SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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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 ss. 240.14a-11(c) or ss. 240.14a-12
THE EMPIRE DISTRICT ELECTRIC COMPANY
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 by written preliminary materials.
/ / Check box if any of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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<PAGE>
THE EMPIRE DISTRICT ELECTRIC COMPANY
602 Joplin Street
Joplin, Missouri 64801
March 29, 2000
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 27, 2000
at the John Q. Hammons Convention Center, 3615 South Range Line, Joplin,
Missouri.
At the meeting, stockholders will be asked to elect four 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
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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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
27th of April, 2000, at 10:30 a.m., Joplin time, at the John Q. Hammons
Convention Center, 3615 South Range Line, Joplin, Missouri, for the following
purposes:
1. To elect four 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, 2000 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 29, 2000
J.S. Watson
Secretary-Treasurer
<PAGE>
THE EMPIRE DISTRICT ELECTRIC COMPANY
602 Joplin Street
Joplin, Missouri 64801
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PROXY STATEMENT
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ANNUAL MEETING OF STOCKHOLDERS
APRIL 27, 2000
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 27, 2000, 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,
1999, 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 29, 2000, will be made by
use of the mails, telephone, telegraph and by regular employees of the Company
without additional compensation therefore. 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, 2000 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 17,336,923 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 1999, the Board of Directors
held 8 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. R.D. Hammons, Mr. J.R. Herschend, Mr. M.W. McKinney and Mrs.
M.M. Posner as Class I 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, nominees for election
at the Annual Meeting of Stockholders for
terms to expire in 2003)
R.D. Hammons, 66, Chief Executive Officer, Chairman and Director of Hammons
Products Company (food processing) until 1999 (retired). Director of the Company
since 1983.
J.R. Herschend, 67, 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, 55, 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, 60, 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, 58, 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, 52, President of The Hartley Agency (independent insurance
agency); Co-Founder and Director of National Information Consortium (electronic
commerce). Director of the Company since 1988.
F.E. Jeffries, 69, Chairman and Director of Phoenix Duff & Phelps
Corporation (financial services firm) until 1997 (retired). 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 2002)
M.F. Chubb, Jr., 66, 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).
R.L. Lamb, 67, 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.
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<PAGE>
R.E. Mayes, 65, 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 1999, the Board of Directors held
eight 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.
The Company maintains a 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 previous Cash Retirement Plan for Directors. The
Directors 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 1999, 3,441 units were granted for services provided in 1999, and 2,154
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 three meetings during 1999. 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 two meetings during 1999. The members of the Compensation
Committee are Messrs. Herschend, Jeffries, Lamb and Mayes and Mrs. Posner.
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 1999. 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.
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<PAGE>
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, 2000, 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 Beneficially
Name Position Owned
---- -------- ------------------
<S> <C> <C>
M.W. McKinney............................... President and Chief Executive 22,738
Officer
V.E. Brill.................................. Vice President-Energy Supply 5,275
R.B. Fancher................................ Vice President-Finance 2,915
C.A. Stark.................................. Vice President-General 6,433
Services
W.L. Gipson................................. Vice President-Commercial 10,462
Operations
M.F. Chubb, Jr.............................. Director 5,693
R.D. Hammons................................ Director 3,224
R.C. Hartley................................ Director 6,148
J.R. Herschend.............................. Director 1,500
F.E. Jeffries............................... Director 21,524
R.L. Lamb................................... Director 20,493
R.E. Mayes.................................. Director 800
M.M. Posner................................. Director 9,600
Directors and executive officers, as a group................................... 116,805
</TABLE>
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No Director or officer owns more than 0.5% of the outstanding shares of the
Company's Common Stock and the Directors and executive officers as a group own
less than 1% of the outstanding shares of the Company's Common Stock.
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<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 1999 the Chief Executive Officer
of the Company or (ii) at December 31, 1999, 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
Compensation
Annual 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 1999 $206,750 $70,544 $1,447 $20,537 $5,671
President and Chief 1998 194,875 25,076 415 13,075 4,857
Executive Officer 1997 173,500 21,312 1,264 11,306 5,174
V.E. Brill 1999 125,100 15,613 261 7,587 5,647
Vice President - 1998 125,100 14,157 508 4,137 4,774
Energy Supply 1997 124,800 9,800 - 4,781 4,453
R.B. Fancher 1999 117,500 12,230 - 7,187 5,276
Vice President- 1998 115,800 5,143 145 3,595 4,530
Finance 1997 114,600 8,183 3,582 4,163 4,097
C.A. Stark 1999 104,000 12,387 1,132 6,364 4,600
Vice President- 1998 100,250 8,464 - 3,422 3,453
General Services 1997 96,500 9,414 2,317 4,338 3,184
W.L. Gipson 1999 112,200 12,405 105 6,386 3,352
Vice President- 1998 105,750 8,949 2,042 3,940 2,994
Commercial 1997 93,784 9,177 8,338 4,144 2,557
Operations
</TABLE>
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(1) As of December 31, 1999, Messrs. McKinney, Brill, Fancher, Stark and Gipson
had been awarded 1,457, 638, 531, 524 and 381 shares, respectively, of
unvested restricted stock which on such date had values of $32,965,
$14,435, $12,014, $11,855 and $8,620, respectively. Messrs. McKinney,
Brill, Fancher, Stark and Gipson were awarded 923, 341, 323, 286 and 287
shares, respectively, of unvested restricted stock on February 3, 2000,
with respect to their 1999 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 1999: (a) Company matching contributions under the Company's
401(k) Retirement Plan in the amounts of $3,805, $3,753, $3,509, $3,086 and
$3,154 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 $1,866, $1,894, $1,766, $1,515, and $198, respectively.
