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SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT, OFFICIAL TEXT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
OGE ENERGY CORP.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee Computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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OGE ENERGY CORP.
PROXY STATEMENT
AND
NOTICE OF ANNUAL MEETING
========================
MAY 21, 1998
OGE ENERGY CORP.
[LOGO]
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CONTENTS
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Page
NOTICE OF ANNUAL MEETING
Chairman's Letter 1 OF SHAREOWNERS
AND PROXY STATEMENT
Notice of Annual Meeting 2
THURSDAY, MAY 21, 1998, AT 10:00 A.M.
Proxy Statement 3
OKLAHOMA CITY MARRIOTT HOTEL
Proposal No. 1 - Election of Directors 4 3233 NORTHWEST EXPRESSWAY
Information about Directors 4 OKLAHOMA CITY, OKLAHOMA
and Nominees
Information Concerning the 7
Board of Directors
Executive Officers' Remuneration 8
Report of Compensation 8
Committee on Executive
Compensation
Summary Compensation 11
Table
Pension Plan Table 12
Change of Control Arrangements 13
Company Stock Performance 13
Security Ownership 14
Section 16(a) Beneficial 14
Ownership Reporting Compliance
Proposal No. 2 - Approval of OGE Energy 15
Corp. Stock Incentive Plan
Proposal No. 3 - Approval of OGE Energy 19
Corp. Annual Incentive Compensation
Plan
Relationship with Independent 21
Public Accountants
Shareowner Proposals 21
Map 22
Annex A - Stock Incentive Plan A-1
Annex B - Annual Incentive B-1
Compensation Plan
i
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OGE ENERGY CORP.
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March 27, 1998
DEAR SHAREOWNER:
You are cordially invited to attend the annual meeting of OGE Energy Corp.
at 10:00 a.m. on Thursday, May 21, 1998, at the Oklahoma City Marriott Hotel,
3233 Northwest Expressway, Oklahoma City, Oklahoma.
In addition to the election of three directors, all shareowners will be
asked to consider and vote on the adoption of a new Stock Incentive Plan and a
new Annual Incentive Compensation Plan. As described more fully in the attached
Proxy Statement, these new Plans are intended primarily to enable the Company to
attract, retain and motivate officers and other key employees of the Company and
provide incentives directly linked to increases in shareowner value. The Plans
are also intended to comply with the provisions of Section 162(m) of the
Internal Revenue Code regarding deductibility of executive compensation.
Even though you may own only a few shares, your proxy is important in
making up the total number of shares necessary to hold the meeting. Whether or
not you plan to attend the meeting, please fill out, sign and return your proxy
card in the envelope provided as soon as possible. Your cooperation will be
appreciated.
Those arriving before the meeting will have the opportunity to visit
informally with the management of your Company. In addition to the business
portion of the meeting, there will be reports on the Company's current
operations and outlook.
Your continued interest in the Company is most encouraging and, on behalf
of the Board of Directors and employees of the Company, I want to express our
gratitude for your confidence and support.
Very truly yours,
/s/ Steven E. Moore
Steven E. Moore
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING
OF SHAREOWNERS
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The Annual Meeting of Shareowners of OGE Energy Corp. will be held on
Thursday, May 21, 1998, at 10:00 a.m. at the Oklahoma City Marriott Hotel, 3233
Northwest Expressway, Oklahoma City, Oklahoma, for the following purposes:
(1) To elect three directors to serve for a three-year term;
(2) To approve the OGE Energy Corp. Stock Incentive Plan;
(3) To approve the OGE Energy Corp. Annual Incentive Compensation Plan;
and
(4) To transact such other business as may properly come before the
meeting.
The map on page 22 will assist you in locating the Oklahoma City Marriott Hotel.
The Board of Directors has fixed the close of business on March 23, 1998,
as the record date for the determination of shareowners entitled to notice of
and to vote at this meeting or any adjournment of the meeting. A list of such
shareowners will be available, as required by law, at the principal offices of
the Company at 321 N. Harvey, Oklahoma City, Oklahoma 73102.
/s/ Irma B. Elliott
Irma B. Elliott
Vice President and Secretary
Dated: March 27, 1998
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IMPORTANT -- YOUR PROXY CARD IS ENCLOSED IN THIS ENVELOPE
To assure your representation at the meeting, please sign, date and return
the proxy promptly in the enclosed envelope. No postage is required for mailing
in the United States. If your shares are held in the name of a broker, trust,
bank or other nominee and you plan to attend the meeting and vote your shares in
person, you should bring with you a proxy or letter from the broker, trustee,
bank or nominee confirming your beneficial ownership of the shares.
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PROXY STATEMENT
March 27, 1998
The Annual Meeting of Shareowners of OGE Energy Corp. (the "Company") will
be held at the Oklahoma City Marriott Hotel, 3233 Northwest Expressway, Oklahoma
City, Oklahoma, on May 21, 1998, at 10:00 a.m. For the convenience of those
shareowners who may attend the meeting, a map is printed on page 22 that gives
directions to the Oklahoma City Marriott Hotel. At the meeting, it is intended
that the first three items in the accompanying notice will be presented for
action by the owners of the Company's Common Stock. The Board of Directors does
not now know of any other matters to be presented at the meeting, but, if any
other matters are properly presented to the meeting for action, the persons
named in the accompanying proxy will vote upon them in accordance with their
best judgment.
The Board of Directors solicits your proxy for use at this meeting. You may
revoke your proxy at any time before it is exercised by giving written notice of
its revocation to the Secretary of the Company or filing with her another proxy
as provided by law. All proxies properly executed by shareowners and received by
the Company prior to the meeting will be voted and will be voted in accordance
with the directions made on the proxy and, if no directions are made, the proxy
will be voted in favor of election of the Board's nominees for directors and in
favor of the proposals to approve the OGE Energy Corp. Stock Incentive Plan and
the OGE Energy Corp. Annual Incentive Compensation Plan. The cost of soliciting
proxies will be borne by the Company. In addition to the use of the mails,
proxies may be solicited personally or by telephone or telegram by officers and
regular employees of the Company or its subsidiaries. Morrow & Co. Inc., New
York, New York, will assist in solicitation of proxies and the Company will pay
Morrow & Co. Inc. for its proxy solicitation services approximately $7,000 plus
expenses. The Company does not expect to pay any additional compensation for the
solicitation of proxies; however, brokers and other custodians, nominees, or
fiduciaries may be reimbursed for their expenses in forwarding proxy material to
principals and obtaining their proxies.
On March 1, 1998, the Company had outstanding approximately 40,385,198
shares of Common Stock, par value $.01 per share. The Company does not have any
other outstanding class of stock.
The owners of the Company's Common Stock are entitled to one vote on each
matter presented for a vote at the meeting.
The Company's 1997 Annual Report to its shareowners, including financial
statements for the year 1997, was sent on or about March 27, 1998, to all
shareowners of the Company of record on March 23, 1998.
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PROPOSAL NO. 1 - ELECTION OF DIRECTORS
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The Board of Directors of the Company presently consists of nine members.
The directors are classified into three groups. One class of directors is
elected at each year's Annual Meeting for a three-year term and to continue in
office until their successors are elected and qualified. The following three
persons are the nominees of the Board to be elected for such three-year term at
the Annual Meeting to be held on May 21, 1998: Messrs. Luke R. Corbett, Robert
Kelley and Bill Swisher. Each of these individuals is currently a director of
the Company whose term as a director is scheduled to expire at the Annual
Meeting.
The enclosed proxy, unless otherwise specified, will be voted in favor of
the election as directors of the previously listed three nominees. The Board of
Directors does not know of any nominee who will be unable to serve, but if any
of them should be unable to serve, the proxy holder may vote for a substitute
nominee. No nominee or director owns more than 0.07% of any class of voting
securities of the Company.
For the nominees described herein to be elected as directors, they must
receive a majority of the votes of shares of Common Stock present in person or
by proxy and entitled to vote. Withholding authority is treated as a vote
against.
Each director of the Company is also a director of the Company's principal
subsidiary, Oklahoma Gas and Electric Company ("OG&E"). The Company became the
parent company of OG&E pursuant to a corporate reorganization, effective
December 31, 1996.
INFORMATION ABOUT DIRECTORS AND NOMINEES
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The following contains certain information as of March 1, 1998, concerning
the three nominees for directors, as well as the directors whose terms of office
do not expire at the Annual Meeting on May 21, 1998.
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NOMINEES FOR ELECTION FOR TERM EXPIRING AT 2001 ANNUAL MEETING OF SHAREOWNERS
LUKE R. CORBETT, 51, is Chairman and Chief Executive Officer
of Kerr-McGee Corporation. He has been employed by Kerr-McGee
Corporation for more than 13 years, having served as President
and Chief Operating Officer from 1995 to 1997; Group Vice
President from 1992 to 1995; and Senior Vice President from 1991 [Photo]
to 1992. Mr. Corbett also serves as a member of the Board of
Directors of Devon Energy Corporation. Mr. Corbett has been a
director of the Company since December 31, 1996, and of OG&E
since December 1, 1996 and is a member of the audit committee of
the Board.
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ROBERT KELLEY, 52, is Chairman, President and Chief
Executive Officer of Noble Affiliates, Inc., an independent
energy company with exploration and production operations in the
United States and international operations in China, Equador,
Equatorial Guinea and the U.K. sector of the North Sea. He also
serves as President and Chief Executive Officer of Samedan Oil
Corporation and Chairman and Chief Executive Officer of Noble Gas [Photo]
Marketing Inc., both wholly-owned subsidiaries of Noble
Affiliates, Inc. Mr. Kelley has been a director of the Company
since December 31, 1996 and of OG&E since January 17, 1996, and
is a member of the audit and compensation committees of the
Board. Mr. Kelley also serves as a director of Exchange National
Bank and Trust Company of Ardmore, Oklahoma and of AmQuest
Financial Corporation.
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4
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BILL SWISHER, 67, is Chairman of the Board and Chief
Executive Officer of CMI Corporation, a manufacturer of road
construction equipment that is located in Oklahoma City, [Photo]
Oklahoma. Mr. Swisher has been a director of the Company since
December 31, 1996 and of OG&E since 1979, and is chairman of the
compensation committee and a member of the audit committee of the
Board.
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DIRECTORS WHOSE TERMS EXPIRE AT 2000 ANNUAL MEETING OF SHAREOWNERS
WILLIAM E. DURRETT, 67, is Senior Chairman of the Board,
American Fidelity Corporation, an insurance holding company, and
numerous other subsidiaries of American Fidelity Corporation. He
serves as Senior Chairman of the Board and director of American
Fidelity Assurance Company, an insurance company wholly-owned by [Photo]
American Fidelity Corporation. He also serves as a director of
BOK Financial Corporation and INTEGRIS Health. Mr. Durrett has
been a director of the Company since December 31, 1996, and of
OG&E since March 1991, and is a member of the audit and
compensation committees of the Board.
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H. L. Hembree, III, 66, is Managing Partner of Sugar Hill
Partners, a family partnership engaged in trucking, tire
remanufacturing, agriculture and oil and gas exploration, located
in Fort Smith, Arkansas. Prior to l998, he was Chairman of the [Photo]
Executive Committee of Merchants National Bank, Fort Smith,
Arkansas. He has been a director of the Company since December
31, 1996, and of OG&E since 1985, and is a member of the
compensation committee of the Board.
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STEVEN E. MOORE, 51, is Chairman, President and Chief
Executive Officer of the Company and of OG&E, having been
appointed to such positions with the Company effective December
31, 1996 and as President of OG&E in August 1995, and as Chief
Executive Officer and Chairman of OG&E in May 1996. Mr. Moore has
been employed by OG&E for more than 23 years, having previously [Photo]
served as Senior Vice President of Law and Public Affairs. He
also serves as a director of BOK Financial Corporation and has
served on many industry-wide committees in the electric utility
industry. Mr. Moore has been a director of the Company since 1996
and of OG&E since October 1995.
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5
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DIRECTORS WHOSE TERMS EXPIRE AT 1999 ANNUAL MEETING OF SHAREOWNERS
HERBERT H. CHAMPLIN, 60, is President of Champlin
Exploration, Inc., an independent oil producer, and President of
Enid Data Systems, computer marketers, both located in Enid,
Oklahoma. Mr. Champlin has been a director of the Company since
December 31, 1996 and of OG&E since 1982, and is chairman of the [Photo]
audit committee and a member of the nominating committee of the
Board. Mr. Champlin also was engaged separately during 1997 as a
part of his principal business occupation in the petroleum
industry and had interests in oil and gas wells.
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MARTHA W. GRIFFIN, 63, owner of Martha Griffin White
Enterprises, is presently engaged in the management of her
personal investments, the operation of a ranch and various civic
activities. Prior to September 30, 1994, she served as Chairman
of the Board of Griffin Television, Inc., located in Oklahoma
City, Oklahoma, and Chairman of the Board of Griffin Food Company
(a subsidiary of Griffin Television, Inc.). Mrs. Griffin has been
a director of the Company since December 31, 1996 and of OG&E
since 1987, and is chairman of the nominating committee and a [Photo]
member of the audit committee of the Board. During 1997, Mrs.
Griffin was also a major stockholder of television station KWTV,
Channel 9, Oklahoma City, Oklahoma. During 1997, OG&E paid an
aggregate of approximately $126,272 to KWTV for showing
television commercials of OG&E. This television time was
purchased by contract with the station, and the rate paid was no
less favorable to OG&E than the rate that would have been paid to
similar stations in the Oklahoma City area.
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RONALD H. WHITE, M.D., 61, is a practicing cardiologist and
is President and Chief Executive Officer of Cardiology, Inc. in
Oklahoma City. He serves as a member of the Board of Directors of
INTEGRIS Baptist Medical Center of Oklahoma City, and was a [Photo]
member of the Board of Regents of the University of Oklahoma for
14 years. Dr. White has been a director of the Company since
December 31, 1996 and of OG&E since 1989, and is a member of the
nominating committee of the Board.
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6
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INFORMATION CONCERNING THE BOARD OF DIRECTORS
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Each member of the Board of Directors of the Company is also a director of
OG&E. The Board of Directors of the Company met on seven occasions during 1997
and the Board of Directors of OG&E met on six occasions during 1997. Each
director attended 100% of the total number of meetings of the Boards of
Directors and the committees of the Boards on which he or she served, with the
exception of Mr. Hembree, who attended approximately 73% of such total number of
meetings.
COMMITTEES. The committees of the Company's Board of Directors include a
compensation committee, an audit committee and a nominating committee. The
Directors who are members of the various committees of the Company serve in the
same capacity for purposes of the OG&E Board. Members of the compensation
committee are Bill Swisher, chairman, and Messrs. Durrett, Kelley and Hembree.
During 1997, the committee met on four occasions to review and make
recommendations to the Company's Board of Directors with respect to compensation
of principal officers, salary policy for the period, benefit programs for
employees, compensation for outside directors for service on the Board and the
Board committees, and future objectives and goals of the Company.
Members of the audit committee are Herbert H. Champlin, chairman, Mrs.
Griffin and Messrs. Corbett, Durrett, Kelley, and Swisher. During 1997, the
committee met on two occasions to review and make recommendations to the Board
of Directors with respect to internal audit procedures, engagement of
independent public accountants, their review with the independent accountants of
the results of the auditing engagement, and matters having a material effect
upon financial operations.
Members of the nominating committee are Martha W. Griffin, chairman, Mr.
Champlin and Dr. White. During 1997, the committee met on two occasions to
review and make recommendations to the Board of Directors with respect to
nominees for election as directors. Similarly, recommendations were made
concerning membership of the audit, compensation and nominating committees and
rotation of committee assignments among directors. It is expected that the
nominating committee will consider nominees recommended by shareowners in
accordance with the Company's By-laws. The Company's By-laws provide that a
shareowner intending to nominate director candidates for election at an Annual
Meeting of Shareowners must deliver written notice thereof to the Secretary of
the Company not later than 90 days in advance of the meeting. The notice must
set forth certain information concerning such shareowner and the nominee(s),
including each nominee's name and address, a representation that the shareowner
is entitled to vote at such meeting and intends to appear in person or by proxy
at the meeting to nominate the person or persons specified in the notice, a
description of all arrangements or understandings between the shareowner and
each nominee and any other person pursuant to which the nomination or
nominations are to be made by the shareowner, such other information as would be
required to be included in a proxy statement soliciting proxies for the election
of the nominee(s) of such shareowner and the consent of each nominee to serve as
a director of the Company if so elected. The chairman of the Annual Meeting may
refuse to acknowledge the nomination of any person not made in compliance with
the foregoing procedure.
DIRECTOR COMPENSATION. Compensation of non-officer directors of the Company
during 1997 consisted of an annual retainer fee of $31,500, of which $2,000 was
payable monthly in cash (the same amount that has been paid monthly since August
1994) and $7,500 was deposited in the director's Stock Account under the
Directors' Deferred Compensation Plan and converted to 147.420 common stock
units based on the closing price of the Company's Common Stock on November 28,
1997. In addition, all non-officer directors received $1,000 for each Board
meeting and $1,000 for each committee meeting attended. The foregoing amounts
represent the aggregate fees paid to directors in their capacities as directors
of the Company and OG&E.
Under the Directors' Deferred Compensation Plan, non-officer directors also
may defer payment of all or part of their attendance fees and the cash portion
f their annual retainer fee, which deferred amounts are, at the election of the
director, credited to a Dollar Account or a Stock Account or a combination of
both, on the date the deferred amounts otherwise would have been paid.
