<PAGE>
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.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
- --------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee Computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- --------------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
3) Filing Party:
- --------------------------------------------------------------------------------
4) Date Filed:
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<PAGE>
OGE ENERGY CORP.
PROXY STATEMENT
AND
NOTICE OF ANNUAL MEETING
========================
MAY 27, 1999
OGE ENERGY CORP.
[LOGO]
<PAGE>
<TABLE>
<CAPTION>
CONTENTS
<S> <C> <C>
Page
NOTICE OF ANNUAL MEETING
Chairman's Letter 1 OF SHAREOWNERS
AND PROXY STATEMENT
Notice of Annual Meeting 2
THURSDAY, MAY 27, 1999, 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 5 OKLAHOMA CITY, OKLAHOMA
and Nominees
Information Concerning the 8
Board of Directors
Executive Officers' Compensation 9
Report of Compensation 9
Committee on Executive
Compensation
Summary Compensation Table 13
Pension Plan Table 15
Change of Control Arrangements 16
Company Stock Performance 16
Security Ownership 17
Section 16(a) Beneficial 17
Ownership Reporting Compliance
Relationship with Independent 18
Public Accountants
Shareowner Proposals 18
Map 19
i
</TABLE>
<PAGE>
OGE ENERGY CORP.
================----------------------------------------------------------------
March 29, 1999
DEAR SHAREOWNER:
You are cordially invited to attend the annual meeting of OGE Energy Corp.
at 10:00 a.m. on Thursday, May 27, 1999, at the Oklahoma City Marriott Hotel,
3233 Northwest Expressway, Oklahoma City, Oklahoma.
The matters to be voted on at the meeting are described in the Notice of
Annual Meeting of Shareowners and Proxy Statement on the following pages.
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 vote your shares as soon as
possible. A return envelope for your proxy card is enclosed for your
convenience. This year, for the first time, shareowners also have the option of
voting by telephone. A toll-free number and instructions are included on the
proxy card. 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 our 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
========================--------------------------------------------------------
The Annual Meeting of Shareowners of OGE Energy Corp. will be held on
Thursday, May 27, 1999, 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; and
(2) To transact such other business as may properly come before the
meeting.
The map on page 19 will assist you in locating the Oklahoma City Marriott Hotel.
Shareowneres who owned stock on March 19, 1999, are 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 our principal offices at
321 N. Harvey, Oklahoma City, Oklahoma 73102.
/s/ Irma B. Elliott
Irma B. Elliott
Vice President and Secretary
Dated: March 29, 1999
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IMPORTANT -- YOUR PROXY CARD IS ENCLOSED IN THIS ENVELOPE
To assure your representation at the meeting, please vote your shares by
telephone or 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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2
<PAGE>
PROXY STATEMENT
March 29, 1999
INTRODUCTION
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 27, 1999, at 10:00 a.m. For the convenience of those
shareowners who may attend the meeting, a map is printed on page 19 that gives
directions to the Oklahoma City Marriott Hotel. At the meeting, it is intended
that the first item 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.
Your Board of Directors is sending you this proxy statement in connection
with the solicitation of your proxy for use at the Annual Meeting. When you vote
by telephone or sign the proxy card, you appoint Steven E. Moore, Herbert H.
Champlin, and Bill Swisher as your representatives at the Annual Meeting.
Messrs. Moore, Champlin, and Swisher will vote your shares, as you have
instructed them, at the Annual Meeting. This way, your shares will be voted
whether or not you attend the Annual Meeting. Even if you plan to attend the
meeting, it is a good idea to vote your shares in advance of the meeting, just
in case your plans change.
If an issue comes up for vote at the meeting that is not on the proxy card,
Messrs. Moore, Champlin and Swisher will vote your shares, under your proxy, in
accordance with their best judgment.
VOTING PROCEDURES; REVOCATION OF PROXY
You may vote by mail, by phone or in person. To vote by mail, simply
complete and sign the proxy card and mail it in the enclosed, prepaid and
preaddressed envelope. If you mark your voting instructions on the proxy card,
your shares will be voted as you instruct. If you return a signed card but do
not provide voting instructions, your shares will be voted FOR the three named
nominees.
Shareowners of record also may vote by using the toll-free number listed on
the proxy card. Telephone voting also is available to shareowners who hold their
shares in the Dividend Reinvestment and Stock Purchase Plan and the OGE Energy
Corp. Employees' Stock Ownership and Retirement Savings Plan (the "Retirement
Savings Plan"). The telephone voting procedure is designed to verify shareowners
through use of a Control Number that is provided on each proxy card. This
procedure allows you to vote your shares and to confirm that your instructions
have been properly recorded. If you vote by telephone, you do not have to mail
in your proxy card. Please see your proxy card for specific instructions.
If you wish to vote in person, we will pass out written ballots at the
meeting. If you hold your shares in street name (i.e., they are held by your
broker in an account for you), you must request a legal proxy from your broker
in order to vote at the meeting.
