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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X][ ] Preliminary proxy statement. [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2).
[ ][X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
Madison Gas and Electric Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of filing fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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MADISON GAS AND ELECTRIC COMPANY
POST OFFICE BOX 1231
MADISON, WISCONSIN 53701-1231
March 31, 2000April 13, 2001
Dear MGE Shareholder:
It is our pleasure to invite you to attend our 20002001 Annual Meeting of
Shareholders to be held on Tuesday, May 9, 2000,22, 2001, at 11:00 a.m., local time, inat
the Exhibition Hall of the Dane County Exposition Center, 1919 Expo Way,Marriott Madison West, 1313 John Q. Hammons Drive, Middleton, Wisconsin (see
the map on the back cover).
At the meeting we will ask you to consider and vote upon the election of
three Class IIIII directors to hold office until 2003.2004. We will discuss last year's
performance, comment on items of interest to you, and Madison Gas and Electric
Company (MGE), and respond to your questions.
Following the meeting, we will be available to answer any additional questions
you may have.
YOUR VOTE IS IMPORTANT. WE ENCOURAGE YOU TO SIGN AND DATE YOUR PROXY CARD
AND MAIL IT BACK TO US PROMPTLY even if you plan to attend the meeting. You may revoke yourvote using the Internet, by telephone, or
by returning the enclosed proxy atcard in the envelope provided. Instructions
regarding all three methods of voting are included on the proxy card. Internet
and telephone voting are being offered as a convenience to you and as a step
toward reducing costs. If you attend the meeting and prefer to vote your shares in person,
if you wish.may do so.
We look forward to seeing you at the meeting.
Very truly yours,
[DAVID/s/ DAVID C. MEBANE]MEBANE
DAVID C. MEBANE
Chairman of the Board
[GARY/s/ GARY J. WOLTER]WOLTER
GARY J. WOLTER
President and Chief Executive Officer
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NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
OF MADISON GAS AND ELECTRIC COMPANY
DATE: Tuesday, May 9, 200022, 2001
TIME: 11:00 a.m., local time
PLACE:Exhibition Hall
Dane County Exposition Center
1919 Expo Way Marriott Madison West
1313 John Q. Hammons Drive
Middleton, Wisconsin
PURPOSE:
- - To elect three Class IIIII directors to terms of office expiring at the 20032004
Annual Meeting of Shareholders; and
- - To transact such other business as may properly come before the meeting.
Shareholders of record at the close of business on March 1, 2000,15, 2001, are
entitled to vote at the meeting.
The matters to be acted upon at the meeting are described in the
accompanying proxy statement.
By order of the Board of Directors
MARK A. FRANKEL
Vice President, General Counsel,
and Secretary
March 31, 2000April 13, 2001
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TABLE OF CONTENTS
PAGE
----
MADISON GAS AND ELECTRIC COMPANY............................ 1
THE ANNUAL MEETING.......................................... 1
Attending the Annual Meeting.............................. 1
This Proxy Statement...................................... 1
Voting.................................................... 2
How Street Name Holders.......................................Holders May Vote.......................... 2
How Record Holders............................................Holders May Vote............................... 2
Matters to Be Considered.................................. 2
Quorum Requirement........................................ 23
The Vote Necessary for Action to Be Taken................. 3
Revocation of Proxies..................................... 3
Electronic Access to Proxy Materials and Annual Report.... 3
ELECTION OF DIRECTORS....................................... 3
BENEFICIAL OWNERSHIP OF COMMON STOCK........................ 56
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 7
MEETINGS AND COMMITTEES OF THE BOARD........................ 67
AUDIT COMMITTEE REPORT...................................... 8
DIRECTOR COMPENSATION....................................... 79
EXECUTIVE COMPENSATION...................................... 710
Summary Compensation Table................................ 710
Report on Executive Compensation.......................... 811
Company Performance....................................... 1114
Pension Plan and Supplemental Retirement Plan............. 1316
Deferred Compensation Plan................................ 1417
Severance Plans........................................... 1417
OTHER INFORMATION........................................... 1518
Expenses of Solicitation.................................. 1518
Shareholder Proposals for the 2001 Annual Meeting......... 1518
Other Matters............................................. 1619
Audit Committee Charter..................................... A-1
MAP IS ON BACK COVER
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MADISON GAS AND ELECTRIC COMPANY
-------------------------
MGEMadison Gas and Electric Company (MGE) is an investor-owned public utility
with executive offices located at 133 South Blair Street, Madison, Wisconsin
53703. Our telephone number is (608) 252-7000. Our Web site is located at
www.mge.com on the Internet.
THE ANNUAL MEETING
ATTENDING THE ANNUAL MEETING
Our annual meeting will be held on Tuesday, May 9, 2000,22, 2001, at 11:00 a.m. in,
local time, at the Exhibition Hall of the Dane County Exposition Center, 1919 Expo Way,Marriott Madison West, 1313 John Q. Hammons Drive, Middleton,
Wisconsin. If you plan to attend the meeting, please fill out the enclosed
reservation form and return it with your proxy card so we may have an indication
of the number of shareholders planning to attend the meeting. If your shares are
held through a broker or its nominee and you would like to attend the meeting,
please see "Voting -- How Street Name Holders"Holders May Vote" below.
THIS PROXY STATEMENT
We sent you ourare sending this proxy materialsstatement because our Board of Directors is
solicitingseeking your proxy to vote your shares at the meeting. If you own MGE common
stock in more than one account, such as individually and also jointly with your
spouse, you may receive more than one setcopy of thesethis proxy materials.statement. To assist us
in saving money and to provide you with better shareholder services, we
encourage you to have all yourany duplicate accounts registered in the same name and
address. You may do this by contacting our Shareholder Services Department
toll-free at 1-800-356-6423 if calling from within the Continental United States
and at (608) 252-4744 if calling from the Madison area.
On March 31, 2000,April 13, 2001, we began mailing thesethis proxy materialsstatement to all
shareholders of record at the close of business on March 1, 2000.15, 2001. On the recordthat date, of March 1, 2000,
there were 16,192,27216,729,054 shares of our common stock outstanding and entitled to
vote.
At the 1985 Annual Meeting of Shareholders, shareholders approved an
amendment to our Articles of Incorporation limiting the voting power of any
shareholder who acquires more than 10 percent of our outstanding voting stock.
To our knowledge, this limitation does not currently apply to any shareholder.
At the present time,Accordingly, each share of common stock will beis entitled to one vote at the meeting.
For those shareholders who are participants in our Dividend Reinvestment and
Direct Stock Purchase Plan, (Investors Plus Plan), the shares you have accumulated in the plan are held
by the administrator under the nominee name of WhimmMadge & Co., and those shares,
including your reinvestment shares, will be voted in accordance with your
direction given on your proxy.
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VOTING
HOW STREET NAME HOLDERS MAY VOTE
If you own shares through a broker, the registered holder of those shares
is the broker or its nominee. If you receive our proxy materials from your
broker, you should vote your shares by following the procedures specified by
your broker. Your broker will tabulate the votes it has received and submit a
proxy card to us reflecting the votes of the street name holders. If you plan to
attend the annual meeting and vote your street name shares in person, you should
contact your broker to obtain a broker's proxy card and MGE's Shareholder
Services (1-800-356-6423) to make a reservation for the meeting.
