<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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
UTILICORP UNITED INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
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(2) Aggregate number of securities to which transaction applies:
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(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
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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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(4) Date Filed:
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<PAGE>
<TABLE>
<S> <C>
March 18, 1999 [LOGO]
</TABLE>
To Our Shareholders:
You are cordially invited to the UtiliCorp United Inc. Annual Meeting of
Shareholders. The annual meeting will be held at 2:00 p.m., on Wednesday, May 5,
1999, at the Kansas City Marriott Downtown, 12(th) and Wyandotte, Kansas City,
Missouri. The shares eligible to vote at this meeting were determined on the
record date of March 9, 1999 and reflect the shares before our 3 for 2 stock
split, which was payable March 12, 1999.
The formal notice of meeting, follows on the next page. In addition to the
formal business of the meeting, we will also discuss UtiliCorp's 1998
performance and answer your questions. Enclosed with this proxy statement are
your proxy card and UtiliCorp's 1998 Annual Report.
This year, we have added two new ways to vote your shares. You may vote over
the telephone using a toll-free number or, if you have Internet access, you may
vote on-line. Please see the voting procedures on page 1 for details. Of course,
you may still choose to return your proxy card using the enclosed, postage-paid
envelope.
If you plan to attend the meeting, please check the appropriate box on your
proxy card. No admission card is necessary.
We will be providing light refreshments prior to the meeting, beginning at
1:00 p.m. Please take this opportunity to visit with our management and
employees.
I also wanted to let you know that we recently updated our Investor
Relations site on the World Wide Web (http://www.utilicorp.com) to provide
shareholders and other interested parties with ready access to information about
UtiliCorp. Following the annual meeting we will have a transcript of the meeting
available for your review on our web site. YOUR VOTE IS IMPORTANT. WE ENCOURAGE
YOU TO READ THIS PROXY STATEMENT AND TO VOTE YOUR SHARES EITHER BY PHONE, VIA
THE INTERNET OR BY RETURNING YOUR SIGNED PROXY CARD AS SOON AS POSSIBLE, SO THAT
YOUR SHARES WILL BE REPRESENTED AT THE MEETING.
Sincerely,
/s/ Richard C. Green Jr.
Richard C. Green, Jr.
Chairman of the Board and Chief Executive Officer
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS................................................................... 1
VOTING PROCEDURES.......................................................................................... 2
Revoking Your Proxy...................................................................................... 2
Number of Shares Outstanding............................................................................. 2
Vote Required............................................................................................ 2
Certification of Vote.................................................................................... 2
DIRECTOR INFORMATION....................................................................................... 3
Biographies.............................................................................................. 3
Meetings of the Board and Committees of the Board........................................................ 5
Director Compensation.................................................................................... 5
STOCK OWNERSHIP INFORMATION................................................................................ 6
Compliance with Section 16(a) Reporting.................................................................. 6
Stock Ownership Guidelines............................................................................... 6
Stock Ownership of Directors and Executive Officers...................................................... 6
Green Family Ownership and Employee Ownership............................................................ 7
EXECUTIVE COMPENSATION..................................................................................... 7
Report on Executive Compensation......................................................................... 7
Compensation Philosophy.................................................................................. 7
Elements that Make Up Total Compensation for Executives.................................................. 8
Chief Executive Officer (CEO) Compensation............................................................... 10
Internal Revenue Code 162(m) Considerations.............................................................. 11
Conclusion............................................................................................... 11
SUMMARY COMPENSATION TABLE............................................................................... 12
Management Changes....................................................................................... 12
Severance and Employment Agreements...................................................................... 13
OPTION GRANTS IN LAST FISCAL YEAR........................................................................ 14
Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values................................... 15
Long-Term Incentive Plan--Awards in Last Fiscal Year..................................................... 15
Performance Graph........................................................................................ 16
Pension Plan............................................................................................. 17
OTHER INFORMATION.......................................................................................... 18
Relationship With Independent Public Accountants......................................................... 18
Proposals of Security Holders............................................................................ 18
Solicitation of Proxies.................................................................................. 18
ITEMS FOR VOTE
PROPOSAL 1--ELECTION OF DIRECTORS.......................................................................... 19
PROPOSAL 2-- APPROVAL TO AMEND THE AMENDED AND RESTATED 1986 STOCK INCENTIVE PLAN.......................... 19
</TABLE>
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------
The Annual Meeting of Shareholders of UtiliCorp United Inc. will be held at
the Kansas City Marriott Downtown, 12th & Wyandotte on Wednesday, May 5, 1999,
at 2:00 p.m. (Kansas City time), to consider and take action on the following:
1. To re-elect three Directors: Robert F. Jackson Jr.; Herman Cain; and
Robert K. Green, each for a term of three years; and
2. To amend the Amended and Restated 1986 Stock Incentive Plan to allow
for the issuance of an additional 3,000,000 shares under the terms of the
plan.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR
OF BOTH OF THESE PROPOSALS
THE RECORD DATE FOR THE ANNUAL MEETING IS MARCH 9, 1999. ONLY SHAREHOLDERS
OF RECORD AT THE CLOSE OF BUSINESS ON THAT DATE CAN VOTE AT THE MEETING. PLEASE
NOTE THAT THE SHARES ELIGIBLE TO VOTE AT THIS MEETING WERE DETERMINED ON THE
RECORD DATE OF MARCH 9, 1999 AND REFLECT THE SHARES BEFORE OUR 3 FOR 2 STOCK
SPLIT, WHICH WAS PAYABLE MARCH 12, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Dale J. Wolf
Dale J. Wolf
VICE PRESIDENT AND CORPORATE SECRETARY
March 18, 1999
<PAGE>
VOTING PROCEDURES
YOUR VOTE IS VERY IMPORTANT
Whether or not you plan to attend the Annual Meeting, please take time to
vote as soon as possible by completing and mailing the enclosed proxy card or by
using the telephone or Internet procedures described below. To vote by telephone
or via the Internet, you will need the control numbers printed on your proxy
card. To vote over the telephone, please call the toll-free number listed on
your proxy card and follow the prompts.
To vote via the Internet, proceed to http://www.eproxyvote.com/ucu. You will
be asked to enter your personal voter control number found on your proxy card
and the last four digits of your taxpayer identification number. Once your
information has been verified, you may enter your vote.
If you sign, date and mail your proxy card without indicating how you want
to vote, your proxy will be voted as recommended by the Board of Directors.
REVOKING YOUR PROXY
If you wish to revoke your proxy, you may do so in one of the following
ways:
(1) sending a written statement to that effect to the Secretary of the
Company;
(2) submitting a properly signed proxy with a later date; or
(3) voting in person at the annual meeting.
Please keep in mind that while telephone and Internet votes are recorded
immediately, mailed proxy cards will be recorded upon receipt and could override
a vote submitted electronically. The last vote received by the tabulator by
phone, Internet or mail will be the vote counted.
NUMBER OF SHARES OUTSTANDING. At the close of business on the record date,
March 9, 1999, there were 61,270,598 shares of our common stock outstanding and
entitled to be voted at the annual meeting. No other class of our stock is
entitled to vote at the annual meeting.
VOTE REQUIRED. The following is an explanation of the two items that will be
voted on at the annual meeting.
PROPOSAL 1: ELECTION OF DIRECTORS.
For a director to be elected to the Board of Directors, a majority of the
shares of common stock represented at the annual meeting must vote for the
election of that director. If you do not want your shares voted for a
particular nominee, you may indicate that on your proxy card or when you
vote via the telephone or the Internet.
PROPOSAL 2: APPROVAL OF THE AMENDMENT TO THE AMENDED AND RESTATED 1996 STOCK
INCENTIVE PLAN.
A majority of the shares of common stock represented at the annual meeting
must vote for the amendment to the Plan for it to be approved.
Unless marked to the contrary, all proxies received will be voted
"FOR" the election of each of the three nominees for director and the
approval of the amendment of the Plan. The abstention or failure to
vote shares and broker nonvotes do not count as a vote "against" a
nominee or Proposal 2. Only a plurality of votes cast is necessary to
elect a director or pass proposal 2.
CERTIFICATION OF VOTE. We have appointed First Chicago Trust Company of New
York to act as the inspector for the meeting and to tabulate and certify the
vote.
2
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DIRECTOR INFORMATION
<TABLE>
<CAPTION>
YEAR PRINCIPAL OCCUPATION FIRST YEAR
TERM OR EMPLOYMENT AND ELECTED
NAME EXPIRES POSITION WITH THE COMPANY OR APPOINTED AGE
- ---------------------------------------- ------- --------------------------------------------- ------------ ---
<S> <C> <C> <C> <C>
Richard C. Green, Jr................... 2000 Chairman of the Board and Chief Executive 1982 44
Officer of the Company
Avis G. Tucker......................... 2000 Editor and Publisher of The Daily Star- 1973 83
Journal, Warrensburg, Missouri
L. Patton Kline........................ 2000 Retired Vice Chairman of Marsh & McLennan, 1986 70
Inc., New York, New York
John R. Baker.......................... 2001 Retired Vice Chairman of the Board of the 1971 72
Company
Dr. Stanley O. Ikenberry............... 2001 President of the American Council on 1993 64
Education, Washington, D.C.
Irvine O. Hockaday, Jr................. 2001 President and Chief Executive Officer of 1995 62
Hallmark Cards, Inc., Kansas City, Missouri
*Robert F. Jackson, Jr.................. 1999 Retired President of CharterCorp, Kansas 1981 73
City, Missouri
*Herman Cain............................ 1999 Chairman of the Board of Godfather's Pizza, 1992 53
Inc., Omaha, Nebraska
*Robert K. Green........................ 1999 President and Chief Operating Officer of the 1993 37
Company
</TABLE>
- ------------------------
* Nominee for election as a Director.
BIOGRAPHIES
Richard C. Green, Jr. has served as Chairman of the Board since February
1989 and Chief Executive Officer since May 1985. Mr. Green also served as
President of the Company from May 1985 through February 1996. Mr. Green is a
director of BHA Group, Inc., Kansas City, Missouri.
Avis G. Tucker served as Chairman of the Board of the Company from May 1982
through February 1989 and has been editor and publisher of The Daily-Star
Journal in Warrensburg, Missouri during the past five years. Mrs. Tucker
previously served as a director of United Telecommunications, Inc.
L. Patton Kline retired in 1988 as Vice Chairman of Marsh & McLennan,
Incorporated (an international insurance brokerage company), a subsidiary of
Marsh & McLennan Companies, Inc., a position he held for four years. He was
President of Marsh & McLennan Companies, Inc. from 1980 to 1985. Mr. Kline
served as a director of Marsh & McLennan Companies, Inc. from 1975 to 1988.
John R. Baker retired as Vice Chairman of the Board in December 1995, a
position he held since May 1991. He also served as Senior Vice President of the
Company from May 1985 through December 1992.
