discretion,
shall determine the terms, restrictions, conditions, vesting
requirements,
and payment rules of the Award. The Award Agreement shall
specify the rules
of each Award as determined by the Committee. However, each
Stock Unit
Award need not be subject to identical rules.
(b) Rules. The Committee, in its sole and complete
discretion, may grant
a Stock Unit Award subject to the following rules:
(i) Common Stock or other securities issued pursuant to
Stock Unit
Awards may not be sold, transferred, pledged, assigned or
otherwise
alienated or hypothecated by a Participant until the
expiration of at
least six months from the Grant Date, except that such
limitation shall
not apply in the case of death or Disability of the
Participant, a
Change in Control, or where a Committee of the Board,
comprised of non-
Employee directors of the Company within the meaning of Rule
16b-3,
approved the Award. To the extent Stock Unit Awards are deemed
to be
derivative securities within the meaning
B-12
of Rule 16b-3, the rights of a Participant who is subject to
Section 16
of the Exchange Act with respect to such Awards shall not vest
or be
exercisable until the expiration of at least six months from
the Award
Date unless the Board or the Committee, comprised of non-
Employee
directors of the Company within the meaning of Rule 16b-3,
specifies
otherwise. All rights with respect to such Stock Unit Awards
granted to
a Participant under the Plan shall be exercisable during his
or her
lifetime only by such Participant or his or her guardian or
legal
representative.
(ii) Stock Unit Awards may require the payment of cash
consideration
by the Participant in receipt of the Award or provide that the
Award,
and any Common Stock or other securities issued in conjunction
with the
Award, be delivered without the payment of cash consideration.
(iii) The Committee, in its sole and complete discretion,
may
establish certain Performance Criteria that may relate in
whole or in
part to receipt of Stock Unit Awards.
(iv) Stock Unit Awards may be subject to a deferred payment
schedule
and/or vesting over a specified period.
(v) The Committee, in its sole and complete discretion, as
a result
of certain circumstances, may waive or otherwise remove, in
whole or in
part, any restriction or condition imposed on a Stock Unit
Award,
except to the extent that the existence of such discretion
would cause
the tax deduction of the Company in respect of the Stock Unit
Award to
be limited under Code Section 162(m).
7.5 Death, Disability, Retirement or Other Termination of
Employment.
Unless otherwise provided in a Participant's Award Agreement, in
the event of
death, Disability, or Retirement similar rules as provided in
Section 5.5 or
6.7 (as applicable) shall apply to an Award granted under this
Article.
7.6 Deferral of Payment. Notwithstanding the above, a
Participant who is
entitled to payment of an Award under this Article and who is
eligible under
the non-qualified deferred compensation plan sponsored by the
Company may
defer such payment to the extent provided under such plan.
ARTICLE VIII
ANNUAL INCENTIVE AWARDS
8.1 Timing and Determination of Annual Incentive Awards.
Following the
completion of a Performance Period, the Committee shall undertake
or direct an
evaluation of Performance Criteria for such Performance Period as
determined
in Section 8.2.
No Annual Incentive Award may be paid without a certification
by the
Committee that the Performance Goals have been met.
Any Annual Incentive Awards will be paid at such time or times
as may be
determined by the Committee following the end of the Performance
Period to
which they relate, but not later than the last day of the third
month
following the end of the Performance Period without the consent of
the
affected Participant.
8.2 Performance Criteria for Annual Incentive Awards.
Performance Criteria
of the Company will be established in writing by the Committee
before the
beginning of each Performance Period or at such later time as may
be permitted
by Section 162(m) of the Code to maintain the status of Annual
Incentive
Awards as performance-based Compensation.
The Performance Period with respect to Awards shall be the
calendar year or
any other period designated as such by the Committee.