HOW RECORD HOLDERS MAY VOTE
You can vote in person at the meeting or by proxy. By giving us your proxy,
you are authorizing the individuals named on our proxy card (the proxies) to
vote your shares in the manner you indicate. YouIf you elect to vote by proxy, you
may:
- Vote for the election of all three of our director nominees;
- Withhold authority to vote for all three of theour director nominees; or
- Vote for the election of one or two of our director nominees and withhold
authority to vote for the other nominee(s) by so indicating on the proxy
card.
As a convenience to you, we are providing you with the option to vote by
proxy via the Internet or via toll-free touch-tone telephone. You may still cast
your vote by returning your signed and dated proxy card. Instructions regarding
all three methods of voting are included on the proxy card.
If you sign and return our proxy card without indicating yourspecifying any instructions
and without indicating expressly that you are not voting some or all of your
shares, your shares will be voted for the election of all three director
nominees.
The signature on the proxy card should correspond exactly with the name of
the shareholder as it appears on the proxy card. Where stock is registered in
the name of two or more persons, all such personseach of them should sign the proxy. If you sign
a proxy card as an attorney, officer, personal representative, administrator,
trustee, guardian, or similar capacity, please indicate your full title in suchthat
capacity.
MATTERS TO BE CONSIDERED
At the meeting, shareholders will:
- Elect three Class IIIII directors to terms of office expiring at the 20032004
Annual Meeting of Shareholders; and
- Transact any other business properly raised.
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QUORUM REQUIREMENT
A quorum is necessary to hold a valid meeting of shareholders. If
shareholders entitled to cast at least a majority of the shares entitled to vote
at the meeting are present in person or by proxy, a quorum will exist. In order
to assure the presence of a quorum, please vote via the Internet, telephone, or
sign and return your proxy card promptly in the enclosed postage-paid envelope
even if you plan to attend the meeting. Abstentions and broker nonvotes are
counted as present for establishing a quorum. A broker nonvote occurs when a
broker 2
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votes on some matterone or more matters on the proxy card, but not on others because
the broker does not have the authority to do so.
THE VOTE NECESSARY FOR ACTION TO BE TAKEN
If a quorum is present, the three persons receiving the greatest number of
votes will be elected to serve as Class IIIII directors. Accordingly, withholding
authority to vote for a director and nonvotes with respect to the election of
directors will not affect the outcome of the election of directors.
REVOCATION OF PROXIES
If you are a registered holder of common stock, you may revoke your proxy
by giving written revocation to MGE's Corporate Secretary at any time before
your proxy is voted, by executing a later-dated proxy card which is voted at the
meeting, or by attending the meeting and voting your shares in person. If your
shares are held by a broker, you must contact your broker to revoke your proxy.
Attendance at the meeting will not automatically revoke your proxy.
ELECTRONIC ACCESS TO PROXY MATERIALS AND ANNUAL REPORT
Shareholders can elect to view future proxy statements and annual reports
over the Internet instead of receiving paper copies in the mail. You can choose
this option by marking the appropriate box on your proxy card or by calling
MGE's Shareholder Services toll-free number (1-800-356-6423).
ELECTION OF DIRECTORS
The Board of Directors consists of nineten directors divided into three
classes, eachtwo classes having three directors and one class having threefour directors,
with one class being elected each year for a term of three years.
Messrs. Swanson, Nevin,Blaney, Mohs, and WolterHastings are currently Class IIIII directors whose
terms expire at the 20002001 Annual Meeting. They have been nominated for reelection
to serve as Class IIIII directors for three-year terms to expireexpiring at the 20032004 Annual
Meeting and upon the election and qualification of their successors.
Each of the nominees has indicated a willingness to serve if elected, and
the Board has no reason to believe that any nominee will be unavailable. If any
nominee should become unable to serve, it is presently intended that your proxy
will be voted for a substitute nominee designated by the Board.
Mrs. Biddick is currently a Class I director whose term would normally
expire at the 2002 Annual Meeting. Under MGE director retirement guidelines,
nonofficer directors must retire from the Board no later than the annual meeting
following their 73rd birthday. Therefore, Mrs. Biddick would be required to
retire at the 2000 meeting. The Board wishes to make an exception to the
guidelines and has asked Mrs. Biddick to continue to serve as a Class I director
until the term to which she has been elected expires at the annual meeting in
2002 or until her earlier resignation.
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The following table sets forth certain information about the nominees and the
current directors who will continue in office after the meeting.
DIRECTOR
NAMES (AGES) AND BUSINESS EXPERIENCE SINCE
------------------------------------ --------
Nominees (Class II)III) -- Term Expiring in 2003
H. LEE SWANSON (62), Cross Plains, Wisconsin................ 1988
Chief Executive Officer, President, and Director of the
State Bank of Cross Plains, with which he has been
associated for more than 34 years; also director of Chorus
Communications Group and the Federal Home Loan Bank of
Chicago.
JOHN R. NEVIN (57), Madison, Wisconsin...................... 1998
Associate Dean of Master's Programs; Director, Grainger
Center for Supply Chain Management, and Grainger Wisconsin
Distinguished Professor, School of Business, University of
Wisconsin-Madison, where he has been a faculty member for
29 years.
GARY J. WOLTER (45), Madison, Wisconsin..................... 2000
President and Chief Executive Officer of MGE, of which he
has been an officer since 1989 and an employee since 1984.
Members of the Board of Directors Continuing in Office
Class III -- Term Expiring in 20012004
RICHARD E. BLANEY (63)(65), Madison, Wisconsin.................. 1974
Retired President of Richard Blaney Seeds Inc., sellers of
hybrid seed corn, with which he was associated for more
than 9 years.
FREDERIC E. MOHS (63)(64), Madison, Wisconsin................... 1975
Partner in the law firm of Mohs, MacDonald, Widder &
Paradise, of which he has been a member since 1968.1968; also
director of UW System Board of Regents and UW Hospitals
and Clinics.
F. CURTIS HASTINGS (54)(55), Madison, Wisconsin................. 1999
President of J. H. Findorff & Son, Inc., and Findorff,
Inc., commercial and industrial general contractors and
design builders, with which he has been associated for 2930
years; also director of National Guardian Life Insurance
Co.
Members of the Board of Directors Continuing in Office
Class I -- Term Expiring in 2002
JEAN M. BIDDICK (73)(74), Madison, Wisconsin....................Middleton, Wisconsin.................. 1982
Retired Chief Executive Officer of Neesvig's Inc., a
wholesale meat company, with which she was associated for
more than 27 years.
DAVID C. MEBANE (66)(67), Madison, Wisconsin.................... 1984
Chairman of the Board of Directors of MGE, of which he has
been an officer since 1980; also director of First Federal
Capital Corp., a bank holding company.
REGINA M. MILLNER (56)(57), Madison, Wisconsin.................. 1996
Attorney, analyst and broker for more than 2122 years; her
firm, The RMillner & Co.,Company, S.C., specializes in complex
real estate projects and provides consulting services for
private clients and governmental agencies; also director
of Meriter Hospital and Meriter Health Services.
DONNA K. SOLLENBERGER (52), Middleton, Wisconsin............ 2000
President and Chief Executive Officer of UW Hospitals and
Clinics since December, 1999; Executive Vice President and
Chief Operating Officer of City of Hope National Medical
Center, Los Angeles, California, January, 1997, to
December, 1999; Vice President for Hospitals and Clinics
at M.D. Anderson Cancer Center, Houston, Texas, June,
1991, to December, 1996.
