<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:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
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(4) Date Filed:
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<PAGE>
<TABLE>
<S> <C>
March 20, 2000 [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 3,
2000, at the Hyatt Regency Crown Center, 2345 McGee Street, Kansas City,
Missouri. The shares eligible to vote at this meeting were determined on the
record date of March 9, 2000.
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 1999
performance and answer your questions. Enclosed with this proxy statement are
your proxy card and UtiliCorp's 1999 Annual Report.
This year, we again have two additional 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 2 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.
I also want to let you know about a new Shareholder Information line we have
set up. With this interactive service you may listen to our current stock price,
hear about our recent developments and request faxed or mailed company
information. To access this service, please dial 1-888-UCU-2000.
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,
[SIGNATURE]
Richard C. Green, Jr.
<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..................................... 3
DIRECTOR INFORMATION........................................ 4
Biographies............................................... 4
Meetings of the Board and Committees of the Board......... 6
Director Compensation..................................... 6
STOCK OWNERSHIP INFORMATION................................. 7
Section 16(a) Reporting Compliance........................ 7
Stock Ownership Guidelines................................ 7
Stock Ownership of Directors and Executive Officers....... 7
Green Family Ownership and Employee Ownership............. 8
EXECUTIVE COMPENSATION...................................... 8
Report on Executive Compensation.......................... 8
Compensation Philosophy................................... 8
Elements that Make Up Total Compensation for Executives... 9
Chief Executive Officer (CEO) Compensation................ 11
Internal Revenue Code 162(m) Considerations............... 12
Conclusion................................................ 12
SUMMARY COMPENSATION TABLE.................................. 13
Severance and Employment Agreements....................... 14
OPTION GRANTS IN LAST FISCAL YEAR........................... 15
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES............................................. 16
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR......... 16
PERFORMANCE GRAPH........................................... 17
PENSION PLAN................................................ 18
OTHER INFORMATION........................................... 19
Relationship With Independent Public Accountants.......... 19
Proposals of Security Holders............................. 19
Solicitation of Proxies................................... 19
ITEMS FOR VOTE
PROPOSAL 1--ELECTION OF DIRECTORS........................... 20
PROPOSAL 2-- APPROVAL OF THE AMENDMENT TO THE 1986 EMPLOYEE
STOCK PURCHASE PLAN AND RE-APPROVAL OF THE 1986
EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED........ 20
PROPOSAL 3--RE-APPROVAL OF THE ANNUAL AND LONG-TERM
INCENTIVE PLAN............................................ 23
</TABLE>
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------------
The Annual Meeting of Shareholders of UtiliCorp United Inc. will be held at 2:00
p.m. (Central Daylight Time) on Wednesday, May 3, 2000, at the Hyatt Regency
Crown Center, 2345 McGee Street, Kansas City, Missouri, to consider and take
action on the following:
1. To elect three Directors: Richard C. Green, Jr., L. Patton Kline, and
Ronald T. LeMay, each for a term of three years; and
2. To amend the 1986 Employee Stock Purchase Plan to allow for the
issuance of an additional 1,500,000 shares under the terms of the plan and
to re-approve the plan, as amended, to comply with the requirements of
Section 423 of the Internal Revenue Code; and
3. To re-approve the Annual and Long-Term Incentive Plan to comply with
the requirements of Section 162(m) of the Internal Revenue Code.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR
OF ALL THREE OF THESE PROPOSALS
THE RECORD DATE FOR THE ANNUAL MEETING IS MARCH 9, 2000. ONLY SHAREHOLDERS
OF RECORD AT THE CLOSE OF BUSINESS ON THAT DATE CAN VOTE AT THE MEETING.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Dale J. Wolf
Dale J. Wolf
VICE PRESIDENT AND CORPORATE SECRETARY
March 20, 2000
<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 the web address specified on your proxy
card. Then simply follow the instructions to submit 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 Corporate 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, 2000, there were
92,206,029 shares of our common stock outstanding and entitled to be voted at
the annual meeting. You are entitled to one vote for each share of stock you
own. No other class of our stock is entitled to vote at the annual meeting.
VOTE REQUIRED
The following is an explanation of the three items that will be voted on at
the annual meeting.
PROPOSAL 1: ELECTION OF DIRECTORS
In order for a nominee to be elected, he or she must receive a plurality of
the votes cast at the Annual Meeting. The three persons receiving the highest
number of "FOR" votes will be elected as directors. 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: AMENDMENT OF THE 1986 EMPLOYEE STOCK PURCHASE PLAN TO ALLOW FOR
THE ISSUANCE OF AN ADDITIONAL 1,500,000 SHARES UNDER THE TERMS OF THE PLAN AND
TO RE-APPROVE THE PLAN, AS AMENDED, TO COMPLY WITH THE REQUIREMENTS OF
SECTION 423 OF THE INTERNAL REVENUE CODE.
For the plan and the amendment to allow the issuance of an additional
1,500,000 shares to be approved, a majority of the shares of common stock
represented at the annual meeting and entitled to vote must vote in favor of the
amendment to the Plan and the re-approval of the Plan, as amended.
2
<PAGE>
PROPOSAL 3: RE-APPROVAL OF THE ANNUAL AND LONG-TERM INCENTIVE PLAN.
For the Plan to be re-approved, a majority of the shares of common stock
represented and entitled to vote must vote in favor of the re-approval.
Unless marked to the contrary, all proxies received will be voted "FOR" the
election of each of the three nominees for director and "FOR" the approval of
Proposals 2 and 3. The abstention or failure to vote shares and broker nonvotes
do not count as a vote "against" a nominee or Proposals 2 and 3.
CERTIFICATION OF VOTE
We have appointed EquiServe to act as the inspector for the meeting and to
tabulate and certify the vote.
Please note that we may sometimes refer to UtiliCorp United Inc. as the
"Company" throughout this proxy statement.
3
<PAGE>
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 1982 45
Executive Officer of the Company
*L. Patton Kline............. 2000 Retired Vice Chairman of Marsh & 1986 71
McLennan, Inc., New York, New York
*Ronald T. LeMay............. 2000 President and Chief Operating Officer of 1999 54
Sprint Corporation, Kansas City,
Missouri
**Avis G. Tucker.............. 2000 Editor and Publisher of the Daily Star- 1973 84
Journal, Warrensburg, Missouri
John R. Baker............... 2001 Retired Vice Chairman of the Board of 1971 73
the Company
Dr. Stanley O. Ikenberry.... 2001 President of the American Council on 1993 65
Education, Washington, D.C.
Irvine O. Hockaday, Jr...... 2001 President and Chief Executive Officer of 1995 63
Hallmark Cards, Inc., Kansas City,
Missouri
Dr. Shirley A. Jackson...... 2001 President of Rensselaer Polytechnic 1999 53
Institute, Troy, New York
Robert F. Jackson, Jr....... 2002 Retired President of CharterCorp (a bank 1981 74
holding company), Kansas City, Missouri
Herman Cain................. 2002 Chairman of the Board of Godfather's 1992 54
Pizza, Inc., Omaha, Nebraska
Robert K. Green............. 2002 President and Chief Operating Officer of 1993 38
the Company
</TABLE>
- ------------------------
* Nominee for election as a Director.
** Avis G. Tucker has chosen not to run for re-election.
BIOGRAPHIES
Richard C. Green, Jr. has served as Chairman of the Board of the Company
since February 1989 and Chief Executive Officer of the Company 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.
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.
Ronald T. LeMay has served as President and Chief Operating Officer of
Sprint Corporation since October 1997. From July 1997 to October 1997, he served
as Chairman, President and Chief Executive Officer of Waste Management, Inc.
Before July 1997, he held various executive positions at Sprint, including
President and Chief Executive Officer of Sprint from February 1996 to
July 1997, Vice Chairman of Sprint from April 1995 to February 1996, CEO of
Sprint Spectrum L.P. from March 1995 to September 1996 and President of Sprint's
Long Distance Division from October 1989 to March 1995. Mr. LeMay serves as a
director of Sprint Corporation, Yellow Corporation, Ceridian
4
<PAGE>
Corporation, Imation Corporation and Allstate Corporation and is a member of the
National Board of Governors of the Boys and Girls Clubs of America.
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 director of United Telecommunications, Inc. Mrs. Tucker has
chosen not to run for re-election to the Board.
John R. Baker retired as Vice Chairman of the Board of the Company 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., has served as President of the American Council
on Education since 1996. 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 boards of the Smithsonian's Museum of
Natural History and 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 1983 through December 1985. Mr. Hockaday
serves as Trustee of the Hall Foundation, is a Trustee of Princeton University
and is a director of Sprint Corporation, the Ford Motor Company and Dow
Jones, Inc.
Shirley A. Jackson, Ph.D. has served as President of Rensselaer Polytechnic
Institute, a private coeducational institution that emphasizes science and
engineering technology, in Troy, New York since July 1, 1999. She previously was
the Chairman of the U.S. Nuclear Regulatory Commission from July 1995 through
June 1999 and Commissioner of the NRC from May 1995 through June 1999. Earlier,
she was a Professor of Physics at Rutgers University in New Jersey from 1991 to
1995 and a Theoretical Physicist in Solid State and Quantum Physics and Optical
Physics Research at AT&T Bell Laboratories from 1976 to 1991. Dr. Jackson serves
as a director of FedEx Corporation and Sealed Air Corporation.
