SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Kansas City Southern Industries, Inc.
(Name of Registrant as Specified In Its Charter)
Watson & Marshall L.C.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A..
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] 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 O-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:
<PAGE>
KCSI
114 West 11th Street
Kansas City, Missouri 64105-1804
KANSAS CITY SOUTHERN INDUSTRIES, INC.
NOTICE AND PROXY STATEMENT
For
The Annual Meeting of Stockholders
to be held
Thursday, May 4, 1995
YOUR VOTE IS IMPORTANT!
Please mark, date and sign the enclosed proxy card and promptly
return it to the Company in the enclosed envelope.
Mailing of this Notice and Proxy Statement, the enclosed Proxy Card
and the accompanying 1994 Annual Report commenced on or about April
3, 1995
<PAGE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
114 West 11th Street
Kansas City, Missouri 64105-1804
April 3, 1995
TO OUR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of
Stockholders of Kansas City Southern Industries, Inc., which will
be held at the Kansas City Marriott Downtown Hotel, 200 West
Twelfth Street, Kansas City, Missouri, at 10:00 a.m., Central
Daylight Time, on Thursday, May 4, 1995. The purposes of this
meeting are set forth in the accompanying Notice of Annual Meeting
and Proxy Statement.
We urge you to read these proxy materials and the enclosed
Annual Report, and to participate in the meeting either in person
or by proxy.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON,
PLEASE SIGN AND RETURN PROMPTLY THE ACCOMPANYING PROXY CARD IN THE
ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES WILL BE REPRESENTED.
Sincerely,
/s/ Paul H. Henson
Paul H. Henson
Chairman of the Board
/s/ Landon H. Rowland
Landon H. Rowland
President and
Chief Executive Officer
<PAGE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
114 West 11th Street
Kansas City, Missouri 64105-1804
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 4, 1995
The Annual Meeting of the Stockholders of Kansas City Southern
Industries, Inc., a Delaware corporation ("KCSI"), will be held at
the Kansas City Marriott Downtown Hotel, 200 West Twelfth Street,
Kansas City, Missouri, at 10:00 a.m., Central Daylight Time, on
Thursday, May 4, 1995, to consider and vote upon the following
matters:
(1) Election of four directors;
(2) Ratification of the Board of Directors'
selection of Price Waterhouse LLP as KCSI's
independent accountants for 1995; and
(3) Such other matters as may properly come before
the Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on March 27,
1995, are entitled to notice of and to vote at this meeting or any
adjournment thereof.
By Order of the Board of Directors,
/s/ Albert P. Mauro
Albert P. Mauro
Vice President and Secretary
The date of this Notice is April 3, 1995.
PLEASE DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD,
REGARDLESS OF THE NUMBER OF SHARES YOU MAY OWN AND WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING IN PERSON. YOU MAY REVOKE YOUR
PROXY AND VOTE YOUR SHARES IN PERSON IF REVOKED IN ACCORDANCE WITH
THE PROCEDURES DESCRIBED IN THE ATTACHED PROXY STATEMENT. PLEASE
ALSO INDICATE ON YOUR PROXY CARD WHETHER YOU PLAN TO ATTEND THE
ANNUAL MEETING.
<PAGE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
114 West 11th Street
Kansas City, Missouri 64105-1804
PROXY STATEMENT
TABLE OF CONTENTS
General Information and Voting . . . . . . . . . . . . . . .
Principal Stockholders . . . . . . . . . . . . . . . . . . .
Stock Owned Beneficially by Directors and
Certain Officers. . . . . . . . . . . . . . . . . . . . .
Compliance With Section 16(a) of the Securities
Exchange Act of 1934. . . . . . . . . . . . . . . . . . .
Proposal (1) - Election of Four Directors. . . . . . . . . .
The Board of Directors . . . . . . . . . . . . . . . . . . .
Proposal (2) - Ratification of the Board of Directors'
Selection of Independent Accountants . . . . . . . . . .
Management Compensation. . . . . . . . . . . . . . . . . . .
Certain Transactions . . . . . . . . . . . . . . . . . . . .
Stockholder Proposals. . . . . . . . . . . . . . . . . . . .
Other Matters. . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
GENERAL INFORMATION AND VOTING
This Proxy Statement is furnished to the stockholders of
Kansas City Southern Industries, Inc., a Delaware corporation
("KCSI"), in connection with the solicitation of proxies by its
Board of Directors for use at the Annual Meeting of Stockholders to
be held at the Kansas City Marriott Downtown Hotel, 200 West
Twelfth Street, Kansas City, Missouri, on Thursday, May 4, 1995, at
10:00 a.m., Central Daylight Time, and any adjournment thereof (the
"Annual Meeting"). The Notice of Annual Meeting, KCSI's 1994
Annual Report, and the proxy card accompany this Proxy Statement.
KCSI will bear the cost of the Annual Meeting, including the
cost of mailing the proxy materials. Proxies may also be solicited
by telephone, telegraph or in person by directors, officers and
employees not specifically engaged or compensated for that purpose.
Morrow & Co., Inc. has been retained to assist in the solicitation
of proxies at a cost not expected to exceed $6,500 plus expenses.
In addition, KCSI may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in
forwarding the proxy statement, annual report and other soliciting
materials to such beneficial owners.
Brokers, dealers, banks, voting trustees, other custodians,
and their nominees are asked to forward soliciting materials to the
beneficial owners of shares held of record by them and upon request
will be reimbursed for their reasonable expenses in completing the
mailing of soliciting materials to such beneficial owners.
VOTING
Stockholders at the Annual Meeting will consider and vote upon
(1) the election of four directors, (2) ratification of the Board
of Directors' selection of Price Waterhouse LLP as KCSI's
independent accountants for 1995, and (3) such other matters as may
properly come before the Annual Meeting.
Only the holders of KCSI's preferred stock, par value $25.00
per share (the "Preferred Stock"), and common stock, par value
$0.01 per share (the "Common Stock"), of record at the close of
business on March 27, 1995 (the "Record Date"), are entitled to
notice of and to vote at the Annual Meeting. On that date, KCSI
had outstanding 243,170 shares of Preferred Stock (excluding
406,566 shares held in treasury) and 43,592,001 shares of Common
Stock, (excluding 4,810,191 shares held in treasury) for a total of
43,835,171 shares eligible to be voted at the Annual Meeting.
The Common Stock and Preferred Stock (collectively the "Voting
Stock") constitute KCSI's only classes of voting securities and
will vote together as a single class on all matters to be
considered at the Annual Meeting. Each stockholder of Voting Stock
is entitled to cast one vote for each share of Voting Stock held on
the Record Date on all matters other than the election of
directors. There is cumulative voting in the election of
directors. Therefore, each stockholder is entitled to cast a
number of votes equal to the number of shares of Voting Stock held
by such stockholder on the Record Date multiplied by the number of
directors to be elected, and all such votes may be cast for a
single nominee or distributed among the nominees as the stockholder
chooses. This Proxy Statement solicits discretionary authority to
vote cumulatively, and the accompanying form of proxy grants such
authority. The votes are counted and certified by three inspectors
appointed by the Board of Directors of KCSI in advance of the
Annual Meeting of Stockholders in accordance with Delaware law.
In order for a proposal to be approved by the stockholders at
the Annual Meeting, the holders of a quorum of the shares of Voting
Stock entitled to vote must be present at the meeting, and the
required percentage of such quorum must be affirmatively voted for
approval by such holders. Under KCSI's Bylaws, the presence of the
holders, either in person or through a proxy, of a majority of the
Voting Stock entitled to vote at the Annual Meeting will constitute
a quorum, regardless of whether the holders vote such shares.
Under Delaware law, in all proposals other than the election
of directors, the affirmative vote of the majority of the quorum of
shares of Voting Stock present at the Annual Meeting that are
entitled to vote on the proposal is required for approval. In
determining the percentage of shares that have been affirmatively
voted for a particular proposal, the affirmative votes are measured
against the votes for and against the proposal plus the abstentions
from voting on the proposal. A stockholder may abstain from voting
on any proposal other than the election of directors, and shares
for which the holders abstain from voting are not considered to be
votes affirmatively cast. Thus, abstaining will have the effect of
a vote against a proposal.
The directors are elected by an affirmative vote of the
plurality of the quorum of shares of Voting Stock present at the
Annual Meeting that are entitled to vote on the election of
directors. With regard to the election of directors, votes may be
cast in favor or withheld; votes that are withheld will be excluded
entirely from the vote and will have no effect.
Under the rules of the New York Stock Exchange, Inc. (the
"NYSE"), member brokers who hold shares of Voting Stock in the
broker's name for customers are required to solicit directions on
how to vote such shares from their beneficial owners and may vote
shares on certain proposals when the brokers have not received such
directions. The Staff of the NYSE informs the brokers prior to the
Annual Meeting on which proposals the brokers (other than KCSI's
subsidiaries that are brokers) are entitled to vote the shares for
which the brokers do not receive directions. Under the policies of
the NYSE, if KCSI's subsidiaries that are brokers do not receive
directions, they are entitled to vote only in the same proportion
as the shares represented by votes from all record holders.
When a broker does not vote, it is referred to as a "broker
non-vote" (customer directed abstentions are not broker non-votes).
Broker non-votes generally do not affect the determination of
whether a quorum is present at the Annual Meeting because generally
some of the shares held in the broker's name have been voted on at
least some proposals, and therefore, all of such shares are
considered present at the Annual Meeting. Under applicable
Delaware law, a broker non-vote will have the same effect as a vote
against any proposal other than the election of directors and will
have no effect on the outcome of the election of directors.
All shares of Voting Stock represented at the Annual Meeting
by proxies solicited hereunder will be voted by the Proxy Committee
in accordance with the specifications made by the stockholders
executing such proxies. That Committee consists of three directors
whose names are listed on the proxy card. A stockholder wishing to
name as his or her proxy someone other than those designated on the
proxy card may do so by crossing out the names of the designated
proxies and inserting another person to act as his or her proxy.
In that case, it will be necessary for the stockholder to sign the
proxy card and deliver it to the person named and for the person so
named to be present with all appropriate documentation and vote at
the Annual Meeting. Proxy cards so marked should not be mailed
directly to KCSI.
If a properly executed and unrevoked proxy solicited hereunder
does not specify how the shares represented thereby are to be
voted, such shares will be voted FOR the election as directors of
the persons nominated by management, FOR the ratification of the
Board of Directors' selection of Price Waterhouse LLP as KCSI's
independent accountants for 1995, and in accordance with the
discretion of the persons appointed proxy for such shares upon such
other matters as may properly come before the Annual Meeting.
However, such persons appointed proxies reserve the right to vote
such proxies cumulatively and for the election of less than all of
the nominees for directors, but do not intend to do so unless other
persons are nominated and such a vote appears necessary to assure
the election of the maximum number of management nominees.
A stockholder may revoke a properly executed proxy with a
later-dated, properly executed proxy or other writing delivered to
the Corporate Secretary of KCSI at any time before the proxy
originally submitted is voted at the Annual Meeting. Attendance at
the Annual Meeting will not have the effect of revoking a properly
executed proxy unless the stockholder delivers a written revocation
to the Secretary before the proxy is voted.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information based on the most
recent information available to KCSI concerning the beneficial
ownership of any of KCSI's Voting Stock by (i) beneficial owners of
more than five percent of any of KCSI's outstanding classes of
Voting Stock, and (ii) all KCSI officers and directors as a group.
Beneficial ownership is generally defined to mean either the sole
or shared power to vote or dispose of the shares. The percentage
ownership is based on number of shares outstanding as of the Record
Date. Except as otherwise noted, the holders have sole voting and
dispositive power.
<TABLE>
<CAPTION>
S
<PAGE>
<C> <C> Name and Address Common Stock(1)
<PAGE>
Preferred
Stock<PAGE>
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109<PAGE>
3,049,900(2)
6.58%<PAGE>
0 Kansas City Southern Industries,
Inc. Employee Stock Ownership Plan
1010 Grand Avenue
Kansas City, Missouri 64106<PAGE>
5,720,613(3)
12.35%<PAGE>
0 UMB Financial Corporation
and UMB Bank, N.A., as co-trustee
of the Kansas City Southern
Industries, Inc. Employee Stock
Ownership Plan and other fiduciary
accounts, 1010 Grand Avenue, Kansas
City, Missouri 64106<PAGE>
5,726,204(3)
12.36%<PAGE>
0 All Officers and Directors as a
Group (24 Persons)<PAGE>
3,603,728(4)
7.78%<PAGE>
400(*)
</TABLE>
* Less than 1% of the outstanding shares of the class
(1) Share amounts are stated and the percentages are calculated in
accordance with Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), which requires that
shares that may be acquired upon the exercise of stock options
that are exercisable on the Record Date or will become
exercisable within 60 days of such date and shares allocated
to the accounts of such persons under KCSI's Employee Stock
Ownership Plan (the "ESOP") be considered beneficially owned.
