<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 Section240.14a-11(c) or
Section240.14a-12
DST SYSTEMS, 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:
-----------------------------------------------------------------------
(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):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
DST SYSTEMS, INC.
NOTICE AND PROXY STATEMENT
FOR
THE ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 11, 1999
YOUR VOTE IS IMPORTANT!
Please mark, date and sign the enclosed Proxy or Instruction Card
and promptly return it in the enclosed envelope, or vote by telephone or the
Internet
as described on the card.
MAILING OF THIS NOTICE AND PROXY STATEMENT, THE ACCOMPANYING PROXY OR
INSTRUCTION CARD AND THE 1998 ANNUAL REPORT, COMMENCED ON OR ABOUT MARCH 30,
1999.
<PAGE>
DST SYSTEMS, INC.
333 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105
------------------------
PROXY STATEMENT
AND
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 1999
------------------------
You are hereby notified of and cordially invited to attend the Annual
Meeting of Stockholders of DST Systems, Inc., a Delaware corporation ("DST"), to
be held at the Muehlebach Tower, Truman-A Room, Kansas City Marriott Downtown,
1213 Wyandotte, Kansas City, Missouri, at 10:30 a.m., Central Time, on Tuesday,
May 11, 1999, to consider and vote upon the following matters:
1. Election of two directors; and
2. Such other matters which are now unknown to DST as may properly be brought
before the Annual Meeting or any adjournment thereof.
The Board of Directors has set the close of business on March 17, 1999 as
the record date for determining which stockholders are entitled to notice of and
to vote at this meeting or any adjournment thereof. A list of such stockholders
will be available for examination by any stockholder for any purpose germane to
the meeting during the Annual Meeting and during regular business hours at the
offices of DST, 333 West 11th Street, Kansas City, Missouri, in the 10-day
period prior to the Annual Meeting.
It is important that your shares be represented at the meeting. A Proxy Card
is enclosed for those of you who hold shares directly. If you are holding stock
of DST through participation in The Employee Stock Ownership Plan of DST
Systems, Inc. or the USCS International, Inc. 401(k) Retirement Plan, the
enclosed Instruction Card permits you to direct the vote of shares allocated to
you under the plan. Regardless of whether you plan to attend the Annual Meeting,
please date the Proxy or Instruction Card, sign it and promptly return it in the
enclosed envelope, which requires no postage if mailed in the United States.
Alternatively, you may cast your votes by telephone or through the Internet as
described on the Proxy or Instruction Card.
If you own shares registered in the name of a broker, you should receive a
card from that broker permitting you to direct the broker to vote those shares.
Please promptly complete the card and return it to the broker.
Any stockholder or stockholder's representative who may need special
assistance or accommodation to participate in the Annual Meeting because of a
disability should contact DST's Corporate Secretary at the above address, (816)
435-4636. To provide DST sufficient time to arrange for reasonable assistance,
please submit all such requests by May 1, 1999.
By Order of the Board of Directors,
/s/ Robert C. Canfield
Robert C. Canfield
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
The date of this Notice is March 30, 1999.
<PAGE>
DST SYSTEMS, INC.
333 WEST 11TH STREET
KANSAS CITY, MISSOURI 64105
------------------------
PROXY STATEMENT
---------------------
CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Voting..................................................................................................... 1
Principal Stockholders and Stockholdings of Management..................................................... 4
Proposal--Election of Two Directors........................................................................ 7
The Board of Directors..................................................................................... 8
Executive Compensation..................................................................................... 11
Other Matters.............................................................................................. 19
</TABLE>
<PAGE>
PROXY STATEMENT
This proxy statement is being mailed on or about March 30, 1999, to all
holders of the common stock of DST Systems, Inc. ("DST"), par value $.01 per
share ("DST Common Stock"), which is the only class of voting securities of DST
outstanding at the close of business on March 17, 1999 (the "Record Date"). Such
stockholders are entitled to vote on the proposal to be presented by the DST
Board of Directors (the "DST Board") at the Annual Meeting of Stockholders to be
held at 10:30 a.m. Central Time, on Tuesday, May 11, 1999, at the Muehlebach
Tower, Truman-A Room, Kansas City Marriott Downtown, 1213 Wyandotte, Kansas
City, Missouri ("Annual Meeting"). The DST Board is soliciting your proxy or
instructions to vote on the proposal, and is also furnishing you with the Annual
Report to stockholders of DST for the year ended December 31, 1998.
VOTING
PROPOSAL. At the Annual Meeting, the DST Board intends to present the
election of two directors. The DST Board knows of no other matters that will be
presented or voted on at the Annual Meeting. Stockholders do not have any
dissenters' rights of appraisal in connection with the election of two
directors.
TABULATION OF VOTES. Each stockholder may cast one vote for each share of
DST Common Stock held by such stockholder on the Record Date on all matters to
be voted on at the Annual Meeting. Stockholders may vote cumulatively for
directors. In other words, each stockholder may cast a number of votes equal to
the number of shares of DST Common Stock held by such stockholder on the Record
Date multiplied by the number of directors to be elected, and the stockholder
may cast all such votes for a single nominee or distribute them between the
nominees as the stockholder chooses. The directors are elected by a plurality of
the shares voted by the stockholders. The plurality is determined by reference
to the number of votes for each director nominee, and where, as here, there are
two vacancies for director, the two nominees with the highest number of
affirmative votes are elected. Votes with regard to the election of directors
may be cast in favor or withheld; votes that are withheld will be excluded
entirely from the vote and will have no effect. Broker non-votes (which occur
when a broker has not received directions from customers, and the broker cannot
or does not vote the customers' shares) will have no effect on a proposal to
elect directors.
On any proposal other than the election of directors, a majority of the
shares represented at the meeting in person or by proxy is required for the
adoption of the proposal. The percentage of shares that have been affirmatively
voted for such a proposal is determined by dividing the affirmative votes by the
total of the number of shares voted for the proposal, the number of shares voted
against the proposal, the number of shares abstained from voting on the
proposal, and broker non-votes. In other words, abstentions and broker non-votes
will have the effect of votes against a proposal.
QUORUM. In order for any proposal to be approved at the Annual Meeting, a
quorum of DST stockholders must be present at the meeting, either in person or
through a proxy, regardless of whether such stockholders vote their shares. The
presence in person or by proxy of the holders of a majority of the shares of DST
Common Stock outstanding on the Record Date constitutes a quorum. Broker
non-votes generally would not affect the determination of whether the holders of
the majority of shares of outstanding DST Common Stock are present at the Annual
Meeting because typically some of the shares held in the broker's name have been
voted on at least some proposals, and therefore, all of such shares held in the
broker's name are considered present at the Annual Meeting.
1
<PAGE>
HOW STOCKHOLDERS VOTE. Stockholders may hold DST Common Stock in their own
names, through allocations to the stockholders' accounts under The Employee
Stock Ownership Plan of DST Systems, Inc. (the "DST ESOP") or the USCS
International, Inc. 401(k) Retirement Plan ("USCS 401(k)"), or through a broker
or other nominee, and may vote such stock as follows:
DST COMMON STOCK HELD IN STOCKHOLDER'S NAME. Stockholders who hold DST
Common Stock in their own names may only vote their shares of DST Common Stock
if they or their proxies are present at the Annual Meeting. Stockholders may
appoint as their proxy the Proxy Committee, which consists of officers of DST
whose names are listed on the Proxy Card. The Proxy Committee will vote all
shares of DST Common Stock for which it is the proxy as specified by the
stockholders on the Proxy Cards.* A stockholder desiring to name as proxy
someone other than the Proxy Committee may do so by crossing out the names of
the Proxy Committee members on the Proxy Card and inserting the full name of
such other person. In that case, the stockholder must sign the Proxy Card and
deliver it to the person named, and the person named must be present and vote at
the Annual Meeting.
If a properly executed and unrevoked Proxy Card does not specify how the
shares of DST Common Stock represented thereby are to be voted, the Proxy
Committee intends to vote such shares for the election as directors of the
persons nominated by the DST Board ("Board Nominees") and in accordance with the
discretion of the Proxy Committee upon such other matters as may properly come
before the Annual Meeting. This Proxy Statement solicits, and the Proxy Card or
telephone or Internet vote grants, discretionary authority to the Proxy
Committee to vote cumulatively for directors by, for instance, casting all its
votes for a single Board Nominee. The Proxy Committee does not intend to vote
cumulatively unless persons other than Board Nominees are properly nominated and
such a vote appears necessary to assure that a Board Nominee is elected.
DST COMMON STOCK ALLOCATED UNDER THE DST ESOP OR THE USCS
401(K). Individuals for whom shares of DST Common Stock are allocated in the
DST ESOP or the USCS 401(k) may on the Instruction Card instruct the DST ESOP or
USCS 401(k) trustee how to vote their allocated shares.** With respect to any
shares of DST Common Stock not allocated to the accounts of participants and the
shares for which the trustee received no instructions, the DST ESOP trustee must
vote the shares in the same proportion as those shares for which it received
instructions, and the USCS 401(k) trustee may vote the shares as the committee
that administers the plan directs. For either plan, the plan trustee may vote
shares allocated to the accounts of the participants either in person or through
a proxy.