Robert F. Jackson, Jr. retired in July 1985 as president of CharterCorp (a
bank holding company). Mr. Jackson has served as a director on the boards of
various Missouri banks.
Herman Cain has served as Chief Executive Officer of Digital Restaurant
Solutions, a Stamford, Connecticut based Walker Digital affiliated software
technology company, since July 1999. He has continued to serve for the past
14 years as Chairman of the Board of Godfather's Pizza, Inc. in Omaha, Nebraska.
Mr. Cain is also Chief Executive Officer of T.H.E., Inc., a leadership
consulting company. Mr. Cain serves as a director of Nabisco Holdings Corp. and
the Whirlpool Corporation.
Robert K. Green has served as President and Chief Operating Officer of the
Company since February 1996, and earlier served as Executive Vice President of
the Company from January 1993 to February 1996. He held several executive
positions at the Company's Missouri Public Service division since 1988,
including two years as President. Mr. Green also serves as Chairman of United
Energy Limited, UnitedNetworks Limited and Aquila Energy Corporation (affiliates
of the Company). Mr. Green is Co-Chairman of the Kansas City Area Development
Council and a director of Quanta Services, Inc. and UMB Bank, n.a.
Richard C. Green, Jr. and Robert K. Green are brothers and are nephews of
Avis G. Tucker.
5
<PAGE>
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
During 1999, our Board met ten times. Our Board has five standing committees
and the duties of each committee are described below. All directors attended at
least 75% of the meetings of the Board and of the committees on which they
served during the period in which they held office.
<TABLE>
<CAPTION>
NUMBER OF
MEETINGS
COMMITTEES COMMITTEE HELD IN
OF THE BOARD DUTIES OF THE COMMITTEE MEMBERS 1999
- --------------------------------------- ------------------------------- ----------------- ---------
<S> <C> <C> <C>
Audit.................................. Reviews management's Jackson* 3
independent accountant Ikenberry
selection and makes Kline
recommendations to the Board
based on that review. Reviews
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 Baker
other related employee benefit Robert Green
plans.
Compensation........................... Reviews and makes Hockaday* 2
recommendations to the Board Cain
regarding policies, practices Kline
and procedures relating to
compensation of key employees.
Establishes and administers our
compensation programs and
plans.
Nominating............................. Considers and recommends Ikenberry* 2
nominees for directors Cain
including those directors Baker
nominated by the shareholders. Hockaday
** Tucker
Executive.............................. Exercises the authority of the Richard Green* 1
Board, when the Board is not in Robert Green
session, on such matters as are Hockaday
delegated to it by the Board Ikenberry
from time to time.
</TABLE>
- ------------------------
* Indicates Committee Chairperson
** Shareholders desiring to suggest candidates should advise the Corporate
Secretary in writing by December 31 of the year preceding the annual meeting
and include sufficient biographical information to permit an appropriate
evaluation.
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 $1,250 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. They may choose to defer all or part of their
fees under our Capital Accumulation Plan. In addition, Non-Employee Directors
are reimbursed for expenses, including travel, they incur in connection with
attending meetings. Non-Employee Directors receive $30,000 in shares of common
stock each year pursuant to the 1990 Non-Employee Director Stock Plan. Receipt
of shares of common stock may be deferred under the terms of the Plan.
6
<PAGE>
STOCK OWNERSHIP INFORMATION
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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. There was one late filing in 1999. Mr. Jackson failed to report on the
annual Form 5 filings dividends from shares held in a brokerage account
reinvested pursuant to a dividend reinvestment plan.
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 their
annual base salary. If stock ownership levels are not met, the officers' payout
under the long-term element of the Annual and Long-Term Incentive Plan is 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 annual incentive element of the Annual and Long-Term Incentive Plan
cannot be sold for one year after it is issued. Common stock issued under the
long-term element of the 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,
1999, the directors and executive officers of UtiliCorp beneficially owned a
total of 4,566,972 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.............. 2,705,307(2)(4) 456,098 3,161,405(2)(4) 3.4%
Avis G. Tucker.................... 83,776(3)(5) -- 83,776(3)(5) --
L. Patton Kline................... 15,866 -- 15,866 --
John R. Baker..................... 230,629(4) -- 230,629(4) --
Dr. Stanley O. Ikenberry.......... 7,722 -- 7,722 --
Irvine O. Hockaday, Jr............ 6,356 -- 6,356 --
Robert F. Jackson, Jr............. 36,393 -- 36,393 --
Herman Cain....................... 7,198 -- 7,198 --
Ronald T. LeMay................... 260 -- 260 --
Robert K. Green................... 2,408,131(2) 235,806 2,643,937(2) 2.8%
James G. Miller................... 52,347 101,853 154,200 --
Charles K. Dempster............... 49,992 59,651 109,643 --
Edward K. Mills................... 35,065 17,100 52,165 --
Directors and Executive Officers
as a group (23 persons)......... 3,518,720(2)(9) 1,048,252 4,566,972(2)(4) 4.9%
</TABLE>
- ------------------------
(1) Percentages are omitted for Directors and Executive Officers who own less
than 1% of common stock.
(2) Includes 2,117,599 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.
7
<PAGE>
(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
partnership units to approve or disapprove any disposition of the 2,117,599
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 193,089 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 193,089 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.
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, 1999, 3,650,726 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, 1999, employees owned, either directly or beneficially,
approximately 11,532,000 shares or approximately 12.4% 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 of the Board of Directors (the
"Compensation 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, but most
importantly, support the ongoing creation of shareholder value.
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, assess the effectiveness, and oversee the
administration of the compensation 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 that of 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 other 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;
8
<PAGE>
- Heavy emphasis is put on incentive pay linked to achievement of goals;
- Compensation programs are designed to support the achievement of the
Company's business strategy; and
- 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 business. 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 typical 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
and 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 ongoing
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 1999 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 targeted performance. Because the Company sets aggressive
incentive targets that are above the average of those of its competitors,
there are occasions when incentive awards are greater than the average of
it competitors. The targeted award 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.
9
<PAGE>
If an executive decides to take all or part of the annual incentive in
stock, the stock received is restricted from sale for one year. All
amounts paid in restricted common stock are increased by 33% over the
cash equivalent amount. As an example, if an executive receives an annual
incentive award 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)
in restricted stock.
- LONG-TERM INCENTIVES
Long-term incentives are provided according to our Annual and 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 for the three-year cycle beginning in 2000:
90% performance units and 10% 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 targeted 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.
For each three-year cycle, we compare our Total Shareholder Return
("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 used as a comparison group for the Annual and
Long-Term Incentive Plan cycle ending December 31, 1999, consisted of BP
Amoco, Enron, Pacific Gas & Electric, Consolidated Natural Gas, Duke
Energy, Entergy, MCN Energy Group, Reliant Energy, Cinergy, Southern Co.,
Texaco Inc., and Kinder Morgan, Inc. (formerly KN Energy). For the
three-year period ended December 31, 1999, the average TSR of the group
was 22.21% and the Company's TSR was 28.28% ranking it 3 out of 13
companies. To minimize the effect of year-end price spikes, the TSR
calculation uses the average closing price for the last 30 calendar days
of the beginning and ending cycle year.
- 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 1998-2000,
1999-2001, and 2000-2002 are based on TSR as compared to a specific group
of companies in business lines and/or operations similar to ours ("peer
group").
Based on the Company's TSR results for the 1997-1999 cycle and its
subsequent placement as compared to its peer group, we approved a pay-out
of 200% 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 his or her long-term incentive in the form of restricted
stock, the amount of the award taken in
10
<PAGE>
restricted stock will be increased by 25% and will be paid in restricted
stock just as the annual incentives.
- STOCK OPTIONS
We grant stock options every year under the 1986 Stock Incentive Plan to
the Company's executives who are eligible to participate in the Annual
and 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 key employees who do not participate in the Annual and
Long-Term Incentive Plan. The number of options granted is determined by
each employee's level of responsibility, contribution, and the projected
value of the stock options. Broad-based employee stock option grants are
sometimes awarded to those who do not participate in our Long-Term
Incentive Plan based on each employee's 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 lower than the average level of pay for CEO's of
comparable companies. On February 1, 2000, Mr. Green's base salary was increased
13.92% to $900,000 per year, approximately the average increase of his peers.
Mr. Green's annual incentive compensation is based on achievement of plans
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 1999 were $1.75. In addition, we set a 2000 EPS growth plan
of 6.3%, which yielded a maximum pay-out for the growth plan element of the 1999
Annual Incentive Plan. These financial results and growth plan, when combined
with our evaluation of Mr. Green's management performance, earned him an annual
incentive award of $853,200. 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 $1,134,756.
Mr. Green was also awarded performance units because he participated in the
Annual and Long-Term Incentive Plan for the three-year cycle of 1997-1999. When
compared to the list of competitors, the Company's relative shareholder return
ranked at a level that allowed Mr. Green to receive 69,000 (targeted performance
units of 34,500 X 200%) 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 of
11
<PAGE>
$1,572,441 in restricted stock. 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
$1,965,551.
In addition to the performance units, Mr. Green was granted 195,000 stock
options under the 1986 Stock Incentive Plan at a price of $23.0833. These
options vest over a four year period as described above.
