SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
KANSAS CITY SOUTHERN INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
not applicable
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(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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- ------------------------------------------------------------------
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
[LOGO]
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
June 15, 2000
YOUR VOTE IS IMPORTANT!
Please mark, date and sign the enclosed proxy card and promptly
return it in the enclosed envelope.
Mailing of this Notice and Proxy Statement and the accompanying enclosed
Proxy commenced on or about May 8, 2000.
<PAGE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
114 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105-1804
MAY 8, 2000
TO OUR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders
of Kansas City Southern Industries, Inc., at the Kansas City Marriott
Downtown Hotel, 200 West 12th Street, Kansas City, Missouri, at 10:00 a.m.,
on Thursday, June 15, 2000. 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 Annual Report which
was previously mailed to you, and to participate in the Annual 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/ Landon H. Rowland
Landon H. Rowland
Chairman of the Board, 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
---------------
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 12th Street, Kansas City, Missouri, at
10:00 a.m. on Thursday, June 15, 2000, to consider and vote upon:
(1) Election of Two Directors;
(2) Ratification of the Board of Directors' Selection of
PricewaterhouseCoopers LLP as KCSI's independent accountants for
2000; 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 April 28, 2000,
are entitled to notice of and to vote at this meeting or any adjournment
thereof.
By Order of the Board of Directors,
/s/ Richard P. Bruening
Richard P. Bruening
Vice President, General Counsel
and Corporate Secretary
The date of this Notice is May 8, 2000.
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 THIS
NOTICE AND 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
Page
----
Information About the Annual Meeting 1
Voting 2
Principal Stockholders and Stock Owned Beneficially by Directors
and Certain Executive Officers 5
Proposal 1 - Election of Two Directors 8
The Board of Directors 9
Proposal 2 - Ratification of the Board of Directors' Selection of
Independent Accountants 13
Management Compensation 14
Stockholder Proposals 30
Section 16(a) Beneficial Ownership Reporting Compliance 31
Other Matters 32
<PAGE>
INFORMATION ABOUT THE ANNUAL MEETING
WHY WERE KCSI'S STOCKHOLDERS SENT THIS PROXY STATEMENT?
Kansas City Southern Industries, Inc., a Delaware corporation ("KCSI"),
is mailing this Proxy Statement on or about May 8, 2000 to its stockholders
of record on April 28, 2000 in connection with KCSI's Board of Directors'
solicitation of proxies for use at the 2000 Annual Meeting of Stockholders
and any adjournment thereof (the "Annual Meeting"). The Annual Meeting will
be held at the Kansas City Marriott Downtown Hotel, 200 West 12th Street,
Kansas City, Missouri, on Thursday, June 15, 2000 at 10:00 a.m. The Notice
of Annual Meeting of Stockholders and a proxy card accompany this Proxy
Statement.
KCSI will pay for the Annual Meeting, including the cost of mailing the
proxy materials and any supplemental materials. Directors, officers and
employees of KCSI may, either in person, by telephone or otherwise, also
solicit proxy cards. They have not been specifically engaged for that
purpose, however, nor will they be compensated for their efforts. Morrow &
Co., Inc. has been retained to assist in the solicitation of proxies at a
cost not expected to exceed $7,000 plus expenses. In addition, KCSI may
reimburse brokerage firms and other persons representing beneficial owners of
KCSI shares for their expenses in forwarding this Proxy Statement and other
soliciting materials to the beneficial owners.
Brokers, dealers, banks, voting trustees, other custodians and their
nominees are asked to forward this Notice and Proxy Statement and the proxy
card to the beneficial owners of KCSI's stock held of record by them. Upon
request, KCSI will reimburse them for their reasonable expenses in completing
the mailing of the materials to beneficial owners of our stock.
WHO MAY ATTEND THE ANNUAL MEETING?
Only KCSI stockholders or their proxies and guests of KCSI may attend
the Annual Meeting. Any stockholder or stockholder's representative who,
because of a disability, may need special assistance or accommodation to
allow him or her to participate in the Annual Meeting may request reasonable
assistance or accommodation from KCSI by contacting the office of the
Corporate Secretary at KCSI's principal executive offices at 114 West 11th
Street, Kansas City, Missouri 64105, (816) 983-1237. To provide KCSI
sufficient time to arrange for reasonable assistance please submit all
requests by June 8, 2000.
WHAT MATTERS WILL BE CONSIDERED AT THE ANNUAL MEETING?
At the Annual Meeting, stockholders will consider and vote upon: (1)
the election of two directors; (2) ratification of the Board of Directors'
selection of PricewaterhouseCoopers LLP as KCSI's independent accountants for
2000; and (3) such other matters as may properly come before the Annual
Meeting or any adjournment thereof. Stockholders do not have dissenters'
rights of appraisal in connection with any of these matters. Each of these
matters has been proposed by the Board of Directors, and none of them is
related to or contingent upon the other or others.
<PAGE>
VOTING
WHICH STOCKHOLDERS MAY VOTE AT THE ANNUAL MEETING?
Only the holders of KCSI's common stock, par value $0.01 per share (the
"Common Stock"), and preferred stock, par value $25.00 per share (the
"Preferred Stock"), of record at the close of business on April 28, 2000 (the
"Record Date"), are entitled to notice of and to vote at the Annual Meeting.
On the Record Date, KCSI had outstanding 242,170 shares of Preferred Stock
(which does not include 407,566 shares held in treasury) and 111,423,640
shares of Common Stock (which does not include 35,314,592 shares held in
treasury) for a total of 111,665,810 shares eligible to be voted at the
Annual Meeting.
The Common Stock and Preferred Stock (collectively, the "Voting Stock")
constitute KCSI's only voting securities and will vote together as a single
class on all matters to be considered at the Annual Meeting. Each holder 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.
Stockholders may vote cumulatively for the election of directors. In other
words, each stockholder has votes equal to the number of shares of Voting
Stock held on the Record Date multiplied by the number of directors to be
elected, and the stockholder may cast all votes for a single nominee or
distribute the votes among the nominees as the stockholder chooses. This
Proxy Statement solicits discretionary authority to vote cumulatively, and
the accompanying form of proxy grants that authority.
HOW DOES KCSI DECIDE WHETHER ITS STOCKHOLDERS HAVE APPROVED ANY OF THE
PROPOSALS?
In order for a proposal that is to be considered at the Annual Meeting
to be approved (other than the election of directors), stockholders owning at
least a majority of the shares of Voting Stock entitled to vote must be
present (referred to as a quorum) and a majority of the quorum must be
affirmatively voted for approval of that proposal. The shares of a
stockholder who is present and entitled to vote at the Annual Meeting, either
in person or through a proxy, are counted for purposes of determining whether
there is a quorum, regardless of whether the stockholder votes the shares.
The directors are elected by an affirmative vote of the plurality of shares
of Voting Stock present at the Annual Meeting that are entitled to vote.
Voting ceases when the chairman of the Annual Meeting closes the polls.
The votes are counted and certified by three inspectors appointed by the
Board of Directors of KCSI in advance of the Annual Meeting. In determining
whether a majority of shares have been affirmatively voted for a particular
proposal, the affirmative votes for the proposal 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 abstentions from voting are not considered to
be votes affirmatively cast. Abstaining will, therefore, have the effect of
a vote against a proposal. 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.
WHAT IF A STOCKHOLDER HOLDS SHARES IN A BROKERAGE ACCOUNT?
The Voting Stock is traded on the New York Stock Exchange, Inc. (the
"NYSE"). Under the rules of the NYSE member stockbrokers who hold shares of
Voting Stock in the broker's name for customers are required to get
directions from the customers on how to vote their shares. NYSE rules also
permit brokers to vote shares on certain proposals when they have not
received any directions. The Staff of the NYSE, prior to the Annual Meeting,
informs the brokers of those proposals upon which the brokers are entitled to
vote the undirected shares.
When a stockbroker does not vote, the stockbroker's abstention 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,
in most cases, some of the shares held in the broker's name have been voted
on at least some proposals, and, therefore, all of those shares are
considered present at the Annual Meeting. Under applicable 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.
HOW ARE A STOCKHOLDER'S SHARES VOTED IF THE STOCKHOLDER SUBMITS A PROXY CARD?
Stockholders who return a properly executed proxy are appointing the
Proxy Committee to vote their shares of Voting Stock covered by the Proxy.
That Committee consists of the three directors of KCSI whose names are listed
on the related proxy card. A stockholder wishing to name as his, her or its
proxy someone other than the Proxy Committee designated on the proxy card may
do so by crossing out the names of the designated proxies and inserting the
name of another person. In that case, it will be necessary for the
stockholder to sign the proxy card and deliver it to the person so named and
for that person to be present and vote at the Annual Meeting. Proxy cards so
marked should Not be mailed directly to KCSI.
The Proxy Committee will vote the shares of Voting Stock covered by a
proxy in accordance with the instructions given by the stockholders executing
the proxy. If a properly executed and unrevoked proxy solicited hereunder
does not specify how the shares represented thereby are to be voted, the
Proxy Committee intends to vote the shares FOR the election of the persons
nominated by management for directorships, FOR ratification of the Board of
Directors' selection of PricewaterhouseCoopers LLP as KCSI's independent
accountants for 2000; and in accordance with their discretion upon such other
matters as may properly come before the Annual Meeting. The Proxy Committee
reserves the right to vote such proxies cumulatively and for the election of
less than all of the nominees for director, but does 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.
MAY A STOCKHOLDER REVOKE HIS OR HER PROXY OR VOTING INSTRUCTION CARD?
A stockholder who holds stock in his or her name may revoke a properly
executed proxy with a later-dated, properly executed proxy or other written
revocation delivered to the Corporate Secretary of KCSI at any time before
the polls for the Annual Meeting are closed. A stockholder who holds stock
in a brokerage account must contact the broker and comply with the broker's
procedures if he or she wants to revoke or change the instructions that the
stockholder returned to the broker. 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 Corporate Secretary before
the proxy is voted.
WHAT IF A STOCKHOLDER PARTICIPATES IN KCSI'S DIVIDEND REINVESTMENT PLAN?
If a stockholder participates in KCSI's Dividend Reinvestment Plan (the
"DRIP"), the proxy card will represent both the number of shares (including
fractional shares) held on behalf of the stockholder in the DRIP on the
record date and shares registered in the stockholder's name, if any.
