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SCHEDULE 14A
(RULE 14A-101)14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrantRegistrant [X]
Filed by a partyParty other than the registrantRegistrant [ ]
Check the appropriate box:
[X] Preliminary proxy statementProxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive proxy statementProxy Statement
[ ] Definitive additional materialsAdditional Materials
[ ] Soliciting material pursuantMaterial Pursuant to Rule 14a-11(c) or Rule 14a-12
Madison Gas and Electric Company
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(Name of Registrant as Specified in Its Charter)
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing feeFiling Fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(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:
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(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
[MG&E LOGO]
------------------------------------------------
PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 6, 19964, 1999
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MADISON GAS AND ELECTRIC COMPANY
POST OFFICE BOX 1231
MADISON, WISCONSIN 53701-1231
March 26, 199624, 1999
Dear Shareholder:
The directors and officers of the Company join me in extending a cordial
invitation to you to attend our 19961999 Annual Meeting of Shareholders which will
be held on Monday,Tuesday, May 6, 1996,4, 1999, at 11:00 a.m., local time, atin the Holiday Inn --Exhibition
Hall of the Dane County Exposition Center, 1919 Expo Way, Madison, West, 1313 John Q. Hammons Drive, Greenway Center, Middleton, Wisconsin
(see the map on the next page).
TheOur accompanying Proxy Statement requests approval of the election of a
slate of nominees for directors of Class I to hold office until 19992002 and
approval of an amendment to the Company's Restated Articles of Incorporation.Bylaws.
At the Meeting we will discuss last year's operations, comment on items of
interest to you and the Company, and give you an opportunity to ask questions.
Following the Meeting, our Company's officers, directors, and other employees will be
available to answer any questions you may have.
YOUR VOTE IS IMPORTANT TO US.IMPORTANT. I ENCOURAGE YOU TO SIGN AND DATE YOUR PROXY
PROMPTLY AND MAIL IT BACK TO US even if you plan to attend the Meeting. You may
revoke your proxy at the Meeting and vote your shares in person if you wish.
I hope you will be able to attend.
Very truly yours,
DavidDAVID C. MebaneMEBANE
DAVID C. MEBANE
Chairman of the Board, President,
and Chief Executive Officer
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If you plan to attend the Annual Meeting in person, please fill out the
enclosed attendance cardreservation form and return it with your proxy 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 outside
Wisconsin (Continentalwithin
the Continental United States). In Wisconsin, please call
1-800-362-6423,States and 252-4744 in the Madison area, call 252-4744.
CAMERA READY MAP
Fromarea.
Map
Note: Enter the West Beltline Highway, take Exit 252 -- Greenway Blvd.Dane County Expo Center grounds through the Main Gate off of
Rimrock Road (see inset map).
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MADISON GAS AND ELECTRIC COMPANY
POST OFFICE BOX 1231
MADISON, WISCONSIN 53701-1231
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MONDAY,TUESDAY, MAY 6, 1996,4, 1999, 11:00 A.M.
The 19961999 Annual Meeting of Shareholders of Madison Gas and Electric Company
will be held in Middleton,Madison, Wisconsin, atin the Holiday Inn --Exhibition Hall of the Dane County
Exposition Center, 1919 Expo Way, Madison, West, 1313
John Q. Hammons Drive, Greenway Center, Middleton, Wisconsin, on Monday,Tuesday, May 6,
1996,4, 1999,
at 11:00 a.m., local time, for the purposes of:
(1) Electing three directors of Class I directors to hold office until the Annual
Meeting of Shareholders in 19992002 and until their successors have been
elected and qualified.
(2) Considering and voting upon a proposed amendment of Article Third,
Division A,to the Company's
Bylaws to require any employee director of the Company's Restated Articles of IncorporationCompany to (i)
increase the number of shares of Common Stock authorized for issuance by
the Company from the present 28,000,000 sharesremain employed
full-time in order to 50,000,000 shares, and
(ii) reduce the par value of Common Stock from $8.00 to $1.00 per share.continue service as a director.
(3) Transacting such other business as may properly come before the
Meeting.
Only those shareholders of Common Stock of record at the close of business
on March 1, 1996,1999, are entitled to vote at the Meeting. All shareholders are
requested to be present at the Meeting in person or by proxy. Enclosed is a
proxy.
Your attention is directed to the Company's Proxy Statement of Madison Gas and
Electric Company on the
following pages.
By order of the Board of Directors
GARY J. WOLTER, Secretary
March 26, 199624, 1999
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It is important to you and the Company that your shares be represented at
the Annual Meeting of Shareholders.Meeting. Even if you plan to attend the Meeting in person, you are requested
to sign, date, and mail the enclosed proxy promptly -- regardless of the size of
your stock holding.
The signature on the proxy should correspond exactly with the name of the
shareholder as it appears on the proxy. Where stock is registered in the names
of two or more persons, all such persons should sign the proxy.
If the proxy is signed as attorney, officer, personal representative,
administrator, trustee, guardian, or similar capacity, please indicate full
title as such.
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MADISON GAS AND ELECTRIC COMPANY
POST OFFICE BOX 1231
MADISON, WISCONSIN 53701-1231
PROXY STATEMENT
To the Shareholders of
the Common Stock of
MADISON GAS AND ELECTRIC COMPANY:
The Proxy Statement and accompanying proxy, to be mailed on or about March 26, 1996,24,
1999, are furnished as a part of the solicitation of proxies by the Board of
Directors (the "Board") of Madison Gas and Electric Company (hereinafter referred to as the(the "Company"), to
be voted at the 19961999 Annual Meeting of Shareholders of the
Company to be held in Middleton, Wisconsin, at the Holiday Inn --Exhibition
Hall of the Dane County Exposition Center, 1919 Expo Way, Madison, West,
1313 John Q. Hammons Drive, Greenway Center, Middleton, Wisconsin, on
Monday,Tuesday, May 6, 1996,4, 1999, at 11:00 a.m., local time, for the purposes set forth in
the accompanying Notice of Annual Meeting of Shareholders. A shareholder who
executes a proxy may revoke it at any time before it is voted. A proxy may be
revoked by written notice to the Company, execution of a subsequent proxy which
is voted at the 19961999 Annual Meeting, or attendance at the Meeting and voting in
person. Attendance at the Meeting will not automatically revoke a proxy.