As of the Record Date, KCSI had options outstanding covering
2,724,651 shares that were exercisable on that date or would
become exercisable within 60 days of that date.
(2) Based on information reported in a Schedule 13G, dated
February 13, 1995, jointly filed with Edward C. Johnson 3d,
Fidelity Management & Research Company and the Fidelity
Magellan Fund.
(3) Based on information reported in Amendment No. 7 to Schedule
13G, dated February 13, 1995, jointly filed by UMB Bank, N.A.
("UMB"), UMB Financial Corporation (the parent company of UMB)
("UMBFC") and the Kansas City Southern Industries, Inc.
Employee Stock Ownership Plan (the "KCSI ESOP"). Shares held
by UMB include the shares held as co-trustee of the KCSI ESOP.
Voting and dispositive power over the shares held by the KCSI
ESOP that are allocated to participant accounts are vested in
the KCSI ESOP participants (they have the right to direct the
voting of all such allocated shares and the tendering of such
shares in response to offers to purchase). All unallocated
shares are to be voted by the trustees in the same proportion
as the allocated shares. Mercantile Bank of Kansas City is
co-trustee of the KCSI ESOP only for purposes of voting.
Beneficial ownership is disclaimed by UMB and the KCSI ESOP of
the shares allocated to participants accounts under the KCSI
ESOP. UMBFC is prohibited by law from directing voting or
disposition of the shares. Amounts do not include shares held
by UMB in custody accounts for which UMB does not have voting
or dispositive power.
(4) Includes 1,683,976 shares for which options are exercisable or
will become exercisable within 60 days and 142,608 shares
allocated to the accounts of officers under the KCSI ESOP.
<PAGE>
STOCK OWNED BENEFICIALLY BY DIRECTORS AND CERTAIN OFFICERS
The following table sets forth information, as of the Record
Date, concerning the Board of Directors' and certain officers'
beneficial ownership of any of KCSI's Voting Stock. No officer or
director of KCSI owns any equity securities of any subsidiary of
KCSI, except for directors' qualifying shares and Thomas H. Bailey
who owns 1,200,000 (12%) of the outstanding common stock of Janus
Capital Corporation.
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Relationship<PAGE>
Common Stock (1) Preferred Stock (1) A. Edward Allinson
Director<PAGE>
16,800 (*)(2) --- Thomas H. Bailey
Chairman and President
of Janus Capital
Corporation<PAGE>
7,240 (*)(3) --- Paul F. Balser
Director<PAGE>
16,000 (*)(4) --- James E. Barnes
Director<PAGE>
19,000 (*)(5) --- Thomas S. Carter
Director<PAGE>
329,134 (*)(6) 400(*) James B. Dehner
Vice President of KCSI
and Executive Vice
President and Chief
Operating Officer of
KCSR<PAGE>
81,614 (*)(7) --- George W. Edwards, Jr.
Director, Executive
Vice President of KCSI,
and President and Chief
Executive Officer of
KCSR<PAGE>
491,676
(1.06%)(8)<PAGE>
--- Michael G. Fitt
Director<PAGE>
17,200 (*)(9) --- Paul H. Henson
Chairman of the Board<PAGE>
194,722 (*)(10) --- Thomas A. McDonnell
Director, Executive
Vice President of KCSI,
and Vice Chairman,
President, Chief
Executive Officer and
Treasurer of DST
Systems, Inc.<PAGE>
512,204
(1.11%)(11)<PAGE>
- --- Landon H. Rowland
Director, President,
Chief Executive Officer
of KCSI<PAGE>
1,181,415
(2.55%)(12)<PAGE>
- --- Morton I. Sosland
Director<PAGE>
112,288*(13) --- All Directors and
Officers as a Group
(24 Persons)<PAGE>
3,603,728
(7.78%)(14)<PAGE>
400(*)
</TABLE>
* Less than 1% of the shares outstanding of the class
(1) Percentage ownership is based on the number of shares
outstanding as of the Record Date and options that would
become exercisable within 60 days of that date. The holders
may disclaim beneficial ownership of shares included that are
owned by or with family members, trusts or other entities.
Except as noted and except for shares held by the KCSI ESOP,
the holders have sole voting and dispositive power. See also
footnote 1 to the table of Principal Stockholders on page 4.
(2) Includes 14,800 shares which may be acquired through option
exercises.
(3) Includes 5,908 shares allocated to his account under the KCSI
ESOP.
(4) Shares which may be acquired through option exercises.
(5) Includes 16,000 shares which may be acquired through option
exercises and 3,000 shares held jointly with his wife.
(6) Includes 12,000 shares which may be acquired through option
exercises.
(7) Includes 45,000 shares which may be acquired through option
exercises, 15,023 shares held by his wife as to which
beneficial ownership is disclaimed and 11,964 shares allocated
to his account under the KCSI ESOP.
(8) Includes 120,000 shares which may be acquired through option
exercises and 5,908 shares allocated to his account under the
KCSI ESOP.
(9) Includes 14,000 shares which may be acquired through option
exercises.
(10) Includes 7,252 shares allocated to his account under the KCSI
ESOP.
(11) Includes 1,596 shares held by his wife as to which beneficial
ownership is disclaimed and 80,000 shares which may be
acquired through option exercises, 16,805 shares allocated to
his account under the KCSI ESOP and 16,000 shares held in a
charitable foundation of which he is a director, over which he
may have shared voting or dispositive power, but as to which
beneficial ownership is disclaimed. Does not include shares
owned by the DST Profit Sharing Plan.
(12) Includes 948,952 shares which may be acquired through option
exercises and 18,762 shares allocated to his account under the
KCSI ESOP and 159 shares in the KCSI Profit Sharing Plan.
(13) Includes 16,000 shares which may be acquired through option
exercises and 1,600 shares held as trustee over which he has
sole voting and dispositive power. Also includes the
following shares over which he has shared voting and/or power,
but as to which beneficial ownership is disclaimed: 12,000
shares held by certain companies of which he is a director;
39,400 shares held as co-trustee of certain testamentary
trusts; 25,600 shares in a charitable foundation of which he
is a director; and 4,000 shares held by his wife.
(14) See footnote 4 to the table of Principal Stockholders on page
4.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires KCSI's officers and directors, and persons, legal
or natural, who own more than 10% of KCSI's Common Stock or
Preferred Stock (collectively "Insiders"), to file reports of such
ownership with the Securities and Exchange Commission ("SEC"), the
New York Stock Exchange and KCSI. Based solely on review of the
copies of such reports furnished to KCSI, and written
representations relative to the filing of certain forms, no insider
was late in filing such reports for fiscal year 1994.
<PAGE>
PROPOSAL (1) - ELECTION OF FOUR DIRECTORS
Four directors are to be elected for three-year terms, to
serve until the Annual Meeting of Stockholders in 1998 or until
their successors are elected and qualified. All of the nominees
are presently directors of KCSI, have indicated that they are
willing and able to serve as directors if elected, and have
consented to be named as nominees in this Proxy Statement. If any
nominee should become unable or unwilling to serve, the persons
appointed proxy pursuant to the enclosed proxy card intend to vote
for one or more substitute nominees chosen by them in their sole
discretion. The directors are elected by the affirmative vote of
the plurality of shares of Voting Stock present at the Annual
Meeting that are entitled to vote on the election of directors.
See also "General Information and Voting". Stockholders do not
have any dissenter's right of appraisal in connection with the
election of directors.
YOUR BOARD RECOMMENDS THAT YOU VOTE "FOR" THE
ELECTION OF MANAGEMENT'S NOMINEES
INFORMATION ABOUT NOMINEES AND PRESENT DIRECTORS
The following sets forth certain information about the
nominees and about the present directors of KCSI who will continue
in office after the Annual Meeting. Other information about the
directors, nominees and the Board is set forth below under "The
Board of Directors".
NOMINEES FOR DIRECTOR TO SERVE UNTIL THE ANNUAL MEETING OF
STOCKHOLDERS IN 1998
A. EDWARD ALLINSON, age 60, has been a director of KCSI since 1990.
He is Executive Vice President of the Global Financial Asset
Services area of State Street Bank and Trust Company, Chairman of
the Board of Directors of Boston Financial Data Services, Inc.
("BFDS"), a joint venture between State Street and DST Systems,
Inc. ("DST"), and Executive Vice President of State Street Boston
Corporation and has been since March 1990. He served as Chief
Executive Officer of BFDS from 1984 until August 1992, a director
of DST from 1977 to November 1990 and as President of Mitchell
Hutchins Asset Management from June 1987 to February 1990.
PAUL F. BALSER, age 53, has been a director of KCSI since 1990. He
is a Partner of Centre Partners, New York, New York, and has been
since September 1986. He served as a director of DST from 1983 to
November 1990. He also serves as a director of Carbide/Graphite
Group, Inc., Pittsburgh, Pennsylvania; Scientific Games, Inc.,
Atlanta, Georgia and United Retail Group, Inc., Rochelle Park, New
Jersey.
PAUL H. HENSON, age 69, has been a director and Chairman of the
Board of KCSI since May 1990 and had previously served as a
director of KCSI from 1966 through 1980. He previously served as
Chairman of the Board of United Telecommunications, Inc., which has
been renamed as Sprint Corporation, Shawnee Mission, Kansas, from
1966 to April 1990, and he still serves as a director of that
company. He is also a director of Armco, Inc., Parsippany, New
Jersey and Duke Power Company, Charlotte, North Carolina.
LANDON H. ROWLAND, age 57, has been a director of KCSI since 1983,
President of KCSI since July 1983 and Chief Executive Officer of
KCSI since January 1987. He was Chief Operating Officer from July
1983 through December 1986. He was President and Chief Executive
Officer of The Kansas City Southern Railway Company ("KCSR") from
October 1990 to April 1991, and has been Chairman of the Board of
KCSR since May 1990 and a director of that Company since May 1982,
and has been Chairman of the Board and a director of DST since June
1983.
DIRECTORS SERVING UNTIL THE ANNUAL MEETING OF STOCKHOLDERS IN 1996
JAMES E. BARNES, age 61, has been a director of KCSI since 1986.
He is Chairman of the Board of MAPCO, Inc., Tulsa, Oklahoma, and
has been since May 1986, and has been Chief Executive Officer of
that company since February 1984. He also served as President of
MAPCO from February 1984 until December 1991. MAPCO owns,
develops, produces and transports coal, petroleum and gas products.
He is also a director of SBC Communications, Inc. (formerly
Southwestern Bell), San Antonio, Texas and of BOK Financial
Corporation, Tulsa, Oklahoma.
THOMAS S. CARTER, age 73, has been a director of KCSI since 1973.
He previously served as Chairman of the Board of KCSI's
subsidiaries, KCSR and the Louisiana and Arkansas Railway Company
("L&A"), from 1983 until 1990, and as a director of both companies
from 1973 until May 1990 and is now retired. He also served as
President of both companies from 1973 until January 1986, and as
Chief Executive Officer of KCSR from 1982 to 1990 and of L&A from
1981 to 1990.
DIRECTORS TO SERVE UNTIL THE ANNUAL MEETING OF STOCKHOLDERS IN 1997
GEORGE W. EDWARDS, JR., age 55, has been a director of KCSI since
1991, and Executive Vice President of KCSI and President and Chief
Executive Officer of KCSR since April 1991. He previously served
as Chairman of the Board and Chief Executive Officer of the United
Illuminating Company, New Haven, Connecticut from April 1987 until
April 1991. He also serves as a director of the Aquarion Company,
Bridgeport, Connecticut; El Paso Electric Company, El Paso, Texas
and Hubbell, Inc., Orange, Connecticut.
MICHAEL G. FITT, age 63, has been a director of KCSI since 1986.