(3) Includes payment to Mr. Gipson of $8,275 for relocation expenses in 1997.
Retirement Plans
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<PAGE>
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 Annual Years of Credited Service(b)
Earnings(a) 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
75,000................... 16,313 21,750 27,188 32,625 38,063 44,157
100,000................... 22,407 29,875 37,344 44,813 52,282 60,407
125,000................... 28,501 38,000 47,501 57,000 66,501 76,657
150,000................... 34,594 46,125 57,657 69,188 80,719 92,907
175,000................... 40,688 54,250 67,813 81,375 94,938 109,157
200,000................... 46,782 62,375 77,969 93,563 109,157 125,407
225,000................... 52,876 70,500 88,126 105,750 123,376 135,000
250,000................... 58,969 78,625 98,282 117,938 135,000 135,000
275,000................... 65,063 86,750 108,438 130,125 135,000 135,000
300,000................... 71,157 94,875 118,594 135,000 135,000 135,000
</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, 1999, Messrs. McKinney, Brill, Fancher, Stark and
Gipson, had accrued 32, 37, 28, 19 and 18 Years of Credited Service,
respectively, under the Retirement Plan and the SERP.
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. A change
of control was decreed to occur on September 3, 1999 when the Company's
shareholders voted in favor of the Company's merger with UtiliCorp United Inc.
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
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<PAGE>
the Severance Plan which are automatically extended for one-year terms unless
the Company has given prior notice of termination.
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, all restricted stock held
by a participant vests upon voluntary or involuntary termination after a change
of control (which occurred as noted above, on September 3, 1999). Also,
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 1999, 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 1999 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 1999, 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 equity
compared to that of all other electric utilities reported in an industry survey
of approximately 75 electric and gas utilities over a five-year period (40%),
(2) reduction of controllable ex-
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<PAGE>
penses 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 1999,
the Company achieved a level midway between threshold and par performance for
return on equity, the par level of performance for reduction of controllable
expenses and the maximum 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 1999, the dividends paid on each share
of the Company's Common Stock were equal to those paid in 1998.
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 1999, 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.
The senior executive officers are also eligible for lump sum incentive
awards. The incentive awards, which pertain to all non-bargaining unit
employees, are based on a "pay for results" approach and reward those employees
who make significant contributions to the overall success of the Company. Base
and incentive objectives are set each year by an employee and his supervisor,
which in the case of the President and Chief Executive Officer is the
Compensation Committee. Base objectives must be met to be eligible for the lump
sum incentive awards, and employees accomplishing one or more of their incentive
objectives are then awarded a lump sum incentive award which is allocated from
an incentive pool. In 1999, all the senior executive officers received a lump
sum incentive award.
In 1999, the President and Chief Executive Officer's base salary was
increased 6.1% above its 1998 level reflecting his leadership in controlling
expenses and exploring operating options for the Company. 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 1999 was
approximately 95.9% of his target total compensation. In addition, Mr. McKinney
received a lump sum incentive award as a result of meeting his base and
incentive objectives and negotiating the merger agreement.
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<PAGE>
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
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, 1994, 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.
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<PAGE>
GRAPHIC OMITTED
The Empire District Electric S&P 500
Electric Company Companies Composite
1994 $100.00 $100.00 $100.00
1995 119.97 131.09 137.58
1996 134.89 130.88 169.17
1997 151.54 165.23 225.60
1998 203.10 190.80 290.08
1999 195.53 153.84 351.12
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, 1999, all its officers and directors complied with applicable
Section 16(a) filing requirements.
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 2001 Annual Meeting is tentatively scheduled to be held on April 28,
2001. 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 2001 Annual Meeting, must be received at the principal office
of the Company not later than November 29, 2000. If the date of the 2001 Annual
Meeting is changed by more than 30 days from April 27, 2001, stockholders will
be advised of such change and of the new date for submission of proposals.
Dated: March 29, 2000
----------------------
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.
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<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 John Q.
Hammons Convention Center, 3615 South Range Line, in the City of Joplin, State
of Missouri, on the 27th day of April, 2000 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
[GRAPHICS OMITTED]
SERVICES YOU COUNT ON
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.
<TABLE>
<CAPTION>
<S> <C>
FOR the election of Directors in accordance with the WITHHOLD AUTHORITY to vote for all nominees listed
provisions of the accompanying proxy statement (except below.
as marked to the contrary below).
</TABLE>
(INSTRUCTION: You may withhold authority to vote for any individual nominee by
striking a line through the nominee's name below:) Class I (to serve until the
2003 Annual Meeting): R.D. Hammons, J.R. Herschend, M.W. McKinney, and M.M.
Posner.
<PAGE>
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(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 1999.
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.
FOLD AND DETACH HERE
[GRAPHICS OMITTED]
SERVICES YOU COUNT ON
Dear Shareholder:
We will hold the 2000 Annual Meeting of Shareholders of The Empire District
Electric Company on Thursday, April 27, 2000, at 10:30 a.m., at the John Q.
Hammons Convention Center, 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.
<PAGE>
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Sincerely,
/s/ Myron W. McKinney
Myron W. McKinney
President and Chief Executive Officer