As of March 1, 1996,1999, the Company had outstanding 16,079,718 shares of
28,000,000 authorized shares of
Common Stock. The Common Stock constitutes the only class of securities entitled
to vote at the 1996 Annual Meeting of
Shareholders.Meeting. Only those shareholders of Common Stock of record at the close of
business on March 1, 1996,1999, are entitled to vote at the Meeting. At the 1985
Annual Meeting of Shareholders, the shareholders of the Company approved an
amendment to the Company's Restated Articles of Incorporation (the "Restated
Articles") limiting the voting power of any shareholder who acquires more than
10 percent of the Company's outstanding voting stock. To the knowledge of the
Company, this limitation does not currently apply to any shareholder.
Accordingly, at the present time, one share of Common Stock will be entitled to
one vote. For those shareholders who are participants in the Company's Investors
Plus Plan, the shares you have accumulated in the Plan are held by the
Administrator of the Plan under the nominee name of Whimm & Co., and those
shares, including your reinvestment shares, will be voted in accordance with the
direction given on the proxy.
VOTING INFORMATION
A shareholder may, with respect to the election of directors, (i) vote for
the election of all named director nominees, (ii) withhold authority to vote for
all named director nominees, or (iii) vote for the 2
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election of all such nominees
other than any nominee with respect to whom the shareholder withholds authority
to vote by so indicating on the proxy. A shareholder may, with respect to the
proposal to amend the Company's Restated
Articles of Incorporation,Bylaws, (i) vote for the proposal, (ii) vote
against the proposal, or (iii) abstain from voting on the proposal. Proxies
properly executed and received by the Company at or prior to the 1996 Annual Meeting of
Shareholders and not
revoked will be voted as directed therein. In the absence of a specific
direction from a shareholder, proxies will be voted for the election of the
named director nominees and for the proposal to amend the Company's Restated Articles of Incorporation.Bylaws. If a
proxy indicates that all or a portion of the votes represented by such proxy are
not being voted, such nonvotes will not be considered as votes cast with respect
to such matter, although such shares may be considered present and entitled to
vote for other purposes and will count for purposes of determining the presence
of a quorum.
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If a quorum is present, at the 1996 Annual Meeting, the three persons receiving the greatest number of
votes will be elected to serve as Class I 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. If a quorum
is present atand the 1996 Annual Meeting,
approvalnumber of votes cast favoring the proposal to amend the
Company's Restated ArticlesBylaws exceeds the number of Incorporation requiresvotes cast opposing the affirmative vote of two-thirds ofproposal, the
Common Stock
outstanding and entitled to vote at the 1996 Annual Meeting.proposal will be approved. Accordingly, abstentions and nonvotes with respect to
the proposal to amend the Company's Restated ArticlesBylaws will not affect the outcome of Incorporation have the
legal effect of a vote against theon that proposal.
ELECTION OF DIRECTORS
As described below, upon the retirement of Messrs. BolzStark and RennebohmVondrasek at
the 19961999 Annual Meeting, the Board of Directors will consist of eight directors
divided into three classes, with one class having two directors and two classes
having three directors, with one class being elected each year for a term of
three years. Accordingly, it is proposed that the three nominees listed below be
elected to serve as Class I directors for three-year terms, to expire at the
19992002 Annual Meeting of Shareholders and upon the election and qualification of their successors.
Mrs. Biddick, Ms. Millner, and Messrs.Mr. Mebane and Rennebohm are currently Class I directors
whose terms expire at the 19961999 Annual Meeting. Mrs. BiddickMeeting and Mr.
Mebanewho have been nominated for
reelection. Mr. Rennebohm, age 73, who has been a
director for 13 years, has informed the Board of his intention to retire from
the Board and committees thereof upon the expiration of his term at the 1996
Annual Meeting. Ms. Millner has been nominated for election as a Class I
director to fill the vacancy created by the retirement of Mr. Rennebohm.
Each of the nominees has indicated a willingness to serve if elected, and
the Board of Directors has no reason to believe that any nominee will be
unavailable. If any of the nominees should become unable to serve, it is
presently intended that the proxies solicited hereby will be voted for a
substitute nominee designated by the Board of Directors. 3
8Under the Company's
retirement guidelines for directors, non-officer directors must retire from the
Board no later than the Annual Meeting following their 73(rd) birthday.
Mr. Bolz,Stark, age 73, who has been a director for 2414 years, has informed the
Board of his intention to retire from the Board and its committees at the 1999
Annual Meeting. Mr. Stark is currently a Class III director whose term would
expire at the 2001 Annual Meeting. Mr. Vondrasek, age 70, a director for 17
years, has also informed the Board of his intention to retire from the Board and
its committees thereof at the 19961999 Annual Meeting. Mr. BolzVondrasek is currently a Class II
director whose term would expire at the 19972000 Annual Meeting of Shareholders.Meeting. Shareholders are
not being asked to elect a nomineenominees to fill the vacancyvacancies created by the
retirement of Mr. Bolz's
retirement.
Under the terms of the Company's Bylaws, nominations for the Board of
Directors made by shareholders must be made in writingStark and delivered or mailed
to the Chief Executive Officer and/or President of the Company at the Company's
principal executive offices not less than 14 days nor more than 60 days prior to
the Annual Meeting of Shareholders. If less than 14 days' notice of the Annual
Meeting is given to shareholders, such nominations must be delivered or mailed
as specified above not later than the close of business on the fourth day
following the day on which the notice was mailed. Such notification shall
contain the following information to the extent known to the nominating
shareholder: a) name and address of each proposed nominee, b) the principal
occupation of each proposed nominee, c) the name and residence address of the
nominating shareholder, and d) the number of shares of capital stock of the
corporation owned by the nominating shareholder. Shareholder nominations for the
1996 Annual Meeting of Shareholders must be delivered or mailed to the Company
no later than April 22, 1996.Mr. Vondrasek.
The following table sets forth the names of the nominees and the current
directors who will continue in office after the Meeting, their ages, information
as to their business experience for the last five years (unless otherwise
noted), and the year they first became directors of the Company.
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DIRECTOR
NAMES (AGES) AND BUSINESS EXPERIENCE SINCE
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Nominees (Class I) -- Term Expiring in 1999
JEAN MANCHESTER BIDDICK (69)(72), Madison, Wisconsin...............................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 (62)(65), Madison, Wisconsin.......................................Wisconsin.................... 1984
Chairman of the Board of Directors, President, and Chief
Executive Officer of the Company, of which he has been an
officer since 1980; also director of First Federal Capital
Corp., a bank holding company.