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DIRECTOR
NAMES (AGES) AND BUSINESS EXPERIENCE SINCE
------------------------------------ --------
Class II -- Term Expiring in 2003
H. LEE SWANSON (63), Cross Plains, Wisconsin................ 1988
Chairman of the Board, Chief Executive Officer, and
Director of the State Bank of Cross Plains, with which he
has been associated for more than 35 years; also director
of Chorus Communications Group and the Federal Home Loan
Bank of Chicago.
JOHN R. NEVIN (58), Madison, Wisconsin...................... 1998
Associate Dean of Master's Programs; Executive Director,
Grainger Center for Supply Chain Management, and Grainger
Wisconsin Distinguished Professor, School of Business,
University of Wisconsin-Madison, where he has been a
faculty member for 30 years.
GARY J. WOLTER (46), Madison, Wisconsin..................... 2000
President and Chief Executive Officer of MGE, of which he
has been an officer since 1989 and an employee since 1984.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table lists the beneficial ownership of common stock of each
director and nominee, the individuals named in the summary compensation table,
the directors and executive officers as a group, and each person known by MGE to
be the beneficial owner of more than 5 percent of the outstanding shares of our
common stock. In each case, the indicated owner has sole voting power and sole
investment power with respect to the shares shown except as noted.
PERCENT OF
NUMBER OF SHARES OUTSTANDING
NAME BENEFICIALLY OWNED COMMON STOCK
- ---- ------------------ ------------
Jean M. Biddick....................... 4,1894,543 *
Richard E. Blaney..................... 1,5051,632 *
Terry A. Hanson....................... 3,294(1)4,249(1)(2) *
F. Curtis Hastings.................... 1,7021,846 *
Thomas R. Krull....................... 11,954(1)13,803(1)(2) *
David C. Mebane....................... 9,888(1)11,025(1)(2) *
Regina M. Millner..................... 924 *
Frederic E. Mohs...................... 1,891(3)12,064(3) *
John R. Nevin......................... 900961 *
Donna K. Sollenberger................. 995 *
H. Lee Swanson........................ 3,1504,080 *
Mark C. Williamson.................... 3,456(1)4,454(1)(2) *
Gary J. Wolter........................ 4,887(1)6,090(1)(2) *
All directors and executive officers
as a group (19).................... 59,716(2)(20 persons)............ 83,276(2) *
Marshall & Ilsley Corporation......... 889,625(4) 5.53
770 North Water Street877,708(4) 5.31
Milwaukee, Wisconsin 53202
Systematic Financial Management LP.... 1,047,349(5) 6.30
Glenpoint East, 7th Floor
300 Frank W. Burr Blvd
Teaneck, NJ 07666
- -------------------------
* Less than 1 percent.
(1) Messrs. Hanson, Krull, Mebane, Williamson, and Wolter are directors of
Madison Gas and Electric Company Foundation, Inc., and as such have shared
voting and investment power in an additional 12,000 shares of common stock
held by the Foundation.
(2) Includes common stock held under the two employee stock ownership plans for
the account of executive officers of MGE with respect to which such persons
have sole voting but no investment power: Mr. Hanson, 453491 shares; Mr. Krull,
7,2057,324 shares; Mr. Mebane, 5,8046,295 shares; Mr. Williamson, 1516 shares; Mr.
Wolter, 94101 shares; and directors and executive officers as a group, 16,62418,032
shares.
(3) Includes 628 shares of common stock with respect to which Mr. Mohs is
trustee of a trust for the benefit of his children.
(4) Marshall & Ilsley Trust Company is the Trustee of the MGE employee stock
ownership plans. Marshall & Ilsley Corporation (M&I), as a parent holding
company, filed a Schedule 13G to report beneficial ownership by it and four
subsidiaries of shares of common stock. Based on information contained in
the Schedule 13G, thisthe number shown in the table includes shares as to which
M&I has or shares voting and investment power as follows: sole voting power
as to 124,12988,332 shares; shared
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voting power as to 765,271789,376 shares (as to which beneficial ownership is
disclaimed as to 756,909781,014 shares held in one or more employee benefit plans);
sole investment power as to 127,67992,007 shares; and shared investment power as to
761,946785,701 shares (as to which beneficial ownership is disclaimed as to 756,909781,014
shares held in one or more employee benefit plans).
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10(5) Information contained on Form 13F filed with the Securities and Exchange
Commission for year ended December 31, 2000. Percent shown in table is based
on outstanding shares of common stock as of December 31, 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires MGE's
directors, executive officers, and persons who own more than ten percent of
MGE's common stock to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. Those persons are also required to
furnish MGE with copies of all such reports.
Based solely on its review of the copies of the reports received by MGE and
written representations from certain reporting persons, MGE notes that its
directors and executive officers (MGE does not have any greater than ten percent
shareholders) filed all required reports during or with respect to the year
ended December 31, 2000, on a timely basis, except for Harold L. Swanson who
filed one report late relating to the purchase of stock and Jean M. Biddick who
filed one report late relating to the sale of stock.
MEETINGS AND COMMITTEES OF THE BOARD
MGE has an Audit Committee, a Compensation Committee, an Executive
Committee, and a Personnel Committee.
The following table sets forth the membership of each committee:committee and the
number of meetings held during 2000:
AUDIT COMPENSATION EXECUTIVE PERSONNEL
NAME COMMITTEE COMMITTEE COMMITTEE COMMITTEE
---- --------- ------------ --------- ---------
Jean M. Biddick...................................Biddick................................. X X X
Richard E. Blaney.................................Blaney............................... X X X
F. Curtis Hastings................................Hastings.............................. X X
David C. Mebane...................................Mebane................................. X X
Regina M. Millner.................................Millner............................... X X
Frederic E. Mohs..................................Mohs................................ X X*X X X
John R. Nevin.....................................Nevin................................... X X
Donna K. Sollenberger........................... X X
H. Lee Swanson.................................... X*Swanson.................................. X X X
Gary J. Wolter.................................. X X
Number of Meetings.............................. 2 1 1 1
- -------------------------
* Chairperson
The Board of Directors met 12 times during 1999.2000. All directors attended at
least 75 percent of the aggregate number of meetings of the Board and the
committees on which the director served.
The function of the Audit Committee's functionCommittee is to meet with MGE's internal auditors
and independent public accountants and discuss with them the scope and results
of their
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audits, accounting practices, and the adequacy of MGE's internal controls. The
Audit Committee also approves services performed by MGE's independent public
accountants. The Audit Committee held two meetings during 1999 andconsists of eight independent directors as
defined in Rule 4200(a)(15) of the National Association of Securities Dealers'
listing standards. The Audit Committee adopted a new charter induring 2000.
The function of the Compensation Committee is to review the salaries, fees,
and other benefits of officers and directors and recommend compensation
adjustments to the Board. The Compensation Committee held two meetings during
1999.
The Executive Committee acts in lieu of the full Board and between meetings
of the Board. The Executive Committee has the powers of the Board in the
management of the business and affairs of MGE, except action with respect to
dividends to shareholders, election of principal officers, or the filling of
vacancies on the Board or committees created by the Board.
The Executive
Committee did not meet during 1999.
The Personnel Committee makes recommendations with respect to the election
of MGE directors and officers. Nominations for the Board by shareholders, which
are submitted to the Chief Executive Officer and/or President of MGE in the
manner described under "Other Information -- Shareholder Proposals for the 2001
Meeting" will be considered by the Personnel Committee, the Board, or the Chief
Executive Officer.
AUDIT COMMITTEE REPORT
The PersonnelAudit Committee held two meetings during 1999.
