<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
WESTERN RESOURCES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
MERRILL CORPORATION
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
/ / Filing fee paid with preliminary filing
<PAGE>
[LOGO]
March 29, 1995
Dear Shareholder:
I am pleased to present to you this year's Notice of Annual Meeting and
Proxy Statement, detailed on the following pages. I want to extend my thanks for
your continued interest in the Company and urge you to participate through your
vote.
Please read the material in this Proxy Statement carefully before voting. It
is important that your shares be represented at the meeting whether or not you
are able to attend. By promptly filling out and returning the enclosed proxy,
you will ensure that your votes are counted. Your cooperation is appreciated.
Sincerely,
/s/ JOHN E. HAYES, JR.
JOHN E. HAYES, JR.
CHAIRMAN OF THE BOARD,
PRESIDENT, AND CHIEF EXECUTIVE
OFFICER
<PAGE>
WESTERN RESOURCES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 2, 1995
You are invited, as a shareholder of Western Resources, Inc. (the Company),
to be present either in person or by proxy at the Annual Shareholders' Meeting,
which will be held in the Maner Conference Centre (Kansas Expocentre) located at
the southeast corner of Seventeenth and Western, Topeka, Kansas, on Tuesday, May
2, 1995, commencing at eleven o'clock in the morning for the following purposes:
1. To elect four (4) directors to Class II of the Company's Board of
Directors to serve a term of three years;
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on March 14, 1995, will be
entitled to vote at the meeting, or at any adjournment thereof.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. WE URGE YOU
TO EXERCISE YOUR RIGHT TO VOTE BY PROMPTLY MARKING, DATING, SIGNING AND
RETURNING THE ENCLOSED PROXY CARD. NO POSTAGE IS NECESSARY IF MAILED IN THE
UNITED STATES. THE PROMPT RETURN OF YOUR PROXY WILL SAVE THE COMPANY THE
ADDITIONAL EXPENSE OF FURTHER REQUESTS TO ENSURE THE PRESENCE OF A QUORUM.
By Order of the Board of Directors,
/s/ Richard D. Terrill
Richard D. Terrill
SECRETARY
Topeka, Kansas
March 29, 1995
<PAGE>
PROXY STATEMENT
GENERAL INFORMATION
<TABLE>
<CAPTION>
MAILING ADDRESS OF PRINCIPAL APPROXIMATE MAILING DATE
EXECUTIVE OFFICES OF THE COMPANY OF PROXY MATERIAL
-------------------------------- ------------------------
<S> <C>
818 Kansas Avenue March 29, 1995
Topeka, Kansas 66612
</TABLE>
The enclosed proxy is solicited by the Board of Directors of the Company for
use at the Annual Meeting of Shareholders to be held on Tuesday, May 2, 1995, or
any adjournment thereof, for the purposes set forth in the above notice of
meeting. Proxies are revocable at any time before voted. Such right of
revocation is not limited or subject to compliance with any formal procedure.
The cost of the solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited personally, or by
telephone or electronic media by regular employees of the Company. The Company
has engaged the services of D. F. King & Co. Inc., a proxy solicitation firm, to
aid in the solicitation of proxies for which the Company will pay an estimated
fee of approximately $8,500, plus reimbursement of reasonable out-of-pocket
expenses. In addition, the Company will reimburse brokers and other custodians,
nominees or fiduciaries for their expenses in forwarding proxy material to
security owners and obtaining their proxies.
Shareholders of record at the close of business on March 14, 1995, are
entitled to vote on matters to come before the meeting. On that date there were
outstanding and entitled to vote 61,760,853 shares of Common Stock, par value $5
per share; 138,576 shares of Preferred Stock, 4 1/2% Series, par value $100 per
share; 60,000 shares of Preferred Stock, 4 1/4% Series, par value $100 per
share; and 50,000 shares of Preferred Stock, 5% Series, par value $100 per
share.
CUMULATIVE VOTING RIGHTS
Each share of Common and Preferred Stock entitles the holder of record at
the close of business on the record date of the meeting to one vote. In voting
for the election of directors, cumulative voting is permitted and record holders
are entitled to as many votes as shall equal the number of shares of stock held,
multiplied by the number of directors to be elected. Such votes may be cast all
for a single candidate or the votes may be distributed among the candidates, as
the shareholder may see fit if present to vote in person, or as the proxyholder
elects, if voting by proxy. Any shares not voted (whether by abstention, broker
nonvote or otherwise) have no impact in the election of directors except to the
extent the failure to vote for an individual results in another individual
receiving a larger proportion of the total votes.
INSTRUCTIONS TO HOLDERS OF COMMON STOCK WHO ARE PARTICIPANTS IN THE
COMPANY'S AUTOMATIC DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN. All shares of
Common Stock credited to a shareholder's account in the Plan will be voted in
accordance with the specifications indicated on the form of proxy sent to the
shareholder if the form of proxy is returned in a timely manner.
1
<PAGE>
SHAREHOLDER PROPOSALS
The 1996 Annual Meeting of Shareholders is scheduled to be held on May 7,
1996. Specific proposals of shareholders intended to be presented at this
meeting must comply with the requirements of the Securities Exchange Act of
1934, the Company's Articles of Incorporation, as amended, and be received by
the Company's Corporate Secretary for inclusion in its 1996 proxy materials by
November 24, 1995. If the date of the Annual Meeting is changed by more than 30
days, shareholders will be advised promptly of such change and of the new date
for submission of proposals.
1. ELECTION OF DIRECTORS
The Board of Directors of the Company is divided into three classes (Class
I, Class II, and Class III). At each Annual Meeting of Shareholders, the
directors constituting one class are elected for a three-year term. The
Company's By-Laws provide for the classification of directors into three
classes, which shall be as nearly equal in number as possible, and no class
shall include fewer than two directors. In accordance with the Restated Articles
of Incorporation of the Company, the Board of Directors has set the number of
directors at thirteen.
