UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[_] 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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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[LOGO] Vectren
VECTREN CORPORATION
20 N. W. Fourth Street
Evansville, Indiana 47708
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 2002
TO THE SHAREHOLDERS OF VECTREN CORPORATION
The annual meeting of shareholders of Vectren Corporation (the "Company")
will be held at the University Place Conference Center and Hotel, 850 West
Michigan Street, Indianapolis, Indiana, on Wednesday, April 24, 2002, at 10:00
a.m. (Eastern Standard 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 ratify the appointment of Arthur Andersen, LLP as the Company's
independent public accountants for 2002; 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 1, 2002, 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 1-800-542-1160 or using the Internet
(www.votefast.com) 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
/s/ RONALD E. CHRISTIAN
RONALD E. CHRISTIAN
Senior Vice President, General
Counsel, and Corporate Secretary
Evansville, Indiana
March 15, 2002
1
LOCATION OF APRIL 24, 2002
ANNUAL SHAREHOLDERS' MEETING
[MAP] Location of April 24, 2002
Annual Shareholders' Meeting
University Place Conference Center and Hotel
850 West Michigan Street
Indianapolis, Indiana 46202-5198
Parking for shareholders will be provided in the underground parking garage
connected to the University Place Conference Center and Hotel. Please use the
North 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.
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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 II Directors........................................................................... 2
Class III Directors.......................................................................... 3
Class I Directors............................................................................ 4
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......................................... 8
Report of the Audit Committee................................................................... 8
Executive Compensation and Other Information.................................................... 9
Report of the Compensation Committee............................................................ 9
A. Executive Compensation Policy............................................................. 9
B. Components of Executive Compensation...................................................... 10
Base Salary.............................................................................. 10
Annual Incentive Compensation............................................................ 10
Long-Term Incentive Compensation......................................................... 11
C. Chief Executive Officer Compensation...................................................... 11
D. Share Ownership........................................................................... 12
E. Compensation Consultant, Termination Benefits Agreements and Deductibility of Executive
Compensation.............................................................................. 12
Compensation Committee Interlocks and Insider Participation..................................... 14
Compensation.................................................................................... 14
Table I: Summary Compensation............................................................. 14
Table II: Option/Stock Appreciation Rights Grants in Last Fiscal Year...................... 17
Table III: Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
from 1/1/2001 - 12/31/2001........................................................... 17
Table IV: Long-Term Incentive Plan Awards in Last Fiscal Year............................... 18
Retirement Savings Plan......................................................................... 18
Retirement Plans................................................................................ 18
Table: Pension Plan.......................................................................... 19
Stock Option Plan............................................................................... 20
Employment Agreements........................................................................... 20
Corporate Performance........................................................................... 22
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Page
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Comparison of 21 Month Cumulative Total Return............. 22
Item 2. Ratification of Appointment of Independent Accountants 23
Independent Public Accountants of the Company................. 23
Audit Fees................................................. 23
Financial Systems Design and Implementation Fees........... 23
All Other Fees............................................. 23
Cost and Method of Solicitation............................... 24
Annual Report................................................. 24
Revocation Rights............................................. 24
Nomination of Directors by Shareholders....................... 24
Shareholders' Proposals for 2003 Annual Meeting............... 24
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 University Place Conference Center and Hotel, 850 West Michigan
Street, Indianapolis, Indiana, on Wednesday, April 24, 2002, at 10:00 a.m.
(Eastern Standard 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 15, 2002.
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 2002 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 ratification of the appointment of Arthur Andersen,
LLP as the Company's independent public accountants for 2002. 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 percent
of the Company, and the former SIGCORP shareholders owned 51.4 percent of the
Company.
1
As of March 1, 2002, the Company had one class of capital stock outstanding,
consisting of 67,725,269 shares of common stock without par value. The holders
of the outstanding shares of common stock are entitled 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 1, 2002 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 thirteen directors
divided into three classes having staggered terms of three years each. The
Class II directors, Lawrence A. Ferger, Ronald G. Reherman, Richard W.
Shymanski, and Jean L. Wojtowicz, are nominees for election with terms expiring
in 2005. The Class III directors, John M. Dunn, Niel C. Ellerbrook, Anton H.
George, Andrew E. Goebel, and Robert L. Koch II, have terms expiring in 2003.
The Class I directors, John D. Engelbrecht, William G. Mays, J. Timothy
McGinley, and Richard P. Rechter, have terms expiring in 2004. Messrs.
Ellerbrook and Goebel also serve as directors of Vectren Utility Holdings, Inc.
("VUHI"), 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 24, 2002.
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 II Directors--Term expiring 2005
Lawrence A. Ferger, age 67, 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,
2
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.
Ronald G. Reherman, age 66, 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 Corporation of Evansville, Indiana.
Richard W. Shymanski, age 65, has been a director of SIGECO, SIGCORP, or the
Company since 1989. Mr. Shymanski is a consultant to the Private Client Group
of Fifth Third Bank. He is also the retired Chairman and Chief Executive
Officer of Harding, Shymanski & Co., P.C., Certified Public Accountants and
consultants, in Evansville, Indiana.
Jean L. Wojtowicz, age 44, 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.
The board of directors recommends a vote "FOR" all nominees for Class II
director.
Class III Directors--Term expiring 2003
John M. Dunn, age 64, has been a director of SIGCORP or the Company since
1996. Mr. Dunn is President and Chief Executive Officer of Dunn Hospitality
Group, Ltd., a hotel development and management company. He is also a director
of Old National Bank of Evansville.