6oversees the Company's financial reporting process on
behalf of the Board of Directors (the Board). The Audit Committee consists of
eight independent directors. Its duties and responsibilities are set forth in
the Audit Committee Charter adopted by the Board. The Audit Committee Charter is
included in this proxy statement as Exhibit A.
In the course of fulfilling its responsibilities, the Audit Committee has:
- Reviewed and discussed with management the audited financial statements
for the year ended December 31, 2000;
- Discussed with the representatives of our Independent Accountants,
PricewaterhouseCoopers LLP (PwC), all matters required to be discussed by
Statement on Auditing Standards No. 61, Communication with Audit
Committees;
- Received the written disclosures and the letter from PwC required by
Independence Standards Board Standard No. 1, Independence Discussions
with Audit Committees;
- Discussed with PwC their independence from the Company and management;
and
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- Considered whether the provision by PwC of nonaudit services is
compatible with maintaining their independence.
AMOUNT
--------
INDEPENDENT ACCOUNTANT FEES DISCLOSURE
AUDIT FEES........................................... $139,500
========
FINANCIAL INFORMATION SYSTEMS DESIGN AND
IMPLEMENTATION FEES................................ $ 0
========
Financial Analysis for Special Projects.............. $320,500
Tax Services......................................... $ 38,500
Issuance of Comfort Letters for Debt Financing....... $ 29,000
Financial Accounting Standard 133 Implementation..... $ 25,000
--------
ALL OTHER FEES....................................... $413,000
========
Based on the foregoing, the Audit Committee recommended to the Board that
the audited financial statements referred to above be included in the Company's
annual report on Form 10-K and the annual report to shareholders for the fiscal
year ended December 31, 2000.
Jean M. Biddick Regina M. Millner Donna K. Sollenberger
Richard E. Blaney Frederic E. Mohs H. Lee Swanson
F. Curtis Hastings John R. Nevin
-------------------------
DIRECTOR COMPENSATION
In 1999 directorsDirectors who wereare not employees of MGE receivedwill receive an annual retainer of
$13,000,$14,000, plus $800$900 for each Board meeting attended and $350 for each Audit,
Compensation, Executive, or Personnel Committee meeting attended. Neither Mr.
Mebane nor Mr. Wolter receive additional compensation for serving as a director.
The chairperson of the Audit Committee will receive an additional $2,000
retainer.
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EXECUTIVE COMPENSATION
The following table summarizes thesets forth compensation information for 1997, 1998, 1999, and
1999 of
the2000 for our Chief Executive Officer and our four other most highly compensated
executive officers serving as executive officerssuch on December 31, 1999,2000, whose salary exceeded
$100,000 for 1999.2000.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------- ---------------------------------
AWARDS PAYOUTS
----------------------- -------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION STOCK OPTIONS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) AWARDS($) (#) ($) ($)(6)
------------------ ---- ------ ----- ------------ ---------- ---------- ------- ------------
David C. Mebane(1)................. 2000 311,674 29,000 0 0 0 0 23,115
Chairman of the Board 1999 337,036323,036 17,500 0 0 0 0 10,892
Chairman of the Board
1998 303,736 14,000 0 0 0 0 8,226
1997 287,316Gary J. Wolter(2)........... 2000 251,674 29,000 0 0 0 0 0 8,857
Gary J. Wolter(2)........10,018
President and 1999 219,780205,780 17,500 0 0 0 0 8,677
President andChief Executive Officer 1998 192,356 14,000 0 0 0 0 7,584
Chief Executive Officer 1997 176,612Mark C. Williamson(3)....... 2000 223,574 29,000 0 0 0 0 0 6,171
Mark C. Williamson(3)....9,461
Executive Vice President 1999 219,604205,604 17,500 0 0 0 0 8,733
Executive Viceand Chief Strategic 1998 191,528 14,000 0 0 0 0 8,325
President
and Chief Strategic 1997 174,984Officer
Thomas R. Krull(4).......... 2000 149,413 24,000 0 0 0 0 0 3,114
Officer
Thomas R. Krull(4).......4,612
Group Vice President 1999 149,332137,332 15,000 0 0 0 0 4,268
Group Vice President
1998 131,204 12,000 0 0 0 0 3,981
1997 120,764Terry A. Hanson(5).......... 2000 144,544 24,000 0 0 0 0 0 2,736
Terry A. Hanson(5).......6,959
Vice President and Chief 1999 148,776136,776 15,000 0 0 0 0 6,632
Vice President --Financial Officer 1998 130,260 12,000 0 0 0 0 6,450
Finance 1997 122,416 0 0 0 0 0 5,089
- -------------------------
(1) Chairman, President and Chief Executive Officer until February 1, 2000.
(2) Senior Vice President -- Administration and Secretary until February 1,
2000, when he was promoted to President and Chief Executive Officer.
(3) Senior Vice President -- Energy Services until February 1, 2000, when he was
promoted to Executive Vice President and Chief Strategic Officer.
(4) Vice President -- Gas and Electric Operations until February 1, 2000, when
he was promoted to Group Vice President.
(5) Vice President and Treasurer-- Finance until NovemberMay 1, 1997,2000, when he was promoted to Vice
President -- Finance.and Chief Financial Officer.
(6) AllAmounts shown for all other compensation for 1999 amounts2000 are company contributions
to a 401(k) defined contribution plan, $148$130 for value attributable to a
holiday gift, and pay for unused vacation. The 401(k) company contribution
for 19992000 was $4,800$5,100 for Mr. Mebane, $4,734$5,080 for Mr. Wolter, $4,800$5,100 for Mr.
Williamson, $4,120$4,482 for Mr. Krull, and $3,938$4,156 for Mr. Hanson; the residual
for each person in 19992000 was pay for unused vacation for each officer, except
Mr. Krull.
7
12
AGREEMENT WITH EXECUTIVE OFFICER
In 1999, Chairman, President and Chief Executive Officer David C. Mebane indicated an intention to retire from MGE. The
Board desired to continue Mr. Mebane's employment as an officer of MGE and
advisor to the Board and senior management. The Board then entered into a
contract with Mr. Mebane. The agreement provides for him to continue as an
employee and serve as Chairman of the MGE Board, consultant and advisor to the
Board and senior management, and Chairman of the MGE Foundation. Mr. Mebane has
agreed to act
10
15
as Chairman of the monthly Board meetings and the 2000 Annual Meeting.annual meetings. He will also
review and approve official communications with shareholders and review major
operational, financial, regulatory, public policy, and public affairs activities
of MGE and provide the Board with a monthly assessment of the same. He will be
responsible for corporate governance issues at the Board level. Mr. Mebane is
prohibited from engaging in any other aspect of the gas and electric utility
business in the state of Wisconsin during the term of the contract and for two
years thereafter. The initial agreement runsran from February 1, 2000, through
February 1, 2001.2001, and was extended during 2000 for an additional year through
February 1, 2002. The Chairman will be paid $310,000, plus standard benefits.
REPORT ON EXECUTIVE COMPENSATION
CORPORATE MISSION
The mission of MGE is to provide qualityreliable gas and electric utility service to itsour
customers at competitive rates; to meet all customers' gas, electric, and
related energy needs; and to earn a reasonable return for investors. MGE is
committed to the communities we serve and to maintaining the highest standards
of corporate citizenshipcitizenship. MGE is committed to treat employees fairly and fair
treatment for all employees.provide
equal opportunity.