Amounts credited to the Dollar Account accrue interest approximately equal
to the commercial paper rate for established companies. Amounts credited to the
Stock Account are converted into common stock units equal in number to the
number of shares of the Company's Common Stock which the amounts would purchase
based on the fair market value of the Company's Common Stock on the date the
amounts would otherwise be paid. The Stock Account is credited on each dividend
payment date for the Company's Common Stock with additional common stock units
by dividing the aggregate cash dividend which would have been paid if existing
common stock units were actual shares of the Company's Common Stock by the fair
market value of the Company's Common Stock as of the dividend payment date.
When an individual ceases to be a director of the Company, all amounts
credited under the Plan are paid
7
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in cash in a lump sum or installments, with the value of common stock units
based on the fair market value of the Company's Common Stock at the time of
payment. In addition, amounts that are credited to the Stock Account are
automatically transferred to a Dollar Account upon the occurrence of certain
mergers and related transactions in which the Company is not the survivor. As an
alternative to the foregoing investment options, the Plan permits a non-officer
director to have all or any deferred portion of the attendance fees and the cash
portion of the annual retainer fee applied to purchase life insurance for the
director.
Historically, for those directors who retired from the Board of Directors
after 10 years or more of service, the Company and OG&E continued to pay their
annual cash retainer until their death. In November 1997, the Board eliminated
this retirement policy for directors. Directors who retired prior to November
1997, however, will continue to receive benefits under the former policy. In
payment for benefits accrued under the former policy, each current director
received a payment equal to the present value of the benefit that the director
would have received had he or she retired from the Board at age 70 under the
former policy and the annual cash retainer had remained at $24,000. The payments
were made in the form of common stock units under the Directors' Deferred
Compensation Plan, based on the closing price of the Company's Common Stock on
November 28, 1997. The number of common stock units awarded to each director
was: Mr. Corbett, 698 units; Mr. Champlin, 1,538 units; Mr. Durrett, 2,768
units; Mrs. Griffin, 2,344 units; Mr. Hembree, 2,482 units; Mr. Kelley, 796
units; Mr. Swisher, 2,790 units; and Dr. White, 1,570 units.
EXECUTIVE OFFICERS' REMUNERATION
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The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee"). Set forth below is the Committee's report on compensation paid to
executive officers during 1997.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
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GENERAL. The primary goals of the Committee in setting executive
compensation in 1997 were: (i) to provide a total compensation package that
would enable the Company to attract and retain key executives and (ii) to align
the executives' interests with those of shareowners and with performance by the
Company and its subsidiaries.
Compensation of the Company's executive officers in 1997 was comprised
primarily of salary, awards under the Annual Incentive Compensation Plan, awards
under the Restricted Stock Plan, and benefits under the Employees' Retirement
Savings Plan and pension plan. Virtually all employees, including executive
officers, are eligible to participate in the Retirement Savings Plan and pension
plan. Both the Retirement Savings Plan and pension plan have a supplemental
restoration plan that enables executive officers to receive the same benefits
that they would have received in the absence of limitations imposed by the
federal tax laws on contributions or payouts. In addition, a Supplemental
Executive Retirement Plan (the "SERP"), which was adopted in 1993, offers
attractive pension benefits to lateral hires. The SERP is not expected to
benefit present executive officers generally who remain employed by the Company
or OG&E until age 65. In reviewing the benefits under the SERP, Retirement
Savings Plan, pension plan and related restoration plans, the Committee sought
in 1997 to provide participants with benefits at least commensurate with those
offered by other utilities of comparable size. The restoration plans for the
Retirement Savings Plan and pension plan contain provisions requiring their
immediate funding in the event of certain mergers, consolidations or tender
offers involving the Company.
In recent years, the Committee has significantly altered the structure of the
executive compensation system and the composition of the individual compensation
packages, shifting from a compensation system based in large part on individual
performance and continued employment to a compensation system that places a
significant portion of compensation at risk dependent on the performance of the
Company and its subsidiaries. Also, in an effort to ensure the continued
competitiveness of the Company's executive compensation policies, the Committee
in 1997 changed the peer groups considered in setting compensation. Base salary
continued to be set at approximately the average of the compensation paid to
similar executives within the approximately 120 electric utilities included in
the Edison Electric Institute Survey1 (the "Base Salary Survey Group"). Yet, in
making long-term and annual incentive compensation awards, the Committee sought
to set such awards at approximately the 25th percentile of the awards made to
similar executives in the Towers Perrin General Industry Compensation Data
Bases1 (the "Incentive Compensation Survey Group"). This change caused the
Company's executive officers in 1997 to receive a greater portion of their total
compensation in incentive-based awards than they had in prior years.
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1 The companies in the Base Salary Survey Group are not the same as the
utilities in the Dow Jones Electric Utilities Index utilized in the Stock
Performance Graph on page 13. The Base Salary Survey Group and Incentive
Compensation Survey Groups were selected by Towers Perrin and, in the
judgment of the Committee, are appropriate peer groups to use for
compensation purposes.
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In 1993, a Federal tax law was passed which limits the deductibility of
executive compensation in excess of $1,000,000 unless certain exceptions are
met. This law did not impact the Company with respect to executive compensation
paid in 1997. The Committee has continued to analyze the structure of its salary
and various compensation programs in light of this law. The Committee's present
intent is to take appropriate steps to ensure the continued deductibility of its
executive compensation. For this reason and the reasons discussed in Proposal
No. 2 and Proposal No. 3 herein, the Committee determined that the Company
should modify its long-term and short-term incentive plans beginning in 1998 so
that certain compensation payable thereunder would qualify for the "performance
based compensation" exception to the $1,000,000 deduction limit, thereby
ensuring that such compensation will continue to be deductible by the Company.
BASE SALARY. The base salaries for the Company's executive officers in 1997
were designed to be competitive with the Base Salary Survey Group and generally
approximated the salary at the 50th percentile of the range for comparable
executives employed by companies in the Base Salary Survey Group. Actual base
salaries were determined based on individual performance and experience. The
salaries of executive officers for 1997 were determined in January 1997, with an
effective date of March 1, 1997 and were subject to adjustment during the year
if an individual's duties and responsibilities were changed.
ANNUAL INCENTIVE COMPENSATION PLAN. The current Annual Incentive
Compensation Plan was adopted in late 1992. The Plan was designed to provide key
management personnel with annual incentive awards, the payment of which is tied
to the achievement of specified Company objectives relating to profitability.
Awards with respect to 1997 performance were made under the Plan to 48
employees, including all executive officers, and specified corporate and
individual performance goals were established in January 1997. Payouts of the
awards were in cash and were dependent primarily on the achievement of such
specified performance goals. In 1997, the corporate goals were based 50% on
earnings per share, as compared to earnings goals set by the Committee, and 50%
on operating and maintenance expense per kilowatt-hour, as compared to
approximately 25 electric utilities. The amount of the award for each executive
officer was expressed as a percentage of base salary (the "targeted amount"),
with the officer having the ability, depending upon achievement of corporate
goals, to receive from 0% to 150% of such targeted amounts. For 1997, the
targeted amounts ranged from 20% to 40% of base salary and approximated the 25th
percentile of the level of such awards granted to comparable executives employed
by companies in the Incentive Compensation Survey Group.
The percentage of the targeted amount that an officer ultimately received
was subject to being increased or decreased by up to 20% at the discretion of
the Committee, depending on the individual's achievement of pre-established
personal goals approved by the Committee. In no event, however, were any payouts
made unless the specified minimum corporate performance goals were satisfied.
For 1997, the Company's earnings per share ($3.23) and the operating and
maintenance expenses both exceeded the target levels. Corporate performance in
1997 and performance by executive officers of their pre-established personal
goals resulted in payouts ranging from 140% to 145% of their target amounts and
from 28% to 58% of their base salaries.
RESTRICTED STOCK AWARDS. Another significant component of executive
compensation in 1997 was awards under the Company's Restricted Stock Plan, which
historically has been the only long-term compensation awarded to the Company's
executive officers. In the future, it is anticipated that stock options under
the proposed Stock Incentive Plan will represent a significant component of
long-term compensation.
The Restricted Stock Plan empowers the Committee to make contingent awards
of Common Stock ("Restricted Stock") to key employees. Each share of Restricted
Stock is subject to a Restricted Period of three or four years during which the
share is subject to forfeiture if the recipient of the share ceases to render
substantial services to the Company or a subsidiary for any reason (other than
death, disability or normal retirement) and during which the share may not be
transferred. The Committee has the power in the event of certain mergers,
consolidations or tender offers involving the Company to lapse all restrictions
on shares of Restricted Stock.
Awards under the Restricted Stock Plan were made at the end of 1997 and
were based, as required by the Plan, on the individual's performance during
1997. In evaluating an individual's performance, the Committee considered
individual job performance, experience and individual characteristics such as
leadership and dedication, with no particular weight given to one factor over
another. The Committee also considered the long-term incentives awarded to
similar executives by corporations in approximately the 25th percentile of the
Incentive Compensation Survey Group (the "long-term targeted amount"). In
anticipation of the adoption in 1998 of the Stock Incentive Plan (a copy of
which is attached as Annex A) and the award in early 1998 of stock options as a
significant part of the executives' 1998 long-term compensation, the Committee
awarded Restricted Stock to executive officers in late 1997 having a value
(based on the fair market value of the Company's Common Stock on the date of the
award) of approximately 33 1/3% to 50% of such executive officers' long-term
9
<PAGE>
targeted amount. As a result, awards of Restricted Stock ranged from 10% to 20%
of an executive's anticipated 1998 base salary.
As in prior years, each share of Restricted Stock awarded in 1997 is
subject to forfeiture during a Restricted Period. Moreover, as in prior years,
the shares awarded in 1997 to all the executive officers contained a significant
additional condition. Such officers generally will be entitled at the end of the
Restricted Period of three years to keep the full amount of the shares awarded
to them only if the Company during such period meets or exceeds a specific
return on equity target as compared to the return on average equity for the
approximately 90 electric and combination utility companies (including utility
holding companies) shown in the Merrill Lynch & Co., Inc. Data Sheet-Electric
and Combination Utility Companies (the "Merrill Lynch Index") with the officer
receiving fewer shares and possibly no shares depending on the Company's
performance relative to the performance of the companies in the Merrill Lynch
Index. The Committee's rationale for this additional condition was to continue
to reward past service and to align the officers' interests with those of
shareowners and, at the same time, to tie the Restricted Stock awards directly
to long-term corporate performance. The amount of shares awarded in 1997 that an
officer will ultimately receive will not be determined until the end of 2000.
Prior awards of Restricted Stock were not considered by the Committee in making
awards in 1997.
CEO COMPENSATION. The 1997 compensation for Mr. Moore consisted of the same
components as the compensation for other executive officers. Mr. Moore's 1997
salary was increased from $375,000 to $425,000, effective March 1, 1997, and his
1997 targeted award under the Annual Incentive Plan was set at 40% of his base
salary, which the Compensation Committee believed were appropriate levels based
on his performance and his prior experience. As a result of 1997 performance as
described above, he received a payout of $246,500 under the Annual Incentive
Plan, representing 145% of his composite targeted award, of which 125% was
attributable to corporate performance and 20% was attributable to his individual
performance. Mr. Moore's Restricted Stock award was based on his performance in
1997 and a comparison of his award to the long-term compensation of other chief
executive officers in the 25th percentile of the Incentive Compensation Survey
Group. Consideration also was given to Mr. Moore's prior experience with the
Company and OG&E, his demonstrated leadership skills and his positive reputation
within the community and utility industry. Based on these factors and the
expected award in early 1998 to Mr. Moore of stock options under the proposed
Stock Incentive Plan, the Committee determined to grant Mr. Moore a Restricted
Stock award having an approximate value at the date of its grant of 20% of his
base salary for 1998. As was the case with respect to awards of Restricted Stock
to other key officers, Mr. Moore's ultimate receipt of the shares awarded to him
will be dependent upon the Company's achievement of specified return on equity
targets during 1998, 1999 and 2000.
CONCLUSION. The Committee believes that, with the adoption of the Stock
Incentive Plan and the Annual Incentive Compensation Plan, the Company's
executive compensation system will serve the interests of the Company and its
shareowners effectively. The Committee takes very seriously its responsibilities
with respect to the Company's executive compensation system. To this end, the
Committee will continue to monitor and revise the compensation policies as
necessary to ensure that the Company's compensation system continues to meet the
needs of the Company and its shareowners.
Compensation Committee
Bill Swisher, Chairman
Hugh L. Hembree, III, member
William E. Durrett, member
Robert Kelley, member
10
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
The following table provides information regarding compensation paid or to be paid by the Company or any of its subsidiaries to
the Company's Chief Executive Officer and four other most highly compensated executive officers for the past three years. To the
extent the table shows zeros for other annual compensation, stock options, stock appreciation rights or payouts under long-term
incentive plans for a particular year, no amounts were required to be reported in such year or, in the case of other annual
compensation, the amounts were below the threshold required for disclosure under the SEC's rules.
Long Term Compensation
--------------------------------
Annual Compensation Awards Payouts
------------------------------ ----------------------- -------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Principal Salary Bonus(1) Compensation Awards(2) Options/ Payouts Compensation(3)
Position Year ($) ($) ($) ($) SAR(#) ($) ($)
- ------------------ ---- ------ -------- ------------- ---------- ---------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S.E. Moore, (4) Chairman, 1997 416,667 246,500 0 91,982 0 0 38,309
President and 1996 337,708 146,072 0 101,291 0 0 28,489
Chief Executive Officer 1995 212,000 58,591 0 52,974 0 0 17,726
A.M. Strecker 1997 225,500 116,218 0 36,630 0 0 14,987
Senior Vice President 1996 206,667 62,816 0 51,653 0 0 19,242
Finance and Administration 1995 200,000 46,800 0 39,974 0 0 19,059
J.T. Coffman 1997 143,333 63,075 0 21,825 0 0 16,361
Vice President Power Supply 1996 134,167 39,420 0 26,814 0 0 14,913
1995 127,500 31,720 0 25,475 0 0 6,039
J.R. Hatfield 1997 143,000 63,075 0 21,825 0 0 12,939
Vice President and 1996 132,083 40,166 0 26,402 0 0 9,089
Treasurer 1995 127,500 29,835 0 25,475 0 0 2,350
M.D. Bowen, Jr. 1997 142,833 60,900 0 18,722 0 0 17,040
Vice President Power 1996 130,333 38,544 0 26,067 0 0 15,447
Delivery 1995 119,167 28,548 0 23,814 0 0 7,926
</TABLE>
- -----------------
<TABLE>
<CAPTION>
<S> <C>
(1) As explained on page 9, amounts in this column reflect payouts under the former Annual Incentive Compensation Plan.
(2) Amounts in this column reflect the market value of the shares of Restricted Stock awarded under the Restricted Stock Plan,
based on the closing price of the Company's Common Stock on the date the award was made. The number of shares awarded in
1997,1996 and 1995 was as follows: (i) Mr. Moore, 1,808 shares, 2,463 shares and 1,308 shares, respectively; (ii) Mr. Strecker,
720 shares, 1,256 shares and 987 shares, respectively; (iii) Mr. Coffman, 429 shares, 652 shares and 629 shares, respectively;
(iv) Mr. Hatfield, 429 shares, 642 shares and 629 shares, respectively; and (v) Mr. Bowen, 368 shares, 633 shares and 588
shares, respectively. In the absence of death, disability or normal retirement, the shares awarded to these individuals are
subject to forfeiture for three years with the amount the recipient ultimately receives dependent on Company performance. The
total number of shares and market value of Restricted Stock held by each of the named individuals as of December 31, 1997, were
as follows: Mr. Moore, 6,570 shares, $359,297; Mr. Strecker, 4,161 shares, $227,555; Mr. Coffman, 2,384 shares, $130,375; Mr.
Hatfield, 1,990 shares, $108,828; and Mr. Bowen, 2,152 shares, $117,688. Dividends are paid to these individuals on the shares
of Restricted Stock owned by them.
(3) Amounts in this column for 1997 reflect: (i) for Mr. Moore, $25,323 (Retirement Savings Plan and Retirement Savings Restoration
Plan) and $12,986 (insurance premiums); (ii) for Mr. Strecker, $12,974 (Retirement Savings Plan and Retirement Savings
Restoration Plan) and $2,013 (insurance premiums); (iii) for Mr. Coffman, $8,224 (Retirement Savings Plan and Retirement
Savings Restoration Plan) and $8,137 (insurance premiums); (iv) for Mr. Hatfield, $5,495 (Retirement Savings Plan and
Retirement Savings Restoration Plan) and $7,444 (insurance premiums); and (v) for Mr. Bowen, $8,162 (Retirement Savings Plan
and Retirement Savings Restoration Plan), and $8,878 (insurance premiums). A significant portion of the insurance premiums
reported for each of these individuals is for life insurance policies and such premiums are recovered by the Company from the
proceeds of the policies.
(4) Mr. Moore was appointed President of OG&E in August 1995, and Chairman and Chief Executive Officer of OG&E in May 1996.
11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PENSION PLAN TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
The Company and OG&E maintain a qualified non-contributory Retirement Plan covering all employees of the Company who have
completed one year's service. Subject to limitations imposed by the Employee Retirement Income Security Act of 1974 ("ERISA"),
benefits under the Retirement Plan are based upon the five highest consecutive years of cash compensation (which for the executives
named in the Summary Compensation Table prior to 1993 has consisted solely of salaries and for subsequent years consists of salary
and bonus) during an employee's last ten years prior to retirement and length of service. Social Security benefits are deducted in
determining benefits payable under the Plan. Remuneration covered by the Plan includes salaries, bonuses and overtime pay.