Stanley O. Ikenberry, Ph.D., is President of the American Council on
Education. Dr. Ikenberry is also a Regent Professor and President Emeritus of
the University of Illinois. He previously served as President of the University
from 1979 to 1995. Dr. Ikenberry serves as a director of Pfizer, Inc. and as a
member of the Board of the Carnegie Foundation for the Advancement of Teaching.
Irvine O. Hockaday, Jr. has served as President and Chief Executive Officer
of Hallmark Cards, Inc. since January 1986 and served as Executive Vice
President of Hallmark Cards, Inc. from
3
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1983 through December 1985. Mr. Hockaday serves as Trustee of the Hall
Foundation and the Aspen Institute and is a director of Sprint, Ford Motor
Company, and Dow Jones, Inc.
Robert F. Jackson, Jr. retired as President of CharterCorp (a bank holding
company). Mr. Jackson has served as a director on the boards of various Missouri
banks.
Herman Cain is Chairman of the Board of Godfather's Pizza, Inc. in Omaha,
Nebraska. He has been with Godfather's Pizza, Inc. for the past thirteen years.
Mr. Cain also serves as Chief Executive Officer of the National Restaurant
Association and is a director of Nabisco Holdings Corp., SUPERVALU, INC. and the
Whirlpool Corporation.
Robert K. Green has served as President of the Company since February 1996,
and earlier served as Managing Executive Vice President of the Company from
January 1993 to February 1996. He has held several executive positions at the
Company's Missouri Public Service division since 1988, including two years as
President. Mr. Green is Co-Chairman of the Kansas City Area Development Council,
President of the Heart of America Council, Boy Scouts of America and a director
of UMB Bank, n.a.
Richard C. Green, Jr. and Robert K. Green are brothers and are nephews of
Avis G. Tucker.
4
<PAGE>
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
During 1998, our Board met six times. Our Board has five standing committees
and the duties of each committee are described below. Eight directors attended
at least 75% of the meetings of the Board and the committees on which they
served. L. Patton Kline did not attend 75% of the meetings of the Board and the
committees on which he serves.
<TABLE>
<CAPTION>
NUMBER OF
MEETINGS
COMMITTEES COMMITTEE HELD IN
OF THE BOARD DUTIES OF THE COMMITTEE MEMBERS 1998
- ----------------------------------- ------------------------------------ -------------- -----------------
<S> <C> <C> <C>
Audit.............................. Reviews management's independent Kline* 3
accountant selection and makes Ikenberry
recommendations to the Board based Jackson
on that review. Review and approves
audit plans, accounting policies,
financial statements and financial
reporting, internal audit reports
and internal controls.
Pension............................ Establishes and administers our Tucker* 2
retirement plan and certain other Baker
related employee benefit plans. Robert Green
Compensation....................... Reviews and makes recommendations to Hockaday* 3
the Board regarding policies, Kline
practices and procedures relating to Cain
compensation of key employees.
Establishes and administers our
compensation programs and plans.
Nominating......................... Considers and recommends nominees Ikenberry* 0
for directors including those Tucker
directors nominated by the Hockaday
shareholders. Baker
Cain
Executive.......................... Exercises the authority of the Richard Green* 2
Board, when the Board is not in Robert Green
session, on such matters as are Jackson
delegated to it by the Board from Ikenberry
time to time.
</TABLE>
- ------------------------
* Indicates Committee Chairperson
DIRECTOR COMPENSATION
Directors who are employees do not receive fees or any other compensation
for their services as directors. Directors who are not employees receive an
annual retainer of $35,000, plus $1,000 for each Board meeting they attend.
Non-Employee Directors also receive an annual fee of $2,500 for each Board
Committee on which they serve. In addition, Non-Employee Directors are
reimbursed for expenses, including travel, they incur in connection with
attending meetings. Non-Employee Directors receive $20,000 in shares of common
stock each year pursuant to the 1990 Non-Employee Director Stock Plan. They may
choose to defer all or a part of their fees under our Capital Accumulation Plan.
5
<PAGE>
STOCK OWNERSHIP INFORMATION
COMPLIANCE WITH SECTION 16(A) REPORTING
The rules of the Securities and Exchange Commission require us to disclose
any late filings of stock ownership reports by our directors and executive
officers. To the best of our knowledge, there were no late filings during 1998.
STOCK OWNERSHIP GUIDELINES
Your Board of Directors adopted stock ownership guidelines for our
executives in 1995. The chief executive officer and chief operating officer are
expected to own common stock having a value of at least five times their annual
base salary. Senior vice presidents of the organization are expected to own
common stock with a value of at least two times their annual base salary and
vice presidents are expected to own stock having a value of at least one times
their annual base salary. If stock ownership levels are not met, the officers'
payout under the long-term incentive plan are paid in common stock. If their
target ownership levels are met, the officers may take their payout in cash or a
combination of cash and stock. Any common stock issued under the long-term
incentive plan cannot be sold for one year after it is issued.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
In general, "beneficial ownership" includes those shares a director or
officer has sole or shared power to vote or transfer, and stock options that are
currently exercisable or that are exercisable within 60 days. On December 31,
1998, the directors and executive officers of UtiliCorp beneficially owned a
total of 2,707,433 shares of our common stock.
<TABLE>
<CAPTION>
ISSUED SHARES EXERCISABLE STOCK TOTAL BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OPTIONS OWNERSHIP CLASS(1)
- --------------------------------------------- --------------------- ----------------- -------------------- ----------
<S> <C> <C> <C> <C>
Richard C. Green, Jr......................... 1,764,394(2)(4) 246,215 2,010,609(2)(4) 3.3%
Avis G. Tucker............................... 51,340(3)(5) -- 51,340(3)(5) --
L. Patton Kline.............................. 12,215 -- 12,215 --
John R. Baker................................ 152,213(4) -- 152,213(4) --
Dr. Stanley O. Ikenberry..................... 4,412 -- 4,412 --
Irvine O. Hockaday, Jr....................... 3,612 -- 3,612 --
Robert F. Jackson, Jr........................ 19,832 -- 19,832 --
Herman Cain.................................. 4,001 -- 4,001 --
Robert K. Green.............................. 1,544,090(2) 110,924 1,655,014(2) 2.7%
James G. Miller.............................. 33,922 51,752 85,674 --
Charles K. Dempster.......................... 38,340 51,525 89,865 --
James S. Brook............................... 11,612 2,800 14,412 --
Harvey J. Padewer(6)......................... 8,542 -- 8,542 --
Directors and Executive Officers as a group
(19 persons)............................... 2,187,750(2)(3)(4) 519,693 2,707,433(2)(3)(4) 4.5%
</TABLE>
- ------------------------
(1) Percentages are omitted for Directors and Executive Officers who own less
than 1% of common stock.
(2) Includes 1,411,733 shares held by the Green Family UCU Limited Partnership
of which Richard C. Green, Jr. and Robert K. Green are general partners with
shared voting and investment power.
(3) Mrs. Tucker is a trustee of trusts which hold a part of the limited
partnership units of the Green Family UCU Limited Partnership and shares
voting and investment power with other trustees with respect to the units
held in such trusts. The units may be voted together with other limited
6
<PAGE>
partnership units to approve or disapprove any disposition of the 1,411,733
shares of the common stock held by the limited partnership and may also be
voted together with other limited partnership units to direct the voting of
the common stock on certain matters.
(4) Includes 128,726 shares held in trust for the benefit of Mrs. Tucker, of
which Mr. Richard C. Green, Jr. and Mr. Baker are trustees with shared
voting and investment power.
(5) Excludes 128,726 shares held in trust for the benefit of Mrs. Tucker, of
which Mr. Richard C. Green, Jr. and Mr. Baker are trustees with shared
voting and investment power.
(6) Mr. Padewer resigned from the Company in 1998.
GREEN FAMILY OWNERSHIP AND EMPLOYEE OWNERSHIP
Richard C. Green, Jr., Robert K. Green, Avis G. Tucker, members of their
family and trusts for the benefit of members of the Green family owned as of
December 31, 1998, 2,366,090 shares or approximately 3.9% of our common shares
outstanding. This number includes shares held by the Green Family UCU Limited
Partnership.
We encourage employee ownership of our common stock. We feel that employees
who have a vested interest in the company make decisions in their daily work
that are in our best interest and in the best interest of our shareholders. As
of December 31, 1998, employees owned 7,403,788 shares or approximately 12% of
our outstanding common shares. This includes the Green family ownership
described above.
EXECUTIVE COMPENSATION
REPORT ON EXECUTIVE COMPENSATION
The following report on executive compensation is submitted by our
compensation committee:
As members of the Compensation Committee (the "Committee"), we consider
providing oversight and guidance for the administration of executive
compensation as our most important role. While performing this role, we want to
make sure that the compensation policies and practices support the achievement
of the Company's short- and long-term goals along with maintaining the Company's
organizational values.
As three independent, non-employee directors, we maintain an impartial view
as we oversee the Company's executive compensation activities. Impartiality is
important as we approve the designs of the compensation programs, assess the
programs effectiveness, and oversee the administration of the programs. We also
review and approve all salaries and other forms of compensation for the
Company's executives, and evaluate the Company's executives' performance along
with other related matters.
COMPENSATION PHILOSOPHY
Our overall philosophy is to make sure the Company's executive pay is
competitive with similar companies, while rewarding executives based on how
successful they are at achieving certain goals. We chose this philosophy because
the Company must compete with many companies to attract and develop a talented
group of employees. At the same time, we know it is important to achieve
financial success. Therefore, our compensation philosophy is built on the
following principles:
- Total compensation should provide a competitive advantage over companies
competing for management talent;
- Heavy emphasis is put on incentive pay linked to achievement of goals;
7
<PAGE>
- Compensation programs are designed to support the achievement of the
Company's business strategy;
- Executives' long-term compensation is closely tied to the total return on
the Company's common stock.
We seek advice from an independent compensation consultant to ensure we are
accurately comparing the Company's executive compensation levels to those of
similar companies. Some of the factors we consider are: business operations,
sales, market values, employment levels, and lines of businesses. The group of
companies that we use for comparing compensation levels is not the same group of
companies that is used in the Stock Performance Graph in this proxy statement.
The reason for this difference is that the Company's most direct competitors in
attracting and retaining executive talent are not always the same companies that
make up the Company's industry peer group.
ELEMENTS THAT MAKE UP TOTAL COMPENSATION FOR EXECUTIVES
The Company's total compensation consists of the following components: base
salary, annual incentives, long-term incentives and benefits. Each of these
elements is described below. We consider these components an integral piece of
an executive's compensation package. Other pieces we look at are severance
plans, insurance and other benefits. We want to make sure the total compensation
package is competitive.
- BASE SALARY
We review each executive officer's base salary annually. Base salaries
are targeted to approximate the average base salaries paid to executives
of similar companies for each position. To make sure each executive is
paid appropriately, we consider the executive's level of responsibility,
prior experience, overall knowledge, executive pay for similar positions
in other companies and executive pay within the Company.