COMPENSATION PHILOSOPHY
The principal goal of the MGE compensation program is to pay employees,
including executive officers, at levels which are:
- Reflective of how well MGE is achieving its corporate mission;
- Consistent with MGE's current financial condition, earnings, rates, total
shareholder return, and projected Consumer Price Index;
- Reflective of individual performance and experience;
- Competitive in the marketplace; and
- Administered in a fair and consistent manner.
Executive salaries are established within a salary range that reflects competitive
salary levels for similar positions in similar-sized gas and electric utilities,
similar-sized companies outside of the utility industry, and other Wisconsin
utilities. The utilities used for salary comparison are not the same companies
included in the performance graph peer group in this proxy statement. The Upper Midwest combination utilities included
in the performance graph peer group were selected to reflect utilities facing
similar weather and economic conditions. Many of these companies are larger than
MGE with much higher compensation structures.
8
13
When
examining compensation peer groups, it was determined more appropriate to
consider similar-sized utilities, other similar-sized companies, and other
Wisconsin utilities.
The midpoint (or middle) of an executive's salary range is approximately
equal to the median salary level of the surveyed utilities. An executive's
position in the range reflects his or her performance over a period of years in
that position, the executive's experience in that position, and MGE performance.
11
16
Specific individual or company performance targets are not set. Instead, an
executive's salary within the salary range is determined by subjectively
evaluating the individual's performance and experience and MGE's performance.
While MGE's current compensation program has functional adequacy to retain
and fairly compensate executives, the Compensation Committee and the full Board
review the objectives of the executive compensation program on a continuing
basis. Each year, the Compensation Committee reviews and recommends to the Board
annual salaries, salary grades and ranges, and the overall salary program design
for MGE's executives.
From time to time the Compensation Committee considers awarding bonuses to
MGE's executives in the form of cash and/or stock. These bonuses may be made for
extraordinary company or individual performance, a desire to retain an executive
by making that executive's compensation more competitive, aligning the long-term
interests of executives with shareholders, and other reasons.
EXECUTIVE COMPENSATION
Performance factors such as earnings, rates, shareholder return, and other
available financial criteria were used in determining the CEO's and other
executive officers' positions in his or her salary range. Other criteria such as
gas and electric reliability, customer service, and responsiveness to industry
change were also examined.
Officer salaries were set effective May 1, 1999.2000. Among the significant
achievements the Compensation Committee considered in setting the salary of the
CEO and other senior executives were the following: 1998 earnings were strong
despite lower gas sales resulting from one of the warmest years on record. A gas
capacity release program generated new revenues, and MGE implemented a
distributed generation program. An 83-MW natural gas peaking plant was
negotiated, sited, and readied for construction. MGE constructed a 17-turbine
wind farm which is the largest east of the Mississippi. MGE also maintained its
strong AA bond rating.
In 1999 MGE's earnings exceeded the
budget forecast, despite lower gas margins because of another warm winter and
the higher electric fuel costs resulting from Columbia Plant outages and higher
purchased power costs. MGE was instrumental in shaping WisconsinWisconsin's energy policy
through the Governor's Reliability 2000 Act which will provide fair access for
all to the transmission grid. MGE developed a new gas purchasing incentive
program which will allow shareholders to receive up to $750,000 of additional
earnings in 2000.future years. MGE had the highest ten-year average annual return
among the four major Wisconsin combination utilities. 9
14The Company's bond rating
was fourth out of 307 electric, gas, and water utilities in the country. MGE met
customer needs by implementing a backup generator program for commercial
customers, beginning construction of an 83-megawatt natural gas peaking plant
and building an additional reporting site in Fitchburg.
A compensation study was performed for MGE in 1999 and updated in 2000 by
an independent compensation consultant. The study compared the pay level of key
MGE executives to pay levels of general industry and pay levels of other
utilities with revenues of approximately $250 million. The study showed that pay
levels for MGE executives were generally below the median of salary and
incentive compensation for both general industry and similar-sized utilities.
Salary adjustments were made which moved MGE executives closer to the market
median for their positions. In May of 1999,2000, the CEO's annual salary was set at
$330,000.$257,508.
12
17
A stock and cash bonus was granted to MGE officers based on 19992000
performance. The bonus granted to the CEO and several other senior officers was
$17,500.$29,000. When determining whether to grant the bonus, the Compensation Committee
in particular considered the performance factors noted above, together with the
further alignment of the long-term interests of the executive officers and
shareholders created by the stock portion of the bonus.
Jean M. Biddick
Richard E. Blaney
Frederic E. Mohs
1013
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COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative total
returns for MGE,the Company, Russell 2000, a Peer Group Industry Index, and the EEI Investor-owned Electric
Index, weighted according to each company's market capitalization as of the
beginning of each year.
MADISON GAS AND ELECTRIC COMPANY
FINANCIAL PERFORMANCE
CUMULATIVE FIVE-YEAR TOTAL RETURN COMPARISON
[PERFORMANCE GRAPH]
MGE RUSSELL 2000 PEER GROUP EEI INDEX
--- ------------ ---------- ---------
19941995 100.00 100.00 100.00
100.00
1995 114.00 127.00 127.001996 92.00 116.00 101.00
1997 111.00 143.00 129.00
1998 116.00 139.00 147.00
1999 109.00 168.00 120.00
2000 131.00 1996 105.00 155.00 141.00 133.00
1997 126.00 204.00 191.00 169.00
1998 132.00 191.00 206.00 192.00
1999 125.00 188.00 204.00 157.00147.00 177.00
Assumes $100 invested on 12/31/94December 31, 1995, in each of MGE's common stock,the Company's Common
Stock, Russell 2000,
the Industry Peer Group, and the EEI Index.
Total return assumes reinvestment of dividends
-------------------------------------------------------------------
RUSSELL PEER EEI
MGE 2000 GROUP INDEX
----------------------------------------------------------------
19941995 $100 $100 $100
$ 100
1995 $114 $127 $127 $ 131
1996 $105 $155 $141 $ 133$92 $116 $101
1997 $126 $204 $191 $ 169$111 $143 $129
1998 $132 $191 $206 $ 192$116 $139 $147
1999 $125 $188 $204 $ 157$109 $168 $120
2000 $131 $147 $177
MGE has decided to use the EEI Index for the industry index comparison.
Given the mergers in the electric utility industry, the original peer group
has substantially changed and MGE believes a standard industry index will
provide a better comparison.
The Peer Group selected by the Company is composed of 13 Upper Midwest
combination utilities:
AES Corp.
Alliant Energy Corp.
CMS Energy Corp.
DPL Inc. St.
Illinova Corp.
MidAmerican Energy Holding
Minnesota Power & Light
Northern States Power-MN
SIGCORP Inc.
Joseph Light & Power
Utilicorp United Inc.
Wisconsin Energy Corp.
WPS Resources Corp.
1114
1619
MADISON GAS AND ELECTRIC COMPANY
FINANCIAL PERFORMANCE
MGE VERSUS WISCONSIN PEER GROUP
Note: This graph is for comparison purposes only. It is to show how the
Company's Five-YearMGE's Five-
Year Total Return compares to the other Wisconsin utilities.
[PERFORMANCE GRAPH]
MGE WI PEER GROUP
--- -------------
19941995 100.00 100.00
1995 114.00 125.00
1996 105.0092.00 93.00
1997 111.00 110.00
1998 116.00 1997 126.00 138.00
1998 132.00 154.00123.00
1999 125.00 117.00109.00 94.00
2000 131.00 121.00
Assumes $100 invested on December 31, 1994,1995, in each of the MGE's common stockCommon Stock and
the
Wisconsin Utility Peer Group Average.