A new three-year performance cycle started in 1998 and will be completed at
the end of 2000. Another three-year cycle started in 1999 and will conclude at
the end of the year 2001. 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 what 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 will not 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 $1 million that might be
paid to executives. We believe that compensation paid in 1999 is deductible from
the Company's income taxes.
CONCLUSION
We believe the executive compensation programs we have described to you
serve your interests as stockholders. These programs are designed to motivate
the executives to help the Company succeed both today and in the future. We will
continue to monitor the effectiveness of our total compensation programs to
ensure they promote the needs and goals of the Company.
Irvine O. Hockaday, Jr. L. Patton Kline Herman Cain
12
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
OTHER RESTRICTED LONG-TERM
NAME AND PRINCIPAL ANNUAL STOCK STOCK INCENTIVE
POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARD(S)(1)($) OPTIONS(2)(#) PLAN($)
- ------------------ -------- --------- -------- --------------- -------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. Green, Jr.......... 1999 768,678 0 30,145 1,134,756 195,000 1,965,551
Chairman & CEO 1998 720,674 0 32,415 1,041,590 135,000 1,582,325
1997 675,192 0 13,821 1,020,163 212,100 574,148
Robert K. Green............... 1999 630,194 0 19,138 912,114 156,000 1,572,441
President & COO 1998 517,786 0 50,814 840,294 108,000 1,265,680
1997 507,115 0 20,893 765,122 169,680 278,384
Charles K. Dempster........... 1999 336,862 0 43,073 323,124 70,500 461,476
Senior Vice President 1998 307,116 115,601 252,523 153,749 52,500 371,502
1997 269,861 92,675 16,366 123,258 51,150 80,595
Edward K. Mills............... 1999 263,626 636,600 36,146 0 70,500 174,055
President, Aquila Energy 1998 221,912 490,000 20,571 0 34,200 491,352
1997 189,160 771,302 10,130 0 54,200 0
James G. Miller............... 1999 284,781 234,870 33,745 0 70,500 410,202
Senior Vice President 1998 268,147 216,742 28,291 0 52,500 330,224
1997 241,538 212,712 22,356 0 44,400 62,088
<CAPTION>
NAME AND PRINCIPAL ALL OTHER
POSITION COMPENSATION
- ------------------ ------------
<S> <C>
Richard C. Green, Jr.......... 36,758(3)
Chairman & CEO 41,992
60,262
Robert K. Green............... 58,981(4)
President & COO 47,693
61,895
Charles K. Dempster........... 38,468(5)
Senior Vice President 164,197
251,396
Edward K. Mills............... 25,120(6)
President, Aquila Energy 22,386
19,196
James G. Miller............... 27,178(7)
Senior Vice President 28,521
30,238
</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, 1999, the value of total shares
of restricted stock held by the above officers is: Mr. Richard C. Green, Jr.
(216,684 shares; $4,164,450); Mr. Robert K. Green (242,232 shares;
$4,655,457); Mr. Dempster (44,559 shares; $856,379); Mr. Mills
(24,352 shares; $468,021); and Mr. Miller (7,200 shares; $138,377). All
market values are determined as of December 31, 1999. Grants made on
March 10, 2000 for 1999 service are included in the market value totals
described in the "Restricted Stock Awards" column above for the year 1999,
representing restricted stock granted in lieu of annual bonuses.
2) Share amounts have been adjusted for the 3-for-2 stock split effective
March 12, 1999.
3) Consists of employer contributions to the UtiliCorp United Restated Savings
Plan of $14,800, a lump-sum payment of perquisite allowance for 1999 of
$20,000, and premium paid for term life insurance and AD&D insurance
equivalent to three times salary of $1,958.
4) Consists of employer contributions to the UtiliCorp United Restated Savings
Plan of $4,800, a lump-sum payment of perquisite allowance for 1999 of
$15,000, premium paid for term life insurance and AD&D insurance equivalent
to three times salary of $1,369, and employer contributions to the
Supplemental Contributory Retirement Plan of $37,812.
5) Consists of employer contributions to the UtiliCorp United Restated Savings
Plan of $9,800, a lump-sum payment of perquisite allowance for 1999 of
$5,000, premium paid for term life insurance and AD&D insurance equivalent
to three times salary of $3,171, employer contributions to the Supplemental
Contributory Retirement Plan of $15,027, and a payment for foreign
assignments of $5,470.
6) Consists of employer contributions to the UtiliCorp United Restated Savings
Plan of $14,400, a lump-sum payment of perquisite allowance for 1999 of
$5,000, premium paid for term life insurance and AD&D insurance equivalent
to three times salary of $469, and employer contributions to the
Supplemental Contributory Retirement Plan of $5,251.
7) Consists of employer contributions to the UtiliCorp United Restated Savings
Plan of $9,800, a lump-sum payment of perquisite allowance for 1999 of
$5,000, premium paid for term life insurance and AD&D insurance equivalent
to $50,000 of $291, and employer contributions to the Supplemental
Contributory Retirement Plan of $12,087.
13
<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 $790,000 and $635,000,
respectively. In addition, Richard C. Green, Jr. will continue as Chairman and
Chief Executive Officer and Robert K. Green will continue as President and Chief
Operating Officer for the term of the agreements. Each will also continue to
participate in our benefit and incentive plans during the term of the
agreements.
If either is terminated without good cause or if either quits for good
reason, we will continue to pay his base salary for three years following the
date of termination. In addition, we will pay a one-time amount equal to three
times the highest incentive compensation award he would have received for the
year terminated if all targeted goals in effect on the date of the termination
are exceeded. Each will also receive certain other amounts consistent with what
he would have received as an active employee.
With the exception of Richard C. Green, Jr. and Robert K. Green, the people
listed in the Summary Compensation Table have entered into severance agreements
with the Company. The agreements give the executives certain severance benefits
following a change in control and are designed to avoid an interruption of
management following a change in control.
If, following a change in control, an executive's employment with us is
terminated for any reason, that person is entitled to a one-time, lump sum
severance payment equal to 2.99 times average annual compensation for the five
prior years. An executive is not entitled to a severance payment if the
executive dies, retires, becomes disabled, is terminated for cause or quits
without good reason.
14
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% OF TOTAL
OPTIONS
GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE OR BASE EXPIRATION GRANT DATE
NAME GRANTED(#)(2) FISCAL YEAR PRICE($/SH) DATE PRESENT VALUE $(1)
- ---- ------------- ------------ ---------------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Richard C. Green, Jr........ 195,000 7.38% 28.0833 02-02-09 $479,700
Chairman and CEO
Robert K. Green............. 156,000 5.91% 23.0833 02-02-09 383,760
President and COO
Charles K. Dempster......... 70,500 2.67% 23.0833 02-02-09 173,430
Senior Vice President
Edward K. Mills............. 70,500 2.67% 23.0833 02-02-09 173,430
President, Aquila Energy
James G. Miller............. 70,500 2.67% 23.0833 02-02-09 173,430
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 $23.0833, 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 $1.20 per share representing the annualized
dividends paid with respect to a share of common stock at the date of
grant.
- Reductions of approximately 16.62% to reflect the probability of
forfeiture due to termination prior to vesting, and approximately 4.76% to
reflect the probability of a shortened option term due to termination of
employment prior to the option expiration date.
The ultimate values of the options will depend on the future market price of
the our common stock, which cannot be forecast with reasonable accuracy. The
actual value, if any, an optionee will realize upon exercise of an option will
depend on the excess of the market value of the our common stock over the
exercise price on the date the option is exercised.
Options were granted on February 2, 1999 and 25% can be exercised after the
second anniversary of the grant, an additional 25% can be exercised after the
third anniversary of the grant and the final 50% can be exercised after the
fourth anniversary of the grant.
(2) Share amounts have been adjusted to reflect the 3-for-2 stock split
effective March 12, 1999.
15
<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FY-END(#) AT FY-END($)(2)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#)(1) REALIZED($)(2) UNEXERCISABLE UNEXERCISABLE
- ---- -------------- -------------- --------------- --------------------
<S> <C> <C> <C> <C>
Richard C. Green, Jr............ 0 $ 0 456,098/402,300 $285,111/76,250
Chairman and CEO
Robert K. Green................. 0 0 235,806/321,840 191,340/61,000
President and COO
Charles K. Dempster............. 43,548 274,283 59,651/135,451 18,778/18,389
Senior Vice President
Edward K. Mills................. 8,550 38,317 17,100/113,250 6,148/12,295
President, Aquila Energy
James G. Miller................. 0 0 101,853/132,075 58,138/15,962
Senior Vice President
</TABLE>
- ------------------------
(1) Option holders may surrender shares to pay the option exercise price and tax
withholding requirements. The amounts provided assume no shares were
surrendered.
(2) Calculated on the basis of the fair market value of the underlying
securities at the exercise date or year-end, as applicable, minus the
exercise price.
LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
TARGET PERFORMANCE OR
PERFORMANCE OTHER PERIOD UNTIL
NAME UNITS(#) MATURATION OR PAYOUT THRESHOLD($) TARGET($) MAXIMUM($)
- ---- ----------- -------------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Richard C. Green, Jr......... 66,000 12-31-01 363,000 1,650,000 3,300,000
Chairman and CEO
Robert K. Green.............. 52,800 12-31-01 290,400 1,320,000 2,640,000
President and COO
Charles K. Dempster.......... 24,000 12-31-01 132,000 600,000 1,200,000
Senior Vice President
Edward K. Mills.............. 24,000 12-31-01 132,000 600,000 1,200,000
President, Aquila Energy
James G. Miller.............. 24,000 12-31-01 132,000 600,000 1,200,000
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.