Base salaries represent the amount executives are paid on a regular basis
(as opposed to an incentive, which is only paid when certain goals are
achieved). Therefore, this part of an executive's pay is a very important
tool in attracting and retaining talented people. The flexibility in our
base pay program allows us to reward individual executives for superior
work that may not be immediately reflected in financial measurements, but
is important to everyday business operations.
When evaluating individual performance, we look at the executive's
efforts in promoting the Company's values; participation in on-going
education and management training; improving project quality;
strengthening relationships with customers; developing relationships with
strategic partners and employees; demonstrating leadership abilities with
co-workers; and other goals. Overall, executive base salaries were
increased in 1998 at a rate similar to increases provided by other
companies with which the Company competes.
- ANNUAL INCENTIVES
Another major part of each executive's total compensation is the annual
incentive. The amount awarded to each executive is targeted to be above
the average of what the Company's competitors would award their
executives for similar performance. This targeted amount is based on
advice from an independent compensation consultant. The actual award will
vary, and may not be paid at all, based upon the Company's financial
results for the year. If an award is earned, it is paid in cash or
restricted stock at the election of the executive.
If an executive decides to take all or part of the annual incentive in
stock, the stock they receive is restricted. All amounts paid in
restricted common stock are increased by 33% over the cash equilivant
amount. As an example, if an executive receives an annual incentive award
8
<PAGE>
of $50,000 and elects to take $20,000 in restricted stock, we will award
the executive an additional $6,600 (33% of $20,000) worth of restricted
stock.
- LONG-TERM INCENTIVES
Long-term incentives are provided according to our Long-Term Incentive
Plan. We determine if an executive is eligible for participation in this
plan based on prior experience, performance measures and compensation
practices of the Company's competitors. Only executives who have an
on-going, company-wide impact are eligible to participate in this plan.
We also have the authority to grant restricted stock to reward special
performance or to retain key executives.
We have decided to award long-term incentives to each eligible executive
in the following proportion: 75% performance units and 25% stock options.
Incentive awards are available at the conclusion of each three-year
cycle. Award amounts, if any, are based on defined financial performance
measures over the preceding three years as compared to a specific group
of comparative companies. The objective of this design is to pay
long-term incentive awards each year that are above the average of what
similar companies would pay their executives for similar performance. We
regularly review the companies used for comparison, decide on the
performance criteria, and receive advice from an independent compensation
consultant to ensure a fair, appropriate program.
In 1998, shareholders approved two amendments to this plan. The first
amendment added a performance measure of total shareholder return
("TSR"). Previously, the performance measure was a combination of
earnings available and economic value added ("EVA"). The amendment was
adopted because it more effectively linked true increases in shareholder
value to rewards paid to our executives. We elected to apply the TSR
measure for the 1996-1998 cycle and all cycles to follow.
For each cycle, we compare our TSR results to either a published or
special index. These indexes may include the Standard & Poor's 500 Stock
Index or a specific group of companies in business lines and/or
operations similar to ours. The group of companies that we currently use
as a comparison group for the Long-term Incentive Plan consists of Enron,
Pacific Gas & Electric, Consolidated Natural Gas, Duke Energy, Entergy,
American Electric Power, Reliant Energy, Cinergy, New Century Energy,
Southern Co., CMS Energy, and KN Energy. For the three-year period ended
December 31, 1998, the average TSR of the group was 40.9% and the
Company's TSR was 45.1% ranking it 6 out of 13 companies. To minimize the
effect of year-end price spikes, the TRS calculation uses the average
closing price for the last 30 calendar days of the beginning and ending
cycle year.
The second amendment increases the maximum annual award or long-term
award which may be paid to an eligible executive in any year from 200% to
400% of the executive's annual base pay for that year. This amendment was
adopted to ensure our executives' total compensation remained
competitive.
PERFORMANCE UNITS
Performance units are designed to tie executives' long-term compensation
directly to specific corporate performance measures. Each performance
unit is equivalent in value to one share of the Company's common stock on
the last trading day of the three year cycle plus the dividends paid over
the preceding three-year cycle. The cycles for the years 1997-1999,
1998-2000, and 1999-2001 are based on TSR as compared to a specific group
of companies in business lines and/or operations similar to ours ("peer
group").
9
<PAGE>
In order to ensure a smooth transition from the prior plan (with awards
based on earnings available and EVA) to the current plan (based on TSR),
we decided to reduce the targeted number of performance units for which
each participant in the plan is eligible and to limit the maximum pay-out
to 100% of the targeted number of performance units, which is below the
approved plan maximum of 200%. As an example, if an executive is normally
eligible for a maximum of 5,000 performance units under the plan, the
executive can only receive a maximum of 2,500 performance units for the
1996-1998 cycle. However, we reserved the right to consider awarding
performance units above the 100% level if the Company was successful in
exceeding TSR expectations as compared to the peer group. The Company
completed the 1996-1998 cycle significantly above the targeted ranking
within the peer group and, therefore, we approved a pay-out of 132% of
targeted performance units.
Payments made under the three year performance cycles are in the form of
restricted stock until the executive has accumulated certain targeted
shareholdings of the Company from any source, excluding unexercised stock
options. Once the executive has exceeded the targeted share ownership,
compensation, if any, from the plan will be paid in cash or restricted
stock at the option of the executive. If an executive elects to take all
or a portion of their long-term incentive in the form of restricted
stock, the amount of the award taken in restricted stock will be
increased by 25% and will be paid in restricted stock just as in the
annual incentive plan.
STOCK OPTIONS
We grant stock options every year to the Company's executives who are
eligible to participate in the Long-Term Incentive Plan. The stock
options are priced at the fair market value of the Company's common stock
on the date of the grant. Therefore, these stock options only have value
to the executives if the stock price goes up following the date of the
grant. This is intended to make sure the executives are focused on
creating long-term shareholder value. The stock options vest over a
four-year period; 25% at the end of the second and third years and 50% at
the end of the fourth year. The reason for this four-year vesting period
is to create a mechanism to provide an incentive for the executives to
stay with the Company during that period.
In a further effort to achieve long-term success, we sometimes issue
stock options to executives and employees who do not participate in the
Long-Term Incentive Plan. The number of options granted is determined by
each executive's level of responsibility and the projected value of the
stock options. Employees (who do not participate in our Long-Term
Incentive Plan) are sometimes awarded stock options based on their level
of annual salary. These stock options are also priced at the fair market
value of the Company's common stock on the date of the grant and have a
one year vesting period.
- BENEFITS
The benefits we offer key executives serve a different purpose than the
compensation programs described above. In general, they provide some
level of protection against the chance of an executive having financial
difficulties as a result of illness, disability, or death. The benefits
offered are usually comparable to those offered to all other employees
with some differences based on tax and employee benefit laws.
CHIEF EXECUTIVE OFFICER (CEO) COMPENSATION
We review the Chief Executive Officer's base salary every year. In doing so,
we compare his pay to the pay of other CEO's in comparable companies. Currently,
Richard Green's salary is slightly lower than the average level of pay for CEO's
of comparable companies. On February 1, 1999, Mr. Green's pay was increased 9%
to $790,000 per year, so that his pay would keep pace with that of his peers.
10
<PAGE>
Mr. Green's annual incentive compensation is based on achievement of goals
associated with an increase in the Company's earnings per share and an
assessment of how well Mr. Green managed the Company. Normalized basic earnings
per share ("EPS") in 1998 was $2.46. In addition, we set an EPS growth goal for
1999 of 6.1% to achieve a target level pay-out and 9.0% to earn a maximum
pay-out for 1999. These financial results and growth goal, when combined with
our evaluation of Mr. Green's management performance earned him an annual
incentive award of $783,000. Mr. Green decided to take this award in the form of
restricted stock. As a result he received an additional 33% of the value of the
shares in the form of restricted stock for a total value of $1,041,390.
Mr. Green was also awarded performance units because he participated in the
Long-Term Incentive Plan for the three-year cycle of 1996-1998. When compared to
the list of competitors the Company's relative shareholder return ranked at a
level that allowed Mr. Green to receive 30,360 (targeted performance units of
23,000 X 132%) performance units. Each performance unit was worth the value of
one share of our common stock on the last trading day of the three-year cycle,
plus dividends paid over the three-year cycle. Mr. Green elected to receive his
award in restricted stock for a value of $1,265,860. As a result he received an
additional 25% of the value of the shares in the form of restricted stock for a
total value of $1,582,325.
In addition to the performance units, Mr. Green was granted 130,000 stock
options at a price of $34.625. These options vest over a four year period as
described above.
A new three-year performance cycle started in 1997 and will be completed at
the end of 1999. Another three-year cycle started in 1998 and will conclude at
the end of the year 2000. An independent compensation consultant assisted us in
determining the number of performance units that may be granted following each
cycle. Our goal was to make sure that Mr. Green's compensation would equal at
least 75% of our competitors pay their Chief Executive Officers, if the Company
meets its financial targets. However, if the Company doesn't meet the minimum
level of performance associated with these goals, Mr. Green won't be paid
anything under this Plan.
INTERNAL REVENUE CODE 162(M) CONSIDERATIONS
Section 162(m) of the Internal Revenue Code states that the Company cannot
deduct from its income taxes any executive compensation greater than $1 million,
unless it is paid based on the achievement of clear performance-related goals
and is paid under plans that meet certain requirements of the Code. We plan to
continue to rely on compensation programs that are based on achievement of
specific performance-related goals. These programs will continue to be designed
to fulfill, in the best possible manner, future corporate business objectives.
We also intend to design compensation programs that satisfy the requirements of
Section 162(m) so that the Company is able to deduct from its income taxes
compensation greater than $1 million that might be paid to executives. We
believe that compensation paid in 1998 is deductible from the Company's income
taxes.
CONCLUSION
We believe the executive compensation programs we have described to you
serve your interests, as stockholders. These programs are designed to motivate
the executives to help the Company succeed both today and in the future. We will
continue to monitor the effectiveness of our total compensation programs to
ensure they promote the needs and goals of the Company.