DST COMMON STOCK HELD THROUGH A BROKER OR OTHER NOMINEE. When shares are
registered in a broker or broker nominee name, each broker or nominee must
solicit from its customers holding DST Common Stock on the Record Date
directions on how to vote the customers' shares, and the broker or nominee must
then vote such shares in accordance with such directions. Brokers or nominees
are to forward soliciting materials to the beneficial owners of shares, and,
upon request, will be reimbursed by DST for their reasonable expenses in mailing
soliciting materials to such beneficial owners. Whether member brokers may vote
the shares of their customers when they have not received directions from their
customers depends on the proposal and on the rules and procedures of the New
York Stock Exchange ("NYSE") and the Chicago Stock Exchange, which are the
exchanges that list DST Common Stock for trading.
- ------------------------
* Stockholders may also specify their vote and appoint the Proxy Committee to
vote their shares via a toll-free telephone number or through the Internet.
The Internet address and telephone number are shown on the Proxy Card.
** Internet and telephone voting are also available to DST ESOP and USCS 401(k)
participants, and the Instruction Card contains the Internet address and
toll-free telephone number.
2
<PAGE>
REVOKING PROXY AUTHORIZATIONS OR INSTRUCTIONS. Until the polls close, (or,
in the case of DST ESOP or USCS 401(k) participants, until the plan trustee
votes), votes with respect to shares held other than through a broker or nominee
may be recast by (a) an Internet or telephone vote subsequent to the date shown
on a previously executed and delivered Proxy or Instruction Card or to the date
of a prior electronic vote or (b) with a later-dated, properly executed and
delivered Proxy or Instruction Card. Otherwise, a stockholder may not revoke a
vote, even by attending the Annual Meeting, unless, in the case of a stockholder
of record, a written revocation is delivered to the Corporate Secretary of DST
at any time before the Chairman of the Annual Meeting closes the polls, or, in
the case of a DST ESOP or USCS 401(k) participant, the trustee's revocation
procedures are followed. A customer of a broker or nominee may recast votes or
revoke instructions to the broker or nominee only by obtaining and following the
procedures of the broker or nominee.
ATTENDANCE AND VOTING IN PERSON AT THE ANNUAL MEETING. Attendance at the
Annual Meeting is limited to stockholders of record on the Record Date or their
properly appointed proxies, beneficial owners of DST Common Stock having
evidence of such ownership, and guests of DST. Participants in the DST ESOP and
the USCS 401(k) and stockholders holding DST Common Stock through a broker or
other nominee, absent special direction to DST from the plan trustee, broker or
nominee, may only vote by instructing the trustee, broker or nominee and may not
cast a ballot at the Annual Meeting. Stockholders of record who have not
appointed a proxy, or who have revoked the appointment of a proxy, may vote by
casting a ballot at the Annual Meeting.
3
<PAGE>
PRINCIPAL STOCKHOLDERS AND STOCKHOLDINGS OF MANAGEMENT
As of the Record Date, DST had outstanding 62,999,864 shares of DST Common
Stock. The following table sets forth information as of the Record Date
concerning the beneficial ownership of DST Common Stock by: (i) beneficial
owners of more than 5% of the outstanding DST Common Stock which have publicly
filed a report acknowledging such ownership; (ii) the directors and certain
executive officers of DST; and (iii) all of DST's executive officers and
directors as a group. Beneficial ownership generally means either the sole or
shared power to vote or dispose of the shares. Except as otherwise noted, the
holders have sole voting and dispositive power. No officer or director of DST
owns any equity securities of any subsidiary of DST.
<TABLE>
<CAPTION>
SHARES OF
COMMON PERCENT
NAME AND ADDRESS STOCK(1) OF CLASS(2)
- ------------------------------------------------------------ -------------- --------------
<S> <C> <C>
Kansas City Southern Industries, Inc. ("KCSI")(3)........... 20,281,526(4) 32.2%
Massachusetts Financial Services Company(5)................. 5,085,920(6) 8.1%
George L. Argyros(7)........................................ 4,786,036(8) 7.6%
Director
FMR Corp., Edward C. Johnson 3d,............................ 4,562,184(10) 7.2%
Abigail P. Johnson, Fidelity Management & Research Company
("Fidelity"), Fidelity Management Trust Company ("Fidelity
Trust"), Fidelity International Limited ("Fidelity
International")(9)
A. Edward Allinson.......................................... 22,000(11) *
Director
Robert C. Canfield.......................................... 116,203(12) *
Senior Vice President, General Counsel and Secretary
James C. Castle, Ph.D....................................... 374,005(13) *
Chairman and Chief Executive Officer of USCS
International, Inc.(17)
Director
Michael G. Fitt............................................. 20,000(11) *
Director
James P. Horan.............................................. 124,350(14) *
Director of International Technology
Thomas A. McCullough........................................ 293,291(15) *
Executive Vice President, Director
Thomas A. McDonnell......................................... 587,186(16) *
President and Chief Executive Officer, Director
William C. Nelson........................................... 17,100(11) *
Director
Charles W. Schellhorn....................................... 195,730(18) *
Vice Chairman, USCS International, Inc.(17)
M. Jeannine Strandjord...................................... 18,000(11) *
Director
All Executive Officers and Directors as a Group (18
Persons).................................................. 7,156,225(19) 11.4%
</TABLE>
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* Less than 1% of the outstanding DST Common Stock.
4
<PAGE>
(1) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), share amounts shown for DST's executive
officers and directors include shares of DST Common Stock they may acquire
upon the exercise of options which are exercisable at the Record Date or
will become exercisable within 60 days of such date and shares of DST
Common Stock allocated to the accounts of such persons under the DST ESOP
or the USCS 401(k). The holders may disclaim beneficial ownership of any
such shares which are owned by or with family members, trusts or other
entities.
(2) The percentage is based on the number of shares outstanding as of the
Record Date.
(3) The address of KCSI is 114 West 11th Street, Kansas City, Missouri 64105.
(4) The number of shares is based upon information reported in a Form 4 dated
March 8, 1999.
(5) The address of Massachusetts Financial Services Company is 500 Boylston
Street, Boston, Massachusetts 02116.
(6) The number of shares is based upon information in Amendment No. 2 to
Schedule 13G dated February 11, 1999 ("MFS Schedule"). The MFS Schedule
states that the shares are also beneficially owned by certain
non-reporting entities as well as MFS.
(7) Mr. Argyros' address is c/o Arnel Development Company, 949 South Coast
Drive, Suite 600, Costa Mesa, California 92626.
(8) Mr. Argyros acquired shares of DST Common Stock pursuant to an Agreement
and Plan of Merger dated September 2, 1998 by and among DST, USCS
International, Inc. and DST Acquisitions, Inc. (the "USCS Merger
Agreement"). The number of shares of DST Common Stock is based on
information in Schedule 13D dated December 30, 1998 ("Argyros Schedule")
and a Form 3 dated December 29, 1998. The shares consist of 9,166 shares
that may be acquired through option exercises, 4,706,876 shares held by
Mr. Argyros, 37,200 shares held by Argyros Children's Trust II, 16,451
shares held by The Argyros Foundation, 15,500 shares held by HBI
Financial, Inc., and 843 shares held by GLA Financial Corporation. Mr.
Argyros is the sole shareholder of HBI Financial, Inc. and GLA Financial
Corporation. The Argyros Schedule states that Mr. Argyros disclaims
beneficial ownership of 53,651 shares held by The Argyros Foundation and
Argyros Children's Trust II.
(9) The address of FMR Corp., Fidelity and Fidelity Trust is 82 Devonshire
Street, Boston, Massachusetts 02109. Edward C. Johnson 3d is Chairman of
and Abigail P. Johnson is a director of FMR Corp. Fidelity and Fidelity
Trust are wholly owned subsidiaries of FMR Corp. Shares of Fidelity
International were distributed to shareholders of FMR Corp.
(10) The number of shares is based upon information in Amendment No. 2 to
Schedule 13G dated February 1, 1999 (the "FMR Schedule"). The FMR Schedule
states that Fidelity beneficially owns 3,763,396 shares, Fidelity Trust
beneficially owns 728,312 shares, and Fidelity International beneficially
owns 70,476 shares of DST Common Stock.
(11) Includes 17,000 shares that may be acquired through option exercises.
(12) Includes 102,000 shares that may be acquired through option exercises and
5,813 shares allocated to his account in the DST ESOP.
(13) Dr. Castle acquired shares of DST Common Stock pursuant to the USCS Merger
Agreement. Includes 269,681 shares that may be acquired through option
exercises and 406 shares allocated to his account in the USCS 401(k).
(14) Includes 102,000 shares that may be acquired through option exercises and
13,046 shares allocated to his account in the DST ESOP.
5
<PAGE>
(15) Includes 265,000 shares that may be acquired through option exercises and
17,654 shares allocated to his account in the DST ESOP.
(16) Includes 550,000 shares that may be acquired through option exercises and
18,451 shares allocated to his account in the DST ESOP.
(17) USCS International, Inc. is a wholly owned subsidiary of DST.
(18) Includes 170,000 shares that may be acquired through option exercises and
12,226 shares allocated to his account in the DST ESOP.
(19) Includes 2,005,088 shares that may be acquired through option exercises by
the executive officers and directors and by the spouse of an executive
officer, 126,571 shares allocated to the DST ESOP accounts of executive
officers and the spouses of two executive officers, and 812 shares
allocated to the USCS 401(k) accounts of executive officers.