16
<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, 1995 and that all dividends were reinvested.
DATA POINTS
<TABLE>
<CAPTION>
UTILICORP COMMON STOCK EEI INDEX S&P 500 INDEX
---------------------- --------- -------------
<S> <C> <C> <C>
100 100 100
12/95............................................ 111.79 127.37 137.53
12/96............................................ 109.44 126.57 169.11
12/97............................................ 166.71 163.61 225.55
12/98............................................ 165.12 190.1 290.04
12/99............................................ 140.57 154.5 350.95
</TABLE>
17
<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 years' 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., 21 years; Robert K.
Green, 11 years; James G. Miller, 16 years; Charles K. Dempster, 7 years; Edward
K. Mills, 7 years
The following table sets forth the estimated annual benefits payable to
people in specified remuneration and service classifications assuming retirement
in 2000 at age 62:
<TABLE>
<CAPTION>
YEARS OF PENSION SERVICE
FINAL AVERAGE ---------------------------------------------------------------
COMPENSATION 15 20 25 30 35 40
- --------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
$200,000 $ 37,608 $ 53,744 $ 69,880 $ 86,016 $ 90,516 $ 95,016
250,000 47,658 68,044 88,430 108,816 114,441 120,066
300,000 57,708 82,344 106,980 131,616 138,366 145,116
350,000 67,758 96,644 125,530 154,416 162,291 170,166
400,000 77,808 110,944 144,080 177,216 186,216 195,216
450,000 87,858 125,244 162,630 200,016 210,141 220,266
500,000 97,908 139,544 181,180 222,816 234,066 245,316
550,000 107,958 153,844 199,730 245,616 257,991 270,366
600,000 118,008 168,144 218,280 268,416 281,916 295,416
650,000 128,058 182,444 236,830 291,216 305,841 320,466
700,000 138,108 196,744 255,380 314,016 329,766 345,516
750,000 148,158 211,044 273,930 336,816 353,691 370,566
800,000 158,208 225,344 292,480 359,616 377,616 395,616
850,000 168,258 239,644 311,030 382,416 401,541 420,666
900,000 178,308 253,944 329,580 405,216 425,466 445,716
950,000 188,358 268,244 348,130 428,016 449,391 470,766
</TABLE>
These benefits are applicable to employees retiring after December 31, 1999
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.
18
<PAGE>
OTHER INFORMATION
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
We retained Arthur Andersen LLP as our independent public accountants for
1999. 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 2000
at the quarterly meeting of the Board on February 2, 2000.
PROPOSALS OF SECURITY HOLDERS
If you want to submit proposals for possible inclusion in the 2001 proxy
statement, you must do so on or before November 20, 2000. It is anticipated that
the proxy statement and form of proxy relating to that meeting will be mailed to
you on or before March 20, 2001.
Also, if you want to bring a matter before the 2001 annual shareholders
meeting, our bylaws require you to notify us in writing at least 60 days prior
to the meeting. Our 2001 annual shareholders meeting is scheduled for May 2,
2001. Accordingly, we must receive all notices by March 2, 2001.
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.
19
<PAGE>
ITEMS FOR VOTE
PROPOSAL 1
ELECTION OF DIRECTORS
Three 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:
Richard C. Green, Jr., L. Patton Kline, and Ronald T. LeMay.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR EACH NOMINEE FOR DIRECTOR.
PROPOSAL 2
TO AMEND THE 1986 EMPLOYEE STOCK PURCHASE PLAN TO ALLOW FOR THE
ISSUANCE OF AN ADDITIONAL 1,500,000 SHARES UNDER THE TERMS OF THE PLAN
AND TO RE-APPROVE THE PLAN, AS AMENDED, TO COMPLY WITH THE
REQUIREMENTS OF SECTION 423 OF THE INTERNAL REVENUE CODE.
INTRODUCTION
The 1986 Employee Stock Purchase Plan (the "Purchase Plan") was adopted by
the Board of Directors on April 1, 1986, and approved by shareholders on May 7,
1986. The Purchase Plan was thereafter amended during 1992 to increase the
number of authorized shares under the Purchase Plan.
The Purchase Plan provides the employees of the Company and its subsidiaries
the opportunity to purchase the Company's Common Stock during certain option
periods throughout the year. On February 2, 2000, the Board of Directors adopted
an amendment to the Purchase Plan to increase the number of shares available for
issuance under the Purchase Plan by an additional 1,500,000 shares, subject to
shareholder approval. Upon shareholder approval, the Purchase Plan will be
amended to include an additional 1,500,000 shares available for issuance under
the Purchase Plan. The Board of Directors feels that the Purchase Plan has
proved to be of substantial value in stimulating the efforts of employees and
increasing their ownership stake in the Company. In light of the Company's
continued growth, the number of shares remaining for issuance under the Purchase
Plan is insufficient to provide adequately for the participation of the number
of eligible employees who wish to purchase stock. The entire Purchase Plan, as
amended, is being resubmitted to the shareholders for approval to comply with
certain requirements of Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code") so the Company may apply for the listing on the New York
Stock Exchange of the 1,500,000 additional shares of Common Stock reserved for
issuance under the Purchase Plan.
The following discussion summarizes the material features of the Purchase
Plan. The full text of the Purchase Plan, as amended, appears as Appendix A to
this Proxy Statement. Reference is made to such appendix for a full statement of
the terms and conditions of the Purchase Plan.
SHARES SUBJECT TO THE PURCHASE PLAN
A total of 22,042 shares of the Company's Common Stock remains available for
purchase by employees upon the exercise of options under the Purchase Plan (as
adjusted for stock dividends and stock splits pursuant to the Purchase Plan)
(1,522,042 shares with the approval of Proposal 2). Since the inception of the
Purchase Plan through October 31, 1999, 2,100,702 shares (adjusted for previous
stock splits) have been purchased. The total number of shares under the Purchase
Plan will be subject to adjustment by the Board of Directors upon the occurrence
of stock dividends, stock splits or other recapitalizations, or by reason of
mergers, consolidations or similar changes in outstanding shares of
20
<PAGE>
Common Stock. If any option under the Purchase Plan terminates or expires, the
shares allocable to the unexercised option will be available for the purposes of
the Purchase Plan.
ADMINISTRATION
The Purchase Plan is administered by a Committee (the "Committee") appointed
by and serving at the pleasure of the Company's Board of Directors. The
Committee has full authority to interpret the Purchase Plan and may recommend to
the Board of Directors rules for administration of the Purchase Plan.
ELIGIBLE EMPLOYEES
All employees of the Company, and such subsidiaries as are designated by the
Board of Directors, are eligible for an option under the Purchase Plan as of the
first option period following such employment if their customary employment is
for at least 20 hours in each week and for at least 5 months in each calendar
year. The Board of Directors may from time to time change its description of
subsidiaries, employees of which may be eligible to participate in the Purchase
Plan.
PURCHASE OF SHARES
On each February 1, May 1, August 1, and November 1, each eligible employee
is granted a nontransferable option to purchase Common Stock from the Company on
the last day of the option period. Option periods are 3-month periods beginning
on February 1, May 1, August 1, or November 1, and ending on the next April 30,
July 31, October 31, or January 31. Options expire at the end of the option
period. An employee may exercise the option granted by authorizing payroll
deductions. Deductions may be authorized on any February 1, May 1, August 1, or
November 1, up to 20% of the employee's basic rate of compensation. In addition,
an employee may make a lump sum contribution at any time during an option
period. As of the last day of the option period, the amount of employee
contributions during such option period will be used to purchase whole and
partial shares of Common Stock under the employee's option. Such shares may be
authorized but unissued shares or may be purchased in the open market. An
employee may discontinue the payroll deductions at any time or may change the
rate of payroll deductions as of the first day of the option period. If during
an option period an employee becomes ineligible to purchase stock under the
Purchase Plan because of the termination of employment or if payroll deductions
are discontinued during an option period, the employee's contributions will be
returned without interest to the employee. An employee has no right, title or
interest in any stock subject to an option until the stock has been purchased
for and issued to the employee.
The price for stock purchased under each option is 85% of its fair market
value on the first day or the last day of the option period, whichever is lower.
(The price at the beginning of the option period is adjusted if there is a stock
dividend, stock split, other recapitalization, merger, consolidation or similar
change in outstanding shares during the option period.) Fair market value on any
day means the closing price on the New York Stock Exchange, or if the Common
Stock is not traded on that exchange, on such exchange or market as designated
by the Board of Directors.
The grant of options to an employee and the right to purchase shares are
also subject to certain limitations of the Purchase Plan. An employee may not be
granted an option if the employee would own (as determined under the Internal
Revenue Code) 5% or more of the voting power or value of all classes of stock of
the Company or any of its subsidiaries immediately after the option is granted
or if options under the Purchase Plan or other plans qualified under the same
provision of the Internal Revenue Code would result during any calendar year in
the purchase of shares having an aggregate fair market value of more than
$25,000. Further, an employee may not purchase in an option period more than the
number of shares equal to 20% of such employee's annual basic rate of
compensation divided
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by 85% of the fair market value of the Common Stock, both determined on the
first day of the option period.