8.3 Maximum Annual Incentive Award. The maximum individual
Annual Incentive
Award for a Performance Period of twelve calendar months will be
$1,500,000,
provided the Eligible Employee has been a Participant for such
twelve month
period. In the event that an Annual Incentive Award is being
determined for a
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Performance Period of less than twelve calendar months or for the
Performance
Period in which the Eligible Employee becomes a Participant, dies
or incurs a
Disability, the maximum Annual Incentive Award of $1,500,000 shall
be prorated
in accordance with Section 8.4 or 8.5, whichever is applicable.
8.4 Short Performance Year.
(a) Death, Disability or Retirement. In the event of a
Participant's
death, Disability or Retirement prior to the date the Annual
Incentive
Award is paid, the following shall apply:
(i) In the event of the Participant's death or Disability
before the
end of the Performance Period, the Company will be assumed to
have
achieved a target performance level for the Performance Period
in which
death or Disability occurs for purposes of determining the
Annual
Incentive Award. In the event of the Participant's death or
Disability
after the end of the Performance Period, but before the date
the Annual
Incentive Award is paid, the Participant's Annual Incentive
Award shall
be payable based on the actual Performance Criteria for the
entire
period.
(ii) In the event of a Participant's Retirement, the
Participant's
Annual Incentive Award shall be determined and payable
following the
end of the Performance Period based on the actual Performance
Criteria
for the entire period.
(iii) The amount of Annual Incentive Award shall be
prorated as
necessary to reflect the period of time during which the
individual was
employed in the Performance Period.
(b) New Participants. In the event an individual becomes a
Participant
and is eligible for an Annual Incentive Award based on a
Performance Period
shorter than twelve months, such Annual Incentive Award shall be
prorated
to reflect the period of time the individual was employed in the
Performance Period.
8.5 Limitation on Right to Payment of Award. Notwithstanding
any other Plan
provision to the contrary, no Participant shall have a right to
receive
payment of an Annual Incentive Award under the Plan if, subsequent
to the
commencement of the Performance Period and prior to the date any
Award would
otherwise be payable, the Participant resigns or is otherwise
terminated from
the Participating Company for reasons other than death,
Disability, or
Retirement or following a Change in Control.
ARTICLE IX
SPECIAL PROVISIONS APPLICABLE TO COVERED PARTICIPANTS
9.1 Special Provisions Applicable to Covered Participants.
Awards to
Covered Participants shall be governed by the conditions of this
Article in
addition to the requirements of Articles V through VIII above.
Should
conditions set forth under this Article conflict with the
requirements of
Articles V through VIII, the conditions of this Article shall
prevail.
(a) All Performance Criteria relating to Covered Participants
for a
relevant Performance Period shall be established by the
Committee in
writing prior to the beginning of the Performance Period, or by
such other
later date for the Performance Period as may be permitted under
Section
162(m) of the Code.
(b) The Performance Criteria must be objective and must
satisfy third
party "objectivity" standards under Code Section 162(m), and the
regulations promulgated thereunder.
(c) The Performance Criteria shall not allow for any
discretion by the
Committee as to an increase in any Award, but discretion to
lower an Award
is permissible.
(d) The Award and payment of any Award under this Plan to a
Covered
Participant with respect to a relevant Performance Period shall
be
contingent upon the attainment of the Performance Criteria that
are
applicable to such Award. The Committee shall certify in writing
prior to
payment of any such Award that such applicable Performance
Criteria have
been satisfied. Resolutions adopted by the Committee may be used
for this
purpose.
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(e) The aggregate maximum Awards that may be granted to any
Covered
Participant under Article VI and the maximum number of Shares
represented
by Performance Shares that may be granted to any Covered
Participant under
Article VII during any calendar year shall be 100,000 Shares.
The maximum
aggregate amount payable in respect of all other Stock Based
Awards (except
Stock Appreciation Rights) granted to a Covered Participant
pursuant to
Article VII during any calendar year cannot exceed $1 million.
(f) The aggregate maximum number of shares of Stock subject
to Options
under Article V and Stock Appreciation Rights under Article VII
made to any
Covered Participant during any calendar year shall be 500,000.
