SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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 Section 240.14a-11(c) or Section
240.14a-12
THE EMPIRE DISTRICT ELECTRIC COMPANY
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the
Registrant)
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
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<PAGE>
THE EMPIRE DISTRICT ELECTRIC COMPANY
602 Joplin Street
Joplin, Missouri 64801
March 16, 1999
Dear Stockholder:
You are cordially invited to attend the Company's Annual Meeting
of Stockholders to be held at 10:30 a.m., Joplin time, on Thursday,
April 22, 1999 at the Holiday Inn, 3615 South Range Line, Joplin, Missouri.
At the meeting, stockholders will be asked to elect three persons
to the Company's Board of Directors for three-year terms.
Your participation in this meeting, either in person or by proxy, is
important. Even if you plan to attend the meeting, please sign, date
and return the enclosed proxy promptly. At the meeting, if you desire
to vote in person, you may withdraw your proxy.
Sincerely,
M.W. McKinney
President and Chief Executive Officer
<PAGE>
THE EMPIRE DISTRICT ELECTRIC COMPANY
602 Joplin Street
Joplin, Missouri 64801
___________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
__________________
To the Holders of Common Stock:
Notice is hereby given that the Annual Meeting of Stockholders of The
Empire District Electric Company (the "Company") will be held on Thursday
the 22nd of April, 1999, at 10:30 a.m., Joplin time, at the Holiday Inn,
3615 South Range Line, Joplin, Missouri, for the following purposes:
1. To elect three Directors for terms of three years.
2. To transact such other business as may properly come before
the meeting, or any adjournment or adjournments thereof.
Any of the foregoing may be considered or acted upon at the first
session of the meeting or at any adjournment or adjournments thereof.
Holders of Common Stock of record on the books of the Company at the
close of business on March 1, 1999 will be entitled to vote on all matters
which may come before the meeting or any adjournment or adjournments thereof.
A complete list of the stockholders entitled to vote at the meeting will be
open at the office of the Company, 602 Joplin Street, Joplin, Missouri, to
examination by any stockholder for any purpose germane to the meeting, for a
period of ten days prior to the meeting, and also at the meeting.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND IN PERSON ARE REQUESTED
REGARDLESS OF THE NUMBER OF SHARES OF STOCK OWNED, TO SIGN AND DATE THE
ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE, TO WHICH NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
Joplin, Missouri
Dated: March 16, 1999
J.S. Watson
Secretary-Treasurer
<PAGE>
THE EMPIRE DISTRICT ELECTRIC COMPANY
602 Joplin Street
Joplin, Missouri 64801
________________________
PROXY STATEMENT
________________________
ANNUAL MEETING OF STOCKHOLDERS
APRIL 22, 1999
This proxy statement is furnished in connection with the solicitation
on behalf of the Board of Directors of The Empire District Electric Company,
a Kansas corporation (the "Company"), of proxies to be voted at the Annual
Meeting of Stockholders of the Company to be held on Thursday, April 22, 1999,
and at any and all adjournments of the meeting.
A form of proxy is enclosed for execution by stockholders. The Proxy
reflects the number of shares registered in a stockholder's name directly
and, for participants in the Company's Dividend Reinvestment and Stock
Purchase Plan, includes full shares credited to a participant's account. Any
stockholder giving a proxy has the right to revoke it at any time before the
proxy is exercised by written notice to the Secretary-Treasurer of the
Company, or a duly executed proxy bearing a later date or voting in person at
the meeting.
A copy of the Annual Report of the Company for the year ended December 31,
1998, has been mailed to each stockholder of record on the record date for the
meeting. You are urged to read the entire Annual Report.
The entire cost of the solicitation of proxies will be borne by the
Company. Solicitation, commencing on or about March 16, 1999, will be made by
use of the mails, telephone, telegraph and by regular employees of the Company
without additional compensation therefor. The Company will request brokers or
other persons holding stock in their names, or in the names of their nominees,
to forward proxy material to the beneficial owners of such stock or request
authority for the execution of the proxies and will reimburse such brokers or
other persons for their expense in so doing.