If you change your mind after voting your proxy, you can revoke your proxy
and change your vote at any time before the polls close at the meeting. You can
revoke your proxy by either signing another proxy with a later date, by voting
by telephone or by voting again at the meeting. Alternatively, you may provide a
written statement to the Company (attention Irma B. Elliott, Vice President and
Corporate Secretary) of your intention to revoke your proxy.
RECORD DATE; NUMBER OF VOTES
If you owned shares of our Common Stock at the close of business on March
19, 1999, you are entitled to one vote per share upon each matter presented at
the meeting.
On March 1, 1999, there were 77,801,317 shares of Common Stock outstanding.
The Company does not have any other outstanding class of stock. No person holds
of record or, to our knowledge, beneficially owns more than 5% of our Common
Stock.
3
<PAGE>
EXPENSES OF PROXY SOLICITATION
We will pay all costs associated with preparing, assembling and mailing the
proxy cards and proxy statements. We also will reimburse brokers, nominees,
fiduciaries and other custodians for their expenses in forwarding proxy
materials to shareowners. Officers and other employees of the Company may
solicit proxies by mail, personal interview, telephone and/or telegraph. In
addition, we have retained Morrow & Co., Inc. to assist in the solicitation of
proxies, at a fee of approximately $7,000 plus associated costs and expenses.
Our employees will not receive any additional compensation for soliciting
proxies.
MAILING OF PROXY STATEMENT AND ANNUAL REPORT
This proxy statement and the enclosed proxy were mailed on or about March
29, 1999. We mailed our Annual Report for the year 1998 on or about March 29,
1999, to all of our shareowners who owned stock on March 19, 1999.
VOTING UNDER PLANS
If you are a participant in our Retirement Savings Plan (RSP), you will
receive a RSP voting directive for shares allocated to your account under the
RSP. The Trustee for the RSP will vote such shares as instructed by you in your
RSP voting directive. If you do not return a RSP voting directive, the Trustee
will not vote your allocated RSP shares. The Trustee, however, will vote all
unallocated RSP shares held in the RSP, in the same proportion that all
allocated shares in the RSP are voted.
If you are a participant in our Dividend Reinvestment and Stock Purchase
Plan (DRIP), your proxy will represent the shares held on your behalf under the
DRIP and such shares will be voted in accordance with the instructions on your
proxy. If you do not vote your proxy, your shares in the DRIP will not be voted.
VOTING OF SHARES HELD IN STREET NAME BY
YOUR BROKER
Brokerage firms have authority under New York Stock Exchange Rules to vote
customers' unvoted shares on certain "routine" matters, including the election
of directors. If you do not vote your proxy, your brokerage firm may either vote
your shares on routine matters or leave your shares unvoted. We encourage you to
provide instructions to your brokerage firm by voting your proxy. This ensures
your shares will be voted at the meeting. When a brokerage firm votes its
customers' unvoted shares on routine matters, these shares are counted for
purposes of establishing a quorum to conduct business at the meeting. A
brokerage firm, however, cannot vote customers' shares on non-routine matters.
Accordingly, these shares (sometimes referred to as broker non-votes) are
considered not entitled to vote on non-routine matters, rather than as a vote
against the matter.
PROPOSAL NO. 1 -
ELECTION OF DIRECTORS
- ----------------------------
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 27, 1999: Mr. Herbert H. Champlin, Mrs.
Martha W. Griffin and Dr. Ronald H. White. 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 .08% 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.
4
<PAGE>
INFORMATION ABOUT DIRECTORS AND NOMINEES
- --------------------------------------------------------------------------------
The following contains certain information as of March 1, 1999, concerning
the three nominees for directors, as well as the directors whose terms of office
extend beyond the Annual Meeting on May 27, 1999.
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NOMINEES FOR ELECTION FOR TERM EXPIRING AT 2002 ANNUAL MEETING OF SHAREOWNERS
HERBERT H. CHAMPLIN, 61, 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 [Photo]
December 31, 1996 and of OG&E since 1982, and is chairman of the
audit committee and a member of the nominating committee of the
Board. Mr. Champlin also was engaged separately during 1998 as a
part of his principal business occupation in the petroleum
industry and had interests in oil and gas wells
- --------------------------------------------------------------------------------
MARTHA W. GRIFFIN, 64, 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 [Photo]
since 1987, and is chairman of the nominating committee and a
member of the audit committee of the Board. During 1998, Mrs.
Griffin was also a major stockholder of television station KWTV,
Channel 9, Oklahoma City, Oklahoma. During 1998, OG&E paid an
aggregate of approximately $232,139 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.
- --------------------------------------------------------------------------------
RONALD H. WHITE, M.D., 62, 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
audit and nominating committees of the Board.