He was Chairman and Chief Executive Officer of Employers
Reinsurance Corporation, Overland Park, Kansas, from 1980 through
1992 and President of that company from 1979 through 1991 and is
now retired. Employers Reinsurance Corporation is a subsidiary of
General Electric Financial Services, Inc. He is also a director of
NACRE Corp., Greenwich, Connecticut.
THOMAS A. MCDONNELL, age 49, has been a director of KCSI since
1983, and Executive Vice President of KCSI since February 1987. He
has served as Chief Executive Officer of KCSI's subsidiary, DST
since October 1984, as a director of DST since 1971, as President
of DST since April 1987 (having previously served in such position
from January 1973 until October 1984), and as Treasurer of DST
since January 1973. He has also served as a director of KCSR since
December 1989. He is a director of Informix, Inc., Menlo Park,
California; BHA Group, Inc., Kansas City, Missouri; The Continuum
Company, Inc., Austin, Texas; Puritan-Bennett Corporation, Kansas
City, Missouri and First of Michigan Capital Corporation, Detroit,
Michigan.
MORTON I. SOSLAND, age 69, has been a director of KCSI since 1976.
He has been Chairman of the Sosland Companies, Inc., Kansas City,
Missouri, since January 1993 and was President from July 1968
through December 1992. The Sosland Companies are publishers and
venture investors. He is also a director of Brown Group, Inc., St.
Louis, Missouri; H & R Block, Inc., Kansas City, Missouri;
AgriStar, Inc., Conroe, Texas and Commerce Bancshares, Inc., Kansas
City, Missouri.
THE BOARD OF DIRECTORS
The Board of Directors met eight times in 1994 to review
significant developments affecting KCSI and to act on matters
requiring Board approval. All directors attended at least 75% of
the total of all meetings of the Board during 1994. The Board of
Directors is divided into three classes, with members of each class
serving a three-year term and with a class to be elected each year
by the Stockholders.
KCSI's Certificate of Incorporation does not prescribe any
eligibility criteria for a person to serve as a director. However,
KCSI's Bylaws provide that from January 19, 1990, no person who has
attained the age of 72 shall be eligible to be nominated or to
serve as a member of the Board of Directors, but any person who
shall attain the age of 72 during the term of directorship to which
he was elected shall be eligible to serve the remainder of such
term.
INFORMATION ABOUT COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of KCSI has established an executive
committee (which also nominates individuals to serve as directors
of KCSI), an audit committee, a compensation and organization
committee, and a finance and strategy committee, among others.
During 1994, there were three meetings of the Executive Committee,
four meetings of the Audit Committee, and five meetings of the
Compensation and Organization Committee. All directors attended at
least 75% of the total of all meetings of committees on which they
served during 1994.
EXECUTIVE COMMITTEE
The Executive Committee consists of KCSI's Chairman of the
Board, its Chief Executive Officer and three outside directors
elected by the Board to serve one-year terms. When the Board is
not in session, the Executive Committee has all the powers in the
management of KCSI of the Board in all cases in which specific
direction has not been given by the full Board.
The Executive Committee also serves as the Board's nominating
committee and recommends to the Board suitable nominees for
election to the Board of Directors or to fill newly created
directorship or vacancies on the Board. The Chief Executive
Officer is a non-voting member with respect to nomination
activities. As a part of its nominating duties, the Executive
Committee may meet with and consider suggestions from Board
members, management, consultants and others in formulating its
recommendations. The Executive Committee generally will consider
director nominees recommended by stockholders. Stockholders should
see "Stockholder Proposals" and "Other Matters" below for
information relating to the submission by stockholders of nominees
and matters for consideration at a meeting of KCSI stockholders.
The members of the Executive Committee are: A. Edward
Allinson, Thomas S. Carter, Michael G. Fitt, Paul H. Henson and
Landon H. Rowland.
AUDIT COMMITTEE
The Audit Committee consists of three outside directors
elected by the Board of Directors to serve staggered three-year
terms. The Audit Committee meets with and considers suggestions
from members of management and of KCSI's internal audit staff, as
well as KCSI's independent accountants, concerning the financial
operations of KCSI. The Audit Committee also reviews the audited
financial statements of KCSI and considers and recommends the
employment of and approves the fee arrangement with independent
accountants for audit functions and for advisory and other
consulting services.
The members of the Audit Committee are: A. Edward Allinson,
Thomas S. Carter and Michael G. Fitt.
COMPENSATION AND ORGANIZATION COMMITTEE
The Compensation and Organization Committee (the "Compensation
Committee") consists of four outside directors elected by the Board
to serve one-year terms. The Compensation Committee authorizes all
salaries for KCSI and subsidiary company officers and supervisory
employees, other than officers and supervisory employees of Janus
Capital Corporation, earning $100,000 or more per year, administers
the incentive compensation plans of KCSI, KCSR and DST in
accordance with the terms of those plans and determines any
incentive allowances made to their officers and staff. In
addition, the committee administers KCSI's employee stock purchase
plan under which eligible employees of KCSI and its subsidiaries
and affiliates are permitted to subscribe to and purchase shares of
KCSI common stock through payroll deductions.
The Compensation Committee also has the authority to review
the consolidated earnings of KCSI and to make recommendations to
the Board about the allocation of funds to KCSI's profit sharing
plan. The Compensation Committee also reviews the results of the
investment program of the profit sharing plan and reports to the
Board.
The Compensation Committee acts as KCSI's stock option plan
committee, and administers KCSI's stock option plans, other than
the 1993 Directors' Stock Option Plan, in accordance with KCSI's
Bylaws, the terms of the plans and the applicable laws. The
Compensation Committee is also responsible for an annual update of
succession plans and major organizational changes.
The members of the Compensation and Organization Committee
are: Paul F. Balser, James E. Barnes, Thomas S. Carter and Morton
I. Sosland.
The Committee's report on executive compensation is set forth
in the section on Management Compensation.
COMPENSATION AND ORGANIZATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Thomas S. Carter, who is a member of the Compensation and
Organization Committee, was an officer of KCSR and L&A until his
retirement in 1990.
Mr. Balser, who is a member of the Compensation and
Organization Committee, is a partner of Centre Partners, which may
be deemed to indirectly control over 83% of the Jungle Jim's
Playground, Inc., and Mr. Balser is a director of Jungle Jim's.
Southern Credit Corporation, a subsidiary of KCSI, had a $2.2
million credit commitment to Jungle Jim's during 1994 that expired
in October 1994. At December 31, 1994, Jungle Jim's was indebted
to Southern Credit Corporation for a total of $1.586 million. The
indebtedness is evidenced by several notes at various fixed rates,
which were determined at the time of borrowing, and is secured by
certain equipment of Jungle Jim's. Jungle Jim's paid a total of
$198,187 in interest to Southern Credit Corporation in 1994.
Messrs. Balser and Carter hold limited partnership interests
for themselves or members of their immediate family in certain
partnerships of which a DST subsidiary, National Realty Partners,
Inc. ("NRP"), serves as general partner. During 1994, management
fees of $10,000 were paid to NRP by Inwood Towers, L.P. ("Towers"),
respectively. NRP and DST Realty, Inc. ("Realty"), a DST
subsidiary, advanced $51,625 to another such limited partnership,
Trails Investors, L.P. ("Trails"). At December 31, 1994, Trails
was indebted to NRP and Realty in the amount of $1,013,760.
FINANCE AND STRATEGY COMMITTEE
The Finance and Strategy Committee consists of KCSI's Chairman
of the Board and four outside directors elected by the Board to
serve one-year terms. The Finance and Strategy Committee is
responsible for reviewing financial plans, major capital
investments, long-term strategic plans, and KCSI's acquisition and
divestiture programs and to make recommendations to the Board.
The members of the Finance and Strategy Committee are: Paul
F. Balser, James E. Barnes, Michael G. Fitt, Paul H. Henson and
Morton I. Sosland.
COMPENSATION OF DIRECTORS
During 1994, directors, who are not officers or employees of
KCSI, its subsidiaries or affiliates, received a $21,000 annual
retainer, payable quarterly, and $2,000 plus expenses for each KCSI
Board meeting attended or $1,000 for each telephonic board meeting
in which they participated. Such directors also received $1,000
plus expenses for each KCSI committee meeting attended, and each
committee chairman received a $3,000 annual retainer fee. During
1994, the outside directors who were members of a special committee
formed by the Board to oversee the previously disclosed proposed
merger of the KCSR were each paid a fee of $20,000. The committee
was dissolved prior to year end.
Directors of KCSI and certain subsidiaries are permitted to
defer receipt of directors fees under unfunded directors' deferred
fee plans adopted by the respective boards of directors, and either
to receive interest on such fees until they have been paid to them
or if they are a director of KCSI, in lieu of receiving interest,
to have earnings on their deferred fees determined pursuant to a
formula based on the performance of certain mutual funds advised by
Janus Capital Corporation. The rate of interest to be paid under
the KCSI and KCSR plans is set at the prime rate of a certain
national bank less 1%. Under the DST Deferred Fee Plan, interest
paid on deferred fees is based upon the performance of the DST
Profit Sharing Plan. Distributions under the plans are allowed in
certain instances as approved by the respective boards of
directors. The KCSI, KCSR and DST deferred fee plans also allow
the respective directors to elect to receive deferred amounts in
installments payable over several years. Deferred fees and accrued
interest thereon for 1994 are included in the amounts shown in the
Summary Compensation Table below.
Pursuant to the terms of the KCSI Directors' Retirement Plan,
any director of KCSI who has served five years as a director
without simultaneously being employed by KCSI or any of its
subsidiaries is eligible to receive benefits under the plan. The
retirement plan provides that, following retirement, eligible
directors will receive a monthly benefit payment equal to one-
twelfth of a percentage, varying from 40% to 55% depending upon the
number of years of service, of the average monthly directors' fee
paid the directors for Board and committee service during the 36
month period immediately preceding retirement. Directors serving
five to eight years will receive benefits at a 40% level and
directors serving from nine to fifteen years will receive benefits
at a 50% level for a period equal to the number of months served,
whereas directors serving over 15 years will receive benefits at a
55% level until their death. The retirement plan also allows
directors to choose a reduced benefit payable until the death of
both the retired director and his spouse, and allows KCSI to
convert retirement benefits to an annuity payable over a number of
years.
Members of the Board of Directors of Janus Capital Corporation
receive an annual retainer fee of $3,500 and a fee of $500 per
meeting attended. Mr. McDonnell received no fee as a director of
Janus in 1994, 1993 and 1992. Since May 1, 1993, no directors'
fees have been paid to the Directors of KCSR.
PROPOSAL (2) - RATIFICATION OF THE BOARD OF DIRECTORS'
SELECTION OF INDEPENDENT ACCOUNTANTS
The Audit Committee has recommended, and the Board of
Directors has selected, the firm of Price Waterhouse LLP as
independent accountants to examine the consolidated financial
statements of KCSI for the year 1995. No relationship exists
between KCSI and Price Waterhouse LLP other than that of
independent accountant and client.
Price Waterhouse LLP served as KCSI's independent accountants
for 1994. As such, Price Waterhouse LLP provided audit and tax
services to KCSI and certain of its subsidiaries. Such services
included examinations of the consolidated financial statements of
KCSI and of the financial statements of various subsidiaries in
connection with its annual audit of such financial statements,
review of reports filed by KCSI with the Securities and Exchange
Commission and review of control procedures of the mutual fund
processing system of DST and certain of its subsidiaries.
One or more representatives of Price Waterhouse LLP will be
present at the Annual Meeting and will have the opportunity to make
a statement if they desire and to respond to appropriate questions
by stockholders. Stockholders have no dissenter's rights of
appraisal in connection with the ratification of the Board's
selection.
YOUR BOARD RECOMMENDS THAT YOU VOTE "FOR"
RATIFICATION OF THE BOARD OF DIRECTORS
SELECTION OF PRICE WATERHOUSE LLP
<PAGE>
MANAGEMENT COMPENSATION
COMPENSATION AND ORGANIZATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
The Board of Directors of KCSI believes that increasing the
value of KCSI to its stockholders is the Board's most important
objective. The Compensation and Organization Committee was
established by the Board of Directors, in part, to design
compensation packages for KCSI's executives that are consistent
with the Board's overall objective while still allowing KCSI to
attract and retain the highest quality of executives. In order to
ensure that the Committee objectively determines compensation
packages, the Board requires that the Committee consist of four
directors who are not officers of KCSI and who are not eligible to
participate in any of the compensation plans administered by the
Committee. The Committee, from time to time, utilizes the
expertise of outside compensation consultants to help in designing
the compensation packages.