Mr. David H. Hughes, Mr. John H. Robinson, Ms. Susan M. Stanton, and Mr.
Kenneth J. Wagnon have been nominated for election as directors at the Annual
Meeting of Shareholders as Class II directors. All nominees except Ms. Stanton
were elected by shareholders of the Company at the Annual Meeting of
Shareholders in 1992. Ms. Stanton was elected by the Board of Directors on March
15, 1995. Ms. Marjorie I. Setter, a director since 1992, has reached mandatory
retirement and, therefore, has not been nominated for re-election at this year's
Annual Meeting. The number of directors will decline to twelve upon Ms. Setter's
retirement on May 2, 1995.
Unless otherwise instructed, proxies received in response to this
solicitation will be voted in favor of the election of the persons nominated by
the Board of Directors and named in the following tabulation to be directors of
the Company until their successors are elected and qualify. While it is not
expected that any of the four nominees will be unable to qualify or accept
office, if for any reason one or more are unable to do so, the proxies will be
voted for substitute nominees selected by the Board of Directors of the Company.
The nominees for directors are as follows:
2
<PAGE>
NOMINEES (CLASS II)--TERM EXPIRING IN 1998
DIRECTOR (AGE), YEAR FIRST BECAME A DIRECTOR
DAVID H. HUGHES (66), 1988 [PHOTO 1]
Retired Vice Chairman (since January, 1991) Hallmark
Cards, Inc., Kansas City, Missouri; Director, Hall
Family Foundations; Director, Midwest Research
Institute; Director, Yellow Corporation; Trustee, St.
Luke's Hospital Foundation; Trustee, Children's Mercy
Hospital; Trustee, Princeton Theological Seminary;
Trustee, Linda Hall Library.
JOHN H. ROBINSON (68), 1991 [PHOTO 2]
Chairman Emeritus (since December, 1992) and prior to
that Chairman, Black & Veatch, Kansas City, Missouri;
Director, St. Luke's Hospital; Director, Automobile
Club of Missouri; Director, CompuSpeak Laboratories,
Inc.; Director, The Greater Kansas City Community
Foundation & Affiliated Trusts; Trustee, Midwest
Research Institute; Trustee, University of
Missouri-Kansas City.
SUSAN M. STANTON (46), 1995 [PHOTO 3]
President and Chief Operating Officer (since November,
1993) and prior to that Senior Vice President,
Merchandising and Marketing, Payless Cashways, Inc.,
Kansas City, Missouri; Director, Commerce Bank of
Kansas City; Director, Greater Kansas City Chamber of
Commerce; Trustee, Rockhurst College.
KENNETH J. WAGNON (56), 1987 [PHOTO 4]
President, Capital Enterprises, Inc., Wichita, Kansas;
Director, Fourth Financial Corporation; Director,
Tele-Matic Corporation; Director, Vanguard Airlines,
Inc.; Director, Cerebral Palsy Research Foundation;
Trustee, University of Kansas School of Business;
Trustee, The Kansas University Endowment Association.
3
<PAGE>
OTHER DIRECTORS
(CLASS III)--TERM EXPIRING IN 1996
DIRECTOR (AGE), YEAR FIRST BECAME A DIRECTOR
FRANK J. BECKER (59), 1992 [PHOTO 5]
President, Becker Investments, Inc., El Dorado, Kansas
(since January, 1993) and prior to that Personal
Investments; Director, Bank IV Butler County, N.A.;
Director, Great-West Life & Annuity Insurance Co.;
Trustee, The Kansas University Endowment Association.
GENE A. BUDIG (55), 1987 [PHOTO 6]
President, American League of Professional Baseball
Clubs, New York, New York (since July, 1994) and prior
to that Chancellor, University of Kansas; Director,
Harry S. Truman Library Institute; Director, Ewing
Marion Kauffman Foundation; Director, American College
Testing; Director, Major League Baseball Hall of Fame.
C. Q. CHANDLER (68), 1992 [PHOTO 7]
Chairman of the Board, INTRUST Financial Corporation,
Wichita, Kansas; Chairman of the Board, INTRUST Bank
N.A.; Director, Fidelity State Bank & Trust Co.;
Director, First Newton Bankshares; Chairman and
Director, Kansas Health Foundation.
THOMAS R. CLEVENGER (60), 1975 [PHOTO 8]
Investments, Wichita, Kansas (since August, 1990) and
prior to that President Fourth Financial Corporation;
Director, Fourth Financial Corporation; Director,
Security Benefit Life Insurance Company; Trustee and
Chairman, The Menninger Foundation; Trustee, Midwest
Research Institute.
4
<PAGE>
(CLASS I)--TERM EXPIRING IN 1997
DIRECTOR (AGE), YEAR FIRST BECAME A DIRECTOR
JOHN C. DICUS (61), 1990 [PHOTO 9]
Chairman of the Board and President, Capitol Federal
Savings and Loan Association, Topeka, Kansas; Director,
Security Benefit Life Insurance Company; Director,
Columbian National Title Company; Trustee, The
Menninger Foundation; Trustee, Stormont-Vail Regional
Medical Center; Trustee, The Kansas University
Endowment Association.
JOHN E. HAYES, JR. (57), 1989 [PHOTO 10]
Chairman of the Board, President, and Chief Executive
Officer of the Company; Director, Boatmen's Bancshares,
Inc.; Director, Security Benefit Life Insurance
Company; Director, CommNet Cellular, Inc.; Director,
Tele-Matic Corporation; Trustee, Rockhurst College;
Trustee, The Menninger Foundation; Trustee, Midwest
Research Institute.