Niel C. Ellerbrook, age 53, has been a director of Indiana Energy, Indiana
Gas, SIGECO, VUHI 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 Holdings, Vectren Capital, and Vectren Enterprises.
He is also a director of Deaconess Hospital of Evansville, Indiana.
Anton H. George, age 42, 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 54, has been a director of SIGCORP, Indiana Gas,
SIGECO, VUHI 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 63, 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 worldwide subsidiaries that
produce aluminum die castings, industrial painting systems, structural
adhesives and
3
distribute heating and air conditioning equipment and hydraulic and pneumatic
equipment. Mr. Koch is also a director of Fifth Third Bancorp.
Class I Directors--Term expiring 2004
John D. Engelbrecht, age 50, has been a director of SIGCORP or the Company
since 1996. Mr. Engelbrecht is President and Chief Executive Officer of South
Central Communications Corp., 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 56, has been a director of Indiana Energy or the
Company since 1998. Mr. Mays is President and Chief Executive Officer of Mays
Chemical Company, Inc., an Indianapolis, Indiana based chemical distribution
company. Mr. Mays is also a director of Anthem, Inc.
J. Timothy McGinley, age 61, has been a director of Indiana Energy or the
Company since January 1999. Mr. McGinley is Managing Partner and principal
owner of House Investments, Inc., a real estate investment company. He is also
a director of Waterfield Mortgage Corporation and he is the Chairman of the
Board of Trustees of Purdue University.
Richard P. Rechter, age 62, has been a director of Indiana Gas, Indiana
Energy, or the Company since 1984. Mr. Rechter is a director and Chairman of
Rogers Group, Inc., a company providing crushed stone, sand and gravel,
asphalt, highway construction, concrete masonry and construction materials
recycling. Mr. Rechter is also a director of Monroe Bank and Monroe Bancorp.
OTHER EXECUTIVE OFFICERS
Other executive officers of the Company are Jerome A. Benkert, Jr., age 43,
Carl L. Chapman, age 46, and Ronald E. Christian, age 43.
Mr. Benkert has served as Executive Vice President and Chief Financial
Officer of the Company since March 2000 and as Treasurer of the Company since
October 2001. Mr. Benkert has also served as director of Indiana Gas, SIGECO
and VUHI since March 31, 2000. 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 Assistant Treasurer
for Indiana Gas from January 1, 1991 to October 1, 1993. 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.
On March 31, 2000, Mr. Chapman was elected Executive Vice President of the
Company and President of Vectren Enterprises, Inc. Prior to March 31, 2000 and
since 1999, Mr. Chapman served as Executive Vice President and Chief Financial
Officer 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. 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. Christian was elected Senior Vice President, General
Counsel and Secretary of the Company. Mr. Christian has also served as director
of Indiana Gas, SIGECO and VUHI since March 31, 2000. Prior to March 31, 2000,
and since 1999, he was Vice President and General Counsel of Indiana Energy,
Inc.
4
From June of 1998 to July of 1999, Mr. Christian served as Vice President,
General Counsel and Secretary of Michigan Consolidated Gas Company. Mr.
Christian served as General Counsel and Secretary of Indiana Energy, Inc. from
1993 to 1998. Prior to 1993 and since 1988, Mr. Christian was employed as
counsel for the Company.
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, 2001. 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................................... 4,141 (2)(4)(10)
Niel C. Ellerbrook............................. 118,038 (2)(3)(6)(8)
John D. Engelbrecht............................ 5,791 (3)(4)(10)
Lawrence A. Ferger............................. 144,874 (4)(7)(10)
Anton H. George................................ 2,587,294 (1)(4)(5)(10)
Andrew E. Goebel............................... 188,518 (2)(3)(6)(8)
Robert L. Koch II.............................. 5,654 (2)(3)(4)(10)
William G. Mays................................ 2,216 (4)(10)
J. Timothy McGinley............................ 10,821 (2)(4)(10)
Richard P. Rechter............................. 12,640 (2)(4)(10)
Ronald G. Reherman............................. 241,861 (3)(4)(9)(10)
Richard W. Shymanski........................... 15,401 (3)(4)(10)
Jean L. Wojtowicz.............................. 2,233 (2)(4)(10)
Jerome A. Benkert, Jr.......................... 25,787 (2)(6)(8)
Carl L. Chapman................................ 44,077 (2)(6)(8)
Ronald E. Christian............................ 26,687 (2)(6)(8)
All Directors and Executive Officers as a Group
(16 Persons)................................. 3,436,033 (1)
--------
(1) Except for Anton H. George, no director or executive officer owned
beneficially as of December 31, 2001, more than .36 percent of common
stock of the Company. Excluding Anton H. George, all directors and
executive officers owned beneficially an aggregate of 848,739 shares or
1.25 percent of Common Stock of the Company. The beneficial ownership by
Anton H. George of 2,587,294 shares or 3.82 percent 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................................................ 3,196
Niel C. Ellerbrook.......................................... 50,854
Andrew E. Goebel............................................ 10,019
Robert L. Koch II........................................... 3,192
J. Timothy McGinley......................................... 1,162
Richard P. Rechter.......................................... 13,148
Jean L. Wojtowicz........................................... 5,727
Jerome A. Benkert, Jr....................................... 15,525
Carl L. Chapman............................................. 28,173
Ronald E. Christian......................................... 25,987
All Directors and Executive Officers as a Group (10 Persons) 156,983
5
(3) Includes shares held by spouse or jointly with spouse.