The Committee has developed current compensation packages
based on the principle that executive compensation should be
structured to provide fair, reasonable and competitive base
salaries along with the opportunity to earn incentive compensation
reflecting both KCSI's and the individual's performance; that
executive performance should be judged and compensated primarily on
the basis of KCSI's earnings and the strength of KCSI's financial
position; that long-term changes in stockholder value are the most
appropriate measure of KCSI's financial performance; and that the
best approach to promoting the financial success of KCSI is to
align the stockholders' and the executives' interests through a
compensation strategy emphasizing long-term stock ownership.
As a result, the Committee significantly restructured the
executives' compensation packages during the last several years to
reduce the proportion of short-term cash compensation and to
increase the proportion of long-term compensation tied to
improvements in KCSI's earnings and financial position. For the
members of the Office of the Chief Executive, who are Messrs.
Rowland, McDonnell and Edwards, annual cash compensation is
primarily in the form of base salary, which is being maintained at
levels which were determined to be consistent with competitive
market pay practices, along with incentive compensation primarily
in the form of grants of restricted stock and stock options. The
intent of the restructured packages is to link the executives'
compensation with changes in stockholders' value.
In order to help ensure that this strategy is implemented, the
Committee has expressed its intent in the employment agreements of
executives that future awards of stock incentives are dependent
upon the executives retaining ownership of a substantial portion of
the shares of KCSI Common Stock acquired through the stock
incentives awarded after March 1992. The members of the Office of
the Chief Executive, as part of their employment agreements, have
agreed to retain a majority (less shares forfeited or used to pay
the option exercise price or taxes) of all restricted stock and
stock acquired through the exercise of options awarded under the
agreements.
The Committee believes that, while KCSI should provide an
opportunity for its executives to acquire a significant equity
stake in KCSI, realization of the benefits of this opportunity
would occur only after stockholders experienced an increase in the
value of their investment in KCSI. The Committee intends that the
application of these principles results in total compensation for
the executives above competitive levels for superior stockholder
returns and below competitive levels for average or lesser returns.
There are three components to KCSI's executives' compensation
packages: Base Salary, Annual Cash Incentives and Stock
Compensation. Each of these components is discussed below.
BASE SALARY
The Committee determines the level of base salaries by
competitive market practices and by individual contribution and
performance. The Committee utilizes a number of surveys to
determine compensation practices. The surveys are prepared or
otherwise obtained by the outside compensation consultants for the
Committee, and focus only on U. S. based companies generally of
similar size because competition for executives is not limited to
the asset management, railroad and transaction processing
industries. These surveys include some of the companies that make
up the Fortune 50 Transportation Group, which is the industry group
used for comparing share investment performance in the Stock
Performance Graph below.
Based upon the surveys, the Committee is able to determine the
competitive range of base salaries for a particular position. The
Committee targets the median of the range for setting base salary
levels for the executives, but may adjust the salaries as a result
of an individual's performance, level of responsibility and
experience as well as business results and general economic
factors.
Effective January 1992, the members of the Office of the Chief
Executive entered into employment contracts with KCSI that fixed
their base salaries for five years at $500,000 annually. The
Committee set base salaries at levels that were between the median
and seventy-fifth percentile levels indicated in the surveys. The
Committee chose such levels based upon its overall strategy of
compensating such executives primarily through stock-based
incentives.
ANNUAL INCENTIVES
Annual cash incentive awards to executives are based primarily
on overall business unit and corporate earnings and cash flow
performance, modified to reflect individual contribution and
performance. Under the incentive awards program, minimum, target
and maximum level corporate and personal goals are established
annually by the Committee. The minimum level goals must be met in
order for an executive to receive any incentive award. If the
corporate and the executive's target goals are attained, an
executive will receive an incentive award of between 30 and 50
percent of his or her base salary depending upon the executive's
level of responsibility. Incentive awards for attainment of the
corporate and personal minimum goals are each one-half of the
target goal award and maximum goals are two times the target goal
award. For the members of the Office of the Chief Executive,
participation in KCSI's annual cash incentive program was
discontinued through 1996.
STOCK COMPENSATION
The key component to the Committee's strategy is to make stock
incentives, which consist primarily of grants of stock options and
restricted stock, a significant portion of the executives'
compensation package. Generally, the number of options and shares
of restricted stock that an executive is awarded is tied to the
compensation targets for that individual during the period covered
by the grant. Through the application of option pricing models and
other valuation analysis to data concerning stock incentives in the
compensation surveys (see the discussion under Base Salary), the
Committee is able to determine a range of values and numbers of
stock incentives to be awarded. In determining the amount of stock
incentives to be awarded to an executive, the Committee also
considers previous awards, whether the executive has exercised, to
the extent possible, options previously awarded and whether the
shares of KCSI Common Stock acquired thereby or shares of
restricted stock previously awarded have been retained.
For purposes of determining the number of options to be
granted to the members of the Office of the Chief Executive under
their employment agreements, the Committee also considered the risk
adjusted present value of annual cash incentives that these
executives might have earned over the five-year term of their
employment agreements had they participated in such programs. In
addition, these options were structured so that there had to be
substantial appreciation in the market price of KCSI Common Stock
in order for total compensation of the members of the Office of the
Chief Executive to equal or exceed the estimated amount of total
compensation that they would have received under the prior
compensation structure. To provide additional incentives to the
members of the Office of the Chief Executive, the Committee
structured the awards of stock option incentives in 1991 and 1992
to reward the executives when KCSI's market value reached certain
predetermined levels and remained at or above those levels for
thirty consecutive trading days or if the executives remain
employed with KCSI over a prescribed period. Each of these
predetermined levels was established by assuming appreciation in
the market price for KCSI Common Stock from the date of grant at a
rate that was slightly above the average historical return of the
S&P 500 (See the footnotes to the Performance Graph below). By
structuring the option awards this way, the members of the Office
of the Chief Executive would not be rewarded unless the
stockholders of KCSI first received an above average market return.
All of these levels were reached in 1992.
LANDON H. ROWLAND, CEO
KCSI entered into an employment agreement with Mr. Rowland
that was effective January 1, 1992, which is based upon the
principles discussed above in connection with the members of the
Office of the Chief Executive. Thus, during the five-year term of
the agreement, Mr. Rowland's base salary is fixed, and he is
ineligible to participate in KCSI's annual cash incentive
compensation programs. In addition, Mr. Rowland was awarded stock
incentive compensation in the form of restricted stock and stock
options, under the agreement, which is discussed elsewhere in this
Proxy Statement, subject to the terms and conditions discussed
above. The grant of this stock-based compensation was intended to
provide incentives to increase stockholder value over the five-year
term of the agreement. No additional compensation was awarded Mr.
Rowland in 1994.
DEDUCTIBILITY OF COMPENSATION
The Internal Revenue Code was amended effective in 1994 to add
Section 162(m), which limits the deduction for federal income tax
purposes by publicly held corporations of compensation in excess of
$1 million dollars paid to the executive officers listed in the
corporation's Summary Compensation Table unless such excess
compensation is performance based as defined in Section 162(m).
The Committee has been counseled about the potential impact of
Section 162(m) and determined that it was not necessary to take
further action during 1994. The Internal Revenue Service issued
proposed regulations interpreting Section 162(m) but has not issued
final regulations as of the date of this report. In addition,
Section 162(m) provides that compensation arrangements entered into
prior to February 1993, which have not been materially modified,
are not subject to its limitations even if the compensation is
realized in later years. KCSI entered into the employment
agreements with the named executive officers in the Summary
Compensation Table other than Mr. Bailey and awarded substantially
all of such executives' options prior to February 1993. KCSI and
its affiliates currently do not have an agreement with Mr. Bailey
with respect to his compensation. At this time, the Committee does
not anticipate that it will materially change the named executive
officers' employment agreements during 1995 or that such officers'
non-performance based compensation arrangements entered into after
February 1993 will exceed $1 million in 1995.
The Committee will continue to be counseled about Section
162(m) and potential impacts on any compensation packages the
Committee may be considering. The Committee expects to take action
as necessary in the future to comply with Section 162(m).
COMMITTEE'S COMPENSATION ACTIVITIES DURING 1994
The Committee did not materially change the compensation
packages for KCSI's executives during the last fiscal year. Mr.
Dehner's base salary was increased as a result of increases in the
market as indicated in salary surveys obtained by the Committee,
his performance as Chief Operating Officer of KCSR, his increased
experience and responsibility and the improved operating results of
KCSI's transportation services. In addition, during 1994 Mr.
Dehner met his personal maximum goals and the maximum corporate
goals. Therefore, Mr. Dehner's incentive compensation was equal to
100% of his base salary.
The Committee also awarded Mr. Dehner options to acquire 5,000
shares of the Common Stock. The other terms of the options are set
forth under the Option Grants Table below. The Committee considers
awarding options each year. In determining the number of options
to be granted, the Committee took into account its past grants made
to officers at various levels of responsibility in KCSI and its
subsidiaries. The Committee determined the amount of options
awarded to Mr. Dehner was appropriate for his level of
responsibility as Chief Operating Officer of KCSR based on the
historic practices of the Committee. The Committee did not use
outside compensation consultants in determining Mr. Dehner's or any
other officer's option award in 1994, and the Committee did not
consider the options that Mr. Dehner currently holds in determining
the size of the 1994 award.
This report was presented to and approved by the Board of
Directors.
The Compensation and Organization Committee
James E. Barnes, Chairman
Paul F. Balser
Thomas S. Carter
Morton I. Sosland
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows the changes in value over the past
five years since December 31, 1989 of an assumed investment of $100
in: (i) KCSI's Common Stock (the blue line); (ii) the stocks that
comprise the S&P 500 index(1) (the dotted line); and (iii) certain
stocks from the Fortune 50 Transportation Companies(2) (the green
line). The table following the graph shows the value of those
investments as of December 31, of the years indicated. The value
for the assumed investments depicted on the graph and in the table
has been calculated, assuming that cash dividends paid reinvested
at the end of each quarter during the fiscal year.
[GRAPH]
<TABLE>
<CAPTION>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
RELATIVE MARKET PERFORMANCE
TOTAL RETURN 1990 THROUGH 1994
S
<PAGE>
<C> <C> <C> <C> <C> <C> Year Ended
December 31,<PAGE>
1989 1990 1991 1992 1993 1994 KCSI Total Return $100 $ 80 $139 $231 $489 $296 S&P 500 Index
Total Return<PAGE>
$100 $ 97 $126 $136 $150 $152 Fortune 50
Transportation
Total Return<PAGE>
$100 $ 83 $126 $141 $176 $149
</TABLE>
(1) The S&P 500 is an index prepared by Standards and Poor's
Corporation, an independent company. The S&P 500 index reflects
the change in weighted average market value for 500 companies whose
shares are traded on the New York Stock Exchange, American Stock
Exchange and in the over the counter market from the base period of
1941 through 1943. The index also assumes reinvestment of all
dividends. These companies consist of approximately 400 industrial
firms, 40 public utilities, 40 financial institutions and 20
transportation companies. All together, the stocks of these
companies represent approximately 80 percent of the market value of
all the stock listed on these exchanges.
(2) This index is based upon the 1994 Fortune 50 Transportation
Companies (the "Transportation Group") as published by Time, Inc.,
an independent company, in Fortune Magazine. The list is comprised
of the 50 largest transportation companies for which public records
are available, and the companies are ranked by consolidated total
revenues as of December 31 of the immediately preceding year. The
total consolidated revenues of each company in the Transportation
Group include revenues from non-transportation lines of business,
if any. However, to be included in the Transportation Group, a
company must derive 50 percent or more of its total revenues from
transportation services. KCSI was included in the Transportation
Group in each of the five years covered by the Performance Graph.
The index is prepared using information about those companies in
the Transportation Group the stock of which is publicly traded
(i.e. the "public companies") for the entire five year period
covered by the graph. Those companies in the Transportation Group
the stock of which is not publicly traded (i.e. the "private
companies") are not included in the index, as well as those
Transportation Group public companies that were not included in the
Fortune 50 Transportation list for the five year period covered by
the graph.