AMENDMENTS AND TERMINATION
The Board may amend the Purchase Plan at any time provided that no amendment
shall, without the approval of the shareholders of the Company, increase the
number of shares of stock available for purchase under the Purchase Plan except
by reason of an adjustment for the reasons discussed above. The Purchase Plan
may be terminated by the Board at any time, in its entirety or as to any group
of employees.
ASSIGNABILITY
Each employee agrees by participating in the Purchase Plan not to sell,
transfer or otherwise dispose of shares purchased under the Purchase Plan for
two years from the first day of the option period during which the shares were
purchased. No such restriction applied to option periods prior to November 1,
1991. Exception to such restriction on sales may be granted for hardship
circumstances to be determined by the Committee.
FEDERAL INCOME TAX CONSEQUENCES
The Purchase Plan qualifies as an Employee Stock Purchase Plan under
Section 423 of the Code. The grant or exercise of an option under the Purchase
Plan will not have a tax impact on the employee or Company. If the employee
disposes of the stock acquired upon the exercise of the option after at least
two years from the date of grant and one year from the date of exercise, then
the employee must treat as ordinary income the amount by which the lesser of
(1) the fair market value of stock at the time of disposition over the exercise
price; or (2) the fair market value of the stock on the first day of the option
period in which the stock was purchased less the applicable discount (10% for
stock purchases prior to May 1, 1989 and 15% for stock purchases after
April 30, 1989). Any gain above this amount of ordinary income will be treated
as a long-term capital gain. If an employee holds stock at the time of the
employee's death, the holding period requirements are automatically deemed to
have been satisfied and ordinary income must be realized by the employee in the
amount by which the lesser of (1) the excess, if any, of the fair market value
of the stock at the time of death over the exercise price or (2) the fair market
value of the stock on the first day of the option period in which the stock was
purchased less 10% or 15%, as applicable. The Company will not be allowed a
deduction if the holding period requirement is satisfied.
If an employee disposes of stock before the expiration of two years from the
date of grant and one year from the date of exercise, then the employee must
treat as ordinary income the excess of the fair market value of the stock on the
date of exercise of the option over the exercise price. Any additional gain will
be treated as long-term or short-term capital gain, depending upon whether the
stock was held for more than one year after the date of exercise. The Company
will be allowed a deduction equal to the amount of ordinary income recognized by
the employee.
PLAN BENEFITS
Since participation in the Purchase Plan is entirely voluntary on the part
of eligible employees, the benefits and amounts that will be received by each of
the named executive officers, the executive officers as a group and all other
employee participants under the Purchase Plan are not presently determinable.
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REQUIRED APPROVAL
A majority of the shares of Common Stock represented and entitled to vote at
the Annual Meeting must vote for amendment to the Purchase Plan and for the
re-approval of the Purchase Plan, as amended, for it to be approved. Unless
marked to the contrary, all proxies will be voted for the amendment to and the
re-approval of the Purchase Plan, as amended.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR PROPOSAL 2.
PROPOSAL 3
PROPOSAL TO RE-APPROVE THE ANNUAL AND LONG-TERM INCENTIVE PLAN TO COMPLY WITH
THE REQUIREMENTS OF SECTION 162(M) OF THE INTERNAL REVENUE CODE
INTRODUCTION
The Company has an executive compensation plan in place, the Annual and
Long-Term Incentive Plan (the "Incentive Plan"). The Incentive Plan was adopted
in 1995 and subsequently amended in 1998. The Incentive Plan, as amended, is
being submitted to the shareholders for re-approval because Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code") requires such
re-approval by the Company's shareholders every five years for the Company to
remain eligible for a tax deduction for awards paid under the Incentive Plan to
certain executive officers whose total compensation is in excess of $1 million.
Accordingly, renewal of approval of the Incentive Plan, as amended, will be
presented for consideration at this year's Annual Meeting of Shareholders.
The purpose of the annual portion of the Incentive Plan is to provide key
executives with financial incentives that will motivate and reward performance
within established business criteria on which the performance goal is based. The
purpose of the long-term portion of the Incentive Plan is to further the growth
and profitability of the Company by offering key executives the opportunity to
receive incentive awards based on the successful achievement of certain
long-range Company goals.
The following discussion summarizes the material features of the Incentive
Plan. The full text of the Incentive Plan, as amended, appears as Appendix B to
this Proxy Statement. Reference is made to such appendix for a full statement of
the terms and conditions of the Incentive Plan.
ADMINISTRATION
The Incentive Plan is administered by the Compensation Committee. The
Compensation Committee has discretion to identify individual employees who will
be eligible to participate in the Incentive Plan based on the Compensation
Committee's determination that such employee's performance may have a
significant impact on the annual and long-term success of the Company.
ELIGIBLE EMPLOYEES
Participants in the Incentive Plan with respect to annual awards and
long-term awards are key managerial, professional or technical employees, and
include the Company's Chief Executive Officer and the other four executives
named in the Summary Compensation Table (the "Covered Employees"). All employees
of the Company are eligible to participate in the Incentive Plan with respect to
discretionary annual awards.
TYPES OF AWARDS
There are three types of awards payable under the Incentive Plan: annual
awards, long-term awards and discretionary annual awards. The performance goals
for the annual portion of the Plan are
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measured over a calendar year and are set no later than April 1 of each year.
Under the long-term portion of the Plan, incentive awards are paid to
participants on the basis of the Company's performance over a rolling
three-year, or longer, cycle. Additional performance measures that may be used
are those described below.
Annual awards and long-term awards are payable in cash, restricted stock, or
any combination thereof, as approved by the Board of Directors, or at its
discretion, the Compensation Committee for any individual participant in any
plan year. Notwithstanding the foregoing, payment of awards in restricted stock
shall always be approved by the Compensation Committee.
Discretionary annual awards are available to any full-time employee of the
Company (excluding the Chief Executive Officer of the Company). Discretionary
annual awards are determined subjectively by the Chief Executive Officer or each
division or unit (subject to approval by the Chief Executive Officer) to
recognize outstanding individual performance. Discretionary annual awards are
payable in cash.
PERFORMANCE CRITERIA
The Board of Directors or, at its direction, the Compensation Committee
administers the Plan and approves both the annual awards and long-term awards if
the achievement of certain goals based on business criteria is met, either over
one year or long-term cycles, as the case may be. Such performance goals may be
set for the Company as a whole, for each division or unit, or for individual
performance criteria. The performance objectives may vary from participant to
participant, but with respect to Covered Employees such business criteria to
establish a performance goal is currently measured by revenues, units sold,
operating income, operating company contribution, cash flow, income before
taxes, net income, earnings available per share, return on equity, return on
assets, Economic Value Added (EVA) or total return to shareholders, whether
applicable to the Company or any relevant subsidiary or business unit, or
combination thereof, as the Compensation Committee may deem appropriate or any
of the above-mentioned goals as compared to the performance of a published or
special index deemed appropriate by the Compensation Committee, including, but
not limited to, the Standard and Poor's 500 Stock Index or a group of comparator
companies. In addition, the criteria selected by the Compensation Committee
includes a minimum performance standard below which no payment will be made and
a maximum performance level above which no increase in payment will be made.
Under the current terms of the Incentive Plan, an annual award or a long-term
award paid under the Incentive Plan will not exceed 400% of the annual base
salary of a Covered Employee on January 1 for the year in which an award is
paid. The Incentive Plan calls for the Compensation Committee to at all times
administer the Incentive Plan with respect to Covered Employees so that
compensation paid as annual awards or long-term awards thereunder will be
tax-deductible as performance-based compensation under Section 162(m) of the
Code.
Any discretionary annual awards will be outside of the definition of
"performance-based" compensation and thus will count toward the $1 million per
person compensation limit which may be deducted in any year.
PLAN BENEFITS
While the amount of the annual or long-term award that may be awarded to a
Covered Employee for any Plan Year cannot be determined, payments under the
annual portion of the Incentive Plan for the preceding three years are included
in the Summary Compensation Table and potential awards under the long-term
portion of the Incentive Plan are reported in the table entitled "Long-Term
Incentive Plans--Awards in Last Fiscal Year."
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REQUIRED APPROVAL
A majority of the shares of Common Stock represented and entitled to vote at
the Annual Meeting must vote for the re-approval of the Incentive Plan for the
Company to remain eligible for the tax deduction for awards paid under the
Incentive Plan to covered employees. Unless marked to the contrary, all proxies
received will be voted for the re-approval of the Incentive Plan.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND RECOMMENDS THAT YOU VOTE FOR
PROPOSAL 3.
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APPENDIX A
1986 UTILICORP UNITED INC.
EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED
ARTICLE I
PURPOSES
UtiliCorp United Inc. has established the Plan set forth herein in order to
encourage ownership of its Common Stock by its employees and employees of
certain Affiliates, by providing them a convenient means for regular and
systematic purchases on an advantageous basis, thereby increasing their interest
in the Company's success.
ARTICLE II
DEFINITIONS
"Affiliate" means a subsidiary of the Company (including corporations
becoming subsidiaries subsequent to the adoption of the Plan) in an unbroken
chain of corporations beginning with the Company if at the time of the granting
of the Option each of such corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
"Company" means UtiliCorp United Inc.
