Alimentation Couche-Tard is paying each of its "independent" nominees to the board of takeover target Casey's General Stores more than US$20,000, the Canadian convenience store chain said in a preliminary proxy filed with U.S. regulators.

The nine candidates will get the one-time payment and "all reasonable expenses" for agreeing to serve as a nominee for the board of Casey's, which has rebuffed Couche-Tard's US$1.9 billion bid launched three months ago.

If elected, they would also be eligible to receive other benefits from Casey's, including an annual retainer of $40,000 and a meeting fee of $1,000 for each shareholder and committee meeting attended.

Couche-Tard declined to comment about the payments.

But they may be a bargain compared to other takeover bids.

For example, Airproducts is paying each of its board nominees US$100,000 as part of a shareholder battle to take over Airgas Inc. (NYSE:ARG), according to a separate S.E.C. filing.

Board candidates are deemed independent according to securities law because they are not officers or employees of Casey's, an Iowa-based convenience store operator. Outside board members are supposed to bring unbiased opinions about the company's decisions.

But in this case, they would be elected by Casey's shareholders to pave the way for a negotiated sale to Couche-Tard, which so far has been thwarted by the existing board.

Couche-Tard said the nominees understand that they have an obligation under Iowa law to discharge their responsibilities as directors in good faith and consistent with their fiduciary duties to Casey's and its shareholders.

"The only commitment Couche-Tard and the purchaser have sought from the nominees is that they will act in the best interest of Casey's and its shareholders and exercise their independent judgment," said the proxy.

But it adds that a vote for the nominees lets Casey's and the nominees know that you want to have the opportunity to accept the offer.

"We believe that you deserve a board of directors that is answerable to you and that will act in your best interests. By voting for the nominees, you can demonstrate to the nominees and Casey's your support for the offer and proposed merger," shareholders are told.

The election will take place at Casey's annual meeting, expected to be held in late September or early October.

Couche-Tard has set a deadline of Aug. 6 for Casey's shareholders to tender to its $1.9 billion offer to take over the 1,500-store chain.

On Thursday, the Montreal-area company slightly increased its hostile takeover bid to US$36.75 cash per Casey's share. That's up 75 cents per share — an improvement of about two per cent over Couche-Tard's initial bid this spring.

The offer is subject to a number of conditions, including the removal of roadblocks that Casey's put in place to hamper Couche-Tard's takeover efforts.

Casey's is expected to reject the offer but has urged its shareholders to hold off on tendering their stock until it makes a recommendation in "due course."

Meanwhile, Moody's Investors Service said Friday that it is continuing to review Couche-Tard's Ba1 senior subordinate rating for a possible downgrade following changes to its Casey's offer.

Moody's said it will focus on the company's plans to finance the transaction, which is a condition of the offer, including an assessment of the impact on its balance sheet, liquidity profile and plans for future debt reduction.

Couche-Tard operates such well-known convenience store brands as Circle K in the United States and Mac's, Beckers and Couche-Tard in Canada.

Casey's shares gained 17 cents at US$36.38 in trading on the Nasdaq market. On the Toronto Stock Exchange, Couche-Tard's shares closed at C$22.19, up $1.73 or 3.4 per cent.