(g) All Awards under this Plan to Covered Participants or to
other
Participants who may become Covered Participants at a relevant
future date
shall be further subject to such other conditions, restrictions,
and
requirements as the Committee may determine to be necessary to
carry out
the purposes of this Article, which is to avoid the loss of
deductions by
the Company under Code section 162(m).
ARTICLE X
CHANGE IN CONTROL
10.1 Change in Control Agreements. The provision of this
Section regarding
the terms and conditions of an Award Agreement upon a Change in
Control shall
apply notwithstanding any Plan provision to the contrary, and
notwithstanding
any agreement between the Participating Company and such
Participant which
relate to the terms of the Awards hereunder upon a Change in
Control.
Upon a Change in Control, the following shall apply:
(a) The Awards previously granted shall be immediately vested
and not
subject to forfeiture due to any subsequent termination from
employment or
removal or resignation from the Board.
(b) In the event the Participant terminates employment from
the Company
with Good Reason or is terminated by the Company (except for
Cause), any
Stock Option Awards shall be exercisable within such time as
specified in
the Option Agreement. In the event the Participant otherwise
resigns from
the Company any Stock Option Awards shall be exercisable within
3 months
following such termination of employment. In the event the
Participant is
terminated by the Company for Cause, the Participant shall be
required to
exercise Options immediately, and Options not immediately
exercised shall
lapse.
(c) Restrictions on any Restricted Stock shall be eliminated
as of such
event.
(d) If the Change in Control occurs before the end of the
Performance
Period, no further adjustment shall be made to the number of
Shares of
Restricted Stock contingently granted based on the Performance
Criteria.
(e) Annual Incentive Awards shall be considered earned and
shall not be
subject to forfeiture due to any subsequent termination from
employment. If
the Change in Control occurs before the end of the Performance
Period, the
amount of the Annual Incentive Award shall be determined
assuming the
Company has achieved a target performance level and, the amount
shall then
be multiplied by the portion of the Performance Period the
individual was
an active Participant hereunder. If the Change in Control occurs
after the
end of the Performance Period but before the Annual Incentive
Award is
paid, the amount payable shall be determined based on the actual
performance level. In either case payment of the Annual
Incentive Award
shall be made as soon as practicable following the Change in
Control.
10.2 Change in Control Defined. For purposes of this Article,
"Change in
Control" shall have the same meaning as such term or similar term
is defined
in a Participant's individual agreement with the Company which
relates to such
Participant's compensation and benefits upon the occurrence of a
change in
ownership of the Participating Company or similar event.
(a) In the event there is no such agreement, "Change in
Control" shall
mean:
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(i) The acquisition by any individual, entity or group
(within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
(a
"Person") of beneficial ownership (within the meaning of Rule
13d-3
promulgated under the Exchange Act) of twenty percent (20%) or
more of
either (A) the then outstanding shares of Common Stock of the
Company
(the "Outstanding Company Common Stock") or (B) the combined
voting
power of the then outstanding voting securities of the Company
entitled
to vote generally in the election of directors (the
"Outstanding
Company Voting Securities"); provided, however, that the
following
acquisitions shall not constitute an acquisition of control:
any
acquisition directly from the Company (excluding an
acquisition by
virtue of the exercise of a conversion privilege), any
acquisition by
the Company, any acquisition by any employee benefit plan (or
related
trust) sponsored or maintained by the Company or any
corporation
controlled by the Company or any acquisition by any
corporation
pursuant to a reorganization, merger or consolidation, if,
following
such reorganization, merger or consolidation, the conditions
described
in clauses (A), (B) and (C) of subsection (iii) of this
section are
satisfied;
(ii) Individuals who, as of the Effective Date, constitute
the Board
of Directors of the Company (the "Incumbent Board") cease for
any
reason to constitute at least a majority of the Board of
Directors of
the Company (the "Board"); provided, however, that any
individual
becoming a director subsequent to the date hereof whose
election, or
nomination for election by the Company's shareholders, was
approved by
a vote of at least a majority of the directors then comprising
the
Incumbent Board shall be considered as though such individual
were a