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5
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS WHOSE TERMS EXPIRE AT 2001 ANNUAL MEETING OF SHAREOWNERS
LUKE R. CORBETT, 52, is Chief Executive Officer of
Kerr-McGee Corporation, which is engaged in oil and gas
exploration and production and chemical operations. He has been
employed by Kerr-McGee Corporation for more than 14 years, having
served as Chairman and Chief Executive Officer from 1997 to 1999; [Photo]
President and Chief Operating Officer from 1995 to 1997; and
Group Vice President from 1992 to 1995. Mr. Corbett also serves
as a member of the Board of Directors of Devon Energy Corporation
and BOK Financial 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.
- --------------------------------------------------------------------------------
ROBERT KELLEY, 53, 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 [Photo]
Corporation, Chairman and Chief Executive Officer of Noble Gas
Marketing Inc., and President and Chief Executive Officer of
Noble Trading, Inc., 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.
- --------------------------------------------------------------------------------
BILL SWISHER, 68, is Chairman of the Board of CMI
Corporation, a manufacturer of road construction equipment that
is located in Oklahoma City, Oklahoma. Mr. Swisher has been a [Photo]
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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6
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS WHOSE TERMS EXPIRE AT 2000 ANNUAL MEETING OF SHAREOWNERS
WILLIAM E. DURRETT, 68, is Senior Chairman of the Board,
American Fidelity Corporation, an insurance holding company and
President and Chief Executive Officer of North American Insurance
Agency, Inc. From November 1989 to 1998, Mr. Durrett served as
Chairman, President and Chief Executive Officer of American
Fidelity Corporation. He also serves as a member of the Boards [Photo]
and holds various executive positions in numerous other
subsidiaries of American Fidelity Corporation. He also serves as
a director of BOK Financial Corporation and Chairman of the Board
of 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.
- --------------------------------------------------------------------------------
H. L. Hembree, III, 67, 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 1998, 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.
- --------------------------------------------------------------------------------
STEVEN E. MOORE, 52, 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. Mr. Moore was appointed President of OG&E in August
1995, and as Chief Executive Officer and Chairman of OG&E in May [Photo]
1996. Mr. Moore has been employed by OG&E for more than 24 years,
having previously 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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7
<PAGE>
INFORMATION CONCERNING THE BOARD OF DIRECTORS
- --------------------------------------------------------------------------------
Each member of our Board of Directors is also a director of OG&E. The Board
of Directors of the Company met on 6 occasions during 1998 and the Board of
Directors of OG&E met on 6 occasions during 1998. 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 Messrs. Hembree and
Kelley, who attended approximately 90% 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.
The members of the committees, and the duties and responsibilities of the
committees are described below.
<TABLE>
<CAPTION>
NAME OF COMMITTEE FUNCTIONS OF THE NUMBER OF
AND MEMBERS COMMITTEE MEETINGS IN 1998
----------- --------- ----------------
<S> <C> <C>
COMPENSATION COMMITTEE: Reviews and recommends 4
William E. Durrett o compensation of principal
H.L. Hembree, III officers
Robert Kelley o salary policy
Bill Swisher* o benefit programs
o compensation for outside
directors
o future objectives and goals of
Company
AUDIT COMMITTEE: Reviews and recommends 2
Herbert H. Champlin* o internal audit procedures
Luke R. Corbett o engagement of independent
William E. Durrett public accountants
Martha W. Griffin o matters having a material effect
Robert Kelley upon financial operations
Bill Swisher Reviews with independent
Ronald H. White accountants results of
auditing engagement
NOMINATING COMMITTEE: Reviews and recommends 2
Herbert H. Champlin o nominees for election as
Martha W. Griffin* directors
Ronald H. White o membership of director
committees
- -------------------------
* Chairperson
</TABLE>
SHAREOWNER NOMINATIONS FOR DIRECTORS. It is expected that the nominating
committee will consider nominees recommended by shareowners in accordance with
our By-laws. Our By-laws provide that if you intend to nominate director
candidates for election at an Annual Meeting of Shareowners you must deliver
written notice to the Corporate Secretary not later than 90 days in advance of
the meeting. The notice must set forth certain information concerning you and
the nominee(s), including each nominee's name and address, a representation that
you are entitled to vote at such meeting and intend to appear in person or by
proxy at the meeting to nominate the person or persons specified in your notice,
a description of all arrangements or understandings between you and each nominee
and any other person pursuant to which the nomination or nominations are to be
made by you, such other information as would be required to be included in a
proxy statement soliciting proxies for the election of the nominee(s) and the
consent of each nominee to serve as a director 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.
8
<PAGE>
DIRECTOR COMPENSATION. Compensation of non-officer directors of the Company
during 1998 consisted of an annual retainer fee of $35,500, of which $2,000 was
payable monthly in cash (the same amount that has been paid monthly since August
1994) and $11,500 was deposited in the director's Stock Account under the
Directors' Deferred Compensation Plan and converted to 411.633 common stock
units based on the closing price of the Company's Common Stock on November 30,
1998. In addition, all non-officer directors received $1,000 for each Board
meeting and $1,000 for each committee meeting attended. These amounts represent
the total fees paid to directors in their capacities as directors of the Company
and OG&E.