HOW DO PARTICIPANTS IN KCSI'S, STILWELL FINANCIAL, INC.'S OR DST SYSTEMS,
INC.'S EMPLOYEE STOCK OWNERSHIP PLANS VOTE?
Participants in KCSI's, Stilwell Financial, Inc.'s and DST Systems,
Inc.'s employee stock ownership plans ("ESOPs") are each provided a separate
voting instruction card (accompanying this Proxy Statement) to instruct the
trustee of these ESOPs how to vote the shares of Common Stock held on behalf
of the participant. The trustee is required under the trust agreements to
vote the shares in accordance with the instructions indicated on the voting
instruction card. If the voting instruction card is not returned, the
trustee must vote those shares, as well as any unallocated shares, in the
same proportions as the shares for which voting instruction cards were
received from the plan participants. The voting instruction card should be
returned to the trustee in the envelope provided AND SHOULD NOT BE RETURNED
TO KCSI, STILWELL FINANCIAL, INC. ("STILWELL") OR DST SYSTEMS, INC. ("DST").
The mailing address of the trustee is UMB Bank, N.A., Securities Transfer
Division, P.O. Box 410064, Kansas City, Missouri 64179-0013, Attention:
Kansas City Southern Industries Employee Stock Ownership Plan (for KCSI
participants), Attention: Stilwell Financial, Inc. Employee Stock Ownership
Plan (for Stilwell participants), or Attention: DST Systems, Inc. Employee
Stock Ownership Plan (for DST participants). ESOP participants who wish to
revoke their voting instruction card must contact the trustee and follow its
procedures.
ARE THE VOTES OF PARTICIPANTS IN THE ESOPS CONFIDENTIAL?
Under the terms of the ESOP trust agreements, the trustee is required to
establish procedures to ensure that the instructions received from
participants are held in confidence and not divulged, released or otherwise
utilized in a manner that might influence the participants' free exercise of
their voting rights.
<PAGE>
PRINCIPAL STOCKHOLDERS AND STOCK OWNED BENEFICIALLY
BY DIRECTORS AND CERTAIN EXECUTIVE OFFICERS
The following table sets forth information as of the Record Date
concerning the beneficial ownership of KCSI's Common Stock by: (i) beneficial
owners of more than five percent of any class of such stock that have
publicly disclosed their ownership; (ii) the members of the Board of
Directors and certain executive officers; and (iii) all KCSI officers and
directors as a group. KCSI is not aware of any beneficial owner of more than
five percent of the Preferred Stock. No officer or director of KCSI owns any
equity securities of any subsidiary of KCSI. Beneficial ownership is
generally either the sole or shared power to vote or dispose of the shares.
KCSI is not aware of any arrangement which would at a subsequent date result
in a change of control of KCSI.
PERCENT
COMMON OF
NAME AND ADDRESS STOCK (1) CLASS(1)
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Amvescap, PLC and certain affiliates 9,164,600 (2) 8.23%
The TCW Group, Inc. and certain affiliates 8,994,994 (3) 8.07%
American Express Company and certain affiliates 6,858,952 (4) 6.16%
A. Edward Allinson 76,468 (1)(5) *
Director
Thomas H. Bailey 29,469 (5) *
Chairman of the Board, President
and Chief Executive Officer of
Janus Capital Corporation
Paul F. Balser 66,000 (1) *
Director
James E. Barnes 93,000 (1)(6) *
Director
Danny R. Carpenter 321,317 (1)(5)(6) *
Vice President - Finance
Michael G. Fitt 87,600 (1)(6) *
Director
Michael R. Haverty 988,675 (1)(5)(6) *
Director, Executive Vice President
James R. Jones 12,100 (1) *
Director
Joseph D. Monello 457,103 (1)(5) *
Vice President and
Chief Financial Officer
Landon H. Rowland 3,473,173 (1)(5) 3.04%
Chairman of the Board,
President, Chief
Executive Officer
Jose F. Serrano 42,000 (1) *
Director
Morton I. Sosland 161,511 (1)(6) *
Director
All Directors and Executive Officers 6,525,157 (1)(5) 5.59%
as a Group (16 Persons)
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* Less than one percent of the outstanding shares.
(1) Percentage ownership is based on the number of shares outstanding as of
the Record Date plus any Additional Shares (as defined below). The
holders may disclaim beneficial ownership of shares included under
certain circumstances. Except as noted, the holders have sole voting
and dispositive power over the shares. Under applicable law, shares
that may be acquired upon the exercise of options or other convertible
securities that are exercisable on the Record Date or will become
exercisable within 60 days of that date (the "Additional Shares") are
considered beneficially owned. The Additional Shares included in the
amounts shown above are as follows: Mr. Allinson, 70,400; Mr. Balser,
66,000; Mr. Barnes, 84,000; Mr. Carpenter, 294,818; Mr. Fitt, 78,000;
Mr. Haverty, 944,053; Mr. Jones, 12,000; Mr. Monello, 395,000; Mr.
Rowland, 2,732,645; Mr. Serrano, 42,000; Mr. Sosland, 6,000; and all
directors and executive officers as a group, 5,278,948. Certain
directors and executive officers disclaim beneficial ownership of
142,375 of these shares. The list of executive officers of KCSI is
included in KCSI's Annual Report on Form 10-K. See the last page of
this proxy statement for instructions on how to obtain a copy of the
Form 10-K.
(2) Based upon information in Schedule 13G filed February 4, 2000. The
address for Amvescap, PLC is 11 Devonshire Square, London EC2M 4YR,
England.
(3) Based upon information in Schedule 13G filed February 14, 2000. The
address for The TCW Group, Inc. is 865 South Figueroa Street, Los
Angeles, California 90017.
(4) Based upon information in Schedule 13G filed February 8, 2000. The
address for American Express Company is American Express Tower, 200
Vesey Street, New York, New York 10285.
(5) Under applicable law, shares that are held indirectly are also
considered beneficially owned. The shares included in the amounts shown
above are as follows: Mr. Allinson owns 2,400 shares in a Keogh Plan;
Mr. Bailey owns 22,004 shares through the Stilwell ESOP; Mr. Carpenter
owns 8,631 shares through the Stilwell ESOP and 2,836 shares held in a
revocable trust of which he is the trustee; Mr. Haverty owns 3,686
shares through the KCSI ESOP; Mr. Monello owns 34,463 shares through the
Stilwell ESOP; Mr. Rowland owns 61,845 and 480 shares through the
Stilwell ESOP and KCSI's Profit Sharing Plan, respectively; and all
directors and executive officers as a group own indirectly 359,749
shares.
(6) Directors and executive officers may also be deemed to own,
beneficially, shares held in other capacities as follows: Mr. Barnes,
9,000 shares held jointly with his wife; Mr. Carpenter, 15,032 shares
held by his wife in a revocable trust of which she is the trustee; Mr.
Fitt, 9,600 shares held in trust; Mr. Haverty, 1,575 shares held by his
children and 36,000 Additional Shares held by his children's trusts, as
to which he disclaims beneficial ownership; and Mr. Sosland, 4,800
shares held in trust over which he has sole voting and dispositive power
as trustee, 12,000 shares held by his wife and the following shares over
which he has shared voting and/or dispositive power but as to which
beneficial ownership is disclaimed: 36,000 shares held by certain
companies of which he is a director, 46,000 shares held as co-trustee of
certain testamentary trusts and 6,000 shares in a charitable foundation
of which he is a director. Mr. Sosland disclaims beneficial ownership
of all of these shares.
<PAGE>
PROPOSAL 1 - ELECTION OF TWO DIRECTORS
The Board of Directors of KCSI is divided into three classes. The
members of each class serve staggered three-year terms of office, which
results in one class standing for election at each annual meeting of
stockholders. The term of office for the directors elected at the Annual
Meeting will expire in 2003 or when their successors are elected and
qualified.
Two persons have been nominated by management for election as directors.
Both of these nominees are presently directors of KCSI, both have indicated
that they are willing and able to serve as directors if elected, and both
have consented to being named as nominees in this Proxy Statement. If any
nominee should become unable or unwilling to serve, the Proxy Committee
intends to vote for one or more substitute nominees chosen by them in their
sole discretion.
KCSI's Bylaws provide that after January 18, 1990, no one who is 72
years old 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. KCSI's Certificate of Incorporation and Bylaws do
not have any other eligibility requirements for directors.
As explained further under "How Does KCSI Decide Whether Its
Stockholders Have Approved any of the Proposals," Directors are elected by
the affirmative vote of the plurality of the shares of Voting Stock present
at the Annual Meeting that are entitled to vote on the election of directors,
assuming a quorum.
NOMINEES FOR DIRECTORS TO SERVE UNTIL THE ANNUAL MEETING OF STOCKHOLDERS IN
2003
MICHAEL G. FITT, age 68, has been a director of KCSI since 1986. Prior to
retirement, 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. Employers Reinsurance
Corporation, a subsidiary of General Electric Capital Services, Inc., is a
reinsurance company. Mr. Fitt is also a director of DST Systems, Inc.,
Kansas City, Missouri.
MICHAEL R. HAVERTY, age 55, has been a director and Executive Vice President
of KCSI and President and Chief Executive Officer of The Kansas City Southern
Railway Company ("KCSR"), a subsidiary of KCSI, since 1995. He is also a
director and Chairman of the Executive Committee of the Board of Grupo
Transportacion Ferroviaria Mexicana, S.A. de C.V., an affiliate of KCSI. Mr.
Haverty previously served as Chairman and Chief Executive Officer of Haverty
Corporation from 1993 to May 1995, acted as an independent executive
transportation adviser from 1991 to 1993 and was President and Chief
Operating Officer of The Atchison, Topeka and Santa Fe Railway Company from
1989 to 1991. Mr. Haverty is also a director of Midwest Grain Products,
Inc., Atchison, Kansas.
YOUR BOARD RECOMMENDS THAT YOU VOTE
"FOR"
THE ELECTION OF MANAGEMENT'S NOMINEES
<PAGE>
THE BOARD OF DIRECTORS
The Board of Directors met eight times in 1999. The Board meets
regularly to review significant developments affecting KCSI and to act on
matters requiring Board approval. The Board reserves certain powers and
functions to itself; in addition, it has requested that the Chief Executive
Officer refer certain matters to it. All directors attended at least
seventy-five percent of those meetings of the Board in 1999 other than Mr.
Serrano who attended four of the eight meetings.