(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 2,587,294 shares, Mr. George has both voting and investment power
with respect to 17,050 shares. Regarding the balance, he has either voting
or investment power in his capacity as a member of the shareowner's board
of directors, charitable donations committee, or board of managers. 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 partnership, in which Mr. Ferger
is a general partner and owns limited partnership interests.
(8) Includes shares which the named individual has the right to acquire as of
December 31, 2001, or within sixty (60) days thereafter, under the Vectren
Corporation Stock Option Plan (formerly SIGCORP, Inc. Stock Option Plan)
or the Company's At-Risk Compensation Plan.
(9) As of December 31, 2001, Mr. Reherman had the right to acquire 225,998
shares under the Vectren Corporation Stock Option Plan.
(10) Does not include 2,805 shares which the named individual non-employee
board member has the right to acquire under the Company's At-Risk
Compensation Plan. As of December 31, 2001, these options were not vested.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Andrew E. Goebel is President and Chief Operating Officer of the Company.
During 2001, Hasgoe Cleaning Systems, a cleaning company owned by Mr. Goebel's
brother's family, performed certain cleaning services for the Company and
certain of its subsidiaries and is expected to perform such services in 2002.
During 2001, the cost of such services was $140,023, 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 ten (10) 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, the Public and Environmental
Affairs Committee, and the Nominating and Corporate Governance 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 four (4) 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, and Jean L. Wojtowicz. The
functions of the Audit Committee are described under "Report of the Audit
Committee" below. There were four (4) meetings of the committee during the past
fiscal year.
The members of the Compensation Committee are Robert L. Koch II, chairman,
J. Timothy McGinley, Richard P. Rechter, Richard W. Shymanski, and Jean L.
Wojtowicz. None of the members is an officer or
6
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. The committee administers the
Company's At-Risk Compensation Plan and its other executive compensation plans.
There were three (3) 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 Richard W.
Shymanski, chairman, Lawrence A. Ferger, William G. Mays, and Ronald G.
Reherman. 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.
In February of 2002, the board established the Nominating and Corporate
Governance Committee. Membership on the committee is restricted to non-employee
members of the board of directors. The members of that committee are Robert L.
Koch, II, chairman, Anton H. George, William G. Mays, J. Timothy McGinley, and
Richard W. Shymanski. The committee has responsibility to search for qualified
nominees (including receiving communications submitted to the Company from
shareholders relating to nominees) for election to the board, and evaluate and
make recommendations to the board as to the qualifications of nominees. The
committee will make recommendations concerning the composition, organization
and functions of the board; make recommendations concerning the compensation
for non-employee members of the board; monitor and consider the Company's
corporate governance practices; and monitor and recommend the functions of the
various committees of the board. The committee will review periodically the
performance of the entire board, the Company's Shareholder Rights Agreement,
and the Company's By-Laws and Articles of Incorporation. The committee will
perform succession planning with respect to the Chairman and Chief Executive
Officer and provide guidance with respect to the development of members of the
board of directors. Subsequent to the committee's formation, the committee met
and considered the candidates for reelection to the board of directors. At that
meeting, the committee decided to recommend to the board that Messrs. Lawrence
A. Ferger, Ronald G. Reherman, and Richard W. Shymanski and Ms. Jean L.
Wojtowicz should stand as the candidates for reelection at the Annual
Shareholders Meeting.
DIRECTOR COMPENSATION
Non-employee directors of the Company receive a cash retainer of $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 May 1, 2001, each non-employee member of the board received a grant of
387 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 May 1, 2002. At that time, if the
director continues serving on the board he or she will receive the shares
without restrictions. As part of the total compensation provided to
non-employee directors, a similar sized grant will be made on May 1, 2002.
7
On May 1, 2001, each non-employee member of the board also received a grant
of 2,805 options to acquire one share of the Company's Common Stock for each
option. The options were issued under the Company's At-Risk Compensation Plan.
The terms of that grant provide that, subject to certain limited exceptions,
the options will vest on May 1, 2002, and will be exercisable until May 1,
2011. If non-employee directors continue serving on the board, as part of the
total compensation provided to non-employee directors, a similar sized grant
will be made on May 1, 2002.
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 percent 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 2001 were timely made. However, the
Company did discover in preparing the filing on Form 5 for 2001 on behalf of
John M. Dunn that the Company, which prepares these reports on behalf of its
insiders, had inadvertently understated Mr. Dunn's ownership of Common Stock by
1,008 shares. This error has been corrected and the current filing on Form 5
accurately reflects Mr. Dunn's holdings of Company Common Stock.
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 five 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 four (4) 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. 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 financial statements and records and
accounting policies, principles, methods and systems. It further considers
whether the provision by the independent accountants of services for the
Company in addition to the annual audit examination is compatible with
maintaining the independent accountants' 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
accountants, 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 accountants the
accountants' independence from management and the Company, including the
matters in the accountants' written disclosures required by the Independence
Standards Board.
The committee also discussed with the Company's internal auditors and
independent accountants the overall scope and plans for their respective
audits. The committee meets periodically with the internal auditors and
independent accountants, 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.
