Ameren DEF 14A 2010
Documents found in this filing:
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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:
(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):
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
AND PROXY STATEMENT OF AMEREN CORPORATION
If you plan to attend the annual meeting of shareholders, please advise the Company in your proxy vote (by telephone or the Internet or by checking the appropriate box on the proxy card) and bring the Admission Ticket on the reverse side of your proxy instruction card. Persons without tickets will be admitted to the meeting upon verification of their shareholdings in the Company. If your shares are held in the name of your broker, bank or other nominee, you must bring an account statement or letter from the nominee indicating that you were the beneficial owner of the shares on March 1, 2010, the record date for voting. Please note that cameras and other recording devices will not be allowed in the meeting.
Important Notice Relating to the Voting of Your Shares: Under revised New York Stock Exchange rules, brokers are not permitted to exercise discretionary voting authority, as it pertains to the election of directors (whether contested or uncontested) with respect to shares for which voting instructions have not been received. Your vote is important, regardless of the number of shares you own. We urge you to please vote by proxy (via telephone or the Internet or the enclosed proxy card) as soon as possible even if you own only a few shares. This will help ensure the presence of a quorum at the meeting. Promptly voting by proxy will also help save the Company the expenses of additional solicitations. If you attend the meeting and want to change your proxy vote, you can do so by voting in person at the meeting.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
We will hold the Annual Meeting of Shareholders of Ameren Corporation at Powell Symphony Hall, 718 North Grand Boulevard, St. Louis, Missouri, on Tuesday, April 27, 2010, at 9:00 A.M., for the purposes of
(1) electing 12 directors of the Company for terms ending at the annual meeting of shareholders to be held in 2011;
(2) ratifying the appointment of independent registered public accounting firm for the fiscal year ending December 31, 2010;
(3) considering a shareholder proposal relating to report on Callaway Plant extension of operating license, if presented at the meeting; and
(4) acting on other proper business presented to the meeting.
The Board of Directors of the Company presently knows of no other business to come before the meeting.
If you owned shares of the Companys Common Stock at the close of business on March 1, 2010, you are entitled to vote at the meeting and at any adjournment thereof. All shareholders are requested to be present at the meeting in person or by proxy so that a quorum may be assured.
You may vote via telephone or the Internet or, if you prefer, you may sign and return the enclosed proxy card in the enclosed envelope. Your prompt vote by proxy will reduce expenses. Instructions for voting by telephone or the Internet are included with this mailing. If you attend the meeting, you may revoke your proxy by voting in person.
By order of the Board of Directors.
St. Louis, Missouri
March 10, 2010
PROXY STATEMENT OF AMEREN CORPORATION
(First sent or given to shareholders on or about March 10, 2010)
Principal Executive Offices:
One Ameren Plaza
1901 Chouteau Avenue
St. Louis, MO 63103
Statements in this proxy statement not based on historical facts are considered forward-looking and, accordingly, involve risks and uncertainties that could cause actual results to differ materially from those discussed. Although such forward-looking statements have been made in good faith and are based on reasonable assumptions, there is no assurance that the expected results will be achieved. These statements include (without limitation) statements as to future expectations, beliefs, plans, strategies, objectives, events, conditions, and financial performance. These statements are intended to constitute forward-looking statements in connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Ameren Corporation (the Company, Ameren, we, us and our) is providing this cautionary statement to disclose that there are important factors that could cause actual results to differ materially from those anticipated. Reference is made to our Annual Report on Form 10-K for the year ended December 31, 2009 (the 2009 Form 10-K) filed with the Securities and Exchange Commission (the SEC) for a list of such factors.
This solicitation of proxies is made by our Board of Directors for the Annual Meeting of Shareholders of the Company to be held on Tuesday, April 27, 2010 (the Annual Meeting), and at any adjournment thereof. Our Annual Meeting will be held at Powell Symphony Hall, 718 North Grand Boulevard, St. Louis, Missouri, at 9:00 A.M. Central Time.
We are a holding company and our principal direct and indirect subsidiaries include Union Electric Company, doing business as AmerenUE (UE), Central Illinois Public Service Company, doing business as AmerenCIPS (CIPS), Central Illinois Light Company, doing business as AmerenCILCO (CILCO), Illinois Power Company, doing business as AmerenIP (IP), Ameren Services Company (Ameren Services) and Ameren Energy Generating Company (AEG).
The accompanying proxy card represents all shares registered in the name(s) shown thereon, including shares in our dividend reinvestment and stock purchase plan (DRPlus Plan), the 401(k) savings plan of Ameren, the Ameren Corporation Long-Term Incentive Plan of 1998 (Long-Term Incentive Plan of 1998) and the Ameren Corporation 2006 Omnibus Incentive Compensation Plan (2006 Omnibus Incentive Compensation Plan).
Only shareholders of record of our common stock, $0.01 par value (Common Stock) at the close of business on the record date, March 1, 2010, are entitled to vote at the Annual Meeting. In order to conduct the Annual Meeting, holders of more than one-half of the outstanding shares entitled to vote must be present in person or represented by proxy so that there is a quorum. A quorum consists of a majority of the outstanding shares entitled to
vote, present or represented by proxy. The voting securities of the Company on March 1, 2010, consisted of 237,610,760 shares of Common Stock. Each share of Common Stock is entitled to one vote. It is important that you vote promptly so that your shares are counted toward the quorum.
In determining whether a quorum is present at the Annual Meeting, shares represented by a proxy which directs that the shares abstain from voting or that a vote be withheld on a matter and broker non-votes, shall be deemed to be represented at the meeting for quorum purposes. A broker non-vote occurs when shares are represented by a proxy, returned by a broker, bank or other fiduciary holding shares as the record holder in nominee or street name for a beneficial owner, which gives voting instructions as to at least one of the matters to be voted on but indicates that the record holder does not have the authority to vote or give voting instructions by proxy on a particular matter, such as a non-discretionary matter for which voting instructions have not been given to the record holder by the beneficial owner. Shares as to which voting instructions are given as to at least one of the matters to be voted on shall also be deemed to be so represented. If the proxy states how shares will be voted in the absence of instructions by the shareholder, such shares shall be deemed to be represented at the meeting.
The New York Stock Exchange (NYSE) permits brokers to vote their customers shares on routine matters when the brokers have not received voting instructions from their customers. The ratification of the appointment of independent registered public accountants is an example of a routine matter on which brokers may vote in this way. Brokers may not vote their customers shares on non-routine matters such as shareholder proposals unless they have received voting instructions from their customers. Under revised NYSE rules, brokers are not permitted to exercise discretionary voting authority as it pertains to the election of directors (whether contested or uncontested) with respect to shares for which voting instructions have not been received.
In all matters, including the election of directors, every decision of a majority of the shares entitled to vote on the subject matter and represented in person or by proxy at the meeting at which a quorum is present shall be valid as an act of the shareholders. In tabulating the number of votes on such matters (i) shares represented by a proxy which directs that the shares abstain from voting or that a vote be withheld on a matter shall be deemed to be represented at the meeting as to such matter, (ii) broker non-votes shall not be deemed to be represented at the meeting for the purpose of the vote on such matter or matters, (iii) except as provided in (iv) below, shares represented by a proxy as to which voting instructions are not given as to one or more matters to be voted on shall not be deemed to be represented at the meeting for the purpose of the vote as to such matter or matters, and (iv) a proxy which states how shares will be voted in the absence of instructions by the shareholder as to any matter shall be deemed to give voting instructions as to such matter. Shareholder votes are certified by independent inspectors of election.
The Board of Directors has adopted a confidential voting policy for proxies. This policy does not prohibit disclosure where it is required by applicable law.
By Proxy. Before the Annual Meeting, you can give a proxy to vote your shares of the Companys Common Stock in one of the following ways:
- by calling the toll-free telephone number;
- by using the Internet (http://www.proxyvote.com); or
- by completing and signing the enclosed proxy card and mailing it in time to be received before the Annual Meeting.
The telephone and Internet voting procedures are designed to confirm your identity and to allow you to give your voting instructions. If you wish to vote by telephone or the Internet, please follow the instructions on your proxy card. Additional instructions will be provided on the telephone message and website. Please have your proxy card at hand when voting. If you vote by telephone or Internet, DO NOT mail a proxy card. The telephone and Internet voting facilities will close at 11:59 P.M. Eastern time on April 23, 2010.
If you mail us your properly completed and signed proxy card, or vote by telephone or the Internet, your shares of our Common Stock will be voted according to the choices that you specify. If you sign and mail your proxy card without marking any choices, your proxy will be voted as recommended by the Board FOR the Boards nominees for director Item (1), FOR ratifying the appointment of the independent registered public accounting firm Item (2), AGAINST the shareholder proposal Item (3), and in the discretion of the named proxies upon such other matters as may properly come before the meeting.
If you hold any shares in the 401(k) savings plan of Ameren, your completed proxy card or telephone or Internet proxy vote will serve as voting instructions to the plan trustee and the plan trustee will vote your shares as you have directed. However, your voting instructions must be received at least five days prior to the Annual Meeting in order to count. In accordance with the terms of the plan, the trustee will vote all of the shares held in the plan for which voting instructions have not been received in accordance with instructions received from an independent fiduciary designated by Ameren Services.
If you have shares registered in the name of a bank, broker, or other registered owner or nominee, you should receive instructions from that registered owner about how to instruct them to vote those shares.
In Person. You may come to the Annual Meeting and cast your vote there. Only shareholders of record at the close of business on the record date, March 1, 2010, are entitled to vote at the Annual Meeting.
You may revoke your proxy at any time after you give it and before it is voted by entering a new vote by telephone or the Internet or by delivering either a written revocation or a signed proxy bearing a later date to the Secretary of the Company or by voting in person at the Annual Meeting. To revoke a proxy by telephone or the Internet, you must do so by 11:59 P.M. Eastern Time on April 23, 2010 (following the directions on the proxy card). Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically so request.
The Company is permitted and intends to mail only one annual report and one proxy statement to multiple registered shareholders sharing an address who have received prior notice of our intent and consented to the delivery of one annual report and proxy statement per address, so long as the Company has not received contrary instructions from one or more of such shareholders. This practice is commonly referred to as householding. Householding reduces the volume of duplicate information received at your household and the cost to the Company of preparing and mailing duplicate materials.
If you share an address with other registered shareholders and your household receives one set of the proxy statement and the annual report and you decide you want a separate copy of the proxy statement and/or the annual report, the Company will promptly mail your separate copy if you contact the Office of the Secretary, Ameren Corporation, P.O. Box 66149, St. Louis, Missouri 63166-6149 or by calling toll free 1-800-255-2237 (or
in the St. Louis area 314-554-3502). Additionally, to resume the mailing of individual copies of future annual reports and proxy statements to a particular shareholder, you may contact the Office of the Secretary, and your request will be effective within 30 days after receipt. You may request householding of these documents by providing the Office of the Secretary with a written request to eliminate multiple mailings. The written request must include names and account numbers of all shareholders consenting to householding for a given address and must be signed by those shareholders.
Additionally, the Company has been notified that certain banks, brokers and other nominees may household the Companys annual report and proxy statement for shareholders who hold Company shares with the bank, broker or other nominee in street name and have consented to householding. In this case, you may request an individual copy of this proxy statement and/or the annual report by contacting your bank, broker or other nominee.
This proxy statement and the accompanying proxy card are first being mailed to shareholders on or about March 10, 2010. In the same package with this proxy material, you should have received a copy of our 2009 Form 10-K, including consolidated financial statements. When you receive this package, if all of these materials are not included, please contact us and a copy of any missing material will be sent at no expense to you.
You may reach us:
- by mail addressed to
Office of the Secretary
P.O. Box 66149, Mail Code 1370
St. Louis, MO 63166-6149
- by calling toll free 1-800-255-2237 (or in the St. Louis area 314-554-3502).
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on April 27, 2010:
This proxy statement, the accompanying proxy card and our 2009 Form 10-K, including consolidated financial statements, are also available to you at http://www.ameren.com/AmerenProxyMaterial.
The names of shareholders of record entitled to vote at the Annual Meeting will be available at the Annual Meeting and, for 10 days prior to the Annual Meeting, at the Office of the Secretary of the Company.
The Annual Meeting will also be webcast on April 27, 2010. You are invited to visit http://www.ameren.com at 9:00 A.M. CT on April 27, 2010, to hear the webcast of the Annual Meeting. On our home page, you will click on Live Webcast Annual Meeting April 27, 2010, 9:00 A.M. CT, then the appropriate audio link. The webcast will remain on our website for one year. You cannot record your vote on this webcast.
Twelve directors are to be elected at the Annual Meeting to serve until the next annual meeting of shareholders and until their respective successors have been duly elected and qualified. In the absence of instructions to the contrary, executed proxies will be voted in favor of the election of the persons listed below. In the event that any nominee for election as director should become unavailable to serve, votes will be cast, pursuant to the enclosed proxy card, for such substitute nominee or nominees as may be nominated by the Nominating and Corporate Governance Committee of the Board of Directors and approved by the Board of Directors. The Board of Directors knows of no reason why any nominee will not be able to serve as director. The 12 nominees for director who receive the vote of at least a majority of the shares entitled to vote in the election of directors and represented in person or by proxy at the meeting at which a quorum is present will be elected. Shareholders may not cumulate votes in the election of directors. In the event any nominee for re-election fails to obtain the required majority vote, such nominee will tender his or her resignation as a director for consideration by the Nominating and Corporate Governance Committee of the Board of Directors. The Nominating and Corporate Governance Committee will evaluate the best interests of the Company and its shareholders and will recommend to the Board the action to be taken with respect to any such tendered resignation. In the event any nominee, other than a nominee for re-election, fails to obtain the required majority vote, such nominee will not be elected to the Board and there will be a vacancy on the Board of Directors as a result thereof. Pursuant to the Companys By-Laws and Articles of Incorporation, any vacancy on the Board of Directors shall be filled by a majority of the directors then in office.