REGINA M. MILLNER (52)(55), Madison, Wisconsin.....................................Wisconsin.................. 1996
Attorney, analyst and Real Estate Consultantbroker for more than 10 years and President of
RMM Enterprises, Inc.20 years; Her
firm, RMillner & Co., aS.C., specializes in complex real
estate projects and provides consulting firm;services for
private clients and governmental agencies; also a director
of DomusWisconsin State Equity Corporation.
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DIRECTOR
NAMES (AGES) AND BUSINESS EXPERIENCE SINCE
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Members of the Board of Directors Continuing in Office
Class II -- Term Expiring in 19972000
H. LEE SWANSON (58)(61), Cross Plains, Wisconsin...................................Wisconsin................ 1988
Chief Executive Officer, President, and Director of the
State Bank of Cross Plains, with which he has been
associated for more than 3033 years; also director of Mid-PlainsChorus
Communications Group, MidPlains Telephone Company, an independent telephone company.
FRANK C. VONDRASEK (67)and the
Federal Home Loan Bank of Chicago.
JOHN R. NEVIN (56), Madison, Wisconsin.................................... 1982
Vice ChairmanWisconsin...................... 1998
Director, Grainger Center for Distribution Management, and
Grainger Wisconsin Distinguished Professor, School of
the BoardBusiness, University of Directors of the Company, of whichWisconsin-Madison, where he was an
officer from 1974 through 1993.has
been a faculty member for 28 years.
Class III -- Term Expiring in 19982001
RICHARD E. BLANEY (59)(62), Madison, Wisconsin.....................................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 (59)(62), Madison, Wisconsin......................................Wisconsin................... 1975
Partner in the law firm of Mohs, MacDonald, Widder &
Paradise, of which he has been a member since 1968.
PHILLIP C. STARK (70)F. CURTIS HASTINGS (53), Madison, Wisconsin...................................... 1985
ChairmanWisconsin................. 1999
President of the BoardJ. H. Findorff & Son, Inc., and Vice PresidentFindorff,
Inc., commercial and Secretary of The Stark Company,
a real estate company,industrial general contractors and
design builders, with which he has been associated for 47 years.28
years; also director of National Guardian Life Insurance
Co.
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BENEFICIAL OWNERSHIP OF COMMON STOCK
BY DIRECTORS AND EXECUTIVE OFFICERS
(AS OF MARCH 1, 1996)
The following table lists the beneficial ownership of Common Stock of each
director and nominee, the individuals named in the Summary Compensation Table,
and the directors and executive officers as a group.group, and each person known by the
Company to be the beneficial owner of more than 5 percent of the outstanding
shares of 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
------------------------------------------------------ ------------------ ------------
Burnett F. Adams.................................. 1,144(2) *
Jean Manchester Biddick........................... 3,311Biddick................ 3,936 *
Richard E. Blaney................................. 1,190Blaney...................... 1,414 *
Robert E. Domek................................... 7,068(1)Terry A. Hanson........................ 2,477(1)(2) *
F. Curtis Hastings..................... 1,088 *
Thomas R. Krull........................ 10,178(2) *
David C. Mebane................................... 7,650(1)Mebane........................ 8,947(1)(2) *
Regina M. Millner................................. 918Millner...................... 924 *
Frederic E. Mohs.................................. 1,591(3)Mohs....................... 1,872(3) *
Phillip C. Stark.................................. 2,966John R. Nevin.......................... 900 *
H. Lee Swanson.................................... 3,150(4) *
Frank C. Vondrasek................................ 19,028(1)(2)Swanson......................... 3,150 *
Mark C. Williamson................................ 1,747(2)Williamson..................... 2,614(1)(2) *
Gary J. Wolter.................................... 2,519(1)Wolter......................... 3,888(1)(2) *
All directors and executive officers as
a group(17)....................................... 72,213(2)group (18)........................ 52,979(2) *
Marshall & Ilsley Corporation.......... 910,798(4) 5.66
770 North Water Street
Milwaukee, Wisconsin 53202
- -------------------------
* Less than 1 percent.
(1) Messrs. Domek,Hanson, Mebane, Vondrasek,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 9,84712,000 shares of Common Stock held
thereby.
(2) Includes Common Stock held under the two Employee Stock Ownership Plans of
the Company for the account of executive officers of the Company with
respect to which such persons have sole voting but no investment power: Mr.
Adams, 412Hanson, 425 shares; Mr. Domek, 5,735Krull, 6,344 shares; Mr. Mebane, 4,588 shares; Mr.
Vondrasek, 10,6535,453 shares; Mr.
Williamson, 1214 shares; Mr. Wolter, 7488 shares; and directors and executive
officers as a group, 33,01318,302 shares.
(3) Includes 544628 shares of Common Stock with respect to which Mr. Mohs is
trustee of a trust for the benefit of his children.
(4) Mr. SwansonMarshall & Ilsley Trust Company is a memberthe Trustee of the Qualified Plan CommitteeCompany's 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 Profit
Sharing Plan and the Money Purchase Pension Plan of the State Bank of Cross
Plains andSchedule 13G, this includes shares as suchto which M&I has sharedor
shares voting and investment power as follows: sole voting power as to
87,144 shares; shared voting power as to 823,501 shares (as to which
beneficial ownership is disclaimed as to 782,535 shares held in an additional
1,575one or more
employee benefit plans); sole investment power as to 82,546 shares; and
shared investment power as to 828,252 shares of Common Stock(as to which beneficial
ownership is disclaimed as to 782,535 shares held thereby.
6in one or more employee
benefit plans).
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BOARD COMMITTEES
The Company has an Audit Committee, a Compensation Committee, an Executive
Committee, and a Personnel Committee.
During the year ended December 31, 1995,1998, a total of 1211 meetings of the
Board of Directors were held. All of the directors attended in excess of 75
percent of the aggregate of these meetings and (if they were members of the
Audit, Compensation, Executive, or Personnel Committee) the meetings of the
Audit, Compensation, Executive, and Personnel Committees.
DirectorsIn 1998 directors who arewere not employees of the Company will receive $10,000
annually,received an annual
retainer of $11,500, plus $500$650 for each Board meeting attended and $350 for each
Audit, Compensation, Executive, or Personnel Committee meeting attended. The Vice
Chairman of the Board of Directors receives an additional $1,000 annual
retainer. Mr.