Under the Directors' Deferred Compensation Plan, non-officer directors may
defer payment of all or part of their attendance fees and the cash portion of
their annual retainer fee, which deferred amounts are, at their election,
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 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 these investment options, a non-officer
director may 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.
EXECUTIVE OFFICERS' COMPENSATION
- --------------------------------------------------------------------------------
The Compensation Committee of the Board of Directors of the Company (the
"Committee") administers our executive compensation program. The Committee's
report on compensation paid to executive officers during 1998 is set forth
below.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
GENERAL. The primary goals of the Committee in setting executive
compensation in 1998 were: (i) to provide a total compensation package that
would enable us to attract and retain key executives and (ii) to align the
interests of our executives with those of our shareowners and also with our
performance.
Compensation of our executive officers in 1998 was comprised primarily of
salary, annual awards under our Annual Incentive Compensation Plan, long-term
awards under our Stock Incentive Plan, and benefits under our Employees'
Retirement Savings Plan and pension plan. Virtually all of our 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 1998 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
9
<PAGE>
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 our
executive compensation policies, the Committee in 1997 changed the groups of
companies whose compensation data was considered in setting compensation for our
executive officers. Base salary continued to be set generally 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 generally 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 Bases 1 (the "Incentive
Compensation Survey Group"), which as the name implies includes companies of
comparable size from other industries, not just utility companies. This change
caused the Company's executive officers in 1997 and 1998 to receive a greater
portion of their total compensation in incentive-based awards than they had in
prior years.
A Federal tax law currently limits our ability to deduct an executive's
compensation in excess of $1,000,000 unless such compensation qualifies as
"performance based compensation" or certain other exceptions are met. This law
did not impact us in 1998. 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, the Committee and
the Board of Directors recommended, and the shareowners approved, the Stock
Incentive Plan and a new Annual Incentive Plan at the 1998 Annual Meeting so
that certain compensation payable thereunder would qualify for the "performance
based compensation" exception to the $1,000,000 deduction limit and thereby
continue to be deductible by the Company.
BASE SALARY. The base salaries for our executive officers in 1998 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 1998 were determined in November 1997, with
an effective date of January 1, 1998 and were subject to adjustment during the
year if an individual's duties and responsibilities changed.
ANNUAL INCENTIVE COMPENSATION PLAN. Awards with respect to 1998 performance
were made under the old Annual Incentive Compensation Plan to 47 employees,
including all executive officers. 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.
Payouts of the awards were in cash and were dependent primarily on the
achievement of the corporate and individual goals that were established by the
Committee in January 1998. The corporate goals were based: (i) 50% on total
shareowner return compared to a peer group of utilities and an earnings per
share target established by the Committee and (ii) 50% on operating and
maintenance expense and capital expense targets established by the Committee.
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 1998, the targeted amounts ranged from 20% to 50% 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 1998, our earnings per share ($2.04) and capital expense both were better
than the target levels, while the operating and maintenance expenses and total
shareholder return were below the target levels. Corporate performance in 1998
and performance by executive officers of their pre-established personal goals
resulted in payouts ranging from 128% to 134% of their target amounts and from
25.7% to 66.75% of their base salaries.
As noted above, shareowners approved a new Annual Incentive Plan at the
1998 Annual Meeting of
- --------------------------------------------------------------------------------
1 The companies in the Base Salary Survey Group and Incentive Compensation
Survey Group are not the same as the utilities in the Dow Jones Electric
Index utilized in the Stock Performance Graph on page 16. 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.
10
<PAGE>
Shareowners. The new Plan has replaced the old Annual Incentive Plan with
respect to annual awards in 1999 and subsequent years. The new Annual Incentive
Plan is expected to operate in the same general fashion as the old plan, except
that the Committee will cease to have the discretion to increase, based on
individual performance, the amount payable to any of our top five most
highly-paid executive officers.
LONG-TERM AWARDS. Another significant component of executive compensation
in 1998 was long-term awards under our Company's Stock Incentive Plan, which, as
noted above, also was approved by the shareowners at the 1998 Annual Meeting.
The Plan provides for the grant of any or all of the following types of awards:
stock options, stock appreciation rights, restricted stock and performance
units. In 1998, the Committee made awards of stock options and restricted stock.
In making awards of restricted stock and stock options, the Committee considered
numerous factors as discussed below and sought generally to provide executives
with an aggregate value of restricted stock and stock options equal to the
expected value of long-term incentives payable to executives in the 25th
percentile of the Incentive Compensation Survey Group. For 1998, this long-term
targeted amount was awarded 50% in restricted stock and 50% in stock options for
each executive officer, except for Messrs. Moore and Strecker who received 33
1/3% in restricted stock and 66 2/3% in stock options.