RUSSELL W. MEYER, JR. (62), 1992 [PHOTO 11]
Chairman and Chief Executive Officer, Cessna Aircraft
Company, Wichita, Kansas; Director, Fourth Financial
Corporation; Board of Governors, United Way of America.
LOUIS W. SMITH (52), 1991 [PHOTO 12]
President, AlliedSignal Aerospace Company, Kansas City
Division, Kansas City, Missouri; Director, Commerce
Bank of Kansas City; Director, Ewing Marion Kauffman
Foundation; Director, Kansas City Royals Baseball Club;
Director, Midwest Research Institute; Trustee,
University of Missouri-Rolla; Trustee, Rockhurst
College.
5
<PAGE>
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
The Company knows of no beneficial owner of more than 5% of any class of the
Company's outstanding voting stock as of March 14, 1995.
The following information is furnished with respect to each of the four
director nominees, each of the eight other current directors and all current
directors and executive officers of the Company as a group as to ownership of
shares of Common Stock of the Company as of March 14, 1995.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP(1)
--------------------------
DIRECT INDIRECT
------------ ------------
<S> <C> <C>
Class I Directors:
John C. Dicus....................................................... 500 500(2)
John E. Hayes, Jr................................................... 15,209 2,448(3)
Russell W. Meyer, Jr................................................ 3,049(4)
Louis W. Smith...................................................... 400
Class II Directors:
David H. Hughes..................................................... 500
John H. Robinson.................................................... 1,000
Susan M. Stanton.................................................... 500
Kenneth J. Wagnon................................................... 2,202(4)
Class III Directors:
Frank J. Becker..................................................... 7,665 1,000(5)
Gene A. Budig....................................................... 439
C.Q. Chandler....................................................... 1,227(4)
Thomas R. Clevenger................................................. 1,400(4)
All directors and executive officers including the above.............. 40,857 17,581(3)
<FN>
---------
(1) Each individual owns less than .029% and the group owns approximately .09%
of the outstanding shares of Common Stock of the Company. No director or
executive officer owns any equity securities of the Company other than
Common Stock.
(2) Represents 500 shares held by Mr. Dicus' spouse, not subject to his voting
or investment power.
(3) Includes beneficially owned shares held in employee savings plans.
(4) Does not include stock held in trust by Fourth Financial Corporation of
which Mr. Clevenger, Mr. Meyer and Mr. Wagnon are directors and INTRUST
Financial Corporation of which Mr. Chandler is a director.
(5) Represents 1,000 shares held by the Connie A. Becker Trust of which Mr.
Becker is a co-trustee with voting and investment power.
</TABLE>
6
<PAGE>
Based solely on the Company's review of the copies of reports filed under
Section 16(a) of the Securities Exchange Act and written representations that no
other reports were required, the Company believes that, during the fiscal year
ended December 31, 1994, all filing requirements applicable to its executive
officers, directors, and owners of more than ten percent of the Company's Common
Stock were complied with.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
During 1994 the Board of Directors met eight times. Each director attended
at least 75% of the total number of Board and Committee meetings held while he
or she served as a director or member of the committee.
Members of the Board serve on the Audit and Finance, Human Resources,
Nominating and Corporate Public Policy Committees. The Audit and Finance
Committee is currently composed of Mr. Chandler, Chairman, Mr. Becker, Dr.
Budig, Mr. Clevenger and Mr. Robinson. This Committee reviews internal and
independent Company audits and strategic financial programs. It also recommends
the independent auditor for Board approval. The Committee held four meetings
during 1994.
The Human Resources Committee, currently composed of Mr. Dicus, Chairman,
Mr. Meyer, Mr. Robinson, Ms. Setter, Mr. Smith and Mr. Wagnon, reviews the
performance of corporate officers and changes in officer compensation and
Company benefits. The Committee held five meetings during 1994.
The Nominating Committee, currently composed of Mr. Hughes, Chairman, Dr.
Budig, Mr. Clevenger, Mr. Meyer, Mr. Smith and Mr. Wagnon, recommends nominees
for election to the Board, including nominees recommended by shareholders if
submitted in writing to the committee, in care of the Company. The Committee
held three meetings in 1994.
The Corporate Public Policy Committee is currently composed of Ms. Setter,
Chairman, Mr. Becker, Mr. Chandler, Mr. Dicus and Mr. Hughes. This Committee
reviews major strategic programs of the Company relating to community relations,
marketing, customer relations, corporate contributions and other public affairs
issues. The Committee held four meetings during 1994.
OUTSIDE DIRECTORS' COMPENSATION
Each director who is not also an employee of the Company receives $1,250 per
month in retainer fees. The fee paid for attendance at each Board meeting is
$850 and $500 for each meeting held by telephone conference. The fee paid for
attendance at each committee meeting other than the Audit and Finance Committee
is $750, unless the committee meeting is held on the same day as a regular Board
meeting, in which case the committee meeting attendance fee is $500. The fee
paid for attendance at each Audit and Finance Committee meeting is $850, unless
the committee meeting is held on the same day as a regular Board meeting, in
which case the committee meeting attendance fee is $600.
7
<PAGE>
Pursuant to the Company's Outside Directors' Deferred Compensation Plan (the
Plan), an outside director of the Company may elect to defer all, part, or none
of his or her retainer and/or meeting fees. The directors may choose one of the
following deferral options: cash deferral or phantom stock. Amounts deferred
under the cash deferral alternative are increased by an interest equivalent
compounded quarterly at a rate equal to the prime rate published in the Wall
Street Journal or a rate established by the Human Resources Committee annually
based upon the Company's long term cost of capital. Under the phantom stock
alternative, the director receives credit for "stock units" equivalent in value
to shares of the Company's Common Stock equal to the amount deferred. "Stock
units" will be credited to the director's account at the stock price as of the
close of business the day the deferred amount would have been paid. On each date
on which a dividend is paid on the Company's Common Stock, the director's
phantom stock account will be credited with additional units of phantom stock
based on the same price as stock purchased in the Company's Dividend
Reinvestment Plan. Deferred amounts distributed from a directors' cash deferral
option or phantom stock option are paid in the form of cash.