8
Management is responsible for the Company's financial reporting process
including its system of internal control, and for the preparation of
consolidated financial statements in accordance with generally accepted
accounting principles. The Company's independent accountants are responsible
for auditing those financial statements. The committee's responsibility is to
monitor and review these processes. It is not the committee's duty or
responsibility to conduct auditing or accounting reviews or procedures. The
committee members are not employees of the Company and may not be, and may not
represent themselves to be or to serve as, accountants or auditors by
profession or experts in the fields of accounting or auditing. Therefore, the
committee has relied, without independent verification, on management's
representation that the financial statements have been prepared with integrity
and objectivity and in conformity with accounting principles generally accepted
in the United States of America and on the representations of the independent
accountants included in their report on the Company's financial statements.
Furthermore, the committee's considerations and discussions with management and
the independent accountants do not assure that the Company's financial
statements are presented in accordance with generally accepted accounting
principles, that the audit of the Company's financial statements has been
carried out in accordance with generally accepted auditing standards or that
the Company's independent accountants are in fact "independent."
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, 2001 for filing with the Securities and Exchange Commission. The committee
also evaluated and selected Arthur Andersen, LLP as the Company's independent
accountants for fiscal year 2002. The committee further recommended to the
board of directors that the shareholders of the Company be recommended to
ratify this appointment.
Audit Committee
Anton H. George, Chairman
John M. Dunn
John D. Engelbrecht
J. Timothy McGinley
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, including the Company's At-Risk Compensation Plan
(the "At-Risk Plan"). 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, as well as annual incentive and long-term incentive opportunities
under the At-Risk Plan. 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 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
9
and is competitive with programs offered by comparable organizations of similar
size. It is the opinion of the committee that the total compensation earned by
Company officers in 2001 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 opportunity under
the At-Risk 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 55
percent of base salary.
For 2001, under the At-Risk Plan, the committee established two performance
metrics to be used for determining whether and to what extent annual incentive
payments would be made to participants. One metric was based upon the Company's
achievement of specified earnings per share ("EPS") measures, as adjusted for
normal weather and certain extraordinary and non-recurring events that were
identified by the committee at the time of the establishment of the metrics and
were expected to occur during the year. For 2001, this metric represented a
significant portion of the total annual incentive payment opportunity. The
committee established three 2001 EPS measures for payments: threshold (zero
payment); target; and maximum (two times target incentive). Linear
interpolation was to be used for results between threshold, target and maximum.
Because the Company's 2001 EPS, as adjusted for the items established by the
committee and referenced above, did not exceed threshold, there was no payment
to executives under the At-Risk Plan for this metric.
The other metric was based upon achieving a specified level of safety
performance during 2001, and represented the balance of the total annual
incentive opportunity. This metric was designed to incent the minimization of
OSHA recordable accidents at the Company and the Company's regulated
subsidiaries. Similar to the EPS metric, the committee established achievement
standards for 2001 OSHA Recordable Accidents: threshold; target; and maximum.
Similar to the measurement used for the first metric, linear interpolation was
used for results between threshold, target and maximum. In 2001, the actual
number of OSHA recordable accidents resulted in a maximum payment with respect
to this metric.
The annual incentive payments shown in the Summary Compensation Table for
2000 compensation (and paid in calendar year 2001) include payments that were
for the performance period from April 1, 2000 through December 31, 2000. At the
time of the preparation of last year's proxy statement, these payments were not
yet calculable and authorized by the Committee and, as a result, they were not
able to be reported in that proxy statement. For this partial-year period, the
target annual incentive opportunities for the executive officers, excluding the
CEO, ranged from 25 to 50 percent. For this partial year period, the committee
established one metric, earnings per share, as adjusted for normal weather and
certain extraordinary and non-recurring events
10
which were specifically identified by the committee. Similar to the 2001
program, for this partial year period the committee calibrated the incentive
payouts using measures for threshold (zero payment), target, and maximum (two
times target incentive). Based upon the Company's actual EPS, as adjusted
pursuant to the methodology established as part of the EPS metric, incentive
payments at 1.9 times target were authorized. The actual incentive payments
were adjusted on a pro-rata basis to reflect the nine-month performance period.
The amounts payable under the At-Risk Plan for 2002 will be determined and
paid early in 2003 and accordingly will be reflected in next year's proxy
statement as part of calendar year 2002 compensation.
Long-Term Incentive Compensation
The purpose of the long-term incentive opportunity under the At-Risk 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 as the annual incentive opportunity under the At-Risk Plan, this
component of total compensation is also performance driven and totally at-risk.
As a result of the shareholders approval of the At-Risk Plan in 2001, the
committee authorized grants of stock options at the market price on the date of
grant to each of the Company's key employees. The award of options under the
At-Risk Plan varied for each participant and was based upon market data that
established the appropriate market level for those payouts consistent with the
Executive Compensation Policy described above. The award was predicated upon a
review of long-term market incentive compensation data as of January 2001, and
provides that the options will vest in 20 percent increments as of January 1,
2002, and, thereafter, on each January 1 through 2006. The options have a term
of ten years. The Company did not make any other equity-based awards in 2001,
and the committee does not plan to make any additional long-term grants to
executives during calendar year 2002.
It is the opinion of the committee that the long-term Plan meets the
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 shareholder value relative to the performance of the
Company's common stock. 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 2001, 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 report.