Mebane does not receive additional compensation for serving as a director.
The members of the Audit Committee continuing in office are Mrs. Biddick, Ms. Millner, and
Messrs. Blaney, Hastings, Mohs, Nevin, Stark, Swanson, and Vondrasek. The Audit
Committee held two meetings during 1995.1998. The Audit Committee's function is to
meet with the Company's internal auditors and independent public accountants and
discuss with them the scope and results of their audits, the Company's
accounting practices, and the adequacy of the Company's internal controls. The
Audit Committee also approves services performed by the Company's independent
public accountants.
The members of the Compensation Committee continuing in office are Messrs. Blaney, Mohs, and
Mohs.Stark. The Compensation Committee held four meetingsone meeting during 1995.1998. 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 of
Directors.
The members of the Executive Committee are Mrs. Biddick and Messrs. Blaney,
Mebane, Mohs, and Vondrasek. The Executive Committee held one meetingdid not meet during 1995.1998.
The Executive Committee provides a means of taking prompt action when a quorum
of the Board of Directors cannot be readily assembled. When the Board of
Directors is not in session, the Executive Committee has the powers of the Board
in the management of the business and affairs of the Company, except action with
respect to dividends to shareholders, election of principal officers, or the
filling of vacancies on the Board of Directors or committees created by the
Board of Directors.
The members of the Executive Committee are elected by the
Board of Directors each year at the first meeting of the Board following the
Annual Meeting of Shareholders to serve until the first Board meeting following
the next Annual Meeting of Shareholders.
The members of the Personnel Committee are Mrs. Biddick, Ms. Millner, and
Messrs. Mebane, Mohs, Swanson, and Vondrasek. The Personnel Committee held four meetingsone
meeting during 1995.1998. The Personnel Committee makes recommendations with respect
to the election of directors and officers of the Company. Nominations for the
Board of Directors by shareholders, which are submitted to the Chief Executive
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Officer and/or President of the Company, in the manner previously described, above,
will be considered by the Personnel Committee, the Board, or the Chief Executive
Officer.
Messrs. Stark and Vondrasek will be retiring from the above committees at
the 1999 Annual Meeting.
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PROPOSED AMENDMENT TO ARTICLE THIRD, DIVISION A, OF THE COMPANY'S RESTATED
ARTICLES OF INCORPORATIONBYLAWS TO (I) INCREASE THE NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED FOR ISSUANCE BY THE COMPANY FROM THE PRESENT 28,000,000 SHARESREQUIRE EMPLOYEE DIRECTORS TO 50,000,000 SHARES, AND (II) REDUCE THE PAR VALUE OF COMMON STOCK FROM $8.00 PER
SHAREREMAIN
EMPLOYED IN ORDER TO $1.00 PER SHARECONTINUE TO HOLD OFFICE
The Board of Directors has unanimously approved and recommended to the
shareholders an amendment (the "Proposed Amendment") of Article Third, Division
A, ofto the Restated Articles of Incorporation ("Articles")Company's Bylaws
which reads as follows:
"The number"3.02(b) Qualifications. Each Director who is a full-time employee of sharesthe
Corporation or a subsidiary of capital stock whichthe Corporation shall cease to hold office as a
Director upon a termination of employment with the Company shall be
authorized to issue is Fifty-One Million One Hundred Seventy-Five Thousand
(51,175,000) shares, divided into Fifty Million (50,000,000) sharesand its subsidiaries
for any reason other than retirement with the consent of
Common Stock, $1.00 par value per share, and One Million One Hundred
Seventy-Five Thousand (1,175,000) shares of Cumulative Preferred Stock,
$25.00 par value per share."
The Articles currently authorize the issuance of 28,000,000 shares of
Common Stock and 1,175,000 shares of Cumulative Preferred Stock. On December 15,
1995, the Board of Directors
declaredby a 3 for 2 stock split in the formresolution adopted by directors constituting not less than 70 percent of a
stock dividend on the issued and outstanding shares of Common Stock, which was
paid on February 20, 1996, to shareholders of record at the close of business on
February 1, 1996. The payment of the stock dividend increased
the number of issued sharesdirectors of Common Stock from 10,719,812 to 16,079,718, leaving 11,920,282
shares available for issuance.
The Proposed Amendment would increasethe Corporation fixed by the Board of Directors in
accordance with Section 3.01. Each Director must be a shareholder of the
Corporation. This Section 3.02(b) may be amended or repealed by the shareholders
in accordance with Section 11.01 or by the Board of Directors by a resolution
adopted by directors constituting not less than 70 percent of the number of
sharesdirectors of Common Stock
authorized for issuance to 50,000,000 shares and would not change the numberCorporation fixed by the Board of sharesDirectors in accordance with
Section 3.01."
DESCRIPTION
Currently, the only qualification that the Bylaws impose on directors is
that a director must be a shareholder of Cumulative Preferred Stock authorized for issuance. Thethe Company. If the Proposed Amendment
would have no effect onis approved, a second qualification will be added: a director who is a full-time
employee of the rights attaching to Common Stock.Company must relinquish his or her position as director when
that employment ceases for any reason unless, after a cessation of employment by
reason of retirement, 70 percent of the Board approves his or her retention in
office.
The Board of Directors believes that the proposed increasedirector qualification requirement is
in the number of
authorized shares of Common Stock will significantly enhance the Company's
financial flexibility. Shares of Common Stock may be used for general corporate
purposes, including stock splits and stock dividends, acquisitions, public and
private offerings, stock options, and other employee benefit plans. Having
additional authorized shares of Common Stock available for issuance will give
the Company greater flexibility and may result in future acquisitions or
issuances of Common Stock being effected without further shareholder action. The
Company has no present plans to issue any of the additional shares of Common
Stock which would be authorized by adoption of the Proposed Amendment.
The issuance of any additional shares of Common Stock may have the effect
of diluting the percentage of stock ownership, book value per share, and voting
rights of the present holders of the Common Stock. The Proposed Amendment may
also have the effect of discouraging attempts to take
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over control of the Company, as additional shares of Common Stock could be
issued to dilute the stock ownership and voting power or increase the cost to a
party seeking to obtain control of the Company. The Proposed Amendment is not
being made in response to any known effort or threat to acquire controlbest interest of the Company and is not part of a plan by management to adopt a series of amendments
toits shareholders because it promotes the
Articles having an anti-takeover effect.