For 1994, the public companies that were included in the Fortune 50
Transportation Group were: Air Express International, Airborne
Freight Corp., Alaska Air Group, Inc., Alexander & Baldwin Inc.,
America West Airlines, American President Cos. Ltd., AMR Corp.,
Burlington Northern, Inc., Carnival Corp., Carolina Freight Corp.,
Conrail, Inc., Consolidated Freightways, Inc., CSX Corp., Delta Air
Lines, Inc., Federal Express Corp., Gatx Corp., Harper Group, Inc.,
Hunt (JB) Transportation Services, Inc., Kansas City Southern
Industries, Inc., Mark VII, Inc., Norfolk Southern Corp., Panhandle
Eastern Corp., Roadway Services, Inc., Ryder System, Inc., Santa Fe
Pacific Corp., Southwest Airlines, Tejas Gas Corp., UAL Corp.,
Union Pacific Corp., USAir Group, Yellow Corp. KCSI may adopt a
new comparative index in the future if KCSI's revenues, assets and
earnings from its non-transportation operations continue to
increase as a percentage of KCSI's consolidated operations.
<PAGE>
SUMMARY COMPENSATION TABLE
The Summary Compensation table shows certain information
concerning the compensation paid by KCSI to the Chief Executive
Officer of KCSI and the four most highly compensated executive
officers during 1994 (based upon the total salary and bonus paid
during 1994).
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Long Term
Compensation Awards
S><PAGE>
<C> <C> <C> <C> <C> <C
<PAGE>
Name
and
Principal
Position<PAGE>
Year<PAGE>
Salary ($)<PAGE>
Bonus(1) ($)<PAGE>
Restricted
Stock
Award(s)
($)<PAGE>
Securities
Underlying
Options/
SARs (#)
<PAGE>
All Other
Compen-
sation
($)<PAGE>
Landon H.
Rowland
President
and Chief
Executive
Officer<PAGE>
1994
1993
1992
<PAGE>
500,004(2)
500,345(2)
501,145(2) <PAGE>
---
---
---
<PAGE>
---
---
593,125(3)
<PAGE>
---
---
80,000
<PAGE>
81,846(4)
182,332(4)
262,224(4)
<PAGE>
Thomas A.
McDonnell
Chief
Executive
Officer of
DST
<PAGE>
1994
1993
1992
<PAGE>
500,004
500,004
501,004(5)
<PAGE>
---
---
---
<PAGE>
---
---
593,125(3)
<PAGE>
---
---
80,000
<PAGE>
97,139(6)
226,207(6)
306,099(6)
<PAGE>
George W.
Edwards, Jr.
Chief
Executive
Officer
of KCSR<PAGE>
1994
1993
1992
<PAGE>
500,004
500,004
501,004(5)
<PAGE>
---
---
---
<PAGE>
---
---
593,125(3)
<PAGE>
---
---
80,000
<PAGE>
81,846(7)
182,332(7)
306,099(7)
<PAGE>
Thomas H.
Bailey
Chairman,
Chief
Executive
Officer of
Janus
Capital
Corporation<PAGE>
1994
1993
1992
<PAGE>
560,000(8)
556,492(8)
553,243(8)
<PAGE>
---
---
---<PAGE>
---
---
---<PAGE>
---
---
---<PAGE>
22,284(9)
25,942(9)
30,000(9)
<PAGE>
James B.
Dehner
Executive
Vice
President
and Chief
Operating
Officer of
KCSR<PAGE>
1994
1993
1992
<PAGE>
203,004
185,004
175,008
<PAGE>
203,004
185,004
175,008
<PAGE>
---
---
108,938(10)<PAGE>
5,000
10,000
18,000
<PAGE>
19,819(11)
63,309(11)
79,734(11)
</TABLE>
<PAGE>
(1) Except as otherwise indicated, bonuses paid to the named
executives represent cash awards under KCSI's incentive
compensation programs.
(2) Includes directors' fees of $1,000 for 1992 paid by KCSR and
L&A, which were discontinued as of January 1, 1993, and
earnings on the KCSR deferred directors' fee plan for 1992,
1993 and 1994 of $141, $341, and a negative $29, respectively.
(3) Pursuant to the terms of their employment agreements, Mr.
Rowland, Mr. McDonnell and Mr. Edwards each were awarded
40,000 shares of KCSI Common Stock, which are subject to
certain restrictions. They have all rights of a stockholder
with respect to these shares, including the right to receive
dividends and other distributions on the shares and the right
to vote such shares. However, they may not transfer the
shares, except to KCSI, without prior approval of the Board of
Directors. In addition, they must transfer some or all of the
shares back to KCSI without any payment by KCSI if, prior to
January 1, 1997, their employment with KCSI is terminated for
cause or they voluntarily terminate their employment. The
restrictions on such shares and KCSI's right to receive such
shares back upon termination of employment lapse on 20 percent
of the shares on each of the five anniversary dates beginning
January 1, 1993. The amount shown in the Summary Compensation
Table is the fair market value of the restricted stock on the
date of grant based upon the average of the high and low price
as quoted on the New York Stock Exchange (the "NYSE") of
$14.8281 (adjusted for stock splits). As of December 31,
1994, Mr. Rowland, Mr. McDonnell and Mr. Edwards each held
24,000 shares of restricted KCSI Common Stock. The aggregate
value of 24,000 shares at that date was $745,500.00 (based on
the average price of $31.0625 per share on the NYSE).
(4) All other compensation for Mr. Rowland for the years indicated
is comprised of: (i) contributions to his account under KCSI's
ESOP for 1992, 1993 and 1994 of $30,000, $14,150 and $14,784
respectively; (ii) contributions to his account under the KCSI
Profit Sharing Plan, for the years 1992 and 1993 of none and
$4,717, respectively; and (iii) amounts credited to his
account under the Executive Plan (a non-qualified deferred
contribution plan, which is discussed in more detail under
"Other Compensatory Plans" below) for 1992, 1993 and amounts
estimated to be credited for 1994 of $232,224, $163,465 and
$67,062, respectively.
(5) Includes directors' fees of $1,000 for 1992 paid by KCSR and
L&A, which were discontinued as of January 1, 1993.
(6) All other compensation for Mr. McDonnell for the years
indicated is comprised of: (i) contributions to his account
under KCSI's ESOP for the years 1992, 1993 and 1994 of
$30,000, $14,150 and $14,784 respectively; (ii) contributions
to his account under the DST Profit Sharing Plan, for the
years 1992, 1993 and 1994 of none, $4,717 and none,
respectively; (iii) amounts credited to his account under the
Executive Plan for 1992, 1993 and amounts estimated to be
credited for 1994 of $232,224, $163,465 and $82,355,
respectively; and (iv) payments of $43,825 in each of 1992 and
1993 for DST options which were canceled when KCSI acquired
DST's publicly held minority interest.
(7) All other compensation for Mr. Edwards for the years indicated
is comprised of: (i) a contribution to his account under
KCSI's ESOP for 1992, 1993 and 1994 of $30,000, $14,150 and
$14,784 respectively; (ii) contributions to his account under
the KCSI Profit Sharing Plan for the years 1992 and 1993 of
none and $4,717, respectively, and (iii) amounts credited to
his account under the Executive Plan for 1992, 1993 and
amounts estimated to be credited for 1994 of $232,224,
$163,465 and $67,062, respectively.
(8) Includes directors' fees for 1992 and 1993 of $6,750 and
$4,000, respectively, paid to Mr. Bailey in his capacity as
director of Janus Capital Corporation and $16,500, $22,500 and
$46,250 for the years 1992, 1993 and 1994 for fees in his
capacity as a director of the Janus Funds.
(9) All other compensation for Mr. Bailey for the years indicated
is comprised of: (i) contributions to his account under
KCSI's ESOP for 1992, 1993 and 1994 of $30,000, $14,150 and
14,784 respectively; and (ii) contributions to his account
under the Janus Profit Sharing Plan, for 1992, 1993 and 1994
of none, $11,792 and $7,500, respectively.
(10) Pursuant to the terms of his employment agreement, Mr. Dehner
was awarded 6,000 shares of KCSI Common Stock, which is
subject to the same restrictions, rights and vesting schedule
as the awards to Messrs. Rowland, McDonnell and Edwards
discussed above. The amount shown in the Summary Compensation
Table is the fair market value of the restricted stock on the
date of grant based upon the average of the high and low price
as quoted on the NYSE of $18.1563 (as adjusted for stock
splits). As of December 31, 1994, Mr. Dehner held 3,600
shares of restricted KCSI Common Stock, the aggregate value of
which at that date was $111,825.00 (based on an average price
of $31.0625).
(11) All other compensation for Mr. Dehner for the years indicated
is comprised of: (i) contributions to his account under
KCSI's ESOP for 1992, 1993 and 1994 of $30,000, $14,150 and
14,784 respectively; (ii) contributions to his account under
the KCSI Profit Sharing Plan, for 1992 and 1993 of none and
$4,717, respectively; and (iii) contributions to his account
under the Executive Plan for 1992, 1993 and amounts estimated
to be contributed for 1994 of $49,734, $44,442 and $5,035,
respectively.
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR 1994 OPTION GRANTS TABLE
The following table sets forth information with respect to the
options granted by KCSI during 1994 to the named Executive
Officers.
PAGE>
<S> <C> <C> <C> <C> <C
<PAGE>
Name<PAGE>
Number of
Securities
Underlying
Options/
SARs
granted(#)(1)<PAGE>
% of
Total
Options/
SARs
Granted to
Employees
in Fiscal
Year(2)<PAGE>
Exercise
or Base
Price
(per
share)(3)<PAGE>
Expiration
Date<PAGE>
Grant
Date
Value(4)<PAGE>
Landon H. Rowland<PAGE>
0 0% --- --- ---<PAGE>
Thomas A. McDonnell<PAGE>
0 0% --- --- ---<PAGE>
George W. Edwards, Jr.<PAGE>
0 0% --- --- ---<PAGE>
Thomas H. Bailey<PAGE>
0 0% --- --- ---<PAGE>
James B. Dehner<PAGE>
5,000 2% $49.00 3/30/2004 $98,137
</TABLE>
<PAGE>
(1) The options were granted Mr. Dehner under KCSI's 1991 Stock
Option and Performance Award Plan. The options were granted
on March 31, 1994 and expire at the end of ten years, subject
to earlier termination as provided in the option agreement,
including termination of employment, disability, retirement or
death. The options become exercisable, in whole or in part,
on the first annual anniversary of the grant, except if there
is a change in control, as defined in the agreement, in which
case the options are immediately exercisable. The options are
subject to voluntary tax withholding rights.
Granted in tandem with the options were limited rights. The
limited rights are exercisable only in the event of a change
in control and only to the extent the related options are
exercisable. The limited rights may be exercised in lieu of
the options or any portion thereof.
(2) Total options granted to eligible employees in 1994 were
254,950. This amount does not include options granted to
outside directors pursuant to the 1993 Directors' Stock Option
Plan.
(3) Average of the high and low prices of the Common Stock on the
date of grant as reported on the NYSE.
(4) Valuation determined using Black-Scholes' option pricing model
with the following assumptions: market price of stock $49.00;
exercise price of option $49.00; stock volatility* 0.2240;
annualized risk-free interest rate 7.10%; option term (in
years) 10; stock's dividend yield* 1.55%; vesting restriction
discount 3% per year. (*Stock's volatility and dividend yield
are based on 3-year monthly data).
<PAGE>
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth information with respect to the
aggregate option exercises during 1994 by the named Executive
Officers and the number and value of options held by such officers
as of December 31, 1994.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
S
<PAGE>
<C> <C> <C> <C> (a) (b) (c) (d)
Number of
Securities
Underlying
Unexercised
Options/
SARs
at FY-End
(#)(2)<PAGE>
(e)
Value (1) of
Unexercised
In-the-Money
Options/SARs
at FY-End
($)(2)<PAGE>
Name<PAGE>
Shares
Acquired
on
Exercise (#)<PAGE>
Value
Realized(1)<PAGE>
Exercisable/
Unexercisable<PAGE>
Exercisable/
Unexercisable<PAGE>
Landon H.
Rowland
<PAGE>
- -0- -0- 948,952/
- -0-<PAGE>
$17,040,385/
- -0-<PAGE>
Thomas A.
McDonnell
<PAGE>
620,000 $23,046,248 80,000/
- -0-<PAGE>
$672,496/
- -0-<PAGE>
George W.