March 1, 1999 has been fixed as the record date for the determination of
stockholders entitled to vote at the meeting and at any adjournment or
adjournments thereof. The stock transfer books will not be closed. As of
the record date, there were 17,081,019 shares of Common Stock outstanding.
Holders of Common Stock will be entitled to one vote per share on all matters
presented to the meeting.
1. ELECTION OF DIRECTORS
The Board of Directors is divided into three classes with the directors
in each class serving for a term of three years. The term of office of one
class of directors expires each year in rotation so that one class is elected
at each Annual Meeting for a full three-year term. During 1998, the Board of
Directors held 5 meetings and each of the members of the Board of Directors
attended more than 75% of the aggregate of the Board meetings and meetings
held by all committees of the Board on which the Director served during the
periods that the Director served. Unless otherwise specified, the persons
named in the accompanying proxy intend to vote the shares represented by such
proxies for the election of Mr. M.F. Chubb, Jr., Mr. R.L. Lamb and Mr. R.E.
Mayes as Class III Directors, all of whom are members of the current Board of
Directors. Directors will be elected by a plurality of the votes of the
stockholders present in person or represented by proxy at the meeting. Any
shares not voted (whether by abstention, broker non-vote or votes withheld)
are not counted as votes cast for such individuals and will be excluded from
the vote.
<PAGE>
While it is not expected that any of the nominees will be unable to
qualify for or accept office, if for any reason one or more shall be unable to
do so, proxies will be voted for nominees selected by the Board of Directors.
The name, age, principal occupation for the last five years, period of
service as a Director of the Company and certain other directorships of each
Director of the Company are set forth below.
CLASS I DIRECTORS
(Terms expire in 2000)
R.D. Hammons, 65, Chief Executive Officer, Chairman and Director of
Hammons Products Company (food processing). Director of the Company since 1983.
J.R. Herschend, 66, Co-owner, co-founder and Chairman of the Board of
Directors of Silver Dollar City, Inc. (entertainment attractions). Director
of the Company since January 1994. Director of Ozark Mountain Bank, Branson,
Missouri; Director of Central Bancompany, Jefferson City, Missouri.
M.W. McKinney, 54, President and Chief Executive Officer of the Company
since April 1, 1997. Executive Vice President-Commercial Operations of the
Company from 1995 to 1997. Executive Vice President of the Company from 1994
to 1995. Vice President-Customer Services of the Company from 1982 to 1994.
Director of the Company since 1991.
M.M. Posner, 58, President and Principal of Posner McCleary Inc., an
international advertising, marketing and communications firm. Director of the
Company since 1991. Director of United Missouri Bank of Jefferson City,
Jefferson City, Missouri.
CLASS II DIRECTORS
(Terms expire in 2001)
V.E. Brill, 57, Vice President-Energy Supply of the Company since 1995.
Vice President-Finance of the Company from 1983 to 1995. Director of the
Company since 1989.
R.C. Hartley, 51, President of The Hartley Agency (independent insurance
agency); Director and Vice President of International Information Consortium
(electronic commerce). Director of the Company since 1988.
F.E. Jeffries, 68, Chairman and Director of Phoenix Duff & Phelps
Corporation until 1997 (retired) (financial services firm). Director of the
Company since 1984. Director of Duff & Phelps Utilities Income Inc.,
Chicago, Illinois; Duff & Phelps Utilities Tax-Free Income Inc., Chicago,
Illinois; Duff & Phelps Utility and Corporate Bond Trust Inc., Chicago,
Illinois.
CLASS III DIRECTORS
(Terms expire in 1999, nominees for election
at this Annual Meeting of Stockholders for
terms to expire in 2002)
M.F. Chubb, Jr., 65, Senior Vice President of Eagle-Picher Industries Inc.