The decreaseefficiency and continuity of the par valueoperations of each sharethe Board in the event that an
employee director is terminated or otherwise leaves the Company. If, however, a
director's employment with the Company ceases by reason of Common Stock from $8.00retirement, the
proposed director qualification requirement would enable the Board to $1.00 will reduce correspondinglyweigh the
Company's Common Stock account by $7.00
for each outstanding share.merits of retaining that director against any possible disruption on the Board.
The proposed reduction in par value will not affectProposed Amendment also provides that the rightsBoard may amend or repeal
this provision only if 70 percent of the Board agrees to do so. Generally, the
Bylaws permit Board amendment or repeal of any shareholders of the Company and will not require share
certificates to be exchanged.provision by a simple majority
vote. The effect of the reduction will allow the
transfer of $7.00 per outstanding share from the Company's Common Stock account
to the Amount Received in Excess of Par Value account. As of March 15, 1996, the
amount transferable from the Company's Common Stock account to the Amount
Received in Excess of Par Value account pursuant to this Proposed Amendment was
$112,558,026. The reduction in par value will have no effect on total
shareholders' equity as reflected in the Company's balance sheet, nor will the
decrease in par value have any negative impact on the Company, its operations,
or the manner in which it conducts its business.
The approvalsupermajority voting requirement of the Proposed Amendment requiresis designed
to ensure that the affirmativefull force and effect of the proposed director qualification
requirement is not diluted by the general Bylaw amendment provision. Since a 70
percent vote is required for the Board to approve the retention of a retiring
employee as a director, the same vote should be required to amend or repeal the
provision altogether.
REQUIRED VOTE
The vote of the
holders of two-thirdsshares cast in favor of the outstanding shares of Common Stock.Proposed Amendment must exceed the
votes cast against it in order to approve the Proposed Amendment.
THE BOARD OF DIRECTORS BELIEVES THATRECOMMENDS VOTES "FOR" THE PROPOSED AMENDMENT IS INTO THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE
FOR THE PROPOSED AMENDMENT.
9BYLAWS.
7
1412
EXECUTIVE COMPENSATION
The following table summarizes the compensation for the fiscal years 1993,
1994,1996, 1997, and 19951998 of
the Chief Executive Officer and four other executive officers serving as
executive officers on December 31, 1995,1998, whose salary exceeded $100,000 for
fiscal year 1995.1998.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------------------------------------------ ---------------------------------
AWARDS ANNUAL COMPENSATION ------------------------ PAYOUTS
---------------------------------------------------------- -------
RESTRICTED SECURITIES -------
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS ($) OPTIONS PAYOUTS COMPENSATION
($)
POSITION YEAR SALARY ($) ($) ($) (6)($) (#) ($) (7)
- -------------------------($)(3)
------------------ ---- ---------------- ----- ------------ ---------- ---------- ------- ----------------------------
David C. Mebane(1)....... 1995 $264,321Mebane.......... 1998 303,736 14,000 0 0 $6,350 0 0 $2,2508,226
Chairman, President, and 1994 $237,6011997 287,316 0 0 0 0 0 $2,2508,857
and Chief Executive Officer 1993 $175,8061996 270,756 0 0 0 0 0 $2,24912,263
Officer
Gary J. Wolter(2)........ 1995 $146,517Wolter........... 1998 192,356 14,000 0 0 $6,350 0 0 $2,0467,584
Senior Vice President- 1994 $122,221President - 1997 176,612 0 0 0 0 0 $1,8326,171
Administration and 1993 $ 97,5151996 160,516 0 0 0 0 0 $1,4454,412
Secretary
Mark C. Williamson(3).... 1995 $141,580Williamson....... 1998 191,528 14,000 0 0 $6,350 0 0 $ 3548,325
Senior Vice President- 1994 $116,230President - 1997 174,984 0 0 0 0 0 $ 2913,114
Energy Services 1993 $ 95,4681996 158,092 0 0 0 0 0 $ 239
Robert E. Domek(4)395
Thomas R. Krull(1)....... 1995 $126,9301998 131,204 12,000 0 0 $6,350 0 0 $1,393
Executive3,981
Vice President 1994 $112,255- Gas 1997 120,764 0 0 0 0 0 $1,268
1993 $ 93,8842,736
and Electric Operations 1996 114,612 0 0 0 0 0 $1,238
Burnett F. Adams(5)...... 1995 $127,6651,742
Terry A. Hanson(2)....... 1998 130,260 12,000 0 0 $6,350 0 0 $ 956
Former6,450
Vice President- 1994 $107,074President - 1997 122,416 0 0 0 0 0 $ 802
Procurement and 1993 $ 94,2655,089
Finance 1996 114,068 0 0 0 0 0 $ 707
Division Operations3,836
- -------------------------
(1) PresidentVice President-Electric Transmission and Chief Operating OfficerDistribution until JanuaryNovember 1,
1994, when he assumed
the duties of Chief Executive Officer. Promoted to Chairman, President and
Chief Executive Officer on May 9, 1994.
(2) Vice President-Administration and Secretary until May 1, 1995, when he was
promoted to Senior Vice President-Administration and Secretary.
(3) Assistant Vice President-Energy Services until May 1, 1993,1997, when he was promoted to Vice President-Energy Services. Promoted to Senior Vice
President-Energy Services on MayPresident-Gas and Electric Operations.
(2) Treasurer until October 1, 1995.
(4) Vice President-Human Resources until May 1, 1993, when he was promoted to
Senior Vice President-Human Resources. Promoted to Executive Vice President
on May 1, 1995.
(5) Assistant Vice President-Procurement and Division Operations until June 1,
1994,1996, when he was promoted to Vice President-ProcurementPresident and
Division
Operations. Mr. Adams resigned asTreasurer. Promoted to Vice President-Procurement and Division
Operations effective January 31, 1996.
(6) The amounts in the table reflect the market valuePresident-Finance on the date of grant of
restricted stock awarded under restricted stock award agreements. The number
of shares of restricted stock held by each executive officer named in the
table is 300, and the market value of such shares as of December 31, 1995,
was $7,000 (each as adjusted for the 3 for 2 stock split paid on February
20, 1996). The restricted stock vests for each named executive who remains
employed until February 16,November 1, 1997.
Holders of shares of restricted stock are
entitled to receive dividends on such shares at the same rate and at the
same time as on the Common Stock.