Our Board of Directors is currently comprised of 14 members. In accordance with the director retirement age provisions of the Companys Corporate Governance Guidelines, Susan S. Elliott is completing the term of her service as a director effective at the Annual Meeting. On February 12, 2010, our Board of Directors announced that both Gary L. Rainwater, Executive Chairman of Ameren, and Douglas R. Oberhelman, Vice Chairman and CEO-Elect of Caterpillar Inc., requested that the Board not nominate them for re-election to Amerens Board. Mr. Rainwater indicated that he will retire from Ameren at the Annual Meeting and Mr. Oberhelman requested not to be nominated for re-election due to increased responsibilities as CEO-Elect of Caterpillar Inc. We thank Ms. Elliott and Messrs. Rainwater and Oberhelman for their service, contributions and leadership throughout their tenure as directors and in the case of Mr. Rainwater, for his more than 30 years of service to the Company and its subsidiaries. As described in the second paragraph under INFORMATION CONCERNING NOMINEES TO THE BOARD OF DIRECTORS below, the Board of Directors has nominated Steven H. Lipstein, who is not currently a director of the Company, for election at the Annual Meeting. As a result of the foregoing, the size of the Board of Directors will be reduced to 12 members effective as of the Annual Meeting.
Ms. Elliott is currently Chairman and Chief Executive Officer of Systems Service Enterprises, Inc., a privately held information technology firm that she founded in 1966. Ms. Elliott has been a director of the Company since 2003. Ms. Elliott is a past Chairman of the Federal Reserve Bank of St. Louis and was also a director of Angelica Corporation from 1998 to 2006. Based primarily upon Ms. Elliotts extensive executive management and leadership experience as the Chairman and Chief Executive Officer of an information technology firm; strong banking, accounting, financial, risk analysis, nuclear operations, corporate governance and administrative skills and experience; and tenure and contributions as a current Board and Board committee member, as well as those demonstrated attributes discussed in the first paragraph under INFORMATION CONCERNING NOMINEES TO THE
BOARD OF DIRECTORS below, the Board determined that Ms. Elliott should serve as a director of Ameren at the time that this proxy statement is filed with the SEC.
Mr. Rainwater is currently Executive Chairman of the Company. Mr. Rainwater began his career with UE in 1979 as an engineer and has held various positions with UE and other Ameren subsidiaries during his employment. Effective January 1, 2004, Mr. Rainwater was elected to serve as Chairman and Chief Executive Officer of the Company, UE and Ameren Services in addition to his position as President. At that time, he was also elected Chairman of CILCORP Inc. (a former Ameren subsidiary that merged into the Company in March 2010) (CILCORP) and CILCO in addition to his position as Chief Executive Officer and President of those companies which he assumed in 2003. In September 2004, upon Amerens acquisition of IP, Mr. Rainwater was elected Chairman, Chief Executive Officer and President of IP. He held the position of Chairman of CIPS, CILCO and IP after relinquishing his position as President in October 2004. Effective January 2007, Mr. Rainwater relinquished his positions as Chairman, President and Chief Executive Officer of UE and Ameren Services and as Chairman and Chief Executive Officer of CIPS, CILCO and IP. Effective May 1, 2009, Mr. Rainwater relinquished his position of President and Chief Executive Officer of the Company and remained as Executive Chairman of the Company. He has been a director of the Company since 2003 and a director of the following Ameren subsidiaries: CIPS (1997-2007); UE (1998-2007); CILCO (2003-2007); CILCORP (2003-2009); AEG (2000-2007); and IP (2004-2007). Based primarily upon Mr. Rainwaters extensive executive management and leadership experience as the Executive Chairman of Ameren and the former Chairman, President and Chief Executive Officer of Ameren and CILCORP; 31 years of experience with the Company (or subsidiaries); strong strategic planning, financial, regulatory, nuclear operations and administrative skills and experience; and tenure and contributions as a current Board member, as well as those demonstrated attributes discussed in the first paragraph under INFORMATION CONCERNING NOMINEES TO THE BOARD OF DIRECTORS below, the Board determined that Mr. Rainwater should serve as a director of Ameren at the time that this proxy statement is filed with the SEC.
Mr. Oberhelman is currently Vice Chairman and Chief Executive Officer-Elect of Caterpillar Inc., a maker of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. Mr. Oberhelman joined Caterpillar in 1975. He was elected a Vice President in 1995 when he served as Caterpillars Chief Financial Officer. Mr. Oberhelman was elected a Group President in 2001 with responsibility for Caterpillars worldwide manufacturing, marketing and support of industrial and large power systems, industrial gas turbines and Progress Rail Services; and remanufacturing, human services and sustainable development functions. In October 2009, he was elected, effective January 1, 2010, as Caterpillars Vice Chairman and Chief Executive Officer-Elect until July 1, 2010, at which time he will be elected Chief Executive Officer and a member of Caterpillars board of directors. He has been a director of the Company since 2003 and of Eli Lilly and Company since 2008. Based primarily upon Mr. Oberhelmans extensive executive management and leadership experience as the Vice Chairman and Chief Executive Officer-Elect and the former Chief Financial Officer of an industrial manufacturing company; strong strategic planning, accounting, financial, risk analysis, corporate governance and administrative skills and experience; and tenure and contributions as a current Board and Board committee member, as well as those demonstrated attributes discussed in the first paragraph under INFORMATION CONCERNING NOMINEES TO THE BOARD OF DIRECTORS below, the Board determined that Mr. Oberhelman should serve as a director of Ameren at the time that this proxy statement is filed with the SEC.
The nominees for our Board of Directors are listed below, along with their age as of December 31, 2009, tenure as director, other directorships held by such nominee during the previous five years and business background for at least the last five years. Each nominees biography below and Ms. Elliotts and Messrs. Rainwater and Oberhelmans biography above, also include a description of the specific experience, qualifications, attributes or skills of each director or nominee that led the Board to conclude that such person should serve as a director of Ameren at the time that this proxy statement is filed with the SEC. In addition to those specific experiences, qualifications, attributes or skills detailed below (or above, in the case of Ms. Elliott and Messrs. Rainwater and Oberhelman), each director or nominee has demonstrated the highest professional and personal ethics, a broad experience in business, government, education or technology, the ability to provide insights and practical wisdom based on their experience and expertise, a commitment to enhancing shareholder value, compliance with legal and regulatory requirements, and the ability to develop a good working relationship with other Board members and contribute to the Boards working relationship with senior management of the Company. In assessing the composition of the Board of Directors, the Nominating and Corporate Governance Committee recommends Board nominees so that collectively, the Board is balanced by having the necessary experience, qualifications, attributes and skills and that no nominee is recommended because of one particular criterion, except that the Nominating and Corporate Governance Committee does believe it appropriate for at least one member of the Board to meet the criteria for an audit committee financial expert as defined by SEC rules. See Consideration of Director Nominees below for additional information regarding director nominees and the nominating process.
Each nominee has consented to being nominated for director and has agreed to serve if elected. No arrangement or understanding exists between any nominee and the Company or, to the Companys knowledge, any other person or persons pursuant to which any nominee was or is to be selected as a director or nominee. All of the nominees are currently directors of the Company and have been previously elected by the Companys shareholders at prior annual meetings, except for Stephen R. Wilson, who was elected as a director by the Board of Directors at a meeting of the Board in December 2009, and Steven H. Lipstein, who was nominated to stand for election to the Board of Directors at a meeting of the Board in February 2010. Mr. Wilson was recommended to the Board by Thomas R. Voss, the President and Chief Executive Officer of the Company and Mr. Lipstein was recommended for nomination by a non-management member of the Board. There are no family relationships between any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer except that Charles W. Mueller is the father of Michael G. Mueller, who is an executive officer of certain Company subsidiaries. See CORPORATE GOVERNANCE Policy and Procedures With Respect to Related Person Transactions below for further information on this family relationship and another reportable family relationship with an employee of the Company who is not an executive officer. All of the nominees for election to the Board were unanimously recommended by the Nominating and Corporate Governance Committee of the Board of Directors and were unanimously nominated by the Board of Directors.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF THESE DIRECTOR NOMINEES.
Board and Committee Meetings and Annual Meeting Attendance
During 2009, the Board of Directors met eight times. All directors attended or participated in 75 percent or more of the aggregate number of meetings of the Board and the Board Committees of which they were members.
The Company has adopted a policy under which Board members are expected to attend each shareholders meeting. At the 2009 annual meeting, all of the 11 then incumbent directors and all of the 13 directors nominated for election in 2009 were in attendance.
Director Qualification Standards
The Board of Directors, in accordance with NYSE listing standards, has adopted a formal set of Corporate Governance Guidelines which include certain director qualification standards.
Directors who attain age 72 prior to the date of an annual meeting are required to submit a letter to the Nominating and Corporate Governance Committee offering his or her resignation, effective with the end of the directors elected term, for consideration by the Committee. The Nominating and Corporate Governance Committee will review the appropriateness of continued service on the Board of Directors by that director and make a recommendation to the Board of Directors and, if applicable, annually thereafter.
In addition, the Corporate Governance Guidelines provide that a director who undergoes a significant change in professional responsibilities, occupation or business association is required to notify the Nominating and Corporate Governance Committee and offer his or her resignation from the Board. The Nominating and Corporate Governance Committee will then evaluate the facts and circumstances and make a recommendation to the
Board whether to accept the offered resignation or request that the director continue to serve on the Board.
Board Leadership Structure
The Companys By-Laws and Corporate Governance Guidelines delegate to the Board of Directors the right to exercise its discretion to either separate or combine the offices of Chairman of the Board and Chief Executive Officer. This decision is based upon the Boards determination of what is in the best interests of the Company and its shareholders, in light of then-current and anticipated future circumstances and taking into consideration succession planning, skills and experience of the individual(s) filling those positions, and other relevant factors. The Board has determined that the Board leadership structure that is most appropriate at this time, given the specific characteristics and circumstances of the Company, the skills and experience of Mr. Rainwater and Mr. Voss and succession planning, is a leadership structure based on the experienced leadership afforded by a full-time Executive Chairman (currently Mr. Rainwater, former Chairman, President and Chief Executive Officer of the Company) and a full-time Chief Executive Officer (currently Mr. Voss), both positions being subject to oversight and review by the Companys independent directors. The Board recognizes that depending on the specific characteristics and circumstances of the Company, other leadership structures might also be appropriate. A combined Chairman and Chief Executive Officer Board leadership structure has previously served the Company and its shareholders well and may serve them well in the future. The Company is committed to reviewing this determination on an annual basis.
The Boards leadership structure is designed so that independent directors exercise oversight of the Companys management and key issues related to strategy and risk. Only independent directors serve on the Audit and Risk Committee, the Human Resources Committee and the Nominating and Corporate Governance Committee of the Board and all standing Board committees are chaired by independent directors. Additionally, non-management directors regularly hold executive sessions of the Board outside the presence of the Executive Chairman, the Chief Executive Officer or any other Company employee and meet in private session with the Chief Executive Officer at every regularly scheduled Board meeting. The Boards independent directors also hold executive sessions at least once each year. Such executive sessions are led by the Lead Director (as defined and discussed below).
According to the Companys Corporate Governance Guidelines, when the Chairman of the Board is the Chief Executive Officer or an employee of the Company, the Nominating and Corporate Governance Committee of the Board of Directors shall select an independent director to preside or lead at each executive session (which selection shall be ratified by vote of the non-management directors of the Board of Directors) (the Lead Director). The Companys Corporate Governance Guidelines set forth, as described below, the authority, duties and responsibilities of the Board of Directors Lead Director: convene and chair meetings of the non-management directors in executive session at each Board meeting; convene and chair meetings of the independent directors in executive session no less than once each year; preside at all meetings of the Board at which the Chairman is not present, including executive sessions of the non-management directors and independent directors; solicit the non-management directors for advice on agenda items for meetings of the Board; serve as a liaison between the Chairman and Chief Executive Officer and the non-management directors; call meetings of the independent directors; collaborate with the Chairman and Chief Executive Officer in developing the agenda for meetings of the Board and approve such agendas; consult with the Chairman and Chief Executive Officer on information that is sent to the Board; collaborate with the Chairman and the Chief Executive Officer and the chairpersons of the standing committees in developing and managing the
schedule of meetings of the Board and approve such schedules; and if requested by major shareholders, ensure that he or she is available for consultation and direct communication. In performing the duties described above, the Lead Director is expected to consult with the chairs of the appropriate Board committees and solicit their participation. The Lead Director also performs such other duties as may be assigned to the Lead Director by the Companys By-Laws or the Board of Directors.