6
<PAGE>
PROPOSAL--ELECTION OF TWO DIRECTORS
The DST By-laws classify the DST Board into three classes and stagger the
terms of each class to expire in consecutive years. The term of office of one
class of directors expires each year in rotation so that at each annual meeting
of stockholders one class is up for election for a full three-year term. The
terms of the two Board Nominees identified below are expiring at this Annual
Meeting. Directors elected at the Annual Meeting will hold office for a
three-year term expiring in 2002 or until their successors are elected and
qualified. DST expects that the other directors will continue in office for the
remainder of their terms.
The Board Nominees are Thomas A. McDonnell and M. Jeannine Strandjord. They
are currently directors of DST, have indicated that they are willing and able to
continue serving as directors if elected and have consented to being named as
nominees in this Proxy Statement. If any of the Board Nominees should for any
reason become unavailable for election, the Proxy Committee will vote for such
other nominee as may be proposed by the annually appointed Nominating Committee
of the DST Board or, alternatively, the DST Board may reduce the number of
directors to be elected at the meeting.
THOMAS A. MCDONNELL, age 53, has served DST as a director since 1971; as
Chief Executive Officer since October 1984; and as President since January 1973
(except for a 30-month period from October 1984 to April 1987). He served as
Treasurer of DST from February 1973 to September 1995; and as Vice Chairman of
the Board from June 1984 to September 1995. He served KCSI as Executive Vice
President from February 1987 until October 1995 and as a director from 1983
until October 1995. He is a director of BHA Group, Inc., Cerner Corporation,
Computer Sciences Corporation, Euronet Services, Inc., and Informix Software,
Inc.
M. JEANNINE STRANDJORD, age 53, has served as a director of DST since
January 1996. She has served as Senior Vice President of Finance for the Long
Distance Division of Sprint Corporation ("Sprint") since November 1998. She had
previously served since 1985 as Vice President of Finance and Distribution at
AmeriSource, Inc., a Sprint subsidiary, and since 1990 as Senior Vice President
and Treasurer for Sprint. She is also a director of six registered investment
companies which are advised by American Century Investments.
THE DST BOARD RECOMMENDS THAT YOU CAST YOUR VOTES
"FOR" THE ELECTION OF THE BOARD NOMINEES
7
<PAGE>
THE BOARD OF DIRECTORS
INFORMATION ABOUT PRESENT DIRECTORS. In addition to the Board Nominees, the
following individuals are also on the DST Board, for a term ending on the date
of the annual meeting of stockholders in the year indicated.
DIRECTORS SERVING UNTIL THE ANNUAL MEETING OF STOCKHOLDERS IN 2000.
JAMES C. CASTLE, PH.D., age 62, has been Chairman and Chief Executive
Officer of USCS since August 1992. Dr. Castle has been a member of the DST Board
since December 21, 1998, when USCS International, Inc. ("USCS") became a
wholly-owned subsidiary of DST (the "USCS Merger"). The USCS Merger Agreement
contemplated Dr. Castle's appointment as a DST director.
THOMAS A. MCCULLOUGH, age 56, has served as a director of DST since 1990. He
has served as Executive Vice President of DST since April 1987. His
responsibilities include full-service mutual fund processing, remote mutual fund
client servicing, information systems, portfolio accounting, securities transfer
and product sales and marketing.
WILLIAM C. NELSON, age 61, has served as a director of DST since January
1996. He is the President, Kansas City, of NationsBank, N.A. and Chairman of
NationsBank, N.A. (Mid-West), which was previously Boatmen's First National Bank
of Kansas City ("Boatmen's"). Mr. Nelson had served Boatmen's since February
1990 as Chairman of the Board, since May 1989 as Chief Executive Officer, and
since June 1988 as President.
DIRECTORS SERVING UNTIL THE ANNUAL MEETING OF STOCKHOLDERS IN 2001.
A. EDWARD ALLINSON, age 64, has served as a director of DST from 1977 to
November 1990 and from September 1995 to present. He has been Executive Vice
President of State Street Bank and Trust Company ("State Street Bank") and an
Executive Vice President of State Street Corporation ("State Street"), the
parent company of State Street Bank, since March 1990. He is also a director of
KCSI.
GEORGE L. ARGYROS, age 62, joined the DST Board on December 21, 1998, the
effective date of the USCS Merger. Mr. Argyros had been a USCS director since
November 1990, and the USCS Merger Agreement contemplated his appointment as a
DST director. From 1968 to the present, Mr. Argyros has been Chairman and Chief
Executive Officer of Arnel & Affiliates, a diversified investment company. From
1987 to the present, he has been a general partner and the principal financial
partner in Westar Capital, a private investment company. Mr. Argyros serves as a
member of the boards of directors of First American Financial Corporation,
Rockwell International Corporation, and Newhall Land and Farming Co.
MICHAEL G. FITT, age 67, has served as a director of DST since September
1995. He was Chairman of Employers Reinsurance Corporation from 1980 through
1992, its President from 1979 through October 1991, and its Chief Executive
Officer from 1980 through 1992, and he is now retired. He is also a director of
NAC RE Corp. and of KCSI.
BOARD OF DIRECTORS' MEETINGS AND STANDING COMMITTEES.
MEETINGS. The DST Board met or took action by unanimous consent eleven
times in 1998, and all directors attended all meetings of the DST Board during
1998. The DST Board has established two standing committees: the DST Audit
Committee and the DST Compensation Committee. It has not established a standing
nominating committee. During 1998, the DST Audit Committee held three meetings
and the DST Compensation Committee held five meetings, and all committee members
attended all of the meetings of the committees on which they served.
DST AUDIT COMMITTEE. The DST Audit Committee's primary responsibilities are
to oversee the internal and external audit functions of DST and to meet with and
consider suggestions from members of
8
<PAGE>
management and the internal audit staff, as well as from DST's independent
accountants, concerning the financial operations of DST. The DST Audit Committee
also reviews audited financial statements of DST and considers and recommends
the appointment of, and approves the fee arrangement with, independent
accountants for audit, advisory, and consulting services. Members of the DST
Audit Committee are Ms. Strandjord and Messrs. Fitt and Nelson. The DST Board
appoints the members of the DST Audit Committee to serve staggered three-year
terms.
DST COMPENSATION COMMITTEE. The DST Compensation Committee's primary
responsibilities are to make determinations with respect to salaries and bonuses
of and other compensation arrangements with DST's officers and to administer the
officers' compensation plans. Members of the DST Compensation Committee are Ms.
Strandjord and Messrs. Fitt and Nelson. The DST Board appoints the members of
the DST Compensation Committee to serve one-year terms. The DST Compensation
Committee's report on executive compensation is set forth herein under
"Executive Compensation."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. Thomas A.
McCullough, Director and Executive Vice President of DST, serves on the Board of
Directors and as a member of the Executive Committee of the Board of Directors
of Boston Financial Data Services, Inc. ("BFDS"), a joint venture of State
Street and DST. A. Edward Allinson, Chairman of the Board of Directors of BFDS,
serves as a director of DST. Although the BFDS Board of Directors Executive
Committee performs certain functions equivalent to those of a compensation
committee, it does not determine Mr. Allinson's compensation for serving as an
officer of BFDS. BFDS uses DST's mutual fund system and services as a remote
service client of DST. Certain subsidiaries of DST provide printing, mailing and
other services to BFDS. For 1998, DST and subsidiaries had revenues of
$97,776,730 from BFDS and its subsidiaries and joint ventures.
CERTAIN BUSINESS RELATIONSHIPS. George L. Argyros is a general partner and
the principal financial partner in Westar Capital. USCS paid Westar Capital
approximately $430,500 for financial management and strategic advisory services
during 1998. The letter agreement under which these services were provided
terminated on December 21, 1998.
COMPENSATION OF DIRECTORS. Directors who do not receive compensation as
officers or employees of DST or any of its more than 50% owned affiliates (the
"Outside Directors") are each paid a fee of $4,000 for each meeting of the DST
Board that they attend, a fee of $2,000 for each committee meeting that they
attend, and a fee of $500 for any telephonic DST Board or committee meeting in
which they participate, plus reimbursement of reasonable travel expenses.
The Outside Directors may defer their compensation under the Directors'
Deferred Fee Plan, a non-qualified deferred compensation plan adopted September
19, 1995. Under the plan, directors who receive fees from DST may make an annual
election to defer all or a part of any fees earned during the next calendar
year. Each participant's account will be credited with the amount of fees
deferred and adjusted annually by an interest factor equal to a rate of return
selected by the DST Board, or if the participant elects, by a rate of return
earned for the year from a hypothetical investment allocated by the participant
among certain mutual funds. The benefits become distributable after termination
of service as a director or in certain other circumstances as approved by the
DST Compensation Committee. Fees to some directors previously deferred under an
earlier plan, which terminated effective August 31, 1995, continue to be
deferred and earn interest and shall be distributed in accordance with such
earlier plan.