The Wisconsin Peer Group average is weighted based on market capitalization at
the beginning of the year.
Total return assumes reinvestment of dividends
------------------------------------------
WI
MGE PEER
GROUP
----------------------------------------
1994 $100 $100
1995 $114 $125$100.00 $100.00
1996 $105 $116$ 92.00 $ 93.00
1997 $126 $138$111.00 $110.00
1998 $132 $154$116.00 $123.00
1999 $125 $117$109.00 $ 94.00
2000 $131.00 $121.00
Wisconsin Peer Group: Wisconsin Energy Corp.
Alliant Energy Corp.
WPS Resources Corp.
1215
1720
PENSION PLAN AND SUPPLEMENTAL RETIREMENT PLAN
MGE has a noncontributory qualified defined benefit pension plan covering
its salaried employees. The amount of pension is based upon years of service and
high 60-month average earnings in the ten years prior to retirement.
The following table indicates the estimated maximum retirement benefits
payable (unreduced for survivor protection) at the normal retirement age of 65
for specified compensation and years of service classifications. Substantially
all compensation shown in the salary column of the summary compensation table is
included in compensation under the pension plan, subject to any statutory
regulations imposed by the Internal Revenue Code. Information in this table is
based on the pension plan formula for years of service credit earned in 1986 and
subsequent years. The retirement benefits are not subject to any reduction for
Social Security benefits received by the employees or for any other offset
amounts.
PENSION PLAN TABLE(1)
ANNUAL PENSION AT NORMAL RETIREMENT AGE OF 65
AFTER YEARS OF SERVICE INDICATED BELOW(2)
--------------------------------------------------------------
FINAL FIVE-YEAR 30 YEARS
AVERAGE ANNUAL SALARY 10 YEARS 15 YEARS 20 YEARS 25 YEARS OR MORE
- --------------------- -------- -------- -------- -------- --------
$100,000.............. $14,000 $21,000 $28,000 $35,000 $42,000
$140,000.............. $19,600 $29,400 $39,200 $49,000 $58,800
$170,000.............. $23,800 $35,700 $47,600 $59,500 $71,400
- -------------------------
(1) The retirement benefits reflect limits imposed by the Internal Revenue Code
on benefit amounts and covered compensation.
(2) The pension plan table does not reflect service credit prior to 1986 when
the pension plan required employee contributions. The normal retirement
pension for employees with service credits prior to 1986 will exceed the
amounts shown in the pension plan table, depending on their years of
pre-1986 service and contributions made to the pension plan.
The estimated annual retirement benefit payable at normal retirement age of
65 under the pension plan formula (assuming continuation of 19992000 compensation
levels through retirement and taking into account employee contributions and
service credits for 1985 and prior years) is $77,187$78,205 to Mr. Wolter, $72,940$72,986 to
Mr. Williamson, $86,946$92,588 to Mr. Krull, and $62,232$66,725 to Mr. Hanson. At December 31,
1999,2000, the annual retirement benefit payable to Mr. Mebane is $64,985.$71,562.
The full credited years of service under the pension plan are 2324 for Mr.
Mebane, 1617 for Mr. Wolter, 1415 for Mr. Williamson, 2628 for Mr. Krull, and 1819 for
Mr. Hanson.
Officers of MGE are also covered under a nonqualified supplemental
retirement plan which provides a supplemental retirement benefit. The
supplemental retirement benefit is a designated percentage ranging from 55 to 70
percent of the final 60-month average earnings less the benefit payable from the
pension plan described above. The designated percentage is based on the
officer's age at retirement. The estimated supplemental annual retirement
benefit payable at normal retirement age of 65 under the supplemental retirement
plan (assuming continuation of 19992000 compensation levels
1316
1821
through retirement) is $97,819$102,051 to Mr. Wolter, $81,066$85,639 to Mr. Williamson,
$16,029$13,479 to Mr. Krull, and $35,057$36,402 to Mr. Hanson. At December 31, 1999,2000, the
annual supplemental retirement benefit payable to Mr. Mebane was $140,961.$143,905.
DEFERRED COMPENSATION PLAN
Officers of MGE are permitted to defer a portion of their current salary
under a nonqualified deferred compensation plan initiated in 1984. Three
officers contributed to the plan during 1999.2000. Participants in the plan are
entitled to receive deferred compensation upon termination of active employment.
Deferred compensation under this plan does not constitute compensation as
defined under the pension plan described above.
MGE has entered into a trust agreement for the purpose of assuring the
payment of its obligations under the supplemental retirement plan and deferred
compensation plan. Under the trust agreement, in the event of a change in
control or potential change in control of MGE, MGE will be obligated to deliver
to the trustee cash or marketable securities having a value equal to the present
value of the amounts which MGE is obligated to pay under such plans and the
costs of maintaining the trust. "Change in control" is defined generally as the
acquisition by any person, subject to certain exceptions, of beneficial
ownership of 20 percent or more of theMGE's common stock; a change in the majority
of the Board of Directors; certain mergers or similar transactions involving
MGE's assets where, among other conditions, the current shareholders do not
constitute at least 60 percent of the shareholders of the resulting or acquiring
entity; or a liquidation of MGE.
SEVERANCE PLANS
MGE has entered into severance agreements with certain key employees,
including Messrs. Mebane, Wolter, Williamson, Krull, and Hanson. Under these
agreements, each such employee is entitled to a severance payment following a
change in control of MGE as defined above if, within 24 months after such change
in control, employment with MGE is terminated by (i) MGE, (ii) the employee for
good reason, or (iii) the employee for any reason during the 30-day period
commencing one year after the date of change in control. Each agreement has a
three-year initial term, but on the first anniversary of execution and each
anniversary thereafter, the agreement is extended for an additional year, unless
either MGE or the employee gives notice not to extend the agreement or a change
in control of MGE has occurred. Severance payments will be equal to three times
the employee's annual base salary plus three times the highest bonus paid during
any of the five years preceding a change in control. If the employee receives
severance benefits following a change in control, health, life, and disability
benefits are continued for up to three years, and the employee will also be
grossed up for any excise taxes the employee may incur. In circumstances not
involving a change in control of MGE, Messrs. Mebane, Wolter, Williamson, Krull,
and Hanson, like other salaried employees, are entitled under MGE's general
severance plan to a payment 14
19
equal to two weeks of compensation plus the
employee's weekly compensation multiplied by the number of years of employment,
not exceedingto exceed 24.
17
22
OTHER INFORMATION
EXPENSES OF SOLICITATION
MGE will bear the cost of soliciting proxies for the annual meeting.
Proxies will be solicited by mail and may be solicited personally by directors,
officers, or employees of MGE who will not receive special compensation for such
services. MGE has retained Morrow & Co., Inc., to solicit proxies at a fee of
$6,000 plus expenses.