Risk Oversight Process
Given the importance of monitoring risks, the Board has determined to utilize a committee specifically focused on oversight of the Companys risk management. The Board has charged its Audit and Risk Committee with oversight responsibility of the Companys overall business risk management process, which includes the identification, assessment, mitigation and monitoring of risks on a Company-wide basis. The Audit and Risk Committee meets on a regular basis to review the business risk management processes, at which time applicable members of senior management provide reports to the Audit and Risk Committee. While the Audit and Risk Committee retains this responsibility, it coordinates this oversight with other committees of the Board having primary oversight responsibility for specific risks (see Board CommitteesStanding Committee and Function below). Each of the Boards standing committees, in turn, receives regular reports from members of senior management concerning its assessment of Company risks within the purview of such committee.
Notwithstanding the Boards oversight delegation to the Audit and Risk Committee, the entire Board is actively involved in risk oversight. The Audit and Risk Committee annually reviews for the Board which committees maintain oversight responsibilities described above and the overall effectiveness of the business risk management process. In addition, at each of its meetings, the Board receives a report from the Chair of the Audit and Risk Committee, as well as the chair of each of the other committees identified above, each of which is chaired by an independent director. The Board then discusses and deliberates on the Companys risk management practices. Through the process outlined above, the Board believes that the leadership structure of the Board supports effective oversight of the Companys risk management.
The Board of Directors has a standing Audit and Risk Committee, Human Resources Committee, Nominating and Corporate Governance Committee, Nuclear Oversight Committee, Public Policy Committee and Finance Committee, the members of which are identified below. The Audit and Risk Committee, Human Resources Committee and Nominating and Corporate Governance Committee are comprised entirely of non-management directors, each of whom the Board of Directors has determined to be independent as defined by the relevant provisions of the Sarbanes-Oxley Act of 2002, the NYSE listing standards and the Companys Policy Regarding Nominations of Directors (the Director Nomination Policy).
Corporate Governance Guidelines and Policies, Committee Charters and Codes of Conduct
The Board of Directors has adopted Corporate Governance Guidelines, a Director Nomination Policy, a Policy Regarding Communications to the Board of Directors, a Policy and Procedures With Respect to Related Person Transactions and written charters for its Audit and Risk Committee, Human Resources Committee, Nominating and Corporate Governance Committee, Nuclear Oversight Committee, Public Policy Committee and Finance Committee. The Board of Directors also has adopted the Companys code of business conduct (referred to as its Corporate Compliance Policy) applicable to all of the Companys directors, officers and employees, and the Companys Code of Ethics for Principal Executive and Senior Financial Officers. These documents and other items relating to the governance of the Company can be found on our website at http://www.ameren.com. These documents are also available in print free of charge to any shareholder who requests them from the Office of the Companys Secretary.
Human Resources Committee Governance
The Human Resources Committee focuses on good governance practices in its operation. In 2009, this included:
Delegation of Authority
The Human Resources Committee has delegated authority to the Human Resources Administrative Committee, comprised of designated members of management, to approve changes to certain of the Companys retirement plans.
Role of Executive Officers
The role of executive officers in compensation decisions for 2009 is described below under EXECUTIVE COMPENSATION COMPENSATION DISCUSSION AND ANALYSIS Role of Executive Officers. Neither Mr. Rainwater nor Mr. Voss, while Chief Executive Officer of the Company, was involved in determining his own compensation. See EXECUTIVE COMPENSATION COMPENSATION DISCUSSION AND ANALYSIS Timing of Compensation Decisions and Awards below.
Role of Compensation Consultants
In 2009, the Human Resources Committee directly retained Hewitt Associates (Hewitt) as its outside compensation consulting firm. The Committee informed Hewitt in writing that it expected Hewitt to be frank and upfront with the Committee at all times and to advise the Committee if and when there were elements of management proposals to the Committee that Hewitt believed the Committee should not support. The Committee specified that the scope of Hewitts work with the Committee was to:
For 2009, Hewitt provided the following services to the Committee:
Hewitt representatives attended six of the seven Human Resources Committee meetings during 2009 and, as described below, met separately with the Committee.
In 2004, the Human Resources Committee selected the principal executive compensation consultant from Hewitt that reports to the Committee. During 2009, various factors contributed to the autonomy of the executive compensation consultant, including the following: (1) the consultant did not operate as the primary relationship manager for other work Ameren might do with the consultants firm; and (2) the consultant met separately with the Committee members outside the presence of management at each meeting which the consultant attended at the Committees request, and spoke separately with the Committee Chair and other Committee members between meetings, as necessary or desired. In addition, Hewitt adopted a policy, effective October 1, 2007, that expressly provided that the compensation of its executive compensation consultants would not be impacted by any other services Hewitt might provide to the clients served by those consultants, or by Hewitts overall profitability. Other than services provided to the Human Resources Committee as set forth above and for the Nominating and Corporate Governance Committee as described below, Hewitt did not perform any other services to the Company in 2009.
In early 2010, Hewitt spun off a portion of its executive compensation practice into a separate and independent entity named Meridian Compensation Partners, LLC (Meridian). For 2010, the Human Resources Committee has engaged Meridian as its independent compensation consultant.
Also in 2009, Hewitt was retained by the Nominating and Corporate Governance Committee as its outside consulting firm with respect to director compensation matters. See Director Compensation below for a description of the services Hewitt provided to the Nominating and Corporate Governance Committee in 2009. For 2010, the Nominating and Corporate Governance Committee has engaged Meridian as its outside consulting firm with respect to director compensation matters.
Human Resources Committee Interlocks and Insider Participation
The current members of the Human Resources Committee of the Board of Directors, Messrs. Johnson, Galvin, Saligman and Stokes, were not at any time during 2009 or at any other time an officer or employee of the Company, and no member had any relationship with the Company requiring disclosure under applicable SEC rules.
No executive officer of the Company has served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of the Companys Board of Directors or the Human Resources Committee during 2009.
Consideration of Director Nominees
The Nominating and Corporate Governance Committee will consider director nominations from shareholders in accordance with the Companys Director Nomination Policy, a copy of which is attached hereto as Appendix A. Briefly, the Committee will consider as a candidate any director of the Company who has indicated to the Committee that he or she is willing to stand for re-election as well as any other person who is recommended by any shareholders of the Company who provide the required information and certifications
within the time requirements, as set forth in the Director Nomination Policy. The Committee may also undertake its own search process for candidates and may retain the services of professional search firms or other third parties to assist in identifying and evaluating potential nominees. In 2009, the Company made payments in the approximate amount of $2,038 to Spencer Stuart, Inc., which was engaged by the Committee, to assist in identifying and evaluating potential director nominees.
In considering a potential nominee for the Board, shareholders should note that in selecting candidates, the Nominating and Corporate Governance Committee endeavors to find individuals of high integrity who have a solid record of accomplishment in their chosen fields and who display the independence to effectively represent the best interests of all shareholders. Candidates are selected for their ability to exercise good judgment, and to provide practical insights and diverse perspectives. Candidates also will be assessed in the context of the then-current composition of the Board, the operating requirements of the Company and the long-term interests of all shareholders. In conducting this assessment, the Nominating and Corporate Governance Committee will, in connection with its assessment and recommendation of candidates for director, consider diversity (including, but not limited to, gender, race, ethnicity, age, experience and skills) and such other factors as it deems appropriate given the then-current and anticipated future needs of the Board and the Company, and to maintain a balance of perspectives, qualifications, qualities and skills on the Board. Although the Committee may seek candidates that have different qualities and experiences at different times in order to maximize the aggregate experience, qualities and strengths of the Board members, nominees for each election or appointment of directors will be evaluated using a substantially similar process and under no circumstances will the Committee evaluate nominees recommended by a shareholder of the Company pursuant to a process substantially different than that used for other nominees for the same election or appointment of directors.
The Nominating and Corporate Governance Committee considers the following qualifications at a minimum in recommending to the Board potential new Board members, or the continued service of existing members:
Other than the foregoing, there are no stated minimum criteria for director nominees, although the Nominating and Corporate Governance Committee may also consider such
other factors as it may deem are in the best interests of the Company and its shareholders. The Nominating and Corporate Governance Committee does, however, believe it appropriate for at least one member of the Board to meet the criteria for an audit committee financial expert as defined by SEC rules. In addition, because the Company is committed to maintaining its tradition of inclusion and diversity within the Board, each assessment and selection of director candidates will be made by the Nominating and Corporate Governance Committee in compliance with the Companys policy of non-discrimination based on race, color, religion, sex, national origin, ethnicity, age, disability, veteran status, pregnancy, marital status, sexual orientation or any other reason prohibited by law. In connection with its periodic review of the Director Nomination Policy and at the time of consideration of each potential nominee to the Board, the Nominating and Corporate Governance Committee conducts an assessment of the effectiveness of its policy of diversity considerations regarding director candidates.
The Companys Corporate Governance Guidelines provide that if a director has a significant change in professional responsibilities, occupation or business association, he or she is required to notify the Nominating and Corporate Governance Committee and offer his or her resignation from the Board. The Nominating and Corporate Governance Committee will evaluate the facts and circumstances and make a recommendation to the Board whether to accept the resignation or request the director to continue to serve on the Board.
The Companys Director Nomination Policy requires all directors standing for re-election to agree that in the event any director fails to obtain the required majority vote at an annual meeting of shareholders, such director will tender his or her resignation as a director for consideration by the Nominating and Corporate Governance Committee and recommendation to the Companys Board.
Executive Sessions of Non-management Directors and of Independent Directors
The non-management directors meet privately in executive sessions to consider such matters as they deem appropriate, without management being present, as a routinely scheduled agenda item for every Board meeting. An executive session including only independent directors as defined by the NYSE listing standards is also held no less than once each year. During 2009, all non-management directors were independent, except Jack D. Woodard for the first quarter of 2009, who was determined to be independent effective as of April 1, 2009, and Charles W. Mueller. See Director Independence below. Patrick T. Stokes served as Lead Director presiding at such executive sessions during 2009. The Lead Directors duties include convening and chairing meetings of the non-management directors in executive session at each Board meeting; convening and chairing meetings of the independent directors in executive session at each Board meeting; presiding at all meetings of the Board at which the Chairman is not present, including executive sessions of the non-management directors and independent directors; soliciting the non-management directors for advice on agenda items for meetings of the Board; serving as a liaison between the Chairman and the Chief Executive Officer and the non-management directors; calling meetings of the independent directors; collaborating with the Chairman and the Chief Executive Officer in developing the agenda for meetings of the Board and approving such agendas; consulting with the Chairman and the Chief Executive Officer on information that is sent to the Board; collaborating with the Chairman and the Chief Executive Officer and the chairpersons of the standing committees in developing and managing the schedule of meetings of the Board and approving such schedules; and if requested by major shareholders, ensuring that he is available for consultation and direct communication.
Pursuant to NYSE listing standards, the Companys Board of Directors has adopted a formal set of categorical independent standards with respect to the determination of director independence. These standards are set forth in the Companys Director Nomination Policy, as amended, attached to this proxy statement as Appendix A. The provisions of the Director Nomination Policy regarding director independence meet and in some areas exceed the listing standards of the NYSE. In accordance with the Director Nomination Policy, in order to be considered independent a director must be determined to have no material relationship with the Company other than as a director. The Director Nomination Policy specifies the criteria by which the independence of our directors will be determined.
Under the Director Nomination Policy, an independent director is one who:
For purposes of determining a material relationship, the following standards are utilized:
For purposes of these independence standards, (i) immediate family members of a director include the directors spouse, parents, stepparents, children, stepchildren, siblings, mother- and father-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone (other than domestic employees) who shares the directors home and (ii) the term primary business affiliation means an entity of which the director or the directors immediate family member is a principal/executive officer or in which the director or the directors immediate family member holds at least a five percent equity interest.
In accordance with the Director Nomination Policy, the Board undertook its annual review of director and director nominee independence. During this review, the Board considered transactions and relationships between each director and director nominee or any member of his or her immediate family and the Company and its subsidiaries and affiliates. The Board also considered whether there were any transactions or relationships between directors, nominees or any member of their immediate family (or any entity of which a director, director nominee or an immediate family member is an executive officer, general partner or significant equity holder). As provided in the Director Nomination Policy, the purpose of this review was to determine whether any such relationships or transactions existed that were inconsistent with a determination that the director or nominee is independent.
This review specifically included all transactions with entities with which the directors and nominees are associated. Certain directors are employed by or otherwise associated with companies which purchased energy services from subsidiaries of the Company, which services were either rate-regulated or competitively bid. In particular, the Board reviewed non rate-regulated and non-competively bid transactions between subsidiaries of the Company and Emerson Electric Co., Caterpillar Inc. and BJC HealthCare and their respective subsidiaries and affiliates since the aggregate amount involved in such transactions exceeded $120,000. Mr. Galvin is the Vice Chairman of Emerson Electric Co., which, together with its subsidiaries (Emerson), purchased rate-regulated energy services from and made utility pole attachment license payments to Company subsidiaries. Certain Company subsidiaries purchased, on a negotiated basis, engineering system support and consulting services as well as electric motors, control valves and associated instrumentation and other materials from Emerson. The Board determined that its subsidiaries followed the Company procurement and sales policies and procedures, that the amounts were well under the thresholds under the director independence requirements and that Mr. Galvin did not have a direct or indirect material interest in the transactions. Mr. Oberhelman is Vice Chairman and Chief Executive Officer-Elect of Caterpillar Inc. In addition, Mr. Oberhelmans wife is the Chief Executive Officer of Cullinan Properties, Ltd. (Cullinan Properties), a real estate development firm. The transactions between Company subsidiaries and (1) Caterpillar Inc. and its subsidiaries and affiliates and (2) Cullinan Properties and its subsidiaries and affiliates are described below in this proxy
statement under the caption, Policy and Procedures With Respect to Related Person Transactions. The Board determined that its subsidiaries followed Company procurement and sales policies and procedures and that the amounts were well under the thresholds under the director independence requirements. Mr. Lipstein is President and Chief Executive Officer of BJC HealthCare which, together with its affiliates (BJC HealthCare), purchased rate-regulated energy services from Company subsidiaries. Certain Company subsidiaries made claims payments, on a negotiated basis, to BJC HealthCare, one of the health care providers under our group health plan. The Board determined that its subsidiaries followed the Company procurement and sales policies and procedures, that the amounts were well under the thresholds under the director independence requirements and that Mr. Lipstein did not have a direct or indirect material interest in the transactions.