Stock options were granted to executive officers during the first quarter
of 1998 at an exercise price equal to the fair market value at the date of the
grant. The options have a 10-year term and vest over 3 years, with one-third of
the options becoming exercisable at the end of each year. Since options were
granted with an exercise price equal to the market value of our Common Stock at
the time of grant, they provide no value unless our stock price increases after
the options are granted. These awards are thus tied to stock price appreciation
in excess of the stock's value at time of grant, rewarding executives as if they
shared in the ownership of the Company. The number of shares subject to options
for each executive officer was determined by taking the expected value to be
provided in options, as determined above, and dividing that amount by the
estimated current value of an option for our stock using the Black-Scholes
Option Pricing methodology provided by an outside compensation consultant. This
resulted in executive officers receiving stock options with an estimated value
of approximately 13.3% to 40% of their 1998 base salaries.
The restricted stock awards in 1998 under the Stock Incentive Plan were
similar to the awards in prior years under the former Restricted Stock Plan.
Each share of restricted stock is subject to a Restriction Period of three 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.
Awards of restricted stock under the Stock Incentive Plan were made at the
end of 1998 and were based on the individual's performance during 1998. 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. As noted
above, 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 and awarded restricted stock to executive officers
having a value (based on the fair market value of the Company's Common Stock on
the date of the award) of approximately 6.7% to 20% of such executive officer's
anticipated 1999 base salary.
As in prior years, each share of restricted stock awarded in 1998 is
subject to forfeiture during a Restriction Period. Moreover, as in prior years,
the shares awarded in 1998 to all the executive officers contained a significant
additional condition. Such officers generally will be entitled at the end of the
Restriction 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 our
shareowners and, at the same time, to tie the restricted stock awards directly
to long-term corporate performance. The amount of shares awarded in 1998 that an
officer will ultimately receive will not be determined until the end of 2001.
Prior awards of restricted stock were not considered by the Committee in making
awards in 1998.
CEO COMPENSATION. The 1998 compensation for Mr. Moore consisted of the same
components as the compensation for other executive officers. Mr. Moore's 1998
salary was increased from $425,000 to $460,000, effective January 1, 1998, and
his 1998 targeted award under the Annual Incentive Plan was set at 50% of his
base salary, which the Compensation Committee be-
11
<PAGE>
lieved were appropriate levels based on his performance and his prior
experience. As a result of 1998 performance as described above, he received a
payout of $307,050 under the Annual Incentive Plan, representing 134% of his
composite targeted award, of which 114% was attributable to corporate
performance and 20% was attributable to his individual performance. The awards
of restricted stock and stock options made to Mr. Moore were based on his prior
performance 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,
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 anticipated base salary
for 1999 and stock options having an expected value of approximately 40% of his
1998 base salary. 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 1999, 2000 and 2001.
CONCLUSION. The Committee believes that our Company's executive
compensation system serves the interests of the Company and our shareowners
effectively. The Committee takes very seriously its responsibilities with
respect to our executive compensation system. To this end, the Committee will
continue to monitor and revise the compensation policies as necessary to ensure
that our compensation system continues to meet the needs of the Company and our
shareowners.
COMPENSATION COMMITTEE
Bill Swisher, Chairman
William E. Durrett, member
Hugh L. Hembree, III, member
Robert Kelley, member
12
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
The following table provides information regarding compensation paid or to be paid by us or any of our subsidiaries to the
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, Chairman, 1998 460,000 307,050 0 99,000 104,000 0 50,754
President and 1997 416,667 246,500 0 91,982 0 0 38,309
chief Executive Officer 1996 337,708 146,072 0 101,291 0 0 28,489
A.M. Strecker 1998 297,500 158,866 0 58,667 41,400 0 35,165
Executive Vice President 1997 225,500 116,218 0 36,630 0 0 14,987
and Chief Operating 1996 206,667 62,816 0 51,653 0 0 19,242
Officer
J.T. Coffman 1998 175,000 70,088 0 22,167 12,400 0 28,107
Vice President Power 1997 143,333 63,075 0 21,825 0 0 16,361
Supply 1996 134,167 39,420 0 26,814 0 0 14,913
J.R. Hatfield 1998 175,000 70,088 0 22,167 12,400 0 22,364
Vice President and 1997 143,000 63,075 0 21,825 0 0 12,939
Treasurer 1996 132,083 40,166 0 26,402 0 0 9,089
M.D. Bowen, Jr. 1998 150,000 57,825 0 13,750 10,600 0 26,048
Vice President Power 1997 142,833 60,900 0 18,722 0 0 17,040
Delivery 1996 130,333 38,544 0 26,067 0 0 15,447
</TABLE>
- -----------------
<TABLE>
<CAPTION>
<S> <C>
(1) As explained on page 10, amounts in this column reflect payouts under the 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,
and the Stock Incentive 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 1998, 1997 and 1996, as adjusted to reflect the 1998-2-for-1 stock split, was as follows: (i) Mr.