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
In order to be considered for inclusion in MGE's proxy materials for the
20012002 annual meeting, a shareholder proposal must be received by MGE no later
than December 1, 2000.14, 2001. In addition, even if a shareholder proposal is set forth
in MGE's 20002001 proxy statement as a matter to be considered by shareholders,
MGE's Bylaws establish an advance notice procedure for shareholder proposals to
be brought before any meeting of shareholders, including proposed nominations of
persons for election to the Board of Directors. Shareholders at the 20002001 annual
meeting may consider a proposal or nomination brought by a shareholder of record
on March 1, 2000,15, 2001, who is entitled to vote at the 20002001 annual meeting and who
has given MGE timely written notice, in proper form, of the shareholder's
proposal or nomination. A shareholder proposal or nomination intended to be
brought before the 20002001 annual meeting must have been received by MGE after the close of
business on January 24, 2000, and prior to the close of business on February 18,
2000. MGE did not receive notice of any shareholder proposal or nomination
relating to the 2000 annual meeting. The 2001 annual meeting is expected to be
held on May 15, 2001. A shareholder proposal or nomination intended to be
brought before the 2001 annual meeting must be received by MGE after the
close of business on January 29, 2001, and prior to the close of business on
February 22,23, 2001. MGE did not receive notice of any shareholder proposal or
nomination relating to the 2001 annual meeting. The 2002 annual meeting is
expected to be held on May 14, 2002. A shareholder proposal or nomination
intended to be brought before the 2002 annual meeting must be received by MGE
after the close of business on February 11, 2002, and prior to the close of
business on March 8, 2002. All proposals and nominations should be directed to
MGE's principal executive offices at 133 South Blair Street, Post Office Box
1231, Madison, Wisconsin 53701-1231, Attention: Corporate Secretary.
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2023
OTHER MATTERS
Our Annual Report for the year 19992000 has been mailed to shareholders.
The Board does not know of any other matters that will be presented at the
annual meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the proxy to vote the proxies in accordance
with their judgment on such matters.
The Board has selected PricewaterhouseCoopers LLP to audit the consolidated
financial statements of MGE and its subsidiaries for 2000.2001.
PricewaterhouseCoopers LLP, MGE's independent public accountant in 1999,2000, is
expected to have a representative present at the 20002001 annual meeting who may
make a statement and will be available to respond to appropriate questions.
MADISON GAS AND ELECTRIC COMPANY
[DAVID/s/ DAVID C. MEBANE]MEBANE
DAVID C. MEBANE
Chairman of the Board
[GARY/s/ GARY J. WOLTER]WOLTER
GARY J. WOLTER
President and
Chief Executive Officer
Dated March 31, 2000
16April 13, 2001
19
2124
EXHIBIT A
AUDIT COMMITTEE -- CHARTER
The charter identifies the purpose, authority, composition, and
responsibilities of the Madison Gas and Electric Company Audit Committee of the
Board of Directors (the "Committee").
PURPOSE
The purpose of the Committee is to assist the Board of Directors of Madison
Gas and Electric Company (the "Company") in fulfilling its oversight
responsibilities to the shareholders, potential shareholders, and the investment
community relating to financial reporting and accounting practices, the system
of internal controls, and all audit processes.
AUTHORITY
The Committee reports to the Board of Directors and has unrestricted access
and authorization to obtain assistance from Company personnel to accomplish its
purpose. In addition, the Committee has the discretion to initiate and supervise
investigations within the scope of its duties as it may deem appropriate and to
employ whatever additional advisors and consultants it deems necessary for the
fulfillment of its duties.
COMPOSITION
The Committee shall consist of three or more outside directors, as
determined by the Board of Directors. Each member shall be an independent
director, defined as a person other than an officer or employee of the Company
or its subsidiaries or any other individual having a relationship which, in the
opinion of the Company's Board of Directors, would interfere with the exercise
of independent judgment in carrying out the responsibilities of a director. All
members of the Committee shall have a working familiarity with basic finance and
accounting practices and be able to read and understand balance sheet, income
and cash flow statements. At least one member of the Committee shall have
accounting or related financial management expertise.
GENERAL RESPONSIBILITIES
1. The Committee shall provide open avenues of communication with the
director -- internal audit, the independent accountants, management, and
the Board of Directors.
2. The Committee shall report committee actions to the full Board of
Directors and may make appropriate recommendations.
3. The Committee shall meet at least two times each year. The Committee
chair has the power to call a committee meeting whenever he or she
thinks there is a need. A Committee member should not vote on any matter
in which he or she is not independent. The Committee may ask members of
management or
A-1
25
others to attend the meeting and is authorized to receive all pertinent
information from management.
RESPONSIBILITIES FOR ENGAGING INDEPENDENT ACCOUNTANTS AND APPOINTING THE
DIRECTOR -- INTERNAL AUDIT
1. The ultimate accountability of the independent accountants shall be to
the full Board of Directors and the Committee, as representatives of the
shareholders. The full Board of Directors, with the recommendations of
the Committee, shall have ultimate authority to select, evaluate, and
replace the independent accountants.
2. The Committee shall recommend the engagement of independent accountants
to the full Board of Directors for approval and shall review the fees
paid to the independent accountants.
3. The Committee shall review and have veto power over the appointment,
replacement, reassignment or dismissal of the director -- internal
audit.
4. The Committee shall assure the objectivity of the director -- internal
audit and the independence, as defined by Independence Standards Board
(ISB) Standard No. 1, of the independent accountants, including a review
of management consulting services provided by the independent
accountants and the fees paid for them.
5. The Committee shall consider, in consultation with the independent
accountants and the director -- internal audit, the audit scope and plan
of the director -- internal audit and the independent accountants.
6. The Committee shall make sure that the director -- internal audit and
the independent accountants coordinate the internal and external audits.
RESPONSIBILITIES FOR REVIEWING INTERNAL AUDITS, THE ANNUAL EXTERNAL AUDIT AND
THE REVIEW OF QUARTERLY AND ANNUAL FINANCIAL STATEMENTS
1. The Committee shall ensure that the independent accountants are
available to the full Board of Directors at least annually, and shall
provide the Committee with a timely analysis of significant financial
reporting issues.
2. The Committee shall ask management, the director -- internal audit, and
the independent accountants about significant risks and exposures and
shall assess management's responses to address them.
3. The Committee shall review the following with the independent
accountants and the director -- internal audit:
a. The adequacy of the Company's internal controls, including
computerized information system controls and security.
A-2
26
b. Any significant findings and recommendations made by the independent
accountants or the director -- internal audit, together with
management's responses to them.
4. Shortly after the annual external audit is completed by the independent
accountants, the Committee shall review the following with management
and the independent accountants:
a. The Company's annual financial statements.
b. The independent accountants' audit of and report on the annual
financial statements.
c. The independent accountants' qualitative judgment about the
appropriateness, not just the acceptability, of accounting
principles and financial disclosures, and about the degree of
aggressiveness or conservatism of the Company's accounting
principles and underlying estimates.
d. Any serious difficulties or disputes with management encountered
during the course of the audit.
e. Anything else about the audit procedures or findings that is
required to be discussed with the Committee by Statement on Auditing
Standard (SAS) No. 61, as may be modified or supplemented.
5. The Committee shall review the following with management and the
director -- internal audit:
a. Any significant findings during the year and management's responses
to them.
b. Any difficulties the director -- internal audit encountered while
conducting audits, including any restrictions on the scope of his or
her work or access to required information.
c. Any changes required to the planned scope of their audit plan.
d. The internal auditing department's budget and staffing.
e. The internal auditing department's charter.
6. The Committee shall review with management annual filings with the
Securities and Exchange Commission (SEC) and other published documents
containing the Company's annual financial statements and shall consider
whether the information in the filings is consistent with the
information in the financial statements. The Chair of the Committee may
represent the entire Committee for purposes of this review.
7. The Committee shall review the interim financial reports with management
and the independent accountants prior to filing with the SEC. The Chair
of the Committee may represent the entire Committee for purposes of this
review.