The Board also reviewed all contributions made by the Company and its subsidiaries to charitable organizations with which the directors or their immediate family members serve as an executive officer. The Board determined that the contributions were consistent with similar contributions, were approved in accordance with the Companys normal procedures and were under the thresholds of the director independence requirements.
All of the referenced transactions were ordinary course commercial transactions made on an arms length basis. The Board considered each of these transactions and relationships and determined that none of them was material or affected the independence of directors involved under either the general independence standards contained in the NYSEs listing standards or the categorical standards contained in our Director Nomination Policy.
As a result of this review, the Board, at its meeting in February 2010, affirmatively determined that the following directors or nominees for director are independent under the standards set forth in the Director Nomination Policy: Stephen F. Brauer, Susan S. Elliott, Ellen M. Fitzsimmons, Walter J. Galvin, Gayle P.W. Jackson, James C. Johnson, Steven H. Lipstein, Douglas R. Oberhelman, Harvey Saligman, Patrick T. Stokes, Stephen R. Wilson and Jack D. Woodard; and that Gary L. Rainwater, Charles W. Mueller and Thomas R. Voss are not independent under the Director Nomination Policy.
All members of the Audit and Risk Committee, the Human Resources Committee and the Nominating and Corporate Governance Committee of the Board of Directors are independent under the standards set forth in the Director Nomination Policy.
Policy and Procedures With Respect to Related Person Transactions
In 2007, the Board of Directors adopted the Ameren Corporation Policy and Procedures With Respect to Related Person Transactions. This written policy provides that the Nominating and Corporate Governance Committee will review and approve Related Person Transactions (as defined below); provided that the Human Resources Committee will review and approve the compensation of each Company employee who is an immediate family member of a Company director or executive officer and whose compensation exceeds $120,000. The Chair of the Nominating and Corporate Governance Committee has delegated authority to act between Committee meetings.
The policy defines a Related Person Transaction as a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which the Company (including any of its subsidiaries) was, is or will be a participant and the amount involved exceeds $120,000 and in which any Related Person (as defined below) had, has or will have a direct or indirect material interest, other than (1) competitively bid or regulated public utility services transactions; (2) transactions involving trustee type services; (3) transactions in which the Related Persons interest arises solely from ownership of Company equity securities and all equity security holders received the same benefit on a pro
rata basis; (4) an employment relationship or transaction involving an executive officer and any related compensation solely resulting from that employment relationship or transaction if (i) the compensation arising from the relationship or transaction is or will be reported pursuant to the SECs executive and director compensation proxy statement disclosure rules, or (ii) the executive officer is not an immediate family member of another executive officer or director and such compensation would have been reported under the SECs executive and director compensation proxy statement disclosure rules as compensation earned for services to the Company if the executive officer was a named executive officer as that term is defined in the SECs executive and director compensation proxy statement disclosure rules, and such compensation has been or will be approved, or recommended to our Board of Directors for approval, by the Human Resources Committee of our Board of Directors; or (5) if the compensation of or transaction with a director is or will be reported pursuant to the SECs executive and director compensation proxy statement disclosure rules.
Related Person is defined as (1) each director, director nominee and executive officer of the Company, (2) five percent or greater beneficial owners, (3) immediate family members of the foregoing persons and (4) any entity in which any of the foregoing persons is a general partner or principal or in a similar position or in which such person and all other related persons to such person has a 10 percent or greater beneficial interest.
The Office of the Corporate Secretary of the Company will assess whether a proposed transaction is a Related Person Transaction for purposes of the policy.
The policy recognizes that certain Related Person Transactions are in the best interests of the Company and its shareholders.
The approval procedures in the policy identify the factors the Nominating and Corporate Governance Committee will consider in evaluating whether to approve or ratify Related Person Transactions or material amendments to pre-approved Related Person Transactions. The Nominating and Corporate Governance Committee will consider all of the relevant facts and circumstances available to the Nominating and Corporate Governance Committee, including (if applicable) but not limited to: the benefits to the Company; the impact on a directors independence in the event the Related Person is a director, an immediate family member of a director or an entity in which a director is a general partner, 10 percent or greater shareholder or executive officer; the availability and costs of other sources for comparable products or services; the terms of the transaction; the terms available to or from unrelated third parties or to employees generally; and an analysis of the significance of the transaction to both the Company and the Related Person. The Nominating and Corporate Governance Committee will approve only those Related Person Transactions (a) that are in compliance with applicable SEC rules and regulations, NYSE listing requirements and the Companys policies, including but not limited to the Corporate Compliance Policy and (b) that are in, or are not inconsistent with, the best interests of the Company and its shareholders, as the Nominating and Corporate Governance Committee determines in good faith.
The policy provides for the annual pre-approval by the Nominating and Corporate Governance Committee of certain Related Person Transactions that are identified in the policy, as the policy may be supplemented and amended. For 2009, the Nominating and Corporate Governance Committee (and the Human Resources Committee, in the case of employment relationships involving compensation exceeding $120,000) approved, and for 2010 pre-approved, in accordance with the policy, the following Related Person Transactions:
Other than the employment relationships of Charles R. Mueller and Michael G. Mueller described above, the only director that had a business relationship with the Company in 2009 that is required to be reported is Mr. Oberhelman. Mr. Oberhelman is an executive officer of Caterpillar Inc. which purchases regulated public utility energy services and non-regulated energy services from certain of the Companys subsidiaries (primarily CILCO, Ameren Energy Marketing Company, IP and UE) and sells and leases equipment to and provides repair, maintenance and training services for some of our subsidiaries. During 2009, revenues from energy sales by Ameren subsidiaries to Caterpillar Inc. aggregated approximately $19.8 million excluding revenues from the supply of regulated public utility services and revenues based on competitive bid transactions. Payments made during 2009 by our subsidiaries to Caterpillar Inc. for the purchase or lease of equipment and for repair, maintenance and training services aggregated approximately $7.1 million. During 2009, Cullinan Properties made lease payments to CILCO for property use aggregating approximately $11,000. These transactions, many of which are for multiple year terms, were entered into in the ordinary course of business on an arms length basis. The total of all payments made by our subsidiaries to Caterpillar Inc. and payments received by our subsidiaries from Caterpillar Inc. and Cullinan Properties during 2009 (including payments related to the supply of regulated public utility services and payments related to competitive bid transactions) did not exceed two percent of Caterpillar Inc.s 2009 consolidated revenues of approximately $32.4 billion or two percent of Cullinan Properties consolidated revenues, respectively. In addition, the total of all payments made by our subsidiaries to Caterpillar Inc. during 2009 was less than two percent of our 2009 consolidated revenues of approximately $7.1 billion. Caterpillar Inc., Cullinan Properties and Ameren transactions also did not exceed these two percent thresholds during 2007 and 2008.
In addition to the above business relationships, certain of the Companys directors and executive officers had reportable family relationships in 2009. Charles W. Mueller is the father of Michael G. Mueller, President of the Companys wholly-owned indirect subsidiary,
Ameren Energy Fuels and Services Company and a Vice President of Ameren Services, for which he received in 2009 total compensation (consisting of all equivalent items included in total compensation in columns (c) through (i), inclusive, of the Summary Compensation Table in this proxy statement) of $537,952 (including $81,278, representing the grant date fair value computed in accordance with authoritative accounting guidance of performance share unit awards under the Companys 2006 Omnibus Incentive Compensation Plan). See below for more information regarding performance share unit awards and other compensation, respectively. Another son of Mr. Mueller, Charles R. Mueller, is employed by CILCO as a Manager of Strategic Initiatives, for which he received total compensation (consisting of all equivalent items included in total compensation in columns (c) through (i), inclusive, of the Summary Compensation Table in this proxy statement) of $201,871 for 2009 (including $15,939, representing the grant date fair value computed in accordance with authoritative accounting guidance of performance share unit awards under the Companys 2006 Omnibus Incentive Compensation Plan.)
Policy Regarding Communications to the Board of Directors
The non-management directors of the Board of Directors have adopted a policy for shareholders and other interested persons to send communications to the Board. Shareholders and other interested persons who desire to communicate with the Companys directors or a particular director may write to: Ameren Corporation Board of Directors, c/o Head of Investor Relations, Mail Code 202, 1901 Chouteau Avenue, St. Louis, Missouri 63103. E-mail communications to directors should be sent to email@example.com. All communications should not exceed 500 words in length and must be accompanied by the following information: if the person submitting the communication is a shareholder, a statement of the number of shares of the Companys Common Stock that the person holds; if the person submitting the communication is not a shareholder and is submitting the communication to the Lead Director or the non-management directors as an interested party, the nature of the persons interest in the Company; any special interest, meaning an interest not in the capacity of a shareholder of the Company, of the person in the subject matter of the communication; and the address, telephone number and e-mail address, if any, of the person submitting the communication. Communications received from shareholders and other interested persons to the Board of Directors will be reviewed by the Head of Investor Relations and if they are relevant to, and consistent with, the Companys operations and policies that are approved by all non-management members of the Board and if they conform to the procedural requirements of the Policy, they will be forwarded by the Office of the Corporate Secretary to the Lead Director or applicable Board member or members as expeditiously as reasonably practicable.
Annual Assessment of Board, Board Committee and Individual Director Performance
The Board reviews its own performance, structure and processes in order to assess how effectively it is functioning. This assessment is implemented and administered by the Nominating and Corporate Governance Committee through an annual Board self-evaluation survey. Individual directors are also asked annually to assess each others performance through a director peer assessment. The views of individual directors are collected by the Secretary of the Company and the Chairman of the Nominating and Corporate Governance Committee and summarized for consideration by the full Board. In addition, each of the Audit and Risk Committee, Human Resources Committee, Nominating and Corporate Governance Committee, Nuclear Oversight Committee, Public Policy Committee and Finance Committee, of the Board conduct an annual self-evaluation of its performance.
Role of Director Compensation Consultants
As noted above under BOARD STRUCTURE Role of Compensation Consultants, the Nominating and Corporate Governance Committee directly retained Hewitt to advise it with respect to director compensation matters. During 2009, Hewitt conducted an outside director market pay analysis for the Nominating and Corporate Governance Committee and attended a Committee meeting to discuss the analysis.
Fees and Stock Awards
The Nominating and Corporate Governance Committee of the Board of Directors of Ameren has approved the following compensation program for each director who is not an employee of the Company:
Directors who are employees of the Company do not receive compensation for their services as a director.
The following table sets forth the compensation paid to non-management directors for fiscal year 2009, other than reimbursement for travel expenses.
DIRECTOR COMPENSATION TABLE
Directors Deferred Compensation Plan Participation
During 2009, an optional deferred compensation plan available to directors (the Directors Deferred Compensation Plan) permitted non-management directors to defer all or part of their annual cash retainers, meeting fees and Company Common Stock share awards as described below. The deferred compensation plan available to directors prior to 2009 permitted non-management directors to defer only annual cash retainers and meeting fees. Directors Galvin, Oberhelman, Saligman, Stokes and Woodard elected to defer their annual Board and Board Committee cash retainers, meeting fees and 2009 stock award under the Directors Deferred Compensation Plan in 2009.
All deferrals of Company Common Stock awards pursuant to the Directors Deferred Compensation Plan are converted to Stock Units, representing each share of Company Common Stock awarded to and deferred by the participant. Stock Units are not considered actual shares of Company Common Stock and participants have no rights as an Ameren shareholder with respect to any Stock Units until shares of Company Common Stock are delivered in accordance with the Directors Deferred Compensation Plan. Participants will have the right to receive dividend equivalents on Stock Units as of each dividend payment date, which are to be converted to additional Stock Units on the dividend payment date of Company Common Stock in accordance with the 2006 Omnibus Incentive Compensation Plan. The price used for converting dividend equivalents to additional Stock Units is determined using the same methodology as the price used for calculating the number of additional shares purchased as of such dividend payment date under the Ameren DRPlus Plan.
All payments under the Directors Deferred Compensation Plan relating to deferrals of a directors Company Common Stock award (including dividend equivalents which will be converted into additional Stock Units) will be made in the form of one share of Company Common Stock for each Stock Unit or fraction thereof. Each such share of Company Common Stock will be distributed subject to the terms of and pursuant to the 2006 Omnibus Incentive Compensation Plan and the related award agreement issued to the director thereunder.