Irvine O. Hockaday, Jr. L. Patton Kline Herman Cain
11
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER RESTRICTED
ANNUAL STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARD(S)(1)($)
- ----------------------------------- ---- --------- -------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Richard C. Green, Jr............... 1998 720,674 0 32,415 1,041,590
Chairman & CEO 1997 675,192 0 13,821 1,020,163
1996 618,057 0 15,423 796,009
Robert K. Green.................... 1998 517,786 0 50,814 840,294
President & COO 1997 507,115 0 20,893 765,122
1996 466,731 0 10,764 756,493
James G. Miller.................... 1998 268,147 216,742 28,291 0
Senior Vice President 1997 241,538 212,712 22,356 0
1996 215,576 141,634 4,54 0
Charles K. Dempster................ 1998 307,116 115,601 252,523 153,749
Chairman and Chief Executive 1997 269,861 92,675 16,366 123,258
Officer, UtiliCorp U.K., Inc. 1996 283,683 0 3,285 399,523
James S. Brook..................... 1998 174,249 0 6,001 168,640
Vice President, Controller and 1997 162,116 0 4,770 0
Chief Accounting Officer 1996 146,923 65,272 7,127 0
Harvey J. Padewer.................. 1998 306,769 0 27,869 0
Senior Vice President 1997 255,191 217,738 14,827 0
1996 203,845 144,182 5,402 250,000
<CAPTION>
LONG-TERM
STOCK INCENTIVE ALL OTHER
NAME AND PRINCIPAL POSITION OPTIONS(#) PLAN($) COMPENSATION
- ----------------------------------- ---------- --------- ---------------
<S> <C> <C> <C>
Richard C. Green, Jr............... 130,000 1,582,325 41,992(2)(3)(4)(5)
Chairman & CEO 90,000 574,148 60,262
141,400 0 35,968
Robert K. Green.................... 104,000 1,265,680 47,693(3)(4)(5)
President & COO 72,000 278,384 61,895
113,120 0 52,741
James G. Miller.................... 47,000 330,224 28,521(2)(3)(4)(5)
Senior Vice President 35,000 62,088 30,238
29,600 0 24,000
Charles K. Dempster................ 47,000 371,502 164,197(2)(3)(4)(5)(6)(7)
Chairman and Chief Executive 35,000 80,595 251,396
Officer, UtiliCorp U.K., Inc. 34,100 0 67,270
James S. Brook..................... 20,000 152,882 15,733(2)(3)(5)
Vice President, Controller and 10,422 39,402 15,601
Chief Accounting Officer 11,200 0 16,319
Harvey J. Padewer.................. 0 0 30,117(2)(3)(4)(5)
Senior Vice President 35,000 64,476 30,961
25,500 0 26,042
</TABLE>
- ------------------------
(1) Restrictions lapse at various times following the third anniversary of the
grant. Dividends are paid on restricted stock awards at the same rate as
paid to all shareholders. As of December 31, 1998, the value of total shares
of restricted stock held by the above officers is: Mr. Richard C. Green, Jr.
(95,888 shares; $3,487,926); Mr. Robert K. Green (100,644 shares;
$3,660,926); Mr. James G. Miller (4,800 shares; $174,600); Mr. Dempster
(33,664 shares; $1,224,528); and Mr. Brook (3,227 shares; $117,382). All
market values are determined as of December 31, 1998. Grants made on March
12, 1999 for 1998 service are included in the market value totals described
in the "Restricted Stock Awards" column above for the year 1998.
(2) Consists of employer contributions to the UtiliCorp United Restated Savings
Plan. Mr. Richard C. Green, Jr., $14,400; Mr. Miller, $10,873; Mr. Dempster,
$9,841; Mr. Brook, $11,761 and Mr. Padewer, $10,961.
(3) Lump-sum payment of perquisite allowance for 1998. Mr. Richard C. Green,
Jr., $20,000; Mr. Robert K. Green, $15,000; Mr. Miller, $5,000; Mr.
Dempster, $5,000; Mr. Brook, $3,000 and Mr. Padewer $5,000.
(4) Consists of employer contributions to the Supplemental Contributory
Retirement Plan. Mr. Richard C. Green, Jr., $3,904; Mr. Robert K. Green,
$29,717; Mr. Miller, $11,268; Mr. Dempster, $8,779; and Mr. Padewer,
$12,529.
(5) Premium paid for term life insurance and AD&D insurance equivalent to three
times salary. Mr. Richard C. Green, Jr., $3,688; Mr. Robert K. Green,
$2,976; Mr. Miller, $1,380; Mr. Dempster, $1,628; Mr. Brook, $972; and Mr.
Padewer, $1,628.
(6) Includes payment made to Mr. Dempster of $130,686 for foreign assignments.
(7) Includes payment to Mr. Dempster of $8,263 for relocation.
MANAGEMENT CHANGES
Mr. Charles K. Dempster is completing his three year assignment in the
United Kingdom and as of November 16, 1998 became the chairman of the board and
chief executive officer of Aquila Energy Corporation.
Mr. Harvey Padewer left the Company during 1998. However, in accordance with
the Securities and Exchange proxy regulations, he was an officer of the Company
during 1998 and, therefore, is included in the compensation tables.
12
<PAGE>
SEVERANCE AND EMPLOYMENT AGREEMENTS
The employment agreements of Richard C. Green, Jr. and Robert K. Green
entitle them to an annual base salary of at least $725,000 and $585,000,
respectively. In addition, Richard C. Green, Jr. will continue as Chairman and
Chief Executive Officer and Robert K. Green will continue as President and Chief
Operating Officer for the term of the agreements. Each will also continue to
participate in our benefit and incentive plans during the term of the agreement.
If either is terminated without good cause or if either quits for good
reason, we will continue to pay his base salary for three years following the
date of termination. In addition, we will pay a one-time amount equal to three
times the highest incentive compensation award he would have received for the
year terminated if all targeted goals in effect on the date of the termination
are exceeded. Each will also receive certain other amounts consistent with what
he would have received as an active employee.
With the exception of Richard C. Green, Jr. and Robert K. Green, the people
listed in the Summary Compensation Table have entered into severance agreements
with the Company. Mr. Padawer's severance agreement was terminated at the time
of his resignation. The agreements give the executives certain severance
benefits following a change in control and are designed to avoid an interruption
of management following a change in control.
In August 1998, your Board of Directors approved certain modifications to
the definition of "change in control" that effected both the severance
agreements and the Amended and Restated 1986 Stock Incentive Plan. The reason
for modifying the change in control definition was that the prior definition did
not adequately protect deferred compensation, restricted stock and stock options
in the event of a change in control. Specifically, the modification expands the
types of transactions that can result in a change in control and result in
immediate vesting of restricted stock and stock options. The old definition had
provided that a merger or consolidation in which the Company was not the
survivor would be considered a change in control if there was a change in
ownership of more than 33 1/3%. Under the new definition, a merger or
consolidation in which the Company does not survive is a change in control only
if one of the following three events take place: 1) there is a change in
ownership of at least 50%; 2) at least two-thirds of the board of directors of
the new company are not current directors of the Company; or 3) both Richard C.
Green, Jr. and Robert K. Green are not members of the board of directors of the
new company.
If, following a change in control, an executive's employment with us is
terminated for any reason, he is entitled to a one time, lump sum severance
payment equal to 2.99 times average annual compensation for the five prior
years. An executive is not entitled to a severance payment if the executive
dies, retires, becomes disabled, is terminated for cause or quits without good
reason.
Charles K. Dempster signed a three year employment agreement effective
January 1, 1996. He agreed to serve as Chairman and Chief Executive Officer of
UtiliCorp U.K., Inc. The employment agreement entitles Mr. Dempster to receive
an annual salary of at least $252,000. In addition, Mr. Dempster is entitled to
a bonus equal to 55% of his annual base salary if he achieves his targeted
incentive goals and a maximum of 85% of his annual base salary if he
significantly exceeds these goals. In addition, his employment agreement ensures
his participation in our long-term incentive program and in other employee
benefit plans. The employment agreement provides for various other benefits
associated with working and living as an expatriate in the U.K. In the event of
involuntary termination, Mr. Dempster will receive a lump sum payment equal to
2.99 times the average of his last five years' base salary.
13
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS
GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE EXPIRATION GRANT DATE
NAME GRANTED(#)(1) FISCAL YEAR PRICE($/SH) DATE PRESENT VALUE $
- ------------------------------------ ------------- --------------- --------------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Richard C. Green, Jr................ 130,000 5.8% $ 34.625 2-2-09 $ 479,700
Chairman and CEO
Robert K. Green..................... 104,000 4.6% 34.625 2-2-09 383,760
President and COO
James G. Miller..................... 47,000 2.1% 34.625 2-2-09 173,430
Senior Vice President
Charles K. Dempster................. 47,000 2.1% 34.625 2-2-09 173,430
Chairman and CEO,
UtiliCorp U.K., Inc.
James S. Brook...................... 20,000 .9% 34.625 2-2-09 73,800
Vice President, Controller
and Chief Accounting Officer
Harvey J. Padewer................... 0 N/A N/A N/A N/A
Senior Vice President
</TABLE>
- ------------------------
(1) BLACK SCHOLES ASSUMPTION
The estimated present value on the date of grant reflected in the above
table is determined using the Black-Scholes model. The material assumptions and
adjustments incorporated in the Black-Scholes model in estimating the value of
the options reflected in the above table include the following:
- An exercise price on the option of $34.625, equal to the fair market value
of the underlying stock on the date of grant.
- An option term of 10 years.
- An interest rate of 4.72% that represents the interest rate on a U.S.
Treasury security on the date of grant with a maturity date corresponding
to that of the option term.
- Volatility of 19.55% calculated using daily stock prices for one-year
period prior to the grant date.
- Dividends at the rate of $1.80 per share representing the annualized
dividends paid with respect to a share of common stock at the date of
grant.
- Reductions of approximately 16.62% to reflect the probability of
forfeiture due to termination prior to vesting, and approximately 4.76% to
reflect the probability of a shortened option term due to termination of
employment prior to the option expiration date.
The ultimate values of the options will depend on the future market price of
the our common stock, which cannot be forecast with reasonable accuracy. The
actual value, if any, an optionee will realize upon exercise of an option will
depend on the excess of the market value of the our common stock over the
exercise price on the date the option is exercised.
Options were granted on February 2, 1999 and 25% can be exercised after the
second anniversary of the grant, an additional 25% can be exercised after the
third anniversary of the grant and the final 50% can be exercised after the
fourth anniversary of the grant.
14
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FY-END(#) AT FY-END($)*2
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#)(1) REALIZED($)(2) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------- --------------- ------------- ----------------- ----------------------
<S> <C> <C> <C> <C>
Richard C. Green, Jr. ................. 0 $ 0 257,465/184,800 $2,16,654/$995,872
Chairman and CEO
Robert K. Green ....................... 0 0 119,924/147,840 1,007,211/796,698
President and COO
James G. Miller ....................... 10,120 110,859 56,127/52,825 429,276/223,049
Senior Vice President
Charles K. Dempster ................... 18,432 204,348 59,900/56,202 413,800/252,159
Chairman and CEO,
UtiliCorp U.K., Inc.
James S. Brook ........................ 13,655 103,592 3,738/18,935 25,117/79,216
Vice President, Controller
and Chief Accounting Officer
Harvey J. Padewer ..................... 0 0 0/0 0/0
Senior Vice President
</TABLE>
- ------------------------
(1) Options holders may surrender shares to pay the option exercise price
and tax withholding requirements. The amounts provided assume no shares were
surrendered.
(2) Calculated on the basis of the fair market value of the underlying
securities at the exercise date or year-end, as applicable, minus the exercise
price.
LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
TARGET PERFORMANCE OR
PERFORMANCE OTHER PERIOD UNTIL
NAME UNITS MATURATION OR PAYOUT THRESHOLD($) TARGET($) MAXIMUM($)
- ----------------------------------- ------------- -------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Richard C. Green, Jr. ............. 32,000 12/31/00 $ 316,000 $ 1,440,000 $2,880,000
Chairman and CEO
Robert K. Green ................... 25,600 12/31/00 253,440 1,152,000 2,304,000
President and COO
James G. Miller ................... 12,000 12/31/00 118,800 540,000 1,080,000
Senior Vice President
Charles K. Dempster ............... 12,000 12/31/00 118,800 540,000 1,080,000
Chairman and Chief
Executive Officer,
UtiliCorp U.K., Inc.
James S. Brook .................... 4,375 12/31/00 43,313 196,875 393,750
Vice President, Controller and
Chief Accounting Officer
Harvey J. Padewer ................. -- -- -- -- --
Senior Vice President
</TABLE>
The long-term awards are expressed in the form of performance units. Each
performance unit is equal in value to one share of common stock on the last
trading day of the three-year cycle plus the dividends paid over the three year
cycle. Threshold payment is based on 22% of the target performance units.
Maximum payment is based on 200% of the target performance units.
15
<PAGE>
PERFORMANCE GRAPH
The graph compares the cumulative total shareholder return on our common
stock for the last five fiscal years with the cumulative total return of (1) the
S&P 500 Index and (2) the Edison Electric Institute Combination Gas and Electric
Utility Index.
The graph assumes that the value of the investment in our stock and each
index was $100 on January 1, 1994 and that all dividends were reinvested.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
UTILICORP S & P
<S> <C> <C> <C>
Common Stock 500 Index EEI Index
12/94 $100.00 $100.00 $100.00
12/95 $104.41 $139.41 $110.96
12/96 $102.21 $171.42 $110.27
12/97 $155.69 $228.64 $142.54
12/98 $154.21 $294.01 $165.62
</TABLE>
16
<PAGE>
PENSION PLAN
We maintain the UtiliCorp United Inc. Restated Retirement Income Plan (the
"Retirement Plan"). Employees do not make contributions to this plan and the
benefits are paid based on an employee's years of service and final average
compensation. Final average compensation is defined in this Retirement Plan as
total base salary excluding overtime payments, bonuses, amounts deferred to
non-qualified deferred income plans and any other extraordinary compensation.
Final average compensation does include employee contributions made to the
UtiliCorp United Inc. Retirement Investment Plan and the flexible spending plan.
Final average compensation is computed using an individuals' four highest
consecutive year's salary.
Benefits payable from the Retirement Plan are limited by provisions of the
Internal Revenue Code. We maintain an unfunded supplemental retirement plan to
provide for the payment of retirement benefits calculated in accordance with the
Retirement Plan which would otherwise be limited by the provisions of the Code.
The years of credited service for each officer named in the Summary
Compensation Table are as follows: Richard C. Green, Jr., 20 years; Robert K.
Green, 10 years; James G. Miller, 15 years; Charles K. Dempster, 6 years; James
S. Brook, 22 years; and Harvey J. Padewer, 4 years.
The following table sets forth the estimated annual benefits payable to
people in specified remuneration and service classifications assuming retirement
in 1999 at age 62:
YEARS OF SERVICE
<TABLE>
<CAPTION>
FINAL AVERAGE
COMPENSATION 15 20 25 30 35 40
- ------------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 18,210 $ 25,930 $ 33,650 $ 41,370 $ 43,620 $ 45,870
$ 150,000 28,485 40,455 52,425 64,395 67,770 71,145
$ 200,000 38,760 54,980 71,200 87,420 91,920 96,420
$ 250,000 49,035 69,505 89,975 110,445 116,070 121,695
$ 300,000 59,310 84,030 108,750 133,470 140,220 146,970
$ 350,000 69,585 98,555 127,525 156,495 164,370 172,245
$ 400,000 79,860 113,080 146,300 179,520 188,520 197,520
$ 450,000 90,135 127,605 165,075 202,545 212,670 222,795
$ 500,000 100,410 142,130 183,850 225,570 236,820 248,070
$ 550,000 110,685 156,655 202,625 248,595 260,970 273,345
$ 600,000 120,960 171,180 221,400 271,620 285,120 298,620
$ 650,000 131,235 185,705 240,175 294,645 309,270 323,895
$ 700,000 141,510 200,230 258,950 317,670 333,420 349,170
$ 750,000 151,785 214,755 277,725 340,695 357,570 374,445
$ 800,000 162,060 229,280 296,500 363,720 381,720 399,720
$ 850,000 172,335 243,805 315,275 386,745 405,870 424,995
$ 900,000 182,610 258,330 334,050 409,770 430,020 450,270
</TABLE>
These benefits are applicable to employees retiring after December 31, 1998
at age 62 and have been computed on the basis of a straight-life annuity.
James G. Miller has a supplemental retirement agreement that provides for
the payment of an annual retirement benefit of $40,000 in addition to the
benefit provided in the above table.
17
<PAGE>
OTHER INFORMATION
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
We retained Arthur Andersen LLP as our independent public accountants for
1998. Arthur
Andersen LLP has audited our financial statements since May 1992.
Representatives of Arthur Andersen LLP are expected to be present at the
annual meeting and will have the opportunity to make a statement, if they desire
to do so, and to respond to appropriate questions.
The Audit Committee of the Board of Directors recommended that we retain
Arthur Andersen LLP as our independent public accounting firm for the year 1999
at the quarterly meeting of the Board on February 2 and 3, 1999.
PROPOSALS OF SECURITY HOLDERS
If you want to submit proposals for possible inclusion in the 2000 proxy
statement, you must do so on or before November 19, 1999. It is anticipated that
the proxy statement and form of proxy relating to that meeting will be mailed to
you on or before March 17, 2000.
Also, if you want to bring a matter before the 2000 annual shareholders
meeting, our bylaws require you to notify us in writing at least 60 days prior
to the meeting. Our 2000 annual shareholders meeting is scheduled for May 3,
2000. Accordingly, we must receive all notices by March 3, 2000.
SOLICITATION OF PROXIES
We are making this solicitation by mail, but our officers or employees may
also solicit proxies by telephone or in person. We may reimburse brokerage firms
and others for their expenses in forwarding soliciting material to the
beneficial owners. We have hired Morrow & Co. for $7,500 plus reimbursement of
out-of-pocket expenses to assist in the solicitation.
18
<PAGE>
ITEMS FOR VOTE
PROPOSAL 1
ELECTION OF DIRECTORS
Three Class A Directors of the Company are to be elected to hold office for
three years. The following persons have been designated as nominees for the
office: Robert F. Jackson, Jr., Herman Cain and Robert K. Green.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE
NOMINEES FOR DIRECTOR.
PROPOSAL 2
PROPOSAL TO AMEND THE AMENDED AND RESTATED
1986 STOCK INCENTIVE PLAN TO ALLOW THE ISSUANCE
OF AN ADDITIONAL 3,000,000 SHARES PURSUANT TO THE PLAN
INTRODUCTION
The purpose of the Amended and Restated 1986 Stock Incentive Plan (the
"Plan") is to motivate our key employees, to promote our continued success and
growth and to assist us in retaining and attracting individuals who will be
committed to our success and growth. Currently, 1,113,327 shares of common stock
are reserved for issuance as non-qualified and incentive stock options and
restricted stock awards under the Plan. The Board, subject to shareholder
approval, has authorized us to issue an additional 3,000,000 shares of common
stock to grant as options and restricted stock awards under the Plan. The number
of shares available under the Plan will be adjusted in the event of stock
splits, stock dividends and other situations.
EMPLOYEE PARTICIPANTS
Certain key employees selected by the Compensation Committee participate in
the Plan ("Participants"). Currently, approximately 123 persons participate in
the Plan.
DELIVERY OF SHARES IN LIEU OF CASH INCENTIVE AWARDS
The Compensation Committee, in its discretion, may permit any Participant
who is eligible to receive a cash bonus or incentive payment or any director who
is entitled to receive director fees in cash to receive shares of common stock
under the Plan in lieu of those payments.
ADMINISTRATION
The Compensation Committee, which consists of at least two persons appointed
by the Board, administers the Plan. The Board may fill vacancies and may from
time to time remove or add members. All of the Compensation Committee members
are required to be Non-Employee Directors as defined in Rule 16b-3 under the
Exchange Act.
The Compensation Committee is authorized to adopt rules and regulations for
the administration of the Plan and to amend those rules and regulations without
further approval by the shareholders unless shareholder approval is required by
law.
19
<PAGE>
TERMINATION
The Plan will terminate upon the earlier of (1) the date all shares of stock
available for grant have been acquired through exercise of options or restricted
stock awards or (2) September 1, 2005. In addition, the Board can terminate the
Plan at any time.
TERMS OF STOCK OPTIONS
The Compensation Committee will determine the exercise or purchase price per
share of any stock option granted under the Plan, but the exercise price may not
be less than 100% of the fair market value of the stock on the date of the
grant. The closing price of our common stock on the New York Stock Exchange on
March 9, 1999 was $34.9375. Options granted may be either incentive stock
options ("ISOs") or nonqualified stock options. The Committee will fix the term
of each option and each option may have a different term. Options will be
exercisable as determined by the Committee, and will expire no later than ten
years from the date the option is granted. The aggregate fair market value of
the shares as to which ISOs are exercisable for the first time by a grantee
during any calendar year may not exceed $100,000. Options may be exercised by
paying the purchase price and applicable withholding taxes, either in cash, or
in stock, at the discretion of the Committee.
The Plan contains additional restrictions on ISOs as required by the federal
tax code. Additionally, subject to the restrictions on ISOs contained in the
federal tax code, the Compensation Committee may allow the accelerated
exercisability of options, or lapse of options, in the event of the employee's
death, disability or termination or certain changes in control as set forth in
the Plan.
Options are transferable only by will or the law of descent and distribution
and may only be exercisable by the Participant during his or her lifetime.
TERMS OF RESTRICTED STOCK AWARDS
The Committee will determine the number of shares and other terms and
conditions of any restricted stock award, including the period during which the
shares awarded will be subject to forfeiture, the restrictions on transfer and
the period during which the grantee may not make tax elections without the
consent of the Compensation Committee. No restrictions will lapse earlier than
the first, or later than the tenth, anniversary of the date of the award except
that the Compensation Committee may provide for the lapse of the restrictions on
the employee's death, disability or termination of employment or upon a change
in control of the Company.
The Compensation Committee, in its sole discretion, may impose performance
restrictions on restricted stock awards as it may deem advisable or appropriate
in accordance with the Plan and the federal tax code.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of the Plan
is only a summary of applicable federal law. State and local tax consequences
may differ. ISOs and nonqualified stock options are treated differently for
federal income tax purposes. ISOs are intended to comply with the requirements
of Section 422 of the Internal Revenue Code. Nonqualified stock options need not
comply with such requirements.