Retirement benefits are payable to participants upon normal retirement (at or after age 65) or early retirement (at or after
attaining age 55 and completing five or more years of service), to former employees after reaching retirement age who have completed
five or more years of service before terminating their employment and to participants after reaching retirement age upon total and
permanent disability. As indicated above, the benefits payable under the Plan are subject to maximum limitations under ERISA. Should
benefits at the time of retirement exceed the then permissible limits of ERISA, the Retirement Restoration Plan will provide
benefits through a lump-sum distribution actuarially equivalent to the amounts that would have been payable annually under the
Retirement Plan but for the ERISA limits. The Company and OG&E fund the estimated benefits payable under the Retirement Restoration
Plan through contributions to a trust for the benefit of those employees who will be entitled to receive payments under the
Retirement Restoration Plan.
The following table sets forth the estimated annual benefits payable upon normal retirement under the Retirement Plan and
Retirement Restoration Plan to persons in the remuneration classification specified.
- -----------------------------------------------------------------------------------------------
Average Years of Service at Retirement
Compensation --------------------------------------------------------------------------------
5 Highest Years 10 15 20 25 30 35 40 45
===============================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 13,391 $ 20,086 $ 26,782 $ 33,477 $ 40,172 $ 46,868 $ 53,563 $ 60,259
125,000 17,141 25,711 34,282 42,852 51,422 59,993 68,563 77,134
150,000 20,891 31,336 41,782 52,227 62,672 73,118 83,563 94,009
175,000 24,641 36,961 49,282 61,602 73,922 86,243 98,563 110,884
200,000 28,391 42,586 56,782 71,977 85,172 99,368 113,563 127,759
225,000 32,141 48,211 64,282 80,352 96,422 112,493 128,563 144,634
250,000 35,891 53,836 71,782 89,727 107,672 125,618 143,563 161,509
300,000 43,391 65,086 86,782 108,477 130,172 151,868 173,563 195,259
350,000 50,891 76,336 101,782 127,227 152,672 178,118 203,563 229,009
400,000 58,391 87,586 116,782 145,977 175,172 204,368 233,563 262,759
450,000 65,891 98,836 131,782 164,727 197,672 230,618 263,563 296,509
500,000 73,391 110,086 146,782 183,477 220,172 256,868 293,563 330,259
550,000 80,891 121,336 161,782 202,227 242,672 283,118 323,563 364,009
600,000 88,391 132,586 176,782 220,977 265,172 309,368 353,563 397,759
650,000 95,891 143,836 191,782 239,727 287,672 335,618 383,563 431,509
700,000 103,391 155,086 206,782 258,477 310,172 361,868 413,563 465,259
750,000 110,891 166,336 221,782 277,227 332,672 388,118 443,563 499,009
- -----------------------------------------------------------------------------------------------
As of December 31, 1997, the credited years of service for the individuals listed in the remuneration table on page 11 are as
follows: S. E. Moore - 23 years; A. M. Strecker - 26 years; J. T. Coffman - 27 years; J. R. Hatfield - 3 years and M.D. Bowen - 32
years.
In 1993, OG&E adopted a Supplemental Executive Retirement Plan (the "SERP"). The SERP is an unfunded supplemental plan that is
not subject to the benefits limit imposed by ERISA. The plan generally provides for an annual retirement benefit at age 65 equal to
65% of the participant's average cash compensation during his or her final 36 months of employment, reduced by Social Security
benefits, by amounts payable under the Company's Retirement and Restoration Plans described above and by amounts received under
pension plans from other employers. For a participant in the SERP who retires before age 65, the 65% benefit is reduced, with the
reduction being 1% per year for ages 62 through 64, an additional 2% per year for ages 60 through 61, an additional 4% per year for
ages 58 through 59 and an additional 6% per year for ages 55 through 57, so that a participant retiring at age 55 would receive 32%
of his average cash compensation during his final 36 months, reduced by the deductions set forth above. None of the individuals
listed in the remuneration table on page 11 has received or is expected to receive benefits under the SERP at normal retirement as
the benefits payable to such individuals under the Company's Retirement and Restoration Plans are expected to exceed the benefits
payable under the SERP.
12
</TABLE>
<PAGE>
CHANGE OF CONTROL ARRANGEMENTS
- --------------------------------------------------------------------------------
The Company and OG&E have entered into employment agreements with each
officer of the Company and OG&E. Pursuant to such agreements, each such officer
is to remain an employee for a three-year period following a change of control
of the Company (the "Employment Period"). During the Employment Period, the
officer is entitled to (i) an annual base salary in an amount at least equal to
his or her base salary prior to the change of control, (ii) an annual bonus in
an amount at least equal to his or her highest bonus in the three years prior to
the change of control, and (iii) continued participation in the incentive,
savings, retirement and welfare benefit plans. The officer also is entitled to
payment of expenses and provision of fringe benefits to the extent paid or
provided to (a) such officer prior to the change of control or (b) other peer
executives of the Company.
If, during the Employment Period, the officer's employment is terminated by
the employer for reasons other than cause or disability or by such officer due
to a change in employment responsibilities, the officer shall be entitled to the
following payments: (i) all accrued and unpaid compensation and (ii) a severance
payment equal to 2.99 times the sum of such officer's (a) annual base salary and
(b) highest recent annual bonus. The officer shall also be entitled to continued
welfare benefits for three years and outplacement services. If the payment of
the foregoing benefits, when taken together with any other payments to the
officer, would result in the imposition of the excise tax on excess parachute
payments under Section 4999 of the Internal Revenue Code of 1986, as amended,
then the severance benefits will be reduced if such reduction results in a
greater after-tax payment to the officer. The officer is entitled to receive
such amounts in a lump-sum payment within 30 days of termination. A change of
control encompasses certain mergers and acquisitions, changes in Board
membership and acquisition of securities of the Company.
COMPANY STOCK PERFORMANCE
- --------------------------------------------------------------------------------
The following graph shows a five-year comparison of cumulative total
returns for the Company's Common Stock, the Dow Jones Equity Market Index and
the Dow Jones Electric Utilities Index. The graph assumes that the value of the
investment in the Company's Common Stock and each index was 100 at December 31,
1992, and that all dividends were reinvested.
[GRAPH]
<TABLE>
<CAPTION>
OGE
Measurement Period Energy Dow Jones Dow Jones
(Fiscal Year Covered) Corp. Equity Index Electric Utilities
- --------------------- ------ ------------ ------------------
<S> <C> <C> <C> <C>
1992 100 100 100
1993 117 110 112
1994 113 111 98
1995 159 152 129
1996 165 188 130
1997 229 251 165
</TABLE>
13
<PAGE>
SECURITY OWNERSHIP
- --------------------------------------------------------------------------------
The following table shows the number of shares of the Company's Common
Stock beneficially owned on March 1, 1998, by each Director, by each of the
Executive Officers named in the compensation table on page 11, and by all
Executive Officers and Directors as a group:
<TABLE>
<CAPTION>
Number of Common Shares(1)
<S> <C>
Herbert H. Champlin 7,303
Luke R. Corbett 1,155
William E. Durrett 4,917
Martha W. Griffin 5,176
H. L. Hembree, III 19,445
Robert Kelley 3,241
Bill Swisher 16,597
Ronald H. White 3,934
S.E. Moore 26,664
A.M. Strecker 23,172
J.T. Coffman 7,026
J.R. Hatfield 4,534
M.D. Bowen 8,259
All Executive Officers and 155,792
Directors as a group
(17 persons)
<S> <C>
(1) Ownership by each executive officer is less than 0.07% of the class, by
each director other than Mr. Moore is less than 0.05% of the class and, for
all executive officers and directors as a group, is less than 0.39% of the
class. Amounts shown include shares for which, in certain instances, an
individual has disclaimed beneficial interest. Amounts shown for executive
officers include 74,014 shares of Common Stock representing their interest
in shares held under the Company's Employees' Stock Ownership Plan,
Retirement Savings Plan and Restricted Stock Plan, for which in certain
instances they have voting power but not investment power.
(2) Amounts shown for Messrs. Champlin, Corbett, Durrett, Hembree, Kelley,
Swisher and White, and for Mrs. Griffin include, 6,426, 1,043, 3,276,
9,726, 2,241, 10,873, 2,934, and 2,846 common stock units, respectively,
under the Directors' Deferred Compensation Plan.
</TABLE>
The foregoing information on share ownership is based on information
furnished to the Company by the individuals listed above and all shares listed
are beneficially owned by the individuals or by members of their immediate
family unless otherwise indicated.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
- --------------------------------------------------------------------------------
Under federal securities laws, the Company's and OG&E's directors and
executive officers are required to report, within specified monthly and annual
due dates, their initial ownership in the Company's common stock and OG&E's
preferred stocks and subsequent acquisitions, dispositions or other transfers of
interest in such securities. All of OG&E's preferred stocks were redeemed in
January 1998. The Company is required to disclose whether it has knowledge that
any person required to file such a report may have failed to do so in a timely
manner. To the Company's knowledge, all of the Company's directors and officers
subject to such reporting obligations have satisfied their reporting obligations
in full for 1997.
14
<PAGE>
PROPOSAL NO. 2 - APPROVAL OF
OGE ENERGY CORP. STOCK INCENTIVE PLAN
- --------------------------------------------------------------------------------
The Board of Directors has approved and recommended the adoption of the OGE
Energy Corp. Stock Incentive Plan (the "Stock Incentive Plan"), subject to
approval by the Company's shareowners. The Stock Incentive Plan is intended to
replace the Company's Restricted Stock Plan, which was first approved by
shareowners at the 1985 annual meeting.
The purpose of the Stock Incentive Plan is to enable the Company and its
subsidiaries and other Affiliates (as defined in the Stock Incentive Plan) to
attract, retain and motivate non-employee directors, officers and employees and
to provide the Company and its Affiliates with the ability to provide incentives
directly linked to the profitability of the Company's businesses and increases
in shareowner value and the enhancement of performance relating to customers.
The Stock Incentive Plan has been designed to comply with recent tax law
changes which impose limits on the ability of a public company to claim tax
deductions for compensation paid to certain highly compensated executives.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
generally denies a corporate tax deduction for annual compensation exceeding
$1,000,000 paid to the chief executive officer and the four other most highly
compensated officers of a public company ("Covered Employees"). Certain types of
compensation, including performance-based compensation, are generally excluded
from this deduction limit. In an effort to ensure that stock awards under the
Stock Incentive Plan will qualify as performance-based compensation, which is
generally deductible, the Stock Incentive Plan is being submitted to shareowners
for approval at the Annual Meeting. While the Company believes compensation
payable pursuant to the Stock Incentive Plan generally will be deductible for
federal income tax purposes, under certain circumstances such as death,
disability and change of control (all as defined in the Stock Incentive Plan),
compensation not qualified under Section 162(m) of the Code may be payable. By
approving the Stock Incentive Plan, the shareowners will be approving, among
other things, the performance measures, eligibility requirements and limits on
various stock awards contained therein.
Set forth below is a summary of certain important features of the Stock
Incentive Plan. This summary is qualified in its entirety by reference to the
actual plan attached hereto as Annex A.
ADMINISTRATION. The Stock Incentive Plan will be administered by the
Compensation Committee of the Company or such other committee of the Board as
the Board may from time to time designate, which will be composed solely of not
less than two "disinterested persons" for purposes of Rule 16b-3 under the
Securities Exchange Act of 1934 who also qualify as "outside directors" for
purposes of Section 162(m) of the Code. Among other things, the Compensation
Committee will have the authority, subject to the terms of the Stock Incentive
Plan, to select non-employee directors, officers and employees to whom awards
may be granted, to determine the type of award as well as the number of shares
of Common Stock to be covered by each award, and to determine the terms and
conditions of any such awards. The Compensation Committee also will have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Stock Incentive Plan as it deems advisable, to interpret
the terms and provisions of the Stock Incentive Plan and any awards issued
thereunder and to otherwise supervise the administration of the Stock Incentive
Plan. All decisions made by the Compensation Committee pursuant to the Stock
Incentive Plan will be final and binding.
ELIGIBILITY. Officers and salaried employees of the Company and its
Affiliates designated by the Compensation Committee who are responsible for or
contribute to the management, growth and profitability of the Company and
non-employee directors of the Company are eligible to be granted awards under
the Stock Incentive Plan.
PLAN FEATURES. The Stock Incentive Plan authorizes the issuance of up to
2,000,000 shares of Common Stock pursuant to the grant or exercise of stock
options, including incentive stock options ("ISOs"), nonqualified stock options,
stock appreciation rights ("SARs"), restricted stock and performance units, but
not more than 500,000 shares may be issued as restricted stock. No single
participant may be granted awards pursuant to the Stock Incentive Plan covering
in excess of 250,000 shares (2,500 shares for non-employee directors) of Common
Stock in any one calendar year and no participant may be granted performance
units in any one calendar year payable in cash in an amount that would exceed
$1,000,000 ($15,000 for non-employee directors). Subject to the foregoing
limits, the shares available under the Stock Incentive Plan can be divided among
the various types of awards and among the participants as the Compensation
Committee sees fit. The shares subject to grant under the Stock Incentive Plan
are to be made available from authorized but unissued shares or from treasury
shares as determined from time to time by the Board. Awards may be granted for
such terms as the Compensation Committee
15
<PAGE>
may determine, except that the term of an ISO may not exceed ten years from its
date of grant. No awards outstanding on the termination date of the Stock
Incentive Plan will be affected or impaired by such termination. Awards will not
be transferable, except by will and the laws of descent and distribution and, in
the case of nonqualified stock options and any related SARs, as a gift to an
optionee's children. The Compensation Committee will have broad authority to fix
the terms and conditions of individual agreements with participants.
DESCRIPTION OF AWARDS
As indicated above, several types of stock-related grants can be made under
the Stock Incentive Plan. A SUMMARY OF THESE GRANTS IS SET FORTH BELOW:
STOCK OPTIONS. The Stock Incentive Plan authorizes the Compensation
Committee to grant options to purchase Common Stock at an exercise price (the
"option price") which cannot be less than 100% of the fair market value of such
stock on the date of grant. The Stock Incentive Plan permits optionees, with the
approval of the Compensation Committee, to pay the exercise price of options in
cash, stock (valued at its fair market value on the date of exercise) or a
combination thereof. As noted above, options may be granted either as ISOs or
nonqualified options. The principal difference between ISOs and nonqualified
options is their tax treatment. See "--FEDERAL INCOME TAX CONSEQUENCES."
SARs. The Stock Incentive Plan authorizes the Compensation Committee to
grant SARs in conjunction with all or part of any stock option granted under the
Stock Incentive Plan. An SAR entitles the holder to receive upon exercise the
excess of the fair market value of a specified number of shares of Common Stock
at the time of exercise over the option price per share specified in the related
stock option. Such amount will be paid to the holder in shares of Common Stock
(valued at its fair market value on the date of exercise), cash or a combination
thereof, as the Compensation Committee may determine. An SAR may be granted in
conjunction with a contemporaneously granted ISO or a previously or
contemporaneously granted nonqualified option. Since the exercise of an SAR is
an alternative to the exercise of an option, the option will be canceled to the
extent that the SAR is exercised and the SAR will be canceled to the extent the
option is exercised.
RESTRICTED STOCK. The Stock Incentive Plan authorizes the Compensation
Committee to grant restricted stock to individuals with such restriction periods
as the Compensation Committee may designate. The Compensation Committee may,
prior to granting shares of restricted stock, designate certain participants as
"Covered Employees" upon determining that such participants are or are expected
to be "covered employees" within the meaning of Section 162(m)(3) of the Code,
and will provide that restricted stock awards to these Covered Employees cannot
vest unless applicable performance goals established by the Compensation
Committee within the time period prescribed by Section 162(m) of the Code are
satisfied. These performance goals must be based on the attainment of specified
levels of total shareholder return, return on capital, earnings per share,
market share, stock price, sales, costs, net operating income, net income,
return on assets, earnings before income taxes, depreciation and amortization,
return on total assets employed, capital expenditures, earnings before income
taxes, economic value added, cash flow, retained earnings, return on equity,
results of customer satisfaction surveys, aggregate product price and other
product price measures, safety record, service reliability, demand-side
management (including conservation and load management), operating and/or
maintenance cost management (including operation and maintenance expenses per
Kwh) and energy production availability. At the time of establishing a
performance goal, the Compensation Committee shall specify the manner in which
the performance goal shall be calculated. In so doing, the Compensation
Committee may exclude the impact of certain specified events from the
calculation of the performance goal. Such performance goals also may be based on
the attainment of specified levels of performance of the Company or one or more
Affiliates under one or more of the measures described above relative to the
performance of other corporations. Performance goals based on the foregoing
factors are hereinafter referred to as "Performance Goals." With respect to
Covered Employees, all Performance Goals must be objective performance goals
satisfying the requirements for "performance-based compensation" within the
meaning of Section 162(m)(4) of the Code. The Compensation Committee also may
condition the vesting of restricted stock awards to participants who are not
Covered Employees upon the satisfaction of these or other applicable performance
goals. The provisions of restricted stock awards (including any applicable
Performance Goals) need not be the same with respect to each participant. During
the restriction period, the Compensation Committee may require that the stock
certificates evidencing restricted shares be held by the Company. Restricted
stock may not be sold, assigned, transferred, pledged or otherwise encumbered.
Other than these restrictions on transfer and any other restrictions the
Compensation Committee may impose, the participant will have all the rights of a
holder of stock holding the class or series of stock that is the subject of the
restricted stock award.