A director is not entitled to exercise voting rights with respect to units
held in his or her phantom stock account. The Plan is a voluntary participation
plan. The Plan is administered by the Human Resources Committee of the Board of
Directors of the Company or by such other committee as may be appointed by the
Board from time to time.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the named executive
officers for the last three completed fiscal years of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- ------------
NAME AND PRINCIPAL OTHER ANNUAL LTIP ALL OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION(2) PAYOUTS(3) COMPENSATION(4)
-------------------- ----- ------------ -------- ----------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
John E. Hayes, Jr. 1994 $ 436,667 $112,684 $ 12,990 $ 47,563 $ 5,151
Chairman of the 1993 $ 416,666 $85,000 $ 11,142 $ 60,039 $ 7,623
Board, President, 1992 $ 400,000 $50,000 $ 7,164 N.A. $ 7,543
and Chief
Executive Officer
William E. Brown 1994 $ 230,384 $50,163 $ 6,640 $ 22,339 $ 5,000
President and 1993 $ 205,000 $61,717 $ 5,190 $ 26,922 $ 6,832
Chief Executive 1992 $ 189,200 $18,584 $ 3,573 N.A. $ 6,103
Officer, KPL
Steven L. Kitchen 1994 $ 202,683 $45,359 $ 9,492 $ 20,299 $ 4,941
Executive Vice 1993 $ 181,375 $54,381 $ 6,968 $ 24,106 $ 6,050
President and 1992 $ 170,992 $16,903 $ 6,645 N.A. $ 5,517
Chief Financial
Officer
James S. Haines, 1994 $ 197,267 $44,755 $ 9,032 $ 14,305 $ 4,930
Jr. (5) 1993 $ 175,419 $52,896 $ 3,319 N.A. $ 5,936
Executive Vice 1992 $ 121,509 $15,876 $ 848 N.A. $ 6,763
President and
Chief
Administrative
Officer
Kent R. Brown (5) 1994 $ 177,883 $37,131 $ 5,865 N.A. $ 4,886
President and 1993 $ 171,502 $50,544 $ 2,363 N.A. $ 5,943
Chief Executive 1992 $ 123,757 $14,521 $ 235 N.A. $ 6,414
Officer, KG&E
<FN>
------------
(1) The amounts reported in this column represent payments under the Company's
Short Term Incentive Plan. Payments are made only if certain Company
financial and individual performance goals are achieved.
(2) The amounts reported in this column for 1994 represent dividend
equivalents received under the Long-Term Incentive Plan in the amount of
$7,885, $3,951, $3,510, $2,241 and $2,082, respectively; payments for the
benefit of each named executive officer for federal and state taxes
associated with personal benefits in the amount of $2,160, $1,094, $4,359,
$5,403 and $2,727, respectively; and interest (excess of the applicable
federal long-term interest rate) on deferred compensation for the year in
the amount of $2,945, $1,595, $1,623, $1,388 and $1,056. There was no
deferred compensation in 1992.
(3) The amounts reported in this column for 1994 represent the cash equivalent
for common stock issued pursuant to the Long-Term Incentive Program for
the 1992-1994 incentive period. Mr. Haines was not eligible for benefits
under the Long-Term Incentive Program prior to the 1992-1994 incentive
period and received a pro-rated benefit in 1994. Mr. Brown is not eligible
for benefits under the Program until the 1993-1995 incentive period.
(4) The amounts reported in this column for 1994 represent Company
contributions for each of the named individuals under the Company's 401(k)
savings plan, a defined contribution plan, in the amount of $4,500,
$4,500, $4,500, $4,500 and $4,500, respectively and premiums paid on term
life insurance policies in the amount of $651, $500, $441, $430 and $386,
respectively.
(5) Mr. Haines and Mr. Brown commenced their employment with the Company on
April 1, 1992, following the acquisition of Kansas Gas and Electric
Company.
</TABLE>
9
<PAGE>
LONG-TERM INCENTIVE PROGRAM
The following table provides information concerning awards made during the
last fiscal year under the Company's Long-Term Incentive Program.
LONG-TERM INCENTIVE PROGRAM--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF ESTIMATED FUTURE PAYOUTS
PERFORMANCE PERFORMANCE PERIOD -------------------------------------
NAME SHARES UNTIL PAYOUT THRESHOLD TARGET MAXIMUM
------------------------------------------ ------------- ------------------ ------------- --------- -----------
<S> <C> <C> <C> <C> <C>
John E. Hayes, Jr......................... 1,268 3 years 847 1,268 1,394
William E. Brown.......................... 677 3 years 452 677 744
Steven L. Kitchen......................... 595 3 years 397 595 654
James S. Haines, Jr....................... 579 3 years 386 579 636
Kent R. Brown............................. 515 3 years 344 515 566
</TABLE>
At the beginning of each three year incentive period, each Participant
selected by the Board of Directors is allocated performance shares equal in
value to 10% of his or her annual base compensation at the time of grant. Each
performance share is equal in value to one share of the Company's Common Stock.