With respect to retainer and meeting fees, deferred amounts, plus an interest factor, are used to provide payout distributions following completion of Board service and certain death benefits. Cash compensation deferred with respect to plan years commencing prior to January 1, 2010 earns interest at 150 percent of the average Mergents Seasoned AAA Corporate Bond Yield Index rate (the Directors Deferred Plan Index Rate) until the participant director retires or dies in accordance with the terms of the Directors Deferred Compensation Plan. After the participant director retires or dies, the deferred amounts earn interest at the average Mergents Seasoned AAA Corporate Bond Yield Index rate (the Directors Deferred Plan Base Rate). See Directors Deferred Compensation Plan For Plan Years Commencing On and After January 1, 2010 below for a description of changes to the interest crediting rates for deferrals made with respect to plan years commencing on and after January 1, 2010. For 2009, the Directors Deferred Plan Base Rate was 5.63 percent and the Directors Deferred Plan Index Rate was 8.45 percent.
A participant director may choose to receive the deferred amounts upon ceasing to be a member of the Companys Board of Directors in a lump sum payment or in installments over a set period of up to 15 years. However, in the event a participant ceases being a member of the Companys Board of Directors prior to age 55, the balance in such participants deferral account shall be distributed in a lump sum to the participant within 30 days of the date the participant ceases being a member of the Companys Board of Directors. In the event a participant ceases being a member of the Companys Board of
Directors prior to attainment of at least 55 years of age and after the occurrence of a Change of Control (as hereinafter defined under EXECUTIVE COMPENSATION OTHER POTENTIAL POST-EMPLOYMENT PAYMENTS Change of Control Protection In General Change of Control Severance Plan), the balance in such directors deferral account, with any interest payable at the Directors Deferred Plan Index Rate, for amounts deferred prior to 2010, shall be distributed in a lump sum to the director within 30 days after the date the director ceases being a member of the Board of Directors. In the event that the Company ceases to exist or is no longer publicly traded on the NYSE or the NASDAQ Stock Market (NASDAQ), upon the occurrence of such Change of Control, any Stock Units held by a participating director will be converted to a cash value upon the Change of Control and thereafter will be credited with interest at the Directors Deferred Plan Index Rate for deferred amounts prior to 2010. The cash value of the Stock Unit will equal the value of one share of Company Common Stock based upon the closing price on the NYSE or NASDAQ on the last trading day prior to the Change of Control.
Directors Deferred Compensation Plan For Plan Years Commencing On and After January 1, 2010.
In October 2009, the Company adopted an amendment to the Ameren Directors Deferred Compensation Plan which amended the portion of the Directors Deferred Compensation Plan relating to the interest crediting rates used for cash amounts deferred with respect to plan years commencing on and after January 1, 2010. Pursuant to the amended Directors Deferred Compensation Plan, cash amounts deferred with respect to plan years commencing on and after January 1, 2010 accrue interest in an amount equal to 120 percent of the applicable federal long-term rate, with annual compounding (as prescribed under the IRC) (the AFR) for the December immediately preceding the year of the cash deferral. Under the amended Directors Deferred Compensation Plan, the interest crediting rate to be used upon the occurrence of a Change of Control for amounts deferred with respect to plan years commencing on and after January 1, 2010 will also equal 120 percent of the AFR. Cash amounts deferred under the Directors Deferred Compensation Plan with respect to plan years commencing prior to January 1, 2010 will continue to be credited interest at the Directors Deferred Plan Index Rate or the Directors Deferred Plan Base Rate, as the case may be.
Director Stock Ownership Requirement
In 2006, the Companys Board of Directors adopted a stock ownership requirement applicable to all of its directors. Under this requirement, within five years of the January 1, 2007 effective date or within five years after initial election to the Board, all non-management directors are required to own Company Common Stock equal in value to at least three times their base annual cash retainer and hold such amount of stock throughout their directorship.
At any time, if a non-management director has not satisfied the requirement, such director must retain at least 50 percent of all shares granted to him or her after January 1, 2012 under Amerens equity compensation programs.
The Company is asking its shareholders to ratify the appointment of PricewaterhouseCoopers LLP (PwC) as the Companys independent registered public accounting firm for the fiscal year ending December 31, 2010. PwC was appointed by the Audit and Risk Committee.
Although ratification by the shareholders is not required by law, the Board of Directors has determined that it is desirable to request approval of this selection by the shareholders. In the event the shareholders fail to ratify the appointment, the Audit and Risk Committee will consider this factor when making any determination regarding PwC. Even if the selection is ratified, the Audit and Risk Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its shareholders.
Passage of the proposal requires the affirmative vote of a majority of the shares entitled to vote on the proposal and represented in person or by proxy at the meeting at which a quorum is present.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF PWC AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2010.
Proponents of the shareholder proposal described below notified the Company of their intention to attend the Annual Meeting to present the proposal for consideration and action. The names and addresses of the proponents and the number of shares they hold will be furnished by the Secretary of the Company upon receipt of any telephonic or written request for such information.
WHEREAS: The Nuclear Regulatory Commission (NRC) issues 40-year licenses for commercial nuclear power plants, and allows these licenses to be renewed for an additional 20 years.
A nuclear power plant licensee seeking to renew its original license must submit an application to the NRC that:
AmerenUE has stated its intention to submit a license extension application with the NRC to extend its Callaway nuclear plants operating license by 20 years so that the operating license will expire in 2044 and cannot predict whether or when the NRC will approve the license extension. (Annual Report, 2008)
RESOLVED: Shareholders request that Ameren prepare a report, at reasonable cost, omitting confidential information, and available within six months of the 2010 Annual Meeting, that discloses the companys evaluation (costs, risks, and benefits) of applying for a twenty-year extension of Callaways current 40-year operating license as opposed to the costs, risks, and benefits of decommissioning in 2024.
We believe there are concerns about extending the operating life of the Callaway nuclear power plant beyond the 40-year duration for which the plant was originally designed, including:
Ameren remains morally responsible and financially liable for Callaway into the indefinite future. We believe this report is essential for AmerenUEs realistic and responsible, economic and ethical planning and for its accountability to its shareholders.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST ITEM (3).
The Board is of the opinion that it is not necessary, prudent or cost-effective to prepare the report requested by the proposal, given the reviews undertaken by Ameren and the nuclear utility industry to date and the reviews and reports that will be undertaken and prepared by UE and the U.S. Nuclear Regulatory Commission (NRC) in connection with UEs request for an extension of the operating license of the Callaway Plant, as described below.
Amerens Health and Safety Policy and Environmental Policy evidence the Companys commitment to protecting its employees, the public and the environment. Ameren fulfills its commitment to safety and environmental compliance. The Board of Directors established the Nuclear Oversight Committee to assist the Board in providing oversight of the Callaway Plants operations (including safety and environmental concerns) and advise the Board in developing and implementing long-term strategies and plans relating to the Callaway Plant, including the decision to seek an extension of the operating license. Amerens existing policies, together with Board oversight and the NRC regulatory process, will appropriately and adequately address the potential issues raised by this proposal.
In light of the foregoing, the Board of Directors believes that adoption of the proposal is not in the best interests of Ameren and its shareholders. Therefore, the Board unanimously recommends voting AGAINST ITEM (3).
Passage of the proposal requires the affirmative vote of a majority of the shares entitled to vote on the proposal and represented in person or by proxy at the meeting at which a quorum is present.
The Board of Directors does not know of any matter, other than the election of Directors, the ratification of the appointment of independent registered public accounting firm and the shareholder proposal set forth above, which may be presented at the meeting. However, if any other matters should properly come before the meeting, it is the intention of the persons named in the enclosed proxy to vote thereon in accordance with their best judgment.
The following table contains information with respect to the ownership of Ameren Common Stock by each person known to the Company who is the beneficial owner of more than five percent of the outstanding Common Stock.
The following table sets forth certain information known to the Company with respect to beneficial ownership of Ameren Common Stock and Stock Units as of February 1, 2010 for (i) each director and nominee for director of the Company, (ii) each individual serving as the Companys President and Chief Executive Officer and the Companys Chief Financial Officer during 2009, and the three most highly compensated executive officers of the Company (and/or its subsidiaries) (other than individuals serving as President and Chief Executive Officer and the Chief Financial Officer during 2009) who were serving as executive officers at the end of 2009, named in the Summary Compensation Table below (collectively, the Executives), and (iii) all executive officers, directors and nominees for director as a group.
Since 2003, the Company has had a policy which prohibits directors and executive officers from engaging in pledges of Company securities or short sales, margin accounts and hedging or derivative transactions with respect to Company securities.
The address of all persons listed above is c/o Ameren Corporation, 1901 Chouteau Avenue, St. Louis, Missouri 63103.
Stock Ownership Requirement for Directors
The stock ownership requirement applicable to directors is described above under ITEMS YOU MAY VOTE ON DIRECTOR COMPENSATION Director Stock Ownership Requirement.
Stock Ownership Requirement for Officers
The stock ownership requirements applicable to the Executives are described below under EXECUTIVE COMPENSATION COMPENSATION DISCUSSION AND ANALYSIS Common Stock Ownership Requirement. The Company also has stock ownership requirements applicable to certain other officers. These requirements are included in the Companys Corporate Governance Guidelines which are available on the Companys website or upon request to the Company, as described herein.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Companys directors and executive officers and persons who own more than 10 percent of the Companys Common Stock to file reports of their ownership in the equity securities of the Company and its subsidiaries and of changes in that ownership with the SEC and the NYSE. SEC regulations also require the Company to identify in this proxy statement any person subject to this requirement who failed to file any such report on a timely basis. Based solely on a review of the filed reports and written representations that no other reports are required, each of the Companys directors and executive officers complied with all such filing requirements during 2009.
Notwithstanding anything to the contrary set forth in any of the Companys filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate other filings with the SEC, including this proxy statement, in whole or in part, the following Human Resources Committee Report shall not be deemed to be incorporated by reference into any such filings.
The Human Resources Committee (the Committee) discharges the Boards responsibilities relating to compensation of the Companys executive officers and for all Company subsidiaries which are registered companies pursuant to the Securities Exchange Act of 1934. The Committee approves and evaluates all compensation of executive officers, including salaries, bonuses, and compensation plans, policies and programs of the Company.
The Committee also fulfills its duties with respect to the Compensation Discussion and Analysis and Human Resources Committee Report portions of the proxy statement, as described in the Committees Charter.
The Compensation Discussion and Analysis has been prepared by management of the Company. The Company is responsible for the Compensation Discussion and Analysis and for the disclosure controls relating to executive compensation.
The Human Resources Committee met with management of the Company and the Committees outside consultant to review and discuss the Compensation Discussion and Analysis. Based on the foregoing review and discussions, the Human Resources Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and the Companys 2009 Form 10-K, and the Board approved that recommendation.
Human Resources Committee:
Patrick T. Stokes, Chairman
Walter J. Galvin
James C. Johnson
2009 In Brief
During 2009, actions taken with respect to executive compensation reflected the negative economic conditions affecting the broader U.S. economy, the utility industry and the Company. For example:
In addition, Executives are required to own our Common Stock through stock ownership guidelines (see Common Stock Ownership Requirement below) and the two-year hold requirement on performance share unit awards granted in prior years. The value of those shares declined in the same proportion that share value declined for other shareholders.
In the remainder of this Compensation Discussion and Analysis (or CD&A), references to the Committee are to the Human Resources Committee of the Board of Directors. We use the term Executives to refer to the employees listed in the Summary Compensation Table.
Guiding Principles and Policies
Our philosophy for compensation of the Executives is to provide a competitive total compensation program that is based on the size-adjusted median of the range of compensation paid by similar utility industry companies, adjusted for our short- and long-term performance and the individuals performance. The adjustment for our performance aligns the long-term interests of management with that of our shareholders to maximize shareholder value. The programs in place for 2009 support the pay-for-performance philosophy that we utilize.
Overview of Executive Compensation Program Components
In 2009, our compensation program for the Executives consisted of several compensation elements, each of which is discussed in more detail below. At the Company, decisions with respect to one element of pay tend not to impact other elements of pay. The following are the material elements of our compensation program for the Executives:
Our Common Stock ownership requirements applicable to the Executives are discussed in this CD&A.
We also provide various welfare benefits to the Executives on substantially the same basis as we provide to all salaried employees. We provide modest perquisites and other personal benefits to the Executives. None of the Executives received perquisites or other personal benefits in an amount of $10,000 or more in 2009.
Each element is reviewed individually and considered collectively with other elements of our compensation program to ensure that it is consistent with the goals and objectives of that particular element of compensation as well as our overall compensation program.
Market Data and Peer Group
For 2009, the Committees consulting firm, Hewitt, collected and analyzed comprehensive market data, including base salary, target short-term incentives (non-equity incentive plan compensation) and long-term incentives opportunities.
The elements of pay were benchmarked both individually and in total to the same comparator group.
To develop market figures, compensation opportunities for the Executives were compared to the compensation opportunities for comparable positions at companies similar to us, defined as regulated utility industry companies in a revenue size range approximately one-half to double our size. Hewitt used statistical techniques to adjust the market data to be appropriate for our revenue size.
We provide compensation opportunities at the size-adjusted median of the Hewitt data, and design our incentive plans to pay significantly more or less than the target amount when performance is above or below target performance levels, respectively. Thus, our plans are designed to result in payouts that are market-appropriate given our performance for that year or period.