member of the Incumbent Board, but excluding, for this
purpose, any
such individual whose initial assumption of office occurs as a
result
of either an actual or threatened election contest (as such
terms are
used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange
Act) or other actual or threatened solicitation of proxies or
consents
by or on behalf of a Person other than the Board;
(iii) Consummation of a reorganization, merger or
consolidation, in
each case, unless, following such reorganization, merger or
consolidation, (A) more than sixty percent (60%) of,
respectively, the
then outstanding shares of common stock of the corporation
resulting
from such reorganization, merger or consolidation and the
combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common
Stock and Outstanding Company Voting Securities immediately
prior to
such reorganization, merger or consolidation in substantially
the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation, of the Outstanding
Company
Stock and Outstanding Company Voting Securities, as the case
may be,
(B) no Person (excluding the Company, any employee benefit
plan or
related trust of the Company, or such corporation resulting
from such
reorganization, merger or consolidation and any Person
beneficially
owning, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, twenty percent (20%) or
more of
the Outstanding Company Common Stock or Outstanding Voting
Securities,
as the case may be) beneficially owns, directly or indirectly,
twenty
percent (20%) or more of, respectively, the then outstanding
shares of
common stock of the corporation resulting from such
reorganization,
merger or consolidation or the combined voting power of the
then
outstanding voting securities of such corporation entitled to
vote
generally in the election of directors and (C) at least a
majority of
the members of the board of directors of the corporation
resulting from
such reorganization, merger or consolidation were members of
the
Incumbent Board at the time of the execution of the initial
agreement
providing for such reorganization, merger or consolidation;
(iv) Approval by the shareholders of the Company of (A) a
complete
liquidation or dissolution of the Company or (B) the sale or
other
disposition of all or substantially all of the assets of the
Company,
other than to a corporation, with respect to which following
such sale
or other disposition (1) more than sixty percent (60%) of,
respectively, the then outstanding shares of common stock of
such
corporation and the combined voting power of the then
outstanding
voting securities of such corporation entitled to vote
generally in the
election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities
who were the beneficial owners,
B-16
respectively, of the Outstanding Company Common Stock and
Outstanding
Company Voting Securities immediately prior to such sale or
other
disposition in substantially the same proportion as their
ownership,
immediately prior to such sale or other disposition, of the
Outstanding
Company Common Stock and Outstanding Company Voting
Securities, as the
case may be, (2) no Person (excluding the Company and any
employee
benefit plan or related trust of the Company, or such
corporation and
any Person beneficially owning, immediately prior to such sale
or other
disposition, directly or indirectly, twenty percent (20%) or
more of
the Outstanding Company Common Stock or Outstanding Company
Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, twenty percent (20%) or more of, respectively, the
then
outstanding shares of common stock of such corporation and the
combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors and
(3) at least a majority of the members of the board of
directors of
such corporation were members of the Incumbent Board at the
time of the
execution of the initial agreement or action of the Board
providing for
such sale or other disposition of assets of the Company; or
(v) The closing, as defined in the documents relating to,
or as
evidenced by a certificate of any state or federal
governmental
authority in connection with, a transaction approval of which
by the
shareholders of the Company would constitute an "Change in
Control"
under subsection (iii) or (iv) of this Section.
(b) Notwithstanding (a) above, if the Participant's
employment is
terminated before a Change in Control as defined in this Section
and the
Participant reasonably demonstrates that such termination (i)
was at the
request of a third party who has indicated an intention or taken
steps
reasonably calculated to effect a "Change in Control" and who
effectuates a
"Change in Control" or (ii) otherwise occurred in connection
with, or in
anticipation of, a "Change in Control" which actually occurs,
then for all
purposes of this Agreement, the date of a "Change in Control"
with respect
to the Participant shall mean the date immediately prior to the
date of
such termination of the Participant's employment.