"Board" means the Company's Board of Directors.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and regulations thereunder.
"Effective Date" shall mean June 1, 1986.
"Employee" means a person employed by an Employer.
"Employee Contributions" means contributions in the form of payroll
deductions and/or lump sum deposits of cash for payment for stock to be
purchased by that Employee as provided by Section 5.1.
"Employer" means the Company and its Affiliates which are designated by the
Board as an employer for purposes of this Plan. The Board may from time to time
change the designation of Affiliates who are employers for purposes of this
Plan.
"Option" means a right to purchase Stock granted under Section 4.1.
"Option Period" means the two-month period beginning June 1, 1986 and ending
July 31, 1986 and each three-month period thereafter beginning on any August 1,
November 1, February 1 or May 1 thereafter and ending on the next October 31,
January 31, April 30 or July 31.
"Plan" means the 1986 UtiliCorp United Inc. Employee Stock Purchase Plan set
forth herein, as it may be amended from time to time.
"Plan Agent" means EquiServe who has been appointed Plan Agent by the
Company to administer and maintain the records for the Plan or such other Plan
Agent who is appointed to act in such capacity by the Committee set forth in
Article VIII hereof.
"Stock" means the Common Stock of UtiliCorp United Inc.
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ARTICLE III
ELIGIBILITY
An Employee shall be eligible for an Option on the first day of an Option
Period if he is an Employee of an Employer, if his customary employment is for
at least 20 hours in each week and for at least 5 months in each calendar year
and if he has been employed by the Employer immediately preceding the first day
of the Option Period. For purposes of determining an Employee's period of
employment with the Employer, such period of employment shall include an
Employee's employment with any business entity, the assets, business or stock of
which has been acquired, in whole or in part, by the Employer through purchase,
merger or otherwise. In addition, an Employee of an Affiliate shall be deemed to
have been employed with an Employer as of the first day of his employment with
such Affiliate prior to its date of affiliation with the Company.
ARTICLE IV
GRANTING OF OPTIONS
4.1 OPTION PERIODS
On June 1, 1986, and on each August 1, November 1, February 1 and May 1
beginning with the Effective Date, each Employee who is eligible for an Option
under Article III shall be granted an Option to purchase Stock from the Company
on the last day of the Option Period beginning on that date, by authorizing
Employee Contributions under Article V. Notwithstanding the foregoing, no
Employee shall be eligible for an Option under Article III if such Employee,
immediately after the Option is granted, shall own 5% or more of the total
combined voting power or value of all classes of stock of the Company or of any
of its Affiliates, treating the maximum amount of stock available to him under
the Plan for such Option Period and shares subject to any other option as owned
by him and treating as owned by him shares owned by others to the extent
provided in Section 425(d) of the Code. Any Options granted in an Option Period
which are not exercised on the last day of the Option Period shall expire as of
the end of the Option Period.
4.2 AMOUNT OF STOCK AVAILABLE
An aggregate of 1,522,042 shares of Stock shall be available for purchase
under the Plan, subject to adjustment under Section 4.7. To the extent options
expire unexercised, the Stock subject to such Options shall become available for
subsequent grant. Stock available for purchase under the Plan shall be
authorized but unissued shares or reacquired shares purchased in the open
market.
4.3 EXERCISE PRICE
Stock shall be purchased under each Option at 85% of its fair market value
on the first day or the last day of the Option Period, whichever is lower,
subject to adjustment under Section 4.7. Fair market value on any day means the
closing price on the New York Stock Exchange on such day or, if not traded on
such day, on the last preceding day on which the stock was traded, or, if not
traded on the New York Stock Exchange, on such exchange or market as the Stock
from time to time may be traded if such market or exchange is designated by the
Board as controlling for purposes of the Plan.
4.4 NONTRANSFERABILITY
Options granted to an Employee are not transferable, and may be exercised
during the Employee's lifetime only by him. Any attempt of assignment, transfer,
pledge, hypothecation, or other disposition of any Option contrary to the
provisions of this Plan, and the levy and attachment or any similar proceedings
upon any Option, shall be null and void.
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4.5 STOCKHOLDER APPROVAL
If the Plan is not approved by the Company's stockholders prior to June 1,
1986, the Plan shall be null and void.
4.6 LIMITS ON STOCK PURCHASE
Notwithstanding any other provision of this Plan, no Employee may purchase
in any calendar year more than the number of shares equal to 20% of his annual
basic rate of compensation divided by 85% of the fair market value of Stock,
both determined on the first day of the Option Period. In addition, no Employee
may be granted an Option which permits him to purchase during a calendar year
under the Plan and any other employee stock purchase plan, within the meaning of
Section 423 of the Code, shares of the Company and its Affiliates having an
aggregate fair market value, determined at the time such Option is granted, of
more than $25,000.
4.7 ADJUSTMENT OF AMOUNT OF STOCK
In the event of change in the number of shares of Stock outstanding by
reason of a Stock dividend, Stock split or other recapitalization, or by reason
of a merger or consolidation or otherwise, the number of shares of Stock
available under this Plan, and the fair market value of such shares at the
beginning of the Option Period during which such change occurs, shall be
adjusted in such manner as the Board, in its discretion, deems equitable and
appropriate.
ARTICLE V
PAYMENT FOR STOCK
5.1 EMPLOYEE CONTRIBUTIONS
Each Employee may exercise Options granted to him under Section 4.1 by
authorizing Employee Contributions on a form provided by his Employer. The
actual exercise of the Options shall occur on the last day of the Option Period.
Employee Contributions may be authorized beginning June 1, 1986 or any
August 1, November 1, February 1 or May 1 thereafter, in an amount up to 20% of
an Employee's basic rate of compensation paid by the Employer. Total deductions
may not exceed $25,000 for any calendar year. The basic rate of compensation
shall include amounts contributed at an Employee's election that are excludible
or deductible from income under federal tax law, but not Employer matching
contributions, under any thrift or savings plan to which the Employer
contributes. An authorization for Employee Contributions hereunder shall remain
in effect until changed under Section 5.3.
5.2 PURCHASE OF STOCK
As of the last day of each Option Period the amount of Employee
Contributions during such Option Period for each person who remains an Employee
on such date shall be used to purchase from the Company full and partial shares
of Stock computed to three decimal places under the Employee's Option. Upon the
purchase of shares of Stock under an Option, the Company shall deliver, or cause
to be delivered, promptly to the Employee a statement reflecting the status of
his account and, if requested in writing by the Employee, the Plan Agent shall
issue a stock certificate for such shares with a restrictive legend, if
applicable. The account and such shares shall be registered in the name of the
Employee.
5.3 DISCONTINUANCE OR CHANGE
An Employee may discontinue Employee Contributions authorized under
Section 5.1 at any time, or change the rate of payroll deductions to any other
permitted rate as of the first day of any Option
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Period, by signing and filing with his Employer within the time prescribed in
rules and regulations adopted under Article VIII a form provided for this
purpose. Once discontinued hereunder, Employee Contributions may not be made
again until the next succeeding Option Period.
5.4 REFUND OF CONTRIBUTIONS
If during an Option Period an Employee for whom contributions are being made
under Section 5.1 becomes ineligible to have Stock purchased for him under
Section 5.1, or discontinues his contributions under Section 5.3, his Employee
Contributions during such Option Period shall be returned without interest to
him within 30 days of the date on which the Company first learns of the
Employee's ineligibility, or the date on which the Employee informs the Company
that he wishes to discontinue contributions. If the aggregate amount of Employee
Contributions under Section 5.1 during any Option Period exceeds the purchase
price of Stock available under the Plan, the available Stock shall be allocated
to Employees in proportion to the respective maximum number of shares that can
be purchased during the Option Period, and amounts not used to purchase Stock
shall be returned without interest to the respective Employees as soon as
practicable. Any Employee Contributions in excess of the limits in Section 4.6
shall be returned without interest to an Employee within 30 days of the date on
which the Company first learns of the existence of any excess contributions.
5.5 RIGHTS OF EMPLOYEES
An Employee shall have no right, title or interest in any Stock subject to
an Option, including no right to receive dividends, until such Stock has been
purchased for him and credited to his account or issued to him.
5.6 REQUIREMENTS OF SECURITIES LAWS
No shares of Stock may be issued under any Option until all requirements of
applicable federal, state or other securities laws, and of any securities
exchange upon which Stock may be listed, with respect to the purchase, sale and
issuance of the Stock shall have been satisfied. If any action must be taken
because of such requirements, then the purchase, sale and issuance of the shares
shall be postponed until such action can reasonably be taken. Upon demand by the
Company, an Employee shall deliver to the Company a representation in writing
that the purchase of all shares of Stock under an Option is being made for
investment only and not for resale or with a view to distribution, and
containing such other representations and provisions with respect thereto as the
Company may reasonably require in order to comply with any registration
requirements or exemptions therefrom of applicable securities laws.
ARTICLE VI
APPLICABLE LAW
Options granted under this Plan shall be construed and shall take effect in
accordance with the laws of the State of Delaware.
ARTICLE VII
AMENDMENT; TERMINATION
7.1 AMENDMENT
The Board may amend this Plan at any time in such manner and to such extent
as it deems appropriate; provided, that no such amendment shall, without
approval of the stockholders of the Company, increase the number of shares of
Stock available for purchase under the Plan, except as provided in Section 4.7.