Assuming attainment by the Company of certain established financial and
strategic goals, each participant will become entitled to receive a stock
distribution determined by multiplying the value of his or her performance
shares by the applicable distribution percentage determined by the Board of
Directors, not to exceed 110%. The distribution percentage is a weighted
average, 70% of which is based on achievement of the Company's financial goals
and 30% of which is based on the individual's achievement of the Company's
corporate strategic goals set for him or her. The financial goals under the plan
are based upon attainment of budgeted earnings per share goals and the
Committee's evaluation of the total return to shareholders as compared to the
following established indexes: the Standard & Poor's Utilities Stock Index,
Standard & Poor's Electric Companies Stock Index and the Dow Jones Utility Stock
Index. In determining whether the Company's individual strategic goals were met
under the Long-Term Incentive Program, the Committee considers the individual's
contribution toward meeting the Board approved budgeted financial plan,
compliance with capital financial plans, construction budgets, operation and
maintenance plans for the performance period and the individual's management
effectiveness. Based upon exceeding the financial goals and the relative
attainment of each individual's goals for the 1992-1994 incentive period, the
above named executive officers received 1,446; 679; 617; 435 and N.A.,
respectively, shares of Common Stock of the Company in exchange for the
applicable performance shares. These shares represented 102%, 100%, 101%, 101%
and N.A. of the original number of performance shares granted. Mr. Haines' award
was prorated to reflect his participation in the plan commencing in April, 1992.
Mr. Kent Brown is not eligible for distributions until 1995. Dividend
equivalents are paid on the performance shares from the date of grant.
10
<PAGE>
COMPENSATION PLANS
WESTERN RESOURCES, INC. RETIREMENT PLAN
The Company maintains a noncontributory defined benefit pension plan, the
Western Resources Inc. Retirement Plan (Retirement Plan), in which all executive
officers and substantially all employees of the Company participate. The
Retirement Plan provides an eligible employee with 35 years of service an annual
benefit equal to 42% of the employee's final average earnings, plus an
additional 14% of the amount final average earnings exceed the applicable
covered compensation. The benefit is payable for the employee's lifetime. The
above percentages are reduced if years of service are less than 35.
Final average earnings are the average of the employee's highest 60
consecutive months compensation during the last 120 months of service. (An
employee's earnings include amounts deducted from the employee's compensation
and contributed on his or her behalf to a 401(k) savings plan.) Earnings do not
include incentive compensation. Covered compensation is the career average of
the maximum Social Security wage base for the employee at age 65. Benefits under
the Retirement Plan are not offset by social security or other benefits.
The following table sets forth the estimated annual benefits payable upon
specified remuneration and years-of-service classifications based on age 65 as
of January 1, 1995. The amounts presented do not take into account any reduction
for joint and survivorship payments.
<TABLE>
<CAPTION>
ANNUAL PENSION FOR YEARS OF SERVICE INDICATED
AVERAGE --------------------------------------------------------------------
ANNUAL PAY 15 20 25 30 35
------------------------------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$50,000............................. $ 12,695 $ 16,926 $ 19,408 $ 21,890 $ 24,371
100,000............................ 26,945 35,926 41,408 46,890 52,371
150,000............................ 41,195(a) 54,926(a) 63,408(a) 71,890(a) 80,371(a)
200,000 (or greater)............... 41,195(a) 54,926(a) 63,408(a) 71,890(a) 80,371(a)
<FN>
---------
(a) Maximum allowed by current law.
</TABLE>
The years of service and annual accrued benefit pursuant to the Retirement
Plan as of January 1, 1995, for the persons named in the cash compensation table
are as follows: Mr. Hayes, 5 years and $20,340; Mr. W. Brown, 33 years and
$78,672; Mr. Kitchen, 31 years and $69,048; Mr. Haines, 15 years and $37,452;
Mr. K. Brown, 12 years and $31,668.
EXECUTIVE SALARY CONTINUATION PROGRAM
The Company maintains an Executive Salary Continuation Program for the
benefit of certain management employees, including executive officers, selected
by the Board's Human Resources Committee. The Plan provides a retirement benefit
at or after age 65, or upon disability prior to age 65,
11
<PAGE>
in an amount equal to 61.7% of final three-year average cash compensation,
reduced by existing Company pension benefits (but not social security benefits),
such amount to be paid to the employee or his designated beneficiaries for the
employee's life with a 15-year term certain. The percentage of final three-year
average compensation to be paid, before reduction for Company pension benefits,
is 50% for a 50-year old, increasing to 61.7% for a 65-year old. An employee
retiring at or after age 50, but before age 65, may receive a reduced benefit,
payable in the same form. The Program vests 10% per year after 5 years of
service until fully vested with 15 years of service or at age 65. Payments are
reduced by 5% per year if commenced prior to age 60, but no earlier than age 50.
The Program also pays a death benefit if death occurs before retirement, equal
to 50% (or the vested retirement benefit percentage, whichever is higher) of the
employee's previous 36 months average cash compensation to his beneficiary for
180 months following his death. All of the individuals listed in the
compensation table are covered by the Executive Salary Continuation Program.
Based upon current three-year average compensation, reduced by the estimated
projected pension benefit (but not social security benefits), the named
individuals, except Mr. Hayes, would receive an annual benefit of $73,345;
$61,167; $54,167 and $53,193, respectively, under the Program, assuming
retirement at age 65.
In accordance with a Salary Continuation Agreement between Mr. Hayes and the
Company, Mr. Hayes will receive a retirement benefit equal to 60% of his average
annual compensation during the 36 months immediately preceding his retirement,
but reduced by existing Company pension benefits, if he has remained an employee
of the Company until age 61, or 61.7% at age 65, and then retires or terminates
his employment with the Company. Such retirement benefits shall be paid monthly,
for a period of 180 months or for life, whichever is greater. Based upon Mr.