Edwards, Jr.
<PAGE>
- -0- -0- 60,000/
120,000<PAGE>
$1,212,186/
2,424,372<PAGE>
Thomas H.
Bailey<PAGE>
- -0- -0- -0-/-0- -0-/-0- James B.
Dehner<PAGE>
- -0- -0- 40,000/
5,000 <PAGE>
$483,561/
- -0-
/TABLE
<PAGE>
1. The dollar value in columns (c) and (e) are calculated by
determining the difference between the fair market value of the
securities underlying the options and the exercise price of the
options on the date of exercise or December 31, 1994, respectively,
times the number of options exercised or held at year end.
2. Does not include change in control options for shares of KCSI
Common Stock, which can only be exercised in the event of a change
in control of KCSI as defined in the option agreements.
<PAGE>
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN
CONTROL ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS
EMPLOYMENT AGREEMENTS WITH MESSRS. ROWLAND, MCDONNELL AND EDWARDS
KCSI, DST and KCSR have entered into Employment Agreements
with Messrs. Rowland, McDonnell and Edwards effective January 1,
1992, which provide, respectively, for Mr. Rowland's continued
employment as President and Chief Executive Officer of KCSI, Mr.
McDonnell's continued employment as Executive Vice President of
KCSI and as President and Chief Executive Officer of DST, and Mr.
Edwards' continued employment as Executive Vice President of KCSI
and as President and Chief Executive Officer of KCSR. KCSI also
agreed to use its best efforts to enable such individuals to
continue in various other director and officer positions with KCSI,
DST and KCSR. The Employment Agreements with Messrs. Rowland,
McDonnell and Edwards were amended and restated in March, 1993 to
conform certain provisions and language to a standard form of
employment agreement developed in 1992 for other executives.
The Agreements are effective for a term of five years expiring
on January 2, 1997 subject to earlier termination under certain
circumstances. Pursuant to the Employment Agreements, each
individual receives a fixed annual base salary of $500,000 over the
term of the Agreement. Under the Agreements, none of the
individuals are entitled to participate in the KCSI Incentive
Compensation Plan, but each continues to participate in other
benefit plans or programs of his employer generally available to
executive employees and is provided with disability insurance
coverage comparable with that provided to executive officers of DST
and life insurance in the amount of $1,000,000 payable to
beneficiaries designated by the individual. The Agreements provide
that the value of each individual's annual compensation is fixed at
$875,000 for purposes of cash compensation based benefit plans.
The Agreements provide for twenty-four months of severance pay at
an annual rate equal to the base salary and for certain health,
disability and life insurance benefits in the event of termination
of the individual's employment without cause unless such benefits
are provided by another employer. Mr. Edwards' Employment
Agreement also provides for the retention of the initial signing
bonus he received upon his employment by KCSR in 1991, subject to
repayment in amounts prorated for his years of service from April
1, 1991 through March 31, 1996 upon termination of employment by
voluntary resignation or by KCSR with cause.
In conjunction with the Employment Agreements and in lieu of
participation in the KCSI Incentive Compensation Plan, options to
purchase 568,000 shares of KCSI Common Stock were granted to
Messrs. Rowland and Edwards and options for 580,000 shares were
granted to Mr. McDonnell under the Plan. The stock options have an
option price of $13.0625 per share and were to first become
exercisable on January 1, 1997 or at earlier times if the trading
price of KCSI's Common Stock was at least equal to certain
threshold prices ranging from $14.50 to $21.25 for a period of at
least 30 consecutive trading days. As of December 31, 1992, all
threshold prices had been met and all such options were
exercisable. Options that became exercisable based on such
threshold prices will remain exercisable for a term of ten years
from date of grant.
Under the Employment Agreements, the individuals also were
each awarded 40,000 shares of KCSI Common Stock ("Restricted
Stock") that are subject to forfeiture in the event the
individual's employment is terminated for cause or voluntarily by
the individual. The number of shares subject to forfeiture
decreases by 8,000 shares on January 1 of each year through 1997
and the shares are no longer subject to forfeiture following
termination due to retirement to which the Board consents, death or
disability. Shares of Restricted Stock subject to forfeiture are
not transferable other than to KCSI without the prior approval of
KCSI's Board of Directors. In addition, each individual has agreed
to retain ownership in himself or members of his immediate family
of at least a majority of the number of shares of Common Stock
acquired pursuant to his Employment Agreement (other than shares
forfeited, exchanged for other shares or used to satisfy
withholding tax requirements).
If there is a change in control of KCSI (as defined in the
Employment Agreements) during the term of the Agreements, each
individual's employment, executive capacity, salary and benefits
shall be continued for a three year term at levels in effect on the
control change date (as defined in the Employment Agreements) and
the individuals also will participate in any incentive compensation
plan and be entitled to immediately exercise all outstanding stock
options and shares of Restricted Stock no longer will be subject to
forfeiture. With respect to unfunded employer obligations under
benefit plans, the individual would be entitled to a discounted
cash payment of amounts to which he is entitled. An individual's
employment may be terminated after the control change date, but
where it is other than "for cause" (as defined in the Employment
Agreements) the individual is entitled to payment of his base
salary through termination plus a discounted cash severance payment
based on his compensation for the remainder of the three year
period and for continuation or payment of benefits to the end of
that period. An individual is also permitted to resign employment
after a change in control upon "good reason" (as defined in the
Employment Agreements) and advance written notice, and to receive
the same payments and benefits as if his employment had been
terminated "for cause". The Employment Agreements also provide for
payments to such individuals necessary to relieve them of certain
adverse federal income tax consequences if amounts received under
these agreements involve "parachute payments" under Section 4999 of
the Code. In addition, upon a change in control of KCSI, funds are
to be placed in trust to secure the obligations to pay any legal
expenses of the individuals in connection with disputes arising
with respect to the Agreements.
EMPLOYMENT CONTINUATION AGREEMENTS
Under the terms of the Employment Agreements with the named
executives, other than Mr. Bailey, if there is a change in control
(as defined in such agreements) during the term of an Employment
Agreement such agreements obligate KCSI (or KCSR) to continue for
a three year term the employee's executive capacity, salary and
benefits at levels in effect on the control change date (as defined
in the agreements). If the employee is terminated after the
control change date and within the three year period other than for
a defined cause, the Agreements provide for a severance payment to
the employee based on his compensation for the remainder of the
three year period and for continuation or payment of benefits to
the end of that period. The employee is also permitted to resign
employment after a change in control upon "good reason" (as defined
in the agreements) and to receive the same payments and benefits as
if his employment had been terminated. The Agreements also provide
for payments to such employees necessary to relieve them of certain
adverse federal income tax consequences if amounts received under
these Agreements involve "excess parachute payments" under Section
4999 of the Internal Revenue Code. Under these Agreements, upon a
change in control of KCSI, funds are to be placed in trust to
secure the companies' obligations to pay any legal expenses of
employees in connection with disputes arising with respect to the
Agreements.
INDEMNIFICATION AGREEMENTS
In 1987, KCSI entered into indemnification agreements with its
officers and, as approved by KCSI's stockholders at the 1987 Annual
Meeting, its directors. Such agreements are intended to supplement
KCSI's officer and director liability insurance and to provide the
officers and directors with specific contractual assurance that the
protection provided by KCSI's Bylaws will continue to be available
regardless of, among other things, an amendment to the Bylaws or a
change in management or control of KCSI. The indemnification
agreements provide for prompt indemnification "to the fullest
extent permitted by law" and for the prompt advancement of
expenses, including attorney's fees and all other costs and
expenses incurred in connection with any action, suit or proceeding
in which the director or officer is a witness or other participant,
or to which the director or officer is a party, by reason (in whole
or in part) of service in certain capacities. Under the
agreements, KCSI's determinations of indemnity are made by a
committee of disinterested directors unless a change in control of
KCSI has occurred, in which case the KCSI determination is made by
special independent counsel. The agreements also provide a
mechanism to seek court relief if indemnification or expense
advances are denied or not received within periods provided in the
agreement. Indemnification and advancement of expenses are also
provided with respect to a court proceeding initiated for a
determination of rights under the agreement or of certain other
matters. KCSI has entered into such indemnification agreements
with all current directors and officers of KCSI.
DST has entered into director indemnification agreements with
DST's directors, including Messrs. Rowland and McDonnell. The
agreements provide for indemnification for, among other things,
matters arising from service at DST's request as an officer or
director of DST. Such agreements are intended to supplement DST's
officer and director liability insurance and to provide the
officers and directors with specific contractual assurance that the
protection provided by DST's Articles of Incorporation will
continue to be available regardless of, among other things, an
amendment to the Articles of Incorporation or a change in
management or control of DST. The provisions of the agreements are
similar to those of the KCSI indemnification agreements.
AGREEMENT WITH MR. BAILEY
Mr. Bailey has the right under an agreement to require KCSI to
purchase his shares of stock of Janus Capital Corporation at a
price equal to fifteen times the defined after-tax earnings per
share of Janus Capital Corporation for the year ended December 31,
1987, or if greater, the year ended immediately prior to the date
of his notice. Under that agreement, Mr. Bailey is also entitled
upon a termination of his employment within one year of a defined
change in ownership of KCSI to receive a payment equal to his prior
year's current and deferred compensation.
AGREEMENT WITH MR. DEHNER
KCSI has also entered into an Employment Agreement with Mr.
Dehner effective April 1, 1992. The Agreement is subject to
termination under certain circumstances. Pursuant to the
Employment Agreement, Mr. Dehner is to receive an annual base
salary of $175,008, subject to such increases as may from time to
time be authorized by the Board, over the term of the Agreement.
Under the Agreement, as long as KCSR remains a subsidiary of KCSI,
Mr. Dehner is entitled to participate in the KCSI Incentive
Compensation Plan under such terms and conditions as determined
from time to time by the Board or the Compensation and Organization
Committee. In addition, Mr. Dehner may participate in other
benefit plans or programs generally available to executive
employees serving in the Office of the Chief Executive of KCSR.
The Agreement provides for twelve months of severance pay at an
annual rate equal to the base salary and for reimbursement for
costs incurred for obtaining comparable health and life insurance
benefits in the event of termination of the individual's employment
without cause, unless such benefits are provided by another
employer.
Under the Employment Agreement, Mr. Dehner was also awarded
6,000 shares of KCSI Common Stock ("Restricted Stock") that are
subject to forfeiture in the event his employment is terminated for
cause or voluntarily by him. The number of shares subject to
forfeiture decreases by 1,200 shares on March 31 of each year
through 1997, and the shares are no longer subject to forfeiture
following termination due to retirement to which the Board or
Compensation and Organization Committee consents, death or
disability. In addition, shares of Restricted Stock subject to
forfeiture are not transferable other than to KCSI without the
prior approval of KCSI's Board of Directors.
If there is a change in control of KCSI (as defined in the
Employment Agreement) during the term of the Agreement, Mr.
Dehner's employment, executive capacity, salary and benefits shall
be continued for a three year term at levels in effect on the
control change date (as defined in the Employment Agreement), and
Mr. Dehner also will participate in certain incentive compensation
plans and be entitled to immediately exercise all outstanding stock
options and any forfeiture provisions associated with any
restricted stock previously awarded will lapse. With respect to
unfunded employer obligations under benefit plans, Mr. Dehner would
be entitled to a discounted cash payment of amounts to which he is
entitled. Mr. Dehner's employment may be terminated after the
control change date or he may resign. If he is terminated other
than for cause (as defined in the Employment Agreement) or resigns
for good cause (as defined in the Employment Agreement) and with
written notice, Mr. Dehner is entitled to payment of his base
salary through termination plus a discounted cash severance payment
based on his compensation for the remainder of the three year
period and for continuation or payment of benefits to the end of
that period. The Employment Agreement also provides for payments
to Mr. Dehner necessary to relieve him of certain adverse federal
income tax consequences if amounts received under the agreement
involve "parachute payments" under Section 4999 of the Code. In
addition, upon a change in control of KCSI, funds are to be placed
in trust to secure the obligations to pay any legal expenses of Mr.
Dehner in connection with disputes arising with respect to the
Employment Agreement.