DIRECTORS SERVING UNTIL THE ANNUAL MEETING OF STOCKHOLDERS IN 2001
A. EDWARD ALLINSON, age 65, has been a director of KCSI since 1990. He has
served as the Chief Executive Officer and Chairman of the Board of EquiServe
LP ("EquiServe") since January 1, 2000. EquiServe provides stock transfer and
related services to publicly listed corporations. Prior to joining
EquiServe, Mr. Allinson was an Executive Vice President of State Street Bank
and Trust Company, Chairman of the Board of Directors of Boston Financial
Data Services, Inc. ("BFDS"), and Executive Vice President of State Street
Corporation from March 1990 through December 1999. BFDS provides full service
share owner accounting and recordkeeping services to mutual funds, selected
services to certain retirement plans and certain securities transfer
services. DST Systems, Inc., of which KCSI owns approximately 32 percent of
the outstanding stock, owns 50% of BFDS. Mr. Allinson is also a director of
DST Systems, Inc., Kansas City, Missouri.
PAUL F. BALSER, age 58, has been a director of KCSI since 1990. He has been
a Managing Partner of Generation Partners, L.P., New York, New York, since
August 1995. Generation Partners is an investment firm specializing in
privately negotiated equity and venture capital investments. He was a
Partner of Centre Partners, L.P., New York, New York, from September 1986
through July 1995, which also specialized in privately negotiated equity and
venture capital investments. Mr. Balser is also a director of the
Carbide/Graphite Group, Inc., Pittsburgh, Pennsylvania, and Scientific Games,
Inc., Atlanta, Georgia, as well as a number of private companies. It is
expected that Mr. Balser will become a director of Stilwell at the time of
the separation of KCSI's Financial Services and Transportation segments (the
"Separation") and not continue as a director of KCSI upon completion of the
Separation.
JAMES R. JONES, age 60, has been a director of KCSI since November, 1997. He
is Special Counsel to the firm of Manatt, Phelps & Phillips. He is also
Chairman of Globe Ranger Corp. Mr. Jones was President of Warnaco Inc.
International Division, 1997-98; U.S. Ambassador to Mexico, 1993-97; and
Chairman and Chief Executive Officer of the American Stock Exchange, 1989-93.
Mr. Jones served as a member of the U.S. Congress representing Oklahoma for
14 years. He was White House Special Assistant and Appointments Secretary to
President Lyndon Johnson. Mr. Jones is also a director of Anheuser-Busch;
Grupo Modelo S.A. de C.V.; San Luis Corporacion; TV Azteca; and Keyspan
Energy Corporation.
LANDON H. ROWLAND, age 62, has been a director of KCSI since 1983. He has
been President of KCSI since July 1983, Chief Executive Officer of KCSI since
January 1987 and Chairman of the Board since May 1997. Mr. Rowland has been
a director and President of Stilwell Financial, Inc., a wholly-owned
subsidiary of KCSI, since May 1998. He has also served as Chairman of the
Board and Chief Executive Officer of Stilwell Financial, Inc. since August
1999. Mr. Rowland is also a director of Janus Capital Corporation, Stilwell
Management, Inc. and Nelson Money Managers PLC, each subsidiaries of KCSI,
Grupo Transportacion Ferroviaria Mexicana, S.A. de C.V., an affiliate of
KCSI, and Transportacion Maritima Mexicana, S.A. de C.V.
DIRECTORS SERVING UNTIL THE ANNUAL MEETING OF STOCKHOLDERS IN 2002
JAMES E. BARNES, age 66, has been a director of KCSI since 1986. Prior to
retirement, he was Chairman of the Board, President and Chief Executive
Officer of MAPCO Inc., Tulsa, Oklahoma. Mr. Barnes is also a director of SBC
Communications Inc., San Antonio, Texas; BOK Financial Corporation, Tulsa,
Oklahoma; and Parker Drilling Co., Tulsa, Oklahoma. It is expected that Mr.
Barnes will become a director of Stilwell at the time of the Separation and
not continue as a director of KCSI upon completion of the Separation.
JOSE F. SERRANO, age 59, has been a director of KCSI since 1996. He is
Chairman and a director of Grupo Servia, S.A. de C.V. and Transportacion
Maritima Mexicana, S.A. de C.V. ("TMM"). TMM and KCSI jointly own The Texas
Mexican Railway Company through Mexrail, Inc. and Grupo Transportacion
Ferroviaria Mexicana, S.A. de C.V. Mr. Serrano is also a director of Grupo
Transportacion Ferroviaria Mexicana, S.A. de C.V.
DIRECTOR RETIRING IN 2000
MORTON I. SOSLAND, age 74, has been a director of KCSI since 1976. He has
been Chairman of the Sosland Companies, Inc. (the "Sosland Companies"),
Kansas City, Missouri, since January 1993 and was President from July 1968
through December 1992. He has also served as Chairman of Sosland Publishing
Company, Kansas City, Missouri, since 1984. The Sosland Companies are
publishers and venture capital investors. Mr. Sosland is also a director of
H & R Block, Inc., Kansas City, Missouri. Mr. Sosland's current term of
office expires this year at the Annual Meeting of Stockholders and he is
retiring from the KCSI Board of Directors according to the provisions of
KCSI's Bylaws. If the Separation occurs prior to the Annual Meeting of
Stockholders, it is expected that Mr. Sosland will become a director of
Stilwell and will resign as a director of KCSI upon completion of the
Separation.
COMMITTEES OF THE BOARD OF DIRECTORS
- ------------------------------------
The Board of Directors has established an Executive Committee (which
also nominates individuals to serve as directors of KCSI), an Audit Committee
and a Compensation and Organization Committee. The members of the committees
are elected at the Board's annual meeting immediately following KCSI's annual
meeting of stockholders. During 1999, there were eleven 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 seventy-five percent of the total of all meetings of all committees on
which they served during 1999.
THE EXECUTIVE COMMITTEE
The Executive Committee consists of KCSI's Chairman of the Board and two
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 of the
Board for management of KCSI in all matters in which direction has not been
specifically reserved 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 directorships or vacancies on the Board.
The Chairman of the Board 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: James E. Barnes, Landon H.
Rowland and Morton I. Sosland.
THE 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 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
appointment of and approves fee arrangements with independent accountants for
audit functions and for advisory and other consulting services.
The members of the Audit Committee are: Paul F. Balser, Michael G. Fitt
and James R. Jones.
THE COMPENSATION AND ORGANIZATION COMMITTEE
The Compensation and Organization Committee (the "Compensation
Committee") consists of at least three outside directors (as defined under
applicable federal income tax and securities laws) elected by the Board to
serve one-year terms. The Compensation Committee has the authority to: (a)
authorize all salaries for certain KCSI and subsidiary company officers and
supervisory employees; (b) administer the incentive compensation plans of
KCSI and certain subsidiaries in accordance with the terms of those plans and
determine any incentive allowances made to their officers and staff; (c)
administer KCSI's Employee Stock Purchase Plan under which eligible employees
of KCSI and its subsidiaries and certain affiliates are permitted to
subscribe to and purchase shares of KCSI common stock through payroll
deductions; (d) administer KCSI's Profit Sharing Plan, 401(k) Plan and
Employee Stock Ownership Plan; (e) act as KCSI's stock option plan committee
and administer KCSI's stock option plans, in accordance with KCSI's Bylaws,
the terms of the plan and the applicable laws; and (f) initiate, review and
approve the succession plans and major organizational changes.
The members of the Compensation and Organization Committee are: A.
Edward Allinson, James E. Barnes and Morton I. Sosland.
The Committee's report on executive compensation is set forth in the
section under "Management Compensation."
COMPENSATION OF DIRECTORS
Directors who are officers or employees of KCSI or its subsidiaries do
not receive any fees or other compensation for service on the Board or its
committees. No fees were paid during 1999 to any director or officer of KCSI
for service on any board of directors of any subsidiary of KCSI other than
Janus Capital Corporation, which pays fees to Mr. Bailey. (Although Mr.
Rowland serves as a director of Janus Capital Corporation, he does not accept
any fees for such service.)
The Outside Directors (those directors who are not employees of KCSI or
its subsidiaries) are not paid any retainers for Board or committee
membership. The Outside Directors are paid $4,000 for each Board meeting
attended in person or $2,000 for telephone meetings. The Outside Directors
are also paid $2,000 for each committee meeting attended in person or $1,000
for telephone meetings. The Chair of a committee receives an additional $500
for each committee meeting. The Outside Directors may also be granted
awards, including among others, options to buy shares of KCSI Common Stock,
pursuant to the 1991 Amended and Restated Stock Option and Performance Award
Plan, as determined by the Committee (as defined in such plan).
Directors of KCSI are permitted to defer receipt of directors' fees
under an unfunded directors' deferred fee plan adopted by the Board of
Directors, and either to receive interest on such fees until they have been
paid to them or, 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 plan is set at the prime rate of a certain
national bank less one percent. Distributions under the plan are allowed in
certain instances as approved by the Board of Directors. The KCSI deferred
fee plan also allows the directors to elect to receive deferred amounts in
installments payable over several years.
<PAGE>
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 PricewaterhouseCoopers LLP as KCSI's independent
accountants to examine KCSI's 2000 consolidated financial statements.
PricewaterhouseCoopers LLP served as KCSI's independent accountants for 1999.
No relationship exists between KCSI and PricewaterhouseCoopers LLP other than
that of independent accountant and client.
KCSI seeks its stockholders' ratification of the Board of Directors'
selection of KCSI's independent accountants even though KCSI is not legally
required to do so. If KCSI's stockholders ratify the Board of Directors'
selection, the Board of Directors nonetheless may, in their discretion,
retain another independent accounting firm at any time during the year if the
Board of Directors feels that such change would be in the best interest of
KCSI and its stockholders. Alternatively, in the event that this proposal
is not approved by stockholders, the Audit Committee and the Board will re-
evaluate their decision.
One or more representatives of PricewaterhouseCoopers LLP are expected
to be present at the Annual Meeting and, if so, will have the opportunity, if
desired, to make a statement and are expected to be available to respond to
appropriate questions by stockholders.
As explained further under "How does KCSI Decide Whether its
Stockholders Have Approved any of the Proposals," approval of this proposal
requires the affirmative vote of a majority of the shares of Voting Stock
present at the Annual Meeting that are entitled to vote on the proposal,
assuming a quorum.