Performance Units. The Stock Incentive Plan authorizes the Compensation
Committee to grant performance
16
<PAGE>
units. Performance units may be denominated in shares of Common Stock or cash,
or may represent the right to receive dividend equivalents with respect to
shares of Common Stock, as determined by the Compensation Committee. Performance
units will be payable in cash or shares of Common Stock if applicable
Performance Goals (based on one or more of the measures described in the section
entitled "-- RESTRICTED STOCK" above) determined by such committee are achieved
during an award cycle. An award cycle will consist of a period of consecutive
fiscal years or portions thereof designated by the Compensation Committee over
which performance units are to be earned. At the conclusion of a particular
award cycle, the Compensation Committee will determine the number of performance
units granted to a participant which have been earned in view of applicable
Performance Goals and shall deliver to such participant (i) the number of shares
of Common Stock equal to the value of performance units determined by the
Compensation Committee to have been earned and/or (ii) cash equal to the value
of such earned performance units. The Compensation Committee may, in its
discretion, permit participants to defer the receipt of performance units on
terms and conditions established by the Compensation Committee.
The Compensation Committee will have the authority to determine the
non-employee directors, officers and employees to whom and the time or times at
which performance units shall be awarded, the number of performance units to be
awarded to any participant, the duration of the award cycle and any other terms
and conditions of an award. In the event that a participant's employment is
terminated due to death, disability or retirement, the Compensation Committee
will have the discretion to pay a prorated award, based on the participant's
number of months of service and achievement of performance goals over the entire
award cycle.
DURATION, AMENDMENT AND DISCONTINUANCE. The Stock Incentive Plan will
terminate on December 31, 2007. Awards outstanding as of such date will not be
affected or impaired by the termination of the Stock Incentive Plan. The Stock
Incentive Plan may be amended, altered or discontinued by the Board, but no
amendment, alteration or discontinuance may be made which would (i) impair the
rights of an optionee under an option or a recipient of an SAR, restricted stock
award or performance unit award previously granted without the optionee's or
recipient's consent, except such an amendment made to qualify the Stock
Incentive Plan for the exemption provided by Rule 16b-3 or (ii) disqualify the
Stock Incentive Plan from the exemption provided by Rule 16b-3. Except as
expressly provided in the Stock Incentive Plan, the Stock Incentive Plan may not
be amended without shareowner approval to the extent such approval is required
by law or agreement. The Compensation Committee also may amend the terms of any
option or other award previously granted, except that (i) no such amendment
shall impair the rights of any holder without the holder's consent except such
an amendment made to cause the Plan or award to qualify for the exemption
provided by Rule 16b-3 and (ii) no such amendment shall lower the option
exercise price of an option other than in certain specified instances involving
a change in capitalization or similar transaction.
CHANGES IN CAPITALIZATION; CHANGE OF CONTROL. The Stock Incentive Plan
provides that, in the event of any change in corporate capitalization, such as a
stock split, or a corporate transaction, such as any merger, consolidation,
share exchange, separation, spin-off or other distribution of stock or property
of the Company, or any reorganization or partial or complete liquidation of the
Company, the Compensation Committee or the Board may make such substitutions or
adjustments in the aggregate number and kind of shares reserved for issuance
under the Stock Incentive Plan, in the number, kind and option price of shares
subject to outstanding stock options and SARs, and in the number and kind of
shares subject to other outstanding awards granted under the Stock Incentive
Plan as may be determined to be appropriate by the Compensation Committee or the
Board, in its sole discretion. The Stock Incentive Plan also provides that in
the event of a change of control (as defined in the Stock Incentive Plan which
is attached hereto as Annex A) of the Company (i) any SARs and stock options
outstanding as of the date of the change of control which are not then
exercisable and vested will become fully exercisable and vested, (ii) the
restrictions applicable to restricted stock will lapse and such restricted stock
shall become free of all restrictions and fully vested and (iii) all performance
units will be considered to be earned and payable in full and any restrictions
will lapse and such performance units will be settled in cash as promptly as
practicable. The holders of options will have the right, for a period of 60 days
after such date, to surrender such options in exchange for a cash payment based
on the change of control price (as defined in the Stock Incentive Plan).
However, if settlement in cash would disqualify a transaction from
pooling-of-interests accounting treatment, the Compensation Committee may
substitute stock.
FEDERAL INCOME TAX CONSEQUENCES. The following discussion is intended only
as a brief summary of the federal income tax rules relevant to stock options,
SARs, restricted stock and performance units. The laws governing the tax aspects
of awards are highly technical and such laws are subject to change.
o NONQUALIFIED OPTIONS AND SARs. Upon the grant of a nonqualified option
(with or without an SAR), the optionee will not recognize any taxable
income and the Company will not be entitled to a deduction. Upon the
exercise of such an option or an SAR, the excess of the fair market value
of the shares acquired on the
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exercise of the option over the option price (the "spread"), or the
consideration paid to the optionee upon exercise of the SAR, will
constitute compensation taxable to the optionee as ordinary income. In
determining the amount of the spread or the amount of consideration paid to
the optionee, the fair market value of the stock on the date of exercise is
used. The Company, in computing its federal income tax, will generally be
entitled to a deduction in an amount equal to the compensation taxable to
the optionee.
o ISOs. An optionee will not recognize taxable income on the grant or
exercise of an ISO. However, the spread at exercise will constitute an item
includible in alternative minimum taxable income, and thereby may subject
the optionee to the alternative minimum tax. Such alternative minimum tax
may be payable even though the optionee receives no cash upon the exercise
of his ISO with which to pay such tax.
o Upon the disposition of shares of stock acquired pursuant to the exercise
of an ISO after the later of (i) two years from the date of grant of the
ISO or (ii) one year after the transfer of the shares to the optionee (the
"ISO Holding Period"), the optionee will recognize long-term capital gain
or loss, as the case may be, measured by the difference between the stock's
selling price and the exercise price. The Company is not entitled to any
tax deduction by reason of the grant or exercise of an ISO, or by reason of
a disposition of stock received upon exercise of an ISO if the ISO Holding
Period is satisfied. Different rules apply if the optionee disposes of the
shares of stock acquired pursuant to the exercise of an ISO before the
expiration of the ISO Holding Period.
o RESTRICTED STOCK. A participant who is granted restricted stock may make an
election (a "Section 83(b) election") to have the grant taxed as
compensation income at the date of receipt, with the result that any future
appreciation (or depreciation) in the value of the shares of stock granted
shall be taxed as capital gain (or loss) upon a subsequent sale of the
shares. Any such Section 83(b) election must be made and filed with the IRS
within 30 days of receipt in accordance with the regulations under Section
83(b) of the Code. If the participant does not make a Section 83(b)
election, then the grant will be taxed as compensation income at the full
fair market value on the date that the restrictions imposed on the shares
expire. Unless a participant makes a Section 83(b) election, any dividends
paid on stock subject to the restrictions are compensation income to the
participant and compensation expense to the Company. The Company is
generally entitled to an income tax deduction for any compensation income
taxed to the participant, subject to the provisions of Section 162(m) of
the Code.
o PERFORMANCE UNITS. A participant who has been granted a performance unit
award will not realize taxable income until the applicable award cycle
expires and the participant is in receipt of the stock distributed in
payment of the award or an equivalent amount of cash, at which time such
participant will realize ordinary income equal to the full fair market
value of the shares delivered or the amount of cash paid. At that time, the
Company generally will be allowed a corresponding tax deduction equal to
the compensation taxable to the award recipient, subject to the provisions
of Section 162(m) of the Code.
NEW PLAN BENEFITS. Apart from the grant of nonqualified stock options
granted in January 1998 and described below, it cannot be determined at this
time what benefits or amounts, if any, will be received by or allocated to any
persons or group of persons under the Stock Incentive Plan if the Stock
Incentive Plan is adopted. Such determinations as to allocations are subject to
the discretion of the Compensation Committee and as to receipt of payouts is
dependent on future performance.
1998 AWARDS. Subject to shareowner approval, the Compensation Committee in
January 1998 decided to grant nonqualified stock options to purchase the
following number of shares of Common Stock to the individuals and groups
described on page 11 who are currently employees of the Company: Steven E.
Moore, 52,000 shares; A.M. Strecker, 20,700 shares; J.T. Coffman, 6,200 shares;
J.R. Hatfield, 6,200 shares; M.D. Bowen, 5,300 shares; all executive officers as
a group, 106,400 shares; and all employees (excluding executive officers),
79,500 shares. The nonqualified stock options will become exercisable in
one-third annual installments beginning one year from the date of grant at a
purchase price of $51.50 per share (which was the fair market value of the
Common Stock on the date the options were granted) and will expire ten years
from the date of grant.
VOTE REQUIRED. The affirmative vote of a majority of the votes entitled to
be cast by the holders of the shares of the Company's Common Stock represented
at the Annual Meeting and entitled to vote thereon is required to approve the
Stock Incentive Plan with respect to Section 162(m) of the Code. Absentions from
voting on this matter will be treated as votes against, while broker non-votes,
if any, will be treated as shares not voted. Such vote will also satisfy the
shareowner approval requirements of the New York Stock Exchange and Section 422
of the Code with respect to the grant of ISOs.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE STOCK
INCENTIVE PLAN.
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PROPOSAL NO. 3 - APPROVAL OF OGE ENERGY CORP. ANNUAL INCENTIVE COMPENSATION PLAN
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The Board of Directors has approved and recommended the adoption of an
annual incentive compensation plan subject to approval by shareowners. The OGE
Energy Corp. Annual Incentive Compensation Plan (the "Annual Plan") is intended
to replace the Company's Annual Incentive Compensation Plan that was adopted in
1992. As discussed below, the Annual Plan is designed to comply with Section
162(m) of the Code and the Annual Plan will not become effective unless the
shareowner approval described below is obtained.
The purpose of the Annual Plan is to maximize the efficiency and
effectiveness of the operations of the Company and its subsidiaries by providing
incentive compensation opportunities to certain key executives and managers
responsible for operational effectiveness and to link further the financial
interests and objectives of employees with those of the Company and its
shareowners. The Annual Plan provides for the payment of annual cash bonuses
based on Company performance and individual performance.
The Annual Plan is designed to take into account Section 162(m) of the
Code, which, as explained above regarding Proposal No. 2, generally denies a
corporate tax deduction for annual compensation exceeding $1,000,000 paid to the
chief executive officer and the four other most highly compensated officers of a
public company ("Covered Employees"). Certain types of compensation, including
performance-based compensation, are excluded from this deduction limit. In an
effort to ensure that certain compensation payable under the Annual Plan to
certain executives will qualify as performance-based compensation that is
generally tax-deductible, the Annual Plan is being submitted to shareowners of
the Company for approval at the Annual Meeting. By approving the Annual Plan,
the shareowners will be approving, among other things, the performance measures,
eligibility requirements and annual incentive award limits contained therein.
The Annual Plan provides for the establishment and payment of Target Company
Awards and Target Individual Awards. Target Individual Awards payable under the
Annual Plan will not qualify as "performance-based compensation" under Section
162(m) of the Code and, thus, will count toward the annual $1,000,000 deduction
limit. For this reason, the Annual Plan precludes the granting or payment of
Target Individual Awards to any Covered Employee. If the shareowners approve the
Stock Incentive Plan and the Annual Plan, the Compensation Committee believes
that all compensation paid to executives will continue to be deductible by the
Company in the foreseeable future.
Set forth below is a summary of certain important features of the Annual
Plan. This summary is qualified in its entirety by reference to the actual plan
attached hereto as Annex B.
ADMINISTRATION. The Annual Plan will be administered by the Compensation
Committee, or such other committee of the Board as the Board may from time to
time designate, which, to the extent Target Company Awards are intended to be
exempt from Section 162(m) of the Code, will be composed solely of not less than
two persons who qualify as "outside directors" for purposes of Section 162(m) of
the Code. The Compensation Committee will have sole authority to make rules and
regulations relating to the administration of the Annual Plan, and any
interpretations and decisions of the Compensation Committee with respect to the
Annual Plan will be final and binding.
ELIGIBILITY. Officers, executives or other key employees of the Company and
its subsidiaries who, in the opinion of the Chief Executive Officer, can
contribute significantly to the growth and profitability of the Company and its
subsidiaries are eligible to be selected by the Compensation Committee to be
granted awards under the Annual Plan. Specific criteria for participation shall
be established by the Compensation Committee prior to the beginning of each
incentive period (generally a calendar year), and selected employees will be
notified in writing of their selection, and of their performance goals and
related Target Company Awards and Target Individual Awards, as soon as
practicable. Under certain circumstances, individuals who become eligible after
an incentive period has commenced may participate in the plan. The Compensation
Committee may withdraw its approval for participation in the plan with respect
to an incentive period at any time during such period (except where a change of
control occurs during an incentive period), and the employee will not be
entitled to the payment of any Award for such incentive period. No participant
or other employee shall have the right to participate in the Annual Plan for any
incentive period, despite having been selected in a previous incentive period.
No right or interest of any participant in the Annual Plan may be assigned,
transferred, pledged or encumbered.
DESCRIPTION OF AWARDS.
TARGET COMPANY AWARDS. The Annual Plan permits the award of Target Company
Awards (expressed as a percentage of base salary), which are established
independent of the Target Individual Awards discussed below.
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On or before the 90th day of each incentive period and in any event before 25%
or more of the incentive period has elapsed, the Compensation Committee will
establish for each participant the Target Company Award and specific objective
performance goals for the incentive period, which will be based on one or more
of the following: total shareholder return, return on equity, return on capital,
earnings per share, market share, stock price, sales, costs, net operating
income, net income, return on assets, earnings before income taxes, depreciation
and amortization, return on total assets employed, capital expenditures,
earnings before income taxes, economic value added, cash flow, retained
earnings, results of customer satisfaction surveys, aggregate product price and
other product price measures, safety record, service reliability, demand-side
management (including conservation and load management), operating and/or
maintenance cost management (including operation and maintenance expenses per
Kwh), and energy production availability performance measures ("Company
Performance Goals"). At the time Target Company Awards are established, the
Compensation Committee will specify the manner in which the Company Performance
Goal(s) will be calculated. In so doing, the Compensation Committee may exclude
the impact of certain specified events from the calculation of the Company
Performance Goal(s). For example, if a Company Performance Goal was earnings per
share, the Compensation Committee could, at the time the Company Performance
Goals are established, specify that earnings per share are to be calculated
without regard to any subsequent change in accounting standards required by the
Financial Accounting Standards Board. Company Performance Goals may also be
based on the attainment of specified performance levels of the Company and/or
any of its subsidiaries relative to other corporations. Upon establishing the
Target Company Awards, the Compensation Committee will establish a minimum level
of achievement of the Company Performance Goals that must be met in order to
receive any portion of such award.
The level of achievement of the Company Performance Goals at the end of the
incentive period will determine the amount of each participant's Target Company
Award that such participant will receive (the "Earned Company Award"), which may
exceed 100% of the participant's Target Company Award. If the minimum level of
achievement of Company Performance Goals for any incentive period is not met, no
payment of an Earned Company Award will be made to the particular participant
during the incentive period. To the extent that minimum achievement levels are
met or surpassed, and upon certification by the Compensation Committee that the
Company Performance Goals have been satisfied and that any other material terms
and conditions of the Company Performance Awards are met, payment of an Earned
Company Award will be made to the participant for that incentive period. The
payment of all Earned Company Awards is subject to reduction or elimination by
the Compensation Committee, in its sole discretion, until a change of control
occurs. Except as set forth above, the Compensation Committee will have no
additional discretion to modify the terms of Company Performance Awards. The
maximum amount payable to a participant for an Earned Company Award during any
fiscal year will not exceed $1,000,000.
INDIVIDUAL PERFORMANCE AWARDS. The Annual Plan permits the award of Target
Individual Awards (expressed as a percentage of base salary), which are
established independent of the Target Company Awards discussed above. At the
beginning of each incentive period, the Chief Executive Officer will recommend
individual performance goals for each plan participant, other than any Covered
Employee. The Compensation Committee will consider and approve or modify the
recommendations as appropriate. The level of achievement of the individual
performance goals at the end of the incentive period will determine the amount
of each participant's Target Individual Award that such participant will receive
(the "Earned Individual Award"), which may range from 0% to 175% of the
participant's Target Individual Award and cannot exceed $250,000. The payment of
all Earned Individual Awards is subject to approval by the Compensation
Committee, and will in no way be contingent upon the attainment of, or the
failure to attain, the Company Performance Goals for the Target Company Awards
granted to participants.
Because the individual performance goals described above are not objective
in nature, the award of Target Individual Awards and the payout of Earned
Individual Awards do not qualify as "performance-based compensation" as defined
in Section 162(m) of the Code. In order to ensure compliance with Section
162(m), the Annual Plan precludes the granting of Target Individual Awards or
payout of Earned Individual Awards to Covered Employees. However, the
Compensation Committee desires to retain the ability to evaluate other key
employees on a subjective basis through Target Individual Awards.
TERMINATION OF EMPLOYMENT. In the event of termination due to death, total
and permanent disability or retirement, and such termination does not occur
within 24 months after a change of control, any Earned Awards (Earned Individual
Awards and/or Earned Company Awards) will be prorated to reflect participation
prior to termination. In the event of termination for any other reason, and such
termination does not occur within 24 months after a change of control, all of a
participant's rights to an Earned Award for the incentive period then in
progress will be forfeited; provided that, except in the event of termination
for cause, the Committee may, in its discretion, pay a prorated award for the
portion of the incentive period that the participant was employed.