CHANGE IN CONTROL ARRANGEMENTS
KCSI has established a series of trusts that are intended to
secure the rights of its officers, directors, employees, former
employees and others (the "Beneficiaries") under various contracts,
benefit plans, agreements, arrangements and commitments. The
function of each trust is to receive contributions from KCSI and,
following a change in control of KCSI (as defined by the trust), in
the event that KCSI fails to honor certain obligations to a
Beneficiary, the trust shall distribute to the Beneficiary amounts
accumulated in such Beneficiary's trust account sufficient to
discharge KCSI's obligation as such amounts become due and payable.
Most of the trusts require KCSI to be solvent as a condition to
making distributions and certain trusts allow distributions upon
Board of Director approval prior to a change in control. Trusts
have been instituted with respect to the employment continuation
commitments under the KCSI Employment Agreements, the Executive
Plan, the Directors Deferred Fee and Retirement Plans, the
Indemnification Agreements, Stock Option Plans, incentive
compensation arrangements and KCSI's charitable contribution
commitments in addition to certain other agreements, commitments
and arrangements. The trusts are revocable until a change in
control of KCSI and will terminate automatically if no such change
in control occurs prior to December 31, 1995, unless the trusts are
extended prior to such date.
DST and KCSR have established similar trusts relating to their
employment continuation commitments under the Employment
Agreements, Directors Deferred Fee Plans and incentive compensation
arrangements, in addition to certain other agreements, commitments
and arrangements. KCSR also established a similar trust with
respect to its participation in the Executive Plan. As with the
KCSI trusts, distributions under the DST and KCSR trusts are tied
to failures by the respective companies to honor their obligations
to their respective Beneficiaries following a change of control of
KCSI.
TERMINATION OF EMPLOYMENT
Under the terms of the employment agreements with Messrs.
Rowland, McDonnell and Edwards, in the event of termination of
their employment, other than by the executive (whether voluntary or
by death or disability) or by KCSI, DST or KCSR, as may be the
case, for cause, they will continue for a period of 24 months
following such termination (i) to receive an amount equal to their
base salary and (ii) to be reimbursed for their costs (including
the income taxes payable with respect to the reimbursement) of
obtaining comparable coverage under the health, disability and life
insurance provided under the agreement, unless such executive is
provided comparable coverage in connection with other employment.
Under the terms of his employment contract, Mr. Dehner is to
receive the same benefits, but such benefits will only continue for
a 12 month period following his termination by KCSI other than for
cause.
OTHER COMPENSATORY PLANS
KCSI and its subsidiaries maintain compensation plans for
certain of their officers and employees. The description of the
plans set forth below is of those plans under which the executives
named in the Summary Compensation Table will receive benefits in
excess of $100,000 if they were to have retired from or terminated
their employment with KCSI or its subsidiaries on December 31,
1994.
KCSI EMPLOYEE STOCK OWNERSHIP PLAN
KCSI's Employee Stock Ownership Plan (the "ESOP") is designed
to be a qualified employee stock ownership plan under the Code.
Employees of KCSI and certain of its subsidiaries, including DST
and Janus Capital Corporation, participate in the plan.
By its terms, the KCSI ESOP will continue until terminated.
All employees of KCSI and certain KCSI subsidiaries not subject to
a collective bargaining agreement become eligible to begin
participation in the KCSI ESOP on January 1 or July 1 coincident
with or immediately following commencement of their employment. As
of December 31, 1994, approximately 6,322 employees of KCSI and
certain of its subsidiaries, including all of KCSI's executive
officers, were eligible to participate in the KCSI ESOP.
The KCSI ESOP is designed to invest primarily in shares of
KCSI Common Stock. KCSI will provide funding for the KCSI ESOP
through contributions in cash or in shares of KCSI Common Stock as
determined each year by the Board of Directors. Participants may
not make contributions to the KCSI ESOP. Contributions will be
limited by the maximum contribution limitations for qualified
employee stock ownership plans under the Code.
Allocations, if any, to participant accounts in the KCSI ESOP
with respect to any plan year are based upon each participant's
proportionate share of the total compensation paid during the plan
year to all participants in the KCSI ESOP, subject to Code maximum
allocation limitations. Forfeitures are similarly allocated. For
this purpose, compensation includes only compensation received
during the period the individual was actually a participant in the
KCSI ESOP.
A participant with less than five years of service is not
vested in KCSI's contributions, forfeitures and earnings. However,
a participant becomes 100% vested upon completion of five years of
service. In addition, a participant becomes 100% vested upon
attaining the KCSI ESOP's normal retirement age of 65, or if the
participant's employment is terminated because of death or
disability. Participants have been given credit for vesting
purposes for years of service rendered to KCSI or its subsidiaries
prior to the establishment of the ESOP.
Each participant has the right to direct the trustee as to the
manner in which (a) to vote any KCSI stock allocated to his or her
account in the KCSI ESOP as of the applicable record date of any
stockholder meeting on any matters put to a stockholder vote, and
(b) to respond with respect to a tender offer, exchange offer or
any other offer to purchase KCSI stock allocated to the
participant's account. The KCSI ESOP provides that shares
allocated to the accounts of participants who have not timely
instructed the trustee how to vote, tender, exchange or sell such
shares, and any unallocated shares will be voted, tendered,
exchanged or sold in the same proportions as the shares for which
the trustee has received timely instructions.
Distributions of benefits under the KCSI ESOP will be made in
connection with a participant's death, disability, retirement or
other termination of employment. In addition, participants who
have attained age fifty-five and have at least ten years of
participation in the KCSI ESOP have the option to diversify the
investment of their account balances by having the trustee
distribute a portion of their account balances. A participant has
the right to select whether payment of his or her benefit will take
the form of cash, whole shares of KCSI stock or a combination
thereof. In the event no election is made, the payment shall be
made in KCSI stock. A participant may further opt to receive
payment in a lump sum, in installments or in a combination thereof.
In the event that the Board of Directors declares a cash dividend
on the KCSI Common Stock, at the discretion of the Advisory
Committee, dividends paid on the shares of Common Stock held by the
KCSI ESOP may be: (i) paid directly to participants on the basis
of the number of shares of Common Stock allocated to each
participant's account; (ii) retained by the KCSI ESOP; or (iii)
used by the KCSI ESOP to pay interest or principal on indebtedness
incurred to acquire the shares on which the dividends are paid.
Pursuant to the KCSI ESOP, a trust fund has been established
to hold contributions thereto and the proceeds from investments for
the benefit of KCSI ESOP participants. UMB Bank, N.A. serves as
co-trustee for the sole purpose of jointly voting with UMB the KCSI
stock held by the KCSI ESOP. The KCSI ESOP is administered by an
Advisory Committee appointed by KCSI's Board of Directors. The
current members of the Advisory Committee are officers and/or
employees of KCSI and DST. As trustee, UMB has the power to invest
the KCSI ESOP's funds, to sell the securities and other properties
of the KCSI ESOP, and to change the KCSI ESOP's investments from
time to time. The KCSI ESOP may be amended by KCSI's Board of
Directors and such amendment could increase the costs to KCSI,
although it may not adversely affect any person's accrued benefits
under the KCSI ESOP.
As of December 31, 1994, the ESOP held 5,720,613 shares of
KCSI's Common Stock, 4,893,579 shares of which have been allocated
to participants' accounts. The shares allocated to participants'
accounts do not reflect allocations made subsequent to December 31,
1994, that for purposes of the ESOP are allocated to participants'
accounts as of December 31, 1994. The ESOP borrowed funds to
purchase a number of the shares it holds, which borrowing is
secured by such shares and by a KCSI guaranty. As of December 31,
1994, the total outstanding debt owed by the ESOP was $13,202,236,
which does not reflect payments of principal made after December
31, but for purposes of the ESOP are considered payments made as of
December 31. The debt is paid through contributions by KCSI and
participating subsidiaries to the ESOP and a portion of the
dividends paid on the ESOP shares.
KCSI PROFIT SHARING PLAN
The Profit Sharing Plan is a qualified, non-contributory,
defined contribution plan. Employees of KCSI and certain of its
subsidiaries, not including DST or Janus, who have completed one
year of service and meet certain standards as to hours of service
are eligible to receive allocations under the plan. Contributions
to the plan are made at the discretion of the KCSI Board of
Directors in amounts not to exceed the maximum allowable deduction
for federal income tax purposes and certain Code allocation limits.
No minimum contribution is required. Subject to Code maximum
allocations limitations, each participant is allocated the same
percentage of the total contribution as the participant's
compensation bears to the total compensation of all participants.
Vesting occurs under the plan at the rate of 10% for each year of
service for the first four years and thereafter at the rate of 20%
until the participant is fully vested. A participant's interest
also becomes fully vested at retirement age, death or disability.
Distribution of benefits under the plan will be made in
connection with a participant's death, disability, retirement or
other termination of employment or at the participant's election at
normal retirement age or upon attainment of age 59 1/2 with five
years of service. A participant has the right to elect whether
payment of his or her benefits will be in a lump sum, in
installments, or in a combination thereof.
The assets of the plan are held in a trust fund by a trustee
appointed by the KCSI Board of Directors. The plan is administered
by an Advisory Committee appointed by KCSI's Board of Directors.
The current members of the Advisory Committee are officers,
employees or former employees of KCSI and DST. The trustee has the
responsibility for holding and investing plan assets other than
assets managed by an investment manager or managers appointed by
the Advisory Committee. The plan may be amended by KCSI's Board of
Directors and such amendment could increase the cost to KCSI,
although it may not adversely affect any person's accrued benefits
under the Profit Sharing Plan.
KCSI EXECUTIVE PLAN
Due to contribution limitations under the Code and ERISA and
eligibility requirements under KCSI's and DST's qualified plans,
the Executive Plan (formerly the ERISA Excess Benefit Plan)
provides benefits in addition to the annual contributions permitted
under qualified plans of KCSI and certain subsidiary companies.
The Executive Plan is a non-qualified plan for participants who are
certain employees and officers of KCSI and certain subsidiary
companies. Effective in 1992 for 1991, and future years, certain
employees of DST will participate in the Executive Plan.
The benefit accrued on behalf of each participant in the
Executive Plan equals the amount which would have been contributed
for such participant under the various qualified plans without
regard to statutory contribution limitations or eligibility
requirements, less the amount actually contributed on the
participant's behalf. In 1992, the Executive Plan was amended to
change the definition of compensation to base compensation plus
incentive compensation; however, if KCSI and the participant have
agreed that the participant's compensation is a fixed amount for
purposes of the plan, such amount is deemed to be the participant's
compensation. The compensation of Messrs. Rowland, Edwards and
McDonnell has been fixed at $875,000 for the plan as provided in
their Employment Agreements. The participant's account is
increased annually by an amount equal to the interest then being
credited under KCSI's Directors Deferred Fee Plan or, as amended in
1991, the earnings alternatively credited in accordance with the
mutual fund related formula under such Deferred Fee Plan. The
benefits become distributable in five annual installments upon
retirement on or after the age of 65, or termination of employment
because of disability or death. The Board of Directors may approve
an alternative form of distribution upon the recommendation of the
KCSI Compensation and Organization Committee. If the participant's
employment is terminated for any reason other than death or
disability, but before the age of 65, the participant shall receive
the nonforfeitable percentage of the participant's account equal to
the same vesting percentage under the terms of the KCSI Profit
Sharing Plan. The Executive Plan allows distributions prior to
retirement, death or becoming disabled in certain instances as
approved by the KCSI Compensation and Organization Committee.
DST PROFIT SHARING PLAN
The DST Profit Sharing Plan is a qualified, non-contributory,
defined contribution plan administered by DST's Profit Sharing
Advisory Committee. Employees of DST and certain of its
subsidiaries who have completed one year of service and meet
certain standards as to hours of service are eligible to receive
allocations under the plan. Contributions to the plan are at the
discretion of the Board of Directors with no minimum contribution
required. Each participant is allocated the same percentage of the
total contribution as the participant's compensation bears to the
total compensation of all participants. The plan provides for
vesting at the rate of 10% for each of the first four years of
service and 20% for each of the next three years of service,
resulting in 100% vesting at seven years of service. A
participant's interest also becomes fully vested at retirement age,
death or disability.
JANUS PROFIT SHARING PLAN
The Janus Profit Sharing Plan is a qualified, non-
contributory, defined contribution plan administered by Janus'
Profit Sharing Advisory Committee. Employees of Janus and certain
of its subsidiaries who have completed one year of service and meet
certain standards as to hours of service are eligible to receive
allocations under the plan. Contributions to the plan are at the
discretion of the Board of Directors with a minimum contribution of
5% required; effective beginning in 1995, the 5% minimum
contribution has been eliminated. Each participant is allocated
the same percentage of the total contribution as the participant's
compensation bears to the total compensation of all participants.