(diversified industrial products) until 1996 (retired). Director of the
Company since 1991. Director of Eagle-Picher Industries Inc., Cincinnati,
Ohio until 1996 (retired).
<PAGE>
R.L. Lamb, 66, President of the Company from 1982 to March 31, 1997
(retired). Executive Vice President of the Company from 1978 to 1982. Vice
President-Customer Services of the Company from 1974 to 1978. Director of
the Company since 1978.
R.E. Mayes, 64, Chairman and Chief Executive Officer of Carmar Group Inc.
(underground storage) until 1998 (retired). Director of the Company since
1991. Director of United Missouri Bancshares, Kansas City, Missouri.
Director Compensation
Each Director of the Company who is not an officer or full-time employee
of the Company is paid a monthly retainer for his or her services as a Director
at a rate of $12,000 per annum. In addition, a fee of $750 is paid to each
such Director for each regular meeting or any special meeting of Directors and
for each meeting of a Committee of the Board (the chairman of each Committee
receives an additional $250 for each such Committee meeting) which such
Director attends in person or by telephone. During 1998, the Board of
Directors held five meetings. The Company's 1996 Stock Incentive Plan permits
Directors of the Company to receive shares of Common Stock in lieu of all or a
portion of any cash payment for services rendered as a Director. In addition,
a Director may defer all or part of any compensation payable for his or her
services as such under the terms of the Company's Deferred Compensation Plan
for Directors. Amounts so deferred are credited to an account for the
benefit of the Director and accrue an interest equivalent at a rate equal to
the prime rate. A Director is entitled to receive all amounts deferred in a
number of annual installments following retirement, as elected by him or her.
On August 1, 1998, the Company implemented a new Stock Unit Plan for
Directors (the "Directors Retirement Plan") to provide directors the
opportunity to accumulate retirement benefits in the form of common stock
units in lieu of cash which was how benefits accumulated under the older Cash
Retirement Plan for Directors. The new Director Retirement Plan also
provided directors the opportunity to convert previously earned cash
retirement benefits to common stock units. Each common stock unit earns
dividends in the form of common stock units and can be redeemed for one share
of common stock upon retirement or death of the director. The number of
units granted annually is computed by dividing the director's retainer fee by
the fair market value of the Company's common stock on January 1 of the year
the units are granted. Common stock unit dividends are computed based on the
fair market value of the Company's stock on the dividend's record date. During
1998, 34,214 units were granted upon conversion of previously earned
retirement benefits, 1,681 units were granted for services provided in 1998,
and 1,068 units were granted pursuant to the dividend reinvestment plan.
Committees of the Board of Directors
The Company has an Audit Committee of the Board of Directors. The Audit
Committee reviews with the Company's independent auditors the scope and
results of its auditing procedures, meets with the Company's internal auditors
regarding internal auditing procedures and establishes procedures to assure
the adequacy of the accounting practices and internal controls of the Company.
The Audit Committee held two meetings during 1998. The members of the Audit
Committee are Messrs. Chubb, Hartley and Jeffries and Mrs. Posner.
The Company has a Compensation Committee of the Board of Directors. The
Compensation Committee fixes the compensation of each of the senior officers
of the Company and administers certain of the Company's employee benefit
plans. The Committee held three meetings during 1998. The members of the
Compensation Committee are Messrs. Herschend, Jeffries, Lamb and Mayes and
Mrs. Posner.
<PAGE>
The Company has a Nominating Committee of the Board of Directors which
meets to suggest to the Board nominees to fill vacancies on the Board of
Directors when they occur. The Committee met one time in 1998. The members
of the Nominating Committee are Messrs. Chubb, Hammons, Herschend and Mayes.