The grant of a stock option will not result in taxable income at the time of
the grant for the optionee or the Company. The optionee will have no taxable
income upon exercising an ISO (except that the alternative minimum tax may
apply), and the Company will receive no deduction when an ISO is exercised. Upon
exercising a nonqualified stock option, the optionee will recognize ordinary
income in the amount by which the fair market value exceeds the option price on
the date of exercise, and the Company will be entitled to a deduction for the
same amount. The treatment to an optionee of a
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disposition of shares acquired through the exercise of an option is dependent
upon the length of time the shares have been held and on whether such shares
were acquired by exercising an ISO or a nonqualified stock option. Generally,
there will be no tax consequence to the Company in connection with the
disposition of shares acquired under an option except that the Company may be
entitled to a deduction in the case of a disposition of shares acquired upon
exercise of an ISO before the applicable ISO holding periods have been
satisfied.
The grant of restricted stock will not result in taxable income at the time
of the grant for the participant or the Company. A participant will, however,
recognize income in the first year in which the Participant's rights in the
stock award are transferable or are not subject to substantial risk of
forfeiture, whichever occurs earlier, unless the Participant files an election
with the IRS to be taxed at the time the stock award is received. In either
case, the amount of taxable income recognized will be equal to the difference
between the fair market value of the stock award at the time the income is
recognized and the amount (if any) paid for the stock award. The Company
receives a corresponding deduction equal to the taxable income recognized by the
Participant, in the taxable year in which the Participant recognizes the income.
PLAN BENEFITS
The Compensation Committee has full discretion to determine the number and
amount of options to be granted to key employees under the Plan, subject to an
annual limitation on the total number of options that may be granted to any key
employee. Therefore, the benefits and amounts that will be received by each of
the named executive officers, the executive officers as a group, the current
directors who are not executive officers as a group and all other key employees
under the Plan are not presently determinable. Details on stock options and
restricted stock awards granted during the last three years to certain executive
officers are presented in the table entitled "Summary Compensation Table."
Additional information with respect to options granted during 1998 is presented
in the table entitled "Option Grants in Last Fiscal Year."
The following table sets forth additional information with respect to 1998
awards.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NUMBER OF OF RESTRICTED
OPTIONS STOCK
---------- -----------------
<S> <C> <C>
All executives (12 persons)................................... 468,500 173,579
All employees, as a group, excluding executives............... 1,453,800 155,060
</TABLE>
Stock options were granted to 12 executives, and restricted stock was
awarded to 8 executives.
REQUIRED APPROVAL
A majority of the shares of Common Stock represented and voting at the
Meeting must vote for the amendment to the Plan for it to be approved. Unless
marked to the contrary, all proxies received will be voted FOR the approval of
the amendment of the Plan.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS THAT YOU VOTE FOR
PROPOSAL 2
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APPENDIX A
UTILICORP UNITED INC.
AMENDED AND RESTATED
1986 STOCK INCENTIVE PLAN
(MAY 5, 1999)*
1. PURPOSE
The UtiliCorp United Inc. Amended and Restated 1986 Stock Incentive Plan is
designed to enable qualified executive, managerial, supervisory and professional
personnel of UtiliCorp United Inc. to acquire or increase their ownership of the
$1.00 par value common stock of the Company on reasonable terms. The opportunity
so provided is intended to foster, in participants, a strong incentive to put
forth maximum effort for the continued success and growth of the Company and its
Subsidiaries, to aid in retaining individuals who put forth such efforts, and to
assist in attracting the best available individuals in the future.
2. DEFINITIONS
When used herein, the following terms shall have the meaning set forth
below:
2.1 "Award" shall mean an Option or a Restricted Stock Award.
2.2 "Board" means the Board of Directors of UtiliCorp United Inc.
2.3 "Committee" means the members of the Board's Compensation Committee,
which shall consist solely of two or more directors who are both (a)
"non-employee directors" under Rule 16b-3(b)(3) promulgated under Section 16 of
the Exchange Act, or any successor provision thereto and (b) "outside directors"
under Section 162(m) of the Code.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.5 "Company" means UtiliCorp United Inc., a Delaware corporation.
2.6 "Fair Market Value" means, with respect to the Company's Shares, the
mean between the high and low prices of Shares on the New York Stock Exchange
Composite Tape on, as applicable: (a) the day on which an Award is granted; (b)
the day all restrictions lapse for a Restricted Stock Award; or (c) the day
Shares are delivered in lieu of current cash compensation as permitted by the
Plan or, if there should be no sale on that date, on the next preceding day on
which there was a sale.
2.7 "Grantee" means a person to whom an Award is made.
2.8 "Incentive Stock Option" or "ISO" means an Option awarded under the Plan
which meets the terms and conditions established by Section 422 of the Code and
applicable regulations.
2.9 "Non-Qualified Stock Option" or "NQSO" means an Option awarded under the
Plan other than an ISO.
2.10 "Option" means the right to purchase a number of Shares, at a price, for
a term, under conditions, and for cash or other considerations fixed by the
Committee and expressed in the written instrument evidencing the Option. An
Option may be either an ISO or NQSO.
2.11 "Plan" means the Company's Amended and Restated 1986 Stock Incentive
Plan.
2.12 "Restricted Stock Award" means the grant of a right to receive a number
of Shares at a time or times fixed by the Committee in accordance with the Plan
and subject to such limitations and
- ------------------------
* Assuming Shareholder Approval at the 1999 Annual Meeting.
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restrictions as the Plan and the Committee impose, all as expressed in the
written instrument evidencing the Restricted Stock Award.
2.13 "Right of First Refusal" means the right of the Company to be given the
opportunity to purchase Shares issued pursuant to Awards under the Plan at their
then Fair Market Value, in the event the holder of such Shares desires to sell
the Shares to any other person. This right may apply to any Shares awarded under
the Plan under terms and conditions established by the Committee at the time of
Award and included in the written instrument evidencing the Award, and shall
apply to sales by the Grantee or the Grantee's guardian, legal representative,
joint tenant, tenant in common, heir or successors.
2.14 "Shares" means shares of the Company's $1.00 par value common stock or,
if by reason of the adjustment provisions hereof any rights under an Award under
the Plan pertain to any other security, such other security.
2.15 "Subsidiary" means any business, whether or not incorporated, in which
the Company, at the time an Award is granted to an employee thereof, or in other
cases, at the time of reference, owns directly or indirectly not less than 50
percent of the equity interest except that with respect to an ISO the term
"Subsidiary" shall have the meaning set forth in Section 425(f) of the Code.
2.16 "Successor" means the legal representative of the estate of a deceased
Grantee or the person or persons who shall acquire the right to exercise an
Option, or to receive Shares issuable in satisfaction of a Restricted Stock
Award, by bequest, inheritance or permitted transfer as provided in accordance
with Section 8 hereof, or by reason of the death of the Grantee, as provided in
accordance with Section 9 hereof.
2.17 "Term" means the period during which a particular Option may be
exercised or the period during which the restrictions placed on a Restricted
Stock Award are in effect.
3. ADMINISTRATION OF THE PLAN
3.1 The Plan shall be administered by the Committee.
3.2 Subject to the provisions of the Plan, the Committee shall have the sole
authority to determine:
(i) the employees of the Company and its Subsidiaries to whom Awards
shall be granted;
(ii) the number of Shares to be covered by each Award;
(iii) the price to be paid for the Shares upon the exercise of each
Option;
(iv) the Term within which each Option may be exercised;
(v) the terms and conditions of each Option, which may include
provisions for payment of the option price in Shares at the Fair Market
Value of such Shares on the day of their delivery for such purpose;
(vi) the restrictions on transfer and forfeiture conditions with respect
to the Award; and
(vii) any other terms and conditions of the Award.
3.3 The Committee may construe and interpret the Plan, reconcile
inconsistencies thereunder and supply omissions therefrom. Any decision or
action taken by the Committee in the exercise of such powers or otherwise,
arising out of or in connection with the construction, administration,
interpretation and effect of the Plan and of its rules and regulations shall be
conclusive and binding upon all Grantees, and any other person claiming under or
through any Grantee.
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3.4 The Committee shall designate one of its members as Chairman. It shall
hold its meetings at such times and places as may be determined. All
determinations of the Committee shall be made by a majority of its members at
the time in office. Any determination reduced to writing and signed by a
majority of the members of the Committee at the time in office shall be fully as
effective as if it had been made at a meeting duly called and held. The
Committee may appoint a Secretary, who need not be a member of the Committee,
and may establish and amend such rules and regulations for the conduct of its
business and the administration of the Plan as it shall deem advisable.
3.5 No member of the Committee shall be liable, in the absence of bad faith,
for any act or omission with respect to his service on the Committee. Service on
the Committee is hereby specifically declared to constitute service as a
Director of the Company, to the end that the members of the Committee shall, in
respect of their acts and omissions as such, be entitled to the limitation of
liability, indemnification and reimbursement as Directors of the Company
pursuant to its Certificate of Incorporation, Bylaws and to the benefits of any
insurance policy maintained by the Company providing coverage with respect to
acts or omission of Directors of the Company.
3.6 The Committee shall regularly inform the Board as to its actions under
the Plan in such manner, at such times, and in such form as the Board may
request.
3.7 Notwithstanding the foregoing, in the event the Committee shall not
exist at any time during the term of this Plan, the Plan shall be administered
by the Board of Directors.
4. ELIGIBILITY
Awards may be made under the Plan only to the class of employees of the
Company or of a Subsidiary, including officers, consisting of those employees
who have executive, managerial, supervisory or professional responsibilities
("Eligible Employees"). A Director who is not an employee shall not be eligible
to receive an Award. Awards may be made to Eligible Employees whether or not
they have received prior Awards under the Plan or under any other plan, and
whether or not they are participants in other benefit plans of the Company.
5. SHARES SUBJECT TO PLAN
2,149,479(1) Shares are hereby reserved for issuance in connection with
Awards under the Plan and the issuance of Shares pursuant to Section 19, below.
The Shares so used may be Shares held in the treasury, however acquired, or
Shares which are authorized but unissued. Any Shares subject to Options which
lapse unexercised, and any Shares forming part of a Restricted Stock Award which
do not vest in the Grantee, shall once again be available for grant of Awards.
6. GRANTING OF OPTIONS
6.1 Subject to the terms of the Plan, the Committee may from time to time
grant Options to Eligible Employees.
6.2 Pursuant to the Code and applicable regulations, the aggregate Fair
Market Value (determined at the time the Option is granted) of Shares as to
which ISOs are exercisable for the first time by a Grantee during any calendar
year (under all Plans of the Grantee's employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000. No ISO shall be granted to a
Grantee who, at the time the ISO is granted, owns (within the meaning of Section
422(b)(6) of the Code) stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Grantee's employer
corporation or of its parent or subsidiary corporation unless, at the time the
ISO is granted, the Option price is at least 110 percent of the Fair Market
Value of the stock subject to the
- ------------------------
(1) Assuming shareholder approval of 3,000,000 additional shares at the 1999
Annual Meeting.