(7)(3) All other compensation for 19951998 amounts are Company contributions to a
401(k) defined contribution plan.
10plan and pay for unused vacation. The 401(k)
Company contribution for 1998 was $4,800 for Mr. Mebane, $4,032 for Mr.
Wolter, $4,800 for Mr. Williamson, $3,936 for Mr. Krull, and $3,981 for Mr.
Hanson; the residual for each person in 1998 was pay for unused vacation for
each officer, except Mr. Krull.
8
1513
REPORT ON EXECUTIVE COMPENSATION
CORPORATE MISSION
The mission of Madison Gas and Electric Company is to provide quality gas
and electric utility service to its 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 maintaining the highest standards of
corporate citizenship and fair treatment for all employees.
COMPENSATION PHILOSOPHY
The principal goal of the Madison Gas and Electric Company compensation
program is to pay employees, including executive officers, at levels which are:
- reflective of how well the Company is achieving its corporate mission
- consistent with the Company's current financial condition, earnings,
rates, total shareholder return, and projected Consumer Price Index
- reflective of individual performance and experience
- competitive in the marketplace
- administered in a fair and consistent manner.
The 1995 compensation program for executives was comprised of base salary,
plus a restricted stock award of 200 shares of MGE Common Stock. The 200 shares
of restricted Common Stock were awarded to all officers in February of 1995 in
recognition of 1994 record earnings. Executive salaries are established within a salary range that reflects
competitive salary levels for similar positions in similar-sized gas and
electric utilities 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. When examining compensation peer
groups, it was determined more appropriate to consider similar-sized utilities
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 Company
performance.
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 the Company's
performance.
11
16
While MGE's current compensation program has functional adequacy to retain
and fairly compensate the Company's 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 the Company's executives.
9
14
From time to time the Compensation Committee considers awarding bonuses to
the Company'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
Company 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 and responsiveness to industry change were
also examined.
In 1998, the Company achieved solid earnings despite substantially lower
gas sales resulting from one of the warmest years on record. MGE addressed
electric reliability concerns by taking a leadership role in the passage of the
Wisconsin Electric Reliability Act of 1998 and taking steps to add electric
generation. The Company positioned itself for the future by merging gas and
electric field operations and restructuring its major pipeline contract.
Implementing innovative measures such as a gas margin hedge helped earnings in
1998, and putting in place gas purchasing incentives provides an opportunity to
increase future earnings and shareholder return.
A study was performed for the Company in 19951996 by a compensation consultant.
The study compared the pay levelslevel of key MGE executives to pay levels of general
industry and pay levels of other utilities with revenues of approximately $250
million. ThisThe 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 to movewhich moved Company
executives closer to the market median for their positions and to reflectpositions. In May of 1998, the Company's performance as discussed
below.
COMPANY PERFORMANCE AND EXECUTIVE COMPENSATION
Company performance factors such as earnings, rates, shareholder return,
and other financial criteria are used in determining the CEO's and other
executive officers' positions in his or her salary range as described above.
Company performance in 1995 continued to be strong. MGE achieved earnings
of $2.23 per share. Total shareholder return exceeded MGE's peer group of
utilities for the five-year period ended December 31, 1995. During 1995, the
Company also held its electric rates and natural gas rates constant. The
CEO's annual salary was increasedset at $309,108
A stock and cash bonus was granted to $260,340 to reflect these recent accomplishments.
Mr. Mebane, as well as all other MGE officers receivedbased on 1998
performance. The bonus granted to the awardCEO and other senior officers was $14,000.
When determining whether to grant the bonus, the Compensation Committee in
particular considered the factors noted above, together with the further
alignment of 200 sharesthe long-term interests of restrictedthe executive officers and shareholders
created by the stock in recognitionportion of 1994 record earnings. The CEO's total 1995
compensation remains below the market total compensation for both general
industry and similar-sized utilities identified in the compensation study.bonus.
Richard E. Blaney
Robert M. Bolz
Frederic E. Mohs
12Phillip C. Stark
10
1715
COMPANY PERFORMANCE
The following graph shows a five-year comparison of cumulative total
returns for the Company, S&P 500, Russell 2000, and a Peer Group Index weighted
according to each company's market capitalization as of the beginning of each
annual period.year.
MADISON GAS AND ELECTRIC COMPANY
FINANCIAL PERFORMANCE
CUMULATIVE FIVE-YEAR TOTAL RETURN*RETURN COMPARISON
PERFORMANCE GRAPH
1998
MGE - $135
S&P 500 - $294
Russell 2000 - $179
Peer Group - $182
MEASUREMENT PERIOD
(FISCAL YEAR COVERED)
MGE S&P 500 RUSSELL 2000 PEER GROUP
--- ------- ------------ ----------
1990 100 100 100
1991 147 130 127
1992 165 140 135
1993 181 155 153
1994 184 157 145
1995 210 215 189
'1993' 100.00 100.00 100.00 100.00
'1994' 102.00 101.00 98.00 95.00
'1995' 116.00 139.00 126.00 124.00
'1996' 107.00 171.00 147.00 128.00
'1997' 129.00 229.00 180.00 166.00
'1998' 135.00 294.00 179.00 182.00
Assumes $100 invested on December 31, 1990,1993, in each of the Company's Common
Stock, S&P 500, Russell 2000, and the Peer GroupGroup.
*Total return assumes reinvestment of dividends
-----------------------------------------------------------------------
S&P RUSSELL PEER
MGE 500 2000 GROUP
----------------------------------
S&P PEER
MGE 500 GROUP
--------------------------------
1990
1993 $100 $100 $100 1991$100
1994 $102 $101 $ 98 $ 95
1995 $116 $139 $126 $124
1996 $107 $171 $147 $130 $127
1992 $165 $140$128
1997 $129 $229 $180 $166
1998 $135 1993 $181 $155 $153
1994 $184 $157 $145
1995 $210 $215 $189$294 $179 $182
13The Company has decided to use the Russell 2000 for the broad equity market
index comparison. Given the Company's market capitalization relative to the
companies included in the S&P 500 and the Russell 2000, the Company believes the
Russell 2000 companies are a more representative investment alternative than the
S&P 500 companies.
11
1816
The Peer Group selected by the Company is composed of the following19 Upper Midwest
combination utilities:
Cilcorp Inc. ***MidWest ResourcesMidAmerican Energy Holding
Cinergy Corp. Minnesota Power & Light
Cipsco Inc. Nipsco Industries Inc.