Moore, 3,881 shares, 3,616 shares, and 4,926 shares, respectively; (ii) Mr. Strecker, 2,300 shares, 1,440 shares, and 2,512
shares, respectively; (iii) Mr. Coffman, 869 shares, 858 shares, and 1,304 shares, respectively; (iv) Mr. Hatfield, 869 shares,
858 shares, and 1,284 shares, respectively; and (v) Mr. Bowen, 539 shares, 736 shares, and 1,266 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, 1998, were as follows: Mr. Moore,
15,039 shares, $436,131; Mr. Strecker, 8,226 shares, $238,554; Mr. Coffman, 4,289 shares, $124,381; Mr. Hatfield, 4,269 shares,
$123,801; and Mr. Bowen, 3,717 shares, $107,793. Dividends are paid to these individuals on the shares of Restricted Stock
owned by them.
(3) Amounts in this column for 1998 reflect: (i) for Mr. Moore, $31,793 (Retirement Savings Plan and Retirement Savings Restoration
Plan) and $18,961 (insurance premiums); (ii) for Mr. Strecker, $18,617 (Retirement Savings Plan and Retirement Savings
Restoration Plan) and $16,548 (insurance premiums); (iii) for Mr. Coffman, $10,713 (Retirement Savings Plan and Retirement
Savings Restoration Plan) and $17,394 (insurance premiums); (iv) for Mr. Hatfield, $7,142 (Retirement Savings Plan and
Retirement Savings Restoration Plan) and $15,222 (insurance premiums); and (v) for Mr. Bowen, $9,491 (Retirement Savings Plan
and Retirement Savings Restoration Plan), and $16,557 (insurance premiums). A significant portion of the insurance premiums
reported for each of these individuals is for life insurance policies and such premiums are recovered by the Company from the
proceeds of the policies.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
OPTIONS AND STOCK APPRECIATION RIGHTS (SARs)
- ------------------------------------------------------------------------------------------------------------------------------------
The following table indicates for each of the named executives (i) the extent to which the Company used stock
options and SARs for executive compensation purposes in 1998 and (ii) the potential value of such options and SARs as determined
pursuant to the SEC rules.
OPTIONS AND SARS GRANTED IN 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Individual Grants Appreciation for Option Term
----------------------- ----------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total Options
and SARs Granted to Exercise or
Options/SARs Employees Base Price Expiration
Name Granted(1)# in 1998 ($/Share) Date 5%($)(2) 10%($)(2)
---- ------------ ------------------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
S.E. Moore 104,000 27.97 $25.75 1/21/08 $1,684,176 $4,268,066
A.M. Strecker 41,400 11.14 $25.75 1/21/08 $670,432 $1,699,019
J.T. Coffman 12,400 3.34 $25.75 1/21/08 $200,806 $508,885
J.R. Hatfield 12,400 3.34 $25.75 1/21/08 $200,806 $508,885
M.D. Bowen 10,600 2.85 $25.75 1/21/08 $171,656 $435,014
- -------------
(1) Options were granted on January 21, 1998 and become exercisable in one-third annual installments beginning one year
from the date of grant. No SARs were awarded for 1998.
(2) The hypothetical potential appreciation shown in columns (f) and (g) for the named executives is required by the SEC rules. The
amounts in these columns do not represent either the historical or anticipated future level of appreciation of our Common
Stock.
</TABLE>
<TABLE>
<CAPTION>
The following table indicates for each of the named executives the number and value of exercisable and unexercisable options
and SARs as of December 31, 1998.
AGGREGATED OPTION AND SAR EXERCISES IN 1998
AND FY-END OPTION/SAR VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of Unexercised Value of Unexercised In-the-
Options and SARs at 12/31/98 Money Options and SARs at
Shares Acquired on Realized (#) - Exercisable (ex)/ 12/31/98 ($) - Exercisable (ex)/
Name Exercise (#) Value ($) Unexercisable (unex) Unexercisable (unex)
---- ------------ --------- ---------------------------- --------------------------------
<S> <C> <C> <C> <C>
S.E. Moore N/A N/A 0 (ex) 0 (ex)
104,000 (unex) $338,000 (unex)
A.M. Strecker N/A N/A 0 (ex) 0 (ex)
41,400 (unex) $134,550 (unex)
J.T. Coffman N/A N/A 0 (ex) 0 (ex)
12,400 (unex) $40,300 (unex)
J.R. Hatfield N/A N/A 0 (ex) 0 (ex)
12,400 (unex) $40,300 (unex)
M.D. Bowen N/A N/A 0 (ex) 0 (ex)
10,600 (unex) $34,450 (unex)
- ---------------------------
* Share price on December 31, 1998 was $29.00. Unexercisable options were granted on January 21, 1998 at a price of $25.75. No
SARs were granted in 1998.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
PENSION PLAN TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
The Company and OG&E maintain a qualified non-contributory pension plan (the "Retirement Plan") covering all employees who
have completed one year's service. Subject to limitations imposed by the Employee Retirement Income Security Act of 1974 ("ERISA"),
benefits payable under the Retirement Plan are based upon (i) the average of the five highest consecutive years of cash compensation
(which for the executives named in the Summary Compensation Table prior to 1993 consisted solely of salaries and for
subsequent years consists of salary and bonus) during an employee's last ten years prior to retirement and (ii) length of service.