The Outside Directors automatically participate in the 1995 DST Systems,
Inc. Stock Option and Performance Award Plan (the "Stock Option Plan"). Under
the Stock Option Plan, when an Outside Director is first elected or appointed to
the DST Board, the Outside Director receives an option to purchase 8,000 shares
of DST Common Stock. On the date of each annual meeting of DST's stockholders,
each Outside Director receives an option to purchase 4,000 shares of DST Common
Stock if such Outside Director will continue to serve in such capacity
immediately following such meeting. Except as otherwise set forth in the Stock
Option Plan, all options granted to an Outside Director to purchase shares of
DST
9
<PAGE>
Common Stock have an exercise price equal to the fair market value of DST Common
Stock on the date of the grant and become exercisable as follows: 50% on the day
preceding the date of the first annual stockholders' meeting after the date of
grant of the option; an additional 25% on the day preceding the date of the
second annual stockholders' meeting after the date of grant of the option; and
the remaining 25% on the day preceding the third annual stockholders' meeting
after the date of grant of the option. The term of any options granted to an
Outside Director may not extend more than ten years from the date of grant. All
such options shall immediately become exercisable in the event of a change in
control of DST (as defined in the Stock Option Plan) subject to certain
restrictions under federal securities law.
10
<PAGE>
EXECUTIVE COMPENSATION
DST COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION.*
COMPENSATION PRINCIPLES. The DST Compensation Committee based the 1998
compensation packages for DST executive officers on the principles that the
packages should (a) provide fair, reasonable and competitive base salaries, (b)
provide the opportunity to earn additional compensation if DST stockholders
experience increases in the value of DST Common Stock, and (c) emphasize
long-term stock ownership of DST Common Stock by executive officers.
OVERVIEW OF 1998 COMPENSATION. The compensation of DST executive officers
for 1998 consisted of base salary and of awards issued pursuant to the Stock
Option Plan. The Stock Option Plan allows the granting of stock options and
other forms of incentive compensation to DST officers and was approved by
stockholders in 1996. In 1997, stockholders approved additional types of awards
the DST Compensation Committee could grant under the Stock Option Plan,
including restricted stock. For 1998, the awards granted under the Stock Option
Plan were cash bonuses, restricted stock, and stock options. Because of the last
two types of awards, a substantial amount of the executive officers' 1998
compensation was at-risk and tied to DST's performance, furthering the DST
Compensation Committee's compensation principles. The executive officers also
participated in certain other benefits available generally to DST officers and
employees so that their base compensation packages were competitive with
compensation packages of other companies.
DETERMINATION OF 1998 COMPENSATION. The DST Compensation Committee utilized
data from several surveys provided by independent compensation consultants in
determining 1998 compensation. The independent consultants provided a survey of
compensation information contained in the proxy statements of fifteen companies
determined for purposes of the survey to be peers of DST. The survey group
included all the companies in the peer group shown in the Stock Performance
Graph contained in this Proxy Statement (with the exception of The Continuum
Company, Inc., which was acquired August 1, 1996 by Computer Sciences
Corporation), and other companies the compensation consultants and the DST
Compensation Committee believed would have needs similar to DST for executive
talent. The independent consultants also provided surveys of the compensation
packages of technology companies, of entities with revenues comparable to DST,
and of entities with revenues comparable to DST subsidiaries.
The DST Compensation Committee analyzed the surveys and considered the
recommendations of the independent compensation consultants to determine target
levels of base salary and of total cash compensation and the types of awards to
grant. The DST Compensation Committee focused on information in the surveys
about officers with positions and responsibilities similar to each DST executive
officer. When information from more than one survey applied to a DST executive
officer, the DST Compensation Committee considered information from multiple
surveys.
The DST Compensation Committee took the following actions with respect to
each component of the compensation packages:
BASE SALARIES. With the advice of independent compensation consultants, the
DST Compensation Committee set the target for each DST executive officer's base
salary for 1998 to be in the 50th percentile of compensation levels for
comparable positions shown in the applicable survey. The DST Compensation
- ------------------------
* The DST Compensation Committee Report on Executive Compensation and the
Stock Performance Graph included herein shall not be incorporated by
reference into any filings under the Securities Act of 1933 or the Exchange
Act, either as amended, notwithstanding the incorporation by reference of
the Proxy Statement into any such filings.
11
<PAGE>
Committee also examined the responsibilities of individual executive officers in
relation to the market and in relation to each other and made adjustments where
appropriate.
CASH BONUSES AND RESTRICTED STOCK. As incentive for DST executive officers
to meet DST's financial goals, the DST Compensation Committee adopted the DST
Systems, Inc. Officers Incentive Plan effective January 1, 1997 (the "Officers
Incentive Plan") pursuant to the provisions and as an implementation of the
Stock Option Plan. Under the Officers Incentive Plan, the DST Compensation
Committee may award incentive compensation to an officer based on a percentage
of the officer's base salary. The percentage of salary awarded, if any, depends
on DST achieving certain annual or cumulative threshold, target or maximum
earnings per share goals ("EPS Goals") established by the DST Compensation
Committee prior to the beginning of the years in which the goals apply.
For 1998, the DST Compensation Committee established threshold, target and
maximum EPS Goals for DST and determined the percentage of each officer's salary
to be awarded at each level of EPS Goals met by DST. The DST Compensation
Committee, with the help of an independent compensation consultant, determined
that DST's stand-alone 1998 financials be used in calculating officer bonuses.
The range of minimum percentages of base salary which could be awarded to
officers other than Mr. McDonnell for 1998 if EPS goals were met was from 25% to
50% and the range of maximum percentages was 75% to 150%. In establishing the
ranges, the DST Compensation Committee set the target for each DST executive
officer's total cash compensation to be in the 75th percentile of the applicable
survey information, if DST met certain performance criteria.
Incentive compensation awarded under the Officers Incentive Plan if DST
exceeded the threshold EPS Goal may consist of a combination of cash and
restricted DST Common Stock. If the threshold EPS Goal is met but not exceeded,
all of the incentive bonus is paid only in cash; for that portion of the bonus
attributable to performance above the threshold EPS Goal and up to the target
EPS Goal, 60% of the bonus is cash and 40% restricted stock; and for that
portion of the bonus attributable to performance above the target EPS Goal and
up to the maximum EPS Goal, 50% of the bonus is cash and 50% restricted stock.
The incentive award for 1998 consisted of a combination of cash and restricted
DST Common Stock.
Holders of restricted DST Common Stock issued pursuant to the Officers
Incentive Plan have the right to vote such stock and receive any dividends or
other distributions with respect to such stock. If the participant's employment
by DST or its subsidiaries terminates (other than upon retirement after age 60,
disability, death or termination without cause) prior to the last day of the
third calendar year after the plan year for which the incentive award was
granted, the restricted DST Common Stock is forfeited. The Officers Incentive
Plan provides that no participant may receive an incentive award greater than
250% of such participant's base salary as of the beginning of the plan year.
Additionally, the aggregate value of all incentive awards for a calendar year
may not exceed 10% of DST's pre-tax income for that year.
STOCK OPTIONS. In granting stock options in 1998 to executive officers as
part of 1998 compensation, the DST Compensation Committee analyzed the
application of option pricing models and other valuation techniques to stock
option data in the surveys of the independent compensation consultants and
considered the responsibility level of each officer receiving an option award
and the total number of options previously granted to each such officer.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. For 1998, Mr. McDonnell's
compensation was governed by a three-year employment agreement (the "1996
McDonnell Agreement") which was effective from January 1, 1996 through December
31, 1998. Under the 1996 McDonnell Agreement, Mr. McDonnell's annual base salary
for 1998 was $400,000, and he participated in DST's incentive compensation
program for DST executive officers.
The annual base salary set by the 1996 McDonnell Agreement was less than Mr.
McDonnell's base salary prior to the initial public offering of DST Common Stock
on October 31, 1995 (the "IPO") and was determined prior to the IPO by the KCSI
Compensation and Organization Committee (the "KCSI
12
<PAGE>
Compensation Committee") and subsequently approved by the DST Board. The KCSI
Compensation Committee had initially based Mr. McDonnell's salary on surveys of
independent compensation consultants of the compensation packages of other U.S.
based companies comparable in size to DST but then reduced it to align Mr.
McDonnell's compensation with that of other DST executive officers.
Under the Officers Incentive Plan, Mr. McDonnell's threshold, target and
maximum incentive awards for 1998 were set at 65%, 130% and 195% of his base
salary, respectively, if DST attained its threshold, target or maximum EPS
Goals. The DST Compensation Committee set such levels in recognition of Mr.
McDonnell's responsibilities and to provide incentives tied to DST's financial
performance.
The stock options awarded Mr. McDonnell in 1998 have the same terms as the
options awarded the other executive officers. The DST Compensation Committee
awarded Mr. McDonnell the number of options he received because of his level of
responsibility.
DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the Internal Revenue Code
limits a public company's deduction for federal income tax purposes of
compensation expense in excess of $1 million paid to the executive officers
named in the company's summary compensation table. Performance-based
compensation which meets the requirements of Section 162(m) is excluded from the
compensation subject to the $1 million deduction. The DST Compensation Committee
believes DST has taken the steps required to exclude from calculation of the $1
million compensation expense any performance-based awards granted under the
Stock Option Plan to the executive officers listed in the Summary Compensation
Table in this proxy statement (the "Named Officers").
THE DST COMPENSATION COMMITTEE
Michael G. Fitt
William C. Nelson
M. Jeannine Strandjord
13
<PAGE>
STOCK PERFORMANCE GRAPH.