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CHANGE OF CONTROL. If any participant is terminated for any reason other
than for cause within 24 months after a change of control (as defined in the
Annual Plan which is attached as Annex C), all awards previously deferred (with
earnings) will be paid to the participant; along with the Target Company Award
and the Target Individual Award established for the participant for the
incentive period in progress at the time of termination, which is prorated for
the portion of the incentive period the participant is employed.
AMENDMENT AND DISCONTINUANCE. Subject to the provisions of the Plan, the
Board of Directors of the Company has absolute discretion to amend, modify,
suspend or terminate the Annual Plan at any time.
NEW PLAN BENEFITS. Although the Committee has awarded target company awards
to certain individuals under the current annual plan (see 1998 Awards, below),
it cannot be determined at this time what benefits or amounts, if any, will be
allocated to or received by any persons or group of persons under the Annual
Plan if the plan is adopted. Such determinations as to allocations are at the
discretion of the Compensation Committee and as to receipt of payouts is
dependent upon future performance. However, the benefits and amounts payable
under the Annual Plan for 1997 and prior years are set forth in the bonus column
of the Summary Compensation Table on page 11 of this proxy statement.
1998 AWARDS. The Committee in November 1997 awarded target company awards
under the current annual plan to the following individuals and group described
on page 11 that are presently employees of the Company: Steven E. Moore in an
aggregate amount equal to 50% of base salary; A.M. Strecker in an aggregate
amount equal to 40% of base salary; J.T. Coffman in an aggregate amount equal to
30% of base salary; J.R. Hatfield in an aggregate amount equal to 30% of base
salary; M.D. Bowen in an aggregate amount equal to 30% of base salary; and other
selected executive officers. These awards were granted for the incentive period
commencing January 1, 1998, and ending December 31, 1998, and their payout is
dependent upon individual and Company performance. In the event that the Annual
Plan is not approved by the shareowners at the Annual Meeting, these awards will
not be affected. Yet, the Board of Directors will consider what other actions,
if any, will be necessary to effectuate the Company's executive compensation
program.
VOTE REQUIRED. The affirmative vote of a majority of the shares of Common
Stock entitled to vote and present in person or by proxy at the Annual Meeting
is required for the approval of the adoption of the Annual Plan with respect to
Section 162 of the Code. Abstentions from voting on this matter are treated as
votes against, while broker nonvotes are treated as shares not voted.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL
OF THE ANNUAL INCENTIVE PLAN.
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
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During 1997, the Company and Oklahoma Gas and Electric Company engaged
Arthur Andersen LLP as its independent public accountants. The Board of
Directors has appointed Arthur Andersen LLP as the independent public
accountants for the Company and OG&E for 1998. Representatives of Arthur
Andersen LLP will be present at the Annual Meeting of Shareowners and will have
the opportunity to make a statement if they so desire. Such representatives will
be available to respond to appropriate questions from shareowners at the
meeting.
SHAREOWNER PROPOSALS
- --------------------------------------------------------------------------------
Any shareowner proposal intended to be presented at the Annual Meeting in
1999 must be received by the Company on or before November 27, 1998, for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting. Proposals received by that date, deemed to be proper for consideration
at the Annual Meeting and otherwise conforming to the rules of the Securities
and Exchange Commission, will be included in the 1999 proxy statement.
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LOCATION OF OKLAHOMA CITY MARRIOTT HOTEL
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[MAP]
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ANNEX A
OGE ENERGY CORP. STOCK INCENTIVE PLAN
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SECTION 1. PURPOSES/DEFINITIONS.
The purpose of the Plan is to give the Company and its Affiliates a
competitive advantage in attracting, retaining and motivating non-employee
directors, officers and employees and to provide the Company and its Affiliates
with the ability to provide incentives more directly linked to the profitability
of the Company's businesses, increases in shareowner value and enhancement of
performance relative to customers.
For purposes of the Plan, the following terms are defined as set forth below:
a. "Affiliate" means (i) a corporation at least 50 percent of the common stock
or voting power of which is owned, directly or indirectly by the Company,
and (ii) any other corporation or other entity controlled by the Company
and designated by the Committee from time to time.
b. "Award" means a Stock Appreciation Right, Stock Option, Restricted Stock or
Performance Unit.
c. "Award Cycle" shall mean a period of consecutive fiscal years or portions
thereof designated by the Committee over which Performance Units are to be
earned.
d. "Board" means the Board of Directors of the Company.
e. "Change of Control" and "Change of Control Price" have the meanings set
forth in Section 9(b) and (c); respectively.
f. "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
g. "Commission" means the Securities and Exchange Commission or any successor
agency.
h. "Committee" means the Committee referred to in Section 2.
i. "Common Stock" means common stock, par value $.01 per share, of the
Company.
j. "Company" means OGE Energy Corp., an Oklahoma corporation.
k. "Covered Employee" shall mean a participant designated prior to the grant
of shares of Restricted Stock or Performance Units by the Committee who is
or may be a "covered employee" within the meaning of Section 162(m)(3) of
the Code in the year in which Restricted Stock or Performance Units are
taxable to such participant.
l. "Disability" means permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan.
m. "Disinterested Person" means a member of the Board who qualifies as a
non-employee director as defined in Rule 16b-3, as promulgated by the
Commission under the Exchange Act, or any successor definition adopted by
the Commission, and as an "outside director" for purposes of Section
162(m).
n. "Early Retirement" of an employee means Termination of Employment with the
Company or an Affiliate at a time when the employee is entitled to early
retirement benefits pursuant to the early retirement provisions of the
applicable pension plan of such employer.
o. "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor thereto.
p. "Fair Market Value" means, as of any given date, the mean between the
highest and lowest reported sales prices of the Common Stock on the New
York Stock Exchange Composite Tape or, if not listed on such exchange, on
any other national securities exchange on which the Common Stock is listed
or on NASDAQ. If there is no regular public trading market for such Common
Stock, the Fair Market Value of the Common Stock will be determined by the
Committee in good faith.
q. "Incentive Stock Option" means any Stock Option designated as, and
qualified as, an "incentive stock option" within the meaning of Section 422
of the Code.
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r. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
s. "Normal Retirement" means (i) with respect to an employee, Termination of
Employment with the Company or an Affiliate at a time when the employee is
entitled to retirement benefits pursuant to the applicable pension plan of
such employer and (ii) with respect to a non-employee director, retirement
from the Board pursuant to the applicable rules for the Board.
t. "Performance Goals" means the performance goals established by the
Committee prior to the grant of Restricted Stock or Performance Units that
are based on the attainment of goals relating to one or more of the
following: total shareholder return, return on capital, earnings per share,
market share, stock price, sales, costs, net operating income, net income,
return on assets, earnings before income taxes, depreciation and
amortization, return on total assets employed, capital expenditures,
earnings before income taxes, economic value added, cash flow, retained
earnings, return on equity, results of customer satisfaction surveys,
aggregate product price and other product price measures, safety record,
service reliability, demand-side management (including conservation and
load management), operating and/or maintenance costs management (including
operation and maintenance expenses per Kwh), and energy production
availability. At the time of establishing a Performance Goal, the Committee
shall specify the manner in which the Performance Goal shall be calculated.
In so doing, the Committee may exclude the impact of certain specified
events from the calculation of the Performance Goal. Such Performance Goals
also may be based upon the attainment of specified levels of performance of
the Company or one or more Affiliates under one or more of the measures
described above relative to the performance of other corporations. With
respect to Covered Employees, all Performance Goals shall be objective
performance goals satisfying the requirements for "performance-based
compensation" within the meaning of Section 162(m)(4) of the Code, and
shall be set by the Committee within the time period prescribed by Section
162(m) and related regulations.
u. "Performance Units" means an award made pursuant to Section 8.
v. "Plan" means the OGE Energy Corp. Stock Incentive Plan, as set forth herein
and as hereinafter amended from time to time.
w. "Restricted Stock" means an award granted under Section 7.
x. "Retirement" means Normal or Early Retirement.
y. "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, as amended from time to time.
z. "Section 162(m)" means Section 162(m) of the Code, as amended from time to
time.
aa. "Stock Appreciation Right" means a right granted under Section 6.
bb. "Stock Option" means an option granted under Section 5.
cc. "Termination of Employment" means (i) with respect to an employee, the
termination of participant's employment with the Company and any Affiliate
and (ii) with respect to a non-employee director, termination of service on
the Board. A participant employed by an Affiliate shall also be deemed to
incur a Termination of Employment if the Affiliate ceases to be an
Affiliate and the participant does not immediately thereafter become or
remain an employee of the Company or another Affiliate.
In addition, certain other terms that are defined herein shall have the
definitions so ascribed to them.
SECTION 2. ADMINISTRATION.
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The Plan shall be administered by the Compensation Committee of the Board
or such other committee of the Board as the Board may from time to time
determine, which committee, to the extent required to comply with Rule 16-3 and
Section 162(m), shall be composed solely of not less than two Disinterested
Persons, each of whom shall be appointed by and serve at the pleasure of the
Board. The Committee shall have plenary authority to grant Awards pursuant to
the terms of the Plan to non-employee directors of the Company and officers and
employees of the Company and its Affiliates. Among other things, the Committee
shall have the authority, subject to the terms of the Plan:
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(a) to select the non-employee directors, officers and employees to whom Awards
may from time to time be granted;
(b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock
and Performance Units or any combination thereof are to be granted
hereunder;
(c) to determine the number of shares of Common Stock to be covered by each
Award granted hereunder;
(d) to determine the terms and conditions of any Award granted hereunder,
including, but not limited to, the option price (subject to Section 5(a),
any vesting condition, restriction or limitation (which may be related to
the performance of the participant, the Company or any Affiliate) and any
vesting acceleration or forfeiture waiver regarding any Award and the
shares of Common Stock relating thereto, based on such factors as the
Committee shall determine;
(e) to modify, amend or adjust the terms and conditions of any Award, at any
time or from time to time, including but not limited to Performance Goals;
provided, however, that the Committee may not adjust upwards the amount
payable to a designated Covered Employee with respect to a particular Award
upon the satisfaction of applicable Performance Goals or take any other
such action to the extent such action or the Committee's ability to take
such action would cause any Award under the Plan to any Covered Employee to
fail to qualify as "performance based compensation" within the meaning of
Section 162(m) and the regulations issued thereunder;
(f) to determine to what extent and under what circumstances Common Stock and
other amounts payable with respect to an Award shall be deferred; and
(g) to determine under what circumstances an Award may be settled in cash or
Common Stock under Section 8(b)(i).
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in office,
except that the members thereof may (i) delegate to an officer of the Company
the authority to make decisions pursuant to paragraphs (c), (f), (g), (h) and
(i) of Section 5 (provided that no such delegation may be made that would cause
Awards or other transactions under the Plan to cease to be exempt from Section
16(b) of the Exchange Act) and (ii) authorize any one or more of their number or
any officer of the Company to execute and deliver documents on behalf of the
Committee.
Any determination made by the Committee or pursuant to delegated authority
pursuant to the provisions of the Plan with respect to any Award shall be made
in the sole discretion of the Committee or such delegate at the time of the
grant of the Award or, unless in contravention of any express term of the Plan,
at any time thereafter. All decisions made by the Committee or any appropriately
delegated officer pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and its Affiliates and Plan
participants.
SECTION 3. COMMON STOCK SUBJECT TO PLAN; OTHER LIMITATIONS.
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The total number of shares of Common Stock reserved and available for
issuance under the Plan shall be 2,000,000; provided, that not more than 500,000
of such shares shall be issued as Restricted Stock. No participant may be
granted Awards covering in excess of 250,000 shares of Common Stock in any one
calendar year and no participant who is a non-employee director of the Company
may be granted, in any one calendar year, Awards covering in excess of 2,500
shares of Common Stock. Shares subject to an Award under the Plan may be
authorized and unissued shares or may be treasury shares. No participant may be
granted Performance Units in any one calendar year payable in cash in an amount
that would exceed $1,000,000 and no participant who is a non-employee director
of the Company may be granted Performance Units in any one calendar year payable
in cash in an amount that would exceed $15,000.
Subject to Section 7(c)(iv), if any shares of Restricted Stock are
forfeited for which the participant did not
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receive any benefits of ownership (as such phrase is construed by the Commission
or its staff), or if any Stock Option (and related Stock Appreciation Right, if
any) terminates without being exercised, or if any Stock Appreciation Right is
exercised for cash, shares subject to such Awards shall again be available for
distribution in connection with Awards under the Plan.
In the event of any change in corporate capitalization, such as a stock
split, or a corporate transaction, such as any merger, consolidation, share
exchange, separation, including a spin-off, or other distribution of stock or
property of the Company, any reorganization (whether or not such reorganization
comes within the definition of such term in Section 368 of the Code) or any
partial or complete liquidation of the Company, the Committee or Board may make
such substitution or adjustments in the aggregate number and kind of shares
reserved for issuance under the Plan, in the number, kind and option price of
shares subject to outstanding Stock Options and Stock Appreciation Rights, in
the number and kind of shares subject to other outstanding Awards granted under
the Plan and/or such other equitable substitution or adjustments as it may
determine to be appropriate in its sole discretion; provided, however, that the
number of shares subject to any Award shall always be a whole number. Such
adjusted option price shall also be used to determine the amount payable by the
Company upon the exercise of any Stock Appreciation Right associated with any
Stock Option.
SECTION 4. ELIGIBILITY.
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Officers and employees of the Company and its Affiliates who are
responsible for or contribute to the management, growth and profitability of the
business of the Company and its Affiliates and non-employee directors of the
Company are eligible to be granted Awards under the Plan.
SECTION 5. STOCK OPTIONS.
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Stock Options may be granted alone or in addition to other Awards granted
under the Plan and may be of two types: Incentive Stock Options and Nonqualified
Stock Options. Any Stock Option granted under the Plan shall be in such form as
the Committee may from time to time approve.
The Committee shall have the authority to grant any optionee Incentive
Stock Options, Nonqualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights); provided, however, that
grants hereunder are subject to the aggregate limits on grants to individual
participants set forth in Section 3. Incentive Stock Options may be granted only
to employees of the Company and its subsidiaries (within the meaning of Section
424(f) of the Code). To the extent that any Stock Option is not designated as an
Incentive Stock Option or, even if so designated, does not qualify as an
Incentive Stock Option, it shall constitute a Nonqualified Stock Option.
Stock Options shall be evidenced by option agreements, the terms and
provisions of which may differ. An option agreement shall indicate on its face
whether it is intended to be an agreement for an Incentive Stock Option or a
Nonqualified Stock Option. The grant of a Stock Option shall occur on the date
the Committee by resolution selects an individual to be a participant in any
grant of a Stock Option, determines the number of shares of Common Stock to be
subject to such Stock Option to be granted to such individual and specifies the
terms and provisions of the Stock Option. The Company shall notify a participant
of any grant of a Stock Option, and a written option agreement or agreements
shall be duly executed and delivered by the Company to the participant. Such
agreement or agreements shall become effective upon execution by the Company and
the participant.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered nor
shall any discretion or authority granted under the Plan be exercised so as to
disqualify the Plan under Section 422 of the Code or, without the consent of the
optionee affected, to disqualify any Incentive Stock Option under such Section
422.
Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:
(a) OPTION PRICE. The option exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee and
set forth in the option agreement, and shall not be less than the Fair
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Market Value of the Common Stock subject to the Stock Option on the date of
grant.
(b) OPTION TERM. The term of each Stock Option shall be fixed by the Committee,
but no Incentive Stock Option shall be exercisable more than 10 years after
the date the Stock Option is granted.
(c) EXERCISABILITY. Except as otherwise provided herein, Stock Options shall be
exercisable at such time or times and subject to such terms and conditions
as shall be determined by the Committee. If the Committee provides that any
Stock Option is exercisable only in installments, the Committee may at any
time waive such installment exercise provisions, in whole or in part, based
on such factors as the Committee may determine. In addition, the Committee
may at any time accelerate the exercisability of any Stock Option.
(d) METHOD OF EXERCISE. Subject to the provisions of this Section 5, Stock
Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Company specifying
the number of shares of Common Stock subject to the Stock Option to be
purchased.
Such notice shall be accompanied by payment in full of the purchase price
by certified or bank check or such other instrument as the Company may accept,
or in such other manner as the Committee approves. If approved by the Committee,
payment in full or in part may also be made in the form of unrestricted Common
Stock already owned by the optionee of the same class as the Common Stock
subject to the Stock Option and, in the case of the exercise of a Nonqualified
Stock Option, Restricted Stock subject to an Award hereunder which is of the
same class as the Common Stock subject to the Stock Option (based, in each case,
on the Fair Market Value of the Common Stock on the date the Stock Option is
exercised); provided, however, that, in the case of an Incentive Stock Option,
the right to make a payment in the form of already owned shares of Common Stock
of the same class as the Common Stock subject to the Stock Option may be
authorized only at the time the Stock Option is granted.
If payment of the option exercise price of a Nonqualified Stock Option is
made in whole or in part in the form of Restricted Stock, the number of shares
of Common Stock to be received upon such exercise equal to the number of shares
of Restricted Stock used for payment of the option exercise price shall be
subject to the same forfeiture restrictions to which such Restricted Stock was
subject, unless otherwise determined by the Committee.
In the discretion of the Committee, payment for any shares subject to a
Stock Option may also be made by delivering a properly executed exercise notice
to the Company, together with a copy of irrevocable instructions to a broker to
deliver promptly to the Company the amount of sale or loan proceeds to pay the
purchase price, and, if requested by the Company, the amount of any federal,
state, local or foreign withholding taxes. To facilitate the foregoing, the
Company may enter into agreements for coordinated procedures with one or more
brokerage firms.