The Nominating Committee will consider nominees recommended by stockholders
for election to the Board of Directors. Recommendations of nominees for
election should be submitted in writing to the Secretary-Treasurer of the
Company, in accordance with the Company's charter and the rules under the
Securities Exchange Act of 1934 (the "Exchange Act") relating to the
solicitation of proxies. Any such recommendation should be accompanied by a
written statement from the candidate of his or her consent to be considered
as a candidate and, if nominated and elected, to serve as Director.
Stock Ownership of Directors and Officers
The following table shows information with respect to the number of
shares of Common Stock of the Company beneficially owned as of March 1, 1999,
by each officer of the Company named in the Summary Compensation Table, each
Director and the Directors and executive officers of the Company, as a group.
The shares reported as beneficially owned include (a) shares owned by certain
relatives with whom the Directors or officers are presumed, for proxy
statement reporting purposes, to share voting or investment power and
(b) shares accrued for the benefit of certain officers under certain employee
benefit plans of the Company.
<TABLE>
<CAPTION>
Shares of Common
Stock
Name Position Beneficially
Owned
<S> <C> <C>
M.W. McKinney........... President and Chief Executive Officer 20,781
V.E. Brill.............. Vice President-Energy Supply 4,829
R.B. Fancher............ Vice President-Finance 2,513
C.A. Stark.............. Vice President-General Services 5,249
W.L. Gipson............. Vice President-Commercial Operations 9,205
M.F. Chubb, Jr. ........ Director 4,851
R.D. Hammons............ Director 3,059
R.C. Hartley............ Director 4,811*
J.R. Herschend.......... Director 1,500
F.E. Jeffries........... Director 19,474
R.L. Lamb............... Director 20,493
R.E. Mayes.............. Director 800
M.M. Posner............. Director 10,800
Directors and executive officers, as a group..................... 108,365
</TABLE>
_________________________
* Mr. Hartley also beneficially owns 2,000 shares of the Company's 8 1/8%
Cumulative Preferred Stock.
No Director or officer owns more than 0.5% of the outstanding shares of the
Company's Common Stock or 8 1/8% Cumulative Preferred Stock. No Director or
officer owns any shares of the Company's 5% Cumulative Preferred Stock or
4 3/4% Cumulative Preferred Stock. The Directors and executive officers as
a group own less than 1% of the outstanding shares of the Company's Common
Stock and of its 8 1/8% Cumulative Preferred Stock.
<PAGE>
2. EXECUTIVE COMPENSATION
Set forth below is information concerning the various forms of
compensation of each person who was (i) at any time during 1998 the Chief
Executive Officer of the Company or (ii) at December 31, 1998, one of the
four most highly compensated executive officers of the Company, other than
the Chief Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation Awards
Restricted All Other
Name and Other Annual Stock Compen-
Principal Position Year Salary Bonus (Compensation(3) Awards(s)(1) sation(2)
<S> <C> <C> <C> <C> <C> <C>
M.W. McKinney 1998 $194,875 $25,076 $415 $13,075 $4,857
President and Chief 1997 173,500 21,312 1,264 11,306 5,174
Executive Officer 1996 140,000 10,806 222 5,814 4,470
V.E. Brill 1998 125,100 14,157 508 4,137 4,774
Vice President- 1997 124,800 9,800 - 4,781 4,453
Energy Supply 1996 123,000 7,879 - 3,870 4,327
R.B. Fancher 1998 115,800 5,143 145 3,595 4,530
Vice President- 1997 114,600 8,183 3,582 4,163 4,097
Finance 1996 113,000 5,942 - 2,934 4,055
C.A. Stark 1998 100,250 8,464 - 3,422 3,453
Vice President- 1997 96,500 9,414 2,317 4,338 3,184
General Services 1996 92,000 5,710 136 2,718 3,658
W.L. Gipson 1998 105,750 8,949 2,042 3,940 2,994
Vice President- 1997 93,784 9,177 8,338 4,144 2,557
Commercial 1996 67,905 - - - 2,587
Operations
</TABLE>
- - - ----------
(1) As of December 31, 1998, Messrs. McKinney, Brill, Fancher, Stark and Gipson
had been awarded 1,420, 809, 648, 385 and 221 shares, respectively, of
unvested restricted stock which on such date had values of $35,145,
$20,023, $16,038, $9,529 and $5,470, respectively. Messrs. McKinney,
Brill, Fancher, Stark and Gipson were awarded 531, 168, 146, 139 and 160
shares, respectively, of unvested restricted stock on February 4, 1999,
with respect to their 1998 employment. Dividend equivalents are paid on
such shares. All of the foregoing shares were awarded pursuant to the
Company's 1996 Stock Incentive Plan.