10.3 Good Reason Defined. For purposes of Section 10.1(b),
"Good Reason"
shall mean, without the Participant's written consent,
(a) a demotion in the Participant's status, position or
responsibilities
which, in his reasonable judgment, does not represent a
promotion from his
status, position or responsibilities as in effect immediately
prior to the
Change in Control;
(b) the assignment to the Participant of any duties or
responsibilities
which, in his reasonable judgment, are inconsistent with such
status,
position or responsibilities immediately prior to the Change in
Control; or
any removal of the Participant from or failure to reappoint or
reelect him
to any of such positions that the Participant had immediately
prior to the
Change in Control;
(c) a reduction by the Company in the Participant's base
salary or the
Company's failure to increase (within twelve (12) months of the
Participant's last increase in base salary) the Participant's
base salary
after a Change in Control in an amount which at least equals, on
a
percentage basis, the average percentage increase in base salary
for all
executive and senior executives of the Company effected in the
preceding
twelve (12) months;
(d) the relocation of the principal executive offices of the
Company or
Subsidiary, whichever entity on behalf of which the Participant
performs a
principal function of that entity as part of his employment
services, to a
location more than fifty (50) miles outside the Evansville,
Indiana
metropolitan area or, if his services are not performed in
Evansville,
Indiana, the Company's requiring him to be based at any place
other than
the location at which he performed his duties immediately prior
to the
Change in Control, except for required travel on the Company's
business to
an extent substantially consistent with his business travel
obligations at
the time of a Change in Control;
(e) the failure by the Company to continue in effect any
incentive,
bonus or other compensation plan in which the Participant
participates
immediately prior to the Change in Control, including but not
limited
B-17
to this Plan, unless an equitable arrangement (embodied in an
ongoing
substitute or alternative plan), with which he has consented,
has been made
with respect to such plan in connection with the Change in
Control, or the
failure by the Company to continue his participation therein, or
any action
by the Company which would directly or indirectly materially
reduce his
participation therein;
(f) the failure by the Company to continue to provide the
Participant
with benefits substantially similar to those enjoyed by him or
to which he
was entitled under any of the Company's pension, profit sharing,
life
insurance, medical, dental, health and accident, or disability
plans in
which he was participating at the time of a Change in Control,
the taking
of any action by the Company which would directly or indirectly
materially
reduce any of such benefits or deprive him of any material
fringe benefit
enjoyed by him or to which he was entitled at the time of the
Change in
Control, or the failure by the Company to provide him with the
number of
paid vacation and sick leave days to which he is entitled on the
basis of
years of service with the Company in accordance with the
Company's normal
vacation policy in effect on the date hereof;
(g) the failure of the Company to obtain a satisfactory
agreement with
any successor or assign of the Company to assume and agree to
perform under
any Change in Control agreement between the Company and the
Participant; or
(h) any request by the Company that the Participant
participate in an
unlawful act or take any action constituting a breach of the
Participant's
professional standard of conduct.
For the purpose of Section 10.1(b), "Good Reason" shall also
mean with the
Participant's written consent, the exercise by the Participant of
a
contractual right to terminate his or her employment voluntarily,
without good
reason, during a thirty (30) day period immediately following the
first annual
anniversary of a Change in Control.
10.4 Cause Defined. For purposes of Sections 10.1(b) and
5.5(b), "Cause"
shall mean
(a) intentional gross misconduct by the Participant damaging
in a
material way to the Company, or
(b) a material breach of the Participant's employment
agreement, after
the Company has given the Participant notice thereof and a
reasonable
opportunity to cure.