Hayes' average annual compensation for the preceding 36 months, reduced by the
estimated projected pension benefit, Mr. Hayes would receive an annual benefit
of $269,514, assuming retirement at age 61 or $267,213 at age 65.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with its executive
officers to ensure their continued service and dedication to the Company and
their objectivity in considering on behalf of the Company any transaction which
would result in a change in control of the Company. Under the
agreements, during the twelve month period after a change in control, the
executive officer would be entitled to receive a lump-sum cash payment and
certain insurance benefits if such officer's employment were terminated by the
Company other than for cause or upon death, disability, or retirement; or by
such executive officer for good reason (as defined therein).
Upon such termination, the Company must make a lump-sum cash payment to the
executive officer, in addition to any other compensation to which the officer is
entitled, of (i) two (three in the case of executive officers who are members of
the President's Council) times such officer's base salary, (ii) two (three in
the case of executive officers who are members of the President's Council) times
the average of the bonuses paid to such executive officer for the last three
fiscal years, and (iii) the actuarial equivalent of the excess of the executive
officer's accrued pension benefits, computed as if the
12
<PAGE>
executive officer had two (three in the case of executive officers who are
members of the President's Council) additional years of benefit accrual service,
over the executive officer's vested accrued pension benefits. In addition, the
Company must offer health, disability and life insurance coverage to the
executive officer and his or her dependents on the same terms and conditions
that existed immediately prior to the termination for two (three in the case of
executive officers who are members of the President's Council) years, or, if
earlier, until such executive officer is covered by equivalent benefits.
HUMAN RESOURCES COMMITTEE REPORT
The Company's executive compensation programs are administered by the Human
Resources Committee of the Board of Directors (Committee), which is composed of
six non-employee directors. The Committee reviews and approves all issues
pertaining to executive compensation. The objective of the Company's three
compensation programs (base salary, short-term incentive, and long-term
incentive) is to provide compensation which enables the Company to attract,
motivate, and retain talented and dedicated executives, foster a team
orientation toward the achievement of business objectives, and directly link the
success of the Company's executives with that of the Company's shareholders.
The Company extends participation in its long and short-term incentive
programs to certain key employees in addition to executive officers based on the
potential to contribute to increasing shareholder value.
BASE SALARY COMPENSATION
A base salary range is established for each executive position to reflect
the potential contribution of each position to the achievement of the Company's
business objectives and to be competitive with the base salaries paid for
comparable positions in the national market by energy companies, with emphasis
on natural gas and electric utilities with annual total revenues comparable to
the Company. Some, but not all, of such Companies are included in the Standard
and Poor's Utilities Index. The Company utilizes industry information for
compensation purposes. Not all companies comprising such index participate in
making available such industry information. In addition, the Company considers
information of other companies with which the Committee believes it competes for
executives, and is therefore relevant, but is not part of such information. The
mid-point for each base salary range is intended to approximate the average base
salary for the relevant position in the national market. Industry surveys by
national industry associations are the primary source of this market
information. The Committee has also utilized the services of an independent
compensation consultant to provide national market data for executive positions
and to evaluate the appropriateness of the Company's executive compensation and
benefit programs. Due to the Company's current level of executive compensation,
the Committee does not believe it necessary to adopt a policy with respect to
Section 162(m) (which disallows the deduction of compensation in excess of
$1,000,000) of the Internal Revenue Code at this time.
13
<PAGE>
Within the established base salary ranges, actual base salary is determined
by the Company's financial performance in relation to attainment of budgeted
earnings per share goals and total returns to shareholders, and a subjective
assessment of each executive's achievement of individual objectives and
managerial effectiveness. The Chairman annually reviews the performance of
executive officers and makes compensation recommendations to the Committee. The
Committee annually reviews the performance of the Chairman. The Committee, after
consideration of the Chairman's recommendations, the financial performance of
the Company, and such other subjective factors as the Committee deems
appropriate for the period being reviewed, establishes the base compensation of
such officers.
In reviewing the annual achievement of each executive and setting the new
base annual salary levels for 1994, the Committee considered each individual's
contribution toward meeting the Board approved budgeted financial plan for the
previous year, total return to shareholders and earnings per share, compliance
with the Company's capital financial plan, the construction budget, and the
operation and maintenance budgets and the individual's management effectiveness.
ANNUAL INCENTIVE COMPENSATION
All executive officers are eligible for annual incentive compensation.
The primary form of short-term incentive compensation is the Company's
Short-Term Incentive
Plan for employees, selected by the Committee, including the executive officers
listed in the table, who have an opportunity to directly and substantially
contribute to the Company's achievement of short-term objectives. Short-term
incentives are structured so that potential compensation is comparable with
short-term compensation granted to comparable positions in the national market.
Short-term incentives are targeted to approximate the median in the national
market.
Mr. Hayes is eligible for an annual short-term incentive target of 35% of
base salary with a maximum of up to 42% of base salary. Other executive officers
are eligible for an annual short-term incentive target of 30% of base salary
with a maximum of up to 36% of base salary. 30% of the annual incentive is tied
to the attainment of individual goals and 20% is based on management skill. The
balance is based upon the Company's achievement of financial goals established
annually by the Committee.
Changes in annual incentive compensation to the named individuals in 1994
compared to 1993 resulted from an individual's relative attainment of his or her
goals, and the Company meeting its financial goals in 1993.
LONG-TERM INCENTIVES
Long-term incentive compensation is offered to employees who are in
positions which can affect the long-term success of the Company, through the
formation and execution of the Company's business strategies. The Long-Term
Incentive Program is the principal method for long-term incentive compensation,
and compensation thereunder takes the form of performance share grants. The
purposes of long-term incentive compensation are to: (1) focus key employees'
efforts on performance which will increase the value of the Company to its
shareholders; (2) align the interests of management
14
<PAGE>
with those of the shareholders; (3) provide a competitive long-term incentive
opportunity; and (4) provide a retention incentive for key employees. The
performance criteria used in the Long-Term Incentive Program measure the impact
of both team and individual performance on the financial performance of the
Company over time.