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27
8. The Committee shall prepare a report for inclusion in the Company's
proxy statement that states whether:
a. The Committee reviewed and discussed the audited financial
statements with management.
b. The Committee discussed with the independent auditors all matters
required to be discussed by SAS 61, as may be modified or
supplemented.
c. The Committee received the written disclosures and the letter from
the independent accountants required by ISB Standard No. 1, as may
be modified or supplemented, and discussed with the independent
accountants the independent accountants' independence.
d. The Committee recommended to the full Board of Directors that the
audited financial statements be included in the Company's Annual
Report on Form 10-K and the annual report to shareholders.
PERIODIC RESPONSIBILITIES
1. The Committee shall review and, as necessary, update the Committee's
charter at least annually.
2. The Committee shall review with the director -- internal audit the
results of his or her examination of compliance with the Company's code
of conduct.
3. The Committee shall review with the Company's general counsel, legal and
regulatory matters that may have a material effect on the Company's
financial statements, compliance policies, and programs.
4. The Committee shall meet with the director -- internal audit, the
independent accountants, and management in separate executive sessions
to discuss any matters that the Committee or these groups believe should
be discussed privately with the Committee.
A-4
28
If you plan to attend the meeting in person, please fill out the
reservation form and return it with your proxy card so that we may have an
indication of the number of shareholders planning to attend the meeting.
If you have any questions, please feel free to call our Shareholder
Services toll-free number. Call 1-800-356-6423 if you are calling from within
the Continental United States and 252-4744 if calling from the Madison area.
Map
Note: Enter the Dane County Expo Center grounds through the Main Gate off of
Rimrock Road (see inset map).MAP
22
MADISON GAS AND ELECTRIC COMPANY
POST OFFICE BOX 1231
MADISON, WISCONSIN 53701-1231
[MG&E LOGO]
This proxy is solicited on behalf of the Board of Directors of Madison Gas and
Electric Company. MGE's Annual Meeting will be held at 11:00 a.m., local time,
on Tuesday, May 9, 2000, in the Exhibition Hall at the Dane County Exposition
Center, 1919 Expo Way, Madison, Wisconsin (see map on back).
YOUR VOTE IS IMPORTANT. PLEASE SIGN AND DATE THE ATTACHED PROXY PROMPTLY AND
MAIL IT BACK TO US EVEN IF YOU PLAN TO ATTEND THE MEETING. If you do plan on
attending the meeting, be sure to complete and return the bottom two-thirds of
this form in the enclosed envelope.
Fold and Detach Here Fold and Detach Here
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
PLEASE
SIGN
AND
RETURN
MADISON GAS AND ELECTRIC COMPANY PROXY
ITEM 1: Election of Directors: Class II Nominees: John R. Nevin,
H. Lee Swanson, and Gary J. Wolter29
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Madison Gas and Electric Company [MG&E LOGO OMITTED] | Control Number |
Post Office Box 1231 YOUR VOTE IS IMPORTANT! | for Telephone and Internet Voting: |
Madison, Wisconsin 53701-1231 ---------------------------------------
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| | Call the Toll-Free Number 1-800-678-8548. (You will not be charged for this call.) You will be asked to enter |
| | the control number found in the box in the upper right corner of this form. |
| | |
| VOTE BY | OPTION A: To vote as the Board of Directors recommends on ALL proposals, press 1. |
| TELEPHONE | |
| | OPTION B: If you choose to vote on each item separately, press 0. You will hear these instructions: |
| | To vote FOR ALL nominees, press 1. To WITHHOLD FOR ALL nominees, press 9. To WITHHOLD |
| | FOR AN INDIVIDUAL nominee, press 0 and listen to the instructions. |
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| VOTE BY | Access our Web site HTTP://WWW.PROXYVOTING.COM/MGE |
| INTERNET | |
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IF YOU VOTE BY PHONE OR INTERNET - DO NOT MAIL THE PROXY CARD. THANK YOU FOR VOTING.
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The Board of Directors recommends a vote "FOR" Item 1.
ITEM 1. ELECTION OF DIRECTORS
Nominees for terms ending in 2004:
01 Richard E. Blaney
02 Frederic E. Mohs
03 F. Curtis Hastings
Indicate your vote by placing an (X) in the appropriate box.
[ ]For all [ ] FORWithhold [ ] WITHHOLDFor all
nominees listed abovefor all except*
* To withhold authority to vote for any individual nominee, strike a Signature(s): Date:
line through the nominee's name in the list above and mark an (X)
in the "For all (except as marked to the nominees listed
contrary below)
To withhold authority to vote
for any individual nominee,
write that nominee's name here:
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ITEM 2: In their discretion upon such other business as may
properly come before the meeting
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED
WITH RESPECT TO PROPOSAL NUMBER (1). IF NO SPECIFICATION IS
MADE, THE SHARES WILL BE VOTED "FOR ALL NOMINEES."
except" box. --------------------------------------- ------------
This proxy revokes any proxy heretoforeprevious proxies given. ----------------------------------------------------
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2000
MONTH DAY--------------------------------------- ------------
Please sign exactly as namename(s) appears hereon. Forabove and date
[ ] I/We consent to access all future proxy materials and annual this proxy. If joint accounts, all tenantsaccount, each joint owner should
reports via the Internet instead of receiving these materials sign. Executors, Administrators, Trustees, etc.,
should soby mail. indicate when signing.
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2000the capacity in which you are signing.
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2001 ANNUAL SHAREHOLDER MEETING RESERVATION
PLEASE SIGN AND RETURN IF YOU PLAN TO ATTEND THE ANNUAL
MEETING. ------------------------------------------------------------If you plan to attend the Annual Meeting, please
sign and return with your proxy vote. (IF YOU DO
NOT PLAN TO ATTEND, DO NOT RETURN THIS PORTION OF
Shareholder(s)
THE FORM.)
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Shareholder(s)
------------------------------------------------------------[ ] I/We will attend the annual meeting.
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Shareholder Attending
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Shareholder Attending
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Guest
2330
[MAP]
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[MG&E LOGO] PROXY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS --- MAY 9, 200022, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
[MG&E LOGO]
I (we) appoint(s) RICHARDI/We appoint Richard E. BLANEY, DAVIDBlaney, Frederic E. Mohs, and David C. MEBANE, and FREDERIC E.
MOHS,Mebane, as
proxies with power of substitution, to represent and to vote all shares of
stock I (we)I/We would be entitled to vote at the Annual Meeting to be held inat the
Exhibition Hall of the Dane County ExpositionMarriott - Madison West, 1313 John Q. Hammons Drive, Greenway Center, 1919
Expo Way, Madison,Middleton,
Wisconsin, on Tuesday, May 9, 2000,22, 2001 at 11:0011 a.m., local time, and at all
adjournments thereof.
Shares represented by all properly executed proxies will be voted in accordance
with instructions appearing on the proxy. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
PLEASE SIGN EXACTLY AS NAME(S) APPEARAPPEARS ON THIS PROXY CARD AND DATE THIS PROXY.
IF JOINT ACCOUNT, EACH JOINT OWNER SHOULD SIGN. IF SIGNING FOR A
CORPORATION OR PARTNERSHIP OR AS AGENT, ATTORNEY, OR FIDUCIARY,EXECUTORS, ADMINISTRATORS,
TRUSTEES, ETC., INDICATE THE CAPACITY IN WHICH YOU ARE SIGNING.
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