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7.2 TERMINATION
This Plan may be terminated by the Board at any time, in its entirety or as
to any group of Employees. In the event of termination of the participation of
an Employee under this Article VII during an Option Period, no further Employee
Contributions shall be made with respect to such Employee's annual basic rate of
compensation under Section 5.1, but Stock shall be purchased for him under the
terms of Section 5.2 as of the last day of an Option Period. If the Plan is
terminated by the Board under this Article VII and if (a) any reclassification
or change of outstanding shares of Stock or (b) any consolidation or merger of
the Company with or into another corporation, or (c) any sale, lease, exchange
or other disposition of all or substantially all the property and assets of the
Company occurs on or prior to the last day of the Option Period during which the
Plan is terminated, then, notwithstanding the foregoing, no Stock shall be
purchased as of the last day of such Option Period and each Optionee's Employee
Contributions during such Option Period shall be returned without interest to
him within 30 days.
ARTICLE VIII
ADMINISTRATION
A Committee of persons appointed by the Board of Directors shall have the
authority and responsibility for administration of the Plan. The Board may from
time to time appoint or dismiss members of the Committee. The Board may
prescribe, amend and rescind, and the Committee may adopt, rules and regulations
for administration of the Plan, and the Committee shall have full power and
authority to construe and interpret the Plan. A majority of the members of the
Committee shall constitute a quorum and the acts of a majority of the members
present at a meeting or the consent in writing signed by all members of the
Committee shall be the acts of the Committee and shall be final, conclusive and
binding upon all parties, including the Company, its Affiliates, the
stockholders, the Employees and all persons or entities claiming by or through
the Employees. The Board may correct any defect or any omission or reconcile any
inconsistency in the Plan or in any Option granted hereunder in the manner and
to the extent it shall deem desirable. The expense of the Plan shall be paid for
by the Company.
ARTICLE IX
LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE PLAN
The Company does not intend to restrict or influence any Employee in the
conduct of his own affairs. Each Employee agrees by entering the Plan not to
sell, transfer or otherwise dispose of stock purchased under the Plan for two
years from the first day of the Option Period during which the Stock was
purchased. Exceptions to such restriction on sales may be granted for hardship
circumstances to be determined by the Committee administering the Plan. The
Employee assumes the risk of any market fluctuations in the price of such Stock.
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APPENDIX B
AMENDED AND RESTATED
UTILICORP UNITED INC.
ANNUAL AND LONG-TERM INCENTIVE PLAN
INTRODUCTION: The following sets forth the Annual and Long-Term Incentive
Plan for UtiliCorp United Inc. which amends and restates the
Annual Incentive Plan effective January 1, 1986 and expands
it to include the Long-Term Incentive Plan, effective as of
January 1, 1994. This Plan has been further amended effective
February 3, 1998, and August 4, 1998.
(A) PLAN PURPOSES
The key purposes of the Plan are as set forth below.
1. To encourage and reward both annual and long-term sustained performance
above the level of performance that would be expected at a fully
competent level, thereby enabling the Company to continue to provide
outstanding service to its ratepayers and other customers while enhancing
the value of the Company for its stockholders.
2. Further, to provide competitive levels of cash compensation for key
employees to assure the Company of the necessary talent for future
success, and to directly link a significant portion of such compensation
to those performance results most directly impacted by such key
employees.
3. Further, to permit the payment of a significant portion of the Plan
awards on a deferred basis with appropriate vesting requirements to
assist the Company in retaining the services of key employees and, by
using Restricted Stock for such deferral, to enhance the ownership
interest of key employees for the benefit of Company stockholders.
(B) DEFINITIONS
1. "Annual Award" shall mean the payment received annually by a Plan
Participant whether paid in cash or shares of Restricted Stock as
described in Section (F) below.
2. "Award" shall mean the payment of an Annual Award or Long-Term Award.
3. "Board" shall mean the Board of Directors of the Company.
4. "Committee" shall mean the Compensation Committee of the Board.
5. "Company" shall mean UtiliCorp United Inc., and its divisions,
subsidiaries and affiliated organizations approved for participation.
6. "Designated Beneficiary" shall mean the person, or persons as elected by
the Participant (or designated by the Company in the absence of such
election) to receive any payments, whether in cash or shares of
Restricted Stock due from the Plan in the event of a Participant's death.
7. "Discretionary Annual Award" shall have the meaning described in
Section (F), below.
8. "Discretionary Annual Award Pools" shall have the meaning set out in
Section (F), below.
9. "Long-Term Award" shall mean the payment received hereunder, either in
cash and/or shares of Restricted Stock following completion of a
Long-Term Award Cycle.
10. "Long-Term Award Cycle" shall mean a period of three or more consecutive
calendar years during which cumulative Performance Awards are set.
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11. "Effective Date" shall mean January 1, 1994.
12. "Participant" or "Plan Participant" shall mean a key managerial,
professional or technical employee approved for Plan membership by the
Board (or the Committee) with respect to any Plan Year.
13. "Performance Goals" shall have the meaning set forth in Paragraphs
(F) and (H) below.
14. "Plan" shall mean the UtiliCorp United Inc. Annual and Long-Term
Incentive Plan as described herein or amended hereafter.
15. "Plan Year" shall mean January 1 through December 31, the calendar year,
which corresponds with the Company's fiscal year.
16. "Restricted Stock" shall mean shares of the Company's common stock
awarded to Participants under the UtiliCorp United Inc. 1986 Stock
Incentive Plan or any successor plan providing for the grant of
Restricted Stock.
(C) PLAN ADMINISTRATION
1. The Company shall be responsible for the general administration of the
Plan.
2. The Board or, at the Board's direction, the Committee shall be
responsible for monitoring the ongoing use of the Plan and shall:
(a) review Company recommendations with respect to all necessary actions;
(b) review Company recommendations for any amendments to the Plan; and
(c) approve all Annual Awards and Long-Term Awards under the Plan and
monitor the use of Discretionary Annual Award Pools.
(D) BOARD (OR COMMITTEE) POWERS
1. The Board, acting upon the advice and counsel of the Committee, or the
Committee itself if so empowered by the Board, shall have the following
powers with respect to the Plan:
(a) Annual approval of: Participants; opportunity levels; the basis of
Awards; and the method of payment for such Awards including the use
and content of written agreements for Restricted Stock Awards.
(b) The right to review, amend, and authorize any Performance Goals or
other factors used to determine Annual Awards, Long-Term Awards and
the Discretionary Annual Award Pools for any division or unit of the
Company as described in Section (F) below.
(c) The right to retroactively adjust any aspect of the Plan for an
already completed or ongoing Plan Year if in the Board's (or
Committee's) judgment significant events outside of the control of
Plan Participants have occurred which require such adjustment if the
Plan is to effectively serve its purposes.
(d) The right to receive an annual summary of all Awards paid for each
Plan Year and pertinent information with respect to all Restricted
Stock Awards, plus such other information as it may reasonably
request.
(e) The right to amend or discontinue the Plan at any time if such action
is deemed to be in the best interests of the Company, its ratepayers
and its stockholders. In such event an appropriate and equitable
resolution of Awards in the process of being earned during a Plan
Year shall be made.
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(E) PLAN PARTICIPATION
1. Each Plan Year all full-time employees shall be eligible to participate
in the Plan with respect to the receipt of Discretionary Annual Awards
pursuant to Section (F) below.
2. With respect to Annual Awards and Long-Term Awards pursuant to
Section (F) below, participation shall be limited to those managerial,
professional, or technical employees who are key employees approved for
participation by the Committee.
3. To the extent separate incentive arrangements are established for
various divisions or units of the Company, participation may include the
eligibility for an Annual Award or Long-Term Award from one or more of
such separate arrangements as the Board (or Committee) may determine.
4. Participation for an Annual Award or Long-Term Award in one Plan Year
does not automatically qualify an employee for participation in
subsequent years nor does participation in a separate incentive
arrangement for one division or unit automatically qualify an employee
for participation in any other such arrangements.
5. Subject to special action by the Board (or Committee) pursuant to
subsection (6) below, participation for otherwise eligible employees
whose status changes during a Plan Year, or prior to actual payment of an
Award, shall be determined by the Chief Executive Officer of the Company,
in accordance with the following:
(a) VOLUNTARY TERMINATION OF EMPLOYMENT, OR TERMINATION AT THE REQUEST OF
THE COMPANY. If such termination occurs prior to the date an Award is
paid, a Participant shall have no right to any Award from the Plan.
(b) DEATH, RETIREMENT, OR TOTAL DISABILITY. In such event a Participant
(or his or her estate) shall be entitled to a pro-rata Award, if any,
for the Plan Year in which such event occurs.
(i) Such Awards shall be determined when all other Awards are
determined for the applicable Plan Year.
(ii) "Pro-rata" shall mean the Award for the entire Plan Year
multiplied by a fraction the numerator of which is the
Participant's days of full-time active employment (counting any
days on short-term disability or salary continuation) during the
Plan Year and denominator of which is 365.
(iii) "Total Disability" shall mean the date of commencement of
payments under the Company's long-term disability plan applicable
to the Participant.