CMS Energy Corp. Northern States Power-MN
DPL Inc. ****SIGCorp.SIGCORP. Inc.
IES Industries Inc. St. Joseph Light & Power
Illinova Corp. Utilicorp United Inc.
*Interstate Energy Corp. Wisconsin Energy Corp.
Interstate Power Co. WPS Resources Corp.
**Iowa-Illinois Gas &
Elec.
*WPL Holdings merged with IES Industries and Interstate Power, which
formed Interstate Energy, which later changed its name to Alliant
Energy Corp.
**Merged with Midwest Resources on 7/17/95
12
17
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-Year Total Return compares to the other Wisconsin utilities.
PERFORMANCE GRAPH
1998
MGE = $135
Wisconsin
Peer Group = $146
MGE WI PEER GROUP
--- -------------
'1993' 100.00 100.00
'1994' 102.00 95.00
'1995' 116.00 118.00
'1996' 107.00 110.00
'1997' 129.00 130.00
'1998' 135.00 146.00
Assumes $100 invested on December 31, 1993, in each of the Company's Common
Stock and the
Wisconsin Utility Peer Group Average
The Wisconsin Peer Group average is weighted based on market capitalization at
the beginning of each year.
* Total return assumes reinvestment of dividends
-------------------
WI
MGE PEER
GROUP
-------------------
1993 $100 $100
1994 $102 $ 95
1995 $116 $118
1996 $107 $110
1997 $129 $130
1998 $135 $146
Wisconsin Peer Group: Wisconsin Energy Corp.
Interstate Energy Corp.
*Iowa-Illinois Gas & Elec. WPL Holdings Inc.
**MidAmerican Energy Co.
WPS Resources Corp.
Note: Data accumulated by S&P Compustat Services
* ConsolidatedWPL Holdings merged with MidWest Resources into MidAmericanIES Industries,
and Interstate Power, which formed Interstate Energy;
which interchanged its name to Alliant Energy Co.
** Consolidation of Iowa-Illinois Gas & Electric and MidWest Resources
*** Consolidated with Iowa-Illinois Gas & Electric into MidAmerican Energy Co.
**** Name change from Southern Indiana Gas & ElectricCorp.
13
18
PENSION PLAN AND SUPPLEMENTAL RETIREMENT PLAN
The Company has a noncontributory qualified defined benefit Pension Plan
covering its salaried employees. The amount of pension is based upon years of
service and final 60-month average earnings 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.
14
19
PENSION PLAN TABLE (1)TABLE(1)
ANNUAL PENSION AT NORMAL RETIREMENT AGE OF 65
AFTER YEARS OF SERVICE INDICATEINDICATED BELOW(2)
-------------------------------------------
25--------------------------------------------------
FINAL FIVE-YEAR 10 15 2025 YEARS
AVERAGE ANNUAL SALARY 10 YEARS 15 YEARS 20 YEARS OR MORE
--------------------------------- ------- ------- ------- -------- --------------------- -------- -------- -------- --------
$100,000.........................$100,000.............. $12,500 $18,750 $25,000 $31,250
$125,000.........................$125,000.............. $15,625 $23,438 $31,250 $39,063
$150,000......................... $18,750 $28,125 $37,500 $46,875$160,000.............. $20,000 $30,000 $40,000 $50,000
- -------------------------
(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 19951998 compensation
levels through retirement and taking into account employee contributions and
service credits for 1985 and prior years) is $53,184$57,380 to Mr. Mebane, $46,047$49,845 to
Mr. Wolter, and $46,316$51,025 to Mr. Williamson. The estimated annual retirement
benefit payableWilliamson, $66,837 to Mr. Adams at normal retirement age of 65 under the Pension
Plan formula is $15,151. At December 31, 1995, the estimated annual retirement
benefit payableKrull and $48,042 to Mr.
Domek was $40,019.Hanson.
The full credited years of service under the Pension Plan are 1922 for Mr.
Mebane, 1215 for Mr. Wolter, 1013 for Mr. Williamson, and 25 for Mr. Domek.Krull, and 17 for
Mr. Hanson.
Officers of the Company 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 19951998 compensation levels through retirement) is
$125,739$135,472 to Mr. Mebane, $59,952$88,293 to
14
19
Mr. Wolter, $86,743 to Mr. Wolter, and $57,432Williamson, $26,344 to Mr. Williamson.
The estimated annual supplemental retirement benefit payableKrull, and $44,610 to Mr.
Adams at
normal retirement age of 65 under the supplemental retirement plan is $52,574.
At December 31, 1995, the estimated annual supplemental retirement benefit
payable to Mr. Domek was $30,497.
15
20Hanson.
DEFERRED COMPENSATION PLAN
Officers of the Company are permitted to defer a portion of their current
salary under a nonqualified deferred compensation plan initiated in 1984. Two
officers contributed to the plan during 1995.1998. 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.
The Company has entered into a trust agreement for the purpose of assuring
the payment of the Company's 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 the Company, the Company
will be obligated to deliver to the trustee cash or marketable securities having
a value equal to the present value of the amounts which the Company 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 the Common
Stock; a change in the majority of the Board of Directors; certain mergers or
similar transactions involving the Company'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 the
Company.
SEVERANCE PLANS
The Company has entered into severance agreements with certain key
employees, including Messrs. Mebane, Wolter, Williamson, Krull, and Domek.Hanson.
Under these agreements, each such employee is entitled to a severance payment
following a change in control of the Company as defined above if, within 24
months after such change in control, employment with the Company is terminated
by (i) the Company, (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 the Company or the employee gives
notice not to extend the agreement or a change in control of the Company 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 the Company, Messrs. Mebane, Wolter, Williamson, Krull, and
Domek,Hanson, like other salaried employees, are entitled under the Company's general
severance plan to a payment
15
20
equal to two weeks of compensation plus the employee's weekly compensation
multiplied by the number of years of employment, not exceeding 24.
16
21
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, directors, officers, and employees of the Company may
solicit proxies from the shareholders of the Company personally or by telephone.
The Company has retained Morrow & Co., Inc., to aid in the solicitation of
proxies at a fee of $6,000 plus expenses.