(2) Included for 1998: (a) Company matching contributions under the Company's
401(k) Retirement Plan in the amounts of $4,278, $3,606, $3,463, $2,974
and $2,942 for Messrs. McKinney, Brill, Fancher, Stark and Gipson,
respectively, and (b) Company payments of premiums for term life insurance
on behalf of Messrs. McKinney, Brill, Fancher, Stark and Gipson in the
amounts of $579, $1,167, $1,066, $479, and $52, respectively.
(3) Includes payment to Mr. Gipson of $8,275 for relocation expenses in 1997.
<PAGE>
Retirement Plans
The Company maintains a Retirement Plan covering substantially all
employees. The Retirement Plan is a noncontributory, trusteed pension plan
designed to meet the requirements of Section 401(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). Each covered employee is eligible for
retirement at normal retirement date (age 65), with early retirement permitted
under certain conditions. The Company also maintains a Supplemental Executive
Retirement Plan (the "SERP") which covers officers of the Company who are
participants in the Retirement Plan. The SERP is intended to provide benefits
which, except for the application of the limits of Section 415 and Section 401
(a)(17) of the Code, would have been payable under the Retirement Plan. The
SERP is not qualified under the Code and benefits payable thereunder are paid
out of the general funds of the Company.
The following table shows estimated maximum annual benefits payable
following retirement (assuming payments on a normal life annuity basis and not
including any survivor benefit) to an employee in specified remuneration and
Years of Credited Service classifications. These amounts are based on an
assumed final rate of compensation and retirement at normal retirement age of
65 and are approximated without consideration of any reduction which would
result from various options which may be elected prior to actual retirement.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
Average Years of Credited Service(b)
Annual ---------------------------------------------------------------
Earnings(a) 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
- - - --------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
75,000 ------- 16,426 21,900 27,376 32,850 38,326 44,420
100,000 ------ 22,519 30,025 37,532 45,038 52,544 60,669
125,000 ------ 28,613 38,150 47,688 57,225 66,763 76,919
150,000 ------ 34,707 46,275 57,844 69,413 80,982 93,170
175,000 ------ 40,801 54,400 68,001 81,600 95,201 109,420
200,000 ------ 46,894 62,525 78,157 93,788 109,419 125,669
225,000 ------ 52,988 70,650 88,313 105,975 123,638 130,000
250,000 ------ 59,082 78,775 98,469 118,163 130,000 130,000
</TABLE>
(a) "Average Annual Earnings" is the average annual compensation over the
five consecutive years within the ten-year period prior to termination
of employment which produces the highest average. The compensation used
to calculate such average for a salaried employee is the aggregate of
the employee's annual compensation which generally corresponds with the
employee's salary and incentive compensation. The earnings of Messrs.
McKinney, Brill, Fancher, Stark and Gipson covered by the plans
correspond substantially to such amounts shown for them in the Summary
Compensation Table.
(b) As of December 31, 1998, Messrs. McKinney, Brill, Fancher, Stark and
Gipson, had accrued 31, 36, 27, 18 and 17 Years of Credited Service,
respectively, under the Retirement Plans.