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<PAGE>
ISO, and the ISO by its terms is not exercisable after the expiration of five
years from the date the ISO is granted.
6.3 The purchase price of each Share subject to an Option shall be fixed by
the Committee, but shall not be less than the greater of the par value of the
Share or 100 percent of the Fair Market Value of the Share on the date the
Option is granted, except as otherwise provided in Section 6.2 with respect to a
10 percent stockholder.
6.4 Each Option shall expire and all rights to purchase Shares thereunder
shall terminate on the date fixed by the Committee and expressed in the written
instrument evidencing the Option, which date in the case of ISOs shall not be
after the expiration of ten years from the date the Option is granted, except as
otherwise provided in Section 6.2 with respect to a 10 percent stockholder.
6.5 Subject to the terms of the Plan each Option shall become exercisable at
the time, and for the number of Shares, fixed by the Committee and expressed in
the written instrument evidencing the Option; provided, however, that during any
fiscal year of the Company, no Grantee shall be granted Options covering more
than 150,000 Shares. Except to the extent otherwise provided in or pursuant to
Sections 9 and 10, no Option shall become exercisable as to any Shares prior to
the first anniversary of the date on which the Option was granted.
6.6 Subject to the terms of the Plan, the Committee may at the time of the
Award make all or any portion of Option Shares subject to a Right of First
Refusal for any period of time designated by the Committee in the written
instrument evidencing the Awards.
7. RESTRICTED STOCK AWARDS
7.1 Subject to the terms of the Plan, the Committee may also grant Eligible
Employees Restricted Stock Awards.
7.2 The number of Shares covered thereby and other terms and conditions of
any such Restricted Stock Award, including the period for which and the
conditions on which the Shares included in the Award will be subject to
forfeiture and restrictions on transfer or on the ability of the Grantee to make
elections with respect to the taxation of the Award without the consent of the
Committee, shall be determined by the Committee and expressed in the written
instrument evidencing the Award; provided, however, that during any fiscal year
of the Company, no Grantee shall receive Restricted Stock Awards covering more
than 150,000 Shares. Except as provided in or pursuant to Sections 9 and 10, no
such restrictions shall lapse earlier than the first, or later than the tenth,
anniversary of the date on which the Award was granted.
7.3 Subject to the terms of the Plan, the Committee may at the time of the
Award make all or portion of the Shares awarded under a Restricted Stock Award
subject to a Right of First Refusal for any period of time designated by the
Committee and expressed in the written instrument evidencing the Award.
7.4 The Committee, in its sole discretion, may impose performance
restrictions on Restricted Stock Awards as it may deem advisable or appropriate
in accordance with this Section 7.4.
7.4.1 The Committee may set restrictions based upon (a) the achievement
of specific performance objectives (Company-wide, divisional or individual),
(b) applicable Federal or state securities laws, or (c) any other basis
determined by the Committee in its sole discretion.
7.4.2 For purposes of qualifying Restricted Stock Awards as
"performance-based compensation" under Section 162(m) of the Code, the
Committee, in its sole discretion, may set restrictions based upon the
achievement of performance goals. The performance goals shall be set by the
Committee on or before the latest date permissible to enable the Restricted
Stock Awards to qualify as "performance-based compensation" under Section
162(m) of the Code. In granting
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<PAGE>
Restricted Stock Awards that are intended to qualify under Code Section
162(m), the Committee shall follow any procedures determined by it in its
sole discretion from time to time to be necessary, advisable or appropriate
to ensure qualification of the Restricted Stock Awards under Code Section
162(m) (e.g., in determining the performance goals).
8. NON-TRANSFERABILITY OF RIGHTS
Except for certain transfers of Non-Qualified Stock Options to family
members, trusts and charities, or pursuant to domestic relations orders, which
the Committee in its sole discretion may permit, no Option and no rights under
any Restricted Stock Award shall be transferable by the Grantee otherwise than
by will or the laws of descent and distribution, and, except for permitted
transferees, each Option may be exercised during the lifetime of the Grantee
only by him.
9. DEATH OR TERMINATION OF EMPLOYMENT
9.1 Subject to the provisions of the Plan, the Committee may make and
include in the written instrument evidencing an Option such provisions
concerning exercise or lapse of the Option on death or termination of employment
as it shall in its discretion determine.
9.2 No ISO shall be exercisable after the date which is three months
following the Grantee's termination of employment for any reason other than
death or disability, unless (a) the Grantee dies during such three-month period,
and (b) the written instrument evidencing the Award or the Committee permits
later exercise. No ISO may be exercised more than one year after the Grantee's
termination of employment on account of disability, unless (a) the Grantee dies
during such one-year period and (b) the written instrument evidencing the Award
or the Committee permits later exercise.
9.3 The effect of death or termination of employment on Shares issuable or
deliverable pursuant to any Restricted Stock Awards shall be as stated in the
written instrument evidencing the Award.
9.4 A transfer of employment between the Company and a Subsidiary, or
between Subsidiaries, shall not constitute a termination of employment for
purposes of the Award and the Plan.
10. PROVISIONS RELATING TO TERMINATION OF THE COMPANY'S SEPARATE EXISTENCE
The Committee may provide that in the event of a Change in Control, any or
all Options granted under the Plan shall be immediately exercisable in full and
the restrictions relating to any or all Restricted Stock Awards made under the
Plan shall immediately lapse.
A "Change in Control" shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:
(1) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company or its affiliates, other than in connection
with the acquisition by the Company or its affiliates of a business)
representing 20% or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the
Company's then outstanding securities; or
(2) the following individuals cease for any reason to constitute at least
two-thirds ( 2/3) of the number of directors then serving:
individuals who, on August 4, 1998, constituted the Board and any new
director (other than a director whose initial assumption of office is
in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the
election of directors of the Company (as such terms are used in Rule
14A-11 of Regulation 14A under the Exchange Act)) whose appointment
or election by the Board or nomination of election by the Company's
shareholders
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<PAGE>
was approved by a vote of at least two-thirds ( 2/3) of the directors
then still in office who either were directors on August 4, 1998, or
whose appointment, election or nomination for election was previously
approved; or
(3) the execution of an agreement in which the Company agrees to merge or
consolidate with any other entity, other than (i) a merger or
consolidation which would result in (A) the voting securities of the
Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any
parent thereof), in combination with the ownership of any trustee or
other fiduciary holding securities under an employee benefit plan of
the Company, greater than 50% of the combined voting power of the
voting securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation, (B) such of Richard C. Green, Jr. and Robert K. Green
continuing as members of the board of directors of the surviving
entity or ultimate parent thereof as were members of the Board of the
Company immediately prior to such transaction, and (C) individuals
described in paragraph (2) above constitute more than one-half of the
members of the board of directors of the surviving entity or ultimate
parent thereof, or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities Beneficially Owned by such Person any securities acquired
directly from the Company or its affiliates, other than in connection
with the acquisition by the Company or its affiliates of a business)
representing 20% or more of either the then outstanding shares of
common stock of the Company or the combined voting power of the
Company's then outstanding securities; or
(4) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company of
all or substantially all of the Company's assets to an entity,
greater than 50% of the combined voting power of the voting
securities of which is owned by Persons in substantially the same
proportions as their ownership of the Company immediately prior to
such sale.
Notwithstanding the foregoing, no "Change in Control" shall be deemed to
have occurred if there is consummated any transaction or series of integrated
transactions immediately following which the record holders of the common stock
of the Company immediately prior to such transaction or series of transactions
continue to have substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.
For purposes of this Section 10, the following definitions shall apply:
(a) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 under
the Exchange Act.
(b) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(c) "Person" shall have the meaning given in Section 3(a)(9) of the Exchange
Act, as modified and used in Sections 13(d) and 14(d) thereof, except
that such term shall not include (i) the Company or any of its affiliates
(as defined in Rule 12b-2 promulgated under the Exchange Act), (ii) a
trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to
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<PAGE>
an offering of such securities, or (iv) a corporation owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
The Committee may amend any existing Option or Restricted Stock Award to
reflect this provision, provided, however, that should the Company determine
that shareholder or regulatory approval of this provision is required and such
shareholder or regulatory approval is not obtained by December 31, 1999, any
such amendment shall be null and void.
11. WRITINGS EVIDENCING AWARDS
Each Award granted under the Plan shall be evidenced by a writing which may,
but need not be, in the form of an agreement to be signed by the Grantee. The
writing shall set forth the nature and size of the Award, its Term, the other
terms and conditions thereof, and such other matters as the Committee directs.
Acceptance of any benefits of an Award by the Grantee shall be an assent to the
terms and conditions set forth therein, whether or not the writing is in the
form of an agreement signed by the Grantee.
12. EXERCISE OF RIGHTS UNDER AWARDS
12.1 A person entitled to exercise an Option may do so only by delivery of a
written notice to that effect specifying the number of Shares with respect to
which the Option is being exercised and any other information which the
Committee has previously prescribed and of which such person has been notified.
12.2 Such a notice shall be accompanied by payment in full of the purchase
price of any Shares to be purchased thereunder, with such payment being made in
cash or Shares having a Fair Market Value on the date of exercise of the Option
equal to the purchase price payable under the Option, or a combination of cash
and Shares, and no Shares shall be issued upon exercise of an Option until full
payment has been made therefor; provided that the Committee may disapprove any
payment in part or full by the transfer of Shares to the Company.
12.3 Upon exercise of an Option or after grant of a Restricted Stock Award
under which a Right of First Refusal has been required with respect to some or
all of the Shares subject to such Option, or included in the Restricted Stock
Award, the Grantee shall be required to acknowledge, in writing, his or her
understanding of such Right of First Refusal and the legend which shall be
placed on the certificates for such Shares in respect thereof.
12.4 All notices or requests by a Grantee provided for herein shall be
delivered to the Secretary of the Company.
13. EFFECTIVE DATE OF THE PLAN AND DURATION
The Plan shall be effective as of September 1, 1995, and no Awards may be
granted under the Plan after September 1, 2005, although the terms of any Award
may be amended at any time prior to the expiration of the Award in accordance
with the Plan.
14. DATE OF AWARD
The date of an Award shall be the date on which the Committee's
determination to grant the same is final, or such latter date as shall be
specified by the Committee in connection with such determination.
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<PAGE>
15. STOCKHOLDER STATUS
No person shall have any rights as a stockholder by virtue of the grant of
an Award under the Plan except with respect to Shares actually issued to that
person.