Mr. Ellerbrook's annual incentive opportunity and actual payment received
for 2001 were established pursuant to the At-Risk Plan and was based upon the
two metrics described in section B of this report--2001 EPS and Safety. With
respect to 2001 EPS, which accounted for the vast majority of Mr. Ellerbrook's
annual
11
incentive opportunity, he received no payment. Regarding Safety, he received
the maximum payment, which was the balance of the annual incentive opportunity.
This method of measurement ensured the linkage of this aspect of Mr.
Ellerbrook's compensation to the Company's financial performance, as well as
the maintenance of a safe workplace. Mr. Ellerbrook was eligible to receive a
target annual incentive opportunity of 70 percent of salary and a maximum
annual incentive of 140 percent of salary.
As with the other executives, the incentive payment shown for Mr. Ellerbrook
for 2000 (and paid in 2001) was based, in part, on the performance period of
April 1, 2000 to December 31, 2000 and for that partial year period was based
entirely on EPS. For this partial year period, Mr. Ellerbrook was eligible to
receive a target annual incentive of 70 percent and a maximum of 140 percent of
base salary. As described previously, based upon the Company's actual EPS, as
adjusted pursuant to the methodology established as part of the EPS metric, Mr.
Ellerbrook received an incentive payout of 1.9 times target, which was further
adjusted on a pro-rata basis to reflect the nine-month performance period.
Mr. Ellerbrook's receipt of stock options under the At-Risk Plan is likewise
directly linked to the Company's performance. Whether the options have value
and, if so, in what amount, will depend upon the performance of the Company's
common stock.
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 and directors to meet
share ownership targets. That policy was adopted in 2000 and it provides for a
five year transition period for officers to comply. The Committee expects the
officers to make ratable progress toward compliance each year. The program
includes these key features:
. Participants who are officers 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 of the end of
2001, four of the five named executive officers listed in the compensation
table on page 14, already exceed the established ownership requirements.
.. Participants who are non-employee board members have a share ownership target
of five times the annual retainer amount of $20,000. As of the
end of 2001, ten of the eleven non-employee board members
already exceed the established ownership requirement.
. 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.
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.
As described elsewhere under the heading "Employment And Termination
Benefits 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.
12
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 One Million Dollars unless the compensation is payable solely
on achievement of an objective performance goal. The "At-Risk Compensation
Plan" has been structured to satisfy the requirements of 162(m) of the Code.
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, Chairman
J. Timothy McGinley
Richard P. Rechter
Richard W. Shymanski
Jean L. Wojtowicz
13
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 1999, 2000, and 2001, 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)
Annual Compensation Long-term CompensationPayouts
---- ------------------------------ -----------------------------
Other All
Annual Other
Com- Options LTIP Compen-
Bonus ($) pensation (# Shares) Payouts sation
Name and Principal Position Year Salary ($) (1) ($)(2) (3) ($)(4) ($)(5)
--------------------------- ---- ---------- --------- --------- ---------- ------- -------
Niel C. Ellerbrook............. 2001 548,847 77,000 51,903 230,000 -- 120,278
Chairman and 2000 470,873 583,357 19,063 -- 496,433 399,126
Chief Executive Officer 1999 363,946 203,829 19,933 -- 214,863 51,286
Andrew E. Goebel............... 2001 359,328 39,600 27,145 100,000 -- 44,674
President and 2000 326,143 369,000 6,720 -- -- 17,638
Chief Operating Officer 1999 275,014 80,156 -- 49,973 -- 13,023
Carl L. Chapman................ 2001 269,617 27,000 17,647 85,000 -- 39,083
Executive Vice President 2000 244,437 226,326 7,098 -- 218,066 220,132
President Vectren Enterprises 1999 214,615 119,879 9,589 -- 153,335 31,249
Jerome A. Benkert Jr........... 2001 249,423 22,500 13,339 50,000 -- 33,904
Executive Vice President and 2000 208,943 156,422 5,347 -- 163,389 159,550
Chief Financial Officer 1999 164,692 75,405 5,807 -- 37,207 18,492
Ronald E. Christian............ 2001 229,616 18,400 11,419 50,000 -- 36,330
Senior Vice-President, General 2000 204,670 153,910 3,857 -- 135,352 101,718
Counsel and Secretary 1999 81,780 15,144 1,030 -- -- 76,543
Earnings are shown on a calendar year basis.
(1) The amounts shown in this column for 2001 are payments under the Company's
At-Risk Compensation Plan, which is discussed above in Part B, relating to
"Annual Incentive Compensation," and Part C of the Compensation Committee
Report. The amounts shown in this column for 2000 include payments under
the Company's Executive Annual Incentive Plan, Indiana Energy's Annual
Management Incentive Plan (for Mr. Ellerbrook, Mr. Chapman, Mr. Benkert,
and Mr. Christian), and the SIGCORP Corporate Performance Plan (for Mr.
Goebel). The amount paid to Mr. Goebel in 1999 is attributable to SIGCORP's
performance in the previous year. For Mr. Ellerbrook, Mr. Chapman, Mr.
Benkert, and Mr. Christian, bonus payments shown in 1999 are attributable
to Indiana Energy's performance for the 1999 fiscal year.
The amounts shown for 2001 are attributable to the Company's At-Risk
Compensation Plan for the performance period of January 1 to December 31,
2001.
14
Included in year 2000 of the table are payments attributable to the
Company's Executive Annual Incentive Plan for the performance period of
April 1 to December 1, 2000 (Mr. Ellerbrook, $489,000; Mr. Goebel, $232,000;
Mr. Chapman, $178,000; Mr. Benkert, $125,000; and Mr. Christian, $120,000).