The plan provides for vesting at the rate of 25% after three years
of service, 50% after four years of service, and 100% after five
years of service. A participant's interest also becomes fully
vested at retirement age, death or disability.
CERTAIN TRANSACTIONS
Messrs. Rowland and McDonnell, hold limited partnership
interests for themselves or members of their immediate family in
certain partnerships of which NRP serves as general partner.
During 1994, management fees of $25,000 and $10,000 were paid to
NRP by Elgin Investors, L.P. and Towers respectively. NRP and
Realty advanced $51,625 to another such limited partnership,
Trails. At December 31, 1994, Trails was indebted to NRP and
Realty in the amount of $1,013,760.
In January of 1995, KCSI and its subsidiaries purchased a
portion of Mr. Bailey's holdings in Janus Capital Corporation for
$7,182,289 in cash.
A. Edward Allinson is the Chairman of the Board of Boston
Financial Data Services, Inc. ("BFDS"), a joint venture between DST
and State Street Bank and Trust Co., which each have a 50% interest
in the venture. He is paid an annual salary of $100,000 by BFDS.
On January 31, 1995, DST together with Kemper Financial
Services, Inc. ("Kemper") completed the sale of all of the
outstanding capital stock of IFTC Holdings Inc. ("Holdings"), to
State Street Boston Corporation ("State Street"). DST and Kemper
each owned 50% of Holdings, which wholly owns Investors Trust
Company. Under the Agreement, DST received 1,986,111 shares of
State Street common stock. A. Edward Allinson is an Executive Vice
President of State Street.
STOCKHOLDER PROPOSALS
To be properly brought before the Annual Meeting, a proposal
must be either (i) specified in the notice of the meeting (or any
supplement thereto) given by or at the direction of the Board of
Directors, (ii) otherwise properly brought before the meeting by or
at the direction of the Board of Directors, or (iii) otherwise
properly brought before the meeting by a stockholder.
DIRECTOR NOMINATIONS
With respect to stockholder nominations of candidates for
KCSI's Board of Directors, KCSI's Bylaws provide that not less than
45 days nor more than 90 days prior to the date of any meeting of
the stockholders at which directors are to be elected (the
"Election Meeting") any stockholder who intends to make a
nomination at the Election Meeting shall deliver a notice in
writing (the "Stockholder's Notice") to the Secretary of the
Corporation setting forth (a) as to each nominee whom the
stockholder proposes to nominate for election or re-election as a
director, (i) the name, age, business address and residence address
of the nominee, (ii) the principal occupation or employment of the
nominee, (iii) the class and number of shares of capital stock of
KCSI that are beneficially owned by the nominee, and (iv) any other
information concerning the nominee that would be required under the
rules of the Securities and Exchange Commission in a proxy
statement soliciting proxies for the election of such nominee; and
(b) as to the stockholder giving the notice, (i) the name and
address of the stockholder and (ii) the class and number of shares
of capital stock of the Corporation which are beneficially owned by
the stockholder and the name and address of record under which such
stock is held; PROVIDED, HOWEVER, that in the event that the
Election Meeting is designated by the Board of Directors to be held
at a date other than the first Tuesday in May and less than 60
days' notice or prior public disclosure of the date of the Election
Meeting is given or made to stockholders, to be timely, the
Stockholder's Notice must be so delivered not later than the close
of business on the 15th day following the day on which such notice
of the date of the meeting was mailed or such public disclosure was
made, whichever first occurs. The Stockholder's Notice shall
include a signed consent of each such nominee to serve as a
director of the Corporation, if elected. KCSI may require any
proposed nominee or stockholder proposing a nominee to furnish such
other information as may reasonably be required by KCSI to
determine the eligibility of such proposed nominee to serve as a
director of KCSI or to properly complete any proxy or information
statement used for the solicitation of proxies in connection with
such Election Meeting.
MATTERS OTHER THAN DIRECTOR NOMINATIONS
In addition to any other applicable requirements, for a
proposal to be properly brought before the meeting by a
stockholder, the stockholder must have given timely notice thereof
in writing to the Secretary of KCSI. To be timely, such a
stockholder's notice must be delivered to or mailed and received at
the principal executive offices of KCSI, not less than 45 days nor
more than 90 days prior to the meeting; provided, however, that in
the event that the meeting is designated by the Board of Directors
to be held at a date other than the first Tuesday in May and less
than 60 days notice or prior public disclosure of the date of the
meeting is given or made to stockholders, to be timely, the notice
by the stockholder must be so received not later than the close of
business on the 15th day following the day on which such notice of
the date of the meeting was mailed or such public disclosure was
made, whichever first occurs. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder
proposes to bring before the meeting (i) a brief description of the
business desired to be brought before the meeting and the reasons
for conducting such business at the meeting, (ii) the name and
address of the stockholder proposing such business, (iii) the class
and number of shares of capital stock of the Corporation which are
beneficially owned by the stockholder and the name and address of
record under which such stock is held and (iv) any material
interest of the stockholder in such business.
1996 ANNUAL MEETING PROXY STATEMENT
If a holder of KCSI Common Stock or Preferred Stock wishes to
present a proposal, other than the election of a director, in
KCSI's Proxy Statement for next year's annual meeting of
stockholders, such proposal must be received by KCSI on or before
December 5, 1995. Such proposal must be made in accordance with
the applicable laws and the applicable rules of the Securities and
Exchange Commission and the interpretations thereof. Any such
proposal should be sent to the Corporate Secretary of KCSI at 114
West 11th Street, Kansas City, Missouri 64105-1804.
OTHER MATTERS
The Board of Directors know of no other matters that are
expected to be presented for consideration at the Annual Meeting.
KCSI's Bylaws require that stockholders intending to bring business
before an Annual Meeting, including the nomination of candidates
for election to the Board of Directors, give timely and sufficient
notice thereof to the Secretary of KCSI, not more than 90 and no
less than 45 days before an Annual Meeting held on the date
specified in KCSI's Bylaws and provide certain additional
information. As of the date of this Proxy Statement, no such
notice has been received. However, if other matters properly come
before the meeting, it is intended that persons named in the
accompanying proxy will vote on them in accordance with their best
judgement.
Notwithstanding anything to the contrary set forth in any of
KCSI's previous filings under the Securities Act of 1933, as
amended, or the Exchange Act that might incorporate in future
filings, including this Proxy Statement, in whole or in part, the
Compensation and Organization Committee Report on Executive
Compensation and the Performance Graph included herein shall not be
incorporated by reference into any such filings.
By Order of the Board of Directors
/s/Albert P. Mauro
Vice President and Secretary
Kansas City, Missouri
April 3, 1995.
A COPY OF KCSI'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR 1994 WILL BE FURNISHED TO
STOCKHOLDERS WITHOUT CHARGE, UPON REQUEST DIRECTED TO THE CORPORATE
SECRETARY OF KCSI, 114 WEST 11TH STREET, KANSAS CITY, MISSOURI
64105-1804.
<PAGE>
APPENDIX A
GRAPHIC AND IMAGE MATERIAL
IN
PROXY STATEMENT
This appendix is included in this electronic format document
in accordance with Rule 304 of Regulation S-T. The following
graphic and image material is included in the KCSI's proxy
statement:
PHOTOGRAPHS OF EACH DIRECTORS
The proxy statement includes photographs of each director. A
photograph of a director is placed in the proxy statement next to
the discussion of the director's principal occupations in the
section entitled "INFORMATION ABOUT NOMINEES AND PRESENT
DIRECTORS".
STOCK PERFORMANCE GRAPH
The proxy statement also includes a stock performance graph,
which is supplemented by a table showing the dollar value of the
points on the graph. The table is set forth in this electronic
format document in the section entitled "STOCK PERFORMANCE GRAPH".
Both the graph and the table will be included in the paper format
definitive proxy mailed to KCSI's Stockholders. In accordance with
a letter to EDGAR filers dated November 16, 1992 from Mauri L.
Osheroff, Associate Director of Regulatory Policy of the Division
of Corporate Finance, no further explanation of the graph is set
forth in this appendix.
<PAGE>
APPENDIX B
FORM OF PROXIES
[FRONT]
<PAGE>
PROXY
[COMMON]
KANSAS CITY SOUTHERN INDUSTRIES, INC.
114 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105
(1) Election of four directors: Nominees: A. Edward Allinson,
Paul F. Balser, Paul H. Henson and Landon H. Rowland.
[ ] FOR all nominees except those indicated below:
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES.
(2) Ratification of the Board of Directors' selection of Price
Waterhouse as KCSI's independent accountants for 1995.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: _______________________, 1995
______________________________
______________________________
Signature(s)
Please sign exactly as name(s) appear. All joint owners should
sign. Executors, administrators, trustees, guardians, attorneys-
in-fact, and officers of corporate owners should indicate the
capacity in which they sign. Please indicate whether you plan to
attend the Annual Meeting:
[ ] Will Attend [ ] Will Not Attend
[BACK]
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. Paul H. Henson,
Landon H. Rowland, and Thomas A. McDonnell, or any one of them, are
hereby authorized, with full power of substitution, to vote the
shares of stock of Kansas City Southern Industries, Inc. entitled
to vote for the stockholder(s) signing this proxy at the Annual
Meeting of Stockholders to be held on May 4, 1995, or any
adjournment thereof as specified and in their discretion on all
other matters that are properly brought before the Annual Meeting.
If no choice is specified, such proxies will vote "For" the
nominees named hereon and "For" proposal 2.
UNLESS AUTHORITY TO VOTE FOR ANY NOMINEE IS WITHHELD, AUTHORITY TO
VOTE CUMULATIVELY FOR SUCH NOMINEE WILL BE DEEMED GRANTED, AND IF
OTHER PERSONS ARE NOMINATED, THIS PROXY MAY BE VOTED FOR LESS THAN
ALL THE NOMINEES NAMED, IN THE PROXY HOLDERS' DISCRETION, TO ELECT
THE MAXIMUM NUMBER OF MANAGEMENT NOMINEES.
This proxy confers discretionary authority as described and may be
revoked in the manner described in the proxy statement dated April
3, 1995, receipt of which is hereby acknowledged.
<PAGE>
[FRONT]
PROXY
[PREFERRED]
KANSAS CITY SOUTHERN INDUSTRIES, INC.
114 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105
(1) Election of four directors: Nominees: A. Edward Allinson,
Paul F. Balser, Paul H. Henson and Landon H. Rowland.
[ ] FOR all nominees except those indicated below:
[ ] WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES.
(2) Ratification of the Board of Directors' selection of Price
Waterhouse as KCSI's independent accountants for 1995.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Dated: _______________________, 1995
______________________________
______________________________
Signature(s)
Please sign exactly as name(s) appear. All joint owners should
sign. Executors, administrators, trustees, guardians, attorneys-
in-fact, and officers of corporate owners should indicate the
capacity in which they sign. Please indicate whether you plan to
attend the Annual Meeting:
[ ] Will Attend [ ] Will Not Attend
[BACK]
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. Paul H. Henson,
Landon H. Rowland, and Thomas A. McDonnell, or any one of them, are
hereby authorized, with full power of substitution, to vote the
shares of stock of Kansas City Southern Industries, Inc. entitled
to vote for the stockholder(s) signing this proxy at the Annual
Meeting of Stockholders to be held on May 4, 1995, or any
adjournment thereof as specified and in their discretion on all
other matters that are properly brought before the Annual Meeting.
If no choice is specified, such proxies will vote "For" the
nominees named hereon and "For" proposal 2.
UNLESS AUTHORITY TO VOTE FOR ANY NOMINEE IS WITHHELD, AUTHORITY TO
VOTE CUMULATIVELY FOR SUCH NOMINEE WILL BE DEEMED GRANTED, AND IF
OTHER PERSONS ARE NOMINATED, THIS PROXY MAY BE VOTED FOR LESS THAN
ALL THE NOMINEES NAMED, IN THE PROXY HOLDERS' DISCRETION, TO ELECT
THE MAXIMUM NUMBER OF MANAGEMENT NOMINEES.
This proxy confers discretionary authority as described and may be
revoked in the manner described in the proxy statement dated April
3, 1995, receipt of which is hereby acknowledged.