Social Security benefits are deducted in determining benefits payable under the Retirement Plan. Compensation covered by the
Retirement 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 for a participant 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 to such participant 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 compensation 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 $ 13,352 $ 20,029 $ 26,705 $ 33,381 $ 40,057 $ 46,733 $ 53,410 $ 60,086
125,000 17,102 25,654 34,205 42,756 51,307 59,858 68,410 76,961
150,000 20,852 31,279 41,705 52,131 62,557 72,983 83,410 93,836
175,000 24,602 36,904 49,205 61,506 73,807 86,108 98,410 110,711
200,000 28,352 42,529 56,705 70,881 85,057 99,233 113,410 127,586
225,000 32,102 48,154 64,205 80,256 96,307 112,358 128,410 144,461
250,000 35,852 53,779 71,705 89,631 107,557 125,483 143,410 161,336
300,000 43,352 65,029 86,705 108,381 130,057 151,733 173,410 195,086
350,000 50,852 76,279 101,705 127,131 152,557 177,983 203,410 228,836
400,000 58,352 87,529 116,705 145,881 175,057 204,233 233,410 262,586
450,000 65,852 98,779 131,705 164,631 197,557 230,483 263,410 296,336
500,000 73,352 110,029 146,705 183,381 220,057 256,733 293,410 330,086
550,000 80,852 121,279 161,705 202,131 242,557 282,983 323,410 363,836
600,000 88,352 132,529 176,705 220,881 265,057 309,233 353,410 397,586
650,000 95,852 143,779 191,705 239,631 287,557 335,483 383,410 431,336
700,000 103,352 155,029 206,705 258,381 310,057 361,733 413,410 465,086
750,000 110,852 166,279 221,705 277,131 332,557 387,983 443,410 498,836
800,000 118,352 177,529 236,705 295,881 355,057 414,233 473,410 532,586
850,000 125,852 188,779 251,705 314,631 377,557 440,483 503,410 566,336
900,000 133,352 200,029 266,705 333,381 400,057 466,733 533,410 600,086
950,000 140,852 211,279 281,705 352,131 422,557 492,983 563,410 633,836
1,000,000 148,352 222,529 296,705 370,881 445,057 519,233 593,410 667,586
As of December 31, 1998, the credited years of service for the individuals listed in the Summary Compensation Table on page 13
are as follows: S. E. Moore - 24 years; A. M. Strecker - 27 years; J. T. Coffman - 28 years; J. R. Hatfield - 4 years and M.D. Bowen
- - 33 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 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 Summary Compensation Table on page 13 has received or is expected to receive benefits under the SERP at normal retirement as
the benefits payable to such individuals under the Retirement and Restoration Plans are expected to exceed the benefits payable
under the SERP.
</TABLE>
15
<PAGE>
CHANGE OF CONTROL ARRANGEMENTS
- --------------------------------------------------------------------------------
The Company and OG&E have entered into employment agreements with each
officer of the Company and OG&E. Under the agreements, the 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 is 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 also is 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 Global - US Index and the
Dow Jones Electric Index. The graph assumes that the value of the investment in
the Company's Common Stock and each index was 100 at December 31, 1993, and that
all dividends were reinvested.
[GRAPH]
<TABLE>
<CAPTION>
OGE Dow Jones
Measurement Period Energy Global-US Dow Jones
(Fiscal Year Covered) Corp. Index Electric Index
- --------------------- ------ ------------ --------------
<S> <C> <C> <C> <C>
1993 100 100 100
1994 96 100 87
1995 135 138 115
1996 140 170 116
1997 196 228 147
1998 218 294 168
</TABLE>
16
<PAGE>
SECURITY OWNERSHIP
- --------------------------------------------------------------------------------
The following table shows the number of shares of the Company's Common
Stock beneficially owned on March 1, 1999, by each Director, by each of the
Executive Officers named in the compensation table on page 13, and by all
Executive Officers and Directors as a group:
<TABLE>
<CAPTION>
Number of Common Shares(1) (2)
<S> <C>
Herbert H. Champlin 17,171
Luke R. Corbett 4,131
William E. Durrett 10,909
Martha W. Griffin 11,062
H. L. Hembree, III 41,907
Robert Kelley 8,113
Bill Swisher 49,801
Ronald H. White 9,947
S.E. Moore 59,655
A.M. Strecker 49,774
J.T. Coffman 15,033
J.R. Hatfield 15,117
M.D. Bowen 17,582
All Executive Officers and 363,270
Directors as a group
(17 persons)
- -----------------
<S> <C>
(1) The number of shares indicated in this table and elsewhere in this Proxy
Statement have been adjusted to reflect the 2-for-1 stock split that
occurred in June 1998.