As of the time of the preparation of the proxy statement for last year's
meeting, these payments were not yet calculable and were not determined by
the Compensation Committee until after the finalization and mailing of the
proxy statement.
At the close of the merger of Indiana Energy and SIGCORP into the Company on
March 31, 2000, 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 ($94,357), Mr. Chapman ($48,326), Mr. Benkert ($31,422), and Mr.
Christian ($33,910), these bonus payments are included 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. Also included in 2000 for Mr. Goebel, ($107,500) is the
payment attributable to SIGCORP's performance for the period January 1 to
December 31, 1999.
(2) The amounts shown in this column are dividends paid on restricted shares
issued under the Vectren Corporation Executive Restricted Stock Plan
(formerly the Indiana Energy Executive Restricted Stock Plan), which was
adopted by the Company on March 31, 2000. No restricted shares were issued
to executives in 2001. Mr. Goebel did not participate in the Stock Plan
prior to March 31, 2000.
(3) For 1999, the options shown in this column were restated to reflect the
conversion ratio of 1.333 described above in Section titled "Voting
Securities." The options shown for year 2001 were issued under the
Company's At-Risk Compensation Plan. For further information, see the
discussion above in Part B relating to "Long-term Incentive Compensation,"
and Part C of the Compensation Committee Report.
(4) The amounts shown in this column represent the value of shares issued under
the Vectren Corporation Restricted 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 percent 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, Mr. Christian--2,674 shares,
$53,066. 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.
(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 percent of their
annual base salary and other allowances related to the move. Of the five
officers discussed in this section, four relocated and, therefore,
received income related to relocation: Mr. Ellerbrook--$204,797, Mr.
Chapman--$114,919, Mr. Benkert--$86,817, Mr. Christian--$79,394. These
payments were made in year 2000. Mr. Christian also received
reimbursement for taxable relocations expenses in 1999-- $72,168.
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
15
walk-away provision, the Board felt that officers should be compensated
for losing the right to exercise the provision. A settlement equal to 25
percent 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, Mr. Benkert, Mr. Christian, the balance
of this column reflects Company contributions to the retirement savings
plan (Ellerbrook: 2001--$10,031, 2000--$10,200, 1999--$9,600, Chapman:
2001--$10,200, 2000--$10,200, 1999--$9,600, Benkert: 2001--$10,200,
2000--$10,200, 1999--$9,600, Christian: 2001--$8,367, 2000--$9,911) 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: 2001--$47,444, 2000--$24,496,
1999--$18,746; Chapman: 2001--$11,101, 2000--$8,880, 1999--$8,589;
Benkert: 2001--$7,549, 2000--$4,705, 1999--$4,423, Christian:
2001--$12,793, 2000--$10,255), credits for flexible spending accounts,
wellness, and perfect attendance (Ellerbrook: 2000--$75, 1999--$579;
Chapman: 2000--$150, 1999--$438; Benkert: 2000--$196, 1999--$196;
Christian: 2000--$125), deferred compensation contributions to restore
employer contributions to the Company Retirement Savings Plan
(Ellerbrook: 2001--$52,240, 2000--$18,174, 1999--$12,237, Chapman:
2001--$16,657, 2000--$4,507, 1999--$3,277; Benkert: 2001--$12,265,
2000--$2,632, 1999--$282, Christian: 2001--$12,610, 2000--$2,033,
1999--$4,375), reimbursement for taxable expenses (Ellerbrook:
2001--$10,563, 2000--$12,884, 1999--$10,124; Chapman: 2001--$1,125,
2000--$18,977, 1999--$9,345; Benkert: 2001--$3,890, 1999--$,3,991;
Christian: 2001--$2,560), and non-cash earnings (Ellerbrook:
2000--$6,000).
d) For Mr. Goebel, this column contains income related to reimbursement for
taxable expenses (2001-- $9,195, 2000--$954, 1999--$1,540), imputed
earnings from automobile usage (2000--$961, 1999--$6,683), Company
contributions to the retirement savings plan (2001--$10,200,
2000--$10,184, 1999--$4,800), and deferred compensation contributions to
restore employer contributions to the Company Retirement Savings Plan
(2001--$25,280). 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, Mr. Goebel was given
a one-time automobile buyout of $5,538, paid in 2000.
16
TABLE II
OPTION/STOCK APPRECIATION RIGHTS ("SAR") GRANTS
IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
% of Total
Number of Options/
Securities SARs
Underlying Granted to
Options/ Employees Exercise or Grant Date
SARs in Fiscal Base Price Present
Name Granted(#)(1) Year (Per Share) ($) Expiration Date Value ($)(2)
---- ------------- ---------- --------------- --------------- ------------
Niel C. Ellerbrook.... 230,000/0 29.34 $22.54 5/1/2011 $1,269,600
Andrew E. Goebel...... 100,000/0 12.76 $22.54 5/1/2011 552,000
Carl L. Chapman....... 85,000/0 10.84 $22.54 5/1/2011 469,200
Jerome A. Benkert, Jr. 50,000/0 6.38 $22.54 5/1/2011 276,000
Ronald E. Christian... 50,000/0 6.38 $22.54 5/1/2011 276,000
--------
(1) In 2001 a total of 783,999 options were awarded to all plan participants
under the Vectren Corporation At-Risk Compensation Plan. Stock options are
exercisable in whole or in part from the date of the grant for a period of
ten years. This grant has a vesting schedule pursuant to which 20 percent
vests each year for the first five years.