Severance Pay Plan
The Company has a severance pay plan (the "Severance Plan") which provides
certain key employees with severance benefits following a change in control of
the Company. A change in control generally includes: (i) certain events
relating to the continued existence of the Company in its current form; (ii) an
acquisition by any person of 10% or more of the securities entitled to vote in
the election of Directors or (iii) the current Directors, or their approved
successors, no longer constitute a majority of the Board of Directors. Certain
executive officers and senior managers of the Company have been selected by the
Compensation Committee of the Board of Directors to enter into one-year
agreements pursuant to the Severance Plan which are automatically extended for
one-year terms unless the Company has given prior notice of termination.
<PAGE>
A participant in the Severance Plan is entitled to receive certain benefits
in the event of certain involuntary terminations of employment occurring
(including terminations by the employee following certain changes in duties,
benefits, etc. that are treated as involuntary terminations) within three years
after a change in control, or a voluntary termination of employment occurring
between twelve and eighteen months after a change in control. A senior officer
participant would be entitled to receive benefits of three times such
participant's annual compensation. A participant who is not a senior officer
would receive approximately two weeks of severance compensation for each full
year of employment with the Company with a minimum of 17 weeks. Payments to
participants resulting from involuntary terminations are to be paid in a lump
sum within 30 days following termination, while payments resulting from
voluntary termination are paid in monthly installments and cease if the
participant becomes otherwise employed. In addition, participants who qualify
for payments under the Severance Plan will continue to receive benefits for a
specified period of time under health, insurance and other employee benefit
plans of the Company in existence at the time of the change in control. If any
payments are subject to the excise tax on "excess parachute payments" under
Section 4999 of the Code, senior officer participants are also entitled to an
additional amount essentially designed to put them in the same after-tax
position as if this excise tax had not been imposed.
Compensation Committee Report on Executive Compensation
The Company's executive compensation policies are designed to enable the
Company to attract and retain high caliber individuals for key positions while
at the same time linking their compensation to the Company's financial
performance and their own performance. The linkage between compensation and
performance is accomplished by dividing executive compensation into two
components: a base salary that is set at the beginning of the year and incentive
compensation that is determined at the end of the year based on the extent to
which specific, predetermined goals were achieved. Depending on the extent to
which these goals are met, the Company's senior executives can earn total
compensation which is above, at or below the level of senior executive
compensation at comparable electric utilities.
At the beginning of each year, the Committee determines a target total
compensation amount for each senior executive, including the President and
Chief Executive Officer. To determine this amount for the President and Chief
Executive Officer, the Committee first takes the mid-point of the range of total
compensation paid to executives in positions comparable to that of the Company's
President and Chief Executive Officer at other utilities. The Committee then
determines a corresponding amount for each other senior officer based on a
comparison of the officer's responsibilities with those of the President and
Chief Executive Officer. The resulting amount is adjusted for each senior
officer to reflect the officer's experience and performance. In determining
the appropriate mid-point amounts in 1998, the Committee relied primarily upon
an industry compensation study prepared by a management consulting firm and, in
addition, took into account increases in compensation for businesses generally
in 1998 predicted by various consulting firms and recent compensation increases
received by the Company's employees. A greater number of companies were
included in the management consulting firm's study than are included in the
Standard & Poor's Electric Companies Index used in the Performance Chart. The
companies included in that study are, for the most part, either electric or
electric and gas utilities.
The Company's total compensation package for senior executives, including
the President and Chief Executive Officer, has an incentive compensation
component. Executives can earn incentive compensation based on the extent to
which Company and personal performance goals are met. In 1998, the areas in
which performance was measured in determining incentive compensation and the
relative weighting of each area were: (1) the Company's return on common
<PAGE>
equity compared to that of all other electric utilities reported in an industry
survey of approximately 92 electric and gas utilities over a five-year period
(40%), (2) reduction of controllable expenses over a five-year period (20%),
(3) control of fuel and purchase power expenses (20%) and (4) for each senior
officer, the achievement of predetermined personal goals for the year (20%).