(iv) "Retirement" shall mean the cessation of active employment and
the effective date of normal, later, or early Retirement under
the Company's retirement or pension plan applicable to the
Participant but not a termination of employment with vested
rights under any such plan.
(c) HIRE OR PROMOTION DURING A PLAN YEAR. Provided such event occurs
within the first nine months of any Plan Year participation may be
authorized for a pro-rata Annual Award or Long-Term Award subject to
Board (or Committee) approval with respect to the opportunity levels
and Performance Goals.
Actions taken by the Chief Executive Officer of the Company in accordance
with the above do not require Board (or Committee) approval.
6. Based upon the recommendation of the Company the Board (or Committee)
may authorize actions other than those set forth in subsection (5) above
to address unusual circumstances.
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7. Regardless of any other provision of the Plan a Participant whose
personal, individual, performance is determined to be unsatisfactory at
the date an Award is otherwise payable shall have no right to receive
payment of an Award. This determination shall be made by the Chief
Executive Officer of the Company with respect to employees not assigned
to a specific unit or division and by the chief executive officer of the
Participant's division or unit in all other cases, subject to the
approval of the Chief Executive Officer of the Company.
(F) TYPES OF AWARDS
1. There are three types of Awards payable under the Plan: an Annual Award,
a Long-Term Award and a Discretionary Annual Award.
2. Annual Awards and Long-Term Awards are available only to key employees
specifically approved as eligible for such Awards and payment with
respect thereto shall be based on the achievement of specific Performance
Goals established for each Participant.
(a) Performance Goals may be set for the Company as a whole, for each
division or unit, or for individual performance criteria.
(b) Such Performance Goals can be established on the basis of specific
numeric standards (e.g. return on net assets) or as one or more
objectives or results for which performance achievements shall be
determined on a discretionary, subjective basis by an appropriate
individual, subject to Section (H), below.
(c) For any Plan Year the Annual Award or Long-Term Award for any
Participant shall have a set maximum amount, expressed as a
percentage of annual salary and/or a dollar amount, as approved by
the Board (or Committee); and set Award amounts may also be
established at other performance levels such as threshold and par
with or without provision for pro-ration.
(d) Specific Board (or Committee) approval is required annually for the
payment of Awards.
(e) As approved by the Board (or Committee) for any Plan Year the Annual
Award or Long-Term Award payable MAY be subject to either or both of
the criteria set forth below.
(i) A "STOCKHOLDER (OR CORPORATE) PROTECTION TRIGGER" which
establishes a minimum level of performance, or other action (e.g.
the distribution of a level of dividends), which must be achieved
before any Awards are payable for a Plan Year.
(ii) A "RATEPAYER PROTECTION FEATURE" which establishes a schedule of
absolute or relative performance relating to the quality or cost
of service provided by the Company (or division or unit) against
which actual results will be compared for the Plan Year with the
resulting comparison used to modify, or eliminate, Total Awards
otherwise payable for such Plan Year.
(f) Each Participant approved for an Award shall receive a written
description of his or her opportunity and applicable Performance
Goals.
3. "Discretionary Awards" are available to any full-time employee of the
Company except the Chief Executive Officer of the Company.
(a) Such Discretionary Awards shall be payable from a Discretionary Award
Pool established annually for each division or unit and the sum of
such Awards for the employees in any unit or division for any Plan
Year cannot exceed the pool approved by the Board (or Committee) for
such division or unit. The pool established for employees not
assigned to a division or unit shall be used for any Discretionary
Award payable to the respective chief executive officers of the
Company's participating divisions or units. The minimum
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Discretionary Award, if any, is $500 and the maximum Discretionary
Award is ten percent of the employee's then existing annual base
salary rate.
(b) Discretionary Awards shall be determined subjectively by the chief
executive officer of each division or unit, subject to the approval
of the Chief Executive Officer of the Company, and shall be used to
recognize outstanding individual performance, the accomplishment of a
specific task in an exemplary manner, or for individuals who made an
inordinately significant contribution to overall divisional, unit or
Company-wide results.
(c) The total Discretionary Award Pool authorized for any division or
unit need not be spent for any Plan Year. Unallocated Pool funds are
not carried forward for subsequent Plan Years.
(G) PAYMENT OF AWARDS
1. Discretionary Awards shall be payable in cash.
2. Annual Awards and Long-Term Awards shall be payable in cash, Restricted
Stock, or any combination thereof as approved by the Board (or Committee)
for any individual Participant in any Plan Year; provided that payment in
the form of Restricted Stock shall be approved by the Committee.
(H) COMPLIANCE WITH SECTION 162(M) REQUIREMENTS.
Subject to the discretion of the Board (or the Committee) to determine that
it would be in the best interests of the shareholders to do otherwise, the
Plan shall at all times be administered to ensure that any Award under the
Plan to the Company's Chief Executive Officer and the four highest
compensated officers (determined pursuant to the executive compensation
disclosure rules under the Securities Exchange Act of 1934) (each a "Covered
Employee") will be tax-deductible. In furtherance of this goal, with respect
to Awards payable under the Plan for Covered Employees, the Performance
Goals established by the Committee may vary from one Covered Employee to
another, and will be limited to certain business criteria measured by one or
more of the following: revenues, units sold, operating income, operating
company contribution, cash flow, income before taxes, net income, earnings
available per share, return on equity, return on assets, Economic Value
Added (EVA) or total return to stockholders, whether applicable to the
Company or any relevant subsidiary or business unit, or combination thereof,
as the Committee may deem appropriate, or any of the above goals as compared
to the performance of a published or special index deemed appropriate by the
Committee, including, but not limited to, the Standard & Poor's 500 Stock
Index or a group of comparator companies. The criteria selected by the
Committee shall include a minimum performance standard below which no
payments will be made and a maximum performance level above which no
increased payment will be made. Notwithstanding the foregoing, in no event
may any Performance Goals be established which would permit a Covered
Employee to receive a single Annual Award or a Long-Term Award of more than
400% of such Covered Employee's base annual compensation as of January 1 for
the year in which an Award is paid. No payment of any Award may be made to
any Covered Employee unless the material terms of the Performance Goal under
which the compensation is to be paid have been approved by shareholders of
the Company and the Committee has certified in writing that the Performance
Goals and any other material terms of the Award were in fact satisfied.
(I) MISCELLANEOUS AND ADMINISTRATIVE PROVISIONS
1. All Participants shall be entitled to receive a copy of the Plan and any
amendments made subsequent to its Effective Date.
2. The Plan shall be binding upon and inure to the benefit of the
Participants (and their personal representatives), the Company and any
successor organization or organizations which
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<PAGE>
shall succeed to substantially all of the business and property of the
Company, whether by means of merger, consolidation, acquisition of
substantially all of the assets of the Company or otherwise, including by
operation of law.
3. All amounts used for Plan purposes shall be rounded to the nearest whole
dollar.
4. Awards, whether in cash or Restricted Stock, shall not be subject to
assignment, pledge, lien, or encumbrances of any kind.
5. Participation in the Plan does not guarantee employment by the Company.
6. Awards shall not be used for any purposes for any employee benefit plan
of the Company.
7. The Plan shall be interpreted under the laws of the State of Missouri.
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<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 3, 2000. By signing this proxy card you are
appointing Robert K. Green, John R. Baker, and Robert F. Jackson, Jr. as
Proxies, with full power of substitution, to vote all of your shares of
UtiliCorp United Inc. common stock held by you on March 9, 2000. They will
vote your proxy exactly as you have indicated on the reverse side of this
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 FOR THE
ELECTION OF THE NOMINEES FOR DIRECTOR, FOR PROPOSALS 2 AND 3, AND ACCORDING
TO THE DISCRETION OF THE PROXY HOLDERS ON ANY OTHER MATTERS THAT MAY PROPERLY
COME BEFORE THE MEETING. The shares will be voted at the Annual Meeting of
shareholders to be held at the Hyatt Regency Crown Center, 2345 McGee Street,
Kansas City, Missouri on Wednesday May 3, 2000. If the meeting is postponed
or adjourned they will vote your proxy at the rescheduled or reconvened 2000
Annual Meeting.
Election of Directors, Nominees:
01) Richard C. Green, Jr.
02) L. Patton Kline
03) Ronald T. LeMay
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.
P
R
O
X
Y
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
UTILICORP UNITED INC.
ANNUAL MEETING OF
SHAREHOLDERS
MAY 3, 2000, 2:00 P.M.
HYATT REGENCY CROWN CENTER
2345 MCGEE STREET
KANSAS CITY, MISSOURI
<PAGE>
4941
/X/ PLEASE MARK YOUR 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 proposals 2 and 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, AND 3.
1. Election of Directors
(see reverse)
FOR WITHHELD
/ / / /
For, except vote withheld from the following nominee(s): ___________________
2. To amend the 1986 Employee Stock Purchase Plan to allow for the issuance
of an additional 1,500,000 shares under the terms of the plan and to approve
the plan to comply with the requirements of Section 423 of the Internal
Revenue Code.
FOR AGAINST ABSTAIN
/ / / / / /
3. To re-approve the Annual and Long-Term Incentive Plan to comply with the
requirements of Section 162(m) of the Internal Revenue Code.
FOR AGAINST ABSTAIN
/ / / / / /
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 Proposals 2 and 3 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. c/o EquiServe, 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!