(2) Ownership by each executive officer is less than .08% of the class, by each
director other than Mr. Moore is less than .06% of the class and, for all
executive officers and directors as a group, is less than .47% of the
class. Amounts shown include shares for which, in certain instances, an
individual has disclaimed beneficial interest. Amounts shown for executive
officers include 156,509 shares of Common Stock representing their interest
in shares held under the Company's Retirement Savings Plan, Restricted
Stock Plan, and Stock Incentive Plan for which in certain instances they
have voting power but not investment power.
(3) Amounts shown for Messrs. Champlin, Corbett, Durrett, Hembree, Kelley,
Swisher and White, and for Mrs. Griffin include, 15,328, 3,895, 7,305,
22,193, 6,113, 37,801, 7,947, 6,402 common stock units, respectively, under
the Directors' Deferred Compensation Plan.
</TABLE>
The information on share ownership is based on information furnished to us
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, our 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 subsequent acquisitions,
dispositions or other transfers of interest in such securities. We are required
to disclose whether we have knowledge that any person required to file such a
report may have failed to do so in a timely manner. To our knowledge, all of our
directors and officers subject to such reporting obligations have satisfied
their reporting obligations in full for 1998, except for Steven R. Gerdes. Mr.
Gerdes became an executive officer this year and filed his required initial
report of ownership after the due date for such report.
17
<PAGE>
RELATIONSHIP WITH INDEPENDENT
PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
During 1998, 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 1999. 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 included in the proxy statement for
the Annual Meeting in 2000 must be received by the Company on or before November
30, 1999. 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 2000 proxy statement.
If you intend to submit a shareowner proposal for consideration at the
Annual Meeting, but do not want it included in the proxy statement, you must
follow the procedures established by our By-laws. These procedures require that
you notify us in writing of your proposal. Your notice must be received by the
Corporate Secretary at least 90 days prior to the meeting and must contain the
following information:
o a brief description of the business you desire to bring before the Annual
Meeting and your reasons for conducting such business at the Annual Meeting
o your name and address
o the number of shares of Common Stock which you beneficially own
o any material interest you may have in the business being proposed.
18
<PAGE>
LOCATION OF OKLAHOMA CITY MARRIOTT HOTEL
- --------------------------------------------------------------------------------
[MAP]
19
<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
R and to vote all shares of stock of OGE Energy Corp. held of record by the undersigned on March 9, 1999, at the Company's
Annual Meeting of Shareowners to be held on May 27, 1999, and at all adjournments thereof, on all matters coming before said
O meeting.
X 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
Y
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SEE REVERSE SIDE
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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.
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The Board recommends a vote FOR the election as directors of the nominees named below.
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1. Election of Directors: 2. In their discretion, the proxies are authorized
NOMINEES: FOR all NOMINEES / / WITHHOLD AUTHORITY / / to vote upon such other business as may properly
01 Herbert H. Champlin; (list exceptions below). to vote for all nominees. come before the meeting.
02 Martha W. Griffin and
03 Ronald H. White M.D.
DISCONTINUE MAILING / / I WILL ATTEND THE / /
OF DUPLICATE ANNUAL ANNUAL MEETING.
REPORT
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INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE LINE ABOVE.
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X / /99 X / /99
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Signature of Shareowner Date Signature of Shareowner Date
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OGE ENERGY CORP.
321 North Harvey Avenue
Oklahoma City, OK 73102 ADMISSION TICKET
RETAIN FOR ADMITTANCE
Annual Meeting of
OGE ENERGY CORP. SHAREOWNERS
Thursday, May 27, 1999
10:00 a.m.
Oklahoma City Marriott Hotel*
3233 Northwest Expressway
Oklahoma City, Oklahoma
EAST BOUND I-44: Exit I-44 East to Highway '3' (Grand Boulevard),
continuing in a northerly direction approximately 1 -1/2 miles,
exit right onto Highway '3A' East (Northwest Expressway), proceed
approximately 1/4 mile, turn left on Independence, turn right to
Marriott Hotel.
{MAP}
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.
*REGIONAL MAP ON REVERSE SIDE.
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VOTE BY TELEPHONE
QUICK *** EASY *** IMMEDIATE
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YOUR VOTE IS IMPORTANT! - YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day-7days a week
There is NO CHARGE to you for this call. - Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form
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OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1
When asked, please confirm by Pressing 1.
OPTION 2: If you choose to vote on each Proposal separately, press 0. You will hear these instructions:
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions
When Asked, Please Confirm by Pressing 1.
The instructions are the same for all remaining proposals.
or
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2. VOTE BY PROXY: Mark, sign and date your proxy card and return promptly in the enclosed envelope.
NOTE: If you vote by telephone, THERE IS NO NEED TO MAIL BACK your proxy Card.
THANK YOU FOR VOTING.
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