RECEIPT OF SHAREHOLDERS'SHAREHOLDER PROPOSALS AND
DIRECTOR
NOMINATIONS FOR NEXT ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy materials
for the 19972000 Annual Meeting, of Shareholders, any shareholders' proposalsa shareholder proposal must be received by the
Company no later than November 25, 1999. In addition, regardless of whether a
shareholder proposal is set forth in the Company's 1999 Proxy Statement as a
matter to be considered by shareholders, the Company'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 1999 Annual Meeting may consider
a proposal or nomination brought by a shareholder of record on March 1, 1999,
who is entitled to vote at the 1999 Annual Meeting and who has given the Company
timely written notice, in proper form, of the shareholder's proposal or
nomination. A shareholder proposal or nomination intended to be brought before
the 1999 Annual Meeting must have been received by the Company after the close
of business on January 25, 1999, and prior to the close of business on February
19, 1999. The Company did not receive notice of any shareholder proposal or
nomination relating to the 1999 Annual Meeting. The 2000 Annual Meeting is
expected to be held on May 9, 2000. A shareholder proposal or nomination
intended to be brought before the 2000 Annual Meeting must be received by the
Company after the close of business on January 24, 2000, and prior to the close
of business on February 18, 2000. All proposals and nominations should be
directed to the Company's principal executive offices at 133 South Blair Street,
Post Office Box 1231, Madison, Wisconsin 53701-1231, no later than November 26,
1996.
Shareholder nominations for Class II directors to be elected at the 1997
Annual Meeting of Shareholders must be submitted in the manner described in
Election of Directors above not less than 14 days nor more than 60 days prior to
the 1997 Annual Meeting.Attention: Corporate
Secretary.
OTHER MATTERS
The Company's Annual Report for the year 19951998 has been mailed to
shareholders.
The management has no knowledge of any other matters to be brought before
the Annual Meeting. If, however, any other matters properly come before the
Annual 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 of Directors has selected Coopers & Lybrand L.L.P.PricewaterhouseCoopers LLP to audit the
consolidated financial statements of the Company and its subsidiaries for 1996.
Coopers & Lybrand L.L.P.,1999.
16
21
PricewaterhouseCoopers LLP, the Company's independent public accountant in 1995,1998,
is expected to have a representative present at the meeting who may make a
statement and will be available to respond to appropriate questions.
Madison Gas and Electric Company
DAVID C. MEBANE
DAVID C. MEBANE
Chairman of the Board, President,
and Chief Executive Officer
Dated March 26, 199624, 1999
17
22
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
MADISON GAS AND ELECTRIC COMPANY
The undersigned Common Stock shareholderPOST OFFICE BOX 1231
MADISON, WISCONSIN 53701-1231
[MG&E LOGO]
This proxy is solicited on behalf of MADISON GAS AND
ELECTRIC COMPANY hereby appoints RICHARD E. BLANEY, DAVID C. MEBANE,
AND FRANK C. VONDRASEK,the Board of Directors of Madison Gas and
each of them, as proxies with power of
substitution (to act by a majority of such of them as shall be
present) to represent and to vote all shares of stock the undersigned
would be entitled to vote at theElectric Company. MGE's Annual Meeting of Shareholders towill be held at the Holiday Inn -- Madison West, 1313 John Q. Hammons Drive,
Greenway Center, Middleton, Wisconsin, on Monday, May 6, 1996, at 11:00 a.m., local time,
on Tuesday, May 4, 1999, 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 at all adjournments thereof:
(1) The electionreturn the bottom two-thirds of
membersthis 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 I of the Board of Directors as
provided in the Company's Proxy Statement:Nominees: Jean Manchester
Biddick, David C. Mebane, and Regina M. Millner
/ /[ ] FOR [ ] WITHHOLD
all nominees listed belowabove authority to vote for
(except as marked to the all
contrary below)
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to vote for all nominees listed
(except as marked to the contrary below) below
Class I (3 years) -- J. Biddick, D. Mebane, and R. Millner (toTo withhold authority to vote
for any individual nominee,
write thethat nominee's name here:
--------------------------------
ITEM 2: Proposal to Amend Bylaws to Require any Employee
Director to Remain Employed Full-Time in the space provided below):
----------------------------------------------------------------------
(2) An amendment of Article Third, Division A, of the Company's
Restated Articles of IncorporationOrder to (i) increase the number of
shares of Common Stock authorized for issuance by the Company from the
present 28,000,000 shares to 50,000,000 shares, and (2) reduce the par
value of Common Stock from $8.00 per share to $1.00 per share.
/ / For / / Against / / Abstain
(3)Continue
Service as a Director [ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 3: In their discretion upon such other business as may
properly come before the meeting.Meeting
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED
WITH RESPECT TO PROPOSALS NUMBERED (1) AND (2). IF NO
SPECIFICATION IS MADE, THE SHARES WILL BE VOTED "FOR""FOR ALL
NOMINEESNOMINEES" AND "FOR" THE PROPOSAL TO AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION.BYLAWS
This proxy revokes any proxy heretofore given. ----------------------------------------------------
--------------------------------------------------- , 1996
MONTH DAY
This proxy revokes any proxy heretofore given. ------------------------------------------------- (L.S.)
--------------------------------------------------- , 1996 ------------------------------------------------- (L.S.)----------------------------------------------------
1999
MONTH DAY Please sign exactly as name appears hereon. For
joint accounts, all tenants should sign. Executors,
Administrators, Trustees, etc., should so indicate
when signing.
(continued on reverse side)
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1999 ANNUAL SHAREHOLDER MEETING RESERVATION
PLEASE SIGN AND RETURN IF YOU PLAN TO ATTEND THE ANNUAL
MEETING. ------------------------------------------------------------
(IF YOU DO NOT PLAN TO ATTEND, DO NOT RETURN THIS PORTION OF Shareholder(s)
THE FORM.) ------------------------------------------------------------
Shareholder(s)
------------------------------------------------------------
Guest
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MAP
PROXY
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- MAY 4, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
[MG&E LOGO]
The aforesigned Common Stock shareholder of MADISON GAS AND ELECTRIC
COMPANY hereby appoints RICHARD E. BLANEY, DAVID C. MEBANE, and FREDERIC
E. MOHS, as proxies with power of substitution, to represent and to vote
all shares of stock the aforesigned would be entitled to vote, at the
Annual Meeting to be held in the Exhibition Hall of the Dane County
Exposition Center, 1919 Expo Way, Madison, Wisconsin, on Tuesday, May 4,
1999, at 11:00 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) APPEAR ON THIS PROXY 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, INDICATE
THE CAPACITY IN WHICH YOU ARE SIGNING.