YOUR BOARD RECOMMENDS THAT YOU VOTE
"FOR"
RATIFICATION OF THE BOARD OF DIRECTORS'
SELECTION OF PRICEWATERHOUSECOOPERS LLP
<PAGE>
MANAGEMENT COMPENSATION
COMPENSATION AND ORGANIZATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
- ------------------------------------------------------------------------
INTRODUCTION
The Board of Directors believes that increasing the value of KCSI to its
stockholders is its most important objective. In support of this objective,
the Board charges the Compensation and Organization Committee (the
"Committee") with the responsibility of designing compensation packages for
KCSI's executives that provide substantial incentives to increase stockholder
value while enabling KCSI to attract and retain exceptionally qualified
executives. The Board emphasizes its overall objective by also relating the
outside directors' compensation to stockholder value through stock options.
The Committee seeks to align the interests of KCSI executives with the
Board's overall objective through a compensation strategy that emphasizes
long-term stock ownership and closely links executive compensation with
changes in stockholder value. In designing those compensation packages, the
Committee believes KCSI's compensation packages should provide executives
with market competitive base salaries and the opportunity to earn additional
compensation if stockholders experience long-term increases in the value of
their stock. The Committee also believes that KCSI's executives should
maintain a significant equity interest in KCSI, but that executives should
earn such interest only if KCSI's stockholders also experience an increase in
the value of their investment.
The Committee has implemented this strategy through compensation
packages that:
* Eliminate participation in any annual cash incentive program.
* Provide stock-based incentives through awards of stock options that
require, for the recipient to receive any benefits, market price
increases in KCSI's common stock.
* Emphasize long-term stock ownership through:
- An agreement with the Chief Executive Officer that a majority of
the net after-tax value of any stock-based awards (less any shares used to
pay any exercise price or satisfy tax withholding requirements) will be
maintained in the form of KCSI stock while the executive remains employed by
KCSI; and
- The Committee's consideration of the retention of past KCSI
stock-based awards in determining the levels of future stock-based grants.
The result is that a significant portion of these compensation packages is
based upon at-risk components.
The Committee has used this compensation strategy with all KCSI and KCSR
executive officers who the Committee identifies as especially important to
the long-term success of KCSI. KCSI had previously employed this strategy
with these executives to cover a three-year period. In light of the
contemplated Separation of the Financial Services and Transportation
segments, however, at the end of 1998, the Committee approved the
compensation packages for these executives for one year beginning in 1999
(other than Mr. Rowland as discussed below). For 2000 and following years,
KCSI plans to implement new three-year compensation programs but has deferred
action on such programs pending completion of such Separation. Upon
completion of the Separation, it is expected that certain of these executives
will continue as executives of Stilwell and not as officers or employees of
KCSI.
To assist the Committee with its responsibilities, the Committee
utilizes the expertise of independent compensation consultants. In addition
to advising the Committee, the compensation consultants provide the Committee
with surveys of compensation practices of selected industries and companies.
The compensation surveys used to determine competitive market pay range
focused on general industrial companies (for executives in both
transportation and financial services segments) having the same level of
revenues as KCSI, publicly traded railroads (for executives in the
transportation segment) and mutual fund and other financial services
companies (for executives in the financial services segment). These
compensation surveys include some of the companies comprising the Dow Jones
Transportation Average (the peer group used in the stock performance graph
below), as well as other companies in other industries. The Committee
believes using a broader sample of companies better represents the market for
executives. Where appropriate, compensation data from these surveys are
adjusted through regression analysis to estimate compensation levels at
companies similar in size to KCSI or its operating units. The next section
of this report details the compensation program for these executives.
COMPENSATION PACKAGE COMPONENTS
BASE SALARY. The Committee determines the level of base salaries for
all of the executives for whom the Committee has responsibility based on
competitive market practices as indicated in surveys utilized by the
Committee, individual contribution and performance, level of responsibility,
experience and KCSI's corporate performance. The Committee does not give any
specific weighting to any of these factors.
The Committee targets the 75th percentile of the observed competitive
market practice in setting base salary levels. The Committee chooses such
levels based on the fact such executives will not participate in any annual
cash incentive plans and such executives have a higher risk (because of the
use of the stock-based incentives) of not being compensated than they would
if they had participated in the annual cash incentive program.
STOCK COMPENSATION. The key component of the Committee's strategy is to
make stock-based incentives a significant portion of the executives' total
compensation package, primarily through stock options. By using primarily
stock options, the Committee seeks to ensure that the executives will be
compensated only if KCSI's stockholders also experience an increase in the
value of their investment and that any such compensation is linked directly
to such increases in KCSI's stock price.
To determine how many options to grant in connection with the
compensation packages, the Committee first considers each individual's
targeted total compensation for the period in question using the compensation
surveys mentioned above, including estimated potential earnings under KCSI's
annual cash incentive compensation plan. Targeted total incentive
compensation is approximately the total of the 75th percentile of the range
of potential short-term incentives foregone plus median long-term incentive
compensation shown in the observed market practices. These amounts are then
adjusted by the Committee to take into account the individual's contribution
and performance, level of responsibility, experience and KCSI's corporate
performance. The Committee does not give any specific weighting to any of
these factors. An option valuation model is utilized to calculate the risk-
adjusted value of each stock option to determine the number of options to be
awarded. Each executive's total option grant value is intended to cover the
year or years to which the grant relates and to approximate the value of a
competitive median long-term incentive opportunity plus the value of the
foregone annual cash incentive opportunity.
The compensation committee of the Board of Directors of Janus Capital
Corporation ("Janus"), with the aid of an independent compensation
consultant, sets Mr. Bailey's base salary and recommends incentive
compensation for him. KCSI's Compensation and Organization Committee
approves the incentive compensation.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Rowland's compensation package is based upon the same compensation
strategy, and utilizes compensation surveys of the same types of companies,
used by the Committee for the other executives of KCSI and KCSR discussed
above. Mr. Rowland's 1997 Employment Agreement froze his annual base salary
through January 1, 2000. In addition, Mr. Rowland was not entitled to
participate in any KCSI annual cash incentive compensation plans for the
years 1997, 1998 and 1999, but continued to participate in other benefit
plans or programs of KCSI generally available to executive employees. As
indicated above, no new compensation program for Mr. Rowland for 2000 and
later years has yet been put in place.
The Committee set Mr. Rowland's base salary in the upper quartile of the
observed base salary ranges indicated in the surveys utilized. However,
because Mr. Rowland did not participate in any annual cash incentive plans,
his total cash compensation was below the median of such compensation
indicated in the surveys. In establishing Mr. Rowland's base salary through
December 31, 1999, the Committee considered the fact that his salary was
frozen for three years and that Mr. Rowland would not participate in any
annual cash incentives during that period in addition to the other factors
indicated above considered for the other officers. The Committee did not
give special weight to any of the factors considered.
Additionally, consistent with the Committee's compensation strategy, Mr.
Rowland was granted 153,000 performance stock options as part of his 1997-
1999 compensation package (the number of options was subsequently adjusted as
a result of the three-for-one split of the Company's common stock in
September 1997). The number of such options was determined using the same
methods used for the other executives of KCSI and KCSR discussed above. The
performance stock options were structured differently from the options
granted the other executives to reward Mr. Rowland only when KCSI's market
value reached certain predetermined levels and remained at or above those
levels for thirty consecutive trading days or if he remained 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 above the average historical return of
the S&P 500 (see the footnotes to the Performance Graph below). The target
stock prices established in the stock option grants for Mr. Rowland have been
met. The grant was intended to cover the three-year period during which
Mr. Rowland did not participate in any KCSI annual cash incentive
compensation plan and was designed to result in total compensation between
the median and 75th percentile of the range of total compensation indicated
in the surveys.
Consistent with the Committee's overall goal of maintaining Mr.
Rowland's equity interest in KCSI, Mr. Rowland also agreed in his 1997-1999
employment agreement that while he is employed by KCSI he or members of his
immediate family will retain ownership of at least a majority of the shares
of the restricted stock awarded in connection with his previous employment
agreement and shares of stock acquired upon exercise of stock options granted
in connection with both his previous and current employment agreements (other
than shares transferred to KCSI to pay the exercise price of stock options or
used to satisfy withholding tax requirements in connection with such awards).
DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code generally limits the
deduction by publicly held corporations for federal income tax purposes of
compensation in excess of $1 million paid to any of the executive officers
listed in the summary compensation table (the "Named Executive Officers")
unless it is "performance-based."
The Committee intends to qualify all compensation expense as deductible
for federal income tax purposes. The compensation packages of the named
officers (other than Mr. Bailey) include base salary and stock compensation,
and the highest total base salary is within the $1 million limit. The stock
compensation awarded to those officers and Mr. Bailey's incentive
compensation package has the potential to result in total compensation in
excess of the $1 million limit of Section 162(m). KCSI believes it has taken
all steps necessary, including obtaining stockholder approval, so that any
compensation expense that KCSI may incur as a result of awards under its
stock option and incentive compensation plans qualifies as performance-based
compensation for purposes of Section 162(m) so that any portion of this
component of the executive compensation packages will be deductible for
federal income tax purposes.
The Committee will review from time to time in the future the potential
impact of Section 162(m) on the deductibility of executive compensation.
However, the Committee intends to maintain the flexibility to take actions
that it considers to be in the best interests of the Company and its
stockholders and which may be based on considerations in addition to tax
deductibility.
The Compensation and Organization Committee.
A. Edward Allinson
James E. Barnes, Chairman
Morton I. Sosland
<PAGE>
STOCK PERFORMANCE GRAPH
- -----------------------
The following graph shows the changes in value over the five years
ending December 31, 1999 of an assumed investment of $100 in: (i) KCSI's
Common Stock; (ii) the stocks that comprise the Dow Jones Transportation
Average Index(1); and (iii) the stocks that comprise the S&P 500 Index(2).
The table following the graph shows the value of those investments as of
December 31 of each 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 are reinvested at the end of each quarter during
the fiscal year paid.
KANSAS CITY SOUTHERN INDUSTRIES, INC.
RELATIVE MARKET PERFORMANCE
TOTAL RETURN 1995-1999
[PERFORMANCE GRAPH APPEARS HERE]
YEAR ENDED DECEMBER 31, 1994 1995 1996 1997 1998 1999
- -----------------------------------------------------------------------------
KCSI Total Return $100 $149 $148 $316 $491 $747
Dow Jones Transportation $100 $139 $159 $236 $230 $220
Average Total Return
S&P 500 Index Total Return $100 $138 $169 $226 $290 $351
- -------------------------
(1) The Dow Jones Transportation Average is an index prepared by Dow
Jones & Co., Inc., an independent company.