The following graph shows the changes in value since the IPO of an assumed
investment of $100 in: (i) DST Common Stock; (ii) the stocks that comprise the
S&P 400 MidCap index(1); and (iii) the stocks that comprise a peer group of
companies(2). The table following the graph shows the dollar value of those
investments as of December 31, 1998. The value for the assumed investments
depicted on the graph and in the table has been calculated assuming that cash
dividends, if any, are reinvested at the end of each quarter in which they are
paid.
STOCK PERFORMANCE GRAPH
The proxy statement also includes a stock performance graph, which is
supplemented by a table showing the dollar value of the points on the graph. The
table is set forth in this electronic format document in the section entitled
"STOCK PERFORMANCE GRAPH." Both the graph and the table will be included in the
paper format definitive proxy mailed to DST's Stockholders. In accordance with a
letter to EDGAR filers dated November 16, 1992 from Mauri L. Osheroff, Associate
Director of Regulatory Policy of the Division of Corporate Finance, no further
explanation of the graph is set forth herein.
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
NOVEMBER 1, 1995 1995 1996 1997 1998
----------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
DST Value $ 100 $ 135.71 $ 149.40 $ 203.27 $ 271.72
S&P 400 MidCap
Index Total
Return $ 100 $ 104.11 $ 124.10 $ 164.13 $ 195.49
Peer Group
Total Return $ 100 $ 103.62 $ 117.74 $ 132.26 $ 167.45
</TABLE>
(1) Standard and Poor's Corporation, an independent company, prepares the S&P
400 MidCap Index.
(2) This index is based upon a group of comparable companies in DST's industry
comprised of: Automatic Data Processing, Inc.; Bisys Group, Inc.; The
Continuum Company, Inc. (through August 1, 1996, the date it was acquired by
Computer Sciences Corporation); First Data Corporation; Fiserv, Inc.; Policy
Management Systems, Inc.; and Sunguard Data Systems, Inc.
14
<PAGE>
SUMMARY COMPENSATION TABLE.
The following table sets forth for the calendar years indicated the total
compensation paid to or for the account of the Chief Executive Officer of DST
and the Named Officers, who are the four executive officers receiving the
highest totals of salary and bonus in 1998.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL
COMPENSATION AWARDS
RESTRICTED NUMBER OF
STOCK SECURITIES
SALARY BONUS AWARDS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(1) OPTIONS/SARS COMPENSATION($)(2)
<S> <C> <C> <C> <C> <C> <C>
Thomas A. McDonnell 1998 400,000 546,000 234,000 75,000 4,175
President and Chief Executive 1997 400,000 546,000 234,000 75,000 4,746
Officer 1996 399,996 480,000 0 0 16,761
Thomas A. McCullough 1998 335,000 351,750 150,750 45,000 4,175
Executive Vice President 1997 335,000 351,752 150,748 45,000 4,746
1996 300,000 300,000 0 0 16,761
James P. Horan 1998 275,000 231,000 99,000 20,000 4,735
Director of International Technology 1997 275,000 231,044 98,956 20,000 4,746
1996 253,008 202,400 0 0 16,761
Charles W. Schellhorn 1998 260,000 218,400 93,600 30,000 4,175
Vice Chairman, 1997 260,000 218,400 93,600 30,000 4,746
USCS International, Inc. 1996 249,996 200,000 0 0 16,761
Robert C. Canfield 1998 252,000 211,680 90,720 20,000 4,175
Senior Vice President, General 1997 252,000 211,712 90,688 20,000 4,746
Counsel and Secretary 1996 241,992 193,600 0 0 16,761
</TABLE>
(1) The number of shares of restricted stock received by the Named Officers
during 1998 and the aggregate market value of such shares on December 31,
1998, are as follows:
<TABLE>
<S> <C> <C>
Mr. McDonnell..................................... 4,500 shares $256,781.25
Mr. McCullough.................................... 2,899 shares $165,424.18
Mr. Horan......................................... 1,903 shares $108,589.93
Mr. Schellhorn.................................... 1,800 shares $102,712.50
Mr. Canfield...................................... 1,744 shares $ 99,517.00
</TABLE>
The DST Compensation Committee Report on Executive Compensation contained
herein describes the restrictions on the stock.
(2) All other compensation for each of the Named Officers for 1998 is
comprised of: (i) contributions to his account for 1998 under the DST ESOP
of $3,372; and (ii) contributions to his account for 1998 under the DST
Systems, Inc. Profit Sharing Plan of $803. All other compensation for Mr.
Horan also includes a grant of 10 shares of DST Common Stock under the DST
Stock Bonus Plan. The closing price of DST Common Stock on the NYSE on the
date of the grant to Mr. Horan was $56.
15
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR.
The following table sets forth information about the options to acquire DST
Common Stock granted the Named Officers in 1998.
<TABLE>
<CAPTION>
PERCENT
NUMBER OF OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED(1) FISCAL YEAR(2) ($/SH)(1) DATE(1) VALUE(3)
<S> <C> <C> <C> <C> <C>
Thomas A. McDonnell 75,000 7.7 % $ 52.00 2/26/2008 $1,389,000
Thomas A. McCullough 45,000 4.6 % $ 52.00 2/26/2008 $ 833,400
Charles W. Schellhorn 30,000 3.1 % $ 52.00 2/26/2008 $ 555,600
James P. Horan 20,000 2 % $ 52.00 2/26/2008 $ 370,400
Robert C. Canfield 20,000 2 % $ 52.00 2/26/2008 $ 370,400
</TABLE>
(1) The options became exercisable one year from the date of grant. All
options have a ten-year term but are subject to earlier termination upon the
occurrence of certain events, including termination of employment,
disability, retirement or death. The exercise price of each option is equal
to the average of the high and low price of DST Common Stock on the NYSE on
the date of the grant. Optionees may satisfy their minimum statutory tax
withholding obligations by authorizing DST to withhold shares of DST Common
Stock which would otherwise have been issuable on exercise or, subject to
certain restrictions, by delivering DST Common Stock to DST. In the event of
a change in control (as defined in the Stock Option Plan), the options
become immediately exercisable and, subject to certain securities laws
restrictions, the optionee may exercise certain limited rights related to
his options.
(2) Options for a total of 980,000 shares of DST Common Stock were granted to
employees in 1998.
(3) In accordance with Securities and Exchange Commission ("SEC") rules, the
Black-Scholes option pricing model was chosen to estimate the Grant Date
Present Value of the options set forth in this table. DST's use of this
model should not be construed as an endorsement of its accuracy at valuing
options. All stock option models require a prediction about the future
movement of the stock price. The following assumptions were made for
purposes of calculating Grant Date Present Value: options are exercised 5
years after the date of grant, volatility of 27.67% (calculated weekly over
the three preceding calendar years), dividend yield of 0% and risk free rate
of return rate of 5.61% (United States Government Zero Coupon Bond on date
of grant with a five-year maturity). Given the limited trading history of
DST Common Stock, the volatility factor was determined by using the average
of the volatility of the stock of three of the peer companies constituting
the peer group referenced in the Stock Performance Graph contained herein.
No adjustments were made for non-transferability or risk of forfeiture of
the options. The real value of the options in this table depends upon the
actual performance of DST Common Stock during the applicable period and upon
the date they are exercised.
16
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES.
The following table shows that none of the Named Officers exercised options
during 1998 to purchase DST Common Stock and shows the number and value of their
exercisable and unexercisable options at December 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
SHARES UNEXERCISED OPTIONS/SARS OPTIONS/SARS
ACQUIRED ON VALUE AT FY-END (#) AT FY-END ($)
NAME EXERCISE (#) REALIZED ($)* EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Thomas A. McDonnell 0 0 475,000 75,000 16,640,625 445,312
Thomas A. McCullough 0 0 220,000 45,000 7,583,438 267,187
Charles W. Schellhorn 0 0 140,000 30,000 4,809,375 178,125
James P. Horan 0 0 82,000 20,000 2,787,625 118,750
Robert C. Canfield 0 0 82,000 20,000 2,787,625 118,750
</TABLE>
* Although neither Mr. McDonnell, Mr. McCullough, nor Mr. Canfield realized
any value through the exercise of options to purchase DST Common Stock, each
realized value from the exercise of options to purchase KCSI stock he had
been awarded prior to the IPO by the KCSI Compensation Committee as a result
of his employment as a DST officer. The value realized by Mr. McDonnell was
$2,553,336, the value realized by Mr. McCullough was $2,273,686, and the
value realized by Mr. Canfield was $534,000.
EMPLOYMENT AGREEMENTS. An agreement between DST and Thomas A. McDonnell
commencing January 1, 1999 (the "1999 McDonnell Agreement") provides for Mr.
McDonnell's continued employment at a base salary set by the DST Compensation
Committee. Agreements between DST and Messrs. McCullough, Horan, Schellhorn, and
Canfield, each dated April 1, 1992 and amended October 9, 1995 (the "Executive
Agreements"), provide for the continued employment of each such officer in his
respective executive officer position at his base salary in effect at the date
of execution of his respective agreement subject to adjustment by the DST
Compensation Committee. Each of the Executive Agreements and the 1999 McDonnell
Agreement (collectively, the "Employment Agreements") may be terminated by the
officer on at least 30 days' notice to DST and by DST without notice and with or
without cause. If DST terminates any of the Employment Agreements without cause,
the Executive Agreements entitle the officer to severance pay equal to 12
months' base salary and 12 months' reimbursement of costs of obtaining
comparable life and health insurance benefits unless another employer provides
such benefits, and the 1999 McDonnell Agreement provides for such severance pay
based on a 24 month period.