The companies identified as the peer group used to develop 2009 compensation opportunities are listed below. The list is subject to change each year depending on the availability of the companies data through Hewitts database, and the continued appropriateness of the companies.
Mix of Pay
We believe that both cash compensation and non-cash compensation are appropriate elements of a total rewards program. Cash compensation is current compensation (i.e., base salary and annual incentive awards), while non-cash compensation is generally long-term compensation (i.e., equity-based incentive compensation).
A significant percentage of total compensation is allocated to short-term and long-term incentives as a result of the philosophy mentioned above. During 2009, there was no pre-established policy or target for the allocation between either cash and non-cash or short-term and long-term compensation. Rather, the Committee reviewed market data provided by Hewitt to determine the appropriate level and mix of incentive compensation. The allocation between current and long-term compensation was based primarily on competitive market practices relative to base salaries, annual incentive awards and long-term incentive award values.
Base salary compensates for competence and sustained performance in the executive role, and is a standard pay element. Our base salary program is designed to provide the
Executives with market competitive salaries based upon role, experience, competence and performance.
The market data referenced above assisted in defining the pay parameters for each Executive. Based on this data and the scope of each Executives role, a base salary range was established for each position at +/- 20 percent of the established market rate for the position. The base salary of each Executive is typically managed within this pay range.
Mr. G.L. Rainwater (our Chairman, President and Chief Executive Officer prior to May 1, 2009) recommended a 2009 base salary increase for each of the other Executives considering their then-current salary in relation to the market median, experience and sustained individual performance and results. These recommendations were presented to the Committee for discussion and approval at the December 2008 Committee meeting. Increases were approved based primarily on market data, base salary range and individual performance. Performance takes into account competence, initiative, contribution to achievement of our goals, and leadership.
The Committee met in executive session at its December 2008 meeting to determine Mr. Rainwaters base salary, as Chairman, President and Chief Executive Officer, for 2009. The Committee determined that Mr. Rainwaters salary should be increased by 3.2 percent for 2009 based on the above-mentioned market data and Mr. Rainwaters performance.
In February 2009, the Committee, due to the business and economic environment affecting the Company, revised downward the annual base salary payable to certain of the Executives (Gary L. Rainwater, Warner L. Baxter, Thomas R. Voss, Steven R. Sullivan and Charles D. Naslund), effective March 1, 2009, to the base salary level payable to such Executive at the end of the 2008 fiscal year (2008 base salary). Consequently, the 2009 base salary payable to such Executive (prior to the salary adjustments made in connection with the executive management changes detailed below) was the same as the Executives 2008 base salary, except for the first two months of fiscal 2009, during which the Executives base salary was higher as approved by the Committee at the December 2008 Committee meeting.
Subsequently, in March 2009, the Company made several executive management changes, each such change effective May 1, 2009, whereby:
In connection with these executive management changes and taking into account market data for the positions, the Executives specific responsibilities, the Executives experience relevant to the new position and the Companys succession planning framework,
the Committee in March 2009 made the following 2009 base salary adjustments, each such change effective May 1, 2009:
Short-Term Incentive Compensation: Executive Incentive Plan
2009 Ameren Executive Incentive Plan
How the Plan Works
Our short-term incentive compensation program element is entitled the Ameren Executive Incentive Plan (EIP). For 2009, the EIP (the 2009 EIP) was comprised of the following components in rewarding Executives for our annual achievement:
EPS Targets and Weightings
EPS was the primary metric used to establish award opportunities under the 2009 EIP and was used to calculate the Executives core award. In establishing 2009 EIP award opportunities, the Committee reviewed Ameren EPS for Executives with corporate
responsibility (Messrs. Rainwater, Lyons and Sullivan) and additionally reviewed the contribution to Ameren EPS performance of Amerens three business segments, consisting of Missouri regulated, Illinois regulated and merchant generation (formerly referred to as non-rate regulated generation), for Executives with business segment responsibility (Messrs. Baxter, Voss, Naslund and Cisel). Mr. Baxters award under the 2009 EIP was, effective May 1, 2009, subject, in part, to Missouri regulated segment contribution to the Ameren EPS goal. Mr. Vosss award under the 2009 EIP was, prior to May 1, 2009, subject, in part, to Missouri regulated segment contribution to the Ameren EPS goal. Mr. Naslunds award under the 2009 EIP was subject, in part, to merchant generation contribution to the Ameren EPS goal throughout 2009. Mr. Cisels award under the 2009 EIP was subject, in part, to Illinois regulated segment contribution to the Ameren EPS goal throughout 2009. Consequently, the Executives with business segment responsibility during 2009 (Messrs. Baxter, Voss, Naslund and Cisel), for applicable periods, had their incentive compensation opportunity based 50 percent on Ameren EPS and 50 percent on business segment contribution to Ameren EPS, while the other Executives (Messrs. Rainwater, Lyons and Sullivan) had their incentive compensation opportunity based 100 percent on Ameren EPS, as illustrated below:
2009 EIP AWARD OPPORTUNITY/WEIGHTINGS
The Committee established three levels of EPS achievement under the 2009 EIP to reward Executives for results achieved in EPS performance. Achievement of EPS falling between the established levels was interpolated. The three levels are defined as follows:
The range of EPS achievement levels for the 2009 EIP, as established by the Committee, is shown below. Prior to 2009, the EPS achievement levels were calculated based on core earnings per share. To provide greater transparency, the 2009 achievement levels were calculated in accordance with generally accepted accounting principles. Achievement levels could be adjusted to include or exclude specified items of an unusual or non-recurring nature as determined by the Committee at its sole discretion and as permitted by the 2006 Omnibus Incentive Compensation Plan.
Individual Performance Modifier
The 2009 EIP award based on the core award for Executives was subject to downward adjustment by up to 50 percent in the Committees discretion. While the 2009 EIP initially provided that the core award could also be adjusted upward by up to 50 percent, the Committee decided at the beginning of 2009 to reduce the executive incentive compensation opportunities for 2009 due to the business environment and, accordingly, the core award of the Executives was not subject to adjustments upward. Awards were subject to downward adjustment due to the Executives performance on key performance variables, including but not limited to leadership, business results, customer satisfaction, reliability, plant availability, safety and/or other performance metrics, as applicable and as determined by the Committee. Awards were subject to reduction by more than 50 percent in cases of marginal or poor performance.
2009 EIP Target Opportunities
Target 2009 EIP award opportunities were determined primarily considering the market data mentioned above, and secondarily considering internal pay equity, i.e., the relationship of target award opportunities of the Executives with those of other officers at the same level in the Company. The amounts listed in columns (c), (d) and (e) of the Grants of Plan-Based Awards Table following this CD&A represent the potential range of cash awards for the 2009 EIP and are based on a percentage (as adjusted, pro rata, during 2009) of each Executives base salary at December 31, 2009, as follows:
2009 EIP TARGET OPPORTUNITY
The minimum payout amount for each Executive was 0 percent of these target opportunities. The maximum payment, per the EIP design, was 200 percent of these target opportunities, but in 2009 was 150 percent.
2009 EIP Payouts
Core Award, Earned through EPS Achievement
Performance goals for 2009 EIP purposes were set in terms of EPS. At the February 2010 Committee meeting, the forecasted 2009 EIP EPS achievement and recommended EIP payouts for the Executives (other than Mr. Voss) were presented by Mr. Voss to the Committee for review. The Committee reviewed Ameren EPS performance and, as applicable, business segment contribution to Ameren EPS. Consistent with its actions in prior years and as permitted under the terms of the 2009 EIP, the Committee determined it was appropriate to adjust EPS achievement levels, either downward or upward as appropriate, to reflect certain unusual, non-operating or unbudgeted events, including, in 2009, mark-to-market adjustments on non-qualifying hedges and the unbudgeted impact of storms in order to avoid artificially increasing or decreasing awards based on unusual items. Similar to prior years, these adjustments were made by the Committee due to:
This resulted in adjustments as follows:
Earned through Individual Performance Modifier
The core award was subject to downward adjustment by up to 50 percent based upon the Executives individual contributions and performance during the year. None of the Executives received downward adjustments to their core award in 2009.
Actual 2009 EIP Payouts
Actual EIP payouts are shown below as a percent of target. Payouts were made in February 2010 and are set forth under column (g) entitled Non-Equity Incentive Plan Compensation in the Summary Compensation Table.
In order to help ensure that amounts are fully deductible for tax purposes, the Committee set a limitation on 2009 short-term incentive payouts for each Executive of 0.5 percent of our 2009 net income. The Committee then used negative discretion as provided under Section 162(m) of the IRC to arrive at actual, lower 2009 payouts based on our performance for the year, which are shown in column (g) of the Summary Compensation Table. By setting the limitation on payouts, the Committee ensured that such payouts met the definition of performance-based pay for tax purposes and thus were fully deductible.
2010 Executive Incentive Plan
In December 2009, the Committee recommended, and the Board approved a change in the design of the EIP for 2010. The principal design change in the 2010 EIP from the 2009 EIP is to utilize only Ameren EPS as a financial goal, regardless of whether an Executive has business segment specific responsibilities. The Committee elected to make this change to the 2010 EIP in order to establish uniform short term goals for each of the Executives based upon overall Company performance.
Long-Term Incentives: Performance Share Unit Program (PSUP)
We began granting performance share units in 2006 and granted them in 2007, 2008 and 2009 as well. In the five years prior to 2006, we granted performance-based restricted stock. Both are discussed below.
A performance share unit (PSU or share unit) is the right to receive a share of our Common Stock if certain long-term performance criteria are achieved and the Executive remains an Ameren employee.
Role of the PSUP
The 2009 PSU grants, which are governed by the shareholder-approved 2006 Omnibus Incentive Compensation Plan, play the following role in the compensation program:
We designed the PSUP to accomplish the following:
Accounting treatment was taken into account in designing the PSUP. PSUs are also intended to qualify for the performance-based compensation exception from the $1 million cap on deductibility of executive compensation imposed by Section 162(m) of the IRC.
For 2009, a target number of PSUs was granted to each Executive pursuant to the 2006 Omnibus Incentive Compensation Plan as reflected in column (g) of the Grants of Plan-Based Awards Table.
Grant sizes were calculated primarily considering the market data mentioned above, and secondarily considering internal pay equity, in other words, the relative differences in grant sizes of the Executives and other officers at the same level in the Company. For 2009 grants, grant values were then reduced by approximately 20 percent, to reflect a stock price decline that occurred immediately prior to the grants as a result of a reduction in Amerens dividend and generally volatile market conditions.
The actual number of 2009 PSUs earned will vary from 0 percent to 200 percent of the target number of PSUs granted to each Executive, based primarily on our 2009-2011 TSR relative to a utility industry peer group and contingent on continued employment during the same period. The threshold and maximum amounts of 2009 PSU awards are reflected in columns (f) and (h) of the Grants of Plan-Based Awards Table.
Awards under the PSUP for 2009 have the same characteristics as those awarded from 2006 to 2008, except that once 2009 PSUs are earned (after a three-year performance period), payment will be promptly made in shares of Common Stock. Prior to 2009, as PSUs are earned under the 2007 PSUP and the 2008 PSUP, PSUs continue to rise and fall in value with our Common Stock price during a two-year holding period, after which they are paid out in our Common Stock. This two-year holding period was eliminated for the 2009 PSU grants primarily because of its redundancy with stock ownership and holding requirements already in existence for all Executives. (See Common Stock Ownership Requirement below.) The Executives cannot vote share units or transfer them until they are paid out.
The following graphic illustrates how the 2009 PSUP works.
The 2009 PSUP performance measure is Total Shareholder Return, calculated generally as change in stock price plus dividends paid, divided by beginning stock price.
PSUP Peer Group
The analysis to determine the PSUP peer group was made as of March 2009 using the criteria below.
The Committee retains discretion to make exceptions for inclusion or exclusion of companies in the PSUP peer group, based upon the criteria established above, in order to ensure the most appropriate and relevant comparator peer group. The Committee elected not to change the companies that comprised the PSUP peer group in 2009 due to economic and stock market volatility experienced in early 2009, which created significant fluctuations such that companies would have been included or excluded from the peer group based on the Beta criteria alone. The 22 companies included in the 2009 PSUP peer group are listed below. These peer group companies are not entirely the same as the peer companies used for market pay comparisons because inclusion in this group was not dependent on a companys size relative to us or its participation in an executive pay database. In order to be counted in the final calculations, a company must still be in existence and have a ticker symbol at the end of the performance period.
PSUP Performance/Payout Relationship
Once our 2009-2011 Total Shareholder Return is calculated and compared to peers, the scale below determines the percent of a target PSU award that is paid. Payout for performance between points is interpolated on a straight-line basis.
The Committee selected EPS as the financial measure under the PSUP for determining whether there will be payout in the event TSR is less than the 30th percentile, consistent with the performance measurement component utilized for the annual awards under the EIP.
2007 PSU Awards Vesting
The PSUP performance period for the 2007 grants ended December 31, 2009. Our 2007-2009 Total Shareholder Return performance was determined to be less than the 30th percentile of the 2007 PSUP peer group and our EPS for each year in the PSUP performance period was greater than $2.54. The following table shows the 2007 PSU awards, their original value at grant, the number earned (which equals the target number plus accrued dividends), times 30 percent, and their value at the vesting date (December 31, 2009). The resulting payout was 18.5 percent of the original target value of the awards.