16. POSTPONEMENT OF EXERCISE
The Committee may postpone any exercise of an Option or the delivery of any
Shares pursuant to a Restricted Stock Award for such period as the Committee in
its discretion may deem necessary in order to permit the Company (i) to effect
or maintain registration of the Plan or the Shares issuable upon the exercise of
an Option or distributable in satisfaction of a Restricted Stock Award under the
Securities Act of 1933, as amended, or the securities laws of any applicable
jurisdiction, (ii) to permit any action to be taken in order to comply with
restrictions or regulations incident to the maintenance of a public market for
its Shares or to list the Shares thereon; or (iii) to determine that such Shares
and the Plan are exempt from such registration or that no action of the kind
referred to in (ii) above need be taken; and the Company shall not be obligated
by virtue of any terms and conditions of any Award or any provision of the Plan
to permit the exercise of an Option to sell or deliver Shares in violation of
the Securities Act of 1933 or other applicable law. Any such postponement shall
not extend the Term of an Option nor shorten the Term of a restriction
applicable under any Restricted Stock Award; and neither the Company nor its
directors or officers or any of them shall have any obligation or liability to
the Grantee of an Award, to any Successor of a Grantee or to any other person
with respect to any Shares as to which an Option shall lapse because of such
postponement or as to which issuance under a Restricted Stock Award was thereby
delayed.
17. TERMINATION, SUSPENSION OR MODIFICATION OF PLAN
The Board may at any time terminate, suspend or modify the Plan, except that
the Board shall not, without authorization of the stockholders of the Company,
effect any change (other than through adjustment for changes in capitalization
as herein provided) which increases the aggregate number of Shares for which
Awards may be granted or sold, materially amends the formula for determining the
purchase price of Shares on which Options may be granted, changes the class of
employees eligible to receive Awards, extends the period during which Awards may
be granted or removes the restrictions set forth in this sentence.
No termination, suspension or modification of the Plan shall adversely
affect any right acquired by any Grantee or any Successor under an Award granted
before the date of such termination, suspension or modification unless such
Grantee or Successor shall consent thereto. Adjustments for changes in
capitalization or corporate transactions as provided for herein shall not,
however, be deemed to adversely affect such right.
18. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION AND CORPORATE TRANSACTIONS
Any change in the number of outstanding shares of the Company occurring
through stock splits, combination of shares, recapitalization, or stock
dividends after the adoption of the Plan shall be appropriately reflected in an
increase or decrease in the aggregate number of Shares then available for the
grant of Awards under the Plan, or to become available through the termination,
surrender or lapse of Awards previously granted and in the numbers of Shares
subject to Restricted Stock Awards then outstanding; and appropriate adjustments
shall be made in the per Share option price and/or number of Shares subject to
the Option as to any outstanding Options. No fractional Shares shall result from
such adjustments. Similar adjustments shall be made in the event of distribution
of other securities in respect of outstanding Shares or in the event of a
reorganization, merger, consolidation or any other change in the corporate
structure or Shares of the Company, if and to the extent that the Committee
deems such adjustments appropriate.
8
<PAGE>
19. DELIVERY OF SHARES IN LIEU OF CASH INCENTIVE AWARDS OR DIRECTOR'S FEES
(a) Any employee otherwise eligible for an Award under the Plan who is
eligible to receive a cash bonus or incentive payment from the Company under any
management bonus or incentive plan of the Company or entitled to receive a cash
payment for services rendered as a Director, may make application to the
Committee in such manner as may be prescribed from time to time by the Committee
to receive Shares available under the Plan in lieu of all or any portion of such
cash payment. Such an application may be made by, and approved with respect to,
a member of the Committee.
(b) The Committee may in its discretion honor such application by delivering
Shares available under the Plan to such employee, equal in Fair Market Value on
the delivery date to that portion of the cash payment otherwise payable to the
employee under such bonus or incentive plan, or for services rendered as a
Director, for which a Share delivery is to be made in lieu of cash payment.
(c) Any Shares delivered to an employee under this Section shall reduce the
aggregate number of Shares authorized for issuance and delivery under the Plan.
(d) Such applications and such delivery of Shares shall not be permitted
after the expiration of ten years from the effective date of the Plan. Delivery
of such Shares shall be deemed to occur on the date certificates therefor are
sent by United States mail or hand-delivered to the recipient.
20. NON-UNIFORM DETERMINATION PERMISSIBLE
The Committee's determination under the Plan including, without limitation,
determinations as to the persons to receive Awards, the form, amount and type of
Awards (i.e., ISOs, NQSOs or Restricted Stock Awards), the terms and provisions
of Awards, the written instruments evidencing such Awards, and the granting or
rejecting of applications for delivery of Shares in lieu of cash bonus or
incentive payments or compensation of a Director need not be uniform as among
persons similarly situated and may be made selectively among otherwise eligible
employees or Directors, whether or not such employees or Directors are similarly
situated.
21. TAXES
(a) The Company shall be entitled to withhold the amount of any withholding
tax payable with respect to any Awards or Shares delivered in lieu of cash
payments. The person entitled to receive Shares pursuant to the Award will be
given notice as far in advance as practicable to permit such cash payment to be
made to the Company. The Company may defer making delivery of Shares until
indemnified to its satisfaction with respect to any such withholding tax.
(b) Notwithstanding the foregoing, at any time when a Grantee is required to
pay to the Company an amount required to be withheld under applicable income tax
laws, the Grantee may satisfy this obligation in whole or in part by electing
(the "Election") to have the Company withhold Shares having a value equal to the
amount required to be withheld. The value of the Shares to be withheld shall be
based on the closing price of the Shares on the New York Stock Exchange on the
date that the amount of tax to be withheld shall be determined ("Tax Date").
Each Election must be made on or prior to the Tax Date. The Committee may
disapprove any Election or may suspend or terminate the right to make Elections.
An Election is irrevocable.
22. TENURE
An employee's right, if any, to continue in the employ of the Company or a
Subsidiary shall not be affected by the fact that he is a participant under this
Plan; and the Company or Subsidiary shall retain the right to terminate his
employment without regard to the effect such termination may have on any rights
he may have under the Plan.
9
<PAGE>
23. APPLICATION OF PROCEEDS
The proceeds received by the Company from sale of its Shares pursuant to
Options granted under the Plan shall be used for general corporate purposes.
24. OTHER ACTIONS
Nothing in the Plan shall be construed to limit the authority of the Company
to exercise all of its corporate rights and powers, including, by way of
illustration and not by way of limitation, the right to grant Options for proper
corporate purposes otherwise than under the Plan to any employee or any other
person, firm, corporation, association or other entity, or to grant Options to,
or assume Options of, any person in connection with the acquisition by purchase,
lease, merger, consolidation or otherwise, of all or any part of the business or
assets of any person, firm, corporation, association or other entity.
<TABLE>
<S> <C> <C>
UTILICORP UNITED INC.
By:
----------------------------------------
ATTEST:
- -------------------------------------------
</TABLE>
10
<PAGE>
UTILICORP UNITED INC.
PROXY/VOTING INSTRUCTION CARD
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING TO BE HELD ON MAY 5, 1999. By signing this proxy card you are
P appointing Avis G. Tucker, John R. Baker and L. Patton Kline as Proxies,
with full power of substitution, to vote all of your shares of UtiliCorp
R United Inc. common stock held by you on March 9, 1999. They will vote
your proxy exactly as you have indicated on the reverse side of this
O card. HOWEVER, IF YOU DO NOT INDICATE, ON THE REVERSE SIDE OF THIS CARD,
HOW YOU WOULD LIKE YOUR SHARES TO BE VOTED, THE PROXY CARD WILL BE VOTED
X FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR, FOR PROPOSAL 2, AND
ACCORDING TO THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS
Y THAT MAY PROPERLY COME BEFORE THE MEETING. The shares will be voted at
the Annual Meeting of shareholders to be held at the Kansas City Marriott
Downtown, 12th and Wyandotte on Wednesday May 5, 1999, at 2:00 p.m.
(Kansas City time). If the meeting is postponed or adjourned they will
vote your proxy at the rescheduled or reconvened 1999 Annual Meeting.
Election of Directors, Nominees:
01 Robert F. Jackson, Jr.
02 Herman Cain
03 Robert K. Green
You are encouraged to mark your choices in the appropriate boxes on the
reverse side of this proxy card. If you do not mark any boxes your vote will
be voted in accordance with the Board of Directors' recommendation. However,
the Proxies can not vote your shares unless you sign and return this card.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
UTILICORP UNITED INC.
ANNUAL MEETING OF
SHAREHOLDERS
MAY 5, 1999, 2:00 P.M.
KANSAS CITY MARRIOTT DOWNTOWN
12TH AND WYANDOTTE
KANSAS CITY, MISSOURI
<PAGE>
/X/ PLEASE MARK YOUR 4941
VOTES AS IN THIS
EXAMPLE.
This proxy when properly executed will be voted in the manner directed
herein. If no direction is made, this proxy will be voted FOR the election of
directors and FOR proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
FOR WITHHELD
--- --------
1. Election of Directors: / / / /
(SEE REVERSE)
For, except vote withheld from the following nominee(s)
- --------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. To amend the Amended & Restated 1986 Stock / / / / / /
Incentive Plan to allow the issuance of an
additional 3,000,000 shares pursuant to the
plan.
SPECIAL ACTION
Notation/Comments / /
Discontinue Annual Report / /
Mailing for this Account
Will Attend Annual Meeting / /
SIGNATURE(S) DATE
-------------------------------------------------- -----------
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
Please follow one of the following steps to ensure that your proxy card is
properly executed and returned in time to be counted:
TO VOTE BY MAIL:
1. Mark your vote relating to the nominees for director in one of the two
boxes to the right of "Election of Directors". If you wish to withhold
authority to vote for any individual nominee, write the name of each such
nominee on the line provided.
2. Mark your vote relating to Proposal 2 in one of the three boxes to the
right of the Proposal.
3. Sign at bottom left in the space provided, exactly as your name appears on
the form. Joint owners should each sign. Also enter the date.
4. Tear off at perforation and mail the completed card with signature(s) in
the enclosed reply envelope to: UtiliCorp United Inc., P.O. Box 8621,
Edison, NJ 08818-9128
WE ENCOURAGE YOU TO TAKE ADVANTAGE OF THESE CONVENIENT NEW WAYS YOU CAN VOTE
YOUR SHARES. YOU CAN VOTE YOUR SHARES THROUGH THE INTERNET OR BY USING THE
TELEPHONE. THIS ELIMINATES THE NEED TO RETURN THE PROXY CARD.
TO VOTE BY USING THE INTERNET:
1. http://www.eproxyvote.com/ucu
2. Follow the instructions using your voter control number listed above and
the last four digits of your taxpayer identification number.
TO VOTE BY USING THE TELEPHONE:
1. Using a touch-tone telephone call 1-877-PRXVOTE (779-8683)
2. Follow the prompts using your voter control number listed above and the
last four digits of your taxpayer identification number.
If you choose to vote your shares through the Internet or by using the
telephone, there is no need for you to mail back your proxy card.
YOUR VOTE IS IMPORTANT TO US!