The Employment Agreements provide that the officers are eligible to
participate in any DST incentive compensation plan and to receive other benefits
DST generally makes available to its executive officers. The Employment
Agreements also govern the officers' employment after a "change in control"*of
DST. If a change in control occurs during the term of any of the Employment
Agreements, the officer would be entitled to the following: (a) continuation of
the officer's employment, executive capacity, salary and benefits for a
three-year period at levels in effect on the "control change date"*; (b) with
respect to unfunded employer obligations under benefit plans, to a discounted
cash payment of amounts to which the officer is entitled; (c) if the officer's
employment is terminated after the control change date other than "for cause"*,
to payment of his base salary through termination plus a discounted cash
severance payment based on his salary for the remainder of the three-year period
and to continuation of benefits to the end of that period; (d) if the officer
resigns after a change in control upon "good reason"* and advance written
notice, to receive the same payments and benefits as if his employment had been
terminated other than for
- ------------------------
* The Employment Agreements define this term.
17
<PAGE>
cause; (e) if amounts received on or after the change in control date involve
"Parachute Payments" under Section 4999 of the Internal Revenue Code, to receive
payments necessary to relieve the officer of certain adverse federal income tax
consequences; and (f) the placement in trust of funds to secure the obligations
to pay any legal expense of the officer in connection with disputes arising with
respect to the agreement.
OTHER COMPENSATION PLANS AND ARRANGEMENTS. The Named Officers participate
in the following compensatory plans and arrangements, which are not generally
available to all DST employees:
THE STOCK OPTION PLAN. Stockholders approved the Stock Option Plan at the
1996 Annual Meeting of Stockholders and approved amendments to the plan at the
1997 Annual Meeting of Stockholders and at the Special Meeting of Stockholders
held on December 21, 1998. The Stock Option Plan provides for the automatic,
periodic grant of stock options to Outside Directors and gives the DST
Compensation Committee the discretion to award incentives to selected DST
employees in the form of options, reload options, restricted stock, stock
appreciation rights, limited rights, performance shares, performance units
(including performance-based cash awards), dividend equivalents, DST Common
Stock, or any other right, interest or option relating to shares of DST Common
Stock granted pursuant to the Stock Option Plan.
In the event of a change in control of DST (as defined in the Stock Option
Plan), vesting of awards (including options) will be automatically accelerated
and all conditions on awards shall be deemed satisfactorily completed without
any action required by the DST Compensation Committee so that such award may be
exercised or realized in full on or before a date fixed by the DST Compensation
Committee, subject to certain restrictions under the federal securities laws.
The DST Compensation Committee may, in its discretion, include such further
provisions and limitations in any agreement documenting such awards as it may
deem equitable and in the best interests of DST.
THE DST SYSTEMS, INC. EXECUTIVE PLAN. The Executive Plan, a non-qualified
deferred compensation plan, terminated effective December 31, 1995. However,
account balances for each participant on such date remain subject to the terms
of the Executive Plan. Officers of DST selected by the KCSI Compensation
Committee prior to the IPO participated in the Executive Plan. Each of the Named
Officers is a participant. DST credited each participant's account with the
value of contributions DST would have made to the various qualified plans
maintained by DST without regard to statutory contribution limits and
eligibility requirements, less the amount actually contributed to such qualified
plans on the participant's behalf. The accounts, which became fully vested upon
termination of the Executive Plan, become distributable after termination of
employment or in certain instances as approved by the DST Compensation
Committee.
THE OFFICERS INCENTIVE PLAN. Incentive awards issued under the Officers
Incentive Plan are subject to restrictions and limitations imposed under the
terms of the Stock Option Plan. All officers of DST participate in the Officers
Incentive Plan, and officers of more than 50% owned subsidiaries are eligible if
designated by the DST Compensation Committee. If for a given plan year DST
achieves performance goals by meeting EPS Goals, each participant may receive an
award based on a percentage of his or her annual base salary.
Restrictions on DST Common Stock issued pursuant to the Officers Incentive
Plan are described in the DST Compensation Committee Report on Executive
Compensation. The restricted DST Common Stock is not transferable during such
period of restriction except to family members or trusts for family members, and
the stock remains subject to the restrictions after such permitted transfers. In
the event of retirement after age 60, termination because of disability or
without cause, or a change in control, as defined in the Officers Incentive
Plan, the restrictions shall be deemed released.
OFFICER TRUSTS. DST has established trusts that are intended to secure the
rights of its officers, directors, employees, and former employees under the
employment continuation commitments of certain employment agreements, the
Directors' Deferred Fee Plan, the Officers Incentive Plan, and the Executive
Plan. The function of each trust is to receive contributions by DST and, in the
event of a change in control of
18
<PAGE>
DST where DST fails to honor covered obligations to a beneficiary, the trust
shall distribute to the beneficiary amounts sufficient to discharge DST's
obligation to such beneficiary. The trusts require DST to be solvent as a
condition of making distributions. The trusts are revocable until a change in
control of DST (as defined in the trusts) and terminate automatically if no such
change in control occurs prior to December 31, 2001, unless the trusts are
extended prior to such date.
DST has established a trust to secure Mr. Horan's rights to deferred
compensation earned from 1989 to 1992. The trust holds the deferred compensation
and the earnings thereon, credited according to a formula in Mr. Horan's
employment agreement. Upon termination of Mr. Horan's employment, the trustee
will pay him the deferred compensation, including earnings, in accordance with
his employment agreement; provided, however, that DST must be solvent as a
condition to the trust making the distribution. To the extent that the trust
assets are not sufficient to pay all amounts due Mr. Horan, DST is liable to pay
any balance due. The trust cannot be revoked without Mr. Horan's consent prior
to the time all payments to him are made.
OTHER MATTERS
GENERAL INFORMATION. DST will bear the cost of the Annual Meeting, including
the cost of mailing the proxy materials. Proxies may also be solicited by
telephone, telegraph or in person by directors, officers and employees not
specifically engaged or compensated for that purpose. DST has retained D.F. King
& Co., Inc. to assist in the solicitation of proxies at a cost not expected to
exceed $5,000 plus expenses.
DST'S INDEPENDENT ACCOUNTANTS. The Audit Committee recommended, and the DST
Board selected, the firm of PricewaterhouseCoopers LLP to serve as independent
accountants to examine the consolidated financial statements of DST for the year
1999. Although the DST Board has selected PricewaterhouseCoopers LLP for 1999,
the DST Board nonetheless may, in its discretion, retain another independent
accounting firm at any time during the year if it concludes that such change
would be in the best interest of DST and its stockholders.
PricewaterhouseCoopers LLP served as DST's independent accountants for 1998.
As such, PricewaterhouseCoopers LLP performed professional services in
connection with the examination of the consolidated financial statements of DST.
Such services included examination of the consolidated financial statements of
DST and of the financial statements of various subsidiaries, review of reports
filed with the SEC, and review of control procedures of the mutual fund
processing system of DST. In addition, PricewaterhouseCoopers LLP provided
certain other accounting, auditing and tax services to DST and certain of its
subsidiaries during 1998.
Representatives of PricewaterhouseCoopers LLP will be present at the Annual
Meeting and will have the opportunity to make a statement if they desire and to
respond to appropriate questions.
STOCKHOLDER PROPOSALS. Stockholders may as described below submit proposals
for consideration at a stockholders' meeting. No stockholder proposals are being
considered at this Annual Meeting.
INCLUSION OF STOCKHOLDER PROPOSALS IN THE 2000 ANNUAL MEETING PROXY
STATEMENT. If a stockholder desires to have a proposal included in DST's Proxy
Statement for the annual meeting of stockholders to be held in 2000, the
Corporate Secretary of DST must receive such proposal on or before December 2,
1999, and the proposal must comply with the applicable SEC laws and rules and
the procedures set forth in the DST By-laws. DST may require any proposed
nominee for election as a director or stockholder proposing a nominee to furnish
such other information as DST may reasonably require to properly complete any
proxy or information statement used for the solicitation of proxies in
connection with the meeting at which stockholders are to elect directors.
TIMELY NOTICE TO DST OF NOMINATIONS FOR DIRECTOR AND OTHER STOCKHOLDER
PROPOSALS. To bring a proposal before an annual meeting (other than a proposal
requested to be set forth in the Proxy Statement, as noted
19
<PAGE>
above), the DST By-laws require that the Corporate Secretary of DST must receive
it not less than 60 days nor more than 90 days prior to the meeting at which the
stockholders will consider the proposal; provided, however, that in the event
that the DST Board designates the meeting to be held at a date other than the
second Tuesday in May and gives notice of or publicly discloses the date of the
meeting less than 60 days prior to its occurrence, the Corporate Secretary of
DST must receive the notice not later than the close of business on the 15th day
following the date of the notice or public disclosure of the meeting date,
whichever first occurs.