All executive officers are eligible for performance shares under the
Long-Term Incentive Plan. Under the Plan, the beginning of each incentive period
performance shares are added to each participant's account. The number of
performance shares equals the number of shares of common stock having a market
value at the date credited to each participant's account equal to 10% of the
participant's base annual compensation for the first year of the incentive
period. The level of performance shares, 10% of base annual compensation, is
established by the plan. Based upon an individual's and the Company's
performance the ultimate grant of shares by the Committee may not exceed 110% of
the performance shares for the relevant period. The Committee, in its judgment,
believes 10% of compensation is sufficient to align the interests of executive
officers with those of shareholders. Participants also receive cash equivalent
to dividends for comparable shares of common stock for each quarter of the three
year incentive period, whether or not the performance shares are ultimately
earned by the participant.
Participants earn shares of stock at the end of the incentive period based
on a formula that has two components. 30% of the long-term incentive is based on
the individual's performance in attainment of long range strategic goals,
objectives, and planned targets for the Company and the individual. 70% of the
long-term incentive is based on financial performance of the Company over the
three year incentive period. One-half of the financial component is based on
earnings per share as a percent of budgeted earnings per share and one-half is
based on the extent to which changes in the market price of the Company's common
stock equal or outperform national electric utility stock indexes selected from
time to time by the Committee. The Committee currently takes into consideration
the Standard & Poor's Electric Companies Stock Index, the Standard & Poor's
Utilities Stock Index, and the Dow Jones Utilities Average Index in order to
provide a broad base of information relative to Company performance.
CHIEF EXECUTIVE OFFICER
Mr. Hayes has been the Chief Executive Officer of the Company since October
1989. Mr. Hayes' base salary and his annual short-term incentive compensation
are established annually in January. In recommending the base salary to be
effective March 1, 1994, while not utilizing any specific performance formula
and without ranking the relative importance of each factor, the Committee took
into account relevant salary information in the national market and the
Committee's subjective evaluation of Mr. Hayes' overall management effectiveness
and achievement of individual goals. Factors considered included his continuing
leadership and contribution to strategic direction, management of change in an
increasingly competitive industry, control of operation and maintenance
expenses, management of unregulated operations, the overall profitability of the
Company, and increased Company productivity. As of March 1, 1994, Mr. Hayes'
base salary was increased 4.76% over 1993.
15
<PAGE>
With respect to Mr. Hayes' 1994 short-term incentive compensation, the
Committee took into account the above performance achievements, the Company's
relative achievement of its financial goal, and Mr. Hayes total compensation as
compared to the national market.
Mr. Hayes' long-term incentive compensation for 1994 represents the cash
equivalent of performance shares earned under the program. Based upon exceeding
the financial and individual goals for the 1992-1994 incentive period, Mr. Hayes
received 1,446 shares of the Company's common stock, representing 102% of the
performance shares granted in 1992.
Western Resources, Inc. Human
Resources
Committee
JOHN C. DICUS,
CHAIRMAN
JOHN H. ROBINSON
RUSSELL W. MEYER, JR.
MARJORIE I. SETTER
LOUIS W. SMITH
KENNETH J. WAGNON
16
<PAGE>
PERFORMANCE GRAPH
Shown below is a line-graph presentation comparing the Company's cumulative,
five-year total returns on an indexed basis* with the Standard & Poor's 500
Stock Index, Standard & Poor's Utilities Index and the Standard & Poor's
Electric Companies Index.
The Company has added the Standard & Poor's Electric Companies Index to the
performance graph and intends to delete the Standard & Poor's Utilities Index in
the future. The Company believes the Standard & Poor's Electric Companies Index
is a more accurate measure of performance relative to the Company.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHICS
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Western Resources 100 93 135 160 188 165
S&P 500 100 97 126 136 150 152
S&P Utilities 100 97 112 121 138 127
S&P Electric Companies 100 103 134 141 159 138
<FN>
*Assumes $100 invested on December 31, 1989. Total return assumes reinvestment
of dividends.
</TABLE>
2. OTHER BUSINESS
The Board of Directors does not know of any other matters to come before the
meeting. If, however, any other matters properly come before the meeting, it is
the intention of the persons named in the enclosed proxy to vote the same in
accordance with their judgment on such other matters.
17
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen & Co. has acted as the Company's independent auditors since
1958, and has been recommended by the Audit and Finance Committee, approved by
the Board of Directors and engaged by the Company as the Company's and its
wholly-owned subsidiaries' independent public accountants for 1995.
Representatives of Arthur Andersen & Co. will be in attendance at the
shareholders' meeting, will be available to respond to appropriate questions
from shareholders and will be permitted to make a statement at the meeting if
they desire to do so.
ANNUAL REPORT TO THE SHAREHOLDERS
The Annual Report of the Company for the year ended December 31, 1994, was
mailed to shareholders on March 9, 1995. The Report contains financial
statements audited by Arthur Andersen & Co., independent public accountants.
A total of 51,503,387 shares of Common Stock and Preferred Stock,
representing 83.2% of all shares outstanding, were represented at the 1994
Annual Meeting of Shareholders. Whether or not you expect to be present at the
1995 Annual Meeting, you are requested to date, sign, and return the enclosed
proxy card. Your prompt response will be much appreciated.
By Order of the Board of Directors,
/s/ Richard D. Terrill
Richard D. Terrill
SECRETARY
Topeka, Kansas
March 29, 1995
18
<PAGE>
WESTERN RESOURCES, INC.
SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING OF
SHAREHOLDERS OF WESTERN RESOURCES, INC.--MAY 2, 1995, AT 11:00 A.M., IN THE
MANER CONFERENCE CENTER (KANSAS EXPOCENTRE) LOCATED AT THE SOUTHEAST CORNER OF
SEVENTEENTH AND WESTERN, TOPEKA, KANSAS.
The undersigned hereby appoints John E. Hayes, Jr., John K. Rosenberg and
Richard D. Terrill and any one or more of them, attorneys and proxies, with full
power of substitution and revocation in each, for and on behalf of the
undersigned, and with all the powers the undersigned would possess if personally
present, to vote at the above Annual Meeting and any adjournment thereof all
shares of Common Stock of Western Resources, Inc. that the undersigned would be
entitled to vote at such meeting. The undersigned acknowledges receipt of the
Notice and Proxy Statement dated March 29, 1995.
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted FOR all proposals.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE PLEASE SIGN ON THE REVERSE SIDE AND
RETURN PROMPTLY
<PAGE>
Please mark your choices like this /x/
I
The Board of Directors recommends a vote FOR the proposals.
------------------------ ----------------------------
COMMON DIVIDEND REINVESTMENT
1. Election of the following nominees as Directors: David H. Hughes, John H.
Robinson, Susan M. Stanton and Kenneth J. Wagnon.
For all Nominees
/ /
Withheld for all Nominees
/ /
Withheld for the following only: (Write the name of the nominee(s) in the space
below)
--------------------------------------------------------------
WILL ATTEND
/ /
2. With discretionary power upon other matters properly coming before the
meeting.
Please check box if address change is noted on reverse side.
/ /
Please mark, date and sign as your name appears hereon and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by duly authorized officer. If shares are
held jointly each shareholder named should sign.
Signature(s)____________________________________
Date________________
<PAGE>
WESTERN RESOURCES, INC.
SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING OF
SHAREHOLDERS OF WESTERN RESOURCES, INC.--MAY 2, 1995, AT 11:00 A.M., IN THE
MANER CONFERENCE CENTER (KANSAS EXPOCENTRE) LOCATED AT THE SOUTHEAST CORNER OF
SEVENTEENTH AND WESTERN, TOPEKA, KANSAS.
The undersigned hereby appoints John E. Hayes, Jr., John K. Rosenberg and
Richard D. Terrill and any one or more of them, attorneys and proxies, with full
power of substitution and revocation in each, for and on behalf of the
undersigned, and with all the powers the undersigned would possess if personally
present, to vote at the above Annual Meeting and any adjournment thereof all
shares of Common Stock of Western Resources, Inc. that the undersigned would be
entitled to vote at such meeting. The undersigned acknowledges receipt of the
Notice and Proxy Statement dated March 29, 1995.
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted FOR all proposals.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE PLEASE SIGN ON THE REVERSE SIDE AND
RETURN PROMPTLY
<PAGE>
Please mark your choices like this /x/
II
The Board of Directors recommends a vote FOR the proposals.
--------------- ------------ ---------------
41/2% Preferred 5% Preferred 41/4% Preferred
1. Election of the following nominees as Directors: David H. Hughes, John H.
Robinson, Susan M. Stanton and Kenneth J. Wagnon.
For all Nominees
/ /
Withheld for all Nominees
/ /
Withheld for the following only: (Write the name of the nominee(s) in the space
below)
--------------------------------------------------------------
WILL ATTEND
/ /
2. With discretionary power upon other matters properly coming before the
meeting.
Please check box if address change is noted on reverse side.
/ /
Please mark, date and sign as your name appears hereon and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by duly authorized officer. If shares are
held jointly each shareholder named should sign.
Signature(s)___________________________________________
Date_______________
<PAGE>
WESTERN RESOURCES, INC.
SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING OF
SHAREHOLDERS OF WESTERN RESOURCES, INC.--MAY 2, 1995, AT 11:00 A.M., IN THE
MANER CONFERENCE CENTER (KANSAS EXPOCENTRE) LOCATED AT THE SOUTHEAST CORNER OF
SEVENTEENTH AND WESTERN, TOPEKA, KANSAS.
The undersigned hereby appoints John E. Hayes, Jr., John K. Rosenberg and
Richard D. Terrill and any one or more of them, attorneys and proxies, with full
power of substitution and revocation in each, for and on behalf of the
undersigned, and with all the powers the undersigned would possess if personally
present, to vote at the above Annual Meeting and any adjournment thereof all
shares of Common Stock of Western Resources, Inc. that the undersigned would be
entitled to vote at such meeting. The undersigned acknowledges receipt of the
Notice and Proxy Statement dated March 29, 1995.
The shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted FOR all proposals.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE PLEASE SIGN ON THE REVERSE SIDE AND
RETURN PROMPTLY
<PAGE>
Please mark your choices like this /x/
III
The Board of Directors recommends a vote FOR the proposals.
------------------------------------
COMMON
1. Election of the following nominees as Directors: David H. Hughes, John H.
Robinson, Susan M. Stanton and Kenneth J. Wagnon.
For all Nominees
/ /
Withheld for all Nominees
/ /
Withheld for the following only: (Write the name of the nominee(s) in the space
below)
--------------------------------------------------------------
WILL ATTEND
/ /
2. With discretionary power upon other matters properly coming before the
meeting.
Please check box if address change is noted on reverse side.
/ /
Please mark, date and sign as your name appears hereon and return in the
enclosed envelope. If acting as executor, administrator, trustee, guardian,
etc., you should so indicate when signing. If the signer is a corporation,
please sign the full corporate name, by duly authorized officer. If shares are
held jointly each shareholder named should sign.
Signature(s)___________________________________
Date________________