In each of these four areas, three performance levels, "threshold", "par"
and "maximum," are set at the beginning of the year. For executives to receive
any incentive compensation based on any particular performance measure, at least
the "threshold" level of performance must have been achieved. Greater incentive
compensation is payable if the "par" or "maximum" performance level is achieved.
If the par level objective in each of the four performance areas is achieved,
each senior executive would receive incentive compensation which, when added to
base salary, would equal the individual's target total compensation. In 1998,
the Company achieved the par level of performance for return on equity and
reduction of controllable expenses and the "threshold" level of performance for
control of fuel and purchase power expenses.
Regardless of the extent to which the four performance criteria are met
in any year, no incentive compensation is payable in any year in which the
Company does not pay dividends per share of Common Stock at least equal to the
dividends per share paid in the preceding year. In 1998, the dividends paid on
each share of the Company's Common Stock were equal to those paid in 1997.
The Company's incentive compensation policy also seeks to encourage senior
executives to hold down the Company's electric rates, so that the Company can
remain competitive with alternate energy suppliers by adjusting incentive
compensation otherwise payable to reflect the level of the Company's residential
electric rates compared to those of the 12 other utilities in the Company's
geographic area. The adjustment ranges from a 10% increase in incentive
compensation if the Company has the lowest rates in the comparison group to
elimination of incentive compensation if the Company is one of the four
companies in the comparison group with the highest rates. In 1998, Empire had
the sixth lowest retail electric rates of the 13 utilities, which resulted in
an adjustment to incentive compensation which was 70% of full value.
Incentive compensation is typically paid one-half in cash at the end of
the year and one-half in Common Stock. The Common Stock portion of incentive
compensation is restricted stock that generally is not issued unless the
recipient continues to be employed by the Company for three years after the
stock is awarded. The three-year vesting period is intended to encourage
continuity among the Company's senior executives. In addition, by increasing
the stock ownership of senior management, it is believed that these individuals
will have an even greater incentive to advance the interests of the Company's
stockholders.
In 1998, the President and Chief Executive Officer's base salary was
increased 6.5% above its 1997 level reflecting his leadership in obtaining
timely rate increases, and bringing new generation facilities on line. Mr.
McKinney's incentive compensation is based on the same factors as the incentive
compensation of the other senior executive officers, although a greater
percentage of his target total compensation is comprised of incentive
compensation. As a result of the level of attainment of performance goals, the
sum of Mr. McKinney's base salary and his incentive compensation for 1998 was
approximately 97.3% of his target total compensation.
Based on the Company's current level of executive compensation, the
Committee does not believe it necessary to adopt a policy with respect to
Section 162(m) of the Code at this time.
F.E. Jeffries, Chairman
J.R. Herschend
R.E. Mayes
M.M. Posner
<PAGE>
Comparison of Stockholder Returns
Set forth below is a graph and table indicating the value at the end of the
specified years of a $100 investment made on December 31, 1993, in Company
Common Stock and similar investments made in the securities of the companies
in the Standard & Poor's 500 Composite Index ("S&P 500 Composite") and the
Standard & Poor's Electric Companies Index ("Electric Companies"). The graph
and table assume that dividends were reinvested when received.
[GRAPHIC OMITTED]
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<CAPTION>
The Empire District Electric S&P 500
Electric Company Companies Composite
<S> <C> <C> <C>
1993 $100.00 $100.00 $100.00
1994 83.01 86.93 101.32
1995 99.58 113.96 139.40
1996 111.97 113.77 171.40
1997 125.79 143.63 228.59
1998 168.59 165.86 293.91
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors and executive officers to file with the Securities and
Exchange Commission and the New York Stock Exchange reports of changes in
ownership of the Company's equity securities. Securities and Exchange
Commission regulations require that Directors and executive officers furnish
to the Company copies of all Section 16(a) forms they file. To the Company's
knowledge, based solely on review of the copies of such reports furnished to
the Company and written representations that no other reports were required,
during the fiscal year ended December 31, 1998, all its officers and directors
complied with applicable Section 16(a) filing requirements.