Under these requirements, proposals (other than proposals submitted for
inclusion in the proxy statement) to be timely for the 2000 annual meeting must
be received by the Corporate Secretary of DST no earlier than February 9, 2000
and no later than March 10, 2000.
CONTENTS OF NOTICE OF PROPOSAL. The required contents of the notice of
proposal depend on whether the proposal pertains to nominating a director or to
other business. A stockholder's notice pertaining to the nomination of a
director shall set forth: (a) as to each nominee whom the stockholder proposes
to nominate for election or re-election as a director, (i) the name, age,
business address and residence address of the nominee, (ii) the principal
occupation or employment of the nominee, (iii) the class and number of shares of
capital stock of DST that are beneficially owned by the nominee, and (iv) any
other information concerning the nominee that would be required, under the rules
of the SEC, in a proxy statement soliciting proxies for the election of such
nominee; (b) as to the stockholder giving the notice, (i) the name and address
of the stockholder, and (ii) the class and number of shares of capital stock of
DST that are beneficially owned by the stockholder and the name and address of
record under which such stock is held; and (c) the signed consent of the nominee
to serve as a director if elected.
A stockholder's notice concerning business other than nominating a director
shall set forth as to each matter the stockholder proposes to bring before the
meeting (a) a brief description of the business desired to be brought before the
meeting and the reasons for conducting such business at the meeting, (b) the
name and address of the stockholder proposing such business, (c) the class and
number of shares of capital stock of DST that are beneficially owned by the
stockholder and the name and address of record under which such stock is held,
and (d) any material interest of the stockholder in such business. The Chairman
of the Annual Meeting has the power to determine whether the proposed business
is an appropriate subject for and was properly brought before the meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE. Section 16(a) of
the Exchange Act requires DST's directors and certain of its officers, and each
person, legal or natural, who owns more than 10% of DST Common Stock (each, a
"Reporting Person"), to file reports of such ownership with the SEC, the NYSE,
the CHX, and DST. Based solely on review of the copies of such reports furnished
to DST, and written representations relative to the filing of certain forms, no
Reporting Person other than John O'Neal, Vice President, was late in filing such
reports for fiscal year 1998. Mr. O'Neal sold 500 shares of DST Common Stock in
May 1998 and reported the sale on a Form 5 in February 1999.
By Order of the Board of Directors
/s/ Robert C. Canfield
Robert C. Canfield
SENIOR VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
Kansas City, Missouri
March 30, 1999
20
<PAGE>
/X/ IF MARKING BOXES,
FOLLOW THIS EXAMPLE
- -------------------------------------------------------------------------------
DST SYSTEMS, INC.
- -------------------------------------------------------------------------------
COMMON STOCK
The DST Board of Directors has appointed Messrs. Thomas A. McDonnell, Robert
C. Canfield and Kenneth V. Hager to act as the Proxy Committee, each with the
power to appoint his substitute. By signing this card, you are authorizing
such Proxy Committee to represent and to vote at the Annual Meeting of
Stockholders to be held on May 11, 1999, or any adjournment thereof, in
the manner you specify on this card, all of the shares of common stock of DST
Systems, Inc. you held of record on March 17, 1999.
CONTROL NUMBER:
RECORD DATE SHARES:
Please be sure to sign exactly as your name appears above and to date this
Proxy Card.
Date
- ----------------------------------------------
Stockholder sign here
- ----------------------------------------------
Co-owner sign here
- ----------------------------------------------
TO VOTE IN ACCORDANCE WITH THE DST BOARD OF DIRECTORS'
RECOMMENDATIONS, PLEASE SIGN AND DATE;
YOU NEED NOT MARK ANY BOXES.
Election of Two Directors. FOR ALL WITH- FOR ALL
NOMINEES HOLD EXCEPT
(01) THOMAS A. MCDONNELL / / / / / /
(02) M. JEANNINE STRANDJORD / / / / / /
NOTE: IF YOU MARK "WITHHOLD", YOUR VOTES WILL NOT BE CAST FOR EITHER NOMINEE.
TO VOTE FOR ONLY ONE OF THE NOMINEES, MARK "FOR ALL EXCEPT" AND STRIKE A LINE
THROUGH THE NAME OF THE NOMINEE FOR WHOM YOU ARE NOT VOTING.
THE DST BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE ELECTION OF TWO DIRECTORS.
SEE IMPORTANT INFORMATION ON THE REVERSE.
Mark box at right if you plan to attend the Annual Meeting of Stockholders. / /
Mark box at right if an address change has been noted on the reverse side of
this card. / /
ALL JOINT OWNERS MUST SIGN. EXECUTORS, ADMINISTRATORS, TRUSTEES, OFFICERS OF
CORPORATE STOCKHOLDERS, GUARDIANS AND ATTORNEYS-IN-FACT MUST INDICATE THE
CAPACITY IN WHICH THEY ARE SIGNING.
DETACH CARD DETACH CARD
DST SYSTEMS, INC.
Dear Stockholder:
Important matters set forth in the enclosed Proxy Statement require your
immediate attention and approval.
DST strongly encourages you to exercise your right to vote your shares. Your
proxy counts.
Please sign the Proxy Card, detach it, and promptly return it in the enclosed
postage paid envelope. Alternatively, you may authorize your proxy by
telephone at (877) 779-8683 or electronically at
http://www.eproxyvote.com/dst. If you choose to do so, you will need the
Control Number on the Proxy Card.
Thank you in advance for your prompt attention.
Sincerely,
DST Systems, Inc.
<PAGE>
COMMON DST SYSTEMS, INC. COMMON
ANNUAL MEETING OF STOCKHOLDERS-MAY 11, 1999
SOLICITED ON BEHALF OF THE DST BOARD OF DIRECTORS
The Election of Two Directors has been proposed by the DST Board and is not
related to or conditioned on the approval of any other proposal which may
come before the meeting.
You authorize the Proxy Committee to vote in its discretion upon such other
business as may properly come before the Annual Meeting. You may revoke this
proxy in the manner described in the Proxy Statement dated March 30, 1999,
receipt of which you hereby acknowledge.
IF YOU DO NOT SPECIFY HOW YOU AUTHORIZE THE PROXY COMMITTEE TO VOTE ON THE
PROPOSAL, YOU AUTHORIZE IT TO VOTE FOR THE NOMINEES NAMED HEREIN.
- -------------------------------------------------------------------------------
PLEASE DATE AND SIGN ON THE REVERSE AND RETURN IN THE ENCLOSED ENVELOPE
OR AUTHORIZE YOUR PROXY BY TELEPHONE AT (877) 779-8683 OR ELECTRONICALLY AT
HTTP://WWW.EPROXYVOTE.COM/DST.
- -------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE NOTE THE NEW ADDRESS BELOW.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -----------------
VOTE BY TELEPHONE
- -----------------
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT AND PROXY CARD.
2. CALL THE TOLL-FREE NUMBER
1-877-PRX-VOTE (1-877-779-8683). FOR SHAREHOLDERS RESIDING OUTSIDE THE
UNITED STATES CALL COLLECT ON A TOUCH-TONE PHONE 1-201-536-8073.
THERE IS NO CHARGE FOR THIS CALL.
3. ENTER YOUR CONTROL NUMBER LOCATED ON YOUR PROXY CARD.
4. FOLLOW THE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime!
- ----------------
VOTE BY INTERNET
- ----------------
It's fast, convenient, and your vote is immediately confirmed and posted.
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT AND PROXY CARD.
2. GO TO THE WEBSITE
HTTP://WWW.EPROXYVOTE.COM/DST.
3. ENTER YOUR CONTROL NUMBER LOCATED ON YOUR PROXY CARD.
4. FOLLOW THE INSTRUCTIONS PROVIDED.
YOUR VOTE IS IMPORTANT!
Go to http://www.eproxyvote.com/dst anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
<PAGE>
/X/ IF MARKING BOXES,
FOLLOW THIS EXAMPLE
- -------------------------------------------------------------------------------
DST SYSTEMS, INC.
- -------------------------------------------------------------------------------
DST ESOP
CONTROL NUMBER:
RECORD DATE SHARES:
Please be sure to sign exactly as your name appears above and to date this
Instruction Card.
Date
- ----------------------------------------------
Participant sign here
- ----------------------------------------------
Election of Two Directors. FOR ALL WITH- FOR ALL
NOMINEES HOLD EXCEPT
(01) THOMAS A. MCDONNELL / / / / / /
(02) M. JEANNINE STRANDJORD / / / / / /
NOTE: IF YOU MARK "WITHHOLD", YOUR VOTES WILL NOT BE CAST FOR EITHER NOMINEE.
TO VOTE FOR ONLY ONE OF THE NOMINEES, MARK "FOR ALL EXCEPT" AND STRIKE A LINE
THROUGH THE NAME OF THE NOMINEE FOR WHOM YOU ARE NOT VOTING.
THE DST BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE ELECTION OF TWO DIRECTORS.
SEE IMPORTANT INFORMATION ON THE REVERSE.
Mark box at right if you plan to attend the Annual Meeting of Stockholders. / /
Mark box at right if an address change has been noted on the reverse side of
this card. / /
DETACH CARD DETACH CARD
DST SYSTEMS, INC.
Dear DST ESOP Participant:
Important matters set forth in the enclosed proxy materials require your
immediate attention and approval.