No shares of Common Stock shall be issued until full payment therefore has
been made. Subject to any forfeiture restrictions that may apply if a Stock
Option is exercised using Restricted Stock, an optionee shall have all of the
rights of a shareholder of the Company holding the class or series of Common
Stock that is subject to such Stock Option (including, if applicable, the right
to vote the shares and the right to receive dividends), when the optionee has
given written notice of exercise, has paid in full for such shares and, if
requested, has given the representation described in Section 13(a).
(e) NONTRANSFERABILITY OF STOCK OPTIONS. No Stock Option shall be transferable
by the optionee other than (i) by will or by the laws of descent and
distribution or (ii) in the case of a Nonqualified Stock Option, pursuant
to a gift to such optionee's children, whether directly or indirectly or by
means of a trust or partnership or otherwise, if expressly permitted under
the applicable option agreement. All Stock Options shall be exercisable,
during the optionee's lifetime, only by the optionee or by the guardian or
legal representative of the optionee, it being understood that the terms
"holder" and "optionee" include the guardian and legal representative of
the optionee named in the option agreement and any person to whom an option
is transferred by will or the laws of descent and distribution or, in the
case of a Nonqualified Stock Option, a gift permitted under the applicable
option agreement.
(f) TERMINATION OF EMPLOYMENT BY DEATH. Unless otherwise determined by the
Committee, if an optionee incurs a Termination of Employment by reason of
death, any Stock Option held by such optionee shall immediately become
exercisable and may thereafter be exercised by the holder for a period of
one year (or such other period as the Committee may specify in the option
agreement) from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter.
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(g) TERMINATION OF EMPLOYMENT BY REASON OF DISABILITY. Unless otherwise
determined by the Committee, if an optionee incurs a Termination of
Employment by reason of Disability, any Stock Option held by such optionee
shall immediately become exercisable and may thereafter be exercised by the
optionee for a period of three years (or such shorter period as the
Committee may specify in the option agreement) from the date of such
Termination of Employment or until the expiration of the stated term of
such Stock Option, whichever period is the shorter; provided, however, that
if the optionee dies within such three-year period (or such shorter
period), any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such three-year (or such shorter) period,
continue to be exercisable for a period of 12 months from the date of such
death or until the expiration of the stated term of such Stock Option,
whichever period is the shorter. In the event of Termination of Employment
by reason of Disability, if an Incentive Stock Option is exercised after
the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be treated as a
Nonqualified Stock Option.
(h) TERMINATION OF EMPLOYMENT BY REASON OF RETIREMENT. Unless otherwise
determined by the Committee, if an optionee incurs a Termination of
Employment by reason of Retirement, any Stock Option held by such optionee
shall immediately become exercisable and may thereafter be exercised by the
optionee for a period of three years (or such shorter period as the
Committee may specify in the option agreement) from the date of such
Termination of Employment or until the expiration of the stated term of
such Stock Option, whichever period is the shorter; provided, however, that
if the optionee dies within such three-year (or such shorter) period any
unexercised Stock Option held by such optionee shall, notwithstanding the
expiration of such three-year (or such shorter) period, continue to be
exercisable for a period of 12 months from the date of such death or until
the expiration of the stated term of such Stock Option, whichever period is
the shorter. In the event of Termination of Employment by reason of
Retirement, if an Incentive Stock Option is exercised after the expiration
of the exercise periods that apply for purposes of Section 422 of the Code,
such Stock Option will thereafter be treated as a Nonqualified Stock
Option.
(i) OTHER TERMINATION OF EMPLOYMENT. Unless otherwise determined by the
Committee, if an optionee incurs a Termination of Employment for any reason
other than death, Disability or Retirement, any Stock Option held by such
optionee shall thereupon terminate, except that such Stock Option, to the
extent then exercisable, or on such accelerated basis as the Committee may
determine, may be exercised for the lesser of three months from the date of
such Termination of Employment or the balance of such Stock Option's stated
term if such Termination of Employment of the optionee is involuntary;
provided, however, that if the optionee dies within such three-month
period, any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such three-month period, continue to be
exercisable to the extent to which it was exercisable at the time of death
for a period of 12 months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter. Notwithstanding the foregoing, if an optionee incurs a Termination
of Employment at or after a Change of Control (as defined in Section 9(b)),
other than by reason of death, Disability or Retirement, any Stock Option
held by such optionee shall be exercisable for the lesser of (1) six months
and one day from the date of such Termination of Employment, or (2) the
balance of such Stock Option's stated term. In the event of Termination of
Employment, if an Incentive Stock Option is exercised after the expiration
of the exercise periods that apply for purposes of Section 422 of the Code,
such Stock Option will thereafter be treated as a Nonqualified Stock
Option.
(j) CHANGE OF CONTROL CASH-OUT. Notwithstanding any other provision of the
Plan, during the 60-day period from and after a Change of Control (the
"Exercise Period"), unless the Committee shall determine otherwise at the
time of grant or pursuant to Section 13(i) hereof, an optionee shall have
the right, whether or not the Stock Option is fully exercisable and in lieu
of the payment of the exercise price for the shares of Common Stock being
purchased under the Stock Option and by giving notice to the Company, to
elect (within the Exercise Period) to surrender all or part of the Stock
Option to the Company and to receive cash, within 30 days of such notice,
in an amount equal to the amount by which the Change of Control Price per
share of Common Stock on the date of such election shall exceed the
exercise price per share of Common Stock under the Stock Option (the
"Spread") multiplied by the number of shares of Common Stock granted under
the Stock Option as to which the right granted under this Section 5(j)
shall have been exercised.
SECTION 6. STOCK APPRECIATION RIGHTS.
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(a) Grant and Exercise. Stock Appreciation Rights may be granted in conjunction
with all or part of any Stock Option granted under the Plan. In the case of
a Nonqualified Stock Option, such rights may be granted either
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at or after the time of grant of such Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of
grant of such Stock Option. A Stock Appreciation Right shall terminate and
no longer be exercisable upon the termination or exercise of the related
Stock Option.
A Stock Appreciation Right may be exercised by an optionee in accordance
with Section 6(b) by surrendering the applicable portion of the related Stock
Option in accordance with procedures established by the Committee. Upon such
exercise and surrender, the optionee shall be entitled to receive an amount
determined in the manner prescribed in Section 6(b). Stock Options which have
been so surrendered shall no longer be exercisable to the extent the related
Stock Appreciation Rights have been exercised.
(b) TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to such
terms and conditions as shall be determined by the Committee, including the
following:
(i) Stock Appreciation Rights shall be exercisable only at such time or times
and to the extent that the Stock Options to which they relate are
exercisable in accordance with the provisions of Section 5 and this Section
6.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall be
entitled to receive an amount in cash, shares of Common Stock or both equal
in value to the excess of the Fair Market Value of one share of Common
Stock over the option price per share specified in the related Stock Option
multiplied by the number of shares in respect of which the Stock
Appreciation Right shall have been exercised, with the Committee having the
right to determine the form of payment.
(iii)Stock Appreciation Rights shall be transferable only to permitted
transferees of the underlying Stock Option in accordance with Section 5(e).
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or part
thereof to which such Stock Appreciation Right is related shall be deemed
to have been exercised for the purpose of the limitation set forth in
Section 3 on the number of shares of Common Stock to be issued under the
Plan, but only to the extent of the number of shares as to which the Stock
Appreciation Right is exercised at the time of exercise.
SECTION 7. RESTRICTED STOCK.
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(a) ADMINISTRATION. Shares of Restricted Stock may be awarded either alone or
in addition to other Awards granted under the Plan. The Committee shall
determine the non-employee directors, officers and employees to whom and
the time or times at which grants of Restricted Stock will be awarded, the
number of shares to be awarded to any participant (subject to the aggregate
limits on grants to individual participants set forth in Section 3), the
conditions for vesting, the time or times within which such Awards may be
subject to forfeiture and any other terms and conditions of the Awards, in
addition to those contained in Section 7(c).
The Committee shall in the case of Covered Employees, and may in the case
of other participants, condition the vesting of Restricted Stock upon the
attainment of Performance Goals established before or at the time of grant and,
in each instance, may establish the various levels of achievement of Performance
Goals at which a portion or all of such Restricted Stock vests. In the case of
Covered Employees, prior to the vesting of any Restricted Stock, the Committee
shall certify that the applicable Performance Goals have been satisfied. The
Committee may, in addition to requiring satisfaction of any applicable
Performance Goals, also condition vesting upon the continued service of the
participant. The provisions of Restricted Stock Awards (including the applicable
Performance Goals) need not be the same with respect to each recipient.
(b) AWARDS AND CERTIFICATES. Shares of Restricted Stock shall be evidenced in
such manner as the Committee may deem appropriate, including book-entry
registration or issuance of one or more stock certificates. Any certificate
issued in respect of shares of Restricted Stock shall be registered in the
name of such participant and shall bear an appropriate legend referring to
the terms, conditions and restrictions applicable to such Award,
substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the OGE Energy Corp. Stock Incentive Plan and a
Restricted Stock Agreement. Copies of such Plan and Agreement are on
file at the offices of OGE Energy Corp. at 101 North Robinson,
Oklahoma City, Oklahoma 73102."
The Committee may require that the certificates evidencing such shares be
held in custody by the Company until the restrictions thereon shall have lapsed
and that, as a condition of any Award of Restricted Stock, the
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participant shall have delivered a stock power, endorsed in blank, relating
to the Common Stock covered by such Award.
(c) TERMS AND CONDITIONS. Shares of Restricted Stock shall be subject to the
following terms and conditions:
(i) Subject to the provisions of the Plan (including Section 5(d)) and the
Restricted Stock Agreement referred to in Section 7(c)(vi), during the
period, if any, set by the Committee, commencing with the date of such
Award for which such participant's continued service is required (the
"Restriction Period"), and until the later of (i) the expiration of the
Restriction Period and (ii) the date the applicable Performance Goals (if
any) are satisfied, the participant shall not be permitted to sell, assign,
transfer, pledge or otherwise encumber shares of Restricted Stock. Within
these limits, the Committee may provide for the lapse of restrictions based
upon period of service in installments or otherwise and may accelerate or
waive, in whole or in part, restrictions based upon period of service or
upon performance; provided, however, that in the case of Restricted Stock
with respect to which a participant is a Covered Employee, any applicable
Performance Goals have been satisfied.
(ii) Except as provided in this paragraph (ii) and Section 7(c)(i) and the
Restricted Stock Agreement, the participant shall have, with respect to the
shares of Restricted Stock, all of the rights of a shareholder of the
Company holding the class or series of Common Stock that is the subject of
the Restricted Stock, including, if applicable, the right to vote the
shares and the right to receive any cash dividends. If so determined by the
Committee in the applicable Restricted Stock Agreement and subject to
Section 13(f) of the Plan (1) cash dividends on the class or series of
Common Stock that is the subject of the Restricted Stock Award shall be
automatically deferred and reinvested in additional Restricted Stock, held
subject to the vesting of the underlying Restricted Stock, or held subject
to meeting Performance Goals applicable only to dividends, and (2)
dividends payable in Common Stock shall be paid in the form of Restricted
Stock of the same class as the Common Stock with which such dividend was
paid, held subject to the vesting of the underlying Restricted Stock, or
held subject to meeting Performance Goals applicable only to dividends.
(iii)Except to the extent otherwise provided in the applicable Restricted Stock
Agreement, any applicable employment agreement and Sections 7(c)(i),
7(c)(iv) and 9(a)(ii), upon a participant's Termination of Employment for
any reason during the Restriction Period or before the applicable
Performance Goals are satisfied, all shares still subject to restriction
shall be forfeited by the participant.
(iv) Except to the extent otherwise provided in Section 9(a)(ii), in the event
that a participant incurs a Termination of Employment due to Retirement or
involuntary termination, the Committee shall have the discretion to waive
in whole or in part any or all remaining restrictions (other than, in the
case of Restricted Stock with respect to which a participant is a Covered
Employee, satisfaction of the applicable Performance Goals unless the
participant's Termination of Employment is due to death or Disability) with
respect to any or all of such participant's shares of Restricted Stock.
(v) If and when the applicable Performance Goals are satisfied for any shares
of Restricted Stock and the Restriction Period expires without a prior
forfeiture of such shares of Restricted Stock, unlegended certificates for
such shares shall be delivered to the participant upon surrender of the
legended certificates.
(vi) Each Award shall be confirmed by, and be subject to the terms of, a
Restricted Stock Agreement.
SECTION 8. PERFORMANCE UNITS.
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(a) ADMINISTRATION. Performance Units may be awarded either alone or in
addition to other Awards granted under the Plan. Performance Units may be
denominated in shares of Common Stock or cash, or may represent the right
to receive dividend equivalents with respect to shares of Common Stock, as
the Committee shall determine. The Committee shall determine the
non-employee directors, officers and employees to whom and the time or
times at which Performance Units shall be awarded, the form and number of
Performance Units to be awarded to any participant (subject to the
aggregate limits on grants to individual participants set forth in Section
3), the duration of the Award Cycle and any other terms and conditions of
the Award, in addition to those contained in Section 8(b).
The Committee shall condition the settlement of Performance Units upon the
attainment of Performance Goals, which shall be established before or at the
time of grant. The provisions of such Awards (including the applicable
Performance Goals) need not be the same with respect to each recipient.
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(b) TERMS AND CONDITIONS. Performance Units Awards shall be subject to the
following terms and conditions:
(i) Subject to the provisions of the Plan and the Performance Unit Agreement
referred to in Section 8(b)(vi), Performance Units may not be sold,
assigned, transferred, pledged or otherwise encumbered during the Award
Cycle. At the expiration of the Award Cycle, the Committee shall evaluate
actual performance in light of the Performance Goals for such Award, shall
certify the extent to which such Performance Goals have been satisfied and
shall determine the number of Performance Units granted to the participant
which have been earned and the Committee may then elect to deliver cash,
shares of Common Stock, or a combination thereof, in settlement of the
earned Performance Units, in accordance with the terms thereof.
(ii) Except to the extent otherwise provided in the applicable Performance Unit
Agreement and Sections 8(b)(iii) and 9(a)(iii), upon a participant's
Termination of Employment for any reason during the Award Cycle or before
the applicable Performance Goals are satisfied, the rights to the shares
still covered by the Performance Units Award shall be forfeited by the
participant.
(iii)Except to the extent otherwise provided in the applicable Performance Unit
Agreement and Section 9(a)(iii), in the event that a participant incurs a
Termination of Employment due to death, Disability or Retirement, such
participant shall receive a prorated payment based on such participant's
number of full months of service during the Award Cycle, further adjusted
based on the achievement of the Performance Goals during the entire Award
Cycle, as certified by the Committee. Payment shall be made at the time
payments are made to participants who did not terminate service during the
Award Cycle.
(iv) A participant may elect to further defer receipt of the Performance Units
payable under an Award (or an installment of an Award) for a specified
period or until a specified event, subject in each case to the Committee's
approval and to such terms as are determined by the Committee (the
"Elective Deferral Period"). Subject to any exceptions adopted by the
Committee, such election must generally be made prior to commencement of
the Award Cycle for the Award (or for such installment of an Award).
(v) If and when the applicable Performance Goals are satisfied and the Elective
Deferral Period expires without a prior forfeiture of the Performance
Units, payment in accordance with Section 8(b)(i) hereof shall be made to
the participant.
(vi) Each Award shall be confirmed by, and be subject to the terms of, a
Performance Unit Agreement.
SECTION 9. CHANGE OF CONTROL PROVISIONS.
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(a) IMPACT OF EVENT. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change of Control:
(i) Any Stock Options and Stock Appreciation Rights outstanding as of the date
such Change of Control is determined to have occurred and not then
exercisable and vested shall become fully exercisable and vested to the
full extent of the original grant.
(ii) The restrictions applicable to any Restricted Stock shall lapse, and such
Restricted Stock shall become free of all restrictions and become fully
vested and transferable to the full extent of the original grant.
(iii)All Performance Units shall be considered to be earned and payable in full
and any deferral or other restriction shall lapse and such Performance
Units shall be settled in cash as promptly as is practicable.
(b) DEFINITION OF CHANGE OF CONTROL. For purposes of the Plan, a "Change of
Control" shall mean the happening of any of the following events:
(i) An acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of either (1) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common Stock") or
(2) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however, the
following: (1) any acquisition directly from the Company, (2) any
acquisition by the Company, (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company or (4) any acquisition by any
corporation pursuant to a transaction which complies with clauses (1), (2)
and (3) of subsection (iii) of this Section 9(b); or
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(ii) A change in the composition of the Board such that the individuals who, as
of January 1, 1998, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided,
however, for purposes of this Section 9(b), that any individual who becomes
a member of the Board subsequent to January 1, 1998, whose election, or
nomination for election by the Company's shareowners, was approved by a
vote of at least a majority of those individuals then comprising the
Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board; but, provided further, that any such individual
whose initial assumption of office occurs as a result of either an actual
or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board shall not be so considered
as a member of the Incumbent Board; or
(iii)Consummation of a reorganization, merger, share exchange or consolidation
or sale or other disposition of all or substantially all of the assets of
the Company (a "Business Combination"), excluding, however, such a Business
Combination pursuant to which (1) all or substantially all of the
individuals and entities who are the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company or all or substantially all
of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be,
(2) no Person (other than the corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the Company
or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the outstanding voting
securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (3) at least a majority of
the members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or the action of the Board,
providing for such Businss Combination; or
(iv) The approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
(c) Change of Control Price. For purposes of the Plan, "Change of Control
Price" means the higher of (i) the highest reported sales price, regular
way, of a share of Common Stock in any transaction reported on the New York
Stock Exchange Composite Tape or other national exchange on which such
shares are listed or on NASDAQ during the 60-day period prior to and
including the date of a Change of Control or (ii) if the Change of Control
is the result of a tender or exchange offer or a Business Combination, the
highest price per share of Common Stock paid in such tender or exchange
offer or Business Combination; provided, however, that in the case of
Incentive Stock Options and Stock Appreciation Rights relating to Incentive
Stock Options, the Change of Control Price shall be in all cases the Fair
Market Value of the Common Stock on the date such Incentive Stock Option or
Stock Appreciation Right is exercised. To the extent that the consideration
paid in any such transaction described above consists all or in part of
securities or other non-cash consideration, the value of such securities or
other non-cash consideration shall be determined in the sole discretion of
the Board.