(2) The S&P 500 is an index prepared by Standard and Poor's Corporation, an
independent company. The S&P 500 Index reflects the change in weighted
average market value for 500 companies whose shares are traded on the
New York Stock Exchange, American Stock Exchange and in the over-the-
counter market. Information concerning Standard and Poor's Corporation
and the S&P 500 Index is available on the Internet at
www.stockinfo.standardpoor.com.
<PAGE>
SUMMARY COMPENSATION TABLE
- --------------------------
The Summary Compensation Table shows certain information concerning the
compensation earned by the Chief Executive Officer of KCSI and certain of the
most highly compensated executive officers for 1999 (based upon the total
salary and bonus for 1999).
Long Term
Compensation
Annual Compensation Awards
--------------------------------- -------------
Other All
Name Annual Securities Other
And Compen- Underlying Compen-
Principal sation Options/ sation
Position Year Salary($) Bonus($) ($) SARs(#) ($)
- -----------------------------------------------------------------------------
Landon H. Rowland 1999 750,000 --- 46,067(1) --- 105,490(1)
Chairman of the 1998 750,000 --- 53,877 6,138 26,632
Board, President 1997 750,000 --- 57,900 --- 114,801
and Chief
Executive Officer
Michael R. Haverty 1999 608,652 --- --- 4,063 19,186(2)
Executive Vice 1998 500,204 --- --- 88,259 16,000
President 1997 500,004 --- --- --- 87,500
Thomas H. Bailey 1999 900,000 1,000,000(3) --- --- 121,128(3)
Chairman of the 1998 900,000 833,000 --- --- 109,000
Board, President 1997 900,000 675,000 --- --- 75,667
and Chief Executive
Officer of Janus
Capital Corporation
Joseph D. Monello 1999 600,000 --- --- --- 45,668(4)
Vice President and 1998 250,008 --- --- 65,000 43,754
Chief Financial 1997 250,008 --- --- --- 62,640
Officer
Danny R. Carpenter 1999 330,000 --- --- 980 17,815(5)
Vice President - 1998 190,008 --- --- 31,481 16,000
Finance 1997 190,008 --- --- --- 43,751
- --------------------
(1) Other Annual Compensation for Mr. Rowland includes premiums on
disability and life insurance policy of $46,067. All other compensation
for Mr. Rowland for 1999 is comprised of: (i) a contribution to his
account under the Stilwell ESOP of $6,400; (ii) interest on deferred
director's fees of $13,049; (iii) a contribution to his account under
KCSI's 401(k) plan of $4,800; (iv) a contribution to his account under
KCSI's profit sharing plan of $4,800; (v) premiums on group term life
insurance of $4,941; and (vi) an amount paid out to him pursuant to the
KCSI Executive Plan of $71,500. As of December 31, 1999, Mr. Rowland
held no shares of restricted stock.
(2) All other compensation for Mr. Haverty for 1999 is comprised of: (i) a
contribution to his account under the KCSI ESOP of $6,400; (ii) a
contribution to his account under KCSI's 401(k) plan of $4,800; (iii) a
contribution to his account under KCSI's profit sharing plan of $4,800;
and (iv) premiums on group term life insurance of $3,186. As of
December 31, 1999, Mr. Haverty held no shares of restricted stock.
(3) The bonus for Mr. Bailey for 1999 was under a performance based
incentive compensation plan approved by stockholders in 1997. All other
compensation for Mr. Bailey for 1999 is comprised of: (i) directors'
fees in the amount of $31,000 and $65,333, paid to Mr. Bailey in his
capacity as director of Janus Capital Corporation, and Janus Investment
Fund and the Janus Aspen Series, respectively; (ii) a contribution to
his account under the Stilwell ESOP of $6,400; (iii) a contribution to
his account under KCSI's 401(k) plan of $4,800; and (iv) a contribution
to his account under Janus' profit sharing plan of $4,800 and (v)
premiums on group term life insurance of $8,795 paid by Janus Capital
Corporation. As of December 31, 1999, Mr. Bailey held no shares of
restricted stock.
(4) All other compensation for Mr. Monello for 1999 is comprised of: (i) a
contribution to his account under the Stilwell ESOP of $6,400; (ii) a
contribution to his account under KCSI's 401(k) plan of $4,800; (iii) a
contribution to his account under KCSI's profit sharing plan of $4,800;
(iv) premiums on group term life insurance of $1,917; and (v) an amount
paid out to him pursuant to the KCSI Executive Plan of $27,751. As of
December 31, 1999, Mr. Monello held no shares of restricted stock.
(5) All other compensation for Mr. Carpenter for 1999 is comprised of: (i)
a contribution to his account under the Stilwell ESOP of $6,400; (ii) a
contribution to his account under KCSI's 401(k) plan of $4,800; (iii) a
contribution to his account under KCSI's profit sharing plan of $4,800;
and (iv) premiums on group term life insurance of $1,815. As of
December 31, 1999, Mr. Carpenter held no shares of restricted stock.
<PAGE>
1999 OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ------------------------------------------
GRANT DATE
INDIVIDUAL GRANTS VALUE
(a) (b) (c) (d) (e) (f)
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/
OPTIONS/ SARS GRANTED EXERCISE GRANT DATE
SARS TO EMPLOYEES OR BASE PRESENT
GRANTED IN FISCAL PRICE EXPIRATION VALUE
NAME (#) YEAR(4) ($/SH)(5) DATE $(6)
- -----------------------------------------------------------------------------
Landon H. Rowland 0 N/A N/A N/A N/A
Michael R. Haverty 4,063(1) * 44.00 01/25/09 58,792
Thomas H. Bailey 100(2) * 44.00 01/25/09 1,447
Joseph D. Monello 0 N/A N/A N/A N/A
Danny R. Carpenter 980(3) * 44.00 01/25/09 14,181
- -----------------------------------
*Less than one percent of the total options granted.
(1) The options were granted on January 26, 1999 under KCSI's 1991 Amended
and Restated Stock Option and Performance Award Plan (the "1991 Plan")
in connection with KCSI's Executive Plan. Under the Executive Plan, the
participants may elect to receive their accumulated balance and annual
benefit either in cash or in non-qualified stock options with an
estimated value (using the Black-Scholes' valuation model) equal to 125
percent of the annual cash benefit. The options for 2,031 shares were
immediately exercisable and the balance became exercisable on June 23,
1999. Limited stock appreciation rights ("LSAR's") were granted in
tandem with these options. All of the LSAR's are automatically
exercised upon a change in control that is not approved by the incumbent
board of KCSI (as such terms are defined in the 1991 Plan). All the
options expire at the end of ten years, subject to earlier termination
as provided in the individual's option agreement. The options are
subject to voluntary tax withholding rights.
(2) The options were granted under the 1991 Plan. These options were granted
on January 26, 1999 and became exercisable upon January 26, 2000. LSAR's
were granted in tandem with these options. All of the LSAR's are
automatically exercised upon a change in control that is not approved by
the incumbent board of KCSI (as such terms are defined in the 1991
Plan). All the options expire at the end of ten years, subject to
earlier termination as provided in the individual's option agreement.
The options are subject to voluntary tax withholding rights.
(3) The options were granted under the 1991 Plan in connection with KCSI's
Executive Plan. These options were granted on January 26, 1999 and were
immediately exercisable. LSAR's were granted in tandem with these
options. All of the LSAR's are automatically exercised upon a change in
control that is not approved by the incumbent board of KCSI (as such
terms are defined in the 1991 Plan). All the options expire at the end
of ten years, subject to earlier termination as provided in the
individual's option agreement. The options are subject to voluntary tax
withholding rights.
(4) Total options granted to eligible employees in 1999 were 490,716.
(5) Average of the high and low prices of the Common Stock on the date of
grant as reported on the NYSE.
(6) Valuation determined using Black-Scholes' option pricing model with the
following assumptions: market price of stock is equal to the exercise
price of options; stock volatility (based on 3-year monthly data)
42.20%; annualized risk-free interest rate 4.6710%; option term (in
years) 3; and stock's dividend yield 0.36%.
<PAGE>
1999 AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
- -----------------------------------------------------------
The following table sets forth information with respect to the aggregate
option exercises during 1999 by the Named Executive Officers and the number
and value of options held by such officers as of December 31, 1999 (the last
trading day of the year).
- -----------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End at FY-End
(#) ($)
Shares
Acquired Value Exercisable/ Exercisable
On Exercise Realized(1) Unexercisable Unexercisable(1)
Name (#) ($)
- -----------------------------------------------------------------------------
Landon H. Rowland 0 N/A 2,769,138/0 182,179,057/0
Michael R. Haverty 0 N/A 912,322(2)/ 52,134,707(2)/
65,000 1,950,000
Thomas H. Bailey 0 N/A 0/100 0/2,831
Joseph D. Monello 0 N/A 330,000/ 18,773,136/
65,000 1,950,000
Danny R. Carpenter 0 N/A 263,461/ 15,060,840/
30,000 900,000
- -----------------------
(1) The dollar value in columns (c) and (e) is 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, 1999 (the last trading day of 1999),
respectively, times the number of options exercised or held at year end.
(2) Includes options for 36,000 shares held by Mr. Haverty's children's
trusts with a value of $2,143,500 as of December 31, 1999.
<PAGE>
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
- -------------------------------------------------------------------------
ARRANGEMENTS WITH NAMED EXECUTIVE OFFICERS
- ------------------------------------------
EMPLOYMENT AGREEMENTS WITH THE NAMED EXECUTIVE OFFICERS
As indicated above, KCSI has deferred action on new compensation
programs with its Named Executive Officers (other than Mr. Bailey) pending
the Separation of its Financial Services and Transportation segments. Upon
such Separation, it is expected that certain of these Named Executive
Officers, namely Messrs. Rowland, Carpenter and Monello will continue as
executives of Stilwell and not as employees of KCSI, and Janus Capital
Corporation, of which Mr. Bailey is the President and Chief Executive
Officer, will no longer be a subsidiary of KCSI. Following the separation,
KCSI will be engaged only in the transportation business and expects to enter
into new three-year compensation programs with its executives, all of whom
will be involved only with the transportation business. The following
discussion describes employment agreements in effect in 1999 and which
currently remain in effect until terminated or modified.
MR. ROWLAND. KCSI entered into an Amended and Restated Employment
Agreement with Mr. Rowland effective September 18, 1997, which provides for
Mr. Rowland's continued employment as President and Chief Executive Officer
of KCSI.