DST strongly encourages you to instruct the Trustee of The Employee Stock
Ownership Plan of DST Systems, Inc. ("DST ESOP") how to vote the shares
allocated to your DST ESOP account. Your instruction counts.
Please mark the boxes on this Instruction Card to indicate how the Trustee
shall vote your shares. Then sign the Instruction Card, detach it, and
promptly return it. PLEASE USE THE ENCLOSED POSTAGE PAID ENVELOPE AND DO NOT
RETURN THIS CARD TO DST AS YOUR VOTE IS CONFIDENTIAL.
Alternatively, you may make your instructions by telephone at (877) 779-8683
or electronically at http://www.eproxyvote.com/dst. If you choose to do so,
you will need the Control Number on the Instruction Card.
Thank you in advance for your prompt attention.
Sincerely,
DST Systems, Inc.
<PAGE>
DST ESOP DST SYSTEMS, INC. DST ESOP
ANNUAL MEETING OF STOCKHOLDERS-MAY 11, 1999
CONFIDENTIAL VOTING INSTRUCTIONS TO UMB BANK, N.A. AS TRUSTEE UNDER THE
EMPLOYEE STOCK OWNERSHIP PLAN OF DST SYSTEMS, INC.
The Trustee of The Employee Stock Ownership Plan of DST Systems, Inc. ("DST
ESOP") seeks your instruction on how to vote your shares on the proposal
listed on the reverse side of this Instruction Card. The Election of Two
Directors has been proposed by the DST Board and is not related to or
conditioned on the approval of any other proposal which may come before the
meeting.
By signing this Instruction Card, you direct that the voting rights
pertaining to shares of common stock of DST Systems, Inc. held by the Trustee
and allocated to your DST ESOP account shall be exercised as specified herein
by you when the Trustee votes at the Annual Meeting of Stockholders to be
held on May 11, 1999, or any adjournment thereof. You may revoke your
instruction in the manner described in the Proxy Statement dated March 30,
1999, receipt of which you hereby acknowledge.
If you either fail to return this Instruction Card or do not specify your
vote, the Trustee will vote shares allocated to your DST ESOP account in the
same proportion as the shares held by the DST ESOP for which the Trustee
receives voting instructions.
- -------------------------------------------------------------------------------
PLEASE DATE AND SIGN ON THE REVERSE AND RETURN IN THE ENCLOSED ENVELOPE
OR MAKE YOUR INSTRUCTIONS BY TELEPHONE AT (877) 779-8683 OR ELECTRONICALLY AT
HTTP://WWW.EPROXYVOTE.COM/DST.
- -------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE NOTE THE NEW ADDRESS BELOW.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -----------------
VOTE BY TELEPHONE
- -----------------
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT AND INSTRUCTION CARD.
2. CALL THE TOLL-FREE NUMBER
1-877-PRX-VOTE (1-877-779-8683). FOR SHAREHOLDERS RESIDING OUTSIDE THE
UNITED STATES CALL COLLECT ON A TOUCH-TONE PHONE 1-201-536-8073.
THERE IS NO CHARGE FOR THIS CALL.
3. ENTER YOUR CONTROL NUMBER LOCATED ON YOUR INSTRUCTION CARD.
4. FOLLOW THE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime!
- ----------------
VOTE BY INTERNET
- ----------------
It's fast, convenient, and your vote is immediately confirmed and posted.
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT AND INSTRUCTION CARD.
2. GO TO THE WEBSITE
HTTP://WWW.EPROXYVOTE.COM/DST.
3. ENTER YOUR CONTROL NUMBER LOCATED ON YOUR INSTRUCTION CARD.
4. FOLLOW THE INSTRUCTIONS PROVIDED.
YOUR VOTE IS IMPORTANT!
Go to http://www.eproxyvote.com/dst anytime!
DO NOT RETURN YOUR INSTRUCTION CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
<PAGE>
/X/ IF MARKING BOXES,
FOLLOW THIS EXAMPLE
- -------------------------------------------------------------------------------
DST SYSTEMS, INC.
- -------------------------------------------------------------------------------
USCS 401(K)
CONTROL NUMBER:
RECORD DATE SHARES:
Please be sure to sign exactly as your name appears above and to date this
Instruction Card.
Date
- ----------------------------------------------
Participant sign here
- ----------------------------------------------
Election of Two Directors. FOR ALL WITH- FOR ALL
NOMINEES HOLD EXCEPT
(01) THOMAS A. MCDONNELL / / / / / /
(02) M. JEANNINE STRANDJORD / / / / / /
NOTE: IF YOU MARK "WITHHOLD", YOUR VOTES WILL NOT BE CAST FOR EITHER NOMINEE.
TO VOTE FOR ONLY ONE OF THE NOMINEES, MARK "FOR ALL EXCEPT" AND STRIKE A LINE
THROUGH THE NAME OF THE NOMINEE FOR WHOM YOU ARE NOT VOTING.
THE DST BOARD OF DIRECTORS RECOMMENDS THAT
YOU VOTE FOR THE ELECTION OF TWO DIRECTORS.
SEE IMPORTANT INFORMATION ON THE REVERSE.
Mark box at right if you plan to attend the Annual Meeting of Stockholders. / /
Mark box at right if an address change has been noted on the reverse side of
this card. / /
DETACH CARD DETACH CARD
DST SYSTEMS, INC.
Dear 401(k) Participant:
Important matters set forth in the enclosed proxy materials require your
immediate attention and approval.
DST strongly encourages you to instruct the Trustee of the USCS
International, Inc. 401(k) Plan how to vote the shares allocated to your
401(k) account. Your instruction counts.
Please mark the boxes on this Instruction Card to indicate how the Trustee
shall vote your shares. Then sign the Instruction Card, detach it, and
promptly return it. PLEASE USE THE ENCLOSED POSTAGE PAID ENVELOPE AND DO NOT
RETURN THIS CARD TO USCS OR DST AS YOUR VOTE IS CONFIDENTIAL.
Alternatively, you may make your instructions by telephone at (877) 779-8683
or electronically at http://www.eproxyvote.com/dst. If you choose to do so,
you will need the Control Number on the Instruction Card.
Thank you in advance for your prompt attention.
Sincerely,
DST Systems, Inc.
<PAGE>
USCS 401(K) DST SYSTEMS, INC. USCS 401(K)
ANNUAL MEETING OF STOCKHOLDERS-MAY 11, 1999
CONFIDENTIAL VOTING INSTRUCTIONS TO CIGNA RETIREMENT AND INVESTMENT SERVICES
AS TRUSTEE UNDER THE USCS INTERNATIONAL, INC. 401(K) PLAN
The Trustee of the USCS International, Inc. 401(k) Plan ("401(k)") seeks your
instruction on how to vote your shares on the proposal listed on the reverse
side of this Instruction Card. The Election of Two Directors has been
proposed by the DST Board and is not related to or conditioned on the
approval of any other proposal which may come before the meeting.
By signing this Instruction Card, you direct that the voting rights
pertaining to shares of common stock of DST Systems, Inc. held by the Trustee
and allocated to your 401(k) account shall be exercised as specified herein
by you when the Trustee votes at the Annual Meeting of Stockholders to be
held on May 11, 1999, or any adjournment thereof. You may revoke your
instruction in the manner described in the Proxy Statement dated March 30,
1999, receipt of which you hereby acknowledge.
If you either fail to return this Instruction Card or do not specify your
vote, the Trustee will vote shares allocated to your 401(k) account as the
administrative committee of the 401(k) directs.
- -------------------------------------------------------------------------------
PLEASE DATE AND SIGN ON THE REVERSE AND RETURN IN THE ENCLOSED ENVELOPE
OR MAKE YOUR INSTRUCTIONS BY TELEPHONE AT (877) 779-8683 OR ELECTRONICALLY AT
HTTP://WWW.EPROXYVOTE.COM/DST.
- -------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE NOTE THE NEW ADDRESS BELOW.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -----------------
VOTE BY TELEPHONE
- -----------------
It's fast, convenient, and immediate!
Call Toll-Free on a Touch-Tone Phone
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT AND INSTRUCTION CARD.
2. CALL THE TOLL-FREE NUMBER
1-877-PRX-VOTE (1-877-779-8683). FOR SHAREHOLDERS RESIDING OUTSIDE THE
UNITED STATES CALL COLLECT ON A TOUCH-TONE PHONE 1-201-536-8073.
THERE IS NO CHARGE FOR THIS CALL.
3. ENTER YOUR CONTROL NUMBER LOCATED ON YOUR INSTRUCTION CARD.
4. FOLLOW THE RECORDED INSTRUCTIONS.
YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime!
- ----------------
VOTE BY INTERNET
- ----------------
It's fast, convenient, and your vote is immediately confirmed and posted.
FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY STATEMENT AND INSTRUCTION CARD.
2. GO TO THE WEBSITE
HTTP://WWW.EPROXYVOTE.COM/DST.
3. ENTER YOUR CONTROL NUMBER LOCATED ON YOUR INSTRUCTION CARD.
4. FOLLOW THE INSTRUCTIONS PROVIDED.
YOUR VOTE IS IMPORTANT!
Go to http://www.eproxyvote.com/dst anytime!
DO NOT RETURN YOUR INSTRUCTION CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