<PAGE>
3. OTHER MATTERS
PricewaterhouseCoopers LLP have been the Company's independent auditors
since 1992. Representatives of PricewaterhouseCoopers LLP are expected to be
present at the meeting for the purpose of answering questions which any
stockholder may wish to ask, and such representatives will have an opportunity
to make a statement at the meeting.
The Company knows of no other matter to come before the meeting. If,
however, any other matters properly come before the meeting, it is the intention
of the persons named in the enclosed proxy to vote the same in accordance with
their judgment on such other matters.
4. STOCKHOLDER PROPOSALS
The 2000 Annual Meeting is tentatively scheduled to be held on April 27,
2000. Specific proposals of stockholders intended to be presented at that
meeting (1) must comply with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder and the Company's Articles of
Incorporation, and (2) if intended to be included in the Company's proxy
materials for the 2000 Annual Meeting, must be received at the principal
office of the Company not later than November 16, 1999. If the date of the
2000 Annual Meeting is changed by more than 30 days, stockholders will be
advised of such change and of the new date for submission of proposals.
Dated: March 16, 1999
______________________
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND IN PERSON ARE URGED TO SIGN, DATE AND
RETURN THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, TO WHICH NO POSTAGE NEED
BE AFFIXED IF MAILED IN THE UNITED STATES.
<PAGE>
PROXY
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS OF
THE EMPIRE DISTRICT ELECTRIC COMPANY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints M.W. MCKINNEY, R.B. FANCHER and J.S. WATSON, or any one of them, with
power of substitution, as attorneys and proxies to appear and vote all shares
of Common Stock standing in the name of the undersigned, with all the powers
the undersigned would possess if personally present, at the Annual Meeting of
Stockholders of The Empire District Electric Company to be held at the Holiday
Inn, 3615 South Range Line, in the City of Joplin, State of Missouri, on the
22nd day of April, 1999 at 10:30 a.m., Joplin time, and at any and all
adjournments and postponements thereof, in the manner indicated on the reverse
thereof.
(Continued on the reverse side)
FOLD AND DETACH HERE
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SERVICES YOU COUNT ON
<PAGE>
<TABLE>
<CAPTION>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF THE COMPANY. The Board
of Directors recommends a vote FOR (1).
(1) The election of Directors.
<S> <C>
FOR the election of Directors in accordance WITHHOLD AUTHORITY to vote
with the provisions of the accompanying for all nominees listed below.
proxy statement (except as marked to the
contrary below).
(INSTRUCTION: You may withhold authority to vote for any individual nominee
by striking a line through the nominee's name below:) Class III (to serve
until the 2002 Annual Meeting): M.F. Chubb, Jr., R.L. Lamb and R.E. Mayes.
(2) Upon any other matter which may properly
come before the meeting in their discretion.
Every properly signed proxy will
be voted in the manner specified
hereon and, in the absence of
specification, will be voted FOR
Item (1).
The undersigned hereby acknowledges
receipts of the Notice of Annual
Meeting of Stockholders and Proxy
Statement annexed thereto and of the
Company's Annual Report for 1998.
Signature Signature Date
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
</TABLE>
FOLD AND DETACH HERE
[GRAPHICS OMITTED]
SERVICES YOU COUNT ON
Dear Shareholder:
We will hold the 1999 Annual Meeting of Shareholders of The
Empire District Electric Company on Thursday, April 22, 1999, at
10:30 a.m., at the Holiday Inn, 3615 South Range Line (Intersection
of Highway 71 and Interstate 44), Joplin Missouri. I cordially
invite you to attend.
Whether or not you plan to attend the meeting, please detach the
proxy card above, complete it and return it in the envelope provided.
Your vote is important to us.
Sincerely,
Myron W. McKinney
President and Chief Executive Officer