ARTICLE XI
ADMINISTRATION
11.1 The Committee. The Plan shall be administered and
interpreted by the
Committee which shall have full authority, discretion and power
necessary or
desirable for such administration and interpretation. The express
grant in
this Plan of any specific power to the Committee shall not be
construed as
limiting any power or authority of the Committee. In its sole and
complete
discretion the Committee may adopt, alter, suspend and repeal any
such
administrative rules, regulations, guidelines, and practices
governing the
operation of the Plan as it shall from time to time deem
advisable. In
addition to any other powers and, subject to the provisions of the
Plan, the
Committee shall have the following specific powers: (a) to
determine the terms
and conditions upon which Awards may be made and exercised; (b) to
determine
the Participants to which Awards shall be made; (c) to determine
all terms and
provisions of each Agreement, which need not be identical for
types of Awards
nor for the same type of Award to different Participants; (d) to
construe and
interpret all terms, conditions and provisions of the Plan and all
Agreements;
(e) to establish, amend, or waive rules or regulations for the
Plan's
administration; (f) to accelerate the exercisability of any Award,
the length
of a Performance Period or the termination of any Period of
Restriction; and
(g) to make all other determinations and take all other actions
necessary or
advisable for the administration or interpretation of the Plan.
The Committee
may seek the assistance or advice of any persons it deems
necessary to the
proper administration of the Plan.
11.2 Committee Decisions. Unless strictly and expressly
prohibited by law,
all determinations and decisions made by the Committee pursuant to
the
provisions of this Plan shall be final, conclusive, and binding
upon all
persons, including Participants, Designated Beneficiaries, the
Company, its
shareholders and employees.
11.3 Rule 16b-3 and Section 162(m) Requirements.
Notwithstanding any other
provision of the Plan, the Committee may impose such conditions on
any Award
as it may deem to be advisable or required to satisfy the
requirements of Rule
16b-3 or Section 162(m).
B-18
ARTICLE XII
GENERAL PROVISIONS
12.1 Withholding. The Company shall have the right to deduct or
withhold,
or require a Participant to remit to the Company, any taxes
required by law to
be withheld from Awards made under this Plan. In the event an
Award is paid in
the form of Common Stock, the Participant may remit to the Company
the amount
of any taxes required to be withheld from such payment in cash,
or, in lieu
thereof, the Company may withhold (or the Participant may be
provided the
opportunity to elect to tender) the number of shares of Common
Stock equal in
Fair Market Value to the amount required to be withheld.
12.2 Terms of Awards. Each Award granted under the Plan shall
be evidenced
in a corresponding Award Agreement provided in writing to the
Participant,
which shall specify the terms, conditions and any rules applicable
to the
Award, including but not limited to the effect of a Change in
Control, or
death, Disability, or other termination of employment of the
Participant on
the Award.
12.3 Non-transferability. No Award, including any Options,
granted under
the Plan may be sold, transferred, pledged, assigned or otherwise
alienated or
hypothecated, except by will or the laws of descent and
distribution. Further,
no lien, obligation, or liability of the Participant may be
assigned to any
right or interest of the Participant in an Award under this Plan.
12.4 No Right to Employment. Neither the Plan, nor any Award
made, or any
other action taken, hereunder shall be construed as giving any
Participant or
other person any right of employment or continued employment with
the
Participating Company.
12.5 Rights as Shareholder. Subject to the terms and conditions
of each
particular Award, no Participant or Designated Beneficiary shall
be deemed a
shareholder of the Company nor have any rights as such with
respect to any
shares of Common Stock to be provided under the Plan until he or
she has
become the holder of such shares.
12.6 Construction of the Plan. Except to the extent superceded
by the laws
of the United States, the Plan and all Agreements shall be
governed,
construed, interpreted and administered in accordance with the
laws of the
State of Indiana. In the event any provision of the Plan or any
Agreement
shall be held invalid, illegal or unenforceable, in whole or in
part, for any
reason, such determination shall not affect the validity, legality
or
enforceability of any remaining provision, portion of provision or
the Plan
overall, which shall remain in full force and effect as if the
Plan had been
absent the invalid, illegal or unenforceable provision or portion
thereof.