SECTION 10. LOANS.
- --------------------------------------------------------------------------------
The Company may make loans to a participant in connection with Awards
subject to the following terms and conditions and such other terms and
conditions not inconsistent with the Plan as the Committee shall impose from
time to time, including without limitation the rate of interest, if any, and
whether such loan shall be recourse or non-recourse.
No loan made under the Plan shall exceed the sum of (i) the aggregate price
payable with respect to the Award in relation to which the loan is made, plus
(ii) the amount of the reasonably estimated combined amounts of Federal and
state income taxes payable by the participant.
A-10
<PAGE>
No loan shall have an initial term exceeding ten (10) years; provided that
the loans under the Plan shall be renewable at the discretion of the Committee;
and provided, further, that the indebtedness under each loan shall become due
and payable, as the case may be, on a date no later than (i) one year after
Termination of Employment due to death, Retirement or Disability, or (ii) the
day of Termination of Employment for any reason other than death, Retirement or
Disability.
Loans under the Plan may be satisfied by the participant, as determined by
the Committee, in cash or, with the consent of the Committee, in whole or in
part in the form of unrestricted Common Stock already owned by the participant
where such Common Stock shall be valued at Fair Market Value on the date of such
payment.
When a loan shall have been made, Common Stock with a Fair Market Value on
the date of such loan equivalent to the amount of the loan shall be pledged by
the participant to the Company as security for payment of the unpaid balance of
the loan. Any portions of such Common Stock may, in the discretion of the
Committee, be released from time to time as it deems not to be needed as
security.
The making of any loan is subject to satisfying all applicable laws, as
well as any regulations and rules of the Federal Reserve Board and any other
governmental agency having jurisdiction.
SECTION 11. TERM, AMENDMENT AND TERMINATION.
- --------------------------------------------------------------------------------
The Plan will terminate 10 years after the effective date of the Plan.
Under the Plan, Awards outstanding as of such date shall not be affected or
impaired by the termination of the Plan.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would (i) impair the rights of
an optionee under a Stock Option or a recipient of a Stock Appreciation Right,
Restricted Stock Award or Performance Unit Award theretofore granted without the
optionee's or recipient's consent, except such an amendment made to cause the
Plan to qualify or continue to qualify for the exemption provided by Rule 16b-3,
or (ii) disqualify the Plan from the exemption provided by Rule 16b-3. In
addition, no such amendment shall be made without the approval of the Company's
shareholders to the extent such approval is required by law or agreement.
The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, except that: (i) no such
amendment shall impair the rights of any holder without the holder's consent
except such an amendment made to cause the Plan or Award to qualify for the
exemption provided by Rule 16b-3 and (ii) no such amendment shall lower the
option exercise price of an Option other than as permitted by Section 3 in
connection with a change in corporate capitalization or other transaction
described in Section 3.
Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules, as
well as other developments and to grant Awards which qualify for beneficial
treatment under such rules without shareholder approval.
SECTION 12. UNFUNDED STATUS OF PLAN.
- --------------------------------------------------------------------------------
It is presently intended that the Plan constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided, however, that, unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 13. GENERAL PROVISIONS.
- --------------------------------------------------------------------------------
(a) The Committee may require each person purchasing or receiving shares
pursuant to an Award to represent to and agree with the Company in writing
that such person is acquiring the shares without a view to the distribution
thereof. The certificates for such shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer.
A-11
<PAGE>
Notwithstanding any other provision of the Plan or agreements made pursuant
thereto, the Company shall not be required to issue or deliver any certificate
or certificates for shares of Common Stock under the Plan prior to fulfillment
of all of the following conditions:
(1) The listing or approval for listing upon notice of issuance, of such shares
on the New York Stock Exchange, Inc., or such other securities exchange as
may at the time be the principal market for the Common Stock;
(2) Any registration or other qualification of such shares of the Company under
any state or Federal law or regulation, or the maintaining in effect of any
such registration or other qualification which the Committee shall, in its
absolute discretion upon the advice of counsel, deem necessary or
advisable; and
(3) The obtaining of any other consent, approval, or permit from any state or
Federal governmental agency which the Committee shall, in its absolute
discretion after receiving the advice of counsel, determine to be necessary
or advisable.
(b) Nothing contained in the Plan shall prevent the Company or any Affiliate
from adopting other or additional compensation arrangements for its
employees.
(c) The adoption of the Plan shall not confer upon any employee any right to
continued employment nor shall it interfere in any way with the right of
the Company or any Affiliate to terminate the employment of any employee at
any time.
(d) No later than the date as of which an amount first becomes includible in
the gross income of the participant for Federal income tax purposes with
respect to any Award under the Plan, the participant shall pay to the
Company, or make arrangements satisfactory to the Company regarding the
payment of, any Federal, state, local or foreign taxes of any kind required
by law to be withheld with respect to such amount. Unless otherwise
determined by the Company, withholding obligations may be settled with
Common Stock, including Common Stock that is part of the Award that gives
rise to the withholding requirement. The obligations of the Company under
the Plan shall be conditional on such payment or arrangements, and the
Company and its Affiliates shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to the
participant. The Committee may establish such procedures as it deems
appropriate, including the making of irrevocable elections, for the
settlement of withholding obligations with Common Stock.
(e) The Plan and all Awards made and actions taken thereunder shall be governed
by and construed in accordance with the laws of the State of Oklahoma,
without reference to principles of conflict of laws.
(f) The reinvestment of dividends in additional Restricted Stock at the time of
any dividend payment shall only be permissible if sufficient shares of
Common Stock are available under Section 3 for such reinvestment (taking
into account then outstanding Stock Options and other Awards).
(g) The Committee shall establish such procedures as it deems appropriate for a
participant to designate a beneficiary to whom any amounts payable in the
event of the participant's death are to be paid or by whom any rights of
the participant, after the participant's death, may be exercised.
(h) In the case of a grant of an Award to any employee of an Affiliate, the
Company may, if the Committee so directs, issue or transfer the shares of
Common Stock, if any, covered by the Award to the Affiliate, for such
lawful consideration as the Committee may specify, upon the condition or
understanding that the Affiliate will transfer the shares of Common Stock
to the employee in accordance with the terms of the Award specified by the
Committee pursuant to the provisions of the Plan.
(i) Notwithstanding any other provision of the Plan, if any right granted
pursuant to this Plan would make a Change of Control transaction ineligible
for pooling of interests accounting under APB No. 16 (or any similar
bulletin, rule or regulation) that but for the nature of such grant would
otherwise be eligible for such accounting treatment, the Committee shall
have the ability to substitute for the cash payable pursuant to such grant
Common Stock (or the common stock of the issuer for which the Common Stock
is being exchanged in such Change of Control transaction) with a Fair
Market Value equal to the cash that would otherwise be payable hereunder.
SECTION 14. EFFECTIVE DATE OF PLAN.
- --------------------------------------------------------------------------------
The Plan shall be effective as of January 1, 1998, but only if it is
subsequently approved by the affirmative vote of a majority of the votes
entitled to be cast by the holders of the shares of common stock of the Company
represented at a meeting and entitled to vote thereon.
A-12
<PAGE>
ANNEX B
OGE ENERGY CORP.
ANNUAL INCENTIVE COMPENSATION PLAN
- --------------------------------------------------------------------------------
I. PURPOSE AND EFFECTIVE TIME OF THE PLAN
The purpose of the Annual Incentive Compensation Plan (the "Plan") is to
maximize the efficiency and effectiveness of the operations of OGE Energy Corp.
and its subsidiaries (the "Company") by providing incentive compensation
opportunities to certain key executives and managers responsible for operational
effectiveness. The Plan is intended to encourage and reward the achievement of
certain results critical to meeting the Company's operational goals. It is also
designed to assist in the attraction and retention of quality employees, to link
further the financial interest and objectives of employees with those of the
Company and to foster accountability and teamwork throughout the Company.
This Plan is designed to provide incentive compensation opportunities;
awards made under this Plan are in addition to base salary adjustments given to
maintain market competitive salary levels.
Payments pursuant to Article 6 of the Plan are intended to qualify under
the performance-based compensation exemption of Section 162(m)(4)(C) of the
Internal Revenue Code of 1986, as amended.
The Plan shall be effective as of June 30, 1998, subject to approval of the
Plan by the shareowners of OGE Energy Corp. at its 1998 annual meeting by the
affirmative vote of a majority of the shares of common stock of OGE Energy Corp.
present in person or represented by proxy at the meeting and entitled to vote.
II. DEFINITIONS
- --------------------------------------------------------------------------------
When used in the Plan, the following words and phrases shall have the following
meanings:
2.1. "Base Salary" means the actual annual base salary in effect for the first
-------------
full pay period after the beginning of the Plan Year as shown in the
personnel records of the Company, and, for a Participant who is added to
the Plan during a Plan Year pursuant to Section 4.3, his or her annual base
salary in effect at the time he or she becomes a Participant as shown in
the personnel records of the Company.
2.2. "Board" means the Board of Directors of Energy Corp.
------
2.3. "Change of Control" shall mean the happening of any of the following
--------------------
events:
(i) An acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 20% or more of either (1) the then outstanding shares
of common stock of Energy Corp. (the "Outstanding Company Common Stock") or
(2) the combined voting power of the then outstanding voting securities of
Energy Corp. entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); excluding, however, the
following: (1) any acquisition directly from Energy Corp., (2) any
acquisition by Energy Corp., (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by Energy Corp. or any
corporation controlled by Energy Corp. or (4) any acquisition by any
corporation pursuant to a transaction which complies with clauses (1), (2)
and (3) of subsection (iii) below; or
(ii) A change in the composition of the Board such that the individuals who, as
of January 1, 1998, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided,
however, that any individual who becomes a member of the Board subsequent
to January 1, 1998, whose election, or nomination for election by Energy
Corp.'s shareowners, was approved by a vote of at least a majority of those
individuals then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board; but, provided
further, that any such individual whose initial assumption of office occurs
as a result of either an actual or threatened election contest with respect
to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the Board shall not be so considered as a member of the Incumbent Board; or
B-1
<PAGE>
(iii)Consummation of a reorganization, merger, share exchange or consolidation
or sale or other disposition of all or substantially all of the assets of
Energy Corp. (a "Business Combination"), excluding, however, such a
Business Combination pursuant to which (1) all or substantially all of the
individuals and entities who are the beneficial owners, respectively, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 60% of, respectively, the outstanding
shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as
a result of such transaction owns Energy Corp. or all or substantially all
of Energy Corp.'s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be,
(2) no Person (other than the corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of Energy Corp.
or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the outstanding voting
securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (3) at least a majority of
the members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or the action of the Board,
providing for such Business Combination; or
(iv) The approval by the shareowners of Energy Corp. of a complete liquidation
or dissolution of Energy Corp.
2.4. "Code" means the Internal Revenue Code of 1986, as amended.
-----
2.5. "Committee" means the Compensation Committee of the Board or any other
----------
Committee of the Board designated by resolution of the Board to perform
certain administrative functions under the Plan provided that, to the
extent awards under the Plan are intended to be exempt from Section 162(m)
of the Code, such Committee shall be comprised of two or more persons, each
of whom shall qualify as an "outside director" for purposes of Section
162(m)(4) of the Code.
2.6. "Company" means Energy Corp., its subsidiary, Oklahoma Gas and Electric
--------
Company, and any domestic subsidiary or division of these entities, as
designated by the Committee for participation in the Plan.
2.7. "Company Performance Goals" shall have the meaning ascribed to it by
----------------------------
Section 6.2 hereof.
2.8. "Covered Employee" means, for any Plan Year, a Participant designated prior
-----------------
to the grant of a Target Company Award for such Plan Year who is or may be
a "covered employee" within the meaning of Section 162(m)(3) of the Code
for such Plan Year.
2.9. "Earned Award" means the Earned Individual Award, if any, and the Earned
-------------
Company Award, if any, for a Participant for the applicable Plan Year.
2.10."Earned Company Award" means the actual award earned under a Participant's
----------------------
Target Company Award during a Plan Year as determined by the Committee
after the end of the Plan Year (pursuant to Section 6.3 hereof).
2.11."Earned Individual Award" means the actual award earned under a
----------------------------
Participant's Target Individual Award during a Plan Year as determined by
the Committee after the end of the Plan Year (pursuant to Section 5.4
hereof).
2.12."Energy Corp." shall mean OGE Energy Corp. and its successors and assigns.
-------------
2.13."Participant" means any officer, executive or other key employee of the
------------
Company selected by the Committee to be eligible to receive an award under
the Plan. Members of the Board who are not employed on a full-time basis by
the Company are not eligible to receive awards under the Plan.
2.14."Performance Matrix" means the chart or charts or other schedules approved
--------------------
by the Committee that are used to determine the percentage of each
Participant's Target Company Award which the Participant will actually
receive as a result of the attainment of Company Performance Goals.
2.15."Plan" means this Annual Incentive Compensation Plan, as it may be amended
-----
from time to time.
2.16."Plan Year" means a fiscal year beginning January 1 and ending December 31.
----------
B-2
<PAGE>
2.17."Target Company Award" means an award established pursuant to Article 6
-----------------------
hereof. Such Target Company Award shall be expressed as a percentage of the
Participant's Base Salary.
2.18."Target Individual Award" means an award established pursuant to Article 5
------------------------
hereof. Such Target Individual Award shall be expressed as a percentage of
the Participant's Base Salary.
III. ADMINISTRATION OF THE PLAN
- --------------------------------------------------------------------------------
The Plan shall be administered by the Committee to the extent provided
herein. Subject to the provisions of the Plan, the Board shall have exclusive
authority to amend, modify, suspend or terminate the Plan at any time.
IV. ELIGIBILITY AND PARTICIPATION
- --------------------------------------------------------------------------------
4.1. Eligibility. Eligibility for participation in the Plan shall be limited to
-----------
those officers, executives or other key employees who are nominated for
participation by the Chief Executive Officer of Energy Corp. (the "Chief
Executive Officer") and then selected by the Committee to participate in
the Plan.
4.2. Participation. Participation in the Plan shall be determined annually based
-------------
upon nomination by the Chief Executive Officer and selection by the
Committee. Specific criteria for participation shall be determined by the
Committee prior to the beginning of each Plan Year. Persons selected for
participation shall be notified in writing of their selection, and of their
individual performance goals and Company Performance Goals and related
Target Individual Awards and Target Company Awards, as soon after approval
as is practicable.
4.3. Partial Plan Year Participation. Subject to Article 6 herein, the Committee
-------------------------------
may, upon recommendation of the Chief Executive Officer, allow an
individual who becomes eligible after the beginning of a Plan Year to
participate in the Plan for that period. In such case, the Participant's
Earned Award normally shall be prorated based on the number of full months
of participation during such Plan Year. However, subject to Section 5.1 and
Article 6 herein, the Chief Executive Officer, subject to Committee
approval, may authorize an unreduced Earned Award.
4.4. Termination of Approval. In its sole discretion, the Committee may withdraw
-----------------------
its approval for participation in the Plan with respect to a Plan Year for
a Participant at any time during such Plan Year; provided, however, that
such withdrawal must occur before the end of such Plan Year and provided
further that, in the event a Change of Control occurs during a Plan Year,
the Committee may not thereafter withdraw its approval for a Participant
during such Plan Year. In the event of such withdrawal, the employee
concerned shall cease to be a Participant as of the date designated by the
Committee, and the employee shall not be entitled to any part of an Earned
Award for the Plan Year in which such withdrawal occurs. Such employee
shall be notified of such withdrawal in writing as soon as practicable
following such action.
V. INDIVIDUAL AWARDS
- --------------------------------------------------------------------------------
5.1. Award Opportunities. At the beginning of each Plan Year, the Committee
--------------------
shall establish Target Individual Award levels for each Participant who is
to be granted an opportunity to achieve an Earned Individual Award. The
established levels may vary in relation to the responsibility level of the
Participant. In the event a Participant changes job levels during the Plan
Year, the Target Individual Award may be adjusted at the discretion of the
Committee to reflect the amount of time at each job level. Notwithstanding
any provision in this Plan to the contrary, (i) Target Individual Awards
and Earned Individual Awards shall not be granted to Covered Employees, and
(ii)Target Individual Awards shall not be dependent in any manner on, and
shall be established independently of and in addition to, the establishment
of any Target Company Awards or the payout of any Earned Company Awards
pursuant to Article 6 herein.
5.2. Individual Performance Goals. At the beginning of each Plan Year, the Chief
----------------------------
Executive Officer shall recommend individual performance goals for each
Participant who is granted a Target Individual Award. The Committee shall
consider and approve or modify the recommendations as appropriate. The
level of achievement of the individual performance goals by a Participant
at the end of the Plan Year, as determined pursuant to Section 5.4 below,
will determine such Participant's Earned Individual Award, which may range
from 0% to 175% of such Participant's Target Individual Award.