2008 and 2009 PSU Awards
The PSUP performance periods for the 2008 and 2009 grants will not end until December 31, 2010 and December 31, 2011, respectively. The figures in column (e) of the Summary Compensation Table of this proxy statement for the years 2008 and 2009 represent the aggregate grant date fair values for the PSUP performance grants, computed as described in footnote (3) to the Summary Compensation Table. There is no guarantee that such amounts will ultimately be earned by participants.
Changes to the 2010 PSUP
Awards under the PSUP beginning with the 2010 PSU grants will have the same characteristics as those for 2009 except that, if TSR for the performance period (January 1, 2010 through December 31, 2012) is below the 30th percentile, in order to receive a 30 percent payout, the average annual Ameren EPS for such three-year period must be greater than or equal to the average of the Ameren EPS thresholds under each EIP during such period. This change was made by the Committee because our dividend was no longer set at the $2.54 level used in prior plan years. The Committee determined that this change would have a neutral affect on the difficulty of earning an award.
Performance-Based Restricted Stock
How It Works
Performance-based restricted stock was awarded from 2001 through 2005 under the Companys Long-Term Incentive Plan of 1998 (Performance Restricted Stock). The awards have the potential to vest over a seven-year period from the date of grant (approximately one seventh on each anniversary date). Vesting occurs only if we achieve certain Ameren EPS performance levels which correspond to the levels established for the 2009 EIP, with no annual vesting if the Ameren EPS performance does not reach a minimum level established annually. The vesting period could have been reduced from seven years to three years if Amerens EPS had achieved a prescribed growth rate over the three-year period, which it did not. The Executives cannot receive more than the original Performance Restricted Stock grants plus dividend accruals.
Dividends paid on Performance Restricted Stock are reinvested in additional shares of Ameren Common Stock, which vest concurrently with the Performance Restricted Stock. The Executives are entitled to voting privileges associated with the Performance Restricted Stock to the extent the Performance Restricted Stock has not been forfeited.
Prior to February 2006, Performance Restricted Stock vesting was also conditioned upon the Executives achievement of required stock ownership levels based on position and salary. In February 2006, the Committee recommended and the Board of Directors approved the elimination of the stock ownership requirement as a condition to vesting in the Performance Restricted Stock awards granted under the Long-Term Incentive Plan of 1998 to facilitate the transition from that plan to the 2006 Omnibus Incentive Compensation Plan approved by shareholders in May 2006. No new Performance Restricted Stock awards were made to the Executives after 2005.
Vesting of Performance Restricted Stock Based on 2009 Results
As a result of Ameren 2009 EPS performance, 86.7 percent of the Performance Restricted Stock awards granted prior to 2006 and eligible to vest based on 2009 EPS performance vested.
Retirement benefits provide post-employment security to our employees. There are three primary retirement benefit programs applicable to the Executives:
A more detailed explanation of retirement benefits applicable to the Executives is provided in this proxy statement under the captions PENSION BENEFITS and NONQUALIFIED DEFERRED COMPENSATION below.
Change of Control Protections
Change of Control protections under Amerens Second Amended and Restated Change of Control Severance Plan, as amended provide severance pay and, in some situations, vesting or payment of long-term incentive awards, upon a Change of Control of the Company. The arrangements provide market-level payments in the event of an involuntary termination not for Cause or a voluntary termination for Good Reason. Definitions of Change of Control, Cause and Good Reason, as well as more complete descriptions of Change of Control protections are found below under the caption OTHER POTENTIAL POST-EMPLOYMENT PAYMENTS Change of Control Protection In General Change of Control Severance Plan.
We believe that providing limited protections to the Executives upon a change of control is in shareholders best interests because doing so serves to maintain a stable executive team during the process and is helpful in hiring executives into the Company. The triggers are structured so that payment and vesting occur only upon the occurrence of both a change of control and loss of the Executives position, except that restrictions on Performance Restricted Stock are eliminated immediately upon a change of control, as defined in the Long-Term Incentive Plan of 1998. In permitting the Performance Restricted Stock to vest immediately upon a change of control, the Company sought to ensure that ongoing employees are treated the same as terminated employees with respect to outstanding Performance Restricted Stock grants and to provide employees with the same opportunities as other shareholders, who are free to sell their equity at the time of the change of control event and thereby realize the value created at the time of the deal.
We consider it likely that it will take more time for higher-level employees to find new employment than for other employees, and therefore senior management, including the Executives, generally are paid severance upon a termination for a longer period following a Change of Control. The Committee considered this as well as the factors described in the preceding paragraph in structuring the cash payments described under OTHER POTENTIAL POST-EMPLOYMENT PAYMENTS Change of Control Protection below, which an Executive would receive if terminated within two years following a Change of Control.
Common Stock Ownership Requirement
The Company has a stock ownership requirement for Executives, in accordance with the positions listed below, that fosters long-term Common Stock ownership and aligns the interests of the Executives and shareholders. The requirement provides that, within five years of either the January 1, 2007 effective date or the Executives initial election to such office, each Executive is required to own shares of our Common Stock valued as a percentage of base salary as follows:
When an Executive reaches age 62, the applicable stock ownership requirement is reduced by one-half. At any time an Executive has not satisfied the applicable requirement, such officer must retain at least 50 percent of the net shares delivered to him pursuant to awards granted after January 1, 2012 under our equity compensation programs.
Timing of Compensation Decisions and Awards
The Board and the Committee establish meeting schedules annually, well in advance of each meeting. Except as noted below, incentive compensation awards were made at regularly scheduled meetings.
Following is a discussion of the timing of compensation decisions for 2009 at the Company:
In the past, the Committee typically made long-term incentive grants at its February meeting. In 2009, the Committee made long-term incentive grants in March due to Ameren Common Stock price volatility associated with Amerens dividend reduction and general economic conditions. The Committee has changed the timing of long-term incentive grants from February of the year the grants were made to December of the year prior to the year the grants are made for 2010 and future years for accounting reasons. Executive base salaries for 2010 remain at the same levels as in effect as of the end of 2009. The Committee expects to continue to establish base salaries at its December meeting each year, effective in January.
Impact of Prior Compensation
Amounts realizable from prior compensation did not serve to increase or decrease 2009 compensation amounts. The Committees primary focus was on achieving market-level compensation opportunities.
Considerations for Changes in Compensation Opportunities
Market data, retention needs, general economic conditions and internal pay equity have been the primary factors considered in decisions to increase or decrease compensation opportunities materially. Corporate and individual performance are the primary factors in determining the ultimate value of those compensation opportunities.
In June 2009, based on a study conducted in October 2008, the Committee performed a comprehensive examination of market information relating to executive benefits. Upon a review of market data relating to peer group companies available in Hewitts benefits database, the Committee determined that, while the basic compensation elements of base salary, short-term incentive opportunities and long-term incentive opportunities offered to Executives were at the appropriate level, the retirement benefits payable to Executives were below market. In an effort to more closely align the retirement benefits made available to the Executives to that of the size-adjusted median of peer group companies, the Committee identified certain aspects of retirement benefits that were appropriate for adjustment, including:
As a result, the Committee, in October 2009, made changes to the deferred compensation plan available to Executives, effective January 1, 2010. The Committee determined that, while the changes resulted in increases in retirement benefits payable to Executives, the total retirement benefits payable to Executives remain below market (See NONQUALIFIED DEFERRED COMPENSATION below).
Role of Executive Officers
For 2009, the Chief Executive Officer as of December 2008 (Mr. Rainwater) with the assistance of the former Senior Vice President and Chief Human Resources Officer (Ms. Donna Martin) recommended to the Committee compensation amounts for the other Executives. In February 2009, Mr. Rainwater, with the assistance of Ms. Martin, also recommended to the Committee downward adjustments to the base salary level payable to certain of the Executives, which changes became effective March 1, 2009. Mr. Rainwater was not involved in determining his own compensation. The Committee subsequently made compensation adjustments in connection with certain executive management changes for each of the applicable Executives, effective May 1, 2009, with the assistance of Messrs. Voss, Lyons, Sullivan and Ms. Martin. None of Messrs. Rainwater, Voss, Lyons or Baxter were involved in determining his own compensation adjustment relating to his new position beginning May 1, 2009. Mr. Rainwater, Mr. Sullivan and Ms. Martin assisted in changes approved by the Committee to the PSUP design for 2009. Messrs. Voss, Lyons and Sullivan had input to the changes approved by the Committee to the Ameren deferred compensation plan effective January 1, 2010.
Company Policy Regarding the Economic Risk of Company Securities Ownership
Our Section 16 Trading Reporting Program prohibits executive officers and directors from engaging in pledges of Company securities or short sales, margin accounts and hedging or derivative transactions with respect to Company securities.
Other Compensation Matters
We do not have any written or unwritten employment agreements with any of our Executives. Each Executive is an employee at the will of the Company.
The following table sets forth compensation information for our Executives for services rendered in all capacities to the Company and its subsidiaries in fiscal years 2009, 2008 and 2007, except that Mr. Lyons 2007 compensation information is not included as Mr. Lyons was not among the Executives included in the Summary Compensation Table of the Company or its subsidiaries in 2007. You should refer to the section entitled COMPENSATION DISCUSSION AND ANALYSIS above for an explanation of the elements used in setting the compensation for our Executives.
SUMMARY COMPENSATION TABLE
For assumptions and methodology regarding the determination of pension values, please refer to the footnotes under the Pension Benefits Table.
The amounts in column (i) reflect for each Executive matching contributions allocated by the Company to each Executive pursuant to the Companys 401(k) savings plan, which is available to all salaried employees, and the cost of insurance premiums paid by the Company with respect to term life insurance, which amount each Executive is responsible for paying income tax. In 2009, the Companys 401(k) matching contributions for each of Messrs. Voss, Lyons, Baxter, Naslund and Cisel were $11,025 and for Mr. Rainwater was $10,934. In 2009, the Companys costs of insurance premiums for Mr. Voss and Mr. Rainwater were $12,971 and $15,472, respectively.
The following table provides additional information with respect to stock-based awards granted in 2009, the value of which was provided in the Stock Awards column of the Summary Compensation Table with respect to 2009 grants, and the potential range of payouts associated with the 2009 EIP.
GRANTS OF PLAN-BASED AWARDS TABLE
See COMPENSATION DISCUSSION AND ANALYSIS for further information regarding the terms of awards reported in the Summary Compensation Table and the Grants of Plan-Based Awards Table and for discussions regarding officer stock ownership requirements, dividends paid on equity awards, and allocations between short-term and long-term compensation.
The following table provides information regarding the outstanding equity awards held by each of the Executives as of December 31, 2009.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
The following table provides the outstanding shares of Performance Restricted Stock and their potential vesting dates (at target performance).
The 2008 and 2009 PSU awards under the 2006 Omnibus Incentive Compensation Plan vest, subject to Ameren achieving the required performance threshold and continued employment of the Executive, as of December 31, 2010 and December 31,
2011 for all Executives, respectively. See COMPENSATION DISCUSSION AND ANALYSIS Long-Term Incentives: Performance Share Unit Program (PSUP).
The following table provides the amounts received upon exercise of options or similar instruments or the vesting of stock or similar instruments during the most recent fiscal year.
OPTION EXERCISES AND STOCK VESTED TABLE
The table below provides the actuarial present value of the Executives accumulated benefits under the Companys retirement plans and the number of years of service credited to each Executive under these plans.
PENSION BENEFITS TABLE
Ameren Retirement Plan
Retirement benefits for the Executives fall under one of two plan structures: (1) Benefits for Salaried Employees (the Cash Balance Account) or (2) Benefits for Management, Office, and Technical Employees of CILCO (CILCO Pension) (collectively, the Retirement Plan). The CILCO Pension structure remains in place for those management employees who joined Ameren as a result of the 2003 acquisition of CILCO. Among the Executives, only Mr. Cisel is in the CILCO Pension structure; all others accrue retirement benefits according to the Cash Balance Account structure.
Cash Balance Account. Most salaried employees of Ameren and its subsidiaries, including the Executives other than Mr. Cisel, earn benefits in the Cash Balance Account under the Ameren Retirement Plan immediately upon employment. Benefits become vested after three years of service.
On an annual basis a bookkeeping account in a participants name is credited with an amount equal to a percentage of the participants pensionable earnings for the year. Pensionable earnings include base salary and annual EIP compensation, which are equivalent to amounts shown in columns (c), (d) and (g) in the Summary Compensation Table.
The applicable percentage is based on the participants age as of December 31 of that year. If the participant was an employee prior to July 1, 1998, an additional transition credit percentage was credited to the participants account through 2007 (or an earlier date if the participant had less than 10 years of service on December 31, 1998).
These accounts also receive interest credits based on the average yield for one-year U.S. Treasury constant maturity for the previous October, plus one percent. The minimum interest credit is five percent.
In addition, certain annuity benefits earned by participants under prior plans as of December 31, 1997 were converted to additional credit balances under the Retirement Plan as of January 1, 1998.
Effective January 1, 2001, an enhancement account was added that provides a $500 additional credit at the end of each year.