(2) The assumptions used for the Model are as follows: Volatility--25.79
percent based on monthly stock prices for the period of March 1, 1998 to
February 28, 2001; Risk-free rate of return--5.75 percent; Dividend
Yield--4.30 percent over the period of March 1, 1998 to February 28, 2001;
and, a ten-year exercise term. Discount of .9159 applied to reflect 5-year
graduated vesting schedule. (Per binomial model as certified by an
independent consultant.)
TABLE III
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
FROM 1/1/2001 TO 12/31/2001
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-The-Money Options
Acquired Value Options As of 12/31/2001 As of 12/31/2001
on Realized ------------------------- -------------------------
Name Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
Niel C. Ellerbrook.... 0 $ 0 0 230,000 $ 0 $331,200
Andrew E. Goebel...... 6,377 $59,013 117,704 100,000 $611,256 $144,000
Carl L. Chapman....... 0 $ 0 0 85,000 $ 0 $122,400
Jerome A. Benkert, Jr. 0 $ 0 0 50,000 $ 0 $ 72,000
Ronald E. Christian... 0 $ 0 0 50,000 $ 0 $ 72,000
17
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 Other Threshold
Number of Periods Until Number Target Maximum
Shares; Units or Maturation of Number of Number of
Other Rights (1) or Payout Shares Shares Shares
---------------- ------------- ------------ --------- ---------
Niel C. Ellerbrook.... 0 0 0 0 0
Andrew E. Goebel...... 0 0 0 0 0
Carl L. Chapman....... 0 0 0 0 0
Jerome A. Benkert, Jr. 0 0 0 0 0
Ronald E. Christian... 0 0 0 0 0
--------
(1) No restricted shares were awarded to Executives during fiscal year 2001
under the Vectren Corporation Restricted Stock Plan or the Company's
At-Risk Compensation Plan.
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 (or, effective January 1, 2002, 50
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 50 percent of their contributions not in excess of 6 percent of their
individual redirected compensation and non-matching contributions of 3 percent;
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 percent 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. Effective January 1, 2002, the 3 percent annual
contribution will not be made for employees of certain non-regulated
subsidiaries.
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
18
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.
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. Benefits under the supplemental plan above would be offset
by Social Security and benefits under the defined benefit plan and
Retirement Savings Plan attributable to contributions made by the Company
and, as pertinent, one or more of its subsidiaries.
19
(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 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, Carl L. Chapman and Ronald E. Christian, 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
established performance targets, 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
20
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.
As part of a restructuring of the Company in 2001, certain officers and
employees of the Company or subsidiary companies were terminated under early
retirement agreements and their previous employment agreements were terminated.
Under the terms of a retirement agreement with J. Gordon Hurst, formerly an
Executive Vice President of the Company, the Company agreed to make the
following severance payments to Mr. Hurst: 2001--$116,746; 2002--$1,067,316;
2003--$584,752; 2004--$526,817.
21
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 21 MONTH CUMULATIVE TOTAL RETURN*
AMONG VECTREN CORPORATION, THE S & P 500 INDEX
AND THE S & P UTILITIES INDEX
[CHART]
DOLLARS
Vectren S & P S & P
Corporation 500 Utilities
4/3/2000 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
3/01 111.02 78.32 137.27
6/01 108.64 82.91 129.41
9/01 119.02 70.74 106.24
12/01 128.97 78.30 102.78
*$100 INVESTED ON 4/3/00 IN COMPANY COMMON STOCK OR IN THE S & P 500 UTILITY
INDEX ON 3/31/00--INCLUDING REINVESTMENT OF DIVIDENDS FOR THE PERIOD.
22
ITEM 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The board of directors recommends that the stockholders ratify the selection
of Arthur Andersen, LLP ("Andersen") as independent public accountants to
examine the consolidated financial statements of the Company and its
subsidiaries for the fiscal year ending December 31, 2002. A representative of
Andersen will be present at the annual meeting to make a statement if such
representative desires to do so and to respond to appropriate questions.
The votes cast for ratification must exceed the votes cast against
ratification. Abstentions will not be counted either for or against the
proposition. In the event the stockholders fail to ratify the appointment, the
Audit committee of the board of directors will consider it as a direction to
select other auditors. Even if the selection is ratified, the board of
directors in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the board of
directors determines that such change would be in the best interest of the
Company and its stockholders.
The board of directors recommends voting "FOR" this proposal.
INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY
The board of directors has recommended that the stockholders ratify the
selection of Andersen as the independent public accountants of the Company and
its subsidiaries for fiscal year 2002. See "Report of the Audit Committee," and
"Item 2. Ratification Of Appointment Of Independent Accountants."
Audit Fees
The aggregate fees paid to Andersen for professional services rendered for
the audit of the Company's 2001 fiscal year annual financial statements, and
the reviews of the Company's financial statements included in the Company's
Forms 10-Q filed during the Company's 2001 fiscal year were $481,000. This
includes fees incurred for audit services related to certain of the Company's
subsidiaries, in connection with the audit of the Company's financial
statements.
Financial Systems Design and Implementation Fees
No services were rendered by Andersen during the Company's 2001 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 paid to Andersen for other services totaled $1,452,000.