The Employment Agreement provides that Mr. Rowland is to serve at the
pleasure of KCSI's Board of Directors and does not contain a fixed term of
employment. Pursuant to the Employment Agreement, Mr. Rowland receives a
fixed annual base salary of $750,000, which was not to be increased prior to
January 1, 2000 and is not to be reduced except by mutual agreement of KCSI
and Mr. Rowland or except as part of a general salary reduction program
applicable to all officers of KCSI. Mr. Rowland was not entitled to
participate in any KCSI incentive compensation plan for the years 1997, 1998
and 1999, but continues to participate in other benefit plans or programs of
KCSI generally available to executive employees and is provided with certain
disability insurance coverage and life insurance payable to beneficiaries
designated by him. Under the Employment Agreement the value of Mr. Rowland's
annual compensation is fixed at $875,000 for purposes of cash compensation
based benefit plans.
The Employment Agreement provides for twenty-four (24) months of
severance pay at an annual rate equal to Mr. Rowland's base salary and for
certain health and life insurance benefits in the event of the termination of
his employment without cause, other than in connection with a change in
control of KCSI (as defined in the Employment Agreement), unless such
benefits are provided by another employer. In the year in which termination
occurs, Mr. Rowland shall remain eligible to receive benefits under the KCSI
Incentive Compensation Plan, if any, and the KCSI Executive Plan. After
termination, Mr. Rowland shall not be entitled to accrue or receive any
benefits under any other employee benefit plan, except he will be entitled to
participate in the KCSI Profit Sharing Plan, the KCSI Employee Stock
Ownership Plan and the KCSI 401(k) Plan in the year of termination if he
meets the requirements for participation in such termination year.
As part of the Employment Agreement, Mr. Rowland has agreed not to use
or disclose any KCSI trade secret (as defined in the Employment Agreement)
after any termination of his employment and not to engage in, or manage, a
business in competition with any business conducted by KCSI or its
subsidiaries, in any country or jurisdiction in which KCSI or any of its
subsidiaries conduct business, for a period of three years following Mr.
Rowland's resignation or termination of his employment for cause or due to
his disability.
During the period of his employment under the Employment Agreement, Mr.
Rowland has agreed to retain ownership in himself or members of his immediate
family of at least a majority of the number of shares of (i) KCSI Common
Stock ("Restricted Stock") awarded to Mr. Rowland in connection with his
previous employment agreement dated January 1, 1992 and (ii) shares of KCSI
stock acquired upon exercise of stock options granted on or after December
12, 1991 (other than shares transferred to KCSI to pay the purchase price
upon the exercise of stock options or used to satisfy tax withholding
requirements).
If there were a change in control of KCSI during the term of the
Employment Agreement, Mr. Rowland's employment, executive capacity, salary
and benefits would be continued for a three-year period at levels in effect
on the control change date (as defined in the Employment Agreement) at a rate
not less than twelve times the highest monthly base salary paid or payable to
him in the twelve months prior to any change in control. During such three-
year period, Mr. Rowland would also be eligible to participate in all benefit
plans made generally available to executives of his level or to the employees
of KCSI generally, would be eligible to participate in any KCSI incentive
compensation plan, and would be entitled to immediately exercise all
outstanding stock options and receive a lump-sum cash payment equal to the
fair market value of all non-vested options. If the amounts payable during
this three-year period were discretionary, the benefits continued would not
be less than the average annual amount for the three years prior to the
change in control, and incentive compensation would not be less than 75% of
the maximum amount which could have been paid to Mr. Rowland under the terms
of the incentive compensation plan. With respect to unfunded employer
obligations under the benefit plans, Mr. Rowland would be entitled to a
discounted cash payment of amounts to which he is entitled. Mr. Rowland's
employment may be terminated after the control change date, but where it were
other than "for cause" (as defined in the Employment Agreement) he would be
entitled to payment of his base salary through termination plus a discounted
cash severance payment equal to 175 percent of three times his annual base
salary and continuation or payment of benefits for a three-year period at
levels in effect on the control change date. Mr. Rowland is also permitted
to resign employment after a change in control upon "good reason" (as defined
in the Employment Agreement) and advance written notice, and to receive the
same payments and benefits as if his employment had been terminated by KCSI.
Mr. Rowland's Employment Agreement also provides for payments to him
necessary to relieve him of certain adverse federal income tax consequences
if amounts received under the Agreement would be determined to involve
"parachute payments" under Section 4999 of the Internal Revenue 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. Rowland in
connection with disputes arising with respect to the Employment Agreement.
MESSRS. CARPENTER, HAVERTY AND MONELLO. KCSI entered into Amended and
Restated Employment Agreements with Messrs. Carpenter and Monello effective
January 1, 1999. In addition, KCSI and KCSR entered into an Amended and
Restated Employment Agreement with Mr. Haverty also effective January 1,
1999. These Employment Agreements provide, respectively, for Mr. Carpenter's
continued employment as Vice-President-Finance, Mr. Haverty's continued
employment as President and Chief Executive Officer of KCSR and Mr. Monello's
continued employment as Vice President & Chief Financial Officer of KCSI.
KCSI also agreed to continue to cause Mr. Haverty to be elected and retained
as Executive Vice President of KCSI and Director of KCSR and to use its best
efforts to enable Mr. Haverty to continue to be elected as a director of
KCSI. The Employment Agreements are subject to termination under certain
circumstances.
Pursuant to his Employment Agreement, Mr. Haverty receives as
compensation for his services an annual base salary at the rate approved by
the Compensation Committee, which was set at $600,000 for 1999. Such salary
shall not be reduced except as agreed to by the parties or as part of a
general salary reduction by KCSR applicable to all officers of KCSR.
Mr. Haverty was not entitled to participate in any KCSI or KCSR incentive
compensation plans for 1999, but is eligible to participate in other benefit
plans or programs generally available to executive employees of KCSR. The
Employment Agreement provides that the value of Mr. Haverty's annual
compensation is fixed at 167.67 percent of base salary for purposes of cash
compensation based benefit plans.
Pursuant to their Employment Agreements, Messrs. Carpenter and Monello
receive as compensation for their services an annual base salary at the rate
approved by the Compensation Committee, which was set at $330,000 and
$600,000, respectively, for 1999. Such salary shall not be reduced except as
agreed to by the parties or as part of a general salary reduction by KCSI
applicable to all officers of KCSI. Under the Employment Agreements, neither
Mr. Carpenter nor Mr. Monello was entitled to participate in any KCSI
incentive compensation plan for 1999, but both are eligible to participate in
other benefit plans or programs generally available to executive employees of
KCSI. The Employment Agreements provide that the value of Messrs.
Carpenter's and Monello's annual compensation is fixed at 175 and 167
percent, respectively, of their annual base salaries for purposes of cash
compensation benefit plans.
In the event of termination without cause by KCSI, Messrs. Carpenter,
Haverty and Monello would be entitled to twelve months of severance pay at an
annual rate equal to their base salary and for reimbursement for the costs of
continuing or obtaining comparable health and life insurance benefits unless
such benefits are provided by another employer. In the year in which
termination occurs, Messrs. Carpenter, Haverty and Monello would remain
eligible to receive benefits under the KCSI Incentive Compensation Plan, if
any, and the KCSI Executive Plan. After termination, the officers would not
be entitled to accrue or receive benefits under any other employee benefit
plan, except the officers would be entitled to participate in the KCSI Profit
Sharing Plan, The KCSI Employee Stock Ownership Plan and the KCSI 401(k) Plan
in the year of termination if such officer were to meet the requirements for
participation in such termination year.
As part of the Employment Agreement, Messrs. Carpenter, Haverty and
Monello have agreed not to use or disclose any KCSI trade secret (as defined
in the Employment Agreements) after any termination of their employment and
shall, immediately upon termination of employment, return to KCSI or its
subsidiaries or affiliates any trade secrets in their possession which exist
in tangible form.
If there were a change in control of KCSI (as defined in the Employment
Agreements) during the term of the Employment Agreements, the officers'
employment, executive capacity, salary and benefits would be continued for a
three-year period at levels in effect on the control change date (as that
term is defined in the Employment Agreements). During the three-year period,
salary would be paid at a rate not less than twelve times the highest monthly
base salary paid or payable to the officers by KCSI in the twelve months
immediately prior to any change in control. During the three-year period,
the officers also would be eligible to participate in all benefit plans made
generally available to executives of their level or to the employees of KCSI
generally, would be eligible to participate in any KCSI incentive
compensation plan and would be entitled to immediately exercise all
outstanding stock options and receive a lump-sum cash payment equal to the
fair market value of all non-vested options. If the amounts payable during
this three-year period were discretionary, the benefits continued would not
be less than the average annual amount for the three years prior to the
change in control and incentive compensation would not be less than 75% of
the maximum amount which could have been paid to the officers under the terms
of the incentive compensation plan. With respect to unfunded employer
obligations under benefit plans, the officers would be entitled to a
discounted cash payment of amounts to which they would be entitled. The
officers' employment may be terminated after the control change date, but
where it were other than "for cause" (as defined in the Employment
Agreements) they would be entitled to payment of their base salary through
termination plus a discounted cash severance payment equal to 175 percent for
Mr. Carpenter and 167 percent for Messrs. Haverty and Monello of three times
their annual base salaries, continuation or payment of benefits for a three-
year period at levels in effect on the control change date and certain
health, prescription and dental benefits for the remainder of their lives
unless such benefits are otherwise provided by a subsequent employer. The
officers are also permitted to resign employment after a change in control
upon "good reason" (as that term is defined in the Employment Agreements) and
advance written notice, and to receive the same payments and benefits as if
their employment had been terminated. The Employment Agreements also provide
for payments to such officers necessary to relieve them of certain adverse
federal income tax consequences if amounts received under the Agreements were
determined to involve "parachute payments" under Section 4999 of the Internal
Revenue Code.
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 per share
price equal to fifteen times the defined after-tax earnings per share of
Janus Capital Corporation for the year ended immediately prior to the date of
notice, or, a price per share equal to fifteen times the after-tax earnings
per share of Janus Capital Corporation for the year ended December 31, 1987,
whichever is greater. 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. An assignment of that agreement to Stilwell will
become effective upon approval by the KCSI Board of Directors of the
distribution of Stilwell common stock to KCSI shareholders and the fixing of
a record date and distribution date by the Board of Directors. KCSI will
remain obligated under such agreement in the event Stilwell fails to perform
any obligation thereunder; however, Stilwell has agreed to indemnify KCSI
with respect to all matters arising out of or relating to such agreement.