12.7 Amendment of Plan. The Committee or the Board of Directors
may amend,
suspend, or terminate the Plan or any portion thereof at any time,
provided
such amendment is made with shareholder approval if and to the
extent such
approval is necessary to comply with any legal requirement,
including for
these purposes any approval requirement which is a requirement for
the
performance-based compensation exception under Code Section
162(m).
12.8 Amendment of Award. In no event shall the Committee
increase the
amount payable pursuant to an Award after it has been granted. In
addition, no
amendment shall be made to an outstanding Award without written
consent of the
affected Participant.
12.9 Exemption from Computation of Compensation for Other
Purposes. By
acceptance of an applicable Award under this Plan, subject to the
conditions
of such Award, each Participant shall be considered in agreement
that all
shares of Stock sold or awarded and all Options granted under this
Plan shall
be considered extraordinary, special incentive compensation and
will not be
included as "earnings," "wages," "salary" or "compensation" in any
pension,
welfare, life insurance, or other employee benefit arrangement of
the Company
except as otherwise specifically provided in such arrangement.
B-19
12.10 Legend. In it sole and complete discretion, the Committee
may elect
to legend certificates representing Shares sold or awarded under
the Plan, to
make appropriate references to the restrictions imposed on such
Shares.
12.11 Special Provisions for Certain Participants. All Award
Agreements for
Participants subject to Section 16(b) of the Exchange Act shall be
deemed to
include any such additional terms, conditions, limitations and
provisions as
Rule 16b-3 requires, unless the Committee in its discretion
determines that
any such Award should not be governed by Rule 16b-3. All
performance-based
Awards to Covered Participants shall be deemed to include any such
additional
terms, conditions, limitations and provisions as are necessary to
comply with
the performance-based compensation exemption of Code Section
162(m), unless
the Committee, in its discretion, determines that any such Award
is not
intended to qualify for the exemption for performance-based
compensation under
Code Section 162(m).
12.12 Unfunded Plan. The Plan shall be unfunded and the Company
shall not
be required to segregate any assets in connection with any Awards
under the
Plan. Any liability of the Company to any person with respect to
any Award
under the Plan or any Award Agreement shall be based solely upon
the
contractual obligations that may be created as a result of the
Plan or any
such award or agreement. No such obligation of the Company shall
be deemed to
be secured by any pledge of, encumbrance on, or other interest in,
any
property or asset of the Company or any Subsidiary. Nothing
contained in the
Plan or any Award Agreement shall be construed as creating in
respect of any
Participant (or beneficiary thereof or any other person) any
equity or other
interest of any kind in any assets of the Company or any
Subsidiary or
creating a trust of any kind or a fiduciary relationship of any
kind between
the Company, any Subsidiary and/or any such Participant, any
beneficiary
thereof or any other person.
12.13 Conflict with Employment Agreement. Except as specified
in Article X
or otherwise restricted under Section 12.11, to the extent any
provision of
this Plan conflicts with any provision of a written employment
agreement
between an Employee and the Company, the material terms of which
have been
approved by the Board, the provisions of the employment agreement
shall
control.
12.14 Gender and Number. Where the context admits, words in the
masculine
gender shall include the feminine gender, the plural shall include
the
singular and the singular shall include the plural.
12.15 Severability. In the event any provision of this Plan
shall be held
to be illegal or invalid for any reason, such illegality or
invalidity shall
not affect the remaining parts of this Plan, and this Plan shall
be construed
and endorsed as if such illegal or invalid provision had never
been contained
in this Plan.
12.16 Effect of Headings. The descriptive headings of the
Articles and
Sections of this Plan are inserted for convenience of reference
and
identification only and do not constitute a part of this Plan for
purposes of
interpretation.