The normal retirement age under the Cash Balance Account structure and the SRP is 65. Neither the Cash Balance Account structure nor the SRP contain provisions for crediting extra years of service or for early retirement. When a participant terminates employment (including as a result of retirement), the amount credited to the participants account is converted to an annuity or paid to the participant in a lump sum. The participant can also choose to defer distribution, in which case the account balance is credited with interest at the applicable rate until the future date of distribution.
CILCO Pension. Salaried employees that joined Ameren in conjunction with Amerens 2003 acquisition of CILCO continue to participate under the terms of the CILCO Pension. Participation begins after one year of service. Service for vesting and benefit purposes begins at the date of hire. Benefits generally become fully vested after five years of service.
The benefit formula is based on final average earnings and credited service. Final average earnings (FAE) is the highest consecutive 60-month average of pensionable earnings over the final 120 months of service. Pensionable earnings include base salary and annual EIP compensation, which are equivalent to amounts shown in columns (c), (d) and (g) in the Summary Compensation Table. The benefit formula is
1.425% x FAE x (Credited Service up to 35 years) PLUS
0.003% x FAE x (Credited Service in excess of 35 years) PLUS
CILCO cash balance benefit (with interest since 1998)
The CILCO cash balance benefit is a prior plan provision that was frozen in 1998. It is no longer actively in force, and it has no relationship whatsoever to the Cash Balance Account structure of the Retirement Plan described above. Those participants that had the CILCO cash balance benefit in 1998, including Mr. Cisel, continue to accrue interest on their balance, with interest payable each year based on the prior December average rate for 30-year U.S. Treasury bonds.
The normal retirement age under the CILCO Pension structure is 65. The CILCO Pension structure does not contain a provision for crediting extra years of service. The CILCO Pension structure also has an early retirement provision as early as age 55. Employees that retire at age 62 or after will receive an unreduced payment. Those that retire between 56 and 62 will have a payment reduction of 2 percent per year lower than age 62; an additional 3 percent reduction applies for retirement at age 55.
The normal form of payment is a single life annuity for single participants and 100 percent joint and survivor annuity for married participants. Generally, no lump sum option is available, unless the actuarial present value of the benefit is less than $12,000.
Ameren Supplemental Retirement Plan
In certain cases, pension benefits under the Retirement Plan are reduced to comply with maximum limitations imposed by the IRC. The SRP is maintained by Ameren to provide for a supplemental benefit equal to the difference between the benefit that would have been paid if such IRC limitations were not in effect and the reduced benefit payable as a result of such IRC limitations. Any Executive whose pension benefits under the Retirement Plan would exceed IRC limitations or who participates in the deferred compensation plans described below is eligible to participate in the SRP. The SRP is unfunded and is not a qualified plan under the IRC.
There is no offset under either the Retirement Plan or the SRP for Social Security benefits or other offset amounts.
The following table discloses contributions, earnings and balances under nonqualified deferred compensation plans for each Executive.
NONQUALIFIED DEFERRED COMPENSATION TABLE
We made changes to our nonqualified deferred compensation plans in response to changes in tax rules applicable to these type of plans.
Executive Deferred Compensation Plan Participation
Pursuant to an optional deferred compensation plan available to executive officers and certain key employees (the Ameren Deferred Compensation Plan) Executives may annually choose to defer up to 50 percent (in one percent increments) of their salary and up to 100 percent (in one percent increments or amounts in excess of a threshold) of cash incentive awards. There are no minimum dollar thresholds for deferrals. At the request of a participant, the Company may, in its discretion, waive the 50 percent limitation.
Amounts deferred with respect to plan years commencing prior to January 1, 2010 under the Ameren Deferred Compensation Plan earn interest at 150 percent of the Mergents Seasoned AAA Corporate Bond Yield Index rate (the Officers Deferred Plan Index Rate) while the participant is employed by the Company or one of its subsidiaries. After the participant terminates employment for any reason, the amounts deferred with respect to plan years commencing prior to January 1, 2010 under the Ameren Deferred Compensation Plan earn the average Mergents Seasoned AAA Corporate Bond Yield Index rate (the Officers Deferred Plan Base Rate). The plan compounds interest annually and the rate is calculated as of the first day of the plan year.
A participant may choose to receive the deferred amounts at retirement in a lump sum payment or in installments over a set period of up to 15 years. In the event a participant terminates employment with the Company and its subsidiaries prior to age 55, the balance in
such participants deferral account is distributable in a lump sum to the participant within 30 days of the date the participant terminates employment. In the event a participant terminates employment with the Company and its subsidiaries prior to age 55 and after the occurrence of a Change of Control (as defined below under OTHER POTENTIAL POST-EMPLOYMENT PAYMENTS Change of Control Protection In General Change of Control Severance Plan) the balance in such participants deferral account, including interest payable at the Officers Deferred Plan Index Rate (for amounts deferred with respect to plan years commencing prior to January 1, 2010), is distributable in a lump sum to the participant within 30 days of the date the participant terminates employment.
Deferred Compensation Plan For Plan Years Commencing On and After January 1, 2010
In October 2009, the Company adopted an amended and restated Ameren Deferred Compensation Plan effective January 1, 2010 (the Amended Ameren Deferred Compensation Plan), to change the interest crediting rates for deferrals made with respect to plan years commencing on and after January 1, 2010 and to add a 401(k) restoration benefit for eligible officers of Ameren whose total salary and short-term incentive award exceeds the limit on compensation in effect under the IRC. Pursuant to the Amended Ameren Deferred Compensation Plan, amounts deferred with respect to plan years commencing on and after January 1, 2010, other than the 401(k) Restoration Benefit (as defined below), earn interest in an amount equal to 120 percent of the AFR for December immediately preceding the year of the cash deferral and calculated as of the first day of each applicable plan year on or after January 1, 2010. Under the Amended Ameren Deferred Compensation Plan, the interest factor to be used on a participants deferral account upon the occurrence of a Change of Control as described above for amounts deferred with respect to plan years commencing on and after January 1, 2010 will also equal 120 percent of the AFR for the December immediately preceding such Change of Control. Amounts deferred with respect to plan years commencing prior to January 1, 2010 will continue to be credited interest at the Officers Deferred Plan Index Rate or the Officers Deferred Plan Base Rate, as the case may be.
The 401(k) Restoration Benefit allows eligible officers of Ameren, including the Executives, to also defer a percentage of salary and/or EIP awards in excess of the limit on compensation then in effect under the IRC (currently $245,000), in one percent increments, up to a maximum of six percent of total salary and EIP awards (this 401(k) restoration deferral, together with Amerens 401(k) matching credit described below are referred to collectively, as the 401(k) Restoration Benefit). Under the Amended Ameren Deferred Compensation Plan, Ameren credits each participating officers deferral account with a matching credit equal to 100 percent of the first three percent of salary and EIP awards and 50 percent of the remaining salary and EIP awards deferred by the participant, as a 401(k) restoration deferral. In general, eligible participants, including the Executives, may direct the deemed investment of the 401(k) Restoration Benefit in accordance with the investment options that are generally available under Amerens 401(k) savings plan, except for the Ameren stock fund.
A participants benefit will be comprised of separate bookkeeping accounts evidencing his or her interest in each of the investment funds in which contributions and applicable matching contributions have been deemed invested. While no actual contributions are made to the funds, earnings or losses are calculated using the valuation methodology employed by the record keeper for each of the corresponding funds. Participants may generally transfer investments among various investment alternatives on a daily basis, subject to the provisions of the Amended Ameren Deferred Compensation Plan.
Distributions from the Amended Ameren Deferred Compensation Plan will be paid in cash. Participants may also elect to receive distributions in a single lump sum or in substantially equal annual or monthly installments over a period of 5, 10 or 15 years.
The Company has no employment agreements with the Executives.
General Severance Plan
Ameren maintains a Severance Plan for Management Employees which provides for severance based on years of service and weeks of pay for all salaried full-time employees on the active payroll. The Executives are covered under this plan in the event of a qualified termination (defined under the plan) and are eligible for severance on the same basis as other full-time salaried employees.
Change of Control Protection
Change of Control Severance Plan. In 2008, Amerens Board of Directors adopted a Second Amended and Restated Change of Control Severance Plan, as amended (the Change of Control Plan). Other Company plans also carry change of control provisions.
Severance and PSUP provisions pursuant to a Change of Control (as defined below) were redesigned or designed by the Committee in 2006 and subsequent changes to the Change of Control Plan have been made in response to various changes in tax laws. The Change of Control Plan was amended in October 2009 to eliminate reimbursement and gross-up payments in connection with any excise taxes that may be imposed on benefits received by any officers who first become designated as entitled to receive benefits under the Change of Control Plan on or after October 1, 2009.
Under the Change of Control Plan, designated officers of Ameren and its subsidiaries, including the Executives, are entitled to receive severance benefits if their employment is terminated without Cause (as defined below) or by the Executive for Good Reason (as defined below) within two years after a Change of Control.
Definitions of Change of Control, Cause and Good Reason
A change of control (Change of Control) occurs under the Change of Control Plan, in general, upon:
(i) the acquisition of 20 percent or more of the outstanding Common Stock of Ameren or of the combined voting power of the outstanding voting securities of Ameren;
(ii) a majority change in composition of the board of directors;
(iii) a reorganization, merger or consolidation, sale or other disposition of all or substantially all of the assets of Ameren, unless current shareholders continue to own 60 percent or more of the surviving entity immediately following the transaction; or
(iv) approval by Ameren shareholders of a complete liquidation or dissolution of Ameren.
Cause is defined as follows:
(i) the participants willful failure to substantially perform his or her duties with Ameren (other than any such failure resulting from the participants disability), after notice and opportunity to remedy;
(ii) gross negligence in the performance of the participants duties which results in material financial harm to Ameren;
(iii) the participants conviction of, or plea of guilty or nolo contendere to, any felony or any other crime involving the personal enrichment of the participant at the expense of Ameren or shareholders of Ameren; or
(iv) the participants willful engagement in conduct that is demonstrably and materially injurious to Ameren, monetarily or otherwise.
Good Reason is defined as follows:
(i) a net reduction of the participants authorities, duties, or responsibilities as an executive and/or officer of Ameren;
(ii) required relocation of more than 50 miles;
(iii) any material reduction of the participants base salary or target bonus opportunity;
(iv) reduction in grant-date value of long-term incentive opportunity;
(v) failure to provide the same aggregate value of employee benefit or retirement plans in effect prior to a Change of Control;
(vi) failure of a successor to assume the Change of Control Plan agreements; or
(vii) a material breach of the Change of Control Plan.
If an Executives employment is terminated without Cause or by the Executive for Good Reason, the Executive will receive a cash lump sum equal to the following:
(i) salary and unpaid vacation pay through the date of termination;
(ii) pro rata EIP compensation for the year of termination;
(iii) three years worth of each of base salary, target EIP compensation, additional pension credit and employee welfare benefits;
(iv) up to $30,000 for the cost of outplacement services (not available for a Good Reason termination); and
(v) reimbursement and gross-up for any excise tax imposed on benefits received by the Executive from Ameren, assuming such payments (as defined by the IRS) are at least 110 percent of the imposed cap under the IRC; provided that officers who first become designated as entitled to receive benefits under the Change of Control Plan on or after October 1, 2009, are not eligible to receive reimbursement and gross-up for any such excise tax.
Following are details of how the above items are calculated.
Ability to Amend or Terminate Change of Control Plan
The Board may amend or terminate the Change of Control Plan at any time, including designating any other event as a Change of Control, provided that the Change of Control Plan may not be amended or terminated (i) following a Change of Control, (ii) at the request of a third party who has taken steps reasonably calculated to effect a Change of Control or (iii) otherwise in connection with or in anticipation of a Change of Control in any manner that could adversely affect the rights of any officer covered by the Change of Control Plan.
Change of Control Provisions Relating to PSU Awards and Performance Restricted Stock Awards
Below is a summary of protections provided upon a Change of Control with respect to the PSU awards under the 2006 Omnibus Incentive Compensation Plan and Performance Restricted Stock under the Long-Term Incentive Plan of 1998. In brief, the goal of these protections is to avoid acceleration of PSU vesting and payment in situations where a Change of Control occurs but the Company continues to exist and the Executive retains his or her position. In the table below, the term qualifying termination means the participant is involuntarily terminated other than for Cause or has a voluntary termination for Good Reason before the second anniversary of the date of the Change of Control. Other definitions of capitalized terms may be found in the Change of Control Plan.
Termination of PSU Awards and Performance Restricted Stock Awards Other Than for Change of Control
The following table summarizes the impact of certain employment events that may result in the payment of unvested PSU and unvested Performance Restricted Stock awards.
Estimated Potential Post-Employment Payments
The tables below reflect the payments and benefits payable to each of the Executives in the event of a termination of the Executives employment under several different circumstances. The amounts shown assume that termination was effective as of December 31, 2009, at the Executives compensation and service levels as of that date, and are estimates of the amounts that would be payable to the Executive in each scenario. Excise tax and gross-up payments are estimated using a stock price of $27.95 per share (the closing price of Amerens Common Stock on the NYSE on December 31, 2009, the last business day of 2009). In addition, the amounts shown do not include benefits paid by insurance providers under life and disability policies or payments and benefits provided on a non-discriminatory basis to employees upon a termination of employment. The actual amounts to be paid out can only be determined at the time of the Executives actual separation from the Company. Factors that could affect the nature and amount of the payments on termination of employment, among others, include the timing of event, compensation level, the market price of our Common Stock and the Executives age.