Upon the effective date of the assignment of such agreement, the change in
ownership provision discussed above will refer to a change in ownership of
Stilwell.
INDEMNIFICATION AGREEMENTS
In 1987 and at subsequent times, 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 were denied or not received
within periods provided in the Agreement. Indemnification and advancement of
expenses would also be 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.
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 the Board of
Directors' 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
Plan, the Indemnification Agreements, Stock Option Plans, 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, 2000.
KCSR has established similar trusts relating to its 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 KCSR trust are tied to failures
by the respective companies to honor their obligations to their respective
Beneficiaries following a change in control of KCSI.
OTHER COMPENSATORY PLANS
- ------------------------
KCSI and its subsidiaries maintain compensation plans for certain of
their officers and employees. Certain of those plans have vesting provisions
under which the plan participants do not have the right to receive all of the
plan benefits allocated to their accounts until certain conditions have been
satisfied. Described below are the portions of those plans in which the
accounts of the officers named in the Summary Compensation Table become
vested as a result of (a) their retirement from or termination of employment
with KCSI or (b) a change in control of KCSI, where the value of the unvested
portion of the account was more than $100,000 on December 31, 1999.
THE EMPLOYEE STOCK OWNERSHIP PLAN
The Employee Stock Ownership Plan (the "ESOP") is designed to be a
qualified employee stock ownership plan under the Internal Revenue Code of
1986, as amended (the "Code"), for purposes of investing primarily in shares
of KCSI Common Stock. Employees of KCSI and certain of its subsidiaries,
including Janus Capital Corporation, have participated historically in the
KCSI ESOP. As of October 1, 1999, in anticipation of the Separation, the
KCSI ESOP was divided between the KCSI ESOP and the Stilwell ESOP. Until the
Separation, both ESOPs will hold only shares of KCSI Common Stock and cash.
Allocations of KCSI shares, if any, to participant accounts in the KCSI ESOP
and the Stilwell ESOP with respect to any plan year are based upon each
participant's proportionate share of the total eligible compensation paid
during the plan year to all participants in the respective ESOP, subject to
Code-prescribed maximum allocation limitations. As of the date of this Proxy
Statement, all shares held by the KCSI ESOP and the Stilwell ESOP have been
allocated to participants' accounts. 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 or the
Stilwell ESOP.
A participant with less than five years of service is not vested in the
respective ESOP'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 at his or her retirement, death
or disability or upon a change of control of the Company (as defined in each
of the ESOPs). Distributions of benefits under the respective ESOPs may be
made in connection with a participant's death, disability, retirement or
other termination of employment. A participant in the KCSI ESOP or the
Stilwell ESOP 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.
1991 AMENDED AND RESTATED STOCK OPTION AND PERFORMANCE AWARD PLAN
Under the provisions of the 1991 Plan and subject to the terms of the
pertinent Award agreement, the retirement, death or disability (as such terms
are defined in the 1991 Plan) of a Grantee of an Award or a change of control
of KCSI (as defined in the 1991 Plan) may accelerate the exercisability of an
Award as follows. Upon the death or disability of a Grantee of an Award
under the 1991 Plan, the unexercisable options become exercisable and the
Grantee (or his or her personal representative or transferee under a will or
the laws of descent and distribution) may exercise such options up to the
earlier of the expiration of the option term or 12 months. Upon the
retirement of a Grantee of an Award under the 1991 Plan, the unexercisable
options become exercisable and the Grantee (or his or her personal
representative or transferee under a will or the laws of descent and
distribution) may exercise such options up to the earlier of the expiration
of the option term or five years from the date of retirement. Upon a change
of control of KCSI (as defined in the 1991 Plan), the unexercisable options
become immediately exercisable. LSAR's are granted in tandem with options.
All of the LSAR's are automatically exercised upon a change in control that
is not approved by the incumbent board of KCSI (as such terms are defined in
the 1991 Plan).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTION
- ---------------------------------------------
During 1999, KCSI retained the law firm of Manatt, Phelps & Phillips to
provide legal services in connection with its transportation operations in
Mexico. Mr. Jones, a director of KCSI, acts as Special Counsel to Manatt,
Phelps & Phillips and receives a salary from such law firm for his services
as Special Counsel. The fees paid by KCSI to such law firm did not exceed 5%
of the law firm's gross revenues for that firm's last full fiscal year.
<PAGE>
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.
If a holder of KCSI Common Stock wishes to present a proposal for
inclusion in KCSI's Proxy Statement for next year's annual meeting of
stockholders, such proposal must be received by KCSI on or before November
26, 2000. Such proposal must be made in accordance with the applicable laws
and rules of the Securities and Exchange Commission and the interpretations
thereof as well as KCSI's Bylaws. Any such proposal should be sent to the
Corporate Secretary of KCSI at 114 West 11th Street, Kansas City, Missouri
64105-1804.
As described below, in order for a stockholder proposal that is not
included in KCSI's Proxy Statement for next year's annual meeting of
stockholders to be properly brought before the meeting, such proposal must be
delivered to the Corporate Secretary and received at KCSI's executive offices
no earlier than January 31, 2001 and no later than March 17, 2001 (assuming a
meeting date of May 1, 2001) and such proposal must also comply with the
procedures outlined below, which are set forth in KCSI's Bylaws. The
determination that any such proposal has been properly brought before such
meeting is made by the officer presiding over such meeting.
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 KCSI 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 KCSI 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 KCSI, 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 KCSI 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires KCSI's directors, executive officers and certain other officers, and
persons, legal or natural, who own more than 10 percent of KCSI's Common
Stock or Preferred Stock (collectively "Reporting Persons"), to file reports
of their ownership of such stock, and the changes therein, with the
Securities and Exchange Commission, the New York Stock Exchange and KCSI (the
"Section 16 Reports"). Based solely on a review of the Section 16 reports
for 1999 and any amendments thereto furnished to KCSI and written
representations from certain of the Reporting Persons, all Section 16 Reports
were timely filed by the Reporting Persons.
<PAGE>
OTHER MATTERS
The Board of Directors knows 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; provided, however, that in the event the Annual Meeting is 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, such notice must be 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,
which first occurs. 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 judgment.
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 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/ Richard P. Bruening
Richard P. Bruening
Vice President, General Counsel
and Corporate Secretary
Kansas City, Missouri
May 8, 2000
KCSI's Annual Report includes KCSI's Annual Report on Form 10-K for the
year ended December 31, 1999 (without exhibits) as filed with the Securities
and Exchange Commission (the "SEC"). KCSI will furnish without charge upon
written request a copy of KCSI's Annual Report on Form 10-K. The Annual
Report on Form 10-K includes a list of all exhibits thereto. KCSI will
furnish copies of such exhibits upon written request therefor and payment of
KCSI's reasonable expenses in furnishing such exhibits. Each such request
must set forth a good faith representation that, as of the Record Date, the
person making such request was a beneficial owner of Voting Stock entitled to
vote at the Annual Meeting. Such written request should be directed to the
Corporate Secretary of KCSI, 114 West 11th Street, Kansas City, Missouri
64105-1804. The Annual Report on Form 10-K for the year ended December 31,
1999 with exhibits, as well as other filings by KCSI with the SEC, are also
available through the SEC's Internet site at www.sec.gov.
<PAGE>
APPENDIX A
GRAPHIC AND IMAGE MATERIAL
IN
PROXY STATEMENT
In accordance with Rule 304 of Regulation S-T, the following graphic and
image material is included in the KCSI proxy statement.
PHOTOGRAPHS OF EACH DIRECTOR
- ----------------------------
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 "PROPOSAL (1) -
ELECTION OF TWO DIRECTORS" and "THE BOARD OF 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
KANSAS CITY SOUTHERN INDUSTRIES, INC.
114 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105-1804
May 8, 2000
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Kansas City Southern Industries, Inc., at the Kansas City Marriott
Downtown Hotel, 200 West Twelfth Street, Kansas City, Missouri, at 10:00
a.m., on June 15, 2000. 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 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
ATTACHED PROXY CARD IN THE ENVELOPE PROVIDED TO ASSURE THAT YOUR SHARES WILL
BE REPRESENTED.
Sincerely,
/s/ Landon H. Rowland
Landon H. Rowland
Chairman of the Board, President and
Chief Executive Officer
PLEASE SEE REVERSE SIDE FOR PROPOSALS TO BE VOTED
(Date, sign and return promptly in the prepaid envelope enclosed)
(TEAR HERE)
<PAGE>
KANSAS CITY SOUTHERN INDUSTRIES, INC. PROXY
This proxy confers discretionary authority as described and may be
revoked in the manner described in the Proxy Statement dated May 8, 2000,
receipt of which is hereby acknowledged.
Signature Date , 2000
-------------------------------- ------------
Signature Date , 2000
-------------------------------- ------------
Please sign exactly as name(s) appear. All joint owners should
sign. Executors, administrators, trustees, guardians, attorneys-
in-fact, and officers of corporate stockholders should indicate
the capacity in which they are signing. Please indicate whether
you plan to attend the Annual Meeting:
[ ] WILL ATTEND [ ] WILL NOT ATTEND
(CONTINUED ON OTHER SIDE)
<PAGE>
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
(TEAR HERE)
KANSAS CITY SOUTHERN INDUSTRIES, INC. PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. Landon H. Rowland,
James E. Barnes and Michael R. Haverty, 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 be voted by the
stockholder(s) signing this proxy at the Annual Meeting of Stockholders to be
held on June 15, 2000, or any adjournment thereof as specified herein 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.
1. Election of two directors. Nominees: Michael G. Fitt and Michael R.
Haverty
[ ] FOR all nominees EXCEPT THOSE INDICATED BELOW:
------------------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for all nominees.
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 ABOVE, IN THE PROXY HOLDERS' DISCRETION, TO
ELECT THE MAXIMUM NUMBER OF MANAGEMENT NOMINEES.
2. Ratification of the Board of Directors' selection of
PricewaterhouseCoopers LLP as KCSI's independent accountants for 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
114 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105-1804
May 8, 2000
Dear KCSI ESOP Participant:
Enclosed is your voting instruction card in connection with the Annual
Meeting of Stockholders of KCSI to be held on June 15, 2000, which instructs
UMB Bank, N.A. as Trustee of the Employee Stock Ownership Plan of Kansas City
Southern Industries, Inc. (the "KCSI ESOP") how to vote the shares of KCSI
common stock allocated to your account in the KCSI ESOP.