12.17 No Liability. No member of the Board or the Committee or
any officer
or Employee shall be personally liable for any action, omission or
determination made in good faith in connection with this Plan. The
Company
shall indemnify and hold harmless the members of the Committee,
the Board and
the officers and Employees, and each of them, from and against any
and all
loss which results from liability to which any of them may be
subjected by
reason of any act or conduct (except willful misconduct or gross
negligence)
in their official capacities in connection with the administration
of this
Plan, including all expenses reasonably incurred in their defense,
in case the
Company fails to provide such defense. By participating in this
Plan, each
Employee agrees to release and hold harmless the Company and its
Subsidiaries
(and their respective directors, officers and employees), the
Board and the
Committee, from and against any tax or other liability, including
without
limitation, interest and penalties, incurred by the Employee in
connection
with his participation in this Plan.
B-20
IN WITNESS WHEREOF, the Company has caused this instrument to
be executed by
its duly authorized Compensation Committee Chair as of this 24th
day of
January, 2001.
Vectren Corporation
/s/ Robert L.
Koch II
By:
_________________________________
Robert L.
Koch II
Compensation
Committee Chair
ATTEST
/s/ Ronald E. Christian
By: _________________________________
Ronald E. Christian
Senior Vice President, Secretary
and
General Counsel
B-21
[X] Please mark your vote as in this example.
5455
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. UNLESS OTHERWISE SPECIFIED, THE
SHARES WILL BE
VOTED FOR PROPOSALS 1 AND 2.
- ------------------------------------------------------------------
- --------------
The Board of Director recommends a vote FOR each of the
items below
- ------------------------------------------------------------------
- --------------
FOR WITHHOLD
1. Election of [_] [_]
Directors
FOR AGAINST ABSTAIN
2. Approval of the Company's [_] [_] [_]
At-Risk Compensation
Plan.
3. In their discretion, the proxies are authorized to vote upon
such other
business as may properly come before the meeting.
Nominees:
01. John D. Engelbrecht
02. William G. Mays
03. J. Timothy McGinley
04. Richard P. Rechter
For, except vote withheld from the following nominee(s):
- ------------------------------------------------------------------
- --------------
THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE VOTE ON THE
PROPOSALS.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY. THANK YOU.
Signature of Shareholder(s) ________________________________ Date:
______
Please sign exactly as your name(s) appears hereon. All joint
tenants should
date this proxy and sign. When signing as attorney, executor,
administrator,
trustee or guardian, give full title as such. If a corporation,
sign the full
corporate name by an authorized officer. If a partnership, sign in
partnership
name by authorized person.
. FOLD AND DETACH HERE .
VECTREN CORPORATION
Dear Shareholder:
We encourage you to vote your shares electronically this year
either by
telephone or via the Internet. This will eliminate the need to
return your proxy
card. You will need your proxy card and Social Security number
(where
applicable) when voting your shares electronically. The Vote
Control Number that
appears in the box above, just below the perforation, must be used
in order to
vote by telephone or via the Internet.
The EquiServe Vote by Telephone and Vote by Internet systems can
be accessed
24-hours a day, seven days a week up until the day prior to the
meeting.
To Vote by Telephone:
- ---------------------
Using a touch-tone phone call Toll-free: 1-877-779-8683)
To Vote by Internet:
- --------------------
Log on to the Internet and go to the website:
http://www.eproxyvote.com/vvc
Note: If you vote over the Internet, you may incur costs such as
telecommunication and Internet access charges for which you will
be responsible.
THANK YOU FOR VOTING YOUR SHARES.
YOUR VOTE IS IMPORTANT!
Do Not Return this Proxy Card if you are Voting by Telephone or
the Internet.
PROXY
VECTREN CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS, APRIL 25, 2001
The undersigned hereby appoints Jerome A. Benkert, Jr.,
Ronald E.
Christian, and Richard G. Lynch and each of them, jointly and
severally, with
power of substitution, to vote on all matters which may properly
come before the
2001 Annual Meeting of shareholders of Vectren Corporation or any
adjournment
thereof.