B-3
<PAGE>
5.3. Adjustment of Individual Performance Goals. The Chief Executive Officer
--------------------------------------------
shall have the right to adjust the individual performance goals (either up
or down) during the Plan Year if he determines that external changes or
other unanticipated conditions have materially affected the fairness of the
goals and unduly influenced a Participant's ability to meet them; provided,
however, that no such adjustment to the Chief Executive Officer's
individual performance goals shall be made unless approved by the
Committee; and provided further that no adjustment of such individual
performance goals for any Participant shall be made based upon the failure,
or the expected failure, to attain or exceed the Company Performance Goals
for any Target Company Award granted to such Participant under Article 6
herein and provided further that no adjustment shall be made of such
individual performance goals for a Plan Year in which a Change of Control
occurs.
5.4. Earned Individual Award Determination. At the end of each Plan Year, the
---------------------------------------
Chief Executive Officer shall review the performance of each Participant
who received a Target Individual Award. Based on the Chief Executive
Officer's determination as to a Participant's level of achievement of his
or her individual performance goals, the Chief Executive Officer shall make
a recommendation to the Committee as to the Earned Individual Award to be
received by such Participant. The payment of all Earned Individual Awards
is subject to approval by the Committee. The payment of an Earned
Individual Award to a Participant shall not be contingent in any manner
upon the attainment of, or failure to attain, the Company Performance Goals
for the Target Company Awards granted to such Participant under Article 6.
5.5. Maximum Payable/Aggregate Award Cap. The maximum amount payable to a
--------------------------------------
Participant pursuant to this Article 5 for performance by the Participant
during any fiscal year of the Company shall be $250,000. The Committee also
may establish guidelines governing the maximum Earned Individual Awards
that may be earned by all Participants in the aggregate, in each Plan Year.
These guidelines may be expressed as a percentage of a financial measure,
or such other measure as the Committee shall from time to time determine.
5.6. Deferral of Payment. The Committee may in its sole discretion delay payment
-------------------
to a Participant pursuant to this Article 5, until the Participant is no
longer a "covered employee" under Section 162(m) of the Code, as amended
from time to time, its legislative history, and any regulations promulgated
thereunder.
VI. COMPANY AWARDS
- --------------------------------------------------------------------------------
In addition to any Target Individual Awards granted under Article 5, Target
Company Awards based solely on Company performance may be established under this
Article 6 for Participants. Earned Company Awards are intended to satisfy the
performance-based compensation exemption under Code Section 162(m)(4)(C) and the
related regulations and shall thus be subject to the requirements set forth in
this Article 6.
6.1. Award Opportunities. On or before the 90th day of each Plan Year and in any
-------------------
event before 25% or more of the Plan Year has elapsed, the Committee shall
establish in writing for each Participant for whom a Target Company Award
is to be granted under this Article 6, the Target Company Award and
specific objective performance goals for the Plan Year, which goals shall
meet the requirements of Section 6.2 herein (such goals are hereinafter
referred to as "Company Performance Goals"). The extent, if any, to which
an Earned Company Award will be payable to a Participant will be based
solely upon the degree of achievement of such preestablished Company
Performance Goals over the specified Plan Year; provided, however, that,
unless and until a Change of Control occurs, the Committee may, in its sole
discretion, reduce or eliminate the amount which would otherwise be payable
with respect to a Plan Year. Payment of an Earned Company Award to a
Participant shall consist of a cash award from the Company to be based upon
a percentage (which may exceed 100%) of the Participant's Target Company
Award.
6.2. Company Performance Goals. The Company Performance Goals established by the
-------------------------
Committee pursuant to Section 6.1 will be based on one or more of the
following: total shareholder return, return on equity, return on capital,
earnings per share, market share, stock price, sales, costs, net operating
income, net income, return on assets, earnings before income taxes,
depreciation and amortization, return on total assets employed, capital
expenditures, earnings before income taxes, economic value added, cash
flow, retained earnings, results of customer satisfaction surveys,
aggregate product price and other product price measures, safety record,
service reliability, demand-side management (including conservation and
load management), operating and/or maintenance cost management (including
operation and maintenance expenses per Kwh) and energy production
availability performance measures. At the time of establishing a Company
Performance
B-4
<PAGE>
Goal, the Committee shall specify the manner in which the Company
Performance Goal shall be calculated. In so doing, the Committee may
exclude the impact of certain specified events from the calculation of the
Company Performance Goal. For example, if the Company Performance Goal were
earnings per share, the Committee could, at the time this Company
Performance Goal was established, specify that earnings per share are to be
calculated without regard to any subsequent change in accounting standards
required by the Financial Accounting Standards Board. Company Performance
Goals also may be based on the attainment of specified levels of
performance of Energy Corp. and/or any of its subsidiaries under one or
more of the measures described above relative to the performance of other
corporations. As part of the establishment of Company Performance Goals for
a Plan Year, the Committee shall also establish a minimum level of
achievement of the Company Performance Goals that must be met for a
Participant to receive any portion of his Target Company Award. All of the
provisions of this Section 6.2 are subject to the requirement that all
Company Performance Goals shall be objective performance goals satisfying
the requirement for "performance-based compensation" within the meaning of
Section 162(m)(4) of the Code and the related regulations.
6.3. Payment of an Earned Company Award. At the time the Target Company Award
------------------------------------
for a Participant is established, the Committee shall prescribe a formula
to determine the percentage (which may exceed 100%) of the Target Company
Award which may be payable to the Participant based upon the degree of
attainment of the Company Performance Goals during the Plan Year. Such
formula may be expressed in terms of a Performance Matrix, a form of which
is attached hereto as Schedule B. If the minimum level of achievement of
Company Performance Goals established by the Committee for a Participant
for a Plan Year is not met, no payment of an Earned Company Award will be
made to the Participant for that Plan Year. To the extent that the minimum
level of achievement of Company Performance Goals is satisfied or surpassed
for a Participant for a Plan Year, and upon written certification by the
Committee that the Company Performance Goals have been satisfied to a
particular extent and that any other material terms and conditions of the
Company Performance Awards have been satisfied, payment of an Earned
Company Award shall be made to the Participant for that Plan Year in
accordance with the prescribed formula except that, unless and until a
Change of Control occurs, the Committee may determine, in its sole
discretion, to reduce or eliminate the payment to be made.
6.4. Maximum Payable. The maximum amount payable to a Participant pursuant to
----------------
this Article 6 for performance by the Participant during any fiscal year of
the Company shall be $1,000,000.
6.5. Committee Discretion. Notwithstanding Articles 3 and 5 herein, the
---------------------
Committee shall not have discretion to modify the terms of Target Company
Awards or the formula for calculating Earned Company Awards, except as
specifically set forth in this Article 6.
VII. FORM AND TIME OF PAYMENT OF AWARDS
- --------------------------------------------------------------------------------
Subject to Article 6 herein, as soon as practicable following the
availability of the Company's audited financial statements pertaining to the
applicable Plan Year, Earned Award payments, if any, for such Plan Year shall be
paid in cash.
VIII. TERMINATION OF EMPLOYMENT
- --------------------------------------------------------------------------------
8.1. Termination of Employment Due to Death, Disability, or Retirement. In the
------------------------------------------------------------------
event a Participant's employment is terminated by reason of death, total
and permanent disability (as determined by the Committee), or retirement
(as determined by the Committee) during a Plan Year and such termination
does not occur within twenty-four (24) months after a Change of Control,
the Earned Award, determined in accordance with Section 5.4 and Section 6.3
herein, for such Plan Year shall be reduced to reflect participation prior
to termination. This reduction shall be determined by multiplying said
Earned Award by a fraction; the numerator of which is the months of
participation through the date of termination rounded up to whole months
and the denominator of which is 12. The Earned Award thus determined for a
Plan Year shall be paid as soon as practicable following the release of the
Company's audited financial statements pertaining to such Plan Year.
8.2. Termination of Employment for Other Reasons. In the event a Participant's
-------------------------------------------
employment is terminated for any reason other than death, total and
permanent disability (as determined by the Committee) or retirement
B-5
<PAGE>
(as determined by the Committee) during a Plan Year and such termination
does not occur within twenty-four (24) months after a Change of Control,
all of the Participant's rights to an Earned Award for the Plan Year then
in progress shall be forfeited; provided that, except in the event of a
termination of employment for cause (as determined in the sole discretion
of the Committee and without regard to Section 10.2 hereof), the Committee,
in its sole discretion, may pay a prorated award for the portion of that
Plan Year that the Participant was employed by Energy Corp. or any of its
subsidiaries, computed as determined by the Committee.
IX. BENEFICIARY DESIGNATION
- --------------------------------------------------------------------------------
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively and
who may include a trustee under a will or living trust) to whom any benefit
under the Plan is to be paid in case of his death before he received any or all
of such benefit. Each designation will revoke all prior designations by the same
Participant, shall be in a form prescribed by the Committee, and will be
effective only when filed by the Participant in writing with the Committee
during his lifetime. In the absence of any such designation, or if all
designated beneficiaries predecease the Participant, benefits remaining unpaid
at the Participant's death shall be paid to the Participant's estate.
X. CHANGE OF CONTROL
- --------------------------------------------------------------------------------
10.1.Termination Other than for Cause. Notwithstanding any other provisions of
--------------------------------
the Plan, in the event a Participant's employment with Energy Corp. or any
of its subsidiaries is terminated voluntarily or involuntarily for any
reason other than for cause (with cause being determined by the Committee
in accordance with Section 10.2 hereof), within twenty-four (24) months
after a Change of Control, all awards, if any, previously deferred (with
earnings) shall be paid to the Participant within ten (10) business days of
the termination, along with the Target Company Award and Target Individual
Award established for the Participant for the Plan Year in progress at the
time of the employment termination, prorated for the number of days in the
Plan Year in which the Participant was employed by Energy Corp. or any of
its subsidiaries, up to and including the date of termination; provided,
however, any such payment to a Participant pursuant to this Section 10.1
shall be reduced to the extent the Participant otherwise received payment
of such Target Company Award or Target Individual Award pursuant to the
terms of any employment agreement, plan, contract or other arrangement
involving the Participant and Energy Corp. or any of its subsidiaries.
10.2.Termination for Cause. In the event a Participant's employment with Energy
---------------------
Corp. or any of its subsidiaries is terminated for cause (as determined by
the Committee in the manner hereinafter set forth) within twenty-four (24)
months after a Change of Control, no Earned Award will be paid for the Plan
Year in progress at the time of the employment termination; provided that,
following a Change of Control, a Participant shall be deemed to be
terminated for cause only if his employment was terminated involuntarily at
the written direction of the Committee due solely to: (i) the willful and
continued failure of the Participant to substantially perform his duties
(other than any such failure resulting from physical or mental illness) for
a minimum period of two weeks after receiving a written demand for
substantial performance from the Committee which specifically identifies
the manner in which the Committee or Chief Executive Officer believes that
the Participant has not substantially performed his duties or (ii) the
willful engaging by the Participant in illegal conduct or gross misconduct
that is materially and demonstrably injurious to the Company.
XI. MISCELLANEOUS
- --------------------------------------------------------------------------------
11.1.Nontransferability. No Participant shall have the right to anticipate,
------------------
alienate, sell, transfer, assign, pledge or encumber his or her right to
receive any award made under the Plan until such an award becomes payable
to him or her.
11.2.No Right to Company Assets. Any benefits which become payable hereunder
---------------------------
shall be paid from the general assets of Energy Corp. or applicable
subsidiary. No Participant shall have any lien on any assets of the Company
by reason of any award made under the Plan.
B-6
<PAGE>
11.3.No Implied Rights; Employment. The adoption of the Plan or any
----------------------------------
modification or amendment hereof does not imply any commitment to continue
or adopt the same plan, or any modification thereof, or any other plan for
incentive compensation for any succeeding year, provided, that no such
modification or amendment shall adversely affect rights to receive any
amount to which Participants have become entitled prior to such
modifications and amendments. Neither the Plan nor any award made under the
Plan shall create any employment contract between the Company and any
Participant.
11.4.Participation. No Participant or other employee shall at any time have a
-------------
right to be selected for participation in the Plan for any Plan Year,
despite having been selected for participation in a prior Plan Year.
Nothing in this Plan shall interfere with or limit in any way the right of
the Company to terminate any Participant's employment at any time, nor
confer upon any Participant any right to continue in the employ of the
Company.
11.5.All Determinations Final. All determinations of the Committee or the Board
-------------------------
as to any disputed questions arising under the Plan, including questions of
construction and interpretation, shall be final, binding and conclusive
upon all Participants and all other persons and shall not be reviewable.
11.6.Plan Description. Each Participant shall be provided with a Plan
------------------
description and a Plan agreement for each Plan Year which shall include
Target Individual Awards, individual performance goals, Target Company
Awards, Company Performance Goals and a Performance Matrix for each year.
In the event of a conflict between the terms of the Plan description and
the Plan, the terms of the Plan shall control unless the Committee decides
otherwise.
11.7.Successors. This Plan shall be binding on the successors and assigns of
----------
Energy Corp.
B-7
<PAGE>
<TABLE>
<CAPTION>
OGE ENERGY CORP.
OGE ENERGY CORP. ANNUAL MEETING OF SHAREOWNERS
[LOGO] MAY 21, 1998
<S> <C>
P The undersigned hereby appoints Steven E. Moore, Herbert H. Champlin, and Bill Swisher, and each of them severally, with
full power of substitution and with full power to act with or without the other, as the proxies of the undersigned to represent
and to vote all shares of stock of OGE Energy Corp. held of record by the undersigned on March 23, 1998, at the Company's
R Annual Meeting of Shareowners to be held on May 21, 1998, and at all adjournments thereof, on all matters coming before said
meeting.
O THIS PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED ON THE REVERSE SIDE OF THIS PROXY CARD AND FOR APPROVAL OF
THE OGE ENERGY CORP. STOCK INCENTIVE PLAN AND THE OGE ENERGY CORP. ANNUAL INCENTIVE COMPENSATION PLAN.
X
-------------------------------------------------------------------------------------------------------------------------------
Y PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE. Unless you attend and vote in person,
you MUST sign and return your proxy in order to have your shares voted at the meeting.
-------------------------------------------------------------------------------------------------------------------------------
----------------
SEE REVERSE SIDE
----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
PLEASE DATE AND SIGN EXACTLY AS NAME APPEARS BELOW. EACH JOINT OWNER SHOULD SIGN. ATTORNEY, Please mark your votes as /X/
EXECUTOR, ADMINISTRATOR, TRUSTEE OR OTHERS SIGNING IN A REPRESENTATIVE CAPACITY SHOULD indicated in this example
GIVE THEIR FULL TITLES.
- ------------------------------------------------------------------------------------------------------------------------------------
The Board recommends a vote FOR the election as directors of the nominees named below and a vote FOR approval of the Stock Incentive
Plan and the Annual Incentive Compensation Plan.
- ------------------------------------------------------------------------------------------------------------------------------------
1. Election of Directors: FOR all NOMINEES / / WITHHOLD AUTHORITY / / 3. Approval of the FOR AGAINST ABSTAIN
NOMINEES: (list exceptions below). to vote for all nominees. OGE Energy Corp. / / / / / /
Luke R. Corbett; Annual Incentive
Robert Kelley; Compensation Plan.
Bill Swisher
- ---------------------------------------------------------------------------- 4. In their discretion, the proxies are authorized
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE to vote upon such other business as may properly
THAT NOMINEE'S NAME ON THE LINE ABOVE. come before the meeting.
2. Approval of the OGE Energy Corp. Stock FOR AGAINST ABSTAIN DISCONTINUE MAILING / / I WILL ATTEND THE / /
Incentive Plan. / / / / / / OF DUPLICATE ANNUAL ANNUAL MEETING
REPORT
- ------------------------------------------------------------------------------------------------------------------------------------
X / /98 X / /98
- -------------------------------------------------------------- ----------------------------------------------------------------
Signature of Shareowner Date Signature of Shareowner Date
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
OGE ENERGY CORP.
ADMISSION TICKET
RETAIN FOR ADMITTANCE
Annual Meeting of
OGE ENERGY CORP. SHAREOWNERS
Thursday, May 21, 1998
10:00 a.m.
Oklahoma City Marriott Hotel*
3233 Northwest Expressway
Oklahoma City, Oklahoma
It is important that your shares are represented at this meeting, whether
or not you attend the meeting in person. To make sure your shares are
represented, we urge you to complete and mail the proxy card above.
{MAP}
THIS TICKET MUST BE PRESENTED TO THE OGE REPRESENTATIVE AT THE MARRIOTT
HOTEL FOR ADMITTANCE TO THE ANNUAL MEETING.
*REGIONAL MAP ON REVERSE SIDE.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
OGE ENERGY CORP. ADMISSION TICKET
321 North Harvey Avenue RETAIN FOR ADMITTANCE
Oklahoma City, Oklahoma 73102
EAST BOUND I-44: Exit I-44 East
to Highway '3' (Grand Boule-
vard), continuing in a northerly
direction approximately 1-1/2
miles, exit right onto Highway
'3A' East (Northwest Express-
way), proceed approximately {MAP}
1/4 mile, turn left on Indepen-
dence,turn right to Marriott
Hotel.
WEST BOUND I-44: Exit left I-44
West 'Exit 125C' to Highway
'3A'(Northwest Expressway),
turn right onto Highway '3A'
(Northwest Expressway),
continue in a northwesterly
direction approximately 2 miles,
turn right to Marriott Hotel.
</TABLE>