Please DO NOT DELIVER THIS CARD TO THE COMPANY, as your vote is
confidential. Your card should be returned directly to the Trustee, UMB
Bank, N.A., Securities Transfer Division, P.O. Box 410064, Kansas City,
Missouri 64179-0013, in the enclosed postage-paid return envelope at your
earliest convenience.
Thank you,
/s/ Richard P. Bruening
Richard P. Bruening
Vice President, General Counsel &
Corporate Secretary
PLEASE SEE REVERSE SIDE FOR PROPOSALS TO BE VOTED
(Date, sign and return promptly in the prepaid envelope enclosed)
(TEAR HERE)
<PAGE>
CONFIDENTIAL VOTING INSTRUCTIONS TO UMB BANK, N.A. AS TRUSTEE
UNDER THE EMPLOYEE STOCK OWNERSHIP PLAN OF
KANSAS CITY SOUTHERN INDUSTRIES, INC.
Signature Date , 2000
----------------------------- -----------
PLEASE SIGN EXACTLY AS NAME APPEARS.
(CONTINUED ON OTHER SIDE)
<PAGE>
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
(TEAR HERE)
THIS VOTING INSTRUCTION CARD IS SOLICITED BY THE TRUSTEE. I hereby direct
that the voting rights pertaining to shares of stock of Kansas City Southern
Industries, Inc. held by the Trustee and allocated to my account shall be
exercised at the Annual Meeting of Stockholders to be held on June 15, 2000,
or any adjournment thereof, as specified hereon and in its discretion on all
other matters that are properly brought before the Annual Meeting and matters
incidental to such meeting.
1. Election of two directors. Nominees: Michael G. Fitt and Michael R.
Haverty
[ ] FOR all nominees EXCEPT THOSE INDICATED BELOW:
------------------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for all nominees.
2. Ratification of the Board of Directors' selection of
PricewaterhouseCoopers LLP as KCSI's independent accountants for 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IF THE VOTING INSTRUCTION CARD IS NOT RETURNED, THE TRUSTEE MUST VOTE
SUCH SHARES IN THE SAME PROPORTIONS AS THE SHARES FOR WHICH VOTING
INSTRUCTION CARDS WERE RECEIVED FROM THE PLAN PARTICIPANTS.
<PAGE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
114 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105-1804
May 8, 2000
Dear Stilwell ESOP Participant:
Enclosed is your voting instruction card in connection with the Annual
Meeting of Stockholders of KCSI to be held on June 15, 2000, which instructs
UMB Bank, N.A. as Trustee of the Employee Stock Ownership Plan of Stilwell
Financial, Inc. (the "Stilwell ESOP") how to vote the shares of KCSI common
stock allocated to your account in the Stilwell ESOP.
Please DO NOT DELIVER THIS CARD TO THE COMPANY, as your vote is
confidential. Your card should be returned directly to the Trustee, UMB
Bank, N.A., Securities Transfer Division, P.O. Box 410064, Kansas City,
Missouri 64179-0013, in the enclosed postage-paid return envelope at your
earliest convenience.
Thank you,
/s/ Richard P. Bruening
Richard P. Bruening
Vice President, General Counsel &
Corporate Secretary
PLEASE SEE REVERSE SIDE FOR PROPOSALS TO BE VOTED
(Date, sign and return promptly in the prepaid envelope enclosed)
(TEAR HERE)
<PAGE>
CONFIDENTIAL VOTING INSTRUCTIONS TO UMB BANK, N.A. AS TRUSTEE
UNDER THE EMPLOYEE STOCK OWNERSHIP PLAN OF
STILWELL FINANCIAL, INC.
Signature Date , 2000
----------------------------- -----------
PLEASE SIGN EXACTLY AS NAME APPEARS.
(CONTINUED ON OTHER SIDE)
<PAGE>
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
(TEAR HERE)
THIS VOTING INSTRUCTION CARD IS SOLICITED BY THE TRUSTEE. I hereby direct
that the voting rights pertaining to shares of stock of Kansas City Southern
Industries, Inc. held by the Trustee and allocated to my account shall be
exercised at the Annual Meeting of Stockholders to be held on June 15, 2000,
or any adjournment thereof, as specified hereon and in its discretion on all
other matters that are properly brought before the Annual Meeting and matters
incidental to such meeting.
1. Election of two directors. Nominees: Michael G. Fitt and Michael R.
Haverty
[ ] FOR all nominees EXCEPT THOSE INDICATED BELOW:
------------------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for all nominees.
2. Ratification of the Board of Directors' selection of
PricewaterhouseCoopers LLP as KCSI's independent accountants for 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IF THE VOTING INSTRUCTION CARD IS NOT RETURNED, THE TRUSTEE MUST VOTE
SUCH SHARES IN THE SAME PROPORTIONS AS THE SHARES FOR WHICH VOTING
INSTRUCTION CARDS WERE RECEIVED FROM THE PLAN PARTICIPANTS.
<PAGE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
114 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105-1804
May 8, 2000
Dear DST ESOP Participant:
Enclosed is your voting instruction card in connection with the Annual
Meeting of Stockholders of KCSI to be held on June 15, 2000, which instructs
UMB Bank, N.A. as Trustee of the Employee Stock Ownership Plan of DST
Systems, Inc. (the "DST ESOP") how to vote the shares of KCSI common stock
allocated to your account in the DST ESOP.
Please DO NOT DELIVER THIS CARD TO THE COMPANY, as your vote is
confidential. Your card should be returned directly to the Trustee, UMB
Bank, N.A., Securities Transfer Division, P.O. Box 410064, Kansas City,
Missouri 64179-0013, in the enclosed postage-paid return envelope at your
earliest convenience.
Thank you,
/s/ Richard P. Bruening
Richard P. Bruening
Vice President, General Counsel &
Corporate Secretary
PLEASE SEE REVERSE SIDE FOR PROPOSALS TO BE VOTED
(Date, sign and return promptly in the prepaid envelope enclosed)
(TEAR HERE)
<PAGE>
CONFIDENTIAL VOTING INSTRUCTIONS TO UMB BANK, N.A. AS TRUSTEE
UNDER THE EMPLOYEE STOCK OWNERSHIP PLAN OF
DST SYSTEMS, INC.
Signature Date , 2000
----------------------------- -----------
PLEASE SIGN EXACTLY AS NAME APPEARS.
(CONTINUED ON OTHER SIDE)
<PAGE>
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
(TEAR HERE)
THIS VOTING INSTRUCTION CARD IS SOLICITED BY THE TRUSTEE. I hereby direct
that the voting rights pertaining to shares of stock of Kansas City Southern
Industries, Inc. held by the Trustee and allocated to my account shall be
exercised at the Annual Meeting of Stockholders to be held on June 15, 2000,
or any adjournment thereof, as specified hereon and in its discretion on all
other matters that are properly brought before the Annual Meeting and matters
incidental to such meeting.
1. Election of two directors. Nominees: Michael G. Fitt and Michael R.
Haverty
[ ] FOR all nominees EXCEPT THOSE INDICATED BELOW:
------------------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for all nominees.
2. Ratification of the Board of Directors' selection of
PricewaterhouseCoopers LLP as KCSI's independent accountants for 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IF THE VOTING INSTRUCTION CARD IS NOT RETURNED, THE TRUSTEE MUST VOTE
SUCH SHARES IN THE SAME PROPORTIONS AS THE SHARES FOR WHICH VOTING
INSTRUCTION CARDS WERE RECEIVED FROM THE PLAN PARTICIPANTS.
<PAGE>
KANSAS CITY SOUTHERN INDUSTRIES, INC.
114 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105-1804
May 8, 2000
Dear KCSI Profit Sharing Plan Participant With Rollover Account Containing
KCSI Shares:
Enclosed is your voting instruction card in connection with the Annual
Meeting of Stockholders of KCSI to be held on June 15, 2000, which instructs
UMB Bank, N.A. as Trustee of the KCSI Profit Sharing Plan, how to vote the
shares of KCSI common stock allocated to your profit sharing plan account as
a rollover contribution.
Please DO NOT DELIVER THIS CARD TO THE COMPANY, as your vote is
confidential. Your card should be returned directly to the Trustee, UMB
Bank, N.A., Securities Transfer Division, P.O. Box 410064, Kansas City,
Missouri 64179-0013, in the enclosed postage-paid return envelope at your
earliest convenience.
Thank you,
/s/ Richard P. Bruening
Richard P. Bruening
Vice President, General Counsel &
Corporate Secretary
PLEASE SEE REVERSE SIDE FOR PROPOSALS TO BE VOTED
(Date, sign and return promptly in the prepaid envelope enclosed)
(TEAR HERE)
<PAGE>
CONFIDENTIAL VOTING INSTRUCTIONS TO UMB BANK, N.A.
AS TRUSTEE UNDER THE KANSAS CITY SOUTHERN INDUSTRIES, INC.
PROFIT SHARING PLAN
Signature Date , 2000
----------------------------- -----------
PLEASE SIGN EXACTLY AS NAME APPEARS.
(CONTINUED ON OTHER SIDE)
<PAGE>
(CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)
(TEAR HERE)
THIS VOTING INSTRUCTION CARD IS SOLICITED BY THE TRUSTEE. I hereby direct
that the voting rights pertaining to shares of stock of Kansas City Southern
Industries, Inc. held by the Trustee and allocated to my account shall be
exercised at the Annual Meeting of Stockholders to be held on June 15, 2000,
or any adjournment thereof, as specified hereon and in its discretion on all
other matters that are properly brought before the Annual Meeting and matters
incidental to such meeting.
1. Election of two directors. Nominees: Michael G. Fitt and Michael R.
Haverty
[ ] FOR all nominees EXCEPT THOSE INDICATED BELOW:
------------------------------------------------------
[ ] WITHHOLD AUTHORITY to vote for all nominees.
2. Ratification of the Board of Directors' selection of
PricewaterhouseCoopers LLP as KCSI's independent accountants for 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IF THE VOTING INSTRUCTION CARD IS NOT RETURNED, THE TRUSTEE MUST VOTE
SUCH SHARES IN THE SAME PROPORTIONS AS THE SHARES FOR WHICH VOTING
INSTRUCTION CARDS WERE RECEIVED FROM THE PLAN PARTICIPANTS.