Of this amount, audit-related fees were $767,000 and consisted of (i)
assistance with registration statements, comfort letters, consents and other
communications with the Securities and Exchange Commission, (ii) assistance
with and consultation on various accounting issues and changes in accounting
standards, and (iii) audits of employee benefit plans. Fees paid to Andersen
for other services totaled $685,000 and consisted of (i) tax planning and
review of tax returns of the Company, and (ii) customer information system
conversion consultation and controls assessment.
The Audit committee of the board of directors has considered whether the
provision by Andersen of the services described above is compatible with
maintaining Andersen's independence.
23
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 $6,500 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, 2001, was mailed to
shareholders on or about March 15, 2002.
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.
SHAREHOLDERS' PROPOSALS FOR 2003 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 2003 annual meeting of its shareholders
by submitting their proposals to the Company in a timely manner. In order to be
so included for the
24
2003 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 15, 2002, 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.
By order of the board of directors.
VECTREN CORPORATION
/s/ RONALD E. CHRISTIAN
RONALD E. CHRISTIAN
Senior Vice President, General
Counsel and
Corporate Secretary
Evansville, Indiana
March 15, 2002
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 1-800-542-1160 or using the
Internet (www.votefast.com) 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.
25
-------------------------------------
Vote by Telephone
-------------------------------------
Have your proxy card available when
you call the Toll-Free Number
1-800-542-1160 using a touch-tone
phone. You will be prompted to enter
your Control Number and then you can
follow the simple instructions that
will be presented to you to record
your vote.
-------------------------------------
Vote by Internet
-------------------------------------
Have your proxy card available when
you access the website
www.votefast.com. You will be
prompted to enter your Control Number
and then you can follow the simple
prompts that will be presented to you
to record your vote.
-------------------------------------
Vote by Mail
-------------------------------------
Please mark, sign and date your proxy
card and return it in the
postage-paid envelope provided or
return to: Stock Transfer Dept (VVC),
National City Bank, P.O. Box 92301,
Cleveland, OH 44193-0900.
------------------------ -------------------------- --------------------------
Vote by Telephone Vote by Internet Vote by Mail
Call Toll-Free using a Access the website and Return your proxy
Touch-Tone phone: cast your vote: in the postage-paid
1-800-542-1160 www.votefast.com envelope provided.
------------------------ -------------------------- --------------------------
Vote 24 hours a day, 7 days a week!
Your telephone or Internet vote must be received by 11:59 p.m. Eastern Daylight
Time on April 23, 2002, to be counted in the final tabulation.
if you vote by telephone or Internet, please do not send your proxy by mail.
===================================================
Your Control Number is:
===================================================
If voting by mail, Proxy must be signed and dated below.
. Please fold and detach card at perforation before mailing. .
--------------------------------------------------------------------------------
Proxy Vectren Corporation Proxy
--------------------------------------------------------------------------------
This Proxy is solicited by the Board of Directors for the Annual Meeting of
Shareholders to be held on April 24, 2002. The undersigned hereby appoints
Jerome A. Benkert, Jr., Ronald E. Christian and Richard G. Lynch and each of
them, jointly and severally, with powers of substitution, to vote on all matters
which may properly come before the 2002 Annual Meeting of Shareholders of
Vectren Corporation (or any adjournment thereof).
____________________________________________________
Signature(s) of shareholder
____________________________________________________
Signature, if held jointly
Date: _________________________________________,2002
Please sign as your name(s) appear hereon. All joint
tenants should date this proxy and sign. When
signing as attorney, executor, trustee or guardian,
give the full title of such. If a corporation, sign
the full corporate name by an authorized officer. If
a partnership, sign in partnership name by
authorized person.
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY. THANK YOU.
ELECTRONIC ACCESS TO FUTURE DOCUMENTS
NOW AVAILABLE
You now have the opportunity to access your Annual Report and Proxy Statement
over the Internet, instead of receiving these documents in print. Participation
is completely voluntary. If you give your consent to receive future annual
reports and proxy statements via the Internet, we will notify you each year of
the Internet location when the documents become available. Once you give your
consent, it will remain in effect until you notify Vectren Corporation by mail
that you wish to resume mail delivery of the Annual Report and Proxy Statement.
As a Vectren shareholder, you have the right to request copies of these
documents.
To give your consent, follow the prompts when you vote by telephone or over the
Internet. If you are voting by mailing your proxy card, check the appropriate
box located on the proxy card below.
. Please fold and detach card at perforation before mailing.
--------------------------------------------------------------------------------
Proxy Vectren Corporation Proxy
--------------------------------------------------------------------------------
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 and in the discretion of the proxy holders upon
such other matters as may properly come before the meeting. This proxy can be
revoked at any time prior to the vote on the Proposals.
The Board of Directors recommends a vote FOR Proposal 2.
1. ELECTION OF DIRECTORS (three-year term):
Nominees:
(01) Lawrence A. Ferger (02) Ronald G. Reherman (03) Richard W. Shymanski (04) Jean L. Wojtowicz
[_] FOR [_] WITHHOLD
For, except vote withheld from the following nominees:
------------------------------------------------------------------------------------------------------------------------------
2. RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN, LLP AS INDEPENDENT ACCOUNTANTS FOR 2002:
[_] FOR [_] AGAINST [_] ABSTAIN
[_] I plan to attend the Annual Meeting.
[_] I consent to access future Annual Reports and Proxy Statements over the Internet rather than to receive copies
by mail.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)