Vectren Corporation 20 N
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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 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 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. 2 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 Ownershipby 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 i Page 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